Forum Post: "Psychopaths Caused the Financial Crisis"
Posted 12 years ago on Jan. 6, 2012, 9:21 a.m. EST by pathwhisperer
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"Psychopaths Caused the Financial Crisis … And They Will Do It Again and Again Unless They Are Removed From Power
"The “corporate psychopaths” at the helm of our financial institutions are to blame [for the financial crisis]. . . .
"How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the “relative chaotic nature of the modern corporation,” including “rapid change, constant renewal” and high turnover of “key personnel.” Such circumstances allow them to ascend through a combination of “charm” and “charisma,” which makes “their behaviour invisible” and “makes them appear normal and even to be ideal leaders.”"
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It's psychopaths with no downside. If they win, they get a bonus. If they lose, we pay and they just move on to something else.
Man you people talk about this like its something new.
Historically rich people have been far crueler towards poor people
Why?
Because the brain will justify anything that it deems most convenient at the time.
The two causes, psychopathy and corrupt human nature (a mind that justifies self interest and convenience) aren't contradictory, they aid and strengthen each other. But ignoring psychopathy as though it doesn't exist is what got us into these straights, imo.
I'm sure most posters here do not ascribe to human nature being corrupt but how do they explain the rush back to near slave labor exploitation of globalism? It seems to me that humans simply can not handle vast differentials of wealth and power without becoming corrupt, self justifying and contemptuous of the poor/weak (I'm talking about normals, not psychopaths, here).
P@thwhisperer : Re. your interesting forum-post, please watch and also amalgamate and assimilate :
http://documentarystorm.com/inside-job/ &
http://topdocumentaryfilms.com/i-psychopath/ .
fiat lux ...
I hate reading opinion pieces based on other opinion pieces.
The original paper that sparked all these opinion pieces, "The Corporate Psychopaths Theory of the Global Financial Crisis" by Clive R. Boddy, is available at http://www.springer.com/cda/content/document/cda_downloaddocument/fulltext.pdf?SGWID=0-0-45-1269145-p35739432 .
According to the author, the paper is an unsubstantiated theory, but one he feels is worthy of further investigation using proper scientific methods. Lacking any proof from formal studies, I can only judge the theory according to my own experience, and while I find some evidence that supports the paper's theory, I have to disagree that it explains a dominant force.
I happen to circulate with some folks pretty high up in a Fortune 100 company. The career paths in my organization have a very strong social component; nobody gets to the top without forming relationships. I'd say about 1% of the people I interact with when called into meetings with the higher ups would fit the profile of a sociopath, the more correct term for the syndrome the paper describes; these are the politicians interested in nothing but self advancement, and I know a few before whom even Machiavelli would bow. The social structure, however, tends to weed these people out, and I have never seen one rise above the ranks of middle management. Those at the top are generally pretty good and moral people with strong social ties. This is the foundation of "networking" we all know is key to success in business.
You can see the biography of Clive R. Boddy at http://us.macmillan.com/author/cliveboddy . There you will see his background is in marketing. You will also see he has a book for sale. I suspect he used his marketing sense to capitalize on OWS by writing a book that would appeal to the tone of the movement.
It's very dangerous for people to start demonizing an entire class of society. Each man must be evaluated on his own merits. Bill Gates, for example, runs the largest charitable foundation the world has ever seen. Many others have pledged billions to charity ( see http://www.reuters.com/article/2010/08/04/us-wealth-philanthropy-billionaires-idUSTRE6733F520100804 ).
Please let's not endorse demonization of an entire segment of society. Black people are not stupid and lazy, women aren't the weaker sex, and rich people aren't mentally ill.
The condition is called pleonexia. Psychotic behavior is but one of it's symptoms.
Sometimes the behavior moves on to sociopathy.
Perhaps we need to call for diagnosis and treatment.
I had to look that one up. Thanks, shooz. Very interesting.
The thread on greed, tweaked me to look into how to define it.
Viewing it as a pathology, is the key to avoiding pointless rhetoric.
They really are sick little rich boys.
Agreed.
The OP in that thread was attempting to play a game with that rhetoric.
I stopped him dead in his tracks.
How do you define psychopath?
From the link in the OP: "psychopaths are the 1 percent of “people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry” lack a “conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people.”
". . . such people are “extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society.”
Later: "traits such as superficial charm, an exaggerated sense of self-worth, glibness, lying, lack of remorse and manipulation of others."
Well then I must be a psychopath because I am much more cold and calculating than most of my peers.
If that's true. I hope you still decide to live the Golden Rule (do unto others as . . ). Millions of psychopaths do and live lives within the law and social norms, having families and careers.
So if I act responsible others will as well? Hasn't seemed to work for my father.
psychopath is actually a person suffering from psychopathy. I suggest looking up the second term.
None of this would have happened without our sociopath fed chief Alan Greenspan. During his 30 year fed tenure laws were changed to enable more and more risk and gambling. The breakup of Glass Steagall put us all on the hook for the bill if the bets went bad. It is important to realize how much of the mess we are in can be attributed to this one man. There are so many disgusted Americans who don't believe either party and it's no wonder when we have a political system like Iran with an ayatollah fed chief and sociopath mullahs from Goldman Saks writing banking laws for themselves. I know I sound like a R Paul fan but I'm not, we had good banking and tax laws that were put in place after the last depression, we could have them again. 30 years that creep changed bank laws, through Reagan Bush Clinton, Bush.
"They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”
remember how "revered" greenspan was during that time? he was probably man of the year and perhaps won nobel prizes, accolades all around, he could do no wrong--at least that's what i recall from the 90s. since then he has admitted that he made huge errors, and bordered on saying he caused this piece of shit economy.
I am sure you saw "inside job"--that made me furious at him... and the whole web of DC idiot sociopaths... they really don't know what they're doing... and clearly don't think things through--they act solely in their own interest.
I didn't see inside job but I've read a lot of books by by wall street insiders, and I might add learned a lot more on this website about the law changes that took place that created this mess. I revered Greenspan in the 90's because I had no idea what devils he was unleashing at the time. It really is the same scenario that created the 1929 crash, it was naive to ignore history and think that speculators would behave differently this time.
i would suggest seeing that movie--it's well done, good quick synopsis, and i was amazed at the level of cronyism--i mean it stunned me--i knew it was bad, but not THAT bad. what was your favorite insider book? i'd like to pick one up to read.
My favorites are " It takes a Pillage" by X Goldman exec Nomi Prins about the real estate crisis and insider bailout deals and F.I.A.S.C.O. The Inside Story of a Wall Street Trader Frank Partnoy about bond trading in the 90's at Morgan Stanley in the 90's (that book should have been the clue phone ringing about these monstrous concoctions that were allowed to be called bonds.) also A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers Lawrence G. McDonald and my new one "The Devils Derivatives" I just started it and it's a bit complex. I also heard "house of Cards" is good. I will see that movie at some point
thanks, demcapitalist, i'll start with your favorite. the devils derivatives sounds very prescient, since many people are talking about how large the market is (true) and how bad it could be if it implodes--the latter of which i do not grasp--you're always reliant on your counterparty, so i suppose if one very big player has an issue it could topple alot of others. but i am sure the CFTC, OCC and SEC have it on their radar, and well under control :) (total sarcasm--like i said, they're clueless, and intentionally understaffed by congress who gets their money from the financial industry--a sad state of america indeed)
Well just take AIG and the credit default swaps. They are basically bond insurance but since they were called swaps AIG had no reserves put aside to pay them off. We don't know the exact numbers because it is a deal between parties and not on an exchange, but I know they trade in basis points, like .005 would make it a 200 o 1 bet that the value of the bond would remain constant. the counterparty bet would be betting .005 cents on the dollar that the bond would go bad. When the CDO bonds that AIG sold the swaps on went to .10 on the dollar you can see how much trouble AIG was in. But wait there's more, there was a law passed in 2005 that gives derivatives priority in a bankruptcy---------so Goldman one of the biggest counter parties was gonna get paid no matter what. We have no idea how many CDS are floating around out there and what would happen in the case of a credit "event". I don't know about some of the other swaps out there --------should be in that new book. "It takes a Pillage" is good relevent and I think most people could understand it --I do speak banker but not fluently.
ahhh yes, we do need to regulate the derivatives (get a full accounting, have them run through an exchange so they are liquid and standardized [like stock options] and to hold reserves against them), because clearly the children still need to be babysat--however, with so much leverage piled on those instruments, i am not sure reserves of say 10% would help. my friend is a VP of risk management at one of the world's biggest ibank/brokerage/holding companies on wall street; and i can tell you he's doing his best to get his head around their exposure, and further, he is required regularly to meet with people at the fed. and submit tons of reports. they wrote and bought so much, they don't know how much is out there, plus they just gobbled up other gigantic investment banks/brokers that couldn't stand on their own--which compounds the job.
i do remember that the bankruptcy reform act of 2005 enabled goldman and others similarly situated, were paid 100 cents on the dollar while everyone else got hosed; including the consumer who was also highly limited in their ability, under the act, to discharge credit card debt in bankruptcy... remember that Bush favor to his bank buddies??
We either need to babysit the children or kick them out into the free market. No retail bank loans or fed loans to wall street banks or hedge funds. Then they could pretty much what they wanted without using our money or taking us down with them. I really don't think an entity that holds customer funds should be able to sell CDS it should be a separate business. Man you friend must be going crazy that would be a hard job. Nomi Prins said she could never get an accurate # about how much leverage banks were using. The # I've read most was 30 (3.33% reserves) and MF Global between 39 and 44 depending on where you read it ---long way to go to get back to %10, never mind the risky derivatives lurking in the casino wing.
Currently the lunatics are running the asylum, the teenage help are running the bowling alley -- absolutely we need to babysit the Wall St. children or at least not protect them from consequences, as you suggest.
Psychopaths often are model prisoners when in jail. This is because guidelines are very strict and enforced. Wall St. psychopaths need the same controlling oversight.
needless to say there are several VPs, so it's not all on him, but he particularly does the derivatives book, as they need to gauge and model volatility since derivatives are highly sensitive to it--his PHD in math renders him qualified for that. Yes, I've hear those same leverage numbers... scary, when will they learn? Banks should always have been about the balance sheet, not the income statement. only ONE CEO has said his bank is strictly about the balance sheet, and that is TDAmeritrade/bank--they've done fine through this depression as a result. In truth, I think alot of financial conglomerate's functions should be separated--break the conglomerate financial houses up. that's the smartest thing to do--and therefore is notably absent from discussion in DC:):):)
You would think MF Global would have been the wake up call, then again you would have though LTCM would have been in the late 90's. I think there's far to few people in politics who understand what systemic risk means. You know what you might like if you haven't read it already " The Great Crash" by John Kennith Galbraith. I was stunned to find that the derivatives that crashed the market in 1929 were structured almost identically to the CDO's of this crash. They were called investment trusts. They were made of stocks but layered and leveraged so that the top tier was what was sold to investors, then they made trusts of trusts---LOL as long as the market was going up the leverage was magical, they really thought they had found the answer to permanent wealth creation, and yes Goldman Saks was there (in case you were wondering).
Ok. Let me get this straight. You have every right to work for your money but they do not.
Anyone on wall street has the right to make all the money they want in the free market where they belong. They don't have the right to use my money to do it. Corzine was leveraged 40/1 with money he borrowed from JP Morgan a bank full of citizens deposits, then when his over leveraged bets went bad he stole MF stole money from customers to pay the margin call. Get wall street out of our fed system and don't let them borrow money from retail banks. They can lend money to each other and take all the risk they want they can get off welfare and get out into the free market where they can go BK without taking the rest of us down with them. Yes they might actually have to work hard once they get off welfare. I will cheer them on.
all 99%ers should remove their wealth from the stock market's and the banksters' grasps. That's roughly 9 trillion dollars that will indeed eventually be stolen too.....
otherwise over half of them are allegedly protesting........... themselves as they too are would-be wealth extractors no better than those doing all the blatant and corrupt theft.
You know a lot those CME traders who had their money stolen by JP Morgan and MF Global use their own money to make a market for commodities. Two huge bank/brokerage firms who have access to fed funds and retail deposits stole their money. You and I could argue that there is to much speculation in the commodity markets but that said there is still a need for those traders who are willing to risk their own money to play the middleman. What if a farmer has twice as much wheat to sell as there are buyers? well you need those guys to buy from the farmer and wait till they find a buyer and make a few bucks in the process.
I do grasp the concept of surplus being managed. However, what exists today is far removed from managing surplus. I think we'll agree on that, and many other things you may find unlikely. I am not against capitalism at all. I am against fraud and treason.
We do agree perhaps on position limits for speculators in commodities, but my point was the traders who were robbed were people who had the guts to operate in the free market with their own money, and they were robbed by MF Global and JP Morgan who were using our money to make massive over leveraged bets. here's the other thing I'd like to know, when there is over speculation in a commodity, who is funding it? You know all these big banks borrow from the fed window and from each other to gamble with and the leverage they use is outrageous. If wall street was not allowed to use retail bank loans or borrow at the fed window that might be enough to curb some of the crazy speculation.It really bothers my that they use my money to run up the price of my oil and food.
On that we agree for sure. No such system should exist to even be exploited in any such manner. It' easier to grasp when it's understood these people own our nation and DC.
http://www.barefootsworld.net/constructive_fraud.html
rewind the movie further back........
we still haven't paid the civil war debt
do you think that could possibly have any reason to do with our nation de facto being owned by industrial and financial complexes?
yes
http://www.youtube.com/watch?v=JxYDnYgQ5MQ
The first ten seconds, she ask Obama, "which one" and he answers.
Why do people refuse to acknowledge the huge debt the nation incurred during the civil war and all wars following? All is a matter of public record in the library of congress, the trail is not an easy one, but, it does exist.
Even SCOTUS ruled that both Constitutions, and their governing powers exist, but that the original Republic has all it's seats vacant.
http://www.serendipity.li/jsmill/us_corporation.htm
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very interesting .. there should be more research on this ..
fair enough, but when?
http://www.barefootsworld.net/constructive_fraud.html
The United States STILL hasn't paid the Civil War Debt.
Wars are very expensive.
check out "IOUSA" for a good documentary about debt.
http://www.youtube.com/watch?v=O_TjBNjc9Bo
here is the 30 minute version
it shows the basic numbers but doesn't show the fangs being sunk in along the time line
More whining and name calling. Get a JOB
I have a job. I make my own money trading and I use my own money to do it. I'm not one of the welfare queen banks using citizens money to gamble with. Kick wall street out into the free market and get them to stop suckling at the feds teat and we can start to talk about the free market for real. I'm not gonna take any BS from any welfare queen bank supporter
More rhetoric. Dont u get tired
So you like America's welfare queen banks good for you.
give a job... you're making an baseless assumption. how do you know anyone's status?
I am just betting on statistics. Statistically most OWS hippies are jobless.
again; give one who is unemployed a job. do something good, rather than derisively make ignorant trite generalizations. why would you even post here in support of OWS? you only detract. probably lived your life like that--taking rather than contributing. i get it--i am playing the stats. now on you.
We do actually. We get our clients to invest in other corporations which in turn creates jobs.
but that only creates jobs to the extent that the end recipient of the capital is growing and hiring (something i haven't heard much of lately) such as PE or VC rounds in growth companies,,, it does not create jobs if it's used for MBOs, LBOs or similar change of control transactions, nor does it if it's used for investments in publicly traded stocks (since the company does not receive the capital--the stock seller does).