if Reagan was so great then why did the market collapse in 87'?

Question

if you don't know about the worst stock markey crash in history don't bother answering, if you know the answer to my question enlighten me.
why is he considered so great when he almost destroyed the capaitalist system. pretty much all of what he siad failed. so why is he so priased

of course i blame reagan. you never heard of reaganomics? are you kidding me. reagan encouraged those compays to get biggeer then they actually where. it was artificial inflation that collapsed. how was it that the market had 55 record closeing in a row that year. all you have to do is look at the facts and then use common sense

Answer 1

In a word, nostalgia, like why do people have the 1957 Chevy all polished and sitting in the garage.

More specifically, I was there when it happened. I was an interning at a brokerage house when that happened. Basically it wasn't "Reagan" so much as an "unintended" consequence of full-on laizez-faire capitalism.

Which is to say that unregulated junk-bond manipulations and speculations caused a disasterous market "correction", and the recently devalued dollar combined with a failure on the part of "foreign" (read Japanese and European) investors to buy into increased US debt expendintures. The realization of irregularities cause a slip in confidence generally in bonds and poof, there goes 1/3 of your market capitalization.

I believe there is no better system of governance and economic mechanism of prospertiy than ours however, it cannot run without minimial regulation and civic responsibility.

So by virtue of the laizez-faire , unimpeded, unregulated market forces of our economy, we failed to anticipate or empathize with the fact that the other great powers, might not see our needs to be as pressing as their needs.

This is by no means an exhaustive examination, just my impression. Today, conservatives generally and neoconservatives in particular glory in and fetish the military buildup of the Reagan administration and similiary seem incapable of an empathy with any concerned parties other than their own. While Reagan's policies were tempered by realpolitik of the bipolar nature of the cold-war, they incurred massive debts and had we managed to pay that debt off, the Reagan policies might be considered a stand-alone success, however we while we got the meal and ate the dessert the check is not yet paid.

Furthermore Reagan's diplomatic confrontation followed by the detante/glastnost/perestroika and basically sheer luck of the USSR for had it not been for individuals as diplomatically / politically gifted as M. Gorbachev on the part of the USSR, we could have had a much different scenario play out, possibly the outbreak of war.

So to suggest that Reagan was somehow responsible in total is to utterly disregard the circumstances in which he was operating. The US / USSR, conservatives and neocons and everyone else lucked out in what turned out to be the waning days of the cold war.

However, I am more concerned about the future of this movement however, since the military buildup was primarily against the then economically failing but still militarily impressive Soviet Union.

It could be argued that the arms race itself - with it's ever spiraling costs per weapons systems, caused the economic collapse of the USSR, however true this may be, it was an effective engagement strategy based nearly entirely on the concept of Mutually Assured destruction (MAD).

The end of the cold-war should (and during the early/mid 1990's did) mean that the military budget in the US was slated to be slashed dramatically and commensurate with the overall reduced threat to the US.

Primarily the focus of neoconservative thinking in the late 1990's changed to consider the plausible "enemy", and this was readily found in the (then) theoretically problematic fundamentalism of Islam.

The real and theoretical threat of terrorism with WMD, is in fact potentially much more dangerous than the old USSR, when one considers the consequences of MAD.

If one takes into account the less than coherent strategy with regard to policing nuclear materials in the former USSR we will have only ourselves to blame when bad stuff goes down.

Further, when one considers the broad Saudi/Muslim support of and tolerance for violent religious fundamentalism coupled with Israeli's economic and military antagonism of it's Muslim citizenry / neighbors, it seems unlikely that the US hard-liners
will again luck out by having an Islamic Gorbachev type
character to bring moderation and diplomatic flexability
to the forefront.

And so as a direct result of the neoconservative and conservative backing of the Mujahadiin and elements of what was to become Al-Qaedia in the late 1980's and 1990's we are now in a position where a circumstance exists where it would not be entirely unexpected if we woke up one day to find Manahattan or Washington or Boston obliterated from the map.

And as attractive as that might sound to some elements of the fundamentalist community, our only cold solace in this debacle of neoconservatism is that such an attack would virtually assure an even more devistating megadeath within of the Islamic world.

So yes, conservatives and neoconservatives look back fondly upon the good old days of the US / USSR, which in itself is ironic, and worship at the altar of Reagan. But they consistently and utterly misread the current situation that is something entire within their control, they forget - far too often - that there is always more than one player at the table of diplomacy.

Worse is the implication that somehow American resolve alone will "solve" the problem.

Perhaps, if the Islamic fundamentalists lament at seeing nothing but radioactive glass across a scorched desert plain, we could say this was the case. But that result would really make our current crop of neocon thinkers no better than (and I supose depending on the body count), worse than the regime of Mao Tze Deong or Stalin or the Nazis.

Answer 2

None of these factors were caused by a President --DUH! ut let me guess, NO MATTER WHAT IT IS, it had to be Reagans fault. Like Bush right???

The most popular explanation for the 1987 crash was selling by program traders. Program trading is the use of computers to engage in arbitrage and portfolio insurance strategies. Through the 1970s and early 1980s, computers were becoming more important on Wall Street. They allowed instantaneous execution of orders to buy or sell large batches of stocks and futures. After the crash, many blamed program trading strategies for blindly selling stocks as markets fell, exacerbating the decline. Some economists theorized the speculative boom leading up to October was caused by program trading, while others argued that the crash was a return to normalcy. Either way, program trading ended up taking the majority of the blame in the public eye for the 1987 stock market crash.

Economist Richard Roll believes that the international nature of the stock market decline contradicts the argument that program trading was to blame. Program trading strategies were used primarily in the United States, Roll writes. If program trading caused the decline, why would markets where program trading was not prevalent, such as Australia and Hong Kong, have declined as well? Although these markets might have been reacting to excessive program trading in the United States, Roll points to observations that would indicate otherwise. The crash began on October 19 in Hong Kong, spread west to Europe, and hit the United States only after Hong Kong and other markets had already declined by a significant margin.

Another common theory states that the crash was a result of a dispute in monetary policy between the G-7 industrialized nations, in which the United States, wanting to prop up the dollar and restrict inflation, tightened policy faster than the Europeans. The crash, in this view, was caused when the dollar-backed Hong Kong stock exchange collapsed, and this caused a crisis in confidence. Jude Wanniski stated that the crash happened because of the breakup of the Louvre Accord, a monetary pact between the US, Japan, and West Germany to keep currencies stable. Just prior to the crash, Alan Greenspan had said that the dollar would be devalued.

Answer 3

History is judged on long-term consequences as well as the usual date and time of events.

The market did eventually recover, and was soon forgotten (note the dot-com boom-bust), while the credit Reagan gets for ending the decades old cold war is something that resonates to the current day.

I realize the fact that certain events are beyond or outside the President's control, but also understand we have a tendency to associate the President's term with what happened during his watch.

Answer 4

Reagan is more of an icon for Republicans than anything else.

He was like John Wayne in the White House.

He is overrated.

Answer 5

He was alright...he gets a lot of his praise just from his foreign policy. But neo-conservatism is still an abomination to the human race.

Answer 6

I was quite young but I remember being quite scared that we were headed into another depression. I remember how that affected my grandparents. They had a basement full of out of date canned food.

Answer 7

the stock market has nothing to do with the president. Other factors affect it.

Answer 8

He was a mediocre President.

Answer 9

Well, most liberals would say it was George Bush's fault.

Answer 10

I'm pretty sure Clinton was involved in this somehow ;-)