2009 - %3, May

Highway Privatization: A Dead End?

| Fri May 22, 2009 10:06 AM EDT

"It was the best deal since Manhattan was sold for beads." That's what Indiana's Republican governor, Mitch Daniels, told Barron's recently, referring to the privatization of the 157-mile Indiana Toll Road—a deal that netted the state $3.8 billion. Back when Jim Ridgeway and I wrote about this deal, and the larger infrastructure privatization trend that was being pushed along by the Bush administration and Wall Street (Goldman Sachs in particular), there was some question as to whether Hoosiers were getting a good deal. One local economist had estimated that the value of the road, under the terms of the state's 75-year lease agreement with the Spanish construction firm Cintra and Australia-based Macquarie Infrastructure Group, could be as much as $11 billion. Surely he didn't anticiapte a major spike in gas prices and an economic meltdown, factors that took a serious toll on toll revenues.

According to Barron's, which declared the infrastructure privatization boom all but dead, the MIG-Cintra investment is not panning out so well.

Indiana is looking particularly smart because toll-road revenue now seems less dependable than it appeared to be just a few years ago. "Toll-road traffic declines in this recession have been more severe than in any other post-war recession," says Peter Samuel, editor of TollRoadNews, an online transportation Website. He says toll-road traffic is down 6% this year and revenue has been hit by recession-reduced usage by trucks, which often account for 50% or more of tolls.

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BankUnited Collapses

| Thu May 21, 2009 5:47 PM EDT

The Wall Street Journal is reporting that BankUnited in Florida has finally been taken into receivership.  No surprise there, but the price tag might be: apparently the FDIC estimates the takeover will ultimately cost taxpayers a cool $4.9 billion — and that's for a bank with less than $15 billion in assets.  I don't think even IndyMac was quite that bad.

Quote of the Day

| Thu May 21, 2009 5:19 PM EDT

From Conor Clarke, writing about taxes on booze and soda:

"I am all for taxing unhealthy foods, but I still agree with the old Kevin Drum suggestion of taxing the sweeteners, not the beverage."

That was all of nine days ago!  What would we call a suggestion made in the dark ages of April?

And speaking of old (smooth segue, no?), I tried out the WolframAlpha search engine today for the first time.  It's been getting generally panned, but it sure did an impressively good job on my test drive query.  Check it out:

Obama and Cheney

| Thu May 21, 2009 3:46 PM EDT

The media framing of today's national security speeches by Barack Obama and Dick Cheney as a sort of "showdown at noon" has struck me as pretty bizarre.  And yet....I just read both speeches and I have to admit that it's really not so bizarre after all: they could hardly form a starker contrast if they tried.  Obama's speech is all about the rule of law, honoring American values, creating policies that look beyond just today and tomorrow, and trying to figure out how to gain genuine security in a dangerous and complicated world.  Conservatives are going to absolutely howl over it.

And then there's Cheney: no regrets, no second thoughts, not even an admission that any kind of balance should be entertained ("In the fight against terrorism...half-measures keep you half exposed").  It's a pure, white hot defense of an absolutist military approach to every aspect of national security.  Among liberals, Cheney's reputation as a panic-stricken Buck Turgidson will be confirmed beyond doubt.

I want to read both of the speeches before I say any more.  But really, the contrast is truly spectacular.  It's worth your time to read them if you haven't already.

UPDATE: David Corn has a good summary here.   Jacob Heilbrunn has a good take here.

Walmart Uzez Lolcatz 2 Advertize

| Thu May 21, 2009 1:54 PM EDT

In a novel advertising move, Walmart has partnered with hit lolcat site I Can Haz Cheezburger? (ICHC). Walmart and ICHC have an addictive online game called NOM NOM NOM 4 FUD! in which players direct a rotund marmalade tabby around a house. Players get points for making the cat "nom" Iams brand cat food, cheezburgers, and balls of yarn. The more Iams kitty eats, the faster it runs around the house. This, as anyone who has a cat knows (cough! Kevin Drum!), is totally bogus. After eating, my cats promptly retreat to the nearest soft surface and fall blissfully unconscious.

Real-life cat behavior aside, Walmart's corporate sponsorship of ICHC looks like a canny move: the site has a 60% female demographic, and gets up to 50 million page views per month. Likely, many users are pet-owners. However, the partnership may not be as good for the lolcat site. Some commenters have asked ICHC to not associate themselves with a company that has a history of abusing employees (Walmart) or a corporation that tests on animals (Iams). I doubt there will be any concerted boycott of the site, but this may not be the last time you see Walmart blogvertising.

The Credit Economy

| Thu May 21, 2009 1:27 PM EDT

Megan McArdle shares a horror story of her own about a mistaken tax lien that attached itself to her credit report for years like a barnacle from hell, but then adds a comment:

It is terrifying the power that these bureaus have assumed over us — when my bank made an error on my car loan, my first worry wasn't that they'd upped my payment by $60, but that the subsequent late charge for an undersized loan payment might show up on my credit report.  This was only slightly less panic-inducing than thinking that it might show up as a shadow on a chest x-ray.  The bank fixed its error immediately and cheerfully.  (And may I commend the Navy Federal Credit Union to all who are eligible for membership).  I doubt Experian would have been so accomodating.

But maybe it's worth remembering that the tyranny that credit scores exercise over our imagination have everything to do with the fact that we've built a society so utterly dependent on credit.  If you didn't need a credit card, an auto loan, and probably a mortgage to be considered middle class in this society, these opaque and unresponsive bureaus wouldn't be the most important source of information about us.

It is terrifying that these bureaus have such fantastic power to go around saying anything they want about us with virtually no oversight.  But I'd take issue with the closing paragraph here.  I don't know quite how Megan intended it, but I'd argue that there's nothing per se wrong with the fact that modern economies are so dependent on credit.  Widespread use of credit really does make life more convenient, really does make banking more efficient, really does enable useful advances like online shopping, and really does allow easier access to goods and services that would otherwise be difficult to get hold of.  Used in moderation, it's good stuff.  I sure don't want to return to the days of hauling around travelers checks whenever I fly off to Europe.

Speaking for myself, my jeremiads against the credit-industrial complex have never been meant as an attack on widespread access to credit itself.  Used reasonably, credit cards are a boon and credit reporting is a necessary part of providing credit responsibly in a big, complex world.  That said, credit is critically important to everyday living now, and that means that it needs to handled fairly and transparently.  And that's all I want from these folks: if you make a mistake, you clean it up.  If you can gather negative information automatically, you can also gather positive information automatically.  If you offer a loan at a given rate, then that's the rate.  If you charge fees and penalties, they should be at least vaguely related to the actual cost of the service, not made into a profit center designed to squeeze an endless income stream from the very customers most vulnerable to fine print and slick marketing.

That's all I want.  It's not so much, is it?

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NYPD: Bombers "Wanted To Commit Jihad." Really?

| Thu May 21, 2009 12:20 PM EDT

The four men arrested in the Bronx Wednesday night "wanted to commit jihad," New York City Police Commissioner Raymond Kelly told reporters. Certainly that appears to be the case. The unarmed men, taken into custody after a dramatic scene during which police blocked their escape with a 18-wheeler and smashed the windows of their SUV, stand accused of plotting to blow up two religious centers and using stinger missiles to down US military aircraft at an Air National Guard base. The arrests came after the would-be terrorists placed what they believed to be 37 pounds of C4 in the trunk of a car outside Riverdale Temple and planting two other bombs at the Riverdale Jewish Center. But as it turns out, the bombs were fakes, given to the plotters by an FBI informant, as were the stinger missiles they obtained from the same source.

The case calls to mind earlier foiled plots. Remember the Lackawanna Six? The Fort Dix Six? In both instances, as in many others, the men arrested appear to have been lured in by FBI informants feigning outrage at the US foreign policy and offering to obtain weapons for terror attacks on American soil. In all cases, there's little question that those arrested ultimately plotted (however ineffectively) to commit acts of terrorism. But would they have done so without encouragement from FBI informants? In other words, is this an instance of effective policing? Or maybe entrapment by an imaginative, but overzealous FBI? Too little is known about Wednesday's arrests to say one way or the other. But it may be worth your while to read a Eric Urmansky's February 2008 piece in Mother Jones, in which he explores the concept of "material support" for terrorism, and wonders if we are in effect criminalizing thought by leading disaffected young men along a path they might not otherwise have chosen.

Google PowerMeter

| Thu May 21, 2009 12:18 PM EDT

Felix Salmon updates us on Google's PowerMeter project:

San Diego Gas & Electric [] has recently started installing what it calls “smart meters” in 1.4 million homes in southern California. It’s up to 10,000 now, hopes to get more than 200,000 by the end of the year, and have everybody installed by 2011.

Any of SDG&E’s customers can get their electricity-usage information from the utility’s own website, but now they’ll have the option of getting it straight from Google instead, embedding it on their iGoogle home page, that kind of thing. And the more they see how much energy they’re using, the less they’ll use — a 5%-10% reduction up-front, with more down the road when they start replacing appliances and light bulbs and the like.

SDG&E's smart meters are indeed smarter, but they're still outside, and they're still basically just a fancy replacement for your current power meter.  What's important is having something inside that shows you in real time how much electricity you're using.  Someday that will probably be a physical device, but for now Google is providing this information to SDG&E customers via its PowerMeter app, which can be embedded on your iGoogle home page.  Open it up and you can see exactly how much power you're using every time you turn an appliance on or off.  Neat.

The simple act of making people aware of their electricity usage can probably generate a surprising amount of conservation.  And relatively speaking, it's cheap.  This kind of thing could help in other areas too.  Here's a cheap and simple idea, for example: place the estimated 5-year cost of gasoline on the sticker of every new car.  EPA could easily come up with a formula based on average car use and recent gasoline prices, and it would almost certainly make fuel-efficient cars more attractive if people saw the savings of buying one right in front of their faces when they were comparing cars.  More like this, please.

Forbidden Topics

| Thu May 21, 2009 11:47 AM EDT

I'm having a little bit of a slow start this morning, so in the meantime here's your idiot news of the day:

The ACLU is demanding that school officials in the northern San Diego County community of Ramona apologize to a sixth-grade student who was not allowed to present her report on slain San Francisco Supervisor Harvey Milk during class time.

Instead, the principal sent letters to parents giving them the option of not allowing their child to listen to the presentation by classmate Natalie Jones. Officials cited the district policy requiring that parents be notified before any classroom instruction about sex, AIDS or "family life."

About half the class received permission and listened to the report, which was given during lunch hour rather than regular classroom time like other students' reports, the ACLU said.

Honestly, I don't even know if I blame the principal for this cretinism.  He probably has long experience with mobs of angry parents making his life miserable over trivia.  Not exactly a profile in courage either way, though.

Global Economy Update

| Thu May 21, 2009 1:54 AM EDT

The U.S. economy contracted by more than 6% last quarter, as bad a decline as we've had since World War II.  So how's the rest of the world doing?

On Wednesday, Mexico became the latest country to report a plunge in output. The country's gross domestic product fell at an annualized rate of 21.5% in the first quarter....Mexico's decline followed by a day Japan's report that its economy contracted in the first quarter at a 15.2% clip, its worst performance since 1955. Last week, Germany said its first quarter decline in GDP, an annualized 14.4%, was the worst since 1970.

Holy cow.