Our Man In New York: There's nothing quite like splashing the cash when the economy's about to take a bath

Click to follow
The Independent Online

A recession is coming – don't call it a depression, it scares people – and the only medicine is to behave just like it's not happening.

That's why I stopped by the newly reopened Plaza Hotel last week for afternoon tea. The whole country is on food stamps and it can't be long before the encampments return to Central Park and the starving hordes will be storming the Palm Court for cake.

Good luck to them if they do. For my sixty bucks, I got many delicious morsels – mint-infused cucumber on a dainty slice, a prosciutto and tomato confit on olive bread, some scones with cream and jams – but all thimble-sized. Great for the taste buds, a tease for the stomach. I suppose stuffing yourself is not why you have tea at the Plaza. It's more about affordable decadence.

After all, not many of us are going to see much of the Plaza otherwise. Not when the hotel rooms start at a thousand a night and the new residential apartments that are now part of the hotel have been selling for as much as $50m (£25m). Regrettably, I am not a purchaser and will therefore be skipping the black-tie party soon to be thrown for the new owners featuring 12 female musicians dressed to look like statues, a buffet that will allegedly resemble a Rembrandt portrait and separate caviar and Cognac bars.

I am guessing that James Cayne, chairman of Bear Stearns, will be among the guests. He bought one of the apartments for $25m just before his bank went belly-up, or almost, in March. He has felt the cold blast of a spiralling economy, but that is apparently not giving him pause in his private life.

His purchase is just one of many shards of evidence to suggest that, so far at least, the very rich in town are remaining just that. Some of this is anecdotal, of course.

Take a recent night when I found myself invited to a hush-hush cabaret club on the Lower East Side where just getting a table – and therefore past the bouncers at the door – normally costs $1,000 and they have a bottle of champagne on hand at the bar, just in case, for $50,000. It was jammed. The last guy to buy one of those bottles (it has gold embellishments) shook it up and sprayed the contents on his pals.

And how about that man John Paulson, who may or may not have been pleased when the press exposed how nicely he has been doing of late? A hedge-fund owner, he placed bets last year precisely on the credit implosion accelerating and pocketed wages of $3.7bn. By most reckonings, it is the most money made by an individual in history.

If things get really bad, even some of these folks may eventually begin to feel it. I would not count on it, though, and for now, at least, they are throwing cash – and bubbly – around like never before.

Manhattan should be tightening its belt. Wall Streeters are being laid off by the ship-load. Citigroup has beenthe latest to announce more job cuts, a further 9,000 to be shown the door. And many a personal fortune was lost in the Bear Stearns debacle. Yet if the housing market is a barometer of economic health – and we know it is in the rest of America – then the Manhattan boom is still in full swing.

So far this year, deals have been closed on 71 apartments in Manhattan costing $10m or more. That compares with just 17 during all of 2007. Don't see recession spelt inthat statistic? How about this? According to another report, the average price of apartments on the island leapt an additional 41 per cent in the first quarter of this year to a record $1.6m compared with the same period last year. And there was I thinking prices might drop and I could finally escape my rental.

I will just have to satisfy myself with the occasional tea at the Plaza. A delusion of wealth. But next time I'll bring an additional peanut-butter-and-jelly sandwich in my jacket pocket.