Weekend Reading

That fish is swimming towards the bottom pretty quickly.

That fish is swimming towards the bottom pretty quickly.

I’m sitting in the screening room of Maher Hall at the top of campus listening to a recruiter from the CIA talk about the history of students from the University of San Diego joining the clandestine service.  He’s got my attention.

That my future lay in finance wasn’t always clear to me.  I’ve been trading to one degree or another since high school, but didn’t realize I wanted to make my career, but more accurately, life, in the markets until the ladder half of my sophomore year of undergrad.  I’ve always been an information junkie, but my intellectual appetite was geared more towards politics and foreign affairs than the markets during my teenage years.  I attribute this to to several factors.  First off, it takes a far greater deal of technical knowledge to understand markets and trading than it does politics and international relations.  It’s far easier to build the technical base on which you learn political and war theory than corporate finance and statistics as a teenager, at least that’s how my mind worked anyway.  I also attribute it to my father who after flipping a coin between going to law school or taking the foreign service exam, went to law school eventually becoming a real estate attorney.  His love for politics and foreign affairs has greatly influenced me.

The CIA recruiter continues with his schpeal about how the University of San Diego has sent more undergrads to the CIA than any other school.  Now, understand that I’m an east coast Jew at what is technically a Jesuit university, my father wasn’t thrilled with the crosses above the doors when he dropped me off out there.  To say that there was an abundance of rich waspy types would be an understatement, I definitely understood why the CIA liked my school.  Anyway, the dude goes on explaining how joining the CIA worked, the different paths, some cool stuff about being a NOC, and what kind of sacrifice you have to make.

I came to the conclusion that I wasn’t altruistic enough to join either the CIA or foreign service.  I’m glad I came to that conclusion, because it wasn’t long after that I realized my future lay in the markets.  If you read this blog on a regular basis you know I still have a passion for foreign policy.

I bring this story up because we face a lack of talent in both the clandestine and foreign services today.  Well educated graduates with specific skills are not looking for careers in civil service, they know there’s more money and notoriety in the private sector.  This is a huge issue, if you think our government has screwed shit up in the past, don’t underestimate how badly they’ll screw more shit up in the future given this trend.  We don’t pay these people enough, we don’t support their families enough, and we’ve taken the pride out of being part of these organizations by vilifying them.

For all of you who need things put in market speak, here is some macro perspective on our foreign policy.

We have entered an era where our military is able to defeat in short order any conventional or paramilitary force which we would seek to destroy.  This has not always been the case, don’t fool yourself.  We have also entered an era where our main focus will be nation building and counter insurgency conflicts.  Problem is, our foreign service, clandestine service, and military are not built for nation building.   The men and women who sit on the military equipment procurement and defense budget committees have for too long neglected the need to plan for this type of international engagement.  Frankly it’s not all their fault, the top brass of our military has pleaded with our civilian leadership not to engage this country in nation building.  As well, these representatives are at the behest of their corporate defense industry backers.  What type of war do you think makes more money for the defense contractors, the ones with lots of planes and bombs, or the ones with lots of people and school building.  These battles are ugly and boring, and what’s more, they don’t leverage the superior training and technical capability of our military at this time.

So you’ve got a military that doesn’t want to fight these wars in the first place, a procurement and budget system that doesn’t want to pay or prepare for them, and a population that doesn’t want to be any part of them (CIA, NSA, foreign service).  Put simply, our military is built to break things, not build them.

We need all of the above to have a successful foreign policy.  having the correct strategy is not enough, having the tools to implement that strategy is necessary.

Obama can send 200,000 more troops to Afghanistan, it won’t make any difference.  Our military does not possess the skills to do nation building.  More than that, we litteraly do not have enough foreign service member to handle the administration of rebuilding a country (see disaster that was Iraq).

Here is your weekend reading:

David Brooks get’s it, I don’t agree with him on everything, but he get’s it.

When Bill Gross speaks, you better listen, unless of course he’s speaking on CNBC.

Who are you going to put your money on when it comes to making calls in commercial real estate, Goldman or Merrill (BAML).

We just don’t have enough well trained civilians willing to do nation building.

Solar needs water, yea, where the hell are you gonna get that in the middle of the desert.

All superpowers get the same treatment eventually, they’re already gunning for China.

Micro finance may be micro focused, but has a huge ability to make macro results.

The shorts may finally be crawling out of their holes after the whooping they’ve gotten the past 7 months.

The military and now the civilian leadership now realizes that this is the only option for staying in Afghanistan.

Still a long way to go before we hit oversold conditions on this breadth indicator.

Parabolic for sure, but I don’t see any reason this is slowing.

Saudi Arabia get’s it, they still have to talk out of both sides of their mouth though, a sad reality.

China is walking a textbook path of development, once their citizens are no longer poor they will demand political freedom and a cleaner environment.

An interesting take on abortion rates in and outside of what Thomas Barnett calls “the core”.

China, unlike the US or Japan, will get old all at once, that’s a huge issue.

The Air Force is searching for its place in and outside of our military’s future.

This is not a healthy indicator.

I’m going as the Citibank balance sheet for my Halloween party (joking), last year I was a Bear Stearns MBS trader with a torn suit and a cardboard sign that said, “will trade MBS and dignity for doughnut and hug” (not joking).

What a ride it’s been.

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