Part 1: The Crisis On Wall Street
It’s clear from what I have read that a complete moral collapse occurred within these organizations, by which I mean these organizations produced leaders and corporate cultures that were driven by a limited self-interest with no regard for the larger good. In creating a “shadow market” in excess of $60 trillion (four times the U.S. debt) and “credit default swaps” that multiplied the losses they have created a crisis that may ultimately control America’s financial destiny. It is fair to say that Wall Street produced a greater threat to democracy and capitalism than terrorists. They have unleashed a financial virus the likes of which we have never seen and no one knows really what to expect. At present all we can do is wait to see the next system the virus will infect. And it was all man-made, entirely preventable, occurring in the middle of a relatively prosperous economy. It never would have happened if ethical leadership had meant something to Wall Street. But it didn’t, anymore than it did at Enron. On 60 Minutes last fall, Jim Grant, author of Mr. Market Miscalculates and one of the nation’s foremost experts on credit markets summarized the crisis in chilling terms:
A trainee making $45,000 a year would have had the common sense not to bet the firm on mortgage contraptions that no one in the firm actually understood. Somehow through criminal neglect and incompetence, the people at the top of these firms choose to look away, to take more risks, enrich themselves, and put the shareholders and indeed the country, ultimately the economy at risk. It is truly not only a shame; it is a crime.
The numbers are staggering, but they don’t begin to explain the greed and incompetence that created this mess. Those of us who believe that people are basically good have to make sense of this. How could people get so carried away with greed that they would threaten the solvency of their own country? Part of the answer is neurological. As strange as this might sound, the case for it is compelling and offers part of the cure that will help prevent this kind of thing from happening again. These people that made the decisions that created cultures of greed were running at high speed, on high stress, and playing high stakes poker to make short term killings, all of which biologically wired their brains for a nasty form of fight or flight called “malignant narcissism.” It wired their brains for survival, for me-first and screw everybody else, whipped up by the promise of more than their fair share, and pushed hard, top-down, by the fear of failure. Eventually it became a feeding frenzy. And as strange as it may sound to some, these same brains wired in this destructive way are still running Wall Street. The only difference now is that, since the stuff hit the fan, their brains have shifted to the flight side of fight or flight. Now they are either frozen, sitting on hundreds of billions in handouts or irrational and afraid, driving the stock market down. We need to fix their brains once and for all. In fact, we need to fix the brain of corporate America and Washington. Breakthroughs in neuroscience in the last ten years show how to do it. I’ll tell you how next week in my next blog.
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Street as it drove 