Wall Street: A Blow to U.S. Prestige?

The surprising answer is no. Most business people still view the U.S. as a beacon of free enterprise and praise its swift response to the crisis

by Jack Ewing

Andy Martin

The boulevards of Paris are a pretty reliable place to troll for anti-American sentiment. And sure enough, self-described anarchist Bernard Barbry is happy to weigh in with his opinion of the U.S. financial system. "The banks have brought this on themselves, and they deserve what they get," says Barbry, out for a stroll on a busy street in southwestern Paris. Surprisingly, though, the retired journalist isn't predicting America's downfall. The U.S., he believes, will remain powerful, and the crisis on Wall Street won't affect Washington's influence on world affairs. "I like Americans," he says.

Tokyo's financial district, in contrast, isn't the kind of place where you typically find an excess of vitriol aimed at the U.S. But some there are plenty miffed after seeing how the hubris of Wall Street wizards has wiped out billions of dollars of wealth in stock markets from Toronto to Tokyo. "We feel betrayed by Lehman," says Tetsuo Ishihara, a credit analyst at Mizuho Securities in the Japanese capital. "We feel betrayed by Bear Stearns. We feel betrayed by Fannie Mae and Freddie Mac. We feel betrayed by the U.S. government…Losing trust can happen in a second, but regaining it takes years."

As the world grapples with the fallout from Wall Street's shenanigans, there's no shortage of consternation, and even anger. But so far the international image of the U.S. economic model has shown amazing resilience. Lehman Brothers may be in the morgue and AIG on government-funded life support, but most businesspeople think the U.S. is more about Silicon Valley and Hollywood than the erstwhile dynamos of Wall Street. Even in China—where broadcaster CCTV-2 has been running two hours of special programming every night about the financial crisis—the U.S. is still a land to be emulated. "I see two Americas: One is wealth-creating, innovative, with people like Bill Gates, and the other is made up of speculators," says Wang Jianmao, an economics professor at China Europe International Business School in Shanghai. "China should learn more from wealth-creating America."

The prospect of a diminished U.S., though, is sobering. What will take its place as a beacon of free enterprise? Not Europe, which still speaks with too many voices to play a leadership role. Not China or Russia. Their economies are still developing, the motives of their leaders suspect. So as businesspeople survey the rubble on Wall Street and look for an alternative, they don't see any nation that's as accommodating to innovators and entrepreneurs—or as rich in expertise. For instance, Ulf Mark Schneider, CEO of German health-care provider Fresenius, remains a fan of the likes of Morgan Stanley, which handled a recent acquisition in India. "When it comes to democracy and free market economics, the U.S. is still the original article," says Schneider. "Nobody wants to see it fail."

Of course, it hasn't taken long for critics to descend on the carcass of U.S. finance. Fredmund Malik, an influential Swiss management consultant who has long criticized U.S. business practices, dispatched an e-mail to clients on Sept. 19 reminding them that he predicted the collapse of U.S. investment banking back in 2004. Others are using the crisis to flog an agenda. German Chancellor Angela Merkel took the occasion to renew her calls—in the past largely ignored by other Group of Seven members—for more regulation of international banking. "The current financial crisis will nudge the whole liberalization process backwards," says Liu Jing, a finance professor at Cheung Kong Graduate School of Business in Beijing.