NoahBrier.com

Hitler and the Capacity for Evil

Sun, 30 Nov 2008 21:36:50 +0000

What started out as a link to an article about people's desire to dehumanize Hitler turns to a long entry on what makes people evil.

Over the last few weeks you may have run across the story that Hitler only had one testicle. Anyway, Ron Rosenbaum, author of Explaining Hitler: The Search for the Origins of His Evil (which I haven't read), had a really interesting article on Slate which basically suggested that people's fascination with Hitler's sexuality is little more than an attempt to explain him as something other than a normal human being who performed unbelievable atrocities.

As Rosenbaum puts it, "Isn't it obvious by now what this is about? Our need to prove that Hitler was not 'normal,' thus not like us, normal human nature thereby exculpated from producing a Hitler. It fills a need to reassure ourselves there is no Hitler potential in human potential. We're off the hook."

Anyway, I got to thinking about Hitler and the capacity for evil in people. As The Stanford Prison Experiment showed, even regular folks can turn to the dark side quite quickly. Of course whenever we talk about someone who's done terrible things, we talk about their past and the thing that "screwed them up." But who's to say that's what turned them? As I wrote in a post on predictions that "A clue is only a clue if it helps solve a mystery, afterwards it becomes explanation, equally important (for our psyche) but a very different beast."

Who is to say that we don't post-rationalize these people's past as the reason they did what they did in order to satiate our own need for them to be "different"? I actually just got finished watching Phillip Zimbardo's TED talk on what he calls The Lucifer Effect (which is essentially how good people go bad). Zimbardo is most famous for The Stanford Prison Experiment which took regular college kids and split them into prisoners and guards, turning the basement of the psychology building into a makeshift prison. What happened over the next few days was horrifying as these kids who had been chosen for their stability began to abuse the "prisoners". The two-week experiment was stopped after 6 days because of how crazy things had gotten. (The whole documentary is up on Google video, though I haven't watched it yet.)

Anyway, Zimbardo makes a bunch of interesting points in his talk which revolves around both the experiment and what went on at Abu Ghraib. He begins by explaining what drove him into his area of study, "That line between good and evil, which privileged people like to think is fixed and impermeable, with them on the good side and the others on the bad side, I knew that line was movable and it was permeable." That, ultimately is the point (and his big one). People aren't evil or good, they're put in situations and they act and eventually their behavior is judged as one or the other.

Zimbardo sums up the point with this excellent New Yorker cartoon, which features two men in a police interrogation room and the caption, "I'm neither a good cop nor a bad cop, Jerome. Like yourself, I'm a complex amalgam of positive and negative personality traits that emerge or not, depending on circumstances."

Also included in his talk is reference to the other famous experiment that points to people's ability to do evil, Stanley Milgram's shock studies of the 1960s, which the New York Times describes as "a series of about 20 experiments, [in which] hundreds of decent, well-intentioned people agreed to deliver what appeared to be increasingly painful electric shocks to another person, as part of what they thought was a learning experiment. The 'learner' was in fact an actor, usually seated out of sight in an adjacent room, pretending to be zapped." While the same article points out it's hard to extrapolate the findings of these studies to either the Holocaust or Abu Ghraib, it also points out the enduring interest in the studies as a barometer for their importance.

In discussing them, Zimbardo makes a few key points, the most important of which was that "all evil starts at 15 volts" (the machines went all the way to 450 volts, which only 1/3 of participants refused to push). In other words, thinking of these transformations as immediate are wrong. People are not like Clark Kent, jumping into a phone booth to turn into Superman at the sight of evil. Rather they're more like the drunk guy dancing around the bar, mild-mannered when he arrived, slightly slurring an hour later, visibly drunk after two and making a complete fool of himself after four. It's a slow process which is dependent on a number of circumstances, most important of which is lack of intervention.

That intervention, Zimbardo points out, is actually what makes a hero. A hero, he explains, is the person who does what nothing else would do. In fact, he points out, heroes are deviants since they're acting against the will of the group.

All of this has become a fairly long-winded way of saying that I think it's a better thing for the future of humanity that people accept and acknowledge that anyone can be evil instead of trying to find the fatal flaw that "turned someone." As Dostoevsky wrote (at least according to Zimbardo), "Nothing is easier than to denounce the evildoer; nothing is more difficult than to understand him." Maybe in understanding we can be a bit more self aware and hopefully be able to catch ourselves when we're caught up in a mob.

Update (12/1/08): After having a conversation with my mom this morning, I wanted to clarify something: There are genuinely crazy people who kill folks and do terrible things. Schizophrenia and other psychological problems are very real and can cause people to do totally crazy things. There are also folks who join the herd, like the trampling at WalMart or even the Germans who followed Hitler. These are people who get caught up in the moment/follow instructions and this is what most of the research from Zimbardo and Milgram is about. Then there are people like Hitler. By all accounts he was neither clinically crazy nor following anyone else's lead. He was a person who hated a group of people and wanted them dead. Of course he probably got caught up in his own power, but the bottom line (and the point I was trying to make) was that he seems to have been a regular person other than that. That's important to understand and acknowledge because it forces us all to acknowledge the capacity for extreme hatred in us.

Advertising vs Reality

Fri, 28 Nov 2008 04:27:00 +0000

Awesome collection of photos of product packaging photos versus what the food actually looks like. Unfortunately it's all in German, but you can still click around and get the drift.

Not for nothing, but someone should either a) turn this into a blog or b) turn this into a book.

via i [love] marketing.

COMMENTS OPEN

Making New York Undrivable

Fri, 28 Nov 2008 03:51:24 +0000

So I've got this theory that because Bloomberg had his congestion tax shot down he's decided to make New York as uninhabitable as possible for drivers. This includes turning busy intersections into parks and turning one of two lanes on the incredibly busy Broadway into a bus only lane. As an inhabitant of Soho (roughly), I've been particularly interested in the bus thing as I've both watched countless people get ticketed while walking to work and been annoyed while in a cab that they wouldn't just pull into the right lane and speed past traffic (because they were afraid of said tickets).

Anyway, I was writing all this because I just saw this New York Times breakdown on parking tickets given and discovered that 10,997 tickets were given on that stretch of one-lane Broadway, but then I realized that parking tickets and traffic tickets were different. Even so, it's a lot of tickets and in total, there were 9,955,441 parking tickets given out in New York City between July 2007 to June 2008 (which is a Holy Crap Fact I believe).

via tecznotes

COMMENTS OPEN

Spreading Against Your Will

Thu, 27 Nov 2008 17:38:50 +0000

Some thoughts on viral ideas that spread without the consent of their hosts.

The "viral is a dumb name for media that spreads" is hardly a new conversation, but Faris summed it up quite nicely the other day, explaining that viruses spread without the consent of the host. Viral marketing, on the other hand, is different. "LOTS OF PEOPLE CHOOSE TO PROPAGATE IT. It requires people to do something. Voluntarily. For their own reasons. It is not simply a new way to broadcast our messages through populations. It suggests we push, when in fact they pull."

But then I read something about the Sarah Palin turkey murder interview and got to thinking. New York Magazine's Daily Intel blog wrote that the cameraman told Palin and her aides of what was going on in the background and they said, "no worries." As the Daily Intel wrote, "It’s been speculated that Palin would have trouble staying in the national spotlight until 2012 while holed away up in Alaska, where news travels by sled dog and darkness shrouds the land for months at a time. But this video proves that Palin knows exactly how to continue to attract attention: Take a normally mundane gubernatorial event like a turkey pardon, Palin it up with something irresistible to the elite east-coast liberal media, and watch the coverage follow."

This, I'd argue, is actually closer to the way viruses spread. People and media are sharing this video not because they like the message, but because they're so amazed by what's going on. It's almost like they're doing it against their will. (As my sister put it, it's kind of like watching a car crash.) Think of political combat generally and this is how things work. When the republicans started the Bill Ayers thing, for instance, the hope was that they'd get everyone talking about it. Even the people who were saying how terrible it was to try and connect Obama and Ayers were actually pushing forward the republican cause, further cementing a connection between terrorism and Obama.

I recently watched Boogie Man: The Lee Atwater Story and this is precisely the kind of politics he created. One of the more famous moves was in making Willie Horton a household name (here's a clip from Boogie Man about it). While the world argued about the ad, the final outcome was that, as Atwater had apparently predicted, the country knew Horton's name (and presumably connected it with Dukakis) by the end of the campaign. The Obama/Muslim connection was similar in that even when people on the left argued how ridiculous it was they were still spreading the idea.

Basically the best way to fight this kind of behavior is to not talk about it. But most people can't help themselves. To give one more political example, remember September when everybody could talk about nothing but Sarah Palin? While democrats were panning her as an inexperienced choice they were still pushing her further into the collective consciousness (and I would guess making her seem more experienced: After all, how could you be famous and inexperienced?)

In a non-political sphere, think about Wired's blogging is dead article and the firestorm it created. Most of what I read was disagreeing with the idea, but in the process they were also strengthening the meme (both from a pagerank and collective consciousness perspective). While lots of people opened their posts with something to the effect of "I don't even want to respond to this," they followed it with a response, thus justifying it as a worthwhile bit of thinking (inasmuch as it made them feel compelled to write a retort).

Anyway, all of this is to make the point that while I do think viral is overused in marketing terms, I also think there are viral ideas that spread despite their hosts best effort not to push forward the idea.

Oh, and happy thanksgiving.

Update (11/29/08): My buddy Eric wrote a very interesting response to this post over at his blog. It's specifically about how even if you disagree with something you may be accepting the framing of the issue and thus pushing forward the idea. Well worth a read.

The Many Skins of Web Data

Wed, 26 Nov 2008 00:04:44 +0000

Some thoughts on APIs and the different ways to view the same data.

As I've said in the past, I really love making stuff on the internet as much for the thing that's created as watching and learning from the reactions to it. This was most certainly the case with My First Tweet (which is still alive and well, by the way, with 5,370 first tweets in the DB so far). There's one response in particular I want to highlight today, though, because I think it's particularly interesting.

A few days after launching I got an email from someone telling me I must take down their first tweet. It wasn't offensive or anything like that, rather, they just didn't like the idea that they hadn't said it was okay for it to be on the site. While I didn't really understand it, I figured it seemed like a reasonable request and would only take a minute of my time. So I took it down. When they went back to check that I had done what I said, they found their first tweet again. Once again, I took it down.

Then I realized what the problem is. You see, the site is built so that if the user's first tweet isn't already in the database, it queries Twitter's API and grabs it. That means that every time they went back to check if I had been honest, they were actually responsible for their first tweet being in the database.

That, I thought, is a really interesting problem. I went over to read Twitter's terms of service and indeed you the user own everything you create. In addition, they "encourage users to contribute their creations to the public domain or consider progressive licensing terms." However, from a technology perspective there are only two states for Twitter: Public and private.

Let me step back for one second and explain the act of querying Twitter's API for one second. Basically, when someone puts their username into the site, I send a message to Twitter saying, "hey, can I have the information for the user XYZ?" Twitter then sends me back one of two different messages, most often they say, "sure, here's the info you requested," but sometimes they say, "sorry, we can't give you that info because the user you requested have made themselves private." (When you try to look at the tweets of a user that is private on twitter.com you get a little lock icon and a message that says you can only see this person's tweets if they give you permission.)

So basically Twitter is a binary system, you are either public or you are private. If you're private I can't grab your first tweet. However, if you're public, I can, whether you want me to or not.

This is particularly interesting to me for a few reasons. First, it's a good way to explain how outdated the idea of webpages really are. Most people think of them as these hard coded things, like pages in a magazine or something. However, many of the webpages you look at are not created until the moment you look at the site. Brand Tags, for instance, really only consists of about a dozen files. Even though there are 800 brands in the system, all the tag clouds are generated by the same few lines of code which queries the database and returns the formatted results. When I was getting the request to take down the first tweet, I was complying, however, it didn't really matter because it never existed as anything but a database entry in the first place.

What's so interesting about this is that that's actually how Twitter works as well (I believe). The results that the Twitter API returns are remarkably similar to the way the pages are formatted (down to the fact that you can only get to page 160 on both Twitter.com and from their API). That means that the site isn't so much a site as it is a view for the data (of which My First Tweet is one, search.twitter.com is another and Twitter Grader is a third).

Twitter isn't alone in working this way, either. Most sites these days are just skins for the underlying data, which is increasingly being shared with others who are making new skins for it. This isn't new news to those who build things on the web, but I think it is a fundamentally different functionality than the average user understands. Just something to think about.

The second point I wanted to make is around this public/private thing. In a world where everything is just skins for the underlying data, you have fewer and fewer controls over how that data is displayed when you sign up to use a service. Some services (like Flickr) allow you to specify a licensing for your work (full copyright, creative commons, etc.) and they report that to those people who want to work with the data, but even then, the API user can chose to ignore the licensing entirely and just take the photo unless the user has specified that this CAN NOT be used (either because it's private or there is no access to full size).

As someone developing using APIs this kind of flexibility is pretty awesome. I can get access to pretty much anything I want (which is rad). But for some users, clearly this is worrying. I don't know that more safeguards need to be put in place, but I do think that this wholesale data access needs to be better explained (there's a tendency to live in a world where we assume people know what an API is¹).

As usual, no hard answers here, just some stuff to think about.

¹ While I'm no technician, I do think it's worth trying to explain what an API is, since it's thrown around quite a bit these days. Essentially an API is just wholesale access to the data/functionality from a web service. If you're Google Maps that can manifest itself in letting people send you an address and returning the latitude and longitude or if you're Flickr that can mean returning the URLs for photos tagged with noah. Developers then can find lots of different ways to use the data/functionality. Essentially, with access to the raw data the sky is the limit. In some ways, RSS feeds are kind of like APIs for websites. They provide people with some access to the underlying data (which is separated from the presentation layer that you see when you visit NoahBrier.com for instance). (I don't know if this definition is helpful at all. If anyone wants I can take another shot, or maybe someone else can try to give a better definition in the comments.)

The Future of Ephemeral Conversation

Tue, 25 Nov 2008 23:09:41 +0000

Schneier makes some interesting points about digital communication (and specifically ephemeral conversation). Basically he says that in a world where everything is recorded and (most often) permanently stored, what happens to the ephemeral conversation that once passed into the ether after it was uttered? As he puts it, "Conversation used to be ephemeral. Whether face-to-face or by phone, we could be reasonably sure that what we said disappeared as soon as we said it. Organized crime bosses worried about phone taps and room bugs, but that was the exception. Privacy was just assumed."

Anyway, it's a good read, Shneier as always makes some good points and asks whether we should be making more efforts to protect this type of conversation so that everyone doesn't turn into politicians who are forced to watch every word and give away their BlackBerrys (or at least not as extreme as politicians are).

via rc3.org

COMMENTS OPEN

SearchWiki (aka Google Changes its Search Listings)

Fri, 21 Nov 2008 03:04:29 +0000

It's not every day that you see a massive change to the way Google results look, but if you've got a Google account you've no doubt noticed it. Basically you search for something when you're signed in and next to every result is an up arrow, down arrow and little x with a speech bubble after the result. Basically Google is asking for your feedback, though apparently your pumping things up and down only effect your own results (for now). The comments, however, will be public to all and you'll be identified with your username (which Google reminds you of when you first use it).

This is all kind of crazy, mostly because I seemed to have missed hearing about it all together. Apparently it only came online today. Clearly search engines are inherently social (rankings like PageRank rely on people linking to one another to work), but this is an interesting and opaquely social development. I'll be fascinated to see how they keep this from devolving into a giant spam-filled game of FIRST!. (BTW, looks like Google just posted something.)

COMMENTS OPEN

More Creative Banner Ads

Thu, 20 Nov 2008 15:17:43 +0000

I've been thinking quite a bit lately about advertising on the internet. More specifically about how the economic downturn could signal a breaking point for banner advertising. So we know about banner blindness and dismal clickthrough/interaction rates, yet people keep buying up the stuff. Mainly it's because it's the closest thing the web has to do with scale. There are no other good ways to get your message in front of a lot of people (whether or not they look at it) that doesn't take a lot more work (like PR/outreach).

With that said, I had another thought the other day: Maybe the answer is that advertisers need more variations on their creative. What I mean is, I think part of the banner blindness problem (and this is all speculation without any data behind it so take it with a grain of salt) is that we're all trained to recognize when something doesn't belong and, in the case of the web, to ignore it. Banners tend to be a different color, font and they move all around, add in the fact that they sit along the edges and they're just too easy to quickly spot and dismiss. But once in awhile someone like Apple comes along and does some fancy custom unit where they pay attention to everything including getting the NYTimes.com typeface right. That kind of stuff must make more of an impact than your run of the mill banner, no matter how cool it might be. Right?

Of course, doing a whole bunch of custom units that match to both the look/feel of the site and the audiences mindset is a whole lot more expensive from a creative development perspective. But isn't that kind of targeting what the web does best? If advertisers are so desperate for people to pay attention, maybe they should try a little harder.

COMMENTS OPEN

Animals, Science and Human Behavior

Thu, 20 Nov 2008 15:01:17 +0000

It seems to be a good week for animals helping us understand the world. Not only has metacognition been found in rats but also, specialist ants were not found to be any more efficient than non-specialists. (Yay generalists!)

Anyways, I'm always amazed by the amount we can learn from nature (if you haven't read Emergence, do so). I'm more and more convinced that the answers to most questions lie in basic human/animal tendencies and are just post-rationalized to be more complex (both by ourselves and outside observers). For whatever that's worth ...

COMMENTS OPEN

Reminder that the Web is Awesome

Wed, 19 Nov 2008 17:15:01 +0000

So we're all in agreement that the internet is awesome but links like these make you pause and realize just how awesome it is. Where else could you read an exchange between a guy who owes money and the person trying to collect (via Charles of RD4T) where the guys offers a drawing of a spider in exchange? (While I doubt it's true, it's amazingly funny.) Or, where else would you find out about the unlikely economic indicator of gifts to mistresses? "The current economic conditions have caused 82% of the men surveyed to cut back on allowances and gifts to their mistresses." (Women, it turns out have increased gifts and there are some theories on why that might be in the piece.)

I love this thing.

COMMENTS OPEN

Bailing Out the Auto Industry

Tue, 18 Nov 2008 01:42:53 +0000

I was in the middle of reading yet another article on the auto industry bailout when I realized something really interesting: I genuinely haven't made up my mind yet. It seems like such a quaint idea that I was actually reading all this stuff and getting swayed from one side to the other, still unable to make up my mind on what move I think is right. On one side you've got folks arguing that whether you believe in what they've been up to or not, the eventual net effect on the economy of not bailing them out will be greater than the cost. Further supporting just how far this ripple effect could go, when I picked up AdAge from my mailbox this evening the cover page outlines just what roll Detroit plays in the ad industry: 3.3% of total US measured spending, 5.9% of US network TV spending, etc. (For the record, the most interesting and compelling argument I've read so far comes on this side as Jonathan Cohn argues in the New Republic that a) they may be forced into Chapter 7 not Chapter 11 and b) that the auto industry has actually already begun going down the right path and they just need some more time to get there.)

On the other side you've got people saying that they must be allowed to fail and that, "if GM is going to be a welfare agency, it’s hard to also expect it to be a viable company that will rapidly get off the federal teat."

Anyway, I still haven't come to a conclusion, but I'm having a lot of fun being one of those undecideds so many of us spent the last year debating about.

COMMENTS OPEN

Don't Let Poets Lie to You

Mon, 17 Nov 2008 18:48:35 +0000

This video of Bjork explaining how television works is well worth three minutes of your life (plus you'll understand where the title of this post comes from). Really makes me think someone should give Bjork a web show where she dispatches pieces of absurd advice and explanation. It would be kind of like David Lynch's daily weather report.

Maybe this is a new genre. Other examples?

COMMENTS OPEN

When Too Much Listening is a Bad Thing

Mon, 17 Nov 2008 17:31:09 +0000

There's a lot of chatter out there, how do you know when to listen and when not to?

This one's been germinating for awhile now. About a month ago I was having drinks with my friend Matt and he made a point I hadn't heard before about the election: "Sarah Palin's handlers let the chatter get to them." Basically what he was saying is that if they had really been good at their jobs they never would have let her go on with Katie Couric and that the only reason they did is because everyone (media talking heads, DC folks) was saying that you can't have a VP candidate that doesn't do any interviews. But who says so? Who makes the rules?

Now I don't know whether I agree with the hypothesis or not, but I think it nicely frames an issue which seems to be coming up more and more lately (thought its really not new). In some ways its related to Alan's Nascar Blindness (the ad industry's tendency to miss out on that which they can't see) but in the opposite direction. This is actually about paying too much attention to the chatter and losing site of your goals. In the case of Sarah Palin, it seems safe to say that her role was to sure up the base of the party (I don't even think that's a controversial statement at this point). So if that's the case, what do you get out of putting her on with Katie Couric other than the potential for harm?

Take another example, those Bill Gates and Jerry Seinfeld Microsoft ads (video for those that missed it). Immediately, online folks started ripping at the flesh of Microsoft and their agency, Crispin Porter + Bogusky. (The most ridiculous thing I read was from Information Week and suggested "The effectiveness of brand-driven advertising died about the same time Seinfeld hit syndication." That's so dumb I'm not even going to bother with it.) Now, according to Gizmodo, "there's even more of an indication now that Microsoft aggressively cut the Gates/Seinfeld spot production short, canceling the shoot for a fourth spot just three days into production. The spots were intended to be part of a running series with up to 12 planned spots conceptualized. Now it's unclear whether or not we'll even see the last spot air, let alone Seinfeld come back for a reprisal."

But why? It couldn't have been because the ads didn't get attention: As AdAge pointed out, the Seinfeld/Gates ads were getting 14x as many views per day as the new "I'm a PC" spots. What's more, that same article points out that much of this came from all the chatter online and "The Seinfeld/Gates ads had more adjectives in them, while comments in PC ads had more nouns, suggesting a more emotional response to Seinfeld/Gates ads." Now my argument from the start is that the goal of Microsoft advertising right now is to reposition/humanize the company. From my original Seinfeld/Gates post:

Anyway, let me get to my point. I think there are a lot of problems at Microsoft, most of which can't be solved with advertising. For one, it won't solve the fact they put out a dud in Vista is something they're not going to fix with an ad campaign (OS 9 ring a bell??). However, what it can start to do is make people think about Microsoft in a slightly different way. It starts to soften the company around the edges. As I wrote in an IM to Alan earlier today, you can't just jump from super-nerd (Microsoft's perception) to cool guy (Apple) without at first rolling up your sleeves. The ad humanizes Microsoft by making one of the world's richest men seem like an every day guy.

It's precisely those emotional comments that the ads should have been aimed for and seemed to have succeeded at. So why did they drop it? Well, my theory is that it's because a bunch of people with blogs and such started talking about how they didn't like/didin't get the ads. Lots of people were saying that Microsoft needed to respond and listen to what the consumer was saying, but I call bullshit. In a quote for PRWeek I explained, "Other than the Super Bowl, how often do people talk about ads? Microsoft should let this play out. I think there are times to listen to everyone and there are times not to listen to everyone... the people talking about this may not be the audience for this ad. They may not be talking to early adopters." And I stand by that.

In the end I guess my point is that there are times to listen and act upon what you've heard and times to listen and respectfully ignore the feedback. As a small example, I've been asked a ton of times to add logos to brand tags for companies that have just started/don't exist yet. Every time I've declined because I've explained that the site is about measuring brand perception and that if you don't exist yet, you don't have a brand perception. What these people want is for consumers to give them feedback on their logos and I basically just think that's useless. What are people going to tell you? That your logo is too blue? The reality of the situation is that logos, like brands, don't exist in vacuums and people's feedback on your logo without holding your product or seeing it on the shelf is pretty much 100 percent useless (unless you're missing some giant thing like you're selling mens deodorant and your logo is pink with flowers, but some basic testing/a decent design firm should clear that up).

Commercials are different that products. If your product is hurting someone you've got to do something about it immediately, if your commercial is offending their sensibilities think carefully whether anything really needs to be done. Brands need to ask themselves, is this the a vocal minority speaking or are they actually a reflection of our target?

Sometimes too much listening is a bad thing.

Marketing FIOS

Sun, 16 Nov 2008 22:56:39 +0000

This is as much a lazyweb request as it is thinking out loud: Looking at the way Verizon has spread FIOS seems to me like a classic case of old-school advertising working just as its supposed. They've bought tons of TV, used claim-based messaging ("X times faster than cable/DSL") and every one and their mother knows about them. I haven't seen a Facebook page, heard about blogger outreach or anything else of that ilk (though they certainly may be doing all of it). Anyway, I guess my point is that you can still build a brand the old-fashioned way: By buying a whole lot of television ads. Think about it, where did you hear about FIOS?

(Usual caveats apply: I don't think this is the only answer, I know you need lots of different stuff and every brand is different. Just wanted to make the point.)

COMMENTS OPEN

Steve Eisman and Betting on Collapse

Sun, 16 Nov 2008 17:25:29 +0000

Michael Lewis has a really good portfolio piece outlining the financial crisis and specifically telling the story of Steve Eisman whose firm FrontPoint Partners put their money where their mouth was and shorted just about everything mortgage related.

Anyway, the article is a well written narrative through Eisman's eyes as he uncovered just how bad each level of the mortgage crisis actually was. The kicker quote to me, though, came as part of a conversation with John Gutfreund, former boss of Solomon Brothers who brought the company public (also prominently featured in Lewis's Liar's Poker).

Anyway, here's what Lewis wrote: "He thought the cause of the financial crisis was 'simple. Greed on both sides—greed of investors and the greed of the bankers.' I thought it was more complicated. Greed on Wall Street was a given—almost an obligation. The problem was the system of incentives that channeled the greed." This is actually something I've thought a great deal about as I've seen people blame greed for the crisis. Whoever sets regulations needs to understand that people will be greedy and deal with it accordingly. The fact that incentives for greed were put in place, which Lewis outlines, is the fault of the government. Or, as Eisman puts it in one of the turning points of the story when he realizes that the investment banks were actually creating more crappy bonds with his short money, "This is allowed?"

COMMENTS OPEN