Securities Markets in the 1980s: The New Regime, 1979-1984

By Barrie A. Wigmore | Go to book overview

10
Conclusions

The first Reagan administration marked a change in policy regimes that sharply reduced inflation, set the foundation for a record period of steady economic growth, revived the stock and bond markets, and initiated a merger boom without modern parallel. The federal authorities contributed a set of explicit policy decisions to this new regime -- monetary policy that was aggressively anti-inflationary, fiscal policy that reduced taxes, and free-market prejudices that disbanded wage and price controls, attacked unions, ceased energy regulation and incentives, and freed industry of most antitrust controls. Some aspects of the new regime were fortuitous, such as the drop in the price of oil from $40 a barrel to $25, the 55% rise in the dollar, and the decline in credit standards for bank loans and junk bonds that fueled the growth in the merger market, although it must be said that Reagan administration policies fostered and often welcomed these trends. The administration's policies also contrasted strongly with those of the Nixon and Carter administrations, under which the Federal Reserve was more concerned with economic growth than inflation, wage and price controls were favored, and there was extensive intervention in the energy industries -- policies that led to rising inflation, a weak dollar, and frequent crises in the foreign exchange and financial markets.

The eventual results in securities markets and the economy were very much what the proponents of the new regime had promised -- lower inflation, steady economic growth, and rewarding stock and bond markets. Inflation dropped below 3%, the economic recovery during 1983-1984

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Securities Markets in the 1980s: The New Regime, 1979-1984
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Contents ix
  • 1 - Introduction 3
  • 2 - The Change in Regimes 15
  • 3 - The New Regime Revives the Common Stock Market 79
  • Summary 107
  • 4 - The Underperforming Industries 118
  • Summary 174
  • 5 - The Overperforming Industries 178
  • Summary 210
  • 6 - U.S. Treasury Markets 211
  • Summary 240
  • 7 - The Mortgage Securities Market 242
  • Summary 252
  • 8 - The Corporate Bond Market 253
  • Summary 295
  • 9 - The Merger and Acquisition Market 301
  • Summary 361
  • 10 - Conclusions 366
  • Notes 380
  • Index 401
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