Capitalism at its Best

As sung by Sam Zell
And another .

Knowing the Enemy

Knowing the Enemy contains more useful suggestions than the Iraq Study Group. However there is neither the will nor the time. The most useful thought is how to understand the ladder of extremism. The vast population are mainstream who are potential allies against radical Islamism and whose grievances can be addressed by political reform. The next tier is alienated Muslims who require ideological conversion. The next tier are the ones that end up joining insurgent cells. The full range of counter insurgency tools including violence must be used. The top tier must be imprisoned or killed. The issue is how to identify and isolate each tier.

Iraqi Study Group Reivew

The Iraq Study Group Review has damning points if no magic suggestions.

Know the Enemy

The east coast establishment often underestimates the power of religion. The New Yorker reminds us from time to time. The most astonishing quotes are that the bible is not only the best selling book of all time it is the best selling book every year in the United States: 25 million copies a year. Most homes are buying their fourth or fifth bible.

Larry Summers

Larry Summers gave a presentation to the DNC Trailblazers Club in NY this morning. He sees three main issues facing America: Financing, Fairness and America's place in the world. The financing is an issue not just because of the size of the deficit itself, which historically is not at the high end of the range. The issue is that the most powerful country in the world owes money to the country that arguably aims to increase its strategic position in the world. Strategically it is important that the US get its fiscal house in order.

Fairness is politically important. The free trade argument is correct and has every economist on its side. However, that does not make it any easier to explain to the vast middle which feels that it is losing out to free trade of labor and capital. The fairness issue can be addressed by increasing investment in education. Teaching must be made a respected and well paid profession. The average SAT score of new teachers is 950. The average pay is 40K. Therefore the teachers union arose to support teachers who are not respected and underpaid. The Republicans are correct to say that more accountability is needed. But the elite class that decides things is too insulated from the public school system.

America's place in the world is slipping. The most recent non-aligned movement brought 119 heads of state to Cuba. China brought 46 heads of State of African nations to Beijing for a summit. Where is the leadership of the United States? The U.S. is playing no role in the Arab Israeli conflict. This is because the Bush administration suffers from the problem of the impatient mediator. Mediators must be willing to bring parties together on a regular basis and make moderate progress towards an ultimate goal.

On corruption, Summers remains optimistic. Culture changes slowly. Many of us in business will acknowledge that some of the things that we might have done ten years ago are now illegal or at least more gray. Greater transparency should not be mistaken for lack of progress on reform.

Oracle Bones

Sometimes there are books that I just do not get. This is one of them. It seems more of an unedited diary than a well thought out book. But because the diary happened to be in a foreign country the book became a possibility.
NYT review.

More on Friedman

This video sums up Friedman's philosophy as well as any of the recent obits.

What American Education is really focused on.

Americans complain about education. But the real problem is focus. Spending millions of dollars on high school football stadiums sends the wrong message to everyone: kids, teachers and parents.

Why Toyota is the best manufacturer.

Toyota retains humility about its position. It is always afraid and this paranoia keeps it sharp.

Larry Summers got fired for saying this.

A Nixon in China moment. This professor of neuropsychiatry at the University of San Francisco says that her research shows that women think different than men.

No Way to Win a War

The value of committees...

Multinationals and Society

Walmart is better than the alternative.

Solar Power Plants

The future of solar power has always been the future. It is an example of a common good that will take massive government investment to get to profitability but will provide many beneficial side effects. Investment is beginning to yield results.

Bloomberg for President

Can a five foot seven pro-choice, pro-gay rights, pro-science jewish guy win the presidency? Let's hope so.

Google and Health

Google is thinking about the broader meaning of search. An interesting piece on Google and healthcare.

Pity the Poor Corporation

Are corporates really that poor off? They are complaining that regulation hurts them. Is that true or is it poor management. It certainly was not an unbiased group.
Most observers recognized the fact that the panel was self serving even if Glen Hubbard did not. The argument that the US share of IPO's is falling due to regulation ignores many other factors.

Economic Wars

Economists agree about more things than it seems when you read the NYT and WSJ.

Graduate Engineer Race

One often hears that India and China graduate x times the numbers of engineers than the US. While it is correct that American higher education can be improved it is important to realize that numbers are not everything.

Meds for Kids

Sometimes the letters are better than the articles. A good look at both sides of psychiatric medicines for kids.

Rich Man poor Man

I often told my staff, don't do anything that you would not want to see on the front page of the New York Times. Well some didn't get it. They want to be on the cover. Two others from my prior organizations showed the same lack of foresight. Robert Glassman made me ashamed to be Class of '83 Harvard. If that was not bad enough the second braggart was from Morgan Stanley. If you are going to talk about being rich on the cover of the Times you had better have a couple of jets and a 100 foot yacht. If not just shut up and read page 18 about the poor trying to survive at Burger King.

Death and taxes

Only one is not avoidable if you have a good accountant. One of the best ways to clean up corporate accounting and collect more taxes would be to unify reporting for shareholders and the IRS. Because corporations despise transparency this will not happen.

Private Equity

Which gets worse media publicity these days, private equity or hedge funds? Is this just a case of media envy or are both ills of society. There will be lots of articles debating both sides. Practitioners will of course defend their livelihood.

Hedge Funds

Mass media is increasing its focus on hedge funds. Hedge Funds for Dummies hits the bookstore. Is there any evidence that Dummies books predict market tops? However it is often said that hedge funds are not an asset class but a compensation scheme. Therefore there is no way to burst a bubble. There will always be a market for intermediaries who can manage money. One clue to how hedge funds gain an edge is by doing lots of research with boutique shops. Analysts can use what is called the mosaic method to put together lots of pieces of evidence to create proprietary information. Does this fall into the realm of insider trading? Mostly not, but as in any endeavor, people will find a way to cloak illegal activity in normal routines if there is a way to profit.
Oh, and by the way, according to Kat you can cheaply replicate hedge fund performance without the fees.

Casino Royal

The construction site scene might go down as one of the best chases in movie history. Yes it is that good. Fights, jumps, fires and death are combined. The criminal La Chiffre reminds me of any one of the hedge fund managers that I know; mathematical smart and good at short selling and poker.

Artists Deals

Many artists are getting below market rates on land to develop in China if they promise to build a museum. Will this result in many under-used museums?

Adam's Fallacy

A couple of years ago there was an Atlantic article "The Market as God" which parodied the similarity between theological treatises and the comments about the movement of the bond market. And David Stockman once said that he wanted to come back as the bond market. Duncan Foley's book warns that economics is neither good nor bad. It just is. If there are value-laden decisions to be made, we must find other sources to make choices. Economics will not tell you.

Soldier

The book review is better that the biography of highly regarded Colin Powell. He gave up his reputation because he forgot that he was no longer a soldier.

Education Gap

I saw a recent post that said for all of the complaints about the Bell Curve, none of the arguments were ever proved incorrect. The argument of the KIPP program is that minorities start from behind because of culture so that they must be given an even better education that cultures which stress achievement at home. There still are too many theories of education and no scale to the successes. As long as education is the responsibilities of localities with all of their strengths and weaknesses, American education will not be able to excel. Failure of education is that outcome that we have chosen because of the structure that we accept.

Tommorrow Square

James Fallows has moved to Shanghai as he did to Japan twenty years ago. His most interesting point is the impact that the tribe of returnee Chinese will have on the economy of China. I think that he might overrate them because they are the people he is most likely to meet and to speak with. They are fluent in English and not shy about dealing with Americans. He also overrates the dislike of the Japanese. Japan and China are major economic partners and Japanese companies are major employers.
The leadership has shown its skill in developing the economy while keeping dissent in check. To ask what is the Chinese dream is like asking what is the american dream. And the answers might not be that much different.

The Intelligent Investor

Ben Graham's Intelligent Investor should be read every few years. Rising valuations tempt even the most conservative investors to stray from sound practices.
He takes investment much more seriously than the television gurus. All things excellent are as difficult as they are rare. The aggressive investor must view security investment as a business enterprise. Investors need time, determination and mental training and capacity. There are only three guaranteed methods: unpopular large company, undervalued stocks, and special situations concerning mergers or workouts.

Behavioral finance seeks to explain investment errors. If something happens two or three times in a row the mind reflexively expects it to keep going. Success releases dopamine. Failure stirs up fight or flight response.

The five elements for picking companies are simply put.
- Understand the companies long term prospects
is there a moat of brand identity, monopoly, intangible asset, resistance to substitution.
- Know the quality of management
CEO pay, managers or promoters
- What is the financial strength and capital structure
Owner earnings: net income plus amortization and depreciation.
- What is the dividend record
- What is the current dividend rate.

Really understanding a balance sheet and income statement is difficult even for a trained securities analyst. Stock valuations are dependable only in exceptional circumstances.

Chinese Art

The modern art scene continues to defy gravity. Why don't all those hedge fund guys sponsor schools in Laos?

Fiasco

I think that Fiasco might be the last Iraq book that I read for a couple of months. It is too depressing to think that even with all of this information, current policy makers do not think to reconsider strategy. The next two days might prove me wrong, but I do not think that the American people believe that there should be accountability for the level of errors made. It seems likely that control of the House will shift by a small margin and control of the Senate might even remain in Republican control.

The political reasons given for the war were a sham. The real reason was to transform the Middle East. The CPA was not there to rebuild. It was to change the politics, economy and culture of Iraq.

Much of the book is not about politics however. It is about military strategy and tactics and what defines the two. Strategy is understanding what kind of war you are fighting. Then there is movement of large units. Finally there is tactics. The most contentious point from this prospective is that the military plan was bad. What seemed obvious at the time that a light and quick strike was best for all occasions proved wrong. Afghanistan taught the wrong lesson. It is more important to secure the country with boots on the ground. Astonishingly there were only 247 tanks in the initial invasion.

Like many military books it is full of management advice. Part of the issue was psychological. W's feelings about his father will be analyzed forever. Less prominent are Rumsfeld's feelings about Powell. He was determined to discredit the "Powell Doctrine" of overwhelming force. Other management critics are throughout the book. Rumsfeld erred by giving a management job to a thinker.

But the story of Iraq is a summary of how not to win an insurgency. The hallmarks of failure:
- primacy of military direction of counter insurgency
- priority to kill-capture the enemy
- battalion size operations the norm
- military units concentrated on large bases for protection
- Special forces focused on raiding
- adviser effort a low priority

The Fog of War

The Fog of War might be used in its entirety by Donald Rumsfeld when he makes his own movie at age of 85. History is not cycles but it rhymes. It did not take even a generation to forget the lessons of Vietnam. How many of the same mistakes were made in Iraq where it seems all eleven of the rules were violated.

1. Empathize with your enemy.
2. Rationality will not save us.
3. There's something beyond one's self.
4. Maximize efficiency.
5. Proportionality should be a guideline in war.
6. Get the data.
7. Belief and seeing are both often wrong.
8. Be prepared to reexamine your reasoning.
9. In order to do good, you may have to engage in evil.
10. Never say never.
11. You can't change human nature.

Economic Wars II

Morgan's constant battle of economists mirror the broader debate about the direction of the economy. How hard will the housing decline hit consumption is the crux of the debate. Is consumer spending more linked to income or to wealth? Since the disparate views cannot even agree looking in the rear view mirror they obviously have different forecasts for the future.

Why backdate options?

It was not entirely clear to me why companies backdated options. They could give more options or lower the strike price of options at a given date if they wanted to pay executives more. Jame Surowieki offers the suggestion that in the money options were recorded as expenses but at the money were not.

Pre-election hubris or How can you vote Republican?

The Talk of the town in the New Yorker gives a good summary of the state of the nation. It is probably too negative on the economy. The deficient is relatively not that high. But as Larry Summers wrote earlier in the week, the middle class if not losing is winning less than the rural poor of developing nations and the rich.

The problems in foreign affairs are less nuanced. It is hard to see how things could be worse in Iraq.

Can hedge fund returns be replicated?

The more important debate is whether hedge funds are an asset class or a compensation scheme. But Andrew Lo has a new paper on the subject.

Economic Wars

JPMorgan investment management is in the business of keeping the money not making the money. They are worried about a lot of things; geopolitical risk, energy prices, de-leveraging and the end of the carry trade, a housing collapse, the end of the US consumer, inflation, and the wrath of nature. But evidence shows that none of these are "the end of the world". Wars cause dips, energy prices fluctuate, the carry trade might never have been, and the consumer never dies. Nature's wrath is localized.

He gave a nice summary of the Greenspan thesis: the fall of the Berlin Wall brings capitalism to the masses (more Marxists on the Harvard faculty than the rest of the world combined). Agrarian markets with high savings rates grow and continue to save. The savings flow to the US.

Is it true that there is prosperity but no security? Was there any security except for a brief period of time post World War II?

He joins the other speaker I saw this week going gaga about China. Take current growth rates of China and the United States. Draw a straight line. Predict the year that the Chinese economy will be larger than the U.S. I think that the year that Japan was 2005.

News Notes

The cover page is a picture of bodies at a religious school in Pakistan. Not that we were winning any hearts and minds but more on the fence will be pushed the other way.

Presidential Candidates

John Edwards is still trying. He might have been a good country lawyer but he has still got a lot more polishing to do before he has a foreign policy resume. He spoke about his trip to China in front of the Asia Society of New York today. The speech might have worked well in front of a rural audience but not in front of China experts.

His US centric world view was on display in comment after comment. How does Chinese support for "rogue regimes" in Sudan and Venezuela differ from US support of Saudi and Nigeria? Does the world really crave for US leadership? Does the world need US morals as defined by the Christian right? Might the only real benefit of the war in Iraq be the loss of the America's stature as the world's only hyper power.

He did not study China much before or after his trip. He forgot the names of the agencies that he meet with. He was surprised that all of the Chinese cared about the Taiwan issue.

Some of the speech sounded like the same platitudes spoken about Japan: "the single most bilateral relationship in the world today".

News Notes

Larry Summers begins his career as a journalist with a lot of questions about what is wrong with the new style of growth: the very rich, the owners of assets, gain and the very poor, new workers in India and China, gain, but the middle is squeezed. He does not come up with any answers.

Political Fundraiser

I attended my first political fundraiser last night. Andrew Cuomo, running for NY Attorney general, had former President Bill Clinton for support. The crowd was full of rich looking New Yorker Democrats. I have never been to a Republican fundraiser but I cannot imagine that the crowd would look any different. There were lots of suits and very few people of color. Cuomo served in various roles in HUD for the entire Clinton term. He has never won a major office. He spoke smoothly but not quite convincingly. Clinton was clearly the draw. From his speech you would think that Cuomo was running to replace some right wing Republican and not Elliot Spitzer. Clinton feels that because the direction of the country has gone so far off, the Democrats will take significant seats in this election. He stated that most of the Democrats running in Kansas are former Republicans. He did not state how this will impact the direction of the Democratic party.

News Roundup

No one ever makes money underestimating the America consumer. While the GDP growth rate slide to 1.6% (before numerous revisions), personal consumption grew by 3.2% versus a prior 2.6%. University of Michigan consumer survey rose to 93.6 for September. Consumption depends on jobs and job prospects, not housing prices or sales. Residential investment dropped by 17%.

Bill Miller's quarterly letter is a good read. There are three edges in investing; informational, analytical and behavioral. I agree with the first two. Private equity and venture can exploit the first but public market traders legally cannot. Quants exploit the second. I wonder if the third describes the fact the money managers and hedge funds take advantage of investor gullibility to raise money based on psychology of investors. Miller ends the letter with reading suggestions on the study of beliefs.

He is very very bullish.

Operation Dreamland

Operation Dreamland depicts life in Iraq in the good old days of January 2004. The war is not yet a year old. The film could not even be made now. Iraq is not that safe any more. The soldiers are bored and cynical. Even the most optimistic of them do not believe that there is much they can do positive in Iraq. Their only job is protecting themselves. These guys, some just out of high school, proved to be more prescient than their leaders. The locals are idle men harassed day and night by US forces. Or scared women and children. The film is even more powerful two years later. What will we say in 2008?

News Roundup

Private equity is growing in Japan. In 2006 there have been 53 deals worth 3.3 billion. Carlyle has raised $1.9 billion to invest. The biggest was Skylark at 2.3 billion.

The God Delusion

"The God of the Old Testament is arguably the most unpleasant character in all fiction: jealous and proud of it; a petty unjust, unforgiving control freak; a vindictive, blood thirsty ethnic cleanser; a misogynistic, homophobic, racist, infanticidal, genocidal, filicidal, pestilential, megalomanical, sadomasochistic, capriciously malevolent bully." And then Dawkins states that region gets an abnormal amount of respect? Well if Dawkins wrote this book to persuade, he just lost his audience with that opening line. All who remain to read the book are those in agreement. Dawkins is at his best when he sticks to the science aspect and especially when he stays close to home on evolutionary theory.

The book inspired a number of debate opportunities for Dawkins. One debate with Francis Collins shows how intractable both positions really are. There is no way for proof of either opionion. As one reviewer stated "it is poignant that the believers in God will never know if they are wrong and the disbelievers will never know if they are correct.

NY Times Review

Oracles

Feeling a little bit like Claudia and Jamie from the Mixed up Files of Mrs. Basil E. Frankweiler, I headed to the audience hall of Ashurnasirpal II in the Sackler Gallery of the Metropolitan Museum last night. Allan Greenspan, our modern day oracle spoke. He gave what I imagine is his stump speech, a modest review of his achievements and an optimistic outlook for the US and world economy.

History

The economic implications of political events are often not understood until later. Greenspan stated that the fall of the Berlin Wall, which led to the abandonment of the concept of command economies was the most significant contributor to growth.

Current State of Economy
The current situation is good driven by positive demand, capital investment and exports. Homebuilding and inventories are keeping a lid on the economy.

There are two imbalances; the current account imbalance and the deficit. The current account balance is an economic number. Despite years of deficits, the last quarter was the first quarter where US paid out more interest than it received on foreign investments. The rates of return on foreign investments are higher than we are paying foreigners. So why do foreigners keep investing here? The stability and the protections provided by the constitution. The current account deficit has been occurring for years. Division of labor means that there is a constant growth in the deficit. Think of the deficit across other entity boundaries; cities, counties and states and it will become clear that the division of labor is an irresistible force. It only becomes noticeable when national boundaries are breached. The only risk is protectionism.

The Fed did a lot of research using much more information than available to private investors to try to forecast exchange rates. His conclusion was that "long term rates cannot be predicted better than a coin toss". The way that banks and financial institutions make money in fx is by taking the other side of the trade of the "garment business".

The other imbalance is the budget deficit. Excepting for Medicare this is a political problem. We can forecast the number of recipients of Medicare but not the outlay per recipient. It seems that the current promises cannot be fulfilled. The program will end up paying for only those in need.

On Bubbles
He was modest about the powers of his office. "It don't work" he says about attempts to address asset prices. There was much talk in the Fed about how to defuse bubbles. Bubbles can only be crushed, not slowly deflated. Maybe 1000 bps of fed funds increases might have worked to end the 90's bubble. Rather than attempt to end things this way, Greenspan felt it would be easier to deal with the stock market bubble's aftermath and address the downside. But even this might not be a lesson for future bubbles.

The housing bubble primarily impacts consumption thru the wealth effect. Even the amount of this on the upside and the downside is not clear. Mortgage equity withdrawals have been cut in half and consumption is still level. At any rate, most of the worst of the housing slump might be over. The stock market is a more potent force by its impact on capital, goods and people.

The commodity bubble in base metals is a passing one. As China develops it will follow the path of the US and move from a real to a conceptual economy. Use of steel and commodities per GDP will decline. The energy problem is more serious.

News Roundup

The deathknells for Netflix sounded too soon. It is okay to be the best manufacturer of buggywhips. The number of subscribers grew to 5.6 million and quarterly revenue to $250.

News Notes

Iraq dominates the NYT editorial page. The five point "Containing the Disaster" editorial is probably a digest of the post election Baker report. Not in order of importance are; fire Rumsfeld, hold local and regional talks, stabilize Baghdad and lastly acknowledge reality. I do not think that Bush reads the NYT any more than he listens to Countdown. We can only expect more of the same.

China's impact on economic growth in developing nations might prove to be more important than all the foreign aid ever given. China's African summit
should not be "watched warily" but embraced. China can export growth in a way which more advanced economies cannot. Human resource development and training and investment will be more suitable to developing economies.

News Notes

Is Iraq a lost cause? Thomas Friedman, an early believer is losing faith. Yesterday 10 soldiers deaths were announced in Iraq. October is on track to be one of the worst months of the war.

Healthcare might be almost as decisive a topic as Iraq. David Leonhardt looks at why US healthcare does not seem to get as high a return on investment as other countries. It all depends on how you measure. US consumers want to pay more because they can. Another view is that too much money is spent in the wrong places by Boudreaux.

I have been watching a lot of Countdown, O'Reilly Report, Jon Stewart and Colbert. This New Yorker cartoon expresses the result of it all.

News Roundup

The most effective type of foreign aid is economic growth. Despite the recent Nobel to Muhammed does WalMart do more for developed countries. I think that although is doesn't feel right, it might be so.

News Roundup

CEO William McGuire to leave UnitedHealth. He will also reprice the options that he received from the low price of the year to the high of the year, forcing him to return hundreds of millions in paper profits. Whether this will allow him to repurchase his honor and avoid jail time is not yet answered.

Hedge funds might resort to insider trading. Many hedge funds are privy to insider information if they are lenders or are on creditor committees. They are responsible for maintaining Chinese walls in house. Many do not have trained compliance and disregard this rule and other rules as well.

Single country hedge funds are increasing in Asia. There were 225 in Japan at the end of 2005.

Recent economic numbers reduce the chances of an interest rate decrease in early 2007.

A good article by Muhammad Yunus, the recent recipient of the Noble Peace Prize.

Ryoma's Wife, Her New Husband and Her Lover

Does the women make the man or...? This play by Mitani Koki was the first that I have seen at the Japan Society and the first time I have ever seen a play with subtitles attempted. I am glad I know some Japanese because the subtitles were set off to the side. There were some sore necks after this performance I am sure. I enjoy plays with simple set and plot. The set was the one room apartment were Oryo settled with her second husband Nishimura Matsubei. He is the most pleasant character but clearly not anything similar to Ryoma Sakamoto. Why Oryo picked him was never made clear but she makes no attempt to climb the social ladder again. Sugano Kakubei who comes to bring her back for the 13th memorial service wants her to conceal her present to honor the past of Sakamoto. In fact he will kill her if she does not return with him. There is a three way combat for Oryo Matsubei, Kakubei and the Western looking Torazo.
Sometimes the comedy degenerates into scenes that are too cute. But there is a great scene about sake fermented with spit.

Stumbling on Happiness

How to be happy? Do not read this book for the answer. Stumbling on Happiness might give you clues why your level of happiness is what it is but not how to change it. He introduces the concept of synthetic happiness which means that people have a psycological immune system. People will like what they get not what they did not get. Or don't worry be happy. And if you like the book you will enjoy the film.

Imperial Hubris

Michael Scheuer likes checkables, or as most of us would say lists. I thus submit a list of lists.

Al Qaeda is described as a determined an almost invincible enemy in Michael Scheuer's Imperial Hubris.
Bin Laden's foreign policy goals are clear and have been announced many times;
- The end of US aid to Israel and the elimination of the Jewish State
- The withdrawal of all forces from Saudi Arabia and other Muslim states.
- End of US involvement in Afghanistan and Iraq.
- End of repression of Muslims by Russia, China and others
- Restoration of energy resources to Islamic owners
- Replacement of Western leaning Islamic regimes.

Because the US stands in the way of the achievement of these goals it is hated, not misunderstood.

The questions that the US needs to answer;

- Does it serve the national interest to protect Israel?
- Is John Adams correct when he says America must be the "well wisher of freedom and independence to all but the champion and vindicator only of our own"?
- Can the United States overcome the oil lobby to become energy independent?
- Does the United States need bases on the Arabian peninsula?
- Should the United States install secular democratic systems in countries that do not ask for them?

He also questions whether anyone can rule Afghanistan.
- Pashtuns will rule. Minorities will only temporarily control Kabul.
- The Afghans who matter are Muslim tribal xenophobes.
- Afgans cannot be bought.
- Strong governments in Kabul cause war
- Pakistan must have an Islamist, Pashtun dominated regime in Kabul.

News Roundup

The NYT pans one of my better performing strategies this year. However if there is a reason to believe that the market is trending buy writes are not all bad. It is not much more conservative that buying stocks but can enhance returns. I favor using short term options to capture quick theta decay and reduce risk of opportunity cost on the upside. The story Corporate America's Pay Pal confirms that corporate CEO pay is not market based but is part of a conspiracy.

In The Line of Fire

Watching Sunday morning talk shows discuss foreign affairs resembles listening in to firemen chatting. They might disagree with one another, but their lives have basically been shaped by the same experiences. That is why it is important to read books like In the Line of Fire by Pervez Musharraf. He is a tough soldier who has survived politics and brutal enemies to rise to the leader of Pakistan. He has some of the same enemies as the United States but he knows that he has to live with them. It will not serve to kill as many as possible and then go away. Musharraf might be a dictator to some, but the army's control of Pakistan is not absolute. He needs to negotiate and compromise with local powers. While not religious, he understands the power of Islam among his nation. There is a great interview with Musharraf promoting his book with Jon Stewart.

Other reviews:
WSJ

Leaving Microsoft to Change the World

" I feel lucky enough to know who I am, what I want to focus on, and the yardsticks by which I will measure myself". If you cannot say that about yourself you need to read this book. Leaving Microsoft to Change the World sets a standard for books written by the new philanthropists. They are aggressive and driven people who have been successful and made money faster than any generation before them. Some of this new money generation continue to use money as the only yardstick for success. Bill Gates and others, as John Wood notes are, as the Dalai Lama says, "lucky enough to have had a good life and recognize it as a gift and look out for others who might need help".

Not many business books have scenes which move the reader. My favorite was the one pictured on the cover; the Yak delivery of the first books to the first library greeted by the crowd of children. Equally interesting are some of the Bill and Balmer stories of Microsoft. Scheduling and scripting Gates trip to the minute including laundry delivery only to be confounded by the whims of Bill would be enough to drive most from business.

Lessons from Microsoft and business are sorely needed in many non-profits. Established foundations and charitable organizations often evolve into bureaucracies which while they continue to deliver good works are distracted by internal politics. Two of Wood's five guidelines for organizations, an intense focus on results and driven by data, might even be seen as inappropriate in some charities. How many charities, or for that matter organizations, can retain the passion once the charismatic founder departs.

For the middle aged boomer ego this book could be a dangerous read. Wood carried his success at one of the best businesses in America to the charitable world. Few can claim to have reached even the peaks that he saw in business. And those who have been successful in the commercial world are left feeling shallow in the shadow of his deeds.

"Do not try to be anything but what you are and try to be that perfectly.

Suggested books:
How to Practise: The Way to a Meaningful Life
Unfinished Presidency

Wedding Family

Mary, Joe Kathryn, Paul and John pose in the classic spot for the wedding day pictures.

Wedding Day

State of Denial

Woodward's book State of Denial is certain to have an impact on the election. It is now ranked number 2 on the New York Times non-fiction best seller lists. As with all of Woodward's books State of Denial straddles the line of fiction and non-fiction. His liberal use of quotation marks and descriptions of thoughts have become trademarks of his works.

It is an easy and compelling read; I finished the book in two days. While there are snippets of new information about the role of Henry Kissinger and Prince Bandar bin Sultan as advisers to the Bush administration, much of the book confirms prior assumptions. Even Bush supporters are likely to acknowledge that he lacks intellectual curiosity and depth. Rumsfeld's arrogance and micromanagement style are well know and may even be part of his attraction to some.

Richard Armitage gives a memorable quote about leaving large organizations; "When you pull your fist out of a pail of water, remember you do not leave a hole".

Other Reviews
NYT
WSJ