Edward Jay Epstein has posted a long piece on "The Milken Revolution and Its Consequences," an excerpt of Mr. Epstein's new e-book, The Money Demons.
On Milken:
He undertook, as a matter of routine, to work a fifteen hour day. He usually arrives at the trading room at 4:30 a.m.-- toting two dog-eared canvas bags full of reports and memosthat he had taken home to read-- and remains there until at least 7:30 at night. "Lunch,"usually a sandwich and soda, is brought in on a tray for him, and everyone else, at 10a.m. He neither smokes or drinks-- not even coffee, explaining, "I don't need stimulants."
More: "By concentrating on the first component in his equation--the historical balance sheet-- the rating services had seriously neglected the other component--future cash flow. 'And that what bonds are all about-- getting paid off in the future,' he added."
And this:
Under siege, corporate managements turned in increasing numbers to State and Federalvgovernment for help. By November 1986, some 30 bills had been proposed in Congress,while a dozen states passed or considered anti-take over laws. With the Business RoundTable, which represents the Fortune 500, warning that junk bond take overs could bringon a 1929-type depression, the Federal Reserve Bank raised margin requirements on junk bond financing, State Insurance Commissions mandated reduced investment in junk bonds, and Congressmen called for new restrictions on their purchase.
Rudolph Giuliani is no hero in this tale.
