Pam opens her teapot, and is thrilled. Jim doesn't say anything, but she knows it's from him anyway, because they are The Magic. Dwight tosses Ryan his gift, which nearly gives Michael a stroke. And Ryan opens up a video iPod. Which, by the way, you can watch episodes of The Office on, as soon as the writers stop getting screwed out of their share of the revenue. "Whoa, somebody really got carried away with the spirit of Christmas," Michael gloats from behind his madly flashing digital camera, while everyone -- no one more so than Ryan -- looks uncomfortable at the $400 price tag. Michael acts all expansive and generous, saying that what matters is that Christmas is fun. So now it's Michael's turn to open his gift, and he says those three words everyone wants to hear -- especially Phyllis -- when their gift is opened: "Ah, come on." Phyllis says she knitted the pink oven mitt (with a rubber insulated palm) herself, and Michael storms out of the office, throwing the Santa hat on the reception couch as he goes. And then he bitches to us about how little Phyllis cares about him. "I gave Ryan an iPod!" he snots, waving his oven-mitted hand around. And not to pile on Phyllis, because I appreciate hand-crafted gifts, but...pink?
Inside the office, the Secret Santa proceedings have come to a halt, while Dwight makes everyone wait for further instructions from Michael. Phyllis is, of course, devastated. Naturally Michael's Santa was the most phragile person in the office. It couldn't have been any other way. Finally Michael comes back and breezily decrees that it's not Secret Santa any more; it's Yankee Swap, also known as "Nasty Christmas" or "White Elephant" or "Dirty Santa" or "Michael Scott Is A Prick," depending upon certain regional preferences. Oscar and Angela object, and Angela THs that Michael should have asked the party planning committee before making a change like this. And then she abruptly melts into tears, in that patented disaster-victim way she has.
Michael tells Meredith it's her turn, and she poaches Pam's teapot, despite Michael's efforts to sell his oven mitt. Jim objects, but Michael shuts him down with a piercing scream of "EEEEEEYankee Swap!". And now Pam takes Ryan's iPod. Ryan picks a new gift, and opens a flowery lavender desktop nameplate that reads "Kelly." "That was meant for Kelly," Stanley volunteers. "I think this is going great!" Michael self-deludes.