The decline and fall of the Wall Street Empire

The following article is by Luigi Zingales a business school professor at the University of Chicago. (As you may remember President Obama was a faculty member of the University of Chicago Law School.) This article discusses the ebb and flow of financial centers:

http://www.forbes.com/2009/07/13/wall-street-changed-opinions-contributors-luigi-zingales.html

Professor Zingales' outlook for the future of New York as the financial capital of the world can be summed up in these 2 parpgraphs:

• The biggest threat of all to the Big Apple's financial supremacy, however, comes from Washington. The Founding Fathers wisely decided that the nation's political capital should be separate from its financial capital (in both senses of the word). Now this splendid segregation has ended. If the outcome of the Chrysler bankruptcy is any indication, Washington is willing to flex its muscle in financial decisions, altering the substance of contracts freely agreed to by private parties. In so doing, the national government has undermined the certainty of the rule of law, which was the American capital market's strongest asset.
• 
  Unfortunately, since Washington is the source of the problem, New York City can do little by itself to defend its position. Perhaps the city's best bet is to offer favorable tax treatment to the financial industry--but to do that, it had better first put its finances in order.