What will happen to the bond ratings?

0:00 Speaker 1 There’s a crisis coming in New York City, and the crisis, well, you might end up with a socialist mayor. What is today is Richard Farley. The Farley family has always been Democrats for one hundred years, and he, Richard, is an attorney in New York City, a prominent one. He handles the bond markets and other financial markets. And Richard, good morning,

0:27 Sunday morning. I understand that you were very much concerned that if a socialist gets in that the bonds ratings for New York City will go down the sewer.

0:37 Speaker 2 You tell us, Yeah, John, I’m very concerned about that now. As you know, I wrote a book that came out last month on the seventy five crisis called drop Dead after the famous headline. And if I look at the factors that caused the seventy five crisis, a lot of them seem to be emerging now. Number one, the loss

0:56 of high paying jobs. I was industrial jobs back then, but now we’ve got a concern about financial jobs leaving to go to Florida and Texas and elsewhere. Number Two, there was a big inflow of unskilled workers into New York in those days, and of course with the immigration under Biden. We’ve seen that here as well. They’re going

1:17 to need services. They’re not going to be able to get high paying jobs right off the bat, most of them. That’s going to be an issue. Rising interest rates, big problem in seventy five. We’re seeing that now as well, loss of aid from Washington. Now, in the seventies it was the Knicks administration cutting back on the LBJ programs,

1:39 and now with DOGE and with the COVID money gone, I think there’s going to be substantially less aid coming to New York City. And another factor which could be very relevant with a socialist mayor, is the city in those days provided services to the citizens there were in other cities done by the state government or the private sector.

2:01 And John, you know better than anybody else this notion that the city is not going to run all a supermarket change. You’re not how hard it is to run a supermarket chain and even a modest profit. There’s no doubt in my mind this would be an absolute budget killer for New York City.

2:16 Speaker 1 Well, it’s not only a budget killer. I mean I think I have said to her, if I’m not gonna I’m not going to compete with the city of New York.

2:27 Speaker 2 I mean, how could you, how could you compete with a government subsidized program that is going to destroy your profit margin. There’s no way you can continue to do that. That would be foolish.

2:38 Speaker 1 And I understand. I spoke to Virginia to the person that’s running for governor there and miss Sears, and I understand that the opponent, the Democratic opponent in the state of Virginia for governor, thinks they should have government supermarket seto.

3:02 Speaker 2 Well, it’s crazy, John, and the expense of that would be enormous. What they want to do with residential real estate, what he wants to do in terms of capping rents, well, that’s just going to result in less investment in housing.

3:13 It’s going to exacerbate the housing crisis, and it’s going to result in units not being kept up to snuff. And we saw what happened in the seventies with that. You had burning the buildings burning down. I think it’s a big risk now at some point, the crisis doesn’t start until the municipal bond market says no more, we’re

3:34 not buying any more of your debt because we don’t like what we see. And I would watch spreads in that bond market very carefully now as we approach the November election, and if the bond market is convinced that these programs have legs, and I think they do, because if you look at the city council, there’s no question

3:53 would get rubber stamped. And if you look what happens up in Albany unless Hulkal’s willing to veto the raised taxes and other items that require the approval of the state, and I think she’s scared to death of being primary by Tis James or another progressive. Tis James was of course front and center at Mandamie’s victory celebration. This is

4:15 not far fetched. A lot of people think, oh, well, he’s just saying these things and they’ll never get enacted. I’m quite concerned they may very well get enacted, and then we’re facing a real fiscal crisis understood.

4:28 Speaker 1 Meanwhile, I think we don’t have to I mean, we don’t have to worry worry until November, but I think the New York City people have to worry and going to make sure they vote the right way in November.

4:42 Speaker 2 Absolutely.

4:43 Speaker 1 Thank you Richard Fowley, and thank you for everything your family has done. Now the post office is a folly name that’s named after your family. Yes, so congratulations and having such a beautiful family name, and God bless.

4:59 Speaker 2 You, and and we thank a former Governor Cuomo for keeping that name on the building. There was, you know, some movement by an unnamed family to have it taken off, also prominent democratics, but that’s sales, thanks to Governor Cuomo.

5:14 So we thank him for that.

5:15 Speaker 1 Thank you so much.