Working- and middle-class Americans, especially those of color, struggled to maintain economic equilibrium during the Reagan years. The growing national debt generated fresh economic pain. The federal government borrowed money to finance the debt, raising interest rates to heighten the appeal of government bonds. Foreign money poured into the United States, raising the value of the dollar and attracting an influx of goods from overseas. The imbalance between American imports and exports grew from $36 billion in 1980 to $170 billion in 1987. Foreign competition battered the already anemic manufacturing sector. The appeal of government bonds likewise drew investment away from American industry.<\/p>\n
Continuing a recent trend, many steel and automobile factories in the industrial Northeast and Midwest closed or moved overseas during the 1980s. Bruce Springsteen, the bard of blue-collar America, offered eulogies to Rust Belt cities in songs like \u201cYoungstown\u201d and \u201cMy Hometown,\u201d in which the narrator laments that his \u201cforeman says these jobs are going boys\/and they ain\u2019t coming back.\u201d Meanwhile, a \u201cfarm crisis\u201d gripped the rural United States. Expanded world production meant new competition for American farmers, while soaring interest rates caused the already sizable debt held by family farms to mushroom. Farm foreclosures skyrocketed during Reagan\u2019s tenure. In September 1985 prominent musicians including Neil Young and Willie Nelson organized \u201cLive Aid,\u201d a benefit concert at the University of Illinois\u2019s football stadium designed to raise money for struggling farmers.<\/p>\n
At the other end of the economic spectrum, wealthy Americans thrived thanks to the policies of the New Right. The financial industry found new ways to earn staggering profits during the Reagan years. Wall Street brokers like \u201cjunk bond king\u201d Michael Milken reaped fortunes selling high-risk, high-yield securities. Reckless speculation helped drive the stock market steadily upward until the crash of October 19, 1987. On \u201cBlack Friday,\u201d the market plunged 800 points, erasing 13% of its value. Investors lost more than $500 billion. An additional financial crisis loomed in the savings and loan industry, and Reagan\u2019s deregulatory policies bore significant responsibility. In 1982 Reagan signed a bill increasing the amount of federal insurance available to savings and loan depositors, making those financial institutions more popular with consumers. The bill also allowed \u201cS & L\u2019s\u201d to engage in high-risk loans and investments for the first time. Many such deals failed catastrophically, while some S &L managers brazenly stole from their institutions. In the late 1980s, S & L\u2019s failed with regularity, and ordinary Americans lost precious savings. The 1982 law left the government responsible for bailing out S&L\u2019s out at an eventual cost of $132 billion.<\/p>\n\n\t\t\t Candela Citations<\/h3>\n\t\t\t\t\t