Riches Among the Ruins: Adventures in the Dark Corners of the Global Economy [NOOK Book]

Overview

Selected by Strategy+Business magazine as one of the best business books for 2009 in the Globalization category

  • Selected by The 800-CEO-Read Business Book Awards of 2009 in the Biographies & Narratives category – short list

Today, Robert P. Smith is a legend in the world of finance. Part adventurer and part economic warrior, this Indiana Jones of the financial world was an advance man for the forces of globalization, having spent more ...

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Riches Among the Ruins: Adventures in the Dark Corners of the Global Economy

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Overview

Selected by Strategy+Business magazine as one of the best business books for 2009 in the Globalization category

  • Selected by The 800-CEO-Read Business Book Awards of 2009 in the Biographies & Narratives category – short list

Today, Robert P. Smith is a legend in the world of finance. Part adventurer and part economic warrior, this Indiana Jones of the financial world was an advance man for the forces of globalization, having spent more than thirty years traveling through five continents, buying and selling high-risk securities in the world’s most downtrodden economies. So tenuous was his operation and so covert the transactions, that an overnight fluctuation in a country’s currency rate could mean the difference between a spectacular profit or a devastating loss. Today, the trade in emerging market debt is worth more than five billion dollars a day, but it was virtually nonexistent when Smith, a one-time collections lawyer, pioneered the business in the late 1970s.

Riches Among the Ruins is the extraordinary story of Robert Smith’s search to make money doing the riskiest kind of business. We are at his side as he travels through the treacherous and exhilarating world of the debt trader, dodging bullets and roadside bombs in post-Saddam Iraq, and risking his life on the chaotic streets of Nigeria. As he engages in a battle of wills with businessmen in Istanbul, and loses millions overnight in the ruins of the post-Soviet Russian economy, we experience all of the thrill and terror that accompanies making big money in emerging markets. At once adrenaline-fueled and utterly compelling, this is the gripping story of one man’s quest for fortune where others fear to tread.

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Editorial Reviews

Publishers Weekly

Smith's memoir of a career spent brokering sales of sovereign debts (also known as government debts) makes for a gripping read. With a raconteur's gusto, the author describes his flight from a solidly conservative New England Jewish upbringing into a world of high-stakes wheeling and dealing. He plied his trade in developing markets, where shortages of hard currency force governments to offer promises of payment for imported goods or services. The author bought and sold these debts, thriving on the risk (he lost $15 million in one day in "the ruins of the Russian economy" in 1988) and the rewards (in three years he had more than made up his losses). He details his travels to five continents seeking creditors looking to cut their losses and investors willing to take on the tremendous risk, hoping for a windfall should an ailing government ever fulfill its obligation. Smith clearly explains the mechanics of international debt trading-now a $1.7 trillion industry-and his yarns of successes, failures and dangerous near-misses are thrilling. (Mar.)

Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Bookviews.com
Usually, the world of finance doesn't yield memoirs that keep you turning the pages unless it involves criminality as in the case of Bernard Madoff or a lifestyle of obscene wealth. It's so rare I get a really interesting memoir by someone from that world that, Riches Among the Ruins . . . is the true exception to the rule . . . This is great reading and an insight to the way the real world operates.
Conference Board Review magazine
. . . the book is a rambunctious rollercoaster that dodges bullets and missiles, maneuvers around shady characters, and speeds through all sorts of danger . . . At the same time, Smith's portrayal of emerging markets shines an unnerving light on the state of today's economy.
Foreword Magazine
a crackling good yarn about a high roller in the age of globalism will appeal to financial specialists and to general readers.
Providence Journal
One of the best books I have read about what it has been like to do business in the crazy and ever more linked international debt markets of the past 30 years. It's an immensely engaging and often exciting memoir by a remarkably unassuming but big-risk-taking individual who somehow made his way through the likes of El Salvador, Iraq, Nigeria and Russia (and the Boston area as a collections lawyer!) without having his head blown off . . . it reads like a novel, with enough adventures in Third World places (especially near war zones) to provide material for about 10 movies. And the lessons drawn by the adventurous Mr. Smith, who is based in Boston and New York and runs Turan Corp., are particularly germane to today's financial crisis, here and abroad.
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Product Details

  • ISBN-13: 9780814410615
  • Publisher: AMACOM
  • Publication date: 3/18/2009
  • Sold by: Barnes & Noble
  • Format: eBook
  • Sales rank: 1,268,210
  • File size: 460 KB

Read an Excerpt

I N T R O D U C T I O N

ON A SINGLE DAY in 1998, I lost $15 million in the ruins of the

Russian economy. A short time before I had been a guest on a tour of Russia sponsored by MFK Renaissance, a Russian investment empire headed by Boris Jordan. He is an American-born investment banker of Russian descent. Among the country’s new class of power brokers—

known as the oligarchs—he is the only one born outside of Russia. The tour was by invitation only, organized for movers and shakers in the international investment community who had been invited to come see the vast potential of the new Russia and, not incidentally, it was hoped, to invest there.

I was deeply impressed, and when I returned home I added to my

Russia holdings, which were already quite significant. Russia has vast natural resources and a large, well-educated population. With its powerful nuclear arsenal, a landmass that stretches across ten time zones a and its geopolitical importance, Russia was too big to fail, I thought.

The international community and its financial institutions, the International

Monetary Fund (IMF) and the World Bank among them a would never let the Russian economy collapse. The stakes were simply too high. Global stability and security would demand that the financial cavalry ride to the rescue on white stallions if worse ever came to worse.

The IMF and theWorld Bank did try to ride to Russia’s rescue, but a was mistaken about the possibility of the Russian economy failing.

For more than thirty years, I have made my living by creating a market for the sovereign debts of governments in what are often called, sometimes euphemistically, emerging markets or, sometimes a third-world countries. I’ve made and lost tens of millions of dollars by investing in the world’s most derelict and downtrodden economies:

economies racked by war or revolution, where inflation has run amok or corruption and greed sap the economic lifeblood out of an entire nation; economies battered by bullets and bandits. I like to think a know what I am doing.

I certainly thought so when, giddy with the potential I saw in

Russia, I bought $9 million in Russian government bonds for Turan

Corporation, the company I founded in the 1970s to trade in emerging market debt. I was so swept away by Russia’s promise that I invested several million of my own money in Russian bonds and other debt instruments as well. But when the Russian government defaulted on its foreign debt obligations on August 17, 1998, the value of Russian paper in my accounts plummeted instantaneously by nearly 80

percent. Never has money disappeared so fast.

In retrospect, it was all foreseeable. Throughout my career I have thrived on making instinctive decisions, but in this case my instincts were wrong—temporarily, at least. I didn’t panic. I held on and even bought more Russian paper, which was now selling for next to nothing.

By 2001, I had not only recouped my losses, but made a nice sum, though not before losing a lot of sleep.

A headline in Forbes magazine once declared, ‘‘Indiana Jones,

Meet Bob Smith.’’ Some called me the King of Jungle Bonds, and others credited me with contributing significantly to the birth of the debt market and ‘‘possibly even to the entire emerging market investment community, well ahead of Wall Street’s more prominent houses.’’* I rather like the Indiana Jones image, though I am not as prepossessing a presence as Harrison Ford in his fedora and Territory

Ahead wardrobe. Indeed, if you passed me on the street, you might mistake me for the small-time collections lawyer I was in my youth.

Indiana Jones searched for riches among ancient ruins. I search for riches among modern-day economic ruins. Along the way, the adventures have been many and Hollywood couldn’t begin to invent some of the characters I have thrown my lot in with. It’s been a unique education in human nature and the nature of the global economy we live in today.

***

In the opening of his insightful book The Lexus and the Olive

Tree, New York Times columnist Thomas L. Friedman describes how the sudden devaluation of the baht, Thailand’s currency, in December

1997, set off a global economic panic sometimes referred to as the

Asian flu. Russia’s default was indirectly related to the Asian flu a which triggered a dramatic loss of confidence in emerging markets.

Friedman’s point was that today’s highly integrated global economy is like a single ecosystem in which a small change in one seemingly remote place can trigger a series of unexpected changes in all parts of the global economic ecosystem. Or, as some described it, Thailand sneezed and the world caught a cold. The devaluation of the baht was akin to the proverbial butterfly that flaps its wings somewhere in western Africa, triggering a tiny perturbation in the environment that eventually leads to a massive hurricane that strikes the United

States.

Yet, what happened to the global economy following the devaluation of the Thai baht was more of a psychological phenomenon than an economic one. Markets are supposed to be extremely efficient processors of vast amounts of information that result, ultimately a in rational economic outcomes. But people, the millions of us who every day make large and small financial decisions, are not rational. We are creatures prone to excesses of both pessimism and optimism. We are emotional. And emotions, especially contagious emotions like excessive pessimism and excessive optimism (‘‘irrational exuberance,’’ as Alan Greenspan once famously called it), move markets all the time.

In The Lexus and the Olive Tree, Friedman, while often explaining the global economy at street level, also takes a bird’s-eye view, especially as he describes the huge amounts of capital that rush across international boundaries daily like huge tsunamis. I surf those perilous tsunamis, and the view in this book is sometimes from the crest of a tsunami. But because I, too, am human and prone to irrational exuberance from time to time (as happened with my investments in

Russia), sometimes my perspective is from the beach, after the wave has crashed ashore, leaving me bedraggled, alone, and a good deal poorer.

Economic bottom feeder? I’ve been called that and worse. I call it opportunism, and while my motives were and are financial, what

I’ve done has sometimes provided bankrupt governments with a light at the end of the tunnel. As for me personally, I have used the riches a have found among the ruins to build a theater and arts center at my high school alma mater, the Roxbury Latin School in West Roxbury,

Massachusetts; to build a new student center at my college alma mater, Bowdoin College in Maine; to renovate a synagogue in Bath,

Maine, my mother’s hometown; and to set up a foundation to support research in mental illness, specifically schizophrenia. This isn’t an excuse or a rationalization for wealth. At the end of the day, it’s about doing well and doing good, and in my view everyone who has done well has an obligation to do good.

In this book, I will take you to some of the most dangerous countries on earth: dangerous economically and, quite often, dangerous physically. In my search for riches among the ruins I often have taken great personal risks, traveling to places where violence is always at your elbow and Americans are not always welcome. Debt traders like me do business where you have to hold on to your wallet and your life. It’s not for the faint of heart.

What is a debt trader? The young Turks, the ‘‘Masters of the

Universe’’ as Tom Wolfe called them in The Bonfire of the Vanities a the ‘‘Big Swinging Dicks’’ as Michael Lewis called them in Liar’s Poker, who sit at bond-trading desks on Wall Street. They are one species of debt trader because bonds, simply put, are debt obligations of corporations and governments.

I am a rarer subspecies of debt trader than those who spend their days on the telephone in a New York office tower. I specialize in trading the debts of governments in the darkest corners of the global economy, the so-called second and third tier credit countries on the borderline of default or in urgent need of rescheduling their debt. In my heyday, to do my job, whether in Guatemala, Russia, Nigeria, or other developing countries, I had to be ‘‘boots on the ground,’’ as they say in the military. I had to pound the pavement and ingratiate myself with the people, many unsavory, who mattered when it comes to doing the business I do. I had to make connections. I often had to risk flights on substandard airlines, stay in no-star hotels, and eat strange food. I sometimes had to dodge bullets and shake down artists.

It’s hard work compared to sitting at a trading desk in New York a but I don’t have the attention span to sit long at a desk. In Yiddish parlance, I have shpilkes, which, roughly translated, means ‘‘ants in the pants.’’ I’m restless and I love to travel. I have craved adventure in exotic places ever since I was eleven and my uncle gave me an album filled with colorful stamps from countries in all corners of the world. In my small room in my parents’ home in Brookline, Massachusetts, a would look up those countries in the World Book Encyclopedia and dream of seeing the world someday.

*Peter Marber, From Third World to World Class: The Future of Emerging Markets in the Global Economy (New York: Perseus Books, 1998), 231.

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Table of Contents

C O N T E N T S

AUTHOR ’S NOTE, ix

CHAPTER 1

EL SALVADOR

Bullets, Bombs, and Bonds, 1

CHAPTER 2

VIETNAM

The Early Education of an Economic Warrior, 44

CHAPTER 3

TURKEY

Selling the Letter ‘‘M’’ for a Cool Half Million, 69

CHAPTER 4

GUATEMALA/PANAMA

Risky Business, 103

CHAPTER 5

NIGERIA

Promises, Promises, 126

CHAPTER 6

RUSSIA

Boom to Bust and Back, 149

CHAPTER 7

IRAQ

Mission Not Accomplished, 186

CHAPTER 8

AMERICAN TWILIGHT, 215

ACKNOWL EDGMENTS , 233

INDEX, 237

ABOUT THE AUTHOR, 243

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Sort by: Showing 1 – 4 of 5 Customer Reviews
  • Posted August 27, 2009

    A thrilling voyage

    Mr. Smith's adventures in some of the most dangerous hot spots in the world was a not only an eye opener but an edge of your seat tale that sometimes felt like fiction. A financial thriller in the best sense of the phrase!

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  • Posted June 5, 2009

    A great adventure

    New thrills and surprising insights come around every corner in this real life adventure from a man who is equal parts adventurer, businessman and citizen of the world. The tale not only moves at breathtaking speed, it also delivers enthralling (and important) intelligence about how the global financial marketplace really works -- and how it is worked BY an amazing cast of entrepreneurs, crime bosses, international corporations and government operators large and small.

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  • Posted June 5, 2009

    The First Addition of a Future Classic

    Insightful, fascinating, philosophical, inspirational, amusing, and amazing - these are some of the words I have already used to describe Robert Smith's first, and hopefully not last, chronicle of his incredible adventures to my friends and family. Though he makes it clear that today's information systems have closed the door on the high margin business opportunities he pursued, Mr. Smith leaves the entrepreneurial reader convinced that the next opportunity to make one's fortune will always be around the corner, if one has the business acumen to recognize it, and the iron disposition necessary to see it through. If Mr. Smith is too busy living out future adventures to pen another installment for his growing base of admirers, perhaps his extraordinary wife could be convinced to write a complementary collection of her memoirs, which I would read just as eagerly.

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  • Anonymous

    Posted March 16, 2009

    "Riches Among the Ruins" is an Exotic Busines Biography

    "Riches Among the Ruins" is a terrific read. It's Robert Smith's autobiography of how an average American Joe became one of the most successful traders in third world debt. Through revolution and wars, failing economies, and hot spots all over the world, Smith brings us into some of the most dangerous countries he has traveled to pursue his dream of adventure, opportunity and profit. Peter Zheutlin does an admirable job explaining Smith's global business transactions and turns the complexity of currency blocks, barter transactions, bond trading, and trade debt into prose with pristine clarity. The book is filled with raw excitement from Smith's first deal to his last. It is a must read for anyone in business. AJ Cushner, Boynton Beach, FL

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