Word: economists
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Dates: during 1980-1989
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...most accounts, the Fed is attempting to nip inflation before it buds, a policy some economists believe could be dangerous. Says Sidney Jones, a professor at Georgetown University's business school: "The Federal Reserve is overreacting to the risk of what it perceives as an overheated economy. I don't think it's there." Adds Edward Yardeni, chief economist for Prudential- Bache Securities: "I hope Greenspan doesn't do too good a job of keeping the lid on, because it could cause a recession. I don't think he will, but he could take some...
Salinas, the 40-year-old economist and former foreign minister of Budget and Planning, finds himself immediately confronted with an economy which many observers say is on the verge of wholescale collapse. Inflation is nearly 60 percent, per capita income is rapidly declining and the country's foreign debt is roughly $104 billion. Service and interest payments on this debt alone demand more than 40 percent of Mexico's export earnings, money desperately needed to revitalize the country's industrial base...
...even in the investment community, where some executives feared that the Johnson-initiated scramble would swallow up too much of the available money for deals and, moreover, give mergers and LBOs a bad name. "This is the sort of excess that investment bankers have worried about for years," said economist Robert Reich of Harvard's John F. Kennedy School of Government, "because it so clearly exposes the greed and rapaciousness of so many of these takeovers." Martin Weinstein, managing director of Kubera, a Wall Street arbitrage firm, concurred: "Do I sense fear? Yes. At some point there is going...
...worrisome of borrowing, because they replace virtually all of a company's equity with IOUs that must be repaid. A sudden downturn can thus put a firm heavily in hock out of business. "High leverage is unsafe, not just for a company but for the entire economy," says M.I.T. economist Franco Modigliani, a Nobel laureate. Modigliani adds that while the debt mountain has not yet grown perilously high, "LBOs are reducing the safety. Management loses the power to do many things. It has no margin for error and less margin for additional risk...
Proponents say many companies have become stronger than ever after being taken over and reorganized. The point is driven home in a study by Abbie Smith, a University of Chicago economist who surveyed 58 acquired companies -- among them, R.H. Macy, Mary Kay Cosmetics and Uniroyal -- most of which had been bought out since 1984. The findings indicated that the firms were generally more profitable and productive after they were bought...