“Terrorist attacks. Natural disasters. Domestic crackdowns. Economic collapse. Riots. Wars. Disease. Starvation. What can you do when it all hits the fan?”

Sounds like great travel reading, right? Well, it was, at least for me. Emergency: This Book Will Save Your Life by Neil Strauss is not, as you might think, a detailed survival manual, but mainly of one guy’s journey to try and protect himself from all that could kill him. He calls himself a “Fliesian”, based on the book Lord of the Flies, which in his words is “someone who believes that people, if put in a world where there are no consequences to their actions, will do horrible things.”

The first half of the book pretty much details all the things that could go wrong in the world, and his primary goal is to get a second citizenship from another country. The idea being that if the sh*t hits the fan here, he could in theory escape to safety to this other country. The main problem is that most countries, unless you are a citizen by birth or family, force you to renounce your US citizenship. However, it turns out that you can essentially “buy” citizenship in several countries for, oh, about $500,000 in the island country of St. Kitts. I thought this was quite anti-climactic, and not very useful knowledge for most of us.

One related theory that I did find interesting was on how to become a “perpetual tourist”, as to minimize your tax burden and maximize your personal freedoms. To achieve this, you will need “three flags” from three different countries:

1. Have your citizenship somewhere that does not tax income earned outside the country.
2. Have your businesses in a stable, low or no tax country.
3. Live as a tourist in countries where you actually like to spend your time.

A nice idea, but we are not told how to make this actually happen. 🙁 We do find out that Swiss banks won’t even talk to U.S. citizens trying to open an untraceable account.

The second half of the book is more focused on actual survival skills. However, again it’s more of a story of how he takes a variety of different courses from shooting guns to camping to recognizing edible plants to tracking animals, and less of how to actually do these cool things.

The most practical part of the book for me was when he did a 3-day test where he shut off all of the utilities in his condo (water, gas, electricity) and tried to survive on his own. This is actually something I want to try. Most people know to keep some water and food. But how much water do you actually need? What if you don’t have enough? Another example of what you might overlook – where will you poop without flushing toilets? The cardboard port-a-potty he bought had bags that disintegrated in less than a day.

He also explores what’s needed in a bug-out bag, which is a kit designed for you to grab, run, and survive for about 72 hours. He points out that in a city-wide disaster like Katrina, it is unlikely that emergency crews will be able to help average citizens for up to a week. They’ll be too busy helping the seriously ill. You’ll be on your own.

This book was a very easy read, and definitely worth it the time spent if only to explore different possibles. I must say, I do have a certain fascination of living “off the grid”. In some areas near me, I figured that I could have a house that is both completely solar-powered with batteries, and could collect enough rainwater if not by a natural water supply. Too bad I get the shakes when I can’t check my e-mail for 24 hours…

Here’s a book review of an oldie-but-goodie. Liar’s Poker by Michael Lewis is a non-fiction account of the author’s experiences as a 24-year old the 1980s who started working as a bond salesman for Salomon Brothers, one of the most powerful investment banks at the time (now folded into Citigroup).

Half of the book is an insider’s view of the fast-paced and testosterone-driven world of trading and sales on Wall Street. Lewis explains terms like “Big Swinging Dick” and how he made of dollars of profits for the company, sometimes by necessarily screwing a few customers over. Don’t ever forget their priorities! Here is a quote from a 2008 Portfolio article where Lewis takes a look back:

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future. Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

The other half explains how some of the most powerful securities in the world were created – namely high-yield “junk” bonds (which exploded in the late 1980s) and mortgage-backed securities (which took longer, and exploded in the late 2000s). They saw an opportunity:

From the early 1930s legislators had created a portfolio of incentives for Americans to borrow money to buy their homes. The most obvious of these was the tax deductibility of mortgage interest payments. The next most obvious was the savings and-loan industry.

The savings and loan industry made the majority of home loans to average Americans and received layers of government support and protection. The breaks given savings and loans, such as deposit insurance and tax loopholes, indirectly lowered the interest cost on mortgages, by lowering the cost of funds to the savings and loans. The savings and loan lobbyists in Washington invoked democracy, the flag, and apple pie when shepherding one of these breaks through Congress. They stood for homeownership, they’d say, and homeownership was the American way. To stand up in Congress and speak against homeownership would have been as politically astute as to campaign against motherhood. Nudged by a friendly public policy, savings and loans grew, and the volume of outstanding mortgages loans swelled from $55 billion in 1950 to $700 billion in 1976. In January 1980 that figure became $1.2 trillion, and the mortgage market surpassed the combined United States stock markets as the largest capital market in the world.

Following the money, in 1986 Salomon Brothers created the first mortgage derivative. Soon after, they figured out how to take BBB-rate bonds with a unknown maturity and perform financial voodoo to create top AAA-rated bonds with more predictable maturities. (A good explanation of collateralized debt obligations (CDOs) and tranches is in the video Crisis of Credit Visualized.)

Lewis also learned the trader mentality:

Many of the trades that [mentor] Alexander suggested followed one of two patterns. First, when all investors were doing the same thing, he would actively seek to do the opposite. The word stockbrokers use for this approach is contrarian. Everyone wants to be one, but no one is, for the sad reason that most investors are scared of looking foolish. Investors do not fear losing money as much as they fear solitude, by which I mean taking risks that others avoid. When they are caught losing money alone, they have no excuse for their mistake, and most investors, like most people, need excuses. They are, strangely enough, happy to stand on the edge of a precipice as long as they are joined by a few thousand others. But when a market is widely regarded to be in a bad way, even if the problems are illusory, many investors get out.

All in all, this book was a very fun read. It reminded me of somewhat of Ugly Americans by Ben Mezrich, but Liar’s Poker had a much more authentic and feel of historical significance to it.

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I’m still in a tryptophan coma, but here’s a timely mention of the story of the turkey from Nassim Taleb’s book The Black Swan which I am (supposed to be) reading. The following excerpt is taken from the transcript of a Charlie Rose interview.

——
CHARLIE ROSE: And what is the story of the turkey?

NASSIM NICHOLAS TALEB: In the book, I have the story of a turkey that is fed for 1,000 days by a butcher, and every day confirms to the turkey and the turkey’s economics department and the turkey’s risk management department and the turkey’s analytical department that the butcher loves turkeys, and every day brings more confidence to the statement. So it’s fed for 1,000 days…

CHARLIE ROSE: Gets fatter and fatter and fatter.

NASSIM NICHOLAS TALEB: Fatter and fatter. On the day when its comfort will be at its maximum, there is going to be a surprise. There will be a surprise for the turkey.

CHARLIE ROSE: Yes.

NASSIM NICHOLAS TALEB: There will be a surprise for the turkey’s economics department, all those Ph.D.’s. Will it be — after all, there’s maximum (inaudible)…

CHARLIE ROSE: But it’s not a surprise for the butcher, is it?

NASSIM NICHOLAS TALEB: Not a surprise for Charlie Rose as well. Not a surprise for humans. It’s a surprise for the turkey. So the whole idea here is we are not to be a turkey.
——

Who or what might be the next turkey?

Benjamin Roth was a lawyer in Youngstown, Ohio during the Great Depression and kept a regular diary of his impressions during the era. The diary was required reading for his son who also became a lawyer at the firm he started, in order to understand what their clients went through. After the recent crash, it has now been published as a book called The Great Depression: A Diary.

The book is primarily a straight transcription of the original handwritten journal, with a few editor’s notes to provide a little additional background when needed. Each entry is dated, and it is very interesting to see the first-person perspective unfold over time. Indeed, imagine a “blog” back then and you’d get this. Roth was not an economist or historian, and simply wrote down what he saw.

Historical Similarities
It is easy to find many similarities between the recession back then and now. The stock market and real estate market boomed, speculation was rampant, and then it all collapsed. Banks were stuck with mortgages that nobody could afford to keep up with, and foreclosures were everywhere. Unemployment was very high, although it was 25% back then as compared to 10% now.

[9/19/32] It looks as tho the Democrats will win because everybody wants a “change”.

Sound familiar?

Roth considered himself a Republican, and did worry a lot about “a shift towards socialism” and inflation always being around the corner. The government did end up spending a lot of money to stimulate the economy, although not exactly the same way as now. On the other hand, many things that seemed like radical changes back then are things that we almost take for granted today – including new institutions like the FDIC to provide bank deposit insurance, the SEC to regulate investments, and even Social Security.

Historical Differences
Throughout the diary, Roth is always talking about how numerous banks failed or re-opened temporarily only to close again due to rapid withdrawals. This led to even the strongest banks putting very tight restrictions on withdrawals (i.e. max 5% of deposits). Without something like the FDIC, people ended up selling their account balances for 40 cents on the dollar because they needed the money immediately or were afraid they’d never see it again.

Personal Finance & Investing
Roth often wrote about personal finance and investing as well. He really like the idea of saving up a lot of cash during boom times, and then investing it all at the “bottom” after a crash, although he gradually seemed to realize that predicting the exact bottom was impossible and that simply holding it for the long term might be more reasonable.

In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy stocks and real estate. I see now how important it is for the professional man to build up a surplus in normal times. […] His practice suffers and he has no chance of rising above the level of the ordinary practitioner who lives from day to day and from hand to mouth.

[5/9/1932] Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds, etc. were not farsighted enough or patient enough to wait almost three years to re-invest. Most of them re-invested a year or more ago and now find stock prices have sagged to 1/3 of what they were when they thought they were buying bargains.

Of course, back then there was still the CNBC equivalent of various economists and business leaders sharing their “future economic outlook”. Roth recorded their predictions and always seemed to come back with a later follow-up note “…the predictions were wrong.” Some things never change!

If I were to levy a criticism of this book, it would be that it is more of a list of his observations, as opposed to his personal actions. For example, he often mentions how local Bank A or Bank B has failed or is restricting withdrawals. But Roth doesn’t actually share where he keeps his money, if he has moved it due to fear, or if he has had problems withdrawing his own deposits. He doesn’t share his personal investments, even though he records the share prices of many companies regularly. This ends up making the trip to the past a bit more dry than it could have been, but it was still a fun and enlightening trip to take.

How do you read a book that you can’t buy in bookstores or find in libraries… because people keep stealing them since the title is Steal This Book? Even used copies are selling for double the retail list price. By reading a ripped off copy on the internet, of course. 😉

Written by activist Abbie Hoffman in 1970, Steal This Book is basically a counter-culture guidebook to that era, and is self-described as a “manual of survival in the prison that is Amerika.” It promotes its own twisted view of morality, which is that it is okay to steal from everyone from the government to business owners like grocery stores, but not other Yippie activists. The “Survive!” section is basically a “How to see the US on zero dollars a day” travel book.

Whether the ways it describes to rip-off shit are legal or illegal is irrelevant. The dictionary of law is written by the bosses of order. Our moral dictionary says no heisting from each other. To steal from a brother or sister is evil. To not steal from the institutions that are the pillars of the Pig Empire is equally immoral.

The topics covered are very wide-ranging, although many are now out-dated. I’ll “steal” the description at Wikipedia:

The book includes advice on such topics as growing marijuana, starting a pirate radio station, living in a commune, stealing food, shoplifting, stealing credit cards, preparing a legal defense, making pipe bombs, and obtaining a free buffalo from the U.S. Department of the Interior.

Most people will probably be offended by a lot of the content, but I basically viewed it as a mix of history, entertainment, and knowledge. There are even congee recipes from National Liberation Front fighters. I’m also the type of guy who likes to know how all the scams work. Samples:

Free postage: “When mailing to the same city, address the envelope or package to yourself and put the name of the person you are sending it to where the return address generally goes. Mail it without postage and it will be “returned” to the sender.”

Free food: “In restaurants where you pay at the door just before leaving, there are a number of free-loading tricks that can be utilized. After you’ve eaten a full meal and gotten the check, go into the restroom. When you come out go to the counter or another section of the restaurant and order coffee and pie. Now you have two bills. Simply pay the cheaper one when you leave the place.”

Panhandling: “A good prop is a charity canister. You can get them by going to the offices of a mainstream charity and signing up as a collector. Don’t feel bad about ripping them off. Charities are the biggest swindle around. 80% or more of the funds raised by honky charities go to the organization itself. New fancy cars for the Red Cross, inflated salaries for the executives of the Cancer Fund, tax write-offs for Jerry Lewis. You get the picture.”

Never even thought about this: You can get $150 to $600 in advance by willing your body to a University medical school. They have you sign a lot of papers and put a tattoo on your foot. You can get the tattoo removed and sell your body to the folks across the street.