Quotes from Roger Lowenstein

Imagine the big rating agencies as three competitive saloons standing side by side, with each free to set its own drinking age. Before long, nine-year-olds would be downing bourbon

A compact organization lets all of us spend our time managing the business rather than managing each other.

As Keynes observed, there cannot be "liquidity" for the community as a whole.6

Being right on a stock had something of the purity of a perfect move in chess; it had an intellectual resonance.

Markets can remain irrational longer than you can remain solvent.

The real culprit in 1994 was leverage. If you aren't in debt, you can't go broke and can't be made to sell, in which case "liquidity" is irrelevant. But a leveraged firm may be forced to sell, lest fast-accumulating losses put it out of business. Leverage always gives rise to this same brutal dynamic, and its dangers cannot be stressed

And in the late summer of 1998, the bond-trading crowd was extremely fearful, especially of risky credits. The professors hadn't modeled this. They had programmed the market for a cold predictability that it had never had; they had forgotten the predatory, acquisitive, and overwhelming protective instincts that govern real-life traders. They had forgotten the human factor.

Finance is often poetically just; it punishes the reckless with special fervor.

A regulator is part protector, part godfather. He dislikes a public spectacle; he is most effective when he can wield his power discreetly, by merely threatening to act or by cajoling others to do his bidding.

The moment was highly polarizing. Populists agitated for an income tax, tariff reform, regulation of railroads, and direct election of U.S. senators (who were chosen by the legislatures). Workers erupted in sometimes violent strikes—notably, the Pullman strike of 1894, which halted much of the nation's rail traffic and led to rioting and acts of sabotage, and was ultimately suppressed by federal troops.

This verity is well worth remembering: the securities might be unrelated, but the same investors owned them, implicitly linking them in times of stress. And when armies of financial soldiers were involved in the same securities, borders shrank. The very concept of safety through diversification—the basis of Long-Term's own security—would merit rethinking.

The professors' conceit was to think that models could forecast the limits of behavior. In fact, the models could tell them what was reasonable or what was predictable based on the past. The professors overlooked the fact that people, traders included, are not always reasonable. This is the true lesson of Long-Term's demise. No matter what the models say, traders are not machines guided by silicon chips; they are impressionable and imitative; they run in flocks and retreat in hordes.

Three questions divided reformers: Who should issue the new currency? To what degree should the system be centralized? And should bankers or politicians be in control?

This is the true lesson of Long-Term's demise. No matter what the models say, traders are not machines guided by silicon chips; they are impressionable and imitative; they run in flocks and retreat in hordes.

Bundy sternly tool his fellow endowment fund managers to task - not for being too bold, but for being insufficiently so: We have the preliminary impression that over the long run caution has cost our colleges and universities much more than imprudence or excessive risk-taking.

Warburg rifled off a congratulatory note to Owen. He revealed his true feelings about the Senate (including Owen) to a fellow European, to whom he groused, "It is a terribly tiring business to try to influence these hundred obstinate and ignorant men.

His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world, yet those same qualities exacted a toll.

Hewlett-Packard is somewhat riskier than GE; Amazon.com, riskier still.

If you aren't in debt, you can't go broke and can't be made to sell, in which case "liquidity" is irrelevant. But a leveraged firm may be forced to sell, lest fast-accumulating losses put it out of business. Leverage always gives rise to this same brutal dynamic, and its dangers cannot be stressed too often.

A chief attraction of the real bills theory was that it took decisions regarding the money supply out of human hands. John Carlisle, Treasury secretary under Cleveland, maintained that issuing notes "is not a proper function of the Treasury Department, or of any other department of the Government." The task was just too difficult. Rather, Carlisle said, currency should be "regulated entirely by the business interests of the people and by the laws of trade.

When the subject was money, central authority had always been taboo; it was a demon that terrified the people. Fear of this demon had kept the country without any effective organization of its finances for seventy-five years. Now, three-quarters of a century after Andrew Jackson, the ghost was slain.

Warburg hesitated before daring to reply. "Your bank is so big and so powerful, Mr. Stillman, that when the next panic comes, you will wish your responsibilities were smaller.

Warburg was shocked by the primitiveness of American finance. Whereas banks in Germany functioned with near-military cohesiveness, banking in America, he concluded, suffered from an ethos of extreme individualism.

Regardless of how earnestly bankers trumpeted the virtues of laissez-faire, in times of unrest markets looked to Washington to provide stability.