>Nice overall point about how policing on the margins maintains the integrity
>of a rigged racket. But just in case you are serious,
Half. Or something like that. Maybe more even.
> it is worth analyzing
>why Milken really deserves jail. You make the case that Milken funded
>marginal risky investments when many others would not. But is that a good
>thing? You cite MCI- MCI was a massive unionbusting firm that grew based
>on regulatory subsidy by the FCC and did little more than helped usher in
>lower rates for big business customers at the expense of higher costs for
>local phone service.
According to the CPI local phone subindex, local phone costs lagged the CPI from 1977 to 1983 (the series starts in '77, and '84 was the year of the Bell breakup), moved in tandem with the broad CPI from 1984 to 1990, and has lagged the CPI since by about the same margin it did from 1977 to 1983. So "higher costs" seems a bit overstated.
Still, I wasn't arguing that MCI was a good thing. I was arguing that Milken actually did what the public securities markets claim to do but rarely carry through on - financing new risky ventures. Whether that's a good or bad thing is another question entirely. But moralists like Felix Rohatyn, who spent the 1980s denouncing Milken, *never* financed a new venture - Rohatyn was almost entirely an M&A artist, and a protege of the inventor of modern financial engineering, Andre Meyer.
>I can and have made a case for why big lumbering banks like Bank of America
>in its heyday where much better for working class folks (even if tilted
>inevitably to the wealthy) since it tied the savings and fates of average
>people into the success of the overall economy. As the days of Savings and
>Loans and regional banks have given way to junk bonds, "securitization" and
>venture capital, the money game has become even more starkly an internal
>circulation of capital among the elite.
>
>Hell, to give a personal example- when I was in Vegas, financing of the
>casinos had just recently shifted from mob and Teamster pension funds to
>Milken-financed junk bonds. The result was unquestionably a harsher,
>anti-worker management.
>
>Do you have any argument for how junk bond financing improved the lives of
>average folks over the older, conservative banking approach?
That's not the question either. I wrote a longish book on how Wall Street sucks. But it sucks *legally*. It may be a crime against humanity to be a speculator or an investment banker, but it's not against U.S. law. The changes in the financial landscape have been a matter of public policy. Until we're willing to jail the authors of the various dereg bills of the 1970s and 1980s (which, in the case of transport dereg would include Teddy Kennedy), then jailing Milken was strange and unfair.
Doug