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Riches Among the Ruins: Adventures in the Dark Corners of the Global Economy
By Robert P. Smith, Peter Zheutlin

The charm of this book comes from the author’s humors and wits.  Without the weight of big ego usually found in successful people, his spontaneous, calm and pragmatic attitude toward people makes the reading of the book very enjoyable.  As much as I learned about behind-the-scene operation of world finance, I found his entrepreneurial stories full of insights about himself and people in general.

As I explained in other post about this book,  entrepreneurs, and investor alike, can find values in the areas of inefficiency.  The appearance of the ruins is just disguise for values or opportunities.  High risks are involved in irregular conditions though.  How to navigate in uncharted water is the big question.

Investment risks? Read politics

The author mentioned several times in the book that it is not about bonds, it is about people.  I think that is the answer to the big question.  Besides the technical details, human nature is the driving force for economies, and everything else too.  Many things can be scientific and workable in concept, but could be complicated by human factors.

Mr. Smith gave more weight to the political conditions over other factors in his investment decisions.  He once lost big time soon after taking in a big chunk of Russian bonds as trading inventory and only to find that Russia government defaulted on the bonds.  However, he held his positive perspective based on his read on the international political dynamics and his personal observation about the economic conditions of peoples in Russia.  He recouped his losses not too long after.

Human desires

The book comes back again and again to touch the point that doing business is about knowing human nature.  Nothing in the world can be stronger than human desire.  Economic is all about desires.

Mr. Smith serviced as financial officer during the Vietnam war.  He had a unique vintage point about the impact of US military on the economy of the country.  Among many are the foreign currency flows.  With the war, Vietnamese chased for hard currency to anchor the value of their wealth or retain their buying power.  Even though many measures were devised to curb the supplies of dollars in order to control the country’s inflation problem, they always came up with ways to bypass those efforts.  It is human nature that immediate and personal interest will override the long term well being of the whole.  People’s concern about their livelihood is the source of indefinite creativity.

It is suddenly clear to me why our taxation laws are so complicated.  It represents an on-going game between an arbitrary system and the human nature.  Tax regulations, just like any rules in the world, are about setting limits; however, human nature is more dynamic and resourceful than any set of rules can control, so the rules have to be kept revised to response to indefinite potential of human behaviors.

Working with strangers

In his adventure, Mr. Smith had to deal with strangers and counted on them for helps.  He knew how to pull strings or to bluff his way through troubles, but quite often, he knew it was the connection with people in a sincere manner and at personal level the only key to earn respect and cooperation.

Stranger may not be your enemies but they won’t open to you if you fail to connect with them.  It is already a tough skill to find common ground with strangers, it is even worse if you act forcefully out of frustration.  Mr. Smith learned this when he assisted an egoistic American businessman who came to Vietnam, with cloud in DOD, to collect and sell waste metals from the wars.  Powerful as he was, he got stuck in the problems moving his metals out of the country, mainly attributable to his abrasiveness dealing with the locals.

Personally, I had seen the similar when I led audit projects in China.  It is typical that we have project with tight timeline and heavy work load, so the cooperation from client’s local staff is the key to our success.   One member of our team, out of frustration or time pressure, repeatedly played taught and used rough manner trying to get submission from these staffers.  As expected, he get a lot more resistance, quietly.

Have encountered many such people during trips in China, I realized that this is one of the common mistakes for many young westerners doing business in China.  It is a realty that we will face with plenty of conflicts, but the last thing is to use “force” to go get your way.

People will response in your favor if you can establish the “favorite status” in their minds, by sincerely showing your interest in them, their family, their health and career.  After all, business is part of life, learning other people should be part of the fun.  Don’t get hung up on the narrow mission of making money.  Doing business should be regarded as part of living, not just a job or task.

The greedy

There are a few stories in the book touching the subject of greed.  One rich and famous Turkish businessman wanted to get in the debt trading so he partnered with Mr. Smith’s firm because of its strategic status and special permits.  Later, he wanted all the control by buying out his firm.  Without much bargain power, interestingly, Mr. Smith took out a big loan under the firm’s name days before the take-over (good to have strong relationship with a banker ) and cash out big time.  I am not sure if he is the inventor of the classic “poison pill” strategy in modern merger and acquisition.

Another person who wanted to cut him off was his new partner, who worked for big banks and had world class connections.  He was at the point to leave his bank when Mr. Smith tried very hard to impress him to convince him to join the firm.  Found out the lucrative profit of such trade, he insisted to have major ownership of the firm.  Of course, the deal was off.   Interestingly, many years later, his firm had to come back to Mr. Smith because of his strategic position to be the front to buy back tons of bonds for the Nigeria government.

Business is driven by self-interest.  Greed is an important part of human nature.  I will go to an extend that it is also the source of many massy issues.  Doing business is just like managing an investment, the risk of greediness has to be factored into the equation.