Chapter –XIX

The Leveraged Buy-out Gang

During the entire decade of the 1980's, the policies of the Reagan Bush and Bush
administrations encouraged one of the greatest paroxysms of speculation and usury that
the world has ever seen. Starting especially in the summer of 1982, a malignant and
cancerous mass of speculative paper spread through all the vital organs of the banking,
credit, and financial system. Capital had long since ceased to be used for the creation of
new productive plant and equipment, and new productive manufacturing jobs; investment
in transportation, power systems, education, health services and other infrastructure
declined well below thje break even level. Wall Street investors came more and more to
resemble vampires who ranged over a ghouilish landscape in search of living prey whose
blood they could suck to perpetuate their own lively form of death.

Industrial employment was out, the service sector was in. The post-industrial society
meant that the production of tangible, physical wealth, of hard commodities, within US
borders was being terminated. The future would belong to parasitical legions of lawyers,
financial services experts, accountants, and clerical support personnel, but the growth in
the balance of payments deficit signalled that the game could not go on forever.

On the surface, wild speculation was the order of the day: there was the stock market
boom, which underwent a crash in 1987, but then, thanks to James Brady's drugged
futures and index options markets, kept rising until the Dow had passed 3,000, although
by that time no one could remember why it was still called the industrial average. The
stock market provided the right atmosphere for a much broader speculative boom, the one
in commercial and residential real estate, which kept going until almost the end of the
decade, but which then began to crash with a vengeance. When real estate began to
implode, as in Texas at the middle of the 1980's or the northeast after 1988, savings
banks and commercial banks by the scores became insolvent. Thus, by the third year of
the Bush administration, a bankrupt savings and loan was being seized by federal
regulators on almost every business day, and Congressman Dingell of Michigan had to
announce that Citibank, still the largest bank in the USA, was indeed "technically"
bankrupt. Depositors in Hong Kong started a run on the Citibank branch there; their US
counterparts were slower to react, perhaps because deluded by the pathetic faith that the
Federal Deposit Insurance Corporation could still cover their deposits.

Even more fundamental than speculation was the absolute primacy of debt. During the
Reagan and Bush years, unprecedented federal defecits pushed the public debt of the