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Article: A Financial 'Time Bomb'?
- Article from:
- The Washington Post
- Article date:
- March 12, 2003
- Author:
CopyrightThis material is published under license from the Washington Post. All inquiries regarding rights should be directed to the Washington Post. (Hide copyright information)
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Since the 19th century, governments have tried to prevent
financial panics, which led to economic slumps and depressions. In
1873 Walter Bagehot, editor of the Economist, published his landmark
book "Lombard Street: A Description of the Money Market," which
advised the Bank of England about how to stop bank runs. When the
Federal Reserve disregarded his advice in the 1930s, the Great
Depression ensued. Congress later enacted deposit insurance as
another protection against panics. To the list of financial threats
can now be added "derivatives" -- sophisticated securities that are
used mostly by big investors (banks, insurance companies,
corporations).
Just last week, legendary investor ...