Wall Street turmoil ripples across US streets
New York, March 18, 2008
Turmoil on Wall Street is pushing financial professionals to the therapist's couch, scaring them off power lunches and testing the mettle of small investors caught in the vortex.
With investment bank JPMorgan Chase & Company agreeing to buy stricken rival Bear Stearns and the US Federal Reserve stepping in to prop up securities firms, everyday Americans are also feeling the squeeze.
The state of the economy is now the major issue in the campaign for the US presidential election in November and various polls show consumers are turning more gloomy.
A Reuters/University of Michigan survey published on Friday, before the Bear Stearns buyout and the Fed's emergency action, showed nearly unanimous agreement among consumers that the economy was in recession, the director of the survey said.
"Business is definitely quiet because of the market," said Ivan Mitankin, manager of Harry's at Hannover Square, a bar and restaurant popular with traders. "There's been a 20 per cent drop the past couple of days, especially today for lunch."
People are voicing their concerns as they see retirement funds dwindle, friends laid off and ballooning mortgage obligations surpassing the value of their homes. James Masten, a psychotherapist whose practice is a block from Wall Street on Exchange Place, has noticed growing anxiety from patients about layoffs and said the downturn was putting stress on couples with one person working in finance.
"You want to perform at a higher level and the process of witnessing the layoffs is very demoralizing and it undermines self-esteem and ability to work," he said.
But Masten did not expect to see brokers leaping out of windows as they did during the stock market crash of 1929.
"The advances in mental health parallel our advances in developing more financial security. Just as there are structures in place - at least I hope there are as an investor - to prevent the market from collapsing, there are structures in place to prevent people from collapsing," he said.
In Los Angeles, clerical worker Leland Bard, 59, said he hoped colleagues would finally learn there is risk in speculating on financial instruments. "I am disappointed in the number of people that want to go off the cliff with the lemmings," said Bard, who has 45 per cent of his retirement fund in securities. "I wish people had more of a big picture. The stock market is not the economy."
Others were more pessimistic. "There's absolutely nothing good in the American economy," said Mark Lea, 47, an information technology developer from Los Angeles.
"The only thing worth investing in is coastal real estate." The construction business in Phoenix might agree. Fallout from the mortgage crisis has hurt the building sector in one of the fastest growing US cities.
"There was such a high rate of growth. All of a sudden the bottom falls out, people get spooked and don't want to buy, and there are a lot of builders left holding a lot of land," said Steve Cheifetz, a Phoenix construction attorney.
"The large builders are in big trouble, a lot of the small builders have gone out of business. The subcontractors that we work with, a lot of them are letting people go or diversifying."-Reuters