Wrath

As I come to the last of the articles on the “Seven Sins”, the economic situation has been overshadowed by the events in Mumbai, at least in India. Not that; people across the world, are not affected. These terrorist actions just reflect the fact that we are in a very interlinked world.

As per the dictionary meaning of wrath we come across the following:

1. Strong, stern, or fierce anger; deeply resentful indignation; ire.
2. Vengeance or punishment as the consequence of anger.

No matter how angry the emotions of the people, there are times when one should sit back and reflect as Confucius said:

“When anger rises, think of the consequences.”

There are two terrorist actions which come to mind, which have had far reaching consequences.

The first, and the most major till date is of course, 9/11. The response of the US in pursuing the enemy to Afghanistan was very justified. However the war on Iraq, also a consequence of 9/11 was probably not. It could be debated till eternity, as to the actual reasons for the Iraq war, however, what can not be debated, is that 9/11 clouded a lot of reasoning. The second major terrorist activity which comes to mind is the killings of Israeli athletes in the Munich Olympics of 1972. The wrath of the Israeli people was so great that the then Prime Minister of Israel, Mrs. Golda Meir initiated “Operation Wrath of God” to eliminate all the terrorists involved. The consequences on the focus of the Mossad towards revenge perhaps diverted their attention on all the signals of the impending Yom Kippur or 6th Oct 1973 War with the Egyptians and Syrians.

“Holding on to anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one who gets burned.”

Gautam Buddha

While the above are extreme examples for wrath, we experience unreasonable anger sometimes on petty issues. A non appreciation by the boss; a late arrival for an appointment; a sarcastic comment by a colleague are just some examples of petty issues.

We need to control anger as its uncontrolled form could be all consuming.

“Anger is never without a reason, but seldom with a good one”

Benjamin Franklin

Lust

Lust is usually associated with excessive thoughts or desires of a sexual nature. However it could also be associated with any excessive addiction; whether for money or materialistic comfort.

“The lust for comfort, that stealthy thing that enters the house a guest and then becomes a host, and then a master”

Kahlil Gibran

Lust clouds reasoning, forcing a person to behave in a manner very different from its actual nature.

The current situation in the auto industry can be equated with the lust for short term profits alone clouding all reasoning for long term progress. The big 3 in the car industry focused exclusively on SUV’s and the Light truck market giving virtually complete market share in the car segment.

Here is an Aesop fable on the dangers of lust.

The Lion in Love

A lion once fell in love with a beautiful girl and proposed marriage to her parents. The parents did not want this to happen but were afraid of the consequence of refusal. In an effort to dissuade the Lion, the parents said “We would be honored, but feared that the Lions claws and teeth would hurt our daughter”. So blinded was the lion by his love, that he agreed and came back the next day after removing his teeth and claws.

At this site the parents turned him away from as they longer feared the Lion and refused the marriage proposal.

In Greek mythology we have heard of the fall and destruction of Troy, because of the abduction Helen by Paris.

William Shakespeare’s Play “Macbeth” is also a play of Macbeth’s lust for power, which blinds him in his burning ambition to become King. In the process he betrays his friends and all the values he earlier held dear.

“Of all the worldly passions, lust is the most intense. All other worldly passions seem to follow in its train.”

Gautam Buddha

Sloth / Laziness

“Laziness travels so slowly that poverty soon overtakes him.”

Benjamin Franklin

This is one of the sins which has changed in scope and meaning over the centuries. It has been described as apathy of the individual towards his religious duties and in the modern context also has come to mean a failure to utilize ones talents.

The Auto Industry in the US has been a victim of laziness and indifference. While Auto Industries the world over were innovating and moving with the times, the Big 3 in America were focused on maximizing returns on segments like light trucks and SUV’s. The sudden volatility in petrol prices and the downturn in the markets have left these companies with few products to offer. The following table shows the sales figures for Oct 08

Source: http://www.motorintelligence.com/

The only segment of growth has been the small car segment, while the SUV and large car segment has shown the maximum fall in sales.

The story of the Big 3 is like the tale of the Ant and the Grasshopper. The Ant and the Grasshopper In the summers the ant is very busy creature collecting food for the winter months. Once a grasshopper came across a colony of ants and asked them “Why are you so hard at work? Enjoy the warm weather”. The Ants replied that they we stocking up for the winter and recommended that the Grasshopper do the same. The Grasshopper replied, “Why bother when there is so much lying around” and continued on its pursuit of enjoyment. When the winter came and there was no food, the Grasshopper realized the value of the advice, “It is best to prepare for the days of necessity”.

"Failure is not the only punishment for laziness; there is also the success of others"

Jules Renard

Pride

Pride sullies the noblest character.

Claudianus

Pride is considered to be one of the major sins. We are all subject to bouts of pride in our actions, but in Pride; also lays the seeds of destruction.

Consider the following Aesop’s fable,

The fighting Cocks and the Eagle

There were two Cocks fighting to be the master of the farmyard. At last; one won. The loser hid in a corner, while the winner in its inflated sense of the self, flapped its wings and flew to top of the chicken coop. An Eagle sailing through the air pounced upon him and carried him off.

The moral of the story “Pride goes before destruction”

Parmalat, one of the biggest diary corporations was set up in 1961 when its first plant was opened by Calisto Tanzi. By 1990 it was listed on the Milan Stock Exchange. By 2003 it became a symbol of one of the largest corporate scandals when a €4 billion gap was discovered in its accounting records. Part of the reason for the gap was diversion of funds to cover huge losses in new divisions. Pride played a role in that instead of facing reality, a cover up was attempted.

While this may be very simplistic story, Pride, “loss of face” prevents people from acknowledging failure.

As per the Bureau of Economic Analysis, Industry Economic Accounts, on a 2006 GDP of 24735.6 Billion Dollars, “Motor vehicles, bodies and trailers, and parts represented 493.2 Billion Dollars or close to 2%. Taken together with associated industries and support infrastructure, the Auto industry represents 4% of US GDP.

The Auto Industry and consequently the US economy needs support, but the focus has been on “the use of Private jets by the CEO’s to attend the meeting” while the politicians are talking of “what do we tell our voters”. Pride on all sides is confusing the issue and people are missing the woods for the trees.

The Banking sector has collapsed. The housing and construction sector is in shambles. The retail figure which will be coming out in the Thanksgiving – Christmas – New Year sales season would best be forgotten. Therefore saving the auto sector is very important. Else we could perhaps see the Dow Jones going below the 7500 mark by the 1st week of January 2009.

As Dante described Pride:

"Love of self perverted to hatred and contempt for one's neighbor."

The questions is :

Is Pride going to decimate the auto Industry? Nero fiddled while Rome Burnt? The Banking sector has been hit hard, the housing industry is in shambles, retail figures are worrying, and now the auto industry?

Gluttony

"Gluttony denotes, not any desire of eating and drinking, but an inordinate desire... leaving the order of reason, wherein the good of moral virtue consists."

Thomas Aquinas

Gluttony is “Greedy or excessive indulgence” as per the Merriam-Webster Online Dictionary

Gluttony has been described as one of the seven deadly sins. Gluttony can be equated to over consumption to the point of waste.

The big investment banks like Goldman Sachs, Bear Sterns, Morgan Stanley, Merrill Lynch and Lehman Bros. awarded their employees in excess of $130 billion in bonuses between 2003 till 2007.

“Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.”

http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

Bill Coleman, chief compensation officer at Salary.com states the following:

``Wall Street has created this mindset that most people find obscene, which is that it's hard to live on just half a million dollars a year.''

By replacing Pluto, the Greek God of wealth, with ADEPHAGIA, the Greek goddess of gluttony, we see a sea change in attitude.

Does this mark a dangerous trend in business philosophies, in that executive’s lifestyles are paramount, irrespective of fate of their organizations, shareholders and executives?

Does this mean that on Wall Street, gluttony has been a way of life?

Greed

“There is a sufficiency in the world for man's need but not for man's greed.”

Mahatma Gandhi

The Goose with the Golden Eggs

Once upon a time there was a poultry farmer who had a goose which laid golden eggs. This provided a comfortable existence for the farmer. However one day the farmer decided to take out all the golden eggs and so cut the goose. Alas, the farmer lost his steady earning.

The Global world order is dominated by Capitalism. Capitalism has in its root, greed, or the desire for accumulation of wealth. An excess of greed can be catastrophic.

The SEC or the Securities and Exchange Commission was created by the Securities Exchange Act of 1934 as an independent agency of the US Government for enforcing the federal securities laws and regulating the securities, stock and options exchanges, and other electronic securities markets.

The Net Capital Rule, of the SEC mandated the maintenance of a ratio of indebtedness and liquid assets. The objective was to ensure that in the event of a large bad debt brokers/dealers would be able to maintain operations.

The Net Capital Rule was done away with for large investment banks in April 2004

http://www.sec.gov/news/press/2004-58.htm

In their desire to expand all prudence was lost. Over-leveraging no longer regulated by the SEC; saw caution being thrown to the winds. In the period of four years from april 2004 to October 2008, all the large Investment Banks have either collapsed, or converted their operations from Investment banking to commercial Banking.

“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.”

Erich Fromm

So the question arises: Is greed a bottomless pit? How much is enough? When does greed become narcotic?

Hope

In 1762, Sir Francis Baring, founded the Barings Bank. Originally called the “John and Francis Baring Company”, it was later to become Baring Brothers in 1806. After a very long and sometimes checkered history, including participation in the Louisiana Purchase and overexposure to Argentinean and Uruguay debt in 1890, it embarked on a path of fiscal prudence and caution so much so that it became the Bank of the British Monarchy.

Nick Leeson was a derivatives trader in Singapore for the Barrings Banks. While working at the Bank, Nick made a large number of unauthorized speculative trades which made some decent profits. However his luck turned and he soon started making errors and losses which he hid. Between 1992 and 1994 the losses had ballooned from 2 million to pounds 208 million.

In the hope that he would be able to recover these losses he placed huge bets on the 16th of January 1995 on the Tokyo exchange. However the Kobe earthquake of 17th January 1995 sent everything in a tailspin and the losses mounted to pounds 807 million, causing the bank to collapse.

Falsely relying on hope as a means to salvation was the end of Nick Leeson and the Barrings Bank.

"Hope is the most evil of evils, because it prolongs man's torment."

Friedrich Nietzsche

This sense of living on hope is not an isolated and rare event as it may seem. We are all prey to this phenomenon at various stages. When things are not working out or going wrong, we fall back on “Hope”. We hope that things will turn out right. We “Hope” that we will meet our targets. We “Hope” that the economy will be all right. We “Hope” that the boss will give a raise.

He that lives upon hope will die fasting.

Benjamin Franklin

The problem with “Hope” is that it lulls us into a sense of complacency. When a sales person sees a “Sales pipeline” he is prone to feel “Hope” that he will meet his target, little realizing that he has to be on guard, and that a sale is a sale only when the money is in the bank, not when he has got a letter of intent, nor when he has got a purchase order.

Hope can be a very disabling emotion. It “disables” action and weakens the effort. For success in any action we have to overcome “Hope” and rely on action.

“Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”

Dale Carnegie
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Does “Hope” act as a disabling emotion? Does it lull people in a sense of Complacency?