News Cut: December 22, 2008 Archive

An industry's death rattle

Posted at 8:26 AM on December 22, 2008 by Bob Collins (5 Comments)
Filed under: Economy

2009 will likely be the year the Twin Cities becomes a one-newspaper town. The closest thing to us is, perhaps, Denver where the Rocky Mountain News and the Denver Post (owned by Dean Singleton, who also owns the St. Paul Pioneer Press) are slugging it out to be the last newspaper standing.

The Rocky isn't going down without a fight, and it's willing to shed its dignity in the process.

The newspaper has created iwantmyrocky.com to rally support for the newspaper. In the process, its employees get to publicly beg for their jobs.

The secret bank bailout

Posted at 8:46 AM on December 22, 2008 by Bob Collins (5 Comments)
Filed under: Economy

The Associated Press is out with a survey that says banks that are getting taxpayer bailouts gave their bosses $1.6 billion in salaries, bonuses, and other benefits last year. $1.6 billion. That was once considered a lot of money.

Even where banks cut back on pay, some executives were left with seven- or eight-figure compensation that most people can only dream about. Richard D. Fairbank, the chairman of Capital One Financial Corp., took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options. The McLean, Va.-based company received $3.56 billion in bailout money on Nov. 14.

John A. Thain, chief executive officer of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, took the reins of the company in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options.

Meanwhile, another AP story today says the banks won't say how they're spending the money.

Minnesota money

Posted at 2:44 PM on December 22, 2008 by Bob Collins
Filed under: Economy

A friend told me the other day that Minnesota was so concerned about the stability of the economy during the Great Depression, that it printed its own money. I'd never heard such a claim, and for good reason. It isn't true.

But even wading into the subject revealed how different times were in the Great Depression than in the Great Recession.

I learned this from Shawn Hewitt, to whom I turned today to find out if what my friend said was true. Hewitt is the author of A History & Catalog of Minnesota Obsolete Bank Notes & Scrip .

The claim of your colleague is incorrectly stated. In the 1930s, there were two main types of notes issued by entities from Minnesota. One is National Currency, or National Bank Notes. These were issued since the 1860s by National Banks, bearing the name of the issuing bank on the face. An example is shown on my web site

They were introduced by the Union during the Civil War as a means to finance the war and to bring about a more uniform currency. They were discontinued in the 1935 at the close of the Great Depression as part of broader government efforts to shore up the financial system.

The other type is known as Depression Scrip. An example can be found here. The notes were not issued out of fear of government collapse, but due to the scarcity of money.

There were four main types of issuers of Depression Scrip from Minnesota:

1) Bank Scrip, in the form of denominated cashier's checks. These were issued by banks during the Banking Holiday of 1933 and served as a currency substitute until banks were permitted to resume the normal course of business.

2) Municipal Scrip, issued by towns to fund unemployment relief projects.

3) Company Scrip, issued by companies for payrolls and commodities, or by merchant associations.

4) Barter Scrip, issued by unemployment relief organizations.

Most notes were issued in 1932-1933 as a measure of necessity, not one of fear.

The transit riddle

Posted at 3:17 PM on December 22, 2008 by Bob Collins (15 Comments)
Filed under: Economy

We must delve into the causes of Metro Transit's problems as detailed this afternoon by MPR's Dan Olson.

Money for transit from the motor vehicle sales tax is down because of slumping auto sales. The latest numbers show Metro Transit is short $72 million over the next two and a half years, according to Dan.

I wrote a few weeks ago about the wisdom of financing things by taxing things you want to have less of -- cigarettes or gas taxes in that post. Ideally, a proper public transit model would have everyone riding it, and getting rid of cars. But if you're financed by the sale of automobiles, can you do both?

Ridership on Metro Transit has increased, but the system imposed a fare hike this year nonetheless. One solution for the current revenue shortfall? Another fare hike. At what point do you force people off mass transit?

More Twin Citians are riding public transit, getting squeezed in the wallet, and squished on the ride.