Kass: More Casualties of Wealth Destruction

The long tail and economic multiplier effect of the destruction in wealth from the stock market's drop runs well beyond Harvard University and the other educational institutions as it also extends to many charities.

Market losses by wealthy donors and the demise of some of the most generous givers on Wall Street (i.e., Lehman Brothers and Bear Stearns) have had a material negative impact on charitable fund-raising now and will in the year(s) ahead. Even the Bill & Melinda Gates Foundation is decreasing the size of its grants this year. This morning, The Wall Street Journal examines the stock market's profoundly negative impact on charitable contributions. One charity mentioned in the article, Harlem Children's Zone, to which I have contributed in the past and of which eminent hedge-hogger Stan Druckenmiller is its key supporter, was recently forced to cut 10% of its staff in the face of moderating donations.

The recession and stock market blast is even hitting the fanciest Upper East Side schools. An annual benefit auction at the Trevor Day School offering a tennis lesson from John McEnroe -- Johnny Mack's daughter is a student at the school -- drew a bid of only $8,000 vs. past bids in excess of $15,000.

The magnitude of the price drop in stocks has reached a tipping point.

In the past, stock prices have predicted an economic recession. By contrast, in recent months, the drop in stock prices has not only hastened a recession but has served to deepen the economic recession.