One of the more interesting dramas of 2010 is turning out to be theÂ evolving relationship between Wall Street and Main Street. If WallÂ Street’s perspective on the affair is one of calculation, MainÂ Street’s is an affair of the heart. Depending on circumstance andÂ season, depending on mood, this is a love-hate relationship, as theyÂ say, as nuanced as any romance since Adam and Eve. The distaste thatÂ Main felt for Wall, on the heels of a bank bailout and disproportionedÂ executive compensation in combination, was only comparable in itsÂ cynicism to the structured product pushed upon Main by Wall to feedÂ securitized asset pipelines leading to a bubble pop. And yet, theÂ affair continues: Wall courting Main, enticing it to spend and hopingÂ that it does, and Main studying Wall for signals of encouragement. TheÂ central bank’s quantitative easing is in its essence a narrative ofÂ this complex dynamic, aimed as it is at lifting Main’s morale byÂ giving Wall a lift. How twisted.
Like many twisted affairs – and perhaps all romance is on some level twisted – that of Wall and Main is based on mutual dependence. In an environment in which economics plays a central role across social strata, and in an economy that has stood on particularly fragile ground, perhaps this dynamic has been more pronounced than in the past. Or maybe we have only paid greater attention to something that has always existed. Regardless, the tension between a pair that outwardly exudes contempt – but it would be an affront to both to simplify their respective leers thusly – is reflective of nothing more than evenly balanced power. Wall Street controls economic capital, and Main Street controls expenditure. Each on its own is at risk of collapse, and the collapse of either will bring down the other. There has not been such romance since Shakespeare.
Sometimes, indeed, it feels as though everything else is a sideshow. International military conflict, sovereign debt-crisis contagion, widespread crackdowns on insider trading, are all in the finer print of news publications that are now much more attentive to holiday shopping. All of the current events referencedÂ were taken from the homepage of The Wall Street Journal at mid-morning on “Black Friday,” the layout of which was centered around a large picture of a satisfied consumer. In the adjacent box, smaller, the market was flashing red and downward arrows.
In fairness, a global economy that has been built on consumer spending over the course of decades, is bound to be dependent on its continuing boost like a car needing oil. It is not only legitimate, but essential, that “Black Friday” should take center-stage. Indirectly, those other news items may be about the same thing anyway.Â Nevertheless, one does begin to sense that the turbulence of global finance and consumerism has reached a point of having to ease down. The crisis reflected in its variety of manifestations of a fragile world economy has been, after all, born out of this manic passion and the excessive leverage – on levels individual, corporate, national, global – that it created.
Perhaps we are now in a new era in which a “soft landing” – though just as critical as it was during boom-times – contains a different meaning: Rather than a gradual counter-inflationary descent from very high altitude of activity, the gradual descent should now be a managed cooling-off of Wall and Main Street excesses that have only each other for support.