The recession and massive costs for the financial bailout have pushed the federal deficit to an all-time high for the first four months of the budget year. The Treasury Department says the deficit for October through January totals $569 billion, more than six times larger than the imbalance during the year-ago period. The deficit for January alone totaled $83.8 billion, worse than the $78 billion economists expected.
Meanwhile, the U.S. trade deficit fell to the lowest level in nearly six years in December as the recession depressed demand for imports. The trade deficit in 2008 fell for a second straight year and economists expect an even bigger decline this year. The Commerce Department says the deficit in December fell four per cent to $39.9 billion, from $41.6 billion in November. It was slightly higher than the $36 billion deficit economists expected. For the year, the deficit shrank by 3.3 per cent to $677.1 billion. It was the second straight annual decline after the deficit posted records for five straight years.
There’s been a bewildering hiccup after key members of the Senate announced agreement on a $790 billion economic stimulus bill. House Speaker Nancy Pelosi and the White House have withheld immediate expressions of support. And the formal meeting of Congressional bargainers who will need to ratify the deal was delayed. At a capitol news conference, Senate Majority Leader Harry Reid said agreement had been reached on a compromise that he said “creates more jobs than the original Senate bill and costs less than the original House bill.” The new version includes help for victims of the recession in the form of unemployment benefits, food stamps, health coverage and more. It would also provide billions for states that face the prospect of making deep cuts in their own programs. It also preserves President Barack Obama’s tax break for millions of lower and middle income taxpayers.
The president of the Better Business Bureau’s Houston office says there’s a fraud being perpetrated on the public: that the sky is falling, and business as we know it is ceasing. But Dan Parsons says there’s nothing further from the truth. Parsons moved to Houston from Pittsburg, where thousands of steelworkers were made jobless.
“One third of the marketplace lost their jobs. So when you pick up the news, the paper, you hear about, you know, ‘7,000 cut here, 500 may go here,’ I sometimes wonder ‘are those companies doing it to feel good about saying it?’ because the numbers—while they may sound big—in the scheme of what we are as a city, aren’t really that terrible. Not when you lose a third of a city to an industry that went away and never came back. So I was pretty happy to leave Pittsburg. Pittsburg people, by the way, if you’ve never been there, it’s a high-tech, medical—they’ve done really well. It’s taken a long time to get it back together, but they did. Moral to the story: it will happen, even when you lose a third of your workforce.”
Parsons spoke at the annual Houston Minority Business Council networking luncheon at the Hilton Americas.
U.S. refiners could be forced to close older plants, according to Marathon CEO Clarence Cazalot. He told attendees at the Cambridge Energy Research Associates meeting at the Westin Galleria that the industry must keep supplies coming to help avoid price spikes at the pump. That means upgrading refineries to handle larger fuel varieties. The CERA conference also featured Saudi Arabia’s oil minister, who stressed the importance of crude oil price stability to achieve economic recovery.
Eight bank CEOs and chairmen were told by top members of a key House panel that they must win over a disgusted public and work harder to right the deeply troubled financial system. House Financial Services Committee Chairman Barney Frank urged the bankers to be “ungrudgingly cooperative” to give the American people the sense that they are “willing to make some sacrifices to get this working.” The Massachusetts Democrat also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a systemwide mortgage modification. Republican Spencer Bachus of Alabama said the bankers and Congress will have to do their part to sway people by “winning back their trust and their confidence.”
A senior Treasury official says the Obama administration wants to see America’s major allies taking bold actions to deal with the global economic crisis. The official says Treasury Secretary Timothy Geithner will be taking that message to a meeting of finance officials of the group of seven major industrial countries this weekend in Rome. The official, who spoke on condition of anonymity because the G-7 finance ministers had not yet met, says the adverse market reaction Tuesday to the administration’s announcement of its financial bailout overhaul was not seen as a setback to the overall goals of the program.
A federal regulator is urging more than 800 thrift institutions to suspend all foreclosures while the Obama administration develops plans to keep borrowers in their homes. Office of Thrift Supervision Director John Reich says that by doing so, thrifts “would be supporting the national imperative to combat the economic crisis.” The Obama administration says it will spend $50 billion to combat foreclosures of owner-occupied middle-class homes, but is divulging few details until later this month. Thrifts differ from banks in that, by law, they must have at least 65 per cent of their lending in mortgages and other consumer loans–making them particularly vulnerable to the housing downturn.
The FBI is conducting more than 500 investigations of corporate fraud amid the financial meltdown. FBI Deputy Director John Pistole described the bureau’s efforts to the Senate Judiciary Committee. Pistole says there are 530 active corporate fraud investigations, and 38 of them involve corporate fraud and financial institution matters directly related to the economic crisis. Also appearing before the committee was Neil Barofsky, the watchdog of the government’s $700 billion Wall Street rescue package passed last year. Senate democrats are urging more spending to expand the ranks of the FBI’s financial fraud investigators.
Former Halliburton subsidiary KBR has pleaded guilty to bribing Nigerian government officials over a ten-year period in order to obtain construction contracts. The Houston-based construction and engineering company says it’s guilty of conspiring with its joint-venture partners and others to pay off officials in order to secure more than $6 billion in engineering, procurement and construction contracts to build liquefied natural gas facilities on Bonny Island, Nigeria. As part of KBR’s plea agreement, the company agrees to pay a $402 million criminal fine.
President Barack Obama has signed a bill to delay the switch to digital television to June 12th. Congress last week gave TV stations until then to shut down their analog broadcasts to give viewers more time to prepare for the switch to digital signals. The change was to have taken effect next Tuesday. Obama says the later date will give viewers more time to prepare. He says many would have been left in the dark otherwise. Money has run out for a federal fund that helps people without cable or satellite service pay for converter boxes they will need in order to keep watching their televisions. And there’s a long waiting list for the coupons. Nearly 500 stations say they intend to go ahead with the switch on Tuesday and not wait until June.
A House committee is holding the first of three hearings to air concerns about drilling for oil and gas in the outer continental shelf waters. The committee is hearing from environmental activists and officials from coastal communities who want the drilling ban to continue. The hearing comes a day after Interior Secretary Ken Salazar ordered a review of offshore oil and gas development. Congress last fall ended the broad drilling ban, dating back to 1981. But it remains up to the Interior Department to issue specific plans for drilling leases. Salazar criticized a timetable for new drilling which the bush administration proposed four days before President Barack Obama took office.
Houston-based Anadarko Petroleum says it’ll cut 2009 capital spending but boost sales volumes for the year. Anadarko’s one of the nation’s largest independent exploration and production companies. It says it’s lowered its capital budget to between $4 billion and $4.5 billion. It’s also allocating 20 per cent for exploration and appraisal activities and 20 per cent for mega-projects. Anadarko also projected 2009 sales volumes between 208 million and 212 million barrels of oil equivalent. That’s an increase from the 2008 level of 206 million barrels of oil equivalent. Anadarko’s exploration projects include four to six high-impact exploration wells in the deep-water Gulf of Mexico and about 20 high-potential gross wells internationally. More than a dozen of those have resource targets of more than 100 million barrels of oil equivalent per prospect. Development activities include the Jubilee Field offshore Ghana, the Caesar/Tonga Complex in the deep-water Gulf of Mexico, the El Merk Project in Algeria and the recently announced discoveries at its Wahoo Pre-Salt Prospect offshore brazil and at Heidelberg and Shenandoah in the deep water Gulf of Mexico.
The CEO of Houston-based medical device firm Cyberonics addresses a breakfast meeting of BioHouston tomorrow morning at the Brown Foundation Institute for Molecular Medicine on Pressler. Dan Moore will discuss how to partner with large medtech companies to commercialize medical technology.
The Justice Department says it will investigate the proposed merger of Ticketmaster Entertainment with Live Nation. Department spokeswoman Gina Talamona said the department will vigorously enforce antitrust laws and therefore thoroughly investigate the proposed deal. Some lawmakers are already calling on the government to reject the deal. The deal would match the world’s dominant ticket seller, Ticketmaster, with Live Nation, which was once it’s biggest client and is the world’s top concert promoter. A Justice Department investigation could take months or longer. The department has probed Ticketmaster in the past.