Separating Fools from Their Money: A History of American Financial Scandals

What do Michael Milken and Martha Stewart have incommon? (Answer: Both became public scapegoats for anoutrageous era of greed and excess.) What was the mostoutrageous party thrown by a financial baron of the twentiethcentury? (Answer: Tough call, but either MichaelMilken’s Predators Ball in 1985, or Dennis Kozlowski’sSardinian birthday bash in 2001, with its vodka-spoutingsculpture.) Which U.S. war hero president became partyto, and victim of, an unabashed con man known as theNapoleon of Wall Street? (Answer: Ulysses S. Grant, butit’s a long story.)These questions and more are discussed in Scott Mac-Donald and Jane Hughes’ Separating Fools from TheirMoney. The authors trace the history of financial scandalsfrom the early days of the young republic through theEnron/WorldCom debacle of modern times. A host ofcolorful characters inhabit the pages of this history, revealinghuman nature in all of its dubious shades of gray. Atthe same time, the book exposes themes common to allfinancial scandals, which remain astonishingly unchangedover more than two centuries-greed, hubris, mediaconnections, self-interested politicians, and booms-gone-bust,to name a few.Informative and entertaining, Separating Fools shouldengage the interest of investors and casual business readers,as well as economists interested in supplementalreading for their students. A new introduction focuses ontrends since publication of the original, with a postscripton the financial panic of 2008.

Scott B. MacDonald is a partner and co-head of research at Aladdin Capital Management, LLC. He is the author of European Destiny, Atlantic Transformations and the co-author, with Albert L. Gastmann, of A History of Credit and Power in the Western World, both available from Transaction. Jane E. Hughes is a professor of finance at Hult International Business School in Boston. She is the co-author, with Scott B. MacDonald, of International Banking and, with Scott B. MacDonald and David Leith Crum, of New Tigers and Old Elephants, available from Transaction.