Lessons Learned from the American Expedition to Iraq

Fabius Maximus:

For what?

To establish some form of Kurdish state? The Turkish Government, among our stronger allies, will not thank us for this.

To establish Islamic State(s) in the Arab regions of Iraq? Probably difficult to sell this to the American people as “victory.” Certainly an odd aspect of our “War on Terror.”

To establish a Shiite State in southern Iraq? Good news for Iran, a charter member of the “Axis of Evil.” Bad news for Iraq’s southern neighbor, Saudi Arabia, most of whose oil fields lie in Shiite tribal areas.

Perhaps we can redeem ourselves by learning lessons of sufficient value.

Bogle’s “The Battle for the Soul of Capitalism”

Vanguard Founder and former CEO John Bogle has written a timely and useful book: The Battle for the Soul of Capitalism. Daniel Berninger posts a nice summary:

“The Battle for the Soul of Capitalism” argues most of the forces that produced the scandals among Enron, Worldcom, et al remain in place.

This means investors should expect another wave of scandals even as the bad
actors of the first wave go to trial.

The people running investment funds and corporations increasingly put their
short term interests ahead of the long term interests of the investing
public. The status quo has corporate CEO’s reaping a disproportionate share
of returns by finding ways to align the interests of the intermediaries with
their own. The link between executive compensation and stock options
produces more activities that boost short term stock price even as they
jeopardize long term prospects. Bogle makes the point “the more the managers
take, the less investors make.” By his calculations, investing owners take
100% of the risk while CEO’s, intermediary investment bankers, and portfolio
managers get 70% of the compounded return. The currently passive nature of
stock ownership follows the decline of direct ownership of stocks from 92%
in 1950 to 32% today. Portfolio managers do not hold corporate CEO’s
accountable because the average stock stays in a portfolio for less than a
year versus 15 years when Bogle got into the business in the 1960’s.

Well worth reading.