Digby's Hullabaloo
2801 Ocean Park Blvd.
Box 157
Santa Monica, Ca 90405

Facebook: Digby Parton

@BloggersRUs (Tom Sullivan)

thedigbyblog at gmail
satniteflix at gmail
publius.gaius at gmail
tpostsully at gmail
Spockosbrain at gmail
Richardein at me.com


Mother Jones
Raw Story
Huffington Post
Crooks and Liars
American Prospect
New Republic
Common Dreams
Smirking Chimp
CJR Daily
consortium news


Daily Kos
Political Animal
Taylor Marsh
Spocko's Brain
Talk Left
Suburban Guerrilla
Scoobie Davis
Tom Tomorrow
Left Coaster
Angry Bear
Seeing the Forest
Cathie From Canada
Frontier River Guides
Brad DeLong
The Sideshow
Liberal Oasis
Juan Cole
Rising Hegemon
Unqualified Offerings
Alas, A Blog
Lean Left
Oliver Willis
skippy the bush kangaroo
Crooked Timber
the talking dog
David E's Fablog
The Agonist

Denofcinema.com: Saturday Night at the Movies by Dennis Hartley review archive

01/01/2003 - 02/01/2003 02/01/2003 - 03/01/2003 03/01/2003 - 04/01/2003 04/01/2003 - 05/01/2003 05/01/2003 - 06/01/2003 06/01/2003 - 07/01/2003 07/01/2003 - 08/01/2003 08/01/2003 - 09/01/2003 09/01/2003 - 10/01/2003 10/01/2003 - 11/01/2003 11/01/2003 - 12/01/2003 12/01/2003 - 01/01/2004 01/01/2004 - 02/01/2004 02/01/2004 - 03/01/2004 03/01/2004 - 04/01/2004 04/01/2004 - 05/01/2004 05/01/2004 - 06/01/2004 06/01/2004 - 07/01/2004 07/01/2004 - 08/01/2004 08/01/2004 - 09/01/2004 09/01/2004 - 10/01/2004 10/01/2004 - 11/01/2004 11/01/2004 - 12/01/2004 12/01/2004 - 01/01/2005 01/01/2005 - 02/01/2005 02/01/2005 - 03/01/2005 03/01/2005 - 04/01/2005 04/01/2005 - 05/01/2005 05/01/2005 - 06/01/2005 06/01/2005 - 07/01/2005 07/01/2005 - 08/01/2005 08/01/2005 - 09/01/2005 09/01/2005 - 10/01/2005 10/01/2005 - 11/01/2005 11/01/2005 - 12/01/2005 12/01/2005 - 01/01/2006 01/01/2006 - 02/01/2006 02/01/2006 - 03/01/2006 03/01/2006 - 04/01/2006 04/01/2006 - 05/01/2006 05/01/2006 - 06/01/2006 06/01/2006 - 07/01/2006 07/01/2006 - 08/01/2006 08/01/2006 - 09/01/2006 09/01/2006 - 10/01/2006 10/01/2006 - 11/01/2006 11/01/2006 - 12/01/2006 12/01/2006 - 01/01/2007 01/01/2007 - 02/01/2007 02/01/2007 - 03/01/2007 03/01/2007 - 04/01/2007 04/01/2007 - 05/01/2007 05/01/2007 - 06/01/2007 06/01/2007 - 07/01/2007 07/01/2007 - 08/01/2007 08/01/2007 - 09/01/2007 09/01/2007 - 10/01/2007 10/01/2007 - 11/01/2007 11/01/2007 - 12/01/2007 12/01/2007 - 01/01/2008 01/01/2008 - 02/01/2008 02/01/2008 - 03/01/2008 03/01/2008 - 04/01/2008 04/01/2008 - 05/01/2008 05/01/2008 - 06/01/2008 06/01/2008 - 07/01/2008 07/01/2008 - 08/01/2008 08/01/2008 - 09/01/2008 09/01/2008 - 10/01/2008 10/01/2008 - 11/01/2008 11/01/2008 - 12/01/2008 12/01/2008 - 01/01/2009 01/01/2009 - 02/01/2009 02/01/2009 - 03/01/2009 03/01/2009 - 04/01/2009 04/01/2009 - 05/01/2009 05/01/2009 - 06/01/2009 06/01/2009 - 07/01/2009 07/01/2009 - 08/01/2009 08/01/2009 - 09/01/2009 09/01/2009 - 10/01/2009 10/01/2009 - 11/01/2009 11/01/2009 - 12/01/2009 12/01/2009 - 01/01/2010 01/01/2010 - 02/01/2010 02/01/2010 - 03/01/2010 03/01/2010 - 04/01/2010 04/01/2010 - 05/01/2010 05/01/2010 - 06/01/2010 06/01/2010 - 07/01/2010 07/01/2010 - 08/01/2010 08/01/2010 - 09/01/2010 09/01/2010 - 10/01/2010 10/01/2010 - 11/01/2010 11/01/2010 - 12/01/2010 12/01/2010 - 01/01/2011 01/01/2011 - 02/01/2011 02/01/2011 - 03/01/2011 03/01/2011 - 04/01/2011 04/01/2011 - 05/01/2011 05/01/2011 - 06/01/2011 06/01/2011 - 07/01/2011 07/01/2011 - 08/01/2011 08/01/2011 - 09/01/2011 09/01/2011 - 10/01/2011 10/01/2011 - 11/01/2011 11/01/2011 - 12/01/2011 12/01/2011 - 01/01/2012 01/01/2012 - 02/01/2012 02/01/2012 - 03/01/2012 03/01/2012 - 04/01/2012 04/01/2012 - 05/01/2012 05/01/2012 - 06/01/2012 06/01/2012 - 07/01/2012 07/01/2012 - 08/01/2012 08/01/2012 - 09/01/2012 09/01/2012 - 10/01/2012 10/01/2012 - 11/01/2012 11/01/2012 - 12/01/2012 12/01/2012 - 01/01/2013 01/01/2013 - 02/01/2013 02/01/2013 - 03/01/2013 03/01/2013 - 04/01/2013 04/01/2013 - 05/01/2013 05/01/2013 - 06/01/2013 06/01/2013 - 07/01/2013 07/01/2013 - 08/01/2013 08/01/2013 - 09/01/2013 09/01/2013 - 10/01/2013 10/01/2013 - 11/01/2013 11/01/2013 - 12/01/2013 12/01/2013 - 01/01/2014 01/01/2014 - 02/01/2014 02/01/2014 - 03/01/2014 03/01/2014 - 04/01/2014 04/01/2014 - 05/01/2014 05/01/2014 - 06/01/2014 06/01/2014 - 07/01/2014 07/01/2014 - 08/01/2014 08/01/2014 - 09/01/2014 09/01/2014 - 10/01/2014 10/01/2014 - 11/01/2014 11/01/2014 - 12/01/2014 12/01/2014 - 01/01/2015 01/01/2015 - 02/01/2015 02/01/2015 - 03/01/2015 03/01/2015 - 04/01/2015 04/01/2015 - 05/01/2015 05/01/2015 - 06/01/2015 06/01/2015 - 07/01/2015 07/01/2015 - 08/01/2015 08/01/2015 - 09/01/2015 09/01/2015 - 10/01/2015 10/01/2015 - 11/01/2015 11/01/2015 - 12/01/2015 12/01/2015 - 01/01/2016 01/01/2016 - 02/01/2016 02/01/2016 - 03/01/2016 03/01/2016 - 04/01/2016 04/01/2016 - 05/01/2016 05/01/2016 - 06/01/2016 06/01/2016 - 07/01/2016 07/01/2016 - 08/01/2016 08/01/2016 - 09/01/2016 09/01/2016 - 10/01/2016 10/01/2016 - 11/01/2016 11/01/2016 - 12/01/2016 12/01/2016 - 01/01/2017 01/01/2017 - 02/01/2017 02/01/2017 - 03/01/2017 03/01/2017 - 04/01/2017 04/01/2017 - 05/01/2017 05/01/2017 - 06/01/2017 06/01/2017 - 07/01/2017 07/01/2017 - 08/01/2017 08/01/2017 - 09/01/2017 09/01/2017 - 10/01/2017


This page is powered by Blogger. Isn't yours?


Wednesday, March 25, 2009

Corporate Narcissism

by digby

Jonathan at A Tiny Revolution notices something important:

The Washington Post published an op-ed today by Martin Feldstein. Feldstein explains how Obama's proposed limitation on the deductibility of charitable contributions by upper-income taxpayers is a horrible idea. He's identified as "an economics professor at Harvard University [and] president emeritus of the National Bureau of Economic Research."

One affiliation the Post left out is that Martin Feldstein is a longtime member of AIG's Board of Directors. He's also a member of the board's Finance Committee.

Read the rest for the second punchline. And then read this petulant whine from someone who made a $750,000 bonus from AIGFP and feels so hurt and betrayed by all the mean things that are being said about him that he's going to quit and give his bonus to charity. No word about whether he thinks he should get his charitable deduction, but I'll bet he'll scream bloody murder if he doesn't get it.

This person said that despite the fact that he worked for AIGFP he was in the commodities division and had nothing to do with the CDOs and is, therefore, blameless. And for all I know, that's true. But what he seems not to want to recognize is that the whole company would have gone down without the government intervening and he would have been left with nothing. It happens every day. Bonus contracts with bankrupt companies really aren't worth the paper they're printed on.

This crisis in AIG required that people such as this, who admittedly made a ton of money over the years, work for very little for a time until they could get the company back on its feet. They might not be rewarded to the tune of 750 thousand dollars for a years work, but if they made arrangements for deferred compensation down the road, after the taxpayers were repaid, I have little doubt they would have made out very well in the long run. Instead they are having a public tantrum at a time when they should be keeping the lowest possible profile. (Why are we supposed to believe these people are so smart that thes ecompanies can't do without them, again? I keep forgetting.)

I mentioned narcissism in passing yesterday and got an interesting email from journalist and author Tim Hall, who wrote an extremely interesting article for the NY Press on the subject during the Enron scandal. He explains what Narcissistic Personality Disorder is and interviews a well known expert on the subject:
I’m very interested in the concept of corporate narcissism. Many companies are successful without also engaging in criminal behavior. In your opinion, how much of the recent wave of business scandals in the U.S. is attributable to a corporate "culture of narcissism," and how much to a number of very misguided—and possibly narcissistic—individuals?

The "few rotten apples" theory ignores the fact that affairs like Enron and WorldCom were not isolated incidents—nor were they conducted conspiratorially and surreptitiously. What is now conveniently labeled "misconduct" was an open secret. Information—albeit often relegated to footnotes—was available. The charismatic malignant narcissists who headed these corporations were cheered on by investors—small and institutional alike. Their grandiose fantasies were construed as visionary. Their sense of entitlement—never commensurate with their actual achievements—was tolerated forgivingly. Their blatant exploitation of co-workers and stakeholders was part of the ethos of the virile Anglo-Saxon, natural selection, can-do, dare-do version of capitalism. Everyone colluded in this mass psychosis. There are no victims here—only scapegoats.

In the late 1990s, you couldn’t swing a dead cat on lower Broadway without hitting a dozen Internet "visionaries," touting companies that then went bankrupt. These individuals seemed to literally come out of nowhere—suddenly everybody was a Genius with a Big Idea. Do you have any thoughts on whether certain business cycles (like the Internet boom) actually create narcissists? Or do they simply attract preexisting narcissists looking for quick and easy wealth?

The latter. Pathological (or malignant) narcissism is the outcome of a confluence of an appropriate genetic predisposition and early childhood abuse by role models, caretakers or peers. It is ubiquitous, because every human being—regardless of the nature of his society and culture—develops healthy narcissism early in life. Healthy narcissism is rendered pathological by abuse—and abuse, alas, is a universal human behavior. By "abuse" I mean any refusal to acknowledge the emerging boundaries of the individual. Thus, smothering, doting and excessive expectations are as abusive as beating and incest.

Pathological narcissism, though, can be latent and induced to emerge by what I call "collective narcissism." The way pathological narcissism manifests and is experienced is dependent on the particulars of societies and cultures. In some cultures, it is encouraged. In others suppressed. In collectivist societies, it may be projected onto the collective; in individualistic societies, it is an individual’s trait.

Families, businesses, industries, organizations, ethnic groups, churches and even whole nations can be safely described as "narcissistic" or "pathologically self-absorbed."

The longer the association or affiliation of the members, the more cohesive and conformist the inner dynamics of the group, the more shared are its grandiose fantasies ("the vision thing"), the more persecutory or numerous its enemies, the more misunderstood and exclusionary it feels, the more intensive the physical and emotional experiences of its members—the stronger the bonding myth. The more rigorous the common pathology.

Such an all-pervasive and extensive malaise manifests itself in the behavior of each and every member. It is a defining—though often implicit or underlying—mental structure. It has explanatory and predictive powers. It is recurrent and invariable—a pattern of conduct melded with distorted cognition and stunted emotions. And it is often vehemently denied.

What steps might a corporation take to protect itself from being ruined by this kind of narcissistic contagion?

The first—and most obvious—step is screening. Mental health management is often considered a low organizational priority—frequently with calamitous outcomes. Employees on all levels—especially the upper echelons—should be tested periodically and regularly by professional diagnosticians for personality disorders. Those who test positive should be sacked.

There is no way of containing narcissism. It is contagious—weaker people tend to emulate narcissists, stronger ones tend to adopt narcissistic behaviors in order to fend off the narcissist’s unwelcome attentions and overweening demands.

I would have to say that this particular virus is contagious among the ruling class in general.

Here's how MSNBC covered it just now:

Carlos: Is the angry mob trying to destroy any chance of recovery? JP Morgan Chase says making the financial industry the enemy hurts the chances at a rebound.

Contessa: Across the country, there are angry Americans who I know probably scoff at that but an executive vice president at AIG was so furious at the way he was being treated both by the company and the government that he resigned and had the NY Times actually publish his resignation letter today. Jake DeSantis says (she reads the letter)

Let's talk to Melissa Francis from CNBC. You wrote about it and we talked about it yesterday. A lot of concern from people in the financial industry that "you keep doing this and you're going to destroy the very people who can help the nation make a comeback.."

Melissa:Yeah. This is really the case in point of the danger of mob rule. This is somebody who had already agreed to work for a dollar a year. He was in there unwinding a business this Jake DeSantis that he had built for more than a decade. He had nothing to do with the credit default business that had caused so many problems at AIG and he felt like basically he's spending ten, twelve, fourteen hours a day away from his family and for what? You know, to be abused, to be abused in the media, to be abused by congress. And now he's saying, you know,m the ultimate sticking it to everyone, he's not going to give the money back, he's going to give it to charity.

Carlos: Melissa can I play the skeptic here? I read the story by executive vice president Jake DeSantis and he writes that he's an executive vice president, MIT grad, the son of a modest upbringing, and he said, "although I was a vice president I didn't know what was going on." I find that hard to believe. This guy was an executive vice president and he was in the company for eleven years, they're doing literally billions of dollars worth of risky and crazy trades and he's saying that he doesn't know what's going on?

Melissa; His division was completely separate from what was going on. And I'm glad you raised that question because, ...

Carlos: When you say that his division was separate, I know and you know that when you're an executive in a large company you sit in those senior management meetings you hear what's going on in other parts of the business. I find it hard to believe that and I look at the comments on NY Times.com, over 600 comments, and most of the people were a lot like me, saying "come on, you didn't know what was going on?"

Melissa: Yeah. I think that you can hold the CEO and the board of directors to that kind of standard. This is somebody who was in charge of hundreds of people and he knew what his hundreds of people were doing. I don't think he was in charge of this other group. This is a company, you have to understand, that sprawls nations, I mean across oceans. I mean, it's an enormous company. You can hold the CEO to that standard and the board of directors, but I think this person was in charge of a lot of people and, you know, the credit default swap unit wasn't part of that group.

Contessa: And regardless of whether there's credit to be made from that argument, we do know that letting mob mentality leaves no room for logic.

Kudos to Carlos for at least putting up a fight.

I'm afraid that Melissa is ill-informed. Our boy Jake wasn't selling life insurance in Mayberry. He was an EVP for the commodities division AIGFP which was where the crimes took place:

Joseph Cassano and Thomas R. Savage helped start the group in 1987. AIGFP businesses specialize in aircraft and equipment leasing, capital markets, consumer finance and insurance premium finance.

AIGFP focused principally on OTC derivatives markets and acted as principal in nearly all of its transactions involving capital markets offerings and corporate finance, investment and financial risk management products. AIGFP played key roles in the acquisition of London City Airport and, in one of the largest private equity transactions announced in 2006, the management-led buyout of Kinder Morgan Inc.

AIGFP's commodity derivatives and commodity indices helped stimulate the development of this new asset class. AIGFP's sponsored a major study on the historical performance of commodity futures by professors Gary Gorton and K. Geert Rouwenhorst.[1] AIGFP created a specialized credit business. AIGFP focused its business on structured products like CDO's. In 2003, it absorbed subsidiary, AIG Trading Group (AIG-TG) which dealt primarily in over the counter derivatives and created the Dow Jones-AIG Commodity Index (DJ-AIGCI) from their offices in Greenwich, CT. The DJ-AIGCI is a leading commodity benchmark composed of 19 futures contracts on physical commodities. As of the end of June 2007, there was an estimated $38 billion invested in financial products that track the DJ-AIGCI on a global basis.[2]

From 1987 to 2004, AIGFP contributed over $5 billion to AIG’s pre-tax income. During that period, AIG's market capitalization increased from $11 billion to $181 billion, and its stock price increased from $4.50 per share to $62.34 per share.

AIGFP's trading in credit derivatives led to enormous losses. These losses at AIGFP division essentially bankrupted the entire AIG operation, and forced the United States government to bail out the insured.

It's very hard to believe that this person knew nothing of the CDO business since it was the focus of the division in which he worked. I'm sure it's very embarrassing for him to be associated with the criminal side of AIG, but he is, whether he likes it or not. It's just a good thing he made many millions of dollars over the past decade so that he might be comforted through this time of terrible unfairness and injustice.

The smart move for all of them is to shut up rather than whine publicly at a time like this. But corporate narcissists can't help themselves. All you have to do is think of names like Kenny Boy Lay, Jeff Skilling, Bernard Ebbers,Bernie Madoff, Joseph Cassanno and the list goes on, to know that this personality type is rampant among our Masters of the Universe. Rather than being the rational heroes of their Randian dreams (who would be smart enough to STFU at this moment) they are actually seriously screwed up human beings who found the perfect outlet for their disorder in our millennial gilded age.

Risk and growth are absolutely necessary for a dynamic capitalist economy. But this isn't that. This is an organizational and cultural disease and it's landed the economy on life support. These people either need to submit to the cure or be quarantined in their gated communities.

Update: I should be clear that I'm not saying DeSantis was involved in the credit default swaps. But he was Executive VP in the AIG division that did it. It is not reasonable to believe that he didn't know about it --- or profit from it. And even if he didn't, the fact that he worked in the unit that put the entire world financial system at risk and stands to cost the US taxpayers trillions of dollars means that he is going to suffer for their sins. It's the way the world works. Look at Arthur Anderson-- they ceased to exist because of their role in the Enron scandals, and a lot of employees, good and bad, lost their livlihoods. I'm sorry people are being rude about all this but these people need to man up and realize that they are going to take some heat. Maybe they can distract themselves from their troubles by counting their money.