Book reviews – Page 3 – Compliance Building

Weekend Reading: Bluff

The mystery of the Federal Reserve leaves people wondering if it’s controlled by the mysterious Illuminati, corrupt politicians, or fat cat bankers. And it leaves people wondering what exactly it does, or not care and demand an audit. If you believe any of the foregoing then Bluff by Anjum Hoda is not the book for you.

Bluff is a deep dive into macroeconomic theory and monetary policy. It’s sharply written and easy to read, assuming you have some basic understanding of the subject.

The books focuses on the split requirements of the Federal Reserve. The primary role is monetary stability. We all want that dollar in our pocket to be worth a dollar. We want to be able to buy something tomorrow. We accept that it will cost a little bit more next year. We accept a small amount of inflation. Nobody wants high inflation. Nobody want to have to use a wheelbarrow full of dollars to do our shopping.

The other mission of the Federal Reserve is to pursue full employment. It’s this one that causes the problems according to Ms. Hoda.

To her, the Federal Reserve’s “bluff” is to pump of asset values pre-emptively to boost economic growth by lowering interest rates. The magic formula is let assets slowly while wages move on the same path.

The problem is that the Fed gets caught in a bad place when it misses an asset bubble that develops from low interest rates. If the Fed raises rates and pops the bubble, it may burst before wages caught up and send wages back down.

The problem is that artificially lower rates are not boosting economic activity. In the first half of 1999, the Fed lowered rates dramatically after the Asian Flu. Non-financial corporations issued debt with gusto to buy back their own shares. In the years that followed, debt issuance and stock buybacks diminished. Cheap debt is more likely to raise asset prices than to increase employment.

The goal of the Fed is to program a small bit of inflation into the economy. Ms. Hoda’s proposal is to reduce that to a zero inflation policy.

It’s worth the price of the book. For me the price was zero since the publisher sent a copy to me for review.

If you enjoy Compliance Building, please support my Pan-Mass Challenge ride to fight cancer on August 5-7. 100% of your donation goes to the fight against cancer. You can read more and donate here: https://www2.pmc.org/egifts/DC0176

Weekend Reading: The Fever of 1721

We are all familiar with the Founding Fathers and the events that lead to the American Revolution. Stephen Coss points to events in 1721 as the seeds of that revolution two generations later in his new book: The Fever of 1721.

The Boston of 1721 was already full of conflicts between American colonists and the British crown that would lead to the revolution 50 years later. The royal governor, Samuel Shute, quickly came into conflict with Massachusetts legislature. The crown appointed the governor, but the local legislature was in charge of his compensation. The legislators voted to pay the new governor no salary. This lead to the Massachusetts colony’s government being paralyzed by dissent. The Abenaki Indians were become actively hostile as the colony continued to grow and settle further and further into New England and the natives’ lands. War was increasingly likely. The financial markets were a mess with a crippling currency shortage. The English financial markets were suffering from the bursting of the “South Sea Bubble”.

In April 1721, the Seahorse, a British navy frigate, sailed into Boston harbor after hunting pirates. But it carried a deadly cargo: smallpox. In the 17th and 18th century, towns like Boston were struck by a smallpox epidemic ever decade or so. The Seahorse was supposed to dock at Spectacle Island to prevent infection. But the quarantine procedures failed. One fourth of Boston’s population contracted smallpox, and almost 10% of the population died.

A local clergyman heard the tale of one of his family’s African slaves about the West African method of inserting pus from a smallpox victim into an uninfected person. The recipient would gain immunity while usually suffering only a mild form of the disease. The clergyman began advocating for this treatment.

However, the clergyman was Cotton Mather, one of the main players in the Salem witch trials. He had to overcome the public’s suspicion of him and the overt racism of relying on an African method as a legitimate medical procedure.

The local papers were involved in the controversy about this medical procedure. Perhaps the biggest flamethrower of publishing in Boston was James Franklin, publisher of the New-England Courant, and his younger brother/apprentice, Benjamin Franklin. The Courant was trying to operate as an independent newspaper, published without government license. It criticized the vaccination procedure as well as Boston’s government and influential citizens. The Franklin brothers thought the medical procedure would just further spread the disease and unnecessarily kill the patients.

The Fever of 1721 pulls together these tales of medical innovation, freedom of the press, government strife, and economic crisis. I had not heard of this portion of Boston’s history and found the stories to be fascinating.

I’m a sucker for books on Boston history and took a copy from the publisher in exchange for a review.

Weekend Reading: Little Pink House

In 2005, the US Supreme Court was faced with a challenge on the “public use” provision of the Constitution’s eminent domain protection. We know the government can’t take private property without just compensation. The challenge was on the boundaries of the government’s intended use of that property. Kelo v. City of New London gave the government broad rights. It was Susette Kelo who was fighting the City of New London to save her little pink house.

Little Pink House is the story behind the Kelo. The City of New London wanted to take Ms. Kelo’s house and the rest of her neighborhood for redevelopment into an upscale hotel and retail area to complement a nearby redevelopment for Pfizer. Eighty-three property owners had agreed to sell. Ms. Kelo and six others would not sell and resisted the eminent domain action in the Fort Trumbull area.

New London was desperate for tax revenue. The city thought the renewal of Fort Trumbull could trigger a renewal not just of that small area, but the city as a whole. The redevelopment plan included residential units, a hotel and conference center, marina, offices, an expansive and public walkway along the river and most importantly, a new corporate campus for Pfizer. The governor was willing to invest state money to relocate an existing recycling business and to modernize the city’s stinky sewer plant. The government would remediate the brownfields and improve the areas infrastructure.

Little Pink House tells a one-sided view from that of Ms. Kelo. The officials of the local development agency are portrayed as evil single-minded, power-hungry schemers, willing to do anything to get their way. Even if the view is only half-correct, their actions were poor and they botched the process.

The City of New London eventually prevailed in its right to take private property for economic development. But that victory was lost in the storm of public opinion. Just because you can do something not mean that should it.

Pfizer’s buildings went up and the company stayed for 10 years. Then it left when the tax abatements expired. The buildings were valuable and General Dynamics stepped in and bought the complex for its submarine division.

As for Ms. Kelos house and her neighborhood, the re-development never came. Her lot on the corner of East St and Trumbull St is empty. The neighborhood is bulldozed waiting for development some day.

We The People

In We The People, Juan Williams tackles the history of the 20th century through the lens of some keys figures and tries to pin those societal changes back to the original thoughts of the founding fathers.

At first glance, it looks like Mr. Williams might use the ‘great man theory‘ of history. The people he picks are people who make important contributions to the United States in 20th-century America. But he does not deify them. Nor does he deify the Founding Fathers.

He uses each as a lens to elucidate some aspect of American life and how it has changed from the time of the Founding Fathers. In many respects, the US of 1900 was more like the US of the Founding Fathers than the US of 2000. In 1900, broad swaths of citizens could not vote because of the color of their skin or their gender because of the Founding Fathers’ stance on these issues. There was blatant discrimination on the basis of race, country of origin, gender, and religion. Those issues have not gone away, but are less blatant than in the past. Transportation and long distance communication were rudimentary at best. Now we can be halfway around the world in less than a day and immediately talk with anyone near a phone or internet connection.

We The People uses key figures to show the changes in particular areas of US society. In some cases, Mr. Wiliams does so brilliantly and in others, less so. Some of the up and downs of the book depend on the people selected and topic that involves them in each chapter. Given the vast number of topics Mr. Williams tries to cover, each chapter is a mere vignette. Many times it leaves you wanting more.

Juan Williams is a thoughtful journalist. There are not many who can work NPR and for Fox News. When the publisher offered me a copy in exchange for a review, I took the offer.

The Only Game In Town

I’m getting caught up on reading while on April vacation. I just finished The Only Game in Town by Mohamed A. El-Erian.

The book is an exploration of central banks in the economy. The brilliant Mr. El-Erian sees a coming crisis. One that can be avoided, but we must take action to avoid it.

He lauds the Federal Reserve and The European Central Bank for taking decisive steps to stop the financial crisis of 2008. The central banks created liquidity and propped up the financial system and financial institutions. The central banks continued their work to heal the economies as countries entered the Great Recession and slowly crawled back out.

Mr. El-Erian points out that central banks have a very limited set of tools. Its up to the political leaders to use their broader set of tools to create and implement programs that will fix the lagging economies. If not, the crisis will come.

The Federal Reserve is keeping the key interest rates low to stimulate the economy. That is resulting in asset bubbles as investors and companies pile on cheap debt. It is hurting long term investors who are far to one side on the risk curve looking for safe returns.

With its limited set of tools, the Federal Reserve is not able to create inclusive growth. It’s not able to invest in infrastructure and education. It’s up to the political system. The political system is failing us. Congress went 5 years without passing a budget, one of its core duties.

The Only Game in Town is both hopeful and pessimistic at the same time. Its well worth your time to pick up a copy and read.

Weekend Reading: Lights Out

Should we worry about an attack on the Untied States’ electrical infrastructure? Ted Koppel says “very much so” in his book: Lights Out. You probably better know Mr. Koppel as the longtime anchorman on ABC News and Nightline. In Lights Out he puts on his old school journalist hat and puts together an in depth investigation of the vulnerability of the US electrical infrastructure and effects of a cyber attack on it.

The book is divided in three parts. The first part looks at the vulnerabilities of the infrastructure. It’s old. It’s connected. Hackers can get at it and cause problems. He does not dive deep into the nuts and bolts. I’m not sure if that’s because it’s too complicated, he doesn’t completely understand the vulnerabilities, or he does not want the book to be a manifesto on how to structure an attack. Personally, I think it’s a bit of all three.

The second part covers how prepared the government is to handle a prolonged loss of part of the electrical grid. No surprise; It’s not prepared.

He wraps up the book with a look at what individual citizens are doing. He spends a long time looking at the Mormon church. Part of the church’s dogma is to have its members be prepared for a long period of self-reliance. Church members are taught to stockpile food in their homes. The central church organization has a large infrastructure to stockpile and distribute food.

He spends some time with survivalists, but dismisses some of their tin-foil hat conspiracies. The truth is that cities can only survive for a few days without electricity. The lack of food stockpiles, water supply and waste disposal will quickly cause problems.

Given the compliance focus on cybersecurity, I thought this might be an interesting book to read when the publisher offered me a copy for review.

In the first section on vulnerability, you guess what he says he found. It’s just a matter of “when” there is an attack on the electrical infrastructure, not “if.” In part he blames federalism, regulation, and de-regulation on the situation. There is no one regulatory body in place to impose cybersecurity standards. Ownership of the infrastructure is split into thousands of companies, with different business models and different abilities to spend the time and money needed thwart a cyber attack.

I found the second section of the book to be the better of the three. It’s also the part where Mr. Koppel is able to use his star power and connection to meet with current and former government officials who would be responsible for dealing with an attack like this.

You can buy a copy of Lights Out at your favorite bookstore or from Amazon.com

Weekend Reading: Rain

Rain rain go away, Come again another day.

A simple nursery rhyme for a rainy day. It also happens to be a central theme to Rain: A Natural and Cultural History by Cynthia Barnett. We need rain to survive. Too much, too little and either at the wrong time can be devastating.

Ms. Barnett starts out at the solar system level and points out that Earth was not the only planet with water. Mars clearly had water. Venus had water, too. The rest are too far away from the sun or too close to the sun for liquid water. The oceans (or whatever the bodies of water may have been) did not survive on Mars and Venus. Life on earth survived because of the rain, turning the planet blue.

And green. Rain brings plants. Plants convert sunlight to food and provides the energy for life. No rain, no plants, no life.

Rain is not a science book. It’s also not a history book. It drips in the arts with exposition on the influence of rain on music and art. It drips in religion. Ancient civilization put a profound amount of exposition and prayer into keeping the rain gods happy. Ms. Barnett even points out passages in Bible that focus on god’s influence over rain and the life it brings. (e.g. Noah’s ark)

Ms. Barnett’s background is that of an environmental journalist. Rain has large drops of global warming and climate change. She balances the past local weather cycles as experienced during the dust bowl years and settling of the western plains with the current broader trends of global climate trends.

I finished reading Rain while sitting on my front porch during a rain storm. It seemed a fitting perspective. Just last week I barely survived a bike ride in a rainstorm that had turned into the biggest hail storm Boston had seen in 50 years. Rain flooded the streets and hail stones dented car hoods. It also turned my parched lawn greener. I chanted that nursery rhyme while hiding from the pelting of the hail stones under a bridge. It didn’t work.

Rain is inevitable. Rain is unpredictable. Rain, the book, will give you some perspective.

The publisher provided me with a copy of the book in expectation of a review.

<br />

Weekend Reading: In The Kingdom of Ice

It’s amazing to me that we have gone from having unexplored areas on Earth to sending a spaceship to Pluto in less than 150 years. Hampton Sides’ In The Kingdom of Ice tells the story of terrible journey to find the North Pole. (If you’re interested in Pluto, New Horizons is approaching the dwarf planet at 36,373 mph and scheduled to flyby on July 14, 2015.)

James Gordon Bennett was the eccentric and extremely wealthy owner of The New York Herald. He had recently funded Stanley’s trip to Africa to find Dr. Livingstone as way to sell papers. Now he was looking to create the next sensation. He set his sights on an expedition to reach the North Pole.

At the time, the North Pole was still unknown and unexplored. The foremost cartographer in the world, a German named August Petermann, believed that warm currents sustained open water at the top of the world. The theory was that the warm Japan current flowed through the Bering Strait toward the pole and created an area of warmer, ice-free water around the pole. If a ship could just break through the ice ring, it could reach the pole. Peterman even forecast that there was a landmass at the pole.

uss jeanette

George Washington De Long led a team of 32 men deep into those uncharted Arctic waters based on those theories. On July 8, 1879, the USS Jeannette set sail from San Francisco to cheering crowds in the grip of “Arctic Fever.”

Of course, we now know that Petermann was wrong. The Jeannette and her crew suffered the consequences.

The book starts as a tale of risk and facing the unknown. Unfortunately, the captain has faith in the one theory and does not accept the unknown as a risk. He hedged his risk. He had the ship prepared to be trapped in the ice and provisioned to survive being trapped for an extended period of time.

The risk was fueled by a bubble. The world had Arctic fever. Several explorers had attempted to reach the pole. Some of the fever was fueled by the media. Mr. Bennett funded the voyage because he wanted to sell newspapers.

<br />

Weekend Reading: Argo

In 1979, Iranian militants stormed the American embassy in Tehran and captured dozens of American, holding them hostage for 444 days. Six Americans escaped and hid in the home of the Canadian ambassador. A top-level CIA officer named Antonio Mendez devised an ingenious yet incredibly risky plan to rescue them before they were detected. You can read more in Argo: How the CIA and Hollywood Pulled Off the Most Audacious Rescue in History.

The first chapter is great look at the history of the United States’ involvement in Iran. It’s riddled with U.S. mistakes, largely because the singular focus was keeping Iran out of the hands of the Soviets. As a result, the U.S. propped up malicious dictators. That lead to rise of the ayatollahs and the 1979 uprising to overthrow the bad government. The hatred towards the US was because of the bad actions of the U.S.

While the embassy was being stormed, a handful of embassy workers escaped out a side door and fled to the Canadian embassy to hide. The hostages in the embassy were trapped, but the escapees had a chance to get out of Iran. If they could only come up with a plan.

It was CIA operative Antonio Mendez who comes up with the plan. His area of specialty is documentation. They’ll need good, fake paperwork to get out of Iran and avoid the clutches of the Revolutionary Guard.

The rescue attempt is the best part of the book. It’s what inspired Argo, the movie. I loved the movie. The book came out after the movie. It’s written by Tony Mendez, the CIA operative who an the rescue. The role is played by Ben Affleck in the movie.

Unfortunately, the book is more autobiographical, using the Iranian escape as scaffold to tell more spy stories. In the end I think Mendez is a better operative than he is a storyteller. I would recommend skipping the book and watching the movie instead.

I should also point out that I don’t write for Wired’s GeekDad anymore because of the book and movie. The story came in to the public eye as an article in Wired: How the CIA Used a Fake Sci-Fi Flick to Rescue Americans From Tehran. The publisher of Wired was apparently unhappy with its cash from the book and the movie. As a result, it wanted additional rights to the content in case it developed into something more. The GeekDad writers didn’t like that grab and left Wired.

Weekend Reading: Book de Tour

Do you like cycling?
Do you like watercolors?

Then Book de Tour is the perfect book for you. For the past few years, Greig Leach has been painting watercolors of key events from the Tour de France. This year he decided to compile all of the artwork with a narrative description into a single book.

I’m a big fan of his artwork and have a handful of his pieces. In the book, I have the original of Vincenzo Nibali’s win on Stage 13 on the top of Chamrousse. (See page 128).
Victorious - The Art of Cycling

The book is great addition to your library if you like cycling.