Educational Media Reviews Online

From the offset, this widely acclaimed series is situated into the context of the question, “How could the crisis in the U.S. subprime mortgage market, beginning in the summer of 2007, cause a near global depression?” The series does not seek to answer this question outright, as its goal is to build a substantial background in the histories of currencies, securities, economies, lending institutions, regulations, and consumer behavior, to demonstrate the truth of “no sure thing.” That is, every boom is destined for a bust; every bull market is destined for a correction; every grand-scale corrupt enterprise will have its day of reckoning. The point of constant emphasis is that history is cyclical, insofar as we financial creatures are not willing to learn from history’s lessons. The series is a positively brilliant exposition of examples throughout history in which irrational exuberance, greed, and/or ignorance of history (deliberate or not) have led to catastrophe.

Dreams of Avarice: Credit and Interest through the Ages
As an example of both greed and currency devaluation, the host of the series, economic historian Dr. Niall Ferguson discusses Pissarro’s and the Spaniards’ discovery and exploitation of silver in present day Bolivia in the sixteenth century. By flooding the market with massive amounts of newly discovered silver, the Spaniards actually decreased their wealth and hurt their efforts to finance their war efforts. This illustrates a classic example of inflation in history of too many “dollars” chasing too few goods. Niall continues in discussing the history of currency and the element of trust necessary for the issuance of paper currency throughout civilizations. He then examines the concepts of credit and interest, centering in Venice and the Medici family. Here the audience swiftly but purposefully witnesses the evolution of money lending to banking. In the series’s spirit of focus on rise and fall, Niall gives historical details of bad debts and keenly examines the shift of power from creditor to loaner over the years. He thereby shows the frightening ease of access to credit in the U.S. (a conspicuous cause of the subprime market collapse).

Human Bondage: The Evolution of Bond Trading
Niall observes the emergence of government borrowing through bonds. Debt securities have historically been a method of financing wars in Europe for over 600 years. In a brilliant analysis, the film demonstrates how power broking bond traders, such as the Rothschilds during the Napoleonic Wars and beyond, manipulated the markets to the point where they actually had the power to allow or disallow wars. The series cites the financial strategy of the Confederacy, including a full cotton embargo on Great Britain with disastrous consequences. The viewer gains a well chosen example of the relationship between inflation and bond prices, using Argentina in 1989 as a case study.

Blowing Bubbles: The Emergence of Stock Trading
Niall cites the 19th century rise of joint-stock limited liability company, and the subsequent selling of company ownership in stock markets, as likely being the most important development in financial history. He keenly examines the history of the formation of the modern concept of a company in the story of the United Dutch East India Chartered Company. Dutch citizens could buy ownership of this company, which, of course, experienced a goliath boom and bust. The series also gives a thorough account of the life of John Law, and his creation of the Mississippi Company and a central bank in Paris. The demise of the over-inflated Mississippi Company led to financial collapse in France that conspicuously factored into the French Revolution. Naturally, this ardent series scrutinizes the stock market crash of 1929 and subsequent depression.

The series supplies straightforward and unnerving particulars of Enron’s rise and fall, drawing a clear comparison to Law’s bubble. Not afraid to take a stand, Niall lays a great deal of blame upon Alan Greenspan and the Federal Reserve in late 1990s for their loose monetary policy, and deregulation of the energy industry by the Reagan administration. In one of the most scathing portions of the series, Niall discusses present day phenomenon of companies concealing debt, even after Enron.

Risky Business: Insuring Against the Future
The viewer gains a unique perspective on the crunch of insurance, especially in the wake of Hurricane Katrina. It examines dangers to the uninsured, the unresponsiveness of insurance companies, and the escalated insurance rates for flood damaged properties in New Orleans that are slated to be redeveloped. Again, in keeping with the historical orientation of the series, it offers a look back at the origins of the insurance industry in the Scottish Minister’s Widow’s Fund. Special attention is paid to the workings, general calculations, and data collection needed for an insurance entity. It discusses the racial implication of governments’ and insurance companies’ policies. The notion of safeguarding against risk is taken to its next practical step with simple, but precise explanations of the natures of and implications of hedge funds, options, and derivatives.

Safe as Houses: Real Estate Values and Mortgage Trading
With examples of social movements and democratic movements, the series illustrates the power of property ownership and vulnerabilities of those without. It studies the killings of unemployed Ford workers outside a Detroit plant in 1929, and the pressures of communist notions of state ownership of production. With the post-World War II political emphasis on home ownership, the film explores the creation of Fannie Mae and the precipitous market for home loans. These phenomena led to the Savings & Loan scandals of late eighties, and property market bubbles in Britain and Japan. The series makes brilliant linkages between the development of demand, the institutionalization of markets, corruption and avarice infiltrating these institutions, leading to seemingly inevitable disaster.

Chimerica: An Economic Love Story Gone Sour
While globalization is generally considered a new concept, the series points out that new markets are simply reemerging markets. As a point of fact, the 19th century witnessed its own globalization when European powers used gunboat diplomacy to secure trade routes and markets. Niall stands in awe of China’s arrival as an economic superpower, and how this is changing long-standing institutions, supremacies, and economic dogma. Again with a historical bend, he discusses how China could in turn establish dominion over the West. He dissects the economic bases for World War I, and shows how it obliterated the progress of globalization to that point. Niall argues that the rebirth of financial globalization occurred through formation of the World Bank. The viewer is given an absorbing analysis of the use of hedge funds as an economic weapon. Given the trends that he has observed throughout financial history, Niall skillfully hints (without outright predicting) a Chinese/American conflict, as a product of future financial upheavals. At present, he uses his metaphoric expression of “Chimerica” to exhibit the interdependence between the two powers, but also proposes that the relationship is unsustainable, and chimerical.

This work has received international praise and deservedly so. It offers lucid insights for historians, economists, and financiers alike. It is worth noting that Niall is not merely the host, but the researcher and theorist at the core of this series. He is seen reviewing obscure documents in archives and specialized collections around the world. Furthermore, he presents the content in wide reaching locations including China, the United States, Argentina, and many more. The visual appeal of the series is thoroughly engaging.

Though the heart of the series is scholarly, Niall goes to great lengths to explain advanced financial and economic terms, such as stagflation and futures, in very simple and sensible terms. The series makes very sound segues from disc to disc.

I simply cannot heap enough praise upon this series. It was enjoyable, enthralling, and enlightening in both historical and financial circles. The selection and diversity of the historical events is simply staggering. Each historical episode seems to play beautifully into Niall’s premise of inevitable rises and falls.