Making history interesting

Compared to most kids growing up in India, I must say that I had a relatively good school. We had a good looking building, a large playground, labs that were sparsely equipped but existed, a healthy dose of sports and cultural activities, and teachers that tried, for the most part. Given those basics, it feels churlish to criticize what we did not have. But of late, I have been forced to concede this little fact - some of my teachers sucked. Not all of them. Just some. And they were sufficiently bad that they killed any interest one could have developed in their subjects.

The worst treatments were meted out to history. Our history books spared no effort at making the subject as dry, uninteresting and unconnected to our reality as they possibly could. My teachers took it from there and completed the job. One teacher in particular stands out. Mr.I.U.Khan was the teacher who 'taught' us history for the longest stint. His modus operandi was to sit at the head of the class and read verbatim from the book. What he hoped to achieve through this was not entirely clear, as all of us had the same books. To make matters worse, he would chew paan while he did this.

For those of you who are unfamiliar with the term, paan is a mouth freshening concoction chewed after meals - it is made of betel leaves wrapped around areca nuts, tobacco, candied dry fruits and fennel seeds. In its purer forms, chewing paan is an act of supreme cultural refinement in parts of India. It is an act that has a lot of ceremony around it, and is the central component of many a social occasion in northern India. In its unrefined and uncouth version, it is a messy, spit inducing mess that makes for unsightly viewing.

So getting back to Mr.I.U.Khan, he would chew paan as he listlessly read from the insipid book, occasionally dabbing at the corners of his mouth with a once-white handkerchief. This would lead to endless under-the-radar action on all our parts. Which was tremendously risky. Because the one time Mr.Khan showed genuine emotion was when he caught someone 'breaking discipline'. He would be livid and turn into the devil himself. There were whispered stories of a grown boy wetting his pants under one of Mr. Khan's fierce batteries. (Yes, my American friends, our teachers bought wholeheartedly into the 'spare the rod, spoil the child' school of upbringing).

Is it any surprise then, that I have grown up hating history? In all the years of my reading life, I have scrupulously avoided reading history books of any kind. Over the last few years though, I have started taking some tentative steps back in time. Jared Diamond's Guns, Germs and Steel was what started it all. There are some books that attain such an exalted status that ignoring them becomes pretty difficult. GGS is one such book. It made a tremendous impact on me, and for the first time, I started considering the stunningly novel possibility that maybe, just maybe, there could be something to this history thing.

I started this year with another great history book - India After Gandhi, by Ramchandra Guha. Right now, I am reading another history book, A Little History of the World by E.M. Gombrich. A fascinating 250-page run through of the history of human civilization, from pre-historic times to the early 20th century. Absolutely riveting stuff! In almost every page, I have an 'aaahh' moment, when some name, some vaguely understood historical incident falls into place. It is the kind of book that places the 'story' back in history.

With these books under my belt, I want to come right out and say it (maybe it would be therapeutic):

Mr. I.U.Khan, sir: All those years back, you killed and buried history for me. You were not a good teacher sir. No disrespect.

Vanity cards, anyone?

Ever watched Dharma and Greg? It used to be one of my favorite shows on TV. Even back then, I used to dig the infinite comedic potential of living with someone, anyone, full time. (The other classic of the genre, one of my favorite shows of all time - Mad About You)

I was reminded of Dharma and Greg recently by my wife, who insisted (despite my many disbelieving protestations) that the lead woman in the newly piloted CBS sitcom Accidentally on Purpose is none other than a much older Dharma. So finally I went to that Delphi of the film and TV world - IMDB. And what do you know? My wife is right. Again. Billie in Accidentally on Purpose is indeed Jenna Elfman, also known lovingly to many as Dharma Montgomery.

Which is all well and good, but only vaguely related to what I have on my mind. The fall TV season is upon us. And in TV, my taste is ... shall we say, plebian. I go for the simple, mindless sitcom routine. Serve me up my Friends in many different forms, and I sleep easy. Over the last year, this has meant a lot of CBS sitcoms. In particular, I have found myself to be a fan of Chuck Lorre. Yes, indeed the same Chuck Lorre who was the creator of Dharma and Greg, and is currently writing The Big Bang Theory and Two and a Half Men. Mindlessly hilarious shows that I shamelessly enjoy.

If you have ever watched one of these Chuck Lorre productions, you are probably familiar with his 'Vanity Cards'. Funny little things these. After (almost) every episode of one his shows, Chuck Lorre has a little message ... a witty observation, a silly joke, a dig at the expense of the network currently airing his show ... it could be anything. This thing stays on the screen for barely two seconds and is then gone. If you want to read it, you either need to TiVo the show and freeze on that pane, or go to his website.

My wife and I have had differing opinions on these vanity cards. I think they are hilarious. She thinks I am crazy. (Though to be fair, she has her reasons.) You judge for yourself. They are all stored here.

I have spent a good bit of time looking these up recently, and thought Brick and Rope readers might enjoy at least some of them. They started appearing on TV maybe around 2003, and start out very tentative, almost apologetic. See #1 for instance (scroll down on the page). They slowly gain self assurance, with some good ones about being a TV writer - like # 31, #59 and #109. Thrown in somewhere are the truly heartfelt ones, like the card after the last Dharma and Greg episode- #107.

Once Two and a Half Men started, Chuck Lorre's vanity cards got increasingly edgy, clearly testing the patience of network executives. You can see a bunch of them getting censored out of the show (the site has the uncensored version as well as the censored one that was actually telecast). Some of these are the most hilarious - See #171, and #251.

You might read these and wonder about my sophomoric taste in TV humor. I grant you, this isn't exactly high brow literature. By hey, it makes me laugh. And from my idiot box, I don't ask for more.

The two trillion dollar meltdown - Charles Morris

I had at least three reasons for not reading Charles Morris' The Two Trillion Dollar Meltdown. (1) It is being pumped up as an 'I told you so', and let's just say I am sceptical; (2) It has an over-the-top sub-title that I am not crazy about ('Easy money, high rollers, and the great credit crash'); and (3) A personal tick, I don't like books with a number in their title - they always ends up being too simplistic.

But read the book I did, thanks mostly to a Brick and Rope reader who encouraged me on. Glad he did.

The Two Trillion Dollar Meltdown is (another) story of how the wheels came off the American financial services industry in 2007-2008. Economic historian Charles Morris, the story goes, was running a financial software company in 2005, working with some of the top financial companies. Looking at how his software was being used, and the kind of instruments that were getting popular on Wall St, he got convinced that things couldn't possibly end well. He started writing the book on what was going to go wrong and how things were going to break. By the spring of 2007, reality started overtaking events in his crystal ball. The book was published then under the title The Trillion Dollar Meltdown, with the number being Morris' estimate of the total bill the economy would need to pick up. A year later, when it is time for the paperback to be published, the title has been updated to Two Trillion. Enough said.

In the book, Morris tries something that has become rather difficult to pull off in the polarized times we live in - he tries to walk a centrist path. Not too liberally Keynesian. Not too conservatively Chicago School. That is one of the great strengths of The Two Trillion Dollar Meltdown. The other is Morris' easy felicity with words. The pace is set early. In the foreword, Morris writes -

At its core, [this is] a crisis of the classic 'Argentinean' variety - a debt-fed party, marked by a consumer binge on imported goods, and the strutting of an ostentatious new class of super-rich, who had invented nothing and built nothing, except intricate chains of paper claims that duller people mistook for wealth.

I was hooked. Informed and articulate? Isn't that refreshing?

Morris' broader thesis on American economic history provides the bookends between which he lays out his story of what led to the particular crisis of 2007/8. His thesis is this: The ruling political / economic consensus in America alternates between liberal and conservative in roughly 25-30 year cycles. The liberal, Keynesian view believes in an active role for government in the economy and in a regulatory environment that sets up the rules of the game every player needs to follow. The conservative, Chicago School / Milton Friedman view holds that a free market always finds the best answer and the role of government is to get everything out of the market's way. The long government-centric policy making of the '60s, in Morris' view, led to the 'Great Inflation' of the '70s which Paul Volcker broke with his 'forced recession'. With the election of Reagan in 1980, the Chicago School took over in Washington and what followed was 25+ years of continuous financial deregulation and 'markets know best' thinking in Washington. But, Morris goes on, both schools of thought suffer from a problem - they can't control their own excesses.

In the early days of a cycle, the new ways of thinking are like a fresh breeze that blows away the mythologies of the past. Inevitably, through a kind of Gresham's law of
incumbency, breezes become doldrums, and leaders get trapped in mythologies of their own. Liberal cycles inevitably succumb to the corruptions of power, conservative cycles to the corruptions of money.

In talking about the details of how we ended up here, The Two Trillion Dollar Meltdown has some remarkably simple explanations of the key financial instruments created in recent years - stuff that can easily bog a book down end up being some of the stronger points of this one. I particularly enjoyed Morris' clear explanations of credit derivatives.

So in the end, what does Morris propose? What is the way out? To his credit, he doesn't offer any silver bullet. No sound-bite answers in this book! To begin with, Morris states what he thinks is not the right answer -

The prosperity of the 2000's was fake, based on massive consumer borrowing on bubbly-priced assets. Now consumers are deeply in debt, and the price of the favored assets are falling, while both employment and incomes are falling along with them. Pouring out ever more dollars in the hope of recovering the zing of the old bubble days is exactly the wrong prescription, and risks making eventual outcomes far worse than they need to be.

We need, The Two Trillion Dollar Meltdown suggests, to 'recover balance' between the two economic schools of thought. We need to forget about irrelevant side-shows like regulating hedge funds and go back to the hard basics. Go back, in other words, to the old 'Washington Consensus' that the IMF / World Bank combine so often forced on developing countries. In Morris' words -

It's time that we take the same harsh measures we have long preached to other countries. ... Consumption has to fall, by at least 4-5 percent of GDP, and the money has to be shifted to savings and investment. The hypertrophied financial sector has to shrink drastically. And we have to run down the huge overhang of dollar-based debt by producing more than we buy for the first time in a long time - in effect, by working harder and living poorer.

As a banker, I groan. As a citizen of the world, I say 'Amen'.

Wizarding world of Harry Potter

All right. I will admit it. 'Fess up. Come clean.

I love Harry Potter. I am not going to apologize for it.

And while we are on the topic - I like Harry Potter better than I like Lord of the Rings. (OK, this one I am a little ashamed of.)

I also love the theme parks of Orlando. Not all theme parks mind you. It is a specific love - theme parks of Orlando. Disney World is my favorite theme park by far (don't get me started on Disneyland, or whatever that LA version is called - an utter waste of time!). Universal Studios is not far behind.

So it was euphoria wrapped around ecstasy yesterday when I heard news items using the words 'Harry Potter', 'theme park', and 'Orlando' in the same sentence. The details are out everyone! Universal Studios is now sharing details of the Harry Potter based theme park in Orlando, set to open in Spring 2010. It would be a park within the Islands of Adventure park of Universal. A triwizard tournament; Hog's Head pub; Zonko's joke shop; Hogsmeade; Fitch's emporium of confiscated goods; ... and the piece de resistance - Hogwarts!

The official site of the theme-park-to-be is here. Don't expect too much though. They are playing their cards so close to their chest, it is like they have tried to make the site as uninteresting as possible. The LA Times blog here has a good list of the key attractions in the park.

So now is the hard part. The waiting. I know the park is coming. I know it is going to be the awesome-est thing ever. But it's not open yet. Don't get too excited ... deep breaths JS, deep breaths!

(Question to self - Can I buy a time turner on ebay? Then maybe I could go into the future and see the park ... but then I can't see myself at the park, or that would kill me ... aaaaaargh!!)

Mr.Head - can you stop spinning now? The Unconsoled - Kazuo Ishiguro

Oh. My. God.

I am still in shock. It is about 24 hours since I finished reading my little birthday treat, The Unconsoled by Kazuo Ishiguro. Sleep last night was punctuated by short, weird dreams. Waking up in the morning, my first instinct was to get on the net and read what others have thought of this book. Actually, make it 'what others have made of this book'.

If I have read a stranger book in my life, I don't remember it. Back in my undergrad days, we went through a bit of a Kafka phase. My memory of those books is vague, but what I do remember is likely the closest thing I have read to The Unconsoled. I could easily make a case for why this is one of the best books I have read in a long, long time. Or one of the worst. I could get comfortable with either assessment.

Last I spoke with you about The Unconsoled, I was at about the 300-page mark, and had only a vague sense of what was going on in the novel. Soon after, I started forming a hypothesis on how to interpret the book. (Yes, this the kind of book where the reader is not a passive participant in the creative process. Reading is hard work.) Armed with my hypothesis, I could make some sense of what was going on. But only some. The facts did not all fit my little hypothesis. By the time I got to the end of the book, I had a much firmer grasp of a possible interpretation that fit most of the facts laid out by Ishiguro. And since then, I have been polling other reviewers to see what they came up with.

For Brick and Rope readers who haven't read an Ishiguro yet, let me forewarn you. This is probably not a good book to get introduced to this master novelist. Though The Unconsoled has a lot of the characteristics elements of an Ishiguro, it is a rather extreme version of his vision. If you are in the enviable situation of just starting off on your Ishiguro journey, allow me to recommend his most recent book as the best place to start - Never Let Me Go, published in 2005. That book hit me with one of the most powerful emotional impacts a book has ever had. I would follow that up with the work most consider to be Ishiguro's masterpiece, The Remains of the Day. Once you have read those, and have some idea of how to deal with his work, it might be a more worthwhile exercise to pick up The Unconsoled.

The Unconsoled was a more mind-bending experience for me than I had bargained for. But it also established in my mind the Ishiguro's position of as one of the most original of contemporary authors. It is a book that I have to read a second time (maybe it will make more sense this time around!). And it made me do the math in my head - Ishiguro writes a book every five years or thereabouts (no, he is not prolific). Never Let me Go was published in 2005. We are now in 2009 ... Dare I hope for a new Ishiguro next year? Please, please let it be so!

Trusting Kazuo

This was going to by my birthday pony.

I had that annual milestone a few days back, and as always, friends and family didn't need to struggle to think of the perfect gift. For my part, I had saved myself a little treat for B-day. Of the six novels Kazuo Ishiguro has written, The Unconsoled was the fourth. Published in 1995, it is also the only Ishiguro novel I haven't read. Perfect birthday gift to self.

Reading Ishiguro is a matter of trust. To truly enjoy his novels, you have to give yourself up to the author. Not in the half-hearted manner of 'I am not sure where this is leading but let me wait and see what he has up his sleeve'. With Ishiguro, you have to be tuned in at all times. Before you pick up one of his books you know that it is not going to be a simple narrative that flows from point A to point B. It is going to be layered, with the layers relvealed slowly, and not in any particular order. You have to do the work of piecing it all together. You know that it is going to be a first person narrator. Most importantly, you know that the narrator is not to be trusted! This last piece is what makes Ishiguro unique among contemporary authors. He does unreliable narrator better than anybody has probably ever done. That is his signature, and that is what makes his books an absolute pleasure to read.

The Unconsoled has so far been all that I expected it to be. I am about 300 pages into the novel. I am gripped by what is unfolding. But so far I have only a hazy idea of the puzzling dynamic underlying what is unfolding. That is what I mean when I say reading Ishiguro is a matter of trust. With almost any other author, I would likely have been frustrated by now. I mean, your average novel is reaching for its resolution by the time you are through with 300 pages. And here I am, without a clear grasp of the characters yet.

Here is what I do know. Over the next little bit, other aspects of the key characters would be revealed. Every little odd nuance in a sentence would be worth pausing on, because in all likelihood, that nuance is there for a reason. Somewhere along the way, I am going to understand the character. And that is what an Ishiguro novel is all about. My birthday pony is not taking me for a ride.

Kazuo, I trust you.

The myth of the rational market: Justin Fox

It is turning out to be a longish stretch of market related books for me. After Bogle and Galbraith, it is now the turn of Time columnist Justin Fox and his book on the efficient market hypothesis. I think I have had my fill and should move to other subjects for a little while.

The myth of a rational market is an exploration of the up and down history of the efficient market hypothesis around financial markets. The tagline of the book says 'A history of risk, reward, and delusion on Wall Street'. It is nothing of the sort. I am not sure why they chose that subtitle. It is really not what the book is about. And it is not like this is a particularly compelling or resonant title either. Strange are the rules of the publishing world.

Come to think of it, the title of the book is somewhat misleading as well. The myth of the rational market does not prove by any means that the rational market is indeed a myth. In fact, towards the end, Fox asks the question 'Where has the debate over market rationality ended up?' He goes on to answer himself with 'In something more than a draw and less than a resounding victory'. Not exactly the most compelling case for calling the rational market a myth.

For the record, I should state that I do indeed sympathize with Fox's broad view on the matter - that markets are broadly and mostly rational, but are not rational always and everywhere. Long time readers of Brick and Rope might remember my admiration for Dan Ariely's behavioral economics book Predictably Irrational. Human decision making is not entirely rational. And it isn't irrational in any random, unpredictable way. It is so in systematic, entirely predictable ways. Then there are the regularly occurring market crashes, boom and bust cycles and plain failures of the market (calling as witness #1: banks that are too big to fail). Finally there is the curious case of the Ben Graham disciples - a group of investors all studying under one master and going on to build the most extraordinary track records. The case for a perfectly rational market where all knowable information is reflect in prices does dim a little bit in light of these facts.

The myth of the rational market does have a particularly evocative passage about the last of the above - the inexplicably great performance of Warren Buffett and other Graham disciples over the last four decades. Michael Jensen, one of the most vocal proponents of the rational market approach once declared that there was 'no other proposition in economics which has more solid empirical evidence supporting it than the Efficient Market Hypothesis'. In May 1984, Jensen was invited to the Columbia Business School to debate with (among others) Warren Buffett on this view. He explained away the historical performance of Buffett and some others by invoking the much-used analogy of the serial coin-flipping game where everyone starts with a dollar to call a coin flip. Correct callers take the entire loot and call the next round, and so on. After 100 rounds, you would expect to find 215 millionaires. That doesn't make them superstars, goes the argument, just lucky. Buffett responds, with characteristic wit, that 'maybe the professors claim that coin-flipping orangutans would have achieved the same result ... but if you found that 40 of the 215 millionaires came from a particular zoo in Omaha, you could be pretty sure you were on to something. So you would probably go out and ask the zookeeper about what he's feeding them, whether they had special exercises, what books they read, and who knows what else.'

The passage is illustrative of both the strengths and weaknesses Justin Fox as an author of a book about the markets. It is interesting, witty, light and entirely accessible for the lay reader. It is just the kind of thing you would expect a journalist to come up with. But ultimately, the anecdote is just that. Not evidence. Just an anecdote. You get this feeling again and again in the book - that Fox is unable or unwilling to get into the detailed evidence for or against a proposition, but is happy to let an anecdote do the heavy lifting for him.

In his 'A note on sources' at the end, Fox writes - 'I am a journalist, not a scholar, and this is a work of journalism, not a Ph.D. dissertation.' True words. Believe him. For a deep understanding of the rise and fall (and rise and fall, and ...) of the Efficient Market Hypothesis, there are better places to go. But for a breezy, character packed, overview of this thoroughly interesting question about markets, you could do much worse than The myth of the rational market.