Wall Street is already feeling the pinch from the stock market's recent volatility. No one wants to sell an initial public stock offering in this climate, and corporate bonds aren't selling well, either. "A lot of deals are getting shelved," says Guy Moszkowski, analyst at Solomon Smith Barney. "Some will come back later, and some will slip quietly into the night." He says equity-underwriting volume, one of Wall Street's most profitable businesses, often falls off by more than 50 percent from one quarter to the next when the market's mood turns surly. "We're in the throes of that right now," he says.

But no one expects cutbacks like 1987's. Since then, Moszkowski says, underwriting has always bounced back within six months. And Wall Street firms have other businesses like advising mergers and managing assets that are more stable, even if stock prices dive and trading volumes drop. "Obviously," says Moszkowski, "my earnings can fluctuate with the earnings of the firm, and I have to prepare for that kind of volatility, but securities is a growth industry." His take is that the baby-boomers will keep the industry strong. The number of people between 45 and 64 is still growing, and they need somewhere to put their money. "It would take a major change in the culture, a real shock of some sort, to keep people out of the market," he says.

"It is going to take more than people think for there to be layoffs," agrees Steven Galbraith, analyst at Sanford Bernstein & Co. "You would feel the compensation cut right away -- somebody expecting, say, $2 million would end up with $500,000. But the scarcity value of human capital on the Street these days is psychotically high. In 1998, during the Russian debt crisis, Merrill was the only firm that laid people off, and they got raked over the coals, because when the markets came back right away, Merrill was scrambling to get people and everyone else was cooking with gas."

Of course, analysts said similar things in early 1987. And Parrott, for one, thinks history could repeat itself in the event of a stock-market cataclysm. "I think they are living in a dream world if they don't perceive that there is a serious stock-market bubble out there."

The Russian debt crisis in the fall of 1998 was a reminder to the city that, even without layoffs, a steep drop in Wall Street's cash flow quickly crimps the city's economic life. The Manhattan real-estate market virtually froze for weeks while the crisis passed, and prices plunged right away in the Hamptons. "Even then, it was just a hiccup, but the restaurant business really felt it," says Wolf, the restaurant consultant. "There was about a six-month period of uncertainty when people were tapering off in anticipation of what might happen. Places emptied out during the week, and it was like, 'What is going on here?' "

The market's swift rebound ensured that Wall Street's largess continued to spread throughout the city. "When the money is flowing," says Wolf, "a lot of fancy new ingredients start turning up everywhere -- the way these days everything has truffles, morels, or foie gras on it, or you get burgers made from Kobe beef."

The city, no doubt, can survive without Kobe-beef burgers -- it might even be better for it. But in a crash, they may not be the only things New York has to take off its menu.

("Street Addict" 1 | 2 | 3 )