Eighty years ago this week, the Great Crash of 1929 rocked Wall Street and the world — wiping out billions, in today’s dollars, in wealth and sparking the decade-long Great Depression.
Last October, many feared a repeat. The Dow plunged nearly 50 percent, from 14,164 in 2007 to 7,449 last November. Banks failed. Savings and jobs vanished. No one knew where the bottom would be.
A year later, that nightmare may be over. The Dow passed 10,000 this month for the first time since last year’s meltdown. The underlying economy, too, has shown tepid signs of a rebound.
But for New York City — until now, the uncontested financial capital of the world — the damage may be irreversible.
Indeed, mounting evidence suggests that the recession may be permanently reshaping the city’s economy in ways that will have a serious impact on jobs — and on local government’s bottom line.
Take the New York Stock Exchange, the symbolic heart of Wall Street power. It’s seen its share of stock trades plummet in recent years, from 75 percent in 2006 to only 36 percent today.
(This year, Democrats in Washington floated a tax on stock trades, so watch for that number to shrink further as traders go abroad.)
New York’s trading floors are losing business to places like New Jersey and even Kansas, where traders can buy and sell electronically.
No, you can’t blame that trend on the meltdown. But it’s a clear warning that there’s nothing inevitable or permanent about Gotham’s global financial prowess.
Meanwhile, the local financial sector itself has shrunk, with banks and other firms merging or folding, never to return.
If many more leave, it could spell disaster for the local economy — and for state coffers, which rely on Wall Street for 20 percent of its tax revenue. (Some 10 percent of the city’s revenues come from the financial sector.)
If New York wants to stay competitive (and financially solvent) in the post-crash economy, it will have to resist the lure of more government — and slash its sky-high tax and regulatory burden.
With budget crunches in City Hall and Albany, that’s not likely.
Better pray that Wall Street hangs on.