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Left In Lowell » Blog Archive » Perhaps, Signs of Optimism

Left In Lowell

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December 22, 2009

Perhaps, Signs of Optimism

by at 12:43 pm.

The news is reporting that MA home sales last month were up incredibly from last November, by a whopping 59% for single family homes. Of course, November 2008 was a terrible month for home sales, but that is still a very good trend. This is in addition to the encouraging, though fragile news that the state’s revenues are also on the rise, beyond previous gloomy projections.

The conservatives have attempted to label the stimulus efforts of the last year as more than fruitless - they state it has been a huge waste of taxpayer money. For instance, they constantly cite their favorite sets of numbers with regards to the Cash for Clunkers program - that each “clunker” cost far too much to be useful as a stimulus.

But here’s what I know. I know a family member of mine who works in the auto parts industry went from a dismal reduction in hours a year ago, to working full time again in the last few months. I know his company is now working on electric car technology, partly due to a bigger emphasis on green transportation and getting ourselves rid of “clunkers.” I know that my own brother proudly purchased his first home to take advantage of the first-time buyers program last summer, one more notch in the stabilization of home prices. He has a good steady job and was a perfect candidate for someone who just needed a little incentive take the plunge to being a home owner.

I also know that I myself have expanded my business as a direct result of stimulus money which is going to a program intending to help people gain the skills necessary to become more financially responsible. My business is doing so well I have less time for blogging. :)

I know there’s construction going on around the state and I know that the Hamilton Canal District’s Appleton artist live-work rentals had their groundbreaking and is keeping people employed for 18 months. I know that MA’s unemployment numbers are looking better every month, and I know that our schools have dodged a huge bullet when it comes to losing budget in the last year, thanks largely to the priorities of our Governor.

Maybe today’s just a glass half full day because my Christmas shopping is done and mostly wrapped and we’re headed for a three day weekend and I get to watch my excited nieces unwrap gifts, but I’m feeling that 2010 is definitely looking up, and I think that the policies enacted to deal with the Main Street worries, such as the stimulus bill and the incentive programs, did what they were supposed to do. Could they have been more efficient? Sure. For instance, we wasted a 1/3 of the stimulus in pointless tax breaks for special interests and big business. It’s well known* that you do not get back the same economic activity from tax cuts as you do direct spending.

But overall, I think we’re in better shape than we could have been, and averted a worse economic crisis. Now we need to fix what was broken, namely, the regulation of industries in which greed played and still plays such a powerful roll. We need to go back to having a firewall between lending activity and investing, among other things.

I’m not optimistic about health care reform (in that I think that the Senate bill subsides for Big Insurance are just going to become tomorrow’s boondoggle) but at least restricting the ability of insurers to deny you care for a preexisting condition or kicking you off care is a good step (we do that in MA by the way). We need fast action on carbon reduction, and though Copenhagen was a tough nut I hope people are not done fighting for it. If we can build these three pillars - economic reform, heath care reform, and environmental reform - we will have gone a long way towards transforming our country to thrive for the next 9 decades of this century.

* Known except to those who cannot let facts get in the way of their theory binkie called “trickle down.”

18 Responses to “Perhaps, Signs of Optimism”

  1. Bob Forrant Says:

    Don’t start dancin’ just yet - until we have several months in a row of steady jobs gains we are a long way from happy town. This state has generated no net new jobs for nearly a decade and the stimulus bill has thus far saved a lot of public sector jobs that might have disappeared and put some folks to work paving highways - - but none of this stimulates a long-lasting recovery.

  2. Pat Vondal Says:

    Like what you have to say today, Lynne! I agree with you all around…..Enjoy the holiday!

  3. Kim Says:

    Could not agree with you more Bob. Most of the stimulus funds seem to be going to a few select highway contractors. Not sure we have seen the trickle down. Until we step up to the plate saving some manufacturing jobs in this state I am not opportunistic. As a salesperson calling on industrial parks all day I do not like what I have been seeing at all. My counterparts in CT. are seeing a much lower reduction in manufacturers and exporters as I have in MA. I no longer can “walk” and industrial park as the businesses are now too far apart. I love your optimism though Lynne!

  4. Shawn Says:

    Agree with Bob on this one.. the stimulus just delayed the hit to the public sector.. watch the city and town reactions as the stimulus dries up over the next 2 years. Schools are panicking.

  5. MOONLIGHT Says:

    interesting–our congress women NIKI–shopping
    at the mall of chestnut hill–what about downtown
    lowell???? .

  6. Lynne Says:

    Well, duh that we’re not out of the woods yet. Certainly there’s not even a guarantee that we won’t need more, maybe even another stimulus, and there’s still a risk of a long term stalled economy.

    However, all of the people who I know personally who’ve benefited from recent policies were all in the private sector. Are we doing enough? Probably not. But I was pretty sick of hearing the right wing claiming nothing has worked. On the contrary, despite the imperfections (such as wasting a 1/3 of the stimulus on mostly useless tax cuts), there have been some concrete results from it.

    This is not to say there isn’t still a lot of pain out there, unemployment is still unacceptable and no one should be resting on any laurels here.

  7. fishydude Says:

    Sure. Mandates under MA’s so-called “reform” have worked wonders for making health insurance more affordable. NOT! What ever happened to consumer choice? Young people in MA used to be able to buy affordable catastrophic care coverage and pay for routine health care out of pocket. Now they are criminals. The mandates have gotten worse as the bureaucrats strangle consumers and insurance companies with more mandates every year.
    If you want to decrease carbon emissions, just stop breathing. And if you walk or ride a bicycle to work, you are not being green. You are burning too many calories, eating more food and exhaling more CO2 than a couch potato.
    But, y’all prove every day that you are only “pro-choice” when the rest of us make choices you approve of. Y’all truly believe that “Profit” is a four letter word until someone comes after your profit or paycheck.

  8. Bob Forrant Says:

    Well duh back to you (#6) - hate that phrase by the way and always thought it was a put down to whomever one said it to, as though we were not quite smart enough to know what you knew!

    It is OK to say things are not working when clearly they are not. A Target, a Lowes, a blip up in sales of homes, and shovels in the ground at Lowell’s gigantic empty lot that is Hamilton Canal are not yet enough to get me singing. Now, six or seven months in a row of steady jobs increases and I might at least crack a very subtle smile:)

    Part of the left’s problem is most of us assumed President Obama could somehow walk into the White House and magically solve the economy’s long standing problems. However, there are very deep-seated structural problems that have caused massive unemployment and the collapse of several key sectors of the economy. Because we no longer make much of anything we can not produce ourselves out of the decline with heightened exports. And, because of the credit squeeze and our already over-extended credit society, we ca not shop our way out of the mess we are in either.

    At the same time the president’s choice of close advisors on the economy was deeply flawed from the outset. He surrounded himself with the very same people who deregulated financial markets and mortgage markets under Bill Clinton and then loaded up with clones of Richard Rubin and Larry Summers, two guys who think they are brilliant but in reality are not so brilliantafter all and tend to want to take care of their high roller friends more than the unemployed.

    One profound way to move ahead which the new White House crowd never suggested was to call a halt to all foreclosures for 2009. During the Great Depression 28 states passed such legislation to ease the crisis and at least let people keep a roof over the head. Failing to do so, we are left with a growing number of tent cities and many communities knocking down abandoned houses as a device to jack up property values. This, while shelters are bursting at the seams like they are here in the Merrimack Valley.

  9. Lynne Says:

    As I said, this was a commentary on how I’ve personally seen some of the results of recent policies out there in the real world, as imperfect and fragile as it is. The Republicans are continually hammering on the stimulus and trying to make it seem like nothing happened as a result, and I’m disagreeing with that. I am not saying a double-dip recession isn’t possible or all the other problems mentioned are not problems or are not possible pitfalls. Yet I got jumped all over as though commenting that there are signs of things picking up was being all Pollyanna.

    I mean, what part of the phrases “I’m not optimistic about health care reform” or “overall, I think we’re in better shape than we could have been, and averted a worse economic crisis” makes me appear to be overly gushing about progress? I’m merely pausing to remark there *are* signs of progress, not that there is *only* progress, or only positive things on the horizon. I am cautiously optimistic that we’ve at least put a bandaid on things right now, even if it might be the case that we need a new bandaid eventually or, gasp, actually manage to fix the structure of the problems facing us, which, yeah, are pretty dire.

    The environmental aspect alone is cause for grim attitude, but that doesn’t mean that we should crap all over what progress has been made.

    If realism is required, then you have to also realize that some strides have been made.

  10. Lynne Says:

    And you also have to be thankful that certain other people are *not* in charge of the country or state as well.

    It’s a relief to have at least a centrist on the job instead of a far right trickle-downer, isn’t it?

  11. Bob Forrant Says:

    Maybe it is the rush of the holidays, but I think you way to personalized all of this. And, as for taking a ‘crap’ on what has been accomplished, I did not do that but I still hold that after one year in office I am not all that upbeat as you seem to be that things are being done. The normal course of the business cycle and the low, low interest rates for home buying got us most of what we now see as “progress’; it is not just the president who is on the hook here, but the entire Congress and the jelly-fish Dems in name only who keep back stepping on any meaningful change.

    As for strides being made, for me, as I look at the numbers, only baby steps in tiny, white Ideal baby shoes.

    And again, I do not see the reason for the defensiveness on your part Lynne. Glass haf full, glass half empty, the misery index is still the same right now and there is no move afoot that I am aware of to get rid of the architects of the mess, which predates Bush in several respects, and move more aggressively on jobs creation. Absent months and months of new jobs we are not going forward as a country or as a state. MA has created no net new jobs in ten years!!! By accident we should have done better.

  12. Lynne Says:

    Actually that wasn’t directed at you, it’s directed at the constant barrage of Republicans that over and over again state that the stimulus did nothing, the first time home credit did nothing, the Clunker program was a failure, the enviro stuff is going to kill businesses…etc etc. That was the whole point of this post and my comments (I will state again).

  13. M.L. Says:

    Don’t buy the hype. The fundamentals of the economy are still bad. The markets are being propped up by the government, and a serious inflationary threat looms will all this money that’s being printed.

    As for the housing market, the tax credit was one of the worst things they could’ve done. Under the rules, a “first-time homebuyer” is anyone who hasn’t bought a primary residence in the last three years. You could’ve purchased your home four years ago, or bought a vacation home on Nantucket last year, and you’re still a “first-time homebuyer.” All the tax credit has done is create an artificial demand with artificially high home prices.

    The way to go would’ve been to do nothing, let the real estate markets hit rock bottom on their own. THEN we’d see a surge in demand. But instead, the government is going to distort all this with the housing tax credit in real estate, and cash-for-clunkers in the auto industry (which was the right program, but at the wrong time). We cannot spend our way out of a recession brought on by overspending. The FOMC should be raising interest rates, not keeping them at 0-0.25%. There’s no sense in trying to force a seller’s market where there isn’t one to be had.

  14. Mr. Lynne Says:

    Looming inflation fears are way way overstated.

    Much more important is the unemployment rate. The problem with keeping government stimulus out of the market is that the slowdown becomes a much worse and longer recession and perhaps even a depression.

  15. Bob Forrant Says:

    I agree Mr Lynne that inflation fears are over-hyped right now. The biggest problems are a serious lack of permanent job creation, dried up credit markets, especially for small business borrowers and the fact that we no longer make a lot of goods that other people in the world necessarily want to purchase.

    Esp. in Massachusetts, we rebounded from other recessions with manufacturing exports which brought new money into the state, added tax revenue, and afforded firms the ability to pay their workers decent wages. Decent wages got spent and a virtuous circle followed as the wider economy rebounded. We now have that other circle, the vicious one and that ain’t good.

    Santa is flying tonight in a sleigh made in Malaysia powered by engines (I mean reindeer) produced in China and guides by a GPS device designed and assembled in India!

    Happy holidays everyone! See, I am not the grinch!

  16. nextyearishere Says:

    I agree with ML that the fundamentals of the economy are still bad, but disagree with the “do nothing” approach as the hardship cases would have put us over the edge into a depression. It is like given CPR to a heart-attack patient to let him survive, but the CPR does nothing to cure the underlying problem.

    So “stimulus” should not be followed by “stimulus-2″, but rather policies that improve the fundamentals of the economy. Governments involvement in that should be to unburden work as a revenue source for both taxes and healthcare, and get that income from taxing consumption and exorbitant earnings. Then more work may be available to the masses who are the source of economic growth.

  17. M.L. Says:

    If the government wants to take a Keynesian approach and spend money itself on infrastructure and social programs there’s a case to be made for that, I suppose. However, when it comes to individual consumers, the government should not be encouraging spending. Part of the reason banks aren’t lending (as Obama often complains but does nothing about), is because people are reluctant to take on further debt, as they should be.

    And with the housing market, yes, the government should’ve done nothing. Oftentimes, when bubbles burst, the price of whatever the commodity is plummets to pre-bubble levels, and that’s when consumers jump in again. Why keep housing prices artificially high? After all, the tax credit actually hurts people looking to buy a house right now; it doesn’t help them. Let real estate hit rock bottom.

  18. Lynne Says:

    The problem with letting the housing market go down too far, is that even people who bought ten years ago might wind up with upsidedown mortgages. When that happens, foreclosures can go up, refinancing into better terms is impossible, you can’t get home equity loans to do things like improve your house or start a business, etc. It’s not a sound policy to just let things drop precipitously like that.

    I think a drop of roughly 20% in less than a year is about as much as the economy can honestly bear.

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