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Quote of the Day

“No man can calculate to escape ruin but he who owes no money. Happy is he who has little and is free from debt.”

– Phillip Hone

July 11th – This Day in Stock Market History

July 11th, 1836 – Government curbs land speculation by forcing federal land agents to only accept gold and silver as payment. The order, now known as the “Specie Circular” was done via an executive order issued by Andrew Jackson.

The order created repaid deflation in the economy. Lack of credit available lead to a collapse in land prices, and was a primary cause of the panic of 1837, which would be one of the nations worst financial depression in history.

The law was repealed less than 2 years later, but the damage had been done.

July 11th, 1985 – Coca-Cola announces that it will revert back to its old recipe after introducing new coke 79 days before.

New Coke

The move is widely considered one of the largest marketing blunders of all time. Although it may have resulted in a lot of headaches, it had very little impact on Coca-Cola’s stock during the period.

In fact, Coca-Cola performed quite well during the mid 1980’s:

July 11th, 2008 – Indy Mac bank is closed by the F.D.I.C. The bank had $19 billion in assets at the time, and would be the largest bank failure since the Savings and Loan crisis two decades prior.

The bank was heavily involved in subprime mortgages, and its failure would be a warning of the trouble to come for the mortgage and banking industry.

3 months later, the country would be engulfed in a subprime mortgage crisis that would be the nation’s worst downturn since the great depression.

Best July 11th in Dow Jones Industrial Average History

1932 – Up 3.27%, 1.36 points.

Worst July 11th in Dow Jones Industrial Average History

1928 – Down 2.95%, 6.28 points.

Read of the Day

The 2008 failure of IndyMac, and many other financial institutions would turn out to be one of the worst financial shocks since the great depression.

Most of those making the decisions at the Federal Reserve and the Treasury have moved on and written memoirs about the event.

One of my favorite crisis era novels comes from Tim Geithner, who was Secretary of the Treasury at the time. He provides a great first hand account of the late night phone calls, panicked e-mails, and utter despair that many faced.

Stress Test: Reflections on Financial Crises

Also worth noting, Ben Bernanke kept up a blog for a couple years after the crisis, which can be found on the Brookings Institute website here

<– Go To Previous Day: July 10th: 1832 – Andrew Jackson vetoes extension of the Bank of the United States Charter

Go To Next Day: July 12th, 1998 – Russia receives an $11 billion bailout from the IMF to halt the ongoing financial crisis. (It wouldn’t help)  –>