Possibly good, the ever-optimistic Ed Yardeni of Yardeni Research says this morning:

I nearly fell off my chair yesterday morning at 8:30 am when I heard that the latest weekly initial unemployment claims fell below 300,000 for the first time since May. Actually, I was driving to meet with a couple of accounts in New Jersey and heard the news on Bloomberg radio. I don’t get it. Isn’t the labor market supposed to be getting weaker? That’s been the message of every labor market indicator recently with the glaring exception of jobless claims. Perhaps employers aren’t hiring, but they are resisting firing workers because they believe their businesses will be good next year. Or maybe today’s job losers--especially the ones who worked for a subprime mortgage unit on Wall Street--are too proud or too well off to bother filing for unemployment insurance. In any case, the one good thing about August’s 4,000 drop in payroll employment is that any increase above zero would likely be a big positive surprise. Just imagine the reaction if September’s number, which will be released on October 5, is up by let’s say just 50,000. The newspaper headlines would probably hail that the labor market remains surprisingly resilient. There might be dancing in the streets--both Main and Wall--because the economy may not be heading toward a recession, notwithstanding the predictions of Alan Greenspan, Richard Syron (Freddie Mac's CEO), and other gloomy oracles.

Not as good as you think, Merrill Lynch's sober David Rosenberg said yesterday:

Falling jobless claims does not equal labor market strength. No doubt that initial jobless claims surprised to the low side today - dropping 15,000 to 298,000 in the September 22nd week while the consensus was looking for a 316,000 print. This latest data point also dragged the 4-week moving average down to 312k from 321k and the lowest since 4 August 2007. This in turn has prompted comments in some circles that the labor market is actually stronger than the recent nonfarm payroll survey indicated (-4,000 in August). We disagree.

Aggressive seasonal factors yielded sharp drop in claims First, as our bond desk rates strategist John Herrmann pointed out earlier, the previous four years of extremely heavy hurricane activity caused the seasonal adjustment factors for initial claims to be "higher" than they would otherwise be during a period of benign weather patterns as is the case this year. So the seasonal factors were looking for a bump-up in the raw claims data (i.e. the seasonal factors would have attempted to lean against what was supposed to be a sharp rise in the seasonally unadjusted numbers), but that weather-induced runup didn't happen this year. So much of the surprise drop in claims owed to aggressive seasonal factors, not to any incipient strength in the labor market.

Initial jobless claims tell you only about layoffs Even if the claims data had done what the consensus had expected, they still would have been quite low at less than 320,000. In fact, even as job market conditions have slowed in the past year, the claims data have been quite benign. This then begs the question - why are claims so low? Well, initial jobless claims only tell you about layoffs - these are the folks heading to the unemployment insurance line.

Employment changes are about hirings and firings Employment changes are determined not only by the number of firings in any given month but also by the number of new hires. And the jobless claims data do not capture new hirings - and that is why there has been a disconnect between this data series and the official employment surveys. The firing rate is indeed low, but the hiring rate is also is low (in other words, labor market turnover has receded sharply in the past year) - and the latter is actually slowing down faster than the former which is why the NET job creation figures are so anemic.

Posted by Jay Hancock at 11:37 AM | Permalink | Comments (0)
                    

With my permission. They picked me to be a guinea pig in a trial program of programmable, Internet-accessible thermostats. I assume I was picked at random but maybe not. The cool thing for the consumer is that you can set the new thermostat from the Internet. The key from BGE's point of view was a feature allowing the company to shut off my air conditioner for a few minutes at a time on very hot days requiring high kilowatt demand. I think they picked like 1,000 households for the pilot program. BGE guys came to the house, removed the old thermostat and installed this one, which I believe is made by Comverge. The setup is similar to a shutoff box that BGE has placed on people's air conditioner compressors for years. But in this case it's Internet based, and the company was shutting the AC on and off pretty frequently.

Not that I noticed. Yesterday I got the results for the summer. They shut the AC off eight times -- four times in June, once in July and three times in August. They didn't say how many minutes my unit was off each time, but nobody in my family could tell the difference. This is a taste of what the future of home electricity will look like. Eventually our meters themselves will be Internet-based and will be tied into all sorts of cool information from the grid involving how much kilowatts are costing at any given minute. You'll be able to program your AC yourself to shut down if kilowatts get too expensive on high-use days, which will save you money and reduce the need to build new, ugly, expensive, polluting generators.

Posted by Jay Hancock at 9:56 AM | Permalink | Comments (0)
                    

A paper co-authored by a Penn State professor suggests that critical news coverage of poorly run companies spurs them to to try to improve, which leads to actual improvement. Works for politics, too! From the Penn State press release:

UNIVERSITY PARK, PA (September 27, 2007) – Media coverage of the ineffectiveness of corporate boards of directors forces those boards to take corrective actions and increases shareholder profits in the months after the negative publicity, according to new research co-authored by a professor at Penn State's Smeal College of Business.

In a new paper forthcoming in the Journal of Financial and Quantitative Analysis, Henock Louis, associate professor of accounting at Smeal, and his co-authors look at the impact of the media on managers' and investors' behavior by examining how media exposure of board ineffectiveness affects corporate governance, investor trading behavior, and security prices.

Their study is based on BusinessWeek's past publications of the worst boards of directors.

The authors find that, among the 50 unique firms that appeared on the magazine's worst board lists in 1996, 1997, and 2000, 34 (or 68 percent) took observable steps to improve their governance structures.

Of those 34, 82 percent replaced their chief executive officer, president, or board members, 18 percent increased the number of outside board members, and 12 percent instituted some broad corporate governance changes. Firms that appeared on the worst board lists significantly increased the number of outside directors and were significantly more likely to abandon their staggered board structures after the negative public exposure.

Managers are not the only ones to react to the media publicity, however. Shareholders also take some action, ultimately causing the stock price to rise in the wake of the negative media coverage.

The authors find that individual investors tended to overreact and sell, or at least stop buying, shares of the companies whose boards were called out by BusinessWeek. This activity puts downward price pressure on the stocks, which is quickly countered by trading activity by institutional investors.

These savvier investors, who perhaps already know about the ineffectiveness of various boards prior to the publicity generated by the magazine, buy up the worst-board firms, leading to a price reversal and a profit for shareholders in the months following the list's publication.

"The worst-board firms experience very strong stock performance in the week after and over the four months subsequent to the BusinessWeek publication," Louis and his co-authors write. They suspect that this is because these savvier investors may anticipate that the negative publicity will spur the worst-board firms to take some corrective actions.

Ultimately, they conclude "that media releases of (noisy) information affect the behavior of market participants and that exposing board ineffectiveness forces targeted firms to take corrective actions and enhances shareholder wealth."

"Managers' and Investors' Responses to Media Exposure of Board Ineffectiveness" is co-authored by Louis, Jennifer Joe of Georgia State University, and Dahlia Robinson of Arizona State University.

Posted by Jay Hancock at 1:04 PM | Permalink | Comments (0)
                    

UCLA's Edward Leamer presented a bracing paper at the Federal Reserve's annual conference in Jackson Hole, Wyoming, a few weeks ago. The money paragraph:

Only twice have we had this kind of housing collapse without a recession, in 1951 and in 1967, and both times the Department of Defense came to the rescue, because of the Korean War and the Vietnam war. We don't want that kind of rescue this time, do we?

Leamer is saying that housing crunches would have produced recessions in 1951 and 1967 had federal war spending not stimulated the economy and compensated for housing weakness. Recessions, of course are protracted periods (usually at least six months) of shrinking economic output and employment, which are bad all around for the country. Unemployment goes up, tax revenue goes down and people suffer.

A year ago (Aug. 20, 2006) I wrote a "why there won't be a recession" column. Among the reasons I gave:

-- History is strewn with many more recession warnings than recessions.

-- The housing bubble is not the same as the tech-stock bubble.if the nation could survive terrorist attacks and the evaporation of $7 trillion in 1990s stock wealth with only a mild recession in 2001, surely it can get past an orderly softening in home prices without any recession.

-- Consumers, though stretched, are better off than you think. The scary charts of ballooning personal debt neglect to show that interest rates on the debt are lower than they have been in decades. Household debt service - monthly interest and principal payments - has risen much more slowly.

-- Technology efficiencies make recessions less likely. A traditional recession trigger was the inventory glut, which occurred when factory managers overestimated demand. By the time they realized customers weren't buying, they had to lay off employees to work down excess stocks, which converted what might have been a mild slowdown into something worse. Now everything is linked by computers. The cash register at Home Depot talks to the Black & Decker factory, meaning manufacturers can tune production with consumer needs without traumatic jolts. At the same time, service businesses make up a bigger piece of the economy than ever, which also reduces the odds of overproduction. It's hard to have an inventory glut of haircuts.

This is a big reason that the country has had only two recessions since 1982.

-- Banks are fine. Another recession trigger is the credit drought, when bank balance sheets deteriorate, regulators get goosey and loans are hard to get at any rate. A credit drought helped produce the recession of 1990, but there is no sign of one now.

-- Long-term interest rates are still low. According to Bankrate.com, you can get a 30-year mortgage for 6.1 percent. That's only about a percentage point higher than when rates reached their lows in 2003.

-- The world economy is healthier than it has been in years. I'm not sure I agree with Morgan Stanley economist Richard Berner, who wrote last week that global growth could "sustainably boost U.S. net exports for the first time in two decades" and spur a comeback in business investment. But it should bolster exports somewhat and diminish odds of a downturn.

I'm sticking to the "slowdown but no recession" prediction, but more out of stubbornness than conviction. The odds of recession have gone up a lot. The expanding global economy, low interest rates and technology-fine tuning are still working against recession. But there is a credit drought -- not in banks but in the bond and secondary loan market. The consumer is a question mark. And in many parts of the country what's going on in real estate is not "an orderly softening of housing prices."

Posted by Jay Hancock at 9:34 AM | Permalink | Comments (0)
                    

Posted by Jay Hancock at 10:59 AM | Permalink | Comments (0)
                    

When the Greater Baltimore Committee, one of the state's top business groups, calls for a 10-cent increase in the gas tax, you can believe there is political will to get it done. (A few weeks ago I called the GBC "liberal" in a column -- which they objected to. Does their support for a gas-tax increase make them liberal or conservative? Or just sensible? You decide.) The GBC should get kudos for backing a the gas-tax hike, which other business interests will object to. We need the money for transportation. A gas tax is a fair user fee on people who consume highway services, emit pollution etc., and to the extent that it reduces demand, that's a good thing. It will also potentially generate money for badly needed mass transit.

 At the same time, Gov. O'Malley's proposed income-tax increases on high-income households are high enough to spur businesses and well-off families to move to other states. O'Malley's top bracket for the state income tax would be 6.5 percent. Add to this the 3.2 percent "piggyback" tax levied by Maryland's most expensive counties and you get a top marginal rate of 9.7 percent -- higher than in any state except California (10.3 percent rate for every dollar earned over $1 million) and Rhode Island (9.9 percent rate for every dollar earned over $336,550.) Maryland is a small place. Other states with much lower taxes are nearby. Virginia's top marginal rate is only 5.75 percent; West Virginia's is 6.5 percent; and Pennsylvania's is 3.07 percent. Many small businesses are taxed at personal rates, and many businesses large and small are located based on where the CEO wants to live. A better design for the impending tax increases would include a lower tax increase for high earners (make the top state rate 6 percent, not 6.5 percent, and maybe raise the level where it kicks in to $750,000 or $1 million) and a higher gas tax than what O'Malley has proposed.

PS. One thing I forgot to mention: The impact of O'Malley's proposal on high-income households may be higher than immediately meets the eye. Higher state taxes -- and higher state-tax deductions -- will push some households into Alternative Minimum Tax territory, which will increase their federal tax liability as well. increase federal tax liability for households already subject to the Alternative Minimum Tax.

Posted by Jay Hancock at 9:26 AM | Permalink | Comments (29)
                    

Reuters quotes Barron's quoting analyst Ben Silver.

NEW YORK, Sept 23 (Reuters) - Mortgage and vehicle fleet company PHH Corp (PHH.N: Quote, Profile, Research) should be a good buy if its troubled buyout goes through, after its shares slid amid concerns about financing, Barron's said in its Sept. 24 edition.

Last week PHH, which agreed in March to be acquired by General Electric Co (GE.N: Quote, Profile, Research) and Blackstone Group LP (BX.N: Quote, Profile, Research) for $1.8 billion, said its takeover could collapse because Blackstone faces a shortfall of up to $750 million in debt financing.

PHH's leasing business is worth about $20 per PHH share, or 14 to 15 times estimated 2007 cash earnings, and the mortgage business has a tangible book value about $19 a share, Ben Silver, a portfolio manager at Pzena Investment Management, told Barron's.

Silver told Barron's PHH is worth at least the buyout price. PHH shareholders are due to receive a total of $31.50 a share, according to the financial newspaper.

Shares of PHH closed on Friday at $24.39, down 2.6 percent, on the New York Stock Exchange.

Posted by Jay Hancock at 12:14 PM | Permalink | Comments (0)
                    

From my colleague Eileen Ambrose. This got left out of tax stories we ran over the weekend.

O'Malley's tax plan introduces a marriage penalty that wasn't there in the past, says Andrew Bareham, a certified public accountant with Gross Mendelsohn in Baltimore. That's because the income limits for married couples in the proposed tax table aren't simply double what they are for singles. Singles with taxable income of $2,000 to $15,000 would be taxed at a rate of 4 percent, while for couples the income limit is $4,000 to $22,500, not $30,000. So, a married couple with $150,000 in income would pay a little more in tax than two singles living together who each make $75,000, Bareham says.

Here's Eileen's column on taxes from yesterday.

Posted by Jay Hancock at 11:02 AM | Permalink | Comments (0)
                    

If you're thinking about signing with an alternative natural gas company to BGE, don't. As usual, the best choice seems to be to do nothing and stick with BGE's default service, in which the natural-gas price varies with the market from month to month. All the contracts I've been able to find that let you lock in a winter price seem too expensive. Washington Gas Energy Services will charge you a fixed-price of $0.999 per therm for 12 months or $1.02 per therm for 24 months. MXEnergy charges $0.963 per therm for 12 months. Novec Energy Solutions is offering $1.10 per therm for 12 months.

"A fixed gas price for 1 year eliminates the surprise of rising gas costs by providing guaranteed price protection," says WGES. Yeah, and it also eliminates the probabilty that you'll save money when spot nat-gas prices dip under the WGES price.

Check out the price history posted by BGE. You'll see that in the last year BGE's floating prices ranged from 60.4 cents per therm in October 2006 to $1.04 per therm in January 2007. True, two years ago, after Hurricane Katrina, they spiked -- to $1.63 that November and then to around $1.25 for December and January. But the most recent price is 71.59 cents per therm for this month, which is the lowest September price since 2004.

Natural-gas futures prices for this winter are a bit lower now than they were last September for last winter. That suggests that upcoming spot prices won't be much different from last winter. The Energy Department says East-Coast natural-gas stores are still near historical highs, which also portends moderate prices. My rosy little scenario would be upset, however, by a very cold winter, which would drive up nat-gas demand and price. A warm December and January helped keep last winter's gas price down. It would also be upset by a Hurricane Katrina repeat that disrupts Gulf-Coast pipelines, but it's getting late in the year for that.

Posted by Jay Hancock at 10:00 AM | Permalink | Comments (2)
                    

He wouldn't just raise rates on the corporate income tax. He announced today that he would ask the legislature to approve a "combined reporting" law that reduces corporations' ability to shift costs and profits across state borders to reduce taxes. The best-known recent example is Wal-Mart. The giant retailer transfers title to its stores to an affiliate in Delaware or some other outside state. Then it pays "rent" to the affiliate landlord, which it deducts from its Maryland income. Which reduces its Maryland income tax. Another well-known example is Toys R Us. The chain transferred trademarks and other intellectual property out of state, then paid "royalties" to the affiliate, which reduced in-state income.

Requiring combined reporting is a no-brainer. More than a dozen states already do. It should have been first on any governor's "to do" list of tax updates. Out-of-state tax shelters circumvent the intent of the law, and they're unfair to smaller Maryland businesses that don't have out-of-state affiliates and can't shelter income.

Here's a good description of combined reporting from Geller & Co., a New York tax firm. New York Gov. Eliot Spitzer has pushed for combined reporting in that state.

Under combined reporting, a corporate family files a single tax return covering income from all subsidiaries. The income gets apportioned among the states based on the locations of all property, payroll and sales, thereby ending income-shifting between subsidiaries. With combined reporting, corporations cannot structure transactions, such as transferring royalty and dividend income and interest expenses, between affiliates in various states to avoid tax. Combined reporting would also level the playing field for small- and medium-sized businesses operating only [in-state] that shoulder a proportionately higher share of corporate taxes because they lack the opportunity to shift income to other jurisdictions.

Posted by Jay Hancock at 12:42 PM | Permalink | Comments (6)
                    

Forbes published its annual list. Bill Gates and Warren Buffett are on top, as usual. Here are the Marylanders:

165. Ted Lerner, real estate tycoon and Washington Nationals owner. $2.5 billion.
165. (Tied). David Rubenstein, co-founder of the Carlyle Group buyout firm and Baltimore City College grad. $2.5 billion.
204. Bill Marriott, hotel tycoon. $2.2 billion.
220. Richard Marriott, hotel tycoon. $2.1 billion.
297. Bernard Saul II, Chevy Chase Bank founder, real estate investor. $1.6 billion.
380. Steve Bisciotti. Outsourcing magnate, Baltimore Ravens owner. $1.3 billion.

Posted by Jay Hancock at 11:37 AM | Permalink | Comments (1)
                    

I've never seen anything like this.

U.S.-based toy giant Mattel Inc. issued an extraordinary apology to China on Friday over the recall of Chinese-made toys, taking the blame for design flaws and saying it had recalled more lead-tainted toys than justified.

The gesture by Thomas A. Debrowski, Mattel's executive vice president for worldwide operations, came in a meeting with Chinese product safety chief Li Changjiang, at which Li upbraided the company for maintaining weak safety controls.

"Our reputation has been damaged lately by these recalls," Debrowski told Li in a meeting at Li's office at which reporters were allowed to be present.

"And Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Debrowski said.

The carefully worded apology, delivered with company lawyers present, underscores China's central role in Mattel's business. The world's largest toy maker has been in China for 25 years and about 65 percent of its products are made in China.

The fence-mending call came ahead of an expected visit to China by Mattel's chairman and chief executive, Robert A. Eckert. Following the massive recall, Eckert told U.S. lawmakers he wanted to see Mattel's mainland inspections first hand.

Mattel seems more worried about having offended Chinese politicians than about having offended people potentially harmed by its products. Can you imagine Mattel or anybody else apologizing to the United States for recalling defective products made here? It reminds me of the non-apology apology made by Washington six years ago after an American spy plane made an emergency landing in Chinese territory. A Chinese fighter had flown too close and bumped into the Americans outside Chinese airspace, and China demanded an expression of regret before releasing the U.S. crew. I wonder how much the U.S. State Department was involved in the Mattel business.

Posted by Jay Hancock at 10:07 AM | Permalink | Comments (0)
                    

More excerpts from emails & the comments section of yesterday's column:

-- I read your column all the time and really like it, but I thought you gave O'Malley a free pass today. I understand that some taxes may have to increase to cover the budget deficit, but don't you think it would be a good idea for the Governor and General Assembly to look at cutting spending in conjunction with a tax increase? I just wanted you to know what one of your readers is thinking.

-- I wanted to point out a few problems with your editorial in with Mr. O'Malley's plan. Number 1 is that his plan is merely a short-term fix. To fund the $1.5 billion (or $2 billion they now exclaim) you can't rely on a one-time auctioning of slots licenses which is estimated to bring in between $400-600 million, but that is a big part of O'Malley's plan. Do the math:

Sales tax increase: ~$750 million (*note that this number was derived from projects made before the 2% loss in sales tax revenue from last year...should be more like $730 million)
Titling Fees: $170 million (going strictly to the transportation trust fund)
Corporate Taxes: At most we're talking $60million of which they want to split it between the general fund and transportation trust fund.
Service Sales Tax: They keep downplaying this as modest so fair assumption is $100 million.
Income Tax Increases: This is the big question mark
Slots: $400-800 million, but we know O'Malley won't go with Miller's plan so $600 million at best with a one time option.

Towards the General Fund then we have just shy of $1.5 billion assuming the one-time slots auction at $600 million. Now remember our goal is $2 billion and not $1.5 billion meaning we need to raise an additional $500 million from the income tax (hardly doable with the numbers they're discussing). To compound matters is discussion of a property tax cut of .03cents and an increase to the EIC. Property taxes net about $618 million (transfers which arent included in MOM plan, about another 185) so a 27% cut to the $618 million is $166 million less in the budget. Now you're down back to $1.3 billion. I assume MOM will not fund GCEI so that'll shave off $100 million bringing his plan with property tax cut to within $100 million of $1.5 billion and still shy of including EIC #s.

So you raise the cigarette tax... except doing so actually eventually turns a negative impact and they're counting it as a steady revenue stream.Do the math. It's a one-time fix that can't hold up. What's worse is that they're proposing new spending to go with these new measures?
I wholely disagreed with your assessment and find it sad that you're actually agreeing with MOM when YOU HAVEN'T EVEN SEEN HIS NUMBERS!

-- I just received the largest BGE bill in my life. The brain dead democratic general assembly screwed the taxpayers back in 1999 and when we start to pay for their idiocy, the boy mayor wants to increase taxes.

Oh yea, 83% of Marylanders will not be affected! A number brought to us by the guy who believes there was a 40% decrease in crime in Baltimore. The one, on his watch, where $50 million + from the city school system just disappeared. He must believe that all Marylanders "graduated" from Baltimore city schools to believe the 83% lie.

Oh well, the citizens of this state are getting what the wanted... Disgusting

-- I work hard. Every year I get a modest increase in my salary. And every year that extra money is sucked away from me and my family. It's just not fair! I'm tired of being the cash cow for the state. O'Malley - don't you DARE take any more money from my family. Cut services and social programs to get the money you claim you need, and for God's sake STOP adding more services and social programs. Not a single one benefits my family. BGE increase, gasoline prices, phony increased assessment of my home's value, sewer tax, ungodly increase in vehicle registration fees, and now all this that O'Malley proposes? This is robbery. Time for a violent backlash!!

Posted by Jay Hancock at 11:21 AM | Permalink | Comments (22)
                    

A selection from my emails & the comments section of yesterday's column:

-- You sir have no clue. Another democratic pawn heard from. Pass this on to your editors; "articles" like this is why I cancelled my Sunpapers'
subscription. Yea, no bias here! Pathetic. Now tell me, did you really pen this or was it sent down the pipeline from Annapolis?

-- I read your columns regularly and they are very helpful. I guess coming out of the gate with this one, I bristle with the first paragraph: 'If it's necessary....." I could be more informed, I understand, but it is the 'necessary' part that I struggle with. Why can't a state and Governor run like your house and mine? You make $100,000 and you budget $100,000 and that is it - spend what you make? Budgeting 101?

You get what you vote for in this world and the people of Maryland should be smiling as O'Malley and his democratic cronies stick it to us at the General Assembly this year - we knew this was coming with all sorts of slick marketing and packaging. I simply don't have any more to give - property tax's, fees, service charges - my cable keeps climbing, BGE - the list is simply exhausting. I guess I get tired of subsidizing everything - that is probably at the heart of concern.

If I see a need and want to help someone, I would like to have a few dollars of disposable income to do so - but with tax's hitting me again higher and higher, well, I become crippled to make decisions to help those whom I choose to help.You probably didn't want to hear all of this today, but I just wanted share a concern over what 'necessary' was all about.....

-- I still feel that more cuts should have been looked at and acted upon first.

-- So if he raises the sales tax how will 83 percent of us be paying less taxes? More like 100 percent will be paying more taxes. I guess thats some of that tax and spend liberal math I didn't have in school. I didn't vote for him, you that did enjoy your "tax break".

-- Do you get paid directly by the O'Malley administration, or is the money "laundered-under the table"?

-- Ehrlich ran on cutting the budget, then turned around and raised fees and tolls to balance the budget. So, it seems there might not be as much waste as you think? OR, maybe we should cut funding to pregnant mothers again...that worked well for Ehrlich. Maybe we should cut healthcare funding to kids and seniors, that way you won't have to pay a penny more for a cheeseburger from McDonalds. Marykland is a great State because fo the taxes we pay. If you don't like it, move to San Fransisco.

-- I noticed that delaware's sales tax was not posted.. And that " an extra penny" that nobody will notice will come as a complete surprise when buying that new car.
Please let us know how much of these increases are to pay for (new) programs.

-- of course it's "realistic." any tax is "realistic" when people have to pay it or they get thrown in jail.
politicians are the worst of humankind... at least a common thief runs away after he's stolen from me... he doesn't come back over and over again, stealing more and more each time, and constantly trying to convince me that it's for my own good and that i should actually be thankful because he takes more from people in other neighborhoods.
if king o'malley wants more tribute, then he should go around the state begging his 'employers.' at the very least he would get his first honest work experience.

-- here we go! Next this idiot will tax golf balls! Hold on to your wallets - The Sun endorsed this charlatan. Here is a unique idea for the Sun and idiots like O'Malley - CUT SPENDING!

-- Jay you sure are willig to pay more taxes. I'm not and PA is looking closer and closer to work. Cut spending further, user fees are fine, cigarette tax fine, gasoline tax fine, but increasing aregressive sales tax and an income tax increase is a bit much.

-- Be prepared for some kind of shenanigan. Governor O'Malley is above all else a politician. He always has his sights on the next higher office. He knows if this plan is implemented as is, he will always be associated with tax increases and would thereby be unelectable as President or Vice President. My guess is that he will feign a compromise and drop the sales tax increase, but still increase income tax and fees. Slots will be his bargaining chip.

-- Anyone who didn't think O'Malley would raise taxes must have just crawled out from under a rock. But raising taxes will hurt MD's economy in more ways than not. Most unfair is the wage earners over $150M or even $200M that will pay higher taxes. Why are these people being penalized for being successful?

Posted by Jay Hancock at 9:56 AM | Permalink | Comments (3)
                    

O'Malley's office put out a press release. From two personal-income brackets they want to go to six. Most income will still get taxed at 4.75 percent -- the present rate for everything north of $3,000. For married couples, every dollar earned after $200,000 would be taxed at 6 percent; and every dollar earned after $500,000 would be taxed at 6.5 percent. In the lower brackets (again for couples filing jointly), income from$ 0 to $2,000 would be taxed at 2 percent; $2,000 to $4,000, 3 percent; $4,000 to $22,500, 4 percent.

If enacted, the plan would effectively make Maryland's highest marginal income-tax rate 9.7 percent, when you count the "piggyback" income tax charged by counties. That's quite high -- higher than in every state but Rhode Island and California.

Posted by Jay Hancock at 5:43 PM | Permalink | Comments (6)
                    

If more companies do what Hovanian Enterprises did over the weekend, the housing slump would end much more quickly. The company threw a huge sale, cutting prices by as much as 20 percent. From Barry Ritholtz:

[Hovanian] did more than 2100 sales in 3 days, versus 2539 sales in the entire third quarter. That's ~83% of the prior three months of building and selling in just 3 days.

Gee, do you think their homes were previously over-priced? Maybe just a little? Kudos to HOV for finally figuring this out.

There is a lesson in this for Real Estate Agents, home owners, and anyone else who wants/needs to sell their homes: price them realistically, and you can sell them.

It has been more than two years since prices and sales volumes peaked (August 2005), and amazingly, many people are discovering this only now . . .

Posted by Jay Hancock at 12:07 PM | Permalink | Comments (1)
                    

Robert Shiller, who wrote the prescient Irrational Exuberance about the stock market bubble, has been predicting similar things for housing for a long time.Today before Congress he said that declining home prices will cause new financial crises and that this housing downturn could be the worst since the Great Depression. That last part is hyperbole. It will almost certainly get worse. But it won't be nearly as bad as in the Depression, or even as in the early 1980s, when mortgage rates hit 17 percent or so and the home market froze solid. Well-qualified borrowers can still get fixed-rate mortgages for 6 percent. At some point, as prices come down (and rates should fall further, too), they'll be buying houses. This home slump will be worse than the one in 1990, not as bad as 1980 and not nearly as bad as 1930.

Posted by Jay Hancock at 11:32 AM | Permalink | Comments (2)
                    

Neil Bernstein, past president of the Baltimore City College Alumni Association, calls to say that BCC has inducted yet another impressive name into its Hall of Fame. Economist Robert Hormats is vice chairman of Goldman Sachs International and a former assistant secretary of state and deputy U.S. trade represenative. Hormats, class of 1961, gets his name on a bronze plaque along with an incredibly illustrious list of other inductees from City, which calls itself the third-oldest continuously operating public high school in the country.

BCC Hall of Famers include Carlyle Group co-founder David Rubenstein, McCormick spice's Charles McCormick, one time Mercantile Bank chief John Motz (father of Judge Frederick Motz), Sen. Ben Cardin, former Baltimore Mayor Kurt Schmoke, Rep. Dutch Ruppersberger, former Gov. William Donald Schaefer, former Gov. Marvin Mandel, onetime Baltimore Colts owner Caroll Rosenbloom and so on.

Posted by Jay Hancock at 10:47 AM | Permalink | Comments (0)