white men with money

The Times Blows Its Story on the Fall of the Megarich

The Times really missed an opportunity today, in their lengthy story about how the fortunes of the superrich have collapsed. “For every investment banker whose pay has recovered to its prerecession levels, there are several who have lost their jobs — as well as many wealthy investors who have lost millions,” the paper intones. “As a result, economists and other analysts say, a 30-year period in which the super-rich became both wealthier and more numerous may now be ending.” This sounds fun, right? The megawealthy are being brought down to earth! (Or at least to the level of the just plain regularly wealthy.) Some highlights:

Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent … Monthly income from stock dividends, which is concentrated among the affluent, has fallen more than 20 percent since last summer, the biggest such decline since the government began keeping records in 1959 … An index that tracks the price of art, the Mei Moses index, has dropped 32 percent in the last six months. The New York Yankees failed to sell many of the most expensive tickets in their new stadium and had to drop the price. In one ZIP code in Vail, Colo., only five homes sold for more than $2 million in the first half of this year, down from 34 in the first half of 2007, according to MDA Dataquick. In Bronxville, an affluent New York suburb, the decline was to two, from 17, according to Coldwell Banker Residential Brokerage.

But the Times simply chose the wrong fellow to serve as synecdoche for the superrich as a whole. John McAfee, the computer anti-virus whiz whose financial collapse they followed, is just too likable for proper Schadenfreude. McAfee, “whose tattoos and tinted hair suggest an independent streak” (was that even a little bitchy, Times?), was a serial investor who liked to travel through Mexico, India, and Nepal, and wrote a book about yoga. He quickly bored with his own projects, but always managed to make money off of new investments. And he had a really fun house!

He bought the house in New Mexico as a playground for himself and fellow aerotrekkers, people who fly unlicensed, open-cockpit planes. On a 157-acre spread, he built a general store, a 35-seat movie theater and a cafe, and he bought vintage cars for his visitors to use. In the wake of the dot-com crash, stocks started rising again, while house prices just continued to rise. Outside’s Go magazine and National Geographic Adventure ran articles on his New Mexico property, leading to him to believe that “this was the hottest property on the planet,” he said.

Aside from the unlicensed pilots bit, that sounds really fun! But then the economy collapsed.

In 2007, Mr. McAfee sold a 10,000-square-foot home in Colorado with a view of Pike’s Peak. He had spent $25 million to buy the property and build the house. He received $5.7 million for it. When Lehman collapsed last fall, its bonds became virtually worthless. Mr. McAfee’s stock investments cost him millions more. One day, he realized, as he said, “Whoa, my cash is gone.” He has sold a 10-passenger Cessna jet and now flies coach. This week his oceanfront estate in Hawaii sold for $1.5 million, with only a handful of bidders at the auction. He plans to spend much of his time in Belize, in part because of more favorable taxes there. Next week, his New Mexico property will be the subject of a no-floor auction, meaning that Mr. McAfee has promised to accept the top bid, no matter how low it is. “I am trying to face up to the reality here that the auction may bring next to nothing,” he said.

Times, what are you doing? We’re supposed to be delighted that our superrich have to go away and hide in Belize. But we want this guy and his heteronormative version of the Neverland Ranch to stay here and play with us! This is really disappointing. Would no fat guy from Larchmont return your calls, or something?

Rise of the Super-Rich Hits a Sobering Wall [NYT]

The Times Blows Its Story on the Fall of the Megarich