Review by Terry Nichols Clark, University of Chicago



What a marvelous book! Bob Smith leads us through the creation of a new market: for sovereign debt. How do people trade the debt of emerging market countries? For El Salvador, S. Vietnam, or Iraq, especially in the middle of a war, it is hard to sell bonds, to borrow money from the rest of the world. Or Turkey or Russia or Nigeria, as they were working out of black markets and government-regulated currency exchange rates. These were huge barriers to average citizens and investors just a few decades back. People in these countries had trouble buying a refrigerator, and could negotiate with merchants and others about small-scale currency conversion and rates. How rapidly this has moved toward a global , relatively smooth "market" is brought out by Smith's remarkable account.



He tells the story splendidly. He starts in the "middle" of his career and of the emerging market, with a chapter on El Salvador, where he takes us along step by step to show how basic personal relations led him to major results. The big points are made through small specifics. He arrived at the office of a high official, but chatted with the secretary, who in conversation was able to provide a handwritten list of all the bond holders of El Salvador's debt. Bob Smith then shows how this sort of list was the Key to the Kingdom, in El Salvador and as he continued around the globe, seeking to extract or assemble such lists. He could then contact the bond holders individually and inquire about whether they wished to sell their holdings. Many did. He would then ask them to suggest a price. And in what currency? If they wanted dollars, this implied finding enough dollars in the country that could be purchased to pay for the bond. And more transactions to put the package together.



Each chapter builds in a dramatic way, so we soon become fascinated by the story, and want to learn how Smith ever learned to navigate these highly risky, often deceitful and opaque waters. He takes us along, with great humor and self-deprecation, to show what a fatalistic roll he took, year by year, sometimes way up, sometimes way down, with much of his personal fortune at stake.



He went to Vietnam in the middle of the war, not to fight, but to learn things like how people bought old tanks and shipped them out for sale as scrap metal. He learned how to navigate six exchange rates that were used for different kinds of transactions. In Nigeria, it was sovereign debt bonds that had been "dead" for years, but might come back to life.



And in just a few decades it all seemed to become part of smooth electronic global trading. It was no easy trek.



What an engaging, personable tour!