The World Is Curved: Hidden Dangers to the Global Economy
by David M. Smick
(Portfolio, $26.95)
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Don’t feel alone if you can’t understand how a sudden collapse can occur in the global economy, says financial consultant David Smick. When most people hear the term “globalization,” they think about how easy it’s become to afford a widescreen Korean-made television or to lose manufacturing jobs to a new plant in Mexico. But the flows of capital and credit that have fueled the trade boom move far less predictably. Roughly 5,000 specialists working on Wall Street and in other world financial centers made the rules that all lenders and borrowers now play by, says Smick. And even those specialists lacked enough information to grasp the risks they’ve assigned to the lenders. “The world is not flat,” Smick writes. “We can’t see over the horizon.”
Smick’s lively and discerning survey of “the dangerous economic world” we live in just may be “the book of the year,” said Robert Novak in the Chicago Sun-Times. The author is a firm believer that globalization does more good than harm for people whose nations embrace it. But he warns that the complexity and sheer size of the global financial market have made it “unbelievably fragile.” Its smooth operation depends on trust, but no government or other public authority has the power to police abuses. Meanwhile, Wall Street isn’t monitoring several overseas trends that may cause large foreign investors to pull back capital almost overnight. Smick’s “astonishingly prescient” analysis concludes by proposing a bold remedy, said David Brooks in The New York Times. World leaders, he tells us, must remake “the fundamental architecture” of our financial markets.
Smick “has a knack for explaining” complex ideas, said Matthew Continetti in The Weekly Standard. His book “reads like a pleasant conversation at a cocktail party”—even when the picture he paints is terrifying. What he personally fears most is that the hobgoblins in the system will ignite class resentment in America and cause policymakers to “retreat into a protectionist cave,” said Todd Buchholz in The Wall Street Journal. Fortunately, “there will be fewer Bentleys” rolling through Wall Street to roil envy in the coming months. “That’s one problem solved.” There are many more to face.
