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

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

by Robert P. Smith

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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

…  See more details below


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.)

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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.
Foreword Magazine
a crackling good yarn about a high roller in the age of globalism will appeal to financial specialists and to general readers.
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.
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.
From the Publisher

"This crackling good yarn about a high roller in the age of globalism will appeal to financial specialists and to general readers."

Foreword Magazine

“… a rambunctious rollercoaster that dodges bullets and missiles, maneuvers around shady characters, and speeds through all sorts of danger…shines an unnerving light on the state of today’s economy.”

Conference Board Review

“…one of the best books I have read about what it has been like to do business in the crazy…international debt markets of the past 30 years. It's an immensely engaging and often exciting memoir... lessons are particularly germane to today's financial crisis…”

Providence Journal

“Usually, the world of finance doesn’t yield memoirs that keep you turning the pages… Riches Among the Ruins is the true exception to the rule…great reading and insight to the way the real world operates.”

“Smith offers lessons relevant for U.S. investors seeking opportunity overseas…also shares his take on the importance of narrowing the gap between rich and poor; the U.S. role in the global economy; and an increasingly integrated world trade system.” -- Associated Press

"With his ear and eye for the telling detail, his vignettes have the stamp of authenticity and are often screamingly funny."-- Financial Post

“Wow! This is one fascinating book; it reads like an adventure story...Not only is it a terrific book, but Smith and Zheutlin are great teachers….Enjoy!” -- Life Insurance Selling

“… it’s great to read a book like this and live vicariously through some of these incredible stories.” -- 800 CEO-Read

“…a treasure trove of stories of profit and loss and of warnings of the on the ground reality of economic crisis.” -- Blog Business World

“…riveting adventure that takes you deep within the world of emerging market debt….we thoroughly enjoyed learning more through his roller coaster ride.” --

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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,

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,

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 I

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,

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 I

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,

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


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,

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


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

I 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,

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,

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,

I 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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