jaelmara (jaelmara) wrote,

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World in Miniature; America - the beginning of the end.

This miniature couldn't have been written better by any leftist novelist, so we give you the story of New Orleans...

(and to it give away, where 'America' is in history, is precisely this - can the financial instruments which have caused near term destruction, be reinterpreted in such a way as to create the "wealth" they promised.)

This day in history: (from Wikipedia)

Enter the antagonist "The Mississippi Company" (agent of colonial powers):
"The Mississippi Company (of 1684) became the Company of the West (1717) and expanded as the Company of the Indies (1719).[1] The French names for the company were: in 1684, Compagnie du Mississippi; in 1717 Compagnie d'Occident; and in 1719, Compagnie des Indes (or Compagnie Perpétuelle des Indes).

New Orleans - the original Ponzi scheme, and the first proto-American Bubble:
"In August 1717, Scottish businessman John Law acquired a controlling interest in the then-derelict Mississippi Company and renamed it the Compagnie d'Occident, (or Compagnie du Mississippi). Its initial goal was to trade and do business with the French colonies in North America, which included much of the Mississippi River drainage basin, and the French colony of Louisiana. As he bought control of the company, he was granted a 25-year monopoly by the French government on trade with the West Indies and North America.
"Law exaggerated the wealth of Louisiana with an effective marketing scheme, which led to wild speculation on the shares of the company in 1719. Shares rose from 500 to 15,000 livres, but by summer of 1720, there was a sudden decline in confidence, and the price was back to 500 livres in 1721. By the end of 1720, the Regent Philippe II of Orléans dismissed Law, who then fled from France.

France's debt laden upon the company; 'Credit default swap'?
"With the demand for company shares being high, the government and John Law set out to buy back the whole 1.6 billion livres government debt for shares in the company. The plan was successful and in 1720 the whole government debt was acquired by the company, before the company's market capitalization began to collapse during 1720 and 1721.

A period of prosperity... right?
"The company sought bankruptcy protection in 1721. It was reorganized and open for business in 1722. In 1723 it was granted fresh privileges by Louis XV. Among these were the monopoly of sale of tobacco and coffee, and the right to organise national lotteries... Its main goods of trade during the period were porcelain, wallpapers, lacquer and tea from China, cotton and silk cloth from China and India, coffee from Mocha (Yemen), pepper from Mahé (South India), gold, ivory and slaves from West Africa."

I'm sure they said, "It's too big to fail!"
"After 1746 the spendthrift policies of the French Government began to hurt the Company, and the Seven Years' War (1756–1763) brought severe losses. In February 1770 an edict required the Company to transfer to the state all its properties, assets and rights, then valued to just 30 million livres, while the King accepted to pay all the Company's debts and annuity (rente) obligations. The company was officially dissolved in 1770, although its liquidation dragged on into the 1790s.

So to recap on the rest of the history of New Orleans:


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