My Review of Porter Stansberry's "Warren's Mistakes"*

 Chinks in Buffett’s Armor

Financial newsletter writer Porter Stansberry has written a detailed critique of legendary investor Warren Buffett’s investments after 1999. In essence Stansberry believes that Buffett changed his investing style in 1999 when Berkshire Hathaway offered its then undervalued stock to buy General Re. From there, instead of finding hidden value in the stock market, Berkshire embarked on a process of buying companies whole with huge investments in electric utilities and the Burlington Northern Railroad. Berkshire became a clunky conglomerate, a business model he once derided. In a notable example he cites Berkshire’s acquisition of the Benjamin Moore paint company for one billion dollars in 2001. Instead Stansberry argues that Berkshire should have bought a 25% interest in Sherwin Williams, a far better paint company.

 

The reason why the years around the turn of the century are so important is that from 1967-2000 Berkshire dramatically outperformed the stock market as a whole. After that Berkshire’s performance roughly tracked the S&P 500. To Stansberry, Buffett is a better investor than an operator.

 

One of the questions Stansberry asks is to what we attribute Buffett’s success as a stock market investor. He found the answer in a 2018 Financial Analysts Journal article by Andrea Frazzini, David Kabiller and Lasse Heje Pedersen, all of AQR, entitled “Buffett’s Alpha.” Using data from 1976-2017 the AQR authors developed a multi-factor analysis that attributed much of Buffett’s outperformance to buying high-quality low beta stocks with a considerable amount of leverage. A good piece of the leverage came from Buffett’s utilizing the float from his insurance companies.

 

Buffett’s genius was to consistently utilize these factors, even the face of temporary downturns that could have broken other managers employing the same strategy. In 1998-1999 Buffett was sorely underperforming and many “value” managers were crushed during that period. (See for example: https://shulmaven.blogspot.com/2026/02/my-review-of-jeremy-granthams-making-of.html ) Such was the strength of Buffett’s reputation and the permanence of his capital that enabled him to ride out the storm.

 

Stansberry is especially critical of Berkshire’s investment in the Burlington Northern Railroad in 2010 and a series of investments in Berkshire Hathaway Energy. (BHE) In the case of Burlington Northern the author notes that is has the worst operating ratio of all the Class I railroads significantly underperforming its competitor, Union Pacific. Indeed, Buffett himself has noted that Burlington’s capital expenditure consistently exceeds its depreciation allowance. Thus, owner’s income is less than reported income.

 

In the case of BHE, Stansberry states that it has yet to pay a dividend to the parent company. BHE’s huge investment in solar and wind energy is done solely for the tax credits that the parent company utilizes. Absent the tax credit the investments in solar and wind would not be economic. Furthermore, in 2022 BHE was valued in excess of $90 billion in 2022 when then CEO Greg Abel sold his stock back to Berkshire. Two years later the company was valued when the Scott family sold its interests back to Berkshire, a huge haircut. In the interim the PacifiCorp subsidiary became on the hook for a maximum of $50 billion for potential liabilities accruing from the Oregon wildfires. Stansberry unfairly harps this maximum liability because should it be awarded the liability would be limited by the bankruptcy of its Pacific Power subsidiary.

 

Stansberry’s solution is for Berkshire to spin off both Burlington Northern and BHE. That would clean up Berkshire’s balance sheet and make it look more like the Berkshire of old.  

 

My primary criticisms of the book are twofold. First, Stansberry after paying lip service to Buffett’s investment acumen, he takes on the role of prosecutor and in many instances, he refers to Buffett as an “old man,” hardly fair. Next, he leaves out perhaps the most important reason as to why Berkshire has failed to outperform the S&P 500.

 

My explanation is that Berkshire’s primary competitive advantage, aside from Buffett’s investment acumen, is the ability to access its insurance float at a low or zero cost. With the Federal Reserve operating at a very low or zero interest rate policy for the past 25 years, Berkshire’s competitive advantage from this source has been severely eroded. Thus, with interest rates normalizing, we should expect Berkshire to once again outperform the market averages. However, this would be a tall order with Buffett no longer at the helm. Greg Abel, Berkshire’s new CEO, has his work cut out for him.

* Shulmaven is a longtime shareholder in Berkshire Hathaway. Subsequent to the original post I discovered that Stansberry was found civilly liable by the SEC for violating the securities law to the tune of $1.5 million in 2007.

 

Warsh Strikes the Right Chord

Fed Chairman Kevin Warsh struck the right chord in his Jackson Hole speech yesterday. He noted that the Fed has missed its 2% inflation target for five years and the economy is operating at full employment. Although there has been some modest improvement in the recent inflation data, Warsh remains skeptical that it is on a clear glide path towards 2%. Although not giving forward guidance in the traditional sense, Warsh put the markets on notice that a rate hike is likely at the September Open Market Committee meeting.

 

The treasury market responded with a “bear flattener” where short rates went up much more than long rates. The 2-year surged by 12 basis points to 4.36% while the 10-year and 30-year yields advanced by 5 basis points and 2 basis points, respectively. The market action on Friday was the mirror image of the response after Warsh’s comments after the July Fed meeting. Then the market put on a “bear steepener” trade with short rates falling and long rates rising significantly. (See: Shulmaven: The Bond Vigilantes Strike)  I would remind readers that the 10-year treasury is trading at 4.72%, precisely the level when Treasury Secretary Scott Bessent announced his expanded bond buyback program. (See: Shulmaven: The Treasury Strikes Back )

 

Whether a September rate hike is one-off or the start of new tightening cycle remains to be seen. However, with the 2-year note yielding 4.36%, it looks like the federal funds rate is now on a slow road to 4.5%.

My Review of Daron Acemoglu's "What Happened to Liberal Democracy?”

The New, New Deal

M.I.T. economist and Nobel Laureate Daron Acemoglu’s idea of a liberal democracy is the New Deal era of 1933-1973 where under some very unique circumstances the U.S. enjoyed a “shared prosperity.” True to form, the book is being hailed by a host of Left and Far-Left economists.  As a result, his liberal democracy is not the liberal democracy of Milton Friedman and Friedrich von Hayek. Thus, if a reader wants a more balanced account on the need to restore liberal democracy, I would suggest Adrian Wooldridge’s the “The Revolutionary Center.” (See: Shulmaven: My Review of Adrian Woodridge's "The Revolutionary Center" ) What both books have in common is that they go back to the seminal works of Kant, Hobbes, and Locke.

 

In many respects this book is a follow-on to Acemoglu’s and James Robinson’s “Why Nations Fail.” Simply put, Acemoglu worries about how the collapse of democratic institutions leads to authoritarians of the Right and the Left. Here Acemoglu makes a plea to the Democratic Party to return to its working-class roots of the Roosevelt era. He notes that the party began going astray when it traded the working class for the college educated elites. This was in response to the post-industrial world’s reduced need for mass production factory workers in favor of highly educated technical workers needed to run the more automated work of the future.

 

To Acemoglu the first sign of this was the student deferments of the 1960’s during the Vietnam War. It was the factory workers that went to Vietnam while the college students of that era lived it up with sex, drugs, and rock ‘n roll. I know from experience as college graduate in the army at the time, college graduates among my fellow enlisted personnel were few and far between.

 

To Acemoglu, the turning point of the Democrats abandoning the working class went into full force in the 1980’s. This dating is no coincidence because it represented the start of Reagan’s first term. To the author the slow demise of the working class begins then.

 

He is wrong on this point. I would date the slow decline in the working class to the early 1970’s which brought with it the first oil shock and increased foreign competition in automobiles and steel. The date that will live in infamy was September 19,1977 when Youngstown Sheet and Tube shut down its 5,000-worker Campbell Works. Within five years the Mahoning Valley lost 50,000 workers. Why is this important? The Democrats held the presidency and both houses of Congress and did nothing.

 

At the same time the Democratic Party, instead of supporting in the interests of factory workers, turned its attention to the environment, abortion, and racial preferences. To be sure those are real issues, but it was of no solace to the relative and absolute decline of manufacturing work. Thus, it is no wonder that many workers moved away from the Democratic Party.

 

To cure this Acemoglu wants to return the Democratic Party to its to emphasize prolabor positions by strengthening labor unions, selectively supporting tariff, investment in public goods improving the safety net, and above all stop having its elites look down on people who work with their hands and live in small and mid-sized cities across America that have been devastated by deindustrialization. No more should a Hillary Clinton call them “Deplorables.” People forget that FDR was socially conservative, religious and very patriotic, characteristics that hardly define the Democratic Party of today.

 

What Acemoglu gets right is his hostility to identity politics and the cancel culture it breeds. As a liberal he believes in free speech and compares the cancel culture with the Spanish Inquisition, Maoism, and Soviet Communism. The logic behind identity politics requires Orwellian speech police to enforce all of its strictures. Acemoglu, within limits, accepts the rights of diverse communities to live their lives as they see fit.

 

My problem with Acemoglu’s New, New Deal is that the original New Deal was a product of a time and a place that no longer exists. The massive factories of that era are gone, and America has lost its postwar monopoly position in tradeable goods. Further the original New Deal was not bogged down by a host of regulations that make it impossible to build. To be sure Acemoglu is supportive of the “abundance agenda,” but that is a long way from being implemented. (See: Shulmaven: My Review of Ezra Klein's and Derek Thompson's "Abundance") Even more problematic is the prevalence of government employee unions which makes effective government hard to deliver. Recall that FDR himself was against public employee unions. And if you need further proof all you have to do is to look at the failed states of California, New York, and Illinois to see how a New, New Deal would work in practice.

 

To conclude I wish the Democrats would take to heart Acemoglu’s criticism of identity politics. Here he completely agrees with Adrian Wooldridge. I am also glad that Acemoglu is at the barricades fighting the illiberality of the Left and Right. It is good fight. On a more technical level, the book is in need of an editor because it bogs down in too many places and it is need of tables and charts to visualize the data in the text and finally why does the author have to cite himself 56 times in the bibliography, a bit over the top.

The Treasury Strikes Back

As we wrote earlier this month the bond vigilantes were on the warpath sending the yields on 30-year sovereign debt to generational highs. ( See: https://shulmaven.blogspot.com/2026/08/the-bond-vigilantes-strike.html ) With the headlines screaming “bond market rout,” Secretary of the Treasury Scott Bessent announced that he was doubling the treasury’s bond buyback program from $2 billion to $4 billion a week starting in early September to be financed in the short-term bill market. In essence the treasury is engaging in a version of “operation twist,” a policy that historically had little long-term effects.

 

In response the yields on the 30-year U.S. Treasury bond declined from 5.3% to 5.19% and the yield on the 10-year dropped from 4.7% to 4.64%. In a clear way Bessent told the speculators that shorting bonds was not a one-way street. In response gold and bitcoin rallied and the dollar declined.

 

However, Bessent, as former hedge fund trader, knows full well that temporary interventions of this type do not work unless they are backed up by the underlying fundamentals. In this case nothing has changed as fiscal deficits continue to mount, AI spending soars and there is a global build-up in military spending.

 

Thus, it will take a lot more that $4 billion a week to halt the secular bear market in bonds that we are now in. If Bessent wants to engage in a policy of yield curve control it would require the full cooperation of the Federal Reserve, which at this time seems unlikely. Why?  It would unleash a collapse in the dollar with a concomitant increase in inflation.

 

Net. Net. Look for yields to work their way higher as the summer turns to autumn. 

My Review of Batya Ungar-Sargon's "The Jews and the Left"

 Jews and Democrats: Time for a Divorce?

Last November I wrote that Jews were between a rock and a hard place in that both Democrats and Republicans have become more hostile to Jews. (See: https://shulmaven.blogspot.com/2025/11/american-jews-between-rock-and-hard.html ) Here polemicist Batya Ungar-Sargon argues that it is time for the Jews to divorce from the Democratic Party. Simply put the Left in America has become increasingly hostile to Jews; witness the Michigan senate primary win of Abdul El-Sayed, the near gubernatorial primary win of Francesca Hong in Wisconsin, and Peggy Flanagan’s win the Minnesota Senate primary. However, Ungar-Sargon does not suggest that Jews marry the Republican Party, but rather to vote strategically. As my late father of blessed memory constantly reminded me the criterion for a vote is whether or not a candidate would be good for the Jews.

 

Ungar-Sargon presents a brief history of the relationship of Jews and politics in America starting in colonial times. She notes that with George Washington’s letter to the Jewish congregation in Newport, Rhode Island in 1790 that Jews in America would be free to practice their religion. Aside from Grant’s Civil War order which was cancelled by President Lincoln there hasn’t been official discrimination against the Jews. Thus, in her mind Jews should not consider themselves a persecuted minority. This is especially true because Jews as a group have achieved huge success in “The Golden Land.”

 

A problem with the book is that she ignores the entire 19^th Century history and the whole history of private discrimination against Jews (restictions on club membership and property covenants) that existed from the beginning. She also ignores the rabid antisemitism of the Klan in the 1920’s and Father Coughlin in the 1930’s. She also ignores that in Europe and especially in Russia it was the Left that led the charge against the antisemitism of the Right.

 

To her the source of the bond between the Jews and the Democratic Party is a result of the labor movement in the early 20^th Century where Jewish immigrants were in the vanguard of the growing movement, especially after the Triangle Fire in 1911. (See: https://shulmaven.blogspot.com/2020/01/my-amazon-review-of-terry-golways-frank.html )  The deal was closed with the very pro-Labor Roosevelt Administration and Roosevelt’s opposition to Hitler.

 

It was an easy step from labor activism to civil rights activism in the 1950’s and 1960’s. Here Jews were in lockstep with the northern Democratic Party. However, once the civil rights movement moved away from equal opportunity to equal results and later to the DEI mentality of oppressor versus the oppressed Jews began to have second thoughts about the Democrats. This is especially because DEI treats Jews as oppressors, not the persecuted minority of old. In a nutshell, the Democratic Party abandoned the working class in favor of identity politics.

 

All of this has come to a boil with the virulent anti-Zionism of the Left after October 7^th. Here the Left is calling for the destruction of Israel as a Jewish state and thus condemning half the Jews in the world who happen to live in Israel to death. That is exactly what “from the river to the sea” means.

 

Although I have outlined several issues with Ungar-Sargon’s book, she makes a convincing case that the Democratic Party as it exists today is far from the best political home for Jews today. That said, Trump and the Republican Party do not make for a comfortable home. However, given current trends, in a post-Trump world the Republicans could very well offer a better option than Democrats. In the meantime, a trial separation from the Democrats is in order.

 

My Review of Bojan Pancevski's "The Nord Stream Conspiracy"

 Sabotage in the Baltic

On September 26,2022, a team of six Ukrainian divers blew up the $20 billion Nord Stream 2 gas pipeline that lied 80 meters below the surface in the very dark and very polluted Baltic Sea at a cost of about $250,000. The 760-mile pipeline stretched from Russia to Germany and was to supply cheap gas for German industry. In this remarkable feat of investigative journalism Wall Street Journal reporter Bojan Pancevski tells us the story as to how the operation came together and the police work in Germany to uncover the source of the sabotage.

 

The operation was conceived shortly after the Russian invasion of Ukraine. It was put together by an off-the books operation of former SBU (Ukraine CIA) and GUR (Ukraine military intelligence) called The Start-Up. In order to protect their identities, the author calls the two leaders The General and the Colonel, respectively. They are high enough in the bureaucracies to get things done even though at time they were officially retired and later in jail. The purpose of the operation was to cut off the dollars that Putin received from selling natural gas to the West that fed his war machine.

 

Pancevski uses many aliases for the leading characters in his book. The most interesting is Freya, a woman in her late 30’s who in a former life graced the cover of an erotic magazine. She is full of spunk, and it was her who actually placed the charges that blew up the pipeline. 

 

Because much of the action took place on German territory, the German Federal Police became involved. Here we follow The Chief Inspector engage in the extraordinary nitty-gritty police work to piece together what happened and to ultimately name the Ukrainians involved in the plot. For example, a speed camera in Germany caught the license plate of an automobile used by the Ukrainians. Piece-by-piece the Chief Inspector solves the crime. However, when seeking help from Poland, he was turned down because Poland rightfully viewed the Ukrainians as heroes deserving of medals.

 

The author gives a great deal of background on the entire Nord Stream endeavor. Despite U.S. opposition, Germany’s need for cheap gas over-rode the strategic imperative of not funding Russia. Indeed, once Putin understood that his invasion would not stop the flow of gas, he green—lit the Ukrainian invasion. He was wrong in that assumption. The pipeline represented a massive outlet for Gazprom, Russia’s leading gas producer. The German-Russian relationship on gas was more than cozy as Pancevski notes that former German Chancellor Gerhard Schroder ends up on the Gazprom board. Did someone say payoff?

 

We also discover the CEO of Nord Stream was Mattias Warnig. Early in his career he was member of the Stasi, the East German secret police and later became a good buddy of Putin. It just shows how important Germany’s lust for cheap gas was and Angela Merkel was no exception.

 

We also learn that much of the Ukraine Army is funded privately with individual oligarchs and businesses putting up money for individual units. That is how The Start-up was funded. Furter Voldamyr Zelensky is not quite the boy scout his press portrays him and his former deputy Andry Yermak participated in more than his share of corruption. Nevertheless, that while both The General and The Colonel expected Zelensky to flee after the invasion, he did not. Lastly, we learn that the CIA station in Kiev was and is very active and there are American boots on the ground training Ukrainians how to use U.S. equipment. My guess is, not mentioned in the book, the special forces were and are on temporary duty to the CIA giving Washington deniability.

 

Bojan Pencevski has written a nonfictional spy thriller that gripped me throughout reading his book. We witness unbelievable human courage on the part of the Ukrainians and excellent police work on the part of the Germans. It should be a leading candidate for the major book awards!

The Bond Vigilantes Strike

 Most market commentators attributed last week’s bond market sell-off to the lack of specificity in newly installed Fed Chair Kevin Warsh comments during his post-open market committee news conference. Although the Fed voted to keep the Fed’s target rate unchanged, regional bank presidents Beth Hammack, Lori Logan and Neil Kashkari voted for an increase thereby issuing a challenge to Warsh who has said that “inflation is a policy choice.” Warsh did not give any guidance as to how the Fed will bring inflation down to its long missed 2% inflation target. Thus, short-term interest rates declined as long-term interest rates rose in a classic bear steepener trade.

 

To be sure, I am in general agreement with Warsh on the limitations of forward guidance. The markets should not be spoon-fed the Fed’s outlook as to the course of short-term interest rates. As I noted a decade ago, the Fed should not be the stock market’s fairy godmother. (See:https://shulmaven.blogspot.com/2016/01/memo-to-stock-market-janet-yellen-is.html )

 

My sense is that the back-up in yields has more to do with the return of the late 20^th century bond vigilantes in a 21^st century form. Simply put, the back up in the 30-year Treasury yield to 5.27%, its highest in 17 years and new multi-year highs in British, French, German and Japanese yields is telling us that something more fundamental is going on than a Fed meeting. What the markets are coming to grips with is the fiscal train wreck across the industrialized world, combined with supply shocks and an unprecedented amount of business investment associated with AI. Put bluntly, there is not enough funding to go around and the bond vigilantes sense this. There are more uses of funds than sources of funds.

 

In my year-end outlook I noted that the 30-year Treasury Bond would end this year at around 5.5%. (See: Shulmaven: 2026: A Year of Turbulence ) My guess is that target is likely to be exceeded before year-end and that it will likely have a 6 handle on it next year. Although the stock market rallied late week in response Citadel’s covering the hedge fund Situational Awareness’ margin call, it will soon turn its focus to the bearish forces emanating from the bond market.

  

My Review of John Ireland's "The Death of Trotsky"

 Stalin’s Long Arm

Stalin’s long arm reached into suburban Mexico City in August 1940 to assassinate Leon Trotsky, his former rival for power in the Soviet Union. Here author John Ireland examines how Stalin used his NKVD security service to infiltrate Trotsky’s inner sanctum to allow Ramon Mercader to smash an ice ax into the back of Trotsky’s skull thereby killing him.

Ireland tells us how the mother son team of Caridad Mercader and Ramon Mercader were recruited during the Spanish Civil War. Though both of them were stone-cold communists, they enjoyed the finer things in life. They were aided by Iosif Grigulevich, the NKVD’s super spy who assisted in the plot. (See: https://shulmaven.blogspot.com/2025/05/my-review-of-shaun-walkers-illegals.html )

 

The operation had a very long tail. For example, Ramon Mercador first had to seduce Sylvia Ageloff, a Brooklyn social worker who was the sister of one of Trotsky’s secretaries. It was the connection to Sylvia that enabled Ramon to enter Trotsky’s household.

 

Ireland goes into the background as to how Trotsky, the founder of the Red Army, lost his fight with Stalin. Trotsky was too much of an intellectual to get involved in the day-today nitty gritty of Soviet politics. On the other hand, Stalin coldly and methodically accumulated power to best all of his rivals. (See: Shulmaven: My Amazon Review of "Stalin: Volume I: Paradoxes of Power, 1878 -1928" and Shulmaven: My Amazon Review of Steven Kotkin's "Stalin: Waiting for Hitler, 1929-1941" ) Although, by the time Trotsky was assassinated he had little power being in charge of a very small sect revolving around his personality, Stalin was so paranoid that he feared him as a potential rival. Trotsky wasn’t the only one because during the Purge Trials Stalin finished off his old Bolshevik comrades in the early leadership including Zinoviev, Kamenev, and Bukharin.

 

So how did Trotsky end up in Mexico?  Stalin first exiled him to Turkey and Trotsky moved on to Paris and Soviet diplomacy forced him out. He then went to Norway. From Norway the new revolutionary regime of Lazaro Cardenas in Mexico invited him in. Initially he stayed with the painter Diego Rivera and had an affair with Frida Khalo, Rivera’s wife. Of course this did not please Natalia, Trotsky’s wife.  With so much tension the Rivera household Trotsky moved on to a villa in suburban Mexico City.

 

While there Stalin sent three assassination teams into Mexico. The first attempt failed, but not for the lack of trying; 200 bullets rained into the Trotsky household. The second attempt succeeded. After the assassination Ramon was jailed, a Stalin had no interest in pursuing the remainder of Trotsky’s following.

 

At times Ireland’s book reads like a spy thriller. However, at other times it gets bogged down in minutia. A better editing job would have been helpful. Nevertheless, we get a very real glimpse as of what happened to people who got on the wrong side of Stalin.

 

 

 

My Review of Maggie Haberman's and Jonathan Swan's "Regime Change"

 A Man in Full*

Much has already been written about “Regime Change.” New York Times reporters Maggie Haberman and Jonathan Swan have chronicled the first year of the second Trump administration which they rightly characterized as the start of an imperial presidency. Thus, I don't have much to add. It is an administration loaded with sycophants who are willing to enforce Trump’s retribution agenda. Indeed, Trump is presiding over an historic expansion of executive power that has no parallel in peacetime and has engaged in a pattern of self-enrichment that is without precedent.

 

There are more than a few nuggets in the book such as the use of the situation room, hitherto focused on national security events, to discuss the Epstein affair which for a while, paralyzed the administration. We also learn that Trump aide, Natlie Harper is with him constantly as she runs his Truth Social account and caters to his every whim.

 

Nevertheless, I expected much more from the book, especially from Maggie Haberman who has followed Trump since her days at the New York Post in the early 2000’s. ( See: Shulmaven: My Amazon Review of Maggie Haberman's "Confidence Man: The Making of Donald Trump and the Breaking of America")  In many respects the book reads like a long New York Times article, except most of the sources are on deep background. The authors put you in the room where it happened with direct quotes of the participants without attribution.  Unlike Trump’s first administration, the current one does not leak out of a real fear of retribution.

 

So, we are left with question, who talked to the authors?  Who benefits from the book? I can only guess, but those officials most interested in running for office in 2028 and in protecting their future reputation from the investigations that are sure to come can give us a clue as to who spoke to the authors.

 

My candidates are Vice President J.D. Vance, Secretary of State Marco Rubio, Chief of Staff Susie Wiles, Secretary of the Treasury Scott Bessent, CIA Director John Ratcliffe, and son-in-law Jared Kushner. These folks talked to Haberman and Swan on a situation-by-situation basis. They only spoke when it served their individual interests, par for the course.

 

What Haberman and Swan have done is to give us a good summary of Trump’s first year and it demonstrates his primary motivation is to avenge those who he perceived wronged him in his first term and the investigations that followed. Policy is secondary to vengeance, the accretion of power and self-enrichment.

 

*-With apologies to Tom Wolfe.

My Review of Randall Sullivan's "The First All-Star Game"

 All-Stars

On July 14^th baseball will celebrate the 93rd anniversary of the first All-Star Game to be held in Philadelphia. Here Randall Sullivan recounts the history of how the first All-Star game came to be along with digressions about the history of baseball, the Great Depression, The Negro Leagues, Franklin Roosevelt, Chicago politics, and the gangsters of the 1930’s. As a kid growing up in the 1950’s, I ate, drank, and slept baseball. I read all kinds of sanitized books about the early years of baseball and the great players of that era.

 

As Sullivan notes, the origin of the first All-Star game in 1933 had its roots in the Chicago Tribune and its sports editor, Arch Ward. With the country in depression there was a special need to hype up the 1933 Chicago World’s Fair. The idea came to Ward to have the “game of the century” that would feature the best players in the National and American leagues playing against each other with the players to be selected by a vote of the fans. To pull this event off it required the support of both league presidents, the Kenesaw Mountain Landis, the Commissioner of Baseball, Chicago Mayor Edward Kelly, and the support of President Roosevelt.

 

It worked and it all came together with Connie Mack, the manager of the then Philadelphia Athletics, and John McGraw, the manager of the then New York Giants piloting each team of all-stars. Of course, the great Babe Ruth played for the American League and let his team to a 4-2 victory with a home run.

 

I learned much about the players of that era. They weren’t quite the all-American choir boys, except for the great Lou Gehrig, they were portrayed in the books that I read those many years ago. For example, instead of coming out of an orphanage to play baseball, Babe Ruth was in reform school. He also had a gluttonous taste for food, booze, and women. He was a customer of brothels in every American League city. Nevertheless, after a night of carousing, he was still among the greatest of all time on the field and at bat.

 

My quarrel with the book is that Sullivan goes off on to many tangents that can lose the reader’s interest. Nevertheless, he tells a story of how baseball captured America’s imagination in the 1920’s with Babe Ruth along with Charles Lindberg being the two great celebrities of the Roaring 20’s.

 

Ukraine Goes on the Offensive

 Shulmaven has been commenting on Russo-Ukraine War since 2014 when the Russian “green men” seized Crimea. (See: https://shulmaven.blogspot.com/2014/03/the-ukraine-what-is-to-be-done.html ) The all-out Russian invasion began in February 2022 and if we date the war’s start to then, the Russo-Ukraine War is now longer than the fighting in World War I. Similar to World War I, the battlefield has been stalemated since the end of 2022 with a “no-man’s land” in the east separating the forces and on ongoing Russian drone/missile blitz on Ukrainian cities in the West.

 

However, of late, Ukraine has gone on the offensive with drone and missile attacks reaching into the heart of Russia. Both Moscow and St. Petersburg have witnessed the war coming home. More important, Ukraine has taken out more than 25% of Russia’s oil refining capacity triggering gasoline rationing that Putin was forced to admit last week.

 

Under severe wartime conditions Ukraine has built up the capacity to mass produce long range drones and missiles. What we are witnessing in Ukraine is a revolution in military affairs where ground forces have become immobilized by the fear of drone attacks and that swarms of low-cost drones can overcome Russia’s sophisticated air defenses. No region in European Russia is safe and perhaps we will soon see Ukraine set ablaze the west Siberian oilfields, a course I have long advocated.

 

Russia is now in a box. Instead of their once thought of inevitable victory, it is now slowly losing the war. Putin will have to accept this reality or attempt to widen the War into Poland or the Baltic states. His goal would be to force NATO into pressuring Ukraine to accept its demands. Of course, this high risk strategy could very well bring NATO directly into the war with unknowable consequences.

 

NATO is meeting in Ankara, Turkey next week. I am sure Ukraine will be a major topic of conversation. Given Ukraine’s battle-tested army and its advanced weapons production capabilities, it would seem to me that NATO needs Ukraine more than Ukraine needing NATO. It wouldn’t surprise me that while the meeting is in progress, Ukraine will launch its largest air assault on Russia to date.

Havana on the Hudson - Part 3*

With the results of last Tuesday’s primary victories for the TikTok Jacobins and the enactment of a rent freeze on one million rent stabilized apartments, New York City drove a few more nails into its coffin. The congressional primary victories of DSA members Claire Valdez and Derializa Avila Chevalier along with the anti-Zionist Jew, Brad Lander, defeating Congressman Dan Goldman demonstrated the power of Mayor Zohran Mamdani’s machine. To be sure he was pushing against a hollowed out Democratic Party. Put bluntly the socialist left in the Democratic Party is copying the Tea Party/Trumpian takeover of the Republican Party a decade ago.

 

Of particular note is that Chevalier is a stone-cold communist of the third world variety.  My guess is that she would take what I just wrote as a compliment. She doesn't beleive in prison terms for murderers. Her political support comes not from the Black and Latino populations of her district, but rather from the white intellectual leftists that seem to have found a home in New York City.

 

As expected, the Rent Guidelines Board froze rents on one million apartments under its authority. Because most of the rent stabilized housing stock is old, the likely outcome of a rent freeze would be speed up the deterioration of the buildings. Indeed, the not so hidden agenda of the Mamdani is to bankrupt the existing owners to enable the city to buy up the buildings.  Recall that the city is already the biggest slumlord through its housing authority.

 

While New York City seems to be prospering on the surface and benefitting from the Wall Street bull market, beneath the surface the socialist termites are eating away its foundation. So, just as the speed of the socialist takeover seemed to surprise, so too will the speed of the city’s demise. Havana here we come.

 

*-   See: https://shulmaven.blogspot.com/2025/11/havana-on-hudson-part-2.html

The Fed Turns a Page: Warsh and Greenspan

Kevin Warsh’s first meeting as Fed Chair last week and the death of longtime Fed Chair Alan Greenspan yesterday signaled that the Federal Reserve is embarking on a new chapter in its history. The Fed is now turning a page as it leaves its policies for the first quarter of the 21^st Century behind. Under Warsh the Fed is abandoning its policy of forward guidance and with that the so-called “dot plots” that were introduced in 2012 which presented the forecasts of individual members of the Open Market Committee will soon go by the wayside. As a result, the Fed Put that worked as a floor underneath the stock market since 1987 has been removed. Look for more volatility in stock prices. As if on cue, the stock market is responding today. Over the longer term the four task forces authorized by Warsh, which will include outside members, may end up having a far more lasting effect on the Fed.

 

Ten years ago, I reviewed Sebastian Mallaby’s biography of Alan Greenspan so there is no need to recount his remarkable career here. (See: https://shulmaven.blogspot.com/2016/10/my-amazon-review-of-sebastian-mallabys.html ) In a nutshell a kid from the Washington Heights neighborhood of Manhattan rose to become the conductor of the global economic orchestra as I wrote then. Both Henry Kissinger and Henry Kaufman, my old boss at Salomon Brothers came from the same neighborhood. Something must have been in the water.

 

I met Alan Greenspan twice as an outside consultant to the Federal Reserve Board. The first time was in December 1991, when the Fed invited a group of real estate experts to discuss the then ongoing meltdown in commercial real estate. Greenspan listened and maintained a sphinxlike expression. Two days later he announced an inter-meeting 100 basis point cut in the discount rate and a 50-basis point cut in the federal funds rate. He obviously took seriously my comments and those of others on the gravity of the situation.

 

The second time was in December 1996 when the Fed called in several Wall Street equity strategists and few academics including Robert Shiller. The topic was whether or not the roaring bull market in stocks was getting out of control. A few days later Greenspan gave his famous “Irrational Exuberance” speech. When the formal meeting was over, I sat with him and a few others at a small table over lunch. There he gave me a marked-up copy with his autograph on “Comments on Credit,” Salomon Brothers weekly publication on the credit markets and the economy. He noted a small error. When I got back to the office I gave the copy to Robert DiClemente, the author of the report. Bob was flabbergasted that Greenspan read his work in such detail and he immediately had it framed. One of the secrets to Greenspan’s success was that he was very meticulous. He knew every data point in most economic series, both current and historical.

 

Under Greenspan’s leadership the Fed helped lead the U.S. economy into an extended period of moderate growth, with low unemployment and low inflation. Along the way he rescued the stock market after the 1987 crash giving rise to the Fed Put, organized the rescue of Long-Term Capital Management 1997, the Asian crisis of 1998. The whole period form 1982 -2007 was known as “the great moderation.” Unfortunately, it came crashing down with the financial crisis of 2008. Just as in the days of ancient Rome, a slave in the chariot of a conquering general would warn that all glory is fleeting, the ghost of Hyman Minsky should whisper in the ear of every Fed chair that “stability leads to instability.” I think Warsh understands that and let us hope he won’t be a slave to President Trump.

 

All that said, Alan Greenspan was a giant in the world of central banking. May his memory be a blessing.

The Purim War- Part 8: Trump Capitulates

 As we noted in a prior post, Trump is completely transactional and has no loyalty to his ally Israel. (See: https://shulmaven.blogspot.com/2026/06/the-purim-war-part-7-israel-learns.html ) Little did we realize at the time how craven Trump would be with his capitulation to Iran. Trump has gone from “unconditional surrender” to practically whatever Iran wants. The 14-point Memorandum of Understanding (MOU) leaves open Iran’s nuclear program and enables them to continue their ballistic missile program. Indeed, the MOU calls the termination of the war in Lebanon without mentioning Hezbollah and without Israel being a signatory to the deal. Recall Israel entered the war cheek by jowl with the U.S. in the most coordinated inter-allied cooperation since World War II.

 

Perhaps more troubling is that Iran is now given sanctions relief to sell its oil on the market thereby funding the regime that is now desperate for cash. Although the deal keeps the Strait of Hormuz to be free from tolls for 60 days, it leaves open the very real possibility of tolls going forward. This is in complete contradiction to international law and America’s long held position on freedom of the seas. (See: Shulmaven: The Purim War- Part 5, Deadlock in the Strait of Hormuz* )

 

Put bluntly, in exchange for temporarily opening the Strait of Hormuz, which was wide open prior to the war, Iran has conceded nothing. To be sure, if Iran fails to move forward on eliminating its nuclear capacity, the U.S. reserves the right to resume the war.  Trump has threatened this, but his threat has zero credibility with the midterm elections just around the corner. What we have ended up with is something worse than Sherman-Malley-Obama-Biden deal of 2015.

 

In 1938, just after the Munich summit with Hitler, Winston Churchill called out Neville Chamberlain with the following:

 

   “You were given the choice between war and dishonour. You chose dishonour, and you will have war.”

 

I fear that instead of peace, Trump has set the stage for the next Iran War in the not-too-distant future.

My Review of Liaquat Ahmed's "1873: The Rothschilds. the First Great Depression......"

A Good Deflation

Liaquat Ahmed of “The Lords of Finance” fame has written a new account of the long depression of the last quarter of the 19^th Century. To me, Ahmed mixes up depression with deflation. A depression signals a massive decline in aggregate output, which did not happen and a deflation signals a sustained decline in the price level, which did happen. I have covered some of the ground here in two prior reviews (See:  https://shulmaven.blogspot.com/2016/02/my-amazon-review-of-robert-j-gordons.html and https://shulmaven.blogspot.com/2017/09/my-amazon-review-of-richard-whites.html )

In the late 1860’s Europe witnessed a great railroad boom that was interrupted by the Franco-Prussian War of 1870. France was required to pay a huge indemnity to the newly united Germany. Instead of being a burden, it turned out to be a boon as the Rothschild banks, who are featured prominently in the book, fund the payment with two massive bond issues. Money came out of the woodwork from all over Europe to buy the bonds and that lead to a surge in economic activity leading to a boom in lending to eastern Europe and to Latin America. It all came unglued when the Vienna stock market crashed that rippled into Germany. Sixty years later a bank failure in Vienna would also deeply impact Germany, but to a far greater extent. In the U.S. the trigger was the collapse of the Jay Cooke & Co. banking operation that financed the Union during the Civil War and became undone with the failure of the Northern Pacific Railroad. 

 

According to Ahmed the crash was exacerbated by Europe moving away from a bi-metallic standard (gold and silver) towards a full gold standard. Similarly in the U.S., the Coinage Act of 1873, later known as “The Crime of 1873” limited the use of silver coinage. With the U.S. and Europe operating under the straitjacket of the gold standard, money in circulation declined and a deflation ensued. Indeed, in the U.S. both leaderships of the Republican and Democratic parties supported hard money

 

All of this was going on against the backdrop of improved global transportation which lowered shipping costs worldwide. For example, both the Suez Canal and the U.S. transcontinental railroad were completed in 1869. Later in the 1870’s and especially in the 1880’s there were huge advances in farm and industrial mechanization. Thus, if other things being equal, prices should have fallen and fall they did.

 

The wholesale price index fell from 140 in 1870 to 116 in 1878, a decline of 2.3% a year. Prices continued to fall and did not bottom until 1899 at an index level of 81. Thus, for the entire period prices declined at an annual rate of 1.9%. This price deflation obviously wreaked havoc for indebted farmers, triggering a populist revolt across the prairie. Their cause was to allow for unlimited silver coinage to expand the money supply and increase prices. Of course, the urban workers would have issues with this.

 

In Europe the political climate darkened with moves against free trade and the creation of the modern version of antisemitism partly tied to the Jewish Rothschild banking family. Indeed, the term “antisemitism” was coined in the Germany of the 1880’s. Further exacerbating the sour mood was the level of opulence of the bankers and industrialists of the gilded age.

 Although there were depressed conditions on the farm, industrial production boomed. There was only a modest decline in U.S. industrial production between 1873 and 1876, but by 1880 industrial output was one third higher than the decade before and it would double in the 1880’s. Industrial production was aided by the surge of immigrant workers flooding into the country from eastern and southern Europe. This explosive growth in industrial activity is the opposite of a depression. Further, in 1879 three major inventions would soon change the world: the incandescent light bulb, the telephone and the internal combustion engine.

 

By the end of the century gold discoveries in South Africa and Alaska eased the monetary pressure and prices started to increase. The deflation was over, but not before the hard money McKinley would defeat the soft money Bryan in the 1896 presidential election.

 

Although I come to a different conclusion than Ahmed, I do recommend his book. He brings insight into the popular feelings of the day, and you get a sense of the people and personalities of that era. 

The Purim War- Part 7* - Israel Learns a Lesson about Trump

Israel is learning a lesson about Donald Trump. Put bluntly, Trump has no loyalty and is completely transactional. Thus, it should not come as surprise that Trump pressured Netanyahu to call off his second and massive strike against Iran in retaliation to a missile attack on northern Israel over the weekend. It seems that Trump, contrary to “The Art of the Deal,” wants a deal with Iran more than Iran does.

 

Of course, it goes without saying that the U.S. and Israel have different interests with respect to Iran. To Israel Iran is an existential threat while to the U.S. Iran is more of a problem to be managed, shades of Obama/Biden. Moreover, Hezbollah’s presence in Lebanon represents a direct threat to Israel, while to Trump, Lebanon is a sideshow. Thus, from Israel’s point of view any Iran deal that leaves Hezbollah with a free hand in Lebanon is a bad deal for Israel.

 

As a result of Trump’s actions, Netanyahu is between a rock and a hard place. His room to maneuver is limited and he might be forced to accept a deal not of his liking or face an aid cut-off from the U.S. The alliance that began with high hopes last June has become very fragile and is on the verge of shattering.

*-See: https://shulmaven.blogspot.com/2026/05/the-purim-war-part-6-cracks-in-home.html

My Review of Sebastian Mallaby's "The Infinity Machine: Demis Hassabis, Deep Mind......."

 The Prophet of AI

 

Sebastian Mallaby, Council on Foreign Relations fellow, tells us the story of artificial general intelligence through the life of Demis Hassabis, the founder of Google’s Deep Mind. The story is not limited to Hassabis as Mallaby discusses his rivalry with Sam Altman’s OpenAI and Mark Zuckerberg's Meta. Along the way we meet venture capitalist Peter Thiel and Elon Musk. Mallaby also goes into great detail as to how AI works and how AI agents can hallucinate and go rogue. Thus, in a way the book is primer on AI.

 

Hassabis is the son of immigrants to North London, with a Chinese Singaporean Mom and a Greek Cypriot father. As a child he was chess prodigy and was a champion by age 13. From chess Hassabis moves on to gaming, first a player and then as a successful designer. He gets degrees from Cambridge in physics and neuroscience which gives him an excellent background to pursue his interest in AI.

 

He forms Deep Mind in 2010 with the support of Peter Thiel and other venture capitalists. There he and his colleagues do pioneering work in deep learning and reinforced learning. In 2014 Google bought out Deep Mind for $650 million, making Hassabis worth $134 million. His interest is not in money but rather pursuing the science of artificial general intelligence. Their models became experts at the highly complicated game of Go, so much so that they defeat the world champion in a globally televised event in Korea.

 

The reinforced learning technique used for GO was then used to detect the shapes of proteins using their Alpha Fold model. This innovation is hugely important in the drug discovery process, so much so that Hassabis along with his colleague John Jumper win the Nobel Prize for chemistry in 2024.

 

One of Hassabis’ colleagues at Deep Mind was Mustapha Sulayman, another immigrant son from North London. Sulayman was very concerned about AI safety, so much so that Google delayed releasing its early AI models to the public. After an intital misstep, Google's Gemini has become a world beater. However, when Open AI released ChatGPT, the competitive juices began flowing and the safety issues were put on the back burner. Ultimately Sulayman ended up heading Microsoft’s AI efforts. In a strange quirk of history, we now two immigrant children from North London running the AI efforts of two of the major players in the field.

 

Mallaby hardly mentions Dario Amodei, the head of Anthropic, which is fast becoming an industry leader. Amodei was at OpenAI and then left to form his own company. Anthropic is the developer of Claude which is fast becoming the AI model of choice in the enterprise. My guess is that Mallaby did not have the time to interview or understood the significance of Amodei in the AI race. That aside Mallaby has written an important book on what is becoming a revolution in how we approach the world around us.

American Politics has gone Batshit Crazy

On the eve of the 250^th anniversary of the signing of the Declaration of Independence, American politics has gone completely batshit crazy. Where the Republican leadership spent millions of dollars only a few weeks ago pillorying the highly flawed Texas Attorney General Ken Paxton in Senate primary, they are now falling over themselves to support him. It no longer matters that he has been investigated for securities fraud, been impeached by his own party and that is wife is divorcing him over his adultery.

 

On the Democratic side leading Democrats continue to support Graham Platner, their preferred Senate candidate in next week’s Maine primary. Those leaders choose to ignore the fact that Platner is a Jew-hating neo-Nazi who has a habit of sexting a half dozen women while still being married. Several years ago, Anthony Weiner’s New York City’s mayoralty campaign collapsed over his infamous dick-pix.

 

What is going on? It seems that the hatred of MAGA-Republicans for their Democratic counterparts overwhelms any sense of decency and the Democrats hatred of the MAGA-Republicans, if anything, is greater than the Republican hatred of them. Of course, the polarizer-in-chief, Donald Trump has set the tone for the divisions in our land. However, I would caution to note that Trump is the product of something that has been brewing in our politics for a long time.

 

My guess is that the infighting we are now witnessing is reminiscent of the religious wars of the late Middle Ages. Thus, if we are in a religious war where politics has substituted for religion, compromise is impossible. Recall that our founders wanted to separate religion from the state, but the fanatics in both parties are now making that difficult causing our founders to turn over in their graves.

My Review of Adrian Woodridge's "The Revolutionary Center"

Liberalism Under Siege

Adrian Wooldridge, formerly political editor of The Economist and now an opinion columnist at Bloomberg, has offered up a history of liberal political thought from Montesquieu to John Stuart Mill and on to Hayek, Keynes, and Friedman. That liberalism faces attacks to today from the authoritarian Right and the identitarian Left reminiscent of the 1930’s. (See: https://shulmaven.blogspot.com/2023/11/reliving-1930s-part-5.html ) And it goes without saying that the concept of free speech is now under a withering assault. Wooldridge wants to reclaim liberalism’s revolutionary history that brought freedom and prosperity to much of the world. Thus, you can call him a revolutionary centrist, and the world truly needs hm today.

 

For whatever reason, too many people have abandoned the basic tenets of liberalism which include freedom of thought, a free market, room for heterodox views and the removal of obstacles to self-development. In short, Wooldridge believes in a meritocracy that offers a ladder up for those folks who have been left behind.

 

In terms of government liberalism stands for the separation of powers as articulated by the U.S. Constitution. He quotes Lord Acton about power corrupting, and we are getting a real-life lesson with the antics of Donald Trump.

 

Wooldridge sees three strands of liberalism today. The first being neoliberalism with its faith in markets to solve society’s problems. Second, managerial liberalism, which is characterized by an elite consensus coming out of Davos, the universities, and the NGOs. The third form is progressive liberalism which exalts rights over responsibilities especially for groups. I would not call this liberalism.

 

Wooldridge offers political solutions reanimating liberalism. He moves to the right and the left at the same time by calling for higher taxes, antitrust enforcement of the tech companies, immigration restrictions, and a return to merit-based admissions to the universities. He also doesn’t believe that Muslim fundamentalism is compatible with liberalism. If the Muslim population of Europe can’t be integrated into the broader society Europe will (is) be in a world of hurt.

 

To me the solution is in governing, not only in making political compromises as necessary as they are. In order for liberalism to succeed, it has to govern successfully. That means a wholesale repudiation of the “blue model” that now governs most of America’s large cities. The high tax-low service model of the blue cities and today’s U.K. for example, is forcing voters to move towards the authoritarian right and to the socialist left in the U.S.

 

We are living in a time where the horseshoe theory of politics holds as both the right, and the left ending up in opposition to the liberal order that has served us well for of these years. It is a real shame, and it is very disheartening. Wooldridge points us a way out of this malaise.

The Trump Train Runs into a Wall

I am writing this while the U.S./Iran negotiations are in a state of flux, but make no mistake, the Trump train ran into a wall last week. His $1.8 billion “anti-weaponization” slush fund sparked outrage among Senate Republicans. So much so, that Trump’s all-important immigration funding reconciliation bill had to be pulled from the Senate calendar. Meantime Speaker Mike Johnson recessed the House because he lacked the votes to stop a war powers resolution on the Iran War.

 

Although Trump tactically succeeded in defeating Louisiana Senate incumbent Bill Cassidy, he strategically failed by making an enemy of him for the remainder of his term. He along with North Carolina Senator Tom Tillis will remain thorns in his side for the rest of the year. Those two along with Senators Susan Colllins and Lisa Murkowski means that Trump no longer has a working majority on a host of issues that will soon come before the Senate. Further exacerbating the situation is that Trump connived with his own Treasury Department to cease all tax audits on his and his family’s tax returns. The stench grows by the minute.

 

Adding impetus to the revolt was Trump’s endorsement of the ethically challenged Ken Paxton in the Texas primary over incumbent John Cornyn. Cornyn is one of the most well-liked senators in the Republican caucus. Should Cornyn go down this week, he too will likely join Tillis and Cassidy as a thorn in Trump’s side. Even if Cornyn surprises and wins, Trump will not be able to count on him as a supporter.

 

One last thing should the Iran deal go the way many are now speculating, Trump risks the support of Senators Cruz, Graham, and Wicker, among others. Any deal that looks like what the Obama appeasers Wendy Sherman, Bob Malley and Ben Rhodes would have produced will ignite a firestorm in the Republican caucus. Stay tuned.