Also last week, Mr. Braconi projected 165,000 private-sector job losses locally over the next 24 months, largely because of the crisis.
“We believe that’s a probable trajectory given what we’ve seen so far,” he told The Observer. “But we did leave it a little open-ended because we’re not saying what happens in the 25th month. … It’s really hard to make straight-line forecasts of this stuff, and very difficult to use past history as a guide.”
It is not necessarily that New York will reemerge fundamentally weaker, but instead that what made the city the financial capital will have disappeared, or at least be tempered.
Some of the Wall Street jobs, for instance, that fed the crisis—traders of mortgage-backed securities and other derivatives—will not be welcomed warmly in a new Wall Street, whenever that arrives. Mr. Braconi and others have noted that trading mortgage-backed securities isn’t dead per se, just that other iterations have to emerge and gain acceptance on the Street before banks will again risk so much.
This will happen in an atmosphere of tighter regulation, as the last dying embers of laissez-faire are being snuffed out with each whipsaw of the Dow.
A central recommendation of Messrs. Bloomberg and Schumer in the early 2007 report, for instance, was a modification of the Sarbanes-Oxley Act, a law enacted in the wake of the Enron implosion in 2002 to require more transparency by public companies. The duo, along with Mr. Spitzer, also called for a more languid local legal environment to discourage frivolous lawsuits.
To be fair, at the time, many in bigger business regarded Sarbanes-Oxley and the vagaries of American corporate law as hindrances to companies’ ability to compete. But it’s now unlikely any major politician in the near future will call for looser financial services oversight. (The Wall Street Journal’s David Reilly nailed it on Monday: “[G]ains from lax oversight tend to be ephemeral, while the costs are very real. The race to the bottom on regulation is over.”)
The Congressional bailout, in fact, contains provisions to tighten oversight, and the federal government now holds ownership stakes in commercial banks. Uncle Sam has made himself comfortable at the board table.
HE WILL VERY likely be there still when the market panic subsides, and people begin to speak of September 2008 as a fixed point in contemporary history and not as an everyday companion to current events.
And New York will remain a financial star, though in an ever shared spotlight—and not only, as was the case pre-crisis, shared worriedly with London. Other cities will continue to emerge, rendering the very idea of a hegemonic capital of world finance obsolete.
“As Asia emerges as a more formidable economic and financial zone in its right,” Mr. Braconi said, “one can certainly imagine a certain percentage of the world’s capital circulating in Asia without having to go through New York or London. I think that process was probably already under way and over the next decade or two it will continue to be under way.
“You know, essentially what we’re going to have is a smaller share of a growing pie—and that’s not necessarily bad for everyone concerned. As long as our share’s not too small!”