What is going on with municipal bonds? The End of BABs (Build America Bonds) (from WSJ)

Muni Bonds Continue to Tumble
A Rush to Sell Build America Bonds Before They Are Gone.

By Romy Varghese and Kelly Nolan
Of DOW JONES NEWSWIRES

Prices of municipal bonds fell sharply for the second day Tuesday, driving yields on long-term bonds to the highest points in more than 18 months, as investors worried about the impact of the end of a federally subsidized borrowing program.

The yield on a closely watched index of high-grade, tax-exempt 30-year muni bonds rose to 4.84%, its highest level since March 2009, according to Thomson Reuters Municipal Market Data. The yield on 10-year bonds climbed to 3.24%, the highest since June 2009. Yields move inversely to prices.

.The market took a hit Monday as well, as the expiration of the Build America Bond program by the end of the year looked increasingly likely.

An extension of the program, which provides a 35% interest-rate subsidy from the federal government on taxable bonds issued by municipalities, on Monday wasn't included in legislation introduced in the U.S. Senate that continues Bush-era tax cuts.

Since the government started the BAB program in April 2009 as part of its economic stimulus, more than $165 billion of these bonds have been sold, accounting for about 22% of all new municipal debt, according to data from the U.S. Treasury Department.

Many municipal-bond market participants expect that, without BABs, state and local governments will issue more tax-exempt bonds next year and may overwhelm investor demand for that debt. This would force states and cities to raise their rates to attract buyers.

About $100 billion in long-term tax-exempt bonds would return to the market next year, estimated Robert Nelson, managing analyst at Municipal Market Data.

"With the loss of leveraged buyers of municipal bonds in 2008, there has been a dearth of demand for long maturity munis--this is where BABs came in and diverted this issuance to the taxable market," Nelson said. "Now without BABs the market is left to deal with the same supply/demand imbalance that plagued munis in 2008 and early 2009."

He added that long-term yields have generally returned to the same level seen at the outset of the Build America Bond program last year.

States with some of the lowest credit ratings have been especially battered by the recent muni-market turmoil.

The spreads on Illinois 10-year maturity general obligation bonds grew from 1.60 to 1.90 percentage points from Nov. 1 through Monday above a benchmark triple-A bond with the same maturity, according to Municipal Market Data.

Spreads on California general obligation bonds increased from 0.97 to 1.30 percentage points over the same time frame.

Meanwhile, municipal borrowers are plowing into the market with BAB deals in the last few market days of the year.

"We are hitting the market as quickly as we can because it's only going to get worse," said Harold Downs, treasurer of the Metropolitan Water Reclamation District of Greater Chicago.

Because of the market conditions, the water district is shrinking the size of its bond sale this week from $500 million to $280 million, he said. Most of the offering is BABs.

The Metropolitan Water District of Southern California is planning to sell $250 million in BABs this week, moving up part of a $450 million deal it had originally scheduled for the spring, said Brian Thomas, the water district's assistant general manager and chief financial officer.

"I think the market is still favorable if you look back over the last 10 years, but if you look compared to a month ago, it's a much more difficult market," Mr. Thomas said.

Higher yields may ultimately help stabilize the market by attracting buyers, said Dan Solender, director of municipal bond management at investment firm Lord Abbett in Jersey City.

And amid the volatility, some analysts are encouraging investors to buy municipal bonds from creditworthy issuers. Munis are now offering higher yields than U.S. Treasurys of comparable duration, which is the inverse of the usual relationship, noted Dan Loughran, senior portfolio manager at OppenheimerFunds. "Prices in the municipal bond market may continue to be volatile in the near term, but we believe relief is likely waiting in the wings once the New Year gets underway," he wrote in a report.

—Jeannette Neumann contributed to this article.
-By Romy Varghese, Dow Jones Newswires; 215-656-8263; romy.varghese@dowjones.com

Cash for Clunkers II: Rebates for energy-saving appliances (St Petersburg Times)

Florida Program

All States information



Florida sweetens deal for clunker appliances
By MARK ALBRIGHT
St. Petersburg Times

State officials have sweetened Florida's upcoming energy-efficient appliance rebate program with a $75 bonus to assure buyers retire the old energy hogs they are replacing.
Dubbed ``cash for clunkers'' for major appliances, the rebates bankrolled by last year's federal economic stimulus program will pay consumers 20 percent discounts on six types of Energy Star-rated appliances.

Florida retailers will offer the rebates April 16-25.

``We are trying to encourage energy efficiency, water conservation and recycling,'' said Brenda Buchan, the program coordinator, who works for the governor's Energy Office. ``So the bonus is designed to ensure people properly dispose of their old appliances rather than move that old refrigerator into the garage.''

Today's refrigerators are about five times as energy efficient as their 15-year-old ancestors.

The recycling bonus addresses issues raised by what had been a wary appliance industry. It substantially increases the savings of what had been a $100 discount on a $500 appliance. To get the additional $75, consumers will have to supply a receipt from a store or certified disposal facility or landfill. Retailers have to rejigger their delivery services, which now destroy four out of five appliances they pick up. The rest are resold as used machines, so they do not qualify for the recycling bonus.

``I don't see any problem adding this sort of receipt to delivery,'' said Al Greco , owner of Apsco Appliance Centers in Largo.

The $300 million rebate program already is under way in eight other states, but Florida is waiting until the week of Earth Day.

The state is negotiating with mail-in rebate contractors (American Express and Ohana Cos.) that submitted low bids to process the paperwork for an estimated 66,0000 rebates.

State officials hope buyers won't have to wait as long for their money as some store rebate programs.

The federal stimulus program, which is providing the cash to back what had been an unfunded 2005 Energy Star purchase incentive program, was unveiled last summer to help ease reluctant consumers into buying mode and revive a stagnant appliance industry.
The business suffered because of the housing slump and a credit meltdown that sidelined big-ticket home improvements.

Appliance manufacturers said thanks for the help, but they needed time to ramp up production without disrupting the market. So the government delayed the program until this year.

Last summer, appliance retailers feared news of rebates coming (with no firm date or rules for implementing the program yet established) would kill whatever demand they had while undermining discounts already planned for the holidays.

After the government backed off, major appliance sales volume jumped 5.5 percent nationally in the fourth quarter, according to NPD Group.

Much of the credit went to planned discounts and limited inventory that drew big Black Friday crowds.

LED Companies with Government Funding (Popular Mechanics)

Here's how the U.S. Department of Energy is investing in a future illuminated by light-emitting diodes (LEDs) and organic light-emitting diodes (OLEDs).

17 Projects Shaping the Future of LED Lights

see where all the money is going

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Which States are in the Most Financial Trouble (CNN)

10 states face financial peril

Dropping tax revenue, rising unemployment and yawning budget gaps are wreaking havoc in states from Arizona to Wisconsin, a new report shows.

By Tami Luhby, CNNMoney.com senior writer
Last Updated: November 11, 2009: 3:42 PM ET

NEW YORK (CNNMoney.com) -- The same economic pressures that pushed California to the brink of insolvency are wreaking havoc on other states, a new report has found.

And how state officials deal with their fiscal problems could reverberate across the United States, according to the Pew Center on the States' analysis released Wednesday.

The 10 most troubled states are: Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.

Other states -- including Colorado, Georgia, Kentucky, New York and Hawaii -- were not far behind.

The list is based on several factors, including the loss of state revenue, size of budget gaps, unemployment and foreclosure rates, poor money management practices, and state laws governing the passage of budgets.

These troubles have forced these states -- as well as many others -- to raise taxes, lay off or furlough state workers and slash services. These actions can slow down the nation's recovery, especially since these 10 states account for one-third of the country's population and economic output.

"Decisions these states make as they try to navigate the recession will play a role in how quickly the entire nation recovers," said Susan Urahn, managing director of Pew Center on the States.

In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.

These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found.

10 troubled states
Here's a summary of what Pew found is plaguing each of the states:

California: The Golden State's housing collapse -- and resulting unemployment surge -- has plagued the state's economy. The weakening economy prompted revenue to fall by nearly a sixth between the first quarters of 2008 and 2009. State lawmakers have limited ability to deal with California's massive budget gap due to several voter-imposed restrictions, including requirements that all budgets and tax increases pass the legislature by a two-thirds majority.

Arizona: The state depends heavily on a growing economy to bring in tax revenue, and lawmakers don't have a lot of leeway to address budget deficits thanks to voter-imposed spending constraints. Lawmakers relied on one-time fixes to balance its budget instead of making long-term changes.

Rhode Island: The Ocean State has among the highest unemployment rates in the nation and among the highest foreclosure rates in New England. High tax rates, big budget deficits and a lack of high tech jobs are hurting its chances to pull out of the doldrums. State government has a poor record of managing its finances

Michigan: The state never climbed out of the recession that started in 2001, and matters only became worse during the Great Recession. Two of the Big Three Detroit-based automakers went bankrupt in 2009, sending shockwaves through a state on track to lose a quarter of its jobs this decade. The recession accelerated drops in state revenue, and has left Michigan's government trying to deal with today's problems on a 1960s-sized budget.

Nevada: Nevada is one of the recession's big losers as its gaming-based economy suffered. Year-over-year revenue has fallen for two consecutive years, a record. But changing tax laws is tough because some are written into the state constitution.

Oregon: Oregon's leading industries, such as timber and computer-chip manufacturing, have been hit hard in the recession. Lawmakers have approved more than $1 billion in new taxes to keep it afloat. But voters in January will have the final say on another $733 million in new income taxes.

Florida: For the first time since World War II, Florida's population is shrinking -- bad news for an budget built on new residents flocking to the Sunshine State. Lawmakers raised $2 billion in new revenue this year, but could face a similar shortfall next year.

New Jersey: The Garden State, which has been plagued by years of fiscal mismanagement, spends more than it collects in revenue. The collapse of Wall Street, which supports about one-third of New Jersey's economy, has only made matters worse.

Illinois: Since the last recession earlier this decade, the state piled up huge backlogs of Medicaid bills and borrowed money to pay its pension obligations. The state's current budget still relies heavily on borrowing and paying bills late.

Wisconsin: Wisconsin has a long history of budget shortfalls. It also borrows frequently to cover operating expenses, among other measures. Unemployment is climbing as manufacturing, the state's largest sector, sputters.

More stimulus needed
The Center on Budget and Policy Priorities, a liberal research group, says the states need additional federal fiscal relief to avoid budget cuts that will hurt both the economy and people. State and local spending accounts for about one-eighth of the GDP.

Already, less than five months into fiscal 2010, several states are looking at additional budget cuts. Rhode Island announced Tuesday it is facing a revenue shortfall for the current fiscal year of $130.5 million. Gov. Donald Carcieri said the state must examine its aid to local governments, since it has already cut personnel and social service programs.

And in California, Gov. Arnold Schwarzenegger said Tuesday that his state is facing a budget gap of up to $7 billion. The state will likely announce across-the-board spending cuts in January.

"So we just have to hang in there, tighten our belts and live within our means," he said.

The center would like to see the federal government allocate another $50 billion, while economist Mark Zandi said about half of that would be needed. Congress should pass the additional aid now since states are currently crafting their fiscal 2011 budgets.

States received billions of dollars in funding from the Obama administration's $787 billion stimulus package, including $87 billion for Medicaid and $48.3 billion for maintaining education and other key services.

The stimulus funds plugged about 30% to 40% of the budget gaps states were facing, and created or saved more than 300,000 jobs, said Iris Lav, the center's senior adviser.

But the economic downturn is greater than administration officials expected when the Recovery Act was passed in February, Lav said. That's why more assistance is needed now.

Budget projections show that states could face deficits as large as $260 billion in 2011 and 2012 after stimulus funding is exhausted. State economies usually take up to two years longer to recover after the nation's fiscal health begins to improve.

New budget cuts and tax increases "will be a serious drag on the economy at just the wrong time," said Mark Zandi, chief economist at Moody's Economy.com.Without assistance, the economy could slide back into a recession, he said.

First Published: November 11, 2009: 1:00 PM ET







Find this article at:
http://money.cnn.com/2009/11/11/news/economy/states_economies

What's Next for the Economy: Stocks vs Bonds (Marketwatch)

Bonds and stocks diverge on U.S. economy
By Nick Godt, MarketWatchLast Update: 4:20 PM ET Sep 9, 2009


NEW YORK (MarketWatch) -- For those investors who believe the stock market works perfectly at discounting risks and rewards, the U.S. economy and corporate profits must seem to be on track for a stellar recovery.

After a spectacular 50% surge since March, stocks on the S&P 500 Index ($SPX) have continued rising through the summer and into September.

Yet, the market for U.S. government bonds, considered among the safest assets around, seems to be telling a different story."There is a growing group of people following the view that we'll have a jobless recovery in the economy," said Bill O'Donnell, head of Treasury strategy at RBS Securities.

"They're asking what comes after the sugar-high from the government stimulus measures, and what they see is rising joblessness, consumers spending less and lower inflation. All in all, good conditions for bonds."

On Wednesday, U.S. stocks continued to advance after the Federal Reserve's so-called Beige Book of current economic conditions. The central bank said the economy is improving across most U.S. regions but that consumer spending remains sluggish.

The Dow Jones Industrial Average ($INDU) finished up 49 points, or 0.5%, at 9,547. The Nasdaq Composite (COMP) was up 22 points, or 1.1%, at 2,060, while the S&P 500 gained nearly 8 points, or 0.8%, to 1,033.

Separately, Treasurys turned higher after the Beige Book and after the government's auction of $20 billion worth of 10-year notes was met by ample demand.

Demand for benchmark 10-year Treasury notes surged over the past month, sending their yields (UST10Y) down by about 40 basis points. Bond yields move inversely to price.

Government bonds provide fixed income over periods of time. This means that longer-dated bonds, such as the 10-year note, are more susceptible to inflation as fixed income loses value if prices rise in general.

When bond prices rise and their yields fall, it generally means that the chance of rising inflation is waning -- along with the outlook for economic growth.

Who's right?

Unfortunately for stock investors, bonds have often provided a better gauge of economic trends than equities. A recent example was when Treasury yields began sliding in June of 2007, as defaults on subprime mortgages surged and deteriorating credit conditions led fixed-income investors to seek safety.

Yet stocks continued to rally for another four months, reaching record highs by the middle of October 2007 before taking the big plunge. In those four months, the yield of the benchmark 10-year Treasury bond had already slumped by about 70 basis points.

Perhaps similarly, yields rose sharply for most of this year, as investors abandoned the safety of bonds and jumped into the massive equity rally. But over the past few months, yields have started to slump again.

Strong demand for even shorter-dated maturities, such as the 3-year notes sold at a government bond auction on Tuesday, is now raising doubts about the economic outlook among a number of market strategists.

"What does it say about the view on economic growth that there is such big demand for the 3-year note?" asked Peter Bookvar, equity strategist at Miller Tabak, in a research brief.

"Why isn't this money going into riskier assets? Again, it's another data point of the disconnect between the U.S Treasury market and equities," he said.

The visible hand of government

"The government has got a heavy hand in this recovery," says Jack Ablin, chief investment officer at Harris Private Bank.

Ablin does believe the economy and stocks are still running on the "sugar high" provided by government spending. However, while the bond market may be looking further ahead when the economy might run out of momentum next year, he doesn't believe stocks have to come down.

"There's still 10 donuts in the box [out of 12]," Ablin says. "We've only spent about 10% of the $800 billion or so committed. "The government is still spending a lot of money and that's going to be reflected in the economy and profits at least for the next couple of quarters."

And corporate bonds also continue to improve steadily, he noted.

Meanwhile, government bonds may simply have become a good bet again because of the lack of inflation in the outlook for the economy.

With the government raising close to $2 trillion to help shore up the economy, and as markets took the view back in March that those measures had helped avoid the worst, Treasurys seemed to be a bad bet for most of the year, and yields surged along with stocks.

Some of the hesitations on the way up were that government spending would pressure the dollar and boost inflation, and that raising money might become harder as buyers of U.S. debt, including foreigners, would become more scarce.

But while the dollar has returned to its lows of the year, few believe inflation is in the cards as long as the economy continues shedding jobs, and consumer spending, which makes up for about 70% of the economy, remains muted.

And judging by the results of this year's auctions, demand for U.S. government bonds remains strong.

For Ablin, if there's one area where a weak dollar has led to too much speculation, it's commodities, including gold topping $1,000 an ounce.

"I'd think twice before melting down your Rolex," Ablin said.

Use These Tax Breaks Before the End of the Year (Kiplingers)

Take Advantage of These Stimulus Breaks Soon
Posted Thu Sep 3, 11:05 am ET
Provided by:


The economic-stimulus plan that President Obama signed into law February 17 includes several tax breaks that will expire in the next few months. Some of these breaks are for big purchases, which may require a few months' worth of planning. And people who lose their job in 2010 won't be able to take advantage of some stimulus-related benefits. Here's a reminder about a few key provisions that are scheduled to end soon -- including a major credit that disappears before the end of the year.

First-time home-buyer credit. The stimulus plan provides a tax credit of up to $8,000 for purchasing a first home between January 1 and November 30, 2009. Keep in mind that this break does not last through the end of the year -- you must close on the home no later than November 30.

You don't have to pay back the credit, as long as you live in your home for at least three years. You're considered a first-time home buyer if you (and your spouse, if you're married) haven't owned a home in the past three years. The credit begins to phase out if your modified adjusted gross income is more than $75,000 (or $150,000 if married filing jointly), and it disappears if your income exceeds $95,000 if you're single (or $170,000 if married filing jointly).

You don't need to wait until next April to get the money. After you close on the house, you can get the $8,000 refund quickly if you claim the credit for a 2009 purchase on an amended 2008 tax return (file Form 1040X.

Tax break for new-car purchases. If you're thinking about buying a new car, it may pay to do so before the end of the year. The stimulus plan lets you write off state and local sales taxes and excise taxes paid on up to $49,500 of the cost of a new car you buy between February 17 and December 31, 2009. If you live in a state that doesn't have a sales tax, you still get a tax break if your state imposes a flat fee on the purchase of vehicles or a fee based on the price you pay. The tax break applies to new (not used) cars, light trucks, motor homes and motorcycles. To qualify, your modified adjusted gross income must be less than $135,000 if you're single, or $260,000 if married filing jointly (the deduction starts to phase out if you earn more than $125,000 if single, or $250,000 if married filing jointly).

Two breaks for the unemployed will expire
COBRA subsidy. When you lose your job, you can generally remain on your employer's health-insurance coverage for up to 18 months, as long as you pay the full premium yourself. The stimulus provides a subsidy that covers 65% of the COBRA premiums for up to nine months after you lose your job. But this break applies only if you lose your job by December 31, 2009. You won't get the break on premiums if you lose your job in 2010.

Breaks for unemployment benefits. The stimulus also provides an extra $25 in weekly unemployment checks until December 31, 2009, and lets you exclude up to $2,400 in unemployment benefits from your taxes in 2009. But neither of these provisions has been extended yet to apply to 2010.

Some of these breaks could be extended into 2010, but it seems unlikely at the moment. "Extension of these items has not yet been included in any major tax bills," says Mark Luscombe, principal analyst with CCH, a tax-publishing firm. "As talk continues of the recession ending this quarter, it appears more likely that at least the new tax breaks on the list may be allowed to expire, as was just done with the 'cash for clunkers' program. If, however, as the fall progresses, concern about the health of the economy continues, some of these provisions could be considered for extension."

Ways to Make the Most of Cash for Clunkers (cars.com)

Official Government Website is www.cars.gov

Ten Ways to Stretch Your Cash for Clunkers Dollar
By David Thomas, Cars.com

Here at Cars.com we've listed five new cars and five new trucks/crossovers/minivans that would make the most of your Cash for Clunkers credit. Many have significant incentives on top of the thousands the government is handing out, but we've also listed a few hot models that rarely get cash-back offers of their own, as this may be the one time to get them at any type of discount.

The adjusted price we've listed here assumes you qualify for the biggest credit available, $4,500. If you're still not sure how the program works, check our Cash for Clunkers guide.

Cars
2010 Toyota Prius
Starting MSRP: $22,000
Available incentives: None
Cash for Clunkers credit: $4,500
Adjusted price: $17,500
Clearly, the most fuel-efficient car in America is the prototypical vehicle the framers of Cash for Clunkers wanted you to trade your clunker in for. You're guaranteed the full $4,500 credit for the Prius no matter your trade-in, because its combined 50 mpg will best any eligible Clunker by well more than 10 mpg. Because the new Prius is so popular, there are no manufacturer discounts and it may be hard to find one locally, but we still give it the thumbs-up as a money-saver because it'll save money on gas in the long run. Even the previous-generation Prius never saw incentives close to the Clunker rebate of $4,500.
Find This Car Near You

2009 Hyundai Sonata
Starting MSRP: $18,700
Available incentives: $2,000 cash back, plus $1.49 gas for a year (expires July 31)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $12,200
The Sonata is a favorite value pick here at Cars.com. It has a pleasant ride, upscale interior and better than average reliability ratings from Consumer Reports. There's a national cash-back incentive, plus a gas deal that will save you some pain at the pump — even at $2.50-a-gallon gas. The base model's mileage rating of 21/32 mpg city/highway is also good for the class. Staring at that $12,200 figure is kind of amazing; that's a lot of car for the price of a stripped economy car.


2009 Mini Cooper
Starting MSRP: $18,550
Available incentives: None
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $14,050
The Mini Cooper is a blast to drive, even in the base form listed here. The car has been so popular since it was reintroduced in the U.S. that there are rarely cash-back deals available. Mileage is excellent at 28/37 mpg city/highway, with which you're guaranteed to qualify for the full $4,500 credit. That means you'll drive away in a stylish, European import for under $15,000.


2009 Nissan Altima
Starting MSRP: $19,900
Available incentives: $1,500 cash back (expires Aug. 3)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $13,900
If you like a little performance in your midsize sedan, the Altima is the way to go. Even in base, four-cylinder form, the steering is sharp and nimble. Plus, mileage is 23/31 mpg city/highway. Nissan's interiors are always top-notch for the segment, and while the $1,500 cash-back deal is a nationally advertised offer, the 2010 model goes on sale in September and will have some updates. That means dealers might want to make a deal on the 2009 model.


2009 Pontiac Vibe
Starting MSRP: $16,100
Available incentives: $2,500 cash back or 0% for 60 months (expires Aug. 3)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $9,100
One of the unfortunate casualties of GM shutting down the Pontiac brand is the redesigned Pontiac Vibe. This little hatchback has a relatively upscale interior, good crash-test ratings and much better than average reliability scores from Consumer Reports. There should still be plenty of 2009 inventory on lots, as the 2010s are just arriving at dealerships. Again, we expect dealers will want to make even better deals because the brand itself is disappearing. Don't fear future repairs; GM says it will service all Pontiacs at other brand locations. For under $10,000, this is an exceptionally well-rounded choice.


Trucks, SUVs and Minivans
2009 Honda Odyssey
Starting MSRP: $26,355
Available incentives: None
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $21,855
We know what you're thinking: If there's no incentive, why is buying a new Odyssey worth using a big government credit? Well, Honda is rolling out the 2010 model right now, and dealers will be ready to clear out old inventory to make room on lots. There are no noticeable differences between the 2009 and 2010 Odysseys, and the 2009 is rated a Top Safety Pick by the Insurance Institute for Highway Safety. That's good news for families looking for what is consistently one of the best minivans on sale today.


2009 Subaru Forester
Starting MSRP: $19,995
Available incentives: 2.9% financing (expires Aug. 3)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $15,495
Last year, the redesigned Subaru Forester came very close to being named Cars.com's New Car of the Year — that's how highly we regard this compact crossover. If you're a small family downsizing from a huge, gas-guzzling SUV, the Forester is a good choice with standard all-wheel drive, a low base price and Top Safety Pick status. Like the Odyssey, the 2010 Forester is just arriving on dealer lots, so now is one of the few times the hot-selling Subaru might get a dealer discount on top of financing deals. Don't expect to get too much off during your negotiations, though, because the starting price is so low. There aren't any significant changes on the 2010 model, but it does see a price bump of $300.


2009 Toyota Venza
Starting MSRP: $25,975
Available incentives: None
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $21,475
Yep, here's another crossover on our list with no advertised incentives. But if you're looking for an alternative to a truck-based SUV and need lots of room, good gas mileage — 21/29 mpg city/highway — and available all-wheel drive, the Venza is a good bet. Like others on this list, the Venza is a Top Safety Pick. While there are no incentives on the Venza, buying one would be a good use of federally supplied funds, as they'd knock what we consider a pretty expensive sticker down to something more palatable.


2009 Ford Escape
Starting MSRP: $20,435
Available incentives: $2,500 cash back or 0% financing (expires Aug. 3*)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $13,435
Ford's long-running Escape is one of the most affordable compact SUVs on the market before any discounts. A redesign a few years ago was enough of an update to keep it competitive, and it also earns Top Safety Pick status. Lots of cash back from the automaker brings the adjusted price down to the low teens, which is an unbelievable cost for such a well-rounded vehicle.
Find This Car Near You

2009 Toyota Tacoma
Starting MSRP: $15,170
Available incentives: $1,500 or 0% financing for 36 months (expires July 31*)
Cash for Clunkers credit: $3,500-$4,500
Adjusted price: $9,170
If you're wondering where all the actual trucks are, there aren't many that fit into the spirit of the Cash for Clunkers legislation. Most full-size pickups get just one or two mpg better fuel economy than their predecessors of decades past. Instead, buyers can pick something smaller and more efficient, like the Tacoma, which has better than average reliability ratings and is the only small pickup to earn a Top Safety Pick award from IIHS. Its better mileage should also help it qualify for the full $4,500 credit from the government. For under $10,000, it's a terrific alternative to larger trucks.


*Incentives may vary by region.

© Cars.com 7/22/09

Investing in the Smart Grid - Utilities (marketwatch)

Smart grid not clever enough to avoid recession
BY MarketWatch
— 6:55 PM ET 05/29/2009

NEW YORK (MarketWatch) -- While the U.S. government and electricity producers get ready to spend hundreds of billions to upgrade the nation's power lines and electricity infrastructure, the so-called smart grid may not be clever enough to escape economic uncertainty.

After Congress OK'd $30 billion for the electric grid, advanced battery manufacturing and energy efficiency projects, much of the money included in the $787 billion economic stimulus bill signed into law on Feb. 18 remains unused.

As utility companies prepare for the peak summer season of 2009, new efforts to update the power grid remain in limbo in the face of a new regulatory landscape and other changes affecting long-term plans for the electric generation and transmission business.

Wall Street hasn't been exactly cheering either, with power companies lagging the broader stock market by a big margin. But the smaller, more nimble companies tapping new technology to wring higher performance out of an aging power grid have fared far better.

"It's all very convoluted on how it'll all work," said Justin McCann, analyst with S&P Equity Research. So far, the government has pledged loan guarantees and tax credits for projects, but concrete progress remains vague.

Before diving into the new federal subsidy programs, experts point out that the industry is still waiting for rules on loan guarantees from the Department of Energy. Utility firms welcome new federal tax credits, but are trying to clarify how they would affect existing tax breaks for depreciation and other expenses.

And in a sign that public policy can't always compensate for a slower economy, at least one turbine plant in the sector remains mostly idle -- not immune from competition from abroad and a recession at home.

While the slow economy may take the sting out of spikes in demand in June, July, August and September, the nation's power system remains vulnerable to large-scale blackouts from monster hurricanes and other natural disasters.

Fresh regulations also loom in the power industry and elsewhere, as Congress and the Obama administration plan for a cap-and-trade system to reduce carbon dioxide emissions.

Instead of huge ramp-ups in spending, McCann said, utility giants such as Exelon (EXC), FPL Group (FPL) and Southern Co. (SO) have been working on big infrastructure projects already in progress and deferring others until credit markets improve.

With the business in flux for the power grid, Exelon (EXC) CEO John Rowe said in a speech this week that "there is no grand structure for the electricity business that is completely accepted" nowadays.

"What's a smart grid, does anyone know? And of course the answer is, everybody has their own definition of the smart grid," he said.

Some think it's new power lines to carry wind power from the Dakotas to the Midwest, or from West Texas to Houston, or smart meters to improve efficiency, he said. The goal would be to transform the current patchwork of aging cable and technology into a "self healing system" that increases reliability, he said.

"It can be all of the above, but whichever you choose, it's expensive," Rowe said at the Sanford C. Bernstein & Co. Strategic Decisions Conference.

While talk of new transmission lines remains front and center in the debate, communities aren't exactly lining up to volunteer for new 200-foot transmission towers in their collective back yard, either.

Earlier this months, Edison International (EIX) scrapped plans for a 50-mile power line right-of-way in Arizona, after objections from state officials. The owner of Southern California Edison hopes to move ahead with plans to connect Palm Springs, Calif. with generation facilities on the books near Blythe, Calif.

American Electric Power (AEP), the transmission line specialist in the U.S., continues to grapple with regulatory OKs for new conduits, even as Washington officials ponder proposals to increase the power of the Federal Energy Regulatory Commission to site power towers.

Market beats up power companies

The smart-grid effort, as well the coming carbon dioxide legislation, cap off a tough year so far in the stock market for the 35 issues in the S&P utilities sector index.

The sector has been facing higher operating expenses, cash payments for pension plans, and tight capital markets, plus many investors maintain that improvements in the economy are more likely to benefit other sectors more.

Exelon (EXC) currently leads the class as the bulkiest power company in the S&P 500 with a market cap of more than $31 billion. FPL Group (FPL) holds the No. 2 position at $23 billion, followed by Southern Co. (SO) with $22 billion. Dominion Resources Inc. (D) comes next at about $19 billion, and Duke Energy (DUK) wraps up the top five at $18 billion.

Recent months have seen a shake-up among the top names in the business, with Constellation Energy selling a big chunk of its nuclear business to Electricite de France and Exelon (EXC) moving to buy NRG Energy (NRG) through a hostile offer to common shareholders.

Collectively, the largest publicly traded utility components of the S&P 500 are down 9.4% so far in 2009, compared with a gain of 0.8% for the S&P 500, as of Wednesday's close.

In year-to-date performance the S&P utilities sector index ranks last out of the 10 sub-sectors of the S&P, noted Howard Silverblatt of S&P.

While the big cap names struggle, some smaller-cap companies with ties to the smart grid and clean technology sector have rebounded this year.

Smart grid technology firm Comverge (COMV) have risen to above $9 a share from $5 a share earlier this year. EnerNoc (ENOC) has risen from below $10 to more than $22 now.

American Superconductor Corp. (AMSC) is also up handily for the year, along with Enersys (ENS) . Echelon Corp. (ELON) has remained about flat this year. Itron (ITRI) is lower for the year and Esco Technologies (ESE) about flat.

General Cable Corp. (BGC) and Composite Technology are also seen as beneficiaries of grid spending.

Peak summer conditions still expected

While utility companies have already reported lower usage because of the recession, it's likely that demand for power will still increase during the usual summer surge.

In New York, for example, the operator of the state's power grid, NYISO, expects peak power usage to climb 3% from the year-ago period to 33,452 megawatts.

"Heat waves, causing increased power use by air conditioning and cooling systems, could produce peak loads this summer to rival those of recent years," said Stephen G. Whitley of the New York Independent System Operator.

Power grids remain vulnerable to a host of hazards posed by nature, from squirrels to rainstorms and even heavy tree growth.

Meanwhile, the industry is sifting through a host of new government incentives starting to kick in under the American Recovery and Investment Act.

The law earmarked $4.5 billion in matching grants for smart grid projects that help utilities and their customers to track and manage the flow of energy more effectively, curb peak demand, reduce blackouts, and integrate renewable energy and storage, including electric and plug-in hybrid vehicle batteries.

Another $32 billion has been set aside for grid improvements, including 3,000 miles of new and upgraded transmission lines.

Southern California Edison has laid out plans to spend $1.2 billion for smart meters, while Pacific Gas & Electric plans to spend $1.7 billion through 2011 on new meters.

The cost to put a smart meter in every home in the United States has been estimated at $6 billion," SBI noted in a recent study. "However, unless smart meter costs fall substantially below $100 per meter, overall costs will likely exceed $15 billion if all 150-plus million electric meters in the United States are replaced with smart meters."

While some programs move ahead, some in the industry has yet to fully tap into the new incentive packages.

"More than 100 days have passed since the Recovery Act became law in mid-February, but U.S. power companies are still frustrated by the lack of clarity and the lack of guidelines needed to disperse some of those funds," Platts analyst Peter Maloney said in a study this week. "There is only about $18 billion in direct spending allocations designated for power sector capital projects, but there is much more than that in the form of loan guarantees and tax incentives," Maloney said. "Unfortunately both the loan guarantee program and the tax incentives for power sector projects come with ties to past programs that complicate their successful implementation."

Economic Stimulus Plan Jobs - Where to Look (Kiplingers)

Land a Government Job Now
Most of the new jobs being created by the President's economic-stimulus package are outside the Washington, D.C., area. Here's how to benefit, no matter where you live.
By Marty Nemko, Contributing Columnist, Kiplinger.com
May 21, 2009

President Obama's budget projects hundreds of thousands of new job openings in government and for government contractors during his first term. How do you find and land one well suited to you? Here's a guide.

Where are the jobs?

Especially when aiming for a government job, I reject the standard career-counselor advice to use your network to gain access to people with the power to hire you. My clients increasingly find that it's more time-effective to search the best job Web sites regularly by keyword and zip code for on-target job openings and then craft a top-notch application for each.

So where are the jobs?

*

About 85% of federal jobs are not in D.C. They're typically in major cities, both around the country and overseas.
*

To access the federal-job postings, start with www.usajobs.gov, which, as of this writing, lists 47,059 openings. That site has recently added a link for positions created by the stimulus package. Many of those positions will be filled through accelerated hiring procedures. To access that directly, go to http://jobsearch.usajobs.gov/a9recoveryjobs.asp.
*

Visit the individual Web sites of your favorite federal agencies. You can access the major ones from http://dcjobsource.com/fed.html. An agency may have special positions and recruitment programs listed only on its site. That means you'll be competing with fewer job seekers. Also, some federal agencies -- for example, the FBI, Federal Reserve, Government Accountability Office and CIA -- don't have to advertise their jobs on www.usajobs.gov.
*

An even more under-the-radar source of federal jobs is www.fedbizopps.gov. It lists positions, including many overseas (Iraq or Afghanistan, anyone?), that are filled via personal service contracts. Those jobs are less secure than government jobs but usually pay more.
*

Federal agencies, especially the EPA, State Department, FBI, FDIC and Treasury Department, often fill unadvertised openings at job fairs. Some are listed at www.govcentral.com/careers/articles/1871 and at www.fedjobs.com/chat/jobfairs.html.
*

Some private temporary agencies staff federal temp positions. Some of those agencies are listed on www.state.gov/m/dghr/flo/c21666.htm.
*

If you're a student, a good route to a permanent government job is a federal internship. The site www.makingthedifference.org lists 200 federal internship programs. Also see www.studentjobs.gov.
*

There's a directory of federal jobs set aside for veterans and people with disabilities: apps.opm.gov/sppc_directory.
*

For state, county and city jobs, visit your local government's Web site. To find yours, enter, for example, "government jobs" and "Chicago" in a search engine.
*

Lots of stimulus dollars are going to federal contractors -- independent firms that the government hires to do its bidding. Want to become one? The government's portal for potential contractors is www.fedbizopps.gov. Also see www.recovery.gov, which reports where stimulus dollars are going. Want to work for a government contractor? The 100 largest are listed at www.usaspending.gov. Smaller contractors list openings on their own site. The good news is that many or most such openings are aggregated, along with literally millions of other job openings, at www.indeed.com and www.simplyhired.com. Another approach: Regularly check the business section of your local newspaper or a dedicated business periodical, such as Crain's or Business Times, for announcements or articles about companies that have just received government contracts.

Which jobs should you apply for?

1.

Because there are so many applicants for most government jobs, you probably won't stand a chance unless you at least minimally meet most or all the requirements listed in the job announcement. Save your energy for the good fits. There are so many government openings, for everything from chef to chief, you'll likely find plenty.
2.

Federal jobs will be most abundant in areas the Obama administration has listed as priorities: renewable energy, the environment, infrastructure, health care and education. Lily Whiteman, author of How to Land a Top-Paying Federal Job, says jobs are particularly plentiful for contracts and grants managers, procurement officers, financial managers/auditors, IT specialists, intelligence experts, and people with knowledge of the culture and language of Middle East countries.
3.

Don't worry if your first government job isn't perfect -- your priority should probably be just to get into the government. That means applying for jobs you're fully or even overqualified for. Once you're a government employee, you'll find it easier to transfer to something you'll like better.

Landing the job

Finding on-target job openings is the easy part. The challenge is to become the winning candidate -- especially now, with all the publicity around ObamaJobs and the private sector offering so few full-time, long-term positions with benefits.

Applying for a government job is usually cumbersome. That's good news for you. So many people get frustrated with the application process that they do a shoddy job. If you craft a solid application for all the jobs you can, you'll likely prevail. And remember, the pot at the end of the rainbow is quite golden: moderate work hours, unmatched job security, great benefits, and ample vacation and holidays. Thank you, taxpayers.

My job-seeking clients are finding these to be the most potent approaches to beating out the competition:

*

Research your target agency. Whiteman suggests you review its Web site and, particularly, its recent press releases. Then reflect your knowledge of the agency in your application.
*

Call the hiring manager to get application tips. Yes, there's a chance you'll be viewed as pushy, but there's a greater chance you'll get inside information or even develop enough of a relationship to gain an edge against the competition.
*

Use a two-column cover letter. Hiring managers are overwhelmed with applications, so yours should quickly and clearly demonstrate that you're a great fit for the position: On the left side, list the job's major qualifications; on the right, say how you meet each requirement.
*

Tell PAR stories. In interviews and in job-application essays (in federal job applications they're usually called KSAs, which stands for knowledge, skills and abilities), tell one or more anecdotes that demonstrate you have one or more key attributes listed in the job announcement. Each anecdote should usually follow the PAR formula: a problem you faced, how you approached it, and its positive resolution.
*

Create a portfolio. Consider creating a Web site consisting of your work products and resume. Of course, include its URL on your job applications.
*

Make sure your message is clear. Whiteman says that before submitting an application, it must pass the "30-second-test." Ask a person you trust to identify your best attributes from your application in 30 seconds. If he or she can't, it's unlikely a hiring manager will be able to do so.

Marty Nemko (bio) is a career coach and author of Cool Careers for Dummies.

Renewable Energy, Clean Technology: Water, Solar, Hydrothermal , Wind, Biofuel Companies (Businessweek)

Renewable Energy
May 06

By Aaron Pressman

Clean energy may be the wave of the future, but shares of alternative energy suppliers have taken investors on a wild ride. After getting hit hard by the credit crunch last year, the sector has rallied recently as stimulus plans from the Obama Administration and other governments promise substantial sums for renewable energy projects. The Market Vectors Global Alternative Energy ETF, which tracks 30 companies around the world, lost 61% last year but has risen 22% over the past three months.


Much of the money will likely go to the industry’s biggest and best-known companies, like Denmark’s wind farm developer Vestas Wind Systems or solar-panel maker First Solar of Tempe, Ariz. There will also be opportunities for smaller players. But “this can be a hairy sector for investing in early-stage companies,” says Edward Guinness, co-manager of the Guinness Atkinson Alternative Energy Fund.

While solar and wind projects are now commonplace, geothermal power is less developed. Geothermal systems typically use heat found deep underground to make steam and generate electricity. WaterFurnace Renewable Energy in Fort Wayne, Ind., builds heat pump systems that don’t require deep drilling for homes and businesses. The technology takes advantage of modest but consistent temperatures of about 55 degrees found a few feet underground. Air pumped underground is heated or cooled, which reduces the load on traditional heating and cooling systems and cuts energy bills by about two-thirds. Over time, that offsets installation costs. Revenue is growing 50% a year, and installations haven’t been hurt by the credit crunch, says Jack Robinson, lead manager of the Winslow Green Growth Fund. Guinness’ fund owns Energy Development Corp., a Philippine utility that oversees a dozen geothermal plants and consults on projects for others.

Stocks in the biofuels area have been crushed, not just by difficulty obtaining financing but by overbuilding and rising prices for key ingredients. It isn’t clear which players will survive. Still, the sector could one day generate big profits so it pays to stay up to date, says Guinness. He thinks Maple Energy, a Peruvian oil and gas producer, could become a leading ethanol supplier. Even so, Guinness sold the stock last year after a runup. “When they get their plant up and running, they’ll be the world’s lowest-cost ethanol producer,” he predicts. But he’s waiting to see how the project progresses.

President Barack Obama’s plan to reduce air pollution with a system of tradable pollution rights, known as “cap and trade,” could lead to the development of trading exchanges rivaling those for stocks, bonds, and derivatives. U.K.-based Climate Exchange, a publicly traded company, is the leading player in European pollution-rights trading, but Guinness says it’s too pricey at more than five times expected 2009 revenue (it has yet to show a profit). Unless a national cap-and-trade system becomes a reality in the U.S., the stock is too speculative, he says.

Another player, World Energy Solutions of Worcester, Mass., trails Climate Exchange in revenue. But new Environmental Protection Agency chief Lisa Jackson is familiar with the type of system World Energy has developed, which could bode well for the technology, says Winslow’s Robinson. “They’re a small player but are just becoming profitable and growing at a 50% rate,” Robinson says. Investing in it now, he adds, is like being a venture capitalist

US Treasury on Buy America Bonds (BAB)

April 3, 2009 - US Treasury Press Release
TG-81

Build America Bonds and School Bonds
Investing in our States, Investing in our Workers, Investing in our Kids

The United States is facing the most severe financial crisis in generations. Extraordinary challenges require extraordinary action by our government to ensure the economy gets back on track and that millions of Americans get back to work. The American Recovery and Reinvestment Act of 2009, along with the Financial Stability Plan, are critical steps. In just two months, the Obama Administration, in conjunction with Congress, has enacted legislation to create or save 3.5 million jobs; give a tax break to 95% of working families; and has put forward detailed programs to address falling home prices, frozen credit markets, weak bank balance sheets and legacy assets.

Creating the conditions for an economic recovery also requires addressing the challenges facing state and local governments in the midst of the current economic climate. Budgets are being scaled back, government jobs are being cut, and services are being curtailed. These cuts contribute to a deeper recession, while restricting access to services at a time when the need for them is greatest. Turning things around requires innovative thinking.

Today Treasury announces two new, innovative bond programs to help states pursue capital projects. This funding means much needed infrastructure projects can begin to revitalize our communities while putting Americans back to work.

BUILD AMERICA BONDS
First, Treasury announces the implementation of the Build America Bond program under the American Recovery and Reinvestment Act of 2009 to provide much-needed funding for state and local governments at lower borrowing costs. This will enable them to pursue necessary capital projects, such as work on public buildings, courthouses, schools, roads, transportation infrastructure, government hospitals, public safety facilities and equipment, water and sewer projects, environmental projects, energy projects, governmental housing projects and public utilities.

Traditionally, tax-exempt bonds provide a critical source of capital for state and local governments, but the recession has sharply reduced their ability to finance new projects. Supplementing this existing market, the Build America Bond program is designed to provide a federal subsidy for a larger portion of the borrowing costs of state and local governments than traditional tax-exempt bonds in order to stimulate the economy and encourage investments in capital projects in 2009 and 2010.
HOW BUILD AMERICA BONDS WORK
Build America Bonds are a new financing tool for state and local governments. The bonds, which allow a new direct federal payment subsidy, are taxable bonds issued by state and local governments that will give them access to the conventional corporate debt markets. At the election of the state and local governments, the Treasury Department will make a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds. As a result of this federal subsidy payment, state and local governments will have lower net borrowing costs and be able to reach more sources of borrowing than with more traditional tax-exempt or tax credit bonds. For example, if a state or local government were to issue Build America Bonds at a 10 percent taxable interest rate, the Treasury Department would make a payment directly to the government of 3.5 percent of that interest, and the government's net borrowing cost would thus be only 6.5 percent on a bond that actually pays 10 percent interest.

This feature will make Build America Bonds attractive to a broader group of investors, and therefore create a larger market than typically invest in more traditional state and local tax-exempt bonds, where interest rates, due to the federal tax exemption, have historically been about 20 percent lower than taxable interest rates. They should be attractive to investors without regard to their tax status or income tax bracket (e.g., pension funds and other tax-exempt investors, investors in low tax brackets, and foreign investors).

GUIDANCE TO STATES ON BUILD AMERICA BONDS
The IRS is releasing Notice 2009-26 to provide state and local governments with prompt guidance on implementation of the new direct federal subsidy payment procedures for Build America Bonds so that issuers can begin issuing these bonds with confidence about how these federal payments will be made. This guidance covers the direct federal subsidy payment procedures regarding:

how (on new IRS Form 8038-CP available now) and when (by 45 days before an interest payment date) to request these payments;
when the IRS will begin making these payments (July 1, 2009);
how to make necessary elections to issue these bonds (in writing in an issuer's books and records);
how to satisfy the information reporting requirement for these bonds (modified IRS Form 8038-G); and
future implementation plans (electronic platform in 2010).
Finally, the Notice solicits public comments on all of the plans for this program.

SCHOOL BONDS
In addition, Treasury also announces today guidance on allocations of national bond volume cap authorizations for two innovative tax credit bond programs for schools, known as Qualified School Construction Bonds and Qualified Zone Academy Bonds. The American Recovery and Reinvestment Act of 2009 provided new or expanded authorizations, respectively, for these two programs. These tax credit bond programs allow state and local governments to finance public school construction projects and other eligible costs for public schools with interest-free borrowings. These tax credit bond programs provide this federal subsidy by giving those who buy these bonds a federal tax credit that essentially allows state and local governments to issue these bonds without interest cost.

The guidance that Treasury is issuing today allocates the national bond volume authority for these school bond programs among the states and certain large local school districts pursuant to statutory formulas. These volume cap allocations are important to enable State and local governments to use these low-cost borrowing programs to finance school projects to promote economic recovery and job creation.

For Qualified School Construction Bonds, the guidance divides the $11 billion national bond volume authorization for 2009 among the states and 100 largest local school districts based on Federal school funding.

For Qualified Zone Academy Bonds, the guidance divides the $1.4 billion bond national bond volume authorizations for each of 2008 and 2009 among the states based on poverty levels.

Business Week: Economic Stimulus for Medical Records

April 23, 2009, 5:00PM EST

The Mad Dash to Digitize Medical Records

GE, Google, and others, in a stimulus-fueled frenzy, are piling into the business. But electronic health records have a dubious history

By Chad Terhune, Keith Epstein and Catherine Arnst

Neal Patterson likens the current scramble in health information technology to the 19th century land rush that opened his native Oklahoma to homesteaders. Cerner (CERN), the large medical vendor Patterson heads, is jockeying for new business spurred by a $19.6 billion federal initiative to computerize a health system buried in paper. "It's a beautiful opportunity for us," the CEO says.

The billions in taxpayer funds—part of the $787 billion economic stimulus—also have energized tech titans General Electric (GE), Intel (INTC), and IBM (IBM), all of which are challenging Cerner and other traditional medical suppliers. Microsoft (MSFT) and Google (GOOG) aim to put medical records in the hands of patients via the Web. Wal-Mart (WMT) is teaming with computer maker Dell (DELL) and digital vendor eClinicalWorks to sell information technology to doctors through Sam's Club stores.

Under the federal stimulus program enacted in February, hospitals can seek several million dollars apiece for tech purchases over the next five years. Individual physicians can receive up to $44,000. These carrots should encourage the proliferation of technology that will computerize physician orders, automate dispensing of drugs, and digitally store patient records. If providers participate broadly, those files are supposed to be accessible no matter where a consumer goes for treatment. President Barack Obama says the changes will improve care, eliminate errors, and eventually save billions of dollars a year. There's also a stick: The federal government will cut Medicare reimbursement for hospitals and medical practices that don't go electronic by 2015.

The incentives are working. R. Andrew Eckert, CEO of tech provider Eclipsys, says one client, a 250-bed hospital that shelved a software order in the fall after losing $50 million in the stock market, has reinstated the order. The move is "100% due to the stimulus," says Eckert (who won't name the hospital). Brandon Savage, chief medical officer at GE's health unit, says his company's technology will leapfrog the competition by not just replacing paper but also guiding doctors to the best, least-costly treatments.

In Washington, where partisan bickering over how to revive the economy flares on several fronts, sweet consensus reigns on health-tech spending. Congressional Republicans sound just as enthusiastic as the White House. Encouraged by former House Speaker Newt Gingrich, now an influential industry consultant, lawmakers cheer electronic records as a business-based remedy for much that ails medical care.

HIGH COST, QUESTIONABLE QUALITY

That rare agreement, however, is obscuring the checkered history of computerized medical files and drowning out legitimate questions about their effectiveness. Cerner, based in Kansas City, Mo., and other industry leaders are pushing expensive systems with serious shortcomings, some doctors say. The high cost and questionable quality of products currently on the market are important reasons why barely 1 in 50 hospitals has a comprehensive electronic records system, according to a study published in March in the New England Journal of Medicine. Only 17% of physicians use any type of electronic records.

Hospitals and medical practices that plugged in early have experienced pricey setbacks and serious computer errors. Suddenly dumping more money on hospitals, which will then funnel the cash to tech vendors, won't necessarily improve the situation, say many doctors and administrators.

Studies have shown that some large networks, such as the Veterans Administration and the Kaiser Permanente system, based in Oakland, Calif., have used electronic records to help cut costs and improve care. But so far there's little conclusive evidence that computerizing all of medicine will yield significant savings. And improvements to patient care may be modest. An analysis of four years of Medicare data published in March in the scholarly journal Health Affairs found only marginal improvement in patient safety due to electronic records—specifically, the avoidance of two infections a year at the average U.S. hospital. "Health IT's true value remains uncertain," wrote Stephen Parente and Jeffrey McCullough, researchers at the University of Minnesota.

Part of the problem stems from a fundamental tension. Info tech companies want to sell mass-produced software. But officials at large hospitals say such systems, once installed, require time-consuming and costly customization. The alterations often make it difficult for different hospitals and medical offices to share data—a key goal. Meantime, the health IT industry has successfully lobbied against government oversight.

"Most big health IT projects have been clear disasters," says Dr. David Kibbe, senior technology adviser to the American Academy of Family Physicians. "This [digital push] is a microcosm for health-care reform....Will the narrow special interests win out over the public good?"

OVERLOOKING RED FLAGS

Britain's experience shows that technology alone doesn't offer an automatic advantage. An $18.6 billion initiative to digitize Britain's government-run health system is four years behind schedule because of software snafus and vendor troubles. Few British doctors have been able to use electronic records, and there's little proof that they have saved money or helped patients. "There is a belief that technology solves all of our problems," says Ross Koppel, a sociologist at the University of Pennsylvania School of Medicine. "[But] more data does not equate to better medical care."

Administration officials insist they are proceeding cautiously and will learn from any missteps. But red flags raised by doctors and researchers haven't gotten much attention in Washington, in part because the health-tech industry has forged strong ties to the President, his top medical advisers, and Republican heavyweights such as Gingrich.

Nancy-Ann DeParle, the new White House health-reform czar, recently stepped down after eight years as a member of Cerner's board of directors. A former administrator of Medicare and Medicaid during the Clinton Administration, DeParle worked from 2006 through 2008 as a managing director at CCMP Capital Advisors, a private equity firm that invests in health-care businesses. She has sold shares in Cerner for about $950,000 and is disposing of investments related to CCMP, according to the White House.

DeParle declined to comment. Obama spokeswoman Linda Douglass says DeParle will delegate any decisions related to Cerner to a subordinate. "She is not going to be involved in implementing health IT," Douglass adds. Cerner CEO Patterson says DeParle's ascension won't benefit his company, which had $1.7 billion in revenue in 2008. "I think that actually works to our disadvantage," he argues. "I'm not sure I'll even be able to talk with her now."

Glen Tullman, CEO of Allscripts-Misys (MDRX) Healthcare Solutions, a big Chicago vendor to doctors, became acquainted with Obama when he ran for the Senate in 2004. The pair worked out at the same Chicago gym and occasionally played basketball. At that time, Tullman gave Obama a personal demonstration of his company's software at Allscripts' headquarters and went on to serve on Obama's Presidential campaign finance committee. "I feel fortunate that before he became President we had the opportunity to help him better understand the value of electronic health records as a necessary condition to fixing health care," Tullman says.

Shortly after the stimulus became law two months ago, Tullman and Gingrich hosted a Webcast for thousands of hospital officials and doctors promoting the financial incentives. Since then, Tullman has worked with a client, the University of South Florida Health system in Tampa, to seek $15 million in stimulus money to hire 130 e-health "ambassadors" who would pass out free samples of Allscripts' prescribing software to physicians. If the funding comes through, the $50,000-a-year representatives would receive a two-week training course from Allscripts, though the marketers otherwise are supposed to be independent of the company.

"This is all about getting doctors moving and considering an electronic health record," Tullman says. "The market is so big, we will get our fair share." U.S. Representative Kathy Castor, a Tampa Democrat, is helping. She has brought the Allscripts proposal to the attention of officials at the U.S. Health & Human Services Dept. whose job it is to dole out the tech incentives. Castor says the program will create good jobs during a recession.

Allscripts' rivals want their share, too. Lobbyists for McKesson (MCK), a large medical supplier based in San Francisco that already generates $3 billion a year in health technology sales, are distributing a position paper to members of Congress and Administration officials that could help steer stimulus dollars toward the company. The document, reviewed by BusinessWeek, addresses the definition of "meaningful use" of electronic records. That is the standard Congress set for hospitals and doctors seeking incentive money; it is now up to the Obama Administration to refine the term. The McKesson paper urges a requirement that recipients "build on existing technologies"—language that could favor products of McKesson and other established vendors.

Dr. David Blumenthal, the new head of health tech at HHS, will play a big role in fine-tuning this language. Formerly director of the Institute for Health Policy at Harvard Medical School, he declined to comment. HHS spokesman Nicholas Papas says: "Health IT has the potential to save the federal government more than $12 billion over 10 years, improve the quality of care, and make our health-care system more efficient. We have work to do to achieve this potential... and we will ensure that everyone has a seat at the table." McKesson says it's just trying to speed the process. "Our big message is: 'Please do this quickly. Uncertainty creates a slowdown,' " says Ann Richardson Berkey, senior vice-president for government strategy.

There are potential benefits to patients and taxpayers if the promise of electronic medical records can be fulfilled. In theory, a computer screen can supplant reams of paper and offer instant access to patient histories, dangerous drug interactions, and allergies. Treatment of diabetes, cancer, and other illnesses can be tracked more effectively.

SPIKES IN PHARMACY ERRORS

Geisinger Health System in Danville, Pa., wanted all that when it spent $35 million to purchase and install software from Epic Systems, a large vendor in Verona, Wis. But in June 2005, during a pilot run of a computerized order-entry system at Geisinger's flagship medical center, errors began appearing at a rate of several a week in the hospital's psychiatric unit. "The pharmacy would interpret an order as one drug at one dosage, and the patients were ordered the wrong medications at different dosages," recalls Jean Adams, a nurse in charge of the IT team. Fortunately, astute staffers discovered the problem after a few weeks and began verifying the computer drug orders using the phone. Full implementation of the Epic system was put on hold. Adams says Geisinger traced the trouble to incompatibility between a common pharmacy database and Epic's system.

Epic CEO Judith Faulkner says the episode at Geisinger, and similar incidents at other hospitals, taught her company that physician orders and pharmacy records cannot use distinct technologies. "It doesn't work when you mix and match vendors," Faulkner says. "It has to be one system, or it can be dangerous for patients."

To resolve its problem, Geisinger spent an additional $2 million on fixes that took 18 months, according to Dr. James M. Walker, the hospital chain's chief health information officer. An internist and former minister, Walker is one of health technology's best-known advocates. Tech boosters frequently cite Geisinger as an illustration of IT's sunny future. But Walker concedes that the stimulus-fueled rush to adopt existing technology could cause other providers to suffer through expensive fixes with potentially harmful consequences for patients. Vendors such as Epic, Walker says, sell relatively rudimentary electronic tools and expect hospitals and doctors to assure accuracy and safety. "This can be very tricky," Walker adds. "A lot of us are trying to say: 'Look, let's slow down.' "

NO WAY TO REPORT PROBLEMS

The Joint Commission, a nonprofit group that inspects and accredits 15,000 health-care organizations, has expressed similar caution. The commission, based in Oakbrook Terrace, Ill., issued a warning in December about problems with complex health-tech systems. It cited one U.S. pharmaceutical database that found 43,372 medication mistakes, or about 25% of the total reported in 2006, involved computer technology. The problems included flaws in data entry, inadequate software, and confusing screens.

Koppel, the researcher at Penn, has sounded some of the loudest alarms. In 2005 he published a study in The Journal of the American Medical Association that examined an Eclipsys system at the university's academic hospital. He found that use of computers introduced 22 new types of medication errors. His goal was to discover why young medical interns make so many errors. He hypothesized that long hours were to blame. To his surprise, the problems stemmed mostly from software installed to prevent mistakes.

Eclipsys CEO Eckert says Koppel's study examined a technology that has been updated. "The industry has grown up," he says. "There are months of testing by the client and us before someone activates a system."

When health technology fails for one medical provider, there is no central mechanism for reporting problems to others who use it. The federal government collects and disseminates this kind of information on drugs and medical devices. But tech contracts routinely bar medical providers from disclosing systemic flaws. Koppel contends this is unethical and risky: "We need to collect what we know and head off [any potential] tragedy."

Companies counter that confidentiality agreements protect their proprietary technology and that privacy laws prevent disclosure of patient and physician information without consent. "To the extent we are required to report information, or are allowed to, we would, of course, like to do that," says Allscripts CEO Tullman. He compares the skeptics of health info tech to doctors who questioned the introduction of the stethoscope in the 19th century: "There have been Luddites in every industry."

Disputes over health-tech failures are often resolved in private, making them difficult to sort out. Seattle Children's Hospital sued Eclipsys in 2002, claiming the company missed installation deadlines and failed to fix software errors. This resulted in "sizeable cost overruns and delays," the suit alleged. Eclipsys and the hospital reached a confidential settlement in 2003. A spokeswoman for Eclipsys says "isolated problems in Seattle don't reflect our company's overall success. Every vendor in the industry has had accounts with implementation issues."

"That was a bad marriage," says Dr. Mark Del Beccaro, chief medical information officer at Seattle Children's Hospital. "It taught us to get a better prenuptial agreement next time." The hospital turned to Cerner for a new system, but Del Beccaro soon became troubled by incidents of children suffering medication overdoses despite alerts from the Cerner software. He asked the doctors involved whether they had seen the alerts onscreen. "They told me, 'I get so many alerts, I click through [them],' " Del Beccaro says. "They do become mind-numbing."

"Alert fatigue" is a common concern at hospitals. The Joint Commission, in its December bulletin, warned about doctors and nurses overriding them and impairing patient safety. At Seattle Children's, Del Beccaro says, it took considerable effort to reduce online warnings. "There are definitely times Cerner could be more responsive to our problems, but we are pretty happy with them," he says.

Children's National Medical Center in Washington, D.C., has had a similar experience. In 2006 doctors and nurses there say they discovered an eightfold increase in dosage errors for high-risk medications. They attributed the trend to a Cerner system installed six months earlier. The mistakes were caught, and no patients were harmed, according to the center. But the hospital reverted to a process using paper notes. "I felt betrayed by a system I was supposed to trust," says Cherise Aldridge, a neonatal intensive-care nurse.

For three years, Cerner has resisted making adjustments to its software, which cost the Children's Center $30 million, says Linda Talley, the hospital's director of nursing systems. Today nurses use the Cerner network in combination with one assembled by the hospital's tech department. Nurses retype drug dosages, babies' weights, and other information from the Cerner computer into the homemade system to double-check how much medicine to administer. This time-consuming process has brought the dosage-error rate back down, says Talley. But she warns that other hospitals use the Cerner system without a backstop like the one her institution cobbled together.

Dick Flanigan, a senior vice-president at Cerner, says the company responds swiftly to requests for improvements and is "absolutely focused on making systems as safe and effective as possible." There are divergent opinions as to which technology works best, he adds. Cerner has developed a more expensive system that uses bar codes for medication and is capable of better integrating a wide array of data, he says. "We are flexible on this, and at times we incorporate what is done by the client." CEO Patterson adds that hospitals "are much safer [with Cerner technology] than without it."

The company faced more questions over its technology at the University of Pittsburgh Medical Center (UPMC). In 2005 researchers there found that at the university's Children's Hospital, patient deaths more than doubled, to 6.6% of intensive-care admissions, in the five months following the installation of a computerized order-entry system. The research on child patient deaths at the University of Pittsburgh found a "direct association between [computerized records] and increased mortality," according to an article published in December 2005 in the medical journal Pediatrics. Digital technology slowed treatment in several ways, the researchers concluded. One example: Doctors and nurses in the intensive-care unit were accustomed to ordering medications and tests while a sick child was en route to the hospital. The Cerner system required that orders be submitted only when the patient arrived, costing crucial time. The authors of the Pediatrics article acknowledged that their work clashed with other studies showing that digitization decreases errors and shortens hospital stays.

G. Daniel Martich, chief medical information officer at UPMC, says the Pediatrics study was flawed. Factors other than the installation of computers, such as the centralization of pharmacy services, also disrupted care, he emphasizes. The problems identified in the 2005 paper have all been resolved, Martich adds. "There were workflow issues," he says. "We learned the hard way because we were pioneers." Over the long run, he says, technology has helped decrease mortality rates and cut medication errors in half at Children's Hospital since 2003 .

CURSORY PRODUCT TESTING

Cerner CEO Patterson says the 2005 Pittsburgh study "certainly got our attention" and prompted an internal review. But that inquiry and others since have found no pattern of ill effects, he says. "We have more clients doing more orders than anybody," Patterson says. "If I had a systemic problem, you'd be reading about it on the front page."

The U.S. Food & Drug Administration has been considering whether to regulate health technology in the manner it oversees medication and implants. That decision now falls to the Obama Administration, which faces opposition from industry groups arguing that additional red tape would impede adoption of helpful technology.

Companies are lobbying the Administration to keep product-testing and standard-setting within the sole jurisdiction of a nonprofit body called the Certification Commission for Healthcare Information Technology. Founded in 2004 with industry money and grants from nonprofits, CCHIT now receives $7.5 million a year under a contract with the federal government. The other half of CCHIT's $15 million budget comes from fees paid by companies.

Mark Leavitt, chairman of CCHIT, is a former tech vendor. He sold his electronic health-records company to GE (GE) in 2002 and later became chief medical officer of the Healthcare Information & Management Systems Society, a trade group in Chicago. Seven of the CCHIT's 19 voting members work for vendors or for-profit tech consulting firms. "We try to strike a fair balance between medical providers and vendors," Leavitt says. "People need to trust what we do."

But another commissioner at the CCHIT, Michael L. Kappel, the senior vice-president for government and industry relations at McKesson Technology Solutions, acknowledges that preserving purely private-sector oversight will be tough in the wake of the financial crisis. "I'm having a hard time with this issue because people read about these financial companies, and there is a feeling that government lacks enough regulation," Kappel says. But regulating health info tech "is a recipe for disaster," he adds. "I am very sensitive to criticism that [CCHIT] is vendor-dominated. That couldn't be further from the truth."

Blumenthal, the new Obama health-tech chief, declined to comment on CCHIT. But in an article published this month in the New England Journal of Medicine, he said the body needs to set stricter standards: "Many certified [electronic health records] are neither user-friendly nor designed to meet [the stimulus law's] ambitious goal of improving quality and efficiency in the health-care system."

Sharona Hoffman, a professor of law and bioethics at Case Western Reserve University in Cleveland, says CCHIT's product testing, typically completed in a single day, isn't rigorous enough. In an article last December in the Harvard Journal of Law & Technology, she and a co-author faulted the group for telling vendors the testing scenarios in advance and for not conducting ongoing monitoring. Without better oversight, she argues, hospitals and doctors probably will not spend their stimulus money wisely.

Barry Hendrix, a primary-care physician in Paragould, Ark., says he paid dearly for just such a mistake, wasting $100,000 on an electronic records system. "It was a complete disaster," he says of the equipment he bought from NextGen in 2005 and abandoned within months. The system generated patient notes with stray asterisks and other gibberish, he says, and it didn't work properly with NextGen's billing software. Hendrix says he couldn't get technical support from the company or its authorized reseller. NextGen, a unit of Quality Systems (QSII) in Horsham, Pa., counters that Hendrix is a rare exception among thousands of loyal customers. It adds that it has terminated the reseller that served him.

Hendrix, however, has advice for doctors looking to go electronic: "Never believe a slick salesman."

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic network
Obama's Point Man on Health IT Weighs In

Businesses angling for a share of federal health- technology stimulus money will want to study an Apr. 9 New England Journal of Medicine article written by the new Obama Administration health info tech overseer, David Blumenthal. Overall, "Stimulating the Adoption of Health Information Technology" conveys a strong sense of caution. "Huge challenges await," Blumenthal writes.

To read the full NEJM piece, go to http://bx.businessweek.com/health-information-technology/reference/

Terhune is a senior writer for BusinessWeek based in Florida. Epstein is a correspondent in BusinessWeek's Washington bureau. Arnst is a senior writer for BusinessWeek based in New York.


Copyright 2000-2009 by The McGraw-Hill Companies Inc. All rights reserved.

The New Buy America Bonds (BABS) taxable munis subsidized by Fed (Reuters)

UPDATE 3-California prepares deal as NJ Turnpike sells BABs
Mon Apr 20, 2009 10:30pm BST

By Caryn Trokie

NEW YORK, April 20 (Reuters) - California on Monday outlined for investors what interest rates they may be paid in this week's planned debt sale, the biggest on the week's negotiated calendar, which will include up to $3.5 billion of new Build America Bonds.
California is planning a six-part deal that is expected to total up to $4 billion in BABs and general obligation debt, Tom Dresslar, spokesman for California State Treasurer Bill Lockyer, said last week.

The bond offering includes: four-year bonds expected to price at a yield spread of about 50 basis points over five-year U.S. Treasuries; five-year bonds at a yield spread of about 350 basis points over comparable Treasuries; six-year bonds expected to yield about 370 basis points over Treasuries and seven-year bonds expected to yield about 362.5 basis points over Treasuries.

It also includes 25- and 30-year bonds expected to yield about 387.5 basis points over Treasuries.

"With the 30-year Treasury (yield) last at 3.70 percent, that implies a yield around 7.57 percent," said MMD analyst Randy Smolik. "This would be a net cost to the state around 4.90 percent if the price was locked in currently."
U.S. states, cities and towns are increasingly taking advantage of this new kind of taxable debt that Congress included in its stimulus plan.

Investor enthusiasm for the debt, whose interest rates have a 35 percent subsidy from the federal government, spurred the New Jersey Turnpike to move up its planned sale by one day -- and increase its size.

The $1.375 billion offering that priced Monday saved the Turnpike about $100 million, on a present-value basis, according to financial advisor Dennis Enright of NW Financial Group, based in Jersey City, New Jersey.

The deal was oversubscribed, Enright said, adding that investors included "a long list" of money managers, pension funds and life insurance companies.

The bonds, which are due in 2040, carry a 7.414 percent coupon. When the taxable debt's federal subsidy is taken into account, the taxable yields came in at about 4.81 percent, Enright said.

The turnpike also sold $375 million of tax-exempt debt with a top yield of 5.35 percent in the 2040 maturity.

Due to the surging demand, the Turnpike twice tightened yields, which were first estimated at a 387.5 basis point spread, according to IFR.




© Thomson Reuters 2009. All rights reserved.

Stimulus Package Opportunities (from Bondbuyer.com)

"Stimulus 2009 - Maximizing the Opportunity" March 26, 2009 reprint from bondbuyer.com on
Resources for Information on the American Recovery and Reinvestment Act, including
new bonds to fund infrastructure, clean energy, clean water initiatives for municipalities.

Economic Stimulus - Medical Records Companies (WSJ)

MARCH 24, 2009 Stimulus Funds for E-Records Augur Big Windfall for Small Health Firms
»By JACOB GOLDSTEIN

Big companies including General Electric Co. will likely profit from the billions of federal stimulus dollars going to doctors who buy and use electronic health records. But little-known niche players could be among the biggest winners.

One such company is eClinicalWorks, a closely held firm in Westborough, Mass. The company, founded a decade ago by computer-programmer Girish Kumar Navani, his cousin and his physician brother-in-law, now has about 750 employees and expects $100 million in revenue this year. In the next few years, the company plans to hire 500 more people, up from 150 before the stimulus bill was approved.

"As of Dec. 31, we had put together a game plan saying, 'This economy looks like it's really getting bad. Why don't we be a little bit prudent?'" Mr. Navani says. "It changed in four weeks to, 'You will hire for growth; forget hiring for need.'"

The $787 billion stimulus package Congress approved in February promises more than $20 billion in outlays for health-information technology, coming mostly between 2011 and 2015, according to an estimate from the Congressional Budget Office. Physicians using electronic records will be eligible for more than $40,000 each in Medicare incentive payments over several years starting in 2011. Hospitals can also qualify for millions of dollars in incentive payments. Doctors and hospitals not going electronic by 2015 will be subject to penalties.

"We never anticipated the kind of dollars we're talking about today -- never in our wildest dreams," says Steven Plochocki, chief executive of Quality Systems Inc., a publicly traded company that sells electronic records under the brand NextGen.

An electronic health record, sometimes called an electronic medical record, replaces a patient's paper file. EHR systems can incorporate safety features such as automatically alerting a doctor if a patient has prescriptions for drugs with dangerous interactions. Proponents believe EHRs can also reduce wasteful spending from unnecessary testing, help doctors spot trends in their practices and enable agencies such as Medicare to pool anonymous medical data to track public-health issues.

Skeptics say that sharing information electronically will require the creation of complex data networks. Worries about patient privacy also persist. And many physicians say the systems can be expensive and difficult to use. The cost often runs to tens of thousands of dollars per doctor in the first year -- and several thousand dollars a year after that.

A federally funded survey published last year found that only 13% of practicing doctors used a basic EHR system, and only 4% used what the authors called a "fully functional" system.

Key details of how the money will be distributed remain undecided. To receive incentive payments, doctors must demonstrate "meaningful use" of a "certified" EHR, but the legislation leaves those terms to be defined by federal officials.

GE has been in the health-equipment business for decades, but it didn't start selling EHR systems to doctors until 2002, when it bought a system from another vendor. The business is already growing at a rate of 15% to 20% a year, says Jim Corrigan of GE Healthcare IT.

But the labor-intensive aspects of adopting and maintaining electronic systems in doctors' offices can give smaller technology companies an opening to compete against big corporations, says Eric Brown, an analyst at Forrester Research Inc.Shares of publicly traded specialists such as Quality Systems, Allscripts-Misys Healthcare Solutions Inc. and Cerner Corp., have outperformed the broader market this year. Earlier this month, eClinicalWorks gained a national distribution channel when Wal-Mart Stores Inc. said it will begin selling eClinicalWorks EHR packages to medical offices through its Sam's Club stores.

The installation of Dell Inc. computers and training by eClinicalWorks staff will cost a physician $25,000 for the first year, with the option of adding additional doctors in the practice for $10,000 each. After the first year, the price will fall to about $5,000 a doctor annually.

Mr. Plochocki of Quality Systems says consolidation among vendors is likely, and he says that his company is considering a few acquisitions this year. Quality Systems has also been beefing up its sales force, he says.

Allscripts is using its business selling billing software to doctors as a jumping off point, selling EHR systems to its existing customers. Glen Tullman, the company's CEO, says a physician customer recently explained why he would rather buy both billing software and an EHR system from a single vendor: "If something goes wrong, I want one throat to choke," the doctor said.

Write to Jacob Goldstein at jacob.goldstein@wsj.com