Morning Report: Mansions pile up in Greenwich 7/10/14

Markets are higher as Greece proposed a new package of spending cuts, reform, and tax increases in exchange for a new bailout. Chinese stocks rose overnight for the biggest 2-day gain since 2008. Bonds and MBS are down.

It looks like we are close to a deal to give Greece another bailout. Greece has proposed to more or less adopt the creditors’ proposals on sales and corporate tax rates. Pensions also got trimmed and the savings are more or less in line with that the creditors have wanted all along. Greece has capitulated and it looks like they will stay in the EU.

Janet Yellen will be speaking at 12:30 EST. Traders will be listening for comments regarding China and whether the melt-down there will cause the Fed to hold off raising rates.

Everywhere it seems like there is a shortage of real estate for sale. The exception is the uber-high end, especially in NYC suburbs like Greenwich, CT. At the current pace of sales, it would take 4.9 years to absorb the current inventory. Compare this to the NAR’s estimate of about 5 months nationally. IMO, there is an additional factor here – Wall Street salaries have been eroded over time as hedge funds consolidate, sales and trading jobs vanish and proprietary trading goes away. If the Chinese government orders their rich to repatriate their assets to support domestic markets, we could see more inventory in the big cities. Even if their government does not order them to repatriate, there is almost no doubt that the slowdown will affect their appetite for new properties.

19 Responses

  1. Frist!

    Hah! I got it again. Suckers!


  2. Like

  3. Is summer in Greenwich comfortable? If nice homes get cheap enough, and have pools and BBQ pits, maybe I can get a coop of retired Texans together. Of course, IDK what we’d do with the house for the other 9 months. Rent to hunters and fishermen for weekends?

    Is CT’s economy not based in Wall Street doing OK? I assume the insurance industry is healthy as can be.


  4. Summer is not bad here. I would say Greenwich is mainly levered to Wall Street and Hartford is mainly levered to insurance.


    • Mark:

      Is CT’s economy not based in Wall Street doing OK? I assume the insurance industry is healthy as can be.

      Outside of Fairfield County I think the place is doing pretty poorly. Bad economy and totally incompetent government. This article will give you some sense of how bad the economy is in general, although you will have to ignore the standard lefty framing….income inequality, 1% vs 99%, yada yada. Hear’s another take from Forbes, telling essentially the same economic story without the lefty narrative.

      Also, CT has an extremely large unfunded pension system.


        • Mark:

          Another useful site.

          Yes, very. I like it.


        • So my suspicion about AK vs FL was somewhat correct. Direct transfer payments to individuals in FL came to 67% of all federal spending in FL ($6.7k per resident), while it came to only 26% of spending in AK ($4k per resident). Contracts, wages and salaries made up 50% of federal spending in AK, but only 18% of federal spending in FL. So even though your chart suggests that Florida is a net donor while Alaska is a net taker, Florida residents are sucking on the government teat at a far bigger rate than are Alaska residents.

          At least for the most recent year.


  5. @McWing: “Paralyzing drought on continental interiors that will lead to Dust Bowl–style famine” . . . man, remember all that AGW in the 1930s? Thank goodness the government stepped in a limited carbon dioxide emissions.

    I also notice that we have 5 times the number of destructive weather events as we did in the 1970s. Wonder if they adjusted for 45 years of real estate development.

    Also, I’m to believe that more people were killed by heat waves recently than in the 70s, when temperatures were plenty hot and air conditioning not nearly so ubiquitous. I’m feeling dubious about the numbers.

    ““pre-traumatic stress””

    Hope that becomes a disability the government will start cutting checks for.

    “Others, resigned to our shared fate, have written what amount to survival guides for a sort of Mad Max dystopian future where civilization has broken down under the pressures of resource scarcity and habitat erosion.”

    Idiots. Whatever happens and whatever constrains there are on resources, it’s never, ever, ever gonna be Mad Max or The Road or The Stand or anything like it. There also won’t be zombies.

    “And perhaps the biggest indicator of that unwillingness is the constant attacks climate scientists endure at the hands of climate-change deniers — attacks that leave their own psychological bruises.”

    I’m looking forward to the story about how emotionally injured people who want to grill or own an SUV or run a power plant are because climate scientists and politicians keep insisting they are going to cause the end of the world.

    “Gavin Schmidt of NASA’s Goddard Institute for Space Studies admits he lapsed into “an episode of serious depression” after he was one of thousands of scientists to be hacked shortly before a climate summit in Copenhagen in 2009”

    Didn’t that hacking reveal there was something off about their numbers? Maybe that’s what made him depressed.

    “Parmesan and quite a few others have moved from the U.S. to Europe.”

    Europe sounds awesome.


  6. This is how I imagine the interviews went.

    Poor bastards.


  7. I’m betting there was no tunnel. Bet he walked out the front door into a limo.


    • Yep, George. Our neighbor to the south…did you hear NPR’s series on how corruption in the Valley is worse than ever, thanks to the freaking cartels?


  8. I believe it. Mexico needs to take the Columbia route like they did with Escobar.


    • “Our inability to get Mexico to extradite Chapo Guzmán, and indicted Tamaulipas Governors Tomas Yarrington and Eugenio Hernandez Flores is an insult to the law enforcement and prosecutorial personnel who have worked for years to build criminal cases against these drug profiteers,” he added, referring to the former lawmakers who are also sought by U.S. authorities for their alleged dealings with Mexican cartels.

      “The United States needs to exercise stronger diplomatic muscle, ensure the recapture of Chapo Guzmán and see to it that these three individuals be brought to the United States at once to face the charges that have been levied against them.”


  9. “Let the mutherfuker burn!, on July 12, 2015 at 8:49 pm said:

    I believe it. Mexico needs to take the Columbia route like they did with Escobar.”

    Or the US could just legalize drugs and end all of this overnight.


  10. One of the big issues now is drug use in Mexico. It would help but not fully solve the problem. You’re right, I was victim blaming.


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