A tight history of the Presidency since WWII as the American constitutional form of government was transformed, according to Wills, into an unconstitutional Monarchy that would have been the envy of England’s King George III, against whom America rebelled.

He puts the origin of this transformation in the Manhattan project that created the Bomb. The realities of the nuclear era meant the need for instant decision making in the event of a nuclear attack. Instant decisions can only be made by a single individual, not a committee or a congress, and that individual must necessarily be the President. Will argues that this single reality transformed the Presidency and led to all the other unprecedented changes in peacetime American democracy, secrecy, and the activities that must be kept secret from the public including assassination, overthrow of governments, bombing of peaceful countries (Cambodia and Laos among others), special rendition, torture, surveillance of ordinary citizens, etc.

Groves and Oppenheimer

He begins with an extensive review of the organization of the ultra secret Manhattan Project directed by Gen. Leslie Richard Groves (played by Paul Newman in the film Fat Man and Little Boy). Groves had access to virtually unlimited resources with his AAA priority, including all the leading scientists in the country. He existed outside the military reporting structure and no one in that structure was allowed to even know what he was doing. He created his own air force complete with secret military bases. His three central facilities at Hanford (Plutonium enrichment), Oak Ridge (Uranium enrichment), and Los Alamos, (where the scientists were housed and where the bomb was created and assembled), covered thousands of acres each, and employed hundreds of thousands of workers, yet only a handful of people outside the facilities knew of their existence. Grove’s only restraints were imposed by his chief scientist Robert Oppenheimer, who needed an environment in which the scientists could collaborate and live in a suitable environment. This project, according to Wills, laid the foundations for the modern security state and the imperial presidency. Its primary legacy, of course, was the Bomb.

James Forrestal with Truman <> <> <> <> <> <> George Kennan

Truman gets harsh treatment here. Almost all the secret apparatus of government post WWII was created under Truman. Truman and his administration, particularly George Kennan and James Forrestal, pioneered the use of fear tactics, overstating the Soviet threat, to push through changes expanding the military and powers of the President. W was to use the same tactics after the attack of 9/11. The Presidency since WWII perfected the state of permanent emergency. After the collapse of the Soviet Union ended the cold war many thought the state of perpetual emergency had ended. W and his administration cynically used the attacks of 9/11 to recreate this state of perpetual emergency telling us we must be in constant fear of future terrorist attacks and that only the powerful President can protect us.

A strange thing about this history which probably reflects the reality of the times is the absence of attention to China and its communist takeover. The focus was totally on the Soviet threat, even when massive Chinese troops poured across the border into Korea. Ironically, the insistence of the US that Taiwan represented China on the UN Security Council and the consequence boycott of the Council by the Soviets was what allowed Truman to get the UN resolution passed by the Council that he used to justify, unconstitutionally, the Korean war.

Korea was not a UN “police action.” It was not even a UN war. It was an American war, a President’s war, Truman’s war. And Truman found out what others would learn after him, that presidential wars may be easy to start, but they are almost impossible to end.

Korea was only the first in a long line of Presidential Wars, of which we are currently engaged in two simultaneously. The last war declared by Congress was WWII.

Wills spends a lot of time on secrets, mere possession of which is a source of power and authority. He quotes Max Weber:

Every bureaucracy seeks to increase the superiority of the professionally informed by keeping their knowledge and intentions secret…The concept of the “official secret” is the specific invention of bureaucracy, and nothing is so fanatically defended by the bureaucracy as this attitude.

The problem with intelligence secrecy is that it excludes information of the real experts who are not members of the intelligence priesthood. McNamara later admitted that the administration knew very little about Vietnam as they made their decisions. Obama is repeating the same mistake in Afghanistan. The real experts are outside the sacred priesthood. We previously reviewed an excellent account of secrecy in the CIA who missed virtually every important world event since its inception.

Bobby and Jack “Let’s Kill Fidel”

Will also spends much time demonstrating that the primary purpose of secrecy and secret classification has been to cover up government malfeasance and embarrassment, to cover up incompetence more often than illegal activity. Unless documents are destroyed as in the case of the CIA experiments with LSD, the secrets are usually revealed 50 or 60 years after the fact. Thus historians are getting their first looks at the top secret military plans for reacting to a nuclear attack. FUBAR doesn’t begin to describe the incoherent and inconsistent mess they are finding. This may keep historians busy, but it does little to stop illegal activities or reveal incompetence in time to correct things. The need for secrecy is always justified by the need for national security, hence Will’s “national security state”, as a state of secrets, a government conducted in the shadows.

Henry “Hit Man” Kissinger

After the Watergate and other Nixon excesses, there was Congressional push back with increased congressional oversight and a weak attempt to regain a share of war-making authority which is under the constitution the sole responsibility of Congress. Congress passed the the War Powers Resolution, CIA oversight, and constituted the FISA court of authorize surveillance. The administrations pushed right back. According to Kissinger:

It is an act of insanity and national humiliation to have a law prohibiting the president from ordering assassination.

Wow!

W Issues Signing Statement “The Law is what I say it is.”

Push back is now instantaneous, as when W simply issued a “signing statement” that he would not enforce the McCain Anti-Torture provision, even as he signed it into law. Take that Congress!

All this executive power is hard to resist as Dick Cheney (aka Darth Vader) proved on 9/11 when, without consulting W, he unilaterally (his favorite word) assumed the powers of the President and ordered the military to shoot down a civilian aircraft UA 93. There was never an inquiry into this action.

Will sites a study by Steven Kinzer, who counted 114 cases where the US denied a country the right to choose its own government. Some involved direct and indirect American assassinations. Kinzer says the long term results of these interventions were usually damaging to the US. Virtually every President since Truman with the sole exception of Jimmy Carter was responsible for these interventions. In each case the people in the countries involved knew exactly what was happening and who was behind it. The secrecy was only for the benefit of the American public.

Where is the real Leon?

He ends on a really bright note. The Obama administration has already demonstrated an unwillingness to give up the powers accumulated by past administrations. This includes continuing special rendition and interrogations. The powers just seem to swallow everyone who assume the office. An insider, commenting on the transformation of CIA’s Leon Panetta; “Its like Invasion of the Body Snatchers.”

This is a love story set in Istanbul in 1975. The main character, Kemal has just entered his rich father’s business after having earned a business degree at an American University and served his military duty. Kemal is 30 and has chosen the girl he wants to marry, the Sorbonne education Sibel. Sibel has proven she is a modern girl by giving her virginity to Kemal before marriage. They occasionally make love in Kemal’s office after the other workers have left for the day. Kemal sees a beautiful young Turkish girl with bleached blond hair and miniskirt and realizes the girl is Fusun the 18 year old daughter of his mother’s seamstress. Fusun is working as a shop girl and has already gained notoriety for herself by entering a beauty pageant. Kemal seduces the willing Fusun and they make love 44 times before his engagement party.

Skiing in Uludag Turkey <> <> <> <> <> <> <> <> <> <> <> Istanbul Yacht

We are introduced to social life for Kemal’s set including shopping trips to London and Paris; ski trips in Turkey and Switzerland; yachting in the summer; restaurants and clubs.

1954 Istanbul Hilton

The engagement party is an important part of Istabul social life for Kemal’s modern class. His family spends months planning the party and deciding on the guest list which is in the hundreds. They choose the contemporary Hilton as the appropriate site for such a modern group. The guests will expect to be served foreign liquor import of which is highly restricted and much effort goes into acquiring it. Kemal at the last minute adds Fusun and her family to the guest list. Fusun comes, perhaps to see if Kemal will really go through with the engagement. At the party Fusun dances seductively with several men including 23 year old Orhan Pamuk. It is a dance Orhan will never forget.

Istanbul Yali on the Bosporus

Fusun disappears after the party and Kemal’s obsession begins. He and Sibel move in together to a family summer Yali cottage. Kemal soon confesses and Sibel, thinking he is ill arranges for him to see Istabul’s only psychoanalyst. But Kemal loves his obsession and Sibel soon gives up on him, breaking off the engagement. This is difficult for her because she is no longer a virgin and everyone in their set knows she and Kemal were living together. For all their efforts to act modern, old prejudices persist. Kemal doesn’t see Sibel again for 31 years.

For more than a year Kemal doesn’t hear from Fusun then gets a letter inviting him to her parents home where they announce that Fusun is married to a fat young film industry screenwriter. Fusun hints that the rich Kemal should underwrite her husband’s career and that she wants to become a movie star. Realizing this is the only way he can continue to see Fusun, Kemal plays along beginning an eight year odyssey in which Kemal comes to have dinner and watch television four nights a week at Fusun’s family’s house. He does this exactly 1593 times. To sustain himself at other times he starts removing and replacing objects from the house that were touched by Fusun. He also collects her cigarette butts (1486, each annotated with what Fusun was doing as she smoked it).

First Turkish Best Foreign Film Nominee Yol

This obsession gets a little old after a few hundred pages but Pamuk compensates a little by capturing an image of Istanbul life during this 9 year period. Kemal starts going to Turkish films for the first time in his life (as an excuse to be with Fusun even though the husband is also in attendance). Foreign films are shown in the movie houses but Turkish films are shown outdoors in movie gardens in the summer. All are melodramas and Turkey boasts that it is the third largest producer of movies after the US and India. None have ever been shown outside Turkey. The industry is dominated by the board of censors and the major challenge of making movies is to get the censor’s approval. Movies may deal with rape or infidelity but must do so indirectly. Foreign films are likewise subject to censorship so that Lawrence of Arabia (anti Turkish) is never shown and Last Tango in Paris is so abbreviated without its sex scenes as to be unintelligible.

1956 Chevrolet

After Grace Kelly’s death, the state operated television ran a series of her films in the evenings. Fusun became fascinated with Kelly, particular when Kelly is shown driving a car. Fusun insists that Kemal teach her to drive. A major character in the novel is Kemal’s 1956 Chevrolet that had belonged to his father. Import of foreign cars was prohibited in the early 1960’s and the old American cars from the late 1950’s and early 1960’s were preserved with great care much like those in Havana. It is this car the Fusun learns to drive.

This period was one of major political unrest in Turkey as the nationalists and communists waged a civil war with bombings, assassinations and riots. Periodically the military took over, imposing martial law. Kemal’s only comment on all this:

I had no interest in politics, and it seemed to help no one that this war was being waged in the streets by an assortment of ruthless factions none of which had anything in common with the rest of us. When I told Cetin (the chauffeur), who’d been waiting for me outside, to drive carefully, I was speaking as if politics were as natural a cataclysm as an earthquake or a flood, and there was nothing we ordinary citizens could do except to stay out of its way.

Poe House Baltimore

Later in life, Kemal wonders what to do with the huge accumulation of Fusun memorabilia. He starts visiting museums around the world (1743 in all) with the same obsession he gave to the pursuit of Fusun. His favorite is the Edgar Allan Poe Museum in Baltimore but he gets the idea that any collection can be made into a museum given money and dedication. His completed museum, housed in Fusun’s former family home, is left to the care of Orhan Pamuk who also wrote this account of his life of obsession.

This reader was interested in the insights into the perceptions of young Turks growing up in this period. Their parents grew up in the era of Ataturk who died in 1938 and who played much the same roll in modernizing Turkey as Meiji had played earlier in Japan. For Ataturk, the secular state was key to modernization of Turkey. By the next generation, this secularization was taken for granted by all “modern” Turks. Non modern Turkish men could be recognized by whether their wives and daughters wore headscarves. It was absolutely essential for a “modern” Turkish woman never to appear in public wearing a headscarf. The importance of this seemingly minor dress code distinction is now a central issue in France.

The young of this period and class were educated in Western Europe or America. While proud to be Turks, they still felt isolated and largely ignored by the outside world. They wanted increased visibility and respect but using cinema as the example in this novel, they were unable to produce films that would receive wide distribution in the West until much later. A 1964 movie Topkapi featured a heist from the Topkapi Museum in Istanbul and showed scenes from the city. It was directed by an American, Jules Dassin, and starred an Englishman, Peter Ustinov, A Greek, Melina Mercouri who married the director, and a German, Maximilian Schell. This is one of the few times a major Western film had been shot in Turkey. The Turkish film, Dry Summer, was made in the same year 1964, and it won the Golden Bear at the Berlin Film Festival. In 1982, another full Turkish production, Yol, was smuggled into Switzerland for post production and submitted it to the Academy for Best Foreign Language Film.

A young Bangalore entrepreneur, Balram, learns that the Chinese Premier Wen Jiabao plans a trip to Bangalore to learn about the envied Indian talent for entrepreneurship. Balram feels that he is in a unique position to educate the Premier from his own experience. He writes a series of email communications which constitute this novel.

Rural India

Balram was born into extreme poverty into a large family in the Darkness, the great interior of India along the Ganges River. His father was a rickshaw man who dies young of TB. Balram isn’t even given a name by his family who call him Munna which means boy. His teacher names him Balram which means white tiger. His last name, Halwai, is his families caste which means sweets maker. He is forced to leave school after a few years to work in a tea shop and contribute to his family. Balram is ambitious and saves enough to pay someone to teach him to drive. He applies for a job with the local landlord and gets lucky when the younger son, Ashok, has just returned from America and the family now has two cars and needs a second driver.

Rickshaw Man

Ashok and his Christian wife Pinky are sent to Delhi to live where he can bribe politicians to allow the family to avoid paying taxes. Balram is now making 3000 rupees a month, a fortune for his family back home. Balram is driving an air conditioned Honda City and is the envy of everyone in his family. One night Ashok and Pinky get drunk and Pinky insists on driving home. She hits and kills a young girl and isn’t even aware it has happened. Ashok’s family moves quickly, offering a large sum to Balram’s family on condition Balram signs a confession that he was driving at the time and struck the child. He will be arrested and sent to prison. But no one comes forward to report the girl missing and the police are able to dismiss the whole situation, sparing Balram. Balram now hates Ashok and his family. One day Ashok is carrying an Italian case with 700,000 rupees as a bribe. Balram kills Ashok and steals the money. The wanted poster looks like half the poor men in India. He thinks of running the Mumbai but has heard that things are happening in Bangalore so he travels there instead.

Bangalore Traffic

He finds there is a big demand for businesses hiring cars for their employees and executives. At first he can’t break into the business, but then remembers how Ashok bribes the politicians and he does the same to get a few car companies licenses pulled. Balram is then able to start his own successful company.

Bangalore Limo

Along the way we learn about the fate of poor workers (servants) in India. The servants largely remain honest (they can be seen spending hours in line at the airline ticket offices to buy tickets costing many hundreds of dollars without stealing the money even though they themselves make only a few dollars a month). Balram explains that this is largely because the employers know the families back home and the family honor is at stake to say nothing of possible revenge by the employers against the family. Balram also introduces us to the world’s greatest democracy where politicians register all villagers once they turn 18 and vote for them the rest of their lives regardless of where the person now lives. Balram left his village as a boy but has never missed an election at home.

Cosmos

A short marvelously written novel follows the evolution of the universe from the big bang through the eyes of seemingly immortal Qfwfq who thinks in time frames of 200 million years. As a child he plays a form of marbles with Hydrogen atoms. We follow the formation of the galaxy and the changes in the world which will allow the formation of life. We see the first life crawling out of the sea to begin life on land. Throughout the eons, Qfwfq is always looking for a mate, usually without success, often with jealous rivals.

The latest novel by the author of Brick Lane (and movie of the same name) has an English chef, Gabriel, as its main character. Gabriel grew up in a Northern mill town where his father introduced him to the latest technology and techniques in looms and weaving. The mills are now shuttered and one is being converted to a museum, his father has terminal cancer, and Gabriel, now a French trained chef, is about to launch his own London restaurants with his business and political partners. As a final preparation and as a test to satisfy his other investors, Gabriel is spending a year as executive chef at the Imperial Hotel, a Victorian era relic that has been refurbished everywhere but his kitchens. Gabriel has previously served in restaurants in Lyon and a two star restaurant in Paris. His new restaurant will be located near government offices and will serve classic French cuisine.

Thistle Royal Horeseguards Hotel London

Gabriel’s staff at the Imperial are all immigrant foreigners (Ali’s theme subject) of unknown legality. Some of his staff is highly educated (accountants, lawyers, one surgeon) just trying to survive in London. There is much detail about the day to day activities and human interactions in a large busy kitchen. One day Gabriel descends into the labyrinth under the kitchen (used for storage) and finds the body of Yuri, a Ukrainian worker naked and dead on the floor. The police conclude the death was accidental (Yuri slipped on the floor after a shower), that Yuri was secretly living in the labyrinth, and the case is closed.

Victorian Kitchen

Gabriel returns later to the labyrinth and this time encounters a Belorussian girl, Lena, who has been missing from work. She claims to be looking for money she has stashed in the wall. The money in the wall is gone. Gabriel suspects she has been living in the labyrinth as well and somehow invites her to stay at his place after he learn she is hiding from her pimp. This arrangement doesn’t go over too well with Gabriel’s long time girl friend Charlie, a 39 year old lounge singer, especially when Gabriel naively confesses he is sleeping with Lena. Gabriel started having repeating nightmares about events in the labyrinth and he loses sleep. Gabriel has become suspicious of the hotel’s maître d and now becomes obsessed with finding out what he is up to in an unused hotel room. Gabriel finally gets one of his workers to tell him what is going on which turns out to be human trafficking for the sex trade by convincing hotel chamber maids and kitchen workers that better employment can be found elsewhere. This means of “recruiting” sex workers is easier than smuggling girls across national borders since they are already in England. Gabriel descends, not so slowly, into madness and his behavior becomes increasingly erratic. After uncovering the maître d’s trafficking scheme, Gabriel now inadvertently stumbles into the maître d’s brother’s indentured servitude agriculture labor activity. The brother has purchased an old hotel shuttle bus to transport his labor to his vegetable farms and the mad Gabriel gets on the bus to see what other strange activity is surrounding the hotel.

We learn that Gabiel’s mom had descended into madness and Gabriel seems to be following. In the climax, Gabriel assaults his politician partner believing him to be the john of which Lena is terrified. Gabriel is dumped from the restaurant partnership and he loses his investment. Gabriel’s father dies, Gabriel is unemployed and his life savings are gone, to the restaurant and to Lena. Gabriel is living in his father’s house and ready to start rebuilding his life. Charlie may even give him another chance.

The madness comes off better in this novel than the themes of human trafficking and slavery that Ali is interested in exposing. Worth reading anyway.

Here is a concise attempt to explain in layman’s terms what went wrong in the financial crisis. It is particularly interesting since the author lives in London and can give us a view from the global epicenter complete with British wit. Unfortunately dry British humor sometimes doesn’t translate so well for an American reader.

Rogues Neeson <> <> <> Citron <> <> <> Iguchi <> <> <> Hamanaka <> <> <> Kerviel

He brings us up to date on the rogues gallery that began with Nick Neeson the Rogue Trader whose more than $1 billion trading losses single handedly brought down century old Barings Bank. The ever expanding gallery now includes Robert Citron of Orange County and Toshihide Iguchi of Daiwa Bank each losing more than $1 billion. Move up to Yasuo Hamanaka of Sumitomo who clocked in at $2.6 billion and on to the current reigning champion Jerome Kerviel of Societe Generale at $7.2 billion.

Joseph Cassano

Consciously missing from this rogues list is AIG’s London based Joseph Cassano who earned $280 million writing CDS insurance policies for much of the CDO industry.To date bailouts to AIG add up to $173 billion, most of which has gone to Morgan Stanley, Goldman Sachs and other big subprime players in the form of insurance payouts.

He briefly explains how banks work, taking deposits and leveraging them into loans far exceeding the value of the deposits. With the invention of securitization and the use of off shore corporations to hide leveraged positions and avoid taxes, leverage went on steroids sometimes reaching 40 or 50 to 1 times deposits or equity.

Genius David X Li

He spends some time on the geniuses (mathematics and statistics) who came up with models that were presumed to eliminate all risk from investment and brought us LTCM that collapsed in 1998. We are now familiar with the VAR risk index based on the Gaussian bell curve much criticized by Nassim Talib (The Black Swan). Here we meet for the first time Chinese immigrant David X. Li (whereabouts unknown) with a PhD in Statistics from the University of Waterloo who suggested applying the Gaussian copula function to the CDO (subprime derivatives) market. Basically, and without any evidence that CDOs fit the function, Li proposed that the price of the insurance policies, the CDS, be used as the metric to determine the level of risk for any CDO. “On Default Correlation: A Copula Function Approach” In other words he proposed a totally circular measurement in which the price of insurance (CDS supposedly reflecting the actual underlying risk of the securitization) is used to determine the risk of the security! Wow! Yet this unbelievably stupid idea caught fire and suddenly, sub prime securitized mortgages were rated AAA, the same as US Treasuries. If this stuff were fiction no one would believe it for a second. This one dumb idea, allowing subprime junk to receive AAA ratings, more than anything else blew up the entire global financial system. The CDO market which was worth $275 billion in 2000 when Li published his paper exploded to $4.7 trillion by 2006.

To accommodate this massive new market, the industry needed vast numbers of new customers. Here is the the birth of the subprime mortgage market. Governments in the US and Britain played their part by staying away from any regulation under the guise of promoting the “ownership society”. Lanchester summarizes:

…by 2006, 60 percent of subprime applicants were lying about their income by more than 50 percent… By that point more than half of all applications for mortgages were either “piggyback” loans, meaning that they were double loans taken out to buy the same property, or “liar loans” in which the applicants were invited to state their own income, or “no doc” loans in which the buyer produced no paperwork. Gee, what could possibly go wrong?…And as for the idea that those peoples’ mortgage payments were being miraculously transmuted into AAA-grade investments…

Where were the regulators? Here is his summary of American government policy:

* insistance on free movement of capital across borders
* the repeal of depression era regulations seperating commercial from investment banking
* a congressional ban on the regulation of credit default swaps
* major increases in the amount of leverage allowed to investment banks
* a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement
* an international agreement to allow banks to measure their own riskiness
* and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation

So what brought us to this disaster?

The credit crunch was based on a climate (the post Cold war victory party of free market capitalism), a problem (the subprime mortgages), a mistake (the mathematical models of risk), and a failure (that of the regulators).

How do we fix this mess? Lanchester doesn’t know.

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.

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.

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.

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.