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Inquirer Daily News

Archive: November, 2011

POSTED: Wednesday, November 30, 2011, 12:48 PM

Affluent Newtown Township, Bucks County (where the median family income is over $92,000, almost double the Pennsylvania average) has had its credit rating cut two notches, to Aa3 from Aa1, by Moody's Investors Service, which says the local government has been spending more than it brings in.

Moody's downgraded $9.8 million in general-obligation bonds, raising the possibility the town will have to pay future investors more to buy its bonds, the next time it borrows money.

The agency cited falling tax revenues, rising budget deficits, and "deterioration of the township's reserves and cash position." The township's general fund balance fell to $1 million in the last fiscal year, from $3 million three years earlier, while income taxes, which pay more than half the township's bills, have fallen more than 6% since the start of the recession, Moody's analyst Kristina Piccareto noted.

Despite the evidence, "we are not spending beyond our means, which would signify spending has increased dramatically in the last few years," said Robert L. Ciervo, head of the township's elected Board of Supervisors and a learning-center manager at Rutgers University in Camden. He said the Moody's downgrade won't much affect Newtown Township because "I don't see us (borrowing) money, probably, in the next ten, fifteen years." The downgrade doesn't affect current fixed-rate debt, which was issued when the township had more money and a higher credit rating.

POSTED: Wednesday, November 30, 2011, 12:08 PM

Amid Pa. Gov. Tom Corbett's push to sell and privatize Pennsylvania's state liquor and wine stores, elected state Auditor General Jack Wagner says he'll tell the state House Liquor Control Committee, at a 1 pm hearing at the Pa Convention Center today, that an analysis by his office shows the plan "would lead to higher prices" and would likely "fall short" of continuing the current $470 million/year in Pa. Liquor Control Board payments to the state's general fund. 

Wagner also doubts a sale of liquor sale license can generate the estimated  one-time $2 billion in revenues that privatization backers estimate, given depressed real estate and business values in the current market. 

State liquor and wine revenues can only be maintained at current levels by boosting taxes that would make Pennsylvania wine retailers the nation's most expensive, Wagner added.

POSTED: Wednesday, November 30, 2011, 10:00 AM

After four years as boss of Publicis Groupe's Digitas online ad agency, Digitas Global CEO Laura Lang is moving back to New York to run TimeWarner's Time Inc., publisher of Time, Fortune, Sports Illustrated, People and other popular magazines, the Wall St Journal and Ad Age and the  Hollywood Reporter say this morning.

 UPDATE: TimeWarner confirms, here. 

EARLIER: Digitas employs 3,000 in 19 countries. The firm's health division, based in Philadelphia, counts drugmakers  AstraZeneca, Pfizer, Bristol-Myers Squibb, Shire, Novo Nordisk, and Johnson & Johnson. among its clients. (Corrected. Thanks, PhillyTechNews, for setting me straight.)

Lang's move comes a month after Publicis said it was merging Digita Health and affiliate Razorfish into a new Healthcare Communications group headed by Nick Colucci. Digitas Health founder David Kramer, a longtime Philadelphia business video producer, last summer announced his retirement at the end of this year. (Also corrected.)
POSTED: Tuesday, November 29, 2011, 3:39 PM

John Elduff, the Berwyn-based owner of JTE Multimedia, publisher of Postgraduate Medicine and other medical-themed magazines, says he's preparing the revival issue of long-dormant Colliers' magazine, which he bought at auction with the old Saturday Review last year for just $2,000, as I reported here.

"We're doing a clean-up of our website before the first mails," Elduff told me. The new Colliers is aimed at senior citizens in doctors' offices, which ought to be good for some drug and 'lifestyle' ads.  It also hopes, he says, to recapture some of the muckraking and serious literary tone of the old publication, which published Hemingway, Fitzgerald, Kipling, Vonnegut, Bradbury, Edward R. Murrow, and many other big 20th Century names, and took credit for helping prod creation of the Food and Drug Administration, before it was suspended in the 1950s. 

The new Colliers promises articles on cholesterol and statins, Medicaid in Florida, American exceptionalism, Norman Mailer's "failed attempt at redemption", and an English translation of French novelist Gilles Leroy's book on Scott and Zelda Fitzgerald, among others. Ad rates top at just under $2,000 for a full-cover spread or back cover. Elduff isn't saying much yet about planned circulation or who's writing the new content. 

POSTED: Tuesday, November 29, 2011, 12:35 PM
An ex-Penn State disciplinarian said Joe Paterno interfered with judicial affairs decisions and procedures at the school. (AL MESSERSCHMIDT / Getty Images)

Philadelphia investor Ira Lubert has joined four current or former Penn State staffers on a committee to select a replacement for 46-year football coach Joe Paterno before Christmas.

The architect of the school's popular football program that helped raise Penn State's national profile and attract alumni donations, Paterno was fired early this month along with school President Graham Spanier after a state invesigation of child abuse reports against a former coaching staff member and the university's initial failure to respond.

In his day job, Lubert and his hand-picked partners manage $12 billion at Lubert-Adler real estate funds and a group of related private investment portfolios that count Pennsylvania state and teacher pensions as clients.

POSTED: Monday, November 28, 2011, 11:40 AM

When the US was bailing out giant banks in 2008, the Federal Reserve and the Treasury Department didn't want us to know just how much money was propping up the largest US banks in the middle of the crisis.

The secrecy (under Bush and the Bernanke Fed, and under NY Fed boss turned Obama Treasury Secretary Geithner) might have helped keep the financial system from collapsing at the worst of the crisis. That's how bank regulatory secrecy is justified.

But the government's and the banks' continued failure to disclose, once the worst was over, made it easier for big bank CEOs to claim they hadn't been in really serious trouble (when records show they were), and to fight off conservative Republicans (like Dallas Fed head Richard W. Fisher) and liberal Democrats (like then-US Sen. Ted Kaufman, D-Del.) who wanted to break up Citigroup, JPMorgan, Goldman and the other giants so this wouldn't happen again. Result: the big banks got bigger.

POSTED: Monday, November 28, 2011, 11:10 AM

Marlton-based Hill International says it's been hired by California-based Bloom Energy Corp. "to provide construction management services" at the Red Lion, Del. natural gas fuel-cell generating station Bloom's Diamond State Generation Partners LLC affiliate plans to build south of Wilmington.

The site, south of Wilmington near the Chesapeake & Delaware Canal, will include a water de-ionizing plant, wells and water storage, a "natural gas regulating station," an office building and stormwater management. Bloom and Hill won't say how much the plant will cost or how much the Hill contract is worth.

Bloom's "Bloom Box" fuel cells are in use at Wal-Marts and other sites in California. Delaware Gov. Jack Markell has agreed to use up to $16 million in taxpayer funds and allow a surcharge on electric rates to subsidize the project, in hopes of creating hundreds of jobs, if the fuel cells catch on with East Coast commercial energy users.

POSTED: Monday, November 28, 2011, 10:27 AM
Markets are rallying sharply this morning overseas for three reasons. First, European leaders issued statements over the
weekend acknowledging that they are creeping in the direction of fiscal unity. Markets are casting a vote on direction, not any
actual steps that will shore up Italian debt. But any step forward is a positive. Second, U.S. retail sales over the weekend serve
as a reminder that our economy so far is doing just fine. Not great, but OK. We have learned over the years not to read too
much into strong opening weekends. They often are head fakes for what is to follow. But good sales are certainly better than a
buyers’ strike so we will take it. Third, as I noted last week, hedge funds are always chasing momentum and performance and
they have gotten themselves into as short a position as any time since February 2009. That means a sharp rally this morning is
2
likely to include massive short covering which will only serve to magnify the rally. If today’s strength is simply short covering,
it will be another one-day wonder in a bear market. We, unfortunately, have seen lots of those over the past 4 years. If it is real,
meaning markets believe the strength in the U.S. economy and are more confident that Europe can get its arms around its debt
problems, then the rally will carry through tomorrow and beyond.
So enjoy this morning and probably today. At the moment we remain in an 1100-1250 trading range and even with the rally in
futures this morning, we are smack in the middle of the range. I don’t see any reason that we should break out any time soon.
So far, I have spent most of the morning talking about Europe once again but I shouldn’t end without mentioning our own fiscal
mess. The supercommittee’s failure to attack fiscal irresponsibility isn’t the end of the story. Before year end, there are two
issues to address. Congress at the moment is operating under a continuing resolution that runs out on December 6. That means,
without another extension or passage of the necessary appropriations bills, the government will shut down then. An entity as
adept at kicking the can down the road as Congress ought to be able to pass yet another continuing resolution without much
bother but there is a fly in the ointment this time around. Last year, Congress passed a 2% cut in payroll taxes for employees as
well as one-year accelerated writeoffs for specific capital spending and an extension of unemployment benefits. All of these run
out on December 31 unless extended. In order to extend them, conservatives in Congress want offsetting tax cuts. The left
wing wants higher taxes on the wealthy. This is exactly what tied the supercommittee in knots. The right wanted no tax
increases whatsoever; the left wanted no plan that didn’t raise $1 billion from taxes on the wealthy. No compromise; no deal.
The debate over the payroll tax etcetera is a precursor to next year’s battle regarding the demise or extension of the Bush tax
cuts.
If the payroll tax cuts die, there is little question that growth forecasts for 2012 will have to be lowered. Take $1,000 out of the
pockets of every wage earner and clearly economic growth will be less. But letting the cuts expire will almost certainly shrink
the deficit a bit. Both sides have a point but neither is ready to move an inch. If they don’t and stay stubbornly in position for
another year, 2013 will witness the largest tax increase in U.S. history. I am not making any predictions. Politics has a way of
confounding the wisest of souls. But the storm cloud is out there and it likely won’t lift before the 2012 elections, if then.
But for now enjoy today. Maybe European leaders will heed the message of today’s rally or maybe it will simply buy them a
little more time. We’ll see.
Today, actor Ed Harris is 61. Paul Shaffer is 62.
James M. Meyer, CFA 610-260-2220

Stocks are up today. Maybe cause the Euro fog lifted a bit, or US consumers spent a little better than was feared, or hedge funds are temporarily covering lots of short bets, or Asian investors are spooked and see Western stocks as a safe haven. Or last resort.

But there's plenty more trouble and uncertainty just ahead, thanks to the people we've elected, warns James F. Meyer of Tower Bridge Investors, in a note to clients of Boenning & Scattergood in West Conshohocken.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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