Check it out. Malcolm Gladwell, New Yorker staff writer extaordinaire, has a blog. Hopefully, it’ll be as good as everything else he writes.
Gladwell has a blog
The Week in books
The big sellers around my neck of the woods this week were: The Da Vinci Code by Dan Brown was the big seller in hardcover fiction. This book is no big surpise as it has already taken the New York Times bestseller list by storm. This looks like a pretty exciting read, definitely one for the summer. It’s got a real Indiana Jones vibe to it, full of puzzles and unravelling the mysteries of the past, in this case the source material is the Mona Lisa. In hardcover non-fiction there’s Reefer Madness by Eric Schlosser, who wrote the book that blew the lid off McDonalds and the rest of the burger slingers: Fast Food Nation. Now, I found Fast Food Nation to be a bit preachy and I felt that sometimes he went over the top trying to get his point across, but at the same time I was impressed by his feats of investigative journalism. So when I first heard about Reefer Madness, ostensibly an expose on the illegal drug industry, I was looking forward to reading it. The reviews I have read have tempered my enthusiasm, however. Michiko Kakutani wasn’t very impressed, and I was especially disappointed to find that the book consists of three distinct essays cobbled together to represent a discussion of “the underground economy,” in this case pornography, the plight of illegal migrant workers, and the domestic marijuana industry. After the book came out, I realized that I had already read most of the section on pornography when it appeared in the New Yorker a few months ago. I hadn’t really been that into it at the time. So, unfortunately, it seems like Schlosser, instead of attacking a new subject with the zeal he displayed in his attack on fast food, has thrown together a follow up and slapped a catchy title on it, knowing that his name will sell the book. For now, at least, it seems to be working. In the realm of paperback fiction, Life of Pi by Yann Martel and The Adventures and Misadventures of Maqroll by Alvaro Mutis were the big sellers. I have already talked about both of these books, but it is good to see more and more people coming around to old Maqroll the Gaviero.My trip to EuropeNext week, I am travelling to Barcelona and then to Ireland. I have some serious airplane time ahead of me so I am packing several books. I had a thought that it might be a fun idea to read a novel that takes place in Barcelona while flying over there. I did a little research and found myself an intriguing little book: The Lonely Hearts Club by Raul Nunez. Apparently it is about a lonely man in Barcelona, who joins “a lonely hearts club” to alleviate his solitude. Instead, it throws him into contact with the most eccentric characters in an eccentric city. Sounds like fun.
●
●
Turnips, Quarterbacks, and Strawberry Pickers: Credit Default Swaps Made Simple
Last week, Max directed our attention to a major new piece of reporting on the financial crisis: a Portfolio article by Millions favorite Michael Lewis. The author of Liar’s Poker, among other books, Lewis is a gifted explainer of an industry badly in need of explanations. In the Portfolio piece, for example, he immerses us in the world of short-sellers who saw the subprime meltdown coming. However, the key paragraph – wherein trader Steve Eisman has an epiphany about how investment banks are leveraging subprime bonds – resorts to a sports metaphor, and thus fails to demystify an elusive instrument at the center of the financial crisis: the credit default swap (CDS).”When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats,” Lewis writes.But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. ‘They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,’ Eisman says. ‘They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans.’I’ve heard financial insiders inveigh against peons who “don’t know a credit-default swap from a turnip,” but how are we to wise up, if explanations only come in the form of metaphors (athletic or agricultural)? Grabbing a fig leaf from the N+1 playbook, as it were, I decided to ask a friend in finance to explain the Peyton Manning analogy, as simply as possible. Here’s what he had to say (wait for “the rub”):Assume the following: Eisman buys a crappy mortgage security (say, a $1,000 bond from a mortgage given to a strawberry picker who makes $14,000 dollars per year). Say the mortgage rate the strawberry picker pays is 15%. This means he’s agreed to pay $150 a year to Eisman. But Eisman is worried that the strawberry picker will default because the guy’s house value has collapsed and his income is drying up. Thus, Eisman wants to buy insurance on the $1,000 he’s loaned. The way he does this is via a credit default swap.A CDS is essentially an insurance policy on a loan, and here’s how it works. Eisman finds a counterparty willing to sell him insurance on his loan (a big investment bank like Lehman Brothers). Eisman agrees to pay the bank a fixed rate every year for protection of the mortgage security he owns (the crappier the loan, the higher the rate). Let’s say for the $1,000 loan to the strawberry picker, his rate will be 10%. The bank pays him nothing on a regular basis, BUT, if the borrower defaults, they pay him the full $1,000.So: if times are good and everyone makes payments on time, the payments are structured as follows: The strawberry picker pays $150 per year to Eisman; Eisman pays $100 per year to Lehman (which then uses some of the cash to provision for losses, and uses the rest to make more loans). The strawberry picker gets to keep his house, Eisman keeps $50 per year (loan payment from strawberry picker minus the insurance premium he pays to Lehman), and Lehman gets $100.Got the structure? Now here’s the rub.Imagine Eisman never actually had exposure to the loan in the first place. Being the brilliant skeptic he is, Eisman would never lend $1,000 to a strawberry picker with little income. He thinks that strawberry man is doomed to default on that loan, and he actually wants to bet AGAINST him. So instead of giving the loan and buying insurance, he just buys the insurance (hence the often used and rarely understood term “side bet”). To do this, Eisman still has to pay the “premium” for the insurance he’s bought, and since it’s a risky loan, the rate is high (e.g. $100 per year in the example above). [Though he stands to win $1,000 if the loan defaults.] In effect, Eisman is paying a “subprime-like” interest rate to Lehman every year! That’s what Lewis was getting at.I would have used a different metaphor. I would have said it’s like a New Yorker buying a bunch of home insurance policies in New Orleans because you are expecting that there will be a massive hurricane coming to wreck them. Now lets say that the insurance company took the money you were giving it, didn’t provision for the coming doom, and instead, used that money to lend to more people building and buying houses in New Orleans.That’s leverage upon leverage upon leverage. And that’s the mess that is unraveling before us.
Summer = New = Money
It’s officially been summer for coming up on two weeks, which means that, in accordance with typical publishing and bookselling practices, near the front of the bookstore there will be stacks of books by new and unknown authors all vying to become this summer’s “breakout hit.” Last year the winner of the “breakout hit” lottery was won by Alice Sebold whose book, The Lovely Bones, was much purchased and enjoyed by the majority and vehemently despised by the minority of readers who are not willing to shut off the part of the brain that determines what is tasteful and what is not. What’s funny about this way of selling books is that every bookstore that you walk into will try to make its customers think that their staff personally discovered these new authors and that the customers are among the lucky first few to enjoy these newcomers. In reality, the candidates for “breakout hit” are chosen months in advance by the publishing companies and aggressively marketed much in the same way that one would market a film. In a sense The Lovely Bones is not very different from The Hulk. In my opinion this year’s winner has already been declared: Dan Brown’s The Da Vinci Code is already the book that recreational readers ask for by name when looking for a summer reading distraction. This non-threateningly clever, historical thriller acheived success in a couple of ways. First, like all of the other “breakout hit” candidates it is engagingly written and also contains a “hook,” in this case the idea is that embedded within da Vinci’s famous artwork are hidden clues that can solve a present day murder mystery while at the same time unravelling some of humanity’s great unsolved conundrums. Very Indiana Jones. Secondly, in the weeks leading up to the release of The Da Vinci Code, Doubleday reps blitzed bookstores to talk up the book, hand out advance copies, and put up teaser posters. Finally Doubleday’s publicists were able to get the book mentioned in all the weekly newsmags and grocery store aisle gossip rags. Voila! Breakout hit… There are lots of books sitting on either side of The Da Vinci Code on the “breakout hit” display, all are almost as heavily marketed but some might be a bit more rewarding: The Curious Incident of the Dog in the Night-Time by Mark Haddon is narrated by a 15 year old autistic math savant who thinks he is Sherlock Holmes and tries to find out who murdered his neighbor’s dog. Liars and Saints by Maile Meloy is an example of what a multi-generational saga can look like when written by a young writer. Bangkok 8 is a debut by John Burdett. This one is perfect for those who like thrillers in exotic locals. (In this case, a U.S. Marine is dead in Thailand. Great cover art, too). Finally, Benjamin Cavell’s Rumble, Young Man, Rumble and Sherman Alexie’s Ten Little Indians are two much lauded short story collections. Bye now…
●
●
Random Roundup of Recent Books
Sorry about the infrequency of updates. I saw the Walkmen play two nights this weekend. The new songs are great. The new album will be called Bows and Arrows and it’ll be out some time next February.If you’ve read much of this blog, you’ve probably noticed that I am a fan of food writing (Jeffrey Steingarten, Calvin Trillin, and Jonathan Gold are my favorites), and all too often I find myself allured by a brand new restaurant that I can’t possibly afford. Food writing, more than any other type of journalism, tends to dwell upon the personality of the writer, and so as I devote untold hours to living vicariously, I get to know my food writers pretty well. For quite awhile now I have enjoyed weekly imaginary meals with LA Weekly food writer Michelle Huneven. She’s eloquent and friendly and thorough; not as adventurous as her predecessor Jonathan Gold, but sometimes a peaceful and upscale imaginary lunch is exactly what I’m in the mood for. So, naturally, the other day when I saw that she had a new novel out, I was intrigued. It’s called Jamesland, and it was put out by Knopf (a good sign). Then I noticed that the LA Weekly published an excerpt, which I promptly read. It was surprisingly good, compelling enough to make me want to read the book. You can find the excerpt here.You may have heard of “the original club kid,” James St. James. He arrived in New York City towards the end of the Warhol heyday, and with his cadre of maniacs, built a new “scene” from the ground up. It was Studio 54 for the next generation: drugs, sex and a taste for the macabre and bizarre. Fast forward a few years: a murder has shattered the fantasy they created for themselves, and James is spiraling into drug addiction. At this point he decided to write a book: it is half memoir, half true crime account of the “clubland murder.” It came out a few years ago under the title, Disco Bloodbath. Then this year it was made into a (profoundly forgettable) movie called Party Monster. Though the movie is bad, the book is not, and now it has finally been released as a paperback (and retitled Party Monster: A Fabulous But True Tale of Murder in Clubland). It’s hard to find a book more fun than this one.A new issue of my favorite magazine came out. The latest installment of Colors is devoted to slums. In classic Colors fashion, their eye is unblinking, yet they do not dwell upon misery or pass judgment, instead they focus on how these hand made cities are an example of human ingenuity and a will to survive and live a life of dignity. Where there is beauty and humor to be found in these places, Colors finds it. These people are everyone, the magazine seems to say.
●
●
2 comments:
Add Your Comment: Cancel reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
Going the Distance
In Elmira, NY, six high school students banded together to break the Guinness Book of Records marathon reading record. Says the AP:They whizzed through more than 20 beloved children’s books, including the six-volume Harry Potter series, seven Goosebumps thrillers and Katherine Paterson’s Bridge to Terabithia. They wrapped up their epic, 128-hour performance on the school auditorium stage with Oh, the Places You’ll Go, a Dr. Seuss classic.Meanwhile, in Albany, other long-distance readers, among them William Kennedy and Andy Rooney, joined forces for a 24-hour reading of Moby Dick, as part of “Why Melville Matters Now” weekend at the Albany Academies school.
Attention Menand Fans
Louis Menand is one of my favorite regular contributors to the New Yorker, so I was excited to discover a Web site devoted to “the foremost modern scholar of American studies.” The Essential Menand includes commentary by three contributors as well as a handy collection of links to dozens of Menand essays in the New Yorker, The New York Review of Books and Slate.
Froot Loop Followup: Knowledge Products
Borders’ plan to display more books face-out and, as a result, to stock fewer titles has generated quite a bit of discussion. On our own post about the plan, we received several interesting comments, but I was most intrigued by what commenter Matthew had to say:The Froot Loops example is classic thinking from retailers who enter bookselling from another retail environment.The next time I go down to my local chain Cerealseller to choose my cereal for this week from among the 150,000 cereals on offer Mr Froot Loop can come and offer me some buying advice.Finally, the point of facing out is to attract attention to specific titles from the larger product range. The larger product range sells fewer copies of individual titles, but sells well by total volume… it also serves to attract serious bookbuyers and lend kudos to the bookstore.If chains chose to employ staff with knowledge (and local control) of that enormous range then they’d have a most effective sales tool. These retail gurus need to spend less time in supermarkets and more time at beauty counters and in cell phone stores. Books are a knowledge product requiring retail guidance and salesmanship… do these guys spend as long with their Wheaties as they do with a novel?Emphasis mine. What Matthew has so deftly put into words is something I’ve mulled over since my bookselling days but never quite found the right words for. I’ve always known that knowledgeable booksellers are a huge asset to any bookstore – I was lucky to be surrounded by many when I worked at one – but I had never fully grasped what it means to sell a “knowledge product” as opposed to a “commodity product,” nor had it occured that generally products can be described as one or the other.What’s key here is the distinction between how knowledge products are sold versus commodity products. To use Matthew’s example, when buying a cell phone or going to the beauty counter, you are confronted with many dozens of choices offering an array of specific features suited to a variety of specific needs – bluetooth or dry skin, for example. When it comes to breakfast cereal, you don’t need the guidance as much. The product is cheaper, “wrong” choices cost less, and cereal box mascots aside, one type is generally as good as another.Viewed in this light, it’s crazy to try to sell books as a commodity product because, (and this is just a guess) out of all the retail categories out there, bookstores by far offer the widest array of products, and therefore would require the most guidance and the best systems to help customers find what they are looking for. Undoubtedly, there are many knowledgeable booksellers at chain stores, but if the chains continue to view books as commodity products, their booksellers’ efforts will be futile. It’s also clear why Amazon has been so hugely successful. The site is the ultimate resource for selling knowledge products, with a wealth of information at the ready for anyone looking for a book. It’s possible that, thanks to the internet, the costs are simply too high for chains to go the knowledge-product route, but running in the other direction, towards Froot Loops, hardly seems the answer.For those still interested in this issue even after all this, check out these links:GalleyCat wonders if face-out books will put more emphasis on cover design and follows up with further questions about the co-op payment aspect of this.The Stranger guesses we’ll see more extremely popular and/or bad books face-out at the expense of those hidden gems.A dissenting opinion
●
●
What a windfall for the Dalkey Archive, the heroic publishing house (named after another O'Brien novel) that, like the NYRB, for years has been keeping esoteric masterworks like Stanley Elkin's George Mills or D. Keith Mano's Take Five in print. Couldn't happen to nicer guys. Check them out at centerforbookculture.com
Oops. I mean .org.