In the new information economy, software maker PeopleSoft made a bid to acquire J.D. Edwards and Co. Shortly thereafter, Oracle announced a takeover of PeopleSoft. And storage leader EMC Corp. will acquire Legato Systems Inc.

In the old economy, aluminum producer Alcan launched a hostile bid for French rival Pechiney. Trucking company Yellow Corp. said it would buy rival Roadway Corp. And autoparts maker ArvinMeritor announced a hostile bid for competitor Dana Corp.

In the financial world, Lehman Brothers seeks a friendly purchase of Neuberger Berman, and Citigroup may acquire another investment management company, Boston's State Street.

All these deals point to growing business confidence in a solid economic recovery. After a dismal three-year stock market downturn, large-scale consolidation in corporate America is an efficient way for excess capacity to be absorbed. Business leaders have decided that it's cheaper to acquire firms and their assets than to replace or build new ones.

Following the recent stock market bottom, the attitude in the business world is: Now is the time to strike. Noteworthy is the fact that acquiring companies are opting to purchase firms in their own industries -- where they have great knowledge and experience -- rather than build over-diversified, far-flung empires. The latter was the case in the late 1990s, when the disease of excess conglomeratization led to massive shareholder losses.

The re-emergence of M&A deal activity is also an efficient way to price the true value of companies. An asset is only worth what someone will pay for it, and right now takeover companies are willing to pay high price premiums. At the margins, buyers of companies are establishing reliable market-price estimates in all sectors. This will permit individual investors re-entering the market to be better informed about fair-value market pricing.

This vibrant merger activity has a precedent. A similar wave appeared in the early 1980s, when another round of across-the-board tax cuts ushered in the great Reagan bull market. That deal-making activity more than two decades ago heralded a phenomenal boom in economic growth, job creation and investor-class wealth creation. That boom lasted nearly 20 years.

Judging from the hot new market in deal-making right now, it looks very much like history is about to repeat itself.

Liberals beware.