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Good Reading -- October 2010

Lots of good stuff this month -- hope you enjoy.



  1. "It's quite clear that stocks are cheaper than bonds. I can't imagine anybody having bonds in their portfolio when they can own equities, a diversified group of equities. But people do because they, they lack of confidence. But that's what makes for the attractive prices. If they had their confidence back, they wouldn't be selling at these prices. And believe me, it will come back over time." -- Warren Buffett, in an interview with Fortune's Carol Loomis on October 5, 2010

  2. "Generally speaking, I believe Costco does more for civilization than the Rockefeller Foundation. I think it's a better place. ... I've seen so much good in the world by people who really created better systems, and I've seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank, that I really have more confidence in building up the more capitalistic ventures like Costco." -- Charlie Munger, in a recent speech at the U. of Michigan (see link below)

Facts and Figures

  1. In 1989, 45 of the top 50 banks in the world (ranked by market cap) were in the U.S. In 2009, there were 11.

  2. The FDIC has been tracking the banking industry for more than 75 years, and the current aggregate level of tangible common equity (now over 11%) is at its highest level on record

  • on a less healthy note, the FDIC's list of "problem" list now stands at 829, or 10.6% of all banks

  1. How did Americans spend so much money in the past decade, given that there were basically zero net jobs created since 2000 and that the median male worker's inflation-adjusted wage is lower now than it was 30 years ago? Four(ish) main factors:

  • Global trade

  • Technology

  • More workers per family: millions upon millions of women joined the workforce (see attached diagram on employed wives' contribution to family earnings)

  • More hours per worker: between 1985 and 2005, the average male worked 100 hours more per year, and the average female worked 200 hours more

Featured Investment Idea

  1. The Mexican government recently issued a $1 billion bond at about 6% that matures in 100-years (yes, a century from now.) A "fat" 200-300 basis point spread sounds good, right? I mean, what could possibly go wrong in Mexico during the next 100 years?


  1. "Beware of Greeks Bearing Bonds" -- a long article from Michael Lewis about the fiscal disaster in Greece. Wow, I knew it was ugly, but this describes a mess beyond comprehension. A must-read article.

  2. "A conversation with Charlie Munger" -- video of his interview at U. Michigan. Great as always.

  3. "The Daily Show with Jon Stewart" -- I actually don't like The Daily Show or Jon Stewart all that much, but occasionally there is great stuff on that show. And this is just awesome. About 100 years ago, unions served a useful puprose; today the vast majority are total nonsense like this one.

  4. "The Financial Investigator" -- seems like this could be a very interesting site. "My name is Roddy Boyd and I run The Financial The mission here is simple: The utter collapse of the mainstream media business model has led to a concurrent collapse in critical investigative reporting on the financial and operational prospects of publicly-traded corporations. seeks to fill this vacuum."

  5. "White Collar Fraud" -- an interesting behind-the-scenes look at how a convicted felon pulled the wool over the eyes of his auditors. Amazing and scary how easy it was....

  6. "The Blundering Herd" -- a long but excellent article excerpted from Bethany McLean's new book, "All the Devils Are Here." Merrill Lynch was obviously dysfunctional, but there are some good nuggets in here (such as the fact that Stan O'Neal apparently liked it that way: "You don't understand. Dysfunction is good on Wall Street.") McLean's book on Enron was outstanding, so I hope this one lives up its predecessor.


  1. "Hemlines and Investment Styles" -- the usual good stuff from Howard Marks.

  2. "A Man from a Different Time" -- the usual good stuff from James Montier.

  3. "Testimony of Edward Pinto -- Hearing before U.S. House of Representatives, Financial Services Committee" -- more truth on the housing finance mess.

  4. "Charles Brandes on Investing Lessons from Benjamin Graham" -- an interesting interview with Mr. Brandes. A lot of worthwhile thoughts in here.

  5. "Rolling up TARP, Though Cleanup Isn't Over" -- a graphic summary of TARP, now that it's (mostly) over. (See also the Geithner article below.)

  6. "The Housing Crisis -- Sizing the Problem, Proposing Solutions" -- unlike TARP, the housing crisis decidedly not over. Amherst does great work in this area, and this report highlights the 11mm mortgages (20% of the total) it believes are at high risk of default and foreclosure. It says that for every 100 1st lien residential mortgages in the U.S., 20 are already impaired (of which 9 are seriously delinquent; 6 have been delinquent or defaulted in the past only to be restructured and redefault at rates running >50%; and 5 are underwater by more than 20%). Good data throughout. As for the proposed "solutions"...not so much.

Copied Below

  1. "Sweating Your Way to Success" -- a great article from Peter Orszag, the recently departed budget chief in President Obama's administration.

  2. "The Effort is the Prize" -- a second, related article from Orszag.

  3. "Five Myths about TARP" -- Treasury Secretary Geithner tries to set the record straight. I'd quibble with a few of the minor points, but yes, it was more successful than not, and it's largely misunderstood in terms of (significant) benefits and (fairly small) costs.

  4. "Goodbye Free Trade?" -- beyond clearing up some interesting popular misconceptions about Smoot-Hawley, this an important and timely (ahem) look at free trade and monetary policy in times of economic distress. (For more on this topic, The Rational Optimist is a good read.) I was shocked and extremely disturbed to read recently that 53% of Americans now believe free-trade agreements have hurt the U.S.; that is up sharply in recent years, even among well-educated people who should know better. Free trade is disruptive, no doubt, but I find it disheartening that short-sighted politicians and even ordinary, educated Americans would still avoid near-term disruption at the expense of very clear medium- and long-term benefits. Find me one single country or economy that curtailed free trae and did not fare markedly worse because of it. It was horribly painful for the tens of millions of American farmers who lost their jobs over the past century or two, but we would we prefer to have the vast majority of our workforce still laboring in the fields? At least one encouraging reassurance emerges from this article: Ben Stein is always wrong.

  5. "Prime Mover" -- a very interesting interview with Vaclav Smil.

  6. "'Nails' Still Has No Quit in Him" -- the Lenny Dykstra story just keeps getting better. This article nicely captures everything you've ever needed to know about what not to do in investing, business, real estate, and life.

  7. "Buffett's Berkshire Hathaway Poised to Advance 13%, MKM's Stockton Says" -- apparently this guy is both serious and completely unaware of the amazing irony happening here.

  8. "Postal Union Election Delayed After Ballots Lost in the Mail" -- a great story about the amazing level of fail that can be achieved when you combine a bloated bureaucracy with a Luddite union boss.

  9. "Teacher Who Serves as Symbol of Jobs Measure Gets Laid Off" -- the Unintentional Comedy Factory was busy this month. The only problem is that none of this is funny...

Sweating Your Way to Success


The most important book I’ve read over the past six months is Matthew Syed’s “Bounce.” Teddy Roosevelt once said that “in this life we get nothing save by effort.” Syed shows how trenchant Roosevelt was.

Syed is a two-time Olympian in table tennis. His book is impressive for two reasons. First, he takes empirical evidence on the science of success seriously (and in the areas where I know the literature to some degree, his depiction is quite accurate). Second, he shows how that evidence shatters widespread myths about what leads to better performance in any complex undertaking (including, for example, chess, tennis and math).

Basically, we’ve bought into several misconceptions about excellence, which are not only wrong but affirmatively counterproductive.

Let me focus today on the core one. Too many of us believe in the “talent” myth — that top performers are born, rather than built. But Syed shows that in almost every arena in which tasks are complex, top performers excel not because of innate ability but because of dedicated practice. In effect, the stars among us have practiced so much that they are better at what psychologists call “chunking.” Imagine trying to remember 41 letters or numbers. Most of us couldn’t come close to doing that. Now imagine trying to remember a sentence with 47 letters or numbers, like: “Imagine trying to remember 41 letters or numbers.” Most of us can do that with little difficulty, because we are chunking the letters and numbers. We remember the words, and we know the letters in each word.

Syed shows that most better performers have practiced so intensely that they chunk better at their tasks than normal people. So we see impressive performance and think someone is naturally skilled, whereas the reality is that person has simply practiced for longer and more intensely than others.

Perhaps the most dramatic example is from chess. A 1973 study took one group of chess masters and another group of novices. When presented with chess pieces as they would be arranged in a chess game, the masters were stunningly better than the novices at recalling each piece’s position.

But here’s the catch: when the pieces were set up randomly, in a manner that would never occur in a real game of chess, the masters were no better than novices at remembering where the pieces were. So much for chess masters being born with special powers of memory or concentration. Instead, the explanation is that they’ve played so many games of chess that they are more adept at recognizing patterns on the chess board (at least, when those patterns could arise in a game of chess).

Success in most arenas of life is thus not a reflection of innate skill but rather devoted effort. And Syed demonstrates why it is not just effort, but purposeful effort that is key — if you’re going to get better at chunking, you can’t just go through the motions and punch time on the clock. You need to put your heart into it. More on that later this week.

The Effort Is the Prize


An earlier post highlighted the evidence that in many arenas, purposeful practice is the key to high performance. In other words, top performers in complex fields like medicine, math and chess become that way through repeated and focused practice that builds their skills until their performance seems almost super-human — rather than being born with highly exceptional skill.

Some readers have questioned the evidence, arguing that it is too simplistic and that even with hard and dedicated practice, not everyone could become Mozart. Perhaps. But at the very least, the evidence presented in Matthew Syed’s “Bounce” and elsewhere should convince skeptics that the conventional wisdom significantly exaggerates the relative role of innate and immutable ability in complex tasks. (Notice the word “complex.” Dedicated practice has larger payoffs the more complex the task; in more straightforward tasks, innate ability plays a larger role.)

Or to phrase it differently, it seems plausible that many more people than commonly believed (but perhaps not all people!) have sufficient innate skill to perform at world-class levels in complex fields with sufficient practice; the problem is that they do not undertake the necessary practice. Indeed, the examples we have of individuals who put in 10,000 or more hours of dedicated practice and fail to achieve stunning levels of performance is quite limited — because most people are not willing to put in that time and effort. A fundamental question thus becomes why some people are willing to undertake repeated and focused practice and others aren’t. It is not sufficient merely to log 10,000 hours “practicing” a complex task; one must sustain an intensity that seems beyond the reach of most people, and that must come from loving the process. You can’t just force yourself to do it; you must somehow actually enjoy it.

So why can some people do this and others can’t? And even if the end result of purposeful practice is not always (or even usually) performance at the gold-medal level, are there lessons from those experiences that can be useful in earning the equivalent of the bronze?

Stanford psychologist Carol Dweck suggests that what she calls “mindset” (in her 2006 book of that name) plays a crucial role in sustaining the necessary type of intense practice — and that the right mindset can be quite useful even if your goal is not to win the gold. Dweck puts forward two mindsets — a fixed mindset, which occurs when someone believes that personal qualities like intelligence are immutable, and a growth mindset, which occurs when someone believes that skills and characteristics can be cultivated through effort. In the fixed mindset, success is showing you’re talented; in the growth mindset, it’s developing yourself.

The evidence Dweck and others present, albeit only suggestive, indicates that the growth mindset is what sustains purposeful practice even when things are not going well (which is when most mortals give up). In particular, Dweck shows dramatic differences in how people with a growth mindset react to difficulty, assess their own strengthens and weaknesses, and engage in skill-building but challenging exercises relative to those with a fixed mindset.

Dweck also suggests that many ways in which we encourage students are counterproductive. “You’re so smart” makes the fixed mindset more salient; “I’m proud of how hard you’re working and that you enjoy the challenge” makes the growth mindset more salient.

Benjamin Cardozo once wrote that “in the end, the great truth will have been learned, that the quest is greater than that which is sought, the effort finer than the prize, or rather, that the effort is the prize . . . ” If the evidence from Syed and Dweck is right — and it seems that way to me — embracing the unconventional perspective that the effort itself is the prize is ironically also more likely to lead to the conventional “prize.”

Treasury Secretary Timothy Geithner tackles five myths about TARP

By Timothy F. Geithner Sunday, October 10, 2010; B03

Born at the peak of the financial crisis in 2008, the Troubled Asset Relief Program expired last week, ending what was perhaps the most maligned yet most effective government program in recent memory. Despite new evidence about the low ultimate cost and positive impact of the TARP, there is still a chasm between the perceptions of the program and its overwhelmingly favorable effect on the U.S. economy.

The TARP was doomed to be unpopular from inception, because Americans were rightfully angry that the same firms that helped create the economic crisis got taxpayer support to keep their doors open. But the program was essential to averting a second Great Depression, stabilizing a collapsing financial system, protecting the savings of Americans and restoring the flow of credit that is the oxygen of the economy. And it helped achieve all that at a lower cost than anyone expected.

As we put the TARP to rest, let's also put to rest some of the myths about the TARP.

1. The TARP cost taxpayers hundreds of billions of dollars.

The true cost of the financial crisis will always be measured by the devastating losses of jobs, homes, businesses, retirement savings and fiscal revenues. But the cost of the TARP, which succeeded in reducing the overall economic damage, will be considerably lower than once feared. In fact, the direct budget cost of the program and our full investment in the insurer AIG is likely to come in well under $50 billion -- $300 billion less than estimated by the Congressional Budget Office last year. And taxpayers are likely to receive an impressive return (totaling tens of billions) on the investments made under the TARP outside the housing market.

Even looking beyond the TARP to the losses associated with Fannie Mae and Freddie Mac's pre-crisis mistakes, the direct costs of the government's overall rescue strategy are likely to be less than 1 percent of GDP. By comparison, the much less severe savings and loan crisis of the late 1980s and early 1990s cost 2 1/2 times that as a share of our economy.

2. The TARP was a gift for Wall Street that did nothing for Main Street.

Financial crises matter not because they hurt banks and bankers. They matter because they kill jobs, businesses and the value of retirement savings. To protect Main Street from the damage caused by a financial crisis, you must first put out the financial fire. That is precisely what the government did.

In the fall of 2008, the Bush administration injected nearly $250 billion into our largest financial institutions and provided a guarantee, for a fee, to help them continue to operate. Those emergency actions, taken at a time of grave danger for the U.S. economy, were absolutely essential. Without them we would have seen a broader collapse and losses of millions more jobs and trillions more dollars in income and savings.

Those initial investments, which came with limited conditions designed to protect taxpayers, helped stop the free fall of the financial system. But by the time President Obama took office, credit markets were still severely distressed and the economy was contracting at an accelerating rate.

So we shifted strategy to recapitalize the financial system with tough conditions and with private money, not public funds. And we focused resources directly on the victims of the crisis, rather than on the institutions that helped cause it. After inheriting nearly $300 billion in commitments, mostly to large companies, we directed resources toward lowering mortgage rates, reducing foreclosures and helping restart the credit markets for consumers and small businesses.

In addition to the nearly $300 billion in tax cuts in the Recovery Act for working Americans and businesses, the new initiatives on which we spent TARP funds were for broad-based programs to lower lending costs and mortgage payments. And where we inherited commitments to individual institutions -- such as AIG and auto companies -- we acted to ensure that those companies were fundamentally restructured so they could survive without government assistance and ultimately repay the taxpayer.

3. The TARP was a quick fix for the market meltdown but left our financial system weak.

The U.S. financial system has been completely overhauled and is in a much stronger position today than before the crisis. In fact, the weakest parts of the system are gone.

Of the 15 largest financial institutions before the crisis, four are no longer independent entities. Five were forced to restructure. Two have altered their legal form and are subject to much stricter federal oversight. Ten have seen major changes in senior management and boards of directors.

Investors in those institutions that didn't survive were wiped out. Investors in those that did faced substantial losses. Where firms could not finance themselves and the government was forced to take a large stake, our investments came with conditions that forced fundamental restructuring.

The firms that remain are less leveraged and hold much more capital (or financial reserves) against risk. They were forced by the stress tests we conducted to demonstrate that they could raise equity from private investors on the strength of their businesses.

4. The TARP worsened the concentration of the banking sector, leaving it more vulnerable to another crisis.

It is true that the financial system is more concentrated today than it was before the crisis. This was unavoidable, but our banking system is still much less concentrated than the systems of every other major country and represents a smaller share of our economy. We have 7,800 banks, not two or five, and we are less dependent on banks overall for credit, with securities markets and other financial institutions providing roughly half of all credit to businesses and individuals.

More important, the financial reforms enacted by Congress in the Dodd-Frank Act created stronger protections for consumers and against excessive risk-taking than existed before the crisis. They include greater transparency, tight limits on size and further concentration, and a clear prohibition on taxpayer-funded bailouts.

5. The TARP was the centerpiece of a strategy by President Obama to assert more government control over the economy.

The TARP was created by a conservative Republican president, who was also forced by the crisis to take over Fannie Mae andFreddie Mac, lend billions to the automobile industry and guarantee money-market funds. And the TARP was championed by the same Republican congressional leaders who are in office today. They deserve more credit for the courage they showed than they seem willing to accept now.

Before President Obama took office, the Bush administration committed nearly $300 billion under the TARP, including investments in banks representing more than three-quarters of the entire sector, two of the three big American car companies and AIG. That support was critical to preventing a complete system collapse, but it also represented a level of government involvement in our economy not seen since the Great Depression.

President Obama adopted a strategy designed to get the government out of the private sector as quickly as possible. To date, we have recovered more than $200 billion in TARP funds, as well as made $28 billion in profits. Our remaining investments in banks are a small fraction of what we inherited. And, in the end, 90 percent of that once-feared $700 billion TARP price tag either will not have been spent or will be returned to the taxpayers.

We will exit the AIG and automotive industry investments much faster than anyone predicted. General Motors is planning an initial public offering for later this year, and AIG has announced a restructuring plan that will accelerate the timeline for repaying the government.

The TARP is over. And as we put it behind us, it is worth noting that the financial security of all Americans is much stronger today than it would have been without the rescue strategy that the program made possible. It worked.

Timothy F. Geithner is secretary of the Treasury.

Prime mover

Local scientist’s theories on globalization and energy consumption have wide influence

By: Morley Walker

Posted: 2/10/2010 2:18 PM

Dr. Vaclav Smil, a distinguished professor in the Faculty of Environment at the University of Manitoba, has published 30 books, four in 2010. His latest, Prime Movers of Globalization, is receiving positive reviews.

UNIVERSITY of Manitoba scientist Vaclav Smil has had a good year. This weekend sees the publication of his 30th book and his fourth of 2010, Prime Movers of Globalization, from The MIT Press in Cambridge, Mass.

His following among world opinion-makers, including Microsoft chairman Bill Gates, continues to grow on a variety of subjects, especial­ly world energy consumption and global risks.

The current issue of the prestigious academic journal American Scientist contains a positive review by John R.F. McNeil, a leading U.S. historian, of Smil’s 2010 book Why America Is Not a New Rome. In fact, Smil has had seven of his books reviewed in Nature, the oldest science weekly, something few scholars have achieved.

Smil, 67, was born in Czechoslovakia and, fol­lowing a short stint in the U.S. to complete his doctorate, came to Winnipeg in 1972. He teaches in the faculty of environment. The Free Press caught up with him recently to conduct a brief interview by email.

Q: The New York Times columnist Thomas Friedman has influenced the globalization dis­cussion with his book The World Is Flat, which argues that the economic playing field is being levelled in the 21st century. Do you agree with his assessment?

A: The surface may seem to be getting flatter (the same brands, cars, e-gadgets, the world of Sony, Toyota and LG, are encountered from Seoul to Soweto). But underneath, the differences (eco­nomic but also cultural and, most distressingly, the religious ones) are actually getting greater.

This is not only in China and India (where the proverbial tide lifts all boats, but those of the new urban class float now relatively lot higher than decades ago) but for the past generation even in the U.S. and Canada, where inequality is increas­ing. Think of nearly 50 million Americans living on food stamps: hard to believe how Friedman could get it so wrong.

Q: In Prime Movers of Globalization, you write about the under-appreciated impact of the diesel engine and the gas turbine on modern civiliza­tion. Can you summarize their importance?

A: Any imported manufactured products (that is, the bulk of consumer goods sold in North America today) came either on a container ship and was then loaded onto a truck for the final delivery (all powered by diesels) or as jet cargo (powered by gas turbines). All intercontinental trade in coal, oil and natural gas, ores and fertil­izer goes in large vessels powered by massive diesels. All long-distance flight is powered by GE, Pratt & Whitney and Rolls Royce gas tur­bines: from moving materials and products to moving people, the modern global economy rests on those two prime movers.

Q: Why are these engines more important than, say, the steam engine or the gasoline-powered automobile engine?

A: Both steam engines and gasoline-powered internal combustion engines are not powerful enough to propel massive container or bulk cargo ships (they carry commonly 250,000 tonnes of load) and are horribly inefficient compared to massive diesels, the only prime movers that can now convert half of all fuel into useful energy.

And no prime mover is more reliable than a gas turbine powering an intercontinental jet.

Q: How much longer do you think modern economies will rely on oil, and what do you think of some of the proposed alternatives, such as bat­teries and fuel cell or even solar and wind power?

A: That depends not only on how much coal, oil and gas we will move from resource to reserve category (resources of everything are still plentiful, but the cost of their recovery and the environmental impacts are a different matter), but also how much we will eventually consider enough. Canadians and Americans consume twice as much energy per capita as the richest EU countries or Japan — without, obviously, be­ing twice as rich, smart or happy. Besides, no al­ternative is, as yet, available at a scale needed to make a difference to the global supply, that is on the order of hundreds of gigawatts for electricity generation, and hundreds of millions to billions of tonnes of oil equivalent in terms of fuel supply.

Q: Do you call yourself an environmentalist?

A: Of course, but the first qualification for such a label should be an extensive quantitative understanding of nature. Without it, everything dissolves into emotional qualitative claims that may, or may not, have any real merit.

Q: What are your views of the local food move­ment or the so-called 100-mile diet?

A: An appealing and laudable idea — but within limits, as the numbers often stack up against it: Differences in climates, soils and labour costs make for some convincing comparative advan­tages, as well as for superior product quality, and large diesels often make the long-distance ship­ping cheaper than the energies that would have to expended for local production in poorer soils and less clement climates. Hence garlic from Gilroy (just south of San Francisco) and Shiraz from Southeast Australia make sense.

Q: In your recent book Global Trends and Catastrophes, you argue that modern civilization is not at serious risk of imminent collapse. But if you were going to place a bet, which country or countries do you think will dominate the world 50 years from now?

A: I never make long-range forecasts; I have written a great deal (and perhaps convincingly) how and why they always fail. Find somebody who, in 1980, predicted the combination of the Soviet demise, China’s rise and America’s trans­formation into the world’s biggest debtor. He or she would tell you who will be on top in 2060.

Q: What do you think is a bigger threat to western civilization — "asymmetrical" conflicts, as you call terrorist attacks, or some kind of viral pandemic?

A: In terms of fear, anguish and enormous expenses aimed at preventing another major attack, obviously the first. In terms of eventual global impacts, the second: A mere repeat of the 1918-1919 pandemics would mean (with today’s global population about four times larger than 90 years ago) at least a quarter-billion deaths.

Q: Are modern communications technologies, such as cellphones, the Internet, Facebook and Twitter, as world-changing as contemporary pundits say they are?

A: Yes on the surface, no as far as the founda­tions are concerned. The modern world rests on massive incessant flows of fossil energies, on constant extraction of minerals, on smelting and machining of metals, syntheses of plastics and applications of fertilizers. These physical founda­tions of our civilizations (entirely hidden, indeed entirely non-existent to the mind of an average texter) have nothing to with Facebook or Twitter.

No amount of texting will extract more oil, pro­duce more steel or ammonia, and without their constant flows, everything modern, including all e-devices, would go down in no time.

Q: Is technological change in fact speeding up, and if so, what impacts will this have on human civilization?

A: This is an all too common claim, entirely based on the advances in solid-state electronics (ever-tighter packing of transistors on a chip ac­cording to Moore’s law). There is no sign of any technical acceleration as far as huge swaths of industries and production and consumption pro­cesses are concerned: The same prime movers power most of our electricity generation as they did a century ago (large steam and water tur­bines) and most of our personal mobility (internal combustion engines), and the same converters heat our houses (furnaces) or cook our food (gas or electric ranges). Of course, their efficiencies are now higher, a result of incremental improve­ments, not of any accelerated innovation.

Q: In your book Why America Is Not a New Rome, you argue that comparisons between the modern U.S. and the classical Roman Empire are misguided. Why is this? And do you think that the often-heard predictions of U.S. decline are overstated?

A: I wrote the book because I was annoyed by constant comparisons of the two polities based on nothing but the propensity for tossing off seem­ingly captivating phrases. There are so many fundamental differences, starting with the fact that Rome was never that powerful as believed by the talking TV heads — and neither has been the post-Second World War America. The U.S. began its inexorable decline from a very high spot on the global ladder, so it will take a while before it gets to be just one of many.

Q: The communications theorist Marshall Mc-Luhan, who grew up in Winnipeg, argued that we are in an era where the primacy of the written word is ending. Do you agree? What do you think is the future of the book?

A: More than that: In so many obvious ways the age of the book is already over. Just start quantifying time spent on Tweeting, texting, in­cessant neurotic checking of messages, staring at miniature or wall-like screens and then gossiping about what was seen on all of the above. Or as Hal Crowther put it, modern minds are turning into suet." target="_blanks">

'Nails' still has no quit in him

By Alejandro Lazo

Oct 6 (Los Angeles Times) -- Lenny Dykstra paced his Westwood apartment, fidgeting with a butterfly knife and mumbling profanities to an attorney. A succession of visitors, including a hulking bodyguard and a personal assistant named Destiny, streamed through the 12th-story penthouse.

One wall held a framed poster from Dykstra's days with the Philadelphia Phillies, his cheeks characteristically bulging with tobacco chaw. Against another wall leaned a Sotheby's real estate sign, sullied with specks of fresh dirt.

Dykstra, nicknamed "Nails" by baseball fans for his tough style of play, said he uprooted the for-sale sign from the front lawn of his Thousand Oaks mansion. It had been staked there at the direction of court officials overseeing his bankruptcy case. Then, Dykstra said, he changed the locks to the neo-Georgian home and threw a victory party there to celebrate what he saw as his reclamation of the $17.4-million showplace, bought from hockey star Wayne Gretzky in 2007, at the top of the housing bubble.

"If you [mess] with Nails," Dykstra said, nodding at the sign, knife still in hand, "you get the hammer."

Dykstra, a self-styled financial guru who sells his investing expertise through a website and occasional TV commercials, charmed Wall Street and the sports world with his stock-picking columns and fast-spending life after baseball.

But by 2009, most of the money was gone, and the three-time major league all-star filed for bankruptcy protection, saying he wanted to stave off foreclosure and reorganize his finances. Instead, Dykstra's creditors quickly pushed him into a court-ordered liquidation.

At age 47, the Nails who posed bare-chested for an '80s-era New York Mets glamour poster has turned beefy and grizzled. He has a thatch of graying hair and is missing several teeth. His marriage has crumbled.

His baseball pals have made themselves scarce. The bejeweled 1986 World Series ring was pawned, then sold.

Still, like those days on the diamond, Dykstra has proved he's not going down without a fight. He has challenged the bankruptcy proceedings at nearly every juncture and has managed to keep creditors away for months. At times representing himself, Dykstra argues that he could right his finances if he were allowed to pursue lawsuits against various parties.

Court officials, creditors and former associates say the ex-ballplayer is in over his head and should submit to the unwinding of his once- gilded existence.

'It's a slow-motion car wreck," said author Randall Lane, who devoted a chapter to Dykstra in his recently published book about Wall Street excess, "The Zeroes: My Misadventures in the Decade Wall Street Went Insane." "He is a perfect metaphor for what happened to many people, but he did it on a scale that was monumental."

Dykstra's bankruptcy filing lists assets of $24.6 million and debts of

$37.1 million. Unsecured creditors, which number close to 100, offer a snapshot of his former life as a high roller: credit card companies, the Carlyle hotel in New York, Mercedes-Benz Financial, the venerable Rubenstein public relations firm and several former employees, including the pilots of his private jet.

The Gretzky mansion is by far the most valuable and hotly contested piece. Claimants include Wall Street titan JP Morgan Chase & Co. and private equity firm Index Investors.

Dykstra currently lives in a two-bedroom bachelor pad in the Westwood high-rise, where, according to court documents, he has missed several months of rent. He is also fighting eviction attempts by Wells Fargo, which foreclosed on the property's owners.

The apartment is filled with remnants of his flush days, including flat-screen televisions, sports memorabilia and ornate office furniture. Photographs of his three sons -- his middle son, Cutter, is a minor league baseball player -- are scattered throughout the place.

His desk displays a framed photo of Dykstra with President George H.W.

Bush smiling on a sunny golf course.

When not in court, the retired center fielder spends most of his time in his living room staring at two flat-screen computer monitors, firing off e-mails to people involved in his case, plotting a financial comeback and chugging Red Bull energy drinks.

Dykstra said he moved into the apartment last winter after living for months in various odd spots including an airplane hangar and his car after the mansion was placed under control of the court. His attempt to retake the Thousand Oaks property this summer was short-lived, and the court has barred him from returning there.

"I was a wanderer, dude. I was like Gandhi," Dykstra said. "He lived out of a bag."

Dykstra, who grew up in Garden Grove, helped the Mets to a 98-win season in his first year in the majors, 1985, and he became a star the next, helping them win the World Series.

Dykstra cemented himself in the hearts of his fans with his grit, determination and raucous style of play. In Michael M. Lewis' book

"Moneyball: The Art of Winning an Unfair Game," Oakland Athletics General Manager Billy Beane, a former Mets teammate of Dykstra, described him as "able to instantly forget any failure and draw strength from every success."

Dykstra was traded in 1989 to Philadelphia, where the rest of his career was marked by successes as well as injuries, brawls and allegations of steroid use that he has denied. Dykstra's last great season was in 1993, when he set a major league record of 773 plate appearances and led the National League in at-bats, walks, hits and runs -- a staggering performance that helped lead the Phillies to the World Series, which they lost to the Toronto Blue Jays.

That year, Dykstra started a luxury car wash in Corona that he dubbed "the Taj Mahal" of car washes. He expanded the business to other parts of Southern California and in 2007 sold it to investors. By the time he retired in 1998, Dykstra had earned $36.5 million from major league baseball, according to

In the go-go years of the new century, Dykstra brought his head-first style to Wall Street. After teaching himself financial analysis, he struck up a friendship with CNBC "Mad Money" host Jim Cramer, who hired Dykstra to write a stock-picking column for his influential website,

With his sports celebrity, entrepreneurial success, unlikely reincarnation as an ace stock picker and Cramer's seal of approval, Dykstra's prominence soared. He was profiled in a New Yorker article titled "Nails Never Fails: Baseball's most improbable post-career success story." He touted his stock picks on financial news shows.

He also donned the trappings of Wall Street success: He drove a Maybach, flew by private jet and lived in the palatial former Gretzky estate, a mansion of more than 10,000 square feet with tennis courts, a pool, a guesthouse and striking views of the Sherwood Country Club.

In 2008, he began publishing the Players Club, a glossy financial advice magazine created exclusively for pro athletes featuring sports luminaries such as Brett Favre and Tiger Woods on its covers. Dykstra envisioned the Players Club becoming a company that would help players with all aspects of their retirements and dealings off the field.

The venture folded as lawsuits from creditors and unpaid business associates began piling up. Among the litigants was author Lane, the former owner of Doubledown Media, which produced the Players Club.

Lane attributes the glossy's failure in part to Dykstra's unrestrained spending.

As an example, Lane cites a launch party for the Players Club that turned into a $600,000 affair at the Mandarin Oriental ballroom in New York attended by former tennis star John McEnroe, Donald Trump, Cramer and other elites of the business and sports worlds.

Cramer, who refused an interview request for this story, issued a statement standing up for his former protege.

"Lenny was a good investment idea generator and strong contributor for a period of time," the statement said. "I am personally surprised and saddened by the events that today pervade Lenny's life."

Dykstra's undoing is outlined in voluminous court filings. His main source of income in 2007 was $125,000 in monthly payments from a type of IOU called a promissory note, which Dykstra had received from the buyers of his car wash businesses.

The purchase of the Gretzky home that year would prove financially catastrophic, as Dykstra took on monthly payments totaling $135,434.

The Washington Mutual broker who had arranged the loans for the purchase -- promising a quick refinance into a cheaper mortgage once the deal closed -- never followed through, according to a declaration by Dykstra in bankruptcy court documents. The former ballplayer said the loan was predatory.

Property values in Southern California began to plunge, sending Dykstra into a scramble that led to the sale of his nest egg: the car wash note. By the time Dykstra filed for bankruptcy in July 2009, he had six loans totaling $21 million secured against the mansion and another nearby home. His only listed income was a $5,700 monthly pension from Major League Baseball.

Despite this very public collapse, Dykstra appears to have no shortage of associates and hirelings willing to work for him these days. He has several projects planned, including the reintroduction of his Players Club magazine.

Certain that he will win back the Gretzky home, Dykstra is making plans. With a sharply dressed accountant at his side, he said he wants to carve up the mansion among several investors as a time share.

"I have been fighting my whole life," Dykstra said. "That's why I have a new theme song, dude, and I am going to play it for you."

"I want to be a billionaire, so ... bad, buy all of the things I never had," he sang along, loudly and off-key, to the Travie McCoy song "Billionaire," as it blared from his Bose computer speakers. "I want to be on the cover of Forbes magazine, smiling next to Oprah and the queen."


Buffett's Berkshire Hathaway Poised to Advance 13%, MKM's Stockton Says

By Joanna Ossinger - Oct 7, 2010

Shares of Warren Buffett’s Berkshire Hathaway Inc. are poised to rise as much as 13 percent, according to Katie Stockton, chief market technician at MKM Partners LLC.

Berkshire’s Class B shares since last month have been “challenging resistance” at their March highs, and secondary resistance at $94 is “our intermediate-term target upon a decisive breakout,” Stockton said in a note today. The stock closed yesterday at $83.54, matching the two-year high it set on Sept. 16.

“A breakout appears likely to us because the recent consolidation phase has relieved intermediate-term overbought conditions” and “momentum is positive,” Stockton, who is based in Greenwich, Connecticut, said in the note.

Omaha, Nebraska-based Berkshire reports third-quarter earnings on about Nov. 5. The holding company with units in industries such as insurance, railroads, manufactured homes and media reported a 40 percent profit decline in the three months ended June 30 as Buffett’s derivative bets on equity indexes produced losses.

Technical analysts study price charts to predict market moves.

Postal Union Election Delayed After Ballots Lost in the Mail

Published October 07, 2010

Irony alert.

The American Postal Workers Union has extended its internal election after thousands of ballots appeared to have gotten lost . . . in the mail.

The union's election committee was supposed to be counting those ballots this week in downtown Washington, D.C., following a tradition mail-in election. But the union announced that only about 39,000 ballots were turned in -- and that "a large number of union members had not received their ballots."

As Federal News Radio first reported, the union has responded by extending the deadline to Oct. 14.

Workers now have until close of business Thursday to ask for a new ballot. It's unclear whether the mail mix-up will become an eleventh-hour campaign issue.

The union of postal clerks is separate from the National Association of Letter Carriers, which comprises postal workers who deliver the mail.

Teacher Who Served as Symbol of Jobs Measure Gets Laid Off


For a while, it looked like a federal measure aimed at supporting teachers and other state and local workers had helped save Amanda VanNess's job. It turned out it was only a temporary reprieve.

President Obama signed a bill in August aimed at saving teachers' jobs, with Education Secretary Arne Duncan, Council of Economic Advisers chief Christina Romer and teacher Amanda Van Ness on hand.

In July, the 25-year-old Ms. VanNess lost her job teaching kindergarten at Pickett Elementary School in Toledo, Ohio, as a result of cuts that came after voters rejected an income-tax increase aimed at shoring up a budget deficit at the Toledo Public School District.

In August, the White House had contacted Ms. VanNess's union and invited her to Washington to watch as the House, in a special one-day session, passed a $26 billion plan to save teachers' jobs, and then to stand by President Barack Obama as he signed the bill in the Oval Office.

"The idea was, with this bill passing, it was going to give teachers a better chance of being called back," Ms. VanNess said.

Indeed, Ms. VanNess's district received $7.6 million of federal funds. And the day before school started in late August, the school district called Ms. VanNess back to work, on a one-year basis, teaching second grade.

But even with the injection of federal dollars, the district's budget troubles have led it to increase class sizes, cut athletics programs, fire crossing guards and reduce bus services. Some parents have responded by pulling their children from Toledo's public schools. High unemployment in the area also is prompting some families to move away.

The upshot is that with enrollment down by 5.4% this fall from last year, the school district just put through another round of cuts: Ms. VanNess was laid again off last week.

One of the hardest things was leaving her students, she said, who were split between two other classrooms.

"I really love teaching," said Ms. VanNess, who hopes to remain in the Toledo area. "I'm hoping if I wait this out, I can get back into the classroom."

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