GROWTH = PROGRESS

This week, I was watching an episode of the PBS show Frontline called "Inside the Meltdown" when I realized that the person quoted above, who worked for the now-bankrupt investment bank Lehman Brothers, was referring to Phase Four of the cycle. Which meant that what we call a "bubble" is one way to describe what inevitably happens during that phase of every growth cycle.

Normally, when I talk about a growth cycle, I'm talking about personal, emotional, or spiritual growth. As an investment bank, Lehman Brothers was interested in financial growth. Political entities like the United States are interested in growth, too: growth in wealth, certainly, as well as growth in security, reputation, influence, and so on. The growth of a nation is often considered "progress." I think most people like to believe that the actions we take as a community, a nation, and a world make progress toward a better world and a brighter future.

Which brings me to the mortgage crisis. I think most people believed, as the "housing bubble" grew, that we were making progress toward home ownership and prosperity.

If I'm correct, that a "bubble" is what happens in Phase Four of every cycle, then bubbles are inevitable.

That doesn't mean, however, that we can't protect ourselves from their impact. The way to do that, I believe, is to understand how and why bubbles develop, by understanding all the phases of the growth cycle.

This article will, of necessity, provide the briefest of snapshots of the Six Loop Model.

THE SIX LOOPS THEORY OF THE HOUSING BUBBLE

Words that describe Phase One include Support, Inspiration, Vision, and Hope.

In Phase One, we get an inspiring idea that offers a new vision of how life could be. We are so inspired that we idealize that vision, and our inspiration motivates us to move ahead with it. In order to be willing to move forward, however, we must ask for what we want and put our hopes on the line, which requires a degree of vulnerability. Phase One is a loop between the idealization and motivation of Sovereign energy and the vulnerability of Lover energy.

In the case of the housing bubble, Phase One happened when mortgage rates were low, real estate values were rising, and more and more people seemed capable of qualifying for a home mortgage. Mortgage lenders had a vision of selling mortgages to nearly everyone. Prospective buyers had a vision of life being better by owning a home.

"Hey, look, it costs almost nothing to own a home!"
"Hey, maybe real estate values will always go up!"
"Hey, maybe everybody can own a home, even if they don't have much income!"
"Hey, maybe owning a home can offer not just security but significant wealth!"

Words that describe Phase Two include Safety, Container, Guidelines, and Trusting Relationships.

In Phase Two, we begin to figure out how to make the vision a reality, by forming the necessary relationships that will nurture the vision and developing strategies to keep us safe. We try out new relationships, see how they feel, figure out how to make them safe enough, and open ourselves to change so that we can proceed. Phase Two is a loop between the vulnerability of the Lover energy to risk and change, and the objective analysis and strategizing of Magician energy.

In the case of the housing bubble, Phase Two happened when investment firms figured out which financial tools and strategies could make it possible to offer mortgages to just about anyone. Magician energy offered a variety of alternatives to the traditional 30-year mortgage with 20% down payment: ARMs, subprime rates, credit default swaps, and so on.

"How can we make this work?"
"If we do that, are we still at risk?"
"How can we reduce that risk?"
"Once we've managed risk, to whom can we sell these mortgages, and how?"

Words that describe Phase Three include Commitment, Action, Assessment, and Accomplishment.

In Phase Three, we've developed enough strategies for moving forward that they form a coherent approach we can give a name to. When we commit ourselves to that approach, we're ready to take action. We get down to business. As we go, we occasionally step back to assess how we're doing, make any necessary adjustments, and then resume work. Phase Three is a loop between the activism of Warrior energy and the objective assessment of Magician energy.

In the case of the housing bubble, Phase Three would have happened when financial institutions — and in particular, investment banks — developed and applied policies for home mortgages that took advantage of new tools and strategies and then packaged and sold these mortgages as securities to other institutions. Institutions sold mortgages, analyzed what seemed to work and what didn't, adjusted their strategies accordingly, and continued selling mortgages.

"We'll call this our XYZ Plan."
"The XYZ Plan will set us apart from our competitors."
"We'll sell these securities to our trading partners in the US and abroad."

My favorite way to describe Phase Four is the phrase "pedal to the metal."

Phase Four is when the bubble appears, grows, and eventually bursts.

The bubble begins when we believe that our actions are going well, and we idealize our success. That idealization motivates us to do even more, and more, and more. Phase Four is a loop between the idealization and motivation of Sovereign energy and the activism of Warrior energy.

"If X is good, then X+1 must be better."
"If X+1 works out, let's try X+2, then X+3, then X+5, etc."

PHASE FIVE: WERE WE BAD?

My favorite way to describe Phase Five is, "Back to the drawing board, where among the drawings I rediscover the divine plan."

Phase Five, in the aftermath of the bubble, is when we feel the shame of failure and allow that shame to teach us what to do next.

The pain of the betrayal at the end of Phase Four takes us back to the drawing boards to figure out what went wrong. Was our failure the result of others, or of forces beyond our control? Or was our failure the result of our own actions, our own arrogance? Does our failure mean we're bad and can't be trusted? If we are indeed bad, how do we go on safely?

We begin to question our assumptions about success and failure, good and evil, life and death. We remember precepts from long ago that, in the heady acceleration of Phase Four, we put disdainfully on the shelf. We thought we knew better, and now we learn that there are elders among us who knew the safer path all along. We relearn sacred laws long forgotten, such as thrift and caution. Phase Five is a loop between the objective reassessment of Magician energy and the meaning and reassurance of Sovereign energy.

"Guess we got carried away by our own good fortune."
"We didn't realize we would carry everyone else with us."
"Perhaps financial regulation has its place."
"Maybe there's something to be said for thrift."
"Those old-fashioned rules don't look so old-fashioned any more."

My favorite way to describe Phase Six is, "Connect. Differentiate. Repeat."

In the aftermath of the bubble, Phase Six is when we take our reacquaintance with divine law and our magical new perspectives from Phase Five and recommit ourselves to working for the benefit of ourselves and of others simultaneously. Phase Six isn't easy, but it offers the ultimate satisfaction of the greatest reward from the hardest work.

In Phase Six, we alternate between two diametrically opposed energies: the connection of the Lover and the differentiation of the Warrior. We find each other and yet demand our own individuality. We connect, we separate. We come together, we part. One image I like for Phase Six is the blood in our circulatory system rushing toward the heart where it gets refueled before hurtling out toward the extremities, changing from red to blue to red to blue. The Lover and the Warrior are opposites, yet we can alternate between them in a continuous stream of connection and differentiation.

"We will listen to input from our financial partners."
"What we do affects the entire global economy."
"No one is asking us to sacrifice our own self-interest."
"What benefits each of us, benefits the whole."
"We'll take it one step at a time, and do what works."

IDEAS ON PROTECTING YOURSELF FROM THE NEXT BUBBLE

In the last decade, we've seen a dot-com bubble and a housing bubble, to name just two.

There will be a next bubble, for at least two reasons.

1. The bubble is a predictable manifestation of Phase Four and will therefore occur in every cycle of growth.
2. In my judgment, people in the worlds of Wall Street and politics aren't in the habit of doing deep-level emotional and spiritual growth work. If they were (again, in my judgment), they wouldn't be in the worlds of Wall Street and politics.

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