Winners and losers

Monday, March 22
Posted: 2 p.m. EDT

All economic cycles have financial winners and losers; thus news of the financial health of the wealthy is mixed. On the one hand, we have evidence of rebounding sales of yachts, art, and other discretionary spending. Much of that is probably due to bargain-hunting.

On the other hand, we still have fallout from the recession and loose credit from rich folks who did what so many did during the economic bubble -- borrowed more than they should have in order to live the high life. Many are now trying to unload real estate in a soft market, and selling off various toys like luxury cars, planes and boats.

A more drastic fate awaits those who fail to heed economic reality. Saturday's Wall Street Journal has an entertaining article about a repo man who takes back some of those expensive jets and yachts from the over-leveraged. His career is experiencing its own bubble: Apparently business is booming, to the point that some repo companies have even lowered their commissions to combat competition and gain more market share.

In the article, the repo man estimates that 70 percent of those he is relieving of their cars, yachts and planes made their money in real estate -- which brings up another roadblock for the rich: how to sell those over-mortgaged properties in a stagnant real-estate market.

The Palm Beach Post in Florida reports that a mansion in tony Manalapan, an oceanfront community just south of Palm Beach, sold for $12 million. Sounds like a lot, but the property had been sold in 2000 for $27.5 million and in 2009 for $22.45 million. "Somebody got a great buy," said Frank McKinney, a local high-end builder who had owned the home twice. Apparently, the seller was a hedge fund that was taking losses on properties. It's a perfect example of winners and losers.

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