Monday PM February 16th, 2009
by: Ed Mayberry, February 16, 2009 4:02:40 pm
Tomorrow's a big day for President Barack Obama, as he signs the $787 billion stimulus bill. It's also the day U.S. automakers submit their viability and loan payback plans. Obama plans to appoint a government panel to oversee the auto restructuring. A senior administration official says a presidential task force will direct the restructuring of General Motors and Chrysler. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will lead the panel. Obama's focus Wednesday will shift to the housing crisis. He'll go to Phoenix, where it's expected he'll offer help to homeowners on the brink of foreclosure.
State officials are doing some hand-wringing about priorities for limited funding. State officials have to juggle competing pressures from communities, watchdog groups and federal regulators. Under the $787 billion stimulus, states will divide $27 billion. That is less than half the $64 billion they say they could use. The law also requires that half the money be spent on projects that have been vetted by the federal government as a way to jolt the economy and create jobs. While many states have made their lists of “ready-to-go” projects available for public review, others have resisted. Only a fraction of the projects will receive money and watchdog groups say some state officials fear angering constituents if a project appears on a wish list and gets scratched.
Treasury Secretary Timothy Geithner has received a better response from America's allies than Wall Street to his bank rescue plan. The secretary spent the weekend explaining the plan to the group of seven major industrial countries. Investors sent stocks plunging last week because of their unhappiness over aspects of the program that were left out. They also criticized a lack of details over a plan to deal with toxic loans. But Geithner provided enough specifics to the G-7 that they came away expressing support for the program where many had voiced doubt before the meetings. Administration officials are promising more details quickly, starting with an expected rollout on Wednesday of a $50 billion program to combat mortgage foreclosures.
Fannie Mae and Freddie Mac have suspended all residential foreclosure sales of occupied homes through March 6th. Fannie Mae currently lists 216 Houston properties for sale and Freddie Mac lists 38 Houston properties. The suspensions do not apply to vacant properties in foreclosure.
Ten contractors, hired by Houston-based KBR to make repairs at a Basra water plant during the Iraq war, and dozens of National Guardsmen, say the company knowingly allowed them to be poisoned by cancer-causing chemicals. The Houston Chronicle reports the allegations from the workers are documented in a federal arbitration complaint pending in Houston and a related federal lawsuit filed in December by the guardsmen in Indiana. Most of the KBR contractors were sent to Iraq around April 2003 as part of Operation Restore Iraqi Oil, a no-bid U.S. contract. Members of the U.S. Army National Guard, most from Indiana, escorted and guarded the workers. KBR officials have acknowledged that a dangerous anti-corrosive chemical was stored and spilled at a water plant just outside Basra. But in a written statement provided to the Chronicle for its report, KBR attorneys dispute nearly all of the legal and medical claims made by the workers and soldiers.
Crude oil prices have fallen to new lows for this year. So you'd think gas prices would sink right along with them. Not so. On Thursday, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher. To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings. The price of gas is indeed tied to oil. It's just a matter of which oil. The benchmark for crude oil prices is West Texas intermediate, drilled exactly where you would imagine. The New York Mercantile Exchange is the price that you see quoted on business channels and in the morning paper. Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows. But it is the overseas crude that goes into most of the gas made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.
Prosecutors are filing new embezzlement and theft charges against jailed Russian oil tycoon Mikhail Khodorkovsky. The prosecutor general's office alleged in a statement that Khodorkovsky schemed with a group of investors at his company Yukos to bilk a Siberian oil company of 3.6 billion rubles ($102 million). Khodorkovsky was once Russia's richest man. He was convicted of fraud and tax evasion, and sentenced in 2005 to eight years in prison. He is serving his sentence at a Siberian prison colony. A court in August rejected his request for parole. His Yukos oil company was broken up and its main assets were sold to a state-controlled company in what was seen as the Kremlin's punishment for Khodorkovsky's political ambitions.
The U.S. peanut industry has been devastated by an ongoing salmonella outbreak that has sickened some 600 people in 43 states and been linked to nine deaths. The executive director of the Peanut Producers Board in Texas says the entire industry has been “tainted.” Shelly Nutt heads the nation's second largest growing state behind Georgia. More than 2,000 products have been recalled — one of the largest in U.S. history. And the damage was done by a small player in the industry — Virginia-based Peanut Corp of America. Two of the company's plants — in Georgia and in Plainview — have been shuttered after salmonella contamination was found. The industry had expected sales to soar this year.
More than 300 Minute Maid employees this morning began work in their new building in Sugar Land Town Square. The company moved its corporate headquarters to Sugar Land at the southwest corner of U.S. Highway 59 and State Highway 6 after more than 25 years in Houston’s Galleria area.