$up­erHubs – How the Fi­nan­cial Elite & Their Net­works Rule Our World: The Fi­nan­cial Su­per Network

A close ex­am­i­na­tion of the most ex­clu­sive global club of all – the fi nan­cial elite’s club. By PROS­EN­JIT DATTA

Business Today - - CONTENTS -

Con­sider a very elite, global club which con­trols fi­nan­cial sys­tems around the world. Mem­ber­ship is limited and ex­clu­sive. The elite mem­bers are ca­pa­ble of bankrupt­ing na­tions, or help­ing them come out of bank­ruptcy. How do you be­come a mem­ber of such a club? Where do the mem­bers grav­i­tate nor­mally? And even within the club, how do you move up the strict hi­er­ar­chy?

San­dra Navidi’s book, $up­erHubs: How the Fi­nan­cial Elite & Their Net­works Rule Our World, is a close ex­am­i­na­tion of the most ex­clu­sive global club of all – the fi­nan­cial elite’s club.

You need to be very rich to be a part of this club, of course. Al­most all mem­bers in the top ech­e­lon are bil­lion­aires. Ge­orge Soros (net worth $24.9 bil­lion), who can move cur­rency and other fi­nan­cial mar­kets, is one of the mem­bers. David Tep­per of Ap­paloose Man­age­ment (net worth $11.4 bil­lion); Steve Co­hen, Founder of SAC Cap­i­tal, now re­named Point72 As­set Man­age­ment ($12.7 bil­lion); John Paul­son, Founder of Paul­son & Co ($9.8 bil­lion); Stephen Sch­warz­man, Co-founder of Black­stone ($9.5 bil­lion); Leon Black of Apollo Global ($4.6 bil­lion); and Henry Kravis ( KKR, $4.2 bil­lion) are some of the other mem­bers. They are hedge fund man­agers, bond kings, pri­vate eq­uity ti­tans, and cur­rency mar­ket moghuls.

But hav­ing bil­lions (or at least mil­lions) is not enough to get an en­try. In fact, one of the pre-req­ui­sites of be­com­ing a part of the Su­per­hubs and the net­works around it is be­ing truly in­tel­li­gent, at least in global fi­nance. Most mem­bers are self-made mul­ti­mil­lion­aires and bil­lion­aires, bank CEOs (Jamie Di­mon, CEO, JP Mor­gan Chase; Lloyd Blank­fein, CEO, Gold­man Sachs; Michael Cor­bat, Cit­i­group CEO, etc), or glob­ally renowned econ­o­mists (Nouriel Roubini, Robert Shiller, Paul Krug­man, Nis­sim Taleb, and Thomas Piketty), politi­cians from the west­ern world (Tony Blair, the Clin­tons), cen­tral bankers of the west­ern world, chiefs of the IMF and World Bank, US Trea­sury Sec­re­tary, or oth­ers who have reached the top of their pro­fes­sions and fields. There are, in fact, rel­a­tively few in­her­i­tors who in­habit the Su­per­hubs. The abil­ity to take enor­mous risks and come out ahead of­ten dis­tin­guish the mem­bers from oth­ers who are oth­er­wise good fi­nan­cial brains, but don’t make the cut.

Navidi’s book came af­ter four years of re­search on net­works that the fi­nan­cial elites form, how some of the big­gest fi­nan­cial ti­tans be­come Su­per­hubs, which in turn at­tract other fi­nan­cial giants, and how net­work­ing

– in Davos, in mil­lion-dol­lar char­ity galas and art auc­tions, in New York par­ties and other think-tanks and global con­fer­ences – keeps mem­bers closely linked to each other.

The Su­per­hubs like Davos or the char­ity galas of New York or the par­ties in the houses of some of the bil­lion­aire fi­nanciers pro­vide the meet­ing ground for the elite. The money, in­for­ma­tion and so­cial cap­i­tal of the mem­bers of the net­works pro­vide in­fi­nite op­por­tu­ni­ties.

Navidi is a mem­ber of the network her­self. She is the founder and CEO of BeyondGlobal, a man­age­ment con­sult­ing firm. She has worked with Nouriel Roubini closely at his macroe­co­nomic firm, been an in­vest­ment banker and a cor­po­rate lawyer and con­sul­tant. She also spends a good part of her life net­work­ing around the world with the sub­jects fea­tured in her book.

She ex­am­ines the Davos phe­nom­e­non and points to its real im­por­tance. “The of­fi­cial pur­pose of Davos is to fos­ter crit­i­cal dis­cus­sions to find so­lu­tions for press­ing global prob­lems... But the real rea­son why heavy hit­ters spare no ef­fort or ex­pense to at­tend? The end­less peer-to-peer power-net­work­ing op­por­tu­ni­ties...”

Where Navidi’s book scores over oth­ers who have writ­ten about fi­nan­cial net­works and their power is that her’s is an in­ti­mate look from the in­side. And it is com­pletely bal­anced. While it ap­plauds and glo­ri­fies many of the men who con­trol the fi­nan­cial levers of the world, she in­di­cates to the in­her­ent in­sta­bil­ity of the global fi­nan­cial net­works and their ruth­less­ness. She points out that the net­works are less about in­sti­tu­tions and sys­tems and more about su­per in­tel­li­gent per­son­al­i­ties, with their enor­mous egos, and their ec­cen­tric­i­ties. She also finds out the fact that at the global level, the fi­nan­cial net­works are about rich white men – and ex­cludes women to a large ex­tent. (Christine Le­garde is an honourable ex­cep­tion).

Navidi tells how once a per­son gets into a network it is rare to fall out of it. But it does hap­pens oc­ca­sion­ally. Do­minique Strauss-Kahn, who was once right at the top of the net­works, is one ex­am­ple. To­day he is scrab­bling around the pe­riph­eries. Larry Sum­mers made some spec­tac­u­lar mis­takes – but man­aged to bounce back. And the one network king, who was spec­tac­u­larly dis­graced but has clawed his way right into the heart of the network is Micheal Milken, the erst­while Junk Bond King.

Navidi’s book is both fas­ci­nat­ing and fright­en­ing. Fas­ci­nat­ing be­cause it deals with high fi­nance and the ti­tans of the fi­nan­cial world and gives an in­ti­mate look into their work­ing styles and their life­styles, and fright­en­ing be­cause it leaves you with an un­der­stand­ing of how frag­ile the global fi­nan­cial network is, and how de­pen­dent it is on hu­man frail­ties – and why, even if it is run­ning per­fectly nor­mally now, it can crash once again and va­por­ise bil­lions and even tril­lions of dol­lars of wealth. ~

BY SAN­DRA NAVIDI PAGES: 289 PRICE: ` 599 NI­CHOLAS BREALEY PUB­LISH­ING $up­erHubs: How the Fi­nan­cial Elite & Their Net­works Rule Our World

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.