Special report: Corporate Ethics
Read more about the economy from the Online NewsHour.
Big businesses are in trouble for cheating, the stock market is tumbling and thousands of people have lost their jobs - all within the last few months.
The stock market's Dow Jones Industrial Average, usually a good indicator of how investors are feeling about American businesses, has lost 10 percent of its value since July 8.
In the past two years, the stock market has declined 30 percent. That's like saying the dollars in your pocket are only worth 70 cents because people no longer have faith in the economy.
What Happened to the Stock Market?
The American economy was at a high point back in 1999 and early 2000 when thousands of new Internet-related companies created new jobs and "Internet Millionaires" became the symbol of a new technology-driven economy.
Since the economy was so strong, people felt comfortable taking money from their savings accounts and investing it in the stock market.
Roughly 60 percent of American households own stocks. Many families' retirements and college savings are tied up in the stock market.
Unfortunately, that feel-good time ended by spring 2000 and the economy began to sink into recession.
By early 2002, once-confident investors were selling their stocks or getting nervous. Many Americans now worry about whether they can afford to send their children to college or retire when planned.
Scandal in the News
To add to the difficult financial situation, some of America's largest and most trusted corporations admitted this year to making false claims about how much money they made and other illegal activities.
Enron, WorldCom and Global Crossing are in deep financial trouble and have fired thousands of employees.
Investors and former employees are upset because the people in charge of the companies were able to take away hundreds of millions of dollars as the companies tanked. Regular investors lost everything.
Capitol Hill Reacts
The issue of improving corporate ethics and accounting practices is at the top of the agenda for national lawmakers in Washington D.C.
This isn't the first
time politicians have used business reform as a political issue. In
the early 20th century, President
thought the government should have more power to make sure businesses
were responsive to people's needs.
The House of Representatives and the Senate both have passed bills with tough criminal penalties for bad accounting practices and businesses that cheat. Congress will now try to hammer out a unified plan as soon as possible and send it to President Bush before leaving for summer break.
Business scandals and the economy may affect how people vote in the elections coming up this fall. If the economy continues to do poorly, voters may connect the recession to these corporate scandals and reject political candidates too closely tied to big business, and those who don't promise to help reform corporate America.
-- By Samara Aberman, NewsHour Extra
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