January 4, 2012
December 28, 2011
Steve Hanke and Richard Conn Henry of The Johns Hopkins University have proposed the latest in what will probably be a perpetual series of calendar reforms as long as men and women breathe. It's presented as a business-friendly calendar, eliminating uncertainty over which holidays fall on which days of the week and how many days are in a month and a fiscal quarter. It reminds me however of the French Republican Calendar of two centuries ago in its attempt to rationally boost efficiency and minimize religion and tradition.
Hanke and Henry would have twelve months with same names as those we use now. The year would have 364 days. The first two months of each quarter would have 30 days; the last, 31.The week would remain the same, with Sundays every seven days as a nod to the devout. However each date would share the same day of the week each and every year. Since Dec. 25 was on a Sunday this year, in their calendar it would always be on Sunday.
Why reform? One reason is that giving every fiscal quarter the same number of days would eliminate uncertainty about how much interest investments earn over short periods. From Hanke/Henry's article in Globe Asia.
The best example comes from calculating accrued interest between February 28th and March 1st in a non-leap year. A corporate bond accrues three days of interest, while a government bond accrues interest for only one day. The proposed permanent calendar — with a predictable 91-day quarterly pattern of two months of 30 days and a third month of 31 days — eliminates the need for artificial day count conventions.
The universe, of course, refuses to be put in such a square box. Like other reformers Hanke and Henry have to true up their calendar every few years to stay in sync with the seasons. The calendar we have now is 365 days with a leap-day every few years to catch up to elapsed and uncounted fractional days. They propose what looks like a leap-week every five or six years to keep their neat structure of weekly blocks intact.
They also want to eliminate time zones and put everybody on Greenwich Mean Time.
December 27, 2011
BGE spokesman Rob Gould said an animal caused a brief electricity outage on Christmas morning. Gould:
Electric service was disrupted to approximately 160 customers Christmas morning at 8:50am due to damage caused to electric service equipment by an animal. All service was restored by 10:50am.
This Sun reader named Roger was not happy:
That's right, 8:33am, right as we're opening presents, heat shuts off, lights go out, tree lights off, no running water or toilets (since many MDers are on well). Merry Christmas Davidsonville. Power goes out once per month yet we continue to pay premiums. The answer? Buy a $10,000 whole house generator. Their incompetence is baffling. They claim only 150 were affected but we've already learned that is not true. There is truly no accountability with BGE. I really hope somebody writes something.
December 26, 2011
From Amy Harmon at the NYT. A sensitive, moving, illuminating portrait of two young adults who have been diagnosed with Asperger's Synrome and are in love.
She was the only girl to have ever asked questions about his obsessive interests — chemistry, libertarian politics, the small drone aircraft he was building in his kitchen — as though she actually cared to hear his answer. To Jack, who has a form of autism called Asperger syndrome, her mind was uncannily like his. She was also, he thought, beautiful.
So far they had only cuddled; Jack, who had dropped out of high school but was acing organic chemistry in continuing education classes, had hopes for something more. Yet when she smiled at him the next morning, her lips seeking his, he turned away.
“I don’t really like kissing,” he said.
December 21, 2011
Poorly planned tree-trimming contributed to the Pepco outages that upset everybody last year, says the Public Service Commission, which fined the utility $1 million as a result. The commission also faulted what it called Pepco's "poor communication with customers during storm events. This was particularly evident with regard to developing and communicating accurate and timely estimates of service restoration, which was a significant contributor to customer dissatisfaction."
Here is the whole press release from the PSC:
Maryland Public Service Commission Imposes $1 Million Initial Fine on Pepco Utility Faulted for Poor Management and Ineffective Practices
(Baltimore)—The Maryland Public Service Commission (Commission) has ordered an initial fine of $1 million against the Potomac Electric Power Company (Pepco). Commission Order No. 84564 finds that Pepco failed to maintain its system properly over a period of years; that those failures subjected its customers to excessively high frequencies and long durations of electric outages during storm events and on fair-weather days, and that Pepco compounded those reliability problems through poor customer communication.
In its decision, the Commission also found that reliability expenses in 2011 were increased because of “imprudent and inadequate expenditure and neglect.” Therefore
December 20, 2011
Because, says a paper published through the National Bureau of Economic Research, nursing homes have an easier time hiring minimum-wage nursing assistants. At least that's part of the reason. (People also drive less during recessions, so the risk and incidence of vehicular death goes down.)
Robin Hanson explains:
It seems that the puzzle of why death rates rise in good economic times is nearly solved. There’s an effect of increased driving deaths from increased driving, but the main effect is that in good times nursing homes have to compete more for minimum wage nursing assistants. Apparently a one percentage point cut in the unemployment rate leads to three percent fewer nursing assistants, which increases the national death rate by a half percent (which cuts about three weeks of life per person):
December 16, 2011
This is the brilliant-report-of-the-painfully-obvious headline of the day: "EDF Considers Dropping New Nuclear in Maryland," from Dow Jones. The French EDF's plans for a third nuclear unit at Calvert Cliffs have been deader than Lehman Brothers for more than a year.
The French company's partner, Constellation Energy, pulled out of the deal. They couldn't reach an agreement with Washington on subsidies to build the plant. With the plunge in natural gas prices and the failure of federal climate-change legislation, new nuclear plants, with all their complexity and financial risk, are wildly overpriced. The Fukushima disaster in Japan has made nuclear energy politically incorrect again.
(UPDATE: Another reason why it won't happen: As a foreign company EDF needs an American partner to build the Calvert Cliffs reactor. It doesn't have one. Exelon seems to have rejected its overtures. And it's not going to get one.)
Yet for months EDF has been pretending that a third reactor at Calvert Cliffs was still a possibility, that Maryland politicians cared about it and that somehow the company could use the prospect as leverage in opposing Constellation's agreement to be bought by Exelon.
EDF is one of Constellation's biggest shareholders and it owns half of Constellation's nuclaer-power division. EDF had been pressuring Maryland officials to block the Exelon deal, which it rightly fears will dilute its interest in and control of the Constellation assets. Now EDF seems to be shocked that it wasn't a factor in Gov. Martin O'Malley's settlement with Constellation and Exelon that got the companies to boost their investment in green (non-nuclear) energy in Maryland.
EDF undoubtedly feels spurned after it rescued Constellation from being bought by Warren Buffett three years ago and saved Constellation CEO Mayo Shattuck's job. My colleague Hanah Cho contacted EDF's people this morning. They declined to comment.
Here is the story from Dow Jones:
PARIS -(Dow Jones)- French state-controlled power behemoth Electricite de France SA (EDF.FR) is considering dropping all plans for new nuclear capacities in Maryland, following a proposed settlement between the Maryland governor and EDF's U.S. partner, Constellation Energy (CEG), a person familiar with the matter said Thursday.
"EDF is being side-lined here, nuclear is not even mentioned and the group seriously mulls dropping any new projects to develop nuclear" in Maryland, said a person familiar with EDF's thinking.
December 15, 2011
As noted, Constellation, Exelon and the governor have agreed on a settlement in which, among many other items, BGE customers get a $100 credit on their bills. ALL BGE customers. Readers often worry that if they have switched to Veridian, Ambit, Washington Gas Energy or some other alternative electricity provider, they won't get this kind of rebate.
Don't worry. Everybody gets the credit no matter who their electric supplier is. The credit is funneled through the BGE part of your bill, not the electric supply part. BGE is always your electric delivery company no matter whom you buy your electric supply from. So all 1.1 million BGE customers get the $100, even if they shop around and buy something other than BGE's default electricity product.
December 14, 2011
I am a traffic conservative. Not counting the speed camera citation I got a few weeks ago, I have received one speeding ticket in the last 30 years. I am the guy obeying the speed limit in my neighborhood while cars pile up behind me tailgating. I'm the person admonishing my wife and kids for having lead feet.
However I can't say, as some readers seem to be prepared to do, that ever-proliferating speed cameras used under almost any conditions are a great thing. The feedback from yesterday's column was pretty evenly divided between readers with their own horror stories (check out the guy who got a school-zone speed-camera ticket in Catonsville the day after Thanksgiving, when schools were closed), who were sympathetic to Jim Hunter, whom I quoted, and those who believe speed cameras increase safety and are a force for good. I agree that ticketing speed violators is a good idea. I don't agree that speed cameras should be allowed just about anywhere, with little warning to drivers.
Hunter's main gripes are that the camera that nailed him wasn't well marked and it didn't seem to be in a genuine construction zone. Those points seemed to have been lost on some readers. Here's a sample of my email feedback on Monday:
It really grieves me that a Connecticut businessman was booked by a speed camera going 67 in a 55-mph zone and given a $40 fine. And that you yourself were snapped going 43 in a 30-mph school zone.
What is this? No one can read anymore? You exceed posted speed limits by 21 and 13 miles per hour and bellyache that you got a ticket? And that it’s the fault of the State of Maryland that needs to fill its coffers with money from innocent drivers?
IMHO (In my humble opinion, for those who don’t use email shorthand), your only reaction should be gratitude that Maryland allows a generous 11 miles over the limit leeway before issuing tickets and that you didn’t hit or kill someone.
Give us a break. Speed cameras do their job of getting “I’m above the law” drivers to slow down and avoid accidents. IMHO, there should be one at every corner.
I received my third speed camera ticket in the last three weeks last night for going 48 mph on a 35 mph stretch of Northern Parkway. The other two were for the same stretch of road next to the State Office Building on Preston Street where it is a 25 mph street on Howard. I have heard they give you a break for up to 12 mph over the speed limit, and I believe each and every one of my tickets were for 13 mph over. It is a big drain on my non existent cash flow, where I live from paycheck to paycheck and have to drive about 25 miles each way to my job. Thanks, Jay. It was very gratifying to know I am not the only one who is suffering and I was shocked to realize it is only Maryland that is doing this on the East Coast.
GREAT piece, Mr, Hancock. Here is the comment I added.
The only reason that Maryland CAN be the notorious speed trap state and red light camera trap state is that the traffic safety engineering parameters are deliberately and maliciously done improperly to reduce safety and facilitate more ticket camera revenue.
If all main roads were posted with the speed limits that produce the greatest safety, the 85th percentile speed of free flowing traffic under good conditions, speed cameras could not issue enough citations to even pay their own costs of operation.
If all traffic lights had yellow intervals long enough for the ACTUAL 85th percentile speeds of approaching traffic to produce the minimum number of violations and the greatest safety, they could not issue enough citations to even pay their own basic costs of operation.
Speed and red light cameras are just cynical means to make money with improper engineering and unethical traffic management policies.
The portrayal of Mr. Hunter’s reaction, criticism and subsequent behavior appears self-centered and “possibly” hypocritical to his own employee business behavior expectations. Regardless whether the speed zone was posted as 55 and or 65, his driving behavior and lack of attention caused him to exceed the max limits on that highway. In his business, I’m sure, if one of his employees behaved out side the parameters of company work rules, there would be a supervisory mention or verbal warning up to written reprimand/termination. I also wonder if he communicates as well as he expects MD by follow-up employee relations best practices to once a year re-briefed employees and have
December 13, 2011
I knew Maryland was adding speed cameras. But until I researched today's column I didn't realize how many and by what margin we seem to be ahead of the rest of the country. According to the Insurance Institute for Highway Safety, there are "more than 106" cities, towns and counties in the United States with speed cameras. Twenty-nine of them are in Maryland.
From the column:
Maryland is also one of the few states with speed cameras on interstate highways — seven camera vehicles rotating among 10 locations. (Check safezones.maryland.gov to see where.)
Gathering state and local data, StopBigBrotherMD.org calculated this month that Maryland speed cameras generated $77 million in revenue for the fiscal year that ended June 30. That's twice as much as the state collected in alcohol taxes.
Here is the stopbigbrothermd link. Here are the locations of speed cameras on the Baltimore Beltway and other Maryland interstate locations. Here is the IIHS's maps and lists of states and localities with speed cameras and red-light cameras.
To see where the cameras are in your locality, check with the county. The places keep changing.
From Yale law professor Jonathan Macey in the WSJ:
On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption. For one thing, the rules proposed for Capitol Hill are not like those that apply to the rest of us. Ours are so broad and vague that prosecutors enjoy almost unfettered discretion in deciding when and whom to prosecute.
Congress's rules would be clear and precise. And not too broad; in fact they are too narrow. For example, the proposed rules in the Stock bill are directed only at information related to pending legislation. It would appear that inside information obtained by a congressman during a regulatory briefing, or in another context unrelated to pending legislation, would not be covered.
December 9, 2011
The misery index, a term made popular in the 1970s, is the unemployment rate plus the inflation rate. It's getting currency again, although this time the unemployment component is much worse than the inflation component. Maryland Public Television's Jeff Salkin and I talk about it.
Baltimore Racing Development is a startup company. Almost all startups lose money in their first years. Well-run, startups, however, make sure their cash will last until that day. The Baltimore Grand Prix didn't -- by a long shot, as this weeks stories by Luke Broadwater show. The operation is $12 million in debt, much of it past due. It lost millions on this year's race. And it has little cash on hand.
But the turnout for the race seems to have been encouraging enough to generate some interest. Would-be investor Felix Dawson would seem to have the wherewithal and the contacts to turn the thing around. He worked at Constellation Energy and Goldman Sachs, and perhaps he has the Rolodex to find a sponsor to underwrite next year's race.
That doesn't necessarily mean all the debts will get paid off. I don't have any inside information, but this wouldn't be the first insolvent but promising business venture to sort itself out through a Chapter 11 proceeding. Another question, as The Sun's editorial board raises today, is whether or not the city will have to invest more in the local Grand Prix. The editorial board says: Don't do it. But I wouldn't rule that out, either.
December 6, 2011
Like Maryland and other states New York has been levying a tax surcharge on high-income folks. New York's main income-tax bracket used to be 6.85 percent. But for the past three years couples' income of more than $300,000 was taxed at 7.85 percent. And couples' incomes of more than $500,000 was taxed at 8.97 percent.
Some in New York wanted to keep the millionaire tax. Gov. Andrew Cuomo disagreed, saying it would drive capital out of the state. Now he has mainly caved, agreeing with legislative leaders to reduce the rates a little but maintain the surcharge on higher incomes. They also agreed to lower rates for couples making less than $150,000. From the NYT:
Under the proposal announced Tuesday, for married couples filing jointly, income from $40,000 to $150,000 would be taxed at 6.45 pecent; from $150,000 to $300,000 at 6.65 percent; from $300,000 to $2 million at 6.85 percent, and over $2 million at 8.82 percent.
Changing the tax rates and brackets would allow the state to replace some, but not all, of the revenue to be lost when the so-called millionaires’ tax expires on Dec. 31.
Maryland's millionaire tax expired last year, but there is talk of reviving it.
December 5, 2011
In its most caustic blast yet against Exelon Corp.'s proposed buyout of Baltimore-based Constellation Energy, the French EDF Group called the combined company's offers to Maryland citizens "insulting" and says the deal will be "harmful to Maryland, harmful to BGE and harmful to consumers." The transaction "fails to meet every standard imposed by Maryland's public utilities law and should be denied," EDF said in a filing Monday with the Public Service Commission.
EDF, of course, is the parent of Electricité de France, the giant utility owned largely by the French government. EDF is a big Constellation shareholder and also shares ownership with Constellation of the company's nuclear fleet. EDF rescued Constellation from being bought by Warren Buffett three years ago, saving Constellation CEO Mayo Shattuck's job. Apparently it expected Shattuck to be grateful. Instead, Shattuck is pursuing a deal that is OK for his shareholders but which EDF fears will harm its interests by burying its U.S. nuclear stake within the much larger combination of Exelon and Constellation.
So EDF is missing no chance to blast the transaction. Exelon and Constellation "persist with the claim that after the merger, BGE somehow will be locally managed and controlled" EDF said in Monday's filing, "despite overwhelming evidence to the contrary." (The whole company would be run from Exelon's Chicago headquarters.) It goes on:
The evidence at the hearing further established that the merger’s so-called benefits for Maryland and Exelon’s commitments to Maryland are both woefully inadequate and totally illusory. Maryland jobs will be lost, Maryland tax revenues will decline, and Maryland’s ability to influence its electric generation facilities will be severely limited.
Also Monday, Constellation and Exelon agreed to boost the commitments that EDF says are woefully inadequate and insulting. See Hanah Cho's story on the companies' promise to build additional generation capacity, including more green power than they had previously talked about. Somehow, however, I don't think that's going to change EDF's mind.
I'll be on the C4 show on WBAL today to talk about this column:
Gov. Martin O'Malley's notorious but temporary "millionaire tax" doesn't seem to have prompted rich folks to flee Maryland in much greater numbers than usual, according to the latest data. But that doesn't mean they're not fleeing, and it doesn't mean the tax should be resurrected, as some advocate.
Even without the millionaire surcharge that began in 2008 and expired in 2010, Maryland's income tax is sufficiently high to repel some of the wealthy. Add in this state's higher estate taxes, and we don't need another reason to push plutocrats into Virginia.
Read the whole thing here.
The theory of tax incidence says that those paying a tax increase are those who can least afford to avoid it. Conversely, those who can afford to avoid high taxes often do. People with million-dollar incomes can afford many things.
December 2, 2011
As the wire reports say, November's unemployment drop from 9.0 percent to 8.6 percent puts the jobless rate at its lowest point in more than two years. But there are still more than 13 million unemployed folks -- Americans who want to work, have looked for a job in recent weeks and haven't been hired. And that doesn't count the folks who have given up. If you want to work but you're not actively looking for a job, you're not counted as unemployed.
Hundreds of thousands seem to have given up looking last month, which is what partly explains the drop in unemployment. That doesn't seem like huge progress. And, as Bloomberg notes:
The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 43 percent from 42.4 percent.
The separate sample of payrolls showed a seasonally adjusted gain of 120,000 jobs, which is about what economists expected. But that's not nearly enough to provide work for everybody who wants it. The population and the labor force keep growing. The job base needs to grow faster than the labor force to put the country back on the right track.
November 30, 2011
Time was when people got paid for an honest day's work. Compensation was proportional to time and effort spent. At some point, however, clients and employers started adding significant marginal compensation for goals reached. Bonuses. "Success fees." "Landmark payments." "Contingency fees." And so forth.
Turns out Ehrlich consultant Julius Henson, who orchestrated allegedly illegal robo-calls to keep minority voters from going to the polls last year, would get a $30,000 bonus if Ehrlich won, in addition to his regular compensation.
From Luke Broadwater's story:
Though rejecting that plan, the campaign continued to pay Henson $16,000 a month — for a total of $112,000 — and promised a bonus of $30,000 should Ehrlich win
I believe bonuses paid based on political, legal, legislative or business outcomes are potentially insidious. All that money based on one little result can incentivize parties to go beyond what's proper. Maryland lobbyists are banned by law from getting exrtra payoffs for successful legislative accomplishments -- for good reason. Maybe the bonus was a factor in the Ehrlich campaign's ordering of these obnoxious calls telling African-Americans to "relax" and not vote.
November 29, 2011
Maryland Business for Responsive Government notes that Maryland's budget increase for the current fiscal year, as reported by the National Governor's Association, is 11.4 percent.
That's far higher than the national average for states of 2.9 percent. And it's higher -- but in most cases not greatly higher -- than that of Maryland's neighbors. Virginia's general fund expenditures are rising 7.1 percent this fiscal year. Delaware's are up 9.3 percent. West Virginia's are up 8.2 percent. Pennsylvania's are down 4.1 percent. Here's MBRG's commentary:
According to the report, Maryland has the highest increase in general fund spending between fiscal years 2011 and 2012 as compared to surrounding states Delaware, Pennsylvania, Virginia and West Virginia. Maryland also has the nation's seventh highest increase in the nation during the same period.
Overall, state 2012 enacted budgets will rise 2.9%, while Maryland's will rise 11.4%.
"These numbers clearly show that Maryland has a spending problem. Maryland's political leadership continues to feed the beast with hard earned taxpayer dollars through tax and fee increases instead of looking for cost savings in the budget," said MBRG President Kimberly M. Burns.
"Without an honest, bipartisan assessment of state spending, the budget will only continue to grow out of control and politicians will demand more and more revenue on a continued march towards big government."
Alaska had the highest budget increase for the year -- 21.3 percent. North Dakota was second highest at 20.7 percent. Oil and gas revenue! Read the whole report here. The year-over-year spending changes are in Table 6.
UPDATE: Warren Deschenaux, the General Assembly's chief budget analyst, says the 11 percent increase isn't being spent on new programs. Mostly it's to replace disappearing federal stimulus money. "It's not as though we're improving anything by 11 percent," he said. "We're just maintaining what we had." He adds via email:
Actually the general fund budget increases by $91 million, or 0.6% (less than 1%) when adjusted for three things. First was the replacement of $1.2 billion in federal stimulus funds (largely for Medicaid and education aid) from the American Recovery and Reinvestment Act of 2009. Second, Maryland used $350 million in fiscal 2011 from the local income tax reserve to support education spending (those funds will be repaid over multiple years) which also artificially lowered the base. Finally, the State received $124 million in Education Jobs Funds which allowed the reduction of $124 million in fiscal 2012. Those funds will be replaced in the 2013 budget, but for purposes of consistent presentation are included in the adjusted 2012 budget.
UPDATE: O'Malley spokeswoman Raquel Guillory weighs in.
Maryland growth rate in FY 2012 is distorted by our use of federal ARRA State Fiscal Stabilization Funds for education and public safety in FY 10 ($377 M) and FY 11 ($501 M). Most states spent all of their money in FY 2010 and backfilled with state dollars in FY 2011. Maryland chose instead to prudently spread the dollars over two years (which allowed the Governor to fully fund the growth in education aid in both years). Maryland was thus backfilling for the lost federal dollars in FY 2012 while most other states backfilled in FY 2011.
To avoid the distortions created by the timing of when federal stimulus dollars were spent, we compared the FY 2010 general fund spending of each of our neighbors to the FY 2012 general fund spending. Maryland has increased general fund spending more slowly over the last two years than most of our neighbors.
Maryland’s spending growth across all funds in FY 2012 is only 4.4% (much less than the 11% general fund growth).
The idea is that Maryland would look better in this comparison if it hadn't nursed the ARRA stimulus money over more than one year instead of blowing it all in one wad like some states did. However Maryland would also look better if it had cut more spending to make up for the vanishing ARRA money.
In his latest dispatch to clients (no link) economist Ed Yardeni says:
US CORPORATE PROFITS: The corporate profits data released last week for the third quarter along with GDP in the National Income & Product Accounts (NIPA) confirm the remarkable rebound that's been evident in the S&P 500 earnings since early 2009. Profits' share of total National Income (NI) typically increases during economic recoveries. However, it has snapped back much faster than in the past, surpassing previous cyclical peaks. It is unlikely to rise much higher in 2012. However, profits may continue to rise along with National Income next year.
What about labor's share of NI? It's been going down for many years. The share of wages and salaries in NI fell below 50% for the first time on record during Q2-2010.
However, he adds, personal income has held up fairly well thanks to social payments such as unemployment insurance, Social Security etc.
November 28, 2011
The latest in groundbreaking work from Bloomberg News, which sued to get access to secret bailout data held by the Federal Reserve:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
November 18, 2011
WBAL's John Patti and I talk about the legacy of Bill Miller, who announced Thursday that he'll step down as co-manager of Legg Mason's famous Value Trust fund.
And Maryland Public TV's Jeff Salkin and I discuss prospects for an increase in the Maryland gas tax:
WGES, which sells a lot of renewable energy credits in Maryland in combo with its alternative offerings to the standard products from the utilities, got an award from the Energy Department.
From the press release:
WASHINGTON GAS ENERGY SERVICES RECEIVES PRESTIGIOUS GREEN POWER SUPPLIER OF THE YEAR AWARD Herndon, VA. – Today, the U.S. Department of Energy (DOE) presented Washington Gas Energy Services (WGES) with the 2011 Green Power Supplier of the Year Award in the non-utility category. The award recognizes non-utility providers for outstanding efforts, initiatives and programs that significantly advance the development of green power sources.
I walked out of the Thursday morning session of T. Rowe Price's biennial investment symposium wanting to move more money into stocks. I couldn't stick around long because I had to head back to the newsroom. But my overall impression from the first few speakers was that T. Rowe likes emerging markets, is pretty positive on the United States and believes the fear factor driven by ongoing financial crises is overdone.
Some snippets of the first 90 minutes. There's "an unrealistic quest for safety" which is driving up some bond prices and driving down yields, said Brian Rogers, T. Rowe's chief investment officer. "Investors are investing conservatively and nobody is willing to take any risk." There's almost, he said, "irrational exuberance in reverse."
Actions (or non actions) by governments continue to be key to markets, Rogers said. "It does not seem to us these days that there are an awful lot of Profiles In Courage moments in Washington." While money-market funds pay basically zero, Rogers said, many stocks pay dividends of 3 percent or 4 percent. Emerging markets, he said are "a great opportunity."
Housing is still a drag on the U.S. economy. "It's going to take three to five years" for housing to get back to normal, said Michael Gitlin, the firm's fixed-income director. But he doesn't expect the United States to fall into a decades-long, Japan-style slump. Japan has no population growth. Its banks were even more leveraged than U.S. banks. It had serious deflation. And wages fell there while they're holding steady or rising here, he said.
There are more than 200 companies in the S&P 500 whose dividend yields are greater than the yield on Treasury bonds, said John Linehan, head of T. Rowe's Equity Division.
On the subject of corporate America's cash hoard: "You'll see dividend payouts increase," said Linehan. And, he said, when economic uncertainty recedes, you'll see corporate mergers pick up.
Apple and Google, Linehan said, are not the next Microsoft (ie., about to reach a peak and stagnate). "I think those companies will continue to innovate and grow," he said.
T. Rowe Price is not a fan of high-frequency trading. "It's a real risk to the market," Linehan said.
His columns appear Tuesdays and Sundays.
- This blog has moved
- Fix the calendar so Christmas is always on Sunday?
- Christmas BGE outage for Davidsonville families
- This will be a Pulitzer finalist feature story this year
- PSC hits Pepco for bad tree-trimming, communication
- Why do death rates fall during hard economic times?
- Report: EDF may drop plans for Calvert Cliffs reactor
- You get BGE merger credit even if you switched
- Speed cameras are fine -- but only up to a point!
- Where the Maryland speed cameras are
Fix the calendar so Christmas is always on Sunday? (9)
Speedy wrote: My wife worked for a company that i... [more]
Christmas BGE outage for Davidsonville families (2)
LK wrote: OK yes stinks to have your power go... [more]
Erickson Retirement: Pay the severance money (33)
NotanEricksonFan wrote: Wow! Some people were really duped... [more]
Why do death rates fall during hard economic times? (2)
Cheap Jim wrote: As for why mortality rises in good ... [more]
PSC hits Pepco for bad tree-trimming, communication (1)
Phillip wrote: Who gets the money from these fines... [more]
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