As Congress prepares to take over our financial industry and American car manufacturers, the hubris of its members swells with each new beggar who appears before them. Here’s Barney Frank, a fellow who permitted his page-boy lover to run a prostitution business from Frank’s Georgetown apartment for years, addressing the heads of GM, Ford and Chrysler:
The CEOs of Detroit’s “Big Three” automakers spent hours testifying for lawmakers in their bid to secure $34 billion to keep their struggling companies in business.
Before setting out for home, they were chided like children.
“Please leave. Right now. Go,” Democratic Rep. Barney Frank ordered the chief executives of General Motors Corp, Ford Motor Co and Chrysler LLC when they failed to promptly exit as requested after testifying before his panel.
“You can do your socializing outside,” barked Frank, of Massachusetts who chairs the House of Representatives Financial Services Committee, as he cleared the way for other witnesses.
I have no particular sympathy for these executives – they came groveling to Washington and probably deserve the contempt Frank and his colleagues displayed, but I find it alarming to see the immense shift in power from private enterprise to Washington that’s occurring. It started long ago, of course, but this latest bit of trouble may well complete the transfer.
But maybe I should change venues and save. Saks is dumping its designer and luxury goods at 70% off.
“It’s painful,” Linda Fargo, the women’s fashion director at Bergdorf Goodman, said referring to a landscape in which carriage-trade stores are struggling not only to hold on to their profits but also their ineffable luster.
What seems inevitable is that the pain will worsen as the price reductions provoke questions among consumers of how stratospheric profits must have been when the economy was riding high. How great, really, was the surcharge to consumers for participating in fashion fantasy?
“I was in Saks last week, and there were these staggering discounts and it’s not even Jan. 1,” Tim Gunn, the “Project Runway” host and chief creative officer of Liz Claiborne, said Tuesday, before a discussion on “Redefining the Rules of Fashion in Today’s Economy,” sponsored by the textile manufacturer Dow XLA. “I was told by easily half a dozen sales associates that if I opened a Saks credit card, I’d get another 15 percent off. What I wonder is, “What are the real margins?’ ”
That question gives rise to another: once consumers become acquainted with slash-and-burn prices, how can designer fashion regain its mystique? Will shoppers ever again want to buy luxury goods at full price? The depth of the challenge was suggested by the incongruity this week of seeing Prada wallets, usually kept under glass at Saks, dumped into display stands that at Wal-Mart are known as “end-caps”; lizard handbags at Bergdorf Goodman jumbled on counters as if that Fifth Avenue landmark were an outlet of Loehmann’s; and Ralph Lauren dress shirts at Lord & Taylor thrown together and offered at prices roughly equivalent to the cost of two McDonald’s Happy Meals.
Can this happen to Greenwich real estate? God, I hope not. I would think that Greenwich will always be nicer than Queens and people will pay more for that difference. I’m not sure I could tell the difference between a Ralph Lauren Costco shirt and one sold on Greenwich Avenue for 5X more. But if the rich and/or foolish aren’t forking it over for Prada bags, what does that say about their willingness to spring for a McMansion?
Okemo and Crested Butte are sold again. This time to a REIT that’s been buying up ski resorts all over the country. It seems to me that these operations change hands every few years – remember American Skiing? – and each new owner claims to see a new way to turn the areas into 4-season resorts with year-round cash flow. Do they make out like bandits and flip it to the next guy or do they go bust and find another sucker? I have no idea but I’ll bet some of you high finance types do. Your insight would be welcomed, just to satisfy my curiosity.
Not necessarily, according to this WSJ article. Several readers’ comments point out that if buyers use the lower rates to buy more expensive houses than they otherwise could afford then they’re just setting themselves up for the next disaster. Still, if you used the extra money to buy a less expensive house in order to build your equity, that would seem to me to be a good thing.
The firm is moving (has moved?) from its Field Point Road headquarters to what was Preferred Properties glass box on the Post Road. Too bad – those were nice digs.
And without getting into some sort of “who’s better” contest, I notice that they have an ad in today’s real estate section of the Greenwich Time boasting that their 120 agents were involved in 22% of every transaction that went down between August 1st and November 30th of this year. That’s great, and certainly better than I’ve done this fall, but the actual numbers behind those statistics aren’t all that encouraging: We saw 66 contracts in those four months, 17 condos (22% = 4) and 49 single families (22% = 11). Divided among 120 agents, it would seem that many of them had the same disappointing fall that I did. Oh well, onward and upward.
One in ten mortgages is now in foreclosure or delinquent. We’ve lost 2,000,000 jobs this year and today’s report shows 500,000 lost in November. I think I’ve been pretty confident that we were going to stop digging a deeper hole but now, I don’t know.
To bring this back to real estate, I wouldn’t panic but, if you really do have to sell your house in the near future, you might want to reconsider any offers you may have rejected in the past as too low. If any of those offers are still open, you or your agent might want to make a call.
But that’s just me at 10:30 in the morning between my fourth and fifth cup of coffee. Perhaps the fifth one will cheer me up.
Update: The Wall Street Journal reports on the same story. Nothing here reassures me.