Review of The Return of Depression Economics and the Crisis of 2008 (Hardcover)

Depression economics is when conventional economic wisdom no longer applies.In a "normal" recession the Federal Reserve would lower interest rates in order to stimulate consumption and investment.According to Paul Krugman, that remedy is no longer getting any traction.He claims it's time to cast conventional economic wisdom to the wind.The economy is in such a deep hole that he's calling for another $600 billion in federal outlays.This is in addition to the $700 billion already asked for by Treasury Secretary Paulson, and looks very similar to Obama's spending plans for next year.

This is a re-issue of a book written by Krugman in 1999 after multiple economic crises in the decade of the 1990s.Japan had just lost a decade's worth of growth for responding too timidly to the bursting of their stock and real estate bubbles.Krugman also analyzes the various currency crises of that decade: from Britain and Sweden in the early 90s, to Mexico and Argentina in the mid-90s, and finally to Brazil and East Asia in the late 90s.These crises occurred as globalization was doing its work in the currency markets.

In his analysis of Japan's lost decade, he argues that everything must be done to increase aggregate demand.The collapse of demand caused by loss of confidence and fear had severely depressed spending and investment.At that point only government spending can lessen the severity of the recession and perhaps even turn the economy around.In Krugman's view, the lackluster response was the reason it took Japan so long to recover.He believes that one should only worry about deficits and debt when the economy is on the rebound.(This is completely contrary to what Robert Samuelson advises in The Great Inflation and Its Aftermath: The Past and Future of American Affluence.)

Krugman claims that the financial crises of 2008 is "functionally similar" to the Great Depression.He does not believe, however, that it will be as severe.We now have the financial tools and institutions - and the hindsight - to make for a softer landing.Nevertheless, this crisis has no end in sight yet.The one big thing that everyone seems to know now is that one does not increase taxes and implement budget cuts during a crisis, as Herbert Hoover did.And which FDR did several years into the Depression.

Another lesson that Krugman derives from the 90's is the need for greater regulation.As one country after another experienced currency problems from investor flight, there was one country that did better than others to weather the storm: that country was Malaysia.It's leader Mahathir Muhammed was of the same mind as Krugman.Managing the capital flows in and out of the country will soften the blows, should foreign investors decide to pull out.The conventional wisdom of the time was that price stability and currency convertibilty were the only things needed, and that the market would take care of the rest.However, in this case, a little more regulation saved them from a crisis.

Depression economics goes against the grain of conventional economic wisdom, and given the current crisis it is coming back into fashion, even among those who preached deregulation and fiscal restraint a decade ago.This theory should be applied sparringly, only in extreme cases - the present crisis probably qualifies.It should not be applied to every minor recession that comes along.The danger of overuse of depression economics is that it can cause a toxic brew of inflation and stagnation - not to mention corruption.



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Review of The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution (Hardcover)

Because U.S. Supreme Court justices have effective life tenure under the federal Constitution, the high court has long been viewed as a undemocratic institution in our society.The "countermajoritarian" nature of the Court has been a cause both for censure and celebration.On the one hand, the Court has been faulted for sitting as a "superlegislature," in which five (out of nine) middle-aged to elderly judges can strike down the enactments of democratically elected bodies.On the other hand, a counter-majoritarian Court has been seen as a bulwark for fundamental liberties or powerless minorities whose status should not be determined by a popular vote.

Friedman's book renovates this well-rehearsed debate by challenging its core premise.Taking a broad yet detailed historical perspective, he observes that the Supreme Court is rarely out of sync with popular opinion.Under this view, both the demerits and the merits of judicial review will be dampened.The Court is not as susceptible to the charge that it is an activist institution out of touch with the polity.At the same time, it is also not as worthy of praise as an institution that can protect rights and groups from majority whims.

The book is a fascinating sociological study of the Court.It is also an important theoretical work that shows how unelected officials are held indirectly accountable to the people.Most of all, it is a call to reflect and act that is all the more effective for not coming to us as a polemic.This book argues that what we as individual citizens believe, say, and do affects the meaning of the Constitution.It addresses us all, which is why we all should read it.






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Review of A Comrade Lost and Found: A Beijing Story (Hardcover)

There are many biographical narratives about life in the Cultural Revolution.There is a whole genre for survivors who find a way out of the country. Another genre like the now classic, Wild Swans : Three Daughters of China puts the Cultural Revolution in a generational context. Yet another genre represented by Chinese Lessons: Five Classmates and the Story of the New China gives a then and now report. There is also fiction for each of the categories. I believe this book is unique because it is written by a former true believer, that is, a former persecutor who admits guilt.

The writer arrived in China in 1970, one of the first foreigners to study after/during the Cultural Revolution and participated in the denunciation of a classmate. While her act was small in comparison to what others had done, being on the persecution side, she is able to give clues as to the pshchology and temper of the times.As one survivor in Chinese Lessons observes, everyone claims to be a victim, but "do the math".

The breezy narrative ("Cult Rev") and the travelogue belie the serious content. This it the first volume I've read that compares this history to other mass hysteria movements like the Holocaust, where citizens were proud to inform, to destroy and to generally participate. This is also the first volume I've read that even mentions the psychological fallout, such as the compartmentalization of the persecutors and the damaged self of the persecuted.

Also important is that this is the first story I know of that reports on an every day (not a Deng Xiouping, etc,) fully persecuted survivor who is still in China.We learn about the many years she suffered, like an abandoned child, or a victim of child abuse and/or poverty, and of her careful steps in her own rehabilitation - it did not "just happen".

The author speaks to her own psychology of joining the movement. She wanted to fit in, to prove herself to the group.With the benefit of distance, life in Canada, knowledge of history and psychology she had the tools to understand what happened. China is collectively wiping this out today. In this book, many young people don't know much about the formerly life and death issues of "left' and "right".Wanting to leave China is not a crime and the youth probably don't know that once it was.Since so much of the literature of this time is created by the persecuted survivors who have escaped to the west, it may be that the whole sad generation of "Cult Rev" persecutors takes their stories to their graves.






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Review of Winner Take All: A Top Commodity Trader Tells It Like It is (Hardcover)

This book should be on the essential reading list for every aspiring Trader.

Trading is an extremely difficult business. It is often difficult to identify charlatans and myth from genuine journeymen and truth. Everywhere there is someone hawking a product with the promise of an easy path to success and riches. A primary focus of"Winner Takes All" is to debunk these people and their products. The real value in this book is that it is written by an insider - someone who has been a broker but who now trades his own account. It is rare to find a writer in this business who is not pushing some personal (and often concealed) agenda.Gallacher is one of those rarities. He is not trying to improve his station or business.He simply sets out to write an entertaining book that sets straight a few solid (and, for some, unpalateable) truths.
The hardcover edition is subtitled " A Top Commodity Trader Tells It Like It Is" . The paperback edition is half the price of the hardback and doesn't suffer the unnecessary hype; instead the subtitle here is " A Brutally Honest and Irreverent Look ..." . This subtitle is much more in keeping with the spirit of the book. Gallacher makes no claims about his own "success",he merely informs us that he has been trading for 20 years and that he has never wiped-out nor has he had to send additional funds to bolster up his account. At the least this makes him a survivor, which already puts him in the top 1% as far as I'm concerned. In any event one of the things that impressed me most in this book is that Gallacher makes no effort to bignote himself.
He readily tells us that he is very conservative (12 trades per year!) and that he strongly favors a fundamental approach. Having said this, and knowing he won't win any votes, he goes on to effortlessly bring a few big-name technicians (and other vendors) down a few pegs. Remember, here is a guy who at least walks the talk.

It is worth reading all the reviews because this book has elicited some extreme reactions( from 1 star to 5 stars). I believe the poor reviews tell us more about the people writing them than about the issues they raise:

The most detailed negative review is by maclee33 (1 star) who goes to much trouble to demonstrate an apparently incorrect argument in the book.

But it is the review that is fallacious, not the book, and here's why. Gallacher uses a chart from Murphy's book "Technical Analysis of the Futures Markets" (and I have this book too, so I can verify the chart) to show that Murphy's use of trendlines is after-the-fact and superficial. There is no discussion here about active and inactive contracts etc. Gallacher simply takes a chart that Murphy himself has usedand shows how misleading it is to draw trendlines with 20:20 hindsight. As Alexander Elder points out it is easy to trade the middle of the chart but, in the real world, we have to trade the extreme right of the chart.

"The lesson? All examples of the alleged uselfulness of trendlines, flags, pennants etc. will, under scrutiny, be shown to be the product of hindsight, perceived after the occurrence of the events they are alleged to foresee...Chartists see what they want to see, not what is really there."

Admittedly this is a polemic statement (and I do not personally agree with it)nonetheless this was the point that Gallacher was making and I cannot see anything "egregious and inexcusable"(maclee)in that.

Another reviewer defends Larry Williams (who gets a caning by Gallacher) stating that he (Williams) " made a million in a year" not once but twice ... and then taught his daughter (how to do it)". This anonymous reviewer gave the book 1 star while pointedly overlooking the fact that Gallacher's actual criticism was based on Williams losing more than $6million in one account while "making" the so-called $1million in another account - an event for which both Williams and Robbins Trading Company were taken to court and convicted by the NFA.

Another 1 star reviewer was upset with Gallacher's harsh treatment of neural net systems. Another didn't like the criticism of Elliot.

I think all of these negative reviews miss the point which is that it is very easy to mislead people in this business and we should be thankful for good watchdogs like Gallacher.

The book is humorous, insightful and well-written. I usually prejudge a book through Amazon by how many Customer Rating stars it gets. Sometimes these ratings mislead or disappoint. In this case I think 4 stars is honestly earned.

If you read this book with an open mind you will treasure it.



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Review of We Tell Ourselves Stories in Order to Live: Collected Nonfiction (Everyman's Library) (Hardcover)

I checked this out from our local library the other day and it turned out to be a serendipitous find. I've read some of Didion's work previously of which _The Year of the Magical Thinking_ was the most recent.

This compilation was actually fun to read. My favourite pieces were the ones that focused on California or Southern California, respectively. She is a gifted storyteller.

I couldn't help but feel a keen sense of sadness for her with the noted timeline of her life (and historical moments, too). She lost both her parents, then her spouse and two years later her daughter.

I would suggest this book to others. It's a real treasure.



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Review of It's More Than Money-It's Your Life! : The New Money Club for Women (Hardcover)

This is a personal finance book you'll actually ENJOY reading!
It doesn't contain any get-rich-quick schemes, nor does it offer any unrealistic promises or guarantees.

What it does do is help you identify your own "money type" (how you use money in general), and then gives simple lessons on how to best improve what needs improving.

Easy? Not exactly.As I said, there are no quick-fixes offered here.The lessons take time and effort.But if you do them, they're sure to work, because they're based on good sense, and an understanding of how women relate to money issues.

Reviewer: Linda Painchaud



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Review of Trade Like a Pro: 15 High-Profit Trading Strategies (Wiley Trading) (Hardcover)

Reviewed by Darrell Jobman, Senior Analyst, TraderPlanet.com

What started out as a response to his anger related to investors losing money trading has now reached its sixth book, which expands and elaborates on material covered in the author's previous publications. Nine of the 15 risk-management strategies included in this book present new depth and details from his earlier book, Winning the Trading Game, and he has added six advanced strategies that can help a trader manage an increased level of risk.

Part I introduces readers to traits of retail and professional traders - both unsuccessful and successful - and some of the essentials of trading and the trading industry and serves as a good review. DraKoln stresses the importance of risk management - what you do when faced with the risk of losing your principal and profits - vs. money management and sets out the core components of a trade setup - entry price, loss price and profit price and whether you are trading with the trend or the countertrend.

Part II covers basic strategies, showing how the spot market is protected by the futures market and how options can protect both the spot and futures market, broken down into several sections dealing with the time frame for which each is best suited. Some strategies will be familiar to options traders, such as straddles or strangles, but DraKoln focuses on when to use them and what you hope to accomplish with your position, citing a number of examples and how they look on a chart.

DraKoln discusses using options as primary and secondary alternatives to stops and stop loss orders, working through several market scenarios, and he covers the use of option collars at several different stages of a trade. He also shows the advantages of synthetic options and covered options and deals with traditional spreading techniques as well as options front spreads and back spreads.

The more advanced strategies in Part III, DraKoln explains, have "some risk management components associated with them, but also provide more exposure to the unlimited risk aspect of selling options." Synthetic futures or selling naked options are more sophisticated strategies that should probably be reserved for more sophisticated traders, who may be able to capitalize on their margining advantages. DraKoln illustrates how to manipulate or combine those strategies to convert one position into another when necessary.

Mixed in with the options-related strategies is a section on inter-commodity spreads featuring seasonally-based trades, the soybean crush and energy crack spreads and trades based on ratios between related commodities such as silver and gold.

For serious traders who have a background in reading charts and are ready to begin converting their chart interpretation skills beyond just basic buy or sell into more advanced trading strategies, this book provides some valuable insights that can help make the transition from being a typical retail trader to a professional trader. With a very readable style and numerous chart illustrations, DraKoln explains how the strategies can be implemented in a wide range of markets from commodities to forex to single stock futures.



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