The Big L – Gloom and Doom Part 3

Here's what Richard Russell (Dow Theory Letters) -- one of the few market commentators with first-hand experience of the Great Depression -- has to say:

“The market is warning of a coming depression. Next year there’ll be a huge problem of unemployment, job openings will have disappeared, and every business will be going over its personal thinking in terms of who the business can do without.

“The sentiment in the country will be dark grey to jet black. Fortunes will have been wiped out. Thousands of savings plans and 401Ks will have been shattered. Americans who have never experienced true hard times will be living hard times. Confusion and fear will be rampant. How do I know all this? I’ve been here before, I know the signs.”


By now, even those among us that think economists are people who know what they’re talking about, realize this: that the genie is now out of the bottle. Few believe that the government has a handle on where this ship of state is headed, financially. Despite Wall Street and its current health, next year and quite possibly the year after, 2009 and 2010, will almost certainly be a disaster. Even if a traditional-style recovery on Wall Street were to start happening now, there is no imaginative vehicle, like CDO’s or SIV’s, that will be the “next big thing” to bail out this economy. Wall Street may recover slowly from here, but it is more likely that any rally that occurs will be a Bear Rally, to be followed by pain -- a lot more pain.

What lies ahead is not a V or a U – traditional symbols of a bounce in Wall Street that signals we are recovering. The big L is now what is predicted if we are lucky enough to avoid the big D.
This describes a long, long, slide down – followed by a very long period of flat or low economic activity accompanied by deflation. It is clearly NOT a period of recovery – it is a period of economic stagnation. Few new jobs, little housing activity and disasterous, permanent downsizing. Only afterwards, assuming that rational economic policy – worldwide – is put into place, can there be any growth.
If you doubt this, contemplate the fact that Japan was in the dumpster for 17 years before it began to recover. Contemplate the fact that real economic activity after 1929 did not occur until World War II – and that any stock purchased in 1929, which was followed by SEVEN major drops before it ended in 1932, did not regain its value until 1954.

We are now still on the slide. Housing has another year or two before it hits bottom. Many houses in the Hamptons have already dropped by 50% in value and Manhattan condos and coops are just now beginning to fall in value. Many of the sales figures that real estate companies provide are hype. Few brokers will tell the truth that activity has fallen by 30-35% and that prices are buoyed only be the averages artificially skewed by a few extremely upscale new developments which are as close to speculating in tulips, as one can imagine.
Price drops are now common. They will soon be the norm.
With 50,000 Citigroup pink slips, 10% of JPMorgan Chase employees being dropped and the combined redundancies at the Merrill/Bank of America merger, the Lehman fiasco and the disappearance of WAMU, not to mention the bank failures across the country – credit, capital and investment is fast disappearing. The recovery figures in housing are based upon limited sales – foreclosures and short sales. By the end of this year and next, several million more people will be out of work and the foreclosures may INCREASE rather than decrease as a result.
There are convincing arguments that we are, in fact, no matter what anyone does, headed into a Depression by 2011. This is based upon the cumulative begging, borrowing and stealing now going on by the Federal government – which uses printed money to solve an essential problem with our economic model. And, that is, there is a limit on how long you can pay your bills and the interest on your bills by borrowing yet more money. That process, created by massive leveraging, does end somewhere. And, since we are still leveraging our way out of this mess by printing more money, issuing more Treasury Bills, and bailing out more inefficient businesses, the end will not be pretty.

What is to be learned from this?
Nothing. This is our future.
Everyone needs to understand where we all going.
To know is to be forewarned.


Buying gold is a hedge but until grocery stores start accepting gold coins for bread, the only transactions that can be had are with Steve, the coin dealer. It is neither realistic nor practical to hoard gold. And, don’t forget, those who bought gold at $950 an ounce a few months ago, have lost $200 on that investment already.
Reducing expenses, downsizing your business, limiting unnecessary purchases and increasing your productivity are among the few things you can do personally. If you MUST attend a political fundraiser, be damned sure that he or she represents your needs and will give you real promises.

What may be helpful in knowing what is about to happen, assuming that GM, Ford and Chrysler do get a bailout or bridge-to-nowhere loans (since non are viable business models), is that voters need to keep a sharp eye on the politicians.
Forget Bush and forget Paulson – the Goldman Sachs CEO who bailed out his buddies on Wall Street first -- and then scrapped plans to buy the toxic debt which he used to convince Congress to give him the money. Paulson had resigned effective January even before he got the green light from Congress, so he’s already accomplished what he needed for his friends.

But, local politicians need to be watched like a hawk.

In the Hamptons, where a bankruptcy in the Town of Southampton is not unlikely, more local residents need to understand that the Republicans have been running things for decades. They are used to living off of the fat in the real estate game – by taking the property taxes and the transfer taxes intended for the Community Preservation Fund to run the government. Fred Thiele, former Town of Southampton Supervisor, buddy of Democratic County Chairman Rich Schaeffer and friend of racist County Executive Steve Levy – created the Preservation Fund to buy vacant land not to be developed. That fund has now been raided by Supervisors in East Hampton and Southampton in order to pay salaries and other expenses. In other words, instead of the painful decisions, they have dipped into that money improperly, if not illegally.

What does this tell you? It tells all of us that the source of funds to run the government – the money used to abuse New Yorkers, landlords, non-resident taxpaying property owners – has dried up. The entire local economy in the Hamptons is in deep, deep trouble. And still, like before, they exclude the ONLY source of money in their planning or government. Calls for a Hamptons Advocate fell on deaf ears in the past. That is unlikely to change with another administration of Republicans who only want power.
With wins by Obama, Pope and Schiavoni, the economy as well as the political landscape may change without their cooperation.

In Manhattan, there is more subtlety. But, change in Manhattan will come in the form of alternative political structures. The fact that Democrats control the agenda in a liberal or progressive city, may be challenged. As the economy tanks in Manhattan, politicians may find that they do not have guarantee of a sinecure in office.
Fundraising will change. The money will not be there.

As the budget decreases, as tax revenues dry up, and the City and private workforce decreases – and as deflation takes hold, politicians will have to work harder to retain the trust of voters. The Obama win will comfort many but change is the message – not status quo.

Notes on the Dictatorship

In America you can go on the air and kid the politicians, and the politicians can go on the air and kid the people.
-- Groucho Marx (1890 - 1977)


As people dropped off their young children today at school, Officer Maresco was directing the Police Department tow-trucks to remove the cars belonging to known criminals -- parents who were located in a No Parking zone.
Five Police tow-trucks cruised around the two schools waiting for the parents to escort their children in safely – and, as they walked out of sight for this 10 minute ritual known loosely as PROTECTING CHILDREN – the tow trucks swooped in. The tickets had already been issued on the spot.

The fact that numerous meetings were held with representatives of the 6th Precinct, Community Board #2, including Brad Hoylman (before he was Chair) and Commissioner Forgione, the City agencies persist in penalizing parents in trying to protect their children. Why would they say that there is no such sign allowing children to be dropped off in the mornings – and that the “word will go out so that this does not happen” and then just continue to do it?

Of course, all of this flows from the top. Bloomberg has once again proven that Ve Must Vollow Ze Rulz.
The Nightlife industry has experience Gestapo tactics by the police, with phony arrests and set-ups to shut down clubs and bars;
Communities have been ruined with Department of Buildings and Department of Transportation actions that spit on the needs and desires of residents – and, lest we not forget –
Democracy has been suspended with the term limits fiasco.

So, now that we have severely reduced crime, the City will now go after parents and children? Do you smell a prude who has the arrogance of power and money?
Another weak link where our Dear Leader can assert his complete control over our thoughts and wishes?
Even our children’s safety is an irrelevancy.

We need better leadership than this.

Trump Safety

The United States is a nation of laws: badly written and randomly enforced.
--Frank Zappa

Walking along Varick Street as you cross Spring, Trump SoHo is a reminder that safety is now the prime issue with this project, assuming that it is legal. After crane collapses and a worker’s death, you would think that nothing could go wrong. I even controlled the urge to look up at the 42 or 45 story construction, which is completely out of place in this neighborhood.
After Speaker Quinn’s hearings and lawsuits by the SoHo Alliance, what could go wrong?

Well, the 5 construction and safety workers were busy looking up but said nothing as I walked along Varick under the shed protecting pedestrians. After reaching the other end at Dominic I saw a few more. Only they were telling a pedestrian NOT to walk where I had just exited. They, too, were pointing up and then said “They shouldn’t have let you through, that’s a 9 ton load coming down on the crane and if…” That was relaxing. Then, I looked up. Sure enough, a huge load was making its way down from the crane exactly over where I had been walking. My life insurance is up to date but would the 3 year old understand?

Does anyone understand? That we have a project where safety is LAST.

Don Ameche and Bob Dylan were wrong. Some things don’t change

The Mean Streets of SoHo

Politics... have always been the systematic organization of hatreds.
-- Henry Brooks Adams

Has anyone noticed that Grand Street has been turned into a rat maze?
In an industrial, manufacturing zone (why Chris Quinn and Hi-Rise Mike still let developers put up hotels in SoHo with no review) we have trucks that cannot turn the corner and children than cannot cross the street. We have parents that cannot cross the street with baby carriages. We have lots of space for bikes, though. Although, there are few bikes and lots of pushcarts, and homeless carts with bottles and cans. Of course, no one can stop to drop off their children or park overnight on one side of the street – now that there is “No Stopping.” Not to mention the fact that there are now cars parked in the middle of the street with grid-work lines galore. It looks like a board game.

(GRAND STREET. CARS IN LANE NEXT TO GREEN PATH ARE PARKED)























There are other areas in the City which are extremely upset as well. It seems that in Brooklyn, 30 blocks have lost their parking on both sides of the street. Apparently, there is a Mayoral Directive that is not subject to any community review at all. Read the comment sections on StreetsBlog.

It's too bad we don’t have more artwork in SoHo instead. The billboards are still everywhere, though. None of the politicians or the Community Board did anything about that. No public or guerilla art was ever saved or supported; nor has there been any effort to give Bob Bolles park any support –- although, Alan Gerson gave a million bucks to just one Village park. And, pedestrians have been completly overlooked.

So, its the Department of Transportation, another of Bloomberg’s autonomous fiefdoms like the Building Department, which apparently decides what they want to do with minimal discussions (and great support from members of the Transportation Committee who do not allow disagreement from SoHo). D.O.T. just makes a decision without the residents and they simply implement their plans, as they did on Grand Street.

(BROADWAY BUS ISLAND IN SOHO)













No one in SoHo knew about the Broadway islands either and no one in SoHo knew about the impending destruction of Grand Street. When Commissioner Janette Sadik-Kahn, Bloomberg’s current Commissioner of D.O.T., permits press conferences to announce their plans -- it is interesting to note that Transportation Alternatives (a bike advocacy organization) often appears at photo ops -- but no one from SoHo is ever invited – even when it affects our community. One can only wonder why. Is it perhaps because we either don’t know what is happening or may not agree with it? The controversy involving the Public Theatre is an additional case in point with respect to D.O.T.

Much of the current “planning” involving SoHo dates back to the reign of D.O.T. Commissioner Iris Weinshall, Senator Schumer’s wife, when the Houston Street Reconstruction was in its planning stages. THAT was the street, which was originally to have provided a cross-Manhattan route for bikes – which in a half-assed way, Grand Street has been elected to be. Even bike enthusiasts were in favor of Houston Street with curbs to protect them.


(HOUSTON STREET)













It was rejected by D.O.T. because of a study in, are you ready for this, Idaho, which claimed that that route was unsafe. Since Houston Street was comletely reconstructed, THAT was the street which should have benefited from a rational cross-Manhattan bike lane. It would have been a win-win situation for pedestrians, vehicular traffic AND bikers. What we wound up with is a route, which has been installed without notice or truly open meetings. Those who did know and attended from SoHo were silenced early on by the Community Board #2 Transportation Committee. At the Community Board it was badly advertised and very poorly decided. Opposition was not tolerated because D.O.T. mandated that it be done. The horrendous decisions were made for a community on narrow clogged streets in SoHo – with the help of a politicized Community Board. So, what we now have is a poorly designed, chopped up street which is ruining businesses (no parking or stopping allowed anytime), and which is confusing motorists, impeding traffic and limiting the flow of trucks in an area that is already overburdened by the Holland Tunnel.


(BROOME STREET & WEST BROADAY)













But, that’s only part of the picture.

This is an example of a small group of NIMBYists running the Community Board Traffic and Transportation Committee – Chaired by Shirley Secunda and Ian Dutton who live in Greenwich Village – making poor decisions out of allegiance to the D.O.T. without permitting any serious input from SoHo. Residents would demonstrate if the Grand Street plan were ever tried in Greenwich Village.

(GREENWICH VILLAGE BIKE LANES -BLEECKER top HUDSON bottom)
























This appears to be the local version of the Stockholm syndrome on that committee -- psychologically held hostage to the D.O.T.'s wishes and desires.
Board Chair Hoylman needs to revisit this decision and reverse it, if he has the guts to confront the Mayor and his flunkies.
Why? Because, the quality of life in SoHo demands it. We are a small community, not a testing ground for out-of-town
bike enthusiasts who want SoHo to be their playground. Do a bang-up job of protecting bikers on Houston Street where there is room for it and get rid of the junk and crazy stripes on Grand Street! Support for rational bike lanes have support. What has been done on Grand Street is completely unacceptable to residents.

Here’s the big problem: Everyone has ignored the plight of PEDESTRIANS - FIRST - in SoHo. That MUST be the priority.

Caregivers pushing baby carriages, elderly crossing the street, parents taking their children for a walk cannot do so without being accosted by cars, trucks, buses, and now bikes. We have new green pathways carved out of our streets, which makes an insane state of confusion – and no crosswalks for pedestrians. Residents cannot legally pull over their cars where they live to load or unload groceries or drop off children safely. In the few areas where there are crosswalks, there are no D.O.T. officers to protect them. Try to walk across the street on weekends at West Broadway and Broome Street, if you dare. No tickets are given out and pedestrians, who cross where there are D.O.T. officers, are often ignored if there is less than 4 inches between cars – even when the person has the light. On Bleecker Street and 7th Avenue South in the Village a whole team of cops ticket cars simply for not using a turn signal. There are no cops in SoHo, except the Midtown Taskforce a few hours a weekday at two intersections.
But, step on a green pathway and an irate biker will scream at you or hit you as they drive the wrong way on these paths. This is not Denmark, where street paths were planned out decades ago for the benefit of a society that supports biking -- which is NOT at the expense of pedestrian safety.
Shall we paint green paths on all Village thoroughfares, place protrusions in the middle of those streets, and park cars in the middle of the street and eliminate overnight parking in most areas? Remember, many of these streets are in landmarked areas in SoHo. And, there are only four cross streets in all of SoHo. But, we know that won’t happen. The D.O.T. Commissioner knows better to pick a fight with a Community Board that is stacked for the Village and against SoHo. We have no such support from our politicians.

We have broken or completely missing crosswalks, missing cobblestones, decaying or broken sidewalks, no protection from D.O.T. officers, and no pedestrian safety. NONE of the streets in Greenwich Village have been treated like Grand Street. None exist Uptown.

(CURRENT CONDITION OF SOHO CROSSWALKS - photo: Beat Keerl)











As a friend on the upper East Side recently said when asked about the Grand Street problem: “They wouldn’t tolerate this where I live.”
Are we, in SoHo, to be treated like guinea pigs for the D.O.T. Commissioner’s friends -- who would like to live and party in SoHo – and who would like to tell us how we should live? Are we the underrepresented neighborhood where the Community Board performs its experiments to save themselves discomforts?

We in SoHo, who provide the City with an arts heritage, put up with endless Film shoots, suffer from illegal billboards, breathe Downtown’s pollution from the Holland Tunnel, and bring money to the City coffers – get nothing in return. We get no support from Mr. Gerson, our Councilman, nothing but promises from Mr. Stringer, the Borough President, and absolutely nothing from the Speaker, Christine Quinn, who has let our community be developed mindlessly and then sold out to Bloomberg.

Remember this when you get your next fundraiser invitation.

The Hobgoblins of Inconsistency

Ninety percent of the politicians give the other ten percent a bad reputation.
--Henry Kissinger (1923 - )

For a good read on the term-limits saga, Henry Stern’s continuing reportage and commentary gives you some pithy views of how the game is playing out. The latest round of political posturing seems to suggest that Speaker Quinn expects more than she is getting from Hi-Rise Mike’s staff. And, while she expects a plum appointment in his new third term for rounding up the natives to push through the Council vote, all is already not golden. Whether the Councilmembers' compliant efforts will be rewarded by another term, or whether either the Council vote will be reversed by the Justice Department (not likely), or whether voters turn out the quislings at the polls next year (likely) – remains to be seen.
What is more likely, and is being played out right now – is that having produced the required vote, many Councilmembers are feeling their oats. They are giving Quinn and Bloomberg a little stress.
While politics is a many faceted game, three-dimensional chess comes to mind. And, it should not be lost on any of us that while the media has been brainwashing everyone about Mike’s much-touted popularity, never discount a multi-leveled plan that anticipates a Love Fest when our Mayor “relents” and decides upon having another special referendum to confirm his high level of morality and support for democracy. Can’t you see the hugging and kissing in the streets as we all learn to love Big Brother – with the big fat checkbook – when we are told there will be a referendum after all?
But, don’t expect love and kisses from Downtown where the hotels are sprouting like daisies – as the City agencies ignore tenants and residents who are being sold out for the benefit of developers. Hotels, a fake 45 stories Trump condo and a 3 District Sanitation garage, to boot.
Quinn has practically signed her soul away for Mikey, Alan Gerson has sold out SoHo -- and the voters will remember. Apparently, a new blog/website devoted to Quinn’s questionable popularity has recently appeared. Can Gerson’s be far behind?


While the term-limits fiasco plays out, many of the Downtowners are figuring out what their next job will be. Whether they will run, whether they can run, whether the on-again, off-again pleasures of Mikey will change yet again.
Gerson is running for his seat again and the likely opponents will be Pete Gleason and Margaret Chin. Menin will likely not challenge Gerson. Gerson may be vulnerable despite the fact that he’s a “nice guy.”
Gleason is tenacious, close to the unions, and committed. He is known as someone who remembers his friends and hires people who, when they pick up the office phone, will be able to answer a question. Jim McManus said of those he has supported, “you can pick up the phone and get him on the line.”
Margaret Chin is still a bit of a cipher. She is well respected in the Asian community but has not yet broken out of that provincial mold in some people’s minds. She is enormously effective and has become a solid supporter of stabilized tenants. But, again, it has been limited to the Chinatown community. Her intelligence and drive is still encapsulated and she would need to be seen as breaking out of that.
Julie Menin, Chair of Board #1 has appeared on CNN and seems to have decided that her star is tied to political expertise with knowledge of national politics. With a lot of cash and a PR firm behind her, the reality of what she really knows or understands is debatable. There have been a few snickers, however, by Downtown political junkies over that. While the clamor over the aborted D.I.D. incursion has subsided it is unknown whether this permanently damaged her support – at least outside of Community Board #1. Menin’s evaluation of a run for City Council seat may have as much to do with Alan’s omnipresent Jewish mother (Sophie) as any political issue. It is widely assumed that Jewish females have a lock on downtown voters. Menin has made numerous mistakes, including taking the advice of a small coterie of Downtown activists who are about as community-minded as Genghis Khan.
So, we may or may not have another five years of Alan, based upon how loudly Sophie yells out at him from behind the phone. We all await the Vendor Law, for example, in SoHo after what could only kindly be called “minimalist” politics. Nothing else, after all, has happened for SoHo in eight years.


There are positive expectations that Daniel Squadron will give SoHo residents a much-awaited shot in the arm. With numerous problems that have long been ignored (illegal billboard proliferation, traffic management and pollution, tenants rights, antiquated zoning and overzealous development, lack of parking, liquor license oversaturation) --we look to Election Day for the conclusion of a stellar campaign. Squadron has indicated that he is an activist and will work tirelessly for SoHo. We’ll keep you posted.