Thursday, 22 July 2010


“Wall Street, runs the sinister old gag, is a street with a river at one end and a graveyard at the other. This is striking, but incomplete. It omit’s the kindergarten in between.”

Fred Schwed (1901-1966), US Author

There were a number of causes, all mostly avoidable, which contributed both collectively and cumulatively to the debacle in the financial markets, given the sobriquet “The Credit Crunch”. By and large the ‘factors’ were as a direct result of monumental errors of judgement, and commonsense by many extravagantly remunerated people in various positions of high responsibility, who frankly should have known better.

1. The Fed greatly abetted speculation in mortgages by keeping interest rates too low.

2. The various banking regulators failed to prohibit inordinately risky mortgages (Teaser mortgages, “Liar Loans”, 100% loans and ARM mortgages) - a staggering case of regulatory neglect.

3. The governments backstopping of Fannie and Freddie, along with the federal agenda of promoting home ownership, contributed to the bust.

4. Rampant speculation (and abuse) in mortgages was the primary cause of the bubble, which was greatly inflated by leverage in the banking system, in particular on Wall Street.

5. The system of securitizing mortgages lay at the heart of Wall Street’s unholy alliance with Main Street, and several links in the chain made this process especially risky:-

- Mortgage issuers, the parties most able to scrutinize borrowers, had no continuing stake in the outcome.

- The ultimate investors, dispersed around the globe, were too remote to be of use in evaluating the loans.

- These investors (as well as government agencies) relied on the credit agencies to serve as a watchdog and the agencies, being cozy with Wall Street, were abysmally lax.

- Abstruse securities were more difficult to value and multi-layered pyramids of debts far more susceptible to ruinous collapse.

6. When house prices began to go into decline with an accompanying increase of mortgage defaults and foreclosures, it caused those holding Collateralized Debt Obligations (CDO’S) and similar securitized products to become increasingly nervous over the value of its investments. Prices of these investments, held in the $Billions by Banks, Insurance Companies etc rapidly fell resulting in many companies having to write off huge sums of asset values which in turn depleted their capital bases.

7. For a number of years Banks had financed themselves primarily short-term, much of it on overnight through the ‘repo’ market, inter-financial institution asset backed loans. When the value of Banks assets fell or were perceived to have fallen, Banks began becoming nervous about lending to other banks and these funds were greatly curtailed causing severe liquidity within the system.

8. Financing operations with short-term money was dependent on the ability to sell assets when necessary to correct liquidity and capital depletions but this was almost impossible given the paranoia in the markets. Thus followed failures through illiquidity or insufficient capital bases of the likes of Lehman Brothers, the ‘forced’ takeovers at relatively nominal considerations of Bear Stearns, Merrill Lynch, CitiBank, and even Goldman Sachs seeking refuge on somewhat onerous terms from Warren Buffett. Many others were coerced into yielding up equity to The Government in return for additional capital and liquidity under The Troubled Asset Relief Programme (TARP). Many Mortgage Companies were wiped out and the 2 F’s had to be effectively nationalised.

8. Credit Default Swaps (CDS) = insurance = and with no insurable interest necessary = unbridled speculation = unregulated gambling. A relatively new market now grown to over $65 trillion today, many times greater than the Combined Worldwide Gross Domestic Product.

The CDS market is responsible for much of the financial belly-flop. Although the financial crisis kicked-off with mortgages, it surged with the credit crunch, when banks stopped lending even to other banks. The reason they stopped lending was mostly due to the CDS market. Because of the multiplicity of counterparties (everyone is out there punting away, a few with insurable interests but most with absolutely no direct or even indirect interests) no one knew which company held which assets, and worse: no one knew, if a company did go bankrupt, who would be hurt in the CDS market from having insured it against bankruptcy.

The failure of any one major counterparty in the CDS market would bring down the entire credit default sway market and many of its players and we are talking about some of the largest financial institutions in the world. AIG, then the worlds largest insurer by far, was brought to its knees over negligent underwriting of CDS risks and to ensure that it did not bring down other major financial corporations, over $180 billion was injected into it under TARP and effectively nationalised.

Because of this interconnectedness in the CDS and other credit derivative markets, almost all financial institutions, including many insurance companies as well as other companies in the market, are considered ‘too big to fail.’

9. The credit derivative market was devoid of meaningful regulation. In fact from the Fed downwards there was a great reluctance to impose regulations on the transaction of credit derivatives which was ‘hoisted aloft’ as ‘the perfect and healthy expression of free trade’ - a throw-back to the Alan Greenspan philosophy whilst in charge of The Fed.

In the glory days of credit derivative trading, financial institutions paid out $millions and $millions to Washington Lobbyists to ensure that the gravy train was not derailed by legislation and regulation.

Allowing the Credit Derivative Express to speed unobstructed over the financial rails and headlong into the canyon of pecuniary abyss was truly woeful, irresponsible and inexcusable.

10. Finally, the overriding weakness that contributed to much of the shocking lack of duty of care and diligence shown by senior executives in the financial institutions, advising professions such as Auditors, Lawyers, and Rating Agencies, and various regulatory bodies, festered in the method of remunerating those involved. Some examples are:-

- House loan companies paying executives for the volume not quality of mortgages sold.

- Banks giving annual bonuses without regard to the longer term profitability of the business conducted by the recipients of the bonuses.

- The Rating Agencies being paid not by the end purchasers of CDO’s etc but by the issuers and thereby undermining confidence in their impartiality.

- Senior executives of financial institutions who were forced to leave their companies due to less than satisfactory performance, were routinely rewarded with multi $million pay-offs. When Stanley O’Neal, COE of Merrill Lynch was eased out after presiding over his companies financially disastrous entry into sub-prime mortgage securitisation, he left grasping a pay-off package totalling $161 million. His successor in December 2003, John Thain was given a $15 million joining bonus and in 2007 the year before he was forced out, his remuneration package was $84 million. Shortly after he left, quarterly losses of $15 billion were revealed.

In conclusion, the entire system steadfastly avoided transparency, but even if it had been transparent it was so interconnected that there would still have been individual failures. Capitalist institutions created what was thought to be a new idea in the credit derivatives market, but its collective sharing of risk goes against the whole ethos of capitalism, which is to have individual companies compete, not to have them make contractual arrangements that cause them all to fail if one of them fail. This is not capitalism; it is more like a parody of socialism.

Afterword….long ago, an out-of-town visitor to New York was admiring the elegant vessels harboured off the Financial District; “Those are the bankers’ and brokers’ yachts!” exclaimed the guide. “But where are the customers’ yachts?” questioned the na├»ve visitor in response……

Where are the customers’ yachts indeed? In 1940, well respected Wall Street commentator and author, Fred Schwed strove to find the answer and deduced that a lot of the trading activity was conducted under a tenebrous cloud of fibs, bluffs, nonsense and downright lies. When his findings were reprinted 15 years later, he said that “indeed, little had changed in that period” - indeed, seemingly little has changed in the following 70 years!

Tuesday, 21 July 2009


And for your entertainment and enjoyment let us introduce to you The Two Sid's.....and, of course Nancy.


The first Sid is to be seen darting in and out of his nest in Church Street. On leaving his dark and highly private habitat, his customary practice is to only open his front door a tiny fraction and to poke his head out to see if one of his many natural predators are around. If clear he then makes a quick slither to his intended destination, using rapid head and eye movements to ensure he avoids adversaries.
As there are lots of adversaries, his travelling time and distance are somewhat elongated by having to take avoiding action and continuous detours and quite often having to take shelter in a nearby property. As a result he tends to be a creature of the night when his presence is not so easily discernable and he can go about his 'business' with less hindrance. Count Dracula had similar nocturnal habits.


The second half of this indomitable duo, masters of frightening the faint hearted, is the grey-haired, sweet talking devourer of the unsuspecting.

His technique is to lull his prey into a feeling of bonhomie and relaxation and when the time is right he wields his cudgeon savagely and without the slightest remorse or pity for his quarry. Thank goodness there are not too many of this type around.


Sid Vicious had his Nancy Spungeon and behind our two own Sid's is the redoubtable and 'control freaky' Mistress of the Paperwork and just about everything else that moves or doesn't move whichever the case may be.

Whilst our two Sids may wield great power in the hyper-narrow world in which they seek to make their stages, the real power behind the throne, in fact the only power, is our Nancy. Our erstwhile "D" category power seekers have to dance to whatever tune our Nancy chooses to orchestrate. Be warned though Nancy, in real life it is rumoured that one of the Sid's bought your existence to a very unpleasant end.

Friday, 20 March 2009


You take a taxi to your health club to exercise.

You think Central Park is "nature."

Your favorite movie has DeNiro in it.

You run when you see a flashing "Do Not Walk" sign at the intersection.

You go to a hockey game for the fighting. In the stands. To participate.

You say "the city" and expect everyone to know that it means Manhattan.

You've been to New Jersey twice and got hopelessly lost both times.

You pay more each month to park your car than most people in the U.S. pay in rent.

The subway should never be called anything prissy, like the Metro.
You have 27 different menus next to your telephone.

Going to Brooklyn is considered a "road trip."

Wednesday, 18 March 2009


......or STIFF NECK. My doctor peered over the top of his half-glasses and pronounced that I was probably the author of my own painful complaint. " Do you" he asked " spend a long time at your desk, one-fingering your keyboard, looking up or down at your computer screen and side to side at reference material?" When I confirmed that indeed I did, I was given a chapter-and-verse demonstration on the correct ergonomic proceedures to adopt in the future and sent on my way.

In order to let mother nature effect her customary reparations, the rate of OUTSIDERS NEW YORK CITY blogs will be cut back for a few weeks. In the meantime I shall be introducing better posture practices and, hopefully, will be back to full flow and discomfort-free in the not too distant future.


Hotel Gansevoort, 18, 9th Avenue at 13th Street (above) epitomizes the entire essence of the Meatpacking District. Uber-Chic and cutting edge trendy, slavish to 'killer' fashion, vainglorious and 'serial hedonistic' and yet fun, lively and irresistible. Like other establishments in the area it equates 'success' to the number of thick-necked, shaven-headed men in suits standing menacingly on the premises ostensibly providing security. Hotel Gansevoort even has these 'heavies' in each of it's elevators as well!

Hotel Gansevoort Lobby....

....and bedroom ....

....and rooftop swimming pool with spectacular views

It's 187 rooms all have high ceilings and large windows, sophisticated color scheme (neutrals and greys with a shot of blackberry) and minimalist decor, are comfortable enough if not a little tight in square footage. I stayed for two nights in 2008 and whilst initially a tad resistant to the room size and the 'razzmatazz' of most habitues and visitors, really warmed to the place particularly the front desk staff who were delightfully charming and helpful. The buffet breakfast served in the Ono Restaurant was very good value at $13 per head.
Generally the hotel's clientele is international (me), fashionable (not me), and affluent (definitely not me). A UK national newpaper's travel reporter recalls having checked out at the same time as a blonde starlet, who got into a waiting stretch limo, saying into her mobile phone: "Come in my plane darling. I'm leaving now and there's loads of room."

Hotel Gansevoort's position as 'the' place to stay and be seen at in the Meatpacking District is under threat from the forthcoming arrival of the Standard New York (below), hotelier Andre Balazs' ambitious 18-story, 337-room lodge, erected on pillars straddling the elevated High Line park at the corner of Washington and West13th Street, less than two blocks away.

Standing 4 stories taller and with nearly double the room capacity as the Hotel Gansevoort, with a beer garden, a pool and two restaurants, the hugely hyped Standard threatens to depose its barely four-year-old neighbour as the area's trendiest hub.

With the global economy in recession at best, there will be a marked reduction in visitors to NYC, along with a tightening of both corporate and individual's belts, which would indicate a 'shoot-out' between the Standard and Gansevoort for the lion's share of whatever is going of Meatpacking's hotel business and the sobriquet of the 'place to stay and be seen at' in this style obsessed district.

Sunday, 15 March 2009


Steve Brodie (1863-1901)(above) was a bookmaker from Brooklyn who claimed to have jumped off the Brooklyn Bridge (below) and survived on July 23, 1886. His claim that he jumped for a $200 bet won him instant celebrity. Some months earlier a daredevil named Robert Odlum was killed attempting the same dive, so Brodie's alleged accomplishment made front page headlines in New York City and eventually acquired myth status.

Like most urban legends, this incident was probably a hoax because the odds of anyone surviving the 135 foot plunge are practically nil. Skeptics claimed that Brodie had a friend toss a dummy off the bridge while he hid under a nearby pier, then swam out when rescue boats approached the scene.

Hoax or not, Brodie became famous, and his name became slang; "to pull or do a Steve Brodie" came to be understood to do something flamboyant and dangerous, a suicide leap, fall or flop.
His undoubted talent lay in his ability capitalise on his disputed claims to fame. He was a shrewd self-promoter who managed to milk his 15 minutes of fame into lasting notoriety. He went on to star in vaudeville musicals and operated a Bowery saloon-museum at 114, Bowery (below) that became a popular tourist attraction displaying a mural of his 'jump', the clothes he wore, and a signed affidavit from the barge captain who fished him out of the East River.

It is said that Jim Corbett once took his father to Brodie's saloon. The elder Corbett extended his hand and said, "I've always wanted to meet the man who jumped over the Brooklyn Bridge."
"He didn't jump over the bridge, Father," Jim said. "He jumped off it."
"Shucks," said the older man, turning to go. "I thought he jumped over it. Any damn fool can jump off it!"

Saturday, 14 March 2009


Capt. Joseph Rose built his first house at 273, Water Street in 1773 and the second - remnants of which stand to this day (above) - in 1780. Landfill had not yet changed the shoreline and the captain kept his brig, moored at a wharf outside his back door. The building is Manhattan's third oldest building but bears no plaque commemorating the captain or any subsequent occupant.

Just as well really as shortly before the Civil War, Christopher "Kit" Burns leased the building as "Sportsmen's Hall" ostensibly to run a tavern but as a side-line to promote, illegal but semi-tolerated bare-knuckle boxing matches.

However, Sportsmen's Hall was reportedly dedicated to "every variety of vice" particularly Burn's particular favorite, ratting; turning one terrier loose against up to 100 rats in his first floor amphitheatre (above illustration) before as many as 100 roaring spectators who wagered heavily on how quickly the dog would kill its prey. As James Dabney McCabe, writes in "Secrets of the Great City" (1868) "Rats are plentiful along the East River, and Burns has no difficulty in procuring as many as he wishes." He also staged regular dog fights (below) again for the benefit of crowds of baying sadistic gamblers. Burns was very proud of his dogs, and his cellar contained an awesome collection of the most frightfully hideous animals found in America.

Among the toughs who favoured Sportsmen's Hall was George "Snatchem" Leese, so called because he could steal almost anything from anybody. A "beastly, obscene ruffian, with bulging, bulbous, watery-blue eyes, bloated face, and coarse swaggering gait," Snatchem usually carried two revolvers in his belt, a knife in his boot top, and a bludgeon in his hand. One of the very worst scoundrels in New York City, at a time when there were thousands of miscreants, Snatchem would when not engaged in violent crime, provided half-time entertainment by jumping into the rat pit to bite off the heads of live rats for a quarter.
The building has now been converted into luxury apartments.

Friday, 13 March 2009


Pete's Tavern at 129 East 18th Street near Gramercy Park,, claims to be the oldest continuously operating tavern in New York City. This iconic bar has been featured in numerous television shows, advertisements, and movies. Pete's Tavern has been operating as a bar since 1864. During prohibition, when selling alcohol was illegal, Pete's continued to operate disguised as a flower shop.

Pete's Tavern at lunchtime. Sketch by Stephen Gardner

Take away the television (and most of the women), and you'll have a pretty good idea of what this pub looked like when it pulled its first pint back during the Civil War. It still retains a neighborhood atmosphere right down to the regular's football pool. The intricately carved bar serves enough beers (including Pete's own brew, 1864 Ale) to slake all but the pretentious thirsts, and the dense decor recalls an eccentric grandmother's attic.

O.Henry, the pen name of American writer William Sydney Porter (1822-1910) was regular at Pete's Tavern. His short stories are known for wit, wordplay, warm characterization and clever twist endings and from his favourite booth in the front part of the tavern wrote in 1904 one of his most famous stories "The Gift of the Magi".

Pete's Tavern is the ideal place to enjoy an intimate and flavoursome meal in one of the many cosy booths or outside (with the weather's blessing) on one of the colourfully presented tables. Or just hoist a pint of house ale at the original thirty-foot rosewood bar.

Thursday, 12 March 2009


A vacant Manhattan building at 22,West 24th Street (above), that played a part in an infamous 'Gilded Age' murder case, partially collapsed, less than two weeks after city officials expressed concerns about the buildings stability. No one was hurt as the back of the four-and-story building caved in about 8pm Saturday October 27th 2007.

The building became a salacious footnote in a sensational 1907 trial involving a teenage showgirl, a jealous husband, and a renowned architect Stanford White (below).

Something about him tickled her fancy.
Stanford White enjoyed a successful career which included designing the original Madison Square Garden, the famous arch at Washington Square Park and several other city landmarks. He was also a legendary philanderer. White rented part of this property and used it for trysts in 1901 with 16-year-old showgirl Evelyn Nesbit (below). She subsequently married, and her vengeful husband Harry Thaw, shot and killed White on Madison Square Garden's rooftop garden in 1906. The trial revealed that White's 24th Street hideaway was fitted with a red velvet swing (on which Miss Nesbit swung in the all-together, while he watched on appreciatively from beneath), among other racy details best left to the imagination. Thaw was eventually acquitted on the grounds of insanity.

It also came out that White would suggest to his guests "to see his drawings and etchings," kept here. This mock-seductive invitation to "come up and see my etching?" became a popular line with aspiring playboys for decades after this revelation.

Wednesday, 11 March 2009


Hotel Pennsylvania - 401, Seventh Avenue, across the street from Pennsylvania Station and Madison Square Garden.
The Manhattan Room in this hotel was a favorite with the big bands of the thirties and forties with the hotel's phone number being immortalised by Glenn Miller in his song "Pennsylvania 6-500." Many big band names played here, including the Dorsey Brothers, Count Basie, Duke Ellington, and the Glenn Miller Orchestra.
Edwin H Land publicly demonstrated his "instant" picture camera on February 21, 1947. The sad-eyed inventor was his own subject in an 8-by-ten-inch print developed just 50 seconds after it had been exposed, to the astonishment of the winter meeting of the Optical Society of America.

On November 19, 1953, this hotel, during this period called the Statler, would be the site of a mysterious tragedy not fully explained for 22 years. On that night Frank Olson (above) a U.S. Army scientist and germ-warfare specialist, jumped through a glass window and fell ten stories to his death. It was reported as a suicide. In 1975 it was finally revealed that Olsen's death was the result of a CIA experiment to study the effects of the drug LSD. The scientist, who was working on the project, code-named MKULTRA, was an unwitting guinea pig after the drug was slipped into his drink. It was also revealed that the spy agency used prisoners and patrons of brothels set up and run by the agency to test the drugs effects.

Bad trip: Artist's portrayal of the suicide of Frank Olsen jumping from his hotel room window, 9 days after the CIA gave him LSD. Foreground, Dr Robert Lashbrook, the CIA scientist who brought Olsen to New York to seek treatment (Illustration by Haruo Miyauchi.)

The future of Hotel Pennsylvania is currently in doubt as the owner would like to demolish it and replace with an office tower. The debate rages on with nothing as yet decided.

Tuesday, 10 March 2009


Shortly after 8.00 on the morning of September 22, 1915, this stretch of Seventh Avenue between West 23rd and West 25th Streets, was the scene of an accident that killed twenty-five people. During work on the subway excavation for the construction of the new IRT (Interborough Rapid Transit Company), an explosion opened up a thirty-foot pit in the street that swallowed a crowded trolley car and a brewery truck. The death toll would have been higher but for the fact that the wooden planked structure gave way slowly, allowing hundreds of people on the street to scramble to solid ground.

As big a hole as it was, it still pales into insignificance when compared to the 'mind-boggling' size of the enormous hole left in the balance sheets of the world's leading financial institutions by 'toxic loans and other trading losses' made by negligent, foolhardy and totally irresponsible but surprisingly highly remunerated executives.


In my blog "WALKIES" published on 15th. December 2008, New Yorker's love of dogs was highlighted. It cannot be stressed enough how prominent the canine 'cuddly' is within the NYC street scene and the obvious love, affection and pride stretched across the visages of the owners, is apparent for all to witness. Below are just a few photographic examples of the pooch in New York City:-
Watching the world go by

Something in the city

"If it's not the Easter Day Parade my street cred's blown."

"Fidel Castro is my name."

Fire dog

Lock up your daughters - the Fleet's in town

Let's see what some famous and erudite people have said about dogs:-
"My little dog - a heartbeat at my feet."
Edith Wharton
"They never talk about themselves but listen to you while you talk about yourself, and keep up an appearance of being interested in the conversation."
Jerome K. Jerome
"Happiness is a warm puppy."
Charles M. Schulz
"A man may smile and bid you hail
Yet wish you to the devil;
But when a good dog wags his tail
You know he's on the level."

Monday, 9 March 2009


Tabloids today are still focusing on salacious events as they did in 1836

41 Thomas Street is known as the birthplace of Tabloid journalism and newspapers. This is the notorious address where Helen Jewett (below), an upper class prostitute was murdered in her brothel in 1836. The murderer smashed her head in with an axe and later set her bed on fire. This was the first murder that was covered in detail by the city journalists and papers. The increase in circulation guaranteed that this sort of reporting would become the common practice.

Jewett (1813-1836) was borne in Maine to a working class family and her first job was as a servant girl in the home of The Lord Chief Justice of the Maine Supreme Court where she developed into a sexually assertive young woman. Upon reaching the age of 18 she left her home and became a prostitute locally, eventually finishing up in New York City.

Jewett's body was discovered by the matron of the brothel at 3am on April 10, 1836. The position of the corpse in bed indicated that the attack was not expected as there were no signs of a struggle. After inflicting the lethal blows, the murderer then set fire to Jewett's bed. The room was full of smoke and Jewett's body charred on one side. Based on the testimony of the women who lived in the brothel, the police arrested 19 year old Richard P. Robinson on suspicion of Jewett's murder. Robinson, a repeat customer of the victim, flatly denied killing her, and did not display much emotion when confronted by the still warm corpse. He was later charged with the murder.

On June 2, 1836, Robinson's trial began and after days of testimony from several witnesses, including, Posina Townsend, the judge gave the jury its instructions and ordered that as most of the other witnesses were prostitutes, the jury must disregard their evidence. These instructions coupled with the circumstantial nature of the other evidence resulted in the jury only taking less than half an hour to return a not guilty verdict.

An illustration of the murder scene from a pamphlet. Richard P. Robinson with hatchet in hand.

The murder of Jewett and trial of Robinson excited the press and the public and the coverage was highly polarized, with reporters either sympathizing with Jewett and vilifying Robinson or attacking Jewett as a seductress who, according to 19th century standards, deserved her fate. Whichever stance adopted by each of the papers covering the story, none passed by the opportunity to exploit the sexual, violent details of Jewett's death. Never before had a crime and subsequent trial been so graphically and widely reported.
Post trial, personal letters of Robinson's became public which undercut some of the his claims and showed him to be capable of vicious and (for the time) deviant sexual behaviour. The public turned on him, including those that had been his most vocal supporters, as his guilt became clear. He eventually moved to Texas where he became a respected frontier citizen.

Friday, 6 March 2009


208 E. 13th St. near Third Avenue

The famed anarchist and feminist Emma Goldman (below) lived in an apartment on the sixth floor of this old building from 1903 until 1913. She published her journal, Mother Earth, here starting in 1906. In that same year, her anarchist colleague and lover, Alexander Berkman (below with Goldman), was released from prison and joined her. Berkman had served 14 years for the attempted assassination of Henry Clay Frick in 1892.

Goldman's apartment was known as the "home for lost dogs" because many people who had little money and no place to stay often ended up here. It became a gathering place for Greenwich radicals and intellectuals.