|The Celebration of Wealth
|Digital History ID 3368|
In 1981, the year Ronald Reagan was inaugurated as president, ABC television introduced the smash hit "Dynasty," a show celebrating glamour and greed. It was, in the eyes of many social commentators, an appropriate beginning for the 1980s--a decade of selfishness and an anything goes attitude.
Wall Street enthusiastically took part in the new celebration of wealth, as the Reagan years witnessed a corporate merger and takeover boom of unprecedented proportions. By using low-grade, risky "junk bonds" to finance corporate acquisitions, corporate raiders such as Michael Milken of Drexel Burnham Lambert purchased and then dismantled companies for huge profits. In 1987, Milken earned $550 million by financing acquisitions.
During the 1980s, 100,000 Americans became millionaires every year. The average annual earnings of the bottom 20 percent, however, fell from $9,376 to $8,800. In addition, many of the new jobs created during the Reagan years were in the low-wage service industries.
By the early 1990s, there were signs that the time had come to pay for the financial excesses of the 1980s. On October 19, 1987, the Dow Jones industrial average fell 508 points--a 22.6 percent plunge in stocks in one day. In response, many Wall Street stock brokerage firms began to lay off employees--cutbacks that continued despite the market's recovery. In 1989, Milken was indicted on charges of criminal racketeering and securities fraud. The next year, Drexel Burnham Lambert agreed to pay a fine of $650 million and filed for bankruptcy. Wall Street speculator Ivan Boesky was fined $100 million for insider trading and sentenced to jail. Those Americans who had fostered in the ambition, greed, and excesses of the 1980s seemed to be getting their comeuppance.
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