New York’s Left Turn And The Future Of Markets with Frazer Rice

We unpack what Mamdani's win signals for New York’s markets and whether capitalism is shifting toward protectionism and cronyism rather than socialism. We weigh crime, taxes, housing, and transit funding against ratings risk, capital mobility, and the city’s tech-and-finance future.

• election results as the context for market sentiment
• is capitalism evolving or declining in practice
• Mamdani's platform and business community reaction
• crime and police leadership as talent retention drivers
• tax sensitivity, mobility, and slow erosion of the base
• federal protectionism and deal-by-deal policy volatility
• New York versus Texas, Florida, and Connecticut dynamics
• tech as the backbone of modern finance in New York
• housing rezoning as the fastest credible win
• MTA funding, congestion pricing, and cost overruns
• ratings agencies, borrowing limits, and fiscal guardrails
• near-term predictions for the council, midterms, and the House

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Chapters

• 0:00 Elections Set The Stage
• 2:54 Is Capitalism Declining Or Evolving
• 4:44 Mandami’s Win And Business Signals
• 8:44 Crime, Police Choice, And Market Confidence
• 11:54 Taxes, Mobility, And Capital Flight Risk
• 15:44 Protectionism Vs Socialism At The Federal Level
• 19:54 Ratings, Media Power, And Policy Volatility
• 23:50 The Democrats’ Big Tent Identity Problem
• 27:50 New York Vs Sunbelt: Where Finance Grows
• 31:50 Tech As Wall Street’s Next Engine
• 35:50 What Follows Mandami Politically
• 41:10 Borrowing, Ratings, And Fiscal Guardrails
• 44:50 Transit Funding, Congestion Pricing, And Costs

Transcript

Steve Davenport: 0:26

Hello everyone and welcome to Skeptics Guide to investing. We're here on November 5th after the elections last night and the mayor's race in in New York and the governor's race in New Jersey , in Virginia. And I'd say it was kind of a sweep for the Democrats. I think they are probably in in those areas very hard to see somebody really doing something different. So I'm not sure if it's a victory or if it's just kind of life goes on as the same. Today's topic is capitalism. Are we redefining it or are we or is it declining? And I think that we've seen so many things in the last six months, nine months, twelve months that all make you think that we're living in a different world now. And the most, you know, the capitalist city in the world, the center of markets in New York City, , has decided on a socialist born in Uganda who wants to give free buses and universal care and set up grocery stores in the five boroughs. So today we've got Fraser Rice with us from Wealth actually, and Frazier has been a guest with us before, and he does a tremendous job of looking out for what's happening in the world of wealth management and being in the heart of New York. I thought it would be great to have his opinion on some of these issues. So, Frazer, tell me, is capitalism dying or is it in such a great place now that the markets are high that it doesn't matter who the mayor is, he's not a factor.

Frazer Rice: 2:12

Well, it's sort of a tough question in the sense that it usually these things all get sort of adjudicated in in the rearview mirror once we've had some sort of perspective on it. But just some thoughts on Mandami and his election. I you know that the I haven't been able to totally troll through the data, but it I I think a couple of things to take for granted or take in mind here. N ber one, huge turnout and overwhelming response from young people, male and female, as far as being pro-Mandami, which tells me that especially amongst college-educated types, et cetera, his message of affordability and being able to access the things that are great in the city resonated. Uh he did not have to make a statement vis-a-vis how he would pay for certain things. And as a result, he, you know, I think, you know, under the you know sort of guise of you know someone who's charismatic and attractive, et cetera, for a very popular candidate, both at the primary and at the general election. You know, I think Cuomo, we I think we can all agree that one name in the Democratic national circles is now, I think, officially dead. I think the Cuomo brand is over. Um and Curtis Sleewa was not, you know, he's just an oddity and sort of an interesting political candidate in a extremely weak Republican setting. And so it was Mandami's to take. And having gotten through the rank choice voting gauntlet to become the nominee, it was just a matter of time. Uh, I think that as far as his relationship to the business community, that is to be defined. Um, and I think he's trying to say some of the right things. I think now that he's elected, he can probably ease off the base a little bit and have a bit more of a conciliatory tone, especially behind closed doors. Um, I think the most important thing, the thing that I'm watching the most is how he deals with the police commissioner hire. Uh, because Jessica Tisch is, I think, well regarded from the police perspective. I think from the highly moneyed perspective, she's one of them. And if he's able to keep her on, I think he gets at least a year or two of leeway in terms of crime. Uh, and I think that's one thing that people really focus on as far as New York's effectiveness in the capitalist environment. Um, I think across the river to New Jersey, I think seeing Democrat win the governorship there, , I think that signals that whatever we thought the gains might have been from Tr p in his election are particular to him and him alone and not necessarily a marker or a sea change as far as electoral politics in the Northeast and New York in particular. Um, and then, you know, I think as far as, you know, sort of wealthy people saying, oh my God, they're gonna, he's gonna raise taxes and so on. I don't see that happening, certainly this year, because Governor Hulkel needs to be re-elected or, you know, try to get re-elected in 2026. I very much doubt she's gonna be in a hurry to raise taxes on New York City, a place that she does not come from. She's Buffalo based. And so as a result, I think anything sort of revolving around that happens well after 2026 and 2027-28. Um, and that's where I would sort of focus my focus my lens on it. Uh, you know, the fact of the matter is also that you know, New York City, and frankly, New York State runs as the financial services industrial complex runs. Uh, a gigantic fraction of the tax revenue comes directly from that. Uh, and it's no surprise that I think Connecticut and New Jersey and other surrounding states are licking their chops as far as you know being able to soak up some of the financial services firms. And then if you start thinking about sort of Palm Beach, Miami, Tennessee, Texas, as other places that have their eyes open and are putting up billboards in Manhattan saying, why are you paying state income taxes? That's out there too. And I think Mundami, young as he is, I think he has political instincts that are to be, you know, taken seriously. And he he's not going to be in a hurry to blow all that up. Uh, you know, when you see when the when the favorite meme is that Florida's best realtor of the year is Mandami, because he creates the situations for people to move, I think that's a real thing. Uh and that just to sort of round out the monologue slightly, I think Mandami's gonna learn real quick how things get funded or not funded. And to drive out, maybe not the billionaires, they're gonna be mobile whether, you know, no matter what happens, but to drive out the the millionaires, the income earning class, not the asset owning class, he really sets himself up for a problem. Uh, and that ultimately that affects things statewide, which then gets back to his ability to borrow via you know municipal bonds, et cetera. And you know, those are a lot of very difficult lessons for a 33-year-old with limited legislative Albany experience to learn, but he's gonna learn them real quick.

Clem Miller: 7:32

So, Fraser, you answered one of my questions, actually, my biggest question already, which was are we gonna see an erosion of the tax base? And it sounds like the answer to that is maybe not right away. There might be some in anticipation, right, of taxes later on. Right.

Frazer Rice: 7:49

About right? I think the the sort of the instant case, and I think I've I've sort of anecdotally seen this, is that people who own gigantic properties in New York, and I think this is happening in London in advance of their tax regime changes, are going from say townhouse to two-bedroom apartment. Uh and I think there's downsizing to that as a way to stage an ultimate exit once kids are out of schools and all the different life stages that have that happen to, you know, for people who ultimately think they're gonna be bail out of New York eventually, this is acting as a way to sort of begin your phase out on that front and then to eventually move. Now, I would argue you're probably six months too late and that some of the hysteria is already baked in, and you know, to get somebody to come in and buy your $18 million townhouse is gonna be somewhat tricky. But at the same time, I I think that the tax base erosion in general, I think that is it, I don't think that's a near-term thing. I think people who are you know in hysterics and j ping up and leaving, they're kind of they're gonna do that anyway. Uh, but I think if you start getting some conditions that make capital formation and business development and the being able to earn you know, create headwinds with that vis-a-vis crime, vis-a-vis ability to do business, be it vis-a-vis being able to develop properties, that type of thing, then I think you start seeing the slow gears start to turn. And if then if you you know add on to that sort of the political window dressing of tax rates going up, then I think you might see some acceleration there.

Clem Miller: 9:32

So I think one of the key questions we wanted to talk about in this broadcast is , you know, essentially, are we sliding a little bit in the socialist direction, , in you know, away from sort of a more pure capitalist approach? And you know, the reason we we pose that question is not just because of the left, you know, the rise of Mamdani and AOC and Bernie, , but also because you have some, you know, within the administration, the president president's administration, Tr p's administration, you have a move towards ownership of various you know strategic companies, you know, like in rare earths and semiconductors, you know, minority stakes. Uh you've got government, the Tr p administration trying to manage a deal with TikTok. So you know, the question is, are we moving in the direction of state ownership of the economy, or let's call it mixed. You know, there's a phrase mixed ownership of the economy, , away from something that's more private sector focused because of political developments on either side.

Frazer Rice: 10:55

Yeah, I don't know if I'd call it sort of a secular trend versus maybe a more tactical trend. I think I would divide the two initiatives into two different types of government intervention. I would say the first one related to socialism and sort of having command and control from the government on down with certain things. I am more sanguine on that notion. I think the way I would describe it maybe differently is that we are going into a protectionist slash cronyist type of environment at the federal level. Um, you know, I think it Tr p's personality and his, you know, everything from tariffs to ownership of things like Intel to , you know, soybeans, sort of correcting a misstep there because he, you know, sort of looks at the political wins and that didn't work. I would I think we're in that vein a little bit more than sort of the socialist vein, because he's certainly not sort of staffing the federal government with experts to be able to have a command and control type of impact on the overall environment. Uh Tr p, by virtue of being a real estate developer, is deal-to-deal. He's even he's week to week, not even quarter to quarter at this point. And so I I to say that he's that we're look going toward like a China five-year plan environment, I don't think we're anywhere close to that. Yeah. But I do think, you know, there are winners and losers. And you know, that's as quickly as you donate to the new East Wing or you know, buy the latest crypto offering. And I I think the cronyist slash protectionist, depending on you know how much you believe in what's going on, that that's the that's where we are at the federal level.

Clem Miller: 12:38

Well, it it it's interesting that you bring up cronyist because it kind of reminds me, I don't know if you remember back when Putin came into power around the turn of the century, 2000 this turn of this century, right? Where where when he came into power, basically he called in all the oligarchs and he said, Look, I'm gonna let you guys make a lot of money. In fact, I'm gonna give away state assets and let you guys make a lot of money as long as you don't criticize me or as long as I can count on you to do my bidding. And that sounds pretty much exactly what Tr p's doing with US oligarchs, especially in the tech sector. Sounds exactly the same.

Frazer Rice: 13:25

Just to add on to that, I mean, the what the framework I use to analyze Tr p to the extent anybody can, , you know, n ber one, it's to just sort of understand that, you know, he's the disciple of Roy Cohn, and that has its own weirdness to it. But I I view success in this country usually along three principles. N ber one is currency, the other one is votes, and then finally ratings. I would give Tr p in general middling marks on the dollars and votes part, believe it or not, even though politically there's lots of evidence to say, you know, you don't know what you're talking about, Frage. But but he is a once-in-250-year genius in terms of ratings, and all of his success comes from that. Uh, and ultimately, I think that's how he's running this country and running the economy. And, you know, that and it's just sort of results, contracts, commitments, they don't matter. They're all negotiable all the time with him. And you know, against that backdrop, that's it's very difficult to plan for. Uh, it's very difficult to budget for, it's very difficult to sort of you know look around corners and try to understand, you know, what you can count on and what you can't count on. But , you know, ultimately, if you if you play into the ratings game, , you know, I I think that's the that's that's the metric that he understands best. Um, and if you operate in that world, you know, hopefully for your sake, the votes and the dollars follow. Uh, but in, you know, as we were talking about before we started recording, I think I think we're in sort of like this Berlusconi post postmodern environment with new US politics. And so, you know, if you can recover from certain things by just getting past the news cycle as fast as possible, that's in many ways how the economy's being run. Yeah, Burliscone.

Steve Davenport: 15:17

One thing that j ped out at me in terms of this is the similarity between you know the Hillary and Tr p first election. And I look at it and I say, Boy, you know what I mean? It wasn't him winning as much as it was her really doing a poor job in terms of how she attracted different voting groups and how she listened to what was happening on the internet with fundraising and other things. And I look at this situation and I'm sitting there saying, is this what the Democrats are going to present as their solution to pick a candidate who's got all the sexual innuendo and all the problems in his background? You'd say almost like the Democrats wanted to present a Tr p-like candidate to see if they could win. And I I I don't know what the test was, and I don't know why it wasn't more important to them, but they seem like if everybody wants to characterize, and I'm sure that Tr p is going to win from having M done, because basically you're just saying, hey, we went as far left as we could go, and we are away from the norm, and therefore that's where you know the Democratic Party is going.

Frazer Rice: 16:30

Yeah, look, I I I think the Democratic Party has a real has a real, I don't know if I'd call it crisis, but they they they have a real idea issue. And you know, while a lot of Republicans way back when you had sort of the, let's call it the fiscal conservatives, socially liberal types, and then it sort of morphed into the hard right. And then when Bush II kind of opened up the spigot from a spending perspective, then the the the root system of fiscal conservatives kind of went away with the Republican Party, and you were left with the social conservative components of it as a as a way to hold your base. I mean, I think the the Democrats are kind of facing that right now. I the the the tent is so wide open, the issue the being everything to everybody all at once component of the party is such that they don't at the moment stand for anything. And I think that allows, let's call it, experiments at the local level. And I would call Mandami's win an experiment in democratic principles. Uh, I I think the Democrats that look at that and say, oh my gosh, I mean, there's a reason why Obama didn't endorse him. There's a reason why Hakeem Jeffries didn't j p out and endorse him. It's because they aren't sure that, and there's lots of precedent to say this is the case. They're not sure that New York City is the rest of the country. And their jobs in many ways are to sort of preside over the party and to make sure that they're relevant nationwide and that they present an interesting alternative to whatever candidacy the Republicans put forward. I'm ass ing it's Vance at the moment, but you know, Tr p, they say he's gonna try to do it. I find that constitutionally dubious, if not necessarily clear. Um, but the the party, the Democratic Party is in a period of experimentation right now. And , I mean, I think I think they have to feel heartened that the the sugar high of the last election with Tr p seems to be off, and that you know the n bers are such that at least in New York and Virginia, and you know, it looks like California is gonna win with the redistricting plan and New Jersey, that there are some successes there that they can build off of, , and that that's something that that points to a better midterm outcome than they may have had before. But , you know, I think the long-term component is that until they have, for lack of a better words, like a contract of America that Gingrich came up with, or a somebody who embodies a broad stroke of people and is able to articulate and get people excited and so on, , you know, Newsom AOC, manual. I've heard that name pop back up. And you know, those are people who are who sense the vacu and want it, but you know, whether whether they are the solution to the Democratic problems on that side, I don't know about that. But that's that's what the Democrats are wrestling with. I think the ideas component of it has just gotten so mashed up that that the you know the the the experimentation at the local level are going to be kicking at things until they grasp onto some ideas. And it's something they have to grasp on to very quickly because these midterms are vital for them going forward. I I mean if I'm kind of a I like divided government, so I I well the you know the traditional Republican me, Republican in me sort of says, well, I don't know if I want this, but the idea of having a house controlled by the Democrats to offset what's going on at the with the rest of the federal level is appealing to me in terms of sort of laying out some accountability, whether learn it or not. Um, but at the by the same token, I I think that I wouldn't ass e it's there. Uh and that, you know, either turbocharge gerrymandering efforts or others that don't protect that Republican majority, and then you have another two years of essentially the same type of government that we're feeling right now.

Steve Davenport: 20:50

Yeah, it it just feels to me like we if if you were the the the king of the Democratic Party and you said it would be really good for us to win back New Yorkers and win back the idea that Democrats can coexist and and and thrive and in endorsing the markets and endorsing the industry of finance. You know, right now it seems like if I were Jamie Diamond opening up a $59 million headquarters in New York City, I I gotta think it's you know it's not an the place he once wanted it to be two years ago or three years ago when he started building this campus.

Frazer Rice: 21:34

Yeah, no question. I think look, I mean, they don't have buyers or boars. I mean, this has been a 15-year plan of his essentially to get that skyscraper up. And he actually, you know, COVID was the biggest favor of him ever because that he had a bunch of empty streets, he could take down the old building very quickly. But yeah, I think he looks at New York and says, look, you know, what are we doing here? I I I need to be able to staff this thing, and I need to be able to have the best and brightest come here. And I need for the capital markets, the international capital markets, to look at New York and and be that beacon on a hill to borrow you know some political phrasing from way back, , so that we are the ones that are attracting the capital and we're the ones that are advising on it so that we can drive our revenues. But it's no secret that you know Dallas has got more employees than New York does for JP Morgan.

Steve Davenport: 22:25

And , you know, they I I think that , you know, as as do you think this promotes the Texas becoming the new marketplace? Um it's already happening. Yeah, I know it's happening, but it it feels like to me this is going to be an accelerator for the relocation of markets to Texas.

Frazer Rice: 22:46

I don't take it as feta comply that Texas is where everything shows up, or that Miami or think I think it will just diffuse according to you know the particular, let's call it regional needs of these different institutions. I don't think you need to run a wealth management firm out of New York to be particularly competitive to a national client base, for instance. But I do think you know the investment banking world probably needs to center around New York in order to deal with worldwide interests, , you know, whether you're London or Kyrgyzstan or wherever, they they got to come to New York to do it. You can't have that run out of Nashville.

Steve Davenport: 23:26

The regulations and the ideas of Texas, I mean, I really do think they have a point about how how do we access capital and how do we get things you know started and incorporating in Texas for a lot of oil companies and a lot of other companies is now making, you know. I mean, I think that Austin has become a chip headquarters, and I think that there is a technology side to this that I think people are missing. And my my only thing is I went to school in New York, I love New York, I think it's a great city, I think the arts and the the things there, but if we do so many, if you keep making mistakes, I guess I would say how do we know that somebody couldn't, you know. Um I mean, I I don't know how you turn and make New York more favorable when you're gonna have a government that is going to be almost you know the opposite in terms of how they're gonna want to treat the average citizen and and who they're gonna be. I mean, the affordable housing isn't gonna help Wall Street.

Frazer Rice: 24:29

Well, look, I mean, I think that , you know, if you're a business thinking about locating in New York, I think you have to sort of understand the costs of doing business here. Everyone already kind of does already, and say, you know, it's probably gonna go up. Uh, can I house my people? Can they be close by? Uh, you know, Greenwich is a hedge fund haven for a reason. And , you know, New Jersey is where pharma ultimately went for reasons. Uh, and people migrate down to Florida and Texas. And manufacturing hasn't been a significant thing in sort of the New York City area in a very long time for all these different reasons that we're talking about. The important thing for New York, I think, and this was really a great legacy of Bloomberg, was the positioning or sidestepping over to tech and the Googles and et cetera, and attracting them as as Wall Street 2.0 in many ways. And so I if I were really worried about New York, and I am because I'm a live here and I want it to be good and you know, I don't want my taxes to go up anymore than they have to, and all that stuff, like if I start seeing tech companies wander away because it's just not what it needs to be in service of them, you know, apart from what they do on the left coast, then that's when you start saying, okay, something really significant is here. Because we are now, I mean, New York is sort of pressing the, you know, retreating from work from home and get back to the office and all that stuff. Um, if the and the tech companies are sort of the major manifestation of that, and Wall Street is gonna fall in line very quickly. If the tech underpinning of Wall Street's economy weakens, that's a disaster because that that that is the next 50 years, that is the next hundred years. I mean, it's you know, Wyoming is the crypto state, and you know, Texas is oil and gas, and Florida is whatever it is, besides tourism. But , you know, New York is the financial capital of the world and finance is tech at this point. And so if that weakens, then then you've then the diffusion, I think, accelerates, and , you know, the critical mass that sort of powers the city and the state in terms of business, that that that's when you start seeing you know the light bulb flicker, and that's not great.

Clem Miller: 26:43

So so Fraser, , I I would characterize Mom Donnie as in large part a reaction to Tr p. Um that's how I would characterize it. I mean, there are other specific New York elements to it, but I think he's more or less a reaction to Tr p. The question then becomes what'll happen? You know, what what will Mom Dani's election trigger in terms of future opposition to him? I mean, where are we gonna go next? You know, what what what's gonna be the trend in New York? There's not gonna be a second Mamdani, I don't think, right? I mean, what what follows Mam Dani?

Frazer Rice: 27:22

Well, you know, let's go back to how New York is funded. Uh and it's funded at the New York City level that drives most of the tax revenue. And then, you know, the funding decisions around New York really happen at the state level. Uh, if you see an issue with Mandami where crime goes up, the standard of living goes down, , he doesn't come through on affordability, that type of thing. Uh the Republican Party is so weak in New York City at this point that the you know, the the opposition will come from within the Democratic Party, and they'll you know, that centrist person, whomever that is, , you know, if they make any sort of pro-business gestures or you know, are able to deliver some sort of achievement around increasing housing and you know the different components on that front, , then you know, I think that's that's where it's gonna happen. Um but you know, all of which is to say that you know, if you come out on the backside of it and Mandami, you know, somehow, you know, his policies quote unquote work, which I don't think they will, but let's say that there are successes that he can point to, you know, the the the world, the way the world is set up, it's just not in with rank choice voting and those types of things, you have to really split hairs in order to distinguish yourself from the current incoming candidate. And I think once he get learns and learns how to, you know, raise real money for things that are larger than the current election, and he starts getting used to getting driven around New York and things like that. I suspect there's gonna be a bit of a softening. And then, you know, the world of compromise is gonna the the job of mayor of New York is the toughest political job in the country, including president of the United States. He is in front of people with severe opinions and real issues all the time. And you that there just aren't enough buffers for that, and that wears on you. So I think there's gonna be a bit of a softening of his of his stances in order to try to get things done. Um is that good, good or bad for New York? I'm not sure.

Steve Davenport: 29:35

The the thing that I find very intriguing is the connection between a Mandani and a de Blasio. I mean, are they really different or are they kind of just a 2.0 of the same idea that we need to give more, we need to do more, we need to help more of the people in the city? And he he was able to somehow generate the idea that he was the solution. And I think Mandani kind of stepped in his shoes and moved it even a little bit further to the left. But I guess I wonder, is there anything in his record or in his candidacy that you say, you know, he he may be a little bit left on this and this, but he's he's right on in terms of how he's talking to voters and how he's trying to get them to see a different city. Because I I think New York survived De Blasio, who I thought was perhaps one of the worst mayors ever, but maybe, you know, maybe there's something there that you know I'm missing.

Frazer Rice: 30:34

Uh yeah, I'm missing it too. Uh, you know, from a pure substance portion of his message, you know, it's sort of you know. five new five co-op grocery stores and free buses and universal this or that and tax tax hikes on billionaires that that's kind of that that that's that's his agenda and then other than that you know I I want more housing and it's gonna be union built and all that that that's it the I mean why would so many people fall for that kind of like if we have an intelligent electorate what what what would lead them to go past the simple question of well well how are we gonna pay for I well so first of all people don't care how that gets paid for I think they just sort of ass e that it magically happens and you know that New York City doesn't print money it borrows money at the you know the behest of the people who are willing to lend it to them but they they're not in charge of the dollar and just doesn't magically appear that's where you get back into sort of a beam days and Ford goes to city drop dead we're not guaranteeing your payment that that's ultimately what happens if you really turn the dial all the way the wrong way and you overspend to the point that it's not supported by any revenue because states have to balance their budgets cities do too etc I I I think look he's young and untested without much accomplishment sort of surrounding him and so there's let without that there's not much to really parse through and criticize and so you wrap that up into a charismatic package the right person for the right moment and people are I'm really overstating what I think the zeitgeist is doing but if people are willing to give him a chance as sort of retribution against what's happening at the federal level then you know that that's that's part of the emotion that people are sort of taking taking with it from a when they go to the ballot box so you you mentioned borrowing which raises an interesting question actually two related questions one is does he actually does would momdani actually be able to control how much is borrowed or is that is the comptroller of New York sort of more independent I think the controller has more independence over that the because absent that then you know mayor adams would have borrowed he would have borrowed everything in order to and you would have you know the the the giveaways would be infinite if there was control at the mayor level.

Clem Miller: 33:13

And then the second question I have about same same general issue is how much buffer does he have before the rating agencies start really downgrading big time New York City?

Frazer Rice: 33:27

So I think that I again I give him a year on that front because I think that the you know the budgets are strained currently and you know that that that happens if he starts spending willy-nilly on a variety of different giveaways and he's able to he's able to extract that at the state level from Holkel then you know I think he's got some buffer to work with but I think that leash is real short and the Holkel needs to get reelected in 2026 she's in no hurry to raise taxes at the city level where she needs she's not from New York City she's from Buffalo and and she's an outsider in that environment and so she can't be you know sort of raising taxes in order to pay for things that don't really help her very much they're better for Mamdami's political benefit that to me is the real that that's the real go-between there you know as far as rating agencies you know ultimately they're gonna look and say look if you're spending 125 billion and you're only taking in 110 that's not great and you know if you persist in that over a couple of cycles then that's really not great. Ultimately I think the three of us would agree the the pen hits the paper when they miss a payment. And I think there are a lot of vested interests not only Mamdami but Hochul and lots of other people who just can't have that happen. Uh and that message will get back to Mamdami saying look you know this is great and all but you if you do this you you're not gonna be mayor for much longer.

Clem Miller: 35:09

So is there going to be now I know that there's been some talk of New York state redistricting of congressional districts I don't think if I'm not mistaken they can't do it before 26 or maybe they can if they found a way to do it. But I was asking I was thinking more specifically about Staten Island. I heard something about about some effort to try to make make Staten Island more democratic.

Frazer Rice: 35:37

Sure. So the redistricting animal rises up all the time there was a one plan that got struck down by the courts for being overly tailored. And so you know nationally speaking when you hear about Republicans redistricting Texas to get more seats they you know they say well what about New York? They they did it too so much so that the neutral court said this was crazy. Um and so that that constantly happens and so the you know if you look at the way the lines are drawn that they're just the the gerrymandering that that really is the if I were to sort of say one thing that scares me the most about the future of this country it's the prevalence of the you know the gerrymandering to sort of cement in vested interests for a very long period of time. The you know I I I think at the moment yeah Staten Island they they may you know try to stick some you know take part of Brooklyn and you know wedge that in there and make that part of the the voting component. But I'm in the very short term I don't think that's gonna be a huge deal you know I think there will be some gestures to try to you know eke out another district or two at the Democratic level within the state the larger question is is that New York state actually loses is has been losing Congress people over the last 10 to 20 years as they flee in theory to go to Florida and warmer states or the growth doesn't catch up or what have you that that to me is a larger issue you know and then it's sort of for a different podcast maybe it's sort of the idea of you know how New York City versus the rest of New York State and how does that align with it you know is it really two different states in terms of what they need from the federal government at all yeah we could go that that doesn't hit the capitalism part too closely.

Steve Davenport: 37:33

Yeah just wanted to add on one question though regarding the debt and the subway I mean is it is there a a path forward that doesn't really decimate the balance sheet in of of New York City?

Frazer Rice: 37:47

I mean how is the subway treated is that separate debt from the city debt or yes so the MTA which is jointly controlled by New York New Jersey is the they're they're the the that's what pays for the subway and the transportation infrastructure and and those types of things you know the congestion pricing was the way to fill the gaps on that that I guess is going to continue I mean Tr p comes in and says oh I'm gonna outlaw it or whatever I I I really don't think that's gonna happen but I I've been wrong before I you know for things like capital projects and general maintenance and so on it it the money has to come from somewhere and the idea that congestion pricing you know people who are driving cars etc help to fund that I I could envision an expansion of congestion pricing to try to you know sort of improve the subways and the other parts of the infrastructure that are important it just seems funny to me to not say free transportation you say free buses and I don't know why the subway like isn't in like I I I never liked using the bus because there was too much above ground traffic but maybe New York's a different place now. But you know I the free buses I mean I take the business yep and so you know that's a you know it it it's really gonna be end up being kind of a a moving of shells in order to pay for one thing you're gonna have to take from something else. Uh you know and keep in mind too capital projects you know I don't know if this is the right n ber but it seems like it costs 2x to 3x more to do anything in New York versus anywhere else. And so you know to do anything to actually improve situations is extremely expensive. And you know the the the actual cost of upgrading things and sort of taking a switching system that that is turn of the century and making it modern to be one way to sort of improve things and by turn of the century I mean 1900 not 2000 the it's just a real problem and so the you know where does the money come from when you're dealing with you know Ben billions and billions and billions and billions of dollars if you if you're coming out of the same AMTA and you're gonna take less income it feels like your capital projects are going to be less capable you know you're gonna be less able to achieve them unless you come up with a some new revenue source.

Steve Davenport: 40:19

And I don't think that the people in New York feel like they you know want to become another revenue source.

Frazer Rice: 40:26

No and then and that that underscores I mean again the the that is sort of a death by a thousand cuts problem where you know you're not going to see these things sort of manifest themselves instantly but if you take that in conjunction with a decline in standard of living manifested by crime then that's when people say you know do I really want to have my kids educated here or is it just easier to head off to Westchester County or Fairfield County or New Jersey or a different state to build my life if I think that you know in in in general, you know, when when people feel like the government is taking you for granted, that's when you're in deep trouble if you're an elected official. And you know Mundami's going to have a little grace period on that, but not long, I don't think okay we got about three minutes left.

Steve Davenport: 41:15

Does everybody want to kind of make their like believe that you know Mundami seems like a one term I don't see it as a long term going to be good for the community to have somebody who wants to redistribute more money when there's so many fiscal problems with New York as it's currently constructed. So I think he's gonna face real problems in the crime rate and real problems in the transportation updates he's trying to make so I think he's gonna make it a less livable place and once they start to see some of that tax revenue leaving as I know it's been leaving over the last 10 years, but I could see it definitely pick up as people just say I want to go to a different place where I think it's more aligned with my values. What are you two guys think in s mary about Mandani and his long or short term I would agree with you Steve.

Clem Miller: 42:09

I think it's one term I also have a fear that you know Trump is going to use him as the symbol of the Democratic Party in general and the Democrats what they have to do is they have to leverage all the other things that they achieved yesterday. When you take Mamdani out of the equation really yesterday was a victory not just for Democrats but for I would say independence as well so I mean basically for anybody who's not MAGA I think yesterday was a big victory. It's just that the Mamdani thing is sort of the downside of that because he could use that he and my MAGA could use that to paint you know all Democrats with a brush I think those are two heavily democratic Air states though so I wouldn't I don't know if I could declare a big victory because I think those states didn't go for Tr p and probably wouldn't have right well it what was interesting was that even in Georgia I don't know if you saw in Georgia there were three I know this sounds kind of silly public service commissioners right but I I think well you would know better than I what a public service commissioner is Steve but my understanding is that they're pretty big officials at the local level from what I heard and three three former Republican public service commissioner roles went to Democrats yesterday and so I think that's you know consider that's more significant to me than the New Jersey government being Democrat which is why I bring it up I know I like that Fraser do you have more comment on Modami short term long term what it's really tough to say long term because you just don't know but I I I think that he as I said before the thing I'm watching the most is is who he ends up hiring as police commissioner.

Frazer Rice: 44:04

If he if Tisch sticks around he gets two years on crime I think and then that lets him focus on other things. The other thing is in side note is that three initiatives to sort of speed up rezoning for housing went but were passed yesterday in New York City. If if I'm advising Mandami I would pour all of my efforts into housing rezoning and and to get as much built or as many shovels in the ground as possible so that he can point to some sort of win economically that is in line with his in line with his principles, which is to get more people housed as cheaply as possible as possible. And I you know if he's able to do that then I think he gets even more bandwidth and you know if he you know if he came out of the mirror if he came out four years from now and said I was able to get 5000 units built he wins. Simple as that. I mean that that's one of the the real unsolvables in New York City and if he's able to articulate a solution to that I think you know I it it's a win for everybody. Um all that to say I I think the other big takeaway is that the the imagery that a Tr p led sort of MAGA effort made huge inroads into a variety of different minority groups from as a voting block I think is an illusion or or certainly more muted than was sort of declared at the last election and that that is the part that I think will be interesting to watch going forward into the midterms. So and if I have a prediction which is usually a horrible idea because they're minor go go short it run the other way I I do think the Democrats win the House by like one vote or you know one seat and then and then the final two years of Tr p are quite a bit different because every step is going to be challenged and it's gonna take four times as much energy for him to do what he's been trying to do recently.

Steve Davenport: 46:21

Thank you Frazier this has been a great call glad to always great to talk to you no it's this is a treat.

Frazer Rice: 46:29

I love doing it and I hope I pass the audition for the next one.

Steve Davenport: 46:33

Yes we're always on the calendar every six months and we we really appreciate you Fraser and and we look forward to some of your things and coming back and talking again about New York City because it is key to the financial services in the United States. So thanks everyone hope you enjoy this and please listen for more podcasts thank you