Daily Archives: April 11, 2009

Social Security going bankrupt

Well it’s not as though everyone hasn’t known this was coming but until now, the day of reckoning was always estimated to be at least a few decades away and therefore completely off politicians’ radar. Now insolvency seems to have arrived early. Henry Bloget spells out the consequences for those who have ignored all this until now:

This, of course, will have implications far beyond the Social Security system.

The Social Security “trust fund,” you’ll recall, isn’t a trust fund at all.  It’s just another source of annual government financing and a future liability.  Today’s receipts are used to pay current payments to retirees and, in the case of a surplus, whatever else the government is spending money on.  As the Social Security surplus shrinks, therefore, the government loses a source of funding.  If it wants to keep spending at its planned rate, it therefore has to borrow the difference.

When Social Security goes into deficit, meanwhile, the government will have to borrow even more money to pay current SS recipients.  Chris Martenson:

From a budget-busting perspective, last year where the US government had a $73 billion Social Security surplus to spend, this year it will be a paltry $16 billion and next year it will be a number indistinguishable from zero. It is hard to overstate the importance of this shift.

This means several things. Instead of $703 billion coming in over the next 10 years, the current (overly optimistic) projection calls for only $83 billion. This means at least another $620 billion in fresh borrowing will have to occur.

More importantly, this means that the United States eventual date with bankruptcy has been moved forward by about 8 years or so. It also means that instead of being some future problem, a few administrations down the road, it is a near certainty that the current administration will have to confront some very difficult funding decisions that will be forced by the inability to borrow enough to pay for everything.


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Why isn’t Cathy Fuld helping out, now that Dick’s working again?

From the best bridge playing realtor in Minnesota, Peg, comes this link to a NYT story detailing the woes of Palm Beach retailers in Bernie’s aftermath.

LONG before the number was redolent of bailouts and bank failure, David Neff decided that Trillion was the perfect name for his clothing store here on Worth Avenue, this town’s boulevard of luxe retail.

The idea was to brace customers for the you’ve-got-to-be-joking price tags — $6,800 for a sport jacket, $800 for a button-down shirt — and to convey unparalleled opulence.

“We wanted people to know that this is a lot,” Mr. Neff says, gesturing to the clothing, “and we didn’t want anyone to open next door with a store that sounded like it might be more.”

Until last year, this idea actually seemed reasonable.

Then the meltdown vaporized the portfolios of multimillionaires here and, soon after, a beloved Wall Street wizard and Palm Beach homeowner named Bernie Madoff was unmasked as a fraud.

For years, Mr. Madoff’s elusive genius act beguiled his Jewish neighbors, as well as friends of those neighbors, and so on, and so on, until vast chunks of local money were hoovered into his Ponzi scheme. Life savings, dreams, and countless inheritances, gone.

“A guy stood right there and cried,” says Mr. Neff, pointing at a table covered with $800 cashmere cable knit sweaters. “And he told me he’d lost it all, his wife lost it all, his daughter lost it all. He said to me, ‘I had everything with Bernie.’ ”

A lot of regular customers haven’t been seen in Trillion since Hurricane Madoff struck in December — including, of course, the hurricane himself.

The last time he was here, he fell for a $2,000 pair of worsted spun cashmere pants, which Trillion didn’t have in his size, and had to be ordered from Italy.

After the slacks arrived, but before Mr. Madoff could come by for a fitting, he was arrested.

“I remember I heard about the arrest and I went directly to the store to charge those pants on his credit card,” recalls Mr. Neff, a fit, gray-haired man in perpetual motion. “But the card had already been canceled.”

One familiar note: realtors in Palm Beach can be counted on for the same soothing calm reassurance that most Greenwich agents engage in. “Fifty cents on the dollar? Not in Palm Beach – hah!”. Ha ha ha.


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$275 a foot for new construction

Peter the Reader sends this news:

The lakeside chateau in New Canaan that failed to sell by auction a few months ago–and posted a couple of items about– seems to have sold for $5.5M. That’s a 20,000 square foot main house with a lake, separate staff house and over six acres of property in a prime estate area. If it was an arms length transaction, it means that the buyer paid zero for the land and only $275 per square foot for the structure. No way you can reproduce the structure for $275 psf. What does that tell us about high end real estate in Fairfield County?

Before you angry home sellers call my manager to complain that I’m now ruining the New Canaan market, too, remember that, when I wrote about the place, I said I liked it!


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How much is that dog in the window?

Depends on the type of dog, I suppose, so no help here. But if you’re interested in how much the window itself will set you back, I found this chart of the costs of installing doors, windows, siding, brick fireplaces here. Looks interesting.

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Why not send Dodd and Frank on a fact finding tour of the Philippines?

Repentant sinners crucified in our former colony.

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Les Miserables, Greenwich version


He went thata way!

He went thata way!

I see in the police blotter that a James D. Allen, 48, of 19 Farley Street was arrested for attempting to steal frozen lobster tails from Whole Foods Market. No loaf of stale bread for this modern Jean Valjean, but what would you expect in Greenwich? I could be mistaken, but this is probably the same “Jimmy Allen” who lived in reader Cobra’s house on Gilliam Lane (after Cobra moved out, of course). The kid was a pestilent creature, breaking and entering into everyone’s house and generally keeping the police blotter filled until he finally moved out of town. Our hope that that was a permanent move was apparently fruitless. My favorite Jimmy story concerns the time he trekked from his house, through our back yard and into the French’s on Club Road. He worked his magic there and went home with his loot but because he performed this burglary during a snowstorm, even Greenwich police were able to solve the crime by following his tracks in reverse (the sight of a blue coat walking backwards in the snow was quite droll). Someone made “Officer of the Month” for that accomplishment, you bet.


But to all you conservatives out there who deny that a child’s environment affects his later accomplishments in life, notice that the guy stole lobster not ground beef (the cops must have missed the tub of hollandaise tucked in his underwear). If that doesn’t speak to a Greenwich upbringing, I don’t know what does.


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Greenwich tea party!

I’m delighted to learn that there is a taxpayer’s protest scheduled for Greenwich at Town Hall Wednesday from 3 – 5 PM. For those who don’t know, this will be part of a national demonstration against grasping politicians and their insane idea that they can generate wealth by taking from one group and redistributing it to politically-favored recipients. Be there or be square. Tax day, natch.


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When squirrels attack


Got a PB & J?

Got a PB & J?

From the Norwich (CT) Remainder:



Both my sons have extremely life-threatening peanut allergies, and we try to keep our home and of course our yard safe for them to play in. Recently, squirrels have been bringing in peanuts from other people’s feeders and burying them in our yard – a huge health and safety issue for us! Thank goodness I have been finding them before our 4-and 2- year-olds do! Please, please feed the squirrels birdseed, sunflowers, grapes – anything but peanuts!


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Mongo just pawn in great game of life, but …

What’s so difficult about this? Pirates are seizing our ships and killing and capturing our seamen. We know where they’re based and we know, because Stephen Decator showed us how to do it in 1805 or so, that destroying those bases ends piracy. Boom – end of problem. The thugs holding that brave Vermonter? They’re in a life boat with him, in the middle of the ocean. They might be open to reason if they had nowhere to return to and no one to ask for help. Let’s try it and see.

UPDATE: Christian Science Monitor has a round up of similar opinions.


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Banks, regulators and toxic write offs

According to the Times, banks and their regulators are squabbling over how soon to write off bad mortgages. The fight (or the article about it, at any rate) is mostly over evading pay caps for bank executives, which probably tells you something about who’s still running our banks, but when they get around to real issues, the feds want bad loans written down now and the banks, to protect their books, are resisting. To the extent the barks prevail on this issue, I think we will see the housing recovery delayed, and here’s why:

I’m working with a number of buyers, all solvent all ready to buy but all unwilling to pay current asking prices (smart move). I’ve reviewed almost every spec house out there and haven’t found one that I thought would eventually sell for anything close to its asking price. I could be wrong – the builders and their agents obviously think I’m nuts, but if I’m right about only half of these houses, that’s a huge amount of inventory sitting on the market with the wrong price attached. They’ll go nowhere. If the lenders on these projects declared as non-performing those that aren’t current with the loan and forced them onto the market at, say, the amount of the first mortgage and not the builder’s dream price, people would buy them. It seems the banks won’t do this voluntarily. If the regulators don’t make them take the hit now, these house will continue to sit on the market, unsold, and buyers will continue to sit on the sidelines. Better, I think, to get the houses sold and move on.

Greenwich is not the national market, I realize, but the principle applies, whether in Las vegas or Round Hill. Unsellable inventory will gradually drop in price, dragging down the prices of comparable houses, while bloating the inventory roll and, eventually, stink the place up. Remember the bunker kill in – I don’t know, 1988?- millions of dead bunkers piled up on our shorelines, rotting in the sun and putting a real damper on sales of waterfront real estate until they finally rotted away. Something like that. First Selectman Margenot refused to use bulldozers to remove the dead fish, reasoning that God put them there and God would take them away but that decision prolonged the suffering of down-wind home owners. In the present case, I think a bulldozer would be better than waiting for God to act.

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