I have a shelf of international security books I acquired in 2005-11 as I was developing possible PhD topics. When the Egyptian Army deposed President Morsi this week I thought of my secondhand copy of John Samuel Fitch’s The Military Coup d’etat As Political Process: Ecuador, 1948-1966 (Baltimore, MD: John Hopkins University Press, 1977). I thought about a Political Islam course I took with Shahram Akbarzadeh in 2006, and the military’s role in Egypt’s history. Then I looked at the financial markets for event arbitrage opportunities I had missed. Two weeks ago, the Market Vectors Egypt Index ETF (NYSEARCA: EGPT) had predicted a political change, and then rallied after news of the coup d’etat, in a trend-following pattern. The Dow Jones Egypt Total Stock Market Index (EGP) had risen, whilst the Egyptian pound $EGP had fallen against the $US dollar. Someone has read Andrew Busch’s World Event Trading: How to Analyze and Profit from Today’s Headlines (Hoboken, NJ: John Wiley & Sons, 2007) and ‘shorted’ Egypt’s currency cross-rates. Alternatively, this might all be a case of Nassim Nicholas Taleb’s narrative fallacy.
Antifragile: How Things Gain From Disorder by Nassim Nicholas Taleb (New York: Allen Lane, 2012). (TS-5) (MAM-5). Taleb (Fooled By Randomness, The Black Swan, The Bed of Procrustes) is a former options trader and philosopher who focuses on the ontology and epistemology of uncertainty. Antifragile develops a via negativa philosophy about things that benefit from disorder and shock: vega and long gamma exposure in stock markets; post-traumatic growth in medicine; and cultivating ‘optionality’ and the ‘barbell strategy’ as ways to deal with Hazard, chance, and life stressors (preferably of short duration followed by recovery). Taleb rails against ‘fragilistas’, ‘touristification’ and details a range of Black Swan errors that humans and social institutions can fall prey to. He constructs a dense personal, subjective universe that needs its own glossary to decode. Antifragile’s mix of analysis, critique and personal memoir would have benefited from an editor but is filled with Taleb’s philosophical insights. For a specialist view of vega and long gamma see Robert A. Schwartz, John Aidan Byrne and Antoinette Colaninno’s Volatility: Risk and Uncertainty in Financial Markets (New York: Springer, 2011) (TS-4) (MAM-4). For an historical counter-view to Taleb on vega and risk see Aaron C. Brown’s Red-Blooded Risk: The Secret History of Wall Street (New York: John Wiley & Sons, 2012) (TS-3) (MAM-3).
Every Love Story Is A Ghost Story: A Life of David Foster Wallace by D.T. Max (New York: Viking, 2012). (TS-3). David Foster Wallace (1962-2008) was a United States novelist, short story writer and essayist best known for the maximalist novel Infinite Jest (New York: Little, Brown, 1996) (TS-5). D.T. Max’s autobiography is a cathartic and confronting exploration of DFW’s development as a humanist, philosophical writer, his impact on academia and popular culture, and his personal demons. DFW struggled with depression and nervous breakdowns at Amherst to write the Wittgenstein-influenced novel The Broom of the System (New York: Viking Press, 1987) (TS-3). Infinite Jest combined a critique of popular culture with DFW’s experiences in Alcoholics Anonymous, and brought him major critical acclaim and commercial success. In some ways this could be interpreted as de facto Recognition (‘the most influential writer of his generation’) which DFW was unprepared for, and which attracted criticism from Bret Easton Ellis and other writers. Max is unflinching about how DFW dealt with this disproportionate success and includes some reflective correspondence with Don DeLillo, Jonathan Franzen and other writers. DFW would spend over a decade writing his unfinished novel The Pale King (New York: Little, Brown, 2011) (TS-3) and struggling with Buddhist mindfulness practices. He articulated this philosophical shift in his commencement speech ‘This Is Water’ delivered at Kenyon College in May 2005 and available on YouTube. Perhaps what DFW missed was a balanced initiatory sense (which developed from Infinite Jest to The Pale King) and the appropriate psyche-strengthening resources and skills to overcome his suicidal ideation. DFW’s papers are now housed at the University of Texas at Austin.
More Than You Know: Finding Financial Wisdom in Unconventional Places by Michael J. Mauboussin (rev. ed.) (New York: Columbia University Press, 2008). (TS-3) (MAM-1). Mauboussin is Chief Investment Strategist at Legg Mason Capital Management and Adjunct Professor of Finance at Columbia Business School. More Than You Know is a guide for investment strategists to find alpha (actively managed returns in excess of a performance benchmark — or, philosophically, what is psyche-enhancing in your life). It is an accessible guide – influenced by Edward O. Wilson’s ‘consilience’ integrative approach – to current thinking about behavioural finance, market microstructure (how market design and transaction costs impact price activity), portfolio management, and how the emerging sciences can be applied to investment management, idea generation, and decision-making. The essay structure in More Than You Know also highlights the importance of metacommunication in conveying new insights to different audiences: this is a book about how the exploratory search for investment and trading ideas can lead to new applied knowledge and can refresh strategic thinking. For an overview of Mauboussin’s interest in the emerging sciences, fitness landscapes, and economics see Eric D. Beinhocker’s The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics (New York: Random House, 2006) (TS-3) (MAM-3). For an in-depth conceptual and historical account of model-making in economics, game theory and macroeconomic simulations see Mary S. Morgan’s The World In The Model: How Economists Work and Think (New York: Cambridge University Press, 2012) (TS-4) (MAM-4).
How Much Is Enough? The Love of Money, and the Case for the Good Life by Robert Skidelsky and Edward Skidelsky (London: Penguin Books, 2012). (TS-3) (MAM-3). In 1928, the economist and philosopher John Maynard Keynes spoke to Cambridge University undergraduates on ‘economic possibilities for our grandchildren’. The Skidelskys set out to examine how and why Keynes’ forecast has failed to occur. This book generated a sustained public debate about consumption, work productivity, and income inequality in London’s Financial Times and other media outlets. The ‘insatiability’ of work, Faustian and self-interested economics, and shifts in global attitudes to wealth are considered. The Skidelskys debate the Club of Rome’s Limits to Growth World-3 simulation forecast and its ‘overshoot and collapse’ scenario; happiness economics; and what a ‘good life’ consists of. They conclude that a philosophically-oriented worldview that cultivates the Good is healthier than a consumption-oriented life. For the historical context of the shift from Keynes to Faustian and self-interested economics, and the key personalities involved, see Jeff Madrick’s Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present (New York: Vintage Books, 2011) (TS-3) (MAM-3). If you aspire to the 1% then Chrystia Freeland’s Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else (New York: The Penguin Press, 2012) (TS-3) (MAM-3) might convey why this was a highly visible socio-political issue in 2012.
The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors by Gregory Curtis (Hoboken, NJ: John Wiley & Sons, 2012). (TS-3) (MAM-3). Curtis is founder of the wealth advisory firm Greycourt & Co. The first third of this book explores Curtis’s views on creative capital, wealth management, government policies, capital and financial markets, and risk. The second third deals with advisors, family investment decisions, and trusts. The third deals with asset allocation and portfolio decisions including equities, international markets, real estate, fixed income, and alternative investments (including hedge funds and private equity). Curtis addresses money managers, tax minimisation strategies, investment policy statements, and the myths of wealth, the rich and happiness. A website has further chapters and resources. If you are considering a career in private wealth management then you might consult G. Victor Hallman and Jerry S. Rosenbloom’s Private Wealth Management: The Complete Reference for the Personal Financial Planner (8th ed.) (New York: McGraw-Hill, 2009) (TS-4) and Harold Evensky, Stephen M. Horan and Thomas R. Robinson’s The New Wealth Management: The Financial Advisor’s Guide to Managing and Investing Client Assets (Hoboken, NJ: John Wiley and Sons, 2011) (TS-4) which outlines the CFA Institute’s approach.
The Signal and the Noise: The Art and Science of Prediction by Nate Silver (New York: Penguin, 2012). (TS-3) (MAM-3). Silver is a United States statistician and ‘sabermetrics’ (sports statistics analyst) whose blog FiveThirtyEight (currently hosted by The New York Times) achieved a highly accurate forecast of the 2012 United States election outcome. The Signal and the Noise outlines Silver’s Bayesian approach to forecasting and prediction, including under what conditions these may fail. His methodology uses Big Data, model building, probability, analytics, inference testing, and other tools. If you grapple with uncertainty or to use statistics insights in organisational management, Silver’s book may be a useful introduction to a rapidly growing field. Jim Manzi’s Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society (New York: Basic Books, 2012) (TS-3) argues for the use of induction, randomised trials, and experimental social science in government, political administrations, and the diffusion of social innovation.
Market Sense and Nonsense: How the Markets Really Work and How They Don’t (Hoboken, NJ: John Wiley & Sons, 2012). (TS-3) (MAM-3). Schwager is a futures market expert whose four volume Market Wizards interview series (1989-2012) have status amongst traders as mouth-to-ear initiation. Market Sense and Nonsense collects Schwager’s insights on capital preservation; market experts and the investment media; why he feels the Efficient Market Hypothesis doesn’t always work; and lessons on evaluating past returns, volatility, risk, hedge funds, mutual funds, and portfolio management. A strategic primer for new investors to understand how capital and financial markets work, and how to critically evaluate advice, media, and other information sources.
Why I Left Goldman Sachs: A Wall Street Story by Greg Smith (New York: Grand Central Publishing, 2012). (TS-3) (MAM-3). On 14th March 2012, The New York Times published Smith’s op-ed ‘Why I Am Leaving Goldman Sachs’. In the NYT op-ed and this follow-up book Smith adopts a ‘whistleblower’ stance about the cultural change he believes the investment bank Goldman Sachs has undergone from client-oriented service to extractive rent-seeking and proprietary trading. This rushed-to-publication book doesn’t live up to the promise of Smith’s op-ed and “muppets” claim about how Goldman Sachs views its clients. However, it can be read as a firsthand, somewhat initiatory account of Smith’s transformation from idealistic intern in 2000 to disaffected sales trader and manager in 2012. Were there ethical dilemmas, shadow projection, or a combination? The reaction to Smith’s book particularly from NYT Dealbook editor-at-large and CNBC co-anchor Andrew Ross Sorkin offers lessons in framing and metacommunication about ethical dilemmas. For an historical and contemporary overview of Goldman Sachs and its investment bank culture see Charles D. Ellis’s magisterial The Partnership: A History of Goldman Sachs (New York: Allen Lane, 2008) (TS-3) (MAM-3) and William D. Cohan’s reportage Money and Power: How Goldman Sachs Came To Rule The World (New York: Penguin Books, 2011) (TS-3) (MAM-3).
Octopus: Sam Israel, The Secret Market, and Wall Street’s Wildest Con by Guy Lawson (New York: Crown Publishers, 2012). (TS-3) (MAM-3). I first heard about the Octopus power elite conspiracy from parapolitical researcher Kenn Thomas and later from open source intelligence advocate Robert David Steele. Octopus resurfaces in this biography of Bayou Group hedge fund founder Samuel Israel III who had $US117 million in debts and trading losses. Israel attempts to enter a purported high-yield bond debt ‘secret market’ involving the Rothschilds and other elite banking families. The first third of the book deals with Bayou’s Ponzi scheme; the second with how Israel becomes ensnared with conspiracy theorist Robert Booth Nichols; and the third with the fallout involving international prime bank fraud. This is a cautionary tale of multiple cons and marks; the ‘medial’ conspiracy netherworld; and the failure of reality-testing. Israel might have benefited from Mark Schindler’s Rumors in Financial Markets: Insights Into Behavioral Finance (Hoboken, NJ: John Wiley & Sons, 2007) (TS-4) and Jeffrey A. Winters’ Oligarchy (Cambridge: Cambridge University Press, 2011) (TS-4).
The New Machiavelli: How to Wield Power in the Modern World by Jonathan Powell (New York: Vintage, 2011). (TS-3). Jonathan Powell was Tony Blair’s Chief of Staff from 1994 to 2007. The New Machiavelli is a defence of applied Machiavellian realpolitik from The Prince and The Discourses that draws on Powell’s unpublished diaries and his political administration experiences. Powell discusses the Blair Government’s rise-to-power; Cabinet, Chancellery, and Civil Service negotiations; the importance of multi-stakeholder decision-making and strategic thinking; and how the Blair Government dealt with Europe, geopolitical crises, scandals, and war. For Powell, Blair was a leader who benefited from both Fortuna and also from heeding Machiavelli’s insights about people, persuasion, and leadership. For a comparative analysis of Machiavellian leadership and statecraft in the contemporary era see Carnes Lord’s The Modern Prince: What Leaders Need To Know (New Haven: Yale University Press, 2003) (TS-3) which considers states, regimes, elites, and the various levers of national power (such as economics, diplomacy, force, intelligence, education, and strategic culture). Jeffrey Pfeffer’s Power: Why Some People Have It – And Others Don’t (New York: HarperCollins, 2010) (TS-3) considers power in organisational culture and leadership.
Wait: The Useful Art of Procrastination by Frank Partnoy (New York: Public Affairs, 2012). (TS-3). Partnoy is the George E. Barrett Professor of Law and Finance at the University of San Diego and a former investment banker at Morgan Stanley. Wait examines evidence and insights from diverse sources—sport, high-frequency trading, neuro-marketing, information economics, and fighter pilot training—that delaying our decisions can give us situational and strategic advantages. This book is pitched at a Malcolm Gladwell audience but with more substantive research and interviews. Partnoy introduces ideas that have become very influential in their fields, such as George Akerlof’s ‘market for lemons’, and John Boyd’s OODA loop (observe, orient, decide, act) which is situated in Grant T. Hammond’s The Mind of War: John Boyd and American Security (Washington DC: Smithsonian Institution, 2001) (TS-4). The late Amos Tversky and Daniel Kahneman’s work on cognitive biases and decision heuristics is detailed in Kahneman’s Thinking, Fast and Slow (New York: Penguin Books, 2011) (TS-1) (MAM-1).
Willpower: Why Self-Control Is the Secret to Success by Roy F. Baumeister and John Tierney (New York: Penguin, 2011). (TS-3) (MAM-3). Baumeister is the Francis Eppes Professor of Psychology at Florida State University. Willpower is the first popular account of Baumeister’s influential research program into emotional self-regulation, self-control, cultivating will, and the danger of ego depletion: perhaps the key to world-building. Baumeister and Tierney discuss current psychological research on will; the design of personal productivity tools; decision heuristics; self-help programs; parenting; dieting; and other topics. This is a gateway to academic research by Baumeister, Kathleen D. Vohs and others about self-control and experimental social psychology — where the insights and writing can surpass Tierney’s journalistic account here.
The Archaeology of Mind: Neuroevolutionary Origins of Human Emotion by Jaak Panksepp and Lucy Biven (New York: W.W. Norton & Co., 2012). (TS-3). Panksepp is a Professor at Washington State University and this book presents his affective neuroscience research program for a broader audience. Panksepp’s research examines how deep brain systems and affective consciousness can affect humans and animals, and might be part of the neuro-evolutionary roots of archetypes, legends and myths. He has identified several deep brain systems—seeking (expectancy), fear (anxiety), rage (anger), lust (sexual excitement), care (nurturance), panic/grief (sadness), and play (social joy)—that shape the neuro-biology of the core self. This book considers how the frontier research on brain emotional systems can affect our mental life and philosophy. Panksepp’s popular account here is supported by a growing number of highly cited academic research papers and collaborations.
The 4-Hour Chef: The Simple Path to Cooking Like a Pro, Learning Anything, and Living the Good Life by Timothy Ferriss (Las Vegas, NV: Amazon Publishing, 2012). (TS-3). Ferriss (The 4-Hour Workweek) is a raconteur who shifted from self-promoting author to popular blogger and adviser for entrepreneurial start-ups and venture capital. The 4-Hour Chef is Ferriss’s guide to accelerated learning using cooking as a domain of expertise. Ferriss’s framework of DSSS (deconstruction, selection, sequencing, and stakes) and CaFE (compression, frequency, and coding) is a distillation of techniques that Richard Bandler, John Grinder and Robert Dilts developed for Master Practitioner courses in Neurolinguistic Programming, and that were previously outlined in Leslie Cameron-Bandler, David Gordon and Michael Lebeau’s The Emprint Method: A Guide to Reproducing Competence (Moab, UT: Real People Press, 1985) (TS-3). However, Ferriss is able to use metacommunication skills to reach a broader audience: this is a book to be closely studied for how Ferriss distils and presents information, as well as his advice on transferring competence. For two comparative models on developing expertise see Brett N. Steenbarger’s The Daily Trading Coach: 101 Lessons For Becoming Your Own Trading Psychologist (Hoboken, NJ: John Wiley & Sons, 2009) (TS-3) and Robert Greene’s Mastery (New York: Viking, 2012) (TS-3). Cook Ferriss’s recipes at your own risk—and remember to send me some ‘food porn’ photographs.
The Net Delusion: How Not To Liberate The World by Evgeny Morozov (New York: Penguin, 2011). (TS-3). In a former life I edited an alternative news website and was a senior researcher on the sociology of the internet for a university research consortium. Morozov’s Net Delusion and his Twitter feed (@evgenymorozov) are one of the wittiest, scathing critiques of the democracy-internet nexus promoted by Wired, Fast Company and Red Herring magazines and by TED’s popular talks. Morozov in the past has been funded by the Open Society Foundations funded by George Soros. Amongst the book’s insights are an exchange between Aldous Huxley and George Orwell about oligarchical social control; how authoritarian regimes use the internet and social networks; how ‘internet freedom’ can have propaganda elements; and the technological determinism embedded in many internet histories. Morozov’s next book is To Save Everything, Click Here: The Folly of Technological Solutionism (New York: Public Affairs, 2013).
The Twilight War: The Secret History of America’s Thirty-Year Conflict With Iran by David Crist (New York: The Penguin Press, 2012). (TS-4). A possible conflict between Iran, and Israel and the United States was a highly visible geopolitical scenario in 2011 and 2012. Crist is a United States historian who spent over a decade researching this eye-opening exploration of United States diplomacy and low-intensity conflict involving Iran, from the Carter to the Obama Administration. The “Iran Problem” involves the Middle East, oil, religion, nuclear weapons development and other complex national security issues. For author and defense historian Thomas Ricks, The Twilight War “is the secret history of the last three decades of American foreign policy in the Middle East”: it provides the historical and institutional context to understand current geopolitical debates, forecasts and pundits. Crist’s contribution is to capture the multi-sided decision-making that occurs in a national security confrontation which lies below the escalation threshold of declared physical war.
Tantra by Geshe Tashi Tsering (Somerville, MA: Wisdom Publications, 2012). (TS-3). Tsering is a guiding teacher at London’s Jamyang Buddhist Centre and this is the final volume in his very accessible Foundations of Buddhist Thought series (which might be regarded as vital for Buddhists and are useful metacommunication guides on how to present religious doctrines and practices to a broader audience). This book explains with model clarity the Tibetan Buddhist tantric practices of the Mahayana and Vajrayana schools with a Madhyamaka or Middle Path emphasis: initiation and vows; deity, guru, and kriya yoga and visualization practices; highest yoga tantra; the generation and completion stages; and the physiology of esoteric practices involving the subtle body. Kirti Tsenshap Rinpoche’s Principles of Buddhist Tantra (Somerville, MA: Wisdom Publications, 2012) (TS-3) explains the Middle Path of spiritual illumination in greater detail, whilst Lama Yeshe’s Becoming Vajrasattva: The Tantric Path of Purification (Somerville, MA: Wisdom Publications, 2004) (TS-3) explains Vajrasattva purification and retreat practices.
Tantra: The Path of Ecstasy by Georg Feuerstein (Boston, MA: Shambhala, 1998). (TS-3). Feuerstein (1948-2012) was a major scholar on Hinduism, Tibetan Buddhism, and yoga. Tantra provides an accessible, clear introduction to Hindu Tantric cosmology, the major Hindu deities and their religious significance, the subtle body, and the practices of mantra, mudra, and yantra. The chapter ‘The Transmutation of Desire’ quotes from Kaula and Left Hand Path scriptural sources, discusses the panchamakara or 5 Ms (madya, mamsa, matsya, mudra and maithuna); and examines how the ritualised practice of maithuna or sexual intercourse differs from the Western Neo-Tantra derived from the Kama Sutra. Feuerstein dispels many of the myths and misunderstandings in Western contemporary occulture about the panchamakara and maithuna, in particular. Feuerstein also makes comparisons where relevant between Hindu and Tibetan Buddhist forms of Tantra, their religious practices, and cultural transmission.
Tantra: Sex, Secrecy, Politics, and Power in the Study of Religion by Hugh B. Urban (Berkeley: University of California Press, 2003). (TS-4). Urban is a Professor in the Department of Comparative Studies at Ohio State University and an expert on the historiography and sociology of Tantra. Tantra posits that Tantra arose through the interplay of Western and Indian encounters and the ‘medial’ battle between scholarship and the popular imagination, and political elite and social non-elite practice. Urban examines the contributions and debates over Sri Aurobindo, Swami Vivekananda, Mircea Eliade, Sir John Woodroffe, Chogyam Trungpa, Osho, Aleister Crowley, and the popularity of ‘sex magick’ in contemporary occulture. Urban concludes that although Tantra is an “imagined category” it can also be reimagined in new ways. This book is an academic theory-dense gateway to the historically contested Vamachara (Left Hand Path) and its influence on Western contemporary occulture.
Sinister Yogis by David Gordon White (Chicago: University of Chicago Press, 2009). (TS-4). White is professor of religious studies at the University of California, Santa Barbara. Sinister Yogis examines the esoteric writings of yogis in Hindu Tantra, their development of siddhis (special powers), and cross-cultural encounters with the West. Yogis had a far more sinister reputation in Hindu religious and occult circles before Colonialist discovery, and the modern yoga and Neo-Tantra industries which White traces to B.K.S. Iyengar in the 1930s. White includes a wealth of information and translated texts on the ‘immanent’ Vamachara (Left Hand Path) that contextualises yogic practices involving inner space, apotheosis, self-willed death, and siddhis. Gordon’s earlier books on Tantra and Yoga are highly recommended.
The Taming of Demons: Violence and Liberation in Tibetan Buddhism by Jacob P. Dalton (New Haven: Yale University Press, 2011). (TS-4). Dalton is Assistant Professor of Tibetan Studies at University of California, Berkeley. This scholarly study examines the Tibetan ‘Dark Ages’ period or “age of fragmentation” (842-986 AD) and how socio-political upheaval shaped the subsequent transmission of Tantric Buddhist doctrines in the 11th and 12th centuries. Dalton focuses on Tantric manuscripts found in Dunhuang that explore the taming of Rudra and other Tibetan Buddhist demons; Buddhist warfare doctrines; the 19th century debate about early Tibetan blood sacrifice rites; and transgressive ethics in Vajrayana Buddhism. How early Tibetan Buddhists dealt with the “age of fragmentation” violence had profound effects on its cultural transmission as a religion.
Understanding Sarkar: The Indian Episteme, Macrohistory, and Transformative Knowledge by Sohail Inayatullah (Leiden, The Netherlands: Brill, 2002). (TS-5). Inayatullah is a Professor at Taiwan’s Tamkang University and an Adjunct Professor at Australia’s University of the Sunshine Coast. Prabhat Ranjan Sarkar (1921-1990) was an Indian spiritual philosopher, social activist, founder of Ananda Marga, and conceptualised Progressive Utilisation Theory (PROUT). Understanding Sarkar is the book-length version of Inayatullah’s PhD that situates Sarkar’s neo-humanist, macrohistorical contribution in the context of Hindu Vedic and Tantra frameworks as initiatory, transformative knowledge, and the Yugas as historical cycles. Sarkar’s social cycle and sadvipra leaders (“the spiritual intellectual”) offer a way for social and civilizational transformation in the Kali Yuga, which Inayatullah compares with Sri Aurobindo and other Indian thinkers. Inayatullah also compares Sarkar to other macrohistorians including Ssu-Ma Ch’ien, Khaldun, Marx, Pareto, Mosca, Comte, Vico, Hegel, Toynbee, Spengler, and others. Inayatullah concludes with an analysis of Sarker’s laws for social change, and contrasts this with Krishnamurti, Foucault, Galtung, Wallerstein, and other contemporary religious and socio-political thinkers. For a background on macrohistory see Johan Galtung and Sohail Inayatullah’s Macrohistory and Macrohistorians: Perspectives on Individual, Social, and Civilizational Change (Westport, CN: Praeger, 1997) (TS-4). Further Sarkar-related analysis can be found in Sohail Inayatullah and Jennifer Fitzgerald’s Transcending Boundaries: Prabhat Ranjath Sarkar’s Theories of Individual & Social Transformation (Maleney, Australia: Gurukula Press, 1999) (TS-3) and Sohail Inayatullah’s Situating Sarkar: Tantra, Macrohistory & Alternative Futures (Maleney, Australia: Gurukula Press, 1999) (TS-3).
The Teacher-Student Relationship by Jamgon Kongtrul The Great (Ithaca, New York: Snow Lion, 1999). (TS-3). The institutional challenges of Dakshinachara or Right Hand Path religions in the West often relate to abuses of power rooted in Vedic-derived brahmacharya or guru and wisdom teacher yoga. This excerpt from Tibetan teacher Jamgon Kongtrul’s Treasury of Knowledge provides a Vajrayana Buddhist perspective on the Master or Wisdom Teacher and the Student, the criteria for selection, dangers of the Vajrayana path, and the mind-to-mind transmission of Dharma teachings. Kongtrul’s text provides Dakshinachara insights into the X crisis in the Church of Satan and the Xem crisis in the Temple of Set, and into scandals involving Gurdjieff and Ouspensky, Chogyam Trungpa, Adi Da Samraj, and other guru-like teachers.
Mutants and Mystics: Science Fiction, Superhero Comics, and the Paranormal by Jeffrey J. Kripal (Chicago: University of Chicago Press, 2011). (TS-3). Kripal is the J. Newton Razor Professor and chair of the Department of Religious Studies at Rice University. Mutants and Mystics is an historical and thematic analysis of the ‘daemonic’ Super-Stories and mythemes in the occult, paranormal and superhero literature, and their interplay with ‘medial’ subcultures and the individual Quest for higher consciousness and self-actualisation (Divinization or self-godhood). Kripal’s framework distinguishes between Orientation (East-West cultural transmission and fusion of religion, and mythological framing); Alienation (the impact on consciousness of cosmos awareness, an expanded space-time continuum, and UFOlogy); Radiation (how the discovery of the electromagnetic spectrum and quantum physics led to speculation about metaphysical energy and ‘siddhis’ or special powers); and Mutation (Eros as a vehicle for evolutionary transformation). For Kripal, this is an initiatory dynamic in which the individual has Realization awareness (they are being ‘authored’ by contemporary culture) and then Authorization enactment and experiences (in which individuals ‘author’ their own Divinization using elements of Orientation, Alienation, Radiation, and Mutation mythemes). Kripal discusses many authors including: Charles Fort, Wilhelm Reich, Louis Pauwels and Jacques Bergier, Michael Murphy, George Leonard, Alan Moore, Grant Morrison, Philip K. Dick, John Keel, the remote viewing debate, and how Gopi Krishna and Sri Aurobindo influenced Western contemporary occulture.
Taleb spoke to EconTalk a year ago about Antifragile and “how we can cope with our ignorance and uncertainty in a complex world.”
The Interpreter‘s Rory Medcalf asks:
But bear with me. What if, this time, complex uncertainty really is the order of the day, indeed, of the next two decades?
In the 1990s the Global Business Network‘s Peter Schwartz popularised scenario planning as a methodology to deal with complex uncertainty. John Petersen’s Arlington Institute considered wild cards and side-swipes. The political scientists Robert Jervis (System Effects) and James N. Rosenau (Distant Proximities) have explored the kinds of causal interactions and second/third-order effects that Medcalf suggests about the global order and trends. Perhaps we’ll all be reading Nassim Nicholas Taleb‘s new book Anti-Fragile when it’s released in November.
Is success in the arts largely due to luck? Reuters blogger Felix Salmon has argued so in a blog post about why people should choose a different career with better probabilities of success. Salmon was responding to philosopher Nassim Nicholas Taleb’s latest paper on ‘spurious tail’ (luck) dynamics in the investment industry. Taleb argued that new trainees will be out-competed by an existing power elite that has succeeded due to ‘winner-take-all’ effects, fat-tailed randomness, scalability, and luck. Taleb’s insight holds for academia and Salmon felt it was relevant to artists as well. Investment manager Joshua Brown made two counter-arguments: (1) investment banking has survivorship bias; and (2) sustained artistic success usually requires talent. I wish that Salmon had read Nicholas Reschler‘s Luck or was familiar with the innovation case studies in Simon Reynolds‘ Rip It Up And Start Again on the 1978-84 Post-Punk or New Wave period. Reynolds highlights that in many cases the New Wave success was due to a combination of skill; awareness of aesthetic and sociopolitical currents; being in a networked city like London or New York; gaining mentors and producers in the music industry; and using ‘risk ignition’ to proactively deal with novelty.
I remember writing an immediate response for the website Disinformation to the dotcom crash that occurred on 14th April 2000. I researched and wrote a post-mortem on the dotcom crash in 2003 as a Masters essay in strategic foresight. I read Robert Shiller, Nassim Nicholas Taleb, and Charles P. Kindleberger on how speculative bubbles form. But for some people like fallen entrepreneur Jennifer Sultan the 2000 dotcom crash continues to have a personal fallout.
Gladwell (The Tipping Point, Blink) spearheads a group of writers who are masterful at using anecdotes about insights from statistics, system dynamics and the decision sciences that will interest a broad readership. This group also in Chris Anderson (The Long Tail), James Surowiecki (The Wisdom of Crowds), Nassim Nicholas Taleb (Fooled by Randomness, The Black Swan), Tim Harford (The Undercover Economist), Steven Levitt and Stephen Dubner (Freakonomics), and Michael Lewis (Liar’s Poker, The New New Thing, Moneyball) also belong to this group. Apart from outliers and tipping points these books explore intuitive decisions, long tail distributions, the Law of the Many, chance, low probabilty high-impact events, martingales, and data-driven decisions. Each author has a different background: Taleb is an epistemologist and former trader, Anderson is a technology pundit, and Lewis, Gladwell and Surowiecki are essayists and journalists.
For me, six observations emerge from these authors. First, they have a writing style that appeals to a broad audience. Second , they provide an introduction to quantitative elements of decision-making and judgments. Third, their publishers have created a niche market in airport reading and popular science paperbacks. Fourth, they differ in their approach to theory building: Anderson, Gladwell and Surowiecki take an insight, interview people, and promote it; Taleb, Harford and Lewis draw on their domain experience; and Levitt and Dunbar illustrate how a subject matter expert can collaborate with a journalist to reach a broader audience. Fifth, their books have seeded a range of Web 2.0 strategies, which vary in rigour, validity, generalisability and applicability to real-world analysis.
Finally, their publishers have used their marketing appeal to build an audience during turnarounds and post-acquisition integrations: Gladwell and Surowiecki helped revive The New Yorker, Levitt and Dunbar’s blog gained The New York Times an Internet readership, and Anderson revamped Wired after Conde Nast‘s acquisition.
The nuclear strategist Herman Kahn coined the phrase ‘thinking about the unthinkable’ in a series of black comic Air Force briefings that became On Thermonuclear War (Princeton University Press, 1960). Faced with a year-long crisis in US credit markets analysts have embraced similar imagery in their forecasts of catastrophic risk.
Several different players in the financial ecosystem rely on the forecasts for multiple payoffs, one for their target audience and the other for themselves:
- Research Analysts: (1) Provide clients with guidance and metrics to the market turbulence; (2) stand out in the pecking order of research firms and competing industry/sectoral analysts to remain relevant.
- Investment Media: (1) Catastrophes as the source of drama and headlines to keep consumers engaged; (2) Financial and operational synergies of convergent media production.
- Fund Managers: (1) An external input to valuation models for visiting potential firms to invest in; (2) A parameter for deciding on the asset classes, diversification and hedging for investment portfolios.
Some questions to ask in evaluating any catastrophic forecasts that predict the unthinkable:
- What is the source, type and timeframe of the evidence presented? The source may be company interviews, earnings calls, investment calls and trade seminars. The type may be firsthand observation, market rumour, financial model, computer simulation or analyst conjecture. The timeframe may be historical simulation of past data, quarterly forecasts or a longer time horizon for capital financing, global market entry, innovation pipelines or sustainability projects. The source enables you to filter any possible agendas, the type refers to the information structure, whilst the timeframe often has embedded assumptions about cause-effect relationships, impacts, and the actions of others.
- Why is the analyst making this forecast and could there be other agendas? Analysts have biases and personal theories that an attention economy might amplify. At a group level this becomes self-reinforcing collective wisdom that may turn out to be flawed. In embracing a current meme in a true believer stance analysts create a cognitive frame prevents them from considering alternative outcomes, options and possibilities. At its most cynical this question is a reminder that forecasts are not objective or value-neutral, especially if the analyst is under pressure to generate earnings revenue or has a different private opinion to their public view.
- What is the analyst’s track record in accurate forecasting? This focuses on the analyst’s patterns of thinking and rhetoric in forecasts; how their performance compares to an industry, market or sectoral baseline; and the margin of error in their past forecasts. This can be used to construct a brains syndicate, to filter out media reports and noise, to surface hidden assumptions and how they affect performance, and as a quality assurance check.
- How might the catastrophic forecast be hedged? This shifts the focus from optimistic versus pessimistic views to the risk management focus on mitigative strategies and action planning. To be effective, this requires an understanding of your risk profile and risk-return needs (risk averse, neutral or seeking), your time horizon, and the nature of the financial instruments, investment portfolio and markets to be used.
Financial contagion is a powerful media narrative for business journalists. The fallout makes sellable news copy: the melodrama of market volatility, trainwrecks and corporate collapses, and the spectre of nation-state breakdown and global disorder. Chroniclers from Charles Mackay to Charles P. Kindleberger have recognised this madness in markets. So why hasn’t this been applied to business journalists apart from critiques like Thomas Frank‘s sobering One Market Under God (Anchor Books, New York, 2000)
For example is the Australian economy facing a deep financial crisis compared with the US subprime fallout? The Telegraph‘s Ambrose Evans-Pritchard contends yes. Evans-Pritchard uses inductive reasoning to build many examples that illustrate his conclusion that ‘that the Antipodes are tipping into a serious downturn’. These include share write-downs at the National Australia Bank (NAB) and New Zealand’s Guardian Trust; rising household debt and current account deficits in Australia; cross-currency volatility on the forex market; and turbelence in the regional economies of Japan and New Zealand. Evans-Pritchard’s examples collectively add up to a disturbing and pessimistic view of the near future.
On closer examination many of Evans-Pritchard’s examples fall apart, partly because he over-relies on comments from analysts at BNP Paribas and Lombard Street Reearch instead of doing his own evaluation. NAB’s write-down was very likely due to high exposure to Merrill Lynch derivatives and ML’s write-down announcement 12 hours earlier in US markets. The $A still remains strong against the $US and the shifts are due to forex market volatility. Evans-Pritchard fails to explain which productivity growth gaps are meant or the possibility that this is due to adjustment lags after 1990s reforms. He glosses over the different dynamics and histories of Australian, Japanese and New Zealand markets to reach a false consensus of Pacific Rim economies.
Some comments are nonsensical in the context of free market ideals: the Reserve Bank of Australia‘s monetary policy is not Keynesian and thus is open to ‘vast inflows of Asian capital’ — into investments and property developments — just as the US economy is open to investment from sovereign wealth funds. Perhaps Evans-Pritchard’s fears of Japanese money are about Bondi Beach’s gaudy tourism? If your ideal is free market flows of global capital then you have to accept the entrepreneurial sources who will take on the risk-return (if that’s not your ideal, or the ideal turns out to have some adverse consequences in practice . . .).
Evans-Pritchard is closer to the mark in his comments on the current account deficit (macroeconomics) and household debt (microeconomics). Australia’s mining and resources boom won’t cancel out its current account deficit alone, and given the economy’s structure, its reliance on cheap imports and its debt servicing costs it’s ridiculous for Evans-Pritchard to think so. Household debt and mortgage stress levels are worrying – but Evans-Pritchard leaves out the role of inflated house prices, interest rate risk, and consumer expenditure. Despite the high rents and shortage of new houses Australia is nowhere near as exposed to collateralised debt obligations and subprime mortgages as the US is.
Business journalists can be guilty of creating noise in the face of financial contagion. As Henry Blodget observes in his contrarian book The Wall-Street Self Defense Manual (Atlas Books, New York, 2007) the financial media wants to hold your gaze: ‘You will know the arguments and action of the day, recognize the major players, and feel the market excitement. You will develop strong opinions about the future.’ (p. 203). Who cares if the strong opinions are formed on the basis of noise rather than signals? Instead, Blodget argues that we should see Bloomberg and CNBC as players in a financial services ecosystem who thrive on melodrama and noise, especially during a contagion, crash or panic.
The philosopher and post-trader Nassim Nicholas Taleb is even more scathing in his contrarian book Fooled by Randomness (Texere, New York, 2004): ‘To be competent, a journalist should view matters like a historian, and play down the value of the information he is providing, such as by saying: “Today the market went up, but this information is not too relevant as it emanates mostly from noise.” He would certainly lose his job by trivializing the value of the information in his hands.’ (p. 58). As Evans-Pritchard’s overreaction to the NAB write-down and cross-currency fluctuations in the forex market show, he and many other business journalists would fail Taleb’s test because their reportage is a reaction to financial market events that are noise, and don’t factor in the dynamics of chance, randomness and volatility.
Could the roots of the 2007 subprime crisis in collateralised debt obligations (CDOs) and residential mortgage-backed securities (RMBS) lie in financial analysts who all used similar assumptions and forecasts in their quantitative models?
Barron’s Bill Alpert argues so, pointing to a shift of investment styles after the 2000 dotcom crash from sector-specific, momentum and growth stocks to value investing. Investment managers who prefer the value approach then constructed their portfolios with ‘stocks that were cheap relative to their book value.’ In other words, the value investors exploited several factors — the gaps in asset valuation, asymmetries in public and private information sources, price discovery mechanisms and market participants — which contributed to mispriced stocks compared to their true value.
However, the value investing strategy had a blindspot: many of the stocks selected for investment portfolios also had a high exposure to credit and default risk. The 2007 subprime crisis exposed this blindspot, which adversely affected value investors whose portfolios had stocks with a high degree of positive covariance.
Alpert quotes hedge fund manager Rick Bookstaber who believes that financial engineers have accelerated crises and systemic risks via the complex dynamics of new futures contracts, exotic options and swaps. These new financial instruments create interlocking markets (capital, commodities, debt, equity, treasuries) which have the second-order effects of larger yield curve spreads and trading volatility. Alpert and Bookstaber’s views echo Susan Strange‘s warnings a decade ago of ‘casino capitalism’ and ‘mad money’ as unconstrained forces in the international political economy.
Quantitative models also failed to foresee the 2007 subprime crisis due to excessive leverage, difficulties to achieve ‘alpha’ or above-market returns in market volatility, and the separation of risk management from the modelling process and testing. Other commentators have raised the first two errors, which have led to changes in portfolio construction and market monitoring. Nassim Nicholas Taleb has built a second career on the third error, with his Black Swan conjecture of high-impact events, randomness and uncertainty (see Taleb’s Long Now Foundation lecture The Future Has Always Been Crazier Than We Thought).
Alpert hints that these three errors may lead to several outcomes: (1) a new ‘arms race’ between investment managers to find the new ‘factors’ in order to construct resilient investment portfolios; (2) the integration of Taleb’s second-order creative thinking and risk management in the construction of financial models, in new companies and markets such as George Friedman’s risk boutique Stratfor; and (3) a new ‘best of breed’ manager who can make investment decisions in a global and macroeconomic environment of correlated and integrated financial markets.