John Voelcker's
New York Letters

Today is gray and cool, with rain forecast. No Indian summer for NYC at the moment.

In this irregular series of letters about New York, news items have often prompted me to write. This feels like one of those times, an unexpected twist in the unpredictable tide of current events.

The headlines in both of my newspapers span side to side (though newspaper followers will point out that the width of both The Wall Street Journal and The New York Times has been recently reduced):

WSJ: "Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis"

NYT: "Defiant House Rejects Huge Bailout; Stocks Plunge; Next Step is Uncertain"

Some say these events were entirely predictable. Indeed, you cannot survive if you lend money indefinitely to people who cannot demonstrate a clear likelihood of paying it back. What has stunned Wall Street and the nation, I suspect, is the rapidity of the collapse, the global nation of the "contagion"--and perhaps the venom of an electorate that itself feels financially pressed and entirely uncertain where to place the blame or to look to for solutions.

I've lived in NYC long enough to have seen two previous financial crises. The decline of October 19, 1987, aka "Black Monday," was thought at the time to presage a new period of stagnation. It did nothing of the kind, producing a classic rebound the next day and leading within a few years to the "irrational exuberance" of the late 1990s tech bubble and the next correction. In other words, the market did what markets do: It corrected itself.

The four-day closure of the markets following the attacks of 9/11 felt more serious, given the physical damage to the infrastructure downtown. Following heroic efforts, the NY Stock Exchange, the American Stock Exchange and the NASDAQ reopened the Monday after the Twin Towers were destroyed, and following a sharp decline, stabilized within a matter of months.

While yesterday's drop of 777.68 points in the Dow Jones Average is the largest in absolute terms, it sits atop a much larger denominator than past declines. This one-day drop of just under 7% is fractionally smaller than that of September 17, 2001, when it dropped 7.1%--and nowhere near the breathtaking decline of 22.6% on October 19, 1987. And so forth.

What happens in the markets today and tomorrow, before Congress reconvenes after the Jewish holidays, may alter those numbers. If the Dow Jones Average drops a further 1,738 points over the next few weeks--to equal that 1987 drop--then I'll worry.

My better half Dave works in finance, so we sometimes tune into market data when we get up. By 6 am this morning, we noted that while Asian markets declined sharply on opening, they recovered by closing, with Hong Kong actually up a bit. As I write, the London FTSE 100 is up very slightly.

Now, classically, markets are predicted to rise slightly. Go back and check what happened on October 20 and October 21, 1989 ....

Incidentally, is anyone else both startled and charmed that Congress shuts down for the Jewish New Year? Or am I the only person left in the States who didn't know that?

Pop quiz for extra credit: Does the US Congress also shut down for any Muslim holidays?

One challenge of working in my apartment is a lack of human contact. I work to avoid the lack of perspective that can follow from that. It's compensated for, somewhat, by IMs, e-mails, Facebook comments, and occasionally even the odd phone call with an actual live human being.

Still, I have to remember that working alone in front of the glowing screen can lead to an obsessive and distracting focus on the very latest: Reload! Reload! I often need to remind myself: Focus, write, look at it after the markets close, when the analysis starts. After all, it's not as if I can do a damn thing about any of it.

But that's the peril of having enormous volumes of information instantly available. With the onrush of new media (I like to think I've helped further it, in my minor way), we're not yet very good at differentiating among data, information, analysis, knowledge...and wisdom.

In the kind of supreme irony that my city is sometimes known for, the mailbox disgorged the 40th Anniversary issue of New York magazine yesterday as the markets plummeted. Covering the years 1968 to 2008, it's a remarkable panorama of this city's turnaround. I'm familiar with many of the names it contains, most of them attached to photos of people at ages far higher than I (and perhaps they) ever imagined them. Retrospectives are tough that way.

The issue contains a joint interview with Mayors Michael Bloomberg (2002-present) and Ed Koch (1978-90). Mayor Rudy Giuliani (1994-2002) is covered by a respectful article, written by frequent critic and nemesis Michael Tomasky, that notes both his substantial contributions to improving the city and the toxic legacies of his attitudes and policies. Mayor David Dinkins (1990-1994) is not covered in such depth.

Both Koch and Bloomberg strike a note of experience and perspective, and in an issue that was put to bed long before yesterday's failed vote and market plunge:

Koch: "Wall Street and the city will survive."

Bloomberg: "Yes, these are difficult days, but we know how to get through them. We've done it before and will do it again."

In some ways, the life of a sporadically employed freelance writer & consultant is good training for constrained economic times. Freelancers are often first to be tossed overboard in a downturn ("we'll no longer be requiring your services, as of tomorrow"), but then, many of my friends with lavish salaries and seemingly solid jobs have experienced that too--not only in bad times (Lehman Brothers, anyone?) but good times (you know who you are).

My parents taught me how to live thriftily, and to put less importance than many into purchased objects. They are children of the Depression, and learned those lessons early. They're good lessons at any time, but I'd like to think they'll become newly relevant.

Over the past 10 to 20 years, the growing level of personal indebtedness has awed and depressed me. I couldn't even have imagined the concept of a "negative amortization mortgage," and I hope that type of easy and unsupportable credit is gone for a while. Perhaps a new generation will learn the same lessons my parents did.

David Carr, the fascinating and always readable New York Times media critic, recently quoted Clarence Nathan, who received a $465,000 mortgage (now in foreclosure) despite his lack of full-time employment: "I wouldn’t have loaned me the money. And nobody I know would have loaned me the money. I know guys who are criminals who wouldn’t loan me that, and they break kneecaps.” 'Nuff said.

I will be curious to see whether our adult side will quietly acknowledge we spent 10+ years as a nation buying things we couldn't afford, and start to pay down the bills--or whether we'll give rein to our teenage side, and whine, "Why not?" and "It's not my fault" and "They gave me that credit!"

I continue to believe that the US economy is one of the most adaptable and resilient in the world. This too shall pass. And while it's tempting, I feel no need to cue up that aging anthem of resilience in the face of unspeakable loss, "I Will Survive". That I will save for more joyful celebrations of survival; this is just markets doing what they do. What goes up, must come down. [Fill in platitude of your choice here; do not exceed 20 words.]

After reading my last note, "9/11 + 7," my father commented, "I'm surprised that the trauma of the 9/11 event, captured so poignantly in your 2001 series, has been expunged so thoroughly (apparently). It's as if you (or New Yorkers in general) just don't want to talk about it, and perhaps are a bit embarrassed at having succumbed to emotion seven years ago."

I'm confident few people I know are embarassed about our reactions at the time (embarassment not being that high on the list in this city anyhow.) The majority of us are, I think, just moving on--and choosing not to probe thickening scar tissue just now.

But the always quotable Ed Koch said it better: "It's not possible to continue constantly in fear or sorrow. Otherwise, you can't get things done. What's happening is very normal ... you also have to live your life. And that is what we are doing in the city of New York."

Meanwhile, anyone who needs either digital consulting or thoughts on the automotive industry is strongly encouraged to contact me. Here in New York, like anywhere else, we network. We're just more blatant about it. :)

best, jv.