Condo and Co-Op Crunch

As bad as the economy is, the worst is likely yet to come for those who live in condos and co-ops. Gothamist and Crain's are both reporting on skyrocketing maintenance fees for many Manhattan buildings, citing one Upper East Side co-op whose rates are shooting up 15%.

It is especially fierce in buildings that depend on retail and office rental income for their bottom line. Crain's notes:  "Ground-floor retail leases are major sources of revenue for many residential properties. For instance, such space in a building on Madison Avenue in the East 80s can fetch at least $300 a square foot. Retail rents can bring in millions of dollars, according to Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail leasing and sales division."

With the retail vacancy rate in Manhattan closing in on 18%, the numbers look pretty grim there.

While there are advantages to buying in a depressed economy, condos and co-ops may be a really rough bet. Home-seekers may be better off renting for the time being. Who knows, maybe you can find your very own Greek temple.

Bloomberg & Derivatives: Another Look At the Financial Crisis

The cover story of this week's Village Voice explains, in layman's terms, the damage done to our economy through credit derivatives (essentially insurance policies for large loans). The derivitives market became a big money operation by making money off of failed loans. 

An interesting twist to this is that the company who put together the hardware and software for pricing and clearing derivatives is Bloomberg, the company which is the cornerstone of Mayor Mike's vast wealth. The Voice takes a closer look:

"Did Bloomberg L.P. do anything illegal? Absolutely not. We prosecute hit-and-run drivers, not roads. But there are many questions—about the size of the derivatives market, the names of the counterparties, the amount of replication of derivatives, the role of securities ratings in Bloomberg calculations (in other words, could puffing up be detected and potentially stop a swap?), and how the OTC industry should be reported and regulated in order to prevent future catastrophes. Bloomberg is a privately held company—to the chagrin of would-be investors—and quite private about its business, so this information probably won't surface without subpoenas."

Lost City takes a less politic stance, comparing Bloomberg to Oppenheimer. "Bloomberg–he's the guy who's trying to convince us to elect him for a third term, because he's the only mayor who can handle things during a financial crisis like this one, right? Is that because, since he helped create the crisis, it's only right that he should clean it up?"

A recent NY1 poll shows that 57% of New Yorkers still disapprove of Bloomberg's move to extend his stay in Gracie Mansion. 46% said they think less of the Mayor because of how he's handled the term limits situation. I would suggest, in light of the Voice article, if Bloomberg wants to be our savior in the next election, he should encourage some transparency on the part of the company which bears his name.