Video: Niall Ferguson on Milton Friedman's Legacy

Video: Happy Memorial Day

Memorial Day is a time for Americans to say thank you to those who have served and are serving in the U.S. armed forces, and to remember in particular those who have been killed or injured in the line of duty. If you know someone in the U.S. service it takes just a few moments to say thank you and it really is appreciated by those who serve. 

And even if you don't agree with the Afghanistan war or other U.S. military activities that are currently underway remember that as Vietnam General William Westmoreland said, “The (U.S.) military don’t start wars. Politicians start wars.”

Memorial Day is also a good time to reflect on war in general and the tremendous suffering and destruction it causes. While there is still war we should not stop asking what are its root causes, and what more can we do to try and prevent it? 

The question of why war occurs is no doubt complex with many factors, but one component to keep in mind is the sheer size and business of war, and the affect it has on the livelihoods of millions of people.

Many are familiar with President Eisenhower's 1961 farewell address, and his famous warning about the 'Military-Industrial Complex'. If you haven't watched his full speech it is well worth the 15 minutes of your time.

Ike, a well respected leader with impeccable military credentials, was in a strong position to offer up such a warning.

One wonders if we'll ever see another Ike, or FDR, or TDR or Truman as U.S. President. One has the impression that they just don't make them like that anymore.

Video: A Simple, 8-Minute Explanation of What's Wrong With Mainstream Economics

Below is NOVA's longer but also recommended explanation of what's wrong with mainstream economics.

 

Why is the U.S. Government Still Hiding Financial Crisis Documents?

Here here to former Lazard partner turned Wall St. author/historian William Cohan and his fighting the good fight to obtain public documents from the U.S. government related to financial firms such as Goldman Sachs.

Enemies: A History of the FBI - Podcast by Pulitzer Prize Winner Tim Weiner

An excellent talk on his new book about the FBI from the author of Legacy of Ashes, the must read Pulitzer Prize winning history of the CIA.

Regarding the FBI, here is Wired's story of one tech company's efforts to prevent the Bureau from obtaining information about its customers, via a National Security Letter (NSL), which legally prevents those customers from being informed by the company that the FBI is seeking information about them. Here is a brief excerpt from Wired's article:

In 2007, a Justice Department Inspector General audit found that the FBI, which issued almost 200,000 NSLs between 2003 and 2006, had indeed abused its authority and misused NSLs. 

The inspector general found that the FBI evaded limits on (and sometimes illegally issued) NSLs to obtain phone, e-mail and financial information on American citizens, and that it had also underreported the use of NSLs to Congress. In 2006 alone, the FBI issued more than 49,000 NSLs, but that number dropped dramatically to 16,804 in 2007 following the inspector general’s report. After the Justice Department claimed it instituted reforms to address the legal lapses, the number of NSLs issued increased to 24,744 in 2008. In 2010, the most recent year for which statistics are available, the FBI issued 24,287 NSLs.

Without any further adieu, here is Tim Weiner's podcast.

Speaker(s): Tim Weiner
Chair: Professor George Gaskell

Recorded on 13 March 2012 in Hong Kong Theatre, Clement House.

The United States is a country founded on the ideals of democracy and freedom, yet throughout the last century it has used secret and lawless methods to destroy its enemies. The Federal Bureau of Investigation is the most powerful of these forces. Following his award-winning history of the C.I.A., Legacy of Ashes, Tim Weiner has now written the first full history of the F.B.I. as a secret intelligence service, Enemies: A History of the FBI| which he will talk about in this lecture. Drawn entirely from firsthand materials in the F.B.I.'s own files, Enemies brilliantly brings to life the entire story, from the cracking of anarchist cells to the prosecution of the 'war on terror'. It is the story of America's war against spies, subversives and saboteurs - and the self-inflicted wounds American democracy suffered in battle. Throughout the book lies the long shadow of J. Edgar Hoover, who ran the F.B.I. with an iron fist for forty-eight years. He was not a monster, but a brilliant confidence man who ruled by fear, force, and fraud. His power shaped America; his legacy haunts it.

Tim Weiner is a Pulitzer Prize-winning journalist at the New York Times, where he has reported from Afghanistan, Pakistan, Sudan and fifteen other nations. He was based for a decade in Washington, DC, where he covered the C.I.A. and the Military - the latter topic being the subject of his Blank Check: The Pentagon's Black Budget. He is the author of the bestselling Legacy of Ashes: The History of the CIA, which won the 2007 National Book Award for Non-Fiction.

Video: Niall Ferguson's China: Triumph and Turmoil

Link to video here. (Non UK-based viewers will need to use a proxy.)

For more on the subject of China and the West here is Standpoint's recent interview with Niall and Dambisa Moyo.

Video: Niall Ferguson Interviews Peter Thiel

2012 Predication #2: iTV Will Prove Apple's Waterloo

Should Apple's all but confirmed iTV make landfall in 2012 I expect that it will serve as a fitting high-water mark for the high-flying tech company.

In this sense perhaps the Battle of Waterloo, which marked the once-and-for-all final defeat of Napoleon, is the wrong metaphor. Instead the Battle of Borodino, a contest which Napoleon won and allowed him to enter Moscow but also ultimately led to his later retreat from Russia in 1812, may prove a better analogy.

All great runs ultimately meet the same fate

I'm sure the iTV will be a huge hit and will make a great addition in Apple's ecosystem. I'm so frustrated with the TV market that it was the subject of a rant a few months back. Let me be clear: TVs are begging for the Apple treatment.

And there is no doubt that Apple will be a successful, highly profitable company for years to come. Apple is more than Steve Jobs, and there is enough magic and momentum to sustain success for the next 3-5 years, at least. But having said all that some recent trends for Apple aren't looking so hot.

Apple is squarely in the competition's cross-hairs and very few -- if any -- companies have historically been able to sustain the level of success achieved by Apple this past decade. And the reasons are well known: people leave, get rich and lazy, retire, distracted, all of the above.

But perhaps the biggest problem will be Apple's own DNA, which is based on cult of personality, not long lasting institutions. Steve Jobs lionized and embodied the Great Man school. In contrast Bill Gates' favorite business book was Sloan's My Years with General Motors, a rather dull treatise on the art of running a large corporation through a series of committees. As so often happens following the departure of a dominant, charismatic leader there is growing talk of an Apple palace coup. Jockeying and politics won't make success any easier in Cupertino.

There is nothing Apple does that can't be replicated, and part of the evidence of that comes from Apple increasingly turning to the courts to fight its battles. Steve Jobs' seethed vitriol from his deathbed over Android's success. Because Apple controls its products end-to-end it has to flawlessly execute by itself every time. But there are literally hundreds of younger, hungrier companies competing with Apple. In some ways the relative demise of Apple is simply a numbers game.

The iTV will likely be insanely great in the way it integrates and simplifies our digital lives, and it is a product I'm very much looking forward to. But I predict that it will also mark the plateau of the greatest run in tech history.

Video: The Great Stagnation vs. The Singularity

For anyone who missed Tyler Cowen's presentation at the Singularity Conference from earlier this year.

Video: Niall Ferguson on Charlie Rose

Video of Niall discussing his new book, Civilization, as well as his current views on the European debt crisis, Turkey's resurgence, and Iran's future here.

Video: Niall Ferguson on Colbert Report

Video: Niall Ferguson on China's 'Achilles Heel'

Video: Niall Ferguson Says Financial Repression Preventing Full-Scale Italian Bank Run

Niall's latest comments on the Eurozone crisis after the jump:

Default Myth Busting: Sorry Simon and James, the U.S. is not a Default Virgin

Professor Simon Johnson and James Kwak of The Baseline Scenario have an article at Vanity Fair about the geopolitical importance of credit in late-18th century France, Great Britain, and (especially) the United States. Their article, however, fails to mention an important detail which also happens to contradict their claim that "the (U.S.) federal government would always honor its debt".

The consolidation/conversion of U.S. revolutionary state debt into federal debt, which took place in the early 1790s, and which the authors refer to in the paragraph prior to the above quote, represented a U.S. sovereign default. (For more on this event see Reinhart and Rogoff (click on the U.S. tab) or Sylla, et al, which describes the 'haircut' bondholders received (6% to 4%).)

The notion that the U.S. has never defaulted has unfortunately been repeated often enough that, like the incorrect claim that TARP was "profitable", otherwise well-informed people have come to believe it.

In terms of other U.S. defaults, Reinhart and Rogoff also count Franklin Roosevelt's 1933 prohibition on owning gold and the subsequent devaluation of the U.S. dollar vs. gold as a default.

It's not very surprising to see Vice President Biden promoting the myth that the U.S. has never defaulted (in his case following a visit to the U.S.'s largest creditor, China). Professor Johnson, however, should know better.

Video: Keynes on Britain's Departure from the Gold Standard

Steve Jobs RIP (1955-2011)

The King of the BHAG is dead.

Steve Jobs (1955-2011)

Official statement from the Apple Board:

We are deeply saddened to announce that Steve Jobs passed away today. 

Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve. 

His greatest love was for his wife, Laurene, and his family. Our hearts go out to them and to all who were touched by his extraordinary gifts.

For more reflections on Jobs recent resignation as CEO and some rare, early interview footage of the Apple co-founder see End of a Tech Era.

Video: The Teaching of Economics

Podcast: Carmen Reinhart on the Coming Financial Repression

Link to audio stream here.

Greece and Gold During World War II

Reading Timothy Green's The World of Gold  (1968, p. 154-55) I ran across the below quote from a wealthy Greek soap and oil manufacturer from Salonica reflecting back on the war:

'My family changed all their money into gold sovereigns in the winter of 1941 before the Germans invaded Greece. We had at least 3,000 sovereigns hidden behind the frames of four doors in the house. As soon as the Germans arrived, they took over my father's factory and without those (gold) sovereigns we would all have starved. Although we didn't realize it at the time, most of our other relatives and friends had done just the same thing. But my grandfather, who had put his faith in the Greek currency, was left with a bundle of worthless notes. He lost everything.'

Green then reflects on the role of gold in Greece at the time of his writing in 1968:

This experience dies hard. Today the (gold) sovereign is still the backbone of the Greek economy. The country absorbs vast quantities of the gold coins. Six million of them were imported from London in 1965, a further two million in 1966. The Bank of Greece has made some attempt to check the habit by insisting that sovereigns can be imported only with dollars held outside Greece and that all transactions must be registered with the Bank. But such regulations are unlikely to sweep away the customs of many generations. There is a thriving black market in sovereigns. The uneasiness about the future of the monarchy in Greece is not helping to breed confidence in the drachma.

From this it would seem that Greeks have a rich history of understanding the value of gold in uncertain times, which makes it all the more difficult to understand why so many Greeks are still keeping their euros in Greeks banks?!

Video: Why Is There a Nobel Prize in Economics?