Fallout: The Financial Crisis

Why NYC won’t revisit its lost decade

Jeremy Hobson Feb 24, 2009
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Fallout: The Financial Crisis

Why NYC won’t revisit its lost decade

Jeremy Hobson Feb 24, 2009
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TEXT OF STORY

Steve Chiotakis: Just in the past several months, thousands have lost their jobs in
New York’s financial services industry. You can imagine it’s had a ripple effect on the city’s economy. Stores, restaurants and other services just aren’t doing the business they used to. And it’s reminding some of a decade they’d just as soon forget. Here’s Marketplace’s Jeremy Hobson.


Jeremy Hobson: At a recent conference of city leaders, Mayor Michael Bloomberg acknowledged the city’s current woes. But he tried to put them in the context of New York’s troubled past.

Michael Bloomberg: It has been burned to the ground, it has been ravaged by cholera and yellow fever, it has been devastated by financial collapse time and time again, and it was even forced to watch the Knicks last year.

But just minutes later, an army of protesters — representing lower income and immigrant groups — halted the mayor’s speech.

Protest: Show me what Democracy looks like! This is what Democracy looks like!

The scene crystallized the sentiment in the room. Fear of a return to New York’s lost decade.

The year was 1975. The nation was in the midst of a recession. And New York City was an embarrassment, says historian Vincent Cannato at the University of Massachusetts Boston.

Vincent Cannato: Subway trains, parks, bridges, buildings are just filled with graffiti.

Crime was rampant, and residents were fleeing to the suburbs — starving city coffers of needed tax revenue. City leaders begged President Gerald Ford for a bailout. The president pushed back, saying if the city can scare the country now:

President Gerald Ford: Why shouldn’t they be confident they can scare us again?

In the end, the president gave Gotham some relief. But it took years for New York to get back on its feet.

Today, the city is facing a massive budget deficit, rising crime and the mayor faces the choice of cutting services or raising taxes and driving residents away.

Bloomberg: Yes, there are more stores going out of business, we are going through an economic downturn, but we’re going through a downturn from a much higher base than we ever had before.

Indeed, Historian Vincent Cannato says a repeat of the 70’s is unlikely.

Cannato: I think that there’s a chance that the city might be able to weather this because what had gone on for the last 15 years was a strengthening of a lot of aspects of city life — what you didn’t have in the 60’s and early 1970’s.

And Cannato says New Yorkers are more committed to the city today. So it would take a heck of a tax hike to drive them out.

In New York, I’m Jeremy Hobson for Marketplace.

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