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?
Daily Archives: March 24, 2009
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.”
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.”
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 ….
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,
Not 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.
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.
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.