Adds veteran Wall Street strategist Barton Biggs of hedge fund Traxis Partners, currently in Europe meeting with investors: "It is shocking the level of disillusionment with Wall Street." He says it could take five to 10 years to restore trust.
If investors around the world no longer see the U.S. model as the only way to run markets, it could foster a new era of more independent thinking and speed the rise of new financial capitals around the globe, says Peter Schiff, president of Euro Pacific Capital.
"Wall Street risks losing its prominence to foreigners just like the auto and textile industries did," Schiff says. "More deals will take place … in places like Hong Kong, Dubai, Shanghai and London. More and more companies will list their shares on other stock markets."
Despite its black eye, there is still hope that Wall Street can repair its tattered image.
Earning back the trust of investors at home and around the world can be done, but it takes time, says Muriel Siebert, the first woman to own a seat on the New York Stock Exchange and president of brokerage Muriel Siebert & Co.
"There will be a period where we have to go out and prove ourselves. And after the sale of Merrill Lynch to Bank of America, and Lehman going broke, that will take time. You just can't change a name on a firm's door and have everybody say, 'New name, new firm. I trust them.' "
Bogle rattles off three quick fixes: "We need more simplicity and less complexity. We need more investing and less speculation. We need more value and less cost."
Byron Wien, a veteran Wall Street strategist and current chief investment strategist at hedge fund Pequot Capital Management, also believes confidence in Wall Street will be restored.
We'll get through this mess
Sure taxpayers and Main Street feel offended that Congress will have to bail out "Wall Street's so-called fat cats," he says. But the sense of crisis will pass if Congress passes a rescue plan that stabilizes markets and restores a sense of financial well-being to Main Street, Wien says.
Wall Street survived the '87 crash, the near meltdown of hedge fund Long Term Capital Management in 1998, the tech stock crash and 9/11, Wien says. "Memories are short. We have recovered from every previous calamity. This is a serious situation, but not life-threatening."
A successful bailout package is key, Wien says. In addition, excessive use of debt must continue to come down, and the economy must skirt a serious recession. "If all those things happen, we are on the road to re-establishing our prestige."
Betting aggressively against a resurgence of U.S. economic might is a bad idea, says Scott Black, president of Delphi Management. "We are still the lynchpin of the free-enterprise system around the world. Everyone has an inherent vested interest in the U.S. doing well."
Don't count out the American people, either, he says. "This country was built by people who said, 'I can,' not 'I can't.' Our entrepreneurial spirit has not been extinguished by this latest crisis."