Ahmed Elbatrawy

OECD: Europe debt could derail global recovery

OECD warns that debt problems in Europe are the greatest risk to uneven, fragile growth around the globe.

OECD warns that debt problems in Europe are the greatest risk to uneven, fragile growth around the globe.

NEW YORK (CNNMoney) — Europe’s sovereign debt crisis risks derailing the global economic recovery, the Organization for Economic Cooperation and Development warned Tuesday.

The OECD issued the warning as it also cut its economic outlook for the eurozone this year. It now forecasts a decline of 0.1% in the 17-nation block that uses the common currency; it previously had expected growth of 0.2%. It also cut its forecast for 2013 growth, to 0.9% from 1.4%.

The OECD was particularly concerned that problems with sovereign debt in Europe have become a significant threat to growth around the world.

“The crisis in the eurozone remains the single biggest downside risk facing the global outlook,” said Pier Carlo Padoan, chief economist for the OECD.

The global economic recovery remains fragile and extremely uneven across different regions, according to the OECD, a multinational research body.

Growth in emerging economies, which have been the engine of the global recovery, has slowed, the OECD said, while growth in more developed economies is likely to remain modest.

Overall growth for the developed economies that make up the OECD is now forecast at only 1.6%, down from the 1.8% forecast in 2011.

The eurozone didn’t grow at all in the first quarter, as both it and the broader 27-nation European Union teetered on the edge of recession. Eleven European nations have already suffered declines in their gross domestic product for two or more consecutive quarters, the common definition of a recession.

The outlook was brighter for the U.S. The OECD forecast 2.4% growth for 2012, up from the 2.0% it forecast last fall. The U.S. achieved 1.7% growth last year.

Fears about the eurozone debt crisis have heated up in recent weeks, after Greek voters denied the ruling coalition enough votes to form a new government. That’s thrown austerity measures approved as part of a European bailout of Greek debt into doubt, and raised the risks Greece could leave the eurozone.

But while sovereign debt gets much of the attention from political and economic leaders, high levels of consumer and business debt are also putting a cap on worldwide growth.

“This is a global crisis which is largely a debt crisis,” said Padoan. “It is a result of excessive debt accumulation in both the private and public sectors. One can not safely say we’re out of the crisis until debt comes down to more manageable levels.” To top of page

How Alcatel-Lucent made the Internet 5 times faster

Alcatel-Lucent's new 7950 XRS core router can stream 2.5 million HD videos every second.

Alcatel-Lucent’s new 7950 XRS core router can stream 2.5 million HD videos every second.

NEW YORK (CNNMoney) — In a world where we’re constantly connected and video sucks up an ever-growing chunk of precious bandwidth, Internet service providers are getting desperate for ways to crank up their speed.

Networking challenger Alcatel-Lucent (ALU) is about to give them what they want.

The company announced Tuesday that it has developed the “7950 XRS,” a core Internet router that is capable of speeds up to five times faster than those of its nearest competitor. Just one 7950 XRS router can deliver 16 terabits of data per second. That’s about 2.5 million HD video streams every tick of the second hand.

It’s roughly five times faster than the CRS-3, networking giant Cisco’s latest and greatest core router, which debuted in 2010.

Core routers sit at the epicenter of the Internet, serving as the traffic cops at the biggest intersections on the busiest data highways. They direct huge amounts of traffic, connecting visitors’ requests to sites like Google (GOOG, Fortune 500), Netflix (NFLX) or CNNMoney and sending data back to the right place in return.

It’s a crucial part of the Internet backbone, but it’s a market in which Alcatel-Lucent hasn’t participated until now. Cisco (CSCO, Fortune 500) and Juniper (JNPR) are by far the two largest players in core routing. Few have challenged them since the dawn of the Internet.

“Alcatel-Lucent faces a big challenge,” said Michael Howard, principal analyst at Carrier Networks. “It is hard for service providers to change or add new products and new vendors in any critical area, and core routing is a critical area.”

But if history is any guide, Alcatel-Lucent has a shot at making a serious dent in Cisco’s market share. In 2003, the company began challenging Cisco and Juniper in “edge routing,” which take individuals’ requests and sends them to core routers. Think of edge routers as the on-ramps to the information superhighway.

Starting from a customer base of zero, Alcatel-Lucent now controls 24% of the market, surpassing Juniper as the No. 2 vendor in edge-routing last year and bringing in $2 billion in revenue.

Core routing is a $4 billion a year business. Alcatel-Lucent wants a piece of it.

“Service providers know us now, and they trust us,” said Basil Alwan, president of IP networks at Alcatel-Lucent. “Most customers don’t want to be bothered with a new system unless there’s a meaningful benefit. But this is an inflection point, allowing our customers to stay ahead of demand.”

Those potential customers include not only the ATTs (T, Fortune 500) and Comcasts (CMCSA) of the world, but also operators of the vast fiber networks that form the backbone of the Internet, like Level 3 (LVLT).

Analysts say huge data center operators like Apple (AAPL, Fortune 500), Microsoft (MSFT, Fortune 500), Amazon (AMZN, Fortune 500) and Google may also take a close look.

Alcatel-Lucent touts its 7950 XRS router as not just being faster, but also 66% more power efficient than its rivals and far more intelligent. Alcatel-Lucent’s technology knows to treat video traffic differently than clicks on a Web page, for instance. Videos need sustained high bandwidth, because users notice lags in the network — unlike websites, which typically only need bandwidth when a user clicks on something.

The new router still has to undergo real-world customer tests, but early indications are that it’s generating some serious interest.

Ihab Tarazi, head of transport planning at Verizon (VZ, Fortune 500), plans to do some tire-kicking.

“Platforms such as the Alcatel-Lucent 7950 XRS will help us efficiently scale to support higher speeds and new capabilities,” he said.

Cisco currently controls 54% of the core routing market, but industry analysts widely expect Alcatel-Lucent to eat into that share. Stuart Jeffrey of Nomura Securities even believes the company will take 10 percentage points away from Cisco and 4 percentage points from Juniper by 2014.

Either way, the vendors’ speed race should pay off for consumers. We’d all love to see fewer buffering errors when we’re sucking down Netflix and Hulu streams.  To top of page

Why is Jamie Dimon on a Federal Reserve board?

While serving as the head of JPMorgan Chase, Jamie Dimon has also sat on the New York Fed's board of directors. Seem shady? Blame Congress.

While serving as the head of JPMorgan Chase, Jamie Dimon has also sat on the New York Fed’s board of directors. Seem shady? Blame Congress.

NEW YORK (CNNMoney) — Is there a conflict of interest when bankers like JPMorgan Chase CEO Jamie Dimon serve on the board of the same institution that regulates them?

Insiders say no. But critics harp on the central bank for what seems like an incestuous relationship with Wall Street.

Massachusetts Senate candidate Elizabeth Warren called for Dimon’s resignation from the New York Fed’s board last week, and Sen. Bernie Sanders has used the uproar to promote the idea of overhauling the Federal Reserve.

“The conflicts of interest are so apparent that they’re laughable,” Sanders told CNN’s Wolf Blitzer last week. “Here you have the Fed, which is supposed to regulate Wall Street. Then you have the CEO of the largest Wall Street company on the board which [it] is supposed to be regulating. This is the fox guarding the henhouse.”

Dimon served on the New York Fed’s board of directors amid the financial crisis. Appointed to the post initially in 2007, he is scheduled to end his second three-year term in December. He is currently the only executive of a major national bank to serve on a regional board.

If it seems shady though, don’t blame the Fed. Congress intentionally set the central bank up that way in 1913.

The Federal Reserve Act, which created the central bank, was a controversial measure back then. In a political move designed to get the bill passed, Congress decided to include bankers on the regional boards.

“There was a tremendous amount of opposition. The bankers were terribly offended by the idea that a central bank would regulate them,” said Elmus Wicker, professor emeritus at Indiana University, who has written five books about the history of the Fed.

In an attempt to decentralize the institution away from just Washington and New York, the law divided the Fed into 12 regional banks. Each are led by a president and a board of directors with nine members.

The law requires that three of those nine members, dubbed “Class A” directors, are bankers from the region. The other six must represent the public, particularly in the interests of agriculture, commerce, industry, services, labor and consumers.

The central bank’s most influential branch is undeniably the New York Fed, which sits just blocks away from Wall Street.

There, Dimon sits on the board along with CEOs from Banco Popular de Puerto Rico and Solvay Bank, a small regional bank based near Syracuse, N.Y. The heads of Macy’s (M, Fortune 500), the Metropolitan Museum of Art and Columbia University are also on the board.

The board members typically meet twice a month and are paid a bit for the job — about $5,000 a year for the chairman and $2,000 for the others. Their responsibilities include overseeing the management of the New York Fed, contributing their insight on the economy, and acting as a link between the government and private sector.

However, they have no say over the Fed’s supervisory or regulatory role.

It’s “not like a board, it’s more of an advisory group,” Dimon explained to JPMorgan Chase (JPM, Fortune 500) shareholders at the bank’s annual investor meeting in Tampa, Fla. last week. “I am not involved at all in the supervisory side of that.”

That distinction was not enough to satisfy government investigators last year though, who chided the Federal Reserve’s regional banks for failing to clearly document the roles and responsibilities of their directors.

A report by the Government Accountability Office cited a case where then-chairman of the New York Fed’s board of directors Stephen Friedman owned shares in Goldman Sachs (GS, Fortune 500) — one of many banks to benefit from the Wall Street bailouts.

Friedman was granted a waiver in January 2009, but the board was unaware that he had purchased additional shares in Goldman Sachs through an automatic stock purchase program. He later resigned from the board.

While the GAO report did not identify actual conflicts of interest, it indicated the appearance of a conflict could hurt the credibility of the Fed.

Treasury Secretary Timothy Geithner echoed those concerns last week following the JPMorgan Chase uproar. In an interview with the PBS NewsHour, he admitted that bankers on the board create a public relations nightmare for the central bank.

“The perception is a problem,” Geithner told PBS NewsHour. “And it’s worth trying to figure out how to fix that.” To top of page

Stocks rebound on Europe hopes

u.s. stock market

Click on chart to track stocks

NEW YORK (CNNMoney) — U.S. stocks bounced back Monday, after closing one of the worst weeks of the year, on renewed optimism over the ability of European leaders to manage their debt crisis.

Over the weekend, the Group of Eight nations met and reaffirmed their commitment to keeping Greece in the eurozone. And two opinion polls released in Greece reportedly put the pro-bailout party ahead of the anti-austerity Syriza party.

The combination of the G8 and the poll results was enough to boost sentiment across world markets, with European and Asian stocks eking out gains and the euro holding steady around $1.27 against the U.S. dollar.

“I don’t think we’re out of the woods, but it’s a step in the right direction,” said Elisabeth Afseth, a fixed income analyst with Investec in London, about the polls out of Greece. She said the next three weeks leading up to the June 17 Greek election are likely to be volatile for both equity and bond markets.

The Dow Jones industrial average (INDU) rose 63 points, or 0.5%. Blue chips, including Caterpillar (CAT, Fortune 500), Boeing (BA, Fortune 500) and Alcoa (AA, Fortune 500) led the gains on the Dow.

The SP 500 (SPX) gained 8 points, or 0.6%, and the Nasdaq (COMP) rose 21 points, or 0.8%.

Shares of Facebook (FB) plunged 11% to well below the $38 initial public offering price.

The sharp drop ‘weighed heavily’ on markets, said Anthony Conroy, head trader at ConvergEx Group, noting that the tech-heavy Nasdaq briefly slid into negative territory.

But trading will likely remain choppy as worries about Europe will continue to dominate trading this week.

After Greece failed to form a coalition government, concerns about the nation leaving the eurozone and how that would impact the rest of Europe have dominated global market sentiment.

An informal summit of European leaders is scheduled for Wednesday.

U.S. stocks closed lower Friday, after the euphoria surrounding Facebook’s Friday IPO had worn off. All three indexes clocked their worst weekly losses of the year last week.

World markets: European stocks extended their gains in afternoon trading. Britain’s FTSE 100 (UKX) jumped 0.5%, the DAX (DAX) in Germany rose 0.5% and France’s CAC 40 (CAC40) edged up 0.1%

Asian markets ended mixed. The Shanghai Composite (SHCOMP) edged 0.2% higher and Japan’s Nikkei (N225) ended up 0.3%. The Hang Seng (HSI) in Hong Kong shed 0.2%.

Companies: Yahoo (YHOO, Fortune 500) and China’s Alibaba Group have agreed to a $7.1 billion deal, in which the Chinese Internet giant will buy back half of Yahoo’s 40% stake in the company.

Speaking at a Deutsche Bank conference, JPMorgan Chase (JPM, Fortune 500) CEO Jamie Dimon said the firm would suspend its stock buyback program but would keep its dividend. Bank of America (BAC, Fortune 500) CEO Brian Moynihan is also slated to speak.

Lowe’s (LOW, Fortune 500) reported better-than-expected earnings but issued mixed guidance.

Campbell Soup (CPB, Fortune 500) posted a slight decline in earnings per share but performed slightly better than forecasts.

Economy: No major economic reports are expected in the U.S. on Monday.

Currencies and commodities: The dollar posted modest gains versus the euro, the Japanese yen and the British pound.

Oil for June delivery rose 39 cents to $91.87 a barrel.

Gold futures for June delivery jumped $1.20 to $1,593.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell Monday morning, pushing the yield up to 1.75% from the 1.70% level late Friday.  To top of page

Google ordered to mend its ways fast or face antitrust action

google-monopoly.top.jpg

NEW YORK (CNNMoney) — In a scolding letter sent to Google on Monday, European regulators outlined their “concerns” about Google’s business practices, giving the search giant “a matter of weeks” to shape up or pay up.

The European Commission said it had reached preliminary conclusions based on its 18-month antitrust investigation of Google. It found four ways in which Google potentially violates anti-monopoly laws in the region.

Google (GOOG, Fortune 500) displays links to its own “vertical search services” differently than it does for links to competitors, the letter said. The commission said it is concerned that Google may be giving its own services preferential treatment over rivals’.

Though the letter did not outline specifics, such Google services include local reviews, shopping listings and flight schedules among others, which sometimes compete with companies like Yelp (YELP), Amazon (AMZN, Fortune 500), Priceline (PCLN) and Expedia (EXPE).

The commission also said it is concerned with how Google scrapes content from the Internet to post within some of its own search verticals, including reviews from across the Web. Though it’s a common practice among search engines, the commission is worried that it may harm innovation by “appropriating the benefits of the investments of competitors.”

The third and fourth issues focus on Google’s advertising business.

The commission found that Google enters into quasi-exclusivity agreements with partner sites that display Google advertising, which could hinder competition. The letter also said that Google makes it difficult for AdWords customers to port their ad campaigns to rival services, such as those from chief competitors Yahoo (YHOO, Fortune 500), AOL (AOL) and Microsoft (MSFT, Fortune 500).

A Google spokesman said the company has only just started looking through the commission’s letter.

“We disagree with the conclusions but we’re happy to discuss any concerns they might have,” the company said. “Competition on the Web has increased dramatically in the last two years since the commission started looking at this, and the competitive pressures Google faces are tremendous.”

Since the European Commission first began its probe in November 2010, several companies have filed complaints against Google, most notably Microsoft and Expedia. Microsoft operates the second-place Bing search engine, which trails Google by a long shot in the United States and by even more in Europe.

The letter was sent ahead of any official complaint or ruling because Google had urged the commission to discuss the results with it ahead of time. Google said it is interested in potentially reaching a settlement.

“This is why I am today giving Google an opportunity to offer remedies to address the concerns we have already identified,” wrote Joaquín Almunia, head of the European Commission’s competition committee. He said he is eager to reach a swift conclusion to the matter.

“If Google comes up with an outline of remedies which are capable of addressing our concerns, I will instruct my staff to initiate the discussions in order to finalize a remedies package,” he continued. “I hope that Google seizes this opportunity to swiftly resolve our concerns, for the benefit of competition and innovation in the sector.”

Almunia sent the letter to Google Chairman Eric Schmidt and gave the company “a matter of weeks” to address each of the commission’s concerns with “first proposals of remedies.”

Google faces a similar antitrust probe in the United States from the Federal Trade Commission. To top of page

Anti-social: Zynga tumbles after Facebook IPO

Zygna stock

Click the chart to track Zynga’s stock.

NEW YORK (CNNMoney) — Social media stocks just aren’t feeling the love, despite Facebook’s highly-anticipated stock market debut.

Shares of Zynga (ZNGA), which generates the lion’s share of its revenue from Facebook, tumbled as much as 23% Friday after Facebook began trading, before settling down 13%.

In fact, shares lost more than 10% in value within a five-minute period twice during the day, triggering the Nasdaq to halt trading on the stock on two separate instances due to Securities and Exchange Commission rules that were implemented after the May 2010 Flash Crash.

Friday’s tumble, however, comes on the heels of a rally in the stock. In the four days leading up to Facebook’s first day as a public company, shares of Zynga soared more than 10%.

“A part of this case is investors buying on the rumor, and selling on the news,” said Sterne Agee analyst Arvind Bhatia. But the fact that Facebook’s market debut has been relatively muted could also be a factor.

Shares of Facebook (FB) spiked as much as 18% above their IPO price of $38 per share, but quickly pulled back. The stock finished up 0.6% at $38.23.

“People expected Facebook to pop a lot more than it has today,” said Bhatia. “The fact that it didn’t might be making Zynga shareholders a bit more cautious, especially if they consider that the company’s fundamentals have deteriorated.”

Bhatia noted that traffic on Zynga’s core games, like FarmVille, is down about 40% compared to a year ago. That doesn’t bode well for future quarters.

Meanwhile, shares of other social media stocks also declined. Groupon (GRPN) shares slid 6.7% and Yelp’s (YELP) stock dropped 12%.

LinkedIn (LNKD) shares also fell, but the losses were slimmer, with shares dropping less than 6%. Earlier this month, LinkedIn reported first-quarter profit and sales that doubled from a year earlier.

“The overarching trends for social media are positive– more people are using social media, more advertisers are using social media, and more money is being spent on social media,” said Bhatia. “But not all social media companies and stocks will do well.”

Shares of the Global X Social Media ETF (SOCL), which boasts LinkedIn as its biggest holding, were down 6.8%. The ETF also includes shares of Pandora (P), Zynga, Groupon and Yelp.

Facebook will join the ETF by the end of next week, following five days of trading. The five-day rule allows the parent of the Solactive Social Media Index, which the social media ETF tracks, to vet companies it wants to add.

When Facebook first filed for its IPO back in February, Global X CEO Bruno del Ama said the rule helps “avoid speculative trading that happens early on, which can play for or against you.”  To top of page

Stocks: Storm clouds continue to gather over Greece

SP 500

The SP 500 has tumbled more than 7% in May already, and is on track for its worst monthly performance since May 2010, the month when investors were shaken by the Flash Crash.

NEW YORK (CNNMoney) — Facebook is finally public, but that won’t solve Greece’s problems.

Investors are likely to continue to bail out of stocks and continue the move into U.S. Treasuries and gold in search of safety as doubts over Greece’s future in the eurozone continue to build.

Elections in Greece earlier this month failed to form a coalition government, and now the debt-laden country is under a caretaker government until the next election in June, which experts say will serve as a referendum on whether Greece stays in the eurozone.

Syriza, a coalition of leftist parties, is currently leading the polls. Syriza has vowed to fight austerity measures that are a condition for Greece to get the €130 billion bailout agreed to in March.

“If the pro-euro major parties fail to muster enough support to form a coalition and the radical left Syriza party and other anti-euro, anti-austerity parties secure a majority, the risk of a disorderly Greek exit from the Euro increases and could roil markets,” said John Praveen, chief investment strategist at Prudential International Investments Advisers.

Though a Greek exit would pressure market, the greater fear is what it might mean for the rest of Europe, especially Spain.

While U.S. banks have cut two-thirds of their Greek debt exposure of the past two years, they have not necessarily had the same time to discount a blowup of Spain, said Kathy Lien, director of currency research at Global Forex Trading.

As investors continue to keep a close eye on the region for developments, increased uncertainty in the eurozone will likely boost demand for safe haven investments, Praveen said.

Last week, as U.S. stocks clocked their worst weekly losses of the year, investors rushed into U.S. government debt, sending the 10-year Treasury yield down to 1.71%, the lowest closing level on record. As investors continue to seek safety in Treasuries, the 10-year could move past its intraday record low of 1.671%, hit on Sept. 23, 2011.

Though the U.S. economic calendar is light next week, investors will also be taking cues for the latest reports on the housing markets. The weekly jobless claims number will also be in focus, as well as the final reading on consumer confidence for May from the University of Michigan.

On the corporate front, Facebook’s (FB) first full week on the stock market will be watched closely. The social media giant’s debut was highly anticipated, but shares ended just 0.6% above their offering price on the first day of trading.

Though a bulk of U.S. companies have reported quarterly earnings, a few major companies are on deck to open their books, including PC makers HP (HPQ, Fortune 500) and Dell (DELL, Fortune 500).  To top of page

Ex-Goldman director Rajat Gupta set for insider trading trial

Former Goldman Sachs board member Raj Gupta goes in trial Monday in the highest-profile case yet in the government's insider trading crackdown.

Rajat Gupta leaves a Manhattan court after he surrendered to federal authorities in New York last October.

NEW YORK (CNNMoney) — Rajat Gupta was once a board member at Goldman Sachs and managing director of consulting giant McKinsey Co. Now, he’s the biggest target yet in the government’s sprawling insider trading crackdown.

Gupta will face trial in New York Monday in a case that will feature evidence from the highest levels of Corporate America. On the list of potential witnesses are investment guru Warren Buffett, celebrity analyst Meredith Whitney, Goldman (GS, Fortune 500) CEO Lloyd Blankfein and HP (HPQ, Fortune 500) CEO Meg Whitman.

“This is such a high-profile individual,” said Jeff Ifrah, a white-collar defense lawyer based in Washington, DC. “To the extent that anyone wasn’t aware before that the government was taking this stuff seriously, it’s kind of hard to believe that they wouldn’t be now.”

The case is part of a wave of insider trading probes over the past two-and-a-half years that have yielded 66 indictments and 59 convictions. None of these defendants have been acquitted so far, though several cases are still pending.

Dubbed “Operation Perfect Hedge,” the effort has utilized investigative tools like wiretaps and informants that are more commonly associated with other kinds of crime.

Wiretaps were first used to target insider trading in the case of Raj Rajaratnam, the manager of hedge fund Galleon who received a record 11 years in prison last year after earning $64 million in a long-running insider trading scheme.

Gupta is accused of passing inside information to Rajaratnam about Goldman and Procter Gamble (PG, Fortune 500), where he was also a director. He faces five counts of securities fraud that carry maximum sentences of 20 years each, as well as one count of conspiracy that carries a five-year maximum.

Prosecutors say that in one instance in the fall of 2008, Gupta called Rajaratnam just 16 seconds after disconnecting from a conference call in which Goldman’s board approved a crucial $5 billion investment from Warren Buffett’s Berkshire Hathaway.

Minutes later, Galleon purchased $27 million worth of Goldman stock. In a conversation the next morning that was recorded secretly by the FBI, Rajaratnam told an associate that he had received a phone call ahead of the share purchase saying “something good might happen to Goldman.”

When Goldman’s shares jumped later that day on news of Buffett’s investment, Galleon sold them at a profit of $840,000.

Rajaratnam, now serving his jail sentence, is also on the list of potential witnesses for Gupta’s trial. The government says Gupta maintained a number of investments with Rajaratnam.

Gupta’s lawyers did not respond to requests for comment, though they are fighting the charges and have previously called the government’s case “totally baseless.”

Gupta “did not trade in any securities, did not tip Mr. Rajaratnam so he could trade, and did not share in any profits as part of any quid pro quo,” lawyer Gary Naftalis said following last fall’s indictment.

A number of pre-trial hearings have been held already, though the trial itself is not expected to take more than a few weeks. Whatever the result, executives across the country will surely be paying attention.  To top of page

New York penthouse sells for a record $90 million

New York penthouse

Take a look inside New York’s most expensive penthouse by clicking on the picture above.

NEW YORK (CNNMoney) — An unnamed buyer paid more than $90 million for a Midtown Manhattan penthouse, the highest price ever paid for a New York apartment, according to the building’s developer.

The seller, the Extell Development Co., had been asking $98.5 million for the 10,923 square-foot condominium. Gary Barnett, Extell’s president, wouldn’t confirm the exact price the condominium went for or who the buyer was, but he would say the apartment sold for about $8,000 a square foot.

Located on the 89th and 90th floors of the One57 building on 57th street, the apartment features 23-foot ceilings, rosewood flooring, panoramic views of the city, Italian marble and custom hardware and light fixtures.

The building, which is still being constructed, includes a total of 95 condos and is built on top of a five-star Park Hyatt hotel. Prices start at $6.75 million and about half of the units have been already sold, said Barnett. Occupancy won’t begin until early next year.

The purchase follows two other recent blockbuster sales. In December, a Russian billionaire paid $88 billion for a home once owned by ex-Citigroup CEO Sanford Weill. Then, earlier this week, a Park Avenue co-op was sold for $52.5 million, a record for a co-op apartment.

“I call it the 10,000-square-foot trifecta,” said Jonathan Miller, president of Miller Samuel and one of New York’s best known appraisers. “I think it’s a statement about global economic instability.”

The Weill sale broke the ice. “When that happens, other high-end sales come in clusters,” he said.

Helping to drive up the sale price was a lack of competing properties on the market, said Miller. The apartment came to the market at a time when there weren’t many competing super high-end products.

It’s also in a prime location, near Central Park, the Midtown business district, theater and restaurants. It’s just down the block from Carnegie Hall.

Miller said many of the ultra-high-end purchases in New York and other expensive markets are done for investment purchases — at least in part. With the future of the eurozone in question and bond yields low, there’s not a lot of other attractive investing options.

“New York real estate is a hard asset, a safe haven for investors” he said. “Relative to other markets, it’s still seen as safe. I would not be surprised to see more of these sales.” To top of page

GM won’t advertise in the 2013 Super Bowl

During last year's Super Bowl, GM ran an ad implying that only its Chevrolet Silverado trucks could survive an apocalypse. But apparently, even GM couldn't live with next year's Super Bowl ad prices.

During last year’s Super Bowl, GM ran an ad implying that only its Chevrolet Silverado trucks could survive an apocalypse. But apparently, even GM couldn’t live with next year’s Super Bowl ad prices.

NEW YORK (CNNMoney) — General Motors will not advertise during this year’s Super Bowl game, the automaker said Friday.

It’s a big change for GM which had returned to Super Bowl advertising after sitting out 2009 and 2010 as the automaker recovered from economic disaster and bankruptcy. GM executives have said that ads during the game were very effective.

Advertisers paid an average of $3.5 million for a 30-second ad during last year’s Super Bowl, which was broadcast by NBC. Next year’s game will be broadcast by CBS.

“We understand the reach the Super Bowl provides, but with the increased price, we can’t justify the expense,” GM spokesman Pat Morrissey said.

Morrissey would not say how much CBS was asking but he said it was more than was demanded last year. CBS did not immediately return a call asking for comment.

The move was first reported Friday by the Wall Street Journal.

General Motors (GM, Fortune 500) also recently announced it would stop buying paid ads on the social media Web site Facebook, athough the company said it would continue to operate free pages on the site for its various brands.

The automaker is not reducing its overall ad spending, Morrissey said, and may even spend slightly more this year than it has in the past.

GM, the nations’s biggest-selling automaker, has traditionally been among among America’s biggest-spending advertisers. Between 2002 and 2011, GM was the third biggest spender on Super Bowl ads after Anheuser-Busch InBev (AHBIF) and PepsiCo (PEP, Fortune 500), according to analysts at Kantar Media.

The automaker spent nearly $83 million on Super Bowl ads during that time, Kantar Media said.

During last year’s Super Bowl, GM broadcast a controversial Chevrolet truck ad that brought an objection from Ford over a claim that Chevy sold the “longest-lasting, most dependable truck on the road.” To top of page

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Ahmed Elbatrawy