The massive growth of hedge funds has sparked warnings of instability and demands that the industry be regulated. But the fear of hedge funds is overblown, based on a misunderstanding of their role in the international financial system. In reality, hedge funds do not increase risk; they manage it -- and policymakers, rather than clamping down, should make sure hedge funds have the tools to perform this function well.

Accurately assessing the rise of China is a critical task. Yet U.S. policymakers often overestimate China's military might. And if they continue to view China's power in substantially coercive terms when it is actually growing most rapidly in the economic and intellectual domains, they will be playing the wrong game, on the wrong Þeld, with the wrong team.

Rumsfeld's mishandling of the Iraqi occupation has given the "revolution in military affairs" a bad name. But as Max Boot and Frederick Kagan point out in two new books, transformation is vital to any military's success -- and more important now than ever.