Excellent piece in yesterday's Sun by Kelly Brewington and Jamie Smith Hopkins on how Baltimore's elite hospitals are responding to the medical-reform debate. With all the discussion about high and unsustainable medical costs, Johns Hopkins Medicine and the University of Maryland Medical Center are under the spotlight for the amounts they charge the system to treat sick people.

American medicine is more expensive than treatment almost anywhere else in the world. The cost of care in Baltimore is even higher than the American average. This bar chart accompanying the article tells the tale. Drawing on data from the widely respected Dartmouth Atlas Project, it shows the expense borne by Medicare for spending in the last two years of chronically ill patients' lives at several hospitals.

As you can see, the expense at the University of Maryland Medical Center and Johns Hopkins Hospital was far above the national average and far above that of the standard-setting Mayo Clinic.

When presented with this kind of data, expensive hospitals always have the same response: Our patients were sicker than the patients at those other hospitals, so we had to bill more to take care of them.

But with this particular data there's a problem with that excuse. Can you see it? The patients at Baylor and the other low-cost hospitals were just as dead after two years as the patients at Hopkins, Mount Sinai and other high-cost places. So it's hard to argue that they were not as ill. 

Posted by Jay Hancock at 6:30 AM | Permalink | Comments (5)
Categories: Health Care
        

Light or nonexistent posting from now until next week. Happy Thanksgiving to all. We have much to be thankful for, despite everything. Be patient with comment moderation. I'll try to post comments often but it won't be up to the usual standards.

Posted by Jay Hancock at 10:45 AM | Permalink | Comments (0)
        

GAO found "pervasive deficiencies" in contract management by metro-Baltimore's own Centers for Medicare and Medicaid Services, which run the giant federal health programs. The Government Accountability Office concluded: "The continuing weaknesses in contracting activities and limited progress in addressing known deficiencies will continue to put billions of taxpayer dollars at risk of improper payments or waste."

Note that the problems have to do with contractors Medicare/Medicaid hires to do its job -- administering and auditing claims, keeping computers working, consulting and running the 1-800-MEDICARE phone line. It's work outsourced to the private sector -- not money to pay for medical services. Nevertheless, as someone who supports expanding the Medicare/Medicaid administration's power to run a public health option for all Americans, I admit that the GAO report does not inspire confidence in the organization's competence. GAO said:

These control deficiencies... stem from a weak overall control environment as characterized primarily by inadequate strategic planning for staffing and funding resources. CMS also did not accurately capture data on the nature and extent of its contracting, which hinders CMS’s ability to manage its acquisition function by identifying areas of risk, due to a lack of quality assurance procedures over data entry. CMS also has not substantially addressed seven of the nine recommendations made by GAO in 2007 to improve internal control over contracting and payments to contractors.

For example, CMS has not made progress in clarifying the roles and responsibilities for implementing certain contractor oversight responsibilities and, as of July 2009, CMS still had a backlog of contacts that were overdue for closeout, putting CMS at increased risk of not identifying or recovering improper payments or waste.

Pervasive deficiencies in CMS contract management internal control increase the risk of improper payments or waste. Specifically, based on our statistical random sample of 2008 CMS contract actions, GAO estimates that at least 84.3 percent of fiscal year 2008 contract actions contained at least one instance where a key control was not adequately implemented. GAO also estimates that at least 37.2 percent of fiscal year 2008 contract actions had three or more instances in which a key control was not adequately implemented.

Posted by Jay Hancock at 9:29 AM | Permalink | Comments (2)
Categories: Health Care
        

For all posts on Erickson's bankruptcy process, click here. You can also bookmark the link and check back for updates.

Judge Stacey Jernigan has approved Erickson Retirement's requests for additional, temporary protections for new residents at some of its communities, the company says. While the bankruptcy process goes on, Erickson will escrow new residents' entrance fees and give them a money-back guarantee if they move out -- whether or not their unit is resold to a new person. But only during the bankruptcy proceeding, which will last for at least several months in Erickson's case and often drags on for more than a year in others. To get this deal you have to be at an eligible community (See below. The Maryland communities are not eligible).

The guarantee lasts only as long as the bankruptcy process, the company says. If you stay in the community after Erickson corporate emerges from bankruptcy, the rules revert to the way they were before: You don't get your money back unless your community can sell the unit to a new resident for at least what you paid. If the apartment fetches less than what you paid, you get a lesser amount back. These are still and always have been the rules at most Erickson campuses.

Says Erickson spokesman Mel Tansill: "Once Erickson emerges from Chapter 11, this incentive expires and the entrance deposits will be moved from escrow and treated as all other residents' deposits, subject to the terms of the Residence & Care Agreement."

The entrance fees can run up to $600,000. For developing communities that are part of the bankruptcy process, the increased protections are intended to reassure people who might think twice about buying into a Chapter 11 situation.

Here are the Erickson communities that ARE offering the money-back protections, according to information supplied by Tansill: Ann's Choice and Maris Grove (PA); Fox Run Village (MI); Eagles Trace and Highland Springs (TX); Wind Crest (CO); Tall Grass Creek (KS); and Ashby Ponds (VA).

Here are the communities that are NOT offering the new deal. These are either 1) "mature" communities that are owned by a nonprofit and therefore shielded from the bankruptcy process or 2) communities that were financed with public bonds and are not directly part of the bankruptcy proceeding for that reason: Greenspring (VA); Charlestown, Riderwood and Oak Crest (MD); Henry Ford Village (MI); Seabrook and Cedar Crest (NJ); Brooksby Village (MA); Sedgebrook and Monarch Landing in IL; and Linden Ponds in MA.

Here is the full email from Tansill:

The protection of initial entrance deposits is not being challenged. The judge overseeing our proceedings has granted our motion to allow new initial entrance deposits to be escrowed, and returned without the condition that the residence is re-settled, if the resident leaves before Erickson emerges from Chapter 11. What is at issue is to which lenders those initial entrance deposits will go after Erickson’s emergence; a hearing has been scheduled for January 13 to address that issue – that’s all. In the meantime, Erickson can move forward with its incentive program.

As I previously noted to you, Erickson wants to continue to welcome as many new residents as possible. To create an incentive -- and an added reassurance -- for prospective residents to move in during Erickson's filing, the company has implemented a short-term offer whereby a resident could move in and, if he or she decided to leave while the company remains in Chapter 11,
could receive their deposit refund before their unit is re-occupied (normally, departing residents receive a refund of their entrance
deposit when their unit is re-occupied, in accordance with the terms of the Residence & Care Agreement that is in effect at all communities). The mechanism for accomplishing this incentive is to establish a temporary escrow account for new entrance deposits that is not subject to the terms of the Residence & Care Agreement's refund policy.

This temporary escrowed initial entrance deposit program is not available at all communities. Greenspring (VA); Charlestown, Riderwood and Oak Crest (MD); Henry Ford Village (MI); Seabrook (NJ); Brooksby Village (MA); and Cedar Crest (NJ) are not part of the bankruptcy filing. In addition, the bonded communities – Sedgebrook and Monarch Landing in IL, and Linden Ponds in MA -- are not part of the bankruptcy because they are financed via public bonds.

Once Erickson emerges from Chapter 11, this incentive expires and the entrance deposits will be moved from escrow and treated as all other residents' deposits, subject to the terms of the Residence & Care Agreement.

Posted by Jay Hancock at 12:28 PM | Permalink | Comments (4)
Categories: Erickson Bankruptcy
        

Of course the number of Marylanders earning more than $1 million plunged last year. There was a financial crisis. Proportionally, as they affect income and net worth, financial crises hurt the wealthy more than others. The plunge in the fortunes of the very wealthy after the Depression caused the mid-20th century decline in income inequality as much as anything else.

But that doesn't mean taxes aren't persuading rich folks to bug out of Maryland. The number of million-dollar-plus tax returns in the state fell by 30 percent last year, reports Laura Smitherman. More to the point of tax flight, more than 500 filers with million-dollar incomes in 2007 filed no tax return for 2008, meaning they moved, died or just didn't file. Surely many of them moved.

But probably not because of the special, 6.25 percent "millionaire's" bracket on the income tax. That expires next year. Rich people are exiting Maryland, their lawyers will tell you, because of Maryland's estate tax. Maryland's estate tax applies to estates of over $1 million and can take hundreds of thousands or millions from a dead person's heirs. The federal estate tax kicks in only on estates of more than $3.5 million. And many states, including Virginia and Florida, have no estate tax at all.

For the wealthy, Maryland's estate tax is a much more powerful repellent than its income tax. I guess Republicans focus on criticizing the income tax surcharge because it was approved by Gov. O'Malley. The estate tax has been around for a while. But I bet the income tax isn't the main factor.

Posted by Jay Hancock at 8:31 AM | Permalink | Comments (5)
Categories: Taxes
        

Carbon Fixated does a lovely job putting the global-warming emails stolen from the University of East Anglia in perspective. In exposing correspondence involving Issac Newton and other 17th-century researchers, he shows them to have been altering papers, shielding data from the public and agreeing to publish incorrect data.

Obviously the only conclusion to draw is that they foisted a giant fraud on a gullible public.

If you own any shares in companies that produce reflecting telescopes, use differential and integral calculus, or rely on the laws of motion, I should start dumping them NOW. The conspiracy behind the calculus myth has been suddenly, brutally and quite deliciously exposed after volumes of Newton’s private correspondence were compiled and published.

Posted by Jay Hancock at 5:32 PM | Permalink | Comments (6)
Categories: Environment
        

Linthicum-based Ciena Corp., a tech startup and superstar in the 1990s, is buying Nortel's fiber-optic networking business for $769 million. This is good news for the metro-Baltimore economy and helps make up for the fact that the region is losing Black & Decker's headquarters to Connecticut. Connecticut-based Stanley Works is buying Black & Decker and will lay off lots of employees at B&D's Towson headquarters.

Unlike Black & Decker's mature business, Ciena's is still developing, meaning more growth may be more likely. Ciena is not a Fortune 500 company like Black & Decker. It's not even in the Fortune 1,000. But this deal, if it's approved by antitrust authorities, would get it there. Put together the Ciena and Nortel operations would have about about $2 billion in revenue, which ought to put them somewhere in the upper reaches of the Fortune 1,000 on next year's list.

Reports The Sun's Gus Sentementes:

The acquisition would essentially double the size of Ciena's workforce, which currently stands at 2,100, with 700 in Maryland. The company has said it would offer jobs to about 2,000 Nortel employees.

Ciena said the assets the company is acquiring generated $1.36 billion in revenue for Nortel in 2008, and $556 million in revenue for the first six months of 2009.

Posted by Jay Hancock at 9:22 AM | Permalink | Comments (1)
        

The California Regents just raised tution by 32 percent. In Virginia, Virginia Tech, the College of William and Mary and Mary Washington are all raising tuition. Maryland should move in the same direction -- only more on the order of 5 percent. Gov. O'Malley's three-year tuition freeze has left Maryland universities without the resources to admit and educate everybody who wants to be educated. Maryland universities are rejecting applicants at record rates. We're rationing education.

Here's the recent column arguing in favor of a tuition increase. Here's a video reprise of the column in a chat with Jeff Salkin on Maryland Public Television.

Posted by Jay Hancock at 6:13 AM | Permalink | Comments (4)
Categories: Education
        

Climate-change deniers will make much of the hacked emails at the University of Anglia showing global-warming researchers deprecating their opponents and expressing frustration that data show planetary temperatures temporarily declining. Like anybody with a cause, scientists worried about climate change want to press their views as aggressively and persuasively as possible. Can't wait to see the image of (presumably) Pat Michaels and other skeptics stranded on an iceberg after the polar caps have melted. Couldn't find it on the Web so far.

For example, in one of the emails, not cited in the New York Times piece referenced above, Michael Mann, then at the University of Virginia, now at Penn State, says "we need to cover our behinds on what was done here, lest we be vulnerable to the snipings of the Idsos and co (i.e., that non-climatic influences on recent growth were nominally dealt w/, as in MBH99)." (Craig Idso and his relatives run the Center for the Study of Carbon Dioxide and Global Change, which says: "Tired of alarmist global warming propaganda?")

To put this in a fair light, we should have somebody hack the deniers' emails. Of course their correspondence would show only honest and faithful guidance by the data, wherever it might lead, and dignified respect for their opponents!

Climate change is not a continuous upward curve. If temperatures showed a long, unbroken upward slope, that really would be proof of a conspiracy. There are fluctuations. Sometimes temperatures go down for a year or few, which gives fodder to the talk radio blabbers. For climate scientists to be frustrated that this hurts the case for political action against climate change is natural.

The Times piece gives Michaels a $10 quote up high in the story. "This is not a smoking gun; this is a mushroom cloud," he tells the Times's Andrew Revkin. But what he seems to be saying, as becomes apparent lower down, is not that it's a mushroom cloud indicating climate change is a hoax. It's an alleged mushroom cloud about academic protocols, an "effort to block the release of data for independent review." At first, Michaels thought, the emails just showed "this is the way scientists talk."

Trying to draw any conclusion from imperfect data often produces a sales job from those pushing one course of action or another. But that doesn't change reality. There is a scientific consensus that humans are changing the planet's climate. The emails' disclosure does nothing to change that. The effects of global warming are uncertain, but they represent a huge risk to future generations. To ignore that risk, to do nothing, would be the real outrage.

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (35)
Categories: Environment
        

As Jamie Smith Hopkins reports, mortgage delinquencies keep rising and are now occurring in a huge way among borrowers who had been rated good credit risks. Just about every category of mortgages gone bad hit a new record in the third quarter, according to the Mortgage Bankers Association. Rising unemployment is a primary cause. "Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP," chief economist Jay Brinkmann said in the MBA's press release.

One piece of data lacking in the survey is the vintage of the mortgages going bad -- ie., how long ago were they issued? It's relevant because even today, after all we've been through, there are reasons to question the lending standards on newly issued mortgages. Especially loans guaranteed by the FHA. As many have pointed out and as today's column notes, we're trying to solve a debt crisis by issuing more debt.

Federal Housing Administration-backed loans have soared in the last year, but the foreclosure rate on FHA loans has risen even higher! Says Brinkmann:

The foreclosure rate on FHA loans also increased, despite having a large increase in the number

of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages. If we assume these newly-originated loans are not the ones defaulting and remove the big denominator increase from the calculation results, the foreclosure rate would be1.76 percent rather than 1.31 percent reported.

"If we assume these newly-originated loans are not the ones defaulting..." That's a pretty big assumption.

Posted by Jay Hancock at 8:05 AM | Permalink | Comments (7)
Categories: The Great Recession
        

Stopped at T. Rowe Price's annual investment symposium at the Waterfront Marriott this morning. I only caught an hour, but the plenary panel on the global investment environment was, on the whole, quite positive. The panelists were relieved that the world has stepped away from the economic abyss, surprised at how quickly financial markets have snapped back since March and cautiously optimistic that there's still some upside.

The panelists were Christopher Alderson, CEO of T. Rowe Price International, John Linehan, co-director of U.S. equities and Mary Miller, director of fixed income. Here are some snippets:

The panelists see plenty of investors still waiting to dive in to the markets. "There's still a huge amount of cash on the sidelines," said Linehan. Said Miller: "I'm familiar with one institution that just borrowed $400 million because they could and then called up and said, 'What should we do with it?'"

Miller: "We have had a remarkable recovery this year in the credit markets." The economy is "out of the ICU" and "out of the emergency room" and on "outpatient status." But economic performance is lagging behind the markets, she said, and commercial real estate credit is "still struggling."

Investors are still "hesitant," she said, with lots of money going into conservative short-term bond funds instead of stocks. "There's enormous relief, and that's all to the good. But I think the psychology is still pretty fragile."

Alderson sees short-term interest rates staying low as global central bankers continue extraordinary economic stimulus. But, he said, "it's starting to create problems in other part of the world" as cheap dollar-denominated loans are cranking up asset prices. Recently in Hong Kong, he said, a 1,000-square-foot apartment sold for $12 million -- evidence of a bubble.

Corporate profits are back, but Linehan noted that they're coming largely from cost-cutting, not healthy demand. 70 percent of U.S. companies are beating profit forecasts, he said, but only 30 percent beat revenue forecasts.

Alderson sees more gains possible in all kinds of stocks. "I don't think the market has got ahead of itself," he said. Emerging market stocks sell for 2 times book, about their historical average. Nor are developed-market stocks overpriced on a book-value basis, he said.

Linehan noted the rise in importance of Washington as a force in the markets -- in financial reform, in health-care reform, in enforcing Internet neutrality and in disbursing the billions in stimulus money. He is relatively optimistic about U.S. consumer spending. "A lot has been written about the demise of the U.S. consumer. My sense is, we're probably more resilient than that."

Alderson asked Miller a great question: Give enormous government debt and government borrowing around the world, why should anybody own U.S. treasuries or any other government debt? She gave a sort-of half-hearted answer. "You might always want to have some allocation go government debt as a risk-free asset," even if you make sure to vary maturities and consider inflation bonds such as TIPS, she said. Alderson: "Is it really risk free?"

The panelists were skeptical about gold, which has been setting new records recently. "Gold has symbolic value, but does it really have any economic value?" asked Linehan. "Clearly gold has been bid up in anticipation of inflation." But, he suggested, owning other commodities might be a better hedge against inflation.

And the panelists didn't think inflaiton was much of a near-term problem, anyway, given the huge global excess labor and capital-stock capacity. "It would be difficult for me to imagine an environment with inflation getting out of control," Miller said. The weak dollar, she added, "is a cause of concern, but at the moment it is helping the U.S. economy" by stimulating exports.

Nobody was worried that the dollar will cease to be the global currency of choice. There are no alternatives, they said. The Chinese yuan doesn't trade freely. The euro is managed by countries that have economic troubles of their own and are often in disagreement. Alderson sees a world where the yuan might be the reserve currency -- but not for another decade or two.

Linehan seems to like large-cap stocks relative to small, given the huge run-up that small companies have had.

Posted by Jay Hancock at 10:58 AM | Permalink | Comments (0)
Categories: The Great Recession
        

Jamie Smith Hopkins writes in today's Sun about downsizing moves by home owners -- and not just retirees and empty nesters. Home builders are joining the small-house trend, too. They've figured out that Americans can afford less house and often want smaller even if they can afford bigger. At the same time, builders need a product to compete with all the foreclosed houses that still flood the market and keep falling in price.

Compact starter homes are a way to do that. KB Home introduced its Open Series of homes this year, which it says have been selling nicely. Open Series designs range from 1,239 to 2,300 square feet, according to Builder online, and are priced less than $120,000 in Las Vegas and less than $300,000 in California. To save space without making people feel cramped they combine the kitchen, dining and living spaces in one, wall-less area. (Here's a video.) Two months ago KB said it was relaunching operations in Maryland, and it looks like it'll push the Open Series hard here. D.R. Horton and other builders are also offering smaller homes, says Seeking Alpha.

All in all, a good trend. Smaller houses, smaller energy bills, smaller mortgages. It will, however, mean much lower profits for builders. (Full disclosure: Your blogger & Mrs. Hancock, new empty nesters, live in a house of 2,300 square feet, according to the State Department of Assessments & Taxation. Seems too big.)

Posted by Jay Hancock at 7:00 AM | Permalink | Comments (5)
Categories: The Great Recession
        

Excellent post on the Audacious Ideas blog by Dan Morhaim, emergency medicine physician and state delegate from Baltimore County, on the failed war on drugs. Go read it.

Jammed prisons, AIDS, destroyed families, crime victims, terrorist funding: the toll is immense. Addiction treatment is a critical step but just a beginning. Isn’t it time our society had a full, open, honest, and intense discussion about drugs? Shouldn’t we admit that the War on Drugs has failed and that other policies deserve exploration?

The answer, of course, is hell yes. Carefully controlled legalization of heroin and cocaine would improve society from Baltimore to Mexico to Colombia to Afghanistan. It's a radical move, but it can't be any worse than what we have now. Just do it.

Posted by Jay Hancock at 6:39 AM | Permalink | Comments (5)
Categories: War on Drugs
        

Tackle Michael Oher and running back Ray Rice will be signing autographs at the "Keep It Made In America" meeting at M&T Stadium tonight. Other luminaries include Aris Melissaratos of Johns Hopkins, Mike Galiazzo of the Regional Manufacturing Institute, United Steelworkers 9477 President John Cirri and Severstal Sparrows President Thomas Russo.

The meeting is sponsored by the Alliance for American Manufacturing, a joint Steelworkers-industry venture that pushes U.S. policymakers to hold importing countries and industries accountable for currency manipulation, environmental despoilation, poor labor conditions and so forth. According to the press release they'll ask/answer questions such as "How do we bring good clean energy manufacturing jobs to Maryland? How can rebuild our manufacturing base? What changes do we need to [make] to tax and trade policies?"

There'll be an autograph session with Oher and Rice, "who will be signing limited edition 'Keep It Made In America' souvenir photos."

6 p.m. in the stadium's club level. Free admission. Free parking. Open to the public.

Posted by Jay Hancock at 6:49 AM | Permalink | Comments (3)
Categories: Manufacturing
        

Gresham's Law, in monetary studies, is the tendency of bad money to drive out good. When potentates start debasing their currencies, people hoard the coins with high precious-metal content and spend the bad stuff. Coins laced with lead and copper take over the money supply.

There is a similar dynamic going on in media. As platforms proliferate, crap news is driving out legitimate news. It started when Time magazine started its "People" section. It expanded when Time turned "People" into a whole magazine. It expanded again with reality TV, Gawker, Kate Gosselin etc. Now it has reached a new high. Today's New York Times -- the sober newspaper of record, the Gray Lady! -- has published this headline and subhed on its home page:

Is Doomsday Coming? Perhaps, but Not in 2012 Scientists say not to worry about predictions based on the Mayan calendar that the world will end soon.

On the contrary. This seems to be a powerful sign that the world is indeed ending.

Posted by Jay Hancock at 12:21 PM | Permalink | Comments (3)
Categories: Media
        

The Great Recession has given currency to the ancient legal term "cease and desist," as bank after bank gets smacked with an order from government regulators to shape up or else. Baltimore's 1st Mariner Bank got a "cease" letter a couple months ago, basically giving it until June to get more capital or risk being seized.

Now, reports American Banker and relayed by Calculated Risk, the Federal Deposit Insurance Corp. is trashing "cease and desist" and replacing it with "consent order," a term AB says is used by other regulators.

We're getting a little Orwellian here. Most cease and desist orders were already "consent" orders in the sense that banks had to stipulate (not contest) the facts as found by the FDIC or challenge them at a hearing. In both cases the bank is consenting only because government heavies are giving it the fifth degree.

But consent sounds so much nicer than the categorical C&D, don't you think? Cease and desist is the FDIC in crouch position, service revolver drawn. "Back away from the subprime mortgages!" Consent makes it sound like the FDIC and the banks are friends!

Posted by Jay Hancock at 9:03 AM | Permalink | Comments (0)
Categories: The Great Recession
        

The Cordish Co., Simon Property and others are having a jobs and vendor fair Thursday for people who want to do business with Power Plant Entertainment, Casino Resorts Maryland. It's at Arundel Mills Mall, near the putative slots site. Problem: The county hasn't approved the project. The developers don't have a casino license.

Perhaps it's their attempt to push the process and show how much local dough will be spent and jobs created locally if the project goes forward. But the county councilmembers -- doing their best Hamlet, brows furrowed, hands wringing -- are unlikely to be impressed. They may be annoyed.

I asked Cordish spokeswoman Danielle Babcock whether the job fair might be premature, given the lack of approval by the county. She replied: "We expect approvals. We have received hundreds of calls from job seekers and potential vendors about the project. This is a Career & Vendor Information Expo to prepare local contractors, vendors and career candidates for the estimated 4,000 jobs anticipated."

Says the press release from Cordish et. al.:

(Baltimore, MD) – PPE Casino Resorts Maryland, LLC (“PPE MD”) announced its plans today to host a Career & Vendor Information Expo at Arundel Mills Mall in an effort to prepare local contractors, vendors and career candidates for the estimated 2,500 construction and 1,500 permanent jobs anticipated with the development of a world-class gaming facility at Arundel Mills Mall. The Expo will be held on Thursday, November 19, 2009 from 11am – 2pm in the Arundel Mills Mall food court.

The Expo will be an information based event to provide Anne Arundel County and Maryland contractors and vendors information on how to procure business with the casino development and operations divisions of PPE MD. Contractors and vendors will have an opportunity to register for inclusion in PPE MD’s future bid lists and to receive information regarding future events and opportunities with PPE MD.

The career segment of the Expo will be dedicated to informing job candidates of
opportunities in the gaming industry, requirements for employment, training programs
available to prepare candidates for hiring and to meet gaming professionals in the field for an
insider’s perspective of the various career opportunities with PPE MD’s facility at Arundel
Mills. Representatives from the Anne Arundel Workforce Development Corporation and
Anne Arundel Community College will be on hand to provide information on job training
and academic opportunities available to prepare prospective candidates for employment in
areas such as the culinary arts, customer service, security, surveillance, information
technologies, finance, audit and compliance, marketing and business management.

In addition to the Career and Vendor Expo, PPE MD will also hold a press conference in
the Community Center adjacent to the food court at Arundel Mills Mall at 10:30am the day
of the Expo. Representatives from PPE MD, The Simon Property Group (Arundel Mills)
and local business organizations will be present to answer questions regarding the event and
vendor and employment opportunities with PPE MD at its Arundel Mills gaming facility.

Posted by Jay Hancock at 6:33 AM | Permalink | Comments (16)
Categories: Slots
        

Cute stuff from EJSKanye8585, the Dow Jones, the Great Recession and the Clash.

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

a public option open to everyone (allow states to opt out of this if they dare), Medicare-negotiated drug benefits, no 12-year monopoly for new drugs, and a major squeeze on Medicare reimbursements for doctors -- and have CBO score the savings. I guarantee you, the number will be large.

A public option available to everyone -- not just people who lack insurance -- really would stop costs from rising so quickly. Letting Medicare negotiate lower drug prices would also save money, but probably not as much as Reich thinks. "A major squeeze on Medicare reimbursements for doctors" could have terrible consequences if the targets were primarily general practitioners, who are already getting hammered. The target needs to be specialists -- surgeons, neurologists etc. -- and not just on their fees per procedure (see below).

Reducing patent protections for new drugs is a terrible, terrible idea. Dollar, for dollar, pharmaceuticals are among the best medical investments going. Telling the biotech companies they'll

get competition from generics the minute their pills hit the market is a perfect way to get them to stop trying -- hurting patients and a key U.S. industry in one stroke.

Reich fails to mention two other cost-control measures missing from the legislation. 1) Malpractice lawsuit reform. This isn't a silver bullet, but it's real money and ought to be thrown in not just as good policy but as a tactical plea for possible Republican support. 2) Much more emphasis on "evidence-based" medicine and reimbursement. The BIG reason for out-of-control medical costs isn't that we're paying surgeons too much. It's that they're doing too many unnecessary surgeries. Have the Congressional Budget Office score those provisions and you'll see even bigger savings.

Posted by Jay Hancock at 6:51 AM | Permalink | Comments (4)
Categories: Health Care
        

The jobs discussion board on Baltimore Craigslist is having a few spam issues.

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

Excellent story by NYT's Robert Pear. Statements by more than a dozen members of congress weren't their own but were written wholly or partly by lobbyists for Genentech, the biopharm company owned by Roche. The statements were put in the Congressional Record, the official archive of the proceedings of Congress.

Pear queried Gententech for a response:

Asked about the Congressional statements, a lobbyist close to Genentech said: “This happens all the time. There was nothing nefarious about it.”

Well, he's half right. It probably does happen all the time. Why is it a scandal when a politician plagiarizes an author or another politician in a campaign speech but not when a multinational corporation programs more than a dozen Chatty Cathy lawmakers and pulls the string?

Posted by Jay Hancock at 5:03 PM | Permalink | Comments (3)
Categories: Health Care
        

You can read all the posts on Erickson's bankruptcy by clicking here.

Bankruptcy Judge Stacey Jernigan will hear arguments at 9:30 a.m. next Wednesday on Erickson Retirement's plan to increase protections for resident's entrance fees, which the company calls "initial entrance deposits." It basically amounts to a money-back guarantee if you buy an Erickson unit and want to move out later or if the community has financial troubles or goes out of business. Current practice is, you get your money back after the community sells your unit to somebody else.

If I were about to sign for an Erickson unit, I would wait until next week to see if the judge approves the new protections and then ask for the new deal. Below is Erickson's argument. IED is initial entrance deposit. CCRC is continuing care retirement community.

Allowing the residents to have a free look at whether or not the CCRCs are operating effectively while these cases are pending should drastically increase the willingness of potential residents to pay an IED... Equally important to a residents’ peace of mind is the knowledge that should their CCRC close, their IED would be promptly refunded to such resident. Should a Closure Event happen, it is imperative that the residents have access to the IEDs paid upon their residency of the CCRC.

UPDATE: Jon Chesto at the Patriot Ledger in Quincy, reporting on Erickson's Linden Ponds property in Hingham, reports that the new protections would not apply to all Erickson communities.

Mary Helen Lorenz, chairwoman of the Linden Ponds board, said the escrow protections being considered in bankruptcy court would only apply to communities where Erickson landowner subsidiaries filed for bankruptcy along with their parent company. Because the Hingham Campus hasn’t filed for bankruptcy, the deposit refunds at Linden Ponds would continue to be governed by the terms spelled out in the residency contracts.

Posted by Jay Hancock at 3:16 PM | Permalink | Comments (2)
Categories: Erickson Bankruptcy
        

Overthinking It identifies the smoking gun in the declining quality of rock music. As you can see from his chart below, the number of songs making Rolling Stone's Top 500 Greatest Songs of all time falls off sharply right after American crude oil output begins declining in the 1960s. Coincidence?? That's what you naive zombies always say. You can't handle the truth.

Barry Ritholtz uses the chart to teach an elementary statistics lesson.

Posted by Jay Hancock at 2:20 PM | Permalink | Comments (1)
        

In an email to members, Greater Baltimore Committee's Don Fry says Black & Decker's decision to sell itself to Stanley Works, with the combined corporate headquarters in Connecticut, is not a reflection on Maryland's business climate.

For the record, even with the loss of Black and Decker's headquarters, Maryland’s remaining six Fortune 500 headquarters are one more than our state had four years ago in the boom year of 2006. Thirty states have fewer Fortune 500 corporate headquarters than Maryland.

My point is: a state’s business climate is reflected in many more economic outcomes than simply the number of its Fortune 500 headquarters, so let’s resist the temptation to become fixated on this one measurement. It would be far more constructive for Maryland business leaders and elected leaders to achieve a consensus on what, specifically, are the characteristics of a good business climate and fashion our policies around that consensus to ensure that Maryland is optimally competitive and economically successful.

Posted by Jay Hancock at 1:43 PM | Permalink | Comments (1)
        

Federal officials arrested two computer programmers who worked for Bernie Madoff. Officials alleged that the men showed Madoff how to produce fake documents -- presumably financial statements -- in return for hush money. AP:

"Without the help of O'Hara and Perez, the Madoff fraud would not have been possible," George S. Canellos, director of the SEC's New York Regional Office, said in a statement.

If true, I hope it was a lot of hush money. These are only government allegations. But if they're true, these guys were putting their freedom on the line to enable Bernie to pocket billions. In the job market such combat duty should have commanded a very nice premium. But usually in cases like this it seems that the low-level folks -- the drug mules, the street-corner dealers, the insider-trading tippers etc. -- don't get paid for the risks they take.

UPDATE: I'm not justifying anything that happened. But in theory the same incentives for risks and rewards should apply in the illicit job market as the licit.

Posted by Jay Hancock at 11:44 AM | Permalink | Comments (0)
        

The price of gold, in case you hadn't noticed keeps hitting new highs. After spending the 1990s in the $300 and $400 range, it started rising, passed $1,000 and recently passed $1,100. The price is being driven up by speculation, yes, but also by the U.S. government's decision to print billions of dollar bills out of thin air and to add trillions to the national debt that will probably be paid back through inflation.

Tyler Cowen, however, says there is evidence that gold is a bubble -- the latest being a gold necklace shaped in the form of gold's round-trip price from the early 1980s to now. This is already earning him objections from gold bugs -- generally a prickly bunch. "Why is it that many academics have a thinly veiled contempt for the yellow metal...?" says the first commenter. It's true that gold has been a miserable investment over long periods. But when the world financial and economic system is as messed up as this one, an investment that doesn't depend on human competence -- indeed, it thrives on incompetence -- looks pretty good.

Posted by Jay Hancock at 9:39 AM | Permalink | Comments (1)
        

One of the many flaws in the way big corporations are run is the way CEOs dominate the boards of directors they're supposed to be reporting to. Look no further than CEO Mayo Shattuck's tame panel of lackeys at Constellation Energy. Technically CEOs don't choose their directors, but they have effective veto power and frequently "suggest" "suitable" candidates to the nominating committee. Barry Ritholtz describes the phenomenon well in Bailout Nation.

Boards of Directors have historically been a collection of business associates, cronies and golfing buddies, with interlocking memberships between companies.

Board members are nominated by fellow insiders, effectively disenfranchising shareholders. This allows management to become ensconced, with little in the way of owner input into a company’s direction. Open competition for Board seats is difficult, even for large shareholders.

Now Bloomberg's David Reilly reports that Chris Dodd's financial-reform bill would allow shareholders themselves -- the owners! -- to decide who should run their companies. But, as Reilly notes, the proposal will be fiercely fought.

A prime example is buried deep within the 1,136-page, financial-reform legislation unveiled this week by Senate Banking Committee Chairman Christopher Dodd. It is a proposal to let shareholders nominate directors to corporate boards. The draft bill goes on to say votes for these positions shouldn’t resemble a Soviet-era election.

This isn’t radical stuff. Shareholders are the owners of companies and it is high time they have a greater say in how they are run. For years, though, corporate executives and their supporters have beaten back attempts to make boards accountable.

Posted by Jay Hancock at 9:18 AM | Permalink | Comments (1)
        

Former Washington Post monetary guru John Berry, writing for Reuters, is optimistic about the huge increase in labor productivity for the third quarter. Some think the fact that the country is making much more stuff with many fewer workers signals a jobless recovery and high unemployment for a long time. Maybe not, says Berry:

Yet the sharp gains in efficiency are helping drive corporate profits and that could be just what’s needed to convince employers that it’s safe to begin hiring again.

Furthermore, it isn’t just profits that are improving. Workers’ inflation-adjusted hourly compensation rose 2.1 percent over the past four quarters after falling by about the same amount in the preceding period.

Increased profitability is also paving the way for increased business investment, which will be an important determinant in how fast the economy grows next year. After falling for six consecutive quarters, business spending on equipment and software edged up at a 1.1 percent annual rate in the third quarter.

Posted by Jay Hancock at 1:41 PM | Permalink | Comments (0)
        

"It's very important to the United States that we have a strong dollar," Treasury Secretary Timothy Geithner said in Singapore today, keeping a straight face.

Here is our allegory of the day. Kevin Bacon is Treasury Secretary Geithner. The wreckage from the Faber College parade represents the dollar. The berserk crowds fleeing the meltdown are the international investors. See what happens.

Posted by Jay Hancock at 1:14 PM | Permalink | Comments (1)
        

First-time claims for unemployment benefits fell to their lowest level since January. T. Rowe Price ecnonomist Alan Levenson looks at the data. New claims fell by 12,000 to 502,000 last week. Continuing claims fell by 312,000 to 5.8 million. (That's for two weeks ago.)

Says Levenson:

Bottom line: Labor market healing trend continues into November, and the unemployment rate should reverse some of October's outsized gain. Nonetheless, the unemployment will tend to rise until monthly job growth is sufficient to absorb the flow of labor force entrance (roughly +110,000 per month); we don't expect a peak until mid-2010.

Posted by Jay Hancock at 10:56 AM | Permalink | Comments (2)
Categories: The Great Recession
        

The Milken Institute published its annual list of the best-performing cities, economically speaking. Metro Baltimore was No. 64 on the list of the 200 biggest metro areas for 2009, ranking well in high-tech production and gross domestic product growth. It beat out most metro areas in the Mid-Atlantic and Northeast. But it ranked far below dozens of southern towns -- partly, as the report admits, because the oil economy boosted metro areas in Texas and Louisiana. The Milken Institute also credits the south's lower costs.

You should note, however, that a lot of the data is from 2008, possibly before the economic crash took full effect. I bet Baltimore, which has been helped by stimulus and other government spending this year, would do much better if ranked now.

Texas took four of the top five spots -- Austin, Kileen-Fort Hood, McAllen and Houston. Salt Lake City was No. 3. The only northern city in the top 10 is Olympia, Washington. The highest-ranking city that's even remotely in the Northeast was metro Washington D.C. Next is New York at 38th and Hartford at 48th.

Out of the 200 biggest metro areas, metro Baltimore ranked 23rd in one high-tech "location quotient" and 56th in another. It was 38th in 1-year, high-tech GDP growth and 54th in 5-year, high-tech GDP growth. For other measures, such as overall job growth and wage and salary growth, it ranked lower.

Posted by Jay Hancock at 6:08 AM | Permalink | Comments (4)
        

Note to self: Do not ever again use the MetaBank "Get Cash Now!" ATM in The Sun's lobby. $4.25 in fees to get $100 in cash.

Posted by Jay Hancock at 2:59 PM | Permalink | Comments (2)
Categories: Finance
        

This is mind-blowing. Justice Kennedy, who advanced free speech when he voted to uphold Constitutional protections for flag-burning, demanded to view and edit a high-school newspaper story about a talk he gave at the high school. In his legal opinions he is wise and just. But in his actions... Hmmm. Yoda, we have a disturbance in the categorical imperative. From the New York Times:

It turns out that Justice Anthony M. Kennedy, widely regarded as one of the court’s most vigilant defenders of First Amendment values, had provided the newspaper, The Daltonian, with a lesson about journalistic independence. Justice Kennedy’s office had insisted on approving any article about a talk he gave to an assembly of Dalton high school students on Oct. 28.

Posted by Jay Hancock at 11:42 AM | Permalink | Comments (0)
        

No column today or Friday. I'm helping out editing this week... Here is today's economic indicator. As expected, a rainy rush hour jammed up the interstate north of town. According to traffic reports there were big backups on 95 coming down to the Baltimore beltway from White Marsh and the north. The rain should have turned Route 100 in Howard County, normally stop-and-go during morning rush, into an even slower proposition. But 100 was free and clear.

The difference, of course, is Veterans Day. Shows you how dependent the southwest Baltimore suburbs are on the government. I've seen 100 more crowded on Sunday mornings.

Posted by Jay Hancock at 10:55 AM | Permalink | Comments (0)
        

For all the Erickson bankrutpcy commentary on one, easy-to-read blog page, click here.

Naturally people thinking of moving into one of Erickson Retirement's communities have started thinking twice since the the mother, for-profit company -- the one that develops the communities and eventually sells them to a nonprofit corporation -- sought protection under the bankruptcy code. A new filing with the Dallas bankruptcy court documents the plunge in people putting money down for Erickson apartments. It also asks the court for new protections -- beyond the escrow account already approved -- to give customers confidence they can get their money back if they move out of a community. If approved, the request would give new residents greater protections than current residents enjoy -- at least temporarily.

In 2008 Erickson as a whole was taking in more than $30 million a month in entrance fees, which give people the right to move into an Erickson space, according to the filing. (No link. The documents are behind a pay wall on pacer.gov.) Entrance fees run from $100,000 to $600,000 per apartment. This year collections were down to $13.5 million per month up until the bankruptcy filing. That was less than half the usual level as seniors had trouble selling their homes to raise the cash for the entrance cost. This was a big factor in Erickson's financial troubles. Since the Oct. 19 bankruptcy filing Erickson has received only $4.5 million in entrance fees, the filing said.

To try to reverse the drought, first Erickson sought and received the judge's permission to create an escrow account that would wall off new entrance fees from creditors. Now it wants to go further, guaranteeing to new residents they'll get entrance fees back if the community has to close or when they move out or die -- even if the company can't resell the apartments to somebody else. In effect it's a "money-back guarantee" to give prospective residents the choice to move out with a refund if they decide the bankruptcy process has diminished a community's quality.

Under Erickson's current contracts, residents or their heirs get the entrance fee back only if a community can resell the apartment to a new resident. If the new resident pays a lower entrance fee than the previous one, resident No. 1 might not get back the full fee.

Says Erickson's request to the bankruptcy judge:

The Debtors are hopeful the relief sought in this Motion will provide new residents with comfort that during the time periods covered in this motion, the new residents can elect to leave their respective CCRC [continuing care retirement center] and receive a refund of their IED [initial entrance deposit]. The Debtors believe that these modifications are critical to obtaining new IEDs pending confirmation of a plan in these cases.

A resident’s ability to elect to leave their respective CCRC is necessary to provide prospective residents with the peace of mind that, during the pendency of the Debtors’ chapter 11 cases, the residents are not held captive by their obligations under the Residence and Care Agreements. The current requirement that a new resident pay an IED prior to the refund of an exiting resident’s IED will necessarily deter prospective residents from entering into Residence and Care Agreements while the Debtors cases are pending. Allowing the residents to have a free look at whether or not the CCRCs are operating effectively while these cases are pending should drastically increase the willingness of potential residents to pay an IED. Because IEDs are critical to the Debtor Landowners’ operations, the provision regarding return of the IEDs should be amended in order not to discourage prospective residents from choosing to reside at one of the Debtors’ CCRCs.

Equally important to a residents’ peace of mind is the knowledge that should their
CCRC close, their IED would be promptly refunded to such resident. Should a Closure Event
happen, it is imperative that the residents have access to the IEDs paid upon their residency of
the CCRC.

Posted by Jay Hancock at 6:15 AM | Permalink | Comments (3)
Categories: Erickson Bankruptcy
        

Maybe the toughest job in today's real estate market is selling monster luxury homes, many of which were built only because of the financing bubble and people scoring mortgages they didn't deserve to buy houses they couldn't afford. Many million-dollar homes are in bankers' inventories, having been foreclosed upon. They're big white elephants -- expensive to keep up and in saleable condition, but difficult to sell.

But the latest metro-Baltimore sales numbers show that million-dollar homes are participating in the jump in activity that the rest of the market is seeing. Sixteen metro-Baltimore homes priced $1 million or more sold in October, according to MRIS. Seven sold in September, 22 in August and 13 in July. There were 695 million-dollar-plus houses for sale in metro Baltimore last month. That's down from 786 in May and the lowest level since January, when fewer people are trying to sell houses, anyway.

Few if any people buying these things qualify for the first-time home buyer tax credit. (Only people with relatively modest incomes qualify.) But my colleague Jamie Smith Hopkins says there could be a tax-credit knock-on effect boosting the luxury market. The credit probably helped some trade-up buyers sell their modest ranchers or Colonials so they could move into their dream mansions.

Posted by Jay Hancock at 11:31 AM | Permalink | Comments (0)
Categories: The Great Recession
        

Faithful reader Mr. Rational weighs in with a model health plan. This is how you might set it up if you were starting from scratch. But we're not. We have powerful interests wedded to the the inequities, inefficiencies, expenses and failures of the system we already have. Mr. R's scheme (he admits it's "quixotic"), if I have interpreted it right, is this:

1) Have people pay out-of-pocket for everyday medical encounters. That would encourage people to shop for good but inexpensive care. It would yield huge savings in bureaucratic costs. There would be no paperwork. 2) Have primary insurance to cover the odd appendectomy, broken-limb treatment and other "normal" emergencies that crop up throughout life. This would revert medical "insurance" to its true meaning -- a capitalized risk pool for non-ordinary expenses. 3) Have re-insurance from the government for catastrophic, bankruptcy-threatening expenses for say, cancer, car-crash recovery or heart surgery. 4) Devote a separate category of coverage for end-of-life treatment. Mr. R. puts it well:

If we are truly honest we can add a fourth category: Terminal care. Stop pretending that anyone gets out alive by refusing to flog and abuse our elderly and other terminal loved ones and still call it medicine. Most terminal care expenses are covered under Medicare (the elderly) but it still warrants its own category because of how it distorts every other cost statistic. It especially distorts when pointless treatments are used because the misguided emotionality and guilt of survivors mistakenly insist on them.

So we would cut bureaucratic costs in a huge way. We would deploy market forces for everyday care, making consumers spend their own money on medicine instead of somebody else's. We would have a safety net to keep people from going bankrupt. And we would have an honest discussion about why Medicare blows 30 percent or so of its dollars in the last six months of life.

Questions/possible objections: What about pharmaceuticals? Are they out of pocket? Wouldn't many people skip preventive care if they had to pay for it themselves, thus inflating aggregate health-care expense? Doesn't most medical spending come under categories 3) and 4), anyway -- so how will this save money? Thoughts?

Posted by Jay Hancock at 10:35 AM | Permalink | Comments (8)
Categories: Health Care
        

Nice to hear at least lip service from key Democrats over the lack of cost controls in the health-reform legislation advanced so far. Good NYT story from Sheryl Gay Stolberg on intra-Democratic tensions over the tradeoff between making sure legislation has cost-cutting teeth but not enough to hack off medical constituencies who so far have backed it. The Emanuel brothers find themselves on opposite sides. Budget czar Peter Orszag is trying to stifle himself. But his "absolutely" below, answering his own question about whether future cost control will be necessary, means "really, truly, totally yes and I completely mean it -- no matter what's in this bill."

“Let’s be honest,” Rahm Emanuel said in a recent interview. “The goal isn’t to see whether I can pass this through the executive board of the Brookings Institution. I’m passing it through the United States Congress with people who represent constituents.”

He went on: “I’m sure there are a lot of people sitting in the shade at the Aspen Institute — my brother being one of them — who will tell you what the ideal plan is. Great, fascinating. You have the art of the possible measured against the ideal.”

Mr. Orszag would not be interviewed. But in an e-mail message sent through a spokesman, he said the current legislation “lays the foundation” for cost-cutting over the long-term, adding: “Will more need to be done in the future? Absolutely.”

Posted by Jay Hancock at 8:37 AM | Permalink | Comments (6)
Categories: Health Care
        

As Lorraine Mirabella reports in today's paper, thousands of realigned defense jobs aimed at Aberdeen Proving Ground are prompting something unusual for the 2009 economy: Not just office-building construction, but in some cases office-building construction without any tenants signed up.

"In this economy, I cannot tell you anyplace else in the nation where this is going on right now," James Richardson, head of Harford County economic devlopment, told Mirabella. The activity seems to show up in Harford's vital statistics. The county's September unemployment rate of 7.1 percent is below the overall metro Baltimore rate of 7.6 percent.

But Harford unemployment is still greater than Anne Arundel’s, which is 6.5 percent. And it’s miles above Howard County’s, which is 5.4 percent. Base realignment notwithstanding, the closer you get to the money fountain called Washington, the fewer jobless people there are. (Montgomery County unemployment for September was 5.3 percent.) The pattern doesn't hold everywhere. As you can see Prince George's unemployment is 7.5 percent.

Posted by Jay Hancock at 6:41 AM | Permalink | Comments (1)
        

A reader of The Economist responds to a piece from a couple weeks ago weighing the efficiencies of intra-firm transactions vs. arm's length business in the market. Corporations really exist, the writer says, because society needs the equivalents of barons and margraves from 1,000 years ago to offer protection and dole out resources to the overseers and peasants. Interesting analogy. Know any CEOs who comport themselves like dukes or duchesses?

You could argue that at least in feudalism the loyalty worked both ways. But that probably wasn't as much the case as Hollywood would have us believe. The barons had their versions of downsizing and layoffs. Ever heard of enclosures?

SIR – There is a simple answer to the question “why do companies exist at all?” (Economics focus, October 17th). Corporations are organised and run in the same hierarchical, non-democratic manner that feudal societies were. The lord provides protection and defence so the workers can produce without fear of raiders taking their life’s bread. In exchange, the lord gets a percentage of the production. Today’s companies provide that same trade-off, giving their workers job security in exchange for the profit from their productivity. When there is a good balance of productivity and services between the lords and the workers, the system is mutually beneficial.

One could argue that we still live in feudal societies as the dominant organisation in most people’s lives is the company they work for.

Dennis Merritt
Asheville, North Carolina

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (1)
        

Portfolio has a good roundup of business lobbies' reaction to the passage of the health-care bill. It's more of the same stuff: Employers will kick people of existing policies. It doesn't cut costs enough. The mandate will hurt small businesses. Etc.

“The current House legislation fails to bend the health care cost curve and breaks the promise that those who like their current coverage can keep it," Karen Ignagni, CEO of America’s Health Insurance Plans, says in a statement.

It's true that the bill doesn't do much about costs. But as somebody said (Andrew Sullivan? I can't remember) it's the Democrats' job to pass entitlements and it's the Republicans' job to control the costs. Still, not addressing costs is a huge flaw in this bill. Especially since today's Republicans seem to have forgotten all about fiscal conservatism. We can't be sure they'll do the job when they regain power.

Unlike the other biz lobbies, Big Pharma waffles. The bill seems to leave it pretty unscathed.

"This is a three-act play and a good critic doesn’t write a review after the opening scenes," Ken Johnson, senior vice president for Pharmaceutical Research and Manufacturers of America, says in a statement. "We are still hopeful that before the curtain comes down on health care reform, the Senate will seriously consider the impact any final legislation will have on U.S. jobs and innovation."

I'm not sure these are just the opening scenes. Seem like Act III, Scene 2 to me.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (2)
Categories: Health Care
        

I haven't been following this vote-by-vote, but I was surprised to see Kucinich vote "no" on health reform last night. Obviously he wanted single-payer, but I'm nevertheless taken aback to see him vote with the Republicans. Here's part of his statement on why he voted no.

Clearly, the insurance companies are the problem, not the solution. They are driving up the cost of health care. Because their massive bureaucracy avoids paying bills so effectively, they force hospitals and doctors to hire their own bureaucracy to fight the insurance companies to avoid getting stuck with an unfair share of the bills. The result is that since 1970, the number of physicians has increased by less than 200% while the number of administrators has increased by 3000%. It is no wonder that 31 cents of every health care dollar goes to administrative costs, not toward providing care. Even those with insurance are at risk. The single biggest cause of bankruptcies in the U.S. is health insurance policies that do not cover you when you get sick.

Posted by Jay Hancock at 10:13 AM | Permalink | Comments (11)
Categories: Health Care
        

The spam commenters are getting better. Evidently there's a fake-comment generator that picks up on repeated words in a post, such as this one on Thursday's announcement of the third-quarter productivity rate. It almost had me.

Hello You have very well said about productivity and I completely agree with your perspective.Thank you very much for giving such a good information to us.

(Or maybe it was just my Mom posting again.)

Posted by Jay Hancock at 11:12 AM | Permalink | Comments (0)
        

Paul Krugman issues the clarion call:

For this is the moment of truth. The political environment is as favorable for [health care] reform as it's likely to get. The legislation on the table isn't perfect, but it's as good as anyone could reasonably have expected. History is about to be made – and everyone has to decide which side they're on.

And Frank Kratovil forgot to pick up:

WASHINGTON - If Democratic leaders manage to push a massive health care overhaul through the House of Representatives this weekend, they'll have to do it without one of Maryland's Democratic congressmen.

Freshman Rep. Frank Kratovil, facing one of the toughest re-election fights in the country next year, announced Friday that he opposes the measure. His stance could complicate efforts by Democratic leaders to secure approval of the legislation this weekend.

Posted by Jay Hancock at 12:37 PM | Permalink | Comments (7)
Categories: Health Care
        

From the email inbox:

Constellation Energy and EDF Group Complete Nuclear Joint Venture

BALTIMORE and PARIS – Nov. 6, 2009 – Constellation Energy (NYSE:CEG) and EDF Development Inc. (a wholly-owned subsidiary of EDF S.A.) today announced that EDF has completed its investment in Constellation Energy Nuclear Group, LLC, which is structured as a new joint venture. With the close of the transaction, the companies look forward to working together to deliver the expected economic, environmental and clean energy benefits created by the joint venture.

Posted by Jay Hancock at 11:57 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

I'll be on WYPR at 1 p.m. today to for the kickoff of Weekly News Review with Karen Hosler. We'll talk about the Constellation/EDF settlement, the Black & Decker sale, the elections, gay marriage & more.

Here's today's squib from WBAL, Bill Vanko and me talking about EDF/Constellation.

Posted by Jay Hancock at 11:25 AM | Permalink | Comments (0)
        

The biggest economic news this week isn't that the unemployment rate rose from 9.8 percent to 10.2 percent in October, or that the economy lost another 190,000 jobs, according to the Labor Department. It's that labor productivity for the third quarter rose at an eye-popping 9.5 percent annual rate, according to another report.

Of course both reports paint different parts of the same picture, but the productivity figures are remarkable for what they say about the divergence of hiring and economic output. The government previously reported that GDP rose at a healthy clip in the third quarter. The productivity figures show that was accomplished with even fewer workers than economists had expected. We're making more stuff with A LOT fewer workers, and that's contributing to the high unemployment rate and continuing job losses.

In the long run productivity growth is great. When workers can produce more per hour of labor, their incomes rise, corporate profits rise, standards of living rise etc. Productivity growth kills inflation. Technology-enabled productivity growth essentially explains why Americans are rich and cavemen were poor. A hundred cavemen working for one hour could catch a bison, if they were lucky. A hundred Americans working for an hour can produce a Toyota. (I'm simplifying here and leaving out non-labor inputs like investment and natural resources, but you get the idea.)

But in recent decades corporate profits have grabbed a huge share of the gains from greater productivity, at the expense of workers. In theory profits from productivity growth are supposed to be shared with a company's work force or redeployed in other areas of the economy to employ displaced workers. But it's not happening so far in this recession.

Brad DeLong was shocked at the 3rd quarter productivity numbers and explains why what's going is prompting a rethinking of conventional wisdom.

DeLong:

Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.

For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions--that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers.

I don't think that I can mock Michel Kalecki any more, ever again.

Posted by Jay Hancock at 9:41 AM | Permalink | Comments (7)
Categories: The Great Recession
        

Tyler Cowen did TEDx MidAtlantic in Baltimore yesterday. You can hear the talks online, although I haven't gotten to them yet. He says there's a TED halo effect and the non-high-status speakers benefit from speaking into the same mic as the stars, even if their material might not be first-rate.

One thing I learned from this experience is that if you follow professional entertainers, the "status rub-off" effect dominates the "suffer by comparison" effect. The audience is primed to be sympathetic to you and many of them do not actually know which of the speakers are truly the high status people.

Of course Cowen, New York Times columnist, author, professor and the best economics blogger, was one of the biggest stars there. Sorry I missed it.

Posted by Jay Hancock at 8:24 AM | Permalink | Comments (1)
        

The New York Times gets it right on extending and expanding the homebuyer tax credits, which will probably cost the country another $15 billion.

If Congress wants to spend the taxpayers’ money to do something about the struggling housing market — and it should — it should invest the money where it is most needed, in better programs that help people avoid foreclosure and stay in their homes.

Posted by Jay Hancock at 8:09 AM | Permalink | Comments (1)
Categories: The Great Recession
        

Today's column is about where the Maryland/Baltimore economy goes from here now that Black & Decker is getting bought by Stanley Works and its corporate headquarters will disappear in Towson. I would have written a different headline. Editors wrote: "Losing Black & Decker a bad sign for Md. business." Black & Decker's departure doesn't say much if anything about the state business climate. It was a business deal pure and simple and would have turned out this way no matter what the tax/regulatory/labor complexion of Maryland was.

Dan Rodricks wrote about the campaign by Black & Decker a few years ago to change Maryland's apportionment formula for the income tax. That sure didn't keep B&D happy. CEO Nolan Archibald closed their plant in Easton and now he's sold the company to Stanley.

The column concludes: "The fact that Black & Decker didn't bolt because of Maryland's business climate doesn't mean it doesn't matter. What do we do when the federal money dries up?"

Read the whole thing here.

Posted by Jay Hancock at 8:05 AM | Permalink | Comments (0)
        

Former real estate agent Sen. Johnny Isakson is helping out his Realtor pals by getting Congress to pass another round of homebuyer tax credits. Looks like the $8,000 credit, which was supposed to expire at the end of November, will be extended to April 30. It looks like it'll also be granted to families with higher incomes than before and offered at a lower level ($6,500) to "move-up" buyers, as long as they have lived in their present homes for five years. (The first one was for first-time buyers only.)

But this is really truly the last housing giveaway, Isakson says. And this time he means it!

"Tax credits like this only work by creating the sense of urgency to take advantage of them. This is the last extension of the home buyer tax credit, and I urge all Americans whether they're first-time buyers who've always dreamed of having a home of their own or someone who's been gridlocked in the failure of our move-up market to take advantage of this opportunity."

Where's Supernanny when you need her to intervene and stop this ineffective parenting?

Posted by Jay Hancock at 10:57 AM | Permalink | Comments (2)
Categories: The Great Recession
        

If you haven't switched to an alternative electricity supplier yet, Dominion Retail is offering a good deal to BGE customers. At 10.37 cents per kilowatt-hour for electric supply and cross-country transmission (delivery by BGE is another 2.37 cents), Dominion has the lowest price most BGE customers have seen in a while. The price locks in from now through 2010, and there is no cancellation penalty. A typical house ought to save $10 or more a month.

(Attention: If you switch to Dominion you WON'T lose the $100 BGE credit just obtained by the Public Service Commission as a result of a venture by Constellation Energy, the utility's parent. The credit is applied through your BGE delivery account, which doesn't change no matter who your electricity vendor is. So you can basically double the O'Malley/PSC credit by switching to Dominion.)

UPDATE: Switching to Dominion, WGES or any other competitive supplier does not affect the Peak Rewards you get from BGE cycling off your AC in the summer, either.

In comparing its price to BGE's price, Dominion's marketing department seems a little messed up. They claim 10.37 cents is 12 percent less than BGE's "price to compare" of 11.97 cents. Actually it's 13 percent less. But at this point on the calendar, BGE's price to compare is misleading. That's because 11.97 cents is a blended price to compare for the 12 months starting June 1 -- a period that includes both BGE's high summer rates and lower non-summer rates. But summer is over, so a better point of comparison should be BGE's non-summer price that started Oct. 1 and goes through May 31 -- 11.527 cents.

Got that? No? Don't worry. Dominion's price is still 10 percent less than what BGE's standard price will 

be from now through May. That's worth the trouble of switching. It ought to save about $10 per month. People who heat with electricity may save more. And while we don't know what BGE's standard price will be starting June 1, it's still likely to be somewhat higher than Dominion's 10.37 cents because BGE bought a substantial amount of electricity for the period last year, when prices were high.

If you already switched to Washington Gas Energy Services' long-term, fixed offer like I did, Dominion's offer is better. But the WGES termination fees probably make it not worth your while to switch -- you'll spend more for the switching penalty than you'll save with Dominion. WGES is offering 10.9 cents to BGE customers for 12 months and 10.2 cents through May. I'd still go with the 10.37 cents from Dominion, because that lets you lock in for an extra 7 months, including summer when you'll be burning juice to run the AC.

Posted by Jay Hancock at 7:16 AM | Permalink | Comments (27)
Categories: BGE/electricity
        

Early this year Erickson Retirement Communities laid off 260 people, many from its corporate headquarters in Catonsville. Now I'm hearing from people who got laid off that their severance payments have gotten hung up in Erickson's bankruptcy filing. When companies seek protection under the bankruptcy code all payments get suspended unless a judge OKs them. Something similar happened at The Sun a year ago; people who had taken buyouts temporarily stopped getting the twice-weekly payment.

Erickson has asked the judge in its case to approve the payments, but as of Wednesday morning he hadn't done so. Says Erickson spokesman Mel Tansill:

We have filed a motion to allow us to resume making severance payments, but we don't have a date for the court making a decision.This is all we wish to say about the matter.

I had asked him how many people were affected, how much money was involved etc.

Posted by Jay Hancock at 6:24 AM | Permalink | Comments (10)
Categories: Erickson Bankruptcy
        

The seeming inability of many to delay gratification -- to study in school to prepare for a career, to forego sex until ready, to save up for a down payment -- is responsible for many problems. Turns out that dolphins have figured out the benefits of saving for the future -- an insight that seems to have eluded people who bought houses with nothing down and thought it would all work out fine. From the Guardian:

At the Institute for Marine Mammal Studies in Mississippi, Kelly the dolphin has built up quite a reputation. All the dolphins at the institute are trained to hold onto any litter that falls into their pools until they see a trainer, when they can trade the litter for fish. In this way, the dolphins help to keep their pools clean.

Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. This behaviour is interesting because it shows that Kelly has a sense of the future and delays gratification. She has realised that a big piece of paper gets the same reward as a small piece and so delivers only small pieces to keep the extra food coming. She has, in effect, trained the humans.

HT Marginal Revolution.

Posted by Jay Hancock at 2:22 PM | Permalink | Comments (1)
Categories: The Great Recession
        

Coming on the heels of the state's intervention in EDF Group's attempt to invest $4.5 billion in Constellation Energy, the sale of Black & Decker to rival Stanley Works is another commentary on Maryland's dubious business climate, many are suggesting.

I don't think this is the case. There are plenty of things to discuss about how Maryland deals with its business citizens, but the Black & Decker case doesn't seem relevant. It's a business deal pure and simple. Black & Decker boss Nolan Archibald has no love for Maryland's business environment. And I assume he was appalled by the Constellation/EDF developments. But there is no evidence the Maryland's business climate had anything to do with Black & Decker's sale. Company spokesman Roger Young said it was not a factor.

And Connecticut, to where the corporate headquarters and power will pass, is hardly the rule-free business playground that corporate America sometimes suggests it would prefer. It does, however, have both personal and corporate income tax rates that are lower than Maryland's.

Here's today's column on Black & Decker. Read the whole thing here.

It was the first thing analysts asked Black & Decker boss Nolan D. Archibald about the Maryland company's sale to The Stanley Works.

"Why now?" James C. Lucas of Janney Montgomery Scott in Philadelphia queried during a Tuesday conference call. "What drove this transaction today as opposed to any time in years past?"

Archibald had an answer, which I'll get to. But the real answers seem obvious.

After one of the longest reigns in history for a Fortune 500 CEO, Archibald is old enough to retire and ready to relinquish power. That's the first answer. The second: Both Stanley and Black & Decker are probably worried about the economy.

Posted by Jay Hancock at 8:24 AM | Permalink | Comments (5)
        

My first reaction to the news about Black & Decker is that it's not good for Baltimore. Whether you call it a "merger" or a "sale," metro Baltimore is losing a major corporate headquarters that it has had for 100 years. It's also hard for the people who will lose their jobs. It sounds like there will still be a major white-collar presence in Towson. (Black & Decker's last factory jobs left Maryland six years ago.) The way the companies are talking, most of the jobs there will be preserved.

But the ones that get eliminated will be highly-paid, top-of-the-food-chain positions that overlap with those at Stanley's headquarters in Connecticut. When you lose a job from that level, especially in today's economy, it is difficult to find a new position with as much pay and responsibility. The disappearance of those positions also reduces the spending power of the Baltimore economy. Losing a corporate HQ often means fewer charity dollars locally and less autonomy for the jobs that remain.

Baltimore has seen this movie before: Rouse, Allfirst, Alex. Brown, Mercantile, USF&G, Maryland National etc. We're lucky to have so much federal money washing over the state at the moment. From a macro point of view, that will ease the pain. Other things being equal, you'd rather get laid off from Black & Decker in Towson these days than from General Motors in Detroit. But it will still be tough.

Posted by Jay Hancock at 6:56 AM | Permalink | Comments (13)
        

I get questions about this all the time, so now that EDF Group and Constellation have agreed to complete their deal and rebate $100 to Baltimore Gas & Electric customers, it seems a good time to repeat: EVERY BGE household gets the $100 credit, even if you have switched like me to buying electricity from Washington Gas Energy Services or somebody else. The $100 credit will be applied to the distribution charge on your BGE bill. You always pay BGE a distribution charge; BGE is your electricity delivery company no matter who your supplier is.

Dominion Retail is offering a new deal to BGE customers that is cheaper than BGE's standard charge for households. (I'll have more on this later.) So don't resist switching to Dominion Retail or anybody else because you fear it would jeopardize the $100 credit that the Public Service Commission made Constellation provide as part of the EDF deal. If you're a residential customer and you're in the BGE delivery zone (essentially Baltimore and its suburbs), you get the credit.

UPDATE: Under the PSC requirements BGE has to give the credit by March 30. But it could be earlier.

Posted by Jay Hancock at 9:39 AM | Permalink | Comments (9)
Categories: BGE/electricity
        

I'm reading between the lines here, but it sounds like the Sarkozy government pushed the French EDF Group's deal with Constellation Energy to go through even though incoming EDF boss Henri Proglio has his doubts about it. Without Proglio's wholehearted support, I wonder how well the partnership will work out.

Last week reports surfaced in the French press that Proglio was skeptical of the agreement with Constellation and was looking for a way out. He met in closed session with a parliamentary committee. Some of the legislators leaked his testimony to reporters.

But late last week there was push-back. French government sources were telling reporters that the Sarkozy administration still supported the deal, suggesting that Proglio was told to swallow it. (The French government owns most of EDF's stock.)

In any event, the agreement would have been hard for the French to dump if Constellation had wanted to go through with it. There was a signed contract requiring the agreement of both parties if the deal were to be scrapped -- absent extraordinary conditions such as a huge change in the outlook for nuclear power. And if EDF withdrew its $4.5 billion investment in the nuclear business, Constellation had the option to sell EDF several fossil-fired generation plants -- mainly coal. Proglio almost certainly didn't want those.

Still, launching the partnership with indications of skepticism from the French CEO creates a shadow. Pierre Gadonneix, EDF's outgoing CEO who strongly supported the Constellation partnership, said in a company press release that EDF is "eager to enhance its presence in the United States." There was no statement from Proglio.

Posted by Jay Hancock at 9:17 AM | Permalink | Comments (0)
Categories: BGE/electricity
        

After months of uncertainty and contention over the French EDF Group's plan to invest $4.5 billion in half of Constellation Energy's nuclear power business, the companies announced this morning that they would go through with the deal.

Constellation CEO Mayo Shattuck said last week that they could complete it within a couple weeks. The conditions set by the Maryland Public Service Commission for the transaction include a required credit of about $100 for every residential customer in Baltimore Gas & Electric's service area.

"We have consulted with our Board and received its approval," Constellation said in a prepared statement this morning. "We are now moving to close the transaction as quickly as possible so that we can begin to deliver the many benefits of this investment to all stakeholders across the state."

In its statement, EDF said: "Through its investment in Constellation Energy’s nuclear business, EDF has chosen Maryland to be at the center of its growth efforts in the United States. EDF is eager to be a strong corporate citizen in Maryland, and looks forward to moving its U.S. headquarters to the State."

The decisions come after months of uncertainty and weeks of contentious hearings before the Maryland Public Service Commission, which asserted authority after EDF and Constellation agreed to the deal late last year. Gov. Martin O'Malley had sought several conditions from Constellation before he would agree to countenance the transaction, including protections for Constellation subsidiary BGE, rate rebates for BGE customers and compensation reductions for Shattuck.

In approving the deal with conditions on Friday, the PSC agreed with O'Malley's desired protections for BGE and required a $100-per-household rebate for BGE customers -- about half of what O'Malley had suggested. But it said it has no jurisdiction over Shattuck's pay.

Late last week reports surfaced in the French press suggesting that EDF's incoming CEO, Henri Proglio, was unenthusiastic about the Constellation deal and was looking for a way out. However, Proglio doesn't take over until later this month. EDF's existing boss, Pierre Gadonneix, badly wanted the transaction to close so that the huge French utility could use the United States to demonstrate its nuclear expertise.

In deciding that the transaction can go forward, both companies agreed to the conditions that the PSC imposed.

EDF will own 49 percent of Constellation's nuclear business, and they will operate it together. The PSC decision was the last regulatory hurdle that the partnership needed, U.S. federal authorities having already given it their blessing. The deal's completion and the injection of the French cash strengthens Constellation's financial position after it was badly damaged by the 2008 financial meltdown and came close to seeking bankruptcy protection.

It also sets the stage for the construction of a third nuclear reactor at Calvert Cliffs, which both companies have pledged to pursue. The project would be one of the biggest construction projects ever in Maryland and bring new supplies of electricity to a state that hasn't seen significant generation capacity built in more than a decade. But first the companies need to secure financing for the reactor. And even if construction goes smoothly it would take years to complete.

EDF's and Constellation's statements are below:

Constellation:

"We are pleased that the Maryland Public Service Commission concluded the Constellation Energy-EDF nuclear joint venture is in the public interest and represents an important element in Maryland's energy future. Constellation Energy appreciates the PSC's professional approach to the process and commitment to bringing this review to conclusion in a timely manner.

"We have consulted with our Board and received its approval. We are now moving to close the transaction as quickly as possible so that we can begin to deliver the many benefits of this investment to all stakeholders across the state."

EDF:

EDF welcomes the decision of the Board of Directors of its American partner Constellation Energy to approve moving forward based on the conditions set forth in the order issued by the Maryland Public Service Commission with respect to the creation of a nuclear joint venture between EDF and Constellation Energy. The Maryland PSC has attached conditions designed to preserve the independence and financial strength of Constellation Energy’s regulated subsidiary.

Approval from the Maryland PSC completes the regulatory review process, and the companies now have received all necessary approvals at the federal and state levels to proceed with the transaction. EDF and Constellation Energy will complete the transaction without modification to the previously agreed terms of the transaction. EDF will commence the process to enable the close of the transaction, for which it has already received the authorization of its own Board of Directors. The consummation of the transaction is the result of a partnership between EDF and Constellation Energy that began over two years ago.

Through its investment in Constellation Energy’s nuclear business, EDF has chosen Maryland to be at the center of its growth efforts in the United States. EDF is eager to be a strong corporate citizen in Maryland, and looks forward to moving its U.S. headquarters to the State.

Pierre Gadonneix, Chairman and CEO of EDF said: “EDF, the world's largest operator of nuclear generation, is eager to enhance its presence in the United States, the largest market in the world. EDF looks forward to operating and developing nuclear power plants in the U.S., where the group is already active in the development of renewable energy (enXco, a subsidiary of EDF Energies Nouvelles), trading (EDF Trading North America), and the nuclear renaissance (via Unistar Nuclear Energy)”.

Posted by Jay Hancock at 8:42 AM | Permalink | Comments (22)
Categories: BGE/electricity
        

People have been speculating for a while that Google would get rid of the "I'm Feeling Lucky" button on its main search interface. About 1 percent of Google searches reportedly employ the button, which takes you straight to the top search result and which helped Google establish its reputation as a laser-accurate information retriever in the late 1990s. But when Web users go directly to the page they want, Google misses a chance to display the ads that go with its search results.

Now the company seems to be at least experimenting with an even more stripped-down page than the famously minimal Google marquee. It lacks any buttons. My Google page today says "Press Enter to Search" under the search field, and that's it. Is this what everybody is seeing today? Is anybody still seeing "I'm Feeling Lucky"?

UPDATE: At least some foreign language Google versions still have the "lucky" option.
Including the Pig Latin UI. "I'mway Eelingfay Uckylay"

Posted by Jay Hancock at 3:00 PM | Permalink | Comments (4)
Categories: Technology & Innovation