Monday, September 10, 2007

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?

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?

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