As Mike Dresser points out, trial lawyers would like to see Maryland's minimum auto insurance mandate rise because their compensation would rise along with it. Lawyers typically take home 30 percent of a settlement, and auto cases are often settled to the limit of the insurance coverage.

That would be an incentive to lobby for higher limits even if other factors stayed equal. But they haven't. Thanks to the recession, campaigns against drunk driving and safer cars, auto injuries and deaths have plummeted. As Dresser wrote a few weeks ago, U.S. traffic fatalities reached their lowest level in 55 years in 2009, falling 9 percent from the year previously.

Preliminary reports say traffic deaths for Maryland were 550 last year, Dresser reported. That's down from 614 in 2007 and 707 in 1990, and the state has many more drivers now. We can be reasonably sure that traffic deaths are a good proxy for accidents, injuries and lawsuits generally. No wonder the trial bar wants a raise. So many lawyers, so few crashes. A basic business rule is that, when you have fixed overhead and your volume goes down, you try to raise prices.

UPDATE: For a good argument in favor of higher premiums, see Bmore1981 in the comments section. He mistakes my post, which is about the incentives lawyers have to raise coverage floors, for an attack on bill's merits. But his comments, coming from one who says he has suffered from inadequate, 2nd-party auto liability coverage, are worth reading. An excerpt:

Insurance protect ones self and others from the risks that they pose on the roads. If people are not willing to pay for a minimum level of coverage that is reasonable to protect others, which the current minimums are not, they should not be allowed on the roads. This isn't about Lawyers wanting premiums to rise, this is about having a rational insurance system.

Posted by Jay Hancock at 9:53 PM | Permalink | Comments (15)
        

I hate to belabor this, but I'm going to belabor it. Everybody is slobbering over Northrop Grumman CEO Wesley Bush to try to get him to move the company's headquarters to Maryland. He's supposed to be choosing between Maryland and Virginia.

Here is all you need to know about what will happen. Bush, who is succeeding Ron Sugar as Northrop's boss, will make about $20 million a year. (Sugar made $18 million last year and $20 million in 2008.) Let's assume for argument's sake that the $20 million is all ordinary income and that what gets reported in the proxy will be the same as what shows up on Bush's W2. (It won't be, but gross oversimplification here does not falsify the larger point.)

If he lives in Maryland he's going to pay at least $500,000 more a year in personal income tax, thanks mainly to local income taxes that Virginia doesn't have. And I'm not counting the Maryland's millionaire tax, which is supposed to disappear this year. Where would you put the headquarters?

Posted by Jay Hancock at 8:41 AM | Permalink | Comments (4)
Categories: Corporate welfare
        

I'm skeptical of the new KPMG study on the lowest-cost metro areas for business. Or at least I suspect it doesn't tell the whole story.

Of 20-plus U.S. metro areas with more than 2 million people, metro Baltimore ranked fourth in a study that gauged costs for labor, taxes, real estate, utilities and other factors. The only large U.S. metros with lower business costs than Baltimore were Tampa, Atlanta and Miami. According to the KPMG study, Phoenix, Denver and Northern Virginia are all more expensive for business than Baltimore. Baltimore is even lower cost for manufacturing than Phoenix or Denver, according to the study.

The scores, rendered as an index, are all fairly close. Fewer than 10 index percentage points separate the most expensive metro, San Francisco, from Tampa. Baltimore beats out Philly, Northern Virginia and eight more metros by 2 percentage points or less. The other point to be made is that most businesses, when looking to open an operation, don't confine their searches to areas with major-league sports teams, which is basically what this study looks at. They look at smaller towns with lower costs.

On the plus side for Baltimore, this study makes no attempt to look at the size and quality of the local workforce, a category in which Maryland scores very well against other states. I suspect Baltimore is a higher-cost area for business than KPMG suggests, but for many businesses that higher cost is worth it.

Posted by Jay Hancock at 8:21 AM | Permalink | Comments (0)
        

The government moved today to end Saturday delivery by the Post Office, beset like other businesses with soaring costs and poor revenue. The Postal Regulatory Commission -- I had no idea there was such a thing -- opened a new case to consider the matter.

One filed piece of testimony estimates the agency could save $3 billion a year by stopping Saturday stops. Fine by me.

From the press release in my email:

Washington, DC – The Postal Regulatory Commission today established Docket N2010-1 to thoroughly review whether the U.S. Postal Service plan to eliminate Saturday delivery should be implemented. The Postal Service is required to ask the Commission for an Advisory Opinion on any change in nationwide service it proposes. This is one of the most significant changes the Postal Service has ever presented to the Commission.

“The Commission is the watchdog agency that determines if the Postal Service meets its Universal Service Obligation to the nation. Our process will provide multiple opportunities for the public to be heard and for all the facts to be considered before the Commission issues its Advisory Opinion,” said Chairman Ruth Y. Goldway. “The ball is in our court now. There will be no final decision until the record is complete.”

The Postal Service has advised the Commission that due to falling mail volumes and revenues it is considering eliminating Saturday mail collection and delivery except for Express Mail and existing post office box service. It submitted 11 pieces of testimony in support of its Request.

Posted by Jay Hancock at 5:50 PM | Permalink | Comments (3)
        

Canadian author Margaret Atwood is on Twitter -- with 35,000 followers. She writes about it on the NY Review of Books blog.

I was told I needed “followers.” These were people who would sign on to receive my messages, or “tweets,” whatever those might turn out to be. I hummed a few bars from “Mockingbird Hill”—Tra-la-la, twittly-deedee—and sacrificed some of my hair at the crossroads, invoking Hermes the Communicator. He duly appeared in the form of media guru McLean Greaves, who loosed his carrier pigeons to four of his hundreds of Twitterbuddies; and with their aid, I soon had a few thousand people I didn’t know sending me messages like “OMG! Is it really you?” “I love it when old ladies blog,” one early follower remarked.

As so often this was shamelessly stolen from Marginal Revolution, Tyler Cowen's and Alex Tabarrok's endlessly fascinating and intelligent economics/policy/culture/everything blog.

Posted by Jay Hancock at 11:43 AM | Permalink | Comments (0)
Categories: Technology & Innovation
        

Thanks to Dave Troy for sending this. George Soros has just endorsed Baltimore's bid for Google gigabit fiber. Here are Soros and Google GEO Eric Schmidt talking three years ago about Soros's book on the war on terror. Yesterday I wondered how well these guys knew each other and how much juice Soros would give to Baltimore's application. They obviously know each other quite well.

Posted by Jay Hancock at 9:15 AM | Permalink | Comments (4)
Categories: Technology & Innovation
        

Much hot air has been blown about the tyranny that will ensue once the Internal Revenue Service starts enforcing the requirement in Obamacare for almost everybody to have health insurance coverage. Republicans hallucinated about the "15,000" IRS agents that would enforce the law. People went on about "brownshirts" etc. Actually, the enforcement provisions look too weak. The only way this plan is going to work is if young people sign up to subsidize the older and sicker. But the risks of not buying health insurance look minimal.

First, the penalties to be assessed are probably far less than what coverage will cost. Second, it looks like the IRS is not exactly going to be keeping a hawk eye. This accounting blog says it'll basically be an honor system. Libertarians (!!) Megan McArdle and Tyler Cowen suggest the mandate is too weak.

Here is a description of the penalties from the Joint Committee on Taxation:

The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

Posted by Jay Hancock at 8:53 AM | Permalink | Comments (4)
Categories: Health Care
        

For what it's worth, the Baltimore branch of George Soros's Open Society Institute is putting out a release expressing Soros's support for Baltimore's application for Google gigabit fiber. It's unclear how well Soros knows the Google people. And it's unclear how much his support will help Baltimore's bid. If Soros and Google's Eric Schmidt were really that tight they'd do this behind the scenes instead of having Baltimore OSI announce it. But it won't hurt. And it'll do a lot more than having your mayor jump in a lake.

Below is Soros's comment from the release, which OSI says they'll be putting out today or tomorrow. Also, Baltimore Google Czar Tom Loveland adds this via email:

Soros sent Eric Schmidt a personal letter on Friday, March 19th urging Google to select Baltimore. We got permission last week to go public and the press release below was approved by Soros’ New York office late Friday afternoon.

Soros's statement:

"Google should consider Baltimore for this trial for the same reasons that I selected Baltimore for my philanthropic investment, and as the site of the only field office of the Open Society Institute in the United States," said George Soros. "Baltimore has strong community institutions but still many people who suffer from being disconnected from important resources. The city and its residents would benefit dramatically from enhanced communications infrastructure. An investment in Baltimore is sure to yield positive returns both for Google and for the city."

Posted by Jay Hancock at 11:07 AM | Permalink | Comments (6)
Categories: Technology & Innovation
        

So I'm using TurboTax for the first time. (Don't laugh. I got my first cell phone last year.) It's a very good program, although it took a long time to load and install on my 500-MB RAM machine. But I'm a little disconcerted by the frequent fixes, even as tax season is upon us and April 15 approaches. There have now been a dozen updates, some with half a dozen or more fixes. The most recent update was last week. Many fixes are functional -- preventing glitches and crashes.

But many affect your tax calculation. Most of these seem to be minor, but some are not. "Fixed erroneously qualifying for the First-Time Homebuyer Credit" is one of the latter. Even so, I don't blame TurboTax very much. Every release is beta to a great extent. The government keeps changing the rules. TT actually has a deadline that must be met, as opposed to, say, USB 3.0. Some updates were unavoidable -- allowing deductible donations for Haiti. Kudos to TT for being transparent and forthright about its updates.

Instead, I present TT's endless updates as Exhibit 4,568 in the case for demonstrating the impenetrable complexity of the United States tax system. The system is a bloody nightmare. In a perfect world, you wouldn't need a 176 MB program to do your taxes.

Posted by Jay Hancock at 9:08 AM | Permalink | Comments (2)
Categories: Technology & Innovation
        

Juju.com is out with its latest job-search difficulty rankings, based on a measure of online help-wanted ads held up against local unemployment. Washington D.C. and San Jose are tied for the easiest place in the country to find a job, according to this list, with one job opening for every 1.7 unemployed people. Baltimore is No. 3, with a job for every 2.4 unemployed people.

Other cities ranking near the top are New York, Hartford and Salt Lake City. Detroit, St. Louis and Miami are at the bottom of the 50-city list, each with more than 10 unemployed persons per online advertised job opening. Of course these kinds of rankings are imperfect. Even though the folks who compile these claim to eliminate duplicate help-wanted ads, I suspect some double counting is going on. And highly-wired towns like Baltimore and San Jose are going to have a higher portion of help-wanted ads online, anyway. Still, you'd rather be looking for a job in Baltimore than in Las Vegas, also with more than 10 unemployed people per job in the list.

Posted by Jay Hancock at 8:42 AM | Permalink | Comments (1)
Categories: The Great Recession
        

It must be do-business-like-a-pirate day. This is Blackbeard's business plan, updated for the 21st century. From the UN's report on Somali pirates, here is the pirates' business blueprint. All you VCs out there, crying about the lack of deals to finance, check it out.

Among other things, there are two classes of equity shares, like at the New York Times. More-valuable Class-A shares go to pirates who board the ship. Class-B owners, who run support operations, get about $15,000 after ransom is paid. There are also outside investors. Residual profits go to Class-A shareholders after accounting for costs. HT Marginal Revolution.

A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited as militiamen to provide protection on land if a ship is hijacked. In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:

• Reimbursement of supplier(s)

• Financier(s) and/or investor(s): 30% of the ransom

• Local elders: 5 to 10 %of the ransom (anchoring rights)

• Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum — the profit — is divided between class-A shareholders.

Posted by Jay Hancock at 8:17 AM | Permalink | Comments (4)
Categories: Technology & Innovation
        

Here's the equivalent of the death certificate for the 100-year-old, Towson-based Black & Decker, lately acquired by Stanley Works. It's Monday's form 15-12b filing with the Securities & Exchange Commission, stating that Black & Decker is no longer registered under the Securities Exchange Act of 1934.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (6)
        

Interesting confab at the University of Virginia starting tomorrow. It's U.Va.'s 2nd annual "venture summit," this time starring former Va. Gov. Mark Warner, Baltimore VC pioneer Chuck Newhall of New Enterprise Associates and Robert Paull of Lux Capital.

Panelists also include leading venture capitalists A.G.W. "Jack" Biddle III of Novak Biddle Venture Partners, J. Sanford "Sandy" Miller of Institutional Venture Partners and Robert Paull of Lux Capital, as well as Frank Levinson, experienced entrepreneur and founder of Small World Group. A founding partner in the U.Va. Venture Summit, Chuck Newhall of New Enterprise Associates, who is regarded as one of the visionary creators of the U.S. venture capital industry, will also participate in the summit.

UVA is upping its game as a core and disseminator of entrepreneurial knowledge. Maryland universities: pay attention.

Posted by Jay Hancock at 10:58 AM | Permalink | Comments (0)
Categories: Technology & Innovation
        

Today's column is about the tax increment financing deal that Harford County approved for developer Clark Turner last week. Turner will turn Beechtree golf course into a neighborhood of 768 houses, and the site's future property-tax revenue will be used to secure a $14 million bond issue to help pay for roads, sewers and so forth.

But only on and immediately outside the site. Proponents of the TIF kept talking about how it would upgrade county infrastructure at a time of scarce public funding -- as if the traffic nightmare on Fallston's Route 152 or some other systemic bottleneck would be addressed. The only road improvements that will come from the deal are four intersection upgrades right near Beechtree. These are the kind of projects developers routinely have to do with their own money.

Another point: Pro-TIFers keep trying to pretend that the Beechtree taxing district will somehow be separate from Harford County. "The bonds are not an obligation of the county," they say. True, Beechtree residents, and not the county as a whole, will have to service the bonds. But Beechtree residents will be county residents as much as anybody who lives in Harford now. If somehow the project got stalled and there wasn't enough tax revenue to pay bond interest and principal, the county would probably have to come up with a bailout. In any event the TIF will divert property tax revenue that ordinarily would have gone into Harford's general fund, and that's a material impact on all county taxpayers.

Posted by Jay Hancock at 7:55 AM | Permalink | Comments (2)
Categories: Corporate welfare
        

Bloomberg reports that some private-sector debt trades at yields that are lower than yields for comparable paper from the U.S. Treasury. This is unusual, since Treasury paper is usually thought of as the "risk-free" lending against which all other debt is gauged. Tyler Cowen is skeptical -- thinks that it may be a liquidity anomaly or that the private paper contains rights that the public paper doesn't.

Bloomberg:

March 22 (Bloomberg) -- The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.

Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.

Posted by Jay Hancock at 8:27 AM | Permalink | Comments (0)
Categories: Slo-mo fiscal train crash
        

This week's Economist magazine (pro-markets, thought Bill Clinton should resign for lying about Monica Lewinsky) gets the historic health bill right. The magazine says:

... It is wrong for a country as rich as America to have tens of millions of people without health insurance. Beyond them is the much larger number of people who fear falling into that position through losing their jobs; and the larger number again who cannot get affordable insurance because they have an existing medical condition, or because they are too old, or because they have exhausted the "lifetime caps" imposed by insurance companies. The health-reform plan represents the last chance, perhaps for decades, of erasing one of the least creditable differences between America and the rest of the industrialized world. If this president, who came into office with solid congressional majorities and stratospheric ratings fails, neither he nor his successors will dare touch health care for many years to come; and that would be a tragedy.

Now that the United States has joined the civilized world in trying to provide universal medical coverage, maybe it can start concentrating on controlling costs. An OECD study last year showed that the U.S. spent 16 percent of its economic output on health care in 2007, half again as much as the nearest runner-up and nearly twice what the average developed country spends. France, Switzerland and Germany, numbers 2, 3 and 4, were 10 percent or 11 percent.

There's no financial reason the U.S. can't continue delivering decent care while controlling costs. The trick will be getting the health-care system to change its behavior. The cost "controls" in the health-care bill just passed are "top down" -- basically statements or goals of what aggregate spending will do in coming years. But real change won't come until we work on the "bottom up" details of doing fewer unnecessary procedures and paying doctors to keep patients well instead of to perform tests and surgeries after they get sick.

Posted by Jay Hancock at 9:10 AM | Permalink | Comments (22)
Categories: Health Care
        

A week ago I wrote a column about Baltimore Gas & Electric's proposed smart-meter program that said:

Someday your meter will talk to your refrigerator and the Internet, and it'll really be cool. But because the hardware and software are unproved, maybe Maryland should wait a couple years before sending its meters to college.

Here is a response from Mark Case, BGE's senior vice president of strategy and regulation. Case's thoughts were initially sent internally to BGE's media relations crew and then shared with me. They're a fair response to the column, and he and BGE agreed to let me publish them. I respond to his points in italics.

A few reflection’s to Jay’s story over the weekend:

1. Jay doesn’t accurately quote me or reflect my position and interview comments in the statement below from his story. My statements have consistently been that both PeakRewards and Smart Grid are far cheaper options than the cost of building new power plants, and that Smart Grid provides benefits that go well, well beyond what PeakRewards can do. The two serve related purposes but have many important differences.

“Peak Rewards has already chopped electricity demand in Maryland by half of what a new decent-size nuclear reactor would pump out - at far less cost than for smart meters, according to Mark Case, BGE's senior vice president of strategy and regulation”

I didn't misquote Case, but I didn't present his full argument, either. Yes, Peak Rewards is cheaper than smart meters and has delivered big efficiencies. But BGE claims that, dollar-for-dollar, smart meters will deliver much greater energy- and money-saving dividends than Peak Rewards. It may, but this remains to be seen. Nowhere in the country has a large-scale smart-meter rollout proven this.

2. While Jay is correct that PeakRewards and Energy Efficiency are great programs benefitting BGE’s customers, the fact is that even with such programs demand in the region is forecasted by PJM and by us to grow significantly over the next several years. We need to do

more. BGE already has by far the most aggressive demand response program in the country targeting about 400,000 of our 1.1 million customers – it will be a real stretch as to whether we can fully reach the ambitious goals we’ve established – and any sort of hope that we can offset the demand growth simply by signing up even more customers is wishful thinking, but not based on anything substantive at this point.

3. There certainly are some aspects of Smart Grid that are less developed than others, such as networked ZigBee communications in the home with newly developed smart appliances, integration with electric vehicles, and the like. However, our foundational premise is fairly simple, and well demonstrated from ours and many other pilots. That is, let customers know when prices and demand are high (through low-tech phone calls and emails, etc.) and incent them through bill credits to reduce their usage. Use the advanced meters to measure the reductions on an hourly basis so we can reward customers based on the level of reduction they choose to take. Nothing real “rocket science” about this concept. Also provide customers with better information about their usage and costs year-round (not just on hot summer days), and the tools to manage and reduce their costs.

4. Our business case shows benefits of $2.6 billion vs costs of less than $500 million – reduced to $300 million with the DOE grants. Thus, even if some of our assumptions in the business case prove out to be optimistic – and we’ve deliberately reduced them already by 30% in order to be highly conservative – customers come out way ahead. The downside to delaying implementation goes well beyond the loss of the DOE funds – it delays customers from realizing the benefits which are multiple times higher than the costs. For a state very focused on energy prices and costs, and the impact on consumers, this makes little sense.

I would welcome a chance to have our team meet with Jay and give him a deeper review of the case for Smart Grid.

MC

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

Great post by Barry Ritholtz on Congress' chronic underfunding of the Securities and Exchange Commission. The SEC had its failures, for sure, but they were exacerbated by lack of money. From Barry:

Apparently, Congress screwing around with SEC defunding goes back 20 years, if not further.

The villain of the discussion is (of course!) Phil Gramm, the intellectually bankrupt Texas Senator whose economic arguments are invariably proven to be wrong, with grave economic consequences. Gramm argued in 1994 that SEC fees “made it too expensive to raise money in the capital markets, and thus deterred growth.”

As per usual, Gramm had it precisely backwards at exactly the wrong time.

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (2)
Categories: Regulation
        

From MPT with Jeff Salkin.

Posted by Jay Hancock at 4:56 PM | Permalink | Comments (0)
Categories: The Great Recession
        

Even if you're for the Walmart project in Baltimore's Remington section, like me, maybe you can agree that the one-off tax breaks associated with so many city developments should not apply here. Baltimore, slowly being taken over by tax-exempt nonprofit organizations, needs all the for-profit, tax-paying corporate citizens it can get. There's a dubious argument to be made in favor of giving tax breaks to a manufacturer or marquee hotel development. But there is no argument at all to be made in favor of one-company tax breaks for pure retail projects.

So I asked Jay Brodie, chief executive of the Baltimore Development Corp., if the Remington Walmart and Lowe's or its developer may be getting tax abatement, payment "in lieu of" tax or other one-off breaks. Brodie's reply: The project "is in the Enterprise Zone and so is entitled to those credits. No other incentives have been asked for or offered."

That's good. Remington is the kind of place enterprise-zone credits were designed for, and they go to any project locating within the zone. So they're not a special emolument just for Walmart and Lowe's. Under Maryland's law, the project will get an 80 percent property-tax credit on investment to renovate and rehab the site. The credit starts diminishing after five years and disappears after 10.

Posted by Jay Hancock at 6:22 AM | Permalink | Comments (3)
Categories: Corporate welfare
        

Who says U.S. entrepreneurs have lost their innovative edge? Atlantic Monthly blogger Megan McArdle is getting married. One of her bridesmaids got a Gmail ad for Bachelorette Barf Buckets, a heartwarming, personalized gift bucket full of bachelorette stuff. The site, whose URL you can see on Megan's blog, may or may not be safe for work.

On second thought, hold the reference to U.S. entrepreneurs. The buckets and everything in them look like they're made in China.

Posted by Jay Hancock at 6:10 AM | Permalink | Comments (0)
Categories: Technology & Innovation
        

It's an unpopular message, but the New York Times' David Leonhardt is doing a thorough, unbiased and intelligent job of delivering it while covering country's looming fiscal crisis: After the economy recovers, spending will have to be cut AND taxes will have to rise. Read today's piece, part of which says:

Yet our desire for government services just keeps growing. We added a prescription drug benefit to Medicare. Farm subsidies are sacrosanct. Social Security is the third rail of politics.

This disconnect is, far and away, the main reason for our huge budget problems. Yes, the wars in Iraq and Afghanistan, the recession and the stimulus have all added to the deficit. But they are minor issues in the long run.

For now, political leaders in both parties are still in denial about what the solution will entail. To be fair, so is much of the public.

What needs to happen? Spending will need to be cut, and taxes will need to rise. They won’t need to rise just on households making more than $250,000, as Mr. Obama has suggested. They will probably need to rise on your household, however much you make.

Also highly recommended: What really caused the deficits
And: If Americans love Medicare (and they do), their taxes have to rise

Posted by Jay Hancock at 12:17 PM | Permalink | Comments (8)
Categories: Slo-mo fiscal train crash
        

The Street.com asked Phoenix Marketing to rank states by their portion of millionaires. Maryland came in No. 2, after Hawaii but beating Connecticut and New Jersey. Here is the story, but be careful of the innumeracy. The story keeps talking about states with "the most" millionaires when what's really being measured is the concentation of millionaires.

The story says Maryland's number of millionaires "will definitely go down next year" because the number of million-dollar income-tax returns has declined. This confuses income and wealth. Most of the people who had million-dollar incomes last year, when Phoenix allegedly compiled its data, probably still have over $1 million in assets.

Posted by Jay Hancock at 11:37 AM | Permalink | Comments (8)
Categories: Maryland Economy
        

In a column I year ago I guessed that Verizon would "start stringing cable and digging trenches in Baltimore in 2010," based on some tea leaves and meetings between the company and city officials. Doesn't look like it's going to happen, however.

Verizon spokesman Sandra Arnette told me a couple weeks ago that the company was concentrating on building out networks in localities where it already had franchise agreements. And she sends the same message in Gus Sentementes' story today on Progressive Maryland accusing Verizon of redlining Baltimore.

Here is my column from January 2009.

Mark Phillips of Ednor Gardens in Baltimore sees ads everywhere for Verizon's high-speed Internet and cable service.

He reads about "FiOS" in the paper. He wants to be your customer, Verizon. His family keep jamming their slower DSL line with entertainment downloads. When he streams video from Hulu.com, his daughter might not be able to do schoolwork online.

He doesn't really want Comcast's broadband product. FiOS lays fiber-optic cable right to your door, which he says is faster and more secure.

When will Verizon bring FiOS to Baltimore? he wants to know. He signed up for the "Want to know when FiOS Internet Service will be in your neighborhood?" e-mail notification. Silence. He bugs people in the Verizon Wireless stores. They don't know.

"I see ads everywhere, but I'm in limbo," says Phillips, a family physician. "I can't get a straight answer."

I couldn't get a straight answer either, but there seems to be creeping progress. The pressure is rising on Verizon to start serving Maryland's biggest city.

This is an educated guess: The company will start stringing cable and digging trenches in Baltimore in 2010, four years after it began bringing FiOS to Howard County and other, wealthier suburbs.

Marilyn Harris-Davis, executive director of Baltimore's Office of Cable and Communications, held what she described as "informal" contacts with Verizon this week. She wouldn't give details, and neither would Verizon.

"I anticipate they'll submit an application soon," she said. "My gut says within the next quarter or two."

That would launch negotiations probably lasting the balance of the year, with the first lines being laid next year.

"There's really nothing new to report on Verizon's plans to offer FiOS in Baltimore City," says Verizon spokeswoman Sandra Arnette. "We have not entered into franchise discussions with the city. We've only had some informal conversation. And I have no idea when formal discussions might begin."

The Phillips family's pent-up FiOS demand is typical. Baltimoreans inquire about FiOS "all the time," Harris-Davis says. "They write to the mayor. They write to this office. They call this office."

Comcast's Baltimore broadband products, the legacy of a 1980s cable franchise, don't have all the business to themselves. For household customers, Comcast competes with satellite TV, DSL Internet providers, including Verizon, and others.

But people want two cable competitors, a situation that has demonstrably lowered broadband prices in neighborhoods where Comcast and Verizon compete.

The masses are crying, yearning for broadband utopia. It's great public relations for Verizon.

Except when it's not. Verizon's strategy of connecting suburbs before it gets to older cities has prompted repeated charges of redlining - tapping the upscale gravy while depriving poorer folks of the best telecom products.

Wilmington, Del., "will not tolerate redlining of cable television service," said that city's News Journal. A New Jersey minister accused Verizon of proposing "a plan that leaves behind residents of apartment buildings and rural areas," according to the Courier-Post of Cherry Hill.

A Citigroup study a couple of years ago found that families served by FiOS in New Jersey, Connecticut and New York made 67 percent more than the average U.S. household income, reported the National Journal.

Verizon has said it makes sense to wire suburbs first because there are fewer regulatory and physical obstacles.

"As for redlining, it's against the law," Arnette said via e-mail. "And it runs counter to our 100-year legacy of providing great customer service. We do not discriminate in providing our voice, broadband or FiOS TV service."

Baltimore "is very much part of the discussion" about where to go next, she said.

You can get FiOS in parts of Annapolis as well as certain neighborhoods in Anne Arundel, Howard, Baltimore, Montgomery and Prince George's counties. Verizon just signed deals with Bel Air and La Plata. It's negotiating with Harford and Charles counties.

As if to prove it's not allergic to big cities, it's negotiating with Philadelphia and has reached agreements with New York, Tampa and Washington.

But even within cities the redlining issue crops up.

The Philadelphia negotiations, which began in June, bogged down partly over which neighborhoods would be connected first, according to The Philadelphia Inquirer.

It's no surprise Verizon wants to wire houses that are likely to generate a return on its investment. It's spending an estimated $23 billion to run cable past 18 million homes by the end of 2010. This economy can use that kind of capital expenditure.

But it's past time to hook up the Phillipses and the rest of Charm City. With deals struck or under negotiation in other big East Coast cities, Baltimore is a gaping urban hole in the FiOS grid.

The Philly talks are almost wrapped up. The Washington contract was signed last week. Verizon lawyers are about to have time on their hands. There's business to do in Baltimore.

Posted by Jay Hancock at 8:01 AM | Permalink | Comments (23)
Categories: Telecom
        

The Prince of Denmark Arbutus, who, seven months before the election, may or may not run for governor, sort of sounded like a candidate this morning. Addressing 50 people at the Pikesville Chamber of Commerce, he said Maryland is business-hostile and held out Virginian proposals to kill the corporate income tax as the way to go. Of course the Virginia measure failed.

Maryland is never going to repeal its corporate income tax, which doesn't raise that much money anyway. What it ought to do is consider reducing it personal income-tax rates, which discourage entrepreneurs because startup companies pay taxes on the personal schedule. But anybody who made such a proposal would sound like s/he was catering to the rich. Maybe Ehrlich is running.  

Posted by Jay Hancock at 11:47 AM | Permalink | Comments (15)
Categories: Politics
        

Not much time to get into details, but the proposed tax increment financing (TIF) in Harford County that Jonathan Pitts writes about in today's paper is the dumbest legislative proposal to come down the pike in -- well, at least a couple weeks. As of February there were 1,682 homes for sale in Harford County, according to my colleague Jamie Smith Hopkins.

That's a huge inventory -- much higher, as a multiple of local demand, than the national average. And developer Clark Turner and County Exectutive David Craig want county taxpayers to take out a special loan so Turner can build more houses? A mile from Aberdeen Proving Ground? In a county where base realignment will soon bring demand for houses and allow development to proceed naturally? No way.

TIFs are intended to bring development to challenged areas that might not otherwise get it. Harford, and Beechtree, will eventually be swamped with development without any special deals for Turner.

Posted by Jay Hancock at 11:14 AM | Permalink | Comments (3)
Categories: Corporate welfare
        

Barry Ritholtz excerpts Elizabeth Warren's recent appearance on Charlie Rose. She's talking about the complexity and opacity of financial transactions, how credit card rules grew from one page in 1980 to a million pages in 2010. One might think this is the usual result of bureaucracy and regulation -- fine print sediment builds up. But she also suggests that it's intentional -- all these details are designed to confuse the consumer, to hide the booby traps that generate extra fees and other revenue for the companies. Same thing happened with mortgages, cell phone bills, cable-TV statements etc.

This is one of the dangers of smart electricity meters, which I wrote about on Sunday. Smart meters can do a lot of good, but they can also make your electricity bill even more impenetrably complex and hide consumer booby traps. One challenge for regulators will be to minimize this.

Posted by Jay Hancock at 8:50 AM | Permalink | Comments (6)
        

Fixing Wall Street is complicated, but a piece at the core of Dodd's bill is very simple: Don't let these jerks ever again make bets with 2 percent capital and 98 percent debt. Leverage was the poison that caused the Great Recession, starting with home "owners" putting zero percent down and extending all through the system. Capital is what cushions everybody against unforeseen reverses. With no equity in the system in 2008, the whole thing collapsed.

Dodd says his bill will prevent another catastrophe by "imposing tough new capital and leverage requirements that make it undesirable to get too big."

Good idea. But it's hard to say at this point what that means. But it sounds like the Financial Stability Oversight Council would make "recommendations" to the Fed for ratcheting up capital requirements as companies get big and complex, "with significant requirements on companies that pose risks to the financial system." I'd rather see statutory or at least permanent regulatory capital requirements than some squishy advisory power, but this is hard to do in a global economy.

Posted by Jay Hancock at 3:13 PM | Permalink | Comments (0)
Categories: Finance
        

People for the Ethical Treatment of Animals, masters of guerrilla PR, must be thrilled with their latest stunt. When the group heard that budget problems forced Colorado Springs to remove trash cans from public parks, it "offered" to pay for anti-meat ads on the cans. The ads, showing models wearing bikinis made of lettuce, supposedly would have paid for the cans to be put back in the parks.

Brilliant, of course. Not the idea of sponsored trash cans. The idea of proposing sponsored trash cans bearing a controversial message with a risque image in a conservative town that PETA knew never would have accepted them. You can't pay for this kind of coverage, and PETA got it for free. Today's Sun ran an earnest story from the Los Angeles Times, picking up from an AP story a couple days ago.

Here's an excerpt from the editorial from the Colorado Springs paper:

Mr. Mayor, please call People for the Ethical Treatment of Animals. Call them and close a deal that could change the way we fund services in Colorado Springs.

“We are just waiting for the mayor to call, and we are excited to put something together that will be a win-win for everyone involved,” said Kristina Addington, campaign coordinator for PETA, in an interview with The Gazette’s opinion department.

Boy, she must have giggled after that interview. PETA never even said how much money they were offering.

Posted by Jay Hancock at 10:28 AM | Permalink | Comments (10)
Categories: Marketing
        

Moody's says the United States and other Western nations have moved "substantially" closer to the point of losing their top-drawer credit ratings, the NYT reports today. And the countries won't be able to repay what they owe -- currently $12.6 trillion -- relying only on economic growth. That means tax increases and/or budget cuts -- and the U.S. loves its Medicare and other entitlements so much that budget cuts alone won't work.

“Growth alone will not resolve an increasingly complicated debt equation,” Moody’s said. “Preserving debt affordability” — the ratio of interest payments to government revenues — “at levels consistent with Aaa ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”

Posted by Jay Hancock at 9:36 AM | Permalink | Comments (4)
Categories: Slo-mo fiscal train crash
        

Libertarian Alex Tabarrok is honest and subtle enough to suggest that, were the government to propose daylight savings time today, he would be against it, thinking it an example of central-planning meddling and futility. And yet, and yet...

Had the idea of a government plan to shift the clocks back and forth twice and year been proposed today I am reasonably certain that I would have been against it. I probably would have argued that it would be chaotic, inefficient and unnecessary (private firms could agree with their employees to change working hours at any time, right?). Central planning of time! Washington bureaucracy messing with the clocks! Get your government hands off my time!

And yet, it works and I like it. It is good to be reminded of this twice a year.

Posted by Jay Hancock at 9:28 AM | Permalink | Comments (9)
        

The Black & Decker sale to Stanley Works is done. And minutes later they take the Black & Decker corporate Web site offline. bdk.com now redirects to stanleyblackanddecker.com. Fast and efficient, these folks.

Posted by Jay Hancock at 5:28 PM | Permalink | Comments (0)
        

Johns Hopkins prof. Steve Hanke, often the contrarian, recommends Chinese real estate even as some analysts detect a bubble. From his latest Forbes column:

In China, Hong Kong real estate remains an attractive place to invest in. For seven consecutive years the supply of new private residential units has declined. This supply crunch, coupled with a strong demand, make Kerry Properties (683 HK, $4.9) and Sino Land (83 HK, $1.9) look attractive, particularly since both trade at significant discounts to their net asset values. (Both price quotes are in U.S. dollars.)

Posted by Jay Hancock at 12:28 PM | Permalink | Comments (3)
        

Black & Decker tried to discourage insurgent Baltimore shareholders from making it to the meeting at which the company's sale to Stanley Works was approved this morning. Instead of putting the meeting in Towson they moved it to Virginia near Dulles airport. But at least one ticked off Black & Decker owner made it to the 9 a.m. meeting. Brooke Lynch blasted B&D boss Nolan Archibald for reaping millions as he sells the company.

This is the kind of thing the company presumably was trying to avoid. Nice that Mr. Lynch could dish out a little dissent and keep the meeting from being a total sham.

From the account of my colleague Gus Sentementes, who also braved the rain and the Capital Beltway to be at the meeting.

Brooke Lynch, 69, who owns 35 Black & Decker shares and who spoke at the meeting, told Chairman and Chief Executive Officer Nolan D. Archibald that the merger with Stanley was a "disservice" to the company and its employees, and to the Baltimore community.

He accused Archibald, who could receive a $45 million "cost synergy bonus" in three years for helping make $350 million in merger-related cuts, of being motivated "strictly by greed."

"You'll come out of this smelling like a rose," Lynch said.

After Lynch's comments, Archibald said "Thank you."

After the meeting, Archibald told The Baltimore Sun in a brief interview: "This merger had nothing to do with greed. It had to do with what was in the best interests of the shareholders."

Yeah, the shareholders did OK. Archibald, aided by his pal and business partner Tony Burns, who sat on the supposedly "independent" committee approving the deal and Archibald's pay, did a heck of a lot better.

Posted by Jay Hancock at 10:25 AM | Permalink | Comments (3)
        

Good move by city to make Mind Over Machines' Tom Loveland the volunteer "Google czar" charged with pulling together a proposal to bring Google's gigabit fiber to Baltimore. He'll have a full two weeks; the proposal is due March 26.

What ought to be on Loveland's list? As he notes in Gus Sentementes' story, gimmicks like Topeka pretending to switch its name to Google, Kansas, (or the mayor of Duluth jumping into Lake Superior) aren't going to win the project. For Baltimore, getting Under Armour's backing is good. But Loveland needs to get many more people invovled for a killer proposal.

Some thoughts:

-- Get Hopkins and University of Maryland medical center to submit detailed descriptions of how gigabit fiber can transform their care with easier sharing of 3D radiology imaging, long-distance diagnosis, leaps in electronic medical records etc.
-- Talk to Erickson Retirement Communities, which is a leader in electronic medical records and might have some ideas.
-- Get George Soros and his Baltimore foundation involved. There was some buzz about this a couple weeks ago but it seems to have died down.
-- By all means talk to tech transfer offices at local universities, especially to Aris Melissaratos at Hopkins.
-- The Johns Hopkins Carey Business School is growing rapidly under Dean Yash Gupta -- it's basically an educational startup, with enormous resources. Have Carey propose to serve as a permanent, local brain trust for the Google project, with profs and students figuring out how to wring the most out of the project as it develops.
-- You're not going to get Google's attention without showing how the project will help challenged schools and neighborhoods. Baltimore schools chief Andres Alonso is on board, but he needs to show Google, not just tell it, how gigabit fiber will make a difference.
-- Other ideas?

UPDATE: Loveland and the other Bmorefiber brains have already thought of all this stuff, of course. Email from Loveland:

Hi Jay: ;

Thanks for the ideas! Happy to report that most of your list is already in the can in a deep way, plus much more. Only thing we hadn’t thought of is Erickson; not sure how speed helps EMR. But will include him. And the brain trust idea is a good extension of what we’re already working on.

If you or others come up with more ideas, please forward!

Posted by Jay Hancock at 8:27 AM | Permalink | Comments (3)
Categories: Technology & Innovation
        

Airport passenger volume is one of the things regional economists look at to determine commercial vitality. The numbers from BWI Marshall jibe with other indicators that suggest Maryland's economy, while sluggish, is doing much better than that of the nation as a whole. BWI traffic grew 6 percent in January compared with January 2009, reports airport spokesman Jonathan Dean, making 8 straight months of growth.

BWI was one of a small minority of U.S. airports to have passenger growth in 2009. The fact that it is dominated by discount carriers such as Southwest hasn't hurt in a recession and slow recovery. And continued expansion by Southwest and AirTran show they are confident the Baltimore-Washington economy will continue to grow.

Posted by Jay Hancock at 8:55 AM | Permalink | Comments (0)
        

An NIH-convened panel concludes that most women don't need repeat C-sections if they're already had one, Kelly Brewington reports in today's Sun. The medical assumption that vaginal birth is dangerous for women who've given birth previously by C-section has helped drive the huge increase in C-section deliveries -- along with fear of malpractice lawsuits. About one birth in three in the United States is by C-section.

Fewer C-sections wouldn't just mean quicker recoveries for moms or a reduction in C-section-associated complications. As a reader recently pointed out, it would mean billions in savings for the health-care economy. A normal vaginal birth costs about $6,000, according to figures from a few years ago. A normal C-section is twice that. With 4 million annual live births, that's at least $7 billion a year that C-sections are costing Americans.

Posted by Jay Hancock at 8:40 AM | Permalink | Comments (5)
Categories: Health Care
        

Black & Decker is going out in a blaze of embarrassment. First the move of Friday's shareholder meeting to an out-of-town venue to avoid Baltimore complaints about the sale to Stanely Works. Now this.

As I noted in a post yesterday, Black & Decker's description of the New York Stock Exchange's criteria for determining who is an "independent" director was quite misleading. The matter is relevant because the company certified Anthony Burns as independent -- a distinterested party qualified to evaluate without bias Black & Decker's sale to Stanley Works and huge pay for CEO Nolan Archibald. In fact, Burns is Archibald's business partner in a luxury residential development in Utah.

Now the New York Stock Exchange says it agrees with me. It rebuked Black & Decker's description of its rules. Black & Decker was forced to put out another, humiliating press release late last night saying so. Disgraceful. Of course business deals between an overpaid CEO and the yes-men approving his pay are relevant! From the company's press release:

Towson, MD — On March 9, 2010, The Black & Decker Corporation (NYSE:BDK) issued a press release in which it stated, in part, that “Personal business relationships between individuals (as opposed to relationships with the company) generally are not relevant to the independence tests under the New York Stock Exchange rules because they do not create a material relationship between a director and the company.” In discussions between representatives of the New York Stock Exchange (“NYSE”) and Black & Decker after the issuance of the press release, representatives of the NYSE advised Black & Decker that, in interpreting its rules, the NYSE believes relationships between a director and a member of senior management that are material to either party should be considered by a board of directors in its evaluation of a director’s independence.

UPDATE: Check out Joann Lublin's story in today's Wall Street Journal, in which indepedent compensation consultant Mark Reilly estimates Archibald could make up to $89 million in the three years after Stanley buys Black & Decker. From the story:

"It's an over-the-top pay package," said Mr. Reilly, the compensation consultant.

Posted by Jay Hancock at 10:20 AM | Permalink | Comments (2)
        

Of the many unanswered questions about allegations of unneeded stent implants at St. Joseph Medical Center is this one: If the allegations are true, will somebody stand to collect a reward under the federal False Claims Act? The False Claims Act allows citizens to sue federal contractors (in health care it's usually Medicare providers) on behalf of the government and share up to 25 percent of any reward. Christopher Mallavarapu, the cardiologist I wrote about on Sunday, was the official whistleblower in a case of unneeded stents in Louisiana.

St. Joseph has said that it began investigating stent histories after a patient complaint and a federal investigation simultaneously raised questions. Last week I asked whether to the hospital's knowledge there is a would-be False Claims Act plaintiff who tipped off authorities. This is the response of spokeswoman Vivienne Stearns-Elliot:

"St. Joseph Medical Center cannot speculate whether or not there is a whistleblower in this matter. Our concern is not how this investigation began, but rather the steps we have taken and continue to take to address the substantive issues and to move forward."

Posted by Jay Hancock at 6:24 AM | Permalink | Comments (4)
Categories: Health Care
        

Black & Decker is defending Anthony Burns' status as an "independent" director despite his business relationship with CEO Nolan Archibald by saying the company was only following the definition of independence as described by the New York Stock Exchange. See background here.

Says Black & Decker: "Personal business relationships between individuals (as opposed to relationships with the company) generally are not relevant to the independence tests under the New York Stock Exchange rules because they do not create a material relationship between a director and the company."

But this isn't what the NYSE says. It urges companies to take a broad view in determining who is not independent.

It is not possible to anticipate, or explicitly to provide for, all circumstances that might signal potential conflicts of interest, or that might bear on the materiality of a director’s relationship to a listed company (references to “company” would include any parent or subsidiary in a consolidated group with the company). Accordingly, it is best that boards making “independence” determinations broadly consider all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with the company, the board should consider the issue not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. However, as the concern is independence from management, the Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.

Notice the bold face, which is my emphasis. The concern is independence from management. A director who is partner with the CEO in an eight-figure real estate development is not independent from management.

Posted by Jay Hancock at 11:36 AM | Permalink | Comments (4)
        

Two weeks ago Chessicap's Doug Schmidt reported Black & Decker CEO Nolan Archibald's business relationship with M. Anthony Burns, a Black & Decker board member. Schmidt, an investment banker, identified what seems to be a conflict of interest that those of us in the Baltimore biz press missed.

Burns and Archibald are co-owners of Red Ledges, a private, super-upscale golf development in Utah, where prices for "cottage homes" start at $900,000. Burns also sat on the supposedly "independent" Black & Decker board committee that evaluated the company's sale to Stanley Works and Archibald's post-merger contract, which stands to substantially increase his already substantial wealth.

Schmidt explains the problem very well:

But for heaven's sakes, Mr. Burns is in a major business partnership with the chairman & CEO. This business partnership involved the sale of luxury real estate in a recession. The financial success and well-being of Mr. Burns' business partner is critical to Mr. Burns' own interests. There are tens of millions of dollars at risk. Yet, the Black & Decker board deemed Mr. Burns sufficiently independent to place him on the three person committee that passed judgment not only on the transaction but on the appropriateness of his business partner's compensation. I am at a loss for words to describe what I believe is the bewildering conduct that infuses this transaction.

Black & Decker evidently felt enough heat that it put out a press release this morning, two days before the shareholder's meeting in Dulles at which the Stanley deal will be voted on. The verbiage is far from convincing. Basically the company says Burns was independent enough based on criteria set by the company and the New York Stock Exchange. Both Burns and Archibald are rich enough that they would have enough dough to support Red Ledges even without the millions Archibald will get from the merger, was the essential message. Oh, and this gem:

Mr. Burns has informed Black & Decker that his private business relationship with Mr. Archibald did not affect his evaluation of the Stanley transaction.

Feel better now?

Posted by Jay Hancock at 11:03 AM | Permalink | Comments (5)
        

So I'm interviewing Dr. Robert Wachter last week for this column on the lack of oversight in the medical system for invasive cardiology procedures. He's driving is car in what ought to be the most-wired city in the world -- metro San Francisco. He's on a main artery -- I-80 as it crosses the Oakland Bay Bridge. He's speaking to me on his iPhone. And the AT&T reception is God-awful. The call gets dropped 5 times in the course of a 20-minute interview.

"But I'm addicted to my iPhone," Wachter says, so he puts up with it. Similar tales are told in New York and other places.

Posted by Jay Hancock at 8:14 AM | Permalink | Comments (3)
Categories: Technology & Innovation
        

Out of what I assume was fear of local protest over selling one of Baltimore's signature companies to Stanley Works, Black & Decker's board has seen fit to schedule Friday's shareholder vote on the deal not at the company's Towson headquarters but near Dulles Airport in Virginia. I've asked the company to explain the site decision, but no other reason comes to mind, except maybe a shorter limo drive for Black & Decker CEO Nolan Archibald. (He lives in Potomac.)

In any event, the proceedings will probably be perfunctory and the attendance sparse, just as the company wants them. But if you can't make it to the meeting, feel free to leave comments here. I'll pass them along to Archibald and company. I'm not necessarily looking for criticism of the company or the deal. True, Baltimore is losing a 100-year-old corporate headquarters, and it's a sad day for the area. On the other hand, the stock has tripled since March 2009 and is performing better than anybody had a right to expect in the worst-ever housing crash.

There are two sides to the story. But moving to Virginia to sell out one of Maryland's premier companies suggests that the Black & Decker's board is worried about the negative side.

Posted by Jay Hancock at 6:32 AM | Permalink | Comments (3)
        

George Soros just chipped away at his credibility. As noted on this blog, the billionaire trader told folks at the Davos forum in January that gold was "the ultimate asset bubble." But as several readers have pointed out, it turns out that Soros was actually buy gold like a madman through the end of last year.

There are several possible interpretations. 1) Soros really thought in January that there was a gold bubble and was dumping the gold investments he had so recently amassed. 2) Soros really thought in January that there was a gold bubble but also thought that he could profit from it and get out before it collapsed. 3) Soros didn't think gold was a bubble but wanted to talk the price down so he could buy even more.

I would bet on No. 2. Yes, the guy's ego really is that big. However, given the dissonance between the Soros money and the Soros mouth, investors would probably be best served by just ignoring him.

Posted by Jay Hancock at 9:29 AM | Permalink | Comments (4)
        

Many Oscar-winning movies are based on novels. But as the publisher of the source novel for 'Precious,' Random House may benefit more than usual from that film's awards. During the ceremonies I kept wondering who got paid off on the show to mention Sapphire's novel, "Push," every time they talked about "Precious." The formal title of the film, however, is "Precious: Based on the Novel 'Push' by Sapphire." So every time they referenced the movie, the Oscars ran a big, free ad saying: Hey, buy the book.

"Xxxxx," based on the novel "Yyyyy" by "Zzzzz" trips off the tongue about as sweetly as "The 97th Rose Bowl Game Presented By Citi" and similar constructions. Hope it's not a trend.

Posted by Jay Hancock at 9:06 AM | Permalink | Comments (4)
Categories: Marketing
        

At least there's something Democrats and Republicans can agree on, Paul West shows in today's story: Spreading around the pork. In an excellent expose of how Washington really works, West reveals how President Obama's desire to shut down NASA's program to revisit the moon has turned into a fund-raising bonanza for Maryland's senior senator -- with Republican help. The cash is rolling into Mikulski's campaign till from Huntsville, Ala., where NASA has a big operation that works on the moon project. She was in Huntsville for a breakfast fundraiser in October, where she got tens of thousands of dollars from Huntsvillians who respect her pro-choice stance on abortion work for NASA contractors. Mikulski is up for re-election this year.

Behind the scenes, West reports, was Alabama Republican Sen. Richard Shelby, making sure the thing went off. A key part of the rainmaking formula here is Mikulski's studied indecision. If she announced her position there would be no reason to ply her with money. She told West: "As I review NASA's plans for human space flight, I will evaluate them the way I do all decisions about NASA funding - with carefully thought through principles."

Pffft. Here are the principles that really matter, from Paul's story:

From the Alabama space community, Mikulski received $14,400 from Francisco J. Collazo of COLSA Corp., a contractor on NASA's moon rocket program, and five members of his family, FEC records show. Collazo has also contributed more than $400,000 to Shelby campaigns and committees over the years, Bloomberg News reported in a 2006 article that said Shelby had steered at least $50 million in government earmarks to COLSA.

Four members of the 25-member Huntsville task force personally directed $7,300 in contributions to Mikulski's re-election. Three others work for aerospace contractors that have given $14,000 through their political action committees, records show. The Huntsville group is headed by Cramer, a Democrat who represented the city in Congress for 18 years before retiring in 2008.

Cramer, now chairman of a Washington lobbying firm, donated $4,000 in leftover campaign funds to Mikulski, whose ability to stockpile campaign cash has helped keep her in Congress for 34 years (though her $2.1 million bankroll at the start of 2010 was the smallest of the 13 Democratic senators running this year). Of the $1.5 million that Mikulski collected in 2009, according to FEC records, at least $88,610 came from Huntsville-area donors in the last four months of the year.

Most, if not all, who gave owned or were employed by NASA contractors or relied on the space agency for business.

Posted by Jay Hancock at 11:18 AM | Permalink | Comments (15)
Categories: Politics
        

The February employment report is out, basically showing no change in unemployment or jobs added to the economy. But the spin is, it's good news. The Dow is up 80 points. Here are WBAL's Bill Vanko and me talking about the jobs report and the super kosher supermarket coming to Pikesville.

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

So the Senate has rejected President Obama's proposal to spend $14 billion to give a $250 bonus to Social Security recipients this year. Obama wanted to hand out the bonus because... well, just because. Social Security payments are tied to inflation. Since there is no inflation there is no Social Security adjustment this year. But judging from the comments section of this post, many people felt very entitled to the $250.

In other comments developments, we have what could be the start of a Baltimore-Topeka food fight over Google fiber. Those darn Topekans. So sensitive.

Posted by Jay Hancock at 8:55 AM | Permalink | Comments (5)
        

After hanging in limbo for four months, former employees of Erickson Retirement Communities heard Wednesday that the company will move to pay $750,000 of the $1.8 million in severance payments they’re owed.

Ex-employees owed less than $10,950 in severance would get everything previously pledged by the company, which has been in Chapter 11 bankruptcy proceedings since October. Those owed more would get only $10,950, several dozen of the former workers were told on a conference call Wednesday afternoon.

“Great news for me,” said Stacey O’Neale, a former auditor who’s owed $6,927, according to court records. “But I feel sorry for all those people who are owed big money.”

Some former senior managers are owed $50,000 or more in severance. But at least the company shows signs of paying some of the money and communicating with its former associates, many of whom could really use it.

The matter is scheduled to come up in U.S. Bankruptcy Court in Dallas today. Checks could be sent at soon as late April, employees were told.

I wrote about these folks a month ago. Erickson pledged severance money when it laid off dozens amid last year's terrible economy. Some were promised extra compensation in exchange for agreeing to work extra weeks to close their departments.

But the company's bankruptcy put everything on hold. Erickson quickly filed a request to pay the severance, but the motion languished. Ex-employees couldn't afford a lawyer and resorted to sending letters to the judge and telling their stories to a snoopy newspaper columnist.

Sharon Kirkley, an Erickson interior-design manager laid off last year, seems philosophical about not getting the full, $28,423 that she's owed.

"From the beginning I said to myself, 'I may not get anything,' " she said. "We tried and did the best we could without legal counsel."

Limiting severance payments to $10,950 for employees laid off before a bankruptcy filing is typical in Chapter 11 bankruptcy cases, said Peter Chapman, publisher of Erickson Retirement Bankruptcy News, a specialty newsletter for creditors and lawyers. The amount is specified in bankruptcy law.

More than half of the 90 former workers owed severance are owed more than $10,950. Many also have much bigger claims in Erickson's profit-sharing plan that are unlikely to be paid in anything close to full value.

"We hope to resolve this matter as promptly as the court process allows," Erickson spokesman Mel Tansill said of the severance. The ex-employees hope so, too.

Posted by Jay Hancock at 6:04 AM | Permalink | Comments (1)
Categories: Erickson Bankruptcy
        

Yesterday's column was an expanded version of this blog post about falling electricity prices and alternative deals from Dominion Retail and other power sellers.

Bottom line: If you haven't switched to an alternative supplier yet, take Dominion Retail's deal of 10.37 cents per kilowatt hour for generation and transmission. It'll save you $10 or $20 a month off BGE's standard price of 11.78 cents for the summer months. Then, if prices continue to fall as experts believe they will, shop around again in the fall or at the end of the year. Either timing will work because Dominion's offer expires in December, but you can get out of the deal early penalty-free.

But what if you're like reader Ron and me, who switched to a 10.8-cent fixed-price deal from Washington Gas Energy Services a year ago? We've saved a decent amount of money. (BGE's standard price last summer was more than 12 cents.) But now some WGES customers are locked in until 2011 or even 2012 if they took a 3-year deal.

Unlike Dominion, WGES and other alternative suppliers charge an early termination fee of $75, $150 or sometimes even more. I told Ron I'm going to keep my WGES deal at least through the summer. My 10.8-cent price is still lower than the 11.78 cents BGE will be charging this summer. Then I'll see where the market is in the fall. (Let's hope no Gulf Coast hurricane disrupts natural gas supply lines, which would cause prices to spike.) If prices really do fall to 9 cents, as some are predicting, I'll do the math and see how many months of savings it would take to repay my WGES termination fee.

UPDATE: A reader asks: What are the risks of switching to Dominion? Here's my answer.

The risks are that electric prices spike back up in the near term. (Because of a hurricane or economic revival.) The Dominion deal expires in December. But even here you are hedged, because BGE has been locking up supply for 2011 and 2012 at current, lower prices. BGE's summer 2011 price will be decently lower than the summer 2010 price of 11.78 cents. (All these prices are exclusive of delivery, which adds another 2.5 cents or so.) Even BGE's standard price from Oct. 1 2010 to May 31 2011 is likely to be at or slightly less than the Dominion price. (It's still worth taking the Dominion deal to avoid BGE's high prices this summer, when your AC will be cranking.) So to me the potential downsides of taking the Dominion deal are limited.

Posted by Jay Hancock at 8:37 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

You thought Shazam was the coolest iPhone app ever in history?

It's pretty neat, but it doesn't come close to Derek Trauger's Bait Shops locator, "an easy to use interface that places an ever growing database of over 10,000 shops at your fingertips."

Next time you need minnows or crawdads, punch in your location. Bait Shops scores your supply like Roland Martin reeling in a smallmouth.

Trauger also has a boat-ramp locator app.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (1)
Categories: Technology & Innovation
        

The Beige Book from the Federal Reserve Bank of Richmond, whose territory includes Maryland and Delaware, says the snowstorms helped the ski resorts but hurt the stores, natch. But it also says that stir-crazy, snowbound folks stormed back to the stores once the skies and streets were clear.

... retail sales fell abruptly during recent major snow storms, although some of our contacts indicated that sales rebounded quickly as customers fought "cabin fever" by shopping when roads were cleared. However, many retailers were unable to recover lost sales and advertising expenses because those snow storms occurred on consecutive weekends. In contrast, District grocery sales rose, and the store manager at a chain discount retailer in North Carolina reported that sales of larger screen televisions were especially strong just prior to the Super Bowl football game and following the snow storms.

Posted by Jay Hancock at 3:11 PM | Permalink | Comments (1)
        

Marc Van Camp's day job is chief financial officer for Bindagraphics. But he volunteers as The Sun's nautical correspondent in Crossroads Business Park in Southwest Baltimore, monitoring the maritime traffic just as Helen Delich Bentley used to cover the Port of Baltimore for the paper. Of course, there are no docks, cranes, berths or water at Crossroads. But that doesn't stop people from dumping boats there along with trash and busted furniture.

The Sun first reported on the latest Crossroads boat in January. Finally, after some crossed semaphors with the city, Van Camp sends this dispatch:

The ship has sailed.

For Crossroads denizens, not even Lord Nelson or Admiral Dewey ever spoke more stirring words.

Posted by Jay Hancock at 11:05 AM | Permalink | Comments (1)
        

This is not how to win millions in investment for Google broadband fiber. Topeka, Kansas has "renamed" itself as Google, Kansas. Informally. Temporarily. For one month. By proclamation of the mayor. This is the kind of cute/dumb gimmick that college grads often believe can get them a job. Send a pajama-gram resume! Sing a seranade under the boss's window, etc.

But the Google projects will go to the communities that can make effective use of them, and Baltimore is one.

Posted by Jay Hancock at 10:55 AM | Permalink | Comments (9)
Categories: Marketing
        

If Allen Zaruba had called himself a "slave" on a corporate plantation instead of using what the Sun calls "a racially insensitive term," he'd still have his job as an adjunct professor at Towson University. His firing is attracting attention because of our fascination with race and language taboos. (Zaruba is white but had a black stepfather.) But the case will also renew discussion about the low pay and status of adjunct faculty. Among many questions: If Zaruba had tenure, would he have been fired?

For a nice portrait of adjunct life, check out this piece by Audrey Williams June in the Chronicle of Higher Education last fall.

They don't make much money, they don't have health benefits, and they don't have job security. So why do adjuncts keep showing up to teach in college classrooms semester after semester, year after year?...

[Adjunct James Davis] expects to earn about $18,000, in all, this year from teaching and additional work as a tutor in the writing center at Roosevelt University. The recent downturn is forcing him to re-evaluate his career goals. He admits that if he were "a little bit more aggressive I could probably have more classes right now because of all the colleges that are here." But without a car, he says, he's limited to teaching at colleges that are close to one another.

And after applying for three or four full-time jobs each year around the country, "I'm getting tired of chasing the carrot at the end of the stick," says Mr. Davis. "It's disappointing because you're taught all your life if you work hard, you'll be rewarded." He has been dabbling in other money-making opportunities, such as freelance writing or publishing, from which he might fashion a new career.

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Posted by Jay Hancock at 8:07 AM | Permalink | Comments (11)
Categories: Education
        

Today at 1 on WYPR (FM 88.1) My colleage Dan Rodricks will be talking about the job market. Listen, call and tell employers who might be listening why you've got the stuff.

1:00-2:00 pm today on Midday Midday invites you to take part in another Radio Resume hour. We'd like to hear about your experiences trying to find a job, what type of work you're looking for, and your qualifications. A prospective employer might be listening. Joining us in the studio to offer his advice to job seekers will be Patrick Madsen, director of programs and education at the Johns Hopkins Carey Business School, Office of Career Services.

Posted by Jay Hancock at 12:27 PM | Permalink | Comments (3)
Categories: The Great Recession
        

General Motors is recalling more than a million Chevrolet Cobalts, Pontiac G5s, Pontiac Pursuits sold in Canada and Pontiac G4s sold in Mexico. They have power-steering motors that can fail in what GM says are rare cases. Note that the recall comes after regulators got complaints and opened an investigation. Some 1,100 hundred GM owners told the National Highway Traffic Safety Administration about power-steering failure, reports the Associated Press. Would be interesting to see how long GM itself has been getting complaints.

The GM problems are less serious than the Toyota accelerator disaster. Even if the power-steering motor dies you can still steer the cars. There are reports of 14 crashes and one injury in the complaints that NHTSA got, says AP. Even so, the GM recalls will remove the focus from Toyota, at least for now. But Toyota has a long, long way to go to repair its reputation.

From the AP story:

The recall affects 2005 to 2010 Chevrolet Cobalts, 2007 to 2010 Pontiac G5s, 2005 and 2006 Pontiac Pursuits sold in Canada and 2005 and 2006 Pontiac G4s sold in Mexico.

Posted by Jay Hancock at 9:06 AM | Permalink | Comments (3)
Categories: Manufacturing
        

I wouldn't believe it if I hadn't read the story and editorial in today's Baltimore Sun. The Maryland Chamber of Commerce and other business groups have agreed to back Gov. O'Malley's proposed repair of the state's depleted unemployment insurance fund. And get this: They've agreed to pay higher taxes in the short term in order to help the fund gain solvency.

Where are the protests against this tyranny? What happened to the conservative wisdom that the only good tax is a lower tax -- now!? Why have Maryland businesses agreed to feed the beast of big government? At this rate the unemployment fund will turn into a success -- providing temporary relief to jobless workers while keeping Maryland's books in the black. Republicans and Democrats came together in Annapolis to craft a sensible solution. The horror!

Truth be told, this is the kind of compromise that will be required in Washington, although Capitol Hill is light years away from it. Paying for the entitlements that Americans love -- Medicare and Social Security -- will require some kind of tax increase beyond the ones that will happen when the Bush tax cuts expire. (After the economy recovers!) Sorry, but that's the way the math works. Drastically cut Medicare or raise taxes.

A few weeks ago I portrayed the opposition to O'Malley's unemployment-tax fix as connected to tea-party animus against Washington and bailouts. (O'Malley's plan and the amended scheme accepted by the chamber includes $127 million in stimulus funds to replenish the fund.) I still think that's true, but the chamber should get credit for the compromise. Just don't let the word get out that you supported a tax increase, chamber. What would Mitch McConnell say?

Posted by Jay Hancock at 8:30 AM | Permalink | Comments (3)
Categories: Taxes
        

Here are Maryland Public Television's Jeff Salkin and me talking about General Motors' decision to move the manufacturing of hybrid-vehicle motors to the company's White Marsh plant. The discussion is about this column.

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

The Great Recession seems to be prompting a surge in entrepreneurship, if you believe anecdotal evidence. Lacking a formal job, folks are starting their own businesses and trying to make their own way. If you're thinking about starting a business, here's a great, free resource to get you launched from Baltimore County lawyer and part-time author Eliot M. Wagonheim.

"Business Owner's Pocket Guide" is a concise handbook that gives the crucial basics of starting a company. What legal structure to choose? How to deal with employees? How to get a bank loan? What are bankers looking for?

Wagonheim's wise, Top 10 Business Guidelines alone are worth the trouble of downloading his book. Rule No. 1, which applies to all areas of life, not just business is: "Make It Easy for People to do What You Want Them to Do." Here's another good one: "Companies don't have to be Busy; They have to be Profitable."

To download a copy or request a hard copy, go to Wagonheim's Web site.

Posted by Jay Hancock at 9:07 AM | Permalink | Comments (3)
Categories: The Great Recession
        

Sarah Palin's provocative reference to "death panels" last summer prompted paranoid fantasies about government health care and more excuses to delay the screaming need to control health costs. The Philadelphia Inquirer did what newspapers are supposed to do: It embedded itself on what some might imagine to be a death panel and wrote in great detail about what happened.

Reporter Michael Vitez spent months with a "palliative care" team at Abington Memorial Hospital and the Tole family as they agonized over what to do about 74-year-old Mary Tole, a mother, sister and grandmother who had fallen into sudden, mysterious and what seemed to be permanent dementia and decline. The family and health professionals allowed Vitez to be in the room as they made the tough decisions on whether to continue the administration of phenomenally expensive care for Mary Tole.

Yes, Vitez's presence probably subtly changed the story. The act of observing always alters what is observed, whether in quantum physics or journalism. Would people have acted differently had the reporter not been there? But the piece is an amazing, sensitive and complete picture of the terrible choices that must be made. I say "complete" because it contains what these kinds of stories almost never do -- the cost of the care. Treating Mary Tole cost Medicare and taxpayers more than $700,000. If you don't include the dollars, you haven't told the whole story.

Mary Tole's family, like most Americans, had no idea what a palliative care team was, or what the meeting would be about. The family had heard the noise all summer in the media over "death panels" and "pulling the plug on Grandma."

Was that what this was?

One brother, Greg Smith, 53, of Glenside, didn't want to go to any meeting that morning, but his wife pushed him. "They're going to pull the plug," he worried, "and everything's going to be over."

Another brother, Bob Smith, 64, of Douglassville, Pa., feared doctors had called the meeting "to plan her final days."

Diane Dietzen, medical director of the palliative care team at Abington, led Mary's two brothers, two daughters, and a sister-in-law away from the sterile ICU and into a family lounge, where they sat in a circle, on a sofa and comfy chairs, as if in somebody's living room.

Dietzen shut the door.

Read the whole thing here.

Posted by Jay Hancock at 8:39 AM | Permalink | Comments (3)
Categories: Health Care