BudgetWisdom

The South Sea Bubble Of 1720 The World's First Ponzi Scheme The South Sea Bubble has been called: the world’s first financial crash, the world’s first Ponzi scheme, speculation mania and a disastrous example of what can happen when people fall prey to ‘group think’. That it was a catastrophic financial crash is in no doubt and that some of the greatest thinkers at the time succumbed to it, including Isaac Newton himself, is also irrefutable. Estimates vary but Newton reportedly lost as much as £40 million of today’s money in the scheme. Although this bubble happened 300 years ago, generations of British population have been paying down this debt. Even today, a portion of the tax collected from the general population is used to pay off this debt. The complete history of the South Sea company is well beyond the scope of this article. However, we will try to cover the important financial aspects. .................. My youtube chanel: https://www.youtube.com/channel/UCj_uWYaGgY87C9eMM5CeqdA Video product from: bit.ly/3LqUDGj

27 years ago, Britain’s oldest investment bank, which listed Queen Elizabeth II among its clients, was declared insolvent. The collapse of Barings Bank was caused by colossal losses incurred by a single rogue trader. Nick Leeson, the bank’s then 28-year-old head of derivatives in Singapore, gambled more than $1 billion in unhedged, unauthorized speculative trades, an amount which dwarfed the venerable merchant bank’s cash reserves. Leeson’s assignment in Singapore was to execute “arbitrage” trade, generating small profits from buying and selling futures contracts on the Japanese Nikkei 225 in both the Osaka Securities Exchange and the Singapore International Monetary Exchange. .................. My youtube chanel: https://www.youtube.com/channel/UCj_uWYaGgY87C9eMM5CeqdA Video product from: bit.ly/3LqUDGj