“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.

Burst housing bubble? Sorry pal, only the “little people” get their bubbles burst.

So I’m just back from Paris and what’s the first thing that greets me in the mail? Why, a report to the terribly, terribly rich from one of their New York real estate brokers, a company called Stribling. (God knows why they think a crank like me possibly could be super rich, or even merely rich. But let 'em dream.)

Entitled, “Mid-Year Luxury Report 2007 – The $5,000,000 and up Manhattan Residential Market,” Stribling's report leaves no doubt whatsoever that the roof is only crashing down on Joe Average and his pathetic adjustable rate mortgage.

Meanwhile the barely-taxed superrich with their $20 million to $1 billion-plus incomes have mega-wads of cash to burn on what Stribling is calling “trophy apartments.”

Says the Stribling report, “…there continues to be an extraordinary amount of money in this market, mostly from the beneficiaries of the hedge fund industry and other areas of Wall Street.”

Hedge fund industry? Aren’t those the guys who keep running to Congress demanding bigger tax breaks for themselves because they’re risking their clients’ money?
http://www.epi.org/content.cfm/pm120

Nah, it's not logical. Just greedy.

If you think you just detected a slight flaw in logic, you're right. The hedge fund billionaires want a huge tax break for themselves because they’re risking other peoples’ money. Well hey, if you don’t have the sheer conscience-free nerve of knife-wielding thug, it’s still almost impossible to become a billionaire in this country, the likes of Warren Buffet possibly excepted.

But back to Stribling, the real estate brokers. Stribling reports that in the first half of this year in Manhattan, there were 45 sales of apartments in the cheesy $5 to $10 million range, 18 in the $10 to $20 million range, and six that sold for $20 million and over. That’s for an apartment, dude. You know, one of them things with a living room, a little bitty kitchen for the cook to make your dinner in, a dining room, a couple of bedrooms or maybe three, and perhaps a nice view.

The highest sale so far this year has been for over $33 million dollars. Only five years ago, the highest sale was for $17 million and fewer than half as many people shelled out over $5 million for a place to hang their hats as have so far this year.

"Mortgages? We don't need
no stinking mortgages."

Remember, these are folks whose co-op buildings don’t believe in mortgages. At the very least in most top Manhattan buildings, you’ll be required to put down 50% in cash and to have liquid net worth of at least three times – and I’ve heard of buildings demanding 20 times – what the apartment cost you.

In addition, many of the buildings for the super rich are "all cash" buildings. If you have to apply for a mortgage, the building's co-op board won't let you in.

But $5 to $33 million is still just play money for folks who also have palatial estates in the Hamptons, and travel around in private jets to avoid the nastiness of having to go through airport security lines with their shoes off or have their tranquility disturbed by crying babies back there in tourist class.

It's time to tax 'em
'till they bleed

All the more reason why this nation needs more steeply graduated taxes for individuals whose incomes run in the millions, and an excess wealth tax for people with more than double-digit millions of net worth.

And if you red state readers think you’ll get any love and comfort from the super rich for letting them rob you blind in the stock market and via George Bush’s "compassionate conservative" taxation system that punishes the poor just because they're poor, I refer you to the last paragraph of the Stribling report, which says in part:

“In this global economy, Manhattan should be compared to London, not Lubbock.”

Got that, Lubbock?