Wall Street Reorg: Impact on Real Estate?
After a weekend spent huddling together, Wall Street chieftains were unable (or, more precisely, unwilling) to come up with a plan to save faltering Lehman Brothers, which is now expected to file for bankruptcy. Merrill Lynch, which had seen its shares drop along with Lehman’s in recent days, agreed to be acquired by Bank of…
After a weekend spent huddling together, Wall Street chieftains were unable (or, more precisely, unwilling) to come up with a plan to save faltering Lehman Brothers, which is now expected to file for bankruptcy. Merrill Lynch, which had seen its shares drop along with Lehman’s in recent days, agreed to be acquired by Bank of America for close to $50 billion. Meanwhile, questions about giant insurer AIG’s ability to weather its own set of mortgage-related problems continued to mount. My goodness. I’ve been in the business 35 years, and these are the most extraordinary events I’ve ever seen, said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration. The big question is whether these moves will increase investor unease or, by removing a few of the major question marks, hasten its recovery. The same can be said for the local real estate market. While many of Merrill’s remaining 60,000 employees will undoubtably be kept on, the same can’t be said for Lehman’s workforce of 25,000; on the other hand, market’s hate uncertainty, and maybe this just helps ensure that New York market is on target to meet Jim Cramer’s projected turnaround date of June 30, 2009.
Two Major Wall Street Banks Falter [NY Times]
Crisis on Wall Street [WSJ]
Photo by huachen
cobblehiller–I don’t think I did. I certainly didn’t see physically threatening ones. Brownstoner must have removed them quickly.
“…but what do you think the impact will be on the Manhattan, and subsequently, the brooklyn rental market?”
History says rents will be down too. They’re already down in the Financial District because of ongoing weakness in the financial sector. Today’s event doesn’t help. It is my theory that rents are still stubbornly high in Brooklyn because less people are buying and they have to live somewhere. But when all these condos (many of them not even ready yet) get converted to rentals, supply will do it’s magic.
Wasder, did you see the comments?
Lechacal–while I agree that it seems inevitable that housing prices will continue to drop for the forseeable future, why should the cycle be as extreme as you describe? Why wouldn’t many sellers just hold out for a while and have inventory dwindle? I certainly don’t have any info better than yours and I am not questioning the validity of what you are saying. Just asking for clarification.
Dow–right on. that went over my head.
sebb – we’re discussing the rental market. A good deal of renters who live in Brooklyn do it because it is comparatively affordable to manhattan (not myself, i prefer brooklyn, but still)
If prices in manhattan become more affordable, do you think this will spell trouble for new brooklyn brownstone owners, since alot rely on rental income to make their mortgage payments?
DOW…if you don’t think all of these guys talk to each other on a daily basis anyway you’re out of touch. No conspiracy theory here.
Prodigal–I hear you, though I think the What treaded way over the slippery line. But agreed, hard to say what constitutes over the line lots of times.
“DOW—I have no idea what your last post was supposed to mean.”
“…notorious Irish Mob boss Francis “Frank” Costello (Nicholson) plants his protégé Colin Sullivan (Damon) as an informant within the Massachusetts State Police.”
“Henry Merritt “Hank” Paulson Jr. (born March 28, 1946) is the United States Treasury Secretary and member of the International Monetary Fund Board of Governors. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.”
Just entertaining a theory.
A bad day no doubt. And I feel for the poor souls at these firms that didn’t make the bad decisions and didn’t get paid millions of dollars to make them.
Should be noted though that oil is down $5 and interest rates are also down. It’s a bad day, not the end of the world. The economy is still growing, albeit slowly, and the What is still an idiot.