From HamptonsPolitics.blogspot.com

They’re rioting in Africa
They’re starving in Spain
There’re hurricanes in Florida
And Texas needs rain.
(The Merry Minuet)
A business associate complained today that his house was falling into foreclosure, his credit-line second mortgage was in default, his credit cards were about to be charged-off, and he has been left, literally, with nothing of value.  He lives on Long Island.  He has a small business where he derives his income.
He was thankful that he has no assets. No one can attach them.
Meanwhile, a woman who bought a brownstone in upper Manhattan bemoaned the fact that she could get nowhere with the Department of Buildings and was unable, after nearly two years, to complete its renovation legally.  The property is now worth 50% of what it was purchased for in 2007.  But, she refuses to hire a lawyer despite her tribulations, even after the useless employment of expediters.
In Manhattan, real estate brokers took solace in the hordes of Europeans who, after the destruction of Lehman Brothers reportedly hopping off their 747’s onto the tarmac before the plane landed and immediately lined up behind shopping carts at Tiffany’s and filled out broker’s applications in order to scoop up condos with their rapidly appreciating Euros.
Builders in the Hamptons were stepping over ½ acre lots in Hampton Bays in order to pick up those 3-5 acre parcels in Water Mill to build mini-McMansions that were so popular with those Euro-zone émigrés.
It was convenient to believe that Europe has much less exposure to the subprime mess.  But, as the game has played out, it wasn’t simply those CDO’s and SIV’s that did them in.
Goldman Sachs, for example, was an advisor to the Greek government and proceeded to do two very neat tricks:
First, they showed the pencil-pushers how to hide a lot of debt, “off balance sheet” – then, knowing that this was an hourglass that would certainly run out, the boys at GS bought a whole lot of CDS’s (credit default swaps) which essentially bet that the value of the Greek debt would degrade to the point of default.
That’s the same play they used with mortgages and took TARP money from Paulson (Treasury Secretary and former Goldman CEO) in addition.  Few people know about the private letter ruling that allowed Paulson to meet and do business with Goldman during the meltdown (read “To Big to Fail”).
Europe is now rapidly becoming the wagging tail that follows the American dog. Portugal, Ireland, Greece and Spain (PIGS) now face the possibility of default on their debt.  Not to far on the heels of already defaulted Iceland and Dubai – which recently rescheduled its debt while offering only 60 cents on the dollar.  No moral hazard here folks.  That’s only for individuals.  Corporations and countries walk away from debt all the time.
As Kenneth Rogoff of Harvard writes, this is just the beginning:
The Federal Reserve last week raised the discount rate charged to banks for direct loans, and plans to end its $1.25 trillion purchases of mortgage-backed securities in March.  President Barack Obama’s administration is proposing a $3.8 trillion budget for fiscal 2011 to spur the recovery.
“When they start tightening monetary policy even a little bit, it’s going to send shockwaves through the system,” Rogoff said.
In an interview a month before Lehman Brothers Holdings Inc. went bankrupt in 2008, Rogoff said, “The worst is yet to come in the U.S.” and predicted the collapse of “major” investment banks. His 2009 book 'This Time Is Different,' co- written with Carmen M. Reinhart, charts the history of financial crises in 66 countries.
“We almost always have sovereign risk crises in the wake of an international banking crisis, usually in a few years, and that’s happening,” he said.  "Greece is just the beginning.”
Few real estate brokers are now touting the advantages of a Manhattan market supported by the soon to be expected plummeting Euro.  In fact, those who did buy condos and hopped back onto the plane are now worried about higher maintenance fees from enlarged shares of unsold or defaulted apartments and value dropping like a rock.  At 311 West Broadway, a 68 unit condo in SoHo, for example, there are rumors of a huge inventory of unsold apartments with a developer whose monthly loan vig is $6 million a month.  StuyTown value dropped from $5.8 Billion to a current value of $1.8 Billion. Rental prices are also dropping substantially despite what any broker tells you.
And, in the Hamptons, where the newly installed Supervisor Anna Throne-Holst has been the poster girl for the Moody’s investment rating for Southampton Town (which has dropped) – and the fact that it has only dropped a couple of notches shows you how both drugs and alcohol can be useful while reading through “news” reports.  With a multi-million dollar budget loss that no one can figure out, a devastating indictment of a previous Supervisor Skip Heaney in a report by Linda Kabot, and rapidly disappearing revenues, only a fool would believe that the Town’s credit rating is anywhere near investment grade.
Construction of new homes is non-existent (certainly on spec), the value of the real estate tax credit has already been discounted and, considering the fact that there is no industry beyond real estate in the Hamptons, property tax receipts, transfer taxes, and home values have plummeted.  It is much cheaper to rent than to buy anything.  Values are 50% lower and are still dropping regardless of what anyone tells you.
Perhaps Goldman Sachs was the budget advisor in Southampton as well?
This economy has a minimum of another three years before it stabilizes, IF we do not have a double-dip and IF there is no credit bubble that bursts due to multi-trillion dollar deficits and the printing of fiat money.