Vital Signs

The Restructuring of America

Restructuring: that's one way the recent wave of take-overs, breakups, and buyouts of major US corporations has been described.

Others see it in more pejorative terms. "Violating the rules of prudence" said a Wall Street Journal editorial. "The buyout bomb," The New York Times called it. "When everything's for sale, you lose something," is the way Harold Geneen, former chairman of the huge conglomerate, ITT, puts it.

Even the lawyers, who sometimes pocket fees running into the millions of dollars from these transactions, are getting nervous. Martin Lipton, one of the best (and richest; he's the father of "poison pills" designed to thwart takeovers), wrote to his clients in October: "Our nation is blindly rushing to the precipice. As with tulip bulbs. South Sea bubbles, pyramid investment trusts, Florida land, REITs, LDC loans, Texas banks, and all the other market frenzies of the past, the denouement will be a crash.

"We and our children will pay a gigantic price for allowing abusive takeover tactics and boot-strap, junk-bond takeovers. . . . While the rest of the industrialized world is investing for the future, we are squandering our assets in a speculative binge of junk bonds, financial futures, program trading, put and call options and the other games of today's financial market casinos."

Some of the most famous...

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