2008 April 20 Sunday
Merely Rich Lagging Super Rich In Economic Downturn

I'm sure your heart bleeds for the people who can only afford one million dollar apartments. The poor dears are cutting back on their limo usage in New York City.

Buyers this year have already closed on 71 Manhattan apartments that each cost more than $10 million, compared with 17 apartments in that price range during all of 2007.

...

That said, providers of luxury goods reported anecdotal evidence of a widening gap between the merely rich and the ultrarich. Clifford Greenhouse, who owns a household-staff employment company, said he suspects that the merely rich might be starting to lag behind their far richer counterparts, and are trimming their budgets. He cited reduced demand for chauffeurs — a relatively small-ticket service — yet ever-strong demand for private chefs, butlers and “household managers.”

Darren Sukenik, a real estate broker with Prudential Douglas Elliman, said that while business may be slower for clients with a mere million to spend on apartments, none of his clients with budgets of more than $2.5 million have stopped shopping. Seth Semilof, the publisher of Haute Living, a luxury magazine, said that luxury car dealerships that advertise with him are pushing Bentleys and Rolls-Royces at the expense of less-extravagant cars like the BMW 5 Series.

Why even mention the BMW 5 Series? Surely nothing below the $110,000.00 BMW 750 Li is worth considering unless you just want a sports car. Why isn't there a $300,000 hybrid Rolls or Bentley so that the ultrarich can be environmentally conscious by boosting their gasoline mileage up to 12 or 15 miles per gallon?

Share |      By Randall Parker at 2008 April 20 12:42 PM  Economics Inequality


Comments
Wolf-Dog said at April 20, 2008 1:03 PM:

The ultra-rich (or at least the ones who are managing their finances) are so smart that they can weather the extraordinary gyrations in the economy and markets. For instance, although most people and most hedge funds lost big money in the real estate related areas (including securitized subprime investments) a few hedge funds made astronomical fortunes both on the way up and also on the way down, because they knew when to liquidate their long positions and replace these with short positions. Zero-sum Darwinism at its high point. There are even incredibly advanced artificial intelligence based computer programs to interpret the psychology of the investors from the syntax and grammar of the news articles in order to trade and win in the markets. In this paradigm, in order to win, a loser must be found.

But despite all these complaints against the rich, there is a blue collar revolution in the US, where there is a new rising middle class of producers. IF the dollar declines another 50 % against most currencies, which it probably will in less than a few years, then it is guaranteed that almost everything will be manufactured in the US, like in the good old days. The main reason the poor are becoming so poor in America, is the trade deficit. Once the trade deficit stops, which it ultimately will, then the enrichment of the upper class will be much less dangerous.

Kapper said at April 20, 2008 2:26 PM:

Wolf-Dog, you will have to howl at a countless number of full moons before your predictions in your second paragraph come true! If the dollar really does decline another 50%, there will hardly be any US middle class producers left as any new or reopened factories will be owned by foreigners, no doubt paying their workers (mostly former illegal immigrants coming off a fresh amnesty) in near worthless dollars. If there is any middle class left it will be a lucky few that both stayed out of debt and invested in commodities (oil, gold, etc.) which would soar in value while the dollar declines, and they won't produce much, just sell each other financial services like they do now.
And who's going to lead this blue collar revolution? Normally that would be a Democrat, but their leadership is just as rich and elitist as the Republicans are.
No, I don't see a blue collar revolution any time soon, but maybe a bloody one in a few decades.

gcochran said at April 20, 2008 9:20 PM:

As I understand it, there's someone who will convert your Rolls into a Rolls pickup truck. Maximally cool.

Wolf-Dog said at April 21, 2008 5:10 AM:

Wolf-Dog, you will have to howl at a countless number of full moons before your predictions in your second paragraph come true! If the dollar really does decline another 50%, there will hardly be any US middle class producers left as any new or reopened factories will be owned by foreigners, no doubt paying their workers (mostly former illegal immigrants coming off a fresh amnesty) in near worthless dollars.

---------------------

I won't have to howl too many years, because the "foreigners" will have to pay the US workers in America in wages that are competitive with the rest of the world, since the exchange rate will have declined. Already many Indian software companies are having difficulties competing with the American software companies. Additionally, it won't just be the "foreigners" who will be opening a lot of factories in America, the super-rich who have nothing but capital, also will smell an opportunity when the American labor becomes cheaper than in many other countries.


Post a comment
Comments:
Name (not anon or anonymous):
Email Address:
URL:
Remember info?

      
 
Web parapundit.com
Go Read More Posts On ParaPundit
Site Traffic Info
The contents of this site are copyright ©