After December progress in working through the inventory of houses sitting on the market, we had a setback in January. Sales of existing homes as well as new homes were a big disappointment.

Both housing sales indicators fell to their lowest levels in years (seasonally adjusted to reflect January's slow pace compared with other months). Thousands bought up houses at bargain prices, especially in California and Nevada. The median sales price nationwide for a house sold in January plunged 15 percent, to $170,000, from the level a year earlier. That was the lowest level since 2003, when the housing bubble was just starting to inflate. But overall the results were weaker than what economists expected.

We need one more ingredient to move the lumber in sufficient volume to get the housing crisis behind us: even lower mortgage rates. There has been progress. Thanks to action by the Federal Reserve in the long-term lending markets, the fixed, 30-year mortgage rate plunged from 6.4 percent in October to around 5.2 percent now. But it still hasn't dipped below the magic 5 percent. Home loans of 4.5 percent could really accelerate the recovery.

In December the Fed said it would buy "large quantities" of mortgage bonds and debt issued by mortgage agencies to get rates down. It also said it "stands ready to expand its purchases" if needed. Seems like it's time to do so.

Posted by Jay Hancock at 9:02 AM | Permalink | Comments (5)
        

An alert reader points out that Tribune's linking policies and terms of service are almost as tedious and dumb as Constellation/BGE's. Tribune owns The Sun. But Constellation's still says you have to ask it for permission to even link in the first place. Tribune says you are welcome to link unless Tribune asks you not to.

Welcome to tribune.com! We have developed these Terms of Service to govern your use of tribune.com. Your use of our site tells us you have read and agreed to these Terms of Service . Please read them carefully. This Terms of Service is a binding contract regarding your use of tribune.com. If you do not agree with any of these terms, please exit tribune.com.

Copyright. All information, content, services and software displayed on, transmitted through, or used in connection with tribune.com, including for example news articles, reviews, directories, guides, text, photographs, images, illustrations, audio clips, video, html, source and object code, trademarks, logos, and the like (collectively, the "Content"), as well as its selection and arrangement, is owned by Tribune Company, and its affiliated companies, licensors and suppliers. You may use the Content online only, and solely for your personal, non-commercial use, and you may download or print a single copy of any portion of the Content solely for your personal, non-commercial use, provided you do not remove any trademark, copyright or other notice from such Content. If you operate a Web site and wish to link to tribune.com, you may do so provided you agree to cease such link upon request from tribune.com. No other use is permitted without prior written permission of tribune.com. The permitted use described in this Paragraph is contingent on your compliance at all times with these Terms of Service.

Posted by Jay Hancock at 3:23 PM | Permalink | Comments (0)
        

I have never seen this before. Whatever you do, don't link to this site!!! You would think that BGE/Constellation's lawyers have better things to do.

If you are interested in linking to our Web site, you must first notify us by sending notice to our Webmaster per the contact information below. You must include your name, organization name, contact information (including phone number and e-mail address), URL of your site, and a list of any URLs from which you want to link to our Web site.

1. You must link to the home page only. Links to other pages on our Web site are prohibited.

2. Links must only be text-based using the words "Constellation Energy" and "www.constellationenergy.com", or "Baltimore Gas and Electric Company" and "www.bge.com". You may not use these words, or any of our logos or other marks as a link or in any other way. By linking, you acknowledge and agree that all rights to these words and marks, including but not limited to all content appearing on our Web site and the design of our Web site, belong solely to us.

3. Framing is not permitted under any circumstances. You may not create frames around our Web site or use any other technique that alters in any way the visual presentation or appearance of our Web site.

Posted by Jay Hancock at 10:17 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Business Week is out with its annual list of U.S. companies displaying the highest in customer service standards. Baltimore financial manager T. Rowe Price is No. 9, up there with companies such as Amazon, Hewlett-Packard, Jaguar, Ritz-Carlton and Keybank.

Of T. Rowe customers surveyed, 46.36 percent "would definitely recommend the brand," while 44.68 percent "will definitely repurchase." Those percentages were lower than for other customer service champs -- but hey, it's the financial services industry in the worst bear market in decades. T. Rowe ranked higher than other financial services champs American Express and Charles Schwab.

Posted by Jay Hancock at 10:00 AM | Permalink | Comments (0)
        

Today I present my biennial anti-Dow column. They never seem to make any difference. Today's starts out:

The poor Dow Jones industrial average. It's under attack again, and not just by fearful investors dumping shares and driving it toward 7,000.

"Some critics say the Dow is an inherently flawed gauge of overall market activity," The New York Times reported in 1986.

They're still saying it, only louder. Poorly designed, more than a century old, the Dow is less relevant than ever. For all the alarm it is causing, the diving Dow actually understates the fear in the economy and the stock market.

Here is the first Hancock anti-Dow column, from April 4, 1999:

DOW 10,000? Ignore those headlines.

"The Economy" is here to tell you that the Dow Jones industrial average has been propped up by shadowy East Coast power brokers who have a big stake in the bull market.No, not the Fed.

The Dow was "adjusted" March 17, 1997, by the people who invented it: Dow Jones & Co., publishers of the Wall Street Journal. A committee of green-eyeshade types juiced the lineup, blackballing four down-at-heel Dow members and picking ringers as replacements.

Out went Bethlehem Steel, Woolworth, Texaco and Westinghouse. In came Johnson & Johnson, Wal-Mart, Hewlett-Packard and Travelers. One eighth of the Dow membership changed that day, but you'd never know it from looking at those mountainous Dow graphs. The plot line rises unbroken, one pure Dow, as it was and ever shall be.

Without the switch, by my calculation, the Dow would have been near 9,000 last week. Not 10,000.

Bethlehem Steel is worth $8 a share these days -- same as two years ago. Woolworth, now called Venator, sells for $7, one third its 1997 value. Meanwhile, Johnson & Johnson is up by half. Wal-Mart has tripled. The new ingredients added some fizz.

It's no crime. Dow Jones has been fiddling with the blend of 30 firms since shortly after the index was created and included companies like U.S. Rubber and National Lead. The 1997 change was only the latest of many.

The Dow is supposed to reflect big business, the thinking goes, and these days big business is more about computers and financial products than oil wells and dime stores.

Here's the point: By discriminating against sunset companies and favoring growing ones, the Dow has a selection bias as big as Manhattan. The Dow is not the economy. It's not even the stock market. It's a slice of the stock market as seen by a few people in New York who "could run into somebody in the men's room" to start talking about the next Dow makeover, as index editor John Prestbo told Fortune magazine.

Science it ain't.

What's more, there is some conflict of interest. Don't make too much of this, but the ascent of Dow Jones the index clearly helps Dow Jones the company.

While the Dow is up more than 10 percent in the past year, Standard & Poor's index of 400 mid-size U.S. companies is flat, and S&P's 600 smaller-company index has plunged by a fifth.

"The Dow has been given this life of its own. The higher it goes, the better," said Donald J. Cunningham, a professor in the educational psychology department at Indiana University. "It is kind of like this religious symbol, in that we're bowing to it."

Cunningham is director of IU's Center for Applied Semiotics. Semiotics is the study of symbol, sign and metaphor; its most famous practitioner is novelist Umberto Eco. As any semiotician can tell you, the totems that lend meaning and direction to our days aren't necessarily the same as reality.

"You have to have stories you tell about the way things are," Cunningham said. "Whether or not they are true isn't really important."

Take the Dow. "The numbers mean nothing," Cunningham said. "You can re-sort the stocks. Ten thousand is as meaningless as 32 on the temperature scale. What does it mean? If you convert to Celsius, nothing. Well, somehow we have equated this Dow index with the health of our economy."

Cunningham isn't the first person to connect stocks with religion. "The Market as God" is the title of Harvey Cox's recent article in Atlantic Monthly.

French mathematician Blaise Pascal argued that rational people should believe in God because if you bet on God and he's real, the rewards are infinite. And if God is not real, there's no downside.

You can't say that about the Dow.

But salvation feels good meanwhile. Pay no attention to that man behind the curtain, er, men's room stall.

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (3)
        

A few months ago I wrote about the amazing Old Line Bancshares, based in Bowie, which at the time had one nonperforming loan (which was being paid back) and no other loans past 30 days due.

As the economy slumps, one Maryland bank has not only stayed out of trouble but has burnished the kind of 24-karat lending record that rivals would covet even in a boom.

Bowie-based Old Line Bank has lent more than $200million to local homebuilders, hoteliers, auto repair shops, lawyers, homebuyers and landscapers. But as banks fail nationwide at the greatest rate since 1993, so far every one of Old Line's borrowers is paying interest and principal as planned.

A church that was behind on payments is catching up. Other than that, Old Line has zero "nonperforming" loans, defined as at least 90 days overdue. It doesn't even have a loan that is 30 days overdue.

There's no guarantee that it won't take some lumps. But Old Line's performance so far in the greatest financial crisis in decades is up there with pitching a perfect game against the 1927 Yankees or bowling 300 wearing mittens.

I had been waiting for their fourth-quarter results, which came out yesterday. Profits declined for the quarter, but mainly because of branch openings, which is what good companies do in recessions. They build market share as their rivals bite the dust. Old Line is the anti-Suburban Federal Savings Bank.

Bank boss James Cornelsen's outlook in the future: "Although we do not expect that all of our customers will remain immune from the economic difficulties apparent in our marketplace, but because we have still not experienced any deterioration in asset quality or had any significant historical losses in our loan portfolio, we decreased the loan loss provision $42,000 in the fourth quarter of 2008 relative to the fourth quarter of 2007."

Posted by Jay Hancock at 8:00 AM | Permalink | Comments (1)
        

If you haven't done so, read Bob Little's and Andrea Walker's story on the demise of Suburban Federal Savings Bank, which ran on Sunday. Some highlights:

Getting a mortgage from Suburban Federal Savings Bank couldn't have been much easier for Samuel Burrow Jr.

A Baltimore mortgage broker introduced him to Suburban in April 2005, when he was looking for $1.3 million to refinance and finish construction of a home in Ellicott City. His loan application listed his occupation as minister and his income at about $30,000 a month. The bank didn't ask him to prove he could make the $9,100 monthly payment, just to sign a paper stating he could. Two months later, Burrow scrawled his name on some documents at a Timonium title company and got his money.

But Burrow never made a payment, according to court records, and then filed for bankruptcy. Late last year, he sued Suburban, claiming his income was just $4,700 a month and that the bank lured him into a loan he couldn't afford. He and Suburban's lawyers are still arguing in court over who misled whom.

And:

Loan officers complained to top management that "we're losing loans right and left. We can't make a living," the loan officer, who wanted to remain anonymous because she is still in the banking business, recalled in an interview this week. "We had to compete."

Management relented and started offering more innovative loan products with relaxed terms and little or no credit or documentation required. It also began making considerably larger loans, often to customers it didn't know, in areas where it did little or no banking business.

And:

Another troubling sign was that loan officers at the satellite offices were paid to find borrowers and execute loans, but bore no consequences if those loans went bad. It was a formula for disaster, Ward said - a new and riskier line of business with inadequate controls.

And:

Sidney P. Levin, a Baltimore-based broker who helped arrange the loan, said he wasn't involved in checking Burrow's credit or determining whether he could afford the loan. That was Suburban's job, he said. "I just submit it to the banks, and they make up their own mind," said Levin. "Once those no-doc products came out, everyone was using them. The market was so good that's what everyone was selling."

Posted by Jay Hancock at 3:49 PM | Permalink | Comments (4)
        

New Jersey Attorney General Anne Milgram announced a weak settlement with Ticketmaster today over complaints that Bruce Springsteen fans ran into software problems when they tried to buy tickets and got automatically redirected to Ticketmaster's TicketsNow scalper site, which sells at hugely marked up prices.

It's really not much of a deal and suggets that Milgram was not very interested in getting to the bottom of what went on. Ticketmastser has to pay $350,000 and give free tickets to 2,000 New Jersey Bruce fans who experienced software errors. The settlement also, according to her press release:

places a wall between Ticketmaster and its ticket re-selling subsidiary TicketsNow.com for at least a year for all shows and entertainment events Ticketmaster handles.

But the link ban applies to only one kind of page on the Ticketmaster site, the "no tickets found," page that comes up after you search in vain. Sounds like there is plenty of room for other links from Ticketmaster to TicketsNow, and people are still going to be confused. Says Milgram:

“Significantly, Ticketmaster has agreed to change its business practices and not allow any link from its No Tickets Found Internet page to re-sale Internet sites for at least one year, and after that any proposed linkage will not be permitted unless approved by my office,” she said.

Posted by Jay Hancock at 3:24 PM | Permalink | Comments (1)
        

One followup point on Saturday's column on Constellation boss Mayo Shattuck.

How hard is it to be fired from the top reaches of corporate America? Consider the strange case of Mayo A. Shattuck III, chairman and chief executive of Baltimore-based Constellation Energy.

Commodity bets with borrowed money and market turmoil nearly pushed Constellation into bankruptcy in September.

The company's stock has fallen 75 percent since the beginning of 2008. Constellation shares have delivered about the same return as a broad basket of U.S. electricity and utility stocks since Shattuck took over in late 2001.

Constellation said this week that it was cutting its dividend by half, reducing income for thousands of Marylanders who bought the stock back when it was a reliable, boring utility called Baltimore Gas & Electric. The company lost $1.4 billion last quarter. It's laying off 800 people.

But not the guy at the helm when the sloop hit the reef.

The column goes on to quote Freeman Hrabowski, president of the University of Maryland Baltimore County, praising Shattuck. I did not know, and should have mentioned, that Shattuck is chairman of UMBC's Board of Visitors and has given UMBC money.

Posted by Jay Hancock at 11:02 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

From Tribune's Washington Bureau:

Even as President Barack Obama told the nation's mayors they now have a friend in the White House, he warned that he would use the "full power" of the presidency to expose and crack down on them if they misuse the economic stimulus dollars meant to boost the economy out of its doldrums.

Obama cautioned the mayors that the American people had placed their trust in their political leaders to spend the $787 billion wisely and that such trust would be squandered if mayors and other officials wound up wasting the money on dubious projects.

"If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it and put a stop to it," Obama told the mayors who were gathered in the White House. "And I want everybody here to be on notice that if a local government does the same. I will call them out on it and use the full power of my office and our administration to stop it."

Great thoughts, but how will abuse be exposed when the nation's newsrooms are shrinking? How will Obama know if mayors are wasting money on dubious projects if enough reporters aren't around to check them out?

Posted by Jay Hancock at 10:21 AM | Permalink | Comments (1)
        

If ever a Democratic administration wanted to fulfill the dark fears of the the right wing this would be the way: Float a plan in raise Americans' taxes AND invade their privacy at the same time. But this idea came from a Republican. Transportation Secretary Ray LaHood told the Associated Press on Friday that the administration should consider taxing people according to how many miles they drove.

"We should look at the vehicular miles program, where people are actually clocked on the number of miles that they traveled," LaHood told The Associated Press on Friday.

This would require putting GPS transponders in every vehicle, thus building a database of where every American has driven and when, down to the second and square meter. How utterly tone deaf can you get? A gas tax increase, which is a good idea, will be hard enough. It really makes you question this guy's political judgment. Of course a chagrined White House immediately shot it down.

"I can weigh in on it and say that it is not, and will not be, the policy of the Obama administration," said Robert Gibbs, White House press secretary. The spokesman succinctly added later: "It's a no-go."

Posted by Jay Hancock at 8:02 AM | Permalink | Comments (9)
        

It's hard to imagine this is more than a one-time thing. But for inflation hawks it looks like the 1970s stagflation -- weak economy and high inflation. From AP:

Inflation at the wholesale level surged unexpectedly in January, reflecting sharply higher prices for gasoline and other energy products.

The Labor Department said Thursday that wholesale prices increased by 0.8 percent last month, the biggest gain since last July and well above the 0.2 percent increase that economists had expected.

The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping by 15 percent, the biggest gain in 14 months.

Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent. Economists had expected a slight 0.1 percent rise in so-called core inflation.

Posted by Jay Hancock at 10:44 AM | Permalink | Comments (1)
        

Great piece in Money magazine by Eric Schurenberg. He asked Philip Tetlock, a Berkeley prof and expert on experts, why so many experts missed the housing crash and which experts are likely to be right about how it will resolve. Among his answers:

What makes some forecasters better than others?

The most important factor was not how much education or experience the experts had but how they thought. You know the famous line that [philosopher] Isaiah Berlin borrowed from a Greek poet, "The fox knows many things, but the hedgehog knows one big thing"? The better forecasters were like Berlin's foxes: self-critical, eclectic thinkers who were willing to update their beliefs when faced with contrary evidence, were doubtful of grand schemes and were rather modest about their predictive ability. The less successful forecasters were like hedgehogs: They tended to have one big, beautiful idea that they loved to stretch, sometimes to the breaking point. They tended to be articulate and very persuasive as to why their idea explained everything. The media often love hedgehogs.

HT Barry Ritholtz

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

Retired executives from Columbia-based Grace go on trial in Libby, Montana. From the NYT:

Grace, which bought the mine in 1963 and shut it in 1990, has been paying medical bills here for years and agreed in 2008 to spend $250 million for environmental cleanup of the town. The company, which was driven into bankruptcy protection in 2001 by hundreds of millions of dollars in asbestos poisoning claims mostly unrelated to the Libby disaster, reached tentative civil settlements last year to pay $3 billion to asbestos victims.

Its criminal trial in the Libby affair, originally set to begin in 2006, was delayed by prosecutors’ ultimately successful appeals of judicial rulings on the admissibility of evidence.

At least 200 deaths and thousands of illnesses are known to be related to the town’s exposure to the mine’s billowing dust clouds of vermiculite, which by dint of geological bad luck was layered millions of years ago with naturally occurring asbestos.

Prosecutors say that the mine’s owner, W. R. Grace & Company, which is also a defendant, and its managers knew as far back as the 1970s that asbestos was mixed with the vermiculite and that this posed a risk to their workers, but that they conspired to continue releasing it into the air and to misrepresent the peril.

The company’s own medical studies of its miners, the government says, create a paper trail that will prove the charges of wire fraud, obstruction of justice, conspiracy and violations of the Clean Air Act.

“Our major problem is death from respiratory cancer,” one of the executives, Henry A. Eschenbach, wrote in 1982 in response to one such study, according to the indictment, returned in 2005. “This is no surprise."

The judge in the case, for which jury selection is to begin Thursday in Missoula, has barred lawyers on both sides from commenting publicly. But Grace has said in the past that its managers acted in good faith.

The five executives being tried are Mr. Eschenbach, Jack W. Wolter, William J. McCaig, Robert J. Bettacchi and Robert C. Walsh. All are now retired, and all have remained free on their own recognizance while awaiting trial.

If convicted, they face as much as 15 years in prison on each of three counts of endangering Libby through Clean Air Act violations, and lesser time on each of the other charges, plus fines that could amount to several million dollars. Conviction of Grace could mean fines of hundreds of millions.

Posted by Jay Hancock at 10:09 AM | Permalink | Comments (1)
        

So I asked Ticketmaster spokesman Albert Lopez about the experience of a Baltimore grandmother who tried to by Disney on Ice tickets online from Ticketmaster. She was shocked to find out later that she had actually bought from TicketsNow, Ticketmaster's marked-up, scalper site, for much more than face value.

"I've got to tell you, I think it's a generational thing," he said. For most people, buying tickets online "is very plain and straightforward." If they aren't comfortable with the Internet, he says, older people should buy by phone or at the box office.

So it's the woman's fault that she paid $136 more than the tickets were supposed to cost. I guess the numerous young people who have told me similar stories are likewise to blame. The relationship between Ticketmaster and TicketsNow is rife with conflicts of interest. Next week there are congressional hearings on Ticketmaster's proposed merger with Live Nation. Maybe they'll get into the TicketsNow problem, too.

Posted by Jay Hancock at 11:29 AM | Permalink | Comments (6)
Categories: Ticketmaster
        

Hi, Jay~ I had an "aha moment" when I read your column, 'Boss' furor shakes Ticketmaster's reign, last Saturday. We had just come home from a trip to Disney On Ice, and I can tell you, buying the tickets was a very unhappy experience for me. I rarely buy tickets on line, so I feel really naive about about the TicketsNow issue.

When the tickets arrived at our house [with a Ticketmaster logo], we realized we had been charged more than the face value of the tickets. We had been charged $42 per ticket, plus fees, and the face value of the tickets was $25 each. Of course, the fees put the ticket prices over $50 per ticket.

So not only are adults who want to go see the Boss being overcharged, but little kids wanting to see Disney On Ice are a small part of the TicketsNow scalping scheme, too. I figure we were overcharged $17 ($42 - $25) per ticket, not counting fees, or a total of $136. What a racket!

Posted by Jay Hancock at 9:49 AM | Permalink | Comments (1)
        

Federal regulators on Tuesday charged Texas financier R. Allen Stanford and three of his firms with a "massive" fraud that centered around high-interest-rate certificates of deposit, and raided some of the companies' offices.

In a complaint filed in federal court in Dallas, the Securities and Exchange Commission alleged Stanford orchestrated a fraudulent investment scheme centered on an $8 billion CD program that promised "improbable and unsubstantiated high interest rates."

Stanford's assets, along with those of the three companies, were frozen. Stanford's firms include Antigua-based Stanford International Bank, broker-dealer Stanford Group Co. and investment adviser Stanford Capital Management, which are both based in Houston.

 Stanford, 58, is one of the most prominent businessmen in the Caribbean, with investment advisers around the world helping him grow a personal fortune estimated at $2.2 billion by Forbes magazine. His Stanford International Bank Ltd. said deposits surged from $624 million in 1999 to $8.4 billion in December.

The bank is based in the twin-island Caribbean nation of Antigua and Barbuda, which has carved out a niche as a tax haven and offshore base for Internet gambling. Stanford has deep roots in Texas, where he graduated from Baylor University, and still speaks with a slight twang.

But he travels in different circles now — knighted in 2006 by the islands' government, Stanford is known there as "Sir Allen." And last year he shook up the staid world of professional cricket by bankrolling the purse in a $20 million winner-take-all match in Antigua between England and a West Indies select team.

Posted by Jay Hancock at 2:55 PM | Permalink | Comments (0)
        

A commenter wondered whether grid frequency anomalies -- running higher than 60 hertz -- could have made BGE meters run faster and BGE bills go higher than they should have:

What if the power generating stations were erroneously making electricity at 65, 70, or 75 Hertz? Just as the frequency of the alternating current will affect the speed of a motor, it will affect the speed of electric meters.

Whereupon reader Bryan put the question to Mike Holt's electrical training forum, which elicited the following replies from the community, which is skeptical:

The US electrical grid is so interconnected that is is all but impossible for the grid frequency to fluctuate by more than tenths of a frequency. If you ever saw 70Hz, the reading would immediately be followed by 0Hz as the grid shuts down causing a multi-state power outage.

And:

NERC Regulates the grid to 60Hz +/- 5%, so the highest you could see is 63Hz. But local regulations are more restrictive and the most you typically see is 60.1 Hz for sustained periods. Over/Under frequesncy relays would prevent any large distortion as Jim said.

And:

Just think of all the electric clocks that would run fast! Most devices that use large amounts of electricity for heating or lighting are rather frequency insensitive.

Posted by Jay Hancock at 11:08 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Pulled from comments. Interesting thought. Googling suggests that grid frequency fluctuation is a problem in developing countries but not here. It looks like cycles are pretty tightly regulated in the U.S. and in the PJM mid-Atlantic grid

I have notified the Maryland Public Service Commission of my following theory:

"My electric bill for last month was abnormally high - it has never been higher!
Something happened and I suspect it might be technical in nature. As an engineer with a degree in electronics and electrical technology, I suspect that perhaps the electrical characteristics of the alternating current supplied our homes was abnormal, causing meters to spin faster than normal.

The frequency of alternating current should be 60 cycles per second, or 60 Hertz. What if the power generating stations were erroneously making electricity at 65, 70, or 75 Hertz? Just as the frequency of the alternating current will affect the speed of a motor, it will affect the speed of electric meters. There should be records of the alternating current frequency from the monitoring equipment at the power plants made available to the PSC for review."

Posted by Jay Hancock at 8:00 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

Richland County Sheriff Leon Lott said he won't file criminal charges against Michael Phelps for being photographed with a bong pressed up to his face. Now the sheriff should stop hassling the eight people he arrested to try to build evidence against Phelps. Presumably some/all are college kids. Aside from the legal consequences, a drug conviction can jeopardize student financial aid, enrollment etc.

Posted by Jay Hancock at 5:52 PM | Permalink | Comments (2)
        

I am doing a great job at columnizing, at least according to this unidentified financial columnist quoted in David Carr's column on media coverage of the financial crisis:

“You aren’t doing your job right if you don’t have an in-box full of hate mail,” said one financial columnist who didn’t want to be identified.

There is also this truthful gem:

“The headline that you will never hear is ‘The market was down 110 points, a random fluctuation in a very complex system,’ ” said Eric Schurenberg, the former managing editor of Money magazine who is busy building — get this — a financial Web site for CBS. “No one has ever known what was going to happen, but there is this temptation to act like you did. But that fantasy has been exploded.”

Posted by Jay Hancock at 12:25 PM | Permalink | Comments (1)
        

Saturday's column:

One benefit of living in a rich country is that we can pay psychologists and professors to explain why wealth doesn't make us very happy.

It's true. Researchers have found that, once people can meet basic needs, psychological dividends from additional money steadily decrease. Making $100,000 does not make you twice as happy as $50,000.

So why does losing money, and the prospect of losing money, make us so miserable?

The short answer is that it doesn't have to. If you think about money in the context of what economics says about true fulfillment, having less of it shouldn't be quite so painful.

With our retirement savings cut in half, vacation plans scrapped, car purchases postponed and debt up to our nostrils, let us hearken to the good news of happiness research.

Read the whole thing.

Posted by Jay Hancock at 9:57 AM | Permalink | Comments (0)
        

From yesterday's Washington Post. There is much grousing, but it's time for Wall Street to swallow the restrictions and get on with the work. Many are making sacrifices; the people whose companies caused the whole mess should be the last to complain.

Congressional leaders debated the proposals, the banking industry lobbied intensely against them and President Obama's top economic advisers even put out last-minute calls for revisions. But in the end, new rules to significantly curb compensation of the banking industry's top executives and rainmakers were tucked into the 1,073-page stimulus bill now making its way to Obama for his signature.

The pay restrictions, which go much further than limits proposed by the Obama administration 11 days ago, were the product of forceful negotiations, careful diplomacy and give-and-take that lasted into the night Thursday before Congress passed the stimulus package Friday, according to interviews with officials in the banking industry, on the Hill and in the Obama administration.

Posted by Jay Hancock at 9:54 AM | Permalink | Comments (2)
        

Thomas Friedman promotes the wise idea, if I do say so myself, of quality, long-term immigration as a way to fuel U.S. growth and revival. Read the whole thing here.

The Open-Door Bailout

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

Posted by Jay Hancock at 10:25 AM | Permalink | Comments (2)
        

Economists worry about deflation – a persistent, broad decline in consumer prices that sometimes accompanies severe recessions.

Deflation can lead to lower wages and other income, which makes it difficult to handle debt. Deflation can also accelerate a recession because consumers postpone buying, knowing prices will be lower next month.

But fear not. A trip through the statistics shows that some costs continued to rise in December even as the overall consumer price index plunged. A few industries are still minting money. They tend to be – this is no coincidence – semi-monopolies or protected by regulation.

Leading the fight against deflation is sugar. Helped by barriers against sugar imports, U.S. sugar prices rose by 1.2 percent in December – a 15 percent annual rate.

Oil and natural gas plunged. Beef and chicken fell. Even milk dipped in December. But sugar kept cooking, contributing to an increase in baked-good prices.

For some reason beer prices rose just us fast. Maybe beer demand is up as people forsake expensive tipples. Drug prices and doctor fees rose. So did car insurance, funerals, college textbooks and cigarettes.

And – you knew this was coming! – cable and satellite TV prices rose at an annual rate of 3.7 percent.

Posted by Jay Hancock at 8:45 AM | Permalink | Comments (2)
        

Columbia is the county seat of Richland County, South Carolina. Let's check Columbia's crime roster for 2008.

650 violent crimes -- two a day. (This is for 2007; nothing posted for 2008.)
4 murders. 36 forcible rapes (2007). 124 robberies. 437 aggravated assaults (2007).
3008 property crimes. 519 burglaries. 2,223 thefts. 266 stolen cars. 8 arsons.

But Sheriff Leon Lott thinks his department's resources are best spent busting two kids for allegedly possessing pot so he can build a case against another kid who may have been smoking pot.

I thought Lott's earlier promise to investigate allegations that Michael Phelps smoked dope was just for show. South Carolina taxpayers should be very unhappy at this waste of their money. Looks like this bozo wants to run for governor.

Posted by Jay Hancock at 2:57 PM | Permalink | Comments (1)
        

Loyal reader Ann asks:

Could the solution be to tax every fill-up and not every gallon? If you've got to raise taxes, wouldn't this be more palatable to consumers?

My reply: It might be more palatable, but it would penalize efficient users of energy. Under your plan my neighbor with the Chevy Suburban would pay no more in gas tax than somebody with a Prius. Half the reason to have gas taxes or cigarette taxes is to discourage use of products that are bad for society. A gas tax isn't just a way to raise revenue. It's a step toward putting a proper price on the carbon emissions that are cooking the planet. And it would install disincentives against wasteful energy use, rewarding the Prius driver or the person who walks to work and penalizing the gas guzzlers.

Posted by Jay Hancock at 12:40 PM | Permalink | Comments (4)
        

From the Chicago Tribune:

The top two leaders of the Illinois House and Senate began paving the way Tuesday for increasing the state's gasoline tax to fund billions of dollars in highway and mass-transit projects.

House Speaker Michael Madigan will support a proposal to raise the existing 19-cent-per-gallon motor fuel tax to 27 cents—a boost that could raise $500 million a year to fund bond payments on a $5.9 billion transportation repair plan, a Madigan spokesman said.

Senate President John Cullerton also told the Chicago Tribune's editorial board that increased motor fuel taxes and higher vehicle fees should be considered "on the table" for what he called an Illinois "stimulus" package that would fund school construction as well as road and transit projects.

A spokesman for Gov. Pat Quinn said the governor is "keeping all options open as he works to get a clear idea of the state's finances." In one of his first appearances since replacing Rod Blagojevich as governor last week, Quinn called a statewide public works program a top priority.

Posted by Jay Hancock at 10:15 AM | Permalink | Comments (1)
        

Martin Wolf at the Financial Times publishes the best commentary I have read on Bailout 2.0. The gist:

I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome. ...

Why then is the administration making what appears to be a blunder? It may be that it is hoping for the best. But it also seems it has set itself the wrong question. It has not asked what needs to be done to be sure of a solution. It has asked itself, instead, what is the best it can do given three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress. Yet why does a new administration, confronting a huge crisis, not try to change the terms of debate? ...

Then there has to be recapitalisation in one of the two ways indicated above. Both have disadvantages: government recapitalisation is a bail-out of creditors and involves temporary state administration; debt-for-equity swaps would damage bond markets, insurance companies and pension funds. But the choice is inescapable.

The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (0)
        

They must be feeling the pain in Vegas, one of the epicenters of the housing implosion. Metro Las Vegas was adding 50,000 jobs a year a few years ago -- more than the whole state of Maryland. Now they're losing thousands of jobs. Since Obama was speaking particularly about companies getting government bailouts, we can only conclude that Vegas wants bailout money to be spent on gambling junkets.

After Obama said:

"You can't get corporate jets, you can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime."

The mayor says, from AP:

"Mr. President, I understand the enormous burden you carry in dealing with the worst economy since the Great Depression," Goodman wrote in the letter, sent late Tuesday.

"I also understand the need for accountability, but your comments are harmful to the meetings and convention industry as a whole and Las Vegas specifically," he said.

And the local congresswoman says:

"Please, let's stop the attacks, let's call a cease-fire and let's recognize the true cost of these words in real dollars lost as a result of canceled meetings and other functions that will not be held in Las Vegas," Berkley said.

"Mr. President, I support your efforts to curb corporate excesses in your recovery plan, but from the neon lights of Las Vegas to the Chicago skyline, from the white sands of Hawaii to the Kansas heartland, tourism means jobs," she said. "We need your support and we need the business more than ever before."

Posted by Jay Hancock at 8:18 AM | Permalink | Comments (2)
        

Another reason to limit media agglomeration. From Portfolio:

McGraw Hill has dropped Barry Ritholtz's Bailout Nation book and the author charges that the publisher quashed it to protect its Standard & Poor's credit-rating division.

Ritholtz, whose Big Picture economics and financial blog has become must-reading, had what should have been a publisher's dream. The blogger came up with a book idea in the spring of last year on the financial collapse. McGraw Hill bought the rights for a modest advance and he set about writing it.

Events cooperated. As he was writing, Lehman Brothers and AIG collapsed, Goldman and Morgan Stanley became bank holding companies, and the Bush administration rolled out its massive $700 billion TARP plan to aid the banking sector.

In short, Ritholtz was writing Bailout Nation before we became a nation of bailouts.

Posted by Jay Hancock at 1:53 PM | Permalink | Comments (0)
        

Massachusetts's present gas tax is 23.5 cents a gallon, same as Maryland's. From the Boston Globe:

Governor Deval Patrick is considering raising the state's gasoline tax by as much as 29 cents per gallon, which would at once give Massachusetts the highest state gas tax in the country while generating enough revenue to potentially rid the Massachusetts Turnpike of tolls.

But administration officials, responding yesterday to a leak reported in the media, said the governor also was considering a gas tax increase as low as 5 cents and that no decisions have been made.

The gas tax in Massachusetts is 23.5 cents per gallon, which has not been substantially increased since 1991. A 29-cent increase would bring the state's tax to 52.5 cents per gallon. New York currently has the nation's highest state gas tax, at 41.3 cents per gallon.

Posted by Jay Hancock at 10:21 AM | Permalink | Comments (1)
Categories: Taxes
        

Perhaps this is not surprising from a former head of the New York Fed, whose job it is to canoodle with Wall Street bankers. I missed this yesterday from the NYT:

In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.

Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.

He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.

Posted by Jay Hancock at 9:50 AM | Permalink | Comments (1)
        

Thanks to everybody who responded to Saturday's column on people who had problems buying tickets for Bruce Springsteen from Ticketmaster.

Ticketmaster denies it was automatically bouncing people over to its high-priced TicketsNow scalping site, but I talked to four people for the column who said that's what happened to them. Now others are emailing reporting the identical experience, including for attempts to buy Radiohead and Hannah Montana tickets. A sampling:

I was waiting for 10:AM to come about 1 week ago today sitting at my computer at 9:55AM. TicketMaster. The line after Verizon Center tickets for Bruce Springsteen read "more info" as it was not 10am as of yet.

Trying to get a jump for tickets I clicked on more info but it was not ready to sell, so I waited to 10am.

As soon as the more info line changed to "find tickets" I clicked on it and then tried to buy 2 tickets for any price, any section, any location just to see my choice and the message I received was "no exact matches" for my choice, but the TicketsNow web site showed up stating tickets were available by section for prices at least double what the TicketMaster price was listed for $68. or $98. a seat. I was furious. What happened?

Well I was scalped.

And:

Having read your article on Saturday concerning the problems locals were having in their quest for Springsteen tickets through Ticketmaster, you can add my name to the list of those frustrated and outraged. I was able to purchase tickets so count myself as lucky. However, upon trying to purchase a second set, I too was automatically redirected to TicketsNow. I did not "click a button", nor am I misremembering or lying. I did nothing different then in my successful purchase.

This happened at approximately 10:05, just 5 minutes into the release of tickets. How was it possible that TicketsNow was able to secure, price (outrageously), and post these tickets so quickly? I think the answers to this rhetoical question are obvious. Further, I only searched for tickets for the Verizon Center show of 5/18.

And:

My Name is Natalie Deakins. I just read your article about Ticketmaster. This same exact thing happened to me last year when I attempted to buy Radiohead tickets. To make a really long story short I ended up buying four tickets to a concert at the Hollywood Bowl in California for just under $1,400.00. I tried to contact Ticketsnow to refund this as I did not want to buy four tickets for this price & they were very rude and would not help me. I tried to dispute this with my bank and that did not work either. I got screwed. I am a 26 year old student and that was basically most of my savings.

And:

I read your article this morning about the Springsteen concert. I had the same problem. I went onto the website at precisely 10:00 and was sent almost immediately to Tickets Now after being told the $65 or $95 were not available. I bought tickets for over $250 each and told my daughter who said the same thing happened to her for the Hannah Montana concert. We agreed the tickets were much too expensive. I tried to call Tickets Now, which, of course, I could not reach, so I cancelled the transaction on my credit card. I’ve tried a few times to reach Ticketmaster but Tickets Now always pops up and I keep getting e-mails from them from which I just unsubscribed because it was very annoying!

And:

My mother wanted to buy me tickets for my birthday but did not know when tickets went on sale. She went to the internet about a week before tickets actually went on sale and after a Google search she found TicketsNow. And guess what? TicketsNow had tickets available for the Springsteen show. My mom bought the tickets for me and sent me an email saying she had. I wondered how this was possible since the tickets did not go on sale for another week.

I did some of my own investigating, and both StubHub and TicketsNow indeed had tickets available for the show before tickets were released to the public. I called TicketsNow and they said that the Ticket Brokers that use their site have agreements with the concert promoters and are sure of obtaining tickets. The StubHub representative told me that the Ticket Brokers have physical possession of the tickets already. He even called one to confirm this for me. Naturally, he was unable to confirm this. I called Ticketmaster and they said that no one has preferential treatment in purchasing Tickets. I called Comcastix and their representative said that Ticket Brokers actually engage in short sales of tickets prior to their release date. They sell tickets that they do not own, hoping that when tickets are released they will be able to buy them and “cover their short”.

Seeming as the Springsteen Tickets sell out in 7 minutes, I am skeptical of how any Ticket Broker, can be so sure that they’ll be able to purchase tickets “of comparable quality” to the ones that they pre-sell without some sort of advantage. The tickets that my mom bought on TicketsNow actually have section, seat and row numbers. The seat numbers (999 and 1000) are bogus. But the section, 218, and row, 14, are very real.

The short sales allow TicketsNow to have an immediate and substantial inventory of tickets the instant the show sells out.

I know as a veteran Springsteen ticket purchaser, buying Springsteen tickets the morning they go on sale is not a sure thing. And certainly there is no way to ensure that you get seats of a certain quality. Therefore I believe that ticket brokers have some sort of advantage in obtaining tickets, that people like me do not enjoy. It may be a technological advantage. It may be preferential treatment, though TicketMaster denies this.

And:

First, thanks. I found your recent article about Ticketmaster interesting. I can't count the number of times that I paid their convenience tax because there was no other online alternative and driving to the box office was as inconvenient as their tax was expensive. While at my stage of life the tax is an annoyance, for the kids it's a much heavier burden. I found the bits about their relation to Ticketron and LiveNation intersting. And depressing.

And:

I tried to search Ticketmaster for a ticket the day they went on sale. I searched for one ticket, best available and it said there were no matches. That should only happen if the event is 100% sold out.

I believe I followed a link to TicketsNow and scoffed at the prices there and didn't buy anything.

I did use Tickets Now once the day before a Capitals game. It said I could get my tickets at will call. When I got to will call they said those seats were already sold. Tickets Now did try to call me to tell me the tickets I bought were already bought by someone else and I wasn't charged, but I had to buy tickets from a scalper outside.

The will call agent at Verizon Center said they hate Tickets Now and we were the like the 8th ones to have a problem.

And their fees alone have gotten to be more than the tickets themselves should be, but that's a whole other story.

Posted by Jay Hancock at 11:13 AM | Permalink | Comments (11)
        

My new BGE bill: $414.06 Yee haw! A new record, I think, although it may have been over $400 before. The next bill should be better for me and everybody if February ends up being warmer than January, which is likely. A decline in natural gas prices to below 90 cents per therm starting this month should also help gas customers.

Posted by Jay Hancock at 8:00 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

No matter what your politics etc., you have to agree: That guy is a supermensch. What a quality human being. He handled a sappy interview by Katie Couric as well as he handled a crippled Airbus A320. We all should be so level-headed when we get our 15 minutes. Did he pray? Are you kidding? He was landing the airplane. "I think people in the back were taking care of that for me," he said on 60 Minutes, or words to that effect.

My friend Larry sees the successful rescue of Flight 1549 as a hopeful metaphor for the economy and the country. Let's pray Captain Obama can bring in his bird with similar or better results.

Posted by Jay Hancock at 7:45 PM | Permalink | Comments (3)
        

Greg Mankiw, former chairman of GW Bush's Council of Economic Advisors, repeats his call for a gas-tax increase. From Steve Mufson's and Lori Montgomery's story in today's Washington Post.

N. Gregory Mankiw, a Harvard University economics professor who was chairman of former president George W. Bush's Council of Economic Advisers, supports cuts in payroll taxes partially offset by gradual increases in gasoline taxes. He says more time should be taken to craft spending programs that would not be wasteful.

Posted by Jay Hancock at 10:21 AM | Permalink | Comments (0)
Categories: Taxes
        

John Dean of Watergate fame goes bonkers in a response to a New York Times story on gaps and errors in the Nixon tapes transcripts. That there are gaps and errors is not in dispute. Transcriber Stanley Kutler admits as much. He blames the difficulty of listening to hundreds of hours of scratchy, faint recordings.

Surely the lacunae are fodder for academic and journalistic discussion. Dean thinks not. In a long-winded, emotional blast on the Daily Beast, he questions Patricia Cohen's competence in covering the story, compares the Times with the National Enquirer and, in the new and already tedious habit of aggrieved readers and news subjects, says newspapers are failing because they print stories he doesn't like.

When I found the story on the front page of the nation’s paper of record, I was sure I could hear a desperation death rattle of dead-tree journalism.

Here's what I found to be the rant's biggest howler:

Most journalists would consider an unpublished submission even less credible than a complaint filed in a lawsuit (since lawyers can be disbarred for false and frivolous complaints), and scrupulous journalists only report on legal complaints after they have been litigated and tested.

I guess that's why Bob Woodward and Carl Bernstein, whom Dean seems to revere, waited until Nixon had been arrested, charged and tried by a jury of his peers before they wrote their Watergate stories. No journalist waits, or should wait, before reporting an important lawsuit or compelling evidence of wrongdoing. Or an interesting paper submitted to U.S. history's most important journal.

Posted by Jay Hancock at 10:09 AM | Permalink | Comments (3)
        

I think Michael Phelps is getting a raw deal. Here we have a young man who basically spent his childhood and youth in a swimming pool and then got thrust into a glaring spotlight just when he could relax and blow off steam. The USA Swimming suspension is symbolic and perhaps understandable. The antics of Richland County Sheriff Leon Lott, who says he's considering pursuing charges against Phelps for smoking pot, are unbelievable.

But here is my question, prompted by this paragraph in Kevin Van Valkenburg's story:

USA Swimming also said it is withdrawing financial support from Phelps during the suspension, a mostly symbolic punishment. The sport provides stipends for Olympic-caliber athletes in case they cannot afford to train and work at the same time.

Is this like an insurance plan, which kicks in if athletes have to quit their day jobs and really isn't costing USA Swimming on Phelps' behalf? Or is USA Swimming paying out dollars that Phelps obviously doesn't need and that could be spent on other athletes?

UPDATE: Hauled up from comments. From Swimming World mag:

All National Team members get financial support. He's had that national team stipend suspended. Probably will kick back in after three months.

Jason Marsteller
Swimming World Magazine

Posted by Jay Hancock at 10:55 AM | Permalink | Comments (14)
        

In honor of the creepy, anti-immigration Preserving Western Civilization Conference, which convenes at Baltimore/Washington International Thurgood Marshall Airport this weekend, we reprise this column:

So President Barack Obama, presiding over what will surely be the biggest budget deficits in history, doesn't want the country to go bankrupt.

"If we do nothing, then we will continue to see red ink as far as the eye can see," he said at a news conference two weeks ago. He'll summon a "fiscal responsibility summit," he told The Washington Post last week. America, he said, must make "hard decisions" about Medicare, Social Security and other expensive programs.

Hard decisions, of course, will include cutting costs and benefits, which will anger Democrats. We'll also need to raise taxes, which will anger Republicans.

But the hardest decision of all may be about increasing immigration, which even Obama doesn't seem to want to talk about. The retreat from trillion-dollar deficits must include recruiting millions of new Americans to share in this country's bounty as well as the cost of running it.

Immigrants have freed the United States from tight spots before. Properly managed, a doubling or tripling of immigration in the coming decades can help get us out of this one.

We can't cut our way entirely to solvency. The senior lobby is too entrenched, the profligate Medicare program too cherished to shrink it to a size within the country's present means. (Social Security, on the other hand, is easy to fix if we slightly cut benefits and increase contributions now.) Extending national health care to everybody will raise spending even higher.

Nor can we tax our way completely out of the red. Raise taxes too high, and they hinder growth.

And growth, after all, is a critical piece of the solution. Because tax collections rise with the size of the economy, a percentage-point increase in annual gross domestic product, sustained over decades, can mean the difference between insolvency and surpluses.

One way to improve the economy is productivity - higher output per worker or per factory. But the technology boom that increased productivity since the mid-1990s may be stalling. Every worker is on the Web who needs to be. Everybody has a cell phone, and pretty soon everybody will have a BlackBerry.

The only other way to expand the economy is by adding to the work force. Americans alone aren't doing the job. At recent birth rates, the population would decline if it weren't for immigrants, leaving an inadequate pool of younger Americans struggling to pay debt incurred by their elders.

So immigration is another way out of the deficit debacle.

The national debt just surpassed $10 trillion and will surely head higher. We need new taxpayers to help pay it off.

There are nearly 20 million vacant homes and apartments across the United States. We need new renters and owners to live in them.

There are companies that can't find enough competent employees. We need new workers to help them grow. There are retailers going bankrupt. We need new consumers to buy their stuff.

About 1 million people a year have immigrated to the United States recently, or one third of 1 percent of the population. A century ago, immigrants boosted the population by much more - 1 percent a year.

Good thing, too. Millions of new Polish, Russian, Irish, Italian and Greek citizens gave the country the economic strength it needed to win two world wars.

Opponents focus on the short-term costs of immigration - increases in social services use, supposed competition with domestic workers or alleged higher crime.

But these costs can be smart, long-term investments. The United States is living proof. No country is better at merging many into one, at building strength through diversity. Those who "packed up their few worldly possessions and traveled across oceans in search of a new life," as Obama described immigrants in yesterday's inaugural speech, helped themselves but also bequeathed a rich future to their descendants.

The U.S. government is spending trillions to bail out banks, consumers and everybody else.

Immigrants can bail out the bailer.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (13)
        

Yves Smith at Naked Capitalism eviscerates Obama's bailout plan. Some highlights:

The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was. We have no new thinking, no willingness to take measures that are completely defensible (in fact not doing them takes some creative positioning) like wiping out shareholders at obviously dud banks (Citi is top of the list), forcing bondholder haircuts and/or equity swaps, replacing management, writing off and/or restructuring bad loans, and deciding whether and how to reorganize and restructure the company. Instead, the banks are now getting the AIG treatment: every demand is being met, no tough questions asked, no probing of the accounts (or more important, the accounting).

What we have from Team Obama is a bigger abortion of a "throw money at bad bank assets" plan that I feared in my worst nightmare. And (when we get to the Post preview), they have the temerity to invoke triage to make what they are doing sound surgical and limited.

Those who remember the origin know that triage means focusing on the middle third of the wounded on the battlefield : abandoning the goners to die, leaving those wounded but stable to fend for themselves for the moment (they were in good enough shape to wait to be transported or hold on to be treated later). The middle third, those in immediate danger but who might nevertheless be salvaged, get top priority.

The concept of "triage" recognizes that resources are limited, tough decision need to be made, and some are beyond any hope. But in Team Obama Newspeak, triage means everyone can be saved because resources are presumed to be unlimited.

Posted by Jay Hancock at 10:13 AM | Permalink | Comments (0)
        

Having been battered via email and C4's show on WBAL all day yesterday over raising the gas tax, I ended the day with this in my inbox. Crying in the wilderness indeed:

Dear Mr. Hancock:

It's about time that someone took up this cause, brought up already by the Click and Clack brothers of Car Talk, who have wondered the same thing, have us keep the money in this country, especially with gas prices so low right now, which could be used for so many things. The figure I've heard at the federal level is that each penny of the gas tax raises a billion dollars, is that true?

People are struggling to pay their bills, yes, but about 17 cents extra a day, maybe that's the way to put it, is not going to force someone out of their home or keep them from feeding their families. And that 17 cents could do so much good, not just for transportation either, look at the whole gambling fiasco (I'm strongly anti-slots).
Why doesn't Senator Mikulski push for this instead of tax breaks for buying gas-guzzling cars? No one should get any kind of financial break for buying a car that gets less than 40 miles a gallon...

Anyway, I'm afraid that you are a sane voice crying in the wilderness, but one that is greatly appreciated.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (0)
        

BGE has posted the February "commodity" price for natural gas: 89.71 cents per therm. That's the cheapest for the default BGE product since October 2007. The plunge in market energy costs is starting to show up in BGE's retail prices. Ninety cents per therm is 14 percent lower than BGE's December price and 43 percent lower than the high of $1.58 reached in July. (This is your raw fuel price. Delivery charges are added.)

But the only BGE customers who will benefit from this plunge are those who didn't sign up for a fixed price deal with a third-party supplier such as BGE Home (different but related to BGE), Washington Gas Energy Services, etc. For many customers, BGE Home is still charging last summer's prices.

For anybody stuck with these fixed-price deals (typically you have to lock in for a year), it still might make sense to cancel and go back to BGE's default price -- even if there is an early-termination fee. It's a recession. Don't pay more for energy than you have to. BGE's standard natural-gas price should move even lower in coming months. But you need to switch as soon as you can because it takes a while for the paperwork to happen, and most of your savings will be reaped in colder-weather months.

BGE's electricity price should also eventually move lower, but not as much. And it will take longer. See Saturday's column for more details.

Posted by Jay Hancock at 6:30 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Few things indicate America's callowness and shallowness as the use of the euphemism "success" for the feat of accumulating lots of assets in your brokerage account, a house at the shore, a Cadillac Escalade etc. Obama makes this mistake in today's comments on capping executive pay at companies that get big bailouts.

"This is America. We don't disparage wealth. We don't begrudge anybody for achieving success. And we believe that success should be rewarded," Obama said in a news release. "But what gets people upset -- and rightfully so -- are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."

Success is responsible parenting, a stable marriage, happiness, a job you like, staying out of jail, looking after your fellow humans, having good friends and generally making the world better. It has little to do with your bank account.

Posted by Jay Hancock at 11:59 AM | Permalink | Comments (7)
        

I think what you have here is called a conundrum. Our legislators have preached to us for years about conserving gas. Now, with the demand on gas finally dropping in recent months, the state tax revenue is lacking, thus causing a problem for funding road maintenance and other related expenditures. The demand for gas has decreased because the price at the pump was high. The result was that people are conserving, just like the government has asked.

So, now that the price has come down and people are realizing that they CAN conserve, you would propose raising the price of gas by another ten cents per gallon. We did what the government wanted.....conserved...but now you would have us pay the price for conservation with higher taxes. Excuse me? Did I miss something here?

On the one hand, you comment "Ten cents a gallon would cost drivers only about $5 per month...". But then to further confuse us, your article states that "Environmentalists like a gas tax because it discourages driving and pollution." So, if the $5 per month is insignificant, why would those environmentalists believe if would discourage driving further? I am confused. So, let's assume that our state heeds your advice and raises our gas tax.

If the environmentalists are right and driving decreases with a ten cent increase, demand would go down. But with demand down, revenues would again suffer so we would need to raise the tax again. But then the demand would go down because we raised the gas tax. So we would have to raise the gas tax again because the demand is down which further discourages driving and demand, so we would have to raise the gas tax again. Lets' see now, with less need to drive, we wouldn't need our cars and surely wouldn't need new ones.....UMMMM

First the article about more immigrants now raise the gas tax. The biggest problem I see is that the garbage in Annapolis and Washington can not spend our tax money wisely. How many times has state administrations taken money out of the transportation fund to balance the general fund? No matter how much money is raised they will steal it for unimportant agendas.

You start comparing our tax to Europe, just compare it to Arizona. If the gas tax is raised then that money should only be used for roads and bridges. Lets put a 50% tax on the mass transit system that comes no where close to covering its expenses. Then lets take 50% of the salaries away from the do nothing Porcari and J.White, White left the port then came back and got a fifty thousand dollar raise , what changed but his bank account.

Porcari came from that bloated overpaid revolving door Uof M system, what a deal for us taxpayers. I am sick and tired of them telling me how important they are, if they are taht special they should be making magic things happen.Before I go would you find out who pays that other do nothing overpaid slob Donald Fry.

Even O'Malley, as you state, has more sense than you to even consider such a move of an increase. But then newspaper people who are not really stating news but non factual opinions say things for which they have no basis. Your first comment is really sound in that you indicate that raising the tax by only a dime makes us only a penny more than Pennsylvania. That's always a good argument for doing something..... stating that we are only this less than or more than that.

Great point! I know that convinces me of your sound argument. Then your second sound point is that it will only cost about $5.00 a month for getting the state a head start in beating foreign oil habit. Great insight. I'm sure that our foreign oil suppliers will sit back and accept a lesser income because of the decline in gas usage and not cut supply so that the cost will rise on its purchase. But you're right, the gas tax won't adjust because of that (it will stay at 10 cents) it will be the suppliers fault for punishing us for cutting usage. But, I do see your point in that it will cut dependence on foreign oil. Do you think if we raise it to 15 cents we can cut them out completely. Yeah, right. Good thinking.

Oh, then you use the great line of how the party in office, this time Democrats, will spend the money wisely. Wow! I bet you have plenty of great examples of that. How 'bout the earmarks on a "stimulus" package. I wonder who they're stimulating...certainly not their constituents at home. No? Of course the "Democratic senator who happened to stick in a few million for his son's project as an earmark, stimulates me and our economy. Great example don't you think? It certainly swayed me in having more "blind" faith. It's great in this country that anybody can say what they want or think as a right. Feels good. You must be exhilarated each day being able to do that. Good job.

When are you people at "The Sun" going to stop injecting personal opinion in the news? I read for months the bias and cheerleading showing up everywhere in the paper during the campaign and now it shows up in whats left of the business page. I thought your paper already had an opinion page.

Oh, you found selective quotes to support your case, but the bottom line is that this time the last thing we need is another tax. EZ Pass just raised its fees. Wasn't that enough? By the way according to how you liberals called it when the last admimistration did it, it was a tax. I'm sure if you sent the state a check the O'Malley clan would cash it. But for this ordinary citizen, no thanks.

In case you don't remember the year old tax hike (largest in the history of the state of Maryland) hasn't done anthing but drive some hard woking people out of the state. Of course you really played your hand when you said " Maryland needs to think bigger." Liberals always hide who they are, but that sentence says it all about you. In closing, I guess it doesn't matter to you because from what I understand in the last week is that Democrats don't feel the need to pay taxes!

Dear Mr. Hancock: Your recommendation to increase the State’s gas tax by a dime underscores the importance of creating a constitutional firewall to protect the Transportation Trust Fund (“Maryland could lead the way by raising its gas tax,” Feb 4).

There is no denying the need to “build a 21st-century transportation system,” but, unfortunately, more than $1 billion has been transferred from the fund over the past two decades into the general fund to balance the state budget. Millions of dollars have yet to be repaid. While emergency transfers to balance the budget have a rational underpinning, it is imperative that transferred money be replenished within a set time frame, to honor a promise to the taxpayers.

This was a key recommendation of the 1999 Hellman Commission on Transportation Investment. The fund is called the Transportation Trust Fund because motorists trust their government to spend gas tax revenue collected at the pump on transportation improvements. Legislation has been introduced in recent years to provide a constitutional firewall that would require the repayment of Transportation Trust Fund dollars that were transferred to the general fund. This constitutional protection exists in a number of states and is sound public policy. Any discussion or initiative to increase gas taxes must be preceded by the creation of a foundation of trust on transportation policy.

JOHN R. LEOPOLD

County Executive

Annapolis, MD

Posted by Jay Hancock at 10:03 AM | Permalink | Comments (1)
        

Here come the haircuts, and high time. The New York Times' Ed Andrews is reporting that Obama will cap executive pay at companies getting huge bailouts at $500,000 a year. Already garments are being rent, teeth gnashed, lamentations keened. This from the NYT story:

"That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus," said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. "And you know these companies that are in trouble are not going to pay much of an annual dividend."

Mr. Reda said only a handful of big companies pay chief executives and other senior executives $500,000 or less in total compensation. He said such limits will make it hard for the companies to recruit and keep executives, since they could earn more money at other firms.

"It would be really tough to get people to staff" companies that are forced to impose these limits, he said. "I don’t think this will work."

OK, then let them quit. Trained orangutans will work for bananas and do a better job than the guys now running Bank of America etc. If execs know what's good for themselves and the country, they'll take the crewcut and set an example. Or the firms will be nationalized, the common shareholders wiped out, and the top ranks swept clean.

Posted by Jay Hancock at 8:00 AM | Permalink | Comments (1)
        

Republicans haven't been this down and out since the 1970s, but already the Democrats are sowing the seeds of a Republican revival. The parade of well-off Democrats being considered for positions in Washington who have "questionable" tax returns, as we like to say, now includes Nancy Killefer, whom Obama chose as chief performance officer at the White House. Killefer withdrew from the position, says the New York Times.

President Obama’s choice for the position of chief White House performance officer has withdrawn from the post, an administration official said Tuesday, after coming forward with concerns about her tax returns.

Nancy Killefer, appointed by the president last month to a new position to scrutinize government spending, told the administration on Monday that she intended to step down from the position at the Office of Management and Budget. An administration official, speaking on condition of anonymity because the announcement was not finalized, confirmed that Ms. Killefer’s withdrawal came because of questions with her taxes.

The withdrawal, first reported by NBC News, came as the White House was already grappling with controversy over the tax returns of Tom Daschle, the president’s choice to lead the Health and Human Services Department.

So we now have Daschle, who didn't pay tax on a private car and driver and apparently took some dubious deductions. We have Treasury Secretary (!) Tim Geithner, who didn't pay self-employment tax for Medicare and Social Security for several years. We have Killefer. And don't forget Caroline Kennedy, who seems to have withdrawn from consideration for filling Hillary Clinton's NY Senate seat because of tax issues.

No wonder Republicans' favorite joke this week is: Why are Democrats so happy to raise taxes? They don't pay them.

Posted by Jay Hancock at 11:16 AM | Permalink | Comments (1)
        

JPMorgan Chase's Jamie Dimon doesn't get why Obama blasted financiers getting federal welfare for continuing to shovel millions into the pockets of their executives and employees. Banks didn't cause all of the problems, Dimon says. JP Morgan did better than most banks, he's thinking. We have to pay to retain the best employees (like they're going to get a job if they quit), he says.

Suck it up, pal. Everybody's making sacrifices. Life isn't fair, and it's really not fair this year. The majority of homeowners who didn't default are paying for a large minority who did. Retailers who did little to cause the crisis are getting killed. Collateral damage is everywhere. But guess what? The people who can most afford to make sacrifices, the people who did most to cause the catastrophe, the people who are benefiting most at the expense of taxpayers, are whining the loudest. Quite amazing.

From CNBC:

JPMorgan Chase Chairman and Chief Executive Jamie Dimon thinks outrage over bonuses being paid to executives of firms involved in the financial crisis and now receiving federal assistance is not entirely justified.

In his keynote speech to the "Future Of New York" conference sponsored by Crain's New York,
Dimon took issue with President Obama's characterization of bonuses and the way they have been paid out.

Dimon said that although bonuses have been very large, sizable portions are paid in stock, with strict rules on when that stock can be sold. He said an employer wants to support the best people on the payroll, and the quality of an employee is not always based on performance.

Although he suggested the president should not be pointing a finger at the financial community, Dimon acknowledged that banks are to blame for the crisis, with too much leverage, too many products, and bad underwriting.

Banks, he said, did not cause the troubles experienced by American International Group [AIG 1.21 -0.02 (-1.63%) ], the collapse in monoline credit, the woes of Fannie Mae [FNM 0.58 -0.01 (-1.71%) ] and Freddie Mac [FRE 0.58 --- UNCH (-0.59) ], or the poor regulation of the mortgage business.

The blame on Freddie Mac and Fannie Mae is especially disingenuous. Fannie and Freddie, flawed as they were, were largely victims of Wall Street's excess.

Posted by Jay Hancock at 10:53 AM | Permalink | Comments (8)
        

Good advice on cutting BGE bills from commenter Charlie, who chimes in on an extended thread on BGE costs here. In terms of per-cubic-foot heating power I assume space heaters are much more expensive than central heat. But they've also gotten more efficient. And if you're only using them to heat selected spaces, they could lower your overall bill.

The people who spend $20,000 on energy related expenditures hopefully plan to live in their home a long time. That's a long payback period. Of course the house is more comfortable and it might help the resale, but you won't get it all back. My suggestion for folks who live in an old drafty house and have done all the obvious inexpensive 'energy tips' is to make serious use of space heating. Keep the house quite cold and just heat the room you're in. There are all kinds of space heaters, pick the one that works for you.

Posted by Jay Hancock at 9:53 AM | Permalink | Comments (5)
Categories: BGE/electricity
        

Here is director/producer Barry Levinson's retort to last week's column on his proposal to have Maryland taxpayers share the cost of producing movies in Maryland. The letter was printed in yesterday's newspaper. I searched today to see if bills for this proposal had been filed. But I didn't find any on the General Assembly's site.

State film subsidies create jobs, revenue February 2, 2009 Last week, I traveled to Annapolis to support the proposal for a tax rebate to film companies that shoot films in the Maryland area. I was joined at the press conference on this issue by business and political leaders from all over the state, none of whom has anything to gain from increased film production except inasmuch as it helps builds Maryland's economy.

Is this proposal worthy of a debate? I would think so.

But Jay Hancock reduces it to sophomoric satire, comparing tax rebates to a scam in Mel Brooks' The Producers: "Entertainment moguls don't need to con little old ladies to finance productions anymore" ("Lights, camera ... what?" Jan. 28).

But Mr. Hancock's suggestion that this proposal represents Hollywood lining the pockets of producers at the expense of Maryland taxpayers is not only wrongheaded but naive.

Mr. Hancock provides a few statistics to support his case, but he avoids a recent study of New York state film subsidies by the accounting firm of Ernest and Young.

This study found that as a result of the credits, New York would keep or create about 19,500 jobs and generate $404 million in tax revenues at a cost of $215 million for the tax credits.

Jobs and revenue are at stake here. This issue is something that should be discussed.

Mr. Hancock's smug attitude is hardly an answer and is not informative to his readers.

Barry Levinson
New York

The writer is a movie and television producer.

Posted by Jay Hancock at 8:19 AM | Permalink | Comments (0)
        

Saturday's daily anti-recession tip included this piece of expert advice:

Do you really need a bundle? Comcast sells just cable for $61.30 a month. DirecTV and Verizon FiOS sell cable for about $50. You can get DSL Internet for less than $20 a month from Verizon and others. Then sign up with Vonage's Web-based phone service for $25. You're down to less than $100 a month.

Alert reader Hal Laurent notes that, to get DSL, you need a phone line, which would be an additional cost to the ones listed. And if you have a phone line, you don't need Vonage. So maybe the cheapest way to go is: $50 TV, plus a basic Verizon phone plan, plus DSL or dialup Internet.

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (2)
        

Some good responses to Saturday's column on big BGE bills, the gist of which is:

Metro Baltimore is freezing, worried about the recession and wondering why BGE bills are higher than ever even as the cost of gasoline, electricity and other energy has plunged.

Blame a cold winter and BGE's purchase of electricity last year when energy prices were hitting record heights. The popped energy bubble should eventually mean moderately lower BGE bills.

In my email inbox this morning is a mix of reactions, from the superfrugal who keep the thermostat at 61 and don't understand why everybody else doesn't, too, to those who DO keep the thermostat down but still struggle paying bills, to the couple with $1,200 monthly BGE bills.

Jay, our last bill was $528 and I’m expecting the next one to be over $600. To say that we are about broke is an understatement. And it’s the utility bills that are sending us over the edge. Our thermostat is never over 66, usually at 62, I’ve never been so cold in my home in my life. We’ve taken measures to cut costs, but to no avail. Our home is old (1925), central gas heat on first floor and electric baseboard on second floor – whole house is about 1800 sq. ft. Our highest bill here before deregulation was $165. Outraged doesn’t begin to describe it. And I will tell you that I talk about this issue all the time to people I meet, work with and to all the activists groups I work in – everyone is outraged and no one has forgotten.

AND:

Jay: $300 and they're complaining!?! We live in a 3,500 sq ft spec house, built in '86, we bought it in '91; replaced the the heat pumps 3.5 yrs ago w/ Carriers super duper new improved ya-dee-ya-da system and our last 2 bills have been $1,150.00 and $1,275.00 respectively! No kids, just the wife & I; 67 degrees upstairs, 68 downstairs; we're not chronic launderers unlike some friends who seem to go nuts if they don't hear the whir of the Maytags ... we do a load a week, and about 1.5 loads per week w/ the dishwasher. The AC/Htg folks blame it on the "heatpacks" coming on at a certain temperature ... w/ a straight face!

AND:

Mr. Hancock....I have been reading your column for some time and was particularly taken with the Saturday, January 31 edition. We live in a 2-BR rancher in Catonsville and have watched our BGE bills soar - some explanations are acceptable, some are not: Over the past 18 months we have initiated measures to help control our usage. Our total cash outlay is $20,030 to add replacement windows; hot water heater; insulaltion upper and lower levels; replaced standard light bulbs with fluorescent; storm doors front and rear; 2 ceiling fans in BR's - PLUS we enrolled in the 3-tier BGE hourly rate program; unplugged all equipment not in use; launder and use dishwasher only on off-peak hours and lowered the thermostat 2 degrees day and evening. And we only heat the upper level which contains 1180 square feet. All of this is documented and this month's BGE bill was for $492.50.

Repeated calls to BGE have been received courteously but with no substantive response as to how our increased billings can be exlained. Do you see any way that the million+ customers of BGE can look forward to relief anytime in the near future?

AND:

I never cease to be amused at the people who are complaining about high heating bills. Imagine lowering the thermostat from 70! These people are their own worst critics unintentionally. For years we operated our house at 65 daytime, 60 at night. Since my wife is now 75 and recovering from open-heart surgery we run the house at 67! I wonder how many electric users

are unknowingly not riding or taking advantage of the time-of-use rates they may be on? I have a very nice neighbor who didn't even realize that's what he had, much less the ability to take advantage of them to lower his electric charges. Next summer the people you quoted will be complaining about high electric costs while operating their home A/C at 72 instead of 78 during the day.

AND:

I'm sure you've received a ton of e-mails today about the various temperatures maintained by the home owners in your article. My wife and I laughed when we read how warm some people keep their homes. Our gas heat is set at 61 during the day and 57 at night. We live in an older rancher, use fluorescent bulbs and have a pellet stove in the clubroom. We had new windows and doors plus an energy efficient furnace installed a couple of years ago. We've also signed up for the BGE Smart Energy Savings Program (the programmable thermostat is due to be installed on March 10th.) Our latest BGE bill was $238.00 which, after reading about the others, seems reasonable. I'm retired and pushing 67 so we have to watch our money (especially after our retirement savings of 32 years vanished by over 50%.) Unfortunately, due to the current depression (it's well past any recession I've lived through) my wife can't afford to retire. I'm home most of the day so I try to be smart in the cold weather. I wear long johns under my regular clothes plus a vest on top which makes three layers for warmth. I wear thermal socks and have cut the tips of the fingers off a pair of gardening gloves for my hands. In the evening, we sit under lap blankets and use two down comforter plus an blanket when we go to bed. Do we feel the cold....yes! Is it manageable.....also yes!

Posted by Jay Hancock at 10:18 AM | Permalink | Comments (45)
Categories: BGE/electricity
        

A correspondent writes:

On Saturday afternoon and I my wife stopped off at Columbia Mall to buy a piece of carryon luggage that was on sale at at Macys. I was astounded -- the place looked like Christmas week in a good year. It took us 10 minutes to find a parking space, and when we did, it was at the opposite end of the Mall. So we walked from one end to the other and the place was jammed with shoppers. A lot of them seemed to be carrying bags, so it wasn't just sighseers.

I realize that the Howard County economy is not the metro Baltimore economy. How about reports from Baltimore city and the county? How's traffic at restaurants/ stores there?

Posted by Jay Hancock at 9:53 AM | Permalink | Comments (2)
        

George Mason University libertarian economist Don Boudreaux pens this clever reply...:

C. Paul Mendez wants to protect American workers from competition with a moratorium on immigration (Letters, Jan. 28). Why stop there? Why not also impose moratoria on worker training and on technological advances? After all, improved worker skills and more highly developed production techniques increase worker productivity. The result is that any given amount of output is produced using fewer workers. So worker training and technological advances, no less than immigrants, also compete with many existing workers.

In truth, any such moratoria are moratoria on sources of economic growth - never wise moves at any time, but especially not during times such as these when investors are especially leery of committing funds to long-term projects.

Sincerely,
Donald J. Boudreaux

... To this letter...:

Jay Hancock's disregard for the plight of unemployed Americans is shocking ("Immigrants can come to economy's rescue again," Jan. 21).

More than 11 million people are now looking for a job. Millions more are involuntarily working part-time or have grown so discouraged they have stopped looking for work altogether.

The best way to help the economy is to get these people back to work.

We need an immediate moratorium on immigration and guest-work visas, not more competition for Americans who can't find work.
C. Paul Mendez
Silver Spring

... Which was a response to this column:

So President Barack Obama, presiding over what will surely be the biggest budget deficits in history, doesn't want the country to go bankrupt.

"If we do nothing, then we will continue to see red ink as far as the eye can see," he said at a news conference two weeks ago. He'll summon a "fiscal responsibility summit," he told The Washington Post last week. America, he said, must make "hard decisions" about Medicare, Social Security and other expensive programs.

Hard decisions, of course, will include cutting costs and benefits, which will anger Democrats. We'll also need to raise taxes, which will anger Republicans.

But the hardest decision of all may be about increasing immigration, which even Obama doesn't seem to want to talk about. The retreat from trillion-dollar deficits must include recruiting millions of new Americans to share in this country's bounty as well as the cost of running it.

Boudreaux's retort is of a piece with the famous story about the Chinese dam, attributed by the Cato Institute to Jerry Jordan:

I am reminded of a story that a businessman told me a few years ago. While touring China, he came upon a team of nearly 100 workers building an earthen dam with shovels. The businessman commented to a local official that, with an earth-moving machine, a single worker could create the dam in an afternoon. The official’s curious response was, “Yes, but think of all the unemployment that would create.” “Oh,” said the businessman, “I thought you were building a dam. If it’s jobs you want to create, then take away their shovels and give them spoons!”

Posted by Jay Hancock at 8:04 AM | Permalink | Comments (2)