Daily Archives: March 24, 2009

Whew, he did it! 2 months in office and the Messiah has ended the war on terror!

Henceforth, it will now be referred to as “Overseas Contingency Operations”. I bet you think I’m kidding, don’t you? Click on the link and the Washington Post will prove you wrong. Next up, the war on poverty will be renamed, Domestic Revenue Enhancement Opportunities and that will be the end of that. Anything else you want solved, now that Bush is gone?


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At least pitchers know when it’s over

Bloomberg: Financial jobs disappearing, never to return.

Michael Migliaccio, a mortgage trader who worked for 11 years at RBS Greenwich Capital Markets Inc., a subsidiary of Edinburgh-based Royal Bank of Scotland Group Plc, was fired in December along with seven others on his trading desk, he says. He’s painting the inside of his house in Greenwich, Connecticut, saving the $3,000 his wife planned to spend on the job, and is worried about paying for his two teenagers’ college education.

Migliaccio, 44, has sent out his resume and attended a couple of networking sessions. No luck. “With so many people out of work, you don’t even get the callbacks,” he says. “It’s discouraging.” …. The U.K. government is now set to own 75 percent of RBS, Migliaccio’s former employer.

The system is convulsing, says Charles Geisst, author of “Wall Street: A History” and a finance professor at Manhattan College in New York. Most of the people who have been turned out of the banks are now, en masse, going to have to find something else to do.

“The jobs are not coming back,” he says. “This time, it’s permanent.”

Transaction Bubble

The jobs have disappeared because the “transaction bubble” has burst, Geisst says.

From 2003 to ‘07, banks hustled for short-term profit through transaction-based fee businesses, including packaging mortgages into debt securities and selling them to investors. The banks built up departments such as prime brokerage, which clears trades for hedge funds. They hired thousands of people to work in those units, from bankers to back-office programmers and accountants. In London alone, industry jobs ballooned by almost 50,000 to 353,000 in 2007 from ‘02, according to the Centre for Economic and Business Research.

The job cuts began as the markets turned in mid-2007. Merrill Lynch Chief Executive Officer Stanley O’Neal and Citigroup CEO Charles Prince were ousted following writedowns on mortgage-backed securities. Since then, financial firms worldwide have shed 282,000 jobs, about 5 percent of the total industry workforce, according to Bloomberg data.


“The idea that so many people could move money around and make so many millions seemed economically unreasonable,” he says. “Moving those people on to other pursuits is going to be much better for our economy.”

Florida, author of “The Rise of the Creative Class,” says the expansion of financial services in the past decade soaked up talent from other industries.

“I see this as a recalibration,” he says. “Economic crises are a source of great innovation. It forces people to apply themselves to do more to add to productivity.”



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Our new resident

I really didn’t know who the baseball player was who bought a new house in town, notwithstanding that my colleague at Raveis, Herb Erlich, sold it and my bestest friend, Jeremy Kaye, represented him on the legal side – these guys keep quiet and I didn’t ask, out of respect for their rectitude. But commentators on this blog knew (it amazes me how, in this town, rumors about real estate are almost always true) and passed around the name CC Sabathia, who is apparently a new pitcher for that team in the Bronx – the one my Red Sox beat not so long ago. I Googled the fellow, curious to see if even Google would be stumped by such an obscure team but no, it came up with an article. Not only is he indeed a pitcher, this article says he and his wife are excited about moving to a new house in Greenwich. Unless Tom Seaver is making a comeback, this is probably the man. Welcome to town sir – do well, except against a certain team from Boston.

UPDATE: The readers know best and also know how to read an entire sports article without their eyes glazing over. The article says that “By committing to a eight-year, $180 million contract, Teixeira is in New York for the long haul. His wife, Leigh, is busily moving into a new home in Greenwich, Conn., and Teixeira said that the most important adjustments he will need to make are likely to come away from Yankee Stadium.” I said I didn’t ask Herb or Jeremy for the name and this proves it, eh? 

That ties in with the earlier reader comment that the buyer landed a $180 million contract (poor CC Sabathia is making do with a mere $161 million). So okay, first baseman, pitcher, it’s still a Yankee and I’ll still wish him well, just not too well. One plus – I now know the names of at least two Yankee players. I’m not sure what I’ll do with that knowledge but ….


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I don’t have to sell?

I was prowling through our MLS listings just for diversion and see that we have 152 single family houses that have been for sale since July 1st or longer (and more than that, actually, since many houses are dropped off and then returned to look fresh). Of that number, 71 were first listed before April 1, 2008. I selected 25 at random to see which were now asking less than they were bought for. That’s hard to tell because the MLS histories don’t always show previous sales but of those that do, we’ve got quite a few that are below water or getting close to that unhappy state. One house, for instance, sold for $1.8 million in 1995, was listed for sale at just under $4 and is now just a tad over $2. And a property on Round Hill Road, bought for $3 million in 2000 started at $4.4 and now asks $2.6.

Etc. What really caught my eye, though, are the houses that set an aggressive price to begin with and have refused to drop that price in the face of a declining market. Mostly this occurs in the high-end brackets where, presumably, it’s a matter of indifference whether they sell or not. One house, bought for $9.950 million in 2006 has been priced at $11.950 since April ’08 and never budged. That’s obstinacy. It’s surprising how many sellers are demanding a premium of at least 20% over what they paid in 2006 and aren’t moving off that price. Of course, they aren’t moving anywhere, but I do admire their stamina. In looking for houses to show buyers, though, I avoid these stalwart souls. They are signalling that they are not interested in negotiating and I’m signalling back, “okay – good luck, see ya.”

On the whole,


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Well this changes everything!

caseyismNot really, but confirmation that it was a baseball player, not a real person, who paid $6.7 million for 80 Perkins yesterday kind of removes it from the data base as evidence of anything. I mean, just as baseball’s not a real job, ballplayers aren’t paying with real money. The builder and the agents involved will spend whatever it is that they did receive just as happily, mind you, but I’d like to see a normal guy – someone earning a mere $5-$10 million a year, say, buy a spec house before I conclude that the market is back.


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Even banks don’t like admitting their mistakes

10 Spezzano Drive

10 Spezzano Drive

This bank-owned property might have sold, back when it was new to the market a year or so ago, for perhaps $1.675 – that was the price I suggested, anyway, and advice which was ignored. It didn’t sell at the $2 million + price its builder placed on it and now it belongs to the lender. That institution has had it on for $1.899, which I assume is the amount it loaned – oops! – and today whacked a full $24,000 off its price. I’ve suggested this to homeowners before, but always thought banks were sophisticated enough to know it already: if someone won’t bid at almost $2 million, it’s not a measly $24,000 that’s keeping his wallet in his pocket. Go big or stay home or, in this case, keep the home.


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Price History

74 Lower Cross

74 Lower Cross

This house on Lower Cross has an interesting history. It sold for $6.747 million in August, 2003, and was relisted in February ’04 for $6.995. It didn’t sell until May, 2005, when it traded for just $5.225 million. It’s been back up for sale since last year, first at $6.995 and, as of today, $6.495. I do wonder where it ends up.

46 Terrace Avenue in Riverside sold for $1.995 million in August 2007 and the buyer recognized what had happened to the market by the time he listed it for resale this January and priced it at $1.825. Today he’s knocked it down to $1.650.

Comments Off on Price History

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The Greenwich Listing Book

I gave up my subscription to the printed version of our listings which came out twice a month. The board made it optional to subscribe and the price, divided among the few of us who still wanted it, became too steep. But our office still receives one and today the new one arrived in its new format of two, rather than one listing per page.

What’s worth mentioning about all this is that, despite putting two listings on each page, the damn thing is as thick as the Manhattan telephone directory (or would be, if they still printed that – do they?). That’s an eloquent statement on the size of our current inventory.


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Good news

Bond traders fleeing wreckage of Wall Street banks and starting new trading firms

Smaller firms are emerging from the wreckage of the world’s largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They’re luring traders with a shot at $500,000 commissions for two days’ work as banks that accepted federal bailouts retrench and slash bonuses.

“I don’t mean to dance on anybody’s graves here, but it’s just this incredible opportunity to reassemble a securities firm that does business the right way,” said Lee Fensterstock, chief executive officer of one of the firms, Broadpoint Securities Group Inc. in New York. “That business is going to lead with brain as opposed to capital. We’re not planning to run big balance sheets or big leveraged positions.”

Broadpoint, whose shares have outperformed Citigroup Inc.’s by almost 51 percentage points this year, has added more than 240 people since September 2007. They include traders from Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co., which either collapsed or were absorbed by bigger banks amid the worst financial crisis since the Great Depression. Cantor Fitzgerald LP, the closely held securities firm, has hired 100 people in the past six months from banks, including UBS and Bear Stearns.

I suppose this is bad news for big Wall Street firms who are losing talent but since they did such a bad job with what they had, who cares? Bring back the money and that will bring back buyers for your Greenwich home. More power to them, says I. And good luck.

As an aside, note the lack of remorse expressed at profiting from another’s misfortune. Agents who are so furious with bottom feeders might remember that it goes on all the time in business and real estate, despite providing a home for families, is business.


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Price drops?

5 Station Drive

5 Station Drive

This Cos Cob listing illustrates the difficulty in even attempting to calculate current values from old asking prices. Built in 1999, the owner renovated it in 2005 and tried to sell it for $1.850, eventually dropping it to $1.565 before it expired unsold near the end of the year. In 2008 he tried again, listing it at $2.2 million. he’s now dropped it all the way down to $1.479 which, compared to it’s ask of over $2 million, looks like a significant reduction – about a third, I believe. But since it didn’t sell at $1.565 in 2005, it’s a fair assumption that it wasn’t worth that then, so its new price, while decent, doesn’t really tell us anything about what’s happening to prices.

So why bring it up? Because there are hundreds of houses in inventory with similar price histories right now and, looking over all the reductions one is tempted to think that we’ve really dropped our prices. I’m not sure we have, if I look at actual sales prices, not asking prices, and compare those to the current price. Keep dropping, is, I suppose, my point.


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Fool me once, shame on you ….


Treasury announces toxic asset plan, Dow jumps 300 + points. Just days after A.I.G. workers saw their names publicized, their greed attacked and their pay extinguished, and two days after Obama pledged to extend the ban on bonuses to all TARP recipients, the treasury announced a plan that requires $500 billion from private investors to work. And the Dow soars.

This time, Obama is promising, “we won’t go after you guys. Get rich on this deal and that’ll be just fine with us.” I have spent a fair amount of electronic ink defending the smarts of Wall Street folks but their falling for this is so breathtakingly stupid that I’m forced to agree with those who’ve been saying that the Harvard MBA is now a certification of dunce hood and nothing else. Lured by the promise of quick profits, these “investors” apparently are as willing to duck under the federal buzz saw again as folks who keep investing in Venezuela. Go for it fellas, but when the next Congressman needs a soundbite for his reelection campaign and drags you all down to Washington to sweat before the cameras, don’t complain to me.

UPDATE: WSJ reports that Obama team is now toning down its criticism of Wall Street. Sure, that was then, this is now. But tomorrow?


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