Friday PM August 7th, 2009

President signs "cash for clunkers" extension…Consumer continue saving, paying down debt for fifth straight month…Unemployment rate drops slightly to 9.4 per cent…

Car shoppers are getting more time to trade in their clunkers for cash. President Barack Obama signed into law an extension of the stimulus program that proved so popular it ran out of money. The Senate voted to triple the cash-for-clunkers fund to $3 billion and extend the program to Labor Day, assuming the new money lasts that long. The law gives owners $3,500 to $4,500 for trading in old cars that use a lot of gas for newer, more efficient vehicles. Administration officials say it could prompt the sale of another half million vehicles. Nearly 185,000 have been sold through the program so far. The extra money is aimed at helping automakers and spurring the economy while removing the least fuel-efficient vehicles from the road.

The Federal Reserve says consumers paid down their credit cards and reduced other debt in June for the fifth straight month as they rebuild savings battered by the recession. The Fed says Americans cut their outstanding consumer debt by $10.3 billion, or 4.9 per cent, to $2.5 trillion in June. The cut is much steeper than the $4.7 billion analysts expected and larger than the $5.4 billion drop in May. Rising unemployment, declining home values and reduced stock portfolios have spurred Americans to spend less and save more. That could slow any economic recovery, as consumer spending accounts for 70 per cent of economic activity.

Employers throttled back on layoffs in July, cutting just 247,000 jobs, the fewest in a year, and the unemployment rate dipped to 9.4 per cent. It was a better than expected showing that offered a strong signal that the recession is finally ending. The Labor Department’s report was better than many analysts were expecting. They were forecasting job losses to slow to around 320,000 and the unemployment rate to tick up to 9.6 per cent, from 9.5 percent in June. If laid-off workers who have given up looking for new jobs or have settled for part-time work are included the unemployment rate would have been 16.3 per cent.

The Obama White House is applauding an encouraging jobs report as evidence the country has retreated from the brink of depression. Presidential spokesman Robert Gibbs told reporters there remains plenty of work to do despite the latest government report showing that unemployment went down from 9.6 per cent to 9.4 per cent in July. The spokesman said the report “is more evidence that we have pulled back form the edge” of a depression. At the same time, he said President Barack Obama still thinks the jobless rate will hit ten per cent later this year. Gibbs acknowledged that it likely will be some time before the country sees a period of sustained job growth.

Jewelry retailer Zale closed 118 struggling retail locations in the quarter that ended July 31st. Irving-based Zale said the closures brought to 191 the number of underperforming locations shut down during the 2009 calendar year. Zale put the breakdown at 160 retail stores and 31 kiosks. The company says it still operates 1,931 retail locations. Zale will record a $50 million pretax charge during the fourth quarter that ended July 31st, to cover the costs of the latest closures. Zale brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda, plus online operations.

The Department of Defense says no criminal charges will be filed against military contractor KBR in connection with the electrocution of a Green Beret soldier who died while showering in his barracks in Iraq. Investigators said there was “insufficient evidence to prove or disprove” that anyone was criminally culpable in the January 2008 death of 24-year-old Staff Sgt. Ryan Maseth of Pittsburgh. The uproar over his death triggered a review of 17 other electrocution deaths in Iraq and widespread inspections. The Pentagon inspector general said last week that Maseth died when he came in contact with an energized metal shower and hose caused by the failure of an ungrounded water pump installed by KBR.

A federal judge in Houston has set a date for the retrial of two former Merrill Lynch executives whose 2004 Enron-related fraud and conspiracy convictions were overturned. U.S. District Judge Ewing Werlein, Jr., ordered a February 8th retrial of Daniel Bayly and Robert S. Furst. Bayly, Furst and a third executive, James A. Brown, were convicted in 2004 of conspiracy and wire fraud. They’re accused of helping push through Enron’s sham sale to Merrill Lynch of three power barges moored off the Nigerian coast in 1999. The deal was struck to inflate the earnings of Enron’s energy division. Enron sought bankruptcy protection in December 2001. An appeals court threw out the convictions in 2006 after finding fault with the prosecution’s legal theory.

A federal judge has ordered stiff sanctions against a Houston-based doughnut maker for harboring illegal immigrants. U.S. District Judge Ewing Werlein, Jr., sentenced Shipley Do-Nut Flour and Supply to pay a criminal fine of $250,000 and forfeit $1.3 million to federal immigration officials. According to a statement from the U.S. Attorney’s Office in Houston, Werlein also placed Shipley under court supervision for three years. The company pleaded guilty, through its president Lawrence Shipley IIIi, to conspiring to harbor illegal immigrants in September 2008. Three former and current Shipley plant managers also pleaded guilty to hiring or continuing to hire illegal immigrants. Prosecutors also said that as part of a plea deal, the company implemented new procedures to prevent future federal immigration violations.

A small fire at an ExxonMobil chemical facility in Baytown generated some black smoke but left behind no air quality problems. Company spokeswoman Neely Nelson told the Associated Press that one contract worker fell and suffered a shoulder injury. She said nobody was burned in Thursday’s fire. Electricity was knocked out to about 1,500 CenterPoint residents, but most power was restored by late Thursday. Company officials blame a power surge that led to a pipe rack catching fire. Nelson says emergency personnel quickly put out the blaze. Nelson says industrial air monitoring “showed no detectable levels of hydrocarbon.” She said crews worked todayto get operations back to normal. Irving-based ExxonMobil this year replaced Wal-Mart atop the 2009 Fortune 500 list of largest U.S. companies.

Retail gasoline prices across Texas are up a dime in the past week. AAA Texas reports the average price per gallon is $2.50. El Paso had the most expensive gasoline at the consumer pump, at $2.58 a gallon. The Galveston-Texas City area had the least costly gas, at $2.46. The association reports the cost of gasoline in Texas rose along with world oil prices. Prices are still lower than last August. AAA spokesman Dan Ronan says last year at this time a gallon of gasoline in Texas was costing $3.75.

A more than 75-year old school stadium damaged by Hurricane Ike could be replaced with help from government loans. Galveston Independent School District officials recently learned Kermit Courville Stadium could be brought down and a new complex built with up to $8.6 million in no-interest or low-interest federal loans. The Galveston County Daily News reported that trustees could seek money through a bond program funded by stimulus dollars. Trustees would have to decide where to put a new stadium and the cost. The issue could go before voters November 3rd. Superintendent Lynne Cleveland says a new venue is important to students who want to feel pride in their football stadium. The stadium was in disrepair before Ike hit on September 13th. The hurricane-added damage forced teams to play games elsewhere.

Strong opinions were expressed when the U.S. Department of Energy visited west Texas for the sixth of eight public meetings on prospective sites for federally mandated mercury storage. About 100 people attended a meeting on Thursday night in Andrews to discuss the possibility that the Waste Control Specialists Radioactive Waste Dump could be chosen. The site, 30 miles west of Andrews, is the only privately owned location among seven under consideration. Adam Greenwood is an attorney in Albuquerque, New Mexico, and founder of Save the Ogallala Aquifer. The Odessa American reported that Greenwood said it would be better to store mercury at a government-run site. But Andrews Economic Development Director Wesley Burnett said bringing mercury in could benefit the community.

Democrats are pushing back against vocal critics of health care reform. Officials say top White House aides have counseled Democratic Senators about coping with disruptions at public events. Those aides, say the officials, promised that the party and its allies, such as labor unions, would respond with twice the force if any individual lawmaker is targeted in TV advertising. The officials spoke on condition of anonymity, saying they were not authorized to discuss details of the closed-door session. Several recent town hall-style meetings have been disrupted by noisy demonstrators. Republicans have seized on them as evidence of a lack of public support for President Barack Obama’s health care overhaul. For their part, Democrats accuse Republicans of sanctioning mob tactics, and say protesters are trying to sabotage the democratic process.

The taxpayer bill from the housing market bust keeps growing. Fannie Mae says it needs an additional $10.7 billion in government aid after posting a loss of more than $15 billion in the second quarter. The mortgage finance company was seized by federal regulators last September. The request for federal aid is Fannie Mae’s third since the takeover. It has received about $34 billion so far.

The postmaster general says his agency needs to find new sources of income, and he’s trying to think outside the mailbox to do so. As John Potter puts it, the U.S. Postal Service shouldn’t “just sell stamps.” He notes that in places like Australia, people can renew driver’s licenses in post offices and in Italy, that’s where people do their banking. In other countries, post offices handle insurance. Potter adds that the U.S. isn’t exploring these particular ideas at the moment. The post office is reporting a loss of $4.7 billion so far this year. It expects to be $7 billion in the red by the end of the fiscal year. The losses are blamed on the recession and online competition. While Congress votes money for free mail delivery for the blind and to offer reduced rates to charities, the post office does not receive taxpayer funds for its operations.

A state court judge has refused to dismiss Dell from a civil lawsuit that alleges people in and with ties to New Orleans’ technology office ripped off a crime camera system developed by two companies and then conspired with Dell to sell it. Civil District Judge Rosemary Ledet also refused Dell’s request to push to January the September trial date, citing a federal criminal investigation into the technology office and city crime camera contracts. Southern Electronics Supply and Active Solutions, which worked on the city’s initial camera program, sued in 2007. Dell got two claims dismissed: that it interfered in a contract between the plaintiffs and the city and that it breached a contract in regards to a partnership with the plaintiffs.

The country’s biggest phone and cable companies have agreed to hand over information about their broadband networks to help the federal government produce a national map showing where high-speed Internet connections are available across the U.S. AT&T, Verizon Communications and Comcast, along with industry trade groups, have told the Commerce Department that they are committed to helping it “complete the important and difficult task of mapping broadband availability.” Congress included up to $350 million in the stimulus bill passed in February to produce a national broadband map that can be searched by the public. The National Telecommunications and Information Administration, part of the Commerce Department, is overseeing the project.

The temporary shutdown of the messaging service Twitter Thursday may have been related to the ongoing political conflict between Russia and Georgia. Twitter says it suffered a denial-of-service attack, in which hackers command scores of computers toward a single site at the same time, preventing legitimate traffic from getting through. Facebook also experienced intermittent access problems. Bill Woodcock of Packet Clearing House, a nonprofit that tracks Internet traffic, says the attacks started with hackers using a botnet to send a flurry of spam e-mail messages that contained links to pages on Twitter, Facebook and other sites written by a single pro-Abkhazia activist. Russia recognized as independent the breakaway regions of South Ossetia and Abkhazia after a brief war with Georgia a year ago. Woodcock says it’s hard to tell whether it was a case of hackers trying to punish the sites for publishing views they disagree with, or if they were directing traffic to the sites out of sympathy for the activist’s message.

The number of rigs actively exploring for oil and natural gas in the United States went up by 18 this week to 966. Houston-based Baker Hughes reported that of the rigs running nationwide, 681 were exploring for natural gas and 277 for oil. Eight were listed as miscellaneous. A year ago, the rig count stood at 1,967. Texas gained 14 rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.


Ed Mayberry

Ed Mayberry

News Anchor

Ed Mayberry has worked in radio since 1971, with much of his early career as a rock’n’roll disc jockey. He worked as part of a morning show team on album rock station KLBJ-FM, and later co-hosted a morning show at adult rock station KGSR, both in Austin. Ed also conducted...

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