Gasparino: $3.5Bln Loss Tax Revenue / 111K Jobs Lost

A: Sorry for the late post, had some work to take care of today. Lets continue to keep it real. Lets continue to keep our heads out of the sand and acknowledge the times we face. There is still buying going on out there and I continue to get buy side requests, but clearly, things have slowed from what will eventually be looked back on as record levels of sales activity. Why are things slowing? Why is sales volume down? Look no further than the BUYERS! Buyers make or break the market when it comes to Manhattan residential real estate sales, and the sooner you realize that it is "buyer confidence that trumps all", the sooner you can get an idea of where this market may be headed. CNBC's Charlie Gasparino gives us the latest figures on the looming budget crisis and job losses to date.

First, the expected loss of tax revenue. NYS Comptroller DiNapoli is forecasting a loss of tax revenue by an estimated $3.5 Bln by March 2010, "due to a lack of wall street bonuses", as Gasparino puts it. With wall street revenues way down, and losses being booked, this is not shocking. This $3.5Bln will come out of the budget by 2010 and does not include the likely loss of revenue from individuals, smaller businesses and retailers. Expect property/capital gains/income taxes to rise, etc., in the near future to help make up for the tax revenue shortfalls that await us.

Second, job losses in the financial services industry hit 111,000 so far year to date, according to Challenger, Grey & Christmas. In the article, it was stated:

The fallout from this year's global credit crisis has claimed jobs on all corners of Wall Street, from hedge fund managers to floor traders and beyond. More than 110,000 have lost their jobs so far this year, and some industry experts forecast it could come close to 200,000 before the year is over.
"Wall Street the way we know it is frankly gone," said Dr. Michael Williams, dean of the graduate school of business at Touro College in New York. "This was inevitable because there's just not enough money out there to support the huge staffs these banks and investment banks had before."

That job loss number I believe is for ALL jobs falling under the umbrella of the financial services industry, with probably half the amount coming from New York City firms. As Gasparino reports this (click here for video), the key element to understand is that "wall street is consolidating and a change in the business model". As consolidation occurs and mergers close, jobs are lost as costs are brought under control. With a changed business model brings the loss of structured credit and other positions related to the securitization process of different types of debt. This sector got hit very heard.

The next 3-4 quarters are going to bring with it more and more job losses as the dust storm settles and we get our first glimpse of what the new wall street looks like and how heavy the regulation is going to be. This is an ongoing process and it will get worse before it gets any better.

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