There are a series of interesting articles in today's New York Times centering on the crises striking the financial and housing industries. They can be summarized as a) is more/more effective regulation needed in the financial services market, and if so, what kind and how intense, and b) does the abrupt loss of stratospheric income to a series of brokers and their toadies, ah, staff mean that the economic climate just became a bit more palatable to people without that nosebleed level of income?
The general tone of the former is that while everything pretty much agrees that the current financial services meltdown is the result of overextension and what someone once called Irrational Exuberance (Hi, Alan!), these things happen, and if we were to establish new controls, strengthen old ones, or otherwise constrain the financial services industry, then we would be limiting their ability to generate wealth (true enough) which would be a bad thing (not so true). If, for example, a brokerage had to back up investments with a certain amount of money, then it would make less investments (true enough); such investments would likely be of the surer type, which would limit the downside, but would also mean less gold-plated investing. Why do I scent a whiff of trickle-down economics in there?
As for the latter, the feeling is that the money-stuffed denizens of Wall Street's upper tiers have been bidding the hell out of all of the possible services and amenities, making it virtually impossible for the average person (who, relative to any other city, is doing Quite Well, but relative to Manhattan, is Just Scraping By) to partake without giving up, oh, paying the rent. To see these people abruptly dropped from the heights is therefore both gratifying (Down to their last forty million? How will they survive?) and the opening of opportunity, as restaurants begin to admit the merely affluent hoi polloi (use the rear entrance, please), and galleries lop a zero or so from the prices of some of their works. But only some.
Makes me glad I no longer live there.
4 comments:
I suspect the problem (the rot) goes deeper than that. Jim Kunstler has a popular blog in which he makes the not unreasonable statement that we are running out of oil, not doing a darned thing about it, and the economy is going to collapse because of it.
http://jameshowardkunstler.typepad.com/clusterfuck_nation/
On the upside, as you found, a lot of people are still building big houses. The bigger the better. The more expensive the better.
I think they want to turn their profit NOW because they see that all heck is going to break loose in the housing market any day now. Ooops...too late...it happened.
Hope they like living in those big houses....grin!
Interestingly enough, I can't seem to find any statements from Hilary, Barak, or John about the coming crisis on my google searches. You found any comments one way or t'other Bill?
Hmmmm....that didn't come out well. Lets try this again....
http://jameshowardkunstler.typepad.com/clusterfuck_nation/
(what is WITH this comments section!!!!!)
http://jameshowardkunstler.
typepad.com/
clusterfuck_nation/
Not a thing. I don't have any deep thoughts as to why, but if I had to guess, I'd say that its an election season, and you don't get elected by making the voter have to think.
I'm kind of amazed by the houses. The only thing that gets me more is that you can pay big house prices and get a small house, if its in a decent, or even semidecent, location. Last night we walked down to the wetlands (about a fifth of a mile from the house), and I noted to my wife that this, too, contributed to the value of where we're currently living.
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