I am a child of the “Great Depression.”
My family lost their farm in Middle Georgia, causing all kinds of challenges and disruptions in my early life. There weren’t many Christmas presents during some of those years. I have not forgotten those hard lessons learned in my youth.
Last week, I had two opportunities to revisit the problems of the 1930s and get expert advice on how today’s recession was caused and how it can be handled.
The governor and his staff held a pre-Legislative Conference in Athens to tell us how the current economy is affecting Georgia. Then I attended the National Conference of State Legislatures in Atlanta listening to, and discussing, the economy from other states’ perspectives.
One of the most interesting sessions of NCSL featured David Wyss, senior economist for Standard & Poor’s, who discussed the current recession in terms of the housing and mortgage markets. These are two separate, yet connected, economic problems. First, housing was over built, and second, it was over priced.
The usual price a family pays for a home is 2.5 times their annual income.
During the past five years, interest rates were so low that consumers looked more at monthly payments than at the prices, thinking that the value would always go up and the house could be sold for more than they paid. People ended up buying more house than they could afford, particularly if one family member lost their job. The average price for houses got up to 3.6 times the annual salary.
Lending institutions were creating mortgages based on as little as two percent down. With home values falling as much as 10 percent in the Atlanta area and over 30 percent in other large cities, many mortgages are more than the houses are worth. Many homebuyers are not waiting for foreclosure. They simply move out and mail the keys to the lender.
Dr. Wyss believes the housing and mortgage market recession will bottom out in the summer of 2009; however, he also believes that the climb out will take years.
Don’t expect a recovery to the pre-recession economy any time soon. It will take longer to recover than it did to slide.
A very interesting Athens session featured Gena Evans, commissioner of the Georgia Department of Transportation. After telling us about straightening out DOT and how little money was left for projects, she told us that President-elect Obama was asking for a list of transportation projects that could put people to work within 30 days and another list that would take 180 days to initiate.
He wants a “road map” for allocating funds for building and repairing the nation’s highways and bridges, which could serve as an economic stimulus to put millions of Americans to work. The District of Columbia and all 50 state Departments of Transportation responded to the survey. More than 5,000 “ready-to-go” projects worth $64 billion were identified. These transportation infrastructure projects are considered “ready to go” because they could be under contract within 180 days, supporting an estimated 1.8 million American jobs, if the funding is made available.
These jobs need to go to American companies, employing American citizens.
The Georgia Department of Transportation looked at all of the safety, bridges, intersections, new capacity and maintenance projects that are backlogged.
The biggest driving force in identifying the projects for the DOT list was the 180-day criteria. They identified projects that were considered ready to go. That means that environmental approval, Right of Way acquisition, designs and plans all could be complete and the project ready to let within 180 days. Some $3 billion worth of projects were identified and submitted.
Evans explained that this is merely a preliminary list and that DOT is still reviewing projects and looking at other considerations before making a final decision.
Not since President Eisenhower initiated the Interstate Highway System in the 1950s have I seen this much excitement. This truly is an opportunity for an investment into improving Georgia’s infrastructure, as well as, putting many Georgians back to work.
But you know me. I always ask the tough question, and that question is: How will all of these projects be funded? Evans admitted that initially the Obama team was talking about an 80-20 split between the federal government and the states.
A survey of the states revealed that none could fund the 20 percent needed; so as a group, the states have asked that the federal government fund 100 percent of the projects chosen. I am cautious, but tomorrow is Christmas and miracles do occur.
Speaking of Christmas, I pray that your holidays will be filled with the spirit that He brings and that your dinner plate will be full.
May your New Year be one of hope and cheer, and may God always bless you.
Let me know what your legislative needs are before the Session starts on Jan. 12. That will give me time to do my homework on your behalf.
Amos Amerson can be reached at 689 N. Chestatee Street, Dahlonega, GA 30533, (706) 864-6589, e-mail email@example.com. Or contact Gerald Lewy at (706) 344-7788.