Oligarchs and sociopaths rule ‘Undermoney’
This spring, my top book recommendation is the zeitgeist-capturing financial thriller “Undermoney” by first-time novelist Jay Newman.
This has everything you want.
Sociopath billionaires. A beautiful adrenaline junkie with the fighting skills of a special forces assassin. Deep state operatives conspiring to steal billions of U.S. taxpayer money to buy an election and undo American malaise. Murderous Russian oligarchs deploying mercenary armies, serving Vladimir Putin, the puppet master. A Medici descendant who controls a financial fortune to rival his descendants. Conspiracies within conspiracies.
And in his mastery of military detail, Newman channels Tom Clancy’s Cold War novels of the 1980s. With his forays into spy craft and double-dealing among competing militaryindustrial complexes, Newman nods to John le Carré. Conspiracies hatch more intricate conspiracies, as baroque as anything in Dan Brown’s “The Da Vinci Code.”
If you enjoy financial/military/spy/conspiracy thrillers, you will love “Undermoney.”
Published in January, the fictional description of Putin and his use of mercenaries to do his dirty work seems ripped straight from current headlines. The dark money fueling U.S. hedge funds are equally nefarious. Newman understands how kleptocracy and oligarchic excess — both in Russia and in the West — repel and attract us in 2022. This is fun stuff and extremely of the moment.
Jay Newman is not just any firsttime novelist. Newman describes the world of the ultra-rich and connected hedge funders because he worked, fought and emerged victorious from this world.
He holds a legendary place in the hedge fund world, having endured decades-long battles against countries unwilling to pay their debts. He writes about big money, international political intrigue and maniacally focused hedge funds managers; he has lived through it all.
In 1999, Newman managed to win a court case and change international bond-market precedent against countries that do not pay their debts to bondholders.
A brief financial history of sovereign debt: In the 1980s, many Latin American countries defaulted on their debt to U.S. and European lenders. In the 1990s, debtholders swapped their defaulted loans for “Brady bonds,” named for then-U.S. Treasury Secretary Nicholas Brady. The settlements allowed much of Latin America to rejoin international financial markets, even though debtholders had to accept less than full value with the Brady bonds.
Newman, however, had purchased some Peruvian debt and withheld it from the Brady bond debt swap. He joined forces with a very patient hedge fund named Elliott Associates. With Elliott, Newman sued for full payment of the debt. After years of appeals, he got a New York court to agree that Peru could not pay its Brady bonds without settling Newman’s debt in full as well. For a few weeks in 1999, he threw the entire country into default until he got paid.
Newman became known as is the ultimate hardball negotiator of sovereign debt.
When Argentina had the largest sovereign debt default of all time in 2001, Newman used the same playbook. He famously managed to seize an Argentine naval ship in Ghana with 200 sailors aboard, using a Ghanian court order.
Usually, when I watch a successful financier turn out to be a great writer, I turn picklegreen with envy. I do not resent Newman, however, and maybe now is time for my own quick name-drop humble brag.
Newman was briefly a client of mine when I worked on the emerging market bond desk at Goldman. We followed along in real time as he engineered the Peruvian bond default.
I tried my darnedest to sell him really cheap defaulted Argentine bonds in 2001, anticipating what his eventual strategy would be. It took him and Elliott 15 years to succeed, but eventually Newman prevailed with a $2.4 billion settlement in 2016, an estimated tenfold return on investment.
The word I kept returning to while reading “Undermoney” is prescient. Newman published the book in January, before most of the Western world had to reckon with Putin’s murderous, kleptocratic regime. This guy sees the future.
Russian bonds will likely default in May because Western bondholders have frozen reserves or blocked payments.
I haven’t spoken to Newman in 20 years. There’s a high probability he would not remember me, as I wasn’t a particularly good salesman and he barely needed Wall Street to do his thing.
I may send him this column, however, as a pretext — I need to find out what he is going to write about in his next novel. He clearly anticipates the future better than anyone. That might make me money some day.