My Review of A. Wess Mitchell's "Great Power Diplomacy"

 The Art of the Deal

 

Diplomat/historian A. Wess Mitchell has offered us a long history of diplomacy starting with Sparta’s conflict with Athens in 400 BCE up to the Nixon/Kissinger opening of China in the 1970’s. Instead of the direct application of force Mitchell views active diplomacy as a way of getting the best out of a weak hand and as a way to strengthen a strong hand in the game of nations.

 

His case studies also include Byzantium’s struggle against the Huns and Persia, Venice making peace with Milan to engage the Ottoman’s, Austria’s many struggles in Central Europe, France’s grand strategy in the 1600’s, Bismarck’s in the 1800’s and Britain’s at the turn of the 20^th Century. Above all to Mitchell, interests triumph over ideology requiring a nation to play the hand with the cards it is dealt.

 

Especially interesting to me was Austria’s Prince Kaunitz, Metternich’s predecessor, using Louis XIV’s mistress Madame Pompadour as a go between to establish an alliance with France against Frederick the Great’s Prussia. A few years later we see Austria, guided by Metternich making an alliance with Prussia to stave off France. Indeed, interests are far more permanent than alliances. Also fascinating are the machinations of France’s Cardinal Richelieu making an alliance with Protestant Sweden against Catholic Austria. Mind you this is against the backdrop of huge religious strife in Europe.

 

Mitchell discusses at length Britain’s realization that by 1900 it was overstretched and had to reduce its global commitments. Mitchell follows Lord Landsdowne as he makes deals with Japan limiting its involvement in the Western Pacific, with Russia in Central Asia and with the Untied States in the America’s. All of this was necessary to gird the nation for the war that would come with Germany. If there is one message in the book is that core interests take precedence over peripheral interests. This blog previously reviewed Kori Schaki’s work on the same topic. (See: Shulmaven: My Amazon Review of Kori Schake's "Safe Passage: The Transition from British to American Hegemony" )

 

Another lesson of the book is the importance of mobilizing effective coalitions and isolating the enemy. The worst thing that can happen is to be isolated against a strong enemy. Opponents have to be constrained and if they can’t be constrained by the threat of force, bribery sometimes works as in the case of Byzantium buying off the Huns. But bribery should not be confused with appeasement of a direct rival. In the case mentioned Persia was the direct rival and the bribes enabled Byzantium to hold its own.

 

In reading Mitchell’s book, one has to shudder just to think about Trump’s foreign policy. Instead of making alliances, he is destroying them and making America more isolated while Russia and China are moving in the fill in the vacuum, not a pleasant sight. ( See: Shulmaven: Some Thoughts on Trump's National Security Strategy ) One would hope that at least a few Trump staffers would sneak away to read this valuable volume on foreign policy.

 

2026: A Year of Turbulence

  “ When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

                          Chuck Prince, Citigroup CEO, July 2007

 

Before discussing the outlook for 2026, I would like to review what we got wrong and what we got right about 2025. (See: https://shulmaven.blogspot.com/2024/12/2025-revenge-of-bond-vigilantes.html )

 

·       Yet again we were wrong about the stock market. Instead of the S&P 500 trading in a 6400-5500 range stocks traded between 6900- 4900 and closing at the top of the range. We thought stocks would end the year lower.

·       We were right about inflation running at 3% annual rate. The year-over-year change in the CPI of 2.7% reported for November will be revised higher to correct data errors.

·       We were right about tariffs and the mass deportations of illegal/undocumented immigrants.

·       We were wrong about the 10-Year U.S. Treasury yield exceeding 5%. The yield peaked early at 4.79% and trended lower towards 4%.

·       We were mostly correct about the passage of the Trump tax cuts thinking that the 2017 cuts would be extended and the SALT deduction would increase to $20,000, it turned out to be $40,000 with an income cap. We were wrong about other aspects of the Trump tax package that passed. (i.e., no tax on tips and overtime)

·       We were wrong about Congress taking down two Trump cabinet appointees.

·       We were right about Israel attacking Iran’s nuclear infrastructure.

·       We were right about France being on the road to becoming the new Greece.

 

Because I am a glutton for punishment here are my thoughts about 2026.

 

·       Inflation will run hotter than what the market expects. It will end the year at a 4% run rate. The combination of fiscal stimulus, monetary ease and AI capital spending will propel inflation higher. 3% will be the new 2%.

·       The yield on the 30-year U.S. Treasury bond will approach 5.5% causing both the Treasury and the new Trump Fed to institute a policy of yield curve control. It has already started with the Fed buying $40 billion of T-Bills a month through April and the Treasury swapping long term bonds for T-Bills.

·       Gold will surge past $5,000/ounce.

·       Stocks will trade in a broad 7500-5500 trading range and close down by more than 10%. The $310 of S&P 500 estimated earnings will not be enough to levitate stock prices. Put simply, the time to dance will soon be over.

·       NVDIA margins will take a big hit late in the year as competition forces price cutting. (See: https://shulmaven.blogspot.com/2025/12/the-economic-obsolescence-to-nvidia-gpus.html )

·       The Democrats will seize control of the House gaining anywhere between 15-40 seats and could very well take the Senate. Just to note the last time one party controlled all three branches of government was 2003-2006 inclusive and before that it was 1977-1980 inclusive. Americans like divided government. I would also point out that in wave elections partisan redistricting actually hurts rather than helps. ( See: https://shulmaven.blogspot.com/2018/07/gerrymandering-wont-save-republicans-in.html )

·       The Minnesota Medicaid scandal will reach into the offices of Governor Tim Walz and Congresswoman Ilhan Omar.

·       Israel will again attack Iran’s nuke and missile infrastructure.

·       Khamenei will meet his virgins in the sky and Maduro will be out.

 

As usual I end with I am often wrong, but never in doubt.

Some Thoughts on Trump's National Security Strategy

Earlier this week the Trump Administration released its updated National Security Strategy. (See: https://www.whitehouse.gov/wp-content/uploads/2025/12/2025-National-Security-Strategy.pdf ) Needless to say that given the howls that went up, it was far from being universally applauded, especially in Europe. Europe is rightly concerned that the era of having a NATO umbrella over the continent is over. However, given earlier commentaries coming from Vice President Vance, in particular, the document should not come as a surprise. Trump’s policy of selling out allies and cozying up to adversaries is all there in black and white.

I have three preliminary thoughts on the strategy. First, it is harkening back to the America First of 1939-1941. It focuses in on hemispheric security to the exclusion of Europe and just has America First leader Charles Lindbergh was open to a modus vivendi with Nazi Germany, here we have America open to a condominium with Putin’s Russia. It certainly does not bode well for Ukraine and for that matter Israel. Further, the strategy puts policy muscle behind Trump’s Caribbean buildup against Venezuela. To the Trump Administration Latin America is now part of an American economic zone.

Second, there is the strong smell of Yalta in the document. Instead of Roosevelt and Stalin dividing up Europe, we now have Trump, Putin and especially Xi dividing up the world into spheres of interest. The glue holding the deal together is economic self-interest. Where Taiwan fits into this over the longer term is very ambiguous.

Third, there are some hard policy realities behind the document. Europe has the ability to defend itself against Russia; it only lacks the will. Russia remains bogged down in Ukraine after more than three years of war indicating it is not as strong as once thought. If Ukraine can hold its own against Russia, so too can a much larger Europe.

What perhaps pissed off Europe the most was that the document called out its “civilization decline.” Unfortunately, that is the reality, and Europe has to recognize that advanced welfare states cannot run a policy of open borders without severe consequences. Simply put, in a generation Europe will not be the Europe of history. Net net, the policy calls for the U.S. to be an offshore balancer with respect to the world outside of Latin America. (See: https://shulmaven.blogspot.com/2025/08/my-review-of-andrew-lamberts-no-more.html )

My Review of Volker Ullrich's "Fateful Hours: The Collapse of the Weimar Republic, 1918-1933"

The Slow Descent into an Abyss

German historian and Hitler biographer Volker Ullrich ( See: Shulmaven: My Amazon Review of Volker Ullrich's "Hitler: Downfall, 1939-1945 , Shulmaven: My Amazon Review of Volker Ullrich's "Hitler: Ascent, 1889-1939", and Shulmaven: My Amazon Review of Volker Ullrich's "Germany 1923: Hyper Inflation, Hitler's Putsch and...." ) has chronicled the rise and then the slow collapse of the Weimar Republic, 1918-1933. ( See: Shulmaven: My Amazon Review of Frank McDonough's "The Weimar Years: Rise and Fall 1918-1933" and  Shulmaven: My Amazon Review of Benjamin Carter Hett's "The Death of Democracy: Hitler's Rise to Power and the Downfall of the Weimar Republic"   )  Like others Ullrich does not believe that the collapse was inevitable and neither was the rise of Hitler. There was much human agency involved as well as three untimely deaths.

The first and most dramatic was the political assignation of foreign minister Walter Rathenau in 1922. Rathenau had just shocked Europe with the Rapallo Treaty with the Soviet Union and was working on solving the reparations crisis. He was perhaps the only German statesman that the Allies trusted enough to make a deal on reparations. With his death the road was open to the reparations crisis of 1923 which brought on the occupation of the Ruhr and the hyper-inflation of 1923, a shock that Germany would not really recover from.

The second two would die of natural causes. President Friedrich Ebert died in 1925 paving the way for Paul von Hindenburg and  former prime minister and foreign minister Gustav Stresemann in 1929.  Although Stresemann was the leader of the right wing German National People's Party, he firmly supported the Weimar Constitution and he showed his mettle in Ruhr/inflation crisis of 1923. He was, perhaps, the only politician in Germany who could have taken on Hitler. 

Ullrich believes that, at the outset, Weimar did not do enough to reform German society, especially after the general strike of 1920 put down the Kapp putsch. Whether the Social Democrats had the will and the power to do it is an open question. Indeed, they relied on the Frei Corps to put down a communist revolt in 1919. Of course, had they succeeded, history would have taken a different turn.

To Ullrich the election of the authoritarian Hindenburg represented the hinge of German history. It was Hindenburg along with the machinations of prime ministers Franz von Papen and Kurt von Schleicher that enabled Hitler to come to power in 1933. They though Hitler could be controlled, but they were immediately disabused of that notion.

In my mind Ullrich doesn’t spend enough time on the socialist/communist split. Had those two leftwing parties held together they had the votes to stop Hitler. Instead, the communists went to bed with the Nazi’s in 1931-32 helping to bring down the Bruning government. They did this just when Heinrich Bruning’s policies were on the brink of success at the Lausanne Conference, which suspended reparations payments.

To sum up, Weimar was dealt with a bad hand that it played well for a while, but at the end of the day it wasn’t quite enough. Ullrich warns that today in the West we have a far better hand, but it remains to be seen whether the forces of the populist Right will be contained. We ignore his warning at our peril. 

My Review of Mike Wallace's Gotham at War: A History of New York City, 1933-1945

 Big Apple History Through a Socialist Lens

 

Self-professed leftist historian and John Jay College professor, Mike Wallace has written a history of New York City through the New Deal years and World War II. In reading this long book (976 pages in the print edition), it seemed that it took the full thirteen years of his history. Needless to say, the book is way too long and covers way too much minutia.

 

Wallace discusses at length how the city’s various ethnic groups approached the coming of World War II. His view of New York’s ethnic groups is through the lens of cultural pluralism. Although that view has some merit, he ignores the fact that New York was becoming more homogenized and, on its way, to being a melting pot. He ignores two facets causing this. This first is that the public schools were inculcating Americanism into the minds of its students. Second, he ignores the roll of baseball which put sometimes antagonistic ethnic groups in rooting for their respective teams. Indeed, the Yankee-Dodger subway World Series was a classic and no matter which team they were rooting for, fans marveled at Joe Di Maggio's 56 game hitting streak.

 

With Hitler’s coming to power in 1933 New York’s Jews, the largest Jewish community in the world, stood as one against him. They had to face off against local Nazi’s in the German American Bund and plea with Roosevelt, to no avail, to open immigration for Jews fleeing Europe. Here Wallace ignores the role of the New York mob which stood foursquare behind the Jews in breaking up Nazi rallies. ( Shulmaven: My Amazon Review of Michael Benson's "Gangsters vs. Nazis" ) Wallace rightly notes the perfidy of New York Times publisher Arthur Sulzberger in his downplaying of the Holocaust.

 

Wallace is all-in on the New Deal and LaGuardia’s social democratic vision for New York. What he ignores is that LaGuardia’s vision was funded by a hugely disproportionate amount of dollars flowing from Washington D.C.  Those who followed him did not have the largess of Washington behind them and that put the city on an unsustainable fiscal path. Simply put, to him business was bad and government was good.

 

True to his beliefs Wallace spends an inordinate amount of time on the three-way split between, the communists, the socialists, and the New Deal liberals. This would play out in the dumping of Henry Wallace as Roosevelt’s VP in 1944. He also ignores the real gravity of the Rosenberg spy ring which went well beyond atomic spying.  

 

Wallace is particularly good at discussing the policy differences between the Fighting Liberals and the Wall Street Warriors in their focus on bringing the U.S. into the war. Both groups had decidedly different war aims. The Fighting Liberals wanted to globalize the New Deal while the Wall Street Warriors following Henry Luce's "Amercian Century,"  wanted to establish U.S. hegemony.  Incidentally, both supported free trade. Many of the architects of the Cold War who came out of Wall Street banks and law firms are here. They include Dean Acheson, James Forrestal, Paul Nitze, and John Foster Dulles, who by the way was too cozy with Nazi Germany in the 1930’s.

 

We also have a whole bunch of folks who featured in my childhood growing up in New York City in the 1950’s. The include future U.S. Congresswoman Bella Abzug, feminist Betty Friedan, governors Dewey, Harriman, and Rockefeller, expert builder Robert Moses, Congressman Adam Clayton Power, Mayor Robert Wagner Jr., Attorney General Herbert Brownell, civil rights leader Bayard Rustin, and builder Bill Zeckendorf.  All-in-all, quite a cast of characters.

 

The book ends with a discussion on planning for the postwar world. There were many plans drawn up under the belief that the New Deal was still alive. It wasn’t and it pretty much died after the 1938 election. To my mind the planners failed to understand that what New Yorkers wanted were automobiles, houses, and babies. They did not want to be cooped up in apartments the planners imagined. Those desires set off the race to the suburbs of Long Island, Westchester, and New Jersey and if you really think about it represented a continuation of the trend that was established in the 1920’s that was interrupted by the depression and the war.

The Economic Obsolescence Risk to NVIDIA GPU's

The financial press has had a field day in discussing the depreciation risk associated with high end NVIDIA GPU chips. However, lurking beneath the surface is the risk of economic obsolescence. That risk will come from the availability of lower cost chips such as the Google Tensor processor. Moreover, additional competition will come from Amazon and Elon Musk who are developing their own chip sets.

The arithmetic is simple. A high-end NVIDIA GPU chip set costs about $60,000 of that $43,800 represents NVIDIA’s extraordinarily high 73% gross margin. In this example NVIDIA’s cost is $16,200. Herein lies the risk. Lower cost chips produced, at say a more normal, but still high 60% gross margin would yield a price of $40,500. Thus, AI competitors using the newer chips would have a significant 1/3 cost advantage thereby rendering the existing NVIDIA chips economically obsolete. In a way NVIDIA could very well become a victim of its own success.

To be sure, NVIDIA is a technological behemoth, and it has its CUDA software to lock in existing customers. Nevertheless, the mere existence of a 73% gross margin will ultimately bring price competition into the GPU landscape.

The Fed is a Prisoner of the Stock Market

After a 6% sell-off from its all-time high the S&P 500, New York Fed Governor John Williams said on Friday that “I still see room for a further adjustment in the near term to the target range for the federal-funds rate to move the stance of policy closer to the range of neutral,” Stocks immediately responded to the signaled rate cut with a strong rally ending the day well off their highs, but up 1% at the close.  Yes, the Fed put is still alive and well.

 

It was no accident that Williams spoke when he did. Put bluntly the economy is being fueled by the bull market in stocks which is enabling the huge investment boom in artificial intelligence and spending by high income investors. Should the stock market falter, both investment and consumption will stall out, triggering a recession.

 

While the stock market has been chugging along the labor market has been weakening and inflation is running at a 3% rate, 1% above the Fed’s target. Were it not for the recent stock market weakness, the Federal Reserve Open Market Committee would be facing a close call in its upcoming December meeting in trying to meet its dual mandate of maximum employment and price stability.  Instead, it will likely opt to lower interest rates to appease the stock market.

 

By lowering rates, the Fed will run the risk that investors will soon realize that supporting stock prices will be added to the dual mandate. In the short run that could add fuel to the bull market, but over time investors will realize that the 2% inflation target has given way to 3% or higher to the detriment of both the inflation and labor market mandates. Thus, by being a prisoner of the stock market the Fed will have lost control of its dual mandate and ultimately it will fail because the stock market is too big for the Fed to tame.

American Jews: Between a Rock and a Hard Place

American Jews are between a rock and a hard place politically. With the Democratic Party increasingly dominated by Hamasnicks and the DEI ideology of oppressors versus oppressed where Jews are characterized as oppressors, belonging to the party of our ancestors no longer seems to make sense. For a while, the Republicans appeared to be immune from the antisemitism of the Democrats, but that immunity is no longer there.

 

With Heritage Foundation president Kevin Roberts sucking up to the antisemitism of Tucker Carlson, the American Right has moved closer to whiffing the noxious fumes of antisemitism. Adding insult to injury, Tucker Carlson’s friendly interview with the noted antisemite and Hitler/Stalin lover, mainstreamed Nick Fuentes, and his Groypers into the heart of the Republican Party. I would note here that Tucker Carlson’s son Buckley is now on JD Vance’s staff. History could very well record that the assassination of Charlie Kirk took from us on of the few conservatives who could take on Carlson and Fuentes.

 

To be sure there is real opposition to Fuentes and his gang coming from more establishment Republicans, notably Ted Cruz, but just like the Democrats the energy is with the extremists. Indeed, supporting antisemitism and anti-Zionism is part of a proxy war within both parties to overturn the current status quo. 

 

As a result, it is not comfortable to be a Jew in either party today. However, we have no choice because we have to take the world as it is rather than as we want it to be.

 

So, what is a Jew to do? To me Jews in both parties should fight and fight hard. They should not cower to the bullies in either party and instead take them on aggressively in party councils, the media and in every social interaction. We should remember the lessons pf the 1930’s where cowering in the face of evil does not end well. Further, pressure should be put on all of the Jews who make common cause with the antisemites. Those Jews should either mend their ways or be regarded as fifth columnists.

 

In the meantime, it would not hurt to take self defense classes and weapons training in the event things turn really ugly. As the saying goes, prepare for the worst, and hope for the best.

The Democrats Snatch Defeat from the Jaws of Victory

The way I see it the Democrats won the political battle over the government shutdown, but as soon as they attacked the deal they committed an unforced error and gave Trump and the Republicans a victory.  Instead of looking like winners the Democrats became losers. How so? With the shut down the Democrats proved they were no longer comatose and were ready to fight Trump and that stance along with Trump voter buyer's remorse set the stage for huge victories in the off-year election.

On the governing side the Democrats achieved robust funding for the SNAP program, the rehiring of riffed workers during the shutdown and were guaranteed a vote on the Obama Care subsidies in December. The Dems have made short shrift of the pledge for a vote on the subsidies. but here they are wrong. The vote will place the Republicans at the horns of a dilemma. If they do nothing, the Dems will have the perfect issue for the mid-terms and if the Republicans compromise with a lower income limit and a minimum premium the Democrats would have achieved their major goal policy goal for the shutdown. The Dems win either way.

Thus, instead of vilifying the eight Democrats who broke the filibuster, they should in turn, commend them for their political savvy and common sense. Sometimes, in politics, you have to know when to take a win.  

My Review of Ray Dalio's "How Countries Go Broke: The Big Cycle"

 Paying the Piper

Ray Dalio, the founder of Bridgewater Associates, which became the world’s largest macro hedge fund, has written an important book on the inexorable reality that accumulated debts have to be extinguished one way or another. He utilizes a host of international examples and aside from the U.S. he focuses in on Japan and China. No matter the country, the piper has to be paid. Dalio’s big cycle lasts approximately 80 years, and it is in many ways similar to the long cycles discussed in Neil Howe’s “The Fourth Turning.” (See: Shulmaven: My Review* of Neil Howe's "The Fourth Turning is Here: What the Seasons of History......" ) It seems that we are on the precipice of Dalio’s big cycle joining  the crisis point  of Howe’s generational cycle. If that is the case, the turbulent time we are now living in is only in its early stages.

 

Dalio’s debt/credit/economy cycle big cycle is made up of a series of short cycles where credit expands and contracts. However, overtime debt increasingly accumulates because it does not generate the revenue needed to service it. The monetary authorities accommodate the increase in debt by going from MP0 where money is tied to a fixed standard, like gold to MP1 where policy is tied to a policy rate to MP2 where through quantitative easing money is printed. At the end of the day when the debt can no longer be serviced at reasonable interest rate, the debt is either directly repudiated or inflated away in order to deleverage the economy. If the debt is not denominated in local currency, it will be repudiated.

 

Overlapping the credit cycle are two other cycles and exogenous events such as acts of nature and the introduction of major innovations that spur growth. The cycles are an internal political cycle evolving around order/disorder and an external cycle similarly revolving around order/disorder. Today the confluence of the big credit cycle with disorder in both internally and externally means Howe’s fourth turning is upon us. What can mitigate this eventuality or make things worse will be the impact of innovative artificial intelligence on our society.

 

Dalio’s solution to the big cycle calls for reducing the federal deficit as a share of GDP from the current 6% to 3% by increasing taxes, lowering spending and lower interest rates. Similar to the 1990’s deficit reduction, if credible, would work to lower interest rates. Some of these nostrums sound similar to what the Trumpies are arguing, except the part about tax increase, tariffs aside. The Trump way of lowering the debt/GDP ratio relies heavily on much lower long-term interest rates that would bring with it other issues.

 

Dalio is clearly worried, and he makes a compelling case to be worried. My criticism of the book is that although he highlights his main points in bold, it still is way to repetitive and because I read the book on my Kindle, the numerous charts were too difficult to read. I therefore would recommend the hard copy.

Havana on the Hudson - Part 2

The Democrats had a great election night winning in New Jersey, Virginia, California, Pennsylvania and Georgia; Donald Trump and the Republicans had a terrible night as voters, especially Latinos, suffered from buyers’ remorse over their votes in 2024; and New York City, especially its large Jewish community, had a horrible night with the election Zohran Mamdani, the antisemitic socialist as mayor. With Mamdani’s plans to build socialism in New York, the city is now further down the road to becoming Havana on the Hudson. (See: https://shulmaven.blogspot.com/2025/06/havana-on-hudson.html )

 

Mamdani plans called for a rent freeze, a massive public housing program, free childcare, free buses, city owned grocery stores, handcuffing the police, $30/hour minimum wage, and much higher taxes on businesses and high-income New Yorkers. For much of this he needs legislative action from Albany. Although most believe that action will not be forthcoming, you can’t count on the wimpy Democrats on holding firm against him. They could very well cave.

 

Mamdani’s program more than anything else is focused on reducing New York’s high rents. Building more apartments will certainly help, but that will not bring relief in the short run, and a rent freeze will actually raise rents on city’s non-rent-controlled apartments. Indeed, the only way Mamdani could lower rents would be for the city to return to hellhole it was in the 1970’s with crime running rampant. Although Mamdani said he would reappoint Jessica Tisch, the highly regarded police commissioner, they have yet to speak and one wonders what Tisch’s conditions would be for her to stay. In a straw in the wind Fire Commissioner Robert Tucker resigned today over Mamdani’s severe anti-Israel stance.

 

For those Jews who are complacent about Mamdani, I would warn them the Mamdani is anti-Israel to his core. Anti-Zionism is what got him into politics in the first place. My question is with Mamdani as mayor, who will protect the Jewish community from street and subway attacks and the defacement of synagogues which actually started last night?

 

Mamdani is no joke, this TikTok Jacobin will have real power and for those with the means it might just make sense to leave the city before it is too late.

Something Investors are not Thinking About

Although there has been recent commentary about the sustainability of corporate profit margins with the stock market bears arguing that the high margins now being reported will soon regress to the mean and the bulls arguing that, at least for now, margins will remain on a high plateau; there has not been any commentary on the sustainability of the historically low corporate tax regime of the past eight years.  Just to note the the high profit margin argument of the bulls is being used to discredit the near record high of the Shiller cyclically adjusted price-earnings ratio. (See:https://shulmaven.blogspot.com/2025/06/my-ucla-anderson-forecast-presentation.html )  

What few people realize that the current corporate tax rate of 21% is from an historical point of view unusually low. Indeed the 21% rate inaugurated in 2017 is the lowest corporate tax rate since 1939. For example, throughout much of the 1950's to the early 1960's the corporate tax rate was 52% (Not a typo) and from 1993-2017 it stood at 35%. Why is this important? 

In an era where most observers believe the federal deficit  now running at 6% of GDP is not sustainable in the long run, something is going to have to give on the tax front. Although no change is likely until 2029, a future administration could very well find the corporate income tax as a tempting target to raise revenue. Indeed the higher corporate margins go, the easier it will be politically  to increase the tax rate. 

Admittedly this is not an issue for today, but it could very well come to the fore in a few years.

My Review of Andrew Ross Sorkin's "1929"

 The Great Crash and its Aftermath

Andrew Ross Sorkin of CNBC, DealBook, and “Too Big to Fail” fame has written a riveting history the 1929 stock market crash and its aftermath through the eyes of many of its key participants. His writing style puts you in the room with the leading players of the day as they experience the exuberance of the boom and then grapple with grinding bear market that followed. It would have helped if there were an annotated chart of the Dow Jones Industrial average from 1929-1933.

His leading players are “Sunshine” Charlie Mitchell, president the National City Bank and its securities affiliate the leading underwriter of new issues in the 1920’s; Thomas Lamont, the de facto head of J.P. Morgan; Jack Morgan, J.P.’s son and nominal head of the bank; Russell Leffingwell,  a Morgan partner and a founder of the Council on Foreign Relations; Albert Wiggins, president of the Chase National Bank; Jesse Livermore, legendary trader who made $100 million in the crash; Owen Young, president of General Electric and author of the Young Plan for German reparations; John Jacob Raskob, General Motors director, chairman of the Democratic National Committee and developer of the Empire State Building; William Crapo Durant, General Motors founder and leading speculator; Senator  Carter Glass, coauthor of the Federal Reserve Act of 1913 and the Glass-Steagall Act of 1933 and a leading critic of Wall Street speculation;  and Ferdinand Pecora, counsel to the Senate Banking Committee taking on the WASP establishment by investigating Wall Street. We also have cameo appearances of the financier and advisor to presidents Bernard Baruch, and Winston Churchill who was out of government and was speculating in the U.S. stock market, and David Sarnoff, president of RCA, the NVIDIA of its day.

 

The stock market of the 1920’s was the wild west where “pump and dump” pools operated, and insider trading was legal. It was not unheard of for insiders and their friends to receive newly issued stock at a discount from the official offering price. All the while margin was freely available where stocks could be purchased with only 10% of the cash payable upfront. The availability of margin was funded by the call money market at interest rates of up to 20%. It was the call money market that sucked in funds from all over the country, and for that matter the world, to earn high returns. However, this form of leverage could be withdrawn on moment’s notice thereby triggering a liquidity squeeze.

 

I learned a few interesting factoids to comment on. I didn’t know that David Sarnoff was actively involved in the Young Plan negotiations. Perhaps more interesting, I didn’t know that Mitchell of National City and Wiggins of Chase actively lobbied Carter Glass to include J.P. Morgan, as a private bank, in the separation of commercial banking from investment banking. It seems that Glass was close to Morgan partners Lamont and Leffingwell. Thus, any allusion to Glass being the Elizabeth Warren of his day hardly rings true.

 

As someone who has read every front page of The New York Times from August 1929 to March 1933 and has read widely on the subject of the crash and its aftermath, I have a few issues to raise with Sorkin. The first is that the depression was not an inevitable result of the crash. It occurred against the backdrop of inept monetary policy followed by the Fed and more important it was caused by the imbalances caused by World War One rubbing against the rigidities of the gold standard. Thus, the root causes were not domestic in origin as Roosevelt argued, but rather international in origin as Hoover argued. Thus it was no coincidence that the Dow Jones Industrial Average bottomed in June 1932 just when the Lausanne Conference was agreeing to drastic cuts in German reparations payments and the suspension of payments on inter-allied debts. 

 

Sorkin should have read Tobias Straumann’s “1931” where he quoted the 1932 Annual Report from the Bank of International Settlements as follows: “In the circumstance of the German problem- which is largely responsible for the growing financial paralysis of the world – call for concerted action Governments alone can take.”  (See: https://shulmaven.blogspot.com/2019/07/my-amazon-review-of-tobias-straumanns.html ) It was the very Young Plan that Lamont helped to negotiate that made Hitler. His attacks on the Young Plan which stretched out the German reparations to schedule to 1989 and made the payments more rigid, was one of Hitler’s leading campaign issues that gave his Nazi Party 19% of the vote. The prospect of future Nazi victories led to a capital flight from Germany and Austria.

 

I wish Sorkin would have spent more time on what his players were doing in June 1930 when Hoover signed the Smoot-Hawley Tariff Act. The day after Hoover announced that he would sign the bill the Dow Jones Industrial Average plunged 8%, its worst day of 1930.  ( See: https://shulmaven.blogspot.com/2025/04/a-broken-stock-market-and-broken-trust.html ) The Times highlighted the new tariff regime would make it harder for Germany to make it reparations payments and for Britain and France to pay its war debt to America.

 

I also wish that Sorkin were in the room when Britain devalued the Pound and left the gold standard in September 1931, the worst month in stock market history. In response to the fears of a gold outflow, the Fed raised its discount rate from 1.5% to 3.5%. That action was a dagger into the heart of the economy.

 

Thus, in my opinion, the triggers of the Great Depression came in the form of a three-act play. The first was the stock market crash of October 1929, and the second was the signing of the Smoot -Hawley Tariff Act in June 1930. The third and final act occurred when the Fed raised the discount rate in September 1931.

 

My last quibble is that Sorkin used the wrong source for his comments on the interregnum period between the Hoover and Roosevelt administrations. He cites  Eric Rauchway’s “Winter War” which is way too biased against Hoover. (See: Shulmaven: My Amazon Review of Eric Rauchway's "Winter War: "Hoover, Roosevelt and the First Clash Over The New Deal" ) A more balanced account by  Jonathan Alter, a serious liberal, in his “Defining Moment” noted that it was  Hoover treasury department officials, namely Ogden Mills and Arthur Ballentine whose drafts ultimately became  the Emergency Banking Act in March 1933 thereby ending the third banking crisis of the depression.

 

All quibbles aside, Andrew Ross Sorkin has given us a new take on the elements and personalities involved in the crash and its aftermath. Can it happen again? In my opinion, yes. All it takes is human greed combined with lots of leverage accompanied by institutional rigidities and incompetent regulators.

Rage and Silence From the So-Called Peace Camp

 While most of the world looked hopefully on the ceasefire between Israel and Hamas, two of the most vocal callers for a ceasefire reacted either with rage or silence. (See: https://shulmaven.blogspot.com/2025/10/free-at-last-now-hard-part-begins.html ) Students for Justice in Palestine (SJP) applauded Hamas' slaughter of innocent Palestinians and further encouraged them to remain armed. Hopefully their fellow travelers in the West will realize that they have been conned and that the western media will wake up to the fact that Hamas has no compunction about killing their fellow Palestinians. 

Instead of raging at the ceasefire, Jewish Voice for Peace (JVP) has been remarkably silent. Recall that this organization attempted to shutdown Grand Central Station in the name of a ceasefire. Well, they got their ceasefire. Then why the silence? The answer is simple. JVP is fundamentally a left wing group seeking the destruction of Israel as a  Jewish state. Israel winning is anathema to them. They care more about their solidarity with the Left then with the Jewish people and it why they will remain silent about Hamas killing Palestinians.  Shame on them.

Free at Last: Now the Hard Part Begins

After two long years Hamas has finally freed the last twenty live hostages left in the dungeons of Gaza. With the captives being redeemed and an Israeli-Hamas cease fire in place, there is much to celebrate. Nevertheless, we should not lose sight of the very difficult tasks ahead. (See: https://shulmaven.blogspot.com/2025/10/the-israel-hamas-war-is-peace-at-hand.html )

As I write this Hamas gunmen are slaughtering their local Palestinian opponents. This has to stop and if Gaza is to be rebuilt by the proposed middle eastern consortium, Hamas will have to be disarmed. That will not be easy and what Arab state will allow their soldiers to be killed in a Gaza peace keeping mission?

In order for this to work is for the United States, Egypt, Qatar, and Türkiye have to put constant pressure on both Hamas and Israel to maintain the momentum of today. There are few hopeful signs. It appears that there is a new openness to expanding the Abraham Accords and that Indonesia, the country with the largest Muslim population, is prepared to commit troops. President Trump and his team have created the framework for a new beginning in the middle east; let us hope they will have the patience to follow through in the days to come.

My Review of Yaakov Katz's and Amir Bohbot's "While Israel Slept"

Confirmation Bias

Veteran Israeli journalists Yaakov Katz and Amir Bohbot have put together a well-sourced and deeply researched indictment of the vaunted Israeli intelligence services and Prime minister Binyamin Netanyahu in their failure to anticipate the deadly Hamas attack of October 7, 2023. In the bluntest of terms, they were guilty of confirmation bias in which their tunnel vision refused to see the signs of the coming attack by Hamas.

 

They thought Hamas was interested in growing the Gaza economy and the intelligence services had their attention centered on Iran, Hezbollah, and the West Bank. They refused to believe reports coming from the Gaza watchers on the border and, in fact, they did not have a single spy on the ground in Gaza. They relied too much on technical superiority, rather than human intelligence.

 

Hamas, on the other hand had excellent intelligence on what the Israeli’s were up to. They know where the cameras and sensors were, and they knew down to the minute details where troops were stationed and where the safe rooms of the nearby kibbutzim were located.

 

Katz and Bohbot pull no punches in describing the ideology of Hamas. Simply put, Hamas is a terrorist organization dedicated to the destruction of Israel. They do not believe in the so-called two state solution. They believe on one state that does not include the Jews of Israel. Why gullible westerners support such barbarism will be the topic of another blog.

 

The authors highlight the huge military buildup that was taking place in Gaza. Starting with the Morsi regime in Egypt which smuggled in weapons manufacturing and construction equipment in 2012. That enabled Hamas to produce heavy weapon and to construct a labyrinth of tunnels underneath Gaza. Israel has no idea as to the full extent of Hamas’ underground city.

Indeed, Hamas war using western and Arab aid to build a war machine. Further they invested some of that aid into a host of front companies to generate income. One of those companies was actually listed on the Istanbul Stock Exchange.

 

Nevertheless, there were warnings. In 2016 the defense minister urged a pre-emptive strike on Gaza. That was turned down out fear of high casualties. Israel’s 2014 incursion into Gaza did not go as well as planned with casualties far higher than expected.

 

Among the many recommendations Katz and Bohbot recommend are:

·      * Establish a Director of National Intelligence to coordinate the various security agencies. I would also create a Team B to critique the DNI conclusions.

·     *  Create a Department of Informational Warfare. Hamas propaganda has been running rings around Israel.

·      *  Change the defense posture from deterrence to active defense.

 

To conclude I believe that this book should at least be a starting point for the coming investigation of Israel’s intelligence failures. The witnesses are in the book. Netanyahu and his cabinet will have a tough time in defending themselves from this indictment.

Change is Coming for CBS News and the Mainstream Media

 Today Paramount Skydance, the parent of CBS News, announced the acquisition of The Free Press (https://www.thefp.com ) for $150 million in cash and stock, a hefty price for a news organization that has 1.5 million subscribers, but only 175,000 pay. With the acquisition comes Bari Weiss, an outspoken journalist, with a large following. In four short years The Free Press has gathered a stable of writers that include Nellie Bowles* (Weiss' spouse), Jed Rubenfeld, Tyler Cowan, Niall Ferguson, Jonathan Haidt, Ayaan Hirsi Ali and Charles Lane, among others. 

Weiss will become CBS News' editor-in-chief and will directly report to Paramount CEO David Ellison. Weiss' strong positions against wokeness in the newsroom and her support for Israel will bring a breath of fresh air to stultifying  leftwing conformism of CBS. Her goal will be to broadcast news for the broad middle of the American public, namely the center-left and the center-right. "60 Minutes" and the evening news will soon look quite a bit different. 

If she succeeds it would help breakdown the algorithmic programming of social media that is designed to split the country apart in rage. It would also be a wake up call for NBC and CBS as well as the hoity toity New York Times from where Weiss was forced out by a woke ruled newsroom in 2020.

It is said that living well is the best revenge. With the takeover of The Free Press, founders Weiss, Nellie Bowles and sister Suzy Weiss are now quite rich. Dare I say it, Weiss is now richer than anyone in the New York Times newsroom. Needless to say, this will not go unnoticed.

As a paid subscriber to The Free Press, I can only wish Bari the best.

 *- Just to note I was banned from publishing book reviews on Amazon over Nellie Bowles' book. (See: https://shulmaven.blogspot.com/2024/06/my-amazon-review-of-nellie-bowles.html )

The Israel-Hamas War: Is Peace at Hand?

 On October 27, 1972, Henry Kissinger told the nation that “peace is at hand” in Vietnam. He was premature to say the least. We now have announcements from Israel, Hamas, and various Arab states that they are on board with President Trump’s 20-point plan to settle the Israel-Hamas War. Discussions will begin tomorrow in Egypt with Hamas already agreeing to release all of the hostages, both dead and alive, that they hold. A reason to be optimistic is that unlike in 1972 when the North Vietnamese Army was standing strong, Hamas is sitting on the brink of military defeat.

 

However, the hostage release is not the be all and end all to the conflict. The critical sticking points that remain is whether or not Hamas will disarm as required and that Hamas will have no role in the future governing body of Gaza. Both of those conditions Hamas has yet to agree to. Further complicating the situation is that Israel attempted to assassinate Khalil Al-Hayya, Hamas’ lead negotiator in Doha, an attack in which his son was killed.

 

My belief, or hope, is that these obstacles will be overcome. Why? Simply put, the correlation of forces is such that Hamas’ choice is to accept the terms or be “obliterated” using President Trump’s term. An early sign of progress will be the speed at which the Israeli hostages are being released. Of course, all of Israel will be looking at the physical condition of the alive hostages being released which will obviously affect Israel’s negotiating posture. Meantime, the ball is in Hamas’ court.

My Review of John Malone's "Born to be Wired: Lessons from a Lifetime...."

 Mogul

John Malone is a larger-than-life figure who played a leading role in bringing the cable industry into being. In telling his life story Malone gives us a history of the cable television industry from its humble beginnings to its peak in the late 20th century to its slow decline in the face of competition from streaming. He was also involved in a host of media deals starting in the 1980’s with CNN and right up to the potential of a Warner Brothers Discovery deal with Paramount Skydance.

The title of the book is derived from the Steppenwolf song “Born to be Wild.” We forget that CATV stands for Community Antenna Television. The industry began in the late 1960’s when a few hardy entrepreneurs began putting up towers in rural areas to capture the signals from over the air television. From the towers they strung wires to customers who previously were unable to watch television. Many of the founders actually strung the wires themselves. The industry exploded in the late 1970’s as satellites beamed down programming such as TBS and HBO to the cable operators. And in the 2000’s we witnessed  the full flowering high speed broadband connections into our homes.

Into this milieu stepped John Malone, a middle-class kid from Connecticut with a degree from Yale and a Ph.D. in operations research from Johns Hopkins. He started out at Bell Labs and in his 20’s he addressed the full AT&T board on how to improve its capital structure. After his suggestions were not adopted by the Bell-Heads, he transitioned to a consulting role and subsequently joined Jerold Electronics, a company that manufactures cable hardware.  After being passed over for the CEO job at Jerold’s parent company he struck a deal with Bob Magnes, who was building out his cable operation out of Denver. Malone became the CEO of Tele- Communications in 1973, and by 1996 it was the largest cable operator in country.

Although I was never a player in the industry, I was peripherally involved in the industry through a few small investments. In the 1970’s made seven times my money on Scientific Atlanta, a major supplier of cable boxes. Along the way I owned stock in Cox Communications and Malone’s Liberty Media, and I suffer for my sins by still owning shares in Comcast.

 

When I was working with Salomon Brothers in the 1990’s Bell Atlantic proposed taking over Tele-Communications. Salomon was representing Bell Atlantic in the deal. I remarked to Jack Grubman, Salomon’s star telecommunications analyst, that there is no way the cable cowboys in Denver would culturally mesh with the Bell Atlantic suits in Philadelphia. That deal did not happen, but when AT&T later bought Tele- Communications the cultural issues that I worried about came to the fore.

 

Malone presents portraits of such media moguls as Rupert Murdoch, Sumner Redstone, Ted Turner, Brian Roberts, Barry Diller, and David Zaslav. Afterall he was instrumental in the success of Turner’s CNN and funded Robert Johnson’s efforts to form BET (Black Entertainment Television) Though his Liberty Media, Malone  had control of Charter Communications, SiriusXM, Formula 1, Direct TV,  Home Shopping Network, The Discovery Channel, Match.com, international cable assets, and the Atlanta Braves. Although he has stepped back from active management, he remains a force to be reckoned with in the media world.

 

A good part of Malone’s success was due to his playing the tax code like a Stradivarius. Wherever he could he avoided the payment of taxes and the prime vehicle for that was to create letter stock in his affiliated companies. Although too complicated to go into here, letter stock enables the parent company to segregate the economics of a subsidiary to a new set of shareholders.

 

Not without good reason, Malone was vilified by the public and politicians as a monopolist who delivered poor service at high prices. Some of this was true because Tele-Communications under-invested in service and capital equipment, Hence the need to merge with a big Telco. As Malone recognizes the cable industry gold standard is Cox Communications (now Enterprises), which has the best customer service with the most advanced equipment. I was very unhappy when the company was taken private in 2004. Cox is now in the process of merging with Charter Communications to become the largest cable provider in the U.S.  

 

There is much more to Malone’s autobiography, and highly recommend this book for those interested understanding how our telecommunications cornucopia came into being.

There is a Method to Trump's Madness

 This week the politico/media world is abuzz with the suspension of late-night comedian Jimmy Kimmel over blame shifting comments on the Charlie Kirk assassination. The suspension by ABC/Disney was exacerbated by FCC Brendan Carr’s mafia like threats to suspend the broadcast licenses of its affiliate stations. This time the pearl clutchers on the Left are legitimately concerned about the very real threat to free speech that Carr represents.

 

But there is more here than meets the eye. The move on Kimmel is part and parcel of Trump’s plan to attack the power centers and funding sources of the Left. Think about it; Trump Administration has moved against high level government bureaucrats with DOGE, NGO’s funded by A.I.D., elite universities, Big Law, alternative energy by removing its tax credits, and now the media. The Trumpistas understand that politics are downstream of culture and so it should not surprise anyone that the media is in their crosshairs.

 

Indeed, a sea change in late-night television is now underway. With Stephen Colbert soon to be gone and Kimmel apparently on the way out, late-night television will no longer be a monopoly of the Left where it functioned as both a cheer leader and a therapist for those who tuned in. Further with the Skydance takeover of Paramount, CBS News will no longer exhibit its Left bias and if Paramount moves to take over Warner Bros. Discovery, CNN will move in the same direction. As Bobby Dylan said, “the times, they are a changing.”  All you have to do is look at Trump’s takeover of the Kennedy Center.

 

With respect to funding, look at how hard Trump has hit the big funders of Democratic and leftwing causes. As stated above, look at the contributors from Big Law, government employees, academia, nonprofit organizations, the media, Hollywood, and the alternative energy producers. The next obvious step will be for Trump to use the IRS to intimidate tax exempt organizations that flow big bucks into the Democratic Party and progressive groups.  

 

Historically Silicon Valley has been a huge source of funds for the Democrats, but no more. Just watch the leaders of Big Tech suck up to Trump.

 

As a result, step-by-step the Trumpistas are seizing the organs of power that made the Democratic Party a viable, and many times, dominant political force. Trump is rapidly accumulating power, and the Democrats are cuddling up to the Socialist wing of the party that will bring with it electoral disaster. And it is my guess, that is part of Trump’s plan.

My Review of Barry Strauss' "Jews vs. Romans"

The Jewish Wars

I take my title from Josephus’ “The Jewish War” which recounts the great Jewish revolt against Rome from 66-74 C.E. Hoover Institution fellow, Barry Strauss while using Josephus’ history, he casts a critical eye on this work written in about 75 C.E. From the time of the Roman invasion of Judea in 63 B.C.E to 136C.E the Jews of Israel fought three wars against the Romans and in many of those wars Jews fought Jews in what can be characterized as civil wars. Indeed, like Josephus some Jews fought on the side of Rome and there was so much infighting that the Talmud tells the reason for the destruction of the Second Temple was “groundless hatred.”

Although Judea was ostensibly a backwater state in the Roman Empire it played a major strategic roll in the thinking of Rome and its arch enemy Parthia (modern day Iran). Simply put, Judea in the hands of Parthia would have created a strategic nightmare for Rome. That is the reason Rome deployed one seventh of its legions in Judea between 66 C.E. – 74 C.E. to put down the great Jewish Revolt. That revolt led to the destruction of the Second Temple and the siege of Masada. Thus, it was no accident that such Roman Emperors as Augustus, Tiberius, Vespasian, and Hadrian took a great interest in the goings on in this small province in their empire.  Further, it was out of this clash of civilizations came Christianity and Rabbinic Judaism.

 

Although Judea was down it was not out. There was a revolt of the diaspora in 116 C.E. and then the Bar Kokhba revolt of 132-136 C.E. Although Bar Kokhba’s guerilla army fought bravely, in the end, they were no match for the trained legions. Just as in the first revolt, there were many Jews who sided with Rome, either out of self-interest or fear of how it would end. The Romans then wiped Judea off the map by calling it “Palaestinia.” I wonder how many Palestinians today know that their name came from ancient Rome.

 

Barry Strauss has given us a very readable history Jewish-Roman wars of two millennia ago. That history resonates today. Indeed, it may seem like current events. My one criticism of the book is that it does not give the reader a sense of the economy of the region. He doesn’t go into the role of Herod as the master builder of Judea. Did that bring about prosperity or result in high taxation to pay for all of his projects? He does mention the gap between the rich and poor Jews but, doesn’t really go into detail.  When I was in Israel last year, I witnessed an archaeological site in Jerusalem that portrayed the immense wealth of the city’s upper crust. That aside Strauss has written an excellent history of the period.