Eugene Linden
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OUR CONFEDERACY OF DUNCES

            The Darwin Award confers mock recognition on individuals killed by their own stupidity, thereby improving the gene pool by removing themselves from it. If there existed such an award at the national level, the U.S. of today would be ...

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The Ragged Edge of the World
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endangered animals
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Winds of Change
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Afterword to the softbound edition.


The Octopus and the Orangutan
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The Future In Plain Sight
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The Parrot's Lament
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Silent Partners
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Affluence and Discontent
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The Alms Race
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Apes, Men, & Language
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bio

             I’ve spent my entire writing career exploring various aspects of one question: Why is it that after hundreds of thousands of years one relatively small subset of our species has reached a point where its fears, appetites, and spending habits control the destiny of every culture, every major ecosystem, and virtually every creature on earth?  What happened that enabled us to seize control in a blink of an eye?

         I began scratching at this question in my first book, Apes, Men and Language, published nearly 40 years ago. In that book I explored the implications of some experiments from the 1960s  that showed that chimpanzees could use sign language in ways similar to the way we use words – to express opinions and feelings, to make specific requests, and to comment on the events of their day.  Since the moral basis of our rights to use nature as so much raw material is deeply entangled with the belief that we are the lone sentient beings on the planet, I wondered what it would mean if it turned out that other animals possessed higher mental abilities and consciousness? I never expected that the scientific establishment and society would say “oops, sorry,” but I also never imagined that the issue would turn out to be as fraught and contentious as it has.

         That first book was the result of a curious turn of events. My first major journalistic assignment was an investigation of fragging (attacks by enlisted men on their officers) in Vietnam. That article, “The Demoralization of an Army: Fragging and Other Withdrawal Symptoms,” was published as a cover story in Saturday Review in 1971. It got a good deal of attention, and a few publishers contacted me about possibly writing a book. I was eager to do that, but a few publishers lost interest when they learned that I wanted to write about experiments teaching sign language to apes and not Vietnam. Dutton gamely stayed on, however, and "Apes" is still in print in some parts of the world.

         Since that first book, I’ve revisited and explored animal thinking in several books and many articles. In Silent Partners: The Legacy of the Ape Language Experiments, I looked at what happened to the animals themselves in the aftermath of the experiments as the chimps were whipsawed by a society that shifted back and forth between treating them as personalities and commodities. I wrote articles for National Geographic, TIME, and Parade, among other publications about animal intelligence as the debate progressed at its glacial pace.

Then, in the 1990s, I had an epiphany of sorts. I’d heard a story about an orangutan that got hold of a piece of wire and used it to pick the lock on his cage, all the while hiding his efforts from the zookeepers. Here seemed to be a panoply of higher mental abilities on display, unprompted by any rewards from humans, and it occurred to me that, if animals could think, maybe they did their best thinking when it served their purposes, and not some human in a lab coat. Out of this flash came two more books, The Parrot's Lament: Tales of Animal Intrigue, Intelligence and Ingenuity, and, The Octopus and the Orangutan: More Tales of Animal Intrigue, Intelligence, and Ingenuity, as well as a few more articles for TIME, Parade, and Oprah among other publications. I’ve found this approach to thinking about animal intelligence both liberating and fun, and I intend to explore this a good deal more.

 

         The question of what makes us different than other creatures was but one aspect of my career-long efforts to understand how we have come to rule the planet. At the same time that I was exploring the question of higher mental abilities in animals I also began to think about how our notions our notions of our own specialness related to the consumer society. If intelligence, language and consciousness gave us dominion, it was the consumer society that gave us the tools to exploit nature for our own benefit. I’ve developed my thoughts on the nature and origins of consumer societies in four books, Affluence and Discontent: The Anatomy of Consumer Societies (1979), The Alms Race: The Impact of American Voluntary Aid Abroad (1976), The Future in Plain Sight: Nine Clues to the Coming Chaos (1998), and, most recently, The Ragged Edge of the World: Encounters at the Frontier Where Modernity, Wildlands and Indigenous Peoples Meet (2011), which tries to tell the story of the inexorable expansion of the consumer society through vignettes and stories.

 

         And then, of course, there are the consequences of our tendency to treat the planet as a cookie jar. This has been the dominant subject of my environmental journalism, which began as soon as I returned from Vietnam in 1971. Over the years, I have covered nearly every major environmental issue in publications ranging from Foreign Affairs to large circulation publications such as TIME and Parade. Sadly, journalistic effort of myself and many others have done little to slow the accelerating destruction of earth’s life support systems. Still, I’m proud that my TIME cover story on threats to the Ndoki, an ecological eden in the Congo, helped rally support for its protection, and that another TIME cover on the threatened extinction of the tiger in the wild proved useful in bringing pressure on China to reduce its role in the out of control poaching that supplied the traditional medicine market. Perhaps, I’m most proud of an article for Foreign Affairs, which I co-authored with Thomas Lovejoy and Daniel Phillips, which offered a blueprint for how to mobilize conservation efforts on a continental scale – something that urgently needed if vast ecosystems such as the Amazon and Congo rainforests are to be saved. My pride, however, has been tempered by the failure of this idea to gain any traction.

Over the years, it’s become clear that the threat of climate change trumps every conservation issue. The Ndoki has been saved from loggers, but the drying of northern Africa threatens to nullify this protection. Similarly, polar bears have been saved from the threat of uncontrolled hunting, but now have to cope with a warming arctic, which robs them of the sea ice from which they hunt ringed seals. I’ve written several articles and op-eds about various aspects of this existential threat as well as one book,The Winds of Change: Climate, Weather, and the Destruction of Civilizations, in which I tried to convey the scale of the threat by revisiting the role natural climate change has played in human evolution and the history of civilization.

 

In recent years, apart from my writing, I’ve pursued an active career in the world of finance, serving as chief investment strategist for Bennett Management, a family of funds that invests in distressed companies. I've also served on several corporate boards.

 

A selective list of my publications is available on this site under the title, “Publications,” and I append to this narrative a more traditional bio, which organizes my writings and activities by topic.

 

                                  EUGENE LINDEN 

 

WRITING:

 

         Social Criticism and Current Affairs:

         Books:

         The Ragged Edge of the World: Encounters at the Frontier Where Modernity, Wildlands and Indigenous Peoples Meet. Viking, April 2011. Plume, April 2012. The Future in Plain Sight: Nine Clues to the Coming Chaos.  Simon & Schuster, August 1998. Reissued, Plume, Jan. 2002. Affluence and Discontent: The Anatomy of Consumer Societies. Viking/Seaver Books; Nov. 1979. The Alms Race: The Impact of American Voluntary Aid Abroad. Random House; May 1976.

         - Articles and essays for TIME, and for journals ranging from Foreign Affairs to the Wall Street Journal.  Cover story on the demoralization of American forces in Vietnam for Saturday Review in Dec. 1971.

 

           Environment:

         - The Winds of Change: Climate, Weather, and the Destruction of Civilizations. Simon & Schuster, Feb. 2006. “Seeing the Forest: Conservation on a Continental Scale,” Foreign Affairs; July/August 2004. Numerous cover stories and essays for TIME. Helped conceive TIME's celebrated, 1989 Planet-of-the-Year, special issue on ``Endangered Earth,'' TIME International's special issue," Our Precious Planet," and wrote major articles for both issues. Wrote main article for TIME's first global special issue in 2000, "How to Save the Earth." WroteSmithsonian’s May 2003 cover story, “The Nature of Cuba.”

 

         Animal Intelligence and Language

         Books:

         - The Octopus and the Orangutan: More Tales of Animal Intrigue, Intelligence, and Ingenuity. E.P. Dutton, Aug. 2002.  The Parrot's Lament: Tales of Animal Intrigue, Intelligence and Ingenuity. E.P. Dutton, Oct. 1999. Silent Partners: The Legacy of the Ape Language Experiments. TIMES Books; April 1986. Apes, Men, and Language. Saturday Review Press/Dutton; Jan. 1975. Soft: Penguin, Feb. 1976, revised edition, 1981.

          Major Articles:

         "Can Animals Think" (cover story for TIME), and "Apes and Humans" (cover story forNational Geographic)

 

        

         Business and the Economy:

         Books:

         The Mind of Wall Street, Leon Levy with Eugene Linden. Public Affairs, Oct. 2002.

         -  Articles on the emergence of the distressed securities industry for TIME and FORTUNE.  Essays on the perils of the integrated global market for TIME and MSNBC.  Major article on the makings of the Asian meltdown as part of cover package forTIME InternationalSeveral articles on entrepreneurial thinking while a senior writer at INC. in 1984, including the centerpiece article of INC.'s fifth anniversary special edition.

 

 

         Awards and Citations:

         2007: Grantham Prize Special Award of Merit.  2001: Poynter Fellow in Journalism, Yale University. 1997: finalist, John Oakes Award. 1996: Overseas Press Club Citation for Excellence; Lowell Thomas Award. 1995: Genesis Award; honorable mention, National Press Club Robert Kozick Award. 1994: Genesis Award; Harry Chapin Media Award; Population Institute Global Media Award. 1991: Finalist, National Magazine Award; Walter Sullivan Award.

 

          Selected List of Keynotes and Major Speeches:

         The Library of Congress, Woodrow Wilson Institute, Carnegie Council, U.S. State Department, Senior Seminar at the Foreign Service Institute, Saint John the Divine, the CIA Transnational Issues Group, LeNS International Conference on Law Enforcement and National Security (keynote), the 2001 Democratic Senatorial Retreat, 7th International Conference on Environmental Enrichment (keynote), Cooper Union

 

 

BOARDS

  • RARE Center for Tropical Conservation, 1997 to 2002
  • World Wildlife Fund, National Council 2003 – 2009
  • Wildlife Conservation Society, Education Committee, 2000- 2007
  • The Green Guide, 2000 - 2008

         -    Golden Books Family Entertainment. Inc., August, 1999 -2001  

  • PGI Inc. 2003 – 2008
  • Evercom Inc. 2003-2005
  • Cibus, 2004 – Present
  • Syratech, 2005 – 2009
  • Insight Health Services, 2007 – 2010
  • Haights Cross, 2010-Present

 

AFFILIATIONS

 

         -    The Century Association

  • PEN
  • The  Katoomba Group
  • Associate Fellow, Timothy Dwight College, Yale University

 

PRESENT EMPLOYMENT:

Chief Investment Strategist, Bennett Management (a family of investment funds specializing in distress and bankruptcies)

 

PREVIOUS EMPLOYMENT:

         Contributor TIME, 1995-2001; Senior writer at TIME, 1987-1995; senior writer at INC., 1984; executive editor at Technology Illustrated, 1983

        

         Education: Yale University, BA

 

                 

 

 

 

                          

 

 

 

 

 

 

 

 

 

 

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Short Take

I’ve just read Black Edge, by Sheelah Kolhatkar, which is about the huge insider trading scam that characterized Steve Cohen’s SAC Capital at the height of its power. I’m going to offer the thoughts it prompted in two parts. The first will delve into the trade itself, and the second will explore the fallout from this insider trading scandal and subsequent events in the market.

Part One:

A good part of Black Edge focuses on one specific instance of insider trading at SAC Capital: Mathew Martoma’s quest for advance knowledge of the results of trials on the efficacy of Elan Pharmaceutical’s experimental drug to halt Alzheimer’s disease. The drug, bapineuzumab, was designed to attack the amyloid plaques that Elan’s scientists viewed as the cause of cognitive decline. In his quest for “black edge” (illegal inside information) Martoma and his compatriots compromised the integrity of the procedures for drug trials and ruined the life and reputation of a distinguished scientist.  Even that wasn’t enough for them. SAC also had access to vast amounts of biotech expertise, both from PhDs on their payroll, and the expert networks they paid handsomely to give them access to researchers with direct access to the studies and trials.

 

In the short run, this inside information paid off for SAC as Martoma’s advance knowledge of the results allowed the hedge fund to reverse a billion dollar position and make a profit of over $180 million versus certain losses of hundreds of millions had they not gotten advance information on a disappointing field trial. In the long run, while Steve Cohen skated, the insider cases led to $1.8 billion in fines, the dissolution of SAC, and jail time for Martoma.

 

In retrospect, it was all so stupid. SAC could have come to the conclusion that Elan’s drug was not going to work without resorting to anything illegal.

 

Instead of deploying all this massive intellectual firepower on getting advance word on the results of the trials, the analysts might have started by asking how solid were the assumptions on which the therapy was based: namely, whether attacking the plaques would halt or reverse the progress of the disease.

 

Even in 2008 and 2009, there were a number of researchers at distinguished universities who questioned that basic assumption. The alternate theory was that the plaques were not the cause of the disease, but rather an analogue of scabbing, the result of the body’s attempt to protect the brain from infection.

 

 In subsequent years, this alternate view has gained some traction, with some now arguing that Alzheimer’s is akin to an autoimmune disease in the sense that as the environment in developed countries has become more antiseptic, protective devices in the brain have turned on the brain itself as the infections they evolved to fight have disappeared. In any events a drumbeat of failed trials with drugs attacking amyloids has discredited this approach. As Tara Spires-Jones, of Edinburgh University’s Centre for Cognitive and Neural Systems put it in an interview with Britain’s Independent, “Most of the trials have been based on the assumption that amyloid is important in causing Alzherimer’s diseas, as opposed to something that happens alongside it. That assumption, I think, is probably wrong…”

 

Even in 2007, SAC’s analysts should have known that many attempts to fight Alzheimer’s by fighting the formation of plaques had failed. Given all the time the fund spent analyzing the drug and trials it must occurred to someone to ask whether Elan was barking up the wrong tree. Maybe someone there did just that, but there’s no indication that the decision makers ever questioned the assumptions upon which the drug was built.

 

Maybe that wouldn’t have mattered. SAC wanted certainty. Clearly, detailed advance knowledge of the results of a field trial is more compelling than a dissenting theory on the nature of the disease. Had SAC questioned the assumptions of the study, they never would have amassed a position in Elan, and they probably wouldn’t have had sufficient certainty to short the stock prior to the results being announced.

 

What can be drawn from this? There are implications about the pressures of the markets – SAC employees felt that had to cheat to maintain performance – but there are also implications about the culture of world of investing.  Alzheimer’s is a horrifying disease, but the book makes a strong case that neither Cohen, nor anyone else at SAC, gave a rat’s ass whether the drug worked or not; they only cared about knowing the results before anyone else and about how other traders would view the data when it came out.  The same probably applied to every other fund playing Elan.

 

It isn’t news that the markets are amoral, but this amorality has real world consequences. The punishment the market meted out to Elan (and other companies with failed trials) makes all but the largest companies risk averse about investing in therapies for difficult diseases. There is a short-term logic to this from an investor’s point of view, but, increasingly, the market sets research priorities, and the market’s priorities – controlling costs and maximizing short-term profits – may not serve the needs of society. Researchers know that breakthroughs often come from learning from failed previous attempts.  So where will breakthroughs come from as fewer and fewer companies risk failure?

 

Part Two:

 

Further thoughts on Black Edge by Sheelah Kolhatkar

The insider trading scandal at SAC confirmed a widely held suspicion among ordinary investors that Wall Street is a rigged game where powerful players can cheat with impunity.  Regardless of the truth of that suspicion, the widely held perception that this is the case has had its own reverberations. In a delicious irony, one of the derivative effects of the market crash and subsequent insider trading scandals has been to make more likely a future in which black edge is less useful.

 

Bear with me.

 

What happened with Elan revealed a contradiction at the heart of the markets. SAC was driven to seeking black edge by the ruthless competition of the markets. In the minds of their analysts and portfolio managers, access to publicly available information wasn’t enough because competing funds had their own PhDs pouring over the same information. Moreover, competing funds also had access to the same expert networks (which might be viewed as “grey edge”) as did SAC.

 

In such a situation, we’d expect that different analysts would take different perspectives on the prospects of the drug and the trials. I would have expected that at least some analysts would question whether the assumptions behind the drug were correct. The market says that wasn’t the case. Rather the hedge fund world was massively longs before the release of the trial results, and Elan’s subsequent 66% price drop suggests that the herd mentality applied on the way down too.

 

So market efficiency drove SAC and some others to seek black edge, while the subsequent drop exposed a herd mentality and deep inefficiency that made the market anything but a black box that continuously adjusts prices for all information.

 

The result for the markets is analogous to the evolutionary theory of punctuated equilibrium: markets will proceed smoothly until some event produces rapid change. Because, as the crash of 2008 demonstrated, the big price-change inducing event can come from any number of directions inside or outside the economy, many investors are giving up on analysis of individual stocks and moving to passive investment funds and ETFs. The size of this shift is staggering. The amount of managed money in passive strategies has risen from an estimated 6% in 2006 to as much as 40% today (these figures vary depending on definitions of what a constitutes passive strategy).

 

That latter figure may be larger given the relationship between value investing and money moved by algorithms and quantitative strategies.

 

Quantitative types try to beat their peers by focusing on changes in pricing or volatility, and/or seeking an edge through speed and data crunching, rapidly identifying anomalies, and then trading at warp speed. Many hundreds of billions of dollars now take this route into the markets. And results have proven that this approach can work; some of these funds have done fabulously well.

 

So, stepping back, it becomes clear that the trillions of dollars invested through passive strategies and ETFs basically piggybacks on the decisions of active managers relying on traditional analysis of individual companies and sectors. Moreover, the hundreds of billions of dollars of money invested in quantitative, momentum, derivative, and volatility strategies, also piggybacks and even amplifies, the decisions made by traditional investors as those decisions become evident in price movements.

 

So the response to the pain inflicted by past booms and busts and insider trading scandals has created a situation today where the huge amounts of money moves in sync with an ever smaller base of active managers. Value investing based on analysis of individual companies has become an ever-smaller tail wagging an ever larger dog.

 

Perversely, this, in turn, has created a situation where in the next crash, Steve Cohen, the quant and momentum funds, and even the Warren Buffets will ultimately have no edge. All it will take to set the next crash in motion is for a fair number of investors to say, “gee I think I should shift more to cash.” Then the passive investment funds will be forced to sell, and they will sell regardless of the merits of any individual stock. This will cause volatility to rise and the billions of dollars of investments tied to volatility will also start selling, and as this is happening, the algorithmic traders, the momo guys and the others looking for direction to exploit will jump in juicing the sell off.  The trigger might be some external event, or something as banal as a simple change in mood, but no insider will have any better insight as to when this occurs than anyone with access to a newspaper.

 

As a coda, it’s worth noting that Steve Cohen has now been cleared to manage other people’s money. At the end of Black Edge the author quotes a savvy market player as saying that the day Cohen could do that, money would come pouring in. Well, according to the New York Times, that day is here and money is not pouring in. Maybe this is because his fees are too high, or because the insider trading scandal has made him tainted goods. Or maybe, it’s because investors doubt that he can achieve his former results without black edge.



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