Wisdom from the 42nd Page

When Giants Fall

2009-03-16T23:29:40-06:00

On the forty-second page of “When Giants Fall: An Economic Roadmap for the End of the American Era” author Michael Panzner wrote (emphasis added):

To try and avoid the economic and social challenges posed by growing resource constraints, countries around the world have raced to find alternatives. Among the options they have chosen is one that will almost certainly have unwelcome and unintended consequences. Without meaning to, they have heightened the risks in a world already destined to become more dangerous and violent.

More information about “When Giants Fall: An Economic Roadmap for the End of the American Era” (and the book itself) is available from:

(John Wiley & Sons, February 2009. Hardcover, 264 pages. ISBN: 047031043X; EAN: 9780470310434.)

Pi: A Biography of the World's Most Mysterious Number

2009-03-14T01:59:00-06:00

On the forty-second page of “Pi: A Biography of the World's Most Mysterious Number” authors Ingmar Lehmann & Alfred S. Posamentier wrote (emphasis added):

were compared for various circular objects. This was likely the beginning of the establishment of comparison between the two measurements that seem related to each other. Was there some sort of common difference or common ratio between their lengths? Each time this comparison showed that the circumference was just a bit more than three times as long as the diameter. The question that perplexed individuals over the millennia was how much more than three times the diameter was the circumference? That would indicate that the relationship was one of a ratio. The history of Π is the quest to find the ratio between the circumference of a circle and its diameter.

The Ancient Egyptians

Frequent measurements probably showed that the part exceeding three times the diameter appeared to be about one-ninth of the diameter. We can assume this from the famous Rhind Papyrus, written by Ahmes, an Egyptian scribe, about 1650 BCE.¹ He said that if we construct a square with a side whose length is eight-ninths of the diameter of the circle, then the square's area will be equal to that of the circle. At this point, you can see there was no reason to find the ratio of the circumference to the diameter. Rather, the issue was to construct a square using the classical tools (an unmarked straightedge and a pair of compasses), with the same area as that of a given circle. This became one of the three famous problems of antiquity.² Although we know today

This was a mathematical practical handbook, containing eighty-five problems copied by the scribe Ahmes from previous works. Alexander Henry Rhind, a Scottish Egyptologist, purchased this eighteen-foot-long (one-foot-wide) manuscript in 1858, which is now in the collection of the British Museum. This is one of our primary sources of information about the Egyptian mathematics of the times.

The other two famous problems of antiquity are using only an unmarked straightedge and a pair of compasses to construct a cube with twice the volume of a given cube using these same tools to trisect any angle.

More information about “Pi: A Biography of the World's Most Mysterious Number” (and the book itself) is available from:

(Prometheus Books, August 2004. Hardcover, 275 pages. ISBN: 1591022002; EAN: 9781591022008.)

Ghost Train to the Eastern Star

2008-10-03T23:59:00-06:00

On the forty-second page of “Ghost Train to the Eastern Star: On the Tracks of the Great Railway Bazaar” author Paul Theroux wrote (emphasis added):

"To some degree, we all worry about what foreigners and strangers think of us," Pamuk says. "My interest in how my city looks to western eyes is—as for most Istanbullus—very troubled; like all other Istanbul writers with one eye on the West, I sometimes suffer in confusion."

"To see Istanbul through the eyes of a foreigner always gives me pleasure," Pamuk goes on. Flaubert, Gide, Nerval, Knut Hamsun, and Hans Christian Andersen all visited Istanbul and recorded their impressions, and in most instances what they saw was a fading Orientalism that ceasted to exist as soon as it was described—the harem, the grotesque and the pictueresque, dervishes, hubble-bubble pipes, the slave market, Ottoman clothing, floppy sleeves, Arabic calligraphy, and, he says, the hamals, the porters, though such men can still be seen, heavily burdened with huge loads on wooden pack frames, trudging up and down the cobbled streets of the old city. Whenever I began to generalize about Istanbul's modernism, I encountered an exotic vignette—a shroud, a fez, a minaret, a veil, a donkey, or something grilling fish over coals by the roadside.

But Pamuk's book, like all passionate books, is a bewitchment. Once you've read his Istanbul, you have been persuaded to see the city with his eyes—a gloomy, smoky warren of narrow lanes and conflicted families, serene, half fictional, like a city in a dream.

I find most cities nasty, but I can see that Istanbul is habitable, a city with the soul of a village. Unless there is a bomb in the bazaar, or a Kurd-related outrage, there is never news of Istanbul in the Western press. To say it is beautiful is so obvious as to be frivolous, yet the sight of its mosques and churches can be almost heart-stopping. I am imprevious to its charm, even the word "charm," but I admire Istanbul for its look of everlastingness, as though it has always existed (it has been a noble city since its first incarnation as Byzantium 1,700 years ago, and looks it in part). Most of all I like the city for its completeness and its self-sufficiency: it is a finished work, distinctly itself. Of course, you can buy gold and carpets in the Grand Bazaar, or jewelry and leather goods in the Egyptian bazaar, but everything else is available throughout the city too, because Turkey makes everything—stationery, cheap clothes, computers, knives, cigarettes, refrigerators, furniture. Heavy industry flourishes. The newspaper business is lively and competitive, book publishing is energetic, Turkish literacy is high, and book sales are brisk.

Give the fact that Turkey shares borders with Iraq, Iran, Syria, Arme[nia]

More information about “Ghost Train to the Eastern Star: On the Tracks of the Great Railway Bazaar” (and the book itself) is available from:

(Houghton Mifflin Company, August 2008. Hardcover, 496 pages. ISBN: 0618418873; EAN: 9780618418879.)

Not Quite What I was Planning

2008-10-02T23:59:00-06:00

On the forty-second page of “Not Quite What I Was Planning: Six-Word Memoirs by Writers Famous and Obscure” authors Rachel Fershleiser, & Larry Smith, wrote (emphasis added):

Found true love after

nine months.

—Jody Smith

Hillbilly does right

by his teeth.

—Jason Snyder

No words can describe my life.

—John Baldridge

Afraid of everything.

Did it anyway.

—Ayse Erginer

On the playground, alone.

1970, today.

—Charles Warren

More information about “Not Quite What I Was Planning: Six-Word Memoirs by Writers Famous and Obscure” (and the book itself) is available from:

(Harper Perennial, February 2008. Paperback, 225 pages. ISBN: 0061374059; EAN: 9780061374050.)

Algorithm Design Manual

2008-10-01T23:59:00-06:00

On the forty-second page of “Algorithm Design Manual” author Steve S. Skiena wrote (emphasis added):

with the priority queue, we built a data structure capable of a wider range of operations.

Although there were various other complications, such as quickly recalculating the length of the strips affected by the peeling, the key idea needed to obtain better performance was to use the priority queue. Run time improved by several orders of magnitude after employing these data structures.

How much better did the greedy heuristic do than the naive herustic? Consider the table in Figure 2-8. In all cases, the greedy heuristic led to a set of strips that cost less, as measured by the total size of the strips. The savings ranged from about 10% to 50%, quite remarkable, since the greatest possible improvement (going from three vertices per triangle down to one) could yield a savings of only 66.6%.

After implementing the greedy heuristic with our priority queue data structure, our complete algorithm ran in O(n - k) time, where n is the number of triangles, and k is the length of the average strip. Thus the torus, which consisted of a small number of very long strips, took longer than the jaw, even though the latter contained over three times as many triangles.

There are several lessons to be gleaned from this story. First, whenever we are working with a large enough data set, only linear or close to linear algorithms (say O(n lg n)) are likely to be fast enough. Second, choosing the right data structure is often the key to getting the time complexiy down to this point. Finally,

More information about “Algorithm Design Manual” (and the book itself) is available from:

(Springer, July 1998. Hardcover, 486 pages. ISBN: 0387948600; EAN: 9780387948607.)

It's Only Too Late If You Don't Start Now

2008-09-30T19:00:00-06:00

On the forty-second page of “It's Only Too Late If You Don't Start Now: How to Create Your Second Life at Any Age” author Barbara Sher wrote (some emphasis added):

Exercise 5

Another glimpse into your future

All right, I'd like to ask you to do something tricky.

Fantasize your life without any narcissistic desperation at all. It's almost impossible to do for more than the briefest moment, but you can get an idea if you imagine that you don't have the slightest interest in being anybody's favorite or any kind of star. See if you can catch a glimpse of how that would feel. Then ask yourself these questions.

What do you think you'd have done differently in your life if you'd always felt that way?

What would you do differently now?

What would you stop doing?

Give it some thought for a few minutes.

Can you see how different your life would be? Well, that's what you can expect in your future.

But first, you need a little deprogramming.

More information about “It's Only Too Late If You Don't Start Now: How to Create Your Second Life at Any Age” (and the book itself) is available from:

(Dell Publishing Company, April 1999. Paperback, 352 pages. ISBN: 0440507189; EAN: 9780440507185.)

The Mirage of Social Justice

2008-09-29T21:30:00-06:00

On the forty-second page of “Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice” author F. A. Hayek wrote (emphasis added):

this does not exclude the possibility that we may later discover cases to which, if we had not commited ourselves, we should wish not to apply the rule, and where we discover that we had thought to be quite just is in fact not so; in which event we may be forced to alter the rule for the future. Such a demonstration of a conflict between the intuitive feeling of justice and rules we wish also to preserve may often force us to review our opinion.

We shall later have to consider further the changes in the recognized rules which will be necessary for the preservation of the overall order if the rules of just conduct are to be the same for all. We shall then see that often effects which seem unjust to us may still be just in the sense that they are necessary consequences of the just actions of all concerned. In the abstract order in which we live and to which we owe most of the advantages of civilization, it must thus in the last resort be our intellect and not intuitive perception of what is good which must guide us. Our present moral views undoubtedly still contain layers of strata deriving from earlier phases of the evolution of human societies—the small horde to the organized tribe, the still larger groups of clans and the other successive steps toward the Great Society. And though some of the rules or opinions emerging in later stages may actually presuppose the continued acceptance of earlier ones, other new elements may be in conflict with some of those of earlier origins which still persist.

The significant of the negative character of the test of injustice

The fact that, though we have no positive criteria of justice, we do have negative criteria which show us what is unjust, is very important in several respects. It means, in the first instance, that, though the striving to eliminate the unjust will not be a sufficient foundation for building up a wholly new system of law, it can be an adequate guide for developing an existing body of law with the aim of making it more just. In such an effort towards the development of a body of rules, most of which are accepted by the members of society, there will therefore also exist an 'objective' (in the sense of being inter-personally valid, but not of universal—because it will be valid only for those other members of the society who accept most of its other rules) test of what is unjust. Such a test of injustice may be sufficient to tell us in what direction we must develop an established system of law, though it would be insufficient to enable us to construct a wholly new system of law.

More information about “Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice” (and the book itself) is available from:

(University of Chicago Press, October 1978. Paperback, 210 pages. ISBN: 0226320839; EAN: 9780226320830.)

The Limits of Power

2008-09-27T23:59:00-06:00

On the forty-second page of “The Limits of Power: The End of American Exceptionalism” authors Andrew Bacevich wrote (emphasis added):

technology converted to military use by talented, highly skilled soldiers) could sustain quantity (a consumer economy based on the availability of cheap credit and cheap oil).

Pledges of benign intent concealed the full implications of Star Wars. To skeptics—nuclear strategists worried that the pursuit of strategic defenses might prove "destabilizing"—Reagan offered categorical assurances. "The defense policy of the United States is based on a simple premise: The United States does not start fights. We will never be an aggressor. We maintain our strength in order to deter and defend against aggression—to preserve freedom and peace." According to Reagan, the employment of U.S. forces for anything but defensive purposes was simply inconceivable. "Every item in our defense program—our ships, our tanks, our planes, our funds for training and spare parts—is intended for one all-importantant purpose: to keep the peace."

Reinhold Niebuhr once observed that "the most significant moral characteristic of a nation is its hypocrisy."²³ In international politics, the chief danger of hypocrisy is that it inhibits self-understanding. The hypocrite ends up fooling mainly himself.

Whether or not, in 1983, Ronald Reagan sincerely believed that "the United States does not start fights" and by its nature could not commit acts of aggression is impossible to say. He would hardly have been the first politician who came to believe what it was expedient for him to believe. What we can say with certainty is that events in our own time, most notably the Iraq War, have refuted Reagan's assurances, with fateful consequences.

Illusions about military power first fostered by Reagan outlived his presidency. Unambiguous global military supremacy became a standing aspiration; for the Pentagon, anything less than unquestioned dominance now qualified as dangerously inadequate. By the 1990s, the conviction that

More information about “The Limits of Power: The End of American Exceptionalism” (and the book itself) is available from:

(Metropolitan Books, August 2008. Hardcover, 206 pages. ISBN: 0805088156; EAN: 9780805088151.)

Beast and Man

2008-09-26T23:59:00-06:00

On the forty-second page of “Beast and Man: The Roots of Human Nature” author Mary Midgley wrote (emphasis added):

should have put an end to this convenient way of thinking. They did, however, and as a the Greek notion of the gods grew steadily more dignified and noble, the problem, "Whom can I blame for my faults?" again became pressing. I do not think it is any accident that Plato, the first Greek who consistently wrote of the gods as good, was also the first active exponent of the Beast Within. Black horses, wolves, lions, hawks, asses, and pigs recur every time he mentions the subject of evil; they provide the only terms in which he can talk about it. This is not an idle stylistic device: there is no such thing in Plato. His serious view is that evil is something alien to the soul; something Other, the debasing effect of matter seeping in through the instinctive nature. This treacherous element clearly cannot be anything properly human; it must be described in animal terms—and those of no particular animal at that, since all particular animals have their redeeming features, but a dreadful composite monster combining all the vices: in short, the Beast Within, whose only opponent is the Rational Soul. Certainly good feeling is sometimes invoked too, and given body as a Good Beast, but its goodness is supposed to consist in its obedience to Reason, not in its contributing anything itself. The white horse willingly obeys the charioteer and helps him to restrain the black;²³ it is no Balaam's Ass that hazards its own suggestions. Accordingly the feeling named in this connection are shame, ambition, the sense of honor, never, for instance, pity or affection, where the body might be held to make good suggestions to the soul. Plato's map excludes such a possibility. This exclusion has been both morally and psychologically disastrous. Fear of and contempt for feeling make up an irrational prejudice built into the structure of European rationalism.²⁴

Aristotelian and Kantian Beasts

Aristotle, though in general he was much more convinced of man's continuity with the physical world than Plato, makes some equally odd uses of the contrast between man and beast. In the Nicomachean Ethics (1 7) he asks what the true function of man is, in order to see what his

Plato, Phaedrus 254–257

I shall develop this point further in chap 11.

More information about “Beast and Man: The Roots of Human Nature” (and the book itself) is available from:

(Routledge, October 2002. Paperback, 416 pages. ISBN: 0415289874; EAN: 9780415289870.)

The Revolution

2008-09-25T19:15:00-06:00

On the forty-second page of “The Revolution: A Manifesto” Represenative and presidential candidate Ron Paul wrote (emphasis added):

One mechanism that has strengthened it is the executive order, an instrument by which presidents have exerted powers that our Constitution never intended them to have. An executive order is a command issued by the president that enjoys his authority alone, not having been passed by Congress. Executive orders can have legitimate functions. Presidents cancarry out their constitutional duties or direct their subordinates by executive order, for instance. But they can also be a source of temptation for ambitious presidents (am I being redundant?), since they can always try to get away with using them as a substitute for formal legislation that they know they cannot get to pass. He can therby circumvent the normal, constitutional legislative process.

Executive orders were rare in the nineteenth century; for a president to issue even several dozen was unusual. The first twentieth-century president to serve a full term, Theodore Roosevelt (who served two, in fact), issued over a thousand. Executive orders continue to serve as a potent weapon in the president's arsenal.

Congress has sometimes been complicit in presidential abuses of executive orders, either by giving express sanction to the president's action after the fact or ignoring the abuse of power altogether. This latter course is sometimes pursued when congressmen happen to favor the president's course of action but do not want to have to associate themselves with it (perhaps because it is controversial or politically sensitive). With executive orders, presidents can commit our troops to undeclared wars, destroy industries, or make unprecedented social-policy changes. And they remain unaccountable because often these actions occur behind the door of the Oval Office, are distributed without notice, and then executed in

More information about “The Revolution: A Manifesto” (and the book itself) is available from:

(Grand Central Publishing, April 2008. Hardcover, 173 pages. ISBN: 0446537519; EAN: 9780446537513.)

Empire of Debt

2008-09-24T23:59:00-06:00

On the forty-second page of “Empire of Debt: The Rise of an Epic Financial Crisis” authors William Bonner, & Addison Wiggin wrote (emphasis added):

of property rights or the division of labor. Things got simpler, more brutal, mean, and nasty; lives were shortened. It was not a time to be in the insurance business.

What caused the periodic invasions no one knows. Perhaps good weather out on the plains produced population explosions that caused the nomads to expand. Perhaps bad weather caused famine that sent hungry mouths in search of someone else's meat and grain. Historians don't know. But fear of the barbarians from the steppes has been a chronic theme of Western history—particularly among the Teutonic tribes that were most exposed to them.

The Great Khan

Perhaps the most successful empire builder of all time was a leader of one of those periods of barbarian expansion—Genghis Khan. Since the time of the Romans, it has been fashionable to put a civilized mask on your face when you put the imperial purple on your back. You are bringing religion to the heathen. You are bringing civilization to the indigenes. You are bringing culture, education, and technology. Even Alexander the Great thought he was doing the world a favor. Conquerors do not like to admit—even to themselves—that their instincts are no different from those of barbarians. They have better table manners. But they are subject to the same urges as Genghis or Attila. Bloodlust, prestige; power, status—who can deny that it would be a thrill to conquer a whole city or an entire nation? But empire builders typically put on the imperial purple like a set of angel's wings, leap off the balcony, and come down with a thud.

Genghis Khan needed no mask. The man showed his face as it really was. He united the Mongolian tribes in about 1129 and beginning with a series of attacks on northern China, he embarked on a spectacular epic of mass slaughter and rapine from which two empires were derived. One of them, the Ottoman Empire, lasted until the end of World War I. The Mongol hordes overran northern China, Tibet, Persia, nearlly all of central Asia and the Caucasus, Korea, Burma, Vietnam, Anatolia, and much of Russia. They attacked India and eventually, in 1526, Babar, one of Genghis Khan's descendants, set himself up as emperor of the place. In China, too, Genghis's descendants founded the Yuan dynasty, which ruled until nearly the fifteenth century.

More information about “Empire of Debt: The Rise of an Epic Financial Crisis” (and the book itself) is available from:

(John Wiley & Sons, September 2005. Hardcover, 370 pages. ISBN: 0471739022; EAN: 9780471739029.)

Crash-Proof

2008-09-23T23:59:00-06:00

On the forty-second page of “Crash-Proof: How to Profit from the Coming Economic Collapse” author Peter D. Schiff, wrote (emphasis added):

The GDP started out as the GNP (gross national product) during World War II, when it was used to measure wartime production capacity. It was never intended to be used as a measure of the country's economic well-being, and its shortcomings are laughably numerous.

By definition, the GDP is the sum total of the monetary value of all final goods and services bought and sold within U.S. borders in a given year. The distinction between GDP and GNP, incidentally, is that GDP doesn't care about the nationality of the producer. It includes everything transacted within our borders, even BMWs manufactured in North Carolina. (GNP, which is almost never used, would exclude foreign manufacturers in the United States and include goods and services produced by U.S. firms operating abroad.) GDP this includes the totality of consumer, investment, and government spending, plus the value of exports, minus the value of imports.

One big problem with GDP, although represented as a measure of economic health, is that it makes no effort to distinguish between transactions that benefit the nation's health and those that subtract from it. Destructive activities are included as well as productive activities. The GDP may not have been designed to measur economic well-being, but since it is used for that purpose, everything it includes—every monetary transaction that takes place anywhere and anytime within its time frame—is, by definition, progress and a contribution to the nation's economic health. Thus Hurricane Katrina added to the GDP despite tragic losses to the populace, as do other negative expenses, such as crime prevention costs, expenses incurred in divorces, medical costs, and national defense expenditures.

Another serious shortcoming is that it ignores everything that doesn't take place under the rubric of monetary trade. Money has to change hands. Functions performed in running a household, for example, are excluded because no money is

More information about “Crash-Proof: How to Profit from the Coming Economic Collapse” (and the book itself) is available from:

(John Wiley & Sons, February 2007. Hardcover, 272 pages. ISBN: 0470043601; EAN: 9780470043608.)

Saving Capitalism from the Capitalists

2008-09-22T11:00:00-06:00

On the forty-second page of “Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity” authors Raghuram Rajan & Luigi Zingales wrote (emphasis added):

on firm value. There are ways of ruiling this explanation out. When a company is included in the S&P 500 index, many mutural funds simply replicate the index and invest in the company. The higher institutional ownership in these "index" companies does not reflect the value judgment of institutional investors but simply the application of a mechanical rule. Even institutional ownership driven by such mechanical considerations has a positive effect on firm value.

More evidence that institutional ownership is beneficial comes from examining the consequences of regulatory changes.³¹ Before 1992, if ten or more investors in the United States wanted to discuss the performance of a particular company, they had to file a report with the Securities and Exchange Comission, detailing the purpose of, and participants in, the discussion. These requirements made it onerous for institutional investors to coordinate their actions. In 1992, this rule was done away with. The relationship between institutional shareholdings and firm value is twice as large after 1992 as bfore, consistent with the idea that institutional investors force companies to be better managed. That institutional investors help reduce waste in companies flush with cash is bolstered by the finding that the relationship between institutional shareholding and firm value is especially strong in firms that generate more free cash flow.

For mature firms, therefore, financiers play the role of policemen and undertakers, preventing the theft of resources and burying the dead. In other instances, however, they play the more creative role of midwife. Young firms need a very different kind of assistance than established, mature firms. Young firms have tremendous growth opportunities, and in an economy with good laws and decent accounting, most managers of young firms ahve the incentive to succeed (rather than steal or waste investors' money). Top management runs the company in trust, not just for shareholders but also for junior management, which expects to succeed top management. The rewards for a growing firm come not from misappropriating current free cash, which is meager, but from the prospect of running a larger, more profitable firm. So managers can be relied upon to keep obvious wrongdoing by other members of the management team in check.³² The reason management needs close monitoring is that management may be inexperienced and headstrong and may unwittingly do the wrong thing.

Consider how venture capitalists (VCs) help inexperienced manage[ment]

More information about “Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity” (and the book itself) is available from:

(Crown Business, February 2003. Hardcover, 384 pages. ISBN: 0609610708; EAN: 9780609610701.)

Secrets of the Temple

2008-09-21T19:30:00-06:00

On the forty-second page of “Secrets of the Temple: How the Federal Reserve Runs the Country” author William Greider wrote (emphasis added):

and his home mortgage payment does not increase at all. The Federal income tax becomes somewhat more onerous, but this effect is far outweighed by the benefits of homeownership. The average middle-income home renters does not fare as well, but overall he nearly keeps up with inflation.

By contrast, Minarik found that upper-income households, then defined as those above $37,500 in income, approximately the top 10 percent on the income ladder, were "left substantially worse off." Their salaries kept pace with inflation too, but their assets were eroded. "The wealthy have no safe and profitable store of value in times of inflation," he explained.

A similar study by economist Edward N. Wolff of New York University measured the effects on wealth caused by the first lag of the modern inflationary spiral, starting in 1969 and ending with the recession of 1974. During that period, Wolff reported: "Inflation acted like a progressive tax, leading to greater equality in the distribution of wealth."

Minarik found that inflation's impact on two other groups—the poor and the elderly—was more ambiguous but also more benign than popular political opinion assumed. Generally, it was believed that these two groups suffered most severely from inflation because they lived on fixed incomes. Minarik found that this was not true. With a lag, government benefit programs for low-income families, those under $9,000, generally increased in time to keep up with prices. Many poor people were sheltered from rising costs in two sectors where prices were soaring—health and housing—because of Medicaid and public housing. "Over a short period, low-income households are indeed the most adversely affected when prices increase, simply because they have the least maneuvering room in their budgets," Minarik wrote. "But over longer periods their incomes tend to catch up with prices." The poor were still poor, of course, but inflation did not make them worse off compared to others.

The elderly were partially protected too. Social Security benefits were indexed to the inflation rate, automatically increasing the monthly checks periodically to catch up with prices. Among the elderly, Minarik found, the ones hurt most "are those who rely most heavily on private pensions or their own savings. The notion of the Social Security recipient as the chief loser in inflation is largely incorrect...."

The central explanation for this reversal of fortunes—the many gaining at the expense of the few—was homeownership. Most American families, two-thirds of them, owned only one real asset of any

More information about “Secrets of the Temple: How the Federal Reserve Runs the Country” (and the book itself) is available from:

(Touchstone Books, January 1989. Paperback, 798 pages. ISBN: 0671675567; EAN: 9780671675561.)

The Best-Laid Plans

2008-09-20T23:59:00-06:00

On the forty-second page of “The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future” author Randal O'Toole wrote (emphasis added):

of money for fire suppression each year. When fire costs exceeded this amount, the Forest Service was expected to borrow the money from its Knutson-Vandenberg (K-V) fund and then repay it in future years when costs were less than the annual appropriation.

The Forest Service responded with many cost-cutting measures, including allowing forests to let natural fires burn instead of suppressing every fire and changing strategies from suppressing fires on every acre to containing fires within natural boundaries. Average annual fire costs fell dramatically for several years. However, droughts in 1987 and 1988 forced the Forest Service to severely deplete the K-V fund. So in 1990, Congress gave the Forest Service a supplementary appropriration of nearly $280 million to replenish the fund.⁴

Congress's action effectively restored the blank-check mentality and reduced the incentive for forest managers to control costs. An internal Forest Service review in 2003 found that fire managers continued to act as though "suppression funds [were] unlimited." They spent millions of dollars on little-used rental cars, unnecessarily purchased upscale camping gear for crews, and paid exorbitant rates for firefighting equipment.⁵

Such free spending offers many opportunities for corruption. In 2006, a Forest Service purchasing agent in Oregon was discovered to have paid her boyfriend more than $640,000 in firefighting funds. No one in the agency missed the funds; she was caught only after someone tipped off the local district attorney that the couple was gambling away unusually large amounts of money.⁶

In 2000, a prescribed fire lit on the Bandolier National Monument escaped control and swept across the Sante Fe National Forest into Los Alamos, where it burned hundreds of homes. Congress responded by increasing the Forest Service's budget by a whopping 38 percent and asking the Forest Service and other federal land agencies to write a national fire plan.

The Forest Service long ago agreed with private landowners that some forests benefit from frequent light fires. But not all do: while 85 percent of the mostly private forests in the South need frequent fires, only about a third of forests in the West, where most federal lands are located, fall into this category. Without making any effort to determine where the money would be most effectively spent, the National Fire Plan simply asked for huge appropriations for treating forests to reduce fire hazards.

More information about “The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future” (and the book itself) is available from:

(Cato Institute, September 2007. Hardcover, 416 pages. ISBN: 1933995076; EAN: 9781933995076.)

Nanny State

2008-09-19T23:59:00-06:00

On the forty-second page of “Nanny State: How Food Fascists, Teetotaling Do-Gooders, Priggish Moralists, and Other Boneheaded Bureaucrats Are Turning America In” author David Harsanyi wrote (emphasis added):

"You don't need nicotine or an illegal drug to create an addiction. You're creating a craving," Hirsch once explained. But more important for the justification of his case, the lawyer maintained "that the fast-food industry has not been totally up front with the consumers." Thus Hirsch was trying to coerce fast-food companies into offering "a larger variety to the consumers, including non-meat vegetarian, less grams of fat," and a reduction in meal size.

Hirsch also demanded that federal legislation require warning labels on fast food similar to those on tobacco products. As many fast-food companies have begun to provide detailed labels of all nutritional content, this truly was grandstanding. But even if you're inclined to believe Hirsch's intentions were unsullied by the dollar—and this would be a massive leap of faith—what we have on our hands is a full-blown nanny.

In the early stages of Jazlyn's suit, the press had a field day. The always cheeky New York Post ran an entertaining piece accusing Hirsch of being almost "singularly responsible for making attorneys the most hated briefcase carriers in the world." Law professor Donald Garner opined in The Washington Post that obesity lawsuits portray "Americans as the most pathetic, pitiable people in the world, that we are incapable of limiting what we eat." Even the usually composed and regal television anchorwoman Diane Sawyer was impelled to ask Hirsch, "Do you realize the whole world is laughing at you?"

No big deal. The world had laughed before. The thick-skinned Hirsch's first crack at litigating the fast-food industry into low-fat submission utilized a highly suspect and completely disingenuous plantiff named Caesar Barber. A maintenance supervisor in his mid-fifites, Barber claimed that he ate at fast-food restaurants four or five times a week and, until recently, had no idea that his diet was slowly killing him. Unlike Jazlyn, Barber didn't have his par[ents]

More information about “Nanny State: How Food Fascists, Teetotaling Do-Gooders, Priggish Moralists, and Other Boneheaded Bureaucrats Are Turning America In” (and the book itself) is available from:

(Broadway Books, September 2007. Hardcover, 291 pages. ISBN: 0767924320; EAN: 9780767924320.)

The Forgotten Man

2008-09-18T23:59:00-06:00

On the forty-second page of “The Forgotten Man: A New History of the Great Depression” author Amity Shlaes wrote (emphasis added):

opportunity in the small towns, and gold "in the hearts of your citizens, the gold which, too, makes each of us able to go all over the world with respect and safety as American citizens."

In New York, Italian Americans became symbols of success; one of these, the half-Jewish Fiorello LaGuardia, represented the state as a Republican in Congress. Another proud group were his cousins, the Jews, both the older German Jews and the newer East European Jews. Jews at the time had a general belief in charity and taking care of one another: "All Israel is responsible for one another." In addition, they were aware of a specific history in New York; Peter Stuyvesant had asked the Dutch West India Company to ban Jewish settlement, but the company had allowed Jews to stay as long as the Jewish poor "be supported by their own nation." The colonial Jews had pledged that they would, and the commitment was still alive. As late as the 1910s, philanthropist Jacob Schiff said that "a Jew would rather cut his hand off than apply for relief from non-Jewish sources."

The paramount symbol of such immigrant independence was the Bank of United States, which served immigrants and within a few years was establishing sixty offices spread around New York. The bank's very name—Bank of United States, not Bank of the United States or Bank of America—was awkward. Its position was also awkward—while it was large, because immigrants were arriving fast and saving aggressively, it was not a member of the New York Clearing House, and therefore outside the established network of banks. Indeed, one likely reason for the bank's official-sounding name was to signal that the bank was part of the American dream, and as close as a private bank could come to being as trustworthy as government.

The Bank of United States served the textile and clothing businesses—the rag trade and many others, for depositors would soon number 400,000. From the jewel trade to the wholesale meat business, immigrants were integrating into the New York economy. Among the Jewish families in the city throngs were kosher butchers named Schechter, in Brooklyn. In the late 1920s several banded together to open the Schechter Brothers wholesale poulty slaughterhouse.

More information about “The Forgotten Man: A New History of the Great Depression” (and the book itself) is available from:

(Harper Perennial, June 2008. Paperback, 468 pages. ISBN: 0060936428; EAN: 9780060936426.)

Fallen Giant

2008-09-17T20:25:30-06:00

Since American Tax Payers now own almost 80% of insurance giant AIG, we turn to the forty-second page of “Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG” where authors Ronald Shelp & Al Ehrbar, wrote (most emphasis added):

shakers. Luce's friend got great treatment—Starr's is the first profile in the package, and the longest. Even then, journalists recognized that insurance as practiced by AIG was different: "His insurance career has not been the dull, routine-ridden affair that is so typical of this profession in America.

"Were the total assets of Mr. Starr's companies to be tabulated they would seem midgetlike beside those of Metropolitain Life," Fortune wrote. "Buy Mr. Starr's income is fat—perhaps as bigtoday as any U.S. insurance income. This money is earned upon a sociological premise, that the standard of living and hygiene of the Chinese middle class are improving, with a consequent decline in the death rate. Indeed, since Chinese statistics are all but nonexistent, the success of Mr. Starr's American Asiatic Underwriters, and of its various subsidiaries, is perhaps the best available proof that the death-rate decline in China is a reality."

The article observed that Starr had never bothered to become proficient in Chinese, but his knowledge of China was encyclopedic, and he was famed in the foreign community for his uncanny ability to work with and through the Chinese people. Fortune explained he was expelled from the Rotary Club for speaking his mind. There is no record of what he said but I would wager it was his pro-Chinese stance, either his belief in their integrity and honesty or his conviction of foreign concessions would revert to the Chinese. In any case, his expulsion probably became a badge of honor to Neil Starr.

Fortune called him Shanghai's most bullish tai-pan. "But like many of his modern associates, he is bullish in finance rather than in goods." Interestingly, the article describes an insurance operation with one characteristic that became a hallmark of AIG under Greenberg: "His operations form a vast and intricate web, the outer limits of which no one knows."

The article concluded: "His is a machine-gun mind, tactful at times, but often tough. At the psychological moment he will thrust out his jaw, which, with his glasses, is the most prominent feature of his face. He is forever on the go—Shanghai to New York, New York to London, London to Singapore. He goes with, and in quest of, ideas, talks insurance everywhere, spreads his interests out through Asia.... In his rare periods of quiescene he lives with a maiden aunt on the eighth floor of the North China Building, No. 17, The Bund, where Asia Life and American Asiatic are also housed. He belongs to the usual Shanghai clubs, dines outs, drinks

More information about “Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG” (and the book itself) is available from:

(John Wiley & Sons, October 2006. Hardcover, 228 pages. ISBN: 047191696X; EAN: 9780471916963.)

Greed and Glory on Wall Street

2008-09-16T23:59:00-06:00

Greed and Glory on Wall Street: The Fall of the House of Lehman” was published in 1987. Obviously the author would have a lot of new material in the past 24-hours (and in the coming weeks and months) for an updated revision! But looking back two decades we find that on the forty-second page author Ken Auletta wrote (some emphasis added):

strategy"; (2) "a fragmented and undisciplined approach to running its business"; (3) "a portion of the partnership whose ability, training, and/or work habits are inconsistent with the competitive demands of the marketplace and with Lehman's present business"; (4) "too small a professional staff relative to the number of clients to be serviced and transactions to be processed"; (5) "a bond distribution system which is in chaos and an equity distribution system which is experiencing declining market share"; (6) "recent management changes throughout the organization"; (7) "high overhead relative to current revenue levels"; (8) "comparatively limited capital." The authors warned that "in our judgment the long-term future of this firm is uncertain."

"The firm must face up to the fact that the ability, training, and/or work habits of a substantial number of partners (totaling perhaps 10 to 15 throughout the Firm) are inconsistent with the competitive demands of the marketplace and with that expected of Lehman partners," the authors concluded. "These individuals should be phased out according to some specific plan. The single most important conclusion of this study is that the quality of the partnership is the key to our present problems and to our ability to be successful in the future [their italics]."

Peterson was determined to phase out some partners and to reinvigorate the forty-four man partnership with new blood. But he was sensitive to how fragile the partnership was, and he moved slowly. It wasn't until September 1976 that he replaced seven senior members of the board, reducing the average age of the board from fifty-six to forty-seven years. After his friend Warren Hellman left in 1977 to start his own venture capital firm, Peterson left the presidency vacant.

To address the composition of the partnership required Peterson to confront a strategic question: What kind of investment bank did Lehman wish to be? With remarkable prescience, the internal report had sketched how investment banking had changed, and was likely to change further: "As the nation industrialized, financing was the most important element of corporate life, since shortages of goods created demand which eliminated marketing as the key feature. Few of the inventory-entrepreneur class understood how to raise capital; they had limited contacts with financial institutions and knew of only the handful of investment banking firms whom they could solicit to assist them in the critical function of raising capital... Personal contacts, imaginations, salesmanship and an entreprenurial orienta[tion]

More information about “Greed and Glory on Wall Street: The Fall of the House of Lehman” (and the book itself) is available from:

(Warner Books, March 1987. Paperback, 292 pages. ISBN: 0446384062; EAN: 9780446384063.)

The Worst Hard Time

2008-09-15T23:59:00-06:00

On the forty-second page of “The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl” author Timothy Egan wrote (emphasis added):

Fruit crates, or planks nailed to stumps, did the job. After school, Hanzel had to do the janitor work and get the next day's kindling—dry weeds or sun-toasted cow manure.

When the winds kicked up as always or a twitching sky threatened hail, she felt like she was back in the dugout, cramped and gasping for space. But when it was nice, she took the children outside and staged horse races. She taught them basketball. Once, she loaded up the players in a wagon and galloped off four miles to play another team. But the sky turned ugly, growled, and broke in a fit of hail. The Children started to cry. One horse panicked and bolted. Kids jumped from the wagon, hail storming down on them. Hazel Lucas leaped from the carriage seat to the back of the panicked horse, seized the bridle, and rode the horse to calm.

All the while, she wondered about a life far away, in one of the bustling cities of the Midwest, or just a place where the routine of a day was not so full of random death. The Kansas City Star arrived by mail in Boise City once a week, and Hazel got a sense of how fast America was moving: flappers, gangsters, and stunts—two men tried to play airborne tennis while standing, strapped, to the wings of a biplane. In Cimarron County, most people didn't even have electricity, and many still lived in earthen dugouts or soddies.

But no group of people took a more dramatic leap in lifestyle or prosperity, in such a short time, than wheat farmers on the Great Plains. In less than ten years, they went from subsistence living to small business-class wealth, from working a few hard acres with horses and hand tools to being masters of wheat estates, directing harvests with wondrous new machines, at a profit margin in some cases that was ten times the cost of production. In 1910, the price of wheat stood at eighty cents a bushel, good enough for anyone who had outwitted a few dry years to make enough money to get through another year and even put something away. Five years later, with world grain supplies pinched by the Great War, the price had more than doubled. Farmers increased production by 50 percent. When the Turkish navy blocked the Dardenelles, they did a favor for dryland wheat farmers that no one could have imagined. Europe had relied on Russia for export grain. With Russian shipments blocked, the United States

More information about “The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl” (and the book itself) is available from:

(Houghton Mifflin Company, December 2005. Hardcover, 340 pages. ISBN: 061834697X; EAN: 9780618346974.)

The River of Doubt

2008-09-13T23:59:00-06:00

On the forty-second page of “The River of Doubt: Theodore Roosevelt's Darkest Journey” author Candice Millard wrote (emphasis added):

From there is neither East nor West,
Border nor breed nor birth,
When two strong men stand face to face,
Though they come from the ends of the earth.

No longer a boy—he would turn twenty-four in just six days—Kermit was showing every sign of growing into the man that his father had always hoped he would be. He had not only carved out a life for himself under tough circumstances in Brazil, but he was earning his own way and was steadily establishing his independence. Concerned that his son was getting "down to such a very simple diet as a result of having no money at the end of the month," Roosevelt had resolved in April to send him two hundred dollars each quarter. By late July, however, Kermit was proudly tearing up his father's checks. "Unless things go very badly I shan't need money unless I happen to marry. I'm now getting something more than a living wage, and have about three hundred and fifty dollars in the bank," Kermit told his father. "I wrote you that I had torun up the first check and I have now torn up the second."

Although Kermit's pay had improved since he had first arrived in Brazil, the conditions under which he was working had not. Not only did he suffer from recurring bouts of malaria—a disease that he had endured since childhood, having first succumbed to it in Washington, D.C., in the days before the swamps on which the capital was build had been drained—but he worked in remote, sparsely populated locations near Indians who had had little interaction with white men beyond occasional, violent clashes. Kermit took the dangers in stride. In a letter he wrote home the previous fall, while he was working for the Brazil Railway Company, he mentioned offhandedly that they had had three derailments in a single week. "Twice it was a big box car that went off, and once it was the engine," he wrote. "Only one of them amounted to anything, and there we very nearly killed our cook." A few weeks later, he mentioned that he did not think he

More information about “The River of Doubt: Theodore Roosevelt's Darkest Journey” (and the book itself) is available from:

(Doubleday Books, October 2005. Hardcover, 416 pages. ISBN: 0385507968; EAN: 9780385507967.)