The Merits of Stereotypes

“The trouble with people is not that they don’t know but that they know so much that ain’t so.”
Henry Wheeler Shaw
 

Do stereotypes usefully represent real knowledge or merely reflect counter-productive prejudice?

Stereotypes invariably refer in a generalized manner to – often arbitrary – groups of people, usually minorities. Stereotypes need not necessarily be derogatory or cautionary, though most of them are. The “noble savage” and the “wild savage” are both stereotypes. Indians in movies, note Ralph and Natasha Friar in their work titled “The Only Good Indian – The Hollywood Gospel” (1972) are overwhelmingly drunken, treacherous, unreliable, and childlike. Still, some of them are as portrayed as unrealistically “good”.

But alcoholism among Native Americans – especially those crammed into reservations – is, indeed, more prevalent than among the general population. The stereotype conveys true and useful information about inebriation among Indians. Could its other descriptors be equally accurate?

It is hard to unambiguously define, let alone quantify, traits. At which point does self-centerdness become egotism or the pursuit of self-interest – treachery? What precisely constitutes childlike behavior? Some types of research cannot even be attempted due to the stifling censorship of political correctness. Endeavoring to answer a simple question like: “Do blacks in America really possess lower IQ’s and, if so, is this deficiency hereditary?” has landed many an American academic beyond the pale.

The two most castigated aspects of stereotypes are their generality and their prejudice. Implied in both criticisms is a lack of veracity and rigor of stereotypes. Yet, there is nothing wrong with generalizations per se. Science is constructed on such abstractions from private case to general rule. In historiography we discuss “the Romans” or “ancient Greeks” and characterize them as a group. “Nazi Germany”, “Communist Russia”, and “Revolutionary France” are all forms of groupspeak.

In an essay titled “Helping Students Understand Stereotyping” and published in the April 2001 issue of “Education Digest”, Carlos Cortes suggest three differences between “group generalizations” and “stereotypes”:

“Group generalizations are flexible and permeable to new, countervailing, knowledge – ideas, interpretations, and information that challenge or undermine current beliefs. Stereotypes are rigid and resistant to change even in the face of compelling new evidence.

Second, group generalizations incorporate intragroup heterogeneity while stereotypes foster intragroup homogeneity. Group generalizations embrace diversity – ‘there are many kinds of Jews, tall and short, mean and generous, clever and stupid, black and white, rich and poor’. Stereotypes cast certain individuals as exceptions or deviants – ‘though you are Jewish, you don’t behave as a Jew would, you are different’.

Finally, while generalizations provide mere clues about group culture and behavior – stereotypes purport to proffer immutable rules applicable to all the members of the group. Stereotypes develop easily, rigidify surreptitiously, and operate reflexively, providing simple, comfortable, convenient bases for making personal sense of the world. Because generalizations require greater attention, content flexibility, and nuance in application, they do not provide a stereotype’s security blanket of permanent, inviolate, all-encompassing, perfectly reliable group knowledge.”

It is commonly believed that stereotypes form the core of racism, sexism, homophobia, and other forms of xenophobia. Stereotypes, goes the refrain, determine the content and thrust of prejudices and propel their advocates to take action against minorities. There is a direct lineage, it is commonly held, between typecasting and lynching.

It is also claimed that pigeonholing reduces the quality of life, lowers the expectations, and curbs the accomplishments of its victims. The glass ceiling and the brass ceiling are pernicious phenomena engendered by stereotypes. The fate of many social policy issues – such as affirmative action, immigration quotas, police profiling, and gay service in the military – is determined by stereotypes rather than through informed opinion.

USA Today Magazine reported the findings of a survey of 1000 girls in grades three to twelve conducted by Harris Interactive for “Girls”. Roughly half the respondents thought that boys and girls have the same abilities – compared to less than one third of boys. A small majority of the girls felt that “people think we are only interested in love and romance”.

Somewhat less than two thirds of the girls were told not to brag about things they do well and were expected to spend the bulk of their time on housework and taking care of younger children.  Stereotypical thinking had a practical effect: girls who believe that they are as able as boys and face the same opportunities are way more likely to plan to go to college.

But do boys and girls have the same abilities? Absolutely not. Boys are better at spatial orientation and math. Girls are better at emotions and relationships. And do girls face the same opportunities as boys? It would be perplexing if they did, taking into account physiological, cognitive, emotional, and reproductive disparities – not to mention historical and cultural handicaps. It boils down to this politically incorrect statement: girls are not boys and never will be.

Still, there is a long stretch from “girls are not boys” to “girls are inferior to boys” and thence to “girls should be discriminated against or confined”. Much separates stereotypes and generalizations from discriminatory practice.

Discrimination prevails against races, genders, religions, people with alternative lifestyles or sexual preferences, ethnic groups, the poor, the rich, professionals, and any other conceivable minority. It has little to do with stereotypes and a lot to do with societal and economic power matrices. Granted, most racists typecast blacks and Indians, Jews and Latinos. But typecasting in itself does not amount to racism, nor does it inevitably lead to discriminatory conduct.

In a multi-annual study titled “Economic Insecurity, Prejudicial Stereotypes, and Public Opinion on Immigration Policy”, published by the Political Science Quarterly, the authors Peter Burns and James Gimpel substantiated the hypothesis that “economic self-interest and symbolic prejudice have often been treated as rival explanations for attitudes on a wide variety of issues, but it is plausible that they are complementary on an issue such as immigration. This would be the case if prejudice were caused, at least partly, by economic insecurity.”

A long list of scholarly papers demonstrate how racism – especially among the dispossessed, dislocated, and low-skilled – surges during times of economic hardship or social transition. Often there is a confluence of long-established racial and ethnic stereotypes with a growing sense of economic insecurity and social dislocation.

“Social Identity Theory” tells us that stereotypical prejudice is a form of compensatory narcissism. The acts of berating, demeaning, denigrating, and debasing others serve to enhance the perpetrators’ self-esteem and regulate their labile sense of self-worth. It is vicarious “pride by proxy” – belonging to an “elite” group bestows superiority on all its members. Not surprisingly, education has some positive influence on racist attitudes and political ideology.

Having been entangled – sometimes unjustly – with bigotry and intolerance, the merits of stereotypes have often been overlooked.

In an age of information overload, “nutshell” stereotypes encapsulate information compactly and efficiently and thus possess an undeniable survival value. Admittedly, many stereotypes are self-reinforcing, self-fulfilling prophecies. A young black man confronted by a white supremacist may well respond violently and an Hispanic, unable to find a job, may end up is a street gang.

But this recursiveness does not detract from the usefulness of stereotypes as “reality tests” and serviceable prognosticators. Blacks do commit crimes over and above their proportion in the general population. Though stereotypical in the extreme, it is a useful fact to know and act upon. Hence racial profiling.

Stereotypes – like fables – are often constructed around middle class morality and are prescriptive. They split the world into the irredeemably bad – the other, blacks, Jews, Hispanics, women, gay – and the flawlessly good, we, the purveyors of the stereotype. While expressly unrealistic, the stereotype teaches “what not to be” and “how not to behave”. A by-product of this primitive rendition is segregation.

A large body of scholarship shows that proximity and familiarity actually polarize rather than ameliorate inter-ethnic and inter-racial tensions. Stereotypes minimize friction and violence by keeping minorities and the majority apart. Venting and vaunting substitute for vandalizing and worse. In time, as erstwhile minorities are gradually assimilated and new ones emerge, conflict is averted.

Moreover, though they frequently reflect underlying deleterious emotions – such as rage or envy – not all stereotypes are negative. Blacks are supposed to have superior musical and athletic skills. Jews are thought to be brainier in science and shrewder in business. Hispanics uphold family values and ethnic cohesion. Gays are sensitive and compassionate. And negative stereotypes are attached even to positive social roles – athletes are dumb and violent, soldiers inflexible and programmed.

Stereotypes are selective filters. Supporting data is hoarded and information to the contrary is ignored. One way to shape stereotypes into effective coping strategies is to bombard their devotees with “exceptions”, contexts, and alternative reasoning.

Blacks are good athletes because sports is one of the few egalitarian career paths open to them. Jews, historically excluded from all professions, crowded into science and business and specialized. If gays are indeed more sensitive or caring than the average perhaps it is because they have been repressed and persecuted for so long. Athletes are not prone to violence – violent athletes simply end up on TV more often. And soldiers have to act reflexively to survive in battle.

There is nothing wrong with stereotypes if they are embedded in reality and promote the understanding of social and historical processes. Western, multi-ethnic, pluralistic civilization celebrates diversity and the uniqueness and distinctiveness of its components. Stereotypes merely acknowledge this variety.

USA Today Magazine reported in January a survey of 800 adults, conducted last year by social psychology professors Amanda Diekman of Purdue University and Alice Eagly of Northwestern University. They found that far from being rigid and biased, stereotypes regarding the personality traits of men and women have changed dramatically to accurately reflect evolving gender roles.

Diekman noted that “women are perceived as having become much more assertive, independent, and competitive over the years… Our respondents – whether they were old enough to have witnessed it or not – recognized the role change that occurred when women began working outside the home in large numbers and the necessity of adopting characteristics that equip them to be breadwinners.”


Also Read:

The Science of Superstitions

Thoughts on the Internet’s Founding Myths

Whenever I put forth on the Internet’s numerous newsgroups, discussion fora and Websites a controversial view, an iconoclastic opinion, or a much-disputed thesis, the winning argument against my propositions starts with “everyone knows that …”. For a self-styled nonconformist medium, the Internet is the reification of herd mentality.

Actually, it is founded on the rather explicit belief in the implicit wisdom of the masses. This particularly pernicious strong version of egalitarianism postulates that veracity, accuracy, and truth are emergent phenomena, the inevitable and, therefore, guaranteed outcome of multiple interactions between users.

But the population of Internet users is not comprised of representative samples of experts in every discipline. Quite the contrary. The barriers to entry are so low that the Internet attracts those less gifted intellectually. It is a filter that lets in the stupid, the mentally ill, the charlatan and scammer, the very young, the bored, and the unqualified. It is far easier to publish a blog, for instance, than to write for the New York Times. Putting up a Website with all manner of spurious claims for knowledge or experience is easy compared to the peer review process that vets and culls scientific papers.

One can ever “contribute” to an online “encyclopedia”, the Wikipedia, without the slightest acquaintance the topic one is “editing”. Consequently, the other day, I discovered, to my utter shock, that Eichmann changed his name, posthumously, to Otto. It used to be Karl Adolf, at least until he was executed in 1962.

Granted, there are on the Internet isolated islands of academic merit, intellectually challenging and invigorating discourse, and true erudition or even scholarship. But they are mere islets in the tsunami of falsities, fatuity, and inanities that constitutes the bulk of User Generated Content (UGC).

Which leads me to the second myth: that access is progress.

Oceans of information are today at the fingertips of one and sundry. This is undisputed. The Internet is a vast storehouse of texts, images, audio recordings, and databases. But what matters is whether people make good use of this serendipitous cornucopia. A savage who finds himself amidst the collections of the Library of Congress is unlikely to benefit much.

Alas, most people today are cultural savages, Internet users the more so. They are lost among the dazzling riches that surround them. Rather than admit to their inferiority and accept their need to learn and improve, they claim “equal status”. It is a form of rampant pathological narcissism, a defense mechanism that is aimed to fend off the injury of admitting to one’s inadequacies and limitations.

Internet users have developed an ethos of anti-elitism. There are no experts, only opinions, there are no hard data, only poll results. Everyone is equally suited to contribute to any subject. Learning and scholarship are frowned on or even actively discouraged. The public’s taste has completely substituted for good taste. Yardsticks, classics, science – have all been discarded.

Study after study have demonstrated clearly the decline of functional literacy (the ability to read and understand labels, simple instructions, and very basic texts) even as literacy (in other words, repeated exposure to the alphabet) has increased dramatically all over the world.

In other words: most people know how to read but precious few understand what they are reading. Yet, even the most illiterate, bolstered by the Internet’s mob-rule, insist that their interpretation of the texts they do not comprehend is as potent and valid as anyone else’s.

Web 2.0 – Hoarding, Not Erudition

When I was growing up in a slum in Israel, I devoutly believed that knowledge and education will set me free and catapult me from my miserable circumstances into a glamorous world of happy learning. But now, as an adult, I find myself in an alien universe where functional literacy is non-existent even in developed countries, where “culture” means merely sports and music, where science is decried as evil and feared by increasingly hostile and aggressive masses, and where irrationality in all its forms  (religiosity, the occult, conspiracy theories) flourishes.

The few real scholars and intellectuals left are on the retreat, back into the ivory towers of a century ago. Increasingly, their place is taken by self-taught “experts”, narcissistic bloggers, wannabe “authors” and “auteurs”, and partisan promoters of (often self-beneficial) “causes”. The mob thus empowered and complimented feels vindicated and triumphant. But history cautions us that mobs have never produced enlightenment – only concentration camps and bloodied revolutions. the Internet can and will be used against us if we don’t regulate it.

Dismal results ensue:

The Wikipedia “encyclopedia” – a repository of millions of factoids, interspersed with juvenile trivia, plagiarism, bigotry, and malice – is “edited” by anonymous users with unlimited access to its contents and absent or fake credentials.

Hoarding has replaced erudition everywhere. People hoard e-books, mp3 tracks, and photos. They memorize numerous fact and “facts” but can’t tell the difference between them or connect the dots. The synoptic view of knowledge, the interconnectivity of data, the emergence of insight from treasure-troves of information are all lost arts.

In an interview in early 2007, the publisher of the New-York Times said that he wouldn’t mourn the death of the print edition of the venerable paper and its replacement by a digital one. This nonchalant utterance betrays unfathomable ignorance. Online readers are vastly different to consumers of printed matter: they are younger, their attention span is far shorter, their interests far more restricted and frivolous. The New-York Times online will be forced into becoming a tabloid – or perish altogether.

Fads like environmentalism and alternative “medicine” spread malignantly and seek to silence dissidents, sometimes by violent means.

The fare served by the electronic media everywhere now consists largely of soap operas, interminable sports events, and reality TV shows. True, niche cable channels cater to the preferences of special audiences. But, as a result of this inauspicious fragmentation, far fewer viewers are exposed to programs and features on science, literature, arts, or international affairs.

Reading is on terminal decline. People spend far more in front of screens – both television’s and computer – than leafing through pages. Granted, they read online: jokes, anecdotes, puzzles, porn, and e-mail or IM chit-chat. Those who try to tackle longer bits of text, tire soon and revert to images or sounds.

With few exceptions, the “new media” are a hodgepodge of sectarian views and fabricated “news”. The few credible sources of reliable information have long been drowned in a cacophony of fakes and phonies or gone out of business.

It is a sad mockery of the idea of progress. The more texts we make available online, the more research is published, the more books are written – the less educated people are, the more they rely on visuals and soundbites rather than the written word, the more they seek to escape reality and be anesthetized rather than be challenged and provoked.

Even the ever-slimming minority who do wish to be enlightened are inundated by a suffocating and unmanageable avalanche of indiscriminate data, comprised of both real and pseudo-science. There is no way to tell the two apart, so a “democracy of knowledge” reigns where everyone is equally qualified and everything goes and is equally merited. This relativism is dooming the twenty-first century to become the beginning of a new “Dark Age”, hopefully a mere interregnum between two periods of genuine enlightenment.

The Demise of the Expert and the Ascendance of the Layman

In the age of Web 2.0, authoritative expertise is slowly waning. The layman reasserts herself as a fount of collective mob “wisdom”. Information – unsorted, raw, sometimes wrong – substitutes for structured, meaningful knowledge. Gatekeepers – intellectuals, academics, scientists, and editors, publishers, record companies, studios – are summarily and rudely dispensed with. Crowdsourcing (user-generated content, aggregated for commercial ends by online providers) replaces single authorship.

A confluence of trends conspired to bring about these ominous developments:

1. An increasingly narcissistic culture that encourages self-absorption, haughtiness, defiance of authority, a sense of entitlement to special treatment and omniscience, incommensurate with actual achievements. Narcissistic and vain Internet users feel that they are superior and reject all claims to expertise by trained professionals.

2. The emergence of technologies that remove all barriers to entry and allow equal rights and powers to all users, regardless of their qualifications, knowledge, or skills: wikis (the most egregious manifestation of which is the Wikipedia), search engines (Google), blogging (that is rapidly supplanting professionally-written media), and mobiles (cell) phones equipped with cameras for ersatz documentation and photojournalism. Disintermediation rendered redundant all brokers, intermediaries, and gatekeepers of knowledge and quality of content.

3. A series of species-threatening debacles by scientists and experts who collaborated with the darkest, vilest, and most evil regimes humanity has ever produced. This sell-out compromised their moral authority and standing. The common folk began not only to question their ethical credentials and claim to intellectual leadership, but also to paranoidally suspect their motives and actions, supervise, and restrict them. Spates of scandals by scientists who falsified lab reports and intellectuals who plagiarized earlier works did nothing to improve the image of academe and its denizens.

4. By its very nature, science as a discipline and, more particularly, scientific theories, aspire to discover the “true” and “real”, but are doomed to never get there. Indeed, unlike religion, for instance, science claims no absolutes and proudly confesses to being merely asymptotic to the Truth. In medicine, physics, and biology, today’s knowledge is tomorrow’s refuse. Yet, in this day and age of maximal uncertainty, minimal personal safety, raging epidemics, culture shocks and kaleidoscopic technological change, people need assurances and seek immutables.

Inevitably, this gave rise to a host of occult and esoteric “sciences”, branches of “knowledge”, and practices, including the fervid observance of religious fundamentalist rites and edicts. These offered alternative models of the Universe, replete with parent-figures, predictability, and primitive rituals of self-defense in an essentially hostile world. As functional literacy crumbled and people’s intellectual diet shifted from books to reality TV, sitcoms, and soap operas, the old-new disciplines offer instant gratification that requires little by way of cerebral exertion and critical faculties.

Moreover, scientific theories are now considered as mere “opinions” to be either “believed” or “disbelieved”, but no longer proved, or, rather falsified. In his novel, “Exit Ghost”, Philip Roth puts this telling exclamation in the mouth of the protagonist, Richard Kliman: “(T)hese are people who don’t believe in knowledge”.

The Internet tapped into this need to “plug and play” with little or no training and preparation. Its architecture is open, its technologies basic and “user-friendly”, its users largely anonymous, its code of conduct (Netiquette) flexible and tolerant, and the “freedoms” it espouses are anarchic and indiscriminate.

The first half of the 20th century was widely thought to be the terrible culmination of Enlightenment rationalism. Hence its recent worrisome retreat . Moral and knowledge relativism (e.g., deconstruction) took over. Technology obliged and hordes of “users” applied it to gnaw at the edifice of three centuries of Western civilization as we know it.


Also Read:

The Six Sins of the Wikipedia

Is Education a Public Good?

The Idea of Reference

The Future of the Book

The Kidnapping of Content

The Internet and the Library

The Future of Online Reference

Will Content Ever be Profitable?

The Disintermediation of Content

The Future of Electronic Publishing

Free Online Scholarship – Interview with Peter Suber

Narcissist vs. Psychopath

We all heard the terms “psychopath” or “sociopath”. These are the old names for a patient with the Antisocial Personality Disorder (AsPD). It is hard to distinguish narcissists from psychopaths. The latter may simply be a less inhibited and less grandiose form of the former. Indeed, the DSM V Committee is considering to abolish this distinction altogether. Still, there are some important nuances setting the two disorders apart:

As opposed to most narcissists, psychopaths are either unable or unwilling to control their impulses or to delay gratification. They use their rage to control people and manipulate them into submission.

Psychopaths, like narcissists, lack empathy but many of them are also sadistic: they take pleasure in inflicting pain on their victims or in deceiving them. They even find it funny!

Psychopaths are far less able to form interpersonal relationships, even the twisted and tragic relationships that are the staple of the narcissist.

Both the psychopath and the narcissist disregard society, its conventions, social cues and social treaties. But the psychopath carries this disdain to the extreme and is likely to be a scheming, calculated, ruthless, and callous career criminal. Psychopaths are deliberately and gleefully evil while narcissists are absent-mindedly and incidentally evil. From my book “Malignant Self Love – Narcissism Revisited”:

“As opposed to what Scott Peck says, narcissists are not evil – they lack the intention to cause harm (mens rea). As Millon notes, certain narcissists ‘incorporate moral values into their exaggerated sense of superiority. Here, moral laxity is seen (by the narcissist) as evidence of inferiority, and it is those who are unable to remain morally pure who are looked upon with contempt.’ (Millon, Th., Davis, R. – Personality Disorders in Modern Life – John Wiley and Sons, 2000). Narcissists are simply indifferent, callous and careless in their conduct and in their treatment of others. Their abusive conduct is off-handed and absent-minded, not calculated and premeditated like the psychopath’s.”

Psychopaths really do not need other people while narcissists are addicted to narcissistic supply (the admiration, attention, and envy of others).

Millon and Davis (supra) add (p. 299-300):

“When the egocentricity, lack of empathy, and sense of superiority of the narcissist cross-fertilize with the impulsivity, deceitfulness, and criminal tendencies of the antisocial, the result is a psychopath, an individual who seeks the gratification of selfish impulses through any means without empathy or remorse.”

Read The Antisocial and Psychopath

Read Notes from the therapy of a Narcissistic Patient

Read Notes from the therapy of a Psychopathic Patient


Many additional Frequently Asked Questions (FAQs) about Personality Disorders – click HERE!

Janusz Courts Dinah

Janusz thrusts his head through the illuminated window, deep into the house, his desperate shadow bedaubed across the wall. We shelter Dinah, a chimera of heads and bodies, protecting her from Janusz, from his love, from his contorted face, as he bawls, in his intellectual accent:

 

“But I want Dinah, let me speak with Dinah!”

 

Dinah’s face alight, attainted red. It has been a long time since she was wooed so forcefully. Janusz, consumed by twilight, bellowing ignominiously in public. It flatters her, evoking stirrings she can recognize. She giggles uncomfortably, a beauty framed in silky skin and pearly teeth.

 

Janusz sits by day on color-peeling, fading benches. His body arched with twanging dignity, his equine face buried in a thickset tome, exaggerated eyes peering through the magnifying lenses of his gold-rimmed glasses. From time to time, he chases a dogged, greasy curl away from his alpestrine forehead.

 

It was this expansive brow that most impressed me as a child. A swathe, pulsating in venous green, a milky desert, crisscrossed with brittle capillaries and strewn with bony rocks. Beneath this tract was Janusz: his wondering eyes, penumbral sockets, and slithering hair.

 

When he summoned Dinah, his face erupted into creases, as wastelands do before the rain. “Go away, crazy one” – my grandma, Dinah’s mother, used to shout at him halfheartedly, as she shuttered the rickety windows. But even Janusz, who I, informed by hindsight, now know to have been really cracked – even he perceived my grandma’s protests as eccentrically veiled summonses.

 

Grinning, he would press his face against the frozen casement, his Hellenic nose made into a bulbous offering, befogged, only his toothy smile remains, then gone.

 

The Seder was often celebrated at my grandparents. Tables colluded under shimmering white clothes, bleached by my grandma in plastic vessels. Matzos and wine bottles served porcelain and crystal bowls with scarlet sparkles. My mother and my father observed, dejected, from the corners of the room, two strangers in an intimate occasion.

 

My parents, unloved, rejected by both progenitors and progeny, clinging together, having survived their families. With eyes downcast, hands sculpting breadcrumbs or folding and unfolding wrinkled napkins, they silently cruised through the night, tight-lipped and stiff.

 

It was an awry evening. My grandpa, drowsed by medication, ensconced in sleepy, torn pajamas, read the Haggadah perfunctorily. We devoured the food doled out by my grandma from steamy, leaden pots. We ate with bated silence, a choir of cutlery and chomp. Immersed in yellow lighting, we cast our shadows at each other. A tiny wooden bird sprang forth, recounting time from a cuckoo clock my father gifted to my grandparents.

 

Still silent, my grandma and my aunts began to clear the table, when Janusz implored Dinah, from the windowpane, to exit and meet him in the dusk. My grandmother didn’t utter a single syllable as she fastened the blinders in his face. Janusz whimpered. The stillness was only interrupted by the clattering plates and the whishing sounds of lacey aprons.

 

Until the door, forced open, let in a tremulous Janusz, his shoulders stooping, his head askance, filling the frame with writhing apprehension and zealous hope. The door – two planks adjoined with sawdust – protested but Janusz didn’t budge. His forehead sketched with rain-drenched hair, his eyes exuding watery anticipation, he stood there, sculpting with his twitchy hands an airy bust of Dinah. The odors of decaying food and festering sweat mingled with the crispness of the drizzle.

 

He tore her name from tortured chest: “DINAH!!!”

 

The women stifled a fearful shriek. The giant Janusz filled the room as he progressed in pilgrimage towards Dinah, his sinewy hands extended, the muscles rippling in his arms. There and then, we in the role of silent witnesses, he courted her, quoting from Kafka and Freud and Tolstoy. That night he called upon the spirits of his library, whose books he romanced on benches under all the lampposts in the township’s parks. He sang her arias and, for a moment, he carried her away from us. His reputation was cemented by this nocturnal recital. We didn’t understand a word he said, his music fell on arid ears.

 

My mother beseeched him softly, shocking us all:

 

“Go away, Janusz, Dinah is tired”.

 

It was the first thing she said that evening. She then stood up, stretching her pygmy frame, pinning on Janusz her kaleidoscopic brown-green gaze. Her hair braked, cropped, atop her shoulders. Janusz, taken aback, studied her as one would an exotic species. His hands, two violent spirals, breached desperately the musty air. My mother stepped up to him and, looking into befuddled eyes, she reiterated her pleading command:

 

“Go away, Janusz” – and, then, soothingly – “Dinah will see you tomorrow”.

 

Janusz’s body crumbled. His shoulders bowed, he took his glasses off, withdrew a patterned flannel shirt from his trousers and polished them meticulously. His lake-blue eyesight fluttered. He placed his eyecups back, forgetting to restore his attire.

 

“I only want to talk to her” – he protested tamely – “I only want to tell her to marry me because I love her”.

 

My mother nodded understandingly:

 

“This is not the time. You must go now. It is Passover, the Seder night, and you are intruding”.

 

He reciprocated miserably and retreated crab-like, sideways, afraid to turn his back on the hostile room.

 

Dinah watched him from the kitchen, numbed. She absentmindedly arranged her hair and tightened the dull apron around her narrow waist. She pulled her blouse to carve her breasts, and, to adjust her stocking, she stretched a bronzed and streamlined leg.

 

Janusz gulped these inadvertent sights, quenching a burgeoning lust.

 

My mother repeated with irrevocable finality:

 

“Goodbye, Janusz!”

 

Awakened and subdued, he headed for the exit.

 

Then Dinah exclaimed:

 

“Janusz, wait, I will come with you!”

 

She hurled the balled apron at us and went and flanked Janusz, provocatively linking arms with him. Janusz stiffened, eyes tensely shut, afraid to shatter this dream of Dinah by his side. My mother fired a glaucous look at her sister, turned her back effusively, and sank into her chair, deflated. Janusz extended one leg towards the exit and Dinah somnambulated after him. Thus, torturously, they vanished into the murky, thunderstruck, outside, leaving the door ajar to the rain sprays and ozone smell of a gathering storm.

 

All the adults commenced and ceased to speak at once. My grandfather snored, his breath deflected by his sprawling chin, fluttering among the white curls on his denuded chest. My grandma concealed him in a tattered afghan and sat beside him, fingering a bracelet helplessly. One of my uncles cleared his throat in bass, regretted this promised speech, and slumped into his chair. They all eyed my father, the oldest and most experienced among them. But he kept mum.

 

They sat there for a while. My father tore apart the shutters and squinted in a futile effort to discern something in the gloom. The streetlamps were few and far between and the tepid lighting of the Seder barely brightened the room’s far corners, let alone the alleyway.

 

The young ones dozed, bowing to soiled plates, their crumpled, stained, cloth bibs bobbing in a sea of matzo crumbs.

 

“Hard-headed” – muttered my grandma and my mother assented absentmindedly. Someone brought my grandma a glass of water. She dipped her lips and crusty tongue and smacked. “Maybe we should call the police” – ventured another uncle of mine, but we knew this was a non-starter.

 

Dinah got divorced in her early twenties, abandoned by her husband. She found refuge in her parents’ home and cared for them and for those of her siblings who still resided there. She scuffed the floor and scrubbed the dishes. In the evenings, she settled down, legs crossed beneath her wearily, gazing at life unfolding from the porch, puffing at a medley of fidgety cigarettes. She had the dead countenance of the introspective. We tiptoed around her and soothingly vilified her former husband to her face.

 

At first, she clung to life. She raised a son and daughter in the squalid quarters of her parents. But when her daughter succumbed to leukemia, she was a broken vessel. She shipped her son to a foster family in a Kibbutz and sought employment in a hospice for the terminally ill. There, among the dead and dying, she spent most of her time, often napping, in between shifts, in a bed still sweating of its former, now deceased, occupant. Or she would sprawl on an operating table, among blood spattered bandages and slabs of sanguinary flesh in overflowing buckets.

 

She rarely returned to her parents now, to assume her tiny chamber, with its monastic bed, and ramshackle dresser. She has not dated, neither has she been with a man since her divorce.

 

And now, this, into the night with the deranged and violent Janusz, who wastes his time on books, on public benches in twilight parks. What could he do to her?

 

“A beautiful woman is only trouble” – someone said and everyone hummed in consent.

 

“Poor Dinah” – sighed another aunt, summing in these three syllables her entire shriveling misery.

 

It was stuffy and men wiped foreheads with blemished handkerchiefs, doffing synthetic shirts imbrued with perspiration. Someone turned on the radio and off again. Others pressed frayed rags against the leaking window frames.

 

“She is not herself since Sima died” – my grandmother intoned in vacant words. No one mentioned Uzi, Dinah’s only son, my cousin, my friend, irrevocably adopted now. I thought to myself: Dinah may be sad on his account as well. No one suggested that she misses him as badly as she does her daughter and her husband, who deserted her, amidst this budding emptiness, without saying why.

 

Mother served a round of roasting, grainy coffee, in tiny demitasses. A symphony of smacking lips and groans of pleasure followed.

 

“What are we to do now?” – my grandma said, her voice monotonous, her fingers curled around the trimmings of her dress – “She eloped with this madman. What’s wrong with her? She has a handsome, clever child, a warm home, a steady job.”

 

My mother stared at her and then away. My uncle, Gabi, said: “There’s more to life than these.”

 

“What more is there to life?” – erupted my grandma, approaching him with scorching eyes – “What do you have in yours? Do you have a wife, a home, or children? Almost thirty years old and still a toddler, unemployed, subsisting on the marrow of this old man here …”

 

My uncle, springing to his feet, circumnavigated the table to face my grandma and then, his mind changed, he exited the house, banging the door behind him wrathfully.

 

“I also must go” – mumbled his younger brother awkwardly – “My friends are waiting. We are going to have us a good time in the square, we …” – and he ran out tearfully.

 

Mother peered at the orphaned coffee cups and sipped from hers. She poured my father some more, avoiding his searching gaze.

 

“Never works, he is killing his old man, destroying his life” – my grandma repeated disparagingly. My mother nodded.

 

My father said:

 

“The aluminum here must be painted, it’s all so rusty. I can do it for you on Saturday.”

 

No one responded. Someone flattened a mosquito between two palms and studied the bloodied outcome.

 

“It’s tough to be alone” – Aliza blurted – “She has no man and Sima dead and Uzi …”

 

“I am alone” – Nitzkhia countered.

 

“I hope she doesn’t do anything stupid” – my father cautioned no one in particular – “This Janusz is a nutcase.”

 

“He loves her” – Aliza said with wistful confidence – “He will not harm her.”

 

“The worst is when you love”- my mother said – “The worst crimes are passionate.”

 

She jumped to her feet and hurried to the kitchen to rid her dress of a budding coffee stain.

 

My father examined the shutters closely, unfurling them and back. “Stop that” – my mother sniped at him and he collapsed into his chair, embarrassed.

 

“It’s late” – Nitzkhia said – “Maybe we should fan out and look for Dinah”.

 

“She’ll be back” – my mother reassured her nervously, fighting a losing battle with the spot – “She has nowhere else to go. He shares the same room with his mother. She watches over him relentlessly. If you ask me, there is something unhealthy going on between these two. No wonder he is like that.”

 

“God” – exhaled my grandma – “I hate to imagine what the neighbors will invent: the two, alone, on the Seder night, in a public park…”

 

“He is a good person, this poor guy, he wouldn’t harm a fly, how could anyone believe that they …together … I am not sure he could do it even if he knew what to do …” – Aliza laughed heartily, exposing equine teeth, and waving back a mane of waning blonde.

 

Everyone brayed and then earnestness reasserted itself. Dinah still hasn’t returned and she was out there, with Janusz.

 

“I have cookies in sugar or in honey” – my grandma chuntered and motioned to the kitchen listlessly. My mother and Aliza rushed to fetch two outsized bowls containing triangular pastry floating in a golden syrupy lake.

 

“I still think that we should go out and look for her” – Nitzkhia insisted dreamily.

 

“Let’s start to clear the table” – my mother instructed me and my sister. We helped her carry greasy plates and cutlery and shapeless napkins to the kitchen and pile them there indiscriminately. Mother rolled up her sleeves, donned a checkered pinafore, and started to scour away the evening with minimal, efficient moves.

 

“Mother” – I said meekly – “we haven’t sung the Passover hymns”.

 

She rinsed the dishes emphatically and used a drab cloth towel to dry them.

 

“Mother” – I persisted – “It is not the same without the signing”. I liked to chime in and yodel the refrains.

 

“Well, I think we will be on our way now” – I heard Aliza from the other room. Nitzkhia had nowhere to go back to, she lived with my grandfather and grandmother.

 

“Mother” – I was panicky now, but I knew not why – “Gabi and Itsik have gone and now Aliza, too! No one is left!”

 

My mother froze and then, bending towards me, she tousled my hair, her hand all wet and soapy.

 

I shut my eyes and opened them repeatedly to repel her rivulets of stinging water. I was crying now and my sobbing swelled in me and I was swept in frazzled tremulousness, wiping my running nose on the back of a sullied hand. My younger sister retreated to the corner, kneeling, and sniveled inaudibly.

 

Mother just stood there, hands airborne, observing us in anxious helplessness. She tried to utter something but it came out a feeble “Don’t you cry now, children”. My father glided from the adjacent room and leaned a naked, bronze, shoulder on the doorframe, his face a sad and distant mask.

 

“Why are they crying?” – he enquired no one in particular.

 

“Because we didn’t sing the Passover hymns” – my mother countered in a stifled voice.

 

Father knelt and cradled me in his arms. He embarked on a monotonous Moroccan tune, until my tears subsided and, enraptured by the distant melody, I fell silent. I joined him in a seamless medley of Passover hymns, my voice lachrymose and screeching. My mother reverted to her chores by the basin and Sima, my sister, absorbed it all in her usual mousy taciturnity.

 

Father held my hand in his spacious, warm palm and led me back to the table, chanting all the way and rhythmically pressing my flesh, spurring me on to join him. We were the only two singing, now in hushed voices, not to wake my grandpa. My sister climbed onto my father’s knee, her scalp safely ensconced in his moustache, head nodding to her chest, eyelids undulating dreams.

 

“We are going” – reiterated Aliza. She arose and straightened an erstwhile festive dress. As she was circling the table, Dinah barged in and hesitated by the threshold, prodded inside by the rain that drenched us all. An invisible hand shut the door behind her.

 

She was soaked, her hair in ropy waterfalls, her clothes an aqueous pulp, her wide feet bare. She gravitated towards a vacant chair and folded, planted in a swelling puddle.

 

My mother, exiting the kitchen, stared at her, alarmed.

 

“Where were you?” – demanded my grandmother bleakly.

 

Dinah shrugged. “We strolled in the public park. We walked a lot. He talked to me. His speech is beautiful, like a gentleman’s. He is wise and erudite. He speaks six languages.”

 

“Then he is definitely not for you” – my grandma interrupted rudely – “We have enough whackos in the family.”

 

Dinah shivered. “He is not a whacko, don’t call him that!”

 

My mother served her scalding coffee and my grandmother kept mumbling crabbily: “He is not for you, Donna. You forget about him this very instant!”

 

Dinah sipped the beverage, her eyes occluding pleasurably. She unwrapped them, green and crystalline, and said: “It all remains to be seen. It all remains to be seen.”

 

My grandma grumbled despondently and gestured dismissively at Dinah’s optimism: “As you have ill-chosen your first one, so shall you cherry-pick your second one, no doubt. Good for nothings. Only trouble and heartbreak await you.”

 

And my mother said:

 

“Come children, let us go home. This is an adult conversation” – as she fired a cautionary glance at the interlocutors.

 

“Let them sleep in my room” – Dinah said – “Sometimes even adults have to talk.”

 

“We all eat what we cook” – my mother sniggered – “Dating someone like that is like laying your bed with sheets of misfortune and blankets of unhappiness. Just don’t come to us complaining that we haven’t forewarned you.”

 

“I never came to you for anything, let alone complaining” – retorted Dinah bitterly – “And not that I had nothing to complain about.”

 

“What now?” – Aliza asked, still on her ostensible way out – “What have you decided?”

 

“What is there to decide after one evening together?” – riposted Dinah.

 

“Will you go on seeing him?” – Nitzkhia challenged her.

 

“I think I will.” – responded Dinah ponderously – “I had a pleasant and interesting time tonight. He is a charming man and I don’t care how he appears to you.”

 

“He is insane” – my grandma groaned – “And you are even nuttier if you consider dating him again. In any case, you are through with us. Take your belongings and let us see the last of you if you intend to follow through with this disgrace.”
 

Dinah trembled, chewing on her upper lip to refrain from crying. “You would have not spoken like that if daddy were awake.” – she spluttered.

 

“You heard me?” – my grandma sniped at her, coughing and massaging her chest, fending off an imminent demise – “From tomorrow, find yourself another place!”

 

A distant mannish voice trilled opera arias. It approached, bathing the room and us, and Janusz knocked on the wooden shutters and called:

 

“Dinah, can I tell you something?”

 

And again:

 

“Dinah, can you come out for a moment?”

 

A tentative knock.

 

Dinah half-arose, supported by the armrests.

 

“Dinah?” – Janusz’s voice, astounded, invaded by its onetime stutter – “Do you hear me? Are you there?”
 

My grandmother fixated Dinah with a tocsin look. Dinah stumbled towards the door, entranced, her hand extended, her mouth agape but speechless. She then sealed both her eyes and mouth and, thus, stood frozen, heaving imperceptibly.

 

“Dinah” – spurted Janusz – “I love you, I have always loved you, don’t be cruel to me, I just want to tell you one little thing, one minute of your life, make it one second” – he paused and then – “I respect you greatly. We can talk through the window curtains. You do not have to come out to me.”

 

Two tearful tributaries, two becks of salty rain, carved up Dinah’s features. She returned to her seat, burying her oval countenance in futile hands.

 

Sighing deeply, my grandma neared the window. She propped herself against the soggy panes and through the fastened blinds she bellowed:

 

“Go away! Away from here, you crazy fool!”

Read the Hebrew Original

Sam Vaknin

Back to Table of Contents

Download Free Anthologies

Poetry of Healing and Abuse

Journal of a Narcissist

Malignant Self Love Narcissism Revisited

After the Rain How the West Lost the East

A World in Conflict and Transition

 

 

postamble();

Female Narcissists – Gender and the Narcissist

Question:

Are female narcissists any different? You seem to talk only about male narcissists!

Answer:

I keep using the male third person singular because most narcissists (75%) are males and more so because there is little difference between the male and female narcissists.

In the manifestation of their narcissism, female and male narcissists, inevitably, do tend to differ. They emphasise different things. They transform different elements of their personalities and of their lives into the cornerstones of their disorder.

Women concentrate on their body (many also suffer from eating disorders: Anorexia Nervosa and Bulimia Nervosa). They flaunt and exploit their physical charms, their sexuality, their socially and culturally determined “femininity”. They secure their Narcissistic Supply through their more traditional gender role: the home, children, suitable careers, their husbands (“the wife of…”), their feminine traits, their role in society, etc.

It is no wonder than narcissists – both men and women – are chauvinistic and conservative. They depend to such an extent on the opinions of people around them – that, with time, they are transformed into ultra-sensitive seismographs of public opinion, barometers of prevailing social fashions, and guardians of conformity. The narcissist cannot afford to seriously alienate his “constituency”, those people who reflect his False Self back to him. The very proper and on-going functioning of the narcissist’s Ego depends on the goodwill and the collaboration of his human environment.

True, besieged and consumed by pernicious guilt feelings – many a narcissist finally seek to be punished. The self-destructive narcissist then plays the role of the “bad guy” (or “bad girl”). But even then it is within the traditional socially allocated roles. To ensure social opprobrium (read: attention), the narcissist exaggerates these roles to a caricature.

A woman is likely to label herself a “whore” and a male narcissist to self-style himself a “vicious, unrepentant criminal”. Yet, these again are traditional social roles. Men are likely to emphasise intellect, power, aggression, money, or social status. Women are likely to emphasise body, looks, charm, sexuality, feminine “traits”, homemaking, children and childrearing – even as they seek their masochistic punishment.

Another difference is in the way the genders react to treatment. Women are more likely to resort to therapy because they are more likely to admit to psychological problems. But while men may be less inclined to DISCLOSE or to expose their problems to others (the macho-man factor) – it does not necessarily imply that they are less prone to admit it to themselves. Women are also more likely to ask for help than men.

Yet, the prime rule of narcissism must never be forgotten: the narcissist uses everything around him or her to obtain his (or her) Narcissistic Supply. Children happen to be more attached to the female narcissist due to the way our society is still structured and to the fact that women are the ones to give birth. It is easier for a woman to think of her children as her extensions because they once indeed were her physical extensions and because her on-going interaction with them is both more intensive and more extensive.

This means that the male narcissist is more likely to regard his children as a nuisance than as a source of rewarding Narcissist Supply – especially as they grow older and become autonomous. Devoid of the diversity of alternatives available to men – the narcissistic woman fights to maintain her most reliable Source of Supply: her children. Through insidious indoctrination, guilt formation, emotional sanctions, deprivation and other psychological mechanisms, she tries to induce in them a dependence, which cannot be easily unravelled.

But, there is no psychodynamic difference between children, money, or intellect, as Sources of Narcissistic Supply. So, there is no psychodynamic difference between male and female narcissist. The only difference is in their choices of Sources of Narcissistic Supply.

There are mental disorders, which afflict a specific sex more often. This has to do with hormonal or other physiological dispositions, with social and cultural conditioning through the socialisation process, and with role assignment through the gender differentiation process. None of these seem to be strongly correlated to the formation of malignant narcissism. The Narcissistic Personality Disorder (as opposed, for instance, to the Borderline or the Histrionic Personality Disorders, which afflict women more than men) seems to conform to social mores and to the prevailing ethos of capitalism. Social thinkers like Lasch speculated that modern American culture – a narcissistic, self-centred one – increases the rate of incidence of the Narcissistic Personality Disorder. As Kernberg observed:

“The most I would be willing to say is that society can make serious psychological abnormalities, which already exist in some percentage of the population, seem to be at least superficially appropriate.”


Quotes from the Literature

“Specifically, past research suggests that exploitive tendencies and open displays of feelings of entitlement will be less integral to narcissism for females than for males. For females such displays may carry a greater possibility of negative social sanctions because they would violate stereotypical gender-role expectancies for women, who are expected to engage in such positive social behavior as being tender, compassionate, warm, sympathetic, sensitive, and understanding.

In females, Exploitiveness/Entitlement is less well-integrated with the other components of narcissism as measured by the Narcissistic Personality Inventory (NPI) – Leadership/Authority, Self-absorption/Self-admiration, and Superiority/Arrogance- than in males – though ‘male and female narcissists in general showed striking similarities in the manner in which most of the facets of narcissism were integrated with each other’.”

Gender differences in the structure of narcissism: a multi-sample analysis of the narcissistic personality inventory – Brian T. Tschanz, Carolyn C. Morf, Charles W. Turner – Sex Roles: A Journal of Research – Issue: May, 1998

“Women leaders are evaluated negatively if they exercise their authority and are perceived as autocratic.”

Eagly, A. H., Makhijani, M. G., & Klonsky, B. G. (1992). Gender and the evaluation of leaders: A meta-analysis. Psychological Bulletin, 111, 3-22, and …

Butler, D., & Gels, F. L. (1990). Nonverbal affect responses to male and female leaders: Implications for leadership evaluations. Journal of Personality and Social Psychology, 58, 48-59.

“Competent women must also appear to be sociable and likable in order to influence men – men must only appear to be competent to achieve the same results with both genders.”

Carli, L. L., Lafleur, S. J., & Loeber, C. C. (1995). Nonverbal behavior, gender, and influence. Journal of Personality and Social Psychology, 68, 1030-1041.


Also Read

Gender and Personality Disorders

Collective Narcissism

The Narcissist and His Family

Narcissism with Other Mental Health Disorders  

The Natural Roots of Sexuality

The Homosexual Narcissist

The Roots of Pedophilia

Sex and Gender

The Savings and Loans Associations Bailout

Asset bubbles – in the stock exchange, in the real estate or the commodity markets – invariably burst and often lead to banking crises. One such calamity struck the USA in 1986-1989. It is instructive to study the decisive reaction of the administration and Congress alike. They tackled both the ensuing liquidity crunch and the structural flaws exposed by the crisis with tenacity and skill. Compare this to the lackluster and hesitant tentativeness of the current lot. True, the crisis – the result of a speculative bubble – concerned the banking and real estate markets rather than the capital markets. But the similarities are there.

The savings and loans association, or the thrift, was a strange banking hybrid, very much akin to the building society in Britain. It was allowed to take in deposits but was really merely a mortgage bank. The Depository Institutions Deregulation and Monetary Control Act of 1980 forced S&L’s to achieve interest parity with commercial banks, thus eliminating the interest ceiling on deposits which they enjoyed hitherto.

But it still allowed them only very limited entry into commercial and consumer lending and trust services. Thus, these institutions were heavily exposed to the vicissitudes of the residential real estate markets in their respective regions. Every normal cyclical slump in property values or regional economic shock – e.g., a plunge in commodity prices – affected them disproportionately.

Interest rate volatility created a mismatch between the assets of these associations and their liabilities. The negative spread between their cost of funds and the yield of their assets – eroded their operating margins. The 1982 Garn-St. Germain Depository Institutions Act encouraged thrifts to convert from mutual – i.e., depositor-owned – associations to stock companies, allowing them to tap the capital markets in order to enhance their faltering net worth.

But this was too little and too late. The S&L’s were rendered unable to further support the price of real estate by rolling over old credits, refinancing residential equity, and underwriting development projects. Endemic corruption and mismanagement exacerbated the ruin. The bubble burst.

Hundreds of thousands of depositors scrambled to withdraw their funds and hundreds of savings and loans association (out of a total of more than 3,000) became insolvent instantly, unable to pay their depositors. They were besieged by angry – at times, violent – clients who lost their life savings.

The illiquidity spread like fire. As institutions closed their gates, one by one, they left in their wake major financial upheavals, wrecked businesses and homeowners, and devastated communities. At one point, the contagion threatened the stability of the entire banking system.

The Federal Savings and Loans Insurance Corporation (FSLIC) – which insured the deposits in the savings and loans associations – was no longer able to meet the claims and, effectively, went bankrupt. Though the obligations of the FSLIC were never guaranteed by the Treasury, it was widely perceived to be an arm of the federal government. The public was shocked. The crisis acquired a political dimension.

A hasty $300 billion bailout package was arranged to inject liquidity into the shriveling system through a special agency, the FHFB. The supervision of the banks was subtracted from the Federal Reserve. The role of the Federal Deposit Insurance Corporation (FDIC) was greatly expanded.

Prior to 1989, savings and loans were insured by the now-defunct FSLIC. The FDIC insured only banks. Congress had to eliminate FSLIC and place the insurance of thrifts under FDIC. The FDIC kept the Bank Insurance Fund (BIF) separate from the Savings Associations Insurance Fund (SAIF), to confine the ripple effect of the meltdown.

The FDIC is designed to be independent. Its money comes from premiums and earnings of the two insurance funds, not from Congressional appropriations. Its board of directors has full authority to run the agency. The board obeys the law, not political masters. The FDIC has a preemptive role. It regulates banks and savings and loans with the aim of avoiding insurance claims by depositors.

When an institution becomes unsound, the FDIC can either shore it up with loans or take it over. If it does the latter, it can run it and then sell it as a going concern, or close it, pay off the depositors and try to collect the loans. At times, the FDIC ends up owning collateral and trying to sell it.

Another outcome of the scandal was the Resolution Trust Corporation (RTC). Many savings and loans were treated as “special risk” and placed under the jurisdiction of the RTC until August 1992. The RTC operated and sold these institutions – or paid off the depositors and closed them. A new government corporation (Resolution Fund Corporation, RefCorp) issued federally guaranteed bailout bonds whose proceeds were used to finance the RTC until 1996.

The Office of Thrift Supervision (OTS) was also established in 1989 to replace the dismantled Federal Home Loan Board (FHLB) in supervising savings and loans. OTS is a unit within the Treasury Department, but law and custom make it practically an independent agency.

The Federal Housing Finance Board (FHFB) regulates the savings establishments for liquidity. It provides lines of credit from twelve regional Federal Home Loan Banks (FHLB). Those banks and the thrifts make up the Federal Home Loan Bank System (FHLBS). FHFB gets its funds from the System and is independent of supervision by the executive branch.

Thus a clear, streamlined, and powerful regulatory mechanism was put in place. Banks and savings and loans abused the confusing overlaps in authority and regulation among numerous government agencies. Not one regulator possessed a full and truthful picture. Following the reforms, it all became clearer: insurance was the FDIC’s job, the OTS provided supervision, and liquidity was monitored and imparted by the FHLB.

Healthy thrifts were coaxed and cajoled to purchase less sturdy ones. This weakened their balance sheets considerably and the government reneged on its promises to allow them to amortize the goodwill element of the purchase over 40 years. Still, there were 2,898 thrifts in 1989. Six years later, their number shrank to 1,612 and it stands now at less than 1,000. The consolidated institutions are bigger, stronger, and better capitalized.

Later on, Congress demanded that thrifts obtain a bank charter by 1998. This was not too onerous for most of them. At the height of the crisis the ratio of their combined equity to their combined assets was less than 1%. But in 1994 it reached almost 10% and remained there ever since.

This remarkable turnaround was the result of serendipity as much as careful planning. Interest rate spreads became highly positive. In a classic arbitrage, savings and loans paid low interest on deposits and invested the money in high yielding government and corporate bonds. The prolonged equity bull market allowed thrifts to float new stock at exorbitant prices.

As the juridical relics of the Great Depression – chiefly amongst them, the Glass-Steagall Act – were repealed, banks were liberated to enter new markets, offer new financial instruments, and spread throughout the USA. Product and geographical diversification led to enhanced financial health.

But the very fact that S&L’s were poised to exploit these opportunities is a tribute to politicians and regulators alike – though except for setting the general tone of urgency and resolution, the relative absence of political intervention in the handling of the crisis is notable. It was managed by the autonomous, able, utterly professional, largely a-political Federal Reserve. The political class provided the professionals with the tools they needed to do the job. This mode of collaboration may well be the most important lesson of this crisis.


Also Read

The Greatest Savings Crisis in History

The Typology of Financial Scandals

The Shadowy World of International Finance

Hawala, or the Bank that Never Was

Money Laundering in a Changed World

The Varieties of Corruption

Corruption and Transparency

Straf – Corruption in CEE

The Criminality of Transition

The Kleptocracies of the East

The Enrons of the East

Bully at Work – Interview with Tim Field

The Economics of Conspiracy Theories

The Industrious Spies

The Business of Torture

Fimaco Wouldn’t Die – Russia’s Missing Billions

Treasure Island Revisited – Maritime Piracy

Organ Trafficking in Eastern Europe

Begging Your Trust in Africa

Slush Funds

The Bursting Asset Bubbles

The recent implosion of the global equity markets – from Hong Kong to New York – engendered yet another round of the semipternal debate: should central banks contemplate abrupt adjustments in the prices of assets – such as stocks or real estate – as they do changes in the consumer price indices? Are asset bubbles indeed inflationary and their bursting deflationary?

Central bankers counter that it is hard to tell a bubble until it bursts and that market intervention bring about that which it is intended to prevent. There is insufficient historical data, they reprimand errant scholars who insist otherwise. This is disingenuous. Ponzi and pyramid schemes have been a fixture of Western civilization at least since the middle Renaissance.

Assets tend to accumulate in “asset stocks”. Residences built in the 19th century still serve their purpose today. The quantity of new assets created at any given period is, inevitably, negligible compared to the stock of the same class of assets accumulated over decades and, sometimes, centuries. This is why the prices of assets are not anchored – they are only loosely connected to their production costs or even to their replacement value.

Asset bubbles are not the exclusive domain of stock exchanges and shares. “Real” assets include land and the property built on it, machinery, and other tangibles. “Financial” assets include anything that stores value and can serve as means of exchange – from cash to securities. Even tulip bulbs will do.

In 1634, in what later came to be known as “tulipmania”, tulip bulbs were traded in a special marketplace in Amsterdam, the scene of a rabid speculative frenzy. Some rare black tulip bulbs changed hands for the price of a big mansion house. For four feverish years it seemed like the craze would last forever. But the bubble burst in 1637. In a matter of a few days, the price of tulip bulbs was slashed by 96%!

Uniquely, tulipmania was not an organized scam with an identifiable group of movers and shakers, which controlled and directed it. Nor has anyone made explicit promises to investors regarding guaranteed future profits. The hysteria was evenly distributed and fed on itself. Subsequent investment fiddles were different, though.

Modern dodges entangle a large number of victims. Their size and all-pervasiveness sometimes threaten the national economy and the very fabric of society and incur grave political and social costs.

There are two types of bubbles.

Asset bubbles of the first type are run or fanned by financial intermediaries such as banks or brokerage houses. They consist of “pumping” the price of an asset or an asset class. The assets concerned can be shares, currencies, other securities and financial instruments – or even savings accounts. To promise unearthly yields on one’s savings is to artificially inflate the “price”, or the “value” of one’s savings account.

More than one fifth of the population of 1983 Israel were involved in a banking scandal of Albanian proportions. It was a classic pyramid scheme. All the banks, bar one, promised to gullible investors ever increasing returns on the banks’ own publicly-traded shares.

These explicit and incredible promises were included in prospectuses of the banks’ public offerings and won the implicit acquiescence and collaboration of successive Israeli governments. The banks used deposits, their capital, retained earnings and funds illegally borrowed through shady offshore subsidiaries to try to keep their impossible and unhealthy promises. Everyone knew what was going on and everyone was involved. It lasted 7 years. The prices of some shares increased by 1-2 percent daily.

On October 6, 1983, the entire banking sector of Israel crumbled. Faced with ominously mounting civil unrest, the government was forced to compensate shareholders. It offered them an elaborate share buyback plan over 9 years. The cost of this plan was pegged at $6 billion – almost 15 percent of Israel’s annual GDP. The indirect damage remains unknown.

Avaricious and susceptible investors are lured into investment swindles by the promise of impossibly high profits or interest payments. The organizers use the money entrusted to them by new investors to pay off the old ones and thus establish a credible reputation. Charles Ponzi perpetrated many such schemes in 1919-1925 in Boston and later the Florida real estate market in the USA. Hence a “Ponzi scheme”.

In Macedonia, a savings bank named TAT collapsed in 1997, erasing the economy of an entire major city, Bitola. After much wrangling and recriminations – many politicians seem to have benefited from the scam – the government, faced with elections in September, has recently decided, in defiance of IMF diktats, to offer meager compensation to the afflicted savers. TAT was only one of a few similar cases. Similar scandals took place in Russia and Bulgaria in the 1990’s.

One third of the impoverished population of Albania was cast into destitution by the collapse of a series of nation-wide leveraged investment plans in 1997. Inept political and financial crisis management led Albania to the verge of disintegration and a civil war. Rioters invaded police stations and army barracks and expropriated hundreds of thousands of weapons.

Islam forbids its adherents to charge interest on money lent – as does Judaism. To circumvent this onerous decree, entrepreneurs and religious figures in Egypt and in Pakistan established “Islamic banks”. These institutions pay no interest on deposits, nor do they demand interest from borrowers. Instead, depositors are made partners in the banks’ – largely fictitious – profits. Clients are charged for – no less fictitious – losses. A few Islamic banks were in the habit of offering vertiginously high “profits”. They went the way of other, less pious, pyramid schemes. They melted down and dragged economies and political establishments with them.

By definition, pyramid schemes are doomed to failure. The number of new “investors” – and the new money they make available to the pyramid’s organizers – is limited. When the funds run out and the old investors can no longer be paid, panic ensues. In a classic “run on the bank”, everyone attempts to draw his money simultaneously. Even healthy banks – a distant relative of pyramid schemes – cannot cope with such stampedes. Some of the money is invested long-term, or lent. Few financial institutions keep more than 10 percent of their deposits in liquid on-call reserves.

Studies repeatedly demonstrated that investors in pyramid schemes realize their dubious nature and stand forewarned by the collapse of other contemporaneous scams. But they are swayed by recurrent promises that they could draw their money at will (“liquidity”) and, in the meantime, receive alluring returns on it (“capital gains”, “interest payments”, “profits”).

People know that they are likelier to lose all or part of their money as time passes. But they convince themselves that they can outwit the organizers of the pyramid, that their withdrawals of profits or interest payments prior to the inevitable collapse will more than amply compensate them for the loss of their money. Many believe that they will succeed to accurately time the extraction of their original investment based on – mostly useless and superstitious – “warning signs”.

While the speculative rash lasts, a host of pundits, analysts, and scholars aim to justify it. The “new economy” is exempt from “old rules and archaic modes of thinking”. Productivity has surged and established a steeper, but sustainable, trend line. Information technology is as revolutionary as electricity. No, more than electricity. Stock valuations are reasonable. The Dow is on its way to 33,000. People want to believe these “objective, disinterested analyses” from “experts”.

Investments by households are only one of the engines of this first kind of asset bubbles. A lot of the money that pours into pyramid schemes and stock exchange booms is laundered, the fruits of illicit pursuits. The laundering of tax-evaded money or the proceeds of criminal activities, mainly drugs, is effected through regular banking channels. The money changes ownership a few times to obscure its trail and the identities of the true owners.

Many offshore banks manage shady investment ploys. They maintain two sets of books. The “public” or “cooked” set is made available to the authorities – the tax administration, bank supervision, deposit insurance, law enforcement agencies, and securities and exchange commission. The true record is kept in the second, inaccessible, set of files.

This second set of accounts reflects reality: who deposited how much, when and subject to which conditions – and who borrowed what, when and subject to what terms. These arrangements are so stealthy and convoluted that sometimes even the shareholders of the bank lose track of its activities and misapprehend its real situation. Unscrupulous management and staff sometimes take advantage of the situation. Embezzlement, abuse of authority, mysterious trades, misuse of funds are more widespread than acknowledged.

The thunderous disintegration of the Bank for Credit and Commerce International (BCCI) in London in 1991 revealed that, for the better part of a decade, the executives and employees of this penumbral institution were busy stealing and misappropriating $10 billion. The Bank of England’s supervision department failed to spot the rot on time. Depositors were – partially – compensated by the main shareholder of the bank, an Arab sheikh. The story repeated itself with Nick Leeson and his unauthorized disastrous trades which brought down the venerable and veteran Barings Bank in 1995.

The combination of black money, shoddy financial controls, shady bank accounts and shredded documents renders a true account of the cash flows and damages in such cases all but impossible. There is no telling what were the contributions of drug barons, American off-shore corporations, or European and Japanese tax-evaders – channeled precisely through such institutions – to the stratospheric rise in Wall-Street in the last few years.

But there is another – potentially the most pernicious – type of asset bubble. When financial institutions lend to the unworthy but the politically well-connected, to cronies, and family members of influential politicians – they often end up fostering a bubble. South Korean chaebols, Japanese keiretsu, as well as American conglomerates frequently used these cheap funds to prop up their stock or to invest in real estate, driving prices up in both markets artificially.

Moreover, despite decades of bitter experiences – from Mexico in 1982 to Asia in 1997 and Russia in 1998 – financial institutions still bow to fads and fashions. They act herd-like in conformity with “lending trends”. They shift assets to garner the highest yields in the shortest possible period of time. In this respect, they are not very different from investors in pyramid investment schemes.


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