Lough points out that Churchill’s switchback from the Tories, to the Liberals, and back to the Tories can be situated in terms of his personal finances. Having started out in the party of the landed interest, he switched to the party of the entrepreneur and the professional when he started to earn serious money with his writing. Having finally acquired land, he switched back to the Tories.
.. this was a guy who decided to drink champagne only five times a week in order to save money.
.. In fact, he tried all the ways rich men find to lose money, except yachting and mistresses.
.. Money also illuminates his inner life. The Black Dog struck in 1937-8, when he was savaged by margin calls in the hundreds of thousands of pounds on his appallingly ill-thought-out share portfolio, pursued by the Inland Revenue, enormously overdrawn at his bank, writing 2000 words a day or more for fear that his publisher would reclaim the long-spent advance on Marlborough: His Life and Times. Of course he was depressed.
.. In the end, one important lesson from this book is that perhaps standards of public integrity and financial probity have actually improved.
In 1923, Churchill accepted a £250,000 fee to lobby on behalf of Shell Oil. He used this money to underwrite part of a major bond issue by Daily Mail & General Trust, a newspaper that also published him and an obvious source of political influence, in exchange for a 2% commission. Vickers, Da Costa called in a favour with DM>’s merchant bank to hold a chunk of the business back for him, after Churchill had Shell send the cheque to his brother Jack’s home address for secrecy’s sake. Jack, of course, had just made partner at Vickers, Da Costa, no doubt in part because he brought Winston’s account with him from Grenfell’s and it wasn’t yet obvious what a mess he was going to be. Churchill collected on the transaction, went to stay with the Duke of Westminster in Mimizan, and proceeded to lose the lot at the casino in Biarritz.
I doubt you’d get away with that now.
What ‘The Big Short’ Gets Right, and Wrong, About the Housing Bubble
“The Big Short” makes a big deal of its protagonists realizing that there was a giant housing bubble in the middle of the last decade at a time no one else could see it. But that’s not quite right. When no-money-down home loans were commonplace and home prices were soaring, there was widespread discussion of the possibility that the United States was experiencing a housing bubble.
It was in August 2005 that the number of Google searches for that term hit its peak, according to Google Trends, fully two years before the crisis began. That year alone, there were 1,628 articles in major world publications included in the Nexis database that used the term “housing bubble.”
.. So plenty of people were at least discussing the possibility of a dangerous bubble. But there’s a big difference between identifying at the macro level that something is going on, and understanding the financial plumbing that would allow a person to profit from that insight.
What the characters portrayed in “The Big Short” figured out that people writing housing bubble stories didn’t was how the rot from bad mortgage loans that helped fuel the housing bubble had come to permeate supposedly safe securities. There were billions of dollars of highly rated bonds floating around that were in fact worthless, or at least worth far less than advertised.
.. But even if you were clever enough in 2005 to see all of this coming, you wouldn’t necessarily have been able to cash in as successfully as the characters in ”The Big Short.” Figuring out exactly what securities to bet against — and how and when — mattered as much as the basic insight.
Why Very Low Interest Rates May Stick Around
The interest rate on a 10-year Treasury note was below 4 percent every year from 1876 to 1919, then again from 1924 to 1958. The record is even clearer in Britain, where long-term rates were under 4 percent for nearly a century straight, from 1820 until the onset of World War I.
The real aberration looks like the 7.3 percent average experienced in the United States from 1970 to 2007.
What Hillary Clinton Gets (and Bernie Sanders Doesn’t) About Wall Street
And if there is a central story of Wall Street since the nineteen-nineties, it has been the stagnation of the sell side and the rise of the buy side, because of technology, regulation, and new profit opportunities.
.. In the past decade, electronic-trading platforms that connect buy-side investors to one another have cleared out floors of traders and other sell-side intermediaries, leading to developments like Morgan Stanley’s recent decision to lay off twenty-five per cent of its bond and currency traders. Meanwhile, many of the Dodd-Frank regulations introduced, after the 2008 financial crisis, forced sell-side banks to shift in countless and surprising ways to less-risky business lines, becoming less profitable as a result.
.. When it comes to pay, yes, an investment banker at Goldman Sachs makes mad money, but in 2014, according to Forbes, the top twenty-five hedge-fund managers—individuals, not firms—made twelve and a half billion dollars from profits they earned as asset managers and appreciation in their own managed investments. That is only two hundred million dollars less than the total compensation expenses forevery employee at Goldman Sachs.