The financial bailout is not Main Street vs. Wall Street, but a rescue for the whole country.
The House lawmakers who sank the financial rescue package Monday said their phones and e-mails burned with protests that Main Street has to bail out Wall Street. But it's not helpful, or even accurate, to view this crisis as scrappy alley cats vs. fat cats. In truth, the whole neighborhood is at stake. We cats are all in this together.
It's understandable that many Americans might view the financial turmoil of recent weeks as distant rumblings in the canyons of lower Manhattan. Failing investment banks and frozen credit markets – what have these to do with the leafy suburbs of, say, Minneapolis?
Plenty. Middle-class America is inextricably linked with Wall Street. The stock market's plunge on the news of the rescue rejection should bring that point home – and bring lawmakers to pass a bipartisan rescue plan.
Almost half of US households own stocks and bonds in the form of mutual funds, most of those through retirement plans. Of the mutual-fund households, 3 in 5 earn moderate incomes of between $25,000 and $99,999.
On Monday, stockholders saw the value of their holdings drop by double-digit percentages – exactly the concern that Federal Reserve Chairman Ben Bernanke voiced in congressional testimony last week.
Asked whether the country would fall into a depression, Mr. Bernanke – an expert on the Great Depression – didn't want to make that comparison, but he warned of "very negative implications" absent a rescue plan, including losses in retirement funds held by millions of everyday Americans.