New York in Trouble??????
Half of Bear Stearns workers likley to lose their jobs. Merrill cuttng 10% of its workforce. Citi announcing cutting 20% of ALL spend. Estimates are for about 35% of Wall Street workers to lose their jobs.
Many of these jobs were directly related to the easy money products of the past seven years. Now that those products are gone, so is the revenues and the jobs. We are likley talking about hundreds of thousands of jobs collectively once you factor support staff. In addition, many of these are high paying jobs that can't be replaced.
First, just think about the office vacancy that will result. Then think about the ability of many of these workers to service the lifestyle they have become used to and the effect. Homes will have to be sold. Visits to stores and restaurants will be curtailed causing hardship for the workers of those businesses.
Although I have not seen a credible study on the issue, one would have to think that hundreds of thousands of financial workers, IT workers, restaurant workers, retail workers, and those that provided other types of support will be affected.
Office vacancies will likely skyrocket. Building values will plumment. Debt will likely default. Homes will get foreclosed. Housing values will fall due to rising foreclosures and less demand.
Remember, Citi is cutting 20% of ALL spend. That will have a tremendous ripple effect in the economy. Compound that by cutbacks at almost every major financial institution. The fallout will likely be incredible to restaurants, retailers, apartment buildings, and a variety of other service businesses.
Just a guess, but by the end of the summer, the emotional well being of New Yorkers will be very different than it is today.
In case you think I am just singling out New York, this trend to varying degrees is happening all over the country.