New York City suburb, Greenwich, Connecticut, has 55 houses for sale asking $9 million dollars or more. Staff at East Hampton Airport on Long Island, a scene of private Gulfstream jet gridlock, says traffic is down 35%. Bettridge Jewelers on Wall Street sees traffic mostly selling off jewels to make mortgage payments.
It means deals on classic pieces to resell. Consigned Couture is doing a bumper business reselling designer gowns and clothes, so much so their appointment book is full for the next three months.
Vanity Fair’s Michael Schnayerson’s essay in the current edition shows that the panic amongst the ultra-rich, a group Tom Wolfe termed ‘Masters of the Universe’ in his breakthrough 1987 book The Bonfire of the Vanities, is reaching alarming heights and taking down retailers and charities across the city.
The amusingly and obscenely rich characters (formerly) running Wall Street’s trading houses are now caught up in a huge personal financial decline. Hardest hit are those who held boatloads of now bankrupt Lehman Brothers stock and saw it collapse after first borrowing millions against its paper value.
They were mostly conservative, borrowing no more than 50% of the value so even if the market “fluctuated” they would still have half their portfolio. No one, though, planned for a stock price of £0.15 a share (down from $80) the Friday before their bankruptcy filing.
Those at the top salted away rainy day funds and will likely feel less pain than so-called ‘middle’ managers worth ‘only’ $5 to 10 million dollars on paper. They were hardest hit because they lived a lifestyle of penthouses, homes, and private schools leveraged to their eyeballs on stock loans that are now coming due with nothing to take their place.
Panic has hit the exclusive corners of New York City so hard, a place where Wolfe described socialite women as “social x-rays,” so thin one could actually see their skeletons if they walked in front of a very bright light and “lemon tarts,” women so young and stunningly beautiful/perfect hanging on the arms of ultra powerful men in their 50’s-70’s that it was like being at an all-you-can-eat dessert buffet, that New York City’s mayor Bloomberg is seriously worried about Manhattan’s tax base. He has already projected a shortfall of 20% and once bonuses are announced… or not… in January, that panic could rise even higher.
And here in the UK the effects on tony Notting Hill and other key London addresses where a Maserati in every driveway was the norm are even worse. Real estate prices have been in a two-year nosedive; the financial district in Canary Wharf is a ghost town as even Lehman employees were told to come to work after the bankruptcy filing or risk losing their jobs even though they had nothing to do before being made redundant one afternoon. And Russian oil paper ‘billionaires’ are walking away from huge London real estate deals, forfeiting huge deposits and leaving empty buildings by the dozens. This is why the first quarter on Wall Street barons could have a huge global financial ripple affect.
The growing cloud, super rich apartments and townhouses for sale and the cutbacks amongst the super rich, could ultimately be a good thing. There are some, including this writer, who sees this as a huge opportunity for us to re-evaluate our global values system. Yes, there will be pain and seeing us return to a place where there is a sense of fairness and balance across the globe could be good for all of us.
The death of: obscene stock price based compensation, CEO’s being paid one or two thousand times their workers, managing for the short term of this quarter and ignoring the long-term picture for the health of the company and our planet, are all notions we could gladly see end up in the dustbin.
There were those who used greed and could never answer the basic question, how much is enough? Now the altar of the market which they worshipped greed, arrogance, and hubris whilst playing Sheriff of Nottingham, shipping jobs abroad and making shareholders more important than stakeholders in the community, the environment or even global warming, is closing down.
So here we go. Major systemic change is coming.
Fasten your seatbelts.
Denis Campbell is a US journalist based in the United Kingdom. He contributes to newspapers and magazines, is a BBC Radio election commentator and publishes the daily e-magazine The Vadimus Post from the Latin Quo Vadimus – where are we headed and do we know why?
Articles by Denis Campbell: