Serafini says downturn will pass

May 29, 2009|By DAN DEARTH

HAGERSTOWN -- A Maryland delegate and investment adviser discussed the state of the economy during a luncheon Friday at the Associated Builders and Contractors office on North Locust Street in Hagerstown.

About 15 people attended the event.

Del. Andrew A. Serafini, R-Washington, said although the national unemployment rate is approaching 10 percent, it is nowhere near the 25 percent unemployment rate the country suffered during the Great Depression of the 1930s.

"I don't want to dismiss that and say (the unemployment rate) is not serious ... but it's not a depression," Serafini said. "We're overreacting."

He said The New York Times warned in 1999 that the recent collapse in the housing market would occur because mortgage giants Fannie Mae and Freddie Mac provided risky home loans "to people who couldn't pay them back."


Serafini asked whether the federal government should have let Chrysler and General Motors fail rather than trying to save the struggling auto makers with billions of federal dollars.

"I don't know," Serafini said. "If you and I make a bad decision, we fail."

Serafini suggested the labor side of the auto industry, whose unionized members earn about $67 per hour in salary and benefits, could have helped expedite the financial meltdown. Employees of Japanese companies, he said, are compensated about $40 per hour.

Economic downturns are cyclical, and the current one eventually will pass, Serafini said. People should use common sense in the meantime.

"If you don't have the money, don't (spend) it," he said.

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