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Shortly after the June 1940 evacuation of the British Expeditionary Force at Dunkirk, Mussolini permanently locked arms with Hitler.
IN May of 1940, Neville Chamberlain resigned in favor of Winston Churchill,
In August 1940, the Battle of Britain began.
asked Congress to enact a lend-lease program that would let Washington guarantee payment for British war orders in the United States and lease supplies indefinitely.
On December 7, 1941, Japan attacked Pearl Harbor,
surprise defeat of Churchill’s government in the 1945 elections,
“Sic transit gloria mundi!”
In the early days, the World Bank was a highly conservative institution. The International Monetary Fund, however—and contrary to its later image—was then feared as a hotbed of left-wing activism.
The sterling market was largely shut to foreigners until Margaret Thatcher dismantled exchange controls in 1979.
Siegmund Warburg had fled Hitler in the 1930s and started a merchant bank in 1946.
(In banking parlance, loans are assets and deposits, liabilities.)
Fed chairman William McChesney Martin:
Fed funds were reserves that commercial banks deposited with the Fed. Some banks would temporarily have “surplus” Fed funds—that is, reserves beyond their legal requirements. Morgans began to take the temporary, unused reserves from small interior banks and either use them or lend them to other banks on an overnight basis.
Leach would place large bets on the direction of interest rates.
Leach saw an excellent chance to speculate on one-year Treasury notes being auctioned by the Fed.
Bankers formerly had been preoccupied with the “asset” side of the business—that is, making loans. Now the liability side—the money on which loans were based—took on equal importance.
Stephen Bechtel, Sr., of the secretive San Francisco-based construction firm
banks could sell large CDs in London and use Eurodollars to finance their domestic lending.
American depositary receipts or ADRs, which were invented by Guaranty Trust back in 1927. ADRs permitted American investors to buy foreign stocks in the United States with a minimum of difficulty. They would actually buy receipts against shares held in a foreign bank vault.
Arthur Burns, Fed chairman after William McChesney Martin,
Stagflation suddenly made it cheaper to buy companies on Wall Street than to invest in bricks and mortar. The age of “paper entrepreneurialism,” to use Harvard economist Robert Reich’s term, had arrived.
Billing itself the Robin Hood of Wall Street, Goldman, Sachs would refuse to represent aggressors,
1975, when the SEC abolished fixed commissions on stock trades.
1973–74 disclosed a turbulent new world. The Arab oil embargo and consequent jump in world oil prices produced inflation and skidding financial markets.
petrodollars flowed mostly into four U.S. banks—Morgan Guaranty, Chase, Citibank, and the Bank of America.
FDR, heeding the advice of Walter Lippmann and Russell Leffingwell, embargoed U.S. gold exports.
Socal had taken Texaco, Standard Oil of New Jersey, and Mobil into its desert oil kingdom in a new operation christened the Arabian-American Oil Company, or Aramco.
Islamic injunction against paying or receiving interest.
if a debtor is big enough, he controls the bank.
George Shultz—as Bechtel president, a Morgan director in the 1970s
common economic deluge of rising interest rates, global recession, and steeply falling commodity prices.
1980, Preston led a $1-billion rescue for the Hunt brothers when their attempt to corner the silver market collapsed, nearly dragging down Bache and other brokerage houses.
fateful precedent of “curing” the debt crisis by heaping on more debt.
bankers would lend more to Brazil with one hand, then take it back with the other. This preserved the fictitious book value of loans on bank balance sheets.
Washington was now saying that some banks were too big to fail.
Glass-Steagall Act had attempted to insulate commercial banks from risk by separating them from securities work. Instead, it had confined them to a dying business and starved them of profits that might have kept them sane and healthy.
He has a tremendous instinct for minimizing awkward situations and getting people to work together.
Morgan Stanley would increasingly serve as an engine of the takeover boom.
Junk bonds revolutionized Wall Street by magnifying the money available to corporate raiders.
the first public offerings of People Express, the pioneering no-frills discount airline.
Morgan Stanley underwrote more than $500 million in junk bonds for People.
Morgan Stanley’s relationship with T. Boone Pickens of Mesa Petroleum.
“corporate finance”—a term that in England signifies takeover work.
The so-called Big Bang deregulation of October 1986 tore down the walls that had divided the two Cities
As in the 1920s, sages said old value measures were outdated and again worried about a shortage of common stock.
over 30 percent of Harvard Business School graduates ended up at Morgan Stanley;
Wall Street was tougher, meaner, smarter, and more macho than ever before.
His persuasive presentation the next day convinced Cooper Industries to make the $1-billion acquisition, netting Morgan Stanley $4 million. Gleacher also convinced Pantry Pride to take over Revlon, bringing in $30 million in fees in a Ronald O. Perelman raid financed by a flood of junk bonds. A decade earlier, naive bankers had trembled to ask for a $1-million fee.
too many deals seemed to be hatched by investment banks and corporate raiders merely for self-enrichment.
Boone Pickens, Carl Icahn, and Sir James Goldsmith—talked self-righteously about “cleansing” or “liberating” companies from “entrenched management.”
