Felix, culpae
MY FORECAST for 1987 comes from the almanack of Felix Rohatyn, doyen of American investment bankers, senior part- ner in Lazard Freres, and the adviser who rescued the City of New York from the consequences of its profligacy: 'In the field of takeovers and mergers, the sky is the limit. Not only in size, but in the types of large corporate transactions, we have often gone beyond the norms of rational econo- mic behaviour. The tactics used in corpo- rate takeovers, both on offence and on defence, create massive transactions that greatly benefit lawyers, investment bank- ers, and arbitrageurs, but often result in weaker companies and do not treat all shareholders equally and fairly. They are wonderful for the profitability of our busi- ness in the short run, but I believe they are reaching a point where the integrity of our financial markets is in question, and that, after all, has been the basis of our free- enterprise system. In the long run, we in the investment banking business cannot benefit from something that is harmful to our economic system. I have no specific answer to these trends except to note that bubbles always burst.' Mr Rohatyn's fore- cast is eighteen months old. My forecast is that 1987 will be the year when he is believed.
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