Wall Street Unoccupied With 200,000 Job Cuts

Wall Street Unoccupied With 200,000 Job Cuts
Bloomberg, 21-Nov-11
By Max Abelson and Ambereen Choudhury

John Brady, co-head of MF Global Inc.’s Chicago office, was having a vodka cocktail at the Ritz- Carlton in Naples, Florida, overlooking the Gulf of Mexico, on the day his company reported its largest-ever quarterly loss.
“Wow, the sun just set,” Brady said to his wife and two colleagues attending a conference with him, he recalled in an interview. “I hope it doesn’t set on MF Global.”

A week later, on Oct. 31, the firm led by former Goldman Sachs Group Inc. (GS) co-Chief Executive Officer Jon Corzine collapsed. Brady and 1,065 colleagues joined a wave of firings that has washed away more than 200,000 jobs in the global financial-services industry this year, eclipsing 174,000 in 2009, data compiled by Bloomberg show. BNP Paribas (BNP) SA and UniCredit SpA (UCG) announced cuts last week, and the carnage likely will worsen as Europe’s sovereign-debt crisis roils markets.

“This is something very different,” said Huw Jenkins, a former head of investment banking at UBS AG (UBSN) who’s now a London- based managing partner at Brazil’s Banco BTG Pactual SA. “This is a structural change. The industry is shrinking.”

Wall Street rebounded from the financial crisis of 2008 with the help of unprecedented government support, including loans from the U.S. Federal Reserve. Goldman Sachs posted record profit the following year, and bonuses paid to securities-firm employees in New York City rose 17 percent to $20.3 billion, according to New York State Comptroller Thomas DiNapoli.

‘Nothing There’
Now, faced with higher capital requirements, the failure of exotic financial products and diminished proprietary trading, the industry is undergoing what Steven Eckhaus, chairman of the executive-employment practice at Katten Muchin Rosenman LLP, called “a paradigm shift.” The New York attorney, whose clients have included former Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan, said he has stopped giving his “spiel” about inherent talent leading to new work.

In interviews, a dozen people who have lost jobs at firms including Societe Generale SA, Royal Bank of Scotland Group Plc (RBS) and Jefferies Group Inc. (JEF) described a grim banking landscape that also includes Occupy Wall Street protests against unemployment stuck above 9 percent and income inequality.

“These are by far my darkest days,” said Scott Schubert, 49, who was dismissed in late 2008 as a mergers-and-acquisitions banker at Jefferies, a New York-based securities firm, and has been unemployed since. “It’s harder and harder to look for a job and feel that there’s nothing there.”

HSBC, BNP Paribas
Banks, insurers and asset managers in Western Europe have been hardest hit, announcing about 105,000 dismissals this year, 66 percent more than the region’s losses in 2008 at the depths of the financial crisis, Bloomberg data show. The 50,000 job cuts in North America this year are more than twice last year’s and fewer than the 175,000 in 2008.

Almost every week since August has brought news of firings by the world’s biggest banks. HSBC Holdings Plc (HSBA), Europe’s biggest lender, announced that month it would slash 30,000 jobs by the end of 2013. In September, Bank of America Corp. (BAC), the second-largest U.S. lender, said it would cut the same number of jobs. Both banks are trimming about 10 percent of their employees. Last week, BNP Paribas, France’s largest bank, said it will cut about 1,400 jobs at its corporate and investment- banking unit, and UniCredit, Italy’s biggest, said it plans to eliminate 6,150 positions by 2015.

“It’s a once-in-a-generation challenge,” said John Purcell, founder of London-based executive search firm Purcell & Co. “Everyone who has worked in the City since 1985 will have no idea of how to cope with this level of dislocation.”

Panic Attacks
Neil Brener, a psychiatrist whose patients work in London’s City and Canary Wharf financial districts said the stress is contributing to panic attacks, binge drinking and chest pains.

“Because there are fewer jobs, people are unhappy about being stuck,” Brener said. “They don’t have options about moving, and there is a sense of feeling trapped.”

London hiring could be frozen next year, according to the Centre for Economics and Business Research Ltd. Headcount in the City and Canary Wharf may fall to 288,225 by the end of the year, 27,000 fewer than in 2010 and the lowest since at least 1998, when there were 289,666 jobs, according to the London- based research firm.

Wall Street won’t regain its lost jobs “until about 2023,” Marisa Di Natale, an economist at Moody’s Analytics in West Chester, Pennsylvania, said in an e-mail.

Second Time
That’s not encouraging for Michael Reiner, 44, who lost his job in June as a credit strategist in New York for Societe Generale (GLE), France’s second-largest bank, whose shares are down 60 percent this year. When he called his wife to tell her the news, she was home watching “The Company Men,” a film about corporate downsizing, he said.

It wasn’t the first time Reiner had lost a job on Wall Street. He worked at Bear Stearns Cos. for 14 years until the firm collapsed in March 2008 and was taken over in a fire sale by JPMorgan Chase & Co. He said he was happy to have some time off with his family and go to Little League baseball games.

When he began looking for a job, he “wanted to find a place for the next 14 years,” he said. A recruiter brought him to Paris-based Societe Generale. It didn’t last that long.

It’s harder to talk about losing a job the second time, Reiner said. “There are a lot of people I haven’t told.”

Opportunities for employment “evaporated” as the European debt crisis escalated, he said. Now he spends his time going to his daughter’s field hockey games and managing his investments. He’s planning to make maple syrup from the trees in the backyard of his home in Briarcliff Manor, New York.

‘Fruitless’ Search
For Schubert, the former Jefferies banker in his third year looking for work, the longer he’s out of a job, the harder it is for him to tell his 10-year-old son to do his homework, he said.

“It might seem outwardly to him that I’ve given up,” he said in an interview this month from his four-bedroom home in Glen Ridge, New Jersey. “I can’t come to the table and say, ‘Well, when you were five, I worked nonstop.’”

Schubert, who received a master’s degree in business administration from New York University in 1989 and was a managing director specializing in middle-market M&A deals at Jefferies, said he wasn’t surprised when he lost his job in 2008 during the financial crisis. He thought unemployment would last 12 months at most.

“The first year out was fruitless,” he said. “There wasn’t much hiring going on at all.”

By the middle of 2010, more potential employers seemed interested, and he felt “something was imminent,” he said. Nothing happened.

This year, he has become increasingly disheartened by bad news on Wall Street, and it’s more difficult to stay in touch with former colleagues as time goes by, he said.

Hurricane Irene
On the August weekend of Hurricane Irene, training to coach his son’s soccer team alongside younger fathers, being “overly competitive for a man of my age,” Schubert twisted his right knee, he said. He aggravated the injury doing yard work and worries how much his health insurance will help, he said.

While his investment choices haven’t been “too terrible,” he will consider selling his house if he doesn’t find a job. “God, I hope it’s in the next six months,” he said.

Hetal Patel, 44, a foreign-exchange trader who worked at London-based Lloyds Banking Group Plc (LLOY) for more than 20 years until last month, said he doesn’t plan to look for work until early next year, “when budgets become clearer and perhaps conditions improve.”

Shares of his former company, controlled by the British government since a bailout in 2008, have fallen 64 percent this year, and the bank has posted a pretax loss of 3.86 billion pounds ($6 billion) in the first nine months. It announced 15,000 job cuts in June.

RBS Cuts
Another lender backed by the U.K., Edinburgh-based RBS, has announced about 30,000 job cuts, including 2,000 this year, since receiving the world’s biggest government bailout in 2008. Its shares are down 50 percent in 2011, and CEO Stephen Hester said Nov. 4 the investment bank “will have to shrink further.”

Tim Leary, 29, a director in high-yield and distressed trading, lost his job there on Nov. 7. After he got the news, he called his wife to say he’d see her and their 4-month-old son for breakfast.

He drove back to Manhattan from his office in Stamford, Connecticut, and put together a resume for the first time in years. He said he plans to spend “a fair amount of time figuring out what the landscape is” before starting his search.

Falling Bonuses
“Unfortunately, the industry always seems to get it wrong and they over-hire,” said Philip Keevil, 65, a former head of investment banking at S.G. Warburg & Co. and now a partner at New York-based advisory firm Compass Advisers LLP. “They are over-optimistic and then periodically throw large numbers out.”

Morale on Wall Street and London is “probably as bad, if not worse” than it has been in decades, said Keevil.

Wall Street bonuses are expected to fall in 2011 from the $128,530 average last year, DiNapoli, the state comptroller, said in October. Even so, when Goldman Sachs set aside 24 percent less to pay employees in the first nine months than in the same period last year, the amount, $10 billion, was equal to $292,836 for each of its 34,200 workers as of Sept. 30. That’s nearly six times the median household income in the U.S., where 49.1 million live in poverty, according to Census Bureau data.

Quitting for Quito
Wyatt Laikind, 26, made three times as much in his first year out of college working at Citigroup Inc. (C) as his single mother earned when he was growing up in western Massachusetts.

“It was like winning the lottery to get that job,” said Laikind, who worked as an associate on the New York-based bank’s high-yield credit-trading desk.

He got a job on Wall Street because he “was under the impression that it was a more meritocratic environment,” and “my hard work and intelligence would be paid off,” he said.

At first, he liked the excitement, he said. Then, after financial regulations curtailed proprietary trading, the job became “less appealing.” He said he didn’t like smiling at clients while having to figure out how to profit from them.

In July, after a vacation, he called his boss to quit, he said in an interview from Quito, Ecuador, where he is now working for Equitable Origin LLC, a start-up that offers a certification system for oil exploration. His salary is less than 5 percent of what he made at Citigroup, he lives with intermittent hot water, and he was robbed at knifepoint last month, he said.

“I feel happier on a daily basis,” Laikind said.

Sagging Mattress
His tone was different in a later e-mail.

“I wasn’t brought up in luxury, so I like to think I can tough it out,” he wrote, describing the sagging mattress he slept on in jeans and a hooded sweatshirt to stay warm. “But I may have to give it up and try going back to finance soon.”

If he does, it won’t be easy.

“Until now, at many firms, a lot of investment bankers have been convinced that we are living now in a limited period where things are a bit more difficult and afterwards the old world will come back,” Kaspar Villiger, 70, chairman of Zurich- based UBS said in an interview this month. “This illusion has now vanished.”

Increased capital requirements agreed to by the Basel Committee on Banking Supervision will limit banks’ use of borrowed funds to boost profit, lower their return on equity and likely reduce executive compensation, analysts say. High leverage “was the juice in the system,” said Ilana Weinstein, CEO of New York-based search firm IDW Group LLC. “It’s gone.”

Boxer Shorts
For Brady, 42, the vanishing point at MF Global arrived after he returned to Chicago from Florida. He thought the New York-based futures brokerage would “weather the storm,” even as Moody’s Investors Service cut its rating and shares plunged, he said. He got word that another company would buy the firm while at a Talking Heads cover-band concert and celebrated with a friend by drinking Anchor Steam beer and shots of Jameson.

He woke on Oct. 31 at 4:40 a.m. and searched for deal reports on his phone while standing in his boxer shorts with an electric toothbrush in the other hand. He didn’t find any.

The acquiring firm, Interactive Brokers Group Inc., pulled out of the deal after a discrepancy in client accounts surfaced, and MF Global filed for bankruptcy later that day.

At first, Brady thought his company would survive, he said. His wife thought he was in denial. His mood changed when he was sitting in the home office adjoining his bedroom, looking at the value of his holdings.

“My Fidelity account looks like my bar tab from just a week ago,” Brady said.

All Fired
On Nov. 11, a human resources executive asked colleagues on Brady’s floor to gather by his desk, which looks out on the Willis Tower, the tallest building in the U.S. They were all fired. She told them to show receipts for large personal belongings to the plainclothes security guards by the elevators, and that checks would be sent in the mail, Brady said. Someone asked if the checks would bounce. She said she didn’t know.

Brady, who said he wasn’t aware of the size of the bets MF Global made on European sovereign debt, wrote to clients this month saying he’s looking to join a firm that believes “integrity and honesty are the single most important ingredients to success.” He said last week he is optimistic.

To contact the reporters on this story: Max Abelson in New York at mabelson@bloomberg.net; Ambereen Choudhury in London at achoudhury@bloomberg.net

New York City's Hurricane History

New York City's Hurricane History
Weather.com, 23-Aug-2011
By Becky Kellogg

Hurricane Irene is threatening the U.S. and could impact tens of millions of Americans along the East coast by this weekend.

People from the Deep South to New England are watching the storm's progress very closely to see how Hurricane Irene will impact them. Several cities who were highlighted by Hurricane Expert Dr. Rick Knabb as being overdue for a hurricane hit, are in the cone of concern. New York City is one of those cities.

"Hurricanes in New York City metro area are relatively rare events because of the geography (places like Cape Cod stick much farther out into the ocean), typical steering patterns, and a tendency for tropical systems to weaken as they go very far north," says The Weather Channel's Senior Meteorologist Stu Ostro.

Only 5 hurricanes in records dating back to 1851 have tracked within 75 miles of New York City. The most recent one being in 1985.

1985 (Cat 1): Gloria
1976 (Cat 1): Belle
1938 (Cat 3): Long Island Expressway
1894 (Cat 1): No name given
1893 (Cat 1): No name given

One of New York's unique challenges in dealing with a hurricane would be mandatory evacuations. It takes hours to evacuate significantly smaller cities, such as New Orleans and Savannah. But New York, as America's most populous city, faces a unique set of evacuation challenges.

“It’s a concern because surveys in recent years have shown that even after the 2004, 2005, and 2008 seasons there is complacency in places which are much more prone to hurricanes, much less in places where hurricanes are very infrequent." says Ostro. "Plus this is one of the last big weekends of the summer with many people heading to the beaches. Folks in New York City and elsewhere need to be closely monitoring the progress of Irene just in case.”

Regardless of Irene's eventual impact on the U.S., Hurricane Expert Rick Knabb says now is the time to prepare. Learn your evacuation routes, get your evacuation kits ready, and be ready to move if your local official order an evacuation notice.

NYC: Where Do All the Cabs Go in the Late Afternoon?

Where Do All the Cabs Go in the Late Afternoon?
NYT, 11-Jan-11
By MICHAEL M. GRYNBAUM

Ever feel as if you can’t get a cab around 5 o’clock? Now there’s scientific proof that you’re right.

There is new data to confirm what generations of New Yorkers have long known in their bones: just as the afternoon rush is about to begin, the taxicabs disappear by the hundreds.

From 4 to 5 p.m., the traditional hour for cabs to change shifts, the number of active taxicabs on the streets falls by nearly 20 percent compared with an hour before, according to a city review of GPS records taken from thousands of cab trips over the past year.

In fact, the number of cabs that pick up at least two fares during that taxicab witching hour is the lowest of any hour between 7 a.m. and midnight, the data show. This vanishing trend turned up in the data regardless of time of year or day of the week.

The hour from 4 to 5 p.m. has long been considered a low tide of taxi service, the maddening moment when, in apparent violation of the laws of supply and demand, entire fleets of empty yellow cabs flip on their off-duty lights and proceed past the outstretched hands of office workers seeking a way home.

But despite decades of complaining from New Yorkers, taxi officials have never been able to gauge the true extent of the shift changeover’s effect on service, until now.

“It’s not just urban legend,” said David S. Yassky, the chairman of the Taxi and Limousine Commission, who asked his agency to investigate the phenomenon. “It’s a real dip.”

The Bloomberg administration, which prides itself on data-driven policy, is still grappling with how to handle the discovery. Mr. Yassky said that, so far, he had no plans to ask for any changes to the industry’s schedule, although his team is still considering its options.

Mr. Yassky said the city “should be circumspect about substituting its judgment for the judgment of business people.” But he acknowledged that any attempt at regulation would have to take into account the forces that have kept the practice in place for years.

The explanation for the 5 p.m. dip is steeped in the history and economics of the taxi industry. Many taxicabs are used by two drivers a day, each working a 12-hour shift. To ensure that each leg is equally attractive, taxi owners schedule the shift change in the middle of the afternoon, so each shift gets a rush hour.

But the switch cannot happen too early, either: a 2 p.m. changeover, for instance, would require a day driver to start his 12-hour shifts in the wee hours of the morning. And cabbies say the midafternoon offers brisk business not evident 12 hours later, when fares mainly consist of late-night revelers.

Hence the 5 p.m. compromise. When the changeover became standard, its timing did not pose a big problem for passengers. Many taxi garages were situated on the Far West Side of Manhattan, requiring cabs to make only a short trip to 11th Avenue before heading back to Midtown with a fresh driver.

But in the 1980s, as commercial rents rose, taxi fleets began migrating across the East River, particularly to Long Island City, Queens. The 5 p.m. shift change now included a journey over the often-packed Queensboro Bridge, not to mention the return slog to the city. Drivers started going off duty between 4 and 4:30 p.m., to ensure that they had enough time to make it to the garage; even today, tardy cabbies can be hit with a $30 fine.

If the system changed, “I’d be very upset,” Youssef Kamel, 34, a day driver from Brooklyn, said the other day. Mr. Kamel was at the BP station on Houston Street, which is among several places that serve as transfer points for driver-owned taxicabs, unaffiliated with a fleet. The gas station gets so busy after 4 p.m. on weekdays, with dozens of cabs gassing up and changing drivers, that managers wave off private automobiles, asking them to return after 5.

The rising popularity of the driver-owned model means that more cabbies today coordinate a handoff in Manhattan, which may be lessening the impact of the 5 o’clock dip.

“There are more drivers changing shifts in Manhattan today than ever before,” said David Pollack, the publisher of Taxi Insider, a monthly industry publication.

Some of the 5 p.m. frustration, Mr. Pollack added, could be about perception. “It’s like Fred Flintstone at 5 o’clock: the whistle blows and everybody wants a cab,” he said.

There is precedent for the city to regulate livery drivers so that they better meet customer demand.

A publication from 1839, “By-laws and Ordinances of the Mayor, Aldermen and Commonalty of the City of New York,” decrees that the mayor can make rules “respecting the standing of horse coaches and carriages at or near the theaters and other places of amusement at night, and at and near steamboats and other vessels at all times, and at and upon the stands designated and specified for such coaches, as may be necessary to preserve order and decorum.”

Indeed, the issue has not gone ignored by the taxi lords. A 1987 dictate by the City Council ordered the taxi commission to investigate the feasibility of staggering shift changes throughout the afternoon, in an attempt to free up more cabs during rush hour. That report has since been lost to history, and the practice continued unabated.

In 2004, the city took a more aggressive approach, implementing a $1 surcharge on fares between 4 and 8 p.m. on weekdays in an explicit attempt to encourage more drivers to work in the afternoon rush. “We believe that the 20 percent dip would be even worse if it weren’t for the surcharge,” Mr. Yassky said.

Still, Mr. Yassky acknowledged that the afternoon taxi drought remained “one of the two or three things that people routinely bring up to me.” One recent complainant was former Mayor Edward I. Koch, who mailed a letter to Mr. Yassky a few days before Christmas, asking about “a dearth of available cabs in the late afternoon.”

“One of my law partners remarked on the fact that at 4 o’clock, you can’t get a cab,” Mr. Koch said in an interview last week. “Wouldn’t it make sense to have a substantial number of cabs on duty at all times?”

“In government,” Mr. Koch added, “nothing goes away. This is a perennial.”

The Next Small Thing

The Next Small Thing
NY Magazine, 4-Apr-2010
By Christine Whitney

The Yotel chain—purveyors of tiny, chic hotel rooms inspired by Tokyo’s famous “Kapseru Hoteru” capsule lodgings—recently announced plans to open an outpost in Times Square. Inexpensive “Kapseru Hoteru” are the SROs of Japan—some capsule-hotel “rooms” are simply three-foot-high sleeping units stacked on top of one another. But the Yotel is a higher-end version, part of a larger city trend toward smaller accommodations.

Yotel Amenities
Large single bed, foldout desk and stool, private bathroom with shower, flat-screen TV, free wi-fi. “We use the language of first-class airline travel,” says Yotel founder Simon Woodroffe. The company’s three existing hotels are all near European airports—London’s Gatwick and Heathrow and Amsterdam’s Schiphol.

Not Yet Turning Japanese
The Japanese capsule trend began with the 1972 opening of a Tokyo apartment building, Nakagin Capsule Tower, that catered to businessmen with 140 rooms the size of shipping containers (104 square feet). The first capsule hotel opened in 1979. Most are equipped with only a radio and a small TV that hangs down from the ceiling like the screens on buses and airplanes.

---

Mini-Rooms
A traditional hotel room at the Hilton New York in midtown is 320 square feet and rents for $309. But cool new hotels are going smaller:

The Standard
meatpacking district
245 square feet
$195

Yotel
midtown (planned)
170 square feet
$150

The Ace
Flatiron
140 square feet
$209

The Pod
midtown
70 square feet
$99

The Jane
West Village
50 square feet
$99

Whitehouse
Bowery SRO turned hotel
24 square feet
$33.50

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Capsule facts
109
Number of capsule hotels currently in Tokyo

21.5 square feet
Average size of Japanese capsule-hotel unit (cost: $38)

18 square feet
Size of smallest available Japanese unit

16 square feet
Size of an average casket

New York Cabs Gouged Riders Out of Millions

New York Cabs Gouged Riders Out of Millions
New York Times, 12-Mar-2010
By Michael Barbaro

About 3,000 New York City taxi drivers routinely overcharged riders over two years by surreptitiously fixing their meters to charge rates that would normally apply only to trips outside the five boroughs, according to the city’s Taxi and Limousine Commission.

The drivers’ scheme, the commission said, involved 1.8 million rides and cost passengers an average of $4 to $5 extra per trip. The drivers, officials said, flipped switches on their meters that kicked in the higher rates, costing New York City riders a total of $8.3 million.

The 1.8 million fares represent a tiny fraction of a total 360 million trips over the 26-month period in question.

Agency officials said, however, that they were alarmed enough that they immediately ordered the companies that manufacture the meters to create a system to alert riders when the higher rates are being charged.

That is likely to be done through the digital screens facing the back seats of the cabs.

The commission said it began an inquiry after investigators, responding to a rider’s complaint, determined that a cab driver from Brooklyn, Wasim Khalid Cheema, had overcharged 574 passengers in just one month last year. Mr. Cheema’s license has been revoked. He could not be reached for comment.

The commission then used GPS data, collected in every cab, to review millions of trips in New York City and found a huge number in which the out-of-city rates had improperly been charged, officials said.

The investigators determined that 36,000 drivers improperly activated the higher rate at least once, and that about 3,000 drivers did it more than 100 times.

The higher rate, reserved for rides in Nassau and Westchester Counties, is 80 cents per one-fifth of a mile — twice the rate charged for rides in the five boroughs.

As described by officials, the fraud might rank as the biggest in the taxi industry’s history.

“We have not seen anything quite this pervasive,” said Matthew W. Daus, the taxi and limousine commissioner. “It’s very disturbing.”

The commission has turned over its probe to the city’s Department of Investigation.

“Some of these people could face serious charges,” Mayor Michael R. Bloomberg said Friday.

Applying the higher rate in New York City violates the commission’s rules. The penalty for it varies, from a fine of $200 to the mandatory revocation of a cab license, depending on how much was overcharged.

The taxi industry vigorously challenged the city’s findings, saying it was unimaginable that such a pervasive problem could be the result of deliberate fraud. The city said that 35,558 out of the city’s roughly 48,000 drivers had applied the higher rate.

“This is clearly a systematic failure on the part of the meters and the technology,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents cabbies.

“For this to be so widespread — nearly every single driver — makes no sense,” she added.

The taxi commission refused to comment on the alliance’s claim, citing its continuing investigation. “We have to sort through the numbers,” Mr. Daus said.

In interviews on Friday, taxi drivers expressed dismay at the city’s findings, which they said threatened to tarnish the image of their industry.

“We are ashamed,” said Bagicha Singh, of Floral Park, Queens, who was on East Houston Street on break from his shift. “People will look at us as a thief.”

Several cabbies defended themselves and their colleagues and said it was easy to accidentally activate the higher rate because of the way the meters were designed.

On some models, they said, the buttons for the New York City and out-of-town rates are extremely close together.

“You’re driving, your fingers are small, the buttons are tiny,” said Rana Singh, 38, of Maywood, N.J. “You look up at traffic; you look at the car ahead.”

Cab drivers are supposed to charge the higher rate only when they cross the border between New York City and Nassau or Westchester.

But according to the taxi commission, drivers often pressed a button on the meter that categorized the fare as Code No. 4, which is charged for trips outside the city, rather than Code No. 1, for those in the city limits.

Currently, passengers can see which rate is being charged by looking at the meter, which displays a No. 1 or a No. 4 — something few riders are aware of. The rate is also printed on every taxi receipt.

The system demanded by the city would require an acknowledgment from the passenger that the higher rate is to be charged before the alert disappears from the digital screen, the commission said.

Eventually, officials said, the changes would remove the ability of drivers to manually activate the higher rate, by creating a GPS-based mechanism that automatically charged it based on the location of the cab.

“We will make sure that this problem comes to an end,” Mr. Daus said.

The Prabal Gurung Girl Is Sexy and Smart

The Prabal Gurung Girl Is Sexy and Smart
New York Magazine, 9-Feb-2010

New York's fashion director, Harriet Mays Powell, paid a visit to Prabal Gurung's studio to talk about his cultural influences, his spring collection, and who the ideal Prabal girl is. Gurung, who is Nepalese, draws influence from the draping of saris. "If I can pinpoint one thing about the way that Nepalese women, or even in India, it's the way they drape their saris," he says. "If you look at my clothes, when it's like draping, it's always influenced by that." Prabal was also influenced by YSL's Rive Gauche perfume bottle. And what makes a girl a Prabal girl? "A beautiful girl with brains — that's a lethal combination." Find out more by watching the video.

Burj Khalifa: World's Tallest Building

The world’s tallest building opens in Dubai

Economist, 4-Jan-2010

AT 828 metres (2,717 feet), the Burj Khalifa, which opened on Monday January 4th, dwarfs Taipei 101, which was previously the tallest tower anywhere, by 320 metres. The tower has more than 160 floors and cost some $1.5 billion. It is in danger, however, of being seen as the height of folly. Construction began in 2004, when the economy of the United Arab Emirates was growing at 9.7%. It is forecast to grow by just 2.4% this year and probably shrank by 0.2% in 2009. This is not the first tower to be planned in the good times and then opened in a slump. Countries home to many of the world's highest buildings (when they opened) saw their economies slump in the years between the start of construction and the official opening. Our chart compares economic growth of the relevant country when a tower was opened, with the respective annual growth rate enjoyed half a decade earlier.

Slumping NYC Real Estate

The Non-Hot Hot Spots
NY Magazine, 22-Nov-09
By S.Jhoanna Robledo

Where are sellers hungriest to make a deal?

When the proprietors of the real-estate auction service Bid on the City wanted to find out where their services would come in handy, they turned to Matthew Haines for data. The founder of PropertyShark.com, Haines and his team dug into third-quarter numbers to help pinpoint the five areas of prime Manhattan that have been toughest on sellers, based on three major criteria: how long it takes a typical seller to find a buyer there (Manhattan average: 150 days), median-price drops over the past two years (Manhattan overall: 10 percent), and the number of closed sales relative to the total number of properties on the market (the average is 23 percent, and higher is better). Bid on the City’s Albert Feinstein says he’d expected unglamorous areas like Murray Hill to top the list, but the results were very different. (It may be that dullness equals stability.) As for where the market may be headed based on these numbers? “If I knew [that], I would be so busy acting on that information that I wouldn’t have time to speak to you,” says Haines with a chuckle. Still, it’s fair to say that where there’s a weak market, there’s space for negotiation.

1. Chelsea/Flatiron/ Union Square/ Hudson Yards
Average days on market: 162
Sales-price change from 2007: –36 percent
Closed sales versus inventory: 21 percent
The explanation: Feinstein says he was surprised to find Chelsea and the Flatiron atop the list. But the whole area’s not uniformly problematic. The main trouble’s in “Chelsea Heights,” the area more or less centered on 23rd Street west of Eighth Avenue. According to appraiser Jonathan Miller, in 2008 this area had “one of the highest concentrations of new-development activity. That’s what this is about: the skew in the far west where there’s a lot of projects to be absorbed.” High Line fans, consider making an offer in 2010.


2. Midtown/Midtown South
Average days on market: 149
Sales-price change from 2007: –27 percent
Closed sales versus inventory: 19 percent
The explanation: Many apartments here are pieds-à-terre, and that’s a weak market segment at a time when getting approved to buy a first home is tough enough. On top of that, a lot of new condos in the area were built specifically for that market, compounding the problem. That said, if you have the cash to buy with a minimal loan, opportunities abound.

3. Soho/Tribeca/Little Italy
Average days on market: 184
Sales-price change from 2007: –15 percent
Closed sales versus inventory: 11 percent
The explanation: Lots of low-hanging fruit here, so pluck away. The particular problem, Miller points out, is that much of the housing stock, both new and old, is made up of larger apartments, requiring bigger loans and more cash up front and therefore “very susceptible to the credit contraction.” For buyers who’ll have no trouble obtaining a mortgage, now may be prime time for loft-hunting.

4. Upper East Side/Carnegie Hill
Average days on market: 162
Sales-price change from 2007: –8 percent
Closed sales versus inventory: 18 percent
The explanation: Feinstein hadn’t expected this moneyed area, but the stats speak for themselves. The occasional buzz-heavy megasale seems to be obscuring the fact that the luxury market has been suffering. “There certainly are sales, but the activity has thinned quite a bit,” reports Miller. “Even though the decline in employment [in the city] wasn’t as high as expected, high-wage-earners were really hit.” Watch this space closely during bonus season.

5. Battery Park City/Financial District/South Street Seaport
Average days on market: 162
Sales-price change from 2007: –7 percent
Closed sales versus inventory: 9 percent
The explanation: Haines says he was struck by the low number of closings, especially in Battery Park City, where prices haven’t dropped much and “nothing’s moving. There seems to be a lot of unrealistic sellers.” Within this area, says Miller, the financial district is particularly bad off, because despite all the new building, the neighborhood, even after a decade, has never quite jelled. Given all the chatter about the neighborhood’s vulnerability, Bid On the City’s Raymond Villani says he’d actually expected the financial district to be higher on the list.

NYT Fashion Week Review: Prabal Gurung

The First Few Strides Are Looking Good
New York Times, 12-Sep-09
By CATHY HORYN

Fashion is such a complete world, wrapped in its own myths, that if the industry is in a bad state, nobody really notices. What you notice instead is someone’s shoes.

My, my: where did she get those? The fashionista’s long legs, exiting a cab on the corner of Sixth Avenue and 42nd Street, setting off a wail of honking (why hurry?) were extended by her super-size, strappy heels, probably a Givenchy model. Killer.

That’s the way it was Thursday and Friday, the opening days of the spring 2010 shows: a dozen little back-to-school wardrobe crushes. There were also some good collections.

Prabal Gurung, a relatively new designer — he spent five years at Bill Blass before he set out on his own last winter — makes sophisticated clothes. He is aware of fit. He can set a proper sleeve. He has good connections with fabric mills, which will sell him small amounts. He makes everything count.

“When I started this collection, I thought, ‘What can I do to get people to buy my clothes? ” said Mr. Gurung, a native of Nepal. That’s a worthwhile question today. Why buy a $3,000 trench-coat dress in khaki double-face silk when you can buy the look for a lot less elsewhere?

Mr. Gurung’s answer is to create clothes that aren’t really about a one-dimensional look. That’s fine for an androgynous-looking label like Wayne.

On Thursday in a stripped-down loft in Chelsea, with a D.J. playing, the designer, Wayne Lee, presented a skinny silhouette of draped jersey T-shirt dresses, leggings split at the knees and gauzy minis that looked tied on the body. At some point the cement grays and whites blurred into the background, the low sky over the Hudson. Did the hard-edged clothes look familiar? A little.

Mr. Gurung knows he has to do something particular, with more depth, if he wants to stand out. If his first collection, shown last February, emphasized tailoring, this one displayed his skills at draping. Also, Mr. Gurung has added a few sportswear looks: slim trousers with diagonal seams or ribbon ties at the ankles, sleeveless silk jackets.

The most interesting dresses were a crisscross of fabric, fitted but not tight and more suggestive of pretty packaging than bondage. A cocktail dress in deep royal blue silk had a doughnut swirl of fabric on one shoulder. From a single piece of fabric, he worked a flat bow into the lapel of a cream pantsuit. There was a too-much-ness to everything that made for a nicely twisted sensibility.

Have you ever become completely irritated by a box of chocolate? You know the kind: concept chocolate, artfully arranged in a just-so box, flavors exotic and trying. I’m afraid that was my overall reaction to Jason Wu’s collection on Friday at the St. Regis Hotel.

Mr. Wu has a pretty good eye for color and prints. This season he plays with broken-wave prints (he called them Rorschach prints in his show notes) and some silk or denim tweeds with the small-grid pattern of industrial screens. For some reason I liked the idea of a slim, hooded tracksuit in dark tweed. It’s wearable and, at the same time, just a little out of it. A tweed mini-sheath with whorls of staple-like embroidery was lovely.

But a banality creeps into the picture. Whereas Mr. Gurung manages to take lightly the notion of feminine packaging, Mr. Wu treats it with a prissiness. Waists are defined and ribbon-tied. There are peplums aplenty. You suspect that Mr. Wu, like many designers, has spent a few hours gazing at the play clothes of Claire McCardell. Yet his cuffed shorts look unplayful and certainly not original. Though he tries.

He should try a little less hard is the answer. Not everything in life is a spotless decorator interior or a magazine spread. He should loosen up a bit. And why the uniformly short hemlines, six inches above the knee? That in itself is the sign of a fairly conformist outlook.

The scene at Elie Tahari’s presentation on Thursday felt like an industry cocktail gathering. The GQ guys are here! The models kept whisking past, on a continuous loop. (“Every seven minutes,” Mr. Tahari said.) There were little things to eat. The clothes were perfectly comprehensible: softly draped dresses and sarong skirts, smart-looking linen shorts and a trim jacket, blasts of orange silk, and a tailored denim shirt with a lovely starchiness.

Then it was out onto 42nd Street toward the wailing taxis and Ms. Hot Shoes.

The Downside for Condos in a Downturn

NYT, 8-Feb-09
By TERI KARUSH ROGERS

DURING the recent boom, buyers who coveted condos for their sex appeal could also make the case that condos were a smarter choice than co-ops.

In theory, you didn’t have to prostrate yourself, financially and otherwise, before a board for approval, and you could sell or rent pretty much to whomever you chose, should the need, or whim, arise. You could also put down a lot less money than the 20, 25, or even 50percent of the purchase price customarily demanded by co-ops.

But as the city’s fortunes buckle and heave, these very differences have potentially rendered some of the city’s condo buildings dangerously exposed to the downturn. Then there is a distinction many condo buyers probably dismissed as a boring legality: If a condo unit is the subject of a foreclosure, the bank gets first dibs on the equity. With real estate prices way off their peak, that means some condo buildings will collect nothing but dust from residents who have also failed to pay their common charges, leaving the remaining owners to shoulder the burden of higher costs or reduced services.

Defaults on common charges began to spike last fall, according to lawyers hired by increasingly jittery boards to file liens (the first step toward foreclosure) against owners in arrears.

“We had maybe four or five before October,” said Adam Leitman Bailey, a Manhattan real estate lawyer, referring to the number of liens his firm filed last year against condo owners in Manhattan and Brooklyn. “It really got going this fall. We had 28 filings here and 17 in Brooklyn. These aren’t in the wealthiest or the poorest buildings. It’s the buildings with the younger 30- or 35-year-old professionals buying a $1 million to $2.5 million apartment, who haven’t been working for 20 or 30 years and are relying on their job to pay for it.” Other lien-filing lawyers said the pace had picked up by at least 10 to 25 percent.

“We’re seeing more, especially in the higher-end buildings where you never heard of foreclosures,” said Adam D. Finkelstein, a real estate lawyer with Kagan Lubic Lepper Lewis Gold & Colbert in Manhattan. Starting last quarter, his firm began filing two or three liens a month, up from two or three per year.

According to figures provided by the online research company PropertyShark.com, condo lien filings more than doubled in Brooklyn during the second half of 2008, and the number of filings in Manhattan zigzagged, with 156 in the first quarter, 186 in the second, 154 in the third and 203 in the fourth.

While the aggregate number of liens is still small (47 in Brooklyn and 67 in Manhattan in December, for example), they may be the first sign of trouble: Liens typically lag months behind defaults in common charge payments, and the bottom didn’t truly fall out of the city’s economy until last fall.

Moreover, barring a swift economic renaissance, lawyers, managing agents and condo boards are bracing for things to worsen significantly this year as job losses mount, severances and savings evaporate, and the new reality sets in.

“The world as we’ve been living in it for the last several years has changed seemingly overnight,” Mr. Finkelstein said. “We’re at the very beginning of this.”

While lawyers are reporting a similar rash of defaults among co-op owners, the risk to the building (and by extension to the defaulter’s neighbors) is slight by comparison. That’s because a co-op building is entitled to its share before the bank can claim anything in the event of foreclosure (the ultimate consequence of nonpayment of maintenance charges).

But in condo foreclosures, the debt priorities are reversed. After a foreclosure process that these days can take two years — during which unpaid common charges proliferate — the building gets its due only after the bank is paid in full. And many condo owners have little equity in their apartments.

“I think it’s safe to say that the value of any apartment purchased in the last two years is less than its purchase price,” said David Kuperberg, the president of Cooper Square Realty, a Manhattan property management company. “The simple calculation is that if you bought an apartment a year ago and financed 90 percent of the purchase price, as many did, and now it’s worth 20 percent less, you’re upside-down as an owner.”

Even worse from the perspective of the condo building, if an apartment owner defaults on common charges but keeps up with mortgage payments, it falls to the building rather than the bank to pursue the foreclosure action.

In that situation, the building must pay the bank the entire balance owed under the mortgage. This prospect is so onerous in a down market that a vast majority of liens for unpaid common charges never advance to the foreclosure stage, said Aaron Shmulewitz, a real estate lawyer at Belkin Burden Wenig & Goldman in Manhattan.

Instead, buildings often sue the owners personally — looking for other assets and garnishing wages, if there are any. But they are effectively powerless to force the expulsion of a deadbeat owner who has no equity. So far, there hasn’t been an uptick in condo foreclosure filings in Manhattan and Brooklyn, according to PropertyShark.com. Instead, owners in financial distress seem more willing to play chicken with the condo board than with the bank, and they appear to have some wiggle room when pressed.

Mr. Bailey said that to date, a majority of defaulting owners had paid up once his firm had filed a lien.

“The owners are hoping we won’t file, and then they find a way to pay, whether they’re borrowing it from relatives or using their last dime,” said Mr. Bailey, who observed that the days of refinancing one’s way out of debt were long gone. “Usually they will pay for their home first, before credit cards and health insurance, because keeping a roof over their heads is their family’s biggest priority.”

But the biggest priority for condo buildings is preserving cash flow. With smaller reserves dictating a more hand-to-mouth lifestyle than that of most co-ops, many have little choice but to assess owners if defaults grow large enough. Never welcome, increased assessments can push additional owners over the brink and into arrears. That is one reason many managing agents and lawyers have begun encouraging condo boards to forsake neighborly empathy and play hardball.

“It used to be three months and then you’d file a lien, and now at the most it’s two months and in many case it’s just one month,” Mr. Shmulewitz said.

Just how long to wait depends on a building’s exposure. “If two people are defaulting in a 200-unit building,” Mr. Finkelstein said, “you can probably exercise some leniency. But it’s more problematic in a 40-unit building, even though it probably won’t kill you. You’ve got to evaluate your risk. If you know someone has a very low mortgage and there’s a lot of equity, you can cut them a little slack, because you can collect if there’s a foreclosure.”

While all condo buildings share vulnerabilities putting them at greater risk than co-ops to defaulting owners, condos of recent vintage appear to be in the greatest peril. For starters, these buildings often have less-experienced boards to navigate a crisis.

“The fear is much more acute in newer buildings than in established condominiums,” said Mr. Kuperberg, the managing agent, whose company has helped about 40 buildings open in the past three years. “There’s a greater likelihood that many apartments were sold for more than they’re worth today. And newer buildings have many people who bought with no-income-verification loans and very relaxed criteria. They also have younger owners who may be less established.”

What’s more, many of these overleveraged, less well established owners are among the several hundred thousand who bought under the 421-a tax abatement program. As the 10-year abatements phase out in steps every two years, the recipients experience increasingly drastic tax increases — which many had been counting on income gains to offset.

Consider the following hypothetical situation, provided by Paul J. Korngold, a real estate lawyer in Manhattan, which he said was consistent with many Manhattan units selling in the $1 million to $2 million range under the 421-a program. What starts out as a $1,214 annual tax bill climbs to $4,613 in the third year, $8,012 in the fifth year, $11,411 in the seventh year and $18,209 when the abatement expires.

But those numbers assume that the city doesn’t raise assessed values or tax rates. Factoring in what Mr. Korngold called a historically conservative 3 percent combined average increase, the unit owner who begins with a $1,214 annual tax bill owes $10,046 in the fifth year and a staggering $32,887 when the abatement expires.

Nearly 300,000 condo units were constructed under the program in the five boroughs from 2002 through 2007, according to the Department of Finance. That figure includes 132,431 units in Manhattan, where about 22,000 owners are in their fourth year of the program, 31,000 are in their fifth or sixth, and 12,000 are in their seventh. Because 421-a purchases were concentrated in a limited number of buildings, they are potentially destabilizing to these buildings in a down economy.

Mr. Kuperberg sketched out a second chain of events, this one pertaining to new buildings with many unsold units. It unfolds like this: Unable to sell half the units in a building, a struggling developer stops paying common charges and defaults on obligations to the lender. Foreclosure by the lender may take years, while individual unit owners effectively wind up paying double their normal common charges. This pushes some owners, themselves struggling, into default. Meanwhile, they are trapped — unable to sell, even at a steep loss, because most mortgage lenders won’t lend to potential buyers in a building where half the units are in default.

“That is a death spiral that could push a building into bankruptcy,” Mr. Kuperberg said. “You basically have a building unable to meet its operating expenses.”

Once the lender succeeds in foreclosing on the developer, there may not be enough money to cover the lender costs and unpaid common charges, forcing the unit owners to permanently swallow the loss. And while the lender must pay carrying costs going forward, it may decide not to throw good money after bad and instead dump the units at auction. The investors who buy them may act against the building’s best interests — renting them out cheaply (introducing a transient population that, among other things, inflicts more wear and tear) and electing boards who defer maintenance and refuse to make improvements.

“We work with a building that’s about 50 percent sold and the developer is gone — they lost all their money and they weren’t able to sell,” said one managing agent who asked to remain anonymous out of concern for the impact on property values in the building. “The lender took over and pays the common charges but doesn’t talk to us and won’t return our calls. If you’re running a building and 50 percent of the ownership doesn’t give you direction, that’s a problem. But I’m really nervous about what happens if the lender sells into the vulture market.”

Even condo boards in fully sold buildings have begun to contemplate the once unthinkable: slashing the very amenities that defined the recent boom.

“The boards are starting to talk about cutting things that might be considered a little excessive,” said Leslie Bogen Winkler, the vice president and director of management at Penmark Realty, a property management firm that has opened 50 condo buildings in the last three and a half years. “They may reduce health-club hours and maybe scale back breakfast. The biggest amenities that are costly are the health club with a swimming pool. It can run up to $200,000 to $400,000, depending on the size, hours open and operator.”

Staff cuts may also be in the offing at some buildings, though union contracts present significant hurdles. Moreover, said J. Brian Peters, the senior managing director of property management for Rose Associates, which owns or manages about 20,000 apartments in New York, “you can cut positions, but at a certain level that’s devaluing the product. And it’s the best product that’s going to survive the easiest in this downturn. We’re really more focused on increasing revenue.”

To that end, condo boards are considering adopting flip taxes, increasing alteration fees and bumping up sublet fees. They are also easing restrictions on the length of sublets so that strapped owners unable to sell their units can more easily rent them out.

Then again, other condos have the luxury of spare cash and might actually come out ahead in the downturn, Mr. Kuperberg said. “The recession can be a good opportunity to buy capital improvements and do upgrades,” he explained, “because contractors don’t have a lot of work and material costs are way down. It’s an opportunity to invest not only in cosmetic things like the lobby but in infrastructure that could reduce operating costs.”

The Suffering of NYC Businesses in the Current Economic Downturn

Freakoutonomics
New York Magazine, 8-Feb-09
By Michael Idov

But the thrill of the bargain should not be confused with the empty pleasures of abstemiousness. At the end of the day, New Yorkers are people with appetites. We’re not going to stop eating at restaurants: Most of us have no real kitchens in our apartments, and we don’t know how to cook anyway. Women are not going to stop getting their nails done. They may cut back, but, as one struggling spa owner says approvingly, “New York women are quite spoiled. Even if they’re getting a mani-pedi once a month, they still want someone else to do it.” More people have their roots showing—one colorist reports significant time lags between treatments—but few are going natural either. At the city’s three Fairways, the famously high-low grocery stores, a major growth area is gourmet-coffee sales: People may be cutting back on Starbucks, but they still want a quality cup of coffee. And at the sex-toy mini-chain Babeland, to the owners’ own surprise, it is the “luxury vibes”—sophisticated, often programmable vibrators with a price point of $125 and up—that are proving to be a recession-era blockbuster. September through December sales of those items have doubled compared to the year before. “This is not a beginner’s toy,” says Babeland’s head of publicity. “People are upgrading.” And why not? The very fact of living in this city means our life is guided by pleasure rather than value. Otherwise we’d be living in Philadelphia.

A friend of mine likes to walk to work from his home in the Village to his office in Tribeca. Lately he’s begun passing the time engaging in what you could call retail anthropology, a sport many New Yorkers seem to have taken up. A partial list of the changes he’s noted in just the past six months reads like this: Cosi, the upscale sandwich shop on the corner of Sixth Avenue and 13th Street, closed; a pop-up Halloween-costume shop temporarily took its place; and the space now sits vacant with a RETAIL SPACE AVAILABLE sign above the door. The Jamba Juice on the same block, which at the height of the city’s economic boom was routinely packed with stroller-pushing moms and NYU kids, is now nearly always empty, while the Murray’s Bagels right next door remains jammed, despite raising its prices substantially because of rising wheat costs. Kuhlman, the mid-price men’s-clothing boutique on the corner of Sixth and 12th, gradually began advertising ever-more-desperate sales before quietly going belly-up just a few weeks ago. The always-busy, beloved local diner Joe Junior, right across the street, is busier than ever. Business is also brisk at Laurent Tourondel’s BLT Burger, a few doors down—where the burgers cost a few bucks more than they do at Joe Junior and in fairness are a good bit better—but only on peak days, and at peak hours (a recent Tuesday lunch there was positively Hopper-esque). Jefferson Market, the decades-old grocery store of choice for many a die-hard Villager, slowly ran out of inventory, citing money problems, last fall, then closed for months and now has a sign in the window promising a full remodeling followed by a grand reopening—meanwhile, there’s a neighborhood rumor that the landlord has been showing the space to new tenants. A bit further south, business at the Duane Reade on West 4th Street seems unchanged, and Starbucks appears to be faring less badly than you might expect, though you certainly don’t have to wait in line to use the bathroom like you used to. The formerly trendy Da Silvano, wan as the crowd is most nights lately, feels like a relic from a hazy past. To cap matters off, the Banana Republic on Sixth above Houston just closed. I can’t remember the last time I saw a Banana Republic close.

New York, as any amateur anthropologist can see, is in the midst of a retail shakeout of historic proportions. On the broadest and most visible level, it appears that people have simply snapped their wallets shut. Nationally, retail and food sales fell by 9.8 percent in December (Standard & Poor’s holiday outlook, at the time the most pessimistic, was 5 percent) and by 1.8 percent more in January. And consumer spending has been steadily dropping for six months. In New York, which caught up with the rest of the country economically just when the rest of the country caught up with New York politically, the decimation began in earnest in the fall. Local outlets of national chains are clanging to the ground: The bankrupt Circuit City is gearing up to leave nine massive vacant spaces in the five boroughs. Times Square’s Virgin Megastore, the highest-volume music store in the country, is out come April. The formerly unstoppable Starbucks will shutter eleven locations by summer. The city’s most storied shopping districts—Fifth Avenue, Madison Avenue, and Soho—are suddenly pocked with empty storefronts looking out onto empty sidewalks. More recently gentrified shopping corridors like North Flatbush are faring even worse; commercial vacancies in that neighborhood are edging toward 20 percent. The city’s legendary department stores are all having their struggles. And that’s not counting the myriad tiny tragedies befalling every block. All over the city, notable restaurants, boutiques, and other mom-and-pops are pulling down the chain-link gate one last time: Fleur de Sel one day, the Oscar Wilde Bookshop the next, Mondo Kim’s video store the day after that. Almost everyone recognizes a name in the roll call of the dead.

And yet there’s more going on than an abject bloodbath. Despite the mutually perpetuating doomsday headlines and foul civic mood, stores still in business outnumber those that have gone under by orders of magnitude, and New Yorkers have not stopped shopping. Every day, millions of us still spend billions of dollars right here in the city. We eat. We wear clothes. We buy sofas. God knows, we drink. The real question, then, is not whether money changes hands, but how both buyers and sellers are adapting to the newly Darwinian economy. To find out, New York conducted a survey of more than 100 city merchants in all five boroughs, from department-store executives to Canal Street sidewalk vendors, from high-end restaurateurs to bodega owners. The results have allowed us to pinpoint a few basic truths of recession retail, some self-evident, some surprising. The one indisputable finding is this: When the dust of ’09 settles, New York will be very different. It already is.

In market-research terms, purchases fall into two categories: staple and discretionary. In the past decade or so, New York consumers have had these things, the need and the want, mixed up. Now, that distinction is being reestablished, and forcefully. The wealthiest of the wealthy may be immune to the downturn, but they’re the only ones. For everyone else, the indulgences of the precrash years—the $275 nine-course tasting menu at Per Se or an impulse purchase of a pair of Louboutins—are mostly out. At high-end jeweler David Lee Holland, items priced between $2,000 and $4,000, the point a manager calls “a lady’s personal discretionary purchase,” are barely moving. “That lady,” the manager says, “is not shopping right now.” Sales of so-called super-discretionary purchases, big-ticket items like cars and home improvements that can be put off, are similarly comatose. Statistics for five-borough car sales aren’t readily available, but with the national figures for January at their worst level since 1982, the implications for New York are clear. Sales at Barney’s Hardware Store, meanwhile, are down 40 percent because, in the words of owner Willie Meistelman, “everything people use for electrical work, painting, and building—none of that has been selling.” About the only luxury items still being bought by people without billions are what you might paradoxically call luxury necessities—wedding rings, for example. The other exception is what might be called the One Thing, the special item a person values so highly—the $10,000 vintage Les Paul for the guitar junkie, say—he simply won’t give it up (though he might scrimp elsewhere to pay for it).

What is holding up well is the “staples”: groceries, basic clothing, medicine—stuff people can’t live without. Still, New Yorkers are cutting back even on the basics, buying less than usual or making do with what they already have (business at cobblers and other repair stores is generally up). Liquor, a traditional tough-times standby, is holding steady, although Greenpoint’s Mark Bar, for one, now makes its margin on the $2 “PBR special” while top-shelf booze gathers dust above. The ratio of espresso drinks to less expensive drip coffees sold at coffee shops has, in the words of one owner, “flip-flopped.” What we’re witnessing, in other words, is not a single fatal blow, but death by a thousand spending cuts.

Along the way, New Yorkers appear to have reassessed what they value. One of the hallmarks of the boom was the triumph of “aspirational” branding: a pair of Gucci-stamped sunglasses did not cost three times as much to produce as a pair of Ray-Bans, but commanded three times the price. Flush with cash (or easy credit), consumers bought the proposition that the brand itself—the status it conferred—was worth a 300 percent markup. Not any more. Not only are real designer bags hard to move off the shelves but the Canal Street knockoff market is in free fall too. A zebra-patterned fake Versace bag, which used to sell for $45 in the summer, now barely fetches $25. With the arrival of the crisis, the price tag on status has come up for renegotiation. Today’s consumer is demanding less and better at the same time.

The corporate largesse that helped inflate the retail bubble is also gone. As panicked penny-pinching has spread through the system, it has hit the city’s businesses in ways both obvious (nightclub owners report fewer Wall Streeter outings) and less so (Smash Studios, a high-end rehearsal space in Midtown, had a slim December because bands who play corporate parties had less need to practice). Corporate dollars have spectacular reach in this town—few visitors to the twee-hip Sugar Sweet Sunshine bakery on the Lower East Side, for example, would guess that 70 percent of its business comes from accounts like Goldman Sachs and AIG. That well has dried up considerably. Florists’ margins wilt as fewer firms splurge on weekly bouquets for the conference room. Times Square–area pizza joints are suffering without the twenty-pizza lunch orders from Hearst, Newsweek, or MTV. And it’s no coincidence that, of the eleven New York locations Starbucks is closing, all six Manhattan ones are in corporate-to-the-bone midtown.

The tourist deficit hasn’t helped matters. The white-hot domestic economy and the cheap dollar once drew armies of visitors to the city, both American and foreign. In 2008, tourists spent an estimated $30 billion here. But in 2009, the city expects the number of tourists to drop by 2.5 million, about 5 percent.

Emotionally speaking, for some, shopping has become a miniature psychodrama in which the customer feels equally guilty if he buys something and if he doesn’t. In January, word began making its way around town that a Fifth Avenue boutique had begun offering customers a plain brown-paper shopping bag. Even if apocryphal, the story is telling: consumption feels dirty. On the other hand, abstention feels like you’re killing the city. Who hasn’t bought something at a corner store just because the owner looked so heartbreakingly hopeful when the door chime rang?

All these factors add up to a do-or-die moment for New York’s merchants. “Retail is historically about birth and death,” says psychologist Paco Underhill, the author of Why We Buy. “If you have a sign ‘open since 1927,’ it’s because everybody around you has closed. And right now there is blood in the water.”

In response, New York retailers are being forced to radically alter the ways they do business. Prices, of course, are plunging. Del Posto has cut the cost of its tasting menu from $175 to $125. Coach has reduced the price of some of its major handbag lines by 15 percent. “Under $100” seems to be the new magic number for shoes and apparel. J.Crew’s ballet flats, previously sold at a minimum price of $130, now start at $98. Repricing can be even more extreme at smaller stores desperate for cash flow.

Sales, meanwhile, are ubiquitous. Deals that haven’t been seen in this town in decades are now commonplace. Last week alone, Eleanor Duffy sold coats and jackets at a 60 percent discount, ABC Carpet & Home was burning off its antique furniture at up to 40 percent off, and West Village pet shop Groom-o-Rama advertised a sad-sounding “Dog Sale 20% Off.” “It’s become literally necessary to have this kind of 50 percent off, 70 percent off sale,” says a manager of a women’s boutique in Forest Hills. “As you go down the street, there are stores that have covered their entire window with a sale banner. There’s nothing in the window, but what’s getting people inside is the sale.”

To adapt to these new price points, retailers have had to alter what they sell. Restaurants are going for cheaper cuts of meat (less rib eye, more hanger steak), and burgers are popping up at all manner of restaurant all over town (not the discretionary $50 foie gras–stuffed haute burgers of yesteryear; the staple burgers). Down on Forsyth, the outer edge of the Lower East Side’s fading shmatte district, Harris Levy has been selling luxury bedding in the range of $200 to $1,500 for a set of sheets; a recession-era best seller is a recently added under-$100 option (again), sourced from China. “These new items may not be crème de la crème, but they’re very nice,” says the fourth-generation owner, Bob Levy, without much conviction. Belle Fleur, instead of offering an “overabundant” bouquet of expensive peonies, now floats three flowers and some candles in a “really really cool vessel.”

Preciousness is out as a guiding retail principle. More and more businesses are abandoning their original lofty purposes—only deadstock wool, only vinyl records—to stay afloat. In the ultimate hipster sacrifice, an indie sneaker store in Soho has put up the sign reading we have uggs. A compromise, yes, but an understandable one: Sales of the well-past-their-moment boots are up 57 percent for the past year.

Sellers with no option to switch merchandise are becoming more inventive—read thrifty—about the ways to deliver it to the buyer. Experts predict a rise in so-called pop-ups, stores leased for a short period of time for a quick hit of cash. (There’s certainly a growing wealth of empty storefronts to choose from.) Target has put a pop-up in Times Square, with good results. Local handbag designer Jennifer Lagdameo is selling her Ananas collection in a six-week pop-up in Nolita. Delis have started home delivery.

Our survey findings were emphatic about a few more things: Foot traffic is dead. Impulse buying is disappearing fast. Nobody is shopping anymore on weekdays—Mondays and Tuesdays in particular—but weekends are still busy. Where people used to buy three items, they are now buying one. Where they used to freely spend $200, they are now spending $99. (Says Jonathan Rubinstein, owner of Joe the Art of Coffee, of his own consuming habits, “When I go out to dinner, I look at an entrée that’s $26 versus $18. I definitely stop for a second and think, ‘Recession.’ ”) While some retailers are expanding hours to catch that elusive 10 p.m. shoe shopper, others are cutting their losses on the slowest days of the week. Restaurants are starting to close earlier, boutiques later: It costs a lot more, after all, to keep the kitchen open than to pay a lone clerk for a few extra hours.

Service, an all-but-forgotten notion in the boom years, is now an essential means of survival. The name of the game is regulars—creating new ones and holding on to old ones. Restaurateurs are plying customers with amuse-bouches, managers are visiting and revisiting tables. Stores are offering free gift wrapping and delivery. Shopkeepers who once treated customers with haughty indifference now practically sprint to the door to greet them. Henri Bendel recently gave away brownies.

Retailers are also looking for cheaper leases—and finding them. That’s the good news in a city small businesses have been priced out of for years. With commercial real-estate inventory piling up, more and more landlords are willing to renegotiate even before the lease is up. West Village’s Biography Bookshop, a onetime stop on the Sex and the City tour, is facing a possible move within the year, but manager Juan Vallejo isn’t worried. “The environment is changing so quickly, you know, in terms of what spaces become available, where we potentially could look.” Operations large and small are cutting staff or cutting back on workers’ hours. “What else can you do?” says a boutique owner who just laid off four employees. “Verizon is not going to give you a break.”

This isn’t the first time, of course, that New York’s retail landscape has undergone a seismic shift. The city’s near-bankruptcy in the seventies killed off many large, family-owned department stores and immigrant-owned mom-and-pops that used to define commerce in New York. That and the crippling early-nineties recession paved the way for Rudy Giuliani, who cracked down on crime, cleaned up Times Square, and lured national big-box chains with tax incentives and other sweeteners. The hedge-fund boom of the aughts redrew the map once again, ushering in the age of Masa and the meatpacking district. How will the current crisis reshape the city’s retail economy?

The immediate future appears to belong to deep discounters, 99-centers, and people who will sell you a nice desk but make you assemble it. On recent weekends, the Red Hook Ikea has been so spectacularly mobbed that bloggers took pictures—even as the small neighborhood businesses like LeNell’s, which the arrival of the Swedish giant was supposed to pull up, were closing down around it. The somewhat grimy, old-school Gristedes grocery chain is doing fine. John Catsimatidis, the billionaire and on-and-off mayoral hopeful who owns Gristedes, gleefully points out that “people are trending away from organic. People are thinking, well, if the regular gallon of milk has been okay for me to drink for the last 50 years, why not again?” Forever 21, the deep-discount, shamelessly derivative fashion chain, took in $1.7 billion in 2008 and projects a $2.3 billion revenue for 2009. Just last month, they took over a number of bankrupt Mervyns locations, and shortly before that 150 stores of a Texas chain called Gadzooks.

Another near certainty is that companies with deep pockets and little to no debt will be best positioned to survive. Because the downturn could take years to ride out, and credit is still devilishly difficult to come by, capitalization is king. The Gap’s sales, for example, are down 23 percent in January alone. But the company is tremendously liquid: It has $1 billion in cash. “It’s not going anywhere,” says S&P analyst Marie Driscoll. The same can be said about Macy’s, which, for all its staff cuts, has the sheer size to hunker down for years. At the same time and somewhat paradoxically, the prospect of cheaper rents, looser credit, and other small-business incentives creates fertile ground for the next crop of one-of-a-kind boutiques, bars, and galleries. Some day in the not-too-distant future, New York may once again be cheap enough to take a risk on.

One long-term concern for retailers big and small is that the consumer, spoiled by constant and massive markdowns, might be permanently hooked on sales. “There’s no question that huge markdowns are a necessity,” says Gilbert Harrison, the CEO of Financo, an investment bank that works with major retail stores. “The question is, how do you get the consumer to go back to full price? They’ve been brainwashed. All they do now is look for sales. It will take years to retrain them.”

In the meantime, the next few years are looking to be, quite literally, a buyer’s market. “The only people who will benefit in this city,” says S&P’s Driscoll, “are the shoppers.” This year will be an ideal time, in other words, to reclaim the mentality best encapsulated by the words “I never pay retail.” Creative bargain-hunting was all but forgotten in the hedge-fund years, yet knowing a guy who knows a guy is one of the New Yorkiest things to do. It harks back to our origin myth as the city of scrappy immigrants: This town was buying off the back of a truck before the truck was even invented.

But the thrill of the bargain should not be confused with the empty pleasures of abstemiousness. At the end of the day, New Yorkers are people with appetites. We’re not going to stop eating at restaurants: Most of us have no real kitchens in our apartments (and now no money for home improvements), and we don’t know how to cook anyway. Women are not going to stop getting their nails done. They may cut back, but, as one struggling spa owner says approvingly, “New York women are quite spoiled. Even if they’re getting a mani-pedi once a month, they still want someone else to do it.” More people have their roots showing—one colorist reports significant time lags between treatments—but few are going natural either. At the city’s three Fairways, the famously high-low grocery stores, a major growth area is gourmet-coffee sales: People may be cutting back on Starbucks, but they still want a quality cup of coffee. And at the sex-toy mini-chain Babeland, to the owners’ own surprise, it is the “luxury vibes”—sophisticated, often programmable vibrators with a price point of $125 and up—that are proving to be a recession-era blockbuster. September through December sales of those items have doubled compared to the year before. “This is not a beginner’s toy,” says Babeland’s head of publicity. “People are upgrading.” And why not? The very fact of living in this city means our life is guided by pleasure rather than value. Otherwise we’d be living in Philadelphia.

Latest security upgrades at city transit hub cost $100M

Latest security upgrades at city transit hub cost $100M
AM News, 1-Aug-08
By Matthew Sweeney, msweeney@am-ny.com

The best evidence of the beefed up security at the Port Authority Bus Terminal might be that a guy snapping photos inside can get stopped three times — twice by Port Authority employees and once by a plainclothes cop — within five minutes.

“They don’t like it when people start taking pictures,” a Port Authority employee said before escorting a reporter and photographer to the bus station’s administrative office where the confusion was cleared up.

The busiest bus station in the world, where some 200,000 passengers come through each weekday, has taken steps to boost security during the past year.

“It has all the attributes of a suburban shopping mall and a major transportation facility,” said Ernesto Butcher, the Port Authority’s chief operating officer. “It is in the category of those kind of facilities that have been targeted around the world.”

At a cost of $100 million, the Port Authority has added steel cross braces to the south side of the south building as a seismic retrofit — a halfway-completed project to help the structure with stand natural disasters. Exterior columns were strengthened. Security cameras were added.

Bollards (barriers that are often disguised as large planters) along Eighth Avenue and 42nd Street are designed to keep vehicles from ramming the building.

The glass in the doors and the walls along the east and north sides of the building has been made shatter-proof.

Since the 9/11 attacks, the Port Authority has spent more than $200 million on security at the bus terminal.

Nicholas Casale, a security consultant, said that while it’s impossible to thwart all attacks, you can make it as difficult as possible and minimize the damage.

The watchful eyes at the Port Authority, however, may be some of the best deterrents to attacks at the terminal.

Feast of nightlife out east: Beach bums turn up heat in Hamptons

Feast of nightlife out east: Beach bums turn up heat in Hamptons
By Gregory Robson
Special to amNewYork

Want to know which clubs are worth your time? Interested in spotting celebrities? Here is a sampling of the Hamptons’ best nightspots.

Pink Elephant
281 County Rd.
Southampton
631-287-9888

Stars abound at this trendy nightspot that features 6,000 square feet of beach, ambient lighting and a scent machine. There isn’t a celebrity who hasn’t danced the night away here.

Whitehouse
239 E. Montauk Hwy.
Hampton Bays
631-728-4121

Whitehouse hosted an event last weekend with Brody Jenner from MTV’s “The Hills.” Then on Sunday, Kim Kardashian’s White Ball was the headline event. ’Nuff said.

The Surf Lodge
183 Edgemere St.
Montauk
631-238-5190

Montauk’s Surf Lodge features a spa and live bands. It boasts a 32-room hotel and boutique and is only a halfmile from the beach.

Porky’s Hamptons
80 E. Montauk Hwy.
Hampton Bays
631-619-6666

Porky’s has a busy summer in store. Local favorite Airdate performs every other Thursday; Sundays are for after-parties and Saturday is ladies’ night.

Star Room
378 Montauk Hwy.
Wainscott
631-537-3332

No place has received more traffic in the past few years than Star Room. Owner Scott Sartiano cut his teeth
in the Manhattan nightclub scene and brings that flair to the Hamptons.

Neptune’s Beach Club
70 Dune Rd.
East Quogue
631-653-8737

For a beach-side clubbing experience, hit up Neptune’s. The multilevel deck overlooks the Atlantic and showcases top-notch DJs.

Southampton Publick House
40 Bowden Square
Southampton
631-283-2800

The Hamptons scene goes beyond rowdy, booze induced late-night parties. If frenetic crowds aren’t appealing, meander down to Southampton Publick House, which pours some of the top beers on the Island, and boasts the best happy hour around.

Neptune Night Club

`Crazy Friday' Comes for New York Parents Seeking School Slots

`Crazy Friday' Comes for New York Parents Seeking School Slots
Bloomberg, 15-Feb-2008-02-15
By Beth Jinks

Parental anxiety in New York rises a notch for today's annual ``Crazy Friday'' as the city's private kindergartens issue decisions that may launch youngsters toward Harvard, Yale or Princeton, or not.

Letters, e-mails and phone calls from schools today will say ``accepted,'' ``rejected'' or ``wait-listed.'' Then the kindergarten shuffle begins, with parents balancing waiting-list spots at their top choices against acceptances at so-called safety schools.

Many parents submitted more than a dozen applications to raise their child's chances, according to New York education advisers. The application flood means some of the $28,000-a-year schools including Brearley, Spence, Collegiate and Dalton in Manhattan have more than 10 contenders for each desk, with competition fiercest for about 2,500 prized seats at the most- sought schools.

``Everybody wants to go the same 15 schools, but they don't have 500 kindergarten places. They have 30 to 60,'' said Amanda Uhry, who charges $15,000 to help families through the admissions process. ``It's like a parental feeding frenzy. You can't buy your way in. If you've got $5 billion, there's probably somebody who is applying who has $10 billion.''

The Trevor Day School in Manhattan had 600 applicants for 64 spots, up 15 percent from 2007, a trend repeated elsewhere, said Deborah Ashe, a board member of the Independent School Admission Association of Greater New York and Trevor's application director.

Legacy Kids

Some spots go to children graduating from the schools' preschool programs, others to ``legacy'' kids whose siblings or other relatives attended the same kindergarten. That leaves precious few spaces for parents trying to secure a kindergarten that will guarantee their child's prep-school path, according to Ashe and Uhry.

``Families are in the middle of the, `Where-am-I-going-to- get-in' panic, it's Crazy Friday,'' Cynthia Bing of the nonprofit Parents League of New York said in a phone interview. Her group doesn't charge to help families apply.

The ``panicked response'' has been building in recent years, Ashe said. ``We don't know if applications are going up because there's more people out there, or if there's just more panic out there.''

New York's five boroughs have 575,823 children younger than 5, according to the 2006 U.S. Census Bureau estimates, up 5.8 percent since 2001. Manhattan's under-5 population jumped 22 percent to 98,361 over the same period, reflecting high-paying jobs that keep more families in the city instead of moving to the suburbs, said Ashe.


Automatic Entry

The 2,500 slots are at 60 kindergartens of private schools that are members of New York's Independent School Admission Association. Acceptance grants children automatic entry into grade school, and can secure their place in the best private high schools. The association represents 127 New York private schools, including 112 in Manhattan.

Families must decide whether to accept admission offers by Feb. 27. If they decline, then those on the wait-list are offered the slot.

Some parents begin angling for the right kindergarten even before conceiving, Bing said.

Amanda Brokaw, a public relations executive, said she and her investment-banker husband are already studying schooling options for their 19-month-old daughter.

``I'm amazed that I'm dealing with this so early,'' she said. ``I grew up in Manhattan. Looking at the future, between the finances and competitiveness of getting in somewhere, it's causing anxiety. No sleepless nights yet, but anxiety.''


Brooklyn's Crazy, Too

It's not just crazy in Manhattan, said Ana Patel, who works for an international human rights organization and lives with her lawyer husband and 4 1/2-year-old son in Brooklyn. After applying to five schools, they won acceptance at a private kindergarten in Brooklyn Heights, where the child can continue through high school.

``You find yourself having the most inane conversations with other parents because it suddenly becomes a big deal whether they get in or not,'' Patel said. ``Do you call the head of development during the first round? Do you send her flowers? Do you send her a thank-you note? Is e-mail OK or should it be handwritten, or on some kind of stationary?''

Application fees, interviews and waiting lists are features of most private New York kindergartens, even those far down in preference lists. Parents submit essays explaining why they'll fit in with the school community, and toddlers take aptitude tests and have ``play dates'' with other hopefuls.

At first-come kindergartens, parents or their nannies line up before dawn on application day. Other schools began applicant lotteries to avoid the spectacle.

`Melissa Moms'

Uhry said that her business, Manhattan Private School Advisors, has doubled since 2005 to about 1,400 families and that 2009 will be the most competitive yet. The key, she said, is selling your family and customizing each application to fit the school's criteria.

``You don't want to look like every other person who lives on the Upper East or Upper West Side. The husband works on Wall Street, probably for Goldman Sachs, the wife doesn't work any more, her name is Melissa, she's 40 years old, has a 2-year-old kid and wears those pants with the word `Juicy' across the butt,'' Uhry said. ``You know how many of those `Melissa Moms' we see around here?''

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