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You're one of those folks who has predicted 10 of the last 3 recessions, aren't you?
Tenured colleagues laughed at me when I, a pissant young lecturer, called the tech bubble just that back in the day. I am no swami, but it's like betting on pro football. If you do the legwork and the research you will often be wrong but you will be up overall for as long as you choose to bet. And calling the impending collapse of a local economy based in large part on an industry in trouble AND on income from renters who are counting on eternal largesse from AMEX, Visa, etc to get by is what the bettors call a "gimme".
Here's the flaw in this logic, though. Credit cards and credit card debt are small beans compared to mortgages. Usually, with credit debt, we're talking defaults that go into the tens of thousands. Mortgage defaults are in the hundreds of thousands, and millions. It would take probably more than half of all credit card users to have defaults in the high tens of thousands to make a ripple even similar to the housing crash.
Let's say, and I am being very conservative, 10% of people renting in all of NYC are using credit to pay for groceries, transportation, utilities, recreation, etc. When the spigot from AMEX/VISA/MC gets shut off, and their other resources run out, they default on their lease because they can no longer afford to pay their rent on top of other expenses. This would be problematic for a significant number of landlords, who would not only be without the money owed them but would not be able to attract new tenants to replace them at the existing rate, in such a tight national credit climate. This will without a doubt lead to mortgage defaults on the part of many of the less savvy landlords, and a city of this size with these property values this will be catastrophic.
Let's say, and I am being very conservative, 10% of people renting in all of NYC are using credit to pay for groceries, transportation, utilities, recreation, etc. When the spigot from AMEX/VISA/MC gets shut off, and their other resources run out, they default on their lease because they can no longer afford to pay their rent on top of other expenses. This would be problematic for a significant number of landlords, who would not only be without the money owed them but would not be able to attract new tenants to replace them at the existing rate, in such a tight national credit climate. This will without a doubt lead to mortgage defaults on the part of many of the less savvy landlords, and a city of this size with these property values this will be catastrophic.
If NYC implodes that means the US is imploding.
Do you think NYC is unique in people living off of credit cards?
NYC will not go the way of Detroit anytime soon. NYC biggest problem is its pension and healthcare liabilities. These will get renegotiated real quick if the city is on th verge of bankruptcy.
Past these 2 liabilities, the city is actually in really good fiscal health.
Comparing todays NYC to Detroit doesn't make much sense.
Btw, anybody with half a brain called the tech bubble. The problem wasn't calling it. The problem was timing it.
Last edited by wawaweewa; 07-20-2013 at 10:37 PM..
Let's say, and I am being very conservative, 10% of people renting in all of NYC are using credit to pay for groceries, transportation, utilities, recreation, etc. When the spigot from AMEX/VISA/MC gets shut off, and their other resources run out, they default on their lease because they can no longer afford to pay their rent on top of other expenses. This would be problematic for a significant number of landlords, who would not only be without the money owed them but would not be able to attract new tenants to replace them at the existing rate, in such a tight national credit climate. This will without a doubt lead to mortgage defaults on the part of many of the less savvy landlords, and a city of this size with these property values this will be catastrophic.
Except you're making the assumption that all NYC landlords who's renters are living beyond their means, rely on rental income to pay their mortgage.
See, the thing is landlords should be able to afford their mortgage without their rental incomes. Landlords who can't afford their mortgages without rental incomes were only able to get loans in the first place because of the lax regulations from the 90s. So it all comes back to the banks.
Detriot was hit harder by the "slaughter of cities" than NYC becuase it was more industrial, more unionized and more ethnic Catholic than NYC. The way to break those cohesive mostly Catholic labor unions was to bring in southern sharecroppers who would work for less and did not have a tradition of guild labor.
Bust up the urban ethnic neighborhood, break down the urban community, replace them with rural sharcroppers and push the ethnics out to the suburbs for "americanization". No where was this more common than Detriot as it had the highest percentage of union labor and required the most extensive ethnic cleansing in the eyes of the protestant ruling class. This is why Detriot became a warzone. It was sacrificed.
NYC will not go down the same route as it always had a large banking industry. After the 20th century urban ethnic cleansing NYC made a rebirth as the children of the culturally vapid suburbs return to NYC to try to live a somewhat civilized life within the urban paradigm. This may save NYC. Very. Few from the suburbs are returning Detriot. Too many rural protestants there- they uncivilized that urban center.
Dont mke me laugh. You think a bunch of so called wannabe privileged gentrifier is going to save NYC. Dont get me wrong gentrification works but only in small scale but not on longterm. Also the back to the city movement is just a trend which can wear its self out. Once these suburbanites start popping out kids in Harlem and parts of Brooklyn and once they csnt afford private education, its back to the suburbs to raise a family. I already know of a few ex gentrifiers who have done this. But overall I agree with the rest of your post nonetheless.
Dont mke me laugh. You think a bunch of so called wannabe privileged gentrifier is going to save NYC. Dont get me wrong gentrification works but only in small scale but not on longterm. Also the back to the city movement is just a trend which can wear its self out. Once these suburbanites start popping out kids in Harlem and parts of Brooklyn and once they csnt afford private education, its back to the suburbs to raise a family. I already know of a few ex gentrifiers who have done this.
Immigrants are much more important. They work hard for lower pay. They save and they build.
NYC has no shortage of immigrants.
This is without the immigration bill passing. If the bill passes in some form, NYC will absorb a substantial percentage of immigrants over the next 20 years.
The housing occupancy rate will be extremely high for years to come. Saying otherwise is just ignorance of the dynamics at play.
Except you're making the assumption that all NYC landlords who's renters are living beyond their means, rely on rental income to pay their mortgage.
I make no such assumption. Not all, not most. My research is showing that such landlords are a small percentage. But there are still enough of them to spell big trouble.
Furthermore, the insolvent renters seem, and I emphasize seem, to wind up disproportionately as the tenants of the semi-solvent landlords.
Will another Lehman finish NYC for good? you already pointed to the housing market as a feature of the next collapse, but do you have any predictions on what the flashpoint will be? Bonds? Housing? the physical gold market?
Due to abortions, controception, selfishness and even sodomy these suburban hipsters may be a limited time run. They are lacking in something they likely never considered in this self-absorbed era - fertility. Since they are the most sterile generation in history I tend to agree that their forays into places like Bushwick may only last for one generation. One thing is clear is that they do lack. That cultural vitiality. If any of them do manage to reproduce - it is so rare that hipster reproducing are almost as big of a story as pandas resporducing in captivity- they likely will make the trek back to the friendly confines of the consumer oriented suburbs.
Maybe a few will stay. It looks like outer borough NYC will continue to become west indian, hispanic and irish. As these are the only ethnicities moving in. Does anyone move/immigrate to Detriot?
Quote:
Originally Posted by Bronxguyanese
Dont mke me laugh. You think a bunch of so called wannabe privileged gentrifier is going to save NYC. Dont get me wrong gentrification works but only in small scale but not on longterm. Also the back to the city movement is just a trend which can wear its self out. Once these suburbanites start popping out kids in Harlem and parts of Brooklyn and once they csnt afford private education, its back to the suburbs to raise a family. I already know of a few ex gentrifiers who have done this. But overall I agree with the rest of your post nonetheless.
Will another Lehman finish NYC for good? you already pointed to the housing market as a feature of the next collapse, but do you have any predictions on what the flashpoint will be? Bonds? Housing? the physical gold market?
The banks are healthier than ever.
They offloaded their garbage unto the FRB's balance sheet which ultimately means the US treasury's balance sheet which then leads to the globes balance sheet seeing that the USD still reigns supreme.
Another Lehman will not happen anytime soon.
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