America, Empire of Liberty


By David Reynolds


Allen Lane


€35 ISBN 9781846140560

This personal interpretation is as zippy as a serious would-be definitive introduction to American history can get. Taking its title from Thomas Jefferson’s vision of the country, the prolific academic Reynolds grapples with the dynamics of American history by exploring three themes: Empire, Liberty and Faith. Setting out the agenda for the first two, the author ditches the familiar tale of colonisation of the Atlantic seaboard by northern Europe’s 17th-century powers for a less heroic one featuring a much more diverse cast. The frontier is “a shifting zone of interaction between different cultures” such as Indians, blacks and Spaniards. Delving into this vast melting pot, Reynolds plucks out individual accounts from all social, cultural and religious groups of men and women. The book’s third theme, religious faith, has affected America as much as its broad cultural baggage. Calvinist Protestantism has corsetted not only the country’s attitude to multiculturalism but its attitude towards women, abortion, homosexuals and gun law. Not terribly originally, but neatly for the purposes of this book, Reynolds shows how faith (or at least evangelism) can be characterised by a sense of mission, so strong that it becomes the underlying ideology of America and its foreign policy, from Woodrow Wilson to George W. Bush. Couched in the context of domestic economic distractions, he concludes by wryly noting that empires do tend to fizzle out when they lose their sense of mission. 


The Luxury Strategy


By Jean-Noël Kapferer, Vincent Bastien


Kogan Page


€35 ISBN 9780749454777

The Luxury Strategy examines business models that were used to transform small family businesses such as Ferrari, Louis Vuitton, Cartier, Chanel, Bulgari, Gucci and Prada into global brands worth $2 trillion by 2010. What makes this comprehensive and well-written book so compelling is its authorship — Bastien is a former managing director of Louis Vuitton Malletier and CEO of Yves Saint Laurent Parfums, while Kapferer is a brand expert — and its timing. There is much here for the luxury houses to consider as the economic downturn progresses.


When 
Bubbles Burst


By John P. Calverley


Nicholas Brealey Publishing


€15 ISBN 9781857885231

Like F.I.A.S.C.O. (below), this is an excellently re-skinned edition of a book originally published before the current crisis, which means that it has substance as well as topicality. Head of research for Standard Chartered Bank, the author predicts that US and UK house prices will fall 40% from peak to trough, and that between one-quarter and one-third of homeowners will face negative equity. However, the real strength of the book lies in its global reach and its grasp of economics, and political and economic policies. It has no axe to grind and is written very clearly.

Green 
to Gold


By Daniel C. Esty and 
Andrew S. Winston


Wiley


€17 ISBN 9780470393741

An excellent, updated primer that tracks the A to Z of getting a grip on green as a business leader. A worthy read full of business school diagrams rather than the soaring rhetorical idealism of Thomas Friedman’s Hot, Flat and Crowded, which should be read alongside it, this volume is more about the prosaic and less heroic job of implementing meaningful change. If time is short focus particularly on Chapter 7, Eco-Tracking, a huge emerging sector; and Chapter 10, which focuses on why green campaigns fail. The pay-offs can be huge if you get it right.

Inside
 Steve’s Brain


By Leander Kahney


Atlantic Books


€11 ISBN 9781843549123

Written by the news editor for Wired.com, this book is a work of discipleship, vamping up the borderline lunatic elements of Apple’s founder Steve Jobs and emphasising the geek-tastic side of his product arsenal. A timely book, given that the iPod is set to overtake the Sony Walkman anytime now, officially qualifying it as the greatest consumer electronics hit of all time. (The Walkman sold 250 million units in the 1980s, whereas the iPod will likely top 300 million later this year.) The book is a must-read if you are an Apple apostle.

F.I.A.S.C.O.


By Frank Partnoy


Profile Books


€12 ISBN 9781846682384

The weakness and the strength of this fine read is that it was originally published in 1997 and principally chronicles the early days of derivative trading at Morgan Stanley, where the author worked on the emerging markets desk between 1994 and 1995. A sales hit at the time, F.I.A.S.C.O. was the spiritual successor to Michael Lewis’ Liar’s Poker, which told of excess and greed in the 1980s at Salomon Brothers. Someone, somewhere, is scribbling juicy insider accounts of the Lehman/AIG/RBS/Merrill sagas – and it remains to be seen whose memoir will emerge as the defining account of the meltdown of 2008-9.


For now, Partnoy’s reworked account is a decade out of date yet provides a perfect primer for what was going wrong long before we reached the current Armageddon. It closes with a freshly minted epilogue ending with an emphatic ‘I told you so’ written from the perspective of 2009. Otherwise, this cheap paperback is probably one of the best layman guides there is to derivatives, which, combined with the housing market bubble, were a root cause of what went wrong at the banks over the past decade. Now a law professor, it helps that Partnoy so easily modulates between sophomore lecturing style — to dispense with the educative bits — and ripping narrative detail that invariably involves debauchery, cussing and greed on an epic scale.


The acronym of the title stands for the now-defunct Fixed Income Annual Sporting Clays Outing, which, by 1994, “had become a legend [within Morgan Stanley]”. Involving a competitive clay pigeon shooting expedition on a pristine, upstate New York reserve, the event steadily defiles itself. “By noon, the salesmen had littered the grounds of Sandanona with liquor bottles, cigar butts, and urine. The tenth F.I.A.S.C.O had been a success.” 


Against a background of launching dicey Latin American bonds, the author never takes a holier-than-thou line. He just observes himself and those around him, which is plenty enough to appal the average observer who thought for one second that the hallowed corridors of an investment bank were connected with decency, integrity and trust. It’s not just the salacious stuff like strip bars and skimpy skirts, which Partnoy keeps firmly in the sidelights. Rather, he repeatedly connects the culture of derivatives trading to gambling, noting how he had become a hero at a previous job at CS First Boston for developing a piece of software that allowed traders to covertly gamble witheach other in the workplace. He also recounts a torrid visit to a casino shortly before starting at Morgan Stanley, where he loses heavily despite being an expert poker player.


The later meaning of this gambling episode unfurls in Chapter 3, where the author’s gradual revelation about small print and infinite jiggery-pokery of selling highly complex products to unsuspecting clients makes a casino look like a bedrock of probity. “…at least that kind of gambling was licit,” exclaims Partnoy. “I had discovered a shadier part of investment banking that mirrored the gambling institutions in Atlantic City before gambling had been legalized; the sign on the door might say GOVERNMENT AGENCY, but you knew that inside a craps game was going on.” Elsewhere, put more succinctly: “The way you made money selling derivatives was by trying to blow-up your clients.”


In another insight, now largely subsumed into the collective consciousness, Partnoy recounts how CS First Boston hatched a division called the Emerging Markets Group, not out of political correctness but as a euphemism to cover up a stinking pile of Third World debt that no one wanted to buy. “It wasn’t clear what “emerging” meant, or how these markets might “emerge.” Still, it sounded awfully good, and it helped cloud the fact that the emerging bond an investor bought actually was a Peruvian loan that hadn’t paid any interest since the 1800s.”


Next up is the Mexican Bank Fiesta, where we start to learn about the black art of banks paying fat fees to ratings agencies to pass off highly risky products as triple A-rated US securities, allied to routine use of offshore jurisdictions to evade US regulators. The resulting financial alchemy completed mission impossible, recounts Partnoy, “an investment-grade-rated Mexican bond denominated in US dollars.” This and similar products, claims Partnoy, were avoided by savvy investors and bought instead by state pension funds and Wisconsin farmer associations bound by the terms of an investment strategy limited to highly rated US securities. No wonder a major debate has today broken out over the function and credibility of the credit rating agencies. 


Putting Brady bonds into a trust before sprinkling them with “some zero coupon bonds [and] junk interest payments, you could convince S&P to rate the entire trust AAA. Combining the two was like baking a cake and then adding icing. The cake was crap. But the icing was real chocolate. The icing persuaded the ratings agency to call a crap cake a chocolate cake.”


Other highlights include a superb account of what happened at Barings PLC, the 233-year-old British bank that collapsed in less than 24 hours in 1995 because of the rogue actions of a single derivatives trader, Nick Leeson. By the end, we’re left in no doubt that derivatives are the financial Frankenstein of our time, and Partnoy is very straightforward about the lessons to draw. “Our culture has become so infused with the gambling instinct that we afford investors only that bill of rights given a slot machine player: the right to pull the handle, the right to pick a different machine, the right to leave the casino, but not the right to a fair game.”