November 4, 2025
Will anyone rescue New York City from its dark destiny this time?
By Geoffrey P. Hunt
Some 50 years ago, New York City was on the verge of bankruptcy.
The overall US economy was a mess. Recession caused by the 1973 oil crisis spawned high inflation and near-zero growth, which in turn sparked municipal bond market fissures and near-defaults from rising interest rates and plummeting yields on extant issues with future maturities.
Remember, in the end, bond markets have the golden vote on all things where governments are financed by debt. Always, and everywhere.
New York City’s decades of profligate spending—public union wages and pensions off the charts, runaway welfare, deferred maintenance coming due on infrastructure and subways, exacerbated by shrinking tax revenues—all resulted in the city being unable to rollover or finance additional municipal bond debt necessary to avoid a catastrophic collapse.
In 1974, then-newly elected mayor Abe Beame, previously New York City’s comptroller, had enacted a series of desperate austerity measures. Beame slashed essential services and reduced the New York City workforce by almost 10%, but high crime, with residents and corporations fleeing to the suburbs, along with the majority of New York City money center institutions suffering ugly fiscal results, crushed the city’s tax base and tax revenues.
Cost-cutting was too late and too anemic. Mayor Beame couldn’t sell more bonds and found no one sympathetic in the Ford administration to lend a bushel, let alone a bale.
Remember President Ford’s “Drop Dead” retort?
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https://www.americanthinker.com/blog/2025/11/will_anyone_rescue_new_york_city_from_its_dark_destiny_this_time.html
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