Crashes and Crises: Lessons from a History of Financial Disasters Season 1 Episode 20 Unhedged! Long-Term Capital Management

In season 1 episode 20 of Crashes and Crises: Lessons from a History of Financial Disasters, titled "Unhedged! Long-Term Capital Management," viewers are taken back to the late 1990s when hedge fund Long-Term Capital Management (LTCM) was experiencing massive success. The fund was managed by prominent figures in the finance industry, including Nobel Prize winners, and was known for making highly risky bets using borrowed money.

However, as the episode unfolds, viewers see the cracks in LTCM's strategy. The fund had too much exposure to certain markets, and when those markets turned against them, LTCM began losing billions of dollars. Despite attempts to keep the fund afloat, it ultimately collapsed, causing widespread panic in the financial industry and threatening the stability of the entire economy.

Through interviews with industry experts, the episode delves into the specific strategies LTCM used and how they ultimately led to the fund's downfall. Viewers also see how the failure of LTCM highlighted the dangers of financial institutions being too interconnected, as the ripple effects of its collapse were felt across the globe.

Overall, "Unhedged! Long-Term Capital Management" serves as an important cautionary tale about the risks of overleveraging and overconfident investing in the financial industry. It also sheds light on the crucial role of regulation and oversight in preventing financial disasters, an important conversation that remains relevant in today's rapidly changing economy.