The Sociopathic Financial System.

by sdharbinger

I did my BA in deconstructive philosophy and one of the tenets of the discipline is that of a multi-disciplinary approach to the analysis of ‘texts’ or systems.  Different disciplines give different perspectives on whatever it is we are trying to understand.

After a very long time, I have come to see that the most appropriate model for understanding what is currently happening is psychology, and in particular the behavioural  analysis of the sociopathic personality.  As institutions themselves have recognizable traits, ethics etc then to a certain extent they have personalities.  My contention is that many of our leaders and institutions have degenerated into a sociopathic entities and that this has come about by – and I use their vernacular – the parking of responsibility and accountability.

Firstly, we will need to establish a rough idea of what constitutes a sociopathic personality.  The following pulled off  the web is roughly adequate:

Conventional appearance

1) Seeks out situations where their tyrannical behavior will be tolerated; condoned, or admired.

2) Prone to corruption; disguise, fraud and embezzlement.  Will manufacture or tamper with evidence and distort figures and give a completely false view that they are either competent or actually in control.

3) Pathological Lying; Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex false belief about their own powers and abilities.

4) Irresponsibility/Unreliability; Will not admit to have done anything wrong or made a bad decision.  Evades responsibility and does not accept blame themselves, but transfers blame to others Not concerned about wrecking others ‘lives and dreams. Oblivious or indifferent to the devastation they cause.

5) Callousness/Lack of Empathy; Unable to empathize with the pain of their victims, having only contempt for others’ feelings of distress and readily taking advantage of them.

6) Does not perceive that anything is wrong with them; Authoritarian, Secretive, Paranoid.

Seems to accurately portray the personality of the EU to me and a good deal of other institutions.

How did this financial crisis come about ?

Simple.  Originally in terms of loan and credit that whoever made the loan retained responsibility and accountability for it.  This meant that the issuer of the debt needs to apply due diligence and make sure their investment is sound.  What happens next is that the markets become systemically sociopathogical when they create CDOs.  The vehicle of CDO’s allows the issuer of  the debt to package it up with a lot of other debts and then sell it on to other investors.  In this process the issuer of the debt has effectively parked the vehicle and with it any responsibility or accountability for it.  This is the process by which moral hazard is systemically created within the system.  Now the issuers of the debt can issue it to anyone at all whether they are credit worthy or not.  All they are now interested in is their commissions and bonuses.

When one also factors in the ‘too big to fail’ safety net then it is clear that any level of speculation is permitted because risk has been taken off the table, and responsibility and accountability for investments has been systemically removed.

I will put up another candidate for sociopathology. The entire market themselves.

Look at the DOW Jones index and set the range to all.

All is relatively calm throughout the 1970s and then following the big bang and subsequent de-regulations which are nothing more than the amputations of the arms of responsibility and accountability, then if one was watching the charts of a sleep study, it is clear that the patient has moved from being relatively calm to schizophrenic night terrors. Such extreme volatility is a form of schizophrenia as markets jump between irrational ends of the spectrum and from crisis to crisis.

Another case that will be familiar to many. A new beast has come to dominate in many companies and they are essentially sociopathic in nature. They are completely self interested, have no real ideas of their own, or even a semblance of common sense. What they do know political manipulation. They know how to steer meetings and park objections. They don’t necessarily move from job to job, their skill is moving from bandwagon to bandwagon and ideological fad to fad. New Labour was such on a institutional scale. It didn’t care if its policies worked or not as it never bothered committing itself to any of them long enough and would abandon any ideology that wasn’t really theirs in the first place for the latest PC or trendy notion which came along. In semi-rejecting the principles of Marxism and socialism Labour gave itself an ideologically split personality barely kept sane by bandwagoneering on social and economic ‘policy’.

Imagine a business meeting a new idea is being proposed. It would save a lot of money if we outsourced our customer services to India. If I was in the meeting, I would point out that our customer services, especially if they were our only client facing entity were rather important and that were the crucial interface by which the public would perceive our company and the effectiveness of its services. If we spent millions on advertising to present the best image possible of our company then it would be foolish to ship our customer services abroad in order to give worst possible service and customer experience.

In the meeting such an objection would be parked by the sociopaths who have jumped on the bandwagon. Common sense is eradicated here and the policy is pushed through regardless of how much damage it will end up doing to the company. When it proves to be wrong the sociopaths who pushed in through will do everything they can to evade any responsibility or accountability for it shifting the blame else where. And even if they do not manage this, they can evade responsibility by virtue of their bandwagon membership, in that they merely point out that everyone else was doing it so how could they possibly have know it wouldn’t work.

7 Comments

Filed under Economic Crisis, Politics

7 responses to “The Sociopathic Financial System.

  1. Pingback: Holiday. | theneedleblog

  2. Kevin,
    It’s complicated and it’s meant to be.
    If dodgy financial ‘products’ were transparent then why would anyone pay bankers so much money ?

    • Sdharbinger

      Hi Gojam

      This is an addendum.to the sociopathological analysis. Your hard work and editorial skills are most appreciated and you have my profound thanks. If you owned a gun to point at me you could be my perfect editor.

      When is a business boost plan not a business boost plan? When it is a bank bailout in disguise. Perfect corruption. You give £140 billion to banks with a suggestion that they might lend it out slightly more cheaply than current rates, but there control stops or is parked.

      That suits the sociopathic authorities nicely, because if they do not take control or exercise power’s legs, they do not have to accept responsibility when the banks don’t lend the money and instead decide to either buy risky sovereign debt or wager it in stock, commodity and derivatives markets because that’s were the real money both is and isn’t.

      Of course if they really wanted to the BOE could have used a Nationalized bank as a conduit to get finance to business or even bought business bonds directly themselves.

      This is unacceptable to them because it involves making investment decisions, and they would directly be responsible and accountable for them – so they’d rather not because its too risky reputation-wise.

      We now live in an age where people seek power, only to find that when they arrive in the office sought, that power has disappeared and any possibility of real control with it. The secret is that it never really existed as such.

      Perversely, by government or central banks refusing to take the risk of acting or enforcing anything, they have abdicated from the very possibility of power itself. Consequently all we have left is a systemic inertia and inability to confront or deal with any problem at all.

      Such inertia is more than problematic when you’re being sucked into a financial black hole.

      Kind Regards

      Simon

  3. Kevin

    Great article but the amount of Special Purpose Vehicles is unlimited, what I didn’t know until watching the Dimon hearing was that banks (being unregulated) create these vehicles no the fly, whilst CDO’s are thought to have resulted in the Lehmans crash they are really just the tip of the iceberg.

    Due to the fact each and every bank can quite literally make it up as they go along we are now in the situation where banks simply can’t trust each other, when they say they don’t know what X’s position is they literally mean it, they can’t know because X has free reign to create SPV’s in any way they like.

    As such the derivatives market that the MSM never talk about has now become one big pile of junk, problem is our entire global market place is intertwined with this market so nobody can unwind their positions without taking a massive haircut.

    The more I look into this the more I realise the rabbit hole goes much much deeper.

  4. Catherine Carr

    I think your View of the CDO is slightly out…. The banks who pooled the debt and issued the CDO were just desperate for funding. So they lumped the mortgages together got Fannie Mae or Freddie Mac to guarantee them and let the idiots through the door. The problem with these debts was when the mortgages started going bad nobody knew if their bonds were effected.

    The buyers of these bonds should have looked more closely at the collateral and didnt. But the Bonds were also guaranteed as AAA by the fannies…

    • Sdharbinger

      Hi Catherine

      My background is experimental philosophy. I got interested in finance about 2 years ago and have been learning about it with a sense of impending doom. In this respect I only look at things in terms of inter-relating structural logics and I use philosophy, literary criticism, Marxism, psychology as but a few perspectives from which to try and understand the world.

      It matters not why banks pooled debts, from my perspective it is a question of tracking the systemic side effects of what that debt pooling have been. One effect has been the parking of debt responsibility and consequently debts are created in an atmosphere of moral hazard and that is now systematic. One doesn’t need to point the finger at some evil genius plotting the worlds downfall somewhere, its just a question of market players exploiting loop holes as much as tax avoiders or benefit scroungers do. As far as logic goes, I feel the argument makes total sense. You may say caveat emptor but the problem with that is there is no transparency to research how viable the packaged debts were.

      I think somewhere today you made an argument asserting that derivatives were a good thing. In principle yes, but in practice maybe $750 trillion of derivatives is too much of a good thing.

      Kind Regards

      Simon.

      • Hi Simon,

        “My background is experimental philosophy. I got interested in finance about 2 years ago and have been learning about it with a sense of impending doom. ”

        Sounds like my background. An intellectual scramble when I realised I’d overlooked something important. A steep learning curve.

        Are you happy about the way you article has been presented, photo, highlights, title ?

        I’m always worried that I’ve somehow misrepresented someone else’s views.

        PS, you’ll find my email address in the Mission Statement, if you have anything else of this quality brewing in your mind then let me know. You’ve had alot of extra views today. This article is the most viewed on this site so far.