The Bonfire of the Vanities

The Bonfire of the Vanities is set in 1980s New York, a period marked by conspicuous consumption, stark inequalities, and a growing stock market. Many factors led to the economic boom of the 1980s, among them the policies of President Ronald Reagan, colloquially known as Reaganomics. Reagan’s government reduced capital gains tax and government regulation on businesses, which contributed to a period of growth in private businesses. The bond market grew substantially, with bond salesmen and investment brokers making enormous commissions. A bond is a debt investment, in which the investor loans money to an entity for a defined period. Corporations and governments—such as the French government with the Giscard bond in Wolfe’s novel—use bonds to negotiate directly with consumers for more favorable rates than banks tend to offer. Salesmen and brokers make money in the form of commissions on the transactions. However, there are risks associated with bonds; bond issuers might default on their payments and be unable to repay bondholders. Certain riskier bonds are known as junk bonds. The trading boom of the 1980s banked on junk bonds, which were repackaged and sold to customers as part of a portfolio with safer instruments.

In the 1980s, Wall Street trading of bonds was a competitive, stressful enterprise, with salesmen loudly negotiating with clients across the US and the world.