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The World Is Curved is a book written by David M.Smick, a financial market consultant, non-fiction author, and Chairman and CEO in the consultancy company of Johnson Smick International (JSI). This book opposes the views of Thomas Friedman's The World Is Flat: A Brief History of the Twenty-First Century. Smick considers the potential negative ramifications of a constantly fluctuating global economy and analyzes possible solutions to these challenges.

The World Is curved
Original 1st edition cover
Author David.M.Smick
Country United States
Language English
Subject Globalization
Publisher Portfolio
Publication date
2009.08.31.
Media type Print (Hardcover and Paperback)
ISBN 978-1591842187

Contents

End of global economyEdit

Globalization has achieved unprecedented economic development.[1] However, the global economy is unstable and sometimes badly agitated. Also, the era of massive wealth creation has led to the era of financial crises.[2] Even though there was a problem, globalization was an effective means of producing wealth. Even though it has been a long time, we do not fully understand the meaning of globalization. People tend to regard the economy as static, but the global economy is very dynamic. Unlike earlier systems that large corporations and regulators have controlled to maintain their power, the new global economy is rapidly changing the way it operates through the Internet, boosting the business value of large-scale collaboration over the Internet.[3] We have no choice but to embrace the ever-changing global market and steer the market to avoid unintended consequences and side effects. The most important thing to stabilize the market is the 'trust'. There is no way to maintain stability since the size of the financial market has relatively grown.[4]

Danger of tremendous financial resourcesEdit

The U.S. financial system was once closed, but the United States soon changed into a part of the interconnected global network. The international migration of saving funds redefined the global economic outlook and reshaped the structure.[5] Since the 1980s, the international financial system has developed a new set of risk management techniques and new advanced financial instruments, and these efforts have led to various ways of success. Among them, asset securitization has been a great source of funding for the global financial revolution, which can significantly reduce the scope of global investment and split the stakes into a wide range of revenue sources. But the financial process of asset itself had a new problem. Asset securitization has allowed widespread funding to induce widespread changes in the economy, allowing widespread financing to take place, but it has spread to a huge problem if it suffers from itself. Asset securitization provided another major vulnerability to today's financial systems. The banks that lend loans do not cling to the danger of borrowers taking loans. The lender no longer needs to cling to compensate for its efforts to avoid danger in any case, as it is divided into the risk of loan. However, it is not only possible to talk about asset securitization as in black and white. If we ban asset securitization, the overall lending of the U.S. and the China will severely decline and the economy will shrink greatly.[6] Since 1980, there has been a significant increase in global capital.[7] Therefore, foreign investment in the United States has been increased. And it was good for U.S. The notion that the U.S. economy depends on foreign capital may sound dangerous. But the situation is not that serious. The savings fund is still based on the U.S. dollar, as its size is so large that only two kinds of the assets denominated in dollar and Euro assets are properly invested to cover the large amounts of capital. What European policymakers do not want to face the world's excessive saving funds is flowing in to Europe and it makes Euro more valuable. Because it means that Europe's product lower position in the world's market. The dollar is still an essential commodity for the commodity, currency, and derivatives of the world. The value of the dollar, which reflects inflation, is too high compared to other Asian currencies. It is necessary to implement coordinated efforts to resolve the exchange rate gap. But if the U.S. financial system fails to restore trust or if the Federal fails to respond to inflation expectations, the debate will end and the dollar will fall into turmoil.[8] The Asian central bank will not deliberately carry out anything that could undermine the dollar as well as the sale of U.S. treasuries. That is because they are degrading the entire value of the enormous dollar they hold.[9] The United States should maintain its position as an attractive target for investment, and its fiscal imbalances should be resolved quickly.[10]

Private equity funds and hedge fund companies who have fallen to the problem.Edit

Today, hedge funds and private equity companies have become increasingly new worries for international financial systems.[11] The hedge fund has a very significant as an actor who is historically appearing in a drama titled "Great Globalization". Hedge fund investors are the first ones to use the new global financial structure to devise and market differences. Based on the macroeconomic assessment of the global economy, they began to form a diversified investment portfolio by studying many international markets. Despite criticism that the hedge fund is irresponsible, it is helping to focus on the market and make it more efficient, rather than relying on global financial uncertainties.[12] In the meantime, the word " entrepreneur " always meant something negative.[13] But they have improved our lives. And as they repeat success and failure, they learn objective lessons.[14] While existing companies are important to try to reform and improve the global market, it is important that new companies are willing to create new ideas that are willing to taking risks. However, there is a problem with corporate capitalism, which is extremely difficult to manage the wealth redistribution without a negative effect on the negative economy. It means that one should be able to tolerate some degree of unfairness with some degree of wealth and job creation. The corporate capitalism, which achieves continued innovation in a society, prevents people from staying there for a long time.[15] Finally, the New York City financial community could have decayed because it failed to grasp the mobility of the dangerous species. Today, risk abusers can easily list new companies in the London Exchange as well as in New York City. It is even possible in Hong Kong. That is why they can make troubles in competitiveness if you increase regulatory barriers or treat rough in choosing rate of compensate compare to risk. And that's why entrepreneurs are perceived as being dangerous beings.[16] In order to sharpen competitiveness in today's global economy, it must develop a competitive idea that will enhance the atmosphere of existing companies and change the atmosphere of new growth and change.[17]

Tony Soprano, a Chinese dragon.Edit

Conventional belief today is that China dominates the 21st century. Rapid growth in China threatens the entire world with economic bubble and financial bubble.[18] The fundamental problem with China is that it lacks reliable information about the nation's economic situation. However, a huge amount of foreign capital has poured into China even if the lack of transparency.[19] One of the reasons why it is very difficult to operate a broad range of macroeconomic operations is due to the massive imbalance in China. While the GDP of Shanghai is higher than that of Malaysia, the standard of living in many other regions is similar to that of Bangladesh.[20] But the real interest rate in China is increasing the economic bubble and the financial bubble. Since no one believes that bubbles will burst, they borrow as much as possible and buy lots of assets. However, bubbles always burst.[21] Another problem with China is the question of population composition. Europe, Japan, and the United States are under heavy pressure of the population. However, the problems of these countries are very simple compared to China, which has caused population problems in terms of its one-child policy. In 2045, one out of every three Chinese people is old enough to be retired, and when the workforce declines, it will also decrease the standard of living, and this will cause a serious chain effect.[22] What happens in China is affecting the world. The problem is that China is growing too big. Therefore, the problem that bubbles occur is more serious than we think.[23] European strategists pointed out that in the 1970s, Germany experienced a strong growth rate and a higher capital inflow in the 1970s. The only way to prove that it was effective to safely land the economy at the time was a currency value. Other methods did not work. On the basis of this, European bureaucrats argued that curbing inflation is the only way to control inflation. To date, aside from some currency revaluation, the revaluation of the Chinese yuan, which is further dramatic revaluation, is not a simple issue. Now, the U.S. and China are faced with a dilemma. Surely, local governments will prefer to grow investment through investments, which will likely bring more control and increased possibility of corruption. And if Beijing stops the intervention of the central bank, the yuan will be highly appreciated and the price competitiveness of foreign goods sold in China will be higher. However, as the yuan is rising, the inefficient and incompetent state-owned firms will collapse, resulting in massive unemployment. However, through artificially lowering the value of the yuan, the U.S.'s current account deficits and the U.S. account deficits are surging to more than 5 percent of GDP, and this imbalance is not beneficial to either China or the United States.[24] China's revaluation of the yuan will take longer than we think. China's producers oppose the prospect of a revaluation of the yuan because they believe that the profitability of Korean companies is too low to dampen exporters ` profitability.[25] However, the United States and China will have to solve current-account imbalances as a way of rebalancing and spending money together.[26]

Japan's housewives, take the initiative.Edit

Japan is a representative example of the most complete and objective of the new global economy.[27] Japan's famous ' bubble economy ' has become an important event. At that time, the price of Japanese stocks, including stocks and real estate stocks, skyrocketed, and finally burst into a huge bubble in Japan.[28] It is inconceivable that Japanese policy failures have frustrated ordinary citizens's lives, and Japanese housewives have started to move.[29] Starting in the early 2000s, Japanese housewives started running directly to earn more money from their savings. Surprisingly, in the process, stay-at-home moms have emerged as powerful forces in the global foreign exchange market overnight. Currently, nearly one-fifth of all foreign exchange transactions are produced by Japanese individuals, many of which are occupied by Japanese housewives. They are increasing direct investment through the Internet, And if the housewives move together, they may be able to drop the global currency market by just two percent.[30] One of the biggest problems right now in Japan is the history of bureaucracy. Corporate capitalism - beset by capricious, persistent failure in global financial systems - does not consort with formal bureaucracy. In Japan, there is a slight bias toward the whims of free financial markets. Japanese bureaucrats are encouraged to avoid failure, ironically because the Japanese economy has fallen apart. Japanese bureaucrats do not know how to deal with entrepreneurial uncertainty and business failures that are essential to economic success.[31] Japan's system of effectively managing bureaucracy and its essence is now facing a period of bending and brittle. Now, millions of stay-at-home mothers and other types of doctors no longer care about bureaucracy and its essence. They only care about the facts and insights that reflect future revenue and risks. Officials in Tokyo proposed a major overhaul of the banking and small business laws to encourage entrepreneurs to promote entrepreneurship. Also, Japanese political leaders understand the need for higher returns on the savings rate of housewives. Clearly, the Japanese economy requires entrepreneurial innovation.[32]

1992, the British pound sterling crisis: there is nothing in it to stayEdit

Our thoughts are fixed to the status quo, not many changes. We think that the current state always be the same. Institutions and the freedom of our times will keep forever give our financial assets, and will always be a belief that economies flourish because they've been far and institutional arrangements confidence never change.[33] But we also can not be avoided by changing the stereotypes that hold firmly the phenomenon will be maintained. All major participants active in the financial sector are aware that the level of common sense, as well as the global economic instability, and the structure continues to change. However, the vulnerability of the financial system in their minds is extremely ideological. Their eyes, as is currently seen as a change in the vaguely distant future threat, but is invisible to the eye in front risks encountered. Thus, they act as if there is a system of the global economy and the current institutional arrangement for the time being remain.[34] But ignorance of the realities of a changing world can be very dangerous. Europe's currency crisis in 1992 is a case to underestimate the power of the financial markets caused by human judgment and a political mistake this huge crisis due. Since ignorance of the changing world, the British pound has experienced a tremendous value plummeted this change the currency systems of Europe, given the continued strong shock to the global economy. These events show that this causes any risk to the folly does not recognize the changes in the global financial environment.[35] If you do not open your eyes to the threats in today's financial leaders have emerged over the horizon will lead to similar results as in the case of the United Kingdom. We do not need the current financial system has been thinking of course that managed to survive by silver bullet. However, in highly liquid capital of the world, like the 1992 UK case there is nothing which can of course here. There is nothing to stay in the same state that nothing in the world.[36]

The central bank can avoid shrinking all believeEdit

People often think that the central bank had magical powers. No matter how the financial crisis occurs, I think the central bank lowered the interest rate financial market will return to normal. This is thought to be exaggerated, but the image of the central market than it actually is.[37]

When the financial crisis occurred in the past, the present time response of the central bank measures that have worked can not exert more force. Now, aggressive central banks have been more difficult to rely on monetary policy. While the huge capital using the leverage is not a limit. The most recent case revealed the limitations of the central bank was in the early years of the US sub-prime mortgage crisis occurred the first time 2008. At the time the Federal Reserve central bank was faced with rising inflation and house prices collapse, banks lending crisis, the risk to the US economy fall into the weak dollar. Policy makers in the US are afraid there is no obvious solution to the risk of disappointing some policies were also aware of the fact that there can only lead to negative results. Also, look the United States who the US central bank is hardly a worldwide central bank had presided over the financial world of the dollar oriented, the sub-prime mortgage crisis has complete control of interest rate policy in the global financial system like anymore, while generating as globalization begins also it showed.[38] But the more serious problem is that the huge financial crisis, when there happen next, and no one is not sure whether the central bank will be and how many days to solve the financial crisis. Subprime mortgage crisis is nothing more than a side issue compared to the interruption of trade war with China and Asian capital flows caused by the aftermath.[39] The reality is that the global trade and financial capital to move freely in the siege being in the world can not deny anyone. And Democrats and Republicans in the US has been gradually move away from policies that constitute a tremendously explosive prosperity. The same is true in Europe and other countries. The market started to notice it, and it also noted the central bank troubled people. I am aware of the fact that a series of policy mistakes that caused the loss of long-term costs can be a huge disaster better than anyone. This was creating huge wealth and reduce poverty system in danger. This system has revolutionized the world to produce the goods in the global market in charitable donations. However, central banks, while solving the debt as a result of the subprime mortgage crisis was much more accurate understanding of the system. And the central bank began keeping the place they convince a new global monetary policy for the 21st century. The US Federal Reserve also avoiding that which severely damaged the US financial sector very carefully so that you can restore the world's confidence in the global financial markets, it is necessary to desperately try to restructure.[40]

Class struggle and global politicsEdit

Fragile banking system, and shrink all central banks face the global financial markets is difficult to predict the political change through the uncertainty of it all. In fact, globalization started in the 1970s and the depression action on the free capital market can be called a political product. Therefore, whether the global economy has indeed gotten to survive in the 21st century will depend on how the political world accepted for defects in the global economy. But whether the survival of today's global economy is being increasingly questioned. Today, a huge global capital has noted the introduction based political risk. Capricious and future-oriented commercial capital moves even slightly negative change in symptoms over the border to another country.[41] Country abandoned by the movement of capital in the process falls in financial panic. Excessive interference of the signals is the government claiming the class struggle and the trade protectionism of the negative changes that lead to this situation, and good intentions, but include changing financial and regulatory aspects of figured counterproductive. In fact, the world today can be bent because the political and financial markets were increasingly able to understand each other. And this phenomenon has been shown most strongly, particularly in the United States. The political movement who want to get away from the current capital market liberalization and free trade has been visible in the United States. Therefore, the United States lies in the critical time in terms of the private economy of the United States. Politicians have experienced economic success of both parties for 25 years. And it could watch the wealth creation and poverty reduction in the global economy moving toward a pure utopia in the late 1970s. But now they are inciting the public protectionism and waging the class struggle and controversy.[42] Because the future of the global economy is currently based essentially owns the financial and political capital is too small, it is impossible to predict. On the one hand, the income gap has been exacerbated. Therefore, the political base of support for the global economy is very weak. Over the past 25 years, people have believed the illusion of globalization since, no matter how policy-makers, even if the measures that continue to create a situation that can cause shock and disillusionment low unemployment would last forever. However, instead of looking for political leaders is how to attract more people into the corporate capitalist system, most are eager to grab this political masterpiece. Among people blame globalization for half the directors and present the class struggle, reckless protectionism and policies that can put the financial system at risk. If the proposed policy as it applies to their moving process of the last 25 years of global wealth creation and poverty reduction would be reversed. These claims are inciting the public has already destroyed the stability of financial markets.[43] Therefore, in recent years in order to maintain political irresponsibility based on the global banking sector and against the political demagoguery that suggests a stupid way to support the new global economy, policymakers should focus on the role of human capital and growth.[44]

Survival in changing timesEdit

In today's dangerous world finance leaders have eyes wide open to face this risk. Before the rise in recent jidojaeun should establish an effective operational plan to reduce global imbalances. Also we have deep discussions in order to prepare for the terrible things that have just started to emerge. In particular, it must be equipped with a broad understanding of the global strategy and international monetary relations width in relation to China has emerged as a giant monster in the financial and manufacturing sectors. In addition, leaders must create the means to better understand the conflict and tension between the need to maintain a global trading system and the need to respond effectively to climate change. Leaders must create a reliable approach that reflects the opportunities and risks of investing these funds, contraction of liquidity around the world and we need to stop the reckless policy of trade protectionism and the class struggle, the fall of the dollar.[45] However, there is another problem beyond all this. It is that system to assess the credit risk and the need to adjust the distribution and flawed financial structure. While up the 2007 sub-prime lending crisis debt default, the financial system structure has changed enough to solve the problem was the worst of the financial crisis. destruction of the financial system is severely damaged an important political basis of globalization, threatened the livelihoods of millions of homes worldwide. Over time, the financial markets have been gradually stabilize underlying issues that are still unstable world situation just below the outwardly exposed.[46] Subprime mortgage crisis is regarding the government's ability to understand the market continues to evolve exposed the inherent vulnerability.[47] Therefore, there is a need to develop new systems that allow traders to assess the global market value more easily. Never, because no economy can develop without rebuilding your credit in today's new asset allocation system.[48] In the new global economy, policymakers should consider the concerns about the future as a collective property and the general risks of the global financial safety net.[49] Therefore, policy makers, and move a few years to get the global financial system has higher transparency and confidence in the future, and as a result we need to be more clearly that to achieve a high productive results. Out of the wrong faction attention of today's innovative monetary policy to focus on the big picture strategist it must work in close relationship with the private sector. We live in an age that can save a new global economic policy-makers need to properly capture important moments. And right now, this moment is an important historical moment.[50] Unlike the past, today's brave policy leaders need a little more aggressive, have an effective agenda to avoid a disaster to move forward. Through good leadership, we can continue to be made to continue the remarkable development of the past 25 years. Otherwise, we will once again experience a new economic pain. The second of the Great Depression is unlikely to happen, it is not only absurd idea completely. Because the world is because fully curved.[51]

ReviewsEdit

Publishers Weekly reviewer Greg Alexander wrote: "Smick brings expertise and lucidity to many difficult subjects, and while his book's appeal will likely be limited to those with some background in the field, it will undoubtedly stir interest and debate amongst investors, policymakers and strategists alike."[52]

In Foreign Affairs, Richard N. Cooper said that "This book is a rambling and anecdotal but enjoyable account by a participant-observer of the vital role the financial system has played in the huge growth in global prosperity over the past 25 years. Smick is unambiguous in holding private-sector players responsible for the emerging debacle."[53]

Book review website Kirkus Reviews opined: "A supremely useful book for portfolio planning, though not the thing to give someone who's inclined to worry about the state of the world."[54]

Forbes contributor Bret Swanson expressed disappointment that Smick lays little responsibility at the feet of the inflationary weak-dollar policy of the Federal Reserve. but he said that Smick ably identifies most of the crucial protectionist policy curves that threaten global prosperity.[55]

Washington Post columnist David Ignatius said, "Economist David Smick had it right in The Post this week when he said the administration had a three-pronged strategy: delay, delay and delay." in 2009.[56]

Columnist Michael Gerson of the Washington Post mentioned that "‘It's not smart to say this economy can’t recover,’ says economist and author David Smick. If the pipeline of credit is somehow unclogged, the Federal Reserve has provided plenty of money for there to be a quick recovery. Americans will eventually need to buy houses or cars again."[57]

The New York Times Joe Nocera mentioned the book, noting that "In indignant tones, he talked to me about the sophisticated off-balance-sheet vehicles the banks used to hide risk and game the system, and the ‘mortgage-backed securities they were shoving out the door.’ He concluded, ‘I find their behavior just appalling.’ But words like ‘off-balance-sheet vehicles’ and ‘mortgage-backed securities’ don’t have much meaning for most of us. What we understand is greed—which, ultimately, is what Mr. Smick was talking about as well." [58]

Pete du Pont in the Wall Street Journal, posted that the book "shows that during the past quarter-century we have had a global ‘golden age of wealth creation and poverty reduction never before seen in the history of mankind.’ The global free market ‘experienced an unprecedented doubling of its labor force from 2.7 billion to 6 billion’; the U.S. had 40 million new jobs created; ‘the Dow Jones Industrial Average climbed from 800 to over 12,000’ (it is back under 9000 now); and, according to the Federal Reserve, U.S. households saw their net worth increase from $11 trillion in 1982 to more than $56 trillion today."[59]

ReferencesEdit

  1. ^ chapter1,41p
  2. ^ chapter1,42p
  3. ^ chapter1,46p~47p
  4. ^ chapter1,50p~51p
  5. ^ chapter2,74p~75p
  6. ^ chapter2,81p~83p
  7. ^ chapter2,82p
  8. ^ chapter2,94p
  9. ^ chapter2,97p
  10. ^ chapter2,108p
  11. ^ chapter3,115p
  12. ^ chapter3,118p
  13. ^ chapter3,127p
  14. ^ chapter3,129p
  15. ^ chapter3,134p~135p
  16. ^ chapter3,138p
  17. ^ chapter3,139p
  18. ^ chapter4,144p
  19. ^ chapter4,157p
  20. ^ chapter4,164p
  21. ^ chapter4,,167p
  22. ^ chapter4,172p
  23. ^ chapter 4, p. 176-177
  24. ^ chapter4,180p~181p
  25. ^ chapter4,183p
  26. ^ chapter4,184p
  27. ^ chapter5,196p
  28. ^ chapter5,199p
  29. ^ chapter5,204p
  30. ^ chapter5,205p
  31. ^ chapter5,207p~208p
  32. ^ chapter5,216p
  33. ^ chapter6,232p
  34. ^ chapter6,233p
  35. ^ chapter6,234p
  36. ^ chapter6,266p
  37. ^ chapter7,268p
  38. ^ chapter7,294p
  39. ^ chapter7,298p
  40. ^ chapter7,301p
  41. ^ chapter8,304p
  42. ^ chapter8,306p
  43. ^ chapter8,334p~335p
  44. ^ chapter8,340p
  45. ^ chapter9,343p
  46. ^ chapter9,344p
  47. ^ chapter9,345p
  48. ^ chapter9,358p
  49. ^ chapter9,369p
  50. ^ chapter9,383p~384p
  51. ^ chapter9,385p
  52. ^ "Nonfiction Book Review: The World Is Curved: Hidden Dangers to the Global Economy by David M. Smick". Publishers Weekly. Retrieved 2016-11-29. 
  53. ^ "The World Is Curved: Hidden Dangers to the Global Economy". Foreign Affairs. 2009-04-20. Retrieved 2016-12-01. 
  54. ^ The World is Curved by David M. Smick. Kirkus Reviews. July 1, 2008. 
  55. ^ Swanson, Bret (2008-09-29). "Not So Flat After All". Forbes. Retrieved 2016-12-01. 
  56. ^ Ignatius, David (2009-03-12). "On the Financial Crisis, We're Stuck in 'Phony War' Phase". The Washington Post. ISSN 0190-8286. Retrieved 2016-11-29. 
  57. ^ Gerson, Michael (2009-03-06). "Wither Conservatives as Obama Tries to Fix the Economy?". The Washington Post. ISSN 0190-8286. Retrieved 2016-12-01. 
  58. ^ Nocera, Joe (2009-01-31). "It's Not the Bonus Money. It's the Principle.". The New York Times. ISSN 0362-4331. Retrieved 2016-12-01. 
  59. ^ Pont, Pete Du (2008-12-17). "Don't Pull Back". Wall Street Journal. ISSN 0099-9660. Retrieved 2016-12-01.