Category: literature

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Chronicle of a Death Footnoted

Condolences to the family of David Foster Wallace, after DFW hanged himself on Friday.

My brother-in-law’s sister killed herself last week, so I’ve spent a bunch of time in the last few days thinking about the frame of mind someone has to be in to commit that act and leave family/friends to pick up the pieces.

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Long-Term, my ass

I recently read When Genius Failed, Roger Lowenstein’s chronicle of the rise (1994) and collapse (1998) of Long-Term Capital Management, a hedge fund staffed by Harvard and MIT Ph.D.s. The LTCM team developed “risk management” models that would allow them fund to “vaccuum up nickels” in massive (leveraged) quantities. The formula worked for a while, until it didn’t, at which point people started to realize that LTCM was leveraged out the wazoo, and that the value of its derivatives bets was literally incalculable.

Once the bottom fell out, the Fed had to coordinate a bailout of LTCM by the world’s leading banks. Many of these banks were treated as doormats by LTCM during its meteoric rise. Trust me; it’s a really entertaining story that Mr. Lowenstein tells. As David Pflug, Chase’s head of global credit, put it, “You can overintellectualize those Greek letters [in LTCM’s formulae]. One Greek word that ought to be in there is hubris.”

Two major issues — beyond the failures of “risk management” — struck me while I read the book. For one thing, LTCM’s collapse was precipitated by a series of regional financial crises in 1997-98. The final straw came when Russia defaulted on its foreign bonds in order to pay workers at home. This means, “Russia welched on its worldwide obligations because it barely had money to keep its government afloat.” And this occurred only ten years ago. So if oil futures didn’t rise 1000% in the past few years, how brazen would Russia be right now? (and if they drop significantly, where will Russia end up?)

The third issue was that the behavior of LTCM and the major banks sounded remarkably familiar to our current mortgage-driven crisis (right down to Lehmann Bros. suffering rumors about its underfunding and impending collapse). The exotic derivatives, the incalculable, illiquid assets, the “too big to fail” mentality: this could be 1998 writ large! Had these financial genii — and many of the major players involved in the recent Bear Stearns collapse also figure into When Genius Fails — managed to ignore every lesson from LTCM’s failure?

Near the end of the book, Mr. Lowenstein wrote:

Permitting such losses to occur is what deters most people and institutions from taking imprudent risks. Now especially, after a decade of prosperity and buoyant financial markets, a reminder that foolishness carries a price would be no bad thing. Will investors in the next problem-child-to-be, having been lulled by the soft landing engineered for Long-Term, be counting on the Fed, too? On balance, the Fed’s decision to get involved — though understandable given the panicky condition of September 1998 — regrettably squandered a choice opportunity to send the markets a needed dose of discipline.

That’s why I was really gratified to open today’s NYTimes and discover that Mr. Lowenstein has a great essay on exactly that topic, “Long-Term Capital: It’s a Short-Term Memory”! He does a good job of explaining the issues without getting overly technical (one of the complaints others have had about his book).

Give it a read; I bet you’ll dig it. (And get irate, when you start reading about the Fannie Mae / Freddie Mac seizure. . .)

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Sunshine

What’s in the Arts+ section of The Official Newspaper of Gil Roth today?

  1. a review of two biographies of Han van Meegeren, the famous Dutch forger of paintings,
  2. a review of Richard Todd’s essays on authenticity (nice complement/contrast to the forgery review),
  3. a review of a biography of Jacob Riis, the man who chronicled the horrors of tenement life in late 19th century Manhattan,
  4. a review of a book on the New Urban Renewal and today’s gentrification,
  5. Otto Penzler’s review of Anton Chekhov’s crime fiction.

Sometimes I think their editors say to each other, “Remember that thing Gil was muttering to himself about in 1997, when he thought no one was listening? We should assign an article on that topic!”

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Life’s work

Earlier this year, I had variations of the following e-mail exchange with several NYC literary figures I know:

GIL: Just wondering: do you know Robert Caro?

AUTHOR/WRITER: By acquaintance. Why?

GIL: Would you say he’s in good health?

A/W: Not sure. What’s up? Have you heard something?

GIL: No. It’s just that, well, I loved his biography of Robert Moses, so I grabbed the first three volumes of his biography of Lyndon Johnson. But I know he’s getting up there in years and I’m afraid to start reading it until I know that he’s going to be around to finish the fourth volume.

A/W: . . . You’re a cold person.

GIL: Yeah, but do you think he’s going to finish the biography?

A/W: . . . Good question.

Caro’s own site doesn’t give info about how he’s doing and I’ve been afraid to contact his agent with such a crass question, so I’ve held off on starting the series. The first three books add up to around 2,250 pages, and winds up in 1960, as he becomes vice president under JFK. I confess that I didn’t understand Caro’s desire to devote the half his life (figuring that he started around 1976 or so) to this biography; I don’t know enough about LBJ’s presidency or his character. He’s sort of a void for me, falling between the mythologies of JFK and Nixon.

But, given Caro’s enormous achievement with The Power Broker, I picked up the first volume of the LBJ bio secondhand last summer and read the first 40 pages (introduction and first chapter) one afternoon. I was blown away by the combination of Caro’s wonderful narrative prose and his ability to convey exactly how LBJ epitomizes American politics. On top of that, LBJ’s character and his seeming desire to cover up and rewrite his past made him a fascinating literary character (to me, but I still like Thomas Pynchon’s novels). By the time I’d wrapped up those 40 pages, I knew that Caro had made a perfect choice of subject, and was looking forward to reading the whole series.

Still, I’d seen Caro in Ric Burns’ New York documentary and, while he didn’t look frail, I feared that I’d be taking a risk in diving into the biography, only to see it cut prematurely.

So I was happy to read that there was a Caro-related party this summer as part of the Authors’ Night  benefit for the East Hampton Library (and you scoff at my devotion to Page Six!). I found out about it too late to break out my seersucker suit and crash the event, but I took it as a good sign that Caro was part of the social scene.

Yesterday, I got even more of a boost when I followed an Andrew Sullivan link to a George Packer piece in The New Yorker, where he discusses the importance of LBJ:

Whenever Democrats gather to celebrate the party, they invoke the names of their luminaries past. The list used to begin with Jefferson and Jackson. More recently, it’s been shortened to F.D.R., Truman, and J.F.K. The one Democrat with a legitimate claim to greatness who can’t be named is Lyndon Johnson. The other day I asked Robert Caro, Johnson’s Pulitzer-Prize-winning biographer and hardly a hagiographer of the man, whether he thought Johnson should be mentioned in Denver. “It would be only just to Johnson,” Caro said. “If the Democratic Party was going to honestly acknowledge how it came to the point in its history that it was about to nominate a black American for President, no speech would not mention Lyndon Johnson.” Caro is now at work on the fourth volume of his epic biography, about Johnson’s White House years. “I am writing right now about how he won for black Americans the right to vote. I am turning from what happened forty-three years ago to what I am reading in my daily newspaper—and the thrill that goes up and down my spine when I realize the historical significance of this moment is only equaled by my anger that they are not giving Johnson credit for it.”

Looks like I have a new reading project set once this Montaigne project is over!

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Catch a fire

I don’t agree with all of this guy’s points about the future of digital books vis a vis the success of the Kindle. I’m optimistic that the presence of the Kindle and other e-readers will help drag book publishing out of the horrifically dysfunctional returnable bookstore model that it’s currently in.

But I don’t think that book publishing can be directly compared to the recording industry, and I really don’t think it’s advisable to tell publishers, “If you’ll just embrace this DRM-free, digital model, you can get your sales demolished just like the recording industry did. What are you waiting for?”

I also think Steve Jobs was full of crap when he said that Apple wouldn’t develop an e-reader because  “Americans don’t read.” I think he recognized that Amazon was already in position as the store of choice, and that meant Apple wouldn’t be able to create an iTunes store for books. No store, no device.

I’m still enjoying the heck out of my Kindle, but I’m also bummed that the new Pevear/Volokhonsky translation of War & Peace is selling for $20, rather than the $9.99 that they usually price new hardcovers. Grr.

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Morning Sun

It’s a comparatively slow day at the Official Newspaper of Gil Roth:

  1. a review of the new book by James Wood, How Fiction Works,
  2. a review of an anthology on New Criticism, and
  3. a brief history (with slideshow) of Art Deco.

So I guess I oughtta flip over to the NYObserver, which is more hit-and-miss in its Gilcentric writing:

  1. the decline of newspaper reporters in NJ, and
  2. an interview with Amtrak president/CEO Alex Kummant about transit plans in NY/NJ and the need for new rail capacity?

Looks like I have nothing to complain about.