In an Uncertain World: Tough Choices from Wall Street to Washington

My decision to read this book was based on an editorial I read many months ago in the Wall Street Journal. I remember the Journal's editors announcing that they thought "Rubin was probably correct" about some policy regarding interest rates and the deficit. Frankly, I didn't much understand the admission at the time but made a mental note. One day I wanted to make some time and understand this issue.Needless to say, I was excited to have that opportunity sooner rather than later. I saw Mr. Rubin's book mentioned in the Financial Times, recalled the editorial, and immediately bought the book. In short, I was pleasantly surprised. Not only do I now understand the relationship between America's deficit and interest rates, but I have a whole new appreciation for topics such as arbitrage, probabilistic thinking, political uncertainties, bailouts of other countries, the interconnectedness of economies in a globalized world, and for Mr. Rubin himself.The book is one part autobiography, one part business and political memoir, and one part economic instruction (101 level, for people like me). We learn about Mr. Rubin's upbringing, the fortuitous circumstances that took him to Harvard and later Goldman Sachs, the challemges of building an arbitrage department, and of course the challenges of the Clinton years and serving as the Secretary of Treasury. No doubt Mr. Rubin has lived a good and interesting life, and I enjoyed following his account and many observations.One nice aspect of this book is that I don't feel like I am reading a highly biased or revisionist spin on history. Sadly, the same cannot be said of other characters from the Clinton administration (e.g., R. Holbrook). I have read enough about the Clinton administration to feel that the author is giving a pretty fair account of events and people. I also appreciate his taking the time to make slightly complex ideas very clear and simple, such as arbitrage or the relationship between deficits and interest rates. Finally, when reading his accounts of international financial crises, I felt the tensions of a very difficult decision. Mr. Rubin has convinced me that the choices we face when dealing with international economic crises are never as simple as the media pundits would have us believe. These are very complex issues with good arguments on both sides--and our leaders must make decisions. I like to think I have a greater appreciation for just how difficult these decisions must be.I can't claim this book was as interesting as a good mystery or a John Fowles novel, but compared to other nonfiction this is a very enjoyable and fairly well-written book. I feel like I have learned something about economics, business, politics, and the author. I am left with the sense that talking with Rubin about these issues, over a cup of coffee, would be very rewarding. He has an interesting mind. I guess this book is worthwhile for that fact alone--it has made Mr. Rubin's interesting thoughts a

Probabilistic decision making is a tool that is the corollary to the premise that nothing in the world requiring a decision is certain. Rubin states that, "Probabilistic thinking isn't just an intellectual construct for me, but a habit and a discipline deeply rooted in my psyche." Warren Buffett and Charles Munger of Berkshire Hathaway fame have long preached this discipline too. Its application is mentioned over and over again in Rubin's approaches to various economic crises faced by him at the National Economic Council and Treasury. The methodology is widely taught and is available to all of us in such books as "Probabalistic Thinking" by Richard Jeffrey. A very burden-lightening idea for all of us, stated repeatedly by Rubin, is that given unavoidable uncertainty, not all decisions will turn out to be right, but that probabilistic decision making is the best way he knows to maximize the number of correct choices.There are many detailed, but non-technical, non-mathematical, discussions of such issues as "bail-ins" (e.g., IMF loans) for countries in deep economic crisis in the '90s (Mexico, Russia, Maylasia), floating currency exchange rates vs. tied-to-the-dollar rates (China) and the part they play in economic crises, and the issue of "moral hazard" (that huge infusions of outside money into failing economies might just encourage more bad behavior by the recipients).Both Republicans and Democrats can enjoy this read. Democrat Rubin's strong position on a balanced budget, reduced deficits and consequent reduced debt interest payments prompted George Will, the conservative columnist of the Washington Post, to comment in a January 2004 piece that "Rubinomics is more Republican than Republicans have recently behaved."Rubin expresses great admiration for then-President Clinton's thought processes, quick intellect, and his actively pursuing divergent views, i.e., he thinks Clinton's decision process was right on. He indicates that Clinton's political genius was a great overlay to the technical insights Rubin and others, such as Alan Greenspan, brought into discussions. Illustrative specifics abound. At the same time, Rubin clearly abhors Clinton's personal shortcomings, such as the Lewinsky matter.This may not be first rate literature, but it is most definitely very well written for such works. It is a fascinating read and very informative. Much of the thinking processes advocated are useful for individuals in their daily lives as they try to make the best possible decisions in the absence of complete information and in the face of considerable uncertainty.

Robert Rubin, in recounting his years on Wall Street and years in the White House has provided an excellent description of the politics of money, no matter where you are. Rubin recounts his 26 years at Goldman Sachs and describes how the company rose to great stature. He then goes on to describe some of the difficulties that they encountered. In large part, because of politics, not the Washington politics, but office politics. This part of the story was fascinating and Rubin even manages to make something like arbitrage somewhat understandable to the average reader.The real meat of the story comes when he moves to Washington to work in the Clinton administration. Rubin describes the problems that he and the administration faced in trying to deal with specific financial crises around the world and the difficulty of solving those crises in a political environment that is filled with ad hominem attacks. His central theme is that of an internationalist, the United States must work to promote solid economic systems around the world because it is in our best interests to do so. If we simply sit by and let things happen, the repurcussions will come back to haunt us.There are several examples that Rubin utilizes to make his point, from Mexico to Russia to Indonesia, he highlights the various economic problems that he encountered as secretary of the treasury. The descriptions he provides of the solutions point to the fact that not all nations can simply pick themselves up by their own bootstraps and make it on their own. Sometimes assistance is necessary. In making this case, he also makes a strong case for both the IMF and the World Bank.When I received this book, I had to wonder how interesting the job of the Treasury Secretary could be, especially compared to the Secretary of State, or National Security Advisor, but Rubin makes the role of the Treasury Secretary stand out as more than the person who signs the dollar bills. His insights into economics, both supply side and Keynesian is the most readable that I have seen. The explanations and difficulties are covered and even though there is a bias, he is not unwilling to admit that there are flaws.In addition to the clear writing and explanations, Rubin keeps to the topic he is addressing, his role as Treasury secretary or manager of a major company. He mentions problems that the Clinton administration went through, but only in the context of how it affected his job, which was minimal. When addressing the issues of working at Goldman Sachs or Citigroup, he stays on those issues and doesn't go off into major tangents. Finally, he does show that he has a sense of humor and others in the government have one too.When I started reading this book, I couldn't put it down. This is a fascinating insight into the world of finance.

Edit of 22 Sep 08 to recognize that Rubin did not bail out Mexico, he bailed out Wall Street, and Paulson is about to rip the heart out of every American taxpayer in the boldest and most insane national treasury rip-off anyone on this planet could conceive of....we don't need a Wall Street bail-out, we need a complete recall of both the Executive and the Legislative leaderships--a fresh start. These pigs have destroyed the nation--see my new book, free online from 24 Sep, ELECTION 2008: Lipstick on the Pig. Edit of 21 Dec 07 to recommend update and reissuance in collaboration with John Bogle, author of The Battle for the Soul of Capitalism: How the Financial System Underminded Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions - and What to Do About It and a few others whose books are linked below. Rubin is self-effacing and not at all, in any way, claiming personal credit for how well it went as America experienced one of its greatest economic booms, despite some rather scary international threats to our economic security. I believe this will be a classic reference for years to come. 1) Early on, and then throughout the book, Rubin does a fine job of documenting and explaining why markets, which are relatively autonomous beasts, and at least as important as governments and government policies, in setting the economic security environment. 2) A corollary to the above, but all the more important because it dovetails precisely with Henry Kissinger's caution ("Does America Need a Foreign Policy"), is Rubin's detailed articulation of how U.S. politics and US policy mechanisms are not now well-suited to coping with the new risks of the global economy. The speed and reach of the marketplace is now such that the industrial-era government bureaucracies and 1970's information technology stovepipes are completely inadequate--however well-intentioned a President might be, the current structure and current approaches to establishing economic strategies and policies are NOT OKAY. 3) Rubin is quite excellent in explaining in a very understandable manner how specific fiscal policies toward other states (e.g. Mexico) can be directly related to consequences in terms of illegal immigration (surging if Mexico is allowed to collapse), illegal drugs and crime, and trade. 4) Especially helpful in this book is its emphasis on the importance of educating the American public as a pre-requisite to the politics of making the right economic decisions for America. Rubin quotes Clinton as saying that one of his (President Clinton's) greatest lessons learned from his two-term Presidency was the need to do the public education (political strategy) before the public politics and deal-making. Senator David Boren (today President of the University of Oklahoma) and Mr. David Gergen have made this point earlier ("Preparing America's Foreign Policy for the 21st Century"), but Rubin's focus merits strong emphasis, because in combination, our mediocre

As other reviewers have mentioned, Rubin spends much of this book detailing the struggles of dealing with the "global economy" with his pals, Greenspan and Summers. Rubin also makes it clear that he feels current economic policy is undisciplined and unsound. While these issues make up the bulk of the book and are surely why it was written, I was most engaged by Rubin's philosophies on keeping work pressures in perspective ("if you can keep your head while those around you are losing theirs...") and on the imminent threat posed by the developed world's continued apathy toward the impoverished.Will you enjoy this book more if you agree with Rubin's ideas about economic policy? Yes. Can you find in this book interesting takeways that will give pause for thought if you don't? Yes.