America’s Foreign-Currency Bonds

           Developing countries and smaller developed country governments often issue bonds in other currencies than their own. This allows investors to separate out the credit risk from the currency, inflation, and interest-rate risk of a particular country. An investor in developing country ‘hard-currency’ bonds, for example, can buy such bonds to take a view of the

India’s Indigo Crash

           Exporting commodities can be a precarious source of riches. From the 20th century to today, oil has been a blessing and a curse to nations that rely on it to sustain their standards of living. In the 17th and 18th centuries, colonialism added an extra dimension to the commodities curse, shaping raw materials booms and

Confessions of a Stockjobber

           Published almost a hundred years ago now, Reminiscences of a Stock Operator by Edwin Lefèvre is more than an investment book. It is something of a novel, set in fin de siècle New York and revolving around a certain stock trader named Larry Livingston. This Larry Livingston did not exist, at least by that name,

New York’s Near Bankruptcy

          Almost fifty years ago, America’s largest city was on the brink of bankruptcy, about to default on a massive debt repayment with only one-tenth of the cash on hand required to make good on it. The day of reckoning had come after years of high spending relative to depressed revenues. New York City was billions

Old Genoa’s Universal Bank

           What banking and public finance have in common might not be obvious. However, in their histories, the two are joined at the hip. Indeed, some of the oldest banks have their origins in public finance. Counterintuitively, this includes central banks with roots as private organizations. The Bank of England, for example, was founded as little

The Saudi-Soviet Cold War

           For most countries, the condition of the public finances is driven by factors as diverse as whether the country is at war or peace, its level of employment, and its demographics. However, for some, the prices of natural resources are also of extraordinary importance. This is especially true for petrostates, nations whose economies are overwhelming

Britain’s Sinking Fund

           In the late-18th century, Britain was awash in debt. So large was this debt that even relatively cheap financing couldn’t save the British government from interest costs that ate up half of state revenues. To pay down this debt, the country implemented a sinking fund, a fund established to repurchase bonds that had previously been

The Confederacy’s Cotton Bonds

        The most unique financial arrangements are usually the product of new or desperate circumstances. Why else would one need to deviate from the norms with which market participants are already acquainted? The American Civil War had a lasting effect on the American economy and on American finance. However, one of the most curious financial innovations

Venice’s Fiscal Restructurings

           Financial innovations are frequently born of necessity and this is true in public finance just as much as in corporate finance, banking, and beyond. It is often when the public finances are in the most dire shape that creative thinking is most needed. Sometimes, the solutions conjured up set governments on the right course. Though

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