Friday PM September 19th, 2008
by: Ed Mayberry, September 19, 2008 11:09:21 am
President Bush has told the nation his administration is taking “unprecedented action” to deal with the ailing financial markets. Bush said he appreciates the willingness of Congress to work with the administration to address the crisis “head on.” The president spoke publicly for the third time this week about convulsive developments in the business world. He was joined on the White House steps outside the Oval Office by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox.
The Securities and Exchange Commission has imposed a temporary emergency ban on “short-selling”--a trading method that bets stocks will go down. That method has been blamed for contributing to the collapse of stock values in investment and commercial banks. In addition, President Bush has authorized the Treasury Department to insure the holdings of eligible money market mutual funds. Meanwhile, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are working on a massive rescue plan to buy up assets held by troubled banks and other financial institutions at the heart of the nation's financial crisis. Paulson says he plans to work through the weekend with Congressional leaders to reach agreement on a plan that would address the root problems of the financial crisis. He gave few details of how the plan would be structured. Paulson says mortgage giants Fannie Mae and Freddie Mac will step up their purchases of mortgage-backed securities to help provide support to the crippled housing market. Paulson also said that the Treasury Department will expand a program, announced earlier this month, to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis.
The Bush administration is asking Congress to give it the power to buy distressed assets in an attempt to rescue banks caught in Wall Street's financial crisis. Senate Majority Leader Harry Reid says he expected the administration and the fed to have a proposal to lawmakers in a matter of hours, rather than days. Massachusetts Congressman Barney Frank said the administration wants the power “to buy up illiquid assets.” Frank says that could be done must faster than to “set up an entity.” Frank says there was “virtually unanimous agreement” among lawmakers in attendance. Senate Banking Committee Chairman Chris Dodd says the United States may be “days away from a complete meltdown of our financial system” and Congress is working quickly to prevent that. Dodd says Democrats and Republicans on the hill are coming together to support the Bush administration's developing plan to buy up bad debt from financial institutions and get the credit system working again. Dodd told ABC's “Good Morning America” that the nation's credit is seizing up and people can't get loans. The ranking Republican on the Banking Committee, Senator Richard Shelby, predicts the new bailout plan will cost at least half a trillion dollars. Shelby says the nation has “been lurching from one crisis to another.” Both veteran lawmakers say this is the most serious financial crisis they've seen in their years in Congress.
Centerpoint Energy had restored power to over 941,000 customers by about 11 this morning, six days after Hurricane Ike. That’s 46 per cent of Centerpoint’s 2.15 million customers. The company says it has restored power to the foundation of the electric infrastructure, transmission lines and substations. It has completed the cut and clear process on major power lines serving neighborhoods and businesses and assessment of damages to circuits. Some 4,000 tree trimmers and 4,000 linemen are sweeping neighborhoods targeting repairs that will restore power to the greatest number of customers. Centerpoint is requesting sensitive equipment such as computers and plasma screen televisions and air conditioners be turned off, because large appliances can cause a short-term power surge, which could damage equipment. The customer is responsible for repairs to meter enclosures or weather heads.
Entergy expects to spend $500 million and $600 million to repair damage from Hurricane Gustav, while the cost of damage from Hurricane Ike is not yet known. New Orleans-based Entergy also expects lower third-quarter utility revenue because of power outages. Entergy said the two storms left about 1.7 million customers without power across Mississippi, Alabama, Louisiana and Texas. As of 9 p.m. Thursday, the company said 231 of 241 power lines and 348 of 354 substations affected by Gustav had been restored. Hurricane Ike affected 238 transmission lines, as well as 383 substations. Ike caused the most outages ever for Entergy's Texas business. Entergy said it believes it has liquidity sufficient to meet its current obligations, but noted it is still responsible for paying restoration and recovery costs.
The mayor of Galveston says the city is “not in ruins,” but nearly a week after Hurricane Ike struck it remains a mess and she's asking people to stay away for another week. There's some power to the only hospital, though not enough, and spotty cell phone service. Meanwhile, more water is flowing out of the city's pipes than flowing in--a situation the city manager describes as the water system “bleeding.” Piles of debris are stacked higher than people's heads, while livestock roam loose, grazing beneath downed power lines. About 45,000 people heeded evacuation orders on Galveston Island. Mayor Lyda Ann Thomas says “by staying away and being patient,” they'll allow workers to stabilize basic services and perhaps get people back to their homes in a week or so. Statewide, about 1.5 million homes are still without power. Water has been restored to all areas behind the seawall in Galveston, but the rest of the city remains without running water nearly one week after Hurricane Ike. City spokeswoman Alicia Cahill said Friday morning that crews are working to fix leaks, which remain a problem. Those repairs could lead to temporary outages even in areas where service has been restored. Cahill says the city's water tanks are beginning to refill, but officials are concerned about the status of the main transmission line that connects Galveston and its mainland water source.
Port of Houston Authority facilities have resumed normal operations at all terminals in the aftermath of Hurricane Ike. PHA was granted U.S. Coast Guard clearance for all its facilities late Wednesday. Employees returned to work Thursday. The Barbours Cut, Bayport and Turning Basin terminals open tomorrow. Carnival’s Conquest arrived at the new Bayport Cruise Terminal yesterday, and Ecstasy disembarked passengers today. Both ships docked in New Orleans following the closure of the Port of Galveston during the hurricane.
The Port of Galveston will reopen Monday as the island city continues recovery efforts. Port Chairman Gerald Sullivan says the port plans to unload its first ship next Wednesday. Sullivan says the port, which city officials say ranks seventh nationally in cruise liner business, will be able to accept those tourist-popular ships again by October 1st. Meanwhile, Navy Commodore Bob Lineberry said that the USS Nassau was anchored seven miles off Galveston, loaded with about 1,000 sailors and Marines, including construction teams. Four landing crafts were starting Thursday to offload workers and heavy machinery used for hurricane debris removal.
Coast Guard members are responding to 158 reports of oil and chemical spills along the Gulf coast. Some 50 responders are assessing the extent of spills and working to mitigate them. More than 1,500 Coast Guardmen are involved in hurricane response.
Hundreds of people whose Texas beachfront homes were wrecked by Hurricane Ike may be barred from rebuilding. And even those whose houses were spared could end up seeing them condemned by the state. Worse, if these homeowners lose their beachfront property, they may get nothing in compensation from the state. The reason is a 1959 law known as the Texas Open Beaches Act. Under the law, the strip of beach between the average high-tide line and the average low-tide line is considered public property, and it is illegal to build anything there. Over the years, the state has repeatedly invoked the law to seize houses in cases where a storm eroded a beach so badly that a home was suddenly sitting on public property. The aftermath of Ike could see the biggest such use of the law in Texas history. Here's the saltwater in the wound: it could be a year before the state tells homeowners what they may or may not do.
Another sign of normal life returning to Galveston has appeared in the form of a reopened gas station. One pump is back on at the gas kiosk in front of a Randall's supermarket about two blocks behind the Galveston seawall. That's six days after Hurricane Ike devastated the island city. This is clerk Elma James' first day back at work at the gas kiosk. She says she believes the pump is the first one back in service in Galveston.
Texas unemployment jumped to five per cent in August as job growth slowed to a crawl and the number of job seekers grew. The Texas Workforce Commission reports the increase compares to a 4.7 metro jobless rate in July. The Texas unemployment rate remained below the national figure of 6.1 per cent. It's unclear what effect the current U.S. financial crisis and Hurricane Ike will have on September unemployment figures. The Houston area increased from 4.9 to five per cent. Midland continued to have the lowest unemployment rate in the state, at 3.1 per cent. At the other end of the scale, unemployment was 7.8 per cent in the McAllen-Edinburg-Mission area, 7.4 per cent in Brownsville-Harlingen, and 6.7 per cent in Beaumont-Port Arthur.
The fuel economy of new cars and trucks is up in 2008, but the government says an increase in sales of smaller vehicles because of high gas prices may push fuel-efficiency numbers even higher. The Environmental Protection Agency said that the average fuel economy of cars and trucks was 20.8 miles per gallon in 2008, up 0.2 mpg compared with 2007 model year vehicles. The estimates were based on sales projections made before gas prices rose, so the EPA expects final fuel-efficiency numbers to be higher. Honda lead the way with a projected 23.6 mpg, followed by Toyota with 23.4 mpg. Hyundai was third with 22.6 mpg. Among domestic automakers, General Motors was at 19.6 mpg, Ford had an estimated 19 mpg and Chrysler came in at 18.9 mpg.
Dallas-based Luminant Power is seeking federal approval to build two new reactors at its Comanche Peak nuclear power plant. Luminant Chief Executive David Campbell announced the application to the Nuclear Regulatory Commission is an initial step in a multi-year process. The application is about 7,500 pages long. It seeks approval for two new nuclear power generation units of 1,700 megawatts each at the company's nuclear plant near Glen Rose. Campbell says the reactors would combine to produce enough electricity for about 1.8 million average Texas homes. The company says no specific construction costs are available yet.
Nigeria's main militant group says its fighters bombed another oil pipeline in the restive southern oil region. The Movement for the Emancipation of the Niger Delta says it destroyed the pipeline run by a unit of Royal Dutch Shell with high explosives. Shell officials could not immediately be reached for comment Thursday. If confirmed, the attack would mark the sixth straight day of stepped-up violence in the southern regions of Africa's oil giant.
For would-be homebuyers that can qualify for a mortgage, they should find that rates have dropped again. Freddie Mac says the average for 30-year, fixed-rate mortgages has edged down to 5.78 percent this week. That is down from 5.93 per cent last week. It is the fifth straight weekly decline. The 15-year fixed fell to 5.35 per cent from 5.54 per cent last week. On one-year treasury-indexed adjustable rate mortgages, the average was 5.03 percent. That is down from 5.21 percent last week.
The government says monthly Medicare premiums will hold steady at $96.40 next year. It's the first time since 2000 that the charge for health coverage is not increasing. Premiums usually go up to reflect higher costs and demand for care. But federal officials said anticipated growth will be offset by an adequate reserve in the Medicare Part B trust fund account. The monthly premium for Medicare Part B covers physician services, home health and the purchase of certain medical equipment, such as wheelchairs and oxygen machines.