Day: December 9, 2007

Article: Inquiry Begins Into Destruction of Tapes


From the December 9, 2007, New York Times:

Inquiry Begins Into Destruction of Tapes

WASHINGTON, Dec. 8 — The Justice Department and the Central Intelligence Agency’s internal watchdog on Saturday began a joint preliminary inquiry into the spy agency’s destruction of hundreds of hours of videotapes showing interrogations of top operatives of Al Qaeda.

The announcement comes amid new questions about which officials inside the C.I.A. were involved in the decision to destroy the videotapes, which showed severe interrogation methods used on two Qaeda suspects, Abu Zubaydah and Abd al-Rahim al-Nashiri.

The agency operative who ordered the destruction of the tapes in November 2005 was Jose A. Rodriguez Jr., then the chief of the C.I.A.’s national clandestine service, known as the Directorate of Operations until 2005. On Saturday, a government official who had spoken recently with Mr. Rodriguez on the matter said that Mr. Rodriguez told him that he had received approval from lawyers inside the clandestine service to destroy the tapes.



Article: Black Swans and Endogenous Uncertainty


Black Swans and Endogenous Uncertainty
by John Mauldin

December 7, 2007

-Ubiquity, Complexity Theory and Sandpiles
-Fingers of Instability
-A Stable Disequilibrium
-General Equilibrium with Endogenous Uncertainty
-Identity Theft and New York

How does the risk of default in California or Thailand get spread throughout the world, causing problem in money market funds in Europe and Florida? Yes, we can trace the linkages now, but was it possible to predict the crisis beforehand? And can we use what we learn to predict and hopefully hedge ourselves from the next crisis? Why do these things seem to be happening with more frequency? This week we are going to look at some economic theories which will give us some insight into the above questions. As it turns out, the more that individuals hedge their risk in economic markets – the larger the network – the more the entire system is put at risk. There is a lot of ground to cover, so we will jump right in.

Before we get to the economic theory, let’s review part of a letter I wrote in April of 2006 discussing chaos theory, as it will give us a useful mind picture to understand the latter part of the letter. This was part of a letter where I laid out my thoughts that we would indeed experience a crisis in the future along the lines we are now seeing.

Ubiquity, Complexity Theory and Sandpiles

We are going to start our explorations with excerpts from a very important book by Mark Buchanan call “Ubiquity, Why Catastrophes Happen.” I HIGHLY recommend it to those of you who like me are trying to understand the complexity of the markets. Not directly about investing, although he touches on it, it is about chaos theory, complexity theory and critical states. It is written in a manner any layman can understand. There are no equations, just easy to grasp well-written stories and analogies. (see or buy on