The Alchemists: Three Central Bankers and a World on Fire (59 page)

In Spain, for example
:
Ricardo Gimeno and Carmen Martinez-Carrascal, “The Interaction between House Prices and Loans for House Purchase: The Spanish Case,” working paper, Banco de España, 2006, http://ideas.repec.org/p/bde/wpaper/0605.html.

“global savings glut”
:
Ben Bernanke, “The Global Saving Glut and the U.S. Current Account Deficit,” remarks, Sandbridge Lecture, Virginia Association of Economists, Richmond, VA, March 10, 2005.

In the United States alone
:
SIFMA database (U.S. corporate issuance data), http://www.sifma.org/research/statistics.aspx.

There were, by 2007, $202 trillion in financial assets on earth
:
Charles Roxburgh, Susan Lund, and John Piotrowski,
Mapping Global Capital Markets 2011,
McKinsey Global Institute, August 2011, 2, http://www.mckinsey.com/.

“elements of buoyancy”
:
Jean-Claude Trichet, interview with
Financial Times,
May 14, 2007, http://www.ecb.eu/press/key/date/2007/html/sp070518.en.html.

“It’s pretty clear there is an unsustainable underlying pattern”
:
Edmund Andrews, “Greenspan Is Concerned about ‘Froth’ in Housing,”
New York Times,
May 21, 2005.

The joke that went around London financial circles
:
“Old Lady Is Dazed and Confused,”
Guardian City Pages,
August 18, 2005.

“Hardly a day goes by”
:
“Meeting of the Federal Open Market Committee,” transcript, Board of Governors of the Federal Reserve System, Washington, DC, June 29–30, 2005.

“Neither borrowers nor lenders appear particularly shaky”
:
Ibid.

“Not in the United States”
:
Ibid.

“I offer one more piece of evidence”
:
“Meeting of the Federal Open Market Committee,” transcript, Board of Governors of the Federal Reserve System, Washington, DC, December 13, 2005.

“the apparent consequence of a long period of economic stability”
:
Alan Greenspan, “Opening Remarks,” Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, WY, 2005.

Raghuram Rajan
:
See, for example, the documentary
Inside Job
.

“I’d like to tell you about the Millennium Bridge in London”
:
Hyun Song Shin, “Commentary: Has Financial Development Made the World Riskier,” Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, WY, August 2005.

CHAPTER 9: THE COMMITTEE OF THREE

“It does not appear possible”
:
Robert J. Shiller, “Understanding Recent Trends in House Prices and Homeownership,” Federal Reserve Bank of Kansas City Economic Symposium, August 31, 2007.

“I am convinced”
:
Jean-Claude Trichet, “Europe: Cultural Identity,” speech, Center for Financial Studies, Frankfurt, March 16, 2009.

“It was . . . a very emotional moment”
:
Corinne Lhaik, “Interview with Jean-Claude Trichet,”
L’Express,
September 29, 2004, http://www.ecb.int/press/key/date/2004/html/sp041009.en.html.

By late afternoon
:
Jack Ewing, “A Fight to Make Banks More Prudent,”
New York Times,
December 20, 2011, B1.

“Crisis is part of his DNA”
:
Krista Hughes, “How Jean-Claude Changed the ECB,” Reuters, November 9, 2010.

“With slightly condescending flattery”
:
David Marsh,
The Euro: The Battle for the New Global Currency
(New Haven, CT: Yale University Press, 2009), 220.

“My life compass”
:
James G. Neuger and Simon Kennedy, “Trichet Life Compass Points to Euro at Center of European Unity,” Bloomberg News, June 7, 2010.

“there were Jews up in Boston”
:
David Wessel,
In Fed We Trust: Ben Bernanke’s War on the Great Panic
(New York: Crown Business, 2009), 70.

“If you had known Ben Bernanke as a student”
:
Rich Miller and Jennifer Ryan, “Europe Crisis Rescue Begins with MIT Men as a Matter of Trust,” Bloomberg News, January 12, 2012.

“he would look at the numbers”
:
Ben White, “Bernanke Unwrapped,”
Washington Post,
November 15, 2005.

He talks baseball with Lenny Gilleo
:
Kai Ryssdal, “The Man Who Makes Ben Bernanke Look Good,”
Marketplace,
American Public Radio, April 17, 2012, http://www.marketplace.org/topics/life/final-note/man-who-makes-ben-bernanke-look-good.

“incredibly stubborn . . . exasperating”
:
Alistair Darling,
Back from the Brink: 1000 Days at No. 11
(London: Atlantic Books, 2011), 14.

“as an autocratic fiefdom of the Governor”
:
Ibid., 70.

“Before the crisis”
:
Chris Giles, “The Court of King Mervyn,”
Financial Times Weekend Magazine,
May 5–6, 2012, 17.

“fusse[d] . . . about who has turned up”
:
Ibid., 17.

“I think the role of conductor”
:
“Mervyn King,”
Mad about Music,
WQXR, June 6, 2004, http://www.wqxr.org/#!/programs/mam/2004/jun/06/.

CHAPTER 10: OVER BY CHRISTMAS

“You don’t want to be the ones in the end of the queue”
:
“Customers queue at Northern Rock,” YouTube, accessed April 15, 2012, http://www.youtube.com/watch?v=EyVk8EI6asQ.

“They’re behaving perfectly rationally”
:
Alistair Darling,
Back from the Brink: 1000 Days at Number 11
(London: Atlantic Books, 2011).

Known before 1997 as the Northern Rock Building Society
:
“Run on the Rock,”
Treasury Select Committee of the House of Commons Report I
, January 24, 2008.

When Northern Rock needed cash
:
Ibid., 48.

“During the conference call”
:
Darling,
Back from the Brink
.

“febrile and fevered atmosphere”
:
“Run on the Rock,” 63.

“Your guy Mervyn has a high pain threshold”
:
Darling,
Back from the Brink,
28.

As economist Hyun Song Shin . . . explained
:
Hyun Song Shin, “Global Banking Glut and Loan Risk Premium,” paper, 12th Jacques Polak Annual Research Conference, International Monetary Fund, November 10–11, 2011.

The list of those borrowing substantial amounts
:
“Term Auction Facility lending details,” Federal Reserve Board, December 1, 2010, http://www.federalreserve.gov/newsevents/reform_taf.htm.

“We think it is a right way to cooperate”
:
European Central Bank Press Release Database, bond purchase data, http://www.ecb.int/press/.

“What appears to be in substance”
:
John Brinsley and Anthony Massucci, “Volcker Says Fed’s Bear Loan Stretches Legal Power,”
Bloomberg News
, April 8, 2008.

“Television dramas”
:
Jean-Claude Trichet, “President’s Address,” speech, ECB and Its Watchers IX Conference, Frankfurt, Germany, September 7, 2007, http://www.ecb.int/press/key/date/2007/html/sp070907.en.html.

“We exchanged many opinions”
:
Jean-Claude Trichet, press conference, June 8, 2008, http://www.ecb.int/press/pressconf/2008/html/is080605.en.html.

“We are solemnly telling all economic agents”
:
Jean-Claude Trichet, press conference, July 3, 2008, http://www.ecb.int/press/pressconf/2008/html/is080703.en.html.

To Geithner, the proposal seemed “gimmicky”
:
Anton R. Valukas,
Lehman Brothers Holdings Inc. Chapter 11 Proceedings Examiner Report
8 (2010): 12.

“raise significant concerns”
:
Scott Alvarez, “Re: Lehman Good Bank/Bad Bank idea discussed last night,” e-mail message to Kieran Fallon, July 15, 2008, obtained by Financial Crisis Inquiry Commission, http://fcic.law.stanford.edu/resource.

“That’s not to imply”
:
Patrick M. Parkinson, “Re: Fw: Our Options in the Event of a Run on LB,” e-mail message to Scott Alvarez et al., July 21, 2008.

“If we think that the run had progressed too far”
:
Joseph Sommer, “Re: another option we should present re triparty,” e-mail message to Jamie McAndrews et al., July 13, 2008.

“We thought a year ago”
:
Treasury Committee Hearing on Bank of England, August 2008 Inflation Report
(Sept. 11, 2008), http://www.parliament.the-stationery-office.co.uk/pa/cm200708/cmselect/cmtreasy/uc1033-i/uc103302.htm.

“financial-market correction”
:
Jean Claude Trichet, speech, 2008 Eurofi Conference, Nice, France, September 11, 2008, http://www.ecb.int/press/key/date/2008/html/sp080911_2.en.html.

CHAPTER 11: A WALL OF MONEY

“The failure of AIG”
:
Ben Bernanke, lecture, George Washington University, Washington, DC, March 27, 2012, transcript by Federal News Service.

a more apt comparison was with popcorn
:
Edward P. Lazear, “The Euro Crisis: Doubting the ‘Domino’ Effect,”
Wall Street Journal,
October 31, 2011.

“We came very, very close”
:
Michael Grunwald, “Person of the Year 2009,”
Time
, December 16, 2009.

“conjured up trillions of new dollars”
:
Ibid.

“Irish bank deposits are not in any danger”
:
Aine Hegarty, “Don’t Panic! Finance Minister Moves to Allay Savings Fears of Bank Customers,”
Mirror,
September 20, 2008.

The Fed also pumped dollars into individual foreign banks
:
Bloomberg News database, lending data, http://www.bloomberg.com/data-visualization/federal-reserve-emergency-lending/.

“I don’t really understand”
:
Andrew Ross Sorkin,
Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System—and Themselves
(New York: Viking, 2009), 526.

The TARP was among the most unpopular programs . . . ever undertaken
:
Karlyn Bowman and Andrew Rugg, “TARP, the Auto Bailout, and the Stimulus: Attitudes about the Economic Crisis,” American Enterprise Institute, May 2010, http://www.aei.org/files/2010/04/22/EconomicCrisis-2010.pdf.

“You must save your banks”
:
“Trichet orders Lenihan ‘Save your banks at all costs,’” YouTube, http://www.youtube.com/watch?v=WDN7NiEdNJ0.

Hurley called Trichet at 6 a.m.
:
Shane Ross,
The Bankers: How the Banks Brought Ireland to Its Knees
(Dublin: Penguin Ireland, 2009), 196.

Alistair Darling found out about it on the BBC morning news
:
Alistair Darling,
Back from the Brink: 1000 Days at No. 11
(London: Atlantic Books, 2011), 143.

“an impossible position”
:
Ibid., 143.

“What were they doing screwing around in the United States?”
:
Craig Whitlock and Ed Cody, “Europe Beginning to Realize Its Lenders Share the Blame,”
Washington Post,
October 2, 2008, A12.

“To put it mildly”
:
Marcus Walker, Joellen Perry, and David Gauthier-Villars, “EU Is Divided on Crisis Measures,”
Wall Street Journal
, October 2, 2008.

“If we cannot cobble together a European solution”
:
Carlo Bastasin,
Saving Europe: How National Politics Nearly Destroyed the Euro
(Washington, DC: Brookings Institution Press, 2012), 15.

people were withdrawing 500-euro notes
:
Ibid., 55.

“If two people always agree”
:
Paul Wiseman, “Bernanke Nonplussed by Dissenters,”
Associated Press
, September 19, 2011.

“I felt after going for a walk down the hall”
:
David Wessel,
In Fed We Trust: Ben Bernanke’s War on the Great Panic
(New York: Crown Business, 2009), 258.

CHAPTER 12: THE BATTLE FOR THE FED

A Gallup poll in the summer of 2009
:
Michael Mandel, “Behind Bernanke’s Charm Offensive,”
BusinessWeek,
July 30, 2009.

“You never want a serious crisis to go to waste”
:
Gerald Seib, “In Crisis, Opportunity for Obama,”
Wall Street Journal,
November 21, 2008.