The Finance Professionals' Post

Checks & Balances: Three Epochs of Federal Budget Management

Credit: Wikimedia Commons

“Today,” President Bill Clinton (1993–2001) said on January 6, 1999, “I am proud to announce that we can say the era of big deficits is over.”¹ Clinton’s pronouncement was profoundly premature, a fact underscored by the debt ceiling impasse and Treasury bond downgrade of 2011. Unless the US economy improves faster than even the most optimistic economist now forecasts, huge federal deficits will be in America’s future for many years to come. That means the national debt, already at almost $15 trillion and 100% of GDP, will continue to grow, putting more downward pressure on the government’s bond rating and additional upward pressure on interest rates. Many Americans believe that more dangerously destabilizing political squabbles over taxes and social programs are forthcoming, with results that no one with a decent respect for the intricacies of politics and economics dares to predict.

Wall Street in Widescreen: The Financial Crisis of '08 in Cinema

In the fall of 2008, as investment banks exploded and their debris cascaded upon the middle and lower classes, many Wall Street CEOs continued receiving bonuses worth millions. The Financial Crisis of 2008 fit Hollywood’s formula for profit—power, corruption, and lies equal ticket sales—so the recent spate of crisis-related films is not surprising. It is important to analyze the most noteworthy of the new films because they will, undoubtedly, become historical references in their own right in years to come as they help to define the Financial Crisis of 2008 for millions of moviegoers.

First Wall Street Collectors Bourse at the Museum of American Finance a Success

The first Wall Street Collectors Bourse, held at the Museum of American Finance, on October 21 and 22, 2011, was a success with approximately 400 visitors. Twenty-three dealers participated, showing and trading their stock and bond certificates and bank notes, including US and worldwide rarities in a wide variety of subjects. In addition, there were autographs, coins, and other ephemera related to finance.

The First Activist Congress

Observers who marvel at the far-reaching nature of the legislation passed by the 111th Congress that met from January 2009 to December 2010 may be even more amazed at the groundbreaking actions of the 37th Congress. 

That group of representatives met in four separate sessions from March 1861 to March 1863, and passed several acts that profoundly changed the federal government’s involvement in many aspects of the nation’s business.The 35th and 36th Congresses had passed 129 and 157 public acts and resolutions, respectively. The 37th Congress passed 428, while its successor extended or passed another 411. Many related not to contingencies of the ongoing Civil War, but to unfinished Republican Party business left over from prewar legislative sessions. Without representatives from 11 states that had seceded and formed the Confederate States of America (CSA), the 37th Congress passed landmark legislation such as the Revenue Act, Legal Tender Act, Homestead Act, Morrill Act, National Banking Act, and Pacific Railway Act, creating what historian Leonard Curry has labeled “a blueprint for modern America” that is still visible some 150 years later.

Nerds on Wall Street

Not long ago, trading on a stock market meant you would be in a crowd of people energetically shouting, running around, and making a mess with great quantities of paper.

No more.

Visiting a financial market now is more like visiting the “cloud,” a big data center. Computers and network gear hum in racks. Fans blow. Rows of tiny lights flicker. Occasionally someone shows up, but do not count on much water cooler conversation.

Technology did not suddenly transform our markets. It has been a gradual process, and understanding how we got here, and the simpler machines we used along the way, provides insight into today’s complex markets. It turns out that going back to the basics, from the buttonwood tree and hand signals, is a good way to explain technology that can seem hopelessly complex and buried in jargon.

Wall Street Bourse at Museum of American Finance

Wall Street Bourse, the first numismatic show to take place at the Museum of American Finance, will be held on October 21 and 22, 2011. Twenty-two dealers will bring stock and bond certificates and bank notes including US and worldwide rarities in a wide array of topics and subjects such as railroads, mining, autos, aviation, Internet and technology, telecommunications, and navigation.  In addition there will be autographs, coins, tokens and other ephemera related to finance and its history.  Admission to museum events, including the Bourse (which will be run by an independent numismatic group), will be free to the public from 10 am to 4 pm on both days.  Much to the delight of collectors and enthusiasts of numismatic objects, the Bourse will also feature an auction by Archives International Auctions on Friday evening at 8 pm, hosted at India House (One Hanover Square). John Herzog, founder and chairman emeritus of the Museum, says "This show should be of interest for the historical perspective it offers practitioners about companies they might be analyzing."   

Real Estate: The Bubble, the Bust, and Beyond

With a decline of 24% in U.S. home prices since its record high in March 2007, this year marks the longest real estate bear market since the beginning of World War II. There is much public debate about when housing’s problems will end and a new bull market will begin. Financial history can provide us with some important insight into the longstanding pros and cons of real estate investing and clues to its future as a popular investment choice.

Artifacts of Finance: Bull and Bear, Wall Street’s Good Luck Icon

There is debate as to the exact origins of the terms “bull” and “bear” markets. But, many agree that the term “bears” first originated in reference to London bearskin brokers who would speculate on the future purchase price of the skins they acquired from trappers. The bulls were likely designated the opponents of the bears due to the popular 19th century blood sport of pitting bears against bulls. It has also been suggested that the metaphor is derived from the manner in which the animals attack, with the bull thrusting its horns up, and the bear swiping its paw down.

Artifacts of Finance: Alexander Hamilton’s Society of the Cincinnati Badge

Alexander Hamilton is known for helping to create the US Mint and the first national bank—but he is also the founding father of our national debt, which, according to John Steele Gordon, eventually led to the creation of capital markets. Hamilton butted heads with Thomas Jefferson over the assumption of national debt—among many other issues—and revisiting these early debates seems apropos in light of recent politics.

The badge above, awarded to Hamilton by the Society of the Cincinnati and passed down through the generations to his descendants, is currently on display at the Museum of American Finance as part of the “Alexander Hamilton: Lineage and Legacy” exhibit (through July 12, 2011). According to guest curator Dr. Richard Sylla, “Hamilton’s principal goals—US independence, a stronger government and economic modernization—are also his legacy. The exhibit shows that Hamilton, the subject of many stiff portraits and cold statues, was really quite a passionate soldier, statesman and financier.” 

Artifacts of Finance: Puck Lampoons Jay Gould

This 1882 cover of Puck lampoons Jay Gould, a leading railroad developer of the times. Labeled the “Robber Baron” by the press, Gould considered himself the most hated man in late-19th-century America. He was often vilified as a reckless speculator and brutal strikebreaker. Although he sought to create intricate railroad and communication systems in New York City, his hand in bribery and stock manipulation overshadowed his contribution to the development of American industry.

Artifacts of Finance: 18-Karat Monopoly Set

The Museum of American Finance is now exhibiting an 18-karat solid gold Monopoly set covered with hundreds of precious gemstones, on loan from the Smithsonian Institution National Museum of Natural History. The Smithsonian received the game as one of 20 jeweled art objects from the personal collection of world-renowned artist and jeweler Sidney Mobell. A long-time resident of San Francisco, Mobell is known for his fanciful and innovative employment of everyday household items as works of art. This unique object is in the Guinness Book of World Records for its value (the dice alone are worth $10,000). It will be on display at the Museum, located at 48 Wall Street, through October 2012.