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Power Shifts From N.Y. to D.C.
"I think it was a humbling experience," said George Artz, who was a young political reporter during the 1975 financial crisis and later press secretary to Mayor Edward I. Koch.
With the contraction on Wall Street threatening New York with a new fiscal crisis, given the city's heavy reliance on the financial sector for a large chunk of its tax revenue, Artz said, "I think people who went through '75-76 fear a recurrence and are watching it carefully . . . with a slight feeling of deja vu all over again."
Mayor Michael R. Bloomberg (I) is already warning residents to brace for the worst. Anticipating a big drop in tax receipts from Wall Street, Bloomberg has ordered all city agencies to cut spending by a total of $1.5 billion over the next two years. Earlier this week, he floated the idea of a 7 percent increase in property taxes to make up for the expected shortfall.
There are signs that the sagging fortunes of the Wall Street titans are already being felt in myriad ways in the city.
Renowned defense lawyer Edward W. Hayes, a self-described night owl, long ago developed two measurements for gauging the ups and downs of Wall Street: the HEGI and the HESI, which stand for High End Girlfriend Index and High End Stripper Index. When the financial sector's business is good, he said, the traders and bankers spend huge sums on high-end girlfriends and in the VIP rooms of Manhattan's pricey strip joints.
Now, said Hayes, who represents many of the woman in the business, he is seeing evidence of the downturn.
"The strippers are getting killed -- it's terrible," he said. "It really started in the last month. What they really need are the guys who go in and spend $500."
In fact, while New York City has for years enjoyed the fruits of Wall Street's decade of dizzying success -- an estimated 10 percent of all tax revenue comes from the Street -- the highflying traders and financiers are far from loved in this city. For many, who didn't share in the spoils, there is a certain sense of schadenfreude -- enjoying the new misery of the formerly wealthy.
"I do have a vengeful streak in me," said Rachelle Pachtman, a public relations consultant who lives in an Upper West Side building heavily populated by some of the rich and privileged financial titans.
"I know that there's going to be a glut of apartments that are going to be dumped in the multimillion-dollar range," Pachtman said. "They pay a lot for their mortgages. They've all got their children in . . . private schools. They all have a lifestyle. How are they going to keep this up?
"It's going to take their breath away, because they're going to have to deal with the reality that all the rest of us do," she added. "I think there's going to be a lot of people on the therapist's couch -- a very typical New York thing. People are going to start drinking a lot."
Douglas Muzzio, a professor of political science at the City University of New York's Baruch College, agreed that the fall from grace is likely to be hard for the formerly well-heeled.
"This mythology of the swashbuckling capitalist entrepreneur and trader, that may be damaged," he said. "They screwed up. And they're asking us to pay for their mistakes."