ONeill GS Summit

Over the years, Jim O’Neill, former Chairman of GSAM, rose to fame for pegging the BRIC acronym (no such luck for the guy who came up with the far more applicable and accurate PIIGS, orSTUPIDS, monikers, but that’s neither here nor there). O’Neill was correct in suggesting, about a decade ago, that the rise of the middle class in these countries and their purchasing power would prove to be a major driving force in the world economy.

O’Neill was wrong in his conclusion as to what the ultimate driver of said purchasing power would be: as it has become all too clear with the entire world drowning in debt (and recently China), it was simply debt, which moved from the funding developed world consumption to handing out credit cards to consumers in the developing world. >> Read More

He may only have five weeks left as Chairman of Goldman Sachs Asset Management but Jim O’Neill is not changing his tune.  We were both speaking at a conference Friday – he got the glamour of the BRIC 4 and I got the depressing Euro 17.  But in Jim’s opinion, ignore the headlines – forget the Fiscal Cliff and the Eurozone crisis is extraneous, it’s all about the developing world. To put it into context economically, China creates another Cyprus every week.  It’s still all about the acronym that made him globally famous and not just in finance.

In 2013, O’Neill’s firm is forecasting Brazil to grow at 4.0%, China at 7.9%, India at 7% and Russia at 4%.  So in total the four BRICs are to power along at 6.9% and what he describes as “growth markets” at 6.4%.  Compare this to the 1.5% forecast in advanced economies.  In total, thanks to the fast-growing world, global GDP is to expand 3.7% in 2013 and 4.1% in 2014.  For any global investor, there is no crisis – there is plenty of growth.  It’s just not in the old world. >> Read More

Jim O’Neill, chairman of Goldman Sachs’ struggling asset management arm, is to retire from the investment bank where he became famous for forecasting the growing power of emerging market economies.

In 2001 Mr O’Neill coined the acronym Brics to represent the potential of Brazil, Russia, India and China while head of economic research for the bank, and his own rise mirrored that of the countries he championed.

However, people familiar with Mr O’Neill’s decision said that his departure may have been motivated in part by frustrations over the status of Goldman Sachs Asset Management within the bank.

A member of Goldman’s influential European management committee from 2006, the post of GSAM chairman was created specifically for Mr O’Neill in September 2010.

He was charged with expanding the business and rebuilding its flagging reputation on Wall Street, and had “strong ideas” about what should be done to revive the business, according to a person familiar with the group. >> Read More

India’s GDP may exceed all expectations next year as there are signs that policymakers might spring up positive surprises, Goldman Sachs has said.

“India in many ways remains the most complex of the four (Bric nations), with its demographics giving it the best potential GDP growth rate, but its inability to introduce effective policy change is a persistent source of disappointment” leading international fund house Goldman Sachs asset management chairman Jim O’Neill said.

“This being said, there are lots of policy changes being discussed and the Indian stock market seems to be quite excited about something. >> Read More

Goldman Sachs Asset Management chair Jim O’Neill tends to look on the cheery side of things, but in his latest weekly letter (.pdf) he’s more bearish than we recall. Just when he thought the economy was turning a corner, he says, there’s been a spurt of bad data, some of it Sandy-related, and some of it Fiscal Cliff-related (a topic on which he sees no progress).

His most interesting comments concern Europe. He notes that it won’t be too long before Germany’s export exposure to the rest of the Eurozone is rather small (compared to its BRICs export exposure) and so therefore it won’t be too long before Germany just doesn’t have any economic rationale in saving it.

He writes:

http://www.goldmansachs.com/gsam/advisors/education/viewpoints_from_chairman/viewpoints-pdfs/Q4_2012/20121116_weekly_update.pdf

Jessica Silver-Greenberg and Susanne Craig at The New York Times have a fantastic account of how Vikram Pandit was forced out as Citi CEO by new chairman Michael O’Neill.

 The report explains how Pandit was completely blindsided on October 15, when he walked into O’Neill’s office, on the same day he reported strong earnings.

…Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his. >> Read More

• CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
• CITIGROUP PRESIDENT-COO JOHN P. HAVENS ALSO RESIGNS
• CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
• CITIGROUP BOARD UNANIMOUSLY ELECTED CORBAT TO CEO
• CITIGROUP SAYS HAVENS HAD BEEN PLANNING TO RETIRE AT YEAR END

And so the rat procession out of the Titanic begins.

Full statement:

The Board of Directors of Citigroup today announced that Vikram Pandit has stepped down as the Company’s Chief Executive Officer and as a member of the Board, effective immediately. The Board also announced it has unanimously elected Michael Corbat CEO and a director of the Board. Mr. Corbat previously served as Citigroup’s CEO of Europe, Middle East and Africa.

Mr. Pandit said: “Thanks to the dedication and sacrifice of people across Citigroup, we have emerged from the financial crisis as a strong institution.

Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking. Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup. I could not be leaving the Company in better hands. Mike is the right person to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this Company. I will truly miss the wonderful people throughout this organization. But I know that together with Mike they will continue to build on the progress we have made.” >> Read More

China’s economy is expected to grow at a much slower pace of about seven percent over the next decade, but its stock market still has the most attractive upside among “BRIC” countries, according to Jim O’Neill, Chairman of Goldman Sachs Asset Management.

 ”China is in the early stages of going from a long period where it was all about the quantity of growth, into an era where the focus is on the quality of growth,” O’Neill told a news conference in Singapore.

O’Neill, who coined the term “BRICs” to describe the emerging countries of Brazil, Russia, India and China, said markets have not fully factored in the next decade of slower growth for the world’s second-largest economy.

That, he said, explains the underperformance of China’s stock market.

After three decades of breakneck development that saw annual growth average of 10 percent, China’s government is trying to steer growth lower to complete structural economic reforms. >> Read More

In the New World Order, the BRIC nations – developing nations – are to be the engine of global growth. That is at least what officials from the foremost global institutions have maintained all along, divorcing their narrative from the other, more populist narrative of just what the ‘New World Order’ is. That the ‘New World Order’ is not a standardization of the world system of financial governance, but, instead, merely a shift of power away from the North to the South has been the storyline given from technocrats, politicians and banksters through the entire crisis since 2008. But, as the crisis wears on and reveals itself to be globally systemic and evasive in nature – endemic to globalization – the future takes on a different aura.

For instance,  Caroline Anstey, managing director of the World Bank, claims that “the North no longer offers the model for development, it’s much more about South to South.” But also that “It’s still a volatile world and it’s a world in which we have to live with expectations of volatility.” But is Anstey’s understanding of the New World Order reality-based? Increasing reports from China – from monumental QE to megacity collapses – portend a much different picture for the future of global geopolitics and socio-economics. A future much less defined by any nation-states at all, and much more by global institutions.

Goldman Sachs foresees this new order as something different than Anstey.  Goldman expectsChina’s economy to grow at a much slower pace of about seven percent over the next decade, although its stock market still has the most attractive upside among the BRIC countries, especially as China embarks upon record quantitative easing.

“China is in the early stages of going from a long period where it was all about the quantity of growth, into an era where the focus is on the quality of growth,” Jim O’Neill, chairman of Goldman Sachs Asset Management, told a news conference in Singapore. >> Read More