Friday, October 31, 2008

Movie Making: Being Annoyed

I have read about the disruptions movie making causes regular people. But until this afternoon, I had not had the pleasure. Here's the tale. Driving south on Girard Blvd. in Albuquerque, toward Lomas, I was about to pass Jefferson Middle School. I was late for a 4 p.m. meeting. This is a standard route, though I hadn't come that way for several days. The road is blocked and traffic is detoured. The sign says, "Special Event." A police officer directs traffic onto the detour route. It's Halloween, so I figure Jefferson has gotten really carried away on a school Halloween event. Because the streets on the detour route are two lane, it takes a while to work my way through the detour.
Coming back, I'm heading north on Girard and I see the street is still blocked at Jefferson. There are lights at Jefferson, big ones. They turn out to be part of the movie production. I got around Jefferson and decide to stop and complain to the principal, still thinking it is a Halloween event. Having attended Jefferson and having living in the neighborhood for decades, I know the location of the little passages between homes that allow access to the school yard. I find one and head across the football field. The area behind the school, next to the field, is full of trailers. There are lights. I'm thinking: This is a really big event, all the more annoying and inappropriate.
Then I come to a police tape and a sign says, "To Set." Aha, I think, it's a movie, which explains the trailers. Still, annoyed, I leave. As I get in my car, I decide to ask the police officer guarding Girard the name of the movie. So I go through another access alley, walk up Girard and ask the officer. He says the movie being filmed is "Spy Next Door" with Jackie Chan. The big lights are on just west of the entrance to Jefferson's old gym. A crowd fills the space between the lights and the gym.
When I report the mess to my wife, she says she had gotten caught in the same disruption earlier in the day and had forgotten to mention it.
The movie economic impact studies that I have seen do not consider the lost time imposed by movie set disruption. For my meeting it was about 20 minutes each for three people or about one man hour. Nor do they consider the sales lost by retailers in downtown Albuquerque. Nor do they consider the gas wasted on the detour. The tax subsidy makes the movie business a dubious business for New Mexico. Considering these additional costs won't help.

Thursday, October 30, 2008

Jobs: September. Slide Continues

New Mexico's economic slide continued, down, that is, in September. Headlines, however, went to a seasonally adjusted drop in the unemployment rate to 4% in September, from 4.6% in August. But after leading with the unemployment rate drop, the release from the Department of Workforce Services release said, "The state’s unemployment rate drop in September likely resulted from a statistical sampling anomaly."
The state added 3,900 wage jobs from September 2007 to September 2008. That's a 0.5% increase, or almost nothing. Santa Fe scored its fourth consecutive month of year-over-year wage job losses, enough to be considered a metro-area recession. Albuquerque lost jobs, year-over-year, for the second month. DWS said, "Over the year, the (Albuquerque) metro area recorded its second consecutive month of negative growth, shrinking by 0.2 percent (-700 jobs). Contractions were seen in half of the 12 major industry divisions." The big hit was in manufacturing, where the Eclipse layoff appeared in the numbers. Manufacturing in Albuquerque has lost jobs for 16 months.
New claims for unemployment compensation in NM were 1,295 for the week ending 10/18, up 260 from a year before. For the week ending 10/11, it was 1,481 new claims, up 397. Year over year increases in claims have been the trend for months.
Wage jobs in the metros:
Albuquerque: -0.2%. -700 jobs.
Farmington: +1.9%. +1,000 jobs.
Santa Fe: -0.9%. -600 jobs
Las Cruces: +2%. +1,400 jobs.
For the year, New Mexico's job growth is behind Texas (+2.3%), Colorado (+1%), and Oklahoma (+0.7%). We are ahead of Utah (+0.1%) and Arizona (-2.2%). Hammered by real estate, Arizona has the 50th ranking wage job performance in the nation, behind even Michigan. Rhode Island is last with a 2.7% year over year job loss.

Tuesday, October 28, 2008

Politics: Obama / AFL-CIO Thorough

At about 8:15 this evening I received a couple of laser printed Obama / Martin Heinrich flyers tucked into my front door. I knew something might be there because the tucking person rang the bell. Given the time of day, I didn't answer. But a few minutes later, I checked and found the flyers. The effort violates a tried and true political door-to-door rule; Stop at dark. That's because the residential insecurity level goes through the roof after dark. Or as the general marketing rule says; Don't annoy the customers.
Obama and Heinrich probably were not responsible for the intrusion. The disclaimer on the flyer credits the New Mexico Federation of Labor, AFL-CIO. Remember that.

Road Notes 2

Three highlights from our return to Albuquerque last Thursday from Clinton, Oklahoma. And you just thought blogs were supposed to be utterly immediate....
1. The east side of Amarillo sports a billboard that may advertise the Ute Lake up-scale retirement / second home development near Logan which is near Tucumcari. The copy was, "Golf. Boat. Live. Ute Lake." Googling around, I find nothing about the development. I have an inquiry in. More later, I hope.
2. Around Santa Rosa we passed a couple of new looking overpassed flanked around the base with what appears to be planter boxes, big ones built of concrete. A sizable tumbleweed was growing from one of the boxes. Such additions to overpasses offer yet another idea of extras that can disappear as the state confronts economic reality. The cost of developing the plantings and then maintaining them would have to be amazing. I assume the water would be trucked to the overpass.
3. Just east of Moriarty we passed a McCain/Palin "Straight Talk Express" RV that was also heading west. A cell-phone report to our friend Mark Bralley established that the McCain campaign has leased a fleet of such vehicles and shuffles them events around each region.
For gas used on our trip, the purchase history started October 7 at Costco in Albuquerque. The price was $3.08/gallon. Today's purchase, also at Costco, was for $2.34/gallon. The highest price gas on the trip as purchased October 13 at a Shell station (The Shell station) in Paxton, Nebraska) for $3.43. There was a tie for second highest price—$3.29/gallon. The purchases were October 12 at a Chevron in Las Vegas, NM, and a Phillips 66 in Newkirk, NM.
The lowest price gas, $2.29/gallon, was purchased October 22 in enid, Oklahoma, from Shell. The second lowest price, $2.34/gallon, was found October 22 at a Conoco in Emporia, Kansas.

Monday, October 27, 2008

Tony Hillerman

As just about everyone in New Mexico knows by now, Tony Hillerman, author and gentleman, died yesterday. My tales of Tony are three.
I was in his senior news writing class in 1969 at the University of New Mexico when he floated in one day to announce the sale of his first book, The Blessing Way.
Much later, after a luncheon presentation, I observed that his writing was spare, very much in contrast to the approach of his friend Norman Zollinger, who used a lot of words. In response, Hillerman reminded the audience of what he taught us at UNM—that the adjective was the enemy of the adverb. In other words, never use substitute two words for the appropriate single word.
Over lunch in the bar at the old Al Monte's restaurant on Rio Grande, we talked about the governance of higher education in New Mexico. Hillerman said the Commission on Higher Education was originally intended to be a super board of regents to get around the lunacy of having he state's six universities enshrined in the state constitution. Once passed, however, the administration of time and the legislature were unwilling to invest political capital in making the idea work. From his post at The New Mexican, Hillerman watched UNM President Tom Popejoy start to dismantle the commission. Then Hillerman went to work for Popejoy and helped him finish the job.
Hillerman was from Sacred Heart, Oklahoma, a place too small to be on either of my two Oklahoma maps. Google Maps reports that Sacred Heart is southeast of Oklahoma City, my birthplace, at the intersection of E 1390 Road and N 3480 Road.

Sunday, October 26, 2008

Politics: Obama Event

The Ds do much better at political events than the Rs. When John McCain and Sarah Palin came to town last month, the Rs stuck with security checks till the bitter end. Th Ds last night got real and about an hour before Obama's scheduled talk, simply started waving people into Johnson Field at the University of New Mexico. We had been in line about 1.5 hours. People had starting walking into the back of the cordoned area about the same time. A friend was in line on Lomas Blvd. near Stanford when a call came from another friend reporting the back door entrance. Our friend got out of line, went to the field and strolled in.
The event stuck with regular political stuff. There was nothing really stupid along the lines of the cheerleaders at the McCain/Palin event. Nor did anyone follow the Darren White example of rudeness and advocate making random phones calls to undecided voters. See my September 7 and 9 posts on the McCain / Palin event.
Crowd reports are 40,000, plus or minus, including folks not inside the fence. I have done crowd reports, so I know such numbers are often pulled from the air. Even so, Joe Monahan's claim of the largest political event crowd in NM history has to be true. Maybe it was event the largest event crowd in NM history. Certainly it was the longest line in the history of UNM.
The crowd ranged from students to Baby Boomers. The capacity of University Stadium is 37,350. I don't know whether the Rolling Stones concert of a few years ago was before the expansion from 32,000. That concert had seating on the field, so the concert crowd and Obama's crowd would have been around the same size. IN any case, the attendance was just under five percent of the metro Albuquerque population, an amazing proportion.
The highlight for us was visiting with five students from China who were attending to see what is was all about. District Attorney Kari Brandenberg was working the line, so I made sure she spoke to the Chinese group. Then I had to explain what she did. A freind of our is teaching English in the hometown of two of the students. Very small world.
Obama spoke at 9:12 p.m., about 25 minutes after his convoy arrived. He is very, very, very, very good, almost persuasive, in fact, unless one tilts strongly the other way, And we were on the other side of the field from him, just barely able to see him. Obma appeared to be a quarter-inch high. The persuasiveness goes away when I start thinking about who he really is—a conventional liberal who clawed his way up the ladder in one of the most corrupt cities in the America and one who has never done something real, except be a community organizer, if that is real. The size of crowd—around 5% of the entire state's population—and the passion define a huge problem for the Rs, one that needs attention starting about 7:30 a.m. November 6.

Sunday, October 19, 2008

Sin: Manny Aragon and Crony Capitalism

Wow! I leave town and economic reality hits the state, Mannie Aragon cops a plea and, for comic relief, Rebecca Vigil-Giron is back on the state payroll.
Readers know I'm a big fan of our citizen legislature. The structure keeps the elected folks, mostly, closer to the people. In Wisconsin this week, a friend mentioned yet another problem with the so-called "professional," full time legislatures. It took the Wisconsin legislature six months to pass a budget this year. My friend figures there was less incentive to act because the legislators got paid whatever happened. In New Mexico, legislators lose money, so they have reasons to get it done.
"Professional" legislatures also do not eliminate sin. Nor does public financing financing. (Think Jerome Black Jr.)
One situation that invites sin is a small, lucrative, tightly controlled operation. Before Manny Aragon and Robert Vigil, the University of New Mexico's Lobogate basketball scandal was the handiest example. Without going through the whole tale, just understand it was small, in terms of the number of people involved, and very profitable, both the basketball operation itself and for the people around it, what might be called "crony capitalism," a term used more recently to describe the Putin regime in Russia. In such situation, crossing the ethical line is a big temptation and, for the weaker folks, the legal line offers temptation.
Our legislature is a small operation that financially is not especially lucrative. Power, though, is a principal currency. So is information. Access to the two can be turned into money. "Crony capitalism" is the term of art. Though crony capitalism was around long before Bill Richardson, his administration does seem to have raised it to a higher art,at least if there is any substance to the many news reports.
As senate leader, Manny Aragon was king or co-king of the legislative hill of a long time. But like that fallen basketball king, Norm Ellenberger, Aragon couldn't just be king on his singular merits as a force of nature. Aragon's plea this week to three felony counts will take him to jail. While Aragon's jail probably will be nicer than others, it will still be a jail. Aragon will not be free. That's as it should be.

Wednesday, October 15, 2008

Road Notes and Signs

We are traveling. This is the annual trip to visit the in-laws in Dubuque, Iowa, and southwest Wisconsin. Think cheese, five-year-old cheddar, a delicacy on the scale of the best green chile.
On October 12, last Sunday, at about 10:15 AM, we saw two road signs flanking I-25 just west of Rowe, NM. The one next to the left lane said that the left lane was closed ahead. The one next to right lane said the right lane was closed ahead. Visions of an old and great B movie flashed. The movie was "Vanishing Point," or something along that line.
Moments later we were pleased to find that only the left lane was closed.
On I-76, heading northeast from Denver, the road sign said: Stay Far Right and then had a bicycle icon. We were 200 miles from Denver and 300 miles from Lincoln, Nebraska. This concern for the cyclists seems to me a grand example of waste of money and the effect of a noisy lobby.

Friday, October 10, 2008

Politics: Tom Udall Interview

The two-week publishing is over for the eight New Mexico newspapers that subscribe to the New Mexico Services syndication service. That means I can post, as promised, the non-interview with Rep. Tom Udall. A subsequent post will have some of the email correspondence with the Udall campaign and some additional comments.

Harold Morgan/New Mexico Progress

Udall motivation a mystery

By Harold Morgan
New Mexico Progress

Is Rep. Tom Udall afraid of me? Actually, properly stated, the question is, “Is the Udall campaign afraid of me?”
However posed, the question is preposterous. And legitimate. I’ll explain.
As noted briefly in my last column, I wanted to interview Udall under the ground rules governing the interview with Rep. Steve Pearce. The idea was to ask the same three general questions using a written script, with no advance notice about the questions.
The candidates would respond spontaneously. Then as best and neutrally as possible, I would transcribe the answers with one column devoted to Udall and one to Pearce. You could then compare the answers and draw your own conclusions.
Pearce accepted. Udall—the Udall campaign—required at least a general indication of the topics. Through two weeks of email exchanges, the campaign continued to insist on advance notice. Finally, I said there would be no interview.
Last fall I did a similarly structured interview with Udall and Pearce. Then it was Rep. Heather Wilson’s staff that blew off the interview—after Wilson agreed. That was strange, but too long a tale for this space. That interview was just one question and with no advance. The responses were transcribed from my notes. The interviews can be found at:, winter issue.
Udall accepted the rules before, but not now. A mystery.
Disclaimer: I am a Republican, your basic small-government sort. That should not have been a problem. The Udall campaign did not raise the issue. To keep the questions even-handed and to avoid accusations of tilt, one way or the other, I got help in developing the questions.
Two other reasons might explain the Udall campaign’s unwillingness to accept the same approach as last fall. First is staff incompetence. I have no basis for comment one way or the other. The second reason might be some desire to protect Udall from the perils of a spontaneous response to a general and perhaps challenging question.
If this factor was an element, it is even nuttier than fear of me. After all, Udall has been an elected official for nearly 20 years and he spent a good ten years before that trying to be an elected official. This is a guy who talks for a living.
Further, a good part of the talking done by an elected official is to and through journalists, even ones who might not think the official walks on water. Elected officials view journalists as a vehicle for communication. From the journalist side, the politician is expected to respond when asked something.
It’s a bit of journalist ego trip, getting to talk to fancy folks. For elected officials to not talk to journalists can be dangerous over time. Besides having the human reaction, being annoyed at the rudeness, they will begin to wonder what is hidden. Finding hidden stuff goes to the core of the journalistic soul.
I don’t know why, in his heart, Tom Udall is running for the Senate. My hunch about his motivation is less than charitable. For a man whose adult life seems to have been all about being elected, being a Senator is more cool than being a Congressman. This is rational, to be sure, but New Mexicans deserve more.
An early theme, now unseen on Udall’s Web site, was “Doing right for New Mexico.” I don’t know what that means. When I wrote this column, the Web site gave you no reason to vote for Udall other than he is Tom Udall. Brand loyalty is assumed, I guess.
When you see Tom Udall, ask him why—deep down, in his heart—he is running for the United State Senate. Try to find passion. And don’t take campaign talking-point rhetoric for an answer.

Sunday, October 5, 2008

Economy: The Credit Crunch, KC Fed View

Tom Hoenig, president and CEO of the Federal Reserve Bank of Bank City, got the second and heavy half of the road show last Thursday. The purpose of the gathering—the 2008 New Mexico Economic Forum—was both to share information and perspective and to listen to people and hearing things that might not filter to Kansas City.
Hoenig, speaking from notes, said his comments could not be characterized as the usual economic outlook. Rather, it would and “economic feel sort of speech” because things were too murky.
He opened with what proved a continuing theme of the talk. “We will see our way through this.” Later Hoenig said that “a year from now” the people in the audience would be saying to themselves, wow, that was really rough. Hoenig also said, “We will work to a solution.” He cautioned against “irrational fear.” Ultimately, the issue is confidence, the faith of businesses and individuals that they will get paid for actions undertaken.
The credit crunch today traces to three causes, Hoenig said. The first was the housing bubble, which happened because of “relatively easy financing.”
What Hoenig didn’t say is that the easy money happened in major part because of Clinton administration changes to the rules for the Fannie Mae and Freddie Mac starting in 1993. The idea was to expand homeownership, certainly a worthy objective. I mention this because of the casual and unsubstantiated claims by liberal pundits that the (evil slimeball) Bush administration did it. In a recent op-ed, Terry Jones of Investors Business Daily said, Clinton “turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocks and handed favors, jobs and money to political allies. This potent mix inevitably led to corruption and the Fannie-Freddie collapse.” The additional detail (thing moral hazard here) is that Fannie and Freddie probably never should have been created with an implicit government guarantee.
There “used to be a statute” limiting a real estate loan to 80% of the value of the property. The limited was eliminated. Loans went, sometimes, to 120% of value. The rush was on.
Also unmentioned by Hoenig is the claim that the Fed’s easy money policies made things worse.
The second shock came because “people hadn’t been paying much attention” to what was really in the CDOs, the too-clever-by-half securities created to somehow off-load the risk of the mortgages done to finance the increase in homeownership. When people did look at the CDOs, the quickly resulting unhappiness “began to affect a whole host of asset backed securities.” Values plunged.
Finally, commodity price shocks affected goods from corn to oil and copper. The result “affected consumers’ willingness to spend” and “depleted disposable income.”
“A fundamental rethinking of the U.S. economy” is the result of everything hitting the fan.
In response, the Fed has been doing its basic thing—trying to keep liquidity, meaning reasonable access to money, in the system. The Fed lowered the Fed Funds rate from 5.25% to 2%, began to use its lending facility to target distressed banks, introduced something called a term auction facility and cooperated with central banks around the world for more liquidity.
What the Fed can’t do and what is the point of the bailout is put capital into the market. Under the bailout, the treasury will buy bad securities. This “is not part of what the central bank does.”
What the Fed—America’s central bank—does do is use monetary policy to pursue a dual mandate—stability in both prices and economic growth. Hoenig tilts a bit toward price stability, which, he said, in the long run is necessary for growth. Over the 20 years, the price index has doubled. “We have to be mindful of that,” he said.
The most important thing that has to happen, Hoenig said, is that someone (which sounds here a whole lot like the government) has to absorb a lot of losses and then get the bad stuff off the books. When you have losses of this magnitude, the government has to make a decision as to what to do. The final step is to think about how to mitigate the negative effects in the future.
For the U.S. economy, the “feel” is:
• “Consumption in the U.S. will slow” but not stop.
• Business fixed investment should improve in 2009. The balance sheets of most of the corporate world are still in good shape, but companies will hang out through 2008.
• Exports, which have been “growing very strongly,” will slow. Export growth has offset the housing hit on the economy.
• “The government of course does appear to be spending.” Hoenig got a chuckle from the audience with that line.
• Depending on the economy, the bailout “should have some effect on the cost of borrowing. You should see an increase in the cost of capital as a result.”
• The third quarter of 2008, which has just ended, will show “very modest growth,” well below the economy’s long term potential of 2.75%, plus or minus, per year.
• “The economy will improve slowly over time” ad will look better by the second or third quarter of 2009.
• “Right now, for the most part, regional and community banks are still lending.”
We’re coming off “a decade of very extreme growth.” Improvement will take time.
Changing mark to market rules is proposed fix Hoenig doesn’t favor. Mark to market means that financial institutions are support to value securities such as sub-prime loans at what the security could be sold for today, however that can be figures.
“I think backing away from mark to market will cause as much (of a) problem as it is intended to alleviate, “Hoenig said. “It would be chaotic. Mark to market is not the problem. The problem” is the sub-prime mortgages and the easy lending practices that produced the sub-primates.
Hoenig’s response to the argument that U.S. regulation of financial institutions is fragmented and ineffective was, “That’s a red herring. I hope we diagnose the problem correctly. It’s not the regulatory structure.” Hoenig noted that the Fed’s attempt to address banks’ concentration of real estate loans ran into a wall.

Friday, October 3, 2008

Economy: New Mexico

Manufacturing is the weakest sector of the New Mexico economy and, as manufacturing sectors go, among the weakest in the nation. In August, manufacturing jobs accounted for 4.16% of New Mexico's nonfarm employment, as compared to 9.85% nationally. Nor do current surveys "indicate a near-term rebound." For perspective, in 1993, manufacturing claimed 6.8% of the state's wage jobs.
The report came last night from Alison Felix, an economist with the Federal Reserve Bank of Kansas City. Felix joined her boss, Tom Hoenig, for the KC Fed's periodic New Mexico Economic Forum. I will report Hoenig's remarks tomorrow. One highlight was that Hoenig doesn't want to dump mark-to-market valuation rules. He says the "chaos" of such a change would be worse than what we have now.
"Overall," Felix said, "the New Mexico economy is outperforming the nation, but has weakened during the past year."
To summarize:
Real personal income is growing nicely in new Mexico, up around 4% for the second quarter of 2008, about double the national rate. Felix didn't mention the huge growth in transfer payments. See September 18 post.
Comparing sector employment to the nation, New Mexico has:
* Four times the employment in Natural Resources and Mining: 2.37% vs. 0.6%.
* Two thirds the employment in financial activities: 4.1% vs. 6%. No surprise here, we're a long way from mega-large population major metros. Finance is the weakest New Mexico service sector with a 2% job drop between August 2007 and August 2008.
* Five percentage points more in state and local government: 18.75% vs. 13.5%. Hmmmm....
Our percentage decline in existing home sales is more than the nation.
Home prices here have held up much better than nationally, only showing a slight decline as of the second quarter of 2008.
Our percentage of homes in foreclosure, 1.35% of all mortgages, is half the national rate and around a third of the worst-hit states such as Arizona.
New Mexico is fourth, per capita, is getting federal spending.
New Mexico tax revenue collections for state government were up all of 1.8% in the fiscal year ending June 30,2008. Without severance tax money, up 25%, we would have been in big trouble.
New Mexicans should get this information—and much more—regularly from the Bureau of Business and Economic Research at the University of New Mexico. BBER has the data, paid for with public money, but keeps it secret due to the structure of BBER's FOR-UNM Economic Forecasting Service. Transparency in the forecasting service is a battle I've long since lost, but the situation is so annoying, I can't resist mentioning it once in a while.