09/11/2009 08:18 PM
Doubt, Worry and Fear
New York Faces Dramatic Consequences of Crisis
By Klaus Brinkbäumer in New York
They still remember how things used to be. That's part of the problem. New York's heroes, the men and women who only yesterday considered themselves the knights and conquerors of Manhattan, remember all too well what New York was like in the 1970s -- the era before seven-figure salaries came to the Big Apple.
They remember -- and they see the signs. That's why they're afraid.
Cathy used to be a banker. Today she is homeless and living in Tompkins Square. She thinks about the heroin and the stench. In the 1970s, Cathy had a small apartment not far from here on Orchard Street. It was broken into three times. She remembers the burning cars and broken glass, the plumes of smoke and the cops who shouted "Fuck you!" every time they lashed out.
Restaurateur Fred Austin says he had the doors taken off the toilet stalls at Katz's restaurant because of the junkies. If they were going to shoot up in front of all his guests, he at least wanted them to feel embarrassed.
Tom Birchard, the owner of the Veselka diner, says he adopted the New York walk in the 1970s: fast, determined, always scanning two blocks ahead, looking behind you every 10 steps or so, staying more than arms-length away from doorways, and crossing the street or even turning around altogether if two or more black men came towards you.
Aside from the murders, the whores and the knowledge that areas like Harlem and the Bronx were strictly out-of-bounds for whites, Mayor Michael Bloomberg says the subway was the worst thing about New York. "The subway was hot and never on time. Everything was damp and grimy, and full of trash," that is how he recalls the days when people went in and never came out again. "It was an inferno."
Only Grace on Wall Street says she isn't afraid of becoming poor again. That was during our first conversation, six months ago. Grace Dolan Flood said her fear lay elsewhere. "I'm afraid I may have lived the wrong life," she said. "You spend so many years, put so much energy in, and suddenly you're out. And then what?"
It's the New York 2009 feeling: A mixture of doubt, worry, and fear. Fear that it won't be worth all the investment, the effort, the constant battles. Fear of drugs in schools, of playgrounds becoming crime scenes again, of broken windows, of decline. Fear of a future that feels like the past.
If you go looking for the New York feeling in southern Manhattan, on Wall Street, in the East Village, on the Lower East Side, or in Tribeca, you'll come away with more than your fair share of doubt about the city. New York City consists of five boroughs and thousands of districts. It's simply too big for gross generalities.
Epicenter of the Crisis
I speak to billionaire realtor Donald Trump is on the phone. "My friend!" he says in greeting, "New York's doing great. We have a splendid police chief, a splendid mayor, we're in splendid shape."
But Donald Trump's opinions are those of the minority this summer. Jamie Johnson sits in a café on Union Square. The 30-year-old pharmaceuticals heir and documentary filmmaker ("Born Rich") says, "The whole city is seriously in danger of losing its meaning. People feel vulnerable. An entire generation that never witnessed hardship are now realizing they'll never fulfill their dream that things will keep on getting better: Cool school, cool grades, cool job, cool money. And that scares them."
Why is this? Because since September 2008 New York has been the epicenter of the global financial crisis. This is where it all began, and this is where the effects were first seen. And felt.
Stores are closing or barely scraping by, offering "three suits for $250." No one is buying. "Food traffic" -- taxis ferrying people straight across Manhattan to the coolest restaurants -- has dwindled to a trickle. Theft, violent and drug crimes are on the rise. There are New Yorkers who pretend to be surprised if a bar only accepts cash, say they're going to an ATM, and never return. "Impulse shopping," the practice of popping down to a boutique over lunch, has died a death. 6.5 percent of all the stores in Manhattan are now vacant: a 20-year high. On Fifth Avenue, the Western world's premier shopping district, 15 percent of the shops between 42nd and 49th Street have closed. Even Brooks Brothers has left nothing but boarded-up windows. And scaffolding. And signs: "For sale," "for rent," "for free."
The city's restaurants are advertising "recession dinners": A hot dog and a beer for $5. Suddenly you can get tables again -- anywhere, anytime -- and the concierge will often ring you back and make you an offer. It feels like the end of snobbery.
Empty Apartments, Big Discounts
The potholes are getting bigger. And could it be there are more rats since the collapse of Lehman Brothers? Garbage sacks pile up because restaurants and hotels have to pay for them to be taken away, but would rather save their money. Homeless people wander the streets, apartments remain empty, landlords offer discounts -- unthinkable circumstances just a short time ago, at least here in Manhattan and over in Brooklyn.
People react differently to crisis. When Andre Wechsler from Düsseldorf lost his job on Wall Street, he opened up a hot dog stand selling German currywurst on First Avenue. City magazines praised him for his smart, tasty, "so German" idea.
A hundred yards further on, Cathy sits on a bench. "I'm exhausted," she says. "I have no insurance, no job, no place to live." Cathy sleeps in subway carriages or on the benches in Tompkins Square Park. She's a bag lady now in a raincoat, with all her belongings in a shopping cart. Cathy used to be a broker at Merrill Lynch, but she never put anything aside. Now she has nothing. When people like Cathy lose their jobs in a city without a welfare net, they fall rapidly -- and far.
It's a chain reaction. Wall Street was the city's engine, and since 1990 New York has been a monothematic metropolis. If a bankrupt Lehman Brothers puts 25,000 people out of work, it robs the city of millions in taxes, revenues that are desperately needed for education, the police force and road repairs. Children are taken out of private schools, cleaners and gardeners are let go. This affects the real estate market and all consumer activity, and taxis drive around empty save for the driver, desperately hunting for the few tourists who still have money to spend. And then AIG and Merrill Lynch cut thousands more jobs.
So could New York's current woes beset Berlin and the rest of the world tomorrow? As so often, New York could become a standard, a model, only this time of fear; a new weltschmerz in the true sense of the word?
A Bubble Develops Every Ten Years
Grace Dolan Flood thinks fast and talks fast. She used to be a saleswoman, after all. Her job was to build relationships, trust. Grace called companies and private customers and tried to convince them to invest their money in Swiss investment bank UBS. Her colleagues invented new investment models, Grace found investors to fit the model. For this she traveled, forgot about her family, vacations, private life, like so many New Yorkers she just worked, she says. For a decade-and-a-half, Grace worked on Wall Street earning at least $300,000 a year, often more.
It bought her an apartment on Chambers and Greenwich with a great view over a relaxed neighborhood. And the Jaguar in the garage. And the status of a Wall Streeter. Fancy clothes, too -- including a $800 Prada dress Grace never got around to wearing.
Grace drank tea during our first conversation. Her skin is freckly, her hair red. She wore an Aston Villa jersey.
Of course Flood knew the market. She knew the cycles and she knew that a bubble develops every 10 years "when everyone gets too excited again about exactly the same thing," as she puts it. Grace bought when others were selling. That's how she got this apartment shortly after 9/11, when it cost just $435,000 because everyone else was fleeing Lower Manhattan. Today it is worth $900,000.
Grace saw the crisis coming, braced for it, bought some stock in falling markets, and hoarded cash to keep her options open. She thought a storm was coming. She hadn't anticipated the end of the world.
In May 2008 Grace lost her job. So she started looking for another. But the Wall Street Grace knew inside out no longer existed. At first she reacted the same way she had always done: She called headhunters who got her interviews. She leaned on her network, but it was over. No-one could help anyone anymore.
Grace says she has an excellent reputation: "I can build relationships, I'm well-educated, a team-player, customer-oriented. That's my reputation." But no-one was interested in her reputation any longer, and her interviews were always followed by silence. Grace gets herself a cardigan and a beer, stepping over a packing case in the process.
'The Best Days Lie Ahead'
The effects of the crisis are plain to see in Manhattan. Virgin has closed its largest outlet worldwide on Times Square, and the ladies on the Upper West Side ask for their purchases to be put in plain, unmarked brown paper bags. Economist Colin Camerer told New York magazine that behavior considered glamorous in good times is seen as revolting when times are bad.
Where is all this leading? The mayor finds himself espousing conflicting views, claiming the situation is worse than ever -- and yet not as bad as people think.
The reasons for this contradiction are clear. On the one hand Michael Bloomberg has to explain why he wants to be re-elected for a third term in November. That used to be impossible and against the rules of the game. Until, that is, he got the municipal authorities to change the rules. Bloomberg says New York is in a state of emergency and needs him because he alone can lead the city out of the crisis.
On the other hand, Bloomberg has put $90 million of his own money into his election campaign. And when you accompany him on the campaign trail visiting first the Hispanic Chamber of Commerce in Queens, then a carpenters' and cabinetmakers' association meeting at the Sheraton on 53rd Street, and finally an award ceremony for a Jewish businessman, you often hear him enthusing about New York being "the most amazing city in the world" whose "best days lie ahead" because it will "beat this crisis" just as it has others.
100,000 Lost Jobs
Bloomberg seems to epitomize New York. His staff say he is quick and intelligent, manic, quick-tempered, and a little megalomanic. For instance, he prefers to live in his townhouse on Central Park rather than the mayor's official residence, a white-and-yellow villa on the East River, because he thinks Gracie Mansion is too small for his needs. Yet he pretends to take the subway just like his voters -- even though his chauffeur drives him to the subway. But when one of his citizens accuses the mayor of bending the democratic rules to allow him to seek a third term in office because no-one could match his media influence or spending power, Bloomberg replies, "you're a disgrace!"
The Michael Bloomberg who opens every conversation with the words "Call me Mike" is a small man. He is independent. He once was brave. Manhattan reporters say Bloomberg had a splendid first term in office in the years before business was stifled by bureaucracy, then sacrificed his second term to his ambition of running for president. His best joke is "It only rained twice last week: Once for three days, once for four." He cracked it six times the day I spent with him, though his followers insist he's a funny guy. They also claim he has lots of ideas for how to save New York from demise.
The mayor denies New York depends entirely on Wall Street. "We are the fashion capital of the world, the medical capital, the media capital," Bloomberg gushes.
His municipal government estimated 75,000 jobs would be lost in the financial industry and a further 300,000 elsewhere in New York. So far, only about 100,000 have been lost. The city has set up a fund to issue small business loans for startups. There is also a retraining program for jobless Wall Streeters. "We're pumping $7.5 billion into public schools," says Bloomberg the campaigner. "We will emerge from this crisis stronger than we entered it."
Tom Birchard drinks a latte in front of the Veselka, a veritable New York institution founded by Ukrainian immigrants on the corner of Second Avenue and 9th Street in East Village. Birchard took over the place from his father-in-law. He has white hair, blue eyes and wears what every New Yorker wears in summer: shorts, a T-shirt and sneakers.
"Everyone Around Here Was on Welfare or Drugs"
Like so many others before him, Birchard came here seeking work. His father, a staunch Republican, worked for the Campbell soup company before teaching airmen how to drop bombs accurately. Tom wanted to get out of Pennsylvania, so he moved to the East Village in 1967. "It was crazy here, and it became my home overnight," he recalls. Here there were blacks, lesbians and gays, and Andy Warhol would come by in the evening from his place further up on Central Park. At the time, Tom Birchard didn't know what he wanted to do in life. It didn't matter. He ate breakfast at the Veselka, met his first wife, his father-in-law died, and Birchard finally realized where he would spend the rest of his life: at the Veselka.
Back then, kids used to play lacrosse on Second Avenue. Car repair men would grease engines on the sidewalk. Painters painted, writers wrote, musicians rehearsed, and hippies watched, read, listened and got stoned. Manhattan was a different place, a good place to be in those pre-70s days. There was a Polish woman at the Veselka who took your order, set the tables, cooked the borscht, served the borscht, took your money and washed up. And she wasn't fast.
But then the city ran out of money, couldn't pay its bills, bureaucracy and construction projects became too expensive, and tax revenues couldn't cover the costs. The subway ground to a halt, the potholes were covered with sheets of steel, the rats came out, and the district turned bad.
Birchard says the "Mafia clubhouse" used to be over there on the corner of First Avenue. Its runners went around collecting money for the numbers game racket. Heroin replaced hash, the hippies became pimps and prostitutes, break-ins and murder shot up. It happened right here, around the corner, in front of the door, even inside the restaurant, which was only half as big as it is now. The people of the East Village carried knives, and Birchard recalls that every apartment got robbed. They stole the TV out of his place, which cost him 125 dollars a month. "East of Avenue A landlords burned their own houses down because no-one was paying rent anymore. Everyone round here was either on welfare or on drugs," he says.
A City at a Junction
And then -- doesn't it always? -- the pendulum swung back. Cheap housing attracted young artists, chess-piece carvers, and designers, cafés opened up and students from New York University over on Washington Square flocked to the Veselka after the Village Voice wrote about Tom Birchard's blini, a kind of Eastern European sweet pancake.
Then came the 1990s; the decade of money. Wall Street took over New York, and the East Village was taken over by those who could afford $2,000 rents. Next to arrive were the fast-food chains: Starbucks, Dunkin' Donuts and the like. "Give me a break," Tom says. "Stop! That's enough now!"
And now?
The city is at a junction. Everyone can sense it. Will the 70s return, ushering the past back in? History rarely repeats itself, and it certainly never ends. Nor will this city ever stop developing. It is changing simply because immigrants will continue to come to New York, changing entire blocks, and with them the rules.
A new, once unimaginable, New York under Mayor Bloomberg is coming to terms with global warming and cycle paths on Times Square, Ninth Avenue, from east to west, and only the taxi drivers still veer from left to right across six lanes of traffic, mowing down cyclists in the process. White bicycles, so-called "ghost bikes," are tied to lampposts as memorials to the victims.
Safety More Important Than Money
The New York of the Wall Street era was a city of egoists. Now rich unemployed people offer to help serve poor unemployed people in soup kitchens, the "city meals-on-wheels" service is growing, and former bankers now want to coach school baseball teams. If money makes people narcissistic, does a lack of it make them better?
Seminaries are reporting a rise in intake. Sociologists claim the new New Yorkers are starting to appreciate the value of regular work again. "In the past people didn't give a damn about safety. Safety was something for low-fliers," says Barry Schwartz, a psychologist at Swarthmore College in Pennsylvania. But now more and more people are realizing that "safety is more important for our happiness than wealth."
In years gone by, urban researchers described New York as a "hedonistic treadmill," the city of "maximizers." Everything had to be perfect, then even better, and everything was constantly being questioned because there was too much choice. New Yorkers were never content. Is this changing? Will calm come, composure even? Will what you do become more important than what you buy?
The same sociologists say aid organizations don't need more helpers because they're running out of money. The same sociologists say the worst thing that could happen to an urbanite is to lose his job because the failure and disappointment plunges them into the abyss here as in all other major Western cities.
Perhaps the city will soon be divided anew -- here the new communities, there the new ghettos -- and return to the rough New York of Martin Scorsese's "Taxi Driver," a New York of cheap rents, trash and murder. Another incendiary issue is that black men, an above-average proportion of whom are poorly or under-educated, are far more likely to lose their job than any other socioeconomic group.
Grace Dolan Flood says the city is spiraling downward, but New York is not a place that gives up, nor is America a powerless nation. "We're not just going to roll over and die," she says defiantly.
Grace would like to buy real estate. Right now. She could live off 10 or 12 apartments. But banks aren't handing out loans. She applied to become a New York City schoolteacher. She was invited for an interview -- that was the first hurdle. Teachers in New York earn $46,000 a year. She got through the entire application procedure before the program was axed. The city wouldn't be hiring any new teachers. "Sorry," they said. They had to cut costs.
"Winding down my upper-class lifestyle won't be hard," Grace says, pointing to her Irish heritage. Her family came to New York when Ireland was the poorest country in Western Europe. The Dolans lived in Brooklyn before it became fashionable. Her father unloaded cargo planes at Kennedy Airport, but he was also a janitor and cleaned offices. Sometimes he took his kids along. "I can still clean any bathroom in five minutes flat," Grace says. Her parents were determined all five of their children would have middle-class lives. They succeeded, and all five went to college. "I wanted my parents to be proud of me," Grace says. "Immigrants will lead this country out of the crisis because immigrants don't assume they have a right to a better life. They fight for it."
Grace has rented out her apartment. She can no longer afford the once paltry sum of $3,500 she needs to pay off her loans and feed herself every month. She found a cheaper place for herself. Grace no longer spends $2 every morning buying the New York Times. And who needs a $5 latte from Starbucks?
In the past, Wall Streeters went out to eat every day. Today former Wall Streeters go out for a meal on Saturdays, skip the appetizers and drink beer instead of wine.
'We're at a Watershed. Everyone Knows That'
Fred Austin knows Lower Manhattan well; the people, the "New York feeling." He grew up here. Austin sits at the back of Katz's, the restaurant he runs on Houston. Over there is where Meg Ryan showed Billy Crystal how women fake an orgasm in the famous scene from the movie "When Harry Met Sally." Here's where Bill Clinton ate. It's a room full of photos; a museum that renews itself every day. The pastrami sandwich is its specialty.
The humor is Jewish: How many people work here? "Half of them," Austin replies.
Austin says New York is and remains the center of the creative world: "All the creative, smart money comes here. That's not going to stop all of a sudden. Young people are moving to New York, and they want to live, not suffer. Thirty years ago, people were predicting that cities would eventually die out. But no longer. We're a long way from the New York of the 70s. The crisis may be depressing and its effects wide-reaching, but urban culture -- a blend of ideas, strength, and energy -- simply can't be replaced. We're making a comeback."
Fred eats a pickle and sips his coffee. He has a bald head and a goatee, and wears a red checked shirt. Then he says, "The entire city now understands there's too much at stake, and none of us wants New York to break apart. We're at a watershed. Everyone knows that."
It's August in New York in a rainy summer. Months have passed since our first conversation, and Grace Dolan Flood has found a job. She now teaches young Wall Streeters about investment banking. "It's great to be back," she says.
Will Things Get Worse?
Are there any signs of improvement? The Bloomberg administration seems to think so. Grace Dolan Flood agrees. "Crises come and crises go," she says.
The figures show that more stores are closing and fewer people are spending their money. The fact that Goldman Sachs is making billions again -- just like before the crisis -- won't save the rest of the city. The figures show that things are going to get worse in the coming months and possibly years.
The people of New York want to beat the crisis, of course. They speak of their courage, their imagination. The Big Apple is still a dynamic city of 8.3 million. But didn't the crisis come about because so many Americans ran up huge debts so unthinkingly in the belief that they deserved another car or another house? Is it because the story about the extraordinary country with the world's best workers has been exposed as a myth or a lie? Could it be that the United States and even the New York of 2009 are too sluggish to change quickly in the face of such a crisis?
Tom Birchard, the owner of the Veselka, says he hasn't forgotten the watchful walk he adopted in the 70s. Yet he hopes New York will bounce back, as always. "We've had lots of practice in survival," he says. "As long as there's a way to survive, we'll survive."
Then he grins and adds, "So many of the really funny, crazy guys that said Manhattan had lost its cool because they couldn't afford to live there anymore: They're all coming home."
Birchard is sure he can detect some sort of a cleansing effect. Speculators are going, artists are returning. Although it's still quite quiet and subtle, he can sense the city humming again, a kind of buzz that almost feels like 1969 again. Not quite a new New York feeling, but something's definitely happening.
Perhaps a city like New York needs a crisis like this every 10 years or so.
Translated from the German by Jan Liebelt.
RELATED SPIEGEL ONLINE LINKS:
- Eight Years after 9/11: The Bloody Legacy of Cheney's Failures (09/07/2009)
http://www.spiegel.de/international/world/0,1518,648161,00.html - SPIEGEL 360: Our Full Coverage of the Global Economic Downturn
http://www.spiegel.de/international/business/0,1518,k-7312,00.html - The End of Arrogance: America Loses Its Dominant Economic Role (09/30/2008)
http://www.spiegel.de/international/world/0,1518,581502,00.html
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