By Steve Poftak
January 6th, 2009
My colleague, Jim Stergios, mused a few weeks ago about Bernie Madoff and the lack of trust out there right now. And Jim is exactly right.
In a previous life, I was part of group that attempted to raise an investment fund (obviously it didn’t work out, did it?). My colleagues were forever pitching the idea to a variety of placement agents, fund-of-fund operators, and miscellaneous middlemen. These gentlemen were always impeccably dressed, impossibly self-assured, and gave off a well-monied whiff that, by virtue of pedigree, education and/or previous employer, each had some link to sources of capital.
That fund never got raised (obviously) but I was reminded of those particular types as I read Harry Markopolos’ devastating critique of Madoff’s operations. Markopolos was an investment analyst of some renown in Boston and he called Madoff’s bluff back in May of 1999. But no one was listening.
I urge you to read the whole document. In summary, he proves that Madoff could not have earned the returns he claimed with the lack of volatility he claimed using his professed strategy. Markopolos also demonstrates that the structure of Madoff’s operation was preposterous on its face — Madoff left absurd amounts of money on the table for his intermediaries.
And here’s where the trust issue comes up. All these intermediaries advised/convinced clients to place money with Madoff and they made good money on the transactions. None of them performed the due diligence that they should have. From reading Markopolos’ takedown of Madoff, its clear that they should have known something was amiss. Instead, they went along with the charade.
By Jim Stergios
January 6th, 2009
A rather odd article by Jamie Vaznis of the Globe on charters and pilots. The Boston Foundation-commissioned study does exactly what Vaznis notes in the first sentence: “A new study indicates that Boston charter schools significantly outperform the city’s traditional schools, but raises new questions about the city’s experimental pilot schools.” But then he goes on to use most of the rest of the article to question pilots. A little more of the clearly good news about charters would have been helpful–and less story fishing.
The story is very good–just so heartening as to our ability to address the achievement gap. By comparing students who got into charter schools by lottery against those who were not chosen by lottery, the study gets past a great deal of the motivated student, or so-called creaming, argument.
Charters do significantly better across the board than traditional district and pilot schools. And the size of the effect of charters in middle school math is especially encouraging. The study also clarifies the racial composition of charter student cohorts, special education numbers, and all the rest.
One would think that it would convince the Education Secretary S. Paul Reville, who has long called himself an agnostic on charters, to reconsider his views based on the data. Unfortunately, the most he could bring himself to say was that the results for pilot schools were “disappointing.” After which, according to Vaznis, Mr. Reville “reaffirmed the governor’s commitment to developing the so-called readiness schools, which would in part draw on the pilot school model.”
We believe pilot schools can be very helpful in advancing reform. We also believe that charters have long proved themselves but that our current leadership, starting with the Secretary, want to bury their heads in the sand. Pretty sad. This does not strike me as ideology, because the Democratic party nationwide is increasingly embracing charters.
We are way past the point of agnosticism; rather this is likely a case of “thickheadedness.” Mr. Reville never liked charters even when they were included in the 1993 Education Reform Act. He would like to be right. Problem is, he is wrong, and the longer he takes trying to prove himself right, the longer inner city kids will have to wait to gain access to the keys to the American Dream.
By Steve Poftak
January 5th, 2009
Ed Glaeser has an interesting and thoughtful piece in today’s Globe on the various stimulus ideas floating around.
I am a bit concerned about the rush to spend billions of dollars willy-nilly. The stimulus package has turned into a Christmas Tree of sorts, with every group hanging their desired ornament on it.
But I fear most people are not paying attention to the details. The State has cranked out its list. There are some worthy projects here, but there is also a lot that has not been fully vetted. $200 million for rebates for biomass pellet furnaces? $200 million buys you about 60,000 of those furnaces outright (against a housing stock base of around 2.5 million) and it increases as you lower the rebate (e.g. at 50% rebate, you are supporting the purchase of 120,000 units). Now, I’ve no idea if these furnaces are a good idea or not, but I’m not comfortable with the notion that the state should be subsidizing them on such a broad scale. Put differently, if you had $200 million, what would you do with it?
Another issue is spending on operating items that exacerbate the structural deficit. The City of Boston initially put in for a one-time grant for 10 police officers*. Great, but who pays their salaries and benefits next year?
*The request for the cops is gone now, so maybe that’s a sign of progress.
By Steve Poftak
January 5th, 2009
As I was walking to work this AM, a cab (thanks hackney license #385!) ran a red light, stopping only to berate me for walking in a crosswalk with a walk signal.
It got me to thinking about the fare increase of this summer. Back in August, in the throes of the gas crisis, the city of Boston raised rates after a series of complaints by cab drivers and their representatives. I advocated back then for a break in the artificial monopoly that supresses the number of cabs in the city (read the comments too).
As gas prices have dropped from $4+ in August to less then half that (at least where I live), the new, higher rates remain in place. Can we expect Mayor Tom Menino and Police Commissioner Ed Davis to lower them soon? Probably not.
By Jim Stergios
January 4th, 2009
Passed on by a friend with a mathematical appreciation for symmetry, and for that balance of responsibility and opportunity, in public affairs is a recent letter to the Wall Street Journal:
I read with interest the president-elect’s appointment of Arne Duncan as Secretary of Education. Mr. Duncan may in fact be the right man for the job, but if the president-elect and his new secretary really wish to fix public education, they need only push through one change: It is hereby illegal for any member of Congress to send his or her children to any nonpublic elementary, junior or senior high school. What do you think? My guess is the whole system would be fixed over the weekend.
Our friendly Kantian “symmetrician” follows with the comment:
What a great suggestion! And it’s consistent with my own modest proposal for fixing the tax code: require everyone who works in the White House, Congress, and Supreme Court to prepare their own tax forms annually, with no help from any other human being or software.
By Steve Poftak
January 2nd, 2009
Hey, its not my idea. It’s a proposal floated by a consultant to the the Readiness Project, tucked in an appendix to the Readiness Finance Commission, released on New Year’s Eve (see “Beware the Doldrums“).
To quote from the appendix itself:
1. Increase the burdens of state-level general sales taxes by 25 percent and state-level selective sales taxes by 60 percent.
2. Create a local-level general sales tax with a burden of $2.00 per $1,000 of personal income.
3. Decrease state-level personal income taxes by 15 percent and state-level corporate income taxes by 10 percent.
4. Decrease local-level property taxes by 10 percent but create a state-level property tax with a burden of about $1.50 per $1,000 of personal income.
5. Increase state-level motor vehicle taxes by 50 percent.
I’ll let someone else run on this platform. It is an interesting (and politically suicidal) mix of ideas. I have not heard anyone connected (or unconnected) to the Administration speak of anything close to this, so I found it intriguing that it made into the report.
By Steve Poftak
December 30th, 2008
It’s been an awkward few weeks for the Globe as reports of its finances and possible sale are floated. (Tip of the pen to Dan Kennedy’s MediaNation blog.)
But, their Spotlight Team reporting on healthcare costs and specifically the role of Partners is a reminder of the paper’s importance as an institution and a check on power. In particular, the third article detailing the “covenant” between Blue Cross Blue Shield of Massachusetts (the largest insurer in the state) and Partners (the dominant healthcare provider in the state) is particularly interesting. A quick look at the boards of each institution - here and here* — is reminder of what deep waters the Globe is swimming in.
Now, for the genius part, what has the Globe’s series forced Partners to do? Respond forcefully with a series of full page and quarter page ad in…..the Globe. Maybe good journalism is good business.
By Steve Poftak
December 29th, 2008
The Commonwealth’s various entities seem to be utilizing the slack periods of the calendar to great effect lately.
Attorney General Martha Coakley chose to release her settlement with Diane Wilkerson late in the day on a Friday in August. (Sidebar: How is that working out?)
The State Ethics Commission released its settlement with current MassBio head Robert Coughlin on Christmas Eve. I commend it to you for its content, although the miserable State Ethics website does not appear to have updated its findings since sometime in 2007.
And, ominously perhaps, Jim Aloisi’s appointment as Secretary of Transportation was shuffled out on Friday, December 19th in the midst of massive snowstorm.
By Jim Stergios
December 23rd, 2008
As Massachusetts seems bent on assuming Rhode Island’s well-earned mantle for corruption, Rhodey seems intent on catching up to Massachusetts. Yesterday, we highlighted education efforts by mayors across Rhode Island. Kudos to the RI mayors.
What about the “global waiver” sought and obtained by Governor Don Carcieri –and announced yesterday? All this is from the press release. The proof will be in the implementation…
The waiver agreement (see here and here) between the federal Centers for Medicare and Medicaid Services and RI is aimed at improving services and expanding consumer choices, according to the Governor, who noted that
This agreement will put us on a sustainable path for growth in Medicaid while also maintaining services for those most in need. I applaud the cooperation and hard work put forth by the federal government and our staff at DHS for making this reform possible.
US Department of health and Human Services Secretary Mike Leavitt:
This demonstration will allow Rhode Island increased flexibility to adjust its Medicaid program to better serve the health care needs of the state’s beneficiaries. In particular, this demonstration advances the Bush administration’s efforts to provide more long-term care services in home and community-based settings.
The Rhode Island waiver means the state will get federal funding certainty and flexibility to redesign the state’s Medicaid program. The goals? Cost-effective services by
bypass[ing] many of the cumbersome and costly federal regulations and offer services specifically focused to meet Rhode Island’s needs. At the same time, it will help to allow DHS to meet its budget targets. The current state budget counts on millions in savings from Medicaid reform efforts to balance the Department’s finances.
Importantly
The major tenets of Medicaid Reform include reforming the way long term care is provided and implementing a prevention-based care system across all Medicaid beneficiaries.
Reforming long-term care to emphasize home and community-based settings such as assisted living and in-home care, where possible, will enable beneficiaries to maintain a family or community-based lifestyle. Under the Global Waiver Compact, decisions on the type of service and the setting for those services will be determined in consultation with the beneficiary and the family, as well as on the level of care needed.
One of the central goals of the Waiver is to reorient the Medicaid program to reward responsible personal choices, including prevention and wellness. An individually-based system provides comprehensive primary care that facilitates partnerships between beneficiaries, physicians, other healthcare professionals and community providers and, when appropriate, the beneficiary’s family. Further, the Waiver will implement care management instruments across populations, increasing the opportunity for more efficient monitoring of access and quality, and greater use and efficacy of performance-based payment incentives.
By Liam Day
December 22nd, 2008
In my last post I implied that, unlike our President-elect, who seems to be enjoying his electoral honeymoon as he builds what might best be described as a pragmatic cabinet, Governor Patrick might not have the same level of public support necessary to sell Jim Aloisi as a tactical choice for Transportation Secretary, one best equipped to implement reform that will ultimately emanate from the corner office. Guess I was wrong, as indicated by the Governor’s favorability numbers reported in this weekend’s Globe.
In contrast, Patrick has seen his favorability rating grow from 57 percent last September to 64 percent, even as his constituents appear to be increasingly nervous about jobs and the faltering economy, the poll indicated.
Mea culpa, mea culpa, mea maxima culpa.
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