Loan Marketing Quotes

Magnus raised an eyebrow. “Ease up,” he suggested to the pentagram. “It’s like someone loaned overly enthusiastic kids a dry-ice machine for their high-school production of Demon Oklahoma! in here.

Lenders often consider a company's industry, market conditions, and competitive landscape in their risk assessment. Everything matters.

Almost as an article of faith, some individuals believe that conspiracies are either kooky fantasies or unimportant aberrations. To be sure, wacko conspiracy theories do exist. There are people who believe that the United States has been invaded by a secret United Nations army equipped with black helicopters, or that the country is secretly controlled by Jews or gays or feminists or black nationalists or communists or extraterrestrial aliens. But it does not logically follow that all conspiracies are imaginary. Conspiracy is a legitimate concept in law: the collusion of two or more people pursuing illegal means to effect some illegal or immoral end. People go to jail for committing conspiratorial acts. Conspiracies are a matter of public record, and some are of real political significance. The Watergate break-in was a conspiracy, as was the Watergate cover-up, which led to Nixon’s downfall. Iran-contra was a conspiracy of immense scope, much of it still uncovered. The savings and loan scandal was described by the Justice Department as “a thousand conspiracies of fraud, theft, and bribery,” the greatest financial crime in history. Often the term “conspiracy” is applied dismissively whenever one suggests that people who occupy positions of political and economic power are consciously dedicated to advancing their elite interests. Even when they openly profess their designs, there are those who deny that intent is involved. In 1994, the officers of the Federal Reserve announced they would pursue monetary policies designed to maintain a high level of unemployment in order to safeguard against “overheating” the economy. Like any creditor class, they preferred a deflationary course. When an acquaintance of mine mentioned this to friends, he was greeted skeptically, “Do you think the Fed bankers are deliberately trying to keep people unemployed?” In fact, not only did he think it, it was announced on the financial pages of the press. Still, his friends assumed he was imagining a conspiracy because he ascribed self-interested collusion to powerful people. At a World Affairs Council meeting in San Francisco, I remarked to a participant that U.S. leaders were pushing hard for the reinstatement of capitalism in the former communist countries. He said, “Do you really think they carry it to that level of conscious intent?” I pointed out it was not a conjecture on my part. They have repeatedly announced their commitment to seeing that “free-market reforms” are introduced in Eastern Europe. Their economic aid is channeled almost exclusively into the private sector. The same policy holds for the monies intended for other countries. Thus, as of the end of 1995, “more than $4.5 million U.S. aid to Haiti has been put on hold because the Aristide government has failed to make progress on a program to privatize state-owned companies” (New York Times 11/25/95). Those who suffer from conspiracy phobia are fond of saying: “Do you actually think there’s a group of people sitting around in a room plotting things?” For some reason that image is assumed to be so patently absurd as to invite only disclaimers. But where else would people of power get together – on park benches or carousels? Indeed, they meet in rooms: corporate boardrooms, Pentagon command rooms, at the Bohemian Grove, in the choice dining rooms at the best restaurants, resorts, hotels, and estates, in the many conference rooms at the White House, the NSA, the CIA, or wherever. And, yes, they consciously plot – though they call it “planning” and “strategizing” – and they do so in great secrecy, often resisting all efforts at public disclosure. No one confabulates and plans more than political and corporate elites and their hired specialists. To make the world safe for those who own it, politically active elements of the owning class have created a national security state that expends billions of dollars and enlists the efforts of vast numbers of people.

There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan. The banker is not giving something for nothing.

On Rachel's show for November 7, 2012: We're not going to have a supreme court that will overturn Roe versus Wade. There will be no more Antonio Scalias and Samuel Aleatos added to this court. We're not going to repeal health reform. Nobody is going to kill medicare and make old people in this generation or any other generation fight it out on the open market to try to get health insurance. We are not going to do that. We are not going to give a 20% tax cut to millionaires and billionaires and expect programs like food stamps and kid's insurance to cover the cost of that tax cut. We'll not make you clear it with your boss if you want to get birth control under the insurance plan that you're on. We are not going to redefine rape. We are not going to amend the United States constitution to stop gay people from getting married. We are not going to double Guantanamo. We are not eliminating the Department of Energy or the Department of Education or Housing at the federal level. We are not going to spend $2 trillion on the military that the military does not want. We are not scaling back on student loans because the country's new plan is that you should borrow money from your parents. We are not vetoing the Dream Act. We are not self-deporting. We are not letting Detroit go bankrupt. We are not starting a trade war with China on Inauguration Day in January. We are not going to have, as a president, a man who once led a mob of friends to run down a scared, gay kid, to hold him down and forcibly cut his hair off with a pair of scissors while that kid cried and screamed for help and there was no apology, not ever. We are not going to have a Secretary of State John Bolton. We are not bringing Dick Cheney back. We are not going to have a foreign policy shop stocked with architects of the Iraq War. We are not going to do it. We had the chance to do that if we wanted to do that, as a country. and we said no, last night, loudly.

The market might have learned a simple lesson: Don’t make loans to people who can’t repay them. Instead it learned a complicated one: You can keep on making these loans, just don’t keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks, which will in turn package them into bonds and sell them to investors.

In real markets, agents make bad choices. They are often ignorant, misinformed, and irrational. Yet, markets tend to punish agents for making bad choices, and they tend to learn from their mistakes. For instance, if you fail to pay your bills, your credit rating declines and you have a harder time getting loans. If you fail to do research and buy an unreliable car, you suffer from repair bills. In contrast, when people in government make bad choices, the political process almost never punishes them. Studies show that voters are terrible at retrospective voting—they do not know whom to blame for bad government—and so politicians are not punished for making bad choices.

We all really only want to lend our money to people we can trust to pay it back. It’s the same thing with banks and other institutional lenders.

Borrow money only for an education that will yield enough of a return in the job market to allow you to pay your loans back.

As a rule, any loan that had been turned into an acronym or abbreviation could more clearly be called a “subprime loan,” but the bond market didn’t want to be clear.

Subprime mortgage lending was still a trivial fraction of the U.S. credit markets—a few tens of billions in loans each year—but its existence made sense, even to Steve Eisman. “I thought it was partly a response to growing income inequality,” he said. “The distribution of income in this country was skewed and becoming more skewed, and the result was that you have more subprime customers.

There are pervasive and powerful marketing forces at work seeking to obscure the idea that such a choice exists. We are relentlessly bombarded with messages telling us that we absolutely need the latest trinket and that we simply must have the most fashionable of currently trending trash. We’re told that if you don’t have the money, no problem. That’s what credit cards and payday loans are for.

it was Greenspan who through some excessive deregulation prepared the monetary ground for the rise of the subprime mortgage companies: a lending market that specialises in high-risk mortgages and loans. 'Innovation', said Greenspan in April 2005, 'has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants'. It is almost touching to find out that Greenspan cares so much about immigrants.

He didn’t worry about how screwed-up the market for some security became because he knew that eventually it would be disciplined by logic: Businesses either thrived or failed. Loans either were paid off or were defaulted upon.

On its surface, the booming market in side bets on subprime mortgage bonds seemed to be the financial equivalent of fantasy football: a benign, if silly, facsimile of investing. Alas, there was a difference between fantasy football and fantasy finance: When a fantasy football player drafts Peyton Manning to be on his team, he doesn’t create a second Peyton Manning. When Mike Burry bought a credit default swap based on a Long Beach Savings subprime–backed bond, he enabled Goldman Sachs to create another bond identical to the original in every respect but one: There were no actual home loans or home buyers. Only the gains and losses from the side bet on the bonds were real.

In a federal lawsuit, Baltimore officials charged Wells Fargo with targeting black neighborhoods for so-called ghetto loans. The bank’s “emerging markets” unit, according to a former bank loan officer, Beth Jacobson, focused on black churches.

In contrast to Ricardo’s expectation that banking would retain its early focus on international commerce — and hence,on industrial capital formation to provide foreign markets with British exports in exchange for raw materials — banking has found real estate to be the key, along with its traditional market in creating monopolies and trusts. Some 80% of bank loans in the United States and Britain are mortgages, and consequently they account for 70% of the economy’s interest payments.

Every business needs capital. Whether we’re talking about a barbershop or a bank, a boutique e-commerce store or a hotdog stand. Whether we’re talking about a restaurant or a clothing store, a giant like Walmart, or the local bodega that’s owned by a local family. They all need capital.

Ninety percent of the population were serfs who could be beaten, killed, transported away from their family, or sold for a gambling debt or as collateral for a loan (a healthy male at the time would fetch between 200 and 500 rubles in the Moscow market; a good-looking young female, several times that).

Cixi’s lack of formal education was more than made up for by her intuitive intelligence, which she liked to use from her earliest years. In 1843, when she was seven, the empire had just finished its first war with the West, the Opium War, which had been started by Britain in reaction to Beijing clamping down on the illegal opium trade conducted by British merchants. China was defeated and had to pay a hefty indemnity. Desperate for funds, Emperor Daoguang (father of Cixi’s future husband) held back the traditional presents for his sons’ brides – gold necklaces with corals and pearls – and vetoed elaborate banquets for their weddings. New Year and birthday celebrations were scaled down, even cancelled, and minor royal concubines had to subsidise their reduced allowances by selling their embroidery on the market through eunuchs. The emperor himself even went on surprise raids of his concubines’ wardrobes, to check whether they were hiding extravagant clothes against his orders. As part of a determined drive to stamp out theft by officials, an investigation was conducted of the state coffer, which revealed that more “than nine million taels of silver had gone missing. Furious, the emperor ordered all the senior keepers and inspectors of the silver reserve for the previous forty-four years to pay fines to make up the loss – whether or not they were guilty. Cixi’s great-grandfather had served as one of the keepers and his share of the fine amounted to 43,200 taels – a colossal sum, next to which his official salary had been a pittance. As he had died a long time ago, his son, Cixi’s grandfather, was obliged to pay half the sum, even though he worked in the Ministry of Punishments and had nothing to do with the state coffer. After three years of futile struggle to raise money, he only managed to hand over 1,800 taels, and an edict signed by the emperor confined him to prison, only to be released if and when his son, Cixi’s father, delivered the balance. The life of the family was turned upside down. Cixi, then eleven years old, had to take in sewing jobs to earn extra money – which she would remember all her life and would later talk about to her ladies-in-waiting in the court. “As she was the eldest of two daughters and three sons, her father discussed the matter with her, and she rose to the occasion. Her ideas were carefully considered and practical: what possessions to sell, what valuables to pawn, whom to turn to for loans and how to approach them. Finally, the family raised 60 per cent of the sum, enough to get her grandfather out of prison. The young Cixi’s contribution to solving the crisis became a family legend, and her father paid her the ultimate compliment: ‘This daughter of mine is really more like a son!’ Treated like a son, Cixi was able to talk to her father about things that were normally closed areas for women. Inevitably their conversations touched on official business and state affairs, which helped form Cixi’s lifelong interest. Being consulted and having her views acted on, she acquired self-confidence and never accepted the com“common assumption that women’s brains were inferior to men’s. The crisis also helped shape her future method of rule. Having tasted the bitterness of arbitrary punishment, she would make an effort to be fair to her officials.

No governments in modern history save Apartheid South Africa and Nazi Germany have segregated as well as the United States has, with precision and under the color of law. (And even then, both the Third Reich and the Afrikaner government looked to America’s laws to create their systems.) U.S. government financing required home developers and landlords to put racially restrictive covenants (agreements to sell only to white people) in their housing contracts. And as we’ve already seen, the federal government supported housing segregation through redlining and other banking practices, the result of which was that the two investments that created the housing market that has been a cornerstone of building wealth in American families, the thirty-year mortgage and the federal government’s willingness to guarantee banks’ issuance of those loans, were made on a whites-only basis and under conditions of segregation.

The market might have learned a simple lesson: Don’t make loans to people who can’t repay them. Instead it learned a complicated one: You can keep on making these loans, just don’t keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks,

The Rothschilds are people we certainly would not attempt to defend given the rumors swirling around them of financial corruption and market manipulation in this era and in earlier eras. However, the way they are held up, by conspiracy extremists and other paranoid thinkers, to represent the Jewish community is an absolute joke. There are good and bad people in all races. The fact that there are many Jews in the banking sector is being used by neo-Nazis and anti-Semites to try to sway the uneducated to believe the Jews are the problem instead of banking shysters and banksters in general. Another important point relating to the current Jewish prominence in the banking world is there is a very obvious historical reason for it...Historically Jews did not have much freedom of choice when it came to their occupations. In fact, they were once forbidden by Christian authorities, and by some Muslim authorities, to pursue most regular occupations. They were, however, permitted and even encouraged to enter the banking industry because, in the medieval era at least, Christians/Muslims were not allowed to charge fellow-Christians/Muslims interest, but someone had to make loans – so the Jews were charged with the task. Jews were also permitted to slaughter animals – another equally unsavory job – and they were then despised and mocked by entire communities for being animal slaughterers and bankers.

Why Did the Stock Market Crash? The most persuasive explanation for the 1929 stock market crash blames the Federal Reserve. Throughout the 1920s, but particularly in 1927, the Fed pumped artificial credit into the loan market, pushing down interest rates from their free-market level. Lower interest rates exaggerated the feeling of prosperity, and misled businesses and investors. In a laissez-faire market where money and banking are not disturbed by the government, the interest rate is a price that tells borrowers how much capital citizens have saved and made available to fund projects. But when the Fed adopts an “easy-money” policy by pushing down interest rates, this signal is distorted and the interest rate no longer does its job of channeling the available capital into the most deserving projects. Instead, an unsustainable boom develops, with firms hiring workers and starting production processes that will have to be discontinued once the Fed slows down its injections of new money. Many economists point to the Fed hikes in interest rates during 1928 and 1929 as the cause of the stock market crash. In a sense this is true, but the deeper point is that the crash was made inevitable by the bubble in the stock market fueled by the artificially cheap credit preceding the hikes. In other words, when the Fed stopped pumping in gobs of new money that pushed up the stock market, investors came to their senses and asset prices plunged back towards their pre-bubble level.

The more trustworthy a borrower is, the greater the likelihood that they will return the money lent to them back to the lender with interest. This is why lenders of every kind and size, place a high priority on the character of potential borrowers – it is one of the five key determining factors as to the likelihood of the lender receiving their money back with interest.

Romantic literature often presents the individual as somebody caught in a struggle against the state and the market. Nothing could be further from the truth. The state and the market are the mother and father of the individual, and the individual can survive only thanks to them. The market provides us with work, insurance and a pension. If we want to study a profession, the government’s schools are there to teach us. If we want to open a business, the bank loans us money. If we want to build a house, a construction company builds it and the bank gives us a mortgage, in some cases subsidised or insured by the state. If violence flares up, the police protect us. If we are sick for a few days, our health insurance takes care of us. If we are debilitated for months, social security steps in. If we need around-the-clock assistance, we can go to the market and hire a nurse – usually some stranger from the other side of the world who takes care of us with the kind of devotion that we no longer expect from our own children. If we have the means, we can spend our golden years at a senior citizens’ home. The tax authorities treat us as individuals, and do not expect us to pay the neighbours’ taxes. The courts, too, see us as individuals, and never punish us for the crimes of our cousins. Not only adult men, but also women and children, are recognised as individuals. Throughout most of history, women were often seen as the property of family or community. Modern states, on the other hand, see women as individuals, enjoying economic and legal rights independently of their family and community. They may hold their own bank accounts, decide whom to marry, and even choose to divorce or live on their own. But the liberation of the individual comes at a cost. Many of us now bewail the loss of strong families and communities and feel alienated and threatened by the power the impersonal state and market wield over our lives. States and markets composed of alienated individuals can intervene in the lives of their members much more easily than states and markets composed of strong families and communities. When neighbours in a high-rise apartment building cannot even agree on how much to pay their janitor, how can we expect them to resist the state? The deal between states, markets and individuals is an uneasy one. The state and the market disagree about their mutual rights and obligations, and individuals complain that both demand too much and provide too little. In many cases individuals are exploited by markets, and states employ their armies, police forces and bureaucracies to persecute individuals instead of defending them. Yet it is amazing that this deal works at all – however imperfectly. For it breaches countless generations of human social arrangements. Millions of years of evolution have designed us to live and think as community members. Within a mere two centuries we have become alienated individuals. Nothing testifies better to the awesome power of culture.

Send me a list of the 2006 deals with high no-doc loans.” Eisman, predisposed to suspect fraud in the market, wanted to bet against Americans who had been lent money without having been required to show evidence of income or employment. “I figured Lippmann was going to send me deals that had twenty percent no docs. He sent us a list and none of them had less than fifty percent.

Romantic literature often presents the individual as somebody caught in a struggle against the state and the market. Nothing could be further from the truth. The state and the market are the mother and father of the individual, and the individual can survive only thanks to them. The market provides us with work, insurance and a pension. If we want to study a profession, the government’s schools are there to teach us. If we want to open a business, the bank loans us money. If we want to build a house, a construction company builds it and the bank gives us a mortgage, in some cases subsidised or insured by the state. If violence flares up, the police protect us. If we are sick for a few days, our health insurance takes care of us. If we are debilitated for months, national social services steps in.

Then it got used as storage in case of siege, became an indoor market, and so on, and then Jocatello La Vice got the place when the city defaulted on a loan. It is all in the official history. Isn't the fornication wonderful?" After quite a lengthy pause, Moist ventured: "It is?" "Don't you think so? There's more here than anywhere else in the city, I'm told." "Really?" said Moist, looking around nervously. "Er, do you have to come down here at some special time?" "Well, in banking hours usually, but we let groups in by appointment." "You know," said Moist, "I think this conversation has somehow got away from me ..." Bent waved vaguely at the ceiling. "I refer to the wonderful vaulting," he said. "The word derives from fornix, meaning arch." "Ah! Yes? Right!" said Moist. "You know, I wouldn't be surprised if not many people knew that.

The ARM, Adjustable Rate Mortgage, was invented in the early 1980s. Prior to that, those of us in the real estate business sold fixed-rate 7 or 8 percent mortgages. What happened? I was there in the middle of that disaster of an economy when fixed-rate mortgages went as high as 17 percent and the real estate world froze. Lenders paid out 12 percent on CDs but had money loaned out at 7 percent on hundreds of millions of dollars in mortgages. They were losing money, and lenders don’t like to lose money. So the Adjustable Rate Mortgage was born, in which your interest rate goes up when the prevailing market interest rates go up. The ARM was born to transfer the risk of higher interest rates to you, the consumer. In the last several years, home mortgage rates have been at a thirty-year low. It is not wise to get something that adjusts when you are at the bottom of rates! The mythsayers always seem to want to add risk to your home, the one place you should want to make sure has stability. Balloon mortgages are even worse. Balloons pop, and it is always strange to me that the popping sound is so startling. Why don’t we expect it? It is in the very nature of balloons to pop. Wise financial people always move away from risk, and the balloon mortgage creates risk nightmares.

Even with the bundling and splitting of tranches, Wall Street needed more mortgage borrowers, so it created the subprime market. These were loans to borrowers who did not meet the underwriting standards set forth by the GSEs, or “prime” loans. Subprime borrowers were riskier borrowers, either because they had fewer assets, lower credit score, or lower incomes. But in finance, higher risk is rewarded with higher yield, so mortgage brokers made even higher premiums from subprime loans.

You may well ask: when the bubble finally burst, why did we not let the bankers crash and burn? Why weren't they held accountable for their absurd debts? For two reasons. First because the payment system - the simple means of transferring money from one account to another and on which every transaction relies - is monopolised by the very same bankers who were making the bets. Imagine having gifted your arteries and veins to a gambler. The moment he loses big at the casino, he can blackmail you for anything you have simply by threatening to cut off your circulation. Second, because the financiers' gambles contained deep inside the title deeds to the houses of the majority. A full-scale financial market collapse could therefore lead to mass homelessness and a complete breakdown in the social contract. Don't be surprised that the high and mighty financiers of Wall Street would bother financialising the modest homes of poor people. Having borrowed as much as they could off banks and rich clients in order to place their crazy bets, they craved more since the more they bet, the more they made. So they created more debt from scratch to use as raw materials for more bets. How? By lending to impecunious blue collar worker who dreamed of the security of one day owning their own home. What if these little people could not actually afford their mortgage in the medium term? In contrast to bankers of old, the Jills and the Jacks who actually leant them the money did not care if the repayments were made because they never intended to collect. Instead, having granted the mortgage, they put it into their computerised grinder, chopped it up literally into tiny pieces of debt and repackaged them into one of their labyrinthine derivatives which they would then sell at a profit. By the time the poor homeowner had defaulted and their home was repossessed, the financier who granted the loan in the first place had long since moved on.

The panic was blamed on many factors—tight money, Roosevelt’s Gridiron Club speech attacking the “malefactors of great wealth,” and excessive speculation in copper, mining, and railroad stocks. The immediate weakness arose from the recklessness of the trust companies. In the early 1900s, national and most state-chartered banks couldn’t take trust accounts (wills, estates, and so on) but directed customers to trusts. Traditionally, these had been synonymous with safe investment. By 1907, however, they had exploited enough legal loopholes to become highly speculative. To draw money for risky ventures, they paid exorbitant interest rates, and trust executives operated like stock market plungers. They loaned out so much against stocks and bonds that by October 1907 as much as half the bank loans in New York were backed by securities as collateral—an extremely shaky base for the system. The trusts also didn’t keep the high cash reserves of commercial banks and were vulnerable to sudden runs.

Estimates suggest that $7.6 trillion of wealth is hidden in tax havens all over the world. The international finance sector acts as a 'circulation system for criminal money acquired through drug trafficking, terrorism, piracy, human trafficking, proliferation and tax evasion.' When we look at the international financial system, we don't find a free-market paradise. Instead, we find incredibly powerful institutions in both the public and private sector shaping the conditions faced by everyone else. Financial institutions 'dress themselves up in liberal trappings of the market, yet capture the old sovereignty of the state all the better to squeeze the social body to feed their own profits.' Yet all this power is held without any democratic accountability. Politicians, technocrats, and financiers work together to decide everything from the interest rates we pay on our loans to who gets what when a state files for bankruptcy. If everyone had a say in determining how these rules were made and enforced, rather than just a privileged few, we'd live in a very different world.

Read the notes.Never buy a stock without reading the footnotes to the financial statements in the annual report. Usually labeled “summary of significant accounting policies,” one key note describes how the company recognizes revenue, records inventories, treats installment or contract sales, expenses its marketing costs, and accounts for the other major aspects of its business.7 In the other footnotes, watch for disclosures about debt, stock options, loans to customers, reserves against losses, and other “risk factors” that can take a big chomp out of earnings

Most of the crime-ridden minority neighborhoods in New York City, especially areas like East New York, where many of the characters in Eric Garner’s story grew up, had been artificially created by a series of criminal real estate scams. One of the most infamous had involved a company called the Eastern Service Corporation, which in the sixties ran a huge predatory lending operation all over the city, but particularly in Brooklyn. Scam artists like ESC would first clear white residents out of certain neighborhoods with scare campaigns. They’d slip leaflets through mail slots warning of an incoming black plague, with messages like, “Don’t wait until it’s too late!” Investors would then come in and buy their houses at depressed rates. Once this “blockbusting” technique cleared the properties, a company like ESC would bring in a new set of homeowners, often minorities, and often with bad credit and shaky job profiles. They bribed officials in the FHA to approve mortgages for anyone and everyone. Appraisals would be inflated. Loans would be approved for repairs, but repairs would never be done. The typical target homeowner in the con was a black family moving to New York to escape racism in the South. The family would be shown a house in a place like East New York that in reality was only worth about $15,000. But the appraisal would be faked and a loan would be approved for $17,000. The family would move in and instantly find themselves in a house worth $2,000 less than its purchase price, and maybe with faulty toilets, lighting, heat, and (ironically) broken windows besides. Meanwhile, the government-backed loan created by a lender like Eastern Service by then had been sold off to some sucker on the secondary market: a savings bank, a pension fund, or perhaps to Fannie Mae, the government-sponsored mortgage corporation. Before long, the family would default and be foreclosed upon. Investors would swoop in and buy the property at a distressed price one more time. Next, the one-family home would be converted into a three- or four-family rental property, which would of course quickly fall into even greater disrepair. This process created ghettos almost instantly. Racial blockbusting is how East New York went from 90 percent white in 1960 to 80 percent black and Hispanic in 1966.

Back in the 1980s, the original stated purpose of the mortgage-backed bond had been to redistribute the risk associated with home mortgage lending. Home mortgage loans could find their way to the bond market investors willing to pay the most for them. The interest rate paid by the homeowner would thus fall. The goal of the innovation, in short, was to make the financial markets more efficient. Now, somehow, the same innovative spirit was being put to the opposite purpose: to hide the risk by complicating it. The market was paying Goldman Sachs bond traders to make the market less efficient.

Posterity can pay for its ancestors’ lives because posterity can be richer through innovation. If somebody somewhere takes out a mortgage, which he will repay in three decades’ time, to invest in a business that invents a gadget that saves his customers time, then that money, brought forward from the future, will enrich both him and those customers to the point where the loan can be repaid to posterity. That is growth. If, on the other hand, somebody takes out a loan just to support his luxury lifestyle, or to speculate on asset markets by buying a second home, then posterity will be the loser.

The easiest way to run developmentally efficient finance continues to be through a banking system, because it is banks that can most easily be pointed by governments at the projects necessary to agricultural and industrial development. Most obviously, banks respond to central bank guidance. They can be controlled via rediscounting loans for exports and for industrial upgrading, with the system policed through requirements for export letters of credit from the ultimate borrowers. The simplicity and bluntness of this mechanism makes it highly effective. Bond markets, and particularly stock markets, are harder for policymakers to control. The main reason is that it is difficult to oversee the way in which funds from bond and stock issues are used. It is, tellingly, the capacity of bank-based systems for enforcing development policies that makes entrepreneurs in developing countries lobby so hard for bond, and especially stock, markets to be expanded. These markets are their means to escape government control. It is the job of governments to resist entrepreneurs’ lobbying until basic developmental objectives have been achieved. Equally, independent central banks are not appropriate to developing countries until considerable economic progress has been made.

But derivatives did create new dangers. If you were making a loan, and you were confident you could hedge some of the credit risk of that loan, you might be tempted to make a larger and riskier loan. And the instruments themselves often had leverage embedded in them, so investors could be exposed to greater losses than they realized. Firms weren’t required by law to post any collateral (or “margin”) to make derivatives trades, and the market wasn’t requiring them to post much, either. This meant fewer shock absorbers for the system if those trades went bad. That’s why Warren Buffett had called derivatives “financial weapons of mass destruction.

Even during its earlier good years, when observers spoke of the Ivory Coast's economic "miracle," it was not a completely free-market economy. Even then, its ventures into the kinds of state regulation engaged in more widely by other African nations had not had good results. For example, the availability of "soft" foreign aid loans for centralized government planning of rice production led the Ivory Coast into policies that produced a glut of heavily subsidized rice that taxed the storage capacity of the government, cost the national budget far more than originally planned, and led to consumer prices far above those at which rice was available on the world market.

Here are my simple rules for identifying market tops and bottoms: 1. Market tops are relatively easy to recognize. Buyers generally become overconfident and almost always believe “this time is different.” It’s usually not. 2. There’s always a surplus of relatively cheap debt capital to finance acquisitions and investments in a hot market. In some cases, lenders won’t even charge cash interest, and they often relax or suspend typical loan restrictions as well. Leverage levels escalate compared to historical averages, with borrowing sometimes reaching as high as ten times or more compared to equity. Buyers will start accepting overoptimistic accounting adjustments and financial forecasts to justify taking on high levels of debt. Unfortunately most of these forecasts tend not to materialize once the economy starts decelerating or declining. 3. Another indicator that a market is peaking is the number of people you know who start getting rich. The number of investors claiming outperformance grows with the market. Loose credit conditions and a rising tide can make it easy for individuals without any particular strategy or process to make money “accidentally.” But making money in strong markets can be short-lived. Smart investors perform well through a combination of self-discipline and sound risk assessment, even when market conditions reverse.

We had come to see the work of Wedco, a small bank – micro-finance institution is the formal term – that has been one of CARE’s great success stories in the region. Wedco began in 1989 with the idea of making small loans to groups of ladies, generally market traders, who previously had almost no access to business credit. The idea was that half a dozen or so female traders would form a business club and take out a small loan, which they would apportion among themselves, to help them expand or improve their businesses. The idea of having a club was to spread the risk. It seemed a slightly loopy idea to many to focus exclusively on females, but it has been a runaway success.

If vampire A loaned vampire B ten centilitres of blood, B will repay the same amount. Nor do vampires use loans in order to finance new businesses or encourage growth in the blood-sucking market. Because the blood is produced by other animals, the vampires have no way of increasing production. Though the blood market has its ups and downs, vampires cannot presume that in 2017 there will be 3 per cent more blood than in 2016, and that in 2018 the blood market will again grow by 3 per cent. Consequently, vampires don’t believe in growth.1 For millions of years of evolution humans lived under conditions similar to those of vampires, foxes and rabbits. Hence humans too find it difficult to believe in growth. The

There are 2 billion people who have no bank accounts at all. There are another 4 billion people who have very limited access to banking. ​ Banking without international currencies, banking without international markets, banking without liquidity. Bitcoin isn’t about the 1 billion. Bitcoin is all about the other 6 1/2. The people who are currently cut off from international banking. What do you think happens when you suddenly are able to turn a simple text-messaging phone in the middle of a rural area in Nigeria, connected to a solar panel, into a bank terminal? Into a Western Union remittance terminal? ​Into an international loan-origination system? A stock market? An IPO engine? At first, nothing, but give it a few years.

So Germany can’t pay France and Britain and France and Britain can’t pay America because the Gold Standard says money = gold and America already has all the gold. But America won’t forgive the loans so Germany starts printing dumpsters full of money just to keep up appearances until one U.S. dollar is worth six hundred and thirty BILLION marks. There’s so much cash, kids are building money forts it is tragic/pimp as hell. Britain does convince America to go easy and lower the interest rates on the loans but in order to do that America has to lower ALL THE INTEREST RATES so everybody back in the U.S. is like “SWEET FREE MONEY BETTER USE IT TO BUY STOCKS” and they just go nuts the whole stock market goes completely bonkers shoe-shine boys are giving out hot tips hobos have stock portfolios and the dudes in charge are TERRIFIED because they know that at this point the market is just running on bullshit and dreams and real soon it’s gonna get to that part in the dream where you’re naked at your tuba recital and you never learned to play the tuba. There are other people who are like “NAW THE MARKET WILL BE GREAT FOREVER PUT ALL YOUR MONEY IN IT” but you know what those people are? WRONG. WRONG LIKE A DOG EATING MAYONNAISE. The market goes down like a clown and a bunch of people lose a bunch of money. It happens on a Tuesday and everybody calls it Black Tuesday and then it happens again on Black Thursday also Black Monday. Everyone is so poor they have even pawned their creativity.

I was stunned that China is becoming more like America used to be, while America is becoming more like China used to be. Even more frustrating, they’re doing it by emulating the free-market, entrepreneurial capitalism that made America great, even as we seem to be abandoning it. While America’s infrastructure crumbles, China is busy building roadways, bridges, airports, and utility systems. China is still a Communist-governed country, and we’re still a constitutional republic, but they are allowing more and more free enterprise and personal ownership. Meanwhile, we’re watching our government take away land rights and personal and religious freedoms at a stunning rate. I certainly don’t want what still remains of Chinese communism, but maybe we could loan them our Constitution. It doesn’t appear that we’re using it much these days anyhow.

You may be thinking, Why don’t you call a bank? Don’t they loan money to businesses all the time? Yes, they do. But not after they’ve heard a story like mine, in which a long-established but barely profitable company enters a downward spiral. Banks want one thing: their money back, with interest. They only want to do business with a company that has a good plan to pay them back, and plenty of collateral available if that plan doesn’t work out. They aren’t interested in propping up a company that’s in trouble. And clearly I’m in trouble. Everything is wrong here—the fact that I’ve survived for many years without building up a healthy cash reserve indicates bad management, and our disappearing sales indicate incompetent marketing. Showing up, hat in hand, at a bank, when I may be out of business in a few weeks, would show a serious lack of judgment on my part.

The state and the market are the mother and father of the individual, and the individual can survive only thanks to them. The market provides us with work, insurance and a pension. If we want to study a profession, the government’s schools are there to teach us. If we want to open a business, the bank loans us money. If we want to build a house, a construction company builds it and the bank gives us a mortgage, in some cases subsidised or insured by the state. If violence flares up, the police protect us. If we are sick for a few days, our health insurance takes care of us. If we are debilitated for months, national social services steps in. If we need around-the-clock assistance, we can go to the market and hire a nurse – usually some stranger from the other side of the world who takes care of us with the kind of devotion that we no longer expect from our own children. If we have the means, we can spend our golden years at a senior citizens’ home. The tax authorities treat us as individuals, and do not expect us to pay the neighbours’ taxes. The courts, too, see us as individuals, and never punish us for the crimes of our cousins.

The subprime market tapped a segment of the American public that did not typically have anything to do with Wall Street: the tranche between the fifth and the twenty-ninth percentile in their credit ratings. That is, the lenders were making loans to people who were less creditworthy than 71 percent of the population. Which of these poor Americans were likely to jump which way with their finances? How much did their home prices need to fall for their loans to blow up? Which mortgage originators were the most corrupt? Which Wall Street firms were creating the most dishonest mortgage bonds? What kind of people, in which parts of the country, exhibited the highest degree of financial irresponsibility? The default rate in Georgia was five times higher than that in Florida, even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California, only 5 percent, even though Californians were, on the face of it, far less fiscally responsible. Why? Vinny and Danny flew down to Miami, where they wandered around empty neighborhoods built with subprime loans, and saw with their own eyes how bad things were. “They’d

Let me illustrate what I mean by “the opportunity costs of working.” I was recently in the market for domestic help, and a young woman I wanted to hire as a housekeeper refused the job because I wouldn’t pay her under the table. No, she wasn’t an illegal alien—she just wanted me to treat her as one. The reason she made this unusual demand was that if she had income to report, she would suddenly have to start making student loan payments and paying taxes. To work for me would have cost her hundreds of dollars every month, creating a big enough hit to her bottom line that it wasn’t worth working anymore. (Perhaps she wasn’t savvy enough to apply for all of the available government programs, but she could have just as well pointed out that my hiring her would have cost her thousands annually in food stamps and other welfare payments.) Just imagine—there are so many unemployed people today, and yet government is making it too expensive for anyone to come and clean your floors for a fair wage. (By the way, the job I offered paid close to $40,000 per year.) Here was someone who admitted that reality quite bluntly—and I still regret the fact that I couldn’t hire her legally.

Then, in 1950, Andy became something more than a model prisoner. In 1950, he became a valuable commodity, a murderer who did tax-returns better than H & R Block. He gave gratis estate-planning advice, set up tax-shelters, filled out loan applications (sometimes creatively). I can remember him sitting behind his desk in the library, patiently going over a car-loan agreement paragraph by paragraph with a screwhead who wanted to buy a used DeSoto, telling the guy what was good about the agreement and what was bad about it, explaining to him that it was possible to shop for a loan and not get hit quite so bad, steering him away from the finance companies, which in those days were sometimes little better than legal loan-sharks. When he’d finished, the screwhead started to put out his hand . . . and then drew it back to himself quickly. He’d forgotten for a moment, you see, that he was dealing with a mascot, not a man. Andy kept up on the tax laws and the changes in the stock market, and so his usefulness didn’t end after he’d been in cold storage for awhile, as it might have done. He began to get his library money, his running war with the sisters had ended, and nobody tossed his cell very hard. He was a good nigger.

Romantic literature often presents the individual as somebody caught in a struggle against the state and the market. Nothing could be further from the truth. The state and the market are the mother and father of the individual, and the individual can survive only thanks to them. The market provides us with work, insurance and a pension. If we want to study a profession, the government’s schools are there to teach us. If we want to open a business, the bank loans us money. If we want to build a house, a construction company builds it and the bank gives us a mortgage, in some cases subsidised or insured by the state. If violence flares up, the police protect us. If we are sick for a few days, our health insurance takes care of us. If we are debilitated for months, national social services steps in. If we need around-the-clock assistance, we can go to the market and hire a nurse – usually some stranger from the other side of the world who takes care of us with the kind of devotion that we no longer expect from our own children. If we have the means, we can spend our golden years at a senior citizens’ home. The tax authorities treat us as individuals, and do not expect us to pay the neighbours’ taxes. The courts, too, see us as individuals, and never punish us for the crimes of our cousins.

Romantic literature often presents the individual as somebody caught in a struggle against the state and the market. Nothing could be further from the truth. The state and the market are the mother and father of the individual, and the individual can survive only thanks to them. The market provides us with work, insurance and a pension. If we want to study a profession, the government’s schools are there to teach us. If we want to open a business, the bank loans us money. If we want to build a house, a construction company builds it and the bank gives us a mortgage, in some cases subsidised or insured by the state. If violence flares up, the police protect us. If we are sick for a few days, our health insurance takes care of us. If we are debilitated for months, national social services steps in. If we need around-the-clock assistance, we can go to the market and hire a nurse – usually some stranger from the other side of the world who takes care of us with the kind of devotion that we no longer expect from our own children. If we have the means, we can spend our golden years at a senior citizens’ home. The tax authorities treat us as individuals, and do not expect us to pay the neighbours’ taxes. The courts, too, see us as individuals, and never punish us for the crimes of our cousins. Not

The American share of the crisis began with grossly improper mortgages provided to wholly unqualified borrowers, all directly caused and encouraged by government distortion of and interference in the market. The government’s market deformation and market intervention was in turn the result of two factors: political favouritism and Leftist ideology, on the one hand; and upon the other, corruption: the blatant cooption of such Friends of Angelo as Mr Dodd and of such bien-pensant Lefties as Mr Frank. The stability and efficiency of any market is directly proportional to the amount and trustworthiness of market information. The Yank Congress, for blatantly partisan and ideological reasons, gave out false information to the market, pushing lenders into making bad loans and giving out, with the appropriate winks and nudges, that Fannie (will Americans ever realise how that sounds) and Freddie, imperfectly quangoised, were ‘really just as good as the Treasury’ and were in any case ‘too big to [be let] fail’: which, as it happens, was untrue. Similarly, this moronic mantra of ‘too big to fail’ was chanted desperately and loudly to drown out the warning sounds of various financial institutions on the brink and of the automobile industry. Incomprehensible sums of public money were thrown at these corporations so that they could avoid bankruptcy, and have succeeded only in privatising profit whilst socialising risk.

We stand today on the brink of economic destruction. The housing market remains stagnant. Unemployment is obviously far higher than the officially reported figures of 6 to 7 percent, which factor in only those filing for unemployment benefits. As I was completing this book, there were alarming reports disseminated by the media that a hundred million Americans of working age were without jobs. This amounts to a staggering true unemployment rate of 36.3 percent. While some of those are willfully unemployed, such as stay-at-home parents, retirees, and high school students, there is no question that the real rate must still be at least somewhere in the HIDDEN HISTORY 4 25-percent range. Student loan debt is quickly surpassing credit card debt in volume. The cost of living continues to surge, while the vast majority of American workers receive little or no yearly wage increase. Our industry has practically left our shores, leaving us incapable of manufacturing anything of substance. Although the US population increased by 10 percent during the first decade of the twenty-first century, 5,500,000 manufacturing jobs were lost during the same time period. The sad reality is America doesn’t make much of anything anymore. The income disparity has grown to such an extent that the richest four hundred citizens presently possess more aggregate wealth than the bottom fifty percent of all Americans combined. If present trends continue, the United States is rapidly on the way to Third World nation status.

In 1962, the clouds of war against China darkened the nation. I got a call from the Prime Minister’s office asking me to come to Delhi for an urgent meeting. Also present at the meeting were some Generals and a senior bureaucrat, Shivaraman. I was informed that the Indian Army needed milk powder, and they asked me how much we could provide and how soon. I said, ‘A thousand tons and within six months.’ One of the Generals looked at me and said, ‘That’s not enough.’ I said, ‘Okay, then 1,500 tons.’ They said that, too, was not enough. ‘I suppose we stop wasting time, and you tell me the quantity that you need?’ I asked. ‘We need 2,750 tons,’ came the reply. I asked for a piece of paper as an idea began forming in my mind. I was aware that there was another milk powder plant in Rajkot, which belonged to the Government of Gujarat. It was a small plant, but I knew that if we put together all the powder and gave it to the army, sacrificing the entire civilian market, then we could fulfil this commitment in six months. So I did a swift calculation on a piece of paper and said, ‘It will be done. Now, can I go?’ The General expressed apprehension, ‘Supposing you let us down?’ ‘That is not the way to speak to Mr Kurien,’ Shivaraman said. ‘We have the highest regard for his words. If he says that he will do it, he will certainly do it. And besides, may I know what other alternative you have?’ That quietened the General. Then Shivaraman asked me, ‘What can the government do for you?’ I said, ‘What do you mean?’ He said, ‘Loans? Grants? Anything you want?’ I said, ‘Mr Shivaraman, you said there is an emergency, and if Amul uses this emergency to squeeze money out of the government, then it is an unworthy organisation. I want nothing.’ From that day onwards, Shivaraman was an ally.

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.

Between 2003 and 2008, Iceland’s three main banks, Glitnir, Kaupthing and Landsbanki, borrowed over $140 billion, a figure equal to ten times the country’s GDP, dwarfing its central bank’s $2.5 billion reserves. A handful of entrepreneurs, egged on by their then government, embarked on an unprecedented international spending binge, buying everything from Danish department stores to West Ham Football Club, while a sizeable proportion of the rest of the adult population enthusiastically embraced the kind of cockamamie financial strategies usually only mooted in Nigerian spam emails – taking out loans in Japanese Yen, for example, or mortgaging their houses in Swiss francs. One minute the Icelanders were up to their waists in fish guts, the next they they were weighing up the options lists on their new Porsche Cayennes. The tales of un-Nordic excess are legion: Elton John was flown in to sing one song at a birthday party; private jets were booked like they were taxis; people thought nothing of spending £5,000 on bottles of single malt whisky, or £100,000 on hunting weekends in the English countryside. The chief executive of the London arm of Kaupthing hired the Natural History Museum for a party, with Tom Jones providing the entertainment, and, by all accounts, Reykjavik’s actual snow was augmented by a blizzard of the Colombian variety. The collapse of Lehman Brothers in late 2008 exposed Iceland’s debts which, at one point, were said to be around 850 per cent of GDP (compared with the US’s 350 per cent), and set off a chain reaction which resulted in the krona plummeting to almost half its value. By this stage Iceland’s banks were lending money to their own shareholders so that they could buy shares in . . . those very same Icelandic banks. I am no Paul Krugman, but even I can see that this was hardly a sustainable business model. The government didn’t have the money to cover its banks’ debts. It was forced to withdraw the krona from currency markets and accept loans totalling £4 billion from the IMF, and from other countries. Even the little Faroe Islands forked out £33 million, which must have been especially humiliating for the Icelanders. Interest rates peaked at 18 per cent. The stock market dropped 77 per cent; inflation hit 20 per cent; and the krona dropped 80 per cent. Depending who you listen to, the country’s total debt ended up somewhere between £13 billion and £63 billion, or, to put it another way, anything from £38,000 to £210,000 for each and every Icelander.

See especially academia, which has effectively become a hope labor industrial complex. Within that system, tenured professors—ostensibly proof positive that you can, indeed, think about your subject of choice for the rest of your life, complete with job security, if you just work hard enough—encourage their most motivated students to apply for grad school. The grad schools depend on money from full-pay students and/or cheap labor from those students, so they accept far more master’s students than there are spots in PhD programs, and far more PhD students than there are tenure-track positions. Through it all, grad students are told that work will, in essence, save them: If they publish more, if they go to more conferences to present their work, if they get a book contract before graduating, their chances on the job market will go up. For a very limited few, this proves true. But it is no guarantee—and with ever-diminished funding for public universities, many students take on the costs of conference travel themselves (often through student loans), scrambling to make ends meet over the summer while they apply for the already-scarce number of academic jobs available, many of them in remote locations, with little promise of long-term stability. Some academics exhaust their hope labor supply during grad school. For others, it takes years on the market, often while adjuncting for little pay in demeaning and demanding work conditions, before the dream starts to splinter. But the system itself is set up to feed itself as long as possible. Most humanities PhD programs still offer little or nothing in terms of training for jobs outside of academia, creating a sort of mandatory tunnel from grad school to tenure-track aspirant. In the humanities, especially, to obtain a PhD—to become a doctor in your field of knowledge—is to adopt the refrain “I don’t have any marketable skills.” Many academics have no choice but to keep teaching—the only thing they feel equipped to do—even without fair pay or job security. Academic institutions are incentivized to keep adjuncts “doing what they love”—but there’s additional pressure from peers and mentors who’ve become deeply invested in the continued viability of the institution. Many senior academics with little experience of the realities of the contemporary market explicitly and implicitly advise their students that the only good job is a tenure-track academic job. When I failed to get an academic job in 2011, I felt soft but unsubtle dismay from various professors upon telling them that I had chosen to take a high school teaching job to make ends meet. It

It felt like fate when I first encountered the automated trading system that promised to transform small investments into substantial wealth over time. The marketing was aggressive, bombarding my social media feeds with images of people lounging on exotic beaches, driving fancy cars, and celebrating their newfound financial freedom. WhatsApp info:+12723328343 As a recent college graduate struggling to make ends meet, I was desperate for a way out of my financial rut, and the allure of easy money was too tempting to ignore. On a whim, I decided to take the plunge. I borrowed from my meager savings and even took out a small loan to fund my excitement. The rush I felt when signing up was like nothing I had ever experienced—an intoxicating thrill, like hopping onto a rollercoaster at full speed. At first, everything seemed to be going exactly as promised. My investment seemed to grow almost overnight, doubling and tripling in value.  My skepticism began to fade, replaced by a sense of confidence and hope for the future. I even shared my success with friends and family, excitedly telling them about the platform that was going to change my life. I imagined a future free from financial worries, a life of luxury and freedom, all thanks to this “revolutionary” trading system. But soon, a familiar sense of unease began to settle in. What had been an impressive surge in profits suddenly plateaued, and I found myself facing unexpected hurdles when trying to withdraw my funds. Pop-up messages about my “account needing an upgrade” and “market tightening” explained away the issues, but the discomfort grew. Still, I convinced myself that success required patience and continued to hold out hope that the system would recover. As weeks turned into months, my investment continued to dwindle. The once-promising account balance plummeted, and each attempt to reach customer support went unanswered. The promises of easy wealth had turned into an unsettling nightmare. Email info: Adwarerecoveryspecialist@auctioneer. net Desperate for answers, I began scouring the internet for any information or advice. That’s when I stumbled across reviews of ADWARE RECOVERY SPECIALIST , a service that seemed to specialize in helping people like me recover lost funds from fraudulent platforms. I felt a glimmer of hope as I read about others who had managed to retrieve their investments with the help of ADWARE RECOVERY SPECIALIST. Perhaps, after all, there was still a way out of this mess. I reached out to their team, and to my relief, they were able to assist me in recovering a portion of the money I thought I had lost for good. ADWARE RECOVERY SPECIALIST gave me the guidance and support I needed to navigate this complicated process, helping me regain control of a situation that had seemed hopeless. Their professionalism and expertise allowed me to salvage what I could, and for that, I am incredibly grateful.

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” George Bernard Shaw On a cool fall evening in 2008, four students set out to revolutionize an industry. Buried in loans, they had lost and broken eyeglasses and were outraged at how much it cost to replace them. One of them had been wearing the same damaged pair for five years: He was using a paper clip to bind the frames together. Even after his prescription changed twice, he refused to pay for pricey new lenses. Luxottica, the 800-pound gorilla of the industry, controlled more than 80 percent of the eyewear market. To make glasses more affordable, the students would need to topple a giant. Having recently watched Zappos transform footwear by selling shoes online, they wondered if they could do the same with eyewear. When they casually mentioned their idea to friends, time and again they were blasted with scorching criticism. No one would ever buy glasses over the internet, their friends insisted. People had to try them on first. Sure, Zappos had pulled the concept off with shoes, but there was a reason it hadn’t happened with eyewear. “If this were a good idea,” they heard repeatedly, “someone would have done it already.” None of the students had a background in e-commerce and technology, let alone in retail, fashion, or apparel. Despite being told their idea was crazy, they walked away from lucrative job offers to start a company. They would sell eyeglasses that normally cost $500 in a store for $95 online, donating a pair to someone in the developing world with every purchase. The business depended on a functioning website. Without one, it would be impossible for customers to view or buy their products. After scrambling to pull a website together, they finally managed to get it online at 4 A.M. on the day before the launch in February 2010. They called the company Warby Parker, combining the names of two characters created by the novelist Jack Kerouac, who inspired them to break free from the shackles of social pressure and embark on their adventure. They admired his rebellious spirit, infusing it into their culture. And it paid off. The students expected to sell a pair or two of glasses per day. But when GQ called them “the Netflix of eyewear,” they hit their target for the entire first year in less than a month, selling out so fast that they had to put twenty thousand customers on a waiting list. It took them nine months to stock enough inventory to meet the demand. Fast forward to 2015, when Fast Company released a list of the world’s most innovative companies. Warby Parker didn’t just make the list—they came in first. The three previous winners were creative giants Google, Nike, and Apple, all with over fifty thousand employees. Warby Parker’s scrappy startup, a new kid on the block, had a staff of just five hundred. In the span of five years, the four friends built one of the most fashionable brands on the planet and donated over a million pairs of glasses to people in need. The company cleared $100 million in annual revenues and was valued at over $1 billion. Back in 2009, one of the founders pitched the company to me, offering me the chance to invest in Warby Parker. I declined. It was the worst financial decision I’ve ever made, and I needed to understand where I went wrong.

The Global Financial Crisis of 2007–08 represented the greatest financial downswing of my lifetime, and consequently it presents the best opportunity to observe, reflect and learn. The scene was set for its occurrence by a number of developments. Here’s a partial list: Government policies supported an expansion of home ownership—which by definition meant the inclusion of people who historically couldn’t afford to buy homes—at a time when home prices were soaring; The Fed pushed interest rates down, causing the demand for higher-yielding instruments such as structured/levered mortgage securities to increase; There was a rising trend among banks to make mortgage loans, package them and sell them onward (as opposed to retaining them); Decisions to lend, structure, assign credit ratings and invest were made on the basis of unquestioning extrapolation of low historic mortgage default rates; The above four points resulted in an increased eagerness to extend mortgage loans, with an accompanying decline in lending standards; Novel and untested mortgage backed securities were developed that promised high returns with low risk, something that has great appeal in non-skeptical times; Protective laws and regulations were relaxed, such as the Glass-Steagall Act (which prohibited the creation of financial conglomerates), the uptick rule (which prevented traders who had bet against stocks from forcing them down through non-stop short selling), and the rules that limited banks’ leverage, permitting it to nearly triple; Finally, the media ran articles stating that risk had been eliminated by the combination of: the adroit Fed, which could be counted on to inject stimulus whenever economic sluggishness developed, confidence that the excess liquidity flowing to China for its exports and to oil producers would never fail to be recycled back into our markets, buoying asset prices, and the new Wall Street innovations, which “sliced and diced” risk so finely, spread it so widely and placed it with those best suited to bear it.

As you can see from the above, virtually all the conditions on which the GFC was built were endogenous to the financial system and the credit cycle. The developments that constituted the foundation for the Crisis weren’t caused by a general economic boom or a widespread surge in corporate profits. The key events didn’t take place in the general business environment or the greater world beyond that. Rather, the GFC was a largely financial phenomenon that resulted entirely from the behavior of financial players. The main forces that created this cycle were the easy availability of capital; a lack of experience and prudence sufficient to temper the unbridled enthusiasm that pervaded the process; imaginative financial engineering; the separation of lending decisions from loan retention; and irresponsibility and downright greed.

The three main players in the MBS market are: • Government National Mortgage Association, or GNMA (pronounced “Ginnie Mae”), is backed by a federal agency and guarantees mortgage payments on loans issued through federal loan programs (like the VA and the FHA). Unlike other MBS, bonds guaranteed by GNMA are backed by the full faith and credit of the US government, just like Treasury bonds. • Federal National Mortgage Association, or FNMA (“Fannie Mae”), is a private corporation that buys mortgages from large commercial banks, repackages them into bonds, and sells those bonds to investors. FNMA is not backed by the federal government (even though the government created it), so these bonds carry higher credit risk (the risk that you won’t get your money back). • Federal Home Loan Mortgage Corporation, or FHLMC (commonly called “Freddie Mac”), works almost the same way as FNMA. It buys up mortgages from smaller lenders, like savings and loan banks or credit unions, then packages them to create MBS. Freddie Mac bonds are not backed by the US government.

No government obligation of any sort is morally binding on the citizen-subjects (or former citizen-subjects) of that government. Those who voluntarily loaned money to the government were at fault for sanctioning and supporting the activities of the hoodlum gang, and justice demands that they must take their losses and make the best of it.

When something in society goes so wrong, that something is often a product of one very large agreement instead of the various small disagreements that consume the political sphere. Looming over the fights about which administration is to blame for housing becoming so unstable and what percentage increase this or that program is entitled to sits the inconsistency of America spending about $70 billion a year subsidizing homeownership through tax breaks like deferred taxes on capital gains and the mortgage interest deduction (MID), which allows homeowners to deduct the interest on their home loan from their federal income taxes. Together these tax breaks amount to a vast upper-middle-class welfare program that encourages people to buy bigger and more expensive houses, but because their biggest beneficiaries are residents of high-cost cities in deep blue redoubts like New York and California, even otherwise liberal politicians fight any attempt to reduce them. These programs are also entitlements that live on budgetary autopilot, meaning people get the tax breaks no matter how much they cost the government. Contrast that with programs like Section 8 rental vouchers, which cost about $20 billion a year, have been shown to be highly effective at reducing homelessness, and cost far less than the morally repugnant alternative of letting people live in tents and rot on sidewalks, consuming police resources and using the emergency room as a public hospital. That program has to be continually re-upped by Congress, and unlike middle-class homeowner programs, when the money runs out, it’s gone. This is why many big cities either have decades-long lines for rental vouchers or have closed those lines indefinitely on account of excess demand. The message of this dichotomy, which has persisted for decades regardless of which party is in charge and despite the mountains of evidence showing just how well these vouchers work, is that America is willing to subsidize as much debt as homeowners can gorge themselves on but that poor renters, the majority of whom live in market-rate apartments, are a penny-ante side issue unworthy of being prioritized.

As a physics major, before getting her hands dirty in New York, she had assumed that money is printed by a nation’s central bank, from where it is distributed to commercial banks. But while this is indeed how cash is created, cash accounts for only 3 per cent of all money. What of the remaining 97 per cent? Surprise and then foreboding were the reactions of every student to whom she had explained how the missing 97 per cent was created – and by whom: not by central banks but by commercial and investment bankers. At this point, her students would ask, ‘Without access to state-sanctioned printing presses, how do private bankers create money?’ ‘Simple,’ she would reply. ‘Every time a banker approves a loan of, say, one million dollars for Jack, a typical business customer, the banker just types 1,000,000 on Jack’s bank statement. However incredible it may seem, that’s all it takes. Bankers create money by granting loans by typing in some numbers!’ The crucial thing, she would explain, is that these numbers are typed into a shared database – or ledger – to which only the bankers have access. When their customers transfer this ‘money’ between them – when Jack transfers numbers from his account to the account of a supplier, say Jill, or of a builder, say Bob, or of a worker, say Kate, and when in turn, Jill, Bob and Kate transfer their numbers on, in the same way, to others to whom they owe money – these numbers simply migrate from one cell in the database to another. For this system to be sustainable, and not merely a pyramid scheme, there is a single condition: that, somewhere down the line, the one million dollars which some banker typed into existence on Jack’s behalf results in new goods and services whose total market value exceeds one million dollars. It is from this surplus that the banker takes his interest and Jack his profit. This is what Iris was referring to as a fool’s wager when she said that bankers plundered value from the future, or when Costa had once claimed that capitalism, like science fiction, trades in future assets using fictitious currency. It is in their nature that the wealthier bankers become by creating money, the more money they tend to create. The danger of such a system, of course, is that the banks end up typing into existence sums of money vastly larger than the market value of the goods and services created as a result of Jack, Jill, Bob and Kate’s endeavours. At the point when the bankers have collectively created money sums greater than the resulting values, the present can no longer repay the future for the money it borrowed from it. The moment Jack, Jill, Bob and Kate get a whiff of this, they may demand their bank balances in cash, sensing that the total value on the bankers’ database is lower than the actual value of their customers’ assets. ‘At that point, a bank run sets in,’ Eva would tell her students, ‘and that’s when the system comes crashing down.

In 1997, the International Monetary Fund bailed out South Korea’s crippling financial crisis with a $58 billion loan upon the agreement that the nation open up its markets to foreign investors and relax labor market reforms, making it easier to hire and fire workers and loosen carbon emission standards so that American cars can be imported.

With the first banks opened on Monday, the afternoon brought another request from Roosevelt. Stating that he needed the tax revenue, he asked Congress that beer with alcohol content of up to 3.2 percent be made legal; the Eighteenth Amendment did not specify the percentage that constituted an intoxicating beverage. Congress complied. The House passed the bill the very next day with a vote count of 316–97, pushing it to the Senate. Wednesday brought good cheer: The stock market opened for the first time in Roosevelt’s presidency. In a single-day record, the Dow Jones Industrial Average gained over 15 percent—a gain in total market value of $3 billion. By Thursday, for increased fiscal prudence, the Senate had added an exemption for wine to go with beer, but negotiated the alcohol content down to 3.05 percent. Throughout the week, banks were receiving net deposits rather than facing panicked withdrawals. Over the following weeks, the administration developed a sweeping farm package designed to “increase purchasing power of our farmers” and “relieve the pressure of farm mortgages.” To guarantee the safety of bank deposits, the Federal Deposit Insurance Corporation was created. To regulate the entire American stock and bond markets, the Exchange Act of 1933 required companies to report their financial condition accurately to the buying public, establishing the Securities and Exchange Commission. Safety nets such as Social Security for retirement and home loan guarantees for individuals would be added to the government’s portfolio of responsibilities within a couple of years. It was the largest peacetime escalation of government in American history.

The funds suddenly had more cash than they knew what to do with. Bent and Brown stuck with investing in large bank deposits and government debt, but other fund managers started looking for new options. Some funds started buying something called “commercial paper,” which was basically a way to make short-term loans to safe, stable companies. In the 1980s, money-market funds became the biggest buyers of commercial paper.

McCulley was an economist who worked at a giant investment firm called PIMCO. He looked out across this world of money-market funds and asset-backed commercial paper and said: this is not just a bunch of arcane investment vehicles. It’s an entire banking system that nobody quite recognizes as a banking system. A bank borrows money from depositors, who can ask for their money back at any time. Then the bank turns around and makes long-term loans. The fundamental bank thing that the bank is doing is borrowing short-term and lending long-term. The money-market funds and asset-backed commercial paper markets were doing the same thing: taking money that investors could demand at a moment’s notice and turning around and lending it out. In the shadows of the regulated banking system, a whole new system of quasi-banks had sprung up. And now there was a problem.

As we sat in the afternoon sun, he gave me a quick tutorial on the burgeoning subprime mortgage market. Whereas banks had once typically held the mortgage loans they made in their own portfolios, a huge percentage of mortgages were now bundled and sold as securities on Wall Street. Since banks could now off-load their risk that any particular borrower might default on their loan, this “securitization” of mortgages had led banks to steadily loosen their lending standards.

To guard against possible contagion effects on the rest of Europe, we also recommended that the Europeans construct a credible “firewall”—basically, a joint loan fund with enough heft to give capital markets confidence that in an emergency the eurozone stood behind its members’ debts. Once again, our European counterparts had other ideas. As far as the Germans, the Dutch, and many of the other eurozone members were concerned, the Greeks had brought their troubles on themselves with their shoddy governance and spendthrift ways. Although Merkel assured me that “we won’t do a Lehman” by letting Greece default, both she and her austerity-minded finance minister, Wolfgang Schäuble, appeared determined to condition any assistance on an adequate penance, despite our warnings that squeezing an already battered Greek economy too hard would be counterproductive.

Conservative pundit Ann Coulter asserted it clearly, in capital letters, in the headline of one of her nationally syndicated columns: They Gave Your Mortgage to a Less Qualified Minority. Another conservative columnist, Jeff Jacoby, wrote, “What does it mean when Boston banks start making many more loans to minorities? Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs.” By 2008, Jacoby was declaring the financial crisis “a no-win situation entirely of the government’s making.” When asked during the market panic on September 17 about the root causes of the crisis, billionaire and then New York City mayor Michael Bloomberg told a Georgetown University audience that the end of redlining was to blame. “It probably all started back when there was a lot of pressure on banks to make loans to everyone….Redlining, if you remember, was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor; they’re not going to be able to pay off their mortgages. Tell your salesmen don’t go into those areas,’ ” Bloomberg said.

If you sell someone a prime-rate, 5 percent annual percentage rate (APR) thirty-year mortgage in the amount of $200,000, they’ll pay you back an additional $186,512—93 percent of what they borrowed—for the privilege of spreading payments out over thirty years. If you can manage to sell that same person a subprime loan with a 9 percent interest rate, you can collect $379,328 on top of the $200,000 repayment, nearly twice over what they borrowed. The public policy justification for allowing subprime loans was that they made the American Dream of homeownership possible for people who did not meet the credit standards to get a cheaper prime mortgage. But the subprime loans we started to see in the early 2000s were primarily marketed to existing homeowners, not people looking to buy—and they usually left the borrower worse off than before the loan. Instead of getting striving people into homeownership, the loans often wound up pushing existing homeowners out. The refinance loans stripped homeowners of equity they had built up over years of mortgage payments. That’s why these diseased loans were tested first on the segment of Americans least respected by the financial sector and least protected by lawmakers: Black and brown families.

The Great War reduced western Europe to a shambles but proved to be a boon to American farmers. Desperate for basic agricultural products, war-ravaged countries turned to the US market, sending prices of cotton, corn, wheat, beef, and other commodities soaring. Between 1914 and 1918, the price of a bushel of corn rose from fifty-nine cents to $1.30, a bushel of wheat from $1.05 to $2.34, and hogs from $7.40 to $16.70 per hundred pounds.1 To meet the demand, farmers acquired more land, expanded their herds of livestock, and invested in new equipment, taking out loans on easy credit to bankroll their purchases. In the years following the armistice of 1918, however—as European nations recovered from the catastrophe—US farm exports plunged so dramatically that one scholar describes the market collapse as a “price toboggan.”2 By 1921, the price of “wheat, corn, beef and pork [had] all plummeted by nearly one-half.”3 Farmers, who had enjoyed unprecedented prosperity just a few years earlier, now faced financial ruin, defaulting on equipment loans, tax payments, and mortgages.

Unfortunately, the Bull that gilded Renaissance New York did little for most Americans. Eighties Wall Street was about institutional money released by deregulation, mergers and acquisitions, and, most of all, the debt that made it all possible. As John Kenneth Galbraith points out, financial euphoria always starts with new ways to borrow money; this time it was triggered by the Savings & Loan crisis. Volcker’s rocketing interest rates had forced S&Ls to offer double digits to new depositors while only getting back single digits on the old thirty-year mortgages on their books. S&Ls were going under, and getting a mortgage was nearly impossible, so in March 1980, with the banking system and the housing market on the brink, Carter had signed a law to allow them to issue credit cards, invest in commercial real estate, and offer checking accounts in order to stay in business. Reagan then took it a step further with a change that encouraged S&Ls to sell their mortgages in search of higher returns, freeing up a $1 trillion that needed to be invested in something. Which takes us back to Salomon Brothers, where in 1978 one Lew Ranieri had repackaged an old investment product the government had clamped down on during the Depression: A group of home mortgages all backed by government insurance would be bundled together, then sliced into bonds, thus converting the debt some people owed on their homes into an asset for others. Ranieri had been a bit ahead of the curve then—the same high interest rates that killed the S&Ls also made his bonds unattractive—but now deregulation let Salomon buy up the S&Ls’ mortgages at a deep discount, bundle them into bonds, and sell them back to the S&Ls who believed they’d diversified into the bond market when in fact they’d just bought ground meat made out of their own steaks. In June 1983, Salomon Brothers and Freddie Mac together issued the first collateralized mortgage obligation bonds (CMOs), which bundled up debt and cut it into tranches based on the amount of risk: you could choose between ground chuck and ground sirloin. It would be years before technology would allow doing this on a huge scale, but the immediate impact was that all kinds of debt, not just mortgages, were bundled, cut into bonds, and sold: credit card debt, car loans, you name it. Between 1983 and 1988, some $60 billion of CMOs were sold; GM’s financing arm became more profitable than its cars. America began to make debt instead of things. The

Socialists have taken advantage of every crisis to promote their policies and spend millions of dollars on marketing (oh, the irony) to convince young people that socialism can take care of everything for them. Bernie Sanders alone has three houses. He’s made millions of dollars under capitalism while preaching like a crazy person for its opposite. Let’s call him the “Commie Capitalist.” People like him say that socialism can pay off student loans, provide a universal basic income, even provide free college and health care. In 2016, a YouGov poll found that 44 percent of young people between the ages of sixteen and twenty-nine would rather live in a socialist country than a capitalist one like the United States. As if that weren’t scary enough, only 33 percent of the people could even describe with any accuracy what the word socialism means. This is precisely the way Bernie Sanders has wanted it all along: push lies for years until you make a majority of the population ignorant enough to believe those lies.

The 2008 collapse in housing prices had the same cause: unlimited unsound loans to create highly leveraged borrowers.

As Edward Chancellor wrote in The Price of Time, “We do know that the Mesopotamians charged interest on loans before they discovered how to put wheels on carts.

When a loan officer complains about “inventory” or “their clients losing out on offers,” a humble suggestion. Hand the loan officer Census data and a mirror. Why build a home loan origination platform as a mortgage lender to service only a small fraction of the market - I.e.: new home construction - comparing sales of newly-built homes to sales of existing homes (resales)? Three answers. 1. Lower inventory = lower commission checks for loan officers, 2. Financing what the market actually needs is usually a good idea for salespeople, 3. Less competition - the loan officer’s job will not succumb to automation.

The highest-risk investments include: Futures Commodities Limited partnerships Collectibles Rental real estate Penny stocks (stocks that cost less than $5 per share) Speculative stocks (such as stock in new companies) Foreign stocks from volatile nations “Junk” (or high-yield corporate) bonds Moderate-risk investments include: Growth stocks (companies that reinvest most of their profits to grow the business) Corporate bonds with lower (but still investment-grade) ratings Mutual funds or exchange-traded funds (ETFs) Real estate investment trusts (REITs) Blue chip stocks Limited-risk investments include: Top-rated investment-grade corporate and municipal bonds The lowest-risk investments include: Treasury bills and bonds FDIC-insured bank CDs (certificates of deposit) Money market funds Practicing

Table 8.1 indicates that two-thirds of the households living in nine Tuscan towns and hundreds of nearby villages were involved in credit transactions (as lenders, borrowers, or both)—an indication that credit was a vital part of the medieval economy. Most households actively participated in credit market transactions. People borrowed for various purposes (to buy seeds and working tools, to provide their daughters with dowries at the time of the marriage, to buy food while awaiting the next harvest). One-third of the loans to peasant households were advanced by fellow peasant households subject to correlated shocks (table 8.2

Read the notes.Never buy a stock without reading the footnotes to the financial statements in the annual report. Usually labeled “summary of significant accounting policies,” one key note describes how the company recognizes revenue, records inventories, treats installment or contract sales, expenses its marketing costs, and accounts for the other major aspects of its business.7 In the other footnotes, watch for disclosures about debt, stock options, loans to customers, reserves against losses, and other “risk factors” that can take a big chomp out of earnings. Among the things that should make your antennae twitch are technical terms like “capitalized,” “deferred,” and “restructuring”—and plain-English words signaling that the company has altered its accounting practices, like “began,” “change,” and “however.” None of those words mean you should not buy the stock, but all mean that you need to investigate further. Be sure to compare the footnotes with those in the financial statements of at least one firm that’s a close competitor, to see how aggressive your company’s accountants are. Read more. If you are an enterprising investor willing to put plenty of time and energy into your portfolio, then you owe it to yourself to learn more about financial reporting. That’s the only way to minimize your odds of being misled by a shifty earnings statement. Three solid books full of timely and specific examples are Martin Fridson and Fernando Alvarez’s Financial Statement Analysis, Charles Mulford and Eugene Comiskey’s The Financial Numbers Game, and Howard Schilit’s Financial Shenanigans. 8

What are you trying to buy? Asset type? Size? Price? To determine the answer to the first question, do the following: Start with your own net worth. Add in friends and family. The total team net worth is your starting point. Choose a market. Consider travel time and expense. You must be able to be in your market to look at deals at least once a month. Determine the viability of your market. Job growth? Population growth? Get deal flow from the market. Real estate agents Find all commercial realty companies in the city. Get on all their mailing lists. Analyze deals online from realtors in the area. Call the realtors about their listings. Direct to owners Get lists of owners. Create a system to reach owners directly. Mail Text Cold calling Analyze deals. Income approach Income – Expenses = Net operating income Net operating income – Debt service = Cash flow Check with lenders for current terms on debt. What is the CoC return? Cap rate? Debt ratio? Comparable data Check the analyzed cap rate against cap rates in the area for similar properties. Check comparable sale prices. Comps should be close in size and age to the subject property. Comps should have similar amenities. Comps should be within a few miles of the subject property. Exit Hold and operate. Refinance. Sell or flip. Consider upcoming market conditions. Debt Check with lenders or a mortgage broker to determine the availability of loans for this type of property. What are the terms and conditions? Is this the information you used to analyze the deal originally? Make the offer. Use an LOI to submit the offer in writing. The LOI will summarize the main deal points. If your offer is less than 15 percent of the asking price, speak with the realtor before you submit the offer. Once the offer is accepted, send the LOI to your attorney and have them draft the purchase agreement. Draft the purchase and sale agreement. Now that you have a fully executed contract, the clock starts. Earnest money goes into escrow. Do your due diligence. Financial inspection Physical inspection Lease audit Begin your loan application. The lender will complete three inspections. Appraisal Environmental inspection Physical engineer inspection of the buildings Do your closing. The lender will wire the loan proceeds to the closing escrow. Wire your down payment funds to the closing escrow. You own a new property! Engage property management for takeover of operations.

This strategy, together with the partial dismantling of measures to fight poverty, partly explains the continuous rise of inequalities in India. However, some of the rich have become richer for other reasons as well, including the close relationship between the Modi government and industrialists. FROM CRONY CAPITALISM TO COLLUSIVE CAPITALISM While the Modi government is not responsible for the enrichment of Indian tycoons, which began in most cases prior to the BJP victory in 2014, it continued to help them. In Gujarat, the Modi government had apparently granted unwarranted advantages to industrialists, including the sale of land below market prices, dispensations from environmental standards, unjustified tax rebates, interest-free loans, and so on.136 After forming the central government, the NDA government allegedly shielded Indian industrialists from banks to which these men owed billions. Such collusion has contributed to destabilizing a banking system undermined by dubious debts—particularly those held by these big investors, who do not pay back their loans.137 Even if the problem began under the previous government, it has persisted in part owing to collusion between businessmen and the ruling class. The government’s cronies continued to receive huge loans from public-sector banks (whose heads have trouble disobeying the government),138 which they proved unable to pay back. In May 2018, nonperforming assets (NPAs) vested in public banks—in other words, loans for which the borrower had not made payment on either the interest or the principal in at least ninety days—accounted for 12.65 billion dollars, or about 14 percent of their total loans (compared to 12.5 percent in March the previous year139 and only 3 percent in March 2012).140 A small number of borrowers were largely responsible for this evolution, among whom were prominent large industrialists.141 In 2015, in a fifty-seven-page document, Credit Suisse gave a detailed analysis of the astounding level of debt of ten Indian corporations that continued to borrow even though all the red flags had gone up.142 In 2018, 84 percent of the dubious loans were owed by major corporations, and twelve of them accounted for 25 percent of the outstanding NPAs.143 Among them is the group owned by Gautam Adani, a supporter of Prime Minister Narendra Modi since 2002.144 In 2015, the group increased its debt level by 16 percent to acquire a seaport and two power plants. Consequently, its debt soared to 840 billion rupees (11.2 billion USD), compared to only 331 billion rupees (4.41 billion dollars) in 2011.145

Up-front investment to try to professionalize the supply side early on in a network’s development inevitably comes with risk. In a well-publicized misstep for Uber, the company sought to expand its supply side by financing vehicles to provide cars to potential drivers who didn’t own vehicles, a program called XChange Leasing. The hypothesis was that this should push these drivers into power-driver territory quickly. Payments could be automatically deducted from their Uber earnings, and their driver ratings and trip data could be used to underwrite the loans. XChange Leasing unfortunately lost $525 million and failed to professionalize the driver side of the market. The problem was, it attracted drivers highly motivated by money—usually a positive—but who didn’t have high credit scores for good reason. They often failed to make payments, using their Uber-provided car to drive for competitors and avoid the automatic deductions. They would steal the cars and sell them for, say, half price. They would drive for Lyft instead of Uber, as a way to avoid the automatic payment deductions—they would try to have their cake and eat it, too. Uber needed to organize a massive repossession effort to get the cars back, but it was too late—many had been sold illegally, some finding themselves as far away as Iraq and Afghanistan, GPS devices still attached and running. This is a colorful example of how scaling the supply side, when a lot of capital is involved, can be tricky.

The Importance of Bookkeeping for Business Success Bookkeeping is a vital component of any business, regardless of its size or industry. It involves the accurate recording of financial transactions, which provides essential data for financial reporting, decision-making, and tax compliance. By maintaining well-organized and detailed financial records, businesses can ensure long-term stability and growth. What is Bookkeeping? Bookkeeping refers to the process of systematically recording a company’s financial transactions, including income, expenses, payroll, and other financial activities. It provides the foundation for creating financial statements such as balance sheets and income statements. Without proper bookkeeping, businesses would struggle to maintain accurate records, which could lead to financial mismanagement and compliance issues. Benefits of Professional Bookkeeping One of the most important benefits of bookkeeping is improved financial management. Professional bookkeepers help businesses maintain accurate and up-to-date records, ensuring that every transaction is tracked and categorized correctly. This level of organization allows business owners to monitor their cash flow, identify areas where they can cut costs, and make informed decisions. Additionally, by outsourcing bookkeeping, businesses can focus on their core operations without worrying about financial details. Tax Compliance and Preparation Tax season can be stressful for businesses, but proper bookkeeping makes it much easier. When financial records are well-maintained throughout the year, tax preparation becomes a seamless process. Bookkeepers ensure that all income and expenses are accurately recorded, allowing businesses to file their taxes without errors. Moreover, organized records help businesses take advantage of tax deductions and avoid penalties for late or inaccurate filings. Financial Reporting and Growth Accurate bookkeeping also plays a key role in generating financial reports. These reports provide insights into a business’s profitability, cash flow, and overall financial health. With this information, business owners can plan for future growth, make strategic investments, and secure loans if needed. Without reliable financial data, making informed decisions becomes much more difficult. In conclusion, bookkeeping is an essential practice for any business. By ensuring accurate financial records, tax compliance, and detailed reporting, businesses can achieve greater financial stability and growth opportunities.

One solution is an impromptu capital market where people can borrow from each other. Some students will give up some of their current purchasing power in order to receive the money at a later date. Being friends, and supposing that they will all be back at their dorms later to settle their accounts, the students might simply loan the money to one another at no cost.

In the mortgage business, is it wise to be a proponent of the free market? No. As the economy boomed after World War II, the United States government entered into the housing business. Post-War, U.S. housing policy backed home loans. When the government enters into any business, that business sector - its size, its shape, its construct, entrants into the business and business behavior overall - changes. Housing is no different. The Servicemen's Readjustment Act of 1944 - we know this to be the GI Bill - helped Veterans transition from soldier to citizen. A gateway to the middle class for countless U.S. Veterans was homeownership. Homeownership made possible through no-down payment VA loans. When speaking about the government’s role in housing, the Department of Housing and Urban Development comes to mind. HUD. HUD was formed in 1965. See low down payment FHA loans. With low down payments, there will be elevated levels of home purchases. Thanks in no small part to the low down payment. In terms of homeownership, countless Veterans - as well as those who benefit by obtaining an FHA loan - can and should acknowledge that the “free market” is not the reason they have been to benefit from homeownership. Government is the reason.

The sudden collapse of many key market actors in 2007, as the scale and extent of exposure to bad debt became clear, resulted in a worldwide seizing up of credit. This in turn made banks unwilling or unable to make loans to businesses, forcing governments to turn to massive intervention via quantitative easing to return liquidity to markets.

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.

commercial paper is short-term money, loaned out for thirty to forty days or less. This market is used by the biggest and best blue-chip companies. Commercial paper is the quickest, cheapest, and easiest way for them to raise a fast loan that is not regulated by the SEC. As

depletion and climate change. For the older generation it’s easy to misunderstand the word ‘student’ or ‘graduate’: to my contemporaries, at college in the 1980s, it meant somebody engaged in a liberal, academic education, often with hours of free time to dream, protest, play in a rock band or do research. Today’s undergraduates have been tested every month of their lives, from kindergarten to high school. They are the measured inputs and outputs of a commercialized global higher education market worth $1.2 trillion a year—excluding the USA. Their free time is minimal: precarious part-time jobs are essential to their existence, so that they are a key part of the modern workforce. Plus they have become a vital asset for the financial system. In 2006, Citigroup alone made $220 million clear profit from its student loan book.2

Two years later, to provide some competition in the secondary market, the Federal Home Loan Mortgage Corporation (Freddie Mac) was set up. The effect was once again to broaden the secondary market for mortgages, and in theory at least to lower mortgage rates.

Greece can balance its books without killing democracy Alexis Tsipras | 614 words OPINION Greece changes on January 25, the day of the election. My party, Syriza, guarantees a new social contract for political stability and economic security. We offer policies that will end austerity, enhance democracy and social cohesion and put the middle class back on its feet. This is the only way to strengthen the eurozone and make the European project attractive to citizens across the continent. We must end austerity so as not to let fear kill democracy. Unless the forces of progress and democracy change Europe, it will be Marine Le Pen and her far-right allies that change it for us. We have a duty to negotiate openly, honestly and as equals with our European partners. There is no sense in each side brandishing its weapons. Let me clear up a misperception: balancing the government’s budget does not automatically require austerity. A Syriza government will respect Greece’s obligation, as a eurozone member, to maintain a balanced budget, and will commit to quantitative targets. However, it is a fundamental matter of democracy that a newly elected government decides on its own how to achieve those goals. Austerity is not part of the European treaties; democracy and the principle of popular sovereignty are. If the Greek people entrust us with their votes, implementing our economic programme will not be a “unilateral” act, but a democratic obligation. Is there any logical reason to continue with a prescription that helps the disease metastasise? Austerity has failed in Greece. It crippled the economy and left a large part of the workforce unemployed. This is a humanitarian crisis. The government has promised the country’s lenders that it will cut salaries and pensions further, and increase taxes in 2015. But those commitments only bind Antonis Samaras’s government which will, for that reason, be voted out of office on January 25. We want to bring Greece to the level of a proper, democratic European country. Our manifesto, known as the Thessaloniki programme, contains a set of fiscally balanced short-term measures to mitigate the humanitarian crisis, restart the economy and get people back to work. Unlike previous governments, we will address factors within Greece that have perpetuated the crisis. We will stand up to the tax-evading economic oligarchy. We will ensure social justice and sustainable growth, in the context of a social market economy. Public debt has risen to a staggering 177 per cent of gross domestic product. This is unsustainable; meeting the payments is very hard. On existing loans, we demand repayment terms that do not cause recession and do not push the people to more despair and poverty. We are not asking for new loans; we cannot keep adding debt to the mountain. The 1953 London Conference helped Germany achieve its postwar economic miracle by relieving the country of the burden of its own past errors. (Greece was among the international creditors who participated.) Since austerity has caused overindebtedness throughout Europe, we now call for a European debt conference, which will likewise give a strong boost to growth in Europe. This is not an exercise in creating moral hazard. It is a moral duty. We expect the European Central Bank itself to launch a full-blooded programme of quantitative easing. This is long overdue. It should be on a scale great enough to heal the eurozone and to give meaning to the phrase “whatever it takes” to save the single currency. Syriza will need time to change Greece. Only we can guarantee a break with the clientelist and kleptocratic practices of the political and economic elites. We have not been in government; we are a new force that owes no allegiance to the past. We will make the reforms that Greece actually needs. The writer is leader of Syriza, the Greek oppositionparty

Comprehensive reform of bankruptcy laws—from the treatment of derivatives to underwater homes and to student loans. Bankruptcy law offers another example of how the basic rules of the game that determine how markets work have strong distributional consequences, as well as effects on efficiency. As in many other areas, the rules have increasingly favored those at the top. Every loan is a contract between a willing borrower and a willing lender, but one side is supposed to understand the market far better than the other; there is a massive asymmetry in information and bargaining power. Accordingly, the lender should bear the brunt of the consequences of a mistake, not the borrower. Making bankruptcy law more debtor-friendly would give banks an incentive to be more careful in lending. We would have fewer credit bubbles and fewer Americans deeply in debt. One of the most egregious examples of bad lending, as we’ve noted, is the student loan programs; and bad lending there has been encouraged by the nondischargeability of the debt. In

Almost all modern governments are highly conscious of what journalism calls ‘world opinion.’ For sound reasons, mostly of an economic nature, they cannot afford to be condemned in the United Nations, they do not like to be visited by Human Rights Commissions or Freedom of the Press Committees; their need of foreign investment, foreign loans, foreign markets, satisfactory trade relationships, and so on, requires that they be members in more or less good standing of a larger community of interests. Often, too, they are members of military alliances. Consequently, they must maintain some appearance of stability, in order to assure the other members of the community or of the alliance that contracts will continue to be honored, that treaties will be upheld, that loans will be repaid with interest, that investments will continue to produce profits and be safe. “Protracted internal war threatens all of this ... no ally wishes to treat with a government that is on the point of eviction.

The Greek GDP spiked 25% when statisticians dove into the country’s black market in 2006, for instance, thereby enabling the government to take out several hefty loans shortly before the European debt crisis broke out. Italy started including its black market back in 1987, which swelled its economy by 20% overnight. “A wave of euphoria swept over Italians,” reported the New York Times, “after economists recalibrated their statistics taking into account for the first time the country’s formidable underground economy of tax evaders and illegal workers.”4 And that’s to say nothing of all the unpaid labor that doesn’t even qualify as part of the black market, from volunteering to childcare to cooking, which together represents more than half of all our work. Of course, we can hire cleaners or nannies to do some of these chores, in which case they count toward the GDP, but we still do most ourselves. Adding all this unpaid work would expand the economy by anywhere from 37% (in Hungary) to 74% (in the UK).5 However, as the economist Diane Coyle notes, “generally official statistical agencies have never bothered – perhaps because it has been carried out mainly by women.”6 While we’re on the subject, only Denmark has ever attempted to quantify the value of breastfeeding in its GDP. And it’s no paltry sum: In the U.S., the potential contribution of breast milk has been estimated at an incredible $110 billion a year7 – about the size of China’s military budget.