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When Genius Failed
Roger Lowenstein chronicles how Long-Term Capital Management — staffed by Nobel laureates and Wall Street's brightest minds — leveraged $4.7 billion into $1.25 trillion in positions before nearly collapsing the global financial system in 1998. The failure demonstrated that mathematical models cannot capture tail risks and that leverage transforms small errors into existential crises. The Fed-orchestrated bailout set precedents that shaped responses to future crises.
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