Even accounting for the normal reporter hyperbole, this has some truth, and it will affect Greenwich real estate values

1929 Tesla

1929 Tesla

Wall Street hasn’t recovered from the crash, and probably won’t.

Ever since Lehman’s bankruptcy in September 2008 jettisoned some 26,000 employees, waves of subsequent layoffs have stripped thousands of Wall Street traders, bankers and analysts of their six- and seven-figure salaries and bonuses.

New York City lost some 28,300 securities industry jobs during the financial crisis after Lehman’s demise, according to estimates by the New York state comptroller’s office. That doesn’t include the thousands more that vanished from hedge funds and private equity shops.

Only 8,500 of those jobs have come back in the past few years, according to the comptroller’s office.

“In past recoveries, Wall Street has been a driving force. That hasn’t been the case this time around,” said Kenneth Bleiwas, deputy New York state comptroller.

What’s more telling is that members of the current crop of Wall Streeters just aren’t making the same kind of money that they were before, even if the nation’s banks are racking up record profits. The comptroller’s office said the average salary has fallen by about $40,000 since 2007.

Moreover, bonuses have declined sharply. In 2006, the average Wall Street bonus was $191,360, according to the comptroller’s office. Last year, it was $121,890.

“Five years ago, you almost had unlimited horizon of opportunity, of what you could create or how much you could make,” said Greg Gentile, who was a Lehman credit trader and played guitar at the blues lounge. “That’s been severely limited and capped by regulation and by just a massive decrease in the risk appetite of the institutions.”

One 40-something stock trader who has bounced around major Wall Street investment houses complained of a “morose” mood in his line of work. Bonuses these days are often deferred, tethering traders to their firms longer than they wish.

A former Lehman trader at the Times Square concert summed up the zeitgeist more bluntly.

“Everybody is miserable,” said the trader, who like many still working on Wall Street declined to be quoted by name because his firm prohibits employees from speaking to reporters. “Everybody’s leaving who can, or they’re being squeezed out.”

I sold a $4 million house last year to a banker who told me, “I could buy a $9 million house (and he could have), but I want to be financially conservative”.  Naturally I thanked God for sending me a  client who viewed the purchase of a $4 million house as being “financially conservative”, but the fact is, that was one less sale of a $9 million house. I also have had clients who either deferred purchases or dropped their price ceiling by as much as $1 million when they found out how much of their bonus was going to be deferred: 90% in some cases. I suspect that sort of thing is happening all across the market.

15 Comments

Filed under Buying/Selling Greenwich Real Estate, pricing

15 responses to “Even accounting for the normal reporter hyperbole, this has some truth, and it will affect Greenwich real estate values

  1. Balzac

    Obama’s stated policy is to reduce the power and earnings of the financial sector. Do you imply Chris that we shouldn’t be overjoyed when his policy achieves its goals?

    • AJ

      Surely you jest, Balzac. As surely you know that Obama does the exact opposite of anything stated — it’s all subterfuge. What is happening in the financial industry is similar to what happened in the health industry. Yeah, the doctors got screwed and so did patients, but Big Pharma and the Insurance Giants make out like bandits. Just ask yourself, does unlimited quantitative easing seem like the way to reduce the power and earnings of the financial sector?

      This may be an old article but it still points out what is pretty much going on:

      ‘A Banana Republic With No Bananas’

      “Experts on third world banana republics from the IMF and the Federal Reserve have said the U.S. has become a third world banana republic (and see this and this).

      Are they right?

      Well, let’s look at Wikipedia’s description of the four factors which make a country a banana republic.

      Profits Privatized and Debts Socialized

      The first feature of a banana republic as “A collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts socialized.” …”

      http://www.washingtonsblog.com/2010/04/banana-republic-with-no-bananas.html

      And from a more recent article:

      ‘Cyprus-Style Wealth Confiscation Is Now Starting To Happen All Over The Globe’

      “Now that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world. As you will read about below, private pension funds were just raided by the government in Poland, and a “bail-in” is being organized for one of the largest banks in Italy. Unfortunately, this is just the beginning. The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe. It is only a matter of time before we see this exact same type of thing happen in the United States as well. From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish. ….”

      http://theeconomiccollapseblog.com/archives/cyprus-style-wealth-confiscation-is-now-happening-all-over-the-globe

  2. Anonymous

    I am not a cheerleader for higher real estate valuations but the phenomenon you describe on Wall Street has been going on since 2010, if not 2008.

    Lower bonuses are not new news, that is why we are only starting to see a recovery in the high end market now, some 5 years after the initial crash.

    This recovery has of course been helped by record low interest rates, and bankers receiving cash today for bonuses that were originally deferred 3 years ago. BTW for many of the survivors on Wall Street, bonuses are likely to be higher this year than in the last 2 years.

  3. Anonymous

    Oh, heavens to mergetroid, bankers are “settling” for $4 million houses. What is this world coming to? These guys are whining about lower than expected bonuses? They’re lucky they’re not folding laundry in Allentown, the bastids. Talk about moochers! We bailed their sorry asses out and now we’re supposed to feel sorry for them? Cry me a river!

    • Schadenfreud is fine, I just hope you are willing to accept 75% of what you once could have sold your home for. That will be a true demonstration of your chops as a man of the people.
      (By the way, my client wasn’t whining; he and I were discussing our mutual pessimistic long term view of the world economy, and he was explaining why he was pulling back from putting a large percentage of his wealth into Greenwich real estate. It could happen to you.)

  4. Dollar Bill

    Your client may not have been whining, but the “morose” traders in the linked article sure are. What a bunch of crybabies! These blubbermouths are beginning to sound an awful lot like the AIG head who said that denying bonuses to rich white guys is like what lynching is to blacks..

    http://talkingpointsmemo.com/livewire/aig-exec-public-outrage-over-bonuses-just-as-bad-as-lynchings-in-the-south

    Why, it seems as if our Masters of the Universe doing “God’s work” on Wall Street have had their fee-fees hurt by the public uproar over their thievery. Not that it matters one whit to CF, and his fellow parasites who feed off this thievery. Why can’t Americans understand how “productive” these bailed-out bankers are? Aren’t these guys the real “job creators” so worshipped in Rand-world? Surely CF thinks so.

    • “Not that it matters one whit to CF, and his fellow parasites who feed off this thievery”
      As do the illegal Mexican masons you profess to love so much, nannies, gardeners, plumbers, shop keepers, accountants, lawyers, and anyone who uses Greenwich taxpayer-funded services. Kill them all! Woe unto all who profit from Gomorrah!

      Bill: you’re the face of local Greenwich Democrats – do your masters know that you’re outside your room and making them look like asinine Brunswick communists? Francis? You there?

    • AJ

      Democrat Boy, foam away, but the ball’s been in your court since 2008. So why is too big to fail now even bigger, way too big to fail? And why, when the opportunity to actually do something about it, did Dear Leader, Pelosi, and Reid look the other way and set out to destroy healthcare? Must have been Ayn Rand scrambled their brains?

  5. Love the ongoing banker hostility and judgment. Contrary to what the media will have you believe, there are many, many people in the financial services industry who are neither thieves, nor were their companies “bailed out.” Many of these people are smart, hardworking, honest folks who went to school, did well, chose a profession not because they are “greedy bastards,” but because maybe they like economics or math or statistics. But god forbid if someone doesn’t want to major in environmental science, or work for Teach for America because those aren’t their interests or strengths. They must be really selfish.

  6. Dollar Bill

    Remember this? An AIG guy was clutching his pearls that he would possibly have to give back his bonus…

    http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=all&_r=1&

    Oh, the humanity! How will Greenwich possibly survive without kowtowing to the sainted “job creators” whose fortunes are built on a casino mentality, one of course which is based on wrecking the economy, and knowing they’ll get bailed out by the taxpayers Heads I win, tails you lose. Sounds like socialism for the rich, capitalism for the poor. What would Ayn baby have to say about that? I know what CF would say: Ayn would approve! Look over there at those food stamp moochers! And those unions! And we wonder why the Tea Party is so reviled!?

    • “the sainted job creators whose fortunes are built on a casino mentality”

      Have you approved this comment with your Democrat boss, Kaptain Keno? God DB, you’re just outdoing yourself today, embarrassing your masters with every posting. How long do you think your party will tolerate being publicly associated with you?

      Speaking for myself, I hope their tolerance holds for a long, long time.

  7. AJ and $ Bill both seem a bit obsessed with Ayn Rand…..

    Meanwhile the government grows and grows, and the entitlement mess….well, Obama is passing that buck to the Republicans after 2016.

    Adult supervision will have to wait until then.

  8. The New Normal

    don’t hate the playaz, hate the game