Not A Mystery

The US Congress is getting close to passing new financial regulation, attempting to rein in our friends on Wall Street. Pending legislation would limit Investment Banks’ ability to trade for their own accounts, and effectively bar them from trading derivatives.

The bankers are pushing back.

Surprised?

The big banks argue that the Volcker proposal is misguided, for several reasons … the banks assert that the financial crisis of 2008 was a lending-based crisis caused by reckless loans made to unqualified home buyers. It was not, they say, a trading crisis.

Source

Wall Street Bankers "Getting Wood" Over The Volcker Rule

This is not quite the truth, or even a close approximation to the truth. It’s an outright lie.

• Investment banks packaged, securitized and re-sold the fraudulent loans made by originators, ‘enabling’ them to keep the hustle going.
• Investment banks deliberately ‘gamed’ the rating agencies so that sub-prime loans were magically converted to investment grade bonds.
• Investment banks invented new vehicles to peddle (trade) their products called Special Purpose Vehicles.
• Investment banks obfuscated what they were doing by re-branding (renaming) the slime that was inside these investments; for example No-Doc (Liar) loans became known as Alt-A loans.

And to say that the crisis was lending based? Get this. When Investment banks ran out of loans to repackage and sell, because their suppliers couldn’t make them fast enough, they invented a totally new class bonds called Synthetic CDOs that didn’t even require real mortgages at all!

It was truly breathtaking.

If you read only one book exposing the underbelly of Wall Street, get a copy of The Big Short by Michael Lewis. If you have an audible.com account, I can highly recommend the audio version read by Jesse Boggs. Listen while you are in the gym, and the adrenalin rush when you hear about these Wall Street thieves will definitely improve your workout.

If you are not familiar with the term “wood”, then here is your link to the Urban Dictionary. Caution, this link is not rated GP.

The good news is that if a catastrophic event destroys mankind our investments will be extremely well managed after we are gone. The bad news is that the computers doing it may be trading for their own accounts instead of ours.

This theater of the absurd scenario might be more plausible than you think, and occurred to me last week when our stock exchanges mysteriously melted down in the space of a few minutes.

I’m currently reading David Hoffman’s Pulitzer prize-winning book “The Dead Hand: The Untold Story of the Cold War Arms Race“. Its cheerful title is taken from a Soviet weapon system designed to have computers automatically fire a massive retaliatory nuclear strike at the US if Soviet leaders were ‘decapitated’ by an assumed US first strike.

The Soviets referred to a semi-automatic defense plan as the “Dead Hand.” The Dead Hand was a system that would fire a portfolio of SS-18′s on to the United States and Western Europe if its sensors made the conclusion that the Kremlin had been destroyed by a nuclear blast. The system was in place as early as the mid-80s. It is a bit of a miracle, given the demonstrated shortcomings of Soviet engineering, that it never made a mistake.

The Soviets claimed that they never actually set up a completely automated system, but instead would have had (surviving) lower level officials make the final decision on whether a strike was to be launched.

In any case I was struck by a parallel in last week’s breakdown of the US stock market. As I write this the SEC has still not tracked  down the specific cause of a 1000 point drop in the Dow that reduced a number of Dow Component stocks to pennies a share in the space of a few minutes. Everyone breathed a sigh of relief when, a few moments later, the market recovered as mysteriously as it had plummeted.

F2U Rio Linda, normally a quick recovery after a market drop is called Dead Cat Bounce by investors. So let’s refer to this event as a Dead Hand Bounce in homage to the anonymous computers that caused, and then corrected, the disruption.

Last One Out, Shut Off The Lights

Although the real cause of the market dislocation is still unknown, what is clear is that a number of computers were at the scene of the crime. And those computers place their trades so fast there is no way humans can be involved in real time to supervise.

By late Sunday, a cause of the slide hadn’t been determined … Still, some new details about what happened during the brief span Thursday afternoon that sent the Dow Jones Industrial Average into a nearly 1,000-point tailspin continued to emerge over the weekend …

But it is becoming clear that much of the decline was because of glitches in how the market functions. High-speed electronic trading, long held as a boon that has made the market more efficient, can also trigger sharp selloffs that overwhelm the market.

Source

Although everyone is relieved that this storm has passed, it reminds me of a that old saying, “Problems that go away on their own, come back on their own.“

And now that hackers know what’s possible, they will have begun working on their own version of the Dead Hand.

I wonder what they’ll call it.

Last night I made Pasta.

And whenever I make Pasta I thank Ron Popeil, Pitchman Extraordinaire who perfected the Infomercial and made pasta a part of my life.

There's More! Click Picture to Play Video

I knew I loved Ron Popeil, but I didn’t know how much until I read the first chapter in “What the Dog Saw: And Other Adventures” by Malcolm Gladwell. The title of that chapter says it all; “The Pitchman – Ron Popeil and the Conquest of the American Kitchen”.

Gladwell begins by describing one of the world’s oldest professions:

You can take a pitchman and make a great actor out of him, but you cannot take an actor and always make a great pitchman out of him. The pitchman must make you applaud and take out your money. He must be able to  to execute what in pitchman’s parlance is called “the turn” – the perilous, crucial moment when he goes from entertainer to businessman. If, out of a crowd of fifty, twenty-five people come forward to buy, the true pitchman sells to only twenty of them. To the remaining five, he says, “Wait! There’s something else I want to show you!” Then he starts his pitch again, with slight variations, and the remaining four or five become the inner core of the next crowd, hemmed in by the people around them, and so eager to pay their money and be on their way that they start the selling frenzy all over again.

He then gives a bit of background to let you know Popeil didn’t just stumble upon success:

Ron Popeil started pitching his father’s kitchen gadgets at the Maxwell Street flea market in Chicago,in the midfifties. He was thirteen. Every morning, he would arrive at the market at five and prepare fifty pounds each of onions, cabbages, and carrots, and a hundred pounds of potatoes. He sold from six in the morning until four in the afternoon, bringing in as much as $500 a day. In his late teens, he started doing the state and county-fair circuit, and then he scored a prime spot in the Woolworth’s at State and Washington, in the Loop, which at the time was the top-grossing Woolworth’s store in the country. He was making more than the manager of the store, selling the Chop-O-Matic and the Dial-O-Matic. … “He was mesmerizing, … there were secretaries who would take their lunch break at Woolworth’s to watch him because he was so good-looking. He would go into the turn, and people would just come running.”

Ron Popeil’s success came from hard work, and the design of unique and compelling products. When coupled with his unmatched ability to “pitch” them to TV audiences the resulting sales were staggering. His crowning achievement, The Showtime Rotisserie is set to soon surpass $1 Billion in sales! Unbelievable.

But I’m much more interested in the Ronco Popeil Automatic Pasta Maker. I mean anyone can Rotisserie a chicken, but when you have your peeps over and make fresh pasta for them right before their eyes, you are a hero! And Ron made me a hero many times over.

After serving faithfully for many years, my own Ronco Popeil Automatic Pasta Maker finally gave up the ghost a while back. When I tried to purchase another I was stunned to find out that Ronco was out of business and there was no joy to be had in my personal Pasta World. Drats.

So I tried to replace it with an Italian machine whose brand I won’t mention. Disaster. It didn’t hold a candle to my beloved Pasta Shooter. As fate would have it some friends had purchased a Takka Pasta Maker from Macy’s about 20 years ago and had never opened the box. They were gracious enough to pass it along to me and when I opened it I discovered that it has a virtually identical mechanism to Popeil’s version. The only difference is that my Takka is built like a Russian Tank with lots of heavy metal where the Popeil used plastic. This baby will be with me until the end!

Here is the video I filmed last night. Bob The Pasta Maker is back! I think of it as my homage to Ron Popeil. The first section shows the ‘mixing’ part of the process. Add oil olive and eggs to 50/50 semolina /white flour.  Then next the breath-taking extrusion phase where the pasta is actually ‘shot’.

And although I make this look easy in the video, knowing how quickly to add the liquid and exactly when to extrude the pasta really does take some skill. It’s me and Ron on this one; but while I can mix with the best, I know I can’t pitch like the Master.

Finally as an extra credit bonus, if you want to see a typical Ron Popeil price countdown (and you should), here’s your YouTube link.

I thought that “The End of The World as We Know It” had already taken place earlier this year. And I was right of course, but for the wrong reason.

Silly me.

“Googled” by Ken Auletta, does describe the end of the world as we know it. But it’s not a financial meltdown, it’s a media meltdown.

And because you can get the book in both Kindle and Audible formats in a matter of seconds, I’m recommending it as a Procrastinator’s Delight for a really last minute Holiday Gift.

Much More Than A Verb

From Publisher’s Weekly:

Two Googles emerge in this savvy profile of the Internet search octopus. The first is the actual company, with its mixture of business acumen and naïve idealism … its brilliant engineering feats and grad-students-at-play company culture; its geek founders, Sergey Brin and Larry Page … The second Google is a monstrous metaphor for all the creative destruction that the Internet has wrought on the crumbling titans of old media, who find themselves desperately wondering how they will make money off of news, music, video and books now that people can Google up all these things without paying a dime …

It’s been a while since I read a great ‘behind-the-scenes’ look at the birth of a technology company. But this is not just any tech company.  Google has in many ways changed our reality. And no, I don’t think I’m exaggerating.

Consider for a second what Google has put at our fingertips, under the seemingly simple term: Search. You can ask virtually any question on virtually any topic and have an answer in a few seconds. You can enter an address in most parts of the US and many parts of Europe and within seconds have a satellite map of the street, and then a view from a car driving down that street. You can, or soon will be able, to search virtually every book that’s ever been written. You can type a page in one language and have it instantly translated into another language.

‘Search’ really is organizing all the world’s information and making it available.

We take it for granted, but the implications of Search are staggering when you think about it. Some have derided Google because ‘all they can do is search’. That misses the point entirely.

Before Google search platforms were not automated. They could never have kept up with the growth in the web. Before Google search results were bought and paid for by advertisers. Google did away with that and made the results as ‘unbiased’ as possible.

[Before I read the book I thought that Google Page Rank was named after an algorithm that ranked a website on how often the pages were referenced. That was partly true, but in fact the 'Page' in the term was just taken from Larry Page's name, since he came up with the algorithm.]

“Googled” gives you the real back-story on Search and Google’s mind-set. Until recently the company pretty much flew under the radar. But that’s changing, and Google are now under tremendous scrutiny around the world by governments and a variety of business interests. This book will help you understand the thinking both at Google and their adversaries on any number of important issues. And these issues effect all of us.

But in fact “Googled” is even more about a change in the media landscape that is unfolding, and will continue to unfold for many years to come. It’s how we get our news, our entertainment, and communicate with other people. Business and cultural models that have been around for a hundred years are collapsing. That’s what’s perhaps the most interesting aspect of the book for me.

In a way the world is choosing up sides, and Googled helps explain the coin toss.

So did you want to Kick or Receive?

Just finished listening to “Where Men Win Glory: The Odyssey of Pat Tillman” by John Krakauer.

It’s a well written and timely (believe it or not) account, which I can recommend.

Like the men whose epic stories Jon Krakauer has told in his previous bestsellers, Pat Tillman was an irrepressible individualist and iconoclast. In May 2002, Tillman walked away from his $3.6 million NFL contract to enlist in the United States Army. He was deeply troubled by 9/11, and he felt a strong moral obligation to join the fight against al-Qaeda and the Taliban. Two years later, he died on a desolate hillside in southeastern Afghanistan.

Not knowing anything about Pat Tillman except for a few newspaper reports about multiple investigations into his death by Friendly Fire, I picked the book because I was a fan of Krakauer’s, having enjoyed both “Into Thin Air” and “Under the Banner of Heaven”.

And I wasn’t disappointed by Krakauer’s honest, multi-dimensional portrayal of Tillman from the time he was growing up in the Bay Area until his death in Afghanistan. The book reflects a huge amount of research into what documents were publicly available, along with extensive interviews of the Rangers who trained with Tillman and were on the scene when he was killed. When you add to that the fact that the Tillman family cooperated and made Pat’s personal diaries available, the result is a credible account of his character and what motivated his decisions.

All that would have made a fine book by itself, but Krakauer also relates the history and a detailed account of what was going on in Afghanistan and Iraq simultaneously in another part of the world. These two parallel universes are merged throughout the book to create a great perspective on the person and the larger conflict.

Krakauer goes deeper into the story by attempting to explain how a series of stupendously stupid decisions could possibly have been made by the military to cover up the fact that Tillman was killed by Friendly Fire. This has gotten him ‘Blow Back’ from some military reviewers; whose argument is simply that he’s not qualified to make judgement calls on the military.

While I agree with the point that Krakauer doesn’t have the military chops to pass judgement in that area, in my opinion they miss the point. The case he makes is that politics and public pressure created an atmosphere where Tillman’s death became a Media Event and a Propaganda Event in the midst of a very complicated war. And I believe Krakauer does have the chops to make a value judgement in that area, and he presents a very credible case.

Krakauer wrote the last chapter of the book in January 2009 from Forward Operating Base Tillman, on the Afghanistan / Pakistan border, which was named for Pat. Krakauer accurately nailed everything that has come to pass over the succeeding 9 months regarding the war with insurgents and the Taliban in the tribal and border areas.

Forward Operating Base Tillman

This book is a great listen, and especially timely now as we consider the future path in Afghanistan.

I just finished listening to “Rocket Men: The Epic Story of the First Men on the Moon”.

Written by Craig Nelson and read by Richard McGonagle the audible.com edition was published just in time for the 40th anniversary of our first moon landing. It is by far my favorite audible book of the many I’ve “read”.

The book contains massive amounts of detailed behind-the-scenes information about the manned space program; its history, politics, science and engineering. We get detailed oral accounts in the astronauts’ and mission controllers’ own words. The narrative takes us into the spacecraft on the journey to the moon and the descent to the lunar surface.

To put everything into context, critical design decisions are described by the managers involved. For example, how do you decide the quality level required of the suppliers who will deliver the (literally) millions of parts that made up the spacecraft? Even with a 99.9% quality requirement there would still be thousands of parts expected to fail on the mission itself.

During the actual mission the narrative makes you feel like you are sitting with the astronauts, inside Columbia and then the LEM (Lunar Excursion Module) as Armstrong and Aldrin descend to the moon’s surface; while Collins orbits the moon waiting their return. Because they missed the intended landing zone by about 20 miles Armstrong had to take over manual control of the landing and finally put it down with less than 30 seconds of fuel remaining.

Starting with the end of WWII and the ‘recruitment’ of German rocket scientists by the USA and Russia, the book follows the development of the US and Russian space programs and how they symbolically ‘fought‘ many battles during the Cold War.

The book finishes with an account of NASA after-the-manned-missions. How the public became blase (at best) about manned spaceflight and NASA lost its way without the tremendous focus of the lunar program. It presages the threat that the US is on the way to losing our leadership position in science and engineering as we move into the 21st Century.

One haunting image painted by Nelson is the possibility of a Chinese or Indian team of astronauts returning to Tranquility Base, taking down the American Flag and putting up their own national flag.

Some final notes.

• This book is a fantastic listen partly because of the subject matter and partly because Richard McGonagle does an outstanding reading. Therefore I highly recommend the audible.com version of the book over the printed or Kindle edition.
• If you did engineering work during the time frame of the book you will enjoy it even more than the average reader, because it will remind you of what the field was like then, as compared to now.
• If you’ve ever used a slide-rule, programmed in Fortran or were awestruck with the first hand-held electronic calculator, then you must listen to this book.

Enjoy.

Go forth and Multitask!

This wasn’t going to be a post about multi-tasking, but I got distracted. And then I realized I was…wait for it… multi-tasking!

But before we get to multi-tasking, my original purpose was to review an audible.com book. “Audible” books are a great way to spend your time when you are already spending your time. It’s like a Time Sale. If there were Op-Shops that sold old pieces of time Leslie and I could shop together.

Most readers will be familiar with ‘Books on Tape’ which was pre-multi-tasking. These were ok for their time, but you couldn’t download them (gulp) or listen on an MP3 player. In fact you needed a whole car to sit in and listen, OMG.

If you want to get aristocratic, the original multi-tasker was Pierre-Daniel Huet, who, in the 17th century had his servant read to him out loud while he was eating or otherwise busying himself. I guess we could call this “Books on Servant”. (Full disclosure, I did a post on Pierre way back before this blog became internationally famous.)

Back to our review. “The Billionaire’s Vinegar” by Benjamin Wallace is subtitled The Mystery of the World’s Most Expensive Bottle of Wine, but it’s reallya story about very rich people getting taken by the Bernie Madoffs of the wine world.

The First Of Many "Jefferson Bottles"

Here’s the blurb from Publisher’s Weekly:

The titular bottle, from a cache of allegedly fine, allegedly French wine, allegedly owned by Thomas Jefferson in the 1780s, set a record price when auctioned in 1985.

The bottle in question was auctioned by Christie’s in 1985. It was a 1787 Château Lafite Bordeaux, and purchased by Malcolm Forbes for the (at the time) record price of $156,000. But that was only the beginning. From there Wallace gets into the opaque world of pre-phylloxera wines with bidding and secret sales at $200,000 to $300,000 a bottle.

The book also sports Thomas Jefferson anecdotes from the years he spent in Paris. Jefferson was quite the wine collector, became extremely knowledgeable on the subject and later attempted to jump start viticulture in the USA at Monticello!

As a renowned oenophile myself, specializing in $5 to $10 per bottle “Reds“, I could identify with these Big Dogs of the wine world. Even though they really do not live like you and me, the common thread is that they can, and do, get conned just like the rest of us. Which is what the book is about.

After all, how many people know what a 200 year old wine tastes like? And when it turns out that a large percentage of them are counterfeit, the sellers and buyers hold hands, close their eyes, jump up and down; and try to pretend that everything is ok. I would too if I had a cellar full of $100,000+ vintage extraordinaries, wouldn’t you?

Just be careful and don’t open them.

So finally, in our continuing tradition of teaching moments:

• Do consider using audible books as an excellent addition to reading, and a great way to multi-task.
• Figure out what kind of audible books you like best. In my case I’ve determined I like non-fiction the best, but your mileage may vary.
• Billionaire’s Vinegar was a great read. Oops, make that listen, and Dennis Boutsikaris did an outstanding job as the reader.
• If you are a Wine Nutter like me then  go for Billionaire’s Vinegar, otherwise go for your own personal gusto and do try an audible book. Sans servant.

Here are your links to Amazon and Audible for The Billionaire’s Vinegar.

Oh yeah, multi-tasking. I guess I got sidetracked.

Make that MultiTracked. Multi-Tracked. Multi.Tracked.

I’ll be back.

Pierre-Daniel Huet [1630 - 1720] was perhaps the first person to multi-task with books, getting the jump on audible.com by a few hundred years.

(Pierre-Daniel) Huet, who lived into his nineties, had a servant follow him with a book to read aloud to him during meals and breaks and thus avoid lost time. He was deemed the most read person in his day.”

The Black Swan: The Impact of the Highly Improbable

By Nassim Nicholas Taleb

Published by Random House, Inc., 2008

more about Taleb and The Black Swan