Tag Archives: recession

Let them eat cake!

Last week I found myself in Cissi’s Wine Bar on South Congress.

If you know me, you might be thinking that I’m not really the wine bar type. It’s true, and I think it was the first time I’d ever been in one. However, they were having a special event which involved free desserts, and that is my vice. Belgian Ale Doughnuts are awesome, especially when dipped in caramel sauce.

I found myself thinking about the economy. The awkward fact is that while things are bad, and a lot of people are in financial difficulty, we are doing OK. So long as my job remains stable, we don’t really have any immediate problems. Sure, the 401(k) has taken quite a hit, but I’m not near retirement age, so I figure it’ll recover.

Obviously, I want to do my bit to keep everyone else afloat. I feel like I should patronize local businesses more, eat out more, buy stuff. But at the same time, I don’t really need any more stuff right now, I’m trying to keep my weight under control, and my fiscal conservatism makes me want to hoard cash in case the worst happens and I’m unemployed for months.

So I’m trying to find the middle ground. So far, that has meant acting as if the recession isn’t happening. If I can manage it for long enough, perhaps I’ll be ready for a career in politics ?

Massachusetts property crisis

Crystal posts a link to a Boston Globe story about property prices in Massachusetts.

Houses here cost so much because there are too few of them for all the people who have been drawn to Boston because it’s such a great place for great minds to do great things. But that reputation, which has kept Boston competitive all these years, is beginning to buckle under the weight of absurd home prices. Even in a recession, Boston’s world-renowned hospitals, higher-education institutions, and biotech firms admit they are seeing their job offers turned down like never before, largely because of housing costs.

[...]

The Census Bureau says Cambridge is the city with the highest percentage of $1-million- plus single-family homes in the country. But this is a surprisingly recent phenomenon. Beaty has to go back only as far as 1986 to find Cambridge’s first million-dollar sale.

It’s the beginning of the end for Davis Square. Diesel only just survived being priced out, and there now appear to be two swanky upscale cocktail bars opening at once, each complete with chic frosted glass windows and ultra-modern designer furniture.

Meanwhile in Harvard Square, it’s so bad that the clothing chain stores like Abercrombie and Fitch are being priced out and replaced by boutiques selling Swiss watches.

An insightful comment from Robert Blatman, an obstetrician quoted in the Globe article:

“The crazy thing is, if I can’t afford to live in these areas, what about the teachers and the firemen? It really worries me that, at some point, this has to erode the quality of life that made the real estate around here so desirable in the first place.”

And that’s the problem. It’s not sustainable. As people making normal wages leave the state (10,000 a year on average), their homes go to developers and owner-speculators, not to another normal family. Ordinary businesses can’t get staff, because the only people within an hour’s commute who can survive on normal wages are the few still living with their parents. Which, in turn, means that everything from groceries to medical bills to utility bills gets jacked up 40% or more to compensate for the increased overheads.

So sooner or later, people start to look at their crummy 2 bedroom rented apartment with the rattling windows and chronic dust bunny infestation, and look at their bills, and then look at other parts of the country…and that’s why we’re leaving. Even if we had a million bucks, we wouldn’t be spending it to get a 2 bedroom house here. Cambridge is nice, but it’s not that nice.

Furthermore, it’s plain that the local powers-that-be aren’t going to do anything about the problem. If they’re lucky, the Boston metro area will turn into another Manhattan. If they’re unlucky, there will be a big crash. I don’t want to be around for either of those scenarios.

Recessionwatch

As you may have heard, there has been a modest rise of a few percent in consumer spending so far this year, leading to hopes that consumer spending will get the US out of recession.

As you may not have heard so loudly, the US trade deficit leapt up 15% in January, said to be fueled mostly by the fact that consumer spending is mostly on foreign goods.