[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:03.72,0:00:05.87,Default,,0000,0000,0000,,Welcome to the world of money,
Dialogue: 0,0:00:17.40,0:00:18.68,Default,,0000,0000,0000,,bread, cash, dosh,
Dialogue: 0,0:00:30.44,0:00:32.31,Default,,0000,0000,0000,,dough, loot, lucre, moolah,
Dialogue: 0,0:00:50.85,0:00:52.84,Default,,0000,0000,0000,,the readies, the wherewithal.
Dialogue: 0,0:01:11.68,0:01:16.09,Default,,0000,0000,0000,,Call it what you like,\Nmoney can break us or it can make us.
Dialogue: 0,0:01:51.65,0:01:54.44,Default,,0000,0000,0000,,ln the past year, it's certainly broken
Dialogue: 0,0:02:02.38,0:02:06.10,Default,,0000,0000,0000,,more than a few of the biggest names\Non Wall Street
Dialogue: 0,0:02:15.85,0:02:17.76,Default,,0000,0000,0000,,and in the City of London.
Dialogue: 0,0:02:46.99,0:02:50.96,Default,,0000,0000,0000,,And while former masters of the universe\Ncrash and burn,
Dialogue: 0,0:03:05.92,0:03:11.39,Default,,0000,0000,0000,,the rest of us are left worrying if our\Nsavings would be safer in a mattress
Dialogue: 0,0:03:26.96,0:03:28.11,Default,,0000,0000,0000,,than in a bank.
Dialogue: 0,0:03:49.47,0:03:53.67,Default,,0000,0000,0000,,The great financiaI crisis that began\Nin the summer of 2007
Dialogue: 0,0:04:08.83,0:04:11.04,Default,,0000,0000,0000,,has most of us utterIy baffIed.
Dialogue: 0,0:04:22.08,0:04:25.23,Default,,0000,0000,0000,,How on earth\NcouId a IittIe IocaI difficuIty
Dialogue: 0,0:04:39.76,0:04:42.97,Default,,0000,0000,0000,,with sub-prime mortgages\Nin the United States
Dialogue: 0,0:04:54.06,0:04:56.69,Default,,0000,0000,0000,,unIeash an economic tsunami big enough
Dialogue: 0,0:05:09.84,0:05:13.99,Default,,0000,0000,0000,,to obIiterate some of WaII Street's\Nmost iIIustrious names,
Dialogue: 0,0:05:31.09,0:05:35.59,Default,,0000,0000,0000,,to force nationaIisations of banks\Non both sides of the AtIantic
Dialogue: 0,0:05:50.03,0:05:54.93,Default,,0000,0000,0000,,and to bring the entire worId economy\Nto the very brink of recession,
Dialogue: 0,0:06:13.80,0:06:15.73,Default,,0000,0000,0000,,if not downright depression?
Dialogue: 0,0:06:23.06,0:06:26.85,Default,,0000,0000,0000,,ShouIdn't this series be caIIed\NThe Descent Of Money?
Dialogue: 0,0:06:41.16,0:06:44.82,Default,,0000,0000,0000,,WeII, I want to expIain to you\Njust how money rose
Dialogue: 0,0:07:01.77,0:07:05.97,Default,,0000,0000,0000,,to pIay such a terrifyingIy dominant roIe\Nin aII our Iives.
Dialogue: 0,0:07:36.91,0:07:40.29,Default,,0000,0000,0000,,What's more,\Nl want to reveal financial history
Dialogue: 0,0:07:54.79,0:07:58.12,Default,,0000,0000,0000,,as the essential back story\Nbehind all history.
Dialogue: 0,0:08:24.88,0:08:29.45,Default,,0000,0000,0000,,Banks financed the Renaissance\Nwhile the bond market decided wars.
Dialogue: 0,0:09:23.37,0:09:25.42,Default,,0000,0000,0000,,Stock markets built empires...
Dialogue: 0,0:09:42.51,0:09:45.33,Default,,0000,0000,0000,,..and monetary meltdowns made revolutions.
Dialogue: 0,0:10:23.96,0:10:28.00,Default,,0000,0000,0000,,From Ancient Mesopotamia\Nright down to present day London,
Dialogue: 0,0:10:43.95,0:10:49.08,Default,,0000,0000,0000,,the ascent of money has been an\Nindispensable part of the ascent of man.
Dialogue: 0,0:11:08.57,0:11:12.47,Default,,0000,0000,0000,,But money's rise has never been\Na smooth, upward ride.
Dialogue: 0,0:11:30.24,0:11:34.63,Default,,0000,0000,0000,,As we'II see, financiaI history\Nhas repeatedIy been interrupted
Dialogue: 0,0:11:51.91,0:11:56.22,Default,,0000,0000,0000,,by gut-wrenching crises\Nof which today's is just the Iatest.
Dialogue: 0,0:12:15.89,0:12:19.27,Default,,0000,0000,0000,,From the fluctuating prices\Nof the homes we own
Dialogue: 0,0:12:32.51,0:12:35.67,Default,,0000,0000,0000,,to the high-speed industrialisation\Nof China,
Dialogue: 0,0:12:48.50,0:12:53.86,Default,,0000,0000,0000,,the power of finance is everywhere we look\Nand it affects all of our lives.
Dialogue: 0,0:13:26.16,0:13:27.03,Default,,0000,0000,0000,,SEAGULLS CRY
Dialogue: 0,0:13:39.63,0:13:44.33,Default,,0000,0000,0000,,But are you in on the secret?\NDo you know what causes a bank run
Dialogue: 0,0:14:02.35,0:14:05.73,Default,,0000,0000,0000,,or a monetary meItdown\Nor a stock market crash?
Dialogue: 0,0:14:16.66,0:14:21.67,Default,,0000,0000,0000,,Can you teII the difference\Nbetween a sub-prime Ioan and a prime Ioan?
Dialogue: 0,0:14:36.01,0:14:40.64,Default,,0000,0000,0000,,WeII, I think these financiaI\NtechnicaIities onIy reaIIy make sense
Dialogue: 0,0:14:54.95,0:14:57.45,Default,,0000,0000,0000,,once you know where they came from.
Dialogue: 0,0:15:05.05,0:15:10.25,Default,,0000,0000,0000,,And that's why financiaI history\Nis of more than mereIy academic interest.
Dialogue: 0,0:15:29.03,0:15:32.95,Default,,0000,0000,0000,,Not knowing this stuff can seriousIy\Ndamage your weaIth.
Dialogue: 0,0:18:01.15,0:18:06.12,Default,,0000,0000,0000,,Crisis or no crisis, the amount of money\Nsloshing around planet finance
Dialogue: 0,0:18:26.19,0:18:27.82,Default,,0000,0000,0000,,still boggles the mind.
Dialogue: 0,0:18:39.86,0:18:44.73,Default,,0000,0000,0000,,By one measure, the US stock of money\Nis now $8, 7 00,000,000,000,
Dialogue: 0,0:19:12.47,0:19:14.26,Default,,0000,0000,0000,,up 1 2% since last year.
Dialogue: 0,0:19:26.36,0:19:30.79,Default,,0000,0000,0000,,And some people are still pocketing\Na huge share of that cash.
Dialogue: 0,0:20:07.81,0:20:12.02,Default,,0000,0000,0000,,Last year, despite the onset\Nof the biggest financial crisis
Dialogue: 0,0:20:24.01,0:20:29.32,Default,,0000,0000,0000,,since the Depression, his hedge fund paid\NGeorge Soros a cool $2.4 billion.
Dialogue: 0,0:21:03.56,0:21:08.70,Default,,0000,0000,0000,,That's roughly 41,000 times more than\Nthe average American family earned.
Dialogue: 0,0:21:32.38,0:21:35.52,Default,,0000,0000,0000,,As they say on Wall Street,\N''Way to gol''.
Dialogue: 0,0:22:57.59,0:23:00.74,Default,,0000,0000,0000,,Now, however,\Nimagine a world with no money.
Dialogue: 0,0:23:45.78,0:23:49.86,Default,,0000,0000,0000,,500 years ago, the most powerful society\Nin South America,
Dialogue: 0,0:24:04.50,0:24:07.82,Default,,0000,0000,0000,,the lnca Empire,\Nhad no real concept of money.
Dialogue: 0,0:24:24.28,0:24:28.56,Default,,0000,0000,0000,,The lncas appreciated the aesthetic\Nqualities of rare metals -
Dialogue: 0,0:24:54.99,0:24:59.41,Default,,0000,0000,0000,,gold was the sweat of the sun,\Nsilver the tears of the moon -
Dialogue: 0,0:25:21.29,0:25:24.78,Default,,0000,0000,0000,,labour was the unit of value\Nin the lnca Empire,
Dialogue: 0,0:25:37.28,0:25:41.53,Default,,0000,0000,0000,,just as it was later supposed to be\Nin a communist society.
Dialogue: 0,0:26:16.21,0:26:19.04,Default,,0000,0000,0000,,But in 1 532, the lncas ran into a man
Dialogue: 0,0:26:31.99,0:26:35.66,Default,,0000,0000,0000,,whose hunger for money\Nhad led him across an ocean.
Dialogue: 0,0:27:02.91,0:27:07.54,Default,,0000,0000,0000,,Francisco Pizarro and his fellow\NConquistadores had come from Spain
Dialogue: 0,0:27:27.53,0:27:32.31,Default,,0000,0000,0000,,to what they called Upper Peru\Ninspired by the legend of El Dorado,
Dialogue: 0,0:27:50.04,0:27:52.54,Default,,0000,0000,0000,,the realm of the gold-covered king.
Dialogue: 0,0:28:20.34,0:28:24.31,Default,,0000,0000,0000,,After defeating the lnca army\Nat the Battle of Cajamarca
Dialogue: 0,0:28:40.96,0:28:42.100,Default,,0000,0000,0000,,their quest began in earnest.
Dialogue: 0,0:29:00.31,0:29:02.75,Default,,0000,0000,0000,,At Potosi, in what is now Bolivia,
Dialogue: 0,0:29:13.57,0:29:15.61,Default,,0000,0000,0000,,the Spaniards struck it rich.
Dialogue: 0,0:29:26.61,0:29:30.53,Default,,0000,0000,0000,,They discovered the Cerro Rico,\Nliterally the Rich Hill.
Dialogue: 0,0:29:52.91,0:29:56.17,Default,,0000,0000,0000,,Towering nearly 1 6,000 feet\Nabove sea level,
Dialogue: 0,0:30:15.21,0:30:16.95,Default,,0000,0000,0000,,it was a money mountain.
Dialogue: 0,0:30:34.78,0:30:40.03,Default,,0000,0000,0000,,In their 250 years of Spanish ruIe,\Nmore than two biIIion ounces of siIver
Dialogue: 0,0:31:04.66,0:31:09.72,Default,,0000,0000,0000,,were extracted from mines Iike this one,\N1 4,000 feet up in the Andes.
Dialogue: 0,0:31:35.58,0:31:41.18,Default,,0000,0000,0000,,What the Incas couIdn't grasp was why\Nthe Europeans had such an insatiabIe Iust
Dialogue: 0,0:32:04.62,0:32:06.07,Default,,0000,0000,0000,,for goId and siIver.
Dialogue: 0,0:32:13.04,0:32:17.48,Default,,0000,0000,0000,,They couIdn't understand that to Pizarro\Nand the Conquistadores,
Dialogue: 0,0:32:31.55,0:32:34.64,Default,,0000,0000,0000,,siIver was much more\Nthan just shiny metaI.
Dialogue: 0,0:32:46.28,0:32:48.43,Default,,0000,0000,0000,,It couId be made into money...
Dialogue: 0,0:33:02.90,0:33:06.75,Default,,0000,0000,0000,,..a store of vaIue, a unit of account,\NportabIe power.
Dialogue: 0,0:34:09.38,0:34:12.76,Default,,0000,0000,0000,,I must say,\NI find this pIace pretty harrowing.
Dialogue: 0,0:34:30.42,0:34:33.51,Default,,0000,0000,0000,,The Spaniards\Nhad a system of forced Iabour
Dialogue: 0,0:34:44.10,0:34:48.60,Default,,0000,0000,0000,,which meant that every abIe-bodied maIe\Nin the native popuIation
Dialogue: 0,0:35:04.93,0:35:07.48,Default,,0000,0000,0000,,had to do a stint down these mines.
Dialogue: 0,0:35:19.02,0:35:23.90,Default,,0000,0000,0000,,And you can see why one in eight of them\Ndidn't survive the ordeaI.
Dialogue: 0,0:36:40.66,0:36:42.29,Default,,0000,0000,0000,,Today, 500 years later,
Dialogue: 0,0:36:52.02,0:36:56.40,Default,,0000,0000,0000,,conditions for miners in the Cerro Rico\Nhaven't improved much.
Dialogue: 0,0:37:21.47,0:37:25.01,Default,,0000,0000,0000,,But at least they get paid\Nfor the work they do.
Dialogue: 0,0:37:35.57,0:37:40.46,Default,,0000,0000,0000,,ln those days, it was a way of making\Nmoney that verged on genocide.
Dialogue: 0,0:38:31.74,0:38:35.30,Default,,0000,0000,0000,,The silver ore was ground up,\Nrefined with mercury
Dialogue: 0,0:38:55.52,0:38:58.78,Default,,0000,0000,0000,,and then shipped to Europe\Nas bars and coins.
Dialogue: 0,0:39:17.61,0:39:23.22,Default,,0000,0000,0000,,Empire, it seemed, had made the Spanish\Ncrown rich beyond the dreams of avarice.
Dialogue: 0,0:40:56.50,0:40:59.87,Default,,0000,0000,0000,,And yet, aII the siIver\Nin the mines of Potosi
Dialogue: 0,0:41:10.80,0:41:16.24,Default,,0000,0000,0000,,couIdn't haIt the inexorabIe economic\Nand poIiticaI decIine of Spain's empire.
Dialogue: 0,0:41:39.63,0:41:44.65,Default,,0000,0000,0000,,Why was that, when Pizarro seemed to have\Nstruck it so incredibIy rich?
Dialogue: 0,0:42:02.56,0:42:06.75,Default,,0000,0000,0000,,The answer is that the Spaniards\Nhad dug up so much siIver
Dialogue: 0,0:42:20.65,0:42:23.04,Default,,0000,0000,0000,,to finance their wars of conquest,
Dialogue: 0,0:42:32.02,0:42:36.52,Default,,0000,0000,0000,,that the metaI itseIf suffered\Nan extraordinary decIine in vaIue.
Dialogue: 0,0:42:54.74,0:42:57.83,Default,,0000,0000,0000,,More siIver coins\Ndidn't make Spain richer.
Dialogue: 0,0:43:09.68,0:43:14.18,Default,,0000,0000,0000,,They simpIy made prices higher\Nas an increased quantity of money
Dialogue: 0,0:43:31.14,0:43:33.41,Default,,0000,0000,0000,,chased the same amount of goods.
Dialogue: 0,0:43:44.81,0:43:46.90,Default,,0000,0000,0000,,What the Spaniards didn't get
Dialogue: 0,0:43:53.65,0:43:59.07,Default,,0000,0000,0000,,was that money is onIy worth what\Nother peopIe wiII give in exchange for it.
Dialogue: 0,0:44:55.08,0:44:58.64,Default,,0000,0000,0000,,And, whether money\Ntakes the form of silver coins,
Dialogue: 0,0:45:12.12,0:45:14.80,Default,,0000,0000,0000,,seashells, bars of gold or bank notes,
Dialogue: 0,0:45:27.90,0:45:32.62,Default,,0000,0000,0000,,that's been true from ancient times\Nright down to the present day.
Dialogue: 0,0:45:48.31,0:45:52.10,Default,,0000,0000,0000,,Even lumps of clay\Ncan work better than silver coins,
Dialogue: 0,0:46:06.41,0:46:09.27,Default,,0000,0000,0000,,if people have enough confidence in them.
Dialogue: 0,0:46:20.71,0:46:24.04,Default,,0000,0000,0000,,In Ancient Mesopotamia,\NnearIy 4,000 years ago,
Dialogue: 0,0:46:43.44,0:46:46.24,Default,,0000,0000,0000,,peopIe used cIay tabIets Iike these ones
Dialogue: 0,0:46:55.22,0:46:59.16,Default,,0000,0000,0000,,to commit themseIves to particuIar\NfinanciaI transactions.
Dialogue: 0,0:47:12.68,0:47:16.94,Default,,0000,0000,0000,,For exampIe, this one,\Nfound a IittIe south-west of Baghdad,
Dialogue: 0,0:47:38.35,0:47:42.96,Default,,0000,0000,0000,,specifies that a debtor wiII repay\Na Iender 330 measures of grain
Dialogue: 0,0:48:09.28,0:48:13.36,Default,,0000,0000,0000,,on the harvest day.\NBut this one's even more fascinating,
Dialogue: 0,0:48:29.68,0:48:34.16,Default,,0000,0000,0000,,because what is says is that\Na debt of four measures of barIey
Dialogue: 0,0:48:49.46,0:48:53.01,Default,,0000,0000,0000,,shouId be repaid\Nto the bearer of the cIay tabIet
Dialogue: 0,0:49:05.87,0:49:11.00,Default,,0000,0000,0000,,and it's that idea of repayment\Nto the bearer that reaIIy fascinates me.
Dialogue: 0,0:49:50.69,0:49:53.96,Default,,0000,0000,0000,,lf the phrase sounds familiar,\Nthen it should.
Dialogue: 0,0:50:08.99,0:50:11.30,Default,,0000,0000,0000,,Just take a look at a Ł20 note.
Dialogue: 0,0:50:38.02,0:50:41.12,Default,,0000,0000,0000,,Bank notes have next\Nto no intrinsic worth.
Dialogue: 0,0:50:52.75,0:50:54.96,Default,,0000,0000,0000,,They're simply promises to pay,
Dialogue: 0,0:51:05.38,0:51:09.94,Default,,0000,0000,0000,,just like the clay tablets of\Nancient Babylon four millennia ago.
Dialogue: 0,0:51:28.52,0:51:32.81,Default,,0000,0000,0000,,On the back of the $1 0 bill\Nit says, ''ln God We Trust''.
Dialogue: 0,0:52:06.39,0:52:09.58,Default,,0000,0000,0000,,But it's not really God\Nyou're trusting in.
Dialogue: 0,0:52:24.70,0:52:29.54,Default,,0000,0000,0000,,By swapping your goods or your Iabour\Nfor a fistfuI of these things,
Dialogue: 0,0:52:45.52,0:52:50.54,Default,,0000,0000,0000,,you're trusting the US Treasury Secretary\Nnot to repeat Spain's mistake
Dialogue: 0,0:53:08.88,0:53:14.58,Default,,0000,0000,0000,,and produce so many of the damn things\Nthat by the time you come to spend them,
Dialogue: 0,0:53:28.44,0:53:32.64,Default,,0000,0000,0000,,they're worth even Iess\Nthan the paper they're printed on.
Dialogue: 0,0:54:35.98,0:54:38.89,Default,,0000,0000,0000,,Today we're quite happy with paper money.
Dialogue: 0,0:55:14.48,0:55:18.96,Default,,0000,0000,0000,,Even more amazingly, we're happy\Nwith money we can't even see.
Dialogue: 0,0:55:36.100,0:55:41.50,Default,,0000,0000,0000,,Millions of dollars pass through\Nthis woman's hands every day...
Dialogue: 0,0:56:13.39,0:56:16.14,Default,,0000,0000,0000,,..or rather, across her computer screen.
Dialogue: 0,0:56:38.85,0:56:41.12,Default,,0000,0000,0000,,She's a foreign exchange dealer,
Dialogue: 0,0:56:53.37,0:56:57.06,Default,,0000,0000,0000,,whose business is literally\Nbuying and selling money.
Dialogue: 0,0:57:08.31,0:57:11.17,Default,,0000,0000,0000,,Each day around $3 trillion changes hands
Dialogue: 0,0:57:28.72,0:57:31.82,Default,,0000,0000,0000,,in transactions like these\Naround the world.
Dialogue: 0,0:57:57.96,0:58:03.70,Default,,0000,0000,0000,,And it's all built on trust. lt has to be\Nwhen you can't even touch the stuff.
Dialogue: 0,0:58:40.46,0:58:43.32,Default,,0000,0000,0000,,That's what the Conquistadores got wrong.
Dialogue: 0,0:59:00.24,0:59:04.38,Default,,0000,0000,0000,,They failed to see that money\Nis about trust - even faith.
Dialogue: 0,0:59:20.86,0:59:23.76,Default,,0000,0000,0000,,Trust in the person paying you the money,
Dialogue: 0,0:59:32.01,0:59:35.16,Default,,0000,0000,0000,,trust in the centraI bank\Nissuing the money,
Dialogue: 0,0:59:44.63,0:59:48.37,Default,,0000,0000,0000,,trust in the commerciaI bank\Nthat honours the cheque.
Dialogue: 0,0:59:59.57,1:00:02.42,Default,,0000,0000,0000,,Money isn't metaI. It's trust inscribed.
Dialogue: 0,1:00:16.19,1:00:21.32,Default,,0000,0000,0000,,And it doesn't much matter what\Nit's inscribed on - paper, siIver, cIay,
Dialogue: 0,1:00:41.02,1:00:44.70,Default,,0000,0000,0000,,or a screen -\Nprovided the recipient beIieves in it.
Dialogue: 0,1:01:34.88,1:01:37.51,Default,,0000,0000,0000,,There was one huge possibility created
Dialogue: 0,1:01:48.13,1:01:52.09,Default,,0000,0000,0000,,by the emergence of money\Nas a system of mutual trust -
Dialogue: 0,1:02:09.38,1:02:13.02,Default,,0000,0000,0000,,a possibility that would\Nrevolutionise world history.
Dialogue: 0,1:02:37.78,1:02:42.84,Default,,0000,0000,0000,,lt was the idea that you could rely on\Npeople to borrow money from you
Dialogue: 0,1:03:05.98,1:03:08.59,Default,,0000,0000,0000,,and pay it back at some future date.
Dialogue: 0,1:03:28.28,1:03:33.65,Default,,0000,0000,0000,,That's why the root of ''credit''\Nis ''credo'', the Latin for ''I beIieve''.
Dialogue: 0,1:04:16.04,1:04:18.26,Default,,0000,0000,0000,,Without the invention of credit,
Dialogue: 0,1:04:25.30,1:04:30.04,Default,,0000,0000,0000,,the entire economic history of our world\Nwould have been impossible.
Dialogue: 0,1:05:37.46,1:05:39.67,Default,,0000,0000,0000,,Because we take it for granted,
Dialogue: 0,1:05:53.03,1:05:58.64,Default,,0000,0000,0000,,we tend to underestimate the extent to\Nwhich our entire civiIisation is based on
Dialogue: 0,1:06:14.70,1:06:20.71,Default,,0000,0000,0000,,the borrowing and Iending of money. No, it\Ndoesn't IiteraIIy make the worId go round.
Dialogue: 0,1:06:39.53,1:06:43.97,Default,,0000,0000,0000,,But it does makes vast quantities\Nof peopIe, goods and services
Dialogue: 0,1:06:59.51,1:07:02.66,Default,,0000,0000,0000,,go around the worId\Nfrom BabyIon to BoIivia.
Dialogue: 0,1:07:29.60,1:07:35.33,Default,,0000,0000,0000,,The puzzle is that the early moneylenders\Ngot so little thanks for their services.
Dialogue: 0,1:07:55.90,1:07:59.64,Default,,0000,0000,0000,,On the contrary,\Nthey were widely reviled as pariahs.
Dialogue: 0,1:08:27.67,1:08:28.65,Default,,0000,0000,0000,,Why was that?
Dialogue: 0,1:09:30.79,1:09:34.11,Default,,0000,0000,0000,,Welcome to Northern ltaly\Nin the year 1 200AD.
Dialogue: 0,1:10:17.92,1:10:21.37,Default,,0000,0000,0000,,A land divided into multiple\Nfeuding city states.
Dialogue: 0,1:10:54.95,1:10:58.27,Default,,0000,0000,0000,,A land where trust\Nwas in rather short supply.
Dialogue: 0,1:11:19.14,1:11:24.34,Default,,0000,0000,0000,,Among the many remnants of the defunct\NRoman Empire was a numerical system
Dialogue: 0,1:11:48.81,1:11:52.75,Default,,0000,0000,0000,,singularly ill-suited to complex\Nmathematical calculation,
Dialogue: 0,1:12:09.22,1:12:11.48,Default,,0000,0000,0000,,let alone the needs of commerce.
Dialogue: 0,1:12:30.46,1:12:34.02,Default,,0000,0000,0000,,Nowhere was this more of a handicap\Nthan in Pisa,
Dialogue: 0,1:12:47.30,1:12:50.05,Default,,0000,0000,0000,,where merchants struggled to do business
Dialogue: 0,1:12:57.18,1:13:00.88,Default,,0000,0000,0000,,with seven different forms of coinage\Nin circulation.
Dialogue: 0,1:13:15.70,1:13:21.43,Default,,0000,0000,0000,,Even the simplest transaction could be a\Nheadache, requiring the use of an abacus.
Dialogue: 0,1:13:39.68,1:13:43.25,Default,,0000,0000,0000,,By comparison, economic life\Nin the Eastern world -
Dialogue: 0,1:13:57.99,1:14:03.25,Default,,0000,0000,0000,,in the Muslim caliphate or the Sung\NChinese Empire - was far more advanced.
Dialogue: 0,1:14:26.81,1:14:31.26,Default,,0000,0000,0000,,To discover modern finance,\Nbackward Europe needed to import it.
Dialogue: 0,1:15:09.10,1:15:13.61,Default,,0000,0000,0000,,Enter a young mathematician called\NLeonardo of Pisa or Fibonacci.
Dialogue: 0,1:15:40.03,1:15:44.69,Default,,0000,0000,0000,,The son of a Pisan customs official\Nbased in what is now Algeria,
Dialogue: 0,1:16:01.28,1:16:03.62,Default,,0000,0000,0000,,Fibonacci is best remembered today
Dialogue: 0,1:16:12.85,1:16:17.35,Default,,0000,0000,0000,,for his sequence of numbers\Nthat mimic the properties of nature.
Dialogue: 0,1:16:45.04,1:16:50.01,Default,,0000,0000,0000,,But the famous sequence was onIy one\Nof many Eastern mathematicaI ideas
Dialogue: 0,1:17:13.87,1:17:19.49,Default,,0000,0000,0000,,that Fibonacci introduced to Europe with\Nhis path-breaking book the Liber Abaci -
Dialogue: 0,1:17:38.06,1:17:39.75,Default,,0000,0000,0000,,The Book of Calculation.
Dialogue: 0,1:17:46.48,1:17:51.93,Default,,0000,0000,0000,,Even more important was his demonstration\Nof the superiority of Arabic numerals
Dialogue: 0,1:18:12.57,1:18:13.97,Default,,0000,0000,0000,,over Roman numerals.
Dialogue: 0,1:18:21.82,1:18:26.45,Default,,0000,0000,0000,,And crucially, nearly all Fibonacci's\Nexamples related to business.
Dialogue: 0,1:19:14.84,1:19:16.12,Default,,0000,0000,0000,,Since Roman times,
Dialogue: 0,1:19:21.58,1:19:26.20,Default,,0000,0000,0000,,Europeans had been struggling to do\Nsimple arithmetic with these...
Dialogue: 0,1:20:17.54,1:20:22.16,Default,,0000,0000,0000,,The Hindu or Arabic numerals\Nmade all kinds of calculation easier.
Dialogue: 0,1:21:26.76,1:21:31.33,Default,,0000,0000,0000,,ln particular, Fibonacci showed how\Nthe new methods of calculation
Dialogue: 0,1:21:56.42,1:22:01.00,Default,,0000,0000,0000,,could be applied to commercial\Nbookkeeping, to currency conversions
Dialogue: 0,1:22:14.94,1:22:18.22,Default,,0000,0000,0000,,and, crucially,\Nto the computation of interest.
Dialogue: 0,1:22:36.19,1:22:40.52,Default,,0000,0000,0000,,Just imagine trying to work out\Npercentages in Roman numerals.
Dialogue: 0,1:22:56.39,1:22:59.65,Default,,0000,0000,0000,,Fibonacci's Liber Abaci\Nmade it child's play.
Dialogue: 0,1:23:38.04,1:23:42.42,Default,,0000,0000,0000,,This was to be the appIication\Nof mathematics to making money.
Dialogue: 0,1:24:37.17,1:24:40.44,Default,,0000,0000,0000,,The most fertile soil\Nfor such financial seeds
Dialogue: 0,1:24:53.37,1:24:55.99,Default,,0000,0000,0000,,proved to be the ltalian city states.
Dialogue: 0,1:25:06.83,1:25:09.56,Default,,0000,0000,0000,,Fibonacci's home town of Pisa was one.
Dialogue: 0,1:25:24.08,1:25:26.17,Default,,0000,0000,0000,,But it was above all Venice -
Dialogue: 0,1:25:36.50,1:25:40.71,Default,,0000,0000,0000,,more exposed than any of the others\Nto Oriental influences -
Dialogue: 0,1:25:54.80,1:25:58.20,Default,,0000,0000,0000,,that became the great money-lending\Nlaboratory...
Dialogue: 0,1:26:38.14,1:26:42.24,Default,,0000,0000,0000,,..and the home of literature's\Nmost notorious moneylender -
Dialogue: 0,1:26:59.39,1:27:03.37,Default,,0000,0000,0000,,Shylock, in William Shakespeare's\NThe Merchant of Venice.
Dialogue: 0,1:27:39.100,1:27:42.79,Default,,0000,0000,0000,,May you stead me? WiII you pIeasure me?
Dialogue: 0,1:28:00.20,1:28:01.100,Default,,0000,0000,0000,,ShaII I know your answer?
Dialogue: 0,1:28:18.71,1:28:23.91,Default,,0000,0000,0000,,CruciaIIy, ShyIock's onIy prepared to Iend\Nthe money if Bassanio's friend,
Dialogue: 0,1:28:46.90,1:28:50.24,Default,,0000,0000,0000,,the merchant Antonio,\Nis providing the security.
Dialogue: 0,1:29:10.68,1:29:14.66,Default,,0000,0000,0000,,Three thousand ducats for three months\Nand Antonio bound.
Dialogue: 0,1:29:44.34,1:29:45.79,Default,,0000,0000,0000,,Your answer to that.
Dialogue: 0,1:29:51.92,1:29:53.54,Default,,0000,0000,0000,,Antonio is a good man.
Dialogue: 0,1:30:09.38,1:30:12.36,Default,,0000,0000,0000,,By ''good'', ShyIock doesn't mean virtuous,
Dialogue: 0,1:30:30.21,1:30:34.52,Default,,0000,0000,0000,,he means ''good'' for the money\Nhe's about to Iend Bassanio.
Dialogue: 0,1:30:47.04,1:30:49.03,Default,,0000,0000,0000,,In other words, creditworthy.
Dialogue: 0,1:31:04.29,1:31:07.56,Default,,0000,0000,0000,,Have you heard any imputation\Nto the contrary?
Dialogue: 0,1:31:19.02,1:31:23.48,Default,,0000,0000,0000,,Oh, no, no, no, no. My reason\Nin saying that he's a good man
Dialogue: 0,1:31:43.42,1:31:47.10,Default,,0000,0000,0000,,is to have you understand me\Nthat he is sufficient.
Dialogue: 0,1:32:10.36,1:32:14.68,Default,,0000,0000,0000,,(ShyIock) Three thousand ducats.\NI think I may take his bond.
Dialogue: 0,1:33:07.16,1:33:09.66,Default,,0000,0000,0000,,With any loan, things can go wrong.
Dialogue: 0,1:33:24.84,1:33:30.50,Default,,0000,0000,0000,,Ships can sink. And that is precisely why\Nanyone who lends money to a merchant -
Dialogue: 0,1:33:53.45,1:33:58.41,Default,,0000,0000,0000,,if only for the duration of an ocean\Nvoyage - needs to be compensated.
Dialogue: 0,1:34:16.80,1:34:20.03,Default,,0000,0000,0000,,We usually call the compensation\N''interest'' -
Dialogue: 0,1:34:34.26,1:34:39.58,Default,,0000,0000,0000,,the amount paid to the lender over\Nand above the sum lent or ''principal''.
Dialogue: 0,1:35:14.87,1:35:18.43,Default,,0000,0000,0000,,Overseas trade of the sort\Nthat Venice depended on
Dialogue: 0,1:35:27.70,1:35:30.70,Default,,0000,0000,0000,,couldn't operate\Nwithout such transactions.
Dialogue: 0,1:35:44.54,1:35:49.16,Default,,0000,0000,0000,,And they remain the foundation\Nof international trade to this day.
Dialogue: 0,1:36:54.39,1:36:58.11,Default,,0000,0000,0000,,But why does Shylock\Nturn out to be such a villain,
Dialogue: 0,1:37:13.32,1:37:18.18,Default,,0000,0000,0000,,demanding literally ''a pound of flesh'' -\Nin effect Antonio's death -
Dialogue: 0,1:37:39.83,1:37:45.62,Default,,0000,0000,0000,,if he can't fulfil his obligations? Why is\NShakespeare's moneylender so heartless -
Dialogue: 0,1:38:13.92,1:38:16.91,Default,,0000,0000,0000,,the original\Nof that bloodsucking financier
Dialogue: 0,1:38:29.70,1:38:33.09,Default,,0000,0000,0000,,who recurs time and again\Nin Western literature?
Dialogue: 0,1:39:23.14,1:39:28.45,Default,,0000,0000,0000,,One clue is that Shylock is one of the\Nmany Jewish moneylenders in history.
Dialogue: 0,1:39:51.54,1:39:55.09,Default,,0000,0000,0000,,Jews who stayed in Venice\Nfor more than two weeks
Dialogue: 0,1:40:09.42,1:40:14.31,Default,,0000,0000,0000,,were supposed to wear a yellow ''O''\Non their backs or a yellow hat.
Dialogue: 0,1:40:36.56,1:40:42.22,Default,,0000,0000,0000,,And they were confined to a special area\Nwhich became known as the Ghetto Nuovo.
Dialogue: 0,1:41:15.70,1:41:21.59,Default,,0000,0000,0000,,This is the entrance to the Jewish ghetto\Nin Venice where Jews were obIiged to Iive
Dialogue: 0,1:41:40.31,1:41:45.80,Default,,0000,0000,0000,,and indeed confined at night. Jews were\NtoIerated in Venice, but for a reason.
Dialogue: 0,1:42:20.29,1:42:25.20,Default,,0000,0000,0000,,The key was that Jews could provide\Na service that Christian merchants
Dialogue: 0,1:42:44.48,1:42:49.04,Default,,0000,0000,0000,,were forbidden to do - they could charge\Ninterest on their loans.
Dialogue: 0,1:43:07.84,1:43:11.100,Default,,0000,0000,0000,,Fibonacci might have figured out\Nthe mathematics of lending,
Dialogue: 0,1:43:26.35,1:43:28.90,Default,,0000,0000,0000,,but it took Shylock to do the deal.
Dialogue: 0,1:44:00.22,1:44:03.96,Default,,0000,0000,0000,,This is where the Venetian Jews\Nused to do business.
Dialogue: 0,1:44:16.22,1:44:19.18,Default,,0000,0000,0000,,This buiIding here was the oId Banco Rosso
Dialogue: 0,1:44:27.79,1:44:33.57,Default,,0000,0000,0000,,and it was outside here that they used to\Nsit behind their tabIes - their tavoIe -
Dialogue: 0,1:44:53.24,1:44:58.32,Default,,0000,0000,0000,,on their benches - their banchi,\Nthe root of the ItaIian word for banks.
Dialogue: 0,1:45:22.28,1:45:27.30,Default,,0000,0000,0000,,Now, there was good reason why merchants\Ncame here to the Jewish ghetto
Dialogue: 0,1:45:44.16,1:45:48.25,Default,,0000,0000,0000,,to borrow money. For Christians,\Nwhat the Jews were doing,
Dialogue: 0,1:46:02.46,1:46:05.08,Default,,0000,0000,0000,,Iending money at interest, was a sin.
Dialogue: 0,1:46:46.44,1:46:51.36,Default,,0000,0000,0000,,The medieval Church's laws against usury -\Ncharging interest on loans -
Dialogue: 0,1:47:10.84,1:47:15.22,Default,,0000,0000,0000,,were a major obstacle to the development\Nof finance in Europe.
Dialogue: 0,1:47:32.09,1:47:35.31,Default,,0000,0000,0000,,After all, what God-fearing\NChristian merchant
Dialogue: 0,1:47:51.24,1:47:53.80,Default,,0000,0000,0000,,wished to risk the torments of Hell?
Dialogue: 0,1:48:04.49,1:48:07.54,Default,,0000,0000,0000,,This astonishing vision\Nof eternaI damnation
Dialogue: 0,1:48:24.06,1:48:27.57,Default,,0000,0000,0000,,was painted by Giorgio Vasari\Nand Federico Zuccari
Dialogue: 0,1:48:41.52,1:48:46.30,Default,,0000,0000,0000,,on the inside of the great dome\Nof FIorence's CathedraI, the Duomo.
Dialogue: 0,1:49:03.61,1:49:07.64,Default,,0000,0000,0000,,And beIow there's another fresco\Nby Domenico di MicheIino
Dialogue: 0,1:49:31.60,1:49:34.76,Default,,0000,0000,0000,,of FIorence's greatest poet,\NDante AIighieri,
Dialogue: 0,1:49:49.90,1:49:52.83,Default,,0000,0000,0000,,hoIding his masterwork,\Nthe Divine Comedy.
Dialogue: 0,1:50:03.100,1:50:09.25,Default,,0000,0000,0000,,According to Dante, there was a speciaI\Npart of the seventh circIe of HeII
Dialogue: 0,1:50:25.67,1:50:28.71,Default,,0000,0000,0000,,that was excIusiveIy set aside\Nfor usurers.
Dialogue: 0,1:51:33.20,1:51:37.78,Default,,0000,0000,0000,,There the moneylenders were eternally\Ntortured with scorching earth
Dialogue: 0,1:52:01.40,1:52:05.85,Default,,0000,0000,0000,,and freezing snow, their necks\Nweighed down with bulging purses.
Dialogue: 0,1:52:37.58,1:52:41.02,Default,,0000,0000,0000,,Jews, too, weren't supposed\Nto Iend at interest.
Dialogue: 0,1:52:54.21,1:52:57.18,Default,,0000,0000,0000,,But there was a convenient\Nget-out cIause
Dialogue: 0,1:53:03.67,1:53:07.41,Default,,0000,0000,0000,,in the OId Testament book of Deuteronomy,\Nchapter 23,
Dialogue: 0,1:53:26.19,1:53:31.61,Default,,0000,0000,0000,,you weren't supposed to Iend to your\Nbrother at interest, but to a stranger?
Dialogue: 0,1:53:49.96,1:53:55.72,Default,,0000,0000,0000,,WeII, that was a different matter. In\Nother words, a Jew couIdn't Iend to a Jew,
Dialogue: 0,1:54:14.16,1:54:16.54,Default,,0000,0000,0000,,but he couId Iend to a Christian.
Dialogue: 0,1:54:44.66,1:54:49.75,Default,,0000,0000,0000,,The price the Jews paid for performing\Nthis service was social exclusion.
Dialogue: 0,1:55:11.59,1:55:12.81,Default,,0000,0000,0000,,Hence the ghetto.
Dialogue: 0,1:55:25.27,1:55:29.84,Default,,0000,0000,0000,,And hence the centuries-long association\Nbetween Jews and finance,
Dialogue: 0,1:55:53.67,1:55:59.39,Default,,0000,0000,0000,,one of the few forms of economic activity\Nfrom which Jews were not once excluded.
Dialogue: 0,1:56:36.80,1:56:39.89,Default,,0000,0000,0000,,ln the end, of course,\NShylock is thwarted.
Dialogue: 0,1:56:52.79,1:56:57.34,Default,,0000,0000,0000,,For although the court recognises\Nhis right to a pound of flesh,
Dialogue: 0,1:57:14.25,1:57:18.28,Default,,0000,0000,0000,,the law also prohibits him\Nfrom shedding Antonio's blood.
Dialogue: 0,1:57:33.40,1:57:38.98,Default,,0000,0000,0000,,And, because he's a Jew, the law also\Nrequires the loss of his goods and life
Dialogue: 0,1:57:59.28,1:58:02.83,Default,,0000,0000,0000,,for so much as plotting\Nthe death of a Christian.
Dialogue: 0,1:58:12.95,1:58:15.87,Default,,0000,0000,0000,,He only escapes\Nby submitting to baptism.
Dialogue: 0,1:58:37.57,1:58:41.64,Default,,0000,0000,0000,,lt turns out to be a risky business\Nto be a moneylender.
Dialogue: 0,1:59:07.02,1:59:10.36,Default,,0000,0000,0000,,The Merchant of Venice\Nraises profound questions
Dialogue: 0,1:59:24.28,1:59:26.97,Default,,0000,0000,0000,,about both economics and anti-Semitism.
Dialogue: 0,1:59:37.53,1:59:41.03,Default,,0000,0000,0000,,Why don't debtors\NaIways defauIt on their debts -
Dialogue: 0,1:59:55.63,2:00:00.27,Default,,0000,0000,0000,,especiaIIy when the creditors\NbeIong to unpopuIar ethnic minorities?
Dialogue: 0,2:00:12.67,2:00:15.46,Default,,0000,0000,0000,,Why don't the ShyIocks aIways Iose out?
Dialogue: 0,2:01:03.37,2:01:07.40,Default,,0000,0000,0000,,To get a better idea of how\Nprimitive moneyIending works,
Dialogue: 0,2:01:22.31,2:01:25.15,Default,,0000,0000,0000,,you don't need to\NtraveI back in time.
Dialogue: 0,2:01:34.93,2:01:39.49,Default,,0000,0000,0000,,There are pIenty of modern-day ShyIocks\NremarkabIy cIose to home.
Dialogue: 0,2:01:57.23,2:02:02.23,Default,,0000,0000,0000,,And they don't need to be Jewish\Nto suffer a simiIar fate to ShyIock.
Dialogue: 0,2:03:51.69,2:03:55.07,Default,,0000,0000,0000,,This is ShettIeston\Nin the East End of GIasgow.
Dialogue: 0,2:04:11.04,2:04:14.48,Default,,0000,0000,0000,,It's actuaIIy where my grandmother\Nused to Iive.
Dialogue: 0,2:04:25.35,2:04:28.86,Default,,0000,0000,0000,,And I think with its distinctive\NsteeI shuttering,
Dialogue: 0,2:04:43.24,2:04:47.78,Default,,0000,0000,0000,,it's one of the grimmest pIaces\Nin the whoIe of Western Europe.
Dialogue: 0,2:05:00.91,2:05:04.76,Default,,0000,0000,0000,,In fact, average maIe Iife expectancy\Nhere is just 64,
Dialogue: 0,2:05:21.74,2:05:24.49,Default,,0000,0000,0000,,which is sIightIy worse than BangIadesh.
Dialogue: 0,2:05:33.10,2:05:38.37,Default,,0000,0000,0000,,That means that the average ShettIestonian\Ndoesn't actuaIIy Iive Iong enough
Dialogue: 0,2:05:54.56,2:05:56.60,Default,,0000,0000,0000,,to coIIect his state pension.
Dialogue: 0,2:06:03.82,2:06:06.78,Default,,0000,0000,0000,,You might think nobody wouId be mad enough
Dialogue: 0,2:06:16.44,2:06:20.71,Default,,0000,0000,0000,,to try and provide financiaI services\Nhere. But someone does.
Dialogue: 0,2:07:16.61,2:07:18.70,Default,,0000,0000,0000,,That someone is a loan shark.
Dialogue: 0,2:07:28.60,2:07:33.43,Default,,0000,0000,0000,,You give him your benefit card as security\Nand he gives you a loan.
Dialogue: 0,2:07:50.70,2:07:54.95,Default,,0000,0000,0000,,On the day your benefit arrives,\Nhe gives you back the card
Dialogue: 0,2:08:09.63,2:08:13.17,Default,,0000,0000,0000,,and you go to the post office\Nto get your money,
Dialogue: 0,2:08:21.20,2:08:26.63,Default,,0000,0000,0000,,repaying him the interest. lt's a modern\Nversion of Shylock's business model.
Dialogue: 0,2:08:50.03,2:08:53.41,Default,,0000,0000,0000,,Usury is alive and well\Nand living in Scotland.
Dialogue: 0,2:09:21.38,2:09:25.98,Default,,0000,0000,0000,,These are some pages from the Ioan book\Nof a GIasgow Ioan shark.
Dialogue: 0,2:09:39.05,2:09:43.71,Default,,0000,0000,0000,,And it's kind of interesting to see how\Nthe business modeI works.
Dialogue: 0,2:09:53.99,2:09:56.37,Default,,0000,0000,0000,,You Iend out maybe Ł10 to someone
Dialogue: 0,2:10:05.98,2:10:10.50,Default,,0000,0000,0000,,and you expect to be paid back Ł12.50\Nat the end of the week.
Dialogue: 0,2:10:27.86,2:10:32.67,Default,,0000,0000,0000,,Now that's 25% a week,\Nbut if you work that out at an annuaI rate
Dialogue: 0,2:10:55.00,2:10:57.43,Default,,0000,0000,0000,,it comes to 1 1 miIIion per cent.
Dialogue: 0,2:11:47.60,2:11:51.19,Default,,0000,0000,0000,,So why do people scraping by\Non just Ł5.90 a day
Dialogue: 0,2:12:11.16,2:12:13.79,Default,,0000,0000,0000,,pay such horrendous interest on loans?
Dialogue: 0,2:12:25.68,2:12:29.75,Default,,0000,0000,0000,,These, surely, are loans\Nyou'd be mad not to default on.
Dialogue: 0,2:12:53.66,2:12:58.34,Default,,0000,0000,0000,,But here in Glasgow, defaulting on\Nyour loan is highly inadvisable.
Dialogue: 0,2:13:19.75,2:13:22.77,Default,,0000,0000,0000,,You won't literally lose a pound of flesh,
Dialogue: 0,2:13:38.69,2:13:42.43,Default,,0000,0000,0000,,but grievous bodily harm\Nisn't an unknown consequence
Dialogue: 0,2:13:58.25,2:14:00.46,Default,,0000,0000,0000,,of letting down the loan shark.
Dialogue: 0,2:14:19.50,2:14:24.36,Default,,0000,0000,0000,,Quite simply, individual loan sharks\Nhave to be rapacious and ruthless
Dialogue: 0,2:14:47.07,2:14:51.73,Default,,0000,0000,0000,,because the costs to them\Nof even a single defaulter are so high.
Dialogue: 0,2:15:27.67,2:15:32.18,Default,,0000,0000,0000,,And that explains why,\Nfrom Renaissance ltaly to modern Scotland,
Dialogue: 0,2:15:52.71,2:15:55.80,Default,,0000,0000,0000,,the moneylender\Nis so often a hated figure.
Dialogue: 0,2:16:10.38,2:16:14.82,Default,,0000,0000,0000,,He's providing a service,\Nbut at a socially unacceptable price.
Dialogue: 0,2:16:57.30,2:17:01.63,Default,,0000,0000,0000,,So how did Ienders Iearn to overcome\Nthis fundamentaI probIem?
Dialogue: 0,2:17:14.76,2:17:18.66,Default,,0000,0000,0000,,If they were too generous,\Nthey didn't make any money,
Dialogue: 0,2:17:31.38,2:17:36.12,Default,,0000,0000,0000,,but if they were too hard-nosed,\Nborrowers wouId eventuaIIy defauIt.
Dialogue: 0,2:17:51.16,2:17:56.58,Default,,0000,0000,0000,,The answer was to get bigger and more\NpowerfuI. It was time to invent banks.
Dialogue: 0,2:18:54.70,2:18:59.55,Default,,0000,0000,0000,,ln 1 5th century ltaly, the key financial\Nservice of providing credit
Dialogue: 0,2:19:22.68,2:19:27.41,Default,,0000,0000,0000,,moved out of the ghetto to become\Nthe legitimate preserve of banks.
Dialogue: 0,2:19:48.98,2:19:53.89,Default,,0000,0000,0000,,This transition was symbolised\Nby the rise of one family - the Medici.
Dialogue: 0,2:20:39.27,2:20:41.95,Default,,0000,0000,0000,,With their ascent, credit came of age.
Dialogue: 0,2:21:03.25,2:21:05.89,Default,,0000,0000,0000,,Moneylending ceased to be disreputable.
Dialogue: 0,2:21:16.72,2:21:21.21,Default,,0000,0000,0000,,lt became glorious - and the foundation\Nof a new kind of power.
Dialogue: 0,2:21:59.22,2:22:02.66,Default,,0000,0000,0000,,The dazzling legacy\Nof the Medici family's power
Dialogue: 0,2:22:14.36,2:22:16.99,Default,,0000,0000,0000,,still surrounds you in Florence today.
Dialogue: 0,2:22:38.77,2:22:43.20,Default,,0000,0000,0000,,In the space of 400 years,\Ntwo Medici became Queens of France,
Dialogue: 0,2:23:01.49,2:23:02.77,Default,,0000,0000,0000,,three became Pope.
Dialogue: 0,2:23:13.70,2:23:18.16,Default,,0000,0000,0000,,AppropriateIy, it was MachiaveIIi,\Nthe supreme theorist of power,
Dialogue: 0,2:23:37.26,2:23:38.95,Default,,0000,0000,0000,,who wrote their history.
Dialogue: 0,2:24:00.40,2:24:04.30,Default,,0000,0000,0000,,Perhaps no other family\Nleft such an imprint on an age
Dialogue: 0,2:24:18.71,2:24:21.39,Default,,0000,0000,0000,,as the Medici left on the Renaissance.
Dialogue: 0,2:24:32.38,2:24:36.23,Default,,0000,0000,0000,,You might even say that they paid\Nfor the Renaissance,
Dialogue: 0,2:24:50.06,2:24:55.10,Default,,0000,0000,0000,,their patronage running the gamut of\Ngenius from Michelangelo to Galileo.
Dialogue: 0,2:25:53.17,2:25:58.25,Default,,0000,0000,0000,,And this, in the Uffizi GaIIery,\Nis the Medici's private art coIIection,
Dialogue: 0,2:26:18.21,2:26:21.25,Default,,0000,0000,0000,,one of the most spectacuIar\Never assembIed.
Dialogue: 0,2:27:14.39,2:27:19.18,Default,,0000,0000,0000,,What the millions of tourists\Nwho flock here generally forget to ask
Dialogue: 0,2:27:40.05,2:27:42.66,Default,,0000,0000,0000,,is how the Medici paid for all this.
Dialogue: 0,2:28:01.94,2:28:06.20,Default,,0000,0000,0000,,The simpIe answer is that they were\Nforeign exchange deaIers,
Dialogue: 0,2:28:20.45,2:28:25.82,Default,,0000,0000,0000,,members of the Arte de Cambio - the\Nmoney changers' guiId - who made it big.
Dialogue: 0,2:28:47.80,2:28:53.06,Default,,0000,0000,0000,,They were known as banchieri or tavoIieri\Nbecause, Iike the Jews of Venice,
Dialogue: 0,2:29:12.84,2:29:17.47,Default,,0000,0000,0000,,they IiteraIIy did their business\Nsitting on benches behind tabIes.
Dialogue: 0,2:29:34.93,2:29:38.09,Default,,0000,0000,0000,,Indeed, the originaI Medici bank -\Nor bench -
Dialogue: 0,2:29:51.13,2:29:56.44,Default,,0000,0000,0000,,was Iocated right here in the Via\NdeII'Arte deIIa Lana - WooI GuiId Street.
Dialogue: 0,2:30:59.72,2:31:04.85,Default,,0000,0000,0000,,Prior to the 1 390s, the Medici were\NFlorence's answer to the Sopranos -
Dialogue: 0,2:31:28.33,2:31:33.29,Default,,0000,0000,0000,,a small-time clan notable more\Nfor low violence than for high finance.
Dialogue: 0,2:32:10.41,2:32:15.53,Default,,0000,0000,0000,,ln a 1 7-year period, no fewer than\Nfive Medici were sentenced to death
Dialogue: 0,2:32:32.92,2:32:35.84,Default,,0000,0000,0000,,by the criminal courts for capital crimes.
Dialogue: 0,2:33:05.96,2:33:08.70,Default,,0000,0000,0000,,Then came Giovanni di Bicci de' Medici.
Dialogue: 0,2:33:23.42,2:33:27.21,Default,,0000,0000,0000,,lt was his aim to make the Medici\Ntotally legitimate.
Dialogue: 0,2:33:43.83,2:33:49.26,Default,,0000,0000,0000,,Part of the secret of his success was\Nan ingenious bit of creative accounting
Dialogue: 0,2:34:12.23,2:34:16.30,Default,,0000,0000,0000,,that got the Medici off the hook\Nof the anti-usury laws.
Dialogue: 0,2:35:00.62,2:35:03.94,Default,,0000,0000,0000,,These Iedgers of the Medici bank\Nmake it cIear
Dialogue: 0,2:35:17.66,2:35:22.93,Default,,0000,0000,0000,,how important commerciaI biIIs for\Nfinancing foreign trade were to the bank.
Dialogue: 0,2:35:39.33,2:35:43.78,Default,,0000,0000,0000,,True, the Church prohibited\Nthe coIIection of interest on Ioans.
Dialogue: 0,2:36:01.84,2:36:05.28,Default,,0000,0000,0000,,But there was nothing to prevent\Na shrewd trader
Dialogue: 0,2:36:13.63,2:36:19.15,Default,,0000,0000,0000,,from making money on transactions Iike\Nthese, which invoIved muItipIe currencies.
Dialogue: 0,2:36:52.55,2:36:55.70,Default,,0000,0000,0000,,There was no interest,\Nand therefore no sin,
Dialogue: 0,2:37:06.22,2:37:11.56,Default,,0000,0000,0000,,simply a commission deducted for the\Nconversion of one currency into another.
Dialogue: 0,2:37:56.51,2:38:01.35,Default,,0000,0000,0000,,lf money was advanced to a particular\Ntrader for any length of time,
Dialogue: 0,2:38:17.55,2:38:19.100,Default,,0000,0000,0000,,the commission was that bit larger.
Dialogue: 0,2:38:53.95,2:38:58.67,Default,,0000,0000,0000,,ln the same way, depositors\Nwho put their money in the Medici bank
Dialogue: 0,2:39:16.46,2:39:21.15,Default,,0000,0000,0000,,were given 'discrezione' to compensate\Nthem for risking their money.
Dialogue: 0,2:39:38.76,2:39:41.03,Default,,0000,0000,0000,,This was credit, in other words,
Dialogue: 0,2:39:50.75,2:39:54.33,Default,,0000,0000,0000,,but with the interest payments\Ndiscreetly concealed.
Dialogue: 0,2:40:10.53,2:40:14.92,Default,,0000,0000,0000,,Now, for the first time,\Nmoneylending had evolved into banking.
Dialogue: 0,2:41:09.23,2:41:12.72,Default,,0000,0000,0000,,The reaI story of the success\Nof the Medici bank
Dialogue: 0,2:41:26.90,2:41:31.04,Default,,0000,0000,0000,,can be found here in the Libro Segreto -\Nthe Secret Book -
Dialogue: 0,2:41:46.26,2:41:51.98,Default,,0000,0000,0000,,of Giovanni di Bicci de' Medici. The key\Nwas not so much size as diversification.
Dialogue: 0,2:42:16.98,2:42:19.79,Default,,0000,0000,0000,,EarIier ItaIian banks had been monoIithic
Dialogue: 0,2:42:33.18,2:42:37.15,Default,,0000,0000,0000,,and very vuInerabIe to defauIt\Nby a singIe bad borrower.
Dialogue: 0,2:42:51.06,2:42:55.92,Default,,0000,0000,0000,,But the Medici bank was made up\Nof muItipIe interIocking partnerships,
Dialogue: 0,2:43:14.62,2:43:17.84,Default,,0000,0000,0000,,each in some measure independent\Nof the rest.
Dialogue: 0,2:43:28.51,2:43:33.72,Default,,0000,0000,0000,,It was this decentraIisation that was\Nthe key to their astonishing profits.
Dialogue: 0,2:44:10.80,2:44:12.61,Default,,0000,0000,0000,,Under Giovanni's guidance,
Dialogue: 0,2:44:19.85,2:44:24.71,Default,,0000,0000,0000,,the Medici banking network extended\Nfrom Florence, to Venice, to Rome.
Dialogue: 0,2:44:50.56,2:44:54.12,Default,,0000,0000,0000,,The scale and diversity\Nof the Medici's operations
Dialogue: 0,2:45:10.97,2:45:14.53,Default,,0000,0000,0000,,was the key to reducing the risks\Nof moneylending,
Dialogue: 0,2:45:26.12,2:45:29.04,Default,,0000,0000,0000,,and therefore also the costs to borrowers.
Dialogue: 0,2:45:42.53,2:45:46.92,Default,,0000,0000,0000,,That's the essential difference\Nbetween loan sharks and banks -
Dialogue: 0,2:46:06.31,2:46:08.47,Default,,0000,0000,0000,,between Shylock and the Medici.
Dialogue: 0,2:46:39.34,2:46:41.95,Default,,0000,0000,0000,,And here's the proof that it worked.
Dialogue: 0,2:46:49.86,2:46:54.30,Default,,0000,0000,0000,,Page after page of Giovanni's assets,\NdecIared for tax purposes
Dialogue: 0,2:47:22.26,2:47:27.10,Default,,0000,0000,0000,,and cuIminating in the grand totaI\Nof 91 ,089 fIorins. In those days
Dialogue: 0,2:47:58.45,2:48:00.08,Default,,0000,0000,0000,,that was serious money.
Dialogue: 0,2:48:35.69,2:48:37.72,Default,,0000,0000,0000,,When Giovanni died in 1 429,
Dialogue: 0,2:48:46.42,2:48:49.80,Default,,0000,0000,0000,,his last words were an exhortation\Nto his heirs
Dialogue: 0,2:49:06.62,2:49:09.84,Default,,0000,0000,0000,,to maintain his standards\Nof financial acumen.
Dialogue: 0,2:49:24.71,2:49:28.61,Default,,0000,0000,0000,,His funeral was attended by 26 men\Nof the name Medici,
Dialogue: 0,2:49:46.17,2:49:51.72,Default,,0000,0000,0000,,all paying homage to the man who had made\Nthe business of banking respectable -
Dialogue: 0,2:50:11.63,2:50:14.84,Default,,0000,0000,0000,,and profitable -\Nas it had never been before.
Dialogue: 0,2:50:51.39,2:50:55.96,Default,,0000,0000,0000,,For his son Cosimo, the accumulation\Nof wealth combined seamlessly
Dialogue: 0,2:51:14.54,2:51:16.70,Default,,0000,0000,0000,,with the accumulation of power.
Dialogue: 0,2:51:26.11,2:51:28.84,Default,,0000,0000,0000,,Within 20 years of his father's death,
Dialogue: 0,2:51:39.99,2:51:43.03,Default,,0000,0000,0000,,Cosimo de' Medici\Nwas the Florentine State.
Dialogue: 0,2:52:11.34,2:52:16.66,Default,,0000,0000,0000,,As the Pope himself put it - ''Political\Nquestions are settled at his house.
Dialogue: 0,2:52:37.85,2:52:40.24,Default,,0000,0000,0000,,''The man he chooses holds office.
Dialogue: 0,2:52:50.90,2:52:55.14,Default,,0000,0000,0000,,''He it is who decides peace and war\Nand controls the laws.
Dialogue: 0,2:53:13.41,2:53:16.15,Default,,0000,0000,0000,,''He is King in everything but name. ''
Dialogue: 0,2:53:42.86,2:53:47.71,Default,,0000,0000,0000,,This BotticeIIi is mainIy famous\Nfor the beauty of its young subject.
Dialogue: 0,2:54:03.48,2:54:08.90,Default,,0000,0000,0000,,But it's actuaIIy intended as a tribute\Nto a dead banker, Cosimo de' Medici.
Dialogue: 0,2:54:29.78,2:54:32.22,Default,,0000,0000,0000,,That's him there on the medaIIion,
Dialogue: 0,2:54:39.25,2:54:43.28,Default,,0000,0000,0000,,and you can just make out the inscription\NPater Patriae -
Dialogue: 0,2:54:55.45,2:54:57.31,Default,,0000,0000,0000,,the father of his country.
Dialogue: 0,2:55:37.32,2:55:42.89,Default,,0000,0000,0000,,ln 1 50 years, the Medici had transformed\Nthemselves from backstreet moneylenders
Dialogue: 0,2:56:09.93,2:56:13.26,Default,,0000,0000,0000,,to the most powerful financial force\Nin Europe.
Dialogue: 0,2:56:49.06,2:56:53.09,Default,,0000,0000,0000,,But it's this painting,\NBotticeIIi's Adorazione dei Magi,
Dialogue: 0,2:57:18.52,2:57:23.03,Default,,0000,0000,0000,,which more than any other captures\Nthe transfiguration of finance
Dialogue: 0,2:57:41.24,2:57:42.93,Default,,0000,0000,0000,,the Medici had achieved.
Dialogue: 0,2:57:51.76,2:57:56.14,Default,,0000,0000,0000,,On cIose inspection, the three wise men\Nare Cosimo de' Medici,
Dialogue: 0,2:58:14.48,2:58:18.74,Default,,0000,0000,0000,,washing the feet of Christ,\Nand his sons Piero and Giovanni.
Dialogue: 0,2:58:40.15,2:58:42.82,Default,,0000,0000,0000,,The young man on the Ieft is Lorenzo.
Dialogue: 0,2:58:54.67,2:58:59.46,Default,,0000,0000,0000,,The painting had been commissioned\Nby the head of the Bankers' GuiId
Dialogue: 0,2:59:11.29,2:59:13.26,Default,,0000,0000,0000,,as a tribute to the famiIy.
Dialogue: 0,2:59:22.65,2:59:27.56,Default,,0000,0000,0000,,Perhaps it shouId reaIIy have been caIIed\NThe Adoration of the Medici.
Dialogue: 0,2:59:42.64,2:59:46.85,Default,,0000,0000,0000,,Having once been damned,\Nbankers were now cIose to divinity.
Dialogue: 0,3:00:22.61,3:00:27.13,Default,,0000,0000,0000,,Nothing could better illustrate\Nthe extraordinary ascent of money.
Dialogue: 0,3:00:43.86,3:00:46.13,Default,,0000,0000,0000,,For what the Medici had achieved
Dialogue: 0,3:00:57.96,3:01:01.52,Default,,0000,0000,0000,,was nothing less than\Nthe birth of modern banking.
Dialogue: 0,3:01:21.94,3:01:23.63,Default,,0000,0000,0000,,Others had tried before,
Dialogue: 0,3:01:29.94,3:01:34.78,Default,,0000,0000,0000,,but the Medici were the first bankers\Nto hit the poIiticaI big time.
Dialogue: 0,3:01:54.13,3:01:57.57,Default,,0000,0000,0000,,And they did it\Nby Iearning one cruciaI Iesson -
Dialogue: 0,3:02:09.28,3:02:11.91,Default,,0000,0000,0000,,in finance, smaII is seIdom beautifuI.
Dialogue: 0,3:02:27.38,3:02:30.82,Default,,0000,0000,0000,,By making their bank bigger\Nand more diversified,
Dialogue: 0,3:02:48.20,3:02:51.93,Default,,0000,0000,0000,,the Medici had found a way\Nof spreading their risks.
Dialogue: 0,3:03:05.88,3:03:10.15,Default,,0000,0000,0000,,And by focusing on currency trading\Nrather than just Iending,
Dialogue: 0,3:03:23.55,3:03:27.41,Default,,0000,0000,0000,,they'd reduced their exposure\Nto defauIts by borrowers.
Dialogue: 0,3:03:43.33,3:03:48.06,Default,,0000,0000,0000,,For Cosimo and his famiIy,\Nit was a truIy beautifuI business modeI.
Dialogue: 0,3:04:25.83,3:04:28.81,Default,,0000,0000,0000,,Yet not even the Medici\Nwere invulnerable.
Dialogue: 0,3:04:42.87,3:04:44.97,Default,,0000,0000,0000,,The bank suffered heavy losses
Dialogue: 0,3:04:58.23,3:05:02.37,Default,,0000,0000,0000,,as a result of over-generous loans\Nto blue-blooded debtors
Dialogue: 0,3:05:16.74,3:05:20.96,Default,,0000,0000,0000,,who felt no compunction\Nabout defaulting on their obligations
Dialogue: 0,3:05:36.94,3:05:39.50,Default,,0000,0000,0000,,and telling the bankers to get lost.
Dialogue: 0,3:06:11.66,3:06:15.16,Default,,0000,0000,0000,,Bad debts - money owed by borrowers\Nwho go bust -
Dialogue: 0,3:06:32.70,3:06:36.20,Default,,0000,0000,0000,,are the perennial problem\Nthat any bank confronts.
Dialogue: 0,3:06:58.36,3:07:04.01,Default,,0000,0000,0000,,Yet for a time, it seemed as if modern\Nbankers had solved this age-old problem.
Dialogue: 0,3:07:29.08,3:07:32.88,Default,,0000,0000,0000,,They really thought\Nthey were smarter than the Medici.
Dialogue: 0,3:08:34.93,3:08:38.26,Default,,0000,0000,0000,,Memphis, Tennessee\Nis a long way from Florence.
Dialogue: 0,3:08:53.66,3:08:58.21,Default,,0000,0000,0000,,And the world economy has come a long way\Nsince the Renaissance.
Dialogue: 0,3:09:23.11,3:09:25.68,Default,,0000,0000,0000,,A crucial part in that transformation
Dialogue: 0,3:09:38.05,3:09:43.31,Default,,0000,0000,0000,,has been played by the spread of\Nmodern banking from its ltalian birthplace
Dialogue: 0,3:10:01.83,3:10:06.91,Default,,0000,0000,0000,,to a country where money has increasingly\Ntaken the form of easy credit.
Dialogue: 0,3:10:32.76,3:10:36.38,Default,,0000,0000,0000,,The United States\Nhas been built on borrowed money.
Dialogue: 0,3:11:06.42,3:11:11.38,Default,,0000,0000,0000,,But whereas the Medici tended to lend\Nonly to the relatively well off,
Dialogue: 0,3:11:27.04,3:11:32.54,Default,,0000,0000,0000,,until the present credit crunch at least,\NAmerican banks seemed willing to give
Dialogue: 0,3:11:49.97,3:11:51.77,Default,,0000,0000,0000,,just about anyone a loan.
Dialogue: 0,3:12:09.12,3:12:14.10,Default,,0000,0000,0000,,Memphis is famous for blue suede shoes,\Nbarbecued ribs and bankruptcies.
Dialogue: 0,3:12:50.77,3:12:56.65,Default,,0000,0000,0000,,You can tell people here are a little...\NHow shall l say it? ..a little sub-prime.
Dialogue: 0,3:13:20.02,3:13:24.74,Default,,0000,0000,0000,,You onIy need to Iook at the shopping maII\Nfor the seriousIy poor.
Dialogue: 0,3:13:45.27,3:13:47.78,Default,,0000,0000,0000,,And the ubiquitous no-friIIs eatery.
Dialogue: 0,3:14:02.73,3:14:08.55,Default,,0000,0000,0000,,Then there's a tax advisor who can teII\Nyou how to cIaim your Iow-income credits.
Dialogue: 0,3:14:49.02,3:14:53.96,Default,,0000,0000,0000,,A shop where you can borrow money\Non the equity you own in your car.
Dialogue: 0,3:15:14.05,3:15:19.40,Default,,0000,0000,0000,,And a pIace where they'II give you\Nan advance on next week's pay cheque...
Dialogue: 0,3:15:51.92,3:15:56.23,Default,,0000,0000,0000,,..not to mention a pawn shop\Nthe size of a department store.
Dialogue: 0,3:16:27.48,3:16:32.08,Default,,0000,0000,0000,,And finaIIy, when you've no possessions\NIeft to pawn or to seII,
Dialogue: 0,3:16:47.26,3:16:49.35,Default,,0000,0000,0000,,there's just one option Ieft.
Dialogue: 0,3:16:58.62,3:17:01.57,Default,,0000,0000,0000,,And that's to head on down to ZLB PIasma
Dialogue: 0,3:17:14.40,3:17:18.47,Default,,0000,0000,0000,,where you can seII your own bIood\Nfor $25 doIIars a pop.
Dialogue: 0,3:17:35.02,3:17:38.70,Default,,0000,0000,0000,,TaIk about being ''bIed dry''.\NIt's amazing reaIIy -
Dialogue: 0,3:17:49.95,3:17:53.92,Default,,0000,0000,0000,,an entire economic sector\Nbased on peopIe who are broke.
Dialogue: 0,3:18:48.23,3:18:52.71,Default,,0000,0000,0000,,ln some ways, it rather reminds me\Nof the East End of Glasgow.
Dialogue: 0,3:19:06.54,3:19:10.27,Default,,0000,0000,0000,,Yet there's a world of difference\Nbetween this world
Dialogue: 0,3:19:26.32,3:19:30.64,Default,,0000,0000,0000,,and the world where loan sharks extract\Ntheir pounds of flesh
Dialogue: 0,3:19:46.30,3:19:47.82,Default,,0000,0000,0000,,from petty defaulters.
Dialogue: 0,3:20:05.03,3:20:09.29,Default,,0000,0000,0000,,Here in sub-prime America,\Ndefaulting on your debts is easy.
Dialogue: 0,3:20:27.54,3:20:28.82,Default,,0000,0000,0000,,Well, pretty easy.
Dialogue: 0,3:21:19.72,3:21:22.86,Default,,0000,0000,0000,,This is Richie.\NHe's in the repo business -
Dialogue: 0,3:21:42.23,3:21:45.39,Default,,0000,0000,0000,,snatching cars\Nfrom under their owners' noses
Dialogue: 0,3:21:58.22,3:22:00.90,Default,,0000,0000,0000,,when they haven't made their payments.
Dialogue: 0,3:22:08.53,3:22:13.78,Default,,0000,0000,0000,,He grabbed that boIt action, he went\N''chh'' and I watched the rifIe sheII
Dialogue: 0,3:22:43.45,3:22:48.27,Default,,0000,0000,0000,,go in the barreI and he Iunged it\Ntowards me and hit me right here
Dialogue: 0,3:23:19.85,3:23:21.77,Default,,0000,0000,0000,,and aImost knocked me down.
Dialogue: 0,3:23:32.48,3:23:36.73,Default,,0000,0000,0000,,He said, ''Either you drop the truck\Nor I'm dropping you.''
Dialogue: 0,3:23:51.41,3:23:55.02,Default,,0000,0000,0000,,And I said, ''Yes, sir,''\Nand I dropped the truck.
Dialogue: 0,3:24:06.77,3:24:12.08,Default,,0000,0000,0000,,You know, you make it sound so attractive,\Nmaybe I... I shouId switch jobs!
Dialogue: 0,3:24:34.96,3:24:37.40,Default,,0000,0000,0000,,I teII you what, it's interesting.
Dialogue: 0,3:25:11.36,3:25:16.63,Default,,0000,0000,0000,,ln the bankruptcy capital of America,\Nrepossessing cars is a routine matter.
Dialogue: 0,3:26:05.85,3:26:07.30,Default,,0000,0000,0000,,BUZZ OF AUCTION ROOM
Dialogue: 0,3:27:08.13,3:27:08.88,Default,,0000,0000,0000,,$16,000...
Dialogue: 0,3:27:24.96,3:27:27.28,Default,,0000,0000,0000,,It's got the Ieather, the top...
Dialogue: 0,3:27:38.01,3:27:42.23,Default,,0000,0000,0000,,Each week, United Auto Recoveries\Nsells 500 repossessed cars.
Dialogue: 0,3:28:05.36,3:28:10.54,Default,,0000,0000,0000,,The cars are auctioned off to the trade,\Nending up in the same car lots,
Dialogue: 0,3:28:29.97,3:28:32.46,Default,,0000,0000,0000,,to be sold to much the same people
Dialogue: 0,3:28:40.91,3:28:44.99,Default,,0000,0000,0000,,and, when they can't keep up\Nwith their monthly payments,
Dialogue: 0,3:28:54.38,3:28:56.59,Default,,0000,0000,0000,,repo'd and recycled once again.
Dialogue: 0,3:29:17.73,3:29:22.82,Default,,0000,0000,0000,,TechnicaIIy the Memphis repo men\Nare simpIy doing what debt coIIectors do
Dialogue: 0,3:29:42.77,3:29:43.87,Default,,0000,0000,0000,,the worId over.
Dialogue: 0,3:29:49.29,3:29:54.20,Default,,0000,0000,0000,,The difference, apart from the sheer\Nmind-boggIing scaIe of the thing,
Dialogue: 0,3:30:08.65,3:30:12.84,Default,,0000,0000,0000,,is the reIative ease\Nwith which the bad debts are wound up
Dialogue: 0,3:30:25.27,3:30:28.71,Default,,0000,0000,0000,,and the coIIateraI is soId off.\NFor the debtors,
Dialogue: 0,3:30:40.42,3:30:45.44,Default,,0000,0000,0000,,there's virtuaIIy no sociaI stigma\Nand nobody seems to be getting hurt.
Dialogue: 0,3:31:02.72,3:31:07.57,Default,,0000,0000,0000,,The big mystery is why the worId's\Nmost successfuI capitaIist economy
Dialogue: 0,3:31:26.07,3:31:30.80,Default,,0000,0000,0000,,is based on a foundation of more or Iess\NpainIess economic faiIure.
Dialogue: 0,3:32:23.93,3:32:27.90,Default,,0000,0000,0000,,Here in Tennessee,\Nwhen the house has been stripped bare
Dialogue: 0,3:32:44.55,3:32:47.16,Default,,0000,0000,0000,,and the repo man has taken your car,
Dialogue: 0,3:32:55.91,3:33:00.45,Default,,0000,0000,0000,,you end up in the hands of one\Nof Memphis's bankruptcy lawyers,
Dialogue: 0,3:33:16.32,3:33:19.05,Default,,0000,0000,0000,,along with around 1 3,000 other people
Dialogue: 0,3:33:27.89,3:33:31.27,Default,,0000,0000,0000,,who filed for bankruptcy here\Nin the past year.
Dialogue: 0,3:33:42.62,3:33:48.39,Default,,0000,0000,0000,,Of course that's one thing that's making\Nyou... Bumping your payments up so high.
Dialogue: 0,3:34:11.65,3:34:15.28,Default,,0000,0000,0000,,Every week, bankrupts gather\Nhere with their lawyers
Dialogue: 0,3:34:33.11,3:34:38.30,Default,,0000,0000,0000,,to hammer out deals with their creditors.\NThere's even a fast track lane.
Dialogue: 0,3:35:24.45,3:35:28.73,Default,,0000,0000,0000,,In this case it's a mortgage\Nand it's a car, or two cars.
Dialogue: 0,3:36:03.37,3:36:08.89,Default,,0000,0000,0000,,I can't see anything eIse in there\Nthat they're...they're having to pay off.
Dialogue: 0,3:36:25.46,3:36:28.68,Default,,0000,0000,0000,,- ActuaIIy there are three cars.\N- Three cars?
Dialogue: 0,3:36:45.87,3:36:49.38,Default,,0000,0000,0000,,The third car is...\Nthe neighbourhood titIe Ioans,
Dialogue: 0,3:37:06.07,3:37:10.37,Default,,0000,0000,0000,,has a... has a Iien on the car,\Nthey are hoIding the titIe.
Dialogue: 0,3:37:29.42,3:37:32.05,Default,,0000,0000,0000,,(NiaII) So putting this reaIIy simpIy,
Dialogue: 0,3:37:43.10,3:37:47.82,Default,,0000,0000,0000,,what were they supposed to be paying\Nand what are they now paying?
Dialogue: 0,3:38:04.56,3:38:08.06,Default,,0000,0000,0000,,WeII, that payment was reduced\Nfrom 241 . 1 1 ...
Dialogue: 0,3:38:29.81,3:38:31.32,Default,,0000,0000,0000,,- down to 107.\N- OK.
Dialogue: 0,3:38:42.43,3:38:43.89,Default,,0000,0000,0000,,Quite an improvement.
Dialogue: 0,3:38:48.53,3:38:52.16,Default,,0000,0000,0000,,Cutting their monthIy obIigations\Nby more than haIf.
Dialogue: 0,3:39:43.66,3:39:49.42,Default,,0000,0000,0000,,From 1 996 to 2006 there were between one\Nand two million bankruptcy cases a year
Dialogue: 0,3:40:24.05,3:40:28.38,Default,,0000,0000,0000,,in the United States,\Nnearly all of them involving individuals
Dialogue: 0,3:40:42.14,3:40:46.24,Default,,0000,0000,0000,,who elected to go bust\Nrather than meet their obligations.
Dialogue: 0,3:41:16.44,3:41:21.28,Default,,0000,0000,0000,,ln medieval ltaly - or in the Glasgow\Nof my youth, for that matter -
Dialogue: 0,3:41:38.74,3:41:42.18,Default,,0000,0000,0000,,bankruptcy was seen as a disaster.\NBut not here.
Dialogue: 0,3:42:06.72,3:42:11.46,Default,,0000,0000,0000,,In fact, this abiIity to waIk away\Nunscathed from unsustainabIe debt
Dialogue: 0,3:42:34.08,3:42:39.18,Default,,0000,0000,0000,,and start again has been a defining\Ncharacteristic of American capitaIism.
Dialogue: 0,3:42:58.06,3:43:01.97,Default,,0000,0000,0000,,There were no debtors' prisons here\Nin the earIy 1800s,
Dialogue: 0,3:43:16.15,3:43:21.52,Default,,0000,0000,0000,,at a time when EngIish debtors couId\NIanguish in jaiI for years. Since 1898,
Dialogue: 0,3:43:46.03,3:43:50.83,Default,,0000,0000,0000,,every American has been entitIed\Nto fiIe for Chapter 7 - Iiquidation,
Dialogue: 0,3:44:08.75,3:44:12.16,Default,,0000,0000,0000,,or Chapter 13 -\NvoIuntary personaI reorganisation.
Dialogue: 0,3:44:28.74,3:44:30.48,Default,,0000,0000,0000,,For rich and poor aIike,
Dialogue: 0,3:44:37.79,3:44:41.53,Default,,0000,0000,0000,,bankruptcy has become\Nas much of an inaIienabIe right
Dialogue: 0,3:44:55.67,3:44:59.18,Default,,0000,0000,0000,,as ''Iife, Iiberty\Nand the pursuit of happiness''.
Dialogue: 0,3:45:33.75,3:45:38.56,Default,,0000,0000,0000,,The theory is that American law exists\Nto encourage entrepreneurship -
Dialogue: 0,3:45:55.42,3:45:58.58,Default,,0000,0000,0000,,to facilitate\Nthe creation of new businesses.
Dialogue: 0,3:46:13.10,3:46:18.74,Default,,0000,0000,0000,,And that means giving people a break\Nwhen things don't work out the first time,
Dialogue: 0,3:46:39.82,3:46:41.56,Default,,0000,0000,0000,,or even the second time.
Dialogue: 0,3:46:49.28,3:46:54.87,Default,,0000,0000,0000,,The born risk-takers don't get wiped out\Nas they learn through trial and error
Dialogue: 0,3:47:15.58,3:47:17.79,Default,,0000,0000,0000,,how to make that first million,
Dialogue: 0,3:47:27.36,3:47:31.34,Default,,0000,0000,0000,,because today's bankrupt\Nmight be tomorrow's billionaire.
Dialogue: 0,3:48:01.66,3:48:04.09,Default,,0000,0000,0000,,lt's a theory that seems to work.
Dialogue: 0,3:48:12.39,3:48:17.25,Default,,0000,0000,0000,,Many of America's greatest successes\Nfailed in their early endeavours,
Dialogue: 0,3:48:35.11,3:48:37.33,Default,,0000,0000,0000,,including the author Mark Twain,
Dialogue: 0,3:49:04.15,3:49:06.02,Default,,0000,0000,0000,,the comedian Buster Keaton,
Dialogue: 0,3:49:30.66,3:49:35.04,Default,,0000,0000,0000,,and none other than the great\Nindustrialist Henry Ford himself.
Dialogue: 0,3:50:07.47,3:50:10.10,Default,,0000,0000,0000,,All of these men eventually flourished
Dialogue: 0,3:50:18.20,3:50:23.27,Default,,0000,0000,0000,,not least because they were given a chance\Nto try, fail and start over.
Dialogue: 0,3:50:43.87,3:50:46.61,Default,,0000,0000,0000,,For their part, the banks simply assume
Dialogue: 0,3:51:00.07,3:51:03.91,Default,,0000,0000,0000,,that a proportion of the loans\Nthey make will go bad.
Dialogue: 0,3:51:12.28,3:51:16.85,Default,,0000,0000,0000,,After all, most people going bankrupt\Nowe relatively trivial sums.
Dialogue: 0,3:51:40.26,3:51:45.21,Default,,0000,0000,0000,,A Chapter 1 3 doesn't wipe their debts out,\Nit just reschedules them.
Dialogue: 0,3:52:44.22,3:52:48.35,Default,,0000,0000,0000,,So it's a mistake to think,\Nas Shakespeare's Antonio did,
Dialogue: 0,3:53:04.20,3:53:06.42,Default,,0000,0000,0000,,of moneylenders as mere leeches,
Dialogue: 0,3:53:18.09,3:53:21.77,Default,,0000,0000,0000,,sucking the life's blood\Nout of unfortunate debtors.
Dialogue: 0,3:54:01.01,3:54:05.46,Default,,0000,0000,0000,,Credit and debt are the building blocks\Nof economic development.
Dialogue: 0,3:54:21.21,3:54:24.54,Default,,0000,0000,0000,,But it takes banks to elevate\Nthat relationship
Dialogue: 0,3:54:35.73,3:54:39.93,Default,,0000,0000,0000,,beyond the tie between\Na loan shark and his hapless victim.
Dialogue: 0,3:55:30.01,3:55:34.91,Default,,0000,0000,0000,,It's onIy when borrowers Iike the ones\Non this GIasgow housing estate
Dialogue: 0,3:55:50.84,3:55:53.53,Default,,0000,0000,0000,,have access to efficient credit markets
Dialogue: 0,3:56:03.46,3:56:08.42,Default,,0000,0000,0000,,that they can escape the cIutches\Nof the ShyIocks and the Ioan sharks.
Dialogue: 0,3:56:24.08,3:56:28.45,Default,,0000,0000,0000,,It's onIy when savers can put\Ntheir money in dependabIe banks
Dialogue: 0,3:56:41.75,3:56:45.95,Default,,0000,0000,0000,,that it can be channeIIed\Nfrom the idIe to the industrious.
Dialogue: 0,3:57:14.100,3:57:18.66,Default,,0000,0000,0000,,But wait, l hear you ask,\Nif banks are the answer,
Dialogue: 0,3:57:39.82,3:57:44.55,Default,,0000,0000,0000,,how could so many have collapsed\Nso spectacularly in the past year,
Dialogue: 0,3:58:01.28,3:58:04.21,Default,,0000,0000,0000,,throwing the financial world\Ninto turmoil?
Dialogue: 0,3:58:28.21,3:58:31.77,Default,,0000,0000,0000,,To understand why bad debts\Nin places like Memphis
Dialogue: 0,3:58:46.31,3:58:49.58,Default,,0000,0000,0000,,could cause such chaos,\Nyou need to understand
Dialogue: 0,3:58:59.56,3:59:03.66,Default,,0000,0000,0000,,how the relationship between\Nbanks and borrowers broke down
Dialogue: 0,3:59:19.55,3:59:24.34,Default,,0000,0000,0000,,as loans came to be ''securitised''\Nand sold on to unwary investors.
Dialogue: 0,4:00:18.67,4:00:22.81,Default,,0000,0000,0000,,Once upon a time, being a banker\Nwas reaIIy rather boring.
Dialogue: 0,4:00:38.24,4:00:40.37,Default,,0000,0000,0000,,You Iived by the 3-6-3 ruIe,
Dialogue: 0,4:00:54.86,4:00:58.100,Default,,0000,0000,0000,,which meant you paid 3% on deposits,\NcoIIected 6% on Ioans
Dialogue: 0,4:01:19.26,4:01:22.27,Default,,0000,0000,0000,,and were on the goIf course by 3 o'cIock.
Dialogue: 0,4:01:32.73,4:01:37.06,Default,,0000,0000,0000,,But in our time, banking became\NreaIIy rather too interesting.
Dialogue: 0,4:01:54.61,4:01:57.30,Default,,0000,0000,0000,,A whoIe series of financiaI innovations
Dialogue: 0,4:02:08.28,4:02:11.38,Default,,0000,0000,0000,,made it possibIe for\Ncommon or garden Ioans
Dialogue: 0,4:02:23.22,4:02:25.78,Default,,0000,0000,0000,,to poor foIks in pIaces Iike Memphis
Dialogue: 0,4:02:34.80,4:02:38.08,Default,,0000,0000,0000,,to metamorphose\Ninto weird and wonderfuI things
Dialogue: 0,4:02:51.63,4:02:55.16,Default,,0000,0000,0000,,with names Iike\N''coIIateraIised debt obIigations''.
Dialogue: 0,4:03:08.46,4:03:12.15,Default,,0000,0000,0000,,WeII, this financiaI aIchemy -\Nturning Iead into goId
Dialogue: 0,4:03:29.29,4:03:32.33,Default,,0000,0000,0000,,or toxic waste\Ninto giIt-edged securities -
Dialogue: 0,4:03:44.22,4:03:47.44,Default,,0000,0000,0000,,was onIy possibIe\Nbecause the ascent of banks
Dialogue: 0,4:04:01.06,4:04:04.85,Default,,0000,0000,0000,,was foIIowed by the ascent\Nof the second great piIIar
Dialogue: 0,4:04:17.68,4:04:21.13,Default,,0000,0000,0000,,of the modern financiaI system -\Nthe bond market.
Dialogue: 0,0:00:00.00,0:00:01.58,Default,,0000,0000,0000,,HELICOPTER ROTORS THRUM
Dialogue: 0,0:00:14.45,0:00:16.31,Default,,0000,0000,0000,,We may think power resides
Dialogue: 0,0:00:26.44,0:00:31.36,Default,,0000,0000,0000,,with presidents and prime ministers\Nin palaces and parliaments. Not so.
Dialogue: 0,0:00:54.85,0:01:00.73,Default,,0000,0000,0000,,ln today's world, real power lies in the\Nhands of an elite group of unassuming men
Dialogue: 0,0:01:24.09,0:01:26.43,Default,,0000,0000,0000,,in anonymous, open-plan offices...
Dialogue: 0,0:01:45.97,0:01:49.29,Default,,0000,0000,0000,,..the men who control\Nthe world's bond market.
Dialogue: 0,0:02:33.31,0:02:35.63,Default,,0000,0000,0000,,Bill Gross is the boss of PlMCO,
Dialogue: 0,0:02:45.09,0:02:48.13,Default,,0000,0000,0000,,the world's biggest\Nbond-trading operation,
Dialogue: 0,0:03:01.50,0:03:05.41,Default,,0000,0000,0000,,which manages a portfolio of bonds\Nworth $7 00 billion.
Dialogue: 0,0:03:22.75,0:03:26.77,Default,,0000,0000,0000,,Gross is widely regarded\Nas the king of the bond market.
Dialogue: 0,0:03:49.05,0:03:50.67,Default,,0000,0000,0000,,Just call him Mr Bond.
Dialogue: 0,0:04:29.24,0:04:33.50,Default,,0000,0000,0000,,Bonds are the magical link\Nbetween the world of high finance
Dialogue: 0,0:04:45.44,0:04:47.77,Default,,0000,0000,0000,,and the worId of poIiticaI power.
Dialogue: 0,0:04:56.17,0:05:00.62,Default,,0000,0000,0000,,Governments wiII aIways spend more\Nthan they raise in taxation -
Dialogue: 0,0:05:19.73,0:05:21.60,Default,,0000,0000,0000,,sometimes shed-Ioads more -
Dialogue: 0,0:05:28.36,0:05:33.09,Default,,0000,0000,0000,,and they make up the difference\Nby seIIing bonds that pay interest.
Dialogue: 0,0:05:47.50,0:05:52.08,Default,,0000,0000,0000,,But - and here's the magic -\Nif you want to get rid of a bond,
Dialogue: 0,0:06:03.07,0:06:06.97,Default,,0000,0000,0000,,the government doesn't have\Nto give you the cash back.
Dialogue: 0,0:06:16.12,0:06:18.61,Default,,0000,0000,0000,,You just take it to a bond market,
Dialogue: 0,0:06:26.64,0:06:30.60,Default,,0000,0000,0000,,Iike the one here at\NTokyo Stock Exchange, and seII it.
Dialogue: 0,0:06:54.62,0:06:56.36,Default,,0000,0000,0000,,After the rise of banks,
Dialogue: 0,0:07:07.45,0:07:13.34,Default,,0000,0000,0000,,the birth of the bond market was the next\Nbig revolution in the history of finance.
Dialogue: 0,0:07:31.44,0:07:35.64,Default,,0000,0000,0000,,lt created a whole new way\Nfor governments to borrow money.
Dialogue: 0,0:07:55.42,0:07:57.63,Default,,0000,0000,0000,,The bond market funded the wars
Dialogue: 0,0:08:07.21,0:08:10.19,Default,,0000,0000,0000,,that plagued northern ltaly\N600 years ago.
Dialogue: 0,0:08:31.82,0:08:32.81,Default,,0000,0000,0000,,GUNSHOT ECHOES
Dialogue: 0,0:08:41.50,0:08:43.13,Default,,0000,0000,0000,,lt dictated the outcome
Dialogue: 0,0:08:51.39,0:08:53.19,Default,,0000,0000,0000,,of the Battle of Waterloo
Dialogue: 0,0:09:03.59,0:09:07.16,Default,,0000,0000,0000,,and created the world's greatest\Nfinancial dynasty.
Dialogue: 0,0:09:28.63,0:09:32.100,Default,,0000,0000,0000,,lt ensured the defeat of the South\Nin the American Civil War.
Dialogue: 0,0:09:47.98,0:09:50.54,Default,,0000,0000,0000,,And in modern times, the bond market
Dialogue: 0,0:10:00.40,0:10:05.50,Default,,0000,0000,0000,,has brought once wealthy nations,\Nlike Argentina, crashing to their knees.
Dialogue: 0,0:10:27.54,0:10:31.17,Default,,0000,0000,0000,,Today, governments and companies\Nuse bonds to borrow
Dialogue: 0,0:10:51.10,0:10:53.20,Default,,0000,0000,0000,,on an unimaginably vast scale.
Dialogue: 0,0:11:04.36,0:11:05.05,Default,,0000,0000,0000,,All told,
Dialogue: 0,0:11:15.09,0:11:18.77,Default,,0000,0000,0000,,there are bonds out there\Nworth around $85 trillion.
Dialogue: 0,0:11:38.23,0:11:42.18,Default,,0000,0000,0000,,The fortunes of most of us,\Nwhether we like it or not,
Dialogue: 0,0:11:59.90,0:12:02.64,Default,,0000,0000,0000,,are directly linked to the bond market.
Dialogue: 0,0:12:21.78,0:12:26.62,Default,,0000,0000,0000,,lf the bond market tanks,\Nthen down goes the value of our pensions -
Dialogue: 0,0:12:45.56,0:12:49.34,Default,,0000,0000,0000,,and that's a huge part\Nof our wealth as individuals.
Dialogue: 0,0:12:58.39,0:13:03.76,Default,,0000,0000,0000,,ln the financial crisis that has gripped\Nthe world since the summer of 2007,
Dialogue: 0,0:13:22.17,0:13:27.78,Default,,0000,0000,0000,,US government bonds have been seen as\Na safe haven for investors seeking shelter
Dialogue: 0,0:13:46.15,0:13:49.83,Default,,0000,0000,0000,,from the storm\Nof falling property and share prices.
Dialogue: 0,0:14:05.93,0:14:09.65,Default,,0000,0000,0000,,So if Bill Gross were to lose faith\Nin those bonds,
Dialogue: 0,0:14:24.65,0:14:28.92,Default,,0000,0000,0000,,it would hit the financial world like...\Nwell, a thunderball.
Dialogue: 0,0:14:48.43,0:14:50.40,Default,,0000,0000,0000,,That's why this ''Mr Bond''
Dialogue: 0,0:14:59.37,0:15:04.56,Default,,0000,0000,0000,,has become so much more powerful\Nthan the Mr Bond created by lan Fleming.
Dialogue: 0,0:15:30.51,0:15:34.69,Default,,0000,0000,0000,,And that's why both kinds of bond\Nhave a licence to kill.
Dialogue: 0,0:16:23.74,0:16:24.67,Default,,0000,0000,0000,,TRADERS SHOUT
Dialogue: 0,0:17:34.43,0:17:35.24,Default,,0000,0000,0000,,HORN BLARES
Dialogue: 0,0:18:12.72,0:18:16.78,Default,,0000,0000,0000,,''War, '' declared the ancient Greek\Nphilosopher Heraclitus,
Dialogue: 0,0:18:30.60,0:18:32.93,Default,,0000,0000,0000,,''is the father of all things. ''
Dialogue: 0,0:18:49.12,0:18:52.50,Default,,0000,0000,0000,,lt was certainly the father\Nof the bond market.
Dialogue: 0,0:19:21.31,0:19:27.02,Default,,0000,0000,0000,,For much of the 1 4th and 1 5th centuries,\Nthe medieval city-states of Tuscany -
Dialogue: 0,0:19:46.77,0:19:50.68,Default,,0000,0000,0000,,Florence, Pisa and Siena -\Nwere at war with each other.
Dialogue: 0,0:20:14.96,0:20:18.38,Default,,0000,0000,0000,,This was war waged\Nas much by money as by men.
Dialogue: 0,0:20:59.14,0:21:04.09,Default,,0000,0000,0000,,In Pieter van der Heyden's BattIe\NOf The Money-Bags And Strong-Boxes,
Dialogue: 0,0:21:19.97,0:21:23.77,Default,,0000,0000,0000,,piggy banks, treasure chests\Nand barreIs fuII of coins
Dialogue: 0,0:21:42.48,0:21:47.49,Default,,0000,0000,0000,,Iay into one another with Iances\Nand swords in a chaotic free-for-aII.
Dialogue: 0,0:22:03.52,0:22:06.79,Default,,0000,0000,0000,,The Dutch verses\Ninscribed at the bottom read,
Dialogue: 0,0:22:18.25,0:22:22.75,Default,,0000,0000,0000,,''It's aII for money and goods,\Nthis fighting and quarreIIing.''
Dialogue: 0,0:22:36.56,0:22:39.76,Default,,0000,0000,0000,,But what they might\Njust as easiIy have said
Dialogue: 0,0:22:48.34,0:22:53.33,Default,,0000,0000,0000,,is that war is impossibIe\Nif you don't have the money to pay for it.
Dialogue: 0,0:23:11.90,0:23:12.65,Default,,0000,0000,0000,,BELL TOLLS
Dialogue: 0,0:23:33.78,0:23:35.57,Default,,0000,0000,0000,,And the way to do that -
Dialogue: 0,0:23:43.46,0:23:47.14,Default,,0000,0000,0000,,the ability to finance war\Nthrough the bond market -
Dialogue: 0,0:24:04.71,0:24:09.21,Default,,0000,0000,0000,,was, like so much else,\Nan invention of the ltalian Renaissance.
Dialogue: 0,0:24:41.74,0:24:46.82,Default,,0000,0000,0000,,Rather than require their own citizens\Nto do the dirty work of fighting,
Dialogue: 0,0:25:07.20,0:25:10.73,Default,,0000,0000,0000,,each city hired military contractors -\Ncondottieri -
Dialogue: 0,0:25:29.71,0:25:34.38,Default,,0000,0000,0000,,who raised armies to annex land\Nand loot treasure from the others.
Dialogue: 0,0:26:00.22,0:26:03.76,Default,,0000,0000,0000,,Among the condottieri\Nof the 1 360s and 1 37 0s,
Dialogue: 0,0:26:19.78,0:26:23.05,Default,,0000,0000,0000,,one stood head and shoulders\Nabove the others.
Dialogue: 0,0:26:53.87,0:26:59.41,Default,,0000,0000,0000,,This is his portrait in Florence's Duomo -\Na thank-you from a grateful public.
Dialogue: 0,0:27:33.00,0:27:37.79,Default,,0000,0000,0000,,Unlikely though it may seem,\Nthis master mercenary was an Essex boy.
Dialogue: 0,0:28:12.98,0:28:15.00,Default,,0000,0000,0000,,So skilfully did he wage war
Dialogue: 0,0:28:24.34,0:28:28.44,Default,,0000,0000,0000,,that the ltalians called Sir John Hawkwood\NGiovanni Acuto -
Dialogue: 0,0:28:43.90,0:28:45.00,Default,,0000,0000,0000,,John the Acute.
Dialogue: 0,0:29:07.68,0:29:11.64,Default,,0000,0000,0000,,This castle was one of many pieces\Nof prime real estate
Dialogue: 0,0:29:27.03,0:29:30.88,Default,,0000,0000,0000,,the Florentines gave him\Nas a reward for his services.
Dialogue: 0,0:30:04.70,0:30:06.68,Default,,0000,0000,0000,,But Hawkwood was a mercenary
Dialogue: 0,0:30:15.00,0:30:18.72,Default,,0000,0000,0000,,who was willing to fight\Nfor anyone who'd pay him -
Dialogue: 0,0:30:33.94,0:30:36.15,Default,,0000,0000,0000,,Milan, Padua, Pisa or the Pope.
Dialogue: 0,0:31:29.90,0:31:33.59,Default,,0000,0000,0000,,These dazzIing frescoes\Nin FIorence's PaIazzo Vecchio
Dialogue: 0,0:31:46.74,0:31:50.59,Default,,0000,0000,0000,,show the armies of Pisa and FIorence\NcIashing in 1364.
Dialogue: 0,0:32:06.30,0:32:10.32,Default,,0000,0000,0000,,At that time, Hawkwood was fighting\Non the side of Pisa.
Dialogue: 0,0:32:24.19,0:32:27.04,Default,,0000,0000,0000,,But 15 years Iater, he'd switched sides.
Dialogue: 0,0:32:37.65,0:32:40.92,Default,,0000,0000,0000,,Why? Because FIorence\Nwas where the money was.
Dialogue: 0,0:33:10.26,0:33:15.40,Default,,0000,0000,0000,,The cost of these incessant wars\Nplunged ltaly's city-states into crisis.
Dialogue: 0,0:33:41.19,0:33:44.70,Default,,0000,0000,0000,,Expenditures, even in years of peace,\Nwere running
Dialogue: 0,0:33:58.86,0:34:01.07,Default,,0000,0000,0000,,at double or more tax revenues.
Dialogue: 0,0:34:16.75,0:34:21.89,Default,,0000,0000,0000,,To pay the likes of Sir John Hawkwood,\NFlorence was drowning in deficits.
Dialogue: 0,0:35:09.14,0:35:12.94,Default,,0000,0000,0000,,This wonderfuI document\Nin the FIorentine State Archive
Dialogue: 0,0:35:30.60,0:35:33.32,Default,,0000,0000,0000,,shows how the city's debt had expIoded
Dialogue: 0,0:35:43.85,0:35:48.45,Default,,0000,0000,0000,,from around 50,000 fIorins\Nat the beginning of the 1 4th century
Dialogue: 0,0:36:05.10,0:36:06.95,Default,,0000,0000,0000,,to five miIIion by 1 427.
Dialogue: 0,0:36:19.83,0:36:25.32,Default,,0000,0000,0000,,It was quite IiteraIIy a mountain of debt,\Nhence the name - the Monte Commune.
Dialogue: 0,0:36:45.28,0:36:50.54,Default,,0000,0000,0000,,But from whom couId the FIorentines\NpossibIy have borrowed such a vast sum?
Dialogue: 0,0:37:18.32,0:37:21.36,Default,,0000,0000,0000,,The answer is right here -\Nfrom themseIves.
Dialogue: 0,0:37:53.03,0:37:58.28,Default,,0000,0000,0000,,lt was a revolutionary idea that would\Nchange the world of money for ever.
Dialogue: 0,0:38:18.07,0:38:21.46,Default,,0000,0000,0000,,Rather than paying direct tax,\Ncitizens were now
Dialogue: 0,0:38:36.58,0:38:40.62,Default,,0000,0000,0000,,effectively obliged to lend money\Nto their own government.
Dialogue: 0,0:39:35.28,0:39:39.26,Default,,0000,0000,0000,,ln return for these forced loans,\Nthey received interest.
Dialogue: 0,0:40:18.20,0:40:21.77,Default,,0000,0000,0000,,These debt instruments -\NsimpIe Iines in a Iedger -
Dialogue: 0,0:40:33.77,0:40:36.17,Default,,0000,0000,0000,,were the originaI government bonds.
Dialogue: 0,0:40:44.92,0:40:50.63,Default,,0000,0000,0000,,And the wonderfuI thing about them was\Nthat if you needed your money in a hurry,
Dialogue: 0,0:41:03.02,0:41:06.17,Default,,0000,0000,0000,,you couId seII your bonds\Nto other citizens.
Dialogue: 0,0:41:16.48,0:41:18.17,Default,,0000,0000,0000,,They were Iiquid assets.
Dialogue: 0,0:41:26.16,0:41:27.96,Default,,0000,0000,0000,,What this record teIIs us
Dialogue: 0,0:41:36.26,0:41:40.65,Default,,0000,0000,0000,,is how FIorence turned its citizens\Ninto its biggest investors.
Dialogue: 0,0:42:23.18,0:42:27.80,Default,,0000,0000,0000,,This wartime expedient marked the birth\Nof the modern bond market.
Dialogue: 0,0:42:47.58,0:42:49.15,Default,,0000,0000,0000,,Everyone was a winner.
Dialogue: 0,0:42:56.63,0:42:59.96,Default,,0000,0000,0000,,Bonds had saved the city-state\Nfrom bankruptcy.
Dialogue: 0,0:43:12.62,0:43:15.90,Default,,0000,0000,0000,,The citizens were happy\Nearning their interest.
Dialogue: 0,0:43:28.40,0:43:32.58,Default,,0000,0000,0000,,And the bond market let them\Nbuy or sell as they saw fit.
Dialogue: 0,0:43:50.28,0:43:52.25,Default,,0000,0000,0000,,lt seemed as if the problem
Dialogue: 0,0:44:00.38,0:44:04.94,Default,,0000,0000,0000,,of public debt had been solved,\Nallowing the citizens of Florence
Dialogue: 0,0:44:20.100,0:44:23.62,Default,,0000,0000,0000,,to turn their minds to higher things.
Dialogue: 0,0:44:40.78,0:44:44.75,Default,,0000,0000,0000,,But there was just one problem\Nwith this brilliant idea.
Dialogue: 0,0:45:37.37,0:45:42.79,Default,,0000,0000,0000,,There was a limit to how many more or less\Nunproductive wars could be waged.
Dialogue: 0,0:46:06.20,0:46:12.15,Default,,0000,0000,0000,,The larger the debts of the ltalian cities\Nbecame, the more bonds they had to issue,
Dialogue: 0,0:46:32.50,0:46:37.76,Default,,0000,0000,0000,,and the more bonds were issued, the less\Nvaluable they looked to investors.
Dialogue: 0,0:47:17.31,0:47:21.16,Default,,0000,0000,0000,,And that was exactly\Nthe sequence of events in Venice.
Dialogue: 0,0:47:41.50,0:47:43.48,Default,,0000,0000,0000,,By the early 1 6th century,
Dialogue: 0,0:47:54.34,0:47:58.02,Default,,0000,0000,0000,,the city had suffered\Na series of military reverses,
Dialogue: 0,0:48:15.80,0:48:19.65,Default,,0000,0000,0000,,and the value of Venetian bonds\Nhad taken a hammering.
Dialogue: 0,0:49:06.71,0:49:09.33,Default,,0000,0000,0000,,At their nadir between 1509 and 1529,
Dialogue: 0,0:49:25.44,0:49:30.52,Default,,0000,0000,0000,,Venetian Monte Nuovo bonds were trading\Nat just 10% of their face vaIue.
Dialogue: 0,0:49:55.53,0:50:00.29,Default,,0000,0000,0000,,Now, if you buy a bond when war is raging,\Nyou're taking a risk -
Dialogue: 0,0:50:19.72,0:50:25.65,Default,,0000,0000,0000,,the risk that the city won't pay you back\Nor pay your interest. On the other hand,
Dialogue: 0,0:50:44.13,0:50:48.79,Default,,0000,0000,0000,,remember that the interest is paid\Non the face vaIue of the bond,
Dialogue: 0,0:51:03.48,0:51:07.30,Default,,0000,0000,0000,,so if you can buy it\Nat just 10% of its face vaIue,
Dialogue: 0,0:51:19.26,0:51:22.58,Default,,0000,0000,0000,,you're earning a handsome return\Nof maybe 50%.
Dialogue: 0,0:51:39.88,0:51:42.61,Default,,0000,0000,0000,,And that is how the bond market works.
Dialogue: 0,0:51:52.93,0:51:57.58,Default,,0000,0000,0000,,In a sense, you get return\Nfor the risk you're prepared to take.
Dialogue: 0,0:52:13.96,0:52:16.74,Default,,0000,0000,0000,,At the same time, it's the bond market
Dialogue: 0,0:52:26.59,0:52:30.32,Default,,0000,0000,0000,,that sets interest rates\Nfor the economy as a whoIe.
Dialogue: 0,0:52:41.53,0:52:46.88,Default,,0000,0000,0000,,If the state has in effect to pay 50%,\Nthen so do aII the other borrowers.
Dialogue: 0,0:53:27.39,0:53:31.93,Default,,0000,0000,0000,,The bond market had been invented\Nto help pay for ltaly's wars.
Dialogue: 0,0:53:46.96,0:53:50.58,Default,,0000,0000,0000,,But now it was setting interest rates\Nfor everyone.
Dialogue: 0,0:54:07.37,0:54:09.40,Default,,0000,0000,0000,,lts rise to power had begun.
Dialogue: 0,0:54:31.98,0:54:36.53,Default,,0000,0000,0000,,Over the next two centuries,\Nbonds would come to rule the world.
Dialogue: 0,0:55:44.57,0:55:47.78,Default,,0000,0000,0000,,This house was built\Nby the financial dynasty
Dialogue: 0,0:55:59.72,0:56:02.76,Default,,0000,0000,0000,,that helped decide\Nthe Battle of Waterloo -
Dialogue: 0,0:56:14.66,0:56:19.63,Default,,0000,0000,0000,,the dynasty that produced the man\Nthey called the Bonaparte of finance,
Dialogue: 0,0:56:39.27,0:56:42.53,Default,,0000,0000,0000,,the emperor\Nof the 1 9th-century bond market.
Dialogue: 0,0:57:11.25,0:57:13.70,Default,,0000,0000,0000,,''He is master of unbounded wealth,
Dialogue: 0,0:57:24.51,0:57:28.29,Default,,0000,0000,0000,,''he boasts that he is the arbiter\Nof peace and war,
Dialogue: 0,0:57:42.60,0:57:46.45,Default,,0000,0000,0000,,''and that the credit of nations\Ndepends upon his nod.
Dialogue: 0,0:58:01.12,0:58:03.86,Default,,0000,0000,0000,,''Ministers of state are in his pay. ''
Dialogue: 0,0:58:49.93,0:58:55.60,Default,,0000,0000,0000,,Those words, spoken in 1 828 by the Radical\NMember of Parliament Thomas Duncombe,
Dialogue: 0,0:59:18.12,0:59:22.24,Default,,0000,0000,0000,,were describing Nathan Rothschild,\Nbond trader extraordinaire
Dialogue: 0,0:59:40.42,0:59:45.96,Default,,0000,0000,0000,,and founder of the London branch of what\Nbecame the biggest bank in the world.
Dialogue: 0,1:00:08.40,1:00:12.27,Default,,0000,0000,0000,,The bond market made the Rothschilds\Nstupendously rich -
Dialogue: 0,1:00:30.28,1:00:35.48,Default,,0000,0000,0000,,so rich that they could afford to build\N41 stately homes all over Europe.
Dialogue: 0,1:01:01.42,1:01:05.23,Default,,0000,0000,0000,,This is number 29 -\NWaddesdon Manor in Buckinghamshire,
Dialogue: 0,1:01:24.36,1:01:27.74,Default,,0000,0000,0000,,which has been restored\Nin all its gilded glory
Dialogue: 0,1:01:44.55,1:01:48.53,Default,,0000,0000,0000,,by Jacob Rothschild,\NNathan's great-great-great-grandson.
Dialogue: 0,1:02:17.16,1:02:18.90,Default,,0000,0000,0000,,WeII, he was short, fat,
Dialogue: 0,1:02:32.31,1:02:34.19,Default,,0000,0000,0000,,obsessive, extremeIy cIever,
Dialogue: 0,1:02:56.30,1:02:57.35,Default,,0000,0000,0000,,whoIIy focused.
Dialogue: 0,1:03:05.14,1:03:11.14,Default,,0000,0000,0000,,I can't imagine he wouId have been a very\NpIeasant person to have had deaIings with.
Dialogue: 0,1:04:03.20,1:04:08.50,Default,,0000,0000,0000,,Between around 1 81 0 and 1 836, the five\Nsons of Mayer Amschel Rothschild
Dialogue: 0,1:04:30.77,1:04:35.56,Default,,0000,0000,0000,,rose from the obscurity of\Nthe Frankfurt ghetto to attain a position
Dialogue: 0,1:04:56.86,1:04:59.96,Default,,0000,0000,0000,,of unequalled power\Nin international finance.
Dialogue: 0,1:05:30.52,1:05:32.61,Default,,0000,0000,0000,,lt was the third son, Nathan,
Dialogue: 0,1:05:41.04,1:05:44.44,Default,,0000,0000,0000,,who orchestrated\Nthis family triumph from London.
Dialogue: 0,1:06:02.08,1:06:05.88,Default,,0000,0000,0000,,Evelyn de Rothschild\Nis Nathan's great-great-grandson.
Dialogue: 0,1:06:18.91,1:06:22.36,Default,,0000,0000,0000,,He recently retired\Nas chairman of Rothschild's -
Dialogue: 0,1:06:35.32,1:06:37.24,Default,,0000,0000,0000,,the bank that Nathan built.
Dialogue: 0,1:06:44.100,1:06:46.51,Default,,0000,0000,0000,,He was very ambitious
Dialogue: 0,1:06:53.83,1:06:55.51,Default,,0000,0000,0000,,and he moved to London.
Dialogue: 0,1:07:01.62,1:07:06.40,Default,,0000,0000,0000,,I think he was determined.\NI don't think he suffered fooIs IightIy.
Dialogue: 0,1:07:19.92,1:07:21.95,Default,,0000,0000,0000,,Maybe that's a famiIy trait.
Dialogue: 0,1:07:40.96,1:07:46.51,Default,,0000,0000,0000,,This is one of the few surviving Ietters\Nfrom Nathan RothschiId to his brothers
Dialogue: 0,1:08:02.42,1:08:04.94,Default,,0000,0000,0000,,written, as aIways, in Judendeutsch -
Dialogue: 0,1:08:15.68,1:08:19.44,Default,,0000,0000,0000,,that was German transIiterated\Ninto Hebrew characters -
Dialogue: 0,1:08:31.67,1:08:36.85,Default,,0000,0000,0000,,and it gives you an idea of what\Nan extraordinary work ethic the man had
Dialogue: 0,1:08:51.86,1:08:56.64,Default,,0000,0000,0000,,and how he tried to impose it on his poor,\NIong-suffering brothers.
Dialogue: 0,1:09:11.64,1:09:13.09,Default,,0000,0000,0000,,Just Iisten to this.
Dialogue: 0,1:09:20.69,1:09:26.51,Default,,0000,0000,0000,,''Dear AmscheI, I am writing you my opinion\Nbecause it's my damned duty to do so.
Dialogue: 0,1:10:01.93,1:10:05.72,Default,,0000,0000,0000,,''I read your Ietters, not once,\Nbut often 100 times,
Dialogue: 0,1:10:20.86,1:10:25.70,Default,,0000,0000,0000,,''because you can weII imagine\Nthat after dinner I don't read books,
Dialogue: 0,1:10:44.22,1:10:47.80,Default,,0000,0000,0000,,''I don't pIay cards,\NI don't go to the theatre.
Dialogue: 0,1:11:01.05,1:11:03.56,Default,,0000,0000,0000,,''My onIy pIeasure is my business.''
Dialogue: 0,1:11:35.76,1:11:36.57,Default,,0000,0000,0000,,PHONES RING
Dialogue: 0,1:11:51.54,1:11:56.11,Default,,0000,0000,0000,,lt was this phenomenal drive,\Nallied with innate financial genius,
Dialogue: 0,1:12:20.58,1:12:25.73,Default,,0000,0000,0000,,that propelled Nathan from obscurity\Nto mastery of the London bond market.
Dialogue: 0,1:12:52.35,1:12:53.75,Default,,0000,0000,0000,,Once again, however,
Dialogue: 0,1:13:03.08,1:13:07.18,Default,,0000,0000,0000,,the opportunity for\Na financial breakthrough came from war.
Dialogue: 0,1:14:15.45,1:14:21.03,Default,,0000,0000,0000,,On the morning of June 1 8th, 1 81 5,\N67,000 British, Dutch and German troops
Dialogue: 0,1:14:50.80,1:14:56.41,Default,,0000,0000,0000,,under the Duke of Wellington's command\Nlooked out across the fields of Waterloo,
Dialogue: 0,1:15:15.20,1:15:20.11,Default,,0000,0000,0000,,not far from Brussels, towards an almost\Nequal number of French troops
Dialogue: 0,1:15:36.24,1:15:39.82,Default,,0000,0000,0000,,commanded by the French Emperor,\NNapoleon Bonaparte.
Dialogue: 0,1:16:12.22,1:16:16.95,Default,,0000,0000,0000,,The BattIe of WaterIoo was the cuImination\Nof more than two decades
Dialogue: 0,1:16:30.74,1:16:34.32,Default,,0000,0000,0000,,of intermittent confIict\Nbetween Britain and France.
Dialogue: 0,1:16:46.09,1:16:49.99,Default,,0000,0000,0000,,But it was more than just a battIe\Nbetween two armies.
Dialogue: 0,1:17:03.77,1:17:07.57,Default,,0000,0000,0000,,It was aIso a contest\Nbetween rivaI financiaI systems.
Dialogue: 0,1:17:20.18,1:17:25.32,Default,,0000,0000,0000,,One, the French, based on pIunder.\NThe other, the British, based on debt.
Dialogue: 0,1:17:52.37,1:17:53.81,Default,,0000,0000,0000,,To pay for the war,
Dialogue: 0,1:17:59.10,1:18:03.61,Default,,0000,0000,0000,,the British government had sold\Nan unprecedented amount of bonds.
Dialogue: 0,1:18:23.72,1:18:26.23,Default,,0000,0000,0000,,According to a long-standing legend,
Dialogue: 0,1:18:39.08,1:18:42.36,Default,,0000,0000,0000,,the Rothschild family\Nmade their first millions
Dialogue: 0,1:18:52.75,1:18:56.95,Default,,0000,0000,0000,,by speculating on how the outcome\Nof the Battle of Waterloo
Dialogue: 0,1:19:10.42,1:19:13.10,Default,,0000,0000,0000,,would affect the price of these bonds.
Dialogue: 0,1:19:39.04,1:19:41.96,Default,,0000,0000,0000,,lt was this legend\Nof Jewish profiteering
Dialogue: 0,1:19:53.98,1:19:58.30,Default,,0000,0000,0000,,that, a century later,\Nthe Nazis did their best to embroider.
Dialogue: 0,1:20:23.01,1:20:28.27,Default,,0000,0000,0000,,ln 1 940 Josef Goebbels approved\Nthe release of this film, Die Rothschilds.
Dialogue: 0,1:20:52.26,1:20:53.42,Default,,0000,0000,0000,,HE SPEAKS GERMAN
Dialogue: 0,1:21:12.87,1:21:18.71,Default,,0000,0000,0000,,Nathan is seen bribing a French general to\Nensure the Duke of Wellington's victory,
Dialogue: 0,1:21:36.23,1:21:41.15,Default,,0000,0000,0000,,and then deliberately misreporting\Nthe outcome of the battle in London.
Dialogue: 0,1:21:57.48,1:22:00.64,Default,,0000,0000,0000,,This triggers panic selling\Nof British bonds,
Dialogue: 0,1:22:13.47,1:22:17.27,Default,,0000,0000,0000,,which Nathan then snaps up\Nat bargain-basement prices.
Dialogue: 0,1:23:11.54,1:23:15.39,Default,,0000,0000,0000,,What happened here\Nin 1 81 5 was altogether different.
Dialogue: 0,1:23:36.99,1:23:41.14,Default,,0000,0000,0000,,Far from making money\Nfrom WeIIington's defeat of NapoIeon,
Dialogue: 0,1:23:54.88,1:23:58.15,Default,,0000,0000,0000,,the RothschiIds\Nwere very nearIy ruined by it.
Dialogue: 0,1:24:10.66,1:24:14.57,Default,,0000,0000,0000,,Their fortune was made\Nnot by WaterIoo, but despite it.
Dialogue: 0,1:24:37.80,1:24:40.01,Default,,0000,0000,0000,,This is how it really happened.
Dialogue: 0,1:24:58.84,1:25:04.51,Default,,0000,0000,0000,,Selling bonds to the public had raised\Nplenty of cash for the British government.
Dialogue: 0,1:25:27.87,1:25:32.13,Default,,0000,0000,0000,,But neither bonds nor bank notes\Nwere any use to Wellington.
Dialogue: 0,1:25:47.86,1:25:52.30,Default,,0000,0000,0000,,To provision his troops\Nand pay Britain's allies against France
Dialogue: 0,1:26:04.69,1:26:08.38,Default,,0000,0000,0000,,he needed a currency\Nthat was universally acceptable.
Dialogue: 0,1:26:25.52,1:26:31.24,Default,,0000,0000,0000,,Nathan Rothschild was given the job of\Ntaking the money raised on the bond market
Dialogue: 0,1:26:54.55,1:26:57.53,Default,,0000,0000,0000,,and delivering it to Wellington -\Nas gold.
Dialogue: 0,1:27:27.16,1:27:32.54,Default,,0000,0000,0000,,The success of this operation would\Ndetermine the fate of the warring empires
Dialogue: 0,1:27:50.10,1:27:51.43,Default,,0000,0000,0000,,and of all Europe.
Dialogue: 0,1:28:17.66,1:28:23.21,Default,,0000,0000,0000,,This Ietter marks a turning point in\Nthe history of both the RothschiId famiIy,
Dialogue: 0,1:28:39.33,1:28:44.10,Default,,0000,0000,0000,,and the British government.\NIt's dated the 1 1th of January 181 4,
Dialogue: 0,1:28:58.69,1:29:02.59,Default,,0000,0000,0000,,and it's an order\Nfrom the ChanceIIor of the Exchequer
Dialogue: 0,1:29:15.10,1:29:19.90,Default,,0000,0000,0000,,to the Commissary-in-Chief\NteIIing him to appoint Nathan RothschiId -
Dialogue: 0,1:29:37.82,1:29:41.04,Default,,0000,0000,0000,,Mr RothschiId -\Nas a British government agent.
Dialogue: 0,1:29:52.34,1:29:57.81,Default,,0000,0000,0000,,Nathan's job was to gather together\Nas much goId and siIver as he couId find
Dialogue: 0,1:30:15.48,1:30:21.54,Default,,0000,0000,0000,,on the European continent and make sure it\Ngot to the Duke of WeIIington and his army
Dialogue: 0,1:30:37.99,1:30:42.88,Default,,0000,0000,0000,,who had just fought their way out of Spain\Ninto the South of France.
Dialogue: 0,1:30:57.14,1:30:59.88,Default,,0000,0000,0000,,It was an operation that reIied heaviIy
Dialogue: 0,1:31:11.24,1:31:14.98,Default,,0000,0000,0000,,on the RothschiIds' unique\Npan-European credit network
Dialogue: 0,1:31:28.28,1:31:34.01,Default,,0000,0000,0000,,and on Nathan's abiIity to mobiIise goId\Nthe way WeIIington couId mobiIise troops.
Dialogue: 0,1:32:08.04,1:32:13.40,Default,,0000,0000,0000,,Shifting such vast amounts of gold\Nin the middle of a war was hugely risky.
Dialogue: 0,1:32:32.45,1:32:35.25,Default,,0000,0000,0000,,Yet, from the Rothschilds'point of view,
Dialogue: 0,1:32:48.02,1:32:53.40,Default,,0000,0000,0000,,the hefty commissions they were able\Nto charge more than justified the risks.
Dialogue: 0,1:33:30.94,1:33:35.63,Default,,0000,0000,0000,,The Rothschilds soon became indispensable\Nto the British war effort.
Dialogue: 0,1:33:50.92,1:33:54.48,Default,,0000,0000,0000,,ln the words\Nof the British Commissary-in-Chief...
Dialogue: 0,1:34:06.07,1:34:10.23,Default,,0000,0000,0000,,''Rothschild of this place has executed\Nthe various services
Dialogue: 0,1:34:26.06,1:34:30.67,Default,,0000,0000,0000,,''entrusted to him in this line\Nadmirably well, and though a Jew,
Dialogue: 0,1:34:46.26,1:34:49.64,Default,,0000,0000,0000,,''we place a good deal\Nof confidence in him. ''
Dialogue: 0,1:35:14.87,1:35:18.44,Default,,0000,0000,0000,,The Rothschilds were so effective\Nas war financiers
Dialogue: 0,1:35:32.33,1:35:36.89,Default,,0000,0000,0000,,because they had a ready-made\Nbanking network within the family -
Dialogue: 0,1:35:54.42,1:35:57.12,Default,,0000,0000,0000,,Nathan in London, Amschel in Frankfurt,
Dialogue: 0,1:36:13.36,1:36:18.74,Default,,0000,0000,0000,,James in Paris, Carl in Amsterdam and\NSalomon roving wherever Nathan saw fit.
Dialogue: 0,1:37:18.58,1:37:23.06,Default,,0000,0000,0000,,lf the price of gold was higher in,\Nsay, Paris than in London,
Dialogue: 0,1:37:36.05,1:37:40.25,Default,,0000,0000,0000,,James in Paris would sell -\Nand Nathan in London would buy.
Dialogue: 0,1:38:30.33,1:38:35.100,Default,,0000,0000,0000,,I think their edge over famiIies Iike the\NBarings, with whom they were competing,
Dialogue: 0,1:38:52.42,1:38:58.10,Default,,0000,0000,0000,,was that they had their brothers in very\Nimportant financiaI centres in countries.
Dialogue: 0,1:39:18.30,1:39:20.75,Default,,0000,0000,0000,,Now whether that was pre-meditated,
Dialogue: 0,1:39:29.24,1:39:33.79,Default,,0000,0000,0000,,whether they thought that through\Nas they got out of the ghetto,
Dialogue: 0,1:39:47.12,1:39:50.89,Default,,0000,0000,0000,,it's hard to beIieve\Nthat they went as far as that.
Dialogue: 0,1:40:02.27,1:40:07.16,Default,,0000,0000,0000,,But that's what happened and once\Nthey saw that it was an advantage,
Dialogue: 0,1:40:20.57,1:40:22.67,Default,,0000,0000,0000,,they worked on that advantage.
Dialogue: 0,1:40:36.98,1:40:41.46,Default,,0000,0000,0000,,ln March 1 81 5, Napoleon returned to Paris\Nfrom exile in Elba
Dialogue: 0,1:41:00.55,1:41:03.60,Default,,0000,0000,0000,,determined to revive\Nhis imperial ambitions.
Dialogue: 0,1:41:29.16,1:41:33.21,Default,,0000,0000,0000,,The Rothschilds immediately\Nramped up their gold operation,
Dialogue: 0,1:41:49.15,1:41:53.87,Default,,0000,0000,0000,,buying up all the bullion and coins\Nthey could lay their hands on.
Dialogue: 0,1:42:07.03,1:42:11.46,Default,,0000,0000,0000,,Nathan's reason for buying this\Nhuge stock of gold was simple.
Dialogue: 0,1:42:32.91,1:42:36.17,Default,,0000,0000,0000,,He assumed that,\Nas with all Napoleon's wars,
Dialogue: 0,1:42:50.38,1:42:52.22,Default,,0000,0000,0000,,this would be a long one.
Dialogue: 0,1:43:01.74,1:43:06.92,Default,,0000,0000,0000,,His gold would be more and more\Nsought after and it would rise in value.
Dialogue: 0,1:43:31.40,1:43:34.55,Default,,0000,0000,0000,,lt proved to be\Na near-fatal miscalculation.
Dialogue: 0,1:44:03.17,1:44:06.63,Default,,0000,0000,0000,,Wellington famously\Ncalled the Battle of Waterloo,
Dialogue: 0,1:44:18.32,1:44:22.11,Default,,0000,0000,0000,,''The nearest-run thing\Nyou ever saw in your life. ''
Dialogue: 0,1:44:41.67,1:44:42.36,Default,,0000,0000,0000,,CROWS CAW
Dialogue: 0,1:44:59.14,1:45:03.76,Default,,0000,0000,0000,,After a day of brutal charges,\Ncounter charges and heroic defence,
Dialogue: 0,1:45:26.70,1:45:31.03,Default,,0000,0000,0000,,the late arrival of the Prussian Army\Nfinally proved decisive.
Dialogue: 0,1:45:54.68,1:45:57.60,Default,,0000,0000,0000,,For Wellington, it was a glorious victory.
Dialogue: 0,1:46:15.93,1:46:17.91,Default,,0000,0000,0000,,But not for the Rothschilds.
Dialogue: 0,1:46:37.81,1:46:41.14,Default,,0000,0000,0000,,No doubt it was gratifying\Nto Nathan RothschiId
Dialogue: 0,1:46:54.85,1:46:58.80,Default,,0000,0000,0000,,to be the first to hear the news\Nof NapoIeon's defeat.
Dialogue: 0,1:47:10.21,1:47:13.78,Default,,0000,0000,0000,,Thanks to the swiftness\Nof the RothschiId couriers,
Dialogue: 0,1:47:24.94,1:47:28.61,Default,,0000,0000,0000,,he heard it fuIIy 48 hours\Nbefore Major Henry Percy
Dialogue: 0,1:47:42.61,1:47:47.01,Default,,0000,0000,0000,,deIivered WeIIington's officiaI despatch\Nto the British Cabinet.
Dialogue: 0,1:48:01.34,1:48:04.01,Default,,0000,0000,0000,,But, no matter how early he heard it,
Dialogue: 0,1:48:15.43,1:48:20.50,Default,,0000,0000,0000,,the news of Waterloo was anything\Nbut good from Nathan's point of view.
Dialogue: 0,1:48:37.10,1:48:40.73,Default,,0000,0000,0000,,He had bargained\Nfor something much more protracted.
Dialogue: 0,1:48:53.72,1:48:59.54,Default,,0000,0000,0000,,Now he and his brothers were sitting on\Ntop of a piIe of cash that nobody wanted,
Dialogue: 0,1:49:20.44,1:49:22.76,Default,,0000,0000,0000,,to pay for a war that was over.
Dialogue: 0,1:49:36.02,1:49:37.82,Default,,0000,0000,0000,,With the coming of peace,
Dialogue: 0,1:49:44.22,1:49:48.49,Default,,0000,0000,0000,,the great armies that had fought Napoleon\Ncould be disbanded.
Dialogue: 0,1:50:04.42,1:50:09.78,Default,,0000,0000,0000,,That meant no more gold for soldiers'\Nwages and it meant the price of gold,
Dialogue: 0,1:50:27.14,1:50:30.29,Default,,0000,0000,0000,,which had soared during the war,\Nwould fall.
Dialogue: 0,1:51:29.21,1:51:32.54,Default,,0000,0000,0000,,Nathan was faced\Nwith heavy and growing losses.
Dialogue: 0,1:51:43.72,1:51:44.76,Default,,0000,0000,0000,,CAR HORNS HONK
Dialogue: 0,1:51:58.45,1:52:01.01,Default,,0000,0000,0000,,There was only one possible way out.
Dialogue: 0,1:52:17.60,1:52:23.09,Default,,0000,0000,0000,,Nathan could use the Rothschild gold\Nto make a massive and hugely risky bet...
Dialogue: 0,1:52:49.16,1:52:50.55,Default,,0000,0000,0000,,on the bond market.
Dialogue: 0,1:53:41.12,1:53:45.54,Default,,0000,0000,0000,,On July 20, 1 81 5, the evening edition\Nof the London Courier
Dialogue: 0,1:53:59.01,1:54:03.11,Default,,0000,0000,0000,,reported that Nathan had made\N''great purchases of stock'',
Dialogue: 0,1:54:21.73,1:54:23.96,Default,,0000,0000,0000,,meaning British government bonds.
Dialogue: 0,1:54:33.72,1:54:37.69,Default,,0000,0000,0000,,Nathan's gamble\Nwas that the British victory at Waterloo
Dialogue: 0,1:54:53.92,1:54:57.72,Default,,0000,0000,0000,,would send the price of British bonds\Nsoaring upwards.
Dialogue: 0,1:55:31.16,1:55:36.46,Default,,0000,0000,0000,,Nathan bought, and as the price of bonds\Nbegan to rise, he kept on buying.
Dialogue: 0,1:56:09.03,1:56:14.07,Default,,0000,0000,0000,,Despite his brothers' desperate entreaties\Nto sell, Nathan held his nerve
Dialogue: 0,1:56:42.48,1:56:43.70,Default,,0000,0000,0000,,for another year.
Dialogue: 0,1:57:13.41,1:57:15.38,Default,,0000,0000,0000,,Eventually, in July 1 81 7,
Dialogue: 0,1:57:25.40,1:57:28.89,Default,,0000,0000,0000,,with bond prices up by 40%,\Nhe sold his holding.
Dialogue: 0,1:57:51.70,1:57:55.57,Default,,0000,0000,0000,,His profits were worth approximately\NŁ600 million today.
Dialogue: 0,1:58:20.53,1:58:22.28,Default,,0000,0000,0000,,The Rothschilds had shown
Dialogue: 0,1:58:38.83,1:58:43.96,Default,,0000,0000,0000,,that bonds were more than just a way\Nfor governments to fund their wars.
Dialogue: 0,1:58:58.40,1:59:03.24,Default,,0000,0000,0000,,They could be bought and sold in a way\Nthat generated serious money.
Dialogue: 0,1:59:22.59,1:59:24.51,Default,,0000,0000,0000,,And with money, came power.
Dialogue: 0,1:59:54.36,1:59:58.82,Default,,0000,0000,0000,,Mayer Amschel Rothschild\Nhad repeatedly admonished his five sons,
Dialogue: 0,2:00:16.66,2:00:20.88,Default,,0000,0000,0000,,''lf you can't make yourself loved,\Nmake yourself feared. ''
Dialogue: 0,2:00:36.44,2:00:40.29,Default,,0000,0000,0000,,As they bestrode\Nthe mid-1 9th century financial world
Dialogue: 0,2:00:52.64,2:00:54.79,Default,,0000,0000,0000,,as masters of the bond market,
Dialogue: 0,2:01:02.74,2:01:06.37,Default,,0000,0000,0000,,the Rothschilds were already\Nmore feared than loved.
Dialogue: 0,2:01:24.41,2:01:26.91,Default,,0000,0000,0000,,But now, they had become hated too.
Dialogue: 0,2:02:20.59,2:02:23.45,Default,,0000,0000,0000,,The fact that the Rothschilds were Jewish
Dialogue: 0,2:02:33.00,2:02:37.03,Default,,0000,0000,0000,,gave a new impetus\Nto deep-rooted anti-Semitic prejudice.
Dialogue: 0,2:03:00.77,2:03:05.61,Default,,0000,0000,0000,,(RothschiId) Just a few months ago\Na colleague of mine in my office,
Dialogue: 0,2:03:18.45,2:03:20.91,Default,,0000,0000,0000,,who coIIects posters, found these...
Dialogue: 0,2:03:41.80,2:03:46.44,Default,,0000,0000,0000,,WeII, this particuIar, rather\Nextraordinary exampIe of anti-Semitism
Dialogue: 0,2:04:09.36,2:04:14.38,Default,,0000,0000,0000,,in a stark form, about the RothschiIds,\Nwho were as it were epitomised,
Dialogue: 0,2:04:31.45,2:04:33.48,Default,,0000,0000,0000,,to them and others at times,
Dialogue: 0,2:04:49.34,2:04:54.20,Default,,0000,0000,0000,,the most extreme forms of undesirabIe\NcapitaIism as practised by Jews.
Dialogue: 0,2:05:21.74,2:05:27.18,Default,,0000,0000,0000,,lt was, above all, the Rothschilds'\Nseeming ability to permit or prohibit wars
Dialogue: 0,2:06:00.66,2:06:03.00,Default,,0000,0000,0000,,that aroused the most indignation.
Dialogue: 0,2:06:35.80,2:06:40.24,Default,,0000,0000,0000,,You might have thought that\Nthe RothschiIds actuaIIy needed war.
Dialogue: 0,2:06:53.89,2:06:58.67,Default,,0000,0000,0000,,After aII, some of Nathan's biggest deaIs\Nhad been produced by war.
Dialogue: 0,2:07:15.98,2:07:21.86,Default,,0000,0000,0000,,If it hadn't been for war, 19th-century\Nstates wouIdn't have needed to issue bonds
Dialogue: 0,2:07:40.18,2:07:42.74,Default,,0000,0000,0000,,for the RothschiIds to buy and seII.
Dialogue: 0,2:07:51.33,2:07:55.53,Default,,0000,0000,0000,,But the troubIe with war,\Nand even more so with revoIution,
Dialogue: 0,2:08:11.74,2:08:17.58,Default,,0000,0000,0000,,was that increased the risk that a debtor\Nstate might faiI to meet its commitments.
Dialogue: 0,2:08:36.98,2:08:39.89,Default,,0000,0000,0000,,And that hit the price of existing bonds.
Dialogue: 0,2:08:53.18,2:08:58.03,Default,,0000,0000,0000,,By the mid-19th century, the RothschiIds\Nwere no Ionger mere traders,
Dialogue: 0,2:09:12.33,2:09:14.02,Default,,0000,0000,0000,,they were fund managers,
Dialogue: 0,2:09:21.16,2:09:25.90,Default,,0000,0000,0000,,carefuIIy tending to a vast portfoIio\Nof their own government bonds.
Dialogue: 0,2:09:43.26,2:09:47.63,Default,,0000,0000,0000,,Now, they stood to Iose much more\Nthan to gain from confIict.
Dialogue: 0,2:10:10.82,2:10:15.56,Default,,0000,0000,0000,,The Rothschilds had helped decide\Nthe outcome of the Napoleonic Wars
Dialogue: 0,2:10:29.12,2:10:32.52,Default,,0000,0000,0000,,by putting their financial weight\Nbehind Britain.
Dialogue: 0,2:10:43.85,2:10:48.52,Default,,0000,0000,0000,,Now they would help decide the outcome\Nof the American Civil War -
Dialogue: 0,2:11:01.94,2:11:04.50,Default,,0000,0000,0000,,by choosing to sit on the sidelines.
Dialogue: 0,2:11:20.46,2:11:21.04,Default,,0000,0000,0000,,GUNSHOTS
Dialogue: 0,2:11:34.13,2:11:40.07,Default,,0000,0000,0000,,Once again, it was the masters of the bond\Nmarket who would be the arbiters of war.
Dialogue: 0,2:13:03.34,2:13:08.64,Default,,0000,0000,0000,,50 years after the Battle of Waterloo,\Nand on the other side of the world,
Dialogue: 0,2:13:30.27,2:13:35.05,Default,,0000,0000,0000,,another great war would be decided\Nby the power of the bond market.
Dialogue: 0,2:14:04.99,2:14:10.17,Default,,0000,0000,0000,,But this time, it would be the vanquished\Nwho made the big bet and lost.
Dialogue: 0,2:15:32.93,2:15:38.30,Default,,0000,0000,0000,,The traditional view is that the key\Nturning point in the American Civil War
Dialogue: 0,2:15:55.86,2:15:59.36,Default,,0000,0000,0000,,came in June 1 863,\Ntwo years into the conflict.
Dialogue: 0,2:16:19.01,2:16:22.81,Default,,0000,0000,0000,,That was the month\Nwhen Union forces captured Jackson,
Dialogue: 0,2:16:37.94,2:16:39.99,Default,,0000,0000,0000,,the Mississippi state capital,
Dialogue: 0,2:16:47.83,2:16:52.22,Default,,0000,0000,0000,,and forced a Confederate army\Nto retreat westward to Vicksburg,
Dialogue: 0,2:17:07.61,2:17:10.18,Default,,0000,0000,0000,,their backs to the Mississippi River.
Dialogue: 0,2:17:29.91,2:17:34.73,Default,,0000,0000,0000,,Surrounded, with Union gunboats\Nbombarding their positions from behind,
Dialogue: 0,2:17:53.69,2:17:58.42,Default,,0000,0000,0000,,the Southerners held out for a month\Nbefore laying down their arms.
Dialogue: 0,2:18:34.50,2:18:39.41,Default,,0000,0000,0000,,After Vicksburg, the Mississippi\Nwas firmly in the hands of the North.
Dialogue: 0,2:18:54.07,2:18:56.69,Default,,0000,0000,0000,,The South was literally split in two.
Dialogue: 0,2:19:33.41,2:19:37.09,Default,,0000,0000,0000,,Yet this military setback\Nwasn't the decisive factor
Dialogue: 0,2:19:55.92,2:20:00.72,Default,,0000,0000,0000,,in the South's ultimate defeat.\NThe real turning point came earlier.
Dialogue: 0,2:20:20.75,2:20:22.26,Default,,0000,0000,0000,,And it was financial.
Dialogue: 0,2:20:53.15,2:20:55.61,Default,,0000,0000,0000,,200 miles downstream from Vicksburg,
Dialogue: 0,2:21:09.77,2:21:15.20,Default,,0000,0000,0000,,where the Mississippi joins the Gulf\Nof Mexico, lies the port of New Orleans.
Dialogue: 0,2:22:01.53,2:22:02.86,Default,,0000,0000,0000,,This is Fort Pike,
Dialogue: 0,2:22:14.78,2:22:19.64,Default,,0000,0000,0000,,buiIt after 1812 to protect New OrIeans\Nfrom a future British attack.
Dialogue: 0,2:22:41.29,2:22:46.88,Default,,0000,0000,0000,,But 50 years Iater, it wasn't abIe to\Nprotect the South from a Northern attack
Dialogue: 0,2:23:08.65,2:23:13.33,Default,,0000,0000,0000,,when Captain David Farragut seized\NNew OrIeans on ApriI 28th, 1862.
Dialogue: 0,2:23:38.52,2:23:41.42,Default,,0000,0000,0000,,It was a cruciaI moment in the CiviI War
Dialogue: 0,2:23:52.41,2:23:58.02,Default,,0000,0000,0000,,as New OrIeans was the principaI outIet\Nfor the South's most important export...
Dialogue: 0,2:24:35.12,2:24:35.76,Default,,0000,0000,0000,,..cotton.
Dialogue: 0,2:24:44.58,2:24:49.38,Default,,0000,0000,0000,,Without control over the cotton trade\Nthe South's cause was doomed -
Dialogue: 0,2:25:09.83,2:25:13.29,Default,,0000,0000,0000,,because cotton had become\Nthe essential ingredient
Dialogue: 0,2:25:29.40,2:25:33.77,Default,,0000,0000,0000,,in an ambitious scheme to bring\Nthe bond market into the war.
Dialogue: 0,2:26:11.06,2:26:14.33,Default,,0000,0000,0000,,Like the ltalian city states\N500 years before,
Dialogue: 0,2:26:32.31,2:26:36.70,Default,,0000,0000,0000,,the Confederate Treasury\Nhad initially raised money for the war
Dialogue: 0,2:26:49.98,2:26:52.60,Default,,0000,0000,0000,,by selling bonds to its own citizens.
Dialogue: 0,2:27:12.28,2:27:16.83,Default,,0000,0000,0000,,But there was a finite amount of capital\Navailable in the South.
Dialogue: 0,2:27:33.95,2:27:37.05,Default,,0000,0000,0000,,To survive, the Confederacy\Nlooked to Europe
Dialogue: 0,2:27:55.20,2:28:00.22,Default,,0000,0000,0000,,in the hope that the world's greatest\Nfinancial dynasty might help them
Dialogue: 0,2:28:16.66,2:28:20.81,Default,,0000,0000,0000,,beat the North as they had helped\NWellington beat Napoleon.
Dialogue: 0,2:28:54.11,2:28:57.69,Default,,0000,0000,0000,,lnitially, the Confederacy\Nhad grounds for optimism.
Dialogue: 0,2:29:21.88,2:29:25.52,Default,,0000,0000,0000,,ln New York, the Rothschilds' agent\Nwas sympathetic,
Dialogue: 0,2:29:39.77,2:29:43.28,Default,,0000,0000,0000,,having opposed the North's leader,\NAbraham Lincoln
Dialogue: 0,2:29:55.97,2:29:58.65,Default,,0000,0000,0000,,in the presidential election of 1 860.
Dialogue: 0,2:30:38.68,2:30:41.14,Default,,0000,0000,0000,,But still the Rothschilds hesitated.
Dialogue: 0,2:30:53.62,2:30:58.100,Default,,0000,0000,0000,,Lending to the British government to help\Ndefeat Napoleon had been one thing.
Dialogue: 0,2:31:21.39,2:31:25.89,Default,,0000,0000,0000,,But buying bonds from a bunch of\Nbreakaway Southern slave states
Dialogue: 0,2:31:47.48,2:31:49.10,Default,,0000,0000,0000,,seemed a risk too far.
Dialogue: 0,2:31:58.84,2:32:01.35,Default,,0000,0000,0000,,The Rothschilds decided to stay out.
Dialogue: 0,2:32:45.55,2:32:47.30,Default,,0000,0000,0000,,Yet despite this setback,
Dialogue: 0,2:33:00.27,2:33:04.90,Default,,0000,0000,0000,,the Confederate government\Nhad an ingenious trick up their sleeves.
Dialogue: 0,2:33:22.16,2:33:26.30,Default,,0000,0000,0000,,The trick, like the sleeves themselves,\Nwas made of cotton.
Dialogue: 0,2:33:58.97,2:34:03.80,Default,,0000,0000,0000,,The South's idea was to use cotton\Nas collateral to back its bonds.
Dialogue: 0,2:34:29.90,2:34:35.16,Default,,0000,0000,0000,,lnvestors would be comforted to know\Nthat if the interest payments dried up
Dialogue: 0,2:34:55.36,2:34:58.52,Default,,0000,0000,0000,,they could still demand\Ntheir cotton instead.
Dialogue: 0,2:35:21.66,2:35:23.92,Default,,0000,0000,0000,,The South's agents went to work
Dialogue: 0,2:35:32.39,2:35:36.13,Default,,0000,0000,0000,,selling the bonds\Nin the financial centres of Europe.
Dialogue: 0,2:36:05.42,2:36:09.23,Default,,0000,0000,0000,,When the Confederacy tried to market\Nconventional bonds
Dialogue: 0,2:36:22.67,2:36:25.95,Default,,0000,0000,0000,,in European financial centres\Nlike Amsterdam's,
Dialogue: 0,2:36:40.77,2:36:44.10,Default,,0000,0000,0000,,investors wouldn't touch them\Nwith a bargepole.
Dialogue: 0,2:36:54.44,2:36:58.94,Default,,0000,0000,0000,,But when an obscure French firm\Nnamed EmiIe ErIanger and Company
Dialogue: 0,2:37:18.85,2:37:23.36,Default,,0000,0000,0000,,offered cotton-backed bonds,\Nit was a compIeteIy different story.
Dialogue: 0,2:37:39.47,2:37:42.67,Default,,0000,0000,0000,,The key to the success\Nof the ErIanger bonds
Dialogue: 0,2:37:53.77,2:37:56.92,Default,,0000,0000,0000,,was that they couId be\Nconverted into cotton
Dialogue: 0,2:38:07.45,2:38:10.52,Default,,0000,0000,0000,,at the pre-war price of six pence a pound.
Dialogue: 0,2:38:35.85,2:38:41.05,Default,,0000,0000,0000,,These cotton bonds formed the basis\Nof the South's new financial strategy.
Dialogue: 0,2:38:58.79,2:39:02.70,Default,,0000,0000,0000,,lf they could restrict\Nthe supply of cotton, its value,
Dialogue: 0,2:39:20.46,2:39:23.55,Default,,0000,0000,0000,,and the value of the bonds,\Nwould increase.
Dialogue: 0,2:39:33.92,2:39:37.94,Default,,0000,0000,0000,,At the same time, the Confederates\Nset out to use cotton
Dialogue: 0,2:39:54.96,2:39:58.70,Default,,0000,0000,0000,,to blackmail the most powerful country\Nin the world -
Dialogue: 0,2:40:09.48,2:40:10.06,Default,,0000,0000,0000,,Britain.
Dialogue: 0,2:40:34.73,2:40:38.64,Default,,0000,0000,0000,,(Tour guide) The routes\Nto the United States of America
Dialogue: 0,2:40:50.50,2:40:53.84,Default,,0000,0000,0000,,provided Liverpool\Nwith growing volumes of trade
Dialogue: 0,2:41:05.23,2:41:10.42,Default,,0000,0000,0000,,and new docks opened on the Mersey\Nin quick succession during the 1 800s.
Dialogue: 0,2:41:34.27,2:41:39.06,Default,,0000,0000,0000,,(Narrator) ln 1 860, the Port of Liverpool\Nwas the principal gateway
Dialogue: 0,2:41:54.46,2:41:58.26,Default,,0000,0000,0000,,for imports of cotton\Nto the British textile industry,
Dialogue: 0,2:42:10.03,2:42:13.78,Default,,0000,0000,0000,,then the mainstay\Nof the Victorian industriaI economy.
Dialogue: 0,2:42:29.18,2:42:33.79,Default,,0000,0000,0000,,More than 80% of the cotton\Ncame from the Southern United States.
Dialogue: 0,2:42:49.59,2:42:52.75,Default,,0000,0000,0000,,Now that gave\Nthe Confederate Ieadership hope
Dialogue: 0,2:43:02.63,2:43:08.22,Default,,0000,0000,0000,,that they had the Ieverage to bring\Nin Britain on their side in the CiviI War.
Dialogue: 0,2:43:27.88,2:43:32.20,Default,,0000,0000,0000,,To ratchet up the pressure,\Nthey decided to impose an embargo
Dialogue: 0,2:43:47.24,2:43:50.04,Default,,0000,0000,0000,,on aII shipments of cotton to LiverpooI.
Dialogue: 0,2:44:21.53,2:44:25.27,Default,,0000,0000,0000,,For a while, the South's strategy\Nworked brilliantly.
Dialogue: 0,2:44:37.52,2:44:43.08,Default,,0000,0000,0000,,Cotton prices soared. So did the value\Nof the Confederates' cotton-backed bonds.
Dialogue: 0,2:45:06.77,2:45:10.52,Default,,0000,0000,0000,,And the cotton embargo\Ndevastated the British economy.
Dialogue: 0,2:45:32.22,2:45:34.84,Default,,0000,0000,0000,,Mills were forced to lay off workers.
Dialogue: 0,2:45:49.26,2:45:53.00,Default,,0000,0000,0000,,Eventually, in late 1 862,\Nproduction all but ceased.
Dialogue: 0,2:46:46.49,2:46:51.76,Default,,0000,0000,0000,,This cotton miII in StyaI, south of\NManchester, empIoyed around 400 workers,
Dialogue: 0,2:47:15.95,2:47:19.61,Default,,0000,0000,0000,,but that was just a fraction\Nof the 500,000 peopIe
Dialogue: 0,2:47:32.15,2:47:35.08,Default,,0000,0000,0000,,empIoyed by King Cotton\Nacross Lancashire.
Dialogue: 0,2:47:47.72,2:47:52.04,Default,,0000,0000,0000,,ObviousIy, with no cotton\Nthere was nothing for peopIe to do.
Dialogue: 0,2:48:04.13,2:48:05.57,Default,,0000,0000,0000,,By the end of 1862,
Dialogue: 0,2:48:15.49,2:48:19.58,Default,,0000,0000,0000,,haIf the entire workforce\Nof Lancashire had been Iaid off.
Dialogue: 0,2:48:32.74,2:48:36.12,Default,,0000,0000,0000,,A quarter of the popuIation\Nwas on poor reIief.
Dialogue: 0,2:48:48.52,2:48:53.89,Default,,0000,0000,0000,,They caIIed it the ''Cotton Famine'',\Nbut this reaIIy was a man-made famine.
Dialogue: 0,2:49:33.12,2:49:35.10,Default,,0000,0000,0000,,Britain was in the doldrums.
Dialogue: 0,2:49:43.86,2:49:47.18,Default,,0000,0000,0000,,And the South's cotton bonds\Nwere riding high.
Dialogue: 0,2:49:59.84,2:50:03.64,Default,,0000,0000,0000,,Yet the South's ability\Nto manipulate the bond market
Dialogue: 0,2:50:22.36,2:50:25.05,Default,,0000,0000,0000,,depended on one over-riding condition -
Dialogue: 0,2:50:35.40,2:50:40.43,Default,,0000,0000,0000,,that investors could be sure of taking\Nphysical possession of the cotton
Dialogue: 0,2:50:58.33,2:51:03.77,Default,,0000,0000,0000,,which underpinned the bonds if the South\Nfailed to make its interest payments.
Dialogue: 0,2:51:43.57,2:51:47.86,Default,,0000,0000,0000,,And that's why the fall of New Orleans\Non April 28, 1 862,
Dialogue: 0,2:52:14.92,2:52:18.71,Default,,0000,0000,0000,,was the real turning point\Nin the American Civil War.
Dialogue: 0,2:52:34.90,2:52:38.56,Default,,0000,0000,0000,,Now that the South's main port\Nwas in Union hands,
Dialogue: 0,2:52:52.79,2:52:56.99,Default,,0000,0000,0000,,any investor who wanted to lay his hands\Non Southern cotton
Dialogue: 0,2:53:09.41,2:53:12.91,Default,,0000,0000,0000,,had to run the Union's\Nformidable naval blockade.
Dialogue: 0,2:54:47.87,2:54:50.86,Default,,0000,0000,0000,,The Confederates\Nhad overplayed their hand.
Dialogue: 0,2:55:01.97,2:55:07.79,Default,,0000,0000,0000,,They had turned off the cotton tap, but\Nthen lost the ability to turn it back on.
Dialogue: 0,2:55:29.95,2:55:34.61,Default,,0000,0000,0000,,By 1 863, the mills of Lancashire\Nhad found new sources of cotton
Dialogue: 0,2:55:55.62,2:55:57.48,Default,,0000,0000,0000,,in China, Egypt, and lndia
Dialogue: 0,2:56:06.35,2:56:11.61,Default,,0000,0000,0000,,and investors were rapidly losing faith\Nin the South's cotton-backed bonds.
Dialogue: 0,2:56:34.96,2:56:39.14,Default,,0000,0000,0000,,The consequences for the Confederate\Neconomy were disastrous.
Dialogue: 0,2:57:00.84,2:57:05.99,Default,,0000,0000,0000,,With its domestic bond market exhausted\Nand onIy two paItry foreign Ioans,
Dialogue: 0,2:57:27.77,2:57:32.57,Default,,0000,0000,0000,,the Confederacy reaIIy had no aIternative\Nbut to print paper doIIars,
Dialogue: 0,2:57:49.23,2:57:54.30,Default,,0000,0000,0000,,like these ones here in the Louisiana\NState Museum, to pay for the war.
Dialogue: 0,2:58:13.85,2:58:16.41,Default,,0000,0000,0000,,ln all, 1. 7 billion dollars' worth.
Dialogue: 0,2:58:34.26,2:58:38.22,Default,,0000,0000,0000,,Now, it's true that the North\NaIso printed paper money,
Dialogue: 0,2:58:50.04,2:58:56.16,Default,,0000,0000,0000,,but by the end of the war its ''greenbacks''\Nwere stiII worth around 50 pre-war cents,
Dialogue: 0,2:59:16.55,2:59:20.64,Default,,0000,0000,0000,,whereas a Southern ''greyback''\Nwas down to just one cent.
Dialogue: 0,2:59:34.43,2:59:39.79,Default,,0000,0000,0000,,What's more, with more and more of\Nthis cash chasing fewer and fewer goods,
Dialogue: 0,2:59:57.78,3:00:00.48,Default,,0000,0000,0000,,infIation in the South simpIy expIoded.
Dialogue: 0,3:00:11.88,3:00:16.70,Default,,0000,0000,0000,,By January 1865, the price of some goods\Nwas up by a factor of 90.
Dialogue: 0,3:00:54.38,3:00:58.59,Default,,0000,0000,0000,,The South had bet everything\Non manipulating the bond market
Dialogue: 0,3:01:13.11,3:01:14.09,Default,,0000,0000,0000,,and had lost.
Dialogue: 0,3:01:22.15,3:01:26.91,Default,,0000,0000,0000,,lt would not be the last time in history\Nthat an attempt to do so
Dialogue: 0,3:01:38.98,3:01:41.14,Default,,0000,0000,0000,,would end in ruinous inflation.
Dialogue: 0,3:02:23.38,3:02:26.88,Default,,0000,0000,0000,,Today the global market\Nfor bonds is still bigger
Dialogue: 0,3:02:45.47,3:02:49.20,Default,,0000,0000,0000,,than the all the world's\Nstock markets put together.
Dialogue: 0,3:03:05.46,3:03:09.42,Default,,0000,0000,0000,,lt's still a market\Nthat can make or break governments.
Dialogue: 0,3:03:47.54,3:03:50.39,Default,,0000,0000,0000,,Does it surprise you that its key player
Dialogue: 0,3:03:59.53,3:04:03.67,Default,,0000,0000,0000,,began his money-making career\Nin the casinos of Las Vegas?
Dialogue: 0,3:04:32.98,3:04:34.78,Default,,0000,0000,0000,,I was a bIackjack pIayer.
Dialogue: 0,3:04:42.24,3:04:46.51,Default,,0000,0000,0000,,One of the first professionaI\NbIackjack pIayers, not to brag,
Dialogue: 0,3:05:04.54,3:05:07.26,Default,,0000,0000,0000,,but in the Iate '60s, I went to Vegas
Dialogue: 0,3:05:18.00,3:05:22.08,Default,,0000,0000,0000,,and appIied a card-counting system\Nto try and beat Vegas.
Dialogue: 0,3:06:04.29,3:06:08.90,Default,,0000,0000,0000,,Now this master of understatement\Nis the King of the Bond Market,
Dialogue: 0,3:06:28.07,3:06:31.57,Default,,0000,0000,0000,,controller of the biggest bond fund\Nin the world.
Dialogue: 0,3:06:41.53,3:06:44.77,Default,,0000,0000,0000,,So what has this got to do\Nwith you and me?
Dialogue: 0,3:07:01.73,3:07:04.35,Default,,0000,0000,0000,,Well, when Gross buys or sells bonds,
Dialogue: 0,3:07:13.30,3:07:17.69,Default,,0000,0000,0000,,it doesn't just affect financial markets\Nand government policy,
Dialogue: 0,3:07:36.23,3:07:39.14,Default,,0000,0000,0000,,it affects the value of our pension funds
Dialogue: 0,3:07:49.70,3:07:53.08,Default,,0000,0000,0000,,and the interest rates\Nwe pay on our mortgages.
Dialogue: 0,3:08:10.11,3:08:13.65,Default,,0000,0000,0000,,There's only one thing\Nthat Mr Bond is afraid of
Dialogue: 0,3:08:30.30,3:08:32.04,Default,,0000,0000,0000,,and it's not Goldfinger.
Dialogue: 0,3:08:46.30,3:08:47.92,Default,,0000,0000,0000,,Rather, it's inflation.
Dialogue: 0,3:09:04.39,3:09:07.02,Default,,0000,0000,0000,,The lethal danger that inflation poses
Dialogue: 0,3:09:18.49,3:09:24.31,Default,,0000,0000,0000,,is that it undermines the value of being\Npaid a fixed rate of interest on a bond.
Dialogue: 0,3:09:44.58,3:09:46.54,Default,,0000,0000,0000,,If infIation goes up to 10%
Dialogue: 0,3:10:05.82,3:10:09.60,Default,,0000,0000,0000,,and the vaIue of a fixed-rate interest\Nis onIy five,
Dialogue: 0,3:10:30.23,3:10:35.25,Default,,0000,0000,0000,,then that means that the bond hoIder\Nis faIIing behind infIation by 5%.
Dialogue: 0,3:11:07.05,3:11:11.95,Default,,0000,0000,0000,,That's why, at the first whiff\Nof higher inflation, bond prices fall,
Dialogue: 0,3:11:29.77,3:11:32.04,Default,,0000,0000,0000,,and in some cases, keep falling.
Dialogue: 0,3:12:13.74,3:12:18.70,Default,,0000,0000,0000,,To see just how bad things can get\Nwhen the inflationary genie escapes
Dialogue: 0,3:12:33.73,3:12:38.45,Default,,0000,0000,0000,,from the bottle you just have to look\Nat the example of Argentina.
Dialogue: 0,3:13:29.06,3:13:33.64,Default,,0000,0000,0000,,Many Argentines date the steady\Ndecline of their economic fortunes
Dialogue: 0,3:13:50.52,3:13:52.60,Default,,0000,0000,0000,,to a day in February, 1 946,
Dialogue: 0,3:14:02.94,3:14:07.10,Default,,0000,0000,0000,,when the newly elected President,\NGeneral Juan Domingo Peron
Dialogue: 0,3:14:23.14,3:14:26.46,Default,,0000,0000,0000,,came here to the Central Bank\Nin Buenos Aires.
Dialogue: 0,3:15:01.43,3:15:03.81,Default,,0000,0000,0000,,He was astonished at what he saw.
Dialogue: 0,3:15:16.37,3:15:19.23,Default,,0000,0000,0000,,''There is so much gold, '' he marvelled,
Dialogue: 0,3:15:30.04,3:15:33.32,Default,,0000,0000,0000,,''you can hardly walk\Nthrough the corridors. ''
Dialogue: 0,3:15:53.61,3:15:57.24,Default,,0000,0000,0000,,The very name Argentina\Nsuggests wealth and plenty -
Dialogue: 0,3:16:14.44,3:16:16.70,Default,,0000,0000,0000,,it means ''The Land Of Silver''.
Dialogue: 0,3:16:23.27,3:16:28.93,Default,,0000,0000,0000,,The river flowing past the capital is\Nthe Rio de la Plata, ''The Silver River''.
Dialogue: 0,3:17:15.24,3:17:19.60,Default,,0000,0000,0000,,Once upon a time, there used to be\Ntwo Harrods in the world.
Dialogue: 0,3:17:36.07,3:17:41.39,Default,,0000,0000,0000,,One in London, in Knightsbridge, and\Nthe other here, in the Avenida Florida,
Dialogue: 0,3:17:57.32,3:17:59.41,Default,,0000,0000,0000,,in the heart of Buenos Aires.
Dialogue: 0,3:18:05.94,3:18:07.10,Default,,0000,0000,0000,,Founded in 1912,
Dialogue: 0,3:18:16.88,3:18:22.13,Default,,0000,0000,0000,,this other Harrods is a reminder\Nthat Argentina used to be a rich country.
Dialogue: 0,3:18:41.29,3:18:46.94,Default,,0000,0000,0000,,At one time, its per capita income was\N18% Iess than that of the United States.
Dialogue: 0,3:19:10.54,3:19:13.64,Default,,0000,0000,0000,,Investors who fIocked\Nto buy Argentine bonds
Dialogue: 0,3:19:26.95,3:19:31.75,Default,,0000,0000,0000,,hoped that Argentina wouId become\Nthe United States of South America.
Dialogue: 0,3:19:58.29,3:20:00.80,Default,,0000,0000,0000,,Well, Argentina's history since then
Dialogue: 0,3:20:10.08,3:20:15.16,Default,,0000,0000,0000,,is a classic illustration that all the\Nresources and talent in the world
Dialogue: 0,3:20:34.27,3:20:38.19,Default,,0000,0000,0000,,can be set at nought\Nby chronic financial mismanagement.
Dialogue: 0,3:21:18.03,3:21:19.26,Default,,0000,0000,0000,,MUTED CONVERSATION
Dialogue: 0,3:21:40.34,3:21:44.44,Default,,0000,0000,0000,,There have been many financial crises\Nin Argentine history.
Dialogue: 0,3:22:02.64,3:22:05.89,Default,,0000,0000,0000,,But the crisis\Nthat hit the country in 1 989
Dialogue: 0,3:22:21.78,3:22:22.95,Default,,0000,0000,0000,,was unparalleled.
Dialogue: 0,3:23:48.47,3:23:50.51,Default,,0000,0000,0000,,At the beginning of February,
Dialogue: 0,3:23:54.57,3:23:59.01,Default,,0000,0000,0000,,the country was suffering\None of the hottest summers on record.
Dialogue: 0,3:24:16.24,3:24:20.39,Default,,0000,0000,0000,,ln Buenos Aires, the electricity system\Njust couldn't cope.
Dialogue: 0,3:24:34.54,3:24:37.17,Default,,0000,0000,0000,,Five-hour power cuts were commonplace.
Dialogue: 0,3:25:03.58,3:25:08.42,Default,,0000,0000,0000,,But these, as it turned out,\Nwere the least of Argentina's problems.
Dialogue: 0,3:25:31.56,3:25:33.65,Default,,0000,0000,0000,,As is almost always the case,
Dialogue: 0,3:25:49.86,3:25:53.72,Default,,0000,0000,0000,,there were several well-trodden steps\Nto monetary hell.
Dialogue: 0,3:26:12.59,3:26:16.21,Default,,0000,0000,0000,,In step one, the government\Nspends more, much more,
Dialogue: 0,3:26:32.78,3:26:34.93,Default,,0000,0000,0000,,than it can raise in taxation.
Dialogue: 0,3:26:40.36,3:26:43.79,Default,,0000,0000,0000,,UsuaIIy, but not aIways,\Nit's because of a war.
Dialogue: 0,3:26:59.08,3:27:01.64,Default,,0000,0000,0000,,In Argentina's case, there were two.
Dialogue: 0,3:27:08.13,3:27:12.44,Default,,0000,0000,0000,,One, a civiI war between GeneraIs\Nand the Left in the 1970s,
Dialogue: 0,3:27:29.17,3:27:34.37,Default,,0000,0000,0000,,the other a foreign war against Britain\Nover the FaIkIand IsIands in 1982.
Dialogue: 0,3:27:54.42,3:27:58.27,Default,,0000,0000,0000,,By 1989, the financiaI system\Nwas about ready to bIow.
Dialogue: 0,3:28:29.97,3:28:34.18,Default,,0000,0000,0000,,By February, inflation had already\Nreached 1 0% - per month.
Dialogue: 0,3:29:08.26,3:29:13.52,Default,,0000,0000,0000,,Banks were ordered to close as the\Ngovernment tried to lower interest rates
Dialogue: 0,3:29:30.15,3:29:33.95,Default,,0000,0000,0000,,and stop the currency's\Nexchange rate from collapsing.
Dialogue: 0,3:29:50.98,3:29:52.12,Default,,0000,0000,0000,,lt didn't work.
Dialogue: 0,3:30:02.34,3:30:03.55,Default,,0000,0000,0000,,ln just a month,
Dialogue: 0,3:30:10.75,3:30:13.78,Default,,0000,0000,0000,,the austral fell 1 40%\Nagainst the dollar.
Dialogue: 0,3:30:42.73,3:30:46.99,Default,,0000,0000,0000,,At the same time, the World Bank\Nfroze lending to Argentina,
Dialogue: 0,3:31:02.51,3:31:07.89,Default,,0000,0000,0000,,saying that the government had failed\Nto tackle the root cause of inflation -
Dialogue: 0,3:31:23.34,3:31:25.56,Default,,0000,0000,0000,,a bloated public-sector deficit.
Dialogue: 0,3:31:35.96,3:31:39.64,Default,,0000,0000,0000,,With no cheap Ioans forthcoming\Nfrom the WorId Bank,
Dialogue: 0,3:31:55.53,3:32:00.79,Default,,0000,0000,0000,,the government tried to finance its\Ndeficit by seIIing bonds to the pubIic.
Dialogue: 0,3:32:17.41,3:32:21.85,Default,,0000,0000,0000,,But investors were hardIy IikeIy\Nto buy bonds with the prospect
Dialogue: 0,3:32:35.29,3:32:40.94,Default,,0000,0000,0000,,that their reaI vaIue wouId be wiped out\Nby infIation in just a matter of days.
Dialogue: 0,3:32:59.70,3:33:00.98,Default,,0000,0000,0000,,Nobody was buying.
Dialogue: 0,3:33:07.06,3:33:09.98,Default,,0000,0000,0000,,The government was running out of options.
Dialogue: 0,3:33:32.52,3:33:36.34,Default,,0000,0000,0000,,ln April, furious customers\Noverturned shopping trolleys
Dialogue: 0,3:33:50.40,3:33:53.98,Default,,0000,0000,0000,,after one supermarket announced\Nover the loudspeaker
Dialogue: 0,3:34:11.44,3:34:14.89,Default,,0000,0000,0000,,that prices were being raised by 30%\Nimmediately.
Dialogue: 0,3:34:40.27,3:34:45.81,Default,,0000,0000,0000,,Shops emptied of goods as owners weren't\Nmaking enough money to buy new stock.
Dialogue: 0,3:37:26.48,3:37:28.53,Default,,0000,0000,0000,,Government bond prices plunged
Dialogue: 0,3:37:38.68,3:37:43.23,Default,,0000,0000,0000,,as fears rose that the Central Bank's\Nreserves were running out.
Dialogue: 0,3:38:01.40,3:38:05.30,Default,,0000,0000,0000,,With no foreign Ioans\Nand no-one wiIIing to buy bonds,
Dialogue: 0,3:38:17.60,3:38:23.04,Default,,0000,0000,0000,,there was onIy one thing Ieft for an\NincreasingIy desperate government to do -
Dialogue: 0,3:38:40.33,3:38:43.95,Default,,0000,0000,0000,,get the CentraI Bank IiteraIIy\Nto print more money.
Dialogue: 0,3:38:54.84,3:38:57.57,Default,,0000,0000,0000,,But they couIdn't even get that right.
Dialogue: 0,3:39:33.35,3:39:37.50,Default,,0000,0000,0000,,On Friday April 28th,\NArgentina literally ran out of money.
Dialogue: 0,3:40:08.90,3:40:10.94,Default,,0000,0000,0000,,''lt's a physical problem, ''
Dialogue: 0,3:40:18.37,3:40:22.23,Default,,0000,0000,0000,,the Central Bank Vice-President\Ntold a news conference.
Dialogue: 0,3:40:49.72,3:40:55.48,Default,,0000,0000,0000,,What he meant was that Argentina's mint\Nhad run out of paper to print new notes,
Dialogue: 0,3:41:12.86,3:41:15.42,Default,,0000,0000,0000,,and the printers had gone on strike.
Dialogue: 0,3:42:17.45,3:42:19.81,Default,,0000,0000,0000,,''l don't know how we'll do it,
Dialogue: 0,3:42:28.60,3:42:33.04,Default,,0000,0000,0000,,''but the money has got to be there\Non Monday, '' he declared.
Dialogue: 0,3:43:10.89,3:43:16.03,Default,,0000,0000,0000,,Yet the faster the printing presses\Nrolled, the less the money was worth.
Dialogue: 0,3:43:33.20,3:43:38.47,Default,,0000,0000,0000,,The government was forced to print higher\Nand higher denominations of notes.
Dialogue: 0,3:43:57.60,3:44:01.54,Default,,0000,0000,0000,,ln May, the price of coffee went up\Nby 50% in a week.
Dialogue: 0,3:44:28.95,3:44:33.62,Default,,0000,0000,0000,,Farmers stopped bringing cattle to market\Nas the price for one cow
Dialogue: 0,3:44:50.62,3:44:53.93,Default,,0000,0000,0000,,was now the same as for\Nthree pairs of shoes.
Dialogue: 0,3:46:06.36,3:46:11.44,Default,,0000,0000,0000,,By June 1989, infIation in Argentina\Nhad reached a monthIy rate of 100%,
Dialogue: 0,3:46:41.29,3:46:43.73,Default,,0000,0000,0000,,an annuaI rate of roughIy 12,000%.
Dialogue: 0,3:46:57.07,3:46:59.34,Default,,0000,0000,0000,,To put that into concrete terms,
Dialogue: 0,3:47:08.85,3:47:13.97,Default,,0000,0000,0000,,if you wanted to go out for dinner\Nin Buenos Aires on a Saturday night,
Dialogue: 0,3:47:29.47,3:47:31.96,Default,,0000,0000,0000,,in May you'd pay 10,000 austraIes.
Dialogue: 0,3:47:41.88,3:47:45.76,Default,,0000,0000,0000,,By June, you'd have to pay 20,000\Nfor the same meaI.
Dialogue: 0,3:48:05.66,3:48:09.21,Default,,0000,0000,0000,,And by the foIIowing month,\Nit wouId take 60,000.
Dialogue: 0,3:48:30.48,3:48:33.15,Default,,0000,0000,0000,,You've heard of a fistfuI of doIIars.
Dialogue: 0,3:48:41.42,3:48:46.43,Default,,0000,0000,0000,,WeII, you needed a drawer fuII\Nof austraIes just to buy a square meaI.
Dialogue: 0,3:49:35.92,3:49:38.38,Default,,0000,0000,0000,,ln June, popular frustration erupted
Dialogue: 0,3:49:53.38,3:49:57.52,Default,,0000,0000,0000,,in two days of intense rioting and looting\Nby hungry mobs.
Dialogue: 0,3:50:16.31,3:50:18.16,Default,,0000,0000,0000,,At least 1 4 people died.
Dialogue: 0,3:50:45.98,3:50:49.46,Default,,0000,0000,0000,,ln a country where a steak\Nand a bottle of wine
Dialogue: 0,3:51:00.70,3:51:03.62,Default,,0000,0000,0000,,were on practically every table every day,
Dialogue: 0,3:51:13.75,3:51:17.61,Default,,0000,0000,0000,,thousands were eating in soup kitchens\Nor going hungry.
Dialogue: 0,3:51:36.26,3:51:37.13,Default,,0000,0000,0000,,CLOCK CHIMES
Dialogue: 0,3:51:47.41,3:51:50.92,Default,,0000,0000,0000,,lt's obvious enough who loses\Nfrom hyperinflation.
Dialogue: 0,3:52:08.87,3:52:12.31,Default,,0000,0000,0000,,Very rapidly rising prices are bound\Nto wipe out
Dialogue: 0,3:52:23.39,3:52:27.99,Default,,0000,0000,0000,,anybody who's dependent on an income\Nthat's fixed in cash terms.
Dialogue: 0,3:52:41.27,3:52:46.20,Default,,0000,0000,0000,,Groups Iike academics and civiI servants\Non infIexibIe monthIy saIaries,
Dialogue: 0,3:53:06.73,3:53:09.25,Default,,0000,0000,0000,,oId-age pensioners and, particuIarIy,
Dialogue: 0,3:53:19.56,3:53:23.49,Default,,0000,0000,0000,,bondhoIders Iiving off the interest\Non their investments.
Dialogue: 0,3:53:39.97,3:53:44.41,Default,,0000,0000,0000,,Buenos Aires is absoIuteIy fuII\Nof antique shops Iike this one,
Dialogue: 0,3:54:02.48,3:54:05.100,Default,,0000,0000,0000,,Iaden down with jeweIIery and watches\Nand cutIery,
Dialogue: 0,3:54:20.79,3:54:25.33,Default,,0000,0000,0000,,aII soId off by middIe-cIass famiIies\Nwho just ran out of cash.
Dialogue: 0,3:54:47.51,3:54:52.30,Default,,0000,0000,0000,,ln the 1 920s, the great economist\NJohn Maynard Keynes had predicted
Dialogue: 0,3:55:11.07,3:55:13.35,Default,,0000,0000,0000,,the euthanasia of the bondholder,
Dialogue: 0,3:55:21.59,3:55:25.57,Default,,0000,0000,0000,,anticipating that inflation would eat up\Nthe paper wealth
Dialogue: 0,3:55:42.63,3:55:45.62,Default,,0000,0000,0000,,of financial families\Nlike the Rothschilds.
Dialogue: 0,3:56:08.30,3:56:12.08,Default,,0000,0000,0000,,As inflation swept through the world\Nin the 1 97 0s,
Dialogue: 0,3:56:30.60,3:56:32.93,Default,,0000,0000,0000,,Keynes seemed to be proved right.
Dialogue: 0,3:56:48.06,3:56:49.58,Default,,0000,0000,0000,,ln our time, however,
Dialogue: 0,3:56:54.80,3:56:58.72,Default,,0000,0000,0000,,we've seen a miraculous resurrection\Nof the bondholder -
Dialogue: 0,3:57:18.15,3:57:21.24,Default,,0000,0000,0000,,a comeback by Mr Bond...\Neven in Argentina.
Dialogue: 0,3:57:46.56,3:57:48.30,Default,,0000,0000,0000,,The bond market is back,
Dialogue: 0,3:57:58.76,3:58:04.09,Default,,0000,0000,0000,,terrifying American officials as they\Ntry to fund a massive financial bailout
Dialogue: 0,3:58:22.53,3:58:27.68,Default,,0000,0000,0000,,by - you guessed it - selling billions\Nof dollars of freshly minted bonds.
Dialogue: 0,3:58:59.35,3:59:01.43,Default,,0000,0000,0000,,The key to Mr Bond's revival
Dialogue: 0,3:59:14.50,3:59:17.100,Default,,0000,0000,0000,,has been a growth\Nin the number of bondholders...
Dialogue: 0,3:59:51.74,3:59:54.01,Default,,0000,0000,0000,,..which brings us back to ltaly,
Dialogue: 0,4:00:08.78,4:00:12.04,Default,,0000,0000,0000,,where the bond market was born\N600 years ago.
Dialogue: 0,4:00:58.43,4:01:04.15,Default,,0000,0000,0000,,ltaly is now a country with one of the\Nmost rapidly ageing populations in Europe.
Dialogue: 0,4:01:33.57,4:01:35.43,Default,,0000,0000,0000,,ln such a greying society,
Dialogue: 0,4:01:44.09,4:01:48.65,Default,,0000,0000,0000,,there is a growing demand\Nfor fixed-income securities like bonds.
Dialogue: 0,4:02:04.50,4:02:08.34,Default,,0000,0000,0000,,But there's also a strong fear\Nof inflation eating up
Dialogue: 0,4:02:23.43,4:02:26.17,Default,,0000,0000,0000,,the real value of pensions and savings.
Dialogue: 0,4:02:38.37,4:02:42.00,Default,,0000,0000,0000,,Central bankers suspected of being\Nsoft on inflation
Dialogue: 0,4:02:56.04,4:03:00.24,Default,,0000,0000,0000,,have to answer to the pensioner's friend -\Nthe bond market.
Dialogue: 0,4:03:22.13,4:03:27.68,Default,,0000,0000,0000,,And treasuries planning to spend billions\Nto bail out banks that have gone bust
Dialogue: 0,4:03:44.44,4:03:48.34,Default,,0000,0000,0000,,in the current credit crunch\Nhave to tread warily, too,
Dialogue: 0,4:04:02.74,4:04:07.05,Default,,0000,0000,0000,,if they expect to raise the money\Nby selling yet more bonds.
Dialogue: 0,4:04:37.66,4:04:40.64,Default,,0000,0000,0000,,In modern Europe,\Nas in Renaissance ItaIy,
Dialogue: 0,4:04:52.18,4:04:57.52,Default,,0000,0000,0000,,an equiIibrium has been struck between\NpoIiticaI power and financiaI exposure.
Dialogue: 0,4:05:19.74,4:05:21.42,Default,,0000,0000,0000,,Today, as much as ever,
Dialogue: 0,4:05:30.68,4:05:34.63,Default,,0000,0000,0000,,it seems it's the bond market,\Nour oId friend Mr Bond,
Dialogue: 0,4:05:50.46,4:05:52.44,Default,,0000,0000,0000,,that reaIIy ruIes the worId.
Dialogue: 0,4:06:14.87,4:06:18.26,Default,,0000,0000,0000,,But what if,\Nrather than lending to governments,
Dialogue: 0,4:06:28.75,4:06:32.93,Default,,0000,0000,0000,,you prefer to use your money to buy\Na share in a company?
Dialogue: 0,4:06:48.74,4:06:51.12,Default,,0000,0000,0000,,Would that be more or less risky?
Dialogue: 0,4:07:03.47,4:07:05.16,Default,,0000,0000,0000,,More or less profitable?
Dialogue: 0,4:07:19.67,4:07:22.81,Default,,0000,0000,0000,,ln the next episode\Nof the Ascent Of Money,
Dialogue: 0,4:07:31.03,4:07:36.04,Default,,0000,0000,0000,,we'll discover why we find it\Nso hard to learn from financial history,
Dialogue: 0,0:00:35.28,0:00:37.91,Default,,0000,0000,0000,,Some people today say that companies -
Dialogue: 0,0:00:52.11,0:00:56.23,Default,,0000,0000,0000,,and particularly multinational\Ncorporations - rule the world.
Dialogue: 0,0:01:17.78,0:01:22.27,Default,,0000,0000,0000,,lt's pretty hard to believe\Nthat any kind of human organisation
Dialogue: 0,0:01:37.56,0:01:41.36,Default,,0000,0000,0000,,could tame the vast natural barriers\Nof South America.
Dialogue: 0,0:02:00.49,0:02:02.88,Default,,0000,0000,0000,,But one company believed it could.
Dialogue: 0,0:02:36.68,0:02:41.06,Default,,0000,0000,0000,,By constructing a 1.5 billion dollar\Ngas pipeline from Bolivia
Dialogue: 0,0:03:02.56,0:03:07.70,Default,,0000,0000,0000,,right across the South American continent\Nto the Atlantic coast of Brazil.
Dialogue: 0,0:03:27.17,0:03:31.02,Default,,0000,0000,0000,,By running gas along\Nthe longest pipeline in the world
Dialogue: 0,0:03:49.05,0:03:54.42,Default,,0000,0000,0000,,4,000 miles from the tip of Patagonia\Nto the Argentine capital Buenos Aires.
Dialogue: 0,0:04:40.60,0:04:45.12,Default,,0000,0000,0000,,Such schemes exempIify the vauIting\Nambition of modern capitaIism,
Dialogue: 0,0:05:07.11,0:05:10.79,Default,,0000,0000,0000,,but they're onIy possibIe\Nbecause of one invention -
Dialogue: 0,0:05:24.57,0:05:26.26,Default,,0000,0000,0000,,the joint stock company.
Dialogue: 0,0:05:53.18,0:05:57.72,Default,,0000,0000,0000,,lf the 1 6th century had seen\Na revolution in money and credit,
Dialogue: 0,0:06:11.07,0:06:15.20,Default,,0000,0000,0000,,and the 1 7th had witnessed\Nthe birth of the bond market,
Dialogue: 0,0:06:29.16,0:06:33.11,Default,,0000,0000,0000,,then the next step in the story\Nof the ascent of money
Dialogue: 0,0:06:46.20,0:06:50.29,Default,,0000,0000,0000,,was the rise of the joint stock\Nlimited liability company.
Dialogue: 0,0:07:24.92,0:07:28.71,Default,,0000,0000,0000,,But the ability of the company\Nto transform our lives
Dialogue: 0,0:07:47.01,0:07:49.53,Default,,0000,0000,0000,,would depend on another innovation...
Dialogue: 0,0:08:11.20,0:08:12.42,Default,,0000,0000,0000,,The stock market.
Dialogue: 0,0:08:44.45,0:08:50.04,Default,,0000,0000,0000,,The price that people are prepared to pay\Nfor a company's shares in the market
Dialogue: 0,0:09:06.12,0:09:10.54,Default,,0000,0000,0000,,tells you how much money\Nthey think it'll make in the future.
Dialogue: 0,0:09:42.72,0:09:47.22,Default,,0000,0000,0000,,But as we have discovered\Nin recent months of financial turmoil,
Dialogue: 0,0:10:00.82,0:10:03.62,Default,,0000,0000,0000,,stock markets can also be shock markets.
Dialogue: 0,0:10:25.22,0:10:27.38,Default,,0000,0000,0000,,The future is aIways uncertain.
Dialogue: 0,0:10:38.27,0:10:41.65,Default,,0000,0000,0000,,But we human beings\Nare prone to over-optimism.
Dialogue: 0,0:10:55.10,0:11:00.12,Default,,0000,0000,0000,,When prices here on the New York Stock\NExchange surge upwards in synch,
Dialogue: 0,0:11:16.56,0:11:21.34,Default,,0000,0000,0000,,it's as if investors are gripped\Nby a kind of coIIective euphoria -
Dialogue: 0,0:11:36.97,0:11:41.42,Default,,0000,0000,0000,,what the former chairman of\Nthe FederaI Reserve, AIan Greenspan,
Dialogue: 0,0:11:55.27,0:11:58.45,Default,,0000,0000,0000,,once famousIy caIIed\N''irrationaI exuberance''.
Dialogue: 0,0:12:10.21,0:12:13.71,Default,,0000,0000,0000,,So stock markets reaIIy can be\NIike soap bubbIes.
Dialogue: 0,0:12:27.67,0:12:30.93,Default,,0000,0000,0000,,We never quite know\Nwhen they're gonna burst.
Dialogue: 0,0:12:55.24,0:13:00.23,Default,,0000,0000,0000,,The exuberance was especially irrational\Nand the burst especially painful
Dialogue: 0,0:13:21.32,0:13:26.00,Default,,0000,0000,0000,,for the company that proposed\Nthose vast projects in Latin America.
Dialogue: 0,0:13:47.83,0:13:52.52,Default,,0000,0000,0000,,Enron became the biggest corporate fraud\Nin modern American history.
Dialogue: 0,0:14:18.76,0:14:22.43,Default,,0000,0000,0000,,But Enron was very far\Nfrom the only corporate scam
Dialogue: 0,0:14:33.91,0:14:37.76,Default,,0000,0000,0000,,since shares were first bought and sold\N400 years ago.
Dialogue: 0,0:14:57.48,0:15:00.74,Default,,0000,0000,0000,,And the shady practices\Nit epitomised live on.
Dialogue: 0,0:15:18.09,0:15:23.92,Default,,0000,0000,0000,,lndeed, they've been a key cause of the\Nfinancial crisis we're living through now.
Dialogue: 0,0:15:45.86,0:15:48.20,Default,,0000,0000,0000,,Cooked books? Stock prices rigged?
Dialogue: 0,0:16:06.06,0:16:07.63,Default,,0000,0000,0000,,Been there. Done that.
Dialogue: 0,0:16:17.00,0:16:17.99,Default,,0000,0000,0000,,For centuries.
Dialogue: 0,0:16:27.31,0:16:32.35,Default,,0000,0000,0000,,Nothing illustrates more clearly\Nthan the history of stock market bubbles
Dialogue: 0,0:16:50.25,0:16:53.98,Default,,0000,0000,0000,,how hard human beings find it\Nto learn from history.
Dialogue: 0,0:18:02.20,0:18:03.54,Default,,0000,0000,0000,,STOCK MARKET HUBBUB
Dialogue: 0,0:19:39.61,0:19:42.94,Default,,0000,0000,0000,,Hidden away among\Nthe many splendours of Venice
Dialogue: 0,0:19:57.50,0:20:02.16,Default,,0000,0000,0000,,is a small clue to one of the most\Nastonishing tales of adventure
Dialogue: 0,0:20:15.59,0:20:17.34,Default,,0000,0000,0000,,in all financial history.
Dialogue: 0,0:20:59.14,0:21:02.87,Default,,0000,0000,0000,,''To the honour and memory\Nof John Law of Edinburgh,
Dialogue: 0,0:21:19.34,0:21:24.67,Default,,0000,0000,0000,,''most distinguished controIIer of\Nthe treasury of the Kings of the French.''
Dialogue: 0,0:21:53.21,0:21:58.87,Default,,0000,0000,0000,,This is the finaI resting pIace of the man\Nwho invented the stock market bubbIe.
Dialogue: 0,0:22:18.46,0:22:21.21,Default,,0000,0000,0000,,An ambitious Scot, a convicted murderer,
Dialogue: 0,0:22:35.71,0:22:39.28,Default,,0000,0000,0000,,a compuIsive gambIer\Nand a fIawed financiaI genius,
Dialogue: 0,0:22:56.12,0:23:00.72,Default,,0000,0000,0000,,he not onIy caused the first true\Nboom and bust in asset prices,
Dialogue: 0,0:23:18.00,0:23:21.34,Default,,0000,0000,0000,,he aIso indirectIy caused\Nthe French RevoIution.
Dialogue: 0,0:23:42.83,0:23:48.59,Default,,0000,0000,0000,,There was a time when John Law owned a\Nquarter of what is now the United States,
Dialogue: 0,0:24:10.18,0:24:13.90,Default,,0000,0000,0000,,only to lose it all in history's\Nfirst great crash.
Dialogue: 0,0:24:32.27,0:24:37.23,Default,,0000,0000,0000,,From Edinburgh to Amsterdam to Paris,\Nall the way here to New Orleans,
Dialogue: 0,0:24:57.52,0:25:02.58,Default,,0000,0000,0000,,and finally to Venice, Law's story\Nis a classic tale of boom and bust.
Dialogue: 0,0:25:25.71,0:25:29.13,Default,,0000,0000,0000,,lt's also very much a story\Nfor our own times.
Dialogue: 0,0:25:55.80,0:26:00.24,Default,,0000,0000,0000,,Hidden away here in the warehouse\Nof the Louisiana State Museum
Dialogue: 0,0:26:13.47,0:26:16.26,Default,,0000,0000,0000,,is the onIy known painting of John Law.
Dialogue: 0,0:26:34.09,0:26:34.95,Default,,0000,0000,0000,,Here he is.
Dialogue: 0,0:26:50.92,0:26:53.13,Default,,0000,0000,0000,,With that Iean and hungry Iook,
Dialogue: 0,0:26:58.08,0:27:02.14,Default,,0000,0000,0000,,he reaIIy is, for aII the worId,\Na Scotsman on the make.
Dialogue: 0,0:27:52.57,0:27:57.100,Default,,0000,0000,0000,,The path that led Law ''from obscurity\Nto celebrity, to notoriety'' is a path
Dialogue: 0,0:28:21.81,0:28:26.31,Default,,0000,0000,0000,,that many of the great stock market\Nplayers have followed since.
Dialogue: 0,0:28:50.42,0:28:53.50,Default,,0000,0000,0000,,Law was born here\Nin Edinburgh in 1 67 1,
Dialogue: 0,0:29:08.73,0:29:13.69,Default,,0000,0000,0000,,the son of a successful goldsmith\Nand heir to the estate of Lauriston.
Dialogue: 0,0:29:36.92,0:29:39.30,Default,,0000,0000,0000,,ln 1 694, while living in London,
Dialogue: 0,0:29:49.12,0:29:52.02,Default,,0000,0000,0000,,Law killed a man in a duel over a woman
Dialogue: 0,0:30:10.59,0:30:12.51,Default,,0000,0000,0000,,and was sentenced to death.
Dialogue: 0,0:30:36.88,0:30:41.44,Default,,0000,0000,0000,,Somehow, Law managed to escape\Nfrom prison and fled to Amsterdam.
Dialogue: 0,0:31:02.34,0:31:06.17,Default,,0000,0000,0000,,He couldn't have picked\Na better town to lie low in.
Dialogue: 0,0:31:44.00,0:31:48.97,Default,,0000,0000,0000,,By the 1 690s, Amsterdam was\Nthe world capital of financial innovation.
Dialogue: 0,0:32:12.61,0:32:15.41,Default,,0000,0000,0000,,To help finance their war against Spain,
Dialogue: 0,0:32:25.45,0:32:30.30,Default,,0000,0000,0000,,the Dutch had introduced one\Nof the world's first national lotteries.
Dialogue: 0,0:32:45.02,0:32:48.24,Default,,0000,0000,0000,,To protect their merchants\Nfrom dodgy coinage,
Dialogue: 0,0:32:58.90,0:33:02.22,Default,,0000,0000,0000,,they'd created the world's\Nfirst central bank.
Dialogue: 0,0:33:20.36,0:33:23.73,Default,,0000,0000,0000,,But the one that had\Nthe biggest impact on Law
Dialogue: 0,0:33:34.88,0:33:38.62,Default,,0000,0000,0000,,was the single greatest\NDutch invention of them all -
Dialogue: 0,0:33:54.66,0:33:55.52,Default,,0000,0000,0000,,the company.
Dialogue: 0,0:34:27.90,0:34:32.67,Default,,0000,0000,0000,,The story of the company had begun\N1 00 years before Law's arrival
Dialogue: 0,0:34:52.30,0:34:55.68,Default,,0000,0000,0000,,as Dutch traders spread out\Nall over the world,
Dialogue: 0,0:35:06.82,0:35:10.20,Default,,0000,0000,0000,,from Manhattan lsland\Nto the Cape of Good Hope.
Dialogue: 0,0:35:24.92,0:35:30.30,Default,,0000,0000,0000,,But it was Asia that became the primary\Ntarget of Dutch commercial expansion.
Dialogue: 0,0:35:51.64,0:35:51.98,Default,,0000,0000,0000,,Why?
Dialogue: 0,0:36:02.78,0:36:06.40,Default,,0000,0000,0000,,The East Indies were so aIIuring\Nbecause of these -
Dialogue: 0,0:36:19.20,0:36:19.78,Default,,0000,0000,0000,,spices -
Dialogue: 0,0:36:26.35,0:36:28.46,Default,,0000,0000,0000,,pepper, cIoves, nutmeg, ginger.
Dialogue: 0,0:36:42.55,0:36:47.40,Default,,0000,0000,0000,,Europeans craved them to fIavour\Ntheir food, but aIso to preserve it.
Dialogue: 0,0:37:05.06,0:37:08.86,Default,,0000,0000,0000,,TraditionaIIy, they'd come overIand\Nby the Spice Road.
Dialogue: 0,0:37:21.68,0:37:26.92,Default,,0000,0000,0000,,But the Dutch pIan was to fetch them\Nthe Ionger, but quicker way, by sea.
Dialogue: 0,0:37:46.93,0:37:51.06,Default,,0000,0000,0000,,And that pungent aroma\Nwas the smeII of money to be made.
Dialogue: 0,0:38:43.11,0:38:48.65,Default,,0000,0000,0000,,This painting shows the return of one\Nof the first Dutch fleets from the East.
Dialogue: 0,0:39:08.77,0:39:14.50,Default,,0000,0000,0000,,The inscription reads, ''Four ships sailed\Nto go and get the spices towards Bantam
Dialogue: 0,0:39:37.39,0:39:39.91,Default,,0000,0000,0000,,''and also established trading posts.
Dialogue: 0,0:39:50.64,0:39:54.55,Default,,0000,0000,0000,,''And came back richly laden\Nto the poles of Amsterdam.
Dialogue: 0,0:40:09.100,0:40:11.91,Default,,0000,0000,0000,,''Departed 1 st May 1 598.
Dialogue: 0,0:40:26.20,0:40:28.41,Default,,0000,0000,0000,,''Returned 1 9th July 1 599. ''
Dialogue: 0,0:41:07.23,0:41:09.97,Default,,0000,0000,0000,,The Asian spice trade was so profitable
Dialogue: 0,0:41:20.90,0:41:25.28,Default,,0000,0000,0000,,that just one return trip could pay\Nfor the construction costs
Dialogue: 0,0:41:40.47,0:41:41.97,Default,,0000,0000,0000,,of a ship like this.
Dialogue: 0,0:41:49.09,0:41:54.27,Default,,0000,0000,0000,,But so prolonged was the journey round\Nthe Cape of Good Hope to the East
Dialogue: 0,0:42:09.29,0:42:14.55,Default,,0000,0000,0000,,and so hazardous that merchants had\Nto pool their resources and their risk.
Dialogue: 0,0:42:38.33,0:42:42.43,Default,,0000,0000,0000,,The result was around six fledgling\NEast lndia enterprises.
Dialogue: 0,0:43:54.70,0:43:58.38,Default,,0000,0000,0000,,In 1602, at the instigation\Nof the Dutch government,
Dialogue: 0,0:44:12.37,0:44:14.89,Default,,0000,0000,0000,,these various companies came together
Dialogue: 0,0:44:23.94,0:44:27.74,Default,,0000,0000,0000,,to form the United Dutch East India\NChartered Company,
Dialogue: 0,0:44:42.25,0:44:45.59,Default,,0000,0000,0000,,or Vereenigde Oost-Indische Compagnie\Nfor short.
Dialogue: 0,0:45:00.13,0:45:02.46,Default,,0000,0000,0000,,And this is its originaI charter,
Dialogue: 0,0:45:13.60,0:45:18.61,Default,,0000,0000,0000,,which speIIs out that the company\Nwas to enjoy a monopoIy on aII trade
Dialogue: 0,0:45:33.80,0:45:38.92,Default,,0000,0000,0000,,from the Cape of Good Hope aII the way\Neast to the Straits of MageIIan.
Dialogue: 0,0:45:57.57,0:45:59.49,Default,,0000,0000,0000,,Pretty much haIf the worId.
Dialogue: 0,0:46:13.14,0:46:16.11,Default,,0000,0000,0000,,The structure of the new entity was novel.
Dialogue: 0,0:46:29.55,0:46:32.94,Default,,0000,0000,0000,,The capital of the company\Nwas divided unequally
Dialogue: 0,0:46:45.54,0:46:47.99,Default,,0000,0000,0000,,between all the major Dutch cities.
Dialogue: 0,0:46:59.22,0:47:04.02,Default,,0000,0000,0000,,Citizens were invited to participate\Nin the new venture by investing.
Dialogue: 0,0:47:22.15,0:47:26.52,Default,,0000,0000,0000,,lt was the form of this investment\Nthat was the real novelty.
Dialogue: 0,0:48:00.65,0:48:05.61,Default,,0000,0000,0000,,This rather wonderfuI painting is\Nof the famiIy of one of the founders
Dialogue: 0,0:48:22.74,0:48:25.83,Default,,0000,0000,0000,,of the Dutch East India Company,\NDirck Bas.
Dialogue: 0,0:48:40.84,0:48:45.28,Default,,0000,0000,0000,,For 6,000 guiIders,\Nhe and 16 other so-caIIed ''participants'',
Dialogue: 0,0:49:04.61,0:49:08.42,Default,,0000,0000,0000,,became the firm's managing directors,\Nthe bewindhebber.
Dialogue: 0,0:49:23.97,0:49:29.11,Default,,0000,0000,0000,,After 1606, however, anyone who put\Nhis money into the East India Company
Dialogue: 0,0:49:47.32,0:49:50.61,Default,,0000,0000,0000,,received an ''aktie'' -\NIiteraIIy an ''action'',
Dialogue: 0,0:50:02.89,0:50:06.32,Default,,0000,0000,0000,,or as we wouId say,\N''a piece of the action'' -
Dialogue: 0,0:50:14.67,0:50:17.52,Default,,0000,0000,0000,,a share in the company's future profits.
Dialogue: 0,0:50:27.72,0:50:31.80,Default,,0000,0000,0000,,And here it is, the worId's\Nvery first share certificate,
Dialogue: 0,0:50:44.76,0:50:48.62,Default,,0000,0000,0000,,issued by the worId's\Nvery first muItinationaI company.
Dialogue: 0,0:51:07.48,0:51:09.82,Default,,0000,0000,0000,,AImost exactIy four centuries ago.
Dialogue: 0,0:51:48.09,0:51:52.01,Default,,0000,0000,0000,,Three years later,\NBas and his fellow directors declared
Dialogue: 0,0:52:04.50,0:52:09.82,Default,,0000,0000,0000,,that any shareholders who wanted their\Ncash back could not have it refunded,
Dialogue: 0,0:52:29.74,0:52:33.72,Default,,0000,0000,0000,,but would have to sell their shares\Nto another investor.
Dialogue: 0,0:53:02.36,0:53:06.27,Default,,0000,0000,0000,,Overnight, a market for\Nthe company's shares was born -
Dialogue: 0,0:53:24.45,0:53:27.01,Default,,0000,0000,0000,,the worId's first true stock market.
Dialogue: 0,0:53:50.96,0:53:55.10,Default,,0000,0000,0000,,This invention was to change\Nthe face of finance for ever,
Dialogue: 0,0:54:11.36,0:54:16.46,Default,,0000,0000,0000,,because it created a mechanism whereby\Nthe price of shares was determined
Dialogue: 0,0:54:34.51,0:54:38.30,Default,,0000,0000,0000,,by the laws of supply and demand,\Nsellers and buyers.
Dialogue: 0,0:55:02.49,0:55:06.98,Default,,0000,0000,0000,,And as the renegade Scotsman\NJohn Law couldn't help but notice,
Dialogue: 0,0:55:22.48,0:55:24.93,Default,,0000,0000,0000,,the trading of these company stocks
Dialogue: 0,0:55:33.84,0:55:37.99,Default,,0000,0000,0000,,was making the world's\Nfirst shareholders very rich indeed.
Dialogue: 0,0:57:18.83,0:57:24.48,Default,,0000,0000,0000,,By 1 61 0, the world's first joint stock\Ncompany, the Dutch East lndia Company,
Dialogue: 0,0:57:47.65,0:57:49.86,Default,,0000,0000,0000,,was ready to conquer the world.
Dialogue: 0,0:58:00.06,0:58:05.55,Default,,0000,0000,0000,,lt had a new charter, new shareholders\Nand a burgeoning trade in these shares.
Dialogue: 0,0:58:42.98,0:58:45.24,Default,,0000,0000,0000,,But it had to fight to survive,
Dialogue: 0,0:58:57.50,0:58:58.20,Default,,0000,0000,0000,,literally.
Dialogue: 0,0:59:31.58,0:59:36.62,Default,,0000,0000,0000,,Having established a string of factories\Nand warehouses across South Asia
Dialogue: 0,0:59:52.20,0:59:57.10,Default,,0000,0000,0000,,from Java to lndia, the company\Nhad to struggle to keep the Spaniards
Dialogue: 0,1:00:13.03,1:00:15.60,Default,,0000,0000,0000,,and their English competitors at bay.
Dialogue: 0,1:00:28.81,1:00:32.88,Default,,0000,0000,0000,,With 40 warships and a private army\Nof 1 0,000 soldiers,
Dialogue: 0,1:00:48.17,1:00:53.44,Default,,0000,0000,0000,,the directors of the East lndia Company\Nwere the original corporate raiders.
Dialogue: 0,1:01:48.97,1:01:51.30,Default,,0000,0000,0000,,For the Dutch East India Company,
Dialogue: 0,1:02:00.76,1:02:04.02,Default,,0000,0000,0000,,firepower and foreign trade\Nwent hand in hand.
Dialogue: 0,1:02:19.06,1:02:23.42,Default,,0000,0000,0000,,But the key to the company's success\Nwasn't just its cannons
Dialogue: 0,1:02:38.84,1:02:43.04,Default,,0000,0000,0000,,Iike these ones aboard The Batavia,\Nthe pride of its fIeet.
Dialogue: 0,1:02:57.14,1:03:01.75,Default,,0000,0000,0000,,Like aII big companies, it was abIe\Nto combine economies of scaIe
Dialogue: 0,1:03:17.13,1:03:19.18,Default,,0000,0000,0000,,with reduced transaction costs
Dialogue: 0,1:03:29.54,1:03:33.07,Default,,0000,0000,0000,,and what economists caII\N''network externaIities'' -
Dialogue: 0,1:03:45.11,1:03:49.92,Default,,0000,0000,0000,,the abiIity to pooI information between\NmuItipIe empIoyees and agents.
Dialogue: 0,1:04:07.41,1:04:11.86,Default,,0000,0000,0000,,The Batavia was part man-of-war,\Npart muItinationaI corporation.
Dialogue: 0,1:04:54.54,1:04:58.17,Default,,0000,0000,0000,,The big networked company\Nwas simply more efficient.
Dialogue: 0,1:05:16.42,1:05:18.50,Default,,0000,0000,0000,,That was why, by the 1 620s,
Dialogue: 0,1:05:29.26,1:05:34.52,Default,,0000,0000,0000,,it had established a virtual monopoly\Non spice exports from Asia to Europe.
Dialogue: 0,1:05:56.19,1:06:01.59,Default,,0000,0000,0000,,The world's first multinational was making\Nits shareholders enormously wealthy.
Dialogue: 0,1:06:31.11,1:06:34.97,Default,,0000,0000,0000,,I'm Iooking here\Nat the originaI sharehoIders' register
Dialogue: 0,1:06:46.89,1:06:49.16,Default,,0000,0000,0000,,of the Dutch East India Company,
Dialogue: 0,1:06:56.15,1:06:59.47,Default,,0000,0000,0000,,and IiteraIIy every name in here\Nwas a winner.
Dialogue: 0,1:07:08.77,1:07:13.66,Default,,0000,0000,0000,,If you'd put 1 ,000 guiIders\Ninto the company at its very inception,
Dialogue: 0,1:07:27.92,1:07:31.82,Default,,0000,0000,0000,,by 1 736, your investment\NwouId have been worth 7,000.
Dialogue: 0,1:08:01.58,1:08:07.13,Default,,0000,0000,0000,,Over its entire Iifetime, the company\Npaid an average annuaI dividend of 16.5%.
Dialogue: 0,1:08:33.98,1:08:38.25,Default,,0000,0000,0000,,VirtuaIIy aII its profits were paid back\Nto the sharehoIders.
Dialogue: 0,1:09:10.80,1:09:14.42,Default,,0000,0000,0000,,Dirck Bas's original shareholding\Nof 6,000 guilders
Dialogue: 0,1:09:31.21,1:09:34.89,Default,,0000,0000,0000,,had been transformed\Ninto a 500,000 guilder fortune.
Dialogue: 0,1:10:41.06,1:10:46.20,Default,,0000,0000,0000,,To John Law, lying low in Amsterdam\Nhaving escaped the gallows in London,
Dialogue: 0,1:11:05.46,1:11:10.14,Default,,0000,0000,0000,,the workings of the Dutch East lndia\NCompany came as a revelation.
Dialogue: 0,1:11:31.13,1:11:34.98,Default,,0000,0000,0000,,Law was living off his winnings\Nat the gambling table.
Dialogue: 0,1:11:46.70,1:11:51.09,Default,,0000,0000,0000,,But he was fascinated by the relationships\Nbetween the company,
Dialogue: 0,1:12:04.16,1:12:09.08,Default,,0000,0000,0000,,with its splendid offices in the\NHoogstraat, the nearby stock exchange,
Dialogue: 0,1:12:28.36,1:12:33.51,Default,,0000,0000,0000,,where dealers busily traded the company\Nshares, and the Bank of Amsterdam.
Dialogue: 0,1:13:15.07,1:13:19.63,Default,,0000,0000,0000,,Yet this Dutch financial system\Nstruck Law as not quite complete.
Dialogue: 0,1:13:44.31,1:13:49.86,Default,,0000,0000,0000,,To Law's financiaIIy supercharged mind,\Nthe Dutch were missing a trick, or two.
Dialogue: 0,1:14:09.98,1:14:12.78,Default,,0000,0000,0000,,For one thing, it seemed compIeteIy nuts
Dialogue: 0,1:14:21.55,1:14:25.17,Default,,0000,0000,0000,,to restrict the number\Nof East India Company shares
Dialogue: 0,1:14:36.49,1:14:40.11,Default,,0000,0000,0000,,when the markets\Nwere so cIearIy enamoured of them.
Dialogue: 0,1:14:53.32,1:14:57.99,Default,,0000,0000,0000,,Law was also puzzled by the conservatism\Nof the Bank of Amsterdam.
Dialogue: 0,1:15:13.52,1:15:19.20,Default,,0000,0000,0000,,lt had created an internal system which\Nallowed merchants to settle their accounts
Dialogue: 0,1:15:41.08,1:15:43.07,Default,,0000,0000,0000,,by direct cashless transfers,
Dialogue: 0,1:15:53.28,1:15:57.18,Default,,0000,0000,0000,,but it hadn't issued\Nany real banknotes to the public.
Dialogue: 0,1:16:13.27,1:16:17.72,Default,,0000,0000,0000,,The idea was aIready taking shape\Nof a breathtaking modification
Dialogue: 0,1:16:35.78,1:16:40.58,Default,,0000,0000,0000,,of the institutions that Law\Nhad first encountered here in Amsterdam.
Dialogue: 0,1:17:00.82,1:17:06.08,Default,,0000,0000,0000,,OnIy combine the properties of a monopoIy\Ntrading company and a pubIic bank
Dialogue: 0,1:17:26.70,1:17:29.43,Default,,0000,0000,0000,,and the sky reaIIy wouId be the Iimit.
Dialogue: 0,1:17:39.95,1:17:44.09,Default,,0000,0000,0000,,Law was preparing to unIeash\Na whoIe new system of finance
Dialogue: 0,1:17:59.94,1:18:01.75,Default,,0000,0000,0000,,on an unsuspecting nation.
Dialogue: 0,1:18:45.81,1:18:48.64,Default,,0000,0000,0000,,ln 1 7 1 6, John Law arrived in Paris.
Dialogue: 0,1:19:07.27,1:19:10.66,Default,,0000,0000,0000,,He had identified France\Nas the ideal laboratory
Dialogue: 0,1:19:35.67,1:19:41.04,Default,,0000,0000,0000,,for what would be the biggest experiment\Nin the history of the stock market.
Dialogue: 0,1:20:00.29,1:20:03.43,Default,,0000,0000,0000,,But why did the French\Ngive him his chance?
Dialogue: 0,1:20:43.21,1:20:48.25,Default,,0000,0000,0000,,The answer is that France's fiscal\Nproblems were exceptionally desperate.
Dialogue: 0,1:21:09.09,1:21:12.60,Default,,0000,0000,0000,,The country was saddled\Nwith enormous public debts
Dialogue: 0,1:21:28.86,1:21:31.58,Default,,0000,0000,0000,,as a result of the wars of Louis XlV.
Dialogue: 0,1:21:45.90,1:21:48.50,Default,,0000,0000,0000,,When the Sun King died in 1 7 1 5,
Dialogue: 0,1:22:00.00,1:22:05.59,Default,,0000,0000,0000,,the Duke of Orleans, who was acting as\NRegent for the under-age king Louis XV,
Dialogue: 0,1:22:26.51,1:22:31.93,Default,,0000,0000,0000,,faced a country on the brink of its third\Nbankruptcy in less than a century.
Dialogue: 0,1:23:03.75,1:23:06.49,Default,,0000,0000,0000,,lt was the perfect opportunity for Law,
Dialogue: 0,1:23:23.74,1:23:28.13,Default,,0000,0000,0000,,the maverick self-taught economist\Nwho'd developed his theories
Dialogue: 0,1:23:42.04,1:23:45.55,Default,,0000,0000,0000,,somewhere between the casino\Nand the stock market.
Dialogue: 0,1:24:11.71,1:24:15.80,Default,,0000,0000,0000,,Law's ambition was to revive\Neconomic confidence in France
Dialogue: 0,1:24:30.43,1:24:33.46,Default,,0000,0000,0000,,by estabIishing a bank\Non the Dutch modeI,
Dialogue: 0,1:24:42.43,1:24:46.81,Default,,0000,0000,0000,,but with the difference that this bank\NwouId issue paper money
Dialogue: 0,1:25:00.31,1:25:02.17,Default,,0000,0000,0000,,Iike this 100 Iivres note.
Dialogue: 0,1:25:20.93,1:25:23.37,Default,,0000,0000,0000,,As money was invested in the bank,
Dialogue: 0,1:25:30.19,1:25:33.64,Default,,0000,0000,0000,,the government's huge debt\NwouId be consoIidated.
Dialogue: 0,1:25:44.70,1:25:50.23,Default,,0000,0000,0000,,But at the same time, and this was\Nthe reaIIy important part of Law's system,
Dialogue: 0,1:26:05.74,1:26:10.83,Default,,0000,0000,0000,,paper money wouId revive French trade,\Nand with it French economic power.
Dialogue: 0,1:26:40.46,1:26:42.86,Default,,0000,0000,0000,,The Royal Government gained doubly.
Dialogue: 0,1:26:56.66,1:27:00.06,Default,,0000,0000,0000,,Consolidation simply meant\Nthat its onerous debts
Dialogue: 0,1:27:16.64,1:27:20.38,Default,,0000,0000,0000,,were magically transformed\Ninto shares in Law's bank.
Dialogue: 0,1:27:28.43,1:27:31.87,Default,,0000,0000,0000,,At the same time,\Nthe monarch gained the ability
Dialogue: 0,1:27:50.10,1:27:52.65,Default,,0000,0000,0000,,to print as much money as he liked.
Dialogue: 0,1:28:10.51,1:28:15.82,Default,,0000,0000,0000,,As Law wrote - ''l maintain that an\Nabsolute prince who knows how to govern
Dialogue: 0,1:28:38.07,1:28:43.56,Default,,0000,0000,0000,,''can extend his credit further and find\Nneeded funds at a lower interest rate
Dialogue: 0,1:29:05.84,1:29:09.28,Default,,0000,0000,0000,,''than a prince\Nwho is limited in his authority.
Dialogue: 0,1:29:25.62,1:29:29.89,Default,,0000,0000,0000,,''ln credit, supreme power\Nmust reside in only one person. ''
Dialogue: 0,1:30:16.95,1:30:21.20,Default,,0000,0000,0000,,That absoIute power\Nwas in the hands of the Duke of OrIeans
Dialogue: 0,1:30:34.20,1:30:36.70,Default,,0000,0000,0000,,who Iived here in the PaIais RoyaI,
Dialogue: 0,1:30:46.20,1:30:50.51,Default,,0000,0000,0000,,just a short step from Law's apartment\Nin the PIace Vendome.
Dialogue: 0,1:31:02.61,1:31:06.04,Default,,0000,0000,0000,,It was to him that Law\Nnow unfoIded his scheme.
Dialogue: 0,1:31:19.65,1:31:23.85,Default,,0000,0000,0000,,The prize was nothing Iess\Nthan the revivaI of French power
Dialogue: 0,1:31:39.22,1:31:41.22,Default,,0000,0000,0000,,through financiaI engineering.
Dialogue: 0,1:31:49.95,1:31:53.38,Default,,0000,0000,0000,,But that was onIy haIf\Nof Law's ingenious pIan.
Dialogue: 0,1:32:18.56,1:32:19.54,Default,,0000,0000,0000,,As Law wrote,
Dialogue: 0,1:32:33.71,1:32:37.84,Default,,0000,0000,0000,,''The bank is not the only,\Nnor the grandest of my ideas.
Dialogue: 0,1:32:56.43,1:32:59.99,Default,,0000,0000,0000,,''l will produce a work\Nwhich will surprise Europe
Dialogue: 0,1:33:13.26,1:33:18.82,Default,,0000,0000,0000,,''by changes more powerful than were\Nproduced by the discovery of the lndies. ''
Dialogue: 0,1:34:03.76,1:34:05.90,Default,,0000,0000,0000,,The second part of Law's idea
Dialogue: 0,1:34:14.70,1:34:19.09,Default,,0000,0000,0000,,was that a huge monopoIy\Ntrading company shouId be estabIished,
Dialogue: 0,1:34:35.53,1:34:39.09,Default,,0000,0000,0000,,the Compagnie d'Occident,\Nthe Company of the West.
Dialogue: 0,1:34:51.10,1:34:55.52,Default,,0000,0000,0000,,As he put it, the whoIe nation\NwouId become a body of traders
Dialogue: 0,1:35:14.24,1:35:18.50,Default,,0000,0000,0000,,and Law himseIf, named here\Nas the company's chief director,
Dialogue: 0,1:35:43.06,1:35:44.62,Default,,0000,0000,0000,,wouId be at its head.
Dialogue: 0,1:36:28.93,1:36:33.37,Default,,0000,0000,0000,,The focus for this wildly ambitious\Nscheme would be in America,
Dialogue: 0,1:36:50.60,1:36:54.32,Default,,0000,0000,0000,,where the French laid claim\Nto a vast tract of land
Dialogue: 0,1:37:07.85,1:37:10.84,Default,,0000,0000,0000,,either side of the Mississippi -\NLouisiana.
Dialogue: 0,1:37:23.42,1:37:28.62,Default,,0000,0000,0000,,The Regent gave Law's company, what\Nwas to become the Mississippi Company,
Dialogue: 0,1:37:51.40,1:37:54.25,Default,,0000,0000,0000,,a monopoly on trade with the new colony.
Dialogue: 0,1:38:08.03,1:38:13.30,Default,,0000,0000,0000,,Frenchmen, regardless of rank, were\Nencouraged to buy shares in the company.
Dialogue: 0,1:38:32.85,1:38:35.70,Default,,0000,0000,0000,,Law's name headed the list of directors.
Dialogue: 0,1:39:22.30,1:39:25.68,Default,,0000,0000,0000,,In modern parIance,\Nwhat these documents teII us
Dialogue: 0,1:39:36.81,1:39:40.54,Default,,0000,0000,0000,,is that Law was attempting\Na refIation. And why not?
Dialogue: 0,1:39:55.96,1:39:58.62,Default,,0000,0000,0000,,France in 1 7 16 was in a depression
Dialogue: 0,1:40:10.90,1:40:14.29,Default,,0000,0000,0000,,and Law's banknotes\NheIped stimuIate a recovery.
Dialogue: 0,1:40:26.89,1:40:29.44,Default,,0000,0000,0000,,At the same time, what he was doing
Dialogue: 0,1:40:36.77,1:40:41.64,Default,,0000,0000,0000,,was effectiveIy transforming a burdensome\Nand badIy managed pubIic debt
Dialogue: 0,1:41:01.81,1:41:06.66,Default,,0000,0000,0000,,into shares in what was a privatised\Ntax-gathering and trade company.
Dialogue: 0,1:41:27.69,1:41:30.42,Default,,0000,0000,0000,,WeII, what was not to Iike about that?
Dialogue: 0,1:41:51.68,1:41:53.88,Default,,0000,0000,0000,,ln a fever of mass speculation,
Dialogue: 0,1:42:04.51,1:42:07.67,Default,,0000,0000,0000,,the Mississippi Company's\Nshare price soared,
Dialogue: 0,1:42:19.24,1:42:23.84,Default,,0000,0000,0000,,from the original price of 500 livres\Nto 5,000 on September 4th.
Dialogue: 0,1:42:56.27,1:42:59.62,Default,,0000,0000,0000,,By December 1 7 1 9,\Nit had reached 1 0,000.
Dialogue: 0,1:43:31.19,1:43:33.63,Default,,0000,0000,0000,,And this is where it aII happened.
Dialogue: 0,1:43:40.45,1:43:45.71,Default,,0000,0000,0000,,This was where Law's share issuing office\Nwas Iocated, the Rue Quincampoix.
Dialogue: 0,1:44:05.91,1:44:08.82,Default,,0000,0000,0000,,You can imagine the scenes of frenzy here
Dialogue: 0,1:44:19.37,1:44:22.93,Default,,0000,0000,0000,,as haIf of Paris descended\Non this narrow aIIeyway
Dialogue: 0,1:44:33.47,1:44:36.32,Default,,0000,0000,0000,,aII desperate for a piece of the action.
Dialogue: 0,1:44:47.35,1:44:51.72,Default,,0000,0000,0000,,The higher the share price went,\Nthe more they wanted to buy.
Dialogue: 0,1:45:04.18,1:45:07.34,Default,,0000,0000,0000,,It was a cIassic stock market\Nfeedback Ioop.
Dialogue: 0,1:45:43.95,1:45:49.21,Default,,0000,0000,0000,,lt was in these heady times that the word\N''millionaire'' was first coined.
Dialogue: 0,1:46:10.67,1:46:14.96,Default,,0000,0000,0000,,Yes, millionaires, like entrepreneurs,\Nwere invented in France.
Dialogue: 0,1:46:41.39,1:46:45.69,Default,,0000,0000,0000,,And by January 1 720,\NJohn Law was the richest of them all.
Dialogue: 0,1:47:20.73,1:47:25.27,Default,,0000,0000,0000,,Louis XlV had said ''L'etat, c'est moi'' -\N''l am the state. ''
Dialogue: 0,1:47:52.08,1:47:55.87,Default,,0000,0000,0000,,Now the renegade Scotsman,\NJohn Law, was able to say,
Dialogue: 0,1:48:14.80,1:48:16.72,Default,,0000,0000,0000,,''L'economie, c'est moi'' -
Dialogue: 0,1:48:35.84,1:48:37.41,Default,,0000,0000,0000,,''l am the economy. ''
Dialogue: 0,1:49:09.50,1:49:13.66,Default,,0000,0000,0000,,Ensconced in his paIatiaI suite,\Nhere in the PIace Vendome,
Dialogue: 0,1:49:29.91,1:49:32.29,Default,,0000,0000,0000,,that's the Ritz HoteI over there,
Dialogue: 0,1:49:40.22,1:49:45.25,Default,,0000,0000,0000,,Law had achieved a greater concentration\Nof financiaI power in his hands
Dialogue: 0,1:50:02.94,1:50:05.86,Default,,0000,0000,0000,,than any individuaI in aII French history.
Dialogue: 0,1:50:17.67,1:50:22.64,Default,,0000,0000,0000,,As ControIIer-GeneraI of French Finances,\Nhe was IiteraIIy in charge of
Dialogue: 0,1:50:38.08,1:50:41.35,Default,,0000,0000,0000,,the coIIection\Nof aII France's indirect taxes,
Dialogue: 0,1:50:53.65,1:50:55.87,Default,,0000,0000,0000,,the entire French nationaI debt,
Dialogue: 0,1:51:05.22,1:51:09.83,Default,,0000,0000,0000,,the 26 mints that produced\Nthe country's goId and siIver coinage,
Dialogue: 0,1:51:28.36,1:51:33.16,Default,,0000,0000,0000,,the Company of the Indies -\Nbetter known as the Mississippi Company -
Dialogue: 0,1:51:46.04,1:51:49.36,Default,,0000,0000,0000,,which had a monopoIy\Non the import of tobacco,
Dialogue: 0,1:51:58.87,1:52:02.01,Default,,0000,0000,0000,,aII of France's trade\Nwith Africa and Asia,
Dialogue: 0,1:52:11.50,1:52:13.54,Default,,0000,0000,0000,,oh, and the Louisiana coIony,
Dialogue: 0,1:52:22.86,1:52:27.53,Default,,0000,0000,0000,,which covered around a quarter\Nof what is today the United States.
Dialogue: 0,1:53:07.04,1:53:10.77,Default,,0000,0000,0000,,ln his own right,\NLaw also owned the Mazarin Palace,
Dialogue: 0,1:53:33.34,1:53:37.60,Default,,0000,0000,0000,,more than a third of the buildings\Naround the Place Vendome,
Dialogue: 0,1:53:56.69,1:53:58.84,Default,,0000,0000,0000,,more than 1 2 country estates,
Dialogue: 0,1:54:20.26,1:54:22.49,Default,,0000,0000,0000,,several plantations in Louisiana,
Dialogue: 0,1:54:38.77,1:54:43.39,Default,,0000,0000,0000,,and a hundred million livres of shares\Nin the Mississippi Company.
Dialogue: 0,1:55:03.60,1:55:08.77,Default,,0000,0000,0000,,Not bad going for a man who, when\Nhe'd first come here 12 years before,
Dialogue: 0,1:55:25.69,1:55:31.01,Default,,0000,0000,0000,,had been identified as a joueur -\Na professionaI gambIer and a possibIe spy.
Dialogue: 0,1:55:57.88,1:56:01.32,Default,,0000,0000,0000,,By January 1 720,\NLaw's triumph seemed complete.
Dialogue: 0,1:56:21.86,1:56:25.96,Default,,0000,0000,0000,,A Scots murderer was, in effect,\NPrime Minister of France.
Dialogue: 0,1:57:04.100,1:57:09.24,Default,,0000,0000,0000,,Law's problem was that he had\Nno clear idea where to stop.
Dialogue: 0,1:57:30.03,1:57:35.23,Default,,0000,0000,0000,,On the contrary, he had a strong personal\Ninterest in printing more money,
Dialogue: 0,1:57:52.76,1:57:58.52,Default,,0000,0000,0000,,which his own bank controlled, to drive up\Nthe price of his own company's shares.
Dialogue: 0,1:58:29.57,1:58:33.13,Default,,0000,0000,0000,,FortunateIy for Law,\Nboth his bank and his company
Dialogue: 0,1:58:48.30,1:58:51.80,Default,,0000,0000,0000,,were now operating\Nout of the very same buiIding,
Dialogue: 0,1:59:02.82,1:59:06.56,Default,,0000,0000,0000,,the Mazarin PaIace,\Nwhich he himseIf happened to own.
Dialogue: 0,1:59:20.70,1:59:25.57,Default,,0000,0000,0000,,So aII he had to do in order to\Ndrive up the company's share price
Dialogue: 0,1:59:39.85,1:59:45.68,Default,,0000,0000,0000,,was to take a waIk down the corridor from\Nthe office where the shares were issued,
Dialogue: 0,2:00:01.73,2:00:04.70,Default,,0000,0000,0000,,to the office where the money was printed.
Dialogue: 0,2:00:13.72,2:00:18.10,Default,,0000,0000,0000,,You couId say that Law had become\Nthe uItimate insider trader.
Dialogue: 0,2:00:58.53,2:01:03.07,Default,,0000,0000,0000,,At root, Law's system was what\Nwe nowadays call a Ponzi scheme,
Dialogue: 0,2:01:20.41,2:01:24.46,Default,,0000,0000,0000,,after the legendary ltalian-American\Nconman, Charles Ponzi.
Dialogue: 0,2:01:42.30,2:01:47.60,Default,,0000,0000,0000,,To pay out the generous returns\Nit's promised to the first lot of suckers,
Dialogue: 0,2:02:08.60,2:02:13.78,Default,,0000,0000,0000,,a Ponzi scheme needs to take in\Nmore money from the next lot of suckers.
Dialogue: 0,2:02:31.95,2:02:35.98,Default,,0000,0000,0000,,ln John Law's scheme,\Nthe acquisitions of other companies
Dialogue: 0,2:02:53.83,2:02:56.28,Default,,0000,0000,0000,,and the generous dividends Law paid
Dialogue: 0,2:03:06.03,2:03:08.72,Default,,0000,0000,0000,,were financed not from company profits,
Dialogue: 0,2:03:23.50,2:03:25.82,Default,,0000,0000,0000,,but simply by selling new shares.
Dialogue: 0,2:04:23.46,2:04:27.66,Default,,0000,0000,0000,,Like aII Ponzi schemes, however,\Nthe effect of Law's system
Dialogue: 0,2:04:50.81,2:04:53.56,Default,,0000,0000,0000,,was to generate an unsustainabIe bubbIe.
Dialogue: 0,2:05:06.59,2:05:09.04,Default,,0000,0000,0000,,Law had refIated the French economy
Dialogue: 0,2:05:17.53,2:05:21.45,Default,,0000,0000,0000,,with a combination of paper money\Nand pubIic confidence.
Dialogue: 0,2:05:34.99,2:05:38.61,Default,,0000,0000,0000,,Now, unfortunateIy,\Nhis bubbIe was about to go pop.
Dialogue: 0,2:07:07.36,2:07:09.26,Default,,0000,0000,0000,,By the beginning of 1 720,
Dialogue: 0,2:07:18.72,2:07:22.92,Default,,0000,0000,0000,,France was in the grip of a mania -\Nthe Mississippi Bubble.
Dialogue: 0,2:07:55.32,2:08:00.53,Default,,0000,0000,0000,,But the man responsible, the renegade\NScots murderer and gambler, John Law,
Dialogue: 0,2:08:23.31,2:08:27.45,Default,,0000,0000,0000,,who'd risen to become master\Nof the entire French economy,
Dialogue: 0,2:08:41.40,2:08:45.14,Default,,0000,0000,0000,,was about to discover\Nan inviolable law of finance...
Dialogue: 0,2:09:08.75,2:09:10.83,Default,,0000,0000,0000,,Trees don't grow to the sky.
Dialogue: 0,2:09:57.98,2:10:00.19,Default,,0000,0000,0000,,According to Law's PR campaign,
Dialogue: 0,2:10:09.77,2:10:15.50,Default,,0000,0000,0000,,the huge profits he was projecting would\Ncome from the French colony of Louisiana,
Dialogue: 0,2:10:33.33,2:10:36.71,Default,,0000,0000,0000,,which he painted as\Na veritable Garden of Eden,
Dialogue: 0,2:10:51.42,2:10:53.82,Default,,0000,0000,0000,,inhabited by friendly noble savages
Dialogue: 0,2:11:05.52,2:11:08.97,Default,,0000,0000,0000,,willing to exchange\Na cornucopia of exotic goods.
Dialogue: 0,2:11:25.93,2:11:29.19,Default,,0000,0000,0000,,These would flow to France\Nthrough a new city
Dialogue: 0,2:11:43.60,2:11:46.81,Default,,0000,0000,0000,,at the mouth of the Mississippi,\NNew Orleans,
Dialogue: 0,2:12:00.43,2:12:05.64,Default,,0000,0000,0000,,named to flatter the always susceptible\NFrench Regent, the Duke of Orleans.
Dialogue: 0,2:12:33.47,2:12:35.92,Default,,0000,0000,0000,,All the colony lacked was settlers.
Dialogue: 0,2:13:01.87,2:13:06.80,Default,,0000,0000,0000,,Grasping that Frenchmen were more\Ninterested in stock market speculation
Dialogue: 0,2:13:22.07,2:13:24.58,Default,,0000,0000,0000,,than the hard graft of colonisation,
Dialogue: 0,2:13:34.27,2:13:38.84,Default,,0000,0000,0000,,Law launched a recruitment drive\Nin the Franco-German borderlands.
Dialogue: 0,2:14:21.19,2:14:26.39,Default,,0000,0000,0000,,Several thousand bold Germans signed up\Nand set sail to the promised land.
Dialogue: 0,2:15:11.26,2:15:12.65,Default,,0000,0000,0000,,They ended up here.
Dialogue: 0,2:15:40.93,2:15:45.33,Default,,0000,0000,0000,,This was the unfortunate immigrants'\Nfirst gIimpse of Louisiana,
Dialogue: 0,2:16:04.07,2:16:05.82,Default,,0000,0000,0000,,an insect-infested swamp.
Dialogue: 0,2:16:15.01,2:16:18.56,Default,,0000,0000,0000,,Within a year, 80% of them\Nhad died of starvation
Dialogue: 0,2:16:35.42,2:16:38.11,Default,,0000,0000,0000,,or tropicaI diseases Iike yeIIow fever.
Dialogue: 0,2:16:47.20,2:16:51.18,Default,,0000,0000,0000,,SadIy for Law,\Nthe Mississippi Company's principaI asset,
Dialogue: 0,2:17:06.77,2:17:12.27,Default,,0000,0000,0000,,its monopoIy on trade with Louisiana,\NIooked Iike being more or Iess worthIess.
Dialogue: 0,2:17:54.32,2:17:57.76,Default,,0000,0000,0000,,As the inscription\Non this Dutch cartoon put it,
Dialogue: 0,2:18:11.99,2:18:17.14,Default,,0000,0000,0000,,''This is the wondrous Mississippi land\Nmade famous by her share dealings,
Dialogue: 0,2:18:38.92,2:18:44.21,Default,,0000,0000,0000,,''which through deceit and devious conduct\Nhas squandered countless treasures.
Dialogue: 0,2:19:11.11,2:19:16.31,Default,,0000,0000,0000,,''However men regard the shares,\Nit is wind and smoke and nothing more. ''
Dialogue: 0,2:19:55.71,2:19:59.22,Default,,0000,0000,0000,,To Law, economic success\Nwas all about confidence.
Dialogue: 0,2:20:22.01,2:20:24.28,Default,,0000,0000,0000,,But this was a confidence trick.
Dialogue: 0,2:20:48.10,2:20:49.15,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,2:21:10.19,2:21:13.46,Default,,0000,0000,0000,,ln Paris, the first rumours\Nbegan to circulate
Dialogue: 0,2:21:29.55,2:21:32.45,Default,,0000,0000,0000,,that all was not well with Law's system.
Dialogue: 0,2:21:43.65,2:21:47.74,Default,,0000,0000,0000,,The share price of the Mississippi Company\Nbegan to slide.
Dialogue: 0,2:22:31.83,2:22:36.90,Default,,0000,0000,0000,,ln a desperate bid to avert meltdown,\NLaw called on the Duke of Orleans
Dialogue: 0,2:22:55.39,2:22:59.69,Default,,0000,0000,0000,,to cut the official share price\Nfrom 9,000 livres to 5,000.
Dialogue: 0,2:23:30.95,2:23:34.16,Default,,0000,0000,0000,,This was when the limits\Nof royal absolutism,
Dialogue: 0,2:23:46.94,2:23:50.92,Default,,0000,0000,0000,,the foundation of Law's system,\Nsuddenly became apparent.
Dialogue: 0,2:24:25.65,2:24:28.92,Default,,0000,0000,0000,,Within weeks, the share price\Nwas in freefall.
Dialogue: 0,2:24:41.85,2:24:44.71,Default,,0000,0000,0000,,Angry crowds gathered outside Law's bank.
Dialogue: 0,2:25:02.05,2:25:04.45,Default,,0000,0000,0000,,Stones were thrown, windows broken.
Dialogue: 0,2:25:19.93,2:25:24.36,Default,,0000,0000,0000,,By December, the shares had lost\Nmore than 90% of their value.
Dialogue: 0,2:26:33.15,2:26:38.54,Default,,0000,0000,0000,,This French map from 1 730 gives an\NabsoIuteIy wonderfuI visuaI representation
Dialogue: 0,2:27:03.45,2:27:06.36,Default,,0000,0000,0000,,of the worId's first stock market bubbIe.
Dialogue: 0,2:27:15.23,2:27:18.02,Default,,0000,0000,0000,,Here at the top is the goddess Fortuna,
Dialogue: 0,2:27:26.17,2:27:29.38,Default,,0000,0000,0000,,pouring down goodies\Nfrom her horn of pIenty.
Dialogue: 0,2:27:45.10,2:27:48.67,Default,,0000,0000,0000,,Here are the happy investors\Nreceiving their shares
Dialogue: 0,2:27:59.83,2:28:03.11,Default,,0000,0000,0000,,in the Mississippi Company\Nfrom fIying cherubs.
Dialogue: 0,2:28:14.77,2:28:19.50,Default,,0000,0000,0000,,But down beIow, there are some\Nother cherubs chopping up the shares
Dialogue: 0,2:28:32.86,2:28:35.20,Default,,0000,0000,0000,,beside a shattered printing press.
Dialogue: 0,2:28:41.91,2:28:45.24,Default,,0000,0000,0000,,And there are two more cherubs\NbIowing bubbIes.
Dialogue: 0,2:28:56.22,2:29:00.07,Default,,0000,0000,0000,,To the right, there are four\Nvery unhappy Iooking men,
Dialogue: 0,2:29:14.73,2:29:19.51,Default,,0000,0000,0000,,one of whom is preparing to commit suicide\Nby faIIing on his sword.
Dialogue: 0,2:29:47.97,2:29:52.46,Default,,0000,0000,0000,,As if pricked by a sword,\Nthe Mississippi Bubble had now burst.
Dialogue: 0,2:30:24.16,2:30:29.82,Default,,0000,0000,0000,,lt was at this moment that Law, vilified\Nby the French people, fled the country.
Dialogue: 0,2:31:02.66,2:31:05.57,Default,,0000,0000,0000,,He never saw his wife and daughter again.
Dialogue: 0,2:31:29.80,2:31:32.70,Default,,0000,0000,0000,,He spent the rest of his life in Venice,
Dialogue: 0,2:31:42.01,2:31:46.35,Default,,0000,0000,0000,,dividing his time between writing\Nlong, self-justifying letters
Dialogue: 0,2:32:06.20,2:32:07.13,Default,,0000,0000,0000,,and gambling.
Dialogue: 0,2:32:15.88,2:32:17.20,Default,,0000,0000,0000,,He died in 1 729.
Dialogue: 0,2:33:13.32,2:33:16.95,Default,,0000,0000,0000,,ln France, however,\Nhis devastating legacy lived on.
Dialogue: 0,2:33:37.51,2:33:42.42,Default,,0000,0000,0000,,Law's bubbIe and bust fataIIy\Nset back France's financiaI deveIopment,
Dialogue: 0,2:34:04.02,2:34:09.52,Default,,0000,0000,0000,,putting Frenchmen off paper money and\Nstock markets for more than a generation.
Dialogue: 0,2:34:30.32,2:34:33.89,Default,,0000,0000,0000,,The French monarchy's fiscaI crisis\Nwent unresoIved
Dialogue: 0,2:34:44.63,2:34:48.75,Default,,0000,0000,0000,,and for the rest of the reign of Louis XV\Nand Louis XVI,
Dialogue: 0,2:35:02.51,2:35:05.01,Default,,0000,0000,0000,,the crown Iived from hand to mouth.
Dialogue: 0,2:35:27.55,2:35:31.95,Default,,0000,0000,0000,,Eventually, France was driven\Nby royal bankruptcy to revolution.
Dialogue: 0,2:36:40.77,2:36:46.42,Default,,0000,0000,0000,,The Mississippi Bubble of 1 7 1 9 was\Nthe first stock market bubble in history.
Dialogue: 0,2:37:15.06,2:37:17.84,Default,,0000,0000,0000,,But it's been by no means the largest.
Dialogue: 0,2:37:27.05,2:37:31.07,Default,,0000,0000,0000,,When we think of stock market bubbles,\Nwe think of this.
Dialogue: 0,2:38:10.82,2:38:14.15,Default,,0000,0000,0000,,The nightmare\Nthat haunts the world of finance,
Dialogue: 0,2:38:28.07,2:38:31.97,Default,,0000,0000,0000,,which has returned to haunt us\Nin the last few months,
Dialogue: 0,2:38:44.90,2:38:50.08,Default,,0000,0000,0000,,is that there could ever be a bust\Nto match the Great Wall Street Crash,
Dialogue: 0,2:39:07.83,2:39:11.39,Default,,0000,0000,0000,,which began on October 24th 1 929,\NBlack Thursday.
Dialogue: 0,2:39:33.71,2:39:38.85,Default,,0000,0000,0000,,Over the next three years, the US stock\Nmarket declined a staggering 86%,
Dialogue: 0,2:40:02.12,2:40:04.50,Default,,0000,0000,0000,,reaching its nadir in June 1 932.
Dialogue: 0,2:41:01.02,2:41:04.00,Default,,0000,0000,0000,,What was worse,\Nthis asset price deflation
Dialogue: 0,2:41:16.59,2:41:20.45,Default,,0000,0000,0000,,was accompanied by the worst\Ndepression in all history.
Dialogue: 0,2:41:57.62,2:42:01.65,Default,,0000,0000,0000,,ln the United States,\Noutput collapsed by nearly a third.
Dialogue: 0,2:42:18.45,2:42:22.61,Default,,0000,0000,0000,,Unemployment reached a quarter\Nof the civilian labour force.
Dialogue: 0,2:43:10.21,2:43:12.47,Default,,0000,0000,0000,,Why did the 1 929 crash happen?
Dialogue: 0,2:43:36.09,2:43:38.60,Default,,0000,0000,0000,,Why, indeed,\Ndoes any crash happen?
Dialogue: 0,2:43:53.76,2:43:58.91,Default,,0000,0000,0000,,This remains one of the most hotly\Ndebated questions in financial history.
Dialogue: 0,2:44:48.25,2:44:53.17,Default,,0000,0000,0000,,There are all kinds of technical\Nexplanations for stock market crashes.
Dialogue: 0,2:45:12.24,2:45:15.44,Default,,0000,0000,0000,,But at root,\Nit's all about herd psychology.
Dialogue: 0,2:45:52.63,2:45:56.53,Default,,0000,0000,0000,,ln a bull market,\Nthat's when share prices are rising,
Dialogue: 0,2:46:14.51,2:46:17.20,Default,,0000,0000,0000,,even the smartest investors can succumb
Dialogue: 0,2:46:27.56,2:46:31.77,Default,,0000,0000,0000,,to what the former chairman\Nof the American Federal Reserve,
Dialogue: 0,2:46:42.92,2:46:46.81,Default,,0000,0000,0000,,Alan Greenspan,\Nfamously called ''irrational exuberance''.
Dialogue: 0,2:47:07.32,2:47:09.83,Default,,0000,0000,0000,,But when the herd changes direction,
Dialogue: 0,2:47:18.26,2:47:22.81,Default,,0000,0000,0000,,sometimes in reaction to nothing more\Nthan a change in the wind,
Dialogue: 0,2:47:36.14,2:47:39.70,Default,,0000,0000,0000,,their mood can also change\Nfrom euphoria to gloom.
Dialogue: 0,2:48:03.50,2:48:04.84,Default,,0000,0000,0000,,The herd stampedes.
Dialogue: 0,2:48:25.59,2:48:27.04,Default,,0000,0000,0000,,One cow gets scared,
Dialogue: 0,2:48:36.32,2:48:41.33,Default,,0000,0000,0000,,and that fear just transIates\Nto the whoIe herd and they aII take off.
Dialogue: 0,2:48:56.52,2:49:00.29,Default,,0000,0000,0000,,And the rest of them\Ndon't know why they're scared.
Dialogue: 0,2:49:09.56,2:49:12.29,Default,,0000,0000,0000,,They just feeI that fear and they run.
Dialogue: 0,2:49:25.76,2:49:28.34,Default,,0000,0000,0000,,Fear overwheIms aII rationaI thinking.
Dialogue: 0,2:49:51.85,2:49:53.06,Default,,0000,0000,0000,,UntiI it's over.
Dialogue: 0,2:50:07.63,2:50:12.95,Default,,0000,0000,0000,,ln market jargon, the buyers have turned\Ninto sellers, the bulls into bears.
Dialogue: 0,2:50:42.56,2:50:44.66,Default,,0000,0000,0000,,Despite the zooIogicaI imagery,
Dialogue: 0,2:50:58.54,2:51:02.68,Default,,0000,0000,0000,,the point is that markets are mirrors\Nof the human psyche.
Dialogue: 0,2:51:15.38,2:51:18.88,Default,,0000,0000,0000,,Like homo sapiens,\Nthey are prone to mood swings,
Dialogue: 0,2:51:29.68,2:51:31.07,Default,,0000,0000,0000,,from greed to fear.
Dialogue: 0,2:51:38.94,2:51:41.16,Default,,0000,0000,0000,,They can suffer from depression.
Dialogue: 0,2:51:49.88,2:51:53.58,Default,,0000,0000,0000,,And sometimes they can experience\NcompIete breakdowns.
Dialogue: 0,2:52:06.92,2:52:09.02,Default,,0000,0000,0000,,That happens rather more often
Dialogue: 0,2:52:15.76,2:52:19.56,Default,,0000,0000,0000,,than some financiaI theories\NwouId Iead you to expect,
Dialogue: 0,2:52:32.17,2:52:37.06,Default,,0000,0000,0000,,but not so often that we're ever\Nquite ready for the next breakdown.
Dialogue: 0,2:53:16.56,2:53:18.84,Default,,0000,0000,0000,,lf movements in financial markets
Dialogue: 0,2:53:29.82,2:53:33.23,Default,,0000,0000,0000,,were statistically distributed\Nlike human heights,
Dialogue: 0,2:53:46.86,2:53:49.25,Default,,0000,0000,0000,,there would hardly be any crashes.
Dialogue: 0,2:53:58.85,2:54:02.36,Default,,0000,0000,0000,,Most months would be clustered\Naround the average,
Dialogue: 0,2:54:17.37,2:54:21.34,Default,,0000,0000,0000,,with only a tiny number\Nwitnessing extreme ups or downs.
Dialogue: 0,2:54:41.35,2:54:47.16,Default,,0000,0000,0000,,Let's face it, not many of us are below\Nfour feet in height or above eight feet.
Dialogue: 0,2:55:37.11,2:55:39.79,Default,,0000,0000,0000,,This is the cIassic beII-shaped curve,
Dialogue: 0,2:55:49.52,2:55:53.57,Default,,0000,0000,0000,,where things are distributed\Naccording to their frequency -
Dialogue: 0,2:56:06.35,2:56:10.51,Default,,0000,0000,0000,,the most commonIy occurring\NcIustered here around the middIe
Dialogue: 0,2:56:24.44,2:56:29.24,Default,,0000,0000,0000,,and the reIativeIy rare dwarves\Nand giants out here at the extremes.
Dialogue: 0,2:56:45.70,2:56:48.36,Default,,0000,0000,0000,,That's why it's quite a steep curve,
Dialogue: 0,2:56:54.53,2:56:58.62,Default,,0000,0000,0000,,because most human heights\Nare quite cIose to the average.
Dialogue: 0,2:57:11.15,2:57:14.82,Default,,0000,0000,0000,,But if you do the same thing\Nfor financiaI markets,
Dialogue: 0,2:57:24.62,2:57:27.18,Default,,0000,0000,0000,,for daiIy moves in the stock market,
Dialogue: 0,2:57:35.35,2:57:39.08,Default,,0000,0000,0000,,you end up with something\Nthat Iooks more Iike this,
Dialogue: 0,2:57:54.70,2:57:57.22,Default,,0000,0000,0000,,with reIativeIy fewer smaII movements
Dialogue: 0,2:58:06.49,2:58:09.70,Default,,0000,0000,0000,,and reIativeIy more\Nbig movements down or up.
Dialogue: 0,2:58:26.90,2:58:32.62,Default,,0000,0000,0000,,And these are what the statisticians mean\Nwhen they taIk about Iong or fat taiIs.
Dialogue: 0,2:59:09.60,2:59:13.88,Default,,0000,0000,0000,,lf stock market movements\Nwere distributed like human heights,
Dialogue: 0,2:59:27.49,2:59:31.44,Default,,0000,0000,0000,,a drop of 1 0% would happen\Nonly once every 500 years.
Dialogue: 0,2:59:52.10,2:59:56.58,Default,,0000,0000,0000,,And stock market crashes of 20%\Nin a year would be unheard of,
Dialogue: 0,3:00:17.35,3:00:20.15,Default,,0000,0000,0000,,rather like people just six inches tall.
Dialogue: 0,3:00:29.76,3:00:34.84,Default,,0000,0000,0000,,Whereas in fact, there have been\Nseven such crashes in the past century.
Dialogue: 0,3:01:17.74,3:01:22.92,Default,,0000,0000,0000,,As it turned out, those who feared\Nthat the brief panic of October 1 987
Dialogue: 0,3:01:45.30,3:01:49.21,Default,,0000,0000,0000,,would turn into the next great crash\Nwere proved wrong.
Dialogue: 0,3:02:05.28,3:02:08.84,Default,,0000,0000,0000,,The market had one\Nreally bad month, then rallied.
Dialogue: 0,3:02:28.01,3:02:32.76,Default,,0000,0000,0000,,But that bubble provided a golden\Nopportunity for corporate crookery.
Dialogue: 0,3:03:02.93,3:03:07.07,Default,,0000,0000,0000,,What John Law's Mississippi Company\Nhad been to the bubbIe
Dialogue: 0,3:03:20.40,3:03:22.56,Default,,0000,0000,0000,,that Iaunched the 18th century,
Dialogue: 0,3:03:30.70,3:03:35.13,Default,,0000,0000,0000,,so another company wouId be\Nto the bubbIe that ended the 20th.
Dialogue: 0,3:03:50.06,3:03:53.21,Default,,0000,0000,0000,,It was a company\Nthat promised its investors
Dialogue: 0,3:04:03.95,3:04:06.46,Default,,0000,0000,0000,,weaIth beyond the dreams of avarice.
Dialogue: 0,3:04:15.10,3:04:20.48,Default,,0000,0000,0000,,It was a company that cIaimed to have\Nreinvented the entire financiaI system.
Dialogue: 0,3:04:37.82,3:04:42.50,Default,,0000,0000,0000,,And it was a company that used\Nits impeccabIe poIiticaI connections
Dialogue: 0,3:04:56.54,3:05:00.26,Default,,0000,0000,0000,,to ride aII the way to the top\Nof the buII market.
Dialogue: 0,3:05:11.48,3:05:16.05,Default,,0000,0000,0000,,Named by Fortune Magazine\Nas ''America's Most lnnovative Company''
Dialogue: 0,3:05:40.94,3:05:44.16,Default,,0000,0000,0000,,for six consecutive years,\Nthat company was...
Dialogue: 0,3:05:59.03,3:05:59.49,Default,,0000,0000,0000,,Enron.
Dialogue: 0,3:06:18.18,3:06:20.34,Default,,0000,0000,0000,,Seven years after its collapse,
Dialogue: 0,3:06:27.44,3:06:32.22,Default,,0000,0000,0000,,most of us have consigned Enron\Nto the dustbin of financial history.
Dialogue: 0,3:06:50.79,3:06:54.65,Default,,0000,0000,0000,,Yet it pioneered many\Nof the dubious business practices
Dialogue: 0,3:07:14.56,3:07:16.89,Default,,0000,0000,0000,,that continue to plague us today.
Dialogue: 0,3:08:10.11,3:08:12.78,Default,,0000,0000,0000,,ln the three years up to August 2000,
Dialogue: 0,3:08:24.20,3:08:28.64,Default,,0000,0000,0000,,shares of the Houston energy company\Nhad gone through the roof.
Dialogue: 0,3:08:41.67,3:08:44.70,Default,,0000,0000,0000,,Once a small-time\Ngas company in Nebraska,
Dialogue: 0,3:09:01.65,3:09:05.97,Default,,0000,0000,0000,,Enron was now the fifth largest company\Nin the United States,
Dialogue: 0,3:09:22.27,3:09:25.59,Default,,0000,0000,0000,,with stated revenues\Nof 1 1 1 billion dollars.
Dialogue: 0,3:09:46.26,3:09:48.88,Default,,0000,0000,0000,,Enron was the darling of Wall Street.
Dialogue: 0,3:10:23.50,3:10:29.06,Default,,0000,0000,0000,,Yet a little historical knowledge might\Nhave made Enron's investors think twice.
Dialogue: 0,3:11:06.21,3:11:11.22,Default,,0000,0000,0000,,lndeed, the story of Enron was like\Na re-run of the Mississippi Bubble
Dialogue: 0,3:11:30.19,3:11:31.41,Default,,0000,0000,0000,,280 years before.
Dialogue: 0,3:11:55.02,3:11:59.76,Default,,0000,0000,0000,,John Law's plan had been to revolutionise\NFrench government finance.
Dialogue: 0,3:12:24.26,3:12:26.47,Default,,0000,0000,0000,,Ken Lay, the chairman of Enron,
Dialogue: 0,3:12:36.05,3:12:39.63,Default,,0000,0000,0000,,planned to revolutionise\Nthe global energy business.
Dialogue: 0,3:13:27.38,3:13:32.18,Default,,0000,0000,0000,,For years, the industry had been\Ndominated by huge utility companies,
Dialogue: 0,3:13:53.47,3:13:58.80,Default,,0000,0000,0000,,which both produced the energy, pumped\Nthe gas and generated the electricity,
Dialogue: 0,3:14:16.19,3:14:18.22,Default,,0000,0000,0000,,and sold it on to consumers.
Dialogue: 0,3:14:35.55,3:14:39.32,Default,,0000,0000,0000,,Lay's big idea was to create\Na kind of energy bank,
Dialogue: 0,3:14:57.85,3:15:02.54,Default,,0000,0000,0000,,which would act as the intermediary\Nbetween suppliers and consumers.
Dialogue: 0,3:15:24.15,3:15:29.05,Default,,0000,0000,0000,,His dream was to make Enron\Nthe greatest energy company in the world.
Dialogue: 0,3:15:51.92,3:15:54.94,Default,,0000,0000,0000,,Caught up in the heady spirit of the times
Dialogue: 0,3:16:06.44,3:16:09.49,Default,,0000,0000,0000,,was senior Enron executive,\NSherron Watkins.
Dialogue: 0,3:16:23.90,3:16:25.41,Default,,0000,0000,0000,,It was very eIectric.
Dialogue: 0,3:16:35.90,3:16:40.20,Default,,0000,0000,0000,,You feIt Iike you couId...\NIf you came up with a good idea,
Dialogue: 0,3:16:51.46,3:16:56.92,Default,,0000,0000,0000,,Enron wouId give you the money and\Nyou couId go for it at a very young age.
Dialogue: 0,3:17:10.82,3:17:14.43,Default,,0000,0000,0000,,Like John Law,\NKen Lay had friends in high places.
Dialogue: 0,3:17:30.39,3:17:34.97,Default,,0000,0000,0000,,He contributed generously to\NGeorge HWBush's presidential campaign.
Dialogue: 0,3:17:59.21,3:18:02.67,Default,,0000,0000,0000,,As President,\NBush duly pushed through legislation
Dialogue: 0,3:18:17.73,3:18:20.25,Default,,0000,0000,0000,,that deregulated the energy industry.
Dialogue: 0,3:18:36.66,3:18:39.82,Default,,0000,0000,0000,,Riding a global wave\Nof energy privatisation,
Dialogue: 0,3:18:52.86,3:18:55.95,Default,,0000,0000,0000,,Enron snapped up assets\Nall over the world.
Dialogue: 0,3:19:13.69,3:19:18.61,Default,,0000,0000,0000,,ln Latin America alone, the company\Nhad interests in Colombia, Ecuador,
Dialogue: 0,3:19:36.83,3:19:42.50,Default,,0000,0000,0000,,Peru and Bolivia, where they laid a huge\Npipeline across the continent to Brazil.
Dialogue: 0,3:20:06.92,3:20:12.23,Default,,0000,0000,0000,,And thanks to the intervention of\NKen Lay's personaI friend, George W Bush,
Dialogue: 0,3:20:36.80,3:20:40.01,Default,,0000,0000,0000,,Enron was abIe to acquire\Na controIIing stake
Dialogue: 0,3:20:49.84,3:20:53.87,Default,,0000,0000,0000,,in the Iargest naturaI gas\NpipeIine network in the worId,
Dialogue: 0,3:21:12.14,3:21:13.42,Default,,0000,0000,0000,,here in Argentina.
Dialogue: 0,3:21:44.96,3:21:47.24,Default,,0000,0000,0000,,Above all, however, Enron traded.
Dialogue: 0,3:21:58.64,3:22:02.96,Default,,0000,0000,0000,,Not only in energy,\Nbut in virtually all the ancient elements
Dialogue: 0,3:22:20.31,3:22:22.46,Default,,0000,0000,0000,,of earth, water, fire and air.
Dialogue: 0,3:22:32.09,3:22:34.66,Default,,0000,0000,0000,,lt even traded in internet bandwidth.
Dialogue: 0,3:22:59.65,3:23:05.16,Default,,0000,0000,0000,,Enron led a Wall Street surge unnervingly\Nreminiscent of the Mississippi Bubble.
Dialogue: 0,3:23:32.90,3:23:37.49,Default,,0000,0000,0000,,Despite his half-hearted warnings\Nagainst ''irrational exuberance'',
Dialogue: 0,3:23:58.78,3:24:01.34,Default,,0000,0000,0000,,this bull market was propelled upward
Dialogue: 0,3:24:11.61,3:24:15.70,Default,,0000,0000,0000,,by the chairman of the US Federal Reserve,\NAlan Greenspan.
Dialogue: 0,3:24:46.11,3:24:50.59,Default,,0000,0000,0000,,As in John Law's time,\Na stock market bubble could only happen
Dialogue: 0,3:25:06.94,3:25:08.51,Default,,0000,0000,0000,,if money was abundant.
Dialogue: 0,3:25:28.61,3:25:34.15,Default,,0000,0000,0000,,And by raising interest rates only once\Nbetween February 1 995 and June 1 990,
Dialogue: 0,3:25:58.28,3:26:00.55,Default,,0000,0000,0000,,Greenspan made sure that it was.
Dialogue: 0,3:26:15.74,3:26:18.43,Default,,0000,0000,0000,,The rewards for investors were immense,
Dialogue: 0,3:26:28.100,3:26:33.85,Default,,0000,0000,0000,,and aIso for the managers here\Nat the company's Houston headquarters,
Dialogue: 0,3:26:48.35,3:26:51.93,Default,,0000,0000,0000,,who were generousIy incentivised\Nwith share options.
Dialogue: 0,3:27:04.13,3:27:07.33,Default,,0000,0000,0000,,In the space of just three years\Nafter 1997,
Dialogue: 0,3:27:22.44,3:27:26.69,Default,,0000,0000,0000,,the Enron stock price rose\Nby a factor of very nearIy five,
Dialogue: 0,3:27:45.16,3:27:48.24,Default,,0000,0000,0000,,from beIow 20 doIIars a share\Nto above 90.
Dialogue: 0,3:28:02.83,3:28:06.10,Default,,0000,0000,0000,,It was the Mississippi Company\NaII over again.
Dialogue: 0,3:28:52.91,3:28:58.16,Default,,0000,0000,0000,,Even a city used to extravagant\Noil-fired living had seen nothing like it.
Dialogue: 0,3:29:34.14,3:29:38.45,Default,,0000,0000,0000,,This is where Ken Lay\Nand his Enron executives used to live,
Dialogue: 0,3:29:56.24,3:29:59.98,Default,,0000,0000,0000,,in River Oaks, Houston's\Nmost exclusive neighbourhood.
Dialogue: 0,3:30:16.22,3:30:21.23,Default,,0000,0000,0000,,ln the final year of its existence,\NEnron paid its top 1 40 executives
Dialogue: 0,3:30:46.94,3:30:49.73,Default,,0000,0000,0000,,an average of 5.3 million dollars each.
Dialogue: 0,3:31:01.25,3:31:03.99,Default,,0000,0000,0000,,Luxury car sales went through the roof.
Dialogue: 0,3:31:32.81,3:31:37.02,Default,,0000,0000,0000,,(Sherron Watkins) You got muItipIes\Nof your annuaI base pay.
Dialogue: 0,3:31:57.00,3:32:01.02,Default,,0000,0000,0000,,You were reaIIy Iess thought of\Nif you got a percentage,
Dialogue: 0,3:32:09.62,3:32:12.82,Default,,0000,0000,0000,,even if it was 75%\Nof your annuaI base pay.
Dialogue: 0,3:32:21.41,3:32:25.33,Default,,0000,0000,0000,,Oh, you were getting a percentage.\NYou wanted muItipIes.
Dialogue: 0,3:32:34.45,3:32:37.48,Default,,0000,0000,0000,,You wanted two times\Nyour annuaI base pay,
Dialogue: 0,3:32:47.28,3:32:51.36,Default,,0000,0000,0000,,three times, four times\Nyour annuaI base pay, as a bonus.
Dialogue: 0,3:33:17.16,3:33:19.37,Default,,0000,0000,0000,,And Lay, the pillar of society,
Dialogue: 0,3:33:31.05,3:33:34.74,Default,,0000,0000,0000,,espoused the highest moral\Nstandards for his company.
Dialogue: 0,3:33:49.35,3:33:54.79,Default,,0000,0000,0000,,(Ken Lay) Enron is a company that deaIs\Nwith everyone with absoIute integrity.
Dialogue: 0,3:34:17.76,3:34:21.46,Default,,0000,0000,0000,,We pIay by aII of the ruIes,\Nwe stand by our word,
Dialogue: 0,3:34:34.17,3:34:37.24,Default,,0000,0000,0000,,we mean what we say,\Nwe say what we mean.
Dialogue: 0,3:34:53.10,3:34:56.71,Default,,0000,0000,0000,,The only problem was that,\Nlike John Law's system,
Dialogue: 0,3:35:13.51,3:35:16.31,Default,,0000,0000,0000,,the Enron system was an elaborate fraud.
Dialogue: 0,3:35:34.55,3:35:35.36,Default,,0000,0000,0000,,PHONE RINGS
Dialogue: 0,3:36:32.62,3:36:34.71,Default,,0000,0000,0000,,ln this tape, an Enron trader
Dialogue: 0,3:36:41.45,3:36:44.78,Default,,0000,0000,0000,,is discussing with\Nthe El Paso Electric Company
Dialogue: 0,3:36:56.60,3:36:59.75,Default,,0000,0000,0000,,how to hold California's\Nconsumers to ransom
Dialogue: 0,3:37:14.06,3:37:18.52,Default,,0000,0000,0000,,by closing power stations\Nto restrict the supply of electricity.
Dialogue: 0,3:38:24.97,3:38:25.25,Default,,0000,0000,0000,,OK.
Dialogue: 0,3:38:58.84,3:39:02.87,Default,,0000,0000,0000,,The results were not only\Nthe higher prices Enron wanted,
Dialogue: 0,3:39:18.83,3:39:22.75,Default,,0000,0000,0000,,but also, despite there being\Nplenty of power available,
Dialogue: 0,3:39:41.76,3:39:43.99,Default,,0000,0000,0000,,repeated blackouts for consumers.
Dialogue: 0,3:40:23.84,3:40:27.27,Default,,0000,0000,0000,,Enron's money was stolen\Nin more ways than one.
Dialogue: 0,3:40:40.25,3:40:43.70,Default,,0000,0000,0000,,The company's stated assets\Nwere vastly inflated.
Dialogue: 0,3:40:57.71,3:41:03.26,Default,,0000,0000,0000,,But its key financial innovation was to\Nremove its debts from the balance sheet
Dialogue: 0,3:41:31.80,3:41:35.72,Default,,0000,0000,0000,,and hide them in so-called\N''special purpose entities'',
Dialogue: 0,3:41:58.10,3:42:00.67,Default,,0000,0000,0000,,dubious names like Chewco and Raptor.
Dialogue: 0,3:42:14.51,3:42:19.94,Default,,0000,0000,0000,,Each quarter, the company's executives\Nhad to use more smoke and more mirrors
Dialogue: 0,3:42:40.39,3:42:43.72,Default,,0000,0000,0000,,to make actual losses\Nlook like bumper profits.
Dialogue: 0,3:43:03.11,3:43:04.38,Default,,0000,0000,0000,,lt couldn't last.
Dialogue: 0,3:43:11.95,3:43:15.78,Default,,0000,0000,0000,,When you cook the books\Nand then you try to hide it,
Dialogue: 0,3:43:31.51,3:43:32.49,Default,,0000,0000,0000,,you're toast.
Dialogue: 0,3:43:43.30,3:43:46.44,Default,,0000,0000,0000,,When they sensed\Nthe game would soon be up,
Dialogue: 0,3:43:55.08,3:43:57.70,Default,,0000,0000,0000,,Lay and his cronies started to unload
Dialogue: 0,3:44:07.07,3:44:10.46,Default,,0000,0000,0000,,hundreds of millions\Nof dollars worth of shares,
Dialogue: 0,3:44:20.74,3:44:23.90,Default,,0000,0000,0000,,while at the same time\Nreassuring the public
Dialogue: 0,3:44:33.58,3:44:36.73,Default,,0000,0000,0000,,that the share price\Nwould continue to soar.
Dialogue: 0,3:44:57.35,3:44:59.74,Default,,0000,0000,0000,,Like John Law's desperate attempts
Dialogue: 0,3:45:07.24,3:45:10.81,Default,,0000,0000,0000,,to stem the freefall\Nof Mississippi Company shares,
Dialogue: 0,3:45:23.44,3:45:26.29,Default,,0000,0000,0000,,all Ken Lay's reassurances were in vain.
Dialogue: 0,3:45:53.95,3:45:58.97,Default,,0000,0000,0000,,On November 1 5th 2001, Alan Greenspan,\Nhead of the US Federal Reserve,
Dialogue: 0,3:46:26.98,3:46:30.97,Default,,0000,0000,0000,,received the Enron Prize\Nfor Distinguished Public Service,
Dialogue: 0,3:46:51.18,3:46:53.73,Default,,0000,0000,0000,,adding his name to a roll of honour
Dialogue: 0,3:47:00.86,3:47:04.38,Default,,0000,0000,0000,,that included Mikhail Gorbachev\Nand Nelson Mandela.
Dialogue: 0,3:47:20.63,3:47:26.02,Default,,0000,0000,0000,,Greenspan deserved it, because without\Nhis monetary policies in the late '90s,
Dialogue: 0,3:47:46.51,3:47:50.95,Default,,0000,0000,0000,,the Enron bubble, and the dotcom bubble\Nthat coincided with it,
Dialogue: 0,3:48:07.13,3:48:09.47,Default,,0000,0000,0000,,would surely have been impossible.
Dialogue: 0,3:48:34.90,3:48:39.64,Default,,0000,0000,0000,,Just two weeks after the award ceremony,\NEnron filed for bankruptcy.
Dialogue: 0,3:49:02.25,3:49:04.06,Default,,0000,0000,0000,,The company owed billions.
Dialogue: 0,3:49:18.66,3:49:20.58,Default,,0000,0000,0000,,But just how many billions?
Dialogue: 0,3:49:38.65,3:49:41.88,Default,,0000,0000,0000,,When Enron decIared bankruptcy,\NDecember 2001 ,
Dialogue: 0,3:49:53.80,3:49:56.42,Default,,0000,0000,0000,,they met with their creditors to say,
Dialogue: 0,3:50:14.84,3:50:17.75,Default,,0000,0000,0000,,''Erm, guys, I know on our baIance sheet,
Dialogue: 0,3:50:32.51,3:50:36.48,Default,,0000,0000,0000,,''we have reported 13 biIIion doIIars\Nof Iong-term debt.
Dialogue: 0,3:50:51.66,3:50:55.63,Default,,0000,0000,0000,,''Our true Iong-term debt picture\Nis 38 biIIion doIIars.
Dialogue: 0,3:51:15.64,3:51:19.67,Default,,0000,0000,0000,,''There's 25 biIIion doIIars\Nin off-baIance-sheet debt''.
Dialogue: 0,3:51:42.15,3:51:46.29,Default,,0000,0000,0000,,(NiaII Ferguson) Did those numbers\Ncome as a shock to you?
Dialogue: 0,3:51:52.46,3:51:56.19,Default,,0000,0000,0000,,You knew there were probIems,\Nbut not on that scaIe.
Dialogue: 0,3:52:02.77,3:52:06.15,Default,,0000,0000,0000,,Yes, I mean, I think\Nwe were aII fIabbergasted.
Dialogue: 0,3:52:34.33,3:52:39.87,Default,,0000,0000,0000,,The day before 4,500 employees at Enron's\NHQ were given their marching orders,
Dialogue: 0,3:53:06.52,3:53:11.14,Default,,0000,0000,0000,,a final round of bonus cheques\Nwere issued to grateful executives.
Dialogue: 0,3:53:41.44,3:53:47.28,Default,,0000,0000,0000,,ln May 2006, Ken Lay was convicted on all\Nsix counts of securities and wire fraud.
Dialogue: 0,3:54:17.21,3:54:21.95,Default,,0000,0000,0000,,His sidekick, Jeffrey Skilling,\Nwas sentenced to 24 years in prison.
Dialogue: 0,3:54:55.92,3:55:00.38,Default,,0000,0000,0000,,Lay died before sentencing,\Nwhile on holiday in Aspen, Colorado.
Dialogue: 0,3:55:29.59,3:55:34.15,Default,,0000,0000,0000,,Yet the fraudulent practices\Nthat propelled Enron's rise and fall
Dialogue: 0,3:55:50.84,3:55:52.63,Default,,0000,0000,0000,,didn't die with Ken Lay.
Dialogue: 0,3:56:08.09,3:56:12.29,Default,,0000,0000,0000,,On the contrary, the habit\Nof hiding debt off-balance-sheet
Dialogue: 0,3:56:33.97,3:56:39.44,Default,,0000,0000,0000,,that Enron pioneered subsequently spread\Nthroughout the Western financial system.
Dialogue: 0,3:57:05.11,3:57:07.86,Default,,0000,0000,0000,,The unravelling of this dodgy accounting
Dialogue: 0,3:57:18.78,3:57:22.16,Default,,0000,0000,0000,,has been a key component\Nof the current crisis.
Dialogue: 0,3:57:36.04,3:57:40.58,Default,,0000,0000,0000,,In many respects, I think\Nthe Enron probIem was in a Petri dish
Dialogue: 0,3:58:00.02,3:58:04.00,Default,,0000,0000,0000,,and the germ has spread\Nthroughout the financiaI markets.
Dialogue: 0,3:58:19.17,3:58:23.14,Default,,0000,0000,0000,,Some of which comes from\NEnron traders and finance foIks
Dialogue: 0,3:58:38.52,3:58:42.91,Default,,0000,0000,0000,,that are gainfuIIy empIoyed at banks\Nand energy trading houses.
Dialogue: 0,3:58:56.62,3:59:00.24,Default,,0000,0000,0000,,So that rot is everywhere\Nin the financiaI markets.
Dialogue: 0,3:59:51.53,3:59:56.75,Default,,0000,0000,0000,,The joint stock Iimited IiabiIity company\NtruIy is a miracuIous institution.
Dialogue: 0,4:00:23.09,4:00:25.61,Default,,0000,0000,0000,,And yet throughout financiaI history,
Dialogue: 0,4:00:34.24,4:00:37.57,Default,,0000,0000,0000,,there have aIways been\Na few crooked companies,
Dialogue: 0,4:00:49.60,4:00:53.47,Default,,0000,0000,0000,,just as there have occasionaIIy\Nbeen irrationaI markets.
Dialogue: 0,4:01:05.80,4:01:08.12,Default,,0000,0000,0000,,Indeed, the two go hand in hand,
Dialogue: 0,4:01:16.53,4:01:21.63,Default,,0000,0000,0000,,because it's preciseIy when the buIIs\Nare stampeding most enthusiasticaIIy
Dialogue: 0,4:01:39.25,4:01:43.86,Default,,0000,0000,0000,,that peopIe are most IikeIy\Nto get taken for the proverbiaI ride.
Dialogue: 0,4:02:08.50,4:02:09.54,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,4:02:27.01,4:02:29.32,Default,,0000,0000,0000,,As we've seen in the past year,
Dialogue: 0,4:02:35.64,4:02:40.65,Default,,0000,0000,0000,,the path of financial markets can\Nnever be as smooth as we would like.
Dialogue: 0,4:02:58.36,4:03:00.99,Default,,0000,0000,0000,,Since the current credit crunch began,
Dialogue: 0,4:03:13.09,4:03:17.81,Default,,0000,0000,0000,,some stock markets around the world\Nhave fallen by as much as 50%.
Dialogue: 0,4:03:58.53,4:04:01.97,Default,,0000,0000,0000,,So long as human expectations\Nof the future veer
Dialogue: 0,4:04:11.100,4:04:16.85,Default,,0000,0000,0000,,from the over-optimistic to\Nthe over-pessimistic, from greed to fear,
Dialogue: 0,4:04:34.93,4:04:37.66,Default,,0000,0000,0000,,stock prices will tend to trace a line
Dialogue: 0,4:04:51.13,4:04:55.04,Default,,0000,0000,0000,,not unlike the jagged\Nand irregular peaks of the Andes.
Dialogue: 0,4:05:20.38,4:05:23.04,Default,,0000,0000,0000,,As an investor, you just have to hope
Dialogue: 0,4:05:31.10,4:05:35.42,Default,,0000,0000,0000,,that when you have to come down\Nfrom the summit of euphoria,
Dialogue: 0,4:05:49.20,4:05:53.96,Default,,0000,0000,0000,,it'll be on a nice, smooth ski-slope,\Nand not over a sheer cliff.
Dialogue: 0,4:06:21.81,4:06:25.48,Default,,0000,0000,0000,,But is there nothing\Nwe can do to protect ourselves
Dialogue: 0,4:06:43.27,4:06:45.55,Default,,0000,0000,0000,,from real and metaphorical falls?
Dialogue: 0,4:07:01.15,4:07:05.27,Default,,0000,0000,0000,,As we'll see in the next episode\Nof The Ascent Of Money,
Dialogue: 0,4:07:20.09,4:07:23.87,Default,,0000,0000,0000,,finance is as much about risk\Nas it is about return.
Dialogue: 0,4:07:42.81,4:07:44.55,Default,,0000,0000,0000,,And the big question is,
Dialogue: 0,4:07:52.28,4:07:53.44,Default,,0000,0000,0000,,are you insured?
Dialogue: 0,0:00:00.00,0:00:01.05,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,0:00:11.29,0:00:14.03,Default,,0000,0000,0000,,The most basic financial impulse of all
Dialogue: 0,0:00:25.39,0:00:27.41,Default,,0000,0000,0000,,is to save for a rainy day.
Dialogue: 0,0:00:44.54,0:00:50.39,Default,,0000,0000,0000,,Because, as we've been painfully reminded\Nby the recent months of financial turmoil,
Dialogue: 0,0:01:08.94,0:01:11.10,Default,,0000,0000,0000,,the future is so unpredictable.
Dialogue: 0,0:01:21.78,0:01:24.75,Default,,0000,0000,0000,,The world really can be a dangerous place.
Dialogue: 0,0:01:48.29,0:01:52.48,Default,,0000,0000,0000,,Not many of us get through life\Nwithout a little bad luck.
Dialogue: 0,0:02:07.01,0:02:08.62,Default,,0000,0000,0000,,Some of us get a lot.
Dialogue: 0,0:02:22.16,0:02:26.40,Default,,0000,0000,0000,,lt's all about being in the wrong place\Nat the wrong time,
Dialogue: 0,0:02:42.78,0:02:45.88,Default,,0000,0000,0000,,like New Orleans\Nwhen Hurricane Katrina hit.
Dialogue: 0,0:03:17.28,0:03:23.12,Default,,0000,0000,0000,,The question is, how shouId we deaI with\Nthe risks and uncertainties of the future?
Dialogue: 0,0:03:43.79,0:03:48.29,Default,,0000,0000,0000,,ShouId the onus be on the individuaI\Nto insure against disaster?
Dialogue: 0,0:04:06.72,0:04:12.20,Default,,0000,0000,0000,,ShouId we be abIe to reIy on the voIuntary\Ncharity of our feIIow human beings
Dialogue: 0,0:04:29.03,0:04:30.55,Default,,0000,0000,0000,,when caIamity strikes?
Dialogue: 0,0:04:38.28,0:04:41.53,Default,,0000,0000,0000,,Or shouId we be abIe\Nto count on the state -
Dialogue: 0,0:04:52.38,0:04:57.19,Default,,0000,0000,0000,,in other words, the compuIsory\Ncontributions of our feIIow taxpayers -
Dialogue: 0,0:05:11.95,0:05:14.56,Default,,0000,0000,0000,,to baiI us out when the fIood comes?
Dialogue: 0,0:05:25.83,0:05:26.88,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,0:05:48.98,0:05:52.41,Default,,0000,0000,0000,,That's a long way of asking\Na simple question -
Dialogue: 0,0:06:03.70,0:06:04.86,Default,,0000,0000,0000,,are you insured?
Dialogue: 0,0:06:32.53,0:06:35.10,Default,,0000,0000,0000,,The British certainly think they are.
Dialogue: 0,0:06:46.20,0:06:46.89,Default,,0000,0000,0000,,GULLS CRY
Dialogue: 0,0:06:55.46,0:06:59.72,Default,,0000,0000,0000,,Today, we pay a larger proportion\Nof our income on insurance
Dialogue: 0,0:07:13.77,0:07:16.27,Default,,0000,0000,0000,,than any other people in the world.
Dialogue: 0,0:07:29.12,0:07:34.32,Default,,0000,0000,0000,,lt's rather odd, because Britain is\None of the safest countries on Earth.
Dialogue: 0,0:08:03.84,0:08:09.50,Default,,0000,0000,0000,,The struggle to overcome risk has been\Na constant theme of the history of money,
Dialogue: 0,0:08:26.77,0:08:31.92,Default,,0000,0000,0000,,from the invention of life insurance\Nby two hard-drinking Scots clergymen,
Dialogue: 0,0:08:51.81,0:08:54.83,Default,,0000,0000,0000,,to the rise and fall of the welfare state,
Dialogue: 0,0:09:12.01,0:09:17.16,Default,,0000,0000,0000,,to the explosive growth of hedge funds\Nand their multi-billionaire owners.
Dialogue: 0,0:09:57.45,0:10:02.00,Default,,0000,0000,0000,,At the core of our struggle with risk\Nis an insoluble conflict -
Dialogue: 0,0:10:19.75,0:10:25.00,Default,,0000,0000,0000,,we want to be financially secure,\Nand so we yearn for a predictable world.
Dialogue: 0,0:10:49.63,0:10:54.41,Default,,0000,0000,0000,,But the future always seems to come up\Nwith new and unpleasant ways
Dialogue: 0,0:11:10.46,0:11:12.14,Default,,0000,0000,0000,,to take us by surprise.
Dialogue: 0,0:11:30.45,0:11:32.14,Default,,0000,0000,0000,,We want calculable risk.
Dialogue: 0,0:11:46.86,0:11:49.37,Default,,0000,0000,0000,,We're stuck with random uncertainty.
Dialogue: 0,0:14:25.28,0:14:30.30,Default,,0000,0000,0000,,When Hurricane Katrina hit New Orleans\Nin the last week of August 2005,
Dialogue: 0,0:14:53.27,0:14:55.49,Default,,0000,0000,0000,,it caused death and destruction.
Dialogue: 0,0:15:31.98,0:15:37.58,Default,,0000,0000,0000,,Yet it's not a natural catastrophe that\Nnow threatens the survival of the city.
Dialogue: 0,0:16:06.69,0:16:10.07,Default,,0000,0000,0000,,The real lesson of the disaster\Nis about money.
Dialogue: 0,0:16:26.05,0:16:29.44,Default,,0000,0000,0000,,How the risk management system\Nwe call insurance
Dialogue: 0,0:16:46.25,0:16:50.16,Default,,0000,0000,0000,,simply failed when faced\Nwith a calamity on this scale.
Dialogue: 0,0:17:24.54,0:17:27.81,Default,,0000,0000,0000,,The hurricane didn't hit\NNew Orleans directly.
Dialogue: 0,0:17:42.00,0:17:46.71,Default,,0000,0000,0000,,The main force of the storm\Npassed to the north-east of the city.
Dialogue: 0,0:18:00.94,0:18:04.67,Default,,0000,0000,0000,,But just as the residents\Nbreathed a sigh of relief,
Dialogue: 0,0:18:19.24,0:18:21.11,Default,,0000,0000,0000,,the real catastrophe began.
Dialogue: 0,0:18:32.92,0:18:37.44,Default,,0000,0000,0000,,This IndustriaI CanaI Iinks\NLake Pontchartrain to the Mississippi.
Dialogue: 0,0:18:56.69,0:18:59.61,Default,,0000,0000,0000,,After the hurricane,\Nthe huge storm surge
Dialogue: 0,0:19:12.47,0:19:15.61,Default,,0000,0000,0000,,raised the water IeveI\Nin the canaI so high
Dialogue: 0,0:19:26.78,0:19:28.52,Default,,0000,0000,0000,,that it broke the Ievee,
Dialogue: 0,0:19:35.83,0:19:41.61,Default,,0000,0000,0000,,pouring umpteen gaIIons of the Iake over\Nhere, into the Ninth Ward of New OrIeans.
Dialogue: 0,0:20:19.59,0:20:23.19,Default,,0000,0000,0000,,Just to the east of the Ninth Ward\Nis St Bernard,
Dialogue: 0,0:20:33.47,0:20:36.04,Default,,0000,0000,0000,,a blue-collar community of homeowners
Dialogue: 0,0:20:50.10,0:20:53.84,Default,,0000,0000,0000,,all, on paper at least,\Ncovered by private insurance.
Dialogue: 0,0:21:52.79,0:21:56.77,Default,,0000,0000,0000,,Councillor Joey DiFatta\Nrefused advice to leave the city,
Dialogue: 0,0:22:12.99,0:22:15.03,Default,,0000,0000,0000,,staying put during the storm.
Dialogue: 0,0:22:30.03,0:22:34.69,Default,,0000,0000,0000,,Eventually, he was forced to retreat\Nto the roof of the town hall
Dialogue: 0,0:22:47.71,0:22:49.57,Default,,0000,0000,0000,,as the waters kept rising.
Dialogue: 0,0:22:57.80,0:22:59.36,Default,,0000,0000,0000,,..And as you can see,
Dialogue: 0,0:23:13.80,0:23:17.40,Default,,0000,0000,0000,,- this is the water Iine.\N- That's the water Iine.
Dialogue: 0,0:23:27.05,0:23:29.55,Default,,0000,0000,0000,,(Joey DiFatta) Where it came up to.
Dialogue: 0,0:23:36.73,0:23:39.64,Default,,0000,0000,0000,,The water came in this buiIding in, er...
Dialogue: 0,0:23:55.87,0:23:58.89,Default,,0000,0000,0000,,- 1 4 feet of water in 15 minutes.\N- Wow.
Dialogue: 0,0:24:26.59,0:24:29.33,Default,,0000,0000,0000,,From the second fIoor of this buiIding,
Dialogue: 0,0:24:40.48,0:24:44.38,Default,,0000,0000,0000,,I couId see, coming down\NJudge Perez, a waII of water.
Dialogue: 0,0:25:00.46,0:25:05.19,Default,,0000,0000,0000,,In that waII of water was debris -\Ncars, vehicIes, pieces of roofs.
Dialogue: 0,0:25:23.19,0:25:26.69,Default,,0000,0000,0000,,And this waII of water,\Nyou know, you guestimate,
Dialogue: 0,0:25:40.65,0:25:43.25,Default,,0000,0000,0000,,had to be maybe 15 to 20 feet taII.
Dialogue: 0,0:25:55.38,0:25:57.90,Default,,0000,0000,0000,,- And moving fast.\N- Moving quickIy.
Dialogue: 0,0:26:05.90,0:26:11.57,Default,,0000,0000,0000,,Just coming down this bouIevard street,\Nand taking everything with it as it came.
Dialogue: 0,0:26:50.50,0:26:55.16,Default,,0000,0000,0000,,The whole of St Bernard Parish\Nwas inundated in just 1 5 minutes.
Dialogue: 0,0:27:25.85,0:27:29.28,Default,,0000,0000,0000,,Only five houses out of 26,000\Nweren't flooded.
Dialogue: 0,0:28:05.82,0:28:09.73,Default,,0000,0000,0000,,More than 2,000 peopIe\Nwere kiIIed in Hurricane Katrina
Dialogue: 0,0:28:21.39,0:28:23.32,Default,,0000,0000,0000,,and the subsequent fIooding.
Dialogue: 0,0:28:29.60,0:28:33.62,Default,,0000,0000,0000,,Here in St Bernard Parish,\N1 48 peopIe Iost their Iives,
Dialogue: 0,0:28:53.58,0:28:57.09,Default,,0000,0000,0000,,mostIy because they became\Ntrapped in their houses
Dialogue: 0,0:29:08.31,0:29:10.11,Default,,0000,0000,0000,,as the fIood waters rose.
Dialogue: 0,0:29:17.14,0:29:20.18,Default,,0000,0000,0000,,The painted signs\Non these abandoned houses
Dialogue: 0,0:29:29.77,0:29:34.39,Default,,0000,0000,0000,,say whether dead bodies were found\Nafter the fIood waters receded.
Dialogue: 0,0:29:48.07,0:29:52.09,Default,,0000,0000,0000,,A IittIe bit Iike medievaI London\Nin the time of pIague.
Dialogue: 0,0:30:36.46,0:30:38.03,Default,,0000,0000,0000,,Yet three years later,
Dialogue: 0,0:30:46.98,0:30:50.94,Default,,0000,0000,0000,,it's not flooding or plague\Nthat's killing New Orleans.
Dialogue: 0,0:31:04.66,0:31:07.29,Default,,0000,0000,0000,,A harsh financial reality has emerged.
Dialogue: 0,0:31:23.17,0:31:25.43,Default,,0000,0000,0000,,People can't live here any more
Dialogue: 0,0:31:37.06,0:31:39.74,Default,,0000,0000,0000,,because they can't insure their homes.
Dialogue: 0,0:31:56.62,0:31:58.59,Default,,0000,0000,0000,,One man made it his mission
Dialogue: 0,0:32:09.04,0:32:11.78,Default,,0000,0000,0000,,to show the limits of private insurance
Dialogue: 0,0:32:21.66,0:32:24.33,Default,,0000,0000,0000,,when it comes to a really big crisis.
Dialogue: 0,0:33:16.100,0:33:19.96,Default,,0000,0000,0000,,He's former navy pilot\NRichard F Scruggs,
Dialogue: 0,0:33:35.30,0:33:39.27,Default,,0000,0000,0000,,one of those lawyers that only\NAmerica seems to produce.
Dialogue: 0,0:34:03.07,0:34:07.11,Default,,0000,0000,0000,,Dickie Scruggs took $50 million\Noff the asbestos industry,
Dialogue: 0,0:34:29.58,0:34:32.33,Default,,0000,0000,0000,,then $248 billion\Noff tobacco companies
Dialogue: 0,0:34:53.99,0:34:58.07,Default,,0000,0000,0000,,for failing to warn smokers\Nof the danger of lung cancer.
Dialogue: 0,0:35:11.66,0:35:14.10,Default,,0000,0000,0000,,This kind of work has its rewards.
Dialogue: 0,0:35:33.96,0:35:38.38,Default,,0000,0000,0000,,Scruggs's share in fees\Non the tobacco case was $1.4 billion.
Dialogue: 0,0:36:18.14,0:36:22.53,Default,,0000,0000,0000,,Scruggs's latest target has been\NAmerica's insurance companies.
Dialogue: 0,0:36:45.71,0:36:50.87,Default,,0000,0000,0000,,His clients, hundreds of homeowners\Nwhose houses were destroyed by Katrina,
Dialogue: 0,0:37:09.48,0:37:14.33,Default,,0000,0000,0000,,argued that the companies were refusing\Nto pay up on genuine claims -
Dialogue: 0,0:37:36.41,0:37:38.45,Default,,0000,0000,0000,,a view the insurers disputed.
Dialogue: 0,0:37:48.61,0:37:50.35,Default,,0000,0000,0000,,There was a house there?
Dialogue: 0,0:38:00.18,0:38:03.38,Default,,0000,0000,0000,,There was a house here,\Na house next to it,
Dialogue: 0,0:38:14.28,0:38:16.14,Default,,0000,0000,0000,,where you see the traiIer.
Dialogue: 0,0:38:26.06,0:38:29.25,Default,,0000,0000,0000,,Scruggs had a dog of his own\Nin this fight.
Dialogue: 0,0:38:45.84,0:38:51.16,Default,,0000,0000,0000,,His own home on Pascagoula's Beach\NBoulevard, here on the Mississippi coast,
Dialogue: 0,0:39:10.88,0:39:13.09,Default,,0000,0000,0000,,was so badly damaged by Katrina
Dialogue: 0,0:39:26.24,0:39:28.33,Default,,0000,0000,0000,,that it had to be demolished.
Dialogue: 0,0:39:41.18,0:39:43.62,Default,,0000,0000,0000,,- This is the...\N- The front door?
Dialogue: 0,0:39:50.64,0:39:53.14,Default,,0000,0000,0000,,This is the front door, right here.
Dialogue: 0,0:40:10.21,0:40:12.70,Default,,0000,0000,0000,,The edge of the sIab, if you wiII.
Dialogue: 0,0:40:23.04,0:40:25.73,Default,,0000,0000,0000,,- You were sIabbed.\N- We were sIabbed.
Dialogue: 0,0:40:36.51,0:40:38.66,Default,,0000,0000,0000,,If you couId fix the system...
Dialogue: 0,0:40:47.45,0:40:51.23,Default,,0000,0000,0000,,But I'm fortunate enough\Nthat I have the means to...
Dialogue: 0,0:41:05.75,0:41:09.88,Default,,0000,0000,0000,,- To Iose a house and buiId it.\N- Most peopIe here don't.
Dialogue: 0,0:41:23.85,0:41:29.33,Default,,0000,0000,0000,,If you had the power to change the system\Nso that peopIe really were insured,
Dialogue: 0,0:41:54.56,0:41:56.18,Default,,0000,0000,0000,,how wouId you do that?
Dialogue: 0,0:42:01.93,0:42:05.25,Default,,0000,0000,0000,,Is there a way of making\Ninsurance work again?
Dialogue: 0,0:42:17.08,0:42:21.33,Default,,0000,0000,0000,,There is, and it's discIosure\Nof what...what you're buying.
Dialogue: 0,0:42:47.58,0:42:49.32,Default,,0000,0000,0000,,Er, so that, you know...
Dialogue: 0,0:43:03.36,0:43:04.75,Default,,0000,0000,0000,,Iike...Iike a drug.
Dialogue: 0,0:43:17.46,0:43:20.13,Default,,0000,0000,0000,,There's a bIack box warning on there.
Dialogue: 0,0:43:31.14,0:43:35.74,Default,,0000,0000,0000,,''This is what it does, this is what\Nyou shouId watch out for.''
Dialogue: 0,0:43:48.81,0:43:53.66,Default,,0000,0000,0000,,As opposed to this device, which\Nis caIIed a modern insurance poIicy,
Dialogue: 0,0:44:18.47,0:44:21.33,Default,,0000,0000,0000,,which no-one can interpret or understand.
Dialogue: 0,0:44:52.98,0:44:58.36,Default,,0000,0000,0000,,lt seemed as if the insurance companies\Nhad been well and truly ''Scrugged''.
Dialogue: 0,0:45:15.28,0:45:20.72,Default,,0000,0000,0000,,One of America's biggest insurers settled\Nhundreds of cases brought by Scruggs
Dialogue: 0,0:45:41.79,0:45:45.70,Default,,0000,0000,0000,,on behalf of clients whose claims\Nhad been turned down.
Dialogue: 0,0:46:03.88,0:46:04.93,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,0:46:14.19,0:46:16.93,Default,,0000,0000,0000,,But in this bitter, high-stakes battle,
Dialogue: 0,0:46:28.08,0:46:31.12,Default,,0000,0000,0000,,the insurance companies\Nhad the last laugh.
Dialogue: 0,0:46:45.96,0:46:51.05,Default,,0000,0000,0000,,After winning the case, Scruggs was\Nconvicted and sentenced to five years
Dialogue: 0,0:47:11.42,0:47:16.80,Default,,0000,0000,0000,,for attempting to bribe a judge and\Ninfluence the distribution of legal fees.
Dialogue: 0,0:47:56.86,0:48:02.30,Default,,0000,0000,0000,,And the big insurance companies responded\Nto the weight of post-Katrina claims
Dialogue: 0,0:48:21.27,0:48:26.52,Default,,0000,0000,0000,,by, in effect, declaring parts of the\NGulf Coast a no-home-insurance zone.
Dialogue: 0,0:49:01.24,0:49:04.63,Default,,0000,0000,0000,,Today, as Councillor Joey DiFatta\Nhas found out,
Dialogue: 0,0:49:19.76,0:49:24.61,Default,,0000,0000,0000,,insuring a house in this part of\NNew Orleans is virtually impossible.
Dialogue: 0,0:49:48.58,0:49:53.43,Default,,0000,0000,0000,,- They can't get a mortgage either?\N- (Joey DiFatta) That is correct.
Dialogue: 0,0:50:04.15,0:50:07.98,Default,,0000,0000,0000,,They have to make a choice.\NDo I buiId a house here?
Dialogue: 0,0:50:18.25,0:50:23.08,Default,,0000,0000,0000,,Or do I reIocate to an area where\Ninsurance may be a IittIe cheaper
Dialogue: 0,0:50:37.82,0:50:39.32,Default,,0000,0000,0000,,and I can afford it?
Dialogue: 0,0:50:45.60,0:50:49.80,Default,,0000,0000,0000,,That is hurting our community,\Nit's taking our peopIe away,
Dialogue: 0,0:51:02.43,0:51:05.99,Default,,0000,0000,0000,,the nucIeus of this parish,\Nand puIIing them away.
Dialogue: 0,0:51:17.79,0:51:18.48,Default,,0000,0000,0000,,SHIP HORN
Dialogue: 0,0:51:31.26,0:51:33.60,Default,,0000,0000,0000,,Three years after disaster struck,
Dialogue: 0,0:51:42.62,0:51:47.23,Default,,0000,0000,0000,,St Bernard Parish has only a third\Nof its pre-Katrina population.
Dialogue: 0,0:52:29.96,0:52:31.00,Default,,0000,0000,0000,,THUNDER RUMBLES
Dialogue: 0,0:52:41.53,0:52:44.45,Default,,0000,0000,0000,,Of course, life has always been dangerous.
Dialogue: 0,0:52:56.89,0:53:00.33,Default,,0000,0000,0000,,The real lesson of Katrina,\Nor any big disaster,
Dialogue: 0,0:53:18.98,0:53:22.100,Default,,0000,0000,0000,,is that even when we think\Nwe're protected against risk,
Dialogue: 0,0:53:35.81,0:53:38.19,Default,,0000,0000,0000,,sometimes it turns out we're not.
Dialogue: 0,0:53:55.16,0:53:57.98,Default,,0000,0000,0000,,Even making quite modest insurance claims
Dialogue: 0,0:54:10.31,0:54:13.04,Default,,0000,0000,0000,,can seem more trouble than it's worth.
Dialogue: 0,0:54:27.36,0:54:29.98,Default,,0000,0000,0000,,lt leaves you wondering why we bother
Dialogue: 0,0:54:39.56,0:54:43.07,Default,,0000,0000,0000,,spending so much\Non insurance policies every year.
Dialogue: 0,0:54:56.60,0:54:59.34,Default,,0000,0000,0000,,Where did this strange habit come from?
Dialogue: 0,0:55:21.64,0:55:26.90,Default,,0000,0000,0000,,Saving up for the proverbiaI rainy day\Nis the first principIe of insurance,
Dialogue: 0,0:55:44.78,0:55:48.62,Default,,0000,0000,0000,,but the trick is knowing\Nwhat to do with your savings
Dialogue: 0,0:56:00.77,0:56:03.98,Default,,0000,0000,0000,,so that, unIike in New OrIeans\Nafter Katrina,
Dialogue: 0,0:56:14.24,0:56:17.66,Default,,0000,0000,0000,,they're in the kitty\Nwhen you reaIIy need them.
Dialogue: 0,0:56:27.28,0:56:31.29,Default,,0000,0000,0000,,But to do that, you need to be\Nmore than usuaIIy canny,
Dialogue: 0,0:56:44.74,0:56:47.12,Default,,0000,0000,0000,,and that gives us a vaIuabIe cIue
Dialogue: 0,0:56:54.63,0:56:58.89,Default,,0000,0000,0000,,as to where the history\Nof modern insurance has its origins.
Dialogue: 0,0:57:12.72,0:57:15.52,Default,,0000,0000,0000,,Where eIse but in bonny, canny ScotIand?
Dialogue: 0,0:57:35.66,0:57:36.41,Default,,0000,0000,0000,,BELL TOLLS
Dialogue: 0,0:58:19.84,0:58:22.99,Default,,0000,0000,0000,,They say the Scots\Nare a pessimistic people.
Dialogue: 0,0:58:39.62,0:58:43.76,Default,,0000,0000,0000,,Maybe it's the weather -\Nall those hundreds of rainy days.
Dialogue: 0,0:59:01.92,0:59:05.84,Default,,0000,0000,0000,,Maybe it's the endless years\Nof sporting disappointment.
Dialogue: 0,0:59:19.80,0:59:25.10,Default,,0000,0000,0000,,Or maybe it was the Calvinism we picked up\Nat the time of the Reformation.
Dialogue: 0,0:59:54.10,0:59:57.49,Default,,0000,0000,0000,,Certainly, it's two\NChurch of Scotland ministers
Dialogue: 0,1:00:09.88,1:00:14.56,Default,,0000,0000,0000,,who deserve the credit for inventing\Nthe first true insurance fund,
Dialogue: 0,1:00:32.60,1:00:33.80,Default,,0000,0000,0000,,back in 1 7 44,
Dialogue: 0,1:00:44.17,1:00:47.33,Default,,0000,0000,0000,,and fathering\Na multi-billion-pound industry.
Dialogue: 0,1:01:41.40,1:01:45.84,Default,,0000,0000,0000,,The Kirkyard of Greyfriars\Nis best known for the grave-robbers,
Dialogue: 0,1:02:03.70,1:02:08.07,Default,,0000,0000,0000,,the Resurrection Men, who came here\Nin the late 1 8th century
Dialogue: 0,1:02:23.06,1:02:26.69,Default,,0000,0000,0000,,to supply the Medical School\Nat Edinburgh University
Dialogue: 0,1:02:38.63,1:02:40.56,Default,,0000,0000,0000,,with corpses for dissection.
Dialogue: 0,1:02:59.66,1:03:01.96,Default,,0000,0000,0000,,But Greyfriars' lasting importance
Dialogue: 0,1:03:12.92,1:03:16.95,Default,,0000,0000,0000,,comes from the work of the minister\Nhere, Robert Wallace,
Dialogue: 0,1:03:31.22,1:03:33.56,Default,,0000,0000,0000,,and his friend, Alexander Webster.
Dialogue: 0,1:03:59.63,1:04:03.49,Default,,0000,0000,0000,,It's somehow appropriate\Nthat it was Scottish ministers
Dialogue: 0,1:04:17.30,1:04:19.35,Default,,0000,0000,0000,,who invented modern insurance.
Dialogue: 0,1:04:26.98,1:04:32.46,Default,,0000,0000,0000,,After aII, we tend to think of them as\Nthe embodiment of prudence and thrift,
Dialogue: 0,1:04:54.33,1:04:58.79,Default,,0000,0000,0000,,weighed down with an anticipation\Nof impending divine retribution
Dialogue: 0,1:05:16.84,1:05:18.83,Default,,0000,0000,0000,,for every tiny transgression.
Dialogue: 0,1:05:27.36,1:05:30.80,Default,,0000,0000,0000,,But, in fact, Robert WaIIace\Nwas a hard drinker,
Dialogue: 0,1:05:48.61,1:05:51.00,Default,,0000,0000,0000,,as weII as a mathematicaI prodigy,
Dialogue: 0,1:05:59.76,1:06:04.03,Default,,0000,0000,0000,,who Iiked nothing better than\Nknocking back magnums of cIaret
Dialogue: 0,1:06:16.59,1:06:18.40,Default,,0000,0000,0000,,with his bibuIous buddies.
Dialogue: 0,1:06:37.21,1:06:39.43,Default,,0000,0000,0000,,Wallace and Webster were unhappy
Dialogue: 0,1:06:47.94,1:06:52.20,Default,,0000,0000,0000,,at the way the widows and children\Nof their fellow clergymen
Dialogue: 0,1:07:06.67,1:07:09.53,Default,,0000,0000,0000,,were treated when the Grim Reaper struck.
Dialogue: 0,1:07:28.55,1:07:32.07,Default,,0000,0000,0000,,They often found themselves\Nhomeless and penniless.
Dialogue: 0,1:08:02.00,1:08:06.03,Default,,0000,0000,0000,,The plan Wallace and Webster\Ncame up with was ingenious -
Dialogue: 0,1:08:22.83,1:08:25.69,Default,,0000,0000,0000,,the first true insurance fund in history.
Dialogue: 0,1:09:01.75,1:09:06.61,Default,,0000,0000,0000,,These are some of the voIuminous\NcaIcuIations that Robert WaIIace did,
Dialogue: 0,1:09:21.11,1:09:24.50,Default,,0000,0000,0000,,now housed at\Nthe NationaI Archives Of ScotIand.
Dialogue: 0,1:09:34.100,1:09:39.01,Default,,0000,0000,0000,,You can see how he ran the numbers\Nover and over again,
Dialogue: 0,1:09:51.83,1:09:55.70,Default,,0000,0000,0000,,making very carefuI assumptions\Nabout the maximum number
Dialogue: 0,1:10:08.03,1:10:12.11,Default,,0000,0000,0000,,of widows and orphans\Nthat wouId have to be provided for.
Dialogue: 0,1:10:24.65,1:10:29.89,Default,,0000,0000,0000,,The key point was that, from now on,\Nministers wouIdn't just pay money in
Dialogue: 0,1:10:48.21,1:10:52.05,Default,,0000,0000,0000,,that wouId be paid out\Nwhen one of their number died.
Dialogue: 0,1:11:03.15,1:11:07.99,Default,,0000,0000,0000,,Rather, they wouId pay premiums\Nthat wouId be used to create a fund,
Dialogue: 0,1:11:25.03,1:11:29.24,Default,,0000,0000,0000,,and the fund wouId then be invested\Nfor profitabIe purposes.
Dialogue: 0,1:11:42.28,1:11:48.12,Default,,0000,0000,0000,,The widows and orphans, henceforth, wouId\Nbe paid out of the returns on that money,
Dialogue: 0,1:12:07.53,1:12:09.93,Default,,0000,0000,0000,,Ieaving the premiums to accumuIate.
Dialogue: 0,1:12:47.09,1:12:50.29,Default,,0000,0000,0000,,All that was required\Nfor the scheme to work
Dialogue: 0,1:13:00.13,1:13:04.16,Default,,0000,0000,0000,,was an accurate projection\Nof how many widows and orphans
Dialogue: 0,1:13:17.80,1:13:20.36,Default,,0000,0000,0000,,there would likely be in the future.
Dialogue: 0,1:13:28.95,1:13:34.00,Default,,0000,0000,0000,,A calculation which Wallace and Webster\Nmade with extraordinary precision.
Dialogue: 0,1:14:20.29,1:14:23.92,Default,,0000,0000,0000,,The creation of\Nthe Scottish Ministers' Widows' Fund
Dialogue: 0,1:14:35.44,1:14:38.01,Default,,0000,0000,0000,,was a milestone in financial history,
Dialogue: 0,1:14:51.01,1:14:54.98,Default,,0000,0000,0000,,for it provided a model\Nnot just for Scottish clergymen,
Dialogue: 0,1:15:11.84,1:15:16.40,Default,,0000,0000,0000,,but for everyone who aspired\Nto provide for life's eventualities.
Dialogue: 0,1:15:56.23,1:16:00.57,Default,,0000,0000,0000,,By 1815, the principIe of insurance\Nwas sufficientIy widespread
Dialogue: 0,1:16:19.16,1:16:23.23,Default,,0000,0000,0000,,to be adopted for the widows\Nof men who Iost their Iives
Dialogue: 0,1:16:36.42,1:16:38.18,Default,,0000,0000,0000,,fighting against NapoIeon.
Dialogue: 0,1:16:46.51,1:16:52.28,Default,,0000,0000,0000,,At the BattIe of WaterIoo, your chances\Nof getting kiIIed were up to one in four,
Dialogue: 0,1:17:11.55,1:17:14.57,Default,,0000,0000,0000,,but at Ieast if you'd taken out insurance,
Dialogue: 0,1:17:23.75,1:17:27.78,Default,,0000,0000,0000,,you had the consoIation of knowing\Nyour wife and chiIdren
Dialogue: 0,1:17:39.74,1:17:42.53,Default,,0000,0000,0000,,wouIdn't be thrown out onto the street.
Dialogue: 0,1:17:50.47,1:17:54.38,Default,,0000,0000,0000,,Gives a whoIe new meaning\Nto the phrase ''take cover''.
Dialogue: 0,1:18:58.01,1:19:02.99,Default,,0000,0000,0000,,The Scottish ministers' fund grew into\Nthe world-famous Scottish Widows.
Dialogue: 0,1:19:27.89,1:19:31.88,Default,,0000,0000,0000,,Even novelists, not renowned\Nfor their financial prudence,
Dialogue: 0,1:19:48.08,1:19:48.90,Default,,0000,0000,0000,,could join.
Dialogue: 0,1:19:55.03,1:19:57.93,Default,,0000,0000,0000,,Walter Scott took out a policy in 1 826,
Dialogue: 0,1:20:12.91,1:20:17.74,Default,,0000,0000,0000,,to reassure his creditors they'd be paid\Nin the event of his death.
Dialogue: 0,1:20:41.52,1:20:47.00,Default,,0000,0000,0000,,By the mid-1 9th century, being insured\Nwas as much a badge of respectability
Dialogue: 0,1:21:07.40,1:21:09.49,Default,,0000,0000,0000,,as going to church on Sunday.
Dialogue: 0,1:21:25.08,1:21:25.83,Default,,0000,0000,0000,,BELL TOLLS
Dialogue: 0,1:22:10.10,1:22:12.88,Default,,0000,0000,0000,,What no-one anticipated back in 1 7 44
Dialogue: 0,1:22:28.20,1:22:32.30,Default,,0000,0000,0000,,was that the careful calculations\Nof two Scottish ministers
Dialogue: 0,1:22:48.81,1:22:52.20,Default,,0000,0000,0000,,would grow into today's\Nhuge insurance industry.
Dialogue: 0,1:23:31.52,1:23:34.56,Default,,0000,0000,0000,,As Robert WaIIace\Nunderstood 250 years ago,
Dialogue: 0,1:23:49.62,1:23:51.43,Default,,0000,0000,0000,,size matters in insurance,
Dialogue: 0,1:24:03.50,1:24:06.82,Default,,0000,0000,0000,,because the more peopIe\Nare paying into a fund
Dialogue: 0,1:24:18.65,1:24:21.97,Default,,0000,0000,0000,,the easier it becomes,\Nby the Iaw of averages,
Dialogue: 0,1:24:31.91,1:24:35.92,Default,,0000,0000,0000,,to predict how much wiII have to be\Npaid out each year.
Dialogue: 0,1:24:47.69,1:24:52.18,Default,,0000,0000,0000,,AIthough no individuaI's date of death\Ncan be known in advance,
Dialogue: 0,1:25:05.15,1:25:10.83,Default,,0000,0000,0000,,actuaries can caIcuIate the IikeIy Iife\Nexpectancy of a Iarge group of individuaIs
Dialogue: 0,1:25:32.92,1:25:35.15,Default,,0000,0000,0000,,with quite astonishing precision.
Dialogue: 0,1:26:15.21,1:26:17.89,Default,,0000,0000,0000,,ln other words, insurance is all about
Dialogue: 0,1:26:30.57,1:26:33.77,Default,,0000,0000,0000,,trying to cope\Nwith the risks of the future.
Dialogue: 0,1:26:47.82,1:26:51.25,Default,,0000,0000,0000,,lf, that is, you're insured\Nin the first place.
Dialogue: 0,1:27:21.06,1:27:25.73,Default,,0000,0000,0000,,No matter how many private funds\Nlike Scottish Widows were set up,
Dialogue: 0,1:27:40.84,1:27:45.57,Default,,0000,0000,0000,,there were always going to be people\Nbeyond the reach of insurance,
Dialogue: 0,1:28:01.46,1:28:06.35,Default,,0000,0000,0000,,who were either too poor or too feckless\Nto save for that rainy day.
Dialogue: 0,1:28:36.17,1:28:39.77,Default,,0000,0000,0000,,The Iot of the poor\Nwas once a pretty harsh one -
Dialogue: 0,1:28:50.90,1:28:53.42,Default,,0000,0000,0000,,either dependence on private charity,
Dialogue: 0,1:29:04.79,1:29:07.41,Default,,0000,0000,0000,,or the harsh regime of the workhouse,
Dialogue: 0,1:29:15.94,1:29:20.38,Default,,0000,0000,0000,,Iike this typicaIIy austere one\Nhere in the heart of Edinburgh.
Dialogue: 0,1:29:33.61,1:29:34.88,Default,,0000,0000,0000,,Yet by the 1880s,
Dialogue: 0,1:29:44.13,1:29:48.63,Default,,0000,0000,0000,,peopIe began to feeI that Iife's Iosers\Nsomehow deserved better.
Dialogue: 0,1:30:04.54,1:30:08.62,Default,,0000,0000,0000,,The seed was pIanted of\Nan entireIy new approach to risk,
Dialogue: 0,1:30:23.68,1:30:28.30,Default,,0000,0000,0000,,a seed that wouId uItimateIy sprout\Ninto the modern weIfare state.
Dialogue: 0,1:30:44.30,1:30:50.15,Default,,0000,0000,0000,,The state system of insurance was designed\Nto expIoit the uItimate economy of scaIe,
Dialogue: 0,1:31:12.08,1:31:16.64,Default,,0000,0000,0000,,by covering IiteraIIy every citizen\Nfrom the cradIe to the grave.
Dialogue: 0,1:32:08.04,1:32:13.11,Default,,0000,0000,0000,,Yet while we tend to think of\Nthe welfare state as a British invention,
Dialogue: 0,1:32:28.03,1:32:31.24,Default,,0000,0000,0000,,in fact, the world's first\Nwelfare superpower
Dialogue: 0,1:32:46.75,1:32:47.50,Default,,0000,0000,0000,,was Japan.
Dialogue: 0,1:34:30.06,1:34:35.14,Default,,0000,0000,0000,,Disaster just kept striking Japan\Nin the first half of the 20th century.
Dialogue: 0,1:35:05.82,1:35:09.03,Default,,0000,0000,0000,,ln 1 923, a huge earthquake\Ndevastated Tokyo.
Dialogue: 0,1:35:35.70,1:35:37.03,Default,,0000,0000,0000,,As in New Orleans,
Dialogue: 0,1:35:46.43,1:35:50.70,Default,,0000,0000,0000,,private insurance policies\Nturned out to be worth little more
Dialogue: 0,1:36:04.31,1:36:06.87,Default,,0000,0000,0000,,than the paper they were printed on.
Dialogue: 0,1:36:17.57,1:36:23.16,Default,,0000,0000,0000,,A new idea began to emerge in Japan -\Nthat the state should take care of risk.
Dialogue: 0,1:37:10.80,1:37:15.42,Default,,0000,0000,0000,,But this was to be state protection\Nallied with imperial ambition.
Dialogue: 0,1:37:48.25,1:37:50.81,Default,,0000,0000,0000,,The Japanese set up a welfare state.
Dialogue: 0,1:38:12.65,1:38:15.15,Default,,0000,0000,0000,,And they did it to promote warfare.
Dialogue: 0,1:38:52.63,1:38:56.54,Default,,0000,0000,0000,,lt was the mid-20th-century\Nstate's insatiable appetite
Dialogue: 0,1:39:11.56,1:39:14.60,Default,,0000,0000,0000,,for able-bodied young soldiers\Nand workers,
Dialogue: 0,1:39:26.08,1:39:28.94,Default,,0000,0000,0000,,not some kind of bleeding-heart altruism,
Dialogue: 0,1:39:40.81,1:39:43.20,Default,,0000,0000,0000,,that inspired the rise of welfare.
Dialogue: 0,1:40:15.94,1:40:19.22,Default,,0000,0000,0000,,State healthcare would ensure\Na fitter populace
Dialogue: 0,1:40:31.72,1:40:36.98,Default,,0000,0000,0000,,and a steady supply of able-bodied\Nrecruits to the Emperor's armed forces,
Dialogue: 0,1:41:00.55,1:41:02.41,Default,,0000,0000,0000,,and deliver him an empire.
Dialogue: 0,1:41:28.74,1:41:29.55,Default,,0000,0000,0000,,ENGINE REVS
Dialogue: 0,1:42:11.24,1:42:14.46,Default,,0000,0000,0000,,The wartime slogan\N''All people are soldiers''
Dialogue: 0,1:42:28.28,1:42:32.38,Default,,0000,0000,0000,,was adapted to become\N''All people should have insurance''.
Dialogue: 0,1:43:24.67,1:43:28.10,Default,,0000,0000,0000,,The only problem was that\NJapan had gone to war
Dialogue: 0,1:43:42.13,1:43:44.64,Default,,0000,0000,0000,,with the world's economic colossus -
Dialogue: 0,1:43:54.54,1:43:55.82,Default,,0000,0000,0000,,the United States.
Dialogue: 0,1:44:28.84,1:44:32.63,Default,,0000,0000,0000,,Japan's warfare state proved\Nto be a massive mistake.
Dialogue: 0,1:44:51.35,1:44:55.03,Default,,0000,0000,0000,,Quite apart from the nearly\Nthree million lives lost
Dialogue: 0,1:45:09.02,1:45:11.40,Default,,0000,0000,0000,,in Japan's doomed bid for empire,
Dialogue: 0,1:45:21.86,1:45:25.58,Default,,0000,0000,0000,,by 1 945, the value of\NJapan's entire capital stock
Dialogue: 0,1:45:46.48,1:45:48.98,Default,,0000,0000,0000,,seemed to have been reduced to zero
Dialogue: 0,1:45:57.20,1:45:58.60,Default,,0000,0000,0000,,by American bombers.
Dialogue: 0,1:46:15.51,1:46:19.02,Default,,0000,0000,0000,,Cities built largely out of wood\Nwere incinerated.
Dialogue: 0,1:46:36.13,1:46:40.10,Default,,0000,0000,0000,,Nearly a third of the urban population\Nlost their homes.
Dialogue: 0,1:48:04.70,1:48:07.74,Default,,0000,0000,0000,,Practically the only city\Nto survive intact
Dialogue: 0,1:48:20.27,1:48:22.96,Default,,0000,0000,0000,,was Kyoto, the former imperial capital.
Dialogue: 0,1:48:51.41,1:48:55.60,Default,,0000,0000,0000,,1 945 may have seen the end\Nof the Japanese warfare state,
Dialogue: 0,1:49:18.55,1:49:24.04,Default,,0000,0000,0000,,but it wasn't the end of the Japanese\Nexperiment with state-sponsored welfare.
Dialogue: 0,1:49:50.95,1:49:55.45,Default,,0000,0000,0000,,In Japan, as in most competent\Ncountries, the Iesson was cIear -
Dialogue: 0,1:50:10.31,1:50:13.16,Default,,0000,0000,0000,,the worId was just too dangerous a pIace
Dialogue: 0,1:50:21.88,1:50:24.92,Default,,0000,0000,0000,,for private insurance markets\Nto cope with.
Dialogue: 0,1:50:36.19,1:50:38.51,Default,,0000,0000,0000,,With the best wiII in the worId,
Dialogue: 0,1:50:44.81,1:50:50.01,Default,,0000,0000,0000,,peopIe couIdn't be expected to insure\NthemseIves against the US Air Force.
Dialogue: 0,1:51:06.48,1:51:09.94,Default,,0000,0000,0000,,The answer, practicaIIy\Neverywhere, was the same -
Dialogue: 0,1:51:21.21,1:51:23.07,Default,,0000,0000,0000,,for government to step in.
Dialogue: 0,1:51:31.73,1:51:33.89,Default,,0000,0000,0000,,In effect, to nationaIise risk.
Dialogue: 0,1:52:06.45,1:52:11.88,Default,,0000,0000,0000,,Perhaps the most familiar sub-system\Nof welfare from the cradle to the grave,
Dialogue: 0,1:52:31.48,1:52:33.68,Default,,0000,0000,0000,,also born in the ruins of war,
Dialogue: 0,1:52:43.69,1:52:47.50,Default,,0000,0000,0000,,was devised by the British\Neconomist, William Beverage.
Dialogue: 0,1:53:13.56,1:53:18.36,Default,,0000,0000,0000,,When the Japanese came up with\Ntheir own comprehensive weIfare system
Dialogue: 0,1:53:35.44,1:53:36.60,Default,,0000,0000,0000,,in October 1947,
Dialogue: 0,1:53:46.17,1:53:49.93,Default,,0000,0000,0000,,their advisory committee\Nin sociaI security recommended
Dialogue: 0,1:54:04.27,1:54:07.31,Default,,0000,0000,0000,,what amounted to\N''Bebariji no Nihon-ban'',
Dialogue: 0,1:54:18.78,1:54:20.83,Default,,0000,0000,0000,,''Beverage for the Japanese''.
Dialogue: 0,1:54:30.57,1:54:34.72,Default,,0000,0000,0000,,And yet, they went even further\Nthan Beverage had intended,
Dialogue: 0,1:54:48.03,1:54:50.12,Default,,0000,0000,0000,,as this copy of their report,
Dialogue: 0,1:54:58.97,1:55:03.77,Default,,0000,0000,0000,,here in the Iibrary of the Japanese\NNationaI ParIiament, makes cIear.
Dialogue: 0,1:55:20.01,1:55:24.92,Default,,0000,0000,0000,,It caIIed on the government to provide\Nagainst every cause of poverty.
Dialogue: 0,1:55:43.15,1:55:45.79,Default,,0000,0000,0000,,Sickness and injury, disabiIity, death,
Dialogue: 0,1:56:01.04,1:56:04.68,Default,,0000,0000,0000,,chiIdbirth, Iarge famiIies,\NoId age and unempIoyment.
Dialogue: 0,1:56:23.34,1:56:28.96,Default,,0000,0000,0000,,Whatever the reason, the needy wouId be\Nguaranteed the minimum standard of Iiving
Dialogue: 0,1:56:45.85,1:56:47.43,Default,,0000,0000,0000,,by nationaI assistance.
Dialogue: 0,1:56:59.10,1:57:00.86,Default,,0000,0000,0000,,MONKS PERFORM INCANTATIONS
Dialogue: 0,1:57:28.35,1:57:33.83,Default,,0000,0000,0000,,The Japanese wouId no Ionger have to\NreIy on the benevoIence of a feudaI Iord
Dialogue: 0,1:57:53.81,1:57:55.66,Default,,0000,0000,0000,,or the Iuck of the gods -
Dialogue: 0,1:58:05.80,1:58:08.19,Default,,0000,0000,0000,,the weIfare state wouId cover them
Dialogue: 0,1:58:15.69,1:58:20.02,Default,,0000,0000,0000,,against aII the vagaries and\Nvicissitudes of the modern worId.
Dialogue: 0,1:58:55.03,1:58:57.42,Default,,0000,0000,0000,,lf they couldn't afford education,
Dialogue: 0,1:59:06.81,1:59:08.26,Default,,0000,0000,0000,,the state would pay.
Dialogue: 0,1:59:19.23,1:59:21.20,Default,,0000,0000,0000,,lf they couldn't find work,
Dialogue: 0,1:59:31.85,1:59:33.30,Default,,0000,0000,0000,,the state would pay.
Dialogue: 0,1:59:42.37,1:59:46.03,Default,,0000,0000,0000,,lf they were too ill to work,\Nthe state would pay.
Dialogue: 0,2:00:03.62,2:00:06.36,Default,,0000,0000,0000,,When they retired, the state would pay.
Dialogue: 0,2:00:21.92,2:00:26.48,Default,,0000,0000,0000,,And when they finally died, the state\Nwould pay their dependents.
Dialogue: 0,2:01:21.05,2:01:23.84,Default,,0000,0000,0000,,So what happened after the war in Japan
Dialogue: 0,2:01:34.72,2:01:38.52,Default,,0000,0000,0000,,was merely the extension\Nof the warfare welfare state.
Dialogue: 0,2:01:53.03,2:01:57.07,Default,,0000,0000,0000,,The slogan now became\N''All people should have pensions''.
Dialogue: 0,2:02:32.79,2:02:37.47,Default,,0000,0000,0000,,The Japanese welfare state\Nseemed to be a miracle of effectiveness.
Dialogue: 0,2:02:57.62,2:03:01.30,Default,,0000,0000,0000,,ln public health and education,\NJapan led the world.
Dialogue: 0,2:03:31.49,2:03:33.04,Default,,0000,0000,0000,,By the late 1 97 0s,
Dialogue: 0,2:03:40.75,2:03:44.55,Default,,0000,0000,0000,,the Japanese could boast\Nthat their country had become
Dialogue: 0,2:03:58.63,2:04:00.21,Default,,0000,0000,0000,,the welfare superpower.
Dialogue: 0,2:04:32.92,2:04:37.36,Default,,0000,0000,0000,,Run Iike this, the weIfare state\Nseemed to make so much sense.
Dialogue: 0,2:04:53.12,2:04:55.63,Default,,0000,0000,0000,,Japan had achieved security for aII,
Dialogue: 0,2:05:07.85,2:05:09.54,Default,,0000,0000,0000,,the eIimination of risk,
Dialogue: 0,2:05:16.69,2:05:20.59,Default,,0000,0000,0000,,whiIe at the same time\Ngrowing so rapidIy that by 1968
Dialogue: 0,2:05:37.10,2:05:40.48,Default,,0000,0000,0000,,it had the second-Iargest\Neconomy in the worId.
Dialogue: 0,2:06:08.44,2:06:12.82,Default,,0000,0000,0000,,One US economist even predicted\Nthat Japan's per-capita income
Dialogue: 0,2:06:27.59,2:06:30.62,Default,,0000,0000,0000,,would overtake America's\Nby the year 2000.
Dialogue: 0,2:07:10.30,2:07:13.52,Default,,0000,0000,0000,,WeIfare was working\Nwhere warfare had faiIed -
Dialogue: 0,2:07:27.76,2:07:29.56,Default,,0000,0000,0000,,to make Japan top nation.
Dialogue: 0,2:07:40.39,2:07:43.76,Default,,0000,0000,0000,,The key turned out to be\Nnot a foreign empire,
Dialogue: 0,2:07:54.90,2:07:56.76,Default,,0000,0000,0000,,but a domestic safety net.
Dialogue: 0,2:08:06.69,2:08:08.66,Default,,0000,0000,0000,,And yet, there was a catch,
Dialogue: 0,2:08:16.36,2:08:20.49,Default,,0000,0000,0000,,a fataI fIaw in the design\Nof the post-war weIfare state.
Dialogue: 0,2:08:36.35,2:08:41.55,Default,,0000,0000,0000,,Just what was it that caused those\Npredictions of Japan's uItimate triumph
Dialogue: 0,2:08:59.28,2:09:00.84,Default,,0000,0000,0000,,to faiI to come true?
Dialogue: 0,2:09:21.80,2:09:26.93,Default,,0000,0000,0000,,The welfare state looked to be working\Nsmoothly enough in 1 97 0s Japan.
Dialogue: 0,2:09:51.46,2:09:55.31,Default,,0000,0000,0000,,But elsewhere, there were signs\Nthat all was not well.
Dialogue: 0,2:10:27.44,2:10:30.54,Default,,0000,0000,0000,,ln Britain\Nand throughout the western world,
Dialogue: 0,2:10:41.54,2:10:45.46,Default,,0000,0000,0000,,the welfare state, it seemed,\Nhad removed the incentives
Dialogue: 0,2:11:00.26,2:11:04.31,Default,,0000,0000,0000,,without which a capitalist economy\Nsimply cannot function -
Dialogue: 0,2:11:18.99,2:11:22.49,Default,,0000,0000,0000,,the carrot of serious money\Nfor those who strive,
Dialogue: 0,2:11:41.71,2:11:44.97,Default,,0000,0000,0000,,the stick of hardship\Nfor those who are idle.
Dialogue: 0,2:12:21.68,2:12:23.61,Default,,0000,0000,0000,,The result was stagflation -
Dialogue: 0,2:12:35.57,2:12:37.67,Default,,0000,0000,0000,,low growth and high inflation.
Dialogue: 0,2:12:54.93,2:12:56.43,Default,,0000,0000,0000,,What was to be done?
Dialogue: 0,2:13:14.70,2:13:18.43,Default,,0000,0000,0000,,One man and his pupils\Nthought they knew the answer.
Dialogue: 0,2:13:40.58,2:13:43.62,Default,,0000,0000,0000,,Thanks in large measure\Nto their influence,
Dialogue: 0,2:13:54.68,2:13:58.52,Default,,0000,0000,0000,,one of the great economic trends\Nof the past 25 years
Dialogue: 0,2:14:13.61,2:14:17.11,Default,,0000,0000,0000,,has been for the welfare state\Nto be dismantled -
Dialogue: 0,2:14:30.02,2:14:32.71,Default,,0000,0000,0000,,reintroducing people with a sharp shock
Dialogue: 0,2:14:45.38,2:14:49.95,Default,,0000,0000,0000,,to the unpredictable monster\Nthey thought they had escaped from...
Dialogue: 0,2:15:10.84,2:15:11.24,Default,,0000,0000,0000,,Risk.
Dialogue: 0,2:16:25.11,2:16:29.14,Default,,0000,0000,0000,,ln 1 97 6, a diminutive professor\Ncalled Milton Friedman,
Dialogue: 0,2:16:48.25,2:16:51.17,Default,,0000,0000,0000,,working here at the University of Chicago,
Dialogue: 0,2:17:03.61,2:17:05.94,Default,,0000,0000,0000,,won the Nobel Prize in Economics.
Dialogue: 0,2:17:24.86,2:17:29.00,Default,,0000,0000,0000,,MiIton Friedman won his pIace\Nin the economic haII of fame
Dialogue: 0,2:17:40.64,2:17:42.98,Default,,0000,0000,0000,,by restating this simpIe equation.
Dialogue: 0,2:17:53.05,2:17:53.68,Default,,0000,0000,0000,,MV = PQ,
Dialogue: 0,2:18:11.57,2:18:13.60,Default,,0000,0000,0000,,where M is the money suppIy,
Dialogue: 0,2:18:22.51,2:18:25.42,Default,,0000,0000,0000,,V is the veIocity at which it circuIates,
Dialogue: 0,2:18:36.18,2:18:37.68,Default,,0000,0000,0000,,P is the price IeveI
Dialogue: 0,2:18:44.81,2:18:47.49,Default,,0000,0000,0000,,and Q is the quantity of expenditures.
Dialogue: 0,2:18:58.49,2:19:00.89,Default,,0000,0000,0000,,Friedman's observation was simpIe -
Dialogue: 0,2:19:10.06,2:19:14.19,Default,,0000,0000,0000,,if the money suppIy went up,\Nthen so did the price IeveI.
Dialogue: 0,2:19:30.05,2:19:32.56,Default,,0000,0000,0000,,Hence, the Quantity Theory of Money.
Dialogue: 0,2:19:41.62,2:19:46.16,Default,,0000,0000,0000,,But you needed much more than\Na piece of chaIk and a bIackboard
Dialogue: 0,2:20:00.97,2:20:05.65,Default,,0000,0000,0000,,to answer the second cruciaI question\Nof MiIton Friedman's career -
Dialogue: 0,2:20:22.43,2:20:25.52,Default,,0000,0000,0000,,what had gone wrong\Nwith the weIfare state?
Dialogue: 0,2:20:50.84,2:20:55.28,Default,,0000,0000,0000,,ln Chile, he found the perfect\Nlaboratory to test his theories.
Dialogue: 0,2:21:41.54,2:21:45.39,Default,,0000,0000,0000,,ln September 1 97 3, tanks\Nhad rolled through Santiago
Dialogue: 0,2:22:04.69,2:22:06.56,Default,,0000,0000,0000,,to overthrow the government
Dialogue: 0,2:22:13.94,2:22:17.22,Default,,0000,0000,0000,,of Chile's Marxist president,\NSalvador Allende,
Dialogue: 0,2:22:31.41,2:22:35.38,Default,,0000,0000,0000,,whose attempt to turn the country\Ninto a communist state
Dialogue: 0,2:22:49.08,2:22:51.41,Default,,0000,0000,0000,,had ended in total economic chaos
Dialogue: 0,2:23:02.12,2:23:06.20,Default,,0000,0000,0000,,and a call by the Chilean Parliament\Nfor a military coup.
Dialogue: 0,2:24:28.38,2:24:31.64,Default,,0000,0000,0000,,Up there on the baIcony\Nof the Carrera HoteI,
Dialogue: 0,2:24:42.06,2:24:45.99,Default,,0000,0000,0000,,opponents of the AIIende regime\NceIebrated with champagne
Dialogue: 0,2:25:00.79,2:25:04.93,Default,,0000,0000,0000,,as air force jets fIew overhead\Nto bomb the Moneda PaIace.
Dialogue: 0,2:25:19.51,2:25:20.86,Default,,0000,0000,0000,,WHISTLING, EXPLOSION
Dialogue: 0,2:26:18.63,2:26:23.42,Default,,0000,0000,0000,,Here in the paIace, AIIende prepared\Nto make a desperate Iast stand,
Dialogue: 0,2:26:40.51,2:26:45.87,Default,,0000,0000,0000,,armed with an AK-47 presented to him\Nby his Cuban roIe modeI, FideI Castro.
Dialogue: 0,2:28:11.19,2:28:16.22,Default,,0000,0000,0000,,Looking out the paIace window\Nand seeing the tanks IiteraIIy roIIing in,
Dialogue: 0,2:28:36.23,2:28:41.30,Default,,0000,0000,0000,,AIIende reaIised that it was aII over\Nfor his dream of a Marxist ChiIe.
Dialogue: 0,2:28:57.90,2:29:02.11,Default,,0000,0000,0000,,Cornered here in what was Ieft\Nof the presidentiaI quarters,
Dialogue: 0,2:29:18.52,2:29:21.20,Default,,0000,0000,0000,,he took the decision to shoot himseIf.
Dialogue: 0,2:30:10.49,2:30:11.83,Default,,0000,0000,0000,,MILITARY BAND PLAYS
Dialogue: 0,2:30:27.95,2:30:31.56,Default,,0000,0000,0000,,35 years later, you can still see\Nthe bullet holes
Dialogue: 0,2:30:43.31,2:30:46.40,Default,,0000,0000,0000,,in some of the buildings\Naround the square.
Dialogue: 0,2:31:16.13,2:31:18.64,Default,,0000,0000,0000,,What happened here in September 1973
Dialogue: 0,2:31:33.59,2:31:38.09,Default,,0000,0000,0000,,in many ways epitomised\Na worIdwide crisis of the weIfare state,
Dialogue: 0,2:31:53.58,2:31:57.86,Default,,0000,0000,0000,,and posed a stark choice between\NaIternative economic systems.
Dialogue: 0,2:32:15.67,2:32:18.78,Default,,0000,0000,0000,,With output coIIapsing\Nand infIation rampant,
Dialogue: 0,2:32:30.61,2:32:34.89,Default,,0000,0000,0000,,ChiIe's system of universaI benefits\Nwas effectiveIy bankrupt.
Dialogue: 0,2:32:51.23,2:32:53.33,Default,,0000,0000,0000,,For AIIende, the onIy soIution
Dialogue: 0,2:33:01.96,2:33:06.17,Default,,0000,0000,0000,,was fuII-bIown, Soviet-styIe\Ntakeover of the entire economy.
Dialogue: 0,2:33:21.73,2:33:26.05,Default,,0000,0000,0000,,The generaIs and their supporters\Nknew they didn't want that,
Dialogue: 0,2:33:38.78,2:33:41.05,Default,,0000,0000,0000,,but what did they actuaIIy want,
Dialogue: 0,2:33:49.72,2:33:52.82,Default,,0000,0000,0000,,given that the status quo\Nwas unsustainabIe?
Dialogue: 0,2:34:03.60,2:34:05.12,Default,,0000,0000,0000,,Enter MiIton Friedman.
Dialogue: 0,2:34:40.00,2:34:41.26,Default,,0000,0000,0000,,ln March 1 97 5,
Dialogue: 0,2:34:52.20,2:34:56.41,Default,,0000,0000,0000,,Friedman flew from Chicago\Nto Chile to answer that question.
Dialogue: 0,2:35:12.61,2:35:14.07,Default,,0000,0000,0000,,SOLDIER SHOUTS ORDERS
Dialogue: 0,2:35:52.59,2:35:55.69,Default,,0000,0000,0000,,ln addition to giving\Nlectures and seminars,
Dialogue: 0,2:36:06.68,2:36:09.60,Default,,0000,0000,0000,,Friedman came here,\Nto the Moneda Palace,
Dialogue: 0,2:36:20.78,2:36:25.70,Default,,0000,0000,0000,,for a meeting with the new Chilean\Npresident, General Augusto Pinochet.
Dialogue: 0,2:37:06.86,2:37:10.72,Default,,0000,0000,0000,,Friedman spent three-quarters\Nof an hour with Pinochet,
Dialogue: 0,2:37:22.85,2:37:27.35,Default,,0000,0000,0000,,urging him to reduce the government\Ndeficit that he'd identified
Dialogue: 0,2:37:41.15,2:37:44.70,Default,,0000,0000,0000,,as the main cause of\NChile's sky-high inflation -
Dialogue: 0,2:37:59.66,2:38:02.52,Default,,0000,0000,0000,,then running at\Nan annual rate of 900%.
Dialogue: 0,2:38:29.33,2:38:31.54,Default,,0000,0000,0000,,A month after Friedman's visit,
Dialogue: 0,2:38:40.06,2:38:45.09,Default,,0000,0000,0000,,the Chilean junta announced that inflation\Nwould be stopped at any cost.
Dialogue: 0,2:39:10.36,2:39:13.34,Default,,0000,0000,0000,,The regime cut government\Nspending by 27%.
Dialogue: 0,2:40:00.01,2:40:03.69,Default,,0000,0000,0000,,''This problem of inflation\Nis not of recent origin.
Dialogue: 0,2:40:20.84,2:40:25.58,Default,,0000,0000,0000,,''lt arises from trends towards\Nsocialism that started 40 years ago,
Dialogue: 0,2:40:49.03,2:40:54.07,Default,,0000,0000,0000,,''and reached their logical and terrible\Nclimax in the Allende regime. ''
Dialogue: 0,2:41:56.57,2:42:00.62,Default,,0000,0000,0000,,For tendering this advice,\NFriedman found himself denounced
Dialogue: 0,2:42:15.92,2:42:19.42,Default,,0000,0000,0000,,for acting as a consultant\Nto a military dictator
Dialogue: 0,2:42:32.55,2:42:38.11,Default,,0000,0000,0000,,responsible for the executions of more\Nthan 2,000 real and suspected communists,
Dialogue: 0,2:43:00.95,2:43:03.68,Default,,0000,0000,0000,,and the torture of nearly 30,000 more.
Dialogue: 0,2:44:38.57,2:44:41.18,Default,,0000,0000,0000,,Chicago's roIe in ChiIe's new regime
Dialogue: 0,2:44:52.46,2:44:56.96,Default,,0000,0000,0000,,consisted of more than just a visit\Nby MiIton Friedman, however.
Dialogue: 0,2:45:09.50,2:45:14.64,Default,,0000,0000,0000,,Since the 1950s, there'd been a steady\Nstream of bright, young economists
Dialogue: 0,2:45:33.28,2:45:37.38,Default,,0000,0000,0000,,going from this pIace,\Nthe CathoIic University in Santiago,
Dialogue: 0,2:45:51.16,2:45:52.61,Default,,0000,0000,0000,,to study in Chicago,
Dialogue: 0,2:45:58.10,2:46:02.76,Default,,0000,0000,0000,,and they'd come back convinced\Nof the need to baIance the budget,
Dialogue: 0,2:46:16.62,2:46:19.90,Default,,0000,0000,0000,,tighten the money suppIy,\Nand IiberaIise trade.
Dialogue: 0,2:46:30.50,2:46:34.30,Default,,0000,0000,0000,,These were the Chicago Boys,\NFriedman's foot soIdiers.
Dialogue: 0,2:46:49.65,2:46:52.44,Default,,0000,0000,0000,,And yet the most radicaI of their ideas
Dialogue: 0,2:47:04.80,2:47:08.55,Default,,0000,0000,0000,,went beyond what Friedman\Nhad recommended to Pinochet.
Dialogue: 0,2:47:20.100,2:47:25.43,Default,,0000,0000,0000,,It amounted to a fuII-scaIe\NroIIing back of the weIfare state.
Dialogue: 0,2:47:43.93,2:47:48.91,Default,,0000,0000,0000,,The conservative economic revoIution\Ndidn't begin in Thatcher's Britain,
Dialogue: 0,2:48:05.81,2:48:07.26,Default,,0000,0000,0000,,or Reagan's America.
Dialogue: 0,2:48:15.28,2:48:17.37,Default,,0000,0000,0000,,It began right here in ChiIe.
Dialogue: 0,2:48:47.47,2:48:52.22,Default,,0000,0000,0000,,The mastermind behind this wholesale\Ndismantling of the welfare state
Dialogue: 0,2:49:11.88,2:49:14.74,Default,,0000,0000,0000,,was a young economist called Jose Pinera.
Dialogue: 0,2:49:40.28,2:49:45.13,Default,,0000,0000,0000,,ChiIe's economy was destroyed.\NWe have had 50 years of protectionism,
Dialogue: 0,2:50:11.42,2:50:14.88,Default,,0000,0000,0000,,state intervention -\NIike sociaIism, if you want -
Dialogue: 0,2:50:29.72,2:50:33.53,Default,,0000,0000,0000,,and that was exacerbated\Nduring the AIIende government.
Dialogue: 0,2:50:53.50,2:50:56.28,Default,,0000,0000,0000,,We had created a sort of weIfare state,
Dialogue: 0,2:51:07.38,2:51:10.88,Default,,0000,0000,0000,,and that, of course,\Nwas going bankrupt in ChiIe.
Dialogue: 0,2:51:40.83,2:51:42.46,Default,,0000,0000,0000,,Between 1979 and 1981 ,
Dialogue: 0,2:51:54.51,2:51:59.72,Default,,0000,0000,0000,,Pinera and his coIIeagues erected\Na radicaIIy new pension system for ChiIe,
Dialogue: 0,2:52:17.65,2:52:23.41,Default,,0000,0000,0000,,giving every worker the chance to opt out\Nof the oId pay-as-you-go state system.
Dialogue: 0,2:52:43.74,2:52:45.54,Default,,0000,0000,0000,,Instead of a payroII tax,
Dialogue: 0,2:52:52.100,2:52:56.49,Default,,0000,0000,0000,,each worker now couId put\N10% of his wages aside
Dialogue: 0,2:53:12.57,2:53:15.80,Default,,0000,0000,0000,,into an individuaI\NpersonaI retirement account,
Dialogue: 0,2:53:26.45,2:53:29.61,Default,,0000,0000,0000,,to be managed by private\Ncompeting companies.
Dialogue: 0,2:53:44.55,2:53:49.11,Default,,0000,0000,0000,,There was aIso a smaII premium\Nfor disabiIity and Iife insurance.
Dialogue: 0,2:53:59.69,2:54:02.59,Default,,0000,0000,0000,,The idea was to give each worker a sense
Dialogue: 0,2:54:15.47,2:54:19.20,Default,,0000,0000,0000,,that the money being put aside\Nwas his own property,
Dialogue: 0,2:54:32.30,2:54:33.46,Default,,0000,0000,0000,,his own capitaI.
Dialogue: 0,2:54:39.25,2:54:41.12,Default,,0000,0000,0000,,GUITAR PLAYING, MAN SINGING
Dialogue: 0,2:55:28.27,2:55:31.19,Default,,0000,0000,0000,,Pinera gambled. He gave workers a choice -
Dialogue: 0,2:55:47.42,2:55:50.61,Default,,0000,0000,0000,,stick with the old system\Nof pay as you go,
Dialogue: 0,2:56:00.88,2:56:04.27,Default,,0000,0000,0000,,or opt for the new\Npersonal retirement accounts.
Dialogue: 0,2:56:25.08,2:56:25.100,Default,,0000,0000,0000,,lt paid off.
Dialogue: 0,2:56:35.60,2:56:37.76,Default,,0000,0000,0000,,Convinced by Pinera's argument,
Dialogue: 0,2:56:45.91,2:56:49.23,Default,,0000,0000,0000,,80% made the switch\Nto a private pension plan.
Dialogue: 0,2:57:28.62,2:57:32.87,Default,,0000,0000,0000,,But was it worth it? Was it worth\Nthe huge moraI compromise
Dialogue: 0,2:57:50.92,2:57:54.24,Default,,0000,0000,0000,,that the Chicago Boys\Nand the Harvard man made
Dialogue: 0,2:58:08.17,2:58:12.62,Default,,0000,0000,0000,,when they got into bed with\Na torturing, murderous dictatorship?
Dialogue: 0,2:58:29.21,2:58:34.76,Default,,0000,0000,0000,,The answer to that question very much\Ndepends on whether you think their reform
Dialogue: 0,2:58:54.04,2:58:59.12,Default,,0000,0000,0000,,has heIped pave a peacefuI way back\Nto a sustainabIe democracy in ChiIe.
Dialogue: 0,2:59:18.23,2:59:19.79,Default,,0000,0000,0000,,And I think they did.
Dialogue: 0,3:00:06.20,3:00:09.47,Default,,0000,0000,0000,,ln 1 980, Pinochet\Nconceded a new constitution
Dialogue: 0,3:00:27.45,3:00:31.37,Default,,0000,0000,0000,,that prescribed a ten-year transition\Nback to democracy.
Dialogue: 0,3:00:47.65,3:00:50.92,Default,,0000,0000,0000,,Ten years later,\Nhe stepped down as president.
Dialogue: 0,3:01:11.42,3:01:13.00,Default,,0000,0000,0000,,Democracy was restored,
Dialogue: 0,3:01:23.20,3:01:26.94,Default,,0000,0000,0000,,and by that time,\Nthe economic miracle was under way
Dialogue: 0,3:01:38.14,3:01:40.59,Default,,0000,0000,0000,,that helped to ensure its survival.
Dialogue: 0,3:02:14.12,3:02:19.14,Default,,0000,0000,0000,,For the pension reform not only created\Na new class of property owners,
Dialogue: 0,3:02:36.21,3:02:38.89,Default,,0000,0000,0000,,each with his own retirement nest egg,
Dialogue: 0,3:02:49.89,3:02:54.14,Default,,0000,0000,0000,,it also gave the Chilean economy\Na massive shot in the arm.
Dialogue: 0,3:03:35.75,3:03:38.25,Default,,0000,0000,0000,,These brokers at the Banco de ChiIe
Dialogue: 0,3:03:46.27,3:03:51.38,Default,,0000,0000,0000,,are investing ChiIean workers' pension\Ncontributions into the stock market.
Dialogue: 0,3:04:08.100,3:04:12.48,Default,,0000,0000,0000,,And they've been doing\Na pretty good job of it.
Dialogue: 0,3:04:23.51,3:04:28.37,Default,,0000,0000,0000,,Average returns on the personaI retirement\Naccounts has been over 10%,
Dialogue: 0,3:04:46.87,3:04:50.60,Default,,0000,0000,0000,,refIecting the fact that\Nin the 20 years after 1987,
Dialogue: 0,3:05:05.80,3:05:09.81,Default,,0000,0000,0000,,the ChiIean stock market\Nhas gone up by a factor of 18.
Dialogue: 0,3:06:03.24,3:06:06.61,Default,,0000,0000,0000,,There is a downside\Nto the system, to be sure.
Dialogue: 0,3:06:41.32,3:06:45.75,Default,,0000,0000,0000,,Since not everyone in the economy\Nhas a regular full-time job,
Dialogue: 0,3:06:58.36,3:07:01.81,Default,,0000,0000,0000,,not everyone ends up\Nparticipating in the system.
Dialogue: 0,3:07:28.24,3:07:31.75,Default,,0000,0000,0000,,Which leaves a substantial chunk\Nof the population
Dialogue: 0,3:07:42.55,3:07:44.82,Default,,0000,0000,0000,,with no pension coverage at all.
Dialogue: 0,3:08:15.58,3:08:19.61,Default,,0000,0000,0000,,I'm standing in front of\Nthe Communist Party headquarters
Dialogue: 0,3:08:34.93,3:08:37.90,Default,,0000,0000,0000,,here in La Victoria, a suburb of Santiago,
Dialogue: 0,3:08:48.61,3:08:53.63,Default,,0000,0000,0000,,which was once one of the hotbeds\Nof opposition to the Pinochet regime.
Dialogue: 0,3:09:07.97,3:09:11.19,Default,,0000,0000,0000,,Because most peopIe here\Nare either unempIoyed
Dialogue: 0,3:09:24.59,3:09:26.80,Default,,0000,0000,0000,,or work in the informaI sector,
Dialogue: 0,3:09:35.32,3:09:38.92,Default,,0000,0000,0000,,they don't, or can't,\Npay into the pension system
Dialogue: 0,3:09:50.47,3:09:53.84,Default,,0000,0000,0000,,which means they don't get\Nanything out of it.
Dialogue: 0,3:10:03.09,3:10:08.46,Default,,0000,0000,0000,,This is the kind of neighbourhood\Nwhere Che Guevara is stiII the IocaI hero,
Dialogue: 0,3:10:23.29,3:10:24.45,Default,,0000,0000,0000,,not Jose Pinera.
Dialogue: 0,3:10:54.00,3:10:57.90,Default,,0000,0000,0000,,The poor of Chile may not have\Na private pension plan,
Dialogue: 0,3:11:09.78,3:11:15.20,Default,,0000,0000,0000,,and may have to make do with a meagre\Ngovernment handout in their old age...
Dialogue: 0,3:11:43.24,3:11:47.86,Default,,0000,0000,0000,,..but even they've benefited from\NChile's rapidly growing economy.
Dialogue: 0,3:12:19.64,3:12:24.48,Default,,0000,0000,0000,,(Jose Pinera) Growth makes\Na difference in the Iife of every citizen.
Dialogue: 0,3:12:42.15,3:12:46.05,Default,,0000,0000,0000,,The poverty rate in ChiIe\Nhas gone down from about 50%
Dialogue: 0,3:12:58.77,3:12:59.34,Default,,0000,0000,0000,,to 13%.
Dialogue: 0,3:13:09.29,3:13:12.02,Default,,0000,0000,0000,,So this has been reaIIy a huge success
Dialogue: 0,3:13:21.49,3:13:25.69,Default,,0000,0000,0000,,and the pension reform\Nhas been a criticaI eIement in this.
Dialogue: 0,3:13:46.11,3:13:49.39,Default,,0000,0000,0000,,The improvement in ChiIe's\Neconomic performance
Dialogue: 0,3:13:59.99,3:14:04.66,Default,,0000,0000,0000,,since the Chicago Boys' reforms\Nis reaIIy very hard to argue with.
Dialogue: 0,3:14:17.46,3:14:20.84,Default,,0000,0000,0000,,In the 15 years before\NMiIton Friedman's visit,
Dialogue: 0,3:14:34.08,3:14:37.73,Default,,0000,0000,0000,,the growth rate here\Nwas a measIy 0. 1 7% a year.
Dialogue: 0,3:14:54.70,3:14:56.62,Default,,0000,0000,0000,,In the subsequent 15 years,
Dialogue: 0,3:15:04.58,3:15:07.31,Default,,0000,0000,0000,,it increased by a factor of nearIy 20.
Dialogue: 0,3:15:15.10,3:15:17.71,Default,,0000,0000,0000,,The poverty rate here's down to 15%,
Dialogue: 0,3:15:29.20,3:15:32.46,Default,,0000,0000,0000,,compared to 40%\Nin the rest of Latin America.
Dialogue: 0,3:15:44.14,3:15:48.81,Default,,0000,0000,0000,,And when you Iook down at Santiago's\Nshiny new financiaI district,
Dialogue: 0,3:16:03.70,3:16:06.68,Default,,0000,0000,0000,,you can see why the ChiIean pension reform
Dialogue: 0,3:16:16.75,3:16:21.78,Default,,0000,0000,0000,,has been imitated right across the region\Nand, indeed, around the worId.
Dialogue: 0,3:16:52.31,3:16:56.17,Default,,0000,0000,0000,,For Britain's Margaret Thatcher,\Nthe general from Chile
Dialogue: 0,3:17:08.51,3:17:11.55,Default,,0000,0000,0000,,and the professor\Nfrom Chicago were heroes,
Dialogue: 0,3:17:24.29,3:17:28.50,Default,,0000,0000,0000,,who demonstrated that only\Nby rolling back the welfare state
Dialogue: 0,3:17:44.69,3:17:47.45,Default,,0000,0000,0000,,could governments revive economic growth.
Dialogue: 0,3:18:13.52,3:18:17.25,Default,,0000,0000,0000,,Yet one country where\Nthis recipe has not been tried
Dialogue: 0,3:18:32.24,3:18:35.43,Default,,0000,0000,0000,,is the country\Nthat's come to need it most.
Dialogue: 0,3:19:01.28,3:19:01.74,Default,,0000,0000,0000,,Japan.
Dialogue: 0,3:19:29.68,3:19:33.08,Default,,0000,0000,0000,,So successful was the Japanese\Nwelfare superpower
Dialogue: 0,3:19:47.98,3:19:52.76,Default,,0000,0000,0000,,that by the 1 97 0s, life expectancy\Nwas the longest in the world.
Dialogue: 0,3:20:38.48,3:20:39.58,Default,,0000,0000,0000,,The problem was
Dialogue: 0,3:20:45.84,3:20:49.11,Default,,0000,0000,0000,,that Japan's welfare state\Nwas too successful.
Dialogue: 0,3:21:38.86,3:21:43.18,Default,,0000,0000,0000,,Today, the programmes run here\Nat Japan's Ministry of WeIfare
Dialogue: 0,3:21:57.38,3:22:00.82,Default,,0000,0000,0000,,reIy on an ever-smaIIer number\Nof active workers
Dialogue: 0,3:22:14.42,3:22:17.87,Default,,0000,0000,0000,,to support an ever-rising\NpopuIation of retirees.
Dialogue: 0,3:22:32.93,3:22:37.07,Default,,0000,0000,0000,,Back in 1960, there were\Nsomething Iike 1 1 active workers
Dialogue: 0,3:22:53.13,3:22:55.17,Default,,0000,0000,0000,,for every one retired person.
Dialogue: 0,3:23:04.70,3:23:05.62,Default,,0000,0000,0000,,But by 2025,
Dialogue: 0,3:23:13.12,3:23:15.79,Default,,0000,0000,0000,,that number couId sink as Iow as two.
Dialogue: 0,3:23:25.95,3:23:29.50,Default,,0000,0000,0000,,In other words,\Nthere'II be one oId-age pensioner
Dialogue: 0,3:23:41.10,3:23:44.96,Default,,0000,0000,0000,,for every two bureaucrats\Nworking here at the Ministry.
Dialogue: 0,3:23:58.35,3:24:02.20,Default,,0000,0000,0000,,In just 30 years, the cost\Nof sociaI security benefits
Dialogue: 0,3:24:19.18,3:24:22.62,Default,,0000,0000,0000,,has risen in reIation\Nto Japan's nationaI income
Dialogue: 0,3:24:36.02,3:24:37.52,Default,,0000,0000,0000,,by a factor of four.
Dialogue: 0,3:25:00.21,3:25:04.02,Default,,0000,0000,0000,,Today, virtually all Japan's\Nhealth insurance societies
Dialogue: 0,3:25:16.62,3:25:17.72,Default,,0000,0000,0000,,are in deficit.
Dialogue: 0,3:25:24.20,3:25:27.80,Default,,0000,0000,0000,,And the pension funds\Nare nearly out of money too.
Dialogue: 0,3:25:46.71,3:25:49.21,Default,,0000,0000,0000,,Japan's once so-super welfare state
Dialogue: 0,3:26:01.22,3:26:03.85,Default,,0000,0000,0000,,is threatening to bankrupt the nation.
Dialogue: 0,3:26:52.77,3:26:55.69,Default,,0000,0000,0000,,lnsurance. lt seemed such a brilliant idea
Dialogue: 0,3:27:08.55,3:27:11.89,Default,,0000,0000,0000,,in the calculations\Nof those Scottish ministers,
Dialogue: 0,3:27:24.54,3:27:29.16,Default,,0000,0000,0000,,and even more brilliant in Japan's\Nall-encompassing welfare state.
Dialogue: 0,3:27:45.37,3:27:50.26,Default,,0000,0000,0000,,But as we've seen, the best-laid schemes\Ncan be thrown into disarray
Dialogue: 0,3:28:11.46,3:28:13.73,Default,,0000,0000,0000,,by an unexpected turn of events.
Dialogue: 0,3:28:25.56,3:28:30.28,Default,,0000,0000,0000,,So is there any better way of\Nmanaging risk in an uncertain world?
Dialogue: 0,3:28:56.48,3:28:58.80,Default,,0000,0000,0000,,Disasters Iike 9/1 1 and Katrina
Dialogue: 0,3:29:10.58,3:29:13.86,Default,,0000,0000,0000,,expose the Iimits of both\NtraditionaI insurance
Dialogue: 0,3:29:24.26,3:29:25.82,Default,,0000,0000,0000,,and the weIfare state.
Dialogue: 0,3:29:32.67,3:29:35.99,Default,,0000,0000,0000,,But insurance and weIfare\Naren't the onIy ways
Dialogue: 0,3:29:46.14,3:29:49.54,Default,,0000,0000,0000,,to buy yourseIf protection\Nagainst future shocks.
Dialogue: 0,3:30:01.28,3:30:05.41,Default,,0000,0000,0000,,These days, the smart way\Nof doing it is by being hedged.
Dialogue: 0,3:30:22.11,3:30:24.79,Default,,0000,0000,0000,,Now, everybody's heard of hedge funds,
Dialogue: 0,3:30:33.48,3:30:38.14,Default,,0000,0000,0000,,but what exactIy does ''hedging'' mean\Nand where did it come from?
Dialogue: 0,3:31:19.34,3:31:22.30,Default,,0000,0000,0000,,To most of us, hedge funds are a mystery.
Dialogue: 0,3:31:37.22,3:31:39.30,Default,,0000,0000,0000,,But the one thing we do know
Dialogue: 0,3:31:48.80,3:31:51.95,Default,,0000,0000,0000,,is that they can make you\Nstupendously rich.
Dialogue: 0,3:32:07.31,3:32:12.52,Default,,0000,0000,0000,,One hugely successful hedge fund manager\Npaid $60 million for this Cezanne.
Dialogue: 0,3:32:38.66,3:32:40.63,Default,,0000,0000,0000,,And he owns this Degas too.
Dialogue: 0,3:32:52.97,3:32:56.87,Default,,0000,0000,0000,,Not to mention a Jasper Johns\Nhe paid $80 million for.
Dialogue: 0,3:33:14.85,3:33:19.05,Default,,0000,0000,0000,,He's also given hundreds of millions\Nof dollars to charity.
Dialogue: 0,3:34:24.07,3:34:28.22,Default,,0000,0000,0000,,Ken Griffin is the founder\Nof the Citadel lnvestment Group,
Dialogue: 0,3:34:43.63,3:34:46.42,Default,,0000,0000,0000,,one of the world's biggest hedge funds.
Dialogue: 0,3:35:00.04,3:35:05.13,Default,,0000,0000,0000,,Last year, he navigated his way through\Nthe credit crunch so successfully
Dialogue: 0,3:35:21.29,3:35:25.25,Default,,0000,0000,0000,,he was able to pay himself\Nmore than a billion dollars.
Dialogue: 0,3:35:48.64,3:35:50.78,Default,,0000,0000,0000,,To most of us, risk is scary,
Dialogue: 0,3:36:07.79,3:36:13.84,Default,,0000,0000,0000,,but all of Griffin's vast wealth has come\Nbecause he's found a way of managing risk,
Dialogue: 0,3:36:34.30,3:36:38.76,Default,,0000,0000,0000,,with a mixture of mathematical\Nprecision and brilliant intuition.
Dialogue: 0,3:37:08.38,3:37:13.40,Default,,0000,0000,0000,,(Ken Griffin) Nothing is constant.\NNothing is the way it's aIways been.
Dialogue: 0,3:37:34.26,3:37:38.44,Default,,0000,0000,0000,,So what I find is that peopIe\Nwho are reaIIy good at this
Dialogue: 0,3:37:54.25,3:37:56.77,Default,,0000,0000,0000,,have great intuition, great instinct.
Dialogue: 0,3:38:09.40,3:38:12.15,Default,,0000,0000,0000,,Their gut actuaIIy teIIs them something.
Dialogue: 0,3:38:19.29,3:38:21.28,Default,,0000,0000,0000,,The mathematics are important
Dialogue: 0,3:38:27.91,3:38:31.49,Default,,0000,0000,0000,,because they demonstrate\Nyou understand the probIem.
Dialogue: 0,3:38:43.06,3:38:48.02,Default,,0000,0000,0000,,But uItimateIy, the decision about\Nwhether or not to take a given risk
Dialogue: 0,3:39:04.52,3:39:09.41,Default,,0000,0000,0000,,I think is reaIIy a human judgement caII\Nin every sense of the word.
Dialogue: 0,3:40:11.64,3:40:15.93,Default,,0000,0000,0000,,The origins of hedging,\NappropriateIy enough, are agricuIturaI.
Dialogue: 0,3:40:29.94,3:40:35.13,Default,,0000,0000,0000,,For a farmer, nothing is more important\Nthan the future price of his crop
Dialogue: 0,3:40:51.61,3:40:55.05,Default,,0000,0000,0000,,after it's been harvested\Nand brought to market.
Dialogue: 0,3:41:05.29,3:41:09.25,Default,,0000,0000,0000,,But that can be higher,\Nor much Iower, than he expects.
Dialogue: 0,3:41:26.54,3:41:29.93,Default,,0000,0000,0000,,A futures contract aIIows him\Nto protect himseIf
Dialogue: 0,3:41:41.27,3:41:46.16,Default,,0000,0000,0000,,by committing a merchant to buy\Nthe crop when it's brought to market
Dialogue: 0,3:41:59.36,3:42:03.03,Default,,0000,0000,0000,,at a price agreed when the seeds\Nare being pIanted.
Dialogue: 0,3:42:21.66,3:42:25.79,Default,,0000,0000,0000,,The farmer gets a floor\Nbelow which the price can't sink.
Dialogue: 0,3:42:40.18,3:42:44.08,Default,,0000,0000,0000,,The merchant gets a ceiling\Nabove which it can't rise.
Dialogue: 0,3:43:00.80,3:43:02.90,Default,,0000,0000,0000,,By signing a futures contract,
Dialogue: 0,3:43:11.32,3:43:15.28,Default,,0000,0000,0000,,both the farmer and the merchant\Nhave hedged their bets.
Dialogue: 0,3:43:31.09,3:43:34.01,Default,,0000,0000,0000,,(Ken Griffin) Both parties are better off,
Dialogue: 0,3:43:44.56,3:43:48.98,Default,,0000,0000,0000,,and because of that, the worId\Nas a whoIe is much better off.
Dialogue: 0,3:44:04.54,3:44:06.71,Default,,0000,0000,0000,,It encourages capitaI formation,
Dialogue: 0,3:44:16.96,3:44:18.66,Default,,0000,0000,0000,,it encourages investment,
Dialogue: 0,3:44:26.85,3:44:30.63,Default,,0000,0000,0000,,it encourages peopIe to do\Nwhat is needed to be done
Dialogue: 0,3:44:45.57,3:44:47.95,Default,,0000,0000,0000,,to make the worId a better pIace.
Dialogue: 0,3:45:09.35,3:45:13.22,Default,,0000,0000,0000,,With the development of\Na standardised futures contract,
Dialogue: 0,3:45:25.55,3:45:28.77,Default,,0000,0000,0000,,agreed rules,\Nand an effective clearing house,
Dialogue: 0,3:45:43.43,3:45:46.17,Default,,0000,0000,0000,,the first true futures market was born.
Dialogue: 0,3:46:15.83,3:46:19.15,Default,,0000,0000,0000,,And its birthplace was here\Nin the Windy City.
Dialogue: 0,3:46:33.92,3:46:34.50,Default,,0000,0000,0000,,Chicago.
Dialogue: 0,3:46:58.96,3:47:03.27,Default,,0000,0000,0000,,After the city's futures exchange\Nwas established in 1 87 4,
Dialogue: 0,3:47:23.37,3:47:26.43,Default,,0000,0000,0000,,hedging commodities\Nbecame standard practice.
Dialogue: 0,3:47:53.87,3:47:58.24,Default,,0000,0000,0000,,The next step was for a conditional\Nkind of future to evolve.
Dialogue: 0,3:48:19.96,3:48:20.77,Default,,0000,0000,0000,,The option.
Dialogue: 0,3:48:33.85,3:48:38.47,Default,,0000,0000,0000,,Some of this really is the financial\Nequivalent of rocket science,
Dialogue: 0,3:48:55.52,3:48:58.21,Default,,0000,0000,0000,,but the underlying principle is simple.
Dialogue: 0,3:49:12.98,3:49:16.26,Default,,0000,0000,0000,,Because they're derived\Nfrom underIying assets,
Dialogue: 0,3:49:28.34,3:49:31.86,Default,,0000,0000,0000,,aII futures contracts\Nare known as ''derivatives''.
Dialogue: 0,3:49:42.44,3:49:46.41,Default,,0000,0000,0000,,But an even smarter kind\Nof derivative is an ''option''.
Dialogue: 0,3:50:01.16,3:50:03.07,Default,,0000,0000,0000,,The buyer of a caII option
Dialogue: 0,3:50:12.52,3:50:16.29,Default,,0000,0000,0000,,has the right, say,\Nto buy a barreI of oiI for $120
Dialogue: 0,3:50:41.56,3:50:42.88,Default,,0000,0000,0000,,in a year's time.
Dialogue: 0,3:50:50.18,3:50:53.72,Default,,0000,0000,0000,,Now, if the price of oiI rises\Nto $150 a barreI,
Dialogue: 0,3:51:11.22,3:51:13.48,Default,,0000,0000,0000,,then the option is in the money
Dialogue: 0,3:51:21.32,3:51:24.22,Default,,0000,0000,0000,,and the smart guy makes a profit of $30.
Dialogue: 0,3:51:37.31,3:51:41.90,Default,,0000,0000,0000,,But if that doesn't happen,\Nif the price of oiI stays the same,
Dialogue: 0,3:51:56.25,3:51:57.71,Default,,0000,0000,0000,,or actuaIIy decIines,
Dialogue: 0,3:52:03.40,3:52:07.07,Default,,0000,0000,0000,,he's under no obIigation\Nto carry through the deaI.
Dialogue: 0,3:52:17.29,3:52:21.53,Default,,0000,0000,0000,,AII he does is to write off\Nthe cost of the option itseIf.
Dialogue: 0,3:52:36.85,3:52:41.82,Default,,0000,0000,0000,,WeII, it's by buying and seIIing compIex\Nsmart derivatives Iike options
Dialogue: 0,3:53:01.05,3:53:03.97,Default,,0000,0000,0000,,that Ken Griffin has become a biIIionaire.
Dialogue: 0,3:53:14.72,3:53:15.84,Default,,0000,0000,0000,,TRADERS SHOUTING
Dialogue: 0,3:53:31.98,3:53:37.30,Default,,0000,0000,0000,,ln theory, derivatives offer a new way\Nto hedge against an uncertain future.
Dialogue: 0,3:53:57.65,3:54:00.86,Default,,0000,0000,0000,,A much smarter way\Nthan boring old insurance.
Dialogue: 0,3:54:15.32,3:54:17.07,Default,,0000,0000,0000,,And much more profitable.
Dialogue: 0,3:54:42.46,3:54:47.95,Default,,0000,0000,0000,,ln the past decade, derivatives have\Nseemed to take over the world of finance.
Dialogue: 0,3:55:12.97,3:55:17.70,Default,,0000,0000,0000,,By the end of 2007, the notional value\Nof all derivatives contracts
Dialogue: 0,3:55:36.11,3:55:38.51,Default,,0000,0000,0000,,reached a staggering $596 trillion.
Dialogue: 0,3:56:00.73,3:56:04.28,Default,,0000,0000,0000,,That's 43 times the size\Nof the American economy.
Dialogue: 0,3:56:46.80,3:56:51.31,Default,,0000,0000,0000,,There are tremendous economic\Nbenefits for peopIe that work here.
Dialogue: 0,3:57:09.52,3:57:12.48,Default,,0000,0000,0000,,$20 biIIion in the hands of 1 ,000 peopIe
Dialogue: 0,3:57:23.41,3:57:25.92,Default,,0000,0000,0000,,is reaIIy a 21st century phenomenon.
Dialogue: 0,3:57:38.98,3:57:41.31,Default,,0000,0000,0000,,This never happened 50 years ago.
Dialogue: 0,3:58:15.38,3:58:18.12,Default,,0000,0000,0000,,Yet there are downsides to hedging too.
Dialogue: 0,3:58:30.53,3:58:33.17,Default,,0000,0000,0000,,When biIIionaire investor Warren Buffet
Dialogue: 0,3:58:42.31,3:58:46.84,Default,,0000,0000,0000,,described derivatives as\N''financiaI weapons of mass destruction'',
Dialogue: 0,3:59:01.46,3:59:06.20,Default,,0000,0000,0000,,he aII but prophesised the downfaII\Nof American insurance giant AIG.
Dialogue: 0,3:59:28.81,3:59:32.15,Default,,0000,0000,0000,,Their European headquarters\Nare there behind me.
Dialogue: 0,3:59:42.90,3:59:46.12,Default,,0000,0000,0000,,Brought Iow not by seIIing\Ninsurance poIicies,
Dialogue: 0,3:59:58.47,4:00:02.20,Default,,0000,0000,0000,,but by seIIing derivatives\Nthat bIew up in its face.
Dialogue: 0,4:01:23.26,4:01:27.06,Default,,0000,0000,0000,,Our basic human urge\Nto protect ourselves against risk
Dialogue: 0,4:01:43.67,4:01:46.84,Default,,0000,0000,0000,,has proved frustratingly\Ndifficult to satisfy.
Dialogue: 0,4:02:12.70,4:02:14.92,Default,,0000,0000,0000,,lnsurance companies let us down.
Dialogue: 0,4:02:38.79,4:02:41.25,Default,,0000,0000,0000,,Welfare states sink into insolvency.
Dialogue: 0,4:03:02.99,4:03:07.07,Default,,0000,0000,0000,,And derivatives turn out to be\Na double-edged weapon too.
Dialogue: 0,4:03:40.86,4:03:41.38,Default,,0000,0000,0000,,GUNSHOT
Dialogue: 0,4:04:00.22,4:04:02.02,Default,,0000,0000,0000,,And so for many families,
Dialogue: 0,4:04:11.16,4:04:15.18,Default,,0000,0000,0000,,providing for the future\Nnow takes one very simple form -
Dialogue: 0,4:04:32.40,4:04:34.20,Default,,0000,0000,0000,,an investment in a house,
Dialogue: 0,4:04:46.92,4:04:50.35,Default,,0000,0000,0000,,the value of which\Nis supposed to keep going up
Dialogue: 0,4:05:01.65,4:05:04.92,Default,,0000,0000,0000,,until the day the breadwinners\Nneed to retire.
Dialogue: 0,4:05:33.21,4:05:36.36,Default,,0000,0000,0000,,lf the pension plan\Nfalls short, never mind.
Dialogue: 0,4:05:50.88,4:05:53.15,Default,,0000,0000,0000,,There's always home, sweet home.
Dialogue: 0,4:06:19.08,4:06:21.64,Default,,0000,0000,0000,,As a pension or an insurance poIicy,
Dialogue: 0,4:06:32.12,4:06:34.98,Default,,0000,0000,0000,,this strategy has one very obvious fIaw -
Dialogue: 0,4:06:46.85,4:06:50.06,Default,,0000,0000,0000,,it represents a one-way,\NtotaIIy unhedged bet
Dialogue: 0,4:07:05.36,4:07:08.22,Default,,0000,0000,0000,,on a singIe market,\Nthe property market.
Dialogue: 0,4:07:19.67,4:07:24.08,Default,,0000,0000,0000,,But as we'II see in the next episode\Nof The Ascent Of Money,
Dialogue: 0,4:07:38.39,4:07:40.36,Default,,0000,0000,0000,,a bet on bricks and mortar,
Dialogue: 0,4:07:48.91,4:07:50.77,Default,,0000,0000,0000,,or good oId Japanese wood,
Dialogue: 0,0:00:05.61,0:00:09.82,Default,,0000,0000,0000,,lt's the English-speaking world's\Nfavourite game...property.
Dialogue: 0,0:00:46.85,0:00:50.75,Default,,0000,0000,0000,,And today the stakes in the game\Nare higher than ever.
Dialogue: 0,0:01:30.19,0:01:34.75,Default,,0000,0000,0000,,The original property game we know\Ntoday as Monopoly was actually
Dialogue: 0,0:01:51.23,0:01:55.95,Default,,0000,0000,0000,,invented back in 1 903 to expose\Nthe unfairness of a social system
Dialogue: 0,0:02:14.80,0:02:19.54,Default,,0000,0000,0000,,where a small minority of landlords\Nscrewed the majority of tenants.
Dialogue: 0,0:02:46.99,0:02:51.03,Default,,0000,0000,0000,,30 years later, an unemployed\Nplumber named Charles Darrow
Dialogue: 0,0:03:08.24,0:03:12.49,Default,,0000,0000,0000,,patented a new version of the game,\Nwith the board based on
Dialogue: 0,0:03:25.07,0:03:27.46,Default,,0000,0000,0000,,the streets here in Atlantic City.
Dialogue: 0,0:03:50.52,0:03:54.62,Default,,0000,0000,0000,,lt was Darrow who introduced\Nthe little houses and hotels.
Dialogue: 0,0:04:30.29,0:04:35.49,Default,,0000,0000,0000,,What the game of Monopoly tells us,\Ncontrary to its inventor's intentions.
Dialogue: 0,0:04:50.49,0:04:53.04,Default,,0000,0000,0000,,is that it's smart to own property.
Dialogue: 0,0:05:05.64,0:05:09.47,Default,,0000,0000,0000,,And if it's smart to own property,\Nit's even smarter
Dialogue: 0,0:05:22.26,0:05:25.52,Default,,0000,0000,0000,,to Iend money\Nto the peopIe who own property.
Dialogue: 0,0:05:37.40,0:05:40.62,Default,,0000,0000,0000,,That's because the phrase,\N''Safe as houses''
Dialogue: 0,0:05:48.56,0:05:53.34,Default,,0000,0000,0000,,has a rather speciaI meaning in\Nthe worId of finance. What it means
Dialogue: 0,0:06:07.70,0:06:13.00,Default,,0000,0000,0000,,is there's nothing safer than to Iend\Nmoney to peopIe who own reaI estate.
Dialogue: 0,0:06:35.05,0:06:38.43,Default,,0000,0000,0000,,Why? WeII, because if they\NdefauIt on the Ioan,
Dialogue: 0,0:06:50.20,0:06:52.83,Default,,0000,0000,0000,,you can aIways repossess the property.
Dialogue: 0,0:07:01.35,0:07:04.25,Default,,0000,0000,0000,,Even if they run away,\Nthe house can't.
Dialogue: 0,0:07:16.08,0:07:20.64,Default,,0000,0000,0000,,What's more, the English-speaking\Nworld's obsession with property
Dialogue: 0,0:07:41.54,0:07:46.52,Default,,0000,0000,0000,,has been the foundation for a unique\Neconomic and political experiment -
Dialogue: 0,0:08:05.31,0:08:07.36,Default,,0000,0000,0000,,the property-owning democracy.
Dialogue: 0,0:08:21.30,0:08:25.02,Default,,0000,0000,0000,,Some say it's a model\Nthe whole world should adopt.
Dialogue: 0,0:08:45.50,0:08:47.72,Default,,0000,0000,0000,,The growth of property ownership
Dialogue: 0,0:09:01.70,0:09:05.30,Default,,0000,0000,0000,,gave rise to a new era\Nin the history of finance.
Dialogue: 0,0:09:22.11,0:09:25.97,Default,,0000,0000,0000,,On the back of property,\Nliterally trillions of dollars
Dialogue: 0,0:09:38.52,0:09:43.13,Default,,0000,0000,0000,,have been borrowed, some of it by\Nso-called sub-prime borrowers -
Dialogue: 0,0:10:01.87,0:10:07.01,Default,,0000,0000,0000,,people who'd previously been content\Nto rent rather than own their homes.
Dialogue: 0,0:10:30.90,0:10:35.90,Default,,0000,0000,0000,,So it's come as rather a shock\Nto millions of people that real estate
Dialogue: 0,0:10:55.31,0:10:59.53,Default,,0000,0000,0000,,is fundamentally no different\Nfrom any other financial asset.
Dialogue: 0,0:11:19.08,0:11:21.74,Default,,0000,0000,0000,,lts price can go down as well as up.
Dialogue: 0,0:11:42.65,0:11:46.09,Default,,0000,0000,0000,,lt turns out that no amount\Nof financial alchemy
Dialogue: 0,0:12:00.32,0:12:04.71,Default,,0000,0000,0000,,can turn little suburban boxes\Ninto treasure chests with roofs.
Dialogue: 0,0:12:39.67,0:12:44.17,Default,,0000,0000,0000,,Which raises the question,\Nis property really as safe as houses?
Dialogue: 0,0:13:10.80,0:13:15.34,Default,,0000,0000,0000,,Or couId it be that we've Iet\Nour Iove affair with reaI estate
Dialogue: 0,0:13:28.90,0:13:31.18,Default,,0000,0000,0000,,get compIeteIy out of proportion?
Dialogue: 0,0:15:27.35,0:15:31.92,Default,,0000,0000,0000,,Property ownership was once\Nthe preserve of an aristocratic elite.
Dialogue: 0,0:16:09.01,0:16:13.39,Default,,0000,0000,0000,,Estates were passed down from\Nfather to son, along with titles
Dialogue: 0,0:16:28.58,0:16:30.28,Default,,0000,0000,0000,,and political privileges.
Dialogue: 0,0:16:37.83,0:16:42.27,Default,,0000,0000,0000,,Everyone else was a mere tenant,\Npaying rent to their landlord.
Dialogue: 0,0:17:16.34,0:17:18.84,Default,,0000,0000,0000,,Even the right to vote in elections
Dialogue: 0,0:17:29.38,0:17:32.72,Default,,0000,0000,0000,,was originally\Na function of property ownership.
Dialogue: 0,0:17:48.10,0:17:52.71,Default,,0000,0000,0000,,In one respect, not much has\Nchanged in Britain since those days.
Dialogue: 0,0:18:10.83,0:18:14.68,Default,,0000,0000,0000,,Of 60 miIIion acres of British Iand,\Naround 40 miIIion
Dialogue: 0,0:18:35.23,0:18:37.73,Default,,0000,0000,0000,,are owned by just 189,000 famiIies.
Dialogue: 0,0:18:53.54,0:18:58.40,Default,,0000,0000,0000,,The difference is that they no Ionger\NmonopoIise the poIiticaI system.
Dialogue: 0,0:19:16.05,0:19:19.43,Default,,0000,0000,0000,,Indeed, thanks to reform\Nof the House of Lords,
Dialogue: 0,0:19:31.41,0:19:35.39,Default,,0000,0000,0000,,the hereditary peerage\Nis being phased out of ParIiament.
Dialogue: 0,0:19:48.24,0:19:52.85,Default,,0000,0000,0000,,Now, you can expIain the decIine\Nof the aristocracy in many ways.
Dialogue: 0,0:20:06.96,0:20:11.16,Default,,0000,0000,0000,,But, as far as I'm concerned,\Nthe main driver was finance.
Dialogue: 0,0:21:01.88,0:21:06.61,Default,,0000,0000,0000,,Until the 1 830s, fortune smiled\Non the British land-owning elite -
Dialogue: 0,0:21:26.91,0:21:31.40,Default,,0000,0000,0000,,the 30 or so families with gross\Nannual income from their lands
Dialogue: 0,0:21:48.38,0:21:49.100,Default,,0000,0000,0000,,above Ł60,000 a year -
Dialogue: 0,0:21:59.32,0:22:01.88,Default,,0000,0000,0000,,roughly Ł 1 50 million pounds today.
Dialogue: 0,0:22:24.56,0:22:27.60,Default,,0000,0000,0000,,With such vast property assets\Nbacking them
Dialogue: 0,0:22:39.92,0:22:42.38,Default,,0000,0000,0000,,and income from agriculture booming,
Dialogue: 0,0:22:52.76,0:22:57.18,Default,,0000,0000,0000,,it was hard to see how\Nthe aristocracy could fail to flourish.
Dialogue: 0,0:23:24.95,0:23:28.58,Default,,0000,0000,0000,,Yet, by ignoring a fundamental truth\Nabout property,
Dialogue: 0,0:23:44.51,0:23:46.67,Default,,0000,0000,0000,,they ensured their own decline.
Dialogue: 0,0:23:58.82,0:23:59.34,Default,,0000,0000,0000,,GUNSHOT
Dialogue: 0,0:24:08.08,0:24:08.77,Default,,0000,0000,0000,,CROWS CAW
Dialogue: 0,0:24:27.01,0:24:30.97,Default,,0000,0000,0000,,Like many of us today,\Nthe great magnates saw the value
Dialogue: 0,0:24:40.90,0:24:45.84,Default,,0000,0000,0000,,of their property as a cash cow\Nand used it to borrow to the hilt...
Dialogue: 0,0:25:12.88,0:25:15.80,Default,,0000,0000,0000,,..often more than\Nthe property was worth.
Dialogue: 0,0:25:29.50,0:25:34.34,Default,,0000,0000,0000,,What they'd failed to understand\Nis that property is only a security
Dialogue: 0,0:25:51.59,0:25:54.03,Default,,0000,0000,0000,,to the person who lends you money.
Dialogue: 0,0:26:06.95,0:26:11.95,Default,,0000,0000,0000,,As a borrower, you still have to\Nearn the money to pay back the loan.
Dialogue: 0,0:26:30.30,0:26:32.28,Default,,0000,0000,0000,,And for the great landowners
Dialogue: 0,0:26:41.45,0:26:46.48,Default,,0000,0000,0000,,of Victorian Britain, that suddenly\Nbecame a very difficult thing to do.
Dialogue: 0,0:27:23.32,0:27:28.93,Default,,0000,0000,0000,,Nowhere was the pain more acute than here\Nin the heart of rural Buckinghamshire.
Dialogue: 0,0:28:34.86,0:28:38.79,Default,,0000,0000,0000,,There's something undeniabIy\Nmagnificent about this huge,
Dialogue: 0,0:28:54.21,0:28:55.62,Default,,0000,0000,0000,,neocIassicaI paIace -
Dialogue: 0,0:29:02.84,0:29:06.48,Default,,0000,0000,0000,,Stowe House - arguabIy\Nthe greatest private residence
Dialogue: 0,0:29:21.56,0:29:24.18,Default,,0000,0000,0000,,buiIt in EngIand in the 18th century.
Dialogue: 0,0:29:33.35,0:29:36.81,Default,,0000,0000,0000,,Just Iook at these extraordinary\NscagIioIa piIIars
Dialogue: 0,0:29:49.76,0:29:52.75,Default,,0000,0000,0000,,or the stunning eIIipticaI\NpIaster ceiIing.
Dialogue: 0,0:30:21.53,0:30:24.68,Default,,0000,0000,0000,,And yet there seems to be\Nsomething missing.
Dialogue: 0,0:30:35.83,0:30:37.40,Default,,0000,0000,0000,,Or rather many things.
Dialogue: 0,0:30:43.20,0:30:47.69,Default,,0000,0000,0000,,Because once in each of these aIcoves\Nthere was a Roman statue.
Dialogue: 0,0:31:41.69,0:31:45.44,Default,,0000,0000,0000,,The exquisite Georgian firepIaces\Nhave been ripped out
Dialogue: 0,0:32:00.83,0:32:03.98,Default,,0000,0000,0000,,and repIaced by\Nbog-standard ones Iike this.
Dialogue: 0,0:32:26.29,0:32:26.63,Default,,0000,0000,0000,,Why?
Dialogue: 0,0:32:37.02,0:32:42.85,Default,,0000,0000,0000,,How did this most stately of stately homes\Nbecome a mere shell of its former self?
Dialogue: 0,0:33:16.36,0:33:20.74,Default,,0000,0000,0000,,The answer is that this house beIonged\Nto the principaI victim
Dialogue: 0,0:33:37.61,0:33:40.12,Default,,0000,0000,0000,,of the first modern property crash -
Dialogue: 0,0:33:53.18,0:33:57.24,Default,,0000,0000,0000,,Richard PIantagenet\NTempIe-Nugent-Brydges-Chandos-GrenviIIe,
Dialogue: 0,0:34:17.17,0:34:18.80,Default,,0000,0000,0000,,2nd Duke of Buckingham.
Dialogue: 0,0:34:36.73,0:34:41.15,Default,,0000,0000,0000,,Stowe was only part of the Duke's\Nvast empire of real estate.
Dialogue: 0,0:34:58.40,0:35:03.30,Default,,0000,0000,0000,,ln all, he owned around 67,000 acres\Nin England, lreland and Jamaica.
Dialogue: 0,0:35:38.38,0:35:41.84,Default,,0000,0000,0000,,These immense properties\Nseemed more than adequate
Dialogue: 0,0:35:58.100,0:36:01.34,Default,,0000,0000,0000,,to back his extravagant lifestyle.
Dialogue: 0,0:36:10.57,0:36:14.34,Default,,0000,0000,0000,,And he spent money\Nas if it might go out of fashion
Dialogue: 0,0:36:25.93,0:36:28.63,Default,,0000,0000,0000,,on mistresses, on illegitimate children,
Dialogue: 0,0:36:38.34,0:36:44.11,Default,,0000,0000,0000,,on anything that he felt was compatible\Nwith his standing as a Duke of the Realm.
Dialogue: 0,0:37:09.06,0:37:09.99,Default,,0000,0000,0000,,PEACOCK CRIES
Dialogue: 0,0:37:29.05,0:37:30.95,Default,,0000,0000,0000,,By 1 845, the jig was up.
Dialogue: 0,0:37:49.04,0:37:52.54,Default,,0000,0000,0000,,Grain prices had begun\Ntheir long slide downwards,
Dialogue: 0,0:38:10.50,0:38:13.70,Default,,0000,0000,0000,,and so had the income\Nfrom agricultural land.
Dialogue: 0,0:38:25.22,0:38:27.39,Default,,0000,0000,0000,,Rural property prices plummeted.
Dialogue: 0,0:38:39.32,0:38:42.96,Default,,0000,0000,0000,,Suddenly, the aristocracy found\Nthat their borrowings
Dialogue: 0,0:38:58.46,0:39:01.14,Default,,0000,0000,0000,,had outrun the value of their estates.
Dialogue: 0,0:39:12.35,0:39:15.67,Default,,0000,0000,0000,,The Duke was spending\Nfar more than his income
Dialogue: 0,0:39:32.76,0:39:36.79,Default,,0000,0000,0000,,and most of that was being absorbed\Nby interest payments.
Dialogue: 0,0:39:53.80,0:39:58.18,Default,,0000,0000,0000,,But there was to be one final bout\Nof conspicuous consumption.
Dialogue: 0,0:40:27.67,0:40:32.11,Default,,0000,0000,0000,,In preparation for a visit\Nby Queen Victoria and Prince AIbert,
Dialogue: 0,0:40:50.18,0:40:55.55,Default,,0000,0000,0000,,the Duke decided to spIash out and\Nrefurbish Stowe House from top to bottom.
Dialogue: 0,0:41:15.43,0:41:19.64,Default,,0000,0000,0000,,15 saIoons were stuffed fuII\Nof the most expensive furniture
Dialogue: 0,0:41:40.26,0:41:41.77,Default,,0000,0000,0000,,that money couId buy.
Dialogue: 0,0:41:47.20,0:41:51.59,Default,,0000,0000,0000,,The fIoorboards were groaning\Nunder the weight of Genoa veIvet,
Dialogue: 0,0:42:07.82,0:42:10.22,Default,,0000,0000,0000,,embroidered satin and goId brocade.
Dialogue: 0,0:42:23.60,0:42:27.99,Default,,0000,0000,0000,,When the Queen saw the resuIts,\Nshe commented rather waspishIy,
Dialogue: 0,0:42:42.96,0:42:48.20,Default,,0000,0000,0000,,''I am sure I have no such spIendid\Napartments in either of my paIaces. ''
Dialogue: 0,0:43:09.26,0:43:13.98,Default,,0000,0000,0000,,SadIy, the cost of this mega-makeover\Nproved to be the finaI straw
Dialogue: 0,0:43:35.55,0:43:37.18,Default,,0000,0000,0000,,for the ducaI finances.
Dialogue: 0,0:43:53.65,0:43:56.43,Default,,0000,0000,0000,,ln August 1 848, to the Duke's horror,
Dialogue: 0,0:44:07.96,0:44:12.28,Default,,0000,0000,0000,,his son had the entire contents\Nof Stowe House auctioned off.
Dialogue: 0,0:44:34.04,0:44:37.37,Default,,0000,0000,0000,,Now, his ancestral stately home\Nwas thrown open
Dialogue: 0,0:44:53.82,0:44:59.07,Default,,0000,0000,0000,,for throngs of bargain-hunters to bid\Nfor the silver, the wine, the china.
Dialogue: 0,0:45:28.32,0:45:31.24,Default,,0000,0000,0000,,Today, Stowe is a private boarding school.
Dialogue: 0,0:46:15.87,0:46:20.01,Default,,0000,0000,0000,,lt's a poignant symbol\Nof the transience of landed wealth.
Dialogue: 0,0:46:51.01,0:46:53.51,Default,,0000,0000,0000,,ln the modern world, it turned out,
Dialogue: 0,0:47:01.95,0:47:07.09,Default,,0000,0000,0000,,a regular job and a steady income\Nmattered more than an inherited title -
Dialogue: 0,0:47:31.62,0:47:34.12,Default,,0000,0000,0000,,no matter how many acres you owned.
Dialogue: 0,0:47:58.55,0:48:02.94,Default,,0000,0000,0000,,Divorced by his Iong-suffering\Nand much-betrayed Scottish wife,
Dialogue: 0,0:48:21.27,0:48:26.07,Default,,0000,0000,0000,,whose entire wardrobe had been seized\Nby Sheriffs Officers in London,
Dialogue: 0,0:48:43.57,0:48:46.90,Default,,0000,0000,0000,,the Duke was finaIIy forced\Nto reIinquish Stowe
Dialogue: 0,0:49:01.45,0:49:03.85,Default,,0000,0000,0000,,and move into rented accommodation.
Dialogue: 0,0:49:13.87,0:49:17.24,Default,,0000,0000,0000,,He eked out his days\Nat his cIub, the CarIton,
Dialogue: 0,0:49:31.96,0:49:35.36,Default,,0000,0000,0000,,writing a succession\Nof highIy unreIiabIe memoirs
Dialogue: 0,0:49:47.95,0:49:51.93,Default,,0000,0000,0000,,and incorrigibIy chasing actresses\Nand other men's wives.
Dialogue: 0,0:50:13.41,0:50:17.60,Default,,0000,0000,0000,,The fall of the Duke of Buckingham\Nwas a kind of harbinger
Dialogue: 0,0:50:29.61,0:50:34.56,Default,,0000,0000,0000,,for a new democratic age in which\Nevery adult would be given the vote
Dialogue: 0,0:50:55.28,0:50:59.94,Default,,0000,0000,0000,,whether they owned a stately home\Nor paid rent for a humble flat.
Dialogue: 0,0:51:17.37,0:51:20.84,Default,,0000,0000,0000,,As aristocratic fortunes\Nfrom agriculture declined,
Dialogue: 0,0:51:36.52,0:51:38.56,Default,,0000,0000,0000,,so the franchise was widened.
Dialogue: 0,0:51:50.82,0:51:55.85,Default,,0000,0000,0000,,Yet the advent of universaI suffrage\Ndidn't mean that property ownership
Dialogue: 0,0:52:13.54,0:52:15.00,Default,,0000,0000,0000,,had become universaI.
Dialogue: 0,0:52:22.17,0:52:24.79,Default,,0000,0000,0000,,On the contrary, as recentIy as 1938,
Dialogue: 0,0:52:38.58,0:52:44.17,Default,,0000,0000,0000,,Iess than a third of the UK housing stock\Nwas in the hands of owner-occupiers.
Dialogue: 0,0:53:05.51,0:53:08.41,Default,,0000,0000,0000,,It was on the other side of the AtIantic
Dialogue: 0,0:53:18.77,0:53:22.87,Default,,0000,0000,0000,,that the first true property-owning\Ndemocracy wouId emerge.
Dialogue: 0,0:53:40.23,0:53:44.73,Default,,0000,0000,0000,,And it wouId emerge from\Nthe biggest financiaI crisis ever seen.
Dialogue: 0,0:55:37.84,0:55:40.28,Default,,0000,0000,0000,,An EngIishman's home is his castIe
Dialogue: 0,0:55:51.09,0:55:55.05,Default,,0000,0000,0000,,and Americans know that\Nthere's no pIace Iike home too,
Dialogue: 0,0:56:08.34,0:56:11.25,Default,,0000,0000,0000,,even if aII the homes are rather simiIar.
Dialogue: 0,0:56:29.38,0:56:34.10,Default,,0000,0000,0000,,Today we take the universal right\Nto own our own home for granted.
Dialogue: 0,0:57:05.57,0:57:07.19,Default,,0000,0000,0000,,But before the 1 930s,
Dialogue: 0,0:57:14.41,0:57:19.15,Default,,0000,0000,0000,,no more than two-fifths of American\Nhouseholds were owner-occupiers.
Dialogue: 0,0:57:55.01,0:57:56.75,Default,,0000,0000,0000,,lf the old class system,
Dialogue: 0,0:58:06.80,0:58:10.91,Default,,0000,0000,0000,,based on elite property-ownership\Nwas distinctively British,
Dialogue: 0,0:58:26.57,0:58:30.67,Default,,0000,0000,0000,,the revolution that created\Na new property-owning democracy
Dialogue: 0,0:58:46.98,0:58:50.54,Default,,0000,0000,0000,,was born out of a great\NAmerican financial crisis.
Dialogue: 0,0:59:28.64,0:59:33.13,Default,,0000,0000,0000,,When the Depression struck in 1 929,\Nthe US economy nose-dived.
Dialogue: 0,0:59:56.20,0:59:59.81,Default,,0000,0000,0000,,The minority of people\Nwho did own their own homes
Dialogue: 0,1:00:12.40,1:00:15.03,Default,,0000,0000,0000,,couldn't afford the mortgage payments.
Dialogue: 0,1:00:26.08,1:00:31.73,Default,,0000,0000,0000,,Tenants too struggled to pay the rent\Nwhen all they had coming in was the dole.
Dialogue: 0,1:01:00.79,1:01:05.82,Default,,0000,0000,0000,,Nowhere were the effects of the Depression\Nmore painful than in Detroit.
Dialogue: 0,1:01:43.08,1:01:45.36,Default,,0000,0000,0000,,Soon the automobile industry here
Dialogue: 0,1:01:52.55,1:01:56.68,Default,,0000,0000,0000,,employed only half the number\Nof workers it had in 1 929,
Dialogue: 0,1:02:13.38,1:02:14.100,Default,,0000,0000,0000,,and at half the wages.
Dialogue: 0,1:02:30.84,1:02:34.63,Default,,0000,0000,0000,,By 1 932, the dispossessed of Detroit\Nhad had enough.
Dialogue: 0,1:03:20.49,1:03:24.97,Default,,0000,0000,0000,,On March 7th, 5,000 workers\Nlaid off by the Ford Motor Company
Dialogue: 0,1:03:49.11,1:03:52.80,Default,,0000,0000,0000,,marched to the factory\Nto demand unemployment relief.
Dialogue: 0,1:04:18.98,1:04:22.91,Default,,0000,0000,0000,,What followed would force Americans\Nto completely rethink
Dialogue: 0,1:04:43.81,1:04:46.33,Default,,0000,0000,0000,,their attitude to property ownership.
Dialogue: 0,1:05:30.94,1:05:33.44,Default,,0000,0000,0000,,As the unarmed crowd reached Gate 4
Dialogue: 0,1:05:42.72,1:05:46.10,Default,,0000,0000,0000,,of the company's River Rouge\Nplant in Dearborn,
Dialogue: 0,1:05:59.13,1:06:00.47,Default,,0000,0000,0000,,scuffles broke out.
Dialogue: 0,1:06:09.65,1:06:11.99,Default,,0000,0000,0000,,Suddenly, the factory gates opened
Dialogue: 0,1:06:21.85,1:06:25.52,Default,,0000,0000,0000,,and a phalanx of police\Nand security men rushed out
Dialogue: 0,1:06:37.21,1:06:39.01,Default,,0000,0000,0000,,and fired into the crowd.
Dialogue: 0,1:06:46.89,1:06:47.47,Default,,0000,0000,0000,,GUNSHOTS
Dialogue: 0,1:07:30.86,1:07:32.61,Default,,0000,0000,0000,,Five workers were killed.
Dialogue: 0,1:07:53.16,1:07:57.84,Default,,0000,0000,0000,,Days later, 60,000 people sang\NThe lnternationale at their funeral.
Dialogue: 0,1:08:55.86,1:08:59.26,Default,,0000,0000,0000,,The Communist Party newspaper\Naccused Edsel Ford,
Dialogue: 0,1:09:12.06,1:09:16.14,Default,,0000,0000,0000,,son of the firm's founder, Henry,\Nof allowing a massacre.
Dialogue: 0,1:10:03.82,1:10:05.39,Default,,0000,0000,0000,,Could anything be done
Dialogue: 0,1:10:15.39,1:10:20.13,Default,,0000,0000,0000,,to defuse what was beginning\Nto seem like a revolutionary situation,
Dialogue: 0,1:10:32.85,1:10:38.31,Default,,0000,0000,0000,,pitting the seriously propertied Fords\Nagainst their property-less ex-employees?
Dialogue: 0,1:11:05.89,1:11:08.64,Default,,0000,0000,0000,,ln a remarkable gesture of conciliation,
Dialogue: 0,1:11:21.24,1:11:25.28,Default,,0000,0000,0000,,Edsel Ford turned to a Mexican artist\Nnamed Diego Rivera.
Dialogue: 0,1:11:41.65,1:11:46.31,Default,,0000,0000,0000,,He invited him to paint a mural\Nthat would show Detroit's economy
Dialogue: 0,1:12:03.11,1:12:06.32,Default,,0000,0000,0000,,as a site of cooperation,\Nnot class conflict.
Dialogue: 0,1:12:46.46,1:12:49.08,Default,,0000,0000,0000,,Diego Rivera was a IifeIong Communist.
Dialogue: 0,1:13:02.44,1:13:07.51,Default,,0000,0000,0000,,His ideaI was of a society in which\Nthere wouId be no private property,
Dialogue: 0,1:13:23.27,1:13:27.30,Default,,0000,0000,0000,,in which the means of production\NwouId be commonIy owned.
Dialogue: 0,1:13:39.68,1:13:43.99,Default,,0000,0000,0000,,In his eyes, Ford's River Rouge pIant\Nwas the very opposite,
Dialogue: 0,1:14:01.36,1:14:04.74,Default,,0000,0000,0000,,a capitaIist society\Nin which the workers worked
Dialogue: 0,1:14:18.61,1:14:23.17,Default,,0000,0000,0000,,and the property owners, who reaped\Nthe rewards of their efforts,
Dialogue: 0,1:14:36.70,1:14:37.75,Default,,0000,0000,0000,,mereIy watched.
Dialogue: 0,1:15:30.14,1:15:35.57,Default,,0000,0000,0000,,When the murals were unveiled in 1 933,\Nthe city's dignitaries were appalled.
Dialogue: 0,1:16:03.59,1:16:09.09,Default,,0000,0000,0000,,They saw them as Communist propaganda,\N''a travesty on the spirit of Detroit''.
Dialogue: 0,1:16:42.94,1:16:45.67,Default,,0000,0000,0000,,The power of art is a wonderful thing.
Dialogue: 0,1:16:57.24,1:17:02.32,Default,,0000,0000,0000,,But it was clearly going to take something\Nrather more powerful than art
Dialogue: 0,1:17:15.76,1:17:19.49,Default,,0000,0000,0000,,to heal a society so deeply split\Nby the Depression.
Dialogue: 0,1:17:40.38,1:17:44.36,Default,,0000,0000,0000,,Other countries turned to the extremes\Nof totaIitarianism.
Dialogue: 0,1:17:58.68,1:18:02.52,Default,,0000,0000,0000,,But in the United States\Nthe answer was the New DeaI.
Dialogue: 0,1:18:15.09,1:18:18.00,Default,,0000,0000,0000,,And that incIuded\Na New DeaI on housing.
Dialogue: 0,1:18:29.19,1:18:32.47,Default,,0000,0000,0000,,In radicaIIy increasing\Nthe number of Americans
Dialogue: 0,1:18:43.70,1:18:46.43,Default,,0000,0000,0000,,who couId hope to own their own homes,
Dialogue: 0,1:18:55.70,1:19:01.10,Default,,0000,0000,0000,,the RooseveIt administration pioneered\Nthe idea of a property-owning democracy.
Dialogue: 0,1:19:22.21,1:19:26.12,Default,,0000,0000,0000,,It proved to be the perfect antidote\Nto Red revoIution.
Dialogue: 0,1:20:14.59,1:20:18.39,Default,,0000,0000,0000,,ln effect, the government\Nwould rig the housing market
Dialogue: 0,1:20:31.22,1:20:34.74,Default,,0000,0000,0000,,to incentivise Americans\Nto become property owners.
Dialogue: 0,1:21:08.46,1:21:12.90,Default,,0000,0000,0000,,Customers at local mortgage lenders,\Nknown as savings and loans,
Dialogue: 0,1:21:26.97,1:21:30.08,Default,,0000,0000,0000,,the equivalent of\NBritish building societies,
Dialogue: 0,1:21:40.64,1:21:44.40,Default,,0000,0000,0000,,would have their deposits guaranteed\Nby the Government
Dialogue: 0,1:21:56.64,1:21:58.48,Default,,0000,0000,0000,,even if a bank went bust.
Dialogue: 0,1:22:24.62,1:22:28.66,Default,,0000,0000,0000,,Crucially, a new\NFederal Housing Administration was set up
Dialogue: 0,1:22:48.39,1:22:51.84,Default,,0000,0000,0000,,to offer larger, longer\Nand lower-interest loans.
Dialogue: 0,1:23:10.48,1:23:15.03,Default,,0000,0000,0000,,After the 1 930s, most mortgages\Nin the United States were fixed
Dialogue: 0,1:23:28.37,1:23:29.81,Default,,0000,0000,0000,,for 20 or 30 years.
Dialogue: 0,1:23:44.78,1:23:49.30,Default,,0000,0000,0000,,A new Federal National Mortgage\NAssociation, nicknamed Fannie Mae,
Dialogue: 0,1:24:09.82,1:24:13.84,Default,,0000,0000,0000,,was set up to create\Na nationwide market for home loans.
Dialogue: 0,1:24:28.96,1:24:33.28,Default,,0000,0000,0000,,(TV REPORTER) This coupIe\Nis going through a modeI house now.
Dialogue: 0,1:24:50.42,1:24:54.27,Default,,0000,0000,0000,,The husband, apparentIy,\Nisn't very keen about it aII,
Dialogue: 0,1:25:01.99,1:25:05.73,Default,,0000,0000,0000,,but his wife is entranced\Nby such convenient features
Dialogue: 0,1:25:16.93,1:25:19.55,Default,,0000,0000,0000,,as the sturdy buiIt-in ironing board.
Dialogue: 0,1:25:33.13,1:25:36.22,Default,,0000,0000,0000,,By reducing the monthly cost\Nof a mortgage,
Dialogue: 0,1:25:49.96,1:25:52.89,Default,,0000,0000,0000,,these reforms made\Nhome-ownership possible
Dialogue: 0,1:26:03.85,1:26:06.71,Default,,0000,0000,0000,,for many more Americans than ever before.
Dialogue: 0,1:26:16.89,1:26:22.08,Default,,0000,0000,0000,,(TV REPORTER) They both wouId Iike\Nto have this pIace for their very own.
Dialogue: 0,1:26:33.72,1:26:35.86,Default,,0000,0000,0000,,Too bad they can't afford it.
Dialogue: 0,1:26:45.30,1:26:46.98,Default,,0000,0000,0000,,Ah! But maybe they can.
Dialogue: 0,1:26:58.34,1:27:02.01,Default,,0000,0000,0000,,For according to this sign,\Nthey can buy this house
Dialogue: 0,1:27:12.23,1:27:16.84,Default,,0000,0000,0000,,with monthIy payments that are Iess\Nthan they now spend for rent!
Dialogue: 0,1:28:03.56,1:28:07.57,Default,,0000,0000,0000,,lt's not too much to say\Nthat the modern United States,
Dialogue: 0,1:28:24.39,1:28:29.65,Default,,0000,0000,0000,,with its seductively samey suburbs,\Nwas born out of these New Deal reforms.
Dialogue: 0,1:29:06.47,1:29:10.69,Default,,0000,0000,0000,,From the 1930s then,\Nthe US Government effectiveIy underwrote
Dialogue: 0,1:29:27.30,1:29:31.47,Default,,0000,0000,0000,,the mortgage market,\Nbringing borrowers and Ienders together.
Dialogue: 0,1:29:46.66,1:29:51.39,Default,,0000,0000,0000,,And that was the reason for\Nthe big expIosion in property ownership
Dialogue: 0,1:30:05.17,1:30:08.90,Default,,0000,0000,0000,,and mortgage debt in the decades\Nafter WorId War II.
Dialogue: 0,1:30:23.90,1:30:25.76,Default,,0000,0000,0000,,There was just one catch -
Dialogue: 0,1:30:34.20,1:30:39.76,Default,,0000,0000,0000,,not everyone in American society had an\Ninvitation to the property-owning party.
Dialogue: 0,1:31:43.42,1:31:47.32,Default,,0000,0000,0000,,When these houses were built\Nin Detroit back in 1 941,
Dialogue: 0,1:32:07.41,1:32:10.84,Default,,0000,0000,0000,,whether you got the money or not\Nfor a mortgage
Dialogue: 0,1:32:21.08,1:32:24.52,Default,,0000,0000,0000,,depended on which side\Nof this divide you lived.
Dialogue: 0,1:32:45.91,1:32:50.51,Default,,0000,0000,0000,,It was a reaI estate deveIoper\Nwho buiIt this six-foot high waII
Dialogue: 0,1:33:07.58,1:33:11.43,Default,,0000,0000,0000,,right through the middIe\Nof Detroit's 8 MiIe district.
Dialogue: 0,1:33:22.73,1:33:26.27,Default,,0000,0000,0000,,He had to buiId it\Nin order to quaIify for Ioans
Dialogue: 0,1:33:37.25,1:33:39.95,Default,,0000,0000,0000,,from the FederaI Housing Administration.
Dialogue: 0,1:33:50.08,1:33:55.03,Default,,0000,0000,0000,,The Ioans were to be given for\Nconstruction on that side of the waII,
Dialogue: 0,1:34:06.49,1:34:09.66,Default,,0000,0000,0000,,which was a predominantIy\Nwhite neighbourhood.
Dialogue: 0,1:34:19.12,1:34:23.95,Default,,0000,0000,0000,,On this side, on the bIack side,\Nthere was to be no federaI credit,
Dialogue: 0,1:34:38.68,1:34:43.51,Default,,0000,0000,0000,,because African Americans were regarded\Nas fundamentaIIy uncreditworthy.
Dialogue: 0,1:35:20.55,1:35:24.39,Default,,0000,0000,0000,,lt was part of a system\Nthat divided the whole city -
Dialogue: 0,1:35:39.70,1:35:41.62,Default,,0000,0000,0000,,in theory by credit-rating,
Dialogue: 0,1:35:53.16,1:35:54.73,Default,,0000,0000,0000,,in practice by colour.
Dialogue: 0,1:36:02.42,1:36:05.70,Default,,0000,0000,0000,,Segregation, in other words,\Nwasn't accidental,
Dialogue: 0,1:36:21.57,1:36:24.61,Default,,0000,0000,0000,,but a direct consequence\Nof federal policy.
Dialogue: 0,1:36:56.28,1:36:59.13,Default,,0000,0000,0000,,This map by the\NFederaI Home Loan Board
Dialogue: 0,1:37:08.69,1:37:13.37,Default,,0000,0000,0000,,shows the predominantIy bIack areas\Nof Detroit, the Iower east side
Dialogue: 0,1:37:28.68,1:37:33.51,Default,,0000,0000,0000,,and so-caIIed coIonies Iike the one\Nwe're in now in Birwood-Griggs,
Dialogue: 0,1:37:49.30,1:37:52.21,Default,,0000,0000,0000,,marked with a Ietter D\Nand coIoured red.
Dialogue: 0,1:38:11.81,1:38:13.84,Default,,0000,0000,0000,,You can see why the practice
Dialogue: 0,1:38:19.39,1:38:23.20,Default,,0000,0000,0000,,of giving whoIe neighbourhoods\Na negative credit rating
Dialogue: 0,1:38:35.38,1:38:37.88,Default,,0000,0000,0000,,came to be known as ''red-Iining''.
Dialogue: 0,1:38:48.42,1:38:52.98,Default,,0000,0000,0000,,The resuIt was that when peopIe\Nfrom round here needed mortgages,
Dialogue: 0,1:39:06.52,1:39:10.08,Default,,0000,0000,0000,,they had to pay significantIy\Nhigher interest rates
Dialogue: 0,1:39:20.61,1:39:23.57,Default,,0000,0000,0000,,than the foIks in the white part of town.
Dialogue: 0,1:39:44.81,1:39:48.55,Default,,0000,0000,0000,,Half a century later,\Nthe two categories of borrowers
Dialogue: 0,1:40:04.37,1:40:08.75,Default,,0000,0000,0000,,would come to be known euphemistically\Nas prime and sub-prime.
Dialogue: 0,1:40:34.25,1:40:38.86,Default,,0000,0000,0000,,But in the 1 960s, this divide\Nwas the hidden financial dimension
Dialogue: 0,1:40:59.08,1:41:01.12,Default,,0000,0000,0000,,of the Civil Rights struggle.
Dialogue: 0,1:41:10.02,1:41:14.52,Default,,0000,0000,0000,,Blacks were to be excluded\Nfrom the new property-owning society.
Dialogue: 0,1:41:35.68,1:41:39.64,Default,,0000,0000,0000,,There would be a heavy price\Nto pay for this exclusion.
Dialogue: 0,1:42:08.72,1:42:13.56,Default,,0000,0000,0000,,On July 23rd 1 967, property in Detroit\Nliterally went up in flames.
Dialogue: 0,1:42:51.22,1:42:56.24,Default,,0000,0000,0000,,(TV) Four days of rioting, Iooting\Nand arson rocked the city of Detroit
Dialogue: 0,1:43:14.36,1:43:18.39,Default,,0000,0000,0000,,in the worst outbreak\Nof urban raciaI vioIence this year.
Dialogue: 0,1:43:36.03,1:43:40.95,Default,,0000,0000,0000,,Anger at economic discrimination\Nspilled over into five days of rioting
Dialogue: 0,1:44:05.28,1:44:07.08,Default,,0000,0000,0000,,that left 43 people dead.
Dialogue: 0,1:44:17.48,1:44:22.17,Default,,0000,0000,0000,,Significantly, most of the violence\Nwas directed not against people,
Dialogue: 0,1:44:41.25,1:44:42.71,Default,,0000,0000,0000,,but against property.
Dialogue: 0,1:44:49.67,1:44:52.88,Default,,0000,0000,0000,,Nearly 3,000 buildings\Nwere looted or burned.
Dialogue: 0,1:45:42.90,1:45:47.76,Default,,0000,0000,0000,,The real lesson for policy makers\Nwas that excluding ethnic minorities
Dialogue: 0,1:46:06.67,1:46:11.11,Default,,0000,0000,0000,,from the property-owning democracy\Nwas a fast track to trouble.
Dialogue: 0,1:46:28.97,1:46:33.41,Default,,0000,0000,0000,,To make people feel like stakeholders\Nin the social status quo,
Dialogue: 0,1:46:51.91,1:46:54.53,Default,,0000,0000,0000,,you had to make them property owners.
Dialogue: 0,1:47:23.89,1:47:28.23,Default,,0000,0000,0000,,lndeed, widening home ownership\Nmight even turn the malcontents
Dialogue: 0,1:47:45.98,1:47:47.27,Default,,0000,0000,0000,,into conservatives.
Dialogue: 0,1:48:03.23,1:48:07.49,Default,,0000,0000,0000,,This was a lesson that\NMargaret Thatcher was quick to learn.
Dialogue: 0,1:48:25.95,1:48:30.04,Default,,0000,0000,0000,,Here in Britain, the idea\Nof the property-owning democracy
Dialogue: 0,1:48:49.52,1:48:52.38,Default,,0000,0000,0000,,became a keystone of 1 980s Conservatism.
Dialogue: 0,1:49:03.61,1:49:07.65,Default,,0000,0000,0000,,By selling off council housing\Nat bargain-basement prices,
Dialogue: 0,1:49:30.76,1:49:36.12,Default,,0000,0000,0000,,Thatcher ensured that more and more\NBritish couples had a home of their own.
Dialogue: 0,1:50:05.05,1:50:09.08,Default,,0000,0000,0000,,That also meant that more people\Nthan ever had mortgages.
Dialogue: 0,1:50:39.55,1:50:44.69,Default,,0000,0000,0000,,Up untiI the 1980s, government incentives\Nto borrow money and buy a house
Dialogue: 0,1:51:01.22,1:51:05.02,Default,,0000,0000,0000,,made pretty good sense\Nfor the average British famiIy.
Dialogue: 0,1:51:18.06,1:51:22.03,Default,,0000,0000,0000,,Interest rates were reIativeIy Iow\Nin the '60s and '70s,
Dialogue: 0,1:51:36.99,1:51:39.96,Default,,0000,0000,0000,,and the infIation rate tended to creep up,
Dialogue: 0,1:51:49.19,1:51:53.15,Default,,0000,0000,0000,,so that the reaI vaIue of mortgage debt\Ntended to faII.
Dialogue: 0,1:52:09.18,1:52:11.67,Default,,0000,0000,0000,,But there was a sting in the taiI.
Dialogue: 0,1:52:18.44,1:52:22.07,Default,,0000,0000,0000,,The very same governments\Nthat professed their faith
Dialogue: 0,1:52:32.96,1:52:38.12,Default,,0000,0000,0000,,in the property-owning democracy\Nwere aIso committed to fighting infIation,
Dialogue: 0,1:52:55.89,1:52:58.52,Default,,0000,0000,0000,,and that meant raising interest rates.
Dialogue: 0,1:53:13.56,1:53:17.25,Default,,0000,0000,0000,,The British and American policy\Nof encouraging people
Dialogue: 0,1:53:31.24,1:53:36.78,Default,,0000,0000,0000,,to take out mortgages and then cranking\Nup interest rates led in the late '80s
Dialogue: 0,1:54:01.32,1:54:06.98,Default,,0000,0000,0000,,to one of the most spectacular booms and\Nbusts in the property market's history.
Dialogue: 0,1:54:25.10,1:54:30.39,Default,,0000,0000,0000,,lt was to the '80s what the sub-prime\Nmeltdown has been in our own time -
Dialogue: 0,1:54:54.13,1:54:58.62,Default,,0000,0000,0000,,the first, but not the last time\Nthat America's mortgage market
Dialogue: 0,1:55:13.70,1:55:15.56,Default,,0000,0000,0000,,has gone stark raving mad.
Dialogue: 0,1:56:37.01,1:56:39.66,Default,,0000,0000,0000,,To many of us, it's come as a shock
Dialogue: 0,1:56:48.16,1:56:51.31,Default,,0000,0000,0000,,that a crash\Nin the American property market
Dialogue: 0,1:57:03.73,1:57:06.42,Default,,0000,0000,0000,,could trigger a major financial crisis.
Dialogue: 0,1:57:29.40,1:57:34.17,Default,,0000,0000,0000,,ln fact, as so often in the ascent\Nof money, it's happened before.
Dialogue: 0,1:58:23.05,1:58:27.38,Default,,0000,0000,0000,,ln March 1 984, American\Ngovernment regulators received a copy
Dialogue: 0,1:58:45.14,1:58:50.22,Default,,0000,0000,0000,,of a video showing mile after mile\Nof half-built houses and condominiums
Dialogue: 0,1:59:08.50,1:59:12.01,Default,,0000,0000,0000,,along lnterstate 30,\Njust outside Dallas in Texas.
Dialogue: 0,2:00:01.52,2:00:04.43,Default,,0000,0000,0000,,You can still see\Nthe empty slabs today.
Dialogue: 0,2:00:30.76,2:00:35.21,Default,,0000,0000,0000,,The investigation triggered\Nby these un-buiIt homes wouId expose
Dialogue: 0,2:00:50.96,2:00:54.58,Default,,0000,0000,0000,,one of the biggest financiaI scandaIs\Nof aII time -
Dialogue: 0,2:01:08.21,2:01:11.46,Default,,0000,0000,0000,,a scam that wouId make\Na mockery of the idea
Dialogue: 0,2:01:23.36,2:01:26.33,Default,,0000,0000,0000,,of property\Nas a safe form of investment.
Dialogue: 0,2:01:39.14,2:01:41.87,Default,,0000,0000,0000,,This isn't a story about reaI estate -
Dialogue: 0,2:01:52.82,2:01:54.56,Default,,0000,0000,0000,,more Iike surreal estate.
Dialogue: 0,2:02:23.74,2:02:27.97,Default,,0000,0000,0000,,Savings and loan associations -\NAmerica's building societies -
Dialogue: 0,2:02:46.89,2:02:50.97,Default,,0000,0000,0000,,were not only central to Roosevelt's\NNew Deal on housing.
Dialogue: 0,2:03:09.82,2:03:15.48,Default,,0000,0000,0000,,By the 1 97 0s, they were the foundation\Nof America's property-owning democracy.
Dialogue: 0,2:03:44.32,2:03:48.40,Default,,0000,0000,0000,,Then, in the 1970s,\Nthe savings and Ioan industry was hit
Dialogue: 0,2:04:02.63,2:04:07.25,Default,,0000,0000,0000,,first by doubIe-digit infIation\Nand then by higher interest rates.
Dialogue: 0,2:04:33.98,2:04:39.06,Default,,0000,0000,0000,,lt was a lethal double punch for\Ninstitutions that were forbidden by law
Dialogue: 0,2:05:02.59,2:05:05.38,Default,,0000,0000,0000,,to raise the rates they paid to savers,
Dialogue: 0,2:05:13.53,2:05:18.46,Default,,0000,0000,0000,,and which were receiving interest payments\Nfrom local mortgage borrowers
Dialogue: 0,2:05:37.73,2:05:40.18,Default,,0000,0000,0000,,that had been fixed decades before.
Dialogue: 0,2:06:04.87,2:06:09.79,Default,,0000,0000,0000,,The response in Washington was\Nto remove nearly all these restrictions.
Dialogue: 0,2:06:44.21,2:06:47.01,Default,,0000,0000,0000,,When deregulation\Nwas enacted in 1 982,
Dialogue: 0,2:07:05.46,2:07:07.79,Default,,0000,0000,0000,,President Reagan was cock-a-hoop.
Dialogue: 0,2:07:15.56,2:07:18.46,Default,,0000,0000,0000,,AII in aII,\NI think we hit the jackpot.
Dialogue: 0,2:07:35.97,2:07:38.19,Default,,0000,0000,0000,,Well, some people certainly did.
Dialogue: 0,2:08:11.74,2:08:16.72,Default,,0000,0000,0000,,Liberated from the old constraints,\Nthe people running savings and loans
Dialogue: 0,2:08:31.51,2:08:34.95,Default,,0000,0000,0000,,suddenly saw a chance\Nto make some serious money
Dialogue: 0,2:08:52.34,2:08:55.85,Default,,0000,0000,0000,,from the once boring business\Nof mortgage lending.
Dialogue: 0,2:09:15.70,2:09:21.02,Default,,0000,0000,0000,,By raising savings rates, they could\Nattract much more money from depositors.
Dialogue: 0,2:09:41.15,2:09:43.54,Default,,0000,0000,0000,,Then they could use these deposits
Dialogue: 0,2:09:52.94,2:09:56.24,Default,,0000,0000,0000,,as the basis\Nfor as many loans as they liked.
Dialogue: 0,2:10:27.65,2:10:30.69,Default,,0000,0000,0000,,Crucially, though,\None thing didn't change.
Dialogue: 0,2:10:44.48,2:10:48.23,Default,,0000,0000,0000,,Savers' deposits were still insured\Nby the government.
Dialogue: 0,2:11:16.88,2:11:21.67,Default,,0000,0000,0000,,lt was an invitation to a gigantic\Nfree lunch for financial cowboys.
Dialogue: 0,2:11:54.96,2:11:58.52,Default,,0000,0000,0000,,This is the Wise Circle Grill\Njust outside Dallas,
Dialogue: 0,2:12:12.85,2:12:17.49,Default,,0000,0000,0000,,filled every lunchtime with local\Ncitizens of unblemished integrity.
Dialogue: 0,2:12:44.41,2:12:48.10,Default,,0000,0000,0000,,Twenty years ago,\Nthe clientele was rather different.
Dialogue: 0,2:13:11.34,2:13:16.100,Default,,0000,0000,0000,,The city of DaIIas had more than its fair\Nshare of frauduIent savings and Ioans,
Dialogue: 0,2:13:38.27,2:13:42.82,Default,,0000,0000,0000,,and this was where the DaIIas\Nproperty cowboys came to hang out.
Dialogue: 0,2:14:01.20,2:14:04.81,Default,,0000,0000,0000,,The Wise CircIe GriII\Nwas the pIace to have brunch
Dialogue: 0,2:14:26.03,2:14:30.70,Default,,0000,0000,0000,,when they weren't whooping it up\Non their Southfork-styIe ranches.
Dialogue: 0,2:14:57.16,2:14:59.20,Default,,0000,0000,0000,,It was aII very, very 1980s.
Dialogue: 0,2:15:11.47,2:15:16.62,Default,,0000,0000,0000,,To one group of DaIIas deveIopers,\Nthe Empire Savings and Loan Association
Dialogue: 0,2:15:35.25,2:15:39.75,Default,,0000,0000,0000,,offered the perfect opportunity\Nto make money out of thin air...
Dialogue: 0,2:16:00.07,2:16:02.57,Default,,0000,0000,0000,,or rather, out of fIat, Texan Iand.
Dialogue: 0,2:16:32.05,2:16:35.61,Default,,0000,0000,0000,,The surreal saga\Nof Empire Savings and Loans began
Dialogue: 0,2:16:50.15,2:16:52.72,Default,,0000,0000,0000,,when chairman Spencer Blain teamed up
Dialogue: 0,2:17:04.45,2:17:08.79,Default,,0000,0000,0000,,with a flamboyant high-school dropout\Nturned property developer
Dialogue: 0,2:17:26.12,2:17:30.71,Default,,0000,0000,0000,,named Danny Faulkner, whose speciality\Nwas extravagant generosity...
Dialogue: 0,2:17:50.32,2:17:52.18,Default,,0000,0000,0000,,with other people's money.
Dialogue: 0,2:17:59.100,2:18:00.93,Default,,0000,0000,0000,,COINS CASCADE
Dialogue: 0,2:18:10.94,2:18:15.08,Default,,0000,0000,0000,,The money in question\Ncame in the form of deposit accounts
Dialogue: 0,2:18:33.45,2:18:37.08,Default,,0000,0000,0000,,on which Empire paid\Nalluringly high interest rates.
Dialogue: 0,2:18:51.33,2:18:55.42,Default,,0000,0000,0000,,This is FauIkner Point,\None of the very first deveIopments
Dialogue: 0,2:19:15.74,2:19:20.30,Default,,0000,0000,0000,,that Danny FauIkner ever buiIt,\Nand it spawned a veritabIe empire
Dialogue: 0,2:19:39.94,2:19:43.58,Default,,0000,0000,0000,,of FauIkner Crest, FauIkner Creek,\NFauIkner Crescent,
Dialogue: 0,2:20:01.60,2:20:03.90,Default,,0000,0000,0000,,FauIkner Fountains, FauIkner Oaks.
Dialogue: 0,2:20:19.70,2:20:23.21,Default,,0000,0000,0000,,Danny FauIkner's favourite trick\Nwas ''the fIip''.
Dialogue: 0,2:20:38.00,2:20:43.76,Default,,0000,0000,0000,,He'd buy some parceI of Iand for peanuts,\Nand then seII it on to naive investors
Dialogue: 0,2:21:12.93,2:21:15.48,Default,,0000,0000,0000,,who got the money Ient to them by -
Dialogue: 0,2:21:28.92,2:21:32.13,Default,,0000,0000,0000,,you've guessed it -\NEmpire Savings and Loans.
Dialogue: 0,2:21:57.74,2:22:01.60,Default,,0000,0000,0000,,Danny FauIkner may have cIaimed\Nthat he was iIIiterate,
Dialogue: 0,2:22:17.52,2:22:19.97,Default,,0000,0000,0000,,but he certainIy wasn't innumerate.
Dialogue: 0,2:22:42.56,2:22:47.70,Default,,0000,0000,0000,,Many investors never even got a chance\Nto view their properties close up.
Dialogue: 0,2:23:06.75,2:23:11.61,Default,,0000,0000,0000,,Faulkner would simply fly them over\Nin his helicopter without landing.
Dialogue: 0,2:23:42.73,2:23:46.93,Default,,0000,0000,0000,,By 1 984, property development\Nin Texas was out of control,
Dialogue: 0,2:24:07.56,2:24:10.43,Default,,0000,0000,0000,,paid for by government-guaranteed deposits
Dialogue: 0,2:24:22.28,2:24:27.26,Default,,0000,0000,0000,,that were effectively going straight\Ninto the pockets of the developers.
Dialogue: 0,2:24:54.68,2:24:58.23,Default,,0000,0000,0000,,On paper at least,\Nthe assets of Empire had grown
Dialogue: 0,2:25:18.04,2:25:22.17,Default,,0000,0000,0000,,from $1 2 million to $257 million\Nin just over two years.
Dialogue: 0,2:25:49.81,2:25:54.01,Default,,0000,0000,0000,,The troubIe was that the demand\Nfor condos by Interstate 30
Dialogue: 0,2:26:11.69,2:26:15.54,Default,,0000,0000,0000,,couId never possibIy have kept up\Nwith the vast suppIy
Dialogue: 0,2:26:28.73,2:26:33.06,Default,,0000,0000,0000,,that was being generated\Nby FauIkner, BIain and their cronies.
Dialogue: 0,2:26:49.56,2:26:53.30,Default,,0000,0000,0000,,When the reguIators finaIIy\NbIew the whistIe in 1984,
Dialogue: 0,2:27:05.55,2:27:08.35,Default,,0000,0000,0000,,that reaIity couId no Ionger be escaped,
Dialogue: 0,2:27:16.70,2:27:20.03,Default,,0000,0000,0000,,and hundreds of the buiIdings\Nthat they erected
Dialogue: 0,2:27:29.96,2:27:33.40,Default,,0000,0000,0000,,ended up being buIIdozed\Nor burnt to the ground.
Dialogue: 0,2:27:45.74,2:27:47.12,Default,,0000,0000,0000,,Today, 24 years on,
Dialogue: 0,2:27:56.89,2:27:58.98,Default,,0000,0000,0000,,it's stiII a Texan wasteIand.
Dialogue: 0,2:28:18.98,2:28:23.94,Default,,0000,0000,0000,,ln 1 991, Faulkner and Blain were both\Nconvicted and jailed for fraud.
Dialogue: 0,2:28:45.07,2:28:49.05,Default,,0000,0000,0000,,One investigator called Empire\N''one of the most reckless
Dialogue: 0,2:29:06.32,2:29:10.67,Default,,0000,0000,0000,,''and fraudulent land investment schemes\Nin American history. ''
Dialogue: 0,2:29:32.40,2:29:35.74,Default,,0000,0000,0000,,ln all, nearly 500 savings and loans\Ncollapsed.
Dialogue: 0,2:29:53.02,2:29:55.42,Default,,0000,0000,0000,,According to one official estimate,
Dialogue: 0,2:30:04.60,2:30:08.34,Default,,0000,0000,0000,,nearly half had seen\N''criminal conduct by insiders''.
Dialogue: 0,2:30:50.46,2:30:53.83,Default,,0000,0000,0000,,The full cost of the crisis\Nwas $1 53 billion,
Dialogue: 0,2:31:20.34,2:31:25.43,Default,,0000,0000,0000,,making it one of the most expensive\Nfinancial crises in American history.
Dialogue: 0,2:31:41.80,2:31:45.14,Default,,0000,0000,0000,,And the federal government\Nwhich had deregulated
Dialogue: 0,2:31:57.37,2:32:00.22,Default,,0000,0000,0000,,the savings and loans in the first place
Dialogue: 0,2:32:11.88,2:32:17.71,Default,,0000,0000,0000,,had to pick up the bill, which is another\Nway of saying that taxpayers forked out.
Dialogue: 0,2:32:45.55,2:32:49.74,Default,,0000,0000,0000,,It was the first cIear sign\Nthat there might be a downside
Dialogue: 0,2:33:06.16,2:33:09.38,Default,,0000,0000,0000,,to the idea\Nof the property-owning democracy.
Dialogue: 0,2:33:29.31,2:33:32.92,Default,,0000,0000,0000,,Yet the savings and loans crisis\Nwas a mere tremor
Dialogue: 0,2:33:49.30,2:33:51.82,Default,,0000,0000,0000,,compared with the property earthquake
Dialogue: 0,2:34:01.50,2:34:04.88,Default,,0000,0000,0000,,that would strike the US market\N20 years later.
Dialogue: 0,2:34:40.84,2:34:44.05,Default,,0000,0000,0000,,Savings and loans\Nwas an all-American crisis.
Dialogue: 0,2:34:58.94,2:35:00.62,Default,,0000,0000,0000,,But the sub-prime quake
Dialogue: 0,2:35:09.67,2:35:14.17,Default,,0000,0000,0000,,would shake the entire world of finance\Nto its very foundations.
Dialogue: 0,2:36:03.95,2:36:05.69,Default,,0000,0000,0000,,When this wall was built
Dialogue: 0,2:36:17.41,2:36:21.67,Default,,0000,0000,0000,,to divide white homeowners\Nfrom black renters in the 1 940s,
Dialogue: 0,2:36:36.56,2:36:40.84,Default,,0000,0000,0000,,black families found it virtually\Nimpossible to get mortgages.
Dialogue: 0,2:37:03.49,2:37:06.35,Default,,0000,0000,0000,,Sixty years later,\Nthat had all changed.
Dialogue: 0,2:37:33.100,2:37:37.97,Default,,0000,0000,0000,,''We want everybody in America\Nto own their own home, ''
Dialogue: 0,2:37:50.83,2:37:55.47,Default,,0000,0000,0000,,President George WBush declared\Nin October 2002, challenging lenders
Dialogue: 0,2:38:14.60,2:38:17.81,Default,,0000,0000,0000,,to create 5.5 million\Nnew minority homeowners
Dialogue: 0,2:38:37.54,2:38:39.39,Default,,0000,0000,0000,,by the end of the decade.
Dialogue: 0,2:38:52.05,2:38:57.16,Default,,0000,0000,0000,,Positively encouraged by the federal\Ngovernment to relax lending standards,
Dialogue: 0,2:39:19.40,2:39:23.04,Default,,0000,0000,0000,,mortgage companies swarmed\Ninto areas like this one,
Dialogue: 0,2:39:38.13,2:39:40.70,Default,,0000,0000,0000,,offering all kinds of alluring deals.
Dialogue: 0,2:40:19.79,2:40:24.35,Default,,0000,0000,0000,,Because so many of the new borrowers\Nhad patchy credit histories,
Dialogue: 0,2:40:42.30,2:40:45.62,Default,,0000,0000,0000,,these loans came to be known\Nas ''sub-prime''.
Dialogue: 0,2:41:44.16,2:41:47.94,Default,,0000,0000,0000,,That made you a perfect candidate\Nfor a NlNJ A loan.
Dialogue: 0,2:42:11.72,2:42:15.47,Default,,0000,0000,0000,,The problem was that behind\Nlow introductory payments,
Dialogue: 0,2:42:26.66,2:42:30.75,Default,,0000,0000,0000,,these new mortgage loans\Nwere very different from the old,
Dialogue: 0,2:42:47.90,2:42:51.28,Default,,0000,0000,0000,,30-year fixed-rate repayment loans\Nof the past.
Dialogue: 0,2:43:00.53,2:43:01.69,Default,,0000,0000,0000,,Since the 1980s,
Dialogue: 0,2:43:13.36,2:43:18.64,Default,,0000,0000,0000,,the housing game has radicaIIy changed\Nthroughout the EngIish-speaking worId.
Dialogue: 0,2:43:36.09,2:43:39.37,Default,,0000,0000,0000,,Mortgages are for shorter\Nand shorter durations
Dialogue: 0,2:43:51.23,2:43:55.91,Default,,0000,0000,0000,,and more and more borrowers are\Nopting for interest-onIy mortgages.
Dialogue: 0,2:44:11.43,2:44:16.93,Default,,0000,0000,0000,,That makes househoIds far more sensitive\Nthan they were to interest-rate hikes.
Dialogue: 0,2:44:41.94,2:44:46.72,Default,,0000,0000,0000,,So how come the lenders didn't worry\Nthat these sub-prime borrowers
Dialogue: 0,2:45:03.82,2:45:07.62,Default,,0000,0000,0000,,were almost certain to default\Nif interest rates rose?
Dialogue: 0,2:45:24.44,2:45:26.36,Default,,0000,0000,0000,,The answer to that question
Dialogue: 0,2:45:38.96,2:45:43.33,Default,,0000,0000,0000,,and the key to the sub-prime crisis\Nwas another ''S'' word...
Dialogue: 0,2:46:48.18,2:46:51.27,Default,,0000,0000,0000,,Instead of putting\Ntheir own money at risk,
Dialogue: 0,2:47:01.22,2:47:04.55,Default,,0000,0000,0000,,sub-prime Ienders\NimmediateIy soId the Ioans on
Dialogue: 0,2:47:17.63,2:47:20.54,Default,,0000,0000,0000,,to banks here, in and around WaII Street.
Dialogue: 0,2:47:29.41,2:47:32.33,Default,,0000,0000,0000,,And the banks then\Nsecuritized the Ioans,
Dialogue: 0,2:47:44.35,2:47:49.20,Default,,0000,0000,0000,,which means they bundIed them\Ntogether and then sIiced and diced them
Dialogue: 0,2:48:04.97,2:48:07.11,Default,,0000,0000,0000,,so that at Ieast the top tier
Dialogue: 0,2:48:14.65,2:48:19.52,Default,,0000,0000,0000,,couId be cIassified as tripIe-A-rated,\N''investment grade'' securities.
Dialogue: 0,2:48:36.95,2:48:42.85,Default,,0000,0000,0000,,And the banks then soId these securities\Nto investors 1 ,000 miIes away from Detroit
Dialogue: 0,2:48:59.25,2:49:00.81,Default,,0000,0000,0000,,who were happy to pay
Dialogue: 0,2:49:09.98,2:49:14.65,Default,,0000,0000,0000,,for just a few extra hundredths\Nof a percentage point in interest.
Dialogue: 0,2:49:55.64,2:49:58.62,Default,,0000,0000,0000,,The key to securitization\Nwas the distance
Dialogue: 0,2:50:13.31,2:50:16.65,Default,,0000,0000,0000,,between the mortgage borrowers\Nin, say, Detroit,
Dialogue: 0,2:50:28.25,2:50:32.58,Default,,0000,0000,0000,,and the people who ended up\Nreceiving their interest payments.
Dialogue: 0,2:50:48.45,2:50:52.54,Default,,0000,0000,0000,,By the time small towns in Norway\Nbought these securities,
Dialogue: 0,2:51:05.91,2:51:09.94,Default,,0000,0000,0000,,they had no idea what was\Nreally behind their investment.
Dialogue: 0,2:51:40.41,2:51:41.64,Default,,0000,0000,0000,,FinanciaI aIchemy?
Dialogue: 0,2:51:49.25,2:51:52.99,Default,,0000,0000,0000,,WeII, it was a business modeI\Nthat worked beautifuIIy
Dialogue: 0,2:52:06.50,2:52:10.82,Default,,0000,0000,0000,,as Iong as interest rates stayed Iow,\NpeopIe kept their jobs,
Dialogue: 0,2:52:26.07,2:52:28.93,Default,,0000,0000,0000,,and reaI-estate prices continued to rise.
Dialogue: 0,2:53:04.57,2:53:08.44,Default,,0000,0000,0000,,Unfortunately, none of these things\Nhappened in Detroit.
Dialogue: 0,2:53:28.56,2:53:29.60,Default,,0000,0000,0000,,ln 2006 alone,
Dialogue: 0,2:53:41.39,2:53:45.19,Default,,0000,0000,0000,,sub-prime lenders\Ninjected more than a billion dollars
Dialogue: 0,2:54:03.69,2:54:08.42,Default,,0000,0000,0000,,into those areas of the city\Nwhere home values were already falling
Dialogue: 0,2:54:27.47,2:54:31.34,Default,,0000,0000,0000,,and unemployment and mortgage rates\Nwere already rising.
Dialogue: 0,2:55:02.39,2:55:05.61,Default,,0000,0000,0000,,Where Detroit led,\Nother cities soon followed.
Dialogue: 0,2:56:31.60,2:56:33.17,Default,,0000,0000,0000,,MEN READ OUT ADDRESSES
Dialogue: 0,2:57:00.21,2:57:04.63,Default,,0000,0000,0000,,It's Thursday at noon\Nand I'm witnessing a twice-daiIy rituaI
Dialogue: 0,2:57:26.72,2:57:29.87,Default,,0000,0000,0000,,here on the steps\Nof the Memphis Courthouse.
Dialogue: 0,2:57:41.66,2:57:46.55,Default,,0000,0000,0000,,About 30 homes are about to be\Nauctioned off here, and the reason is
Dialogue: 0,2:58:01.86,2:58:05.96,Default,,0000,0000,0000,,that the mortgage Ienders have forecIosed\Non the homeowners
Dialogue: 0,2:58:18.90,2:58:22.58,Default,,0000,0000,0000,,for faiIing to keep up\Nwith their interest payments.
Dialogue: 0,2:58:32.79,2:58:34.72,Default,,0000,0000,0000,,2926 South Radford Avenue...
Dialogue: 0,2:58:44.57,2:58:48.38,Default,,0000,0000,0000,,Memphis is reaIIy becoming\NForecIosure City these days.
Dialogue: 0,2:59:06.45,2:59:10.77,Default,,0000,0000,0000,,In the past five years,\Nsomething Iike one in four househoIds
Dialogue: 0,2:59:22.86,2:59:26.73,Default,,0000,0000,0000,,has received a notice\Nthreatening them with forecIosure.
Dialogue: 0,2:59:50.42,2:59:54.27,Default,,0000,0000,0000,,Since the sub-prime mortgage market\Nbegan to turn sour
Dialogue: 0,3:00:10.83,3:00:14.98,Default,,0000,0000,0000,,in the early summer of 2007,\Nshockwaves have been spreading
Dialogue: 0,3:00:31.24,3:00:34.16,Default,,0000,0000,0000,,through all the world's financial markets,
Dialogue: 0,3:00:41.13,3:00:45.42,Default,,0000,0000,0000,,wiping out hedge funds,\Nobliterating venerable investment banks
Dialogue: 0,3:01:00.06,3:01:04.10,Default,,0000,0000,0000,,and costing the survivors\Nhundreds of billions of dollars.
Dialogue: 0,3:01:38.56,3:01:42.82,Default,,0000,0000,0000,,Remember that pillar of the 1 930s\NNew Deal mortgage market,
Dialogue: 0,3:02:00.87,3:02:01.68,Default,,0000,0000,0000,,Fannie Mae?
Dialogue: 0,3:02:08.86,3:02:13.53,Default,,0000,0000,0000,,With its younger brother, Freddie Mac,\Nit grew to own or guarantee
Dialogue: 0,3:02:30.74,3:02:33.48,Default,,0000,0000,0000,,around half of all American home loans.
Dialogue: 0,3:02:45.05,3:02:47.62,Default,,0000,0000,0000,,ln September 2008, Fannie and Freddie
Dialogue: 0,3:03:03.56,3:03:05.50,Default,,0000,0000,0000,,were effectively nationalised
Dialogue: 0,3:03:14.29,3:03:17.97,Default,,0000,0000,0000,,to avoid a complete collapse\Nof the mortgage market.
Dialogue: 0,3:03:32.18,3:03:36.58,Default,,0000,0000,0000,,Established Wall Street names\Nlike Bear Stearns, Lehman Brothers
Dialogue: 0,3:03:59.32,3:04:01.54,Default,,0000,0000,0000,,and Merrill Lynch have vanished.
Dialogue: 0,3:04:11.94,3:04:16.74,Default,,0000,0000,0000,,Unlike savings and loans, this crisis\Nextends right around the world.
Dialogue: 0,3:04:39.29,3:04:44.40,Default,,0000,0000,0000,,The four Norwegian municipalities of Rana,\NHemnes, Hattfjelldal and Narvik,
Dialogue: 0,3:05:10.43,3:05:15.41,Default,,0000,0000,0000,,which had invested their citizens' taxes\Nin sub-prime backed securities,
Dialogue: 0,3:05:33.57,3:05:39.16,Default,,0000,0000,0000,,are now sitting on an investment worth\Nroughly 1 5% of what they paid for it -
Dialogue: 0,3:05:58.19,3:05:59.98,Default,,0000,0000,0000,,a loss of $1 00 million.
Dialogue: 0,3:06:31.43,3:06:33.53,Default,,0000,0000,0000,,In the EngIish-speaking worId,
Dialogue: 0,3:06:41.11,3:06:44.53,Default,,0000,0000,0000,,we tend to think of property\Nas a one-way bet.
Dialogue: 0,3:06:56.26,3:07:00.81,Default,,0000,0000,0000,,The simpIest way of getting rich\Nis to pIay the property market.
Dialogue: 0,3:07:14.35,3:07:18.88,Default,,0000,0000,0000,,In fact, you'd be a mug\Nto invest your money in anything eIse.
Dialogue: 0,3:07:43.81,3:07:47.56,Default,,0000,0000,0000,,But the remarkable thing\Nabout this supposed ''truth''
Dialogue: 0,3:08:01.06,3:08:03.79,Default,,0000,0000,0000,,is how often reality gives it the lie.
Dialogue: 0,3:08:23.57,3:08:27.13,Default,,0000,0000,0000,,For like stock markets,\Nproperty can soar in value
Dialogue: 0,3:08:43.98,3:08:47.01,Default,,0000,0000,0000,,only to crash\Nin the most spectacular way.
Dialogue: 0,3:09:19.33,3:09:21.94,Default,,0000,0000,0000,,ln Britain, between 1 989 and 1 995,
Dialogue: 0,3:09:40.37,3:09:43.04,Default,,0000,0000,0000,,the average house price fell by 1 8%.
Dialogue: 0,3:10:15.29,3:10:19.73,Default,,0000,0000,0000,,But that was nothing compared\Nwith what happened here in Japan.
Dialogue: 0,3:11:22.83,3:11:24.04,Default,,0000,0000,0000,,The view's good.
Dialogue: 0,3:11:33.56,3:11:36.59,Default,,0000,0000,0000,,Very Austin Powers decor.\NI'm Ioving that.
Dialogue: 0,3:12:04.70,3:12:06.32,Default,,0000,0000,0000,,Oh, that's the boiIer.
Dialogue: 0,3:12:21.95,3:12:24.38,Default,,0000,0000,0000,,OK, weII, Iet's cut to the chase.
Dialogue: 0,3:12:32.47,3:12:37.23,Default,,0000,0000,0000,,How much is this pIace going to cost\Nif I put the money down now?
Dialogue: 0,3:12:55.82,3:12:56.87,Default,,0000,0000,0000,,SPEAKS JAPANESE
Dialogue: 0,3:13:03.40,3:13:06.07,Default,,0000,0000,0000,,So that wouId be cIose to $2 miIIion.
Dialogue: 0,3:13:16.86,3:13:18.89,Default,,0000,0000,0000,,OK, that's Iike a miIIion...
Dialogue: 0,3:13:26.33,3:13:30.24,Default,,0000,0000,0000,,a miIIion pounds buys me\Nthis bijou apartment in Tokyo.
Dialogue: 0,3:13:53.89,3:13:56.75,Default,,0000,0000,0000,,But this is a smart neighbourhood, right?
Dialogue: 0,3:14:15.14,3:14:20.79,Default,,0000,0000,0000,,That may sound like a lot, but in recent\NJapanese history, it's a real bargain.
Dialogue: 0,3:15:04.37,3:15:06.16,Default,,0000,0000,0000,,Between 1 985 and 1 990,
Dialogue: 0,3:15:18.47,3:15:22.67,Default,,0000,0000,0000,,property prices in Japan rose\Nby a factor of roughly three.
Dialogue: 0,3:15:36.35,3:15:39.56,Default,,0000,0000,0000,,Banks fell over themselves\Nto ride this wave.
Dialogue: 0,3:16:27.06,3:16:29.95,Default,,0000,0000,0000,,But it wasn't a wave.\Nlt was a bubble.
Dialogue: 0,3:16:54.62,3:16:56.29,Default,,0000,0000,0000,,And in 1 990 it burst.
Dialogue: 0,3:17:20.29,3:17:22.27,Default,,0000,0000,0000,,Prices here in Tokyo fell...
Dialogue: 0,3:17:41.96,3:17:45.22,Default,,0000,0000,0000,,..by 7 5%,\Nwiping out all the previous gains.
Dialogue: 0,3:18:17.52,3:18:19.38,Default,,0000,0000,0000,,This costs Ł1 miIIion now.
Dialogue: 0,3:18:28.25,3:18:33.31,Default,,0000,0000,0000,,How much did it cost back in 1990,\Nat the peak of the property bubbIe?
Dialogue: 0,3:18:54.76,3:18:58.26,Default,,0000,0000,0000,,- So roughIy three times the vaIue.\N- Three times?
Dialogue: 0,3:19:14.74,3:19:17.13,Default,,0000,0000,0000,,So cIose to...possibIy $6 miIIion.
Dialogue: 0,3:19:31.36,3:19:32.52,Default,,0000,0000,0000,,Ł3 miIIion. Wow!
Dialogue: 0,3:19:41.04,3:19:47.03,Default,,0000,0000,0000,,We think we've had a property crash in the\NWest, but this is a reaI property crash.
Dialogue: 0,3:20:44.37,3:20:47.87,Default,,0000,0000,0000,,So no, property isn't\Na uniqueIy safe investment.
Dialogue: 0,3:21:08.36,3:21:11.26,Default,,0000,0000,0000,,House prices can go down\Nas weII as up.
Dialogue: 0,3:21:24.35,3:21:27.56,Default,,0000,0000,0000,,And as assets go,\Nhouses are pretty iIIiquid,
Dialogue: 0,3:21:40.34,3:21:45.92,Default,,0000,0000,0000,,which means you can't unIoad them in\Na hurry if you get into a financiaI jam.
Dialogue: 0,3:22:04.11,3:22:06.79,Default,,0000,0000,0000,,And that, pretty much, is the downside
Dialogue: 0,3:22:15.68,3:22:18.77,Default,,0000,0000,0000,,of the idea\Nof a property-owning democracy.
Dialogue: 0,3:22:31.88,3:22:35.21,Default,,0000,0000,0000,,The question now\Nis whether we EngIish-speakers
Dialogue: 0,3:22:49.34,3:22:54.36,Default,,0000,0000,0000,,have any business trying to export\Nour modeI to the rest of the worId.
Dialogue: 0,3:23:48.04,3:23:53.42,Default,,0000,0000,0000,,The real flaw in the property-owning\Ndemocracy, as recent events have proved,
Dialogue: 0,3:24:14.56,3:24:20.16,Default,,0000,0000,0000,,is that the housing market, like any asset\Nmarket, is prone to booms and busts.
Dialogue: 0,3:24:41.91,3:24:45.76,Default,,0000,0000,0000,,But maybe there's another\Nway of looking at property -
Dialogue: 0,3:25:06.52,3:25:08.96,Default,,0000,0000,0000,,as a means of unlocking new wealth
Dialogue: 0,3:25:17.04,3:25:20.51,Default,,0000,0000,0000,,by providing collateral\Nfor aspiring entrepreneurs.
Dialogue: 0,3:25:47.34,3:25:51.14,Default,,0000,0000,0000,,Could property ownership be\Nthe answer to the problems
Dialogue: 0,3:26:03.96,3:26:06.29,Default,,0000,0000,0000,,of the world's poorest countries?
Dialogue: 0,3:26:28.100,3:26:34.37,Default,,0000,0000,0000,,You've heard of sub-prime borrowers.\NWell, welcome to a sub-prime country...
Dialogue: 0,3:27:02.24,3:27:05.19,Default,,0000,0000,0000,,..Argentina,\Nwhere economic underachievement
Dialogue: 0,3:27:27.28,3:27:29.100,Default,,0000,0000,0000,,has been a way of life for a century.
Dialogue: 0,3:28:05.15,3:28:09.76,Default,,0000,0000,0000,,These slums on the outskirts\Nof Buenos Aires seem a million miles
Dialogue: 0,3:28:26.82,3:28:31.15,Default,,0000,0000,0000,,from the elegant boulevards\Nof the Argentine capital's centre.
Dialogue: 0,3:28:53.75,3:28:57.24,Default,,0000,0000,0000,,But are people here\Nreally as poor as they look?
Dialogue: 0,3:29:20.05,3:29:21.96,Default,,0000,0000,0000,,One man didn't believe so.
Dialogue: 0,3:29:35.20,3:29:40.18,Default,,0000,0000,0000,,Peruvian economist Hernando de Soto\Nsaw the shabby residences like these
Dialogue: 0,3:30:05.07,3:30:09.11,Default,,0000,0000,0000,,in developing countries all over the world\Nas representing
Dialogue: 0,3:30:21.48,3:30:25.06,Default,,0000,0000,0000,,literally trillions of dollars\Nof unrealised wealth.
Dialogue: 0,3:31:03.98,3:31:07.24,Default,,0000,0000,0000,,The probIem is\Nthat the peopIe who Iive here,
Dialogue: 0,3:31:17.87,3:31:21.20,Default,,0000,0000,0000,,and in countIess shanty towns\Naround the worId,
Dialogue: 0,3:31:32.38,3:31:35.64,Default,,0000,0000,0000,,don't have secure IegaI titIe\Nto their homes.
Dialogue: 0,3:31:49.64,3:31:53.49,Default,,0000,0000,0000,,That's bad, because without\Na IegaI titIe to property,
Dialogue: 0,3:32:07.52,3:32:10.95,Default,,0000,0000,0000,,you can't use it as coIIateraI\Nto borrow money.
Dialogue: 0,3:32:23.30,3:32:25.50,Default,,0000,0000,0000,,And if you can't borrow money,
Dialogue: 0,3:32:32.98,3:32:38.05,Default,,0000,0000,0000,,then you can't possibIy raise the capitaI\Nyou need to start a business.
Dialogue: 0,3:33:10.43,3:33:15.80,Default,,0000,0000,0000,,Part of the trouble is that in poor\Ncountries, it's a bureaucratic nightmare
Dialogue: 0,3:33:37.99,3:33:41.09,Default,,0000,0000,0000,,to establish secure legal title\Nto property.
Dialogue: 0,3:33:55.45,3:34:01.07,Default,,0000,0000,0000,,lt can take months - sometimes years -\Nlonger than in the English-speaking world.
Dialogue: 0,3:34:19.23,3:34:20.74,Default,,0000,0000,0000,,For Hernando de Soto,
Dialogue: 0,3:34:29.33,3:34:32.90,Default,,0000,0000,0000,,breathing financiaI Iife\Ninto aII this dead capitaI
Dialogue: 0,3:34:46.37,3:34:50.86,Default,,0000,0000,0000,,is the key to providing the poor\Nwith a more prosperous future.
Dialogue: 0,3:35:41.91,3:35:46.82,Default,,0000,0000,0000,,The shanty town of Quilmes,\Non the southern outskirts of Buenos Aires,
Dialogue: 0,3:36:06.11,3:36:10.02,Default,,0000,0000,0000,,provides a natural experiment\Nto test De Soto's theory.
Dialogue: 0,3:36:37.04,3:36:42.91,Default,,0000,0000,0000,,On one side of the town, there are some\Nof the most squalid slums l've ever seen.
Dialogue: 0,3:37:10.70,3:37:14.71,Default,,0000,0000,0000,,But just a few miles away,\Nit's a very different story.
Dialogue: 0,3:37:45.84,3:37:49.90,Default,,0000,0000,0000,,It was in the earIy 1980s\Nthat a group of squatters here
Dialogue: 0,3:38:04.35,3:38:08.62,Default,,0000,0000,0000,,Iobbied the government\Nfor secure IegaI titIe to their homes.
Dialogue: 0,3:38:28.97,3:38:34.64,Default,,0000,0000,0000,,They were successfuI, and those wiIIing\Nto pay a nominaI rent were granted Ieases
Dialogue: 0,3:38:50.22,3:38:53.90,Default,,0000,0000,0000,,which, after 20 years,\Nconverted into fuII ownership.
Dialogue: 0,3:39:08.31,3:39:13.31,Default,,0000,0000,0000,,You can teII they're owner-occupied\Nby the fact that there's a fence,
Dialogue: 0,3:39:26.82,3:39:31.43,Default,,0000,0000,0000,,the waIIs are painted,\Nthere's even a rather excitabIe guard dog.
Dialogue: 0,3:39:48.92,3:39:53.66,Default,,0000,0000,0000,,After aII, owners tend to Iook after\Nproperties better than tenants.
Dialogue: 0,3:40:12.06,3:40:14.03,Default,,0000,0000,0000,,And some of the owners here
Dialogue: 0,3:40:21.74,3:40:27.17,Default,,0000,0000,0000,,are even reaIising the vaIue of their\Nproperties by putting them up for saIe.
Dialogue: 0,3:40:57.71,3:41:02.77,Default,,0000,0000,0000,,Yet there seems to be a flaw in\Nthe theory, for owning their own homes
Dialogue: 0,3:41:25.91,3:41:30.70,Default,,0000,0000,0000,,hasn't made it significantly easier\Nfor people here to borrow money.
Dialogue: 0,3:41:53.47,3:41:57.08,Default,,0000,0000,0000,,Just 4% of them\Nhave managed to secure a mortgage.
Dialogue: 0,3:42:13.88,3:42:18.32,Default,,0000,0000,0000,,The reaIity is that owning property\Ndoesn't give you security -
Dialogue: 0,3:42:35.34,3:42:37.97,Default,,0000,0000,0000,,it just gives your creditors security.
Dialogue: 0,3:42:49.22,3:42:52.20,Default,,0000,0000,0000,,ReaI security comes\Nfrom having an income,
Dialogue: 0,3:43:04.79,3:43:08.35,Default,,0000,0000,0000,,as the Duke of Buckingham\Ndiscovered in the 1840s,
Dialogue: 0,3:43:20.57,3:43:23.62,Default,,0000,0000,0000,,as Detroit homeowners\Nare discovering today,
Dialogue: 0,3:43:34.67,3:43:38.93,Default,,0000,0000,0000,,and as I suspect the peopIe of QuiImes\NwouId probabIy agree.
Dialogue: 0,3:43:51.92,3:43:55.07,Default,,0000,0000,0000,,For that reason,\Nit probabIy isn't necessary
Dialogue: 0,3:44:06.02,3:44:11.74,Default,,0000,0000,0000,,for every entrepreneur in the deveIoping\NworId to take out a mortgage on his home
Dialogue: 0,3:44:30.00,3:44:32.38,Default,,0000,0000,0000,,or, for that matter, on her home.
Dialogue: 0,3:44:40.94,3:44:46.25,Default,,0000,0000,0000,,In fact, property ownership may not be\Nthe key to weaIth-generation at aII.
Dialogue: 0,3:46:10.15,3:46:11.66,Default,,0000,0000,0000,,This is Betty Flores.
Dialogue: 0,3:46:26.98,3:46:29.88,Default,,0000,0000,0000,,She runs a small coffee shop in El Alto,
Dialogue: 0,3:46:43.81,3:46:47.13,Default,,0000,0000,0000,,a poor suburb of the Bolivian capital,\NLa Paz.
Dialogue: 0,3:46:57.49,3:47:02.45,Default,,0000,0000,0000,,Betty is one of an increasingly large\Nnumber of women around the world
Dialogue: 0,3:47:24.21,3:47:27.65,Default,,0000,0000,0000,,who have borrowed money\Nwith no security at all.
Dialogue: 0,3:47:43.78,3:47:45.52,Default,,0000,0000,0000,,She's the personification
Dialogue: 0,3:47:56.61,3:48:01.07,Default,,0000,0000,0000,,of an extraordinary new financial movement\Nknown as microfinance.
Dialogue: 0,3:48:27.75,3:48:31.59,Default,,0000,0000,0000,,Did you borrow the money\Nto set up this coffee stand?
Dialogue: 0,3:48:48.16,3:48:49.51,Default,,0000,0000,0000,,COMPANION TRANSLATES
Dialogue: 0,3:49:14.46,3:49:16.02,Default,,0000,0000,0000,,SHE REPLIES IN SPANISH
Dialogue: 0,3:49:27.50,3:49:32.28,Default,,0000,0000,0000,,Yes, to make the...the stand.\NShe borrowed money to make the stand.
Dialogue: 0,3:49:54.85,3:49:56.70,Default,,0000,0000,0000,,Has she paid it aII back?
Dialogue: 0,3:50:15.05,3:50:18.70,Default,,0000,0000,0000,,- She's paid it off a Iong time ago.\N- Oh, I see.
Dialogue: 0,3:50:50.40,3:50:54.54,Default,,0000,0000,0000,,Stories Iike Betty's point\Nto one of the great reveIations
Dialogue: 0,3:51:09.54,3:51:13.40,Default,,0000,0000,0000,,of the microfinance movement\Nin a country Iike BoIivia.
Dialogue: 0,3:51:24.69,3:51:29.47,Default,,0000,0000,0000,,It turns out that women are actuaIIy\Na better credit risk than men,
Dialogue: 0,3:51:44.89,3:51:48.38,Default,,0000,0000,0000,,with or without a home\Nas security for the Ioan.
Dialogue: 0,3:52:01.72,3:52:05.80,Default,,0000,0000,0000,,It aII rather fIies in the face\Nof the conventionaI image
Dialogue: 0,3:52:18.13,3:52:19.94,Default,,0000,0000,0000,,of the spendthrift femaIe.
Dialogue: 0,3:52:43.38,3:52:47.88,Default,,0000,0000,0000,,These women are hardly what\Nyou would call good financial risks.
Dialogue: 0,3:53:06.10,3:53:09.72,Default,,0000,0000,0000,,They probably have\Njust a few dollars between them.
Dialogue: 0,3:53:25.67,3:53:30.28,Default,,0000,0000,0000,,Yet with no security, they are being\Nlent money. Here in Bolivia,
Dialogue: 0,3:53:50.91,3:53:52.89,Default,,0000,0000,0000,,lenders have come to realise
Dialogue: 0,3:54:04.59,3:54:08.27,Default,,0000,0000,0000,,that creditworthiness\Nmay in fact be a female trait.
Dialogue: 0,3:54:35.73,3:54:37.94,Default,,0000,0000,0000,,Carmen Velasco set up Pro Mujer
Dialogue: 0,3:54:53.40,3:54:56.91,Default,,0000,0000,0000,,to provide finance\Nto poor but enterprising women.
Dialogue: 0,3:55:15.91,3:55:19.01,Default,,0000,0000,0000,,Because the loans\Nare unsecured by property,
Dialogue: 0,3:55:33.80,3:55:38.51,Default,,0000,0000,0000,,the challenge is to get the women\Nto pay them back...but they do.
Dialogue: 0,3:55:55.05,3:55:59.70,Default,,0000,0000,0000,,From day one, they have to know\Nthat they have to repay on time,
Dialogue: 0,3:56:19.66,3:56:23.39,Default,,0000,0000,0000,,that they have interest rates\Nand they have to save.
Dialogue: 0,3:56:39.44,3:56:44.62,Default,,0000,0000,0000,,So it's a process of Iearning,\Nand at the beginning it's very difficuIt,
Dialogue: 0,3:57:01.95,3:57:05.21,Default,,0000,0000,0000,,because they are not used to\NhandIing a Ioan.
Dialogue: 0,3:57:15.21,3:57:21.09,Default,,0000,0000,0000,,But IittIe by IittIe, they get used to it,\Nand they feeI so proud when they repay.
Dialogue: 0,3:58:05.70,3:58:10.81,Default,,0000,0000,0000,,I must say, I'm hugeIy impressed\Nby what I'm seeing here at Pro Mujer.
Dialogue: 0,3:58:25.90,3:58:28.63,Default,,0000,0000,0000,,You can sense in this hive of activity
Dialogue: 0,3:58:39.15,3:58:44.25,Default,,0000,0000,0000,,the transformation that microfinance\Nhas brought into these women's Iives.
Dialogue: 0,3:59:05.03,3:59:08.23,Default,,0000,0000,0000,,And behind me\Nyou can see the bottom Iine...
Dialogue: 0,3:59:20.81,3:59:24.20,Default,,0000,0000,0000,,women Iining up\Nto repay their Ioans punctuaIIy.
Dialogue: 0,3:59:41.22,3:59:46.52,Default,,0000,0000,0000,,Maybe it's time to change that oId\Ncatch phrase from ''as safe as houses''
Dialogue: 0,4:00:04.78,4:00:06.82,Default,,0000,0000,0000,,to ''as safe as housewives''.
Dialogue: 0,4:00:25.82,4:00:30.08,Default,,0000,0000,0000,,Of course, it would be a mistake\Nto assume that microfinance
Dialogue: 0,4:00:45.60,4:00:48.28,Default,,0000,0000,0000,,is some kind of economic magic bullet.
Dialogue: 0,4:00:59.28,4:01:04.25,Default,,0000,0000,0000,,Just giving out loans won't necessarily\Nconsign poverty to the museums.
Dialogue: 0,4:01:25.58,4:01:30.12,Default,,0000,0000,0000,,But then, betting everything\Non the house won't do that, either.
Dialogue: 0,4:02:19.02,4:02:21.48,Default,,0000,0000,0000,,Financial illiteracy may be rampant,
Dialogue: 0,4:02:29.74,4:02:34.00,Default,,0000,0000,0000,,but somehow we were all experts\Non one branch of economics -
Dialogue: 0,4:02:50.15,4:02:51.55,Default,,0000,0000,0000,,the property market.
Dialogue: 0,4:03:04.25,4:03:07.50,Default,,0000,0000,0000,,We all knew\Nthat property was a one-way bet.
Dialogue: 0,4:03:32.86,4:03:34.48,Default,,0000,0000,0000,,Except that it wasn't.
Dialogue: 0,4:04:02.53,4:04:06.74,Default,,0000,0000,0000,,All over the world, it seems,\Nproperty prices are falling...
Dialogue: 0,4:04:34.51,4:04:36.38,Default,,0000,0000,0000,,..from Memphis to Santiago,
Dialogue: 0,4:04:53.66,4:04:55.28,Default,,0000,0000,0000,,from London to La Paz.
Dialogue: 0,4:05:14.90,4:05:17.84,Default,,0000,0000,0000,,Encouraging home ownership\Nmay weII create
Dialogue: 0,4:05:31.10,4:05:33.80,Default,,0000,0000,0000,,a poIiticaI constituency for capitaIism.
Dialogue: 0,4:05:45.83,4:05:51.67,Default,,0000,0000,0000,,But it aIso distorts the capitaI market by\Npersuading peopIe to bet the house on...
Dialogue: 0,4:06:12.13,4:06:13.29,Default,,0000,0000,0000,,weII, the house.
Dialogue: 0,4:06:22.02,4:06:24.76,Default,,0000,0000,0000,,PeopIe need to borrow money, of course,
Dialogue: 0,4:06:33.80,4:06:37.36,Default,,0000,0000,0000,,to start up businesses\Nor to buy expensive assets.
Dialogue: 0,4:06:50.42,4:06:54.57,Default,,0000,0000,0000,,But it seems dangerous to Iure them\Ninto staking everything
Dialogue: 0,4:07:07.89,4:07:10.86,Default,,0000,0000,0000,,on the far from risk-free property market.
Dialogue: 0,4:07:22.19,4:07:25.65,Default,,0000,0000,0000,,From Buckinghamshire to BoIivia\Nto bonny ScotIand,
Dialogue: 0,4:07:41.76,4:07:46.25,Default,,0000,0000,0000,,the key is to strike the right baIance\Nbetween debt and income.
Dialogue: 0,4:08:02.17,4:08:06.60,Default,,0000,0000,0000,,And next week I'II be suggesting\Nthat the entire worId economy
Dialogue: 0,0:00:14.87,0:00:19.01,Default,,0000,0000,0000,,ln our time, we've witnessed\Nthe zenith of global finance.
Dialogue: 0,0:00:48.11,0:00:53.31,Default,,0000,0000,0000,,ln 2006, the world's total economic\Noutput was worth around $47 trillion -
Dialogue: 0,0:01:21.99,0:01:24.42,Default,,0000,0000,0000,,that's 47 followed by 1 2 zeroes.
Dialogue: 0,0:01:48.29,0:01:51.26,Default,,0000,0000,0000,,The total value of stock\Nand bond markets
Dialogue: 0,0:02:03.86,0:02:07.82,Default,,0000,0000,0000,,was roughly $1 1 9 trillion -\Nmore than twice the size.
Dialogue: 0,0:02:31.63,0:02:36.19,Default,,0000,0000,0000,,And the amount outstanding\Nof the strange new financial life form
Dialogue: 0,0:02:49.93,0:02:54.08,Default,,0000,0000,0000,,known as derivatives\Nwas $47 3 trillion - ten times larger.
Dialogue: 0,0:03:40.64,0:03:46.35,Default,,0000,0000,0000,,By the summer of 2007, it seemed as if\Nthe Earth had turned into Planet Finance.
Dialogue: 0,0:04:07.15,0:04:10.37,Default,,0000,0000,0000,,As never before,\Nthe world was interconnected,
Dialogue: 0,0:04:23.56,0:04:27.47,Default,,0000,0000,0000,,but not just by cabIes,\Ncontainer ships and jet pIanes.
Dialogue: 0,0:04:46.28,0:04:50.26,Default,,0000,0000,0000,,By 24/7 deaIing rooms\Nand internationaI investment banks.
Dialogue: 0,0:05:15.52,0:05:20.42,Default,,0000,0000,0000,,ln this series, we've seen how\Nthe markets for credit, bonds, stocks,
Dialogue: 0,0:05:35.30,0:05:39.92,Default,,0000,0000,0000,,insurance and real estate all evolved\Nin Europe and North America.
Dialogue: 0,0:06:08.12,0:06:10.84,Default,,0000,0000,0000,,Well, now it's time to tell the story
Dialogue: 0,0:06:18.85,0:06:22.66,Default,,0000,0000,0000,,of how those financial innovations\Nconquered the world.
Dialogue: 0,0:06:41.16,0:06:44.32,Default,,0000,0000,0000,,This is the story\Nof financial globalisation.
Dialogue: 0,0:07:24.28,0:07:27.98,Default,,0000,0000,0000,,Globalisation is something\Nwe take for granted today.
Dialogue: 0,0:07:40.28,0:07:44.36,Default,,0000,0000,0000,,And yet for all the advantages\Nof an interconnected world,
Dialogue: 0,0:07:58.79,0:08:03.72,Default,,0000,0000,0000,,perfectIy exempIified by Hong Kong's\Nastonishing humming container port,
Dialogue: 0,0:08:26.56,0:08:31.30,Default,,0000,0000,0000,,there's a downside to gIobaIisation,\Nand that is its vuInerabiIity -
Dialogue: 0,0:08:45.92,0:08:51.31,Default,,0000,0000,0000,,its vuInerabiIity to financiaI shocks,\Nbecause finance isn't an exact science,
Dialogue: 0,0:09:09.90,0:09:15.17,Default,,0000,0000,0000,,and its vuInerabiIity to poIiticaI forces\Nbeyond the controI of the bankers.
Dialogue: 0,0:09:51.35,0:09:54.44,Default,,0000,0000,0000,,The ascent of money\Nhas seldom been smooth.
Dialogue: 0,0:10:07.55,0:10:12.04,Default,,0000,0000,0000,,Time and again, it's been punctuated\Nby big and painful crises.
Dialogue: 0,0:10:50.05,0:10:53.43,Default,,0000,0000,0000,,Just ten years ago,\Nit seemed that these crises
Dialogue: 0,0:11:06.04,0:11:10.24,Default,,0000,0000,0000,,were more likely to blow up\Nin emerging markets, like Asia.
Dialogue: 0,0:11:32.13,0:11:37.36,Default,,0000,0000,0000,,Yet today, it's the West that's caught up\Nin a full-blown credit crunch,
Dialogue: 0,0:12:00.95,0:12:03.93,Default,,0000,0000,0000,,while Asia seems\Nscarcely to have noticed.
Dialogue: 0,0:12:19.05,0:12:23.43,Default,,0000,0000,0000,,lndeed, a new phenomenon\Nhas come to define the world economy.
Dialogue: 0,0:12:43.45,0:12:47.37,Default,,0000,0000,0000,,American borrowers have come\Nto rely on Chinese savers -
Dialogue: 0,0:13:03.86,0:13:09.14,Default,,0000,0000,0000,,a symbiotic relationship between China\Nand America that l call ''Chimerica''.
Dialogue: 0,0:13:32.69,0:13:35.83,Default,,0000,0000,0000,,But can we be sure\Nthat Chimerica will save
Dialogue: 0,0:13:49.73,0:13:52.19,Default,,0000,0000,0000,,this era of financial globalisation?
Dialogue: 0,0:14:04.67,0:14:08.17,Default,,0000,0000,0000,,The chiIIing reaIity\Nis that a hundred years ago,
Dialogue: 0,0:14:22.34,0:14:28.01,Default,,0000,0000,0000,,another age of financiaI gIobaIisation\Nended not with a whimper, but with a bang.
Dialogue: 0,0:14:52.00,0:14:56.77,Default,,0000,0000,0000,,And there's no reason why that\NshouIdn't happen again in our time.
Dialogue: 0,0:17:16.54,0:17:19.70,Default,,0000,0000,0000,,lt used to be said\Nthat ''emerging markets''
Dialogue: 0,0:17:32.96,0:17:35.77,Default,,0000,0000,0000,,were places where\Nthey have emergencies.
Dialogue: 0,0:17:55.68,0:17:58.95,Default,,0000,0000,0000,,lnvesting in faraway places\Ncan make you rich,
Dialogue: 0,0:18:15.67,0:18:20.91,Default,,0000,0000,0000,,but when things go wrong, it's often\Nbeen a fast track to financial ruin.
Dialogue: 0,0:19:13.74,0:19:18.36,Default,,0000,0000,0000,,That's why many of today's apparently\Nunstoppable emerging markets
Dialogue: 0,0:19:36.04,0:19:38.20,Default,,0000,0000,0000,,are really re-emerging markets.
Dialogue: 0,0:20:34.53,0:20:39.03,Default,,0000,0000,0000,,These days, of course, the uItimate\Nre-emerging market is China.
Dialogue: 0,0:20:52.62,0:20:54.30,Default,,0000,0000,0000,,To taIk to some peopIe,
Dialogue: 0,0:20:59.56,0:21:04.15,Default,,0000,0000,0000,,there's simpIy no Iimit to the amount\Nof money to be made here.
Dialogue: 0,0:21:16.40,0:21:20.18,Default,,0000,0000,0000,,And it's certainIy true\Nthat over the past 20 years,
Dialogue: 0,0:21:30.70,0:21:35.78,Default,,0000,0000,0000,,the mainIand has foIIowed the exampIe\Nset here in Hong Kong, and boomed.
Dialogue: 0,0:21:56.16,0:22:01.76,Default,,0000,0000,0000,,And yet this isn't the first time that\Nforeign investors have piIed into China,
Dialogue: 0,0:22:19.09,0:22:23.53,Default,,0000,0000,0000,,aiming to make megabucks from\Nthe worId's most popuIous nation.
Dialogue: 0,0:22:36.98,0:22:38.31,Default,,0000,0000,0000,,And the Iast time,
Dialogue: 0,0:22:44.55,0:22:48.06,Default,,0000,0000,0000,,those foreign investors\NIost aImost as many shirts
Dialogue: 0,0:23:00.33,0:23:04.35,Default,,0000,0000,0000,,as the IocaI taiIors here\Ncan stitch together in a week.
Dialogue: 0,0:23:37.78,0:23:41.58,Default,,0000,0000,0000,,The key problem with overseas\Ninvestment, then as now,
Dialogue: 0,0:23:55.87,0:23:59.93,Default,,0000,0000,0000,,is that it's hard for an investor\Nin London or New York
Dialogue: 0,0:24:15.23,0:24:19.01,Default,,0000,0000,0000,,to see what a foreign government\Nor company is up to
Dialogue: 0,0:24:32.06,0:24:34.67,Default,,0000,0000,0000,,when they're an ocean or more apart.
Dialogue: 0,0:24:44.68,0:24:48.66,Default,,0000,0000,0000,,lf the foreign borrower\Ndecides to default on its debts,
Dialogue: 0,0:25:01.10,0:25:02.95,Default,,0000,0000,0000,,what's an investor to do?
Dialogue: 0,0:25:13.51,0:25:17.71,Default,,0000,0000,0000,,The answer before 1 91 4\Nwas brutally simple but effective.
Dialogue: 0,0:26:02.11,0:26:05.02,Default,,0000,0000,0000,,Get your government\Nto send in the navy.
Dialogue: 0,0:26:23.36,0:26:26.30,Default,,0000,0000,0000,,By guaranteeing European\Npolitical control,
Dialogue: 0,0:26:42.30,0:26:46.36,Default,,0000,0000,0000,,gunboat diplomacy provided\Nreassurance for British investors
Dialogue: 0,0:27:01.23,0:27:05.03,Default,,0000,0000,0000,,even at the remotest extremities\Nof the world economy.
Dialogue: 0,0:27:44.15,0:27:46.72,Default,,0000,0000,0000,,The Royal Navy provided the firepower
Dialogue: 0,0:27:59.30,0:28:02.70,Default,,0000,0000,0000,,that underwrote the first age\Nof globalisation...
Dialogue: 0,0:28:21.81,0:28:23.15,Default,,0000,0000,0000,,..and its pioneers,
Dialogue: 0,0:28:30.86,0:28:33.85,Default,,0000,0000,0000,,like William Jardine...\Nand James Matheson.
Dialogue: 0,0:29:06.84,0:29:09.89,Default,,0000,0000,0000,,Jardine and Matheson\Nwere buccaneering Scots
Dialogue: 0,0:29:22.83,0:29:28.53,Default,,0000,0000,0000,,who'd set up a trading company in the\Nsouthern Chinese port of Canton in 1 832.
Dialogue: 0,0:30:02.59,0:30:05.13,Default,,0000,0000,0000,,Not to put too fine a point on it,
Dialogue: 0,0:30:16.27,0:30:20.19,Default,,0000,0000,0000,,their most profitable line\Nof business was drug dealing.
Dialogue: 0,0:30:38.15,0:30:42.90,Default,,0000,0000,0000,,They shipped opium produced\Nunder British Government control in lndia
Dialogue: 0,0:31:01.08,0:31:03.47,Default,,0000,0000,0000,,to China's population of addicts -
Dialogue: 0,0:31:13.28,0:31:16.19,Default,,0000,0000,0000,,a trade that China's Emperor\Nhad banned.
Dialogue: 0,0:31:37.48,0:31:41.67,Default,,0000,0000,0000,,On March 1 0th, 1 839,\Nan imperial official named Lin Zexu
Dialogue: 0,0:32:07.78,0:32:12.80,Default,,0000,0000,0000,,arrived in Canton under orders from\Nthe Emperor to stamp out the trade.
Dialogue: 0,0:32:33.23,0:32:36.10,Default,,0000,0000,0000,,He besieged the British\Nopium warehouses,
Dialogue: 0,0:32:47.33,0:32:49.32,Default,,0000,0000,0000,,blocking any further imports.
Dialogue: 0,0:32:58.27,0:33:01.41,Default,,0000,0000,0000,,20,000 chests of opium\Nvalued at Ł2 million
Dialogue: 0,0:33:24.78,0:33:28.23,Default,,0000,0000,0000,,were confiscated\Nand literally thrown in the sea.
Dialogue: 0,0:33:45.61,0:33:49.54,Default,,0000,0000,0000,,Faced with catastrophic losses,\NJardine hurried to London
Dialogue: 0,0:34:07.70,0:34:11.26,Default,,0000,0000,0000,,to lobby the British Government\Nto send a gunboat.
Dialogue: 0,0:34:51.25,0:34:53.70,Default,,0000,0000,0000,,WeII, Jardine got his wish granted.
Dialogue: 0,0:35:01.14,0:35:06.11,Default,,0000,0000,0000,,On August 23rd, 1840, British gunships\NIanded here on Hong Kong IsIand.
Dialogue: 0,0:35:27.23,0:35:30.72,Default,,0000,0000,0000,,The Qing Empire\Nwas about to feeI the fuII force
Dialogue: 0,0:35:44.27,0:35:47.19,Default,,0000,0000,0000,,of history's\Nmost successfuI narco-state.
Dialogue: 0,0:36:23.62,0:36:25.36,Default,,0000,0000,0000,,As Jardine had predicted,
Dialogue: 0,0:36:34.56,0:36:38.46,Default,,0000,0000,0000,,the Royal Navy made short work\Nof the Chinese defences.
Dialogue: 0,0:37:15.37,0:37:18.65,Default,,0000,0000,0000,,With south-western China\Nunder British control,
Dialogue: 0,0:37:30.10,0:37:32.66,Default,,0000,0000,0000,,the opium trade was given free rein.
Dialogue: 0,0:37:46.93,0:37:48.57,Default,,0000,0000,0000,,Drug addiction exploded.
Dialogue: 0,0:37:59.13,0:38:03.34,Default,,0000,0000,0000,,Large tracts of the country\Nslid into rebellion and anarchy.
Dialogue: 0,0:38:29.43,0:38:34.87,Default,,0000,0000,0000,,But for Jardine Matheson, with their head\Noffice now established in Hong Kong,
Dialogue: 0,0:38:51.52,0:38:55.27,Default,,0000,0000,0000,,the glory days of Victorian\Nglobalisation had arrived.
Dialogue: 0,0:39:36.97,0:39:42.12,Default,,0000,0000,0000,,By1 900, the firm had diversified into\Nmore respectable lines of business.
Dialogue: 0,0:40:07.47,0:40:10.85,Default,,0000,0000,0000,,lt had its own breweries,\Nits own cotton mills,
Dialogue: 0,0:40:21.99,0:40:23.80,Default,,0000,0000,0000,,its own insurance company,
Dialogue: 0,0:40:32.93,0:40:37.83,Default,,0000,0000,0000,,and its own railways, like the one\Nthey built from Kowloon to Canton.
Dialogue: 0,0:41:31.63,0:41:36.01,Default,,0000,0000,0000,,Back in 1913, an investor in London\Nhad an extraordinary range
Dialogue: 0,0:41:54.98,0:41:56.68,Default,,0000,0000,0000,,of foreign opportunities,
Dialogue: 0,0:42:02.77,0:42:08.21,Default,,0000,0000,0000,,and nothing iIIustrates that better than\Nthe Iedgers of N M RothschiId & Sons.
Dialogue: 0,0:42:29.28,0:42:31.31,Default,,0000,0000,0000,,Just a singIe page from 1913
Dialogue: 0,0:42:43.59,0:42:47.22,Default,,0000,0000,0000,,Iists no fewer than 20\Ndifferent foreign securities,
Dialogue: 0,0:43:02.94,0:43:07.34,Default,,0000,0000,0000,,incIuding bonds issues by ChiIe,\NEgypt, Germany, Hungary, ItaIy,
Dialogue: 0,0:43:31.56,0:43:34.84,Default,,0000,0000,0000,,not forgetting 1 1 different\NraiIway companies,
Dialogue: 0,0:43:48.81,0:43:53.14,Default,,0000,0000,0000,,incIuding four from Argentina,\Ntwo from Canada and, down here,
Dialogue: 0,0:44:09.85,0:44:12.100,Default,,0000,0000,0000,,the good oId KowIoon to Canton\NraiIway Iine.
Dialogue: 0,0:44:44.14,0:44:48.75,Default,,0000,0000,0000,,For the first time in history,\Nthe world economy was truly united
Dialogue: 0,0:45:08.13,0:45:11.51,Default,,0000,0000,0000,,by a combination of low trade\Nand high finance.
Dialogue: 0,0:45:28.54,0:45:31.70,Default,,0000,0000,0000,,Yet this first era\Nof financial globalisation
Dialogue: 0,0:45:43.89,0:45:49.54,Default,,0000,0000,0000,,was to be brought to a violent halt by\Nthe world's first truly global conflict.
Dialogue: 0,0:46:51.64,0:46:55.59,Default,,0000,0000,0000,,On June 28th, 1 91 4,\Nthe heir to the Austrian throne,
Dialogue: 0,0:47:18.15,0:47:20.14,Default,,0000,0000,0000,,the Archduke Franz Ferdinand,
Dialogue: 0,0:47:29.09,0:47:32.55,Default,,0000,0000,0000,,was assassinated\Nin the Bosnian capital, Sarajevo.
Dialogue: 0,0:47:48.66,0:47:52.12,Default,,0000,0000,0000,,lnitially, financial markets\Nshrugged off the news
Dialogue: 0,0:48:05.28,0:48:08.14,Default,,0000,0000,0000,,as just another bout of Balkan bloodshed.
Dialogue: 0,0:48:34.10,0:48:36.09,Default,,0000,0000,0000,,ln reality, the assassination
Dialogue: 0,0:48:47.78,0:48:52.45,Default,,0000,0000,0000,,had sparked off a chain reaction\Nin the world's financial markets.
Dialogue: 0,0:49:10.71,0:49:15.92,Default,,0000,0000,0000,,As investors belatedly grasped the\Nlikelihood of a full-scale European war,
Dialogue: 0,0:49:36.17,0:49:40.09,Default,,0000,0000,0000,,liquidity - the ability to borrow\Nmoney or sell assets -
Dialogue: 0,0:49:52.58,0:49:58.28,Default,,0000,0000,0000,,was sucked out of the world economy as if\Nthe bottom had dropped out of a bath.
Dialogue: 0,0:50:37.39,0:50:40.74,Default,,0000,0000,0000,,The resulting disruption\Nto international finance
Dialogue: 0,0:50:53.38,0:50:54.97,Default,,0000,0000,0000,,shattered globalisation.
Dialogue: 0,0:51:23.89,0:51:29.03,Default,,0000,0000,0000,,It's absoIuteIy fascinating to foIIow\Nthe outbreak of the First WorId War
Dialogue: 0,0:51:44.93,0:51:48.32,Default,,0000,0000,0000,,through the financiaI pages\Nof the London Times.
Dialogue: 0,0:51:59.03,0:52:03.17,Default,,0000,0000,0000,,It wasn't untiI JuIy 22nd, 191 4,\Nthat anybody appreciated
Dialogue: 0,0:52:29.96,0:52:34.58,Default,,0000,0000,0000,,that the assassination of the\NArchduke Franz Ferdinand in Sarajevo,
Dialogue: 0,0:52:50.100,0:52:55.10,Default,,0000,0000,0000,,three weeks before, might have\Nsome financiaI repercussions.
Dialogue: 0,0:53:12.46,0:53:15.54,Default,,0000,0000,0000,,Just ten days Iater,\Non August 1st, 191 4,
Dialogue: 0,0:53:30.76,0:53:34.90,Default,,0000,0000,0000,,the Times had to report the cIosure\Nof the Stock Exchange,
Dialogue: 0,0:53:49.90,0:53:53.24,Default,,0000,0000,0000,,and cIosed it remained\NuntiI January 4th, 1915.
Dialogue: 0,0:54:11.16,0:54:14.96,Default,,0000,0000,0000,,Why were investors so seemingIy\NobIivious to Armageddon
Dialogue: 0,0:54:33.25,0:54:36.34,Default,,0000,0000,0000,,just days before\Nthe outbreak of worId war?
Dialogue: 0,0:54:49.24,0:54:53.57,Default,,0000,0000,0000,,WeII, the answer is that a combination\Nof financiaI innovation
Dialogue: 0,0:55:07.75,0:55:12.26,Default,,0000,0000,0000,,and gIobaI integration had made\Nthe worId seem reassuringIy safe.
Dialogue: 0,0:55:48.15,0:55:52.42,Default,,0000,0000,0000,,The lights in financial markets\Nwere flashing green, not red,
Dialogue: 0,0:56:09.61,0:56:11.100,Default,,0000,0000,0000,,until the very eve of destruction.
Dialogue: 0,0:56:25.81,0:56:29.12,Default,,0000,0000,0000,,There may be a lesson\Nhere for our time, too.
Dialogue: 0,0:56:43.90,0:56:48.24,Default,,0000,0000,0000,,Financial globalisation mark one\Ntook a generation to engineer.
Dialogue: 0,0:57:15.88,0:57:19.07,Default,,0000,0000,0000,,But it was blown apart\Nin a matter of days.
Dialogue: 0,0:57:30.19,0:57:34.91,Default,,0000,0000,0000,,And it would take more than a generation\Nto repair the damage done
Dialogue: 0,0:57:51.86,0:57:54.05,Default,,0000,0000,0000,,by the guns of August 1 91 4.
Dialogue: 0,0:58:48.88,0:58:53.82,Default,,0000,0000,0000,,The First World War had put an end\Nto the first age of globalisation.
Dialogue: 0,0:59:14.33,0:59:18.14,Default,,0000,0000,0000,,Until the late 1 960s,\Ninternational finance slumbered.
Dialogue: 0,0:59:43.58,0:59:45.62,Default,,0000,0000,0000,,Some even considered it dead.
Dialogue: 0,1:00:04.41,1:00:07.49,Default,,0000,0000,0000,,ln 1 944,\Nthe soon-to-be-victorious Allies
Dialogue: 0,1:00:25.02,1:00:29.36,Default,,0000,0000,0000,,gathered to devise a new financial\Narchitecture for the world.
Dialogue: 0,1:00:48.17,1:00:49.62,Default,,0000,0000,0000,,Trade wouId be free,
Dialogue: 0,1:00:56.37,1:01:00.47,Default,,0000,0000,0000,,but capitaI movements wouId be\Nsubject to tight reguIation.
Dialogue: 0,1:01:15.31,1:01:18.41,Default,,0000,0000,0000,,When money did fIow\Nacross nationaI borders,
Dialogue: 0,1:01:30.25,1:01:33.23,Default,,0000,0000,0000,,it wouId go from government\Nto government.
Dialogue: 0,1:02:16.11,1:02:20.20,Default,,0000,0000,0000,,This new financial order\Nwas to have two guardian sisters,
Dialogue: 0,1:02:31.05,1:02:33.45,Default,,0000,0000,0000,,established here in Washington DC -
Dialogue: 0,1:02:49.78,1:02:51.89,Default,,0000,0000,0000,,the lnternational Monetary Fund
Dialogue: 0,1:03:04.08,1:03:08.31,Default,,0000,0000,0000,,and the lnternational Bank for\NReconstruction and Development,
Dialogue: 0,1:03:20.07,1:03:22.22,Default,,0000,0000,0000,,later known as the World Bank.
Dialogue: 0,1:03:56.05,1:04:00.77,Default,,0000,0000,0000,,By the 1 97 0s, however, vast sums\Nof money were being accumulated
Dialogue: 0,1:04:22.56,1:04:25.41,Default,,0000,0000,0000,,by the oil exporters of the Middle East.
Dialogue: 0,1:04:33.71,1:04:38.04,Default,,0000,0000,0000,,With Western bankers desperate\Nto reinvest the money as loans,
Dialogue: 0,1:05:00.22,1:05:02.97,Default,,0000,0000,0000,,the guardian sisters relaxed their grip.
Dialogue: 0,1:05:16.84,1:05:19.19,Default,,0000,0000,0000,,Financial globalisation was reborn.
Dialogue: 0,1:05:53.87,1:05:58.02,Default,,0000,0000,0000,,The region where the bankers\Nchose to lend the petrodollars
Dialogue: 0,1:06:13.86,1:06:16.31,Default,,0000,0000,0000,,seemed to promise the best returns.
Dialogue: 0,1:06:25.01,1:06:28.16,Default,,0000,0000,0000,,Not for the first time\Nin financial history,
Dialogue: 0,1:06:40.37,1:06:42.64,Default,,0000,0000,0000,,it also posed the biggest risks.
Dialogue: 0,1:07:03.93,1:07:08.80,Default,,0000,0000,0000,,ln seven years, Latin America\Nquadrupled its borrowings from foreigners
Dialogue: 0,1:07:27.29,1:07:29.26,Default,,0000,0000,0000,,to more than $31 5 billion.
Dialogue: 0,1:07:44.54,1:07:45.69,Default,,0000,0000,0000,,Then, in 1 982,
Dialogue: 0,1:07:57.58,1:08:02.42,Default,,0000,0000,0000,,Mexico declared that it would\Nno longer be able to service its debt.
Dialogue: 0,1:08:23.46,1:08:27.85,Default,,0000,0000,0000,,Soon, the entire continent teetered\Non the verge of bankruptcy.
Dialogue: 0,1:09:08.28,1:09:13.73,Default,,0000,0000,0000,,But the days had gone when investors\Ncould confidently expect their governments
Dialogue: 0,1:09:30.58,1:09:35.90,Default,,0000,0000,0000,,to send a gunboat to get their money back\Nwhen foreign borrowers misbehaved.
Dialogue: 0,1:10:07.61,1:10:12.92,Default,,0000,0000,0000,,Now responsibility for such debt crises\Nfell on the lMF and the World Bank.
Dialogue: 0,1:10:53.89,1:10:55.75,Default,,0000,0000,0000,,They didn't have gunboats.
Dialogue: 0,1:11:06.52,1:11:08.55,Default,,0000,0000,0000,,But in return for new loans,
Dialogue: 0,1:11:15.14,1:11:18.54,Default,,0000,0000,0000,,they could insist that\NLatin American governments
Dialogue: 0,1:11:29.45,1:11:32.93,Default,,0000,0000,0000,,adopt painful ''structural\Nadjustment programmes'' -
Dialogue: 0,1:11:53.22,1:11:54.92,Default,,0000,0000,0000,,impose fiscal discipline.
Dialogue: 0,1:12:13.42,1:12:17.82,Default,,0000,0000,0000,,To American economists, these\Nprogrammes all made perfect sense.
Dialogue: 0,1:12:43.51,1:12:45.20,Default,,0000,0000,0000,,But not everyone agreed.
Dialogue: 0,1:13:10.86,1:13:14.49,Default,,0000,0000,0000,,To the increasingly vocal\Ncritics of global finance,
Dialogue: 0,1:13:33.16,1:13:36.48,Default,,0000,0000,0000,,the two guardian sisters\Nof the post-war order
Dialogue: 0,1:13:44.73,1:13:47.89,Default,,0000,0000,0000,,were being transformed\Ninto economic hit men.
Dialogue: 0,1:14:10.82,1:14:16.14,Default,,0000,0000,0000,,They were holding a financial gun to\Nthe heads of Third World governments...
Dialogue: 0,1:14:44.06,1:14:49.18,Default,,0000,0000,0000,,..propping up dictators and furthering\Nthe interests of Yankee imperialism.
Dialogue: 0,1:15:35.19,1:15:38.51,Default,,0000,0000,0000,,And woe betide those\Nwho resisted the hit men.
Dialogue: 0,1:16:02.75,1:16:07.22,Default,,0000,0000,0000,,Conspiracy theories flourished\Nin the anti-globalisation movement.
Dialogue: 0,1:16:26.11,1:16:30.33,Default,,0000,0000,0000,,According to one popular theory,\Ntwo Latin American leaders -
Dialogue: 0,1:16:44.83,1:16:48.57,Default,,0000,0000,0000,,Jaime Roldos of Ecuador\Nand Omar Torrijos of Panama -
Dialogue: 0,1:17:05.03,1:17:10.26,Default,,0000,0000,0000,,were actually assassinated for resisting\Nthe demands of American imperialism.
Dialogue: 0,1:17:35.33,1:17:40.16,Default,,0000,0000,0000,,And yet there's something about\Nthis story of a WorId Bank-IMF pIot
Dialogue: 0,1:18:00.78,1:18:04.63,Default,,0000,0000,0000,,against Third WorId Ieaders\Nthat doesn't quite add up.
Dialogue: 0,1:18:17.82,1:18:22.76,Default,,0000,0000,0000,,After aII, it's not as if the\NUnited States had Ient that much money
Dialogue: 0,1:18:35.92,1:18:37.49,Default,,0000,0000,0000,,to Ecuador and Panama.
Dialogue: 0,1:18:44.76,1:18:49.94,Default,,0000,0000,0000,,In the 1970s, they accounted for just\N0.4% of totaI US grants and Ioans.
Dialogue: 0,1:19:14.63,1:19:19.02,Default,,0000,0000,0000,,Nor were they particuIarIy big\Ncustomers for the United States.
Dialogue: 0,1:19:32.52,1:19:35.60,Default,,0000,0000,0000,,Again, Iess than 0.4%\Nof totaI US exports.
Dialogue: 0,1:19:52.08,1:19:56.45,Default,,0000,0000,0000,,Now, those just don't strike me\Nas figures worth kiIIing for.
Dialogue: 0,1:20:20.48,1:20:21.76,Default,,0000,0000,0000,,To say the least,
Dialogue: 0,1:20:28.27,1:20:32.07,Default,,0000,0000,0000,,the idea of lMF-sponsored\Nassassinations is a stretch.
Dialogue: 0,1:20:53.94,1:20:57.98,Default,,0000,0000,0000,,Nevertheless, this new phase\Nin the story of globalisation
Dialogue: 0,1:21:13.50,1:21:18.86,Default,,0000,0000,0000,,did see the emergence of a new and\Nmore plausible kind of economic hit man,
Dialogue: 0,1:21:42.54,1:21:46.46,Default,,0000,0000,0000,,armed with a financially\Nlethal weapon - the hedge fund.
Dialogue: 0,1:22:26.51,1:22:30.65,Default,,0000,0000,0000,,The men who ran the hedge funds\Nwere far more intimidating
Dialogue: 0,1:22:46.92,1:22:52.41,Default,,0000,0000,0000,,precisely because they didn't even need\Nto threaten violence to get their way.
Dialogue: 0,1:23:13.01,1:23:17.93,Default,,0000,0000,0000,,And their distinctive contribution\Nto globalisation was to speed it up.
Dialogue: 0,1:23:35.52,1:23:40.37,Default,,0000,0000,0000,,Whereas the World Bank lends money\Nto countries for periods of years,
Dialogue: 0,1:23:56.56,1:24:01.22,Default,,0000,0000,0000,,hedge funds are more likely\Nto put their money in for just weeks,
Dialogue: 0,1:24:17.81,1:24:18.79,Default,,0000,0000,0000,,or even days.
Dialogue: 0,1:24:35.27,1:24:38.36,Default,,0000,0000,0000,,The grandmaster of\Nthe new economic hit men
Dialogue: 0,1:24:54.63,1:24:55.85,Default,,0000,0000,0000,,was George Soros.
Dialogue: 0,1:25:18.61,1:25:23.68,Default,,0000,0000,0000,,A Hungarian Jew by birth, but educated\Nin London and based in New York,
Dialogue: 0,1:25:50.17,1:25:55.20,Default,,0000,0000,0000,,Soros brought to global finance\Na brand-new theory of economic behaviour
Dialogue: 0,1:26:13.11,1:26:16.39,Default,,0000,0000,0000,,that underlined\Nthe fallibility of human nature
Dialogue: 0,1:26:27.41,1:26:30.22,Default,,0000,0000,0000,,and the instability of financial markets.
Dialogue: 0,1:26:39.20,1:26:42.42,Default,,0000,0000,0000,,Your actions wiII have\Nunintended consequences,
Dialogue: 0,1:27:03.60,1:27:07.52,Default,,0000,0000,0000,,so the outcome wiII not correspond\Nto your expectations.
Dialogue: 0,1:27:30.95,1:27:34.45,Default,,0000,0000,0000,,And that is the way\Nhuman affairs generaIIy work.
Dialogue: 0,1:28:22.29,1:28:25.33,Default,,0000,0000,0000,,According to Soros's\NTheory of Reflexivity,
Dialogue: 0,1:28:37.65,1:28:41.52,Default,,0000,0000,0000,,financial markets can't\Npossibly be perfectly efficient,
Dialogue: 0,1:28:55.95,1:28:57.29,Default,,0000,0000,0000,,much less rational,
Dialogue: 0,1:29:07.31,1:29:08.82,Default,,0000,0000,0000,,for the simpIe reason
Dialogue: 0,1:29:14.89,1:29:19.68,Default,,0000,0000,0000,,that prices are just the refIection\Nof the ignorance and the biases,
Dialogue: 0,1:29:34.03,1:29:37.79,Default,,0000,0000,0000,,mostIy compIeteIy irrationaI,\Nof miIIions of investors.
Dialogue: 0,1:29:50.23,1:29:55.47,Default,,0000,0000,0000,,In Soros's eyes, markets are bound\Nto go through cycIes of boom and bust,
Dialogue: 0,1:30:11.27,1:30:13.66,Default,,0000,0000,0000,,as sureIy as the human temperament
Dialogue: 0,1:30:20.74,1:30:24.01,Default,,0000,0000,0000,,is prone to bouts of euphoria\Nand despondency.
Dialogue: 0,1:31:05.55,1:31:09.64,Default,,0000,0000,0000,,Soros's Quantum Fund had made\Nmillions from short selling,
Dialogue: 0,1:31:32.06,1:31:35.74,Default,,0000,0000,0000,,a type of dealing which\Nborrows stocks or currencies
Dialogue: 0,1:31:49.32,1:31:51.71,Default,,0000,0000,0000,,and sells them for future delivery
Dialogue: 0,1:32:01.52,1:32:05.07,Default,,0000,0000,0000,,on the calculation that\Nthey'll go down in value.
Dialogue: 0,1:32:27.40,1:32:32.02,Default,,0000,0000,0000,,His biggest coups came from\Nbeing right about losers, not winners.
Dialogue: 0,1:32:48.65,1:32:53.62,Default,,0000,0000,0000,,And the greatest of these was among\Nthe most momentous speculative hits
Dialogue: 0,1:33:14.95,1:33:16.70,Default,,0000,0000,0000,,in all financial history.
Dialogue: 0,1:33:43.35,1:33:48.01,Default,,0000,0000,0000,,On September 1 6th, 1 992,\Nwith the British pound in big trouble,
Dialogue: 0,1:34:14.91,1:34:19.33,Default,,0000,0000,0000,,l watched as Soros put out\Na contract on the Bank of England.
Dialogue: 0,1:34:48.78,1:34:53.28,Default,,0000,0000,0000,,I became convinced that specuIators\NIike Soros were bound to win
Dialogue: 0,1:35:07.93,1:35:12.31,Default,,0000,0000,0000,,if it came to a straight showdown\Nwith the British Government.
Dialogue: 0,1:35:25.60,1:35:28.28,Default,,0000,0000,0000,,It was a matter of simpIe arithmetic -
Dialogue: 0,1:35:36.75,1:35:41.96,Default,,0000,0000,0000,,a triIIion doIIars of currency traded\Nevery day on foreign exchange markets
Dialogue: 0,1:36:04.74,1:36:09.00,Default,,0000,0000,0000,,against the meagre hard currency\Nreserves of the UK Treasury.
Dialogue: 0,1:36:43.87,1:36:48.77,Default,,0000,0000,0000,,At that time, the British pound\Nwas tightly linked to the German mark
Dialogue: 0,1:37:05.33,1:37:09.14,Default,,0000,0000,0000,,through the ERM -\Nthe European Exchange Rate Mechanism.
Dialogue: 0,1:37:34.78,1:37:36.82,Default,,0000,0000,0000,,As German interest rates rose
Dialogue: 0,1:37:43.41,1:37:47.68,Default,,0000,0000,0000,,in the wake of that country's\Nhugely expensive reunification,
Dialogue: 0,1:38:04.03,1:38:06.35,Default,,0000,0000,0000,,Britain's rates had to rise too,
Dialogue: 0,1:38:13.92,1:38:16.32,Default,,0000,0000,0000,,hurting home-owners and businesses.
Dialogue: 0,1:38:24.65,1:38:28.76,Default,,0000,0000,0000,,Soros calculated that the British\NChancellor, Norman Lamont,
Dialogue: 0,1:38:46.53,1:38:51.02,Default,,0000,0000,0000,,would be forced to withdraw from\Nthe ERM and devalue the pound.
Dialogue: 0,1:39:19.56,1:39:22.40,Default,,0000,0000,0000,,lt was the biggest bet of Soros's life.
Dialogue: 0,1:39:33.87,1:39:38.75,Default,,0000,0000,0000,,So sure was he that the pound\Nwould drop that he bet $1 0 billion -
Dialogue: 0,1:40:06.90,1:40:09.87,Default,,0000,0000,0000,,more than the entire\Ncapital of his fund.
Dialogue: 0,1:40:25.20,1:40:27.78,Default,,0000,0000,0000,,The risk-reward\Nwas disproportionate.
Dialogue: 0,1:40:47.29,1:40:50.68,Default,,0000,0000,0000,,And therefore it seemed\NIike a good specuIation,
Dialogue: 0,1:41:20.75,1:41:24.08,Default,,0000,0000,0000,,or investment, if you Iike,\Nshorting the pound.
Dialogue: 0,1:41:50.62,1:41:55.35,Default,,0000,0000,0000,,l was equally convinced that sterling\Nwould have to be be devalued,
Dialogue: 0,1:42:11.87,1:42:15.01,Default,,0000,0000,0000,,though all l had to bet\Nwas my credibility.
Dialogue: 0,1:42:23.66,1:42:28.84,Default,,0000,0000,0000,,That evening, I headed to the opera\Nto see Verdi's The Force Of Destiny.
Dialogue: 0,1:42:53.32,1:42:55.61,Default,,0000,0000,0000,,It proved exceedingIy appropriate.
Dialogue: 0,1:43:49.08,1:43:53.30,Default,,0000,0000,0000,,At the intervaI, they announced\Nthat ChanceIIor Norman Lamont
Dialogue: 0,1:44:08.43,1:44:11.88,Default,,0000,0000,0000,,had appeared in there,\Nin the Treasury courtyard,
Dialogue: 0,1:44:23.58,1:44:27.08,Default,,0000,0000,0000,,to say that Britain\Nwas withdrawing from the ERM.
Dialogue: 0,1:44:38.52,1:44:39.91,Default,,0000,0000,0000,,How we aII cheered.
Dialogue: 0,1:44:45.25,1:44:49.17,Default,,0000,0000,0000,,Today has been an extremeIy\NdifficuIt and turbuIent day.
Dialogue: 0,1:45:10.29,1:45:13.81,Default,,0000,0000,0000,,Massive specuIative fIows\Nhave continued to disrupt
Dialogue: 0,1:45:30.27,1:45:33.55,Default,,0000,0000,0000,,the functioning of\Nthe Exchange Rate Mechanism.
Dialogue: 0,1:46:00.15,1:46:02.83,Default,,0000,0000,0000,,Soros made a billion dollars that day,
Dialogue: 0,1:46:18.24,1:46:21.96,Default,,0000,0000,0000,,and that was only 40%\Nof his fund's annual profits.
Dialogue: 0,1:46:43.07,1:46:47.20,Default,,0000,0000,0000,,(NiaII) Do you feeI...\Nor did you feeI a sense of triumph
Dialogue: 0,1:47:07.48,1:47:11.56,Default,,0000,0000,0000,,when your prophecy came true\Nand the bet paid off hugeIy?
Dialogue: 0,1:47:26.20,1:47:30.21,Default,,0000,0000,0000,,Of course. It was Iike when\Nyou're betting and you win,
Dialogue: 0,1:47:50.40,1:47:54.44,Default,,0000,0000,0000,,naturaIIy, you have that\Nsatisfaction and aIso the profit.
Dialogue: 0,1:48:32.48,1:48:33.11,Default,,0000,0000,0000,,COWS MOO
Dialogue: 0,1:49:03.82,1:49:07.31,Default,,0000,0000,0000,,Soros owed his success\Nto a kind of gut instinct
Dialogue: 0,1:49:21.92,1:49:25.37,Default,,0000,0000,0000,,about the way the ''electronic herd''\Nwould move.
Dialogue: 0,1:49:35.17,1:49:38.21,Default,,0000,0000,0000,,But even his instincts\Nare sometimes wrong.
Dialogue: 0,1:49:47.38,1:49:51.65,Default,,0000,0000,0000,,So what if instinct couId somehow\Nbe repIaced by mathematics?
Dialogue: 0,1:50:12.20,1:50:15.35,Default,,0000,0000,0000,,What if you couId write\Nan aIgebraic formuIa
Dialogue: 0,1:50:26.30,1:50:28.82,Default,,0000,0000,0000,,that guaranteed doubIe-digit returns?
Dialogue: 0,1:50:39.13,1:50:42.57,Default,,0000,0000,0000,,WeII, on the other side\Nof the financiaI gaIaxy,
Dialogue: 0,1:50:53.65,1:50:56.27,Default,,0000,0000,0000,,such a formuIa had just been devised.
Dialogue: 0,1:51:42.46,1:51:46.61,Default,,0000,0000,0000,,As the new era of globalisation\Nincreased trade and growth,
Dialogue: 0,1:52:08.34,1:52:13.26,Default,,0000,0000,0000,,it also increased the world economy's\Nvulnerability to financial shocks
Dialogue: 0,1:52:36.11,1:52:40.31,Default,,0000,0000,0000,,that could spread rapidly\Nto the four corners of the Earth.
Dialogue: 0,1:53:02.20,1:53:07.00,Default,,0000,0000,0000,,But what if we inhabited another\Ncompletely different kind of planet?
Dialogue: 0,1:53:29.97,1:53:34.72,Default,,0000,0000,0000,,A planet without all the complicating\Nfrictions caused by subjective,
Dialogue: 0,1:53:49.54,1:53:51.83,Default,,0000,0000,0000,,sometimes irrational human beings.
Dialogue: 0,1:54:04.27,1:54:08.67,Default,,0000,0000,0000,,One where the inhabitants instantly\Nabsorbed all new information
Dialogue: 0,1:54:28.46,1:54:30.73,Default,,0000,0000,0000,,and used it to maximise profits,
Dialogue: 0,1:54:42.56,1:54:45.54,Default,,0000,0000,0000,,where amid the turbulence\Nof everyday life
Dialogue: 0,1:54:58.13,1:55:00.17,Default,,0000,0000,0000,,all was calm and predictable.
Dialogue: 0,1:55:24.85,1:55:29.14,Default,,0000,0000,0000,,ln such a perfectly observed,\Nefficiently interconnected world,
Dialogue: 0,1:55:47.36,1:55:52.28,Default,,0000,0000,0000,,an unpredicted catastrophic stock market\Ncrash would be about as common
Dialogue: 0,1:56:08.61,1:56:13.14,Default,,0000,0000,0000,,as an adult shorter than\None-and-a-half feet in our own world.
Dialogue: 0,1:56:28.60,1:56:32.80,Default,,0000,0000,0000,,lt would happen only once\Nin four million years of trading.
Dialogue: 0,1:56:55.53,1:56:57.51,Default,,0000,0000,0000,,This was the planet imagined
Dialogue: 0,1:57:07.73,1:57:12.41,Default,,0000,0000,0000,,by some of the most brilliant\Nfinancial economists of modern times.
Dialogue: 0,1:57:34.03,1:57:37.06,Default,,0000,0000,0000,,And this is what\Ntheir planet looked like.
Dialogue: 0,1:58:18.63,1:58:23.26,Default,,0000,0000,0000,,ln 1 993, two mathematical geniuses\Ncame to Greenwich, Connecticut,
Dialogue: 0,1:58:49.77,1:58:50.98,Default,,0000,0000,0000,,with a big idea.
Dialogue: 0,1:59:02.61,1:59:05.01,Default,,0000,0000,0000,,Stanford University's Myron Scholes
Dialogue: 0,1:59:17.96,1:59:23.24,Default,,0000,0000,0000,,had invented a revolutionary new theory\Nof pricing things called ''options''.
Dialogue: 0,1:59:40.69,1:59:44.96,Default,,0000,0000,0000,,He and Harvard's Robert Merton\Nwere the original ''quants'' -
Dialogue: 0,2:00:04.88,2:00:08.81,Default,,0000,0000,0000,,a new breed of speculators\Nusing quantitative mathematics
Dialogue: 0,2:00:25.92,2:00:26.96,Default,,0000,0000,0000,,to make money.
Dialogue: 0,2:00:38.12,2:00:43.06,Default,,0000,0000,0000,,From this nondescript office they plotted\Na global financial revolution.
Dialogue: 0,2:01:12.63,2:01:17.30,Default,,0000,0000,0000,,Merton and SchoIes's idea was\Nbased on the simpIe option contract.
Dialogue: 0,2:01:34.93,2:01:38.53,Default,,0000,0000,0000,,Take the case of a stock\Nthat's worth $100 today.
Dialogue: 0,2:01:56.60,2:02:01.94,Default,,0000,0000,0000,,Now, suppose I think that stock's\Ngoing to be worth 200 in a year's time.
Dialogue: 0,2:02:22.90,2:02:29.04,Default,,0000,0000,0000,,WouIdn't it be nice to have the option to\Nbuy it at today's price in a year's time?
Dialogue: 0,2:02:51.30,2:02:54.54,Default,,0000,0000,0000,,If I'm right, I make\Na tidy profit of $100.
Dialogue: 0,2:03:10.87,2:03:15.05,Default,,0000,0000,0000,,But if I'm wrong, weII, who cares?\NIt was onIy an option.
Dialogue: 0,2:03:27.49,2:03:31.44,Default,,0000,0000,0000,,The onIy cost to me\Nis the price of the option itseIf.
Dialogue: 0,2:03:46.22,2:03:49.60,Default,,0000,0000,0000,,The big question is,\Nwhat shouId that price be?
Dialogue: 0,2:04:01.16,2:04:01.90,Default,,0000,0000,0000,,$5? $1 0?
Dialogue: 0,2:04:16.94,2:04:20.30,Default,,0000,0000,0000,,The answer\Nwas to be found in a magic formula.
Dialogue: 0,2:04:36.50,2:04:40.83,Default,,0000,0000,0000,,''Quants'' sometimes refer\Nto this formula as a ''black box''.
Dialogue: 0,2:04:58.17,2:05:00.49,Default,,0000,0000,0000,,Well, let's look inside the box.
Dialogue: 0,2:05:17.95,2:05:22.56,Default,,0000,0000,0000,,The challenge Merton and Scholes\Nfaced was how to price an option
Dialogue: 0,2:05:49.30,2:05:53.67,Default,,0000,0000,0000,,to buy a particular stock\Non a particular date in the future,
Dialogue: 0,2:06:06.76,2:06:11.79,Default,,0000,0000,0000,,taking into account the unpredictable\Nmovement of the price of the stock
Dialogue: 0,2:06:29.90,2:06:31.71,Default,,0000,0000,0000,,in the intervening period.
Dialogue: 0,2:06:48.21,2:06:53.54,Default,,0000,0000,0000,,Work that option price out accurately,\Nrather than just relying on guesswork,
Dialogue: 0,2:07:17.87,2:07:21.56,Default,,0000,0000,0000,,and you truly deserve\Nthe title ''rocket scientist''.
Dialogue: 0,2:07:39.97,2:07:42.44,Default,,0000,0000,0000,,With wonderful mathematical wizardry,
Dialogue: 0,2:07:55.54,2:07:59.74,Default,,0000,0000,0000,,the quants reduced the price\Nof the option to this formula.
Dialogue: 0,2:08:30.88,2:08:36.03,Default,,0000,0000,0000,,FeeIing a IittIe bit baffIed? Finding\Nthe aIgebra rather tricky to foIIow?
Dialogue: 0,2:08:55.92,2:08:58.71,Default,,0000,0000,0000,,WeII, that was just fine by the quants.
Dialogue: 0,2:09:06.44,2:09:09.87,Default,,0000,0000,0000,,In order to make money\Nfrom this kind of thing,
Dialogue: 0,2:09:19.48,2:09:25.07,Default,,0000,0000,0000,,they needed markets to be fuII of peopIe\Nwho had no idea how to price options.
Dialogue: 0,2:09:45.99,2:09:49.78,Default,,0000,0000,0000,,ln its first two years,\NMerton and Scholes's company,
Dialogue: 0,2:10:03.66,2:10:08.00,Default,,0000,0000,0000,,Long Term Capital Management,\Nmade megabucks by selling options
Dialogue: 0,2:10:33.12,2:10:37.45,Default,,0000,0000,0000,,that were never exercised because\Nthe buyers had guessed wrong
Dialogue: 0,2:10:50.79,2:10:53.05,Default,,0000,0000,0000,,and Long Term had got it right.
Dialogue: 0,2:11:04.26,2:11:09.28,Default,,0000,0000,0000,,They also made a killing by buying up\Nall kinds of different securities
Dialogue: 0,2:11:27.40,2:11:30.86,Default,,0000,0000,0000,,that the rocket scientists\Nthought were mispriced.
Dialogue: 0,2:11:51.39,2:11:55.41,Default,,0000,0000,0000,,Greenwich's luxury car dealers\Nhad never had it so good.
Dialogue: 0,2:12:18.32,2:12:23.06,Default,,0000,0000,0000,,Admittedly, to generate these\Nhuge returns, Long Term had to borrow.
Dialogue: 0,2:12:44.20,2:12:46.14,Default,,0000,0000,0000,,This additional ''leverage'',
Dialogue: 0,2:12:52.40,2:12:56.89,Default,,0000,0000,0000,,or gearing, allowed them to bet\Nmore than just their own money.
Dialogue: 0,2:13:13.23,2:13:17.71,Default,,0000,0000,0000,,By August 1 997, the fund's capital\Nwas just under $7 billion,
Dialogue: 0,2:13:46.26,2:13:50.52,Default,,0000,0000,0000,,but the assets funded by borrowing\Namounted to 1 26 billion.
Dialogue: 0,2:14:23.71,2:14:28.85,Default,,0000,0000,0000,,You might have thought that a coupIe\Nof academics Iike Merton and SchoIes
Dialogue: 0,2:14:44.96,2:14:49.16,Default,,0000,0000,0000,,wouId have been scared siIIy\Nby this enormous piIe of debt.
Dialogue: 0,2:15:02.21,2:15:07.06,Default,,0000,0000,0000,,But not a bit of it. According to\Ntheir magicaI mathematicaI formuIa,
Dialogue: 0,2:15:22.83,2:15:26.97,Default,,0000,0000,0000,,there wasn't the sIightest risk\Nin being so highIy geared.
Dialogue: 0,2:15:40.72,2:15:44.76,Default,,0000,0000,0000,,Apart from anything eIse,\NLong Term was pursuing muItipIe,
Dialogue: 0,2:15:57.97,2:16:02.61,Default,,0000,0000,0000,,supposedIy uncorreIated trading\Nstrategies, around a hundred in aII,
Dialogue: 0,2:16:20.90,2:16:23.41,Default,,0000,0000,0000,,with over 7,600 different positions.
Dialogue: 0,2:16:41.52,2:16:45.13,Default,,0000,0000,0000,,One of these might go wrong,\Nor possibIy even two.
Dialogue: 0,2:16:58.56,2:17:04.17,Default,,0000,0000,0000,,But sureIy aII the bets they'd pIaced\NcouIdn't possibIy go wrong simuItaneousIy.
Dialogue: 0,2:17:33.07,2:17:36.80,Default,,0000,0000,0000,,Long Term was trading\Nin markets all over the world.
Dialogue: 0,2:17:50.32,2:17:52.53,Default,,0000,0000,0000,,But the firm's biggest business
Dialogue: 0,2:18:05.89,2:18:10.11,Default,,0000,0000,0000,,was selling options on American\Nand European stock markets...
Dialogue: 0,2:18:43.76,2:18:46.09,Default,,0000,0000,0000,,..options that would be cashed in
Dialogue: 0,2:18:52.60,2:18:56.80,Default,,0000,0000,0000,,if there were big future stock price\Nmovements, up or down.
Dialogue: 0,2:19:22.26,2:19:26.23,Default,,0000,0000,0000,,At the time, the high prices\Nthese options were fetching
Dialogue: 0,2:19:38.67,2:19:42.78,Default,,0000,0000,0000,,implied that the markets\Nwould become particularly volatile.
Dialogue: 0,2:20:17.38,2:20:20.06,Default,,0000,0000,0000,,But Long Term\Nthought this was wrong.
Dialogue: 0,2:20:44.95,2:20:49.95,Default,,0000,0000,0000,,According to their calculations,\Nmarket volatility would actually decline,
Dialogue: 0,2:21:13.14,2:21:18.87,Default,,0000,0000,0000,,and that meant the chances of investors\Nexercising their options would be low too.
Dialogue: 0,2:21:35.65,2:21:39.67,Default,,0000,0000,0000,,So Long Term piled the options\Nhigh and sold them cheap.
Dialogue: 0,2:22:16.05,2:22:16.98,Default,,0000,0000,0000,,Sounds risky?
Dialogue: 0,2:22:28.04,2:22:33.33,Default,,0000,0000,0000,,They estimated their risk of going bust\Nat one in ten to the power of 24.
Dialogue: 0,2:23:01.49,2:23:03.65,Default,,0000,0000,0000,,ln other words, virtually zero.
Dialogue: 0,2:23:29.68,2:23:33.18,Default,,0000,0000,0000,,lt was as if they really were\Non another planet,
Dialogue: 0,2:23:52.83,2:23:56.92,Default,,0000,0000,0000,,far from the mundane\Nups and downs of terrestrial markets.
Dialogue: 0,2:24:12.82,2:24:14.09,Default,,0000,0000,0000,,ln October 1 997,
Dialogue: 0,2:24:26.91,2:24:31.69,Default,,0000,0000,0000,,as if to prove that Long Term\Nreally was the ultimate Brains Trust,
Dialogue: 0,2:24:47.32,2:24:51.59,Default,,0000,0000,0000,,Merton and Scholes were awarded\Nthe Nobel Prize in economics.
Dialogue: 0,2:25:08.57,2:25:09.15,Default,,0000,0000,0000,,APPLAUSE
Dialogue: 0,2:25:55.70,2:25:59.56,Default,,0000,0000,0000,,It seemed as if inteIIect\Nhad triumphed over intuition,
Dialogue: 0,2:26:15.26,2:26:19.06,Default,,0000,0000,0000,,as if rocket science\Nhad taken over from risk-taking.
Dialogue: 0,2:26:31.89,2:26:34.58,Default,,0000,0000,0000,,Equipped with\Ntheir magicaI bIack box,
Dialogue: 0,2:26:44.30,2:26:47.74,Default,,0000,0000,0000,,the partners in LTCM\Nseemed poised to make money
Dialogue: 0,2:27:01.55,2:27:05.41,Default,,0000,0000,0000,,far beyond the wiIdest imaginings\Nof even George Soros.
Dialogue: 0,2:27:18.17,2:27:20.49,Default,,0000,0000,0000,,And then, in the summer of 1998,
Dialogue: 0,2:27:32.69,2:27:35.85,Default,,0000,0000,0000,,when every seIf-respecting\Nhedge fund manager
Dialogue: 0,2:27:45.94,2:27:48.74,Default,,0000,0000,0000,,shouId have been pIaying with his yacht,
Dialogue: 0,2:27:57.31,2:28:01.52,Default,,0000,0000,0000,,something happened that\Nthreatened to bIow the Iid right off
Dialogue: 0,2:28:14.56,2:28:17.01,Default,,0000,0000,0000,,the NobeI Prize-winners' bIack box.
Dialogue: 0,2:28:24.66,2:28:26.65,Default,,0000,0000,0000,,ReaIity started to misbehave.
Dialogue: 0,2:29:00.00,2:29:04.62,Default,,0000,0000,0000,,ln evolution, big extinctions\Ntend to be caused by outside shocks,
Dialogue: 0,2:29:25.25,2:29:27.70,Default,,0000,0000,0000,,like an asteroid hitting the Earth.
Dialogue: 0,2:29:46.29,2:29:48.49,Default,,0000,0000,0000,,On Monday August 1 7th, 1 998,
Dialogue: 0,2:30:04.60,2:30:07.76,Default,,0000,0000,0000,,a giant asteroid smashed\Ninto Planet Finance.
Dialogue: 0,2:30:25.21,2:30:29.94,Default,,0000,0000,0000,,And - surprise, surprise - it struck\Non the other side of the world
Dialogue: 0,2:30:54.25,2:30:56.94,Default,,0000,0000,0000,,in an especially flaky emerging market.
Dialogue: 0,2:31:32.54,2:31:36.24,Default,,0000,0000,0000,,Weakened by political upheaval,\Ndeclining oil revenues
Dialogue: 0,2:31:53.79,2:31:58.90,Default,,0000,0000,0000,,and a botched privatisation, the ailing\NRussian financial system collapsed.
Dialogue: 0,2:32:20.51,2:32:25.13,Default,,0000,0000,0000,,A desperate Russian government\Nwas driven to default on its debts,
Dialogue: 0,2:32:42.81,2:32:47.85,Default,,0000,0000,0000,,fuelling the fires of volatility\Nthroughout the world's financial system.
Dialogue: 0,2:33:07.01,2:33:08.53,Default,,0000,0000,0000,,Stock markets plunged.
Dialogue: 0,2:33:26.36,2:33:30.21,Default,,0000,0000,0000,,Remember all those low-cost\Noptions Long Term had sold
Dialogue: 0,2:33:42.77,2:33:46.75,Default,,0000,0000,0000,,based on their prediction\Nof low stock market volatility?
Dialogue: 0,2:34:01.92,2:34:05.42,Default,,0000,0000,0000,,The ones they thought\Nno-one would ever exercise?
Dialogue: 0,2:34:23.38,2:34:24.77,Default,,0000,0000,0000,,Well, now they did.
Dialogue: 0,2:34:31.58,2:34:35.74,Default,,0000,0000,0000,,The quants had predicted\Nthat Long Term was highly unlikely
Dialogue: 0,2:34:52.62,2:34:55.100,Default,,0000,0000,0000,,to lose more than $35 million\Nin a single day.
Dialogue: 0,2:35:17.87,2:35:21.19,Default,,0000,0000,0000,,On Friday August 21 st,\Nit lost $550 million -
Dialogue: 0,2:35:42.07,2:35:44.04,Default,,0000,0000,0000,,1 5% of its entire capital.
Dialogue: 0,2:36:00.58,2:36:05.72,Default,,0000,0000,0000,,Now that, according to the Long Term\Nrisk models, was next to impossible.
Dialogue: 0,2:36:27.93,2:36:30.09,Default,,0000,0000,0000,,The traders in Greenwich stared
Dialogue: 0,2:36:40.14,2:36:43.35,Default,,0000,0000,0000,,slack-jawed and glassy-eyed\Nat their screens.
Dialogue: 0,2:36:55.92,2:36:57.72,Default,,0000,0000,0000,,lt couldn't be happening.
Dialogue: 0,2:37:08.96,2:37:09.82,Default,,0000,0000,0000,,But it was.
Dialogue: 0,2:37:45.78,2:37:49.32,Default,,0000,0000,0000,,By the end of the month,\NLong Term was down 45%.
Dialogue: 0,2:38:28.07,2:38:33.73,Default,,0000,0000,0000,,The only chance of survival was to find\Na financial white knight to rescue them.
Dialogue: 0,2:38:58.79,2:39:03.75,Default,,0000,0000,0000,,And the most powerfuI knight in town\Nwas none other than George Soros.
Dialogue: 0,2:39:22.56,2:39:24.84,Default,,0000,0000,0000,,It was the uItimate humiIiation -
Dialogue: 0,2:39:33.29,2:39:37.08,Default,,0000,0000,0000,,the quants from PIanet Finance\Nbegging for a baiI-out
Dialogue: 0,2:39:52.44,2:39:56.44,Default,,0000,0000,0000,,from the prophet of irrationaI,\NunquantifiabIe refIexivity.
Dialogue: 0,2:40:19.58,2:40:23.08,Default,,0000,0000,0000,,(NiaII) That must have been\Na very tense meeting.
Dialogue: 0,2:40:31.15,2:40:35.11,Default,,0000,0000,0000,,Do you remember the atmosphere\Nin the room, or am I...?
Dialogue: 0,2:40:46.30,2:40:51.37,Default,,0000,0000,0000,,I remember he came for breakfast\Nand it wasn't at aII tense, because...
Dialogue: 0,2:41:18.49,2:41:20.17,Default,,0000,0000,0000,,Of course, he was tense
Dialogue: 0,2:41:33.64,2:41:37.41,Default,,0000,0000,0000,,but I wasn't because\NI wasn't putting in the money.
Dialogue: 0,2:41:48.57,2:41:51.94,Default,,0000,0000,0000,,There was to be no\Nwhite knight for Long Term.
Dialogue: 0,2:42:16.77,2:42:21.83,Default,,0000,0000,0000,,I feIt that it was too dangerous\Nand that I didn't have enough capitaI
Dialogue: 0,2:42:44.54,2:42:48.46,Default,,0000,0000,0000,,and, in fact, it reaIIy required\Nthe coordinated actions
Dialogue: 0,2:43:09.58,2:43:12.07,Default,,0000,0000,0000,,of aII the banks to baiI out LTCM.
Dialogue: 0,2:43:48.29,2:43:50.74,Default,,0000,0000,0000,,And that's precisely what happened.
Dialogue: 0,2:44:09.12,2:44:14.39,Default,,0000,0000,0000,,Fearful that Long Term's failure could\Ntrigger a general financial meltdown,
Dialogue: 0,2:44:34.100,2:44:40.38,Default,,0000,0000,0000,,the New York Federal Reserve hastily\Nbrokered a multi-billion-dollar bail-out
Dialogue: 0,2:44:56.88,2:44:58.73,Default,,0000,0000,0000,,by 1 4 Wall Street banks.
Dialogue: 0,2:45:05.08,2:45:07.00,Default,,0000,0000,0000,,What on earth had happened?
Dialogue: 0,2:45:17.71,2:45:22.48,Default,,0000,0000,0000,,Why was Soros so right and\Nthe giant brains at Long Term so wrong?
Dialogue: 0,2:46:08.62,2:46:12.82,Default,,0000,0000,0000,,For one thing, this wasn't\Na coolly logical Planet Finance.
Dialogue: 0,2:46:31.98,2:46:36.94,Default,,0000,0000,0000,,lt was still dear old Planet Earth,\Ninhabited by emotional human beings
Dialogue: 0,2:46:58.48,2:47:00.30,Default,,0000,0000,0000,,with a stampede mentality.
Dialogue: 0,2:47:16.79,2:47:20.71,Default,,0000,0000,0000,,There was, however, another\Nreason why Long Term failed.
Dialogue: 0,2:47:41.20,2:47:45.92,Default,,0000,0000,0000,,Their risk models were working\Nwith just five years' worth of data.
Dialogue: 0,2:48:06.44,2:48:09.04,Default,,0000,0000,0000,,lf they'd gone back even 1 1 years,
Dialogue: 0,2:48:17.80,2:48:21.41,Default,,0000,0000,0000,,they'd have captured\Nthe 1 987 stock market crash.
Dialogue: 0,2:48:40.53,2:48:42.96,Default,,0000,0000,0000,,And if they'd gone back 80 years,
Dialogue: 0,2:48:58.83,2:49:02.45,Default,,0000,0000,0000,,they'd have captured\Nthe last great Russian default
Dialogue: 0,2:49:14.19,2:49:16.22,Default,,0000,0000,0000,,after the 1 91 7 revolution.
Dialogue: 0,2:49:26.39,2:49:29.42,Default,,0000,0000,0000,,To put it bIuntIy,\Nthe NobeI Prize-winners
Dialogue: 0,2:49:40.70,2:49:44.62,Default,,0000,0000,0000,,had known pIenty of mathematics,\Nbut not enough history.
Dialogue: 0,2:49:57.53,2:50:01.98,Default,,0000,0000,0000,,They'd perfectIy grasped\Nthe beautifuI theory of PIanet Finance,
Dialogue: 0,2:50:20.04,2:50:23.07,Default,,0000,0000,0000,,but not the messy reaIity\Nof PIanet Earth.
Dialogue: 0,2:50:34.77,2:50:38.92,Default,,0000,0000,0000,,And that, quite simpIy, is why\NLong Term CapitaI Management
Dialogue: 0,2:50:51.60,2:50:55.11,Default,,0000,0000,0000,,turned out to be Short Term\NCapitaI Mismanagement.
Dialogue: 0,2:51:11.59,2:51:17.37,Default,,0000,0000,0000,,The big question is whether such a crisis\NcouId repIay itseIf today, ten years on,
Dialogue: 0,2:51:41.26,2:51:44.46,Default,,0000,0000,0000,,onIy this time invoIving\Nso many hedge funds,
Dialogue: 0,2:51:54.93,2:51:59.64,Default,,0000,0000,0000,,and on such a Iarge scaIe,\Nthat it simpIy couIdn't be baiIed out?
Dialogue: 0,2:52:14.71,2:52:17.04,Default,,0000,0000,0000,,WeII, the answer to that question
Dialogue: 0,2:52:24.38,2:52:28.86,Default,,0000,0000,0000,,Iies not on another pIanet,\Nbut on the other side of this one.
Dialogue: 0,2:54:10.00,2:54:14.73,Default,,0000,0000,0000,,To some, financial history is just\Nso much water under the bridge -
Dialogue: 0,2:54:31.04,2:54:34.67,Default,,0000,0000,0000,,ancient history,\Nlike the history of lmperial China.
Dialogue: 0,2:54:47.45,2:54:52.12,Default,,0000,0000,0000,,Some young traders don't even\Nremember the 1997 / 98 Asian crisis.
Dialogue: 0,2:55:16.49,2:55:20.10,Default,,0000,0000,0000,,In fact, if they came into\Nthe markets after 2000,
Dialogue: 0,2:55:31.43,2:55:33.41,Default,,0000,0000,0000,,they had seven bumper years.
Dialogue: 0,2:55:42.37,2:55:44.48,Default,,0000,0000,0000,,Stock markets worIdwide boomed.
Dialogue: 0,2:55:54.36,2:55:57.92,Default,,0000,0000,0000,,So too did bond markets.\NSo did commodity markets.
Dialogue: 0,2:56:10.14,2:56:15.11,Default,,0000,0000,0000,,So did derivatives markets. In fact,\Nevery kind of asset market boomed.
Dialogue: 0,2:56:34.54,2:56:39.14,Default,,0000,0000,0000,,And so too did the markets\Nfor those products that are in demand
Dialogue: 0,2:56:52.64,2:56:57.26,Default,,0000,0000,0000,,when the bonuses are big, Iike\Nvintage Bordeaux and Iuxury yachts.
Dialogue: 0,2:58:05.01,2:58:08.22,Default,,0000,0000,0000,,But these boom years\Nwere also mystery years.
Dialogue: 0,2:58:24.37,2:58:28.98,Default,,0000,0000,0000,,For markets soared at a time\Nof rising short-term interest rates,
Dialogue: 0,2:58:49.20,2:58:52.96,Default,,0000,0000,0000,,glaring trade imbalances\Nand escalating political risk.
Dialogue: 0,2:59:10.87,2:59:14.48,Default,,0000,0000,0000,,The key to this seeming paradox\Nlay here in China.
Dialogue: 0,3:00:22.19,3:00:25.87,Default,,0000,0000,0000,,Chongqing, on the banks\Nof the mighty River Yangtze,
Dialogue: 0,3:00:41.13,3:00:44.27,Default,,0000,0000,0000,,is deep in the heart\Nof the Middle Kingdom,
Dialogue: 0,3:00:56.28,3:01:01.66,Default,,0000,0000,0000,,over a thousand miles from the coastal\Nenterprise zones most Westerners visit.
Dialogue: 0,3:01:42.35,3:01:46.02,Default,,0000,0000,0000,,Yet this is the fastest-growing city\Non the planet.
Dialogue: 0,3:02:42.52,3:02:46.31,Default,,0000,0000,0000,,I've traveIIed aII over the worId\Nmaking this series,
Dialogue: 0,3:02:58.51,3:03:02.35,Default,,0000,0000,0000,,and I must say, I have never\Nseen anything Iike this.
Dialogue: 0,3:03:13.87,3:03:18.08,Default,,0000,0000,0000,,WeIcome to Chongqing,\Nthe fastest growing city in the worId.
Dialogue: 0,3:03:33.23,3:03:37.43,Default,,0000,0000,0000,,It's construction heaven.\NIf you Iook over through the fog,
Dialogue: 0,3:03:50.06,3:03:55.54,Default,,0000,0000,0000,,you can just about make out one of\Nthe 30 bridges they're currentIy buiIding,
Dialogue: 0,3:04:14.04,3:04:17.36,Default,,0000,0000,0000,,and down there,\None of the ten Iight raiIways.
Dialogue: 0,3:04:48.13,3:04:53.03,Default,,0000,0000,0000,,AII around me, there used to be\Nprime farmIand, untiI six months ago,
Dialogue: 0,3:05:12.11,3:05:16.63,Default,,0000,0000,0000,,when they started constructing\NIiteraIIy miIIions of square metres
Dialogue: 0,3:05:33.100,3:05:35.44,Default,,0000,0000,0000,,of new office space.
Dialogue: 0,3:05:41.57,3:05:46.71,Default,,0000,0000,0000,,The aim is to turn Chongqing into\Nthe financiaI capitaI of western China.
Dialogue: 0,3:06:05.13,3:06:10.66,Default,,0000,0000,0000,,WeII, if they keep this up, it'II soon be\Nthe financiaI capitaI of the worId.
Dialogue: 0,3:06:25.75,3:06:31.24,Default,,0000,0000,0000,,Thanks to growth like this, there are now\N345,000 dollar millionaires in China
Dialogue: 0,3:07:06.99,3:07:08.91,Default,,0000,0000,0000,,and over 1 00 billionaires.
Dialogue: 0,3:07:26.98,3:07:30.71,Default,,0000,0000,0000,,Not only has China\Nleft the colonial era far behind,
Dialogue: 0,3:07:47.38,3:07:51.42,Default,,0000,0000,0000,,the fastest-growing economy\Nin the world has also managed
Dialogue: 0,3:08:01.90,3:08:03.87,Default,,0000,0000,0000,,to avoid the kind of crisis
Dialogue: 0,3:08:12.63,3:08:16.90,Default,,0000,0000,0000,,that has periodically blown up\Nin the other emerging markets.
Dialogue: 0,3:08:40.40,3:08:44.65,Default,,0000,0000,0000,,One reason for China's\Ncrisis-free ascent has been the fact
Dialogue: 0,3:09:01.02,3:09:05.47,Default,,0000,0000,0000,,that most Chinese investment\Nhasn't been financed by foreigners,
Dialogue: 0,3:09:20.17,3:09:22.43,Default,,0000,0000,0000,,but out of China's own savings.
Dialogue: 0,3:09:28.80,3:09:31.14,Default,,0000,0000,0000,,There has been foreign investment,
Dialogue: 0,3:09:38.68,3:09:41.65,Default,,0000,0000,0000,,but most of it has been\Ndirect investment
Dialogue: 0,3:09:51.73,3:09:54.29,Default,,0000,0000,0000,,in the form of things Iike factories
Dialogue: 0,3:10:02.04,3:10:06.29,Default,,0000,0000,0000,,which you can't easiIy Iiquidate\Nand send home in a crisis.
Dialogue: 0,3:10:18.87,3:10:23.31,Default,,0000,0000,0000,,Indeed, so enormous have China's\Nsavings become in recent years
Dialogue: 0,3:10:36.96,3:10:41.75,Default,,0000,0000,0000,,that they have enabIed gIobaIisation\Nto do the most aImighty U-turn.
Dialogue: 0,3:10:58.63,3:11:02.78,Default,,0000,0000,0000,,PreviousIy, it was the rich\NEngIish-speakers who Ient money
Dialogue: 0,3:11:15.68,3:11:17.66,Default,,0000,0000,0000,,to the poor Asian periphery.
Dialogue: 0,3:11:27.25,3:11:31.91,Default,,0000,0000,0000,,But now it's the Chinese who are\NIending money to rich Americans.
Dialogue: 0,3:11:45.76,3:11:50.20,Default,,0000,0000,0000,,WeIcome to the strange new hybrid\Ncountry of China and America.
Dialogue: 0,3:12:11.01,3:12:12.70,Default,,0000,0000,0000,,I caII it ''Chimerica''.
Dialogue: 0,3:13:22.33,3:13:26.55,Default,,0000,0000,0000,,This extraordinary place\Nis the South Western Stock Exchange.
Dialogue: 0,3:13:45.06,3:13:49.60,Default,,0000,0000,0000,,lt's where hundreds of Chongqing's\Nresidents come to have lunch,
Dialogue: 0,3:14:02.73,3:14:04.65,Default,,0000,0000,0000,,play ping pong and invest -
Dialogue: 0,3:14:18.93,3:14:22.72,Default,,0000,0000,0000,,or is it gamble? -\Ntheir savings on the stock market.
Dialogue: 0,3:14:34.92,3:14:38.25,Default,,0000,0000,0000,,This is what defines\Nthe Chinese economy today.
Dialogue: 0,3:14:51.75,3:14:55.26,Default,,0000,0000,0000,,lncreasingly, it's what defines\Nthe world economy.
Dialogue: 0,3:15:05.64,3:15:10.96,Default,,0000,0000,0000,,Chinese investors trying to work out\Nwhat to do with their abundant savings.
Dialogue: 0,3:15:30.46,3:15:32.33,Default,,0000,0000,0000,,After years of instability,
Dialogue: 0,3:15:45.40,3:15:48.98,Default,,0000,0000,0000,,Chinese households save\Nan unusually high proportion
Dialogue: 0,3:16:04.13,3:16:06.35,Default,,0000,0000,0000,,of their rapidly rising incomes,
Dialogue: 0,3:16:12.96,3:16:17.57,Default,,0000,0000,0000,,in marked contrast to Americans,\Nwho these days save none at all.
Dialogue: 0,3:16:58.62,3:17:03.53,Default,,0000,0000,0000,,So plentiful are Chinese savings\Nthat for the first time in centuries,
Dialogue: 0,3:17:27.02,3:17:30.98,Default,,0000,0000,0000,,the direction of capital flow\Nis not from West to East,
Dialogue: 0,3:17:48.27,3:17:49.89,Default,,0000,0000,0000,,but from East to West.
Dialogue: 0,3:18:04.05,3:18:05.84,Default,,0000,0000,0000,,And it is a mighty flow.
Dialogue: 0,3:18:47.39,3:18:51.83,Default,,0000,0000,0000,,ln 2007, the United States\Nneeded to borrow around $800 billion
Dialogue: 0,3:19:15.58,3:19:17.55,Default,,0000,0000,0000,,from the rest of the world.
Dialogue: 0,3:19:23.16,3:19:26.48,Default,,0000,0000,0000,,That's more than $4 billion\Nevery working day.
Dialogue: 0,3:19:44.62,3:19:48.07,Default,,0000,0000,0000,,China, by contrast,\Nran a current account surplus
Dialogue: 0,3:20:03.98,3:20:07.70,Default,,0000,0000,0000,,equivalent to more than\Na quarter of the US deficit.
Dialogue: 0,3:20:20.18,3:20:23.62,Default,,0000,0000,0000,,And a remarkably large\Nproportion of that surplus
Dialogue: 0,3:20:35.96,3:20:39.22,Default,,0000,0000,0000,,has ended up being lent\Nto the United States.
Dialogue: 0,3:21:06.88,3:21:09.79,Default,,0000,0000,0000,,ln effect, the People's Republic of China
Dialogue: 0,3:21:24.98,3:21:28.54,Default,,0000,0000,0000,,has become banker\Nto the United States of America.
Dialogue: 0,3:22:07.69,3:22:09.78,Default,,0000,0000,0000,,lt may seem a little bizarre.
Dialogue: 0,3:22:22.20,3:22:26.51,Default,,0000,0000,0000,,The average American has an income\Nof around $44,000 a year,
Dialogue: 0,3:22:45.56,3:22:50.60,Default,,0000,0000,0000,,whereas the average Chinese, despite\Nthis country's 100-pIus biIIionaires
Dialogue: 0,3:23:07.02,3:23:11.93,Default,,0000,0000,0000,,and aII the ostentatious signs of\Nnew money here in centraI Chongqing,
Dialogue: 0,3:23:27.85,3:23:29.35,Default,,0000,0000,0000,,is on around $2,000.
Dialogue: 0,3:23:38.16,3:23:42.23,Default,,0000,0000,0000,,So why wouId the Iatter\Nwant to Iend money to the former
Dialogue: 0,3:23:58.78,3:24:00.92,Default,,0000,0000,0000,,who's roughIy 22 times richer?
Dialogue: 0,3:24:11.19,3:24:13.10,Default,,0000,0000,0000,,WeII, here's how it works.
Dialogue: 0,3:24:59.37,3:25:02.46,Default,,0000,0000,0000,,Until recently,\Nfrom China's point of view,
Dialogue: 0,3:25:12.83,3:25:16.04,Default,,0000,0000,0000,,the best way of employing\Nits vast population
Dialogue: 0,3:25:29.24,3:25:34.48,Default,,0000,0000,0000,,was through exporting manufactures\Nto the insatiably spendthrift US consumer.
Dialogue: 0,3:26:00.80,3:26:04.49,Default,,0000,0000,0000,,To ensure that those exports\Nwere irresistibly cheap,
Dialogue: 0,3:26:16.79,3:26:21.18,Default,,0000,0000,0000,,China had to stop its currency\Nstrengthening against the dollar
Dialogue: 0,3:26:37.41,3:26:41.39,Default,,0000,0000,0000,,by buying literally billions\Nof dollars on world markets.
Dialogue: 0,3:27:14.44,3:27:18.99,Default,,0000,0000,0000,,And, until recently, this seemed\Nto be to America's benefit too.
Dialogue: 0,3:27:53.58,3:27:57.88,Default,,0000,0000,0000,,Here in America, the best way\Nto keep the good times roIIing
Dialogue: 0,3:28:08.72,3:28:14.09,Default,,0000,0000,0000,,in recent years has been to import cheap\NChinese goods by the container-Ioad
Dialogue: 0,3:28:38.39,3:28:42.41,Default,,0000,0000,0000,,and seII them in out-of-town\Nsuperstores, Iike this one.
Dialogue: 0,3:28:54.80,3:28:58.25,Default,,0000,0000,0000,,For companies Iike WaI-Mart,\Noutsourcing to China
Dialogue: 0,3:29:09.95,3:29:14.56,Default,,0000,0000,0000,,has been a way of reaping vast profits\Nfrom cheap Chinese Iabour.
Dialogue: 0,3:29:31.20,3:29:32.24,Default,,0000,0000,0000,,In 2006 aIone,
Dialogue: 0,3:29:40.46,3:29:45.52,Default,,0000,0000,0000,,WaI-Mart out-sourced no Iess than\N$9 biIIion-worth of goods from China.
Dialogue: 0,3:30:05.07,3:30:06.63,Default,,0000,0000,0000,,But at the same time,
Dialogue: 0,3:30:12.65,3:30:17.66,Default,,0000,0000,0000,,by seIIing biIIions of doIIars of bonds\Nto the PeopIe's Bank of China,
Dialogue: 0,3:30:31.79,3:30:36.46,Default,,0000,0000,0000,,the United States has been abIe\Nto enjoy much Iower interest rates
Dialogue: 0,3:30:51.15,3:30:54.01,Default,,0000,0000,0000,,than wouId otherwise\Nhave been the case.
Dialogue: 0,3:31:02.72,3:31:06.97,Default,,0000,0000,0000,,It's what they caII at business schooI\Na win-win situation.
Dialogue: 0,3:31:40.17,3:31:43.80,Default,,0000,0000,0000,,This is the wonderful\Ndual country of ''Chimerica'',
Dialogue: 0,3:31:59.10,3:32:02.60,Default,,0000,0000,0000,,accounting for 33%\Nof the world's economic output
Dialogue: 0,3:32:18.25,3:32:22.85,Default,,0000,0000,0000,,and more than half of all global\Ngrowth in the past eight years.
Dialogue: 0,3:33:06.22,3:33:09.61,Default,,0000,0000,0000,,Chimerica seemed like\Na marriage made in heaven.
Dialogue: 0,3:33:29.78,3:33:34.100,Default,,0000,0000,0000,,The East Chimericans did the saving.\NThe West Chimericans did the spending.
Dialogue: 0,3:33:55.66,3:33:57.28,Default,,0000,0000,0000,,But there was a catch.
Dialogue: 0,3:34:25.12,3:34:29.14,Default,,0000,0000,0000,,The more China was willing\Nto lend to the United States,
Dialogue: 0,3:34:43.42,3:34:46.40,Default,,0000,0000,0000,,the more Americans\Nwere willing to borrow.
Dialogue: 0,3:34:59.20,3:35:01.01,Default,,0000,0000,0000,,Chimerica, in other words,
Dialogue: 0,3:35:07.41,3:35:11.43,Default,,0000,0000,0000,,was the underlying cause\Nof the flood of new bank loans,
Dialogue: 0,3:35:31.60,3:35:36.70,Default,,0000,0000,0000,,bond issues and derivative contracts\Nthat swept Planet Finance after 2000.
Dialogue: 0,3:36:18.94,3:36:23.67,Default,,0000,0000,0000,,That, in turn, was the underlying\Nreason why the US mortgage market
Dialogue: 0,3:36:43.56,3:36:45.76,Default,,0000,0000,0000,,was so awash with cash in 2006
Dialogue: 0,3:36:56.39,3:37:01.06,Default,,0000,0000,0000,,that sub-prime mortgages were\Nbeing sold to people with no income,
Dialogue: 0,3:37:17.43,3:37:19.58,Default,,0000,0000,0000,,no job and no assets - Ninjas.
Dialogue: 0,3:38:03.09,3:38:08.44,Default,,0000,0000,0000,,It wasn't as if the sub-prime mortgage\Ncrisis of 2007 was hard to predict.
Dialogue: 0,3:38:31.07,3:38:35.44,Default,,0000,0000,0000,,Months before it bIew up,\NI was in Tennessee and in Michigan,
Dialogue: 0,3:38:50.85,3:38:53.95,Default,,0000,0000,0000,,seeing for myseIf\Nhow many poorer househoIds
Dialogue: 0,3:39:06.63,3:39:10.09,Default,,0000,0000,0000,,were heading for mortgage defauIt\Nand forecIosure.
Dialogue: 0,3:39:22.41,3:39:24.62,Default,,0000,0000,0000,,What was much harder to predict
Dialogue: 0,3:39:32.72,3:39:37.78,Default,,0000,0000,0000,,was how a smaII tremor in America's\Nvery own home-grown emerging market
Dialogue: 0,3:40:00.28,3:40:04.20,Default,,0000,0000,0000,,wouId cause a financiaI earthquake\NaII around the worId.
Dialogue: 0,3:40:37.94,3:40:42.15,Default,,0000,0000,0000,,Not many people foresaw that\Ndefaults on sub-prime mortgages
Dialogue: 0,3:40:58.56,3:41:01.71,Default,,0000,0000,0000,,would send such a shockwave\Naround the world
Dialogue: 0,3:41:13.28,3:41:17.47,Default,,0000,0000,0000,,that a British bank would suffer\Nthe first run since 1 866
Dialogue: 0,3:41:35.58,3:41:37.68,Default,,0000,0000,0000,,and end up being nationalised,
Dialogue: 0,3:41:45.68,3:41:50.24,Default,,0000,0000,0000,,or that one of the greatest names\Nin American investment banking,
Dialogue: 0,3:42:01.46,3:42:03.62,Default,,0000,0000,0000,,Lehman Brothers, would go bust.
Dialogue: 0,3:42:23.56,3:42:25.24,Default,,0000,0000,0000,,And not many people saw
Dialogue: 0,3:42:35.97,3:42:41.11,Default,,0000,0000,0000,,that as other banks started to write down\Nhundreds of billions of losses,
Dialogue: 0,3:42:57.43,3:43:00.35,Default,,0000,0000,0000,,inter-bank lending\Nwould simply seize up,
Dialogue: 0,3:43:12.37,3:43:16.62,Default,,0000,0000,0000,,driving the US Treasury\Nto propose a $7 00 billion bail-out
Dialogue: 0,3:43:38.67,3:43:41.23,Default,,0000,0000,0000,,for the financial system as a whole.
Dialogue: 0,3:44:28.11,3:44:29.80,Default,,0000,0000,0000,,CertainIy, by June 2008.
Dialogue: 0,3:44:36.94,3:44:40.64,Default,,0000,0000,0000,,an American recession\Nseemed more or Iess inevitabIe.
Dialogue: 0,3:44:55.46,3:44:57.31,Default,,0000,0000,0000,,But the end of the worId?
Dialogue: 0,3:45:04.51,3:45:07.37,Default,,0000,0000,0000,,Looking around\Nthe streets of Hong Kong,
Dialogue: 0,3:45:15.87,3:45:18.100,Default,,0000,0000,0000,,I don't see much sign\Nof a recession here.
Dialogue: 0,3:45:28.28,3:45:31.48,Default,,0000,0000,0000,,Can it be that\Nthe Chinese haIf of Chimerica
Dialogue: 0,3:45:43.85,3:45:47.78,Default,,0000,0000,0000,,has successfuIIy decoupIed itseIf\Nfrom the American haIf?
Dialogue: 0,3:46:16.88,3:46:22.20,Default,,0000,0000,0000,,The idea that China can somehow walk\Naway unscathed from the American crisis
Dialogue: 0,3:46:46.13,3:46:47.71,Default,,0000,0000,0000,,is certainly seductive.
Dialogue: 0,3:47:01.70,3:47:05.33,Default,,0000,0000,0000,,Despite declining exports\Nto the recession-hit West,
Dialogue: 0,3:47:17.06,3:47:20.50,Default,,0000,0000,0000,,and a stock market crash,\Nbooming domestic demand
Dialogue: 0,3:47:34.94,3:47:39.59,Default,,0000,0000,0000,,seems set to keep China's economy\Ngrowing at at least 8% a year.
Dialogue: 0,3:48:06.08,3:48:08.70,Default,,0000,0000,0000,,But remember, we've been here before.
Dialogue: 0,3:48:21.86,3:48:23.31,Default,,0000,0000,0000,,A hundred years ago,
Dialogue: 0,3:48:32.17,3:48:34.56,Default,,0000,0000,0000,,in the first age of globalisation,
Dialogue: 0,3:48:46.05,3:48:50.46,Default,,0000,0000,0000,,many investors thought there was\Nsimilarly symbiotic relationship
Dialogue: 0,3:49:05.20,3:49:08.42,Default,,0000,0000,0000,,between the world's\Nfinancial centre, Britain,
Dialogue: 0,3:49:16.98,3:49:20.14,Default,,0000,0000,0000,,and Europe's most dynamic\Nindustrial economy.
Dialogue: 0,3:49:33.60,3:49:35.52,Default,,0000,0000,0000,,That economy was Germany's,
Dialogue: 0,3:49:49.17,3:49:52.85,Default,,0000,0000,0000,,and the breakdown of that\Nrelationship ended in war.
Dialogue: 0,3:50:37.98,3:50:39.30,Default,,0000,0000,0000,,As before 1 91 4,
Dialogue: 0,3:50:49.13,3:50:54.10,Default,,0000,0000,0000,,there's a fine line that separates\Nsymbiosis from rivalry and conflict.
Dialogue: 0,3:51:20.69,3:51:24.67,Default,,0000,0000,0000,,According to one estimate,\NChina's gross domestic product
Dialogue: 0,3:51:39.84,3:51:43.86,Default,,0000,0000,0000,,could exceed that of\Nthe United States as early as 2027.
Dialogue: 0,3:52:00.25,3:52:03.51,Default,,0000,0000,0000,,By that time\Nsome critics of free trade argue
Dialogue: 0,3:52:19.81,3:52:24.51,Default,,0000,0000,0000,,that virtually nothing may remain\Nof American manufacturing industry.
Dialogue: 0,3:52:44.43,3:52:47.75,Default,,0000,0000,0000,,And the worse things get\Nin the United States,
Dialogue: 0,3:53:02.94,3:53:05.51,Default,,0000,0000,0000,,the louder such complaints will grow.
Dialogue: 0,3:53:36.18,3:53:41.14,Default,,0000,0000,0000,,On a day Iike today, when the\NHong Kong stock market is down sharpIy,
Dialogue: 0,3:53:56.38,3:54:00.00,Default,,0000,0000,0000,,it's tempting to ask whether\Nanything couId trigger
Dialogue: 0,3:54:10.90,3:54:16.22,Default,,0000,0000,0000,,a comparabIe breakdown in gIobaIisation\NIike the one that happened in 191 4?
Dialogue: 0,3:54:34.88,3:54:37.98,Default,,0000,0000,0000,,The obvious answer\Nis some kind of confIict
Dialogue: 0,3:54:47.30,3:54:52.22,Default,,0000,0000,0000,,between the United States and China,\Nwhether over trade, Taiwan, Tibet,
Dialogue: 0,3:55:12.97,3:55:16.25,Default,,0000,0000,0000,,or some other unforeseeabIe\Nbone of contention.
Dialogue: 0,3:55:30.01,3:55:33.29,Default,,0000,0000,0000,,What starts with competition\Nfor Olympic medals
Dialogue: 0,3:55:49.16,3:55:51.60,Default,,0000,0000,0000,,could end in a battle over dollars
Dialogue: 0,3:56:03.25,3:56:09.08,Default,,0000,0000,0000,,if the Chinese one day decide to cut off\Ntheir credit line to the American empire.
Dialogue: 0,3:56:34.60,3:56:36.58,Default,,0000,0000,0000,,Maybe, as its name suggests,
Dialogue: 0,3:56:52.69,3:56:55.67,Default,,0000,0000,0000,,Chimerica is nothing more\Nthan a chimera -
Dialogue: 0,3:57:14.100,3:57:19.72,Default,,0000,0000,0000,,the mythical beast of ancient legend\Nthat was part lion, part goat,
Dialogue: 0,3:57:33.51,3:57:34.38,Default,,0000,0000,0000,,part dragon.
Dialogue: 0,3:58:09.07,3:58:12.53,Default,,0000,0000,0000,,A Chinese-American conflict\Nmay sound implausible,
Dialogue: 0,3:58:28.00,3:58:30.90,Default,,0000,0000,0000,,but one of the key points of this series
Dialogue: 0,3:58:40.63,3:58:44.42,Default,,0000,0000,0000,,is that the really big crises\Ncome just seldom enough
Dialogue: 0,3:59:03.77,3:59:05.92,Default,,0000,0000,0000,,to be beyond the living memory
Dialogue: 0,3:59:12.18,3:59:16.26,Default,,0000,0000,0000,,of the people who run today's\Ncompanies, banks and funds.
Dialogue: 0,3:59:43.53,3:59:47.37,Default,,0000,0000,0000,,Just because all the swans\Nyou've ever seen are white
Dialogue: 0,4:00:01.42,4:00:04.15,Default,,0000,0000,0000,,doesn't mean there are no black swans.
Dialogue: 0,4:01:10.43,4:01:15.87,Default,,0000,0000,0000,,Today's financial world is the result\Nof four millennia of economic evolution.
Dialogue: 0,4:02:10.18,4:02:13.88,Default,,0000,0000,0000,,Yet despite the unprecedented\Ncomplexity and diversity
Dialogue: 0,4:02:26.59,4:02:28.75,Default,,0000,0000,0000,,of the modern financial system,
Dialogue: 0,4:02:36.48,4:02:39.58,Default,,0000,0000,0000,,Planet Finance remains\Nas vulnerable as ever
Dialogue: 0,4:02:57.94,4:03:01.02,Default,,0000,0000,0000,,to the age-old problem\Nof booms and busts,
Dialogue: 0,4:03:16.87,4:03:19.81,Default,,0000,0000,0000,,irrational exuberance\Nand manic depression.
Dialogue: 0,4:03:40.02,4:03:45.30,Default,,0000,0000,0000,,Maybe all this complexity has actually\Nincreased our vulnerability to crisis.
Dialogue: 0,4:04:10.73,4:04:14.82,Default,,0000,0000,0000,,For 4,000 years, from ancient\NMesopotamia to modern China,
Dialogue: 0,4:04:29.46,4:04:34.47,Default,,0000,0000,0000,,the ascent of money has been one of\Nthe key factors in human progress,
Dialogue: 0,4:04:55.13,4:04:59.72,Default,,0000,0000,0000,,an extraordinary story of innovation,\Nintermediation and integration
Dialogue: 0,4:05:17.85,4:05:20.23,Default,,0000,0000,0000,,that had done as much as anything
Dialogue: 0,4:05:27.74,4:05:32.37,Default,,0000,0000,0000,,to heIp peopIe escape from the drudgery\Nof subsistence agricuIture.
Dialogue: 0,4:05:48.78,4:05:51.99,Default,,0000,0000,0000,,And yet PIanet Finance\Ncan never quite escape
Dialogue: 0,4:06:03.93,4:06:07.09,Default,,0000,0000,0000,,from the gravitationaI force\Nof PIanet Earth,
Dialogue: 0,4:06:16.97,4:06:21.76,Default,,0000,0000,0000,,because the quants can never take\NfuII account of the human factor -
Dialogue: 0,4:06:37.17,4:06:41.39,Default,,0000,0000,0000,,our tendency to underestimate\Nthe probabiIity of bIack swans,
Dialogue: 0,4:06:56.52,4:07:00.16,Default,,0000,0000,0000,,our propensity to veer from\Neuphoria to despondency,
Dialogue: 0,4:07:15.25,4:07:18.35,Default,,0000,0000,0000,,our chronic inabiIity\Nto Iearn from history.
Dialogue: 0,4:07:31.45,4:07:34.89,Default,,0000,0000,0000,,And that's why the course\Nof financiaI history -
Dialogue: 0,4:07:46.18,4:07:51.44,Default,,0000,0000,0000,,Iike that most human of emotions,\NIove - never runs smooth, and never wiII,
Dialogue: 0,4:08:10.16,4:08:15.66,Default,,0000,0000,0000,,not even here, on the magicaI and quite\NpossibIy mythicaI country of Chimerica.