TWO ARTICLES from the Atlantic Monthly bear notice. Here is a strident look at that housing strata may very well be welling up as the next wave of American slumsnot the cities, but those isolated suburbs of abandoned McMansions. Then there is this long piece dissecting and analyzing a rather comprehensive set of notions impacting the history of past economic stresses and their continued impact upon the current financial meltdown in How the Crash Will Reshape America:
In this sense, 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 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 as they continue to monitor this sub-prime crisis.