Expensive gasoline isn’t the only downside of oil at almost $120 a barrel, claims the Insurance Research Council. Rising energy expense could also boost car-accident injuries to increase as drivers switch to smaller vehicles, the group says.

The institute took 9,000 accident claims from 2007 and broke them down according to vehicle weight.

It found that the people driving compacts, sports cars and other smaller cars submitted injury claims that were 14 percent larger, on average, than those of people driving SUVs and other larger vehicles. Small-car accidents also caused more lost work time because of injury than large-car accidents.

(To be precise, the institute compared the average injury claim for cars in the bottom one-fourth of the weight spectrum – less than 2772 pounds – with those from cars in the top fourth, which were more than 3725 pounds.)

There are some problems with drawing too many conclusions from the study, one of which the institute admits. Expensive gas compels people to drive less, which decreases accidents and injuries in all kinds of cars.

“Our findings indicate that higher average claim costs associated with lighter vehicles have the potential to offset, to some extent, whatever beneficial effects might occur from less driving, Elizabeth A. Sprinkel, senior vice president at the institute, said in a prepared statement.

The other point to be made is that, as vehicles become lighter on average, small-car drivers' chances of getting T-boned by a monster SUV also go down.

Posted by Jay Hancock at 8:26 AM | Permalink | Comments (0)
        

I love it when towns buy weird police cars in keeping with a place's cultural vibe. When I lived in Aspen in the late 1970s, the official police uniform was a denim jacket and cowboy hat. And they drove Saabs! From Brad DeLong we have the newest police cruiser from Berkeley. A Prius.

Posted by Jay Hancock at 8:16 AM | Permalink | Comments (0)
        

Obama said the magic word, and its variants, several times, in his acceptance speech last night. What am I talking about? See earlier post here. Obama:

It's a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, to look out for American workers, and play by the rules of the road.

And:

That's the promise of America -- the idea that we are responsible for ourselves...

And:

It will require a renewed sense of responsibility from each of us to recover what John F. Kennedy called our "intellectual and moral strength." Yes, government must lead on energy independence, but each of us must do our part to make our homes and businesses more efficient. Yes, we must provide more ladders to success for young men who fall into lives of crime and despair. But we must also admit that programs alone can't replace parents; that government can't turn off the television and make a child do her homework; that fathers must take more responsibility to provide love and guidance to their children.

Individual responsibility and mutual responsibility -- that's the essence of America's promise.

And:

I will end this war in Iraq responsibly, and finish the fight against al Qaeda and the Taliban in Afghanistan.

Posted by Jay Hancock at 11:09 AM | Permalink | Comments (2)
        

From Laura Smitherman's story this morning on how state revenue is $73 million behind plan, setting the stage for big budget cuts next year. The biggest culprit is the shortfall in sales tax collections, which account for all of the gap and then some.

According to the final accounting of fiscal 2008, income and sales taxes - which make up roughly 80 percent of the state's revenue - fell about $130 million short of projections. Had the sales tax not been increased during the second half of the year as a result of the special session, the revenue take would have ranked as the worst performance since 1991. David F. Roose, director of the Bureau of Revenue Estimates, called the sales tax results "the real big unpleasant surprise."

Of course Maryland just raised its sales tax from 5 percent to 6 percent in January. Smitherman has written about cigarette smuggling in the wake of a hike in the tobacco tax. There has to be something similar going on with the general sales tax, too -- iPod, big-screen-TV and Coach-purse smuggling. Not just from Delaware, which claims to have no sales tax. (It actually has a gross receipts tax, paid by the retailer.) But also via the Internet. You're supposed to pay a Maryland use tax equal to the sales tax when you buy stuff over the Web, but nobody does. When I get a chance next week I'll try to see if Delaware retail sales got a spurt starting in January.

Posted by Jay Hancock at 8:22 AM | Permalink | Comments (8)
        

So far at the convention we have heard Democrats doing lots of lamenting about subprime mortgage victims and people without health insurance and so forth. You heard this from Joe Biden. You heard it from the Clintons. This is an important part of their message and an important part of the national dialogue. The mortgage companies did abuse people. We need health care reform.

But once again the Dems risk making the hard-working people who haven't defaulted on their mortgages, who didn't irresponsibly run up huge credit card bills etc. feel left out. There are millions of them. If the Democrats neglect them and concentrate on the victims without any acknowledgment that many individual Americans went overboard in the irresponsibility department along with the mortgage companies and other lenders, they risk losing the election.

Democrats can bill themselves as the party of responsibility in Washington, in corporations and among individuals. Especially after how the folks in power have performed. Howard Dean put it well four years ago:

There is a Party of fiscal responsibility... economic responsibility.... social responsibility... civic responsibility... personal responsibility... and moral responsibility. It's the Democratic Party.

This is a resonant, appealing message. But we haven't heard it yet.

Posted by Jay Hancock at 12:18 PM | Permalink | Comments (1)
        

The government reported this morning that the economy grew at a healthy, 3.3 percent annual rate in three months that ended in June. It's a preliminary reading and will be revised. Even so, it's inconvenient evidence for those who argue that the country is in a recession. (Who are these doomsayers? See here and here and here. For a sunnier evaluation, see here. )

True, the country has been shedding jobs all year, which is a hallmark of recession. But economic output is the other key metric for calling a recession, and the second quarter output was what economists like to call "robust." We may again be seeing the pattern of the early 2000s, when GDP grew at healthy levels but employment didn't. We're clearly in a jobs recession.

Posted by Jay Hancock at 9:58 AM | Permalink | Comments (0)
        

In an attempt to save his job, Fannie Mae boss Daniel Mudd has tossed three lieutenants overboard and replaced them with three other insiders. From AP:

WASHINGTON (AP) _ Mortgage finance giant Fannie Mae shook up its executive ranks Wednesday, after shares in it and sibling company Freddie Mac rose for a third straight day as investors appeared less certain a government bailout of the two troubled companies is imminent.

Fannie Mae, the largest buyer and backer of U.S. home mortgages, said its chief financial officer and two other top executives are leaving the company. Three current executives were promoted to replace them.

This pathetic paragraph is at the end of Fannie's press release:

"The Board of Directors is firmly committed to Dan Mudd, the management restructuring, and the strategic objectives around capital and credit he set forth on August 8," Stephen B. Ashley, Chairman of the Board, said. "The Board will continue to work closely with Dan and his management team to guide the company and support the housing finance system through a very challenging period."

The Board of Directors may think it's still in charge. But when companies veer toward insolvency, like Fannie, power shifts toward the creditors. When too-big-to-fail financial companies veer toward insolvency, power shifts toward the regulators. In this case, the creditors and the regulators are the same -- the U.S. government. I wonder how much Mudd and the board consulted with the Treasury Department and the Office of Federal Housing Enterprise Oversight before dumping these guys. The Feds should be calling the shots or at least closely consulting. A lot of people expected a federal bailout of Fannie and brother Freddie last Sunday.

Posted by Jay Hancock at 6:04 PM | Permalink | Comments (2)
        

Bowing to national ridicule, the town of Clayton, Calif., has allowed Katie Lewis, 11, and Sabrina Lewis, 3, to reopen their roadside vegetable stand. Katie and Sabrina got busted for selling zucchinis, melons and radishes from a card table -- ie., operating a commercial establishment in a residential area without a license. From the San Jose Mercury News:

Clayton leaders decided Tuesday night that two girls can re-open their vegetable stand — the one city staffers said two months ago violated zoning regulations and was immediately shut down.

As early as Wednesday, the Fisher Price card table could be back in front of the Lewis house on Mitchell Canyon Road, with 11-year-old Katie Lewis and sister 3-year-old Sabrina sitting behind it. They'll once again sell produce like the $1 melons and 50-cent radish bunches grown in their yard.

"We certainly see we've touched a nerve here," Planning Commissioner Keith Haydon said Tuesday night, referring to the regional and national media attention that rained down on the city of 10,000 once word got out that Mayor Gregg Manning had asked the police department to shut down the Lewis's stand.

Letting the stand operate is "in keeping with the flavor or image of Clayton," Haydon continued.

Posted by Jay Hancock at 12:58 PM | Permalink | Comments (0)
        

The Financial Times interviews Austan Goolsbee and Jason Furman, Barack Obama's top economics advisors, at the Democratic convention in Denver. They suggest that Obama's acceptance speech will get heavily into the "are you better off today than you were four years ago?" economics jag that many Democrats have been wishing for.

"We will call for change and we will say what that change is," Mr Furman said. "Measuring the success of the economy by what it does for ordinary families. Recognition that the way to promote growth is to invest in ordinary families . . . 'How is the economy doing for you?' is ultimately the most important question for us."

And, they say, Obama doesn't get enough credit for his tax cuts. (However, he would substantially raise other taxes.)

The Obama campaign, which will eliminate Mr Bush's tax cuts for those earning more than $250,000 and raise the dividend and capital gains tax from 15 per cent to 20 per cent, allege that Mr McCain is focusing purely on tearing down Mr Obama's economic platform.

Barack Obama's campaign plans to push back aggressively against what it sees as John McCain's distortions of his economic policies and hammer home the message that every blue-collar household will get a $1,000 tax cut if he is elected.

"Both candidates are offering tax cuts," said Mr Goolsbee. "It is a question of who gets the tax cuts. The Obama plan gets tax relief to 95 per cent of working Americans."

Posted by Jay Hancock at 11:50 AM | Permalink | Comments (1)
        

Today's column is on the slots referendum.

Supporters and opponents of Maryland slot machines are arguing over the wording of a slots-approval measure on November's ballot. The language goes on and on about education but says nothing about horse racing. Here's how an honest version would read:

This measure authorizes the state to issue up to five video lottery licenses for the purpose of raising revenue for education, bailing out an industry that can't make it on its own and saving Annapolis pols from the hard work of governing.

Revenue for education is part of the story - the way Plymouth Rock is part of Massachusetts. Big profit chunks will go to slot parlors and rich horse owners. Out-of-state horse owners, many of them.

Reader Chuck calls with this idea: Expand offtrack betting for Maryland's racetracks as an alternative to slots. "Let the players play," he says. "The fact that players can't get there to wager is the reason they [the tracks] don't have much cash flow."

(Maryland actually has four offtrack betting facilities, according to the Maryland Racing Commission. But maybe more would increase betting on the horses.

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

Guess the FAA's NextGen traffic control system is still LastGen. From AP:

ATLANTA (AP) -- An electronic communication failure Tuesday at a Federal Aviation Administration facility that processes flight plans for the eastern half of the U.S. caused mass delays around the country. The Northeast was hardest hit.

But by early evening, the FAA said that the situation around the country was returning to normal, with delays remaining in Atlanta and Chicago.

The communication failure caused delays for departures and arrivals at Baltimore-Washington International Thurgood Marshall Airport, according to airport spokeswoman Cheryl Stewart. However, she did not have a number on delays.

Posted by Jay Hancock at 9:36 PM | Permalink | Comments (1)
        

Twitter says: "What are you doing?"

jameshancock I am joining Twitter so I can find out why something seemingly so stupid is so popular and to read Peter Franchot's twitters from Denver less than 5 seconds ago from web

In an email blast, Maryland comptroller Franchot advertises his Denver twitters as "convention coverage from a Maryland perspective."

Posted by Jay Hancock at 5:41 PM | Permalink | Comments (0)
        

Leave it to Baltimore's own Sinclair Broadcast to run the ad tarring Barack Obama for his acquaintance with Bill Ayers, the Weather Underground jerk whose group bombed the Capitol and the Pentagon (with little effect) in the early 1970s. Obama lives in the same neighborhood with the guy, who apparently has rehabilitated himself and is now a professor at the University of Illinois/Chicago.

Ayers had a "meet the candidate" session at his house for Obama in the 1990s when Obama was first running for office. And Obama was on the board with Ayers of the Chicago Annenberg Challenge, an education-reform group financed by the well-known radical-pinko Walter Annenberg. (Annenberg was the billionaire who founded TV Guide and was Richard Nixon's ambassador to Britain when Ayers was bombing Nixon's Pentagon. Annenberg was also a close friend of Ronald Reagan.) So now Obama is being linked to terrorism.

Obama's people are trying to quash the Ayers ad, which is financed by Harold Simmons, the guy behind the Swift Boat attacks on John Kerry four years ago. They say it violates campaign law. CNN and Fox have refused to run the Ayers ad, according to the Associated Press. But, sez the AP:

But by Monday afternoon, the ad had run about 150 times in local markets in Pennsylvania, Ohio, Virginia and Michigan, according to Evan Tracey, head of TNS Media Intelligence/Campaign Media Analysis Group, an ad tracking firm.

Obama spokesman Tommy Vietor said Obama supporters have inundated stations that are airing the ad, many of them owned by Sinclair Communications [sic], with 93,000 e-mails. He called the ad false, despicable and outrageous.

"Other stations that follow Sinclair's lead should expect a similar response from people who don't want the political discourse cheapened with these false, negative attacks," Vietor said.

Sinclair has a history of this, having fanned the Swift Boat flames four years ago. Every candidate has ties to dubious characters. If you're a politician you rub elbows with tens of thousands of people, and some of them turn out to be questionable. You can't fault Obama's ties to Ayers any more than you can fault John McCain's ties to the Rev. John Hagee, the much-criticized megachurch pastor. The left likes to complain that the American news media is a corporate monolith. Sinclair is an outlier, but I don't think that's the kind of diversity liberals have in mind.

Posted by Jay Hancock at 11:23 AM | Permalink | Comments (23)
        

The final numbers are in from the 2007 -- 2008 fiscal year for the lottery. Another decent year -- up 5.9 percent from the previous year. The best showing since 2004/2005. Other states are seeing similar growth.

  From a recent story in the Hartford Courant:

Even as soaring gasoline prices, mounting home foreclosures and bank losses throw the national economy into a tailspin, the lotteries of Connecticut and its neighboring states are booming.

Connecticut's 2008 lottery revenue of almost $1 billion is a new record, making Lotto tickets and scratch games a kind of reverse barometer of the U.S. economy.

 

 

Posted by Jay Hancock at 1:30 PM | Permalink | Comments (0)
        

The bad news: Homes on the market are rising, too. And prices are down. The housing problem won't begin to abate untl the inventory of homes for sale starts falling. See Jamie Smith Hopkins' story in today's Sun. The lede: "For every home that sold in the first half of the year, 10 more would-be sellers in the Baltimore metro area were wishing, waiting, hoping." From AP:

The National Association of Realtors reported Monday that sales rose to a seasonally adjusted annual rate of 5 million units. Sales had been expected to rise by only 1.6 percent, according to economists surveyed by Thomson/IFR.

Home sales were 13.2 percent lower than a year ago and prices were down dramatically. The median price for a home sold in July dropped to $212,000, down by 7.1 percent a year ago.

Despite the third monthly sales jump this year, the number of unsold single-family homes and condominiums rose to 4.67 million, the highest number since 1968, when the Realtors group started tracking the data.

That represented a 11.2 month supply at the July sales pace, matching the all-time high set in April.

Posted by Jay Hancock at 11:22 AM | Permalink | Comments (4)
        

On Friday I posted about the Tax Foundation's piece on Obama's proposal to exempt the first $50,000 of senior citizens' income from income tax.

I respect the Tax Foundation. They do some good work. I frequently make use of their research. But their "analysis" of Obama's proposal to exempt senior citizens making less than $50,000 a year from income tax seems disingenuous. Obama's proposal is a bad idea, but not for the reasons the Tax Foundation gives.

Here is the the response of Communications Director Bill Ahern:

Jay, From the way you're describing Obama's planned cut for seniors, it sounds as if you think it's just a great big zero bracket, above which the 15% tax rate would kick in. That would be much better (and a much bigger tax cut). No, you're right that no one would make tax policy this way, but as silly as it sounds, the "cliff" really was the plan. That's why the Tax Policy Center at Brookings/Urban has been using it in their estimates of the plan's cost: http://www.taxpolicycenter.org/UploadedPDF/411741_updated_candidates.pdf That $5 billion dollar cost estimate for the seniors' exemption would be much larger if a senior making $75,000 were only going to have to pay tax on the last $25,000 he earned. He won't -- he'll be paying on all $75,000. Also, you can tell by Jason Furman's reaction to Mark's piece that the cliff interpretation was correct -- they've rushed out a new "estimate" of the additional cost of the phase-out, $2 billion.

AND:

In short, "hit job" was unfair. How much leeway should analysts give candidates when they come out with such proposals? No information about adjustments by type of tax filer, or for inflation, or how it phases out. And it's been out there for weeks generating great press with no details at all. TPC was the first to comment on it, but we took it another step, and it actually prompted some sort of reaction.

Posted by Jay Hancock at 10:16 AM | Permalink | Comments (2)
        

Joe Nocera's take in the New York Times on the Fannie/Freddie mortgage debacle:

Their only mission has been to get rich, and it has hurt us all.

Posted by Jay Hancock at 10:02 AM | Permalink | Comments (0)
        

To its credit, the Tax Foundation made note of the Obama campaign's rebuttal of its analysis. (See earlier post for background.) Sez a Tax Foundation press release that just landed:

The presidential campaign of Sen. Barack Obama today clarified its proposal to eliminate all income taxes for seniors making under $50,000, after a new economic analysis from the Tax Foundation criticized the plan for being nearly impossible to implement.

After Foon Rhee of the Boston Globe reported Robyn’s analysis on his blog, “Political Intelligence,” the Obama campaign responded by saying that his plan does actually include a phase-out of the tax break, so that the tax bill would rise gradually above $50,000 in income and there would be no “cliff.”

Robyn welcomed the clarification from the Obama campaign, yet made clear that any phase-out would raise the marginal tax rate for some senior taxpayers.

“While it is good to see that the Obama campaign shedding some light on how they would avoid an income tax ‘cliff’ on seniors,” Robyn explains, “this means that those senior taxpayers making just over $50,000 will see an increase in their marginal tax rate.”

Posted by Jay Hancock at 5:31 PM | Permalink | Comments (0)
        

I respect the Tax Foundation. They do some good work. I frequently make use of their research. But their "analysis" of Obama's proposal to exempt senior citizens making less than $50,000 a year from income tax seems disingenuous. Obama's proposal is a bad idea, but not for the reasons the Tax Foundation gives. The Foundation's Mark Robyn said that, "as stated in his official campaign publications," Obama's plan would instantly make all seniors' income liable for tax as soon as they made more than $50,000, even if it was $50,001. I quote Robyn:

The reason this happens is that Obama's plan, as stated in his official campaign publications, throws taxpayers directly into the 15% bracket as soon as they cross the $50,000 threshold, making them fully liable for income tax on all of their taxable income (around $29,000 for seniors after the standard deduction and personal exemptions).

Nobody would create tax law this way, and this is not what Obama proposed. The U.S. income tax system is composed of brackets, and in each higher bracket only the marginal income is taxed at the higher rate. Single filers pay 15 percent on income between $8,026 to $32,550. The next bracket is 25 percent. If you make $32,600, does that mean you have to pay 25 percent on the whole $32,600? No, only on the last $50. Obama's plan would work in a similar way, taxing seniors' income below $50,000 at zero with some kind of phase-in tax for income above that.

I asked Tax Foundation spokesman Matt Moon for the evidence, supposedly from the Obama campaign itself, that the candidate would throw seniors into the 15 percent bracket for all income after they crossed 50K.

Moon's reply:

The whole point of Mark's analysis, which you can find here: http://www.taxfoundation.org/publications/show/23525.html, is that Obama does not include the crucial details about whether or not there would be a phase-out. Mark is not saying that the Obama plan, which is here: http://www.barackobama.com/issues/pdf/FactSheetSeniors.pdf specifically states that they're placing those above the $50K threshold in the 15% bracket; he's saying that a plain reading of Obama's campaign plan makes no mention of a phase-out, which therefore assumes that there would be an "income tax cliff."

"Mark is not saying that the Obama plan... specifically states that they're placing those above the $50K threshold in the 15% bracket."

That's exactly what Mark is saying. Go read it. The Tax Foundation misrepresented Obama's plan, and it's hard not to believe it was intentional. They took a blurb from a campaign brochure and treated it like the definitive statute. The Boston Globe blogged about the Tax Foundaton piece today and later added this clarifier:

UPDATE: The Obama campaign disputes the Tax Foundation's analysis, saying that his plan does actually include a phase-out of the tax break, so that the tax bill would rise gradually above $50,000 in income and there would be no "cliff."

Economic adviser Jason Furman said while there's no specific proposal, Obama's plan includes $5 billion for the tax break, plus another $2 billion for the phase-out, which would be designed later.

Of course.

Posted by Jay Hancock at 5:12 PM | Permalink | Comments (1)
        

Nationwide consumer spending fell in June, adjusted for inflation. Many economists expect the same for July when the numbers come in. This is the first time consumer spending has fallen since the early 1990s.

Research by Rockville-based ChangeWave gives a vivid look what’s going on. The firm surveyed more than 4,000 people and concluded that Washington’s $150 billion fiscal stimulus isn’t having the hoped-for effect. Here are a few responses. Maybe you’ll get some ideas.

-- “I’ve quit eating steak, lobster, and expensive Tex-Mex. I’m searching out all low cost options – eating hamburgers, not ordering drinks or other costly extras with meals.”

-- “Clothing and shoes are now from the discount store.”

-- “Discontinued $129.00 per month Time Warner digital cable TV service and went back to using a free antenna; changed cell phone plan from $120.00 per month down to $45.00 per month; eliminated storage space rentals.”

-- “Buying auto parts to repair my car rather than spending money on a newer car.”

-- “More discount Internet shopping without tax or shipping to replace purchasing from local or national merchants. Shopping more bulk at discount warehouses. Track grocery sales and double/triple coupons.”

-- “Netflix used instead of going to movie theater.”

-- “Drink coffee at home.”

Posted by Jay Hancock at 12:02 PM | Permalink | Comments (0)
        

Recent years have seen the the most vigorous worldwide growth in decades. This is coming to an end, which is why oil prices are declining. Today's headlines in Britain saying that the economy was flat in the latest quarter are but one piece of evidence. From the Daily Telegraph:

The UK economy ground to a standstill last quarter, putting to an end the country's longest stretch of growth in more than a century.

Britain's gross domestic product failed to expand in the three months to the end of June, figures from the Office for National Statistics showed today. The figure was worse than economists had expected and weaker than an initial estimate for the period.

The news delivers a huge blow to Gordon Brown whose popularity is plunging as the economy heads toward its first recession since the early 1990s.

It will also add pressure on the Bank of England to put aside its concern about the inflation threat and deliver the cuts in interest rates signalled in the Inflation Report earlier this month.

Posted by Jay Hancock at 11:14 AM | Permalink | Comments (0)
        

No big surprises that I could see in Bernanke's big speech in Jackson Hole today. Some of the more interesting bits:

Although we have seen improved functioning in some markets, the financial storm that reached gale force some weeks before our last meeting here in Jackson Hole has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment. Add to this mix a jump in inflation, in part the product of a global commodity boom, and the result has been one of the most challenging economic and policy environments in memory...

In view of the weakening outlook and the downside risks to growth, the Federal Open Market Committee (FOMC) has maintained a relatively low target for the federal funds rate despite an increase in inflationary pressures... Nevertheless, the inflation outlook remains highly uncertain, not least because of the difficulty of predicting the future course of commodity prices, and we will continue to monitor inflation and inflation expectations closely...

The collapse of Bear Stearns was triggered by a run of its creditors and customers, analogous to the run of depositors on a commercial bank. This run was surprising, however, in that Bear Stearns's borrowings were largely secured--that is, its lenders held collateral to ensure repayment even if the company itself failed. However, the illiquidity of markets in mid-March was so severe that creditors lost confidence that they could recoup their loans by selling the collateral. Many short-term lenders declined to renew their loans, driving Bear to the brink of default...

Going forward, a critical question for regulators and supervisors is what their appropriate "field of vision" should be. Under our current system of safety-and-soundness regulation, supervisors often focus on the financial conditions of individual institutions in isolation. An alternative approach, which has been called systemwide or macroprudential oversight, would broaden the mandate of regulators and supervisors to encompass consideration of potential systemic risks and weaknesses as well...

Posted by Jay Hancock at 10:43 AM | Permalink | Comments (0)
        

Excellent David Leonhardt piece (actually, that's redundant) in the upcoming New York Times Sunday magazine on Obama's economic soul. The gist:

With Obama, there is vast disagreement about just how liberal he is, especially on the economy. My favorite example came in mid-June, shortly after Obama named Jason Furman, a protégé of Robert Rubin, the centrist former Treasury secretary, as his lead economic adviser. Labor leaders recoiled, and John Sweeney, the head of the A.F.L.-C.I.O., worried aloud about “corporate influence on the Democratic Party.” Then, the following week, Kimberley Strassel, a member of The Wall Street Journal editorial board, wrote a column titled, “Farewell, New Democrats,” concluding that Obama’s economic policies amounted to the end of Clintonian centrism and a reversion to old liberal ways...

I have spent much of this year trying to get a handle on what is sometimes called Obamanomics and have come away thinking that Obama does have an economic ideology. It’s just not a completely familiar one. Depending on how you look at it, he is both more left-wing and more right-wing than many people realize.

Posted by Jay Hancock at 9:55 AM | Permalink | Comments (0)
        

I'll be on Fox Business with Stuart Varney at some point between 1:15 and 2 or so to talk about this column:

In 1993, Defense Secretary Les Aspin invited more than a dozen CEOs of big weapons and aerospace companies to dinner at the Pentagon. In what has become known as the Last Supper, he shocked them by saying that, with the end of the Cold War, America had too many defense contractors and that the companies needed to merge or die.

Merge they did. But 15 years later, as the fiasco with the Air Force's tanker contract and widespread Pentagon procurement dysfunction demonstrate, it's not clear that fewer contractors is better. Monopoly-like power exercised by a few dominant vendors is no better, it turns out, in the defense industry than it is in software, electricity or cable TV.

The next president ought to consider undoing what Aspin wrought and spurring a Ma Bell-like breakup of dominant defense companies.

Sometimes for entertainment's sake these cable TV guys like to ambush their more-obscure guests (like me). I asked the booker: "It would help to know beforehand if Stuart thought the column was brilliant or stupid." She replied: "I’m under the impression that Stuart likes it. Will let you know if that’s not the case, though."

Posted by Jay Hancock at 9:41 AM | Permalink | Comments (0)
        

A thoughtful reader responds to Wednesday's column opposing the building of a liquefied natural gas terminal at Sparrows Point. I'll respond to some of her points later. The gist of her email:

It is so frustrating to read about the risks of the LNG plant in terms of catastrophic failure when that is the least likely accident to happen. Go to the Hess Terminal and watch them unload the tankers- watch who is guarding them.

Good Day Mr. Hancock, I read your article in the paper today regarding the LNG plans, and wanted to balance your LNG/terrorist concerns with a reminder of the explosive chemicals and fuels currently being brought in to the upper harbor by unescorted barges daily. Toluene, Benzine, jet fuel, gasoline, etc. are brought in on a regular basis, are more dangerous and have a higher risk of accident because they are unannounced and unescorted and travel along the same bay channels as the speed boaters and fishermen who do not use required communication, and do not respect the cumbersome nature of the ships and barges they cross in front of and block. Please do the research on what is brought in to Baltimore Harbor daily and weekly. Quoting an accident that happened in 1944 " It is also true that the 1944 LNG accident that killed 128 in Cleveland resulted from virtually nonexistent safety standards" is fear mongering- why discuss an auto accident from 1935 against cars equipped with side-impact air bags? It doesn't make sense, it just scares people.

One reason no one has raised a fuss about the gasoline tankers and other extremely volatile chemicals coming through the Harbor is because no one made a scare film about them and fed exaggerations and lies to an uneducated public about them.

To really scare someone, tell the folks who just spent 600k on a town house a block away what a true terrorist attack object the gas storage tanks at 95 in Federal Hill are- if they were to explode the damage would reach the Washington Monument many blocks away, the tunnel would crack and flood and much greater impact would be felt by that. No one has brought that up yet.

It is so frustrating to read about the risks of the LNG plant in terms of catastrophic failure when that is the least likely accident to happen. Go to the Hess Terminal and watch them unload the tankers- watch who is guarding them- And, Homeland Security required all businesses on the water such as Hess to illuminate the waterfront at night- check out Amoco- they are pitch black, even 4 years after the mandate - an easy access for terrorists. Again, please do the research and balance your opinion on this proposal. Feeding fear with incorrect or incomplete information is a disservice to the citizens who will be affected. Nothing is without risk, but the very nature of the cooled liquefied natural gas would cause it to boil off should there be a leak, not rolling waves of vapors which will bring an Armageddon to Dundalk the way the fear mongers have portrayed it. The best use of the point at Sparrows Point would be a wind farm, but given the "it's ugly" reaction all wind farm proposals have brought, that will not come to pass. Thanks for taking the time to read this, and hopefully follow through with research- you have a strong voice in the community, and a great opportunity to bring the reality of what travels the bay every day to the citizens who are afraid of one of the safest cargoes to come to Baltimore harbor. And, no I don't work for AES, but my husband is in the marine industry and knows what travels when and where and how- and what he knows about the cargoes scare me. And, yes, if I was given a house in Dundalk or Turner's Station, I'd happily live there. Thanks again for taking the time to read this,

Posted by Jay Hancock at 11:39 AM | Permalink | Comments (4)
        

Michael Phelps? Usain Bolt? What about Wu Dianyuan and Wang Xiuying? From the New York Times:

... But the Beijing police still sentenced the two women to an extrajudicial term of “re-education through labor” this week for applying to hold a legal protest in a designated area in Beijing, where officials promised that Chinese could hold demonstrations during the Olympic Games.

They became the most recent examples of people punished for submitting applications to protest...

It is unclear why the police have detained people who sought permission to protest. Some political analysts say the police may be refusing to enforce the government’s order, announced last month, to allow protest zones. Chinese lawyers and human rights advocates also suggested a more cynical motivation — that the authorities were using the possibility of legal demonstrations as a ploy to lure restive citizens into declaring their intention to protest, allowing the police to take action against them...

The announcement that the police had set up special protest zones was initially greeted as a positive if modest step that could allow Chinese a new channel to voice grievances otherwise ignored by party authorities and the state-run media.

But with four days left before the closing ceremonies, the authorities acknowledge that they have yet to allow a single protest. They claim that most of the people who filed applications had their grievances addressed, obviating the need for a public expression of discontent...

Officials say that they received 77 protest applications but that nearly all of them were dropped after the complaints were “properly addressed by relevant authorities or departments through consultations.”

At a news conference on Wednesday, Wang Wei, the vice president of Beijing’s Olympic organizing committee, was asked about the lack of protests. He said it showed the system was working. “I’m glad to hear that over 70 protest issues have been solved through consultation, dialogue,” he said. “This is a part of Chinese culture.”

Posted by Jay Hancock at 6:38 AM | Permalink | Comments (2)
        

Democrat Richard Holbrooke, former UN ambassador and broker of the Dayton peace talks over Bosnia, has some (quite) nice things to say about Obama in the September issue of Foreign Affairs. Holbrooke lost out to Madeleine Albright for SS in the Clinton administration.

"It is the differences between Obama and McCain that are truly revealing, and they offer important insights into the values and styles of the two men, their profoundly divergent attitudes toward the role of diplomacy, and their contrasting visions for the United States. Obama's policy proposals—whether on climate change, energy, Africa, Cuba, or Iran—are forward-leaning; he proposes adjusting old and static policies to new and evolving realities. He emphasizes the need for diplomacy as the best way of enhancing U.S. power and influence. On trade, although McCain accuses Obama of neoprotectionism, in fact Obama argues for improving trade agreements to take into account elements such as labor and environmental standards—improvements that would give them more domestic support."

Posted by Jay Hancock at 3:31 PM | Permalink | Comments (0)
        

I have argued that we are in a recession and presented the views of others who agree. Here is some impressive evidence that this is not a recession. UCLA's Edward Leamer has written a modest algorithm (a sequence of instructions that could be programmed into a computer) that, when it runs through the data, declares recessions almost exactly at the same dates that the official (human) committee in Cambridge, Mass., declares them to have occurred over the decades. And the computer says: This is no recession (so far).

I offer here an algorithm that perfectly identifies the ten official NBER [National Bureau of Economic Research] recessions since WWII and that closely reproduces the official NBER monthly peak and trough dates...

The point of an algorithm is to take the guesswork out of the recession definition. For
those who are too busy to read more than one paragraph, here is the punch line: We are
not yet in a recession. For those who insist otherwise, I offer a challenge: What’s your
algorithm?... Bottom line: things have to get much worse to pass the recession threshold.

Given the importance of having some clear definition of a recession, it is more than a little aggravating that the official recessions are decided by a committee of Ph.D. economists. We can just imagine the committee meeting at which the members pour over data displays to try to decide if there was a recession, and, if so, when it began and when it ended. This brings up fantasies of Justice Potter Stewart and other members of the Supreme Court perusing pictures of naked men and women to decide which pictures are pornographic and which are not...

Another of my favorites is “It may not be a recession, but it sure feels like one.” I am
resisting the temptation to write a delicious, salacious, analogous statement for
pornography.

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

Today's column is on the proposed liquefied natural gas terminal at Sparrows Point.

Maryland undoubtedly needs more and cheaper energy, but we're not going to do just anything to get it. We won't strip state forests for fireplace fodder. We won't reverse pollution controls on cars and power plants.

And we shouldn't let ships carrying liquefied natural gas sail into the mouth of the Patapsco River.

Importing small but potentially catastrophic industrial risks into highly populated areas may have been OK for the 20th-century economy. It doesn't work now.

A reader asks:

Ref your article today on the NIMBY LNG terminal proposal. Hard to understand why you didn't mention the existing LNG terminal in Maryland further south on the Chesapeake Bay at Cove Point. They are nearing completion of a new tank and a new pipeline.

http://www.dom.com/about/gas-transmission/covepoint/index.jsp

The tanks are just a couple of thousand feet from homes. See aerial map view on Google
Maps:http://maps.google.com/maps?hl=en&ie=UTF8&ll=38.386948,-76.410041&spn=0.024724,0.055618&t=h&z=15

I didn't mention Cove Point because I ran out of space. Yes, there is an LNG terminal there. Yes, it is expanding and yes, there are nearby homes. The Google Maps link makes this very clear. But the area is still much less heavily populated than Sparrows and vicinity. And the Cove Point terminal has been there since 1972. So I assume many of these homes were built and bought in the knowledge that the LNG plant and the risks were there. That's different from bringing a terminal into an already-populated areas.

Posted by Jay Hancock at 10:03 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Three cheers for everybody for the intelligent, provoking and civil comments (with a few exceptions!) on yesterday's teen-age drinking post. Many argued effectively that kids will drink no matter what the law says. Letting them drink legally at 18 -- and under some kind of supervision rather than secretly -- would cut binge drinking and let them learn to drink responsibly, many say.

When I was in college -- 1974 to 1978 -- the legal drinking age was 18. It don't remember a scarcity of binge drinking. Quite the opposite. Many commenters correctly note that the illicit thrill of underage alcohol is one of its appeals. But legal alcohol is alluring enough -- pleasure-inducing, courage-giving, depression-banishing (temporarily). Taking away the outlaw thrill won't make the stuff unattractive.

Maybe I'm wrong, but I believe that the stigma of illegality (combined with excellent education from the high schools) does keep some kids on the (relative) straight and narrow when it comes to alcohol. However, I fully agree that there continues to be a huge drinking problem in high school and college.

Posted by Jay Hancock at 8:14 AM | Permalink | Comments (17)
        

Pulled from comments: A concise and perceptive observation from someone who says he's a 20-year-old University of Maryland student.

Why would lowering the drinking age aid in stopping binge drinking? It's simple. I'm 20 and I know that when my friends and I are able to get a hold of some alcohol it's an occasion we don't want to pass up because it doesn't happen very often, and so we take advantage of the situation and drink as heartily as we like (some go further then "heartily" and binge). If it was possible to have alcohol any time we liked, it wouldn't be a once in a while deal to get alcohol and we wouldn't feel compelled to take advantage of the situation.

If you never ever get the chance to have a piece of cake and you suddenly are presented with a whole cake, you're certainly going to eat more then if you have the opportunity to eat cake each and ever day. That's all. It's simple.

Posted by Jay Hancock at 7:15 PM | Permalink | Comments (5)
        

The problem with drunk college kids doesn't have anything to do with whether the legal drinking age is 18 or 21. It's that they're high-spirited young adults away from parental supervision for the first time. Exactly how removing the legal barrier between teens and alcohol will reduce binge drinking is a mystery to me. I'm with MADD and Donna Shalala on this one. She sez:

"I ask every higher education leader who has signed to reconsider. I am old enough to remember life on our campuses before the 21 year drinking rule. It was horrible."

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (63)
        

Merrill Lynch cut me off from receiving its macroeconomic analyses, probably because I posted frequent and what the firm regarded as too-extensive excerpts of material it mainly wanted to reserve for clients. But the pieces were hard to resist -- provocative, intelligent and frequently right on the money. Fortunately, market guru John Mauldin has sent out Dave Rosenberg's latest to his email subscribers, and it's a corker. Rosenberg is Merrill's chief North American economist.

He thinks the recession started in January and isn't nearly over. Of course, the radical liberal capitalists at Merrill Lynch are probably making all this up to throw the election to Obama! (If you're mainstream media, mentions of recession bring accusations you're an Obama shill.) A sampling from Rosenberg's piece:

My sense is that we probably aren't even past the halfway point yet of this recession, the credit losses or the house price deflation. Looking at whether equities may have bottomed or not on an intermediate basis, maybe the recent action to the negative side was an important inflection. In terms of what I do, which is trying to tie the macro into the markets, I have a very tough time believing that we have reached anything close to a fundamental low, either in the S&P 500 or in the long-bond yield, for that matter.

I am convinced that when the NBER does make the final proclamation, it will tell us a that recession officially began in January. Of course, to any market person, this would make perfect sense, because of when the S&P 500 peaked. It did a double top into October, right when it usually does, before a recession begins.

Posted by Jay Hancock at 9:43 AM | Permalink | Comments (3)
        

From the Chicago Tribune, news that Mrs. Fields will file for protection from creditors under Chapter 11 of federal bankruptcy law. It's a "pre-packaged" plan, which isn't as dire as an emergency filing. And creditors are supposed to be paid 100 percent. Still, it shows the pressure that luxury foodmakers are under.

Mrs. Fields Famous Brands LLC, the cookie and frozen yogurt company based in Salt Lake City, said it plans to file for bankruptcy and began seeking support from creditors for a "prepackaged" Chapter 11 plan.

The company filed the turnaround plan Friday with the Securities and Exchange Commission. Unsecured creditors would be paid in full under the proposal while equity holders would get nothing. Funds affiliated with Capricorn Investors LP are the majority owners of Mrs. Fields and support the restructuring, according to the SEC filing.

In a prepackaged bankruptcy, creditors vote on terms of the reorganization before the actual bankruptcy filing, allowing the company to emerge from Chapter 11 more quickly. Creditors must vote by Sept. 15.

The company has 1,268 franchised and licensed locations in the U.S. and 21 other countries, the company said in court filings.

Posted by Jay Hancock at 12:20 PM | Permalink | Comments (0)
        

Obama has resorted to temporizing and excuses instead of addressing the Social Security problem head on. He's not going to increase payroll taxes to fill impending Social Security shortfalls for another 10 years. The thinking: Yeah, we know Social Security needs extra revenue, but any change implemented now would have been phased in and wouldn't have had much immediate effect anyway. So we'll just postpone the pain until after my term as president, when we'll hammer people with increases all at once.

Here's Obama economic czar Jason Furman talking to Bloomberg:

``Historically, many tax changes in Social Security have been phased in gradually and usually not effective immediately,'' Furman, Obama's chief economic adviser, said in an e-mailed response to questions. ``You have virtually the same impact on solvency as an immediate change.''

This is just political chickenheartedness. You can argue about the particulars of his plan -- sticking only income above $250,000 a year with the new payroll taxes. (The SS payroll tax tops out at $102,000 this year. Any income above that isn't taxed for SS. Obama's plan would leave a SS-tax-free doughnut hole between 102K and 250K.) But the basic idea of postponing action for a decade is a cop-out. Obama has said there is a "Social Security crisis." He has also said it's not a crisis. But he doesn't deny there's a problem, and most problems don't get better by neglect.

Posted by Jay Hancock at 10:54 AM | Permalink | Comments (4)
        

This must be celebrity mortgage victim day. Donald Trump has agreed to buy Ed McMahon's house -- which was threatened with foreclosure -- and lease it back to him, according to the Los Angeles Times.

Mega-developer and TV personality Donald Trump has agreed to buy Ed McMahon's Beverly Hills house for an undisclosed amount and allow McMahon to continue living in it. Details of the deal are still being ironed out.

"I don't know the man, but I grew up watching him on TV," Trump said in an exclusive interview with The Times.

McMahon, 85, was facing foreclosure within two weeks on his Beverly Hills home of 18 years. The aging television icon, who was Johnny Carson's sidekick for three decades, defaulted on $4.8 million in mortgage loans with Countrywide Financial Corp. He said in interviews that he was unable to work because of a neck injury that occurred about 18 months ago.

Trump said he stepped in because helping McMahon "would be an honor." His plan is to buy the home from the lender and lease it back to McMahon.

"When I was at the Wharton School of Business," Trump said, "I'd watch him every night. How could this happen?"

Posted by Jay Hancock at 5:31 PM | Permalink | Comments (0)
Categories: Celebrity mortgage victims
        

Remember Laura Richardson, the (Democratic) congresswoman from California who defaulted on her mortgage and had her Sacramento home foreclosed on and auctioned? She got it back, but now the city of Sacramento has declared it a public nuisance. From the Los Angeles Times:

First Rep. Laura Richardson was having problems making house payments, defaulting six times over eight years.

Then after a bank foreclosed on her Sacramento house and sold it at auction in May, the Long Beach Democrat made such a stink that Washington Mutual, in an unusual move, grabbed it back and returned it to her.

This week, in the latest chapter in the housing saga, the Code Enforcement Department in Sacramento declared her home a "public nuisance."

The city has threatened to fine her as much as $5,000 a month if she doesn't fix it up.

Neighbors in the upper-middle-class neighborhood complain that the sprinklers are never turned on and the grass and plants are dead or dying. The gate is broken, and windows are covered with brown paper.

"I would call it an eyesore," said Peter Thomsen, a retired bank executive who lives nearby.

The city action was prompted by police action.

Police were twice called to investigate reports of a suspicious person in or around the house, perhaps a homeless man squatting there. Officers called the Code Enforcement Department, which boarded up a broken door.

Posted by Jay Hancock at 3:16 PM | Permalink | Comments (0)
Categories: Celebrity mortgage victims
        

Marylanders are driving a lot less, Mike Dresser and Rona Kobell reported in Thursday’s front-page story in The Sun.

They’re also driving a lot cheaper, according to statistics kept by the Motor Vehicle Administration.

The average price of a new Maryland car bought in June was $23,759, MVA says. That’s the lowest for any month since July 2002, when the average new car cost $23,069. And it’s down 16 percent from the all-time high of $28,184, reached in January 2007.

People are paying less for used cars, too. The average Maryland used-car price in June was $7,826. That’s the least expensive in any month since May 2005. And it’s down 13 percent from the $9,002 high reached in January 2008.

Part of what’s going on, of course, is that people are buying more fuel-efficient cars, which are smaller, contain less steel and are cheaper to make. But there’s also a valuation problem, especially for gaz guzzlers. Some sport-utility vehicles are depreciating almost as fast as a subprime mortgage bond.

A comment by a used-car dealer a couple months ago in The New York Sun offers an extreme case that nevertheless illustrates the overall trend.

“In years past, if a Hummer was bought for $50,000, somewhere after a year the car would be worth something like $40,000 or $42,000,” Philip Rosato, purchasing manager at the Manhattan-based Car Cash, told the newspaper. “Now, if they paid $50,000 – after a year they’d be lucky to get $30,000. There are no takers for vehicles like that, so the prices are going lower and lower. Some dealers are not even taking sport utility vehicles as trade-ins.”
jay.hancock@baltsun.com

Posted by Jay Hancock at 12:44 PM | Permalink | Comments (5)
        

From an Olympics story in the Wall Street Journal:

At a daily press conference Thursday, reporters confronted Olympic officials over the rough handling of a British television journalist by Chinese security forces, and the government's failure to approve bids to demonstrate in designated protest zones...

Security measures have made it difficult for visitors to reach the pavilions of Olympic sponsors, upsetting companies that have spent tens of millions of dollars on promotional campaigns. The parks that China's government announced would be designated for protests have sat empty, while some Chinese who have sought to protest have been detained...

But Ms. Davies [Giselle Davies, spokeswoman for the International Olympic Committee] sounded a different note when asked about the British TV journalist, who was roughed up Wednesday trying to cover a demonstration by a pro-Tibet group. Officials have said that officers confused him for an activist. Ms. Davies said that such actions wouldn't be tolerated. "We don't want to see it happen again," she said.

Posted by Jay Hancock at 10:53 AM | Permalink | Comments (49)
        

Ed Crooke, director and former vice chairman of Constellation Energy and Baltimore Gas & Electric, died of cancer on Sunday. Crooke was part of BGE's old, pre-deregulation guard, headed by Chris Poindexter, which gave way to new leadership following the 2001 terrorist attacks. Constellation had planned to split BGE off as a separate company, and Crooke was going to be its boss. But in the energy market turmoil and general economic chaos that followed 9/11, Constellation's board wisely decided it needed the stable cash flow from the BGE ratepayers to anchor the whole enterprise.

Poindexter gave up the CEO slot to Mayo Shattuck, who until then had been an outside director. Poindexter held the chairmanship for a time. Crooke retired as vice chairman of Constellation/BGE in December 2001, but he stayed on as a member of the board of directors.

Read BGE's statement on Crooke here. Read Fred Rasmussen's obituary here.

Posted by Jay Hancock at 10:39 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Constellation stock is falling again this morning, brushing $60, its lowest level since late 2006. The mojo Constellation got from the BGE rate caps coming off is behind it now. The rate caps disappeared in mid 2006, which reaped huge windfalls for BGE parent Constellation. Why? During deregulation the company took over BGE's former power plants, most of which are driven by coal and nuclear energy. With the deregulated price of electricity being largely set by natural-gas generators, and with natural gas soaring in price, BGE could book huge margin spreads between its cheap fuel costs and the soaring wholesale market price.

That's still largely going on, although the price of coal has zoomed this year, cutting into the cushion. But Wall Street is focusing on other things, such as the profits Constellation makes from playing the energy markets for its own account. Today's column:

A few sentences on page 46 of a financial disclosure that did not change reported profits, sales or net worth caused Constellation Energy Group's prospects to go into brownout this week.

Its shares dropped 16 percent Tuesday. Analysts rushed to downgrade the stock, although one contrarian changed his recommendation from "underperform" to "hold" because the shares had fallen so far.

Standard & Poor's downgraded Constellation bonds to two steps above "junk" status.

A little jumpy, aren't we?

Not at all.

The punishment of Constellation is an encouraging sign that Wall Street is again skeptical of companies that depend on opaque accounting and complex financial bets for much of their profit. A little such skepticism for folks betting on subprime mortgages could have saved a lot of heartache.

Read the whole thing here.

Posted by Jay Hancock at 10:15 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

This morning, from Bloomberg:

Aug. 14 (Bloomberg) -- U.S. consumer prices jumped to a 17- year high in July, reducing the ability of the Federal Reserve to lower interest rates should the economic slowdown deepen.

The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest surge since January 1991. So-called core prices, which exclude food and energy, also rose more than projected.

Year-over-year inflation for Baltimore-Washington was 5.7 percent -- slightly higher than for the nation, according to Labor Department figures.

Posted by Jay Hancock at 10:23 AM | Permalink | Comments (0)
        

In the first sentence, today's column blithely states that we're in a recession.

It might not feel like it, but so far the national recession of 2008 has left Maryland relatively unscathed. As tough as times are in housing, stores, publishing and finance, this state has avoided the blunt trauma visited upon many regions and the nation as a whole.

Having spent 800 words last week arguing why this is a recession even though the "official" judges haven't declared one yet, I suppose I felt I didn't need to repeat the arguments today. Several readers thought I was trying to mislead by not pointing out that the Business Cycle Dating Committee has yet to declare a recession. This email is typical:

Mr Hancock, You are an intelligent man, and I know that you truly understand what constitutes a 'recession'. Sure we have slowed down and there are many problems in particular in the financial area. But, as you well know, a recession is two consecutive quarters with a contraction in the GDP. And we have not had even one yet. Yet in todays business section, you again state on the front page "It might not feel like it, but so far the national recession of 2008....." as if it is a fact, which it is not.

So if you know it,,,and you and your paper continue to push this absolute LIE upon the people of Maryland, what can any observer conclude? That you are liberals, trying to help your Democratic candidates in the upcoming election, as is done continuously in the news section of your Democratic paper every day. by perpetuating lies to scare people.

I think he's right. Feels like a rececssion to me, but the judges haven't ruled yet. I should have ponted this out. (PS. The reader is wrong when he says a recession must be two consecutive quarters of negative GDP. For more, see last week's column here.)

Posted by Jay Hancock at 3:31 PM | Permalink | Comments (1)
        

More bad news for Constellation Energy Group, the Baltimore-based electricity/natural gas giant and the owner of Baltimore Gas & Electric. Standard & Poor's downgraded them this afternoon. The term "credit cliff" used by S&P is a bit ominous, even if CEG is nowhere near the precipice. For the revised collateral liability that S&P refers to, and yesterday's resulting stock whackage for Constellation, see Tricia Bishop's story in today's Sun. From Standard & Poor's, today:

Standard & Poor's Ratings Services lowered its corporate credit rating on diversified energy company Constellation Energy Group Inc. and affiliate Baltimore Gas & Electric Co. (BGE) to 'BBB' from 'BBB+'. The outlook is stable.

The downgrade is based on our assessment of Constellation's liquidity
position following recently disclosed incremental downgrade collateral
requirements for the customer supply and global commodities activities
relating to non-standard contracts. The disclosure relates to potential
collateral calls in the event of Constellation's downgrade to speculative
grade, and has no cash impact. Yet, the disclosure points to a lapse in the
company's risk management and control process. In addition, the growing scope
of riskier unregulated activities, a financial profile that has improved but
still lags our expectations, and the likelihood that the company's
discretionary cash flow position will remain negative through 2009 have
contributed to a downgrade.

This rating action adds to the primary risk we are citing because in and
of itself it modestly increases Constellation's margining requirements. We
have noted in the past that the company could face a credit cliff if it is
downgraded to below investment grade. Such a scenario could affect
Constellation's ability to conduct its customer supply and global commodities
businesses given the meaningful increase in margining requirements. Therefore,
Constellation's ability to deliver expected financial performance is key to
sustaining credit quality. We note that the company's business profile is
strong and expect Constellation to satisfy performance metrics that are
appropriate for the revised rating level, which is the basis for the stable
outlook.

Posted by Jay Hancock at 3:10 PM | Permalink | Comments (1)
        

From a GAO report out today. It's 25 pages long, but here are the most interesting paragraphs. C4ISR stands for Command, Control, Communications, Computers, Intelligence, Surveillance, Reconnaissance.

The Army is in the process of developing and implementing plans to transfer C4ISR functions from Fort Monmouth to Aberdeen Proving Ground. The Army faces some significant challenges and has started to identify mitigation strategies that, if implemented as intended, may lessen the mission-disruption risks associated with the transfer....

First, the Army is facing human capital challenges in hiring a projected 3,700 federal government civilian
employees to fully reconstitute its expected workforce authorization of about 5,100 civilians
at Aberdeen Proving Ground in 2011, which includes a large number of scientists and
engineers with technical expertise. The Army expects that about 2,200 of these new
employees will not be hired until after the slated closure of Fort Monmouth and transfer of
functions to Aberdeen Proving Ground in 2011. Officials project that the workforce will be
fully reconstituted in 2016...

To help mitigate the effects of the potentially smaller and less experienced workforce at
Aberdeen Proving Ground, the Army has identified strategies, including focusing on the
highest-priority workload and deferring some portions of the C4ISR workload, temporarily
transferring some of the workload to other DOD organizations, or hiring additional
contractors.

Posted by Jay Hancock at 12:54 PM | Permalink | Comments (3)
        

Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress. The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period. Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate. "It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.

Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.

Posted by Jay Hancock at 11:08 AM | Permalink | Comments (0)
        

Not so fast, Provident shareholders. A month ago Provident Bankshares Corp. reported its first quarterly profit in six months, prompting its shares to rise from the $5 gutter back to close to $10. Late today, however, Provident said it should have reported a $10.2 million profit last quarter rather than the $15.1 million that lifted the stock. Certain "investment securities" -- it doesn't identify them -- are worth less than what the biggest remaining Baltimore-based banking company had said. The total writedown comes to $16.7 million.

What's more, Provident says that there may be additional writedowns and adds that it will miss its deadline for filing detailed second-quarter disclosures with the SEC. The true value of mortgage securities and other funky debt on Provident's balance sheet...

... has been one of the big questions about this company for almost a year. Like many other financial companies, Provident keeps downgrading its portfolio.

In February I wrote:

Late Tuesday [Provident] announced another probable loss of up to $48 million on real estate bonds and preferred stock.

"This announcement is really Chapter 2" of the January stink bomb, [CEO Gary] Geisel said Wednesday.

Get ready for Chapter 3 - and there's no guarantee this book isn't War and Peace.

Say hello to Chapter 4.

Posted by Jay Hancock at 7:07 PM | Permalink | Comments (0)
        

The Reuters story on Constellation Energy's stock plunge is better. But it doesn't make sense that increased collateral for a multi-step bond downgrade that hasn't happened yet would bang the stock that bad. Is the energy bubble collapsing faster than anybody expected?

NEW YORK (Reuters) - Shares in Constellation Energy Group (CEG.N: Quote, Profile, Research) tumbled nearly 18 percent on Tuesday to their lowest level in almost two years after the power producer said a credit rating downgrade could force it to post billions of dollars in extra collateral.

Constellation said in a quarterly report with the U.S. Securities and Exchange Commission late on Monday that it had underestimated its collateral liabilities by $1.6 billion in the event its debt rating was cut three notches.

High volatility in fuel and electricity prices have increased the risk of a downgrade, and the company could be forced to post $3.37 billion in collateral to cover those contracts if its debt is downgraded three levels.

One analyst said that disclosure coupled with ongoing concerns about the transparency around the company's cash flows were worrying investors.

Posted by Jay Hancock at 4:33 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Constellation Energy stock fell off a cliff today -- down nearly $12 to $61. The AP story trying to explain it is pretty opaque.

BALTIMORE (AP) -- Shares of utility company Constellation Energy Group Inc. plunged Tuesday after analysts raised questions about some aspects of the company's accounting and the implications of a credit downgrade.

Jefferies & Co. analyst Paul Fremont upgraded Constellation stock to "Hold" from "Underperform" on Tuesday, but said in a note to clients that he is looking forward to company executives answering questions about some of its accounting practices at an Aug. 28 meeting in Baltimore.

In particular, Jefferies & Co. said it's puzzled by some of Constellation's characterizations of depreciation, cash flow and mark-to-market adjustments in recent financial material.

The analyst said he is maintaining his 2008 and 2009 earnings-per-share estimates of $5.55 and $6.50, respectively, and a share-price target of $71.

In a separate note, Deutsche Bank analyst John Kiani said Constellation had materially revised its estimate for the amount of incremental collateral obligations it would be subjected to if its credit ratings were downgraded.

Constellation now estimates a three-notch downgrade -- which would place its senior unsecured credit rating in junk status -- would result in cumulative additional obligations of $3.4 billion as of July 31, Deutsche Bank said. That compares with Constellation's estimate of $1.6 billion in its March quarterly report filing with the Securities and Exchange Commission.

Posted by Jay Hancock at 4:27 PM | Permalink | Comments (1)
        

Bias alert: This study is done by the Communications Workers of America, of which I am a member (I think) by virtue of my membership in the Newspaper Guild. There is a political spin -- CWA notes correctly that the U.S. internet infrastructure lags behind that of other developed nations and wants to establish "a national policy to promote universal, high-speed Internet access." But the results, derived from hundreds of thousands of people testing their units on CWA's SpeedTest site, are interesting.

Maryland has the 8th fastest download time, with median download speed of almost 4 megabits per second and median upload speed of 10 mbps. Rhode Island is fastest, at 6.8 mbps download and 16.2 mbps upload. In Alaska, on the other hand, I don't think they're downloading too many pirated copies of Dark Knight on BitTorrent. Median download speed up there was 814 kilobits per second.

You can test your own computer. My Baltimore Sun machine downloaded at 9.4 megabits per second. Median download speed for the nation is 2.3 megabits. In Japan it's 63 mbps, in South Korea, 49 mbps and in France 17 mbps, says CWA.

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

Read the first two (long) paragraphs of this press release. See if you can explain what it's about. It seems to have something to do with the federal penal system. Beyond that I cannot say.

August 11, 2008 - The Open Compliance and Ethics Group (OCEG), a non-profit organization based in Phoenix, Arizona, today announced the release of a major update to its GRC Capability Modelä (Red Book 2.0), the central piece of the OCEG Framework for Principled Performance®. The OCEG Framework also includes the soon to be released OCEG Burgundy Book, which details the assessment criteria and procedures for evaluating governance, risk management and compliance (GRC) systems under OCEG’s GRC Capability Assessment Program™. The public may obtain a copy of the Red Book 2.0 at http://www.oceg.org/view/RB2Project and may submit comments through September 30, 2008.

“OCEG’s GRC Capability Model is the only publicly vetted framework I know of, that has taken the best from every other set of standards or guidance and combined them to establish clear and concise practices for an effective approach to compliance, wherever you operate,” said former vice-chair of the U.S. Sentencing Commission, John Steer, who is also a senior partner with Allenbaugh Samini LLP and a Red Book steering committee co-chair. “It takes the basic structure for effective compliance in the federal sentencing guidelines and fills it out with a wealth of useful guidance for practitioners and compliance professionals. I am pleased to have been involved in its development and I encourage everyone to review it and use it."

Brings to mind Steve Martin's plumber convention joke.

So, these two guys are working on a golf course reticulation system (chuckles) and the first guy says to his buddy 'George, I can't get this flange backed off.' Well, old George looks over and says 'Jeez Pete, you need to use a 3/4" gangly wrench on a Hobson spigot'. (snicker). Pete says 'I am, pass me yours, maybe mine's broken'. So George... (guffaw).. George passes his tool across .. (snort).. and then Pete says 'GANGLY wrench? I thought you said DANDY wrench!!'.. (paroxysms of self induced laughter)... )...(looks offstage as if in response to a director's cue) ... Sooooooo, folks, there's a big plumbing convention starting TOMORROW apparently...

Posted by Jay Hancock at 2:06 PM | Permalink | Comments (0)
Categories: Stupid PR pitches
        

And none of it is mine. There are several James Hancocks and even a James Hancock Jr., but they aren't me. To see if any of the assets are yours, use the unclaimed property search engine on the comptroller's Web site.

Posted by Jay Hancock at 1:19 PM | Permalink | Comments (2)
        

A reader asks:
“I read your recent blog about Merrill Lynch’s sale of mortgage securities for a fraction of their face value. I have a sizable (for me) investment portfolio at Merrill. Fortunately, I do not own any Merrill stock. Should I be concerned about a Bear Stearns-type collapse?”

My reply:
I know of no reason why investments held/managed by Merrill Lynch would be in jeopardy. The only Bear Stearns clients who lost money in connection with the firm’s collapse were the ones who invested in its ill-fated hedge funds, Bear Stearns stock or directly in subprime mortgage bonds.

Bear Stearns investment clients who owned, for example, Google or Procter & Gamble stock are fine, except to the extent that those stocks are affected by the general market. Bear agreed to be absorbed by JPMorgan Chase, and customer accounts were unmolested.
The Securities and Exchange Commission requires brokers to strictly separate their capital from that of customers. In the event that doesn’t happen, there’s another safety net – the Securities Investor Protection Corp. The SIPC makes investors whole if client assets are missing. Most investment firms must be SIPC members.

That said, remember that the SIPC is not the equivalent of the Federal Deposit Insurance Corp. for banks, ensuring that what you put in is what you get out. Brokerage accounts, as investors can attest this year, are subject to violent market swings even if the broker is flourishing.

Posted by Jay Hancock at 10:34 AM | Permalink | Comments (0)
        

From Joseph Stiglitz, Nobelist and former World Bank chief economist, quoted by Mark Thoma:

Failures to promote social solidarity can have other costs... [For example, the] cost of incarcerating two million Americans – one of the highest per capita rates (pdf) in the world – should be viewed as a subtraction from GDP, yet it is added on.

Posted by Jay Hancock at 10:32 AM | Permalink | Comments (0)
        

As Merrill Lynch's David Rosenberg and Big Picture's Barry Ritholtz pointed out yesterday, every 300-point rally in the history Dow Jones Industrial Average has come during bear markets -- times of overall steep stock declines. Barry's conclusion: "Hence, the odds are against making money chasing these 300+ point rallies."

Today's stock market would seem to reinforce the trend. The Dow was up 300+ points on Tuesday. But following a new spike in initial unemployment claims this morning and disappointing retailing news, the Dow at this moment is down 135 points.

Posted by Jay Hancock at 10:04 AM | Permalink | Comments (0)
        

Yesterday's posts included a bit about Maryland restaurant employment, which seems to be pretty healthy if you believe the Bureau of Labor Statistics. Here is a chart of the National Restaurant Association's "Restaurant Performance Index" for the country, which doesn't look so healthy.

"The June decline in the Restaurant Performance Index was the result of a drop in the current situation component," said Hudson Riehle, senior vice president of research and information services for the Association. "Restaurant operators reported negative same-store sales and customer traffic levels in June, after posting somewhat stronger results in May." "The uncertain economy and rising food costs continue to create a challenging business environment for restaurant operators," Riehle added. "A record 29 percent of restaurant operators said the economy is the number-one challenge facing their business, while 22 percent identified food costs as their top challenge."

Posted by Jay Hancock at 4:55 PM | Permalink | Comments (0)
        

From Reuters:

BOSTON (Reuters) - Massachusetts' $50.6 billion pension fund on Wednesday fired a Legg Mason Inc (NYSE:LM - News) unit run by fund manager Bill Miller and four other fund firms from managing a $1.8 billion U.S. stocks portfolio due to poor performance.

The pension fund, at a board meeting, approved transferring about $1.4 billion of the $1.8 billion portfolio to asset manager State Street Global Advisors, a unit of State Street Corp (NYSE:STT - News). State Street will manage the assets as an index mandate linked to the Russell 3000 index portfolio, the fund said.

The remaining assets will be put into a new fund-of-hedge-funds portfolio that will seek returns in excess of market returns, the pension fund's officials said.

Stanley Mavromates, chief investment officer of the pension fund, told Reuters on the sidelines of the board meeting that of the $1.8 billion, Legg Mason had managed $637 million, Gardner Lewis and NWQ managed $347 million each, Ariel oversaw $246 million and Mazama managed $241 million.

"All five of these managers exhibit inconsistent performance or a high level of tracking error," the pension fund's report said, adding that had caused the fund's $15 billion U.S. stocks portfolio to lag its benchmark over one, three and five-year periods ended May 31.

Posted by Jay Hancock at 2:39 PM | Permalink | Comments (2)
        

Howell Raines, former editor of the New York Times, says:

As for shallow journalism that helps Big Oil, Steele makes the point that the newsrooms that were once staffed by the redistributionist children of the New Deal and the A.F.L.-C.I.O. are now populated with the children of Reaganomics: “Younger reporters come out of a mind-set that the market rules, taxes are evil, and government ought to let these people in the oil industry go about their business.”

Then there is the remarkable job that the oil companies have done in persuading network-TV anchors and correspondents to depict them as they want to be seen: powerless victims of a supply-and-demand cycle that is as immutable as gravity and as random as lightning. Congress, responding to demands for tougher laws on oil speculation, would prefer to blame environmental regulations. Much of the context-free reporting about what the executives say, in Congress and on television, is marked by breathtaking gullibility.

New York Times business columnist Joe Nocera says:

Anyway, I just read, somewhat dumbfounded, his latest column. It’s about how all of us in business journalism are being sandbagged by those awful people running Exxon Mobil and the other major oil companies, who are busy gouging us while tossing the press their “malarkey” about supply and demand being behind the rise in oil prices. Raines, apparently, is among the legions who believe it’s all a big plot by Big Oil, which could bring down the price with a snap of its powerful finger. Well, yes, malarkey is the right word — but it’s a word that more appropriately describes Raines’s column.

I'm mainly with Nocera on this one. I have no doubt that oil companies are up to some funny business. Lose the outrageous tax breaks and badger Big Oil to increase exploration. Raise taxes on Big Oil. Drilling in ANWR to increase supply is a fantasy. But Raines's portrayal of a vast, Enronesque conspiracy is short on details. In the Raines casebook, huge profits alone are proof of Big Oil's turpitude. Especially chilling is the final paragraph, remarkable in its 10th-grade understanding of how companies work. Apparently according to Raines, any gross margin on a business's books is "price manipulation." This guy once ran the New York Times?

Now, let’s say you’re an oil company selling bulk gasoline, and suppose your inventory contains some gasoline made from $140-a-barrel oil and some that was purchased for $75 a barrel. That leaves a lot of room for price manipulation. But please, whatever you do, don’t think for a minute that’s what Tillerson and Exxon Mobil are up to. Just like you and me, they are powerless slaves in the fields of supply and demand. Now tote that barge, lift that barrel.

Posted by Jay Hancock at 10:26 AM | Permalink | Comments (1)
        

As Elizabeth Large notes on her blog, restaurants continue to bite the sawdust. This suggests larger economic weakness. Restaurants are highly visible indicators of economic health or distress. They multiply or fold according to what's going on in the economy as a whole -- only in exaggerated movements. Because restaurants get discretionary spending, they're often the first to perk up when the economy is improving and the first to feel pain when things go bad.

But when you look up the accounts at the Labor Department, restaurants seem to be doing fine. There were 1,700 more restaurant and bar jobs in metro Baltimore in June than there were a year previously. And there were 3,800 more restaurant and bar jobs statewide. The graph below of metro Baltimore restaurant/bar employment shows what's going on -- peaks and dips according to season (restaurants staff up for the summer tourism business) but progressively higher peaks each year. I have no doubt that restaurant profits are getting killed by soaring food prices. But this is not a picture of an economy in serious trouble.

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

Financial outrage story of the day. Freddie Mac CEO Richard Syron, who steered the company into the position of having to be bailed out with potentially billions in taxpayer money, ignored warnings about bad loans and, not coincidentally, collected enormous chunks of compensation tied to the amount of business Freddie was doing. From the New York Times:

The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others.

That chief executive, Richard F. Syron, in 2004 received a memo from Freddie Mac’s chief risk officer warning him that the firm was financing questionable loans that threatened its financial health...

Mr. Andrukonis was not the only cautionary voice at Freddie Mac at the time. According to many executives, Mr. Syron was also warned that the firm needed to expand its capital cushion, but instead that safety net shrank. Mr. Syron was told to slow the firm’s mortgage purchases. Instead, they accelerated.

Those and other choices initially paid off for Mr. Syron, who has collected more than $38 million in compensation since 2003.

But when housing prices began declining in 2006, choices at Freddie Mac and Fannie Mae proved disastrous. Stock prices at both companies have fallen by more than 60 percent since February, destroying more than $80 billion of shareholder value.

More than two dozen current and former high-ranking executives at Freddie Mac, analysts, shareholders and regulators said in interviews that Mr. Syron had ignored recommendations that could have helped avoid the current crisis.

Posted by Jay Hancock at 10:34 AM | Permalink | Comments (1)
        

Oil is down to $119 this morning, boosting stock markets and continuing the slide that began in the middle of last month.

LONDON (Thomson Financial) - Oil prices slumped beneath 119 dollars a barrel again on Tuesday, as slowing US demand for energy offset tensions over crude-rich Iran, traders said.

Crude futures also slid as Tropical storm Edouard was set to cause at worst only small damage to energy installations in the Gulf of Mexico, analysts said.

Brent North Sea crude for September delivery dropped 2.14 dollars a barrel to 118.54 dollars in electronic trading.

New York's main contract, light sweet crude for September shed 2.01 dollars to 119.40 dollars a barrel.

Posted by Jay Hancock at 10:06 AM | Permalink | Comments (0)
        

West Virginia has approved the "Trail" transmission line that will help relieve megawatt congestion in central Maryland, prevent blackouts and potentially alleviate high electricitiy prices. The project still needs lots of other approvals.

From the Charleston Gazette:

The state Public Service Commission late Friday approved Allegheny Energy's plans to build a huge electric transmission line that will stretch across much of Northern West Virginia.

Just hours before a midnight deadline, commissioners issued a "certificate of public convenience and necessity" for the Trans-Allegheny Interstate Line, being promoted by Allegheny as TrAIL. The 500-kilovolt transmission line will run from southwestern Pennsylvania across West Virginia and into Northern Virginia.

From Marylanders for Reliable Power:

Calling it "a significant step in the right direction," Marylanders for Reliable Power spokesman H. Russell Frisby praised the decision of the West Virginia Public Service Commission, rendered August 1, 2008, to permit construction of TrAIL, the Trans-Allegheny Interstate Line through 114 miles of West Virginia...

According to Frisby, "The construction of this line is a starting point for easing the region's badly congested power grid. The expansion of transmission capacity will allow economic devleopment and help to enture reliable electricity to one of the nation's fastest growing areas. However, it is only a start, and, unfortunately, it will not solve Maryland's critical electricity shortage."

From West Virginia Public Broadcasting:

Landowners along the proposed route fought the new transmission line, but earlier this year, officials with Allegheny Energy made two concessions that paved the way for PSC approval – they changed the route to more closely follow existing powerlines, and they agreed on a package of rate reductions negotiated in part by Governor Joe Manchin. The agreement also included a promise to move a transmissions operations center and dozens of jobs to West Virginia.

The fight isn’t over yet, though. Regulators in Virginia and Pennsylvania still have to approve the line, and the West Virginia chapter of the Sierra Club is planning to challenge the PSC decision in state Supreme Court.

Posted by Jay Hancock at 4:41 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Dear Mr. Hancock, I have a question for you and I hope you can help me. I've been holding on to 20 - 1 oz. gold krugerands in a safe deposit box for over 20 years. Most of them are Canadian with the maple leaf on one side and a few are from South Africa. Gold is very high. I feel like I should sell them, but I don't know what to buy. The economy is so unstable right now. What would you do if these were your gold pieces? Also, where do you sell them?

Gold has done quite well, tripling in price (in dollars) since 2002. The answer, of course, depends on her circumstances. What portion of her assets does gold comprise? Is she diversified with other investments in stocks and bonds? Does she need to raise cash soon? If gold is a relatively small portion of her assets, and she doesn't need the money, then I see no reason to sell. By investing in gold she has bought insurance against paper currencies managed by bureaucrats in the the Federal Reserve and the European Central Bank. The need for that insurance has by no means disappeared. Professional traders may see reasons to dump gold (slowing world economy, long-term forces that will quell inflation etc.)

But average investors whose gold makes up 5 percent or 10 percent of their net worth shouldn't try to time these things. "The economy is so unstable now," says my correspondent. That's a reason to own gold. You don't buy gold to make a thousand dollars or five by speculating on its price. You buy gold as a doomsday investment and hope you never have to redeem it.

Posted by Jay Hancock at 10:51 AM | Permalink | Comments (0)
        

The most under-covered story the last two weeks is the plunge in the price of energy other than crude oil. It offers a little hope for lower future heating bills than we once might have expected.

Prices for electricity and natural gas have fallen even more than those of crude, which has won all the headlines and gone from $145 to $125 a barrel. Mid-Atlantic electricity for January delivery has fallen by 24 percent since early July. Natural gas is down about 20 percent.
To be sure, even declines of that magnitude won’t free cash for a shopping spree or vacation. Natural gas prices are still higher than at any time since right after Hurricane Katrina in 2005. Electricity prices have fallen back to their levels of February and March, when nobody was calling kilowatts “cheap.”

But if they hold up, the declines will make future utility bills lower than they might have been. Avoiding another bad hurricane and disruption of natural gas shipments on the Gulf Coast is key. So is the strength of the economy. The weaker the growth, the likelier electricity and gas prices will be to stay lower.

Baltimore Gas and Electric has already bought its electricity supply through next May. So cheaper wholesale electricity now won’t affect BGE’s standard rate this winter. But soon BGE will shop for future periods. And a continued decline could induce independent vendors to try to undercut BGE’s standard price this fall.

For BGE’s standard natural gas service, which moves with the natural gas spot price from month to month, the lower, the sooner, the better.

Posted by Jay Hancock at 2:09 PM | Permalink | Comments (1)