armageddon
i was puzzled by the headlines claiming the new york governor's offer to a.i.g. of $20 billion until i read on.
he is concerned about losing more wall street jobs. wall streeters have big fancy apartments in big, fancy buildings and spend considerable amounts of money on them. wall street had lost 22,000 jobs previous to lehman's collapes and with this new news, we have an additional loss of about 12,000 big money jobs. lehman's average salary was about $325,000. doing the math, that's a loss of almost $4 billion dollars. that's a loss of at least a billion dollars in tax revenue, not to mention local sales taxes and stuff. this is trickle down economics turned upside down.
aig's insatibility could lead to another several thousand upper east siders standing in soup kitchen lines or on street corners as day-laboroers, waiting for some dude with a pickup to roll by.
unemployment compensation pays a maximum of $1600 a month. a shitty one bedroom apartment in east williamsburg, with slanted floors and roaches costs that to rent. the wall-streeters who do rent, rent apartments in places like gramercy park or battery park city or the upper west side. those apartments cost much more than $1600 a month.
this is bad for landlords. people who can't pay rent vacate their leases. the apartment must be rented again and since there are fewer renters available to pay new york's overpriced rents, landlords must lower their prices. the problem with this is, before this credit/mortgage crisis, people were snatching up buildings all over new york city for insane prices. when somebody buys a building for more money than the building is worth, the new landlord must jack the rent sky-high just to be able to afford their mortgage. this means that many landlords will not be able to lower their rents, because if they do, they won't be able to pay their mortgage.
but, people with higher cashflow tend to buy their homes, which poses another situation. somebody loses their job on wall street. no-one is hiring. immediate default.
new york has done pretty well through "the great depression, part 2", but with over 30,000 high rollers out of work and with most of those folks unable to get another job for quite a while, new york is finally facing a catastrophe of it's own.
it's not all doom and gloom though. just remember - when times get tough, music gets better and since music is so pathetic right now, with this generation regurgitating the same old boring guitar driven bullshit, any injection of fire is welcome in my book.
more economics goodies:
food and gas prices defy theory
food and gas prices defy economic theory.
» read | posted: 2008-04-30
money as weapon
there is a new world war brewing, one that will be fought with money.
» read | posted: 2007-12-01
subsidized confusion
a look into the hypocrisy of free-market capitalism and it's position on government intervention
» read | posted: 2007-08-24
no way, jose!
america's refusal to regulate it's marketplace and the consequences for the rest of the world
» read | posted: 2007-08-16
capitalism and friedman
milton friedman was one of the most influential folks of the 20th century. capitalism and freedom is the bible of capitalist liberation.
» read | posted: 2007-07-07
das kapitalism
think capitalism came out victorious when the soviet union dissolved? think again.
» read | posted: 2007-06-25
death in the southland
southern california is in for a big surprise when the water runs out.
» read | posted: 2007-06-20
subsidies vs. tax breaks
how the united states gets away with subsidizing companies and/or industries through generous tax breaks.
» read | posted: 2006-12-17
