In terms everyone can easily understand, Whitney Tilson and Glenn Tongue dissect the greed and folly that spread from Wall Street to Main Street and caused the mortgage mess. More Mortgage Meltdown serves as an excellent reminder that the ugly side to human nature has far reaching and lasting consequences.

In explaining what happened and why, Tilson and Tongue bring a working knowledge of psychology, a firm understanding of investing, and research that leaves few stones unturned. They were not the first people to determine what a crisis we were in but, to their credit, they were smart enough to listen to others and take appropriate action.

Economists, in pursuit of mathematical precision, seem to have forgotten that not everything can be easily counted. Traditional economic theory centers on the premise that people make perfectly rational decisions. People, however, are not so rational. Despite many attempts, not every variable that goes into our decision-making process can be easily quantified, weighted, and stuffed into a formula. As any non-economist knows psychology -- and its hard to measure variables -- plays a large role in how people make decisions.

George Akerlof and Robert Shiller’s book, Animal Spirits, offers an accessible look at how traditional economics can be expanded by incorporating some basic concepts from psychology. The term “animal spirits,” originally coined John Maynard Keynes in the 1930’s, describes how impulses and emotions naturally lead to economic boom and bust cycles. Traditional economists seem to have ignored even the most primitive of these spirits.

I eagerly tore into The Fall of Northern Rock: An Insider's Story of Britain's Biggest Banking Disaster, by Brian Walters, being excited to read a book from a British bank insider. However, this book disappointed my expectations at every turn.

Far from an executive with access to insider information, it turns out that Brian Walters is nothing more than an uninteresting middle manager in a Leeds branch. Walters, a 36 year banking vet, writes in an somewhat awkward style that fails to assemble a series of talking points into a readable story.

It’s no longer a secret that Warren Buffett has been buying Burlington Northern Santa Fe (BNI) with some degree of enthusiasm. In total, Berkshire Hathaway (BRK.A) owns about 22% of the entire company.

A few years ago, in the Wesco letter to shareholders, Charlie Munger gave us some clarity on how the company thinks about entering common stock positions after they ‘lowered the bar’.

It is hard to imagine something more difficult than trying to determine the intrinsic value of a bank right now.  The combination of complexity and a tendency towards subterfuge make understanding the risks involved near impossible.

Morningstar, a company that provides independent advice to the average Joe on equities and mutual funds, appears to have taken a liking to JPMorgan (JPM). Warren Buffett clearly thinks highly of their CEO.

Ok, I have to chime in on this topic.

Starbucks (SBUX) has lost its mojo. Customers are not coming back with the same frequency and new customers are proving harder to find. The world’s leading drug company unintentionally brought this on themselves when they forgot who they were.

“Sometimes, what matters is not so much how low the odds are that circumstances would turn quite negative, what matters more is what the consequences would be if that happens”  Jean Marie Eveillard

The following letter was sent to the Board of Directors of the Steak n Shake company.

*********************************************************************************