On Jan. 21, 2007, Michael Bloomberg, Charles Schumer and Eliot Spitzer stood below a portrait of Thomas Jefferson in City Hall and warned that New York could lose its status as the world’s preeminent financial center.
“The 20th century was the American century in no small part because of our economic dominance in the financial services industry, which has always been centered in New York,” Messrs. Bloomberg and Schumer had written as preface to a McKinsey & Co. report unveiled at the press conference.
“The industry,” the preface read, “will continue to experience rapid growth in the 21st century, which holds great promise for our nation—but only if we take seriously our competitors, who are rapidly gaining ground.”
The competitors? The report ticked off London, Dubai, Hong Kong and Tokyo.
All are now reeling, along with New York, from the financial crisis. For instance, London-area real estate agents reported last week their slowest pace of home deals since 1978, and the city faces an office space glut due to layoffs and dawdling job growth.
Somewhat improbably, the crisis has saved New York from losing its financial capital crown.
It’s a Producers plot line: By staging the worst international financial crisis in 80 years, New York’s Masters of the Universe and their government allies excused the city from the vicious competition to remain the world’s financial capital. The excuse allows New York to reemerge down the line amid a less breathless race.
The 2007 preface by the mayor and the senior senator warned that changes had to be made, including, ironically enough, the further relaxing of business regulations. “Failing to do so,” the letter concluded, “would be devastating both for New York and the entire nation.”
Now such a prognosis seems oddly tinny: Yes, Wall Street devastation loomed—it just had nearly nothing to do with Canary Wharf.
NEW YORK WILL likely emerge from this crisis still the world’s financial capital, but it won’t be the same as in the latter years of the 20th century.
“In the long run, economic growth will resume and the city’s premier position in the global financial network will be retained,” Frank Braconi, the chief economist in the city comptroller’s office, wrote on the office’s Web site last week. “The financial crisis, however, has sped up the process of financial dispersion that was already under way; in coming years, New York will have to share the financial stage with resurgent financial centers such as London and Tokyo, as well as with emerging regional centers like Hong Kong and Shanghai.”