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NY Working Class to be Hit Hard by Financial Crisis

Amsterdam News, News Analysis, Nayaba Arinde Posted: Sep 22, 2008

When Wall Street catches a cold, the Black community catches pneumonia, assessed Councilmember Charles Barron. We are in trouble.

Before Lehman Brothers was thrown a financial lifeline late on Tuesday, and we, the people, bought an 80 percent share in A.I.G. to save the failing company, Monday saw distressed cardboard boxcarrying shirt-sleeved guys and office-smart ladies streaming out of offices on Wall Street. This fiscal approach to bailing out the rich is a reverse Robin Hoodrobbing the poor to give the rich, charged an angry Barron. Under Bill Clinton, the conservative Democrat, and Reagan and Bush, the banking and finance industry was deregulated and they were allowed to run amok with the peoples money and make bad decisions and investments. And now, they are coming back to hurt the economy and poor people.

Tones of The Great Depression were wrapped up in denied sentiments about a possible recession at the beginning of this week. Meanwhile, the working poor, the trembling middle class and the not-so-certain upper class took in news about the tumbling markets and waited for a dire domino effect to sweep the city.

Still present is the specter that is the collapse of Bear Stearns and Merrill Lynch. This week, with the two bailouts effectively saving thousands of jobs, what happened? and whos next? are questions that still abound.

While Gov. David Paterson praised the deal that saved A.I.G., he did not respond to an AmNews request for comment about the trickle-down effects of the Wall Street shenanigans on the inner city.

A buoyant and optimistic New York City Comptroller William C. Thompson, Jr., proclaimed: We are ready for the trying times that no doubt are ahead. Addressing a breakfast hosted by Citizens Union and New York Universitys Robert F. Wagner Graduate School of Public Service, Thompson determined, That is the spirit of New York City. With every downturn New Yorkers have encountered, our city has rebounded stronger than before. We are fighters. We are resilient. We are innovators. He noted, however, It will take months, if not years, to understand the full impact of the current crisis in international financial markets, but one thing is certain: The crises roiling the economy are already having a disproportionate impact on families here in the nations financial capital.

Before the announcement of Tuesdays bailouts Thompson noted, The current turmoil on Wall Street will obviously have major adverse impacts on New York Citys economy.

Before the startling events of the past week, we had forecast a loss of 25,000 jobs in the citys financial services sector. Considering that, in New York City alone, the job losses may be ever deeper than what we originally forecast. The Wall Street dislocations would impact the citys tax revenue.

The financial industry accounted for more than 45 percent of the citys business income tax collections in recent years, amounting to about $5.5 billion in fiscal year 2008 alone. Ultimately, the man positioning himself for a 2009 mayoral run (should term limits remain untampered with) said this is a city well-positioned to survive the current crisis. New York City has weathered other troubles on Wall Street before, such as the financial crisis of the 1970s, the stock market in 1987 and the burst of the dot-com bubble only a few years ago. Barron said that regular, everyday people will be hit hard if the excesses of Wall Street continue to go unchecked.

What happens on swanky and supposedly well-heeled Wall Street trickles down heavily to the homes of people in neighborhoods like East New York, South Jamaica, Stapleton and Soundview. What the city and state are enduring is capitalisms contradiction, said Barron, that we cut $50 million from CUNY and hundreds of millions from Medicaid, we cut 1,500 summer youth jobs, we are closing daycare centers and senior citizen centers, we have cut NYCHAs [the New York City Housing Authority] budget again, so even more community centers have to close. So we give $85 billion to bail out A.I.G. and billions for Fannie Mae and Freddie Mac, but the poor get cuts. We have money for Yankee, Shea and Nets stadiums, but less for social services and education. He continued, You cannot balance the budget on the backs of the poor. It is a national disgrace. Watch, youll soon see the governor, the mayor and the speaker coming back to us to tell us that we must be more fiscally prudent, that we have to tighten our belts and cut back on some of the peoples programs. Meanwhile, big spenders partied on the peoples money, and they get a lifeline and we get cuts. What we really need is courageous lead- ership in local, state and federal government that will protect the interests of the people.

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