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Anglo Disease: hangover in Manhattan

by Carrie Mon Oct 15th, 2007 at 06:52:48 AM EST

I saw this in Sunday's Salon: NYT: The Capital of Capital No More? Money in New York (by DANIEL GROSS on October 14, 2007)

The Corner [of Wall Street] is now a luxury condominium called Downtown by Philippe Starck. The most common financial transactions there probably involve paying the Chinese delivery guy or tallying bills from the luxury retailers — Thomas Pink, Hermès and Tiffany — that have opened outposts down the block. Wall Street has not been Wall Street for a long time. Big investment banks like Lehman Brothers, Morgan Stanley and Bear Stearns decamped for Midtown years ago, and the largest securities trading floor in the world — belonging to the Swiss bank UBS — is in Stamford, Conn. The N.Y.S.E., which is transforming into an electronic exchange, will close two of its remaining four trading rooms next month. The question today — one being asked with increasing frequency and anxiety in certain quarters — is whether New York as a whole is going the way of Wall Street. Are New York’s days as the world’s epicenter of finance coming to an end?
I was surprised that Jérôme didn't use jump on the opportunity to write about the Anglo Disease, because the angst in this article illustrates perfectly what it is about: if you allow one most profitable industry to cannibalize your entire economy, when the industry's economic cycle turns, you find yourself with nothing to do.

The problem ironically, turns out to be Globalization:

But in today’s burgeoning and increasingly integrated global financial markets — a vast, neural spaghetti of wires, Web sites and trading platforms — the N.Y.S.E. is clearly no longer the epicenter. Nor is New York. The largest mutual-fund complexes are in Valley Forge, Pa., Los Angeles and Boston, while trading and money management are spreading globally. Since the end of the cold war, vast pools of capital have been forming overseas, in the Swiss bank accounts of Russian oligarchs, in the Shanghai vaults of Chinese manufacturing magnates and in the coffers of funds controlled by governments in Singapore, Russia, Dubai, Qatar and Saudi Arabia that may amount to some $2.5 trillion, according to Stephen Jen, a Morgan Stanley economist. ... This growth represents a triumph of everything Wall Street stands for — the ability of capital to seek returns across borders [my emphasis], the growing integration of the world’s economy and the triumph of market activity in previously closed areas. And to a degree, this is good news for New York’s asset managers, as private-equity firms and hedge funds now can raise capital from fresh sources. Nonetheless, the diffusion of wealth has unleashed angst among New York’s financial elite, who may soon rue the excesses of recent years as a last-gasp blowout.
We're living in a multipolar world:
These data points represent not so much a shifting from one power center to another but rather a change in how financial power is distributed. In this decade, the global economy has become multipolar. “On the one hand, we have tremendous strengths,” says Robert Rubin, the former Treasury secretary and now chairman of the executive committee at Citigroup. “We’re located in the largest economy in the world. On the other hand, London is creating a regulatory environment that seems to me is equally as effective in terms of safety and soundness. Hong Kong and Singapore are clearly determined to develop as centers. The Chinese are investing in Shanghai.”
And here's the rub, New York has built itself around its monopoly on global capitalism. And, when that is gone, you get what Jérôme has called the Anglo Disease:
What does all this diffusion mean for New York’s economy? Potentially, a great deal. Steve Malanga, senior fellow at the Manhattan Institute, estimates that there are 175,000 securities-industry jobs in New York, which pay an average wage of $350,000. The Committee on Capital Markets Regulation notes that the securities industry accounts for 4.7 percent of the jobs in New York City but 20.7 percent of the wages. But the impact is even larger, since the spending of Wall Street hotshots supports a huge number of other jobs. Between 1995 and 2005, the sector grew at an average annual rate of 6.6 percent in New York and provided more than a third of business income-tax revenues, according to McKinsey. “There’s no doubt that much of the financial and fiscal and economic revival of the city in the 1990s and then again after 9/11 can be attributed to the health and in fact dominance of Wall Street internationally,” Malanga says. A long-term decline, in which the financial-services business slowly moves offshore or out of state over a period of years, would certainly inflict great damage. Without a manufacturing base, New York would become more dependent on its other large sectors like tourism, health care, government and education, none of which possess Wall Street’s capacity for spinning enormous profits.
But to me what is interesting is the admission that free movement of capital is not free trade, or maybe even that protectionism is bad only as long as it's US that benefits from free movement of capital:
It seems inevitable that we will see many more studies about the loss of New York’s status. Unless they can persuade Congress to stop globalization and the free flow of capital around the globe, there isn’t much New York’s billionaire financiers can do to stop the city’s relative decline.
File under America's optimism is gone.
Previous Anglo Disease material:

A multipolar world... coming... next door...

I also noticed that a Madrid billionaire bought one of the most expensive building in the city... who can he be? wondering wondering...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Mon Oct 15th, 2007 at 07:01:08 AM EST
A multipolar world? To me, the modern economy looks a lot like  "Monopoly" game. It is all fun when it starts, but the ending is clear - someone one is dominating (though not necessarily what you thought). We are entering the stage when people are dropping out of the game.
by das monde on Tue Oct 16th, 2007 at 01:43:10 AM EST
[ Parent ]
Teh monopoly will be spread aroudn the world...

Much mroe efficient..and better and secure...  je je

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Oct 16th, 2007 at 02:38:51 PM EST
[ Parent ]
Who, who?  A good hint, or a link!

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Tue Oct 16th, 2007 at 12:47:18 PM EST
[ Parent ]
No freaking clue..r eally ...

But I guessed oen of the big families... from Florentino to the twin brothers.. to.. well one of the big-wig PP-realted families ( I guess)

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Tue Oct 16th, 2007 at 02:39:47 PM EST
[ Parent ]
also afflicts money centers. Whoddathunk?

Once you have the basics of a good enough legal system, available and educated English-speakers, and good flight connections to your clients, the regulatory framework will enter the fray.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Oct 15th, 2007 at 08:52:21 AM EST
Moving out of midtown means moving 5 miles away to New Jersey. Hardly a big move away. I would still point out that a mid town apartment of 600 square feet costs $4,000 a month. I don't see things changing much just because the trading floors are drying up. Here in New York, the concern is just the opposite. Now that Park Slope and Brooklyn has gentrified, the concern is that Harlem is going to be almost totally wiped out by the young money managers. Some of whom complained about the African drum corp that plays every Friday in a Harlem park.
by Upstate NY on Mon Oct 15th, 2007 at 11:56:22 AM EST
But the impact is even larger, since the spending of Wall Street hotshots supports a huge number of other jobs.

Somehow disturbing article on people whose livelihoods depend on Catering to the Superrich.

Truth unfolds in time through a communal process.

by marco on Mon Oct 15th, 2007 at 06:31:30 PM EST
I took a survey recently.  It asked for negative impressions of what I call the yuppie companies.  The designer upscale fashions and everything associated with American richness.  I clicked them all.

Hey it really wasn't Muslims who flattened those two towers so it should not be a surprise when American influence dies.  It is by design.

by Lasthorseman on Mon Oct 15th, 2007 at 07:42:02 PM EST
My my my. Long ago and very far away, I once worked at The Corner, in that grand and beautiful open floor space, with a portrait of old JP himself glaring down from the wall.

According to this [ multiple failed attempts to link inconspicuously via cleverly hidden link to old newspaper article; how does one do it? ] article, it's not 23 Wall but 15 Broad that is to be (or has been by now?) made into condos. A much taller building, if not nearly as architecturally attractive.

I suspect JP might not be grave-spinning so much as those who followed him. The old boy was, as nearly as I could tell, pretty pragmatic.

Wonder if the new owners kept intact the damage from the 1920 bomb along the Wall Street side of the building? Or perhaps they've had it smoothed over--evidence of a bomb attack, however failed, on the bastion of conspicuous consumption might not be good for apartment sales.

Here's the link I couldn't figure out how to hide: http://query.nytimes.com/gst/fullpage.html?res=9E01E6DA133CF932A25756C0A9629C8B63&fta=y

by Mnemosyne on Mon Oct 15th, 2007 at 10:21:28 PM EST
You do
<a href="address">text</a>

Or you can use Ctrl+Shift+C and then paste into the comment box using

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by Carrie (migeru at eurotrib dot com) on Tue Oct 16th, 2007 at 03:10:54 AM EST
[ Parent ]
Thank you. Merci. Gracias.

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by Mnemosyne on Tue Oct 16th, 2007 at 07:52:34 PM EST
[ Parent ]
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by A swedish kind of death on Tue Oct 16th, 2007 at 08:13:11 PM EST
[ Parent ]
before the furriners figured out to outsource the CEOs and hedge fund managers as well as the sweatshop jobs.
by wu ming on Tue Oct 16th, 2007 at 01:36:55 AM EST

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