Patients suffering from characterological defects emphasize certain defensive reactions that are not frequently encountered in the psychoneurotic. Some of these patients have an unusual orientation to the outer world. They must fail. They unconsciously attempt to create an environment in which they feel frustrated. This constitutes an adjustment; frustration has become a way of life. In so far as they cannot master a benign environment they construct one that is harsh and ungiving. The patient's attempt to reconstruct such a frustrating environment is highlighted in the transference. The patient feels frustrated because the constant reliability of the analytic situation refuses to frustrate him. This compensatory defense—the creation of a traumatic but familiar setting—is referred to as externalization, which is distinguished from masochism and projection. The techniques of working with such 'needy' patients demand further scrutiny.