Wednesday, April 23, 2014
Commercial Confidential tracks Maine's business leaders and economic indicators.
I'm an economics wonk and an online content producer for the Portland Press Herald.
"On the Move": Submit items of interest regarding new employees, promotions and professional honors — with photos and LinkedIn URLs — to business [at] pressherald.com.
Randy Billings has a story today about a small boom of housing units being planned or built on small infill lots in Portland's East End. A quote from the story:
“There are a lot people who would like to live on Munjoy Hill, for example, but they don’t want to live in the type of housing that exists right now,” said Jeff Levine, the city’s director of planning and urban development.
Neighborhood residents have mixed feelings: they welcome new investment and vitality as housing replaces vacant lots, but they're also wary of rising rents. "We want to keep the balance where people feel it’s a comfortable and affordable place to live and not overrun with high-end, impossible-to-afford places,” said Andrea Myhaver, president of the Munjoy Hill Neighborhood Organization.
The typical metric for home "affordability" is one-third of a household's income. In Portland, the median household income is $45,153, or $3,763 a month, which means that the median household can afford $1,254 a month (that's $3,763 divided by 3) in rent or mortgage payments.
One development under construction, the 86-unit "Bay House" near India Street (on the site of the former Village Cafe parking lot) is advertising 2-bedroom condos starting at $380,000. A household paying a 10% down payment on a mortgage there would end up paying $2,380 a month — roughly twice what a median household could afford.
In a Wednesday interview, reporter Kevin Miller found that Maine's Senator Susan Collins is somewhat skeptical of the looming default deadline. Here's a quote from Miller's story:
“I’ve been here long enough when we’ve come to what was supposed to be the date of default and the Treasury finds a way to shift obligations or payments . . . in a way that gives us a little more time,” Collins said. “However, I do not doubt that we are coming close to the point where we will need to do something about the debt ceiling.”
Meanwhile, financial markets have been a lot more active than Congress has been. Below is a chart showing the yield rates on short-term Treasury bonds. These 1-month and 3-month bonds typically generate very low, near-zero interest rates, because they're usually regarded as very low-risk investments.
But that attitude has changed over the past week or so. As we edge closer to the debt default deadline, investors are getting skeptical about whether the U.S. treasury is really such a safe place to store their money, and as a result, they're demanding dramatically higher rates of return from these short-term t-bills:
Maine has a disproportionate number of self-employed workers. An August 2011 brief from the Maine Department of Labor estimated that 10.3% of workers in Maine are their own bosses — 66,000 workers in all. That's substantially higher than the national rate, which hovers around 7%.
Many of Maine's traditional industries are rooted in self-employed workers: lots of farmers, fishermen, carpenters and forestry workers are sole proprietors of their own enterprises. But a lot of the trendy "creative economy" workers that cities like Portland, Biddeford and Bangor are trying to attract are also independent contractors. The idea is that places in Maine with good quality of life and an internet connection can poach freelancers and telecommuters from the bigger cities to our south — effectively relocating bigger companies' back offices one worker at a time.
Back when the above-referenced report was published in 2011, I myself was one of those self-employed workers, writing copy and building websites for a living. Some of my clients were based down the street, while others were based in Boston or Seattle.
In the past 20 years, internet-based financial transactions have become integral to the global economy, from online personal banking to multi-million dollar stock transactions executed within microseconds.
We've come to trust the security of those transactions thanks to the Secure Socket Layer (SSL) protocol, which uses huge, unsolvable math problems to hide our personal data until it reaches a trusted recipient. Here's a metaphorical video of how it works:
We're not literally sending keys and padlocks over the internet, though. Instead, we're trading huge numbers that, when multiplied together like a key fitting a lock, generate even bigger numbers that can't be unscrambled into the original factors. The wikipedia article about prime factors explains:
"Determining the prime factors of a number is an example of a problem frequently used to ensure cryptographic security in encryption systems... it is relatively easy to construct a problem that would take longer than the known age of the universe to solve on current computers using current algorithms."
This week at pressherald.com we're welcoming the new Franco-American blog from Juliana L’Heureux, who plans to write about Maine's Franco-American history and culture.
While we were getting the new blog set up, a couple people in my Twitter feed pointed out a new online mapping tool from the US Census Bureau that plots the neighborhoods where the speakers of various foreign languages live (the Census has been asking citizens about what languages they speak at home since 1890).
The dots are sparser in Maine than they are in much of the nation, but the maps do offer some insights into the state's history of immigration.
Here's a sample: