Tag Archives: Goldman Sachs
As an economically anaemic developed world lurches from crisis to crisis, the search for new frontiers of economic growth gathers apace. And having alerted entrepreneurs everywhere to the possibilities of fortunes to be made in territories as diverse as East Africa, Kazakhstan and Indonesia, it seems only natural to highlight yet another huge market that most people in the West are barely cognisant of outside a Cold War context: Vietnam.
Best known worldwide for a conflict which was in many ways the blueprint for a later and similarly illogical conflagration in Iraq, today’s Vietnam is defined by the Đổi Mới or ‘renovation’ reforms begun in 1986 by the still-ruling Communist Party of Vietnam: a significant economic space has been opened up for private enterprise in what is essentially a statist economy, and the results have been impressive. Vietnam has consistently posted exceptional economic growth rates in recent years, with expansion of 5% per annum even in the aftermath of the late 1990s Asian capital flight crisis.
This level of growth is significant in the context of other general indicators, which point to Vietnam as an incredibly underrated market:
1. Population. The Socialist Republic of Vietnam has over 91 million people, making it the thirteenth largest country by population in the world and the eighth most populous in Asia. Moreover, the General Department of Statistics of Vietnam states that over 60% of the population are under 35 years of age: Vietnam is a huge youth market, confirmed in no small part by MTV Vietnam launching on 1st July 2011.
2. Education. As an intriguing recent Business-in-Asia.com report authored by former United States diplomat Christopher Runckel illustrates, education is highly prized in Vietnam – and not just at the level of the individual or family. The Ministry of Education and Training (‘MOET’) commands around 20% of the state budget, with the number of higher education institutions in Vietnam more than doubling from 153 in the 1999-2000 academic year to 369 less than a decade later; the literacy rate for those aged 15 and over was 93.5% in 2009.
3. Trajectory. A 1,281 kilometre border with global manufacturing powerhouse China and membership of regional grouping ASEAN is indicative of Vietnam’s key position in the global economy of the future, with no less a force than Goldman Sachs listing the nation in its Next Eleven, a group of economies that, like the BRICIS, are said to provide the growth of the future.
It’s difficult for most people to recollect an era when the future seemed to be so uncertain, but whatever happens in as yet unelapsed time, we at Mediolana cannot be accused of ignoring the phenomenon that is Alessio Rastani, director of the London-based company Santoro Projects Limited who was catapulted to global stardom this autumn via an instant classic of a BBC News interview. Rastani – who has since featured more times on national and international television than even we can chronicle – is looking increasingly visionary; his observation that ‘governments don’t rule the world: Goldman Sachs rules the world’ has taken on the status of life imitating art as ‘Super Mario’ Monti and Lucas Papademos – both heavily connected with the investment banking and securities behemoth of 200 West Street in New York City – are now respectively in charge of troubled eurozone economies Italy and Greece.
This past Saturday, Rastani outlined a new dimension to his thought at the Bank of Ideas (‘BAI’), an impromptu educational facility that was only inaugurated on 19th November 2011; the BAI is located in an abandoned UBS AG building on the fringes of the City of London. Rastani’s main talk was, as usual, perceptive and honest. He pulled no punches in telling his audience that Wall Street would always defeat them as long as it could manipulate the general public’s ignorance of all matters financial and play on human irrationality; meanwhile, Rastani’s exhortation that people should stop wasting their lives obsessing over reality television shows and soap operas was a call that is as salient as it is unlikely to be heeded, at least in the short-term.
Yet the truly striking – and troubling – development in Rastani’s burgeoning theoretical corpus was articulated not so much during his talk, but whilst waiting to enter the building at Sun Street, Hackney: chatting to some fans, Caffè Nero cup in hand, the amiable Italo-Iranian noted that the state of play in the financial markets ‘is a lot worse than people can actually imagine’, and that soon – perhaps as soon as January, 2012 – ‘people are going to have to realise that the entire system as we know it is going to collapse‘.
This particular strand of Rastani’s thought is disturbing, but not because we think that one of the world’s most famous independent traders is incorrect on this count; quite the reverse is in fact the case, and it is this that perplexes us. During his main talk, Rastani cited the example of MF Global (‘MFG’), a financial services provider that is now in the death spiral of Chapter 11 bankruptcy and liquidation. Facing the inevitable fallout from gigantic bad bets made on European sovereign debt, it appears that MFG heisted hundreds of millions – perhaps billions – of dollars from customer accounts. But, incredibly, these same customers are facing serious obstacles to legal redress, with the judge in their case at the Manhattan Bankruptcy Court refusing their request to form a committee to represent them while, at the same time, ex-MFG CEO Jon Corzine – the man who oversaw this fiscal and ethical meltdown – walks free. As Rastani warns us, this is a sobering precedent – and one the general population would do well to contemplate.
As noted in this blog on 13th November 2011, Mario Monti – a man with the enviable moniker of ‘Super Mario’ – has been appointed as Prime Minister of Italy. A distinguished technocrat with the European Commission (1995-2004), stylistically Monti is a world away from his flamboyant and legendarily corrupt predecessor Silvio Berlusconi; bespectacled and professorial, Monti’s decades of involvement in academia at both the University of Turin and Bocconi University have engendered a thoughtful, intellectual approach to finding solutions. An October 2010 interview with the man who is now in charge of the boot-shaped peninsula reveals a contemplative personality trying to grapple with the problem of making Europe more competitive without diluting the identity of what is still by global standards a social market: a paradigm, albeit flawed, of capitalism with a human face.
Yet as a recent Al Jazeera English report filed by the evergreen Copenhagen-raised Italian Barbara Serra illustrates, ‘Super Mario’ is faced with a predicament so multitiered that his computer game namesake would be daunted by it. Like in many eurozone economies, the Italian labour market is characterised by enormous structural youth unemployment: at 24%, it is three times the 8% general rate of unemployment. This demographic is arguably the most troubled sector of the Italian economy, since it is relatively impoverished, exploited and, lacking any profound stake in the system as a whole, liable to explode. And given Monti’s corporate links – the new Italian Prime Minister and Minister of Economy and Finance is also an adviser to Goldman Sachs and the Coca-Cola Company – there is every chance that any approach to growth will be focused on the cream of the most privileged actors in the macroeconomy, rather than the millions on the social and economic margins of Italy.
To avoid this scenario – and turn Italy into something approaching the economic behemoth of twenty years ago – we at Mediolana think that Monti needs to concentrate on the following objectives:
1. Entrepreneurship. As things stand, millions of young Italians are collecting degrees which are practically worthless in the job market. Monti needs to recalibrate Italy’s education policy to make sure that the link between qualifications and jobs is strengthened, and promote self-employment – with generous government incentives – as the way to slash Italy’s huge welfare bill and empower the next generation of wealth creators. Otherwise, an entire cohort of Italians will continue moving from job centre to job centre and temporary contract to temporary contract without any long-term prospect of security or satisfaction.
2. Exports. Despite intense competition from China, Italy is still a remarkably resilient player in industries such as textiles, food production and design; moreover, anything that requires an artisanal touch and which possesses durability and class will almost always have a market, even in the deepest of recessions. Furthermore, the global middle class is expanding at a phenomenal rate, particularly in Asia and Latin America; as Turkish entrepreneurs are showing – while cutting into Italian market share – there is an unfathomable desire for pasta even in Africa.
3. Emigration. In the short term, rebuilding the shaky foundations of Italian capitalism will take time: the cultural and political shifts necessary to prioritise the creation of SMEs and the families that are their incubator could take at least one generation. In the interim, the current generation of Italians cannot afford to wait: they must emigrate if opportunities cannot be found closer to home. As native speakers of a Romance language, those born and raised in Italy enjoy a natural advantage in seeking their fortunes not merely in swathes of the largely depressed EU, but also much of the booming developing world, most obviously Latin America.
As an introduction to a television programme, the animated sequence at the beginning of RTÉ One‘s The Saturday Night Show is a bizarre juxtaposition to the Republic of Ireland’s current economic predicament: a panoply of ironic hedonism. Once the camera switches to the studio, a barely comedic summary of various news items quickly reveals a nation filled with fiscal foreboding; weak punchlines about emigration to New Zealand abound. On the 8th October 2011 edition of the Brendan O’Connor-fronted extravaganza, Warner-in-Chief Alessio Rastani stepped into this most sullen of sets; having witnessed the choreographed mauling that the panel of That Sunday Night Show attempted to hand out to Rastani a little over a week ago, we at Mediolana expected another sensationalist treatment of the ‘Rogue Trader’ whose stock is rising faster than the markets are falling.
In fairness to O’Connor, while his behaviour towards Rastani was never exactly objective, the former cheerleader of the Irish property bubble did at least give the besuited director of Santoro Projects Limited a little more time and space to expound on some of his central themes: why shares are overvalued; why the present economic crisis is only just beginning; and how the administration of the United States overlaps with the key movers and shakers at certain investment banks.
Yet on reflection, the interview – carried on Ireland’s most-watched channel at 21:40 on a Saturday night – raised more questions than it provided answers; this notwithstanding the efforts of Rastani, who came across as lucid, amiable and gracious. Two issues in particular keep resurfacing in our minds:
1. Strategy. On more than one occasion, O’Connor stated that most people in the ‘broader economy’ do not have a strategy to cope with a recession, the implication clearly being that Rastani’s positive spin on the consecutive economic contraction over two quarters was misplaced. The lack of a game plan may well ring true for many, but one has to ask: why on earth should this be the case? Much of the developed world has been staring down the barrel of prosperity’s machine gun for some time now, with the first stirrings of the credit crunch obvious to wiser minds years before Twitter reached critical mass. Are we to conclude that unparalleled access to knowledge in the form of libraries, bookshops and the World Wide Web at a time of a seismic paradigm shift in global society equates, in the eyes of the majority, to nothing more than passive resignation?
2. Gravity. One of Rastani’s most interesting points is that a recession is one of the best opportunities to pick up assets that might be unattainable at any other time. For many, this is a once-in-a-generation opportunity; locked out of the boom, or simply unwilling to indenture themselves and their children for a shot at mediocrity, savers across the developed world are scanning a horizon of precipitous property prices. Yet when the Internet icon posed the simplest of questions – why would anyone wish to buy in an upward market? – and affirmed that it was time for everyone to ‘dream of a depression’, the atmosphere in the studio seemed poised to explode. Was an entire generation – prisoners of the idea that booms and busts are merely historical artifacts – ever aware that ‘up’ is not the only direction in which an economy can move?