This headline over at Bloomberg today – “Wall Street Cedes to Toronto’s Bay Street” – sure caught my attention. Here’s the gist.

Henry Michaels spent 25 years as an investment banker with New York-based firms such as Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Citigroup Inc. When the financial crisis deepened this year, he abandoned the struggling U.S. companies for a job at Royal Bank of Canada.  “In this crisis, strength and stability matter,” said Michaels, 48, who resigned as co-head of Citigroup’s banks and diversified financials group in May to join RBC Capital Markets in New York. “RBC is in growth mode, and it’s nice to be playing offense.”

Canadian banks, bolstered by their reputation as the world’s soundest, are adding investment bankers even after rivals slashed almost 316,000 jobs worldwide since the collapse of the U.S. subprime market in 2007, according to data compiled by Bloomberg.

Lenders including RBC, BMO Capital Markets and CIBC World Markets have hired more than 700 investment bankers, analysts and traders in the U.S. and Canada this year, including from rivals such as Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch and Citigroup.

“The profile of the Canadian banks on the global scale has been heightened exponentially over the course of the last year,” said Rose Baker, a managing partner in Toronto with executive recruitment firm Heidrick & Struggles International Inc. “They look more powerful and are able to attract talent that was historically not available to them.”

Canadian lenders, based in Toronto’s financial district known as Bay Street, have remained profitable amid the crisis because of tighter restrictions on lending and higher capital requirements. As a result, Canada’s biggest banks posted about $20.4 billion in writedowns and credit losses since 2007, a fraction of the $1.62 trillion taken by global financial- services firms in the period, according to data compiled by Bloomberg. The World Economic Forum last month named Canada as home to the world’s soundest banks for the second straight year.  The resilience allowed the Canadian lenders to climb the ranks of global firms. Three Canadian banks now rank in the top 10 among North American lenders by market value.

Canadian banks are taking on experienced bankers as larger firms trim ranks. North American banks and brokerages cut 9.9 percent of their workforce in the past two years, according to Bloomberg data. Bank of America Corp. eliminated 46,150 jobs, while Citigroup cut 38,900 positions and Lehman fired 13,390 employees.  By comparison, Canada’s five biggest banks pared 3,135 jobs, or about 1.1 percent of their staff, in areas such as consumer banking, according to company filings.

With its housing market on the mend and its ability to attract global talent growing, Toronto seems poised to come out of the Great Reset in much better shape than anyone could have expected.

I’m amazed actually at how many people still want to count NYC for dead. I see it the other way around: The crisis in the financial sector may end up being good for NY in the long. While the massively over-bloated NY financial industry certainly brought short-term income and tax revenues to the city’s economy, it can also be seen as badly distorting the city’s economy, creating real opportunity costs, and, in effect, crowding out other more inventive, creative, and entrepreneurial kinds of endeavors.

I’m still amazed at those who think of NYC primarily driven by the financial sector. Our team at the MPI has looked at the industry mix, the occupational mix, and all of the various measures, clusters, and LQs, and it is a big, diverse economy. It is among the most diverse in the U.S. and the world – more diverse than Chicago, or Washington, D.C., or even Silicon Valley for that matter – all places with solid futures.

NYC also has a very fast metabolism – perhaps the fastest in the world overall, as research by the Santa Fe Institute shows. Without it, it would not have been able to survive, at its scale. That metabolism means it is not only hyper-efficient, it means it has the underlying capability of generating lots of new ideas in leading edge industries – particularly content-based or even convergence industries, like Bloomberg.

The recent shift toward entrepreneurship and creativity by the Bloomberg administration does not surprise me. These ideas have been bubbling around the administration since its earliest days. Bloomberg, at the end of the day, is himself an entrepreneur, so he would naturally gravitate to this kind of response in a crisis period.

In the short run, NYC will certainly take a hit – losing an estimated 65,000 plus financial jobs and many, many more overall. The hit will be harder than in some cities and regions, like say Washington, D.C., but not nearly as hard as in most. In the long run, it has the scale, centrality, openness, creativity, and metabolism to come back.

Like I said: My hunch is the reset ends up being a good thing for NYC in the long-run, helping to correct the distortions the over-bloated financial sector brought to the city’s economy. And it’s good to see the Bloomberg administration acknowledging and trying to encourage the creativity and entrepreneurship that have long powered the NYC economy.

Not to be outdone by Wall Street, auto execs, homeowners, or governors, U.S. mayors are making their grab at federal CYA funds today. Hard to see a silver lining here, but check this snippet in the article by T.W. Farnam:

A delegation of mayors, including Michael Bloomberg of New York and Antonio Villaraigosa of Los Angeles, plans to ask the federal government to distribute funds directly to cities instead of going through state governments. The group is set to present a list of more than 4,600 infrastructure projects that they say are “ready to go.”

Tom Cochran, executive director of the U.S. Conference of Mayors, which is organizing Monday’s event, said the next administration has signaled that it will coordinate financing for projects for an entire metropolitan area instead of dealing with cities and suburbs separately.

Not sure what the mayors will walk away with and how much it will cost those of us who pay taxes and invest, but glad to see that ‘Metro’ Policy may be replacing ‘Urban’ Policy.

Say it ain’t so… please ,someone. Bloomberg is reporting.

President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush’s support, people familiar with the matter said. Obama’s economic advisers are now convinced that if General Motors Corp. doesn’t get a financial lifeline soon, it will have to file for bankruptcy by the end of January. And if the companies don’t get almost $50 billion, Obama will be dealing with the issue again by next summer. Any czar or board would be patterned after the bailout of Chrysler in 1979 and New York City in 1975. Advisers such as former Federal Reserve Chairman Paul Volcker and former Treasury Secretary Lawrence Summers are said to be telling Obama that the cash is urgently needed now.

Congress would have to act in a lame-duck session that begins next week. Obama would need Bush’s backing to pass such a sweeping and costly measure in part because Democrats don’t have enough votes to force a floor vote or override a veto. Obama also would need strong support from auto-producing states such as Michigan, Ohio, Indiana, Illinois and Wisconsin to pass such a sweeping and costly measure. Yet to be determined is whether most of the money would be drawn from the $700 billion financial rescue package Congress passed last month or from newly allocated funds.

By injecting himself into the talks about how to save General Motors, Obama is making an exception to his decision to steer clear of policy-making until he takes office. The president-elect also wants the Federal Reserve to extend emergency loans to General Motors, Ford Motor Co. and Chrysler LLC, according to Obama aides who spoke on condition of anonymity. The failure of those companies would likely bring down parts-makers, dealerships and suppliers in addition to inflicting a deep psychological blow.

Is this really true? A multi-billion dollar bailout for the Big Three whose management has systematically squandered away a huge post-war economic and technological advantage, have misunderstood their markets, who have blamed workers every chance they get, and who failed to learn from their rivals and refuse to harness the creative capabilities of workers. An auto czar – huh? I thought Obama was elected by a combination of African-Americans and the creative class. How does this square with his electoral coalition or his vision of a better future? This will just forestall the inevitable. Why not just allow them to be taken over by Japanese car companies like Toyota and Honda who could truly restructure them? For the life of me and the good of the country, I hope this report is wrong.

Former Treasury Secretary John Snow told Congress the U.S. went “too far”‘ encouraging American home-ownership, saying that: “In retrospect, the bipartisan consensus to promote housing went too far.” As Bloomberg reports, Snow oversaw the “ownership society” where home-ownership rates hit an all-time high of 69.2 percent. He, like former Fed chief Alan Greenspan, now says they are “shocked” by the rapid meltdown of the financial sector.

One piece of the problem was granting mortgages to gullible or desperate people who truly wanted to buy a better home for themselves and their family. But a huge piece that continues to go under-recognized was the the incredible amount of real estate speculation undertaken by small scale investors, real estate agents and developers, and “regular Joes” trying to make a quick buck by flipping real estate.

Was anyone in Montréal this weekend? How about New York?

In both places, the code of the streets was the rule of law as autonomous zones were established where people could appreciate their city from the perspective of the pedestrian. Montréal is in fact a recognized world capital of design, participating as a design capital in UNESCO’s Creative Cities Network and so this weekend’s 6th annual Under Pressure International Graffiti Festival probably wasn’t much of a surprise to residents of la belle province. Young artists from all over the continent and beyond converged on MTL from Friday to Sunday, taking aerosol art and hiphop culture to the next level. It actually baffles me as to why the festival is not included in Montréal’s City of Design profile – it’s the arts- and design-related event that my peers look most forward to in that city, and it attracts an incredible amount of talent from outside of the region. It seemed like all of Ottawa was there or trying to get there this weekend.

Getting fully behind an idea like this seems like very simple and obvious ways for municipalities to engage not only young people, but the types of creative people that contribute to that great intangible – the “vibe” of a city. The emergence of the arts as recapitulated by hiphop culture – taking the idea of the G.O.B.S. (Gallery, Opera, Ballet, Symphony) and putting them on the street via Graffiti, Emceeing, B-Boying and DJing – has galvanized whole new ideas about the role of art in the city, and perhaps its ushered new conceptions of beauty itself. It has certainly brought us a new semiotics of the streets. Acknowledging that this change has taken place makes a municipal administration more relevant to its young contingent.

Case and Point: In New York this weekend, Mayor Bloomberg and Jeanette Sadik-Kahn, his transportation commissioner, launched the Summer Streets initiative. Quoting this New York Times article:

On a path that extended from the Brooklyn Bridge north to Park Avenue and the Upper East Side, thousands of people filled the streets, taking part in activities like street-side tai chi or salsa dancing. Others simply enjoyed the chance to stroll in normally car-clogged streets. In a city where walkers, cyclists, and motorists must share limited space, having a major thoroughfare through Manhattan free of cars created a giddy sort of excitement.

An interesting move on the part of the city of New York to be sure. In Toronto, this is a monthly event over in the historical district of Kensington Market, but it’s nice to see New York getting on board. To get the event moving on the right foot, Mayor Bloomberg and Comissioner Sadik-Kahn coordinated with a special guest. Can anyone guess who?

Click here to watch Mayor Bloomberg, Commissioner Sadik-Kahn and Jay-Z launch the Summer Streets Initiative

That’s right. The Jigga-Man.

Now let’s look past the fact that the mayor’s speech sounded like a passage pulled directly out of one of Richard’s books about the Creative Class, or the obvious discomfort that we all felt hearing Bloomberg make those scripted jokes about Jay, or how awkward Jay-Z actually was on the mic (for once in his life). There’s something bigger to be said here: The administration of New York City, in considering how best to communicate that the streets are for the people, looked to hiphop culture’s – and indeed New York’s – brightest star to emblemize that idea. They are making very strong statements about the culture of the street and of the city – in fact, other than the scale and location of the operation, their statement is almost the most innovative thing about the idea.

Now if the city could hire these kids to ride through various neighborhoods of New York from weekend to weekend, puttin’ it down and giving workshops, THAT would be some innovation. Word.

Was anyone in New York to see how this initiative went? How about Montréal – anyone make it out to Under Pressure? How are you being innovative on your streets in your city? What ideas do you have about what street culture means?

I’m really interested in your opinions!

And now, as always, some music.

R.I.P. Bernie Mac and Isaac Hayes