Wall Street Parties Like It's 2006

You didn't seriously expect the global financial crisis, the worst economic event to hit the world in 70 years, to actually have any lasting effect on anyone's behavior, did you? Good, because two new stories from Bloomberg News provide evidence that no one in the industrial trading and banking complex is going to even remember this little downturn once it passes beyond the event horizon.

In a piece that is sure to have New York Times columnist and Nobel Prize winner Paul Krugman bashing his forehead against a metal filling cabinet, Bloomberg reports that bankers expect bonuses to better or equal those of last year, and that one in 10 bankers expect compensation for 2009 to be the best in history. Bloomberg says almost three in five traders, analysts, and fund managers believe their 2009 bonuses will either increase or won’t change, according to a quarterly poll of customers. The poll finds that one in four see a decline and that Asians are the most optimistic about pay and Americans and Europeans somewhat less so.

But who is faring the best? Why New Yorkers, of course. The city that was the epicenter of the global boom and bust has beat back a challenge from fashionable London and is once again the center of the world's financial industry, according to the Bloomberg poll, which finds that 29 percent of respondents say New York will be the best place for financial services two years from now. "Singapore is chosen by 17 percent of respondents, and London is the pick of 16 percent. Shanghai has 11 percent, while Tokyo, once considered a global hub, gets the nod from only 1 percent," Bloomberg says.

What is the secret to the success of New York, dubbed Fun City by Mayor John Lindsey back in 1966? A good explanation can be found in Richard Florida's counterintuitive but compelling cover story in The Atlantic, which examined How the Crash Will Reshape America.

In a passage that was originally highlighted by New York magazine, he argues:

"The financial crisis may ultimately help New York by reenergizing its creative economy. The extraordinary income gains of investment bankers, traders, and hedge fund managers over the past two decades skewed the city's economy in some unhealthy ways. In 2005, I asked a top-ranking official at a major investment bank whether the city's rising real estate prices were affecting his company's ability to attract global talent. He responded simply: "We are the cause, not the effect, of the real estate bubble." (As it turns out, he was only half right.) Stratospheric real estate prices have made New York less diverse over time, and arguably less stimulating. When I asked [Jane] Jacobs some years ago about the effects of escalating real estate prices on creativity, she told me, "When a place gets boring, even the rich people leave." With the hegemony of the investment bankers over, New York now stands a better chance of avoiding that sterile fate."

In other words, the city with the best restaurants wins.