The Ascent of Money: A Financial History of the World: 10th Anniversary Edition

‘Paradoxical as it may seem, the riches of nations can be measured by the violence of the crises which they experience,’ opined the nineteenth-century French economist Clément Juglar.13 Once creative destruction is taken into account, Juglar’s observation doesn’t appear so puzzling.

Bond transactions are not usually the stuff of great passion. But the megacanje, or megaswap, as this one would come to be known, ranks among the most infamous deals that Wall Street has ever peddled to a government—and with good reason: For CSFB and a half dozen other Wall Street firms, the megaswap would be a bonanza, earning them more than $90 m

The world’s governments thus find themselves in an ever-shrinking box. And all it will take to trigger the crisis is a return to historically-normal levels of interest rates. As recently as 2000, 30-year Treasury bonds yielded over 6 percent and 30-year mortgages cost 7.5 percent. Let rates return to those levels and the global financial system imp