Six years after 9/11 and Osama “Yo Mama” bin Laden is still out there blogging. And in spite of this the Oughts were “the good times.” Go figure. On the other hand, NYC is more death squad-free than ever. So count your blessings. From our continuing series on comparative metrosexual newsflow.
Gotham Gazette — as I like to tell Brazilian friends, the online journalism project most deserving of being translated into New World Portuguese — brings potential bad news to São Paulo, São Paulo from the (Northern Hemisphere) city so nice they named it twice: The NYC Independent Budget Office says that even without a meltdown, gazillion-dollar losses in the “innovations in finance” sector will punch holes in the fiscal situation back home.
Tax Revenues Slip, Labor Costs Rise: City’s Fiscal Outlook Dims
I leave you people behind for a few months to scout another hemisphere and you burn the house down.
To get a sense of the possible impact we tested an alternative scenario in which Wall Street loses another $4.6 billion in the fourth quarter of 2007, reducing total profits for the year to just $500 million, with an increase to only $5.1 billion in 2008 and $10.4 billion in 2009. With heavy job losses in the financial sector, overall New York City employment growth would fall by 8,700 in 2008, then increase by only 15,000 the following year.
Gothamites, report in: Is Alphabet City in flames yet? Are we looking at a return to the 1970s? (The mayor’s office simultaneously announces NYC is still the safest big city in the nation, on the other hand. On the other hand, the question of whether league-chart financial houses will move to Jersey is also back in the atmosphere — nothing definite so far, but definitely a canary in the coal mine to keep an eye on.)
Under these conditions, 2008 tax revenues would be $237 million below our baseline forecast. For 2009, revenues would be $263 million below IBO’s baseline. The declines from our baseline would exceed $300 million in 2010 and 2011, with revenues not expected to regain their 2007 level until 2011, when they would reach $39.0 billion.
Not even the worst-case scenario:
Neither IBO’s baseline economic scenario nor our more pessimistic alternative assumes a national recession. However, if the U.S. economy were to be pulled down by one or more factors such as lower demand resulting from declines in housing, or lower investment caused by tightened access to credit, the effects on local economic variables— and the revenue forecast—would be much greater.
Our current freelance consulting work — for a New York City firm — is actually hedged nicely against the incredible shrinking gringodollar, because it is paid in converted Brazilian reals. The bigger the mess gets back home, the better for us. But we would be happy to public-mindedly sacrifice some of that abitrage opportunity for the sake of the home team(s). Except maybe for the Giants.
Next adventure: Trying to file some minor back tax statements through the U.S. Consulate here. We will be evaluating how well your tax dollars are spent on maintaining the life functions of expats.
Preliminary observation: Outsourced information line reaches local operators trained to tell you nothing more than “go have a look at the Web site.”