The city announced an embarrassing, $200 million accounting mistake. From the finance department's explanation:

Under applicable accounting rules, when a construction project is completed, the project should be reclassified from one asset category (construction in-progress) to another (fixed assets) and the assets should be depreciated. The City recently discovered that some completed projects were misclassified as construction in-progress instead of fixed assets and therefore, not depreciated. Additionally, certain projects were classified as fixed assets that should have been expensed.

It's a mainly a balance-sheet problem, not on the income statement. So for an entity that's not in the habit of using assets as loan collateral or selling off assets to finance operations, it's not a huge deal. As the city says, "This restatement has no impact upon the City’s cash position or the cash position of the respective utilities and enterprise funds. As a result, the City’s ability to meet its outstanding debt obligations remains unchanged."

But as I said, embarrassing.

Posted by Jay Hancock at 5:39 PM | Permalink | Comments (1)
        

From the NYT:

Just last week, Léo Apotheker was shown the door after a tumultuous 11-month run atop Hewlett-Packard. His reward? $13.2 million in cash and stock severance, in addition to a sign-on package worth about $10 million, according to a corporate filing on Thursday.

At the end of August, Robert P. Kelly was handed severance worth $17.2 million in cash and stock when he was ousted as chief executive of Bank of New York Mellon after clashing with board members and senior managers. A few days later, Carol A. Bartz took home nearly $10 million from Yahoo after being fired from the troubled search giant.

Posted by Jay Hancock at 1:39 PM | Permalink | Comments (2)
        

Check out Mark Reutter's stories on minority contracting in Baltimore. P&J Contracting, which gave heavily to Mayor Stephanie Rawlings-Blake's campaign, won a contract to stabilize a building even though its bid was $146,000 higher. The reason: Competitor Bob Andrews' bid included only 27 percent minority- and women-owned participation, not 37 percent as required by the city:

While the mayor called the matter “an unfortunate misunderstanding,” Andrews, who had never before bid on a city contract, was bitter.

“This whole thing’s a joke,” he said after the meeting. “We don’t need this contract, but the people of Baltimore need to know that a lot of money is being wasted by misapplying MBE [minority business enterprise] goals.”

Here is Reutter's post on how P&J met the minority-participation rules: by hiring the owner's son.

Posted by Jay Hancock at 9:13 AM | Permalink | Comments (6)
Categories: Government & Business
        

Some are worried that baby boomers will start dumping stocks to finance their retirement, keeping prices low for a long time. That's not Barry Ritholtz's biggest worry. He's concerned that nobody will be waiting there to buy them:

My single biggest concern regarding equity markets is not a bear or a bull phase — its the wholesale abandonment of investing by the broader public. That is the reason it took 25 years to regain the 1929 peak — til 1954. It required an entire new generation to be born, grow up and start again. I figure we are about 40% of the way there now.

Posted by Jay Hancock at 9:03 AM | Permalink | Comments (4)
Categories: Stock Market
        

Very interesting story by Yinka Adegoke, who says that cable companies are holding private talks to get programmers to "unbundle" their shows. One of the drivers seems to be the soaring cost of sports programming. Reuters:

An "a la carte" menu of programming would give consumers who are not sports fans the freedom to drop high cost sports channels such as Walt Disney Co's (DIS.N) ESPN and ESPN 2 from basic packages. At around $4 a subscriber, ESPN is the most expensive channel in the U.S. cable business, according to SNL Kagan.

Posted by Jay Hancock at 5:07 PM | Permalink | Comments (1)
        

Jeff Salkin, the Maryland Public Television anchor, has revived MPT's most popular show. Wall Street Week is no longer on TV, and it no longer has longtime host Louis Rukeyser. (He died a few years ago.) But it's on the Web. The idea is to be the anti-CNBC, the anti-Mad Money. "No Shouting. Just Sage Counsel From Top Investment Pros" is the motto.

There's a weekly newsletter and regular online videos reminiscent of the interviews Rukeyser used to do with his stable of experts. This is Salkin's deal -- it's not MPT. But it tries to bring the same W$W vibe that had millions turning to public television produced in Owings Mills every Friday night.

Full disclosure: Salkin has me on all the time on his Your Money & Business show on MPT. And Georgia Marudas, former deputy business editor of The Sun, works on the new W$W.

Posted by Jay Hancock at 8:03 AM | Permalink | Comments (3)
Categories: Media
        

On Tuesday BGE was boasting about its improvement in J.D. Power's ratings of gas utilities, which just came out. BGE has historically also done OK in J.D. Power's scores for electric utilities, rating above average for the region. But the latest electric ratings came out before BGE's less-than-par performance after the recent storms. Thousands of households were out of power for many days.

UPDATE: BGE spokesman Rob Gould says I'm stretching when I say the search traffic reflects anger. Much of the searches may have been simply for information, he says. BGE was very active in social media and on the Web, so some of it reflects that activity, Gould says. OK, so I don't know the emotions of all the people who searched on BGE in those days. But this was a big negative story for BGE, just like the 2006 rate increases. Anger was certainly part of the mix.  

To get some idea of how impatient and focused BGE customers were, check out the Google trends graph below. The top graph tracks worldwide Web searches for BGE. The lower one tracks news mentions of BGE. The last time BGE had this much bad publicity was in 2006, right after the deregulatory rate caps came off and prices rose by the famous 72 percent.

Now look at the spike in BGE searches for August -- three times as much volume as in 2006. Yeah, fewer BGE customers may have been online in 2006. But the graphs still suggest that people get a lot more exercised about having no power at all than they do about what they pay for it. And they suggest that BGE might not do so well in the next J.D. Power poll.   

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (8)
Categories: BGE/electricity
        

Author Kathleen Sharp says the government isn't doing enough to fight health-care fraud, which some estimate costs hundreds of billions of dollars a year:

At the beginning of this year, the Justice Department had more than 1,300 whistle-blower cases under investigation, the bulk of them related to pharmaceuticals, hospital chains and health care companies. That’s up from the 900 or so cases that were stalled during the end of the Bush administration. To be fair, the department has long been understaffed when it comes to health care investigations. But in 2009, the Justice Department and the Department of Health and Human Services were given an additional $198 million to combat health care fraud. Neither the money nor a new task force seem to have helped much.

Last year, the Justice Department recovered $3 billion in false claims, $2.5 billion of that from health care cases. But that’s just a drop in the bucket. It’s gotten so that even if a case is settled, many pharmaceutical companies simply write it off as the cost of doing business.

Posted by Jay Hancock at 6:04 PM | Permalink | Comments (0)
Categories: Health Care
        

As many of you know, The Baltimore Sun will be setting up a tollgate for online readers in the next few weeks. Childs Walker has the story here. I'm glad we're giving this a try. Producing original news is expensive. The paper doesn't make as much money from online advertising as it does from print. And spending millions to report stories that you then give away for free doesn't seem like a great business model. My friends in online media disagree vehemently, however.

As Walker notes, one difference between the Sun's digital subscription and the NYT's is in the treatment of links from blogs, Facebook, Twitter etc. The Times limits you to free reads of 20 articles a month -- but only for clicking on the Times' site. You can read unlimited online NYT pieces if you access them from blogs -- or even if you copy and paste the headline into a search engine and click on the result. The Sun, however, Walker reports, "will count links from social media and other websites as part of a user's monthly allotment of 15 views."

So Len Lazarick at MarylandReporter.com wonders, what's a new aggregation site to do? Len:

"So my first reaction is that MarylandReporter.com’s State Roundup can’t very well stop linking to the comprehensive coverage in the Sun, even if it causes readers to drive into the limit. Maybe we should also subscribe to the other publications as well, and at least let readers know about coverage elsewhere, even if it is behind a wall.

"That’s my preliminary thought about the Sun’s new subscription charge. I’d be interested to hear what our readers think about this development, and what we should do about it in the roundup."

Posted by baltimoresun.com at 11:35 AM | Permalink | Comments (0)
Categories: Media
        

From USA Today:

WASHINGTON – The federal government has doled out more than $600 million in benefit payments to dead people over the past five years, a watchdog report says.

Posted by Jay Hancock at 3:11 PM | Permalink | Comments (0)
        

Of the Austrian economic school, that is. Here he is giving a lecture posted on the Mises site:

The triumph of crony capitalism occurred on October 3rd, 2008. The event was the enactment of TARP — the single greatest economic-policy abomination since the 1930s, or perhaps ever.

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (3)
Categories: The Great Recession
        

Stephen Roach also says quantitative easing (central bank buying longer-term government debt in addition to short-term) didn't work in Japan and won't work here:

Posted by Jay Hancock at 9:16 AM | Permalink | Comments (0)
        

Barry Ritholtz is tired of dumb media questions. (And when I say dumb media questions, I mean dumb stories assigned by editors and producers.) Ritholtz:

Whenever we get a day like today — down more than 500 points on the Dow at one point — my phone begins ringing with inquiries from various media.

They always ask the same question: What should investors be doing NOW?

That is the wrong question. The proper one is: What should investors have done in the past to prepare for an event like TODAY?

As answers, he provides various links.

Posted by Jay Hancock at 9:07 AM | Permalink | Comments (0)
Categories: Finance
        

Barry Rascovar says O'Malley hasn't seized on defense base relalignment to transform Maryland's transportation system:

Maryland had a golden opportunity — a once in a lifetime moment — to make this a transformational event.

It is estimated that by 2015, 80,000 highly educated consultants, contractors and military employees — many of them scientists and informational technology experts — will be working at or near the state’s two largest military bases, Aberdeen Proving Ground in Harford County and Fort George G. Meade in Anne Arundel County.

Other well-paid professionals have relocated to Fort Detrick in Frederick County, Joint Base Andrews Naval Air Facility in Prince George’s County and the new Walter Reed National Military Medical Center in Bethesda.

O'Malley has "done little" to improve the transportation infrastructure "to handle this population invasion," Rascovar says. Barry swallows exaggerated estimates of how many jobs BRAC is bringing. But perhaps that doesn't undermine his larger point, that O'Malley has missed opportunities for transport upgrades. The question then becomes: What are the opportunity costs if O'Malley had diverted money to do what Rascovar wants?

Posted by Jay Hancock at 8:56 AM | Permalink | Comments (2)
        

Tyler Cowen, quoted by Alice Korngold in her "Living and Working to 100":

“Online education will move from the add-on to the centerpiece,” Cowen told me. “Higher education will move towards a hybrid approach with top faculty teaching online, and motivational coaches working with students on a personal level.” Cowen sees the hybrid model making college education more affordable. He envisions new job opportunities in statistics, search, programming, and logic, “since you need people behind smart machines.” Cowen also envisions job growth in the motivational sector.

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (5)
Categories: Education
        

Friday is the deadline for bidding on slots at the state-owned Rocky Gap resort. The provisions of the offer also require bidders to take Rocky Gap, a longtime white elephant, off the state's hands. There was some doubt as to whether anybody would be interested and whether the state would be 0 for 3 in trying to get somebody to put slots out there. Now, reports the Post's John Wagner:

Landow said in an interview that his family-owned company will place a bid on Friday, when applications are also due for a slots site in downtown Baltimore, where 3,750 machines are allowed.

Landow said he would propose adding and upgrading other amenities at the lodge, which was financed by the state and has long struggled to become profitable. The property already includes a day spa and an 18-hole “Jack Nicholas Signature Golf Course.”

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (0)
Categories: Slots
        

Great stuff from Lapham's, although how the Hartwick trust was supposed to grow faster in the long run than the economy itself is never quite explained. GDP grows at a compound rate, too.

Because thanks to an eccentric New York lawyer in the 1930s, this college in a corner of the Catskills inherited a thousand-year trust that would not mature until the year 2936: a gift whose accumulated compound interest, the New York Times reported in 1961, “could ultimately shatter the nation’s financial structure.” The mossy stone walls and ivy-covered brickwork of Hartwick College were a ticking time-bomb of compounding interest—a very, very slowly ticking time bomb...

Ten years after Holdeen’s death, in a Pennsylvania courtroom in 1977, economist Jack Rothwell laid out the Armageddon that awaited the state. As the trustees of an increasingly vast fund, Holdeen’s descendants would gradually control ever-larger swaths of currency. The Holdeen Trusts, he argued, would grow until “They would absolutely own the world.”

“Any time you wanted to make a telephone call or take a trip…You would be paying money to the Holdeens,” added economic forecaster Michael Evans. “Everyone in the world would work for the Holdeens.”

Posted by Jay Hancock at 5:42 PM | Permalink | Comments (2)
        

George Soros, founder of the Open Society Institute, has made Forbes magazine's list of top 10 rich Americans for the first time. One reason: Soros has been investing in gold. He also raised cash in the spring before the stock market's summer swoon. Another reason: After Soros kicked outside investors out of his investment vehicle, he revealed more information to the Forbes researchers. Reports Reuters:

"We always thought we were low on our estimates of him, but this time we had more details bringing him to No. 7," said Forbes Senior Wealth Editor Luisa Kroll.

Posted by Jay Hancock at 2:33 PM | Permalink | Comments (3)
        

The stock of Constellation Energy Group closed at $39.66 on Tuesday, its highest price since 2008, when the financial crisis and imprudent borrowing almost drove the company into bankruptcy. This suggests that the arbs and other investors believe the deal with Exelon Corp. will go through. Constellation has agreed to be bought by Exelon in a merger valued roughly at $8 billion.

Institutional investors that I talk to were quite worried about how Gov. Martin O'Malley would react to the merger proposal. O'Malley has jousted with Constellation and subsidiary BGE for years, and previous attempted mergers by CEG and BGE have foundered on the rocks of regulatory resistance in Maryland. My impression is that people were expecting more price rebates for BGE customers and fewer green-energy requests in the O'Malley administration's filings that were made last week. The buoyancy of the stock price suggests they think things will work out. The Public Service Commission will ultimately make the decision, but it is composed mostly of O'Malley appointees.

Posted by Jay Hancock at 9:21 AM | Permalink | Comments (1)
Categories: BGE/electricity
        

I was surprised at how much the O'Malley administration wants the combined Exelon/Constellation Energy to raise its contribution to renewable energy in the state. But perhaps I shouldn't have been. Combined with his proposal for a big offshore wind farm and other efforts to green the state's energy portfolio, this makes clear that Gov. O'Malley sees renewable energy as one of the main legacies he wants to leave for his second term.

Exelon didn't appear to flinch in reaction. Don't forget that it's the Public Service Commission, not the O'Malley administration per se, which has to approve or reject the deal. But the PSC is largely an O'Malley creation. In any event, gone is the intense O'Malley administration focus on price reductions for customers of BGE, Constellation's subsidiary. Now he's all about the environment.

The risks raised by Malcolm Woolf, head of O'Malley's Energy Administration, are also worth mentioning. In the event that Exelon ever does an Enron and goes bankrupt, BGE must be protected as much as legally possible. Out-of-state ownership for an essential economic monopoly is full of potential problems. There is also the market-power problem, in which an Exelon-Constellation combo would give the company too much control over regional generation facilities -- even with the divestiture of several coal plants that the companies have proposed.

And, of course, requiring several hundred megawatts of new, green, Maryland generation from the combined company would only exacerbate the market concentration. Should be an interesting decision process.

Posted by Jay Hancock at 8:23 AM | Permalink | Comments (2)
Categories: BGE/electricity
        

Sen. Ben Cardin is going to a roofing manufacturer in Frederick this morning to promote a bill to accelerate depreciation for energy-efficient commercial roofing, WBAL reports.

Cardin says it would create 40,000 jobs by reducing the depreciation schedule from 39 years to 20 years. That's effectively a tax cut because it increases a business' deductions. This is the kind of targeted tax cut the country needs more of. (To fix the deficit we also need to commit to future tax increases elsewhere! And also cut spending!) Produces jobs. Conserves energy. Heck, Senator, why not just let businesses expense their new, green roofs? (That would make the biggest deduction of all.)

Posted by Jay Hancock at 9:00 AM | Permalink | Comments (1)
Categories: The Great Recession
        

Buildfax says its remodeling index, based on construction permits filed with local governments, hit its highest level since the index was started in 2004. That's not much of a history, and the index measures only the number of permits, not the value or size of the project. Even so, the year-over-year, 24 percent increase in the index shows something's going on. Click here to see the whole Buildfax release and fever chart for the indicator, which I was unable to reproduce.

Here's the canned quote:

Viewing the Economic Recovery Through Remodels

"As millions of Americans believe that they will not be able to secure a new home due to a variety of factors including tight credit, limited buyers and challenging job prospects, they are more and more turning to renovating and remodeling their current properties, sending remodeling activity to record levels," said Joe Emison, Vice President of Research and Development at BuildFax. "However, this remodeling boom is leaving many of these properties under-insured, as the value of these renovations are often not being captured by the homeowners' insurance companies."

Posted by Jay Hancock at 8:46 AM | Permalink | Comments (1)
Categories: Real estate
        

The $109 million Powerball winners came to the Maryland Lottery office this week to present their winning ticket. But they haven't decided whether to go public, Kayla Bawroski reports.

The Tuesday Hancock column was on how it would be crazy for these people to disclose their identity. Maybe they heeded the advice. But just in case, WBAL's Bill Vanko and I repeated the message on the radio this morning. Here is the clip.

Posted by Jay Hancock at 9:27 AM | Permalink | Comments (0)
        

Edward Ericson at the City Paper has a complete summary, inclutding the requisite skepticism, of the based-on-nothing Web reports that Nike might buy Under Armour.

There are many reasons why a Nike-UA deal is not going to happen. But here is the main one: Founder Kevin Plank owns 24 percent of Under Armour's shares. His brother Scott owns another 5 percent. The company is totally kicking butt. Nike is UA Enemy No. 1. Why on earth would the Planks sell out. To anybody? But especially to Nike?

Under Armour is doubling the size of its Baltimore headquarters, Jamie Smith Hopkins reports in today's paper. That does not sound like a company about to sell out to a competitor.

Posted by Jay Hancock at 9:05 AM | Permalink | Comments (4)
        

Victoria Worden of Bel Air called to say she thought her August BGE bill was too high. Late last month BGE meter readers were helping restore power, with the result that BGE couldn't read about 170,000 meters -- including Worden's. Instead BGE sent out estimated bills. In 2010 Worden's August bill was in the $50 range, she says. This year, after BGE estimated it, the August bill was way higher -- $75.50, she says. And the average temperature for this August was a degree cooler than last year, according to BGE.

"$75 is way out of line," Worden says. She's not even sure she ran the AC last month, and she expected the bill to be much lower. Certainly lower than the bill from this July, which was really really hot. Especially since, after Hurricane Irene, she says she didn't have any electricity during part of August for almost 40 hours! But her bills were about the same for both July and August.

UPDATE, 11 a.m.: BGE put out a press release on this this morning, saying: "Baltimore Gas and Electric Company (BGE) today announced that as a result of Hurricane Irene, meter readers were assigned to storm duty and did not read any gas or electric meters from Aug. 30 – Sept. 1. On August 29 and Sept. 2, some, but not all meters were read." BGE is saying 150,000 households were "affected," but the total number of homes with unread meters was 170,000, including those on budget billing. BGE's full press release is below the fold.

If your bill seems too high for August and it's a hassle, do what Worden did and call BGE at 410-685-0123. She says they agreed to bill her zero for August and then put everything on the September bill once they read the meter. (If your estimated bill proves to be too high, BGE is supposed to credit the overbilled amount the next time the meter is read.)

I had a similar experience. My July 2011 bill was $277, and I figured August would be way lower. But it wasn't. BGE estimated that I owe $252 for last month. My average daily kilowatt use in August, according to BGE's estimate, was 25 percent more than it was in August 2010 -- even though, as mentioned, this year's August was cooler than last year's. (I didn't lose power after the hurricane, however.)

I asked BGE for a response to all customers who may believe they were overbilled. (BGE doesn't give me any special treatment, and I didn't ask them to change my bill.) BGE has software that estimates bills when meter readers can't get out, says Jeannette Mills, the utility's senior vice president for customer relations. The estimate is based on actual, metered usage of similar customers, BGE says. Sometimes it overestimates. Sometimes it underestimates, Mills said.

But it doesn't make allowances for when your power goes out. So there are probably other folks out there like Worden, with overestimated bills.

Mills denies that this gives a big boost to BGE's cash flow. "There is no windfall," she said. "There is no significant positive cash flow increase." BGE spokesman Rob Gould says that eliminating estimated bills will be one of the benefits of smart meters, due to be installed starting next year. They'll beam your kilowatt use straight to headquarters every day.

If you're on budget billing, where BGE smooths out seasonal variations to make your invoice more or less the same every month, your bill probably wasn't significantly altered by an unread meter last month, BGE says.

Read BGE's full press release below:

Baltimore Gas and Electric Company Customers May Receive Estimated Bills Due to Hurricane Irene

Meter readers assigned to storm duty for several days during and following hurricane

Approximately 150,000 customers will receive estimated bills due to hurricane

BALTIMORE, Sept. 14, 2011 – Baltimore Gas and Electric Company (BGE) today announced that as a result of Hurricane Irene, meter readers were assigned to storm duty and did not read any gas or electric meters from Aug. 30 – Sept. 1. On August 29 and Sept. 2, some, but not all meters were read. Customers whose meters were not read will receive estimated bills. When an actual reading is taken prior to the mailing of next month’s bill, usage will self-correct to ensure customers are only billed for the energy they actually used during those months.
“Hurricane Irene was one of the biggest storms in BGE’s 200-year history and it forced us to suspend normal business operations for several days in order to focus our attention on restoring electric service to our customers as safely and as quickly as possible,” said Jeannette M. Mills, senior vice president and chief customer officer for BGE. “During large-scale storm restoration events such as Hurricane Irene, meter readers — like the majority of BGE’s 3,000 employees — have storm assignments that are different from their normal day-to-day jobs. BGE’s meter readers were dispatched to address public safety concerns during and in the hours and immediate days following Hurricane Irene. Many of them responded to reports of downed wires and sat in vehicles near downed wires to ensure the safety of others until a crew could respond and de-energize the wires or restore service. In this capacity, meter readers played a crucial role in our efforts to keep our customers and employees safe during this massive restoration effort.”
To inform the approximately 150,000 customers affected by the estimated meter readings caused by Hurricane Irene, BGE employed the use of its automated telephone dialing system and attempted to contact all of these customers. Based on reports generated following these calls, BGE believes it successfully reached approximately 86 percent of these customers.
To further assist customers with monthly bills, BGE offers enrollment into its Budget Billing program which spreads payments out over a 12 month period so customers aren’t as affected by seasonal increases in usage. Additionally, customers are encouraged to contact BGE early if they are having trouble paying their bill to discuss alternative payment options.
BGE, www.bge.com, headquartered in Baltimore, is Maryland’s largest gas and electric utility, delivering power to more than 1.2 million electric customers and more than 640,000 natural gas customers in Central Maryland. The company’s approximately 3,000 employees are committed to the safe and reliable delivery of gas and electricity, as well as enhanced energy management, conservation, environmental stewardship and community assistance. BGE is a subsidiary of Constellation Energy, www.constellation.com, a FORTUNE 500 company also headquartered in Baltimore, with subsidiaries that generate, sell and provide other energy-related services to customers throughout North America.
# # #

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (29)
Categories: BGE/electricity
        

As the markets imply a virtual certainty that Greece will default, possibly triggering a new round of contagion and banking crises, Jeff Kleintop, on thestreet.com, says it might not be that big a deal:

If Greece defaults, and there are a number of reasons why that may not happen, the impact may be more akin to Argentina than Lehman Brothers. In December 2001, the government of Argentina initiated the largest government debt default on record, suspending interest payments and principal repayments on bond issues with a face value of more than $81 billion. Many large global financial institutions that held Argentinean debt were still undercapitalized following the 2001 recession and took substantial losses, yet a global financial crisis did not take place and the global recovery continued.

Here is the famous Der Spiegel article on Germany preparing for the possibility that Greece could leave the Euro zone.

Posted by Jay Hancock at 9:25 AM | Permalink | Comments (0)
Categories: The Great Recession
        

I don't know enough about the Maxim case, covered by Andrea Walker in today's paper, to have an opinion on whether it should have been debarred from the Medicaid program. I do know that time after time after time, defense and health-care contractors cheat the government and reap only mild consequences.

Check out the Project on Government Oversight's Contractor Misconduct Database. Lockheed Martin is at the top of the list, although a quick glance seems to show that most of the violations are relatively minor. Even so, at many companies serious fraud takes place and still the companies are allowed to continue doing business with the government. I quote FraudBlawg:

There have been zero debarment actions in the past fifteen years against the government’s largest (top 100) suppliers of goods and services, despite hundreds of billions of taxpayer dollars lost to fraud. In fact, many of the worst offenders continue to receive taxpayer money and continue to be awarded the largest government contracts.

Posted by Jay Hancock at 9:15 AM | Permalink | Comments (1)
Categories: Health Care
        

Robert Half International, a staffing firm, seems to be questioning the way that fired Yahoo! CEO Carol Bartz went out the door, with F-bombs and vitriol. Robert Half is offering interviews with its media experts who will opine on whether Ms. Bartz's exit was appropriate and exemplary.

Good morning Jay, The recent firing of a top Yahoo executive is grabbing headlines for both the way she was given the boot and how she coped with it. Is it ever ok to fire an employee via email? If your boss was a ‘doofus,’ is it ok to tell the world? A local expert from staffing firm Robert Half can discuss: • Tips to deal with being fired • The appropriate way to let an employee go • How to get your career back on track after termination If you’re interested in an interview, I’m happy to arrange it.

Posted by Jay Hancock at 1:15 PM | Permalink | Comments (1)
        

We want all public servants to be paid adequately. To reward them for their service. To compete with the private sector for talent. To pay for expertise. To incentivize smart people to go into government. To remove temptations to accept bribes. I would argue that judges especially need to be well paid, given their role at the center of dispute processes and the training needed to navigate the law. It's more important to have a smart judge than a smart governor.

Now everybody seems to agree that Maryland judges need a raise, as recounted by Megan Poinski of MarylandReporter.com in the Daily Record. Here are current Maryland judge salaries. Inadequate or not?

Current judicial salaries in Maryland are:

- $162,352 for Court of Appeals judges, making them the 17th best-paid high court judges. The chief judge is paid $181,352. But adjusted for cost of living in Maryland, those salaries are equivalent to $129,944 and $145,151.

- $149,552 for Court of Special Appeals judges, earning a ranking as the 15th-best paid intermediate appellate judges. The chief judge makes $152,552. Adjusted for cost of living, those salaries are $119,700 and $122,100.

- $140,352 for Circuit Court judges, earning a ranking as the 17th-best paid trial court judges in the nation. However, with cost of living factored in, that paycheck is equivalent to $112,336.

- District Court judges were not included in the survey, but they are paid $127,252. Adjusted for cost of living, that is $101,850.

Source: National Center for State Courts

Posted by Jay Hancock at 9:56 AM | Permalink | Comments (1)
        

See the chart below from data compiled by LinkedIn via Social Beat. It shows the vital statistics of entrepreneurs, which Maryland needs more of. A recent column grew out of a conversation with DBED Secretary Chris Johansson and DLLR Secretary Alex Sanchez. They talked about the need to turn more of Maryland's prodigious research and development portfolio into commercial sales -- in other words, how to make Maryland more entrepreneurial.

Readers know that I believe Maryland's high personal income tax is an impediment to growth and entrepreneurs. (Small companies are frequently organized as partnerships, S corps or LLCs, which are taxed at the personal level.) But the map below gives contrary evidence, showing the most entrepreneurial states to be California and New York, which are hardly low-tax havens. Also look at the list of entrepreneurial schools -- UVA, but no Maryland. The University of Maryland has been doing a good job of trying to foster entrepreneurial spirit, but it needs to keep up the effort.

Posted by Jay Hancock at 9:49 AM | Permalink | Comments (2)
        

Don't buy stock in Target, says Citi, in the WSJ via Tyler Cowen. Buy stock in companies that cater to the rich and the lower-middle. The middle is shrinking.

Citigroup calls the phenomenon the “Consumer Hourglass Theory” and since 2009 has urged investors to focus on companies best positioned to cater to the highest-income and lowest-income consumers. It created an index of 25 companies, including Estée Lauder Cos. and Saks at the top of the hourglass and Family Dollar Stores Inc. and Kellogg Co. at the bottom.

Posted by Jay Hancock at 9:01 AM | Permalink | Comments (0)
Categories: The Great Recession
        

Maryland Public Service Commission to Hear Public Comment on Hurricane Irene Outages

(BALTIMORE)—The Maryland Public Service Commission (Commission) will hold hearings to receive public comment related to Hurricane Irene. These public hearings, part of Case No. 9279, pertain to electric service interruptions to BGE customers due to the hurricane. In the Commission’s September 1 Order No. 83406, it was noted that “Hurricane Irene severely impacted electrical service to a significant portion of the State of Maryland beginning on August 27, 2011 and, in some instances, the lack of electrical service continues as of the date of this Order.

 Because of questions that continue to be raised related to storm preparedness and storm restoration efforts, the Commission will conduct a consolidated inquiry to review the preparedness and performance of the utilities in responding to the major outages…” As part of that inquiry, the Commission will hold public hearings as follows:

• Tuesday, September 27, 7 p.m. Baltimore County Office Building, Room 106 111 W. Chesapeake Avenue Towson, Maryland

• Tuesday, October 11, 7 p.m. Wohlman Assembly Hall War Memorial Building, 1st Floor 101 N. Gay Street Baltimore, Maryland

Individuals who cannot attend in person may send written comments to the Commission by October 17, 2011. Originally signed paper comments should be addressed to David J. Collins, Executive Secretary, Maryland Public Service Commission, William Donald Schaefer Tower, 6 St. Paul Street, 16th Floor, Baltimore, Maryland 21202, and reference “Case No. 9279 – Public Comment.”

In the event additional evening hearings for public comment are scheduled regarding the preparedness and performance of other electric utilities in the State, the Commission will issue a further notice with the time, date and location of each such hearing. ##

Posted by Jay Hancock at 3:24 PM | Permalink | Comments (16)
Categories: BGE/electricity
        

From Barry Rascovar's column today:

State and county bureaucracies are not known for responding with alacrity to consumer complaints, especially when they involve infrastructure repairs.

Example: Before agencies even noticed, 100 million gallons of raw sewage had spilled into the Patapsco River during the last hurricane due to broken, malfunctioning or out of service sewage pumping stations. By the time bureaucrats stemmed this outflow of human waste, perhaps twice as much effluent had polluted the Chesapeake Bay.

Imagine what utility repairs after Irene would have been like had local governments — desperate to trim staffing to balance their budgets — were put in charge.

Imagine if Montgomery County, instead of Pepco, had been responsible for restoring customer outages after last winter’s blizzard. As poorly as Pepco performed, local government would have had been even more dilatory.

Posted by Jay Hancock at 10:56 AM | Permalink | Comments (4)
Categories: BGE/electricity
        

President Obama's jobs proposal would help stabilize confidence and keep the U.S. from sliding back into recession.

 The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.

 The plan would cost about $450 billion, about $250 billion in tax cuts and $200 billion in spending increases.

 Many of the president's proposals are unlikely to pass Congress, but the most important have a chance of winning bipartisan support.

President Obama’s much-anticipated jobs plan is a laudable effort to support the struggling economy. The plan would go a long way toward stabilizing confidence, forestalling another recession, and jump-starting a self-sustaining economic expansion.

Posted by Jay Hancock at 10:45 AM | Permalink | Comments (3)
Categories: The Great Recession
        

"Everything in this bill will be paid for. Everything," says President Obama. Perhaps it won't shock you if this turns out to be wrong.

The job of paying or not paying for things will almost certainly be left up to the joint panel known as the supercommittee, which faces a Nov. 23 deadline. But Obama kept saying to Congress, you should pass this stimulus now. And there is a decent chance that the Republican-flavored components of the Obama plan will be passed by the full Congress in the next few weeks.

UPDATE: cf. Eric Cantor's comments here (WP) on tax cuts, reforming regulation. "We could do these right away."

Extend and expand the payroll tax cut. Give tax credits to companies that hire the unemployed. Throw in some public infrastructure spending and you could get a $300 billion or $400 billion stimulus passed by Congress and signed in to law by mid October. Then you tell the supercommitee: OK, go pay for it with future program cuts and tax increases.

And what are the chances of that? Given what we saw this summer it seems highly likely that the supercommitee will fail to get a deal by Thanksgivingl, setting off the $1.2 trillion "trigger" of automatic spending cuts. That's a decent amount of reduction in projected spending, but wouldn't pay for the Son of Stimulus proposed tonight by the president. He's asking the supercommitee to make its cuts required in this summer's debt-ceiling pact and then pay for the new stimulus on top of that.

There seems to be at least a better-than-even chance that tax cuts will be extended and expanded -- and then we'll return to gridlock, with the long-term fiscal situation looking even worse.

Posted by Jay Hancock at 8:10 PM | Permalink | Comments (13)
Categories: Slo-mo fiscal train crash
        

USA Today writes a "Math Tips For the Rest of Us" squib and in turn has to get some math tips from Dean Baker and Alex Tabarrok.

In USA Today's original item, one tip said: “That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise.”

Alex and Dean correctly go bonkers. Tax brackets are marginal. If the rate under $50,000 is 10 percent and the rate over $50,000 is 40 percent, it doesn't mean you pay tax of $20,400 if you earn $51,000 -- or 40 percent on all your income. You pay 40 percent only on the amount that's more than $50,000 -- in this case, $1,000. A "cliff" is what fiscal pros call situations in which an extxra bit of income or assets subjects the entire amount to a new rate. Tax cliffs are pretty rare in this country.

Now USA Today has corrected the item, which now says:

A hefty raise might not be as big as it looks. Extra money could bump you into the next tax bracket, which means you’ll pay a higher tax rate on earnings above a certain threshold. Relax: Your earnings below that threshold are still taxed at the previous, lower tax rate.

Posted by Jay Hancock at 11:51 AM | Permalink | Comments (5)
Categories: Taxes
        

From the Progressive Policy Institute via Michael Mandel, we learn about the proud, the few, the occupations that have been adding jobs in the terrible economy. Computers and health care are no surprise. Mandel thinks the increase in agriculture jobs is related to high crop prices. He's a little puzzled about the lawyers.

The 50-cent analysis on the growth in "protective services" might be that folks are stocking up on security systems and guards in a time of uncertainty. I assume much of the growth is coming in private-sector jobs.

Posted by Jay Hancock at 9:19 AM | Permalink | Comments (0)
Categories: The Great Recession
        

Rep. Dutch Ruppersberger said yesterday he'll introduce a bill to set up a separate federal fund to protect donations from people who give the government more than they owe in taxes to reduce the federal debt. It's a quaint idea for a noble-hearted but quaint practice. According to Ruppersberger's press release, people make donations averaging $500 almost every day to pay down the federal debt, which now is pushing toward $15 trillion. But the checks are deposited in the Treasury's general fund, where they could be spent on a bridge to nowhere or anything else.

The idea of sequestering debt-reduction dollars is appealing, just like the "lock box" for the Social Security trust fund. It's nice to know that dollars with "my" name on them are being spent on what I intended. But money is fungible. A dollar in Washington is a dollar in Washington no matter what account it's in. Congress negates debt-reduction donations with new deficit spending every day. Perhaps Ruppersberger's Restoring Integrity to Public Debt Donations Act would encourage more donations and thus marginally reduce the national debt that way.

But any genuine debt reduction will require the force of tax and spending law passed by Congress, a much tougher proposition.

UPDATE: Ruppersberger Press Secretary Jaime Lennon says:

Hi Jay – just a quick correction to your blog item. Donations on average are UNDER $500, many are much less. Some people donate spare change. Also, there isn’t a box you can check on your tax return to donate. Citizens send in checks to the Bureau of Public Debt or can make donations via the bureau’s website.

The point of the bill isn’t to encourage donations – just to make sure the donations are used for their intended purpose. I am sure the patriotic Americans who donate their hard-earned money to this cause don’t see this bill as purely symbolic!

Posted by Jay Hancock at 8:59 AM | Permalink | Comments (11)
Categories: Slo-mo fiscal train crash
        

Pay little attention to those who say the August jobs report isn't as bad as it looks because of the Verizon strike. 45,000 Verizon workers were on strike during the week that the Labor Department surveyed employers. So the optimistic reading is that rather than stay level last month the economy added 45,000 jobs. Doesn't matter much. Addition of 45,000 jobs or additional of zero jobs -- that's far less than is needed to lower the unemployment rate.

This -- in combo with the latest consumer-confidence reading and other weak indicators -- will add to worries about a double-dip recession. And it will put added pressure on Obama when he gives his jobs speech. It also raises odds that the Fed will launch new monetary stimulus in the form of buying longer-term debt. (Normally the Fed adds money to the economy by buying short-term Treasuries, effectively lowering short-term rates. But short-term rates are already basically zero.)

Also discouraging are the revisions to previous monthly jobs reports. Remember the relief rally last month after BLS reported that the economy added 117,000 jobs in July? That got downgraded to 85,000 jobs in today's report. June got demoted from a gain of 46,000 to a gain of 20,000.

The economy really is at stall speed. But does that mean it will start diving? The Economist magazine said this week that the U.S. economy is already so prostrate it's hard to imagine where new economic decline and layoffs could come from. The housing market is at rock bottom. Manufacturing is mean and lean. Well, how about state and local government? And Wall Street?

Posted by Jay Hancock at 8:44 AM | Permalink | Comments (11)
Categories: The Great Recession
        

Speaker of the House Mike Busch called me, apropros of my earlier post on the possiblity of BGE giving priority to bigshots for power restoration, to tell me tongue-in-cheek that he got left off BGE's secret list.

"I've been out since Saturday," Busch, who lives in Annapolis, said Thursday morning. "Everybody in my community looks at me" and wonders if he's really important, "I said I'm calling Jay Hancock."

Like thousands of other householders, Busch can testify that you take electricity for granted until you lose it. No fridge. No lights after 8. "It's amazing how much you don't realize the importance of electric power."

BGE says it has no secret list to restore power first for political heavyweights. Nor should it. The darkness in the Busch neighborhood supports BGE's assertion. The Speaker of the Maryland House of Delegates: wielder of power, master of billions -- and just another hapless BGE customer, stumbling around in the gloom with flashlights.

Posted by Jay Hancock at 11:28 AM | Permalink | Comments (6)
Categories: BGE/electricity
        

AT&T and T-Mobile, who will be fighting a Justice Department attempt to block their merger, say they'll bring home 5,000 call-center jobs if the deal is approved. From Bloomberg:

The company, which would become the nation’s biggest mobile-phone carrier after the acquisition, said today in a statement that it wouldn’t cut any U.S. wireless call-center jobs as a result of the purchase. The jobs plan doesn’t change Dallas-based AT&T’s forecasts for savings from the deal, it said.

Michael Mandel seems to think that AT&T's jobs promise along with its massive capital investment should earn it a pass on antitrust enforcement. It launches an interesting train of thought. Lax antitrust enforcement would certainly make the U.S. more attractive to large multinationals, especially given Europe's stricter regime. But at what cost to consumers?

Mandel:

AT&T is the company which is putting the most money into the U.S….almost $20 billion in capital spending in 2010. AT&T is also planning to bring back call center jobs from overseas. AT&T is also getting sued by the Justice Department to block the merger with T-Mobile.

Frankly, this sends a signal to U.S. companies that getting out of the reach of government regulators by going overseas is the right strategy.

Posted by Jay Hancock at 8:40 AM | Permalink | Comments (6)
        

“Although same-store sales and customer traffic levels remained positive in July, restaurant operators’ outlook for the economy took a pessimistic turn,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “This survey month was burdened with the debt ceiling crisis and the downgrade in the nation’s credit rating, which added an additional layer of uncertainty in an already fragile economic recovery.”

Posted by Jay Hancock at 8:27 AM | Permalink | Comments (0)
        

So says Dr. Doom on Bloomberg TV:

“We’ve reached a stall speed in the economy, not just in the U.S., but in the euro zone and the UK. We see probably a 60% probability of recession next year and unfortunately we’re running out of policy tools. Every country is doing fiscal austerity and there will be a fiscal drag. The ability to backstop the banks is now impossible because of political constraints and sovereigns cannot bail out their own distressed banks because they are distressed themselves.”

Posted by Jay Hancock at 8:14 AM | Permalink | Comments (1)
Categories: The Great Recession