“It’s always darkest before dawn”
– Thomas Fuller
Panic Bells Begin to Sound
James Altucher began to be alarmed back in January when he saw China shutting down. He was alarmed because, through conversations with high-level individuals, he began to realize just how much of the United States production was outsourced to China. He saw a big threat of the supply chain to America and quickly started warning friends.
According to his observations, COVID-19 and the rioting could be the perfect storm to pull NYC from “The Greatest City in the World” status.
He also looked at government reactions in “locking down,” which did not quite fit with the curve of pandemics as he observed it. It’s not a rise and flattening as most observe, rather, he calls it a sigmoidal curve or “S” curve.
“The best tennis player in the world is a tiny, tiny fraction better than the number 200 tennis player in the world. Because even a small, micro changes at that level will make someone the best; but of course if you and I were playing tennis, even if we were roughly equal, the difference between our skills would be huge.
You know, I’m just making that up. So it looks like an ‘S’ like At first, it’s flat when you’re not learning, then it shoots up exponentially and then it flattens again. That’s how a pandemic works. That’s called a sigmoidal curve. What that means is it’s an exponential curve in a real-world environment.”
-James Altucher
Why is NYC Dead Forever?
When he penned an article to that effect, the world was a buzz. He looked at three unique areas for that put New York City at the center of the universe: Business, Culture and Food.
- Business
Bandwidth has increased greatly across the world. Given that, there is no longer a reason for coming to New York City in order to do business. Many companies have moved to working from home. In addition, they have seen it is cheaper and more efficient. Facebook, Twitter and many others will be working from home for at least the remainder of 2020.The change in business will drive a massive change in the commercial real estate market. This will not be fully realized until bankruptcy proceedings start.
- Culture
Broadway is a huge pull to NYC for its culture and unique experiences. It’s now on hiatus until possibly the spring of 2021. Education has gone online (let’s hope the tuition drops accordingly). Many of NYC’s colleges have been empty all spring and summer and most likely will not see a change in the fall. - Food
James mentions that all three of his favorite restaurants have closed permanently. He estimated that as many as 30% of restaurants have permanently closed. The longer the lockdown continues, his estimates could jump to as much as 60%.
Backlash From NYC
Jerry Seinfeld penned a New York Times Op Ed denouncing him, Mayor Bill de Blasio insinuated that he wasn’t a “Real New Yorker.”
However, it makes sense: NYC has high taxes, high cost of living and now murders are up 50% in July.
Just on Monday, the New York Post reported Governor Andrew Cuomo and Mayor Bill de Blasio hinted to the possibility of no indoor dining until the spring of 2021. With Cuomo adding just yesterday that a 4,000 person task force would also need to be created for indoor dining to proceed.
The above reactions of government do not seem to be those of one looking at the longevity of their city’s economy. No business plans to be closed for six months to one year with no income, but still incur all the costs associated with it.
I reached out to James to re-join me on the Create Your Own Life Show, because I wanted to dive a bit deeper about where he saw NYC going.
Listen to the Full Interview:
The Dash from New York City
1 in 5 New Yorkers have moved out or know someone that has. James refers to Facebook group in his article, for those leaving New York, that gained ten thousand members in just a matter of days.
He also cites that there is currently a shortage of moving trucks with NYC’s “mass exodus.” Could this be a reshaping of NYC’s place in the world?
…But NYC Always Pulls Through
New Yorkers have experienced a lot over the years, but they always come back. Many point to 9/11 and how the city pulled through that event.
Altucher pointed out to me that he lived only a few blocks from ground zero during 9/11 and he saw the city pull together.
However, with drastic changes in the economy and mounting debt, it’s hard to predict how and when a recovery will happen. Congress has been discussing a $1 trillion bailout of states.
James did the math for me on this:
If you divide that by fifty, then that amounts to about $20 billion per state. When looking at New York City, the MTA alone needs a $12 billion bailout in order to survive.
With President Trump’s recent move to take $7 billion in federal funding from NYC and the war of words that ensued, a bailout may not be likely.
It remains to be seen what the future for city’s like New York will be; affected by the pandemic, looting, rioting and dying economy. NYC may not be dead forever, but right now it’s on life support.
