Criticism
By the late 1980s, public confidence in leveraged buyouts had waned, and criticism of the perceived engine of the takeover movement, the junk bond, had increased. Innovative financial instruments often generate skepticism, and few have generated more controversy than high yield debt. Some argue that the debt instrument itself, sometimes dubbed "turbo debt," was the cornerstone of the 1980s "Decade of Greed." However, junk bonds were actually used in less than 25% of acquisitions and hostile takeovers during that period. Nevertheless, by 1990 default rates on high yield debt had increased from 4% to 10%, further eroding confidence in this financial instrument. Without Milken's cheerleading, the liquidity of the junk bond market dried up. Drexel was forced to buy the bonds of insolvent and failing companies, which depleted their capital and would eventually bankrupt the company.
Read more about this topic: Drexel Burnham Lambert
Famous quotes containing the word criticism:
“It is the will of God that we must have critics, and missionaries, and Congressmen, and humorists, and we must bear the burden. Meantime, I seem to have been drifting into criticism myself. But that is nothing. At the worst, criticism is nothing more than a crime, and I am not unused to that.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)
“The aim of all commentary on art now should be to make works of art—and, by analogy, our own experience—more, rather than less, real to us. The function of criticism should be to show how it is what it is, even that it is what it is, rather than to show what it means.”
—Susan Sontag (b. 1933)
“A friend of mine spoke of books that are dedicated like this: “To my wife, by whose helpful criticism ...” and so on. He said the dedication should really read: “To my wife. If it had not been for her continual criticism and persistent nagging doubt as to my ability, this book would have appeared in Harper’s instead of The Hardware Age.””
—Brenda Ueland (1891–1985)