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Because Happy Days Aren’t Just Here Again. They’re Gonna Stick Around for a While

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This year, the Dow Jones cleared the 12,000 bar for the first time, the Standard & Poor’s 500 climbed to five-year highs, and the city’s unemployment rate hit a 30-year low. That’s nothing. Wait until you see what’s going to happen next. Never mind that those gaudy Dow and S&P returns are generating billions in profits for anyone who owns stocksa pittance. Brokerages are pumping out lucrative new deals at a pace never seen before, generating enough work for armies of newly minted college grads and MBAs. Plus in the past few years we’ve seen a whole new trend: the emergence of hundreds of local financial shopshedge funds and private-equity fundsset up not to sell stocks, but to trade company shares or buy the companies outright. With literally trillions of dollars under management, these funds are stretching the limits of hiring, bidding up salaries to the millions, and creating vast amounts of wealth. The year-end bonuses from all threebrokerage houses, hedge funds, and private-equity shopscould fuel the economies of midsize countries, but the payouts will mainly descend on the few square miles that is New York. Goldman Sachs alone announced last week that it’s doling out $16.5 billion in salary and bonuses this year. This isn’t a trickle-downit’s a downpour.

Usually good things have a habit of not lasting, but I think this latest boom will continue for a while. The atmosphere is perfect for the investing casino: low interest rates, a weak dollar to lure foreign purchases of everything that’s not nailed down, low inflation, and a mayorand soon a governorwho understands how businesses work and who will move aggressively to lower taxes now that the good times are back. To be sure, the wealth hasn’t spread to everyone. There are plenty of people who will be left behind for lack of education and opportunities, and no amount of Wall Street dollars, regrettably, can change that. Still, when the biggest problem facing Wall Street is the inability to find enough people to staff their desks and offices, you know the best years are still ahead of us, and could last for a long, long time.


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