ASH BENNINGTON: James Altucher, welcome.
JAMES ALTUCHER: Ash, thanks so much for once again having me on the show. This is great.
ASH BENNINGTON: We just brought you in for like a five-minute segment for Real Vision Daily Briefing and there was just no way that we're going to scratch the surface. We're glad to have you here for a longer time.
JAMES ALTUCHER: We're trying to save the most important city on the planet, so we're going to put in the time.
ASH BENNINGTON: It's a pretty noble cause.
JAMES ALTUCHER: Yes.
ASH BENNINGTON: James, listen. Before I go in and list all of your accomplishments, so I don't sound like your press agent, tell us a little bit about your background, because you're one of the most interesting stories in terms of guests that we've had on this show.
JAMES ALTUCHER: Yeah. I've had two careers all along. I was a hedge fund manager and also a writer. I've written about 20 books on topics ranging from finance and investing to more self-help and how you bounce back from failure which I have experienced many times. I've been an entrepreneur. Now, I have a podcast, so fortunately, I've been able to have on a lot of economists, epidemiologists, virologists, Federal Reserve governors, billionaires, whatever, to analyze the situation from a lot of different angles. I think that's been very use-- I've been grateful that I've been able to be of some use to my listeners.
ASH BENNINGTON: That's great. There's a lot to talk about. Let's jump in with how you got to be in the middle of a firestorm of controversy here in late August-September of 2020.
JAMES ALTUCHER: First, let me say I didn't mean to become the most hated person in New York City. I feel like if I walk outside in New York City, I'm going to get beaten up or something. That's happened to me before but that's okay. I was concerned. This article I wrote on August 13th was titled, New York City is Dead Forever: Here's Why. Then I got a lot of controversy that week. Just everybody, maybe something like 10 tweets a second for seven straight days. Not everybody was against it but the people you hear from are just angry, insane people in general.
Until 10 days later, I wake up and on a Monday morning and Jerry Seinfeld who's never written an article before in his life, he wrote an entire one page New York Times article trashing me and as I mentioned in another segment, everybody was texting me when I was waking up. Hey, putz. Hey, you're a putz, James. I'm like, why is everybody doing this? Who calls anyone a putz? It's like 100-year old Yiddish word or something. Then I realized Seinfeld had done this. Then another friend calls me up and says, see, this is proof. We're in a virtual reality simulation because you wake up one day and Seinfeld trashes you for an entire page in the New York Times, and that's just a normal day in 2020. Welcome to 2020.
The reason I wrote the article was not to take any glee in what was happening, I was actually very upset. I'm born in New York. I've lived in New York my entire-- New York City in my entire adult life. I own a storefront business in New York City. My kids go to school there. That was seeing lots of problems, like many more restaurants permanently closed than I could have possibly expected. I was seeing apartment vacancies at an all-time high on top of the fact that another 400,000 people had left the city since March. Then I was like everyone else is thinking, oh, maybe they'll all come back once this is over, but then I started talking to people, and I was screenshotting about a dozen or more friends a day who were saying well, after 87 years in New York City, we're packing the bags and moving.
People were moving all over the country. I started saying, well, don't they have to go back to work? Then I was seeing article after article about bandwidth was allowing companies to cut costs and back out of leases in Midtown, and people would tell me, don't worry about it. Midtown is not in New York City. I would say no, but it's like a 100 billion in revenues and hundreds of millions in taxes. If you lose all the people, and you lose all the companies, and I haven't even touched the surface of a lot of the problems, but the real problem is with deficits spiking higher and tax revenues collapsing, how do you pay for police teachers, EMTs, transit workers, garbage collectors, firemen?
I started to mention this in my original article, August 13th. Then now two weeks later, de Blasio is right on the fence. He's about to potentially fire 22,000 city workers, workers he had promised he would never fire. I don't even want to blame de Blasio. Everyone's blaming him, but because the initial problems I wrote about were, coronavirus or not, the economic lockdown has consequences. The consequence is that the infrastructure of New York City might have already collapsed. I was worried and so I wanted people to say, wake up, but instead, everybody was like, oh, grit, will get us back. New York City always comes back. This guy just doesn't have any grit, he must be from Iowa or something like that.
I would remind at least my friends, I was living a couple blocks from 911 during 911. I was living on Wall Street during the financial crisis. Like, I love New York City, I'm fourth generation New Yorker, I don't want these problems to-- I don't want New York City to die but these are real problems and I wish-- and they're hard to come up with solutions, else I would have tried to do that a little bit more.
ASH BENNINGTON: This is a fascinating story and your angle on it is fascinating to me for two reasons. One, because it's a great pop culture zeitgeist story. It is hilarious that Jerry Seinfeld wrote a full page in the New York Times yelling about this, which is surreal beyond measure. Second, because you-- in addition to doing the podcast and writing and doing other things, you're a former hedge fund manager, you think about macro issues, you think about issues that involve cities, you think about financial issues, you think about this in a really analytic way. I'm curious, aside from the pop culture insanity around all of this particular article, what do you think is actually happening under the surface here, when it comes to the finances of New York City and the beating heart of the financial center of the United States?
JAMES ALTUCHER: Well, that's a great point because I think early on, de Blasio had to put on his lobbying hat or whatever you want to call it. He really needed to advocate for New York City early on. I will say any mistake he's made recently, I don't know, but all along, he should have been advocating that hey, New York City needs to stand up tall. This is the flagship city of the United States in terms of financially dealing with every other country. He really could have gone to bat for this a little more and been in DC a little bit more. Washington DC is on vacation while the MTA just announced they need a $12 billion bailout.
The MTA is the Transit Authority. That one department by itself is losing $200 million a week and needs a $12 billion bailout. They just announced that a few days ago. Meanwhile, de Blasio needs another 5 billion on top of that to keep the 22,000 people he is thinking of laying off and that's 6% of the city's workforce. By the way, that's only the beginning. We haven't even seen whether the tax revenues come in or not yet for this year. They're not going to come in. Next year, it's going to be worse because there's this whole flight out of New York now.
You're seeing this on the real estate side, like it's not like every city 400,000 people are leaving, some cities, real estate is insane. Real estate is going through the roof in some second or third tier cities, like people are buying houses sight unseen, 50% higher than the listing price. I'm not making that up. You could just Google that and that's in every newspaper, every local newspaper where they see the data. It's a scary trend, but the optimistic thing is that for the first time ever, opportunity is now dispersed throughout the country, it's decentralized. It's no longer just in New York City, LA, San Francisco. You could be a young person and find success anywhere now.
We all got comfortable communicating remotely. A lot of talented and skilled people are leaving the major cities, but particularly New York City, unfortunately. Unfortunately, though, I don't know what you do about New York Cit. The only thing I was thinking and I've been curious with what you were thinking, is if the Federal Reserve itself comes in and buys a lot of all the debt basically, so it buys all of New York City's debt and restructures it so that New York City could borrow more. It's not a great solution, but at least it will allow New York City to continue with police and healthcare. New York City owns all the hospitals, like 27 hospitals. All these things could fall apart if New York City doesn't figure out some way to raise $50 billion.
ASH BENNINGTON: James, you're a finance guy, a longtime New York City person, I'm sure you'll geek out on this too. It reminds me 1970s, I think it was Abe Beam was mayor, feels like the idea that New York City almost or some people argue did default on its municipal bonds, there were all of these challenges that we're talking about now, garbage collection, police, fire, all these things that needed to be paid, no sources of revenue from it. The famous headline, I think, in the Daily News, Ford to New York, Drop Dead. Is that where we're headed back to?
JAMES ALTUCHER: Before I wrote the article, and I was seeing the problems around me, I was hoping that was the worst case scenario, but let's not forget-- and a lot of people are saying, oh, New York City will head back to the 1970s and finally, artists will move back in and people could afford to live in Manhattan, and they have this vision of the 1970s like it was some artistic utopia that wealthy gentrifiers ruined. I was there in the 1970s, that's totally not what happened. New York City was disgusting in the 1970s. It was really horrible. It was not a safe place. I don't know if it was the murder capital of the country or the world. It was a very bad place.
Here's the difference. There's a couple of differences. One is there was not a single day that New York City itself, that industry was closed down. All of Wall Street, the corporate headquarters of every single investment bank was on Wall Street. There was nothing you could do about it. They had to be all hooked up right into the exchange. They had to be on Wall Street. The entire advertising industry of the country, if not the world, was on Madison Avenue. The entire media industry was on Sixth Avenue. These were long standing industries that never closed down.
Now back in, let's even just go to 2008, the average bandwidth was 2.5 megabits per second. We would not be able to have a video conversation at 2.5 megabits per second, just in 2008. That's why people say oh, we survived 2008. Everybody had to come-- nobody left town. You had to be in New York City. Now, our average bandwidth is 40 megabits per second, each person, that's just an average, some people's is much higher. Companies realize this. There's been a lot of scientific research that productivity has actually gone up in the past few months.
There's a lot of evidence also-- like Jerry Seinfeld, the two problems he addressed, but one of them was people absolutely-- he said, people absolutely hate working remotely. It's not really true. There's been all sorts of surveys, more than half the country likes working remotely. I don't know. I don't know. A cubicle is six by six feet. You have to be like best friends with all your-- nobody likes being best friends with all their cubicle mates, and then sharing a bathroom with them. Like even in jail, you have an eight by eight cell and you get your own bathroom and you're allowed, just to be clear, you're allowed to have loving, intimate relationships in jail, but not in the workplace. No one likes working-- at work, I would argue, and the evidence bears that out, that at least half more than half the country likes working from home.
The other thing Jerry mentioned, which is really true actually, is there's a certain energy to cities. This is you exchange ideas, you meet other young people. That's very true, but you still need to have tax revenues. If New York City tried to borrow now, like in the 1970s, New York City was able to borrow because there was a reasonable argument like hey, if we clean the subways, if we fix up the hotels, if we clean Grand Central and clear crime out, then more people will come to New York and we'll be able to pay back our debts. If New York City borrows money now-- and look, there are lenders out there because there will always be lenders for New York City but if New York City borrows now, where do the revenues come from to pay it back? It's not so clear.
You have to really think-- like everybody's already left. 400,000 people have left and more are leaving every single day. It's only in the past few days that we're seeing the news that you can't even rent a u-haul, that you can't get a real estate agent on the phone in any other city because there are all these New Yorkers who are coming out. There's lines of u-hauls going on to the GW Bridge. Yes, maybe young people will come in but you still need tax revenues and meanwhile, deficits because of the virus are spiking higher and revenues are important. You pay for everything. You pay for your city that way.
Also, let's say there's no indoor dining by 2021, as both de Blasio and Governor Cuomo has said it's going to happen, there's going to be no indoor dining, 95% of restaurants will go out of business, just gone. They will never ever reopen, which is about half a million jobs in the city, and that has repercussions. That means tourism goes down. That means all the jobs related to tourism go away. It keeps on cascading out. The subway infrastructure starts to go down because less people are taking the subway. Meanwhile, the MTA needs a bailout anyway. All these repercussions, it just is scary thinking where does that end? Whereas in the 1970s, you could say, all right, well, if the banks restructure, you can make an argument for borrowing. You can't do it right now.
ASH BENNINGTON: Two things. First, I think Seinfeld-Altucher debate right here on Real Vision, or really Altucher-Seinfeld, you're going to be a lead on this one.
JAMES ALTUCHER: You mean if I was talking to Jerry?
ASH BENNINGTON: Yeah, we'll get you on. We'll have you debate.
JAMES ALTUCHER: My daughter asked me, what would you do if Jerry Seinfeld just called you? What would you say to him or if he was standing right here, and I said I would walk away because other than the name Seinfeld, if some random person just wrote a page in the New York Times about you just insulting you and not addressing any of the actual issue, very important issues you bring up and is acknowledged by all the press that these are important issues, you would never talk to that person again. Well, because it's like Jerry Seinfeld, I'm supposed to want to talk to him now. I don't know. I am a big fan of his comedy. I own part of a comedy club that he's performed at many times and I don't know.
I'm happy he has voice in the issue and that he was able to point out my article to people like de Blasio and Cuomo who also then spoke about it. Maybe it will make them more incentive to prove me wrong, and I hope that's right, but right now, I still don't see a single person addressing things other than saying, nobody wants to be remote, which is not true. New York City's got grit, and you don't. Regardless of whether I have any grit or not, grit does not plug a $50 billion hole, which is the minimum New York City needs.
ASH BENNINGTON: That's such a key point. By the way, Jerry, if you're a Real Vision subscriber reach out to us. I'll try and convince James to debate you. This gap, this $50 billion gap, the question that I have and I think about the processional effects here, and how positive feedback loops develop in financial markets, what the hell is going to happen to commercial real estate?
JAMES ALTUCHER: Well, commercial real estate. I've spoken som-- commercial real estate is dominated by a few companies, a few big companies, and then some very large wealthy families that have been buying New York City real estate for 100 years. I would say that particularly the younger generations and the newer real estate companies, they're in big trouble, like they're going to go bankrupt. That's going to go up to the banks. The banks are going to have problems, but the banks have already sold off a lot of the debt to hedge funds, and so who invest in hedge funds? Well, 401k plans, pension plans. In other words, you invest in hedge funds through your 401k and through your IRA and so on, and the American taxpayer is going to pay for the bankruptcies in New York City real estate.
What will happen is a few landlords will go bankrupt. That's sad for them, but that's not 8 million people. The banks will say, whoops, we can't-- the bank's job is to just service the debt but they already sold the debt, like I said to these institutions and they sliced it up so much that even the institutions don't have any idea what they own, and so all those losses are passed through to the taxpayer.
ASH BENNINGTON: The immediate takeaway there, and something that I've been thinking about pretty extensively is this isn't like an Upper East Side, Upper West Side Story. This is a national story. If New York City has massive financial problems, if it becomes destabilized fiscally, financially, it is a challenge that is going to reverberate around the country.
JAMES ALTUCHER: Yeah, it is and again, though, the positive is that many, many, many second and third tier cities, all of them will benefit, if that's the way to put it. They'll benefit from the money coming out of New York City. There's definitely an exodus of money. They'll benefit from-- let's say a talented chef, his restaurant, or her restaurant closes down and now, she's in Nashville and will set up a new restaurant there once she raises money and so on. Think about it, like Broadway is now closed through-- it closed out in March when everything else closed, and it'll be closed until next March, so a year. Who is