Bank Failure Quotes

The Great Depression was going on, so that the station and the streets teemed with homeless people, just as they do today. The newspapers were full of stories of worker layoffs and farm foreclosures and bank failures, just as they are today. All that has changed, in my opinion, is that, thanks to television, we can hide a Great Depression. We may even be hiding a Third World War.

One should never regret one's excesses, only one's failures of nerve.

Imagine there is a bank account that credits your account each morning with $86,400. It carries over no balance from day to day. Every evening the bank deletes whatever part of the balance you failed to used during the day. What would you do? Draw out every cent, of course? Each of us has such a bank, it's name is time. Every morning, it credits you 86,400 seconds. Every night it writes off at a lost, whatever of this you failed to invest to a good purpose. It carries over no balance. It allows no over draft. Each day it opens a new account for you. Each night it burns the remains of the day. If you fail to use the day's deposits, the loss is yours. There is no drawing against "tomorrow". You must live in the present on today's deposits. Invest it so as to get from it the utmost in health, happiness, and health. The clock is running. Make the most of today.

The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground. The people came for miles to take the fruit, but this could not be. How would they buy oranges at twenty cents a dozen if they could drive out and pick them up? And men with hoses squirt kerosene on the oranges, and they are angry at the crime, angry at the people who have come to take the fruit. A million people hungry, needing the fruit- and kerosene sprayed over the golden mountains. And the smell of rot fills the country. Burn coffee for fuel in the ships. Burn corn to keep warm, it makes a hot fire. Dump potatoes in the rivers and place guards along the banks to keep the hungry people from fishing them out. Slaughter the pigs and bury them, and let the putrescence drip down into the earth. There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. The fertile earth, the straight tree rows, the sturdy trunks, and the ripe fruit. And children dying of pellagra must die because a profit cannot be taken from an orange. And coroners must fill in the certificate- died of malnutrition- because the food must rot, must be forced to rot. The people come with nets to fish for potatoes in the river, and the guards hold them back; they come in rattling cars to get the dumped oranges, but the kerosene is sprayed. And they stand still and watch the potatoes float by, listen to the screaming pigs being killed in a ditch and covered with quick-lime, watch the mountains of oranges slop down to a putrefying ooze; and in the eyes of the people there is the failure; and in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.

Suddenly, in the space of a moment, I realized what it was that I loved about Britain - which is to say, all of it. Every last bit of it, good and bad - Marmite, village fetes, country lanes, people saying 'mustn't grumble' and 'I'm terribly sorry but', people apologizing to me when I conk them with a nameless elbow, milk in bottles, beans on toast, haymaking in June, stinging nettles, seaside piers, Ordnance Survey maps, crumpets, hot-water bottles as a necessity, drizzly Sundays - every bit of it. What a wondrous place this was - crazy as fuck, of course, but adorable to the tiniest degree. What other country, after all, could possibly have come up with place names like Tooting Bec and Farleigh Wallop, or a game like cricket that goes on for three days and never seems to start? Who else would think it not the least odd to make their judges wear little mops on their heads, compel the Speaker of the House of Commons to sit on something called the Woolsack, or take pride in a military hero whose dying wish was to be kissed by a fellow named Hardy? ('Please Hardy, full on the lips, with just a bit of tongue.') What other nation in the world could possibly have given us William Shakespeare, pork pies, Christopher Wren, Windsor Great Park, the Open University, Gardners' Question Time and the chocolate digestive biscuit? None, of course. How easily we lose sight of all this. What an enigma Britain will seem to historians when they look back on the second half of the twentieth century. Here is a country that fought and won a noble war, dismantled a mighty empire in a generally benign and enlightened way, created a far-seeing welfare state - in short, did nearly everything right - and then spent the rest of the century looking on itself as a chronic failure. The fact is that this is still the best place in the world for most things - to post a letter, go for a walk, watch television, buy a book, venture out for a drink, go to a museum, use the bank, get lost, seek help, or stand on a hillside and take in a view. All of this came to me in the space of a lingering moment. I've said it before and I'll say it again. I like it here. I like it more than I can tell you.

Although the United States, with its unit banking laws, had thousands of bank failures, Canada, which permitted branch banking, didn't have a single failure during the Great Depression.

Few human inventions are more complex and tightly coupled than the banking system; Charles

P.S. Success hits different when you spend more time clapping for yourself than looking down on your failures.

None of these things define you as a person: Your education The size of your bank account Your job title Your failures Your successes And sadly, we let so many of these things rule our lives. Obsession with crossing off the checkboxes of society's life plan leads to little other than therapy, midlife crises, and depression.

That’s the thing about the collapse of civilization, Blake. It never happens according to plan – there’s no slavering horde of zombies. No actinic flash of thermonuclear war. No Earth-shuddering asteroid. The end comes in unforeseen ways; the stock market collapses, and then the banks, and then there is no food in the supermarkets, or the communications system goes down completely and inevitably, and previously amiable co-workers find themselves wrestling over the last remaining cookie that someone brought in before all the madness began.

The accepted version of history is that the Federal Reserve was created to stabilize our economy. One of the most widely-used textbooks on this subject says: "It sprang from the panic of 1907, with its alarming epidemic of bank failures: the country was fed up once and for all with the anarchy of unstable private banking."23 Even the most naive student must sense a grave contradiction between this cherished view and the System's actual performance. Since its inception, it has presided over the crashes of 1921 and 1929; the Great Depression of '29 to '39; recessions in '53, '57, '69, '75, and '81; a stock market "Black Monday" in '87; and a 1000% inflation which has destroyed 90% of the dollar's purchasing power.24

Excessive rural credit was one of the important causes of bank failure during the Great Depression.

On June 16, 1933, the Senate passed the Glass-Steagall Act whereby banks were forbidden from selling stocks and bonds. The Act also created the FDIC, which insures banks against failure.

I became convinced that the advanced industrial countries, through international organizations like the International Monetary Fund (IMF), the World Trade Organization (WTO), and the World Bank, were not only not doing all that they could to help these [developing] countries but were sometimes making their life more difficult. IMF programs had clearly worsened the East Asian crisis, and the "shock therapy" they had pushed in the former Soviet Union and its satellites played an important role in the failure of the transition.

The determined attempt to discredit Robert Mueller, the FBI and the Justice Department is an endeavor to protect the fervent saber rattlers themselves. You see, all this commotion kicked into overdrive once the Special Counsel sought information from Deutsche Bank.

It is the author's opinion that the history of China and India, and their failure to catch up to the West during the twentieth century, is inextricably linked to this massive destruction of wealth and capital brought about by the demonetization of the monetary metal these countries utilized.

The Freedman’s Savings Bank serves as a cautionary tale for government support of banking for the poor when that support is just a façade. Draping a flag over a building and then installing private profit-motivated management inside is the most dangerous sort of government support. It induces trust in a vulnerable customer base that not only suffers from financial loss, but also loses all faith in public institutions. It poisons true government efforts to help. A similar phenomenon was at the heart of the failure of the government-sponsored enterprises Fannie Mae and Freddie Mac during the recent financial

We have each other. We lived apart from them; we understand now. Our failure to touch, to belong. But it doesn’t matter anymore. Everybody is gone, and we will join them. We are born apart, driftwood on the banks of an endless dark ocean. And we will be carried away by the swell soon enough. But in between, in a single day of living… that dancing in a strip of sunlight, we can find what we miss. The love that makes us whole. The imminence. Everybody found their other. This pattern is mine...

Jesus did the job that you couldn’t do, and He is faithful to keep you. You didn’t save yourself, and you can’t keep yourself saved. You are a Son and not a slave. You don’t owe God anything; absolutely nothing. You never did. He was never banking on you to make up for your failures and faults. He took care of those long before you ever realized it.

Oh no,” Ximenyr said, looking almost serious. “One should never regret one’s excesses, only one’s failures of nerve.

Failure to understand the context in which correlations are observed leads to false conclusions. The

There is a price to pay for success, there is also a price to pay for failure. The question is, what price are you willing to pay?

Sure, anything can make or break a market from the failure of a bank to the rumor that your second cousin's grandmother has a cold.

Now, more than ever, the world needs a Permaculture Economy.

Success at job interview requires preparation. Failure doesn't.

While writing the first draft is an exercise in shutting down all of the things we think we know so that the story features come tumbling out, the revision is the end of the joy ride. We pull on the gloves and sort of poke around inside the body. Is that a tumor? Will that limb need amputation? I nearly second-guessed myself into heart failure while learning to self-edit.

To live for one’s principles, at all costs, is a dangerous speculation; and the failure of an ideal, no matter how humane and noble, is harder for the world to forgive and forget than bank robbery or the grand swindles of corrupt politicians.

If more people understood how nice it is to have a sense of home that extends past our locked doors, past our neighbors' padlocks, to the local food co-op and library, the sidewalks busted up by old trees - if we all held home with longer arms - we'd live in a very different place... We wouldn't feel so alone, no matter the size of our houses or our bank accounts, no matter whether we had good health or congestive heart failure. We would begin to see that each moment presents an opportunity to relax, to notice that the wind has shifted and a storm is coming, or that our friend's toddler has decided to wear dinner instead of eating it. We would see that each minute counts for something timeless and, if we want, we all can find our way inside these big, tiny, moments.

Until well into the modern age, Christians had spread legends about Jews poisoning town wells, intentionally spreading the plague, and murdering Christian babies. Now, in the twentieth century, anti-Semites asserted that, wherever Jews were active, they stirred up popular unrest and sowed discord. This flexible stereotype could be used to interpret a variety of unsettling events—major conflicts of interest, market competition, bank failures, inflation, foreign and civil wars, and revolutions—as Jewish machinations.

I judge myself by the shiny, pretty people I see at parent-teacher meetings, or on Facebook, or Pinterest, who seem to totally have their shit together and never have unwashed hair. They never wait until Thursday night to help their kid with the entire week's homework. They don't have piles of dusty boxes in corners waiting to be opened from the move before last. They have pretty, pastel lives, and they are happy, and they own picnic baskets and napkins and know how to recycle, and they never run out of toilet paper or get their electricity turned off. And it's not even that I want to be one of those people. I fucking hate picnics. If God wanted us to eat on the ground He wouldn't have invented couches. I just don't want to feel like a failure because my biggest accomplishment of the day was going to the bank.

If you take steps to accomplish something, that action will have a result—either failure or success…. Trust is knowing that there will be a message. When you trust in those messages, the reflections of the phenomenal world, the world begins to seem like a bank, or reservoir, of richness.

Politicians have often declared that unbridled competition among financial intermediaries promotes failures that will harm the public. Although the evidence that competition does this is extremely weak, it has not stopped the state and federal governments from imposing many restrictive regulations.

Eli Willard just looked at her for a long moment, and then he announced, 'Lady of the Lake strikes iceberg in mid-Atlantic; 215 drown. New York City fire destroys 700 buildings. Japanese earthquake kills 12,000. Worldwide cholera epidemic kills millions. Wages rise, but prices rise faster. Financial crash occurs on Van Buren's 36th day in office. Nation begins first great depression. Bank failures and closings spread like plague. 200,000 are unemployed. Business bankrupt; only pawnbrokers prosper. Van Buren declares ten-hour days on all federal jobs. There. Does that make you feel any better?

But these things now belonged to the past, and he was flying toward the future. As they banked, Dr. Floyd could see below him a maze of buildings, then a great airstrip, then a broad, dead-straight scar across the flat Florida landscape—the multiple rails of a giant launching track. At its end, surrounded by vehicles and gantries, a spaceplane lay gleaming in a pool of light, being prepared for its leap to the stars. In a sudden failure of perspective, brought on by his swift changes of speed and height, it seemed to Floyd that he was looking down on a small silver moth, caught in the beam of a flashlight.

the general fund of vocabulary, nay, of discourse itself, so calamitous that the failure of the banks in 1929 seems paltry by comparison; so that we find verbal paupers all around us, tattered, emaciated, and reduced to the stark penury of such verbal resources as “It’s like wow” or using “interface” or “office” as verbs.

the first century of the US Federal Reserve’s existence has been a failure. Not only has there been incontinent inflation since 1913, the year the Fed came into existence (8 per cent in the preceding 120 years, 2,300 per cent in the succeeding hundred years), but there has been devastating deflation too, and more banking panics, more financial volatility, longer and deeper recessions.

Burn coffee for fuel in the ships. Burn corn to keep warm, it makes a hot fire. Dump potatoes in the rivers and place guards along the banks to keep the hungry people from fishing them out. Slaughter the pigs and bury them, and let the putrescence drip down into the earth. There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success.

He picked up the telephone on his desk. “Bring in the Cord loan agreement and the check.” “You will note,” he said, “that although the loan is for three hundred thousand dollars, we have extended your credit under this agreement to a maximum of five hundred thousand dollars.” He smiled at me. “One of my principles of banking, Mr. Cord. I don’t believe in budgeting my clients too closely. Sometimes a few dollars more make the difference between success and failure.” Suddenly

What remains of the labours of the ‘new philosophers’ who have been enlightening us – or, in other words, deadening our minds – for 30 years now? What really remains of the great ideological machinery of freedom, human rights, the West and its values? It all comes down to a simple negative statement that is as bald as it is flat and as naked as the day it was born: socialisms, which were the communist Idea’s only concrete forms, failed completely in the twentieth century. Even they have had to revert to capitalism and non-egalitarian dogma. That failure of the Idea leaves us with no choice, given the complex of the capitalist organization of production and the state parliamentary system. Like it or not, we have to consent to it for lack of choice. And that is why we now have to save the banks rather than confiscate them, hand out billions to the rich and give nothing to the poor, set nationals against workers of foreign origin whenever possible, and, in a word, keep tight controls on all forms of poverty in order to ensure the survival of the powerful. No choice, I tell you! As our ideologues admit, it is not as though relying on the greed of a few crooks and unbridled private property to run the state and the economy was the absolute Good. But it is the only possible way forward. In his anarchist vision, Stirner described man, or the personal agent of History, as ‘the Ego and his own’. Nowadays, it is ‘Property as ego’. Which

Cryptocurrency, which was supposedly created as a solution to the myriad failures of our regulated financial system laid bare during the subprime crisis, had effectively reproduced and even amplified the same dynamics, leading to a similar implosion. Thankfully for the broader public, it had all happened on a smaller scale and the real banks were not involved (despite the crypto industry’s efforts to the contrary). But once again, it was regular people who were left holding the bag.

The failure of Islam to take the city in 717 had far-reaching consequences. The collapse of Constantinople would have opened the way for a Muslim expansion into Europe that might have reshaped the whole future of the West; it remains one of the great “What ifs” of history. It blunted the first powerful onslaught of Islamic jihad that reached its high watermark fifteen years later at the other end of the Mediterranean when a Muslim force was defeated on the banks of the Loire, a mere 150 miles south of Paris.

the first century of the US Federal Reserve’s existence has been a failure. Not only has there been incontinent inflation since 1913, the year the Fed came into existence (8 per cent in the preceding 120 years, 2,300 per cent in the succeeding hundred years), but there has been devastating deflation too, and more banking panics, more financial volatility, longer and deeper recessions. Even the Fed’s response to the crisis of 2008 has come under severe criticism, as it effectively bailed out bad assets while doing little to help solvent institutions with needed liquidity

Past successes may be inspirational and encouraging, but they are not by themselves reliable indicators of or guides to future success. The most efficacious changes in any system are informed not by successes but by failures. The surest way for the designer of any system to achieve success is to recognize and correct the flaws of predecessor systems, whether they be in building codes or in banking policies or in bridges.25 The history of civilization itself has been one of rises and falls, of successes and failures. Some of these have been of empires, dynasties, families; others have been of nations, states, and cities. Common to all of them has been the human element, embodied in the ruler and the ruled alike. Given that the ultimate unit of civilization is the individual, we need look no further than within ourselves to gain insight into the world and its ways, including the failure of its institutions and its systems. And, just as those institutions and systems are made up of individual people and things, so ultimately must we look to ourselves and to how we interact with the world, both given and made, whenever something goes wrong.

Except fear, possibly. Because maybe you’ve been really frightened at some time, and so was the bank robber. Possibly because the bank robber had small children and had therefore had a lot of practice being afraid. Perhaps you, too, have children, in which case you’ll know that you’re frightened the whole time, frightened of not knowing everything and of not having the energy to do everything and of not coping with everything. In the end we actually get so used to the feeling of failure that every time we don’t disappoint our children it leaves us feeling secretly shocked.

Now, no creature who has any credit with a bank comes to me. The first step to my door means that a man is desperately hard up; that the news of his failure will soon come out: and, most of all, it means that he has been everywhere else first. The stag is always at bay when I see him, and a pack of creditors are hard upon his track. The Countess lived in the Rue du Helder, and my Fanny in the Rue Montmartre. How many conjectures I made as I set out this morning! If these two women were not able to pay, they would show me more respect than they would show their own fathers.

Perhaps because the bank was identified with the endeavors of the newly freed negro, wrote historians Kindsor and Sagarin, anyone who dared to raise a cry against the mismanagement was charged with being anti-negro. In as much as the enemies of the negro were not interested in the bank, and the friends were effectively silenced with the anti-negro charge, there was no exposure of the condition of the bank. The belief that the failures of black institutions could not be accurately studied because of the sensitivity of the race issue, whether accurate or not, would be a recurring theme through history.

Trust at the interpersonal level. Trustworthiness is the foundation of trust. Trust is the emotional bank account between two people that enables them to have a win-win performance agreement. If two people trust each other, based on the trustworthiness of each other, they can then enjoy clear communication, empathy, synergy, and productive interdependency. If one is incompetent, training and development can help. But if one has a character flaw, he or she must make and keep promises to increase internal security, improve skills, and rebuild relationships of trust. Trust—or the lack of it—is at the root of success or failure in relationships and in the bottom-line results of business, industry, education, and government.

People who learned Eric and I wanted to adopt a child often told us stories of adoptions gone wrong. The adopted child incapable of attachment. Who became a drug addict, a runaway, who drained bank accounts, ruined marriages. "I have a friend who adopted," these stories began. "It was a nightmare."... And their stories did make me afraid, convinced me I was the vulnerable one whose life was at risk. Listening, I'd forget the abandoned, the neglected, the children curled on the floor of some empty-cabinet kitchen or crying in some school bathroom stall or shaking in some crib. I'd forget that these children belong to all of us. If they wield knives in the dark or hit heads against walls or refuse to speak, they signal our failure, not theirs.

First, when all investors were doing the same thing, he would actively seek to do the opposite. The word stockbrokers use for this approach is contrarian. Everyone wants to be one, but no one is, for the sad reason that most investors are scared of looking foolish. Investors do not fear losing money as much as they fear solitude, by which I mean taking risks that others avoid. When they are caught losing money alone, they have no excuse for their mistake, and most investors, like most people, need excuses. They are, strangely enough, happy to stand on the edge of a precipice as long as they are joined by a few thousand others. But when a market is widely regarded to be in a bad way, even if the problems are illusory, many investors get out. A good example of this was the crisis at the U.S. Farm Credit Corporation. It looked for a moment as if Farm Credit might go bankrupt. Investors stampeded out of Farm Credit bonds because having been warned of the possibility of accident, they couldn’t be seen in the vicinity without endangering their reputations. In an age when failure isn’t allowed, when the U.S. government had rescued firms as remote from the national interest as Chrysler and the Continental Illinois Bank, there was no chance the government would allow the Farm Credit bank to default. The thought of not bailing out an eighty-billion-dollar institution that lent money to America’s distressed farmers was absurd. Institutional investors knew this. That is the point. The people selling Farm Credit bonds for less than they were worth weren’t necessarily stupid. They simply could not be seen holding them. Since Alexander wasn’t constrained by appearances, he sought to exploit people who were.

The problem wasn’t that the banks were, in and of themselves, critical to the success of the U.S. economy. The problem, he felt certain, was that some gargantuan, unknown dollar amount of credit default swaps had been bought and sold on every one of them. “There’s no limit to the risk in the market,” he said. “A bank with a market capitalization of one billion dollars might have one trillion dollars’ worth of credit default swaps outstanding. No one knows how many there are! And no one knows where they are!” The failure of, say, Citigroup might be economically tolerable. It would trigger losses to Citigroup’s shareholders, bondholders, and employees—but the sums involved were known to all. Citigroup’s failure, however, would also trigger the payoff of a massive bet of unknown dimensions: from people who had sold credit default swaps on Citigroup to those who had bought them.

By the end of the year 2000, Israeli settlers in the West Bank and Gaza numbered 225,000. The best offer to the Palestinians—by Clinton, not Barak—had been to withdraw 20 percent of the settlers, leaving more than 180,000 in 209 settlements, covering about 10 percent of the occupied land, including land to be “leased” and portions of the Jordan River valley and East Jerusalem. The percentage figure is misleading, since it usually includes only the actual footprints of the settlements. There is a zone with a radius of about four hundred meters around each settlement within which Palestinians cannot enter. In addition, there are other large areas that would have been taken or earmarked to be used exclusively by Israel, roadways that connect the settlements to one another and to Jerusalem, and “life arteries” that provide the settlers with water, sewage, electricity, and communications. These range in width from five hundred to four thousand meters, and Palestinians cannot use or cross many of these connecting links. This honeycomb of settlements and their interconnecting conduits effectively divide the West Bank into at least two noncontiguous areas and multiple fragments, often uninhabitable or even unreachable, and control of the Jordan River valley denies Palestinians any direct access eastward into Jordan. About one hundred military checkpoints completely surround Palestine and block routes going into or between Palestinian communities, combined with an uncountable number of other roads that are permanently closed with large concrete cubes or mounds of earth and rocks. There was no possibility that any Palestinian leader could accept such terms and survive, but official statements from Washington and Jerusalem were successful in placing the entire onus for the failure on Yasir Arafat. Violence in the Holy Land continued.

If you experience feelings of inadequacy and low self-esteem, your poor self-image may keep you from exploring your social self and getting to know others. When fear causes inhibition, your chances of interactive success are severely diminished. Eventually, it will seem easier to avoid the anxiety of socializing than to go ahead and risk failure. The more you avoid these situations, the more you depend on family members for all your emotional support. In my treatment of individuals with social anxiety, these are the two personality profiles that inevitably surface. There is a direct connection between the two: If you avoid doing something that needs to be done, you probably depend on someone else to do it for you. For example, if you habitually avoid going to the bank, or making a phone call, how do these things get accomplished? Ask yourself: “When I avoid these things, who picks up the pieces?” You can’t have avoidance without an element of dependence. Now ask yourself: “If I did it myself, what would the outcome be?” And then: “If no one did it, what would the outcome be?

The scheme began to unravel following the Panic of 1873 when railroad investments failed. The bank experienced several runs at the height of the panic. The panic would not have affected the bank if it had been a savings bank, but by 1866, the business of the bank had become…reckless speculation, over-capitalization, stock manipulation, intrigue and bribery, and downright plundering…. In a last ditch effort to save the bank, the Trustees appointed Frederick Douglas as Bank President in March of 1874. Douglass did not ask to be nominated and the Bank Board knew that Douglass had no experience in banking, but they felt that his reputation and popularity would restore confidence to fleeing depositors….Douglas lent the bank $10,000 of his own money to cover the bank’s illiquid assets….Douglass quickly discovered that the bank was full of dead men’s bones, rottenness and corruption. As soon as Douglass realized that the bank was headed towards certain failure, he imposed drastic spending cuts to limit depositors’ losses. He then relayed this information to Congress, underscoring the bank’s insolvency, and declaring that he could no longer ask his people to deposit their money in it. Despite the other Trustees’ attempts to convince Congress otherwise, Congress sided with Douglass, and on June 20, 1874, Congress amended the Charter to authorize the Trustees to end operations. Within a few weeks’ time, the bank’s doors were shut for good on June 29, 1874, leaving 61,131 depositors without access to nearly $3 million dollars in deposits. More than half of accumulated black wealth disappeared through the mismanagement of the Freedman’s Savings Bank. And what is most lamentable…is the fact that only a few of those who embezzled and defrauded the one-time liquid assets of this bank were ever prosecuted….Congress did appoint a commission led by John AJ Cresswell to look into the failure and to recover as much of the deposits as possible. In 1880, Henry Cook testified about the bank failure and said that bank’s depositors were victims of a widespread universal sweeping financial disaster. In other words, it was the Market’s fault, not his. The misdeeds of the bank’s management never came to light.

In November 1914, the British government issued the first war bond, aiming to raise £350 million from private investors at an interest rate of 4.1% and a maturity of ten years. Surprisingly, the bond issue was undersubscribed, and the British public purchased less than a third of the targeted sum. To avoid publicizing this failure, the Bank of England granted funds to its chief cashier and his deputy to purchase the bonds under their own names. The Financial Times, ever the bank’s faithful mouthpiece, published an article proclaiming the loan was oversubscribed. John Maynard Keynes worked at the Treasury at the time, and in a secret memo to the bank, he praised them for what he called their “masterly manipulation.” Keynes’s fondness for surreptitious monetary arrangements would go on to inspire thousands of economic textbooks published worldwide. The Bank of England had set the tone for a century of central bank and government collusion behind the public’s back. The Financial Times would only issue a correction 103 years later,7 when this matter was finally uncovered after some sleuthing in the bank’s archives by some enterprising staff members and published on the bank’s blog.8

Prin let the old one witter on. They could make him stay in here, stop him from leaving and stop him from offering any violence to this dream-image of the old representative, but they couldn’t stop his attention from wandering. The techniques learned in lecture theatres and later honed to perfection in faculty meetings were proving their real worth at last. He could vaguely follow what was being said without needing to bother with the detail. When he’d been a student he had assumed he could do this because he was just so damn smart and basically already knew pretty much all they were trying to teach him. Later, during seemingly endless committee sessions, he’d accepted that a lot of what passed for useful information-sharing within an organisation was really just the bureaucratic phatic of people protecting their position, looking for praise, projecting criticism, setting up positions of non-responsibility for up-coming failures and calamities that were both entirely predictable but seemingly completely unavoidable, and telling each other what they all already knew anyway. The trick was to be able to re-engage quickly and seamlessly without allowing anyone to know you’d stopped listening properly shortly after the speaker had first opened their mouth.

What’s an IPO, exactly? A company decides it wants to “float” part of its equity on the public markets, allowing employees and founders to sell private shares to pay them off for years of service, as well as sell shares out of the corporate treasury to have some money in the bank. Large investment banks (such as my former employer Goldman Sachs) form what’s called a “syndicate” (“mafia” might be a better term) wherein they offer to effectively buy those shares from Facebook, and then sell them into the capital markets, usually by pushing it via their sales force onto wealthy clients or institutional investors. That syndicate either guarantees a price (“firm commitment”) or promises to get the best price it can (“best effort”). In the former case, the bank is taking real execution risk, and stands to lose money if it doesn’t engineer a “pop” in the stock on opening day. To mitigate the risk, the bank convinces the offering company to expect a lower price, while simultaneously jacking up what real price the market will bear with a zealous sales pitch to the market’s deepest pockets. Thus, it is absolutely jejune to think that a stock’s rise on opening day is due to clamoring and unexpected interest. Similar to Captain Renault in Casablanca, Wall Street bankers are shocked—shocked!—that there should be such a large and positive price dislocation in the market they just rigged.

Neoliberal economics, the logic of which is tending today to win out throughout the world thanks to international bodies like the World Bank or the International Monetary Fund and the governments to whom they, directly or indirectly, dictate their principles of ‘governance’,10 owes a certain number of its allegedly universal characteristics to the fact that it is immersed or embedded in a particular society, that is to say, rooted in a system of beliefs and values, an ethos and a moral view of the world, in short, an economic common sense, linked, as such, to the social and cognitive structures of a particular social order. It is from this particular economy that neoclassical economic theory borrows its fundamental assumptions, which it formalizes and rationalizes, thereby establishing them as the foundations of a universal model. That model rests on two postulates (which their advocates regard as proven propositions): the economy is a separate domain governed by natural and universal laws with which governments must not interfere by inappropriate intervention; the market is the optimum means for organizing production and trade efficiently and equitably in democratic societies. It is the universalization of a particular case, that of the United States of America, characterized fundamentally by the weakness of the state which, though already reduced to a bare minimum, has been further weakened by the ultra-liberal conservative revolution, giving rise as a consequence to various typical characteristics: a policy oriented towards withdrawal or abstention by the state in economic matters; the shifting into the private sector (or the contracting out) of ‘public services’ and the conversion of public goods such as health, housing, safety, education and culture – books, films, television and radio – into commercial goods and the users of those services into clients; a renunciation (linked to the reduction in the capacity to intervene in the economy) of the power to equalize opportunities and reduce inequality (which is tending to increase excessively) in the name of the old liberal ‘self-help’ tradition (a legacy of the Calvinist belief that God helps those who help themselves) and of the conservative glorification of individual responsibility (which leads, for example, to ascribing responsibility for unemployment or economic failure primarily to individuals, not to the social order, and encourages the delegation of functions of social assistance to lower levels of authority, such as the region or city); the withering away of the Hegelian–Durkheimian view of the state as a collective authority with a responsibility to act as the collective will and consciousness, and a duty to make decisions in keeping with the general interest and contribute to promoting greater solidarity. Moreover,

Shortly before our CFO’s pep talk, another high-level executive at the bank stopped me in the hall to give me what he considered some critical advice. “A lot of smart kids like you come through the bank, and they use it for a stepping stone,” he said. “They stay for a year or two and then they leave. I think that’s a huge mistake. Look at me: I’ve been here forever and I’m happier than anyone I know. This place rewards loyalty, and I’m good at my job because I’ve got my finger right on the pulse of the company. I know everything that’s going on.” A week later, I saw two workmen hauling boxes out of his office. He was a victim of the bank’s first-ever round of layoffs. I’m not trying to put this man down for his faith in the bank or make light of his unemployment. I want to use his story to make another point about failure in business. That chat reinforced something else I was beginning to learn: people in management positions, even very senior management positions, are often completely wrong about the fortunes of their own companies. More important, in making these misjudgments, they almost always err on the side of excessive optimism. They think their businesses are in much better shape than they actually are. Jerry’s rig utilization chart at Global Marine and our own CFO’s boasts about Joe DiMaggio only underscored this lesson for me at the time. And, three decades and over 1,400 meetings with other executives later, I can say this tendency is as pronounced as ever.

I have never been able to understand on what theory the original investment of money can be charged against a business. Those men in business who call themselves financiers say that money is "worth" 6 per cent, or 5 per cent, or some other per cent, and that if a business has one hundred thousand dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into the business he had put it into a savings bank or into certain securities, he could have a certain fixed return. Therefore they say that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the product of tools. Therefore money is worth what it will help you to produce or buy and no more. If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business—or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces—and not a fixed sum according to some scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before.

EUROS SIDE WITH MEXICAN GANG RAPIST Mexico, President Bush’s dearest international ally, brought a lawsuit against the United States in the International Court of Justice on behalf of its native son, Jose Ernesto Medellin, arguing that Texas failed to inform him of his right to confer with the Mexican consulate. It probably didn’t occur to the police to ask Medellin if he was Mexican, with the media referring to the suspects exclusively as: “five Houston teens,” “five youths,” “the youths,” “young men,” “members of ‘a social club,’” “a bunch of guys,” “six young men,” “six teen-agers,” and “these guys”23 (and, oddly, “America’s hottest boy band”). The World Court agreed with Mexico, confirming my suspicion that any organization with “world” in its title—International World Court, the World Bank, World Cup Soccer, the World Trade Organization—is inherently evil. The court ordered that Mexican illegal aliens in American prisons must be retried unless they had been promptly advised of their consular rights—a ruling that would have emptied Texas’s prisons. It wasn’t as if America had shanghaied Medellin and dragged him into our country. He sneaked in illegally, demanded the full panoply of rights accorded American citizens, and when things didn’t go his way, suddenly announced he was an illegal alien entitled to rights as a Mexican citizen. Or as the New York Times hyperventilated: A failure to enforce the World Court’s ruling “could imperil American tourists or business travelers if they are ever arrested and need the help of a consular official.”24 If an American tourist or business traveler ever gang-rapes and murders two teenaged girls in a foreign country, I don’t care what they do to him.

We came to the city because we wished to live haphazardly, to reach for only the least realistic of our desires, and to see if we could not learn what our failures had to teach, and not, when we came to live, discover that we had never died. We wanted to dig deep and suck out all the marrow of life, to be overworked and reduced to our last wit. And if our bosses proved mean, why then we’d evoke their whole and genuine meanness afterward over vodka cranberries and small batch bourbons. And if our drinking companions proved to be sublime then we would stagger home at dawn over the Old City cobblestones, into hot showers and clean shirts, and press onward until dusk fell again. For the rest of the world, it seemed to us, had somewhat hastily concluded that it was the chief end of man to thank God it was Friday and pray that Netflix would never forsake them. Still we lived frantically, like hummingbirds; though our HR departments told us that our commitments were valuable and our feedback was appreciated, our raises would be held back another year. Like gnats we pestered Management— who didn’t know how to use the Internet, whose only use for us was to set up Facebook accounts so they could spy on their children, or to sync their iPhones to their Outlooks, or to explain what tweets were and more importantly, why— which even we didn’t know. Retire! we wanted to shout. We ha Get out of the way with your big thumbs and your senior moments and your nostalgia for 1976! We hated them; we wanted them to love us. We wanted to be them; we wanted to never, ever become them. Complexity, complexity, complexity! We said let our affairs be endless and convoluted; let our bank accounts be overdrawn and our benefits be reduced. Take our Social Security contributions and let it go bankrupt. We’d been bankrupt since we’d left home: we’d secure our own society. Retirement was an afterlife we didn’t believe in and that we expected yesterday. Instead of three meals a day, we’d drink coffee for breakfast and scavenge from empty conference rooms for lunch. We had plans for dinner. We’d go out and buy gummy pad thai and throat-scorching chicken vindaloo and bento boxes in chintzy, dark restaurants that were always about to go out of business. Those who were a little flush would cover those who were a little short, and we would promise them coffees in repayment. We still owed someone for a movie ticket last summer; they hadn’t forgotten. Complexity, complexity. In holiday seasons we gave each other spider plants in badly decoupaged pots and scarves we’d just learned how to knit and cuff links purchased with employee discounts. We followed the instructions on food and wine Web sites, but our soufflés sank and our baked bries burned and our basil ice creams froze solid. We called our mothers to get recipes for old favorites, but they never came out the same. We missed our families; we were sad to be rid of them. Why shouldn’t we live with such hurry and waste of life? We were determined to be starved before we were hungry. We were determined to be starved before we were hungry. We were determined to decrypt our neighbors’ Wi-Fi passwords and to never turn on the air-conditioning. We vowed to fall in love: headboard-clutching, desperate-texting, hearts-in-esophagi love. On the subways and at the park and on our fire escapes and in the break rooms, we turned pages, resolved to get to the ends of whatever we were reading. A couple of minutes were the day’s most valuable commodity. If only we could make more time, more money, more patience; have better sex, better coffee, boots that didn’t leak, umbrellas that didn’t involute at the slightest gust of wind. We were determined to make stupid bets. We were determined to be promoted or else to set the building on fire on our way out. We were determined to be out of our minds.

As I saw it, there was a 75 percent chance the Fed’s efforts would fall short and the economy would move into failure; a 20 percent chance it would initially succeed at stimulating the economy but still ultimately fail; and a 5 percent chance it would provide enough stimulus to save the economy but trigger hyperinflation. To hedge against the worst possibilities, I bought gold and T-bill futures as a spread against eurodollars, which was a limited-risk way of betting on credit problems increasing. I was dead wrong. After a delay, the economy responded to the Fed’s efforts, rebounding in a noninflationary way. In other words, inflation fell while growth accelerated. The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history. How was that possible? Eventually, I figured it out. As money poured out of these borrower countries and into the U.S., it changed everything. It drove the dollar up, which produced deflationary pressures in the U.S., which allowed the Fed to ease interest rates without raising inflation. This fueled a boom. The banks were protected both because the Federal Reserve loaned them cash and the creditors’ committees and international financial restructuring organizations such as the International Monetary Fund (IMF) and the Bank for International Settlements arranged things so that the debtor nations could pay their debt service from new loans. That way everyone could pretend everything was fine and write down those loans over many years. My experience over this period was like a series of blows to the head with a baseball bat. Being so wrong—and especially so publicly wrong—was incredibly humbling and cost me just about everything I had built at Bridgewater. I saw that I had been an arrogant jerk who was totally confident in a totally incorrect view. So there I was after eight years in business, with nothing to show for it. Though I’d been right much more than I’d been wrong, I was all the way back to square one.

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

My friend Richard Carrion, the CEO of Puerto Rico’s top bank, once shared a line with me that I’ll never forget: “Robin, nothing fails like success.” Powerful thought. Your business is most vulnerable when it’s most successful. Success actually breeds complacency, inefficiency and – worst of all – arrogance. Whenever I share this point with a roomful of CEOs, every one of them nods their head at this one. Please let me give you a real-world example from my own life.

The Rhine as a barrier with the flower of the German army deployed on its east bank existed mostly in Montgomery’s imagination. His enormous arrangements for the crossing now revealed his failure, as Wilmot phrased it, to appreciate how near collapse the Germans were.

Linda is thirty-one years old, single, outspoken, and very bright. She majored in philosophy. As a student she was deeply concerned with issues of discrimination and social justice and also participated in anti-nuclear demonstrations. Which of two alternatives is more probable? A. Linda is a bank teller. B. Linda is a bank teller and is active in the feminist movement.

21. THE HABIT OF INDISCRIMINATE SPENDING. The spend-thrift cannot succeed, mainly because he stands eternally in FEAR OF POVERTY. Form the habit of systematic saving by putting aside a definite percentage of your income. Money in the bank gives one a very safe foundation of COURAGE when bargaining for the sale of personal services. Without money, one must take what one is offered, and be glad to get it. 22. LACK OF ENTHUSIASM. Without enthusiasm one cannot be convincing. Moreover, enthusiasm is contagious, and the person who has it, under control, is generally welcome in any group of people. 23. INTOLERANCE. The person with a "closed" mind on any subject seldom gets ahead. Intolerance means that one has stopped acquiring knowledge. The most damaging forms of intolerance are those connected with religious, racial, and political differences of opinion. 24. INTEMPERANCE. The most damaging forms of intemperance are connected with eating, strong drink, and sexual activities. Overindulgence in any of these is fatal to success. 25. INABILITY TO COOPERATE WITH OTHERS. More people lose their positions and their big opportunities in life, because of this fault, than for all other reasons combined. It is a fault which no well-informed business man, or leader will tolerate. 26. POSSESSION OF POWER THAT WAS NOT ACQUIRED THROUGH SELF EFFORT. (Sons and daughters of wealthy men, and others who inherit money which they did not earn). Power in the hands of one who did not acquire it gradually, is often fatal to success. QUICK RICHES are more dangerous than poverty. 27. INTENTIONAL DISHONESTY. There is no substitute for honesty. One may be temporarily dishonest by force of circumstances over which one has no control, without permanent damage. But, there is NO HOPE for the person who is dishonest by choice. Sooner or later, his deeds will catch up with him, and he will pay by loss of reputation, and perhaps even loss of liberty. 28. EGOTISM AND VANITY. These qualities serve as red lights which warn others to keep away. THEY ARE FATAL TO SUCCESS. 29. GUESSING INSTEAD OF THINKING. Most people are too indifferent or lazy to acquire FACTS with which to THINK ACCURATELY. They prefer to act on "opinions" created by guesswork or snap-judgments. 30. LACK OF CAPITAL. This is a common cause of failure among those who start out in business for the first time, without sufficient reserve of capital to absorb the shock of their mistakes, and to carry them over until they have established a REPUTATION. 31. Under this, name any particular cause of failure from which you have suffered that has not been included in the foregoing list.

Having “extra” capital gives you a cushion for when outcomes do not in fact follow your plan. Moreover, it increases your optionality—if you need to invest in growth, you can do much more without having to go through the time-consuming process of raising another round. As Mariam Naficy, CEO of Minted, told me, “Act like you’ve got half the amount you have in the bank because you’ve got to factor in all the failures and all the optimizations that kill great entrepreneurs and businesses all the time. Both of us know so many people who had good ideas and were on the right track, but just ran out of money.” At both PayPal and LinkedIn, we raised large financing rounds right before a market meltdown (2000, 2008), and we sure were glad we did. In the case of PayPal, that money allowed us to keep growing during the dot-com bust; without it, we wouldn’t have made it to our IPO. In the case of LinkedIn, the situation wasn’t as dire, but I realized that the value of the optionality from additional funding far outweighed the potential negatives of equity dilution.

Gains without failure is impossible.

If a systemic crisis occurs, the FDIC may rescue a bank in the non-least-cost-way—for example, by paying off creditors who are not covered by deposit insurance or keeping a bank temporarily alive when it is insolvent—when nonpayment of creditors or the bank’s failure would threaten the system.

1298: Seizure of the Gran Tavola of Sienna by Philip IV of France 1307: Liquidation of the Knights Templar by Philip IV 1311: Edward II default to the Frescobaldi of Florence 1326: Bankruptcy of the Scali of Florence and Asti of Sienna 1342: Edward III default to the Florentine banks during the Hundred Years’ War 1345: Bankruptcy of the Bardi and Peruzzi; depression, Great crash of the 1340s 1380: Ciompi Revolt in Florence. Crash of the early 1380s 1401: Italian bankers expelled from Aragon in 1401, England in 1403, France in 1410 1433: Fiscal crisis in Florence after wars with Milan and Lucca 1464: Death of Cosimo de Medici: loans called in; wave of bankruptcies in Florence 1470: Edward IV default to the Medici during the Wars of the Roses 1478: Bruges branch of the Medici bank liquidated on bad debts 1494: Overthrow of the Medici after the capture of Florence by Charles VIII of France 1525: Siege of Genoa by forces of Spain and the Holy Roman Empire; coup in 1527 1557: Philip II of Spain restructuring of debts inherited from Charles V 1566: Start of the Dutch Revolt against Spain: disruption of Spanish trade 1575: Philip II default: Financial crisis of 1575–79 affected Genoese creditors 1596: Philip II default: Financial crisis of 1596 severely affected Genoese businessmen 1607: Spanish state bankruptcy: failure of Genoese banks 1619: Kipper-und-Wipperzeit: Monetary crisis at the outbreak of the Thirty Years’ War

WaMu’s patchwork of systems for making mortgage loans did not help. A homeowner would lock in a low interest rate through

So what changed? What changed is an aggressive campaign, conducted by progressive politicians and community activists, to force banks and financial institutions to lower their lending standards. This goes back to the early 1970s.3 Before that, progressives had focused their political energies in getting government money to build large housing projects for the poor. These projects, however, soon became dens of dilapidation, decay, and criminal activity. They symbolized the failure of the liberal welfare state.

After the Battle of Winchester, Jackson allowed his men two days of rest and prayer, while his quartermasters tallied the spoils left behind by the Yankees. Although Jackson drove his men hard, he could sense they were at their limit; their failure to pursue Banks’ broken army was proof of it. While he was eager to get on with the fight, he needed men capable of fighting. He

We can consider successes and failures in our life as credit and debit entries of our happiness account. Every time we succeed in achieving our goal, we get credit in the form of happiness and every time we fail, we debit our happiness account. If we have enough credits of happiness, we can easily withstand some failures just like the person who has a million dollar bank balance, does not get disconcerted if he loses out on a few thousand dollars. However, the same loss can bring much grief to a person who has a very small balance in his account.

Pages 85-87: Lower Burma when first occupied … was a vast deltaic plain of swamp and jungle, with a secure rainfall; when the opening of the canal created a market for rice, this wide expanse of land was rapidly reclaimed by small cultivators … Formerly, the villager in Lower Burma, like peasants in general, cultivated primarily for home consumption, and it has always been the express policy of the Government to encourage peasant proprietorship. Land in the delta was abundant … The opening of the canal provided a certain and profitable market for as much rice as people could grow. … men from Upper Burma crowded down to join in the scramble for land. In two or three years a laborer could save out of his wages enough money to buy cattle and make a start on a modest scale as a landowner. … The land had to be cleared rapidly and hired labor was needed to fell the heavy jungle. In these circumstances newly reclaimed land did not pay the cost of cultivation, and there was a general demand for capital. Burmans, however, lacked the necessary funds, and had no access to capital. They did not know English or English banking methods, and English bankers knew nothing of Burmans or cultivation. … in the ports there were Indian moneylenders of the chettyar caste, amply provided with capital and long accustomed to dealing with European banks in India. About 1880 they began to send out agents into the villages, and supplied the people with all the necessary capital, usually at reasonable rates and, with some qualifications, on sound business principles. … now the chettyars readily supplied the cultivators with all the money that they needed, and with more than all they needed. On business principles the money lender preferred large transactions, and would advance not merely what the cultivator might require but as much as the security would stand. Naturally, the cultivator took all that he could get, and spent the surplus on imported goods. The working of economic forces pressed money on the cultivator; to his own discomfiture, but to the profit of the moneylenders, of European exporters who could ensure supplies by giving out advances, of European importers whose cotton goods and other wares the cultivator could purchase with the surplus of his borrowings, and of the banks which financed the whole economic structure. But at the first reverse, with any failure of the crop, the death of cattle, the illness of the cultivator, or a fall of prices, due either to fluctuations in world prices or to manipulation of the market by the merchants, the cultivator was sold up, and the land passed to the moneylender, who found some other thrifty laborer to take it, leaving part of the purchase price on mortgage, and with two or three years the process was repeated. … As time went on, the purchasers came more and more to be men who looked to making a livelihood from rent, or who wished to make certain of supplies of paddy for their business. … Others also, merchants and shopkeepers, bought land, because they had no other investment for their profits. These trading classes were mainly townsfolk, and for the most part Indians or Chinese. Thus, there was a steady growth of absentee ownership, with the land passing into the hands of foreigners. Usually, however, as soon as one cultivator went bankrupt, his land was taken over by another cultivator, who in turn lost with two or three years his land and cattle and all that he had saved. [By the 1930s] it appeared that practically half the land in Lower Burma was owned by absentees, and in the chief rice-producing districts from two-thirds to nearly three-quarters. … The policy of conserving a peasant proprietary was of no avail against the hard reality of economic forces…

There was a time when I did,” he said, “but I have learned that financial wealth carries with it certain burdens. True wealth is not found in banks, but in the heart. Oh, sure, having financial wealth can make life better in some ways, but the burdens that come with it—the weight of responsibility, the necessity of constant effort to maintain that wealth—they drain the joy from life. As for power, the man who has it is as much its slave as its master. The use of that power imposes obligations upon the one who uses it, and failure to meet those obligations will result in feelings of guilt and despair.

21. The habit of indiscriminate spending. The spendthrift cannot succeed, mainly because he stands eternally in fear of poverty. Form the habit of systematic saving by putting aside a definite percentage of your income. Money in the bank gives one a very safe foundation of courage when bargaining for the sale of personal services. Without money, one must take what one is offered, and be glad to get it. 22. Lack of enthusiasm. Without enthusiasm one cannot be convincing. Moreover, enthusiasm is contagious, and the person who has it, under control, is generally welcome in any group of people. 23. Intolerance. The person with a closed mind on any subject seldom gets ahead. Intolerance means that one has stopped acquiring knowledge. The most damaging forms of intolerance are those connected with religious, racial, and political differences of opinion. 24. Intemperance. The most damaging forms of intemperance are connected with eating, strong drink, and sexual activities. Over-indulgence in any of these is fatal to success. 25. Inability to cooperate with others. More people lose their positions and their big opportunities in life, because of this fault, than for all other reasons combined. It is a fault which no well-informed businessman or leader will tolerate. 26. Possession of power that was not acquired through self effort. (Sons and daughters of wealthy men, and others who inherit money which they did not earn). Power in the hands of one who did not acquire it gradually is often fatal to success. Quick riches are more dangerous than poverty. 27. Intentional dishonesty. There is no substitute for honesty. One may be temporarily dishonest by force of circumstances over which one has no control, without permanent damage. But, there is no hope for the person who is dishonest by choice. Sooner or later, his deeds will catch up with him, and he will pay by loss of reputation, and perhaps even loss of liberty. 28. Egotism and vanity. These qualities serve as red lights which warn others to keep away. They are fatal to success. 29. Guessing instead of thinking. Most people are too indifferent or lazy to acquire facts with which to think accurately. They prefer to act on “opinions” created by guesswork or snap-judgments. 30. Lack of capital. This is a common cause of failure among those who start out in business for the first time, without sufficient reserve of capital to absorb the shock of their mistakes, and to carry them over until they have established a reputation. 31. Under this, name any particular cause of failure from which you have suffered that has not been included in the foregoing list.

What would its failure do to major banks or investment banks?

Within the Fed, officials were fully aware of the strains on the financial system - the hoarding of currency, the growing problem of bank failures, the reluctance of banks to lend, prices falling at a rate of 20 percent per annum. Somehow they were unable to put all these pieces of the jigsaw puzzle together. At the Federal Reserve Board, Meyer pressed for a more aggressive policy and even Adolph Miller, who with his natural contrarian streak, seemed to end up so often in the minority, joined him. But the Board was legally powerless to initiate action.

But what impresses me most is that so many doctors were influenced by their pledge even though breaking it had no monetary penalty. A pledge like this stands in stark contrast to cash commitments, locked bank accounts, and deadline penalties, which I call “hard commitments” because they involve a more concrete cost. The clinician pledge is a prime example of what I call a “soft commitment”—a commitment that comes with only a psychological price tag for failure.

First, try new things, expecting that some will fail. Second, make failure survivable: create safe spaces for failure or move forward in small steps. As we saw with banks and cities, the trick here is finding the right scale in which to experiment: significant enough to make a difference, but not such a gamble that you’re ruined if it fails. And third, make sure you know when you’ve failed, or you will never learn. As we shall see in the next chapter, this last one is especially difficult when it comes to adapting in our own lives.

TWO AND A HALF CENTURIES AGO, Amsterdam was the world’s commercial center, but many of its wealthy merchants were reeling from one of the world’s first financial crises. The shares of the British East India Company had collapsed, culminating in a series of bank failures, government bailouts, and ultimately nationalization, a debacle that rippled across the continent’s nascent markets. For a little-known Dutch merchant and stockbroker, it proved the inspiration for an idea ahead of its time. In 1774, Abraham von Ketwich set up a novel, pooled investment trust he called Eendragt Maakt Magt—Dutch for “Unity Creates Strength.” This would sell two thousand shares for five hundred guilders each to individual investors, and invest the proceeds into a diversified portfolio of fifty bonds. These were divided into ten different categories, from plantation loans, bonds backed by Spanish or Danish toll road payments, to an assortment of European government bonds. At the time, bonds were physical certificates written on paper or even goatskin, and these were stored in a solid iron chest with three locks, which could be opened only by Eendragt Maakt Magt’s board and an independent notary. The aim was to pay a 4 percent annual dividend, and disburse the final proceeds only after twenty-five years, hoping that the diversity of the portfolio would protect investors.1 As it turns out, a subsequent Anglo-Dutch war in 1780 and Napoleon’s occupation of Holland in 1795 wreaked havoc on Eendragt Maakt Magt. The annual payments never materialized, and investors didn’t receive their money back until 1824, albeit then receiving 561 guilders a share. Nonetheless, Eendragt Maakt Magt was a brilliant invention that would go on to inspire the birth of investment trusts in Great Britain and eventually the mutual fund we know today. It is also arguably the ultimate intellectual forefather of today’s index funds, given its minimal trading, diversified approach, and low fees, charging a mere 0.2 percent a year.

As bank failures accelerated throughout the state—there were twenty-two in the last three months of 1925 alone from several hundred banks statewide—South Dakota’s fund to compensate depositors was itself running low on money.77

the Grand Cayman connection provided three big advantages to a firm like Lehman Brothers, which was trying desperately to compete with the biggest banks on Wall Street. The first was entering false profits from the “sale” onto the balance sheet. The second was receiving all the coupon payments from the derivatives they still held in the trusts. The third was that the Financial Accounting Standards Board (FASB) required them only to put aside 3 percent of capital, a tiny amount, to cover any losses in an offshore trust.

acronym CAMELS stands for Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk. Under this system, banks are ranked on a 1 to 5 scale,

Here is a country that fought and won a noble war, dismantled a mighty empire in a generally benign and enlightened way, created a far-seeing welfare state – in short, did nearly everything right – and then spent the rest of the century looking on itself as a chronic failure. The fact is that this is still the best place in the world for most things – to post a letter, go for a walk, watch television, buy a book, venture out for a drink, go to a museum, use the bank, get lost, seek help, or stand on a hillside and take in a view.

and tightly coupled than the banking system; Charles

By bombs, I meant huge, far-flung, overleveraged institutions whose failure could spark the kind of global panic the Lehman bankruptcy had sparked in the fall. I listed them: Fannie Mae, Freddie Mac, AIG, Citigroup, and Bank of America. They all were much larger than Lehman. All five had received major infusions of government cash to save them from failure; AIG had been rescued three times in four months. But they all were in trouble again, and we needed to make sure they didn’t explode—not to protect them from the consequences of their mistakes, but to prevent another messy failure from ravaging the rest of the economy. The politics would be awful. People hated the idea of government bailouts for mismanaged financial behemoths. But if their creditors or the markets in general lost confidence that any of them could meet their obligations, we’d be looking at a worldwide financial meltdown, and a much deeper economic crisis.

Finally, policymakers had to weigh what might happen if Greece, after a default, also abandoned the euro and returned to its own currency. One reason to do so would be to regain monetary policy independence, which might help the Greek government respond to the economic crash that was likely to follow a default. But if Greece left the euro, fears that other countries might follow would no doubt increase. Even the possibility that the eurozone might break apart would inflict damage. For example, bank depositors in a country thought to be at risk of leaving the euro would worry that their euro-denominated deposits might be forcibly converted to the new, and presumably less valuable, national currency. To avoid that risk, depositors might withdraw their euros from their own country’s banks in favor of, say, German banks (which, in an era of cross-border branching, might simply mean walking a block down the street or clicking on a bank’s website). These withdrawals could quickly degenerate into a full-fledged run on the suspect country’s banks. For these reasons, finance ministers and especially central bank governors in Europe generally, if grudgingly, concluded that they would have to assist Greece. ECB president Jean-Claude Trichet, who had decried the Lehman failure, was particularly adamant on this point and sought to persuade other European policymakers.

What went wrong? Well, comrades, when the American investment bank Lehman Brothers collapsed, it was not just a bank going broke, it was a political ideology going bankrupt. The failure of market liberalism. It ended decades of naive, uncritical faith in the market looking after itself. It does not!

A regulator cannot easily challenge the fundamental strategy of a badly run financial services business, such as Lehman or Royal Bank of Scotland. No one within the businesses themselves was willing to challenge Dick Fuld or Fred Goodwin—including the genuinely distinguished figures who sat on the RBS board (that of Lehman was decorated by friends of Fuld). Even the head of an agency may enjoy less access to the powerful than the senior executives of large corporations—if for no other reason than that the latter have considerably more largesse to dispense. Recall Gordon Brown’s fulsome tribute to Fuld and Lehman (see Chapter 1), and note that Goodwin and his (then) wife enjoyed weekend hospitality at Chequers, Prime Minister Brown’s official residence, even as the bank was sliding towards bankruptcy. It is not an accident that both Lehman and RBS were run by unpleasant, domineering individuals with good political connections: these characteristics are common pointers to the combination of personal success and corporate failure. Now

The phrase ‘too big to fail’ came into wide use in the global financial crisis to describe the dilemma that policymakers faced in resolving the affairs of systemically important financial institutions.3 The phrase provoked the justified rejoinder that ‘too big to fail is too big’. But ‘too big to fail’ misses the key point. Financialisation has led to increases in the size of financial institutions, but the central problem is not size but complexity. Size in banking can enhance stability, at least up to a point. Britain avoided significant bank failures in the twentieth century precisely because its banks were big, in contrast to the collapse of the fragmented US banking industry in 1933. The failure of the UK banking sector in 2008 occurred, and was traumatic, not because the sector had become more concentrated, but because it had become more complex. Lehman

Figure 1: The incidence of banking crises Source: Own calculations, based on the reported numbers of major bank failures in OECD economies, from Reinhart and Rogoff (2010)

Banks: “We should anticipate that at any point in time our U.S. banking system could suffer a blow from which it could not bounce back and which would result in government takeover…In whatever way it may start, if it starts, a series of major bank failures would totally alter the nation as we now know it.

What deserves a bigger punishment—someone with a college education who knowingly helps a gangster or a terrorist open a bank account? Or a high school dropout who falls asleep on the F train? The new America says it’s the latter. It’s come around to that point of view at the end of a long evolutionary process, in which the rule of law has slowly been replaced by giant idiosyncratic bureaucracies that are designed to criminalize failure, poverty, and weakness on the one hand, and to immunize strength, wealth, and success on the other.

I'd already figured out that not understanding my failings was another one of my failings.

Of course, the topography of global finance has changed dramatically since the heyday of the House of Rothschild. Today there are no family-owned global institutions of any significance. Huge publicly listed banks, asset managers, private equity firms, hedge funds, and insurance companies dominate and operate around the globe. Regulators are powerful and ubiquitous. But some things remain constant. Global finance is not for the fainthearted; it is too complex, too volatile, too dependent on uncontrollable political events within and among countries. Global finance also relies heavily on trust between the suppliers and consumers of money. Mayer Amschel Rothschild and his sons were the essence of trustworthiness. Garnering trust has many dimensions, one of which is accountability. If a banker is held responsible for his mistakes, then his customer has more confidence in him. The Rothschilds could not hide behind public corporations that today essentially shield top individuals from the legal liability of big mistakes, as we have seen in the failure of prosecutors to charge and convict senior financial officials in the global crisis of 2008–9. Unfortunately, few institutions today can command the confidence that the Rothschilds engendered and that is essential to a healthy global economy. Other

7 TRUTHS ABOUT MONEY, WORTH, HAPPINESS & CHOICE 1. Money does not validate your personal worth. Just because the financial world uses the term "worth" as it applies to business, does not mean it applies to you as a person. People get that mixed up all the time and it's dangerous. You are worthy just for being. Remember that. You are priceless. 2. When you like yourself regardless of the size of your bank account, success will follow because you're already successful. Think about it. Success begets success. Deal with that self-loathing garbage that holds you back, like yourself and get to work. 3. Don't try to validate your personal worth with money. If you do, your self-esteem may go up or down with the size of your bank account or the success or failure of your next venture. That's no way to live. 4. The fallacy is that the more money you have the happier you are. Some of the saddest people in the world are filthy rich. That said, some of the happiest people are filthy rich. Likewise, some of the saddest people and some of the happiest people are dirt poor. Money is not the deciding factor in your happiness. You are the deciding factor in your own happiness. Take 100% responsibility for your life and watch magic happen. 5. Now don't get me wrong. I live in the 21st century too. Money is like air. You don't know how important it is until it runs out. Money to humans is like water to fish. You can't live without it. Money is how we survive and money impacts our happiness, freedom, how and where we live and our ability to make various choices. 6. In the end, a) money will never determine your personal worth because you are worthy just by the fact that you are here, b) money may impact your happiness, but happiness is a choice regardless of the size of your bank account, and c) money is necessary to survive and enhances your circumstance. 7) Bringing it all together: given a choice (which you are if you are reading this mini-essay), why not a) choose to believe you are already worthy regardless of your financial situation, b) make happiness a habit, and c) get a mentor to learn how to earn more income so you never run out of air or water?

No matter how rich and powerful Bill Gates became, his mother still enjoyed telling of her failure to impress upon him the virtue of neatness. Gates was the only son of a wealthy and successful Seattle family. His mother, Mary, was the scion of a Northwest banking titan and a politically connected regent of the University of Washington. His father, William II, was a prominent downtown lawyer. Bright and willful, Gates often defied his parents as a child. Born on October 28, 1955, he shared with the rest of the baby boom generation a taste for sloppiness.