The US and China: Neither Friends Nor Rivals from The Takeaway: Early Edition by feedback@thetakeaway.org (Public Radio International and WNYC Radio)

As Washington prepares for a visit from Chinese President Hu Jintao this week, we take a look at what lies ahead in the shifting relationship between superpowers. Should we fear the "waking dragon"? We're joined by Gideon Rachman, chief foreign-affairs commentator for the Financial Times and author of "Zero-Sum Future: American Power in an Age of Anxiety," and Simon Tay, was an Asia Society 2009 Bernard Schwartz Fellow and is Chairman of the Singapore Institute of International Affairs. He is also the author of "Asia Alone: The Dangerous Post-Crisis Divide from America." Listen to the podcast.

George DeMartino on economic ethics from The Economist: Finance and economics

The author of "The Economist's Oath" on the need for ethical debate within the economics profession and why some will ardently disagree. Listen to that Economist podcast here.

The Price of Everything from The Takeaway: Early Edition by feedback@thetakeaway.org (Public Radio International and WNYC Radio)

Everyday, all of us spend money on things — things we need, and things we don’t. And in turn prices are put on those things. But where do those prices come from? How much has to do with supply and demand? And how much has to do with bigger forces at play? Finance writer Eduardo Porter has been researching these questions for years. His new book is called “The Price of Everything: Solving the Mystery of Why We Pay What We Do.” Porter joins us to talk about the nature of value in modern society, some of its mysteries and explanations. Listen to the podcast.

Michael Lewis: The Big Short: Inside the Doomsday Machine

In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. It is a form of reverse trading. The short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as the seller will pay less to buy the assets than the seller received on selling them. Conversely, the short seller will incur a loss if the price of the assets rises. Other costs of shorting may include a fee for borrowing the assets and payment of any dividends paid on the borrowed assets. "Shorting" and "going short" also refer to entering into any derivative or other contract under which the investor profits from a fall in the value of an asset. Going short can be contrasted with the more conventional practice of "going long", whereby an investor profits from any increase in the price of the asset.

“I put a sell rating on the thing because it was a piece of shit. I didn’t know that you weren’t supposed to put sell ratings on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.”

- Steven Eisman in The Big Short: Inside the Doomsday Machine by Michael Lewis

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Michael Lewis
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog</a> The Daily Show on Facebook

"Wall Street actually forgot that they rigged the market."

- Michael Lewis tells Jon Stewart on The Daily Show

Watch CBS News Videos Online

“The single greatest line I ever wrote as an analyst was after Lomas said they were hedged: ‘The Lomas Financial Corporation is a perfectly hedged institution: it loses money in every conceivable interest rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.”

- Steve Eisman, on his time at Oppenheimer as a lead analyst.

The Big Short: Inside the Doomsday Machine is a 2010 non-fiction book by Michael Lewis about the build-up of the housing and credit bubble during the 2000s. It describes several of the key players in the creation of the credit-default-swap (CDS) market that sought to bet against the bubble and thus ended up profiting from the financial crisis of 2007–2010. The Big Short also highlights the eccentric nature of the type of person who bets against the market or goes against the grain. The book follows people who believed the bubble was going to burst. The Michael Lewis book was shortlisted for the 2010 Financial Times and Goldman Sachs Business Book of the Year Award. The The Big Short spent 28 weeks on the New York Times Bestsellers list for non-fiction.


Watch CBS News Videos Online

"I felt like I am heading towards a short life. I have been pushed repeatedly to the brink by my own actions, the Fund’s investors, business partners, and even former employees. I have always been able to pull back and carry on my often overly intense affair with this business. Now, however, I am facing personal matters that have carried me irrefutably over the threshold, and I have come to the sullen realization that I must close down the Fund."

- Dr. Michael Burry in a final letter to Scion Capital Investors

Michael Burry was born in 1972. He is the founder of the Scion Capital LLC hedge fund. Burry ran the fund from 2000 to 2008, when he closed Scion for various reasons. Burry was one of the first investors to recognize and invest in the impending subprime mortgage crisis. Author Michael Lewis profiled him in his 2010 book The Big Short: Inside the Doomsday Machine. Burry was also featured in Gregory Zuckerman's 2009 book The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History. Michael Burry left work as a Stanford Hospital neurology resident to become a full-time investor and start his own hedge fund. He had already developed a reputation as an investor by demonstrating astounding success in "value investing," which he wrote about on a message board beginning in 1996. He was so successful with his stock picks that he attracted the interest of such companies as Vanguard and White Mountains Insurance Group, as well as prominent investors such as Joel Greenblatt. In November 2000, Michael Burry shut down his website and discontinued posting to the message board. He did this in order to focus completely and exclusively on launching Scion Capital, which he funded with a modest inheritance and various loans from family members. The company was named after The Scions of Shannara, a favorite childhood book. Burry quickly earned extraordinary profits for his investors.

"[In] his first full year, 2001, the S&P 500 fell 11.88 percent. Scion was up 55 percent. The next year, the S&P 500 fell again, by 22.1 percent, and yet Scion was up again: 16 percent. The next year, 2003, the stock market finally turned around and rose 28.69 percent, but Mike Burry beat it again—his investments rose by 50 percent. By the end of 2004, Mike Burry was managing $600 million and turning money away."

- Michael Lewis, The Big Short: Inside the Doomsday Machine

“I said to my mother, ‘I think we might be facing something like the end of democratic capitalism.’ And she just said, ‘Oh, Charlie,’ and seriously suggested I go on lithium.”

- Charles Ledley co-founder of Cornwall Capital Management

Cornwall Capital is a New York City based private financial investment corporation. Cornwall played a primary role in the story of The Big Short: Inside the Doomsday Machine by Michael Lewis. The firm was one of a handful in the world that correctly foresaw and profited from the subprime mortgage crisis of 2007. Charles Ledley and James Mai were 30 years old when they launched Cornwall Capital in a house garage in Berkeley, California. The fund was seeded with $110,000 from various relatives and family members. In the fund’s first 2 years, they had grown their capital from $110,000 to $15 million by shorting stocks and other investments that they believed were incorrectly valued due to the inability of the market to account for sudden and unexpected change. In other words, option prices (“strikes”) were set according to a stock or set of stocks’ historical data (past performance), and did not take into account unusual or "Black Swan" events that may occur in the future. By finding potential Black Swan events, Charles Ledley and James Mai were able to make stunning returns of 100:1 or greater in extremely short periods. Charles Ledley and James Mai pinpointed and shorted stocks and other financial instruments accordingly, correctly positioning Cornwall Capital against the subprime mortgage crisis before most other people saw the crash coming. Charles Ledley and James Mai have garnered some attention, largely due to the Michael Lewis book, The Big Short. In 2010, Cornwall Capital was estimated to be worth $200 to $300 million.

“They were stuffing the channel, getting as much shit out so that it could be rated by the old model.”

- Vincent Daniel, regarding the May 2006 announcement of Standard & Poor’s new model for rating subprime mortgage bonds

In March 2010, Andrew Leonard wrote “Bringing subprime sexy back” for Salon.com: If you wanted to summarize "The Big Short" in just one line, it might be: the most lucid explanation yet offered to readers as to the importance of a credit default swap on a double-A tranche of a subprime collateralized debt obligation. Which might not sound like a whole lot of fun, but turns out to be a blast. As someone who has struggled for years to penetrate the obtuse world of structured finance and the role it played in blowing up Wall Street, I must give credit where credit is due. "The Big Short" is superb: Michael Lewis doing what he does best, illuminating the idiocy, madness and greed of modern finance. Even though I have long been a huge Michael Lewis fan, dating all the way back to "Liar's Poker," his hilarious and enlightening account of life as a bond broker in the go-go '80s, I did not anticipate something this good, something capable of carrying its weight as a bookend to "Liar's Poker's" delights. My heart actually sank when the galleys of "The Big Short" arrived in the mail. A library of books exploring the financial crisis has already been published, with many, many more yet to come. My bedside table groans under the weight of their unfinished tomes. What could Michael Lewis have to say that hadn't already been said a million times over? But then I made the mistake of glancing at the first chapter and literally could not put "The Big Short" down. Michael Lewis achieves what I previously imagined impossible: He makes subprime sexy all over again. The secret to Lewis' success is a mixture of strategy and craft. Most books on the financial crisis find their locus inside the Wall Street firms at the heart of the action. The general theme: Hubristic banksters are oblivious to what they've wrought until it is too late. Chaos ensues. Michael Lewis takes a different tack. "The Big Short" tells the stories of an odd collection of brilliant misfits who recognize that Wall Street is wearing no clothes, become convinced a massive calamity is nigh, and seek feverishly to profit off of their understanding. They are, in Wall Street parlance, the "shorts" -- speculators who bet that the price of a given stock or bond or commodity or any derivative thereof will fall, rather than rise. Most shorts pick on a single company, or have a dour view of the direction of the price of corn or pork bellies. "The Big Short" is a little more ambitious: It's a bet on financial sector collapse.

Andrew Ross Sorkin: Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System... and Themselves

"Too big to fail" is a term of art in regulation and public policy that refers to businesses dealing with market complications related to moral hazard, economic specialization, and monetary theory. Entities are considered to be "too big to fail" by those who believe those entities are so central to a macro-economy that their failure will be disastrous to an economy, and as such believe they should become recipients of beneficial financial and economic policies from governments and/or central banks. Companies that fall into this category take positions that are high-risk, as they are able to leverage these risks based on the policy preference they receive. The term has emerged as prominent in public discourse since the 2007–2010 global financial crisis. Some critics see the policy as counterproductive, i.e. those large banks or other institutions should fail if their risk management is not effective. Moreover, some assert that the "too big to fail" policy has been explicitly refuted in the People's Republic of China, with the bankruptcy of Guangdong International Trust & Investment Corporation in 1998. Some economists, such as Nobel Laureate Paul Krugman don't see it as necessarily a bad thing, with economy of scale in banks, as in other businesses, as worth preserving, so long as they are well regulated, in proportion to their economic clout.

"You shouldn't assume it's correct just because Goldman said it. My brother works at Goldman, and he's an idiot!"

- Joseph Cassano, the head of AIG's financial products unit told the firm's board of directors after being confronted with conflicting valuations from Goldman Sachs

"There aren't enough lifeboats. Someone is going to die. So you might as well enjoy the champagne and caviar!"

- Jamie Dimon, CEO of JPMorganChase, to his staff the night before Lehman filed for bankruptcy

The "Repo Market" - A Repurchase agreement, also known as a Repo or Sale and Repurchase Agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price will be greater than the original sale price, the difference effectively representing interest, sometimes called the repo rate. The party who originally buys the securities effectively acts as a lender. The original seller is effectively acting as a borrower, using their security as collateral for a secured cash loan at a fixed rate of interest. A repo is equivalent to a cash transaction combined with a forward contract. The cash transaction results in transfer of money to the borrower in exchange for legal transfer of the security to the lender, while the forward contract ensures repayment of the loan to the lender and return of the collateral of the borrower. The difference between the forward price and the spot price is effectively the interest on the loan while the settlement date of the forward contract is the maturity date of the loan.

The Daily Show: Andrew Ross Sorkin: Too Big to Fail
- Watch more Politics Videos at Vodpod.

Stanley Druckenmiller, a George Soros acolyte who's worth more than $3.5 billion, approached Goldman Sachs co-president Gary Cohn about withdrawing millions invested with the bank. “Look, the one thing I’m doing is I’m learning who my friends are and who my enemies are, and I’m making lists.” Cohn said. Druckenmiller replied, “I don’t really give a shit—it’s my money! It’s my livelihood. I’ve got to protect myself, and I don’t really give a shit what you have to say.”

In November, 2009, at around the publishing of the Andrew Ross Sorkin book, Too Big to Fail, Gabriel Sherman wrote "The Information Broker" for New York magazine, about how Andrew Ross Sorkin, himself, is "too big to fail" in the eyes of the company that he works for: For journalists, bad news can be good news. And so, in the wake of the Lehman Brothers collapse last September, as the world’s economy teetered, an all-star roster of business journalists—Roger Lowenstein, Joe Nocera and Bethany McLean—raced to shop book proposals to chronicle the epochal events unfolding on Wall Street and in Washington, D.C. On the morning of September 23, 2008, Andrew Ross Sorkin, the New York Times’ then-31-year-old star financial reporter, made the rounds to publishers with his agent and his proposal, which he’d pulled together over a weekend. “It was like Paulson’s original tarp proposal,” Andrew Ross Sorkin tells me, referring to the former Treasury secretary. “His was three pages, mine was three pages.” We’re sitting at the Lyric Diner on Third Avenue on a Monday morning. Sorkin’s Tuesday Times column is due in a few hours, but, as usual, he’s way behind, and later I learn that he missed it entirely and his editors had to scramble. His excuse is that he’s got a book, Too Big to Fail, to promote. Too Big to Fail, for which Viking paid a reported $700,000 and which debuted at No. 4 on the Times’ best-seller list, is a nearly minute-by-minute account of the financial crisis as observed through the eyes of the clashing Wall Street CEOs who drove their investment banks into the abyss and the government regulators who watched powerless from the sidelines. The book has become a kind of media sensation. In a review for the Financial Times, John Gapper declared that Andrew Ross Sorkin had written this generation’s Barbarians at the Gate. Charlie Rose compared Sorkin to Bob Woodward. Vanity Fair published an excerpt and held a book party at Graydon Carter’s Monkey Bar (“Part of the package we put together for him,” Carter says). Three weeks ago, as the book landed in stores, Sorkin blanketed the airwaves, beginning with an October 19 appearance on the Today show, followed by multiple stops on CNBC and his second appearance in a month on Charlie Rose. “I’m very surprised by the reaction,” Sorkin explains, as we sit over bowls of oatmeal at a rear table. “But it’s good! I can’t complain.” Despite the highs of the past week, Andrew Ross Sorkin looks exhausted. He’s eschewed his usual Ted Baker suits—“You have to dress like them,” he says of his cast of sources—for jeans, a striped blue shirt, and a blazer. At a particularly loud moment in our interview, when he picks up my digital recorder and holds it to his mouth, he looks like a CEO dictating notes to himself.

"So I'm the schmuck?" said Richard Fuld, CEO of Lehman Brothers, after he realized Bank of America would likely drop its bid to buy the firm.

"I'm certain you'll spark a fuckin' panic..." Timothy F. Geithner, then the president of the New York Federal Reserve, to Henry M. Paulson, on disclosing his $700 billion bailout plan without first preparing Congressional leaders.

In May 2010, James Pressley wrote “Sorkin’s ‘Too Big to Fail’ Is Finalist in Samuel Johnson Prize” for Bloomberg, in which he reported: The new Andrew Ross Sorkin book, “Too Big to Fail” made the final round in the BBC Samuel Johnson Prize, an annual U.K. nonfiction award worth 20,000 pounds ($28,650) to the winner. Sorkin’s cinematic reconstruction of how Wall Street and Washington struggled to save the financial system will compete against an eclectic mix of titles on topics ranging from mathematics and fishing to King Charles II of England and the brutalized lives of North Koreans, the organizers said in an e- mailed statement. Billed as the U.K.’s richest award for the genre, the Samuel Johnson Prize is sponsored by the British Broadcasting Corp. This year’s selection of finalists defies categorization, said the chairman of the judging panel, economist and Radio 4 presenter Evan Davis. “Perhaps the only common feature of these books is the passion and sheer enthusiasm of the authors for their subjects,” Davis said in the release.

"When I picked up my newspaper yesterday, I thought I woke up in France."

- Senator Jim Bunning to Henry M. Paulson after the Treasury sought authority to invest in Fannie Mae and Freddie Mac

"The money’s walking out the door."

- Morgan Stanley President Walid Chammah, the day investors withdrew $20 billion from the bank

"What the fuck was that all about? Was he offering to merge with us?" Morgan Stanley CEO John Mack after a meeting with Lehman executives at his house.

In March 2010, Mike Fleming reported “HBO To Make Financial Collapse Drama From NY Timesman's 'Too Big to Fail” for Deadline.com: An HBO movie about the 2008 financial meltdown is finally moving. HBO has acquired rights to Too Big to Fail, the bestselling book by New York Times reporter Andrew Sorkin. Peter Gould has been hired to write the drama, and Spring Creek’s Paula Weinstein and Jeffrey Levine are executive producers. The project has been slow going because it was first set up with a book co-written by Andrew Sorkin's Times colleague Joe Nocera and Vanity Fair writer Bethany McLean, and they haven't turned in their manuscript. HBO execs say they will marry the source materials to chronicle the financial crisis the same way that Recount dissected the disputed Florida results in the 2000 presidential election. For his part, Andrew Sorkin says his book lends itself well to that task. He focused specifically on players like Treasury Secretary Hank Paulson and his successor Timothy Geitner, Lehman Bros CEO Richard Fuld, and Federal Reserve chairman Ben Bernanke, in boardrooms, private planes and bedrooms as the financial system teetered on the brink of collapse. “You see their human sides, the hubris, the ego,” Andrew Ross Sorkin said. “You see Hank Paulsen literally vomiting and Dick Fuld crying with his wife as their world fell apart."

Legendary Blackstone co-founder Peter G. Peterson was stunned by Timothy Geithner's youthful appearance when he first met him, later telling Larry Summers: "He's twelve years old!"

In December 2009, Stephen Foley wrote a review for The Independent: Too Big to Fail rips along at such a pace that even the reader is hard-pressed to stop and ask the what ifs. While no one can be happy that the tale ends with taxpayers paying hundreds of billions of dollars to prop up failed banks and fallible bankers, there are few signposts to better outcomes. That the US Treasury secretary came from Goldman, and didn't have to learn the intricacies of derivatives trading on the job, seems a blessing, rather than the curse many now suggest. It was bad enough that the head of the Securities and Exchange Commission, a former Congressman called Christopher Cox, appears "cryogenically frozen" in fear; how much worse if all the president's men had been the same? Journalists are normally content to write the first draft of history, but Ross Sorkin, mergers and acquisitions reporter for the New York Times, is performing well above his pay grade. He has augmented 500 hours of interviews with 200 participants with access to their email and phone records, private notes and even expenses forms. Too Big to Fail stakes a good claim to being the definitive story of our once-in-a-lifetime crisis.



Andrew Ross Sorkin (born February 19, 1977) is a Gerald Loeb Award-winning American journalist and author. He is a financial columnist for The New York Times and is the newspaper's chief mergers and acquisitions reporter. He is also the founder and editor of DealBook, a financial news service, published by The New York Times. Andrew Sorkin graduated from Scarsdale High School in 1995 and earned a a Bachelor of Science degree from Cornell University in 1999. Sorkin first joined The Times during his senior year in high school, as a student intern. He also worked for the paper while he was in college, publishing 71 articles before he graduated. He began by writing media and technology articles while assisting Stuart Elliott, The Times' advertising columnist. Andrew Sorkin spent the summer of 1996 working for Business Week, before returning to The Times. He moved to London for part of 1998. While there, he wrote about European business and technology for The Times, and then returned to Cornell to complete his studies. Sorkin joined The Times full time in 1999 as the newspaper's European mergers and acquisitions reporter, based in London, and the following year became The Times' chief mergers and acquisitions reporter, based in New York, a position he still holds. In addition, Andrew Sorkin started his financial-news website and email newsletter, DealBook, which he continues to edit. He writes a column by the same name (since April 2004) in the Tuesday editions (initially in Sunday editions). Andrew Sorkin also holds the title of assistant editor of business and finance news.





The Andrew Sorkin book on the Wall Street banking crisis, Too Big to Fail, was published by Viking October 20, 2009. The book won the 2010 Gerald Loeb Award for best business book of the year, was on the shortlist for the 2010 Samuel Johnson Prize, shortlisted for the 2010 Financial Times and Goldman Sachs Business Book of the Year Award, and was on The New York Times Best Seller list (business) for 6 months. Filming began on the HBO production on October 22, 2010 with director Curtis Hanson at the helm. The A-List cast includes Paul Giamatti as Ben Bernanke, William Hurt as Hank Paulson, Billy Crudup as Timothy Geithner, Dan Hedaya as Barney Frank, as well as Topher Grace as Jim Wilkinson (former U.S. government employee). The expected release date is unknown at this time, but expectations are no later than early 2012. Andrew Sorkin also won a Society of American Business Editors and Writers Award for breaking news in 2005 and again in 2006. In 2007, the World Economic Forum named him a Young Global Leader. Also in 2007, SiliconAlleyInsider.com named Sorkin one of New York's "most influential scribes." In 2008, Vanity Fair magazine named Sorkin as one of 40 new members of the "Next Establishment." Andrew Sorkin is also recognized as one of Scarsdale High School's Distinguished Alumni.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Sign Off - Too Big to Fail
www.colbertnation.com
Colbert Report Full Episodes Political Humor & Satire Blog</a> Video Archive

Liaquat Ahamed: Lords of Finance: The Bankers Who Broke the World

Lords of Finance by Liaquat Ahamed is a 2009 nonfiction book about events leading up to and culminating in the Great Depression as told through the personal histories of the heads of the Central Banks of the world's four major economies at the time: Benjamin Strong Jr. of the New York Federal Reserve, Montagu Norman of the Bank of England, Émile Moreau of the Banque de France, and Hjalmar Schacht of the Reichsbank. Liaquat Ahamed's book was generally well received by critics, and won the 2010 Pulitzer Prize for History. Because Lords of Finance was published during the midst of the financial crisis of 2007–2010, the book subject matter was seen as very relevant to current financial events. One of the main themes of the book is the role played by the central bankers' insistence to adhere to the gold standard "even in the face of total catastrophe." As Joe Nocera, a book reviewer at the New York Times, stated, "the central bankers were prisoners of the economic orthodoxy of their time: the powerful belief that sound monetary policy had to revolve around the gold standard...Again and again, this straitjacket caused the central bankers — especially Norman, gold’s most fervent advocate — to make moves, like raising interest rates, that would allow their countries to hold on to their dwindling gold supplies, even though the larger economy desperately needed help in the form of lower interest rates." Another theme that runs through the Liaquat Ahamed book is how difficult it was to forecast the financial future and how the events would influence world events. "The opinions of Liaquat Ahamed are made very clear (the Paris Peace Conference’s plan for Germany to pay war reparations is presented as a great blunder), but his overriding idea is that blame cannot be easily assigned: not even the most sophisticated economists of the era could accurately predict disaster, let alone guard against it. The effects of a public herd mentality at the time of the 1929 stock market crash are depicted, all too recognizably, as unstoppable."

“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.”

- John Maynard Keynes

"Flying Blind" by Joe Nocera for The New York Times: You read the Liaquat Ahamed book's sections on reparations — and there are lots of them because the issue dogged the world for more than a decade — with a growing sense of horror, knowing how it all turns out. But you also read Lords of Finance with a growing sense of recognition. As you learn how the world spiraled into depression, about the interconnectedness of the banking system, where a failure in one country led to problems in other countries, about the way economic orthodoxy caused brilliant central bankers to make mistake after mistake, and on and on — you can’t help thinking about the economic crisis we’re living through now. The central bankers of the 1920s and ’30s were flying blind; Liaquat Ahamed's Lords of Finance makes that quite clear. They could only hope the moves they made would help the economy instead of hurting it. Sometimes they were right, but often they were wrong. We like to think that today we have a better grasp of the machinery that moves an economy — but do we? Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson were much quicker than the earlier lords of finance to throw money at the banking system to prevent it from collapsing, a lesson they learned from the inaction of the Federal Reserve in the 1930s. But Paulson also allowed Lehman Brothers to default, an event that set off a contagion of failure around the world. Here at this critical moment, with a new administration having just taken office, and with so much riding on its policy responses to the current crisis, “Lords of Finance” poses an unsettling question. Do we really understand the workings of that delicate machine any better than our forebears did? Or do we only think we do?



"Pride Before the Fall" by Richard Lambert for the Guardian: The world's four most important central bankers, the principal characters of Liaquat Ahamed book, "Lords of Finance," recognised the political blunders of the peace process and did what they could to deal with the consequences. But more than anyone else, they were also responsible for the second fundamental error of economic policy - the decision to return to the gold standard, at the wrong time and the wrong rate. The Bank of England's Montagu Norman was the first among equals. In the words of his French counterpart, he appeared "to have stepped out of a Van Dyck painting, elongated figure, pointed beard, a big hat ... Very mysterious, extremely complicated, one never knows the depths of his thoughts". Norman saw a return to the gold standard at the prewar rate as a matter of national pride, a moral commitment to those who had placed their assets and their trust in sterling. He could not accept the idea that the City of London should play second fiddle to anyone in the global capital markets. Short-term economic pain would be worth the financial long-term gain. Making up the quartet of central bankers were Hjalmar Schacht of Germany - a man with an extraordinary capacity for making enemies, whose prominent support for the Nazi party was to take him all the way to the Nuremberg trials - and the wily Emile Moreau of France. Unlike Schacht, he was not close to Norman and the distrust was mutual. A Bank of England note-taker at their first meeting observed that he was "stupid, obstinate, devoid of imagination and generally of understanding, but a magnificent fighter for narrow and greedy ends". Then there was John Maynard Keynes - incisive, hostile to those who attacked "the problems of the postwar world with unmodified prewar views and ideas", and almost always ignored. One of the great set pieces of the Lords of Finance is a dinner at 11 Downing Street in March 1925. Chancellor Winston Churchill is trying to make up his mind about the gold standard: Norman, whom Churchill could not stand, is not invited, so senior treasury officials argue his corner. Keynes makes the case against gold, but tragically is not on best form. As the night wears on and the alcohol flows, Churchill is swayed by the idea that failure to act would be seen as a public admission of Britain's diminished role in the world. The final word of the night goes to Reginald McKenna, a banker and former Liberal chancellor. "There is no escape. You will have to go back; but it will be hell." The price of that dinner was economic catastrophe - first in Britain and then more generally. The world's gold reserves were inadequate to take the strain. Because sterling had gone in at the wrong rate, the Bank of England was under constant pressure and Britain's manufacturers were priced out of their export markets. Liaquat Ahamed argues that the four central bankers were able to keep the show on the road only by holding US interest rates down and keeping Germany afloat on borrowed money. The Fed was torn between two conflicting objectives: to keep propping up Europe by cutting interest rates, or to control speculation on Wall Street by raising them. It was a system that was bound to come to a crashing end.

"More than anything else, more even than the belief in free trade, or the ideaology of low taxation and small government, the gold standard was the economic totem of the age. Gold was the lifeblood of the financial system. It was the anchor for most currencies, it provided the foundation for banks, and in a time of war or panic, it served as a store of safety. For the growing middle classes of the world, who provided so much of the savings, the gold standard was more than simply an ingenious system for regulating the issue of currency. It served to reinforce all of those Victorian virtues of economy and prudence in public policy. It had, in the words of H.G. Wells, "a magnificent stupid honesty" about it."

- Liaquat Ahamed, Lords of Finance

"Who Caused the Great Depression?" by Frank Ahrens for the Washington Post: Until last year, few believed anything would stop U.S. homes from going up in value 10 percent every year. That is, until the sub-prime mortgage crisis exploded. Likewise, in the prosperous and interdependent Europe of 100 years ago, war was considered unthinkable because it would destroy all. By 1917, an entire generation of young male university graduates was dead. And, frankly, the brainpower needed for forward-thinking was lacking. European bankers of the time carried a cavalier ignorance of economics, and that goes double for America's first Federal Reserve directors. The science of monetary policy was still in its infancy, and no one could have expected four dreary bankers to turn suddenly into brilliant, ahead-of-their-time economists. That role should have fallen to John Maynard Keynes, one of the few heroes of the Liaquat Ahamed book, Lords of Finance. Keynes called the gold standard a "barbarous relic" and clearly explained its limits; in 1925, he accused the British banking elite of "attacking the problems of the post-war world with unmodified pre-war views and ideas." But despite being a well-known Cambridge don, Keynes was an outsider, not a member of the world's most exclusive club, and those in power largely ignored his warnings. Looking at the events of the 1920s and 1930s, one wonders: Could a modern confluence of catastrophes cause another global depression? No major power is likely to return to the gold standard, so that risk is off the table. But is there a comparable systemic problem today, something we refuse to see? Liaquat Ahamed thinks we're plain lucky that recent financial crises -- in Mexico in 1994, Asia and Russia in 1997-98, the United States beginning in 2007 -- "have conveniently struck one by one, with decent intervals in between." After reading his bracing book, one can only hope that our economy is in the hands of decision makers who are more numerous, less powerful or much wiser than in the past.

Economists See Growth with Unemployment Report from The Takeaway: Early Edition by feedback@thetakeaway.org (Public Radio International and WNYC Radio)

The Labor Department is expected to release December unemployment numbers this morning. And there are rumors the president may also announce a new chief economic adviser to replace Lawrence Summers. Unemployment is likely to remain hovering around 10 percent, but the report is expected to show positive growth from a moth ago when unemployment rose to 9.8 percent from 9.6 percent. And last week, the new claims for jobless benefits increased, while the average number of Americans filing for unemployment insurance declined — a sign of a recovering economy. We talk with Harry Holzer, professor of public policy at Georgetown and a former Chief Economist at the U.S. Department of Labor. He is also the author of the new book Where Are All the Good Jobs Going? His book is out this month from the Russell Sage Foundation. Download the podcast here.

H.W. Brands: American Colossus: The Triumph of Capitalism, 1865-1900

From the Pritzker Military Library: From the beginning, the nation’s commander-in-chief and its capitalists have been uneasy partners in the American enterprise. But for a few decades, it was nothing short of love. Andrew Jackson earned popular acclaim and enraged business magnates by crushing the Bank of the United States and quashing federal spending on roads and canals. But H.W. Brands argues that the Civil War radically changed the relationship between government and business. When J.P. Morgan received a draft notice, he hired a substitute to serve in his place, and spent the war doing a swift trade in commodities like rifles; nearly all of the fortunes that dominated the next four decades, from Carnegie to Vanderbilt, would either begin or soar during the Civil War. In American Colossus, H.W. Brands chronicles an age when the railroads led the nation west and began the Indian Wars; meanwhile, even further west, capitalists would save the military the trouble of toppling the native government of an obscure set of islands called Hawaii. By the Spanish-American War in 1898, business and military interests were so inextricably entwined that ambassador and merchant alike could agree: it had, indeed, been a “splendid little war”.



From Publisher's Weekly: In this timely study, University of Texas historian H.W. Brands (Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt) describes the rise of the great corporate capitalists after the Civil War. J. Pierpont Morgan, John D. Rockefeller, and Andrew Carnegie constituted an trinity of power-obsessed individuals who instinctively understood that wealth was the ultimate political weapon. They defined the cold-blooded authority of big business. Fascinating detours away from the tale of corporate empires examine the Reconstruction process in the South, the Indian Wars of the West, the opening of the Great Plains, immigration in the East, and the rise of organized labor and the agrarian reformers. Effectively, excerpts from the first-person accounts of Booker T. Washington, Black Elk, Jacob Riis, and others convey the drama of the time. Perhaps the only significant omission in this fast-paced, engrossing narrative is a tendency to dwell on political doctrines that sought to repudiate or restrain capitalism while only briefly discussing the dogma of Herbert Spencer's social Darwinism, which favored the monopolists.



From Wikipedia: Henry William Brands is an American historian and author of 22 books, co-author of 2 and editor of 4, he is also a Professor at the University of Texas at Austin. He graduated from Stanford University in 1975 with a B.A. in history and from Jesuit High School in Portland, Oregon. He resides in Austin, Texas. In June 2009 he and eleven other distinguished historians had dinner at the White House with President Barack Obama.



Financial Times - John Gapper - 17 Dec 2010: The life stories of the first JP Morgan, John D Rockefeller and Cornelius Vanderbilt have been written by authors such as Ron Chernow. But HW Brands weaves them into a broader account of the astonishing social changes that rippled through the nation in these decades – shaking up the lives of everyone from the southern slaves to Lower East Side immigrants. [...] Brands, a professor of history at the University of Texas who has written Pulitzer Prize-shortlisted biographies of Benjamin Franklin and Franklin Delano Roosevelt, does not shy away from such suffering. He chronicles the tensions between capitalism and democracy created by extreme divergences of fortune and the lobbying power of big business – tensions that are no less strong today. [...] Yet Brands concludes that “the capitalist revolution was in many ways the best thing ever to befall the ordinary people of America”. The population grew from 40m in 1876 to 76m in 1900, one-third of the rise coming from immigration. Infant mortality fell by one-third and life expectancy grew by one-seventh. Output tripled and average per capita income doubled as the proportion of the workforce on farms halved.

Jonathan Bloom: American Wasteland: How America Throws Away Nearly Half of Its Food (and What We Can Do About It)

From the blog, "Wasted Food" (maintained by Jonathan Bloom): Americans waste more than 40 percent of the food we produce for consumption. That comes at an annual cost of more than $100 billion. At the same time, food prices and the number of Americans without enough to eat continues to rise. Fusing my journalistic research on the topic with the work of countless others, this site examines how we squander so much food. Part blog, part call to action, Wasted Food aims to shed light on the problem of, you guessed it, wasted food. I’ve been researching this topic since 2005, when two experiences made me aware of just how much food is wasted. Volunteering at D.C. Central Kitchen, a homeless shelter that rescues unused food from restaurants and supermarkets illuminated the excess in those areas. Gleaning, or gathering crops that would otherwise be left in the field and distributing them to the hungry, illustrated the agricultural abundance that is often plowed under. When you’re looking for it, you see food waste everywhere–at restaurants, in large portions and even in your own refrigerator. If more and more people recognize their own food waste, we can take a bite out of this problem. Hope you’re hungry for change.





From the author's website, JonathanBloom.net: Jonathan is a freelance journalist who lives in Durham, N.C. The Boston native enjoys covering both serious and quirky topics related to food, the environment, business and the intersection of the three. He has written about subjects ranging from Internet voting to vehicles that run on used vegetable oil.





From The Miami Herald: We all do it. Each year, Americans waste an estimated 160 billion pounds of food - enough to fill the Rose Bowl to the brim, according to Jonathan Bloom, author of "American Wasteland: How America Throws Away Nearly Half of its Food (and What We Can Do About It)." Because an estimated 40 percent of food waste comes from our homes, we all can do better. Near the top of my list of New Year's resolutions is wasting less food. So I asked Bloom, whose book came out this fall, for advice. The seeds of food thriftiness were first planted in Bloom by his mother, a woman who always took home doggie bags from restaurants and for whom no leftover was too small to save. Home is where he learned the practice of turning an array of leftovers into an occasional smorgasbord dinner. Bloom, 34, who received his master's degree in journalism from the University of North Carolina-Chapel Hill, started researching this book in 2005 after working at a food recovery operation in Washington, D.C. During those five years, he has evolved from a person who was taught to understand the value of food to someone who is actively trying to avoid wasting it.



On The Huffington Post, in "How Avoiding Food Waste Aids Our Environment," the author wrote this: There are ethical and economic reasons why we shouldn't waste food. But, putting those aside, the environmental impacts alone make our national culture of waste unpalatable. A tremendous amount of resources go into growing our food. And processing, shipping, cooling and cooking it. A recent study from the University of Texas at Austin professors Amanda D. Cuellar and Michael E. Webber found that two percent of all U.S. energy consumption goes into producing food that is ultimately thrown out. That's the equivalent of 350 million barrels of oil. Worst of all, the two percent figure is a very conservative finding, as the study's authors noted. It's based on the low-end estimate of food's energy usage. Plus, the waste percentage the researchers use is ancient -- OK, mid 90s -- finding that we waste 27 percent of all our food. The most recent estimate is 40 percent, which comes from an NIH study. Using that more up-to-date waste percentage and the most recent estimate of how much energy food production gobbles, our food waste could represent as much as six percent of U.S. energy consumption.

Raghuram G. Rajan: Fault Lines: How Hidden Fractures Still Threaten the World Economy

Raghuram Rajan is the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business. Dr. Rajan is also currently an economic advisor to the Prime Minister of India. Prior to resuming teaching in 2007, Dr. Rajan was the Economic Counselor and Director of Research (in plain English, the Chief Economist) at the International Monetary Fund (from 2003). Since then, he has chaired the Indian government’s Committee on Financial Sector Reforms, which submitted its report in September 2008. Dr. Rajan’s research interests are in banking, corporate finance, and economic development, especially the role finance plays in it. His papers have been published in all the top economics and finance journals, and he has served on the editorial board of the American Economic Review and the Journal of Finance. He has recently written a book entitled Fault Lines: How Hidden Cracks Still Threaten the World Economy. He also has an earlier book co-authored with Luigi Zingales entitled Saving Capitalism from the Capitalists



Dr. Rajan is a senior advisor to BDT Capital, Booz and Co, and is on the international advisory board of Bank Itau-Unibanco. He is a director of the Chicago Council on Global Affairs and on the Comptroller General of the United State’s Advisory Council. Dr. Rajan is President (elect) of the American Finance Association and a member of the American Academy of Arts and Sciences. In January 2003, the American Finance Association awarded Dr. Rajan the inaugural Fischer Black Prize, given every two years to the financial economist under age 40 who has made the most significant contribution to the theory and practice of finance.

Greg Farrell: Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America

From the book's promotional website: Greg Farrell is a correspondent for the Financial Times. In January 2009, he broke the news that Merrill Lynch had paid out its 2008 bonuses a month ahead of schedule, in December, even though Merrill was in the process of losing $28 billion for the year, and Bank of America needed an extra $20 billion in taxpayer funds to complete its acquisition of the firm. That story sparked an investigation by New York attorney general Andrew Cuomo. Greg is a past winner of the American Business Press’s Jesse Neal Award for investigative reporting and a recipient of the Knight-Bagehot Fellowship for business journalism. He earned a BA from Harvard University and an MBA from the Graduate School of Business at Columbia University.

Gordon Brown: Beyond the Crash: Overcoming the First Crisis of Globalization

The author of his controversial and interesting books were recently the subject of a review on The Economist, which was titled "Oh me, oh my: Why Gordon Brown won’t be believed by everyone." MANY politicians use their memoirs to settle old scores. Newspapers scour them for juicy titbits of who said what to whom, and which leaders were perpetually drunk or unreliable. Gordon Brown, the former British prime minister, is above such gossip. His first post-election effort is an analysis of the financial crisis that dominated his premiership. But “Beyond the Crash” is no less revealing for the absence of tittle-tattle. The tone is set in the four-page prologue which contains 34 instances of the words “I”, “me” or “my”. Later on, readers are told of several occasions when an anecdote by Mr Brown would reduce global leaders to silence or a speech would provoke rounds of applause from audiences. You can find the rest of that Economist review of the author's latest book, Beyond the Crash: Overcoming the First Crisis of Globalization, here. As expected, the author's on tour, peddling the book. See the media posted below.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Gordon Brown
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog</a> The Daily Show on Facebook

Perry Mehrling: The New Lombard Street: How the Fed Became the Dealer of Last Resort

The author was recently quoted as stating that the United States' Federal Reserve Bank was acting, in fact, as the world's central bank; this is a relatively straight forward notion, and actually rather self evident when you think of the greenback as the world's base currency (in terms of volume and stability and liquidity, and in terms of currency reserves held by sovereign banks). In the Sun Herald, Bradley Keoun and Hugh Son invoked the author this way: “Things would have been worse if they hadn’t lent to foreigners,” said Perry Mehrling, senior fellow at the Morin Center for Banking and Financial Law at Boston University and author of “The New Lombard Street: How the Fed became the Dealer of Last Resort.” “We’re finally getting to understand the role of the Fed in the world.” Fed spreadsheets showed the central bank became the world’s lender of last resort as dollars flowed to European banks as well as Bank of America Corp. and Wells Fargo & Co, among top borrowers from the Term Auction Facility at $45 billion each. Read that Sun Herald piece here. Recently, the author was a guest on Bloomberg Radio; download the podcast of that show here.

The Great Recession in Historical Perspective, Part 1: Introduction from Committee on Global Thought on Vimeo.