Waiting for this book to be launched in a few weeks' time.
Coincidentally, exactly 100 years ago, the U.S. went through one of the biggest financial crisis in its economic history - i.e. the "Panic of 1907" as it was commonly called. Two writers Robert Bruner and Sean Carr decided to write a book at this 100th anniversary giving an account of the highly dramatic events of that year. The book is expected to come out in mid-September. Little did the writers of this new book know that the events of the last few weeks would see many analysts drawing comparisons between the 1907 crisis and the current global credit turmoil.
The analysts appear to be saying that there are many uncanny parallels between the two situations. Essentially, both crises came about because of a "perfect storm" or confluence of factors, i.e. a booming economy just prior to it, an unprecedented rash of corporate mergers and acquisitions and a profusion of borrowers and creditors who overreach in their use of debt. In both instances, it resulted in "credit anorexia" amongst financial institutions, which threatens to halt one of the key cogs of the economy - debt provision.
Amazon and other booksellers are probably taking the chance to hype up the book, well, good for them. I am actually curious about the book for another reason.
You see, the book is supposed to have given a good account of how one man single-handedly bailed the whole country out of a financial implosion. That guy's name is J.Pierpont Morgan, who put together probably the most famous financial rescue plan in economic history, which he basically made (or as people say, forced) all the other bank presidents at that time to sign up to. As an example of what he did during that year 1907 - at one point of the crisis, the New York Stock Exchange was threatening to close down in the middle of the trading day, Morgan essentially prevented a complete meltdown of the capital markets by announcing that he would underwrite a $30 million bond offering (equivalent to $900 million in our day) for the stock exchange.
There are some who even said he engineered the financial crisis in the first place so as to profit from it eventually. Well, if he did that, he certainly made the most colossal gamble that any person dared to make. In any case, after the crisis, he did make a huge amount of money and spawned the creation of many of the key financial and corporate institutions we know of today, e.g. GE, Morgan Grenfell, US Steel, Exxon etc.
I have always been quite fascinated with the man even before I had anything to do with one of his legacy institutions. When travelling in New York some years ago, I came across the House of Morgan (23rd Wall Street), built at a mere 4 storeys amidst the towering blocks around it, which was meant to demonstrate the economic prowess of the man and his institution at that time. There is also the incredible Morgan Art Musuem, which houses one of the most amazing art collections ever (lots of famous paintings, original scores of Beethoven, Mozart, and even a whole roof of a French castle). There are many colourful stories about the man. He was apparently very strange and enigmatic - reticent, all-powerful and demanding perfect authority.
One question that has been asked is who will be the "Morgan" of this crisis (if it does become a true one)? Some say it will be the central banks, who have been pouring in giant amounts of money into the system in the last two weeks. Some say you do need a real "Morgan", since it is about restoring confidence, and a human person putting his own capital at stake is always going to be more convincing than a faceless central bank system. One writer says it may be Warren Buffet, who interestingly, indirectly owns 19% of Moody, a rating agency who may have caused some of the subprime debt issues in the first place.
All pretty interesting to watch and read. Of course, I do hope things to become stable soon. In the meantime, I am actually kind of glad for the time and opportunity to learn a bit more about all these new financial products and systems that were identified to have triggered the situation. While the markets are hot, nobody cares to really explain it to you (and you are busy yourself with the ride). I was surprised to find that there's much good literature out there that tries to explain the issues. That is necessary and good. Afterall, the crisis is partly about Fugu Fish hedge funds selling collateralized debt packages to the Moms and Pops and Auntie Wongs of this world who may not fully understand what goes into them.
