Book
The book deals with the rise of money as a trade form, and tracks its progression, development, and effects on society into the 21st Century. It also covers the importance of financial systems and the role they have played throughout historical events. In total there are six chapters covering various financial events along with an introduction and an afterword note included at the end. Each chapter covers a different aspect of the financial system.
Chapter one depicts the journey of Francisco Pizarro, a Spanish explorer, as an example of the establishment of gold and silver being used as currency. It also discusses the beginning of lending, or credit, and finally moving on to the foundational pieces of modern banking through the story of the Bank of England in the 19th century.
Chapter two discusses the bond market, focusing primarily on Italy during the Renaissance and their increased usage of the bond market, as well as the development of the Rothschild family's wealth in the 19th century.
Chapter three focuses on the stock market and the occurrence of bubbles. This chapter primarily focuses on the creation of the joint-stock company, the popping of the Mississippi Bubble, the Great Depression, and the Enron Bankruptcy.
Chapter four explores the concept of insurance through various examples such as Hurricane Katrina, describing the life insurance and marine insurance contracts in 14th century Italy, the founding of a fire insurance company by Nicholas Barbon after The Great Fire of London, the marine insurance market that developed around Lloyd's coffee house, the development of mathematical probability and its application by the life insurance fund for the Widows and Children of the Ministers of the Church of Scotland in 1748.
Chapter five discusses housing and the safety behind it being used as a form of investment.
Chapter six, discusses the idea of globalization and its recent implementation around the world, which leads to a discussion of the relationship between the United States and China.
In the afterword, Ferguson compares finance to the idea of evolution and addresses the financial crisis that had recently occurred during the time of writing the book (now known as the Great Recession).
A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities.
The Rothschild family is a wealthy Ashkenazi Jewish noble banking family originally from Frankfurt. The family's documented history starts in 16th century Frankfurt; its name is derived from the family house, Rothschild, built by Isaak Elchanan Bacharach in Frankfurt in 1567. The family rose to prominence with Mayer Amschel Rothschild (1744–1812), a court factor to the German Landgraves of Hesse-Kassel in the Free City of Frankfurt, Holy Roman Empire, who established his banking business in the 1760s. Unlike most previous court factors, Rothschild managed to bequeath his wealth and established an international banking family through his five sons, who established businesses in Paris, Frankfurt, London, Vienna, and Naples. The family was elevated to noble rank in the Holy Roman Empire and the United Kingdom.
Nathan Mayer Rothschild (16 September 1777 – 28 July 1836, also known as Baron Nathan Mayer Rothschild, was an English-German banker, businessman and financier. Born in Frankfurt am Main, he was the third of the five sons of Mayer Amschel Rothschild and his wife, Guttle. He was the founder of the English branch of the prominent Rothschild family.
Sir Niall Campbell FergusonFRSE is a Scottish–American historian who is the Milbank Family Senior Fellow at the Hoover Institution and a senior fellow at the Belfer Center for Science and International Affairs at Harvard University. Previously, he was a professor at Harvard University, the London School of Economics, New York University, a visiting professor at the New College of the Humanities, and a senior research fellow at Jesus College, Oxford. He was a visiting lecturer at the London School of Economics for the 2023/24 academic year and at Tsinghua University, China in 2019–20. He is a co-founder of the University of Austin, Texas.
The savings and loan crisis of the 1980s and 1990s was the failure of 32% of savings and loan associations (S&Ls) in the United States from 1986 to 1995. An S&L or "thrift" is a financial institution that accepts savings deposits and makes mortgage, car and other personal loans to individual members.
A mortgage-backed security (MBS) is a type of asset-backed security which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals that securitizes, or packages, the loans together into a security that investors can buy. Bonds securitizing mortgages are usually treated as a separate class, termed residential; another class is commercial, depending on whether the underlying asset is mortgages owned by borrowers or assets for commercial purposes ranging from office space to multi-dwelling buildings.
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy.
The Greenspan put was a monetary policy response to financial crises that Alan Greenspan, former chair of the Federal Reserve, exercised beginning with the crash of 1987. Successful in addressing various crises, it became controversial as it led to periods of extreme speculation led by Wall Street investment banks overusing the put's repurchase agreements and creating successive asset price bubbles. The banks so overused Greenspan's tools that their compromised solvency in the 2007–2008 financial crisis required Fed chair Ben Bernanke to use direct quantitative easing. The term Yellen put was used to refer to Fed chair Janet Yellen's policy of perpetual monetary looseness.
Residential mortgage-backed security (RMBS) are a type of mortgage-backed security backed by residential real estate mortgages.
Bond insurance, also known as "financial guaranty insurance", is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security. It is a form of "credit enhancement" that generally results in the rating of the insured security being the higher of (i) the claims-paying rating of the insurer or (ii) the rating the bond would have without insurance.
The financial history of the Dutch Republic involves the interrelated development of financial institutions in the Dutch Republic. The rapid economic development of the country after the Dutch Revolt in the years 1585–1620 accompanied by an equally rapid accumulation of a large fund of savings, created the need to invest those savings profitably. The Dutch financial sector, both in its public and private components, came to provide a wide range of modern investment products beside the possibility of (re-)investment in trade and industry, and in infrastructure projects. Such products were the public bonds, floated by the Dutch governments on a national, provincial, and municipal level; acceptance credit and commission trade; marine and other insurance products; and shares of publicly traded companies like the Dutch East India Company (VOC), and their derivatives. Institutions like the Amsterdam stock exchange, the Bank of Amsterdam, and the merchant bankers helped to mediate this investment. In the course of time the invested capital stock generated its own income stream that caused the capital stock to assume enormous proportions. As by the end of the 17th century structural problems in the Dutch economy precluded profitable investment of this capital in domestic Dutch sectors, the stream of investments was redirected more and more to investment abroad, both in sovereign debt and foreign stocks, bonds and infrastructure. The Netherlands came to dominate the international capital market up to the crises of the end of the 18th century that caused the demise of the Dutch Republic.
A synthetic CDO is a variation of a CDO that generally uses credit default swaps and other derivatives to obtain its investment goals. As such, it is a complex derivative financial security sometimes described as a bet on the performance of other mortgage products, rather than a real mortgage security. The value and payment stream of a synthetic CDO is derived not from cash assets, like mortgages or credit card payments – as in the case of a regular or "cash" CDO—but from premiums paying for credit default swap "insurance" on the possibility of default of some defined set of "reference" securities—based on cash assets. The insurance-buying "counterparties" may own the "reference" securities and be managing the risk of their default, or may be speculators who've calculated that the securities will default.
Bethmann Bank AG is a German private bank headquartered in Frankfurt am Main. It is a subsidiary of the Dutch ABN AMRO Bank N.V. and was the product of a merger between the historical German banks Delbrück, Bethmann and Maffei under the umbrella of the renowned Dutch ABN AMRO Bank. LGT Bank Deutschland joined this group in 2011. Bethmann Bank acquired the German private banking activities of Credit Suisse in December 2013. The acquisition positions Bethmann Bank, ABN AMRO's private bank in Germany, as the third largest private bank in Germany.
The Subprime mortgage crisis solutions debate discusses various actions and proposals by economists, government officials, journalists, and business leaders to address the subprime mortgage crisis and broader 2007–2008 financial crisis.
Chimerica is a neologism and portmanteau coined by Niall Ferguson and Moritz Schularick describing the symbiotic relationship between China and the United States, with incidental reference to the legendary chimera. Although the term is largely in reference to economics, there is also a political element.
Philadelphia financier Jay Cooke established the first modern American investment bank during the Civil War era. However, private banks had been providing investment banking functions since the beginning of the 19th century and many of these evolved into investment banks in the post-bellum era. However, the evolution of firms into investment banks did not follow a single trajectory. For example, some currency brokers such as Prime, Ward & King and John E. Thayer and Brother moved from foreign exchange operations to become private banks, taking on some investment bank functions. Other investment banks evolved from mercantile firms such as Thomas Biddle and Co. and Alexander Brothers.
The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.
Rothschild & Co is a multinational private and alternative assets investor, headquartered in Paris, France and London, England. It is the flagship of the Rothschild banking group controlled by the British and French branches of the Rothschild family.
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $72 trillion. In the world's eight largest economies—the United States, China, Japan, the United Kingdom, France, Spain, Italy, and Germany—total corporate debt was about $51 trillion in 2019, compared to $34 trillion in 2009. Excluding debt held by financial institutions—which trade debt as mortgages, student loans, and other instruments—the debt owed by non-financial companies in early March 2020 was $13 trillion worldwide, of which about $9.6 trillion was in the U.S.
The bibliography of Niall Ferguson, a Scottish historian based in the United States who is the Milbank Family Senior Fellow at the Hoover Institution at Stanford University and a Senior Faculty Fellow at the Belfer Center for Science and International Affairs at Harvard University. Previously, he was a professor at Harvard, the London School of Economics and New York University, a visiting professor at the UK New College of the Humanities, and a senior research fellow at Jesus College, Oxford, England.
