Monthly Archives: March 2009
IB types in Britain are reviewing exactly how much they agreed to pay for the privilege of trading in the old battle axe in for a new one and aren’t happy. Here’s the sad story of one fellow whose wife of 26 years got 11 million pounds while his share has declined to a solitary million. For some reason she’s not sympathetic and he’s gone to court for relief. The lawyers interviewed in the article don’t think he’ll get any. Tough to get new arm candy when you’re worth a measly million pounds – trust me, I know – he may have to go find himself another old woman of fifty or so.
From an agent I choose to keep anonymous:
I keep hearing reports of deals being done (contracts signed) but brokers afraid to report for fear of buyers walking away from their deposit! If true, one of these days we’re going to see a flurry of “solds” with no early warning. Very unusual.
I’m from Missouri.
This tear-down was sold in 7 days via bidding war in 2000 – $1.395 on an asking price of $1.295. It’s back today, unchanged except for a plot plan, for $2.5 million. I don’t know what this will eventually sell for but I’ll be surprised if there’s a bidding war this time.
This nifty old house was reduced to $2.495 million today, a price that should attract more buyers than did the original price of $3.175. While one house on Maher, #25, did sell for $3.505 in 2006, nothing before or since has broken the $3 million barrier that I’m aware of. April of 2008 was, in retrospect, not the best time to try breaking that threshold again. At this price, it should attract those who like Maher, and they are legion. I myself consider it too close to the Brunswick kids and their Lexus SUVs on the street but I’m just an old grump.
We are concentrating power in Washington at a rate that would astonish and delight even the most ardent fascist. Yesterday we saw the President of the United States remove a private corporation’s Chief Executive. Here’s today’s outrage:
[I]n a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
The purpose of the legislation is to “prohibit unreasonable and excessive compensation and compensation not based on performance standards,” according to the bill’s language. That includes regular pay, bonuses — everything — paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.
The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.
In addition, the bill gives Geithner the authority to decide what pay is “unreasonable” or “excessive.” And it directs the Treasury Department to come up with a method to evaluate “the performance of the individual executive or employee to whom the payment relates.”
The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.)
First posted on a Chinese blog viewed as credible by military analysts and then translated by the naval affairs blog Information Dissemination, a recent report provides a description of an anti-ship ballistic missile (ASBM) that can strike carriers and other U.S. vessels at a range of 2000km.
The range of the modified Dong Feng 21 missile is significant in that it covers the areas that are likely hot zones for future confrontations between U.S. and Chinese surface forces.
The size of the missile enables it to carry a warhead big enough to inflict significant damage on a large vessel, providing the Chinese the capability of destroying a U.S. supercarrier in one strike.
Because the missile employs a complex guidance system, low radar signature and a maneuverability that makes its flight path unpredictable, the odds that it can evade tracking systems to reach its target are increased. It is estimated that the missile can travel at mach 10 and reach its maximum range of 2000km in less than 12 minutes.
Supporting the missile is a network of satellites, radar and unmanned aerial vehicles that can locate U.S. ships and then guide the weapon, enabling it to hit moving targets.While the ASBM has been a topic of discussion within national defense circles for quite some time, the fact that information is now coming from Chinese sources indicates that the weapon system is operational. The Chinese rarely mention weapons projects unless they are well beyond the test stages.
If operational as is believed, the system marks the first time a ballistic missile has been successfully developed to attack vessels at sea. Ships currently have no defense against a ballistic missile attack.
Along with the Chinese naval build-up, U.S. Navy officials appear to view the development of the anti-ship ballistic missile as a tangible threat.
After spending the last decade placing an emphasis on building a fleet that could operate in shallow waters near coastlines, the U.S. Navy seems to have quickly changed its strategy over the past several months to focus on improving the capabilities of its deep sea fleet and developing anti-ballistic defenses.
As analyst Raymond Pritchett notes in a post on the U.S. Naval Institute blog:
“The Navy’s reaction is telling, because it essentially equals a radical change in direction based on information that has created a panic inside the bubble. For a major military service to panic due to a new weapon system, clearly a mission kill weapon system, either suggests the threat is legitimate or the leadership of the Navy is legitimately unqualified. There really aren’t many gray spaces in evaluating the reaction by the Navy…the data tends to support the legitimacy of the threat.”
This unfortunate renovation project was performed on a house that sold for $1.4 million back in 2004 or 5. The builder/buyer spent hundreds of thousands of dollars building a new septic system and then turned his attention to the house itself. He did an okay job but was hampered by the fact that, despite all his effort, he couldn’t build more than a 3 bedroom septic system and, because the house sits on an acre of land in a two-acre zone, he ran into the Bloomer rule and was forbidden to build a real garage – he ended up with a carport sided with open lattice work. He then compounded his error of buying the place to begin with by pricing his creation at $3.625,000, and it sat.
He eventually lost the project to his lender and now Webster Bank (if there is still a Webster Bank – these days, who knows?) is trying to sell it. They priced it at $1,767,500, perhaps the amount of their loan, in February and today reduced it to $1.699 million. I won’t promise that that’s the winning number but we’re getting awfully close to the price of the land here and the million dollars (or whatever the builder put in) is yours for free. That’s approaching a good deal.
Heh – I was pulling up some old sales on a street of modest houses just now, in preparation to give a price opinion for a colleague’s listing presentation (my advice? Don’t bother) and I saw a string of sales, all the low 6’s through, as we got into 2007, $825. But one sale for a million dollars stuck out from 2006. I looked it up and it had been renovated, but so had most of the others. The only real difference I saw was that the buyer was represented by an out-of-town agent. Readers have commented before that these obliging people get rid of our least desirable houses at ridiculous prices and I agree. Some of my fellow agents think we should make it difficult for these people to operate in town but I think the opposite: bring ‘em on – we have tons of inventory to unload and the sellers would love to get something even close to their asked-for price.
Bloget has in interesting bit of email correspondence from an anonymous source who has mean things to say about Walter Noeland everyone else at Fairfield Greenwich Group. Sigh – can’t we all just get along?
Why should the senator from Connecticut be the only one to get easy credit from banks? Today he rammed through a bill easing credit card terms for consumers who can’t afford credit. This, of course,will drive rates up for everyone and end up restricting credit, not expanding it but Dodd, knowing how much he did for poor folk who deserved to own their own homes, will fix that, too in due course. Just as banks aren’t allowed to redline or otherwise discriminate against home loan borrowers who lack the ability to repay what they take, look for relief for those who need 52″ plasma TVs. It’s their right to have and our obligation to provide, all courtesy of Dodd.
Or I think there is, anyway, because this Riverside house was reported under contract today by an agent who often represents builders. Despite the glowing description in its listing, I thought it was tired old place whose disappearance would only benefit the neighborhood and that’s what I suspect its fate will be. I had my own strong opinion of its price of $1.29 million but either the buyer disagreed or did some strong bargaining. We’ll find out when its selling price is disclosed. Still, a sign of life.
8 Colonial Lane, right through this one’s back yard, more or less, is new construction that came on the market today for $3.595 million. That’s $876 per sq.ft. for the 4,100 above ground (it has another 1,600 or so below grade) which seems a tad aggressive, but the market, not I, decide things like that, so no angry emails, please. Good looking house.
Another new house whose location I was asked not to disclosed will be reported as sold today for $1.850 million. That’s something like $750,000 below its asking price so someone got a very nice at cost or below. There are good deals out there, if you look.
Back from the Tuesday tour. It almost seems like a waste of time these days with so many houses grievously overpriced (an exception: 5 Kenilworth Terrace, asking $1.495. I did not see it but my brother Gideon, a good judge of these things, emailed me that it was “a good deal”. I’ll make an effort to see it). But otherwise, I saw houses for $3 that I thought might go for $1.75, maybe, and $4 million tear-downs sitting on land worth perhaps $1 million, if you can find a buyer for land these days. Painful.
A noteable exception to all this was, surprisingly, Bill Gardiner’s $25 million masterpiece at 253 Round Hill Road. The exterior’s of hand-hewn field stone, every proportion is exquisite, inside and out, and the detail work is phenomenal. The banister alone, hand carved, is reason enough to buy this house. It would be a wonderful thing to start my day coming down the stairs with my hand on this piece of art and just admire its beauty. The basement is huge – my form of entertainment growing up was hunting rats with a barbecue fork and a pellet rifle in my parents’ crawlspace. If your recreational tastes are more conventional, this is the place for you: 12′ ceilings, exercise room, sauna, theatre, etc. etc.
I have some quibbles. I might have made the master bedroom ten feet longer, but I understand the architect’s idea, I think, which is that the bedroom should be a protective space, not an airplane hangar, and besides, there’s a huge sitting room if you insist on space. The land itself, while beautifully landscaped, backs up to those two failed spec houses which were carved out of this property and built on S. Baldwin Farms. Eventually they will be finished and occupied or torn down, I suppose, but until then, you have a question mark as a neighbor.
So what’s the proper price for this place? I have no idea. There are still billionaires around and what’s $25 million to them? Lesser folks might blanch at that price but somewhere there’s a value here, whether that’s at $12.5, $15 million or full price I’ll leave to the rich folks. But a grand house, all in all.
This cozy little beauty, 12,000 square feet and lots of amenities, was originally listed at $11.9 million in February 2005. It took a year and several price drops but it finally sold for $8 million in January ’06. Today it’s back up for sale, asking $6.995. That must be painful for its owner, especially since there is no guarantee that he’ll get even that price, but think how much more he would hurt if he’d paid that $12 million? Ow.
UPDATE: There are five houses for sale on tiny Richmond Hill Road, ranging in price from $3.495, $5.995, $6.500, $6.995 and $9.950 (this last remains just a gleam in the eye of its builder, I believe). Plus two land parcels of 4 and 5 acres each, in case you want to build your own, and an expired listing for a new house built right next door to 99 (85 Richmond Hill) that was priced somewhere in the $7s or 8s, if memory serves. That will probably come back on, although its absent owner may experience a Rip Van Winkle moment when he discovers what’s happened to prices here. I don’t remember a house on Richmond selling in the past year or so, so the market for this location have always been a bit thin. With this much choice, I would think that some serious negotiation might be profitable – for a buyer.
The Case-Shiller index is out: Nationwide, home prices fell 19% in January, a record. That’s hardly a shock and there is a bright side: the faster prices fall the sooner we’ll hit bottom (if , like me, you assume there is a bottom), prices will stop falling and sales will rebound. That may take awhile, but we seem to be t=in the middle of a very necessary, if painful, clearing process.
A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.
“There is still a lot of downward momentum,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We don’t think we’ll see a bottom in home prices until the second half of next year. The decline in home prices will continue to depress household balance sheets.”
From this morning’s online edition of Greenwich Time:
|By Owner 75 Birch Ln. Ltd Time Opp. Custom Ctr Hall, Col., built in 2003 over 5000sqft, 4BR, 3 Full 2 1/2 BA, Cherry Lib., Designer kit., game Rm on LL, bonus Rm w/ home theater, pool. Beautiful 1.1 acre, Town water & Sewer. Too much to list! Call 203-252-1080 Serious inquires only. $4,750,000 Goes to brokers May 1st w/ higher price.|
I have no opinion on whether $4.750 million is the correct price for this house: the town values it at $2.560 million, but the appraisers can be wrong as often as they’re right. It’s 4,100 square feet above ground, 4 bedrooms, 3 1/2 baths, an acre of land with pool. Birch has some nice houses on it but also a number of less pretentious 1954 homes which I assume were built when this land was first developed. That kind of mixture can adversely affect a property’s value but certainly Birch has seen a lot of new, larger homes go up in recent years.
But I do laugh, a little, at the threat that if you don’t buy now, it’s going to the brokers in a month and you’ll have to pay more for it. I understand a home owner who determines his price based on what he wants to net from the sale but that’s also a sign of a non-serious, or deluded seller. The market will tell him what his house is worth and couldn’t care less if he’s paying 5% of that to brokers. If you can’t sell it for $4.750 million on your own, no one is going to pay you $5 million to make up for the added expense of your selling expenses. And that’s just the way it is – sorry.
Big Labor triumphs in New York. From a New York Post editorial:
New York’s $132 billion budget, on course to be rubber-stamped to night, is an unbridled disaster for the state — but a big win for its public-employee unions and their bought-and-paid-for front, the ubiquitious Working Families Party.
The spending plan picks the pockets of the private sector to the tune of $8 billion in new taxes and fees — while the unions barely get a haircut.
That is to say, New York’s private-sector economy — which has shed a staggering 146,000 jobs since last August — will pay billions more for the privilege of attempting to produce sufficient wealth to sustain the state’s tax-mad ethic.
The unions haven’t suffered a single layoff — nor are they likely to, given the lush budget about to be voted on tonight.
But the WFP isn’t really a political party at all.
As Post Editorial Board member John Wilson explains in detail on the previous page, the “party” was established by Big Labor, to serve the interests of Big Labor.
It even runs a murky private corporation to do the business of Big Labor.
And what might that business be? Electing candidates willing to toe the Big Labor line.
In this respect, the circle truly is unbroken.
For the rest of New York, the taxation only starts with the state budget.
Still to be extracted is the cash needed to keep the MTA solvent. And public-school districts are now beginning to adopt budgets of their own — which, as always, means yet another round of crippling property-tax hikes.
Yes, Paterson yesterday bizarrely congratulated himself and legislative leaders for having achieved “cuts” and “restraint on spending” in a budget that grew by fully 10 percent — more than 30 times inflation.
Requests for details on the “cuts” were unavailing, which is par for the Paterson press office.
A hospital-industry group did complain yesterday about “unprecedented levels” of trims, but the union representing health-care employees was silent — so we’ll believe there are real cuts there when we see them.
And the teachers unions were (dare we say smugly) quiet, too.
All in all, a good year for Big Labor and its cat’s-paw Working Families Party.
Not nearly so good for actual working people though.
I don’t know who the interviewer is who is mentioned in this story but he exposes Dick Blumenthal for exactly the toad that he is. Great job.
Beck interviewed Connecticut Attorney General Richard Blumenthal on his March 30 broadcast. But, the radio and TV host took the opportunity to tell Blumenthal what he thought of his investigation into the bonuses received by American International Group (AIG) executives – whose company received federal bailout money.
“Look, you know what you have done, know what you have done?” Beck said. “You have – you are an insult to George Washington, sir. George Washington made it very clear that we are a respecter of laws, not of men. For your own political gain, you have decided to go after these people at AIG because it is a popular thing.”
“And while I may agree with you that it is obscene, I would like to know, is not what’s right as a rule of thumb – not what makes us feel good,” Beck continued. “You, sir, are to protect people and, and to stand for the law in Connecticut, so, again, I ask you, sir – what law gave you the right to go after them? What law did they break?”
Blumenthal claimed the AIG executives were “undeserving” of the bonuses. Blumenthal also pointed out the bonuses paid out were to increase next year. However, Beck pressed Blumenthal on the legality of that and Blumenthal came up blank in this exchange:
BECK: Is that against the law?
BLUMENTHAL: Well, it is against public policy. And it is unsanctioned by law.
BECK: Is that against the law?
BLUMENTHAL: It should be against the law.
BECK: Is it against the law?
BLUMENTHAL: It’s against the public policy and against the taxpayer…In my view it is unrequired by law.
BECK: It is a yes or no question. Counselor, it is a yes or no question. Is it against the law?
BLUMENTHAL: It is not against the law and I have never said that it is against the law, and I have never said that we would bring an action.
An idiot reader called me anti-Semetic because of my earlier criticisms of this ma. I call the reader an idiot because, had he bothered to read my columns and posts over the years, he’d know that I have always attacked Blumenthal for exactly the behavior displayed here. It has everything to do with abuse of power by a publicity-hound crazed by his own ambition, and nothing to do with anything else. Reread the interview and see for yourself.
Attorney David Golub, representing the town of Fairfield as it seeks to recover the millions it lost with Madoff feeder fund Maxam of Darien (yes, the fund that was run by a women to “empower women and minorities” turned out to have sunk every penny entrusted to it with Bernie – it closed the day Bernie was arrested), has persuaded a judge to grant a temporary restraining order freezing all the Madoff players’ assets until a full hearing on April 13th.
The restraining order granted by the judge is a “who’s who” of players in the Madoff scandal: Madoff, his wife Ruth, brother Peter, and son-in-law Andres Piedrahita; sons Andrew and Mark Madoff and Walter M. Noel Jr., a partner in the Fairfield Greenwich Group, all of whom live in Greenwich; Sandra L. Manzke, the founder of Maxam Capital; Robert I. Schulman, the former chairman of Tremont Group Holdings; and Jeffrey H. Tucker, the co-founder of the Fairfield Greenwich Group.
The restraining order prevents not only the sale of any real estate owned by any of the defendants, but also extends to all accounts at any financial institution and all personal property. That includes, but is not limited to, stock certificates or certificated securities and “any other assets in any of the defendants’ possession, custody or control,” according to court documents.
The motion, filed by David Golub, a lawyer hired by the town for the Madoff case, states there is probable cause the town’s pension programs could receive a $75 million judgment and seeks to secure that sum by attaching Andrew Madoff’s home at 57 Tomac Ave., Mark Madoff’s home at 21 Cherry Valley Road, and Noel’s at 175 Round Hill Road home, all in Greenwich, as well as garnish all of the defendants’ accounts at financial institutions.”There is a reasonable likelihood that the defendants Andrew H. Madoff, Mark D. Madoff and Walter M. Noel Jr. are about to remove themselves or their property from this state, or are about to fraudulently dispose of or have fraudulently disposed of their property, with intent to hinder, delay or defraud their creditors,” the motion states.
I think highly of David Golub and I wish him luck in chasing down everyone who profited from Bernie Madoff’s fraud but in this instance, I don’t see how he reaches the Noel’s property. The town didn’t have any direct dealings with FGG, at least none are reported in the article, so it’s stuck with the rather weak argument that FGG and its partners were an integral part of the fraud and made it all possible. Maybe so, but freezing assets on so tenuous a claim seems a bit dubious. Still Connecticut’s judges, perhaps harkening back to the days when they passed out these ex parte orders like candy bars, still grant them with far more alacrity than judges in other states, and God bless them: it makes suing people so much more fun. And notice,by the way, that the judge granted the full $75 million invested. Fairfield invested $22 million, watched it “grow” to a phony $41 million and still got a $75 million attachment, no doubt to cover Goleb’s fees. I do like judges who protect litigators!
Bernie Madoff is unlikely to contest this order on April 13th – why should he care? – but Walt’s lawyers, Andres’ and Mark and Andy Madoff’s should all be in Bridgeport Superior Court that day. I may go up myself just to watch the fun.
Andres Piedrahita sits down with a Journal reporter and denies knowing anything. He sold, got rich, and never questioned a thing. Smart guy, just like Corina’s dad.
After graduating from B.U., Mr. Piedrahita knocked around New York working variously as a commodities broker, selling penny stocks and as an investment adviser. His budding financial career was almost clipped in the early 1980s. At the time, Mr. Piedrahita, who was working for a small commodities dealer then called Balfour Maclaine, got a number of his father’s Bogota friends interested in investments that quickly went south. Many of his investors “stayed quiet and lost their money with dignity,” says one of the investors. “They valued their friendship with the father over their investment.”
But one investor didn’t. He says he asked Mr. Piedrahita frequently for information on how his investment was doing. Mr. Piedrahita avoided the issue, even claiming on one visit to Bogota from New York that he had forgotten to bring along the client’s accounts. Growing suspicious, the client says he hopped a plane to Manhattan, went to Mr. Piedrahita’s office and confronted his boss, asking for the information Mr. Piedrahita had avoided providing. “It was catastrophic,” the client says, remembering the state of his account.
Bottom line: Mr. Piedrahita lost his job, says the client, who recovered all his money. Mr. Piedrahita says eight clients lost a total of about $600,000. “Everybody has some bounces,” he says. “I sold something that turned out to be bad. I sold it with the best intentions, and it didn’t work. That’s the nature of commodities.” He disputes the client’s claim that he was fired from Balfour. “Not true,” he says. “I moved to Prudential Bache.”
Here’s an intriguing bit of history:
Friends say Mr. Piedrahita settled down after his marriage to Ms. Noel. He merged Littlestone with Fairfield Greenwich in 1997. Shortly after, he moved to London to a mansion on Chester Square. In Madrid, where he moved in 2003, Mr. Piedrahita’s lifestyle became even grander. He commuted between Madrid and London on a private Gulfstream jet which was parked at a military base close to Madrid. He was invited to a costume party at a Russian estate where everyone dressed up as czarist-era aristocrats. He went hunting for pheasants with the cream of Spanish society.
Relatives of Piedrahita have told me that he “had to leave Greenwich” and then “had to” flee London. Why? So far, no one’s talking.
But here’s the bottom line. The man was dirt poor, living above a delicatessen in New York, and sold penny stocks. No one sells penny stocks who isn’t a crook because, by their very nature, those securities are solely vehicles for fraud and price manipulation. So a poor, penniless crook meets up with Walter Noel, starts peddling Madoff “investments” and within a few years is flying around in Gulfstream II jets and hunting with the aristocracy. When crooks get rich, I suspect the worst, but Piedrahita denies everything:
“I look at myself in the morning, and I’m very proud of what I have done, and so are my partners,” says Mr. Piedrahita. Then he adds, referring to the Madoff scam: “Nobody knew anything about anything.”
Somehow, I think litigation and criminal investigations will eventually prove otherwise.