The Predators’ Ball
“Congress had been quieted. The takeover debate would continue—but in academia, not in the halls of Congress. And the Fed’s action had been rendered impotent.
“The force in this country buying high-yield securities has overpowered all regulation,” Milken had announced to a group of pension-fund managers and others in April 1986, as reported in The Washington Post. “The investors have recognized increased value, and those financial institutions who dare to move into this area have been well rewar...ded.” Indeed. Free of any constraints, Milken’s machine was working like a dream. And his critics, many of whom had been prophesying a debt-triggered doomsday for the last two years or so, were twisting in the wind.
One of the most thoughtful was James Grant, editor of Grant’s Interest Rate Observer, who had carved out his anti-junk position back in September 1984. Grant explained that he had reached this point of view, first, because the world even at that time was long on debt and short on equity, and he followed the old investment adage that one should own the thing in short supply and shun the thing in surplus.MoreLess
“The force in this country buying high-yield securities has overpowered all regulation,” Milken had announced to a group of pension-fund managers and others in April 1986, as reported in The Washington Post. “The investors have recognized increased value, and those financial institutions who dare to move into this area have been well rewar...ded.” Indeed. Free of any constraints, Milken’s machine was working like a dream. And his critics, many of whom had been prophesying a debt-triggered doomsday for the last two years or so, were twisting in the wind.
One of the most thoughtful was James Grant, editor of Grant’s Interest Rate Observer, who had carved out his anti-junk position back in September 1984. Grant explained that he had reached this point of view, first, because the world even at that time was long on debt and short on equity, and he followed the old investment adage that one should own the thing in short supply and shun the thing in surplus.MoreLess
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