Let us remember that Mayo Shattuck does not own Constellation Energy. Neither does the board of directors. They work for the shareholders, many of whom live in Baltimore. Shattuck and the board direct the affairs of the company in strict and solemn trust for the owners, who by nature of their numbers and diversity cannot exert control themselves.

And the owners have just expressed deep displeasure with their fiduciaries and employees. Constellation badly flunked the "say on pay" test that most companies must take starting this year. More than 60 percent voted down Constellation's pay scheme, which nets Shattuck $10 million a year or so plus an enormous pension that he'll cash in a lump some when he leaves the company.

If you believe in property rights, which are the soul of capitalism, you have to hope this is a major embarrassment for the company. It's the equivalent of a really poor employee performance review.

Posted by Jay Hancock at 6:46 PM | Permalink | Comments (7)
Categories: BGE/electricity
        

Shame Gov. Chris Christie is pulling New Jersey out of the Regional Greenhouse Gas Initiative, calling it "gimmicky" and "ineffective." Is RGGI ineffective?

Well, it hasn't reversed climate change, if that's what he means. But it has made a small step in the direction of putting a market price on carbon emissions and financing alternative energy sources. It's Christie's decision that's gimmicky. Tim Wheeler blogs about Maryland Gov. Martin O'Malley's criticism of Chrisie here. And this is from a 2009 Hancock column explaining what RGGI is and why it's important:

The idea, hatched after governors became impatient with federal inertia on climate change, is to put a price on emissions that are expensive for the planet but had been free for energy customers.

Costlier carbon energy will push people to find clean alternatives. Auctioning the permits produces revenue to invest in clean energy and conservation. So far, Maryland has gotten $85 million for adding home insulation, subsidizing residential solar generators and cutting household electric bills.

Read the whole column here.

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

Sunday's column was about Baltimore's desire to save money and conserve energy by installing light-emitting diodes in its streetlamps and what looks like Baltimore Gas & Electric's attempt to block it on spurious grounds of safety. The column quoted Jamie Kendrick, the city's deputy director of transportation, as saying the city pays BGE $20 million a year total for streetlights and $12 million for maintenance.

The city wants to cut maintenance costs by changing its own bulbs -- needed far less often with LEDs -- and doing other routine maintenance. BGE says that that's too dangerous and that only BGE can do the work unless the city puts in expensive circuit breakers that Baltimore says are a dealbreaker.

BGE disputes the city's cost figures but didn't get back to me on them until after the column was published. Here's part of the reponse from BGE senior vice president Jeannette Mills (I'll publish the whole thing after the jump):

Published reports indicate the city pays BGE $20 million annually for streetlights, of which $12 million is in maintenance fees. This is absolutely incorrect. The City’s total annual BGE bill for streetlights is half that number, and only includes $1.4 in maintenance costs for those 43,000 streetlights.

No way, says the city, although now it says the $20 million annual streetlight bill includes money paid to Pepco, not BGE. But it says it stands by the $12 million paid to BGE for streetlight maintenance, which "includes on-demand maintenance, inspection, cleaning, renewal fees and $6.6 million in equipment rental fees," according to a prepared statement from DOT spokeswoman Adrienne Barnes. "This equipment rental fee, which according to the tariff primarily pays for the maintenance of BGE owned fixtures."

Part of this is an argument about defining maintenance. Equipment leasing isn't maintenance, says BGE spokesman Rob Gould, and he's right. Part of the argument may be about whether you're talking about costs for all 70,000 of the city's streetlights or just the 43,000 that the city owns. City officials talk about eventually installing LEDs in all 70,000 lights, even the ones owned by BGE.

In any case the larger question remains: How come BGE won't let Baltimore maintain its own streetlights without the expensive circuit breakers when other cities are already doing it?

Here is the response from BGE's Jeannette Mills:

In response to your column of May 22, BGE would like to set the record straight. BGE is committed to helping all of our customers — large and small — reduce energy usage and lower their energy bills. In fact, BGE has been a steadfast partner with the City of Baltimore in helping it and its citizens accomplish both. More recently, BGE has been working with the City and the Maryland Public Service Commission (PSC) to identify ways the City can reduce its energy bill

without compromising safety or electric reliability. The safety of our customers and employees as well as the reliability of our service are our top priorities and cannot be sacrificed. Today, 43,000 streetlights are owned by Baltimore City but maintained by BGE. The City would like to reduce costs by assuming the maintenance of these lights. BGE supports this idea. However, published reports indicate the City pays BGE $20 million annually, of which $12 million is in maintenance fees. This is absolutely incorrect. The City’s total annual BGE bill for streetlights is half that number, and only includes $1.4 in maintenance costs for those 43,000 streetlights. The remainder covers the costs for the actual supply of electricity, cable, equipment and other facilities. That said, BGE is fully committed to helping the city find new ways to reduce these costs, but not at the expense of safety.

The City’s current proposal would expose city employees or contractors to live BGE wires during certain types of maintenance. This is both hazardous to workers and could cause costly damage to BGE’s electric infrastructure. BGE’s tariff – the PSC-approved terms and conditions of street lighting service - specifically requires that an appropriate separation between BGE’s equipment and the customer’s equipment be installed if the customer is going to maintain the streetlights. The current proposal under consideration fails to meet that standard.

While BGE contractors who currently perform this type of maintenance are also exposed to live BGE wires, these highly skilled professionals are hired and trained specifically to work on BGE equipment in accordance with BGE’s stringent work practices. Much like a private electrician doesn’t have the authority and may not have the skills to work on BGE’s equipment, it would be inappropriate for contractors hired by the City to perform work on BGE’s equipment.

Separate and apart from the issue of streetlight maintenance, the City also wants to replace current streetlights with energy efficient light emitting diodes (LEDs). Again, BGE supports this idea. However, there are currently no provisions within BGE’s tariff that permit LED street lights or set appropriate usage rates that would be charged. BGE is currently testing LED street lights to confirm energy consumption claims and hopes to work with the PSC to help determine appropriate rates and standards. BGE is more than willing to work with the City to install LED street lights. However, to date, the City has not officially made this request of BGE. That said, the City’s request to assume the maintenance responsibility for street lights is independent of the City pursuing LED street lights.

BGE is committed to promoting energy efficiency and helping our customers lower their energy usage in support of EmPOWER Maryland’s goal of a 15 percent per capita reduction in energy consumption by 2015. And, BGE’s track record is clear in this area. Since 2008, BGE has helped its customers achieve an overall energy savings of more than 550 million kilowatt hours, equivalent to eliminating the carbon dioxide emissions from the electricity use of nearly 46,000 homes.

BGE commends the City of Baltimore for its efforts to reduce energy costs and enhance energy efficiency and BGE will continue to work with the City in that effort.

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

As if any more evidence were needed. When prescribing doctors profit from expensive procedures through an ownership interest in radiology equipment, they prescribe more of those procedures. From MD News:

Patients with low back pain in the care of primary care physicians or orthopedists who own or lease magnetic resonance imaging (MRI) equipment are more likely to receive an MRI, according to a study published online April 21 in Health Services Research...

The investigators found that acquisition of MRI equipment by a physician had a strong correlation with patients receiving MRI scans....

"Orthopedists and primary care physicians who begin to bill for the performance of MRI procedures, rather than referring patients outside of their practice for MRI, appear to change their practice patterns such that they use more MRI for their patients with low back pain," the authors write.

Posted by Jay Hancock at 2:40 PM | Permalink | Comments (2)
Categories: Health Care
        

Perhaps the French EDF Group would have voted against the pay of Constellation Energy Group boss Mayo Shattuck even if EDF and Constellation hadn't tangled. EDF rescued Constellation with cash and as an extra layer of protection gave it an option to sell several generation plants to EDF at a fixed price. Constellation didn't need to exercise the option for liquidity, but the put nevertheless became valauble after energy prices plunged. Shattuck refused to rule out exercising the put and eventually reached a negotiated deal that cost EDF quite a bit of money anyway.

(UPDATE: Readers ask, with good reason, What the heck is a put? There are two kinds of options. A "put" gives you the option but not the obligation of selling at a certain price. A "call" gives you the option of buying at a certain price.)

So now EDF is piling on the accelerating train to vote down (on an "advisory" basis only, unfortunately) Constellation's executive pay practices. Two shareholder advisory services have already recommended a no vote on Shattuck's pay. EDF's "no" vote is partial payback for all the friction they have had with Constellation -- the put option, CEG's pulling out of a joint nuclear-development deal without telling them, etc.

On the other hand, like many Constellation shareholders, they're probably also unhappy with the millions Shattuck is raking in while delivering poor returns to the people he's supposed to be working for. EDF owns 7 percent of CEG's stock.

Posted by Jay Hancock at 10:36 AM | Permalink | Comments (3)
        

Dr. Sanford Siegel, the president of Chesapeake Urology, calls my column last week "a one-sided, uninformed attack on the integrity of those who practice and work at Chesapeake Urology Associates." Read the whole thing here. He continues:

At Chesapeake Urology, treatment decisions are made by our patients and their families only after all available options are presented and discussed. We only do what is best for our patients. To suggest otherwise, as Mr. Hancock does, is insulting to us and to our profession.

I don't know what kind of medicine Chesapeake Urology prescribes for its patients. I do know that many medical authorities discourage the kind of self-referral that Chesapeake Urology engages in because of the conflicting incentives that crop up when doctors prescribe lucrative medical procedures performed on equipment they own. The General Assembly itself intended to "substantially restrict" the practice, Maryland's high court said this year.

I also know that many studies show that, in general, prescribing doctors who profit from the procedures they recommend tend to order many more of those procedures than doctors who don't have such an incentive. It is difficult not to draw the conclusion that, in those documented cases, the extra procedures were unneeded. It is doctors who engage in such practice patterns, not I, who bring discredit on the profession.

Dr. Siegel says that I "might be surprised to learn that the percentage of Chesapeake Urology patients diagnosed with prostate cancer in 2010 who chose to be treated with radiation therapy at our Prostate Center was dramatically lower than the national average for utilization of radiation therapy for prostate cancer treatment."

That would reflect well on the practice because it would suggest that, unlike what has been reported with other urologists referring patients to their own IMRT machines, Chesapeake Urology's financial interest in its device has not induced it to over-utilize that kind of therapy. If it would like to make the point more clearly, Chesapeake Urology should release a full accounting of all the prostate-cancer patients it has seen since acquiring the IMRT machine along with what kind of therapy they received for each year, not just 2010. No need to violate HIPPA; aggregate figures would be sufficient.

Posted by Jay Hancock at 6:11 AM | Permalink | Comments (2)
        

Slate's Jacob Weisberg gets snarky.

Like the White Queen in her youth, the contemporary Republican politician must be capable of believing as many as six impossible things before breakfast. Foremost among these is the claim that it is possible to balance the federal budget without raising taxes.

"Let me see: Four times five is twelve, and four times six is thirteen, and four times seven is -- oh dear! I shall never get to twenty at that rate!"

Posted by Jay Hancock at 10:27 PM | Permalink | Comments (3)
Categories: Slo-mo fiscal train crash
        

ProPublica's Marian Wang has helpfully compiled a catalog of investigations, civil and criminal, state and federal, relating to all phases of the housing collapse, including foreclosure irregularities. Bottom line: Some regulators and prosecutors are bestirring themselves. But some probes have come to nothing, and the level of activity is nowhere near the magnitude of the financial crash that the shenanigans helped cause. Wang:

As we and many others have noted, no top banking executives [1] have been successfully prosecuted [2] in connection with the financial crisis: Not for making the bad loans [3] that fed the mortgage machine, not for lying about the quality of the mortgages [4], and not for foreclosing improperly [5] when homeowners struggled to make loan payments.

But there have been many investigations. Some are still pending, others seem to have fallen by the wayside. Here’s our overview of what the banks have been accused of doing at each stage of the mortgage machine.

Posted by Jay Hancock at 4:20 PM | Permalink | Comments (2)
Categories: The Great Recession
        

Liberals are making fun of Sen. Scott Brown for flipflopping on the Paul Ryan Medicare plan. They are entitled to it. But Brown makes one point everybody ought to be able to agree on: Woodlawn-based Centers for Medicare and Medicaid Services need to change their payment model. Instead of presuming invoices are legitimate and paying everything that lands in the mail or computer server, they need to presume everything is a fraud and not pay any providers unless they can establish themselves as legit.

This would slow down payments and make providers unhappy. Too bad. How much of this would require congressional action I do not know. I was under the impression that Congress basically told CMS not to delay payments. Brown:

The Government Accountability Office has estimated that nearly 10 percent, or $47 billion, of annual Medicare spending is nothing but waste, fraud or abuse. Attorney General Eric Holder has put the number higher -- at $60 billion. We need Medicare administrators to work to prevent these improper payments -- instead of the existing "pay and chase" model that makes the system so susceptible to fraud.

Posted by Jay Hancock at 10:57 AM | Permalink | Comments (1)
Categories: Health Care
        

Sunday's column was about what looks like an attempt by Baltimore Gas & Electric to impede on a pretense Baltimore's plan to install street lamps powered by light-emitting diodes, which would involve lots of energy savings and also the loss of maintenance revenue for BGE. For the project to work the city says it has to change the new lightbulbs itself.

For that to happen BGE insists on installing "upstream" circuit breakers for safety reasons. Otherwise city maintenance workers would be at risk, it says. The city says that's "impractical" and would make the plan pointless. And the city has a great argument: Bowie has been changing its (conventional) street lamps for years with its own workers in just the way that Baltimore wants to do with ITS workers. With no problems.

Below is the letter from Bowie Public Works Director James Henrikson to the PSC. He calls the upstream disconnects "redundant" and "unnecessary." BGE made Bowie put them in. But Bowie doesn't use them for changing bulbs.

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

A recent column on how well the car business was doing in Maryland prompted the economy gods to act as they often do and offer contrary evidence. After popping by 26 percent in March compared with sales in March 2010, April car sales declined slightly against year-earlier levels. It was the best March since 2007, with 27,667 new cars sold. It was the worst April in the last six years except for April 2009. Maryland dealers sold 25,793 new cars last month, down from 25,844 in April 2010.

So-so sales in Maryland contrast with what was going on nationally, where new-car sales rose 18 percent. Maryland used-car sales also dipped last month -- 57,373 vs. 61,229 for April 2010.

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

in these utterances from Newt Gingrich spokesman Rick Tyler?

“The firefight started when the cowardly sensed weakness. They fired timidly at first, then the sheep not wanting to be dropped from the establishment’s cocktail party invite list unloaded their entire clip, firing without taking aim their distortions and falsehoods. Now they are left exposed by their bylines and handles.

"But surely they had killed him off. This is the way it always worked. A lesser person could not have survived the first few minutes of the onslaught. But out of the billowing smoke and dust of tweets and trivia emerged Gingrich, once again ready to lead those who won’t be intimated by the political elite and are ready to take on the challenges America faces.”

Posted by Jay Hancock at 2:44 PM | Permalink | Comments (1)
        

WBAL's Bill Vanko and I talk about the new electric-motor plant at GM's White Marsh campus and the job eliminations at Northrop Grumman and the threat to Maryland's defense economy.

Posted by Jay Hancock at 12:10 PM | Permalink | Comments (0)
        

No doubt some virtue comes from college fraternities. The virtue is drowned by the institutions' unwholesomeness, snobbery and misogyny. As a former proud, dues-paying member of a college fraternity, I kinda agree with Caitlin Flanagan on this one, regarding the troubles of the Yale DKE chapter:

The Greek system is dedicated to quelling young men's anxiety about submitting themselves to four years of sissy-pants book learning by providing them with a variety of he-man activities: drinking, drugging, ESPN watching and the sexual mistreatment of women. A 2007 National Institute of Justice study found that about one in five women are victims of sexual assault in college; almost all of those incidents go unreported. It also noted that fraternity men—who tend to drink more heavily and frequently than nonmembers—are more likely to perpetrate sexual assault than nonfraternity men, according to previous studies. Over a quarter of sexual-assault victims who were incapacitated reported that the assailant was a fraternity member.

Williams College made a very wise decision when it abolished frats in the 1960s.

Posted by Jay Hancock at 11:49 AM | Permalink | Comments (1)
        

I've been of two minds on potential prosecutions of mortgage bankers and their henchmen. I think most business folks obeyed the rules of the system as it was designed, and I'm surprised by the pushback that happens every time somebody mentions that those committing fraud included the homebuyers who lied about their income and assets on their loan applications. Being a small fry doesn't exempt you from the law. And the gut calculation of, "There was a terrible financial crash so somebody must be guilty," doesn't lock the case. How much of the crash was caused by fraud, and how much was the inevitable denouement of a massive investment bubble?

On the other hand, as the late Charles Kindleberger pointed out long ago, massive fraud always accompanies investment manias, and the housing bubble was no exception. Fraud may not have caused the crash, but there is strong prima facie indication that it existed in various pockets and should be dealt with. Most eloquent on this has been Barry Ritholtz, who has another terrific post today on prosecuting banksters and lists 10 areas ripe for indictments:

1. MERS 2. Mortgage Pools (Warranties & Reps) 3. Bad Securitization (Quality) 4. “Misplaced” Mortgage Notes 5. Force-Placed Insurance 6. Illegal “Pyramid” Servicing Fees 7. Document Fraud for Sale 8. False Affidavits, Perjury (Robo-Signing) 9. Foreclosure Mills, Process servers exasperate problem 10. Active Servicemen losing homes while on tour of duty

Of this list, five issues are prosecution-ready, where individual states have jurisdiction. These include: 1) Force-Placed Insurance; 2) Illegal “Pyramid” Servicing Fees; 3) Fraud Documents for Sale; 4) False Affidavits, Perjury (Robo-Signing) and 5) Foreclosure Mills, Process servers.

Also, see Megan McArdle debate Matt Taibbi on the subject of Goldman Sachs.

Let me also say, by way of shop talk, that all this discussion is quite healthy and that we owe it largely to the Web. Mainstream media is petrified of getting sued for libel and has adopted elaborate rituals for discussing criminality and potential criminality. You don't want to convict someone in the paper, but the taboos also suppress even reasonable discussions of potential wrongdoing until allegations are certified by a prosecutor. Ritholtz's comments (even without the mf bomb!) would be unimaginable in the New York Times.

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (3)
        

memo from Patch.com's editorial boss

If one of your sites is producing less than 4 posts a day (and unfortunately, there are a lot of these — nearly 350) immediately talk to that editor about it.

This should not be a punitive conversation, it should be a collaborative discussion about how to improve things. (Are they spending too much time reporting and writing long articles? Are they too caught up in editing freelancers?)

Posted by Jay Hancock at 4:42 PM | Permalink | Comments (2)
Categories: Media
        

The push-back by Chesapeake Urology and its patients against Tuesday's column on self-referral has already started. A former colleague and CU patient emailed me yesterday about what great treatment he received. Today there's a letter to the editor from the pastor of Zion Baptist Church.

Last year, I was diagnosed with prostate cancer. I was concerned, but knew exactly where to turn. Over the past two years, I had worked first-hand with Chesapeake Urology Associates, an organization that brought free prostate cancer screening to my congregation and to other Baltimore City communities.

This is completely beside the point. I'm sure there are thousands of satisfied Chesapeake Urology patients. Why not? They aren't paying the tens of thousands of dollars for the IMRT treatment (taxpayers and insurance companies are) and they're in no position to judge whether that was the right therapy.

The doctors there are no doubt very nice. I hear they have a buffet or something for patients waiting to get zapped. But happy customers do not refute arguments against the conflict of interest that self referral represents. If you want to present evidence showing that in general self-referring doctors do not overutilize the system, fine. (I don't know of any.) If you want to try to show that self-referral saves the system money on net by keeping treatment under one set of docs, great. (It doesn't.) If Chesapeake Urology wants to release patient treatment data to show that it doesn't conform to what the research shows generally about self-referral, great.

But saying "my treatment there was really successful and convenient, and what wonderful caring doctors!" does not end the discussion.

Posted by Jay Hancock at 11:12 AM | Permalink | Comments (6)
Categories: Health Care
        

From the WSJ:

When it comes to grading, Republican and Democratic professors at one unnamed elite university put their ideologies into practice, a new study finds: Republicans welcomed inequality, handing out more very high and very low grades, and Democrats’ grades grouped more tightly around the average.

It would be interesting to see whether there are correlations between political affiliation and Myers-Briggs scores. Anybody know any studies?

Posted by Jay Hancock at 9:05 AM | Permalink | Comments (2)
        

More on the spike in used-car prices, from AP:

People are holding on to cars and trucks for about a year longer than they did before the recession, which has created a tight supply of used vehicles. So few are on the market that prices have risen to their highest in at least 16 years.

Dealers are paying an average of $11,660 for a used car or truck, up almost 30 percent since December 2008.

“You’re not going to find a situation like this very often,” said Jonathan Banks, executive auto analyst for the National Automobile Dealers Association used car pricing guide.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (6)
        

Washington's Blog lays out the evidence. The whole thing is worth a read, but here are some highlights.

The April 20-23 Gallup survey of 1,013 U.S. adults found that only 27 percent said the economy is growing. Twenty-nine percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is "slowing down," Gallup said.

How bad are things for the little guy?

Well, as I noted in January, the housing slump is worse than during the Great Depression.

As CNN Money points out today:

Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

"We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

States and cities are in dire financial straits, and many may default in 2011.

California is issuing IOUs for only the second time since the Great Depression.

Things haven't been this bad for state and local governments since the 30s.

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression.

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

Neither is less informed than the other, perhaps. Or each is about equally misinformed. A new paper by Daniel Klein and Zeljka Buturovic suggests that liberals answer economics questions incorrectly when the questions seem to confirm their biases. And conservatives answer questions incorrectly when they seem to confirm conservative biases.

The paper doesn't show that people of either political persuasion are less informed than the other about economics. Rather, it's a study on the insidious effects of confirmation bias and how we're constsantly on the lookout for evidence that supports what we already "know."

Here's one. Restrictions on housing development make make housing less affordable. Agree or disagree? The correct answer is, yes, they do. 51 percent of people identifying themselves as progressive got it wrong, and 45 percent of the liberals got it wrong. Much lower percentages of conservatives and libertarians muffed it. Of course restricting housing makes it more expensive because it crimps the supply, but liberals may not want to admit that because they often oppose development.

Here's another. When two people complete a voluntary transaction, they both necessarily come away better off. Agree or disagree? The correct answer is no, they aren't necessarily better off. A terrific example is the housing meltdown, in which many economic agents participated voluntarily, to their great regret and harm.

But large majorities of conservatives and libertarians got that one wrong, forgetting about information problems that cause people to willlingly engage in stupid transactions. The conservative bias toward liberty and free contracts seems to have made them forget about the downside. Here are the "conservative-tilted" questions that conservatives tended to get wrong. The liberal questions are after the jump.

Posted by Jay Hancock at 5:08 AM | Permalink | Comments (10)
        

Robin Hanson notes that the percentage of autopsies hospitals perform on their (presumably) unsatisfied customers has plunged. In the 1960s hospitals did post-mortems on half their patients who died. Now it's only 5 percent, and many hospitals don't do autopsies at all, according to the piece he cites in the Washington Post.

Hanson suggests that the rise of malpractice litigation caused the decline in autopsies. Why produce evidence for the plaintiff's bar? And he does not believe the trend is complimentary to the medical profession. Hanson:

The idea that we could afford autopsies before 1970, but now they are too expensive to afford is pretty crazy. In 1970 the US spent 75B$ on medicine (7% of GDP); we now spend 2500B$ (18% of GDP). A pretty obvious explanation for fewer autopsies: docs don’t like being proven wrong. Such dislike can lead to lawsuits, and generally make docs look bad. This can explain doc “fear of litigation”, dislike for autopsies that might disagree with tech diagnoses, and lobbying to cut accreditation rules requiring autopsy funding.

Could there be any clearer evidence that docs care more about getting paid than about healing patients, yet the public can’t bring itself to imagine docs are that selfish?

Posted by Jay Hancock at 5:24 PM | Permalink | Comments (2)
Categories: Health Care
        

Bloomberg TV has a piece on what hedge fund manager Jim Chanos, who called the Enron bubble, calls "ghost cities" -- enormous towns, hundreds of thousands of housing units and hardly anybody living there. "People haven't wanted to think that he China growth miracle might not have as much to it as they thought," Chanos tells Bloomberg.

The Bloomberg reporter passes along some of the Chinese argument -- the government is building for the long term, the developer presold all the units etc etc. But nobody lives there. No matter how you spin it, those are unproductive assets representing poorly invested capital. Sooner or later that has to tell a macroeconomic tale -- no matter how much the Chinese government claims the paper backing the assets is valued at par.

Posted by Jay Hancock at 11:43 AM | Permalink | Comments (3)
Categories: China
        

This is a little surprising. Hopkins Carey Business School Dean Yash Gupta is leaving at the end of the year to join the private sector. Gupta arrived in 2008.
UPDATE: Apparently Gupta was a candidate recently to be provost at the University of Iowa, where he was questioned about his tendency not to stay in jobs for very long. See the Daily Iowan story here.

Here is the memo that went out to faculty today:

The establishment of the Carey Business School in 2007 marked a landmark moment in the proud history of business and management education at Johns Hopkins, a history that dates back to the early years of the 20th century.

Since then, the new school has accomplished so much, with the recruitment of a core group of full-time research faculty, new headquarters in Baltimore's burgeoning Harbor East business district and the establishment of the university's first MBA program designed for full-time students. Those developments brought the school to yet another milestone last summer, when the Carey School's faculty and staff moved into their new quarters in the Legg-Mason Tower and welcomed the first class in the school's Global MBA program. The Carey Business School has quickly become a vital component of The Johns Hopkins University.

I give all due credit for this significant progress to the first dean of the Carey School, Yash P. Gupta, who has been a tireless evangelist for the school and brought us to this important moment.

During his tenure, Dean Gupta has successfully recruited a core group of exceptional scholars and business practitioners to our faculty, hired a new administrative team, developed the

policies and procedures necessary to get the school running administratively, and established the successful “Leaders + Legends” speaker series. He established an Academic Board and recruited a group of truly outstanding leaders to serve on the school’s Corporate Advisory Board and Board of Overseers. Dean Gupta also worked actively to promote the school in the media and complete development of the Carey School as a brand. Thanks to his determination, the charter class of the Global MBA program includes almost 90 students. The Class of 2013 appears equally promising in terms of quality, diversity and size.

With these impressive achievements to boast of, the Carey School is now poised to enter the next phase of its history, one of focused growth and development. Having built the strong foundation that he came to Johns Hopkins to do, Dean Gupta has decided to step down as dean and leave the university at the end of this academic year to join SDP Telecom Inc. as its chief executive officer.

Provost Minor and I will soon initiate a national search for a new dean with the passion and vision to advance the important work that Yash Gupta has done as the inaugural dean of the Carey Business School. I am pleased to share that Executive Vice Dean Phillip Phan has agreed to serve as interim dean of the Carey Business School effective July 1, 2011.

We will, of course, continue to work closely with Dean Gupta for the remainder of the academic year, but we would like to take this opportunity to thank him for his outstanding efforts and wish him the best of luck in his future endeavors.

Sincerely,
Ronald J. Daniels

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

Now that consumer shipments of premium cigars have apparently been outlawed by the 2010 General Assembly, Del. Mike Smigiel says he'll introduce a bill in this fall's special session to make them legit again.

"The comptroller's office told me they had 300 complaints already," says Smigiel, a Republican representing Cecil, Caroline, Kent and Queen Anne's counties. "I have every indication from the comptroller's office" that they'll support a change making shipments of premium cigars (often defined as more than $2 apiece) OK for Web and catalog vendors. "We're working on this. We're going to fix it. It was an unintended consequence" of a bill requiring licensing of wholesalers of cigars and pipe tobacco. "It certainly was not meant to interfere with the individual" buyer of nice cigars by mail.

"We welcome the comptroller to do that. We opposed this legislation when it was introduced," said Craig Williamson of the Cigar Association of America. " We were disappointed to see the provision which prohibits Maryland consumers to purchase legal products from an Internet retailer."

What Williamson really wanted to know, however, about Comptroller Peter Franchot, was: “Do you know if he’s going to be enforcing it?" in the meantime before the ban gets fixed. "Everybody wants to know.”

I do not know the answer. Stay tuned.

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

And WBAL's Bill Vanko and I talk about it on the radio here.

Posted by Jay Hancock at 1:11 PM | Permalink | Comments (0)
Categories: Inflation/Deflation
        

Excerpts from a piece for Business Week by William K. Black, a key regulator during the savings & loan meltdown in the 1980s and an eloquent commentator on white-collar crime.

May 11 (Bloomberg) -- The defining characteristic of crony capitalism is the ability of favored elites to loot with impunity and the failure of regulators to do their jobs.

We have seen this in the financial crisis that started in 2008 and in an earlier era, when the savings-and-loan industry collapsed.

Unless you imprison the fraudsters, sophisticated financial scams grow ever more destructive.
It seems as if we have forgotten this lesson....

The two great lessons to draw from this epidemic of fraud is that if you don’t look for it, you don’t find it and that wherever you do look, you do find fraud. The FBI was concentrating on retail banking, or individual borrowers and smaller lenders. But the big problems were being created in the wholesale end of the business, where loans were pooled, packaged, sold and securitized. Because the FBI only looked at relatively small cases, it found only relatively small frauds.

Posted by Jay Hancock at 6:01 AM | Permalink | Comments (8)
        

Via Greg Mankiw, we get this from an Orange County Register blog. Lifeguards in Newport Beach, Calif., make six figures, get a sunblock allowance and can retire on 90 percent of their salary after working for 30 years.

According to a city report on lifeguard pay for the calendar year 2010, of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively. Even excluding benefits like health care and pension, more than half the lifeguards receive a total salary, including overtime pay, exceeding $100,000. And they also receive an annual allowance of $400 for “Sun Protection.” Many work four days a week, 10 hours a day.

In a phone conversation, Brent Jacobsen, president of the Lifeguard Management Association, defended the lifeguard pay in Newport Beach: “We have negotiated very fair and very reasonable salaries in conjunction with comparable positions and other cities up and down the coast.” “Lifeguard salaries here are well within the norm of other city employees.” And therein is the problem: Local public worker pay has become all too generous and out of line with private sector equivalents.

On face, the compensation packages for these guards are staggering. But take into consideration the retirement benefits being paid to currently retired lifeguards and lifeguards who will retire at these pay levels in the future and the problem is further compounded. Lifeguards are able to retire with 90 percent of their salary, after only 30 years of work at as early as the age of 50.

Posted by Jay Hancock at 5:52 AM | Permalink | Comments (2)
        

Sunday's column will be about the converse of Maryland's recent decision to allow wine shipments direct to consumers: Maryland's new ban on the shipment of cigars to consumers, which has smokers bombarding Maryland Comptroller Peter Franchot with emails. An excerpt from the column:

“Cigar enthusiasts across Maryland have flooded our emails and phone lines” with complaints, says Brian Berman, membership director for Cigar Rights of America, a nonprofit advocacy group based in Virginia.

Philadelphia-based Holt’s Cigar Co.... sent customers an email Tuesday describing the new Maryland law as “unconstitutional, anti-freedom, anti-choice and wholly un-American” and urged them to contact Franchot.

UPDATE: Here is a link to the full column, which begins:

Sometimes Bruce Parrish likes to smoke a Fuente Fuente OpusX when he mows his Westminster lawn. He can't buy the $20 Dominicans, described by Cigar.com as "perhaps the rarest and highest rated brand in the world," at his local tobacconist, he says.

So he takes advantage of the modern economy and orders them online from Pennsylvania, whence they arrive by mail. Or at least they used to.

Starting May 1 it became illegal to ship cigars directly to Maryland consumers, according to an interpretation of a 2010 law by Comptroller Peter Franchot. As a result, smokers have been bombarding Franchot with combustible emails.

Posted by Jay Hancock at 3:59 PM | Permalink | Comments (21)
Categories: Taxes
        

Which of course means raising taxes and cutting spending. Here's is Megan McArdle's gloss on her Atlantic column on Pimco's Bill Gross, who famously said he's bailing from Treasuries. He doesn't believe tax increases or spending cuts are catastrophic, or at least not as bad as the alternative. (He's also the guy who said America's invasion of Iraq put us in danger of losing a piece of our soul. So he has many sensible statements to his credit.)

Cutting the deficit will involve tax increases and spending cuts. But few in either party can admit that. McArdle:

But over the longer term, of course, he's [Gross] worried about the deficit. But unlike many deficit hawks, he doesn't care how we close it. I asked him specifically whether he though it mattered whether we closed the deficit using tax hikes or spending cuts, and though he said he personally thinks we ought to raise taxes on people like him, he professed himself basically indifferent between higher taxes or lower spending--he doesn't think that the economic effects of one are obviously worse than the other.

Keep that in mind when you hear people arguing about austerity:. People like Bill Gross are the ones we ultimately need to convince, because they're the ones whose defection will precipitate a crisis. And he's not buying either supply-side claims that tax hikes will cause disaster, or the super-Keynesian argument that we can't cut spending because the economy will contract so fast that we'll actually end up with a bigger deficit. All he cares about is the math: do the numbers add up, or not?

Posted by Jay Hancock at 11:29 AM | Permalink | Comments (5)
Categories: Slo-mo fiscal train crash
        

Megan McArdle begs to differ with the liberal pundits praising GM's bailout and recovery:

About $40 billion of the money that the government gave GM was converted to GM common stock. In the November IPO, the government made about $20 billion selling 478 million shares, leaving us with around $20 billion more to recoup on our remaining 26.5% stake in the company. That means we need to sell the approximately 365 million shares we have left at about $55 per share, net of underwriting and legal costs. At the current share price of $31, we'd be left with a loss somewhere north of $9 billion--plus the $1 billion we gave the "old GM" to wind things up, and the $2.1 billion worth of GM preferred stock we own. Since I don't know the details of the preferred transaction, I'll leave that out, which gives us a loss after expenses of $10 to $11 billion on our investment in GM.

But of course, that assumes that the current share price holds. It could well fall over the next few months--or when the government dumps an enormous new supply of GM stock on a market that isn't showing all that much enthusiasm for the product.

It also leaves out a very important extra: the $14 billion gift that the government seems to have handed the company, in the form of a special tax break:

Posted by Jay Hancock at 11:04 AM | Permalink | Comments (0)
        

Since we have a Celebrity Mortgage Victim category, we will mention Bair's real estate success in the interest of fair and balanced coverage.

From Calcualted Risk:

From Nick Grabbe at the Daily Hampshire Gazette: Sheila Bair to stay in DC, won't be teaching at UMass (ht Bob_in_MA)

[

Sheila] Bair [and her husband, Scott] Cooper ... bought their house in Amherst for $355,000 in 2002 [and] sold it in 2010 for $625,000.

That is an increase of 76%. The Case-Shiller house price index for Boston shows prices increased about 15% from 2002 to 2010, so maybe they remodeled their home in Amherst - or they did really well.

Posted by Jay Hancock at 10:18 AM | Permalink | Comments (0)
Categories: Celebrity mortgage victims
        

So calculates John Cogan in the WSJ. Thanks, Generations X and Y and Millennials!

...the typical husband and wife who reach age 66 and qualify for Social Security. Starting next year, this typical couple, receiving the average benefit, will begin collecting a combination of cash and health-care entitlement benefits that will total $1 million over their remaining expected lifetime.

According to my calculations based on government data, such married couples will begin receiving monthly Social Security checks that will, on average, total about $550,000 after inflation. They will receive health-care services paid for by Medicare that, on average, will total another $450,000 after inflation. The benefactors will be a generation of younger workers who are trying to support themselves and their families while paying taxes to finance the rest of government spending.

We cannot even remotely afford to make good on these promised benefits.

Posted by Jay Hancock at 10:08 AM | Permalink | Comments (7)
Categories: Slo-mo fiscal train crash
        

Yesterday's column noted a resurgence in the automobile business (in contrast with the housing business) and quoted Bryan Koser at Al Packer Ford saying that prices for used cars, especially cars that don't burn much gas, are soaring. So maybe homo economicus is somewhat rational after all.

Smart Money has a whole article on the subject:

A 2008 Ford Focus S sedan with 35,000 miles, for example, would have sold for $7,525 in May 2010, according to Kelley Blue Book; this month, a seller could reasonably expect $9,600. A Hyundai Elantra SE sedan and a Toyota Prius hatchback from 2008 with the same mileage can now fetch $10,700 and $17,950, respectively, up $1,400 and $4,650 from last year. And prices should remain high for at least the next three years, says Rene Abdalah, vice president at RVI Group, which insures leased car values.

Used car prices are rising in part because of a crimped supply. Slower sales of new cars over the last decade means the nation's fleet is getting really old. There aren't as many late-model pre-owneds for sale. Hey, copper is up. No reason used Corollas shouldn't be, too.

Of course the aging of the fleet combined with the slow economic recovery also means new car sales are up.

Posted by Jay Hancock at 11:34 AM | Permalink | Comments (3)
        

It's a nice thought. Maryland's ~$30 billion pension fund can supercharge the state's economy by disproportionately investing in Maryland. The wonks call it "home bias," and a couple academics at Northwestern find that it's pretty prevalent among state pension funds.

But they also find that the homer investments do a disservice to pensioners by significantly lagging behind the performance of other investments. And states with home-bias pension funds also tend to be states with high levels of corruption. Investment by Maryland's retirement system in Maryland companies, however, is quite modest. HT to Marylandreporter.com's Megan Poinski, who blogs about the study here.

From the paper's abstract:

Public pension funds’ own-state investments perform significantly worse than their out-of-state investments, an average of 3-4 percentage points of net IRR per year, and those that that overweight their portfolios towards home-state investments also perform worse overall. These underperformance patterns are not evident for other types of institutional investors, such as endowments, foundations and corporate pension funds. Overweighting in home state investments by public pension funds is greater in states with higher levels of corruption, although there is no positive correlation of underperformance with corruption for these investors. The overweighting and underperformance of local investments cost public pension funds between $0.9 and $1.2 billion per year, depending on the benchmark.

Posted by Jay Hancock at 10:31 AM | Permalink | Comments (2)
Categories: Finance
        

CKX Inc., owner of 19 Entertainment, which is the owner of American Idol, is being sold to Apollo Global Management. Is this a case of CKX selling out at the top?

Idol is getting pretty long in the tooth. The show badly misses Simon Cowell. Last year Idol generated fully a third of CKX's revenue -- $91 million of $273 million, according to financial statements. Idol revenue -- including show revenue, tours and merchandising, did grow from $79 million in 2009. Presumably margins will be higher for 2011 now that Cowell's huge salary is no longer on the books.

But the show's financials look to be trending down. Revenue was up last year largely because there were more hours of programming -- 56 in 2010 vs. 50 in 2009. Ryan Seacrest is getting more expensive. The 10K refers to a "reduction in the ratings bonus, a reduced producer fee and reduced revenue from sponsorship deals. Television ratings for American Idol declined in 2010 by approximately 10%. Cost of sales for American Idol increased $13.9 million due to $15.0 million of costs arising from Ryan Seacrest’s services agreement and Simon Fuller’s consulting fee, partially offset by lower touring costs due to fewer tour dates."

CKX also has a big piece of the Elvis empire. And Elvis's gross profit margins (profits minus cost of production but not counting operating expense, interest, taxes etc.) are higher than Idol's! Idol's gross margin was 64 percent last year. The gross margin at Graceland was 84 percent. (You can't tell net profits for Idol because the operating costs for 19 Entertainment include those for other shows.)

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (0)
        

Nice employment base you go there, Gov. Quinn. Shame if anything should happen to it. But we can protect you for a modest, multimillion-dollar consideration.

Give me a break. Six thousand Sears employees are going to move to North Carolina? Call their bluff, governor.

Hoffman Estates-based Sears reportedly has been in discussions with North Carolina, Texas, Tennessee and New Jersey to move there. The news was first reported in the Arlington Heights-based Daily Herald newspaper.

"We do owe it to our associates and shareholders to consider options and alternatives and intend to be very thoughtful and thorough in our deliberations," a Sears spokesman told the Daily Herald. "It is still very early in the process."

Sears has both state and local incentives set to expire in 2012, and the company has commissioned a study to measure the impact a move would have on the approximately 6,000 employees and 9,000 ancillary jobs throughout the suburbs, the Daily Herald says.

Posted by Jay Hancock at 2:01 PM | Permalink | Comments (3)
Categories: Corporate welfare
        

There are reasons to go slow on smart, computerized meters. But suggestions that they cause heart attacks or cancer or will read your mind are not among them. The more the smart-meter opposition resembles the anti-fluoride paranoids of the 1960s or whenever, the less credible it becomes. From comments:

I spoke with a previously healthy 30-something man this weekend who has developed heart attack symptoms 3X (3 costly ER trips) from the smart meter on his home. When the smart meter was removed, these ceased. However, now the neighbors' meters are bothering him and he is having to flee his home and try to find a place with no smart meters. Is this America or the old Soviet Union or Nazi Germany?

Posted by Jay Hancock at 12:52 PM | Permalink | Comments (9)
Categories: BGE/electricity
        

From the NYT:

The plant’s owner, the Exelon Corporation, had long known that corrosion was thinning most of these pipes. But rather than fix them, it repeatedly lowered the minimum thickness it deemed safe. By the time the pipe broke, Exelon had declared that pipe walls just three-hundredths of an inch thick — less than one-tenth the original minimum thickness — would be good enough.

Though no radioactive material was released, safety experts say that if enough pipes had ruptured during a reactor accident, the result could easily have been a nuclear catastrophe at a plant just 100 miles west of Chicago.

Exelon has agreed to buy Constellation Energy, BGE and the nuclear reactors at Calvert Cliffs.

Posted by Jay Hancock at 10:14 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Computerized stock trading is insidious in several ways. It hurts the small investor, who gets whipsawed by flash crashes and such. It undermines the notion of ownership and property rights. When you "own" a share for a millisecond, the incentives and obligations that go with ownership disappear. And it causes systemic risk and volatility, all under the defense of liquidity, stipulating that if a liquidity factor of 100 is good a liquidity factor of a trillion is better.

So it's good to see that Barron's Jim McTague has written a history of program trading starting with the 1987 stock market crash: Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market into a Casino.

Equity markets are now high-speed casinos rigged against individual investors. Now, Barron’s Washington Editor Jim McTague reveals the twin causes: high-frequency traders and blundering regulators. Learn why the Flash Crash happened (and will again)… discover titanic, uncontrolled forces driving market chaos… find rational strategies for profiting in this terrifying new environment!

The solution isn't to profit from the environment. It's to change the environment.

Posted by Jay Hancock at 8:43 AM | Permalink | Comments (1)
Categories: Finance
        

Another decent but not fabulous jobs report. Economy added 244,000 jobs, which is the best result since May 2010. This makes more than 1 million jobs that the economy has added on net since September. And -- hurray! -- it's private-sector corporations that are doing the hiring. They're taking the cash hoards they've been sitting on and making them available to the human resources department.

The seers had expected fewer than 200,000 jobs, based partly on a disappointing private-sector jobs survey that came out earlier this week and based partly on a spike in unemployment claims. Initial claims for jobless benefits have spiked in recent weeks to an eight-month high. But some analysts believe that has more to do with weirdness in the Oregon and New York claims systems and with temporary auto-plant shutdowns resulting from the Japanese tsunami than with overall economic torpor. Economy has now added 768,000 jobs this year.

Unemployment went from 8.8 percent to 9.0 percent, suggesting people who had previously been discouraged have begun looking for jobs again. To make a real dent in unemployment, the economy needs to start adding 400,000 jobs a month for an extended period.

Posted by Jay Hancock at 8:45 AM | Permalink | Comments (6)
Categories: The Great Recession
        

Brookings pitches an interesting report to be published next week. How will Baltimore do? Is "not as bad as Los Angeles" the best we can hope for? (The results are embargoed for publication until May 12.)

Next Thursday, May 12, the Brookings Institution Metropolitan Policy Program will release "Missed Opportunity: Transit and Jobs in Metropolitan America,” a groundbreaking report that measures how well the transit systems in the 100 largest metro areas connect workers to their jobs.

This is the first collection of data to analyze how many and what kinds of jobs can be accessed via transit – metro by metro.

Posted by Jay Hancock at 1:58 PM | Permalink | Comments (1)
        

Maryland is pressing ahead with smart, computerized meters. It would have been better if we had held back and let others make the mistakes that happen for all early adopters. It seems that hundreds of PG&E's smart meters in California got roasted by the heat and calculated that customers used more electricity than they really did.

This from the ABC TV station in San Francisco:

SAN FRANCISCO (KGO) -- PG&E will issue some customers refunds after the utility discovered a rare SmartMeter defect.

The meters, supplied by Landis+Gyr, occasionally run fast when experiencing a narrow band of high temperatures, resulting in a miscalculation of energy bills. The error affects fewer than 1,600 of the two million meters Landis+Gyr supplied to PG&E.

The meters will be replaced at no cost to customers. The utility will issue full refunds to customers who received inaccurate bills. The average refund will be about $40 per customer. PG&E will also issue a $25 credit for customer inconvenience and offer a free in-home energy audit to affected customers.

Posted by Jay Hancock at 6:04 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Maryland fell again in Chief Executive magazine's annual ranking of "best states for business." The state ranked 37th -- pretty poorly. That looks like it's down from 34th last year, although the magazine's chart seems to have some typos.

But Maryland's rank wasn't as bad as those of Illinois, New York and California, which scored 48th, 49th and 50th. Illinois and Maryland are distinguished by their inclusion in the "5-Year Biggest Losers" category for states with falling rankings. Illinois plunged 40 places, from 8th to 48th over that period, while Maryland fell 16 spots, from 21st. Of course that period coincides with the departure of Gov. Robert L. Ehrlich Jr., Maryland's first Republican governor in decades, and the inauguration of Democratic Gov. Martin O'Malley, who substantially raised taxes.

California and Illinois probably got negative marks partly for the miserable state of their budgets, which has earned them tons of bad publicity. If O'Malley hadn't raised taxes, Maryland's budget situation might have been as bad as theirs. The "winners" on the list are the usual suspects: southern states with cheap labor and low taxes. Texas, North Carolina and Florida were 1 through 3.

If the business climate in Florida is so great, why is the unemployment rate 11 percent? (Maryland unemployment is 6.9 percent.)

Posted by Jay Hancock at 5:36 PM | Permalink | Comments (15)
Categories: Corporate welfare
        

Three distinguished Harvard academics perform the task for which they've prepared all their lives: reading Goodnight Moon for the Harvard Crimson.

Posted by Jay Hancock at 4:25 PM | Permalink | Comments (0)
        

Former Mexican President Vicente Fox is correctly calling for the U.S. to end the war on drugs, which is killing his country, by legalizing them. Here he is in San Antonio:

"As a country, we are going through problems due to the fact that the United States consumes too many drugs," Fox, who served as Mexico's president from 2000-2006, told reporters Monday night before a speech at the Turkish-American Chamber of Commerce in San Antonio.

"I would recommend to legalize, de-penalize all drugs," Fox added.

Here he is in Houston:

Former Mexican President Vicente Fox said in Houston on Tuesday that the United States should legalize drugs to end the violence in Mexico.

During a speech at the University of Houston, Fox noted that Mexico is located between drug-producing nations in South America and the world's largest drug-consuming nation, the United States.

"We just happen to be in between," Fox said.

In the last few years, drug cartel violence has tarnished Mexico's image — hurting tourism and foreign direct investment, he said.

"We're paying a huge price," Fox told the audience of mostly students, who applauded his suggestion that the United States decriminalize drug consumption to reduce violence — as occurred when the U.S. repealed alcohol Prohibition in the 1930s.

Posted by Jay Hancock at 2:47 PM | Permalink | Comments (7)
Categories: War on Drugs
        

The national debt is $14 trillion. That is a lot of money. Even a trillion is a lot of money. I learned how much after reading this calculation by former math teacher Edward Hopkins, husband of my colleague Jamie Smith Hopkins. You could win trillions of bar bets by asking: How long would it take to count to a trillion?

How much is a trillion?

It's not easy to understand large numbers like billions and trillions, yet we hear about them all the time when people are discussing the economy.

What would happen if you tried to count to one trillion out loud?
Assuming five syllables per second and accounting for the fact that larger numbers have more syllables, I came up with an estimate.

Counting to 10 will take two seconds.

You will reach a hundred in about one minute. After 18 minutes you will hit a thousand. To get to a million takes 700 hours.

Now we're getting to the point where the time is getting too large to easily comprehend. Let's make counting a full-time job of eight hours a day, five days a week, 50 weeks a year. Counting to a million would take about 18 weeks, or from January to the first week in May. To reach 10 million would require four years of counting. If you started young and retired after 48 years of counting, you'd be at 100 million.

To continue we're going to need new counters to carry on the project.
If we employ each person for 50 years, we'll need a succession of 10 more people for a total of 11 lifetimes just to count to a billion.

Archaeologists believe the human race invented counting about 50,000 years ago. Counting to a trillion would take 15 times longer that that.

Posted by Jay Hancock at 6:06 AM | Permalink | Comments (1)
Categories: Slo-mo fiscal train crash
        

When Black & Decker's Nolan Archibald agreed to sell the company in 2009 and become executive chairman of the combined Stanley Black & Decker, he had already negotiated the terms of his new employment in fabulous detail. Archibald will make dozens of millions of dollars in "cost synergy bonus" depending on how well and how much he cuts costs at the merged company. The Archibald deal was agreed to and announced at the same time as the merger itself.

Constellation Energy's Mayo Shattuck is making a similar move in that company's buyout by Exelon Corp. He'll become executive chairman of the combined company, according to the announcement, keeping his family in Maryland but traveling a lot to Exelon's headquarters in Chicago. As we reported, Shattuck isn't getting any change-of-control loot from the Exelon merger beyond accelerations of options and so forth -- about $20 million.

So what deal did he negotiate with Exelon? What's he going to make in his new position? Why didn't they announce his terms as Black & Decker did with Archibald in the Stanley buyout?
Because he hasn't negotiated them yet, the company says.

Shattuck's "post-merger compensation has not yet been established and is not part of the merger agreement," Constellation spokesman Larry McDonnell said in response to my query.

My take: There are two possible reasons for Shattuck not to have nailed down the terms of his new job. 1) It might incite negative public opinion as the companies try to get approval for the merger. 2) Shattuck may already be thinking about moving on, perhaps to Wall Street. If the merger goes through next year, I wouldn't expect him to stick around very long at Exelon.

Posted by Jay Hancock at 5:05 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

Recently I wondered out loud how indepedent electricity marketers such as Washington Gas Energy Services would attract customers now that BGE has just about used up all the expensive electricity it bought before energy prices crashed. While BGE was locked in with the old prices it was easy for third parties to undercut it. That's why tens of thousands of households have switched to independent suppliers. You could save $10 or $15 a month depending on your use.

Now, however, it may be more difficult for the independents to beat BGE's standard price, which will be below 9 cents in the fall. WGES's "Get Green For Free" promotion, which ends May 6, is one way to market a product not strictly based on price. If you pay for half your power to be generated by wind (based on WGES buying energy credits from wind farms), WGES says it'll throw in the other 50 percent for free, so you'll be 100 percent wind. It's part price promotion, part ecology.

So based on this promotion the one-year, 100-percent wind deal from WGES is 9.9 cents per kilowatt hour. The same deal from Constellation Electric, according the the always indispensible Office of People's Counsel price comparison chart, is 10.39 cents/kwh.

Posted by Jay Hancock at 5:54 PM | Permalink | Comments (2)
Categories: BGE/electricity
        

A nice vignette of Charm City in 1861 by Jamie Malanowski in the NYT:

And Virginia has nothing like Baltimore, whose 250,000 residents make it the fourth-largest city in the nation, behind only New York, Brooklyn and Philadelphia. Baltimore’s political and cultural sympathies are mostly southern, its economic interests entirely northern. Baltimore’s financiers think like New Yorkers, its manufacturers like New Englanders, and its railroad men like they were from Illinois. It is indicative of the waning presence of slavery in Maryland that there are 25,000 free persons of color in Baltimore, but only 2,500 slaves.

Posted by Jay Hancock at 9:13 PM | Permalink | Comments (1)