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...economic recovery seemed about to end. Second-quarter growth in the gross national product was a slow 1.1%, compared with 3.7% in the previous period. But the low level of inflation, about 3.5% for the year, enabled the Federal Reserve Board to ease up on interest rates. "The Fed is riding to the rescue," Economist Walter Heller said in May. As a result, more credit began flowing to businesses. Between April and July, the prime rate fell by a point, to 9½%, where it ended the year...
...Duvalier dynasty. Some even talk wistfully of a popular uprising or army coup. "There is a climate of extreme anxiety throughout Haiti," says a Western diplomat in the capital of Port-au-Prince. A Haitian industrialist calls this a "very explosive period." Says he: "People are tired and fed up with this regime." On New Year's Eve, Duvalier tacitly acknowledged the seriousness of the situation by taking drastic action: he fired four members of his "Supercabinet," which ran the day-to-day operations of the government, and then abolished that body. Ministers in charge of the economy, education, foreign...
...Fed's ruling, publicly announced to an overflow crowd of lawyers and lobbyists, stipulates that in certain cases junk bonds may represent no more than 50% of a takeover bid. To make an acquisition, shell companies--firms with no real assets--will be forced to pay half of the purchase price in cash. This could quash the efforts of crafty corporate raiders who have used nothing but junk bond debt to finance their billion-dollar takeover bids...
...Fed's new rule, however, is far from all-embracing. The regulation will not apply if an acquiring company has "substantial assets," including real estate holdings, manufacturing operations, or any cash-generating business, to back up the takeover. Nor would the use of junk bonds be prohibited when two firms make a friendly agreement to merge...
Still, no one expects that either junk bonds or hostile takeovers will disappear in the wake of the Federal Reserve's new regulation. Wily Wall Streeters will undoubtedly soon discover new ways to finance their deals. Even Fed Chairman Paul Volcker predicts that corporate raiders will uncover "innumerable devices" to circumvent the new policy. When that happens, the central bank could decide to take further action...