Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

Launching a President

“Legalized Corruption”: The Best Democracy Money Can Buy

Purchasing Political Protection

Relationship Power: Diffusing the Euro Time Bomb

Super-Entity: The Capitalist Network That Runs the World

CHAPTER 11

DE-LINKED: EXPULSION AND COMEBACK

Sent into Exile: Dick Fuld

Shock-Resistant: Larry Summers’s Network

Meteoric Rise

Against All Odds

The Bull in Charge of the China Shop

Den of Thieves: Mike Milken

Complete Network Collapse: Dominique Strauss-Kahn

Ponzi Schemes and Sex Scandals: Buddy Fletcher and Ellen Pao

Omni-Connected: Michael Klein

CHAPTER 12

SUPER-CRASH: “EXECUTIVE CONTAGION”

The Crash of a Titan: John Meriwether

The Big Picture: Capitalism in Crisis

Debt and Financialization

Wealth Gap and Inequality

Globalization Winners versus Globalization Losers

Approaching the Tipping Point

When an Irresistible Force Meets an Immovable Object: Brexit

The Next Crisis: Systemic Failure and Contagion

The Culprit: The Superhubs or the System?

Disequilibrium: Superhubs Preventing the System from Correcting Itself

“Executive Contagion”: Executives Becoming Super-Spreaders of Risk 216

Averting Collapse: Thinking Differently

The Growth Premise: A Paradox?

Culture: The Value of Our Values

Recalibrating the System: Revolution or Evolution?

The Law and Ethics

Corporate Culture: Psychological Detachment and Willful Blindness

Incentives

A Sense of Purpose: Creating Value for Society

An “Evolving Revolution”

Acknowledgments

About the Author

Notes

Index

Foreword

by Nouriel Roubini

Professor of Economics and International Business, Stern School of Business;

Cofounder, Chairman, and Chief Economist of Roubini Global Economics

IHAVE KNOWN SANDRA NAVIDI FOR SEVERAL YEARS, and have had the pleasure of working with her in my capacity as Chairman of Roubini Global Economics, a global macroeconomic research firm. $uperHubs is a natural extension of Sandra’s academic background and her vast professional experience in law, investment banking, macroeconomic consulting, and the media. In her capacity as an expert, insider, and observer, she has gained the respect and trust of the global industry leaders she writes about and has obtained firsthand access to their international power circles.

In interacting with and advising key industry players, Sandra has acquired a keen, almost intuitive understanding of how they think, communicate, and operate. These fascinating encounters with the global financial and economic policy elite in combination with her knowledge of how the system operates inspired her to apply the analytical framework of network science to the world of finance and global financial policy. By doing so, she shows how networks and their nuclei—the “superhubs”—drive our financial system, our economy, our economic and financial policies, and our society.

Her personal anecdotes from the front lines of international finance provide important context and help familiarize readers with otherwise abstract concepts. By connecting the dots between theory and practice in an original way, and underpinning them with psychological, sociological, and anthropological explanations, she illuminates how human nature and systemic forces impact the course of history. While Sandra’s in-depth analysis is substantiated by exhaustive research, she conveys her theories in an entertaining and user-friendly language, giving readers an intriguing insider’s view of many exclusive networking platforms.

$uperHubs breaks down the complexity of networked systems into easily understandable parts, and while the focus is on finance, its sub-themes on network mechanics are applicable to virtually all areas of life. First, the book identifies and characterizes the most powerful people in global finance, economics, and economic and financial policy; it then exposes their interlocking relationships and their individual as well as collective influence on the system—for better or for worse. Moreover, $uperHubs explores the links that connect them: money, information, and opportunities. It also offers insight into how mere mortals become “masters of the universe,” how they connect and transact within their own homogeneous circles, and why women struggle to seize a foothold in the executive ranks of the financial and business world. She also shows that the worlds of academia, economic policy, and global finance are interconnected as a number of individuals—throughout their careers—straddle these three interlocking networks and have played varying key roles in several of them over their professional and business careers.

Notably, $uperHubs also uncovers how the elite and their networks contribute to systemic weaknesses—the overconcentration of economic and financial power, the widening income and wealth gap, gender and racial disparity, social fragmentation, and the overall systemic fragility—and how they affect all of us. And just as these phenomena are not independent of one another, neither are the networks that govern them. As in every other network, the overwhelming influence of a few key players makes our system increasingly imbalanced and unstable—and therefore susceptible to failure and disruption.

This book provides an intimate glimpse into the obscure world of high finance and global economic policy, and while it will undoubtedly appeal to those outside of the inner circle, it should be voraciously consumed by anyone in business. Elite business schools often advertise their network potential to attract new students; however, they do not teach relationship and network building in their MBA programs. $uperHubs ought to be prerequisite reading material, as it provides an indispensable primer in network science and a master course in the intangible art of networking.

Sandra’s balanced yet critical analysis of the financial power elite neither glorifies nor vilifies, nor does it absolve or blame. It warns that we must understand complex systems not only to think differently but also to pose different questions, because the longer the current unstable disequilibrium of power is allowed to exacerbate, the harder it will be to resolve, and kicking-the-can-down-the-road will make such problems like rising inequality even worse.

We should expect increasing national and global disruptions to come from technological innovations that are capital intensive, skills biased, and labor saving. Growing trade and globalization trends challenge workers, firms, and entire industries and economies. Booms and bubbles lead to crashes, busts, and financial crises with severe economic and fiscal costs. And geopolitical conflicts become geoeconomic conflicts thanks to the rise and decline of global powers. Thus, enlightened policies are needed to reduce inequality and provide greater opportunities for more people; otherwise, social and political instability will seriously rise over time within countries and across borders. Given their power and influence, superhubs—which increasingly connect the centers of economic, financial, and policy power—have a special responsibility to make the system fairer and stable. The alternative is economic, social, political, and geopolitical conflict and dystopia.

There are other books about Wall Street, about the power-elite, and about networks, but $uperHubs uniquely combines these three aspects, along with thoughtful—and thought-provoking—critique from someone who has enough access within the network to acquire valuable information and yet who is sufficiently outside of it to remain objective and reflective.