We all know the economy has been flagging, but now the impacts hit even our most impervious markets. The New York State Comptroller forecasts Wall Street will shed 10,000 jobs by year-end 2012 and even recession resistant Washington DC girds for possible and previously unthinkable federal government jobs cuts.

 The New York story is a delayed reaction to the fallout from the 2008 financial crisis. Wall Street firms thought they could go back to business as usual with the help of various government bailouts. But the M&A and private equity games won’t work without a lot of leverage—the idea is to make quick bucks for managements or the takeover players without putting at stake your own capital. The debt financing isn’t available to do these deals, and the private equity guys (who don’t want to run the businesses on a long-term basis) have no short-term exit strategies since the economy won’t ramp up a lot of new profits to shore up bottom lines after they gut the companies of employees and related expenses. The trading businesses, which made so much money for investment bankers, also run out of gas—people realize these gambling schemes don’t create much if any economic value and are hard to pull off without escalating markets to draw in investors. You just don’t need as much high priced talent to do traditional banking and investment banking—that is carefully investing in companies, their people, and products to reap long-term gains.

 In DC, the bet is that the government payroll won’t shrink much, but the growth track is definitely over. And high priced lobbyists who fill downtown office buildings certainly won’t have as much pork to feast on when budget cuts take hold. And if there is less pork, companies and business interests won’t invest as much locally to get their hands on what’s left.

 Still Manhattan and the nation’s capital look safer than most other cities across the country—they have enough cushion in diversified businesses and the government jobs base to sustain themselves. Global commerce circuits through New York and Washington remains a political nerve center for the world.

 The Texas energy markets gain some attention, but have you noticed gasoline prices are ebbing as world economies slow down (never good for oil towns)  and high tech markets do better (but they can bust quickly if another downturn takes hold, as looks increasingly possible).

 And what about everywhere else—especially Sunbelt markets depending on the housing industry to build homes for expanding populations and the Midwest industrial and agriculture heartland, which suffer continuing job drains? Ugh.

 Investors who thought prices were too rich in the top gateway markets and pulled back were right. The problem is there are no bargains anywhere else, just increasing risk.