Wall Street Chaos Won't Tank Main Street | Newsweek World

The Echoes Of Crisis

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While this shift may signify a relative decrease in U.S. power, it provides a cushion for the global economic system, a system that most U.S. companies and consumers are enmeshed in. Global capital may not flow exactly where it is needed exactly when it is needed, but it changes the equation. There may not be enough capital on Wall Street to float ailing investment banks. There is more than enough capital globally to do that many times over. Sovereign wealth funds already helped Citibank through some of its trouble at the end of 2007; China's SWF just took a larger stake in Morgan Stanley; and they could very well step in again if needed.

Finally, there is the tricky question of Main Street. The more than 400 publicly-traded companies of the S&P 500 that have nothing to do with mortgages and don't make cars have been doing quite well. Earnings of financial companies were down more than 100 percent for the first six months of 2008; the rest saw their earnings up nearly 10 percent, with many individual companies like Google up substantially more. True, these companies function in a global marketplace that is expanding more quickly than Europe or the United States, especially China. They can squeeze more efficiency (fewer workers, more technology) out of their business. But they are also doing well because people and companies outside of Wall Street are simply going about their business.

On Main Street, cell-phone stores are selling iPhones; electronics stores are selling flat screens and game consoles; nail parlors are cutting nails; fast food is selling fast; and medical-equipment companies are making artificial joints, bandages and pacemakers. Ask the average person in Houston or Omaha what they think about Lehman Brothers or AIG, and most of them would probably say they've never heard of either. And for good reason: those companies don't impact their lives meaningfully.

Dark days on Wall Street for sure, but catastrophe for society, that is a stretch. As stock markets continue their wild gyrations, pension plans and retirees who need the cash now are pressured, yet stocks go up just as quickly as they go down. Others will continue to put money in their retirement plans and may find years from now that those investments performed spectacularly. Wall Street will consolidate, and some firms will thrive and profit having picked up solid franchises of imploding companies. And then some other crisis will occur, unexpected, and people will once again say that it's the worst they've ever seen, and life will go on.

Karabell is president of RiverTwice Research and senior adviser to Business for Social Responsibility.

As a public high school teacher, the current state of our public institutions reflect our values as a society, from my point of view. I ask Newsweek readers to PLEASE consider the following comparison of our institutions: our pubic schools and our private financial "powerhouses" that are now being bailed out with our taxpayer dollars.

We are bailing out these failing institutions with taxpayer dollars while the state of our public school system continues to decline. Think about this, voters PLEASE! Not just for the sake of your own personal interests, but for the sake of our country.

Good teachers are being laid off and class sizes are growing. No child left behind is a law that requires improvements without funding to implement these improvements. Schools are listed as "failing schools" (terrible for morale) because of unrealistic goals/unfunded mandates funded by politicians seeking to score political points. What is often "left behind" in our public schools is often a stressed out skeleton staff that does not have the ability to properly educate our students.

Meanwhile, these corporate lobbyists that effectively secured deregulation and what they consider "optimal" conditions for success (deregulation). And a few well-connected people have lined their pockets with enormous amounts of other peoples' money.

John McCain has a record of being a major player and advocate of deregulation and has taken money TIME AFTER TIME from the deregulation lobbyists - the very same "fat cats" he's now criticizing! NOW McCain is calling for change, when his deregulation in part has created this mess?

This sort of short-term gain at the expense of long-term growth way of thinking has infected our entire way of running our society.

Unfortunately, young people (the MAJORITY) of our future do not have the money or the resources to hire corporate lobbyists. Their teachers and their schools have limited resources. And there are little organized efforts to reform and progress/ lead our public schools into the 21st century. In every other developed and developing country we compare our students' progress with, there are sustained efforts to improve, fund, and prioritize education.

In America, we are starving our schools while bailing out reckless fat cats who've thrived on greed. Is this the American Way? Or have we lost our way?

Let this difficult period be a lesson. We all want healthy money markets and retirements. We must see the connection between healthy public schools and a healthy economy that is investing in human capital. Hopefully (as we say in class) we will learn from all of this and use it to improve, grow, and succeed.

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Posted By: adaquit @ 06/09/2009 10:28:49 AM

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Posted By: melbee1971 @ 09/21/2008 3:01:44 PM

"ABOVE ALL THINGS I hope that the EDUCATION of the common people will be attended to, convinced that on their good sense we may rely with the most security for the preservation of a DUE degree of liberty." Thomas Jefferson
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Posted By: melbee1971 @ 09/21/2008 3:00:35 PM

As a public high school teacher, the current state of our public institutions reflect our values as a society, from my point of view. I ask Newsweek readers to PLEASE consider the following comparison of our institutions: our pubic schools and our private financial "powerhouses" that are now being bailed out with our taxpayer dollars.

We are bailing out these failing institutions with taxpayer dollars while the state of our public school system continues to decline. Think about this, voters PLEASE! Not just for the sake of your own personal interests, but for the sake of our country.

Good teachers are being laid off and class sizes are growing. No child left behind is a law that requires improvements without funding to implement these improvements. Schools are listed as "failing schools" (terrible for morale) because of unrealistic goals/unfunded mandates funded by politicians seeking to score political points. What is often "left behind" in our public schools is often a stressed out skeleton staff that does not have the ability to properly educate our students.

Meanwhile, these corporate lobbyists that effectively secured deregulation and what they consider "optimal" conditions for success (deregulation). And a few well-connected people have lined their pockets with enormous amounts of other peoples' money.

John McCain has a record of being a major player and advocate of deregulation and has taken money TIME AFTER TIME from the deregulation lobbyists - the very same "fat cats" he's now criticizing! NOW McCain is calling for change, when his deregulation in part has created this mess?

This sort of short-term gain at the expense of long-term growth way of thinking has infected our entire way of running our society.

Unfortunately, young people (the MAJORITY) of our future do not have the money or the resources to hire corporate lobbyists. Their teachers and their schools have limited resources. And there are little organized efforts to reform and progress/ lead our public schools into the 21st century. In every other developed and developing country we compare our students' progress with, there are sustained efforts to improve, fund, and prioritize education.

In America, we are starving our schools while bailing out reckless fat cats who've thrived on greed. Is this the American Way? Or have we lost our way?

Let this difficult period be a lesson. We all want healthy money markets and retirements. We must see the connection between healthy public schools and a healthy economy that is investing in human capital. Hopefully (as we say in class) we will learn from all of this and use it to improve, grow, and succeed.