Here are WBAL's Bill Vanko and me talking about GM's decision to expand its White Marsh plant. And here is today's column on the same topic.

Amazing what a difference a sensible law can make.

Two years ago, Congress and President George W. Bush agreed to reduce pollution and America's addiction to overseas oil by requiring automobiles to get better mileage. Now, General Motors is spending $246 million to expand its White Marsh plant and make its own electric motors, giving Baltimore a ride on the auto-technology pace car.

Posted by Jay Hancock at 11:35 AM | Permalink | Comments (1)
        

Cute rap video by guys at George Mason on the 20th century's competing economic visions that are still highly relevant today. In this corner, representing the Austrian school, is F.A. Hayek. In that one, representing the fiscal interventionists, is J.M. Keynes. Neither actor looks like the real guy, and the real economists didn't have American accents. Hayek wins, because this is from GMU, after all. But if you read The Road to Serfdom it's striking how much government intervention Hayek can support. HT to Ann for sending the link.

Posted by Jay Hancock at 11:06 AM | Permalink | Comments (1)
        

Obama will propose a federal tax credit today in Baltimore for businesses that hire employees this year, following up on his focus on jobs in this week's state-of-the-union speech, according to The Sun's Paul West. Companies that hire people this year could get credits of up to $5,000 per job. That's a credit -- $5,000 subtracted directly from what a company owes in payroll tax. Since it's a payroll-tax credit even companies that don't have taxable income would benefit.

Add in Maryland's incentives to hire and you could get a pretty good inducement to add employees this year. Gov. Martin O'Malley is proposing a $3,000 tax credit for hiring businesses. That's on top of Maryland's existing job-creation tax credit of up to $1,500. Companies are not going to hire without assurance that the added employees will help them make money. If they're on the fence the incentives could make a difference. But we need a general pickup in consumer spending and consumer confidence to combine with the hiring incentives to really make a difference in the jobs picture.

Posted by Jay Hancock at 8:50 AM | Permalink | Comments (5)
Categories: The Great Recession
        

Excellent job by Michigan's libertarian Mackinac Center exposing hypocrisy by Michael Moore. Moore hates corporate welfare. He even hates it when taxpayers are forced to give money to Hollywood producers. The Mackinac Institute's Kathy Hoekstra has him on tape saying so.

But, in this well researched and produced piece, she reports that his producers are applying for taxpayer subsidies from Michigan's egregious film-welfare program for the portions of "Capitalism: A Love Story" that were filmed there.

Posted by Jay Hancock at 7:00 AM | Permalink | Comments (1)
Categories: Corporate welfare
        

Currency-trade billionaire and Open Society Institute benefactor George Soros tells Davos Man that gold is due for a fall. "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment," he told the World Economic Forum in Switzerland, according to The Telegraph. "The ultimate asset bubble is gold."

Gold bubble talk has been with us for a while, and people listen to Soros. The problem is: What will burst the bubble? If the economy stays in the tank and central banks keep the money supply pumped up like Mark McGwire in 1998, gold should stay elevated. If the economy starts growing vigorously and refuels inflation, that could be good for gold, too.

UPDATE: Here is Soros, wearing a Dr. Zhivago hat, talking to Bloomberg in Davos.

Posted by Jay Hancock at 11:46 AM | Permalink | Comments (17)
Categories: Finance
        

As Jamie Smith Hopkins reports in today's paper, Anne Arundel backed down on its attempt to levy recordation taxes based on the amount of debt forgiven in a short sale rather than the actual sales price. (A short sale is where the home sells for less than what's owed on the mortgage. The county was trying to ding people by taxing the mortgage, not the sale.)

It's true that state law (Property tax article, §12–103) is not exactly a model of clarity. It says:

The recordation tax rates under this section are applied to each $500 or fraction of $500 of consideration payable or of the principal amount of the debt secured for an instrument of writing. The consideration includes the amount of any mortgage or deed of trust assumed by the grantee.

This seems to give the revenuers the choice of taxing either the sales price or the mortgage -- a nice Catch 22. They could tax whichever is higher. But counties tax the mortgage only when banks accept a property deed in lieu of foreclosure, Smith Hopkins writes. The key to the recordation tax is that it's associated with ownership transfer, according to the lawyers she interviewed.

In a bank takeover the debt forgiveness is part and parcel of the transfer -- and there is no other sale price. In a short sale it's separate -- a third party buys the house and the bank just happens to extinguish the debt.

UPDATE: Here's a link to the attorney general's opinion. Thanks Stuart.

Posted by Jay Hancock at 9:04 AM | Permalink | Comments (0)
Categories: Taxes
        

There are many stories suggesting that Toyota sales will suffer long-term damage because of the accelerator problem. But I'm with Justin Newman, a 2008 Toyota Avalon owner whom The Sun interviewed yesterday. "I don't see a single safety issue as a necessary indicator of a corporate trend," Newman said.

A car has maybe 2,000 parts. The hazards of chance and time mean that every now and then an important one will break down, even for a company with an excellent record for quality and safety.Given Toyota's long, impressive record of delivering great cars, it seems like this will be treated as a glitch. A sticky accelerator isn't a systemic issue like metal parts that exceed tolerances. Brand loyalty to Toyota can be measured -- the premium buyers are willing to pay over similar cars made by Ford and GM. Toyota took a while to address this problem, but it should come out of this with most of its reputation intact.

"Integrity doesn't imply a perception of error-free performance," William J. McEwen writes in Married to the Brand. "Instead, it strongly suggests that: -- errors and problems will be rare rather than frequent, and -- identified problems will be acknowledged."

Posted by Jay Hancock at 8:22 AM | Permalink | Comments (0)
Categories: Marketing
        

Here is a good bill, HB344, to be promoted Thursday by Del. Heather Mizeur and others, that deserves to be passed. It would:

• Allow the public free and total access to services provided on the General Assembly’s website, including elimination of the $800 access fee charged for “up-to-the-minute” legislative tracking

• Webcast General Assembly committee hearings and Board of Public Works meetings over the Internet

• Post General Assembly committee hearing agendas at least one day in advance

• Allow online sign-up for those wishing to testify before a General Assembly committee

• Publish the votes of standing committees on the General Assembly website

• Post Board of Public Works proposed budget actions at least two weeks in advance

• Allow for a public comment period in advance of Board of Public Works budget actions

Posted by Jay Hancock at 3:36 PM | Permalink | Comments (1)
Categories: Politics
        

Today's column is about Maryland's cigarette smugging industry, which was fabulously energized by the decision to raise Maryland cigarette taxes from $1 to $2 a pack in 2008. The gap between Maryland's tax and Virginia's tax of 30 cents a pack means there is good money to be made by loading up the minivan with smokes in Virginia and reselling them here.

I didn't have room to mention Delaware, which is also making a name for itself as an illicit tobacco supplier. The folks at Michigan's Mackinac Center for Public Policy ran numbers on tax discrepancies between the states and the proximity of high-tax states to low-tax states. They fingered Delaware as a huge cigarette smuggling source along with Virginia. Delaware's cigarette tax used to be 55 cents per pack but recently went up to $1.15, according to the Tax Foundation. Even so, Delaware is close enough to states with REALLY high cig taxes such as New York that you can make some money by making the trip from New York City to Wilmington.

New York's tax is $2.75 per pack. Tiny Rhode Island's is $3.46. You think any smuggling happens in Rhode Island?

Posted by Jay Hancock at 11:05 AM | Permalink | Comments (3)
Categories: Taxes
        

So it appears that Democrats do understand the importance of controlling costs and avoiding deficits. (Make no mistake: Republicans have had a lot of trouble with the concept lately, too.) The Maryland Democratic Party has moved to a new office, which officials are praising for its lower energy costs and phone bills. Now if only they could demonstrate the same concern and expertise in Annapolis.

If you visited our office in recent years, you know that our old office lacked much needed cell phone reception and natural light. While these may seem like simple perks, the natural light will help reduce our energy consumption while the cell phone reception will allow us to host many more phone bankers during the height of the election year.

We’ve also upgraded our phones to a VOIP (Voice Over Internet Protocol) system, which will dramatically reduce our monthly telephone bill, freeing up more resources to invest in our coordinated campaign this fall.

Thanks to your support last year, we’ve been able to make these key investments and have hit the ground running this year. By contrast, The Washington Post reported last Friday that the MD GOP “remains saddled with debt.”

Posted by Jay Hancock at 10:47 AM | Permalink | Comments (1)
Categories: Politics
        

It's been said many times, but it bears repeating many times. The non-defense, non-discretionary parts of the U.S. budget are very small. President Obama's pledge to freeze domestic spending for the remainder of his presidency is a signal that he's concerned about the deficit, not an indication he plans to do much about it. As AP reports, the president plans to announce a freeze on $477 billion in domestic spending.

But the budget is $3.5 trillion. So the freeze, while it will put pressure on health care, education, transportation and law enforcement programs, will do almost nothing to reduce the deficit. It would save $10 or $15 billion a year, an official told AP -- like 1 percent of last year's deficit of $1.4 trillion. Obama can't cut defense very easily -- he just escalated the war in Afghanistan. What's left are entitlement programs such as Medicare that Americans -- including the tea partiers -- love.

The only way to attack the deficit is to do what responsible politicians such as Ronald Reagan, George H.W. Bush and Bill Clinton did: raise taxes. But Obama has two problems. He can't raise taxes now: We're still in a terrible economic slump. And he has pledged not to raise taxes on the middle class, which narrows his options considerably.

Posted by Jay Hancock at 8:58 AM | Permalink | Comments (27)
Categories: Government & Business
        

Unbelievable. The Obama administration has approved the merger of Live Nation and Ticketmaster by demanding a couple minor concessions. Ticketmaster has to sell off a unit that helps entertainment venues issue their own tickets. The company, Paciolan, will never be a big player, even with ownership by Comcast. And Ticketmaster has to license some other minor technology to Phil Anschutz.

This is bad for fans, venues and artists. And to think that Ticketmaster boss Irv Azoff and his wife were John Edwards supporters! Fortunately, Live Nation boss Michael Rapino ponied up for Obama.

UPDATE: A commenter calls our attention to this relevant information, from Billboard.biz last year. Uuugghh. I'm feelin' a little queasy.

Live Nation board member Ariel Emanuel, is a powerful Hollywood manager who is also brother of Rahm Emanuel, the White House Chief of Staff. Ariel Emanuel was also a major Hollywood fund-raiser for Obama's election campaign.

Julius Genachowski, nominated by Obama earlier this month to be the new chairman of the Federal Communications Commission, was on Ticketmaster's board until March 10.

Posted by Jay Hancock at 3:25 PM | Permalink | Comments (4)
Categories: Media
        

Kelly Brewington has a good piece in today's paper on stents for coronary arteries. Stents have been in the news because the leadership at St. Joseph Medical Center send letters to hundreds of patients indicating they may have received unneeded stents from Dr. Mark Midei. These patients got stents when their arteries weren't significantly blocked, the hospital says. The implication, of course, is that the hype surrounding stents and the inducements of handsome reimbursement impelled St. Joseph and Midei to install more than were needed.

But as Brewington notes, unless a patient is in the middle of a heart attack, implanting a stent is a tough call even if arteries are substantially blocked. The key info is from Dr. Mark Hlatky at Stanford, a professor of cardiovascular medicine at Stanford University.

[For stable patients,] stents only relieve symptoms; they don't make you live longer, Hlatky said, adding that he falls on the conservative side of the debate. The first question any physician and patient should ask is if interventions are needed at all or whether a person's symptoms could be helped with drugs alone, he said.

And some doctors argue that they don't even relieve symptoms -- the chest pain of angina -- for very long. A landmark was the 2007 publication of the COURAGE study, which showed that stenting DID NOT REDUCE HEART ATTACKS even in patients with substantially blocked vessels. So why is the system spending billions of dollars on stents? Here is last week's column on St. Joseph and stents, which said:

Don't let the situation at St. Joseph, where patients received stents when they might have had only slightly blocked arteries, obscure the big picture. Most people getting stents don't need them even if scans show substantial blockage, studies suggest. Stents can be dangerous, too.

Posted by Jay Hancock at 9:13 AM | Permalink | Comments (3)
Categories: Health Care
        

Legg Mason boss Mark Fetting advanced an interesting thesis when he spoke to folks at Johns Hopkins' Carey School of Business Carey Business School this month. Places such as Baltimore, with clusters of smart folks geographically apart from the lemmings and group-thinkers in the mega-towns, can deliver superior ideas -- whether in investing, tech innovation, policy or other areas, he says. Email me if you want the whole speech. I can't find an online copy. UPDATE: Here's a link to a video.  

From the speech:

Leadership can not be limited to so-called global centers like New York, London and Tokyo. Because ideas don’t have zip codes or country codes global leadership also comes from a Baltimore, a Pasadena, a Melbourne, or a Sao Paulo. In fact, the traditional bastions of leadership may be a bit tarred or tired or even jaded these days, often blamed for today’s woes rather than being incubators of solutions.

Would we trust policy on financial reform that comes from Wall Street or is there more credibility if it comes from the Economic Opportunity Institute in Seattle? Would we be more open to a political perspective from the National Peoples Congress in China or from the independent International Peace Research Institute in Oslo? Do we look to Tokyo for new ideas or do we turn to the Silicon Valleys and incubators in mid-sized cities like Ann Arbor and Raleigh-Durham-Chapel Hill or the biotech and medical centers in Baltimore and Boston?

 

Do we even expect great television from the largest, most-entrenched networks or do we look to the HBOs and the Sundance Channels? Do we look for the best movies from Hollywood or from independent filmmakers? If we are honest with ourselves, the answer is probably somewhere in-between. We look to both the big cities but also to the best-in-class cities and there-in lies our opportunity.

A study conducted by The Bogle Center for Financial Research found that successful, alpha-generating investment managers are predominantly headquartered outside of New York and Boston. Baltimore, home to the first-ever investment bank in Alex Brown, is a testament to what Bogle found. From this singular idea this city incubated a robust community of traditional investment managers: T. Rowe Price, Brown Capital and Legg Mason. It is also home to venture investors like NEA and ABS Capital.

And the reach of our community is felt throughout the business world, the private equity firm Carlyle Group was founded by an alumnus of T. Rowe Price and Marriott is led by a graduate of Johns Hopkins University. More than ever, we should be looking outside the business and cultural centers of yesteryear for new ideas and new solutions; that is new leadership. Good ideas simply don’t have zip codes.

Posted by Jay Hancock at 8:45 AM | Permalink | Comments (3)
Categories: Finance
        

Nice description from Krugman of capitalism's central flaw along with the accurate observation that it's the only system that works in the long run, via Brad DeLong:

At the heart of capitalism's inhumanity--and no sensible person will deny that the market is an amoral and often cruelly capricious master--is the fact that it treats labor as a commodity. Economics textbooks may treat the exchange of labor for money as a transaction much like the sale of a bushel of apples, but we all know that in human terms there is a huge difference.... An unsold commodity is a nuisance, an unemployed worker a tragedy; it is terribly unjust that such tragedies are created every day by new technologies, changing tastes, and the ever-shifting flows of world trade. There would be no excuse for an economic system that treats people like objects except that, as Churchill said of democracy, capitalism is the worst system known except all those others that have been tried from time to time...

Posted by Jay Hancock at 7:44 AM | Permalink | Comments (9)
Categories: Government & Business
        

Gary Vikan, his museum, The Walters Art Museum, and his "Postcards from the Walters" pieces on WYPR are great assets for Baltimore and art/culture lovers. Now I see he has a blog on Charm City Current. This is good.

Posted by Jay Hancock at 5:25 PM | Permalink | Comments (0)
        

Market analyst Barry Ritholtz, who calls 'em like he sees 'em, left or right, thinks Murdoch ownership has contaminated the news pages of the Wall Street Journal.

I assumed the drunks on the OpEd page did not care about what they did to your portfolio if you drank their Kool-Aid. But they were easy to avoid –you simply avoided that page, or read it and laughed. Smart investors could easily say “Go sell crazy somewhere else –we ain’t buying.” That was possible because you knew that the business pages were sacrosanct, always run with a steel-eyed objectivity that professionals could rely upon.

That is no longer the case. The lunatics now run the asylum, and henceforth, I am moving the WSJ into the column of “Stuff to read, but not take very seriously.”

I am bereft over this. This is a major change for me, for I have loved this paper for years, even decades. I read the Times, but as someone who works in finance, I marveled at the quality and breadth of the business reportage at the Journal. Accuracy was paramount, political bias limited to the cartoon (Opinion) pages. For a long time, it was the best paper in America.

Those days are now over.

I keep seeing headlines that are blatantly political, articles that looked to be edited by a ham-fisted politburo apparatchiks, other signs that the usual outstanding journalism at the WSJ is under assault.

Posted by Jay Hancock at 11:48 AM | Permalink | Comments (5)
Categories: Media
        

Maryland is arguing with itself over whether to extend the time it takes teachers to obtain tenure. I'm sympathetic to the idea of tenure in academia. The ideal academy and academicians should be shielded from political and commercial pressures, from getting fired for having unusual or anti-establishment views. Colleges and universities are idea incubators. Important ideas often have the effect of goring somebody's ox or making the proprietors uncomfortable.

But should teachers in primary and secondary schools get what some argue is a job guarantee for life, once tenure is achieved? The argument against would be that lower-school teachers are largely in the business of inculcating skills rather than philosophy. They follow a rigid curriculum. They may have less individual leeway -- and one could argue that they should have less leeway -- to get into the ideological territory that causes fights at universities. Is this premise correct? If so is it a reason to water down or abolish high-school and grade-school tenure? I'm not sure.

I reject the notion that teachers need protection because of the normal workplace threats of biased bosses and office cliques. Every worker has to deal with that. But on the question of whether they need protection for academic reasons, I'd like to hear ideas. What do you think?

Posted by Jay Hancock at 9:17 AM | Permalink | Comments (55)
Categories: Education
        

I always figured the debt-collection industry to be a pretty tough crowd. But it turns out their feelings were hurt by this column on the Mann Bracken debacle. Apparently they like to be called "accounts receivable managers" and "credit and collection professionals." They think it was out of bounds to make fun of a huge debt collection operation that went belly up, leaving enormous, unpaid bills like the people it was pursuing. And, being very sensitive and having primed themselves to be offended, they say this paragraph is an incitement to violence:

So more than 20,000 debt-collection lawsuits are languishing in Maryland courthouses without a lawyer. A firebomb tossed into the company's offices could not have been as effective. Many of the cases might not be refiled.

The next time I write about collection professionals I will try to keep in mind their delicate self-esteem. (UPDATE: Here is some radio yacking on WBAL on the Mann Bracken case.) Here is the letter to the editor from Rozanne Anderson from the collections trade group:

To Whom It May Concern,

In response to the Jan. 20, 2010, article “Debt hounds wind up chasing their own tails,” it is shocking the Baltimore Sun finds it acceptable to suggest “a firebomb tossed into [a debt collection] company’s office” might be an effective way to deal with collection-related lawsuits.

In addition, the notion that debt collectors thrive during bad economies is simply false. The assumption there is more debt to collect during a bad economy is true. However, when consumers don’t have the means to pay their debts, collection agencies dedicate more time and resources working with consumers to resolve their payment problems. Consumer who previously were able to pay their accounts in full are now only able to pay over an extended time—sometimes at less than the full amount of their debt.

The vast majority of professional collection agencies take their obligation to consumers and their clients very seriously. By recovering billions of dollars in delinquent debt each year that would otherwise go uncollected, the collection industry helps American companies stay in business and makes it possible for them to offer consumers the convenience of credit.

Using your publication to educate consumers about using credit wisely, avoiding unnecessary debt and resolving payment problems through reasonable means would provide much greater value to your readers than misinformation and suggestions that violent, criminal behavior is acceptable.

Sincerely,

Rozanne M. Andersen, CAE
Chief Executive Officer and General Counsel
ACA International

Posted by Jay Hancock at 8:24 AM | Permalink | Comments (15)
        

A recent column addressed to mayor-to-be Stephanie Rawlings-Blake called attention to the extremely challenging conditions of doing business in Baltimore, particularly at Crossroads Industrial Park in the southwest part of the city. Trash, illegal dumping of construction waste, burglaries, expensive air-conditioning units repeatedly destroyed for their copper, no snowplow service and random abandoned boats showing up on the street and staying for months are all business as usual at Crossroads. The column said:

Send us ideas," Baltimore mayor-apparent Stephanie Rawlings-Blake told businesses.

Here's a radical one: Deliver minimum amounts of cleanliness, safety and service to city companies or keep watching them bug out to the suburbs...Your Honor-To-Be, [the Crossroads businesses] await your visit. If the boats and trash don't get in the way.

In an email and a couple conversations, Baltimore Development Corp. chief Jay Brodie says he's on the case. BDC was to meet with Crossroads folks yesterday. "We’ve been on this and will continue to follow up on the Action Plan that has been discussed with the businesses," he says. OK, but he Action Plan was was sort of hard for the businesses to detect.

The plan includes tree pruning, new signs, extra attention from police, intra-business email alerts about crime and discussion of private security paid for by the businesses. I suspect the businesses have heard this before. What about the boat? "We'll get rid of the boat," Brodie promises. Does the incoming mayor know about all of this? “I sent her a copy of what I sent you," he said.

Posted by Jay Hancock at 8:35 AM | Permalink | Comments (2)
        

Missed this until now. Andy Green, editorial page editor of The Sun, has an excellent summary of O'Malley's budget and the bad and worse choices facing Maryland policymakers.

It will certainly be tempting for Mr. O'Malley's fellow Democrats in Maryland's General Assembly to accept the governor's accounting gimmicks and hope for the best in the 2010 election, but it should be clear to them that Maryland's current tax revenues can't support our present level of spending and won't be able to any time in the near future. It is past time to look at the state government and decide what we can live without. Every program has a constituency, but some are more deserving than others, and we elect our legislators to make those decisions. It is also past time we stopped protecting the alcohol industry and raised beer, wine and spirits taxes to reasonable levels.

Posted by Jay Hancock at 6:19 PM | Permalink | Comments (5)
Categories: Politics
        

Executives at the New York Times have made a radical business decision really shouldn't be so radical: They have decided (again) to ask customers to pay for a product that costs huge amounts of money and hard work to produce instead of giving it to them for free.

The New York Times announced Wednesday that it intended to charge frequent readers for access to its Web site, a step being debated across the industry that nearly every major newspaper has so far feared to take.

Starting in early 2011, visitors to NYTimes.com will get a certain number of articles free every month before being asked to pay a flat fee for unlimited access. Subscribers to the newspaper’s print edition will receive full access to the site.

Stock is down 50 cents on normal volume.

Posted by Jay Hancock at 12:39 PM | Permalink | Comments (3)
Categories: Media
        

My friend Bill Glauber says. Curse of the Bambino, indeed.

UPDATE: In comments Charlie says they're actually very different:

Several notable differences.  Buckner could string a coherent sentence together.  Coakley could not.

Buckner apologized and admitted the mistake was his.  Coakley didn't.

Buckner took a vacation after the World Series was over. Coakley took a week's vacation in the MIDDLE of the campaign!!

But Jay you are right.  They both blew what should have been a sure

thing!!!!!l

Posted by Jay Hancock at 11:39 AM | Permalink | Comments (1)
Categories: Politics
        

So to get health reform passed before Scott Brown is seated as the junior senator from Massachusetts, it looks like the House might pass Senate bill unchanged. Democrats from both chambers have been negotiating behind the scenes for weeks, and the dickering could have made the final bill better -- especially in terms of cost control.

But the need for speed makes it probable that the Senate bill will be the final bill -- if there's any final bill at all. Unlike the House bill, the Senate bill contains no public option. Neither does the Senate bill finance new coverage with a surtax on the wealthy the way the House measure does. Instead it slaps an excise tax on so-called Cadillac health insurance plans. Meanwhile Virginia Democrat Sen. Jim Webb has called for a suspension on all health care votes until Brown is seated.

Posted by Jay Hancock at 10:18 PM | Permalink | Comments (6)
Categories: Health Care
        

Savvy column by Josh Kurtz in Center Maryland on Senate President Miller's surprise declaration that he wants slots in his home county:

But this is the first anyone has heard of Miller agitating for slots specifically in Prince George’s — even as the state is struggling to get its overall slots program going. Miller mentioned the National Harbor resort, the equestrian center in Upper Marlboro and Rosecroft racetrack as possible sites for slots in the county. Take note, conspiracy theorists: Rosecroft, which already has a boat-load of high-priced, high-powered lobbyists, recently hired another, Gerard Evans, convicted felon and a longtime protégé of Miller’s.

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

Last week The Sun broke the story that St. Joseph's Medical Center in Towson had alerted hundreds of patients that they may have received artery-clearing stents they didn't need.

Already the malpractice lawyers are out in force. Saiontz & Kirk was running TV ads over the weekend and they've already got a toll-free number. 1-888-STENT-11! The usual somber-voiced voiceover guy comes on. "ATTENTION! St. Joseph's hospital stent patients. If you or a family member received a warning letter from St. Joseph's Medical Center in Towson, Md., about medical concerns regarding a stent procedure YOU have important legal rights."

Belsky, Weinberg & Horowitz have a Google paid link: Improper Stent-Dr. Midei? "You've Been Wronged. We Can Help Protect Your Legal Rights!" Their Web page says: "A former cardiologist with a large, well-known Cardiovascular Group in Baltimore is under investigation for performing unneeded and unnecessary stenting procedures upon patients who did not clinically require stenting based on test results." Amazing how they know the stents were unnecessary even though the the investigation is still continuing, no evidence has been entered in court and Dr. Mark Midei, who says he expects to be exonerated, hasn't had a chance to give his side of what happened.

With so much money on the line and several lawyers vying for would-be plaintiffs' business, fundamental economic theory says that plaintiffs should be able to bargain the lawyers down from their usual 30 percent fees or whatever they are. But I've never heard of this happening. Hey plaintiffs: See if Saiontz & Kirk will take you for 15 percent.

Posted by Jay Hancock at 9:10 AM | Permalink | Comments (14)
Categories: Health Care
        

So Hugo Chavez devalues the Venezuelan bolivar by half. This is the same as doubling retailers' import costs. Yet when the French chain Almacenes Exito tried to recoup its costs by raising prices, Chavez ordered the state to take it over. "I'm waiting for the new law to begin the expropriation process," he said, according to the Wall Street Journal. "There's no going back."

Of course this will be a great success. Because everybody knows the Venezuelan government controls everything, including the laws of arithmetic. I am reminded of when the wholesale cost of money soared in the early 1980s and the Maryland General Assembly put a cap on credit-card interest rates, thereby limiting card companies from recouping their costs and driving them into other states. As Barry Ritholtz says: "Yes, you can regulate behavior; no, you cannot regulate prices."

Posted by Jay Hancock at 9:26 AM | Permalink | Comments (2)
        

Meg McFadden sends this letter to mayor-apparent Stephanie Rawlings-Blake in response to this column on the constant battle to do business in Baltimore, which quotes the next mayor as saying she's looking for ideas from companies on how to improve the city.

Dear Honorable Rawlings-Blake,

I did not see anything on the city website seeking ideas from citizens, but I did see Jay Hancock's article, referencing your request for ideas from businesses.
I have lived in the city for about 30 years and have been involved with several businesses in the city.

Unfortunately, in the city, crimes are too common, are expected, and are tolerated.
1) I am familiar with numerous burglaries and vehicle thefts where the business owner actually knows who committed the crime, where they live and, sometimes, even their name. But they have been unsuccessful in engaging the police in any follow-up and resolution of the crime.
All they get is a report number and advice to file an insurance claim. No wonder insurance rates are so high on everything in the city! The business owners, in an effort to keep their insurance rates affordable, and strapped with deductibles, end up paying out-of-pocket for these crimes.

Police explain that, unless it is related to a murder, it is not a priority for them. As a result, the same criminals repeat their crimes throughout the city, knowing there will be no consequences. These are the experiences that drive businesses and residents out of the city.

2) I think it is a outrageous to charge victims to tow and store their vehicles after they have been abandoned somewhere by a car thief. Instead, car owners should be notified that their car has been found and where it is located, so they can either bring an extra key to go pick it up, or arrange for their own towing to take the vehicle directly in for repairs, if needed. Car theft victims have already had to do without their car, they have to arrange for a ride to go pick it up, and they have to pay for clean-up and damage repair. The extra time and expense of going through the impound lot just sours people more on Baltimore City's bureaucracy.

3) What would happen if contractors and residents could take their trash to the dump for free?
What if they could call bulk trash and get things picked up quickly, without a limit, so people that did not have a vehicle, or money to pay for trash removal, could keep their yards and alleys clean? What if the city tried this, even as an experiment, to see if we ended up with a cleaner city, that could hold onto residents and businesses that contribute to a tax base the supports this?

Thank you for your dedication to Baltimore's future. Hopefully, it will become a more amazing city under your leadership!

Meg McFadden

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (4)
        

Wow. Bob Little's blockbuster story on heart-stent implants has dire implications for St. Joseph Medical Center and Dr. Mark G. Midei, one of the center's star doctors. St. Joe has sent letters to hundreds of Midei's patients saying they may have received stents when they didn't need them. In one case reviewed by Little, a patient who received a stent was told his arteries were 95 percent blocked. A review showed the blockage was closer to 10 percent.

Lawsuits are certainly going to fly. Midei, Little says, has lost privileges at St. Joe and stopped practicing. Midei says he expects to be exonerated. The implication, however, is that he may have ordered expensive and potentially dangerous stent implants for patients who didn't need them. If true, it speaks volumes about why the reimbursement system of paying doctors and hospitals per procedure is sending medical costs out of control.

This has been talked about in Washington but not enough. The present system gives doctors and hospitals enormous incentives to perform as many surgeries and tests as they can. Whatever went on at St. Joe, it is likely that other docs and hospitals across the country are enriching themselves by performing unneeded "care". We need to start paying the medical system based on patients' health and outcomes, not per procedure.

St. Joe, which advertised itself as one of the top heart-catheterization shops in Maryland, is doing the right thing by contacting patients. But this has damaged its reputation. "The physician is in charge" of treatment, St. Joe's new CEO, Jeffrey Norman, told The Sun. But he acknowledged that the hospital also bears responsibility. From the story:

Asked if the hospital bears any additional liability for the patients who received stents they didn't need, Norman said:

"I suppose we do. I think that we'll see what comes from these attorneys that are looking for cases, and we'll respond to that."

Posted by Jay Hancock at 8:51 AM | Permalink | Comments (22)
Categories: Health Care
        

In today's story by Julie Bykowicz, Senate President Mike Miller held out the prospect that funding for Maryland stem-cell research might be cut. This would be a mistake. The Maryland Stem Cell Research Fund has disbursed more than $50 million in research grants since the legislature approved it in 2006. Cutting the program wouldn't produce that much money to fill budget holes, and it could damage stem-cell momentum in Maryland just when it might be ready to take off.

Here's investment guru John Mauldin:

I think there is a potential for another bubble over the next decade. There will probably be several, but there is one I am particularly interested in and that is biotech, with an emphasis on stem cell and gene therapy and their allied kin. For reasons outlined by my friend Patrick Cox, writer of the newsletter Breakthrough Technology Alert, in today's Outside the Box, I think we are on the cusp of a decade of remarkable breakthroughs which will change the way we do medicine.

Even with its budget disaster, California shows no signs of slowing down its $3 billion stem-cell program, which was ratified by voters. Biotech is Maryland's one hope for a big, private-sector surge in employment and investment over the next decade. Stem-cell money is the seed for the surge. The General Assembly shouldn't cut the water and fertilizer just when it's ready to sprout.

Posted by Jay Hancock at 9:18 AM | Permalink | Comments (7)
Categories: Health Care
        

Wednesday's column focused on the woes of Crossroads Industrial Park in Southwest Baltimore. In the last couple years companies there have put up with construction waste dumped on their properties, theft and destruction of expensive air conditioning equipment, burglaries, squatters in RVs, streets that don't get plowed and trash all over the place.

From the column:

Send us ideas," Baltimore mayor-apparent Stephanie Rawlings-Blake told businesses. Here's a radical one: Deliver minimum amounts of cleanliness, safety and service to city companies or keep watching them bug out to the suburbs.

The people in Crossroads Industrial Park don't just perform the equivalent of two or three jobs - the typical lot of the small-business operator. They also have to be cops, detectives, trash haulers, snow plowers, railway repairers, lobbyists and God knows what else to get basic services they pay the city for but don't receive.

Posted by Jay Hancock at 7:00 AM | Permalink | Comments (0)
        

Gov. Martin O'Malley's three-year tuition freeze was admirable, but it was beginning to be counterproductive. As I wrote in September, under the resource constraints caused by flat tuition, Maryland universities have been obliged to reject more and more students just when people need the low-cost education state facilities can provide.

Salisbury and Towson have been rejecting almost half the kids who apply. Meanwhile the community colleges are jammed. We're rationing education, and that's not good for anybody.

For the September column I asked O'Malley spokesman Rick Abbruzzese if tuition might go up. "For the next school year, I think it is possible," he said. Today the Associated Press's Brian Witte reports that O'Malley would support a 3 percent tuition increase. I suspect the Regents probably want something more like 5 percent.

Posted by Jay Hancock at 5:22 PM | Permalink | Comments (1)
Categories: Education
        

From the WSJ:

It now costs more to insure Californian municipal debt against default than it does bonds issued by the government of Kazakhstan.

Posted by Jay Hancock at 2:03 PM | Permalink | Comments (0)
        

So the protest against Sheila Dixon's pension was a bigger deal on the Web than on City Hall steps. Hundreds of people signed up for Facebook groups protesting the pension for Dixon, who keeps her $83,000 annuity, collectible immediately, even though she pleaded guilty to perjury in connection with gift card shenanigans.

But as Julie Scharper reports in today's paper, only about 30 showed up to carry on the protest in person. Even so, the government pension issue is not going to go away. The focus on Dixon will fade. Federal law gives very strong protections to pensions, and she's not going to lose it. But taxpayer liability for generous government-employee pensions and other retirement benefits is growing at a rapid, probably unsustainable rate. The sooner policymakers deal with it, the better. But since the pensions involved include those of the policymakers, don't sit on the edge of your seat.

UPDATE: Pulled from comments. Organizer Josh Dowlut says:

With the benefit of hindsight I'm going to attribute the low turnout relative to Facebook members to my scheduling it too early to provide enough notice and planning for more people. I received multiple posts and messages saying people would have gone if given more than

a day or two notice and while I created the group on Friday, it didn't get big until late Saturday and it didn't get really big until sometime Monday. We now have 3500 members.

I'm going to float out some feelers asking for a committed RSVP asking how many people would attend a second protest to be held on or about Feb 4th. With 3 weeks notice, and a group measuring in the thousands, we could make our influence that much stronger.

Posted by Jay Hancock at 8:18 AM | Permalink | Comments (7)
        

So I've got three pairs of tickets to see former Labor Secretary Robert Reich at 8 p.m. tonight at the Meyerhoff for the Baltimore Speakers Series. If you want a pair, check out Reich's blog post on how to pay for expanded health coverage and then leave a comment here on whether he's on target or full of baloney or holds the wrong premise (that we need expanded health care). I'll use random.com to do a random drawing among all the decent comments, and winners can pick up the tix at the Meyerhoff will-call window tonight.

Reich opposes the measure to raise money by taxing "Cadillac" health plans:

In any event, I thought a major purpose of health-care reform was to get more care to more people, not to cut it back. Even employees who get extra dollars of wages to make up for the cutbacks won’t necessarily plow those wages back into health care.

He's for the surtax on the rich in the House bill.

But why even take these chances when the House bill simply and cleanly goes after the top 1 percent? It’s not as if couples earning over a million can’t afford to pay the tax. When I last looked, the top 1 percent was taking home a record 23 percent of total income. If anything, the Great Recession is widening the gap. It’s bonus time on Wall Street again. But the middle class is taking a beating.

Posted by Jay Hancock at 11:55 AM | Permalink | Comments (2)
Categories: Health Care
        

In another sign that the market for electricity shopping is heating up for Maryland residential customers, BGE Home launched a fixed-price product on Monday that's more than a penny per kilowatt-hour lower than what Baltimore Gas & Electric is charging from now through May. At 10.25 cents per kilowatt-hour for two years, it's the cheapest competitive offer for BGE customers I can find. It's a decent offer -- subject to the cautions I give below. So is BGE Home's one-year deal of 10.35 cents per kilowatt-hour. (This includes costs for generation and transmission. You pay another 2.5 cents or so for delivery.)

The deals show that wholesale electricity prices continue to edge down from their highs in 2008, thanks to a slowing economy that has reduced demand.

BGE Home, which like BGE is owned by Constellation Energy but is less regulated, has sold fixed-price natural-gas contracts for years. But it has never sold electricity until now. The company joins Washington Gas Energy Services and Dominion Retail in hawking kilowatts that are cheaper, at least for now, than the default BGE product most households get. BGE Home and other companies can undercut BGE because BGE bought much of its juice for this year in 2008 at high, 2008 prices.

"It was a business decision based on the current market prices," says Jack Bode, BGE Home's vice president of sales. "We thought it was time to roll it out." They're limiting the offer, being marketed as from Constellation Electric, to the first 5,000 households. It's kind of pilot program, and Constellation may start selling residential juice under the same name in other places.

Why would Constellation let BGE Home undercut BGE? The dollars aren't that big; this gives Constellation experience selling residential electricity that it can apply in other markets; and these offers are also a signal that BGE's standard price will be coming down, too. Which is to say that it's impossible to tell whether you'll save money vs. the standard BGE offering over the life of these contracts. So far we know what BGE's standard price will be only until May.

I've already locked in with a 10.9-cent offer from WGES for two or three years. (I thought it was two but my statement says three.) Thanks to a high early-cancellation fee it doesn't make sense for me to switch. But if I were starting from scratch I would take the two-year, 10.25-cent offer from BGE Home. It's a decent amount lower than BGE's standard price of 11.527 cents between now and June. (Most houses ought to save at least $10 a month based on that difference.) And it'll shield you from a spike in energy prices if the economy revives, although there aren't many signs of that happening.

However, you need to be careful of two things. 1) There is a hefty early-cancellation fee on all alternative offers, including BGE Home's.

UPDATE: CORRECTION: As a commenter points out, Dominion Retail's offer of 10.37 cents through the end of 2010 has no early-cancellation fee. You can switch anytime.

2) BE CAREFUL when the contract expires in 12 months or 24. Like BGE Home's natural-gas contracts the electric contract automatically rolls over to a new deal unless you tell them to cancel and go back to the regular BGE offering. Many households got burned in the winter of 2008/2009 when their BGE Home gas contract rolled over to a fixed-price deal when prices were at their peak. Locked in for a year, people paid hundreds of dollars more than they would have if they had switched back to the standard BGE natural-gas price, which let households benefit from plunging spot prices. Put a reminder on your calendar in a year or two to make sure the rollover deal is any good.

Posted by Jay Hancock at 6:42 AM | Permalink | Comments (15)
Categories: BGE/electricity
        

In a piece for the Daily Beast, Meghan McCain rises to Michael Steel's defense. But not that high. While she does argue for giving him more time as RNC chairman, she also compiles an impressive list of gaffes.

Last week brought yet another example of his troubles representing the party: an outburst during an interview in which he said his critics should “fire him or shut up.” It was alarmingly immature coming from someone who is supposed to be a leader.

Steele also protested recently that he “didn’t ask for and didn’t seek” the job of RNC chairman.

Unfortunately for him, there are those records of him attending the RNC election last January, not to mention videos announcing his candidacy where he states, “I want the gig. I’m ready, I’m ready to lead this party.”

When a leader is so indecisive about whether he wants his own job, how is anyone supposed to want to follow him? When Steele was initially elected chairman of the RNC, like many others in my party I was excited about a fresh and different voice, especially because Republicans were in need of new inspiration after the last election. However, since his appointment, it’s been one snafu after another, giving the impression that he’s disorganized and full of mixed messages. From his early criticism of Rush Limbaugh as an “entertainer” to recent reports of his $20,000 speaking fees, one thing is certain: From a public-relations standpoint, his actions are killing him in the eyes of the GOP.

Posted by Jay Hancock at 12:25 PM | Permalink | Comments (0)
Categories: Politics
        

Which is the better economic system? Western Europe's? Or the one in the United States? There is a Web debate, here and here, among other places, prompted by Jim Manzi's assertion that Europe's share of the world economy has collapsed since 1980, caused, he implies by its social-welfare state.

Says NYT's Paul Krugman in today's column:

But the story you hear all the time — of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation — bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.

Tyler Cowen suggests several thoughtful ways of looking at this, including posing this highly important question, which gets at the heart of America's genius:

4. One question is whether the U.S. or Europe does a better job of elevating poor immigrants to higher income levels. You would think egalitarians would be obsessed with this issue, but they're not. In fact most of them hardly mention it.

I can't immediately find any stats or studies, but I assume the U.S. wins in this category by a mile.

Posted by Jay Hancock at 12:05 PM | Permalink | Comments (2)
        

Cold weather across the country is pushing up wholesale prices for natural gas. And despite the fact that BGE bought much of its gas supply for this winter at lower prices in the middle of last year, prices for residential BGE customers have popped up as well. The price per therm for household BGE customers for January is 73 cents, according to the latest posting. That's up from 65 cents in December and 63 cents in November.

Even 73 cents is still much cheaper than prices from a year ago, when BGE was still shipping gas bought before energy prices crashed in 2008. In January 2009 BGE's commodity gas price (delivery is extra) was $1.04 per therm. In recent months WGES Energy Services was and still is offering a fixed price of 73 cents per therm for 12 months. If wholesale prices head up much more, those who took that deal for this winter will be happy, although the February gas futures contract hasn't budged much since mid-December.

WGES is also offering an 83-cent, two year deal, which looks tempting. If the economy picks up this year or if we have a hot summer, requiring lots of natural-gas electricity generation, wholesale prices could head back up. So far, however, I'm sticking with BGE's floating, month-to-month price.

Posted by Jay Hancock at 7:00 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

At 10 p.m. Sunday, the Facebook group "Sheila Dixon does not deserve an $83,000 pension" had 650 members. Organizer Josh Dowlut wants people to protest on City Hall steps at 4:30 p.m. Tuesday. Sounds like the TV and radio stations are getting interested. Another FB Group, "Baltimore Mayor Sheila Dixon Does Not Deserve To Collect A Pension", had 800 members.

Dixon's ability to start collecting her pension from 22 years as an elected official does not seem to be in jeopardy, no matter how much people protest. She copped a plea last week, got probation before judgment and avoided conviction on charges related to errant gift cards. Judge Sweeney approved the deal. Under the Maryland Constitution she would have lost the $83,000-a-year annuity if she had been formally convicted. But she wasn't.

Dowlut has also cast the event as a protest against generous government pensions in general, which are eating up an increasing amount of taxpayer resources. Somebody should ask incoming Mayor Stephanie Rawlings-Blake what she thinks about the city's pension system.

Posted by Jay Hancock at 10:03 PM | Permalink | Comments (8)
        

And yet more broadcast bloviating. From Maryland Public Televisions's Your Money & Business show.

Posted by Jay Hancock at 1:59 PM | Permalink | Comments (0)
        

Too often the the mayor of Baltimore's realtionship with business is characterized by how many tax breaks she's handing out to developers and how many new buildings are going up downtown.

Baltimore business is much more than downtown and Harbor East, and the mayor needs to recognize this. Small manufacturers, retailers, office landlords across the city are coping with the usual nuisances: vandalism, service failures, safety. Incoming Mayor Stephanie Rawlings Blake said the right things at her press conference yesterday about the importance of business. But to keep her promise she needs to connect with companies across the city.

Here's some radio yacking about the topic. This morning on WBAL with Bill Vanko. And on WYPR with Sheila Kast.

Posted by Jay Hancock at 10:42 AM | Permalink | Comments (2)
        

Mayor Dixon has enormous legal bills after two years of being investigated, indicted and tried. So her lawyers had just as much motive as she did to ensure that she settled the case without giving up her pension. Presumably that's how she'll at least start to settle her debts. She's entitled to a life annuity of $83,000 immediately after she resigns, and that'll add up to at least $2 million and even more with cost-of-living adjustments if she survives to a typical age.

But many pension plans allow you to withdraw what's owed in an immediate, lump sum, discounted to adjust for the time value of money. Under such a scenario she could take out more than $1 million right now -- plus whatever value actuaries might assign to cost-of-living adjustments tied to future mayor's salaries. It sure would help pay her lawyers' bills, which must run well into six figures at least.

So I asked Roselyn Spencer, executive director of the city's employees and elected officials retirement systems, if this would be possible. There is no provision for lump-sum distributions in the system, she said. Mayor Dixon's pension will be paid through the city payroll system, in monthly checks, she said. Neither had she been approached by Dixon or her people to suggest a lump-sum arrangement, she said.

$83,000 a year is a nice pension, but it'll take a long, long time at that rate to make much of a dent in the bill. Maybe Dixon lawyer Arnold Weiner has put her on an installment plan, although he ought to give her a big discount for all the publicity he got.

UPDATE: WBAL's Jayne Miller reminds us that Dixon can also draw a pension from her time working for the state.

Posted by Jay Hancock at 6:33 AM | Permalink | Comments (15)
        

I'll be on Ron Smith (WBAL AM-1090) this afternoon at 3:30, blabbing about Mayor Dixon's pension.

Posted by Jay Hancock at 1:18 PM | Permalink | Comments (0)
        

Sun editorial writer Peter Jensen gives the top 10 reasons why NG should move its HQ to Maryland instead of Virginia. Among them:

1. Force Northrup executives to experience commuter rush hour in Virginia - say, 6 a.m. on Telegraph Road in Alexandria. I-95/Capital Beltway interchange in Springfield should also do nicely.

2. Express mail them a copy of Gov.-elect Robert F. McDonnell's college thesis and highlight his views on "cohabitators, homosexuals or fornicators." And you thought Virginia was for lovers.

7. Three words: No slot machines.

Posted by Jay Hancock at 11:32 AM | Permalink | Comments (3)
Categories: Corporate welfare
        

Today's column is about Mayor Sheila Dixon's fabulous, $83,000 annual pension, which she gets to keep despite Wednesday's plea to a perjury count. That's objectionable, but another, even more expensive problem is overly generous pensions for all elected officials in Baltimore and beyond.

Here's how pensions work for Baltimore City Council and mayor. For every year of service you build credit for a life annuity worth 2.5 percent of your final salary. Dixon joined City Council in 1988, so she's been in elected service for 22 years. 22 x 2.5 percent is 55 percent. 55 percent of her salary of $151,700 is $83,435 a year. And that will surely go up: There's a provision that the Baltimore pensions keep up with the pay of whatever office the pensioner vacated. So if the next mayor's salary goes up to $170,000, Dixon's annuity will go up to 55 percent of THAT, or $93,500.

There's more: Elected Baltimore officials can start drawing their pensions at very young ages. You have to put in 16 years of service regardless of age. Or you have to put in 12 years -- three elected terms -- and be over age 50. Dixon is 56, so she qualifies on both counts. These terms are far more generous that what private-sector employees get -- with the exception of very senior corporate executives, especially Fortune 500 CEOs, whose pensions make Dixon's look like lunch money.

As The Sun has been reporting, Baltimore isn't the only place with this problem. From Larry Carson's October story:

County Councilman Vincent J. Gardina, a 54-year-old Democrat, is set to be the first person in county history to serve five council terms. That makes him eligible to collect his $54,000 council salary as a retirement benefit as long as he lives. It also means there's no financial incentive for him to run again, even if he had the desire. He didn't mention the perk when he revealed plans to step down late next year.

Four other council members, completing their fourth terms, are right behind.

Posted by Jay Hancock at 8:44 AM | Permalink | Comments (26)
        

Lots of commercial real estate loans are going to go bust this year. The Fed is worried. From the minutes of the Federal Reserve's Open Market Commitee meeting last month:

Conditions in the commercial real estate (CRE) sector were still deteriorating. Bank credit had contracted further, and with many banks facing continuing loan losses, tight bank credit could continue to weigh on the spending of some households and businesses. Some participants remained concerned about the economy's ability to generate a self-sustaining recovery without government support. In particular, they noted the risk that improvements in the housing sector might be undercut next year as the Federal Reserve's purchases of MBS wind down, the homebuyer tax credits expire, and foreclosures and distress sales continue. Though the near-term outlook remains uncertain, participants generally thought the most likely outcome was that economic growth would gradually strengthen over the next two years as financial conditions improved further, leading to more-substantial increases in resource utilization.

Posted by Jay Hancock at 2:59 PM | Permalink | Comments (0)
        

Granted, the miserable 2008 season was not so tough to beat. And non-Web sales almost surely did not rise by the same degree. Still, 4 percent is substantial growth at a time of little inflation. The top performing online category was jewelry, up 20 percent as it recovered from a 29 percent plunge in 2008, said comScore. Tuesday, Dec. 15, with $913 million in online spending, set a record for the heaviest-ever online spending day. The comScore report can be seen here.

Posted by Jay Hancock at 2:37 PM | Permalink | Comments (0)
        

So we're putting $1,500 into the 2010 family pre-tax medical spending account. The year is less than a week old, and we've already spent $900. The thing gets funded with biweekly paycheck deductions of $57.70. Thanks for the interest-free loan, Tribune Co.

Posted by Jay Hancock at 1:14 PM | Permalink | Comments (0)
Categories: Health Care
        

From the Sun's Consuming Interests blog and Eileen Ambrose's live tax chat, a reader question:

Q. I divorced my ex-wife in November 2008. She purchased a home in February 2009. I kept our original house that we purchased together (I had to pay her $90K for the buyout). Turns out she collected the $8000 first-time homebuyer’s credit when she wasn’t even eligible. How do I turn her in to the IRS and remain anonymous?

Nice guy. The answer is here.

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

Today's column argues that Maryland will not win Northrop Grumman's headquarters and that it's not that big of a prize, anyway.

Wherever the 300-job head office lands, it won't add much economic oomph. Recruiting the defense company will waste public servants' time. It probably wants tax breaks no state can afford.

And the headquarters will end up in Northern Virginia anyway. Nothing the District of Columbia or Maryland can do will change that.

Read the whole thing here.

Posted by Jay Hancock at 8:02 AM | Permalink | Comments (0)
Categories: Corporate welfare
        

So says Robin Hanson. Systematized feedback for blog commenters as well as posters, he says, can create incentives for nicer commentary.

This induces snarkier comments for two reasons:

1. Intelligent post authors can usually anticipate the main post “corrections.” Posts written for readability simply cannot mention every related disclaimer, caveat, alternate interpretation, or follow-on question. This leaves a huge opening for comments to seem smart by pointing out such things, even when they are boring.
2. When you post a friendly response to someone else’s post, you can hope for reciprocal posts later, where they respond to one of your posts. This is less likely when your post is critical, or if you just comment on their post; they may not even know you have a blog.

A similar theory explains why large email lists and usenet groups were often so harsh; each contributor had relatively little influence over the subscriber experience. This theory also suggests a fix: let blog readers mark comment authors they like, and read all blog post comments via an interface that emphasizes authors they personally like. Comment authors would then face incentives similar to post authors to please readers.

Posted by Jay Hancock at 6:06 AM | Permalink | Comments (0)
        

At 1 today on WYPR -- 88.1 FM -- Phillip Phan, professor of management at the Johns Hopkins Carey Business School, and I will be talking about what new businesses and jobs America will see when the economy finally recovers. We'll be on Midday with Dan Rodricks. Join the conversation at: 410/662-8780. Or email: midday@wypr.org

Posted by Jay Hancock at 12:05 PM | Permalink | Comments (0)
        

Byron Wien is out with his list of 10 surprises that could move markets this year. The annual list has become well known because of some good calls Wien has made in the past, although the list is published with the idea that many of the surprises will not come to pass. Last, year, however, he was very prescient, making accurate calls on gold, stocks, the savings rate and the housing plunge.

The Surprises of 2010

1. The United States economy grows at a stronger than expected 5% real rate during the year and the unemployment level drops below 9%. Exports, inventory building and technology spending lead the way. Standard and Poor’s 500 operating earnings come in above $80

2. The Federal Reserve decides the economy is strong enough for them to move away from zero interest rate policy. In a series of successive hikes beginning in the second quarter the Federal funds rate reaches 2% by year-end

3. Heavy borrowing by the U.S. Treasury and some reluctance by foreign central banks to keep buying notes and bonds drives the yield on the 10-year Treasury above 5.5%. Banks loan more to corporations and individuals and pull away from the carry trade, thereby reducing demand for Treasuries. Obama says, “The suits are finally listening”

4. In a roller coaster year the Standard and Poor’s 500 rallies to 1300 in the first half and then runs out of steam and declines to 1000, ending where it started at 1115.10. Even though the economy is strong and earnings exceed expectations, rising interest rates and full valuations present a problem. Concern about longer term growth and obligations to reduce leverage at both the public and private level unsettle investors

5. Because it is significantly undervalued on a purchasing power parity basis, the dollar rallies against the yen and the euro. It exceeds 100 on the yen and the euro drops below $1.30 as the long slide of the greenback is interrupted. Longer term prospects remain uncertain

6. Japan stands out as the best performing major industrialized market in the world as its currency weakens and its exports improve. Investors focus on the attractive valuations of dozens of medium sized companies in a market selling at one quarter of its 1989 high. The Nikkei 225 rises above 12,000

7. Believing he must be a leader in climate control initiatives, President Obama endorses legislation favorable for nuclear power development. Arguing that going nuclear is essential for the environment, will create jobs and reduce costs, Congress passes bills providing loans and subsidies for new plants, the first since 1979. Coal accounts for about 50% of electrical power generation, and Obama wants to reduce that to 25% by 2020

8. The improvement in the U.S. economy energizes the Obama administration. The White House undergoes some reorganization and regains its momentum. In the November Congressional election the Democrats only lose 20 seats, much less than expected

9. When it finally passes, financial service legislation, like the health care bill, proves to be softer on the industry than originally feared. There is greater consumer protection, more transparency, tighter restriction of leverage and increased scrutiny of derivatives, but the regulatory changes for investment bankers and hedge funds are not onerous. Trading volume and merger activity increases; financial service stocks become exceptional performers in the U.S. market

10. Civil unrest in Iran reaches a crescendo. Ayatollah Khameini pushes out Mahmoud Ahmadinejad in favor of a more public relations adept leader. Economic improvement becomes the key issue and anti-Israel rhetoric subsides. Talks with the U.S. and Europe begin but the country remains a nuclear threat. Pakistan becomes the hotspot in the region because of the weak government there, anti-American sentiment, active terrorist groups and concerns about the security of the country’s nuclear arsenal

Posted by Jay Hancock at 8:47 AM | Permalink | Comments (1)
        

Wednesday's column is about Northrop Grumman's decision to move its headquarters to the Washington region -- either Virginia, Maryland or the District. Who will win? Northrop will shake down each of the jurisdictions for tax breaks and other incentives. But it may not be corporate taxes that clinch the decision (although no one would ever admit this). You can bet that Northrop execs will look closely at their own tax liability in the different spots, and Virginia has the huge advantage.

Let's assume new Northrop boss Wes Bush will make what outgoing CEO Ronald Sugar made in cash salary and bonus, which in 2008 was $4.3 million. If he settles in Montgomery County, Maryland, thanks (in part) to the state's "millionaire tax" he'll pay what I calculate to be $396,000 in state income tax and Montgomery County piggyback income tax. (This is highly simplified. I'm not counting deductions and in any given year his taxable income might be even more with option exercises, capital gains etc.)

UPDATE: O'Malley spokesman Rick Abbruzzese notes that the millionaire tax is due to expire at the end of this year. My bad: I thought it was 2011. In any case, thanks to the piggyback tax Northrop Grumman execs would still pay a lot more personal income tax in Virginia than in Maryland even if the millionaire tax expires.

But if they put Northrop's new headquarters just across the Potomac and Bush lives there, he would pay only $247,000 in Virginia income tax, saving $149,000. (Again, I'm simplifying. Since he would get a bigger deduction on his federal return by paying Maryland taxes, his federal taxes might be lower if he lived in Maryland. But overall he'd still be way ahead in Virginia, especially once he started paying taxes on capital gains.)

Where would you put your company? More in Wednesday's paper.

Posted by Jay Hancock at 6:24 AM | Permalink | Comments (9)
Categories: Taxes
        

Michael Mandel has launched a Statistic of the Decade contest. Nominations: Home prices. Growth of Chinese economy. Growth and decline of international trade as a portion of the world economy. And U.S. household borrowing.

This last one gets my vote. As Mandel notes, for some reason the Fed figures underlying the graph below include domestic hedge funds, which are certainly not households. Nevertheless it's an impressive pair of slopes.

Posted by Jay Hancock at 12:14 PM | Permalink | Comments (1)
Categories: The Great Recession
        

Check out Eric Siegel's commentary in today's opinion section. "For the first decade since the city's population decline began some 60 years ago," he reports, "white flight is not the leading cause of the decrease in the number of residents - black flight is."

Part of this is simply proportional. Baltimore has twice as many African Americans as whites. So in a city that continues to lose population, it stands to reason that twice as many of the people leaving should be black. But this isn't the way it has worked for a long time. The shift, if it's confirmed by this year's census, would be a major change in Baltimore demographics. As Siegel notes, it's worrying for a city that needs as many residents as it can get. But it's also reflects the continued integration of society, and that's good news.

Posted by Jay Hancock at 9:47 AM | Permalink | Comments (5)
        

As Paul Krugman writes in today's NYT, upcoming economic reports figure to be the best we've seen in more than two years. The economy may well have added jobs in December for the first time since 2007. The report on fourth-quarter gross domestic product should show growth, as the third-quarter report did.

But, Krugman warns, the good news could be temporary, and it's hard to argue with him. None of the potential economic engines looks ready to kick in. Consumers are still indebted and tapped out. There is still a big hangover of unsold houses. A cheap dollar could spur exports, but China and other nations are holding the value of their currencies down, taking away the silver lining of the dollar's decline. The best bet for a kick-start might come from business, which hasn't had an investment boom in almost a decade. But thanks to the recession, corporations have far more office and warehouse space and factory capacity than they need.

To compensate, Krugman wants more monetary and fiscal stimulus. He wants Ben Bernanke and the Federal Reserve to hold down short-term interest rates for a lot longer. And he wants another big spending package from Congress. But he makes no mention of the risks these moves would include.

Ordinarily, ultra-low interest rates run the risk of fueling price inflation. But deflation, not inflation, is the risk these days, so wonks like Krugman may feel rates can be kept low with impunity. But in the new economy, ultra-low rates lead not to price inflation but to asset inflation -- investment bubbles in oil, the stock market, emerging economies and so forth. We all know what happens when investment bubbles pop.

The risks from another congressional spending package are obvious: more deficit spending, hundreds of billions more in obligations loaded on future U.S. taxpayers in addition to everything else Congress is taking on. Krugman argues that the stimulus is needed to prevent renewed economic downturn. He doesn't say it, but he would probably address the deficit and debt by arguing for substantial tax increases after the economy recovers. If he were economic potentate, that might be a way to go. But he's not. The way politics works these days, deficits and federal debt, once created, tend to last a long, long time.

Posted by Jay Hancock at 9:06 AM | Permalink | Comments (2)
Categories: The Great Recession