Goldman Sachs Bet Against Housing, and Won.
Lisa Lisa
quite so fortunate...
--------------------------------------------------------------------------------
December 24, 2009
Banks Bundled Bad Debt, Bet Against It and Won
By GRETCHEN MORGENSON and LOUISE STORY
In late October 2007, as the financial markets were starting to come
unglued, a Goldman Sachs trader, Jonathan M. Egol, received very good
news. At 37, he was named a managing director at the firm.
Mr. Egol, a Princeton graduate, had risen to prominence inside the
bank by creating mortgage-related securities, named Abacus, that were
at first intended to protect Goldman from investment losses if the
housing market collapsed. As the market soured, Goldman created even
more of these securities, enabling it to pocket huge profits.
Goldman’s own clients who bought them, however, were less fortunate.
Pension funds and insurance companies lost billions of dollars on
securities that they believed were solid investments, according to
former Goldman employees with direct knowledge of the deals who asked
not to be identified because they have confidentiality agreements with
the firm.
Goldman was not the only firm that peddled these complex securities —
known as synthetic collateralized debt obligations, or C.D.O.’s — and
then made financial bets against them, called selling short in Wall
Street parlance. Others that created similar securities and then bet
they would fail, according to Wall Street traders, include Deutsche
Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc.,
an investment company whose parent firm was overseen by Lewis A.
Sachs, who this year became a special counselor to Treasury Secretary
Timothy F. Geithner.
How these disastrously performing securities were devised is now the
subject of scrutiny by investigators in Congress, at the Securities
and Exchange Commission and at the Financial Industry Regulatory
Authority, Wall Street’s self-regulatory organization, according to
people briefed on the investigations. Those involved with the
inquiries declined to comment.
While the investigations are in the early phases, authorities appear
to be looking at whether securities laws or rules of fair dealing were
violated by firms that created and sold these mortgage-linked debt
instruments and then bet against the clients who purchased them,
people briefed on the matter say.
One focus of the inquiry is whether the firms creating the securities
purposely helped to select especially risky mortgage-linked assets
that would be most likely to crater, setting their clients up to lose
billions of dollars if the housing market imploded.
Some securities packaged by Goldman and Tricadia ended up being so
vulnerable that they soured within months of being created.
Goldman and other Wall Street firms maintain there is nothing improper
about synthetic C.D.O.’s, saying that they typically employ many
trading techniques to hedge investments and protect against losses.
They add that many prudent investors often do the same. Goldman used
these securities initially to offset any potential losses stemming
from its positive bets on mortgage securities.
But Goldman and other firms eventually used the C.D.O.’s to place
unusually large negative bets that were not mainly for hedging
purposes, and investors and industry experts say that put the firms at
odds with their own clients’ interests.
“The simultaneous selling of securities to customers and shorting them
because they believed they were going to default is the most cynical
use of credit information that I have ever seen,” said Sylvain R.
Raynes, an expert in structured finance at R & R Consulting in New
York. “When you buy protection against an event that you have a hand
in causing, you are buying fire insurance on someone else’s house and
then committing arson.”
Investment banks were not alone in reaping rich rewards by placing
trades against synthetic C.D.O.’s. Some hedge funds also benefited,
including Paulson & Company, according to former Goldman workers and
people at other banks familiar with that firm’s trading.
Michael DuVally, a Goldman Sachs spokesman, declined to make Mr. Egol
available for comment. But Mr. DuVally said many of the C.D.O.’s
created by Wall Street were made to satisfy client demand for such
products, which the clients thought would produce profits because they
had an optimistic view of the housing market. In addition, he said
that clients knew Goldman might be betting against mortgages linked to
the securities, and that the buyers of synthetic mortgage C.D.O.’s
were large, sophisticated investors, he said.
The creation and sale of synthetic C.D.O.’s helped make the financial
crisis worse than it might otherwise have been, effectively
multiplying losses by providing more securities to bet against. Some
$8 billion in these securities remain on the books at American
International Group, the giant insurer rescued by the government in
September 2008.
From 2005 through 2007, at least $108 billion in these securities was
issued, according to Dealogic, a financial data firm. And the actual
volume was much higher because synthetic C.D.O.’s and other customized
trades are unregulated and often not reported to any financial
exchange or market.
Goldman Saw It Coming
Before the financial crisis, many investors — large American and
European banks, pension funds, insurance companies and even some hedge
funds — failed to recognize that overextended borrowers would default
on their mortgages, and they kept increasing their investments in
mortgage-related securities. As the mortgage market collapsed, they
suffered steep losses.
A handful of investors and Wall Street traders, however, anticipated
the crisis. In 2006, Wall Street had introduced a new index, called
the ABX, that became a way to invest in the direction of mortgage
securities. The index allowed traders to bet on or against pools of
mortgages with different risk characteristics, just as stock indexes
enable traders to bet on whether the overall stock market, or
technology stocks or bank stocks, will go up or down.
Goldman, among others on Wall Street, has said since the collapse that
it made big money by using the ABX to bet against the housing market.
Worried about a housing bubble, top Goldman executives decided in
December 2006 to change the firm’s overall stance on the mortgage
market, from positive to negative, though it did not disclose that
publicly.
Even before then, however, pockets of the investment bank had also
started using C.D.O.’s to place bets against mortgage securities, in
some cases to hedge the firm’s mortgage investments, as protection
against a fall in housing prices and an increase in defaults.
Mr. Egol was a prime mover behind these securities. Beginning in 2004,
with housing prices soaring and the mortgage mania in full swing, Mr.
Egol began creating the deals known as Abacus. From 2004 to 2008,
Goldman issued 25 Abacus deals, according to Bloomberg, with a total
value of $10.9 billion.
Abacus allowed investors to bet for or against the mortgage securities
that were linked to the deal. The C.D.O.’s didn’t contain actual
mortgages. Instead, they consisted of credit-default swaps, a type of
insurance that pays out when a borrower defaults. These swaps made it
much easier to place large bets on mortgage failures.
Rather than persuading his customers to make negative bets on Abacus,
Mr. Egol kept most of these wagers for his firm, said five former
Goldman employees who spoke on the condition of anonymity. On
occasion, he allowed some hedge funds to take some of the short
trades.
Mr. Egol and Fabrice Tourre, a French trader at Goldman, were
aggressive from the start in trying to make the assets in Abacus deals
look better than they were, according to notes taken by a Wall Street
investor during a phone call with Mr. Tourre and another Goldman
employee in May 2005.
On the call, the two traders noted that they were trying to persuade
analysts at Moody’s Investors Service, a credit rating agency, to
assign a higher rating to one part of an Abacus C.D.O. but were having
trouble, according to the investor’s notes, which were provided by a
colleague who asked for anonymity because he was not authorized to
release them. Goldman declined to discuss the selection of the assets
in the C.D.O.’s, but a spokesman said investors could have rejected
the C.D.O. if they did not like the assets.
Goldman’s bets against the performances of the Abacus C.D.O.’s were
not worth much in 2005 and 2006, but they soared in value in 2007 and
2008 when the mortgage market collapsed. The trades gave Mr. Egol a
higher profile at the bank, and he was among a group promoted to
managing director on Oct. 24, 2007.
“Egol and Fabrice were way ahead of their time,” said one of the
former Goldman workers. “They saw the writing on the wall in this
market as early as 2005.” By creating the Abacus C.D.O.’s, they helped
protect Goldman against losses that others would suffer.
As early as the summer of 2006, Goldman’s sales desk began marketing
short bets using the ABX index to hedge funds like Paulson & Company,
Magnetar and Soros Fund Management, which invests for the billionaire
George Soros. John Paulson, the founder of Paulson & Company, also
would later take some of the shorts from the Abacus deals, helping him
profit when mortgage bonds collapsed. He declined to comment.
A Deal Gone Bad, for Some
The woeful performance of some C.D.O.’s issued by Goldman made them
ideal for betting against. As of September 2007, for example, just
five months after Goldman had sold a new Abacus C.D.O., the ratings on
84 percent of the mortgages underlying it had been downgraded,
indicating growing concerns about borrowers’ ability to repay the
loans, according to research from UBS, the big Swiss bank. Of more
than 500 C.D.O.’s analyzed by UBS, only two were worse than the Abacus
deal.
Goldman created other mortgage-linked C.D.O.’s that performed poorly,
too. One, in October 2006, was a $800 million C.D.O. known as Hudson
Mezzanine. It included credit insurance on mortgage and subprime
mortgage bonds that were in the ABX index; Hudson buyers would make
money if the housing market stayed healthy — but lose money if it
collapsed. Goldman kept a significant amount of the financial bets
against securities in Hudson, so it would profit if they failed,
according to three of the former Goldman employees.
A Goldman salesman involved in Hudson said the deal was one of the
earliest in which outside investors raised questions about Goldman’s
incentives. “Here we are selling this, but we think the market is
going the other way,” he said.
A hedge fund investor in Hudson, who spoke on the condition of
anonymity, said that because Goldman was betting against the deal, he
wondered whether the bank built Hudson with “bonds they really think
are going to get into trouble.”
Indeed, Hudson investors suffered large losses. In March 2008, just 18
months after Goldman created that C.D.O., so many borrowers had
defaulted that holders of the security paid out about $310 million to
Goldman and others who had bet against it, according to correspondence
sent to Hudson investors.
The Goldman salesman said that C.D.O. buyers were not misled because
they were advised that Goldman was placing large bets against the
securities. “We were very open with all the risks that we thought we
sold. When you’re facing a tidal wave of people who want to invest,
it’s hard to stop them,” he said. The salesman added that investors
could have placed bets against Abacus and similar C.D.O.’s if they had
wanted to.
A Goldman spokesman said the firm’s negative bets didn’t keep it from
suffering losses on its mortgage assets, taking $1.7 billion in write-
downs on them in 2008; but he would not say how much the bank had
since earned on its short positions, which former Goldman workers say
will be far more lucrative over time. For instance, Goldman profited
to the tune of $1.5 billion from one series of mortgage-related trades
by Mr. Egol with Wall Street rival Morgan Stanley, which had to book a
steep loss, according to people at both firms.
Tetsuya Ishikawa, a salesman on several Abacus and Hudson deals, left
Goldman and later published a novel, “How I Caused the Credit Crunch.”
In it, he wrote that bankers deserted their clients who had bought
mortgage bonds when that market collapsed: “We had moved on to hurting
others in our quest for self-preservation.” Mr. Ishikawa, who now
works for another financial firm in London, declined to comment on his
work at Goldman.
Profits From a Collapse
Just as synthetic C.D.O.’s began growing rapidly, some Wall Street
banks pushed for technical modifications governing how they worked in
ways that made it possible for C.D.O.’s to expand even faster, and
also tilted the playing field in favor of banks and hedge funds that
bet against C.D.O.’s, according to investors.
In early 2005, a group of prominent traders met at Deutsche Bank’s
office in New York and drew up a new system, called Pay as You Go.
This meant the insurance for those betting against mortgages would pay
out more quickly. The traders then went to the International Swaps and
Derivatives Association, the group that governs trading in derivatives
like C.D.O.’s. The new system was presented as a fait accompli, and
adopted.
Other changes also increased the likelihood that investors would
suffer losses if the mortgage market tanked. Previously, investors
took losses only in certain dire “credit events,” as when the
mortgages associated with the C.D.O. defaulted or their issuers went
bankrupt.
But the new rules meant that C.D.O. holders would have to make
payments to short sellers under less onerous outcomes, or “triggers,”
like a ratings downgrade on a bond. This meant that anyone who bet
against a C.D.O. could collect on the bet more easily.
“In the early deals you see none of these triggers,” said one investor
who asked for anonymity to preserve relationships. “These things were
built in to provide the dealers with a big payoff when something bad
happened.”
Banks also set up ever more complex deals that favored those betting
against C.D.O.’s. Morgan Stanley established a series of C.D.O.’s
named after United States presidents (Buchanan and Jackson) with an
unusual feature: short-sellers could lock in very cheap bets against
mortgages, even beyond the life of the mortgage bonds. It was akin to
allowing someone paying a low insurance premium for coverage on one
automobile to pay the same on another one even if premiums over all
had increased because of high accident rates.
At Goldman, Mr. Egol structured some Abacus deals in a way that
enabled those betting on a mortgage-market collapse to multiply the
value of their bets, to as much as six or seven times the face value
of those C.D.O.’s. When the mortgage market tumbled, this meant bigger
profits for Goldman and other short sellers — and bigger losses for
other investors.
Selling Bad Debt
Other Wall Street firms also created risky mortgage-related securities
that they bet against.
At Deutsche Bank, the point man on betting against the mortgage market
was Greg Lippmann, a trader. Mr. Lippmann made his pitch to select
hedge fund clients, arguing they should short the mortgage market. He
sometimes distributed a T-shirt that read “I’m Short Your House!!!” in
black and red letters.
Deutsche, which declined to comment, at the same time was selling
synthetic C.D.O.’s to its clients, and those deals created more short-
selling opportunities for traders like Mr. Lippmann.
Among the most aggressive C.D.O. creators was Tricadia, a management
company that was a unit of Mariner Investment Group. Until he became a
senior adviser to the Treasury secretary early this year, Lewis Sachs
was Mariner’s vice chairman. Mr. Sachs oversaw about 20 portfolios
there, including Tricadia, and its documents also show that Mr. Sachs
sat atop the firm’s C.D.O. management committee.
From 2003 to 2007, Tricadia issued 14 mortgage-linked C.D.O.’s, which
it called TABS. Even when the market was starting to implode, Tricadia
continued to create TABS deals in early 2007 to sell to investors. The
deal documents referring to conflicts of interest stated that
affiliates and clients of Tricadia might place bets against the types
of securities in the TABS deal.
Even so, the sales material also boasted that the mortgages linked to
C.D.O.’s had historically low default rates, citing a “recently
completed” study by Standard & Poor’s ratings agency — though fine
print indicated that the date of the study was September 2002, almost
five years earlier.
At a financial symposium in New York in September 2006, Michael
Barnes, the co-head of Tricadia, described how a hedge fund could put
on a negative mortgage bet by shorting assets to C.D.O. investors,
according to his presentation, which was reviewed by The New York
Times.
Mr. Barnes declined to comment. James E. McKee, general counsel at
Tricadia, said, “Tricadia has never shorted assets into the TABS
deals, and Tricadia has always acted in the best interests of its
clients and investors.”
Mr. Sachs, through a spokesman at the Treasury Department, declined to
comment.
Like investors in some of Goldman’s Abacus deals, buyers of some TABS
experienced heavy losses. By the end of 2007, UBS research showed that
two TABS deals were the eighth- and ninth-worst performing C.D.O.’s.
Both had been downgraded on at least 75 percent of their associated
assets within a year of being issued.
Tricadia’s hedge fund did far better, earning roughly a 50 percent
return in 2007 and similar profits in 2008, in part from the short
bets.
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Nickname unavailable
hi lisa, great article as usual, and btw, happy holidays!
i am wondering now with all of this betting going on, its really
exposing wall street hucksterism, and their fairy tale of investing in
america. i am wondering how long even congress will sit by as these
free market vultures bet against the survival of american business's.
that betting will snowball against american business, as other ghouls
see that there are profits to be made, by making sure business's fail.
sooner or later it will be outlawed.
Lisa Lisa
Hey, happy holidays to you too. It looks like the smart money is
shorting America. Hmmm.....
John Galt
The stock market traders are betting on recovery.
The bond market traders are betting on a double dip recession and some
nasty inflation.
Historically, the bond traders are usually right at picking the
prevailing trend.
JG
David P.
>
> hi lisa, great article as usual, and btw, happy holidays!
> i am wondering now with all of this betting going on, its really
> exposing wall street hucksterism, and their fairy tale of investing in
You spelt your name wrong. It's "Brain unavailable".
.
.
--
Lisa Lisa
Um, I've been reading his posts for years, and he's been about 98%
correct in his observations.
His opponents, who called him names just like you just did, were
suffering from the "all is well" mentality. To that crowd, nothing
ever goes wrong with capitalism, regulation is always bad, monopolies
are nothing to worry about, speculation doesn't exist, debt doesn't
matter, the export of our manufacturing base doesn't matter, housing
and stock prices are always correctly priced, the TV shills who hawk
the stocks they own are geniuses (Mary Meeker, where are you?);in
short, everything is perfect, so shut up.
They'll all be eating crow shortly, if they haven't already. I'm sure
you'll be eating it, too.
Lisa
Nickname unavailable
...
>
> You spelt your name wrong. It's "Brain unavailable".
poor little aynny randy bot. i attacked your cult leader, now you are
mad. grow up little boy. rands books were a fantasy, loaded with sex
for the capture of little immature boys. its how she lured you into
her cult. seek a intervention, its quite possible your brain maybe
able to finally mature.
Ayn Rand was a high functioning, manipulative and cunning
sociopath:her writings are expressions of Borderline Personality
Disorder and therefore appeal to a certain borderline type:Galt's
Gulch and face the facts:Mental illness is real:the Sociopath Next
Door
http://blogs.myspace.com/psychorand
Wednesday, December 03, 2008
I get email.
Category: Blogging
I live in a neighborhood that has a small homeless population. One
such person within that homeless group is known to the rest of us by
her first name only. I can hear her now, outside my apartment. I'm
told she lives in a kind of dilapidated garage of some sort, where she
sleeps in a pile of blankets and debris. She often walks my street,
collecting bottles and cans for the cash deposits. Whilst on her
journeys, she often stops abruptly, plants both feet firmly to the
ground and launches a kind of "external dialogue" with the world. She
doesn't scream, but rather projects her voice with a powerful force.
Her chanting can literally be heard for blocks as she speaks directly
to phantoms that only she can see. Sometimes she appears to be
"lecturing" passersby with a hostile, throaty tone. It all comes out
in a weird staccato rhythm, like a drill sergeant. Mostly, she's
harmless and her monologues, indecipherable. This is the kind of
obvious mental illness we can all recognize. But there are other forms
of psychosis. And books such as "The Sociopath Next Door" by Martha
Stout illuminate that fact clearly. Still, as I write this, the sound
of our homeless inculcator strikes me as familiar. I am reminded of my
first Ayn Rand girlfriend ARGF1, who's moods would alternate between
states of overblown confidence and abject misery from time to time.
When she was on one of her transient "highs", she would ad lib her own
monologues, paraphrasing Ayn Rand's vituperative critiques on modern
society with a bratty, flippant demeanor. ARGF1 was crazy too. She was
a borderline.
I'm surprised that my little corner of Myspace gets the modest
attention that it does. However, to my critics and others who would
send me email defending Ayn Rand: let me be clear.
The main topic of this page is Borderline Personality Disorder and the
reasons why the belief system of Ayn Rand appeals to certain
individuals who exhibit traits of that psychological malady. The main
topic of this page is not – I repeat NOT about the merits of Ayn
Rand's "philosophy". Take a psychological perspective on what she said
and how she acted in life. The available research on BPD is extensive,
so I suggest that Rand's defenders who don't understand the disease
should first read "Stop Walking on Eggshells" by Paul Mason and Randy
Kreger. For a different take on the psychology of Objectivism, read
Ellen Plasil's autobiography "Therapist", in which she chronicles how
she was sexually molested by her Objectivist father when she was 11
years old and other horrific events that took place in the Randian
subculture of her time. It is my opinion that Plasil's book is
essential to understanding the cult-like phenomenon of Ayn Rand.
In so far as Rand's "philosophy" is referenced here, it serves mainly
to reinforce the established and substantiated opinion that Ayn Rand
probably did suffer from Borderline Personality Disorder. Her black &
white / all or nothing / love & hate beliefs (including her narrow
views on art and music) reveal her as a borderline pretty quickly to
any person who has experienced a close relationship with a BPD
partner. Apart from Rand's own tawdry personal story, it's also
distinctly evident to me that her writings are expressions of BPD and
therefore appeal to a certain borderline type, as my experiences and
those of others have demonstrated. (I've been contacted by supportive
readers who shared their stories of relationships with Randian
borderlines.) It's very clear to me that Ayn Rand was a high
functioning, manipulative and cunning sociopath (see: gaslighting, as
the term relates to borderline pathology). She was also severely
narcissistic and imperious. She was afflicted with multiple
personality disorders (co-morbidity) and psychologically abused people
within her social group, perhaps most cruelly her own husband.
Evidence of her unbalanced psychology appears early in her life, as
Michael Prescott has observed. This is not a case of a person "losing
it" in her old age, although her psychological problems were magnified
during that later time period.
I suggest that my critics crawl out of the fantasy world of "Galt's
Gulch" and face the facts: Mental illness is real. Borderline
Personality Disorder is real. Now take a fresh new look at your
precious guru.
Currently reading:
The Sociopath Next Door
By Martha Stout
Release date: 2006-03-14
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Wednesday, July 16, 2008
THERAPIST: A book that is testimony to Rand’s destructive legacy.
I purchased a used copy of Therapist from Amazon. It deserves to be
reprinted and perhaps someday a new edition will be published.
It's an engaging read, but disturbingly so. I actually had knots in my
stomach while getting through it. In Therapist, author Ellen Plasil
recounts in detail her experience as a patient with the Objectivist
psychiatrist, Dr. Lonnie Leonard. Over the course of several years,
Dr. Leonard psychologically manipulated, controlled and sexually
abused the author and other women in his care. Years later, legal
action was taken against Dr. Leonard, and some justice was procured
for the victims.
Many of the doctor's patients were students of Objectivism, and it's
unsettling how immured they were, as a group. The doctor's sex
theories were highly informed by those of Ayn Rand, especially in
regards to his interpretation of the so-called "ideal man" that Rand
championed. Plasil says that she, along with other "students of
Objectivism" were all blinded by the mechanism of Objectivist culture,
where leaders of the movement possessed unchallenged authority, much
like a cult. It was this culture that enabled the abuse.
"Whatever their source, there seemed to be rules of right and wrong
for everything in Objectivism. There was more than just a right kind
of politics and a right kind of moral code. There was also a right
kind of music, a right kind of art, a right kind of interior design, a
right kind of dancing. There were wrong books which we could not buy,
and right ones which we should. Wrong books were written by "immoral"
people whom we didn't want to support through our purchase; right
books never were. There were plays we should not see, records we
should not listen to, and movies we should not pay to watch. There
were right ways to behave at parties, and right people to invite to
them. And there were, of course, right psychotherapists. And on
everything, absolutely everything, one was constantly being judged,
just as one was expected to be judging everything around him. And if
one was not judging everything that was around him, one was judged on
that, too. It was a perfect breeding ground for insecurity, fear, and
paranoia."
"The numbers of these blindly devoted went beyond coincidence. There
was more to this than just a chance meeting of several dozen sheep all
willing to follow their hero, their ideal man anywhere. Maybe the
"hook" was in the lesson that if Objectivism was the right way, then
being a student of objectivism made us more right than others. And for
those of us who were not certain of our value to begin with, such
superiority helped us ignore our self-evaluations and feed our
egos.... Or maybe it was in Ayn Rand's incorporation of "hero-worship"
into her representation of romantic love; show an Objectivist a hero
and the hero has but to take command."
Therapist reveals the dark side of Objectivism like no other document
can.
Currently reading:
Therapist
By Ellen Plasil
Release date: September, 1986
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Wednesday, July 11, 2007
Why I created this page.
Narcissistic Personality Disorder and Borderline Personality Disorder;
how I wish I had never heard of these two things!
And how I wish that I'd never heard of a person named Ayn Rand.
Actually, I'm reasonably confident that I never would have heard of
that name until recently, if it were not for one person: I will call
her Ayn Rand Girlfriend Number One, hereafter referred to as ARGF1.
I met ARGF1 about 1 year after graduating from college. I was in my
first (and last) corporate job at the time, making decent money and
trying to figure out what to do with myself. ARGF1 was slightly
younger and had a troubled life. Her father was a recovered alcoholic
and her parents were long divorced. I guess when she was about 15, she
dropped out of high school and ran away to the state where her father
lived. She slummed around, used drugs and ran with a group of punk
rock kids. But when she needed money or food, her father's place was
not far. Indicatively, she had very poor relations with both of her
parents, especially her mother, whom she often spoke of in disparaging
tones. Somewhere along the line, ARGF1 suffered from some kind of
abuse. Parts of that dimension within her history were known to me,
and others I surmised were either missing or suspect, because ARGF1
was a chronic prevaricator. Lies of omission were especially
problematic with her. However, it was certain that something terrible
did happen to ARGF1. I witnessed her trauma as she would break down in
tears, unpredictably on several occasions. Other times she raged and
her face morphed into the most ugly countenance I have ever seen,
before or since. I realized that those incidents occurred because of
triggers (unknown to me) that would cause her to act out. Those
moments were frightening and unsettling. I didn't know it then, but
ARGF1 had Borderline Personality Disorder. Clearly though, I did
perceive that she had Narcissistic Personality Disorder and was
unmistakably antisocial. My friends couldn't believe I was dating her.
Nobody liked her, including my parents.
What was I thinking? Well, I have my own problems too! I'm working on
those issues now. But, let's just say that in the past, I've taken on
the role of the "rescuer" in certain relationships. Also, I honestly
saw the good in ARGF1, even if others did not. Perhaps most
significantly, at that time I was very young. During college, I never
took a proper psychology class. I regret that now.
I mentioned before that ARGF1 was a high school drop out (she later
earned her G.E.D. after she ran away). In this regard, she was low
functioning and characteristically she also had trouble keeping jobs.
The false identity that she fostered, both as a brash punk and an
intrepid runaway appeared outwardly to indicate that she was
independent. The opposite in fact, was true; she was needy, insecure,
petty, histrionic and childish sometimes to the point of caricature.
Somehow, she cultivated an image of herself that equated independence
with intelligence. Her bookshelf was packed with second hand copies of
things I knew she could not possibly have read, including books on
complex subjects such as physics and mathematics. In actuality, when
she enrolled at the local state university, she had to drop out of
basic algebra because she was failing. She was intelligent on a
certain level, however she was not book smart. Revealingly, she only
really finished one specific group of books on that shelf. Indeed, she
read and reread these particular books thoroughly and memorized her
favorite passages from them, underlining the important sections for
good measure. These were the books of Ayn Rand; The Fountainhead,
Atlas Shrugged, We the Living, The Romantic Manifesto and lastly, a
title so sensationally vulgar that it virtually insures book sales to
the publisher – The Virtue of Selfishness.
I don't remember at what stage of the relationship I was introduced to
them, but Ayn Rand's books were obviously important to ARGF1, so I
reluctantly agreed to consider some of them. I wasn't a huge fan of
fiction at the time, so I first chose to read The Virtue of
Selfishness, since it was supposedly a summary of Rand's "philosophy"
and it contained long passages from her fiction anyway. Now let me
declare from the outset that I was immediately suspicious of this
work, since ARGF1's behavior was already troubling, and if these books
were informing her actions at the time, there must have been something
weird about her exaggerated enthusiasm for them. Besides, as a recent
graduate from an elite university with its subsequent required course
work in English literature, I found it strange that I had never heard
of this supposedly important author. My suspicions correctly reflected
the general academic position on Ayn Rand: She was a prodigious hack
who would never have been able to stand up to any kind of rigorous
academic peer review process. This work was nothing more than pop
philosophy and more importantly, it was dogma. To any reasonable
sentient human being, the first few pages of The Virtue of Selfishness
reveal the author as what she was: a hateful, pedantic, patronizing
and arrogant pedagogue.
But people with Borderline Personality Disorder are not reasonable
human beings. They are narcissists. When I tried to explain my
objections to Ayn Rand's "philosophy", my concerns went right through
one ear of ARGF1 and exited out the other side of her skull. It simply
did not register. To ARGF1, Ayn Rand was good, all good and nothing
but good. This hostile dichotomy of things that are either all good or
all bad is in fact, a hallmark of Borderline Personality Disorder.
Moreover, I think the ideas contained in The Virtue of Selfishness
were interpreted by ARGF1 to justify her destructive behaviors. At
times, Rand reads like a teenager who just discovered Friedrich
Nietzsche. It's crass, unsophisticated and simplistic. But that's why
it's so appealing to borderlines: It has often been written that
borderlines stop their emotional development at an early age. While
they may appear to be adults, emotionally, they are frightened
children. Rand dresses her arguments in a kind of pseudo-intellectual
aura, but really she appeals to ugly, base emotions. One of her
favorite words repeated continuously in Atlas Shrugged is contempt.
And contempt is what Ayn Rand exuded in virtually everything she
wrote.
With welcome relief, I ended that relationship within a year. I heard
through a mutual friend that ARGF1 had shacked up with another punk
and consummated an even more turbulent relationship with him. They met
at a punk club. It's my understanding that she cased after him when
she caught a glimpse of the Ayn Rand quote he had scribbled on the
back of his studded leather jacket. Sometimes borderlines are just
like cartoon characters. It would be funny if it weren't so
horrendous.
That was 17 years ago. I'd hoped to have forgotten Ayn Rand. But in
later years I would meet another person that would throw me for a
loop. Unlike ARGF1, she was extremely intelligent, talented and
beautiful. I was in love. In the beginning, it was wonderful. But Ayn
Rand and Borderline Personality Disorder would once again intrude upon
my world. Thus begins my tale of Ayn Rand Girlfriend Number Two.
To be continued…
Update: For personal reasons, I have decided to post only minimal
information regarding my former relationship with ARGF2. There is a
post regarding Ayn Rand tattoos that covers the topic with brevity.
11:57 AM
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Thursday, June 14, 2007
Mental illness is REAL.
They call them "invisible borderlines".
These are people who are "high functioning" and outwardly, they appear
normal.
Inside however, there is emotional turmoil.
Control is what they need; control over their own feelings of inner
shame,
control over their significant others and family members.
Outwardly, they might exude self confidence, but during times when
"the
mask" is off, they often reveal an unusual and irrational fear of
abandonment.
It is this constant fear of abandonment, always churning in the
background
that makes the whole thing so tragic and pernicious.
What this all has to do with Ayn Rand becomes clear when you get
involved
with one of her borderline fans.
Ayn Rand's books are MADE FOR BORDERLINES.
Let me explain. And may I submit that I am not jumping to conclusions
here,
but I am now convinced that there is a quantifiable, tangible
CONNECTION
between Ayn Rand's ideas and the characteristics of borderline
personality disorder.
Twice in my life, I have been involved with BPD women that
"discovered" the
writings of Ayn Rand. The similarities of these two relationships, set
years apart
from one another are frighteningly striking. The cold, social
darwinism championed
by the hateful Ayn Rand appeals to the narcissistic side of the
borderline. Also, the
simplistic black and white solutions to EVERYTHING would seem
perfectly necessary in the BPD's mind. Ayn Rand's portrayal of human
beings as being either "all good" or "all bad" is 100% consistent with
their views of all others and themselves. And a lack of empathy
towards other people, so similar to what Rand preaches is a hallmark
of borderline personality disorder.
Not convinced yet? If your BPD girlfriend has ALL THOSE BOOKS on her
shelf, take a look at them closely, especially if the spines are worn
(evidence of repeated readings). Look for the parts that she
underlined. These passages are frightening glimpses into the mind of
borderline. Remember, Ayn Rand herself was a diagnosed NPD and current
research suggests that she had BPD also.
If you meet someone who claims that Ayn Rand has inspired them to new
heights of
philosophical awareness, be very, very concerned.
Currently reading:
THE AYN RAND CULT
By Jeff Walker
Release date: 1999
3:52 PM
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Monday, June 11, 2007
Why did Ayn Rand use Dexedrine?
This is interesting.
Consider this description of Dexedrine from Wikipedia:
"Dextroamphetamine is a powerful psychostimulant which produces
increased wakefulness, energy and self-confidence in association with
decreased fatigue and appetite."
Self-confidence?
Why did Ayn Rand need a drug to boost her self-confidence? She
apparently held a negative view of her own body image. But her fans
claim that she was the most confident person who ever lived.
Question: Did Ayn Rand even like herself...?
Currently reading:
THE AYN RAND CULT
By Jeff Walker
Release date: 1999
3:46 PM
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Sunday, June 10, 2007
This is how Borderlines talk...
An exaggerated form of hero worship is one of the many hallmarks of
BPD.
Consider these examples of quotes from Ayn Rand's most famous
disciple, Nathaniel Branden.
"I had come to Ayn out of the void - and I imagined that without her a
void was all that awaited me."
"I am in the first place I have ever felt at home in my entire life...
a place where only good can happen and no harm can possibly come."
Borderlines often speak about their lives as being "voids"... They
have a chronic feeling of emptiness. They attempt to fill that void by
virtue of idolizing their significant other (for certain amount of
time) until they "split" and devalue that person.
--------------------------------
---------------------------------------------------------------------------------
Editorial Reviews
From Publishers Weekly
[Dr.] Stout says that as many as 4% of the population are
conscienceless sociopaths who have no empathy or affectionate feelings
for humans or animals. As Stout (The Myth of Sanity) explains, a
sociopath is defined as someone who displays at least three of seven
distinguishing characteristics, such as deceitfulness, impulsivity and
a lack of remorse. Such people often have a superficial charm, which
they exercise ruthlessly in order to get what they want. Stout argues
that the development of sociopathy is due half to genetics and half to
nongenetic influences that have not been clearly identified. The
author offers three examples of such people, including Skip, the
handsome, brilliant, superrich boy who enjoyed stabbing bullfrogs near
his family's summer home, and Doreen, who lied about her credentials
to get work at a psychiatric institute, manipulated her colleagues
and, most cruelly, a patient. Dramatic as these tales are, they are
composites, and while Stout is a good writer and her exploration of
sociopaths can be arresting, this book occasionally appeals to
readers' paranoia, as the book's title and its guidelines for dealing
with sociopaths indicate.
Copyright © Reed Business Information, a division of Reed Elsevier
Inc. All rights reserved. --This text refers to the Hardcover edition.
Nickname unavailable
thanks lisa, he is a randbot, who is mad that i attacked his cult
leader. i pick up stalkers every once in a while. whom are furious
that i have upset their fantasies.
he cannot fathom that the life he lives, is a pure fantasy. one time
a libertarian threatened to sue me for pointing out what a crank
philosophy libertarianism is, he said it was slander. i reminded him
that that would mean he must use government power to shut me up, which
is of course un-libertarian.
this one will dog me for a while i am sure. in fact i think he has in
the past also. he cannot win on facts, such as haiti is a country
without much of a government, a john galt brave new world. except,
slavery runs rampant in haiti.
this is for our libertarian friend.
ayn rand novels are not historically accurate, nor are they the
product of a stable mind.
what is the definition of a crank? one who gives out advise that
makes no sense at all.
what is the definition of a crank? one who accepts, or embraces
advise that makes no sense at all.
definition of a cult:Confusing Doctrine Encouraging blind acceptance
and rejection of logic through complex lectures on an incomprehensible
doctrine, Chanting and Singing Eliminating non-cult ideas through
group repetition of mind-narrowing chants or phrases