Tuesday PM May 19th, 2009
Houston Association of Realtors. Single-family home sales last month fell 22.5 percent compared to the previous month. Prices were down less than one percent. The median price was $149,050 in April, compared to $150,000 a year ago. Homes sold out of foreclosure made up nearly a quarter of those sold.
Housing construction plunged to a record low in April as a steep drop in apartment building offset a rebound in single-family construction. The Commerce Department says construction of new homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units--the lowest pace on records going back a half-century. Economists had expected home construction to post a modest increase in April as a sign that the worst collapse in housing activity in the post-world war ii period was drawing to a close.
The United Steelworkers, the Alliance for American Manufacturing and the Mayors and Municipalities Auto Coalition participated in a "Keep It Made in America" campaign that began May 11th, culminating in Washington, D.C. on Capitol Hill with a "teach-in" to educate lawmakers about the impact of the auto industry in their constituencies. Chuck Rocha is the political director for the United Steelworkers.
"We should be producing cars in North America that people want to buy, and that we can buy, and we need the government to help. The problem right now is not the workers. It's not the union. It's been the downturn from this banking catastrophy. People need to have access to credit, and the companies need to have access to credit. (If) the government wants to stimulate the economy, we should have a program like Cash for Clunkers to help get some of these old cars off of the road--which emissions are terrible—and help people buy new, state-of-the-art cars that would help our economy, help our environment and help the country as a whole. That's what France is doing right now. That's what Germany is doing right now." Rocha is a native of Arlington, which has an auto assembly plant.
A group representing Chrysler dealers says it's in talks with the automaker in hopes of getting it to scale back plans to end franchise agreements with about a quarter of its dealers. An attorney for the Chrysler National Dealer Council says it's unlikely that Chrysler will change its mind about eliminating dealer franchises. But he's optimistic that the company will at least agree to end fewer than the 789 originally listed in its court motion. In addition, the attorney says the group wants to ensure that the dealers whose franchise agreements ultimately are terminated get the help they need from Chrysler for a smooth transition.
President Barack Obama has announced a new fuel and emission standard that he says will, at last, put the United States on the road to a cleaner environment and better fuel efficiency. Surrounded by leading members of Congress, the industry and the Auto Workers Union, Obama said "the goal is to set one national standard." The plan is aimed at saving billions of barrels of oil, although it also is expected to cost consumers an additional $1,300 per vehicle by 2016. Obama agreed that "it costs money to build these vehicles." But he also stressed that "the cost of driving these vehicles will go down as drivers save money at the pump."
A White House environmental adviser says the Obama administration's plan to combine tighter emission standards with higher fuel efficiency will protect consumer choice and provide cleaner cars and trucks. Carol Browner, who headed the Environmental Protection Agency during the Clinton administration, called the accommodation with the industry on new rules "truly historic" and said the regulatory changes are "long overdue." Browner is a key environmental and energy adviser to President Barack Obama. She said in an interview on CBS's The Early Show that consumers will save money on fuel and that the environment will be healthier for everybody.
Iraq's oil ministry has rejected plans by Kurdish authorities to unilaterally export gas from their semiautonomous region to Europe through a pipeline that runs to Turkey. That apparently reverses a previous approval. Oil Ministry spokesman Assem Jihad said oil and gas must be marketed by the ministry and revenues go to the central government. Since 2003, the Kurds have signed some two dozen oil deals with foreign oil companies. But the Iraqi government says they are illegal because it did not sanction them—an issue is causing tension between the government and Kurdish leaders. Austria's OMV and Hungary's MOLl said Sunday they were teaming up with UAE's Dana Gas and Crescent Petroleum to export natural gas from two fields in the Kurdish region in an $8 billion project. The Greater Houston Partnership recently hosted Qubad Talabani from the Kurdistan regional government at a business opportunities luncheon, educating Texans about business opportunities in that region in Iraq.
The Senate has cleared the way for a final vote on prohibiting credit card companies from arbitrarily raising an individual's interest rate and charging many of the exorbitant fees. It requires a 45-day notice before credit card interest rates can be raised. In addition, a consumer would have to be 60 days behind on their payments before a credit card company could raise the interest rate on the balance. But if the consumer pays the minimum balance on time for half a year, the company would have to restore the previous, lower rate. North Dakota Senator Byron Dorgan says it also seeks to deter the industry from offering cards to pre-teens. The banking industry warns the new restrictions could actually hurt consumers by limiting credit at a time when they need it most. With the House on track to endorse the measure by week's end, President Barack Obama could see a bill on his desk by the end of the week.
Allstate says it will not need government funding in the form of a bailout from the Treasury Department. The property and casualty insurer says it has sufficient capital and that its access to potential funding sources is more than adequate. The Northbrook, Illinois-based company was among six insurers approved by the Treasury to receive government aid. On Friday, Ameriprise Financial also turned down bailout funding.
Goldman Sachs and Morgan Stanley have formally asked the Federal Reserve for permission to repay a combined $20 billion in federal bailout money. The requests are pending and no decision has been made on whether the investment banks will get approval to repay the money and sever ties with the troubled asset relief program. Goldman Sachs, Morgan Stanley and JPMorgan Chase have said for weeks that they want to repay tarp funds so they can operate free of federal limits on executive pay and other restrictions on the money. A JPMorgan spokesman won't comment on whether the bank has requested permission to repay TARP.
Many of the nation's largest public housing authorities fear they will be left out when the government distributes hundreds of millions in economic stimulus dollars. The money would go for new plumbing, roofing and other capital improvements. The Council of Large Public Housing Authorities says housing authorities in New York City, Los Angeles, Chicago and Baltimore are examples of agencies that fail to meet the threshold that federal officials have established for getting some of that money. Only housing authorities designated as "high performers" will be eligible during the first round of the competitive grants program. The trade group says the new requirements for getting stimulus dollars go beyond what was required by Congress. Those agencies will still get money for capital improvements because $3 billion will be spent through a formula that gives something to all the agencies.
The Federal Reserve says that in July it will start including a wider variety of commercial real estate securities in a program aimed at sparking consumer and business lending. Specifically, the Fed says it will roll into the program certain existing high-quality commercial real estate securities, known as legacy securities. Currently, only newly issued securities of this type are included. By making the change, the Fed hopes it will help bolster the market for such legacy securities, which were hard hit when the financial crisis intensified last fall. That should help borrowers finance new purchases of commercial properties or refinance existing commercial mortgages on better terms. Lawmakers on Capitol Hill and others urged the Fed to make the change.
It's the toughest question in the health care debate--how to pay for expanding coverage to nearly 50 million uninsured people. A Senate Finance Committee report says that proposals to ease health care costs may work in the long run, but won't finance health care reform now. The committee will meet behind closed doors Wednesday to debate the revenue options. They include a soda pop tax that would apply to drinks sweetened with sugar, high-fructose corn syrup or other high-calorie sweeteners. Diet drinks would escape the tax. There are also proposed hikes in the taxes on alcoholic drinks. Senators are also considering taxing health care benefits on the affluent and doing away with flexible spending accounts. All of the suggestions come with considerable political risk.
New York Attorney General Andrew Cuomo is suing two debt settlement companies, including one in Texas, accusing them of fraudulent business practices and false advertising. Cuomo says CSA-Credit Solutions of America of Richardson, and Nationwide Asset Services of Phoenix, and its affiliates failed to deliver on promises to consumers. He says CSA promised it could reduce outstanding debts by 60 percent, but only about one percent of customers got that much. The company collected roughly $17 million in fees from about 18,000 New Yorkers between 2003 and last September. Cuomo says NAS promised 25 to 40 percent reductions, but less than one percent of its 2,000 New York customers saved that much.
Small festivals and huge parades alike are scaling back or considering canceling as cities say they can no longer afford to provide services for free. Cash-strapped Philadelphia recently billed a gay pride festival $17,000 for police, street cleaning and ambulance services. Philly has plenty of company. Festival organizers in New York, Boston, Detroit and New Jersey also are getting hit with the fees. The cities say revenues are down because of the recession and they're looking to cut wherever they can. Community groups worry that without festivals, their visibility and membership will decline. So they're finding ways to pay for the fees, sometimes stepping up fundraising.
School's out, surf's up, summer beckons. Time for college students to see if they can stay afloat in the worst economy their generation has known. Young people are carrying a heavier burden into this summer break. So says an AP-MTVU poll that finds students anxious about their finances, their future and the folks back home. In the poll of students, nearly one in five reported that a parent lost a job in the last year. Over 20 percent said they worry a lot about having enough money to get through the week. Even more--fully one-third--said they worry a lot about the finances of their parents. Nearly one in five decided to attend graduate school after college because an undergraduate degree might not land them a job.
New census data show that just before the earliest stages of the recession, there was a steep decline in the population growth of children less than a year old in the U.S. Experts have long known that with rising job cuts and home foreclosures, couples often decide the timing isn't right to have children. But the mystery here is that the pregnancy falloff reflected in the government data actually began months before Wall Street's plunge last September. Stephanie Ventura, a demographer for the National Center for Health Statistics, says U.S. couples, who on average have two children, might have instinctively known to slow down amid early signs of economic trouble. But she says a firm conclusion on that will have to await demographic breakdowns later in the year. Teen births have been driving recent increases.
American Airlines says dozens of politicians from Congress to city halls back its hope to work more closely with British Airways on trans-Atlantic flights. Fort Worth-based American is asking the U.S. Department of Transportation for immunity from U.S. antitrust laws so it can share pricing and other information with BA, along with Iberia, Finnair and Royal Jordanian Airlines. A public comment period on the request ended Monday, and a decision is expected by fall. American says 28 Senators, 113 members of the U.S. House, 110 mayors and 39 governors from California's Arnold Schwarzenegger to New York's David Paterson signed letters supporting its immunity bid. American and BA say immunity will let them compete fairly against two other groups of airlines that are already allowed to work together on prices, schedules and other details. Critics, such as Virgin Atlantic Airways head Richard Branson, say American and BA are already too dominant at London's Heathrow Airport and immunity would lead to higher fares on U.S.-U.K. routes.
Former President Bill Clinton has told a climate summit in South Korea that the world can fight global warming in a way that makes sense economically. He also says the battle can even help countries overcome the ongoing economic crisis. Clinton stressed that it's possible for economies to grow without emitting greenhouse gases, and the world must act now to cut emissions before it is too late. He said if greenhouse gases aren't reduced in the range of 80 percent by 2050, "bad things are going to happen." He says the consequences could be so severe that "we won't be able to save the planet for our grandchildren." Organizers of the C40 Large Cities Climate Summit say cities bear a significant responsibility to address climate change. Cities cover less than two percent of the earth's surface but generate 80 percent of heat-trapping greenhouse gases.
Dell is trying to extend its lead with its first "netbook" designed for young students. The Round Rock-based company unveiled its new Latitude 2100 today in Australia at a time when adult consumers and businesses have cut back on technology spending. It's part of a newly popular category of computer that's much like a laptop, but cheaper, smaller, lighter and less powerful. Unlike Dell's other netbooks, the 2100's shell is made from brightly colored, easily gripped rubber, not slippery plastic. And a light on the lid of the computer tells teachers when kids are connected to the Internet. The 2100 is aimed at students in kindergarten through eighth grade. It has a ten-inch screen and a keyboard that's a little bigger than regular netbooks.
Earnings Home Depot reports that its fiscal first-quarter profit rose 44 percent. The nation's largest home improvement retailer beat Wall Street's expectations despite lower sales. Home Depot announced in January that it planned to shutter its 34 Expo design centers.
Houston-area home sales fell for the 20th straight month in April, according to the
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