Tuesday, September 23, 2008

“What, me worry?” Billionaire apartment buyers don’t fret about financial crises — as long as you give Paulsen and Bernacke $700 billion carte blanche

“…the continued depth of wealth at the very high end seems to be totally undaunted by the economic outlook,” reports Kirk Henckels. He’s executive Vice President and Director of Private Brokerage at Stribling, a Manhattan real estate brokerage firm that sells residences to — and keeps track of — people who are rich enough to be different from you and me.

In his “Mid-Year Luxury Report 2008” (the photograph at left is part of the back cover of that report and shows Henckels and his boss) Henckels talks about the still robust market for Manhattan housing in the “over $5 million” category and the people who are financially, umm, untroubled enough to buy them.

“ This group is still fast to act when a first rate piece of real estate or art comes on the market,” burbles Henckels, happily, “Witness the art sale this last June when a Monet fetched a record $80.4m and the sale of a $95m mansion in Palm Beach.”

Stay suspicious

Admittedly, all this was written some days prior to the growing crisis that has financial-gurus-turned-public-servants Henry Paulsen and Ben Bernacke offering to save the financial derrieres of the rest of us poor taxpaying slobs — provided we pony up $700 billion of our money and keep our lips zipped when it comes to questioning what they’re doing with the money, whom they’re giving it to, and how good their judgment is.

Remember, Paulsen is the same financial genius and investment banker who was saying in public, as recently as last July, that the fundamentals of the U.S. economy were strong. He didn’t know a disaster from a dingbat then. And now he’s asking us to trust him to incur the largest deficit in American history.

Why do I suspect that Paulsen and Bernacke want secrecy and freedom from Congressional oversight so they can secretly rescue the vast fortunes of people who otherwise wouldn’t be know where their next $95,000,000 mansion in Palm Beach is coming from?

But I digress. Here are some more eyebrow-raising observations from the Stribling white paper concerning the oblivious-to-it-all rich:

$7,000 per square foot
living quarters

• “…there has been a doubling of the number of sales over $20m [of cooperative apartments in Manhattan] from 6 in the first half of 2007 to 13 in the first half of 2008."

• “The highest sale was a duplex penthouse at 1060 Fifth Avenue that required work to combine the two floors and the purchaser has his own hedge fund.”

• “Also of interest is a pending sale on Fifth Avenue in the East 60s that, at $48m, translates to $7,700 per square foot.”

“You paid only $49 million
for a house?

Excellent buy, old boy!”

Townhouses, says the same Henckels-Stribling report, “enjoyed the same boost in prices as cooperatives with 5 sales over $30m, ranging to $49m this year versus last year’s top sale at 33m.”

And then he adds, “The highest sale at $49m was for the Milbank house at 14 East 67th Street, known more recently as Bob Guccione’s house. Even at this price it was arguably an excellent buy as it is very hard to find a 48 foot wide, 22,000 square foot house with full swimming pool in such a good location for $2,227 per square foot. That’s a bargain relative to the aforementioned $7,700 per square foot cooperative sale.”

Oh the poor babies! Billionaires so desperately need to have a 22,0000 square foot house in Manhattan with a swimming pool, and have such a difficult time locating one at an "affordable" $49 million bucks that John McCain, in the midst of this financial disaster we’re having, wants to give them a tax cut.

Yes, we need a bailout but —

Who knows if the economy can be saved? Banks need a bailout. But they also need to be temporarily nationalized and permanently regulated under close government scrutiny. The Paulsen-Bernacke plan boils down to “shut up, close your eyes and trust us.” That’s an outrage.

We need a bailout. But we don't need a tax cut for people who are pitiable if they're "only" paying $7,700 a square foot for a place to flop.

The rich idiots who got the banks into deep cow plop need to be dismissed the way dismissal happens to the rest of us — no golden parachutes. Give them two weeks severance pay and a security guard who escorts them to the door. And the Republican politicians who let the rich idiots run wild without regulation also need to be shown to the door by the voters.

We also need, as I’ve advocated before, an excess wealth tax. Such a tax would discourage the kind of rampant greed that’s bankrupting America. This tax would pour vast amounts of wealth back into the industrial economy where it can do the United States some good, rather than into private residences for people who simply can’t make do without a 22,000 square foot pied-a-terre, for $49,000,000, “in a good location,” of course.

Will real reform happen? I dunno. But if it doesn’t, I’ll see you on the bread line.

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