We Hear “Recession” And Think It Has Something To Do With Jungle Gyms And Four Square
Yes, Wall Street accounts for like 85 percent of the city’s tax base, but then again it would be nice to . . .:
Posted: March 24th, 2008 | Filed under: Class WarThe collapse of a major financial institution is usually an occasion for hand-wringing and tut-tutting over potential job losses, lower consumer spending and missed mortgage payments.
In New York City, it’s also seen as an opportunity.
For many of the city’s middle class, especially those in the creative class, who have felt sidelined as the city seemed to become a high-priced playground for Wall Street bankers, the implosion of the brokerage house Bear Stearns raises a tantalizing possibility: participation in an economy they have been largely shut out of.
Few romanticize the nearly bankrupt New York of the 1970s or the recession of the late 1980s. But if the city suffers an economic downturn, as many now predict, there are fantasies of New York returning to a pre-Gilded Age, before the average Manhattan apartment cost $1.4 million, SAT tutors charged $500 an hour and dinner entrees crossed the $40 threshold.
Andre Anderson, 34, an account executive at TheDeal.com, a financial news Web site, would like to buy a Manhattan apartment with his girlfriend, but he said their combined incomes still make it nearly impossible to afford one.
Like many, he is rooting for what could be called a Bear Stearns discount, as newly unemployed financiers cut back on the buying binges that inflate the cost of life in the city.
“If there is greater good for everyone, is it worth a few people losing their jobs?” Mr. Anderson asked. “I think so. I hate to see people lose their jobs, but prices in the city have become ridiculous.”
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New York City has always been defined by the yawning gap between its haves and have-nots. But the last 15 years have witnessed the rise of a class of financiers whose salaries and bonuses have reached staggering heights. Over the last five years, the median compensation for a managing director working in investment banking rose from $650,000 to $1.37 million, according to Johnson Associates, a compensation consulting firm.
That is a pittance compared with hedge-fund managers. The highest-paid managers earned at least $240 million a year in 2006, according to the Institutional Investor’s Alpha magazine, nearly double the amount of 2005 (and up from a minimum of $30 million in 2002).
Their pay — and eagerness to spend it — has encouraged the growth of a luxury market in everything from groceries to restaurants to spas to specialty boutiques. Witness the Marc Jacobs-ization of the West Village, the surging average price of a two-bedroom apartment in Harlem to $1.1 million, and the rise of $15 tubs of ice cream in, of all places, the Lower East Side, at Il Laboratorio del Gelato.