Wednesday, February 26, 2014

The "There Is No Inflation" Report: Taxi Medallion Auctioned for Record-Setting $965,000

NyPo reports:
For the first time in six years the city auctioned taxi medallions for yellow cab drivers on Wednesday and the winning bids ranged up to a record-setting $965,000.
“I’ve been waiting for this for years. I missed out the last time,” said Sadar Jaman, 44, who emigrated from Bangladesh 22 years ago and has been a cabbie for ten years.
Jaman, who drives the day shift, and his partner, M.D. Islam, who works nights, agreed on a bid of $910,013, financed with the help of a broker. They are on the hook for $105,000, which they are splitting – but Jaman said it’s a solid investment.
“People come here from all over the world and the first thing they want to do is become a taxi driver,” said Jaman, who is married, with two children and lives in Jackson Heights, Queens. “Everyone comes here for a different dream, a better life, to give my children a better life.”
The arithmetic for Jaman and Islam was simple: “We pay $7,000 a month to rent and with the medallion we’ll pay six thousands in mortgage. So we keep one thousand that we can use to maintain the car.” Now, Jaman can think about his post-cabbie days. “If I want to retire in ten years it’s easier if I have a medallion.”
And the value of a medallion keeps going up.
There is, of course, no question that medallions have such extraordinary value because the government of NYC dramatically limits the issuance of new medallions, but the money still needs to be available to finance such purchases, and that's where the Federal Reserve comes in, because it sure is printing out new money.