Panic in New York - but I'm buying an apartment

New York's financial district pictured from Staten Island ferry.

It may not be the best time to buy a place in Manhattan. A month ago, when I signed the sales contract, banks were either going bankrupt or being bailed out by the government, throwing the world's economic stability into crisis. This inevitably raised questions about the economic health of New York City, which heavily depends on the financial services industry. I was in New York again last week to close the deal. While I waited to see my mortgage adviser, his colleague invited me to his cubicle and almost immediately turned the conversation to the UAE, asking about everything from sailing to job opportunities in Dubai and Abu Dhabi. Even though his employer is not bankrupt and the business is expanding, this mid-level banker was taking no chances with the New York economy. He and his wife were seriously thinking about moving here.

As big lenders such as Bank of America, JPMorgan Chase and Citigroup swallow smaller banks, many of their employees are already voicing fears that mergers will inevitably lead to job cuts, or that even if they keep their jobs, pay is unlikely to increase. This gloomy mood has gripped all sections of the city. New Yorkers are more uncertain about their future than at almost any time since the crash of 1929.

Nobody is immune. It is estimated that every job at a bank feeds five other jobs in the service, entertainment and food sectors. Now, with banks in trouble, people have become fearful and some are making their moves, or thinking about it. My wife and I are buying the apartment of a couple who fear the looming recession might further slow their restaurant business. They have decided to sell and rent instead. Business at their restaurant in Chelsea, a hip neighbourhood in Manhattan, has already slowed and they have decided to move to the suburbs, where rent is cheaper.

"With the economy going down, most people are making steak at home and not going out to eat," a friend of the couple observed. My New York neighbour, a scientist at the Museum of Natural History, also expected tough times ahead. He said that the museum's "fortunes mirror Wall Street's", since a less profitable Wall Street would mean less contribution from the private sector to the museum and recession would ultimately lead to fewer tourists to New York City.

I would not have dared to buy an apartment if I were still working in New York City. My former employer began a round of layoffs this week. While the mood in New York is not nearly as sombre as in the aftermath of the September 11 attacks, the metropolis that is home to Wall Street is more concerned about the latest crisis than most earlier economic downturns, because without banks recovering, the city cannot expect a return to normality.

The New York mayor Michael Bloomberg, who is barred by rules from seeking a third term next year, has asked for those rules to be changed so he can stay on to help the city recover. With a record that proves that he can help the city during troubled times - he led New York's recovery after the 2001 attacks - and with so much uncertainty right now, New Yorkers will probably grant the billionaire businessman his wish to help the Big Apple make it through the credit crunch.

I am just hoping that the value of my apartment does not plummet the same way banking stocks have. [e-mail]