National Prices Fall 18%, New York Further to Go

ooo...I have some comments but don't know if I should add to the rather New Year's contentious tone...

Well, one thing I wanted to point out what that Prodigal Son referred to "bonuses" when he really meant "commissions". Salespeople (call them what you will) in many different industries get commissions...often they will not be in companies regular bonus scheme because they already have been paid commissions throughout the year.

Just a point that jumped out at me.

Young Rob, we need to careerbuild for you...though I'm not sure if this current moment in the American financial landscape is a good time to get a new job.

I think it was BRG who told Hobokenrocks that "maybe in 1999" he might have bought a Brooklyn Heights brownstone. Um...I think she should have written "in 1989". Unless one of you internet-savvy youngsters can find more information on real estate prices, I can't remember when a brownstone in Brooklyn Heights sold for less than $1 million. Certainly not in 1999. Prices in FG were edging that way in 1999 and Prospect Heights was as well. Brooklyn Heights was well over $1 million for a brownstone by 1999.

Just my "share" for the day.

I have to wonder how much the current prices are impacted by the expected bonuses upcoming. I would imagine people are taken this into account. I certainly hope people are not so overextended to have to sell their homes/apartments just because their bonuses drop. That would really be ridiculous...but who am I? Maybe that just might happen...? Eeek!

Anyway, where is someone going to run to? Do people think they can sell in a crisis and then manage to buy another place and pocket any real profit? Buying and moving do cost something. I have a feeling the mortgage rates will be low enough that those whose bonuses are about to plummet end up refinancing.

HAPPPPY New Year, Everyone!!!

Posted by: BrooklynGreene at December 31, 2008 4:20 PM

I just have to add...if all that bonus money had not been sucked "up" the food pyramid all these years, each year more shocking than the previous one, and the money had been distributed to people (i.e. if salaries for your basic workers had kept pace and not slid backward) who would spent in on more mundane things, than maybe we wouldn't be in this huge mess.

Again, sorry for my "share" but I'm hardly the first person to point this out.

Anyway, no one will even bother reading all these comments since we're all running home by now.

Again, Happy New Year! 2009 will certainly, if anything, be very interesting. I hope we can pull it together and help those among us who are the most needy.

Posted by: BrooklynGreene at December 31, 2008 4:33 PM

Well, Benson, I'm not so sure you're taking into account the Japanese citizens save and American citizens do not.

Anyway, I was not drawing a causal line between CEO compensation and the housing bubble (though, on second thought, CEOs did, indeed, have a financial interest in creating and maintaining the bubble of course). I simply wanted to point out that if we had some equity in pay (which has slid into Gilded Age insanity it seems at this point), we might not be in "this huge mess" (read: "this huge mess, not necessarily the real estate crisis...but this whole HUGE mess."

The issue is, from what I pick up here and there mind you, is that American pay has not kept pace over the last 30 years, and with Americans reflex to spend, they and the economy would have been better served if the vast majority had had money to spend and not racked up tons of debt basically leading to a negative savings rate.

As most people can understand, giving $1000 to someone living on $1000/month will generate more economic activity and cascade through the economy (as long as that person does hand over the whole check to Wal-Mart but rather spends it locally, maybe on food, small items, at so-called Mom-n-Pop venues). If you give $1000 dollars to people who make $1000/day, yes, they may end up spending it on the mortgage or some such when all is said and done but it will likely not generate much activity. If you give the $1000 to someone who gets $10,000/day to spend, then it's relative to giving the poorer person in this scenario about $3.50 which doesn't do very much for him.

This explains why the huge tax breaks took billions out of the government coffers and did little for the little folks...in fact hurt those who have to rely heavily on government spending. As we have read, as Warren Buffet saves another $55 million in taxes (and many, many less rich, but still rich, people saw their taxes drop) and insiders rip off the government for billions in so-called war spending...and now the money being thrown at the financial companies and now the automakers (yesterday it was the airlines if I remember...), the poor have gotten poorer and the programs that were there to help them have dried up both from government cuts and not cuts in private donations. Wonderful.

In fact, because so much ended up relying on the noble classes and not on fair taxation, it has left programs that were started in the 80s due to the Reagan era cuts (food pantries and food banks, etc.) to counter that mess now struggling because they have become so absolutely reliant on private funding. By the way, we have friends who run (ran?) a well-off arts foundation that unfortunately lost a ton with Made-Off and now they’ve just had to cease their weekly panel discussions and events…all gone…kaput…their endeavor was widely known and important in their field.

Basically the Surge Up economy has left us in a horrible predicament all around. I'm glad you can point to all those wonderful things America is still good at, but frankly, if you drive around a little you can't help noticing the crumbling/rusting bridges, etc. on interstates and in NYC...the water mains breaking, the sewer main that spewed millions of gallons of yuck into Greenwich and the river (ending the oyster beds),...etc., etc., etc. Last night on Channel 13 there was good show on this.

I'm not saying that we cannot get it together, but frankly you need read up a little more. Even I, lowly victim of the NY Times and PBS with smatterings from the European press know that important infrastructure improvements in other countries has outpaced us here in the US: broadband access, high-speed trains, solar power, building technologies and standards, etc.

Look, it's New Year's Eve. So let's not get into a long discussion (i.e. don't contradict me!!! Hahahaha!!!), but the fact remains many studies show and economists with half-a brain like Paul Krugman point out the majority of Americans have used credit to replace stagnating/retrograde wages…though talking with Paul gives me the creeps a little because he doesn’t blink very much.

It's different than in Japan. Thanks for the insights, but I could relate all my stories about France too and could give you lots of examples that might "argue against" limiting executive pay and through the roof bonuses by looking at the stagnation years in France, but to be honest, despite all the years of "la crise" we heard about non-stop, middle class people kept sticking gold coins into nooks and crannies of their homes (literally!). Plus, even with a much fairer spread in salaries, France has had some pretty good years too! And, in spite of the supposedly high income tax rates (and you get more for those taxes frankly...e.g. health care), people had disposable income to sock away money and gold. Average Americans haven't been able to do this, number one, and number two, the percentage of those living in poverty has steadily grown in the US.

The number of people living at or below poverty in NYC would, together, make their own city that would be the 5th largest in the US! Think of that for a new year's minute. Kind of hair-raising. Is this the same in Tokyo or Paris...? I'm not sure...

Posted by: BrooklynGreene at December 31, 2008 6:13 PM

And chicken,
Most people simply build their portfolios. I'm not so sure how huge so-called "luxury" is. Maybe it is a huge chunk of the economy and an illustration of the "mess we're in"...sorry "the huge mess we're in"...

It seems to me that many of the people who partake in "the lifestyle" are either young and feeling flush before they "settle down" or the ultra-wealthy" who can't spend it fast enough. In fact, much of the "luxury" spending one might point to--high end real estate, art, jewelry, vintage cars, planes, etc.-- is looked upon as an investment...not that it truly *is* and investment in the long run, but it seems those expenditures are often looked on as such.

Granted, we do have the $2 million dollar weddings and the $200,000 spa vacations...

Time will tell where this all goes.

Posted by: BrooklynGreene at December 31, 2008 6:27 PM

Hahahaha!!! Benson, we may have worked at Lucent at the same time but I'm not sure if you were there until the Great Exodus of July 13, 2001...

As you remember Alcatel was a major, major competitor. To use its takeover of Lucent (which was nothing but a shell of its former self by the time of the takeover)is anecdotal if you're trying to use it as an example of there being no French enterprises that can rival American ones. You're rah-rah American Business enthusiasm is quaint and touching but I'm not sure it's fair or accurate.

As you probably should know, the executives of Lucent gutted it and Bell Labs and many people made off with ridiculous millions in stock sales (including, basically, insider trading near the END of the fabulous run-up of the stock--specifically, I'm referring to a sale of $2 million dollars worth of shares by one top executive on--what was it?--November 14th 1999) while the lifers from AT&T/Bell Labs days lost their retirements...

Everything froze up in the last quarter of 1999 financially and the telecom bubble popped before the Internet bubble. Eventually, all those wonderful internationals you're referring to were being disappeared, literally from one day to the next. It was shocking. It seemed every week from the announcement we missed earnings and well into 2001, any researcher who was not a full-timer was losing his/her job/fellowship/program and sometimes, if the person was not a grad student with a visa to be in the US, they lost their visa status and had to leave the US, and rather quickly.

One of my students from France (from the 80s) ended up at Bell Labs. I think he was there for about a year and then he was simply disappeared one day. When these young post-docs would get notification, often they couldn't go back to the office at all. For those of us in Murray Hill, it was very depressing.

I did go to a kind of fun party thrown in Hoboken by one of the young researchers who was let go. There were about 15 of these international kids on their way out or out already.

While this process ground through and the stock was sliding downhill, many great scientists and researchers on the younger side (and not so young) started jumping ship. Many went to teaching jobs both here and in Europe...

AND, notably, a good number went to Sophia Antipolis in France (heard of it???).

July 13, 2001 was the buyout date and departure of many, many old-timer Bell Labs guys, and for me, that was truly the real END of Bell Labs. Sure, people moped around in the late 90s longing for the AT&T days of Bell Labs but it was still pretty good...we just didn't know it.

Under Lucent, "they" expected results that could instantly be turned into product and a set of researchers who could support current product improvements. Bell Labs was already different by then. Although it seemed relatively awash in money and overly funded with lots of dead-end projects, and military money slipping in, it was not the Bell Labs of another era when guys got away with doing, basically, nothing and were constantly fudging demos and test results, when the labs had a large focus on abstract science...remember the monkeys and chickens kept in Murray Hill...remember the guy who played solitaire his entire career...it was nearly like working for the federal government.

Only the monopoly of Ma Bell could support the billions that went down the drain at Bell Labs in those days.

Bell Labs continued to be a multi-billion dollar drain on Lucent and they simply could not support it.

All that to tell you that Alcatel did not kill Bell Labs. What broke down the old Bell Labs of our youth started with the break-up of Ma Bell in the 80s, number one; the spin-off of Lucent in the 90s, number two; and the overzealousness of the Lucent team to blow the stock into the stratosphere and a kind of empire-building where it financed its purchasers to boost sales. Lucent collapsed in on itself.

Now, again, I have to say, BL was not sustainable any longer with the changes both at AT&T and Lucent, the market and society. One would argue that Bell Labs was broken up into many pieces and many executives and researchers started ventures and spun off into small companies, that many of the endeavors and lines of research that were at Bell Labs still exist but have been shifted to military-funded university programs.

That all said, your arguments about demographics in France and the race/class issues appears to me to be what your average Joe, the NY Times reader/World News watcher, would come away with from the media. Hackneyed.

Demander of Respect,
Yes, I'm glad you pointed out the rather ridiculousness that Whole Foods and the aptly-named Banana Republic were somehow harbingers of improvement. I'm one of those who reads Brownstoner who laments the almost complete mallification of Manhattan and the encroaching mallification in Brooklyn.

Posted by: BrooklynGreene at January 2, 2009 1:21 PM