Sunday, November 30, 2008

Swapsylvania

Bloomberg's Joe Myslak tees off on the use of interest rate swaps by local school districts in Pennsylvania. Gotta love anyone who likes to read statements on bond ratings. He does not name the Pennsylvania school district he found using swaps just recently in a bond issuance.

Given how much trouble interest rate swaps have gotten investors into, and how much it has cost some to get out of, it ought to be a no-brainer for Pennsylvania to make this type of municipal debt financing illegal. According to Myslak, it was only made legal in 2003. Not quite sure the financial history written since 2003 is anything worth saving.

But how do you get legislators to outlaw something they probably know nothing about? Raises an interesting question as to who sponsored the legislation that must have made swaps legal for municipal finance. Now I rarely ask questions that are not rhetorical... but does anyone know the history of whatever legislation allowed interest rate swaps in Pennsylvania?

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Matthews vs. Toomey?

It's not a new idea, but the news and blogs are all musing over the potential that uber-talking head Chris Matthews might run for senate against Arlen Specter. I bet he is not trying to decide whether to run against Specter, but whether Specter himself is the Republican nomineee. I had wondered a bit how the presidential race had altered intra-party politics in Pennsylvania. All the new registrations, and party switching has to have some effect, but how much and to what effect. I was not alone in that thought. The LA Times has a look at the prospects for the Pennsylvania senate seat and in particular Arlen's prospects given that Toomey came within just a couple percentage points of beating him in the primary in 2004. If as Toomey implies in that article that Obama support in Pennsylvania essentially pulled moderate Republicans out out of their Republican registration, what is left is a more conservative electorate for the closed Republican primaries coming up. Does that mean that the Democratic primary in the state is pulled more conservative as well? That is a tougher call given that for the D's the impact was not as much from party-switchers as new registrants. So many of the new registrations went D, however as everyone seems to agree a lot of those new registrations were students or younger voters who will likely not even be in the state the next time around. So the party-switchers who I am guessing are older (at least older than students) voters are more likely to stick around until the next election.

So I say Matthews and other D's for that matter are all trying to gauge whether Toomey or another strong R is going to jump into the race. A large part of the senate-hopeful crowd (on both sides) would never run against Specter, but would jump at the chance to run against most anybody else. But the signals from Toomey have been minimal, let alone any glimmer from a Ridge, Schweiker or Scranton. Smart for each side to keep quiet. Both anti-arlen camps on either side are playing a game of chicken with each other. Both would prefer the more extreme opponent on the other side to their opponent yet announcing their own races could have the effect of scaring out the opposites then want. All of which explains the continued success of Arlen Specter at winning the most bipolar of states. As I said before, figure out how a state can vote by large margins for Al Gore and Rick Santorum in the same election as happened in 2000 and you will have a career in Pennsylvania politics. It might be changing, but those types of ticket splitters have been the deciding voters here for a long time.

Is the Pennsylvania middle changing? I am not sure it makes sense to even call it the middle, but I duuno? Obama won PA by large measure, but Republican Tom Corbett won re-election as well. That may not be the best analogy but still. If not decided by the middle, as my bubble chart of the election last month shows pretty clearly, it will be decided by Philadelphia. Former Philadelphia US Attorney Arlen always does pretty well for a R in Philadelphia... and if he does not win Philadelphia proper, he generally wins the environs which went solidly Obama last month. Specter actually won 63 of 67 counties in 2004, though that was down from 65/67 counties in 1998, though Yeakel won 16 counties in 1992. Who would capture that vote in a race without him as a choice?

What is not really talked about yet... if it turns out this registration switch has affected the intra-party dynamics of Pennsylvania's primaries; it's not just what it means for the statewide races, but what impact it might that have on races down the ticket?

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Saturday, November 29, 2008

Penguins-Burgh

Didn't catch this last month. Forbes puts the value of the Penguins at $195 million. Which leads to some funny thoughts. When all is said and done I bet the all-in price for the new arena will be twice that. If someone was worried about keeping the Penguins in town, would it have been cheaper to just send a check to buy the team whole. Yeah, I know, that probably isn't premitted by the NHL or legal in some way, but would it have been cheaper? Forbes also lists as a side note that Penguins owner Ron Burkle's net worth is $3.5 billion. So Burkle's stake in the team can't be worth more than 5% of his total assets.

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Friday, November 28, 2008

Depression in the (greater) Burgh

Just worth reading.. from Altoona native now in Youngstown and his musings on life during the actual depression.

http://postcards.blogs.fortune.cnn.com/2008/11/20/guest-post-the-great-depression-as-i-remember/

Makes me wonder.. did they have Black Friday during the depression?

Also reminds me of this old post with a neat video: Play and Poverty in 1930s and 40s Pittsburgh.

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Thursday, November 27, 2008

Happy Thanksgiving

Still the funniest two minutes in sitcom history:


addendum:

Ha.. I see the Angry Drunk Bureaucrat has the same clip showing today. That makes sense, I think it is the swiss army knife of parables over bureaucratic groupthink.

and just in the Pittsburgh250 theme, it's thanksgiving and sports history was made here when we learned NFL officials can't tell heads from tails a few years ago.

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Wednesday, November 26, 2008

Cleveland, the media, NatCity and looking for the bogeyman

I mentioned this was happening, but you can now download the MP3 file that is a chat with the reporter who wrote the story in the Cleveland Plain Dealer looking at Pittsburgh that everyone here is gushing over... and everyone in Cleveland is gnashing over. It's worth listening through to the end. It must have about 10 times the content of the print story in itself.

A friend told me recently that there is a theory up in Cleveland that goes like this... National City was actually doing ok, not great, but certainly not about to fail.. but that its problems all came from a lack of confidence induced by years of bashing by the Cleveland Plain Dealer up there. While I have to believe that is just simply a case of groupthink transference.... listening to the Pittsburgh love-fest on that chat makes me wonder a bit. Seriously, listen to the chat. As much as we have our own version of self-loathing, it's just hard to imagine that any local media person could write/say some of that and risk being seen in public here ever again. Remember what we did with the poor fellow from Denver who made the mistake of dis'ing us.

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Economic miasma

On the big picture... For one little story that really explains why the economic problems seem so intractable.. The Financial Times explains how the Lehman Bankruptcy is having impacts far beyond the bankruptcy of a single firm. The issue at the end of the day is that too many assets out there are simply illiquid for a host of reasons which is keeping money from flowing. See:

Groups in Lehman asset trap

Which reinforces my own view of the situation at hand in the world financial markets. Until these markets just start running again, a lot of the world's money is locked up and unusable. In this case, the Lehman bankruptcy seems to be preventing some folks out there from even getting information on what their assets are, let alone what they are worth or having some hope of liquidating them anytime soon. In our uber-technology driven world where information is said to be more powerful and abundant than ever before, it's just mind boggling that the issue for many is just figuring out what they own. From what I hear the entire Lehman Bankruptcy in Europe in particular is just such an unimaginable mess that it will be a long time before parts of it are unwound, or in some cases it might be never.

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Hold the presses - transit agreement

In that the public details are sparse, there is little to comment on the headline that a deal is reported to have been reached between the Port Authority and it's drivers. At this point who knows what was was worked out, but it will be interesting to see if one side caved more than the other. The only thing I will say for the moment is that despite all the false starts, all the 'preparations' for a potential strike, and even the media coverage that would leave most to expect an imminent strike I really don't think that was ever about to happen.. or at least the drivers were never planning much of a strike. Think back to how long you have been hearing about the need for preparations in the case there was a strike. As best I can tell it was the Port Authority itself most responsible for any public belief that a strike might have happened as far back as labor day. For the Port Authority and compatriots most of that had to have been geared toward building up public antipathy for the drivers as much as actually preparing strike contingencies. It was an awfully effective tactic I thought. As I said, the details are not known so it's a bit treacherous to comment too much not knowing what deal was struck. If the Port Authority moved at all from its "final and best offer" then you have to wonder about the repeated statements that they were done negotiating and the need to 'impose' a contract. It would mean that baring the unprecedented involvement of national union folks, the Port Authority was more than willing to push the drivers into a work stoppage, whether you want to call it a strike or a lockout, just a few weeks before Christmas. The interesting thing will be if anyone learns what prompted the AFLCIO to get so involved and what pressure they put on either side. There is a story there I am sure.

I was going to joke that we ought to make sure the Port Authority's Rumor of the day site does not come out saying this tentative deal was all a misunderstanding or something. But low and behold, the 'latest rumor' link on thier web page looks to have gone missing... but it's still there on all the other pages.. Must have happened in just the last day.

More to follow..... will update this post if we learn more soon.

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Tuesday, November 25, 2008

the unDetroit?

Detroit's unemployment jumped from 8.5 to 9.0% in October. That story quotes the job loss in Detroit alone as a net employment drop of 17 thousand people between October 2007 and October 2008. Yet before anyone again jumps to any conclusions about what that could mean here, maybe it would make sense to first ask what the comparable employment change is for Pittsburgh? I would tell you, but nobody believes me these days so you might as well read it yourself.

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The auto industry miasma is driving a lot of bad news elsewhere. Last week there was a little bit about how US Steel us laying off 677 folks across all of North America. That probably came out to less than 100 folks here. I suspect there will be more to come, but in Indiana they are already there. Another steel company is looking at over 2,400 layoffs at a single plant there mostly because of the auto industry derived collapse in steel demand. That sure sounds familiar and are more Pittsburgh-like recession numbers. They know what we know that "Communities brace for ripple effect of steelworker layoffs", a headline that was probably written here hundreds of times. There is no sugar coating the state of the steel industry right now, though I did read about the Obama plan to ramp up infrastructure spending. Lots of infrastructure uses lots of steel.


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on casinos, which does not have a Detroit theme other than the fact that Detroit's Greektown casino is running out of cash... Not very long ago some folks were perturbed that the original losers in the casino bidding process didn't get a chance to rebid for the license that Don Barden sold off just this month. well... via Writes Like She Talks is a pointer to this blog entry about one of the two other bidders way back when: Forest City Enterprises is having it's own financial problems which is impacting its other projects. So Barden might have been a first mover into financial oblivion, but it's unclear any of the other original bidders would now be in a position to push our casino forward anyway.

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But back to real estate. Out yesterday was this article from the AP. According to ever more real estate metrics they compiled:

There were some bright spots among the Northeast cities in the AP-Re/Max report.Pittsburgh posted a modest year-over-year price gain of more than 1 percent in October, the only metro area to record appreciation. Its inventory also fell by a quarter from a year ago. However, sales there were down almost 27 percent.


Price up? "only metro".... "inventory down".... wait a second. Wasn't the local news on this recently reporting quotes from folks about how the lower number of sales being recorded must be pushing real estate inventory levels skyward exponentially. The implication that the prices are soon to be pushed down as a result.. Yet this metric says inventory is actually down substantially (down by a quarter is a lot and ought to be a pretty big story unto itself) despite lower sales? Something just isn't right. Somebody has something just plain backwards. If that data is even half right, then go back and re-read this story from last week on what slower rate of real estate sales mean for the region.

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As bad as the near term outlook for steel is, how about other manufacturing in town? There is even evidence that Westinghouse alone is having an impact across a number of local manufacturers who still are still more pressed to find workers than to lay them off. Not all good news of course and some local firms can't escape worldwide demand slumps in a lot of commodity products.

But there is a lot of positive news in the nuclear industry of late, impending worldwide depression or not. See for example how just an order placed by Westinghouse for some nuclear power plant components made news in the UK. If they are excited by the order placed for a single component??? Also from the UK, the construction industry is looking at their piece of the pie: Gearing up for the £30 billion nuclear boom. Here in the US it is a similar story. In Tennesse last week the ramp up of construction for the Watts Bar nuclear plant made news in itself. That plant already has a Westinghouse reactor and when it opens it will be the first nuclear reactor to open in the US since 1996.


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Actually, back to real estate and how the fear out there has everyone's logic all convoluted on what declining sales mean for the region. The confusion of supply vs. demand among even the professionals is everywhere. So as much as I mike quibble with the media stories, they are just duly reporting what the experts are telling you even if it is all a bit backwards. Lest I confuse you more, Seeking Alpha explains the confusion out there and in the media reporting on real estate markets better than my rambling. See:

Home Price Plunge Produces Sales Spikes In Many Cities

They actually mention one local Pittsburgh story in their list of examples.

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Monday, November 24, 2008

What are all the words for? New transit negotiations?

The PG covers the machinations that ended the 1992 Port Authority strike. By focusing on the judicial involvement that ended that strike, it certainly leads the reader to think that there will again be legal involvement that could come into play. I am just not sure the circumstances are similar enough to really compare the two situations as directly as the paper does. So here is some non-lawyerly legal musings over what the legal differences are between then and now and what they may mean.:

In the PG story, local lawyer-politico Joe Mistick ends with a comment implying that the city ought to be preparing now to engage as Mayor Masloff did at the time. But there is a big difference. I am pretty sure a judge wouldn’t order workers to work against their wishes with a contract imposed unilaterally by management. In 1992, a judge ordered workers back to work, but the difference was they went back to work under their previous contract which they may not have liked.. but it was at least a contract they did once approve. It just seems to me that any legally imposed end to a as-yet-nonexistent work stoppage (pick your noun to describe it) would have to be under the currently extant contract… not the contract to be imposed next week.

Then the funny thing to think about is that if the current contract was not about to be abrogated, it seems pretty clear the drivers were not about to strike..... much to the consternation of the Port Authority itself. Think back to all the PR spin you heard that there was going to be a strike once the factfinders report was rejected by the union. That didn’t happen now did it. Was it going to happen? Not much evidence that it was. It’s hard not to get past the conclusion that the imposed contract is first and foremost a means to force the drivers into something that the public will perceive as a strike. If the goal was to keep the system operating at least through Christmas, why would you ‘impose’ a contract Dec. 1.

Let’s also go back to 1992 to see how the factfinders report played into the negotiations. I am reminded that just recently the argument was made that it was the union that was going against the will of the public by rejecting the factfinders report while the reasonable Port Authority management accepted it. Any work stoppage it was argued, would thus be the fault of the union the argument went. Yet what happened in 1992? Rarely mentioned is the fact that back then the union accepted the factfinder’s report and it was Port Authority management that rejected the factfinder's report. So using the same logic, was the Port Authority management in 1992 the one that is responsible for the 28 day strike which was (and still is) the longest public transit stoppage here in recent decades? If you then take that logic just a bit farther... read the Post Gazette article again and see its theme that it was the convoluted ending of the 1992 strike that has lead to the lack of progress in labor issues in the following 16 years and the situation the system finds it in right now. So again, who is at fault for the current sad state of labor management relations at the Port Authority? Consider what if the Port Authority had accepted the factfinders report in 1992. There would have been no strike at the time... there would have been no history of a strike of more than a few days in the entire history of the Port Authority. Earlier strikes had been 3 days in wildcat strike in 1971, for 7 days in 1973, 5 days in 1976 .. That would have left in place a strong precedent for the future.

But looking to our current situation again… counterintuitive as it seems, I just wonder if the last thing the Port Authority would really want to happen is some litigation by the city or somebody else as Mayor Masloff did to end a work stoppage. If that process leads to a return to the previous contract terms then the Port Authority winds up worse than it did to begin with, not only stuck with the old contract but with some legal support for it as well. At the very least it would be a crack in the PR machine that thus far has been swamping the drivers in the public debate is it doesn’t exist.

If that isn’t the way it plays out, consider the alternative. If a local judge were to really force workers to work under a contract imposed completely by management without any cooperation by workers, it would truly be an unprecedented event in labor-management relations in the US. If such a thing were to happen in Pittsburgh of all places it would be a pretty seminal event. Thus I bet why the AFL/CIO is showing such unusual interest in the situation here now.

My guess as to what will happen in the near term is less than a guess. What is going on now in DC is just a big wildcard to me. If nothing comes out of that I go back to the Trib story that really points out how legally tenuous the Port Authority's imposed contract really is. If the drivers can go to court to have the imposed contract tossed they certainly will. The question that I leave to the legal beagles is whether they have to literally be off work to have a claim in court. If they show up at work under the 'imposed' contract will they forfeit their rights in some way. I suspect that is the situation the drivers are forced into at the moment in some form. That again leads to the conclusion that the goal here is more to force the drivers to walk out than anything else. It would be a different case if the legal case were stronger. That and what options does a union have to an 'imposed' contract. If that is left standing then unions might as well fold up shop all around. Not much need for unions if that becomes the paradigm for labor-management relations.


But what is going on in DC? I really have no idea right now. What could be the result if anything? If the AFL/CIO were to come out against the drivers then obviously they would be a much more tenuous position going forward. But if the AFL/CIO throws its own weight against the Port Authority then its hard to say what the impact would be? But the Port Authority has raised this to a bigger issue than a local transit funding issue by potentially making it a symbol for unions across the country. Imagine if folks all over started 'imposing' contracts.


Last comment that occurs to me. The whole basis of the Port Authority claiming that they can impose a contract on the drivers rests supposedly on their being an impasse in the negotiations. I don't see how you can claim that is the case if you are travelling to DC to have meetings with the AFL/CIO on the situation. Sure seems to me that the Port Authority has thrown away the ability to claim there is an impasse if these meetings with the AFL/CIO really took place. If that logic is valid, that means there is no basis at all legally for them to try and impose a contract. But that is trying to apply logic to the law which my lawyer friends tell me is a fool's game.

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BIDs

no reason other than feeling nostalgic: The Trib has a story today looking at discussions over a new Special Assessment District in East Liberty (otherwise known as a Business Improvement District and other terms in various parts of the country). Long ago in graduate school I and some others looked at the Business Improvement Districts of New York City at the time which were a big deal and a relatively new tool back then. NY and Pennsylvania have very different laws covering BID's and certainly their implementations have been different so it may not have a lot of insight into current BID issues here. But it wasn't bad for a student project and the history is worth reading if you are interested in BID's which were once a big deal in public finance.... maybe a little less so today, but still can be a tool as the East Liberty story is evidence of.

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Sunday, November 23, 2008

that arena deal is solid right?

Remember when Blackberry founder Jim Balsille was going to buy the Penguins and said publicly he expected to keep the team in Pittsburgh. Who believed that? The Canadian press is reporting Balsille is going to make another attempt to buy the NHL's Nashville Predators and bring the team to Ontario.

For the record, I would bet the lease agreement between the SEA and the Penguins is pretty solid when it comes to keeping the team in Pittsburgh, at least through the decades the bond is being paid off.. don't want to spur any unjust worries. Now who is going to pay for any more increases in either the building costs or the potential additional financing costs I have mused about.. that is another issue altogether.

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and a Cleveburgh addendum.

I knew this article was in the works, but it was an anonymous commenter pointed out this from the Cleveland Plain Dealer blog: Pittsburgh's renaissance holds lesson for Cleveland. As in other stories, the online comments are almost as interesting as the article itself. Just for example, who knew there were Cleveland Browns fans that show their face in town? per one of the comments:
I grew up in Cleveland but have lived in Pittsburgh the last 16 years. On the
one hand, it is a miserable place to live if you are a Browns' fan as am I. On the other hand, there is a very active Browns Backers Club here. I am heading over to Peters Pub in Oakland in a few hours to join 70 other former Clevelanders to watch the game with the Texans.

If that isn't a sure sign that it's a new Pittsburgh, I don't know what else is. I know there must always have been closet Cleveland fans here because of the all the former Cleveland denizens who have moved here at some point.. but the fact that they can congregate in public says a lot.

Note there is even going to be an online chat about that story Monday, Nov. 24 at 11 a.m.. that could be interesting thread to watch. For more information, click on the link to the story above and look in the top right corner.

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update: and even more Pittsburgh hagiography. From the anonymous commenter is another article which I didn't know about beforehand from the New Orleans Times-Picayune also on Sunday. See: Smaller, smarter: Pittsburgh turns scars into revenue magnets. It's a bit curious to contrast the Cleveland and New Orleans' versions of the same story essentially in that they talk to very different folks for their quotes.

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Saturday, November 22, 2008

UPMC-burgh

The Wall Street Journal had both a front page print story and an expanded entry on its Health Blog all about UPMC yesterday. Not related, but I saw there was a fairly large print ad for UPMC in the national NYT Friday as well.

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Friday, November 21, 2008

misc Cleveburgh thoughts

This isn't so surprising... but many people do not realize just how much accounting is more art than science. and corporate tax accounting borders on metaphysics. In the news today is that the news yesterday was off by just a few $billion when it comes to the potential tax benefits of the PNC acquisition of National City. Hey, what's a stray $billion these days. That first reported tax benefit of $5 billion was the source of a lot of consternation up in Cleveland where folks interpreted it to mean that PNC bought NatCity essentially for nothing. Of course there were all those bad loans in the mix as well, so it was a metaphysical nothing.

More on the : the WSJ's Deal Journal Blog looks ever more into the mechanics of the PNC/NatCity deal.

No news to point out that progress at local government reform has been at best halting of late. They have their own problems up the pike at reforming local government in Cuyaoga County.

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Other news: this has real implications here if AAA Municipal Bond insurance goes away.

New York-Burgh? In the news is that BoNY/Mellon has some job cuts coming down the line. Some will be here for sure, but I have always thought that in a cost conscious era Pittsburgh will fare better in the longer run or not. Real estate price collapse or not, it still is just so much more expensive to have a back office job anywhere near Manhattan than elsewhere. Granted that argument has not worked super well for a few big consolidations of note in the last decade, but then again the cost issues have not been as dire as they have been of late. Anyone notice just how big BoNY/Mellon is? 22 $trillion in assets under management. That is a T.

More from NY.... if Senator Clinton becomes Secretary of State, the PG throws out the possibility of a 28 year old Senator Chelsea. My call for who gets appointed to her senate seat is Nassau County Chief Executive Tom Suozzi.

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Thursday, November 20, 2008

the great Pittsburgh hotel mystery

So here is something of a mystery. For all the bad news all around, why is the Pittsburgh hotel scene veritably booming. Lot's of new hotels coming down the pike supposedly. I am sure I will miss more than a few, but let's try to count up the new hotels that supposedly are being built in Pittsburgh in the near term.



From the east end:
  • East Liberty is slated to get not just one, but three new hotels. and that is over and above the hotel going in at Bakery Square. So make that 4 hotels for East Liberty alone.

  • Also in the east end is the hotel that was said to be part of the new development on the former Don Allen site in Bloomfield.

to Downtown:

and not to leave Oakland out of the mix:


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So all of this has happened, is happening, or is slated to happen, in the midst of the most difficult credit environment in memory, especially for the hotel industry in particular.


So yes, I know everyone is fully expecting something analogous to the depression in the next few years. If that is true, you would think that the very first sign would be that some of these hotel projects, especially the ones that have not broken ground just yet, would be some of the very first projects to be turned off. I am pretty sure the least stable investment in a recession is a new hotel.


My guess. Like a lot of other explanations to why the local economy . The things driving a lot of visitors to the region include hospitals and universities and that demand for hotel rooms has probably not changed all that much of late. But looking to the future.... there really will be an impact of the casino here on the local hospitality industry. That being said, when everyone says you can't get credit to build anything, it's that much more remarkable money can be lined up to build any of these projects... let alone all of them. Worth watching.

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Wednesday, November 19, 2008

Zen and the Pittsburgh Theory on Everything: gas prices

It isn't the average price for the region yet, but the very lowest retail gas prices in Pittsburgh that have dropped below $2.00/gallon. I am pretty sure gas prices that start with a '1' are so unthreatening to most folks these days that they will forget the $4+/gallon of a few months ago. I wonder if there was anyone out there speculating on used SUV's when they were selling for a song just in the hopes of reselling them which they could now for a quick profit. Certainly would have been a better return than the stock market of late.

There was once this hysteria over how unabated energy price increases would spell the end of everything. So if you ask me, nothing is really worse than the unprecedented rate oil prices have dropped. Not for the reasons people usually have for saying that and hey, I am as happy as the next guy to pay less for gas. Yes, SUV sales are probably going to return.. but that isn't the point. In the longer run when energy prices move up again folks will a) not feel so threatened since they have seen it before and b) are likely to believe it is all part of a cycle and need only wait for prices to drop again. It is a pattern that will last until it ends. It was once the logic that folks who watched the steel industry go through periods of boom and bust would use to dismiss the need for change.

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Tuesday, November 18, 2008

Burghosphere past Burghosphere future

Not long ago I mused in passing that the Burghosphere might be content-challenged in the wake of Pat Ford's (remember him?) final resignation. I was joking for the record, or so I thought. You have to admit there has been a rapid culling in the greater Burghosphere as documented well by the main stream media today. I know content is not said to be the reason for most blog-ends, but you have to wonder if my subconscious was more prescient that it appeared. It also is just a tad odd that the Burghosphere gets more dedicated ink in its demise than it ever got before. Maybe some subconscious schadenfreude on the part of our friends wielding the lithograph?

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and more quant obsession on the Steelers' final score

Think you have heard enough about how historic the Steelers 11-10 score was? Even the Wall Street Journal's Numbers Guy wades in today.

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real estate again and again

Headline story nationally is a record drop in home prices. But again, how to translate that national headline to what is happening here?

Ever more Internet forum/discussion sites popping up every day. I'll let you decide whether this one is any better than the rest. But the Trulia Real Estate site (which I have mentioned in the past for some amazing info-graphics they put together on real estate history here) has some forums and I noticed their Pittsburgh Real Estate discussion which has this post recently: 10 Homes Sold in One Community in One Day! What Slump?

With all the national media talking down the economy, it is easy to forget that here in Pittsburgh things are different. Every time someone from Pittsburgh tells me about an article they read about how housing is in trouble, I ask them to read the heading of the article again and notice that 95% of the time it doesn't say the story was written locally.

What happened on 10/18/2008 was that 10 homes were sold, and three more home sites were reserved – in a single day at Franklin Run! To me, this certainly proves that Pittsburgh is in much better shape than the other areas of the country. The average sale price of these homes was in the high $300's to low $400's - and another 5 homes were sold by 11/07/08! It is so nice to be able to say that we sold out 30% of the entire community in the first weekend.


Granted it sounds like the author was involved with the deal and this sounds like marketing spin to a degree, but if one wanted it ought to be easy enough to verify if that story is true. If it is, not many areas of the country where relatively high priced (for the region) housing is moving much at all. Who is buying anything in suburban developments. Who is financing the downtown condo's for that matter which according to news sources are continuing to move... the only exception which we have not heard from in some time were the lagging sales in the Granite Building Downtown. About time for another media story on that I bet.

It also would get to a point made in the news over the weekend. I have resisted dissecting the real estate story in the PG that again tried to paint only a negative spin on the local real estate market. It had a point that the lower number of real estate transactions is an indicator of an imbalance in supply of homes vs. demand which would then push prices down eventually. The money quote from Florida (just like Pittsburgh?) where things really are bad is:
Fewer sales mean the number of transactions aren't there, and it's only a matter of time before prices decline," said Michael Sichenzia, Chief Executive Officer of Dynamic Consulting Enterprises, a Deerfield Beach, Fla.-based firm that renegotiates mortgage debt for distressed owners. "Supply will eventually outstrip demand.


There are reasons to think the transactions are at least in part due to decreased supply of homes on the market which would mean something else altogether. Like a lot of people who would normally be selling their house because they have moved or are looking for a new home... those folks are also unable to finance their new homes I figure, which then means their current home may not go on the market. Now, if you are a real estate professional whose income is dependent on the volume of transactions, the recession is here big time like everywhere else. So you are probably in a sour mood if your business is real estate in any form, but that does not necessarily mean everyone else's home value is plummeting.

But that story also warned "Some housing data also could be deceiving." which was really odd if you just turned to the PG's own real estate section where they looked at the most recent data on real estate prices for a dozen neighborhoods. What did they come up with in terms of real estate prices in the following areas... a couple declines, but some health increases in most other municipalities listed. And that was data through September which is the same timeframe as the really dire national news out today which is all year over year 3rd quarter data. Think about that.



So it was just odd to read both sections of the paper and try to figure out how they fit together. Is the PG casting aspersions on itself? The 'deceptive' part of the real estate stats is supposedly the disparity in real estate micro-markets in the region and specifically the difference between what is happening in Shadyside vs. Homewood. That is absolutely true, but what does it have to do with the housing slump nationally or any regional impacts. The situation in Homewood real estate is dire, has been dire, and will be dire for reasons that are probably not impacted by the national real estate situation only because you can't get much worse. So again, the deceptive part is the implication that our regional real estate data is misleading because of a situation that existed long before any housing price collapse. I hope that does not mean that once the real estate crisis abates folks will think things are solved in Homewood. and the quote about Homewood is that prices have not appreciated since 1997 in the neighborhood. Anyone think it is just a coincidence that that date is awfully close to when the city sold the tax liens to a third party. Again, the issue is not the real estate market nationally.

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More From Detroit

Is this semi-denial? From the Detroit Business press is this story: Region braces for car crash; State, business get ready to cope with this excerpt:

But American cities have faced similar situations before, and have come out alive - and thriving.“It's not uncommon at all,” UM's Grimes said. “If you go back to the late 1960s early 1970s, the situation was reversed between Boston and Detroit.”

Grimes said Boston was heavily dependent on a manufacturing base that began to shrink as it transitioned to other low-cost regions.“They looked very much like Michigan, and the role was exactly reversed, and of course they made the transformation to the knowledge economy,” he said.

Comerica's Johnson says the model for him is Pittsburgh and the collapse of the steel industry that made way for a knowledge-based economy founded on higher education, health care and high-tech industries. (emphasis added)

“That's probably where we're heading, (but) it will be far easier to get there if the auto industry returns,” he said.Economists agree that while the next months, and possibly years, will undoubtedly be difficult for the region, Detroit will still be the Motor City.

“It will still be the largest single concentration of motor vehicle activity in the United States, there's no question about that — it will just be a lot smaller,” Grimes said.


and speaking of Detroit... The Greektown casino is in the news today because it is running out of cash.

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Monday, November 17, 2008

more from San Diego

Even national NPR had a segment on the odd final score of the Steelers game. They say its the first time in some 12K games that 11-10 was a final score. But does that represent the true odds of it happening? How long before it happens again? The statisticians out there might be able to come up with a more precise probability of getting to a final score like that.

Via Modesihouse is something worth noting on what the ref's mistake at the end of the game meant. Either way the Steelers won, but the negated 6 points could have made a 1 point spread into a 7 point spread which made all the difference in the world to the sports book where the Chargers were 4.5 point underdogs. So that last call by the ref made a lot of winners into losers and vice versa. According to Deadspin, that adds up to at least $64 million dollar swing among the bettors. Where is Jimmy the Greek when you need him? There has to be a Nick Perry story in this somehow. Too many 4's and 6's involved to be coincidence.

Looks like the NYT is even running a story of how the Steelers game caused chaos in Las Vegas. Worth a read.

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dateline San Diego

This is only about San Diego I tell you. Far far away. Sunny and warm all year round. No super bowl wins and they even elect Republicans for mayor most of the time. Nothing like Pittsburgh......

Press release recently from the San Diego City Attorney:

SAN DIEGO MAYOR MUST LEVEL WITH CITY TAXPAYERS ON FULL SCOPE OF PENSION FUND LOSSES

What? You wanted a football comment?

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Sunday, November 16, 2008

Pittsburgh Past - Detroit Future?

There was a time not too long ago that you could have had a serious debate over whether Pittsburgh would exist decades into the future. Certainly Pittsburgh would not disappear entirely, but the idea that we would quickly decline to the point that we would not be considered a major metropolitan region in the US was not uncommon. Honestly, vestiges of that debate pop up to this day among the more uber-pessimists in town.

That came to mind because in the Boston Globe today is this remarkably dismal quote from Professor Frankel at Harvard

"There will be some cities like Detroit that in a real depression could just become ghost towns," says Jeffrey Frankel, a Harvard economist and member of the National Bureau of Economic Research committee that declares recessions. (Frankel does not, he emphasizes, think we are headed for a depression.)

Things are bad in the automobile world and there just isn't much on the horizon to turn it around anytime soon. There as here, denial is a real anchor on progress. There and here, there will eventually be a future. There are signs they are getting it. From earlier in the spring was this story comparing the Pittsburgh story to where Detroit is today: Different city, similar story: Pittsburgh rebirth proof that Michigan's industry may not define it forever. I am looking for the moment in Pittsburgh's history when the concept this would not be a 'steel' region was seriously considered, and when folks realized it was inevitable.

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Saturday, November 15, 2008

almost done: Obama vs. Kerry

So this is the difference in the percentage for Obama versus the percentage for Kerry.

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Friday, November 14, 2008

Steel Anchor

It's like back to the future. The weakest part of the American economy may again be heavy industry. Despite a phenomenal run in recent years, the global steel industry has dropped faster than it ever did in the past. I would venture a guess that steel demand has collapsed faster than it did in the 1980's. Some of that drawdown has finally hit home. News out of 677 layoffs at US Steel, 500 in the US and not all of that in Pittsburgh, but for some it will bring back memories. I suspect the 500 will be split between ET, Gary and the few other US Steel locations in the US. Probably under a hundred here. There was a time that would not have even made the news.


Actually the numbers are remarkable. The 677 workers are described as 3% of the companies North American workers. So US Steel in North America employs 15-20k workers. What was it 30 years ago? 100K? 150K? more? US Steel has fewer workers across the entire US today than it once employed just at the Homestead steelworks alone.


But imagine what things would be like here if steel was still the predominant industry and it literally shut down as it has globally in just the last few months. It would soon be far worse than 1982. At the end of 1982, US Steel had nearly 50 thousand workers on layoff, roughly the same size as its entire global (not just US) workforce these days.


I really can't quite get my head around what it means that there is so much talk of bailing out the auto industry these days yet there was virtually no attempt to save steel back then.

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Thursday, November 13, 2008

Another look at the Pennsylvania election results

A different look. Here are the Pennsylvania election results by county, except that the size of the bubble represents just the margin of victory for the winner. Again, the size represents the margin of victory in total votes and the color is obviously whomever the winner was in that particular county.

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Wednesday, November 12, 2008

forgot the actual election results

It's almost time to go back to focusing on the future. Election is history, but just to clear out a few more election items and then we will look at all the fun things that have been overlooked in recent weeks. like maybe transit.

Anyway, there have been some versions of this out there already (and it is on our online site as well, along with some past elections that are fun to compare), but the actual election results by voting district in the county are below. Not that surprising.... or surprising in how unsurprising it is. It is also a reality check for any thought that city/suburb politics has changed much. It is kind of amazing just how stark politics change right at the city border much of the time.

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Tuesday, November 11, 2008

PA going blue... except....

As noted all around, despite the big Obama win in PA, it was not a win with the coattails it could have had at least in PA. Republican AG Corbett won, although it would have been pretty historic for a Democrat to win that office... and Tim Murphy was re-elected fairly easily for congress. There was the congressional seat that flipped up in NW PA where in PA-3 Phil English lost to Kathy Dahlkemper. But one real exception is the Pennsylvania senate that not only didn't shift toward Democrats but actually gained a Republican seat for a virtually absolute 30-20 advantage. This is the map of PA senate seats by party of incumbent come January.. (assuming the one deceased member is replaced by someone of the same party)


A factoid I just noticed on the presidential results... I am sure others have seen this, but the Pennsylvania county with the largest number of McCain votes over and above Obama votes: Westmoreland where McCain came in with 27,782 more votes than Obama. Just thought it noteworthy that it was the biggest margin in total votes for McCain by county. Not a big deal for the overall result of course. Philadelphia alone (just the city/county, not including the region there) had 461,008 more votes for Obama over and above what McCain received. You could throw out every other blue county in the state and Obama would still have won in a landslide with over a 150k vote margin.

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Veterans Day

For Veterans Day a couple years ago I mentioned the fact that percentage wise, women are the fastest growing groups of veterans. Just today CNN has an 'iReport' of Chief Warrant Officer 2 Nicole Shuman, Apache attack helicopter pilot, from Pittsburgh.

Actually women in the services is not a story in itself much any more. I will pass on the story of my friend Stephany and her time in Afghanistan which was spent literally in places no woman had gone before. Also mentioned in the Canadian press of all places.

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Monday, November 10, 2008

the goods on voter turnout

the stats on voter turnout in the election from the United States Election Project at GMU.

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Why NatCity is going away

If you want to see in a nutshell why PNC wound up buying National City, take a look at what NatCity was up to in recent years. See the 2nd paragraph on page 4 of this BusinessWeek story. You might want to read the whole story titled: They Warned Us About the Mortgage Crisis. and fyi, most of that article talks about Ohio and Cleveland, yet no mention at all of Pennsylvania or Pittsburgh in that story.

but if you want to see local foreclosure impacts by other means... Read this story from the South Florida last week about just a single development project gone bad putting 333 housing units into foreclosure... so just a single project down there that that in itself could represent more actual foreclosures than will be recorded here in a month or more. Note that the loan guarantors are named as local developer Deaktor Development... whose name I only recognized because they were the folks who redeveloped Bloomfield's Plaza theater (which used to have grade school classrooms above it for some trivia... I was told it still would have had classrooms as part of the redevelopment except that the utility bills were too high).

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Sunday, November 09, 2008

Read the headline last

So the Saturday PG has top of the fold front page this headline

Jobless Rate at 14 year High

All in a font bigger than I can recreate here of course. Might not have been a Pearl Harbor sized font but still. Ok.. it's true of course. But you have to dig into it quite a ways to get the regional perspective from Stu H. at PNC who says:

Mr. Hoffman expects a jobless rate of 7 to 7.5 percent by mid-2009. He does not believe unemployment in Western Pennsylvania, at 5.4 percent in September, will reach that level. The region has not been affected as much by mortgage foreclosures as the rest of the country and its more stable base of education and health care jobs also provides some insulation, he said.

In fact, if you read PNC's own forecast that is online for the regional economy and literally just completed (so I presume it incorporates most of the recent bad news nationally), it predicts unemployment rate for the Pittsburgh region will average 5.2% for all of 2009. With unemployment at 5.4% in September, that means the region's unemployment rate would have to actually improve from where we are at right now. Further, if national unemployment rate really reaches 7.5% and the local unemployment rate hovers just above 5%, I think that would be a record for how far local unemployment has ever dipped below national levels... certainly the lowest in over 3 decades. That will be big news if it happens... although I wonder how it will all be written up.


I'm just saying... what is the bigger news for a local paper in what Stu is saying and what his shop has put on the record as a prediction. My own two cents for saving local print media is to get past the illusion that there are many left out there getting their core news from the daily paper. Anyone who has watched 5 minutes of TV news gets the headline story about the economy. In fact, you can get a lot more in depth exposition from Stu if you watch CNBC for a few minutes. If you want to be a value to local readers, the only option is to provide the local news that will not be generated by anyone else. There is too much going on and uncovered by local media because resources are strained as they are. Trying to recreate what the national media is obsessing on is more and more a losing proposition every day. and in this particular case, trying to tell the national story all but passes over the on-the-ground local story that will be a bigger impact to local workers.

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Saturday, November 08, 2008

remember that little assessment issue....

worth reading about: property assessments in Philadelphia from the Philadelphia Weekly last week. They have someone out east dubbed their "Taxation Gadfly", do we have anyone here with that title? and no, I dont mean those who limit themselves to this drink tax issue, but otherwise are rarely heard from.. and I didn't say gadfly-in-chief which I am sure we have several in contention... I am looking for a more focused taxation obsessed gadfly.

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Friday, November 07, 2008

turnout

Not quite sure what to make of this, if anything. Here is a quick pass at a version of a turnout map.. This ought to show the percentage change in the total votes cast for president within Allegheny County. There is a little bit of overall population loss, and certainly population change within the region that could be reflected in the patterns on the margin. But here is what I get for the change in turnout this time around compared to the recent past. Later on I will add a link embed in the graphic to pull up a larger PDF file.


correction: ok... I corrected the earlier map which didnt take into account redistricting in a couple places which caused a few red municipalites that shouldn't have been there.

% Change in Total Votes Cast for President 2004-2008

update: The WSJ numbers guy points out that the early look at the national turnout looks to not be a record, at least once you realize the national population has been going up. It's even far more complicated than that right? When you consider the baby boom generation is aging, and elderly vote more than other groups no matter what Tuesday's data shows... it really should be the case that voter participation is going to shoot up for the next couple decades. And none of that really begins to address different turnout rates across the country or the impact of ever-expanding early voting processes. Basically, the political scientists will be parsing all this for years to come.

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and the elk voted for......

There are some obvious jokes to be made in this... but from the York Daily Record is a funny story about how:

Elk County voted for Obama? Seriously?

That's there headline, not mine, for the record. Didn't one side have an elk hunter on the ticket? (elk.. moose, what do I know?). Somebody might have wanted to let the elk into the yard.

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Thursday, November 06, 2008

Wonk-nation

I was reading this blog post out there discussing the magnitude of "Steelers Nation". The comments were interesting... we must have the most wonkish sports fans out there if people are discussing population trends and demographic when debating NFL football. I was not sure there would have been anything to pass on except this line where it says:
"...(Washington) Capitals owner Ted Leonsis once tried to place a block on the team's website preventing fans in Western Pennsylvania from purchasing tickets to playoff games in Washington. "

I had never heard that before. It goes on to say that the attempt to block us from our right of free trade failed since they couldn't block POTS ticket purchases.... and I would love to see some of the cyber-experts in town take on the Washington Capital ticket purchasing ticket system anyway. It just wouldn't be a fair fight.

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searching for America

If only I had an army of data gnomes working for me, the maps I could make. I defer to the discussion on the PG's ER blog over the maps out there looking at the correlation of increased Republican voting and those who describe themselves as simply 'American' to the census ethnicity question.

Also credit where due. I had guessed that the economic miasma of late had doomed the prospect of the talked about Pittsburgh-Amsterdam flight from ever becoming a reality. But as many have read, we are getting a Pittsburgh to Paris flight instead. A curious angle is that it is reported the conference itself is on the hook for at least part of a subsidy if usage does not live up to expectations.

and lets hope I don't sweat too much on air, I will be on WQED's OnQ tonight talking about (hopefully) the local impacts of a recession in Pittsburgh.

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Wednesday, November 05, 2008

election maps

Anyone up for some beta testing? See the button that says "2008 Election Maps" here:

http://www.pghnis.pitt.edu/

It's not obvious yet, but on the left there is a tab called "map contents" where you can see all the data options. Then you will need to click on "Pub-Election". Then you can zoom in and around the county.

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another view

Maps coming, although not sure the local picture is all that interesting compared to the nation. So here is something different. With the help of ManyEyes is this version of what happened yesterday. This has some of the preliminary results for a few states that were not completely decided so I may update this, but this is what I see at the moment. You can click on the image to get an interactive version of this as well. See:


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Tuesday, November 04, 2008

a question

it's not inconceivable the Governor gets a job in the administration right? and with nothing but good wishes, truth is the LT Gov is indisposed of late. Who exactly is next in line in Harrisburg? Is it this fellow?

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small numbers and perception

Not that important and we all should be glued to the news to see how this all turns out... but I read over on the PG ER blog this quote from someone on voter turnout after 6pm:
After voting, I talked with a friend at the (Ward 14) District 26 table. Carol Lazear, my former next-door neighbor who works as an elections official, said District 26 had had 362 voters out of 600 so far. "We're going to hit 400, I'm sure."

It seemed to be a quote in the context of how big turnout is. Just a quick look, 14-26 had 435 votes cast for president in 2004, which may undercount a few folks who showed up to vote for other races and not for president (it happens, not much but it happens). So they have to have a decent end of the day push just to get back to where they were last time around.

Don't get me wrong, I believe the big turnout story, but it will vary across the nation and it's always interesting to me to see how people perceive numbers.

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no bus no way

If anyone has any doubt that what is going on down at the Port Authority vis a vis route cuts or contract negotiations is not between those who support public transit and those who just don't like the idea that transit exists... go and read this and then go look up spatial mismatch. That is just wrong. This quote is just scary:
Buses on routes 35A Baldwin-Whitehall and 59A West Mifflin-North Versailles will no longer pick up or drop off riders at the mall. They'll terminate service at the West Mifflin Wal-Mart.

So if you dont have a car, you are allowed to shop at Walmart, but not at the mall...... and people are all excited about change in America. I don't get it.

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the day before the day after

Election day musings and looking ahead. Just think, in just a few hours the race for Governor begins.

Blog posts really depreciate fast. Just the other day I drafted a post highlighting Pollster.com's summary of trend in the race for Pennsylvania's 11 Congressional District in Eastern PA. Kanjorski is is the incumbent and a Democrat, Barletta is the Republican mayor of Hazleton in the news a lot of late. What it showed was a bizarre trend that the support for both candidates was trending downward which didn't make any sense approaching election day. But today, support for both have shot upward. Still looks like Baretta maintaining a lead.


Pennsylvania has several of these curious races that may go against what should have happened based on how the districts wer carved up after 2000. This may also happen in the state legislature which has some real implications for politics here over the next decade. This race is pivotal for who controls Harrisburg going into redistricting season which is not too far away.

When Pennsylvania was last redistricted following the 2000 census, there was little secret made in the desire to create a district that would swap one traditionally Democratic congressional district for a Republican one in Southwestern Pennsylvania. With just a little help from those darn computers a congressional district was tailor made for then State Senator Tim Murphy who would win the seat. Looks like that will not change this time around as best I read. Jeff Toobin discussed the whole history of Pennsylvania redistricting in this article in the New Yorker. In the end the effort may have backfired and according to no less of a conservative source than the Wall Street Journal the process didn't work out too well for Republicans in the long run. Now with several PA Congressional seats not going to the party the computers would have predicted, is it another case of over reliance on quantitative vs. qualitative knowledge. But this cycle is all about to repeat itself, the only question is who runs the program?

Is how redistricting played out earlier in the decade a prelude to how the post 2010 redistricting will play out. As much significance people put into the races at hand, the current races impact who will control the redistricting processes around the country in just a couple years. Whomever controls the various state legislatures will control the redistricting process which could then impact political control for the next decade. So the least reported news is what really may be quite important down the road... who is the majority in the state house come January?

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ok.. last nonelection post - gas prices

The other day the Trib had a story on how local gas prices have been slow to drop as oil prices declined of late. Could be true. The asymmetry of gas price movement with respect to oil prices is a research field unto itself.... but according to PittsburghGasPrices.com (an under appreciated Web 2.0 site IMHO) local gas prices have now pretty much dipped below $2.50/gallon in a lot of places. It really was not that long ago when prices were $4/gal and at least in people's perceptions rising with little hope of seeing $3/gal ever again. Now at $2.50 we may even have a tad bit more to go given the state of the oil prices and refinery capacity in the US at the moment.
What I want to know is why the most expensive gas in the entire region is most often this station in Bloomfield (at the end of the Bloomfield Bridge). Is that really the single most valuable property in the retail gas market here?

OK.. OK.. I surrender. Nothing else but politics for the duration. gotta go vote myself now. update, its now after 7am. Polls are open and looks like Toland isn't up on the PG's ER blog. Slacker.

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Monday, November 03, 2008

Russian wisdom and the election

ok.. just some personal commentary. Long ago.. 1993 I think it was, I spent part of the summer in Russia mostly learning Russian badly. At the time they couldn't even figure out what they were called. Soviet Union? Russia? It was actually called the 'CIS' at the time. The Commonwealth of Independent States was at best a euphemism for misdrawn maps. Anyway, my teacher had what I thought this great comment on what the difference was between his country and ours. He said that in the US 'economics drives politics', yet in his country 'politics drives the economy'. I don't think it was meant as a positive comment on the situation in the former Soviet Union at the time. I thought it was pretty deep commentary on a number of levels and for a guy who had grown up without any knowledge of free markets was even more telling.


That just came to mind as we look at the final poll numbers going into tomorrow. I just wonder what the landscape would be if the world financial system had not imploded just two months ago. It may seem like an eternity, but Fannie and Freddie were seized on Sept 7. I know some will take a bit of offense at that. It ought not to take away from the campaign of the winner and no matter the circumstances nothing should be taken for granted in a Presidential campaign. Over the long run, I think it cuts both ways. If Obama gained from the economic miasma of late, I myself will wonder more than I already do whether the mythical "Reagan Democrat" was in large part driven by folks more unhappy with the economics of the time than the social conservatism that is the most common explanation for the election results in 1980. I just can't think of theory that really makes sense of Pennsylvania's changing voting patterns. To summarize just how conflicted some large number of voters must be in the state... How is it that this is a state where both Santorum and Gore could win by large margins in the same election? I am not sure if the political scientists or the psychiatrists are best equipped to figure out those ticket splitters which are really the folks who control Pennsylvania politics. Figuring out what makes them tick must be like political gold in this state.

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Real Estate/Foreclosures and the growth of Cleveburgh

Think the PNC acquisition of NatCity is big news in Pittsburgh-Cleveland relations? Looks like local Howard Hanna has bought into the Cleveland Real Estate industry in an ever bigger way.


Folks at thePlain Dealer are still desperately seeking a silver lining for them in the PNC/NatCity deal. They are having a hard time of it. Again, you really need to dig down into the comments as well as the article itself.


More than that going on with respect to Cleveland. Long ago, people would just laugh when I ever discussed Cleveburgh as a concept. Well, they still do when described that way. But the idea has caught on a bit more even though the industry trends are now shooting ahead of any policies at this point.

Brian O. comments on Pennsylvania's unique path in the foreclosure crisis. First real appreciation in the local press of just how different the Pennsylvania and Ohio paths has been in the whole foreclosure crisis thus far. Still at least a tad bit of disbelief in that looking toward the future. The idea that we are just be slow into the tsunami is pervasive and deep seated fear I know. Yet it's hard to really justify when you consider a number of things, not the least of which is that the trend in foreclosures here is downward. But more than that it gets to how to compare current foreclosure numbers these days with the past. So much has changed in how the mortgage market operates that you can't really infer too much from comparing foreclosure rates now with those in the past. Even if there was no nationwide subprime crisis at all, I think there are lots of reasons to think the baseline foreclosure rate would be higher than in the past. That and this fear of all the adjustable rates mortgages adjusting is real, but just not the same issue in a Pittsburgh context as it is in Cleveland no matter. Lots of worst hit markets have been so bad that the saturation of foreclosures can't be absorbed by the market. I was talking to someone who had a deal they were looking at because someone else paid asking price with cash for a local house. Anecdotal I know, but I bet that isn't happening in Cleveland anywhere these days.

Just one data point on this, who knows how representative it is.. but I see a PR from some firm that appears to specialize in house auctions. The headline is: Nearly 500 Foreclosed Homes Hit Auction Block in Ohio and Pennsylvania. Makes it sound like we are all in the same boat. But what are their numbers:


Philadelphia (8 homes);
Scranton, PA (14 homes);
Cincinnati (40 homes)
Dayton (49 homes);
Columbus (48 homes);
Harrisburg, PA(8 homes)
Marion, OH (9 homes);
Toledo (34 homes);
Pittsburgh (30homes)
Freemont/Sandusky, OH (8 homes);
Youngstown (26 homes)
Cleveland (167 homes)
Akron/Canton (43 homes)

Which by my count is Pennsylvania 60 and Ohio 424. Hmm..

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Sunday, November 02, 2008

More Port Authority financial problems?

Wow.... Has anyone looked into this? The Washington Post reported last week that the collapse of AIG could have serious repercussions for some of the major transit systems in the country. The deal apparently involved some lease-buyback guarantees between the agencies with respect to their major capital investments such as rail cars. Somehow AIG fit into the mix with some guaranteed payment function which I don't know the details of.. sounds like the GIC's that got the bond insurers in trouble. The AIG default seems to have triggered some immediate payment clauses in these deals. The Port Authority of Allegheny County is reported elsewhere to be one of the primary transit agencies affected. Anyone know more details? If this really affects the Port Authority, it will be interesting to see the $$ involved. Can't be anywhere near as much as the systems with large rail systems, but still. The WashPo article says the worst case scenario for them (down in DC that is) is an unanticipated payment of $400 million. Even if the exposure for PAT is 1/20th of that it could be a serious problem here. Maybe this rises to the level of importance for the Port Authority to address on their "rumor of the day" site??

update: Down in DC it looks like a Federal judge has already had to intervene because of a call for payment related to this from a Belgian Bank. So if there is any PAT exposure to this, they have painted themselves into a corner. You know, given that the Port Authority has been so public that they are going to run out of money soon, they have essentially told any bank out there in a similar circumstance that they should press for their money immediately as well.

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Saturday, November 01, 2008

endorsement

Silly to try and talk about much else other than politics until after Tuesday. Many readers here will have seen this already, but the official Null Space endorsement for president is here.

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