Monday, April 26, 2010

Let the Games Begin

Money is better than poverty, if only for financial reasons.
-- Woody Allen (1935- )

The St. Vincent’s saga has been a long and unpleasant one. One of the most essential institutions in the Downtown neighborhood and certainly the most necessary medical facility -- has been this hospital and emergency room. It would be hard to find a family that has not relied on the top flight Emergency Room and what some have called the best-kept medical secret in New York.

Whether the doctors, nurses, attendants, ambulance personnel and other hospital employees will manage to weather this storm, is yet another story. But, from the AIDS epidemic, to the SARS scare, to the 9-11 disaster, the hospital and its staff has always been there for the community. My only complaint involved the parking. Other than that, they saved my son’s life. Literally.

Lenox Hill, another important Manhattan hospital, is also reportedly in financial trouble. Upper East Side friends have reported long Emergency Room waits, only to spend hours on a gurney in the hallway waiting for attention. The large area of Manhattan without St. Vincent’s leads you away from where you live or where your doctors are affiliated.

Where do you bring your kid in the middle of the night with a 105-degree temperature when an ice bath won’t do it? Where do you take a cab to when the headache pain is so intense that you fear an aneurism? To a new hospital with no doctor you know or who knows you?
At a kid’s party last week one of the 5 year-olds hurt his arm and not knowing where to go we had to drive in rush hour traffic to N.Y.U on 33rd Street. The Downtown mom did not know where to take him. Suppose it were a life-threatening condition?

Forget the Rudin deal, forget the politicians (who also sometimes need a hospital in a hurry), and forget the community organizations that have taken both sides of the fierce opposition to St. Vincent’s development -- in order to save the hospital services.

This is a deal that will only be saved by financial realities.

So, the well-place rumor is that Mount Sinai is ready to do the deal and is in the wings behind curtain #1, pending resolution of the $700 million of St. Vincent’s in debt -- which the new potential suitors will not assume. Shortly, they may not have to, and will take over the hospital operation.

Let’s hope so.

Friday, April 23, 2010

A New Era

It’s never just a game when you’re winning.
-- George Carlin

The election on Thursday evening at the Downtown Independent Democrats ushered in a new era for residents of lower Manhattan. One of Manhattan's most powerful political clubs, which had been headed by Sean Sweeney, brought in some new leadership. After an informative speech by Assembly Speaker Sheldon Silver, the voting took place. What was striking, was the sense of camaraderie among the members – a stark contrast to the previous elections, which had been marred by, attempts to pack the club and dislodge the leadership.

Marc Ameruso challenged winner Jeanne Wilcke for the Presidency, but the other officers were largely unopposed.
However, while there was a sense of excitement, there was no rancor or divisiveness. The days of the Julie Menin and David Reck challenges to power appear to be over. He now has his own club with former District Leader Linda Belfer and Bill Love.

Sweeney remains as Treasurer and spent most of the evening photographing luminaries. He had to borrow a camera because his own needed help. Having a Scotsman watching even his own money is probably a good sign.

Wednesday, April 21, 2010

Just Desserts or Black Swan?

Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.
-- Sir Winston Churchill (1874 - 1965)

Trying to read between the tealeaves in this regenerating economy is no easy task. While the numbers appear to show that business is improving in certain sectors, employment has again dropped along with optimism and foreclosures have again surged in March.

Improvements in certain real estate in some sections of the country have been noted. Condos in Manhattan have reportedly increased in both sales price and numbers of transactions. There is a market in Manhattan for higher-end apartments (above $3 million) and for Hamptons’ summer homes in higher price brackets (above $2 million) as well as very low priced housing (under $350,000). Most of these transactions follow a simple logic: FNMA mortgages are readily available up to $417,000 and for those happy souls with cash – the lack of mortgages is not a stumbling block. Discounts of 15 to 20 percent all across the board are common.

Meanwhile the foreclosure numbers keep rising and more product comes on to the market. This ensures that home values will not appreciate to the top of the market (2006) until the year 2020 in many locations. Fully 25% of all homes are worth less than the mortgage on it.

Businesses, on the other hand, are suffering. Unfortunately, small businesses employ more than 60 percent of the labor force. If loans are not available, most small businesses have few options: continue to operate at a loss, or fire a few people. When there are no people left to fire, the businesses must close.
Even the touted success that GM has paid back its government loans turns out to be like the shell game played on Canal Street.

The hangover, of course, is that unpaid bills and taxes follow everyone around and it doesn’t matter that there is no business. With no financing, many small companies and their employees are enmeshed in a death spiral. The banks have seen to severe bankruptcy restrictions to prevent a sane exit from Dante’s new Inferno.
Even Hollywood is suffering.
The government has attempted to deal with these issues in a variety of unsuccessful ways. Mortgage modifications are an acknowledged disaster, extended unemployment benefits has become the New Welfare, and rather than soften the crushing debt load for small businesses and individuals, 16,000 new IRS agents have been hired to tighten the noose.

Goldman Sachs, that paragon of American Capitalism philosophy, was finally charged with civil fraud for working its magic

After working diligently, sometimes hand-in-hand with JP Morgan Chase, to destabilize Villages, Counties and Countries with their credit-default swap derivatives – then perversely betting that their toxic handiwork would fail – they get a slap on the wrist from the SEC. Considering the degree of devastation caused by knowingly shopping their degraded bonds like Johnny Appleseed, while shorting them since they expected them to plummet, nothing short of scores of indictments are in order. But, that will not likely happen.

Here are some questions to be asked and answered:

Were the banks complicit in creating mortgage products that they knew would implode at some point

before they saturated the market through complicit mortgage brokers who created any and all documents to push them through – as recently came to light at Washington Mutual?

Were they designed to self-destruct from day one? And, were the securitized mortgage bonds created after harvesting the deadly mortgages back from brokers and then sold off – WHILE purchasing credit default swaps so that they could sit and wait for the bombs to go off?

Were homeowners and real estate investors duped by the fine print into accepting mortgages and easy money that were doomed to fail no matter they did?

Will the Goldman investigation spread to all of the other banks like JPMorgan, Morgan Stanley, Bank of America, Wells Fargo, Deutche Bank and a few that were decimated, like Bear Sterns, Lehman, Merrill Lynch and Washington Mutual? Given the fact that companies like Countrywide, Ameriquest, Long Beach Mortgage and thousands of other independent mortgage brokers were peddling dynamite – will an extensive investigation find out that all of this was planned and carefully executed since at least 2005?

Given the fact that no borrower ever had the time to read an entire mortgage document at a closing, was this the industry’s dirty little secret about duping the public?
Will this pass because the government has no stomach for it, or will Europe force our hand with its own investigations into the matter.

Then, there is the other dangling shoe in Europe -- which is the Greek financial fiasco. Of course, this too was partly constructed
by Goldman's "creative accounting." How many more of these fiscal time-bombs are buried within sovereign debt structures across Europe?

Either of these problems is capable of morphing into a Black Swan