bostonbubble.com

GenXer · Joined: 20 Feb 2009 Posts: 703

http://finance.yahoo.com/news/State-local-governments-set-cnnm-4227360729.html?x=0&sec=topStories&pos=9&asset=&ccode=

Guest · Posted: Tue Jun 07, 2011 3:28 pm GMT Post subject:

GenXer,

Sadly, I know some really bright Government Employees and a good portion seem to believe they have Economic Teflon. Most are blissfully unaware of how the Banking system works and are assured their Defined Pension Benefits/lifetime healthcare are guaranteed.

Higher unemployed = lower tax revenues= raise taxes or cut services

Perhaps they will be guaranteed - but, inflation results in the guarantee not being quite as good as they imagine.

When will people learn we are all in the same boat - if there is a fire in the stern in will ultimately engulf the entire ship.

BK · Guest

GenXer,

Sadly, I know some really bright Government Employees and a good portion seem to believe they have Economic Teflon. Most are blissfully unaware of how the Banking system works and are assured their Defined Pension Benefits/lifetime healthcare are guaranteed.

Higher unemployment = lower tax revenues= raise taxes or cut services

Am I missing any thing?

Perhaps they will be guaranteed - but, inflation results in the guarantee not being quite as good as they imagine.

When will people learn we are all in the same boat - if there is a fire in the stern in will ultimately engulf the entire ship.

Boston ITer · Joined: 11 Jan 2010 Posts: 269

CL · Guest

From Boston Globe

http://www.boston.com/Boston/businessupdates/2011/06/mass-economy-growth-fourth-the-nation/N7cxgTDNJyhbKlBCgj67aI/index.html?p1=News_links

GenXer · Joined: 20 Feb 2009 Posts: 703

If the Globe says so, then it must be true.

BK · Guest

The Devil is in the Detail
The GDP Number is for 2010 - obviously 2010 was a banner year after the recovery from the Depression levels of 2009.

GDP is defined by the BEA for the Report as "GDP is calculated as the sum of what consumers, businesses, and government spend on final goods and services, plus investment and net foreign trade. In theory, incomes earned should equal what is spent, but due to different data sources, income earned, usually referred to as gross domestic income (GDI), does not always equal what is spent (GDP). The difference is referred to as the “statistical discrepancy.”

Full report is found here:
http://www.bea.gov/newsreleases/regional/gdp_state/2011/pdf/gsp0611.pdf

Renting in Mass · Posted: Wed Jun 08, 2011 12:59 pm GMT Post subject:

Here's the summary of the article that CL posted.

"The Massachusetts economy expanded faster than any other state in New England last year and ranked fourth in the nation in economic growth..."

BK · Guest

Renting in Mass - you are wrong on the source of the Data -
Yes. There are lots of positives in the Massachusetts Economy, but keep in mind this report doesn't focus on increased productivity from increased OUTPUT - the report methodology defines Output = Total Money Out. Keep in Mind Gasoline went up and many things went up in price from 2009-2010. Is this productivity or is the Price Inflation??

The Data for the article comes from
THE US DEPARTMENT OF COMMERCE:

"Mass. economy’s growth fourth in the nation
E-mail| Print | Comments (49) June 7, 2011 3:04 PM
By Megan Woolhouse, Globe Staff

The Massachusetts economy expanded faster than any other state in New England last year and and ranked fourth in the nation in economic growth, the US Department of Commerce reported today.

CL · Guest

GenXer - The report is from Department of Commerce, analysis done by BEA, not Boston Globe. Bashing Boston Globe is easy (and fun sometimes), but in this case, irrelevant (and to be honest, quite sloppy).

BK - thanks for the link. I actually think given MA was not hit as hard during the recession (compared to Midwest and West), it would lag other states in recovery.

If you look at 2007 to 2010, MA grows 2.4% in real GDP terms over the period, vs TX 3.1%, NY 1.6%, CA -2.1%

I did not notice the disclaimer, thanks for pointing it out. There are always problem in compiling macro statistics (overseas citizens earnings, different data sources, etc). It's just a fact of life that I learn to accept. While it may affect the absolute number, it should not affect the relative ranking among states.

Renting in Mass · Posted: Wed Jun 08, 2011 1:47 pm GMT Post subject:

BK · Guest

Renting in Mass,

You are a wise man/woman/person.

You may want to review the Local Metro Area Data from the BEA.Gov.

Buffalo has been booming when compared to Boston Metro Area.

Metro Buffalo GDP Increase from prior period was:
3.8% in 2008
0.3% in 2009 (keep in Mind lots of areas went negative in 2009)

Metro Boston-Cambridge-Quincy-NH GDP Increase from prior period was:
2.4% in 2008
-3.3 in 2009 (2010 data must show a rebound from -3.3%)

Metro Springfield-MA GDP Increase from prior period was:
4.0% in 2008
-0.2 in 2009 (so the depression of 09 was a lot less bad in Springfield)

http://www.bea.gov/scb/pdf/2011/05%20May/D%20pages/0511dpg_j.pdf

Bottom line is Government statistics can be mis-leading and useless.

john p · Joined: 10 Mar 2006 Posts: 1820

There are so many statistics and reports out there and ways to interpret them etc. Part of this whole thing is trying to figure out what really matters and has an impact, and how much perception is a force in and of itself, meaning if a bunch of data creates a certain buzz i.e. the article in the Globe saying that Boston is doing better in comparison than other areas, how erect will that make a Renting in Massachusetts?

The Housing Market is driven by Static Head. It's about how excited you are about your future earning prospects and how many times your household income a house price is which you think you can grow into.

If you think you're a rock star you'll buy at more than 3 times your household income. If enough people do this, prices will go up.

During the Bubble, even Joe Schmoe thought he was a rock star. He didn't have a down payment, didn't have a steady job and he still qualified for a mortgage.

Why did Banks let him do this?

1. Government encouraged them with Quotas on low and moderate income loans.

http://online.wsj.com/article/SB123509667125829243.html

from above:

john p · Joined: 10 Mar 2006 Posts: 1820

Here is the other part of context: the future economic deficits...

http://www.businessinsider.com/the-only-chart-you-need-to-see-to-understand-why-the-us-is-screwed-2011-2

Look at the chart that shows how the United States

F2010 Revenue - $2.2 Trillion
F2010 Expenses - $3.5 Trillion

My point here is that prior to the Bubble the norm was 3 times household income bought a house; during the Bubble it was 4 to 5 times household income.

Will it go back to the normal 3 times household income, or because of these Deficits and obvious higher taxes, go down further to 2 times household income?

Now take Boston and the "Superstar" reference, if parents dipped into savings and tapped their home equity to send Junior to a $45k a year college and now Junior has a part of that loan to pay back, Junior doesn't have the down payment and Mom and Dad can't offer it either. Mom and Dad lost a chunk of their Retirement Fund so they need to focus on that.

These kids are the future home buyers in Massachusetts and if they are financially bonded due to college costs and now they get saddled with all this Debt and taxes, and Mom and Dad are still working instead of retiring and clogging the job opportunities, what will the multiple of house price to household income be then?

Renting in Mass · Posted: Wed Jun 08, 2011 7:27 pm GMT Post subject:

BK, I have no idea what your point is.