Archive for July, 2010

Heat Wave Saps New York City

Friday, July 9th, 2010
Triangles Indicate Brownouts

Triangles Indicate Brownouts

With temperatures soaring past 100 degrees, residents of New York City are seeking the shade. Heat wave is the leading cause of weather-related deaths. The current wave has already caused two fatalities. The elderly and the medically vulnerable are most at risk for dehydration and heat stroke. This map shows power outages reported by ConEdison owing to peak demands on the grid from air conditioning systems. To discourage excessive utilization, city inspectors are assessing fines for retail businesses that leave their doors open and blast the air conditioning, to encourage shoppers to come in and cool off. If your business is one where telecommuting is feasible, a heat wave is a good time for people to work from home. Even if your office is located in an area with a reliable power supply, employees still have to commute to and from work where they may be exposed to excessive heat and humidity. Consider your clients and vendors at this time and if you can re-schedule their visits to your office until after the heat breaks, do so. They will appreciate your sensitivity to their well being and comfort.

Painful Symbolism at the Twin Span Bridge

Thursday, July 8th, 2010
A Critical Route

A Critical Route

Tar balls from the oil spill in the Gulf of Mexico have entered Lake Pontchartrain where they have been seen as far away as Slidell, a community west of the Twin Span Bridge. The barges placed at the Rigolets were apparently unable to stop the advance of the tar balls; workers have removed more than 1,500 pounds of the oily waste from the lake. Local officials believe that dispersants pushed the tar balls under water, which then advanced and resurfaced past the protective wall of the barges at the Rigolets. Recovery workers may have to reconsider the benefits of using dispersants to break down the oil in the Gulf of Mexico.

Lake Pontchartrain is a robust ecosystem of water life and residents enjoy fishing and crabbing in the area. But beyond the environmental damage, the presence of the tar balls floating past the Twin Span Bridge must be emotionally upsetting for the symbolism. Rebuilding the Twin Span Bridge after Hurricane Katrina destroyed it was a top priority, as it is critical to inter-state commerce. No doubt Louisianans are reliving their most awful days as the tar balls in the lake float past the bridge.

Policymakers Baffled by Small Business Credit Issues

Wednesday, July 7th, 2010
Just Listen to Us

Just Listen to Us

Policymakers continue to be frustrated by their inability to unblock the flow of credit to the small business sector. The President has put forward a $30 billion legislative package to offer incentives to community banks to lend to small businesses. While the measure has passed the House and is on its way to a Senate vote, there are doubts as to the efficacy of the proposed measures to stimulate lending. One critic expressing such doubts is Harvard Law Professor Elizabeth Warren who was appointed by Congress to oversee the $700 billion Troubled Asset Relief Program. In an interview with Bloomberg Businessweek, she stated, “policymakers are flying blind”, owing to a dearth of data on small business lending. While the original intent was that TARP recipients would on-lend some of their capital infusion from Washington to the small business sector, they have clearly failed to do that. The largest TARP recipients, those with assets in excess of $100 billion, reported 10% declines in small business lending from June 2008 to June 2009. (One bank has even offered rate reductions on its loans to small businesses that hire new employees.) But Warren is uncertain if the decline is the consequence of the banks’ reluctance to lend or the reluctance of credit-worthy small businesses to borrow. To remedy the data gap, the Federal Reserve Bank of Atlanta recently began a quarterly survey of small business lending in its region, in the hope that better data might craft better policies.

If we were not experiencing double digit unemployment even as viable small businesses that wish to hire are choked for credit, this would be funny. But what the monetary economists of the Fed and their academic advisors needs to do is to actually talk to a few small business owners. I am very active in entrepreneurial groups and the message I hear everywhere is the same. Those of us who own businesses that are credible candidates for loans are reluctant to borrow for fear of rising taxes, higher costs due to healthcare reform and other areas of uncertainty arising from government policies. Businesses generally prefer stable environments when taking on longer-term liabilities, such as loans. We are not close to having clarity on some very important tax and economic policies (yes, we know taxes will rise, but by how much?) that would enable us to see through the fog to determine how much debt we could prudently take on. This is the message that Washington needs to hear.

Proposed Reinsurance Tax

Tuesday, July 6th, 2010
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Massachusetts Congressman Richard Neal would like to impose taxes on foreign reinsurance companies and that means scarcer and more expensive risk capital for small businesses. Reinsurance companies are the ultimate providers of risk capital as they back-stop the risks of primary insurance companies. Consider what happens when a hurricane strikes Florida, for example, causing $10 billion in insured losses. The insurance company likely has reinsurance protection in place to spread the risk, thereby increasing capacity and lowering costs. If the insurer had to bear the losses itself, it would have less risk capital to underwrite policies. Imposing a special tax on reinsurance raises its cost, making insurance less affordable to small businesses. Any reduction in reinsurance capacity increases the vulnerability of communities particularly prone to catastrophic risks, such as coastal communities and large cities. Foreign reinsurance providers are of particular concern to the small business community as they provide two-thirds of the reinsurance coverage purchased by U.S. property-casualty insurance companies. We rely on foreign capital to make our economy hum. Imposing a discriminatory tax on reinsurers is counterproductive for the U.S. economy and its small businesses.

NOAA’s Oil Spill Scenario

Monday, July 5th, 2010
Spread Scenario

Spread Scenario

The National Oceanic and Atmospheric Administration has performed a simulation analysis on the possible dispersions of the oil spill, assuming leakage of 33,000 barrels per day that continues for 90 days. NOAA believes that under this scenario, there is an 80% probability that the oil slicks will move east of Florida and then north, effectively going around the peninsula into the Atlantic Ocean. There is a 20% chance that the oil spill could continue north up the Atlantic as far as Charleston, South Carolina, while also dispersing to the west to travel as far as Corpus Christi, Texas.  In the worst-case scenario, to which NOAA assigns a less than 1% probability, the oil slick could spread down to southern Mexico and the Caribbean region. We really should have immediately accepted the offer of the Netherlands to contain the spill quickly using their technology. Washington’s dithering and blame game puts our own interests and the interests of other countries at risk.

Happy Fourth of July!

Sunday, July 4th, 2010
All On Deck

All On Deck

This year the annual Macy’s fireworks were held on the Hudson River, to the west of Manhattan, rather than the East River, on the other side of Manhattan, so I had the perfect view. At about 7:00 p.m., boats began moving up the Hudson to try to position for optimal viewing.

Unfortunately, my photographs of the fireworks and of the boats didn’t come out well. So I am substituting what I think is a better picture: that of a U.S. Navy ship sailing out of the Hudson River after the holidays. Notice the crew in their white uniforms all standing at attention as they prepare to sail past the Statue of Liberty.  I have made a commitment to renew my sailing lessons this summer. It is a waste to be here and not take full advantage. And I need to renew and refresh with a work break from time to time. Happy holidays, everyone.

Getting Sick from Medical Identity Theft

Thursday, July 1st, 2010
Feeling Confident?

Feeling Confident?

Just when you think that the electronic society couldn’t become more inhuman, the U.S. Federal Trade Commission, our over-burdened consumer protection agency, alerts us to signs of medical identity theft:

  • You are billed for medical services that you never received.
  • A debt collector contacts you about medical debt you don’t owe.
  • Your credit report shows medical collection notices that are unfamiliar to you.
  • Your health insurer denies your legitimate claim for medical benefits, stating that you have reached the limit allowed under your plan.
  • You are denied insurance coverage because your medical records reveal a pre-existing condition that you don’t have.

Misuse of your identity can arise from dishonest staff in medical offices filing fraudulent insurance claims with your information or someone has been using your insurance information to obtain medical treatment, which can harm your health as well as your finances. The imposter’s medical information, such as his diagnosis of his condition, may appear on your medical record, exposing you to the risk of improper treatment, possibly leading to injury, illness or death.

In addition to being vigilant about protecting your personal documents, examine your explanation of benefits sent to you each time your insurer pays a claim on your behalf. I used to discard those without reading them. I don’t do that any more; now I look at them carefully and when I discard them, I use a document shredder.