Wall Street Turmoil Ripples Across Main Street


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 agreeing to buy stricken rival Bear Stearns and the U.S. Federal Reserve stepping in to prop up securities firms and poised to lower interest rates again, everyday Americans are feeling the squeeze.

The state of the economy is now the major issue in the campaign for the U.S. presidential election in November and various polls show consumers are turning gloomy.

A Reuters/University of Michigan survey published Friday 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 Manhattan bar and restaurant popular with traders. "There's been a 20 percent drop the past couple of days."

People are voicing their concerns as they see retirement funds dwindle, friends laid off and ballooning mortgage obligations surpassing the value of their homes.

In response, the Fed is bailing out securities firms -- extending them credit and helping JPMorgan reduce its risk in the Bear takeover -- while small businesses struggle.

"It seems to me all we've done is transferred the risk from the private sector to the taxpayer," said Larry Clanton, 59, a Michigan man whose vehicle detailing business recently failed.

As for the rate cuts, "I don't feel that it does affect me.

A lot of it is just politics. In any election year, there's always stuff going on with the economy in Washington that you don't see in the other three years."

Wall Street Anxiety

James Masten, a psychotherapist near Wall Street, has noticed anxiety from patients about layoffs and said the downturn was putting stress on couples.

"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'm disappointed in the number of people that want to go off the cliff with the lemmings," said Bard, who has 45 percent of his retirement fund in securities.

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 U.S. cities.

"The large builders are in big trouble; a lot of the small builders have gone out of business," said Steve Cheifetz, a Phoenix construction attorney. "The subcontractors that we work with, a lot of them are letting people go or diversifying."