21st March 2010: Bloomberg on Michael Lewis and The Big Short

Wrote two pages for PhD draft on Alastair Johnston‘s generational model of strategic culture analysts in security studies and international relations theory.

Cover of

Image Source: Amazon.com

Michael Lewis on Bloomberg‘s ‘For the Record’ to promote his new book The Big Short: Inside the Doomsday Machine (New York: W.W. Norton & Company, 2010). Amazon’s #1 book although the reviews are affected by end-user problems with the Kindle  version. Lewis clearly has had extensive media training.

Major points that Lewis makes:

The five main people that Lewis profiles are outsiders — stockmarket analysts rather than bond market specialists — who had to learn about the subprime mortgage market in order to track stocks that they were interested in, and who then decided to short the market.

Financial innovation should be regarded with some skepticism – we can see examples that led to greater inefficiencies rather than more efficient markets, so some innovation can have a downside, and this may be clear only in retrospect. Lewis believes collateralised debt obligations should be more transparent, i.e. traded on exchanges and clearinghouses, so that all parties can manage their counterparty risk.

Financial service firms are now more professional than what Lewis saw at Salomon Brothers during the late 1980s. Yet Wall Street is now far more cynical: bonuses, incentives and hypercompetition have eroded the partnership ethic that keeps these firms stable.

Reviews of The Big Short: The Big Money, Washington Post.

A 20th anniversary piece on David Lynch’s Twin Peaks has a couple of interesting anecdotes on how Lynch dealt on-set with his actors.

Roger Lowenstein asks: Who needs Wall Street?

John Kay on oblique decisions.

15th March 2010: Breaking the Taboo on Targeting Civilians

Morning meeting: get people face-to-face on sensitive issues, avoid escalation by email, and remove roadblocks. Some interesting anecdotes on what really happens on an overseas consultancy.

Late afternoon meeting over tea and donuts with collaborator Ben Eltham in Melbourne’s Nicholas Building. Discussion: EMI’s troubles; how ERA will affect two articles we are working on; Australian academic and zine maven Anna Poletti; why journal workshops have bad percolator coffee; sick buildings; and the psychological impact of glass desks in offices.

Evening: PhD ‘background research’ viewing the first episode of Gwynne Dyer‘s mid-1980s series ‘War’: archival footage of World War I nationalist mania, the Western Front trenches, machine guns, German zeppelin raids, and World War II aerial bombings, ending in the Trinity nuclear test and Hiroshima. The nationalist mania, and generals’ decision that led to the sacrifice of 60,000 English in one day to German machine guns and no-man’s land, are examples of George Gurdjieff‘s ‘terror of the situation’.

An insight whilst viewing Dyer’s series: the Napoleonic innovation of national conscripts and total war, and German air-raids, broke the taboo on targeting civilians. Prior to this, 19th century Russian anarchists usually targeted police and political leaders. After this, many groups acted on the taboo, for different reasons: anti-colonialist and nationalist revolutions, radicalisation in the shadow of the Vietnam War and other conflicts, strategic tactics such as during hijack negotiations, and religiously motivated violence. This hypothesis appears to be a close fit to David Rapoport‘s waves thesis and to Mark Juergensmeyer‘s research program. Is this testable using the Correlates of War data-sets?