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.

Image created using AI.

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?

Faced with New York City’s looming insolvency, New York State Governor Hugh Carey—an old school Democrat—recruited Felix Rohatyn, the distinguished, august senior partner at the largest investment banking house in both the city and the world, Lazard Freres. Rohatyn was an exquisite financial wizard, navigating, negotiating, and delivering complex financial deals—profitable, innovative, and durable.

Felix Rohatyn might have been the most trusted and respected financial titan since the likes of J.P. Morgan and Andrew Mellon.

Governor Carey, with Rohatyn, formed the Municipal Finance Corp. and the New York State Financial Control Board, which commandeered operational and financial control of New York City.

Carey championed massive loan guarantees from New York and engineered state legislation to enact sweeping tax cuts and regulatory reforms that jump-started New York state’s economy. This provided the confidence and trust enabling Rohatyn to not only refinance New York City’s debt, but to convince President Ford to shelve his “Drop-dead” posture towards New York City. Ford signed the New York City Seasonal Financing Act, through which the city secured some $2 billion in direct loans and additional loan guarantees.

So, here we are, fifty years later, with 33-year-old communist, antisemite, and Islamic terrorist sympathizer Zohran Mamdani, who knows nothing—zero, zilch about finance or governance in any public space or the private sphere—on the cusp of being elected Mayor of New York City.

Mamdani’s communist manifesto for New York City, calling for higher taxes, wealth redistribution, rent control, free food, free health care, free transportation, and more, including dismantling the NYPD and FDNY, will not only defy gravity but will also make the city uninhabitable.

Hugh Carey and Felix Rohatyn clones don’t exist. New York City’s dark destiny, which won’t be confined to the five boroughs, is a hellscape about to unfold and descend upon the greatest metropolis the world has ever seen.

Cave…fortunam obscuri fati.

Geoffrey P Hunt, a retired global electrical products company senior finance and operations executive, was a New York State CPA with Price Waterhouse in New York City from 1973 to 1981.