Category: Books

Ron DeSantis’s book

by philg

I have begun to read The Courage to Be Free: Florida’s Blueprint for America’s Revival, despite my general aversion to this genre of literature. I consider reading Ron DeSantis’s book to be a duty both as a blog publisher and as a new Floridian. Progressive academic friends in Cambridge feel that they already know Mr. DeSantis. One noted, during my most recent visit, that DeSantis is responsible for importing slaves into the United States to pick sugar cane. “They come on boats in chains,” he said, “and aren’t paid.” Why don’t journalists from New York-based media enterprises ask Mr. DeSantis about his slave importation operation at press conferences? “They know that he won’t answer.” Why didn’t the progressive himself go down to Florida and picket outside the Governor’s Mansion for the slaves to be released? He’s a member of the laptop class and can work from anywhere. He couldn’t explain why he wasn’t willing to invest the price of a plane ticket to protest the actual slavery that he has identified on U.S. soil.

For folks who don’t feel that they already know everything worth knowing about Ron D, read on…

The book starts out rough, in my opinion:

Most Americans instinctively know that something has gone wrong with our country over the past generation.

How is Ron going to win with this message? Successful politicians generally tell Americans that they are the world’s greatest people living in the world’s greatest (and richest) country. A vote for the politician is a path to slightly increased greatness, not a recovery from a nosedive. The language gets a little softer later in the introduction:

Our nation needs immigration policies that recognize and enforce the country’s sovereignty, not just by having a wall at the southern border but also by quickly repatriating those in the country illegally. An erroneous claim of asylum should not give a foreign national a ticket to settle in the interior of our country. Nor should the legal immigration system have policies such as the diversity lottery and chain migration; instead, the immigration system should be merit-based; favor assimilation, not mass migration; and be geared toward benefiting the wages of working-class Americans.

Ron D will not deport migrants, but repatriate them.

Looking for useful life advice?

People often talk about the need for a student-athlete to “balance” the demands of the classroom with the requirements of sports. For me, I rejected the idea that I would strike a balance between academic achievement and athletic success, because I was not willing to give less than 100 percent to either baseball or my academics. So instead of balancing, I just did everything to the hilt and let the chips fall where they may.

He gave 110 percent while at Yale, in other words? Or 200 percent? I am not sure how to put this into practice since my capacity is about 50 percent on my best day.

We learn about Ron and Casey’s working class and military roots. Ron worked during high school and college, e.g., for an electrical contractor, while Casey’s sister was a USAF C-17 pilot. (Even today, the DeSantis family has minimal wealth.) Ron’s own military service made him skeptical of America’s recent war aims:

It was just as obvious that we would not succeed in establishing a pro-American, Western-style democracy in Iraq. This was simply outside the capability of any military force to achieve. The cultural differences were too vast for Iraq to embrace Madisonian constitutionalism. In fact, the Iraqis considered “freedom” to be submission to sharia law, not the enactment of a liberal democracy.

(The U.S. would be a lot friendlier to the immigrants that we claim to welcome if Michigan and Minnesota adopted sharia law. Why should Muslim immigrants, many of whom are asylees or refugees who are fleeing violence, have to accept a debauched society? They didn’t come to the U.S. because they love the way that the U.S. is, but because they would have been killed if they had stayed in their home countries.)

Ron was inspired by Barack Obama:

Once I left active duty, I began to think more and more about how our country was moving in the wrong direction, especially under the leftist agenda of the Obama administration.

What did he learn as a Congressman?

Ingrained in Beltway thinking is a contempt for average voters, particularly voters who reject leftist ideology.

That’s certainly consistent with my experience of D.C.! Also, Ron turns out to be one of the few Representatives who actually reads the bills.

The book does get more substantive. Leafing through, I found the following, for example:

Our reforms included protections for political candidates against being deplatformed, which is a way for Big Tech to interfere in elections. What is stopping Big Tech companies from shutting off Republican candidates from social media platforms during the stretch run of an election? If someone hosts a get-together for a candidate and provides refreshments, that must be accounted for as a campaign contribution, yet a tech company can upend an entire candidate’s campaign, and that is somehow not considered interference with an election. The reforms also included transparency requirements for the social media companies’ content moderation policies, and required that users be given notice of changes to those policies. The opaqueness of how Big Tech arrives at its censorship decisions means that it is easy for them to move the goalposts to stifle views the industry does not like.

I’m actually surprised that Twitter, Facebook, and Google allow Republican candidates to use their platforms at all. Any of these firms could cite the following analysis of the January 6 insurrection and say that it wasn’t safe to allow Republicans to speak.

I hope that some readers will read along with me!

So far I’m dismayed that Ron hasn’t adapted his message to be more like conventional politicians’. Crushing it in Florida against an all-abortion-care-all-the-time fossil does not mean that he can crush it with voters nationwide in 2024. Americans in general are the most timid and compliant humans ever to occupy this planet. The Floridians who wanted the freedom to leave their houses, breathe without masks, send children to school, not inject their children with experimental drugs, etc., are outliers on the spectrum of American cowerhood. Young/cognitively sharp/competent/energetic/effective sounds good, but Americans in 2020 chose a new president who does not have any of these qualities.

Full post, including comments

Book review: the American love affair with opioids, accelerated by McKinsey

by philg

Loyal readers may remember a review here of a book by a Los Angeles Times reporter on America’s taxpayer-fueled heroin habit (see Who funded America’s opiate epidemic? You did.). Empire of Pain: The Secret History of the Sackler Dynasty covers the same story from the angle of the family behind OxyContin. The Sacklers, whose names adorn university and art museum buildings throughout the U.S. and Europe, have been convenient scapegoats, but it turns out that they didn’t do it alone. Some things that I learned from the book…

Arthur M. Sackler, the patriarch, died before OxyContin was invented (the slow-release coating was actually the invention of a British company that had been acquired by the Sacklers’ sleepy Purdue Pharma and was used originally for morphine pills called “MS Contin”). He was the significant art collector and benefactor of AOC’s party venue at the Metropolitan Museum (how did it cost $587 for a car ride from the Bronx to the Upper East Side?). With the help of some friendly bureaucrats at the FDA, who would go on to be of much greater assistance to his brothers’ company Purdue, he pushed the limits of what was legal/ethical in medical advertising, especially for Valium and Librium, but museums are still happy to display the name of Hoffmann-La Roche, which actually made the drugs.

The book describes McKinsey, “The firm that built the house of Enron”, working to help Purdue Pharma increase sales of OxyContin even after the company and three executives had pleaded guilty to federal crimes regarding claims made regarding the drug. McKinsey’s biggest idea, according to the author, was that Purdue Pharma’s salespeople should make more frequent calls on the doctors who were the biggest prescribers, i.e., the “pill mills” such as Eleanor Santiago‘s (1 million pills, which resulted in a 20-month prison sentence for the physician). McKinsey also consulted for Johnson & Johnson, the author says, to help them push more opioids out to consumers. (See “Behind the Scenes, McKinsey Guided Companies at the Center of the Opioid Crisis” (NYT 2022))

Speaking of Johnson & Johnson, they owned a division in Tasmania where all of the poppies were grown to enable the production of OxyContin and competitive opioid pills from Janssen (J&J’s pharma subsidiary, now famous for its never-FDA-approved one-shot COVID vaccine) and other companies (in-depth background). The Federal DEA was also complicit in allowing a massive increase in the import quota for this critical raw material.

The author describes Mary Jo White, later appointed by Barack Obama to chair the Securities and Exchange Commission, as instrumental in weakening the government’s efforts to punish Purdue, which was owned entirely by the Sacklers (not, however, by any of Arthur M’s descendants or cash-hungry former wives, “the Valium Sacklers” as opposed to the “OxyContin Sacklers”).

Consistent with Dreamland, the book previously reviewed here, Empire of Pain says that it was common for people to transition from Oxy to heroin sold by migrants from Nayarit, Mexico and that, in fact, 80 percent of heroin overdoses were among people who’d previously been prescribed OxyContin. (See also “From Nayarit to Your Neighborhood: Heroin’s Path to a Ready Local Market”.)

The book supports the heritability of success theory advanced in The Son Also Rises: economics history with everyday applications. Even after a couple of generations that could have succumbed to idleness, the Sackler descendants are reasonably hard-working and successful. Madeleine Sackler, for example, has been successful as a filmmaker (ironically, a couple of them are about life in prison, which is not unrelated to the drug that has funded her lifestyle).

Empire of Pain: The Secret History of the Sackler Dynasty is timely given that a lot of our American brothers, sisters, and binary-resisters were just paid $600/week to stay home for two years and consume drugs and alcohol (this Senate document says there was a 30 percent increase in overdose deaths, but blames the “pandemic” rather than the “lockdown”). The antiracism experts at Mass General say that heavy drinking increased by 21 percent during lockdown.

If nothing else, reading the book will make you cautious about taking that first bottle of painkillers that a doctor prescribes!

The author is a New Yorker writer and he asserts as fact that HIV/AIDS would have been a solved problem if Republicans had not blocked federal funding for research into a cure for this disease (yet SARS-CoV-2 continues to kill steadily despite literally $trillions in tax money that has been thrown at it; see Did vaccines or any other intervention slow down COVID?). He also asserts as fact that if Purdue Pharma was liable for opioid-related deaths then gun manufacturers are obviously liable for shooting deaths (never mentioning that the gun manufacturers have always been quite candid about the lethality of guns/bullets and that the theory of liability for the opioid industry is that the companies lied to Americans about heroin-style drugs not being addictive/harmful).

Loosely related… the Temple of Dendur at the Met, in what used to be called “The Sackler Wing” (funded by Arthur M, blameless in the OxyContin debacle), “temporarily closed” in June 2021 for coronapanic:

Full post, including comments

Book review: Walking the Americas

by philg

To prepare for our own adventurous journey to Colombia, a friend and I listened to Walking the Americas, by Levison Wood, a British Army veteran. Mr. Wood starts farther south than we did, but is handicapped by not having any assistance from Royal Caribbean. Without a boat, Mr. Wood will have to push through the notoriously challenging Darien Gap. Today we tend to think that this term refers to a “gap” in the highway that would otherwise connect Alaska to Argentina. One of the locals interviewed in the book says that the name refers to a gap in the mountains that made it easier to travel through from Atlantic to Pacific than through other parts of Panama.

Mr. Wood’s companion is Alberto, a 42-year-old Mexican fashion photographer who often says “chinga”. Alberto was ready for a distraction in 2016 because he’d recently been targeted in Mexican family court by his wife of one year, availing herself of the then-new no-fault divorce law to obtain a free house after a one-year marriage. From “Do changes in divorce legislation have an impact on divorce rates? The case of unilateral divorce in Mexico” (Aguirre 2019; Latin American Economic Review):

In 2008, Mexico City was the first entity to approve unilateral divorce in Mexico. Since then, 17 states out of 31 have also moved to eliminate fault-based divorce. … The results indicate that divorce on no grounds accounts for a 26.4% increase in the total number of divorces in the adopting states during the period 2009–2015. … Unilateral legislation has proved to be an effective tool in modifying family structures in Mexico…

Alberto’s achievement in walking from Merida, Yucatan to Colombia is more impressive than the author’s. Alberto was not writing a book and was not a former paratrooper.

The Darien Gap turns out not to be all that challenging for our heroes. They have enough connections to get the Panamanian authorities to bless the expedition. They hire Emberá and Kuna Indians as porters and guides (I visited these folks about 20 years ago via Robinson R22 helicopter from the local flight school). But the rest of the book features plenty of challenges, e.g., hiking to 12,536′ to the top of Cerro Chirripó, Costa Rica’s highest peak and walking through gang-held areas of San Pedro Sula, Honduras.

The author points out that Central America’s population is 4X what it was a few decades ago and, in his opinion, this is the principal explanation for the region’s poverty.

The migrants whom the walkers encounter are from Africa, Haiti, Nepal, and Pakistan and have typically entered the Americas by flying to Brazil. The Panamanian authorities explain that, after arresting migrants, they will typically assist them in reaching the United States by transporting them to the border with Costa Rica. This gets the migrants out of Panama, which does not want them, and is cheaper than deportation (Panama pays for some bus rides instead of paying for plane tickets back across the Atlantic).

Here are some of the animals that we saw while walking through the Colombian jungle (at the cruise port in Cartagena). Warning: the toucans are friendly, but one of them likes to bite sneakers and it hurts!

The book lends itself well to the audio format and the narrator is convincingly British. I recommend Walking the Americas to anyone planning a journey to or through Central America. Separately, if you want to see a restored Spanish colonial town and a lot of beautiful nature, I recommend the UNESCO World Heritage site of the old city within Panama City and then do your nature excursions in Panama, which is much wealthier and better developed than other nations in the region. They don’t promote tourism as much as the Costa Ricans do because any time they need $1 million they can let a big container ship through the new locks. Cartagena is jammed with tourists, locals trying to sell things to the tourists, car traffic, massive holes in the sidewalks, etc.

Full post, including comments

Book review: River of the Gods (searching for the source of the Nile)

by philg

Having loved River of Doubt, I listened to River of the Gods: Genius, Courage, and Betrayal in the Search for the Source of the Nile as an audiobook. As with River of Doubt, the story holds the listener’s interest so I recommend it in audio format.

The description from the publisher is presumably exciting for today’s customers:

Yet there was a third man on both expeditions, his name obscured by imperial annals, whose exploits were even more extraordinary. This was Sidi Mubarak Bombay, who was enslaved and shipped from his home village in East Africa to India. When the man who purchased him died, he made his way into the local Sultan’s army, and eventually traveled back to Africa, where he used his resourcefulness, linguistic prowess and raw courage to forge a living as a guide. Without Bombay and men like him, who led, carried, and protected the expedition, neither Englishman would have come close to the headwaters of the Nile, or perhaps even survived.

The book does not deliver on this promise. Bombay is not described as doing anything remarkable other than being a loyal assistant to Richard Burton and Speke. Burton remains the most interesting and impressive character in the drama and it is astonishing what he and Speke were willing to endure to pick up a scrap of knowledge and obtain some fame. They spent most of their time on the expedition suffering from tropical diseases far worse than Covid.

The discovery part of the discovery proves to be somewhat underwhelming. The Black and Arab merchants of East Africa already knew about the rift lakes, including Lake Victoria. As Burton and Speke were “exploring” they were able to exchange letters with Europeans on the coast. They would simply send a letter with a slave or goods caravan and wait for a reply to arrive with a caravan bringing imports from the coast. This is not the exploration of an Amundsen or Shackleton in Antarctica!

Compared to the Blacks and Arabs who lived full time in the region, what was different about Burton and Speke was that they cared about the hydrology of the region, not just making some money by trading goods and/or slaves. The Arab merchants knew about Lake Victoria, for example, but were not curious regarding where the water ultimately ended up. They wanted to sell goods from the coast on the shores and perhaps bring back some slaves. The exploration challenge in River of Doubt was much tougher.

Here are a few of my own snapshots from Zanzibar (2007):

Full post, including comments

World War I and the current war in Ukraine

by philg

It’s Friday the 13th, an unlucky day. Let’s talk about an unlucky human experience: war. For some potentially relevant background on the current war in Ukraine, I decided to read Keegan’s The First World War.

How can a 100-year-old war be relevant to anything that is happening today? The author says that World War I is highly relevant to World War II:

… no explanation of the causes of the Second World War can stand without reference to those roots. The Second World War, five times more destructive of human life and incalculably more costly in material terms, was the direct outcome of the First. On 18 September 1922, Adolf Hitler, the demobilised front fighter, threw down a challenge to defeated Germany that he would realise seventeen years later: “It cannot be that two million Germans should have fallen in vain … No, we do not pardon, we demand—vengeance!”

(for those who aren’t familiar with Adolf Hitler, he was the Donald Trump of his day)

Just as the Ukraine war arrived in a Europe that was not mentally prepared for the idea, so did World War I:

In 1939 the apprehension of war was strong, so was its menace, so, too, was knowledge of its reality. In 1914, by contrast, war came, out of a cloudless sky, to populations which knew almost nothing of it and had been raised to doubt that it could ever again trouble their continent.

Just as folks who’ve started wars recently have been overly optimistic about the timeline and the results (the U.S. being a notable example going back to Vietnam), the Germans had a detailed plan in which the war would be won within about 40 days:

“It is the thirty-fifth day,” the Kaiser exulted to a delegation of ministers to his Luxembourg headquarters on 4 September, “we are besieging Rheims, we are thirty miles from Paris.”94 The thirty-fifth day had an acute significance to the German General Staff of 1914. It lay halfway between the thirty-first day since mobilisation, when a map drawn by Schlieffen himself showed the German armies poised on the Somme to begin their descent on Paris, and the fortieth, when his calculations determined that there would have been a decisive battle.95 That battle’s outcome was critical. Schlieffen, and his successors, had calculated that the deficiencies of the Russian railways would ensure that not until the fortieth day would the Tsar’s armies be assembled in sufficient strength to launch an offensive in the east. Between the thirty-fifth and the fortieth day, therefore, the outcome of the war was to be decided.

Russia got off to a bad start in World War I, but ramped up eventually:

Russia, despite the terrible fatalities of 1914–15 and the large loss of soldiers to captivity after Gorlice-Tarnow, had been able to fill the gaps with new conscripts, so that by the spring of 1916 it would have two million men in the field army. Almost all, moreover, would be properly equipped, thanks to a striking expansion of Russian industry. Engineering output increased fourfold between the last year of peace and 1916, chemical output, essential to shell-filling, doubled. As a result there was a 2,000 per cent increase in the production of shells, 1,000 per cent in that of artillery, 1,100 per cent in that of rifles. Output of the standard field-artillery shell had risen from 358,000 per month in January 1915 to 1,512,000 in November. The Russian armies would in future attack with a thousand rounds of shell available per gun, a stock equivalent to that current in the German and French armies, and its formations were acquiring plentiful quantities of all the other equipment—trucks, telephones and aircraft (as many as 222 per month)—essential to modern armies.

Then as now a respiratory virus was an important consideration:

The German inability to sustain pressure was also hampered by the first outbreak of the so-called “Spanish” influenza, in fact a worldwide epidemic originating in South Africa, which was to recur in the autumn with devastating effects in Europe but in June laid low nearly half a million German soldiers whose resistance, depressed by poor diet, was far lower than that of the well-fed Allied troops in the trenches opposite.

(The book was written at the end of the 1990s. Science then said that the flu originated in South Africa. Wikipedia today says that Science has narrowed things down to just three possibilities for the origin of the influenza that was so much more lethal than SARS-CoV-2: the U.S., Europe, and China.)

The author, writing in the 1990s, might have been a little too optimistic about Europe!

The legacy of the war’s political outcome scarcely bears contemplation: Europe ruined as a centre of world civilisation, Christian kingdoms transformed through defeat into godless tyrannies, Bolshevik or Nazi, the superficial difference between their ideologies counting not at all in their cruelty to common and decent folk. All that was worst in the century which the First World War had opened, the deliberate starvation of peasant enemies of the people by provinces, the extermination of racial outcasts, the persecution of ideology’s intellectual and cultural hate-objects, the massacre of ethnic minorities, the extinction of small national sovereignties, the destruction of parliaments and the elevation of commissars, gauleiters and warlords to power over voiceless millions, had its origins in the chaos it left behind. Of that, at the end of the century, little thankfully is left. Europe is once again, as it was in 1900, prosperous, peaceful and a power for good in the world.

The author hatefully says that diversity is not anyone’s strength and, in fact, is a huge threat to political stability.

The liberation of the peoples of Eastern Europe from the imperial rule of German-speaking dynasties, Hohenzollern or Habsburg, brought equally little tranquillity to the successor states they founded. None of them—Poland, Czechoslovakia, the Kingdom of the Serbs, Croats and Slovenes or, as it became known in 1929, Yugoslavia—emerged into independence with sufficient homogeneity to undertake a settled political life.

According to one of the foremost historians of the past 100 years, a country with a mixture of ethnicities and religions will eventually become too weak to defend itself:

Czechoslovakia’s inheritance from the Habsburgs of another German minority in the Sudetenland equally robbed the new state of ethnic equilibrium, with fatal consequences for its integrity in 1938. Yugoslavia’s unequal racial composition might have been brought into balance with good will; as events turned out, the determination of the Orthodox Christian Serbs to dominate, particularly over the Catholic Croats, undermined its coherence from an early date. Internal antipathies were to rob it of the power to resist Italian and German attack in 1941.

Even one of the world’s best historians can’t figure out the “War, what is it good for?” question:

But then the First World War is a mystery. Its origins are mysterious. So is its course. Why did a prosperous continent, at the height of its success as a source and agent of global wealth and power and at one of the peaks of its intellectual and cultural achievement, choose to risk all it had won for itself and all it offered to the world in the lottery of a vicious and local internecine conflict? Why, when the hope of bringing the conflict to a quick and decisive conclusion was everywhere dashed to the ground within months of its outbreak, did the combatants decide nevertheless to persist in their military effort, to mobilise for total war and eventually to commit the totality of their young manhood to mutual and existentially pointless slaughter?

Do I recommend the book? Not as a way of understanding the action of the World War I. There are so many battles that I think that story of the war needs to be presented as a video animation with voiceover to explain which armies are moving and why. Nobody has sufficient memory plus spatial thinking skills to follow a text narrative of the entire war. Here’s how the grand 40-day plan to beat France is presented in the Windows Kindle app:

Clear as mud! Still, the book has a lot of interesting and surprising facts. Mostly, the reader is left amazed that so many people sacrificed their lives for nothing. See, for example, “Britain entering first world war was ‘biggest error in modern history” (The Guardian):

Ferguson is unequivocal: “We should not think of this as some great victory or dreadful crime, but more as the biggest error in modern history.”

He continued: “The cost, let me emphasise, of the first world war to Britain was catastrophic, and it left the British empire at the end of it all in a much weakened state … It had accumulated a vast debt, the cost of which really limited Britain’s military capability throughout the interwar period. Then there was the manpower loss – not just all those aristocratic officers, but the many, many, many skilled workers who died or were permanently incapacitated in the war.

More: Read Keegan’s The First World War.

Full post, including comments

Book recommendation: River of Doubt

by philg

Christmas gift idea: The River of Doubt: Theodore Roosevelt’s Darkest Journey, a new-to-me 2005 book by Candice Millard. I listened to this as an Audible book so I can’t include excerpts. The story is about an exploration and mapping journey down what was then the Rio da Dúvida and is today the Roosevelt River. Teddy Roosevelt and one of his sons went down the river in 1913-14, whose course and rapids were unknown. The co-leader was Cândido Rondon, Brazil’s greatest explorer and friend to the indigenous (after a lifetime spent under hazardous conditions, he died in 1958, age 92).

I couldn’t help thinking about the unnecessary nature of the hardships that the men endured (no expedition member identifying with any other gender is identified by the author). By 1924 or so, the river could have been surveyed without risk via airplane, e.g., the mass-produced Bréguet 19 (presumably with ferry tanks, flown in 1925 on a non-stop 2,800 nm. flight). Being on the surface might have been useful for diplomacy with the Cinta Larga, but these people were not interested in interacting with the former U.S. president or his Brazilian partners.

The story combines adventure, conflict, family loyalty and sacrifice, tragedy, and a reminder that there are a lot of diseases far worse than COVID-19.

A 2021 journey down part of the river by whitewater nerds with modern equipment who nonetheless had to do some portaging:

I’m now interested to read the author’s 2022 book, River of the Gods: Genius, Courage, and Betrayal in the Search for the Source of the Nile. Of course, during the interval between 2005 and 2022, the standards of what has to go into a successful book have changed. Part of the Amazon description of the new book:

Yet there was a third man on both expeditions, his name obscured by imperial annals, whose exploits were even more extraordinary. This was Sidi Mubarak Bombay, who was enslaved and shipped from his home village in East Africa to India. When the man who purchased him died, he made his way into the local Sultan’s army, and eventually traveled back to Africa, where he used his resourcefulness, linguistic prowess and raw courage to forge a living as a guide. Without Bombay and men like him, who led, carried, and protected the expedition, neither Englishman would have come close to the headwaters of the Nile, or perhaps even survived.

In River of the Gods Candice Millard has written another peerless story of courage and adventure, set against the backdrop of the race to exploit Africa by the colonial powers.

The white exploiters are saved from their own greed and stupidity by a person of color, in other words.

Finally, River of Doubt might be a good name for a book about the Deplorables who reject Science, e.g., that cloth masks protect against an aerosol virus or that vaccinating 6-month-olds with a medicine that does not stop infection/transmission is the obvious answer to a virus that kills 80-year-olds. Titles can’t be copyrighted!

Full post, including comments

Economic bubble reading list: The Lost Bank

by philg

Today is the beginning of the big GDP statistics update from the BEA:

At the end of September, BEA will update five years of U.S. gross domestic product and related statistics, as well as GDP statistics for industries and for each state.

Maybe we’ll get some insight into how badly we fooled ourselves in imagining that people sitting at home scrolling Facebook and playing Xbox were as productive as if they’d continued to go to the office. The latest from the BEA:

Speaking of fooling ourselves, let me recommend The Lost Bank: The Story of Washington Mutual – The Biggest Bank Failure in American History by Kirsten Grind, a Wall Street Journal reporter. The Collapse of 2008 has been covered at a high level in a lot of books, but this one manages to touch on all of the big issues in the context of a single enterprise and group of people. As with “A single death is a tragedy; a million deaths is a statistic,” a narrative about one company is more compelling and easier to follow than a story about the entire U.S. economy.

The book explains how our modern world of a handful of enormous banks came to be. When there are no limits on how big a bank can get, small variations in bank health lead to enormous concentration. Due to being slightly larger, WaMu might have slightly lower costs per customer than a smaller bank, e.g., with information systems being spread across a larger base, thus making an acquisition sensible on both sides. WaMu would buy banks after the CEO got sued for divorce, leaving the target without effective leadership while the CEO was defending the lawsuit. WaMu would ultimately buy banks to feed its own executives’ egos, particularly Kerry Killinger’s, regarding its size rank among U.S. banks (when you’re #4, the desire to become #2 or #1 becomes tough to resist).

The book explains the roots of the Collapse of 2008. At a high level, the book identifies the following culprits:

  • the federal government, starting with Bill Clinton, pressuring banks into lending big money to Americans with low income and bad credit history to serve a social justice goal of achieving a desire mix of skin colors among borrowers (regulators could simply shut down a bank that didn’t lend enough money to the groups of interest to the government)
  • Fannie Mae, which abandoned its insistence on high quality mortgages and, partly due to pressure from the government, started buying low quality mortgages issued to home buyers/flippers who could not be expected to pay back loans if house prices flattened
  • New York City, whose investment banks sold mortgage-backed bonds to investors worldwide and, also, those investors. The book describes people on the ground at subprime lenders, e.g., Long Beach Mortgage (acquired by WaMu in 1999), recognizing that the borrowers would never pay but assuming that if Wall Street kept buying the mortgages the investors must know something that they didn’t.
  • California, where most of the fraudulent practices originated.
  • the issuance of complex variable rate mortgages, such as Option ARM, to consumers who lacked the sophisticated or, in many cases the English language skills, to understand them (it didn’t help that these folks had the financial capacity only to pay the initial teaser monthly payments and were guaranteed to default if a house price didn’t go up enough to enable a refinance; Federal regulators at the Office of Thrift Supervision approved the practice of issuing a $4000/month mortgage to a consumer who could afford only the $1000/month teaser rate)

As in Bubble in the Sun book: even those with the best information can’t predict a crash, those on the inside did not always see crash coming. In early 2007, for example, as investors were fleeing from high-risk mortgages and as some of his junior executives warned of impending doom, Kerry Killinger tried to buy a huge California-based subprime lender, Ameriquest, which went bankrupt shortly afterwards. Questioned regarding why he would want to pay for Ameriquest while the crash appeared to be underway, Killinger responded “They don’t ring a bell at the bottom.”

Kirsten Grind references Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade, by David Lereah, Ph.D., the chief economist for the National Association of Realtors. The 2005 book was rereleased in February 2006 just as the market for subprime mortgage-backed securities began to collapse (but Fannie Mae kept buying!).

The book is a great lesson in what we might call “success disease.” Executives who take risks when everything is going up imagine that they have some special talents. Like individual investors in high-beta stocks, they don’t risk-adjust their high historical returns for the fact that they took a lot of risk and that it could easily have gone in the other direction.

The book answers the question Why did banks work so hard to lend money to people who obviously weren’t going to pay? Due to the higher interest rates on subprime, and the assumption that almost all of the low-income folks who took out subprime loans would actually pay, it was 5-10X more profitable to lend money to someone with no job than it was to lend money to a person with a job and a history of paying his/her/zir/their bills. The book doesn’t say so explicitly, but this also explains why banks couldn’t easily abandon their subprime practices in 2005 when the problems were already obvious. If they had done so, they would have needed to fire half of their employees (since the revenue from being a mortgage lender to those who could actually afford houses was such a small fraction of the subprime revenue stream).

Those passionate about social justice will be pleased to learn that the one voice of praise from a shareholder at the April 2008 meeting was from a Ph.D. economist who was also and employee. She expressed confidence in the Board and executive team, thanking them for their focus on diversity in hiring and lending to minorities (“community”). WaMu had recently rejected an $8/share buyout offer from J.P. Morgan Chase and also recently obtained $7 billion in smart money from the private equity geniuses (WSJ, Sept 2008 describes all $7 billion being lost). The private equity investors got half the company and let the Board and executives keep their jobs.

The book is also a cautionary reminder that it can take a while for bad decisions to work their way through the system. The California-style lending practices first reached the rest of the U.S. perhaps in 2003. It wasn’t until four years later that the subprime lenders began to go bankrupt, in mid-2007. And it was more than a year later before the broader U.S. markets and economy collapsed. If you think that U.S. economic policy has been misguided since March 2020 (as I do, because the rewards have been tilted in favor of those who don’t work or who engage in counterproductive activities), it could be a few years before the consequences of this policy become apparent.

Don’t forget that a disaster for ordinary folks, investors, etc. may be only a minor problem for the executives who caused the disaster. Kerry Killinger took so much money out of WaMu on the way up that he could pay off Wife #1 while also building and enjoying a dream lifestyle with Wife #2 that apparently persists to this day. The Latinx subprime borrowers lost everything, but Killinger still had his collection of $6 million houses (worth $20 million each today?). Killinger’s epic risk-taking would have been rational, even with full advance knowledge that it would render the bank’s shares worthless. If he had managed the bank conservatively, nothing dramatic would have happened either to the shares or to his own net worth.

I’ve actually been listening to The Lost Bank: The Story of Washington Mutual – The Biggest Bank Failure in American History via Audible, but don’t love the narrator so perhaps the Kindle or print versions would be better.

Related:

Full post, including comments

Book recommendation: Anatomy of a Murder

by philg

Here’s a book that I recently enjoyed, loosely related to my slavery as an expert witness: Anatomy of a Murder. It was turned into a 1959 film with some added twists (Jimmy Stewart, a combat B-24 pilot in World War II, is the star). Although the subject of the trial in the book/movie is a murder, which is a little more dramatic than the typical patent infringement lawsuit, many of the ideas and concepts are similar.

Due to its age, the book contains no 2SLGBTQQIA+ angle. What if you need a book that is more up to date? The Barnes & Noble in Palm Beach Gardens, Florida is ready to meet your needs. Some photos from an August 13, 2022 visit that I think our loyal reader/commenter Mike will appreciate:

Need some tips on Zoom etiquette? The store carries this masterpiece by Jeffrey Toobin:

One book is not enough about our fellow Palm Beach County resident?

Prefer to ponder what happens after a few more years of open borders?

Passionate about the skin color of the person who wrote the text on the page?

Who else has a book to recommend? What have you all been reading?

Full post, including comments

Book recommendation: All the Flowers of the Mountain

by philg

Today we celebrate the traitorous rebellion of slaveowners and land-stealers against the legitimate authority of the British government.

Today our family also celebrates a cousin’s wife’s novel, five years in the works, being released. I managed to read the first 60 pages via a preprint and can vouch for it being well-crafted. At the risk of sounding too much like an Oprah copycat, it contains richly imagined characters. The chapters also have an interesting back-and-forth sequence that does not feel like a gimmick. At least in the first 60 pages there are no 2SLGBTQQIA+ characters of color so I don’t expect this book to be featured in the New York Times. I was engaged, despite the romance angle. My only criticism so far is that the main male character seems unrealistically emotional. I’m not sure that the author fully appreciates the “one mood all the time” principle of cisgender masculinity.

The book is All the Flowers of the Mountain. My Kindle copy arrives today and I’m going to be anxious to see how it turns out. A good beach or lake vacation read, certainly!

Full post, including comments

Memorial Day reading: The Last Stand of the Tin Can Sailors

by philg

For Memorial Day, let me recommend The Last Stand of the Tin Can Sailors, a book about the Battle off Samar, in which puny destroyer-escorts and destroyers charged heavy Japanese cruisers and battleships in an attempt to prevent destruction by surface fire of American escort carriers (cargo ships with a flight deck, essentially).

The situation was the opposite of the typical American military engagement, in which we enjoy an overwhelming advantage in numbers and equipment. Most of the American fleet had steamed far away, distracted by a Japanese decoy force.

The book is also timely because the events are the opposite of what happened in Uvalde, Texas. There, the heavily armed, full armored, and numerous police were so intimidated by a single teenager that they took no action. Off Samar, however, captains of absurdly small vessels steamed forward into what they expected to be near-certain death in order to protect the escort carriers and their crews.

Here’s the Samuel B. Roberts, at 1350 tons:

She was sunk by the Kongō, 36,600 tons.

Full post, including comments