The Partnership: The Making of Goldman Sachs by Charles D. Ellis

Businessweek and The Economist's "Best Book of the Year"

The Partnership: The Making of Goldman Sachs by Charles D. Ellis
Penguin | 745 Pages | ISBN: 0143116126 | PDF | 3.1 MB


In this history of investment bank Goldman Sachs, Ellis (Winning the Loser's Game) covers the same ground as Lisa Endlich's Goldman Sachs: The Culture of Success—with notable stylistic differences. From Marcus Goldman's purchase of his first commercial paper in 1869 to the firm's current success, Ellis's account is lively and engaging where Endlich's is accurate but dry. Ellis sheds light on events through dialogue and detailed descriptions of people's thoughts and feelings, embellishments that the author terms recreations in his epilogue. The effect of infusing such narrative techniques into the history of Goldman Sachs is entertaining, but it pushes the envelope of nonfiction, especially since the author appears to have interviewed only former partners of the firm. More damagingly, Ellis fails to report much about actual business, and attempts to do so—such as a chapter on Rockefeller Center financing—require lengthy digressions and are incomprehensible due to the complexities of the transactions. Without links to business, boardroom conflicts take on the air of petty squabbles. More a composite memoir of senior Goldman partners than a traditional history, this book will satisfy readers curious about the philosophies and personalities of the firm.

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The Quants by Scott Patterson

The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It by Scott Patterson



Crown Business | ISBN : 0307453375 | PDF | 286 pages | 2.67 MB

Review

In a fast-moving narrative, Wall Street Journal reporter Patterson explores the coterie of mathematicians behind the Wall Street crash of 2008. The story's stars are "an unusual breed of investors" called quants, who "used brain-twisting math and super-powered computers to pluck billions in fleeting dollars out of the market." Following the first quant, Beat the Market author Ed Thorp, from his graduate school days in 1955, and introducing others like Peter Muller and Ken Griffin as they established funds at major investment firms, Patterson spins a fascinating story of riches amassed for a few and, inevitably, lost for many: a collapsing hedge fund, "imploding under the weight of toxic subprime assets," took down the system "like a massive avalanche started by a single loose boulder." Though his narrative is interesting and easy to follow, Patterson's explanations of investment terms are not for novices; a glossary would have helped. As he puts the excesses and failures of Wall Street into perspective, however, Patterson also offers evidence that Wall Street hasn't learned its lesson: as of spring 2009, "several banks reported stronger earnings numbers... in part due to clever accounting tricks... and other potentially dangerous quant gadgets being forged in the dark smithies of Wall Street."

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Too Big to Fail by Andrew Ross Sorkin

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves (Hardcover) by Andrew Ross Sorkin



Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves
Viking | 351 pages | ISBN: 0670021253 | PDF | 1.7MB

Review:

At 6:30 a.m. on June 6, 1944, U.S. forces began their assault on Omaha Beach as part of the Normandy landings. Casualties among the first wave were horrendous as infantry struggled out of their landing crafts, known as Higgins boats, under intense fire. Incredible acts of individual heroism and great leadership on the spur of the moment eventually saved the day, but not before chaos and death swept the sand. Combat historian S.L.A Marshall described Omaha Beach as "an epic human tragedy which in the early hours bordered on total disaster." At 11 a.m. on Sept. 15, 2008, Lloyd Blankfein pulled up in front of a Manhattan office building to continue working on a way to save his firm, Goldman Sachs. "I don't think I can take another day of this," one of his employees remarked. Blankfein shot back, "You're getting out of a Mercedes to go to the New York Federal Reserve. You're not getting out of a Higgins boat on Omaha Beach." Blankfein was right: Being a Wall Street banker in 2008 was nothing like being a soldier during the Normandy invasion. The financial crisis may have been a once-in-a-lifetime struggle for a group of very well-paid banking executives, but the hardships they endured were long hours, uncomfortable phone calls, and mediocre takeout food. The only thing that JPMorgan Chase and Goldman Sachs had in common with the U.S. forces was that, ultimately, they won: The Wall Street executives kept their jobs, their bonuses and their pensions; they benefited from unprecedented rule changes and unlimited monetary and fiscal support; and their firms became even bigger and more dangerous to the economic health of society. Stephen Ambrose retold the human dimensions of World War II in convincing and excruciating detail. Andrew Ross Sorkin is the Stephen Ambrose for our financial crisis, with the blow-by-blow story of how rich bankers fought to save the Wall Street they knew and loved. The details in "Too Big To Fail" will turn your stomach. The arrogance, lack of self-awareness, and overweening pride are astonishing. Sorkin puts you there -- you see events unfold moment by moment, you hear the conversations, you can sense the hubris. The executives of our largest banks ran their firms into the ground, taking excessive risks that even now they fail to understand fully. But, as these individuals saw it, unless they personally were saved on incredibly generous terms, the world's economy would grind to a halt. This is as compelling as it is appalling. Jamie Dimon, the astute, well-connected and ultimately victorious head of JPMorgan Chase -- a character whose development is revealed meticulously in Duff McDonald's "Last Man Standing" -- told his shareholders' meeting earlier this year that 2008 was probably the company's "finest year ever." He was talking about what you and I call the worst financial crisis since the Great Depression. Sorkin in his general narrative and McDonald in his biography are sympathetic to their protagonists, but the portraits that emerge are not encouraging. Perhaps for this reason, both shy away somewhat from a key point: You can blame the bankers all you want, but it is the government's job to prevent the financial sector (and anyone else) from holding or exercising this kind of power over us. Where was the government? By 2008, our executive and legislative branches had long been deep in bipartisan slumber, allowing vulnerabilities to build up in the form of overspending, rising consumer debt levels and lax (or nonexistent) protection for consumers against outrageous practices by the financial sector. This bigger picture is missing from Sorkin's and McDonald's blow-by-blow accounts, but it is a recurrent theme in "Past Due," by journalist Peter S. Goodman. We can quibble about the relative importance of some details -- such as the role of China's high savings rate in lowering global interest rates and feeding the American credit boom -- in Goodman's highly informative account. But there is no question that politicians either believed that crazy "financial engineering" created a sound basis for sustainable growth or just loved what the financial system could do for them at election time. And, as Sorkin relates, it is hard to escape the conclusion that the rhetoric regarding our supposedly free markets without government intervention just masks the reality -- that there is a revolving door between Wall Street and Washington, and powerful people bend the rules to help each other out.

In an illustration of Wall Street clubbiness, Sorkin documents a meeting in Moscow between Hank Paulson, secretary of the treasury (and former head of Goldman Sachs), and the board of Goldman Sachs. As the storm clouds gathered at the end of June 2008, Paulson spent an evening talking substance with the board -- while agreeing not to record this "social" meeting in his official calendar. We do not know the content of the conversation, but the appearance of this kind of exclusive interaction shows how little our top officials care about public perceptions of favoritism. In saner times, this would constitute a major scandal. At moments of deep crisis, understanding what influences policymakers and having access to them can help a firm survive on advantageous terms. Goldman Sachs was saved, in large part, by suddenly being allowed to become a bank holding company on Sept. 21, 2008. Our most senior government officials determined that the United States must allow Goldman to keep its risky portfolio of assets, while offering it essentially unfettered access to cheap credit from the Federal Reserve. In rescuing a crippled investment bank, the Treasury created the world's largest government-backed hedge fund. In the face of these developments, Andrew Haldane, head of financial stability at the Bank of England, has become blunt about the way our banking system interacts with (and rips off) taxpayers. In a recent paper that represents the straightest talk heard from the official sector in a long while, Haldane puts it this way: The government may say "never again" to bailouts, but when faced with the choice to either "rescue big banks or allow the world economy to collapse," it will reasonably choose the route of rescue. But, knowing this, the people running our biggest banks have an incentive to take more risk -- if things go well, bank executives get the upside, and if there's a problem, the taxpayer will pick up the check. If a financial sector boss wants greater assurance of a bailout, he or she should make bigger and potentially more dangerous bets -- so the government simply cannot afford to let that bank fail. This, Haldane argues, is our "doom loop" -- big banks know they can get away with the same behavior (and more) again, and we are doomed to repeat the same boom-bust-bailout cycle. A long time ago, President Andrew Jackson's private secretary, Nicholas Trist, described the Second Bank of the United States, the last financial institution to seriously challenge the power of the president, thus: "Independently of its misdeeds, the mere power, -- the bare existence of such a power -- is a thing irreconcilable with the nature and spirit of our institutions." Unless and until we break the political power of our largest banks, the middle class will be hammered down. Whose taxes do you think will be raised to reflect the costs of repeated financial shenanigans? The financial sector will become even richer and more powerful. If you didn't like where inequality in the United States was already heading, wait until you see the effects of this recession. The most significant result of the financial crisis is the emergence of six large banks that are undoubtedly too big to fail and therefore enjoy a strengthened government guarantee; Goldman, JPMorgan, Citigroup, Bank of America, Wells Fargo and Morgan Stanley are the beneficiaries of the doom loop. The most significant non-result is the fact that no comprehensive legislation has yet been passed to reform the financial sector. Without really serious reform, we have every reason to start counting down to the next financial crisis, and to the next fleet of Mercedes lining up before the New York Fed.

"...comprehensive and chilling..."
-TIME

"...his action scenes are intimate and engaging..."
-The New Yorker

"Sorkin's prodigious reporting and lively writing put the reader in the room for some of the biggest-dollar conference calls in history. It's an entertaining book, brisk book...Sorkin skillfully captures the raucous enthusiasm and riotous greed that fueled this rational irrationality."
-The New York Times Book Review

"...brings the drama alive with unusual inside access and compelling detail...A deeply researched account of the financial meltdown."
-BusinessWeek

"...meticulously researched...told brilliantly. Other blow-by-blow accounts are in the works. It is hard to imagine them being this riveting."
-The Economist

"Sorkin's densely detailed and astonishing narrative of the epic financial crisis of 2008 is an extraordinary achievement that will be hard to surpass as the definitive account...as a dramatic close-up, his book is hard to beat."
-Financial Times

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How The Mighty Fall: And Why Some Companies Never Give In by Jim Collins

The Book:



How the Mighty Fall : And Why Some Companies Never Give in
225 Pages |PDF |9.9MB |ISBN: 0977326411

About the Book:

How the Mighty Fall addresses two related questions: Why do good companies fail? and how does management respond once a company gets into trouble? Collins introduces a five stage model to answer these questions, where steps one and two address the roots of corporate failure and steps three through five managements' response.

Collins' analysis of management response to decline--denial of risk, grasping for salvation, and capitulation to irrelevance or death--accurately describe how leaders respond to deterioration in their business. This analysis here is solid, the writing clear, and the tempo brisk. Collins does a particularly good job of describing dysfunctional leadership behaviors of companies is in decline.

Collins' analysis of why companies get into trouble in the first place is much less compelling. Companies fail, according to Collins, when success breeds managerial hubris, which leads to overreach and ultimately failure. Like many of Collins' findings, this makes intuitive sense. Unfortunately in this case, his core argument runs counter to research on hundreds of companies, conducted over decades by dozens of scholars. There are two major flaws in Collins argument.

First, he claims that companies get into trouble because they overreach and expand beyond their core. This is consistent with data showing that diversified companies trade at a discount to focused rivals. Recent research published in the Journal of Financial Economics and the Journal of Finance has established that the companies often diversify to escape decline in their core business. Overreach is a symptom--not a cause--of decline and thus cannot explain its roots.

Second, Collins ignores a rich body of research that finds decline sets in not because companies stray from their core, but because they stick too close to it. Clay Christensen's research on disruptive technology, for example, demonstrates that companies stumble when they stay too close to their established customers and fail to serve emerging segments. The competency trap literature finds that companies get locked in by what they do well and struggle to adapt when circumstances change. Hubris and overreach, of course, play a role in corporate decline, but a well-established body of research suggests that they are rarely the root causes.

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After Dark by Haruki Murakami

After Dark by Haruki Murakami
Knopf| 196 pages| ISBN: 0307265838| 2 MB

About the book :

Murakami's 12th work of fiction is darkly entertaining and more novella than novel. Taking place over seven hours of a Tokyo night, it intercuts three loosely related stories, linked by Murakami's signature magical-realist absurd coincidences. When amateur trombonist and soon-to-be law student Tetsuya Takahashi walks into a late-night Denny's, he espies Mari Asai, 19, sitting by herself, and proceeds to talk himself back into her acquaintance. Tetsuya was once interested in plain Mari's gorgeous older sister, Eri, whom he courted, sort of, two summers previously. Murakami then cuts to Eri, asleep in what turns out to be some sort of menacing netherworld. Tetsuya leaves for overnight band practice, but soon a large, 30ish woman, Kaoru, comes into Denny's asking for Mari: Mari speaks Chinese, and Kaoru needs to speak to the Chinese prostitute who has just been badly beaten up in the nearby "love hotel" Kaoru manages. Murakami's omniscient looks at the lives of the sleeping Eri and the prostitute's assailant, a salaryman named Shirakawa, are sheer padding, but the probing, wonderfully improvisational dialogues Mari has with Tetsuya, Kaoru and a hotel worker named Korogi sustain the book until the ambiguous, mostly upbeat dénouement

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Books by Ken Follett

The Pillars of the Earth



With this book, Follett risks all and comes out a clear winner, escaping the narrow genre of suspense thrillers to take credit for a historical novel of gripping readability, authentic atmosphere and detail and memorable characterization. Set in 12th-century England, the narrative concerns the building of a cathedral in the fictional town of Kingsbridge. The ambitions of three men merge, conflict and collide through four decades during which social and political upheaval and the internal politics of the church affect the progress of the cathedral and the fortunes of the protagonists. The insightful portrayals of an idealistic master builder, a pious, dogmatic but compassionate prior and an unscrupulous, ruthless bishop are balanced by those of a trio of independent, resourceful women (one of them quite loathesome) who can stand on their own as memorable characters in any genre. Beginning with a mystery that casts its shadow on ensuing events, the narrative is a seesaw of tension in which circumstances change with shocking but true-to-life unpredictability. Follett's impeccable pacing builds suspense in a balanced narrative that offers action, intrigue, violence and passion as well as the step-by-step description of an edifice rising in slow stages, its progress tied to the vicissitudes of fortune and the permutations of evolving architectural style. Follett's depiction of the precarious balance of power between monarchy and religion in the Middle Ages, and of the effects of social upheavals and the forces of nature (storms, famines) on political events; his ability to convey the fine points of architecture so that the cathedral becomes clearly visualized in the reader's mind; and above all, his portrayals of the enduring human emotions of ambition, greed, bravery, dedication, revenge and love, result in a highly engrossing narrative. Manipulating a complex plot in which the characters interact against a broad canvas of medieval life, Follett has written a novel that entertains, instructs and satisfies on a grand scale

World Without End (Sequel to The Pillars of the Earth)



In 1989 Ken Follett astonished the literary world with The Pillars of the Earth, a sweeping epic novel set in twelfth-century England centered on the building of a cathedral and many of the hundreds of lives it affected. Critics were overwhelmed--"it will hold you, fascinate you, surround you" (Chicago Tribune)--and readers everywhere hoped for a sequel.

World Without End takes place in the same town of Kingsbridge, two centuries after the townspeople finished building the exquisite Gothic cathedral that was at the heart of The Pillars of the Earth. The cathedral and the priory are again at the center of a web of love and hate, greed and pride, ambition and revenge, but this sequel stands on its own. This time the men and women of an extraordinary cast of characters find themselves at a crossroad of new ideas--about medicine, commerce, architecture, and justice. In a world where proponents of the old ways fiercely battle those with progressive minds, the intrigue and tension quickly reach a boiling point against the devastating backdrop of the greatest natural disaster ever to strike the human race--the Black Death.

Three years in the writing, and Eighteen years after Pillars of the Earth weighed in with almost 1,000 pages of juicy historical fiction about the construction of a 12th-century cathedral in Kingsbridge, England, bestseller Follett returns to 14th-century Kingsbridge with an equally weighty tome that deftly braids the fate of several of the offspring of Pillars' families with such momentous events of the era as the Black Death and the wars with France. Four children, who will become a peasant's wife, a knight, a builder and a nun, share a traumatic experience that will affect each of them differently as their lives play out from 1327 to 1361. Follett studs the narrative with gems of unexpected information such as the English nobility's multilingual training and the builder's technique for carrying heavy, awkward objects. While the novel lacks the thematic unity of Pillars, readers will be captivated by the four well-drawn central characters as they prove heroic, depraved, resourceful or mean. Fans of Follett's previous medieval epic will be well rewarded.

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THE LIFE AND TIMES OF THE THUNDERBOLT KID [A MEMOIR] BY BILL BRYSON

The Book



THE LIFE AND TIMES OF THE THUNDERBOLT KID [A MEMOIR] BY BILL BRYSON
Broadway | 207 pages | ISBN 076791936X | PDF | 2.2 MB

About the Book

Bill Bryson was born in the middle of the American century1951in the middle of the United StatesDes Moines, Iowain the middle of the largest generation in American historythe baby boomers.As one of the best and funniest writers alive, he is perfectly positioned to mine his memories of a totally all-American childhood for 24-carat memoir gold. Like millions of his generational peers, Bill Bryson grew up with a rich fantasy life as a superhero. In his case, he ran around his house and neighborhood with an old football jersey with a thunderbolt on it and a towel about his neck that served as his cape, leaping tall buildings in a single bound and vanquishing awful evildoers (and morons)-in his head-as "The Thunderbolt Kid." Using this persona as a springboard, Bill Bryson re-creates the life of his family and his native city in the 1950s in all its transcendent normalitya life at once completely familiar to us all and as far away and unreachable as another galaxy.It was, he reminds us, a happy time, when automobiles and televisions and appliances (not to mention nuclear weapons) grew larger and more numerous with each passing year, and DDT, cigarettes, and the fallout from atmospheric testing were considered harmless or even good for you. He brings us into the life of his loving but eccentric family, including affectionate portraits of his father, a gifted sportswriter for the local paper and dedicated practitioner of isometric exercises, and OF his mother, whose job as the home furnishing editor for the same paper left her little time for practicing the domestic arts at home.The many readers of Bill Brysons earlier classic, A Walk in the Woods, will greet the reappearance in these pages of the immortal Stephen Katz, seen hijacking literally boxcar loads of beer.Joined in the Bryson gallery of immortal characters by the demonically clever Willoughby brothers, who apply their scientific skills and can-do attitude to gleefully destructive ends.

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Marley & Me: Life and Love with the World's Worst Dog by John Grogan

The Book:



Marley & Me: Life and Love with the World's Worst Dog by John Grogan
Harper |PDF | ISBN : 0061687200| 433 Pages

About the book:

Labrador retrievers are generally considered even-tempered, calm and reliable;and then there's Marley, the subject of this delightful tribute to one Lab who doesn't fit the mold. Grogan, a columnist for the Philadelphia Inquirer, and his wife, Jenny, were newly married and living in West Palm Beach when they decided that owning a dog would give them a foretaste of the parenthood they anticipated. Marley was a sweet, affectionate puppy who grew into a lovably naughty, hyperactive dog. With a light touch, the author details how Marley was kicked out of obedience school after humiliating his instructor (whom Grogan calls Miss Dominatrix) and swallowed an 18-karat solid gold necklace (Grogan describes his gross but hilarious "recovery operation"). With the arrival of children in the family, Marley became so incorrigible that Jenny, stressed out by a new baby, ordered her husband to get rid of him; she eventually recovered her equilibrium and relented. Grogan's chronicle of the adventures parents and children (eventually three) enjoyed with the overly energetic but endearing dog is delivered with great humor. Dog lovers will love this account of Grogan's much loved canine.

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The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

The Book:



The Black Swan
Random House | 401 pages | PDF | ISBN 1400063515 | 6.8 MB

About the Book

Four hundred years ago, Francis Bacon warned that our minds are wired to deceive us. "Beware the fallacies into which undisciplined thinkers most easily fall--they are the real distorting prisms of human nature." Chief among them: "Assuming more order than exists in chaotic nature." Now consider the typical stock market report: "Today investors bid shares down out of concern over Iranian oil production." Sigh. We're still doing it.

Our brains are wired for narrative, not statistical uncertainty. And so we tell ourselves simple stories to explain complex thing we don't--and, most importantly, can't--know. The truth is that we have no idea why stock markets go up or down on any given day, and whatever reason we give is sure to be grossly simplified, if not flat out wrong.

Nassim Nicholas Taleb first made this argument in Fooled by Randomness, an engaging look at the history and reasons for our predilection for self-deception when it comes to statistics. Now, in The Black Swan: the Impact of the Highly Improbable, he focuses on that most dismal of sciences, predicting the future. Forecasting is not just at the heart of Wall Street, but it’s something each of us does every time we make an insurance payment or strap on a seat belt.

The problem, Nassim explains, is that we place too much weight on the odds that past events will repeat (diligently trying to follow the path of the "millionaire next door," when unrepeatable chance is a better explanation). Instead, the really important events are rare and unpredictable. He calls them Black Swans, which is a reference to a 17th century philosophical thought experiment. In Europe all anyone had ever seen were white swans; indeed, "all swans are white" had long been used as the standard example of a scientific truth. So what was the chance of seeing a black one? Impossible to calculate, or at least they were until 1697, when explorers found Cygnus atratus in Australia.

Nassim argues that most of the really big events in our world are rare and unpredictable, and thus trying to extract generalizable stories to explain them may be emotionally satisfying, but it's practically useless. September 11th is one such example, and stock market crashes are another. Or, as he puts it, "History does not crawl, it jumps." Our assumptions grow out of the bell-curve predictability of what he calls "Mediocristan," while our world is really shaped by the wild powerlaw swings of "Extremistan."

In full disclosure, I'm a long admirer of Taleb's work and a few of my comments on drafts found their way into the book. I, too, look at the world through the powerlaw lens, and I too find that it reveals how many of our assumptions are wrong. But Taleb takes this to a new level with a delightful romp through history, economics, and the frailties of human nature.

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Sea of Poppies by Amitav Ghosh

The Book:




About the Book:

Diaspora, myth and a fascinating language mashup propel the Rubik's cube of plots in Ghosh's picaresque epic of the voyage of the Ibis, a ship transporting Indian girmitiyas (coolies) to Mauritius in 1838. The first two-thirds of the book chronicles how the crew and the human cargo come to the vessel, now owned by rising opium merchant Benjamin Burnham. Mulatto second mate Zachary Reid, a 20-year-old of Lord Jim–like innocence, is passing for white and doesn't realize his secret is known to the gomusta (overseer) of the coolies, Baboo Nob Kissin, an educated Falstaffian figure who believes Zachary is the key to realizing his lifelong mission. Among the human cargo, there are three fugitives in disguise, two on the run from a vengeful family and one hoping to escape from Benjamin. Also on board is a formerly high caste raj who was brought down by Benjamin and is now on his way to a penal colony. The cast is marvelous and the plot majestically serpentine, but the real hero is the English language, which has rarely felt so alive and vibrant.

One of Economist's Best Books of 2008

Farrar, Straus and Giroux | 399 Pages | ISBN: 0312428596 | 1.2 MB

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