Income-fund

I also give it a Aaa rating!

Perfect for income investors looking to increase their understanding and income potential.

Strategies are a real eye opener!

In many ways, the State has become little more than an engine for the forced redistribution of money. People vote for politicians who will give them things, hoping what they get from picking their neighbors' pockets will be greater than what someone else, in turn, takes out of their own. Politicians flog the system for all it's worth, and are rewarded according to their ability to hand out loot they have no right to in the first place.

Of all the ways this is done, the most egregious, at least in Bennett and DiLorenzo's minds, is the pouring of tax dollars into organizations that then use that money to lobby for specific policy agendas. Again and again, Bennett and DiLorenzo give us chapter and verse (and dollar amounts) of how labor unions, environmental radicals, anti-market and pro-socialist, 'anti-poverty,' 'civil rights,' and other pressure groups pocket free money at taxpayer expense. Conservative, industry, and pro-business groups aren't spared their time in the spotlight either. Nor are the politicians (many of whom are still in office today) who receive hefty campaign cash from the same groups to whom they funneled those tax dollars.

George Will has written that anyone who wants to understand how American government works shouldn't read the Constitution, but rather open the Washington, D.C., phone book and observe all the organizations, associations, and lobbies with the word 'National' in their name. Bennett and DiLorenzo provide an invaluable service by exposing this racket fully. Even seventeen or more years after its first publication, 'Destroying Democracy' is essential reading for anyone seeking to understand what politics and the State are really all about.

This absolute gem from 1989 should be updated and republished. I have resurrected it in relation to my reading on federal budgeting and the dangers of the deficit spending now in vogue in Washington (2002).

This is the best book I have read on the strategic aspects of the federal budget--needed reforms, key issues in allocation policy, using the budget to stabilize the economy.

Where the book excels is in its analysis of how the federal budget should be used to steer private sector outlays--as Osborne and Gaebler suggested, we must steer rather than row--guide the private sector rather than use taxpayer dollars for direct products and services.

In his discussion of priorities, the author focuses heavily on the lack of investment in education and the resurrection of education both public and private. As we enter the 21st Century largely ignorant as a Nation (of external realities, not at individuals), I cannot help but think that the time has come for the public to take charge of "political economy," and begin actively setting forth its priorities. Just this week, in The Washington Post of 27 February 2002, David Ignatius suggests that Washington has turned its back on the Nation. Seems to me that's pretty dangerous, but if the Nation allows itself to be ignored by Washington, then we have the government--and the federal spending priorities--we deserve.

On the minus side, the book is not particularly well documented (in terms of, for example, the graphs and the sources of the data) and some chapters seem suspiciously like lecture notes, hastily adapted to a book format. Still, an enjoyable trip to the dark side of financial market.

When the interest rates went through the roof (from 5,25% to 8% = + 52%), the value of the collateral (the bonds) for his position fell (with a factor 3). He got a margin call, but couldn't pay it. The biggest part of the investment (held by FBCS) was liquidated with a phenomenal loss. Only Merrill Lynch didn't cover their position.

The author gives excellent explanations on some very specialized investments like reverse floaters and other high tech financial operations of which the value can only calculated by partial integrals.

Food for investment bankers.

From this book, we learn that Robert L. Citron was head of a large portfolio, had no oversight, and an inflated ego. His superiors and fellow investment participants (such as the county school district) knew full well what he was doing, but allowed him to continue unsupervised because of his past stellar performance- much of which was due to pure luck and favorable market conditions. We also learn that Citron, much like Nicholas Leeson, the orchestrator of the fall of Barings, was a financial neophyte. While on the one hand believing that he was fully invested in bonds, Citron had taken a heavily leveraged position in very exotic derivative securities, proving to Jorion's point that he really did not have a clue as to what he was doing.

We also learn that Citron (nor the people above him and his investment participants), who had no real background in finance, did not know the difference between market price and face value, nor did he know the difference between an option on an asset and the outright ownership of an asset. Based on one very bad bet on the movement of interest rates, Citron fully invested Orange County's finances in derivative securities that he did not understand at all, and compounded the problem by leveraging his position (basically using a little money to borrow a lot of money) to the extreme.

After reading this book, those of us who believe that our investments, from the retirement funds managed for us by fund advisors and our places of work to our bank accounts and our kids' education funds, are safe should have our heads examined. People such as Citron were not financial gurus, that is certain, but as the more recent derivative led failures at hedge fund Long Term Capital Management (which included the two Nobel laureates who literally wrote the book on derivative pricing on its stellar team of rocket scientists) and Bank of America demonstrate, no one is truly safe.