MARKET PERSPECTIVE

By J Mulraj

Jun 6-12, 2026

History Repeats Itself Because the Polity Doesn’t Learn it’s Lessons

Image created by Chatgpt

In November 2025 Democrative progressive candidate, Zohran Mamdani, was elected Mayor of New York City, beating the erstwhile Democratic Mayor Andrew Cuomo (who ran as an independent) by over 1 million votes, securing 50.8% of the votes. Cuomo’s campaign was tainted by financial and sex scandals.

In his campaign, Mamdani promised free bus rides in NY City, free child care, Affordable housing, rent freezes on some tenants living in rent stabilised units and setting up city owned grocery stores. Much like politicians running for State elections in India, who, after winning, bankrupt the State coffers.

Its great to be able to throw a lavish party if someone else is paying the bill.

After getting elected Mamdani found that New York City budget couldn’t afford the freebies and sought help from New York State, but Governor Cathy Hochul rightly refused.

During the campaign, Mamdani got the support of Michael Mulgrew, President of the United Federation of Teachers, a body that represents around 200,000 educators, child care providers, nurses, etc. At his behest, the members worked weekends on Mamdani’s campaign, on the promise of taking care that their pensions, managed by the Teachers Retirement System, which manage $90 m, are not hit. This pension fund has a funding shortfall; the income it generates meets 71% of it’s obligations and the gap needs to be contributed by the State. The deal was that it would be, as a quid pro quo, for support. It wasn’t. Instead, Mamdani announced a $ 30 m grocery store and a 9.5% increase in property tax.

Michael Mulgrew, and the United Federation of Teachers have, justifiably, felt betrayed.

Mamdani then moved to freeze rents in rent stabilised units, another of his campaign promises. This will, however, result in the eviction of 300,000 tenants, not in protecting them. Most of the buildings of such tenants are individual owners, not hedge funds or institutional owners. They are barely able to afford maintenance of the building, and have borrowed against rental income. When this income gets frozen, the lenders will deny or reduce the loans; the buildings will descend into disrepair, and ultimately, eviction notices to those tenants least able to afford a legal fight.

In order to justify higher property taxes Mamdani shot a video under the apartment of Kenneth Griffin, founder of one of the largest hedge funds, Citadel LLC, and worth $ 50 billion, trying to shame him.

The result?

Ken Griffin moved his residence and his business to Miami, Florida. Other big financial names are moving or expanding elsewhere, too. Goldman Sachs, to Texas and Salt Lake City, and J P Morgan is expanding in Texas. Other big financial firms moving out are Apollo Global Management, a private equity firm, Elliot Management, Alliance Bernstein and ARK Investment Management.

With their exit go the jobs, and, if their properties are sold, as they would be, goes the property tax revenue that decreases, instead of increasing.

The financial sector contributes about 20% of NYC taxes, and Mamdani, with his policies, has killed the goose laying the golden eggs.

He seems to draw inspiration from Emperor Niro, who is believed to have fiddled as Rome burnt.

He ought to have read Ayn Rand’s “Atlas Shrugged”, in which Francisco d’Anconia says “So you think money is the root of all evil? Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced, and men able to produce them”.

Well, several of the people who had the ability to produce wealth and provide employment leaving New York, Mamdani is setting a vibrant metropolis afire. Similar policy mistakes are occurring in other American cities like Los Angeles, Chicago and others, where homelessness is high and a testimony to failed policies.

At the time of writing this column, SpaceX’s IPO is set to open, seeking to raise a whopping $75 b., the largest ever (more than twice the size of the current largest, Saudi Aramco, which raised $29b), at a valuation of $ 1.8 trillion! Other huge IPOs are lining up in America, including Anthropic, Alphabet and Open AI. The US has encouraged growth of it’s capital markets which are the largest in the world, hence enabling new companies to raise huge amounts in quest of exploring new technologies and outer space.

The total global financial assets (equity plus fixed income) are estimated at $ 290 trillion, nearly 2 1/2 times global GDP of $ 117 trillion. Of this, US financial assets are about $120 trillion ($62 t Equity and $ 58 t Debt). It is this huge pool of capital that makes such large IPOs possible.

The largest US bank, J P Morgan, has a PAT of $ 57 billion, more than the combined PAT of all Indian banks, both PSU and private ones, which add up to $ 46.5 b.

It is time that the Indian tax authorities broaden their narrow minds. Remember when Finance Minister P Chidambaram introduced a Securities Transaction Tax (STT) in 2004, which was payable on every purchase or sale of securities, ostensibly to simplify the capital gains structure. In essence, the STT was applied upfront, upon transaction, and not later, on sale, benefiting tax collection. It was payable whether or not the purchase resulted in a gain or not. Also, the tax on short term gains (held for less than a year) was reduced from 33% to 10%.

Investors in USA and Japan are not levied a tax on transactions similar to STT, to encourage the growth of their capital markets. In India, FM Nirmala Sitaraman, peeved at the lower than budgeted STT collection, hiked the STT tax rates on F&O.

Such nettlesome taxes combined with a sliding currency, are the factors leading to sell offs by foreign portfolio investors, and there should be a discussion to reconsider the wisdom of imposing it.

Last week the BSE Sensex closed at 75527, for a weekly gain of 284 points.

In the Iran war USA has been using military power and the blockade to make Iran yield to its demands to forsake its nuclear weapons quest and to allow free passage through the Strait of Hormuz. A breakthrough would lead to a relief rally, which would provide investors with an opportunity to lighten.

It may be prudent to take it.

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Comments may be sent to: jmulraj@asiaconverge.com