Cool beans. I will be out of town (opening day of deer season in NY as you undoubtedly know) but I’m excited about this and it will be the first store to lure me to Greenwich Avenue since Al Franklin’s record shop shut down. The linked-to article says a Ralph Lauren shop opens Friday next door (Apple will be in the old movie theatre, so that places Lauren in the original Richards, I guess) which does nothing for me but is sure to please someone. It also reports, amusingly enough, that we’re going to be graced by a Dooney & Bourke store opening but is silent on whether Fredric Bourke will be allowed out of prison to attend the ceremony. Regardless, it would seem that Greenwich Avenue is coming back from the lackluster state of affairs it’s been suffering. There are still twenty vacant stores left to rent out, but Apple is going to bring a lot of new foot traffic, I think.
Daily Archives: November 18, 2009
California and New York have budget deficits? Bo hoo. If they’d merely increased their spending to population growth and inflation, they’d have huge surpluses. I pointed out the same thing about our own fair state of Connecticut awhile ago: we’ve quadrupled state spending in twenty years in inflation-adjusted dollars while our population has remained constant. Have the needs of our citizens really grown 4X greater than in 1989? So that every dollar budgeted to be spent by our native Democrats is essential and cannot be cut? By one dollar? I think not; Hartford disagrees but then, it’s Fairfield County taxpayers’ money they’re spending, not their own.
Here’s part of Stossel’s column:
It’s not that taxes don’t anger me. They do. But I’m more angry about the arrogance of the ruling class. It reminds me of Walter Williams’ riff: “Politicians are worse than thieves. At least when thieves take your money, they don’t expect you to thank them for it.”
Taxes, even counting hidden taxes, are not the real measure of what the thieves take. The true burden of government, the late Milton Friedman said, is the spending level. Taxation is just one way government gets money. The other ways — borrowing and inflation — are equally burdens on the people. (State governments can’t inflate, but they sure can borrow.)
O’Reilly told me that America is ready for a tax revolt. I hope he’s right. But I don’t think it will happen until more people see the ruling elite for what it is: a gang of arrogant bullies that has the audacity to believe that they know how to direct our lives better than we do.
That’s why, bad as the taxes are, I’m more upset about ObamaCare, Medicare, the “stimulus,” the auto bailout, the bank bailouts, the Fannie/Freddie bailouts, the trillions in guarantees, and on and on.
The politicians’ spending schemes represent presumptuous interference in our lives. They are an assault on our autonomy.
A coming “hurricane” of loan defaults, says this guy. Makes sense to me.
NEW YORK (Reuters) – Sooner or later, office buildings and other commercial real estate financed during the credit bubble will generate hurricane-scale losses for banks.
Banks in recent years have been hammered by losses on home mortgages, buyouts and corporate defaults. Now, lenders face big losses from loans backed by commercial real estate, where a stagnant economy will eventually take its toll, financial services executives told the Reuters Global Finance Summit.
“The commercial real estate business still has not been marked down. It’s not been marked to market,” Cantor Fitzgerald LP Chief Executive Howard Lutnick said. “The economy can’t, in my opinion, grow fast enough that the tenants are going to go out and start hiring and growing and building and take up all these rents at $60 a foot. It’s nonsense.”
Yet banks have postponed their day of reckoning, extending loans in hopes the economy will improve and demand for space will rebound. Banks have resisted selling assets, or taking them away from underwater borrowers, in fear of setting a new and lower market price.
It is a strategy neatly summarized as “a rolling loan gathers no loss,” Lutnick quipped.
[snip] Banks do have a few things going in their favor. Chief among them is a friendly Federal Reserve, whose policy of free money lets banks reap windfall lending profits.
“The Fed has pushed interest rates down to nothing. The spreads on portfolios and securities are generating a huge amount of net interest income,” Broadpoint Gleacher Securities Group (BPSG.O: Quote,Profile, Research, Stock Buzz) Chief Executive Lee Fensterstock said at the Summit. “That will enable them to resolve some of their commercial real estate positions.”
The commercial real estate problem also pales in size next to the previous waves of mortgage, leveraged loan, credit card and other consumer loan losses.
FBR Capital Markets analyst Paul Miller, while generally negative on banks, on Wednesday played down the danger of commercial real estate losses.
Video here. The man had different political advisers then, of course. And, just a reminder, the man who chastised President Bush in 2008 for not sending more troops to Afghanistan, calling it “urgent”, now says he’s really, really close to reaching a decision on what to do with his hand-picked military advisor’s troop recommendation, given him last August. And if you need a further reminder, this same man told the nation on March 27th that he and his advisers had been carefully studying the situation in Afghanistan “from the day I took office”. Apparently, that three month study didn’t reach as far as whether to send in more troops – they forgot.
But don’t say he’s dithering – the man is being deliberative. Is it too late to re-elect Jimmy Carter?
The owners of 11 Sunshine paid $1.130 million for it in 2005, stuck in at least another $100,000 in improvements and priced it at $997,500 when they listed it for sale this year. It’s reported under contract today. These sellers won’t complain: it’s a corporate relocation, with an employer picking up the loss. We should all be so lucky.
188 Otter Rock’s owner is not nearly so fortunate. He sold the place for $4.4 million today, which is nice, but that must be a disappointment after starting at $6.750 2 1/2 years ago in 2007. There are a lot of houses out there that came on grossly over-priced and missed the all-time peak of our market and are now forced to sell in a dead one. If you’ve wondered what harm overpricing can do, here’s an example.
88 Richmond Hill has sold for $4.725, down quite a bit from its 2007 ask of $6.950 and not a heck of lot more than the $4.5 offered a year-and-a-half ago by someone I know. But that buyer was too far ahead of the curve.
Someone who is right on the curve is the buyer of 289 Round Hill Road, which asked $7.6 million in 2005, twisted slowly on the wind for four years as it dropped to $4.680 and has now gone to contract.
BusinessInsider offers a fun look at bubbles throughout history, starting with the 1635 tulip mania. My father gave me Mackay’s “Popular Delusions and the Madness of Crowds” to read when I was a wee lad, thus forever spoiling my until-then unbounded faith in human reason, so none of these are new – but a nice stroll through the tulips, so to speak.
Tommy Hilfiger’s place just sold for $20 million. That’s down from its February 2008 price of $28 million but still a significant chunk of change. Two observations come to mind:
Rene Gallagher, principal of Round Hill Partners, came up with the buyer. Next time you’re told that only a large, “international” firm has the means to bring in the proper customer for your house, you might reflect on this. The few remaining independent firms in town: Round Hill, Cleveland Duble & Arnold, Shore & Country, Fudrucker & Fontanski Discount Realty, all have some whales in their customer base (okay, maybe Frankie and I don’t, but the rest of them do) and they sell a ton of real estate. You might get better attention from them, too.
Second point: Hilfiger paid $18 million for this in November, 2005, which I suppose meant it missed the November 1 grand list date, or something. Either way, his assessment since then has been just $7,634,000. I’m delighted to have subsidized the guy for the past four years, but I look forward to this place assuming its proper position atop the tax rolls.
Obama on the Rag Head: we’re bringing the guy back here so we can try him, find him guilty and fry his fat ass; that way the whole world will see the majesty of the American justice system that presumes every defendant to be innocent and guarantees everyone a fair trial.
He keeps this up, I may lose my respect for Harvard Law graduates.
My liberal friends trot down to Cuba (not Guantanamo Bay, though) and come back with glorious tales of the happy, joyous peasants who are basking in a socialist paradise. So this report from Human Rights Watch that Raul Castro is every bit as repressive as his blood drenched older brother will either come as a disappointment or, much more likely, be ignored.
The New York Times offers this insight:
The assessment came at a critical [embarrassing? awkward?] moment, as President Barack Obama says he wants to “recast” ties with Cuba and Congress is considering lifting a ban on U.S. travel to the Communist-run island 90 miles from Florida.
Don Heller put his house at 45 Peasant Lane up for sale in the spring priced at (cough-cough) $4.795 million. That was pretty steep for a back lot, older home in need of some serious renovation and there were no takers. He dropped it to $3.495 last month and today it’s reported as pending. Assessment’s around $2.7 so anything above that is gravy – just in time for Thanksgiving!
Not much real estate activity these days, nor do I expect to see much until well past Christmas (that said, there are plenty of buyers out looking – they just don’t seem to be in a rush to commit). Today we have one sale: 63 Lancer Road, one of those built-on-a-slab houses that went up in the early 60’s on the farm across from North Mianus School, $874,000 on an ask of $1.125, and one contract, 9 Roosevelt Avenue in Old Greenwich.
Roosevelt offers yet another example of overpricing gaining a seller nothing. It was originally listed for $1.850 million, a ridiculous sum, and went exactly nowhere for a year. The next agent to take it on reduced it to $1.315 which was still too high but it attracted at least one offer, from my clients. That was rejected as too low and so the house stayed unsold. In October agent number three came on the scene and wrangled a price reduction to $1.195, very close to my clients’ offer of last spring. We bid again. lost it to whoever is buying it now, and we’re happy – found a better house, and they’re happy, so there you have it.
Assessment on the house is $1.027, so $1.2 was not a crazy asking price. $1.850 however, was, and that’s not my opinion, it’s the market’s.
It wasn’t long ago (earlier this year) that arguing against the minimum wage was met with the charge that one was a heartless bastard who wanted the poor to suffer. The suggestion that a high minimum wage meant that the unskilled would be priced out of any job whatsoever was rejected: “Better no job than an under-paid one”, was the philosophy. Well, that’s what we have. Who’s the heartless bastard now?
Teenage employment has fallen sharply since July. The most recent minimum wage hike may be an important factor.
Many economists expect the minimum wage, if it has any effect, to (among other things) raise employer costs and therefore reduce employment, especially among those who are likely to work in minimum-wage jobs, like teenagers and restaurant workers.
In July 2007, the federal minimum hourly wage was increased for the first time in 10 years, from $5.15 to $5.85. It was increased again a year later to $6.55, and increased yet again this July to $7.25.
Because the minimum-wage law still permits employers to pay more than the minimum, economists agree that a low minimum wage has smaller effects than a high minimum wage. The inflation-adjusted federal minimum wage had gotten to its lowest in decades by early 2007, so the July 2007 increase should have had the smallest effects of the three.
The July 2009 increase should have the largest effect, because the combination of the two previous hikes and some deflation ($6.55 bought more in June 2009 than it did the previous summer) had already gotten the inflation-adjusted minimum wage relatively high.
A seasonally adjusted index of the number of
16- to 19-year-olds with jobs, with July 2009 as the benchmark. That group is especially likely to be affected by minimum-wage legislation.
The chart below shows a seasonally adjusted index of the number of
16- to 19-year-olds with jobs. That group is especially likely to be affected by minimum-wage legislation. Of course, this is a recession period in which employment has been falling for essentially all groups, so for reference the teenage percentage has been converted to an index by dividing by the percentage for all people, with July 2009 set as the benchmark (i.e., the teenage employment rate that month has been set to 100).
NYT: Carbon-offset seller cancels flight program as useless. No s***, Sherlock.
But last month Responsible Travel canceled the program, saying that while it might help travelers feel virtuous, it was not helping to reduce global emissions. In fact, company officials said, it might even encourage some people to travel or consume more.
“The carbon offset has become this magic pill, a kind of get-out-of-jail-free card,” Justin Francis, the managing director of Responsible Travel, one of the world’s largest green travel companies to embrace environmental sustainability, said in an interview. “It’s seductive to the consumer who says, ‘It’s $4 and I’m carbon-neutral, so I can fly all I want.’ ”
Offsets, he argues, are distracting people from making more significant behavioral changes, like flying less.
Too much debt could sink us deeper into recession, He figured that out all by himself, the brainy fellow. Solution? Tax the middle class, which he has no doubt also figured out but will disclose only after next year’s elections.
Al, “The Debate is Over” Gore was on TV the other night touting, among other things, geothermal energy. “The interior of the earth is hot: millions of degrees.” Wow, no wonder the guy is steamed about global warming – we’re burning up!
You suppose he’s got any other loony ideas in that Harvard-addled noodle of his?
In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care’s dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value.
Worse, currently proposed federal legislation would undermine any potential for real innovation in insurance and the provision of care. It would do so by overregulating the health-care system in the service of special interests such as insurance companies, hospitals, professional organizations and pharmaceutical companies, rather than the patients who should be our primary concern.
In effect, while the legislation would enhance access to insurance, the trade-off would be an accelerated crisis of health-care costs and perpetuation of the current dysfunctional system—now with many more participants. This will make an eventual solution even more difficult. Ultimately, our capacity to innovate and develop new therapies would suffer most of all.
There are important lessons to be learned from recent experience with reform in Massachusetts. Here, insurance mandates similar to those proposed in the federal legislation succeeded in expanding coverage but—despite initial predictions—increased total spending.
A “Special Commission on the Health Care Payment System” recently declared that the Massachusetts health-care payment system must be changed over the next five years, most likely to one involving “capitated” payments instead of the traditional fee-for-service system. Capitation means that newly created organizations of physicians and other health-care providers will be given limited dollars per patient for all of their care, allowing for shared savings if spending is below the targets. Unfortunately, the details of this massive change—necessitated by skyrocketing costs and a desire to improve quality—are completely unspecified by the commission, although a new Massachusetts state bureaucracy clearly will be required.
Yet it’s entirely unclear how such unspecified changes would impact physician practices and compensation, hospital organizations and their capacity to invest, and the ability of patients to receive the kind and quality of care they desire. Similar challenges would eventually confront the entire country on a more explosive scale if the current legislation becomes law.
Selling an uncertain and potentially unwelcome outcome such as this to the public would be a challenging task. It is easier to assert, confidently but disingenuously, that decreased costs and enhanced quality would result from the current legislation.
So the majority of our representatives may congratulate themselves on reducing the number of uninsured, while quietly understanding this can only be the first step of a multiyear process to more drastically change the organization and funding of health care in America. I have met many people for whom this strategy is conscious and explicit.
We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.