5 comments about Basic Economics 3rd Ed: A Common Sense Guide to the Economy.

1. Thomas Sowell has demonstrated once again that economics does not have to include lengthy, convoluted concepts, charts or jargon. 'Basic Economics' should be in every high school and college library. Economic teachers/professors would be wise to include this gem for classroom instruction as there are excellent concepts and historical content presented logically with great care and clarity.
   
   I applaud this work as it avoids the usual sterile presentation of economics. The book is indeed engaging while maintaining the goal of being informative and factual. Plus, it is so very timely.
   
   Much of what Sowell states in this book can be applied to our current economic situation. In fact, this book was published 18 months ago and provides solid, factual examples and relevant information on what happens when governments provide 'bail-outs' along with reactions of various economic systems to failed entities. We would be wise to consider Sowell's observations and sage advice in such matters.
   
   No matter your interest in economics, get this book! You will find just how helpful, informative and necessary this book is from page one!



2. This book is a must-read for anyone desiring to understand economics. I think it's an essential read if you want to know what's really going on in our economy. This book is an easy read too. It's written for everyone no matter what your intellectual capacity is. Don't let the mainstream media tell you what's going on in our economy, understand it for yourself. I knew practically nothing about economics before reading this book. Thomas Sowell is a master at making the seemingly complex easy to understand. This book is on Rush Limbaugh's list of must-reads.



3. The book's main message is clear and instructive: Prices determined by supply and demand are the most efficient allocators of resources. When governments interfere with this (e.g. rent control, minimum wage, trade barriers) total resources of the society are wasted and the results can be exactly opposite of what was intended. The book gives many interesting examples and clarifies many of the misconceptions. However, the book has its shortcomings. Almost every problem is blamed on the government and it is not clear what the government should be doing in many situations. The problems with the free market approach are not really discussed. For example, the government is blamed for making the Great Depression worse by bad fiscal policies, but the fact that the Great Depression exposed the great weakness of the free market system is not discussed. When there is run on the banks should the government not interfere and let the economy collapse or should it try to ease panic by guaranteeing the bank deposits? The author is critical of government insurance of bank deposits saying that it results in banks taking unnecessary risks. But it is not clear what the author is recommending instead.
   
   The author also criticizes government flood insurance. However, he fails to point out what the government should do. If people are building homes in areas exposed to Hurricanes then the government has three options:
   
   1) After a Hurricane help the victims.
   2) Do not allow people to build in these regions
   3) Let everyone build where ever they want but tell them they should buy their own insurance and they will not get help from the government when the hurricane hits.
   
   It is easy to criticize #1 but does the author recommend the other two options? Instead of any serious analysis the author keeps talking about the free market allocating resources most efficiently.
   
   Despite its shortcomings I recommend everyone to read this book. Most of his points are good and it clears many misconceptions. This book might need a re-write after the events of 2008 where the businesses and the people proved to be no wiser or more efficient than the often criticized government.



4. "Economics is the study of the use of scare resources which have alternative uses" (1).
   
   Understanding economics is understanding trade-offs, incentives, and how the world works. This refreshing interesting book does away with all the dry equations, graphs, and jargon of traditional textbooks to show the heart of the matter.
   
   This book fulfills the economic requirement of the 7-Hour School Week's 12 hard skills to master. You don't need to take a dry economic class to benefit from its strategies.
   
   Read this book instead. You will enjoy it more, and you will probably learn more too.



5. "Basic Economics" by Thomas Sowell is a very good book for the average, curious, citizen, who wants to understand the American economy. It is not written in textbook style, but it is highly readable.
   
   The material is a very good counterbalance to highly "liberal" texts that seem to like governmental interventions and some degree of socialism.
   
   I strongly recommend this book for a better understanding of economics.

5 comments about Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant.

1. Strategy:
   
   1. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Companies need to go beyond competing. To seize new profit and growth opportunities, they also need to create blue oceans.
   
   2. Put the clock forward 20 to 50 years and ask yourself how many unknown industries will exist. Surprisingly, many of the unknown industries will exist.
   
   3. Value innovation is focusing on making competition irrelevant by creating a leap in value for your buyers and you company, thereby opening up new and uncontested market space.
   
   4. Value innovation is neither cutting edge technology nor timing of the market. Value innovation occurs when companies align with utility, price, and cost positions. "If the companies fail to anchor innovation with value in this way, technology innovators and market pioneers often lay eggs that other companies hatch."
   
   5. Blue ocean innovation seeks differentiation and low cost simulataneously. The goal is too drive costs down while simulataneously driving value up for buyers.
   
   6. Utility alignment starts at the top. Production innovation may improve subsystem performance without impacting the company's overall strategy. The production costs savings do not realign the utility proposition of the company. The product cost saving reinforce strategic leadership validating the status quo. "Although innovations of this sort may help to secure and even lift a company's position in the existing market space, such a subsystem approach will rarely create a blue ocean of new market opportunity." Market opportunity results from changing the utility proposition.
   
   7. Red ocean strategy assumes that an industrial structural condition are given and that firms are forced to compete within them, a structuralist or environmental determinism view. In contrast, value innovation is based on the view that market boundaries and industry structure are not given and can be reconstructed by actions and beliefs of industry players.
   
   8. In red ocean, differentiation costs because fimrs compete with the same best practice rule. In recontructionist world, the strategic aim is to create new best-practice rules by breaking the existing value cost trade-off and thereby create a blue ocean.
   
   9. Strategy will always include opportunity and risk.
   
   New markets:
   
   1. How to conceive a new market space: a. Look across alternative industries b. look across strategic groups within industries c. redefine the industry buyer group d. look across to complementary product and services e. rethink the functional-emotional orientation of the industry f. participate in shaping external trends over time.
   
   2. Emotionally oriented industries offer many extras that add price without enhancing functionality. Stripping away these extras may create a fundamentally simpler, lower-priced, lower-cost business model that customer will welcome.
   
   3. Products and services that have different forms but offer the same functionality are substitutes for each other. Alternatives include products and services that have different functions and form but serve the same purpose. Alternatives are broader than substitutes.
   
   4. A strategic group is a group of companies within an industry that pursue a similar strategy. Strategic groups can be ranked in a rough hierarchy according to price and performance. Most companies focus on improving their competitive position within a strategic group. "The key to creating a blue ocean across existing strategic groups is to break out of this narrow tunnel vision by understanding which factors determine customer decisions to trade up or down from one group to another."
   
   5. Individual companies in an industry often target different customer segments. An industry typically converges on a single buyer group. "Challenging an industry's conventional wisdom about which buyer group to target can lead to the discovery of new blue oceans."
   
   6. Untapped value is often hidden in complementary products and services. The key is to define the total solution buyers seek when they choose a product or service. A simple way is to think about what happens before, during, and after your product is used.
   
   7. All industries are subject to external trends that affect their businesses over time. Looking at these trends with the right perspective can show you how to create blue ocean opportunities. Most companies adapt incrementally or passively as events emerge. They pace their own actions to keep up with the development of the trend they are tracking. Key insights occur by discovering how trends will change value to the customer and impact the company's business model. Look for the value a market will deliver today to the value it will deliver tomorrow - "managers can actively shape their future and lay claim to a new blue ocean." The trends must be decisive to your business; they must be irreversible; and they must have a clear trajectory



2. This book helps focus the reader on looking at their business, competition and offerings in different and exciting ways. If you are considering a new business venture or product offering, you really should read this book.



3. Watch Video Here: http://www.amazon.com/review/R284Y5A1JGFA8I Jake Olsen's review was made as part of a critical review assignment for the Fall 2008 Honors Colloquium on Creative Destruction at the University of Nebraska at Omaha, taught by Art Diamond. (The course syllabus stated that part of the critical review assignment consisted of the making of a video recording of the review, and the posting of the review to Amazon.)



4. I have been paying attention to the work of Kim and Mauborgne, since they published their first articles in the Harvard Business Review. The thinking they have developed since those days, i.e. building a strategy canvas, accessing non-users of your company's products, and then devising a process to create a blue ocean strategy expand one's ability to apply their ideas.
   
   Building a strategy canvas, however, is a lot harder than it looks. I've tried, with varying levels of success. Discovering the elements of your differentiation is more than half the battle. It's not so difficult to look at an already innovative product or service and abstract back to the strategy canvas. But, starting from scratch and developing your own, means paying attention to the blocking and tackling of Blue Ocean Strategies: Reconstructing Market Boundaries, fund in Chapter 3. In it, the authors identify the six paths to Blue Ocean Strategies. They are to look across Industry, Strategic Group, Buyer Group, Scope of Product, Functional/Emotional Orientation and Time. But one they left one out, which was in their original thinking. It is simply to look across Borders. Ask how do they do it in Spain or China? Just understanding how the healthcare system works in France, for example, can provide huge insights into anyone who sells products or services to in that industry anywhere in the world. I also find 'Crossing Borders' to be the easiest way to find the assumptions you have about your business model. This is the key starting point in how to create Blue Oceans.
   
   (see [.....] for more information).
   
   Understanding the 'how's' of Blue Ocean Strategy, like most things, let's you apply it rather than just to understand what the authors mean.



5. Its is a good book to read not only for marketing people but for anybody who is interested in looking at things from a new perspective.

No comments about J.K. Lasser's Your Income Tax 2009: For Preparing Your 2008 Tax Return (J.K. Lasser).

5 comments about Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics.

1. Every politician and business leader should be forced to read and understand Economics in One Lesson. Again and again, the classic mistake is made: pursuing a short-term policy that benefits only a select few at the expense of a long-term policy that could benefit many. It's why hybrid car policies can lead to more traffic and pollution. Why setting maximum prices for staples (such as milk) can lead to shortages of those staples. There are many more examples. Read the book. It's a quick read with a huge ROI.



2. The title is a little off. This is shortest and surest way to understand government economic policies - not the basic of economics. But this hardly detracts - I think I am more delighted with what I found than I would have been with what I expected!
   
   If you passed a junior high school Economics class (and have the reading skills to match), you'll be able to make sense of this brilliantly written book. Using easy understandable language, simple examples, and direct reasoning founded on straightforward principles, "Economics in One Lesson" dissects most common fallacious economic policies.
   
   Reading it will give you the basic tools needed to cut through the crap and quickly dissect the debates on almost any of the inherently flawed economic policies which are squandering the wealth of the West and retarding the growth of developing nations. Most of the policies we see proposed (and in effect) today fit the basic forms of those Hazlitt dismembered more than 60 years ago.
   
   I was blown away by a single paragraph in chapter 5 which nailed the heart of the current housing crisis.



3. Particularly appropriate for these times (even many decades after it was written), Hazlitt's Economics in One Lesson offers an alternative to the traditional Keynesian economic theory of the 20th Century. This book is a fairly easy read for non-economists and, though a bit repetitive towards the end, quite enlightening. I'd recommend this book strongly for any student of macro economics or anyone curious in what is happening to the global economy.



4. This book, even if it may seem outdated based on the copyright date, relates to today's times. It explains "real" economics and how one should look at it compared to what we are taught in school. It should be a REQUIRED READING in high school as well as to all current and potential politicians.



5. I first heard about this book on "Pro Business With Dr. Mike Beitler," an internet-radio show about free-market capitalism. Hazlitt does not write like an ivory-tower academic; his work is easy to understand and a pleasure to read.
   
   Read this along with Beitler's "Rational Individualism" book Rational Individualism: A Moral Argument for Limited Government & Capitalism.
   
   David Jacobs

5 comments about Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics).

1. Kindleberger does a great job of demonstrating what the root cause of economic downturns is.The process starts as bubbles of speculation on a sea of enterprise and entrepreneurship as pointed out by Keynes.However,as time passes the bankers decide to shift loans to speculators as well as starting to engage in speculation themselves.The situation changes as one observes a sea of speculation with few bubbles of enterprise floating on top.This sets the stage for the bubble to start growing with the finance coming from the bankers who fuel the expansion in the bubble.This leads to the mania stage.All it takes here is for some tiny liquidity disruption to set off a panic of selling which leads to the Crash as various participants discover that their paper wealth has evaporated ,leaving them with crushing debt loans as their debt leveraging and margin account financing now becomes an albatross around their necks.The end result is various bankruptcies and defaults and a recession or depression.
   
   
   Kindleberger shows how this pattern occurs over and over again in history.Unfortunately,Kindleberger fails to provide the reader with a simplified summary from the earlier work of Adam Smith and J M Keynes that explains the crucial steps involved in inflating,but not creating, the bubble-(a)loans from the commercial bankers to loanees whom the bank knows for certain are going to be engaged in speculative behavior and (b)the decision by the banks themselves to enter the market as active speculators.It is true that the bubbles themseves start irrespective of the banking system since individuals are free to engage in speculative finance with their own money and assets.However,the bubbles could not grow and expand over time if the bankers refused to allow the speculators to leverage their debt position by obtaining extensive lines of credit from the bankers to expand their debt positions.
   
   
   Everyone who reads this book should also read pp.290-340 of The Wealth of Nations[1776;Modern Library(Cannan)edition]and chapters 12 and 22 of The General Theory of Employment,Interest and Money(1936).Keynes proves mathematically that it is uncertainty and speculation(the speculative demand for money) that cause involuntary unemployment in chapter 21 on pp.305-306.The neoclassical(monetarism,rational expectations,real business cycles,etc.) schools must,therefore ,deny that there is anything called uncertainty or ignorance;there is only risk, which is represented by the standard deviation sigma.Similarly ,they must deny that there is any significant speculative demand for money;there is only a transactions demand for money.Kindleberger essentially demonstates that the neoclassical schools have absolutely no historical support.This also means that there would be no statistical support for their claims that the normal probability distribution is applicable to a wide range of industrial and financial markets.Kindleberger, as well as the new coauthors of this latest edition, overlooked the immense support that Kindleberger could have used to buttress his overwhelming historical evidence that has been madee available by Benoit Mandelbrot. Benoit Mandelbrot has presented massive amounts of statistical evidence, for over 50 years ,demonstrating that the neoclassical school's claims about the normal distribution do not have a shred of evidence to support them.It should not be surprising to discover that NO neoclassical economist in the 20th or 21st century has ever done a single goodness of fit test on the various time series data sets in order to supply support for their claims that price changes in all markets are normally distributed over time.
   
   
   
   I recommend this book .It will allow a reader to understand the negatives that could very well happen in the 2008-2010 time period.Ben Bernanke's 1.2 trillion dollar banker and Wall Street bailout,from August,2007-May,2008, has merely delayed the inevitable while creating massive new bubbles in oil and commodities and driving the value of the dollar to new lows.Bernanke has merely substituted future stagflation for recession.



2. I gave this book to my grandson who is majoring at UCSD in economics. He has not had any course yet covering the history of financial crashes, etc. and finds it fascinating to compare past times with the present economic slowdown. Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics)



3. I am no economist and just an interested general reader. I expected to read narratives about past financial crises and how they played out. But this book is not organized that way. It doesn't tell any story from start to finish. Instead it references lots of different crises in a kind of shorthand way, without giving the background or the overall narrative.
   
   Many of the references are pretty darn obscure, at least to me. So fine, if he's talking about how a certain phenomenon works and he says, "as in 1932," or "as in the S&L crisis," I'm with him. But when he says, "just as in the 1762 case in Belgium" (made up example)--well, my eyes start to glaze over, because he hasn't told me the story of 1762 Belgium, but referenced it as if it should be as familiar to me as the Great Depression in the US.
   
   I also think there's something wrong with the writing style. He seems not to start out with topic sentences that show us where he's going, or to end with a summing up of the significance of what he's just said. Certain details recur within a few pages of each other. The effect is pretty scatter-shot, as if it was not carefully edited and made to flow.
   
   There is plenty of raw material here for anyone watching our current economic crisis and wondering how it happened, but you have to work for it. What I get from it is that in certain circumstances, if everyone does what seems best to him or her in the market, the end result will be disaster for all. It's not really irrational to buy when prices are increasing by the day, because huge profits can indeed be made. But the more people that make that individually rational choice, the more irrational the whole thing becomes.
   
   Maybe I could compare it to a stampede to an exit door in a fire. Each person's individual best choice is to get out as quickly as possible. But if you allow that psychological reality to play out, you might have people trampled to death at the door who then block everyone else from escaping.
   
   Reading this was like listening to a rather elderly professor of history who is intimately familiar with many obscure incidents, but doesn't provide the context for his young students to follow his train of thought.



4. There is a wealth of great information and insight in this book, but it is organized in a manner that reduces interest and readability. The authors make points and then provide examples from several financial crises, with the result that almost every single page covers multiple events but you never really get a full picture of those events. It is incredibly relevant to the current (2008) crisis, so it is unfortunate the book isn't organized better.



5. Kindleberger who passed away before the current financial crisis wrote the best book I have read on financial crises. His analysis of boom and bust cycle is prescient. It is much superior to Morris' still excellent The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash and Shiller's mediocre The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It.
   
   Kindleberger thesis is that manias and panics result from the pro-cyclical changes in credit following the Hyman Minsky model. Credit expands during economic booms as creditors compete for market share. Credit expansions fuel asset bubbles. At a turning point, leveraged speculative borrowers can't service their debt and have to liquidate their collateral (dubbed "Minsky Moment"). Asset bubbles burst. Economy slows down. Credit contracts as creditors struggle for survival. Thus, financial systems are prone to financial crisis.
   
   Minsky defined three states of financial deterioration: a) hedge finance (borrower can repay both principal and interest); b) speculative finance (borrower can repay only interest); and c) Ponzi finance (borrower relies on asset appreciation to refinance debt servicing). Bubbles eventually burst as leveraged investors experience a "negative carry" on their investments, and stocks and housing markets crash. Borrowers default (Ponzi finance) and banks fail. Credit tightens exacerbating the crash.
   
   The Minsky model is scalable. When homeowners (current housing crisis) and developing countries (LDC debt crisis) could not refinance their interest payments with new loans (Ponzi finance), the crisis ignited. The author uncovers other examples of Ponzi finance. These include Japanese real estate borrowers in the 80s, the S&L industry that became insolvent when rates were deregulated in early 80s, and the junk bond issuers of the 80s.
   
   Financial crises are frequent and massive. The 90s witnessed many real estate bubbles that rendered banking systems insolvent in Japan, Finland, Norway, and Sweden. Banks wrote down over 20% of their assets. Deposit guarantee claims exceeded 15% of GDP. In 2001, the Argentinian bank crisis costs 50% of GDP.
   
   Crisis can be lengthy. The Japanese asset bubble deflated the economy for two decades. During the Asian crisis, Hong Kong suffered deflation for 6 years.
   
   He indicates how asset bubbles are sequential as they flow from one country to another. As Japan's asset bubbles in the 80s deflated in the early 90s, international flows left Japan for Thailand and Malaysia. When those countries' bubbles burst in the mid 90s, the funds flows went to the U.S. causing a stock bubble in the late 90s. In Asian countries, bubbles in real estate and stocks often occurred together. But, bubbles can move from one asset class to another. Greenspan lowered U.S. rates to 1% to shore up the economy after the 2001 recession associated with the dot.com bubble. The resulting low ARMs rates contributed to the housing bubble. He also mentions that international stock markets are highly correlated whenever crashes occur. International diversification does not work.
   
   Asset price bubbles are triggered by economic "displacements." In Japan and Scandinavia in the 80s and 90s it was financial deregulation. Other displacements included financial innovations such as derivatives and securitization and technological innovations such as railroad, automobile, aircraft, and the computer.
   
   Kindleberger describes the two stages of manias. The first one is rational exuberance lead by insiders who leverage the positive implication of displacements. The second stage is euphoria when insiders sell out to naive outsiders at the peak. Vulnerable speculators rely on false assumptions. Lenders to the oil sector in the late 70s assumed crude oil prices were headed to $90 by 1990 leading eventually to a housing and banking crisis in Texas in the 80s when such oil prices did not materialize. During the 1970s LDC debt crisis, banks accelerated lending to governments assuming governments don't default.
   
   When Kindleberger analyzes the Great Depression. He notes that the speed of the money supply contraction was far slower than contraction of industrial production. The instant freezing of the credit markets resulting from the stock market crash provides a better explanation of the Great Depression.
   
   Kindleberger indicates central bankers most often avoid pricking asset bubbles. Addressing asset bubbles causes a policy paradox: should they raise interest rates to preempt an asset bubble at the risk of throwing the economy into a recession? The one example of Yasuki Mieno, Governor of the Bank of Japan in 1990 who did prick an asset bubble is discouraging as he triggered two decades of deflation (average GDP growth < 1%).
   
   Chapter 10 addresses whether Governments should intervene when bubble burst to preserve the financial system. Or do they create a moral hazard by doing so. He refers to Hoover and his Secretary of the Treasury as proponents of the "leave-it-alone liquidation" position. The rest is history. Their restrictive fiscal policies contributed to turning a recession into the Great Depression. History indicates that even when Government authorities did not intend to intervene at first, they eventually had to anyway. The Great Depression is an example. Hoover played tough and caused a disaster that FDR had to counter when he came in office.
   
   Chapter 11 focuses on the issue of a domestic lender of last resort as a means to resolve crashes. Such a lender is to halt the debt-deflation downward price spiral on affected real and illiquid financial assets. There is a chronic debate whether the most appropriate lender of last resort is a nation's Central Bank or its Treasury. The Central Bank can readily create money. But, the Treasury can implement nearly equivalent Keynesian fiscal stimuli. Chapter 12 focuses on international lenders of last resorts that include the IMF, the World Bank, the Asian Development Bank, and ad hoc bilateral commitments between countries such as the ones between the U.S. and Mexico. These international lenders of last resort have provided financial assistance to the countries affected during the Asian crisis in the late 90s and the Mexican crisis in 1994.
   
   All around this is an outstanding book. If you want to study this subject further, I also suggest Minsky's Stabilizing an Unstable Economy and The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy (Vintage).

5 comments about The World Is Curved: Hidden Dangers to the Global Economy.

1. The world is curved is filled with easily understood facts and figures but will astound the unknowing person. We are being kept in the dark by the drive by media and this book will shed light on our faultering economy. This is a good read.



2. The book is an almost timely look behind the scenes at the world's financial bubbles. It was published after the subprime crisis but before the collapse of Wall Street's investment community. The author attempts to justify the continued practices of this community while calling for inspired attempts to regulate it. He has no real suggestions on how this could be done. He defends the system as moving people out of poverty in great numbers defined by those who no longer live on less than $1 a day. I would suggest that living on $2 a day is no less a reasonable definition of poverty.



3. Based on the endorsements for this book I assumed I would be getting an in depth description of how international finance worked and maybe a clue as to why so many were worried about trade deficits and the possible demise of the dollar.
   
   Instead, what I got was more boosterism about free trade, globalization, and entrepeneurship - and warnings to politicians to not mess with this glorious world. No nuance. Very shallow.
   
   Why it received so many prominent endorsements is a mystery to me. Rather than educating, the book just promotes political viewpoints.
   I would not like to see free trade disrupted, but I have read all his arguments a hundred times before.



4. Excellent overview of a complex subject. Relatively easy to read with lots of examples.



5. I wouldn't know whether this book is good or not. The reader seemed adequate, if not terrific. But, 3 of the first 5 discs had flaws and skipped and sputtered and made whole sections incomprehensible. We had a car trip ruined.

5 comments about When Markets Collide: Investment Strategies for the Age of Global Economic Change.

1. excellent read and very pertinent to the investor/trader who wishes to stay on top of the future investment climate.



2. There are few people in the world whose opinions and insights on financial issues matter more than El-Erian. So this is an extremely important book, even for the average investor. However, the book's audience seems to be mainly managers of large portfolios and financial policy makers, and many of the issues discussed will seem arcane to the average investor. Making it that much more difficult for the average reader, I thought the writing style left much to be desired. For instance, El-Erian repeatedly outlines the issues the book will cover, but then, when he actually gets to the meat of his arguments, I felt he left many important points unclear or even just alluded to. I hope future editions will try to improve the books clarity and organization.
   
   Finally, I wish El-Erian would have spent a bit more time on explaining how the average investor implements and monitors the investing strategies he recommends. Nevertheless, keeping in mind that this is not a handbook for us normal people, the average investor can gain a truly authoratative big-picture account of how the global financial landscape is evolving and how this will impact their investments in the coming years.



3. The book is trying to keep the language plain but probably is not for those who haven't a clue about economy. It is a very interesting read so as to see the flaws and cons of today's economic world and to read between the lines from now on.



4. 1. Emerging markets are a key to understanding the global economic and financial markets. Sovereign wealth funds will provide a new pool of money. Directives have helped open emerging markets and allow monetary investment not before possible.
   2. Emerging economies will have a growing influence on the global economy's growth rate.
   3. For several years emerging Asian economies have account for more global GDP growth than America has. China and India consumer spending is increasing and contribute to global GDP.
   4. Purchase power parity is a unit of measure that eschews the market exchange rate for a conversion based on what is need to buy the same amount of goods and services in each country. When measured using purchasing power parity, China and India contribute more to global growth in 2007 than did the US, UK, and Japan. China and India are moving into a new territory where they are able to internal consume and invest.
   5. China will increasingly find that it's growth will be driving by internal demand rather than external markets. Policy will shift in favor of the consumer and help alleviate protectionist pressures coming from outside, especially from the US which some have label China as a currency manipulator.
   6. Developing countries will increasingly step up as significant and sustainable sources of global growth
   7. Global economic growth will gradually reduce the world's sensitivity to variations in US growth performance
   8. Emerging economies will result in a greater emphasis on domestic components of demand. The global economy will be sustainable because a number of emerging economies are coming online resistant to US down turns.
   9. Emerging economies have recycled their trade economies surplus back into US treasury instruments, mortgages, and corporate bonds. Exchange rates have remained stable. The big players are the Middle East oil producers and Asian producers. However, the imbalances are clearly unsustainable.
   10. As emerging economies gradually shift their primary focus from the producer to the consumer, the rate of growth from imports in these countries will increase over that of the exports. Over the next decade many emerging economies will shift from being export machines to being consumers.
   11. Emerging economies will absorb surplus labor from traditional sectors and traditional sectors will shift the focus away from incremental job creation to human capital accumulation and knowledge-based activities.
   12. Emerging market export growth grew from 10 percent at the beginning of the decade to 17 percent by 2006.
   13. The US in particular will be able to gradually and partially replace its reliance on the overstretched consumers with a new reliance on meeting the growing demand impulses coming from the rest of the world.
   14. Global productivity gains put intense competitive pressures on manufacturers and service providers to reduce costs. Dis-inflationary impact is slowly dissipating and key emerging economies are now exhibiting a gradual increase in wages and partial exhaustion of high-productivity, low-cost labor.
   15. A billion workers moving into the market place reduce world wages, inflation, inflation expectations, and interest rates.
   16. Surging economies have been an important factor behind the surge in commodity prices.
   17. Chinese consumption of oil was 7.1 mbd in 2006 and by 2030, oil demand 16.5 mbd and India demand will reach 6.5 mbd.
   18. Emerging economies that have high growth rates are even larger users of natural resources. The impact of this extra demand will not be offset by the reduced consumption in industrial countries because emerging economies are less efficient user of natural resources.
   19. Physical demand for commodities will be supplemented by financial demand.
   20. Accumulative earnings from Middle East oil export for 2004 through 2008 will approach $2 trillion, 45 percent is saved, adding to large holdings of international reserves.
   21. Emerging economies investment in US government papers puts downward pressure on US interest rates.
   22. As reserve accumulation persists contributes to greater inflationary pressure and appreciation in exchange rates. Reserve accumulation makes exports more expensive. Authorities look for ways to sterilize large capital inflows through purchases of US government paper or outsourcing the management to Bank of central banks (BIS). Saves are pulled out and liquidity of the surplus is mopped up. The interest payments on the debt issues to sterilize the inflows far exceed that earned on the reserve (negative carry).
   23. Countries can buy back their debt and extinguish debt in foreign currency that trades at higher yields than what was earned on the investment of the reserves.
   24. Some countries are starting to setup Sovereign wealth funds (SWF). SWF of oil producers have been exploring opportunities in the Middle East and North Africa, India, Pakistan, and the Far East. Chinese entities have been purchasing investments in Africa and Latin America. SWFs operating cross borders and long term gives them value orientation.
   25. Creditor countries must recognize that the shift in external payments has a permanency to it. Emerging countries must encourage domestic components of demand along with the external components.
   26. Bond markets and US government bonds are facing the prospect of lower allocation of sovereign investments. The declining share will reflect a natural diversification in the asset allocation of the SWFs. While equity markets, real estate will likely benefit from larger allocations of bonds.
   27. Derivative products have enabled a far greater degree of linkage across markets, at any time. BIS estimates, end of Jun 2007, the derivatives market to be $516 trillion. Credit Default swaps have shown the fastest growth. The visible revolution of derivatives has been the mortgage products.



5. Poorly written. He admits he's splitting his audiences and the result is a mess of a book where the big themes are well known to even the most remedial investor. If you're really interested in his ideas all that's needed is a video interview search of which there are numerous.

5 comments about The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash.

1. I don't know why I expected a better book to be written about the crisis we are still in, but I did.
   
   I found this book to be superficial. It is a small book and it spread itself too thin and tried to comment on too much without any depth.



2. I'm not an economist or even close to one but this book is written for the average reader to easily understand. If anyone wants to know how we got into the current financial collapse..read this book. The author knew what was going to happen months if not years before!



3. This book, published last year before the meltdown, predicted in great detail what was about to happen. Charles Morris not only saw a pattern of financial danger, he was able to predict where we were going. As this crisis hit in the last four months I have been desperate to try and understand what was happening and what was likely to happen next. Morris lays out in clear detail, in a manner that us non economists can easily understand the history of financial market manipulation over the last 4 decades.
   
   This book is an easy read in that it is not long but it is full of specific examples and ties together the history of US economics with the global markets. Reading it may likely depress you in that Morris proves that free markets are not self correcting and that greed, and bliss over the status quo, and has led us to the brink of financial destruction.
   
   For me it provided the background knowledge to now understand and put into perspective what comes over the news channels and to be able to chart a path out of this economy for my personal life and business. This is a must read book of the year.



4. As every schoolboy knows, there's nothing worse than a dull book, so (after painfully crawling through Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips, and before that the inane Rogue Economics: Capitalism's New Reality by Madame Napoleoni) when "The Trillion Dollar Meltdown" by Charles R. Morris arrived I had scant enthusiasm for reading yet another book about finance. I was about to throw it onto the pile, when I took a peek, and it was immediately apparent that this guy knows how to write in clear, plain and precise English . In the dismal science of finance, it's as though Charles R. Morris has kindly come into your room and turned on the light.
   
   Not, though, that he makes the economy effortless to comprehend for those of us outside the temples of finance. Despite Morris's gift with words, even a well-crafted book about finance is as simple to absorb as one written about particle physics or string theory. Morris takes pains to decipher all the argot (except for Alt-A loans) in detail, and such abstruse terms as "tranching" (including the inverse tranch and the floating tranch) and "leveraging" are explained several times in case they escaped you the first time around. I would fain confess, however, that by the time he came to "synthetic credit-default swaps" and such passages as "In mid-October 2007 a midcredit 'A' swap on the ABX was trading at about 60, down from a par of 100," I was hanging onto the the side of the pool, struggling to keep my head above water.
   
   Not that all that should deter you from tackling the book, because it is also tempered by humor in the form of Charles R. Morris's sardonic wit. He knows the subject of finance well enough to point out that the masters of the financial universe are not above chicanery and self-deception, and that " . . . advanced mathematics fostered the illusion that economics is a science."
   
   It's amusing to note that almost all the negative reviews here are from the zealots of the Libertarian Synod and the cabal of the Objectiveists. Mr. Morris is a heretic in their glaring eyes because he posits the idea that there can be a balance between too much government regulation and too little. For the rest of us, however, Morris is remarkably evenhanded and nonpartisan in his assessments. I confess that, because I was living large during the Clinton administration, I thought highly of "Rubinomics," with its old-fashioned remedy of paying the debt. Morris, however, debunks all that. After reading this book, I watch the talking heads on PBS with new, somewhat jaded, eyes.
   
   The book's major shortcoming is mentioned in other reviews. There's no escaping the fact that the book is, for all practical purposes, now a year old, and on page 105, we find the erroneous conjecture, "As the credit crunch works its way through banks and investment funds over the next year or so, there will be no soothing fountains of new dollars coming out of Washington. The days of a universal put to the Federal Reserve are over." No, there are no soothing fountains; instead the Federal Reserve and the Secretary of the Treasury have turned on a firehose of cash, and it's astounding that anyone would be surprised by this. What else would anyone expect? That's always been the government's sole answer to any problem.
   
   But a far more serious issue is missing from this book, too. It seems unrealistic, to expect that the government, no matter how well-intentioned, can solve the all problems of mortgage default and evictions, credit card delinquencies, commercial mortgage securities, monoline insurers, credit default swaps and insolvent banks -- the entire army of ravenous debt-zombies marching at once-- but now that the great unraveling is in progress they must also face an even greater problem -- fear.
   
   Everyone reading this has recently lost, or knows someone who has lost, a massive portion of his or her net worth. A friend of mine (retired, no job prospects) lost $15k in the last quarter alone. The City of Detroit Pension System lost $52 million when Lehman Brothers sank. (This is actually not my friend, but I'm too embarrassed to admit it's me.) Bankruptcies called for in the auto industries will relieve those companies of their fixed obligations for retirees, and many other companies are defaulting on their pensions, too. Unemployment is rising daily. In the midst of such catastrophic circumstances, can we realistically expect the housing market (or any other market) to rebound? Who, other than dope dealers laundering money, would be foolish enough to apply for a mortgage during times of deflation?
   
   The information in this book is almost trivial in comparison to the general consensus of where we're headed, the name of which no one dares speak -- the forbidden D-word. Fear has gripped the markets, and quite sensibly so. Others here have criticized Mr. Morris for not proposing more solutions (his sole suggestion is to reinstate the old Glass-Steagall Act), but there may, in fact, be no solutions. Because of the multiplier effect of the derivatives, there isn't enough money in the galaxy to pay off all the debt.
   
   Other alert critics here have noticed that this book doesn't end very well, and yes, it veers off the rails into a standard-newsweekly discussion of general (non-financial) social woes such as inequality, high tuition and health care (NOTE TO AUTHORS: REMAIN ON TOPIC), but those stories have been told more thoroughly elsewhere. (I pay $3200 annually for hospitalization insurance, extra for doctor's visits, yet I would never want to trade that for the "free" [ha-ha!] health system of Canada or the UK with their 18-month waits.) Future editions of the book should jettison these pages and in their place address the vital question of What Is to Be Done?
   
   In the meantime, I've wisely prepared for the future by obtaining a large cardboard box (with blue plastic tarp) to live in, and I recommend Hans Fallada's 1932 book,What Now, Little Man? to all readers.



5. It was the book I am interested in, good price arrived on time. No worrys.

5 comments about The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen.

1. This book was pretty much what I expected: a loud siren acting as a wake-up call to the Obama administration. But, to my surprise, it turned out to be a lot more. I learned a great deal here.
   
   The most surprising thing: JFK was a supply-sider! Back in the early 60s, Democratic President John F. Kennedy was proposing tax cuts to get the economy moving, and the NAY-SAYERS were a bunch of curmudgeonly Republicans. (In a similar vein, you will be astonished to learn that this story goes back all the way to Warren Harding!)
   
   Kennedy got his tax-cut package passed (just as Ronald Reagan did) and the economy took off. Tragically, Kennedy was shot dead, and America unfortunately entered what the authors call the "Four Stooges" period of the American Presidency: LBJ, Nixon, Ford, and Carter. Particularly interesting was the slicing-and-dicing of Richard Nixon. He has become known as "The Watergate Villain," and almost nobody remembers his disastrous, idiotic mismanagement of the economy. Wage and price controls, anyone? "We are all Keynesians now?" Ford and his silly WIN buttons helped not a bit, and then Jimmy Carter managed to drive the misery index to its highest level in decades. The Four Stooges, indeed.
   
   I haven't finished this book yet, but I've already learned so much from it that I thought I should post this review. And I will close with a single image, which may be helpful to those who still think that the U.S. President can do as he pleases. This is Bill Clinton, who is getting sound advice that his re-election depends on maintaining credibility with key financial markets.
   
   Clinton is so angry he pounds his desk, and shouts, "You mean to tell me that the success of the program and my re-election depends on the Federal Reserve and a bunch of *(%@&(% bond-traders??!!"
   
   I suspect that this Clinton Moment is due for a replay in the very near future.
   
   In the meantime, read this book. It is excellent in every way.
   
   I sometimes wonder why we don't teach economics in high school!
   
   As for those who think this is a "pro-Republican book," or an "anti-Democrat book," please go back and read this review again. The book heaps praises on JFK, trashes LBJ, Nixon, Ford & Carter, praises Bush Senior until his tax-betrayal -- and, in sum, is almost totally indifferent to partisan politics. What counts, for the authors, is how we will manage our economy.
   
   Can we find a candidate willing to commit to a goal of economic growth? I suspect the White House is waiting for him.



2. While there is more to the economy than taxes, "The End of Prosperity" offers a cogent analysis of the things government does right (increases incentives, minimizes its own role in making thisgs happen) and wrong (protective enterprises and industries of changes that should happen and regulating the financial system). The authors are pessimitic because they conclude that the age of incentivizing risk-taking through lower taxes on capital is all but at an end.
   
   If timing is everything, the authors' timing was poor, not that they had any control over it. The financial crisis, the collapse of equity prices, and the economy in turmoil did not get the treatment is deserves. Why we are here and how we get out of it is not addressed in this book which is unfortunate. I would like to know the authors' analysis of what went wrong and of government's response to it. They need to do a new last chapter, not an easy thing to do when the book is aleady published. A revised edition anyone?



3. The publication of Dr. Laffer's new book [where appropriate, I will write `Laffer' to refer to authors Laffer, Moore, and Tanous] has turned out to be perfectly timed to be greeted with the laughter it deserves: just when the economy is in serious trouble as a result of seven+ years of the Bush administration implementing Laffer's cockamamie economic theories. Whoever it was that said "Show me a supply-side economist and I'll show you an intellectual courtesan!" really hit the nail on the head. If I understand it correctly, that remark suggests that supply-siders begin with the economic conclusions that the super-rich want to hear (and want the general public to believe), and reinterpret or edit economic history to support those theories. And the current economic meltdown renders Laffer's theories truly laughable.
   
   But we cannot have the first laugh: see the December, 1981 issue of Scientific American for Martin Gardner's famous article "The Laffer Curve, and Other Laughs in Current Economics.
   
   I will not discuss the introduction and chapter 1, because I would have little to add to Mr. Tim Warneka's excellent review. He was, quite reasonably, unwilling to commit any more time to reading Laffer's drivel. I persisted, and except for the final chapter, it didn't get better.
   
   On page 40, Laffer states that " In fact the vast, vast majority of the people who got rich over the last twenty-five years were not rich at the start of this period . . . ." This comes as a surprise? Most of those who were already rich GOT RICHER, but those who were already rich at the beginning couldn't GET RICH unless they first lost their wealth. Some no doubt did, but they were a tiny minority.
   
   The last sentence on page 40 is "Lower tax rates have made the tax system more progressive, not less so (see figure 2-2) This is an outright lie. The tax SYSTEM was, and is, regressive, and the Reagan tax cuts made the only tax in the system that was progressive, less so. A progressive tax system would take a larger percentage of a larger income; a proportional (flat) tax the same percentage, and a regressive tax a smaller percentage. For example, if my income is $X and I pay a total of $1,000 in taxes, (including income, FICA, sales tax, property tax, and other taxes, then if my income doubles to $2X, under a flat tax I would pay $2,000. If the tax system were progressive, I would pay more, say S2,500. Under our present regressive tax system, I would pay less, perhaps $1,500.
   
   Now Figure 2-2 shows "Top Marginal Income Tax Rates and Income Tax Share for the Top 1% of Earners 1980-2005" and the correlation between the two appears to be slightly less than zero, but nowhere near a perfect negative correlation of -1. But the key item that is omitted is the percent of total income received by the top 1%, which increased many fold, so with even a proportional (flat) tax the percent of total tax revenue received by the government from the top 1% would have much more than doubled. It didn't. If you include all taxes, it didn't even double. A more pertinent graph would show total income and total taxes paid per $100 of income received by the top 1%, and the same for the bottom 20%, but that information would undermine the thesis Laffer is promoting.
   
   Reading this book does, indeed, seem like a journey thru fairyland, or at least some fanciful alternate history, but one nowhere near as well-crafted as Eric Flint's 1632 (The Assiti Shards) and its sequels. And Eric Flint made no deceptive use of statistics, whereas Dr. Laffer is, I gather, a serious student of Darrell Huff,^ but at face value. For example, on page 116, Laffer states:
   
   . "The New York Times published a front-page story on March 5, 1992 which screamed [sic]: "Even Among the Well-Off, the Richest Got Richer." It then pronounces that "the top 1% received 60% of the gain from the 80's boom."
   . Not quite. From 1981 to 1989, every income group--from the richest to the poorest--gained income, according to the Census Bureau economic data (see Figure 5-7). The reason the wealthiest Americans saw their share of total income rise is that they gained income at a faster pace than did the middle class and the poor. But Reaganomics did create a rising tide that lifted nearly all boats.
   
   Those of us who have never heard a printed page scream, or pronounce anything, may be justified in doubting the neutrality of the first of Laffer's two paragraphs quoted above. "Screamed" carries a connotation of irrationality and "pronounced" of arrogance, qualities best associated with those one wants to discredit, but with deniability.
   
   But note that "Not quite." Is the only thing in the second paragraph that contradicts the claim that "the top 1% received 60% of the gain from the 80's boom." Figure 5-7 may seem to, unless you read and understand the fine print, which reveals the bar graph to be a clever case of deceptive use of statistics. Figure 5-7 is headed "Changes in Real Family Incomes (by upper limit of each quintile )." The last word, `quintile' is followed by an asterisk, which refers to some fine print below the graph: "Since there is no upper limit on the richest quintile, that figure refers to the lower limit of the top 5 percent." This is what logicians call `equivocation,' because the phrase `no upper limit' is used in such a way as to suggest that, there being `no upper limit,' it would have been impossible to graph the entire top quintile. Not so. There is no DEFNITIONAL upper limit. If there had been an American with an income of a trillion dollars ($1,000,000,000,000), that American would have been in the top quintile by definition. But there was an ACTUAL upper limit, because no quintile contains an infinite number of families. The actual upper limit was the highest before-tax income of any American family. Including the top 5% in the graph would have been possible, but then the graph would have shown the truth Laffer apparently wanted to conceal.
   
   It is difficult for a retired individual like me, without subordinates to do extensive research, to find the exact figures on which Figure 5-7 should have been based, but I found on page 31 of Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else, by David C. Johnston, a graph showing that from 1970 to 2000, the real income, adjusted for inflation, of the top 10% of American taxpayers, increased by 88.6% while that of the lower 90% of American taxpayers DEcreased by 0.1%; and on page 34, another graph shows that over the same period, the average income of the lower half of the the top 10% (percentiles 90+ thru 95) increased by 29.6%, while that of the lower 4/5 of the top 5% (percentiles 95+ thru 99) increased by 54.2%, that of the lower half of the top 1% increased by 89.5%, and that of the top ½% by 144.8%. The data for these graphs were taken from a paper by economists Thomas Picketty and Emmanuel Saez, who also reported that the share of national income received by the top 0.01% in 2000 was more than 500% of what it was in 1970. I think we can safely estimate that if Laffer's Figure 5-7 had presented an honest picture, the black bar on the right would have been about twice as high as it is.
   
   It would have been more honest had Laffer put the `Not quite.' at the end of the second paragraph. Ronald Reagan claimed credit for taking millions of Americans off the income tax rolls entirely, reducing their income tax payments to zero. That claim is true with respect to income tax payments made directly to the IRS, but it ignores the incidence of the federal income tax. For those poor and middle class people who lived in homes rented from private landlords, what they saved in direct payments to the IRS was more than offset by the rent increases caused by increased income taxes on owners of rental housing. The incidence of a tax is who ultimately ends up paying it. The incidence of the increased tax on landlords was mostly on the tenants, who typically paid about $200.00 less per year in income tax and $1000.00 more per year in rent. Oh those lucky poor!
   
   On page 68, Laffer states that the Clean Air and Clean Water acts "were well-intentined but heavy-handed blows to the solar plexus of American industry, imposing costs far exceeding benefits from the cleanup legislation." Evidence presented in support of that claim? None whatever. Now it may be that the costs newly imposed ON THE POLLUTERS (which were from the beginning their MORAL responsibility, which they had been IMMORALLY imposing on the general public) far exceeded the benefits TO THE POLLUTERS of cleaning up their act. But experience has shown that such cost-benefit comparisons are generally arrived at by resolutely ignoring all benefits that cannot be mathematically proven (such as less loss of work from respiratory illness--`that may have been the result of taking more vitamins or getting more exercise or . . .'), placing no monetary value on reductions in pain and suffering, making the lowest possible estimate of the value of any proven benefits, and making the highest possible estimate of the costs, often including theoretically possible costs never shown to actually occur.
   
   On page 93, Laffer quotes from "Paul Craig Roberts of the Treasury Department" without revealing that Roberts is a leading supply-sider:
   
   . . . "Keynsians do not realize that investment is crowded out by taxation. SUPPOSE that a 10 percent rate of return MUST BE EARNED if an investment is to be undertaken. In the event that the government imposes a 50 percent tax on investment income, investments earning 10 percent will no longer be undertaken." [emphasis added]
   
   The first sentence is what is called hostile mind-reading, and like most such, it is of highly dubious accuracy. I would challenge anyone to find a living Keynesian who doesn't realize the theoretical possibility of crowding out (the dead may, if you insist, be considered not to realize anything any more). As for the rest of the paragraph, so what? The stated supposition has never been enacted into law and is extremely unlikely to be so enacted; and for every potential investor so stupid and pig-headed as to keep his money in non-interest-bearing cash rather than invest at 9 percent instead of the 10 percent he'd like to get, there are surely dozens who would prefer any positive rate of return to zero, and would take the best return they could get, rather than pout and sit on their money and get nothing.
   
   Figure 7-2 on page 143 is a deceptive graph, because the vertical scale runs from 124 to 140 million. By not showing the lower 88% of the vertical scale, Laffer makes it look as if the number of jobs more than doubled under the Bush administration, when actually the increase over the first six and a half years was a measly 4%, or about 5/8% yearly, compared to 1¼% in the last year of the Clinton administration.
   
   On page 149, Laffer writes: "The biggest budget atrocity of all was the Bridge to Nowhere in Alaska. This bridge, recommended by Senator Ted Stevens of Alaska, had a $200 million price tag to service an island with fewer than fifty residents." Now I will agree (1) that it is probably better that Senator Stevens was not reelected and (2) that the proposed bridge almost certainly would not have been worth the cost of building it, and therefore it is good that it was cancelled. But it is deceptive to make it appear that the only purpose of the bridge was to serve the fewer than fifty residents of Gravina Island. The truth is that the primary benefit of the bridge would have been to serve travelers arriving at or departing from Ketchikan International Airport (which is on Gravina Island), and a secondary benefit might have been to open up the rest of Gravina Island to residential and/or commercial development (maybe a good idea, maybe not, I don't know). But it is not honest or decent to lie about it by omitting significant facts in order to pile onto Senator Stevens more ridicule and opprobrium than he deserves.
   
   Figure 7-3 on page 151 has an honest vertical scale (it starts at zero, as it should) but the choice of data graphed is deceptive, because it shows the gross dollar amount of revenue received from each group (omitting to say what taxes are included; I assume federal income tax only, because that choice skews the graph the most in support of Laffer's desired conclusion, and the poor pay far more in total sales tax than do the rich). If it showed the total taxes (including state and local taxes) paid per dollar of income, it should come as no surprise if the line for the bottom 50% turned out to lie above the line for the top 1%.
   
   Figure 9-2, page 196, has an honest vertical scale on the left, for the bar graph of GDP per Capita, but a dishonest one on the right, for the line graph of life expectancy. And the horizontal dimension, "economic freedom," is not clearly defined; it is said to be the ranking of 80 nations by three professors in a "Cato Institute study," but what is counted as more or less economic freedom is not revealed. Considering the source, I would expect that their definition of economic freedom to be freedom of the very rich to have things their way. For example, their idea of economic freedom might include freedom of businesses from being subject to lawsuits, whereas you and I might prefer to count our freedom to sue for damages if we suffer injury caused by a defective product. And could the good professors have chosen to rank those 80 nations which would best support their thesis?
   
   Even having taken a high-school economics course should be sufficient to prevent one from writing the laughable statement on page 203 regarding a lemonade stand: ". . . the lemons and the stand are the essential capital . . . ." The stand is capital, but the lemons are not. They are material, that becomes part of the finished product.
   
   On page 211, Laffer argues that taxing capital gains is double taxation. But actually every tax can be regarded as double (or multiple) taxation. Income and FICA taxes are deducted from every worker's pay even before s/he receives it. Then, when s/he spends it, in most states sales tax is added to the price of most goods and services bought. The purchase price becomes income to the seller, which is taxed, and if the seller has employees, s/he must pay FICA tax on their wages, and so on. If every after-tax dollar were marked `taxed' and never again be subject to tax, soon every coin and every piece of paper money and every bank account and investment account would be so marked and no more taxes could be collected except on money newly created. Government services would virtually cease. Chaos would reign, briefly, until someone (likely not a benevolent someone) seized power.
   
   To obtain the benefits claimed for a low or zero tax on capital gains, it is neither necessary nor desirable to reduce or eliminate taxes on all capital gains; this merely encourages firms to arrange that profits be eliminated and the stockholders be given capital gains instead. Better to have partial exemptions for venture entrepreneurs and suppliers of venture capital, but not for rentiers.
   
   Laffer devotes chapter 11 to arguing against the estate tax, which he incorrectly refers to as the `death tax,' because that term is believed to evoke a more negative response. On pages 217-8 he writes: "The left has concocted a fairy tale that Americans don't have to sell their businesses or farms to pay the death [sic] tax, but the reality is it happens all the time." I challenge anyone to document even one example of a farm that had to be sold to pay the estate tax; the last I knew, it hadn't actually happened. What does happen quite often is that heirs who don't want to run a business or farm sell it, pay whatever taxes are owed, if any, and spend or invest the rest as they wish.
   
   Laffer also claims on page 218 that the estate tax "slows economic growth and thus reduces other tax receipts," but presents not a shred of evidence.
   
   Perhaps the book's high point of absurdity is on page 231, where Laffer writes: ". . . the politicians say: We must eliminate our trade deficit. Well, the BEST WAY to do that is to slow the economy and slide into the ditch of a recession." (emphasis added) Laffer may think that a recession is the best solution, but surely I am not the only one who finds that notion laughable.
   
   Almost as laughable is: "The greater net wages received, the more willing a worker is to work. If wages received fall, workers find work less attractive and they will do less of it." Obviously written by someone who never worked for an hourly wage, where the number of hours one works per day and per week is set by the employer, as are productivity goals. Most hourly work is not attractive in itself; it is the pay that attracts the workers, who have to work to support their families. If pay is too low, the worker may be forced to hold 2 or even 3 jobs to make ends meet. Raising pay of one job to a living wage would likely cause the worker to quit the extra job(s) and thus to work less.
   
   While it is true that a significant correlation between two phenomena suggests that causation is involved, it can not necessarily be correctly inferred that the direction of causation is that which would give support to the conclusion you wish to arrive at. On page 286 Laffer writes: "There is very little evidence from the past twenty-five years that immigrants displace native workers from jobs or depress wages on average. States with high levels of immigration have lower overall rates of unemployment than states with few immigrants." The conclusion which would support Laffer's argument, which he obviously wants the reader to jump to, is that high levels of immigration lead to lower levels of unemployment. But this has causality exactly reversed. It is precisely those areas with low unemployment which most attract immigrants. They want to go where the jobs are plentiful, not where unemployment is rampant.
   
   On page 288. ". . . these ideas have been tested again and again, always with negative consequences." Conclusion: they are bad ideas, right? WRONG! Virtually any economic or political idea that is tested will have negative consequences, AND POSITIVE ONES! If the negative outweighs the positive, of course, the idea should be rejected or, possibly, modified to reduce the bad consequences before testing it again. But if the positive outweighs the negative, then go with it!
   
   Watziznaym@gmail.com
   
   * Thanks to Jim Hightower's "Lowdown" for suggesting the term Laisez-Faire.yland
   ^ Darrell Huff, How to Lie With Statistics



4. Fortunately for us readers, the authors did not use such a doomsday title. From the viewpoint of a US citizen, though, end-of-prosperity is ugly enough. These three authors, quite famous academic-grade finance/economic people, did do a superb job of spelling out their points in very clear language. For readers who have had to slog and struggle through "regular" works on economic systems, you will understand how important this is in choosing another book on the topic!
   
   The style of "Prosperity" is not only clear and simple, the topics of each chapter can almost stand on their own, and may very well have done so over past years for various essays and papers. Lest anyone reading this review shudder at the thought of "essay" and "papers," be assured that all the text is written with good humor, and the thoughts flow freely one to the next. At the end, the reader will most assuredly understand clearly the arguments of supply-side economics, and see the backup information justifying their conclusions. Above all, they wish to convince the reader that there are well-defined policies which lead to national economic growth, and those which have proven never to work. Obviously the goal is avoid the ones which have never worked.
   
   Personal favorite chapters: Ch 4, "Honey, We Shrunk the Economy - the 1970s," Ch 6, "What Bill Clinton Could Teach Barack Obama," Ch 8, on how the good Gov Schwartzenegger ran California down, and Ch 13, which explains the flat tax option. As other reviewers have stated, that last chapter could be skipped: what to invest in for "troubled times" ahead. One senses that they are really out of their depth here. None of their business anyway! Good book - buy, or borrow from your library.



5. This is an exceptional book for those who relate taxes and economy. The authors with years of experience analyze in a comprehensible way the effect of high taxation on the economy. In particular, the advantages of flat taxation has been clearly and convincible demonstrated. It is wishfull thinking for our politicians to read this book and begin a non-ideological discussion on taxes. Furthermore, it is anazing to read the 180 degree turn of eastern Europe to such taxation. As Milton Freedman said " there is no Democracy without economic freedom"

5 comments about A Guide to the Project Management Body of Knowledge, Third Edition (PMBOK Guides).

1. It's been almost a month and I have received this book. After two weeks, I looked online and reviewed the review of the sender. Too my surprise, I found out that the sender has a practice of not sending the product to buyers. I recommend this seller be taken off of Amazon.



2. This book came to me in very good condition. It looks like it wasn't used at all. Good job!



3. Great book for generic and basic info about PM and being a PMBOK, it is a reference book. Currently using it for the PM class at CSUF.



4. This book has a lot of good information and is a must for any up and coming project manager.



5. Volunteer committees at the Project Management Institute (PMI) created this guide to the processes involved in managing projects. Communication among clients, the project team and vendors is crucial to project management, so the book establishes a common vocabulary and a standard way of discussing a project. The book focuses on going from step to step with reliable coordination and smooth communication. Newcomers will find it helpful as they become conversant in the way professionals view and discuss project management. And, given that this is a standard work in the field, professionals are likely to regard it already as a reliable reference, including the useful process checklist. getAbstract applauds this manual's solid utility for its targeted audience. It is even quite readable, though it is directed only to insiders.