It’s one of the inevitable frustrations of life – being really, really angry, and knowing your anger is misplaced. In fact, there is, sometimes, no sensible place to direct your anger. Parents know this all too well – the kid didn’t know any better, and you’re trying to get the toasted-cheese sandwich out of the new Blue-Ray video thing that cost way too much. Yeah, you scream and yell, but you should have known not to leave it on that low shelf, and three-year-olds are curious. Maybe you should have been more careful. But knowing you shouldn’t be angry at the kid – this is, as they say, a Teaching Moment – only makes you angrier.
Psychologists who think about such things talk about displacement – somehow if you don’t find a legitimate target for your anger you’re in deep trouble. Being angry at the wrong things is stupid and dangerous, and pretending, as best you can, that you’re not really angry after all, is worse – you end up doing crazy things, or massively depressed. Out here in Los Angeles, being stuck at a dead stop on the freeway for an hour or two can make you seethe in anger – but almost always there is no wreck – and no bad weather of course. It’s California. The weather is always fine, and there are just too many people trying their best to get where they think they need to be, just like you.
But you really are angry, and frustrated, and shouting nasty things no one can hear – or you’re resigned and depressed, having turned your anger inward. This usually doesn’t lead to road rage – smashing your car into other cars and shooting other drivers – but that has been known to happen. Mostly, when you glance at those around you stopped on the 405, you see a few folks with stone faces, keeping a lid on the anger, and all the other faces – a frozen sea of resignation and depression.
Yeah, yeah – there are the Zen Masters, drivers who sense that, as they cannot control the situation at all, being stuck in traffic is a wonderful opportunity to groove on what’s on the radio and pay attention to wonder of little things, the sparking light off all the chrome, and work on their karma or something. There may be fourteen such people in Los Angeles.
But there is nothing wrong with rage. Righteous and appropriate anger is great stuff – it’s just that it is often in short supply. Most people just pretend their anger is righteous and appropriate, and hope no one notices the details.
But that’s America today – you lose your job because the economy went sour and now the company you worked for has hardly any clients, or customers for whatever the product is, and there’s nothing much to do. Of course it isn’t fair – you have always done excellent work, and lots of it, and were loyal and trustworthy and honest and all the rest. You made money for these folks – you solved the trickiest of problems.
And you’re angry at being let go, but it’s hard to be angry at the boss – you saw the pain in his eyes when he told you you’d have to go away.
You really don’t know where to direct your anger – the fiscal policy of the Bush administration, or the hapless failure of the new Obama administration to make things all better in sixty days, or at hedge fund managers and derivative traders, or illegal immigrants, or liberals who want to just use tax money to make things better for people who don’t deserve help, or conservatives who want to make sure the rich stay rich and everyone else pays for it – Rush Limbaugh here saying “A lynch mob is expanding: the peasants with their pitchforks surrounding the corporate headquarters of AIG.”
You don’t like being called a peasant, and being told to pay homage, and a hunk of your wages, to your betters. Or maybe you blame the United Auto Workers, or the CEO of GM, or some teacher you had way back when, who encouraged you to choose the career you just had, or one who discouraged you from trying something you really wanted to do all along. Or maybe you blame the wife and kids – you can’t sell of all the crap you own and hit the road to discover yourself, not now.
The possibilities are endless – but none of them seem right. What you need is a good scapegoat – that was in Leviticus 16 – that goat, carrying the sins of the people placed on it, is sent away to perish. Cool – silly, but cool. You want a dead goat, and you want one now. You’re okay with displacement.
Well, on Wednesday, March 18, a frustrated America got its dead goat. That would be Edward Liddy. But Liddy wasn’t driven into the wilderness to perish, alone and abandoned. It was worse. He had to testify to congress:
Under intense pressure from the Obama administration and Congress, the head of bailed-out insurance giant AIG declared Wednesday that some of the firm’s executives have begun returning all or part of bonuses totaling $165 million.
Edward Liddy, brought in last year to oversee a company that has received $182 billion in federal bailout funds, offered no details. Buffeted by congressional outrage, he said he was angry, too, but did not respond directly when advised in pungent terms to pay to the Treasury all the money handed out last weekend in “retention payments.”
It’s tough when all the sins of the people are placed upon you, and you’re sent away to perish. And this is not his mess – Liddy was brought in six months ago, when the government assumed control of AIG, and the guy is working for free. But he is the goat. Liddy was on the board of Goldman Sachs before becoming AIG’s CEO, and before that he was CEO of Allstate from 1999-2006. And he was Chief Financial Officer at Searle back in the eighties, when the CEO there was Donald Rumsfeld, of all people. How did it come to this?
In fact, Liddy may be the wrong guy, a wholly inadequate scapegoat. Of course, as we are sorely in need of one these days, Liddy will have to do.
But not everyone agreed. There’s Daniel Gross, the business columnist for Newsweek, who drives Kudlow and Cramer and Santelli crazy when he joins them on CNBC, as Gross likes detail and has little patience for rants about bad guys and good guys, and winner and losers. He keeps saying it’s not that simple, and Kudlow and Cramer and Santelli look embarrassed – although only for a microsecond. And Gross has a new book – Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, which some say is wonderful, but was published as an e-book, so unless you have a Kindle you’re out of luck. And if you don’t know what a Kindle is, there’s no hope for you.
Daniel Gross is clear about this hearing, and this scapegoat. In Slate he says They Got the Wrong Guy:
The appearance by AIG CEO Edward Liddy before Congress on Wednesday was billed as an epic confrontation between the angry tribunes of a furious public and an arrogant Wall Street. Chris Matthews hyped it on MSNBC as “Watergate Redux.” But the actual hearing – Liddy’s appearance and questioning lasted barely longer than the two-hour preliminaries – was disappointing and misguided.
Roasting Liddy for AIG’s manifold and expensive failures would be like putting Gerald Ford on trial for the crimes of Watergate. Edward Liddy isn’t G. Gordon Liddy. Yes, he could have handled this issue much better. But he’s not the villain. He’s a genuine dollar-a-year man who isn’t looking to make a quick buck on the bailout.
Well, yes – Liddy made all his money at Allstate. And this hearing was, Gross thinks, nonsense:
The proximate cause of the hearings was the revelation that AIG had paid $165 million in “retention businesses” to executives at AIG’s Financial Products division, the tiny unit whose reckless bets and issuance of insurance on financial products blew up the whole company. Liddy acknowledged that it was “distasteful to have to make these payments” and explained that they were made not to people who sold credit-default swaps but to employees who were winding down other components of the business, some of which were profitable. He had asked employees of the division who received at least $100,000 to return at least half of their bonuses, he said, and some had offered to return all of it.
Gross had already argued that blaming Obama for losses in the stock market, or blaming Bush, or any president, was just stupid – the market responds to other things and that was just misplaced anger. But this business with Liddy was worse:
There’s no denying the horrific symbolism of these bonuses. But it would be nice if members of Congress – Republican and Democratic alike – displayed as much attention and outrage over the $80 billion-plus wound that AIG’s implosion has already inflicted on the American taxpayers instead of grandstanding over a mere (irony intended) $165 million.
The failure of leadership at AIG was immense and catastrophic. But Liddy wasn’t leading AIG when it blew up. He didn’t get paid to make the disastrous trades, or to oversee the disastrous traders, or to oversee the people who oversaw the disastrous traders, or even to oversee the people who oversaw the people who oversaw the disastrous traders. It wasn’t his idea for AIG Financial Products to insure billions of dollars in mortgage bonds, or to engage in “regulatory capital trades” or “balance-sheet rental” – insuring assets of European banks to allow them to move assets off their balance sheets. Liddy noted that at its height, AIG had between $350 billion and $370 billion of “balance sheet rental” insurance in force. (The figure is down to a mere $230 billion.)
In short, Liddy is doing his job, carefully unwinding a tangled mess, or defusing a nuclear bomb in Manhattan, which might be a better metaphor. And Gross is offended that people are worrying over these bonuses – there’s actually a more relevant story behind those bonuses:
It is how a single unit of a huge company managed to threaten to blow up the entire financial system, and how the bailout is keeping all sorts of large financial institutions afloat.
But Liddy isn’t the person to ask about that.
I’d like to hear from Maurice “Hank” Greenberg, who built AIG into an international empire and claims the whole thing fell apart after he left. I’d like to hear from Martin Sullivan, CEO from 2005 until June 2008, who got a $47 million severance package, and who, in congressional testimony, blamed AIG’s demise on mark-to-market accounting. I’d really like to hear from the many savvy worthies who were on the board of directors: people like Martin Feldstein, the Harvard economist and father of Reaganomics, who has served on the board since 1987 and has collected millions of dollars in fees (the proxy shows that in 2007 alone he received $236,635), and diplomat Richard Holbrooke (2007 fees: $232,865), and Michael Sutton, a former chief accountant of the Securities and Exchange Commission. Did any of them ever raise any questions as to what AIG was doing and the risks it was assuming? And if not, what were they getting paid for?
And insiders know about this guy:
Congress should have subpoenaed Joseph Cassano, who hauled down a few hundred million dollars while running AIG Financial Products and was the executive with the most direct responsibility (and likely the most legal liability) for the debacle.
Gross also thinks you might want to talk to the economists who developed the fancy risk models for AIG Financial Products, or the guys who wrote the program software. And Gross adds a kicker:
And, for old time’s sake, why not recall Alan Greenspan, who assured the public that credit-default swaps and shadow banks like AIG didn’t need to be regulated.
But wait. There’s more:
Oh, and Congress should also hear from the many AIG counterparties who together have received billions of dollars of taxpayer funds so far through AIG. These folks bought insurance from or did business with a company that was unable, as it turned out, to make good on its financial commitments. And yet because the government didn’t let AIG file for Chapter 11 bankruptcy protection, these counterparties have been made whole. I’d like to hear Goldman Sachs CEO Lloyd Blankfein tell Congress why it was appropriate for taxpayers to make a payment to Goldman of $5.6 billion in credit-default swaps, and why Goldman shouldn’t eat at least a portion of the losses it would have suffered had the taxpayers let AIG fail. It would be nice to hear from the half-dozen German banks, including the state-owned Landesbank Baden-Wuerttemberg, who have benefited from one of the biggest transfers of taxpayer wealth to Europe since the Marshall Plan. Or from executives at Citadel, the beleaguered hedge fund that received $200 million in payments from AIG’s securities-lending business. They should be duly sworn in and forced to explain why taxpayers should pay these claims just because their firms bought insurance without determining whether the insurer could pay the claims.
But here’s why Gross’ next visit on CNBC might be uncomfortable:
Or maybe Congress can call in CNBC’s Rick Santelli and force him to explain why subsidizing these losers is somehow different than subsidizing losers who are behind in their mortgages. Now that, at least, would be good theater.
It seems we have a national problem with anger management of course – displacement issues. CNBC has their list of inappropriate targets, as does Keith Olbermann and the troika of O’Reilly, Beck and Hannity over at Fox News. Everyone wants to make it simple and good theater. The ratings matter.
But also in Slate, John Dickerson argues Obama has a bigger problem:
Everyone is outraged about AIG. The president is outraged. Press secretary Robert Gibbs used the word (or some form of it) 13 times in his briefing Tuesday. Mild-mannered budget director Peter Orszag told reporters that among the White House staff, “the outrage is visceral.” Members of Congress are competing to see who can be most outraged.
But Obama is in a pickle:
Administration aides know this outrage can go too far. If the president stokes too much outrage, he’ll have a tougher time asking for more tax money for future bailouts of banks and other industries. But, as it was explained to me by an administration adviser, it is impossible for the president not to show that he’s outraged. If he didn’t, he’d lose credibility, which would eventually hurt his ability to sell future bailouts and his budget.
If we thought it was tricky to price these toxic assets at failed banks, try calibrating outrage. That’s going to be the president’s task after this AIG mess is over: figuring out how much unfairness the American people will tolerate, even as he promotes a new framework based on fairness.
And his budget will present a problem:
Obama is selling his budget, with its reorientation of spending priorities and taxes as an effort to make the system fairer: Government resources must be redistributed to reverse a three-decade-long trend of rising inequality in incomes and wealth. At the same time, however, he is stuck promoting efforts to revive the economy that are inevitably unfair. It’s not just rewarding people who helped us get into this mess with $165 million in bonuses or paying back Wall Street investment banks that mislead investors about their health. It’s explaining why your neighbor gets help with his mortgage but you don’t.
The polls Dickerson then cites show people are willing to tolerate some unfairness, so far – but that could turn on a dime. And it’s a hard sell:
The budget rests on a “grand bargain,” as Obama puts it, in which individuals agree to make some sacrifices in order to improve our collective lot. No one is going to make a sacrifice if he thinks the new game is just as crooked as the one that allowed our economy to get so out of whack. …
Whether the Obama team knew about the bonuses and only became outraged after they became public, or whether it simply lacked the legal ability to break contracts, doesn’t matter. Clueless or powerless, the episode is especially dangerous for Obama because it suggests that the candidate of change cannot change the system. It’s as if the public is saying, we knew there would still be unfairness, but it’s the same old unfairness we’ve always had. …
More people are going to ask why they should sacrifice when the well-connected didn’t have to. And the president is going to have to do even more work explaining that his team will be good stewards of taxpayer dollars. That’s why Wednesday the president went before the cameras to stress that in the wake of the AIG mess, he was putting new rules in place. “We’re going to be moving that on a fast track. This is part of the broader package of financial regulatory steps that we’re going to be taking that ensures that going forward in the future we’re not going to find ourselves in these kinds of terrible positions again.”
Obama is asking for more time, but just minutes before he said, “I don’t want to quell anger.”
That may be a mixed message, but the idea is that he “needs to sympathize with the public’s outrage while at the same time hoping that the public calms down enough to be patient.”
The American people may not be able to manage to calm down. We may all suffer from narcissistic personality disorder, or so Emily Yoffe suggests here:
A Bloomberg columnist blamed the conceited for our financial troubles in a piece titled “Harvard Narcissists with MBAs Killed Wall Street.” A Wall Street Journal op-ed on California’s economy suggested that Gov. Schwarzenegger’s desire for voter’s love (“It’s classic narcissism”) helped cause the state’s budget debacle. A forthcoming book, The Narcissism Epidemic, says we went on a national binge of I-deserve-it consumption that’s now resulting in our economic purging.
This is the cultural moment of the narcissist. In a New Yorker cartoon, Roz Chast suggests a line of narcissist greeting cards (“Wow! Your Birthday’s Really Close to Mine!”). John Edwards outed himself as one when forced to confess an adulterous affair. (Given his comical vanity, the deceitful way he used his marriage for his advancement, and his self-elevation as an embodiment of the common man while living in a house the size of an arena, it sounds like a pretty good diagnosis.) New York Times critic Alessandra Stanley wrote of journalists who Twitter, “It’s beginning to look more like yet another gateway drug to full-blown media narcissism.” And what other malady could explain the simultaneous phenomena of Blago and the Octomom?
What’s interesting here is the implicit links between narcissistic personality disorder and anger management, and big business:
A recent study titled “Leader Emergence: The Case of the Narcissistic Leader” describes how narcissists have skills and qualities – confidence, extraversion, a desire for power – that propel them into leadership roles but that when true narcissists are in charge, other aspects of their makeup – a feeling the rules don’t apply to them, a need for constant stroking – can have “disastrous consequences.” Yes, we’re talking about you, former Illinois Gov. Rod Blagojevich. After Blagojevich was caught on tape trying to sell a Senate seat, he reveled in the opportunity to appear on talk shows, making the case that he himself was a victim – self-pity being a favorite narcissist refuge.
A line from a New York Times profile of him is as trenchant a description of narcissism as is found in most psychology textbooks: “[He] is unapologetically late to almost everything, and can treat employees with disdain, cursing and erupting in fury for failings as mundane as neglecting to have at hand at all times his preferred black Paul Mitchell hairbrush.” There it all is: the sense that other people don’t matter, the belief others are instruments for the narcissist’s use, the self-admiration.
This leads to no good. Yoffe reminds us that Leona Helmsley did time in prison for her belief about herself and her husband, “We don’t pay taxes. Only little people pay taxes.”
And she notes that management consultant Michael Maccoby studied narcissistic bosses for his book, The Productive Narcissist: The Promise and Peril of Visionary Leadership:
He makes a distinction between leaders with narcissistic traits and those who have full-blown NPD. He says narcissists can be charismatic forces for change – because of their drive, vision, risk-taking, and even ruthlessness, many corporations turn to narcissists for salvation. But such people can become dangerous because their success fuels their already ample grandiosity and feeds the sense they got there by disdaining the normal rules. Maccoby says those working for or doing business with a narcissist have to be careful not be drawn into crossing legal and ethical lines. … Their boldness can lead to big short-term success but long-term disaster.
But it’s not just the mad bosses. Yoffe notes how many have said that much of our economic troubles result from “a mass case of narcissism, from consumers who thought they should have the house of their dreams financed on bad debt to bankers who thought they deserved eight-figure bonuses for packaging that bad debt.”
Here’s a satirical example.
And when you don’t get what you want, you get angry, like those drivers stuck on the freeway, at the edge of road rage. We could be there soon, or with luck all be like the other drivers – resigned, depressed and broken in spirit.
In any event, those AIG bonuses are a minor matter – the toasted-cheese sandwich gumming up the works. Fix it. Move on.