Saturday, 24 October 2009

“Riches Among The Ruins”, by Robert P. Smith (Amacom)


One man’s adventures in the Dark Corners of the Global Economy

Riches Among the Ruins has quite an opening line: “On a single day in 1998, I lost $15 million in the ruins of the Russian economy.”

Described by Forbes magazine as the Indiana Jones of international finance, Robert Smith has lived an incredibly exciting life for a bond trader. In Riches Among the Ruins, he offers his memoir of his international travels and adventures (sometimes, there’s really no other word that can be used for his experiences) in Vietnam, Guatemala, El Salvador, Nigeria, Iraq, and Russia (not approached chronologically in the book). He finishes the book with an objective appraisal of the state of the US economy and also its future promise (which he thinks it has).

He favours Forbes’s nickname as apt because, “Indiana Jones searched for riches among ancient ruins. I search for riches among modern-day economic ruins.” (Rather than this statement coming across like some deluded sense of cool and grandeur, the author makes no attempts to convey this as anything other than someone delighted to be given a cool nickname.)

“For more than thirty years, I have made my living by creating a market for sovereign debts of governments in what are often called, sometimes euphemistically, emerging markets or, sometimes third-world countries.”

Smith has a great, self-deprecating sense of humour, frequently painting his earlier forays into the new and frequently dodgy developing nation sovereign bond market as the actions and posturing of someone clearly in over his head. From his attempts to be threatening and menacing in his first meeting with his money-contact in El Salvador (when, really, the other guy could just have easily had him killed, quietly and efficiently, rather than go into business with Smith). Considering he spends two pages outlining the long history of violence in the small country, his posturing could be seen as suicidal. But, he adds:

“The murder and mayhem went on and on, which is why El Salvador in the mid-1980s was such a perfect place to do business.”

His approach to the business was pretty basic: he went where the big players wouldn’t dream of going. “Your typical banker isn’t keen on to stay in hotels where foreigners are shot, or to work in office buildings that are blown up”, all of which make the risks far too high for larger corporations. But for Smith, “a solo practitioner in a $99 seersucker suit from Filene’s Basement and a bad toupee, the risk of life and limb was lower and the returns, which looked like the five-cent deposits on soda cans to Citibank, looked pretty good.”

“I’ve made and lost tens of millions of dollars by investing in the world’s most derelict and downtrodden economies”, competing with and confronted by war, revolution, rampant inflation, corruption and graft, in “economies battered by bullets and bandits”.

Sometimes the language use can be a bit over-done, or stretched, particularly when it comes to metaphors: Smith says he “surf[s] the perilous tsunamis” of global capitalism,

“and the view of this books is sometimes from the crest of a tsunami. But because I… am human and prone to irrational exuberance from time to time…, sometimes my perspective is from the beach, after the wave has crashed ashore, leaving me bedraggled, alone, and a good deal poorer.”

Smith’s adventures and stories give us a glimpse of a man at the forefront of globalization, chasing money and his dreams of travel (you really get a sense of his wanderlust throughout the book) into regions the big banks would ignore as too risky or worthless. From his experiences (and not a little hindsight), Smith can see how globalization was on the rise in these regions, and he saw first-hand the ways in which people can affect the global economy even without the input or interference from governments.

As for the future, Smith’s prognosis is positive: “the United States, for all its economic problems, is and will remain a stable and relatively predictable place to invest, create a business, and thrive,” cautioning also that the US government must start paying more attention to, and expend more energy addressing, the growing gap between the rich and poor.

“My trading days are over. The globalization of the market and the availability of information rapidly transmitted electronically has made the business much less lucrative than it used to be… But it was a hell of a run, filled with vibrant characters and cochamamy schemes that, even today, seem incredible, even though I thought up some of them myself.”

It does indeed seem to have been quite a ride, and Riches Among the Ruins is a brilliant account of Smith’s travels, with his experiences vividly and engagingly realised on every page, and filled with the knowledge and wisdom he has accumulated over his career. His affection and fascination with different people and civilisations is clear, and you can’t help but be swept up (even a little) by his enthusiasm for his work.

Books about economics are very rarely engaging, entertaining and informative. This manages to be all three and more. It seems bizarre to have got so much enjoyment out of reading it.

Very highly recommended indeed.

1 comment:

  1. Stefan,

    Thanks for your kind words on the book. It's always great to hear that people enjoy reading it.

    I will follow your blog with interest.