Wednesday PM June 10th, 2009
by: Ed Mayberry, June 10, 2009 8:06:21 pm
The U.S. trade deficit edged up in April as crude oil prices hit the highest level since December, but the imbalance so far in 2009 is well below last year's total as the recession dampens demand for imports. The Commerce Department says the deficit rose for a second straight month in April, climbing 2.2 per cent to $29.2 billion. That was slightly higher than economists' expectations. The politically sensitive deficit with China increased 7.3 per cent to $16.8 billion, although that imbalance through the first four months of this year is 11.1 per cent below last year's record pace.
The federal budget deficit soared to a record for May of $189.7 billion, pushing the tide of red ink close to $1 trillion with four months left in the budget year. The rising deficit reflects increased government spending due to the recession, and billions of dollars spent on bailouts for banks and other troubled companies. The Treasury Department says the red ink so far this year totals $991.9 billion.
The economy's sharp downhill slide eased in the late spring and hopes for future business activity improved, suggesting that the worst of the recession has passed. A Federal Reserve snapshot of economic conditions says five of the Fed's 12 regions reported that the "downward trend is showing signs of moderating." In addition, "several" regions say that their expectations of future business activity have improved, although they don't see a "substantial increase" through the end of the year. In the last survey issued in mid-April, several regions simply noted signs of some stability at low levels.
The head of the Federal Reserve Bank branch in Richmond, Virginia, says signs point to the U.S. economy hitting bottom later this year and then expanding. Richmond Fed President Jeffrey Lacker told North Carolina state senators in Raleigh that consumers are starting to spend a bit more. Lacker also said the worst of the declines in manufacturing may have passed. He says housing construction has risen slightly and existing home sales should hit bottom later this year. Lacker says he thinks federal stimulus spending will have only a marginal effect on broader economic recovery. He says the Federal Reserve's challenge will be picking the right time in a budding economic recovery to tighten credit again and prevent rising inflation.
Italian automaker Fiat is the new owner of most of Chrysler's assets. The sale saves the troubled U.S. automaker from liquidation. It also clears the way for a new, leaner Chrysler to emerge from Chapter 11. A judge's approval allows Chrysler to shed billions of dollars in debt, nearly 800 under-performing dealerships, and burdensome labor costs. The deal puts a new company in the hands of Fiat's chief executive. A statement says the new company will soon reopen Chrysler factories that were idled during the bankruptcy process. It says the new company will focus on smaller, "environmentally friendly" vehicles. Fiat isn't putting any money into the deal, but is giving Chrysler billions of dollars' worth of small car and engine technology.
A person briefed on the matter says a Chinese automaker is considering buying Ford's Volvo unit. The person says Beijing Automotive Industry Holding is taking a look at Volvo, and is expected to meet with executives at Volvo's Gothenburg, Sweden, headquarters. The person spoke on condition of anonymity because the discussions are private. Beijing Automotive would be one of three or four companies that have expressed interested in Volvo. Dearborn, Michigan-based Ford said last year that it wants to sell the unit so that it can focus its efforts on three core brands: Ford, Lincoln and Mercury. Ford has already sold its Land Rover, Aston Martin and Jaguar units as it works to restructure during the worst auto sales slump in more than two decades.
The focus to boost new car sales and get old gas guzzlers off the road now turns to the Senate after easy House approval. The "cash for clunkers" bill, which passed the House 298 to 119, would give consumers instant vouchers of up to $4,500 when they turn in older, gas guzzling vehicles and buy new, more fuel-efficient ones. The aim is to help the ailing auto industry, which has seen sales drop by more than a third in just two years. California Democratic Congressman Henry Waxman says the bill is an all-around winner. The year-long program is expected to cost about $4 billion but there's been no determination yet where the money will come from.
Governor Rick Perry is voicing concern about the impact of proposed cap and trade legislation on the Texas economy.
"I happen to think that what they're discussing could wreck our traditional energy industry, and put a very serious dent in our economy."
Cap-and-trade regulation places mandatory caps on emissions. Sources are free to buy or sell allowances or "bank" them for use in future years.
"This new energy tax will affect every Texas household and business with the rising cost of electricity. In fact, every product that's made that uses energy—including our food."
Perry says Texas created more jobs in 2008 than all the other states combined, and scolded Washington politicians that he says are trying to hurt a good thing.
Retail gasoline prices across Texas rose four cents this week to reach an average $2.48 a gallon. AAA Texas reports the increased cost statewide followed the national trend, where the price per gallon rose six cents to hit $2.63. The association cited rising oil prices, with the cost per barrel topping $70 this week. AAA Texas says Houston had the cheapest price at the pump, at $2.43 a gallon. Amarillo had the most expensive gasoline, at $2.57 a gallon. The group said most industry experts expect oil prices to rise as the economy recovers through 2009 and into next year.
The Department of Housing and Urban Development has announced it will provide $3.7 billion to 11 states affected by natural disasters in 2008. HUD Secretary Shaun Donovan made the announcement at a news conference in Cedar Rapids, Iowa, which suffered more than $5 billion in flood damage last year. Iowa will get $516 million of the money. Texas will get $1.7 billion, more than any other state. Louisiana will get $620 million, and Indiana will get $253 million.
The emergency room at the University of Texas Medical Branch at Galveston is expected to reopen August 1st--less than a year after Hurricane Ike ripped through the island's only hospital. Interim Chief Operating Officer David Marshall said that the emergency room will return to full service with 370 new beds and hopes to serve about 44,000 patients a year. He says the hospital plans to recruit 100 nurses by July 1st. The Medical Branch has struggled to rebuild since the September 13th hurricane and have sought state support for the reconstruction. The hospital began admitting patients in January. Before the storm, the hospital boasted one of the highest survival rates among Level 1 trauma centers in the nation, Marshall said.
The hotel occupancy rate in Houston fell nearly ten per cent in April compared with the same month last year, according to a monthly report from PKF Consulting. The area around Bush Intercontinental Airport saw a 15.8 per cent drop. The average daily room rate was off 6.4 per cent in the first four months of the year, according to Skip Kasdorf with the Greater Houston Partnership.
North Carolina-based Concord Hospitality Enterprises plans four new Texas hotels this year, including the 156-room Springhill Suites by Marriott in Houston. Another 121-room Springhill Suites is opening in Webster.
House Republicans are calling for a hundred new nuclear power plants to be built in the next two decades as part of legislation they say is a better alternative than one championed by Democrats. The legislation unveiled by the GOP would increase production of oil and gas offshore, fast-track refinery construction and establish a trust fund using oil and gas royalties to invest in renewable energy. But unlike the Democratic bill, which has the support of the White House, it would not set mandatory targets for reducing greenhouse gas emissions or for producing electricity from renewable sources. Republican leaders said they prefer incentives to switch to cleaner energy sources, rather than mandates that they say disrupt the economy.
The fledgling renewable energy industry has been growing steadily for years with more than twice the national average percentage job growth over much of the last decade. A study released by the Pew Charitable Trusts found that clean energy jobs grew by 9.1 per cent compared with a national average of 3.7 per cent from 1998 to 2007, the latest year available. The most recent data does not include the effects of the recession, which has hit every industry. The report used private jobs data that included information about employers, and Pew researchers spent nearly a year determining which ones could be considered part of the clean energy economy. Idaho, Nebraska, South Dakota and Wyoming led the country with the largest percentage growth in clean energy jobs during the ten-year period. Illinois, Pennsylvania and New Jersey saw a drop.
The head of a Congressional panel overseeing the federal financial system bailout fund says Washington initially underestimated how much banks in America were struggling to stay afloat. Elizabeth Warren says the approval of a repayment to the government of $68 billion by several of the banks receiving taxpayer assistance amounts to "phase two of the economic recovery" in the system. But at the same time, Warren said in an interview on CBS's The Early Show that then-Treasury Secretary Henry Paulson last year erroneously proclaimed banks to be stable when the government initially put some $350 billion into these institutions. She said that Paulson at the time said "they were all healthy banks. ... It just really turned out not to be the case." Warren said she believes the government now is getting "a much more realistic assessment, and they're in the process of sorting the wheat from the chaff."
House lawmakers say they have subpoenaed the Federal Reserve. The central bank has been asked to hand over e-mails, notes and other documents related to Bank of America's acquisition of Merrill Lynch. At issue is whether the Fed and the Treasury Department pressured the bank into buying Merrill. The Fed and former Treasury Secretary Henry Paulson have denied doing so. The Fed pledged to respond completely and fully. The Wall Street Journal has reported that Bank of America CEO Ken Lewis told the New York Attorney General he believed Paulson and Fed Chairman Ben Bernanke pressured him.
An Obama administration official says the administration will appoint a "special master" to oversee executives' compensation at companies receiving large amounts of government aid, with the power to reject pay plans deemed excessive. The official said the special master will review the compensation for the top 100 salaried employees at firms that receive exceptional assistance under the $700 billion Troubled Asset Relief Program. Among the companies that could be affected would be Bank of America, General Motors and American International Group. The official spoke on the condition of anonymity because the program had not yet been announced. The special master is expected to be Kenneth Feinberg, a lawyer who oversaw payments to families of victims of the September 11th, 2001, terrorist attacks.
The Iraqi government has welcomed the start of oil exports from the semiautonomous northern Kurdish region as a step toward ending a spat with the Kurds. Government spokesman Ali al-Dabbagh says it's a "step in the right direction," but that all deals with western companies must be ratified by the oil ministry. He says nearly two dozen deals signed by the Kurds and western companies are "not fully legitimate" because they lack the ministry's approval. The central government approved the Kurdish exports that began last week to alleviate a budget crisis caused by low oil prices. Al-Dabbagh couldn't set a time frame to end the dispute. He spoke at a joint press conference with Oil Minister Hussain al-Shahristani.
The Texas Comptroller's Office is holding a free taxpayer seminar on Tuesday, June 23rd at the Comptroller's Northwest Field Office on North Loop West. The seminars are regularly held throughout the state to help new anew existing business owners understand the state tax responsibilities. Taxpayers learn about tax forms, filing and paying taxes electronically, taxable goods and services, e-services to help manage accounts online, the Comptroller's e-mail subscription service and other information.
Natural-gas processor Crosstex Energy said it's selling its Mississippi, Alabama and south Texas intrastate gathering and transmission pipelines to Southcross Energy for $220 million. Crosstex said it will use the proceeds to pay down more than $200 million of the partnership's outstanding debt. The sale is expected to close on July 31st. Crosstex Energy owns the two per cent general partner interest, a 33 per cent limited partner interest and the incentive distribution rights of Crosstex Energy. Dallas-based Southcross Energy is a newly formed natural-gas transportation and processing company.
A Houston company says it has agreed to buy 219 wells in north Louisiana, east Texas and Arkansas as part of a $218 million deal with Chesapeake Energy. Indigo Minerals also will get working interest in 300 non-operated wells in 60 fields which were producing about 26 million cubic feet equivalent of natural gas per day on March 1st. A news release on its Web site says about 40,000 undeveloped acres bring the deal's total to more than 122,000 net acres on which it plans to drill hundreds of development wells. Oklahoma City-based Chesapeake will keep lease rights to the Haynesville shale and lower formations. Indigo said it has netted about $611 million in the past year by selling Haynesville shale mineral and leasehold positions.
The federal government is expanding an insurance program for sunflower farmers, two years after almost killing it. The move could help protect growers against fluctuating prices and low crop yields. It also could be especially important this year as sunflower seed prices continue to fall, and some farmers contemplate planting fewer flowers. The U.S. Department of Agriculture projects an 18 per cent decrease in the number of sunflower acres planted nationwide. A small sunflower crop could mean higher prices at the grocery store for cooking oil, snacks and other items made with sunflower seeds. This year, the program is being expanded to Montana, Wyoming, Nebraska and Texas. Dalhart-area sunflower farmer David Meyer says he looks forward to having a new insurance option for his sunflowers. He says he's already benefited from crop insurance that guaranteed him $8 a bushel on wheat. That commodity's seen a steep drop in price from record highs two years ago to about $6.25 a bushel. Meyer hopes he and other farmers in the Texas panhandle will now have the same peace of mind with sunflowers.
A report says Craigslist, one of the Internet's top sites for classified ads, is thriving while newspapers and other marketing-driven media are reeling from huge revenue losses. Craigslist's revenue is on pace to rise 23 per cent this year to reach $100 million for the first time, based on an analysis by Advanced Interactive Media Group. Many newspaper executives view Craigslist as a nemesis because it doesn't charge for most ads. Meanwhile, Craigslist has been raking in more revenue from the ad listings that it does charge for in major U.S. markets. A Craigslist spokeswoman declined to comment on the revenue estimate.
Two of the nation's largest security software companies have agreed to clearly detail the terms of subscription renewals and pay penalties totaling $750,000 in a settlement with New York's attorney general. Attorney General Andrew M. Cuomo had accused Symantec and McAfee of renewing customers' software subscriptions without their knowledge. The California-based companies produce software to protect computers from an assortment of viruses and spyware. Symantec said in a statement that it has worked to improve the auto-renewal subscription process to "make it more transparent and visible."' McAfee spokesman Mark Cochran said that his company has been working to clarify and improve its auto-renewal subscription process. He said future enhancements will make it easier for customers to opt-out of the service.
Facebook is further embracing the real name culture it touts as one of its founding principles--and catching up with rival MySpace in the process. Starting on Saturday, the popular online hangout's millions of users will be able to claim a name to use as part of their profile page's Web address--as in http://facebook.com/janedoe. Currently Facebook assigns each profile a string of numerals. Fan pages for businesses, brands and celebrities will be able to adopt such names, too. Facebook says people will be able to choose the names on a first-come, first-served basis. In doing this, Facebook is playing catch-up with News Corp.-owned MySpace, which has let its users pick their own monikers since its 2004 launch.