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Book Reviews to be found on this page: (Reviews by Walt or Linda Ballenberger)

Labyrinth by Kate Mosse- Reviewed by Linda Ballenberger
Frenzy- Bubbles, Busts and How to Come Out Ahead by Carl Haacke
The Chinese Century
by Oded Shenkar
Hot Commodities by Jim Rogers
Rumpole and the Penge Bungalow Murders by John Mortimer

Labyrinth by Kate Mosse- Reviewed by Linda Ballenberger

Have you ever had the same recurring dream and wondered what it means?  I just finished
reading Labyrinth by Kate Mosse.  The book is about a young British woman, Alice, who has
dreams that frighten her and she can’t figure out their meaning.  She is invited by her friend
Shelagh, an archaeologist, to a dig in the Pyrenees mountains in southern France.  One day
Alice wanders off alone and finds a cave that people have been trying to locate for years.  She
lights her lighter to look around the cave and finds two skeletons in front of an alter.  One of the
skeletons is wearing a special ring with an ornate labyrinth design on it.  The ring falls and Alice
loses her balance tying to catch it and loses her lighter as well.  She runs through the cave in
the dark and falls and hits her head.  Alice is awakened by her friend Shelagh.  Everything
changes that day for Alice.  She suddenly knows what the meaning of her dreams is.  The
reader is taken back to the year 1209, and Alais, a young girl from the walled city of
Carcassonne in southern France, is just awakening from a puzzling dream.  

The book is very exciting and skips back and forth from Alice in 2005 and her efforts to find the
ring and Alias from 1209, and her struggles to save the ring and special holy books from the
French conquerors.  (France was not yet unified, and the people there spoke a different
language, Occitan, which still exists today, although fewer and fewer young people are taking
the trouble to learn it).  

I really enjoyed the book and recommend it highly.  It was very exciting and hard to put down.  I
also enjoyed all historical references to that part of France, where we lived in 1984 and 1985
and have visited many times since.  In fact we were able to spend four nights in the walled city
of Carcassonne on one of our tours in 2005.  

Frenzy- Bubbles, Busts and How to Come Out Ahead by Carl Haacke  

I had hoped to be able to answer a couple of specific questions after having read this book:
Is there a bubble in the real estate market now?
Is China a bubble?

Alas, it’s not so easy to come up with definitive answers.  As the author writes, “It is impossible
to know when a bubble begins.”  “Once bubbles burst, there is even no clear way to know when
they began.  There are no tell-tale signs that can clearly signal ‘a bubble is here’.  But there are
warning signs that should set off an alert that a bubble may be arriving or already is sweeping
the marketplace.”

Frenzy spends most of its effort discussing the internet bubble of the early 2000’s which is still
fresh in the minds of most if not all investors.  Also, many of the key players in high-flying
companies of that period are still readily available to be interviewed for their perspective on
those tumultuous days.

One can easily recall the prevailing investment attitudes regarding internet stocks at the time.  
Huge amounts of money poured into companies that had no earnings or sometimes no
revenue.  The thrust was to “get there”, establish a brand, and somehow profits would emerge

“On Aug 8,1998 Geocities, which enabled individuals to set up their own website, went public at
$17 and rose to $37.30, achieving a market value of $1.1 billion, in spite of having no real
prospects for profits.  On Feb 11, WebMD opened at $8 and reached $31.40 by the end of the
day, for a market value of $2.2 billion, despite the absence of any revenues.”

Some of the warning signs of bubbles referred to above are:
BLOCKBUSTERS- “The break-away block-buster that crystallizes investors imaginations and
solidifies the idea that investors can become rich very quickly.”  Some say the Netscape IPO
made people believe that billions could be made quickly on the internet and this event thus
kicked off the internet bubble.  On course the Netscape IPO was in August of 1995, and it was
years later that the internet bubble finally burst.

COPYCATS- “Once the copycat opportunities emerge there is a strong probability that a
bubble is in full swing.”

CHEAP MONEY- “Another important sign that a bubble is in full swing is when money seems to
be endless and can be effortlessly raised for the ‘hot opportunity’.  Cheap money is a sign that
investors are evaluating opportunities based not on real business potential but rather on the
enthusiasm and momentum of the marketplace.”

SECTOR FUNDS- “One extremely visible signal that a bubble may be in full swing is the growth
in the number of investment funds focused on a targeted sector.”  For example, investments in
internet funds topped out at nearly 50% of all venture investments.  “Industries that never
experienced bubble rarely rise above 10 percent of total venture allocations.  This recent
history suggests a pattern that can be used to identify future emerging bubbles: when venture
capital allocation rises above 15-20 percent of all venture investments, a bubble is likely

In addition to the internet bubble, the book looks at several other famous bubbles that have
occurred in the past, including the tulip bubble in Holland in 1600’s, the canal bubble in
England in the 1700’s, and the U.S. stock market in the 1920’s.  In addition, a list is provided of
bubbles that have occurred over the past 200-300 years.  Despite the fact that these took
place in different countries and in different eras, the belief that one can get rich very quickly is
the common denominator, and the human emotions that fuel the frenzy don’t seem to change
over time and place.

The author puts forth several suggestions for avoiding bubbles in the future, including more
study of the phenomenon in business school curriculums.  He also urges company leaders to
listen to skeptics before going after hot new business opportunities.  The ideas of skeptics in a
bubble situation are usually dismissed out of hand as coming from someone who “just doesn’t
get it”.  

For anyone looking for practical answers about whether bubbles exist in real estate markets or
in China investments, for example, this book is not worth reading.  (Interestingly the author
mentions that a bubble in China investments could be forming, but offers no analysis.  He just
makes the assertion and lets it go at that.)  In one is interested in “all things financial” then the
book is worth a read, as the subject is certainly interesting as is the historical perspective.  
Given limited time, however, I would recommend reading “The World is Flat” by Thomas
Friedman, and that book will be reviewed for the newsletter next month.

The Chinese Century by Oded Shenkar

It's true this book does not read like a gripping John Grisham thriller that is difficult to put down.  
To the contrary, at times it is difficult to pick up and get through.  However, the century that the
author refers to in the title is of course the 21st, which many already refer to as “The Chinese
Century”.  In about 20 years the China will surpass the United States as the largest economy in
the world, and the ramifications of that tumultuous rise will change the world in general and the
United States in particular.  So for those interested in a glimpse of the future, this academic
treatise might be worth the effort.  The book’s subtitle is: “The Rising Chinese Economy and It’s
Impact on the Global Economy, the Balance of Power, and Your Job”.  So the impacts of the
emergence of China as a global power will have a personal effect on everyone sooner or later.  
Consider this assertion in chapter 1:

“China’s ascent will bring about novel challenges to ‘common wisdoms’ and rethinking of old
terms and assumptions anchored in events past.  How do you classify a country governed by a
Communist regime but whose government share of GDP is less than half that of the U.S.?  An
economy that attracts the largest volume of foreign investment in history without providing
adequate protection for intellectual property rights?  One with extremely high savings rates but
which grossly misallocates investment capital?  One with the most competitive market in certain
segments, but which has a paternalistic subsidy regime?  A stabilizing force in world affairs that
is now threatening the use of force to regain its ‘renegade province’ of Taiwan?  China will
challenge these and many other dichotomies we have come to accept; it may also realign the
economic, political, and social landscape in the United States as well as in other countries.”

Regarding massive trade imbalances with China, this seems to be a problem unique to the
United States.  “As its trade surplus with the United States expanded to $11.5 billion in January
2004, China’s overall trade balance for February 2004 expanded to $8 billion- in the red.  This
means that other trading partners are doing quite well, maintaining a smaller deficit (the
European Union, or EU) or a substantial surplus (Asia) in their trade“.

The author puts the current era into perspective with some discussion about the long and
mostly illustrious history of the country, in particular the Imperial period, which lasted for more
than 2,000 years.  For much of this period China was the most prosperous and technologically
superior country in the world.  Also discussed are the period of humiliation in the nineteenth
and early twentieth centuries, as well as the first three decades under Communist rule.  All of
these historical eras have influenced where China is today and where it desires to go.  
“Grounded in past glory and modern humiliation, China’s aspirations are not merely rapid
modernization and joining the ranks of developed nations- it wants no less than to restore its
ancient Imperial glory…..”.

Among the many other issues and conclusions discussed in the book are these:
- Effect of a possible revaluation of the currency.  This won’t change much, according to the
author.  Hourly pay in Manufacturing in the U.S. in 2002 was $21.33 (including bonuses and
mandated insurance), in Europe $20.18, and in China 69 cents.  So a 5% currency adjustment
won’t change much.
- Pirating of many types of products, especially software, games, and other digital products.  
“The bootlegged version of ‘Pearl Harbor’ appeared in Hong Kong on May 28, 2000, weeks
ahead of the June 21 premier”.  
- China’s need to keep expanding employment: “Given its population growth (China is now
relaxing its one child policy), China needs to create almost 15 million new jobs annually just to
stay level and stave off an increase in the unemployment rate”
- China’s desire to move up the technological ladder, and especially to develop world class
- Possible future scenarios for how relations with the U.S. will play out.
- The types of jobs that are in danger of being lost to China.  “If you are in manufacturing there
is a better than 50/50 chance that your job is at risk”.
- Is “Buy America” returning? (No).
- China’s weaknesses.  “…lacking a developed service sector to support its manufacturing base
and to which to channel some of its superfluous personnel, a banking sector not far from
default, and a limited ability to generate technological innovation.”
- The impact of ethnic Chinese people in foreign countries coming home and bringing their
expertise with them.
- Perceptions about purchasing Chinese products.  (Seen as good value at a good price).

Mr. Shenkar is a scholar from Ohio State University, and he has studied China for more than 30
years and written numerous articles and books on Chinese subjects.  This review will end where
Mr. Shenkar begins his book, with these observations in the book’s first paragraph.  “What we
are witnessing is the sustained and dramatic growth of a future world power, with an unmatched
breadth of resources, lofty aspirations, strong bargaining position, and the financial and
technological wherewithal of an established and business-savvy Diaspora.  The impact of a
rising China on the countries of the world- both developed and developing- will be enormous,
and so will be the need to develop strategies and responses to meet the challenge.”

Hot Commodities by Jim Rogers

“For my Baby Girl, who owns commodities, but does not yet own stocks and bonds”.

Thus reads the dedication of Jim Rogers’ third book, “Hot Commodities”.  Mr. Rogers’ first two
books help explain why he is one of the world’s most intriguing people.  His first was “Investment
Biker” which describes his around the world motorcycle adventure with a young lady companion
named Tabetha, from March 1990 until August 1992.  They covered over 65,000 miles through
Europe, Russia, China, much of Africa, Australia, South and North America, sometimes through
war zones, all on two BMW motorcycles.  Worth magazine described the book thusly: “Part
adventure story, part travelogue, part love story and part primer on world markets, this book is
propelled by the sheer preposterousness of his journey”.

For the millennium, a restless Rogers wanted to see how the world had changed in the 10
years since his motorcycle trip.  His second journey of about 3 years, this time in a custom-
made yellow Mercedes with matching yellow trailer, started in early 2000.  You can see a photo
of Jim and his wife, who shared the adventure, and this remarkable vehicle at www.jimrogers.
com.  The story of this voyage is told in his second book, “Adventure Capitalist”.  

Jim Rogers is now a legendary Wall St. investor, and he is a regular guest on Fox News
Channel’s financial shows hosted by Neil Cavuto on Saturday mornings and Monday
afternoons.  I try not to miss his appearances and listen carefully to what he says.  He seems to
have this uncanny knack of being right most of the time, and I’ve followed his advice on several
occasions and made money.  He also seems to know what to stay away from.  A Rhodes
Scholar, Rogers co-founded the Quantum Fund with former partner and now billionaire George
Soros, and he amassed a fortune and retired at the age of 37 in 1979.  Recall that the period
from the late 1960’s to early 1980’s was just about flat for the U.S. stock market.  How did
Rogers manage to amass a fortune during that period?  Answer:  commodities.

Rogers feels that now in 2005 the long running bull market in U.S. stocks is about to come to an
end and another extended stagnant period is about to begin, if it hasn’t already.  He feels that
another bull market in commodities began in about 1999, and few people paid attention.  He
explains how and why bull markets in stocks and commodities don’t happen at the same time
and tend to run sequentially.  He also shows how these bull and bear markets tend to last a
fairly long time, on the order of about 15 years.

Anyone interested in maintaining or growing his portfolio over the next ten years or so would do
well to read this book and consider Rogers’ arguments.  (By the way, commodities have
approximately tripled in value since the late 1990’s).

Rogers explains the origins of many misconceptions: “My uncle lost his shirt in commodities” or
“My broker says commodities are too risky”.  No, he explains, you don’t have to take delivery of
5,000 pounds of soybeans on your driveway.  He talks about different ways to make these
investments, and the method he prefers (funds based on a commodity index).  

The book’s fundamental premise is that world wide shortages exist for many basic materials, in
particular oil, but also in metals like copper and lead, soybeans and sugar, among others.  And
in detail but with great clarity, he explains why.  He also points out how it often takes many
years to ramp up production of these materials sufficiently for supply to catch up with demand.

The most important reason for shortages in basic materials, or commodities, can be summed
up in one word: China.  The economy of China and its 1.3 billion people has been growing at
over 9% for over a decade, and we all know that “made in China” has become a ubiquitous
label.  China is today “the world’s:
No. 1 consumer of copper.
No. 1 consumer of steel.
No. 1 consumer of iron ore (to make steel).
No. 1 consumer of soybeans.
No. 2 consumer of oil and energy products.”

Here’s a Rogers perspective: “China will be the world’s next great nation.  Spain was the
greatest economic power in the world in the sixteenth century; the rich and powerful in the
eighteenth century world spoke French;  the nineteenth century belonged to Britain; and the
twentieth was the American century.  The twenty-first will belong to China.”

Rogers councils against buying China related securities now, but he believes a buying
opportunity will occur before long in both China and in commodities in general.  He feels the
Chinese government, which is trying to cool the blazing economy and engineer a “soft landing”,
will not succeed.  He thinks that sometime in the not too distant future we’ll start to hear news
reports about how badly things are going in China, with layoffs, business failures, drops in
property values, street demonstrations, etc.  And that will be the time for investors to step in
and buy.

But although there will be setbacks in China’s road to economic supremacy, and thus setbacks
everywhere (“when China sneezes the whole world will reach for aspirin”), Rogers believes the
momentum cannot be stopped:  “Here’s how important I think China will be”, writes the 62 year
old father of the young girl referred to in his book dedication.  “My daughter, who was born in
2003, is learning Chinese.  Her Chinese nanny speaks only Mandarin to her, and I suspect she
might learn Chinese before she learns English.  In her lifetime Chinese will be the most
important language in the world, next to English.  If you are young and ambitious, learn
Chinese.  If you have ambitions for your children, persuade them to learn Chinese”.

Want to keep an eye on events in China?  Rogers suggests a great resource, the English
language version of
China Daily.

“Hot Commodities” is an excellent read for anyone interested in investing, world events, and the
forces that will drive change in the world over the next ten years and beyond.  And here’s a
bonus:  you can follow Rogers advice and make some money!

Anyone for some light airplane reading?  A review of John Mortimer’s
Rumpole and the Penge Bungalow Murders, by Walt Ballenberger

Long-time Horace Rumpole fans have often heard the barrister refer to his most famous case,
the Penge Bungalow murders, but the details of his brilliant defense have never been told until
now.  When it became obvious to Rumpole in a Chamber’s meeting (which he usually took
pains to avoid) that no one knew even the slightest detail of that famous case, Rumpole
decides to write his memoirs so posterity will not be deprived of such brilliance.  

As with any Rumpole story, there are three plots.  One has to do with the legal case itself, as
Horace irreverently overcomes the odds and defends his client in court, often in front of a non-
disguised bias by the presiding judge.  In the case of the murders at the bungalows in the
Penge neighborhood, Horace was a young solicitor who was assisting in his first big case.  
Everyone thought the young defendant to be guilty, but he kept on insisting he was innocent.  
The leading solicitors for the defense spent most of their time trying to prepare the young man
to accept a guilty verdict, which at that time in England meant the death penalty.  Rumpole’s job
was to observe, do a little administrative leg work, and keep his mouth shut.  Alas, the latter was
impossible for Rumpole, even, or perhaps especially, a younger version.  He manages to take
control of the defense while his leaders were elsewhere and impose his considerable guile.

Another of the plots usually has to do with shenanigans in Rumpole’s law office, or, as it’s
referred to in Britian, in Chambers.  This time Rumpole comes up with a solution to smooth the
ruffled feathers of the female solicitors in Chambers who, aware of their political powers in the
modern world of feminism, are about to sink their collective fangs into the neck of a not-so-
pitiable Claude Erskine-Brown, the self-important and perpetually unsuccessful philanderer.

The third plot has to do with life at the Rumpole household and his relations with his wife, Hilda,
otherwise referred to by Horace as “She Who Must Be Obeyed”, or sometimes simply “She Who
Must….”.  In turn Hilda always addresses Horace simply as “Rumpole”.  Since Horace is writing
his memoirs, we get a view of the early relationship between himself and Hilda, who hopes
Rumpole will succeed her father as Head of Chambers and bring her the status she craves.  
Hilda was in fact the person who convinced her father to engage Rumpole as his junior
assistant for the Penge Bungalow trial.  She was correct about Horace’s ability as a lawyer, but
completely wrong in thinking he might have aspirations to attain high status in Chambers.  
Rumpole only wanted to plead cases and win.  

All the favorite Rumpole traits are in this book:  his off-the-cuff quotations of Shakespeare and
other classical poets; his excursions to Pomeroy’s Wine Bar to sample favorite libations such as
Chateau Thames Embankment or Chateau Fleet Street.  (I am reminded of the Rumpole TV
series that ran in England for some years starring the actor Leo McKern and which was seen in
the U.S. on public television. Occasionally Rumpole would beat a hasty retreat from his office
because “my blood alcohol level is getting dangerously low”); the Rumpole irreverence and
utter disregard for formalities, when all the other barristers aren’t the least bit interested in the
welfare of their clients but only on their perceived personal status.

This book is light reading and would be perfect for your flight to one of our tours in France.  
You won’t break out in embarrassing laughter on the plane, but you’ll feel those chuckles of
Rumpole humor, especially if you happen to be sipping a glass of wine while reading.  Might I
suggest a glass of Pomeroy’s Plonk or perhaps even some Red Very Ordinary?

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