Financial Turmoil takes its toll on New York City

[marmar]

from the NY Times:



September 15, 2008, 8:07 am
Bloomberg and Aides Meet on Banking Crisis
By Michael Barbaro

The banking crisis that gripped Wall Street this weekend is sending a shudder through City Hall. Mayor Michael R. Bloomberg and his top deputies plan to gather this morning to assess the potential economic fallout from the liquidation of Lehman Brothers and the sale of Merrill Lynch, which together employee 85,000 people, many of them in New York City.

Mr. Bloomberg was worried enough about the situation that he canceled a high-profile trip to California, where he was to meet with Gov. Arnold Schwarzenegger today.

The mayor’s biggest challenge: how to deal with thousands of likely layoffs over the next few weeks, and the resulting loss of tax revenue on personal income, corporate profits and real-estate transactions. If Lehman, which employees 25,000, files for bankruptcy, as expected, most of its employees could lose their jobs. And once Merrill is sold to Bank of America, the new owner is expected to cut many workers to avoid overlap. Merrill employs 60,000.

Wall Street firms — and their wealthy employees — account for about one fourth of the city’s personal income and 10 percent of the taxes — so as Wall Street goes, so goes the city’s economy.
The city already expects budget deficits to balloon over the next several years — to $2 billion in 2010 and $5 billion in 2011 — as a result of massive losses on Wall Street and the implosion of Bear Stearns earlier this year. ......(more)

The complete piece is at: http://cityroom.blogs.nytimes.com/2008/09/15/bloomberg-and-aides-meet-on-banking-crisis/

[OneGrassRoot]

1. He officially endorsed Obama, right? (Bloomberg) n/t

[billyoc]

2. Good thing we have 18,000 restaurants for them to all wait tables at.

[marmar]

3. But they were also the customers......

.... Now everyone will be eating at Curry in a Hurry.

[no_hypocrisy]

4. Collateral damage to New York City proper:

1. Loss of tax revenues
2. Loss of revenue to restaurants, bars, cigar salons, health clubs, luxury item purchases, etc.
3. With the loss of revenue, stores and restaurants will close, with even less tax revenues to the City (see #1).

[Tandalayo_Scheisskopf]

5. Well...

Now, maybe it will revert to being a place where people live and go about their business, rather than a theme park for the obscenely wealthy.

[HCE SuiGeneris]

6. Not a good time to be heavily invested in personal real estate there.

[SoCalDem]

7. The thing that bothers me is this.. Instead of more consolidation and even BIGGER

companies, why not BREAK THEM APART into smaller, more manageable components and jettison the the "nasty" parts..just let those fail.. and on the other side we might actually have some smaller, healthier financial institutions who, once burned, might be more responsible..

What we do now, is just sow the seeds for future failures as companies just assume other companies' monumental debt-loads..and after mega layoffs, a few years later THEY need handouts, or go belly-up themselves..