Reflections on New York: BBH

This past summer of 2011 I had an amazing opportunity.  I went to live in Manhattan for a month on a school exchange.  I stayed in International House, a dorm near Columbia University, and I attended the Levin Institute taking classes in Global Leadership and Management and Global Finance and Marketing.  It was an intense 4 weeks, but the best part was the site visits.

Playing with the big boys

During our sojourn in the Big Apple, our group had the opportunity to have private briefings with corporate executives and political delegates.  I even ran into Chris Rock when I was walking through the theatre district.

Yeah he's totally not creeped out by me.  Best buds, us. 

NASDAQ

Anyway these site visits gave us a peek into the world of New York Finance.  I never understood it before, but it's the engine that makes the economy work.  I think the penny dropped for me when we visited the NASDAQ stock exchange to see them ring the opening bell. 

I always thought before that the way businesses worked was you'd buy a few things, then sell them, then use the profits to buy more things, then sell them, and grow the business that way.  Small businesses can start out like that but for bigger ideas like cell phone networks or TV stations or airlines, you can't do things that way, because the whole system is useless unless you start big.  That's when people and firms with lots of money come in to invest. 

This is the role of the stock market, the bond market, investment banks, private equity.  They put in lots of money to get big projects off the ground, hoping to get more money back.  Cool eh?

Marc Chandler of Brown Brothers Harriman

One of the first briefings we had was at a financial services firm called Brown Brothers Harriman (BBH).  Our briefing was with Marc Chandler, the global head of currency strategy.  He deals with foreign currency exchange.  He was a wonderful host who explained to us how one of the reasons BBH fared so much better than other investment banks like Lehman Brothers was because they were a privately held partnership.  They invest their own money, and not so much other people's money, like a publicly held firm would do.  This means they are a lot more careful because they feel a sense of ownership over the money they invest.

I still remember preparing for this meeting.  We were given his bio and a link to his blog.  This was the article that he had written that day and I did research hoping to understand it.  Greece was appearing more and more frequently in the news due to their escalating debt crisis and Jean-Claude Juncker, prime minister of Luxembourg was saying that maybe they wouldn't get another bail-out.  When we met Marc he told us that that was rediculous, because if Greece was allowed to default, the whole Eurozone would go down with them.  Finance being new to me, this was the first time I realized the implications of the European Union - how interconnected everything had become over there.

We got to take a picture with him before we left.  The perspective of the shot makes me look like a giant compared to everyone else.  I assure you it's an optical illusion.

The reason I got to thinking of this was because Greece is still in the papers along with Italy and whatnot.  And of course Marc Chandler was right.  Greece got their bailout.  It took a few months of negotiations and the prime minister stepped down in the process and the Greeks protested and threatened a referendum over the government spending cuts that came with the bailout... but they did get one.  We'll see what happens with the rest of the European debt crisis in the next few months I imagine.

I think over the next little while I'll try and post more about these site visits, because it gave me a glimpse of the world of finance, which is something I never knew before.  And for the laymen on the site, I know it can be a little arcane, but it is worth discussing because in a big way, it's what makes the world go 'round.