CHAPTER 5
THE 2008 FINANCIAL CRISIS
The greatest lesson in life is to know that even fools are right sometimes.
—WINSTON CHURCHILL, BRITISH STATESMAN
RISK QUOTE: Never pick a fight with an ugly person, they’ve got nothing to lose.
—ROBIN WILLIAMS, COMEDIAN
Speculative Frenzies
In 1991, Stephen Case founded America Online (AOL) and led it to rapid growth. In 2000, AOL and Time Warner merged, with AOL shareholders receiving 55 percent of the stock of the new AOL Time Warner. Thus, AOL was valued more highly than Time Warner. Following the merger, AOL suffered a major decline in profitability and cash flow. As a result, AOL Time Warner reported a loss of $99 billion in 2002, the largest corporate loss ever reported up to that time. Less than 15 ...
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