With Mamdani's Mayorship Already a Dumpster Fire, NYC Faces Another Crisis He Clearly Doesn't Get

New York City's Democratic Socialist (Communist, Marxist) mayor has been in office for a mere 204 days, as of the date of this article.

Moreover, the man-child who would be chairman, or perhaps general secretary, is not only doing his damnedest to force-feed New Yorkers a communist nightmare, but the (rotting) Apple is on the verge of another crisis that Mamdani clearly doesn't understand.

While much has been made about the flight of capital facing NYC as Mamdani's words and actions continue to scare the bejesus out of the city's big corporations and ultra-rich residents (the socialist mayor continues to insist business leaders love his socialism; the facts say otherwise), there's another potential financial crisis facing the city.

Municipal Governance and Mamdani's Risk to NYC Municipal Bonds

Clearly — to the rational among us — the boy mayor knows zero about municipal governance, including a form of due diligence, or fiduciary responsibility, for the financial security of the city he aims to turn into a Marxist paradise. The capital flight presently picking up steam in NYC not only negatively impacts the city's tax revenue; it's also beginning to put downward pressure on the city's municipal bonds. 

Let's first look at a brief explanation of how bonds (both corporate and municipal) work.

Municipal bond prices and yields have an inverse relationship (move in opposite directions) because the bond's interest payment (coupon) is fixed. So if the value (current price) of a bond decreases (based on rising interest rates, financial problems, would-be investor hesitance, et al.), the yield of the bond rises.

For example:

• You own a municipal bond with a 5 percent coupon ($50 annual interest on a $1,000 bond).
• If market interest rates rise to 6 percent, investors won't pay $1,000 for a bond paying only $50 a year. The bond's price falls until that $50 payment produces a 6 percent yield.
• Conversely, if market rates fall to 4 percent, that 5 percent bond becomes attractive. Investors bid up its price, causing its yield to fall to match prevailing rates.

In the case of NYC's municipal bonds, there's a potentially larger risk at play; it's called default. 

Richard E. Farley, author of "Drop Dead: How a Coterie of Corrupt Politicians, Bankers, Lawyers, Spinmeisters, and Mobsters Bankrupted New York, Got Bailed Out, Blamed the President, and Went Back to Business as Usual (And It Might Be Happening Again)," a book that chronicles the 1970s meltdown, explained the problem thusly:

I think there is concern over stagnant private-sector employment in NYC and growing welfare rolls during a period of relatively strong economic growth nationally. The bond market obviously pays very close attention to all these data points-and they’re pointing in the direction of increased credit risk and therefore higher yields.

But, Mamdani? 

Yep, the little dictator wannabe remains clueless — just as he does about everything else he's trying to do to the (present) financial capital of the world: 

"When I was running for this office, I would hear time and again what a catastrophe it would be if I were to win, when it came to capital flight, when it came to crime. And what we’ve seen is so much of what is fearmongered around has very little relationship to reality."

What — make that who — has very little relationship to reality is Zohran Mamdani. 

MORE MAMDANI MADNESS:

Epic Fail: Mamdani Finally Makes Humiliating Admission About His Threat to Arrest Netanyahu

Watch: Even Jon Stewart Puts Mamdani on the Spot Over Unhinged Socialist Positions

Anyway, if this guy had a clue about how the municipal bond market works, particularly in New York City, he'd realize that the once-proud city is approaching a financial cliff. 

The question is, does he even care?

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