Updated March 3, 2010
Today's NY Times quoted Mark Zandi of Moodys:
- QUOTATION OF THE DAY -
"If you pick almost any economic statistic -- income, house prices, construction activity -- it would tell the same story: New York has gotten hit, but it hasn't gotten creamed."
- MARK ZANDI, chief economist for Moody's Economy.
Story link here:
http://www.nytimes.com/2010/03/03/nyregion/03recession.html?th&emc=th
In the article itself reports:
"Now city officials and private economists are revising their forecasts with a drastic change in tone. The gathering consensus is that the recession is nearly over in the city and, largely because of the enormous amount of federal aid poured into the big banks, the toll on New York will be much less severe than most had feared. "
Further the article goes on to state:
Why has New York fared much better than many feared?
Economists say the hundreds of billions in loans and aid the federal government pumped into the city’s banks fueled a quick reversal of Wall Street’s fortunes. That turnaround saved thousands of high-paying jobs and the controversial bonuses that go with them, averting a sharper drop in tax collections and consumer spending that would have brought more layoffs. “A lot of us had expected there would be 60,000 or 70,000 jobs lost directly in the financial services sector,” said James Parrott, an economist with the Fiscal Policy Institute.
“Then there would have been a spillover effect,” he said, referring to the widely accepted idea that each job on Wall Street supports two others in and around the city.
Instead, employment in financial companies in the city has declined by only about 30,000 jobs, and some big banks have been hiring again. Some analysts say they think that some of the biggest banks in New York, like JPMorgan Chase and Goldman Sachs, have emerged in stronger relative positions than they held two years ago.
“To some degree, the city’s financial services sector has been strengthened by the crisis,” Mr. Zandi said.
“A lot of financial institutions in a lot of other parts of the country have evaporated,” he said, leaving the big New York banks to fill some of the lending void.
Through the infusions of capital into its banks, New York has been the biggest beneficiary of the federal assistance of the last two years, Mr. Zandi and other economists said.
“One could argue that no city in America got as much government help as New York City,” Mr. Zandi said.
Citigroup received $45 billion in aid. JPMorgan Chase borrowed $25 billion; Goldman Sachs and Morgan Stanley got $10 billion each. But each gained far more from the Federal Reserve’s policy of holding interest rates at very low levels all last year, helping them to amass record annual profits.
The bailout “didn’t prevent substantial losses,” Mr. Parrott said, “but they would have been greater without it.”
For a change, New Yorkers have no reason to complain about sending far more of their tax dollars to Washington than they get back, Mr. Parrott said. He said it was possible that New York recovered all of the surplus in its balance of payments to the federal government over the years.
Whether or not that is true, economists agree that the course of this recession was radically altered by the federal aid the banks received. Few are ready to say that the recession is over in the city, but they expect the recovery, slow and halting as it may be, to begin soon.
Original post January 12, 2010.
FLASH
Thought to Arnold and Mr Brown - A Freeway Series?
Since tax payments are just around the corner - perhaps the G'vner asks us California-based taxpayers to send 78 cents to Fresno and 22 cents to Sacramento (it could be held in the Wells Fargo vault "in trust" just like the Feds hold the Social Security Trust Fund - sure)...then let the Feds duke it out with the Terminator...what fun!
Seriously ---
The open letter to Arnold follows to go after the NY Fed and US treasury to uncover the undisclosed bailout support to NY area employment in the banks, brokerage firms whose employees not only got nice paychecks all year, nice (tax-free) health care, $5B in keep-the-team-together CASH retention bonuses (paid out to the stock brokers at Merrill, Smith Barney and Morgan Stanley in February 2009) but look to CLEAN UP all that's left in the till with the upcoming record CASH bonuses.
As has been asked for decades but remains unanswered "Where are all the customers' yachts?" and tell me again why these entities exist in the first place? To serve the public's interest, customers', shareholders' or their own or did I write out of order?
VIA FACSIMILE (916) 558-3160
Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
Re: “Fair” Federal Funds
Dear Mr Schwarzenegger,
You have reasonably, although unpopular, pointed out some unique-to-California burdens which a more leavened federal outlay formula can and should address.
It may sound extreme, however, you could request Attorney General Brown to join existing or initiate new litigation to force the Federal Reserve, NY Fed and US Treasury to disclose the full nature, extent, past and current extraordinary US taxpayer support provided to a narrow set of NY bank interests. Including any “kinder and gentler” financial accounting rules put forth by the SEC / FASB; which disproportionately benefit same NY Fed district member banks including GE Capital. Other states may find a compelling interest in joining this litigation.
NY Federal Reserve district member banks have and CONTINUE to receive the benefit of hundreds of billions of direct and indirect US taxpayer support.
Support believed to cover their own 20, 30, 40 to 1 or more leveraged proprietary trading investments in both on and off balance sheet special purpose vehicles. Importantly, NONE of the proprietary trading was EVER intended for their customers’ or the public’s benefit; subject to proof, it’s believed certain traders may have engaged in conversion of OTC “mark to model asset values” into their own CASH compensation.
Additionally, “almost zero cost money” from the Federal Reserve’s discount window borrowings are a hand out almost exclusively to maintain NY metro area employment, indeed are a type of pay off to consolidate market monopoly positions and retain their armies of proprietary traders.
The FDIC’s TLGP program has ALARMINGLY and secretly guaranteed debt in the amount of $313 B (not a typo) including, NON F.D.I.C insured affiliates of certain banks and thrifts. A FOIA request seeking the identities of the above and amounts properly submitted by my office last June 2009 was denied. See link to table here http://www.fdic.gov/regulations/resources/TLGP/total_issuance11-09.html
As a resident and business owner in California and fiduciary expert with emphasis in financial services compensation and profitability – I would volunteer my time to assist in pursuit of the above disclosures and identify the beneficiaries in contrast to California and other states & territories and American Indians and Native Alaskans which have not similarly benefitted.
Very truly yours,
Chris McConnell, AIFA®
ACCREDITED INVESTMENT FIDUCIARY ANALYST™
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