Use access key #2 to skip to page content.

alstry (< 20)

America Finally Connecting the Dots???? Impact worse the 9-11



July 26, 2008 – Comments (8)

By PATRICK McGEEHANPublished: July 26, 2008

Government officials in New York are preparing for what could be the biggest single-year decline in pay on Wall Street in history and with it a vexing shortfall in city and state revenues.

A review of the latest statements from the largest financial companies based in the city shows that they intend to hand out about $18 billion less in pay and benefits in 2008 than in 2007. The cutting of payrolls is well under way, but the full effect will not be felt until the year’s end, when bonuses for employees based in New York could shrink by $10 billion or more, according to city officials and compensation experts.

A decline in bonuses of that magnitude would easily eclipse the drop of 2001, the year of the 9/11 terrorist attacks, when total bonuses declined by $6.5 billion, according to the state comptroller’s estimates. City and state officials said the coming plunge in pay would have wrenching effects on the local and regional economies.


Banks shutting down.  States' revenues evaporating.  Deficits exploding.  Jobs and pay being cut everywhere.  Costs and expenses skyrocketing.

What makes this time so different is that the divide between revenues and expenses has never been so wide in American History.  Now the question is how will we deal with it?

8 Comments – Post Your Own

#1) On July 26, 2008 at 9:37 AM, alstry (< 20) wrote:

Remember, the above article contemplates a revenue shortfall of $18 Billion from the "largest" firms.  After 9-11, the shortfall was $6.5 Billion.

Once you factor ALL the financial firms and the collateral damage, we could be looking at well over $50 Billion in lost revenues.  The say at least two jobs are lost for every Wall Street job lost.

$50 Billion could be conservative.  The question now is how will NY's obligations be paid with such a dramatic decline in revenues?

Don't you think it's sorta strange that more people have not been asking this very simple question?

In the mean time, things just keep slowing and shutting down.

Report this comment
#2) On July 26, 2008 at 12:09 PM, bobbyj0708 (< 20) wrote:

Dude, what are you worried about, the housing bill just passed the Senate. Redemption is close at hand!  /sarcasm

Report this comment
#3) On July 26, 2008 at 2:36 PM, DemonDoug (31.04) wrote:

NYC needs this correction more than almost any city in the world.  My friend the lives on the Upper East side tells me that a dozen eggs locally are $4.50.


Report this comment
#4) On July 26, 2008 at 7:12 PM, alstry (< 20) wrote:

Just the deterioration this week from the credit crisis is amazing.  Two more banks failed, Chrysler stops leasing cars, NY's tax revenue contraction worse than after 9-11, Bank of Australia writes down mortgage paper to ten cents on the dollar(can you imagine the ripple effect on deritivives around the world-I think this is what Jim Sinclair was referring to on Friday), in mid August the FDIC is going to impose rules limiting the withdrawal of your own money from certain institutions, commercial vacancies in some areas now over 25%.....let's see what is in store for next week.

Report this comment
#5) On July 26, 2008 at 10:54 PM, jesusfreakinco (28.33) wrote:


Thanks for the info on Bank of Aussie.  I didn't see that.  Will be interesting to see the impact.

If you project that to FNM/FRE, I guess that equates to about $4.5 Trillion in write offs, eh?  I guess that's the bomb that JS said exploded on Friday.  Weren't they just predicting $25 billion in write offs last week? 

Report this comment
#6) On July 27, 2008 at 4:06 AM, jester112358 (28.17) wrote:

I heard conservative estimates were closer to $250B assuming 50% recovery in foreclosure sales.


Alstry:  What have you heard about the FDIC withdrawal limit plans?  I thought they might have to implement something like this with the very limited FDIC capital.  Especially, if/when WM goes under. 

Report this comment
#7) On July 27, 2008 at 9:13 AM, alstry (< 20) wrote:


Check out my post "FDIC expecting Big Bank Failures" from July 19

It is incredible that this only made some small back page story in the WSJ



Report this comment
#8) On July 27, 2008 at 10:16 PM, lquadland10 (< 20) wrote:

H.R. 3221
Housing and Economic Recovery Act of 2008
As passed by the Senate on July 11, 2008, with an amendment transmitted to CBO
on July 22, 2008    On July 22, 2008, CBO transmitted an analysis of the Administration’s proposal to provide
temporary authority to the Secretary of the Treasury to purchase any obligations and other
securities in any amounts issued by the GSEs. CBO estimated that enacting that proposal
would increase direct spending by $25 billion over the 2009-2018 period. CBO’s estimate
for section 1117 of this legislation is unchanged from its estimate of the Administration’s
proposal. That estimate reflects a greater than 50 percent chance that the government would
provide no financial assistance to the GSEs over the next 17 months, and nearly a 5 percent
chance that such assistance would need to cover as-yet unrecognized losses greater than
$100 billion.  
Monthly Budget Review A Congressional Budget Office Analysis
July 7, 2008

Based on the Monthly Treasury Statement for May and the Daily Treasury Statements for June

The federal government incurred a deficit of $268 billion for the first nine months of fiscal year 2008, CBO estimates, $148 billion more than the shortfall recorded during the same period in 2007. About $79 billion of that change is due to the distribution to individuals of the tax rebates enacted in the Economic Stimulus Act of 2008. Compared with their level in 2007, outlays have risen by more than 6 percent, whereas revenues have declined by about 1 percent.

              MAY RESULTS
(Billions of dollars)
Estimate Actual Difference Receipts 125   124   -1   Outlays 290   290   *   Deficit (-) -165   -166   -1   Sources: Department of the Treasury; CBO.
* = between zero and $500 million.

The Treasury reported a deficit of $166 billion for May, about $1 billion more than CBO had projected on the basis of the Daily Treasury Statements.

              ESTIMATES FOR JUNE
(Billions of dollars)
FY2007 Preliminary
FY2008 Estimated
Change Receipts 277   255   -21   Outlays 249   205   -44   Surplus 27   51   23   Sources: Department of the Treasury; CBO.BUDGET TOTALS THROUGH JUNE
(Billions of dollars)
FY2007 Preliminary
FY2008 Estimated
Change Receipts 1,945   1,929   -16   Outlays 2,066   2,198   132   Deficit (-) -121   -268   -148   Sources: Department of the Treasury; CBO.RECEIPTS THROUGH JUNE
(Billions of dollars)
Major Source Actual
FY2007 Preliminary
FY2008 Percentage
Change Individual Income 885   872   -1.5   Corporate Income 280   238   -14.7   Social Insurance 663   690   4.1   Other 118   129   9.5       Total 1,945   1,929   -0.8   Sources: Department of the Treasury; CBO.OUTLAYS THROUGH JUNE
(Billions of dollars)
Change Major Category Actual
FY2007 Preliminary
FY2008 Actual Adjusteda Defense—Military 397   438   10.3   10.3   Social Security Benefits 430   453   5.3   5.3   Medicareb 290   285   -1.8   3.4   Medicaid 144   152   5.6   5.6   Other Programs and Activities 620   679   9.5   9.6     Subtotal 1,882   2,007   6.6   7.5     Net Interest on the Public Debt 185   191   3.5   3.5         Total 2,066   2,198   6.4   7.2

Report this comment

Featured Broker Partners