Finished Liar's poker today - it sure is an unputdownable book ! One character - that of Michael Milken - interested me a lot. Googled him up, and boy - I wonder why I never heard of him before. Milken was this reclusive self built financial wizard who some say was an evil emperor ( he was tried on technical grounds for irregularities in financial transactions ) who bought about the era of hostile takeovers by takeover-artists, while others say, he was the saviour of Corporate America, by forcing them to cut their fat, and become leaner and meaner. What is interesting is that he turned conventional wisdom on its head, and made junk bonds, the flavour of the moment. The insight he had, in a nutshell, was that, "fallen angels" ( companies which were great but fell on bad times ) or small high growth companies, were often unable to raise money in the debt market, because bond rating agencies like Moody's would give them a high risk rating. This rating system was flawed, as it just considered past results, and not the future or the current wealth creating ability of the firm. Milken's genius lies in recognizing that with adequate research he could identify firms which were unlikely to default, inspite of their ratings, and raise money for these companies by floating "junk bonds", which, because of the risk associated with them, would pay out larger interest rates. His USP was his ability to talk many influential money managers into buying these junk bonds, creating a huge market for junk bonds, thus creating almost an equity like market in the debt market itself ! Another interesting development that he orchestrated was to use junk bonds to finance hostile takeovers by folks like Ronald Perelman - these guys would use out and out leverage from their junk bond raised money to target even biggie corporations for takeover bids.

For many, Milken was one of the most significant characters of the "decade of greed" - the roaring 80s, typified by fictional characters like Gordon Gekko ( "Greed is good !" ) from Wall Street - the movie