SUNDAY, AUGUST 1, 2010


BUSINESS REVIEW BY JAMES LEDBETTER


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Short” and dozens of other exhaustive in- vestigations. Yet “Chasing Goldman Sachs” is an exceptionally lucid, well- written account of how and why the finan- cial system broke down; readers need only beware that, despite its title, this book re- veals very little about Goldman Sachs. By now the stories of risky mortgages, underregulated banks and ludicrously complex investment instruments are famil- iar. Suzanne McGee’s book takes the reader much deeper into the history and culture of Wall Street, which is the true cause of the fi- nancial disaster. The mortgage meltdown — like Hurricane Katrina or any perfect storm — could inflict as much damage as it did only because the conditions for de- struction were already in place. A contributing editor at Barron’s,


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McGee encourages us to think of Wall Street’s historical function as a money grid, a utility that ensures a reliable, effi- cient flow of money from Point A to Point B. This mundane but reasonably lucrative duty, she argues, used to make up the bulk of what investment banks did. However, beginning in the 1980s, several things hap- pened that took Wall Street in a very differ- ent direction. One was the rise of a shadow banking system, in the form of hedge funds and private equity firms. These lightly regulated entities earned outsize re- turns by pursuing risky strategies that would have been unthinkable for most tra- ditional Wall Street banks; over time, pri- vate equity firms and hedge funds became the Wall Street banks’ best clients. A second development was that in- vestment banks found that they could make more money by implementing their own investment strategies than by advising corporate clients as they used to do. In the old days of the dot-com boom, for example, a firm such as Morgan Stanley would un- derwrite an initial public offering for an Internet company, taking a fee for selling shares to outside investors. Today, an in- vestment bank is just as likely to make its own investment in the company, taking on greater risk for potentially greater reward. The third and perhaps most trans-


formative development happened mostly in the 1990s, when the largest investment banks — Bear Stearns, as well as divisions of Citigroup, Goldman Sachs, Lehman Brothers, Merrill Lynchand Morgan Stan- ley — all became publicly traded compa- nies. This move increased the capital avail- able to the banks, but if it had any other positive effects, they are hard to find in McGee’s account. The drive to maximize profits to share- holders, to improve the return on equity — the ultimate yardstick used when “chasing Goldman Sachs” — led Wall Street firms into all sorts of behavior that separated their best interests from society’s. Whereas the earlier structure of private partner- ships encouraged bankers to keep track of the overall risks their firms were un- dertaking, the growth and profit imper- atives of shareholder companies meant one thing only: Make more deals to gener- ate more fees. As one former investment banker tells McGee, “We lost the checks and balances, a system that provided a kind of curb on excessive risk-taking, when we moved away from the partnership model.” Public ownership also created a compensation-for-performance system that lavished eight- and nine-figure sala- ries on some bankers, whether or not the work they performed was ultimately bene- ficial to their clients or even their firms (in the case of the now-departed or forcibly merged Lehman, Bear Stearns and Merrill Lynch, much of it was clearly not). The disturbing implication of McGee’s


masterful book is that even the more ag- gressive ideas for regulating Wall Street — such as compensation caps and breaking up big banks — seem unlikely to prevent fu- ture crises, even if Congress had chosen to include them in the recent financial reform package. Some of the system’s weakness re- flects human nature, but much of it, McGee concludes, is built into the fiduciary duty of public companies. As she demonstrates, any given investment strategy can be in- terpreted as reckless or prudent, depend- ing on circumstances; shareholders seem likely to always demand that their bank be as aggressive as the next firm. Today’s Wall Street does not encourage and barely al- lows anyone, as former Citigroup chief Charles Prince put it, to stop dancing as long as the music is playing.


bookworld@washpost.com


James Ledbetter is the editor of The Big Money, the Slate Group’s business news and analysis Web site.


Sink holes threaten Wall Street


CHASING GOLDMAN SACHS How the Masters of the Universe Melted Wall Street Down . . . and Why They’ll Take Us to the Brink Again By Suzanne McGee


Crown Business. 398 pp. $27


pity any author peddling a book about the financial crisis after the publica- tion of “Too Big to Fail,” “The Big


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Aliens . . . will shortly be so numerous as to Germanize us instead of our Anglifying them and will never adopt our Language or Customs.” — Benjamin Franklin in 1751. Read more at Political Bookworm 6voices.washingtonpost.com/political-bookworm/


MEMOIR


TALKING TO GIRLS ABOUT DURAN DURAN One Young Man’s Quest for True Love and a Cooler Haircut By Rob Sheffield Dutton. 274 pp. $25.95


Rob Sheffield learned everything he needed to know


about life from his pop music collection. The journalist and author made that clear in his bittersweet “Love is a Mix Tape,” the 2007 memoir in which he viewed the loss of his first wife through the poignant prism of songs by Pave- ment and Big Star. And he makes it clear again in his latest mash-up of remembrances and rock criticism: “Talking to Girls About Duran Duran,” a breezy ode to growing up in the ’80s that’s fun to read but less fo- cused than the earlier book. Where “Mix Tape” concentrat- ed on a single love story, “Talk- ing to Girls” fills 200-plus pages with personal essays — each


pegged to a different pop song — that wax nostalgic about everything from Sheffield’s former schoolteachers to John Hughes movies to the ludicrousness of the cassingle. It’s a walk down a very specific memory lane, one paved by Generation X. During that walk, Sheffield doesn’t always successfully tie together his flashback with a pop chart-topper; a chap- ter about his summer gig as a garbage collector, dubbed “Total Eclipse of the Heart,” barely refers to the Bonnie Ty- ler track of that name. Yet in other places, Sheffield’s prose shimmers with nostalgia. Recalling his soundtrack to another summer job, one that involved peddling frozen treats, he writes, “Every time Prince strummed that ca- thedral-sized opening guitar chord of ‘Purple Rain,’ it felt like the ice cream truck was a spaceship lifting off to bring Creamsicles to distant constellations.” Moments like that, and there are just enough of them here, will make Sheffield’s fellow early MTV worshipers happy to connect with such a delightfully wistful, New Wave kindred spirit. — Jen Chaney


chaneyj@washpost.com


MEMOIR


KOOK What Surfing Taught Me About Love, Life, and Catching the Perfect Wave By Peter Heller Free Press. 326 pp. Paperback, $15


At age 45, Peter Heller was unmarried and questioning


his life’s path. In the throes of a midlife crisis, he and a buddy decided to — what else? — learn to surf in Califor- nia. Then there was a second problem: He became ad- dicted to the waves’ “throb and drum of contraction and collapse, the rush and hiss around it in constant surge and recession.” The book that resulted follows Heller on a six-month journey through Mexico behind the wheel of a VW camper in search of the best swells. He starts as a “kook,” derisive slang for a be- ginner, and quickly finds that surfing includes “sand in your crotch, salt-stung eyes, banged temple, chipped tooth, scream- ing back, and sunburned ears.”


Nonetheless, he’s totally in love with the sport, dude, and willingly endures the abuse for the chance to ride the waves like a “speeding bullet, or torpedo, of euphoria.” A whole lot happens along the way: The car breaks down, he gets married, and he goes back to his day job writing about other things, such as tracking the social move- ments of humpback whales in Antarctica. Unfortunately, Heller describes the most promising epi- sode only cursorily: his escapades during a brief respite from surfing spent with Hollywood actress Hayden Panat- tiere and animal rights activist Ric O’Barry, trainer of the TV dolphin Flipper, in the Japanese sea town of Taiji. Hell- er’s experiences there were featured in “The Cove,” the 2009 Academy Award-winning documentary uncovering a bloody massacre of the marine mammals for their meat. While this memoir about self-discovery and the joys of


surfing is enjoyable enough, a book about the tragedy Heller witnessed in Taiji would have been more interest- ing and possibly more fulfilling.


—T. Rees Shapiro shapirot@washpost.com


NATURE


THE LAST OF THE TRIBE The Epic Quest to Save a Lone Man in the Amazon By Monte Reel Scribner. 271 pp. $26


In the early fall of 1996, a team of Brazilian govern- ment workers descended into the jungle of the Gua- poré River Valley, a tangled tract of Amazonia known to locals as the “Green Hell.” They eventually emerged with photographic evidence of a lean, mus- tachioed Indian man who lived alone on the valley floor, ap- parently the only remaining member of a vanquished jun- gle tribe. As Monte Reel notes in his gripping new book, “The Last of the Tribe,” this “spec- tral wild man” was one of the few modern examples of a hu- man being “existing within a vacuum of complete solitude, day after day, week after week, year after year, without the companionship of another


soul, without any communication whatsoever.” The bulk of “Tribe” follows the efforts of a hardy group of conservationists who fight to protect the Indian from the incursions of loggers. Reel, a former South America correspondent for


The Washington Post, is good with the context — the section on official Brazilian policy toward indigenous people is powerful and sad — but he’s best when he’s indulging in good old-fashioned adventure-writing: Ar- rows fly, poisonous snakes writhe through the under- growth, and sinister ranchers lord over the boom- towns of Brazil’s Wild West. The real star here turns out to be the Amazon itself, a place thick with “irre- pressible” flora and a “gaudy display” of fauna — a place, in short, that is “neither paradise nor perdi- tion.”


— Matthew Shaer bookworld@washpost.com


An artist’s conception of Voyager I’s encounter with


Saturn on Nov. 12, 1980. The spacecraft came within 77,174 miles of the ringed planet.


NASA/ASSOCIATED PRESS SCIENCE REVIEW BY MARCIA BARTUSIAK Setting sail for the final frontier


VOYAGER Seeking Newer Worlds in the Third Great Age of Discovery By Stephen J. Pyne Viking. 444 pp. $29.95


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or those 30 or younger, the jour- ney is now ancient history, hav- ing originated before they were born. As summer was coming to an end in 1977, two spacecraft were launched from Cape Canaveral, Fla., outfitted with a bevy of instruments to take a grand tour of the outer planets. NASA was taking advantage of a plan- etary alignment that comes only once ev- ery 176 years. Stephen Pyne chose now to write about these probes, Voyager 1 and 2, because he views them as potent symbols of a third great age of discovery. The earlier eras were forged by Euro- pean rivalries — first the great oceanic ex- plorations during the Renaissance and then the more scientific ventures in the 18th and 19th centuries, such as Darwin’s voyage on the Beagle. But the third epoch transcends “anything humanity has known before,” Pyne writes. “It would reach beyond sordid politics and the blink- ered ambitions of its originating time and place.” That’s a weighty mantle for Voyager to


wear, I thought upon starting the book. Why not choose, as the avatars of this age, the robots roving over Martian deserts or the Apollo program that took men to the moon? Pyne, an environmental historian at Arizona State University, answers that question — and much more — in this fasci- nating and beautifully written chronicle. Much like Ferdinand Magellan’s bold, world-spanning journey, Voyager was one of those “moments of exploring that . . . fuse place, time, discovery, and yearning.” The Apollo program, contends the author, “went nowhere, withdrawing to the virtual solipsism of the space shuttle and a near- Earth space station.” But the Voyagers found new moons, planetary rings, erupt- ing volcanoes and potential sites for extra- terrestrial life. It was the grand gesture. Despite the title, “Voyager” is not a de- tailed, straightforward account of the proj- ect. What makes this book unique is Pyne’s combination of history and philosophy as he reflects on the role of exploration in hu- man society. Throughout its pages, the Voyagers’ passage through the solar sys- tem is compared and contrasted with ter- restrial expeditions of the past. Even the most passionate aficionado, who devoured every digital bit sent back by the Voyagers, will find this overview enriching. Occasionally a comparison can be prosaic (in volume, each Voyager was


roughly equivalent to Columbus’s Niña), but more often they are poetic and engag- ing. A Voyager rounding Jupiter, for example, is likened to Vasco de Gama swinging around the Cape of Good Hope. Only this time we found “hurricanes the size of Earth’s Moon that lasted for centu- ries; stormy eddies that roiled past like boiling Mississippis; trade winds that would shred and crush sailing ships.” De Gama caught the austral westerlies to hurl him past Africa; the Voyagers were boosted gravitationally as they sailed from planet to planet. Once Voyager 1 flew past Jupiter and


Saturn, it headed out of the solar system. It was Voyager 2 that completed the full grand tour, arriving at Uranus in 1985 and Neptune in 1989, so far out that it took four hours for its data to reach Earth. Remembering only the glorious images, I was surprised to learn how close the Voyagers came to disaster in flight — jammed platforms, misdirected anten- nas, failed receivers — all either fixed or worked around by ingenious engineers. For that matter, before launch some sci- entists argued against including cameras at all, believing them a waste of payload. Thankfully, others prevailed, perhaps tak- ing a lesson from the second age of dis- covery, when Thomas Moran’s stunning paintings of Mammoth Hot Springs


helped push Congress to declare Yellow- stone a national park. Those remaining home want “not just shared data but shared meaning: not merely the eyes of discovery but its poetry,” writes Pyne. According to Pyne, the golden era of the third age is now turning to silver, where more focused work replaces inspi- ration: The Magellan probe goes to Ve- nus, Galileo to Jupiter, Cassini to Saturn. What comes next is difficult to predict: Perhaps millions will gain the opportuni- ty to virtually explore, as technology pro- gresses. Or maybe there will be renewed competition among spacefaring nations, harking back to the first age. Whatever the outcome, the Voyagers are still on the job. Now past Pluto, the stalwart pair are “sounding” the depths of space and have enough power to send back their findings until 2020. Only last year the probes detected the presence of magnetic fields that are holding together an interstellar cloud through which the solar system is now passing. Hardly ancient history after all. bookworld@washpost.com


Marcia Bartusiak is executive director of the MIT Graduate Program in Science Writing. Her latest book is “The Day We Found the Universe,” on the birth of modern cosmology.


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