First Mariner, the largest Baltimore-based banking company, has been struggling for years with soured loans, many of them linked to residential housing. It has raised some capital but needs to raise more. Boss Ed Hale has been looking for investments for months, but there have been no annoucements yet. In their absence, the inclusion of "going concern" language in the 10K is no surprise. FMAR is below where the FDIC wants it to be in capital strength. This has to change, and FMAR has already been given lots of time to make it right without success.

Curiously, the stock, which has been trading in the 60-cent range recently, has jumped starting on Tuesday to up near $1. Even if Hale succeeds in raising capital from new investors, present shareholders -- including Hale -- are likely to be substantially diluted.

First Mariner's 10K is out, and it contains the "going concern" language:

As discussed above, the Bank is subject to the September Order and the Company is subject to the New FRB Agreement, both of which require the Bank and the Company, respectively, to increase leverage and total risk-based capital ratios and, at December 31, 2010, the Company was significantly below the required levels.

Failure to increase the Company's capital ratios or further declines in the capital ratios exposes the Company and the Bank to additional restrictions and regulatory actions, including potential regulatory receivership of the Bank. This uncertainty as to the Company's ability to meet existing or future regulatory requirements raises substantial doubt about our ability to continue as a going concern. Unless the Company is able to raise sufficient levels of capital in the very near future, we will be unable to meet the capital ratio requirements.

Posted by Jay Hancock at 6:45 PM | Permalink | Comments (6)
        

Under pressure and litigation from Bloomberg News, the Fed has released the names of thousands of banking companies that lined up at its discount window during the financial crisis to take out emergency loans.

Vermont Sen. Bernie Sanders has some questions: Why did the Fed's customers include the Arab Banking Corp., which he says is 59 percent owned by the Central Bank of Libya? And why didn't economic sanctions keep a Libya-owned company from doing business with the U.S. government?

Perhaps the answer to No. 2 is that the Iran-Libya Sanctions Act was modified to apply to only Iran a few years ago after Gadhafi pretended to clean up his act and the West pretended to forget about Gadhafi's murder (all the evidence points this way) of 243 people on Pan Am Flight 103.

Posted by Jay Hancock at 5:38 PM | Permalink | Comments (0)
        

Microsoft files antitrust compliant against Google

Posted by Jay Hancock at 3:29 PM | Permalink | Comments (0)
        

Starting at 1:35 pm today I'll be on the C4 show on WBAL talking about Gov. O'Malley's offshore wind proposal. At 5 pm on WEAA Environment Maryland's Brad Heavner and I will be discussing the same topic with host Marc Steiner.

Posted by Jay Hancock at 1:26 PM | Permalink | Comments (0)
Categories: BGE/electricity
        

The governor defends his offshore wind proposal and responds to this column against offshore wind. O'Malley:

I realize many, including The Sun's Jay Hancock, have raised concerns about the cost of the project ("Stop O'Malley's offshore wind folly now, not later," March 27). It is important to remember that the price of electricity from wind will not fluctuate. When the Public Service Commission approves the contract, we will know how much we will be paying for 2.5 percent of our State's energy load for the next 20-25 years, a claim we can't make about the other 97.5 percent of our energy needs.

Yeah, we know how much that portion of the state's energy load will cost. A lot.

Posted by Jay Hancock at 12:30 PM | Permalink | Comments (3)
Categories: BGE/electricity
        

I knew Steve Hanke, professor of applied economics at Johns Hopkins, was on staff at (Republican) President Reagan's Council of Economic Advisors in the early 1980s. What I didn't know is that he was part of a similar CEA under (Democrat) Gov. Marvin Mandel in the 1970s. It was "an analytical shop," Hanke recalls, designed to analyze policy and forecast revenue through an economic filter.

"There's no question about it; it was a tremendous help to have it," Mandel, who'll turn 91 next month, said in an interview.

Mandel, co-chairman of Maryland Business for Responsive Government, thinks Gov. Martin O'Malley should revive the council to save the state from economic miscues. A good example, Hanke says and I agree, is O'Malley's multibillion-dollar proposal to build electricity-powering windmills of Maryland's coast. An even cursory analysis from within the governor's office might have kept the project from being proposed and might have identified more affordable alternatives.

On the other hand, I believe chief executives in all types of organizations usually do what they they think will sell to key constituencies and then cobble up the "analysis" ex post facto. Nevertheless, says Hanke: "While a governor's CEA couldn't stop all the nutty proposals, it stopped quite a few of them. This was the same experience I had on Reagan's CEA."

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

David Sokol, the chief of MidAmerican Energy who saved Constellation Energy from bankruptcy in the thick of the 2008 financial crisis, has abruptly resigned from Berkshire Hathaway, MidAmerican's owner. Sokol was the guy who negotiated with Constellation boss Mayo Shattuck and extracted a huge ransom from Constellation shareholders for the rescue.

Andrew Ross Sorkin reports some stock transactions by Sokol that might be perceived as front-running Berkshire shareholders. Berkshire recently announced it would buy Lubrizol, and Sokol had been buying Lubrizol stock earlier. Sorkin:

Mr. Sokol purchased 2,300 shares of Lubrizol on Dec. 14, which he then sold on Dec. 21, according to Mr. Buffett. On Jan, 5, 6 and 7, Mr. Sokol bought 96,060 shares “pursuant to a 100,000-share order he had placed with a $104 per share limit price,” Mr. Buffett’s statement said.

Here is an excerpt from a good Fortune profile of Sokol after his staredown with Shattuck:

Sokol phoned the office of Constellation CEO Mayo Shattuck III, who was in an emergency board meeting. When his assistant answered, Sokol told her he'd like to speak to him. The secretary replied that if she interrupted the meeting, she might lose her job. Sokol replied, "If you don't interrupt the meeting, you might lose your job."

Sokol boarded a Falcon 50EX and sped to Baltimore. He met with Shattuck and struck a deal that evening to buy the company for $4.7 billion, staving off bankruptcy.

Posted by Jay Hancock at 9:44 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Julie Bykowicz blogs that Gov. O'Malley has modified his proposal to build offshore wind generators again. Initially he would have capped extra payments for residential utility customers at $2 a month -- but only for a year. Now would cap the monthly payment at $2 -- indexed for inflation, which means it could rise over time -- for the life of the 25-year contract.

Since many credible studies suggest that the cost to build and run these things would be much more than $2 a month on the residential side, you wonder how the costs would be recovered under the new plan if they break the budget.

Posted by Jay Hancock at 12:13 PM | Permalink | Comments (1)
Categories: BGE/electricity
        

Len Lazarick of MarylandReporter.com writes that "health insurance brokers who were afraid the O’Malley administration’s health benefits exchange would put them out of business are now reasonably happy with the bill that passed the House of Delegates Monday."

The bill would basically put the decision off for study. But if the health insurance brokers and the state health exchange both keep up a robust business, we'll have added another layer of health-care administration to the country that already has way too much. I don't blame the brokers for looking after their interests. And government health exchanges are a necessary part of Obamacare. But the practical effect will be even more guys sitting at desks (rather than taking care of patients) adding to the cost of health care. Single-payer system, anybody?

Posted by Jay Hancock at 9:59 AM | Permalink | Comments (3)
Categories: Health Care
        

The Jockey Club is getting lots of criticism for its use of Kegasus, god of Jagerbombs and PortaPotties, in its Preakness promotion.

I say: Way to go Jockey Club. The company is actually investing in horse racing instead of paying lobbyists and lawyers to try to get a slots license. Maryland taxpayers should be excited that they soon may be a proud partner in paying for these kinds of campaigns.

Posted by Jay Hancock at 9:38 AM | Permalink | Comments (12)
        

The Food and Drug Administration restricts what stocks employees can own, with good reason. Not only would it discourage the kind of insider trading that Cheng Yi Liang is accused of. It would prevent the more-damaging corruption of a rigged FDA approval process to boost some key employee's portfolio.

Cheng seemed to know this and, the SEC says, "went to great lengths to conceal his insider trading. He traded in seven brokerage accounts, none of which were in his name. One belonged to his 84-year-old mother who lives in China."

Liang is also being charged criminally, which, if these allegations are true, he should be.

Posted by Jay Hancock at 9:24 AM | Permalink | Comments (1)
        

Lots of response to Sunday's column, Stop O'Malley's Offshore Wind Folly. Most commenters agreed with the column that offshore wind is a dumb idea for Maryland. A sampling:

I just re-read Sunday's column and I disagree with your premise that wind farms are too costly for Maryland. As many have noted that if you wait until the right time to have a child, you will never be a parent, I posit that if you wait until alternative energy is cost effective to create, we will never get it. I, too am appalled by the cost of energy in Maryland however your argument that natural gas prices have plunged and are expected to stay low is a statement that is just as airy as saying that there will be cost overruns and wind farms will end up costing much much more than the numbers being presented to the state government. If government will not invest, then I doubt the private sector will either and even if we don't run out of natural gas or oil in my lifetime, we will run out eventually.

And:

I thought you leftists loved the wind!! Tell the people in Western Maryland that they should stop mining that poisonous coal before global warming overtakes the state. Did you turn your lights off for an hour last Saturday night?

And:

I read your column and can't wait for your next____

"What to do when there is no more natural gas?"

And:

From what I see is that the politicians are only looking at the cost to provide the wind turbines. Ignored are the costs of transmission lines and on-shore facilities.

Wind turbines provide energy that vary with wind conditions. An on-shore facility would be needed to address those variations. Quite possibly, the on-shore facility would include a conventional power plant to address the energy valleys of the wind turbines.

Combined with expected legal fees, the cost to provide a total wind turbine solution appears to be quite exorbitant and the solution probably would fail to meet the energy relief anticipated.

And:

It is a complete looser from the start. The energy consumed fabricating the material for these systems exceed by many times any "savings" during their life. This is just another feel-good scheme that is expensive and risky in a very hostile environment. VERY inefficient.

And:

I'm not too keen on the idea of windmills off OC's shore, but neither am I fond of the idea of any natural gas drilling. If you think Marcellus shale drilling or "fracking" (as they call it) is any better, I would suggest that you get in touch with some of the people out in Allegany County. There have been several articles on shale drilling, and for the most part many of those are not very favorable.....for various reasons. At this point, I'm really not sure what is a good, SAFE, clean way to power our country. I just hope we can find something soon.

And:

In addition to the many significant issues raised by Mr. Hancock I am also very concerned about the unintended consequences that may accrue to this project. Some of the unknowns include the effect on migratory birds, ocean wildlife and the effect that the wind turbines themselves might have on wind patterns along the coast. As an example, we are often told that trees near a house help to protect against cold winds that affect our electricity bills. If trees can affect the wind how much more might these giant turbines affect wind patterns? I realize that this might be far fetched but I have not seen any article or study that comes close to exploring this potential unintended consequence.

And:

Thanks for today's article pointing out that off-shore wind power would be a lot more expensive than its advocates let on. During the 'debate', I haven't seen any mention of the European experience with off-shore wind power. Their findings with actual, installed wind turbines are that the wind turbines need 100% back-up generators. Either the wind blows too much, or too little. The grid manager needs 100% backup generators to provide power when the off-shore system is not. This is a boondoggle, and should be stopped now.

And:

I just read your editorial on Maryland offshore wind farms and was extremely disappointed in its tone.

I have been researching data on this topic and found some of your data useful.

However, in my opinion your hostile terminology ("folly") implies that those of us that disagree with you are idiots. Thus I think you have joined the raucous political extremists of both sides which is too bad because I usually like you editorials because heretofore found them fact-based without resorting to name calling.

In general I don't think you presented all the pros and cons thus making your hostilely presented conclusion hasty and offensive.

In my opinion we need to transition to renewable non-fossil energy regardless of cost.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (7)
Categories: BGE/electricity
        

This is really really disturbing. It seems to reveal a side of the IRS that I never knew existed. According to the NYT's Joe Nocera, an IRS investigator basically stalked ultra-marathoner Charlie Engle because he wondered about how he supported his lifestyle.

The film, “Running the Sahara,” was released in the fall of 2008. Eventually, it caught the attention of Robert W. Nordlander, a special agent for the Internal Revenue Service. As Mr. Nordlander later told the grand jury, “Being the special agent that I am, I was wondering, how does a guy train for this because most people have to work from nine to five and it’s very difficult to train for this part-time.” (He also told the grand jurors that sometimes, when he sees somebody driving a Ferrari, he’ll check to see if they make enough money to afford it. When I called Mr. Nordlander and others at the I.R.S. to ask whether this was an appropriate way to choose subjects for criminal tax investigations, my questions were met with a stone wall of silence.)

I always assumed you weren't investigated by the IRS unless they had some prima facie evidence of wrongdoing or you were subject to a broad and impersonal audit dragnet. Turned out that like millions of others Engle lied on a mortgage application during the housing bubble.
UPDATE: As his dad, Rich, points out and Nocera's article makes clear, there is a good case to be made that Charlie Engle didn't lie about his income on his loan applications. So he may be in jail for nothing.

In March 2009, still unsatisfied, Mr. Nordlander persuaded his superiors to send an attractive female undercover agent, Ellen Burrows, to meet Mr. Engle and see if she could get him to say something incriminating. In the course of several flirtatious encounters, she asked him about his investments.

After acknowledging that he had been speculating in real estate during the bubble to help support his running, he said, according to Mr. Nordlander’s grand jury testimony, “I had a couple of good liar loans out there, you know, which my mortgage broker didn’t mind writing down, you know, that I was making four hundred thousand grand a year when he knew I wasn’t.”

Mr. Engle added, “Everybody was doing it because it was simply the way it was done. That doesn’t make me proud of the fact that I am at least a small part of the problem.”

The woman was wearing a wire, and now Engle is in jail. (Check out his blog here.) Amazing. I had no idea IRS operatives could tape you sureptitiously. I thought only criminal investigation wings of the Justice Department or state and local police could do that. No excuse for Engle to have lied to his lender, but the way he got nailed is quite scary.

Posted by Jay Hancock at 10:33 AM | Permalink | Comments (4)
Categories: Taxes
        

Sunday's column criticized Gov. Martin O'Malley's proposal to build a grandiose set of offshore wind generators. Eastern Shore Republican delegate E.J. Pipkin, who has long been vocal on Maryland energy issues, says offshore wind is a multibillion-dollar "tax" on Marylanders. (It's not really a tax, but it would act like one.)

In an interview with MarylandReporter.com, Pipkin says, "Only a very narrow group of developers are going to be able to get the real benefits from this." The projects "is extremely costly to consumers," he says, "an aggressive project of 120-plus windmills off the coast of Ocean City.... It's hard to get away from that."

People argue about the ultimate cost, Pipkin says, but whatever the number "it's still multibillion dollars in additional tax."

Posted by Jay Hancock at 10:28 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

Maryland Public Television's Jeff Salkin and I talk about requiring high school students to take a semseter-long course in personal finance and economics.

Posted by Jay Hancock at 10:44 AM | Permalink | Comments (4)
Categories: Education
        

The Maryland Office of People's Counsel opposes legislation being considered in Annapolis that would require BGE and other utilities to disclose your name, address, utility account number and information on a year's worth of gas and electricity use to third-party power suppliers.

The retail suppliers who compete with BGE's standard electricity and gas products say the information would help competition by letting them tailor deals to customers' specific needs. But People's Counsel Paula Carmody says BGE should be allowed to give out your electricity profile only if you expressly agree to it. And the legislation doesn't contain that safeguard. Rather, BGE gives you written notice that they'll disclose your info unless you object. If they don't hear back from you within 45 days -- even if you just ignore them -- it's open season on your information.

The coming of computerized "smart" meters, Carmody says, may increase the amount of information that might be available -- your daily electricity use and maybe even which appliances you use on which days.

BGE supports the bill, according to Electric Utility Week. But Pepco supports the bill only if it's changed to require customers to affirmatively agree to information disclosure -- and "opt-in" provision rather than the "opt-out" design now contemplated, EUW reports.

I probably don't get as excited about privacy issues as I should. Red light cameras? (I'm a frequent customer.) Fine. Direct Energy knows I set my thermostat on 67 in the winter? What's the big deal?

However I'm sure others feel differently. This legislation is moving through the assembly pretty quickly, so if you object you ought to tell your delegate and senator now.

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (3)
Categories: BGE/electricity
        

Good midcourse handicapping on the offshore wind legislation by the Daily Record's Nicholas Sohr. I haven't looked at them closely, but Mac Middleton and Dereck Davis are right to question the bills, which seem rushed. Sohr reports:

“I have real concerns about [the bill] right now,” said Sen. Thomas M. “Mac” Middleton, D-Charles, chairman of the Senate Finance Committee, through which the governor’s bill must pass if it is to get a vote in the full chamber.

Middleton said worries about the cost have generated interest in watering down the legislation, SB 881 and HB 1054, to study the issue over the summer.

And:

“I think there’s a reluctance to do anything that raises electric bills any amount,” said Del. Dereck E. Davis, chairman of the House Economic Matters Committee. “Even if you’re on the low end of the range, I think that’s something that folks have reservations about.”

The Sun's Annie Linskey reports:

But Middleton said the bulk of the opposition is centered on the costs to ratepayers. After facing tough elections and angry votes last November, many senators and delegates are particularly sensitive to pocketbook issues.

House Speaker Micheal E. Busch did not sound as rushed. "It is a distance run, not a sprint," he said. Complicated legislation, like the wind bill, can benefit from "thorough dissection," he said.

"Sometimes it takes more than one session," Busch said.

Posted by Jay Hancock at 8:59 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Network 2000 tracks the progress of women in positions of power at Maryland publicly-traded companies. The results of its latest census are out: 86 Maryland public corporations, 40 of which (44 percent) have no women on their boards of directors. That's a pretty big chunk, but it's down from the 2009 results, in which 48 percent of the companies had no women directors.

Women held 6 fewer board seats in Maryland last year than in 2009, but there were fewer public companies -- 86 down from 92. Companies with women comprising at least a fifth of the board include Adams Express, Ciena, Entremed, Glen Burnie Bancorp and Medifast.

Companies with no women on the board and no women executive officers include Jos. A. Bank Clothiers, Severn Bancorp, Celsion, Eagle Bancorp, BCSB Bancorp and Tessco Technologies. Read the whole report here.

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

The temporary but seemingly endless economic slump is prompting lots of once-and-for-all, this-time-I-really-mean-it, finally-the-meaning-of-the-universe-has-been-revealed conclusions and advice. Just as the Internet bubble prompted the Maryland state treasurer to proclaim that stocks never go down (and invest state pension funds accordingly), people now conclude that recent short-term trends are permanent.

In the past few weeks I have heard from various people: 1) You can't buy and hold stocks. You must have professional managers who know how to trade in and out. 2) Homeownership is for suckers. 3) Capitalism is dead. 4) America is finished.

I'll leave the weightier topics to philosophers. James Altucher is getting a lot of attention for his amusing rant on topic No. 2, (You figure out if he really means it) , "Why I Am Never Going To Own A Home Again." My favorite reasons:

E) You’re trapped. Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes. So they can’t move away and get new jobs. Job salaries is a function of supply and demand. If you can’t move, then your supply of jobs is low. You can’t argue the reverse, since new adults are always competing with you.

F) Ugly. Saying “my house is an investment” forgets the fact that a house has all the qualities of the ugliest type of investment:

Illiquidity. You can’t cash out whenever you want.
High leverage. You have to borrow a lot of money in most cases.
No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.

F) Choices. I feel when I rent I always have the choice to leave. To live wherever in the world I want whenever I want. Adventure becomes a possibility even if I never take advantage of it.

UPDATE: Barry Ritholtz says the huge attention given to Altucher's post is a contrarian indicator that the dive in house prices is nearing an end, and he gives top reasons why you SHOULD own a house. And Venezuela's Hugo Chavez says capitalism is to blame for the fact that there is no life on Mars.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (20)
Categories: Real estate
        

In our continuing series on how Baltimore's 5 percent population loss compares with that of other rustbelt towns is this grim news: Detroit lost 25 percent of its people last decade. It now has fewer residents than before Henry Ford ramped up the automobile business.

From USA Today:

"My reaction to the Detroit figure was just wow," said demographer Kurt Metzger, director of Data Drive Detroit, a non-profit data research firm. "I was shocked it was as low as it was."

Metzger said a bad economy drove many people out, but so did falling home prices in the suburbs, which are now within reach of many lower income Detroiters. Other issues such as schools, safety and insurance and tax rates, which are higher in Detroit than in the suburbs, also fueled the move.

Posted by Jay Hancock at 5:15 PM | Permalink | Comments (0)
        

More broadcast yackage. WBAL's Bill Vanko and I talk about Andrea Walker's story today on the Sparrows Point steel mill's reentry into the economy after the two-year financial slump.

Posted by Jay Hancock at 10:39 AM | Permalink | Comments (0)
Categories: Manufacturing
        

WMPT's Jeff Salkin and I yack about Maryland's high millionaire quotient and whether Maryland taxes are driving millionaires to Virginia, Florida etc.

Posted by Jay Hancock at 10:33 AM | Permalink | Comments (2)
Categories: Taxes
        

A contrarian piece from the Chrisian Science Monitor on the danger of nuclear-plant failure:

Fukushima is not Chernobyl, scientists repeat, and even Chernobyl was not as deadly as popularly believed.

Dire warnings of radiation spreading from Japan's embattled Fukushima Daiichi nuclear power plant to deadly effect across Japan, or even to California, are likely overblown, they say.

It's not especially convincing. And this paragraph is especially lame:

While workers in protective jumpsuits and ominous three-pronged radiation warning symbols flashing across television screens evoke fear, it is important to keep in mind that we are exposed to radiation waves all the time, be it from mobile phones, medical devices, or mere sunlight.

Posted by Jay Hancock at 1:04 PM | Permalink | Comments (6)
Categories: Energy
        

GiveWell has very sensible advice for those who are thinking about making donations to charitable organizations for relief in Japan. It kind of boils down to this: If a nonprofit is asking you to give for Japan, that may be a signal to say no to that group.

Charities are using the Japanese tragedy as a fundraising pitch, GiveWell says, when the capacity for meaningful aid at the disaster sites may be already saturated. Any aid you give in the name of Japan will probably be used in other countries or in Japan for non-emergency needs. If you feel the need to do something, GiveWell says, donate to the Japanese Red Cross or to Doctors Without Borders. Doctors Without Borders is well-run, transparent and efficient. And its good faith is proved, Give Well says, by the fact that it is NOT soliciting for Japan.

More from GiveWell:

* Those affected have requested very little, limited aid. Aid being offered far exceeds aid being requested. (Details below.)

* Charities are aggressively soliciting donations, often in ways we feel are misleading (more on this in future posts).

* Any donation you make will probably be used (a) by the charity you give it to, for activities in a different country; (b) for non-disaster-relief-and-recovery efforts in Japan.

* If you’re looking to pursue (a) and help people in need all over the world, we recommend giving to the best charity you can, rather than basing your giving on who is appealing to you most aggressively with images and language regarding Japan.

* Overall, though, a gift to Doctors Without Borders seems to us like the best way to effectively “respond to this disaster”. We feel they are a leader in transparency, honesty and integrity in relief organizations, and the fact that they’re not soliciting funds for Japan is a testament to this. Rewarding Doctors Without Borders is a move toward improving incentives and improving disaster relief in general.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (4)
Categories: Nonprofits
        

Tricia Bishop reports on allegations against Baltimore ophthalmologist Dr. John Arthur Kiely, accused by the U.S. government of performing unnecessary eye procedures at an outpatient facility owned by Bon Secours Hospital.

There's a lot of this going around. The Sun has reported extensively on Maryland cases in which Dr. Mark Midei and Dr. John R. McLean are accused of implanting unnecessary coronary artery stents. Now there is a new stent case in Pennsylvania, according to the Pittsburgh Post-Gazette.

After discovering 149 coronary stent implants in 141 patients in 2010 that may not have been medically necessary, Excela Health hospital system is offering free help to patients directly affected and advice to other people who may be concerned about similar health conditions.

Robert Rogalski, Excela chief executive officer, on Thursday confirmed that two Westmoreland Hospital cardiologists who are no longer members of the Excela staff, Ehab Morcos and George Bou Samra, were found to have performed the procedures after concerns arose among the medical staff at the Greensburg hospital.

"Free help to patients directly affected." How nice. If these allegations are true, how about compensation for the risk of an unnecessary procedure and the damage of a permanent piece of unnecessary hardware? No indication as to whether the hospital is examining these guys' cases prior to 2010. If that's the case, it would seem to be trying to limit its malpractice liability in a similar way to St. Joseph Medical Center, where Midei did his work. St. Joseph reviewed two years of cases.

Posted by Jay Hancock at 9:08 AM | Permalink | Comments (3)
Categories: Health Care
        

The New York Times, which is doing an outstanding job covering the crisis in Japan, has a highly critical piece on General Electric's Mark I containment system. NYT:

The warnings were stark and issued repeatedly as far back as 1972: If the cooling systems ever failed at a Mark 1 nuclear reactor, the primary containment vessel surrounding the reactor would probably burst as the fuel rods inside overheated. Dangerous radiation would spew into the environment.

Now, with one Mark 1 containment vessel damaged at the embattled Fukushima Daiichi nuclear plant and other vessels there under severe strain, the weaknesses of the design — developed in the 1960s by General Electric — could be contributing to the unfolding catastrophe.

"Could be" are the operative words. As the article points out, it's not clear whether any containment shell could survive what's going on in Japan. The primary disadvantage of the Mark I seems to be its relative thinness. Twenty-three U.S. reactors have the Mark I shell, the paper reports. The closest Mark 1 shells to Baltimore are on two reactors at Exelon's Peach Bottom plant, just over the Pennsylvania line on the Susquehanna River, about 50 miles away.

Of course, southeastern Pennsylvania is not part of an earthquake zone. You're no more in danger from Peach Bottom today than you were yesterday. The containment buildings at Constellation Energy's Calvert Cliffs reactors are not Mark I.

Posted by Jay Hancock at 6:54 PM | Permalink | Comments (3)
Categories: Energy
        

We justly laud the firefighter who saves one person from a blaze. The few dozen people working to contain the damage at the Fukushima Daiichi complex are sacrificing themselves -- the cost is unknown, but the risk is enormous -- to save millions. At one point radiation levels at the plant spiked to 400 millisieverts an hour, news organizations are reporting. The level diminished, but anybody within the vicinity has already absorbed a damaging dose.

Sustained for 24 hours, 400 mSv an hour (~ 10 Sv/day) kills, Wiki tells us. 100 mSv a year is "clearly carcinogenic." The crews fighting to contain the reactor meltdowns are Horatius at the bridge, the brave few paying a penalty price to save the many. There is no more glorious role in the drama of mankind. If you're not opposed to petitioning the heavens for earthly intervention, this might be a good time.

Posted by Jay Hancock at 10:57 AM | Permalink | Comments (6)
        

OK, I would like financial statements certified by auditors before drawing any firm conclusions about business at the Maryland Jockey Club, owner of Pimlico and Laurel race tracks. As Hanah Cho reports, the tracks lost a combined $26 million in 2008 and 2009, according to unaudited books presented by the owner. The General Assembly is considering increasing the subsidy from slot machines for the tracks.

Whatever the numbers, however, financial trauma at the tracks is impossible to deny. The revenue line, which is difficult to get wrong in a highly regulated industry, shows "a drop in wagering revenue from 2007 to 2009: $48 million to $37 million at Laurel Park and $35 million to $27 million at Pimlico," Cho reports, from 2007 to 2009.

The question is how much of this is cyclical. 2007 was a normal economic year. 2009 was the trough of a terrible economic slump. I'm not saying the industry doesn't have long-term problems. But some part of this, as John Franzone says in the story, is temporary.

Posted by Jay Hancock at 9:55 AM | Permalink | Comments (3)
Categories: Slots
        

Events in Japan are shocking, impossible to fully comprehend in their magnitude. Inevitably The rethinking of the "nuclear renaissance" has already begun. The New York Times editorial page says it still supports nuclear power as one way to ameliorate carbon emissions and climate change, a "valuable tool." But, it says, "the public needs to know that it is a safe one."

The editorial also contains the best explanation I have read about what is happening inside the reactors.

From early reports, it appears that the troubled reactors survived the earthquake. Control rods shut down the nuclear fission reactions that generate power. But even after shutdown, there is residual heat that needs to be drawn off by cooling water pumped through the reactor core, and that’s where the trouble came.

The nuclear plant lost its main source of electric power to drive the pumps, and the tsunami knocked out the backup diesel generators that were supposed to drive the pumps in an emergency. That left only short-term battery power that is able to provide cooling water on a small scale but can’t drive the large pumps required for full-scale cooling.

Previous nuclear disasters resulted from human error or the failure of human appliances in the absence of natural trauma. We have always known that earthquakes and other natural forces posed a threat to nuclear systems. Now there is terrifying proof.

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

I'm grateful to Northwestern University's Medill School of Journalism for launching me into newspapers in the early 1980s, but I've never felt a great attachment to the place, having been in Evanston for only a couple terms before finishing up in Medill's Washington D.C. program.

And I could never get over the fact that they were training public relations and advertising folks in the same school. PR and advertising are necessary professions, but they have very different aims from journalism. A facility with words is necessary for all three callings, but that's an insufficient common attribute IMHO to teach them from the same lectern.

Now, however, Northwestern has made it official. The Medill School of Journalism will become "The Medill School of Journalism, Media, Integrated Marketing Communications," according to the Daily Northwestern.com. "

(Did they leave out an "and" in the name? Is the school concentrating too much on brand management and not enough on grammar?)

Posted by Jay Hancock at 2:12 PM | Permalink | Comments (0)
Categories: Media
        

Thanks to the alert readers relaying news of BGE Home's offer of a one-year natural gas contract at 67.8 cents per therm. Is it a good deal?, they want to know.

It's certainly one of the lowest fixed-price gas contracts in years. The cost of natural gas has plunged in recent years because the bum economy reduced global demand and because newly available shale gas has increased the U.S. supply. Take a look at BGE's commodity gas price in recent years. In January 2011 it was 63.04 cents per therm. In January 2010 it was 72.59 cents. In January 2009 it was $1.0371, and at one point in 2008 it hit $1.5763.

These fixed-price offers from BGE Home, Washington Gas Energy Services and others are alternatives to the standard offer from BGE. (Don't confuse BGE with BGE Home. Yes, everybody does.) The standard BGE natural gas product floats from month to month depending on the spot market and on what BGE paid the summer before for stored gas.

I'll lay out the pros and cons of the BGE Home deal.

Pro: Although 67.8 cents per therm is about 10 percent higher than the standard BGE price for this winter and could well be higher than BGE's standard price for next winter, standard prices are not likely to fall much farther. By locking in for a year you'd miss out on potential savings of

10 or 15 percent, but you'd insure yourself against, say, another Hurricane Katrina, which sent prices up to $1.63 per therm in November 2005. Locking in at 67.8 cents isn't nearly as risky as locking in at, say, $1.60 in September 2008, as many hapless BGE Home customers did. (By the next month the standard, floating BGE price was 93 cents.)

Con: There is no reason to think natural gas prices will be substantially higher next winter. My rule of thumb for these things is to say no unless they produce immediate and guaranteed savings. BGE Home wants 67.8 cents. But this month BGE's standard price is a dime less: 57.26 cents. Hedging always carries a cost -- the cost of paying the counterparty who shoulders the risk and the (frequently high) cost of trying to outsmart the market.

I'm not taking the BGE Home offer. One these days a hurricane will nail the Gulf again, gas prices will spike and I may be sorry I didn't lock in at some point. But whatever my higher costs then, I hope I will have saved much more in money and aggravation by avoiding lock-in deals in the meantime.

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

I thought my latest BGE bill looked too low -- $128.84 including gas and electric for a cold, windy, miserable month. Turns out BGE didn't charge me for the 430 kwh of electricity I burned in February. I paid $20 for BGE to deliver the juice and for all the electricity nuisance charges. But for the power itself, says the fine print on the bill, "Current electric supplier charges not available for this billing period."

I don't mind! But I bet Castlebridge Energy, my supplier, wants the money. $38.49 at my price of 8.95 cents per kwh.

Posted by Jay Hancock at 1:36 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

Editors at regional papers are always trying to get reporters to localize national and global stories. If there's a flu epidemic, find the local victims. If there's a rash of alleged Toyota malfunctions in California, what about Maryland? Etc.

However sometimes localization angles assigned by editors are brainless. Contain your astonishment. At my first newspaper in Virginia, which was sometimes prone to dumb localization ideas, a newsroom joke evolved concerning a hypothetical, ne plus ultra headline in the category of vacuous attempts to make universal news locally particular: "Earthquake In Japan; No Problem Here."

Now, however, an Ohio radio station is said to have reported just that. But what about Maryland?, you're probably asking. (Shh. Sun editors might hear.)

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

Check out Gus's story on Larry Michael Parrish, a guy a lived outside of Frederick and is accused by the SEC of bilking investors out of $9 million. The SEC complaint contains various kernels of outrage, the worst of which is the allegation that Parrish took money from a dying cancer patient whose widow now may lose her house.

Meanwhile, according to the SEC, old Larry was having a fine time, blowing the money on:

Wire transfers to Parrish’s personal accounts of nearly $600,000;

•
Vacations and travel to tropical resorts and luxury hotels totaling over $40,000;

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Purchase of a $16,823 Harley Davidson motorcycle;

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Shopping at Best Buy totaling over $5,500;

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A $4,799 purchase from Amazon.com; and

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Living expenses, travel, event tickets, electronics, furniture, and other extravagances.

Posted by Jay Hancock at 8:44 AM | Permalink | Comments (0)
        

The perils of labor throwing in its lot with capital are nicely illustrated by a cartoon from the 1950s that a colleague gave me a few years ago. Two steelworkers are sitting outside the locked gates of the plant. One says to the other: "You should have told me we were going to strike when I bought the stock."

But joining the capitalists is perhaps labor's best hope, says Tyler Cowen, responding to Krugman's Monday column on the hollowing out of the middle class. Saving the middle class requires rebuilding unions, Krugman says.

We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages.

But Cowen, who is getting tons of attention for his pessimistic take on the U.S. economy, The Great Stagnation, doesn't see that making much difference.

Trade unions, even if they could become strong again (which is hard to see), would likely accelerate this process of substituting capital for labor, rather than counteracting it. A one-time union wage premium, even if it does not come at the expense of other workers, will put only a small dent in the long-term trend.

If the cost of workers goes up via union bargaining, Cowen is saying, companies will have even more incentive to buy robots and computers to replace them. Instead, he suggests, workers should be encouraged to participate in growing corporate profits by buying stock and other assets. If you can't get hired by 'em at a decent wage, become a shareholder. Cowen:

I have never seen it suggested that this "hollowing out" process will lead to lower output, quite the contrary. Those gains go somewhere. This is a reason to encourage the ownership of capital and on a quite broad basis.

Jay here. This is basically Bush's "ownership society" revisited. The U.S. economy will keep growing, Cowen says, but much of the gain will continue to be reaped by capital, not labor. Of course, for families offered a vision of the American dream that may be no longer attainable, finding the wherewithal to buy stocks is a tad problematic.

Posted by Jay Hancock at 6:08 AM | Permalink | Comments (4)
Categories: The Great Recession
        

Holy cow. Cleveland lost 17 percent of its population in the last decade. About 82,000 people. Since Baltimore was one of the first rust-belt cities to have its 2010 Census results announced, I've been waiting to see how our peers fared.

The answer so far, not so good. Results for Ohio and Pennsylvania are just out. Baltimore's loss of 4.6 percent of its residents over the decade is a significant continuation of a trend that has been going on for half a century. But it's not nearly as bad as the Cleveland hemorrhage. Or even Pittsburgh's population loss of 8.6 percent.

Cincinnati lost 10.4 percent of its people. Toledo, 8.4 percent, Akron, 8.3 percent.

UPDATE: St. Louis also lost population -- 8 percent.

Some Ohio and Pennsylvania cities, however, grew. Fueled by state government, education and health-care jobs, Columbus grew by 10.6 percent.

The most impressive rustbelt urban performance so far, however, is possibly by Philadelphia. From the Philly Inquirer:

The population of Philadelphia grew ever so slightly in the past decade, reversing a 50-year trend of decline, according to official census figures released today.

The number of people living in the city increased by 8,456 to 1,526,006, a rise of 0.6 percent.

Still, it's cause for celebration by government leaders and civic boosters, who have labored to lure people and businesses back to the city and stop the hemorrhage of population.

It suggests that Philadelphia's population may have stabilized, after decade upon decade of drops that began when Harry Truman was president.

Posted by Jay Hancock at 3:21 PM | Permalink | Comments (4)
        

And other cogent observations from thoughtful libertarian Tyler Cowen on the mistakes made by lefty and righty economists. Some left-wing mistakes:

5. Significantly overestimating the quality of the political economy of an America with more powerful labor unions and underestimating the history of labor unions as racist, corrupt, protectionist, and obstructions to positive change.

11. Use of a strong moral argument for universal health care coverage, combined with a fairly practical, hard-headed approach to the scope of the mandate, and not realizing the tension between the two. Failure to indicate where the "bleeding heart" argument actually should stop and at what margins we should (and will) let non-elderly people die, if only stochastically.

And some right-wing errors:

3. Lower taxes don't spur economic development as much as it is often claimed, at least not below the "fifty percent or less of gdp" range.

6. There is already considerable health care cost control embedded in the ACA, most of all for Medicare, and this is not admitted with sufficient frequency.

Both sides downplay the problems of climate change, for different reasons, Cowen says. As usual all his observations are fair-minded and thought-provoking.

Posted by Jay Hancock at 11:43 AM | Permalink | Comments (0)
        

The legislature is holding hearings this week on bills that would allow orthopedists, urologists, cardiologists and other treating physicians to own expensive diagnostic and treatment machines and order their patients to use them. Maryland's highest court recently found that Maryland law prohibits this, and for good reason. History shows that when docs own the equipment, the equipment gets overused. The more procedures you order for your own machine, the more money you make.

The only sane arrangement is to separate the doctors prescribing expensive treatment from the doctors delivering expensive treatment. That removes the profit motive. Here is last month's column on the subject.

But the docs who own these machines are lobbying heavily for the legislature to create a loophole. Here are excerpts from a purple-prose form letter docs are sending to General Assembly members, with my comments in parentheses.

Senator ______,

I am writing to urge you to support Senate Bill 808, in order to protect the rights of patients to choose to have medically necessary MRI and CT scans and radiation therapy for the treatment of cancer in their own treating physicians offices like patients in every other state in the country.

(The rights of patients! Haven't seen that in the Constitution. I believe I have a right to an MRI scan in my living room, and I think Medicare should reimburse my orthopedist to maintain one there in case I ever need it.)

As someone who cares for our State's patients every day, I see first-hand the importance of having modern technology available in our medical practices to timely diagnose and treat patients' injuries and illnesses.

(I also see the importance of being able to reap facility fees from machines that my practice owns and to control how much those machines are utilized. How many other business folks get to play customer and owner at the same time, using taxpayers' and insurance companies' money?)

No other state handcuffs its doctors like Maryland is currently poised to do.

(Maryland's law wouldn't handcuff doctors. It would remove one of many incentives that are slowly choking the system. The U.S. does more MRI procedures per capita than any country in the world (at $500 or $1,500 per pop), and Maryland has one of the top per-capita rates for MRI use in the U.S. Studies show that when machines are owned by the docs who prescribe treatment, utilization more than doubles. The only possible conclusion is that docs are ordering unneeded tests for their own financial benefit. Maryland's law will be a model for other states to follow.)

And importantly for patients, it's time to modernize our state's health care laws so that modern technologies are available in the comfort and convenience of patients' own doctors' offices.

(It's always about patient convenience and comfort, never about the cost. Here's what's inconvenient and uncomfortable: $15,000 a year for a basic Maryland medical plan, 17 percent (and soaring) of our GDP spent on health care and Medicare becoming a fiscal catastrophe.)

Posted by Jay Hancock at 6:09 AM | Permalink | Comments (5)
Categories: Health Care
        

Who says Marshall-BWI doesn't have international destinations? (Look for this to get yanked if the Republicans regain the White House in 2012 and the Castros are still alive.) From the airport:

U.S. Customs and Border Protection Approved Airport’s Application for Charter Service Baltimore/Washington International Thurgood Marshall Airport (BWI Marshall) has received approval from U.S. Customs and Border Protection to handle passenger charter air service to and from Cuba. “We are grateful that the federal government has approved the application for direct charter service between BWI Marshall Airport and Cuba,” said Paul J. Wiedefeld, Executive Director of BWI Marshall. “The authorization can produce expanded access to Cuba for Maryland and the entire National Capital region. This service has the potential to benefit many institutions and organizations throughout our region.” BWI Marshall Airport joins a select list of U.S. airports to offer service to Cuba. Previously, only airports in Miami, New York, and Los Angeles were authorized for Cuba service. In recent days, U.S. Customs and Border Protection has opened Cuba service to several new markets, including BWI Marshall Airport. New federal regulations expand religious, academic, journalistic, and cultural travel between the United States and Cuba. Several additional regulatory and procedural steps need to be completed before the charter service between BWI Marshall and Cuba may commence.

Posted by Jay Hancock at 1:50 PM | Permalink | Comments (2)
Categories: Airlines
        

In my inbox from Credit.com:

Hi [Journalist First Name Appears Here]

The Federal Trade Commission is expected to release new national numbers on ID Theft next week. As a tie-in, I wanted to offer this new free online tool from Credit.com that tells consumers how vulnerable they are to ID Theft. New FTC national numbers on ID Theft are expected to come out on Monday March 7 or Tuesday March 8. Adam Levin of Credit.com can explain how it works and has great tips to avoid or deal with ID Theft.

Posted by Jay Hancock at 11:02 AM | Permalink | Comments (1)
        

A correspondent makes a good point about today's column about Maryland Business for Responsive Government. MBRG, traditionally the purist, free-markets business advocacy group, is rebranding itself as "centrist." This happens every now and then in Maryland. In the 1990s the Maryland Chamber of Commerce hired Champe McCullough as president and ordered him to kick butt against the Democratic machine, only to change its mind.

But one of Maryland businesses' larger problems, my correspondent points out, is its reluctance to personally engage in Annapolis. Instead it hires proxies like MBRG and the chamber. MBRG's co-chairmen are former Democratic Gov. Marvin Mandel and Ellen Sauerbrey, who narrowly missed becoming the state's Rebublican governor in the 1990s. Politicians, not business folks. MBRG's new president, Kim Burns, has been a lobbyist for most of her career.

The CEOs who call the business shots are rarely seen in Annapolis.

Posted by Jay Hancock at 10:14 AM | Permalink | Comments (0)
        

It's not news that the Senate is unlikely to confirm Donald Berwick as head of the Woodlawn-based Centers for Medicare and Medicaid Services. As I wrote last year, "Dr. Donald M. Berwick is far too intelligent, passionate and brutally honest for Congress to approve him to run the bloated Medicare program."

Obama appointed him in recess. What's news, as Robert Pear reports in the NYT, is that Berwick's replacement may end up being his deputy, Marilyn Tavenner, who was head of outpatient services for Hospital Corporation of America, the for-profit hospital chain. Perhaps Tavenner's experience at the cost-obsessed HCA will lead to some real progress on cost and quality in Medicare. But there is ample precedent in government for ex-industry executives to work harder for their former employers than for taxpayers.

Posted by Jay Hancock at 9:49 AM | Permalink | Comments (0)
Categories: Health Care