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Recession special!
Tough times, tough questions
Kerrilee, 20, Financial District; student
QUESTION: How will the r-word—if it does happen—affect my student loans?
ANSWER: It could become harder to get loans, especially private ones. “Lenders are tightening their restrictions,” says Justin Draeger, spokesperson for the National Association of Student Financial Aid Administrators. “Students have to have higher credit scores, cobuyers.” But there’s good news for those paying off private loans: Interest rates could be dropping, so borrowers might see lower monthly minimum payments.Connor, 19, Chelsea; business student
QUESTION: Should I escape from New York and get the hell out?
ANSWER: “Stay put!” says land strategist Christopher B. Leinberger, a visiting fellow at the Brookings Institution and author of The Option of Urbanism. “Anecdotal evidence shows that the housing collapse and subprime meltdown is hitting harder in drivable suburban places. Walkable urban housing units are maintaining their prices, and even going up in value.” Raymond Fisman, Lambert Family Professor of Social Enterprise at Columbia Business School, goes in another direction, explaining, “Because of New York’s reliance on Wall Street money, downturns—and booms—are potentially more extreme here than in other places. But if you didn’t run for the hills on September 12, 2001…why would you now?”Evan, 25, Fort Greene, Brooklyn; café manager
QUESTION: With the declining value of the dollar, would it be a better idea to invest in foreign markets?
ANSWER: “You shouldn’t invest in foreign markets if your goal is to avoid the economic slowdown, because the U.S. is part of a global economy. Banks work in sync with each other, so foreign markets are going to be hit too,” explains Alex McGarr, a commodity broker at Cannon Trading. Professor Fisman says, “Generally you want to think about accruing savings and investments in the currencies where you’re likely to spend money.”Caitlin, 23, Astoria, Queens; musician
QUESTION: Should I change jobs or stick with the security of the soul-killing one I have?
ANSWER: “Financial services are going to cut back, and it’s going to make it more difficult to get a job,” says Gus Faucher, director of macroeconomics at Moody’s Economy.com. “Job growth should pick up again in the second half of the year, but understand that hiring is probably going to be soft into 2009.” In other words, you should probably stick with the job you have—unless you have a cushioned savings account or a trust fund to float you if things go awry. Professor Fisman explains, “For better or worse, there has been a steady increase in demand for skilled workers, and a steady decline in unskilled labor—mostly due to technology and globalization.” On the whole, he cautions, “There’s no reason to expect this to change.” So…yeah…get a skill.Christine, 27, Boerum Hill, Brooklyn; health counselor
QUESTION: What’s a safe investment during an r-word?
ANSWER: Not stocks. “By definition, safe investments are those that are relatively unaffected by the market’s ups and downs, so stocks in general don’t fit this description,” Professor Fisman says. “But some are less subject to the capriciousness of the market, and some may even go against it—like bankruptcy services and powdered milk. There are a lot of investments that aren’t subject to the vagaries of the market,” he continues, “like U.S. Treasury bills and gold.”Alexander, 26, Williamsburg, Brooklyn; designer
QUESTION: How long will people be worrying about all this?
ANSWER: It’s tough to say. We contacted a variety of economists and professors, but none would speculate when talk of the r-word might stop. A pair of Chelsea psychics had some thoughts, though. Stephen Robinson, the New York Psychic, says, “By the end of 2009, I feel there is going to be significant growth in the economy.” Nicole Evans, owner of Psychic Readings by Nicole, disagrees. “The planets are in an uproar,” she says, “so I think it will continue until the summer.”
Time Out New York / Issue 647 : Feb 20–26, 2008No comments yet
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