Friday, September 26, 2008

Main Street's Rage at the Financial Crisis

Main Streets Rage at the Financial Crisis

Allentown, Pa., is in some ways a profoundly ordinary place. Like cities and towns all over America, it has been shaken by economic changes seemingly beyond its control: the churning of industries, the dislocation of workers. Many residents just sigh at the mention of Billy Joel's anthem to the gritty, struggling Allentown of the 1980s, when the once-great Bethlehem Steel mill went into a death spiral: "Every child had a pretty good shot to get at least as far as their old man got. But something happened on the way to that place."

Allentown has reimagined itself since then. The city's biggest employer, Lehigh Valley Hospital & Health Network, is thriving. Officials have enticed companies to the area with tax breaks. A small group of businesspeople is trying to make the city center more vital: Allentown Brew Works, opened a year ago in the old Harold's Furniture building, seats 400 on four floors.

Lately, though, a familiar economic anxiety has been creeping into people's lives. Some retail businesses are starting to cut back on employees' hours. And Mack Trucks announced in August that it is moving its century-old headquarters from Allentown to Greensboro, N.C.

The latest details of the government's proposed $700 billion rescue plan was not the main story in the local paper, The Morning Call, on Sept. 23 (an article about the end of a teachers' strike was). But it is on people's minds. For many of Allentown's residents, the rescue is an occasion for anger, even if that feeling is at times blunted by fatigue and resignation. They dislike what goes on in Washington, but those ill feelings are nothing compared with their view of Wall Street. "People see that the chief executives of these finance companies are making millions on the backs of taxpayers," says Ed Pawlowski, the Democratic Mayor of Allentown. They are worried about how the next generation will fare in an America that many feel has mixed up its priorities.

At Wal-Mart (WMT) SuperCenter Store #2641, Brett Slack, one of the owners of Lehigh Valley Paintball, was picking up groceries with his two-year-old daughter while his wife was at her part-time job as a cashier at Giant Food. He, like most others here, believes that the government has no choice but to intervene, since the consequences of inaction appear to be far worse. So fine: He can live with his tax money helping to prop up America's financial system. But he wants the chief executives of those companies (unnamed by anyone in Allentown) to pay, too. "The government should go after the CEOs," he said. "I own a business, and if I went under, the bank would come after me. They made bad decisions and figured the government would bail them out. If the CEOs end up sleeping in cardboard boxes, that would be O.K. with me. They don't deserve to be multimillionaires."

Slack, who is 32, has had to lay off 20 of his 35 employees in the past year as rising gas prices slowed business. He and his two partners took pay cuts, too. "That's what CEOs and owners should do," he says. He put all his savings into the company when he started it four years ago. "If I have money to invest one day, I'll just start another business. I won't invest in the stock market," he says.

  • Seven Days That Shook Wall Street
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