Notes

Introduction

1 To be precise, this was the increase in per capita disposable personal income between the third quarter of 2006 and the third quarter of 2007. It has since been static, rising barely at all between March 2007 and March 2008. Data from Economic Report of the President 2008, table B-31: http://www.gpoaccess.gov/eop/.

2 Carmen DeNavas-Walt, Bernadette D. Proctor and Jessica Smith, Income, Poverty and Health Insurance Coverage in the United States: 2006 (Washington, DC, August 2007), p. 4.

3 We See Opportunity: Goldman Sachs 2007 Annual Report (New York, 2008).

4 Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford, 2007).

5 David Wessel, ‘A Source of our Bubble Trouble’, Wall Street Journal, 17 January 2008.

6 Stephen Roach, ‘Special Compendium: Lyford Cay 2006’, Morgan Stanley Research (21 November 2006), p. 4.

7 Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867-1960 (Princeton, 1963).

8 Princeton Survey Research Associates International, prepared for the National Foundation for Credit Counseling, ‘Financial Literacy Survey’, 19 April 2007: http://www.nfcc.org/NFCC_SummaryReport_ToplineFinal.pdf.

9 Alexander R. Konrad, ‘Finance Basics Elude Citizens’, Harvard Crimson, 2 February 2008.

10 Associated Press, ‘Teens Still Lack Financial Literacy, Survey Finds’, 5 April, 2006: http://www.msnbc.msn.com/id/12168872/.

1. Dreams of Avarice

1 ‘A World without Money’, Socialist Standard (July 1979). The passage was a translated extract from ‘Les Amis de Quatre Millions de Jeune Travailleurs’, Un Monde sans Argent: Le Communisme (Paris, 1975-6): http://www.geocities.com/~johngray/stanmond.htm.

2 Indeed, Marx and Engels had themselves recommended not the abolition of money but ‘Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly’: clause 5 of The Communist Manifesto.

3 JuanForero,‘Amazonian Tribe Suddenly Leaves Jungle Home’, 11 May 2006: http://www.entheology.org/edoto/anmviewer.asp?a=244.

4 Clifford Smyth, Francisco Pizarro and the Conquest of Peru (Whitefish, Montana, 2007 [1931]).

5 Michael Wood, Conquistadors (London, 2001), p. 128.

6 For a vivid account from the conquistadors’ vantage point, which makes it clear that gold was their prime motive, see the November 1533 letter from Hernando Pizarro to the Royal Audience of Santo Domingo, in Clements R. Markham (ed.), Reports on the Discovery of Peru (London, 1872), pp. 113-27.

7 M. A. Burkholder, Colonial Latin America (2nd edn., Oxford, 1994), p. 46.

8 J. Hemming, Conquest of the Incas (London, 2004), p. 77.

9 Ibid., p. 355.

10 Wood, Conquistadors, pp. 38, 148.

11 Hemming, Conquest, p. 392.

12 P. Bakewell, A History of Latin America (2nd edn., Oxford, 2004), p. 186.

13 Hemming, Conquest, pp. 356ff.

14 See Alexander Murray, Reason and Society in the Middle Ages (Oxford, 2002), pp. 25-58.

15 See Thomas J. Sargent and François R. Velde, The Big Problem of Small Change (Princeton, NJ, 2002).

16 Bakewell, History of Latin America, p. 182.

17 Mauricio Drelichman and Hans-Joachim Voth, ‘Institutions and the Resource Curse in Early Modern Spain’, paper presented at the CIAR Institutions, Organizations, and Growth Program Meeting in Toronto, 16-18 March 2007.

18 Hans J. Nissen, Peter Damerow and Robert K. Englund, Archaic Bookkeeping: Early Writing and Techniques of Economic Administration in the Ancient Near East (London, 1993).

19 I am grateful to Dr John Taylor of the British Museum for his expert guidance and assistance with deciphering the cuneiform inscriptions. I also learned much from Martin Schubik’s ‘virtual museum’ at Yale: http://www.museumofmoney.org/babylon/.

20 Glyn Davies, A History of Money: From Ancient Times to the Present Day (Cardiff, 1994); Jonathan Williams, with Joe Cribb and Elizabeth Errington (eds.), Money: A History (London, 1997)

21 See Marc Van De Mieroop, Society and Enterprise in Old Babylonian Ur (Berlin, 1992) and the essays in Michael Hudson and Marc Van De Mieroop (eds.), Debt and Economic Renewal in the Ancient Near East, vol. III (Bethesda, MD, 1998); Jack M. Sassoon, Gary Beckman and Karen S. Rubinson, Civilizations of the Ancient Near East, vol. III (London, 2000).

22 William N. Goetzmann, ‘Fibonacci and the Financial Revolution’, NBER Working Paper 10352 (March 2004).

23 John H. Munro, ‘The Medieval Origins of the Financial Revolution: Usury, Rentes, and Negotiability’, International History Review, 25, 3 (September 2003), pp. 505-62.

24 On the advantages to Italian cities of nurturing Jewish communities, see Maristella Botticini, ‘A Tale of “Benevolent” Governments: Private Credit Markets, Public Finance, and the Role of Jewish Lenders in Renaissance Italy’, Journal of Economic History, 60, 1 (March 2000), pp. 164-189.

25 Frederic C. Lane, Venice: A Maritime Republic (Baltimore, 1973), p. 300.

26 Idem, ‘Venetian Bankers, 1496-1533: A Study in the Early Stages of Deposit Banking’, Journal of Political Economy, 45, 2 (April 1937), pp. 187-206.

27 Benjamin C. I. Ravid, ‘The First Charter of the Jewish Merchants of Venice’, AJS Review, 1 (1976), pp. 190ff.

28 Idem, ‘The Legal Status of the Jewish Merchants of Venice, 1541- 1638’, Journal of Economic History, 35, 1 (March 1975), pp. 274-9.

29 Rhiannon Edward, ‘Loan Shark Charged 11m per cent Interest’, Scotsman, 18 August 2006.

30 John Hale, The Civilization of Europe in the Renaissance (London, 1993), p. 83.

31 Gene A. Brucker, ‘The Medici in the Fourteenth Century’, Speculum, 32, 1 (January 1957), p. 13.

32 John H. Munro, ‘The Medieval Origins of the Financial Revolution: Usury, Rentes, and Negotiability’, International History Review, 25, 3 (September 2003), pp. 505-62.

33 Richard A. Goldthwaite, ‘The Medici Bank and the World of Florentine Capitalism’, Past and Present, 114 (Feb. 1987), pp. 3-31. On the background to the Medicis’ rise, see Raymond de Roover, The Rise and Decline of the Medici Bank, 1397-1494 (Cambridge, MA, 1963), pp. 9-34.

34 Venetian State Archives, Mediceo Avanti Principato, MAP 133, 134, 153.

35 Franz-Josef Arlinghaus, ‘Bookkeeping, Double-entry Bookkeeping’, in Christopher Kleinhenz (ed.), Medieval Italy: An Encyclopedia, vol. 1 (New York, 2004). The first book to describe the method was Benedetto Cotrugli’s Il libro dell’arte di mercatura, published in 1458.

36 Raymond de Roover, ‘The Medici Bank: Organization and Management’, Journal of Economic History, 6, 1 (May 1946), pp. 24-52.

37 Venetian State Archives, Archivio del Monte, Catasto of 1427. I am grateful to Dr Francesco Guidi for his guidance regarding the Medici papers in the Florence State Archives.

38 Raymond de Roover, ‘The Decline of the Medici Bank’, Journal of Economic History, 7, 1 (May 1947), pp. 69-82.

39 Stephen Quinn and William Roberds, ‘The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking’, Federal Reserve Bank of Atlanta Working Paper, 2005-16 (August 2005).

40 See for example Peter L. Rousseau and Richard Sylla, ‘Financial Systems, Economic Growth, and Globalization’, in Michael D. Bordo, Alan M. Tayor and Jeffrey G. Williamson (eds.), Globalization in Historical Perspective (Chicago / London, 2003), pp. 373-416.

41 See Charles P. Kindleberger, A Financial History of Western Europe (London, 1984), p. 94.

42 Walter Bagehot, Lombard Street: A Description of the Money Market (London, 1873).

43 Quoted in Kindleberger, Financial History, p. 87.

44 Niall Ferguson and Oliver Wyman, The Evolution of Financial Services: Making Sense of the Past, Preparing for the Future (London / New York, 2007), p. 34. See also p. 40 for a composite measure of global liquidity.

45 Ibid., p. 63.

46 Ibid., p. 48.

47 http://www.bis.org/statistics/bankstats.htm.

48 Lord [Victor] Rothschild, Meditations of a Broomstick (London, 1977), p. 17.

2. Of Human Bondage

1 David Wessel and Thomas T. Vogel Jr., ‘Arcane World of Bonds is Guide and Beacon to a Populist President’, Wall Street Journal, 25 February 1993, p. A1.

2 Raymond Goldsmith, Premodern Financial Systems (Cambridge, 1987), pp. 157ff., 164-9.

3 See M. Veseth, Mountains of Debt: Crisis and Change in Renaissance Florence, Victorian Britain and Postwar America (New York / Oxford, 1990).

4 John H. Munro, ‘The Origins of the Modern Financial Revolution: Responses to Impediments from Church and State in Western Europe, 1200-1600’, University of Toronto Working Paper, 2 (6 July 2001), p. 7.

5 James Macdonald, A Free Nation Deep in Debt: The Financial Roots of Democracy (New York, 2003), pp. 81ff.

6 Jean-Claude Hocquet, ‘City-State and Market Economy’, in Richard Bonney (ed.), Economic Systems and State Finance (Oxford, 1995), pp. 87-91.

7 Jean-Claude Hocquet, ‘Venice’, in Richard Bonney (ed.), The Rise of the Fiscal State in Europe, c. 1200-1815 (Oxford, 1999), p. 395.

8 FredericC.Lane,Venice:AMaritimeRepublic(Baltimore,1973),p.323.

9 Idem, ‘Venetian Bankers, 1496-1533: A Study in the Early Stages of Deposit Banking’, Journal of Political Economy, 45, 2 (April 1937), pp. 197f.

10 Munro, ‘Origins of the Modern Financial Revolution’, pp. 15f.

11 Martin Körner, ‘Public Credit’, in Richard Bonney (ed.), Economic Systems and State Finance (Oxford, 1995), pp. 520f., 524f. See also Juan Gelabert, ‘Castile, 1504-1808’, in Richard Bonney (ed.), The Rise of the Fiscal State in Europe, c. 1200-1815 (Oxford, 1999), pp. 208ff.

12 Marjolein ’t Hart, ‘The United Provinces 1579-1806’, in Richard Bonney (ed.), The Rise of the Fiscal State in Europe, c. 1200-1815 (Oxford, 1999), pp. 311ff.

13 Douglass C. North and Barry R. Weingast, ‘Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England’, Journal of Economic History, 49, 4 (1989), pp. 803-32. The classic account of Britain’s financial revolution is P. G. M. Dickson, The Financial Revolution in England: A Study in the Development of Public Credit, 1688-1756 (London, 1967).

14 The best account of the financial crisis of the ancien régime is J. F. Bosher, French Finances, 1770-1795 (Cambridge, 1970).

15 Larry Neal, The Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Cambridge, 1990).

16 Hansard, New Series, vol. XVIII, pp. 540-43.

17 For a detailed account, see Niall Ferguson, The World’s Banker: The History of the House of Rothschild (London, 1998). See also Herbert H. Kaplan, Nathan Mayer Rothschild and the Creation of a Dynasty: The Critical Years, 1806-1816 (Stanford, 2006).

18 Rothschild Archive, London, XI/109, Nathan Rothschild to his brothers Amschel, Carl and James, 2 January 1816.

19 Rothschild Archive, London, XI/109/2/2/156, Salomon, Paris, to Nathan, London, 29 October 1815.

20 See Lord [Victor] Rothschild, The Shadow of a Great Man (London, 1982).

21 Philip Ziegler, The Sixth Great Power: Barings, 1762-1929 (London, 1988), pp. 94f.

22 Heinrich Heine, Ludwig Börne - ein Denkschrift: Samtliche Schriften, vol. IV (Munich, 1971), p. 27.

23 Heinrich Heine, ‘Lutetia’, in Sämtliche Schriften, vol. V (Munich, 1971), pp. 321ff., 353.

24 Anon., The Hebrew Talisman (London 1840), pp. 28ff.

25 Henry Iliowzi, ‘In the Pale’: Stories and Legends of the Russian Jews (Philadelphia, 1897).

26 Richard McGregor, ‘Chinese Buy into Conspiracy Theory’, Financial Times, 26 September 2007.

27 Marc Flandreau and Juan H. Flores, ‘Bonds and Brands: Lessons from the 1820s’, Center for Economic Policy Research Discussion Paper, 6420 (August 2007).

28 For a more complete list of all the bond issues with which the Rothschilds were in any way associated, see J. Ayer, A Century of Finance, 1804 to 1904: The London House of Rothschild (London, 1904), pp. 14-42

29 On Amsterdam, see James C. Riley, International Government Finance and the Amsterdam Capital Market (Cambridge, 1980), pp. 119-94.

30 Niall Ferguson, ‘The first “Eurobonds”: The Rothschilds and the Financing of the Holy Alliance, 1818-1822’, in William N. Goetzmann and K. Geert Rouwenhorst (eds.), The Origins of Value: The Financial Innovations that Created Modern Capital Markets (Oxford, 2005), pp. 311-23.

31 Johann Heinrich Bender, Über den Verkehr mit Staatspapieren in seinen Hauptrichtungen . . . Als Beylageheft zum Archiv für die Civilist[ische] Praxis, vol. VIII (Heidelberg, 1825), pp. 6ff.

32 Heine, Ludwig Börne, p. 28.

33 Alfred Rubens, Anglo-Jewish Portraits (London, 1935), p. 299.

34 The Times, 15 January 1821.

35 Bertrand Gille, Histoire de la Maison Rothschild, vol. I: Des origines à 1848 (Geneva, 1965), p. 487.

36 Richard Hofstadter, The Age of Reform from Bryan to F.D.R. (London, 1962), pp. 75ff.

37 Hermann Fürst Pückler, Briefe eines Verstorbenen, ed. Heinz Ohff (Kupfergraben, 1986), p. 7.

38 J. A. Hobson, Imperialism: A Study (London, 1902), Part I, ch. 4.

39 See e.g. Douglas B. Ball, Financial Failure and Confederate Defeat (Urbana, 1991).

40 Irving Katz, August Belmont: A Political Biography (New York, 1968), esp. pp. 96-9.

41 S. Diamond (ed.), A Casual View of America: The Home Letters of Salomon de Rothschild, 1859-1861 (London, 1962).

42 See Rudolf Glanz, ‘The Rothschild Legend in America’, Jewish Social Studies, 19 (1957), pp. 3-28.

43 Marc D. Weidenmier, ‘The Market for Confederate Cotton Bonds’, Explorations in Economic History, 37 (2000), pp. 76-97. See also idem, ‘Turning Points in the U.S. Civil War: Views from the Grayback Market’, Southern Economic Journal, 68, 4 (2002), pp. 875-90.

44 See W. O. Henderson, The Lancashire Cotton Famine: 1861-1865 (Manchester, 1934); Thomas Ellison, The Cotton Trade of Great Britain (New York, 1968 [1886]).

45 Marc D. Weidenmier, ‘Comrades in Bonds: The Subsidized Sale of Confederate War Debt to British Leaders’, Claremont McKenna College Working Paper (February 2003).

46 Richard Roberts, Schroders: Merchants and Bankers (Basingstoke, 1992), pp. 66f.

47 Richard C. K. Burdekin and Marc D. Weidenmier, ‘Inflation is Always and Everywhere a Monetary Phenomenon: Richmond vs. Houston in 1864’, American Economic Review, 91, 5 (December 2001), pp. 1621-30.

48 Richard Burdekin and Marc Weidenmier, ‘Suppressing Asset Price Inflation: The Confederate Experience, 1861-1865’, Economic Inquiry, 41, 3 (July 2003), 420-32. Cf. Eugene M. Lerner, ‘Money, Prices and Wages in the Confederacy, 1861-65’, Journal of Political Economy, 63, 1 (February 1955), pp. 20-40.

49 Frank Griffith Dawson, The First Latin American Debt Crisis (London, 1990).

50 Kris James Mitchener and Marc Weidenmier, ‘Supersanctions and Sovereign Debt Repayment’, NBER Working Paper 11472 (2005).

51 Niall Ferguson and Moritz Schularick, ‘The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880- 1913’, Journal of Economic History, 66, 2 (June 2006), pp. 283-312.

52 Kris James Mitchener and Marc Weidenmier, ‘Empire, Public Goods, and the Roosevelt Corollary’, Journal of Economic History, 65 (2005), pp. 658-92.

53 William Cobbett, Rural Rides (London, 1985 [1830]), p. 117.

54 Ibid., pp. 34, 53.

55 M. de Cecco, Money and Empire: The International Gold Standard, 1890-1914 (Oxford, 1973).

56 Theo Balderston, ‘War Finance and Inflation in Britain and Germany, 1914-1918’, Economic History Review, 42, 2 (May 1989), pp. 222- 44.

57 Calculated from B. R. Mitchell, International Historical Statistics: Europe, 1750-1993 (London, 1998), pp. 358ff.

58 Jay Winter and Jean-Louis Robert (eds.), Capital Cities at War: Paris, London, Berlin 1914-1919, Studies in the Social and Cultural History of Modern Warfare, No. 2 (Cambridge, 1997), p. 259.

59 Gerald D. Feldman, The Great Disorder: Politics, Economy and Society in the German Inflation, 1914-1924 (Oxford / New York, 1997), pp. 211-54.

60 Elias Canetti, Crowds and Power (New York, 1988), p. 186.

61 John Maynard Keynes, A Tract on Monetary Reform, reprinted in Collected Writings, vol. IV (Cambridge, 1971), pp. 3, 29, 36.

62 John Maynard Keynes, The Economic Consequences of the Peace (London, 1919), pp. 220-33.

63 Frank Whitson Fetter, ‘Lenin, Keynes and Inflation’, Economica, 44, 173 (February 1977), p. 78.

64 William C. Smith, ‘Democracy, Distributional Conflicts and Macroeconomic Policymaking in Argentina, 1983-89’, Journal of Inter-american Studies and World Affairs, 32, 2 (Summer 1990), pp. 1- 42. Cf. Rafael Di Tella and Ingrid Vogel, ‘The Argentine Paradox: Economic Growth and Populist Tradition’, Harvard Business School Case 9-702-001 (2001).

65 Jorge Luis Borges, ‘The Garden of Forking Paths’, in idem, Labyrinths: Selected Stories and Other Writings, ed. Donald A. Yates and James E. Irby (Harmondsworth, 1970), pp. 50ff.

66 Ferguson, World’s Banker, ch. 27.

67 Further details in Gerardo della Paolera and Alan M. Taylor, Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935 (Chicago, 2001).

68 ‘A Victory by Default’, Economist, 3 March 2005.

69 For a recent discussion of the issue, see Michael Tomz, Reputation and International Cooperation: Sovereign Debt across Three Centuries (Princeton, 2007).

70 On the Great Inflation, see Fabrice Collard and Harris Dellas, ‘The Great Inflation of the 1970s’, Working Paper (1 October 2003); Edward Nelson, ‘The Great Inflation of the Seventies: What Really Happened?’, Federal Reserve Bank of St Louis Working Paper, 2004- 001 (January 2004); Allan H. Meltzer, ‘Origins of the Great Inflation’, Federal Reserve Bank of St Louis Review, Part 2 (March / April 2005), pp. 145-75.

71 The eleven markets are Australia, Canada, France, Germany, Hong Kong, Ireland, Japan, Netherlands, Switzerland, the United Kingdom and the United States. See Watson Wyatt, ‘Global Pension Fund Assets Rise and Fall’: http://www.watsonwyatt.com/news/press. asp?ID=18579.

72 CNN, 9 July 2000.

73 Testimony of Chairman Alan Greenspan, Federal Reserve Board’s semi-annual Monetary Policy Report to the Congress, before the Committee on Banking, Housing, and Urban Affairs, US Senate, 16 February 2005.

3. Blowing Bubbles

1 For a recent contribution to a vast literature, see Timothy Guinnane, Ron Harris, Naomi R. Lamoreaux, and Jean-Laurent Rosenthal, ‘Putting the Corporation in its Place’, NBER Working Paper 13109 (May 2007).

2 See especially Robert J. Shiller, Irrational Exuberance (2nd edn., Princeton, 2005).

3 See Charles P. Kindleberger, Manias, Panics and Crashes: A History of Financial Crises (3rd edn., New York / Chichester / Brisbane / Toronto / Singapore, 1996), pp. 12-16. Kindleberger owed a debt to the pioneering work of Hyman Minsky. For two of his key essays, see Hyman P. Minsky, ‘Longer Waves in Financial Relations: Financial Factors in the More Severe Depressions’, American Economic Review, 54, 3 (May 1964), pp. 324-35; idem, ‘Financial Instability Revisited: The Economics of Disaster’, in idem (ed.), Inflation, Recession and Economic Policy (Brighton, 1982), pp. 117-61.

4 Kindleberger, Manias, p. 14.

5 ‘The Death of Equities’, Business Week, 13 August 1979.

6 ‘Dow 36,000’, Business Week, 27 September 1999.

7 William N. Goetzmann and Philippe Jorion, ‘Global Stock Markets in the Twentieth Century’, Journal of Finance, 54, 3 (June 1999), pp. 953-80.

8 Jeremy J. Siegel, Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies (New York, 2000).

9 Elroy Dimson, Paul Marsh and Mike Stanton, Triumph of the Optimists: 101 Years of Global Investment Returns (Princeton, 2002).

10 Paul Frentrop, A History of Corporate Governance 1602-2002 (Brussels, 2003), pp. 49-51.

11 Ronald Findlay and Kevin H. O’Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millennium (Princeton, 2007), p. 178.

12 Frentrop, Corporate Governance, p. 59.

13 On the ambivalence of the Calvinist capitalist Dutch Republic, see Simon Schama, The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age (New York, 1997 [1987]).

14 John P. Shelton, ‘The First Printed Share Certificate: An Important Link in Financial History’, Business History Review, 39, 3 (Autumn 1965), p. 396.

15 Shelton, ‘First Printed Share Certificate’, pp. 400f.

16 Engel Sluiter, ‘Dutch Maritime Power and the Colonial Status Quo, 1585-1641’, Pacific Historical Review, 11, 1 (March 1942), p. 33.

17 Ibid., p. 34.

18 Frentrop, Corporate Governance, pp. 69f.

19 Larry Neal, ‘Venture Shares of the Dutch East India Company’, in William N. Goetzmann and K. Geert Rouwenhorst (eds.), The Origins of Value: The Financial Innovations that Created Modern Capital Markets (Oxford, 2005), p. 167.

20 Neal, ‘Venture Shares’, p. 169.

21 Schama, Embarrassment of Riches, p. 349.

22 Ibid., p. 339.

23 Neal, ‘Venture Shares’, p. 169.

24 Frentrop, Corporate Governance, p. 85.

25 Ibid., pp. 95f.

26 Ibid., p. 103. Cf. Neal, ‘Venture Shares’, p. 171.

27 Neal, ‘Venture Shares’, p. 166.

28 Findlay and O’Rourke, Power and Plenty, p. 178.

29 Ibid., pp. 179-83. Cf. Sluiter, ‘Dutch Maritime Power’, p. 32.

30 Findlay and O’Rourke, Power and Plenty, p. 208.

31 Femme S. Gaastra, ‘War, Competition and Collaboration: Relations between the English and Dutch East India Company in the Seventeenth and Eighteenth Centuries’, in H. V. Bowen, Margarette Lincoln and Nigel Ribgy (eds.), The Worlds of the East India Company (Leicester, 2002), p. 51.

32 Gaastra, ‘War, Competition and Collaboration’, p. 58.

33 Ann M. Carlos and Stephen Nicholas, ‘ “Giants of an Earlier Capitalism”: The Chartered Trading Companies as Modern Multinationals’, Business History Review, 62, 3 (Autumn 1988), pp. 398- 419.

34 Gaastra, ‘War, Competition and Collaboration’, p. 51.

35 Findlay and O’Rourke, Power and Plenty, p. 183.

36 Ibid., p. 185, figure 4.5.

37 Gaastra, ‘War, Competition and Collaboration’, p. 55.

38 Jan de Vries and A. van der Woude, The First Modern Economy: Success, Failure and Perseverance of the Dutch Economy, 1500- 1815 (Cambridge, 1997), p. 396.

39 Andrew McFarland Davis, ‘An Historical Study of Law’s System’, Quarterly Journal of Economics, 1, 3 (April 1887), p. 292.

40 H. Montgomery Hyde, John Law: The History of an Honest Adventurer (London, 1969), p. 83.

41 Earl J. Hamilton, ‘Prices and Wages at Paris under John Law’s System’, Quarterly Journal of Economics, 51, 1 (November 1936), p. 43.

42 Davis, ‘Law’s System’, p. 300.

43 Ibid., p. 305.

44 Thomas E. Kaiser, ‘Money, Despotism, and Public Opinion in Early Eighteenth-Century Finance: John Law and the Debate on Royal Credit’, Journal of Modern History, 63, 1 (March 1991), p. 6.

45 Max J. Wasserman and Frank H. Beach, ‘Some Neglected Monetary Theories of John Law’, American Economic Review, 24, 4 (December 1934), p. 653.

46 James Macdonald, A Free Nation Deep in Debt: The Financial Roots of Democracy (New York, 2003), p. 192.

47 Kaiser, ‘Money’, p. 12.

48 Ibid., p. 18.

49 Hamilton, ‘Prices and Wages’, p. 47.

50 Davis, ‘Law’s System’, p. 317.

51 Antoin E. Murphy, John Law: Economic Theorist and Policy-Maker (Oxford, 1997), p. 233.

52 Hamilton, ‘Prices and Wages’, p. 55.

53 Murphy, John Law, p. 201.

54 Ibid., p. 190.

55 See Larry Neal, The Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Cambridge, 1990), p. 74.

56 Kaiser, ‘Money’, p. 22.

57 For evidence of English speculators exiting Paris in November and December, see Neal, Financial Capitalism, p. 68.

58 Murphy, John Law, pp. 213f.

59 Ibid., p. 205.

60 Lord Wharncliffe (ed.), The Letters and Works of Lady Mary Wortley Montagu (Paris, 1837), pp. 321f.

61 Earl J. Hamilton, ‘John Law of Lauriston: Banker, Gamester, Merchant, Chief?’, American Economic Review, 57, 2 (May 1967), p. 273.

62 Murphy, John Law, pp. 201-2.

63 Hamilton, ‘John Law’, p. 276.

64 Murphy, John Law, p. 239. Cf. Hamilton, ‘Prices and Wages’, p. 60.

65 Kaiser, ‘Money’, pp. 16, 20.

66 Ibid., p. 22.

67 Murphy, John Law, p. 235.

68 Ibid., p. 250.

69 Hyde, Law, p. 159.

70 Schama, Embarrassment of Riches, pp. 366ff.

71 Ibid., pp. 367ff.

72 For contrasting accounts see Neal, Financial Capitalism, pp. 89- 117; Edward Chancellor, Devil Take the Hindmost: A History of Financial Speculation (London, 1999), pp. 58-95.

73 Chancellor, Devil Take the Hindmost, p. 64.

74 Ibid., p. 84.

75 Neal, Financial Capitalism, pp. 90, 111f. As Neal has observed, an investor who had bought South Sea stock at the beginning of 1720 and sold it at the end of the year, ignoring the intervening bubble, would still have realized a 56 per cent annual return.

76 Julian Hoppitt, ‘The Myths of the South Sea Bubble’, Transactions of the Royal Historical Society, 12 (2002), pp. 141-65.

77 Tom Nicholas, ‘Trouble with a Bubble’, Harvard Business School Case N9-807-146 (28 February 2007), p. 1.

78 William L. Silber, When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America’s Monetary Supremacy (Princeton, 2006).

79 Niall Ferguson, ‘Political Risk and the International Bond Market between the 1848 Revolution and the Outbreak of the First World War’, Economic History Review, 59, 1 (February 2006), pp. 70- 112.

80 New York Times, 23 October 1929.

81 Nicholas, ‘Trouble with a Bubble’, p. 4.

82 Ibid., p. 6.

83 Chancellor, Devil Take the Hindmost, pp. 199ff.

84 See Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867-1960 (Princeton, 1963), pp. 299-419. This chapter, ‘The Great Contraction’, should be required reading for all financial practitioners.

85 Ibid., pp. 309f., n. 9. Anyone who reads this footnote will understand why the Fed moved so swiftly and open-handedly to ensure that JP Morgan bought Bear Stearns in March 2007.

86 Ibid., p. 315.

87 Ibid., p. 317.

88 Ibid., p. 396.

89 Ibid., p. 325.

90 Ibid., p. 328.

91 US Department of Commerce Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970 (Washington, DC, 1975), p. 1019.

92 Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (New York / Oxford, 1992). See also idem, ‘The Origins and Nature of the Great Slump Revisited’, Economic History Review, 45, 2 (May 1992), pp. 213-39.

93 See e.g. Ben S. Bernanke, ‘The Macroeconomics of the Great Depression: A Comparative Approach’, NBER Working Paper 4814 (August 1994).

94 Hyman P. Minsky, ‘Introduction: Can “It” Happen Again? A Reprise’, in idem (ed.), Inflation, Recession and Economic Policy (Brighton, 1982), p. xi.

95 The index has fallen by 10 per cent or more in 23 out of 113 years.

96 See Nicholas Brady, James C. Cotting, Robert G. Kirby, John R. Opel and Howard M. Stein, Report of the Presidential Task Force on Market Mechanisms, submitted to the President of the United States, the Secretary of the Treasury and the Chairman of the Federal Reserve Board(Washington, DC, January 1988). Of especial interest to the historian is the comparison with 1929: see Appendix VIII, pp. 1-13.

97 James Dale Davidson and William Rees-Mogg, The Great Reckoning: How the World Will Change in the Depression of the 1990’s (London, 1991).

98 For Greenspan’s own version of events, see Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York, 2007), pp. 100-110.

99 Greenspan, Age of Turbulence, p. 166.

100 Ibid., p. 167.

101 Ibid., pp. 190-5.

102 Ibid., pp. 200f.

103 The best account remains Bethany McLean and Peter Elkind, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (New York, 2003).

104 Ibid., p. 55.

105 See her own account of events in Mimi Swartz and Sherron Watkins, Power Failure: The Inside Story of the Collapse of Enron (New York, 2003).

4. The Return of Risk

1 Rawle O. King, ‘Hurricane Katrina: Insurance Losses and National Capacities for Financing Disaster Risks’, Congressional Research Service Report for Congress, 31 January 2008, table 1.

2 Joseph B. Treaster, ‘A Lawyer Like a Hurricane: Facing Off Against Asbestos, Tobacco and Now Home Insurers’, New York Times, 16 March 2007.

3 For details, see Richard F. Scruggs, ‘Hurricane Katrina: Issues and Observations’, American Enterprise Institute-Brookings Judicial Symposium, ‘Insurance and Risk Allocation in America: Economics, Law and Regulation’, Georgetown Law Center, 20-22 September 2006.

4 Details from http://www.usa.gov/Citizen/Topics/PublicSafety/Hurricane_Katrina_Recovery.shtml, http://katrina.louisiana.gov/index. html and http://www.ldi.state.la.us/HurricaneKatrina.htm.

5 Peter Lattman, ‘Plaintiffs Laywer Scruggs is Indicted on Bribery Charges’, Wall Street Journal, 29 November 2007; Ashby Jones and Paulo Prada, ‘Richard Scruggs Pleads Guilty’, ibid., 15 March 2008.

6 King, ‘Hurricane Katrina’, p. 4.

7 Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York, 2007).

8 http://www.nhc.noaa.gov/pastdec.shtml.

9 John Schwartz, ‘One Billion Dollars Later, New Orleans is Still at Risk’, New York Times, 17 August 2007.

10 Michael Lewis, ‘In Nature’s Casino’, New York Times Magazine, 26 August 2007.

11 National Safety Council, ‘What are the Odds of Dying?’: http:// www.nsc.org/lrs/statinfo/odds.htm. For the cancer statistic, see the National Cancer Institute, ‘SEER Cancer Statistics Review, 1975- 2004’, table I-17: http://srab.cancer.gov./devcan/. The precise lifetime probability of dying from cancer in the United States between 2002 and 2004 was 21.29 per cent, with a 95 per cent confidence interval.

12 Florence Edler de Roover, ‘Early Examples of Marine Insurance’, Journal of Economic History, 5, 2 (November 1945), pp. 172-200.

13 Ibid., pp. 188f.

14 A. H. John, ‘The London Assurance Company and the Marine Insurance Market of the Eighteenth Century’, Economica, New Series, 25, 98 (May 1958), p. 130.

15 Paul A. Papayoanou, ‘Interdependence, Institutions, and the Balance of Power’, International Security, 20, 4 (Spring 1996), p. 55.

16 Roover, ‘Early Examples of Marine Insurance’, p. 196.

17 M. Greenwood, ‘The First Life Table’, Notes and Records of the Royal Society of London, 1, 2 (October 1938), pp. 70-2.

18 The preceding paragraph owes a great debt to Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York, 1996).

19 Gregory Clark, A Farewell to Alms: A Brief Economic History of the World (Princeton, 2007).

20 See the essays in A. Ian Dunlop (ed.), The Scottish Ministers’ Widows’ Fund, 1743-1993 (Edinburgh, 1992) for details.

21 The key documents are to be found in the Robert Wallace papers, National Archives of Scotland: CH/9/17/6-13.

22 G. W. Richmond, ‘Insurance Tendencies in England’, Annals of the American Academy of Political and Social Science, 161 (May 1932), p. 183.

23 A. N. Wilson, A Life of Walter Scott: The Laird of Abbotsford (London: Pimlico, 2002), pp. 169-71.

24 G. Clayton and W. T. Osborne, ‘Insurance Companies and the Finance of Industry’, Oxford Economic Papers, New Series, 10, 1 (February 1958), pp. 84-97.

25 ‘American Exceptionalism’, Economist, 10 August 2006.

26 http://www.workhouses.org.uk/index.html?StMarylebone/ StMarylebone.shtml.

27 Lothar Gall, Bismarck: The White Revolutionary, vol. II: 1879- 1898, trans. J. A. Underwood (London, 1986), p. 129.

28 H. G. Lay, Marine Insurance: A Text Book of the History of Marine Insurance, including the Functions of Lloyd’s Register of Shipping (London, 1925), p. 137.

29 Richard Sicotte, ‘Economic Crisis and Political Response: The Political Economy of the Shipping Act of 1916’, Journal of Economic History, 59, 4 (December 1999), pp. 861-84.

30 Anon., ‘Allocation of Risk between Marine and War Insurer’, Yale Law Journal, 51, 4 (February 1942), p. 674; C., ‘War Risks in Marine Insurance’, Modern Law Review, 10, 2 (April 1947), pp. 211-14.

31 Alfred T. Lauterbach, ‘Economic Demobilization in Great Britain after the First World War’, Political Science Quarterly, 57, 3 (September 1942), pp. 376-93.

32 Correlli Barnett, The Audit of War (London, 2001), pp. 31f.

33 Richmond, ‘Insurance Tendencies’, p. 185.

34 Charles Davison, ‘The Japanese Earthquake of 1 September’, Geographical Journal, 65, 1 (January 1925), pp. 42f.

35 Yoshimichi Miura, ‘Insurance Tendencies in Japan’, Annals of the American Academy of Political and Social Science, 161 (May 1932), pp. 215-19.

36 Herbert H. Gowen, ‘Living Conditions in Japan’, Annals of the American Academy of Political and Social Science, 122 (November 1925), p. 163.

37 Kenneth Hewitt, ‘Place Annihilation: Area Bombing and the Fate of Urban Places’, Annals of the Association of American Geographers, 73 (1983), p. 263.

38 Anon., ‘War Damage Insurance’, Yale Law Journal, 51, 7 (May 1942), pp. 1160-1. It made $210 million, having collected premiums from 8 million policies and paid out only a modest amount.

39 Kingo Tamai, ‘Development of Social Security in Japan’, in Misa Izuhara (ed.), Comparing Social Policies: Exploring New Perspectives in Britain and Japan (Bristol, 2003), pp. 35-48. See also Gregory J. Kasza, ‘War and Welfare Policy in Japan’, Journal of Asian Studies, 61, 2 (May 2002), p. 428.

40 Recommendation of the Council of Social Security System (1950).

41 W. Macmahon Ball, ‘Reflections on Japan’, Pacific Affairs, 21, 1 (March 1948), pp. 15f.

42 Beatrice G. Reubens, ‘Social Legislation in Japan’, Far Eastern Survey , 18, 23 (16 November 1949), p. 270.

43 Keith L. Nelson, ‘The “Warfare State”: History of a Concept’, Pacific Historical Review, 40, 2 (May 1971), pp. 138f.

44 Kasza, ‘War and Welfare Policy’, pp. 418f.

45 Ibid., p. 423.

46 Ibid., p. 424.

47 Nakagawa Yatsuhiro, ‘Japan, the Welfare Super-Power’, Journal of Japanese Studies, 5, 1 (Winter 1979), pp. 5-51.

48 Ibid., p. 21.

49 Ibid., p. 9.

50 Ibid., p. 18.

51 For comparative studies, see Gregory J. Kasza, One World of Welfare: Japan in Comparative Perspective (Ithaca, 2006) and Neil Gilbert and Ailee Moon, ‘Analyzing Welfare Effort: An Appraisal of Comparative Methods’, Journal of Policy Analysis and Management, 7, 2 (Winter 1988), pp. 326-40.

52 Kasza, One World of Welfare, p. 107.

53 Peter H. Lindert, Growing Public: Social Spending and Economic Growth since the Eighteenth Century (Cambridge, 2004), vol. I, table I.2.

54 Hiroto Tsukada, Economic Globalization and the Citizens’ Welfare State (Aldershot / Burlington / Singapore / Sydney, 2002), p. 96.

55 Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867-1960 (Princeton, 1963).

56 Milton Friedman and Rose D. Friedman, Two Lucky People: Memoirs (Chicago / London, 1998), p. 399.

57 Ibid., p. 400.

58 Ibid., p. 593.

59 Patricio Silva, ‘Technocrats and Politics in Chile: From the Chicago Boys to the CEIPLAN Monks’, Journal of Latin American Studies, 23, 2 (May 1991), pp. 385-410.

60 Bill Jamieson, ‘25 Years On, Chile Has a Pensions Message for Britain’, Sunday Business, 14 December 2006.

61 Rossana Castiglioni, ‘The Politics of Retrenchment: The Quandaries of Social Protection under Military Rule in Chile, 1973-1990’, Latin American Politics and Society, 43, 4 (Winter 2001), pp. 39ff.

62 Ibid., p. 55.

63 José Piñera, ‘Empowering Workers: The Privatization of Social Security in Chile’, Cato Journal, 15, 2-3 (Fall / Winter 1995/96), pp. 155-166.

64 Ibid., p. 40.

65 Teresita Ramos, ‘Chile: The Latin American Tiger?’, Harvard Business School Case 9-798-092 (21 March 1999), p. 6.

66 Laurence J. Kotlikoff, ‘Pension Reform as the Triumph of Form over Substance’, Economists’ Voice (January 2008), pp. 1-5.

67 Armando Barrientos, ‘Pension Reform and Pension Coverage in Chile: Lessons for Other Countries’, Bulletin of Latin American Research, 15, 3 (1996), p. 312.

68 ‘Destitute No More’, Economist, 16 August 2007.

69 Barrientos, ‘Pension Reform’, pp. 309f. See also Raul Madrid, ‘The Politics and Economics of Pension Privatization in Latin America’, Latin American Research Review, 37, 2 (2002), pp. 159-82.

70 All figures are for 2004, the latest comparative data available from the World Bank’s World Development Indicators database.

71 I am indebted here to Laurence J. Kotlikoff and Scott Burns, The Coming Generational Storm: What You Need to Know about America’s Economic Future (Cambridge, 2005). See also Peter G. Peterson, Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do about It (New York, 2005).

72 Ruth Helman, Craig Copeland and Jack VanDerhei, ‘Will More of Us Be Working Forever? The 2006 Retirement Confidence Survey’, Employee Benefit Research Institute Issue Brief, 292 (April 2006).

73 Gene L. Dodaro, Acting Comptroller General of the United States, ‘Working to Improve Accountability in an Evolving Environment’, address to the 2008 Maryland Association of CPAs’ Government and Not-for-profit Conference (18 April 2008).

74 James Brooke, ‘A Tough Sell: Japanese Social Security’, New York Times, 6 May 2004.

75 See Mutsuko Takahashi, The Emergence of Welfare Society in Japan (Aldershot / Brookfield / Hong Kong / Singapore / Sydney, 1997), pp. 185f. See also Kasza, One World of Welfare, pp. 179-82.

76 Alex Kerr, Dogs and Demons: The Fall of Modern Japan (London, 2001), pp. 261-66.

77 Gavan McCormack, Client State: Japan in the American Embrace (London, 2007), pp. 45-69.

78 Lisa Haines, ‘World’s Largest Pension Funds Top $10 Trillion’, Financial News, 5 September 2007.

79 ‘Living Dangerously’, Economist, 22 January 2004.

80 Philip Bobbitt, Terror and Consent: The Wars for the Twenty-first Century (New York, 2008), esp. pp. 98-179.

81 Suleiman abu Gheith, quoted in ibid., p. 119.

82 Graham Allison, ‘Time to Bury a Dangerous Legacy, Part 1’, Yale Global, 14 March 2008. Cf. idem, Nuclear Terrorism: The Ultimate Preventable Catastrophe (Cambridge, MA, 2004).

83 Michael D. Intriligator and Abdullah Toukan, ‘Terrorism and Weapons of Mass Destruction’, in Peter Kotana, Michael D. Intriligator and John P. Sullivan (eds.), Countering Terrorism and WMD: Creating a Global Counter-terrorism Network (New York, 2006), table 4.1A.

84 See IPCC, Climate Change 2007: Synthesis Report (Valencia, 2007).

85 Robert Looney, ‘Economic Costs to the United States Stemming from the 9/11 Attacks’, Center for Contemporary Conflict Strategic Insight (5 August 2002).

86 Robert E. Litan, ‘Sharing and Reducing the Financial Risks of Future Mega-Catastrophes’, Brookings Issues in Economic Policy, 4 (March 2006).

87 William Hutchings, ‘Citadel Builds a Diverse Business’, Financial News, 3 October 2007.

88 Marcia Vickers, ‘A Hedge Fund Superstar’, Fortune, 3 April 2007.

89 Joseph Santos, ‘A History of Futures Trading in the United States’, South Dakota University MS, n.d.

5. Safe as Houses

1 Philip E. Orbanes, Monopoly: The World’s Most Famous Game - And How It Got That Way (New York, 2006), pp. 10-71.

2 Ibid., p. 50.

3 Ibid., pp. 86f.

4 Ibid., p. 90.

5 Robert J. Shiller, ‘Understanding Recent Trends in House Prices and Home Ownership’, paper presented at Federal Reserve Bank of Kansas City’s Jackson Hole Conference (August 2007).

6 http://www.canongate.net/WhoOwnsBritain/DoTheMathsOnLand Ownership .

7 David Cannadine, Aspects of Aristocracy: Grandeur and Decline in Modern Britain (New Haven, 1994), p. 170.

8 I am grateful to Gregory Clark for these statistics.

9 Frederick B. Heath, ‘The Grenvilles, in the Nineteenth Century: The Emergence of Commercial Affiliations’, Huntington Library Quarterly , 25, 1 (November 1961), p. 29.

10 Heath, ‘Grenvilles’, pp. 32f.

11 Ibid., p. 35.

12 David Spring and Eileen Spring, ‘The Fall of the Grenvilles’, Huntington Library Quarterly, 19, 2 (February 1956), p. 166.

13 Ibid., pp. 177f.

14 Details in Spring and Spring, ‘Fall of the Grenvilles’, pp. 169-74.

15 Ibid., p. 185.

16 Heath, ‘Grenvilles’, p. 39.

17 Spring and Spring, ‘Fall of the Grenvilles’, p. 183.

18 Heath, ‘Grenvilles’, p. 40.

19 Ibid., p. 46.

20 Ben Bernanke, ‘Housing, Housing Finance, and Monetary Policy’, speech at the Kansas City Federal Reserve Bank’s Jackson Hole Conference (31 August 2007).

21 Louis Hyman, ‘Debtor Nation: How Consumer Credit Built Postwar America’, unpublished Ph.D. thesis (Harvard University, 2007), ch. 1.

22 Edward E. Leamer, ‘Housing and the Business Cycle’, paper presented at Federal Reserve Bank of Kansas City’s Jackson Hole Conference (August 2007).

23 Saronne Rubyan-Ling, ‘The Detroit Murals of Diego Rivera’, History Today, 46, 4 (April 1996), pp. 34-8.

24 Donald Lochbiler, ‘Battle of the Garden Court’, Detroit News, 15 July 1997.

25 Hyman, ‘Debtor Nation’, ch. 2.

26 Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, 1996), p. 64.

27 Ibid., pp. 38-43.

28 Hyman, ‘Debtor Nation’, ch. 5.

29 Sugrue, Origins of the Urban Crisis, p. 259.

30 For a recent case in Detroit, see Ben Lefebvre, ‘Justice Dept. Accuses Detroit Bank of Bias in Lending’, New York Times, 20 May 2004.

31 Glen O’Hara, From Dreams to Disillusionment: Economic and Social Planning in 1960s Britain (Basingstoke, 2007), ch. 5.

32 Bernanke, ‘Housing, Housing Finance, and Monetary Policy’. See also Roger Loewenstein, ‘Who Needs the Mortgage-Interest Deduction? ’, New York Times Magazine, 5 March 2006.

33 Nigel Lawson, The View from No. 11: Memoirs of a Tory Radical (London, 1992), p. 821.

34 Living in Britain: General Household Survey 2002 (London, 2003), p. 30: http://www.statistics.gov.uk/cci/nugget.asp?id=821.

35 Ned Eichler, ‘Homebuilding in the 1980s: Crisis or Transition?’, Annals of the American Academy of Political and Social Science, 465 (January 1983), p. 37.

36 Maureen O’Hara, ‘Property Rights and the Financial Firm’, Journal of Law and Economics, 24 (October 1981), pp. 317-32.

37 Eichler, ‘Homebuilding’, p. 40. See also Henry N. Pontell and Kitty Calavita, ‘White-Collar Crime in the Savings and Loan Scandal’, Annals of the American Academy of Political and Social Science, 525 (January 1993), pp. 31-45; Marcia Millon Cornett and Hassan Tehranian, ‘An Examination of the Impact of the Garn-St Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans’, Journal of Finance, 45, 1 (March 1990), pp. 95-111.

38 Henry N. Pontell and Kitty Calavita, ‘The Savings and Loan Industry’, Crime and Justice, 18 (1993), p. 211.

39 Ibid., pp. 208f.

40 F. Stevens Redburn, ‘The Deeper Structure of the Savings and Loan Disaster’, Political Science and Politics, 24, 3 (September 1991), p. 439.

41 Pontell and Calavita, ‘White-Collar Crime’, p. 37.

42 Allen Pusey,‘Fast Money and Fraud’, New York Times, 23 April 1989.

43 K. Calavita, R. Tillman, and H. N. Pontell, ‘The Savings and Loan Debacle, Financial Crime and the State’, Annual Review of Sociology, 23 (1997), p. 23.

44 Pontell and Calavita, ‘Savings and Loans Industry’, p. 215.

45 Calavita, Tillman and Pontell, ‘Savings and Loan Debacle’, p. 24.

46 Allen Pusey and Christi Harlan, ‘Bankers Shared in Profits from I--30 Deals’, Dallas Morning News, 29 January 1986.

47 Allen Pusey and Christi Harlan, ‘I-30 Real Estate Deals: A “Virtual Money Machine” ’, Dallas Morning News, 26 January 1986.

48 Pusey, ‘Fast Money and Fraud’.

49 Pontell and Calavita, ‘White-Collar Crime’, p. 43. See also Kitty Calavita and Henry N. Pontell, ‘The State and White-Collar Crime: Saving the Savings and Loans’, Law Society Review, 28, 2 (1994), pp. 297-324.

50 The losses were initially feared to be higher. In 1990 the General Accounting Office foresaw costs of up to $500 billion. Others estimated costs of a trillion dollars or more: Pontell and Calavita, ‘Savings and Loan Industry’, p. 203.

51 For a vivid account, see Michael Lewis, Liar’s Poker (London, 1989), pp. 78-124.

52 Bernanke, ‘Housing, Housing Finance, and Monetary Policy’.

53 I am grateful to Joseph Barillari for his assistance with these calculations. Morris A. Davisa, Andreas Lehnert and Robert F. Martin, ‘The Rent-Price Ratio for the Aggregate Stock of Owner-Occupied Housing’, Working paper (December 2007).

54 Shiller, ‘Recent Trends in House Prices’.

55 Carmen M. Reinhart and Kenneth S. Rogoff, ‘Is the 2007 Sub-Prime Financial Crisis So Different? An International Historical Comparison’, Draft Working Paper (14 January 2008).

56 Mark Whitehouse, ‘Debt Bomb: Inside the “Subprime” Mortgage Debacle’, Wall Street Journal, 30 May 2007, p. A1.

57 See Kimberly Blanton, ‘A “Smoking Gun” on Race, Subprime Loans’, Boston Globe, 16 March 2007.

58 ‘U.S. Housing Bust Fuels Blame Game’, Wall Street Journal, 19 March 2008. See also David Wessel, ‘Housing Bust Offers Insights’, Wall Street Journal, 10 April 2008.

59 Henry Louis Gates Jr., ‘Forty Acres and a Gap in Wealth’, New York Times, 18 November 2007.

60 Andy Meek, ‘Frayser Foreclosures Revealed’, Daily News, 21 September 2006.

61 http://www.responsiblelending.org/page.jsp?itemID=32032031.

62 Credit Suisse, ‘Foreclosure Trends - A Sobering Reality’, Fixed Income Research (23 April 2008).

63 See Prabha Natarajan, ‘Fannie, Freddie Could Hurt U.S. Credit’, Wall Street Journal, 15 April 2008.

64 Economic Report of the President 2007, tables B-77 and B-76: http:// www.gpoaccess.gov/eop/.

65 George Magnus, ‘Managing Minsky’, UBS research paper, 27 March 2008.

66 Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London, 2001).

67 Idem, ‘Interview: Land and Freedom’, New Scientist, 27 April 2002.

68 Idem, The Other Path (New York, 1989).

69 Rafael Di Tella, Sebastian Galiani and Ernesto Schargrodsky, ‘The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters’, Quarterly Journal of Economics, 122, 1 (February 2007), pp. 209-41.

70 ‘The Mystery of Capital Deepens’, The Economist, 26 August 2006.

71 See John Gravois, ‘The De Soto Delusion’, Slate, 29 January 2005: http://state.msn.com/id/2112792/.

72 The entire profit is transferred to a Rehabilitation Fund created to cope with emergency situations, in return for an exemption from corporate income tax.

73 Connie Black, ‘Millions for Millions’, New Yorker, 30 October 2006, pp. 62-73.

74 Shiller, ‘Recent Trends in House Prices’.

75 Edward L. Glaeser and Joseph Gyourko, ‘Housing Dynamics’, NBER Working Paper 12787 (revised version, 31 March 2007).

76 Robert J. Shiller, The New Financial Order: Risk in the 21st Century (Princeton, 2003).

6. From Empire to Chimerica

1 Dominic Wilson and Roopa Purushothaman, ‘Dreaming with the BRICs: The Path to 2050’, Goldman Sachs Global Economics Paper, 99 (1 October 2003). See also Jim O’Neill, ‘Building Better Global Economic BRICs’, Goldman Sachs Global Economics Paper, 66 (30 November 2001); Jim O’Neill, Dominic Wilson, Roopa Purushothaman and Anna Stupnytska, ‘How Solid are the BRICs?’, Goldman Sachs Global Economics Paper, 134 (1 December 2005).

2 Dominic Wilson and Anna Stupnytska, ‘The N-11: More than an Acronym’, Goldman Sachs Global Economics Paper, 153 (28 March 2007).

3 Goldman Sachs Global Economics Group, BRICs and Beyond (London, 2007), esp. pp. 45-72, 103-8.

4 The argument is made in Kenneth Pomeranz, The Great Divergence: China, Europe and the Making of the Modern World Economy (Princeton / Oxford, 2000). For a more sceptical view of China’s position in 1700, see inter alia Angus Maddison, The World Economy: A Millennial Perspective (Paris, 2001).

5 Calculated from the estimates for per capita gross domestic product in Maddison, World Economy, table B-21.

6 Pomeranz, Great Divergence.

7 Among the most important recent works on the subject are Eric Jones, The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia (Cambridge, 1981); David S. Landes, The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor (New York, 1998); Joel Mokyr, The Gifts of Athena: Historical Origins of the Knowledge Economy (Princeton, 2002); Gregory Clark, A Farewell to Alms: A Brief Economic History of the World (Princeton, 2007).

8 William N. Goetzmann, ‘Fibonacci and the Financial Revolution’, NBER Working Paper 10352 (March 2004).

9 William N. Goetzmann, Andrey D. Ukhov and Ning Zhu, ‘China and the World Financial Markets, 1870-1930: Modern Lessons from Historical Globalization’, Economic History Review (forthcoming).

10 Nicholas Crafts, ‘Globalisation and Growth in the Twentieth Century’, International Monetary Fund Working Paper, 00/44 (March 2000). See also Richard E. Baldwin and Philippe Martin, ‘Two Waves of Globalization: Superficial Similarities, Fundamental Differences’, NBER Working Paper 6904 (January 1999).

11 Barry R. Chiswick and Timothy J. Hatton, ‘International Migration and the Integration of Labor Markets’, in Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson (eds.), Globalization in Historical Perspective (Chicago, 2003), pp. 65-120.

12 Maurice Obstfeld and Alan M. Taylor, ‘Globalization and Capital Markets’, in Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson (eds.), Globalization in Historical Perspective (Chicago, 2003), pp. 173f.

13 Clark, Farewell, chs. 13, 14.

14 David M. Rowe, ‘The Tragedy of Liberalism: How Globalization Caused the First World War’, Security Studies, 14, 3 (Spring 2005), pp. 1-41.

15 See for example Fareed Zakaria, The Post-American World (New York, 2008) and Parag Khanna, The Second World: Empires and Influence in the New Global Order (London, 2008).

16 Jim Rogers, A Bull in China: Investing Profitably in the World’s Greatest Market (New York, 2007).

17 Robert Blake, Jardine Matheson: Traders of the Far East (London, 1999), p. 91. See also Alain Le Pichon, China Trade and Empire: Jardine, Matheson & Co. and the Origins of British Rule in Hong Kong, 1827-1843 (Oxford / New York, 2006).

18 Rothschild Archive London, RFamFD/13A/I; 13B/1; 13C/I; 13D/1; 13D/2; 13/E.

19 Henry Lowenfeld, Investment: An Exact Science (London, 1909), p. 61.

20 John Maynard Keynes, The Economic Consequences of the Peace (London, 1919), ch. 1.

21 Maddison, World Economy, table 2-26a.

22 Lance E. Davis and R. A. Huttenback, Mammon and the Pursuit of Empire: The Political Economy of British Imperialism, 1860-1912 (Cambridge, 1988), p. 46.

23 Ranald Michie, ‘Reversal or Change? The Global Securities Market in the 20th Century’, New Global Studies (forthcoming).

24 Obstfeld and Taylor, ‘Globalization’; Niall Ferguson and Moritz Schularick, ‘The Empire Effect: The Determinants of Country Risk in the First Age of Globalization, 1880-1913’, Journal of Economic History, 66, 2 (June 2006). But see also Michael A. Clemens and Jeffrey Williamson, ‘Wealth Bias in the First Global Capital Market Boom, 1870-1913’, Economic Journal, 114, 2 (2004), pp. 304-37.

25 The definitive study is Michael Edelstein, Overseas Investment in the Age of High Imperialism: The United Kingdom, 1850-1914 (New York, 1982).

26 Michael Edelstein, ‘Imperialism: Cost and Benefit’, in Roderick Floud and Donald McCloskey (eds.), The Economic History of Britain since 1700, vol. II (2nd edn., Cambridge, 1994), pp. 173-216.

27 John Maynard Keynes, ‘Foreign Investment and National Advantage’, in Donald Moggridge (ed.), The Collected Writings of John Maynard Keynes, vol. XIX (London, 1981), pp. 275-84.

28 Idem, ‘Advice to Trustee Investors’, in ibid., pp. 202-6.

29 Calculated from the data in Irving Stone, The Global Export of Capital from Great Britain, 1865-1914 (London, 1999).

30 See the very useful stock market index for Shanghai Stock Exchange between 1870 and 1940 at http://icf.som.yale.edu/sse/.

31 Michael Bordo and Hugh Rockoff, ‘The Gold Standard as a “Good Housekeeping Seal of Approval” ’, Journal of Economic History, 56, 2 (June 1996), pp. 389-428.

32 Marc Flandreau and Frédéric Zumer, The Making of Global Finance, 1880-1913 (Paris, 2004).

33 Ferguson and Schularick, ‘Empire Effect’. , pp. 283-312.

34 For a full discussion of this point, see Niall Ferguson, ‘Political Risk and the International Bond Market between the 1848 Revolution and the Outbreak of the First World War’, Economic History Review, 59, 1 (February 2006), pp. 70-112.

35 Jean de [Ivan] Bloch, Is War Now Impossible?, trans. R. C. Long (London, 1899), p. xvii.

36 Norman Angell, The Great Illusion: A Study of the Relation of Military Power in Nations to their Economic and Social Advantage (London, 1910), p. 31.

37 Quoted in James J. Sheehan, Where Have all the Soldiers Gone? (New York: Houghton Mifflin Co., 2007), p. 56.

38 O. M. W. Sprague, ‘The Crisis of 1914 in the United States’, American Economic Review, 5, 3 (1915), pp. 505ff.

39 Brendan Brown, Monetary Chaos in Europe: The End of an Era (London / New York, 1988), pp. 1-34.

40 John Maynard Keynes, ‘War and the Financial System’, Economic Journal, 24, 95 (1914), pp. 460-86.

41 E. Victor Morgan, Studies in British Financial Policy, 1914-1925 (London, 1952), pp. 3-11.

42 Ibid., p. 27. See also Teresa Seabourne, ‘The Summer of 1914’, in Forrest Capie and Geoffrey E. Wood (eds.), Financial Crises and the World Banking System (London, 1986), pp. 78, 88f.

43 Sprague, ‘Crisis of 1914’, p. 532.

44 Morgan, Studies, p. 19.

45 Seabourne, ‘Summer of 1914’, pp. 80ff.

46 See most recently William L. Silber, When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America’s Monetary Supremacy (Princeton, 2007).

47 Morgan, Studies, pp. 12-23.

48 David Kynaston, The City of London, vol. III: Illusions of Gold, 1914-1945 (London, 1999), p. 5.

49 Calculated from isolated prices quoted in The Times between August and December 1914.

50 Kynaston, City of London, p. 5.

51 For details see Niall Ferguson, ‘Earning from History: Financial Markets and the Approach of World Wars’, Brookings Papers in Economic Activity (forthcoming).

52 See Lyndon Moore and Jakub Kaluzny, ‘Regime Change and Debt Default: The Case of Russia, Austro-Hungary, and the Ottoman Empire following World War One’, Explorations in Economic History , 42 (2005), pp. 237-58.

53 Maurice Obstfeld and Alan M. Taylor, ‘The Great Depression as a Watershed: International Capital Mobility over the Long Run’, in Michael D. Bordo, Claudia Goldin and Eugene N. White (eds.), The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (Chicago, 1998), pp. 353-402.

54 Rawi Abdelal, Capital Rules: The Construction of Global Finance (Cambridge, MA / London, 2007), p. 45.

55 Ibid., p. 46.

56 Greg Behrman, The Most Noble Adventure: The Marshall Plan and the Time when America Helped Save Europe (New York, 2007).

57 Obstfeld and Taylor, ‘Globalization and Capital Markets’, p. 129.

58 See William Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics (Cambridge, MA., 2002).

59 Michael Bordo, ‘The Bretton Woods International Monetary System: A Historical Overview’, in idem and Barry Eichengreen (eds.), A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform (Chicago / London, 1993), pp. 3-98.

60 Christopher S. Chivvis, ‘Charles de Gaulle, Jacques Rueff and French International Monetary Policy under Bretton Woods’, Journal of Contemporary History, 41, 4 (2006), pp. 701-20.

61 Interview with Amy Goodman: http://www.democracynow.org/ article.pl?sid=04/11/09/1526251.

62 John Perkins, Confessions of an Economic Hit Man (New York, 2004), p. xi.

63 Joseph E. Stiglitz, Globalization and Its Discontents (New York, 2002), pp. 12, 14, 15, 17.

64 Abdelal, Capital Rules, pp. 50f., 57-75.

65 Paul Krugman, The Return of Depression Economics (London, 1999).

66 ‘The Fund Bites Back’, The Economist, 4 July 2002.

67 Kenneth Rogoff, ‘The Sisters at 60’, The Economist, 22 July 2004. Cf. ‘Not Even a Cat to Rescue’, The Economist, 20 April 2006.

68 See the classic study by Fritz Stern, Gold and Iron: Bismarck, Bleichröder and the Building of the German Empire (Harmondsworth, 1987).

69 George Soros, The Alchemy of Finance: Reading the Mind of the Market (New York, 1987), pp. 27-30.

70 Robert Slater, Soros: The Life, Times and Trading Secrets of the World’s Greatest Investor (New York, 1996), pp. 48f.

71 George Soros, The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means (New York, 2008), p. x.

72 Slater, Soros, p. 78.

73 Ibid., pp. 105, 107ff.

74 Ibid., p. 172.

75 Ibid., pp. 177, 182, 188.

76 Ibid., p. 10.

77 Ibid., p. 159.

78 Nicholas Dunbar, Inventing Money: The Story of Long-Term Capital Management and the Legends Behind It (New York, 2000), p. 92.

79 Dunbar, Inventing Money, pp. 168-73.

80 André F. Perold, ‘Long-Term Capital Management, L.P. (A)’, Harvard Business School Case 9-200-007 (5 November 1999), p. 2.

81 Perold, ‘Long-Term Capital Management, L.P. (A)’, p. 13.

82 Ibid., p. 16.

83 For a history of the efficient markets school of finance theory, see Peter Bernstein, Capital Ideas: The Improbable Origins of Modern Wall Street (New York, 1993).

84 Dunbar, Inventing Money, p. 178.

85 Roger Lowenstein, When Genius Failed: The Rise and Fall of Long-Term Capital Management (New York, 2000), p. 126.

86 Perold, ‘Long-Term Capital Management, L.P. (A)’, pp. 11f., 17.

87 Lowenstein, When Genius Failed, p. 127.

88 André F. Perold, ‘Long-Term Capital Management, L.P. (B)’, Harvard Business School Case 9-200-08 (27 October 1999), p. 1.

89 Lowenstein, When Genius Failed, pp. 133-8.

90 Ibid., p. 144.

91 I owe this point to André Stern, who was an investor in LTCM.

92 Lowenstein, When Genius Failed, p. 147.

93 André F. Perold, ‘Long-Term Capital Management, L.P. (C)’, Harvard Business School Case 9-200-09 (5 November 1999), pp. 1, 3.

94 Idem, ‘Long-Term Capital Management, L.P. (D)’, Harvard Business School Case 9-200-10 (4 October 2004), p. 1. Perold’s cases are by far the best account.

95 Lowenstein, When Genius Failed, p. 149.

96 ‘All Bets Are Off: How the Salesmanship and Brainpower Failed at Long-Term Capital’, Wall Street Journal, 16 November 1998.

97 See on this point Peter Bernstein, Capital Ideas Evolving (New York, 2007).

98 Donald MacKenzie, ‘Long-Term Capital Management and the Sociology of Arbitrage’, Economy and Society, 32, 3 (August 2003), p. 374.

99 Ibid., passim.

100 Ibid., p. 365.

101 Franklin R. Edwards, ‘Hedge Funds and the Collapse of Long-Term Capital Management’, Journal of Economic Perspectives, 13, 2 (Spring 1999), pp. 192f. See also Stephen J. Brown, William N. Goetzmann and Roger G. Ibbotson, ‘Offshore Hedge Funds: Survival and Performance, 1989-95’, Journal of Business, 72, 1(January 1999), 91-117.

102 Harry Markowitz, ‘New Frontiers of Risk: The 360 Degree Risk Manager for Pensions and Nonprofits’, The Bank of New York Thought Leadership White Paper (October 2005), p. 6.

103 ‘Hedge Podge’, The Economist, 16 February 2008.

104 ‘Rolling In It’, The Economist, 16 November 2006.

105 John Kay, ‘Just Think, the Fees You Could Charge Buffett’, Financial Times, 11 March 2008.

106 Stephanie Baum, ‘Top 100 Hedge Funds have 75% of Industry Assets’, Financial News, 21 May 2008.

107 Dean P. Foster and H. Peyton Young, ‘Hedge Fund Wizards’, Economists’ Voice (February 2008), p. 2.

108 Niall Ferguson and Moritz Schularick, ‘ “Chimerica” and Global Asset Markets’, International Finance 10, 3 (2007), pp. 215-39.

109 Michael Dooley, David Folkerts-Landau and Peter Garber, ‘An Essay on the Revived Bretton-Woods System’, NBER Working Paper 9971 (September 2003).

110 Ben Bernanke, ‘The Global Saving Glut and the U.S. Current Account Deficit’, Homer Jones Lecture, St Louis, Missouri (15 April 2005).

111 ‘From Mao to the Mall’, The Economist, 16 February 2008.

112 For a critique of recent Federal Reserve policy, see Paul A. Volcker, ‘Remarks at a Luncheon of the Economic Club of New York’ (8 April 2008). In Volcker’s view, the Fed has taken ‘actions that extend to the very edge of its lawful and implied powers’.

113 See e.g. Jamil Anderlini, ‘Beijing Looks at Foreign Fields in Plan to Guarantee Food Supplies’, Financial Times, 9 May 2008.

114 In the absence of the First World War, it may be conjectured, Germany would have overtaken Britain in terms of world export market share in 1926: Hugh Neuburger and Houston H. Stokes, ‘The Anglo-German Trade Rivalry, 1887-1913: A Counterfactual Outcome and Its Implications’, Social Science History, 3, 2 (Winter 1979), pp. 187-201.

115 Aaron L. Friedberg, ‘The Future of U.S.-China Relations: Is Conflict Inevitable?’, International Security, 30, 2 (Fall 2005), pp. 7-45.

116 The average length of the financial careers of the current chief executive officers of Citigroup, Goldman Sachs, Merrill Lynch, Morgan Stanley and JP Morgan is just under twenty-five and a half years.

Afterword: The Descent of Money

1 For some fascinating insights into the limits of globalization, see Pankaj Ghemawat, Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter (Boston, 2007).

2 Frederic Mishkin, Weissman Center Distinguished Lecture, Baruch College, New York (12 October 2006).

3 Larry Neal, ‘A Shocking View of Economic History’, Journal of Economic History, 60, 2 (2000), pp. 317-34.

4 Robert J. Barro and José F. Ursúa, ‘Macroeconomic Crises since 1870’, Brookings Papers on Economic Activity (forthcoming). See also Robert J. Barro, ‘Rare Disasters and Asset Markets in the Twentieth Century’, Harvard University Working Paper (4 December 2005).

5 Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (2nd edn., New York, 2005)

6 Idem, The Black Swan: The Impact of the Highly Improbable (London, 2007).

7 Georges Soros, The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means, (New York, 2008), pp. 91 ff.

8 See Frank H. Knight, Risk, Uncertainty and Profit (Boston, 1921).

9 John Maynard Keynes, ‘The General Theory of Employment’, Economic Journal, 51, 2 (1937), p. 214.

10 Daniel Kahneman and Amos Tversky, ‘Prospect Theory: An Analysis of Decision under Risk’, Econometrica, 47, 2 (March 1979), p. 273.

11 Eliezer Yudkowsky, ‘Cognitive Biases Potentially Affecting Judgment of Global Risks’, in Nick Bostrom and Milan Cirkovic (eds.), Global Catastrophic Risks (Oxford University Press, 2008), pp. 91-119. See also Michael J. Mauboussin, More Than You Know: Finding Financial Wisdom in Unconventional Places (New York / Chichester, 2006).

12 Mark Buchanan, The Social Atom: Why the Rich Get Richer, Cheaters Get Caught, and Your Neighbor Usually Looks Like You (New York, 2007), p. 54.

13 For an introduction, see Andrei Shleifer, Inefficient Markets: An Introduction to Behavioral Finance (Oxford, 2000). For some practical applications see Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven, 2008).

14 See Peter Bernstein, Capital Ideas Evolving (New York, 2007).

15 See for example James Surowiecki, The Wisdom of Crowds (New York, 2005); Ian Ayres, Supercrunchers: How Anything Can Be Predicted (London, 2007).

16 Daniel Gross, ‘The Forecast for Forecasters is Dismal’, New York Times, 4 March 2007.

17 The classic work, first published in 1841, is Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds (New York, 2003 [1841]).

18 Yudkowsky, ‘Cognitive Biases’, pp. 110f.

19 For an introduction to Lo’s work, see Bernstein, Capital Ideas Evolving , ch. 4. See also John Authers, ‘Quants Adapting to a Darwinian Analysis’, Financial Times, 19 May 2008.

20 The following is partly derived from Niall Ferguson and Oliver Wyman, The Evolution of Financial Services: Making Sense of the Past, Preparing for the Future (London / New York, 2007).

21 The Journal of Evolutionary Economics. Seminal works in the field are A. A. Alchian, ‘Uncertainty, Evolution and Economic Theory’, Journal of Political Economy, 58 (1950), pp. 211-22, and R. R. Nelson and S. G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, 1982).

22 Thorstein Veblen, ‘Why is Economics Not an Evolutionary Science?’ Quarterly Journal of Economics, 12 (1898), pp. 373-97.

23 Joseph A. Schumpeter, Capitalism, Socialism and Democracy (London, 1987 [1943]), pp. 80-4.

24 Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics (London, 2005), pp. 180ff.

25 Jonathan Guthrie, ‘How the Old Corporate Tortoise Wins the Race’, Financial Times, 15 February 2007.

26 Leslie Hannah, ‘Marshall’s “Trees” and the Global “Forest”: Were “Giant Redwoods” Different?’, in N. R. Lamoreaux, D. M. G. Raff and P. Temin (eds.), Learning by Doing in Markets, Firms and Countries (Cambridge, MA, 1999), pp. 253-94.

27 The allusion is of course to Richard Dawkins, The Selfish Gene (2nd edn., Oxford, 1989).

28 Rudolf Hilferding, Finance Capital: A Study of the Latest Phase of Capitalist Development (London, 2006 [1919]).

29 ‘Fear and Loathing, and a Hint of Hope’, The Economist, 16 February 2008.

30 Joseph Schumpeter, The Theory of Economic Development (Cambridge, MA, 1934), p. 253.

31 Bertrand Benoit and James Wilson, ‘German President Complains of Financial Markets “Monster” ’, Financial Times, 15 May 2008.