When you consider pension funds, company finance, government finance and many other issues revolve around the stock market and money markets, are we over dependent on stock markets?
Seems to be like that. There are a lot of correlations inside the markets, so each event can influence several companies and sometimes even industries. The other problem is that most of the market participants use margin capital. That is why they would have to close their positions in case of substancial correction, causing further downside movement.
The stockmarket is the key to everything, fund raisings, takeovers, equity finance, etc. When the markets struggle there is a knock on effect to economies - just look back at some of the crashes in the past. Pension funds, company liquidity and much more also depend on the stock market. A perfect point in question, the securitizing of sub-prime mortgage loans back in 2008 which eventually led to the worldwide economic crash.
I think there are no two ways about this. Every big company has tied their future around the stock market, which is why a crash will affect everything. There is no choice here.