The End of the Eighties - Great or Greedy? - 27 April 1990

Tuesday morning, a brilliant spring day, saw an extraordinary scene in downtown Manhattan that was variously described by newspaper reporters as the curtain call on the 1980s and, in a paper long known for its good grey prose, as the last public appearance of the premier financial swindler of all time.

There was a big, restless crowd already on the sidewalk outside the federal district court, when a black car slid up and the man himself, a very tall, slim man in a dark suit, an affable-looking man with a tumble of black hair, unwound himself out of the car and had a rough time getting through the crowd which was now surging and bubbling around him, as it might for a movie star.

In a way, he is a movie star. For at the same moment, on a sidewalk in the mid-70s on the East Side, there was another crowd watching the filming of a character of whom our man entering the courthouse was the prototype.

The movie that's being shot here is an adaptation of Tom Wolfe's Bonfire of the Vanities, a Balzacian journal or coroner's inquest on the life and death of the 1980s. And the character the cameras were training on was Sherman McCoy, who thought of himself as the king of the jungle. The Wall Street jungle that is. And who would, before the movie ended, get his cruel but just reward.

At the same time, down in federal court, the original of Sherman McCoy was being asked how he pleaded to six felony counts of conspiracy, filing false information with the Securities and Exchange Commission which polices the stock market, violating the commission's reporting requirements, securities fraud, mail fraud and aiding and abetting in the filing of a false tax return.

It has taken the United States attorney's office years to track through a jungle of documents and letters and memos and audits in order to present the case at Tuesday's hearing.

In a simpler world, they might have been spared their sweat. For in no time at all in the courtroom, the tall man, all his affability dissolved, was sobbing, "I realise by my acts, I have hurt those who are closest to me. I am truly sorry". The judge allowed him to dry his tears and then asked him, "Mr Milken, how do you plead?" Through a cracking tone of voice, Michael Milken replied, "Guilty, your honour".

Mr Milken has been known as the "king of the junk bond", which may be very starkly defined as a perilously high risk but, if it works, high yield, security. Junk bonds have undoubtedly helped many small firms through generous grants of credit to survive and prosper.

But, more often than not, they have paper-financed giant takeovers and pushed them at once on to preposterous levels of debt and ruined them, along with legions of investors.

However, none of the crimes to which Mr Milken pleaded guilty involved the junk bond market. He was charged with other crimes on that count but the charges were dropped when he agreed to pay $200million in fines and set aside another $400million to satisfy civil claims filed against him. A remarkable break for a big-time swindler.

The crimes he admitted were, in general, illegal acts, performed with accomplices, which were intended to enrich Mr Milken's enormously prestigious firm, Drexel Burnham Lambert, whose prestige, whose existence, vanished with the wind with its collapse into bankruptcy less than three months ago.

Mr Milken will be sentenced on 1 October, so he'll have five months to enjoy himself at large. It is not likely to be a greatly restricted or impoverished life. After paying out those $600million, he is reliably reported to be left with a little over $1billion.

The exposure and ruination of a banker or other prominently wealthy man is always a fascinating story and, let's admit it, to most of us, a meanly satisfying one. In a depression, there are scores of them. They come, they excite us, they go. But every so often, the decline and fall of one man sounds more like a general warning, a fire alarm, than a personal calamity, whenever the fallen man is seen as a symbol of a system that has gone awry.

In the depth of the Great Depression in early 1932, it is hackneyed to say that most ordinary people had lost faith in the bankers and the banking system. But most of the big men who we thought had let us down, the financiers and statesmen who promised us that prosperity was just around the corner, most of them were guilty of bad judgement, of myopic foresight. Their misdeeds were well within the law.

Then, on a March day, that year, a Swedish financier, one Ivar Kreuger, known as the Swedish Match King, put a bullet through his chest. The news rocked the newspapers of the world.

Kreuger had been celebrated in awesome prose by some of the most astute and serious journals in many countries. Time magazine called him a "titan" of finance. When his story came out, what we had to confront was an unbelievable record of financial crookery on a vast, international scale. I doubt that the columnist in last Wednesday's New York Times, if he'd stopped to look over the story of Ivar Kreuger, would have called Michael Milken "the premier financial swindler of all time". Kreuger, in his grave, must be registering a vigorous descent.

But Milken is in the same league with Kreuger. Certainly as a symbol. As a symbol of what has been called the "me" decade, of what Tom Wolfe called "the burning itch to grab it now".

The sentencing of Michael Milken will drive the last nail in the coffin of the junk bond and send a shudder through the millions of ordinary citizens who lost their shirts in the mass bankruptcy of the savings and loans, the building societies.

The day that Michael Milken came to court, a headline in a newspaper literary section read, "In books, greed is out". It topped a survey of the bestseller lists and revealed that a trend in public taste that we guessed would soon be on its way out was already dead and gone.

Throughout the '80s, the non-fiction lists were headed by the autobiographies of self-made men, by titans like Lee Iacocca, the phoenix of the automobile, by Donald Trump, the young bouncy blond tycoon whose aspirations to take over hotels, casinos, airlines, resorts, cities – why not the country? – appear to be boundless.

Along with these confessions of success, the non-fiction bestseller list was, for many recent years, filled out by How To books, but mostly, How To Make A Million, How To Gain Comfort and Luxury In Early Retirement, How To Live The American Dream In Two Years Flat.

There has been a general retreat of such stuff from the stores and from the publishers' lists. A whole raft of the spring offerings suggest almost a concerted act of penance for the Reagan years we once so loved to praise. How about, The Politics of Rich and Poor? Wealth and the American Electorate in the Reagan Aftermath, and Disorder and Decline: Crime and the Spiral of Decay in American Neighborhoods. And The Worst Years of Our Lives: an Outsider's View of the '80s.

Notice that these titles all carry emphatic subtitles just to drive home the point that the author was never deceived and is about to indulge a full-throated lamentation for the fools' paradise of the 1980s.

Well, what happened to the measured but shining tributes to Ronald Reagan the day he left office? The long eulogy of George Will, the sharpest and most thoughtful of conservative commentators. Listen to him, "Reagan's aim has been to restore the plain language of right and wrong, good and evil, for the purpose of enabling people to make the most of freedom".

The world seems less dangerous than it did in 1980 and Reagan is partly responsible. By knocking the budget into radical imbalance he has placed a restraining hand on the 1990s but it will not restrain the growth of the welfare state.

In 1981 America needed reassurance. It needed to recover confidence in its health and goodness. It needed to recover what was lost in the 1960s and '70s, the sense that it has a competence commensurate with its nobility and responsibilities. Reagan, like Roosevelt, has been a great reassurer, a steadying captain who calmed the passengers and, to some extent, the sea.

Well now, the community song has turned into a song of lamentation, a dirge and an indictment of greed and decline and disorder and corruption. Reagan is now suddenly not a second Roosevelt, but a second Harding, another very popular president in a prosperous time who's now chiefly remembered for the shady financial shenanigans of his Cabinet.

I wonder how the old man feels, sitting up there in his office tower in Beverly Hills to hear and read from the sprightly new 1990s authors that he was presiding over a corrupt administration and a failing country. Surely the verdict of history, even in the short run, won't be so damning or so lyrical?

It all depends on which events stick in the public memory. The lowest unemployment and lowest inflation rates, or Iran-Contra and Michael Milken.

There's no rule, no formula, to guarantee the remembrance of the good things. President Herbert Hoover, for one, was a remarkable American in many ways, not simply an engineer of international reputation but the man who saved Europe after the First War from mass starvation.

John Maynard Keynes said of him at the Versailles peace conference, "He imported into the councils of Paris precisely that atmosphere of reality, knowledge, magnanimity and disinterestedness which, if they had been found in other quarters also, would have given us the good peace". But Wall Street crashed during Hoover's reign and he's remembered, cruelly, as the author of the Depression.

Mr Reagan claims to know the American people well. I hope he knows that their frantic affection for a new crooner is only matched by their impatience for the next one.

At the moment, he is the victim of an associated American characteristic, the yearning to anoint a new president as a Moses and when he turns out not to be Moses, to dump him and look around for another one.

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