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| The World Is Curved: Hidden Dangers to the Global Economy | 
 enlarge | Author: David M. Smick
Publisher: Portfolio Hardcover
Category: Book
List Price: $26.95
Buy New: $10.50
You Save: $16.45 (61%)
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Avg. Customer Rating:  22 reviews
Sales Rank: 697
Media: Hardcover
Number Of Items: 1
Pages: 272
Shipping Weight (lbs): 1.1
Dimensions (in): 8.7 x 6 x 1.3
ISBN: 1591842182
Dewey Decimal Number: 337
EAN: 9781591842187
ASIN: 1591842182
Publication Date: September 4, 2008
Availability: Usually ships in 1-2 business days
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Product Description
David Smick keeps a low profile, but experts consider him one of the most insightful financial market strategists in the world. For more than two decades, he has conferred with central bankers (such as Alan Greenspan and Ben Bernanke) and advised top Wall Street executives and investors, from George Soros to Michael Steinhardt to Stan Druckenmiller. Political leaders (from Bill Bradley to Jack Kemp) have regularly sought his policy advice.
The World Is Curved picks up where Thomas Friedmans The World Is Flat left off, taking readers on an insiders tour through the private offices of central bankers, finance ministers, even prime ministers. Smick reveals how todays risky environment came to beand why the mortgage mess is a symptom of potentially far more devastating trouble. He wrestles with the two questions on everyones mind: How bad could things really get in todays volatile economy? And what can we do about it?
Drawing on riveting anecdotes in language anyone can understand, Smick explains:
Why the churning cauldron we call China (the next great bubble to burst) represents a powerful threat to everyones pocketbook
How Japanese housewives have taken control of their nations savings, and why it matters to us
How greed-driven bankers and investment bankers have put everyones pensions and 401(k)s at risk
Why todays incredible shrinking central banks may not be able to save us when the next crisis hits
Why the big-money Russian, Chinese, Saudi, and Dubai sovereign wealth funds represent a tectonic shift in global financial power, away from the United States, Europe, and Japan
Why the world desperately needs a big think financial doctrine to guide todays dangerous ocean of money
The World Is Curved is the rare book that speaks simultaneously to the Wall Street, Washington, and London elite, yet its apt storytelling shows Main Street readers how to survive in these turbulent times.
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| Customer Reviews: Read 17 more reviews...
 In the land of blind, the one-eyed is king October 21, 2008
47 out of 55 found this review helpful
This book will delight anyone who enjoys reading Greenspan. The first 100 pages are simplistic banal ECO001 cliches disguised by the magic of the written word as "powerful deep thinking" and highly recommended as a much safer alternative to sleeping pills for the insomniac bibliophile.
Even better, the sleeping pill has been especially designed for disciples of Greenspan, Paulson or Bush: all the financial delusion/fantasm they share are present and this will comfort the typical Wall Street reader in these troubled time (the book was released sep 4, 2008) and lead them in an (at last) comforting sleep.
Especially, when the eminent author compares China, which banks
"do not understand credit risk management, not to mention even the rudimentary rules of financial transparency"
with ...
"large American and European financial institutions" that "look like paragons of financial purity". (p. 108)
No kidding!
You can hardly be more delusional than that!
The author is remarkably candid about his ability to evaluate the global economy. When he learned on aug 10, 2007, that inter-bank loan market had seized and the stock market had dropped 3%, the author, who "confers with central bankers (such as Alan Greenspan and Ben Bernanke) and advised top Wall Street executives and investors", reasoned:
"None of this makes sense, I though. The markets had become hysterical over losses in the so-called subprime market...why a near-global market meldown and a collapse of lending simply because of some mortgage foreclosures? After all, the problem loans amounted to, at worst, $200 billiom in exposure in a global market worth hundreds of trillions"
Sorry, but any reasonably alert investor who would have read Buffett 2002 letter to investors, or listened to Nouriel Roubini (IMF 2006) would have known exactly what was going on ... months in advance!
That smart investor only had to put his money in his mattress and he would have made more money during the ensuing 1.5 year than the sum of the 4 largest investement bank and 5 biggest bank in the world COMBINED, institutions, let us remind, repleted with "genius traders", managed by CEO worth $10 millions/yr, and last, but not least, enlightened by highly paid consultant such as Mr Smick.
The author was a consultant to Greespan and Bernanke and hadn't a clue on the importance of the bursting of the housing bubble and its amplification by the derivative structure even in the month leading to it. Unbelievably frightening reality.
Before completing the book, I had read enough. It was clear that this book's return on investment (time and money wise) was already too negative to continue.
I will retun it for a full refund. I feel it would be immoral and unconscionable to financially support such writing.
ADDENDUM
One could wonder why such as book got such lavish endorsement by Greenspan, Trichet, Summers, etc.
Very simple.
The author by initiating international banking conferences acted as a middle man between a significant number of high-level financial personalities. True to form, the book contains a few sycophantic pages on each of them to the point that one could be easily led to believe that the true purpose of the book is a public relation exercice to rescue the reputation of the financial actors involved. Highly grateful, they, not surprisinly, are enthusiastically "endorsing" the book.
And surely, those people are indeed in desperate need of hagiographers:
Remember Greenspan's deep insight of the financial market? :
"The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions" (Greenspan, May 2005)
Remember Trichet management at Credit Lyonnais?:
Trichet was prosecuted because as "directeur du tresor" with the complicity of others he had knowingly signed on a falsifed 1992 annual report of the nationalised Credit Lyonais which dramatically reduce its loss and therefore adroitely prevent it from becoming insolvent. He was later rewarded for his brilliant service by being named head of the French Central Bank and the entire world was waiting for him to take the helm of the European Central Bank when, very inconveniently, a stubborn prosecutor continued to press the case forward which threatened to prevent France from having its man at the helm of the ECB. In the end some others were given slap-on-the-wrist sentences and he was himself completely absolved (in 2003) by the judge (the defense being more or less that he had notified/warned the board of director), conveniently just in time to take on his new job.
 Continues where "Flat" left off (and rebuts it) September 11, 2008
38 out of 42 found this review helpful
Smick uses a fascinating series of facts and stories to paint a picture of the world-to-be that is frightening, enlightening, awe-inspiring and hopeful (for the person that knows how to exploit the opporunities). I haven't read a book that changed my world view this much since How to Measure Anything: Finding the Value of "Intangibles" in Business by Doug Hubbard (which Smick could probably have used on a couple of points in his book).
Smick takes, I think, a more realistic view of the world than Friedman's The World Is Flat 3.0: A Brief History of the Twenty-first Century. Where Friedman optimistically sees a move toward an equalibrium of an "even playing field" between all of the world's economic participants, Smick sees something less even - and not entirely in the favor of the developed West. Smick sees market uncertainties, the mortgage crisis, and consumer debt as evidence of a trend toward increasing uncertainties. China is the new economic giant, but lends itself to much less predictability than the relatively solid advances of the western world in the last quarter century.
I have to wonder if Smick makes the "narrative fallacy" as explained in Taleb's The Black Swan: The Impact of the Highly Improbable or his earlier Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. Still, Smick seems to make a convincing case, even if at times anecdotal.
Smick discusses the possibility of a Chinese financial bubble alongside the details of US monetary policy. Utterly unnerving and engaging, it will should eclipse "Flat" as the "must read" for long-term thinkers.
A Blockbuster of a book that everyone should read September 24, 2008
32 out of 35 found this review helpful
This extremely well-written book describes the current financial problems of globalization. It is easy to follow, easy to understand, and eliminates jargon. It's a great example of communication out of the Frank Lutz 'words that work' school.
The problems of globalization, as the book described' are critical as a major period of entrepreneurial prosperity may be coming to an end. The availability of `oceans of money' started with a liberalized program in the USA during the early 1980's and later elsewhere with the rejuvenation of pension funds and other financial instruments. Capitalization/reserve requirements of banks were reduced, capital gains taxes were cut and a variety of new investment vehicles freed up large sources of capital. Smaller businesses were funded as the need to invest capital continued to grow and consequently, new wealth, new jobs and prosperity resulted. Moreover, many countries established sovereign funds that needed to be invested too. Rapid machine computation facilitated an explosion of capital transfer and global investment. Because the USA was perceived as the safest haven with the highest level of global transparency, it benefited from these changes. Moreover, the USA with labor market flexibility, higher education, a benign political environment, innovative strategies and quality of corporate management is considered the prime country in which global funds invest. However, the USA is not an island, but is interconnected and therefore subject to global economic events. But is it fading?
The downside was securitization, a process of spreading out investment into multiple income streams to reduce risks. Securitization also involves arcane practices that are difficult for most policy makers, bankers and financial institutions to fully understand. In the process are no longer tied to the risk of the borrower, making capital easier to lend. Even riskier is the overlay of lack of transparency in many countries, including China. Eventually, underpriced and hidden risk will lead to major market corrections, as we have seen recently. Moreover, global forces and lower international trade barriers have diminished the role of government to influence their own economies.
We now see increasing political risk in the USA that may kill the goose that laid the golden egg. The rising tendency of anti-global trade pacts, envy, class warfare, and populism, are placing the US at economic risk. American politicians, according to Smick, have only one option and that is to make the American economy the most attractive destination for global investment on a LONG-TERM basis.
The wild card in all of this is China and I cannot detail the intricacies in Smick's chapter. China's approach includes widespread investment for strategic advantage, and a lack of transparency. Also it is involved in widespread commodity stockpiling. There, foreign investment is controlled. Chinese banking does not understand credit risks and are viewed instead as social and political instruments. In short, their economic system is extremely unstable and a bursting of its bubble will have worldwide cascading consequences
The chapter on Japan's economic activities is well worth reading, as is the chapter on the sterling crisis of 1992.
But perhaps the biggest change during the past 25 years is the diminishing role of central banks. As private entrepreneurs and government sovereign funds accumulate large amounts of cash, the role of central banks has diminished. With diminished governmental roles, people's vulnerabilities are increasing and one of the consequences is political pandering in the form of abetting class warfare,. We see it today. That is the underlying cause of the current backing-off by congressional democrats from free trade. It is a disaster in the making
The closing chapter on "Surviving and prospering in this age of volatility" would require a long review in itself. It is not only worth reading, but needs to be reread to fully comprehend the economic mess we are in today and possible solutions out of that mess.
Other reviewers have suggested both major presidential candidates should read this book. I can only concur. In fact, everyone needs to read this book to navigate the choppy waters ahead.
A Must-Read For All U.S. Voters and Candidates September 14, 2008
24 out of 28 found this review helpful
The impact of so-called free trade agreements has been a Pandora's Box for many in the United States who have had to suffer through off-shoring and trade imbalance. Smick argues persuasively that the influx of capital from globalization has fueled a level of growth and innovation that is unprecidented and that tampering with that with protectionism or poorly conceived legislation to control complex financial instruments, such as Mortgage Backed Securities, will result in a contraction in the global economy that could be catastrophic. Americans need to understand what has been created. Given that the Chinese are consciously accumulating vast reserves that they can use as an ocean-sized war-chest to exert vast global influence, we must find a way to safely level the playing field. I did not appreciate how difficult that might be until I read this book. It is very well written and terrifying!
 Globalization and why it should be saved September 30, 2008
11 out of 12 found this review helpful
Excellent overview of the current (29 Sept 2008) macroevents and the how we got here. Fascinating for me as I remember the 70's gas lines and lived in DC in the 80's -- Mr. Smick, clearly walked the halls of power and understand how we got into this mess. Note - he seems to be quite balanced in that both Dem's and Republicans are at fault. He gives Bill Clinton a lot of credit for pushing thru NAFTA, Welfare reform and cutting Capital Gains by 30% thus allowing all of us to benefit from globalization.
He also suggests that China is in a large bubble and what the impact is to us. I was there a few years ago and they and Dubai are clearly over the top (dot commish even) so it will likely get ugly for all of us when China blows.
The only disappointment I have is the last chapter "Surviving and Prospering in This Age of Volatility". This is about how to govern better not what you can do in your personal investments. Interesting but not something I can act on, except perhaps voting.
Best quote was from Marc Leland, former US Treasury official... "Globalization is like the two institutions we know as democracy and marriage. Both institutions at times can be problematic, but the alternatives are highly unattractive" Reminds me of Churchill's famous quote "Democracy is the worst form of government, except for all those other forms that have been tried from time to time."
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