NIALL FERGUSON T H E W A R Author of O F T H E W O R L D THE ASCENT OF MONEY A FINANCIAL Tai Lieu Chat Luong HISTORY of THE WORLD U.S $29.95 Canada $33.00 B r e a d , cash, dosh, d o u g h , loot: C a l l it w h a t y o u like, it m a t t e r s To C h r i s t i a n s , love o f it is the root o f all e v i l To g e n e r a l s , it's t h e s i n e w s o f w a r To r e v o l u tionaries, it's the chains o f labor B u t i n The Ascent Money, of N i a l l F e r g u s o n s h o w s that finance is i n fact t h e f o u n d a t i o n o f h u m a n progress W h a t ' s m o r e , h e reveals f i n a n c i a l h i s t o r y as t h e essential b a c k s t o r y b e h i n d all history T h e e v o l u t i o n o f credit a n d debt w a s as i m p o r tant as a n y t e c h n o l o g i c a l i n n o v a t i o n i n t h e rise o f civilization, from ancient B a b y l o n to the silver m i n e s o f B o l i v i a B a n k s p r o v i d e d the m a t e r i a l basis for the splendors o f the Italian R e n a i s s a n c e w h i l e the b o n d m a r k e t w a s the decisive factor i n conflicts from t h e S e v e n Years' W a r to t h e A m e r i c a n C i v i l W a r W i t h t h e c l a r i t y a n d v e r v e for w h i c h h e is k n o w n , Ferguson explains w h y the origins of the French R e v o l u t i o n lie in a stock market bubble caused by a convicted Scots murderer H e shows h o w f i n a n c i a l f a i l u r e t u r n e d A r g e n t i n a from t h e world's sixth richest c o u n t r y into an inflationr i d d e n basket c a s e — a n d h o w a financial r e v o l u t i o n is p r o p e l l i n g t h e w o r l d ' s m o s t p o p u l o u s c o u n t r y from p o v e r t y to p o w e r i n a single g e n e r a t i o n Yet t h e m o s t i m p o r t a n t lesson o f t h e financial h i s t o r y is that s o o n e r o r l a t e r e v e r y b u b b l e bursts — s o o n e r or later t h e b e a r i s h sellers o u t n u m b e r t h e b u l l i s h b u y e r s , s o o n e r o r later g r e e d flips i n t o fear A n d that's why, w h e t h e r you're scraping b y or rolling i n it, there's n e v e r b e e n a b e t t e r t i m e to u n d e r s t a n d t h e ascent o f m o n e y 1108 Niall F e r g u s o n is o n e o f Britain's most r e n o w n e d h i s t o r i a n s H e is L a u r e n c e A T i s c h Professor o f H i s t o r y at H a r v a r d U n i v e r s i t y , a S e n i o r R e s e a r c h Fellow of Jesus C o l l e g e , Oxford University, and a S e n i o r F e l l o w o f the H o o v e r Institution, Stanford University T h e bestselling a u t h o r of Paper and Iron, The House of Rothschild, Nexus, Empire, Colossus The Pity of War, The Cash a n d The War of the World, h e also w r i t e s r e g u l a r l y for n e w s p a p e r s a n d m a g a z i n e s all over the world H e has w r i t t e n and presented four h i g h l y successful television d o c u m e n t a r y series for C h a n n e l 4: Empire, American Colossus, The War of the World and, most recently, The Ascent of Money H e , his w i f e a n d three c h i l d r e n d i v i d e t h e i r t i m e b e t w e e n the U n i t e d K i n g d o m a n d the U n i t e d States Jacket painting: Lais Corinthiaca, (oil on limewood), by Hans Holbein the Younger, Offentliche Kunstsammlung, Basel, Switzerland/The Bridgeman A r t Library The Penguin Press A MEMBER OF PENGUIN 375 Hudson Street, www.penguin.com New GROUP (USA) York, | P r i n t e d in N.Y U.S.A INC 10014 Praise for T H E W A R OF T H E Twentieth-Century Conflict and WORLD the Descent of the West "A heartbreaking, serious and thoughtful survey o f h u m a n evil that is utterly fascinating and dramatic superb narrative history." — S i m o n S e b a g M o n t e f i o r e , The New York Times Book Review "Wielding at once the encyclopedic knowledge o f an accomplished scholar and the engaging prose o f a master storyteller, Ferguson commendably brings fresh insights to a history by n o w f a m i l i a r A tour de force." —San Francisco Chronicle " A fascinating read, thanks to Ferguson's gifts as a w r i t e r o f clear, energetic narrative history." — J a m e s F H o d g e , J r , The Washington Praise Post for EMPIRE: How Britain Made the Modern World "Ferguson is a wonderfully fluent writer, weaving t e l l i n g details and v i v i d anecdotes seamlessly into his narrative Sure to be a chilling assertion to both those in Washington eager to deny imperial ambitions and those in the Arab w o r l d suspicious o f America's motives." — M i c h i k o K a k u t a n i , The New York Times 'Fluently written, engaging, beautifully designed and spectacularly illustrated Empire is a model o f h o w to popular history." —The Economist "An entertaining, engaging romp through four centuries o f British imperialism." —Los Angeles Times ISBN 978-1-59420-192-9 The Ascent of Money ALSO BY NIALL FERGUSON Paper and Iron The House of Rothschild The Pity of W a r The Cash N e x u s Empire Colossus The W a r of the W o r l d NIALL FERGUSON The Ascent of Money A Financial History of the World The Penguin Press New York 2008 THE PENGUIN PRESS Published by the Penguin Group Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 0 , U.S.A Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P Y (a division of Pearson Penguin Canada Inc.) Penguin Books Ltd, 80 Strand, London W C R oRL, England Penguin Ireland, 25 St Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd) Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria , Australia (a division of Pearson Australia Group Pty Ltd) Penguin Books India Pvt Ltd, 1 Community Centre, Panchsheel Park, New D e l h i — 1 0 , India Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd) Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg , South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London W C R oRL, England First published in 2008 by The Penguin Press, a member of Penguin Group (USA) Inc 10 Copyright © Niall Ferguson, 2008 All rights reserved ISBN 978-1-59420-192-9 Printed in the United States of America Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book The scanning, uploading, and distribution of this book via the Internet or via any other means without the permission of the publisher is illegal and punishable by law Please purchase only authorized electronic editions and not participate in or encourage electronic piracy of copyrightable materials Your support of the author's rights is appreciated Contents Introduction i Dreams of Avarice 17 Of Human Bondage 65 Blowing Bubbles 119 The Return of Risk 176 Safe as Houses 230 From Empire to Chimerica 283 Afterword: The Descent of Money 341 Acknowledgements 359 Notes 363 List of Illustrations 399 Index 403 v INDEX Merton, Robert , 2 - , 325 Mesopotamia/Babylonia - , M a r x , Karl/ Marxism , , 364 Marylebone Workhouse , , 358 metals, link with money , - , 199-203 Mary Poppins - , 48, , 5 - , 58, 62 Mexico , 98, , 276, 3 , Massachusetts Affordable Housing Alliance 266 Massys, Quentin 43 Masulipatnam mathematics: applied to finance and insurance 3, - 3 , 8 - , Chinese history of - Oriental 3, Matheson, James 289-92 Medicare and Medicaid 1 , 219-21 Medici family 3, - , , diversification 4 - , - libro segreto 308 Miami 264 Michelet, Jules 90 micro-businesses 280 microfinance , - Middle East , 300, 308 sovereign wealth funds 9, 3 war in 6, 308 migration 286, 303 Milan 70 millionaires Minsky, Hyman , 6 M I R A S see Mortgate Interest Relief At Source misconduct see fraud Mishkin, Frederic Mississippi 90, 92, 96 see also 44-5 Medici, Cosimo ( C ) , - Medici, Duke Cosimo de' ( C i ) 4i,47 bubbles; Katrina Mississippi Company (former Medici, Giovanni di Bicci de' , 44-5 Medici, Lorenzo the Magnificent 46-7 Mediterranean - Memphis - , 268, 270, mercenaries - merchant banks , 299 Merchant of Venice see Shakespeare, William mergers and acquisitions , 5 Meriwether, John 2 , , - , , 329 Merrill Lynch , 2 , 3 , 395 Company of the Indies, Compagnie des Indes) I41-57* !68, , Mohamad, Mahathir bin Moivre, Abraham de Moluccas - monarchs see royal funding monetary policy: and decline in asset prices , 428 167-8 and domestic objectives - and mortgage crisis 266, 338 INDEX Moody's 268 Moore, Deborah 196m moral hazard 5 Morgan (J P.) 326m, , 3 , transformation of 1 monetary theory IOO-IOI money: criteria for - , 26, - driving force behind progress 342 376, 395 Morgan Stanley 3 , 338m, as god 85 market 54 potential excess of 64 prejudices against - as representation of: belief and trust - ; commoditized labour ; relationship between debtor and creditor 395 Morocco 297 mortality statistics iSS see also life expectancy Mortgage Interest Relief At Source ( M I R A S ) mortgages 8-9, - , , - , - , 2-59-61, 341 tokens as 27 as total of specific liabilities incurred by banks see also coins; electronic money; paper money moneylenders: hostility to 2, 3 - , - illegal see loan sharks vulnerability to defaults - , 41,48 moneyless societies - , - money supply: 2-77, adjustable-rate ( A R M s ) 264, 271 discrimination in - and economic downturns 8, 242 federal government and , - , 264, 273 fixed-rate residential 264, 323 foreclosures , - in Great Depression/New Deal 247, 264 history 8-9, - , - , 259-61 indebtedness , - , 249 'no recourse' 27on securitization see securitization subprime see subprime lending and US economic triumph definitions - increasing 26, 28, and war 0 , 'mono-line' financial services 353 monopolies , , - , 307 Monopoly (game) - Montagu, Lady Mary Wortley 146 Motown , 264 Mullins, David 2 mutations (in economies) 349, 350-5I 429 INDEX New York 1 , 6 - , i86n New York Stock Exchange 300 Nicaragua 296 Nicholas II, tsar i n Nigeria 26, 1 , 295 / 1 attack 6, , , 2 , 224 mutual associations 247, 254 see also building societies; Savings & Loan Nairobi 280 Nanking, Treaty of Naples 86 Napoleon Bonaparte 3, 7 - , 80-85 Napoleonic Wars - , , , 235, 302 National Bank Act 57 national debts 80, 99, 1 - National Health Service see N I N J A (No Income N o J o b or Assets) 269 Nixon, Richard 58, 307 Northern Rock 7, , 3 , Britain (welfare state) nationalization see banks National Provincial Bank 56 Nationwide house price index natural and market selection 353 North Korea Norway 292 property prices 233 and subprime loans 8, 269 nuclear attacks 223 Nukak-Makoe people - number systems - 3 - I , 357-8 natural resources see resources Nazis 80, 86 Neal, Larry 343m Nearing, Scott negative equity - neo-imperialism - Netherlands, The: financial and commercial success 3, 48, , Holland (province) 74 pension fund 2 property price bubble 3 see also United Provinces network externalities New Deal - , 259 New Orleans 96, 4 , 177-9, 229, 264 see also Katrina O E C D see Organization for Economic Cooperation and Development off-balance-sheet entities 5, - , 272, 355 Office of Federal Housing Enterprise Oversight , 273 offshore markets 308 oil 26, 308, , 3 O'Neill, Jim - Open Market Operations , 163 opium - options/option contracts , 2 - , - 2 , see also call options; put options 430 INDEX options pricing see Black-Scholes model Organization for Economic Cooperation and Development 3 , Oriental influences 3, , 33 Orleans, Duke of (Regent) , Paris 74 Consensus rue Quincampoix - , , ^55 Parker Brothers parliaments , 76, 234 partnerships 44, Pascal, Blaise 8 Patterson, Lynne 279 Paulson, Henry M , J r ('Hank') 28 Paulson, John 3 pawnshops 60 pecunia 25 Peel, Sir Robert 54 peerage see also aristocracy pegs see currency; dollar Pelham, Sir Henry 75 Peninsular War pension funds 3 , as investors 1 , , , , 329 pensions (old age): ageing populations 1 , - 2 Chile - history , 0 - 2 , 2 - Japan 207, - , 2 - property purchase and 229 see also bonds and bond markets; pension funds Penso de la Vega, Joseph pepper , Perkins, John - , Perôn, General Juan Domingo 109-10 , 144, , O T C contracts see derivatives Ottoman Empire 303 collapse 303 Jews in and Venice 36, - see also Turkey outsiders Overend Gurney bank 5 , 56 Overstone, Baron 5 'over-the-counter' contracts see derivatives overtrading Pacific Investment Management Company see P I M C O Pacific islands Padua 70 Palmer, J Horsley 54 Palmerston, Viscount - Panama 309-11 Papacy , 70 paper markets, commercial paper money - , , 5 , 286, 299 Bank of England monopoly 49, 54 and hyperinflation and First World War see also dollar (bills); Law, John Persia 26, Peru - , 98, , , , 275-7 431 INDEX poverty and poor countries: causes of 2, , 64 incomes and international investment Peruzzi family petrodollars 308 Philadelphia Philippines , 276 Phillips, Elizabeth ('Lizzie') - , 293-4» 307 lack of financial institutions and credit , 64, 280 loan sharks and , - and microfinance - and property ownership - , 274-7 real estate occupied by 274 see also aid; emerging markets; incomes; workhouses pre-modern societies Preobrazhensky, Yevgeni prestanze and prestiti - price controls 338 price-earnings ratios - , 160 'price revolution' 26, 63 price rises 26, 0 , , 284, 308, 338 Princip, Gavrilo 298, 300 private equity partnerships/firms 230 Phoenix 264 Picart, Bernard - pieces of eight 25 P I M C O (Pacific Investment Management Company) 68, 107 Pinera, José - , Pingala 32m Pinochet, Augusto , - Pisa - , , 69, 70 Pius II, Pope - Pizarro, Francisco - plagues , Poland political reform see electoral reform politicians , 2 , 2 , Pope, Alexander Popper, Karl population issues m , see also pensions, ageing populations Portinari, Tommaso - Portugal 5,9»336, 337»353 privatization 1 , , - , 352 probability 8 - , 198, - Proctor &c Gamble productivity , 1 promissory notes 27, 49 see also exploration and East Indies trade - , , and Jews 36 'post-American' era 3, 288 Potosi 2 - , , 27, , 63 pound sterling 5 , - see paper money Pro Mujer - property-owning democracies 3 , - , 266, 274, 276, also gold standard 341 432 INDEX property/real estateaccess to ownership 23on., - , 253, 267-8, 275-7, 341 compared with stock market 261-3 developers 7 , 3 English-speaking world's passion for 4, 6, - 3 , 264 establishing ownership/title - , 277 home ownership: Britain 23on., 241, - ; USA - , 249-51, 265-6, 270-71 illiquidity , investment in , - , 261-70, 273-4, - law - , 294 and political power , , 276, price indexes - price rises and downturns 8, 230, 3 , , , - , 270, - , - regional variations in prices 233n unsafe investment bet 229, - , - , 278, - protectionism , 3 see also free trade Prussian government bonds 86, 87, 90 public housing - , - publicly owned firms 353 Public Works Administration 246-7 Puckler-Muskau, Prince 90 Putin, Vladimir 276 put options , , 227 'quants' - Quantum Fund Quilmes 274, - race divisions - , - , , 6 - see also antiSemitism; ethnic minorities Rachman, Peter railways 226, 292 Rand Corporation 3 random drift , randomness 'random walk' Ranieri, Lewis 259 rating agencies 268 raw materials see resources RCA 160 Reagan, Ronald , 254 and capital account liberalization and S & L s 254 welfare reforms real estate see property recessions - , I prospects of 8, 3 - recourse 270m, recovery, economic 274, 307 red-lining (credit rating) , re-emerging markets 288 Rees-Mogg, Lord 6 reflation reflexivity , Reform Bills see electoral reform 433 INDEX Revlon revolutionaries Richelieu, Cardinal 89 Right wing: and bond markets 89-90 and welfare state 202 Riksbank 49 risk: Regulation Q 249, 254 regulation/regulators 54, 249, *54> *59, 35 ~7 and change - deregulation , Reichsmark, collapse of 1 - religious minorities Renaissance Renaissance (company) 3 Renda, Mario 5 renminbi 3 , 338 rented accommodation: private , , , 7 public see council housing; landlords; public housing rentes!rentiers - , 76, 9 - 0 , aversion and seeking , 347 calculability of 343, 4 - encouraged by state guarantees 106, 1 , reparations see Germany reporting, pressures of 354 representative governments 26 repression (political) Republican Party reserve ratio - residential mortgage-backed collateralized debt obligations (RMBS CDOs) 272 residential mortgage-backed securities ( R M B S ) 26on., 268, Resolution Trust Corporation 258 resources: allocation competition for 3 - , - as 'curses' 26 see also commodity markets retirement ages 220 see also pensions 357 management of 7 , optimal distribution 6, 5 welfare state and 200, 209, 211 see also uncertainty; volatility Risk Management Solutions Rivera, Diego - R M B S see residential mortgagebacked securities Robespierre, Maximilien 89 Rockefeller, John D., J r 246 Rockefeller Center 246 Rodriga, Daniel 37 Rogers, Jim 288 Rogoff, Kenneth 3 Romania 36, 1 Romanov empire see Russia Rome: ancient - , - Medici bank in 42, 45 Roosevelt, Franklin D , , 246-7 Rosario 1 Rostow, Walt 307 434 INDEX Rothschild family and firm - , 88, 90, 0 , 292 and American Civil War , , 96-7 and Argentina 1 - , 292 Jewishness 82, 87n., 88, 90 myths about - political power 82, 87m, - and US 90 Rothschild, 1st Baron (Nathan) 114 Rothschild, 3rd Baron - Rothschild, 4th Baron 78 Rothschild, Amschel 79, 82 Rothschild, Carl 79, 82 Rothschild, Sir Evelyn de 78 Rothschild, James 79, 82, 93 Rothschild, Lionel de 93 Rothschild, Mayer Amschel 88, 89 Rothschild, Nathan Mayer 3, 78-88 Rothschild, Salomon 79, 82 Rothschild, Salomon de 93 Royal Exchange 300 royal funding , 74, , - , 153-5 Royal Society 188 Rueff, Jacques 308 Rumsfeld, Donald Russia/USSR: Bolshevik regime , 303 bonds 86, 90, 297, - , 326 Communist bloc's impending doom 308 currency convertibility 300 debt default (1998) 1 , , 326, 328 Jews in 86 oil as 'resource curse' 26 property price boom 3 Russian/Romanov Empire 298, 303 unaffected by Great Depression 158 and First World War and aftermath 1 , , 299, 300, - , 328 see also B R I C s Ryan, Anthony W , 348 S & L s see Savings & Loan S & P see Standard and Poor's Saint-Simon, Duke of Salomon Smith Barney (formerly Salomon Brothers) 259, 260, 322, 325 San Diego 264 San Francisco , 9 Sanskrit mathematics 2n Santiago (Chile) , 303 Santo Tornas, Domingo de 23 Sassetti, Francesco 46 Saving, Thomas R 2 savings: against future surprises 229 discouraged by taxes 1 gluts , 3 international comparisons 333-5 need for banks 6, 64 pre-modern societies property purchase as 229 435 INDEX savings - cont see also savings banks savings banks , 0 , and bonds 0 , British , Savings & Loan (S&L) securitization 4, , - , of debt , federal government and , 273 perils of , private bond insurers and associations ('thrifts') - , segregation - 5 , - , 322, 349, , Self, Beanie Senegal Company 354 Serbia , - regulatory environment of , 258, sexual language shadow banking see banks Shakespeare, William, The 356 Savonarola, Girolamo Savoy, Victor Amadeus II, Duke of Scholes, Myron - , , Merchant of Venice 3 - , , 37, , , Schumpeter, Joseph - , - Shanghai 3 Schwartz, Anna , - science see also technological innovation scope issues , , Scotland , , 190-98 see also Glasgow Scottish Ministers' Widows Fund 193-6 Scottish Widows , , 9 Scott, Sir Walter 195-7 Scruggs, Richard F ('Dickie') shanty towns shares (or stocks or equities): as collateral 180-82, 198 sea levels 2 securitas securities: new types , see also asset-backed securities; assets; securitization Securities Act m Securities and Exchange Commission i n displacement - , features of - , Law's System and shareholders' meetings and First World War see also options; stock markets Sharpe, William 3 Shaw-Stewart, Patrick shells Shettleston - Shiller, Robert Shining Path ships/shipping - , see also marine insurance short positions short selling Shylock 3 - , , 90, sidecars 2 436 INDEX South Sea Bubble see bubbles Siena 69 Silicon Valley see dot.com silver - , 27, , sovereign wealth funds 9, 3 , 353 and Mississippi Bubble - , 152 Spanish and , - , 52 Simons, James 3 Singapore 337m SIVs see structured investment vehicles Skilling, Jeffrey K , - , 174 slavery: and home ownership 267 Rothschilds and 93 slave trading 25 Sloan, Alfred Slovenia Smith, Adam , socialists: and bond markets - and liberalization and welfare state 0 - 2 , Socialist Standard - Song Hongbing 86 Soros, George 4~i9, 3> 5> 327 I 2 income 2, 3 on 'market fundamentalism' 337 Sourrouille, Juan 1 South America - , 279 gas pipelines 1 property law - see also Latin America Southern Rhodesia 295 South Korea 3 , Soviet-style economics Soviet Union see Russia/USSR Spain 36, - , 292 declining empire 26, , 74, 127, 134 and gold and silver , - , 25-6, 51 property price boom , 3 royal funding , 74, 75 Spanish Succession, War of the 156 special-purpose entitities (SPEs) 172-3 speciation , , speculators 2 , , 226 see also futures contracts Spencer, Herbert spices , - , spreads , squatters - , 7 squirrel skins 25 Sri Lanka stagflation 1 Standard and Poor's (S&P) 268 Standard and Poor's 500: 124m, - , 283, 3 Stanford State Farm insurance company 181-2 state-owned enterprises see privatization; sovereign wealth funds State Savings and Loan 5 statistics 8 - 437 INDEX sterling see pound sterling Stevenson, George 60 Stewart, Jimmy 247-8 Stiglitz, Joseph - stockbrokers - Stockholm - stock markets and exchanges: - , - , 136, 159, , , , - , 344 war and , , and First World War 297, 299-300 stocks see shares Stowe House 236-40 Strong, Benjamin 'structural adjustment' 309 structured investment vehicles benefits of bubbles - , Chile closure of 300, - compared with bond markets 124-5 (SIVs) , , , 5 Styal 94 subprime lending 8-9, - , compared with property market 261-3 283,336 and black and Latino borrowers crashes - , - 6 , , 324 266-7 responsibility for 6 - , as discipline on companies foreign stock exchanges 293 forward/futures markets , 133 fraud - history of 3, 6, 74, - , - , 3 , 341 indices - and inflation insurance companies and - international comparisons mechanical selling and pensions see pension funds speculators 2 stock exchanges 3, 74, - , 300, - and supply of credit total capitalization of the 2-73-4, 3 sugar 285 Sunbelt 255 Sun Insurance Office swaps 4, 2 , 323 Sweden - , , 209 Swift, Jonathan Swiss National Bank 57 Switzerland 57, , 4 Sword Blade Company Syria tail risk 2 , 344 Taiwan 339 Tanzania 276 tariffs: protectionist 303 rising 287 taxes: bond markets and 68, 99 world's volatility and risks 6, , 438 INDEX see also emerging markets 'thrifts' see Savings & Loan Tibet 3 British - 1 , collection 76, , in debtor countries 309 excise tobacco , , token coins Toler, James - tontines 76 Florentine , , land 230 and mortgage payments and property law reform 275 savings discouraged by 1 Torcy, Marquis of Torrijos, Omar - 1 tourists, currency controls on Taylor, Gene Teamsters Union 255 technological innovation: evolutionary history of 8, 160, - and inflation 1 transferability 287 weaponry 285, 297 305 trade unions: Argentina i n , 1 growth and decline of power 1 , 159, 1 and productivity 1 'tranched' debts transatlantic banking 53 treaty ports , 295 'trilemma' 306, 307 triple-A rated investment grade technology companies Temasek 337n tenants see landlords; rented accommodation securities 268, Trollope, Anthony Trustee Savings Banks 294 trust, money and - Ts'ui Pen 1 Tugwell, Guy tulip bubble Tunisia Tennessee 59 'term auction facilities' terrorism/terrorist attacks , 223, 276 financial consequences - , 300 hedging against 228 New York and London 6, 223 nuclear or biological 223 Texas see also Dallas textile industry , 287 Thailand Turkey/Turks , , 1 , see also Ottoman Empire Tversky, Amos 4 - Thatcher, Margaret 252, 267, 312 'Third World': loans and aid to 307, 309 UBS (bank) 2 , 3 uncertainty , - see also certainty; risk underwriters 439 INDEX unemployment 269 and credit 40 in Great Depression , 242 and hyperinflation - and I M F and World Bank Keynes on United Arab Emirates 33711 United Kingdom see Britain United Netherlands East India imports , 334 Company see V O C United Provinces: insurance 9 bond market 75 currencies in 48 and East India Company see VOC and Mississippi Bubble - power of 3, - rentiers in 75 rivalry between provinces see also Netherlands, The United States of America: ageing population - 'American empire' - banking system - British investment in 293 budget deficit 1 currency policy 338 debt and bankruptcy in - defence industry depression see depressions divisions in society see race divisions France and see Louisiana government bonds 3 health care and insurance , 211,219-21 home ownership see property/ real estate 309-12 immigration and population 286, 288 incomes - , , - , 3 - industrialization 285 inflation , 1 , 3 international borrowing 3 - , 337 overseas aid and investment 305-7 public ignorance about finance 10-12 real estate see property/real estate recession prospects 8, 3 - savings 3 - social divisions see race divisions stock market 6, , - , 261-3,283 as subprime superpower 282 use of economic hit men 309-11 welfare system 1 , 1 , - and Second World War - and First World War 1 - , 204 universities , 329 Uriburu, José F n o Uruk US Army Corps of Engineers U S S R see Russia/USSR US Steel 349 usury - , 44, , 440 INDEX Volcker, Paul 166, 395 utility companies see also energy industry utility and probability - utopianism - , 230 Voltaire , voting rights see electoral reform wage cuts Wallace, Robert - , Wall Street crash - war: Value at Risk (VaR) models , 328, 355m Vatican 42 Veblen, Thorstein 348 Velasco, Carmen 279 Venezuela 26, 99, Venice 3 - , 59, - , , and bonds - , ghetto 34, 36 Medici in 42, 46 and money-lending 3 - and Oriental influences 3 San Moise and capitalist system - causing 'bankruptcy of nations' 297 and commodity markets and prices , 300, 339 conditions for 304, 3 - finance for , 26, 49, 79, , 303 globalization and 3 - and industrial change 348 and inflation see inflation and insurance see insurance and money probabilities , 298, 304, Vernon S & L 255 Versailles Treaty - Vicksburg 92, 94 Victoria, Queen 238 Vienna 1 , 300 Vietnam War 307m violence, in absence of money 18-19 'virtual' money see electronic money VOC (Dutch/United East India Company) - , , 174 shares in 129-30, 131-4, 136 structure - , 3 - volatility: alleged death of projected return of 356 see also investors; stock markets 441 343 and trade war bonds 1 - and welfare state 2 - , 205-10 see also bonds and bond markets War Damage Corporation 206 War Loans , Washington, D C 306 Washington Consensus 308, Washington Mutual 266 Waterloo, Battle of 3, 80, 84 Watkins, Sherron - , wealthy 26, 234 INDEX weapons see arms; technological innovation; war weather: derivatives 2 - extreme 6; see also disasters and stock markets Webster, Alexander 190-95, welfare state 9 - 1 backlash against dismantling of 1 and economy - 1 and war see war Wellington, Duke of - , 84 Western Union Westminster, Duke of 234 wheat prices see grain widows and orphans - William of Orange 75 Williamson, John 308m Wilson, Harold 234 wine market 6, 3 Winfrey, Oprah 267 Wisselbank see Amsterdam Exchange Bank Wizard ofOz, The women: discrimination against 5, 279 as entrepreneurs - , 278-80, 333 workers see labour workhouses 199-203 World Bank (former International Bank for Reconstruction and Development and International Development Association) 288m, 306 and Argentina 1 , 275 founding of 306 loans and conditions - as US agents - World Trade Center attack 6, , , 2 , 224 World War, First 2 - , 296-304 aftermath 0 - , , 302-4 as backlash against globalization - decades preceding - and financial markets , 298-303 World War, Second , 305 post-war financial system 305-7 and social insurance 204 US aid after 306 write-downs 354 writing, first use of 27 Wu Yajun 333 yachts 2, 3 Yanomamo people Yap islands 30 Yatsuhiro, Nakagawa - yen 67 Yin Mingsha 3 Yom Kippur War Yudkowsky, Eliezer 347 Yunus, Muhammad - Zimbabwe 108 Zoellick, Robert 306,