A Different Type of Headline

Anyone who reads the newspapers, watches the news on television, or keeps up with current events through the multitude of available electronic information outlets, sees an ongoing drama of negative announcements. Whether it is Greece, Washington, state and local budget shortfalls, or allegations of substantial ethical failures and corruption on the part of elected officials, the monetary news seems dolorous at best. Occasionally, however, there are little bright spots that could point to a somewhat less dreary future. One such piece of news was the announcement, in yesterday’s New York Times, that the bailout of the big banks, while controversial and clearly aimed at protecting the general economic vitality of the country, was actually helping New York City and the metropolitan tristate region during this downturn.

The financial services industry is a major driver in the local economy. As such, when Bear Stearns, Lehman Brothers, WaMu, and other names disappeared or faced terrible strains, it was clear that unemployment was going to increase in the region. However, things appear to have turned out not as bad as analysts had projected.

• Salvaging the industry has saved many jobs. While not all jobs saved were directly attributable to the financial industry, the New York Times article expressed the opinion that perhaps as much as 100,000 additional jobs would have been lost in the worst case scenario.

• New York has actually fared better than the nation with a lower percentage of job losses than the nation experienced for the period from 2007 to 2009.

• For every “Wall Street” job that didn’t disappear, other industries benefitted. For example, the MTA would be facing different challenges if less people were taking the subways, trains, and buses literally to Wall Street.

• Notwithstanding the headlines about select management compensation levels, not all employees of these firms have exorbitant salaries. Rather, it is the middle class workers in the banks and investment firms, making middle class salaries, who continue to pay taxes and support the region’s wellbeing.

• From a bond holder’s perspective, as well as on a human level, it is good to see a lesser rate of job loss. The faster we can come back from this abyss, the stronger the credits will be.

While things continue to be difficult, and not wishing to sound like Pollyanna, it is little headlines like this that perhaps are like the crocuses in the winter. They are the first sign that spring will eventually be here.

For the record, our firm did not receive any of these “bailout” revenues.

Gregory W. Serbe
President
Municipal Asset Management

Lebenthal Asset Management is a division of Alexandra & James Advisory Services, LLC, and is a wholly owned subsidiary of “Alexandra & James, LLC.” Alexandra & James Advisory Services, LLC, is an SEC registered Investment Advisor under the Investment Advisers Act of 1940 (“Advisers Act”).

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