The other day, I heard Mark Haines, doing his Squawk on the Street opening line: "...from New York City, the financial Capital of the Woorrrld"...and I pondered..."is that really a good thing?"
New York politicos and economic types have been promoting the idea of a resilient NewYork. For years, I have made it clear to anyone I know investing or living in New York...that job losses for city will not be the fictitious 50,000 or 60,000 they have tried to pawn off as real but more like 700,000 to 900,000. We have to remember that New York has been and still is one of the most over priced areas in the country to live and work. Therefore, people will put up with those consequences when they are, appropriately enough, paid very well. When the "paid very well" part goes away lots of things change. People stop buying couture clothes, buying 5 cups of Starbucks coffee a day, going out to dinner regularly, hiring a nanny, renovating their over priced condos, taking vacations to the Hamptons and paying a lot to live in an area where they are not paid a lot. Forget, the impacts of laying off that bean counter or banking executive...simply cut their bonus or base pay and the related job losses will be huge. The effect cascades to real-estate and property rentals and nearly every other business. I am quite sure that the banking/finance industry is still over staffed - at least by 25% probably more. Recognize that the pay scenario follows the path of:
- Cut bonus and freeze base pay
- Try to retain talent risked by cutting of bonus/freezing base - increase bonus
- Next Cut bonus again and lower base pay
- Finally the lay off
We do not need more bean counters, we do not need more bureaucracy, we do not need more starbucks, credit cards, taxes, brokerages, developers, real estate agents, strip malls, shopping centers, government agencies, bailouts, banks or regulations. And we definitely do not need more bankers!
If you look at the numbers, the average american spends a significant amount of time and resources every year dealing with filling out government related forms and complying with trivial or unecessary regulations that specifically designed to create and transmit no useful value and contribute no useful capability or potential. The subversive mechanisms that the government uses to continue to steal value from value creators and transmit that value to value debasers results in a continuing increase in the amount of potential that is wasted. Once that potential is wasted it is gone.
The mechanisms are really are amazing and imaginative. Cap and Trade is just one recent example, but many other useless permits, licenses, taxes and other bureaucratic complexities, represent an increasing overall tax on americans and businesses. Those useless mechanisms then require the support of americans, who could be doing something useful, having jobs decoding useless information that transmits or creates no value...but does generate fees. These fees are ultimately paid to bankers, this is by design (and is the reason that you should read the pieces I have written about the dollar and the money system posted in the featured articles section). But the problem is, in New York City, the emblem of this problem lives and breaths. These high powered people who can supposedly afford to live beyond the capabilities and means of almost all other americans - mostly have jobs that involve no creation of value and no transmission of value. Many finance related jobs are actually fairly closely aligned with the theft of value. Those jobs should be and will be gone. Hopefully, most of the fraud will be gone with them. But the results for New York City will be many, many more job losses in finance, and then for every 1 job lost in finance, four jobs lost in the common sectors. New York is very vulnerable. And the articles below are just the beginning of the story...and I for one do not believe that there are any positive underpinnings that are effecting NYC's real estate market dynamics. Its going to get much worse from here.
Manhattan apartment leasing down 59% in year
Rising unemployment and an increase in purchases by first-time home buyers have combined to diminish the number of new apartment leases signed in the third quarter to levels 58.9% below those of a year earlier, according to the latest Manhattan rental market report, released Thursday.
During the quarter, there were 2,549 rentals, according to Prudential Douglas Elliman and appraisal firm Miller Samuel Inc., which conducted the report.
“We saw a significant decline in rental activity from last year,” said Jonathan Miller, chief executive of Miller Samuel.
Meanwhile, the median rental price in the third quarter slipped to $2,950, down 7.7% from year-earlier levels. The drop is likely even deeper than the numbers show because more and more landlords now offer sweeteners like months of free rent and help on the security deposit, concessions that are not reflected in the rent numbers.
see full article here
Condo prices slashed 25% at big Brooklyn tower
In an aggressive effort to boost sales, the developer of the 303-unit Oro tower in downtown Brooklyn said Tuesday that it is slashing prices of its remaining unsold condominiums by as much as 25%.
To date, just 90 units have closed and 30 are in contract at the 40-story tower in the Flatbush Avenue corridor. The developer also announced that, effective two weeks ago, it has changed brokers and will be launching a new advertising campaign focused on the price reductions and the units' value as opposed to luxury. Rose Associates, which traditionally handles the marketing and management of rentals in Manhattan, has taken over sales at the Oro from Prudential Douglas Elliman.
“The pricing will drive sales,” said Matthew Faris, vice president of Greenfield Partners, the Oro's developer. “Right now it's good to have a cohesive sales and managing team. Buyers need a lot more handholding.”
Prices on units ranging from studios to three bedroom units are being cut by 15% or more. For instance, studios are now being sold for as little as $295,000 and three bedrooms for as little as just over $1 million.
see full article here
Whose gonna buy the cookies? Whose gonna make them?
Stella D'oro closes its longtime Bronx factory
Union, owner couldn't settle labor strife. Jobs will move to Ohio. Here's how this cookie crumbled.
After nearly 80 years in the Bronx, the Stella D'oro cookie factory closed Thursday, victim to a labor dispute that dragged on for more than a year.
The closure puts 136 workers out of work at a time when the city's unemployment rate has skyrocketed to 10.3%, a 16-year high.
The workers had been on strike for nearly a year when a judge ruled in June that the company had violated labor law and ordered the workers reinstated with back-pay to May 6. They returned to their jobs in July, but on the same day, Stella D'oro announced plans to shut the factory, arguing the union had failed to make any meaningful concessions that would stop the company from losing money.
Then in September, Brynwood Partners, the private equity firm that bought Stella D'oro from Kraft Foods in 2006, announced it had sold the company to North Carolina-based Lance Inc., which plans to move the operations to Ashland, Ohio.
A spokeswoman for Stella D'oro would not comment beyond confirming the closing. She referred to a statement the company put out last week that blamed the workers for the dispute.
“The union's strategy was to give no ground on wages and benefits, even if that meant the company would be forced to sell the business and shut its doors in the Bronx,” the statement read. “The union got precisely what it knew it would get with its strategy.”
Louie Nikolaidis, a lawyer for the union, said bargaining over the effects of the closure ended Wednesday, without any resolution. “We didn’t agree on anything,” he said. Mr. Nikolaidis contends the company still owes the workers and their union between $15 and $17 million, covering severance pay, back pay, vacation and sick pay, and money owed to the union health and pension funds. “We’ll stay on top of them and make sure they pay it,” he said.
see full article here
