To explain the current economic crisis, the world of finance has a particular lexicon—including, for example, credit default swaps; mark-to market and securitized sub-prime mortgages. Psychologists, on the other hand, might use very different terms: hope, greed and fear. The language of psychology helps to address the fact that behind every cut-and-dried statistic about falling home prices and other indicators of economic decline, lies an ever-shifting horde of homeowners, bankers, business owners, unwitting investors—in short, people. And people often pay no heed to fine-tuned economic models by doing things that are not rational, are not in their best interest, and are justified not by numbers—but by emotion.
    Emotion, it can be argued, not only helped to lead America into the current economic crisis but may also be helping to keep it there. At a recent conference called "Crisis of Confidence: The Recession and the Economy of Fear" sponsored by the University of Pennsylvania’s Department of Psychiatry and the Psychoanalytic Center of Philadelphia, an interdisciplinary panel explored the psychological elements behind today’s economy. "Is there a systematic way to think about our feelings when it comes to the economy" asked Marvin, the panel moderator. The word "confidence" itself has a double edge to it, encompassing optimism on the one hand and delusion on the other. And could there be a psychological tinge to economic vocabulary itself "The powers that be are avoiding the word ’depression’," Marvin pointed out, "which describes not only a state of the market but certainly a clinical condition."
    Psychological factors are at work behind the crisis, the panel agreed, although each focused on a different element: mania and over-optimism behind the housing bubble, a lack of self-control by consumers hooked on debt, and the shock and feelings of betrayal of many Americans who thought they were making safe investments, but now find themselves facing a frightening and uncertain future.
    However, according to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of test. "Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of Bernard Madoff, and by complex financial manipulations. as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11.
    "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."
    "Once a person has been traumatized, promises...are experienced as dangerous—not safe—because they require trust to believe," said Sachs. "It is up to the victim to decide when she can trust again. This takes time."   Why is the public going through a crisis of trust, according to David Sachs