This practice will not only allow you to establish your voice as the author but also show the way you are engaging with the information, not just reporting it. Keeping these formatting guidelines in mind, view a couple of examples of block quot tions in the linked pdf handout: block quot tions. A block quot tion is an extract consisting of more than 40 words from another author s work. According to the apa manual, quot tions that are 40 words or more are considered block quot tions and are formatted differently than regular quot tions.

The following impromptu speech judging is a list of the unique formatting that is needed for block quot tions: block quot tions start on their own line. Five historical crises show how aspects of today’s financial system originated and offer lessons for today’s regulators what is mankind’s greatest invention? ask people this question and they are likely to pick familiar technologies such as printing or electricity. They are unlikely to suggest an innovation that is just as significant: the financial contract. Widely disliked and often considered grubby, it has nonetheless played an indispensable role in human development for at least 7,0 years. It can act as an economic time machine, helping savers transport today’s surplus income into the future, or giving borrowers access to future earnings now. By providing these two kinds of service, a well tuned financial system smooths away life’s sharpest ups and downs, making an uncertain world more predictable.

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In addition, as investors seek out people and companies with the best ideas, finance acts as an engine of growth. When bubbles burst and markets crash, plans paved years into the future can be destroyed. As the impact of the crisis of 2008 subsides, leaving its legacy of unemployment and debt, it is worth asking if the right things are being done to support what is good about finance, and to remove what is poisonous. Five devastating slumps starting with america’s first crash, in 1792, and ending with the world’s biggest, in 1929 highlight two big trends in financial evolution. The first is that institutions that enhance people’s economic lives, such as central banks, deposit insurance and stock exchanges, are not the products of careful design in calm times, but are cobbled together at the bottom of financial cliffs.

Often what starts out as a post crisis sticking plaster becomes a permanent feature of the system. New parts of the financial system are vilified: a new type of bank, investor or asset is identified as the culprit and is then banned or regulated out of existence. It ends by entrenching public backing for private markets: other parts of finance deemed essential are given more state support. Walter bagehot, editor of this newspaper between 1860 and 1877, argued that financial panics occur when the blind capital of the public floods into unwise speculative investments. The sight of britons stuffing icelandic banks with sterling, safe in the knowledge that £35,0 of deposits were insured by the state, would have made bagehot nervous. The fact that professional investors can lean on the state would have made him angry.

If one man deserves credit for both the brilliance and the horrors of modern finance it is alexander hamilton, the first treasury secretary of the united states. In financial terms the young country was a blank canvas: in 1790, just 14 years after the declaration of independence, it had five banks and few insurers. Hamilton wanted a state of the art financial set up, like that of britain or holland. America’s new bonds would be traded in open markets, allowing the government to borrow cheaply.

And america would also need a central bank, the first bank of the united states bus , which would be publicly owned. The initial auction, in july 1791, went well and was oversubscribed within an hour. This was great news for hamilton, because the two pillars of his system the bank and the debt had been designed to support each other.

To get hold of a $400 bus share, investors had to buy a $25 share certificate or scrip , and pay three quarters of the remainder not in cash, but with federal bonds. The plan therefore stoked demand for government debt, while also furnishing the bank with a healthy wedge of safe assets. It was seen as a great deal: scrip prices shot up from $25 to reach more than $300 in august 1791.

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The scheming old etonian was the first englishman to be blamed for an american financial crisis, but would not be the last. Duer and his accomplices knew that investors needed federal bonds to pay for their bus shares, so they tried to corner the market. To fund this scheme duer borrowed from wealthy friends and, by issuing personal ious, from the public. Already massive, it then ballooned, making almost $2.7m in new loans in its first two months. Awash with credit, the residents of philadelphia and new york were gripped by speculative fever.

As many as 20 carriages a week raced between the two cities to exploit opportunities for arbitrage. It cut the supply of credit almost as quickly as it had expanded it, with loans down by 25% between the end of january and march. As credit tightened, duer and his cabal, who often took on new debts in order to repay old ones, started to feel the pinch. Rumours of duer’s troubles, combined with the tightening of credit by the bus, sent america’s markets into sharp descent. Prices of government debt, bus shares and the stocks of the handful of other traded companies plunged by almost 25% in two weeks. A mob of angry investors pounded the new york jail where duer was being held with stones. A student of financial history, he was aware that france’s crash in 1720 had hobbled its financial system for years.