Financial writers are getting morbid with their prose. It’s like the time of real danger has passed, and we’re now sitting around the funeral pyre of the free market, talking about just how awry things are these days.
Take, for example, an opening to an article on Bloomberg: “The London-New York tug-of-war for bragging rights as the world’s preeminent financial center is now a race to the bottom.”
To be sure, that’s a harsh truth, but a fact nonetheless. That being said, do we need to portray it as some sick-headed race? “Regretfully lurching” would work just as well as an image of group bankers vying for the low spot.
The general darkness of the mood, furthermore, is more ideological and what-if based than having to do with the actual state of things, at least regarding the New York City housing market. Yes, a bunch of corrupt, foolish financial corporate heads has stolen thousands of dollars from every taxpayer in this country.
And yes, the federal government – both a thoroughly corrupt Republican Party and a corrupt Democratic Congress – have been the one’s to let them do it. And yes, any statement contrary to that would be like saying, “Well, when I was pulling the trigger/When I was sitting there watching him load the gun, I was hoping the other guy would be able to dodge the bullet, so therefore, I’m not guilty of murder.”
It’s truly a disgusting state of affairs. Morally, patriotically and in every other feasibly ethical dimension, it is the worst thing to happen to this country since the Iraq War. There’s no debate about that.
That doesn’t mean, however, that the economy is doomed, and the same goes for the New York City real estate market. The macroeconomy may be hurting for at least the next year, but the financial industry in New York City – the industry most important to the New York housing market – is not going to lose nearly as many jobs as people think.
According to Moody’s economy.com, for instance, “the New York metropolitan area is forecast to lose 64,000 positions, or 13.5 percent, by the second quarter of 2010.”
Indeed, that is a dour forecast for the city. Should it happen, its effects on demand, especially for the luxury market, would be massive.
But let’s look at part of the language of the Bail Out Bill that is now in front of Congress, and will almost be part of the final bill:
(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the powers in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts
As a colleague of mine put it today, an alternative title to that section of the bill could just as well be, “The Bankers and Lawyers Full Employment Act of 2008.”
That is to say, the Moody’s numbers are roughly accurate if the massive action by the federal government beginning with this bill are not accurately taken into account. Times will not be as glee-filled as they usually are for the industry, but when the wealthy and well-connected – re the New York City financial industry – are in real trouble, government intervention happens. More than a trillion dollars of it.