Sunday, April 23, 2017

My Amazon Review of Michael Sims' "Arthur and Sherlock: Conan Doyle and the Creation of Sherlock Holmes"

When Dr. Doyle Became Sherlock Holmes

Michael Sims has written a very long biography of Sir Arthur Conan Doyle centered around his most famous character, Sherlock Holmes. It is a book that I wanted to like. The beginning of the book is terrific discussing Doyle’s as an avid reader with an alcoholic father and his medical school training at the University of Edinburgh medical school. There he comes under the sway of Professor Joseph Bell, a very shrewd diagnostician with dominant personality.  It is Bell along with Edgar Allan Poe’s detective Auguste Dupin that the Sherlock Holmes character is molded.

Also of interest are the original illustrations for the Sherlock Holmes series. It is those illustrations from the 1890s that for our image of Holmes and Watson today. Moreover Holmes’ dear stalker hat is a creature of the illustrator, not Doyle himself.

This is all to the good, but the book goes on and on dealing with Doyle’s medical practice, his life in Portsmouth and the problems of getting published. For me the book is way too long. Thus I can only recommend Sims’ book to a real Sherlock Holmes geek.

For the complete Amazon URL see:

Monday, April 17, 2017

My Amazon Review of Richard Haass' "A World in Disarray: American Foreign Policy and the Crisis of the Old Order"

A Foreign Policy for Clinton, not Necessarily for Trump

Richard Haass, a person I like (From TV) and respect has written a very long Foreign Affairs article on a foreign policy for the United States. It would be very appropriate for Hillary Clinton, not so much for Donald Trump. After all Haass is a pillar of the establishment, being president of the Council on Foreign Relations for the past fourteen years.

He is a student of Henry Kissinger and, as such, he goes back to the 1648 Peace of Westphalia which represents the beginnings of the nation state system as we know it. He believes that system which is based on the non-interference of the internal affairs of a state is inadequate for the 21st Century. He believes that states have the “sovereign obligation”, to reign in terrorism, fight drug trafficking, prevent nuclear proliferation, and deal with climate change. This is a far cry from the Westphalian System and it necessarily breeds suspicion of the established powers trying to enforce their codes on smaller states.

He is rightly critical of the Obama policies in Syria, Libya and Iraq. And in the 1990s he was prescient in proposing a preventive strike against North Korea’s then nascent nuclear program. The Clinton Administration failed to hear is warning and we are now suffering its consequences.

Haass opens his book with the Brexit vote. However, there is no real follow through. This is a real failure of his book because in my opinion the foreign policy challenges are not external, but rather internal. There is a revolt going on against the global elite of which Haass is an exemplar and I am a mere plebian. It is that revolt that is reordering foreign policy: witness France, Turkey, Hungary and above all the election of Donald Trump. Thus as Dr. Kissinger has taught us, in order to be successful a foreign policy has to have domestic support. I fear Haass’ ideas have yet to convince the general public. It is here where work has to be done.

For the Amazon URL see:

Monday, April 10, 2017

My Amazon Review of Catherine Merridale's "Lenin on the Train"

Riding the Locomotive of History

One hundred years ago this month V.I. Lenin boarded a train in Zurich that would take him through Germany, Sweden and Finland to ultimately arrive at Finland Station, Saint Petersburg, Russia. As history professor Catherine Merridale describes, Lenin arrives in a city racked by three years of war and rapt in the chaos of a new revolutionary government struggling to govern and a Bolshevik Party torn between participating in governing and advocating another revolution.

Merridale vividly describes the collapse of the Czarist regime at home and on the war front and Lenin’s life in exile in Switzerland. It is the German government who seizes upon the idea of transporting Lenin into Russia with the goal of fomenting a revolution that would take that country out of the war. The plot succeeds brilliantly. The go between was a Bolshevik/ speculator Alexander Helphand also known as Parvus, who is quite a character. With the deal orchestrated Lenin and his entourage occupy three rail cars as they travel through Germany and beyond. Although it was known as a “sealed train” it was far from sealed and passengers actually disembarked on occasion. It was quite a menagerie and the passengers included such luminaries as Karl Radek, Grigory Sokolnikov and Grigory Zinoviev. All three would later die in the Stalin purges of the 1930s.

The interesting thing is that it was no secret. The Russian government knew, the British knew and the Bolsheviks knew that Lenin was coming. With his boisterous arrival he grabs the Bolshevik Party by the throat and with the force of his will he sets them on a revolutionary course. Lenin truly was the “plague bacillus” that Churchill described him as, because in his wake you can count the deaths in the tens of millions.

Although the book is slow going at times, Merridale tells the story with great verve and you get a sense of the drama building as the locomotive of history goes on its journey through northern Europe.

Thursday, April 6, 2017

Reliving the 1930s - Part 4

Yet again it looks like we are reliving the 1930s as we watch the U.N. sit idly by as the Assad government in Syria continues to make war on its own people with poison gas. The Obama red line of 2013 has come and gone and now President Trump stated yesterday that Assad went well beyond it. We'll see what Trump's apparent reversal of U.S. policy actually means. Hopefully the leadership of U.N. ambassador Niki Haley will prod him in the right direction.

But what is happening is Syria has an eerie parallel from the 1930s. In 1935 Italy invaded Abyssinia (now Ethiopia) and the League of Nations instituted sanctions. However in 1936 the British and French in the Hoare-Laval Pact chose to appease Italy and lifted sanctions. Meantime with the war on the ground not going well for the Italians, Italy resorted to the use of banned poison gas on the hapless Ethiopians. The war soon ended, but not before Ethiopian Emperor Haile Selassie made a dramatic plea before the League of Nations in Geneva. The delegates sat in silence because they knew that collective security and the League were dead. 

It looks like the U.N. is going down the same path unless America acts alone as we did with respect to the slaughter in Kosovo twenty years ago.

Tuesday, April 4, 2017

Bezos vs. Trump

Today's front page story in the Washington Post ( highlighting a meeting with Blackwater founder Erik Prince (brother of Education Secretary Betsy DeVos) and an emissary from Putin in the Seychelles Islands deep in the Indian Ocean signifies the lengths to which the Washington Post is going to investigate the Trump Administration. With sources in the Seychelles and the UAE, which brokered the meeting, a four reporter team pulled together a story that began in December with Trump triumvirate of Flynn, Bannon and Kushner meeting with a UAE representative in New York. The result was a January 11 meeting in the Seychelles.

To do a story like this requires substantial resources and it demonstrates the commitment Post-owner and Amazon founder Jeff Bezos has made to investigative journalism. Put bluntly Trump is in the cross-hairs of a multi-billionaire willing to go after him. However as the rivalry escalates do not be surprised to see Amazon in Trump's cross-hairs.     

Sunday, April 2, 2017

My Amazon Review of William Walker's "Danzig:A Novel of Political Intrigue"

To Die for Danzig

Cameron Watt in his “How War Came” devotes an entire chapter to Danzig: “Hitler Steps up the Pressure: “Die for Danzig.”” The events in William Walker’s book occur prior to 1939; more specifically the period between 1934 -1936 when Sean Lester was the League of Nations High Commissioner for the “free city” of Danzig. Walker places Danzig at the fulcrum of the growing struggle between Hitler and the rest of Europe.

The mostly German city of Danzig (pop. 400,000) was established by the Treaty of Versailles as a “free city” that would give Poland an outlet to the Baltic Sea. Today it is the Polish city of Gdansk. The League of Nations was responsible for maintaining its constitutional safeguards which would have worked well in more harmonious times, but with the rise of Hitler the German majority of the city moved sharply in the direction of the NDSAP (Nazi Party) thereby creating a crisis for the League.

Although this is far from the best written historical novel Walker integrates the actions of some very real people with his protagonist, Paul Muller an upper-class League diplomat of Swiss-English parents.  In the novel he is Lester’s chief aide and we find him fighting battles in Geneva, the League’s headquarters and on the streets of Danzig. He sees up close the role of Nazi thugs intimidating their opposition and the appeasement policy of Anthony Eden in Geneva as he continually sells out Lester. Eden would later break with that policy, but early on he was an appeaser.

Through Muller we become a fly on the wall in meetings at the League and in Danzig where Lester tries to negotiate with NDSAP leaders Arthur Greisser and Albert Forster who are following direct orders from Berlin and we also get a sense of the opposition Social Democrats who are fighting a losing battle. We also see which is timely for today, the very real risks diplomats and their families take in difficult environments.

I recommend William Walker’s book to those readers who want to get a sense of what dealing with the growing Nazi threat diplomats faced on a day-to-day basis as they struggled to maintain a semblance of collective security.

For the complete Amazon URL see:

Tuesday, March 21, 2017

My Amazon Review of Noah Isenberg's " We'll Always Have Casablanca: The Life Legend and Afterlife of Hollywood's Most Beloved Movie"

The Best Book about the Best Movie Ever

I have to admit at the outset that I am a sucker for Casablanca. It has always been my favorite movie and one of the defining moments when I was dating my wife was the time we watched it on a small black and white TV while she was suffering from a very bad cold. Reading Isenberg’s book brought back memories of that moment and all of the quotes from the movie that I still know by heart.

Isenberg begins at the beginning with the never produced Broadway play, “Everybody Comes to Rick’s” which is picked up by Warner Brothers for the then astounding sum of $20,000. In the Warner factory the Epstein twins, Howard Koch and others turn it into the movie we now know. Director Richard Curtiz as is most of the cast are emigres from Nazi-occupied Europe.  The movie stars Humphrey Bogart as Rick, Ingrid Bergman as Ilsa Lund, who never looked more beautiful, and Paul Henreid as Victor Laszlo.

Casablanca opened to rave notices in late 1942 and Warner Brothers was helped by General Eisenhower landing troops in North Africa a few weeks later and then with Roosevelt holding a summit meeting with Churchill in early 1943 in Casablanca. Jack Warner never had better advance men. It would go on to win the academy award for best picture of that year.

But this book is more than about the history of making Casablanca, it is about what made so popular to this day. For example, why did a movie about World War II become so popular with the anti-Vietnam War college generation of the late 1960s. As Isenberg tells us, it is about the universal themes of love, glory and making the right moral choices in a very difficult environment. Further Rick Blaine is the typical American hero, a loner who rises to the challenge with just the right amount of comic relief.

Isenberg also tells us that Casablanca had to end with Ilsa ending up with Victor. Simply put the Production Code at the time would not have allowed a married woman to run off with another man and the Code forgives Ilsa’s adultery in Paris because she thought Victor was dead and allows it in Casablanca in the service of the war effort. Also of note is Casablanca’s treatment of the African American piano player Sam (“As Time Goes Bye”), played by Dooley Wilson. The black-owned Amsterdam News wrote, “…no picture has given as much sympathetic treatment and prominence to a Negro character…”

To sum up to any lover of Casablanca, Isenberg’s book is a must read!  

The full Amazon URL appears at:

Thursday, March 16, 2017

My Amazon Review of David Downing's "Lenin's Roller Coaster"

Romance and Revolution in Lenin’s Russia

In his third novel about the improbable romance of socialist-feminist journalist Caitlin Henry and MI-6 agent Jack McColl set during World War I, author David Downing finally finds his voice reminiscent of his Station series about prewar and World War II Berlin. Here the setting is primarily in the Russia of 1917-19.  Aside from Moscow and Saint Petersburg we see our protagonists in Siberia, southern Russia and Ukraine where we witness the impact of the revolution in vast distances of the Russian Empire.  And in one chapter when Caitlin is back in the U.S. we get a real sense of the persecution of America’s anti-war left as war fever envelops the country.

Several real historical figures make their appearance, most notably Alexandra Kollontai the leading feminist of the Russian Revolution who would found the Women’s Department in 1919. She and Caitlin are soulmates. In Moscow McColl runs into Sidney Riley, the Ace of Spies while plotting to overthrow Lenin’s regime.  How McColl ends up in Moscow is an adventure in of itself. Through the eyes of both Henry and McColl we see the growing role of the Cheka (secret police) in the day-to-day lives of urban Russia; a portent of things to come.

Given their ideological differences and their long periods of geographical separation caused by the war, it remains to be seen whether or not their romance will survive. We await Downing’s next book, if there is one, to see if they make a go of it. 

The full Amazon URL appears at:

Monday, March 13, 2017

My Amazon Review of Dennis Ross' "Doomed to Succeed: The U.S. Israeli Relationship from Truman to Obama"

Myth Buster

Diplomat and former national Security Council member Dennis Ross has busted three important myths that have been guiding U.S. –Israeli policy since 1948. They are:
1   1)  Distance from Israel engenders Arab cooperation towards the U.S.  Ross convincingly notes that Arab states follow their own national interest irrespective of U.S. relations with Israel.

2   2)    U.S. cooperation with Israel will lose Arab support.  Fails for the same reason as above. And it doesn’t explain the growing Israeli-Saudi rapprochement.

3   3)    Solving the Israeli-Palestinian issue will lead to a transformation of the Middle East.  This myth obviously fails because settling that issue has nothing to do with the ongoing Sunni-Shia split.

Ross presents us with a clear-eyed view of U.S. –Israeli relations since 1948 as he thoughtfully reviews the policies of all of the presidents from Truman to Obama. Ross had a ringside seat in the formation of policy from Carter to Obama and he worked for all of the presidents since Carter with the exception of George W. Bush in various Pentagon, State and National Security Council capacities where he was for the most part up to his eyeballs in U.S. – Israeli relations. Of special note for me was that he worked for the legendary Andrew Marshall in the Pentagon’s Office of Net Assessment and he was Director of Policy Planning in the State Department. He is especially good when he was “inside the room” where the decisions were actually made.

He characterizes the various administrations as having policies of either cooperation or competition with Israel and those policies typically alternated. For example Truman was cooperative while Eisenhower was competitive; both Kennedy and Johnson were cooperative while Nixon initially was competitive. However when Nixon saw the potential of Soviet arms winning the 1973 war, he tilted dramatically in favor of Israel. Thus objectively he was cooperative. On the other hand, in Ross’ view, Carter was outright hostile to Israel. Ross theorizes that Carter felt so guilty about not fully supporting the civil rights revolution in his home state of Georgia; he tilted U.S. policy towards the Palestinians.  In contrast Reagan had a deep affinity towards Israel establishing a strategic cooperation arrangement. However that did not stop him in pushing through the AWACS deal over Israeli opposition and in censuring Israel for its invasion of Lebanon.

Although President George H.W. Bush moved the relationship back towards a more competitive one and was extremely unpopular with American Jewry, he continued the strategic cooperation agreement and worked a diplomatic miracle in keeping Israel out of the Iraq War all the while Israel was under rocket attack. Ross has extraordinarily kind words for the first President Bush.

President Clinton also had a deep affinity for Israel and thought of Israeli President Rabin as the father he didn’t have. He was crushed when Rabin was assassinated. He also learned not to trust the Palestinians after a series of Camp David meetings.

President George W. Bush continued the cooperative relationship with Israel while President Obama continued the high degree of cooperation on the military side; he was far from cooperative on the diplomatic side. On his first trip to the Middle East for his Cairo speech, he intentionally avoided going to Israel. Ross’ book ends before the U.S. abstention on the Security Council resolution condemning Israel for its settlement policy.

Two thoughts come through loud and clear from Ross’ important book. First the Israeli’s live up to their biblical forebears by being a “stiff-necked people.” It is hard to make a deal giving up tangible land for an intangible peace. In contrast the Palestinians come across a duplicitous. They say the right words, but when it comes down to it, they won’t make a deal. For them it remains “from the river to the sea.” They just can’t accept Israel as a Jewish State.

Ross has written an important book that should be read by all serious students of the Middle East. I highly recommend it.

The full amazon URL appears at:

Friday, March 10, 2017

"Extreme Makeover: Second Pass at Trumponomics," UCLA Anderson Forecast, March 2017

Despite all of the chaos coming out of the early days of the new Trump Administration stocks continued to rally on the prospects for “pro-growth” tax cuts, regulatory reform and infrastructure spending. (See Figure 1) However, the rally in bond yields and the dollar stalled as those markets began to exhibit a higher degree of skepticism about President Trump’s still vague proposals and the ability of the Congress to expeditiously pass them. (See Figures 2 and 3) As a result we have pushed back the effective date of the tax cuts to the first quarter of 2018 compared to the third quarter of 2017 that we previously forecast.[i]

Figure 1. S&P 500, Feb. 25, 2016 – Feb. 24, 2017, Daily Data

Source: Standard and Poor’s via

Figure 2. 10-Year U.S. Treasury Bond Yield, Feb. 25 2016 – Feb. 24, 2017, Daily Data

Figure 3. Dollar Index, Feb 25, 2016 – Feb. 24, 2017, Daily Data


Similar to last quarter we are still penciling in about $500 billion/year in personal and business tax reductions, a repatriation holiday for accumulated foreign earnings, increased defense and infrastructure spending, Medicaid cuts, relaxed regulations, modest changes to trade and immigration policies, and reductions in food and aircraft exports as several trading partners react to the policy changes. It remains to be seen to what extent the Affordable Care Act will be amended and its impact on the giant healthcare sector. Further because of the controversy that it has engendered we do not believe that Congress will pass a border adjustment import tax combined with exempting export sales from corporate taxation.

We have, however, become more concerned about the administration’s tone with respect to trade and immigration policies. The changes could be far more drastic than what we are now anticipating thereby increasing the risk level to our forecast. The roll-out of the administration’s partial travel ban and the scandal surrounding the firing of the national security advisor certainly were not a confidence building measures.

Trillion Dollar Annual Deficits Ahead

The impact of a large tax cut on an economy at or very close to full employment will be to explode the federal deficit. We expect the federal deficit to exceed a trillion dollars in 2019 which would amount to about 5% of GDP. (See Figure 4) Simply put there is not enough slack in the economy to enable the 4% economic growth the administration is calling for and it will likely lead to more inflation.

Figure 4. Federal Deficit, FY 2007 – FY2019F
Sources: Office of Management and Budget and UCLA Anderson Forecast

The Fed will become More Aggressive

As of April there will be three vacancies on the seven member Federal Reserve Board which will likely be filled by more hawkish and less economics oriented members.  The era of the very easy Bernanke-Yellen Fed is over and that will be confirmed when Chair Yellen’s term expires in January 2018. Moreover with inflation rising we expect that even under Chair Yellen the Fed will become more active in raising the Fed Funds rate and we believe that the Federal Open Market Committee will increase the fed funds rate by 25 basis points in March. By yearend the funds rate is expected to approach 2% and reach 3% by the end of 2018. (See Figure 5) Similarly the yield on 10-year U.S. Treasury bonds is forecast to increase to 3% by year end and exceed 4% by yearend 2018.

Figure 5. Federal Funds vs. 10-Year U.S. Treasury Bonds, 2007Q1 – 2019Q4F
Sources: Federal Reserve Board and UCLA Anderson Forecast

2018 GDP Growth Spike that Fades

With $500 billion in tax cuts arriving in the first quarter of 2018 we expect a short term growth spike that will soon fade as the economy bumps against its full employment ceiling. Our forecast calls for real GDP growth of 2.4%, 3.0% and 2.2% annual growth in 2017, 2018 and 2019, respectively. (See Figure 6) And note that real growth really trails off on a quarterly basis in 2019 as higher interest rates weigh on the economy. As we noted last quarter, in order for growth to be sustained at 3%, the economy requires a “productivity miracle.” The administration believes that its tax and regulatory reforms will enable a sustainable growth pick up. We, on the other hand, remain skeptical, but, of course, we can’t rule it out.

See Figure 6. Real GDP Growth, 2007Q1 – 2019Q4F
Sources: U.S. Department of Commerce and UCLA Anderson Forecast
In this environment, the labor market will remain robust with job growth coming in on the order of 170,000 a month in 2017 and 2018, before trailing off to about 110,000 a month in 2019. The recent increase in the labor force participation rate has made us more optimistic about job growth over the near term. (See Figure 7) In tandem with the job gains the unemployment rate now looks like it will bottom out at 4.1% in late 2018, before gradually rising. (See Figure 8) Of course if the administration embarks on a large scale deportation program for unauthorized immigrants employment growth will be far slower than what we are now forecasting. Moreover should the administration restrict the issuance of H1-B visas for highly skilled immigrants there would be negative consequences for high technology industries.

Figure 7. Payroll Employment, 2007Q1 -2019Q4
Sources: Bureau of Labor Statistics and UCLA Anderson Forecast

Figure 8. Unemployment Rate, 2007Q1 – 2019Q4F
Sources: Bureau of Labor Statistics and UCLA Anderson Forecast
Inflation on the Rise

Both headline and core inflation rates as measured by the consumer price index are already increasing at a 2%+ clip. It will not take much for inflation to ramp up to between 2.5% - 3%. (See Figure 9) Oil prices continue to rebound and the very tight labor market will bring with it rising wages. (See Figure 10) Although we were too early in our prior forecasts in predicting accelerating wage inflation, we now believe that the table has been set for sustained 4% annual increases in compensation. (See Figure 11) We believe that the unusually slow 0.1% increase in average hourly earnings reported for January was a fluke and it was inconsistent with other labor market data.

Figure 9. Consumer Price Index, Headline vs. Core, 2007Q1 – 2019Q4
Sources: Bureau of Labor Statistics and UCLA Anderson Forecast

Figure 10.Compensation/Hour, 2007Q1 – 2019Q4
Sources: U.S. Bureau of Labor Statistics and UCLA Anderson Forecast
 Consumer Strong, but Housing Stalls

The growth in consumer spending has been strong since 2014 and automobile sales have been running at a record rate. (See Figure 11) Now throw in a large tax cut and real consumer spending will ramp up from a forecast 2.8% increase this year to 3.6% in 2018. In this tax cut fueled environment the saving rate will exceed 7%. (See Figure 12)However, housing starts will plateau out in the 1.2 – 1.3 million unit range. (See Figure 13) Simply put the rise in interest rates will offset the positive factors of higher employment and wages. By 2019 the rate on the 30 year fixed rate mortgage is forecast to exceed 6%, up from the current 4.25% and the recent low of 3.5%. Moreover, because there are numerous signs that high income multi-family housing is becoming over-supplied, that once white hot sector of the economy will soon cool.

Figure 11. Real Consumption Spending, 2007 -2019F

Sources: U.S. Department of Commerce and UCLA Anderson Forecast

Figure 12. Saving Rate, 2007 -2019F
Sources: U.S. Department of Commerce and UCLA Anderson Forecast

Figure 13. Housing Starts, 2007Q1 -2019Q4F
Sources: U.S. Bureau of the Census and UCLA Anderson Forecast

Capital Spending Rebounds in the Face of Export Weakness

With the prospect of a general reduction in corporate income taxes and the likelihood of 100% expensing, equipment spending is forecast to rebound from 2.8% decline in 2016 to increases of 3.5% and 7.1% in 2017 and 2018, respectively. Equipment spending will also be buoyed by the recovery in oil and gas drilling being spurred on by the rebound in oil prices.

Figure 14. Real Equipment Spending, 2007 -2019
Sources: U.S. Department of Commerce and UCLA Anderson Forecast

On the other hand, despite all of the rhetoric coming out of the administration the strong dollar and the large tax cuts will ignite an import boom. After increasing by only 1.1% in 2016, imports will increase by 4.3% and 7.3% in 2017 and 2018, respectively. (See Figure 15) On the other hand export growth will be minimal as the high dollar and retaliation from the administration’s protectionist views by some of our trading partners will limit export growth especially in the aircraft and agricultural sectors. (See Figure 16)

Figure 15. Real Imports, 2007 -2019F
Sources: U.S. Department of Commerce and UCLA Anderson forecast
Figure 16. Real Exports, 2007 -2019F
Sources: U.S. Department of Commerce and UCLA Anderson Forecast

Moreover the administration’s outspoken hostility to NAFTA, especially with respect to Mexico risks a major disruption in economic activity. In 2015 the U.S. exported $236 billion to Mexico while importing $309 billion. Aside from disrupting supply chains, a significant reduction in U.S.-Mexico trade would have significant macroeconomic effects. (See Figure 17)

Figure 17. Schematic of NAFTA Trade
Source: Geopolitical Futures

Defense Spending on a Roll

As we have been discussing for several years the geopolitical threats coming from Russia, China, Iran and ISIS will force the U.S. to increase defense spending. After six years of real declines, defense purchases are forecast to increase by 1.2% in 2017 and then increase by 4.1% and 2.5% in 2018 and 2019, respectively. (See Figure 18) As we noted last quarter, this is one spending priority that is expected to receive broad support, especially with the increased hostility toward Russia coming from the Democratic Party. Further with the administration pressing NATO members to increase defense spending to 2% of GDP, domestic defense outlays will be augmented by increased international demand.

Figure 18. Real Defense Purchases, 2007 -2019F
Sources: U.S. Department of Commerce and UCLA Anderson Forecast


We continue to believe that the election of Donald Trump represents a major regime change with respect to economic policy. We expect significant reductions in personal and corporate income taxes along with a relaxing of regulation in the energy, environmental and financial arenas. However, because the economy is already operating at or close to full employment, the growth spurt caused by the policy changes will be short-lived but the deficits that it will create will be with us for a long time. Moreover the policy changes will elevate both inflation and interest rates that will have a negative effect on the housing sector.

Because of the Trump administration’s rocky start, we have become more concerned about the risks associated with their stated trade and immigration policies. For the time being we have not modeled in serious trade disturbances with our major trading partners and a reduction in the labor force caused by a significant change in deportation policies. Nevertheless those risks are rising.

[i]  See Shulman, David, “First Pass at Trumponomics: From a Reckless Monetary to a Reckless Fiscal Policy,” UCLA Anderson Forecast, December 2016.

Saturday, March 4, 2017

Did Sergey Kislyak Wear a Wire?

It seems that Russian Ambassador Sergey Kislyak met with quite a few officials in the Donald Trump campaign before and after the election. Who knows what was discussed but  the real question is whether or not Kislyak wore a wire. My guess is that he did and therefore the Russians have transcripts of exactly what was said. Given that Attorney General Sessions has already testified under oath and will soon do so again and the other Trumpista's will soon be facing subpoenas, there certainly is the potential  for blackmail.

Further although Kislyak is probably not an officer in the SVR (the Russian foreign security intelligence service) his "Rezidentura" (station chief) reports to him as well as Moscow Central and as is typical for most governments the ambassador and his/her security chief work hand in glove together. 

Thus President Trump has more to worry about than the alleged without evidence Obama wiretap; his friends in Russia could very well have a real hold on him and his administration.

Monday, February 20, 2017

A Talk on the Middle East by Ambassador Dennis Ross

On February 15 Ambassador Dennis Ross and author of "Doomed to Succeed: U.S -Israel Relationship from Truman to Obama" gave a talk sponsored by the Santa Fe Middle East Watch. Needless to say his talk opened with a discussion of the Trump-Netanyahu meeting that took place earlier that day. Ross worked with  all of the administrations from Carter to Obama on middle eastern and European issues. 

Below you find a YouTube link to his talk and I believe you will find it most informative. I am in the process of reading his book and will post a review when I am finished.

Friday, February 17, 2017

My Amazon review of Bret Baier's and Catherine Whitney's "Three Days in January: Dwight Eisenhower's Final Mission"

I Like Ike

Fox news anchor Bret Baier and Catherine Whitney have written a carefully researched hagiographic biography of President Dwight Eisenhower with a focus on his last three days in office. The bookends are Eisenhower’s farewell “military-industrial complex” speech and President Kennedy's inaugural “Ask not..” speech. Baier’s Eisenhower is a highly organized leader who is deliberate and recognizes the importance of processes and teamwork. After all he did lead the D-Day invasion and had a very successful presidency. Under Eisenhower the Korean War was ended, a war in Vietnam was avoided, civil rights moved forward and the interstate highway system was started. Perhaps more importantly the nuclear genie was kept in the bottle as he dealt with the post-Stalin era Soviet Union.

Eisenhower was most concerned about presidential transition and he wanted to make sure that President-elect Kennedy got off to a good start.  He actually spent a year thinking about is farewell address perhaps thinking that the “missile gap” was a creature of election year politics. Kennedy later acknowledged that there was no gap. Unfortunately, like too many of today’s politicians, Kennedy and his crew thought they knew it all. That led to the fiasco at the Bay of Pigs early in his administration.

I wonder after writing this biography how Baier as a Fox news anchor can report on Donald Trump without puking. If ever there were an opposite of Dwight Eisenhower it is Donald Trump. 

Thursday, February 16, 2017

My Amazon Review of Michael Kazin's "War Against War: The American Fight for Peace 1914-1918"

The Good Fight?

Georgetown history professor Michael Kazin wears his biases on his sleeve. As someone who was very active in the 1960s anti-war and radical movements, Kazin has written a highly sympathetic account of the anti-war movement that arose in the U.S. to keep us out of World War I. He organizes his history around the lives of four people who symbolized the broad-based coalition that worked round the clock in their anti-war efforts. They are the Southern segregationist Majority Leader of the House and Chairman of the Ways and Means Committee, Claude Kitchin; Crystal Eastman a social reformer who founds the Woman’s Peace Party and the American Union Against Militarism; Morris Hilquit the Jewish Socialist labor lawyer and politician form New York City and Senator Robert La Follette, the Wisconsin progressive filibusters President Wilson’s proposal to arm merchant ships. It was that filibuster that caused the Senate to adopt the cloture rules we have today.

Along the way we meet Crystal Eastman’s brother, Max who publishes Masses, future socialist Norman Thomas, auto magnate Henry Ford, social reformer Jane Addams and Roger Baldwin who would found the ACLU. All in all it was quite a broad coalition and in Kazin’s mind they worked a miracle to keep the U.S. out of the war as long as it did in countering a pro-war movement headed up by Theodore Roosevelt.  After all the Lusitania was sunk by a German U-boat in 1915 and under the aegis of the German ambassador, Germany was running a vast terror network on the east coast. That network caused the Black Tom explosion in New York Harbor which blew up munitions heading for England.

He argues that were it not for the anti-war movement the U.S. would have entered the war sooner causing countless more American deaths. I would argue to the contrary because, in my opinion, a U.S. entry say in early 1916 would have likely shortened the war and prevented the carnage on the eastern front that was to come.

My criticism of Kazin’s work is that he ignores the broad forces of history that made U.S. entry into the war inevitable. The U.S. as a rising power couldn’t really stay out and a Professor Adam Tooze has taught us that during 1916 economic power was being transferred from England to the U.S. Simply put the U.S. had too much at stake in an Allied victory as the Allies were head over in heels in debt to the U.S. and the war was engendering an economic boom. It was only a matter of time for the “peace candidate” Wilson to tip his hand. That happened in 1917 when Germany renewed unrestricted submarine warfare, the Zimmermann telegram was published indicating German overtures to Mexico and Tsar Nicholas II abdicated making it easy for Wilson to say that the war was about democracy. Put in a geopolitical context, no U.S. president would allow a Europe dominated by a hostile Germany.

Nevertheless Kazin tells a good story about an era in American history that has long been forgotten.

Thursday, February 2, 2017

My Amazon Review of Edward O. Thorp's "A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market"

A Quant before his Time

Ed Thorp has written a rather enjoyable autobiography about a math/science nerd kid from depression Chicago who moved with his parents to Southern California in the 1940s where they found work in the war plants. Who would have predicted that a kid who made nitroglycerin in the family refrigerator and placed red dye in a the Long Beach municipal swimming pool would grow up to invent card counting for blackjack and become a pioneer in quantitative finance.

After receiving a Ph.D. in mathematics in 1958 from UCLA Thorp moved on to post-doctoral research at M.I.T. There he would write an apparently obscure paper for the Proceedings of the National Academy of Sciences (Jan. 1961) entitled “A Favorable Strategy for Twenty-One” that would evolve into his best-selling book “Beat the Dealer.” Nevertheless the paper attracted press notice and the attention of Manny Kimmel, a mob-connected businessman from New Jersey. In an amusing part of the book Thorp discusses how Kimmel showed up at his modest rental house in Cambridge in a Cadillac with his two blond “nieces” dressed in mink coats. Kimmel would go on to backing Thorp in his adventures in Reno and Las Vegas. Once the casinos caught on to his successful gambling strategy he became a persona non grata and was physically threatened. However the secret was out and Las Vegas became inundated with Thorp card counters, one of whom was the famous Pimco manager to be, Bill Gross.

Also at M.I.T., Thorp would work with information science guru, Claude Shannon. Together they would invent the first wearable computer. Its purpose: to beat roulette, which it did. After M.I.T. Thorp ultimately moved on to U.C. Irvine where he became interested in the ultimate casino the financial markets. During this time I had the pleasure of casually meeting him in a few academic settings.

Thorp became interested in the pricing of warrants, options and convertible securities. He intuitively developed what was later to be formally derived as the Nobel Prize winning Black-Scholes Model. It was a money maker and Thorp formed Princeton-Newport Partners (PNP) to capitalize on his expertise.  PNP had a great run from the early 1970s until the late 1980s when it closed down after being peripherally involved in the insider trading scandals involving Drexel Burnham. Along the way Thorp and team developed the trading strategy of statistical arbitrage which is utilized by quant shops to this day. He also mentored several people who would go on to become the hedge fund titans of today.

The last quarter of the book is devoted to his political and life philosophy and his approach to charitable giving. Thorp is a very likable person and his autobiography is a good read.

Sunday, January 29, 2017

Reliving the 1930s - Part 3

In 2014 I posted two blogs as to how we are reliving the 1930s. The first dealt with President Obama's vacillation with respect to Putin's aggression in Ukraine and the second dealt with the rise Antisemitism in Europe. Here are the links: and

With only one week in office it now seems that President Trump put us into "hyper-drive" back to the 1930s. He is in the process of starting a trade war with Mexico, whose government is only now undoing the oil nationalizations of Lazero Cardenas in 1938. Perhaps President Trump wants a virulent left-winger heading up the Mexican government. Trust me if he is worried about Mexican immigration today, just wait for an economic upheaval in Mexico.

More frightening is his wholesale exclusion of Muslims by executive order from seven countries previously identified with terrorism by the Obama Administration in 2015. They are Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen. He also closed our borders to the admission of ALL refugees for 4 months. Although not an explicit Muslim ban, it certainly comes close. The message is loud and clear. Moreover, until restrained by a Judge, legal residents with green cards and immigrants with H1-B Visas were also banned from reentering the United States.

His act is a chilling reminder to the the world of 1939 where President Franklin Roosevelt closed our door to European Jewry seeking refuge from Hitler. In fact he refused to allow the refugee filled ship, the St. Louis, from coming ashore in the U.S. Similarly the UK government issued a White Paper sharply restricting Jewish immigration to Palestine. Just like in today's Syria, the refugees were trapped. If only only Obama enforced his Syrian red line in 2012. But that was then and this is now.

Until this weekend I poo-poohed the talk of Trump fascism. I now have to take it seriously as the 1930s come into clear view.

Wednesday, January 25, 2017

My Amazon Review of Daniel Todman's "Britain's War: Into Battle, 1937-1941"

A Comprehensive Look at Britain Going to War

History professor Daniel Todman has written an encyclopedic look at what the effects were of the onset of World War II and its actual beginning on the people of Britain. Aside from the broad geopolitical history which is well known, Todman details the internal politics of both the Conservative and Labour parties as well as discussing the day-to-day lives of the British people. It is a long book for the lay reader, 816 pages in the print edition, but the reader is rewarded. Still I would have preferred a shorter book, hence four stars, not five. Moreover for readers interested in a very accessible view into the lives of the average Brit during the war I would recommend the British television series, “Foyle’s War” available on Netflix.

Todman begins his book with the coronation of George VI in May 1937 and ends with twin debacles at the start of the Pacific War at Pearl Harbor and sinking of the prides of the British fleet off Singapore by carrier based Japanese aircraft in December 1941. It is a lot of history to cover and at home aside from the collapse of the old industrial regions of the north, the British economy was doing relatively well in the 1930s being governed by moderate conservative policies. For all practical purposes Labour was frozen out. However as the war clouds grow in Europe the British economy is put on a war footing increasing taxation and putting much activity under the command and control of the government. This is Labour’s opening to power.

With the collapse of France, Chamberlain resigns and Churchill becomes Prime Minister to rally the country after Dunkirk. The key Labour ministers in the government are Ernest Bevan and Clement Atlee. Their long term goals are to bring socialism to Great Britain. They succeed in 1945 so much so that their policies hold back the country for the next 30 years. (My comment, not the author’s.) Churchill’s goal is to preserve the British Empire; at this he fails. He also fails in the sense the liberal reform wing of the Conservative Party headed by Eden and Macmillan end up in control. Nevertheless he certainly wins the main fight in defeating the Nazis.

Todman has given us an excellent work of history and for the real history buff I highly recommend it, a little less so for the average lay reader.

Friday, January 20, 2017

President Trump: A New Age of Jackson?

President Trump, I never thought I would be saying it, but here we are. President Trump's inaugural address was not that of a traditional Republican; it was Jacksonian in style and substance with a flat out attack on the D.C. establishment of both parties. It was protectionist and nationalist. Gone was the outspoken internationalism of President Obama. He was speaking to his base, and unlike former inaugurals it was more a campaign speech than being broad and unifying. But then again Andrew Jackson's inaugural was far from unifying and it signaled a new age. 

The one fly in the Jacksonian ointment is that the new administration is populated with billionaires and Wall Street types. Whether this administration delivers to its populist base remains to be seen. Furthermore if Trump is going to govern the way he campaigned the stock market will be littered with a series of disappointments.

Nevertheless my best guess is that in four years time his fervent supporters will be disappointed and his critics worst fears will not be realized. Meantime I won't be surprised to see a foreign policy crisis emerge within his first 100 days. Stay tuned.