Legacy of Ashes by Tim Weiner

New, Unpublished Material!  Back in 2010 I hit the wall, losing the ability to write new book reviews.  Then family matters took a big portion of my time - and still do.  However, the desire to write has returned and am I am happy to start things off by publishing this incomplete post I started to write two years ago but never finished.  I hope you enjoy it.  It is good to be back.


Subtitle: The History of the CIA

It was the right time in my life to read a book about the history of the United States Central Intelligence Agency (CIA). The impression I had conjured up of the agency was still strongly based on the wild fascinations of my youth - one part Mission Impossible, one part gifted linguists, a touch of the Berlin Wall and deep KGB penetration as the garnish. Not the definition to carry me into this new decade at hand especially considering how this ongoing belief somehow prevented me from developing an updated opinion that took into account the blunders and deficiencies of the organization I was coming across in both history texts and current journalism. 

It is not my intention to base my opinions of the CIA on one book. There are always two sides to the story. However, it is fair to say that The Legacy of Ashes gives a solid starting point to begin the formation of one's opinion. It is a book whose every statement can be supported by documentation. The Notes section alone is 172 pages long. It is not a page turner packed with gripping stories of espionage. It is actually rather dry and the author, a NY Times journalist with years of experience covering the CIA, makes no intention for it to be anything but. It is an important piece of American history needing to be written in order to raise the curtains and open the windows of a shadowy organization. It does not bode well for the reputation of the CIA.

The CIA was born out of the intelligence arm of the military, the OSS, used during World War II. After the war's end, Harry Truman turned to them to provide information regarding the intentions of the Soviet Union. It was meant to provide almost newspaper-like details to foreign affairs which the president could refer to when needing to make decisions on foreign policy. Along the way it morphed into an entity consuming vast amounts of resources to promote democracy over the contaminating communist forms of government which were developing throughout the world. Instead of infiltrating the the communist parties in places like Greece, Italy, small Latin American countries and later Indonesia and Vietnam with agents capable of providing valuable intelligence, they used other, simpler and less-effective tactics. It was surprising to see how the majority of their efforts were concentrated on the financing of radio stations, newspapers, and democratic parties who they deemed capable of promoting democracy. Though this "push" form of marketing democracy may have promoted itself as superior to communism, it did little in providing intelligence.

The book continually sites examples where the CIA, with its thousands of agents scattered throughout the globe, time after time failed to foresee significant events that would happen in the specific countries they were suppose to be monitoring. Often these small, satellite countries with upcoming communist leaders such as Honduras or Vietnam received a disproportional amount of attention, and none the less saw events occur that the CIA was unprepared for.  On the other hand, the one country which required the most precise intelligence, the Soviet Union, proved to be a place they knew so little about. Their information was consistently inaccurate.

"The CIA would come in and paint the most scary picture possible about what the Soviets would do to us. They had charts on the wall, they had figures, and their conclusion was that in 10 years, the United States would be behind the Soviet Union in military capability, in economic growth. It was a scary presentation. The facts are they were 180 degress wrong. These were the best people we had, the CIA's so called experts," said former President Gerald Ford who sat on the secret budget committee for CIA funding in the 1960's.

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Nexus by Mark Buchanan

Subtitle: Small Worlds and the Groundbreaking Science of Networks

I am fascinated by networks. Certainly the social networking websites currently available are revealing in a less abstract manner how far our connections are really spread. The most rewarding aspect of joining these sites was the initial 30 minutes after having signed-up when you were quickly reconnected with ex-colleagues and long-forgotten high school acquaintances. From there it is mostly downhill and I am still amazed by those who find so many non-commercial ways to occupy their time posting, tweeting and chatting away.

I spend little time on these sites and am becoming more and more skeptical that they will be able to retain their entertainment value (and massive subscriber growth) before being besieged by individuals and companies trying to push their products and services on you. A recent interview from a Pepsi marketing manager I unfortunately saw on CNN should give a clear indication of what is to come. Pepsi's desire to have a "conversation" with its customers does not bode well to those who find a large aspect of Facebook's appeal to be the limited advertisements pasted on its pages.

However, I do confess to having a soft spot for LinkedIn. It has focused on the business community from day and is now evolving into a profitable company with a clear business model. By being a site catering to business users, it is somehow more justified to find ways to drive revenue - a luxury not necessarily granted to Facebook.

LinkedIn is so great because it allows the users to really see the reach of their networks. By using the "people" search function on the site, I discover to have contacts in Madagascar, Saudi Arabia and Suriname and all of them are only one contact removed from me - meaning that they are connected to someone in my own 170-person network. 20 years ago these same networks existed but it was just much harder to visibly construct them.

The premise of Nexus is that there is scientific evidence demonstrating how the network that links the six billion of us is not completely random in nature but actually has a certain structural configuration. The author then demonstrates how such network structures are not just relevant for human acquaintanceship.

Buchanan introduces the argument by referring to a fascinating experiment conducted by the psychologist, Stanley Milgram in the 1960s. I was familiar with Milgram for the famous test that bears his name yet was unaware he was also credited what came to be know the "six-degrees of separation".

In the Six-Degrees test, Milgram mailed at random letters to people living in Omaha, Nebraska and asked them to forward the letter to a stockbroker friend of his in Boston. He provided no address for the stockbroker but instead asked them to send it to someone who they believed to be "socially closer" to him than they were. Most of the letters made it to his friend as each subsequent recipient forwarded the letter to the next person applying the same request. The most surprising aspect was that it did not take hundreds of mailings but six.

It was then the work of two other academics, Watts and Strogatz, who when further studying Milgram's test, found these six-degree connections to be neither orderly nor random but somewhere in between. These patterns took on an even greater significance when they started examining other types of networks such as electric power grids, human brain cells or the world wide web only to discover clear similarities in all of them.

Before returning to the book, let's look at an example given by one of my professors, Dr. Karen Stephenson, during my graduate studies that should help in understanding how these networks are patterned:

Think of the organization you work in. Most likely it has some type of hierarchical structure of management. Yet by looking at this pyramid, does it really show how the organization is networked together? It is true that the person at the top holds a lot of decision making power but it is certainly bound to be the case that individuals scattered throughout the ranks wield a disproportional amount of network power. These linchpins are the types of people you go to for questions, information or advice and most certainly others turn to them as well.

If every person in the organization drew lines to each person they contacted throughout the day for a question or advice and then all of these drawing were compiled together, you would see a web-like structure emerge. In this web certain people would be crucial "hubs" as they would appear as being connected to a lot of other people as well. Interestingly enough, it is probably the people towards the top of the pyramid who have the fewest connections to others in the organization.

This type of network formation exists in all the communities we interact with on a daily basis. Yet how is it that we are connected in such a short number of steps to people on the other side of the globe if we interact only with our local communities? It is by people acting as "bridges" to other groups far beyond the ones we are involved with at a local level. The exchange student you still keep in touch a couple times a year via email serves as a bridge to her entire network of friends and family back home. Lose connection with her and this whole world (even if you are in no way actively apart of it) disappears.

As stated earlier, this network layout applies to other areas of science as well. One of the more vivid examples is the development of the world wide web. Internet pages are being developed randomly and frequently. However if you look at the links between all of the billions of web pages, you find once again Internet pages acting as "hubs" and a certain order to the random development. What it also means based on the study that examined the network of the web is that even as another billion webpages are added, the number of clicks required to navigate will not change by more than one or two clicks.

These "small world networks" thus make information, electricity or gossip travel much faster than a world without them.

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The Girl with the Dragon Tattoo by Stieg Larsson

When I was home in Seattle a few months ago I took a trip to my favorite book store, The Elliott Bay Book Company, in Pioneer Square - the city's most historic neighborhood. Unfortunately, it was most likely my last visit at its current location. The bookstore is preparing to move to another part of the city. Considering the fate of many independent bookstores, this outcome is far from terrible. And reflecting on it objectively, I should actually be happy.

For those of you unfamiliar with Seattle, Pioneer Square captures perhaps the last glimpse into the origins of our modern city. While I have a hard time believing the commercial- residential buildings constructed in the last decade that include a Quizno's Subs and tanning salon on the ground floor will withstand the tests of time from an architectural standpoint, Pioneer Square with its brownstone edifices offered something different. This "difference" also included the aroma of stale beer and urine on the vast majority of its sidewalks. Yes, Pioneer Square is truly dying and with the loss of Elliot Bay it's destined to become an urban carcass of its former self. Notwithstanding the verbal assault by numerous panhandlers and con artists, I thoroughly enjoyed the trips into Pioneer Square to visit the bookstore. There is a certain sense of loss. Yet as I already said, the move will actually benefit me because Elliot Bay will now be located in an area I actually do frequent for its nightlife.

It was exactly for this reason that Elliot Bay was forced to move locations after a very difficult last 12 months in terms of sales. An independent bookstore relies on foot traffic, especially in the evening. And you can trust me that those going out in Pioneer Square after dark were not the same market segment likely to pop into the reading room to hear an author present her latest work.

I respect Elliot Bay's store as well as its business model and wish it the best of success! We should all be cheering it on as the outcome "post-move" will tell us a lot about what businesses will work and which will fail in the future. One mantra of business strategy is based around the belief that a company must either focus on being a cost leader or a high value-add specialist. Finding yourself in the middle is a recipe for disaster due to the competition you will face from both sides.

Elliot Bay Bookstore does not discount its books. In the days of Amazon, I know it is a hard concept to grasp that a bookstore may actually sell its goods at the list price found in small print on the back of the cover. But it is the case. They do this because they clearly recognize that a war based on price cannot be won against the likes of online retailers or massive chain stores. What they do offer is exceptional staff who know what they are talking about. My favorite thing to do there (and what can also be done in an excellent music or wine shop) is to go in with a set amount you want to spend, say $100, and let them recommend different books for you based on your interest. It is a great way to get guidance in new directions you may have not normally ventured and it is not something Amazon can offer you - even though they try.

However, as this move is eluding to, the specialization they are offering may still not be enough. It is my belief that our ever enduring quest for low prices is devastating large aspects of value and we are not fully aware of it. This value is what lies between a normal versus a basement bottom price. Before parting on too extreme of a tangent, I will just say that the subject of pricing will be further addressed in an upcoming post.

And how is this connected to The Girl with the Dragon Tattoo? I was in Madrid last July. It was a balmy afternoon and we had made an appointment to meet a friend who was getting off work for her lunch hour. She arrived toting the huge, hardback copy of this book. She was in full addiction mode and was unwilling to part with it even on her lunch break.

During my discussion with a salesperson at Elliot Bay a few months back, I noticed my basket of books becoming disproportionately overrepresented with non-fiction and I therefore asked him for a good piece of 2009 fiction. He pointed me towards this book and thinking back on my friend in Madrid, I grabbed it without hesitating.

It is certainly an engrossing story which combines mystery, sex, violence and Sweden. I consumed it in a couple of days much in the same way I would plow through a good TV series if I had the whole thing on DVD. It is entertainment above all else.

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Straw Dogs by John Gray

Subtitle: Thoughts on Humans and Other Animals

I have confessed in other postings that my background in philosophy is far from profound. However, it is a subject (in a very broad definition) that is calling out to me with greater regularity. I have read few of the great works and each attempt to do so thus far has been a struggle. On the other hand, I am always in search of modern day thinkers from whatever academic discipline who are writing about society in a more robust, and shall we say, philosophical context. It is very difficult to do so without tying in the arguments of some of history's great minds and therefore provides me a way to slowly develop a better understanding of some of their principle theses. Wrapped in the discussion of modern society makes it a much less abrupt approach.

One of my favorite current writers is Nassim Taleb, renown author of Fooled By Randomness and later The Black Swan. In an interview I saw of him he recommended two modern scholars - Karen Armstrong and John Gray - for their intellectual excellence in their respective fields. Gray is the former professor of European Thought at the London School of Economics and author of several books. He has written on globalization, religion and philosophy. As is often the case, shorty after being introduced to him and his works, I came across several articles reviewing a recently published book of his.

Straw Dogs was published in 2002. It is a collection of musings stitched together by Gray's underlying belief that humans, in their rather modern distortion of humanist thought, have essentially created a new faith but fails to recognize it as such. This form of humanity, grounded in its roots of Christianity, is based on progress and mankind's ability through such progress to create a better world. Gray argues that "to believe in progress is to believe that, by using the new powers given to us by growing scientific knowledge humans can free themselves from the limits that frame the lives of other animals."T his humanistic vision of progress, outside of science, is a myth fabricated only recently in Western society. It was not long ago when humans thought of themselves as equal to other animals. In many cultures they were even worshiped by humans.

Gray recognizes that humans are a highly developed, and incredibly destructive species. Since our arrival in the New World 12,000 years ago, approximately 70% of the world's species have been eliminated which is quickly approaching the same number caused by whatever event, most likely a meteor, wiped out the dinosaurs 65 million years ago.

At the same time, our destructive species is raging on in fierce debate about how - through science - we can save the earth from the overheating caused by greenhouse gases. Perhaps it is Earth's means of ridding itself us?

Ironic to me is how many of the central responses to climate change revolve around the use of elaborately developed technological tools to save us from such overheating. Humans have never been farther removed from nature as they are now. It is through the abandonment of certain forms of technology that we will make the easiest and fastest gains in this battle. Changing the way we eat based on a diet of local vegetables and occasional meat consumption and distancing ourselves from the meat industry would make enormous gains. Walking or bicycling as opposed to the frequent use of the automobile is a very simple concept that proves incredibly difficult to grasp. In a later chapter Gray reminds us that the average American puts in 1600 hours in the car to get 7500 miles: less than five miles per hour. Not much more than what someone would walk in the same time. It is obvious the automobile represents more to us than a form of transportation.

Straw Dogs is not a book on environmentalism, however the example demonstrates a certain fallacy in human thought based on scientific progress. Many other such anecdotes make up the remainder of the book though I found they begin to stray more and more from his central thesis along the way. Nonetheless, they are fascinating and provocative. It is a book that does not need to be read from start to end but can be "dipped into at will" as well. Either way, it will get you thinking.

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The Dain Curse by Dashiell Hammett

After three rather arduous non-fiction reads, I was more than eager for a quick injection of crime mystery, one of my favorite fictional genres. Hammett, most famous for The Maltese Falcon, is certainly one of the most well-regarded American mystery writers. And it was a late night viewing of The Maltese Falcon with its solid performance from Bogart and a quirky and devilish Peter Lorre as Joel Cairo that prompted me to dive further into the works of Hammett.

It is clear that Hammett knows what he is writing about after having been a private investigator for many years. His writing style is tight, direct with no superfluous words. In both The Maltese Falcon and The Dain Curse the stories move at a breakneck speed. To be honest, some time the speed and number of characters in the latter was too much for me. I often had to flip back a few chapters to remind myself who was who and what had they done. The book does not disappointment but it did not leave me floored either.

What crime/mystery writers do you like?

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When Markets Collide by Mohamed El-Erian

Subtitle: Investment Strategies for the Age of Global Economic Change

As 2009 comes to a close and we prepare for the unknowns of 2010, it seems a just time to quickly summarize the current status of our global economy.

There is a global shift taking place from the traditional power centers - the U.S. and to a lesser degree Western Europe - towards heavily populated, emerging players. This shift, which would have taken place even without the near collapse of our financial system, is now intertwined with the decisions made to stave off disaster over the last year.

The United States acted as the motor for growth and consumption over the last fifty years. The American consumer has driven this consumption, especially over the last twenty years, through debt. We are all aware this can no longer occur and a shift towards savings and debt repayment means consumption will have to come from elsewhere. This U.S. led consumption has made an enormous impact on other countries as well. By importing more goods than it exported, the U.S. generated a large current account deficit resulting in the sending of vast sums of US dollars to the exporting countries. Oil producing nations have likewise accumulated hundreds of billions of dollars due to the exporting of oil to the U.S. and other rich world countries. Amassed with US dollars these countries through vehicles such as sovereign wealth fund, are seeking a home for their liquid dollar assets - from homes on the French Riviera to large stakes in Morgan Stanley.

As exporting nations have been producing goods for the U.S. at low cost, they have put ever more demand on natural resources (commodities). They have begun to see an upward pressure on wages as their local economies grow. Both of these factors, demand for commodities and increasing wages, will fuel inflation. Add on top of this the government spending in the rich world in the forms of various stimulus plans and inflationary concerns abound even though we are currently in a quasi-deflationary period.

Basic demographics are also changing with Europe's population getting older, the US being in between and countries such as Brazil possessing a rather young population. Governments will have to respond accordingly as they struggle to provide the services these population segments require. Demands for certain goods and services will become more relevant based on these shifts.

The above encapsulation of global economics is the context within which El-Erian, the world's largest bond investor, and former directer of Harvard's Endowment fund, frames this concise and relevant text. The majority of the book is spent setting the stage for what is to come and what has developed over the last few eventful years.

He then attempts to outline measures that can be taken to benefit from these shifts taking place. How as investors can we accumulate the wealth needed to support a prosperous future? And, equally as important, how can we counter balance our portfolios to prevent massive loss through huge downswings in markets or erosion of certain asset classes due to inflationary effects?

I am no longer in possession of the book so I can only recall what stayed with me since I read it over one month ago. This will have certainly been meshed together with my own beliefs. Perhaps this is a more useful exercise. Some points for investing in the future:

1. Develop a view of the global economy and dedicate a certain percentage of assets to the shifts you believe likely to occur. If inflation is a concern due to rising wages in Southeast Asia, commodities, real estate or inflation protected securities will be safer bets than cash or certain types of equities.

2. Watch out for "home bias". Investors have the tendency to buy stocks from their home country, especially in the U.S. but also in other countries as well. Active Swedish investors place 48% of their invested money in Swedish stocks even though Sweden makes up 1% of the global economy (Thaler & Sunstein, 2008). Investing in what you know makes sense up to a certain degree but does not warrant such a disproportional approach. This is equally true in the States where a robust and transparent equity market warrants a large percentage of investment focus but not the absurdly high percentages most Americans have in their home market.

3. Emerging Market Government Bonds can essentially be grouped with more traditional bond types as their government balance sheets are in healthier shape than many more traditional markets, e.g. Greece and Ireland.

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