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New York City's Pain
One feels the pain of New York City Comptroller Bill Thompson, Jr. Not only does he have to deal with the continuing lunacy over in Albany and the still ongoing power struggle in the wake of Spitzer's abrupt implosion, but he has to scramble to contain the fall out in the world's most financially dependent city. His only wildcard: hope, whether it be preached by 1,000 billboards across America, or Obama appearing on TV every 15 minutes to remind Americans that the only way out of a credit crisis is to max out their credit cards, or by watching comedy channels disguised as financial reporting.
In the meantime, underneath the still glitzy veneer, is a hollow core that is starting to shrivel at such an alarming pace that the $16 billion in projected budgetary shortfalls will likely double within 12 months at the current rate of deterioration.
A good indication of the real state of micro economy is a cursory read of the most recent edition of NYC's "Economic Notes", the Comptroller's inside view periodic report on the real pain in New York City.
Here are the bullet points for the attention impaired:
- Real Gross City Product fell at an estimated 4.1 percent annual rate in 1Q09, after a 6.1 percent decline in 4Q08.
- NYC payroll jobs have fallen by 108,000 since their cyclical peak in August, 2008.
- NYC’s unemployment rate rose to 9.0 percent in May, compared to 5.1 percent in May, 2008, representing its highest level on a seasonally-adjusted basis since 1997.
- For the first half of 2009, the city’s payroll tax withholding, a good indicator of worker incomes, was down 14 percent from the equivalent period of 2008.
- General city sales tax collections declined 7.8 percent for the first five months of 2009, compared to the same period in 2008.
- The Manhattan office vacancy rate rose to 9.6 percent in 1Q09, the highest since 3Q05.
- The number of Manhattan apartments sold rose 28 percent in 2Q09 over 1Q09, but were down 50 percent from 2Q08, according to a report by Prudential Douglas Elliman.
- Ridership on NYC Transit, an indicator of the City’s overall economic activity, fell 2.2 percent during the first four months of 2009.
And here is Bill's condensed message:
After enjoying a period of historically low unemployment, the city is experiencing a surge in joblessness. The recession’s impacts have fallen most heavily on men, on African Americans, on prime-age workers, and on the relatively well-educated. Income losses from unemployment are likely to be cushioned somewhat due to the preponderance of multi-earner families and an increase in self-employment, but thousands of families will see their incomes plunge.
Here is one for the PR specialists:
The severity of the current recession raises fears that the city’s job losses will match or exceed those of previous downturns. Except in 1980-82, the city always lost proportionately more jobs than did the nation, and national job losses have been mounting at an alarming rate for the past six months. If the city had merely suffered a proportional rate of job loss as has the nation since the beginning of 2008, it would have already lost about 165,000 jobs.
A point on unemployment:
Unemployment is usually measured at the individual level but its impacts are often felt by entire households. Nearly 70 percent of the city’s workers are heads-of-household, or are the householder’s spouse or partner. The rest are the child of a household head, the sibling, the unrelated housemate, or one of a variety of other relations. All told, the average New York City worker lives in a household with 2.2 other people, so each instance of unemployment typically affects the economic circumstances of at least three individuals.
And this:
During 2006 and 2007, new initial claims for unemployment compensation in the city averaged about 7,000 per week. During the first half of 2008 they rose to about 8,000 per week, and during the second half of 2008 they exceeded 9,000 per week. During the first half of 2009 they were averaging over 12,700 weekly. By February, 2009, the total number of beneficiaries in the city had risen to almost 119,000, an increase of 57,000, or 93 percent, over the previous February.
The conclusion: Strip club valuations are going down... way down.
Even if the city’s jobs base stabilizes, however, unemployment is likely to continue to increase, and by mid-2010, some 400,000 New Yorkers may be unemployed. That suggests that over one million residents will be living in households whose incomes are severely diminished by unemployment and underemployment.
So yes, while it is easy to wave the magic wand of generalization and hope at the overall broad and nebulous economy which is "stabilizing" simply due to a short squeeze in the markets, a drill down in regional areas exposes a lot more of the same truth that brought the market to its March lows. Alas, hope as a policy can and will only persist as there is one more marginal shorter whose forced buy in can lead the market that much higher. The question is what after.
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Used to work in fin svcs, not in NYC. Laid off in March. Still seeking something else. When I update friends by email about the struggle (and, believe me, it is a STRUGGLE) to find new employ or obtain UI benefit, I receive no reply. One of them even works for NYC. I guess their heads remain firmly buried in the sand. I'm guessing the buddy in NYC may soon have his head yanked out of the sand by the time bomb described in this thread's attachment. Tick, tick, tick.
At least the prostitutes will be back in times sq, albeit in the new pedestrian zone
bring back the Big Mac bonds!
Get ready to laugh (or cry). Geithner now testifying before Congress.
Cry.
You didn't take the blue pill, did you?
Up until about a year ago, I was gobbling up those suckers faster than teenage hookers giving BJs at a secret society meeting. SCREW THAT! Gimme the red ones. Not pretty but at least it's real (to me).
Chatted with Bill Cara to align ourselves against the common enemy. Since he put Canaccord on the map and has some impressive Google stats, it is worthwhile.
Bill:
[8:08am ET] Goldman Sachs continues to blow smoke that the G-7 GDP numbers are on the rise. Add to their flock, the ex-Goldman banker, Bank of Canada Governor Mark Carney. Today’s headline of Canada’s biggest newspaper reads: Recession is bust: Carney....
In my view, programmed trading using algorithms are ok if not rigged the way some are. So, stop the nonsense without killing legitimate business. [ed. links to the NYC slam]
Me: Bill, I respectfully disagree. While algo trading is fine, the look ahead for a fee and colocation of servers at the exchange is not. Additionally, and this is subjective, 70 percent of trading volume should not be scalping.
Bill: re: "While algo trading is fine, the look ahead for a fee and colocation of servers at the exchange is not", we are in agreement. That's the nonsense part I want eliminated.
But, re: "70 percent of trading volume should not be scalping", there is a reason why the majority of trading today is near-term oriented; it is clearly because of market instability caused by worries over the recent collapse of the financial system, which had everything to do with investment banking, lack of regulation and some immoral (or idiotic) responses from Washington, particularly the previous Treasury Secretary. Traders do what they have to do, not what they would like to do. If I can lose -5% in a single day in a stock like MCD (as happened yesterday on a day that was a roaring Bull), then I'm sorry but I will not take unwarranted risk. So, don't blame me when I am scalping.
When I wrote my book Lessons in the summer of 2007, I made a comment that IBM at 80 is not the same as IBM at 100, or something to that effect. So when the price zooms +25% in a matter of a week or two or three, I'm out.
You think this stuff has not been happening? Look again. On Jul 10, with an RSI at 25, the solid chemicals company PPG closed at 41.94. Yesterday, nine sessions later Jul 23, PPG closed +25.1% at 52.47, with an RSI-7 >90. Is it scalping or common sense that I would sell PPG?
Please don't attribute the problems of this market to scalping. If you do, I'll put you into the group of idiots who want to impose transaction taxes on near-term trading and I'll fight that with a full-out crusade.
We all know who is to blame for the mess the market is in. Don't read some piece of garbage literature paid for by Jamie Dimon to throw you off the truth. If we get stuck with legislative changes that further tax us, I assure you here and now that Jamie's billions will find loopholes in a couple days that he can take his army through, and you will be crushed in defeat.
We have to stand united, and fight these guys.
Me: Bill, I have been with you since your first year and I admire your stands. I never think of your trading as scalping and I am in and out of positions based on technical factors as well. I do not like being glued to the monitor, but as you have said, this is trading now. I know it is us against them. Maybe I should have defined scalping to mean pinging a bid to sniff out the size of the order and then front running the order for five minutes and then getting out. This is what I want to stop. This completely overstates the liquidity that is available in the market and why I think this is a danger. When those machines are shut off, where is the floor and how many more positions will be liquidated out from investors. Respectfully.
Bill: we are both in the same camp fighting the same people. I wish all of us here believed the same.
You know, when I first started this blog over 5 years ago, people would write to say that I was a bit feisty. Well, now you know why. I didn't rise to the corner office of the stock exchange tower penthouse without recognizing the enemy. The public is being ripped every way possible. The HB&B umbrella must be shredded, and the capital markets made fair for all of us who put capital at risk. Compensation to a banker who takes no risk is a sick joke on society.
While I am a huge Yankees fan and in my visits I have met some very nice people there my general thought is f#$k New York. So many there, especially in the Fin/Media Complex give a rats ass about anything west of the Hudson and forget about west of the Appilachians. While I was at the Big Pitcure Conference a month ago I got this impression.
Milton Friedman's Ghost
What a stupid goddamn thing to say; go take a class on NYC governance at any one of the fine educational institutions in the city. What they will tell you is that NYC is the economic engine that drives the entire rest of New York State. They may not give a shit, but without NYC the metro area would be desolate.
This is the line big cities always trot out, that they are so important, blah, blah. blah. I agree with the previous poster. The financial industry is just a big card game. If the table goes bust, who gives a rats ass? I'm a country boy. I can grow food, hunt meat, catch fish, etc. My biggest dilemma is what to do with all the big city whores invading my neck of the woods.
Can't shoot them. At least not yet.
Amen
""The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." - Thomas Jefferson
You must be an Ivy Leaguer. If you look at my comment, I never said NYC was not the economic engine of New York state. I simply said perhaps NYC should go bust. In ten years the world will very NCY like they do London, Paris and other great European cities. Old and tired.
As I work here in NYC, sometimes I believe the Federal Government is in effect "bailing" out NY City, by allowing them The BIG BANKS....TOO BIG TO FAIL) to cheat, lie and steal. After all....if they profit, they must be paying income taxes to the city/state and FED......RIGHT????
Paying taxes? ohhhh okay. GS paid at a rate of 1%. (one percent, not a typo). Next theory?
hey gasbag..
what's that smell???
asshole!!!!!
harde har har har
Here's the problem they are trying to solve:
"Amber Capital Hedge Fund Gets Back Assets Frozen With Lehman"
How many times have you heard the talking heads say "the markets are about where they were pre-Lehman" blahblahblah. They are trying to hold the markets in place long enough to allow these hedgefunds enough time to get their money out from London.
"About 700 hedge funds and investment firms, including GLG Partners Inc., lost control of assets when New York-based Lehman filed for the biggest bankruptcy on record."
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYCrJLYTNDBo
tick, tick, tick......BOOM!
Well, I did in fact max out all my credit cards, but my debt did not miraculously disappear. So much for that theory.
I am Chumbawamba, and I think my 780 FICO score is in jeopardy.
albany is the only town whose lack of integrity rivals that of d.c. the more power and money we give these fools, the worse it will get.
If NY blows out than so does Chicago and any other financial city. If you live in another city and work in "finanz," you will be bf'd. . . bad. Anyhow, cheers to it all.
-Stamford-East Setauket-Chicago
Funny thing about Chicago is it is not dependent on finance to survive. I will take it any day over NYC. Food is better, environment it better, women are better. You get the picture.
Agreed. NY is a coarse, squalid sea of filth.
-Stamford-East Setauket-Chicago
They are entertainment channels not comedy channels.
NY was bailed out by the feds.
Don't forget that a record year on Wall Street will maintain our socialist system. Eventually NYC need to go bankrupt to cancel those socialist labor contracts. Only way out.
NY looks more and more like Batman's Gotham City.
It's falling apart. Former female bankers are selling their body on Craigslist.
"His only wildcard: hope."
I'm sick and tired of all this hope thing. We need realism, not a delusional state of mind. Obama's hope is no better than W's gut feelings.
Apparently, NYC is not the only municipality feeling pain. But, we all knew that already. URL:
http://www.msnbc.msn.com/id/32116694/ns/business-the_new_york_times/
What about the story out of New Jersey: rabbis, mayors, body parts for sale?
yeah hardly anyone talking about that and i live in philly.. i think people are too wigged out to sleep tonight over that..
as far as generating revenue for NY - they just have to tax lap dances but send out all tax returns in booty bucks to keep the cycle going