David Usborne: Our Man In New York

In decline? Not if the bonuses are anything to go by
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The Independent Online

It is nearly 30 years ago since Bette Midler, the comic, uttered the quip, "When it's three o'clock in New York, it's still 1938 in London". I have no idea what she had in mind. Maybe she had just returned from Britain and had suffered on our railways or sampled our then rotten cuisine.

In any event, Bette, we have caught up since. You sound like those Americans who say "fog" when I say London. Don't they know that water shortages are more common in Hampstead these days than Las Vegas? Hey, didn't New York make a run for the 2012 Olympic Games? So sorry about that.

But let's not start a beauty contest here. We all have reasons for liking one of the two cities above the other or, indeed, liking each of them equally for all sorts of different reasons. And if we pit one against the other, where would it end? Who has the more Michelin-starred restaurants? (New York) Which stands above the other in quality-of-life rankings? (London) And so on.

Yet, there is one area of competition between the two capitals that does matter. In 1978, Midler might have been talking about New York's indisputable position as the capital of capitalism. Wall Street was king of all things financial while the City of London was the slightly arthritic, bowler-hatted uncle.

No more. Over here, we have been hearing a lot of rather paranoid chatter in recent weeks about the slow decline of the Wall Street empire versus the unstoppable rise of the London financial markets. Politicians and business leaders are sounding the alarm.

The main New York exchanges, they warn, are losing their competitive edge. They point in particular to the recent successes of the London Stock Exchange, which has seen profits soar as it has attracted the lion's share of new global listings, especially from brash new companies in eastern Europe and Russia. Any erosion of Wall Street's competitiveness "would be devastating for both our city and our nation," the New York senator Charles Schumer warned recently. Late last month, a blue-ribbon panel with ties to the Bush administration said the problem lay with new controls and regulations imposed on Wall Street in the wake of the Enron scandal and urged that they be relaxed.

You might surmise that Wall Street and its legendary big, swinging dicks are somehow in impecunious retreat. You would, of course, be mistaken. This week, New York's brokerage giants, beginning with Goldman Sachs tomorrow, are due to report their latest quarterly results and, to quote Russell Crowe's new film, A Good Year, it has been. Very good. The numbers are likely to be breathtaking.

The annual lighting of a million bulbs on the trees down Park Avenue signal two things - Christmas and the bonus season. Ah yes. Now, here is a measure by which Wall Street seems to be doing just fine. Those nice Maseratis and Ferraris currently gleaming in a showroom around the corner from my Midtown office - they will be gone before the last carol.

The average bonus that the traders and deal-makers on Wall Street can expect at the end of this year, according to one forecast, will be in the order of $165,000 (£85,000), just the right amount of change for a freshly minted Bentley Continental GT. It is rumoured that at Goldmans, 50 senior executives will receive bonuses of $25m each. That's a whole assembly line of Bentleys.

London will have its own bonus avalanche, of course. The boys and girls of the City are expected to pocket nearly $17bn this year. But that pales besides New York. Just the top five banks over here, including Goldman Sachs and Merrill Lynch, are expected to dish out something like $36bn between 173,000 employees. That is 30 per cent more than the record amount dispensed last year.

I, too, am losing sleep over Wall Street but not for the same reasons as Senator Schumer. Keeping me awake is envy. Is such largesse a trifle obscene? By Christmas time there will be so much money rushing down the canyons of Manhattan that the rest of us will need a snorkel.

But while I am green over their green, I am aware how useless I would be trading natural gas options and derivatives.

Moreover, I guess we should be grateful rather than aggrieved, because the good times of others is what keeps all of New York buzzing. The state has just cut its annual budget deficit forecast by 85 per cent on the basis of the bonus predictions. Already, reports are coming in about end-of-year corporate parties being more extravagant than ever. The Russian Tea Room confirms that nearly all of the parties booked for this month will include vodka and caviar service, at $500 a head. Half of the city, meanwhile, is waiting to help the bonus beneficiaries spend their new-found cash, from estate agents to car salesmen and also charity fund-raisers.

So, whatever its worries for the future, Wall Street is hardly on the breadline this Christmas. As for you lot in London, please curb your swagger. You are hardly in 1938, but when it comes to bonuses, at least, you are still a year or three behind.