Fourth Quarter Saw Biggest GDP Decline in 26 Years

It might hit 11,000 but will it stay there????

Frankly though 3.8% (even assuming later downward revision) is really not that bad - we had major bank failures, never ending gloom from our leaders, credit tightening, a stock market crash and a continued housing crash.

Compared to 1982 we have low interest rates, lower unemployment and major Govt spending on tap.

Posted by: fsrg at January 30, 2009 11:45 AM

lechal all your predictions make some sense - except that all RE will be down 25-40% but somehow prime Brooklyn Brownstones will be flat - besides the fact that already isnt the case - your wishful thinking does not compute with any rational look at the RE market.

Posted by: fsrg at January 30, 2009 11:48 AM

lechacal - if the overall RE market goes down 25-40% then Brownstones in those same neighborhoods will go do commensurate as well - that has always happened (both up and down) and always will. Sure there are individual units (both apartments and brownstones) that are so unique that they will hold up better BUT if you really think about it - they probably would have fetched more that "the market" during the boom - therefore again - housing within neighborhoods tend to move together.

Posted by: fsrg at January 30, 2009 12:02 PM

Whuh - no such thing as Stagdeflation; deflation is a natural result of massive economic stagnation - the reason why stagflation gets its own term is because it is a macro-economic annomoly.

and yes of course the number is going higher but it still wont reach '82 levels this qtr and so when you consider the market/social/political events of the last 6mo - this decline is absolutely GOOD news and far below forecasts. - Which you are correct about - nearly worthless since NO ONE KNOWS.

As for this being the last round of bonuses and i-banking being finished - mostly wrong. Will compensation fall dramatically in these down markets - yup, but once deals start happening again, all that is going to happen long-run is that compensation terms will change. Salaries will go up, bonuses will go down (and be longer term) and for people in sales jobs the term bonus will be changed to "commission."

Companies are still going to be merging, issuing stock, debt etc, Governments will still be issuing debt (more than ever) and all these securities are still going to be traded in a secondary market. There will be plenty of business in the future - albeit maybe not as lucrative (but still very high). This time is NOT different - it never is.....

Finally your comments calling bankers - "criminally venal" is just stupid....95% of all bankers, traders on Wall St. had no particular say in how they were compensated. If someone offered you millions of dollars to do your job, I'm sure you'd take it as well - and soon tens of thousands of others would be flowing into your industry.

Posted by: fsrg at January 30, 2009 12:40 PM

northsloper - I am certainly not arguing with your premise or conclusions, but the finance industry is, was and will likely to be one of the highest paid industries in this (and virtually all) societies. [its where the $ literally IS].

Will the changes (business, tax, regulation, etc...) coming have a profound effect on NYC - no doubt; but Whuh seems to be saying that rich bankers are a thing of the past and I am saying that is ridiculous (this time is no different) all we will see (in our lifetimes assuming no revolution, plague, or mass extinction/war/terrorist attack) is a smaller number of less rich bankers, traders etc....

Posted by: fsrg at January 30, 2009 1:07 PM

tinarina - 1st disabuse yourself of this notion that new condos are crap due to poor construction. They very well might be - but 'crap construction' can just as easily be remedied (maybe even easier) then repairing and maintaining 75-150yr old houses and buildings. Therefore other than personal taste - there is no functional difference between the two.

Now in terms of the market - yes you have alot of inventory of new condos coming on-line - so that may depress that housing type for a year or two - until it is sold or rented BUT remember a few things

- there are still FAR FAR more brownstones in neighborhoods like Park Slope/Ft Greene/Brooklyn Heights then condo units even including what is still on the drawing board.

-Most people care about things like neighborhood, schools, commute, etc... at least as much as the housing "type" - otherwise Brownstones in the Bronx would cost similar to Brownstones in Park Slope. Therefore alot of people who may "want" a pre-war housing unit would choose a post-war condo if the discount was 25-40% less.

-As financing gets harder and more expensive - the higher your mortgage the more expensive and more difficult to secure. Therefore buying a 3M brownstone gets much more difficult. and yes of course in poorly sold new condos you will also have trouble getting financing.

-If all these new condos result in more rentals - the value of the Brownstone rental falls (competition) and therefore the affordability/value of the house falls commensurate.

Look there are ten thousand ways to look at it - and I know many people here are such lovers of Brownstones that they do not want to recongnize it - but housing (of similar size) is more or less substitutable and any look at history will show that housing within neighborhoods falls more or less in tandem - albeit with brief periods (as in all markets) where pricing gaps develop and are quickly plugged by people who take 'arbitrage' these gaps.

Posted by: fsrg at January 30, 2009 1:27 PM