Review
"Barrie Wigmore's book will be the definitive financial history of a tumultuous financial decade. The interactions between the financial and the real economy became ever more important, and this book provides a rare degree of insight into how they work."--Lawrence Summers, former Nathaniel Ropes Professor of Political Economy at Harvard University
"From his vantage point at Goldman Sachs, Barrie Wigmore offers the reader a panoramic view of the momentous changes that transformed Wall Street in the early 1980s. His lively chronicle of the emergence of a new macroeconomic policy regime provides an essential backdrop to the stock market's resurgence. The new environment of low inflation and high growth, achieved by tight monetary policy and consequently high interest rates, created big losers and winners in the market. Wigmore sorts through the thicket of factors that caused the stocks of some industries to boom and others to falter. His explorations expose the complex links between the new derivatives, mortgage-backed securities, junk bonds, the merger wave, and the S&L crisis. Thus, this work is an invaluable guide to the researcher, analyst, or historian of the securities markets."--Eugene N. White, Chairman of the Department of Economics, Rutgers University
"This is a very useful book for those seeking to understand the turbulent markets of the US in the 1980s. This period includes the deepest US recession since the Great Depression of the 1930s, the worst peacetime inflation experience this country has ever had, the highest interest rates, and some of the most severe upheavals ever seen in the financial sector. The book maintains a high scholarly level throughout, while at the same time showing a depth of understanding that only an active professional participant in the markets can give."--Robert J. Shiller, Stanley B. Resor Professor of Economics, Cowles Foundation for Research in Economics, Yale University
Product Description
This book is the first of two volumes that provide a uniquely comprehensive history of stock, bond, and merger markets in the 1980s. This volume analyzes the dramatic recovery in the stock and bond markets and the surge in merger activity in the first half of the 1980s, following the dismal record of the 1970s. It expertly relates these changes to the new policy regime created by the Reagan administration, Federal Reserve monetary policy, falling oil prices, and the strong dollar. Although the securities markets, the economy, and inflation were performing favorably by mid-decade, this book reveals the stress and pain that were required to position them so favorably--contrary to rational expectations theory. Stocks and bonds reached their nadir in 1982, there were persistent financial crises that had to be surmounted, and many capital goods and commodities industries contracted permanently.
With a practitioner's eye for important inter-relationships, Wigmore reveals the impact of the Reagan administration on investor optimism and sorts out the influence of the Federal Reserve and the budget deficit on interest rates. The crises that had to be surmounted in international and domestic finance spring to life. He provides unique insight into the role of antitrust policy, lower bank lending standards, and junk bonds in the merger boom. He also describes the roots of some of the decade's later speculative excesses in treasury bond trading, the futures markets, mortgage-backed securities, and the junk bond market.
