LIBOR, Bonds, Mortgages 
EG: And what can bond and mortgage holders in particular, do to prepare for this transition with LIBOR in 2021? 

NP: Libor is the benchmark for over $370 trillion of financial products in five currencies. For decades, it has pegged student loans, mortgages and complex derivatives. It behooves bond holders and mortgage holders to convert their LIBOR-pegged debt to other pegs before the transition date.

EG: How did your experience occupying senior executive positions as Managing Director at Goldman Sachs and Senior Managing Director at Bear Stearns, deepen your insight into investment banking?

NP: I was always on the analytics and research side of banking and investment. My career started at Chase and Lehman Brothers where I had a front seat for the development of the swap market and derivatives market. That provided me excellent groundwork later. When I moved to London, I built the international analytics group at Bear Sterns from scratch. I hired people from all sorts of technical and economic backgrounds. As securities become more complex, I fashioned state of the art credit-risk analytics to reflect so much change in the world. By the time I returned to the US and Goldman Sachs, I was an expert in quantitative credit analysis and credit derivatives. There, I ran a group that focused on both of those elements of the evolving financial world. That experience provided me deeper understanding of the field and the world.

EG: Do you think the next round of Central Bank Quantitative Easing is coming any time soon? And if so, how will the ramifications play out on the global stage? 

NP: The European Commission recently predicted that UK growth would lag that of both the Eurozone and the US for the next two years. But Eurozone growth is equally waning. Japanese inflation is non-existent. Thus, the ECB left rates where they were at its last policy meeting. The body also expanded its QE, or bond-buying, program – which is another small round of QE. The ECB will keep inflating debt bubbles on a steady diet of QE.  So will the BOJ. 

EG: In what ways will the stability of the U.S. dollar as World Reserve Currency be affected by the next systemic crisis occurring in the banking system? 

NP: I Many countries are working together to create trade and other initiatives in the wake of the US financial crisis. China deployed its own version of fabricated money to buck the supremacy of the Fed. By using its central bank funds for development and infrastructure projects, and to lend to countries in order to forge stronger alliances, China turbo-boosted its ascent as a superpower. Those moves reduce the dollar’s position in the world. 

EG: What significant changes in the global financial system do you see on the horizon for the next 5-10 years?

NP: Five areas to watch are Mexico, Brazil, China, Japan and Europe.  They forged new relationships with each other beyond the US. That’ll continue over the next 5-10 years, and the focal point will continue to shift eastward to Asia. Europe’s response to the financial crisis has taken central banking operations to the next level. Japan will leverage the US and China rivalry to its advantage. China will forge a stronger foothold around the globe. Ultimately, the world is stepping away from the US and the dollar. 

EG: Exter’s Pyramid lists gold at the base as the most reliable asset with derivatives and unfunded government liabilities at the top. Would this be an accurate categorisation of asset class risk and size?    

NP: Gold is an important portfolio asset to have allocated. Derivatives are certainly imbued with risk by their very nature, and certain governments will have an even harder time ahead due to cheap money policy. All of that will make it difficult for borrowers to repay their unfunded liabilities. That said, gold is also a very volatility asset from a practical standpoint, so I wouldn’t say given the data so far, that gold is the most reliable asset at this juncture in history. 

EG: Having obtained your BS in Mathematics from SUNY and an MS in statistics from New York University, how did the rigours of academic study help you to successfully emerge at the forefront of investment banking on Wall Street?

NP: I started working on Wall Street while still completing my BS in Mathematics at SUNY. From the beginning of my career, I was used to balancing academic work and long hours with the ‘real’ world. Completing my MS, while working 13 hour days - I only left for classes. When I did my PhD coursework, working a strategist on the future and options desk at Lehman Brothers, I basically didn’t sleep. But I learned how to be extremely efficient and detail oriented, especially with numbers and computations. I balanced a tough schedule, learned to process information very quickly, discarded what seemed wrong or inaccurate and honed in on what was necessary and correct.   EG