Our own correspondence reviews "Six Frigates". First time author Ian Toll has created a military epic on a grand scale. The book describes the founding of the US Navy shortly after the Revolutionary War in response to threats to American commercial shipping from the Royal Navy, French privateers, and North Africa pirates. Toll has a wonderful ear for the telling anecdote that illuminates the political intrigues of the Founders, the technical genius of the Quaker shipwrights, and the courage of the frigate's crews. And, of course, the sheer savagery of naval warfare combined with sheer luck--a brief tack in the wind could change the course of a battle--is simply astonishing. I suggest you watch Peter Weir's historically accurate "Master and Commander" and then read the book.

History does not repeat itself, but sometimes it rhymes: anyone studying the recent history of the Iraq War and America's troubled political and commercial ties to the Mediterranean and Mid East geopolitics will probably hearing some disturbing echos. In particular, foreign powers saw American commercial shipping as "fat sheep" without a nearby shepherd and acted accordingly. The response was quintessential illustration of American character: self reliance and "Yankee" ingenuity. Every step of the way, they invented and improvised creative solutions that allowed the US to take on the preeminent naval powers of the day.

The Sad Saga of "Financial Engineering": started with the mother and father of hedge funds, Long Term Capital Management, (see the semial book on Wall Street hubis, "When Genius Failed" by Roger Lowenstein) back in 1993. Amazingly, no one seemd to learn the lesson of that fiasco. Indeed, hedge funds have poliferated and grown in such popularity that they have become the primary vehicle for Wall Street wealth.Unfortunately, the unintended motto of hedge funds managers should be, "Hedge I win, tails you loose!" Every generation comes to believe that there is some magic formula, some "black box" that allows a chosen few to out maneuver and out think the normal fluctuations of financial markets. Every generation finds out--ususually the hard way--that they are wrong.

What has proved to be the most toxic of derivative instruments, Credit Default Swaps, was partly the subject of the attached essay.

© 2008 Robert Schirtzinger