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Posts Tagged ‘Financial crash

“Fortune favors the brave”*…

Cryptonauts

History is filled with almosts. With those who almost adventured, who almost achieved, but ultimately, for them it proved to be too much. Then, there are others. The ones who embrace the moment, and commit. And in these moments of truth . . . they calm their minds and steel their nerves with four simple words that have been whispered by the intrepid since the time of the Romans. Fortune favours the brave.

Adam Tooze been mulling these lines ever since he first saw the commercial for crypto.com done by Matt Damon during a football game back in the autumn of 2021:

Now he unpacks the backstory…

The phrase “fortune favors the brave” is generally attributed to Pliny the Elder, the obsessive scholar and Roman Fleet commander. He uttered it on the fateful night of August 24 79 AD when the volcano Vesuvius erupted and buried Herculaneum and Pompeii. As recalled 25 years later, at the request of Tacitus, by his nephew Pliny the Younger, Pliny the Elder ignored the advice of his helmsman and steered directly towards the eruption, hoping to pull off a famous rescue. Instead, he was overwhelmed, lost control of the situation and finally, in ridiculous circumstances, succumbed to the fumes, becoming one of the thousands of casualties…

You might say that evoking Pliny’s famous phrase was more apt than Damon or crypto.com realized.

But Vesuvius does not belong only to the classical tradition. In the 18th century, the volcano would become one of the quintessential sites of the romantic sublime…

A fascinating “close read” of an influential TV spot, its intellectual antecedents, and its (intended and unintended) message: “Fortune Favors the Brave: the making of crypto ideology, Vesuvius, and the romantic sublime,” from @adam_tooze.

* Pliny the Younger, “quoting” Pliny the Elder

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As we iron out the irony, we might recall that, on this date in 2008, the Dow Jones Average fell 8%, continuing a slide that had begun with the collapse of Lehman Brothers and other smaller financial firms. The DJI was at 8,149.09, roughly the midpoint (in both timing) of the sub-prime lending crisis and the Dow’s 54% fall to 6,469.95 (in March, 2009) from its peak of 14,164 on October 9, 2007. The recovery, of course, took much longer.

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Written by (Roughly) Daily

December 1, 2022 at 1:00 am

“There was so much more going on than any one person could know, reality was so much bigger than the self, that it was alarming to contemplate”*…

Henry Oliver on The Panic of 1825 and the ways in which it modeled crises to come and shaped the modern world…

… the Panic of 1825… wasn’t like panics of the past. There was no external cause of this bubble — no war, no weather, no pandemic. It was not a speculative mania. It took place in many fragmented investments — loans, insurance policies — made by individuals, often in good faith, in the new economic system. At the end of the Napoleonic Wars, Britain had introduced a new gold standard. To avoid a sudden stop in loans and note issues (after running the war on cheap money) the Bank designed a transition. First, they hoarded gold like Smaug, to keep prices high and prevent a run. Second, they brought out new low-yield stocks. Third, the government issued new bonds and started a big infrastructure programme. With all the extra money in the system, backed by gold, people started investing, post-war prosperity flourished, and George IV could yap complacently about the success of the economy. Now that gold payments resumed, the market for precious metals boomed. Hence all those investments in South American gold mines. That all sent capital overseas, and so the currency was becoming, in reality, a paper system. Letters and warnings were published in The Times, but all in vain. And so when the bank drew in its horns, the crash was inevitable.

This wasn’t, then, a rampant speculative bubble. It was a diversification crisis. So many people invested in so many different things and none of them knew enough about the rest. Many investments were sound. Many participants were not speculators. “The fundamental problem in the market,” as one scholar has written, “was not that investors were over-extending themselves but rather that they did not have enough information to appreciate how over-extended everyone else already was.” After the crash, the finance system started to be centralised, to avoid such situations in the future.

1825 is known as the first modern financial crisis. No single group could be blamed for what happened. It was a systemic event. It demonstrated, quite firmly, that there is no place or person at the centre of things, no-one who runs the market. 1825 was, in some senses, the year the modern economy started. But it wasn’t just in economics that 1825 changed the world. Politics and literature were reinvigorated too…

More (including the role of Disraeli) at “1825: the first modern financial crisis,” from @HenryEOliver.

[Image above: source]

* Kim Stanley Robinson, The Ministry for the Future

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As we ponder precedent, we might recall that it was on this date in 1867 that the first stock ticker was introduced.

The advent of the ticker ultimately revolutionized the stock market by making up-to-the-minute prices available to investors around the country. Prior to this development, information from the New York Stock Exchange, which has been around since 1792, traveled by mail or messenger.

The ticker was the brainchild of Edward Calahan, who configured a telegraph machine to print stock quotes on streams of paper tape (the same paper tape later used in ticker-tape parades). The ticker, which caught on quickly with investors, got its name from the sound its type wheel made.

History

Calahan’s ticker (source)

Written by (Roughly) Daily

November 15, 2022 at 1:00 am

“A turning point at which modern history failed to turn”*…

 

William Powhida: Griftopia, 2011; a ten-foot-wide ‘visual translation’ of the 2008 financial crisis based on Matt Taibbi’s 2010 book of the same title

William Powhida: Griftopia, 2011; a ten-foot-wide ‘visual translation’ of the 2008 financial crisis based on Matt Taibbi’s 2010 book of the same title

 

The historian G.M. Trevelyan said that the democratic revolutions of 1848, all of which were quickly crushed, represented “a turning point at which modern history failed to turn.” The same can be said of the financial collapse of 2008. The crash demonstrated the emptiness of the claim that markets could regulate themselves. It should have led to the disgrace of neoliberalism—the belief that unregulated markets produce and distribute goods and services more efficiently than regulated ones. Instead, the old order reasserted itself, and with calamitous consequences. Gross economic imbalances of power and wealth persisted. We are still experiencing the reverberations…

Read Robert Kuttner‘s review of Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze: “The Crash That Failed.”

* G.M. Trevelyan

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As we struggle to avoid repeating past mistakes, we might recall that it was on this date in 1933 that President Franklin D. Roosevelt announced the Civil Works Administration.  Intended as a short-term agency charged quickly to create jobs for millions of unemployed Americans through the hard winter of 1933–34, it was closed in March of 1934– having provided work for 4 million workers who laid 12 million feet of sewer pipe and built or improved 255,000 miles of roads, 40,000 schools, 3,700 playgrounds, and nearly 1,000 airports.

CWA was effectively replaced by the Works Progress Administration (WPA), which operated on a much larger scale.  Almost every community in the United States had a new park, bridge or school constructed by the agency.

220px-Civil_Works_Administration_(CWA)_workmen_cleaning_and_painting_the_gold_dome_of_the_Denver_Capitol,_1934_-_NARA_-_541904

Civil Works Administration workers cleaning and painting the gold dome of the Colorado State Capitol (1934)

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Written by (Roughly) Daily

November 8, 2018 at 2:01 am

All the news that’s fit to spit…

Your correspondent is an admirer of the stylings of Matt Taibbi; consider, e.g., “The Great Bubble Machine,” wherein Taibbi compares Goldman Sachs to “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

So one can imagine the delight of discovering that, thanks to New York Magazine, one can play along with the Master:

Rolling Stone‘s Matt Taibbi… is perhaps best known for is his willingness to say Bad Things about Important People in a Colorful Way. This talent is on copious display in his new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, which is ostensibly about how America is becoming “a vast ghetto in which all of us … are being bled dry by a relatively tiny oligarchy of extremely clever financial criminals and their castrato henchmen in government” but mostly serves as a 252-page delivery mechanism for ad hominem insults*… we’ve put together a quiz using some of his most vivid descriptions of public figures. See how many you can figure out!

It’s a particularly-challenging game in that so many of the questions have several answers that could easily be correct.  An example:

Try to “Match the Matt Taibbi Insult to the Public Figure.”

* New York’s opinion, not your correspondent’s (though the insults are in fact epic)…

As we Question Authority, we might recall that it was on this date in 2005 that Kenny G, Don Henley, Stevie Nicks, and Tom Petty performed at the Rainbow Room on a bill topped by Aerosmith and 50 Cent for a private bat mitzvah.  The doting dad who sprang for the lavish coming-of-age-fest (at which, in addition to the entertainment, guests were treated to gift bags containing over $1,000 of personal electronics) was defense contractor David H. Brooks, CEO of DHB Industries, a Long Island company that manufactured body armor for the United States military.

Two years after the lavish event, Brooks was served with a 71-page federal indictment featuring charges of insider trading, tax evasion and raiding his company’s coffers for personal gain– including for the $10 million he used to pay for his daughter’s soiree.  Other questionable items charged to the company (thus, via cost-plus contracts, to the Government): pornographic videos for his son, plastic surgery for his wife, a burial plot for his mother, prostitutes for his employees– and, for himself, a $100,000 American-flag belt buckle encrusted with rubies, sapphires and diamonds.

Steven Tyler singing to Our Miss Brooks at her Bat Mitzvah (source)

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