Wednesday, December 17, 2014


I returned to office today after three weeks of revitalizing, and dare I say, much needed leave.
During the leave I tried to catch up on my reading. 

Without moving out of our dusty city, I was able to reminiscence with traders who were at the heart of the global financial crisis, drill into the brain of the man credited with launching the international spot market in oil, confer with the most powerful central bankers of our time before taking a sharp detour to trace the rise of China into the largest economy in the world -- if some observers are to believed. 

Heady stuff. Breath taking characters. Head shaking revelations.

I left a lot unread. 

There is an account of how one country went from world power to gangster state, how the world's favorite toy making company pulled back from the abyss of collapse and reinvented itself and how currencies are increasingly becoming the battle ground on which history is being moulded.

Boss, I need another three weeks.

This reading put context to current events we are experiencing, putting it into context and layering it with deeper meaning than a cursory glance would provide.

"Why is oil collapsing through the floor like it is now? Is it purely driven by supply and demand or are there larger issues at play? In a world where the east-west divide is history what are the new configurations that are going to drive history? In an increasingly liberalized economy, who are doomed to being at the bottom of the pyramid and how are he leaders of the previous world order jostling to maintain their preeminence in world affairs?...

Clearly the inter play between politics and economics can not be ignored. As one drives the other interchangeably.

These are the threads I was able to weave between my latest literary odyssey.

Chairman Mao Tse Tsung the father of modern day China was driven by a vision of world domination that would return the most populous nation in the world to its leadership position in world affairs. According to "Mao: The untold story" by the husband-wife pair of Jung Chang and Jon Halliday, he sought his goal by building a military industrial complex that was paid for with the lives of tens of millions of his countrymen. While history may not be kind to him it his force of personality that is the foundation of the country's current ascendancy to a world economic power, never mind that China's economy's was in tatters by the time of his death in 1976.

"China's rapid growth, launched by Mao's successor Deng Xiaoping - whose life I will shortly delve into, through the pages of his self titled biography by Ezra F. Vogel, would have been near impossible if the oil industry had remained controlled by a cabal of oil companies, "The seven sisters"... 

Believe it or not there was a time when little to no oil was traded outside the seven sisters, which comprised Anglo-Persian Oil Company (now BP); Gulf Oil, Standard Oil of California (SoCal), Texaco (now Chevron); Royal Dutch Shell; Standard Oil of New Jersey (Esso) and Standard Oil Company of New York (Socony) (now ExxonMobil).

Were it not for the plucky Jewish-American commodities trader Marc Rich this status quo may have persisted. "The King of Oil: The Secrets of Marc Rich" reveals the role played by this one, Jewish immigrant in creating a spot market for oil outside the seven sisters, which made it possible for market forces to come into play in the trading of this precious commodity, loosening the grip of governments over its control. There were positives, the aforementioned break up of the oil cartel was one, and negatives to this, like the continued supply of oil to apartheid South Africa through his ingenuity may have sustained the regime for longer than it should have survived. Arguably on the whole the positives outweigh the negatives in as much as he helped set the stage for the subsequent growth in the world economy from the 1980s.

Rich's testing the limits of the established order in the oil trade spilled over into other markets. While Rich, the scion of a long tradition of Jewish traders, remains urbane and cultured, a new generation of traders with no connections to the establishment, living off their wits and indulging in excesses of debauchery unspeakable in polite company, took off where he left off and almost collapsed the world economy as we know it barely a decade ago, are caricatured in "The Buyside".

The autobiographical account of Wall Street trader Turney Duff reminds us that at the end of the day, for better for worse, it's men who create history not systems and cultures. He narrates a life of high living, fast cars and even faster women in a world where the fates of thousands and even millions are in the hands of immature traders whose morality is vague at best and sense of responsibility to themselves or any one else is none existent.

Duff's account sets the stage for the massive reset of the world economy that begun with the collapse of the sub-prime lending debacle and whose reverberations continue to buffet us about today


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