On the boot heels of a Lucrative Investing article about the top 25 areas in America to succeed in business, an article must supplement that and provide the best places in America to go broke due to the high cost of living and failing economy. There are a few things that this writer finds rather symbolic, ironic even, about these locations, some due to the locations involved in the previous article, which you will see if you read both articles, and some are from personal connections.

One thing that the intuitive reader will notice is that in the previous article, a lot of suburbs and rural areas were credited as the best places to prosper. In this article, conversely, major cities are picked on. That is primarily caused by a more demanding economy, with most of these cities totaling well over one million residents.

Thanks to real estate prices that are ‘through the roof’, pun intended, high costs of living, and the highest unemployment rates in the nation next to Detroit, Los Angeles tops our list. Despite being home to the President of the United States, with high real estate prices, high cost of living that is barely under LA and New York City, and almost 10% unemployment, Chicago comes in second. Miami comes in third, despite having three of its close suburbs on the positive list from yesterday’s article.

Residents of The Big Apple have to try to curb the high costs of living, exorbinant living expenses, as even rent in many Manhattan condos can draw blood, only with a median income of $69,500. That may seem reasonable, but remember, so many television personalities live in New York City, like all sorts of nationally syndicated newscasters and the Olsen twins. Naturally, that brings the salary for “normal” people much lower. Coupled with an 8.8% unemployment rate, that brings frenzy to the streets of New York, and puts them at number four. Providence, Rhode Island is fifh on the list, primarily due to the fact that business activity is scarce. Few businesses are quick to branch out into Rhode Island, few universities there come out with top workforce prospects, and venture business capital cannot be easily obtained. Median salary is around 56,000. That obviously means many people are under 30,000 a year, with which it is hard to provide for a family.

The most ironic thing about this list is the fact that some larger cities that are on this list, namely Miami, Boston, Los Angeles, and San Francisco, have suburbs that made it near the top of the list on yesterday’s article about productive areas. The suburbs are thriving, but as soon as you hit the city limits, you theoretically hit poverty central. Unfortunately, this is the pattern of a large recession. These cities will bounce back like they always do. When the economy bounces back, it will bounce back as quickly as it declined, and these cities will thrive once again.

Full list (ties are designated with matching numbers):

19. Boston, Massachusetts

19. Warren, Michigan

18. San Francisco, California

17. Jacksonville, Florida

16. St. Louis, Missouri

15. Orlando, Florida

13. Memphis, Tennessee

13. Tampa, Florida

12. Portland, Oregon

11. Philadelphia, Pennsylvania

10. San Diego, California

9. Newark, New Jersey

8. Cleveland, Ohio

7. Long Island, New York

6. Riverside, California

5. Providence, Rhode Island

4. New York, New York

3. Miami, Florida

2. Chicago, Illinois

1. Los Angeles, California

]]> http://www.thelucrativeinvestor.com/best-places-america-starve/feed/ 0 http://www.thelucrativeinvestor.com/your-taxpayer-dollars-hard-at-work-for-an-ex-merrill-lynch-exec-and-his-37-million-apartment/ http://www.thelucrativeinvestor.com/your-taxpayer-dollars-hard-at-work-for-an-ex-merrill-lynch-exec-and-his-37-million-apartment/#comments Tue, 30 Dec 2008 21:31:18 +0000 Jeremy http://www.thelucrativeinvestor.com/?p=539 No wonder no one wants to tell us where the bailout money is going or how much. One of the companies who benefited from it, Merrill Lynch and its CEO Peter Kraus. Yes, Peter Kraus benefited from your hard earned money.

How? Well, he was CEO of Merrill Lynch for a total of 3 months and received a $25 million bonus during that time. I think I could manage run a company into the ground in three months and I’d take a percentage of that, I’d be happy with $100,000! At that price I’m a bargain as a CEO for a failing investment bank.

So after taking the money and leaving the company, he and his wife decide to buy an apartment. A very expensive one on Park Avenue in New York. The price tag for such an apartment is nearly $37 million.

Here’s the source for this entry along with pictures and a floor plan for such a lavish apartment.

We, as United States taxpayers, have funded companies with $700 billion. It is OUR loan to THEM. However, the economy is still sub-par and there are no investments that we can put our money in for safety with the guarantee of even a tiny profit.

Short run T-bills have 0% interest rate. From what I’ve learned in my managerial finance class, when the T-bills is at 0% that means the risk free rate of interest on an investment is 0% and anything above that (such as on a corporate bond) included a default and market risk premium. (To me) that means any coupon rate on a bond (corporate, municipal, etc) is all risk…

The point I’m trying to make is that the bailout was supposed to help the economy…so when will that happen. There are thousands, if not millions, who are losing their retirement funds in the market. When will they be bailed out?

I guess this means that investors don’t believe the cost-cutting measures Citi has announced in the last couple of months won’t work…or won’t bring the company back to life.

I would really hate to see Citigroup be sold to Chase (it really seems like Chase is buying a lot of failing banks) or Wells Fargo (that would be ironic).

You can read more about the recent events leading up to Citigroup’s troubles here.

Citigroup has already announced it was cutting 22,000 jobs; that announcement was made in October.

All of this news comes after Citi has gone around buying up, and attempting to buy up, failing banks.

So, how does this all affect the average American? Sure, if you?re completely invested in one of the failing companies it is easy to see, but for someone who isn’t in the market but perhaps has a 401 (k) they may be worried about their financial future.

Because banks are playing defensively, they are doing whatever they can to protect their assets. This causes them to not want to produce any new loans, creating sub-prime loans and mortgages is what got most of these banks into this dire situation to begin with. Even student loans will be harder to receive, which could in itself become a disaster, because college tuition will not be going down any time soon (or ever). If a potential borrower does not have great or perfect credit, loans are and will be very hard to acquire.

When the crunch is over, though, many banks will be able to lend again to those with good credit, and those with great and perfect credit will be able to get their loans at better rates. The hardest part is waiting. It is hard to wait for a loan when you need a mode of transportation and can’t get a car loan though, as not everyone lives where there is a method of public transportation or a place close enough to anything to ride a bike.

If you’ve been working and deducting some of your paycheck into a 401 (k) for any length of time, the financial crisis is something to take a serious look at. According to financial adviser Jill Schlesinger in a CBS interview, you should not stop payroll deductions into your 401 (k) just because of a sudden drop in the market, rather now is the time to be putting more money into the fund. Russell Pearlman from SmartMoney magazine also says that investors shouldn’t pull all of their money out of the market and to not panic. She states, ?As bad as things look today, they are just going to be a blip on the radar 10, 20 years from now.? As hard as it is to watch the stocks fall more every day, advisers and market analysts are saying to stick with it and that what is happening now could be the worst of it.

Not all news is doom and gloom however. Some of the brighter side of it is oil has fallen from $147 a barrel to under $70 in 3 months. When things start to shake up Wall Street, it appears that investors will begin looking for something more stable than what they are currently invested in (which probably lead to yesterday?s record jump in the price of an ounce of gold). The fall in oil definitely eases some of the financial burden facing the average consumer in the U.S. The lower oil prices will help ease inflation on all the goods that we buy.

Hopefully Russell Pearlman is right and we will all look back on what is going on now and say it is a blip. We can also hope that the worst of it is over. However you look at what is happening on Wall Street, the biggest thing to do is wait.

A lot of the come back can be attributed to the European union’s announcement to pump $2 trillion into their banking systems to protect them from failing.

Today’s rally was the biggest one day increase since 1933, jumping 11% in just one day. It also blows away the previous one day point record increase from 2000 of 499 points.

No one is saying that the worst is over though, many are still skeptical. The markets are trying to find a balance between where they are and where they should be.

The bill from the resort had $200,000 in room fees, $150,000 for meals, and $23,000 in spa charges…

What does AIG have to say for themselves?

It’s normal. It’s just a retreat for top independent sales people.

Impressive….really impressive. Remind me when I graduate college to attempt to sell insurance. It sounds like I went into the wrong field.

So there you have it America, your tax dollars hard at work. I wish there was someone I could write a very angry letter to about this because I’m quite angry. If AIG is working to "cut the fat" perhaps they should start with expensive Californian retreats.

Banks are still falling hard from their own greed. It was their market to lose and they blew it big time. Few small town banks are failing, and some like Regions, are prospering because of their unwillingness to partake in the sub prime lending scheme.

Yes, I’m still angry that we, the taxpayers of America, had to pay to bailout these companies that could not keep their hands out of the pockets of people who they KNEW couldn’t afford mortgages and loans they were being given.

So CitiGroup was unhappy and Citi along with federal regulators pushed the Citi buyout to go through. However, unless some legal action is put into place, Wachovia’s stockholders and regulators will ultimately decide the fate of the company.

I think Citigroup should either offer more money for Wachovia (which they don’t have) or let it go to Wells Fargo without too much complaining. Wachovia and it’s stockholders need the money, and I think they should take the deal with Wells Fargo and let CitiGroup off easy.

The government has bailed out a handful of banks and savings-and-loan firms now and spent billions of tax dollars in the process…So the question now is what exactly is preventing such a huge failure of the United States financial system in the future?

To me, it seems like nothing. The government is seeing a problem and just throwing money at it to try to plug a leak. All the money being given to mortgage debt and failing banks is being given with little restrictions. Sure, the government (I mean tax payers) will own 80% of AIG and there are restrictions based company by company…but no real legislation is being passed (or at least publicized at this point) for the future to stop something like this from happening again.

In the mean time we can watch the government (I mean tax payers) assume all the debt accumulated by bad mortgages and wait to see what happens in the future.

Bank of America is buying out Merrill Lynch and Goldman Sachs is trying to get together a $75 billion buyout of AIG.

It looks like the problems from the housing foreclosures are moving up the ladder from consumers to the greedy lenders. This is a sad situation for those who have their pensions and investments tied up in these companies, also those who are going to lose their jobs as a direct result of the closures. At least some of the people will be able to get some of their money out of WaMu before it also tanks.