Why is Wall Street so Nervous?

By Bill Glynn

Has Obama inherited a lose-lose situation? Wall Street is up and down like a yoyo. Obama faces one of the most challenging financial crises since The Great Depression, and Main Street is hobbled. Is there any light at the end of the tunnel? The U.S. is bailing water out of the boat but putting debt and newly minted money back into it. I think we all can add that up and come to the conclusion that the boat will still sink anyway regardless of the captain of the ship.

Although big government must bail out big business in order to stabilize the markets and failing banks, what will be done for the "little guy?" Sending out a stimulus check ('economic Viagra,' I call it) and slashing taxes for the middle class is not going to buy us out of trouble. Bankruptcy and bad credit assures that many credit addicts that propped up our Consumption Economy from the 1980s on up to today won't or can't do it anymore. Even for those trying to pay bills and are 30, 60, 90 or 120 days late it assures tens of millions won't be able to buy stuff the traditional way. Add unemployment, under employment, deficit spending, foreclosures and minting money to the equation and there it is - a MORE-than-'Perfect Storm.'

Some blame the Bush Administration and lack of oversight on Wall Street, but frankly this issue dates further back than the last eight years and will project forward for some time. The government couldn't have possibly projected the blowup of the banking industry acutely caused by the lack of confidence in mortgage products, securitizations and the home market bubble bursting. No matter how much is spent bailing out the financial sector, without consumers every industry will be affected - some worse than others. The earthquake deep within the financial sector happened; the resulting tsunami then came roaring ashore and now the water is rushing in and drowning our main economic engine - consumption. [more...]