What it takes to be middle class in NYC...

Parent Cafe
101

<p>“You don’t believe talent is there that’s needed for the recovery?”</p>

<p>Not the same talent that caused the mess. How about character over talent for the next round.</p>

<p>I think that most do not understand the amount of demand created by MEW and how we cannot replace that demand without another bubble. We’re trying with a government bubble right now but it’s unclear if that can create the level of demand that we had before.</p>

<p>The two major problems are restoring the financial system and recreating demand. The latter is what brought us the employment that we used to have. It’s not clear how we will recreate that short of another stock market or housing bubble. </p>

<p>If we have a permanently (or secular if you prefer) lower level of demand, then the amounts of money flowing through banks should deflate appropriately meaning that we will not need as many banker, finance people, etc. And that the amount of compensation that these folks show drop sharply.</p>

102

<p>“We need to use less leverage.”</p>

<p>Or none at all. The popping of bubbles serves to kill speculative excess. Grind it into the sand. Get rid of it completely. Make it incredibly painful. Make it last a long time. And then allow it to grow with everyone remembering how painful it was and as a reminder to live cautiously. Then start growing from that. The popping of the NASDAQ and Japanese stock bubbles is a testament to the damage speculative excess can result in. Greenspan, to my knowledge, encouraged it.</p>

103

<p>“Not the same talent that caused the mess. How about character over talent for the next round.”</p>

<p>This is a great point.</p>

<p>The “talented” guys that didn’t see the problems coming, or partaked in business that blew up, need to go.</p>

104

<p>A little leverage is ok.</p>

105

<p>“A little leverage is ok.”</p>

<p>Ever have your friend lose a ton of money using leverage? It’s not a pretty sight to see. Leverage can be very dangerous when it gets to the point where most think that market direction is a good thing. Witness Casey Serin.</p>

106

<p>“I think that most do not understand the amount of demand created by MEW and how we cannot replace that demand without another bubble. We’re trying with a government bubble right now but it’s unclear if that can create the level of demand that we had before.”</p>

<p>Another great point.</p>

<p>The excessive leverage led to unsustainable asset prices and a larger economy than could be handled financially.</p>

<p>Asset prices and the economy are acting the way they should. Shrinking.</p>

<p>I don’t want to see the economy expand due to inflation. That’s not a real expansion either.</p>

107

<p>“A little leverage is ok.”</p>

<p>“Ever have your friend lose a ton of money using leverage? It’s not a pretty sight to see.” </p>

<p>Come on BCEagle91, do you really think I haven’t seen friends and other people lose a lot of money because of leverage.</p>

<p>I used to use a lot of leverage myself. ;)</p>

<p>“Leverage can be very dangerous when it gets to the point where most think that market direction is a good thing.”</p>

<p>Yes, but we don’t have to go to zero leverage as a society. We don’t have to under- leverage on the downside.</p>

108

<p>As the kid’s say, DUH! Who responsible at any bank supports the continuation of any irresponsible player? And while they should have been put down long ago, these were new markets no one knew anything about, being pushed by the government. 95% of bankers also want to see clawbacks. Lost money? No bonus and you can give the ones you already got back.</p>

<p>Again, I’m not going into causation, but anyone blaming this on WS simply does not understand the complexity of what happened and that it was caused by the manipulations of a government trying to come back from the last down cycle.</p>

109

<p>Come on Hmom5…the government forced the investment banks to leverage over 30 to 1?</p>

<p>To package CDOs?</p>

<p>Forced banks to trade credit default swaps with no margin?</p>

<p>Forced Wall Street to take bonuses on open trades based on financial models that were incorrect? </p>

<p>Really?</p>

<p>The government created easy money and wall street ran with it.</p>

110

<p>I totally agree with your last sentence. Everyone ran with it from WS to Main Street. Greed was everywhere. We were living in a high risk, greedy world. All of us, even if as individuals we did not participate. Just as most people did not get liar loans and buy 4 houses and 3 cars they couldn’t afford, most on WS were not participating in unacceptable activities.</p>

<p>The majority was brought down by a relatively small minority.</p>

111

<p>I didn’t participate either. </p>

<p>Now, it’s time to see how the government allocates the losses and how much it debases the currency.</p>

<p>I’m not thrilled with the prospects.</p>

112

<p>I’m not thrilled either. I’ve been telling my kids to consider futures in other countries!</p>

113

<p>

</p>

<p>Never gonna happen. I don’t know if it’s human nature, greed, power lust or what, but people seem to make the same stupid mistakes over and over again. It’s only the dimensions that change. Sales of SUV’s have gone up now that fuel prices are lower again.</p>

114

<br>

<br>

<p>The recession of the late 1980s and early 1990s did a pretty good job of it and it was long enough to get people to save enough to set the stage for prosperity in the 1990s. I remember the 70s and 80s and it was fairly miserable in much of the population. Those growing up in the 1990s with professional jobs had it a lot better than those in the 60s, 70s and 80s. I’ve read about the Great Depression and that was a load more scary than the stuff that I grew up with.</p>

115

<p>I live near NYC and a lot of our neighbors, friends, acquaitances work in Manhattan. Many are affected directly by all of this. Having moved here from the midwest, I can tell you that if you try to get a comparable house to what you left behind in most areas in the US, you can easily pay 3-4x more and still not quite make it.</p>

<p>The bankers and other financial folks get the pay packages and bonuses, because that is what their worth was determined to be. We are in a capitalist society, and monetary worth is determined by what the market will bear. It is not easy to get one of these jobs and harder yet to keep them. Whether anyone else feels they are worth what they were getting payed, is not the issue, but what they can get. Many of them have contracts guaranteeing them bonuses regardless of the economy or the performance of the bank. If you can get a job with such guarantees, good for you. There are many professions where pay is guaranteed regardless of consequence. Lawyers who lose cases, doctors who do not cure a condition. They are not paid by outcome but by their efforts before the outcome. </p>

<p>There are still high paying positions out there even as many are losing their jobs. My SIL’s company is doing very well. My brother got a hefty increase and a large bonus. I know a number of firms that are hiring at great salaries. My neighbor is having her house redone with a decorator and top of the line stuff at this very moment. I know people who are looking at new cars. Those who are making it in this environment are getting some great deals. If we had not bought such an expensive house or if we had sold a couple of years ago as we had intended, we would not be in the straits we are.</p>

<p>I am anxious about the situation, not because I am worried about the bankers who are limited to $500K. It’s a bigger problem than that. I know that we are downsizing for a number of reasons, and it affects everyone that we touch business wise. Though economic wealth trickles down, misfortune comes roaring down in a flood. When the big guys tighten the purse strings, everyone whose livliehood depends on them is hurt more.</p>

<p>A friend of ours left his bail out firm under the radar with his bonus intact. He’s going to lie low for a while, and can well afford to do so. If he has to do so, he can just ditch his house for something much, cheaper, take his kids out of private school, and really retire, still living well above most people’s means. More likely, he’ll find it easy to get another job, though it is not likely to pay as much as his last job did, though H thinks he’ll be just fine and find something comparable soon. He is one tough son of a gun who bought an attachment to his SUV so he can now shovel his own driveway, and then decided to do a bunch in his neighborhood for what he crows is the easiest $4k he has ever made in his life this winter. Whoever was doing those driveways lost that income because of him, but he does a better job and earlier as he lives right in the area and doesn’t have as many to do as the guy who used to do it. He maxed out his home equity loan and other low credit lines and has the money stashed, knowing that credit is going to be tight. These guys are not as foolish as you would think. No, I don’t cry for them, but for what their plight is going to do to others who are not as able to recover.</p>

116

<p>there are many companies out there still hiring… heck, my company is hiring like 40 people a month for the next 10 months or something crazy like that… they may not be the best paying jobs on the planet, but i’m sure they will turn into something later down the road… it will definitely be a help to the people around here who have been losing jobs left and right… you just have to know where to look. and not be afraid to take a lower paying job, because like i said they can always lead into a higher paying job down the road. </p>

<p>as the posted above me said, some people are getting great deals. i know at least a dozen people, most of them co-workers, who have bought houses within the past month or so - myself included. i mean, i got a GREAT price on my house, a great rate on my mortgage, etc. i did buy a lot of new furniture for my house and i have been decorating it exactly how i want it - i figure why buy the cheap stuff that i don’t want now, only to throw it out later? i’m doing it right the first time… and doing my part to ‘stimulate the economy’ at the same time… while not bankrupting myself. my younger sister is looking to buy a new car in may when she graduates from college, so we have been doing a lot of car shopping for her lately. my parents just paid off their house and have been using the money that used to go to their mortgage to do some renovations and whatnot around the house. I am thinking of finishing off my basement at some point in the near future. </p>

<p>on the other end of the spectrum, i talk to customers every day at work who are losing their jobs left and right. it’s really hitting everywhere.</p>

117

<p>Great post cptofthe house. NY has taken a nosedive shockingly quickly. Half the shows are gone from Broadway, restaurants and retail stores that have been in place for decades are gone, trendy bars and cafes that were standing room only are empty, nannies and housekeepers have been let go. All were making much more doing their jobs than they would have made anywhere else in the Country.</p>

<p>Most high level bankers and executives, even having lost a bundle in the market, still have ample resources. The others don’t.</p>

<p>Fendergirl, advise your sister to buy a car a year or two old. It would be crazy for a young person to buy a brand new car when they are practically giving away newish cars still on warranty in this economy. Why should she suffer that kind of depreciation?</p>

118

<p>

</p>

<p>This seems to be trying to make the argument that those who are talented and successful should (if they choose to) earn a living that pays a lot of money and not be criticized over what they choose to do with that money. I don’t think anyone on this board would disagree with that. Personally, if one is talented and successful and manages to run a stable, profitable company which makes them bazillions of dollars then good for them. If they want to take their billions and build a huge house made out of cheese, well then good for them.</p>

<p>However, the point that many have been making is that in the case of the bailed out companies these executives were not as talented as they seem to think they are, they were not very successful, and their companies are most certainly not profitable. And, now that these companies are being run with taxpayer money (which the executives chose to take) they’re beyond not profitable… they’re on the dole. </p>

<p>People are simply outraged at the sheer stupidity and arrogance on behalf of some of these executives who now stand up and essentially say: </p>

<p>"Dear World,</p>

<p>Despite all solid evidence pointing to the fact that I’m actually quite incompetent and ran this company into the ground, I am one of the most talented businessmen every to occupy the corner office… you should feel blessed to be in my pretense, so close to this aurora of my pure source of talent and knowledge. </p>

<p>As such it is only fit and proper that I receive my customary 8 figure bonus this year. The fact that our firm only has the money to fork out such graces, because the taxpayers gave us corporate welfare money is just a minor technicality and a small price to pay for properly promoting and rewarding accomplished and talented individuals such as myself. </p>

<p>I do send my apologies for missing that meeting this morning about how we’re going to move our company forward… sadly I had to attend to important administrative matters. You see, due to the recent ‘blip’ on our balance sheet my annual office redecoration budget has been lowered to a measly $150k for this year so I had to make some tough decisions. After much deliberation, I had to make the tough decision to forgo my gold toilet until we receive the next installment of taxpayer bailout money."</p>

<p>A bit exaggerated… of course. But far from the truth? Sadly, no.</p>

119

<p>Do you get the FACT that the problems were with a few groups within large organizations?</p>

<p>Moving forward, it’s quite simple, no one will hire those that proved themselves incompetent.</p>

120

<p>hmom,</p>

<p>she’s going to buy a new-to-her used car once she graduates in may. she just found a 2007 that she really likes, but she’s not ready to buy yet. the one she found is selling for about 13k, and she has 7k saved at the moment to put down on it (plus whatever the trade in amount of her current vehicle is), so she’d be borrowing about 4-5k if she did it now. she thinks she’ll have another thousand or so for it in may, and who knows how the car market will shape up over the next few months. i think she’s in pretty good shape to buy a car (esp. since she’s only 20).</p>