Late last week we received our usual dose of hate mail. It read as follows:
Question: Why aren’t you guys covering this emerging economic crisis?. Each time I eagerly come on this site to check out the latest blog, I get disappointed to see it’s about fluff…This is a huge enough story that I know you can find some ways of relating it to the Indian or Indian-American diaspora.
Even hate-mailers need love from time to time so I thought I would oblige with a bit of an omnibus economic meltdown post that was shaded with a tinge of brown. First up, wanna-be gangsta Sudhir Venkatesh wonders, “with Wall Street tanking, who will think of the prostitutes?”
There are some people who might just benefit from the current turmoil in the financial markets. One probably won’t surprise: lawyers. The other might: sex workers…I came across these women when I began studying New York’s sex industry at the end of the 1990s. Mayor Rudy Giuliani, in an effort to clean up Manhattan’s neighborhoods, forced sex off the streets of Times Square and other Midtown neighborhoods. In the process, his administration created a new economic sector. I’ve been following the lives of more than 300 sex workers–in New York and Chicago, in high and low ends of the income spectrum since 1999…
One thing I’ve learned is that economic downturns can be boom times for high-end sex workers. Sex workers of the past waited on street corners, outside bars, and around parks, and their transactions were fleeting and usually for a few dollars. Today’s high-end sex workers see themselves as therapists, part of a vast metropolitan wellness industry that includes private chefs and yoga teachers. Many have regular clients who visit them several times per month, paying them not only for sex but also for comfort and affirmation.
That’s probably not all Jean did for her clients. But, as I reported in Slate a few months ago, about 40 percent of high-end sex transactions do not involve a sexual service. It’s not difficult to imagine that a man’s need for positive reinforcement is amplified when a pink slip lands on his desk.[Link]
And speaking of pink slips landing on desks, along with doctors, lawyers, and engineers, the hottest desi profession in the U.S. right now is what I like to generically term: “finance guy/girl.” Many of these finance guys/girls can’t really describe to you what it is they do without using the words “hedge, asset, or capital,” and by that time you are already half asleep. In truth, they may not even know what they really do (but the little bastards make three times my salary with one third the education 
). In all seriousness though, I think a disproportionate number of our community in the “white collar end” of this turmoil is an example of how the current credit crisis will affect South Asian Americans (but please stay away from the prostitutes!). What about the blue collar South Asian American?
One thing you’ll note if you look at the Roll Call vote from today is that it was subdivided along racial lines. My African American representative (Al Green-D Texas), along with Sheila Jackson Lee from my neighboring district are both Democrats who voted “no.” They did so with many other members of the African American caucus who, along with their constituents, see this as a bail-out for mostly white BSDs and Fat Cats and not the working class (including many minorities). However, the tragedy here is that if something doesn’t get passed soon, the resulting inability to obtain credit will disproportionately affect lower income households (including many in my district) looking to get loans for housing, transportation, or to open small businesses. This last category will affect many South Asian Americans. The quest to own 100% of American hotels will seriously stall if you can’t get financing to buy up another one. As another example, pretty soon there won’t be any more donut shops in Delaware of the kind that Joe Biden likes to frequent. In short, even though nobody likes the idea of it, something really does need to pass soon.
If only people had any faith left in GW Bush or his Tresuray secretary Hank Paulson things might be going smoother.
That brings me to the last desi angle in this post. Fortune Magazine today named the “50 most powerful women.” How about Indra Nooyi for a cabinet position in the next Administration? I’m not the only one that thinks adding her to the next governing economic team is a good idea. SAJA Forum reported something here:
Democratic presidential candidate Barack Obama has met with a bipartisan group of business and economic leaders, including India-born PepsiCo chief Indra Nooyi, and he intends convening the group periodically in the run-up to the November election. [Link]
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p>Monocle thought she’d make a great Scretary of Trade when they announced their hypothetical Dream Team recently:
Recently named the world’s top-earning female CEO, Nooyi might find it hard to drop the tiller at PepsiCo for the thickets of world trade. But with the Doha Round recently collapsed and recriminations between developed and developing nations still fresh, Indian-born Nooyi has the background – professional and ethnic -to turn this round [link]
Remember, when you wake up tomorrow email your representative and tell them what you think of all this (but only if your idea is better than Paulson’s).
I dunno–in my circle, it’s much more common for successful desi men to have a “side-thing” rather than to patronize prostitutes, but maybe they view me as a (good enough) Hindu boy so they camouflage the latter. Finance-wise, cut-backs (in consumption) for me, but–not sure I know enough yet about the story to give one. . . .
I wish I could write something clever here, but I nodded off after you stopped writing about hookers.
A significant number of people laid off by Lehman are Desi. Plus, where do you think all that software — the jazzy ones for the trades and the weirdo ones for the mathematical models — came from? Bangalore enabled this crisis!
well, we’ve all lost a lot of money, but maybe we can look forward to Chakravorty Brothers as a new i-bank–err–probably, I’d just wish to have lost less money!!
First Wall Street, then Main Street, now Devon Street?
Seriously, don’t you bloggers have the decency to put country first and suspend all posts so you can work with your representatives to develop a plan that will bring this great nation. We need to job creation. And that will help those who care about our health plan forward and no more tax and spend. Thank you.
I trust Krugman.
Nahhh–see #2 in this
7 · rob said
The problem is the assumptions in MM: The basic theorem states that, in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. Clearly, in this climate, bankruptcy costs are huge, as is market inefficiency. This is exactly why the fed needs to step in to finance the firm, when they can’t get capital in any other way.
7 · rob said
so rob and hit me bull one more time: do you refute/agree that MM assumptions hold in the current market? why/why not?
. In truth, they may not even know what they really do (but the little bastards make three times my salary with one third the education
wow, you make a lot of green for a scientist then 😉
in any case, i’m to understand that a lot of the high-end massage parlors relied on young finance guys. i suspect they won’t be coming in to blow their load (metaphorically and figuratively) now that they don’t have the green.
now perhaps all the brown physics phds can go back to doing real work. hardware, software and basic research.
Where was the fed when banks were charging 125% interest on a foreign ATM transaction? Or when I was charged all sorts of bogus fees, and overdraft fees when as a college student I barely had money ?
Here’s what I have to say to dying banks: Eat shit and die MoFos! No bailout for your greedy ass!
I’m just laughing my way past the bank. I’m so so divested out of the crisis. I don’t even live in America anymore. And I merrily went shopping recently on Fifth Avenue in NYC flashing my euros. (Aside–there is nowhere safe to keep money from the thieves so I just spend it).
But there was another crisis back in 2001. September 11 was the turning point for me. I lost everything. And I had a lot to lose– money, looks, brains, health, reputation, career, house, but most of all, my goodness and that brilliant smile. I’d have added loved ones but I’ve never been that lucky. My looks, brains and success got in the way of people liking me– If it can be said that I came to the US with just $10 in my pocket (no apologies to Vinod Dham or whichever idiot said that), I left with even less!
So I have known for some time now that there are many problems with the strutures in place in the US. It is a system that allows the full expression of unfettered greed of the middleman–the lawyers, the bankers (and other such white collar thievery desis are so attracted to).
Does the bailout frenzy remind anyone of the frenzy building up to the Iraq-War ? We should take a deep breath and rationally analyze the issues with independent voices.
13 · vv_varaiya said
No, no. Let’s hurriedly take on $700 billion in debt and give it to some politicians who are among the most unreliable people on earth with little oversight or safeguards, and do little to address the underlying problems.
🙂 Here. I like Roubini, personally.
Will no one stand up for the fluff post? Fluff post! Fluff post! As if the economic crisis weren’t being discussed ad infinitum everywhere else. Thankfully, abhi knows how to mix it up: a bit o’ economic crisis, with a dash of good-humored insult (finance guys/girls…describe to you what it is they do….you are already half asleep); plus a few hookers thrown in for good measure/pleasure. Thanks for keeping it fluffy, abhi!
But whores are nature’s candy!
However, the tragedy here is that if something doesn’t get passed soon, the resulting inability to obtain credit will disproportionately affect lower income households (including many in my district) looking to get loans for housing, transportation, or to open small businesses.
Reminds of a story i read as a kid in India.
Suppandi is down on all fours on his lawn busy looking for something. Passerby asks “hey Suppandi, whatcha lookin for?” Suppandi says “I lost my ring in my house, come help me search for it!”
Confused passerby asks “No wait, why aren’t you searching inside then?” Suppandi says “‘Cos it’s brighter outside, you moron!”.
I was hoping SM would cover Arun Gupta, but then again, SM is geared primarily towards 2nd-Gen Indians, so…
Soon to be a lukewarm profession. The %age contribution of finance industry towards GDP doubled between 1996 and 2007. It will revert to the mean. Which means, upto 50% of the jobs will be lost on Wall Street. Good. Now people will go back to making things that you can actually touch, instead of moving electrons around.
Good. Now people have to be nice and deferential to their family elders to make a living. “Mom. Sure, I’ll have an arranged marriage.”
I already did. My idea is to do nothing. Let there me a mini-depression. It will cure the country of many social ills that are haunting it since the New Deal era.
If the kitchen is on fire, will the living room be spared?
M. Nam
moornam @18. Hey thanks for bringing this to my attention. Somehow I missed it but knew there was a compelling brown angle to this story somewhere. I wish/hope that Sepia would interview this guy.
puli’s job was a casualty of the crisis. if effected this brown boy.
Poor Puli. I hope the girlfriend part of your life is still intact ; )
thats goin great!!!
I knew it! Are you on a serious job hunt or are you kicking back at your parent’s house?
serious job hunt. staying @ my own place. living at home would make the relationship side of things lamer. im basically applying to every job on earth in a panic so i stay in my own place.
hehe. I was joking about the parents. Good luck to you, Puli! (maybe PepsiCo is hiring)
its alittle hard to untangle but my guess is rob believes MM doesn’t hold b/c the market’s inefficiient. so if he were to support the bailout it would be with warrants.
Krugman appears to believe MM holds b/c a govt auction would bring back rationality. so, ironically, he doesn’t care for the dems idea of an ownership stake in the companies b/c the price of the now toxic assets will adjust to offset the value of any warrants the govt receives.
he’d prefer an aig-like nationalization, but thats unfeasable, so he’s left supporting paulson. i think.
im not sure why these banks shouldnt fail. i mean, they bought a bunch of shitty assets that went down in value. sounds like they should be going under.
puli..nooooo…wott…moo??
happens to the best of us…
Well, obv. some of the MM assumptions don’t hold–there are taxes (e.g. corp div’s not deductible but interest payments are), bankruptcy’s not cost-free. But, there are still good insights to be gotten by deploying MM–sort of like the Coase Theorem–sure, our world has transactions costs, but–Coase Theorem still has nice insights.
P in the USA–
sorry to hear that your job was a casualty. Take advantage of a little free time to spend with your gf. also, there will be plenty of jobs shortly for people your skill set. you will be tapped to unwind and revalue MBS and ABS. I’m not being cynical, it’s just that I’ve been through some economic cycles and that is how it works. In the meantime, take care.
Abhi, this has already been happening. The people who will feel the crunch next are middle-income owners (many of whom are already crunched) — low-income households haven’t been able to get (non-credit card) credit for months.
I wonder if this financial/credit/economy crisis will have a “dominoe effect” . I just thought at some point in the future it could affect everyone’s job and place of work and not just the average people who are struggling for credit to buy a car. Don’t really know. (Obviously I never majored in econ or finance nor did I take a class in those fields.) Of course, some people or someone will benefit from this financial fiasco. Something doesn’t look or feel right to me.