A previous post (#205) looked at the rich
of nineteenth-century New York, most of whom earned their fortune themselves
and provided some useful product or service to society. So what about the rich of today? I know of no compilation of the richest New
Yorkers comparable to Moses Beach’s tabulation of 1845, but Forbes magazine’s annual list of the 400
richest Americans is a good place to start.
Among the top 100 names listed are 16 New Yorkers, with the source of
their income as follows:
Investments,
4
Hedge
funds, 2
Real
estate, 2
Media,
2
Private
equity, 1
Leveraged
buyouts, 1
Financial
services and news, 1
Cosmetics,
1
Luxury
clothing and housewares, 1
Television
and real estate, 1
Since investments, hedge
funds, private equity, and leveraged buyouts can be combined under the term
“finance,” it’s obvious that finance, for a total of 8 (or maybe 8½, including
financial services and news), is tops, and “finance” of course means Wall
Street. Real estate is second with 2, or
maybe 2½, if one adds the “real estate” half of “television and real estate.” Tying real estate with 2, or surpassing it
with 2½, if the television part of “television and real estate” is included, is
media. Finally come luxury clothing and
cosmetics, which can be lumped together as “retail.” What is conspicuous by its absence is
technology, since that is more of a West Coast phenomenon.
Finance and real estate were biggies in
the nineteenth century also, but the Wall Street of today is not the Wall
Street of then, for hedge funds and leveraged buyouts are recent creations, and
very different creatures indeed. How
many of us even know what a leveraged buyout is, or what a hedge fund or
private equity firm does? In the nineteenth
century the public was surely baffled by short sales, puts and calls, and
straddles, but those devices never by themselves precipitated a worldwide
financial crisis, which is more than can be said for the financial gimmicks of
today. How reassuring it is to find
cosmetics and luxury clothing included in the first 100 – real stuff that you
can see and smell and touch. Even if you
can’t afford it, you can understand such products and wish their creators well.
Who is the richest New Yorker? Michael Bloomberg, whose firm Bloomberg LP is
the “financial services and news”
provider listed above. A business
magnate credited by Forbes with $38.6
billion, he is also the eighth richest man in America. And oh yes, he was the 108th mayor
of our fair city, serving no less than three consecutive terms. A successful business magnate, independent
politician, and philanthropist, he is not to be
dismissed lightly. By serving as
mayor he continued a tradition of New York merchants who in the first half of
the nineteenth century – before the advent of the professional politician and
the dominance of Tammany Hall -- took
two years or more out of their business career to govern, or try to govern, the
unruly city of New York. For them, it
was a matter of public service, even though their heart was in their business.
For Michael Bloomberg, a phenomenally
successful businessman, politics was probably the only place to go for the
thrill of further achievement. The
results? Both negatives and positives. But the negatives – a stop-and-frisk policy
that abused minority communities, homelessness, and cozy relations with banks
and real estate – were surpassed by the positives: restrictions on smoking in
public, pedestrian plazas, 850 more acres of parkland, 470 miles of bike lanes,
and a safer, cleaner city. Not a bad
public record for the city’s biggest moneybags, far surpassing that of
Cornelius “Old Eighty Millions” Vanderbilt, the richest New Yorker in the
1870s. And I haven’t even looked at Bloomberg
Philanthropies Foundation and what it’s up to.
Nor have I mentioned his living with a lady friend, which bothers New
Yorkers not a bit. His appearance? Dignified, mayoral, but with a winsome smile.
 |
| Hizzoner. David Shankbone |
The next richest New Yorker, according to Forbes, is Carl Icahn, a Far Rockaway
native and Princeton graduate turned hedge fund manager and activist
shareholder whose wealth is pegged at $20.5 billion. His involvement in risk arbitrage and options
trading is enough to baffle the uninitiated (of which I am one), and his
reputation as a ruthless corporate raider is not likely to endear him to
multitudes. In 1985 he staged a hostile
takeover of TWA, then sold TWA’s assets to repay the debt he used to acquire
the company – a procedure known as asset stripping. Then in 1988 he took TWA private, reaping a
profit of $469 million, while leaving the company saddled with $540 million in
debt. So if Bloomberg is the big fish in
the pond, Icahn is a shark. Labeled a
financial parasite by some, he insists that he is always acting in the
company’s best interest by ousting incompetent management; also he tends to
hold stock for over three years, which makes him something of an investor. Hostile takeovers, proxy fights, stock
buybacks, chairman of this and acquirer of that – no layman could follow his
career or grasp his motivation, but it all explains why he has the second
biggest New York fortune. A sober-looking,
well-dressed business type whose features have graced the cover of Forbes and Time, he manages to work in some philanthropy, too.
The third richest New Yorker, with $12.5
billion, is investor and philanthropist Ronald Perelman, whom I confess I had
not heard of, but whose photos show a chubby, balding fellow, rather
jolly-looking with a hearty smile. Forbes describes the source of his
wealth as “leveraged buyouts,” so I’m suspicious already. His modus operandi is to buy a company, strip
it of superfluous divisions so as to reduce debt and generate profit, then focus
on the company’s core business and either sell it or hang on to it for its cash
flow. So is all this good or bad? I haven’t the slightest idea, but I gather that
Perelman, like Icahn, is a corporate raider, which makes him shark no. 2. One of his favorite operations is greenmail:
he buys a big chunk of a company’s stock, then threatens a takeover unless they
buy his stock back at a much higher price; if they do, he reaps a phenomenal profit. The mere acquisition of shares by such a
raider precipitates panic in management and a buying frenzy in the public. But like Icahn, he finds time for
philanthropy, and for five marriages as well.
He does get around.
 |
| Shark no. 2. A great smile. David Shankbone |
The
fourth richest New Yorker is none other than Rupert Murdoch, with $11.6 billion
made in media. We’ve all heard of the
gentleman, and “media” barely suggest his amazing career. Australian-born, he first acquired newspapers
in Australia and New Zealand, then expanded his acquisitive talents to Great
Britain, and for further conquests moved to New York City in 1974, becoming a
naturalized citizen in 1985 for the soundest of reasons: to be able to expand
into U.S. television, which can’t be owned by foreigners. Expanding comes naturally to him; by 2000 his
News Corporation owned over 800 companies in some 50 countries, including such
U.S. gems as Twentieth Century Fox, HarperCollins (a publisher I used to work
for), and The Wall Street Journal. Indeed, one wonders what he doesn’t own.
 |
| Mr. Murdoch and wife no. 3, before divorce proceedings. David Shankbone |
Not that all is well in the Murdoch
empire, for in 2011 his newspapers were accused of hacking the phones of
celebrities, including the British royal family, no-no’s that provoked criminal
investigations on both sides of the pond.
Photos reveal a smiling, wrinkled gentleman of 84 with a very receding
hairline and glasses, which hasn’t prevented him from going through three
wives, the last of whom (if “last” there is) he is divorcing. His urgent need to expand his media empire,
like the force driving corporate raiders and hedge fund honchos, puzzles and
intrigues me; I would like to know what makes this man tick, and wonder if he
himself knows. As for hedge fund honchos,
perhaps relevant is the fact they make much more money than CEO’s of
corporations – annually, sometimes a billion or more.
Compared to these other richies, not to
mention Donald Trump – no. 121 on the Forbes
list, with a paltry $4.5 billion – Michael Bloomberg comes off looking
good. He isn’t a pirate or an egomaniac,
gave us bike lanes and greenery, made it possible for us to stroll in Times Square,
and cleansed our indoor public spaces of nicotine. Not bad, Mike, not bad.
So what do these folks do in their spare
time (if they have any)? For one thing,
they give. The New York Times ran a recent article on The Big Ask, on
philanthropies hoping to nudge fat cats toward a Big Give. New York is full of big-name cultural
institutions that gobble up big money so as to realize their big dreams, and
big donors are in their sites. In 2008
Leonard Lauder, the cosmetics magnate, gave $131 million to the Whitney Museum
of American Art – the biggest gift the Whitney has ever received. And in 2013 he gave the Metropolitan Museum
of Art 79 Cubist works, a collection of Picassos, Braques, and Légers valued at
more than $1 billion, to be housed in a projected new wing for contemporary
art. Lauder is seen as embodying an old
money model of largesse, concentrating on one or two institutions and in so
doing making a big splash.
Contrasting with Lauder is Bruce Kovner, a
hedge fund manager who in 2012 gave $20 million to the Juilliard School of
Music for its early music program. Never
heard of him? That’s the way he likes
it. He shuns publicity, doesn’t want his
name on a building, avoids interviews and black-tie fundraising galas that
would love to feature him and lure more donors.
A bit of a surprise: a hedge fund manager in love with music and who
believes that “the arts … are what make humans what we are.”
But today’s moneybags don’t give just to
the arts, far from it; with their eye on the 2016 election, they give big money
to the candidates of their choice. Mostly
Republicans, of course. According to a
lead article in a recent New York Times, only
158 U.S. families have given almost half the cash -- $176 million – raised to
date for the election. So who are these
donors? White, wealthy, older males
clustered in a handful of communities throughout the nation, the biggest of
these being New York. So right away I
smell hedge funds, leveraged buyouts, private equity. And the
Times confirms my hunch, for these donors aren’t from old big money,
haven’t inherited their wealth; they’re newbies who launched their own
businesses, took risks, and reaped huge gains, prominent among them the hedge
fund managers of New York. And they
support Republican wannabes who promise lower taxes, fewer regulations,
stingier entitlements. Not that it’s
easy to sniff these donors out. They
hide behind business addresses, post office boxes, and limited liability
corporations and trusts.
One hedge fund manager named in the Times article is Robert Mercer, whose
Renaissance Technologies, founded in 1982, is one of the world’s biggest hedge
funds, with some $27 billion in assets. Closed
to outsiders and open only to employees and their families (minimum investment
$1 million), Renaissance is said to be run by and for scientists, with an
emphasis on quantitative finance research done by mathematicians, computer
scientists, physicists, astrophysicists, and statisticians; Wall Street
experience is frowned on. Mercer loves
computers, calls himself “simply a computer programmer,” uses computers to
guide his investing and avoid the herd mentality of Wall Street. His staff amass vast amounts of data and use
secret computer-based models to predict prices.
Despite the fund’s obsessive secrecy, one
example of their novel approach to investing has come to light: they obtained
data on clouds indicating that markets are less likely to rise on cloudy days,
which was then confirmed by more data
from Paris, Milan, Tokyo, Sao Paulo, and New York. With even the weather behind them, no wonder
they are billionaires and the rest of us are poor. So if you must invest, check out the cloud
patterns first.
As for donating, the Washington Post has called Mercer one of the ten most influential
billionaires in politics, labeling him a “Tea Party conservative.” Well, he’s got a lot to protect, and the IRS
has been sniffing around his hedge fund for years. His money-backed choice for the White House:
Ted Cruz.
Mercer’s firm is based on Long Island, but
its administrative offices are in Manhattan.
He lives with his wife (believe it or not, he’s had only one) in Head of
the Harbor, New York, a quiet little village in Suffolk County on the North
Shore of Long Island. I confess that
until now I’d never heard of Robert Mercer or Head of the Harbor, New York. As to how he commutes from there to Manhattan
– private jet, limousine, whatever – I haven’t a clue, but I’ll bet he does it,
however discreetly, in style.
The nerd of nerds, Mercer is reclusive,
avoids photographers, rarely speaks in public.
Described as “an icy cold poker player,” he appears in rare photos of
him as a clean-shaven older man with thinning hair, appropriately tense when
playing poker at a tournament. All that
clout, and most of us have never heard of him.
Which says a lot about the rich of today; they aren’t all
attention-grabbing fiends like The Donald.
This last Halloween hedge fund billionaires
left their mark on Manhattan, bedecking their townhouses with goblins, crones,
witches, zombies, skeletons, ghouls, ghosts, spiders, and bats leering from
balconies, peering through railings, or guarding entrances. Outside the East 74th Street
residence of Marc Lasry, a cofounder of Avenue Capital, bloodied life-size
dummies dangled from a balcony, while a chaste neo-classical entrance on East 67th Street featured an
effigy of a two-headed girl standing in a multitude of rats. But it could have been worse: a year before,
the façade of hedge-fund billionaire Philip Falcone’s residence on East 67th
Street, a street that seems to lure spooks, was graced with a crone cradling a
dead infant, while inside a hearse parked at the curb the Grim Reaper was seen beheading
a corpse – a display spooky enough to provoke protests by the neighbors. All of which shows where some of the millions
– a tiny portion -- reaped by fat cats goes.
The rich are served by an army of maids,
nannies, janitors, doormen, chauffeurs, shop clerks, and the staff of elite
restaurants, but not all of the army is enchanted with those they serve. Another Times
article (the Times seems to feast
on stories of the rich) tells of the service of a young captain of waiters in a
Michelin three-star restaurant. When the
doors open and the first guests are seated at 5:31 p.m., he scans a digital
dossier listing every guest’s water preference, food allergies, likes and
dislikes, and whether or not they spend big on wine. The captain greets the table, asks for water
preferences, signals with his hand behind his back to an assistant: wiggling
fingers means bubbles; a slashing motion, still; a twist of the fist, ice
water. Minutes later the captain takes
orders, memorizes each one, then passes them on to the server.
 |
| They also serve who only stand and wait. Michael Plutchok |
“Make it nice” says a sign in the kitchen,
reminding employees that everything in the restaurant, from the placement of
candles to the part in your hair, must seem perfect. Captains, servers, and sommeliers know they
are playing a part, and they do it with a touch of irony. They project warmth while keeping emotional
distance: the thrill of the con. The
guests want to believe that all is perfect, and the staff are trained to
sustain the illusion. A smudged glass, a
fingerprint on a fork would shatter the illusion, must not be allowed to
happen. The guests eat ravenously,
attempt sex in a restroom; one woman tries to leave her baby at the coat check
counter, and grown men at the bar chant, “We are the one percent.”
When a regular has a stroke and topples to
the floor, the staff are visibly shaken, but the manager quickly pushes a
champagne cart in front of the body on the floor, hoping to hide it, and turns
the music up. Ten minutes later the
paramedics arrive to cart the victim off, and the charade resumes.
Finally, after months of “make it nice,”
the young captain felt empty and tired, and quit the job to become a graduate
student at the New School for Social Research.
The superrich would have to do without his service, and he could
certainly do without them. They look
best from a distance.
It must mean something when the ultra rich
get ribbed in advertising. The New York
Lottery has launched a humorous ad campaign showing richies wasting their money
in oddball ways. One TV commercial shows
a man soaking in a bathtub of pinot noir; when his butler lets a bit of cork
fall in the tub, he gets angry. The viewer,
suggests the ad, would make a much better rich person than this fool in a tub,
and Lotto is the way to do it.
Advertisers know you can’t make fun of the poor, but today the wealthy
are fair game. So the Lottery satirizes
the truly rich so as to encourage the not-so-rich to get a little less rich.
The year 2015 has not been kind to the
rich; their investments have languished.
“I’ve failed to protect your capital,” one hedge fund manager, Larry
Robbins of Glenview Capital Management, told his investors, acknowledging a 15%
loss of their capital this year to date.
But this hasn’t kept him from buying the top four floors of the Charles condominium,
a soaring 31-story glass box at 1355 First Avenue between 72nd and
73rd Streets; the price of his multi-storied penthouse, its huge
floor-to-ceiling windows offering sweeping views of the Hudson and East Rivers,
is $37.9 million, a record for that part of Manhattan. In fairness to Mr. Robbins, it should be
noted that the market has not been kind to most investors this year, though not
all are down 15%. And his purchase of a luxury
penthouse, a mere pied-à-terre, since his primary residence is a sprawling
mansion on a four-acre estate in Alpine, New Jersey, shows that the New York
real estate market is still ablaze and booming.
On this happy note, I’ll end; the rich have worn me out.
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| The Charles. Want to live there? Sorry, the top four floors are taken. |
Paris: A sign in a ground-floor window of a building
on my street: J’adore Paris.
The book: The second and final Goodreads giveaway for
the collection of posts from this blog has ended; 598 people signed up, of whom
one will receive a free copy. Both a
print version and an e-book are available online. See Amazon, Barnes & Noble, etc.
Coming soon: The inevitable and inescapable Donald Trump,
who for better and for worse is New York to the bone, and then some.
©
2015 Clifford Browder
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