How do New Yorkers feel about the recent misfortunes of the masters of their universe?
NYTimes: ... 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.
...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.
In a city where the median household income in 2006 was $46,480, it’s no wonder that many people are bitter.
...Robert H. Frank, an economics professor at Cornell, has written about the phenomenon of Americans who feel impoverished because of the towering wealth of those above them. In New York City, he said, those feelings are compounded by the sense that much of the wealth at the top is derived from financial instruments that merely move money around.
“It’s one thing if people are adding value to society,” Professor Frank said. “But there is skepticism that this is all a shell game and these guys are not adding value, at least to the extent that justifies their salaries.”
34k Wall St. layoffs since last July, and another 20k to come? Read what the locals have to say:
March 25th, 2008 9:22 am
Best and the brightest?! Please! They are the greediest and the selfish. I for one am tickled pink that these bankers are finally coming back to earth a bit. They have ruined the entire East Coast as far as affordability. No one except an investment banker or hedge funder can afford a house in a nice area between NYC and Boston. And you can forget about vacation spots - they’re all ruined by them. The ridiculous monopoly money bonuses these “geniuses” receive every Christmas has made me sick for years so my schadenfreude meter is on high.
— Posted by tomas
Or, as I wrote a couple years ago:
...Yesterday, waiting for a lunch meeting, I met an old friend for coffee. We wandered into the recently renovated MOMA in midtown, with its quiet sculpture garden. His employer, like all the big banks, is a major donor, and his ID card gained us immediate entry. Manhattan is like a big amusement or theme park for financiers. Relative to their compensation, all the rides (taxis, restauarants, everything but real estate) are free! See the drivers in big black sedans dropping off perfectly groomed, uniformed children at their $25k/y private schools, where the headmistress greets each child by name.