Happiness

Some old-age truths about happiness — Kua Ee Heok

September 12, 2012

SEPT 12 — Six months ago, I was referred a 67-year-old doctor who was profoundly depressed after suffering a heart attack. His cardiologist requested an urgent psychiatric consultation because he was suicidal.

A general practitioner, he had always wanted to own an elegant house in Queen Astrid Park. In his pursuit of happiness, he worked assiduously, took a large bank loan and was planning the renovation of the bungalow when he collapsed in his clinic after experiencing an acute chest pain. While recuperating, he wondered whether he could work again and worried about the financial burden.

During our psychological therapy session, he confided about having been preoccupied for many years with the “dream house” since visiting a patient living in that prestigious part of Singapore.

He writhed in mental anguish — his happiness had been shattered.

Happiness and depression are on the two ends of the emotion spectrum. Recently, there has been a surge in research into this bipolarity of emotion, with the advent of new brain scanning techniques.

As neuroscientists ponder the convoluted brain neurotransmitter systems of dopamine and serotonin regulating our emotions, we know that happiness is personal and intrapsychic — a psychological term referring to the internal psychological processes of the individual.

People externalise their happiness by sharing with friends, giving to the less fortunate or helping neighbours.

Happiness is a topical issue not only in the heartland kopitiam but, also, the hallowed halls of the United Nations in New York. Many countries, including Bhutan and Britain, have constructed their own Happiness Index. In the homes of many elderly Chinese are three deities — Fu, Lu and Shou — who personify their aspirations of wealth, happiness and longevity.

As you listen to the Singapore national conversation over the next few months, a central theme I suspect will be “happiness”, or the lack of it, and it will pervade the issues of jobs, housing, public transport and foreigners.

Factors associated with happiness and satisfaction in late life have also intrigued many researchers in the field of gerontology. A few years ago, the Department of Psychological Medicine of the National University Health System conducted a study of elderly people living in the Chinatown and Toa Payoh districts.

About 72 per cent of the Chinatown elderly and 69 per cent of the Toa Payoh elderly indicated that they were happy and satisfied with life. However, their reasons for life satisfaction were quite different.

The Chinatown elderly lived in smaller HDB flats and preferred to meet friends in community centres or the void decks; their main reasons for life satisfaction were family or social relationships and good health.

The Toa Payoh elderly were living in bigger flats and their main reasons for life satisfaction were the comfortable homes and good health. When we assessed the rate of depression in both groups, the prevalence was 5 per cent in the Chinatown elderly and 9 per cent in the Toa Payoh elderly.

There was more social interaction among the Chinatown elderly who tended to congregate at public places to chat, watch television, read the papers or play mahjong. The Toa Payoh elderly did not interact as much with neighbours and seemed more isolated and lonely. In short, the Chinatown elderly, although poorer, were happier with lower prevalence of depressive disorder.

You may wonder how many of the Chinatown elderly will participate or are even cognisant of the imminent national conversation. With their long years and wisdom, they can tell us something about happiness, if we have time to listen and understand their dialects.

Because of the change in family structure, more Singapore elderly will be living alone in future and cannot expect much support from close relatives. Living alone and loneliness were issues explored in a recent study in the Jurong district by our research team. We found that a sense of loneliness, and not living alone, was a risk factor for depression which could lead to suicidal ideation.

Many people lament the passing of the kampong or village socio-ecological community of interdependence. In the past, living in a village allowed people to interact and cooperate in caring for their neighbours. With modernity, the ethos of the kampung spirit is lost.

It may be possible to resurrect the same community spirit within blocks of flats by identifying, within each block, the frail and the able-bodied elderly. If the latter can become informal carers of the former, a future tradition could grow within the precinct. And this is the challenge — to build not just a cohesive and inclusive but also caring community, which is the soul of the nation.

As for the doctor, I reviewed him last month and he had improved after four months of psychological therapy. No longer depressed or suicidal, he had begun to recalibrate his priorities in life and felt the “dream house” was no longer at the top of the list.

He decided to work part-time and looked forward to thrice-a-week morning walks at the Botanic Gardens, Labrador Park and MacRitchie Reservoir with his friends from church. His joie de vivre now was admiring the beauty of nature, and spending more time with family and friends.

In fact, his wife persuaded him to stay in their present apartment and sell the bungalow, which should fetch a princely sum today. He is a case study to repudiate the myth that suicide is not preventable.

Before he left my clinic, he reflected on the dark days when he wanted to take his life and, with a wry smile, quipped: “Everybody wants to go to heaven but nobody … nobody really wants to die.”

I agreed. — Today

* Dr Kua Ee Heok is a professor in the Department of Psychological Medicine, National University of Singapore, and senior consultant psychiatrist in the National University Health System.

Keep an Eye on The Investment Clock

Asset Allocation and Economic Hedging in Various Economic Environment

Asset Allocation

This is also referred to as economic hedging and can be defined as a conservative method of diversifying assets so they will react different under various economic conditions.

Successful investing can be based on 4 key characteristics as follows:

• Discipline
• Patience
• Historical Prospective
• Common Sense Strategy

Reasons for using asset allocation:

• History repeats itself
• No one can predict the future – not even the experts
• Comfort in knowing you have not painted yourself in a corner
• Acts as a hedge against financial risks you cannot control

To protect against risks, the risks must first be identified and then investments set up to diversify around them. Listed below are the main types of economic environments.

• Hyper Inflation (100%+/year)
• Double Digit Inflation (10%+/year)
• High Inflation (5 to 9%/year)
• Normal Inflation (2 to 4%/year)
• Recession
• Depression

Now lets look at a couple examples of how various investment types do in these differing environments.

In a depression we see the following:

• Stocks go way down (85-90%)
• Real Estate – Also tends to go down
• Interest Rates – drops to very low rates
• Unemployment – this goes way up
• Property – material things tend to lose value
• Bonds – These do well, as bonds tend to vary inversely with interest rates.

Recommended investment in a depressed economy then would be high quality, intermediate term (2-4 year), discounted corporate bonds.

On the other hand in a Hyper-Inflation economy the situation would be completely different.

• Stocks – do well for a while, then collapse
• Real Estate – depends, because it is often bought with debt
• Gold – this has done well in keeping its value in hyper-inflation conditions

Of note, the last time the US was in a hyper-inflation economy was during the civil war. However several other countries have been in this situation in recent years.

Now that we know how the environment can affect different investments, let's look at what investments are best for each environment and how to protect your investments in these changing economic times with economic hedging.

http://www.nassbee.com/wealthy/asset_allocation.html

Economic Hedging

Following our discussion on asset allocation, below is a list of the best types of investments for each type of environment.

Economic Environment	Best Investment
Hyper Inflation	Gold
Double Digit Inflation	Real Estate
High Inflation	Real Estate / Stocks
Normal Inflation	Stocks
Recession	Cash
Depression	High Quality Corporate Bonds

How you will allocate your assets will depend on if you are in or near retirement as well as other personal circumstances. Below are two basic allocation structures. You should review your own needs to decide what type of allocation meets your needs best.

Aggressive

Cash	Bonds	REIT	Stocks	Gold
15-20%	15-20%	30%	30%	2-5%

Retired

Cash	Bonds	REIT	Stocks
25%	25%	25%	25%

(These percentages can be vaired slightly to fit in 2% Gold for better hedging.)

Over the past 30 years, average yields for these types of investments has been about as follows:

Investment	Avg Yield
Cash	4%
Bonds	7%
REIT	8%
Stocks	10%

For the retired plan then this would have yielded a safe 7.25% annual return. For the aggressive investor it would closer to 8%.

Rebalance

In order to keep the advantage of asset allocation you should rebalance your investments every year. When this is done is not important as long as it is done at least once per year. By taking profits from the investment types that are doing well and putting the money in those that are down, you are buying low and selling high without any emotional input that may cloud your decision. Rebalancing should then be done as follows:

• Periodically (at least once per year)
• If there is a major change in your life
• If there is a major change in the financial market

http://www.nassbee.com/wealthy/economic_hedging.html

Depression? Or just a recession?

From The TimesFebruary 9, 2009

Depression? Or just a recession? Experts also find it hard to tell
This week: After Gordon Brown talked of a new Depression, we explain the phenomenon.

How is an economic depression different from a recession?

First of all, it is important to understand that there is no precise or agreed definition of a depression. Even now, 70 years after the last experience of the 1930s economic slump that became know as the Great Depression, the world's leading economists are still wrangling over what caused it and what it meant. Defining the term is made more difficult since the last experience of anything like a depression was in this period, more than seven decades ago, which is well beyond many people's living memory.

In general, it is accepted by most commentators and experts that a depression is a very severe form of recession: one involving a deeper decline in GDP and most other measures of economic welfare, including employment, and which probably lasts for significantly longer than the typical recessions experienced in modern times.

How different is the scale of a depression from a recession?

Very different. In modern times, the typical experience of recession in big Western economies has been a period of declining GDP that has lasted perhaps three to six quarters, and the typical fall in GDP over the period of recession has been in the order of 1 to 3 per cent. Some recessions have been even briefer and less deep, but all of these have still been bad enough to cause considerable hardship and to alter the business landscape significantly.

By contrast, the Great Depression in the United States stretched from 1929 to 1933, and involved a collapse in the economy that saw national output and income shrink by 29.6per cent. GDP dropped by 8.6per cent in 1930 alone, by 6.4 per cent in 1931 and by 13 per cent in 1932. Recovery in 1934 to 1937 was followed by a relapse into recession. It was only the huge rise in industrial production in the US war economy of the early Forties that ended this profound period of economic woes in America.

What was the toll from this slump?

The impact was brutal. The proportion of the workforce without jobs surged from 2 per cent to a quarter of those of working age. Output from US factories was halved, consumer prices fell by a quarter as the economy slid into deflation, four-fifths of the value of the US stock market was wiped out, from the Wall Street crash onwards, and house prices fell by nearly a third.

What about Britain in the Depression?

Britain's experience of the Thirties was grim and painful, but far from as searing as that of the US. British GDP plunged by about 5 per cent, compared with the 2.9 per cent drop suffered in the worst modern recession in the early Eighties. During the early Thirties, British unemployment doubled from 7 to 15per cent of the workforce. However, this experience was much less severe than the slump that the UK suffered in the early Twenties. Although that is not part of what we know as “the Great Depression”, it clearly was a depression on the same scale. In the wake of the First World War, UK GDP plummeted by 23 per cent, mirroring the experience of America a decade later.

www.timesonline.co.uk/economics
www.timesonline.co.uk/targettwopointzero
www.bankofengland.co.uk/education/targettwopointzero

http://business.timesonline.co.uk/tol/business/economics/target_2_0/article5689193.ece

Recession And Depression: They Aren't So Bad

Recession And Depression: They Aren't So Bad
by Chris Seabury (Contact Author Biography)

More From Investopedia
Recession: What Does It Mean To Investors?
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Recession-Proof Your Portfolio


Recessions and depressions have occurred many times throughout history. To many, they bring fear and uncertainty, but they are actually a natural part of the economic cycle. Unfortunately, there are a lot of myths surrounding market cycles, but in order understand them, we must look beyond these myths. In this article, we'll examine recession and depression, how they work and what they really mean for investors.

What Is a Recession?

First, let's take a look at recessions. There are two definitions of recession:

• one defines a recession as two consecutive quarters of negative economic growth, and
• the second (according to the National Bureau of Economic Research (NBER)) defines a recession as a significant decline in national economic activity that lasts more than just a few months.
  

How It Works

The growth of our economy rests upon the balance between the production and consumption of goods and services. As the economy grows, so do incomes and consumer spending, which continues the cycle of growth. However, because the world is not perfect, at some point, the economy has to slow. This slow down could be caused by something as simple as an oversupply, where producers manufacture too many goods. When this happens, the demand for those goods will drop. This causes earnings to slow, incomes to drop and the equity markets to fall. (To learn more, read Understanding Supply Side Economics.)

Historical Examples
Since the mid-1850s the U.S. had 32 recessions, and according to the NBER, most have varied in length, with the average recession lasting 10 months. The shortest recession on record lasted six months, from January 1980 to July 1980. Two of the longest recessions lasted for 16 months. These were the recessions of November 1973 to March 1975 and July 1981 to November 1982.

What Is a Depression?

A depression is a severe economic catastrophe in which real gross domestic product (GDP) falls by at least 10%. A depression is much more severe than a recession and the effects of a depression can last for years.

It is known to cause calamities in banking, trade and manufacturing, as well as falling prices, very tight credit, low investment, rising bankruptcies and high unemployment. As such, getting through a depression can be a challenge for consumers and businesses alike, given the overall economic backdrop. (To learn more, read The Importance Of Inflation and GDP.)

How It Works
Depressions occur when a number of factors come together at one time. These factors start off with overproduction and decreasing demand and are followed by fear that develops as businesses and investors panic. The combination of excess supply and fear causes business spending and investments to drop. As the economy starts to slow, unemployment rises and wages drop. These falling wages cause consumers to cut back spending even more, putting additional pressure on unemployment and wages. This begins a cycle in which the purchasing power of consumers is eroded severely making them unable to make their mortgage payments; this forces banks to tighten their lending standards, which eventually leads to bankruptcies.

Historical Examples
Throughout history, there are several examples of depressions. The most well-known is the Great Depression of the 1930s. However, this one title actually covers two depressions that took place during that time. The first depression occurred from August 1929 to March 1933, during which GDP growth declined by 33%. The second depression ran from May 1937 to June 1938, during which GDP growth declined by 18.2%. In addition, the Great Depression was preceded by another economic depression, which occurred from 1893 to 1898. (To learn more, read What Caused The Great Depression?)

What Can We Learn?

Recessions and depressions provide us with both negatives and positives that we can use to gain a greater understanding of how they work and how to survive them.

Negatives of Recessions and Depressions

There are many negative consequences of recessions and depressions. Let's take a look at a few:

1. Rising unemployment
Generally, rising unemployment is a classic sign of both recessions and depressions. As consumers cut their spending, businesses cut payrolls in order to cope with falling earnings. The difference between the two is that the unemployment rate in a recession is less severe than in a depression. As a basic rule, the unemployment rate for a recession is in the 5-11% range; by contrast, the unemployment during the first period of the Great Depression (1929-1933) went from 3% in 1929 to 25% by 1933.

2. Economic downturn
Recessions and depressions create a massive unwinding in the economy. During times of growth, businesses keep increasing supplies to meet consumer, demands, but at some point there will be too much supply in the economy. When this happens, the economy slows as demand drops. Recessions and depressions allow us to clear out the excesses of the economy, but the process can be painful and many suffer during this time.

3. Fear
Recessions and depressions create high amounts of fear. As the economy slows and unemployment rises, many consumers become fearful that things will not improve anytime soon. This fear causes them to cut back on spending, causing the economy to slow even more. (For related reading, see When Fear And Greed Take Over.)

4. Sinking values
Asset values sink in recessions and depressions because earnings slow along with the economy. This causes stock prices to fall because of the slowing earnings and negative outlooks from companies. In turn, these falling prices cause new investments for expansion to slow and can affect the asset values for many people.

Positives of Recessions and Depressions

There are many positives that take place as a result of recessions and depressions. They include:
1. Getting rid of excess
Economic decline allows the economy to clean out the excesses. During this process, inventories drop to more normal levels, allowing the economy to experience long-term growth as demand for products picks back up.

2. Balancing economic growth
Recessions and depressions help keep economic growth balanced. If the economy grew unchecked at an expansionist rate for many years, this could lead to uncontrolled inflation. By having recessions and depressions, consumers are forced to cut back in response to falling wages. These falling wages force prices to drop, creating a situation in which the economy can grow at normal levels without having prices run away.

3. Creating buying opportunities
Tough economic times can create massive buying opportunities in huge asset classes. As the economy runs its course, the markets will readjust to an expanding economy. This provides investors with an opportunity to make money as these low asset prices move back to normal.

4. Changing consumer attitudes
Economic hardship can create a change in the mindset of consumers. As consumers stop trying to live above their means, they are forced to live within the income they have. This generally causes the national savings rate to rise and allows investments in the economy to increase once again. (For related reading, see Stop Keeping Up With the Joneses - They're Broke.)

Conclusion

Clearly, both recessions and depressions have many effects on the overall economy. To survive and thrive in these environments requires that you understand what causes them and how those causes create positive and negative effects on the overall economy.

Some of the positive effects include taking the excesses out of the economy, balancing economic growth, creating buying opportunities in different asset classes and creating changes in consumer attitudes.

The negative effects include rising unemployment, a severe slowing in the economy, the creation of fear and the destruction of asset values.

It is by carefully understanding what recessions and depressions are that we can learn how to spot them - and protect investments from them.

by Chris Seabury, (Contact Author Biography)

http://www.investopedia.com/articles/economics/09/lessons-recessions-depressions.asp?partner=basics

Why the Bank of England must fight the economic Blitz in a battle for Britain

From The Times
December 8, 2008
Why the Bank of England must fight the economic Blitz in a battle for Britain
Gary Duncan: Economic view

It is the 64-trillion-dollar question. As a fearful nation battens down the hatches, the question that everyone wants an answer to is: just how bad is this recession going to get?
After the Bank of England’s latest dose of economic “shock and awe” with last week’s landmark cut in interest rates to 2 per cent, a level last seen in 1951, a colleague asked me why so much commentary on the new recession harks back to Britain’s last one, in the early Nineties. Having closely tracked the misfortunes of business in that episode, his point was that this downturn already feels much worse.
You can see the point. As dire news piles up, it really does seem like the economy is going into freefall. And that feeling matters, as it saps sentiment and drains away confidence. None of us can be certain how fast, or how far, the economy will slide. So, in trying to weigh the true scale of the danger, it is worth peering back at the lessons of history. Sadly, there are plenty of recessions to ponder.
About 20 recessions in Britain since the mid-19th century and at least 255 across 17 developed economies since 1870 are examined in recent papers by Paul Ormerod, highlighted in research by David Owen, of Dresdner Kleinwort. The findings offer a little comfort – although mainly of the cold variety.
First, the good news. Most recessions have tended to be relatively short and afflicted economies have been able to bounce back quickly. Only 33 of the 255 recessions lasted more than two years and, while nine were calamitous, with GDP dropping by more than 30 per cent, three of those related to the First World War and six to the Second World War. The conclusion is that, with the exception of the two world wars and the Great Depression, developed economies have generally revived fairly rapidly from recessions.
That, though, is where the reassurance ends. Tellingly, wars aside, episodes of recession in Britain since the Seventies have been much more severe than in the 19th and early 20th centuries. Crucially, Professor Ormerod finds that the deeper and longer a recession is, the more feeble the recovery then is. As Mr Owen observes, this takes us straight back to the role of confidence. The faster and more viciously recession tightens its grip, the more confidence evaporates and the more elusive recovery becomes as what John Maynard Keynes called the economy’s “animal spirits” are killed off.
It is just this peril that, more and more clearly, confronts Britain. The new recession has taken hold with brutal speed and severity and the immediate, acute danger is that it will, indeed, prove to be markedly worse than that of the early Nineties. That is why the only thing wrong with last week’s drastic interest rate cut was that it was not drastic enough.
The Bank itself admits that “the downturn has gathered pace”, with “a weaker outlook for activity in the near-term”. It is worth remembering that it was already forecasting that the economy would shrink next year by 1.3 per cent or more – more or less matching the 1.4 per cent slump suffered in 1991, at the nadir of the last recession.
There are at least two powerful factors that leave us at grave risk of enduring something still harsher and which threaten to mean that the economy’s slump accelerates still farther.
The first is the global nature of this downturn, with all the leading Western economies now in a synchronised slump. This is bound to aggravate the toll from recession, with no big economy left immune and able to act as a locomotive to pull the others out of the mire. As Mr Owen notes, global trade is close to collapsing.
The second factor is the pivotal role of the banks, the bogeymen of this crisis, and their continuing failure to play their proper role in the economy and provide a steady flow of lending to businesses and households.
While the banks’ behaviour in curbing lending to safeguard their own financial strength is individually rational, it is collectively crazy and will mean a far deeper and more painful recession unless it is quickly reversed. Certainly, interest rate cuts will help to limit the toll from recession, but, as Philip Shaw, of Investec, observed last week, there is no point in having very cheap money if nobody will lend it to you. While the banks insist that they are keeping up the flow of lending, the data tells a different story.
Taken together, these aspects of the present crisis make Professor Ormerod’s conclusions compelling. The swifter, more radical and more aggressive the action taken now by the Bank and the Treasury to nip recession in the bud, the more the danger will diminish, the smaller the eventual toll will be and the bigger the chances of an eventual, potent return to growth.
The Bank has already taken two giant leaps with the successive 1.5 and 1 percentage point cuts in interest rates over the past four weeks. It can no longer be accused of timidity. Another step will take it into uncharted territory and rates to a level not seen seen in the Bank’s 316-year history. It should take this step soon and make it another big one.
Yet it must be bolder still and steel itself quickly to follow the US Federal Reserve in deploying more unorthodox weapons from the armoury of monetary policy, such as large-scale direct lending to the banks, the buying-up of credit products and other forms of so-called “quantitative easing”. It is vital that it acts now to jump-start stalled activity and to get the lifeblood of bank lending flowing once more.
The historical parallels remain resonant. The last time that rates were cut to 2 per cent was in 1939, a month after the outbreak of the Second World War. Now, as then, the country confronts an economic Blitz. It is time for the Bank to wage a battle for Britain.

http://business.timesonline.co.uk/tol/business/economics/article5303873.ece

Recession, but we are nowhere near a depression

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What is Recession? What is Depression?

Tuesday, 11 Nov 2008
Recession or Depression? Finding the Trigger ...
Posted By:Daryl Guppy

The key question facing markets these days is the difference between recession and depression. A recession is an economic slowdown that may last for 6 to 18 months. A depression is an economic pullback that may last from two to four years. We'd rather not have a recession at all but if we have to choose one or the other, I'd rather be recessed than depressed!

In either case, the market moves in anticipation of the event. The market decline develops before the fundamental signs of a recession or depression become evident. The market leads the confirmation of conditions.

The market also leads a recovery. In a recession, the market will develop strong trending behavior many months prior to the official confirmation of the end of a recession. This recovery provides trend trading opportunities.

In a depression the market will develop a long-term consolidation pattern. This is an investment period that lays the foundations for generational fortunes. Trend-trading opportunities do not develop for several years. This consolidation and accumulation phase concentrates on creating income flow from dividends. The fundamental end of a depression is not recognized until many months after the market has already reacted.

Right now, market is hovering near significant support levels. The closest of these we call recession support targets. The lowest of these we call depression targets. Many analysts have compared the current market situation to the market collapse in 1929. This week we look at charts from the 1929 period. In particular we look at the similarity of behavior.

The above chart is the weekly Dow for 1929 to 1930. The significant features are these:
The rapid fall is followed by a rebound and rebound failure.
The primary rebound failure occurs rapidly with another market collapse.
The pile driver low is retested within 12 months
Support, defined by the pile driver low, is not successful.

The pink circle shows the comparable position of today’s market. This is a period of high volatility, but volatility lessens and the market moves into a more clearly defined trending behavior. This pattern of behavior suggests that a rebound from the current support levels may persist for around 20 weeks.

The important feature is the rapid failure of the trend line followed by a rapid failure of the pile driver low support-level. The failure of pile driver support brings the really bad news. This failure is acute because the pile driver low support does not equal any previous historical support level.

The low of the market develops in 1932, about three years after the 1929 crash. The key trigger is the failure of support set by the pile driver low. The disaster is that it takes 25 years for the market to exceed the high of 380 set in July 1929. This is why the Depression is referred to as a generational event. The current situation has the potential to have the same generational impact.

SEE CHART ABOVE

The key trigger that separates a recession from a depression is the behavior of the rebound from the pile driver low. After the 1987 crash the rebound quickly developed strong trending behavior. The move above the midway point in the market fall signaled a continuation of the uptrend. This is recession behavior. Depression behavior is when the market fails to move above the midpoint of the extreme fall area.

On the current Dow chart, the area near 12,000 is the key level to watch. Failure to move above this level suggests a depression scenario may develop.

A sustained move above 12,000 signals a recession. There is one caution in this analysis. The Dow has not yet developed a confirmed pile driver bottom pattern on the weekly chart. The low of this pattern will determine the mid-point resistance level that is used to signal a recession recovery.

Markets will not behave the same way as in 1930, but they will develop in a similar fashion. There is a high probability that these behaviors will develop in shorter time frames.

CNBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.
© 2008 CNBC, Inc. All Rights Reserved

http://www.cnbc.com/id/27653888