Monday, August 20, 2007
Shoes. . . and economics??? No joke.
More about the fashion industry, for those who care.
We’ve opened a new shoe department here that has its own floor on Fifth Avenue. The marketing folks (myself) here have created a pretty big to-do about it, boasting the world’s largest shoe department selling Gucci, Dior, Prada, Jacobs, etc., etc., etc., and in a space which we managed to get the USPS to designate its own ZIP code for. In all, about 10,000 shoes are there for between $600 to upwards of thousands of dollars on a floor that has a 70 foot wall of hand-blown Murano glass bubbles, private VIP sales rooms (for which we are known), and other niceties no other luxury retailer has.
We’ve been working on it since I’ve been here, and I have to say it’s fabulous. The irony of this whole thing is that the guy who has been bitching about housing costs, Wall Street bonuses, and the like, happens to be in an industry who’s production certainly can expand to the ultra-rich – this is why people dress better when they get weathier well before their address does.
The market in fashion is far more efficient than housing – at least here in NYC.
We’ve opened a new shoe department here that has its own floor on Fifth Avenue. The marketing folks (myself) here have created a pretty big to-do about it, boasting the world’s largest shoe department selling Gucci, Dior, Prada, Jacobs, etc., etc., etc., and in a space which we managed to get the USPS to designate its own ZIP code for. In all, about 10,000 shoes are there for between $600 to upwards of thousands of dollars on a floor that has a 70 foot wall of hand-blown Murano glass bubbles, private VIP sales rooms (for which we are known), and other niceties no other luxury retailer has.
We’ve been working on it since I’ve been here, and I have to say it’s fabulous. The irony of this whole thing is that the guy who has been bitching about housing costs, Wall Street bonuses, and the like, happens to be in an industry who’s production certainly can expand to the ultra-rich – this is why people dress better when they get weathier well before their address does.
The market in fashion is far more efficient than housing – at least here in NYC.
Sunday, August 19, 2007
For the last week or so I’ve been looking to cut my rent in half. And at a lease renewal rate of $2,400 – and I apologize for throwing the numbers out there, but it helps to drive the point home – one would not think that to be a difficult task. But nowadays it requres me to move all the way out to Brooklyn.
I’m an economist. What does my apartment situation say about inflation in general? I think about these issues often, and in sometimes abstract ways, but this time it has hit me on a personal note. Inflation rates, for the most part, are reported as averages, and policy determined on such numbers. On average the price level has gone up by X and incomes have gone up by Y. But at a behavioral level inflation is something that has massive distributional effects, absolutely nobody is on the “average”. Inflation works its way into the economy as a boon for some and a bust for others (like me). Recent rent increases in Manhattan are a textbook case.
Wall Street, a significant part of the economy here, recently paid out bonuses for individuals in the tens of million of dollars. That’s good news for them. With the Federal government pumping money into the economy and the Federal Reserve pumping money supply into banks stock prices have gone up more than they may have otherwise, a boon to Wall Street broker-dealers who make money in such transactions. And with that came a rather precipitious increase in income to those folks. The problem in New York is that we have not increased production of housing, restaurants, etc., in as large a scale. As a result, as our Wall Street tycoons try to spend more in Manhattan on housing, goods and services. Prices rise. And one would think that someone who has $10 million to spend would hardly effects the likes of me. That is naïve.
There was no increase in the supply in the housing markets of $10 million, so they bought in lower prices levels, crowding out those who would otherwise buy in those price levels, and those in those price levels crowd out those who do not own at that level, and so-on. In that period, of course, no ones income has increased at the same rate as Wall Street’s, so they are forced to a lower standard of living; same salary but lower – what economist call – real income, the $ income requred to purchase the same stuff. That’s me, for example, having to move out to Brooklyn -- rent poor. Eventually, the cost of living rises in such a way that companies find it difficult to hire and retain people in New York. So some skills will get immediate increases in income, while others – for example those making minimum wage – will take years to adjust, if ever.
Eventually, markets clear and, on average, people are making and spending more on things. But did Wall Street’s “real income” rise at the same rate as others? Doubtfully. That’s the pernicious effects of fiscal and monetary policy, and the fallacy of only looking at averages. Distributions abound, and an example of how inflation tears at the heart of society -- on average we are kosher, but in reality inflation was really a tax on the poor people holding cash.
With the seemingly endless supply of economists and political pundits, why is there such myopia in economic policy, and why do we continue to pull these same economic levers that have such harmful effects?
It’s because we are still stuck with Depression-era policy when we are not in a Depression and fixing the other things are too hard, politically. Capital and labor are not idol. Yet the government and Federal Reserve continue to want to think that their spending and expansion of the money supply are silver bullets. It’s not.
If Washington wants to do more for the economy they should do nothing, and eliminate all their bull-shit counter-cyclical policy immidiately. It does more harm than good. Have we learned nothing from Milton Friedman?
Don't they understad that I've got to move all the way the fuck out to Brooklyn?
I’m an economist. What does my apartment situation say about inflation in general? I think about these issues often, and in sometimes abstract ways, but this time it has hit me on a personal note. Inflation rates, for the most part, are reported as averages, and policy determined on such numbers. On average the price level has gone up by X and incomes have gone up by Y. But at a behavioral level inflation is something that has massive distributional effects, absolutely nobody is on the “average”. Inflation works its way into the economy as a boon for some and a bust for others (like me). Recent rent increases in Manhattan are a textbook case.
Wall Street, a significant part of the economy here, recently paid out bonuses for individuals in the tens of million of dollars. That’s good news for them. With the Federal government pumping money into the economy and the Federal Reserve pumping money supply into banks stock prices have gone up more than they may have otherwise, a boon to Wall Street broker-dealers who make money in such transactions. And with that came a rather precipitious increase in income to those folks. The problem in New York is that we have not increased production of housing, restaurants, etc., in as large a scale. As a result, as our Wall Street tycoons try to spend more in Manhattan on housing, goods and services. Prices rise. And one would think that someone who has $10 million to spend would hardly effects the likes of me. That is naïve.
There was no increase in the supply in the housing markets of $10 million, so they bought in lower prices levels, crowding out those who would otherwise buy in those price levels, and those in those price levels crowd out those who do not own at that level, and so-on. In that period, of course, no ones income has increased at the same rate as Wall Street’s, so they are forced to a lower standard of living; same salary but lower – what economist call – real income, the $ income requred to purchase the same stuff. That’s me, for example, having to move out to Brooklyn -- rent poor. Eventually, the cost of living rises in such a way that companies find it difficult to hire and retain people in New York. So some skills will get immediate increases in income, while others – for example those making minimum wage – will take years to adjust, if ever.
Eventually, markets clear and, on average, people are making and spending more on things. But did Wall Street’s “real income” rise at the same rate as others? Doubtfully. That’s the pernicious effects of fiscal and monetary policy, and the fallacy of only looking at averages. Distributions abound, and an example of how inflation tears at the heart of society -- on average we are kosher, but in reality inflation was really a tax on the poor people holding cash.
With the seemingly endless supply of economists and political pundits, why is there such myopia in economic policy, and why do we continue to pull these same economic levers that have such harmful effects?
It’s because we are still stuck with Depression-era policy when we are not in a Depression and fixing the other things are too hard, politically. Capital and labor are not idol. Yet the government and Federal Reserve continue to want to think that their spending and expansion of the money supply are silver bullets. It’s not.
If Washington wants to do more for the economy they should do nothing, and eliminate all their bull-shit counter-cyclical policy immidiately. It does more harm than good. Have we learned nothing from Milton Friedman?
Don't they understad that I've got to move all the way the fuck out to Brooklyn?
Monday, August 13, 2007
Epiphany
A new sort of tornado has hit New York. It started a couple of weeks ago when Judy arrived along with Josh. Friday night he went from drinking beer and arguing about football with friends in Brooklyn, to sipping cocktails and singing show tunes with Judy and me in Manhattan’s fading piano bars. It took my liver and voice about two days to recover.
The following weekend my cousin was in for his birthday. We went out in Hell’s Kitchen where he was on the prowl (ah, the younglings), then to an East Side piano bar. The weather turned from torrential rain to unseasonally mild, spring-like weather, and added fuel to the motley events that followed: We dined alfresco at a French restaurant for brunch, saw the hysterical new musical “Xanadu, Seriously” then out to Caffe Taci for a night of amateur (but wonderful) opera, before hitting the Monster. God, I’m getting exhausted just remembering it all.
And it all just reminds me that the sun may be, in some ways, setting on this lifestyle. With large rent increases for me and across Manhattan, the cost of this lifestyle is out of control. I just formally declined to renew my precious Manhattan lease. (My rent would have been increased to $2,400 a month, 20% higher than it was just two years ago.) The realization has also set in that there’s nothing left to explore. I’ve worked in Consulting, marketing, at a collections agency, luxury retail; I've done grad school, a failed attempt at a PhD, and have lived in Chicago, Washington, and New York just over the last 4 years - there is little left outside the the absurd. It’s time to settle down and save some money to do what my friends have already done: purchase a place of their own and tone down their lifestyle.
Nonetheless, there are things that will not, and can not, be cut: Going to the opera and exploring all the cultural live that Manhattan has to offer. I still have my subscriptions, opening night, etc. The great thing about this New York is that I can still consume its culture, but not pay so much to live here. I have finally gotten over that island mentality that has me paying twice what most New Yorkers pay in rent.
I have to also say that I’m really not a Manhattan person. I’m more bridge-and-tunnel, as they say here. Most of the people here that I regard as my second family here are bridge-and-tunnel. It’s time to make those foreign places across the Brooklyn, Manhattan, Williamsburg, Queensborough, and Triboro bridges my home and stop being a Manhattan wacko.
Yea. . . . eeer, great. Where the fuck to I start? I’ve never been across the East River.
The following weekend my cousin was in for his birthday. We went out in Hell’s Kitchen where he was on the prowl (ah, the younglings), then to an East Side piano bar. The weather turned from torrential rain to unseasonally mild, spring-like weather, and added fuel to the motley events that followed: We dined alfresco at a French restaurant for brunch, saw the hysterical new musical “Xanadu, Seriously” then out to Caffe Taci for a night of amateur (but wonderful) opera, before hitting the Monster. God, I’m getting exhausted just remembering it all.
And it all just reminds me that the sun may be, in some ways, setting on this lifestyle. With large rent increases for me and across Manhattan, the cost of this lifestyle is out of control. I just formally declined to renew my precious Manhattan lease. (My rent would have been increased to $2,400 a month, 20% higher than it was just two years ago.) The realization has also set in that there’s nothing left to explore. I’ve worked in Consulting, marketing, at a collections agency, luxury retail; I've done grad school, a failed attempt at a PhD, and have lived in Chicago, Washington, and New York just over the last 4 years - there is little left outside the the absurd. It’s time to settle down and save some money to do what my friends have already done: purchase a place of their own and tone down their lifestyle.
Nonetheless, there are things that will not, and can not, be cut: Going to the opera and exploring all the cultural live that Manhattan has to offer. I still have my subscriptions, opening night, etc. The great thing about this New York is that I can still consume its culture, but not pay so much to live here. I have finally gotten over that island mentality that has me paying twice what most New Yorkers pay in rent.
I have to also say that I’m really not a Manhattan person. I’m more bridge-and-tunnel, as they say here. Most of the people here that I regard as my second family here are bridge-and-tunnel. It’s time to make those foreign places across the Brooklyn, Manhattan, Williamsburg, Queensborough, and Triboro bridges my home and stop being a Manhattan wacko.
Yea. . . . eeer, great. Where the fuck to I start? I’ve never been across the East River.
Wednesday, August 08, 2007
A tornado storm strikes NYC
I went to bed early last night. It was kinda nice. . . haven’t been sleeping all that well lately. So when I woke up this morning at around 4am during a storm, it seemed like some sort of dream as I fell back asleep. I drug my ass out of bed to get to work. Unlike the rest of the week I was out of the house on time and on my way to an early start on the day.
That all ended as my journey to the subway ended in denial: the subway wasn’t running. What?! What do they mean the subway wasn’t running? While there was little left of the storm during this sunny, 90-degree morning, except the stifling humidity, it was apparently bad enough to flood the subway.
Thinking I’d outsmarted the block-long line for the bus, I decided to take another bus to the West Side – the subway must be running there. Boarding the cross-town bus and heading across Central Park in triumph, I saw the bus coming from the West to the East side –it was packed with people, too. As the passengers of the two busses caught sight of each other, our smug faces turned to horror. We have just relocated our problems.
And I found myself on the West side trolling around for a bus or something. All the busses were packed. I carried on, determined to find something to take me to work. At this point I’m sweating like Whitney Huston at customs. I finally shoe horn myself into a bus during traffic that seemed like a standstill, and it takes another hour to get 30 blocks.
Apparently, the weather was pretty damn bad. The New York Times reports that a tornado struck the city, in Brooklyn, where winds reached 135 mph.
Ah! The perils of bad weather in urban places.
A tornado strikes Brooklyn
That all ended as my journey to the subway ended in denial: the subway wasn’t running. What?! What do they mean the subway wasn’t running? While there was little left of the storm during this sunny, 90-degree morning, except the stifling humidity, it was apparently bad enough to flood the subway.
Thinking I’d outsmarted the block-long line for the bus, I decided to take another bus to the West Side – the subway must be running there. Boarding the cross-town bus and heading across Central Park in triumph, I saw the bus coming from the West to the East side –it was packed with people, too. As the passengers of the two busses caught sight of each other, our smug faces turned to horror. We have just relocated our problems.
And I found myself on the West side trolling around for a bus or something. All the busses were packed. I carried on, determined to find something to take me to work. At this point I’m sweating like Whitney Huston at customs. I finally shoe horn myself into a bus during traffic that seemed like a standstill, and it takes another hour to get 30 blocks.
Apparently, the weather was pretty damn bad. The New York Times reports that a tornado struck the city, in Brooklyn, where winds reached 135 mph.
Ah! The perils of bad weather in urban places.
A tornado strikes Brooklyn
