Twenty-five years ago today, two Nobel laureate economists and a famous bond trader received a $3.65bln bailout from fourteen financial institutions at the behest of the Federal Reserve. LTCM had delivered a 21% net return in its first year. 43% in the second. 41% in the third. Greed, hubris, leverage, illiquidity, and lack of imagination led to the inevitable. A year later, Japan cut rates to zero, started QE in 2001. This sparked the introduction of ever more powerful policy tools to address crises, which manifested regularly, with growing intensity. Decades passed. There appeared no limit to what could be achieved ... (full story)