The biggest news from the weekend is the continuing crash of financial institutions on Wall Street. I’m sure you have seen the news.
Many, however, think that Wall Street is a long way from Main Street and that is simply not the case.
Businesses far away from Wall Street are impacted by these bankruptcies and buyouts. First, credit is much more difficult to obtain — and credit, for you and your employer — is a key factor in being able to continue on financially.
Second, the current debt holdings of companies that secure the debt (think insurance companies and capital banks) just got worth even less than they are now. That means they will need to write those debts down and will need additional capital (money) to come into the business to stay solvent. All that money is not available for growth, simply to remain viable.
Third, companies will be increasingly reluctant to add staff in the face of constantly poor financial news. Much better to keep your hiring powder dry than to suffer layoffs later from poor decision-making.
Finally, if you all have 401(k)’s and IRA’s, you’ll casually notice the beating they have taken this year. I had pulled my money out of the market way earlier this year so the carnage isn’t getting any worse. But, it’s not like I’m putting that money to use to help my retirement…
Being financially secure is a pillar to navigating a successful career. Unfortunately, the news today doesn’t help any of us.
Scot
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