Good 'ol American capitalism. A sharpie a couple seats down from me sold his spot in line for $250. He had come with his cousins to keep them company with no intention of buying an iPhone. Sensing an opportunity, he struck. The sucker… er, purchaser is now being interviewed by an MSNBC reporter (seen to the left of another salesman).

This is not an isolated case. There were people offering to wait in line for a fee. Strolling up and down the line I spotted a number of "Spot 4 Sale" signs. A guy with a spot at the head of the line, likely here since Monday or Tuesday, has been trolling the line, leaning and whispering to each of us like an old Washington Square Park pot dealer, "Psst! $500 for a seat up front!" I've seen him a couple of times already. If he's asking this far forward in the line, the odds are good he's had no suckers… er, takers.

But good for the guy who made the spot sale, dumb on the part of the buyer. While the Apple stores will have the most number of units for sale (one amateur investigator says there's 1,500 phones inside) and are allowing you to buy two phones, there is likely to be no wait at AT&T stores. The AT&T store at 47th and Madison — 10 blocks south of our current location — has only a dozen people in line, if you can call it a line. Of course, there aren't much bragging rights to be gleaned from waiting in line at an AT&T store. On the other hand, those bragging rights and $499 will get you the same iPhone.

More from the scene after the jump.

Spot selling is just one aspect of the growing carnival atmosphere. Earlier this morning, Apple employees with rolling carts handed out water and boxes of muffins were passed down the line. FAO Schwarz employees were handing out free balloons. And where are the clowns? There ought to be clowns.

Don't bother. They're here. Fifth Avenue in front of the Apple Store is lined with news vans from every major national and local news outlet (more on these buzzards later).

The line, now an estimated 250-300 iPhone phanatics, has snaked around Madison almost to 59th Street. As the numbers swelled, the management of the GM Building, in which FAO Schwarz is located, was obligated by city ordinance and liability worries to fence us in. Maintenance workers have arrayed steel barricades, separating us from mere pedestrians. Where once we were fellow citizens simply sharing a New York moment, pedestrians have become rubbernecking gawkers ("Hey, Maude, look at them there funny folks!") and we have become "others," an exhibit. As many people smirk as smile at the site of us. Curiosity seekers snap our pictures with point-and-shoot cameras, fancy SLRs and camera phones. Hey, lady! Yeah, you with the Pentax! I'm not an animal! I'm a human being! And please don't feed the iPhone iPhreaks. Although, a hot dog stand would clean up here.

Psst! Wanna buy some mustard?

P.S. Before I forget. A quick shoutout to Sprint for lending me a Sierra Wireless AirCard 595U EV-DO Rev. A antenna so I can post these missives while sitting on line. It zip-zip-zips much faster than the Wi-Fi inside the Apple Store!

— Stewart Wolpin