The rise and fall of Long-Term Capital Management

Long-Term Capital Management, also known as LTCM, was a large hedge fund, started in 1994 by John Meriwether, former vice chairman and head of bond trading at investment bank Salomon Brothers, with the intent of providing investors with absolute returns using trading strategies combined with high financial leverage. Alongside Meriwether, the fund was led by … Continue reading The rise and fall of Long-Term Capital Management

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What is a Lender of Last Resort?

A Lender of Last Resort (LLR) is an institution, usually a country's Central Bank (like the Federal Reserve in the United States), that offers loans to banks or other organizations that are having financial difficulties or that are near a collapse or a bankruptcy. Generally, LLRs borrow money to those companies or financial institutions whose … Continue reading What is a Lender of Last Resort?

Are banks necessary?

On September 15th, 2008 the Great Recession, officialy started in December 2007, materialized in the financial world with the bankruptcy of Lehman Brothers Holdings Inc., one of the oldest and largest investment banks in Wall Street. The fate of the famous financial firm has shown to all the world the fragility and the weakness of the current economic system, centered … Continue reading Are banks necessary?