The Big Apple. To many the financial capital of the world.
There is no doubt things are rough right now. Many feel this is a temporary measure and the city will bounce back. After all, it always does.
I am here to tell you, things are changing before our eyes. Those who are paying attention know that we are not going back to the way things were. For New York, this is devastating.
The city is finally going to reap what it sows. Years of misguided politicians and class warfare has people on the move. This is not exclusive for NYC since it is happening all over the country. It is, however, having a much bigger impact on the Big Apple.
One of the things that separated New York from the likes of Los Angeles and Chicago is that it is the financial center of the world. Wall Street is very powerful and pours a lot of money into the cities coffers. It also provides a lot of high paying jobs.
When it was mentioned that things are changing before our eyes, they are. One of the old adages is that capital goes to where it is treated best. With the policies of New York, they have finally slayed the golden goose.
There is a migration taking place and it is south. It is estimated that by 2024 or 2025, there will be more capital in South Florida than New York City. In other words, Wall Street is relocating.
Already we saw Goldman Sachs, Carl Icahn, and Point72 opening offices in the South Florida market. Icahn relocated his entire firm to the Sunshine State. This is a trend that is only getting started. What is interesting is that Point72 is owned by Steven Cohen, who just bought the New York Mets. While not leaving the area, he does not want to miss out on the happenings taking place in South Florida.
Politicians love to raise taxes. They also like to demonize the rich. After all, it plays well to crowds on the campaign trail. It also makes for strong talking points on television.
The problem with implementing policies that become onerous to them is that they can just leave. This is especially true in the financial industry which only requires a computer and an internet connection to operate. This can be done just as easily in Miami as on Wall Street.
Of course, this is not without precedence. The New York Stock Exchange was not the first one. Philadelphia held that title. Also, the original firm of what today is JP Morgan was the largest bank and was in Philly. In fact the Bank of the US that Andrew Jackson railed against was also located there.
Now, over 200 years later, we are seeing another migration. The new normal is going to leave a lot of places left out in the cold.
The problem for New York City is they took advantage of Wall Street for decades. We all know the money that flowed through there is insane. That led to a large tax basis. Also, since NYC depends so much on taxes on real estate, the plummeting values of commercial is going to obliterate their tax assessments.
Therefore, we can look for South Florida to become the new financial center of the United States over the next decade.
However, the country as a whole is screwing up that distinction for the world. We are already starting to see things move East, especially from Europe. This means, as we enter the 2030s, the financial capital of the world will be in Asia. They will over take the United States and New York City/Miami.
When billionaires move and take their companies with them, firms that manage billions and trillions of dollars, that is a total that is tough to make up.
Wall Street has a lot of money. The question is how much will still be there in 5 years.
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