Bookman: Effects of Wall Street crisis will be felt for years

ATLANTA — In the wake of the attacks of Sept. 11, you heard a lot of musing that our days of frivolity and cynicism had ended with the collapse of the World Trade Towers. Suddenly, it was time to get serious.

"I think it's the end of the age of irony," Vanity Fair editor Graydon Carter proclaimed, a statement that would itself look ironic seven years later.

"To look at anything published before Tuesday at 8:45 a.m. — People magazine's cover on Ben Affleck's struggle with alcoholism, Time's cover on Venus and Serena Williams, Business Week on the 'Wine War' — is to realize how suddenly, dramatically, unalterably the world has changed," wrote Washington Post media critic Howard Kurtz. "And that means journalism will also change, indeed is changing before our eyes."

"The most important thing is that it will introduce a new seriousness into the world," another writer proclaimed. "Over the past 10 years, since the defeat of communism and the collapse of the various walls, we have been told that there is no more history and it was all right to indulge in fun and frivolity. A decade of unreality has been blown away."

It was a nice sentiment, but little of that change proved permanent.

Now, with the crisis on Wall Street and stern-faced warnings from Washington that we teeter on the edge of another Depression-like collapse, you're once again hearing talk of a cultural sea change under way. As House Speaker Nancy Pelosi warned Wall Street on Friday, "the party is over."

This time, it might be true.

As traumatic as Sept. 11 had been, few Americans outside of New York and Washington felt a direct impact. The blow had come out of the blue, like a sucker punch, and, once we recovered our wits, its impact was short-lived.

By contrast, the foreclosure crisis, the collapse of the stock market and the end of easily available credit are being felt first hand in every community and neighborhood in the country. And the effects are likely to be long-lasting.

Jobs are disappearing — almost 160,000 in September alone — and many may never come back. Retirement funds are evaporating. Local and state governments are facing significant revenue shortfalls and are having trouble selling bonds on Wall Street. According to Bloomberg News, "tax-exempt borrowers this week sold less than 15 percent of a typical week's sales" because Wall Street refused to buy their bonds.

The credit squeeze is so tight that California Gov. Arnold Schwarzenegger warned the U.S. Treasury last week that his state may have to borrow billions from the federal government to make ends meet.

More ominously for the long term, this calamity is going to make the rest of the world look at us differently. We have financed a lot of our prosperity on the willingness of the rest of the world to loan us billions because they saw our country as all but invulnerable economically. Foreign governments and private investors happily bought our government bonds, our corporate bonds and bonds derived from millions of home mortgages.

Last week, just by coincidence, our national debt exceeded the $10 trillion mark, and a lot of that money is owed to foreigners. The tide of money that washed away any sense of proportion or ethics on Wall Street also came in part from overseas. When critics of the $700 billion bailout complain that it was passed just to keep foreign banks happy, there's some truth to that. It's a chilling sign of just how much national sovereignty we've signed away in return for overseas capital.

With recent events, however, that confidence in the economic stability of America has now been compromised, and once lost, confidence is a hard thing to recover. Unlike Sept. 11, this is a setback of systemic origins, going to the core of what we do and how we do it. We're going to feel its consequence for years.

Jay Bookman writes for The Atlanta Journal-Constitution.