The World Is Curved: Hidden Dangers to the Global Economy

by David M. Smick

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—and 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.

Genres: Economics, Nonfiction, Business, Politics, Finance, History

320 pages, Hardcover

First published January 1, 2008

Reviews

[David · Rating 2 out of 5]

The author likes: globalization, Bill Clinton, Alan Greenspan, entrepreneurs, capitalism, risk-takers, wealth, free trade.

The author dislikes: China, bureaucrats, politics, class warfare, high taxes, over-regulation.

The author tolerates as inevitable: "creative destruction" of certain kinds of jobs, economic bubbles bursting, unpredictability of the globalized economy.

these positions are elaborated at length in a retrospective of the 2007-2008 credit crisis, with a large dose of "my analyses of the situation were correct" and an even larger dose of "I am personally familiar with and greatly respected by many very famous and powerful people" as side dishes.

He says in the acknowledgements that the columnist Robert Novak encouraged him to include more personal anecdotes. Mr. Novak did him no favor then, as the book could have been improved and seriously condensed had an editor chopped out every story with the structure "I was having dinner with Larry Summers/Ronald Reagan/the prime minister of Japan/Hillary Rodham Clinton/whomever and I made the following pithy and prescient comment....."

[Iceman · Rating 3 out of 5]

David M. Smick é um consultor experiente e bem sucedido. Dirigindo a sua própria empresa de consultadoria, Johnson Smick International, Inc., David M. Smick foi conselheiro de vários candidatos à Presidência dos Estados Unidos. Fundador e editor da revista “The International Economy”, é também habitual colaborador do “The Wall Street Journal” e “The New York Times”, o que por si só demonstra ser uma sumidade em economia.
Conforme ele refere logo no início do livro ”comprometi-me a escrever sobre este complicado sistema a que chamamos de nova economia global porque assisti na primeira fila e provavelmente desempenhei um modesto papel na sua criação”, David M.Smick coloca então todo esse conhecimento ao dispor do público no sentido de explicar os caminhos da economia global e a forma como a mesma foi nascendo e transformando a vida de todo o planeta.

A ideia inicial de Smick é que o mundo financeiro actual não é plano, mas curvo, pois a falta de transparência não permite aos analistas ver para além da linha do horizonte. O autor inicia então uma viagem que nos revela como chegámos ao presente, como funcionam os mercados internacionais e como a globalização passou a facilitar a transferência de capitais e o investimento global.

Não sendo um amante, nem sequer um grande interessado por questões económinas ou financeiras, foi com agrado que respondi afirmativamente ao convite da Editorial Presença para ler e analisar este livro.

Li-o com interesse e de facto, pese embora existam partes que pouco ou nada me dizem, por outro lado achei interessante compreender a econonomia e a forma como ela se desenvolveu e se desenvolve em países como a China e o Japão. Até porque é compreensível que dificilmente a China poderá ser uma potência económica, face não só à mentalidade como, e sobretudo, ao sistema político. Nem sequer é crível que os chineses estejam preparados para ser uma potência. Serão os dados conhecidos da China, fornecidos somente pelo estado chinês, verdadeiros?

Descobri também que os chineses são umas meras máquinas de trabalho e que, esse estado, não faz qualquer tipo de planeamento para o futuro da sua população. São tipo robôs, não existe planos de Segurança Social, ali, depois da velhice, as pessoas estão entregues a si próprias, sem qualquer apoio. É isso que a Europa quer para ela? Claro que não e fiquei com a ideia que é um erro alguém se preocupar com a economia da China.

Sendo efectivamente um livro de economia, a linguagem acessível de David M. Smick, permite-nos ler e entender a mensagem do livro e ela é simples: a economia é muito volátil, não acredite que a crise passou, ela pode ser apenas utópica, esteja sempre preparado para nova crise, pois, de um momento para o outro tudo pode mudar e, com isso, mudar drasticamente a vida de milhões de famílias e até a face de nações.

“o que dizer de um sistema financeiro mundial que num instante parece estar a sair-se lindamente e no seguinte age como se o mundo estivesse a chegar ao fim?”

[Bao Nguyen · Rating 3 out of 5]

This book offered very interesting analyses about the workings and politics of the major financial giants on the planet - USA, Europe, Japan, China and India. I believe that overall the book is a good learning tool for beginners despite the fact that many of the analyses may be tagged 'biased'.

The analyses and stories in the book help motivate readers to go on. I particularly enjoy his occasional personal anecdotes about the dealings with major bureaucrats and what he got out of those meetings.

The author clearly favors globalization and wishes to argue in favor of free trade and deregulation. It is not fair, I think, to judge the quality of a book just based on beliefs. The author was fair in his argument for globalization, describing its benefits and drawbacks and ultimately concluding that it is worth it. Something I would have loved to hear is further analyses of some of the alternative models for the global economy. His analyses of China were also a bit vague and seems to be based too much on emotions. Of course, in the world of finance, instincts are sometimes more valuable than available facts. I would still want to hear more statistics and reasoning instead of just personal anecdote.

The book also reminds us of a fact that we may have forgotten: it was the long decades of exponential growth during the 80s that have blinded us to the upcoming apocalypse. And, it would seem to me that during these years of strong growth, no one complained about the low interest rates and/or the deregulation of derivatives/take overs etc. which are argued as the main cause for the 2007 financial crisis. I do believe it is worth giving Alan Greenspan the credit for decades of exponential growth despite his failure to prevent the crisis. Whatever the case may be, it is certain no one caused the Great Credit Crisis on their own so it is worth taking time listening to these major bankers' experiences over the crisis so we hopefully may prevent the next one from happening (especially when China in recent years bears remarkable resemblance to what was described in this book).

Overall, I think this is a good read, filled with interesting insights and fit for enthusiasts who wish to learn more about our global economy. It is true that you may find the tone and analyses in this book 'biased' and in favor of globalization and/or deregulation. However, if you truly look at the educational quality that this book offers, I would recommend this book to anyone who wishes to learn more about our global economy.

[Beth · Rating 4 out of 5]

First of all, I almost didn't finish reading this book. It was published in late 2008 and during the first two chapters I kept wondering if it wasn't already irrelevant because of what had happened in the financial world during the last 4-5 months. (I am writing this on March 23, 2009.)
I was very wrong. Not only was I wrong, I was extremely, simplistically foolish to think such a thing.
I feel like I have just finished listening to an incredibly accomplished performance of a great symphony. I am not "learned" in classical music. I can listen to a symphony and enjoy it but I have no deep ability to appreciate what I am hearing because I have only a "layman's" understanding of classical music.
The same with this book. I feel I have just read an extremely insightful, deeply synthesized understanding of what is happening in the financial world and what the future risks and potentials are, but because of my own lack of understanding about that world, I can only glean a very small portion of that understanding and insight.
But it is well worth the read, if only for that small portion of understanding. I have a better understanding, if nothing else, of the complexities of the global financial world, and I think I have a better ability now to look at the broad picture of economics and global finance. Or at least now I will try to look outside my own little box of money and financial security.
For anyone who has a deeper or better working knowledge of finance, this book is a must read. And for those of us who don't, this book is an important learning tool.

[Al · Rating 1 out of 5]

I read this book hoping to find some insights or predictions about where the current economic mess is headed, internationally and domestically. What I got was a windy and frequently opaque description of past international and domestic financial crises, padded by a series of self-serving and egotistical, self-serving anecdotes and name-dropping taken from Mr. Smick's career as an economic consultant.
For the most part, I was unable to follow the logic in his explanations of international credit and the interplay of interest rates and rates of exchange. Perhaps they are obvious to him, but I doubt if most readers will follow them. He simply states what happened, but fails to clearly explain why.
Very disappointing; I'll have to look elsewhere for enlightenment.

[David Owen · Rating 5 out of 5]

Although poorly titled, as it has little connection to the book, “The World is Flat”, this book has helped me better grasp the recent financial meltdown as well as the interconnectivity of global markets. As the author describes, liquidity is the oil in the global economic engine; if the oil collects in the bottom of pan (short-term gov debt), the economy freezes up. If the “oil” remains fluid and able to flow through system, the engine runs smoothly. From Asian Sovereign Wealth funds to the impact of Japanese housewife investing, the author details recent trends that are transforming global finance.

[Mark Polino · Rating 4 out of 5]

This is really the better followup to Friedman's The World is Flat. Smick addresses globalization of finance and capital flows, not just consumer goods and information. In it he shows how the interconnected finance worlds of today gave us both 20 years of prosperity and the sub prime we have today. Highly recommended.

[Thân Thị Thủy Ngân · Rating 4 out of 5]

Sau tựa sách "Thế Giới Phẳng" nêu lên nhưng lợi thế của một thế giởi mở cửa, Thế Giới Cong cho ta một cái nhìn tổng quát về thị trường tài chính thế giới và những nguy hiểm tiềm tàng ẩn trong từng ngóc ngách của một thị trường toàn cẩu, những nơi mà luật định, quy tắc không thể bao phủ tới, như một thế giới ngầm.
Ngày nay, những ngân hàng trung ương, đã không còn nắm quyền lực chủ chốt trong việc điều chỉnh thị trường tài chính thế giới, những quy định được đặt ra không thực sự khả dụng để quản lý nó, những công ty lớn trực tiếp chịu ảnh hưởng trực tiếp của luật thì luôn biết cách lách luật để thực hiện việc kinh doanh theo cách riêng của họ nhằm mục đích sinh ra càng nhiều lợi nhuận càng tốt và giá trị thực sự của thị trường bị che lấp bởi những thủ thuật kinh doanh tinh vi và không sai luật; cùng với những ông lớn, ở đầu ngược lại thị trường đang được điều khiển bới nguồn tài chính vô cùng lớn mạnh từ bộ phận ẩn danh hơn (những khoản tiết kiệm khổng lồ, tiêu biểu là Nhật Bản và dòng chảy của chúng), thêm vào đó, một trong những thị trường tài chính lớn nhât của thế giới là Trung Quốc lại hoạt động theo phương châm cơ hội, thừa nước đục thả câu, lợi dụng sự bất ổn (tạo ra sự bất ổn) để kiếm lợi.
Thị trường tài chính là một tổng thể liên kết chằng chịt giữa quốc gia mà không một biên giới nào có thể phân chia, thể hiện một sự liên kết toàn cấu, điều này tạo nên sự ảnh hưởng qua lại vô cùng lớn, khi một nhân tố trong mạng lưới liên kết không khẻo và nếu nó đủ lớn sẽ tạo ra những dao động lớn tới những nhân tố khác, những ảnh hưởng trực tiếp hay dán tiếp đều đáng lo ngại.
Chính những nhân tố này đã tạo nên những khoảng tối trên thị trường, khiến ngân hàng trung ương không thể nắm được sự kiểm soát tối đa nhằm bảo vệ thì trường khỏi những nguy cơ gây nên khủng hoảng tài chính toàn cầu.
Tác giả đã đưa ra một kết luận rất "Người": Thị trường tài chính (trên tất cả các lĩnh vực tín dụng, bảo hiểm, chứng khoán) chịu chi phối sâu sắc bởi "Lòng Tin", tại sao những cuộc khủng hoảng tài chính lớn có thể xảy ra khi một ngân hàng phá sản hay công ty thất bại, với nguồn tiền của ngân hàng trung ương, hoàn toàn có thể kiếm soát đó, nhưng không, nó không sảy ra theo nguyên lý ấy, bởi vì khi lòng tin bị mất đi, không chỉ một vài bộ phận những người có liên quan trực tiếp đến công ty hay ngân hàng ấy chịu ảnh hưởng, mà nó còn tác động tới lòng tin của toàn thể mọi cá nhân góp mặt trong mạng lưới tài chính này, ví nó như một hiệu ứng domino, toàn bộ các nhân tố được liên kết, chịu ảnh hưởng qua lại và được bắt đầu bởi mảnh ghép nhỏ nhất, vì thế chỉ cần mảnh ghép nhỏ nhất ấy sụp đổ, ở đây là Lòng Tin của một cá nhân hay tập thể, lập tức nó ảnh hưởng tới toàn bộ mạng lưới, đặc biệt trong tình hình thị trường hiện nay khi mà bạn có thể ở Việt Nam nhưng tiền của bạn lại đang được đầu tư vào một thương vụ nào đó ở Mỹ chẳng hạn, và điều này thực sự nằm ngoài khả năng kiểm soát của bất kỳ tổ chức quyền lực nào.
Sau cuộc khủng hoảng tài chính tại Hoa Kỳ năm 2007-2009, đã có nhiều nhận định Mỹ sẽ mất đi vị thế của mình trên thị trường tài chính thế giới, các nhà đầu tư sẽ dần chuyển hướng sang những thị trường mới, và được dự đoán là Pháp hoặc Nhật sẽ lên ngôi, nhưng tới giời chúng ta vẫn được thấy Mỹ vẫn là thị trường số một cho các nhà đầu tư, câu hỏi là vì sao? Thật khó mà dự đoán, hay hiểu được, nhưng có thể Mỹ vẫn chứng minh và cho các nhà đầu tư thấy mình là một thị trường minh bạch, rằng tài sản của họ có thể được bảo vệ và kiểm soát.
Vậy ra, trong một thị trường rối rắm, phức tạp với nhiều quy tắc, thủ thuật từ những nhà kinh doan nhiều chiêu trò và những luật sư "Hiểu luât", có một điề u vô cùng đơn giản nhưng lại cực kỳ khó làm là "Giữ các thông tin được minh bạch, rõ ràng", chỉ cần như vậy chúng ta có thể trách những cuộc khủng hoảng ảnh hướng tới không thể nhiều hơn các cá nhân, opp điều này gần như là không thể, khoảng cách quá mong manh giữa Đạo đức và Kiếm tiền.

[Barry · Rating 2 out of 5]

Globalization is like climate change, it’s an amorphous subject. We struggle to get a handle on it and tend to revert to our world view. For many, no amount of data will sway us. How much you like this book will depend on your views of globalization.

I was surprised by the title. The World is Curved sounded like a refutation of Tom Friedman’s The World is Flat. The subtitle, “Hidden Dangers to the Global Economy” sounded like a heading for an anti-globalization screed. It’s not. Smick is firmly in the globalization camp – an ideologue who worships the free market concept.

I differ from Smick in that I believe in the benefits of globalization but am not an ideologue. I had a slew of “yeah, but” moments reading this text.

Smick is certainly qualified to write on this subject, he has conferred with all the heavyweights in the international financial scene and runs a strategic consulting firm. He’s also organized a number of conferences, bringing together the world’s central bank executives with money men. The conferencing gig sounds very much like a guest booker for TV talk shows – an awful lot of ass kissing is involved.

Smick maybe a natural blowhard or has self-esteem issues. He relentlessly name drops and the mini-hagiographies of his heroes like Alan Greenspan are almost embarrassing. If you co-operate with Smick, you’re absolutely golden, he can’t gush enough. If you don’t, then you’re incompetent. It’s that black and white with him.

The book is reasonably well written and breezy for a subject such as this. There are no charts or footnotes; the book doesn’t need them. The jargon is admirably limited and the concepts are not much more than Econ 101. It does help to have a financial background.

All of the world’s financial whiz people – the traders, the hedge fund people, the central banks, the regulators – are justifiably castigated now. But these are smart, skilful people undone by greed and hubris. Smick is such an insider and a stroker of egos that he doesn’t see their faults. He grudgingly admits the blazingly obvious – that greed caused these bankers to take unimaginable risks.

In Smick’s mind, we can’t regulate the markets because it will kill the “goose that lays the golden eggs.” Yes, Smick is fan of the laziest, hoariest clichés – we get “throwing out the baby with the bathwater” and “house of cards” more than once.

He decries the inexcusable failure of the credit rating agencies to bless the toxic stew of off-balance sheet assets with same high-grade credit rating that the largest banks enjoyed. This is what spread the contagion worldwide – entities like pension funds and municipalities snapped up these securitized sub-prime mortgages because of the rating.

Smick reacts to the proposal to a government takeover of these agencies by saying:

“This makes absolutely no sense to anyone with a modicum of understanding of the global markets because government bureaucrats, even more than the specialists at the private credit rating agencies, are no match for the sophistication and complexity of today’s financial market wizards.”

That may be true and a government takeover might not be the solution but we should at least consider that agencies earn their fees and keep their business by appeasing the banks. There is considerable evidence that these agencies reneged on their duties in search of a buck.

Although Smick regularly reviles the bureaucrats, he likes them when they’re his friends. He rues the fact that Japanese housewives, rather than large financial institutions, now control a large portion of Japan’s capital invested overseas. He worries that the powerful Ministry of Finance can no longer dictate market moves.

His fascinating tale of a run on the British pound in 1992 is the story of a battle between the German Bundesbank and the British Chancellor of the Exchequer. The British, in their hubris, pegged the pound too high against the Deutsche Mark, and currency traders made billions off this fiasco.

As Smick tells it, the British were invariably stunningly unaware or hapless. He quotes the German view that the British were bullying, devious and dirty. In contrast, the Germans were uniformly “well aware, perceptive, superb...” The Germans were brilliant but the currency traders were gods – omniscient, infallible gods.

The traders sound like a collection of benevolent, altruistic souls only concerned about getting the economy to restructure to provide greater efficiency. The fact that a “huge transfer of wealth from British taxpayers to the traders” happened comes across as a fortuitous bonus.

Although Smick concedes greed caused the bankers to move their securitized assets off their balance sheets and out of reach of the regulators, Smick berates the regulators for not asking how the large banks could earn returns “exceeding 30 percent” without tricks.

The problem was not the regulators but their bosses, Smick’s heroes Greenspan and Hank Paulson. Both fervently believed in the power of free market and actively resisted any regulation of derivatives. As so often happened in the Bush administration, red flags, incandescent red flares, were routinely ignored.

Smick offers a few motherhood prescriptions. Now is not the time to panic and swing back to overregulation. Greater transparency is a must. Worldwide coordination and communication should be encouraged. All of which I heartily agree with.

Smick worries that during the recession politicians will yield to the knee-jerk calls for protectionism. It’s a legitimate concern and he offers several plausible scenarios. But Smick is particularly anguished at the devolution from an American dominated world to a matrix of influences. Yes, the world will no longer that cozy, tidy little place run by a handful of countries. But that scenario ceased to exist long ago and, like the balding man, these vainglorious players are the last to realize it.

Smick reserves his strongest invective to the evil Chinese. China, to be sure, has its problems. It is a perilous place for foreign investors and the Chinese need to do significant work to overhaul their legal and financial systems and stamp out corruption. But we need to remember how far they’ve come in the last 20 years.

Smick’s disdain is heightened by the fact that he lost big on an investment in a Chinese cement plant. Hell hast no fury like an American elite scorned. Then add the clash of the two national psyches. As a brash, hard-charging American, he has no patience for the inscrutable, ponderous Chinese. Smick isn’t shy in telling that Chinese better become Americans – and soon. “China [is a:] reckless, unpredictable, out-of-control force” and will cause a major reduction in wealth of the world’s middle and lower classes. He’s eager to blame the Chinese but conveniently forgets that the sub-prime crisis didn’t originate there. In fact, he lambasts the crude Chinese financial system, citing their reluctance to securitize their mortgages as an example.

Smick apparently completed his manuscript shortly after the Fed bailed out Bear Stearns and forced the merger with JPMorgan Chase in March 2008. Our outlook is considerably different from a year ago. I was curious for an update. Fortunately, Smick wrote an editorial in the Washington Post on 10 March 2009 saying:

“To remain solvent, however, the banks say they need … as much as another $2 trillion taxpayer bailout.”

“The Obama team needs to remember that we got into this mess because of a lack of financial transparency.”

“Obama should name a proven, world-class problem-solver who is not from Wall Street as his bank workout czar.”

I’m glad to see that he recognizes that insiders are not always the answer.

[William Schram · Rating 4 out of 5]

With The World Is Curved, author David M. Smick explores the strange and terrifying interconnectedness of the modern day Globalized Economy and Financial System. As was indicated by the Subprime Mortgage Crisis, we can see that an event focused on the United States can cause ripples that effectively cripple the world economy. The title of the book comes from the idea that we can’t see over the horizon, we can’t effectively predict the future.

After the Great Recession, it was somewhat easy to say that it was stupid to pick up all of that bad debt, and then subsequently spread it all over the globe. The problem is that the future is difficult to predict. The biggest thing I can think of is Back to the Future Part II, the movie where Marty McFly goes to the future to 2015 and must deal with his kids being stupid. In the meantime, his boss is Japanese and everything is weird and 1980s futuristic. I mean, to its credit, the Cubs did eventually win the World Series again, but seventeen installments in the Jaws franchise? Please. Mr. Fusion would be amazing, but cold fusion created by the same company that made Mr. Coffee? I dunno.

So this book is a fascinating crash course in Macroeconomics. It discusses things that I hadn’t considered at all since I don’t really have money in other governments or large amounts of money at all for that matter. So it was interesting to see how the strengths and weaknesses of economies are measured by their imports and exports, their transparency in terms of information and so on.

This book was printed back in 2008 so the information is a bit dated, but on the other hand, it was really interesting to see where this was going with the whole crisis and loss of jobs and all of that. David M. Smick is a person that I have never heard of before, but he seems to know some things. I guess being on the job for so long will do that for you. I mean, he was in the business back in the 1987 Market Crash. This isn't to say that he isn't biased, but that hardly matters.

[Trung Trinh · Rating 2 out of 5]

Written a few years after the 2008 financial crisis, the book is more of a personal chime-in about how the flattening world could also do as much as harm as good. In particular, the interconnectedness of the open global financial system could create “unintended consequences” for the world economy. We see here the usual suspects: financial players ( SWF, hedgefunds, PE firms, and oil money) moving dollars faster and bigger than ever around the world, incompetent of politicians failing to catch up with the financial world and making poor decisions (wallstreet loves this narrative); China’s imminent instability; central banks’ roles undermined by the sheer scale of the global economy; etc.

But what really have shaken the world the second half of the 2010s were 2 things: Trump’s presidency, and Covid, none of which were even remotely discussed by the book. Or by anybody back at that time.

The author touts entrepreneurship as one big solution to potentially quench the adverse effects of wallstreet to mainstreet. But instead of being able to foresee how projects in green energy; AI economies; and biotech could open up new frontiers of global economy and make wealth exponentially bigger for all, the author jumps back to the comfort zone (or some would say evil zone) of advocating laxer corporating regulations. It’s the kind of narrative that would only deepen social distrust and would contribute to a Trump-like presidency. This kind of narrative leads us nowhere facing the pressing matters of our time. And frankly that’s pretty lame from an academic standpoint too.

[Dan Ray · Rating 3 out of 5]

I didn't agree with everything Mr Smick says, nor the conclusions he draws. But I did appreciate the reasoned way he put things forward.
It also seemed to have done an excellent job of straddling the political divide in the USA. Economic policy seems like an immediate divider between the red team and blue team but he comes at it from a mostly non-partisan point of view.

The most interesting part for me was him calling attention to the central dilemma of the globalized economy; that it creates great wealth but excludes everyone who has no investments from reaping the benefits. It's great to make a bigger pie, but you need to make sure everyone is getting a piece, however proportionally small. So his proposed solution of investing citizens with a tax-exempt fund of some kind is a very strong one in my opinion.

[João · Rating 3 out of 5]

Just finished reading “The World is Curved” by David Smick, an interesting book on how protectionism endangers the global economy, the case for globalisation, and how past turmoil has shaped the current state of affairs. Funny enough, this book is from 2009...guess I procrastinated on this one for too long! More than 11 years after, many things still apply to these days but, I can’t help wondering, could we imagine we would be where we are now back then?

[Vaidyanathan · Rating 4 out of 5]

Excellent ideas and a wonderful sequel to the "World is Flat". Well thought of and well articulated. Could refrain from name dropping and became a little repetitive towards the last two chapters. Otherwise definitely a recommended read.

[Lucas · Rating 3 out of 5]

Lẽ ra quyển này nên được gọi là Thế giới phẳng và Thế giới phẳng của Tom, nên được đặt là Thế giới cong.

[Carolina Araújo · Rating 3 out of 5]

2,5

[Jake · Rating 4 out of 5]

Years ago I read The World is Flat, the classic treatise on globalization by journalist Thomas Friedman. David Smick's The World is Curved is part sequel, part response, and part companion to this work. Friedman's thesis is that the globalization of the flow of information and the supply of goods has, in effect, leveled the world's playing field. Smick argues, on the other hand, that the globalization of financial markets has a different effect: the complex chains of causes and effects operate to obscure all but the immediate future. The international streams of liquid capital hide what's over the horizon: the world is curved.

In defending this thesis, Smick gives a nuanced inside view into many of the most important financial events of recent history, including the burst of the Japanese bubble in the 1990s, the rise of China in the last decade, and (of course) the present sub-prime credit crisis affecting not only the US, but the entire world.

Throughout the book, a working knowledge of macro-economics is assumed. Smick dashes through subjects such as the forces that affect long-term interest rates and the economic effects of currency devaluations, so that often I found my 101-level economics knowledge insufficient (dead-weight loss? What the heck is that?). Nevertheless, with a few pauses for general background research on basic economic principles, I found his line-of-reasoning clear.

Page after page, Smick turns common financial knowledge on its head: he argues convincingly that China is not the financial threat many think it is; that the Federal Reserve has been all but castrated by the success of Bill Clinton's brand of open trade; that the large banks, despite their mistakes, are our only hope as a nation; that Japanese housewives play an integral role in the world's economy; that the US is alternatively teetering on the brink of international irrelevance or dominance, depending on the complex interplay of market forces that nobody (not even the great Alan Greenspan himself) could predict.

A particularly relevant point for the present political climate is his synopsis of the effects of class warfare. He compares the political tides today to those that led to the recession of the 1970s and the stagflation of the 1980s: a populist surge against the ultra-wealthy, threatening to slash the incentive for entrepreneurial risk in the United States. Many of his warnings sound like the same tired arguments used by fiscal conservatives since Reagan: endangering the trickle-down of wealth to the middle class by punishing the most successful among us, et cetera, et cetera. Nevertheless, he argues cogently that the more important effect of this push toward class warfare will be the withdrawal of international capital. In this day of globalized finance, even the perception of political strife (movements toward less-forgiving tax structure or national isolationism, for example, along with ill-fated but well-intentioned policy shifts) can lead to a spiraling downfall of any economy: just look at Japan's fall from the top in the late '80s. Smick argues that the US is currently teetering at the same brink.

Smick sees the financial world with enviable clarity, and has successfully communicated that view in the pages of The World is Curved. This is going on my shelf at home, and I'm certain it's a book I'll return to often in the future.

[Todd · Rating 5 out of 5]

The World is Curved - Hidden Dangers to the Global Economy, by David M. Smick is required reading for anyone planning to vote in the 2012 elections 15 months hence. It is no exaggeration to say that if you refuse to read it you should probably abstain from voting. The book’s subject matter is that serious.

I have been saying for the past couple of years that the majority of those who hold public office, are seeking public office and those of us voting for them are woefully – I do mean woefully – illiterate regarding economics as a whole. We simply due not understand the complexities of modern economics. That doesn’t mean we are stupid, far from it. But, this new era of global economy is an unpredictable Pandora’s Box that requires our policymakers to have a far deeper understanding then they do.

Bill Clinton has correctly said, “Globalization is not something we can hold off or turn off . . . it is the economic equivalent of a force of nature -- like wind or water.” There is no turning back. As forward thinking as Americans are it is strange that we hold on so strongly to the ideas of the past. I hear people throwing out statements in support of capitalism and free markets or aligning themselves with socialism. Yet, they seem to lack a sophisticated understanding of the ideas they believe in.

We support economic strategies from our poor understanding of theories developed in the 18th (Smith) and 19th (Marx) centuries. Adam Smith, the 18th century moral philosopher, whose seminal work, Wealth of Nations, is considered the foundation of modern economic thought. But, he could not and did not anticipate the modern global economy and the “dangerous ocean of money,” as Mr. Smick coins it, circumnavigating the world’s financial markets and the events that led to one of our most recent crisis, the Credit Crisis of 2007-2009.

Smith’s so-called “invisible hand” was hardly observable. Marx, as shrewd an observer and historian that he was, failed to see the power and effect of the labor movement in the industrialized nations that he believed were ripe for proletariat revolution, in fact, the proletariat revolution was, in many ways quieter and more uplifting than he supposed.

For those of you, like both Ben Stein and myself, who expressed perplexity over why the bursting housing market / lending bubble should nearly destroy the world economy, and we were truly on the brink, Smick’s lucid and easy to read book provides a cogent explanation as to why this and other financial panics happen.

The World is Curved unravels the seemingly esoteric world of Central Bankers, finance ministers and Prime ministers. Smick’s book is balanced, fair and an enlightening discussion of capitalism and the advantages and pitfalls of the new global economy. Yet, he does not let the greed driven bankers who helped fuel the credit meltdown off the hook. Far from it in fact…

In addition to explaining the positive’s to the global economy Smick is careful to point out the very real dangers we face such as why the “shrinking central banks” most likely will not be able to continue saving us each time a new panic arises. He explains how the sovereign wealth funds of nations such as Russia, China and Dubai are moving global financial power away from the United States. He even touches on a potential Chinese driven economic meltdown that could very well be the next fatal crisis. If you neglect this book you do so at your own financial peril.

[mark · Rating 5 out of 5]

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.

[Howard Olsen · Rating 4 out of 5]

Smick tries to do for central banking and international finance what Thomas Friedman did for globalization: explain the hidden forces that move trillions of dollars across the world economy. This book is an excellent introduction to an often arcane world. It's also remarkably up to date. Smick provides a good summary of the development of the current financial crisis, and takes us through the collapse of Bear Stearnes. Smick's thesis is sobering: information and money can flow so quickly that the sort of deleveraging that used to take years can happen in a much shorter time frame. in Smick's view, the financial world is dangerously curved due to the potential for businesses and nations to hide the true state of their balance sheets. The result is capital flow that recedes and washes back like a tsunami. It remains to be seen what effect this will have on economic growth and contraction, but "luckily" we are now running a real-time experiment since last September, so we should have some answers sooner rather than later.

I would definitely recommend this book to anyone who wants to learn what central bankers are doing when they go to their endless rounds of meetings and luncheons. Smick perfectly captures the central bankers' dilemma. each are aware that free markets and globalized economics are a long term benefit to each participant. However, each is also keenly aware that they are ultimately beholden to the citizens of the country for whom they manipulate the levers of finance. Protectionism, and economic nationalism are seen as inimicable forces arrayed against globalization, but they are all too tempting to politicians looking to cast blame in the wake of economic disaster. moreover, they can be perfectly rational alternatives when one is confronted with choosing between protecting the livelihoods of one's own citizens, versus protecting those of a foreign country's citizens. Smick describes the tensions inherent in these dilemmas well.

There is a limit to the user-friendliness of this book. say what you will about Thomas Friedman, he is an excellent writer with a knack for finding the killer anecdote. Smick spends his days with economists and central bankers. They are simply not as engaging as Friedman's entrepreneurs and venture capitalists. Smick's writing style tends to be digressive. He never passes up a chance to tell stories about the various finance ministers he has met. While Smick does a good job describing the issues, some of his discussions remain obscure. His chapter on the 1992 devaluation of the British pound, for example, is tough going.
Nonetheless, this is worth reading as a primer for the finance issues that have become all too prevalent in the news lately.

[Chad · Rating 5 out of 5]

A great book for anyone wanting to understand the world financial markets and what has happened and may happen in the worlds economies. Fascinating and well written. I think most people can gain from it- those with little background in finance/economics to those with degrees in the subject matter. It is billed as the next book in Friedman's The World if Flat and I think Smick tackles the subject matter in a way that Friedman could never even hope to touch.

If you want to get a better understanding of the way capital works and the potential problems in the future regarding finance, trade and economic growth- then this is a read for you.

He throws in enough personal stories that break it up and makes for a more enjoyable read than your typical economics/finance book so even if this is not your typical kind of read, you might find it a good book to read. Although he touches on politics in many areas and has a background in working for Jack Kemp, once a Republican Congressman, he certainly stays away from partisan politics heaping much more praise on Democrats like Bill Clinton and Chuck Schumer than you will find for any Republican.

In general, the book lays out the importance of liberal financial markets, how it works in the international stage and the dangers that could hamper economic growth in the future. The chapter entitled "Tony Soprano Rides the Chinese Dragon" is an eye opening review of the Chinese economy that most Americans likely have not been exposed to. The book warns against the reactionary impulses of class warfare and protectionism, things we see in current politics. Overall, the theme of the book can likely be summed up in one of the last quotes of the book attributed to Marc Leland, a former 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."

[Lori Kincaid Rassati · Rating 4 out of 5]

Like others, I wondered if the date of this book (mid- to late-2008) would make this book irrelevant. Hardly! Smick went into great detail (but at a level that a non-wonk can understand) to explain how we got to the global crisis we were in a few years ago, how the world had changed forever, and what we needed to do to lessen our future misery.

I actually found his words to be prophetic (and not in a good way) as he talked about growing concerns for the US related to mounting debt, rumblings of class warfare, etc.

A couple of points smacked me in the head. The first was that if low- and middle-income workers did not have the ability to invest in global companies (thru retirement funds w/ an international business focus, for instance), they would find themselves even more marginalized financially in the future.

The other thing which I found somewhat profound was the notion that the only thing we can do is globalize more. Retrenching in any way or making it more difficult for folks to do business here (Sarbanes-Oxley, anyone?) will only drive entrepreneurs and others to another country with lesser costs, regulations, taxes, etc.

Given what we've just gone thru in the US w/ the debt-ceiling debacle, it's hard to see a silver lining in Smick's writing. But wake-up calls don't often come with silver linings. I just kept wondering (and hoping) as I was reading if at least one staffer for every Congressman had read this book.

Oh, and an added bonus was the wonderful list for further reading at the end of the book. Obviously all of those books pre-date The World is Curved, but I'm sure many of them would be very helpful in understanding the current climate as well.

[David · Rating 1 out of 5]

Another TERRIBLE book of not truly presenting its theme as supporting globalization? or yet calling globalization as danger..i) Ignoring the fact that fiat money is the culprit for world who cares what kind of inflation scholars call it. ii) the book praising for Japanese Yen Carry Trade by the households which is totally nonsense iii) author likes to throw in as many names as possibles that are responsible for the globalization progress, yet without telling us whether these are culprits or not iv) constantly throw in institutions but without explaining to us what they actually responsible..yes, majority of the readers would be fooled by these institutions..v) again bashing China for their interest rate and currency control as the world inflation maker??? (answer: how about QEx and Nixon Shock) vi) completely ignore of the damage of Plaza Record and Basel Regulation to Japan vii) Praising George Soros attack of the Pounds in 1992?? DON'T BUY THIS BOOK!!

[Terry Earley · Rating 4 out of 5]

Intrigued by this author's thoughts written in a Washington Post editorial I wanted to then read this book.

In his prologue he explains that this book is a follow on to Friedman's The World is Flat, meaning that in the global financial world we really cannot see very well over the horizon.

There is an excellent description of the foundations of the 2007-2008 credit crisis and recommendations to bring stability back to the global economy.

[Maureen · Rating 4 out of 5]

Clear, well-argued descriptions of (fairly) current conditions; mylack of expertise does not allow me to critique his arguments/assertions, but the simple conlcusion for me is how complex our systems are, how interdependent, and how few checks and balances we have in place against our own worst and/or foolish natures. Foremost I have taken away from this the conviction that central to our economic problems is the reliance on consumption and growth, surely there are limits to both that we must come at some point to acknowledge? Relying on consumers to overspend to sustain overproduction cannot produce a stable economic base, or am I not seeing clearly? The irony that has the virtue of personal saving demoted to a social liability is hard to respect. Not a very comforting tale, this one

[Grace · Rating 3 out of 5]

A very enjoyable reading experience of general economics. As an insider, Smick's story of how last 25 years of world economic and financial market development and globalization sure offers more than any boring textbook on macro-economics. Chapter 5 on Japanese political culture and how savings of Japanese housewife helped to balance financial market was a new knowledge to me. The only disappointment is the chapter on China. It was very short and with no depth. Apparently the author's dealing with China in his past career is very limited. No anecdote is provided on any Chinese gov official or businessmen.

[Pat · Rating 4 out of 5]

The book is an almost timely look behind the scenes at the world's financial bubbles. It was published after the subprime crisis but before the collapse of Wall Street's investment community. The author attempts to justify the continued practices of this community while calling for inspired attempts to regulate it. He has no real suggestions on how this could be done. He defends the system as moving people out of poverty in great numbers defined by those who no longer live on less than $1 a day. I would suggest that living on $2 a day is no less a reasonable definition of poverty.

[Alyson · Rating 4 out of 5]

This book was a bit hard to absorb in one read--I'll definitely have to go over it multiple times--but I think the author is spot on and I appreciated his insights. I think he's a Democrat (for those who care about political parties) of the Clinton/Reagan mindset and his predictions of potential class warfare were eerily prescient considering today's Occupy Wallstreet, etc. protests. The book is very readable but the subject matter is complicated. It's going to effect us all whether we've read it or not.

[Carol · Rating 3 out of 5]

Smick is knowledgeable about international economics and details his main points with memorable anecdotes. He praises Senator Schumer and Jack Kemp for their understanding that globalization is more beneficial to all than damaging. He does argue for greater access to wealth from capital and strongly favors birthright bonds as Senator Clinton proposed. The weakness of the book is his simplistic rhetoric opposing "class warfare" for any kind of progressive economic theory.

[victoria hampton · Rating 4 out of 5]

An intriguing read. There were variables left out such as credit default swaps, global poverty and global warming effects. As I see it not only are financial troubles causing problems but also deteriorating values and lack of communication between nations. Besides these criticisms, he makes a lot of great points. Seems a little partician toward republican thinking but many popualist democrats could learn more about global capitalism.