Lines for major rock concerts or the latest Star Trek film are one thing, but who are those folks camping out this week at the University of Maryland BioPark? They are executives from biotech companies anxious to apply for Maryland's $6 million in biotech tax credits.

What started out as an overnight event last summer has become something bigger: The line to apply for tax credits formed Friday morning in advance of when the Maryland Department of Business and Economic Development begins accepting applications Wednesday at 9 a.m. for this year's program.

Is this good or bad? It certainly indicates a strong demand at a time when private capital is hard to find. Of course, it should be noted that applicants (or in some cases, their surrogates) aren't exactly roughing it. They get to stay in an air-conditioned conference room and have access to showers and bathrooms. 

Continue reading "Biotech-apalooza" »

Posted by Peter Jensen at 2:06 PM | Permalink | Comments (0)
Categories: Economic recovery
        

Chrysler filed for bankruptcy protection Thursday and announced it will temporarily halt most of its vehicle production while it completes a deal with Italian carmaker Fiat designed to revive its tattered fortunes.

President Obama said he had long hoped to stave off bankruptcy for the nation's third-largest automaker, but said Thursday that it had become clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt.

Obama attacked a group of hedge fund and private investment managers for refusing to share the financial sacrifices made by the United Auto Workers, banks, Fiat and other stakeholders to set the stage for the Fiat merger without a bankruptcy filing. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.

"No one should be confused about what a bankruptcy process means," President Obama said in a midday announcement. "This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler's revival."

Chrysler hopes to emerge from bankruptcy in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

But Chrysler's situation remains fraught with peril. The hedge funds and other investors could significantly delay the hoped for swift transformation of the company if the New York bankruptcy court judge is sympathetic to their arguments or opens the door to reorganization proposals from other creditors.

The course of the Chrysler bankruptcy will be watched closely by GM workers, dealers and investors. A similar standoff with private holders of GM debt could lead to a similar bankruptcy with similar perils.

Posted by Larry Williams at 6:01 AM | Permalink | Comments (0)
Categories: Economic recovery
        

Economists expect a late year economic recovery, but their conviction appears failing.

Forecasters predict more than 630,000 jobs will be lost in April—an annual pace exceeding 7.5 million. Meltdowns at GM and Chrysler portend more hemorrhaging and depression-like conditions in the Midwest.

 GM said Monday it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take stock in exchange for half GM's government debt as part of a major restructuring effort that would leave current shareholders holding just 1 percent of the company.

GM said in a news release that it will ask the government to take 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1.

In addition, GM is offering the United Auto Workers stock for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

Posted by Larry Williams at 9:42 AM | Permalink | Comments (0)
Categories: Economic recovery
        

A law that is expected to dramatically increase the size and scope of AmeriCorps, the government's largest volunteer organization and the domestic equivalent of the Peace Corps was signed by President Barack Obama on Tuesday

That's good news for Maryland, where AmeriCorps already makes big contributions in dozens of communities. Some 1,300 of the organization's volunteers lead the efforts of thousands more across the state.  AmeriCorps contributions are particularly important when the economy is down and government services are being cut back or eliminated, as they are today.

Democrats and Republicans alike have come to view this national service program as a wise, cost-effective investment in the nation's future. Based on past patterns, some 250,000 AmeriCorps members are expected to recruit or manage 7 million unpaid volunteers.  

  U.S. Sen. Barbara A. Mikulski of Maryland, who co-sponsored the legislation with Sen. Edward M. Kennedy of Massachusetts, was front and center at Tuesday's White House signing ceremony. She said the AmeriCorps expansion "will pay dividends long beyond anything that we can imagine."

The new legislation will expand the program's mission by creating new "service corps" devoted to clean energy and health care.

Lawmakers aren't asking Americans to serve for nothing. Would-be volunteers interested in programs ranging from tutoring disadvantaged kids to building affordable housing will also be offered an array of new educational incentives. Those include an increase in the college stipend to $5,350 for a year of service, and a $1,000 education award for older participants who volunteer for at least 350 hours, which can be passed on to their children or grandchildren.

Posted by Larry Williams at 4:17 PM | Permalink | Comments (1)
Categories: Economic recovery
        

Those with hopes for an early economic recovery should take a close look at what has happened to the Fortune 500 in 2008. America's 500 biggest companies earned $98.9 billion, down 85 percent from $645.2 billion the previous year. "And 128 companies on the list had losses, totalling $519.3 billion. The previous year, just 57 Fortune 500 companies lost money, for a total of $116.7 billion," Fortune said in its just published annual review.

Energy companies - Exxon Mobil, Chevron and Conoco Phillips - captured three of the five top spots on the list with Wal-Mart number two and  and Geneeral Electric fifth.

Posted by Larry Williams at 9:12 AM | Permalink | Comments (0)
Categories: Economic recovery
        

The Federal Reserve recently reported that in 2007 the net worth of the typical African American family was only 10 percent of the net worth of the typical white family — down from 12 percent in 2004. Put another way: For every $1 held by whites five years ago, blacks had 12 cents. Three years later, they had a dime.

The staggering statistic has taken some powerful lawmakers by surprise. Participants in a wealth gap summit on Capitol Hill last month said that House Majority Leader Steny Hoyer, who attended the event, was shocked to learn the extent of the disparity.

But incredulity is one thing; closing the gap is another. And congressional lawmakers with that goal in mind face a series of barriers to getting the job done. Not only is there little recognition that such a divide exists, but the causes, according to reform advocates, are so rooted in history and ingrained in policy that they're tough to iron out. Furthermore, the solutions reside largely in tax code reforms - among the thorniest issues to tackle on Capitol Hill. Advocates for closing the wealth gap say that congressional lawmakers are well behind the curve.

Continue reading "The African American Wealth Gap " »

Posted by Larry Williams at 11:30 AM | Permalink | Comments (3)
Categories: Economic recovery, National politics
        

Getting the boot is bad enough. When it comes from the president of the United States that's a real kick in the pants. But don't feel too bad for General Motors Corp. chief executive Rick Wagoner who was forced out by the Obama administration last week. He'll be walking out the door with about $21 million in pension benefits and deferred compensation, according to a report in The Wall Street Journal. That's what you call a soft landing.

 As a GM stockholder, Mr. Wagoner's taken a hit like everyone else. The value of his 208,000 shares, worth $3.9 million last year, dropped to $560,000 as of January 31, when the company last reported it.  And if GM is forced to file for bankruptcy protection, Mr. Wagoner's pension earned over his 31 years there could decline as well, a compensation consultant told The Journal. Still, that's a retirement package with lots of mileage, unlike the sports utility vehicles and trucks the GM executive promoted.

Posted by Ann Lolordo at 6:00 AM | Permalink | Comments (0)
Categories: Economic recovery
        

By midday, more than 4,000 visitors had spent hours standing in lines twisting in front of booths manned by 89 organizations with jobs to offer in Maryland. The prospective employers ranged from the giant Johns Hopkins Health System Corp. to the Maryland Zoo in Baltimore, the Secret Service and Wendy's. All of these organizations were recruited by Congressman Elijah E. Cummings, who sponsors a job fair every year about this time.

Maryland unemployment as measured by the Labor Department's Bureau of Labor Statistics jumped to 6.7 percent in February as compared to a 4.6 percent average for 2008. Nationally, a report expected this Friday is expected to show unemployment closer to double digits.

In Baltimore, some of those at Monday's job fair were disappointed to be referred to the recruiting company's Web site. But others were encouraged that so many institutions were actually hiring. A number of those trekking from booth to booth were currently employed but anxious about their future employment security. That's a major danger of recession -- fears about the future become a self-fufilling prophecy as worried employers let workers go. 

Posted by Larry Williams at 5:56 PM | Permalink | Comments (0)
Categories: Economic recovery
        

The good news Monday was that Rick Wagoner -- who made enough bad decisions through his nine years at the helm of General Motors to send the company's stock from $80 a share to less then $4 a share -- has been politely shown the door by President Barack Obama, who hopes the failing auto giant can be rescued with radical downsizing and streamlining.

The bad news was that Wall Street reacted to the news that the Obama White House was overseeing the GM rescue effort by sending the company's stock down 75 cents, or 20.7 percent, to $2.87. The Dow Jones Industrial Average plunged more than 280 points.

With his speech announcing the rescue effort, Mr. Obama underscored the extent to which the government is now dictating terms to two of the country's iconic corporations -- GM and Chrysler -- much as it has already taken an ownership stake in banks, the insurance giant AIG and housing titans Fannie Mae and Freddie Mac.

Critics are questioning whether the removal of Mr. Wagoner will succeed in displacing the entrenched management culture that brought GM to this point and whether the White House had adequate expertise to oversee its attempted rescue.

Mr. Obama gave GM 60 days and Chrysler, another ailing car maker, 30 days to come up with a workable recovery plan. If the new leadership teams at the automakers fail satisfy a White House auto industry task force, the companies could be forced into bankruptcy with continued government financial support. That would set the stage for more concessions from the United Auto Workers Union, which represents GM workers, and bond holders who hold more than $26 billion in unsecured GM debt.

GM and Chrysler employ about 140,000 workers in the U.S. In February, GM said it intended to cut 47,000 jobs around the globe, or almost 20 percent of its work force, close hundreds of dealerships and focus on four core brands — Chevrolet, Cadillac, GMC and Buick.

Posted by Larry Williams at 3:03 PM | Permalink | Comments (0)
Categories: Economic recovery
        

Investors went crazy over the potential for profit from the new bank rescue plan laid out by Treasury Secretary Timothy Geithner today. The Dow was up nearly 500 points. The plan offers just what Wall Street loves, a deal where fat profits are possible on the purchase of so-called toxic mortgage-based securities if their value goes up but where the government will eat most of any losses. Much less certain is just how much the plan will do to achieve its larger goal -- setting the stage for economic recovery by encouraging a new wave of lending by unclogging the nation's credit markets.

Regulators are expected to push troubled banks to sell their toxic assets, but the banks may resist, hoping to profit if the assets gain value later. And even if the banks are persuaded to sell, there is no guarantee that they will begin the kind of significant lending that will help spark an economic recovery.

There's another drawback. The plan proposed by Geithner would clear away only half of the estimated $2 billion in troubled bank assets. The government can't spend more because it has used up almost all of the $750 billion set aside to rescue banks and spur lending. With public ire high over hefty bonuses awarded to traders at insurance giant AIG, this is no time to go back to Congress and seek hundreds of billions more. Those worried about the economic future -- that would be everyone, I suspect -- should get some idea by the end of this week whether the smart money thinks Mr. Geithner is on the right track.

So far, his performance has appeared excessively cautious at a time when bold strokes are called for. If this plan falls short, President Obama will likely face more pressure to shuffle his economic team. Stay tuned.

Posted by Larry Williams at 5:32 PM | Permalink | Comments (0)
Categories: Economic recovery