Vanity Fair Tackles Sarah Palin and AIG

I don’t read Vanity Fair regularly, but maybe I should. It’s published a few of my favorite articles in recent memory, and this month’s issue smashes two home runs with It Came from Wasilla and The Man Who Crashed the World.

The first piece, about Sarah Palin of course, is as damning to John McCain and his impetuous nature as it is to the (soon to be) former governor of Alaska. I think we all knew that Sarah Palin was a bit insane and certainly not qualified to be vice president, but good God, this piece exposes her as a bona fide whacko.

I particularly enjoyed the following tidbit about Alaska and I can say with some certainty that we won’t be seeing a national political figure from that state again in my lifetime.

The first thing McCain could have learned about Palin is what it means that she is from Alaska. More than 30 years ago, John McPhee wrote, “Alaska is a foreign country significantly populated with Americans. Its languages extend to English. Its nature is its own. Nothing seems so unexpected as the boxes marked ‘U.S. Mail.’” That description still fits. The state capital, Juneau, is 600 miles from the principal city, Anchorage, and is reachable only by air or sea. Alaskan politicians list the length of their residency in the state (if they were not born there) at the top of their biographies, and are careful to specify whether they like hunting, fishing, or both. There is little sense of government as an enduring institution: when the annual 90-day legislative session is over, the legislators pack up their offices, files, and computers, and take everything home. Alaska’s largest newspaper, the Anchorage Daily News, maintains no full-time bureau in Juneau to cover the statehouse. As in any resource-rich developing country with weak institutions and woeful oversight, corruption and official misconduct go easily unchecked. Scrutiny is not welcome, and Alaskans of every age and station, of every race and political stripe,unself-consciously refer to every other place on earth with a single word: Outside.

So, of all the puzzling things that Sarah Palin told the American public last fall, perhaps the most puzzling was this: “Believe me, Alaska is like a microcosm of America.”

Believe me, it is not.

The Palin piece came out just a few days before she inexplicably decided to resign as governor, which makes this article seem even more bizarre. It’s well worth the read if you’re at all interested in the previous election. There are also quite a few head-scratchers and chuckles in there.

Bill Simmons recently described Michael Lewis as “the Albert Pujols of writers.” If you’re not familiar with contemporary journalism or baseball, this means that Lewis is unbelievably prolific and a threat to hit it out of the park at any moment. I think I’ve read half a dozen exemplary pieces by him in the last six months (his overview of the financial crisis in Portfolio magazine was terrific).

In The Man Who Crashed the World, Lewis focuses on a man named Joseph Cassano, the head of A.I.G. Financial Products. While it’s impossible to blame a single person or organization for the mess we’re in, Michael Lewis makes a compelling case, albeit with a bit of journalistic sensationalism, that Joe Cassano is the reason why seven of your friends got laid off this year.

As recently as August 2007, A.I.G. F.P. traders were feeling almost smug: all these loans made in 2006 and 2007 were going bad, but the relatively more responsible 2005 vintage that they had insureddidn’t look as if it would suffer any credit losses. They were, they thought, the smart guys at the poker table. Joe Cassano even went on an investor conference call and said, famously, “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 on any of thosetransactions.”

And yet the A.I.G. F.P. traders left behind, much as they despise him personally, refuse to believe Cassano was engaged in any kind of fraud. The problem is that they knew him. And they believe that his crime was not mere legal fraudulence but the deeper kind: a need forsubservience in others and an unwillingness to acknowledge his own weaknesses. “When he said that he could not envision losses, that we wouldn’t lose a dime, I am positive that he believed that,” says one of the traders. The problem with Joe Cassano wasn’t that he knew he was wrong. It was that it was too important to him that he be right. More than anything, Joe Cassano wanted to be one of Wall Street’s big shots. He wound up being its perfect customer.

Oddly enough, I think there’s a common theme in these two seemingly unrelated pieces: the fundamental personality flaws that lead to bad decision making exist at all levels of society.

John McCain couldn't field a staff that was capable of properly vetting a vice presidential candidate; that is, the person who would stand a fairly good chance of rising to the most powerful elected office in the entire world. McCain himself failed to properly weigh his options, and while it's impossible to know how much of an effect the Palin pick had on the election, I think most people would agree that it didn't help the Republican cause (thanks Sarah!).

The architects of the global financial system have created a machine that processes unfathomable amounts of money each day, yet a lone despotic sociopath in an obscure unit of a single investment bank managed to slow the world's economy to a screeching halt. (There's that sensationalism again).

The lesson: Never assume that people know what they're doing, and the more they act like they know what's happening, the more dubious you should be.