The World Is Curved: Hidden Dangers to the Global Economy

 
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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 Friedman¡¯s The World Is Flat left off, taking readers on an insider¡¯s tour through the private offices of central bankers, finance ministers, even prime ministers. Smick reveals how today¡¯s risky environment came to be¡ªand why the mortgage mess is a symptom of potentially far more devastating trouble. He wrestles with the two questions on everyone¡¯s mind: How bad could things really get in today¡¯s 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 everyone¡¯s pocketbook
? How Japanese housewives have taken control of their nation¡¯s savings, and why it matters to us
? How greed-driven bankers and investment bankers have put everyone¡¯s pensions and 401(k)s at risk
? Why today¡¯s ¡°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 today¡¯s 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.

Customer Reviews:

  • I agree, an "Economic Elitist Perspective"
    A good read, a good yarn (exception: the sychophantic fawnings and name-dropping.) The most bothersome point is Smick's insistence that hedge funds etc. be allowed to do their magic unimpeded because the system promotes entraprenurial innovation. So what innovations have we seen in the past few years, other than fancy cell phones? How about innovations in affordable health-care? Low-cost housing? So the sop to the middle class for being terrorized by financial instability is to promote ownship. Presumably, owning shares will make them feel better when they lose their jobs. ...more info
  • A Must-Read For All U.S. Voters and Candidates
    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!...more info
  • Globalization and why it should be saved
    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."

    ...more info
  • Continues where "Flat" left off (and rebuts it)
    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....more info
  • Fast shipper
    I recieved my book a week before it was estimated to arive. This seller does not sit around and waste your time....more info
  • great book
    If you wish to understand globalization and the global economy,
    this book is for you. Well written, wordy in parts, but a good
    reference as well....more info
  • World Class
    This is an excellent book. The author keeps you focused and moving from chapter to chapter without much repetition or minutia. The topic is covered with exceptional detail and in the end leaves the reader with invaluable insight.

    Simply put, it's an essential topic and a good read.

    - Unfortunately, it seems that some of the amazon reviews are motivated by something other than the topic at hand. The author has loaded this book with data points, many of which I have not seen elsewhere, and I'm in the business. To criticize the book for not adding anything to the topic is nonesense. Yes, the man worked with Republicans, but he also worked with and praises the Clinton Administration. This is not a book on politics, and when reviewers attack based on references to "delusional" right wingers such as: .... Alan Greenspan??? Wow... ...more info
  • world is curved
    excellent book about the current economic and credit crisis- what to do and what not to do in solving it. the future dangers (and possible opportunities ?) are discussed as is the dangerous disconnect between the political system and economics, somewhat mirroring Friedman's ideas in "The Earth is Flat." The dangerous delusion that impotent governments and central banks can control economies and credit with oceans of money that can move anywhere virtually instantly with a mouse click is disculssed....more info
  • Can be a bit self indulgent
    The author provides some very scary predictions about the current and future global economy, but he does not really provide any direction of how we can navigate through the economic minefield.

    This book feels more like your taking a road trip while looking through the rear view mirror. Not sure of exactly where we are going, but its interesting seeing where we have been.
    ...more info
  • Well written
    Easy and interesting read on the present financial crisis.
    Only drawback for me is that it contains much on China which is not very well researched....more info
  • The World is Curved
    An outstanding book regarding the global financial system that has created great prosperity around the world, but could be in danger of collapsing....more info
  • The World is Curved: Hidden Dangers to the Global Economy
    This is bar none the finest financial book I've read! It's an outstanding well written education on today's (global) financial condition. It's rare you find a book of this calibar from a person who walks the talk. Although it's not a pretty picture, Mr. Smick has a gifted way to bring well documented facts,truth, and a sense of power to the reader without invoking fear and hopelessness. One outstanding work that can be understood by the college student to the Chairman of the Board! ...more info
  • The problem speaks
    The World Is Curved is a self-aggrandizing story about the world of international finance and economic globalization, told in mostly the first person, by David Smick--one of that arenas major players and beneficiaries. It reflects what is the essential problem of the world economic situation but, not unsurprisingly, Smick fails to see that it is HIM and his kind--i.e. self-absorbed and unaware personalities globe trotting and using the latest technology, to pursue the accumulation of wealth for personal status--that has brought the world to the brink of serious depression, both economic and psychically. Oh, he does point the finger at "greedy" bankers and financial "wizards," but doesn't see his connection and complicity. He is a "consultant" and advises "some of the world's most successful money managers." I'll be clear, the author depends on making his living and enjoying a royal jet-setting lifestyle on the super rich maintaining their status and well-being. He trots out the tired old line about the creative class needing the money of the super rich to do what they do; but admits that creative people aren't motivated by money or wealth--just the doing of the thing. But, let me be real, the "investors" are merely interested in getting in on a potential money-maker. They buy low, create a buying frenzy via the oldest trick (thus the wizard label) of the confidence game--fear of losing out-- then sell high and move on. He advises them. He says they must enjoy a high level of confidence (ebullience) that this "system" continues as is, to keep funding innovation. This, of course, creates the bubbles that have dominated the world economy for the last dozen years and created the problem--money out of thin air. I list here some of the bubbles: Dot Com; Telecommunications; Housing; the Stock Market itself. To be clear, again, many people have gotten very rich, but most have been fleeced and NOW ... one of Smick's remedies is to have the government (the people) tax themselves and then give themselves a "gift" upon birth to be invested in the markets. I can't believe this! That money most likely will wind up in the pockets of the already rich and their wizards and bankers. AMAZING! (Does that declaration mean five stars?) What a crock, what a confidence game! One of the tricks these "wizards" use is specialized jargon. For instance, who knows what these words mean in the language of finance: Equity; Capital; Liquidity; Investment; Trust; Leverage; Human Capital; Inflation; Economy; Entrepreneurial; Securities; Sovereign Wealth Funds; Risk; Securitization; Free Trade; Bond Markets; Hedge Funds? Smick even admits the people in charge often don't even know what they are talking about when they use the words!!!!

    This book is a classic. It is about the liars and thieves who have fleeced the people of the world, albeit as Smick contends again and again, without knowledge or intention. So are they innocent? Just jerks doing what jerks do? I would like all these bankers and wizards and their beneficiaries, stripped of their wealth and given shovels to manage manure, dig ditches to move water, and build roads and foundations. Let them earn a living. That would boost my confidence. DON'T BUY THIS BOOK....more info
  • Hard Look
    A great and hard look at what got us into this mess and a scary look at what is ahead. ...more info
  • A Blockbuster of a book that everyone should read
    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.
    ...more info
  • Very readable introduction to modern international finance
    First, the con: Smick is totally full of himself.

    Pro: Very readable introduction to modern (up through Bear Stearns) international finance. To borrow the author's favorite metaphor, he channels a wide and deep river of facts, theories, opinions to describe the impact of the global ocean of money that surges through the financial world and influences everything.

    My financial background: None. I can't speak to it's suitability for experts, but it's accessible to the motivated lay person....more info
  • Some Good Insights; Not Totally Satisfying
    I began reading The World is Curved with great hope and anticipation. The book has some good insights, but in the end I felt disappointed. Smick's basic points include:

    - Global capital today flows from one investment to another in the blink of an eye, regardless of borders or culture. As a result, central banks have less control over their economies.

    - Global capital exceeds the number of good investment opportunities, creating the potential for bubbles (i.e. too much debt has expanded the worlds money supply beyond what's financially healthy).

    - The securitization of debt is a primary villain, because the bank that originates the mortgage suffers no consequence if the loan goes bad. (But I worked at Countrywide in the mid-1990s - they were securitizing mortgages back then and there were no problems at that time).

    Smick says that the bond rating agencies and the government regulators were simply not up to the task of anticipating the problems. In reality, some Republicans belatedly questioned the lending practices that were occurring pre-meltdown, but the Democrats in power at the time denied there were problems! These same Democrats are still in power today.

    Smick expresses concern that the current political trend is toward over-regulation, protectionism and class warfare, all of which will cause the global pie to shrink. And we don't want "financial executives working desperately to avoid civil suits and criminal prosecution."

    In my opinion, a good share of the blame must go to Alan Greenspan who kept interest rates too low for too long. Smick does a good job of trying to protect Greenspan from criticism. I agree that Greenspan did a good job for most of his career, and multiple factors contributed to the today's meltdown, but I can't ignore his obvious role in creating this fiasco. But then again, I don't have a book with Alan Greenspan's glowing endorsement on the cover either!

    Smick says the solution is to have smarter politicians, like Democrat Charles Schumer. Smick's opinion is based, in part, on Schumer inadvertently insulting a Japanese audience. If this is brilliance, then no wonder the world is in trouble.

    Unlike Smick, I WANT the upcoming crop of financial execs to fear "civil suits and criminal prosecution." If the system is too complex for regulators and politicians, then the only thing that will bring prudence to the financial elite is the threat of punishment for screwing up.

    Sadly, the financial policies of Bush and Obama are geared toward maintaining the status quo by further borrowing, and by giving money to the very people who got us into this mess. In the end, we'll have more bubbles and greater financial problems. I agree with Smick that too much regulation will kill the golden goose and we need to encourage entrepreneurs, but I walked away feeling that Smick, who is well connected to the world of high finance and politics, is part of the problem, rather than part of the solution....more info
  • Can be a bit self indulgent
    The author provides some very scary predictions about the current and future global economy, but he does not really provide any direction of how we can navigate through the economic minefield.

    This book feels more like your taking a road trip while looking through the rear view mirror. Not sure of exactly where we are going, but its interesting seeing where we have been.
    ...more info
  • Lacks Depth.
    Not much to be learned from reading the book. Save your money. You could select any other book on economics or risk management on Amazon.com for more information than was provided in this book....more info
  • Stick to an Executive Summary
    I picked up this book based on David Brook's gushing recommendation four months back. The majority of the book is mildly informative with a constant undertone (as has been mentioned in earlier reviews) of self-promotion. A similar feeling I got when I read Robert Rubin's "In Uncertain Times" a few years back.

    If you're not just looking to kill time, or don't need a lot of historical background to be laid out for you; get to the meat of the issues by reading Michael Lewis' December 2008 Article "The End" and his January 4, 2009 NY Times Op-Ed "The End of the Financial World as We Know It", then go to the library and read the last chapter (9) of this book.

    You'll be the wiser and have saved some money too!
    ...more info
  • A solid educated looks at reality
    Reading "Curved" helped refine my thoughts on a process that I was increasingly becoming aware of in a less defined way.

    Smick makes a compelling and easy to read case, often with personal stories as antecdotes, about the effects of the intersection of global markets, global liquidity and technology at just this point in history.

    After reading this book and evolving my own personal thought processes I was able to execute a number of trading strategies that ended up being quite profitable at a time when profits are pretty tough to find.

    Smick can be a little pompous, but that's OK, he's legite and so is this book.

    So for anyone interested in "popular economics" this is a worthy way to spend your time and money....more info

 

 
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