The Match King: Ivar Kreuger, The Financial Genius Behind a Century of Wall Street Scandals |  | Author: Frank Partnoy
Publisher: PublicAffairs
List Price: $26.95
Buy New: $9.99
as of 11/23/2009 02:57 CST details
You Save: $16.96 (63%)
New (42) Used (22) from $7.37
Seller: feathersbooks
Rating:  12 reviews
Sales Rank: 20328
Media: Hardcover
Pages: 288
Number Of Items: 1
Shipping Weight (lbs): 1.2
Dimensions (in): 9.3 x 6.2 x 1
ISBN: 1586487434
Dewey Decimal Number: 364.1680924
EAN: 9781586487430
ASIN: 1586487434
Publication Date: April 13, 2009
Availability: Usually ships in 1-2 business days
| |
| Features:
|
| Also Available In:
|
| Similar Items:
| |
| Editorial Reviews:
Product Description
At the height of the roaring ’20s, Swedish émigré Ivar Kreuger made a fortune raising money in America and loaning it to Europe in exchange for matchstick monopolies. His enterprise was a rare success story throughout the Great Depression. Yet after Kreuger’s suicide in 1932, the true nature of his empire emerged. Driven by success to adopt ever-more perilous practices, Kreuger had turned to shell companies in tax havens, fudged accounting figures, off-balance-sheet accounting, even forgery. He created a raft of innovative financial products— many of them precursors to instruments wreaking havoc in today’s markets. When his Wall Street empire collapsed, millions went bankrupt. Frank Partnoy, a frequent commentator on financial disaster for the Financial Times, New York Times, NPR, and CBS’s “60 Minutes,” recasts the life story of a remarkable yet forgotten genius in ways that force us to re-think our ideas about the wisdom of crowds, the invisible hand, and the free and unfettered market.
|
| Customer Reviews:
Showing reviews 1-5 of 12
 Hero and Villain October 29, 2009
Luc REYNAERT (Beernem, Belgium)
Empire
Ivar Kreuger's industrial empire was mainly built on national monopolies for match sales.
At the zenith of his business career, his holding companies Swedish Match and Kreuger-Toll owned 225 subsidiaries covering banking, mining (Boliden), railway, timber, paper, cellulose, iron ore, real estate, telephone (L.M. Ericsson) and film production (Greta Gustafson Garbo) and distribution interests, together with 75 % of the world's match manufacturing and 24 national match sales monopolies.
All these investments were controlled AND managed by one man: Ivar Kreuger.
Business strategy
His strategy was based on horizontal and vertical integration, but also on briberies and the use of tax havens (he bribed all 13 members of the Liechtenstein parliament!).
Financial strategy
To attract new financial resources he distributed extremely fat dividends, thereby sometimes using his own version of a Ponzi scheme: continuing to pay dividends with newly raised cash.
The financial capacity of his home country, Sweden, was far too small for his business ambitions and he turned to Wall Street to tap new capital.
He was a real financial innovator, creating A and B (1/1000 of one vote) as well as preferred shares in order to keep control of all his interests.
Reporting
Ivar Kreuger used now very well known accounting subterfuges: false financial statements, off-balance sheet liabilities, undisclosed risks, complex derivatives in offshore subsidiaries and even forged signatures and counterfeited debits (bonds).
But in the 1920s some of these practices were rather common. Only 1/4th of the listed companies published quarterly results (without any detail) and 1/3th didn't even report at all. There were no real audits or GAAP rules.
Crash
A few years after the Wall Street crash, Ivar Krueger's conglomerate disintegrated. Its estimated loss was greater than Sweden's national debt. However, investors still recovered 50 % of their money after the bankruptcy proceedings were closed, even when major parts of his holdings were sold at fire prices. The Wallenberg family snatched away his main holding Swedish Match, which still exists today, like L. M. Ericsson and other subsidiaries.
New regulations
Without the collapse of Ivar Kreuger's empire, modern securities regulations and litigations, as well as GAAP rules would not exist or would be introduced much later.
Overall picture
Frank Partnoy's excellent research shows us a Match King as the first real tycoon, full of hubris, living all the time on the brink of financial breakdown, a financial genius and visionary innovator, a reckless entrepreneur who sought greatness, not wealth.
His book is a fascinating portrait of a man who knew no limits and used all means to build and extend maniacally his industrial power base.
This corporate and personal drama is a must read for all those interested in the business world and economic history.
The Match King September 11, 2009
D. B. Ansley (Nashville)
I thought it was a good read especially for airport travel as it was an engaging "start/stop"type book. It was fascinating how innovative Ivar was in creating investment vehicles that are prevalent today but considered radical at the time. Equally fascinating was how long he was able to keep afloat despite the great depression. Certainly a different perspective on the period than I had read before.
Fascinating well-researched financial history with lessons to learn from for us today September 1, 2009
kjellnilsson (Orebro Sweden)
1 out of 1 found this review helpful
Frank Partnoy is a professor of Law and Finance, but do not let that detract you from reading this book, which is not a yawner by a far cry. He has already written two bestelling "financial thrillers", FIASCO and Infectious Greed, and surely knows how to captivate a reader. His latest achievement is this book on the one-time Swedish engineer-turned-industrialist and financial wizard, Ivar Kreuger. The given name Ivar should, by the way, be pronounced not like English-speakers would likely believe, say, "ai-vurr", but more like "ee-vahrr, and N.B. the first syllable is the stressed one. But such niceties are not explained here, on the contrary the text bears many stamps showing that the author does not know Swedish, and that the publisher didn't help out by hiring a knowledgeable corrector. Not only Swedish but also German words and names (of persons or of companies) are misspelled here (glaring is for instance "Svenska Filmindustri"), and the long lists of references and footnotes (pp. 230-262) are, astonishingly for a book dealing with European businesses, monolingually to English sources. There is not a single picture to purvey a flavour of the time or to enliven the book (except a formal portrait -in b/w- of the young but already baldening protagonist, reproduced on the wrapper).
What the book offers is instead an in-depth analysis of Ivar's (this is the way Partnoy refers to him throughout, not "Mr Kreuger" or the like) activities on the US financial markets beginning in 1922. It is a story about image-building ploys, about raising money through manipulation of your bankers, your accountants, and the willing media fellow-travellers (sound familiar, anyone...? !) but also of one man's stubborn decisions to get at the top, and stay there. When you would pocket from your usual US share in some NYSE blue chip stock around 2-4 per cent in dividends (in those days seemingly paid out in quarterly installments) Kreuger's companies would pay out whopping 20-25% dividends to the shareholders, apparently due to hubris on the part of Kreuger (Partnoy's view as an economist on this would have been welcome but he is silent on the matter). And these were real money that went into the pockets of investors in his companies, regularly and timely. In retrospect, when one hears the figures involved, one cannot help comparing with today's situation: the final collapse in Spring, 1932 was due to his failure to raise four million dollars to be paid as dividend to his American shareholders for the next upcoming quarter...That was all it took, back then, to bring down a worldwide business enterprise. Fortunately, Partnoy gives the reader many glimpses into the rest of Ivar's many frantic activities as manager of that financial conglomerate of somewhere around a hundred different companies spread around the world, who all had real assets and made real profits unlike many of today's figure-juggling acrobates on the financial markets. One comes away with the feeling that Partnoy has a good deal of admiration for Ivar's achievements as an industrialist -but this is not what the book is mainly about. The main topic is, throughout, the story of how Ivar, and his American fundraisers, between the years 1922 and 1931-32, headed for the road toward that defaulted dividend payout that ultimately led to the fall of his American investment banking partners. Yes, there was some lack of full disclosure of transactions and assets but not more than in most other American major companies in the 1920's, and yes, there were a few instances of outright fraud, toward the very end of the story. But there would in fact be much more to do if one wanted to give more full accounts of Kreuger's worldwide non-US activitites, but that will take another book or two, it would seem.
Fortunately, the story as it is now remains very much alive and full of interesting glimpses into the lifestyle of people in the American financial world back then, both the very rich ones like Ivar himself and of the likes of Jack Morgan etc, and of more modest salarymen (and their wives) like the poor American and Swedish accountants that had to try to audit Ivar's complex business dealings from time to time. A particularly strong section of the book (pp.201-226) deals with Kreuger's aftermath, the financial leftovers of his companies (which, contrary to popular belief, were truly plentiful and profitable, Partnoy sets the record straight there) and various theories -for and against them- about his untimely death in a hotel room in Paris, 1932. For instance, the flagship, Swedish Match itself, is still today a thriving company, one of the few that actually increased its value during the market slump of 2008-2009, see their website at [...].
In addition to reading like a detective story for much of the time, and perhaps unlike your usual fiction storytellers, here are take-home messages that you even may benefit from yourself in the future when pondering about what you are learning about these things, for instance which stocks -or more complicated financial instruments, several of which Ivar invented or introduced on the US market for the first time- you should trust for your own investments and pension plans. I read this book in just two days although I am normally a slow reader, but it was so exciting that I just couldn't stop reading. I will seek out several more sources about Ivar and his time, guided by the useful Bibliography appended. I deduct a star for the slight deficiencies I mentioned at the beginning but clearly I am glad that I read this fascinating and in general well-written book.
(if you want to learn more about Sweden and its economy and business development there is not much in English out there but top economic historian (he was one of the founders of that science, actually) Eli Filip Heckscher published a Harvard yawner, available second-hand on Amazon, An Economic History of Sweden (Harvard Economic Studies) in 1954, a short version of his Swedish multivolume masterpiece: it goes up to the 1920's so you can put Ivar Kreuger in a national perspective).
 Intriguing Look at the Consequences of Poor Securities Regulation, Disclosure, and Due Diligence July 15, 2009
Professor Donald Mitchell (Boston)
"Indeed, the light of the wicked goes out,
And the flame of his fire gives no light."
-- Job 18:5
Ivar Kreuger and his enterprises are often mentioned in passing by books and articles about the Great Depression, securities, regulation, and fraudulent leadership. Each such reference seemingly assumes that the reader knows all about the subject. Well, I didn't and I suspect you don't either.
Before the mortgage-backed securities meltdown, manipulations of the junk bond market occurred, American Express didn't have any oil in its tanks, and bad accounting made residential real estate developers look profitable when they were on the edge of bankruptcy, Ivar Kreuger used financial innovation after financial innovation to build a huge enterprise and become one of the leading lenders in the world to nations. In this book, you'll read about how those innovations began and how they ended up for the investors.
For much of his career, Mr. Kreuger kept people from realizing that his persona was a carefully calculated and staged one. No one seemed to care as long as it appeared that he was making people rich.
But his inability to understand what he could afford to pay for money caused him to overpay. Eventually, his house of matchsticks collapsed amid the market meltdown during the first few years of the Great Depression.
As an investor, it would be profitable to read this story. It will make you more skeptical of those who pay a lot for their capital. That would be a good lesson to learn.
As someone who wants to understand the financial innovations, I fear that the writing won't get the points across unless you are already pretty financially sophisticated. The book would have benefited from some detailed examples developed in tables within the text.
If you want to understand the lessons for corporate leadership, the book is also on the frail side beyond suggesting that it's a good idea to fully and accurately disclose your situation on a timely basis. At bottom, Mr. Krueger had some very interesting ideas about new business models, a point that isn't fully developed in the book.
If you want to resolve all the mysteries about his death, the book will flesh out some different theories . . . but probably won't leave you satisfied that you know the answer.
On the regulatory front, the book doesn't provide enough perspective on what current practices are to indicate the full extent that the 1920s and early 1930s practices were different. In a number of cases, I'm not sure that current due diligence is necessary much better.
As a story teller, Mr. Partnoy seems compelled to provide as much detail as possible where it's available from first-person accounts and correspondence . . . but not to fill in from other sources and perspectives. As a result, this book gives you more than even a CPA would want to know about his interactions with his accountants and auditors.
Fortunately, it's a pretty short book and Ivar Kreuger is pretty interesting. That combination makes this book a convenient way to fill in the gaps in your knowledge about this "famous" financier.
 Sadly disappointing June 15, 2009
J. DiChiaro (Seattle, WA USA)
2 out of 5 found this review helpful
I was very much looking forward to this work after the enticing allusion to it in The Economist several months back. While I noticed another reviewer allude to the author's ability to streamline so much material into 200 or so pages, I found the opposite to be true. While reading, it seemed a fragile and incomplete tale was stretched to fit between the covers of this volume and released to meet a timely demand for works on financial scandal. A shame. The true story, it seems, is so much more.
Showing reviews 1-5 of 12
|
|
|
|
