Word: debts
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Dates: during 1990-1999
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Money managers call it the doomsday scenario, forseeing an event that could wipe out investor portfolios and wreak havoc on the stock market. The danger stems not from new financial woes erupting abroad but from something happening here. It is the explosive growth in margin debt--loans Americans take out to buy stocks. Margin debt has shot up to $180 billion at midyear, a 25% increase in just six months and by far the most ever recorded. It now accounts for 1.2% of the stock market's total capitalization...
That doesn't seem like much, but it's a level not seen since the last speculative bubble burst, in 1987. And it's still growing, almost exponentially, rising faster than credit-card or mortgage debt. "We've had an expansion of margin debt the likes of which haven't been seen since the 1920s," says Tom Schlesinger, executive director of Financial Markets Center, a research institute...
...borrowed funds that you have to dig into your own pocket to meet the margin requirement or dump stocks you already own to raise the money. If you don't, the broker can sell your securities--and will he ever!--without notifying you. Given the historic level of margin debt out there, a wave of forced selling could lead to a violent downdraft in prices and possibly end the nine-year economic expansion...
...though, Artisan is basking in its good fortune with Blair Witch. Its executives plan to meet with the filmmakers this week to discuss sequels and prequels. The film's success has even earned Artisan higher visibility on Wall Street, where there's been talk of an IPO or debt offering. In at least one way, however, Artisan does hope to emulate its chief indie rival, Miramax. "In five years' time," says Block, "we certainly want to win an Academy Award for Best Picture." Blair Witch in Love, anyone...
...companies used by Atlanta gunman Mark O. Barton -- have not only been under-disclosing to clients the risks associated with this very risky business, but also have been arranging trader-to-trader loans, thus ensuring the flow of commissions while the trader, often, sinks deeper into debt. Such loans, said Massachusetts regulator William Galvin, are brokered "using the same rhetoric as bunko artists and Ponzi schemes...