Detailed piece from the Worldwatch Institute on the natural gas revolution, which stands to keep natural-gas prices low for years and, if managed correctly, replace much of the U.S. oil economy with natural gas. Here's my recent column on the natural-gas boom. Here are some excerpts from the Worldwatch report:

The rise of gas stands in sharp contrast to the three-decade decline in U.S. oil production. Since 1990, total U.S. gas production has increased 20 percent while oil production fell 33 percent.Today, the United States produces more than twice as much gas as it does oil, and that gap will almost certainly widen in the coming years...

A National Research Council study published in 2009 estimated that the environmental damages associated with electricity from natural gas are 95 percent lower than from coal...

Growing concern about climate change in recent years has also worked in favor of natural gas. Gas contains 25 percent less carbon than oil and half as much carbon as coal. Planned and proposed federal and state actions to curb greenhouse gas emissions—from stricter requirements for emissions control technology to renewable or clean energy portfolio standards to a cap on carbon—all expose oil and coal investments to much higher risk than natural gas.

Posted by Jay Hancock at 8:25 AM | Permalink | Comments (1)
Categories: Energy
        

New organizations are reporting that the Justice Department has opened a file for possible criminal prosecution against Goldman Sachs. The SEC, as has been widely reported, filed a civil fraud case against the firm. The case relates to the Abacus 2007 portfolio of toxic junk that hedge fund manager John Paulson bet against.

It's going to be hard enough for the SEC to prove civil fraud in a case that involved consenting, sophisticated institutional investors on all sides. Hard to imagine that the Justice case will go anywhere. The news leak about opening a criminal file suggests it's all PR anyway.

Posted by Jay Hancock at 8:09 AM | Permalink | Comments (2)
Categories: White collar crime
        

Good piece by Steve Lohr in NYT on a study illuminating the crisis in primary-care medicine. In a nutshell, the compensation system for family doctors is broken. They ought to be paid and paid handsomely for preventing illness. Instead they're paid a pittance (relative to their expertise) that is tied to visits from sick patients. And much of their work is for free.

Family doctors are paid mainly for each visit by patients to their offices, typically about $70 a visit. In the practice in Philadelphia covered by the study, each full-time doctor had an average of 18 patient visits a day.

But each doctor also made 24 telephone calls a day to patients, specialists and others. And every day, each doctor wrote 12 drug prescriptions, read 20 laboratory reports, examined 14 consultation reports from specialists, reviewed 11 X-ray and other imaging reports, and wrote and sent 17 e-mail messages interpreting test results, consulting with other doctors or advising patients.

Posted by Jay Hancock at 6:05 AM | Permalink | Comments (1)
Categories: Health Care
        

Her record suggests that Sarah Bloom Raskin, whom President Obama nominated to sit on the Federal Reserve's Board of Governors, will not be a passive regulator. Look for Jamie Smith Hopkins's profile in tomorrow's Baltimore Sun.

Meanwhile, here are Raskin's words from her acceptance speech last fall of an award from the Maryland Consumer Rights Coalition. She quotes the poet Roethke, who perhaps refers to his experience with bipolar disorder. But who says financial markets haven't been manic-depressive, too? Raskin:

The chickens have come home to roost; these are our problems and they are not disappearing on their own... And in this it is necessary to move forward, in the midst of the devastation brought upon us through a combination of greed, weak regulation, and weak enforcement. We need courage. It is a courage not unlike the courage the Theodore Roethke describes in his poem “The Waking” when he writes:

God bless the Ground! I shall walk softly there,
And learn by going where I have to go.
This shaking keeps me steady. I should know
What falls away is always. And is near.

Posted by Jay Hancock at 1:36 PM | Permalink | Comments (0)
Categories: Regulation
        

Nice perspective from The Washington Post's energy reporter, Steven Mufson. The 1969 Union Oil blowout off Santa Barbara cast gooey muck up on the beaches and helped propel the ban on offshore drilling and the environmental movement generally. In today's story, Mufson reports that the Gulf spill could surpass the Santa Barbara disaster in volume of oil leaked by next week.

The spill baby spill will certainly impede renewed efforts to drill baby drill offshore. Obama recently said he wants to reverse the ban on offshore drilling. But he didn't really mean it; it was a political feint to the right. This will set back efforts even more.

Mufson:

At its current rate, the spill could surpass by next week the size of the 1969 Santa Barbara spill that helped lead to the far-reaching moratorium on oil and gas drilling off the Pacific and Atlantic coasts, a ban that Obama recently said he wants to modify. It would take about 260 days for this incident to exceed the size of the 1989 Exxon Valdez oil spill off Alaska, but it took several weeks for a similar oil well blowout to be brought under control off the coast of Australia last year.

Posted by Jay Hancock at 9:27 AM | Permalink | Comments (2)
        

The generation of electricity by the use of wind turbines is growing rapidly, as indicated by Tim Wheeler's story on the Massachusetts Cape Wind project and what it might mean for wind projects off the coast of Maryland.

As the graph below shows, U.S. wind generation capacity grew from less than 2,000 megawatts in 2003 to 8,000 in 2008. (These figures are from the American Wind Energy Association.) Figures for wind capacity vary by source, perhaps because the notion of "capacity" for generators that depend on highly variable and uncertain wind currents is a moving target. But in any case the trend is clear. The chart below will have much higher bars for 2009 and 2010 once the data are plugged in.

But whatever the figures, wind energy is still relatively scarce. Total U.S. generation capacity is about 1 million megawatts. And wind power is still very expensive, although the cost is coming down thanks to the economies that usually accrue to maturing technology, scaling-up of production and so forth. A large factor driving the construction and use of wind capacity is large government subsidies. The Union of Concerned Scientists gives a good summary.

Posted by Jay Hancock at 8:55 AM | Permalink | Comments (4)
Categories: Energy
        

As reported by Liz Kay last week, BGE's default price for electricity generation and transmission will drop to an annual, blended rate of 10.6 cents per kilowatt-hour starting June 1. The actual charge on your bill will be around 11.8 cents for June through September. Then it'll drop close to the 10-cent mark for October through May 2011.

This'll save a typical Baltimore Gas & Electric customer about $160 a year compared with costs for the 12 months that end this May, BGE estimates. But independent suppliers are offering to sell electricity to BGE customers for even less, although navigating the offers takes some work. I'll tell you what I think is the best move, but take my advice with a ton of salt. I'm locked in on a three-year deal with Washington Gas Energy Services for 10.8 cents. I saved money in this cycle but now I'm missing out on deals that have fallen into the 9-cent range. Locking in at that price for such a long time was the wrong move. I may look into paying WGES's early-termination fee and making it up on savings from a cheaper deal.

Bottom line: Wholesale prices are still in the pits, relative to where they've been. It's possible that even cheaper deals will be available to BGE customers in the fall. WGES is offering to renew current customers whose contracts expire in June for 9.6 cents for two years or three. This is a very good deal, although it doesn't seem to be available to new customers on the WGES Web site. (An intermediary called Electric Advisors says it will hook new customers up with WGES's package at 9.7 cents for a year or 9.6 cents for two or three years.)

But if I were starting from scratch and rolling the dice a little I'd sign up for the new offer from Dominion Retail. It's 9.9 cents from now until the end of 2010. And unlike with other offers, there's no early-termination charge. You'll escape paying BGE's high standard price for June through September (11.8 cents). Then you'll be able to shop around again in the fall or at the end of the year and hope for even lower prices.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (12)
Categories: BGE/electricity
        

As Gus Sentementes reports in today's paper, Stanley Black & Decker has begun shedding workers in order to cut costs.

Thirty-seven people are being told this week that Friday is their last day. Stanley Black & Decker is also canning people at facilities around the world. Gus was unable to get the number in time for yesterday's deadline, but company spokesman Timothy Perra tells him it's around 330 worldwide. This of course is only the beginning of the pain. Hundreds of jobs will be lost at Black & Decker's former headquarters in Towson, and thousands will be eliminated worldwide.

Shareholders will get some of the savings. But an enormous amount will accrue to former Black & Decker CEO Nolan Archibald through the "synergy bonus" that he got as the price of selling the company out. Much of the pay of the people being laid off will be diverted into Archibald's pocket.

UPDATE: Among those leaving is Black & Decker spokesman Roger Young, who emailed his contacts this morning: "As many of you know, Friday will be my last day at Stanley Black & Decker. It has been a great ten years here, and I am looking forward to a new professional challenge."

Posted by Jay Hancock at 11:35 AM | Permalink | Comments (5)
        

So I've had Verizon's FiOS triple play for several years and like it very much. Until now. Unlimited phone calls. Enough cable and very fast Internet, all for about $130 a month. Less hassle with modems and wireless network than with Comcast. (Verizon gives you an excellent proprietary modem/router.)

But we've been without service since Sunday, when lightning struck near the house. No TV, no phone and no Net (which helps explain the light posting). I should have known better, but until now I assumed my phone was still on Verizon's traditional copper system, in which case it would still be in service.

Verizon says it's not their fault. All internal components -- modems, routers, networks, computers -- seem to be working fine. A GFI 120v outlet powering the Verizon box next to the circuit breaker isn't delivering any amps. We've reset the GFI and powered the whole house on and off from the breaker. No change. Electricians are scarce. My wife waited until 8 last night for one to show, with no result. Now she has an appointment for 9 a.m. Thursday.

Posted by Jay Hancock at 10:37 AM | Permalink | Comments (6)
Categories: Technology & Innovation
        

It's Joanna Smith-Ramani and me talking about financial reform on Maryland Morning with Sheilah Kast.

Posted by Jay Hancock at 3:27 PM | Permalink | Comments (0)
Categories: The Great Recession
        

Interesting line of defense from fabulous Fabrice Tourre, the Goldman Sachs underling named in the SEC complaint.

Moreover, the securities referenced in the transaction did not underperform the other securities of that ratings class and vintage. All of the securities of that ratings class and vintage performed poorly because the subprime mortgage market suffered a broad collapse.

Sure, Abacus 07 AC-1 was a steaming pile of poisonous junk, and we worked hard to make it that way, Fabrice seems to be saying. But who knew? Everything else was just as toxic!

Barry Ritholtz has an amusing take on just what Goldman was trying to do with Abacus 07. Just like the guys in Mel Brooks' The Producers, Goldman was trying to create the worst possible product, hoping that its failure would earn the firm tons of money. "Its not much of a stretch," Ritholtz says, "to suggest that Abacus 2007 was Goldman Sachs’ “Springtime for Hitler.” "

Posted by Jay Hancock at 12:10 PM | Permalink | Comments (2)
Categories: Finance
        

Good piece by Cornell's Robert Frank in the NYT. To argue in favor of progressive taxes (taxing the rich proportionally more than the poor) he notes that a similar dynamic takes place in the workplace: High-status, highly productive workers make less as a portion of their output than their lazy, skating-by, washed-up colleagues.

Every workplace has them: Unmotivated or just dim colleagues who force everybody else to do more work. How do these folks get hired? The effect, says Frank, is that the competent, productive workers subsidize the lazy ones. In a perfect market, good workers would make more; bad ones would make less. "In short," he says, "the startling fact is that private businesses typically transfer large amounts of income from the most productive to the least productive workers."

For Frank, this is an argument to extend the same dynamic to society as a whole: high-status, high-earning workers pay more in taxes per dollar that they earn to take care of less-productive members of society. Interesting thought, but there are superior arguments for progressive taxation. They are: 1) It's morally right to take care of the laggards. 2) It justifiably extracts higher "user fees" from the people who benefit most from government protections and societal stability. 3) By addressing poverty and limiting social disintegration, it preserves that stability. A good progressive tax system would have nipped the French and Russian revolutions in the bud.

This is an editing week, with limited time to blog, let alone write columns. But I will try to weigh in on the changing household electricity market later today or tomorrow.

Posted by Jay Hancock at 10:43 AM | Permalink | Comments (1)
        

This is a pretty interesting marketing story from Baltimore's Laureate Education. Laureate, which runs for-profit universities around the world, signed Clinton as its "honorary chancellor" to advise Laureate universities and "encourage civic engagement and youth leadership on important social issues during his appearances at university campuses and in print and online messages to the nearly 600,000 students in the Laureate network."

This is probably costing Laureate a pretty penny, but it could pay huge dividends for the company. Clinton is a rock star overseas. Having him show up in Laureate literature and on Laureate's campuses in Europe, Asia and South America should hugely raise the company's profile. Very bold and smart idea and a coup for Laureate boss Doug Becker.

Posted by Jay Hancock at 1:27 PM | Permalink | Comments (0)
Categories: Marketing
        

Here's the latest video of Salkin & me on Maryland Public Television. This interview is apropos of this column. Several of you have asked what I think of the latest prices for BGE and the market alternatives. I'll be posting on that anon -- probably tomorrow morning.

Posted by Jay Hancock at 9:57 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Out of town till Monday to attend a funeral. Meanwhile read the column in Sunday's paper on why fewer than one Maryland public company board member in 10 is female.

Posted by Jay Hancock at 3:49 PM | Permalink | Comments (0)
        

We have a new oxymoron -- "high-speed cruises" -- the new Baltimore harbor offering from Seadog Ventures, according to the story by Julie Scharper. Now you can jet all around the harbor, seeing Fort McHenry and all the sites in less than an hour.

Don't forget to bring your Blackberry or iPhone, so you can check news headlines and answer emails from the office while you're on the water. You wouldn't want to get too relaxed.

Posted by Jay Hancock at 9:16 AM | Permalink | Comments (1)
        

News organizations getting previews of Obama's Manhattan speech today submit reports suggesting he'll fight hard for a "Volcker rule" in any reform bill. The Volcker rule would ban or sharply limit Wall Street banks using their own capital to gamble on the markets. The rule is one of five bullet points that the New York Times says will be in the speech. The others are roll-up authority for failing firms, pension reforms, derivatives "transparency" and "stronger consumer financial protections."

That last item sounds kind of wishy-washy. Republicans hate the proposed Consumer Financial Protection Agency. It sounds like the speech will not explicitly ask for the agency's creation, which suggests that Obama would be willing to dump the idea if he gets support on other measures. In any event the agency is less important than the Volcker rule, derivatives reform and roll-up power.

Posted by Jay Hancock at 8:21 AM | Permalink | Comments (3)
Categories: Finance
        

Mall giant Simon Property has revised its bid for General Growth Properties, owner of the mall in Columbia, Towson Town Center, White Marsh Mall, Harbor Place and numerous other Baltimore-area malls. General Growth bought Columbia-based Rouse Co., a few years ago, taking on huge amounts of debt that set the stage for its bankruptcy filing.

So the bidding war against a group led by Brookfield Asset Management proceeds. Simon added new investors that would put down another $1.1 billion. Maybe equally important, Simon has brought in other investors in what the WSJ describes as an effort to head off the antitrust cops. Simon says it would take only two board seats on General Growth instead of the three it had wanted. Still, the deal would represent an alliance between two mall behemoths that still ought to trouble the Justice Department if it gets signed. If the Simon bid goes through, count at least on some divestitures of some of the GGP properties.

The tenants in General Growth's Baltimore area malls, however, are probably less interested in who wins that battle than that the battle be over. General Growth's takeover of Rouse led to what tenants say is neglect of some of the malls, and the bankruptcy has distracted the company further. The best outcome for tenants is for the drama to end soon.

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

More great thought experiments from the George Mason University folks. Bryan Caplan asks whether he should include this paragraph in his upcoming book, Selfish Reasons to Have More Kids:

I confess that I take anti-cloning arguments personally. Not only do they insult the identical twin sons I already have; they insult a son I hope I live to meet. Yes, I wish to clone myself and raise the baby as my son. Seriously. I want to experience the sublime bond I'm sure we'd share. I'm confident that he'd be delighted, too, because I would love to be raised by me. I'm not pushing others to clone themselves. I'm not asking anyone else to pay for my dream. I just want government to leave me and the cloning business alone. Is that too much to ask?

Tyler Cowen is disappointed in the responses, saying they were "a lesson in how quickly smart people will side with their Darwinian intuitions, and attack another smart person with intolerance, just because something feels icky to them. And Cowen concludes that "I guess he shouldn't put the passage in his book."

But pushing people to examine their irrational, Darwinian intuitions, even if -- especially if -- it makes them uncomfortable -- is exactly the reason Caplan should include the paragraph.

Posted by Jay Hancock at 10:59 AM | Permalink | Comments (6)
        

Analysts expected Apple to earn $2.45 per share. Actual profit: $3.33 per share. The stock is up $17 in after hours, hitting $260. I am in awe and agree to retract and regret an entire 2004 column that said: "These days Apple is just another Standard & Poor's 500 member trying to hit quarterly earnings targets."

After the column ran I got royally flamed online for saying Apple was no longer the company Steve Jobs had founded. The flamers who thought I was wrong were right.

Posted by Jay Hancock at 5:26 PM | Permalink | Comments (1)
Categories: Technology & Innovation
        

David Brooks cites research looking at whether the Internet worsens political polarization. He finishes up suggesting that it doesn't.

If this study is correct, the Internet will not produce a cocooned public square, but a free-wheeling multilayered Mad Max public square. The study also suggests that if there is increased polarization (and there is), it’s probably not the Internet that’s causing it.

I think he's missing two things. 1) The Long Tail. As Chris Anderson's book details, the multifarious channels offered by the Web, cable TV etc. have the effect of moving significant amounts of behavior to extremes of the traditional bell-curve distribution. It's the same in politics. More of us are ordering weird Swedish movies on Netflix. And more of us are gravitating toward nutty right-wing and left-wing beliefs, although the right-wing ones seem to be attracting more adherents.

2) The impersonality of the Web. The Web causes people to behave in ways and say things that they would never dream of doing face to face. Humanity has evolved a set of instinctive responses for face-to-face interaction that allow people to deal with each other in person without killing each other too often. People are programmed not to give offense face-to-face.

But once we're dealing with people at a distance, those behavior governors disappear. When it's some faceless stranger who's challenging you, you respond in ways that you would shudder to use when, say, talking to somebody at a restaurant. Same thing happens when we're driving.

Posted by Jay Hancock at 11:28 AM | Permalink | Comments (1)
        

Agreeing to an increase in the Downtown Partnership surcharge is the least large commercial property-owners can do, considering all the tax breaks that have been given out for locating there. On Sunday I wrote about the need to get more revenue from one undertaxed set of businesses in the city: universities and hospitals that fall under the nonprofit section of the tax code.

Developers getting millions in downtown tax breaks are another group. The downtown business district is riddled with hotels and office buildings that aren't paying their share of property taxes to the city. Developers and the Baltimore Development Corp. argue that the projects wouldn't have been "economically viable" without the welfare. In any case, bumping up the partnership surcharge is one way to get the projects to contribute a little more to the environment that supports them.

The increased surcharge will hit every downtown commercial property, not just the ones getting tax breaks. I propose a special "Paterakis tax" to allow the partnership to get extra money from the welfare queens.

UPDATE: Harbor East isn't even in the Downtown Partnership zone, so the Paterakis projects over there aren't even paying partnership surcharges. Harbor East certainly benefits from all the upgrades to the old city business center, and it ought to be folded into the partnership zone.

PS. Harbor East is in the Waterfront Mangement District, where the surcharge is 17 cents per $100 of value. That's more than the Downtown Partnership assessment is now but less than what the DTP tax would rise to. 

Posted by Jay Hancock at 8:28 AM | Permalink | Comments (7)
Categories: Taxes
        

Last week Walmart lawyer Walker Development lawyer Jon Laria told a community meeting that Walmart wanted to keep its planned store in Baltimore's Remington section open 24 hours a day. Now the company has backed off, saying the place would be open from 6 a.m. until midnight.

 Below is the excerpt from the press release that landed in my inbox. I think the store is good for the city. But this quick about-face looks like a PR job. Whether or not the company was ever serious about staying open 24/7, this is an attempt to look conciliatory and community friendly.

BALTIMORE, Md., April 19, 2010 – Walmart today announced that it plans to operate its proposed store at 25th Street Station in northern Baltimore daily from 6 a.m. to midnight.

The store hours represent a balance between Walmart’s business objectives and its commitment to accommodate customers’ varying shopping schedules. “We’re excited to announce this news as we continue working with area residents to develop a Walmart store that reflects the character of the community,” said Alex Baron, Regional General Manager, Walmart Operations.

“This store will deliver outstanding value to customers in addition to generating approximately 200 well-paying jobs within the city.” Walmart released the operating hours in conjunction with tonight’s expected introduction of a Planned Unit Development (PUD) application by Baltimore City Councilwoman Belinda K. Conaway, who represents the city’s 7th District.

“This will come as a relief to a lot of people,” said Joan Floyd, president of the Remington Neighborhood Alliance, which represents many of the residents who live in close proximity to the proposed store.

Posted by Jay Hancock at 4:13 PM | Permalink | Comments (13)
        

Sam Antar was the chief financial officer of Crazy Eddie, the consumer electronics chain that turned out to be a massive fraud. He now writes a blog and works as a consultant to help companies detect fraud. The SEC's civil prosecution of Goldman Sachs brings back some interesting memories from Mr. Antar. The whole thing is worth reading. Here are excerpts:

In filing its lawsuit against Goldman Sachs (NYSE: GS) on a Friday, the Securities and Exchange Commission sent what I call the "kiss of death" message to the embattled company. In other words, the SEC wanted to stick it to Goldman Sachs and Fabrice Tourre, the Executive Director of Goldman Sachs International, who is also a defendant in the complaint.

When a company or individual receives a surprise subpoena on a Friday from the SEC, it is usually designed to ruin their weekend plans. Yes, the SEC can get personal in its own way.

Usually, corporate lawyers are unavailable on short notice to work weekends. When a company or individual receives a subpoena or lawsuit on a Friday, they are left to stew in anxiety over the weekend until Monday, before their lawyers can appropriately advice them on how to respond to the SEC.

Back in the day as the criminal CFO of Crazy Eddie, I received a surprise subpoena from the SEC late Friday afternoon. I had to wait until Monday before my attorneys had time to advise me on a course of action.

Posted by Jay Hancock at 9:09 AM | Permalink | Comments (2)
Categories: White collar crime
        

"For Cash-Strapped States, Sin Is Sure Lucrative," is the headline in today's NYT. According to the Times, seven states enacted or raised alcohol taxes.

Maryland, meanwhile, hasn't raised the tax on wine and beer since 1972 and hasn't raised the spirits tax since the 1950s. I'm not talking about the percentage of sales, which would rise with inflation even if the rate stayed the same. I'm talking about the TAX. Marylanders pay the same 40 cents per gallon of wine that they did in 1973.

The Maryland alcohol lobby is a thing of might and awesomeness. Attempts in this year's General Assembly to bring Maryland's alcohol taxes into the 1990s failed miserably.

Posted by Jay Hancock at 2:07 PM | Permalink | Comments (2)
Categories: Taxes
        

Thanks to the alert readers who inform me that Washington Gas Energy Services is offering to renew existing customers for two or three years at 9.6 cents per kilowatt-hour. This is the cheapest residential electricity available for Baltimore Gas & Electric Customers at least since early 2006, when the rate caps came off BGE's standard offer, the price went up 72 percent etc.

UPDATE: As noted, WGES is making this offer to existing customers whose contracts are rolling over. Readers who are not existing customers or whose contracts haven't expired have called the 800 number this morning and have been told the 9.6-cent deal is not available to them. However it's still indicative of falling electricity prices and hints at similar deals to come for everybody.

UPDATE2: Leah Gibbons, WGES's director of regualtory and legislative affairs, says the 9.6-cent offer is being made to households whose WGES contracts roll over in June. She wouldn't say whether the deal would be available online for new customers, saying offers depend on the wholesale market.

This is the first viable competitive offer for BGE households to break the 10-cent barrier. As I recall Ohms Energy had offers in the high 9-cent range a few years ago, but it was unable to follow through and some customers were in for a big hassle.

BGE's standard electric price (not counting local delivery, customer fees etc.) starting June 1 will be 11.78 cents per kwh. So 9.6 cents is hugely lower. Rule of thumb for the typical house in a typical month is you save $10 a month for each penny's difference in the kwh price. But summer is not typical. We'll be burning more-than-usual kilowatts running our air conditioners, so the new WGES deal could easily save close to $100 this summer for some.

The question is, what happens after that? These are long-term deals, and the trend for BGE's standard price is down, so the savings will shrink. There is no one-year offer for 9.6 cents from WGES. In this March column, BGE's Mark Case predicted we would see 9-cent household electricity by 2011 or 2012. If that happens, by then you'd be paying slightly more than market at 9.6 cents. On the other hand, getting down to 9 cents isn't guaranteed. And even if it happens you would have saved lots in the meantime.

Even so, if Dominion Retail is still offering its 10.37-cent deal through the end of 2010, that's the one I would recommend. It's not as cheap as the WGES deal. But unlike the WGES offer there is no early-withdrawal penalty. The Dominion Retail offer would let you miss the worst of BGE's prices this summer and then revisit the long-term market at the end of 2010, when prices could be even lower than 9.6 cents.

The WGES deal is nothing to sneeze at, however, and would be a good hedge if electric prices head back up. And if you're already with WGES, who wants the hassle of switching to Dominion for maybe less than a year? The company isn't offering 9.6 cents on its Web site. But maybe if you called 1-888-884-WGES the company would give you the package even if you aren't an existing customer.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (28)
Categories: BGE/electricity
        

The volcano eruption in Iceland, which is disrupting air traffic across northern Europe, is also hurting the Intrade contract that pays off if 2010 sets a record for global temperatures.

The accompanying graph is yesterday's closing price of 72 for the contract that pays off at 100 if 2010 breaks the record. The volcano news has caused the price to plunge. Today's latest trade was 61 -- down 15 percent.

This eruption probably won't be as big as that of Mount Pinatubo in 1991, which depressed global temperatures for more than a year. Pinatubo basically blew up. But the Iceland eruption figures to have at least a small effect on this year's average temperature, and some bettors aren't taking any chances.

Posted by Jay Hancock at 1:14 PM | Permalink | Comments (10)
        

America's back, says Newsweek. The cover is being cited as a classic contrarian indicator, a sign that America actually is about to fall back into recession. Barry Ritholtz disagrees, saying that the magazine cover jinx works only after editors flog a trend that has been around for months or years and can't think of anything better than to wring more mileage out of it by putting it on the cover.

But economic recovery is not a trend on its last legs. It may not even be a trend. In this case, if anything, Newsweek editors are ahead of the facts, not behind them. That's a common error, too, like when the Wall Street Journal proclaimed the death of rock and roll in the 1980s. As usual I agree with the clever and subtle Ritholtz.

Read Daniel Gross's Newsweek piece here.

Posted by Jay Hancock at 12:29 PM | Permalink | Comments (0)
Categories: Media
        

The war between the Jewish Times and H.G Roebuck reminds me of another contract signed in haste, repented at leisure -- the deal to share Laurel Park slots profits between Joe De Francis and Frank Stronach. Jewish Times signed a long-term printing deal with Roebuck 20 years ago that proved to be a bad proposition. Stronach agreed to give huge potential slots profits to De Francis to get De Francis to sell him Laurel and Pimlico.

Both cases seem to have turned into games of chicken that ended up before a bankruptcy judge. Stronach delayed putting up a deposit for a slots license, probably in an attempt to get De Francis to rewrite the contract. The Jewish Times tried to get Roebuck to rewrite its printing contract, then pulled the business to a less-expensive printer. Roebuck sued and won a $362,000 judgment, which would seem to be the precipitating factor in the bankruptcy filing.

Both of these cases seem to be as much about bad blood and besting a business opponent as about a weak economy. The Jewish Times bankruptcy may shield it from having to pay the $362,000 judgment. But I would bet one thing quite confidently: The case will cost the company a heck of a lot more in lawyer fees than $362,000.

Posted by Jay Hancock at 9:33 AM | Permalink | Comments (0)
Categories: Media
        

This may amuse some of you who think I'm a flaming pinko liberal. Today's Rodricks show on WYPR (listen here) was about my Sunday column on unsustainable government pension trends and how Baltimore County's Jim Smith is one of the few politicians in Maryland to be doing anything about it.

I took the most economically conservative position on the show (admittedly it wasn't very hard, considering the other guests), arguing that retiree benefits for government employees are a looming trainwreck. I said that the disparity between generous government benefits and shrinking private-sector benefits is increasing contempt for government among the people who pay the taxes that make government possible. And that's dangerous. After the show a listener emails: "Get that tea partier Hancock off the show and never let him come on again." Or words to that effect.

Posted by Jay Hancock at 4:40 PM | Permalink | Comments (5)
Categories: Government & Business
        

Here are Mayland Public Television's Jeff Salkin and me talking about BP Solar's recent decision to stop all manufacuturing of photovoltaic hardware in Frederick.

Posted by Jay Hancock at 1:47 PM | Permalink | Comments (0)
Categories: Energy
        

So last fall I had AC&R Contracting add insulation in my attic. There were good, temporary tax breaks for weatherizing your house (there still are), and I had pledged to take money I could have been spending on renewable energy credits for electricity generated by wind and spend it instead on reducing energy consumption. After consulting various energy and environmental pros, I decided that was the "greenest" investment.

My attic is one of those low, cheap spaces typical of Howard County houses, propped up by prefab trusses. It had a thin layer of pink blow-in fiberglass, but it was so sparse you could see the ceiling board in some places. The AC&R guys layered on a new, comfy, white blanket at a total cost of $1,120. The material came to $728, which meant I got a $218 credit on my taxes. That reduced the net cost to $902.

Then the job started paying for itself in lower BGE bills. From October through March, I used 688 therms of natural gas, according to my bills. For the same period in the previous winter I used 778 therms. Thermostat was the same. True, average temperatures for the most recent winter were 2 degrees warmer, according to the bills. Still, I figured I saved around $100 compared with what I would have spent without the insulation. And that's not accounting for the most recent winter's lower natural gas prices compared with the previous winter's.

Posted by Jay Hancock at 9:41 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Nurses are probably already the hardest working people in health care. Nurse practitioners -- highly trained professionals who increasingly function as doctor proxies -- are surely going to be part of the solution to the health care crisis. Especially if pay for primary-care doctors continues to lag that of specialists. In 2008 median primary-care doc pay was $186,000, according to the American Medical Association. Some primary care docs make much less and have hundreds of thousands of dollars in student loans to pay off. So fewer and fewer med school students are going into primary care, even though primary care docs -- who keep people well instead of treating people after they get sick and charging for procedures -- are what the system needs.

Nurse practitioner pay, at a median of $83,000, according to salary wizard, is approaching that of primary-care docs.

It's nice that the General Assembly cut the paperwork needed to become a nurse practitioner. But it will do little to increase medical expertise where it's needed. The legislature should have allowed nurse practitioners to eliminate ties to doctors altogether and practice on their own. But it caved to pressure from Med Chi, the Maryland doctor trade group concerned to preserve the monopoly of licensed physicians. Washington, Oregon, Alaska and seven other mostly Western states (rural states where docs in the backcountry are scarce) already allow independent N.P. practice. So does the District of Columbia.

Posted by Jay Hancock at 9:14 AM | Permalink | Comments (26)
Categories: Health Care
        

Great analysis & explication of Twitter's ad strategy by Peter Kafka, among which is this bottom line:

Important — will definitely expand into regular timeline, at some point. IE – you will be getting ads in your stream whether you search or not. Ad-free Twitter is over.

They're calling them "promoted Tweets," not ads. Seems a bit dishonest. Will be interesting to see how well Twitter distinguishes the real Tweets from the paid ones. Google is pretty good about this.

Posted by Jay Hancock at 2:57 PM | Permalink | Comments (2)
Categories: Technology & Innovation
        

A weekend trip to Texas (hotel bill, local purchases) triggered Capital One's fraud alert, so I had to call the company and confirm the purchases were mine. Capital One, in my experience, has VERY sensitive fraud-detection protocols. This is maybe the third or fourth false alarm in three or four years. The woman I spoke with suggested that, in the future, I alert the company about all planned trips, even out of state, and not just overseas travel.

It's a hassle, but I prefer Capital One's false alarms to the customer service from my wife's FIA (M&T Bank private label) card, which took three weeks to discover a couple thousand dollars of fraudulent charges and a bogus address change last year.

Posted by Jay Hancock at 12:06 PM | Permalink | Comments (2)
Categories: Finance
        

Whatever else Mayor Stephanie Rawlings-Blake does to balance Baltimore's budget, she's doing the right thing by not raising the city's residential property tax. Baltimore needs residents. Its high property tax -- 2.268 percent, according to the state -- is a deterrent to residents. That's twice Baltimore County's rate and more than twice Howard County's and Harford County's.

Hospitals and colleges will squawk about the proposed "bed tax, but they need to pay more to support the city. They're exempt from property taxes. One thing is for sure: Baltimore needs to mimic Baltimore County in fixing its pension-expense problem for city employees. I wrote about the county's assertive approach to addressing pension costs in Sunday's paper. Pensions are a much, much more serious problem for the city. Over the longer term, Baltimore needs to figure out how to cut its residential property-tax rate. Cutting pension costs is the first step to doing that.

Posted by Jay Hancock at 8:57 AM | Permalink | Comments (11)
Categories: Taxes
        

What am I missing here? Below is an excerpt from Krugman's column. He talks about the lending and banking disaster in Georgia and reprises his "flatland" theory that says the real estate bubble/crash was worst in places with strong zoning restrictions, which limited supply, drove up prices etc. etc. etc. But the examples of real estate catastrophe that he lays out -- Florida, Nevada and Arizona -- are famous for their lack of zoning curbs. They're not Texas, but they sure ain't Portland, Oregon, either. "Phoenix"? "Zoning restrictions"? "Limited the construction of houses"?

Basically, prices rose sharply only where zoning restrictions and other factors limited the construction of new houses. In the rest of the country — what I once dubbed Flatland — permissive zoning and abundant land make it easy to increase the housing supply, a situation that prevented big price increases and therefore prevented a serious bubble.

Most of the post-bubble hangover is concentrated in states where home prices soared, then fell back to earth, leaving many homeowners with negative equity — houses worth less than their mortgages. It’s no accident that Florida, Nevada and Arizona lead the nation in both negative equity and mortgage delinquencies; prices more than doubled in Miami, Las Vegas and Phoenix, and have subsequently suffered some of the biggest declines.

Posted by Jay Hancock at 12:07 PM | Permalink | Comments (3)
Categories: Real estate
        

Interesting/disturbing stuff from TRAC:

Despite a growing federal deficit, IRS audit efforts aimed at the nation's largest corporations have precipitously declined in the last few years and now are at an all time low, according to the analysis of agency data by the Transactional Records Access Clearinghouse (TRAC).

Among corporations reporting assets of $250 million or more, the IRS since FY 2005 has cut back by a third (33 percent) the hours it spends examining their books. IRS has also sharply reduced the number of large corporate returns it examines — these audits have fallen by 22 percent since 2005 (see Figure 1 and Table 1).

This has occurred even though IRS auditors uncover the largest dollar amounts of tax under-reporting in the books of these large corporations (see Table 2) and Congress has actually provided IRS with more revenue agents trained to handle complex returns such as these (see Table 3).

Posted by Jay Hancock at 11:48 AM | Permalink | Comments (0)
Categories: Taxes
        

The banks dunning Steve Geppi and the auction of his mansion suggest that the comic-book business, like other traditional media, faces kryptonite in the form of the Internet and the recession. But I can find surprisingly little recent coverage of the comic-book industry.

Geppi's wholesaler, Diamond Comic Distributors, has faced its own problems. The company "had a rocky year," according to a Publishers Weekly piece published in October -- "a move to a new warehouse in the spring coupled with a switch to a new software platform led to major problems with orders shipping improperly and lost books."

Diamond and comic publishers are trying to adapt -- putting out graphic novels and selling comics over mobile phones and other digital media. Even so, "concerns about digital caused a lot of unrest among retailers - and may again," the Oklahoman newspaper reported at a comics convention last this year. When Diamond scaled back distribution of the Classics Illustrated series last year, the president of the Classics publisher shot back in a press release: "That this is another example of a knee-jerk reaction to the tough economic environment everybody is struggling with to get through."

But publishers and stores are trying to reassure themselves that they're still relevant. "Comics are special," an industry executive told the recent ComicsPRO confab, according to Nerdage. "It's not something that can easily translate into other media." Sounds familiar.

UPDATE: Over at Read Street, Dave Rosenthal notes that the iPad is a big threat to Geppi and comic books.  

Posted by Jay Hancock at 8:50 AM | Permalink | Comments (4)
Categories: Media
        

The "prediction markets" at Intrade are saying that 2010 has a good chance of being the warmest year on record. A recent bid of 75 on the contract that pays off if the record is broken indicates an implied probability (at least in bettors' minds) of 75 percent that it will be broken, Intrade says. (The contract pays off at 100 percent if 2010 breaks the record.)

The graph says the closing price is 65, but Intrade's site indicates the more recent price is 75. In either case, that's a sharp increase from less than 30 a few weeks ago. Maybe the warm weather is influencing bettors. But no, this week's temperatures don't indicate that climate change is real any more than the recent snowstorms indicate it's fake.  

It's more or less random noise amid a long-term trend that data indicate is gradually upward. And Intrade's "predictions," while often intriguing, are far from infallible.

Posted by Jay Hancock at 11:09 AM | Permalink | Comments (1)
Categories: Environment
        

ABC's Extreme Makeover: Home Edition was one of many TV shows that portrayed and fueled the housing bubble. Now, reports the Wall Street Journal, it's reflecting the bust, too. Some makeover beneficiaries can't afford their fabulous new shelter, and the show's producers are downsizing to more modest quarters.

But after the cameras have gone, another trend has been developing: Homeowners struggle to keep up with their expensive new digs. In many cases, the bigger, more lavish homes have come with bigger, more lavish utility bills. And bigger tax assessments. Some homeowners have tapped the equity of their super-sized homes only to fall behind on the higher mortgage payments.

The show's producers say they are aware of the problem and are making changes appropriate to current economic reality: downsizing.

Posted by Jay Hancock at 7:50 AM | Permalink | Comments (30)
Categories: Celebrity mortgage victims
        

Not only is coal bad for the environment and the people above ground, it's terrible for the folks who dig it out of the ground. The tragedy at Massey Energy's Upper Big Branch mine sadly reminds us of this. If you're a Baltimore Gas & Electric customer, you're probably burning some Massey coal every time you turn on a light.

To say Massey has a "spotty" record on safety, to quote the Associated Press, is to put it mildly. Just in the last year the company has been fined more than $300,000 for violations at Upper Big Branch of protocols designed to prevent this kind of disaster. Violations include "failing to follow the plan, allowing combustible coal dust to pile up and having improper firefighting equipment," AP says. In late 2008 Massey admitted to criminal safety violations in an accident that killed two at its Aracoma mine. Failures in that incident included not conducting safety drills and faking a record book to make it look like the drills occurred.

But coal mining is dangerous even when safety procedures are followed. And Massey is the company that blows up mountaintops to get coal. Burnt coal spews poisonous sulfur dioxide and mercury into the air.

Some readers objected to Sunday's column on the benefits of newly accessible natural gas from Appalachian shale formations, which might allow us to burn less coal. Yes, there are environmental and safety concerns associated with shale gas, as people pointed out. But compared with those attached to coal, they seem minor. And I don't know of anybody who has died extracting shale gas.

UPDATE: To be clear: This is not meant as disrespect to those who have been devasted by the tragedy. Our thoughts ought to be with the families of those who died and of those who are missing. And to promote shale gas is not really anti jobs, either. The beauty of shale gas is that it's creating tens of thousands of jobs in many of the same regions where coal is mined. And it doesn't involve buying foreign oil. And it's a lot safer.

Posted by Jay Hancock at 8:42 AM | Permalink | Comments (25)
Categories: Energy
        

Sunday's column was about the hoopla over natural gas from shale formations in the Appalachians and other parts of the country. Even if only part of the promise from shale gas bears fruit, natural gas stands to stay affordable -- more affordable than oil heat and gasoline -- for years.

If you have natural-gas heat, think twice before locking in any long-term contracts for gas. Deals out there are OK -- in the 70-cents-per-therm range. But the futures market says gas will be cheaper than this next winter. BGE's commodity gas price has been between 73 cents and 59 cents in recent months. (You pay more for delivery.) Even when the economy starts picking up, natural gas prices are more likely to stay in present ranges than gasoline prices, for example, analysts say. I've always stayed with BGE's standard, monthly floating natural gas price and rarely regretted it.

If you have a choice between an electric water heater and gas, go with the gas. Water tanks use up large amounts of energy. Your best bet is to heat with the kind of energy that looks like it'll be more affordable. Of course, if you have a brand-new electric heater it might not make sense to switch. Even with the cheaper BGE bills it'd take years to earn back what a new heater cost. But if you're in the market for a new heater anyway and have a gas hookup, go with that.

Theoretically you can buy a stock natural-gas car -- the Honda Civic GX. But they seem hard to obtain, and they're not very practical for families. I called around to a couple local dealers, who said they've never sold any to individuals. All the customers for natural-gas cars and trucks are government and corporate fleets. Natural gas works for fleets because the vehicles return daily to corporate HQ, where they can fill up on compressed natural gas for the next day's run. It's tougher on individuals, because there's nowhere to fill up. Published range on the GX is only 250 miles.

But if Boone Pickens gets his way and Washington starts promoting NG vehicles, the technology might improve, and gas stations would start offering NG ports as well as diesel and petrol.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

The March employment report shows the best results in three years: 162,000 jobs added to the economy. It was close to what analysts expected. True, the results were probably bolstered by the February snows, which bumped hiring into March, and census hiring. But it sure beats the months of 2009, when losses of half a million jobs per month were common.

Even so, it's barely a beginning of replacing all the jobs wiped out by the Great Recession. The economy has lost 8 million jobs since the downturn began. In March it reinstalled 2 percent of them. Nonetheless, if we get many months of this, pressure will grow on the Federal Reserve to raise short-term interest rates.  

Here's a great snapshot of the labor market from Mint, via Big Picture. There are 16 million unemployed Americans, 8 million more than when the recession began. 

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

Johns Hopkins is a fine citizen of Baltimore, but its nonprofit status means that the takeover of the Zurich Insurance building will further erode Baltimore's tax base. The state assesses the Zurich property at $23.6 million.

This is one reason the city needs to encourage for-profit projects such as the Walmart and Lowe's planned for Remington. They'll be in an enterprise zone, so the property will get tax discounts for a decade. But then the property will be a fully tax-paying entity. With more of those around, the city wouldn't have to threaten to lay off so many police officers.

Posted by Jay Hancock at 9:10 AM | Permalink | Comments (7)
        

Another bold and innovative move. I wonder what other large corporation, other than one that had a poor reputation like Philip Morris (Altria), changed its name at the height of its power. Wait -- I need to go Topeka that.

Posted by Jay Hancock at 8:31 AM | Permalink | Comments (11)
Categories: Technology & Innovation