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Silicon Valley Bank, founded in 1983, served venture capitalists, startups and California wineries. During the pandemic its deposits doubled from $62 billion in March 2020 to $124 billion a year later, and it put over $91 billion into long-term bonds classified as held to maturity, without substantial hedges. When the Federal Reserve raised rates in 2022, those bonds lost tens of billions in marke...

Short selling flips the usual trade: borrow shares, sell them, then buy them back later at a lower price to return to the lender. Lenders are mostly custody banks, pension funds and asset managers, who earn fees and hold cash collateral of about 102 percent of the shares' value. Investors with margin accounts usually sign hypothecation agreements that let brokers lend their shares; while a share i...

Jefferson County, Alabama, was created in December 1819 at the southern edge of the Appalachians, on rare side by side deposits of iron ore, coal and limestone. Birmingham was founded there in 1871 and named for England's industrial city, and after 1890 Black and white rural migrants and European immigrants poured into its mills and mines. A rural-dominated legislature refused to reapportion seats...

Carried interest began with 16th century European ship captains who took a 20 percent cut of the profit on the goods they carried across the ocean. Today it is the share of profits paid to the general partners of private equity, hedge and venture capital funds. Most funds also charge a yearly management fee of 1 to 2 percent of assets, taxed as ordinary income, while carry flows through a distribu...

In 1945 former JCPenney employee Sam Walton bought a Ben Franklin variety store franchise from the Butler Brothers at a high price with steep rent. He cut out regional middlemen, bought direct from manufacturers and passed the savings to customers, and sales grew from $105,000 in the first year to $250,000 by year five. Then the landlord refused to renew the lease and kept the store, forcing Walto...

In the summer of 1998, Russia's ruble lost two thirds of its value in less than a month. The groundwork was years of deficits: the first Chechen War cost close to $30 million a day in early 1995 and an estimated $5.5 billion by 1996, pushing the budget deficit to nearly 10 percent of GDP. The central bank held the ruble in a band of 5.3 to 7.1 per dollar, spending reserves to defend it. Then the 1...

Private equity funds buy private companies or take public ones private, restructure them and sell within about four to seven years. General partners raise money from limited partners such as pension funds, endowments and insurers, then pull four levers: revenue growth, margin expansion, debt paydown and a higher valuation multiple. A leveraged buyout funds most of a purchase with debt placed on th...

A loan shark works outside the law; a predatory lender works through it. A 2006 FDIC audit report defined predatory lending as imposing unfair, deceptive or fraudulent terms during loan origination, usually on loans secured by a house or car. The Office of the Comptroller of the Currency catalogued the tactics: loan flipping through repeated refinancing, packing loans with fees and single premium...

Pizza Hut began in 1958 in Wichita, Kansas, when Wichita State students Dan and Frank Carney borrowed $600 from their mother to open a pizzeria. The sign they inherited had room for only eight letters, so with five taken by PIZZA, the second word had to fit in three. They began franchising within a year, recruiting fellow students, among them future NFL coach Bill Parcells, and passed 100 location...

Petrodollar recycling is the process by which oil exporters such as OPEC members, Russia and Norway earn more U.S. dollars than their own economies can absorb and send the surplus back into the world. After the 1973 oil crisis, exporters built a collective surplus of roughly $450 billion between 1974 and 1981. The IMF encouraged them to recycle it into U.S. Treasuries and Western banks, which fuel...

Peter Lynch was born in 1944 in Newton, Massachusetts, outside Boston. His father died of brain cancer when he was 10, and as a teenager he caddied at the Brae Burn Country Club, where one regular was D. George Sullivan, president of Fidelity Investments. As a Boston College sophomore studying history and philosophy, he bought Flying Tiger Airlines at $7 a share and watched it reach $80, paying fo...

In 2017 the Paradise Papers leaked 13.4 million confidential documents, 1.4 terabytes of data, covering more than 120,000 people and companies. Most came from Appleby, an offshore law firm with roots in Bermuda, along with corporate service providers and business registries in 19 tax jurisdictions. The German newspaper Süddeutsche Zeitung obtained the files and shared them with the International C...

Pan American Airways began in 1927 as a geopolitical block. U.S. Army Air Corps officers including Henry Arnold and Carl Spaatz feared a German-backed Colombian airline seeking landing rights in the Panama Canal Zone and set up a shell company to win the Key West to Havana airmail contract. Juan Trippe, backed by Vanderbilt and Harriman money, already held landing rights in Havana, and days before...

Palm was founded in 1992 in Sunnyvale, California, by Jeff Hawkins, joined by Donna Dubinsky and Ed Colligan. Its first job, software for the Zoomer handheld, flopped, so Palm survived by selling sync software for Hewlett-Packard devices and its Graffiti handwriting recognition to Apple for the Newton. After U.S. Robotics bought it in 1995 and 3Com acquired U.S. Robotics in 1997, Palm released the...

Louis Brandt opened a workshop in La Chaux-de-Fonds, Switzerland, in 1848, assembling key-wound pocket watches. In 1892 he produced the first minute repeating wristwatch with a movement from Audemars Piguet, and in 1894 his sons Louis-Paul and César introduced the Omega caliber, built on interchangeable parts. It sold so well that in 1903 the firm renamed itself Omega, the same year both brothers...

On April 29, 2004, a dark cherry metallic Alero rolled off the line in Lansing, Michigan, as workers signed the underside of its hood, ending Oldsmobile after 107 years. Ransom E. Olds founded the company in Lansing in 1897, and when its Detroit factory burned in March 1901, two workers wheeled out the only surviving prototype, the Curved Dash. With no way to make parts, Oldsmobile outsourced engi...

Myspace was launched in August 2003 by marketers at eUniverse, including Brad Greenspan, Chris DeWolfe and Tom Anderson, who cloned the best of Friendster and built the first version in ten days on ColdFusion. That fast, flexible code let users inject their own HTML into profiles, and eUniverse's existing list of about 20 million users and subscribers gave the site an instant audience. Greenspan o...

In 2015 Ireland recorded 26 percent economic growth in a single year, not from new industry but because Apple moved about $300 billion of intellectual property onto Irish books, prompting Paul Krugman's phrase "leprechaun economics." This episode traces how the modern tax haven came to be, starting with New Jersey in the 1880s, which, short of revenue, created permissive corporate laws and the hol...

In 1913 a strict patriarch opened a luxury travel goods shop in Milan's Galleria Vittorio Emanuele II and barred the women of his family from the business. When his son refused to take over, his daughter Luisa ran the shop for about two decades as a caretaker. By 1978, when her daughter Miuccia took the helm, sales were around $450,000. Miuccia had spent her early adulthood in left-wing politics a...

Michael Milken was born in 1946 in Encino, California, led the cheerleading squad at Birmingham High School, graduated from UC Berkeley with highest honors in 1968 and earned an MBA at Wharton. At Berkeley he absorbed W. Braddock Hickman's research showing that diversified portfolios of low-rated bonds outperformed safe ones even after defaults. He joined Drexel in 1969, built its high-yield depar...

Michael Burry was born in San Jose in 1971 and lost his left eye to retinoblastoma at age two. He studied economics and pre-med at UCLA, earned his medical degree at Vanderbilt in 1997 and began residencies at Stanford, but never practiced, though he still keeps his California license active. During late hospital shifts he posted stock analysis on the Silicon Investor message board, applying Benja...

Maserati's Trident logo was drawn by Mario Maserati, the one brother who became an artist, after the Fountain of Neptune in Bologna. His brothers Alfieri, Bindo, Carlo, Ettore and Ernesto began by building two-liter Grand Prix cars for Diatto, and when Diatto quit racing in 1926 they built their own Tipo 26, which Alfieri drove to a class win at that year's Targa Florio. Alfieri died in 1932, and...

By the fall of 1929, brokers had lent more than $8.5 billion to ordinary investors buying stocks on margin, more than all the physical currency circulating in the United States. The Dow had risen tenfold over nine years and peaked in early September, as economist Irving Fisher spoke of a permanently high plateau and Roger Babson warned of a terrific crash. Beneath the boom, farmers sat on huge whe...

Lyft began with Logan Green's long drives between UC Santa Barbara and his girlfriend in Los Angeles. In 2007 he and John Zimmer launched Zimride, an intercity carpooling board for college students. In the summer of 2012 they tested an on-demand offshoot called Lyft, and it took over: the company renamed itself in May 2013 and sold Zimride to Enterprise Rent-A-Car that July. Early rides came with...

Louis Vuitton opened his Paris shop in 1854 and by 1858 had introduced the flat-topped trunk, built from lightweight poplar, brass corners and waterproof Trianon canvas so luggage could finally be stacked on trains and steamships. His trunks starred at the 1867 Universal Exhibition, and in 1871 Japanese military observer Oyama Iwao became the brand's first customer from Japan. Copycats followed at...