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The Lacuna, Barbara Kingsolver, 2009

The latest from Kingsolver (The Poisonwood Bible, Pigs in Heaven) is a strange one and has been met with mixed reviews. This reader liked it.

It is set in the time period from 1929 to 1951 and Kingsolver’s primary objective seems to have been to focus on significant events of the period; the great depression, war, the cold war and communist witch hunt; from a purely personal point of view namely through the life of the protagonist; a young man, Harrison William Shepherd, whose father is a Washington DC government bean counter and whose mother is the daughter of a Mexican bureaucrat (without an ounce of Indian blood) who married Shepherd as a young teenager against her parent’s will. The novel form is a little hard to make out but seems to be a biography of Shepherd based on diaries and letters and pulled together by mysterious archivist VB.

Tajin Pyramid near Veracruz

The story begins with the divorce of his parents when Shepherd is 12 and his mother returns to Mexico with her new lover, Enrique, a Mexican diplomat and owner of a Hacienda on Isla Pixol a small island north of Veracruz. The island has no school but Enrique loans the boy a few books at a time, mostly European classics, from his personal and locked library. Shepherd reads whatever Enrique chooses. The books include a few on Mexican history and young Shepherd develops a passion for Mexico’s great past civilizations. Shepherd’s mother buys the boy a leather bound diary and Shepherd begins his lifelong habit of keeping a diary.

Life on the island isn’t bad since a young cook takes him under his wing, teaching him to cook, and giving him his dead brother’s hand made diving mask. Shepherd becomes a proficient swimmer and diver and loves to explore an isolated cove where he discovers an underwater cave,a Lacuna. At low tide, during a full moon, the mouth of the cave is exposed and it is possible for Shepherd to enter and explore the cave. He can see light ahead and sets a goal of becoming strong enough to swim to where the light is. In his explorations he finds stone carvings and human bones and imagines that the Indians stored secret treasures in the cave when the Spanish arrived.

Shepherd’s mother tires of the stingy Enrique and runs away to Mexico City with a wealthy, married, businessman who promises her a place of her own and school for her son. Shepherd discovers the great Aztec ruins of Mexico City. Shepherd cannot pass the entrance exams for the better schools and is finally sent to a Catholic run school for misfits and delinquents.

Bonus Army Camp and Col. Pattan’s attack force

Bonus Army Camp burns with Capital in background

His mother convinces his father to put Shepherd in a good American school and packs him off alone by train back to DC. His father, the bean counter, arranges a place in a boarding school where he abandons him. Shepherd and one other student, an orphan and street smart bully are the only two students who live at the school year round. The two boys spend time on the DC Mall where one of the largest Hoovervilles has grown with tents everywhere and people are living in abandoned warehouses. On one occasion WWI veterans stage a protest demonstration because the government has failed to pay their promised pensions and Hoover sends the army (Gen. MacArthur and Col. Patton) to break up the protest. They use horses, tanks, and tear gas, trampling many and accidentally setting fire to some warehouses.

Diego Rivera and Frida Kahlo

Diego Rivera Mexico City Mural

The story suddenly jumps a couple of years ahead and VB explains that a diary for those years is missing. We move to 1935 and find ourselves again in Mexico city. Shepherd is 18 and looking for work in a world without jobs. One day he sees an Aztec queen in the market followed by her slave carrying a bamboo bird cage on her head. The queen is buying birds from the market. Shepherd also goes to the city hall where he sees a mural in progress depicting the history of Mexico. On another day Shepherd again sees the Aztec queen in the market alone and offers to help carry her purchases home. The home is a bright blue house with a fabulous garden; Shepherd has met the painters Frida Kahlo and her husband Diego Rivera. He goes to work in their kitchen. Shortly after, Diego prepares to receive special guests by turning the blue house into a fortress. A Russian peasant couple show up; it is Lev Davidovich Trotsky and his wife. Shepherd knows how to type and becomes a second secretary to Trotsky. This appears a little over the top but somehow works.

Lev Davidovich Trosky and Natalya

Shepherd has also been secretly writing his own novel, a story of Cortez and Moctezuma, known only to Frida. Shepherd’s mother dies suddenly in a car accident while racing with her reporter boy friend to catch sight of Howard Hughes landing at a nearby airfield.

Trotsky is brutally murdered while Shepherd is in the house and the police arrive to take away all of Shepherd’s personal things including his novel and diaries. Frida goes to the police and manages to retrieve his clothes and other items and convinces Shepherd it is time for him to return to Gringolandia (America). She needs to ship her paintings to Peggy Guggenheim’s NY Gallery and sends Shepherd as her shipping agent. She gives him an extra crate which contains a small painting, a gift for Shepherd. After delivering the paintings, Shepherd returns to DC to discover his father has died leaving him a small amount of money and a nearly new white Chevy coupe. Orphan Shepherd drives out the new Blue ridge mountain federal highway until it ends in Asheville NC. He takes a room in a boarding house and gets a job. It is now 1940.

1939 Chevy Coupe

When the war starts Shepherd, who has been blue carded, (he has the wrong sexual preferences) is recruited by the Civilian service to help ship national treasures from DC to Asheville for safe keeping. In 1943 he finally opens Frida’s gift crate. The sketch it contains is not packed in the usual straw but in crumpled up paper and he discovers that Frida has managed to retrieve all his novel and diaries from the police and has hidden them as packing material in the crate. Shepherd immediately buys a typewriter and starts turning the pages into a manuscript. It is published, critically acclaimed, and suddenly Shepherd is famous and has money. He buys a small craftsmen s cottage and sets to work on his second novel. He is overwhelmed with mail and decides to hire a stenographer.

Appalachian Family

Violet Brown (VB) shows up for the interview and he realizes they lived for years in the same boarding house. VB is a widow, 17 years older than Shepherd. Her people have lived in the mountains a day’s drive from Asheville for hundreds of years and she is the only member of her family ever to have escaped the mountains (to Asheville). She reads widely and follows the National Geographic magazine, dreaming of trips she never expects to make. She speaks an idiom that would have been familiar to Shakespeare. She is unshakable and practical and was able to handle the army bureaucracy effortlessly as a secretary during the war. Shepherd hires her and she not only organizes his correspondence and novel drafts, but helps him deal with his new found fame getting him out of the house to mix with the town. The Asheville of this novel is the Ashville of Thomas Wolfe whose tell-all first novel exposed to town to scandal that forced Wolfe to move to NYC. (not to be confused with white suited Tom Wolfe) There is no mention here of Black Mountain College, famous after the war for the works of John Cage, Buckminster Fuller, or Merce Cunningham, who formed the cultural avant garde of the era.

The war ends and his second novel is published to even greater acclaim. He needs to hire a lawyer to negotiate the movie rights. He takes VB to DC to view a contemporary art exhibit the State Department wants to use to show the Europeans that American culture is more than Norman Rockwell. It is VBs first trip out of the county. Congress hates the show and kills the idea of touring the exhibit.

Shepherd decides to set his next novel in the Yucatan dealing with the decline of Mayan culture. He and VB spend two months in Mexico researching his subject. They return to Asheville to the inevitable rumors that they are romantically involved.

The last third of Lacuna deals with the post war Red scare and the communist witch hunts. Guess who is one of the victims. None other than gay, half Mexican friend of famous communists Frida and Diego, and former personal secretary to Bolshevik founder Trotsky himself.

Shepherd consults his lawyer and has VB burn all his diaries and letters, particularly those from/to Frida and Diego. Shepherd is hauled before Congress and it is all but certain he will be arrested. Before that happens he and VB make a final trip to Mexico (using assumed names), back to Isla Pixol. On the full moon at low tide with VB and other island children as witnesses Shepherd, who has been training in an Asheville pool, dives into his boyhood cove and vanishes. He is 34 years old. His body is never recovered. You can guess how VB managed to create this book from all the “burned” material.

How Markets Fail, John Cassidy, 2009

This book is a devastating indictment of Fed Chairman Alan Greenspan and of economics and economists generally. When academic economics should have been focused on Cassidy’s title question: How do Markets Fail? Instead in a blog entitled “The Unfortunate Uselessness of Most State of the Art Academic Monetary Economics“, Willem Buiter, Professor at prestigious London School of Economics charges:

The typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so may have set back by decades serious investigations of aggregate economic behavior and economic policy-relevant understanding. It was a privately and publicly waste of time and resources.

Despite this conclusion, Cassidy feels a need to take us through 200 ponderous pages of the history of economic theory. Probably most readers give up far before reaching the heart of the book and the author’s central arguments.

John Von Neumann at Los Alamos

His history starts picking up when, in 1937, polyglot John Von Neumann (computers, Manhattan project, encryption, etc.) decided to write a paper on economics using the new game theory. Von Neumann teased economists of the day that if their articles using mathematics could be thought to have been written in the age of Newton so primitive were their methods. Von Neumann’s article resulted in two changes; better qualified economists left the field to study game theory; and an extensive discussion of the Prisoner’s Dilemma entered economics discussions. Prisoner’s Dilemma asks why multiple independent actors do not cooperate to achieve optimal outcomes. Instead, in study after study, actors assume the worst of others and act accordingly with the result that inferior outcomes result. Classic examples explain why Microsoft’s operating system becomes dominant when Unix and Apple have vastly superior operating systems and why Intel’s microprocessors become dominant when Motorola microprocessors used by Apple and early engineering workstations were clearly superior.

His history is primarily a battle of ideas or ideology between the free marketeers and the Keynesians. The free marketers take control during stable good economic times and go into eclipse during times of economic turmoil lying low and waiting to reemerge when memories of an economic collapse fade. The great depression, its lessons and the dominant period of Keynesian thought held until the 70’s when a combination of high inflation coupled with high unemployment and tagged “stagflation” led to the end of Keynesian dominance and emergence of the Chicago free market school of Hayek and Milton Friedman. The change was complete with the election of Ronald Regan who appointed Alan Greenspan to head the Federal Reserve. Deregulation, started by Carter in Telecommunications and the airlines was extended to banking and finance. The immediate collapse of the savings and loan industry did nothing to slow the resurgence and power of the free marketeers.

Hyman Minsky

One of the strange things about the history of economics has been the lack of study or interest in banking and the financial economy which is inexplicable given that banks are virtually always at the heart of every economic collapse. Cassidy can find only one economist, Hyman Minsky, working in obscurity at Washington University, who focused on banks and the financial industry and who was an avowed Keynesian who came to the conclusion that the financial market is inherently and violently unstable. Minsky’s books are mostly out of print and Cassidy notes that the recent collapse and freezing of the credit market caused people to bid hundreds of dollars (Cassidy included?) for copies of Minsky’s books on Ebay. The financial market has grown until it now represents a majority of the GDP in the US and if the financial market impact adjusted for inflation is removed from GDP, the US economy has been almost stagnant for the last thirty years. So why did economists not study the key growth portion of the economy? Good question.

Boston Schemer Charles Ponzi

Minsky’s main insight is that the financial markets most innovative changes are actually Ponzi schemes and he coined the term Ponzi Finance to describe these activities. for Ponzi finance, expected income flows will not cover interest cost, so the firm must borrow more or sell off assets simply to service its debt. The hope is that either the market value of assets or income will rise enough to pay off interest and principal. Hence the need to promote successive asset bubbles to sustain the illusion of profits.

Cassidy turns to the question of why banking and wall street executives continued to put all their resources and investments into the Ponzi finance Sub Prime mortgage market even though many of the executives were shown to be aware that the Sub Prime mortgage market was guaranteed to blow up in their faces and that the housing bubble would burst at some time. He dismisses that short term incentives were at fault since several of the top executives held stock worth more than a billion and the poorest held at least 150 million in stock. So why would these aware and intelligence executives drive their companies off the cliff by continuing to load up on sub prime mortgages? Clearly these executives are unable manage their own behavior and need significant regulatory constraints. Yet Cassidy doubts that regulatory reform is forthcoming.

To illustrate the pressures to support bubbles, Cassidy gives the example of the funds manager who sold his fund’s internet dot com holdings a few months before the bubble burst and was fired while another manager held on to his internet holdings, costing the fund 2.5 billion in losses in the burst but who still managed the same fund five years later. This phenomenon has been labeled rational irrationality. Another way to say investors resemble lemmings.

Almost as an aside, but a subject dear to the heart of Nassim Nicholas Taleb author of The Black Swan; the prdilection of economist to assume that various economic phenomena such as stock prices conform to the Gaussian Bell Curve.
Mandelbrot, creator of chaos theory, took the daily DOW Jones Industrial averages from 1916 to 2003 and calculate the mean and standard deviations. If the data actually fit the Bell Curve, one would expect a daily swing of 7% or more only once every 1,000 years. In fact, such swings occurred 48 times in the period under study. In Taleb’s terms there were a remarkable 48 Black Swans during this period. Yet economists continue to model things like risk in terms of conformity to the Bell Curve. Bell Curves were at the heart of the risk models of LTCM (Long Term Capital Management), the hedge fund that collapsed in 1998 due to the emergence of Black Swans. Similarly, and learning nothing from LTCM, the VAR (Value at Risk) models at the heart of the sub prime mortgage market with its derivatives and insurance and AAA ratings had erroneous Bell Curves at their heart. It was obvious, even to many of the key players, that this market would crash so its hard to call the events of the bubble bursting a Black Swan event.

He finds a choice quote in January 2004 from Alan Greenspan for which Cassidy names the entire period the “Greenspan Bubble Era“;

Recent Regulatory reform coupled with innovative technologies has spawned rapidly growing markets for, among many other products, asset backed securities, collateral loan obligations, and credit default swaps…These increasingly complex financial instruments have contributed, especially over the recent stressful period, to the development of a far more flexible, efficient, and hence resilient financial system than existed just a quarter of a century ago.

Cassidy politely calls Greenspan a Naif.

In spite of his promise to write a book of ideas, Cassidy delves into the actual banking meltdown of 2007 – 2008 in some detail. His purpose is primarily to decry the “moral hazard” of the sequence of events that caused the government to ride to the rescue of irresponsible executives who seem to have learned only that they largely insulated from the repercussions of their risky behavior and who today are engaging in the same risky behavior, this time with Federally borrowed money. Cassidy is pretty depressed that things will never change in this one sided socialism.

This book takes discipline to fight through but there are some rewards.

Wolf Hall, Hilary Mantel, 2009
This novel, winner of the Man Booker Prize, is set in the era of Henry VIII from 1527 to 1535 and is told from the perspective of Thomas Cromwell. For the English, the story and cast of characters is probably familiar from childhood, but for this reader it was helpful to have recently viewed the first two seasons of The Tudors TV Series. Unfortunately in the series Henry (Jonathan Rhys Meyers) is not fat and Cromwell (James Frain) is not ugly and physically imposing. The novel has the huge advantage that we can share not only Cromwell’s words (”the most cunning man in England, but who looks like a killer”) but his innermost thoughts as well.

Cromwell in 1527 <> <> <> <> Frain as Cromwell

The novel actually opens in 1500 with Thomas’ blacksmith father Walter delivering a severe beating almost killing 15 year old Thomas. Thomas runs away to the continent where he fights alongside the French briefly before continuing on to Italy (Venice and Florence) where he receives a first class education (bookkeeping, trade, banking and finance, and the law). He returns to England an experienced trader, lawyer, and commited Machiavellian. Cromwell finds work with Cardinal Wolsey, Archbishop of York the most powerful, richest, and vainest man in England. Wolsey surrounds himself with cleaver aids and Cromwell is the ablest and cleaver ist.

We pick up the story in 1527 when Cromwell is 42 and Henry has decided that Katherine of Aragon will not be able to give him a male heir and wants to divorce her to marry Anne Boleyn. Wolsey is unable to help with Henry’s divorce and Henry slowly confiscates Wolsey’s property as punishment. Cromwell carries messages between Henry and Wolsey and Henry comes to respect Cromwell for his loyalty and straight talking intelligence. When Wolsey falls from power, Henry brings Cromwell to advice him and Cromwell slowly gains power and influence in England.

Henry VIII Painting <> <> <> <> Meyers as Henry

Much of Cromwell’s advice has to do with empowering Parliament and making Henry head of the Church in England. The Church holds a third of all land in England and Cromwell realizes that selectively confiscating this land and imprisoning treasonous churchmen will assure Henry’s power and finances. Cromwell becomes the most feared man in England.
The novel is subtly written and assumes the reader is generally familiar with the story and cast of characters. Because it is told from Cromwell’s point of view it is a very Machiavellian view of the times and events. One example: a lord in the north is mismanaging his estates and is heavily in debt. It is Cromwell’s job to talk some sense into him.

Cromwell: But my lord, they need supply, they need provision they need walls and forts in good repair. If you cannot ensure these things you are worse than useless. The king will take your title away and give them to someone who will do the job you cannot…
Lord Percy: He will not. He respects all ancient titles all ancient rights.
Cromwell: Then Let’s say I will. (to himself) Let’s say I will rip your life apart. Me and my banker friends. How can I explain to him? The world is not run from where he thinks. Not from his border fortresses, not even from Whitehall. The world is run from Antwerp, from Florence, from places he has never imagined; from Lisbon, from where the ships with sails of silk drift west and are burned up in the sun. Not from the castle walls, but from counting houses, not be the call of the bugle, but by the click of the abacus, not by the grate and click of the mechanism of the gun but by the scrape of the pen on the page of the promissory note that pays for the gun and the gunsmith and the powder and shot.

Other times Mantel brings an incredible conciseness to a complex tale:

But Christendom was overturned for the Boleyn marriage, to put the ginger pig (Elizabeth) in the cradle.

Not exactly Shakespeare, but that just about sums up the whole story. Well worth the effort.

Where Men Win Glory; The Odyssey of Pat Tillman, Jon Krakauer, 2009

Previously read books by Krakauer include Into Thin Air, the account of the 1996 climbing disaster on Everest; Into the Wild, which was adapted for a movie by Sean Penn; and Under the Banner of Heaven, a story of the Mormon’s violent history. Given this list, it is clear why Krakauer would be interested in the Tillman story.

Pat Tillman

Krakauer had some difficulty fleshing this one out. No one in Pat’s family beyond his wife Mary was willing to help or even be interviewed. The reluctance of the family in the aftermath of the Bush administration’s attempt to turn his tragic death into war propaganda and to hide his fratricide is understandable. As he points out, Pat’s mother Dannie’s insistence on learning the truth of his death and holding the responsible accountable led to the release of most of the material that made the book possible. But to this day, The Bush administration and defense department have refused to release emails and other documents relating to top level involvement in the cover up and propaganda campaign.

One of the big ironies of the book is the central role of Pat’s mother Dannie in raising her three sons to love sports and athletics and to give them a set of values which made it all but inevitable that Pat and Kevin would volunteer for the army rangers in the aftermath of the 9/11 attacks. Dannie was crushed when she organized an intervention to talk Pat out of his decision that failed.

The book is organized into the parallel stories of the recent history of Afghanistan from the Soviet invasion to today with the story of Pat Tillman as he grew to become a star football player whose small size and relatively slow speed belied his real talents that allowed him to star at Arizona State and to start for the Arizona Cardinals in the NFL. Krakauer gets much of his Afghan story from Steve Coll’s Ghost Wars.

Propagandist Jim Wilkinson with Rice

Pat was first sent to Iraq where his group played a backup role in the rescue of Jessica Lynch. This allows Krakauer to talk about the false information and propaganda campaign surrounding Lynch spur headed by a Bush campaign propagandist Jim Wilkinson who later played a similar role in glorifying Tillman. A few days after the uneventful Lynch rescue, a group of marines was ordered into the same city An Nasiriyah to capture the bridges. When the commander’s tank bogged itself into a sewer under a power line so he lost both mobility and communications, the operation turned into a disaster. The group separated into three sub groups, none of which knew where the others were due to the terrible radios. Making matters worse, communicating with air cover requires different radios entirely and the only person able to establish contact with the two circling warthogs mistakenly directed the planes to fire on his own group killing many marines. The cover up of this action included “losing” the warthog videos that recorded the entire action.

The cover up of Tillman’s death, which is described in great detail because of the many subsequent investigations included burning his uniform and vest as well as his personal diary. Finally, after about seven investigations (all by the military), the squad responsible for the actual shooting was kicked out of the rangers and the staff Sargent was demoted. No higher authority was ever even reprimanded. The only reason the military finally revealed the friendly fire was that Pat’s brother Kevin was still in the rangers and was the only member of his group not to know the truth. The army finally realized that someone in Kevin’s group was bound to reveal the truth at some point so they decided to tell him.

Krakauer ends with disturbing statistics; 21% of American deaths in WWII are believed to be caused by friendly fire. the number for Vietnam is believed to be 39%, in the first gulf war the number climbs to 52%.

FOB Tillman

The book indicates that army ranger Tillman may have fired his weapon only once, a warning shot in Baghdad. The only action he was involved in was to be shot by his own colleagues. Not exactly the heroism he expected. Oh, the canyon where he was killed and the nearby Forward Operating Base (FOB) were named after him.

Googled, The End of the World as We Know It, Ken Auletta, 2009

This book, while still worth reading, is a big disappointment. The reader was expecting something akin to the remarkable 1981 The Soul of a New Machine by non engineer Tracy Kidder, that follows Data General as it designs a new generation of minicomputer intended to outperform the offerings of Digital Equipment Corp. This older book is a page turner that uniquely puts the reader into the environment of world class hardware engineers as they race to design the next market beater. I have encountered no other work that has successfully taken you inside this nerdish world.

Auletta focuses more on the technological displacement caused by Google than on the company and its founders and engineers, particularly the displacement experienced by media companies which is really Auletta’s main interest. As a result the two founders Larry Page, and Sergey Brin remain largely unknown beyond what the reader already knows. About their engineering and technology we learn virtually nothing at all. The outside CEO that the venture capitalists forced the founders to hire, Eric Schmidt, is an even bigger enigma. He comes off as a weak indecisive manager with no creativity or imagination and one wonders how he survived this long. His current contribution is to drag Google into “cloud computing” even though it is completely unclear why Google could write or buy suitable enterprise software or would be good at selling or managing this kind of business. Oh, incidentally, Schmidt shares Page’s and Brin’s passion for the Burning Man Festival.

Burning Man

The few facts imparted seem to be these. Larry Page and Sergey Brin met at Stanford and became and remain inseparable. They were both raised in academic families and both attended Montessori schools which encourage independent thought and activity. At Stanford Brin studied data mining, the algorithmic analysis of large amounts of digital data for information. Page was interested in the problem of Internet search and began developing the scan and search algorithms while a student. The first problem is to get the massive resources needed to scan the entire world wide web. The second problem is to somehow prioritize the search hits so that the most relevant results are listed first. We get little insight into either of these problems except some gobbledygook about the number of links to an item giving it weight. After reading this book we don’t know what makes Google the best search engine and this is a big disappointment.

Brin Schmidt Page

Auletta does a little better with the corporate culture captured in the corporate mantra “do no evil”. Somehow, maybe because Google searches are the best, or because their main search page remains totally uncluttered with cute ever changing and timely Google logos, the user has come to trust Google as users never trusted Microsoft. The founders, thus far, have succeeded in putting the user search experience first and any concern with making money second. Despite bad press for their voluntary censorship of their search results in China, Google remains (except for the companies their transformation threatens) a trusted brand and company.

“Do No Evil”

In fact, that Google became a money generating machine is described as almost an accident. Google is engineering driven and they wanted a totally automatic advertising model. What they came up with was an auction where bidders submit a list of keywords and the amount they are willing to pay per click for each word. The winning bid is allowed a short description which will appear in a walled out section of the search result (to make clear that the result is a paid advertisement). The advertiser pays only when the user actually clicks on the link to take them to the advertised page. The result is the money machine, named AdWords.

The second idea came a year later, called AdSense where Google uses a search query to guess what product or service the inquirer might be interested in and displaying, in the walled off section, short advertising blurbs describing the product or service. With AdSense, the result is not directly keyword driven but is driven by assumed inference from the query subject. Neither Adwords nor AdSense which are the only real revenue producers Google has yet conceived are poorly explained and given about 4 pages of the entire book.

In other words we don’t know why Google is the best search engine nor why they are able to generate enormous revenue after reading this book.

Auletta’s discussion of privacy comes down to this; users generally continue to trust that Google won’t misuse the information it collects and every other company in the world is extremely jealous of this information and the uses it could be put to.

Auletta gives considerable attention to the acquisition of YouTube, Google’s so far lack of success in monetizing YouTube, and the copyright problems engendered by user submitted content. Media seem to be slowly coming around to the idea that YouTube can be used to promote their products and lawsuits are abating.

Auletta spends some time on the competitive environment, particularly the almost comic efforts of Microsoft to acquire Yahoo for its reputation and search engine. (For a time when Google was young, Yahoo contracted its searches to Google so clearly even Yahoo recognized that Google has the superior engine). Auletta comments on this protracted odd-couple courtship (Steve Ballmer pursuing Jerry Yang) that the two companies only succeeded in knocking each other unconscious. Microsoft introduced its own search engine, Bing, after this book was completed, but Bing has only achieved about 10% market share and typically is completely entombed in Microsoft stuff like their Explorer 8.

Fearing that Microsoft Explorer will make it difficult to get to Google search, Google has introduced its own browser, Chrome. They would have been better off promoting Mozilla’s open source Firefox but I suspect Google hopes Chrome can become the operating system of cloud computing and wanted a platform that they control. I don’t think many users will use Chrome and Firefox remains very Google friendly.

In perhaps their biggest misstep to date, Google introduced its own open source mobile telephone operating system Android, which they failed to sell to Verizon. (AT&T has a deal with Apple and Iphone). So far, only Tmobile has agreed to experiment with Android. The mistake is that the once close relationship between Google and Apple has soured and Schmidt has been forced to resign from Apple’s board. Having Microsoft (and Yahoo) as enemies is probably inevitable but the Apple rupture should have been avoidable.

Google Earth View of Headquarters

Turning to his favorite subject, mass media, Auletta kind of loses Google because the transformational displacement faced by newspapers, television, radio, cable, and other media would have happened with or without Google. Google just happens to be the capitalization monster and money machine at the center of the Internet transformation. In this section we are really looking at the failures of leadership of these organizations as much as the Internet transformation itself. Corporate consolidation resulted in the corruption of journalism and content and general incompetence. The modern business manager is trained to focus on “efficiency” rather than opportunity and growth with the result that they manage their companies into non existence. Google didn’t destroy these companies, they self destructed in the face of an inevitable technical transformation. I wish this section hadn’t been put into a book purporting to be about Google. The best part of this section is a quote from NYU professor Clay Shirky (written for his blog of course) concerning the fate of newspapers:

The old stuff gets broken faster than the new stuff is put in its place. The importance of any given experiment isn’t apparent at the moment…When someone demands to know how we are going to replace newspapers, they are really demanding to be told that we are not living through a revolution…They are demanding to be told that the ancient social bargains aren’t in peril, that core institutions will be spared, that new methods of spreading information will improve previous practice rather than upending it. They are demanding to be lied to…We’re collectively living through 1500 (advent of the printing press), when its easier to see what’s broken than what will replace it…Society doesn’t need newspapers. What we need is journalism.

Maybe someday someone will write the real inside story of Google. This isn’t it.

This reader’s personal experience with search engines is more compelling than this book. As a software engineer, I was very dependent on being able to find very specific (and often obscure) information on the Internet. Every time a new search engine was introduced, I jumped to try it immediately, hoping that the frustration of finding what I needed would be lessened. When Google first appeared, in 1998-9, I tried it and never left. I have not tried Bing once. During the time I was developing Windows software for Ticketmaster, I was completely dependent on Google to find detailed technical information from Microsoft’s own Developers Network. If I used Microsoft’s own search from within their network I could never find anything. Google could find the most obscure information like how to create a dynamically scalable table in which rows and columns can be dynamically removed. Without Google search, I never would have found the right references and articles.

Too Big to Fail, Andrew Ross Sorkin, 2009

This book focuses on the period from the sale of Bear Sterns to JP Morgan (JPM) in March 2008 through the climactic weekend in September 2008 that decided the fates of Lehman Brothers, Merrill Lynch, and AIG, and finishing with the nine biggest wall street firms being forced to accept TARP money in exchange for stock warrants; the unthinkable temporary nationalization of the American financial system in October 2008 by a Republican administration. Like the account of Bear Sterns collapse, this book reads like a page turning novel.

Lehman Headquarters

Unlike William Cohen’s account, this book does not give a detailed history of the central firms, or attempt a detailed explanation of the securitized mortgages, sub-prime mortgages, and credit default swaps (insurance policies) at the heart of the crisis. Instead, Sorkin argues that even Alan Greenspan, with his extensive mathematical training, was unable to grasp the new investment vehicles, so clearly the wall street executive decision makers, the risk assessors, and the ratings agencies were unable to understand the investments they were rating or making. In other words don’t even try to understand the things at the very heart of the crisis. The only clear thing is that the real estate bubble burst and everyone’s home has lost value, along with 401Ks, etc.

Thus the Quants (quantitative analysts) who invented the complex strategies and instruments that led to the collapse of LTCM in 1998, who invented hedging investment strategies universally accepted whereby big investors hedge their risky investment bets by also betting on the opposite outcome, and who invented securitized asset vehicles that carve up a bundle of individual loans or assets into different risk valued slices that can be sold separately making it almost impossible to find or value the original loan or asset, and finally to credit default swaps (CDOs) as insurance or hedge options which serve to give the appearance of low risk and allow the investor to leverage their investments even further, go largely unexamined here. Someone needs to write a book about these creative geniuses whose work nearly brought on the second great depression.

Ultimate Gambler Einhorn

Some attention is given to short sellers like noisy David Einhorn who featured large in the demise of Bear Sterns. Once Bear was gone, Einhorn immediately focused on Lehman, calling into question their accounting and asset valuations. Thus was launched the short selling that quickly drove Lehman stock into the ground. The other Wall Street firms well understood the dynamic that they would be picked off one by one by the short sellers in order of size Bear first, following by Lehman, Merrill, Morgan, and Goldman. Citicorp was not far behind. But until it was their turn as the biggest firm still standing they said little about the practice. The short sellers were not limited to those who invest solely on the basis of shorting stock, but has spread to hedge fund managers and other institutional investors who now believe it is necessary to hedge your bets by placing opposing bets in order to minimize losses. The CEOs at Bear, Lehman (Fuld) and Merrill (Thain) railed against the short sellers but the government never seriously considered stopping the practice. They played with the uptick rule which Sorkin says is easy to get around. The British, by contrast, banned short selling for 30 days at the height of the crisis.

The Losing CEOs in Denial Thain Fuld Cayne

From March to September, the heads of all remaining investment banks on wall street should have seen the writing on the wall with the collapse of Bear Sterns and sought shelter through acquisition or transformation (to a bank or bank holding company) but the CEO of each, particularly Dick Fuld of Lehman and John Thain of Merrill remained in denial of the new realities of their world. Despite repeated pressure from Paulson at Treasury to raise equity or find a buyer both dithered the months away until it was too late. The section dealing with this interval reads like the lives of the rich and infamous as we meet and follow the handful of “masters of the universe” as they go about their daily lives; the private jets, the second homes, the globe trotting, the exclusive conferences. We meet second tier executives who need $13 million a year just to support their life style. No bridge players here but several masters ski regularly at Vail. The hobby of choice is golf with one CEO getting in 13 rounds of golf a week as his company goes up in flames. (Does even Tiger ever play 13 rounds of golf in a week?)

What really strikes home is how few masters of the universe there are and getting fewer by the day. They all know one another and share career histories as they move from firm to firm or into and out of government. Typically CEOs have previously lost battles for the top spot and retain that bitterness. They share a lack of trust in one another and seldom miss the chance to exploit an opportunity at the expense of a rival. In any crisis like those of last year they gather like sharks to try to learn the inside secrets of the failing firms and see what parts they may be able to devour or steal. They are less than honest even with themselves and seldom even consider the stockholder’s interests except to the extent that they themselves hold stock. They measure themselves in terms of their total compensation and not the success of the companies they lead. More and more, their compensation is untied to stocks and they can maximize their bonuses by creative accounting right up to day they file for bankruptcy. There are so few of them and now even fewer after the events of the last year that they can sit around a small conference table. A surprising number of them were mentored by Robert Rubin as if they are all his children, even Geithner. Warren Buffet hates and distrusts them all but still willing to capitalize on an opportunity if it is sweet enough.

The Key Government Players Paulson, Bernanke, Geithner, Duggan, Cox

The unexpected exception here is Paulson, a Christian Scientist, who lives comparatively modestly with a 1200 square foot apartment in New York, who hates traveling by private jet, who likes to ride his bicycle with his wife Wendy around Rock Creek Park in Washington, and whose main indulgence seems to have been the purchase of a piece of a bird preserve island in Georgia for $30+ million. Not expectantly, Paulson is the central character in this drama.

As to the conspirator’s government Goldman, Sorkin doesn’t believe it but recognizes how many Goldman CEOs have served in government. He relates a delightful story of Secretary Paulson and the Goldman management team coincidentally in Russia at the same time arranging a secret meeting in Moscow and terrified word might leak.

New York Federal Reserve

Tim Geithner is the second central character as head of the New York Fed and who comes across as decisive but imperious, loving to order the masters of universe around like he is a school master giving exams to his pupils. The masters refer to him as the boy scout. Largely missing here is Ben Bernanke who comes across as professorial and detached, who frustrates both Geithner and Paulson for his unwillingness to use Fed powers in creative and expansive ways to deal with the unfolding crisis. Most of the climactic scenes in this book take place in the New York Fed building with one memorable scene where the emergency room with its defibrillator still hanging on the wall at the Fed is quickly converted into a conference room for the Lehman team during the fateful weekend. The irony is not missed by Lehman.

But lots is happening during the lull from March to September. Countrywide, Indymac, and Washington Mutual banks fail and are quietly taken over by the FDIC and Shiela Bair, the only woman of power in this story. Neither Geithner nor Paulson cares much for Bair but they respect her work and ultimately recruit her to help in the TARP bank takeover in October. Perhaps the most significant event of this lull is the failure and government takeover of Freddie Mac and Fannie Mae, a move engineered by Paulson, who many believe tricked congress into giving him authorization. Both Freddie and Fannie keep armies of lobbyists, are insular and arrogant, and can bring enormous pollitical pressure when given enough time. Paulson surprised everyone by instantly nationalizing both firms and firing their management in July. Had Freddie and Fannie who hold more than 50% of the countries mortgages and who freely participated in buying sub prime and mortgage backed securities failed, the entire financial system would have melted down.

And finally we get to the dramatic climax of the book, the weekend in September when a three ring circus is convened to determine the fates of Lehman, Merrill, and AIG. That’s right, all three outcomes were determined in one chaotic sleepless weekend. As we enter the weekend, it is understood that Lehman will not survive to open on Monday, it has been discovered that out of control AIG has another undiscovered $20 billion loss in a real estate investment division bringing its total immediate capital need to at least $60 billion.

Paulson has pressured Bank of America to purchase Lehman but insists that he has burned all his political capital with Bear and the takeover of Freddie and Fannie and will be unable to do a “Jimmie” (Dimond of JPM) where Treasury guaranteed $39 billion in losses for the purchase of Bear. British Barclay is also readying a bid for Lehman and neither BofA nor the British believe Paulson will not participate with a guarantee. Suddenly BofA decides that Merrill is a better fit and unknown to most participants, drops its efforts to acquire Lehman to concentrate of Merrill. Barclay finalizes a bid but at the last minute the British regulators and government refuse to allow the deal fearing the wall street contagion will spread to London (as if they were somehow insular otherwise). Out of time and out of options (how can Paulson and Treasury guarantee losses to a British company?) Lehman is forced into bankruptcy. Fuld alone loses $850 million in stock value. Barclay immediately approaches the bankruptcy judge to buy the New York trading arm (the piece they were after to begin with) and the judge agrees to sell to them to preserve the US jobs. In the meanwhile, and without government intervention or help, BofA agrees to buy Merrill. BoA comes to regret this decision as the true state of Merrill comes to light.

Geithner focuses on AIG this critical weekend and realizes that a failure and default on all its CDOs will be disastrous and collapse the financial system so he masterminds a takeover of AIG which takes place Tuesday and costs taxpayers almost $80 billion (now up to $180 billion). Paul Krugman joked that Paulson’s free market moral hazard lesson issued to Lehman had lasted all of 24 hours.

Joseph Cassano “Patient Zero”

Sorkin includes a picture of Joseph Cassano head of AIGs financial products unit intriguingly dubbed the man who crashed Wall Street. Like Ralph Cioffi of Bear, Cassano single handedly brought down AIG as his quants invented the CDO. Cassano used to brag that CDOs were so perfect AIG would never lose $1 on a CDO. The correct number is $180 billion and counting. Warren Buffet has called the CDOs weapons of mass destruction. More detail on Cassano’s activities and how it destroyed AIG would have been useful. Maybe another book? Incidentally, in a monumental miscarriage of justice, Bear Sterns’ Cioffi and sidekick Matthew Tannin were recently acquitted on charges of lying about their investments.

The book now winds down to the anticlimactic meeting in Washington where the nine largest financial institutions are forced to take government money and government participation. Did all this government intervention save us from catastrophe? Did Lehman’s bankruptcy make thing worse. Sorkin believes that the Fed and Treasury were winging it, moving from crisis to crisis and making numerous sequential and inconsistent decisions which confused the market. TARP was intended to correct this but somehow morphed from buying toxic assets to direct investment in banks. Sorkin thinks the government inconsistency rather than the Lehman bankruptcy itself exacerbated the problems in the markets. Had the government a better regulatory system in place to unwind failing wall street firms like the FDIC would the crisis have looked completely different and would the outcome have been better? One can only speculate.

So what did we learn from all this? Absolutely nothing according to Sorkin’s two page wrap up. Rather than fix some problems with regulation and orderly liquidation, Obama has moved on to other priorities. Wall street continues to focus on generating fees for themselves rather than clients. They see enormous potential profits from the collapse of the commercial real estate bubble. They are taking bigger risks than ever now that they know the government is there if they get into trouble. Even as bank holding companies, leverage is beyond belief. Egos are as big as ever. The survivors feel invulnerable. Humility is totally absent. Compensation and profits are at record levels. We eagerly await the next crisis. Too bad these two books aren’t really novels.

Money Driven Medicine, Maggie Mahar, 2006

This book was published in 2006, two years before the bursting of the real estate bubble and the resulting collapse of Wall Street. Her message in 2006 is that the free market economy doesn’t work in health care. Now even free market pied piper and Serial Bubbler Alan Greenspan realizes it doesn’t work for much else of the economy. The central theme here is the pernicious effects of huge corporations; hospitals, insurers, pharmaceuticals, device and equipment manufacturers on our health care system. Lost in the equation are doctors and patients.

We previously reviewed an excellent history of health care and the road to our current mess and a review of a work exposing the pharmaceutical industry.

She mentions private insurers as they trim their enrollment, deny coverage for preexisting conditions, increase deductibles, and deny claims. She is particularly incensed by the new Las Vegas style “thrill seeker” policies. Blue Cross even named some of their plans Thrill-Seeker, Part Time Daredevil, and Calculated Risk Taker. The idea here is the buyer assumes they will never have a catastrophic health care problem but the low cost policy is there just in case. Of course the fine print in the policy plus the typical $10,000 deductible make the policy all but worthless for most illnesses and problems. Mahar also discusses the medicare drug benefit program which is costing far more than projected and precludes medicare from negotiating for better prices.

On doctors, Mahar says few keep up with developments in their field. They use the excuse of lacking time (that could be better used billing patients) but the effects are profound. In an experiment, a hypothetical patient with symptoms and test results was given to 130 doctors. Using amazing creativity they managed to come up with 88 distinct treatment programs. As far as doctors voluntarily adopting electronic records, it may have to wait for the next generation of doctors. There is a continuing trend for doctors to specialize. Specialists earn more money, only need to keep up with a limited field of knowledge, and can earn more prestige It has the side effect that the specialist has very limited contact with the annoying patient (they may be unconscious most of the time). The downside is the “when you have a hammer, everything is a nail” phenomenon where the specialist is tempted to expand business by employing unnecessary and even harmful treatment (See the Redding doctors later in the review).

As to why the free market economy doesn’t work in health care she gives a simple illustration. The patient visits his doctor who diagnoses a live threatening problem. An immediate operation is required to save the patients life and as luck would have it, the doctor and a hospital have an opening this very afternoon. Can the patient make an informed buying decision under these circumstances. Both the patient and the patient’s spouse are probably in total shock at the diagnosis and would be unable to make any sort of rational decision under the circumstances. This is a situation calling for complete trust between patient and doctor, not a free market economy. At the end of the book she includes a real world example of a doctor, after a full career diagnosing a treating a particular disease himself contracting that disease. Here the doctor has full world class knowledge and information about his own condition and the options available. Yet the doctor is frozen, unable to decide anything about his own treatment until a friend suggested he needed a doctor, a trusted outsider and professional to develop a treatment plan. Free market economics doesn’t apply to health care and Mahar coyly points out only economics of all social sciences is built around the assumption that people behave rationally.

Mahar discusses the full range of issues confronting our broken health care system but gives particular attention to two subjects; for-profit hospitals, and device manufacturers. Hospitals are a bad business for making money; they are labor intensive, need constant equipment updating, and their income is restricted by the private insurers and medicare. So the hospital business became a real estate play where the big hospital corporations go on a mergers and acquisitions binge, swallowing up low valued hospitals around the country. The difference in PE ratios between the hospital corporation and the acquired hospital translates direct to increased valuation of the corporation. Then, once the corporation is satiated it starts unloading its money losing hospitals and because real estate and hospital prices are continuing to rise, the corporation makes money from dumping its losing hospitals. The cycle repeats.

Sen. Bill Frist Lives High on Medicare Fraud

The other way hospital corporations make money is by over-billing, usually fraudulently, insurers and Medicare. They employ accountants who are specialists in “gaming” the insurers and medicare, often fraudulently. One of the first investor owned hospital corporations was HCA founded by the Frist family. In 2000 HCA paid a total of $1.7 billion is civil and criminal penalties as a result of fraudulent billing practices. Senator Bill Frist, joining other insiders at HCA in 2005, sold all his shares at $58, a market peak. Stock prices at HCA subsequently plunged and the company was taken private through a leveraged buyout in 2006. Was this a case of insider trading like that notorious Martha Stewart. Bill Frist was never prosecuted despite an SEC investigation.

Chae Hyun Moon and Fidel Realyvasquez Fraudulent Cardiologists

Hospitals were also generating business by performing unnecessary procedures including surgeries, most notoriously by two doctors in a Redding hospital who conducted bypass surgery and implanted stents in any patient who came their way, needed or not. Some patients who needed no surgery at all died as a result. The Federal government went after the hospital and two doctors with the resulting settlement that the doctors would no longer be eligible for Federal payments for their work. For private insurers, its business as usual.

Mahar also talks about the equipment arms races that all hospitals succumb to for competitive reasons. If one hospital gets a full body scanner, then all hospitals must get one. Doctors joke that in Toledo Ohio their are so many MRI machines that you can feel the magnetic force field just walking across town. The advertising that hospitals are now free to use escalates the arms race with hospitals trying to outbid each other with the latest amenities. They almost sound like resort spas today. Whats wrong with buying the latest equipment? For one thing you risk false negatives and subjecting patients to treatments they don’t need (like the Redding Cardiologists). But even older equipment like mammograms are only as good as the doctors or specialists reading the xrays. And the skill varies remarkably. By having every piece of equipment in every hospital you are almost assured that not everyone performing the tests is adequately skilled and competent, to say nothing of intentional misdiagnosis to generate business.

And what about those uninsured who show up in the hospital’s ER. If they don’t have insurance get lost. Despite laws to the contrary, more and more hospitals, including University research hospitals are turning away uninsured or under-insured patients who are unable to pay for treatment. Simply put, treating uninsured patients hurts the bottom line. Still hospitals routinely set aside a reserve of 12% or more to cover noncollectable debt.

Finally with hospitals there is the issue of electronic records. With billions at stake, IT vendors are falling all over themselves to offer proprietary systems. The problem is that the system do not inter-operate, that is, information can not be shared across systems by different vendors. Then hospitals work with many doctors who each has his own practice and each practice may use two or three different hospitals. Doctors are reluctant to install and learn an electronic record system and it is likely no one system will allow them to communicate with each hospital. Until the government steps in to create an interchangeability standard, electronic records will go nowhere. The two exceptions, noted by Mahar are Kaiser Permanente, a prepaid non profit hospital system and the VA. These two organization have been able to automate records because they are closed systems with payer, doctors, and hospitals all bundled into a unified health care system. The VA’s system costs $78 per patient per year to operate. Kaiser’s system costs $40 per patient per year to operate. Cost should not be a reason not to implement universal interoperable electronic health care records. The VA’s system has been so praised they have offered it free of charge to anyone wanting to automated their records. The VA even has volunteers willing to help any doctor set up a system. Still there are few takers. Electronic records is also not in the interests of the big powerful corporations controlling today’s health care. With electronic records it would be possible to track the performance of doctors, hospitals, devices, drugs, and see what is effective and to find problems. Secrecy is necessary to protect the big interests so expect a big fight over electronic records and interoperability.

Now don’t assume that non profit hospitals are immune to the problems of their for profit brothers. Non profit hospitals still require huge expenditures to keep up in the equipment arms race and for that they need to sell bonds to raise money, and to sell bonds, they need good credit ratings so they are subject to mast of the same problems and constraints of publicly traded companies.

Device manufacturers are now the leading cause of runaway health care costs, but to understand them Mahar says you must start with the pharmaceutical takeover of the FDA in the early 1990s (under Clinton. Pharmaceutical companies wanted fast track approval for new drugs and as part of the new federal mandate they directly foot most of the cost of running the FDA. The program was a rousing success with fast approval of record numbers of new drugs. But of course the FDA ceased to operate as a regulatory body responsible for continuous testing and monitor of FDA approved drugs and devices. As an example Vioxx was identified by the VA, Kaiser Permanente, and the Mayo Clinic as unsafe years before the the FDA came forward and Merck was forced to withdraw Vioxx.

Guidant’s Faulty Defibullator gets Recalled

Her worst device story concerns an implanted defibrillator manufactured by Guidant. A young man with a defibrillator suddenly died while riding a mountain bike in Moab Utah. A New York Times reporter got interested when he discovered the defibrillator had short circuited just when it was need which led to the death. The reporter filed a freedom of information request to find out how much the FDA knew about such failures. His request was denied but upheld on appeal. What he discovered was shocking. Guidant had known about the problem for years and had redesigned the unit to correct the problem but continued to sell the original design for at least three years after the redesign. Many deaths resulted from the faulty device but neither the FDA nor the company ever issued warning to doctors or patients. Only when the reporter began the first of more than 30 articles on the device did the FDA issue a very tepid warning. Oh, by the way Guidant was purchased by another company for an astounding $27 billion in the middle of all this. Device manufacturers think they can get away with anything and charge anything they want.

Now to some startling statistics. Worried about a government run health care option? The Federal government is already paying 51% of all health care costs if you add medicare, medicaid, VA, SCHIP, and Federal employees insurance. If you add tax revenue lost to deductions from employers and employees for health care, the Federal government is in fact paying 60% of all health care. The Federal government and its taxpayers are already paying more than enough for a first class comprehensive all inclusive health care system but the corporations are making sure we don’t get one.

And guess who the the big hero of this book is. The lowly Veterans Administration, those guys with the pealing paint and holes in the wall. The VA had been able to cut their costs by half at the same time everyone else s costs are skyrocketing. They have been able to dramatically reduce hospital beds, negotiate for better drug prices (The VA laments that if VA 5% drug market share could have added to Medicare’s 10% market share they could have negotiated even better prices), control doctor salaries, and implement only testing and treatment procedures that are acknowledged to be be best practices. The result is better outcomes and lower death rates along with lower costs.

Israel Is Real, Rich Cohen, 2009

A 350 page history of the Jewish people from Abraham, Moses, David, through to Zionism and today’s Israel is tough sledding for the reader. Cohen is American, doesn’t speak Hebrew, at one point claims he is Christian to be allowed into the Jerusalem old city, and writes with a strange mixture of empathy and puzzlement at the Jewish story and fate.

Jerusalem – Layers of History

His history is fleeting with special attention to the life arch of King David, from Shepard, to hero, to king, to wife stealer, (he sends the husband to die as a soldier), to sad old man yearning for his lost son. He credits David with the transition from wandering tribe carrying the Ark of the Covenant everywhere to building a permanent temple on the Temple Mount, thus fixing Jewish fate to a single geographic location. He also gives special attention to the Roman conquest and role of the warrior Jewish Zealots in the death and destruction of Judea including the second temple. The Roman built a temple to Jupiter on Temple Mount but within a few hundred years, the Caesars had converted to Christianity as had many Jews.

Yad Vashem Holocaust Memorial Museum

He discusses the 2000 year plight of the Jews with alternating pogroms, assimilation, ghettos, leading up to the Holocaust, which he says has been turned into a new religion with its own temples (museums now include Berlin and Washington) throughout the world centered by Jerusalem’s Yad Vashem, leading via Zionism to the formation of Israel.

He says after the Roman conquest, the Jews succeeded in turning the lost temple with its rituals into a book (or really several books) that they could again carry with them everywhere in their wanderings. Unlike the Ark, the book could be multiplied so every Jew could have his own copy wherever he went. He attributes the strength of the Jewish identity to possession of this book.

One interesting section deals with the rise of the notion of race which was intended to doom the prospects for assimilation since the Jews would never be considered Arlan even if they converted to Christianity. So, to counter the race argument, some Jews discovered a lost tribe of red headed Jews who for a short time around 700 AD ruled a small kingdom called Khazaria. But the concept of race somehow got buried deep in the psyche and today Jews are themselves very race conscience with their distinctions between Ashkenazi Diaspora-Caucasian Jews and Sephardic Jews from the Middle East, North Africa, and Spain.

He traces the origins of Zionism, the movement to return and create a Jewish state in Palestine to people like Disraeli, the first and only Jewish British prime minister and American journalist Mordecai Noah, or more interestingly, to German-Polish Jew Moses Hess who knew and shared a coffeehouse with Marx and Engels. Credit is generally given to Theodor Herzl near the end of the nineteenth century.

He traces the arch of the State of Israel through its key leaders and heroes, particularly warrior Ariel Sharon, hero of 1948, 1967, and 1973. He draws some parallels between Sharon and David and even Sharon and Moses. Sharon’s bold aggressive style of warfare finally came into disgrace in the 1982 Lebanon invasion following the Christian massacre of Palestinians in several refugee camps in Lebanon. In the final stage of the arch, we follow embittered Sharon as he leads a band of police to the mosque on the Temple Mount during Israel’s withdrawal from Gaza.

Ariel Sharon Visits Temple Mount

Most memorable are his stories of the 1973 Yom Kippur war which Israel almost lost. We see once heroic one eyed Moshe Dayan losing it when it appears Syria will prevail in Golan, ranting about the loss of the third temple and scaring everyone around him; we see tough Golda Meir taking a cigarette break to collect herself at the height of the crisis then calmly declaring “Let’s go back to work.”

Tough Mother Golda and her cigarette

Force Zvika

Then there is the amazing story of 21 year old tank commander Zvika Greengold, who commands the only remaining functional Israeli tank and enters the Hula Valley alone at dusk to try to hold off hundreds of assembled Syrian tanks until Israeli reinforcements can arrive. In an all night tank battle, without lights, Greengold maneuvered among and knocked out uncountable tanks and stopped the Syrian advance for 22 hours. He was aided by the fact that his aging tank was a Sherman the same that Syria was using, and that any tank he could find in the dark would be an enemy but the Syrian couldn’t identify him as an enemy. To confuse the Syrians further, he used his radio to command his “Force Zvika” tanks during the action. When reinforcements finally arrive the Israeli commander asks Greengold “Where is Force Zvika?” and he answers “I am Force Zvika”.

Dayan and Sharon during Yom Kippur War

The other Moses-like story concerns Ariel Sharon in the Sinai dessert in 1973. Two divisions of Egyptian soldier have driven the Israelis deep into the dessert where their advance is finally stopped. Some scouts report an incredible discovery; the two Egyptian divisions have left a gap fifteen miles wide between them. Sharon asks his timid commander Gonan for permission to drive through this gap to Suez. Gonan refuses but Sharon, of course, goes anyway. He gets to the Canal by morning and asks Gonan for bridges to cross. Gonan refuses again, so Sharon finds some derelict old landing craft and manages to get several hundred troops and equipment including tanks across the canal. The Egyptians awake to discover their supply lines cut (including water), Israeli troops camped a short drive from Cairo, and two divisions trapped in the dessert. An Egyptian MiG fighter attacks Sharon’s position and Sharon is wounded. Sharon is called back to Sinai for a meeting (shouting match) with Gonan with the result that reinforcements are sent to hold Sharon’s Egyptian position but not under Sharon’s command. Anwar Sadat is forced to negotiate a peace.

Jerusalem Epicenter of Western Religions – and Graveyard

He talks about visiting Israel and of the Jerusalem Syndrome which affects most visitors to the old city, possibly excepting Asian tourists whose culture is outside the Christian, Muslim, and Jewish traditions. Few visitors actually become psychotic but the effects of seeing all the layer upon layer of history built one upon the other and the sites that are central to the three major western religious traditions is somehow overpowering. One wishes that the entire city could be preserved as an international museum, protected from all the struggles and politics but of course Jerusalem is home to a diverse collection of people going about their daily lives, an idea inconsistent with the notion of museum.

The big dynamic today seems to be population, as the Arabs outproduce the Jews changing the political dynamic that would ultimately lead to an Arab controlled democracy. Cohen himself was criticized for being Jewish and for living in the safe US instead of returning to his Jewish homeland. If all American Jews emigrated to Israel (they automatically have Israeli citizenship) the population disparity would be instantly corrected and the Jews would dominate the country. This is the ultimate contradiction buried in the very concept of a religious state. It is something that Ataturk understood when he declared Turkey to be a secular state but that the Zionists and Ayatollahs of Iran have somehow missed.

“B” is for Best

Jenson Button 2009 Grand Prix Driving Champion

In the Brazil Grand Prix, Brawn GP won the constructor’s trophy in its first year of racing, while Jensen Button won the drivers title. This is the fifth straight year where the driver’s title was decided in Brazil, that mecca of sport ready to host the 2014 world soccer cup and the 2016 summer Olympics. (You’ve won a free vacaction to a destination of your choice; you choose A. Chicago; or B. Rio de Janiero. Yeah right.)

We seldom delve into sports with the exception of the tragic-comic 2007 Tour de France which was a first class debacle. This year’s Formula 1 racing season is turning into another memorable sporting season; one that is turning this inbred racing world upside down.

Formula 1 is truly the sport of the very wealthy with unlimited budgets in excess of $400 million (Toyota has been the top spender at $418M) and teams of up to 700 employees. The cost, size, and status of formula 1 in Europe make the America’s Cup contenders look like poor man’s amateur hour. Formula 1 has also been dominated by a few teams, four of which (McLaren, Williams, Renault (formerly Benetton) and Ferrari) have won every world championship since 1984. One driver, Michael Schumacher, and Ferrari won an unprecedented five consecutive drivers’ championships and six consecutive constructors’ championships between 1999 and 2004, putting Ferrari into the same league of dominance as the Boston Celtics under Bill Russell. Schumacher with his endorsements was by far the highest paid athlete in all of sports at the time of his retirement in 2006.

Schumacher and his Ferrari in 2005

Formula 1 today races on 17 circuits consisting of streets and specially built tracks throughout the world. Today they race in Asia, the Middle East, Europe, North and South America. Their most famous circuit is probably Monte Carlo where they race through the city tunneling under hotels and along the ocean side with one U turn reverse on the same street. The cars are powered by tiny 2.4 liter V8 engines that reach 18,000 RPM produce 450 HP and propel the cars to 220 MPH. The cars are technological marvels of electronics, aerodynamics, and ever changing invention and regulation. Tires are equally important with Michelin and Bridgestone competing with equal passion for dominance. In 2009 Bridgestone exclusively supplies the tires, both soft and hard compound, and the cars are required to use each type at least once in each race. Each circuit is unique with some set up clockwise and others counter-clockwise. The cars must be reconfigured with fuel tanks moved to the opposite sides depending on the track. Race conditions and road surfaces also vary dramatically and formula 1 cars race through rain, wind, and heat. Only very extreme conditions will halt a race. These different conditions often find favor for cars that otherwise seldom see wins such as BMW or driver Glock in the rain.

1976 Elf Formula 1

The respect for Formula 1 innovations and technology is highlighted by a McLaren story. McLaren’s designer of the transmission and rear suspension got a call from legendary Jackie Stewart asking him to host and answer the questions of a mysterious visitor, who turned out to be the real world gadget inventor of MI6 (”M” of James Bond fame.) “M” wanted to know everything about the innovative rear car design. One innovation that didn’t survive was the 1976 Elf 6 wheel car considered by some to be the ugliest racing car ever built. Another attempt pitted four cylinder engines against the 8 and 12 cylinder engines used at the time.

The most talked about innovation of 2009 was the addition of a Kinetic Energy Recovery System (KERS) 55 pound flywheel to the transmission. The flywheel stores kinetic energy during braking which can be released by the driver during acceleration. The KERS is of no value to the cars at the critical start of the race and the actual value of its addition seems to have gotten lost amid the surprise victories of the Brawn team.

Britain’s Lewis Hamilton 2007 Second Place and 2008 Formula 1 Driving Champion

Honda, tired of losing, hired the retired technical director of Benetton and Ferrari, Britisher Ross Brawn to head a new racing team for the 2008 season. Honda still finished the season 9th out of 11 teams. For the 2009 reason, Brawn developed a completely new chassis but when Honda sales turned down, a Honda family member returned to take the helm of the company and announced that Formula 1 racing would be dropped. Honda sold the team to Brawn for $1 but stopped production of the race engines as well. Brawn turned to Mercedes who supplies engines for other teams, and to Virgin and other sponsors to enter the 2009 season as Brawn GP with British Jenson Button and former Ferrari driver Brazilian Rubens Barrichello as drivers. Brawn barely finished modifying his new chassis for the Mercedes engines before start of qualifying for the Australian Grand Prix. Brawn GP qualified 1 and 2 and finished the race 1 and 2, setting the race world on its ear. Brawn GP and Button went on to win 6 out of the first 7 races of the season.

Britisher Ross Brawn and his revolutionary Brawn GP car leading the field

The other surprise team this year has been Red Bull (Renault engine) whose driver Sebastian Vettel is in second place in the drivers championship going into the last race and it appears Red Bull has now sown up second place in the constructors competition. Ferrari particularly has been beset by inexplicable lapses and problems. Brazilian driver Filipe Massa received insufficient fuel on his final pit stop and lost several positions nursing his Ferrari to the finish in one race. Another big 4 car lost a wheel on the track. Massa crashed his Ferrari while qualifying in Hungary and is out for the season. With one race remaining legendary Ferrari had won one race, Belgium.

Why is this huge change happening? There are suspicions and accusations, particular surrounding the innovative double diffuser which other teams tried to disallow, in this highly competitive world. In fact the issue of the double diffuser (a subtle rear undercarriage change that is crucial to the aerodynamics, and small changes can have a big impact on down force – and therefore grip and speed, actually ended up in court with Ferrari taking the lead in opposing the innovation. The court ruled that the double diffuser conformed to Formula 1 rules on April 15. This decision left other teams playing technical catch up for the rest of the season as they added double diffusers to their cars. This flap is reminiscent of the controversy over the Kiwi’s secret twin keel on their America’s Cup contender.

But the most significant difference seems to come down to one principal difference which made all the difference in Italy: The Brawn cars are lighter and therefore have greater fuel efficiency and produce less tire wear. This difference was highlighted in the race at Monza in Italy where the two Brawn cars qualified in the third row. Their fuel efficiency and tire life allowed them to pit much later than the leading teams (Hamilton driving for McLaren Mercedes led most of the race from the poll start) and the Brawns were able to finish the race with only a single pit stop where Hamilton had to stop twice. Formula 1 pits stops require only 8-9 seconds for fuel, tire change, and adjustments and the cars can be back racing with only a loss of less than 30 seconds. This second pit stop meant that Hamilton emerged third after the two Brawns. Hamilton pushed hard and had closed to less than 4 seconds with one lap remaining when he spun out and did not finish. The Brawns won by eliminating that extra pit stop, a revolutionary advantage so long as they can qualify in one of the first few rows at the start of the race.

Formula 1 is constantly changing the rules with the result that Schumacher still holds course records 3 years after his retirement. A big change was requiring the actual race car including fuel and tires to be used in qualifying. The teams can’t even change the down forces. This change was needed to stop the manufacturers from creating expensive, lightweight, qualifying cars never intended for an entire race. The problem with this change was highlighted in Brazil where qualifying was held in heavy rain while the race was expected to be conducted on dry roads. McLaren set up Hamilton’s car for dry roads and he qualified near the back of the field. Still Hamilton finished the race third after six cars crashed or broke down in the race. Barrichello, who won the poll position in qualifying, finished eighth. Next year they plan on eliminating refueling entirely during the race which means all cars must be able to carry enough fuel to qualify and complete the entire race, a huge change. The most revolutionary proposal for next year would limit team expenditure to 50 million Euro a huge reduction over current expenditures.

Finally, next year will see the first US entry into Formula 1 with a Charlotte North Carolina based racing team. The Dukes of Hazard this team is not we hope. Also next year will see the return of Lotus to Formula 1.

The Places In Between, Rory Stewart, 2006

I first discovered the Scotsman Rory Stewart on the Bill Moyer’s Journal. Rory Stewart is now director of the Carr Center for Human Rights Policy at the Harvard Kennedy School of Government. Lynn Sherr introduced Stewart as advisor to both Secretary of State Hillary Clinton and U.S. Special Envoy Richard Holbrooke. The following is a small part of the transcript:

LYNN SHERR: What do you tell them?

RORY STEWART: Again, my message is: focus on what we can do. We don’t have a moral obligation to do what we can’t. People can get very fixed by saying, “But surely you’re not saying we ought to do nothing? Surely you’re not saying we ought to allow the Taliban to do this or that?” And I just keep saying “ought” implies “can”– you don’t have a moral obligation to do what you can’t do.

LYNN SHERR: How is your advice taken?

RORY STEWART: I think what I see at the moment is that people are polite, because they imagine maybe I have some experience with Afghanistan. But I’m one of a broad community of people — we have nine people working in my center at Harvard who’ve worked there for 20 or 30 years and the problem we all have is that if the Administration has for some reason already decided that they’re going to increase troops, they’re going to do a counterinsurgency campaign, it’s very difficult for them to take on board people coming back and saying, “Look, actually, I don’t think this is going to work. It’s a great idea. I can see why you want to do it. But by trying to do the impossible, you may end up doing nothing. I’d like to present an alternative strategy, which is lighter, more intelligent, and may end up actually achieving something.”

LYNN SHERR: And again, their reaction? They listen politely, you say?

RORY STEWART: They listen politely, but in the end, of course, basically the policy decision is made. What they would like is little advice on some small bit. I mean, the analogy that one of my colleagues used recently is this: it’s as though they come to you and they say, “We’re planning to drive our car off a cliff. Do we wear a seatbelt or not?” And we say, “Don’t drive your car off the cliff.” And they say, “No, no, no. That decision’s already made. The question is should we wear our seatbelts?” And you say, “Why by all means wear a seatbelt.” And they say, “Okay, we consulted with policy expert, Rory Stewart,” et cetera.

So much for being an expert today.

Rory Stewart’s biography sounds like fiction. Born in Hong Kong in 1973, he was educated at Eton and Oxford. He was tutor to Prince Harry and Prince William. In the 90’s he joined the Secret Intelligence Service and served in the embassy in Jakarta dealing with East Timor. He was next appointed British representative to Montenegro dealing with Kosovo.

Rory Stewart in Afghan garb with Mastiff Babur

This book recounts a small part of an amazing walking journey historian Rory Undertook over 20 months to recreate the 1514 journey of Babur (descendant of Timur and Genghis Khan) from Samarkand, Uzbekistan to Kabul which he conquered. By 1527 Babur had conquered all of Northern India establishing the Mogul dynasty with Agra his capital.

Rory spent 16 months walking from Iran to Nepal. The government of Iran took his visa away and he was refused entry to Afghanistan by the Taliban so he resumed his journey in Pakistan, crossing to Katmandu where, in December 2001, he heard that the Taliban had fallen, so he returned to Herat to pick up his journey from Herat to Kabul. Babur had made his journey through the mountains in the dead of winter and Rory seemed to find the prospect of doing the same thing in 2002 appealing. U.N. workers called him “a nutter” for his walk which he took as a complement.

This book recounts the kind of travel that is far more common in Europe than in America. Herman Hesse in Narcissus and Goldmund describes a young man wandering around medieval Germany indicating that this coming of age European “Walkabout” has been a tradition for a long time. Overland trips from Europe to India and Nepal by motorcycle, van, and bus were common in the 1960s and 1970s but with the Iranian Revolution and Soviet Invasion of Afghanistan in 1979 such journeys died down. A recent German biopic, Eight Miles High, of Uschi Obermaier features a three year trip with boyfriend adventurer Dieter Bockhorn by customize bus from Germany to India in 1973. Their adventure lasted three years and was highlighted by their wedding, complete with elephants, in India. God seems to protect the young and naive which is why most young travelers, despite taking crazy risks, seem to come through relatively unscarred by the experience.

As if walking through the mountains alone in the dead of winter were not enough challenge, Rory somehow acquires a dog, a half wild, uncared for 140 pound mastiff of indeterminate age that he names Babur. So not only does he have to beg for food and shelter in each village for himself, he must find food and shelter for his huge dog in a culture where dogs are considered unclean. A boy who is in training to become a mullah informs Rory that the Koran declares dogs to be unclean. When Rory asks to see the passage, the boy says he doesn’t know where it is. “But haven’t you memorized the entire Koran in your studies? Yes, but it is written in Arabic and I don’t understand Arabic.” Like Roman Catholics who loved the Latin mass they cannot understand, this boy has memorized the entire Koran without understanding anything in it. In many villages he has to fight off with his walking stick packs of dogs sent by children to harass him and his dog.

The journey itself is pretty bleak. Rory walks in sub zero temperatures, through blizzards with zero viability, fighting to forge a path through waist deep snow, and trying to break through thick ice to reach drinking water. Through the first half of his trek, he follows the Hari Rud river, climbing to its source. In Herat, Rory collects a series of letters of introduction which he hopes will result in offers of hospitality along his route. This plan is quickly dashed as a village headman demands the letters (for his own use) and Rory discovers that the local head men are mostly illiterate so cannot write much less read such letters. He falls back on an oral tradition where he recounts the list of men who have recently offered him hospitality and memorizes the names of important men he is likely to meet at the next villages. To make life more miserable Rory suffers from constant dysentery and headaches. He tries to document his travels by writing in his journal, sketching people he meets (some are reproduced in the book) and taking very dark black and white film photographs in which the features of people pictured can hardly be made out.

From Herat he is accompanied by two security soldiers who are ordered to walk with him halfway to Kabul. Both are wearing American camouflage overalls and ill fitting boots which damage their feet. The leader is a congenital liar who introduces Rory as an Ukrainian (Soviet), American Spy, U.N. high official with millions to disperse to the local authorities. After the two start suffering from dysentery and foot sores, Rory is finally able to bribe them to leave him and they return to Herat. With the occasional local guide as part of local hospitality, Rory completes his walk largely on his own.

Minaret at Jam

Rory comes to the ancient city of Jam, destroyed by Genghis Khan. A lone minaret remains of what was once a major trading center. In the 1970s professional archeologists were busy excavating the historic city but the Soviet invasion forced them to leave and they have never returned. Rory encounters hundreds of local villagers randomly digging throughout the ruins looking for any artifacts which they will be able to sell to collectors for $1 or $2 dollars.

Rory’s route took through all four major ethnic groups making up Afghanistan. The Pashtun posed the biggest threat to Rory’s trek. When he asks village elders who they want to lead a new Afghanistan they invariably start by naming their local strongman. When Rory persists, they all mention Ahmed Shah Massoud the Tajiks fighter assassinated by al Qaeda. When he asks their opinion of Hamid Karzai, the most remote villagers immediately respond that Karzai is America’s puppet.

Stewart encounters more U.N. and other aid workers and writes one the best accounts of this new breed that I have seen anywhere (as a footnote):

Critics have accused this new breed of administrators as neocolonialism. But in fact their approach is not that of a nineteenth century colonial officer. Colonial administration may have been racist and exploitative, but they did, at least work seriously at the business of understanding the people they were governing. They recruited people prepared to spend their entire careers in dangerous provinces of a single alien nation.They invested in teaching administrators and military officers the local language. They established effective departments of state, trained a local elite, and continued the countless academic studies of their subjects through institutes and museums, royal geographic societies, and royal botanical gardens. They balanced the local budget and generated fiscal revenue because if they didn’t their home government would rarely bail them out. If they failed to govern fairly, the population would mutiny.

Post-conflict experts have got the prestige without the effort or stigma of imperialism. Their implicit denial of the difference between cultures is the new brand of international intervention. Their policy fails but no one notices. There are not credible monitoring bodies and there is no one to take formal responsibility. Individual officers are never in any one place and rarely in any one organization long enough to be adequately assessed. The colonial enterprise could be judged by the security or revenue it delivered, but neocolonialists have no such performance criteria. In fact their very uselessness benefits them. By avoiding any serious action or judgment they, unlike their colonial predecessors, are able to escape accusations of racism, exploitation, or oppression.

Perhaps it is because no one requires more than a charming illusion of action in the developing world. If the policy makers know little about the Afghans, the public knows even less, and few care about policy failure when the effects are felt only in Afghanistan… A year before they had been in Kosovo or East Timor and a year later they would be in Iraq or offices in New York and Washington.

Murad Khane District of Kabul

A year after his Afghan trek, Rory Stewart was appointed Coalition (civilian) Deputy Governor of Maysan and Senior Adviser in Dhi Qar, two provinces in southern Iraq. From this experience he penned his second book The Prince of the Marshes: And Other Occupational Hazards of a Year in Iraq. For this he was made an Officer of the Order of the British Empire at age 31. In 2005, he founded an NGO, the Turquoise Mountain Foundation and spends much of his time in Afghanistan. Chalk one up for the neocolonialists.