Commentary

Have Capital, Will Travel

Interesting story in today’s Washington Post about newly unemployed financiers taking some time off to travel the world. But these young jet setters aren’t just filling the nightclubs of Ibiza, they’re also laying the foundations of new businesses in the developing world. Paradigm shifting excerpt:

“If you think about the things the world needs in the next 100 years, this country has everything — oil, raw materials, agricultural land,” he said of Brazil. “And the country I was living in, Great Britain, has absolutely nothing.”

He eventually started Sagace, which he said is Brazil’s first nationwide mortgage broker, now with offices in eight states.

Even if the rich world emerges relatively soon from the financial crisis, it is clear we face a future of increased regulation and higher taxes. The financial services sector could even evolve into a type of regulated public utility, averse to any kind of risk.

But, as this article confirms, individuals have choices. Policymakers can dream about regulatory structures and tax schemes and we can always say, like Bartleby the Shrivener, “I prefer not to.” We could be on the edge of a new reverse “brain drain.” Expect to hear a lot more about the new “Expat Class.”

Or, to put it into financial terms, short the rich world and go long on the developing countries.