Geopolitics And The Global Economy: Omeed Malik Weighs-In

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In today’s increasingly globalized world, local politics, cultures, trends, and financial atmospheres can create a ripple effect that is felt outside of the immediate scope of said change. Similarly, these waves of change can indirectly impact other non-local markets, as each country’s independent financial markets become increasingly interconnected. Global political climates have the propensity for creating tariff wars, trade shortages, and other complex issues that can develop into long-term financial change for all parties involved. Thus, in the modern global economy, small shifts in the proverbial wind carry immense weight, and are often considered warning signs of imminent changes, watched over closely by individuals within the financial sector. More than ever, professionals in the financial sector must be aware of not only changing financial and trade conditions on a global scale, but the subtle geopolitical nuances that could manifest themselves in a manner that impacts finance, trade, and the overall markets.

Investment bankers, market managers, and private equity providers must recognize the shifting global conditions, and the ways in which their investments may be impacted, in order to remain successful within their positions. In the spirit of remaining not only informed, but able to leverage their understanding of global events in a monetarily beneficial manner for clients, finance professionals must analyze current events in the realm of geopolitics. Often, this results in global banking individuals pursuing opportunities within the realm of geopolitical education, symposiums and public platforms, and appearances throughout national media platforms. Vastly invested in understanding the complexities of geopolitical impacts on the global money markets, these finance professionals serve as the perfect resource for gaining understanding, and garnering an informed perspective.

As the CEO and founder of Farvahar Partners, a boutique merchant bank that specializes in funding and resources for businesses, Omeed Malik relies on keeping his finger on the pulse of global geopolitics to ensure the successes of his investment endeavors. Unlike many other providers of capital, and liquidity for businesses of all sizes, Farvahar Partners also provides business development services, and leveraged Malik’s years of pertinent leadership experience within the financial sector to offer unique thorough services. Widely involved in each aspect of investment for Farvahar Partners, Malik parlays his previously perfected skills within the finance sector to provide positive investment experiences, and pivots his trajectory appropriately, in tandem with the subtle geopolitical shifts that create market changes. No stranger to regular appearances on national news outlets to discuss the effect of global current events on the financial field, Malik shares his uniquely qualified insights, and believes in the transformative power of educating the general public in terms of the global economy.

In recent months, Malik has lent his insights through various outlets, and has touched upon the current global financial climate. From the recently rising tensions with China, to the potentially misconceived notions of impending depression at home, and the newly burgeoning private-market company investments, Malik has publicly explored the ways in which these currently pertinent topics have impacted investors, businesses, and individuals. Through his previous experiences in leadership roles with global financial juggernauts, as well as through ownership and direction of Farvahar Partners Malik has garnered the pertinent expertise regarding the financial sector needed to accurately predict ways in which current global changes can impact the financial market. He has spoken on the complex myriad of geopolitical changes taking place within the current market within various outlets.

Pre-IPO Trading

On a national level, Malik has lent vast insights related to the blossoming trend of pre-IPO private market investments, which is creating the effect of private companies garnering the needed liquidity to grow infrastructure, and allowing these companies to wait longer to go public. Though VC firms, hedge funds, and PE firms have invested in private firms previously, the newly burgeoning “shadow market” provides private companies with the essential tools needed to maintain complete control, whilst spearheading growth. With trades and investments made only by finance professionals, this sector isn’t readily open to the average individual seeking initial investment, and requires investors to retain a large liquid capital flow prior to completing said private interest investments.

According to Malik, this trend mostly affects highly valued operational private companies who would have chosen to remain private in previous economic conditions. However, with the global economic conditions of the present, these companies could have been somewhat forced to go public earlier. With the influx of liquid capital gained from pre-IPO investment, these companies have been allowed to circumvent the fate that would have ultimately led to their going public.

Malik has referenced former President Obama‘s 2012 signing of the Jobs Act, which quadrupled the amount of shareholders allowed within a private company, as potentially limiting the need for an IPO, with the increased numbers of individuals invested. In turn, this equated to hundreds of billions of liquid capital readily available to utilize for private companies to gain the infrastructure needed to continue growth strategies. A similar cause and effect, according to Malik, can be applied to hedge funds, which have struggled with maintaining performance in recent history. Seeking alternative ways to generate yield, hedge funds have found investment in the pre-IPO private sector to be vastly beneficial, and a thoroughly modern way to keep afloat within the macroeconomic sphere.

Of course, the rise of this new pre-IPO trading has been accompanied to changing economic conditions globally, and locally. Whereas employee shareholders of private companies were required to wait until a company went public prior to being allowed to sell shares, these employees can now sell off their shares during the private investment phase. As the economic conditions of the average American continue to ebb and flow, this method provides employees with tangible cash at an earlier time, versus the potential of long-term reward via stock market success. According to Malik, this occurrence speaks volumes to the macroeconomic conditions related directly to the rise of the private market.

Malik’s company, Farvahar Partners, is registered with the SEC as a licensed broker, providing the company with the ability to confidently trade, invest, and act on behalf of clients within the private market sphere. Recognizing the relatively untapped potential of investment in the pre-IPO private sector, Malik sees ways in which this type of trading can be a mutually beneficial experience for all parties involved, and speaks volumes of the changing macroeconomics at play.

Antiquated Foreign Policies

In speaking about the correlation between the United States’ foreign policy across the timeline of the past, and ways in which foreign policy directly impacts the local and global economic structure, Malik cites the importance of recognizing certain foreign policies as antiquated. Specifically, he cites neo-liberal and neo-conservative policies as being outdated, and not relevant to current conditions. According to Malik’s viewpoint, Presidential candidate Tulsi Gabbard’s policies represent a modern “third way” to view foreign policy, in a way that recognizes its’ tie to domestic economy.

In recent domestic history, foreign policy has resulted in vast deficits in the economy, both directly, and via the devastating effects of dedicating precious funds and resources without a return on expenditure. Notably, the United States has spent over $6 trillion dollars on regime-change wars since 2001, with a majority of said funds arguably wasted. Malik’s stance on this wasteful expenditure states the undeniable notion that this level of bleeding resources has put a deficit into our public finances. In considering ways in which government expenditure can stimulate, or destabilize the economy, such gross monetary loss due to foreign wars has certainly created a negative effect on the overall economic status of the country.

The concept of fiscal stewardship encourages thoughtful consideration for the long-term financial repercussions of various actions. With this in mind, Malik recounts several examples lacking in fiscal stewardship present throughout the previous years, including former President Bush’s tax cuts and wars, the Iraq War’s destabilization of the Middle East, and the wasting of extensive government funds. Throughout this time, as government funds dwindled, there has been a need to counter this deficit through rising costs in the educational, and healthcare sectors. In the same eighteen year period as this era of rampantly outdated foreign policy, educational, healthcare, and infrastructure costs have skyrocketed.

Malik reports that foreign policy has a strong direct impact on domestic economic standing. Learning from the vast mistakes of the previous eighteen years, and abolishing antiquated foreign policy, is the key to reversing the detriment of the past, and maintaining fiscal stewardship.

Outsourcing To The Enemy

With a diminishing number of consumer goods, along with limited government assistance, the current domestic political and business landscape has caused many companies to outsource manufacturing of goods to lower-cost countries. While outsourcing labor has traditionally occurred within a few industries in the past, the rampant increase of outsourcing labor throughout traditionally domestic industries has created long-lasting detriments in the domestic economy. With nearshore outsourcing on the rise within traditionally domestic sectors, including IT, customer service, and email marketing, the loss of domestic jobs has been devastating for the shrinking middle class. In fact, an estimated seven to eight million jobs have been eliminated over the time period in question as a direct result of increased outsourcing.

While outsourcing the manufacturing of goods has been traditionally viewed as a tangible means of controlling costs, the current geopolitical landscape calls into question more than just international tariffs. In practice, governments of the past steered clear of outsourcing their entire manufacturing base to its geopolitical arch-nemesis. With the fragile state of the United States’ relationship with China, the issue has far surpassed the typical squabble over tariffs.

According to Malik, the allowance of entire companies to be controlled by China has led to the emergence of a new breed of thoroughly modern issues, concerns, and potentially hazards. From IP theft, to the manipulation of currency, including China’s latest attempt to devalue the Yuan, various underhanded measures are being utilized by the country’s leaders as a direct result of the ties with manufacturing throughout the world, and the country’s recognition of its’ power as a result of being the manufacturing capital of the modern world. Traditionally, China’s government has never participated in the international system for peace, but China has certainly benefited from it in a manner that some would quantify as unjust.

In response to China’s recent devaluing of the Yuan, Malik has reported this as being a direct result of the country’s desperation, rather than retaliation against the United States. With hopes of creating instability within the United States government that would ultimately result in the appeasement of China, Malik argues that this move was a desperate attempt at beating the system that China has benefited from in the past. However, according to Malik, the present is an ideal time to strike from a place of offense, and change the international relations that have been outdated for over twenty years.

Education, Politics, and Economy

With the previous housing bubble that nearly collapsed the United States economy barely in the rearview mirror, the current student loan debt crisis looms just ahead. With millions of young Americans struggling with crippling student loan debt that amounted to a less-than-stellar job with less-than-stellar pay, young professionals of this generation are currently forced to place normal goals on hold for the time being, directly due to their student loans. As young people must wait to purchase a home, get married, and/or start a family as a result of financial instability, their ability to be thriving members of the economy dwindles. Traditionally, the American economy has benefited from, and succeeded due to this general pattern being repeated by young adults entering the workforce. At a stalemate, the inability of young adults to impart in these milestones interrupts the healthcare economy, housing market, various job sectors, and the purchasing power of growing families.

According to Malik, a total overhaul of the educational system is key to reversing the effects of the student loan debt crisis. The Bankruptcy Code of 2005 did not allow for the discharge of student loan debt, leaving millions of indebted professionals struggling to make payments, even after declaring bankruptcy, as their student loan debt was still not forgiven. For this reason, the Bankruptcy Code appears to be outdated, and not conducive to the current economy.

Malik encourages the creation of a more fruitful community college track, and the emergence of better vocational training, which would be more in line with the skills needed within the new economy. By tying some government resources to STEM training, resulting in highly educated individuals who will excel within the new economy, funds dedicated to this cause would essentially be considered money with societal value, as they would be helping to propel the current needs of society.

In a thoroughly modern solution to the outlandish expectations placed upon college graduates to repay exorbitant amount of debt without the ability to do so, Malik suggests tying debt repayment responsibilities directly to income. For example, in an effort to even the proverbial playing field in a modern manner, Purdue University is tying repayment of student loan debt directly to future income. Furthermore, by not requiring repayment from individuals who simply do not have the means for repayment, the reprieve from this unbalanced payment would allow the individuals in question to partake in the standard adult activities that keep the economy running.

Malik warns of the general imbalance between the number of technical degrees being earned, and job opportunities available in those sectors, as a result of outsourcing, automation, and general detriment of specific fields. In turn, this overabundance of potentially useless degrees could create a degree-specific bubble, rendering the degree almost useless, due to its’ common nature.

Decline Of Capitalism

With the continued rise of automation, outsourcing, and general loss of jobs, the entire structure of the “American Dream” has been compromised. With dwindling middle classes, the loss of ambition, belief, and therefore, the loss of productivity, is almost inevitable. Without the potential for advancement and financial success as a result of hard work, the entire concept of capitalism is diluted. According to Malik, these effects could undermine the very basic capitalist principles of the United States. By normalizing outcomes of all actions, and creating a homogenous lack of potential advancement and success, the sheer essence of the country’s values would result in a lackluster workforce. In terms of long-term outcomes of said government strategies that create equalized outcomes, Malik warns of previous global examples that have failed.

Throughout the various aspects of geopolitics, the idea of fragility, and needed balance, remains integral to maintaining successful domestic economies, and international financial markets. At home, the detrimental effects of decades-long wars and lack of fiscal stewardship, coupled with a crippling student loan debt crisis, and changing job markets as a direct result of outsourcing, all play integral roles in creating a new norm. This modern economy, with its own set of new struggles, has immediate needs, and requires governmental agencies to walk a tightrope for the benefit of its’ people on an immediate, and long-term basis. Subtle changes in domestic affairs can create a shift in the financial markets, and the ways in which companies act, including their current hesitation to go public.

On a global scale, delicate relationships with geopolitical enemies call for the dissemination of antiquated foreign policy, and consideration of ways in which other countries utilize strategies to undermine the United States. These considerations need to trump the quest for lower-cost goods, and desire for maintaining lower tariffs in exchange for cooperation, and maintenance of the status quo.

As global finance expert Omeed Malik continues to evaluate the various balls in motion within this very complex sphere, he recognizes the many changes that need to be made, considerations that need to be heeded, and overhauls required to face thoroughly modern domestic realities. As the Founder and CEO of Farvahar Partners, the successful financier cites his company’s mission in the tagline, “Integrity in every interaction”. Following this general guideline in practice within his own role in the realm of finance, Malik practices what he preaches, and aims to provide fruitful solutions that lead to success for clients, while maintaining the highest ethical standards. In his thoughts on the ties between geopolitics and the global economy, the same basic principles drive his insights.

Follow Omeed on Medium and Twitter to stay current on all his economy insights.

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