Vive la France!

I used to think that the subprime crisis was imported from the US until a friend reminded me of John Law. Granted, John Law was Scottish but he also was “Controller General of Finance” under Louis the XIV, our very own “Roi Soleil”. While there, Mr. Law pretty much created paper money and, rolled up trading companies.

He then created what would be called today “securities” out of the future trading revenues of these companies. In the process, the value of Louisiana has been “over stated” making shares of the consolidated trading company bubble and, later, leading to a 97% decline in the company’s market cap. Since 75% of the company’s capital was in government bills, this bubble burst made France and the rest of Europe plunge into a huge financial crisis.

John Law, and his paper money