Monday PM October 19th, 2009
by: Ed Mayberry, October 19, 2009 10:10:00 pm
Key U.S., Mexican and Canadian trade officials say they plan to talk out their differences. U.S. Trade Representative Ron Kirk said at a meeting over the North American Free Trade Agreement that he wants to work out a deal over a ban on Mexican trucks traveling beyond the border region. The former Dallas mayor says he's encouraged that provisions banning funding for a Mexican truck program haven't been included in 2010 appropriation bills. Canadian Trade Minister Stockwell Day said negotiators are working on a compromise on "buy American" requirements included in the economic stimulus package that have angered his country. Mexican Secretary of the Economy Gerardo Ruiz Mateos joined the NAFTA discussion.
Texas has fared better economically than most other regions during the recession. Governor Rick Perry told the Greater Houston Builders Association that's because of business-friendly regulations. But Perry told the group, and some 70 elected officials in attendance, that there's still work ahead.
"We need to make sure our regulations do their job without chocking companies to death. We also need to take that tax break that you gave 40,000 small businesses this last session of the legislature and make it permanent. Some folks kinda hooted when I called for the legislature to raise the exemption on our business tax to a million dollars. But the legislators in the room understood what a powerful message that would give. During a recession, the one way you can most powerfully send a message about what you think about the economy is to cut taxes on the people who are out there risking that capital."
The governor says Texas has been somewhat inoculated from the global economic crisis by years of efforts to keep taxes down and fostering a healthy regulatory climate. He says there have been two state budgets since World War II that actually spent less general revenue money than the previous budget--both during his time in office.
A Houston attorney who was one of the late Enron founder Ken Lay's trial lawyers has joined R. Allen Stanford's criminal defense legal team. George "Mac" Secrest will work with Houston lawyer Kent Schaffer to defend Stanford, who is jailed for allegedly bilking investors out of $7 billion. Stanford's trial date has not yet been set. He faces 21 charges of conspiracy, fraud, bribery and obstruction of justice. Since Stanford's assets were frozen, a judge had appointed a public defender and Schaffer to represent him. Company insurance policy money was made available last week to pay for lawyers. The Houston Chronicle reports that the public defender withdrew and Stanford decided to keep Schaffer, who picked Secrest, also known as an appellate lawyer, to join him.
A federal judge tosses out a Continental Airlines lawsuit accusing nine pilots of getting sham divorces so their ex-spouses could collect the pilots' retirement benefits while they kept flying. U.S. District Judge Gray Miller says he can't condone the pilots' alleged actions. But he ruled that the law doesn't allow Continental's pension administrator to consider the employee's motivation for getting divorced in deciding whether to distribute benefits. Miller granted the plaintiffs' motion to dismiss. There was no immediate comment from Houston-based Continental, which says it paid out between $10 million and $11 million in suspicious pension distributions. The airline says some of the pilots concealed the divorces from children and friends, then remarried their spouses after getting the money.
A jury has found ExxonMobil liable for contaminating New York City's groundwater with a gasoline additive and has awarded the city $105 million. The jury in federal court in Manhattan issued its findings after an 11-week trial. The city sued ExxonMobil for the costs of removing a gasoline additive from drinking wells in Queens. It argued that the company ignored warnings from its own scientists and engineers not to use the additive in areas that use groundwater for drinking water. Irving-based ExxonMobil said in a statement that it was disappointed with the jury verdict and was considering its legal options. The company said it was not the source of the contamination and should not have to pay for someone else's contaminants.
A federal agency has approved a plan by Shell Offshore to drill exploratory wells on two leases in the Beaufort Sea off Alaska's north coast. However, the Minerals Management Service said the company must meet certain conditions, including federal air and water quality rules and marine mammal protection requirements. Shell proposes drilling during the open water season in July to October 2010. Drilling operations are planned using the Frontier Discoverer, a drill ship that MMS says has been retrofitted and ice-reinforced for operations in Arctic waters. Environmental groups have strongly protested the exploratory drilling plan. Center for Biological Diversity spokesman Brendan Cummings says no technology exist to clean up an oil spill in the Arctic.
Federal Reserve Chairman Ben Bernanke is calling for the United States to eventually whittle down record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis. Bernanke's remarks to a fed conference in Santa Barbara, California, comes just days after the federal government on Friday reported a $1.42 trillion deficit for 2009 budget year that ended September 30th. The previous year's deficit was $459 billion.
The Federal Reserve is testing one of its tools for draining some of the unprecedented amount of money that's been plowed into the economy to ease financial problems and revive business activity. The Federal Reserve Bank of New York said in a statement that investors and others shouldn't read anything into the tests about when the central bank will need to reverse course and start boosting interest rates and removing other supports to fend off inflation. The New York Fed calls the test a matter of prudent advance planning.
A White House adviser says "everything is on the table" when it comes to creating jobs--including another stimulus package. But not right away. Senior Adviser Valerie Jarrett says for now, "let's let the recovery bill do its job." More than half of the $787 billion recovery package has yet to be spent. Jarrett tells NBC it's important to stimulate the economy, but also to take steps to bring down the national deficit, which has reached $1.4 trillion. Another White House adviser says there's a need to balance deficit reduction with efforts to revive the economy. David Axelrod tells ABC that ending the recovery initiatives too early could send the economy back into recession. White House aides are also taking wall street firms to task for giving employees big pay and benefits after accepting taxpayer assistance. Chief of Staff Rahm Emanuel tells CNN that "people have a right to be frustrated and angry" about that.
The Obama administration says spending aimed at boosting the economy has created or saved 250,000 teaching or other education jobs this year. A White House report concludes that money from a $787 billion stimulus package has helped states fill budget gaps that would have cost teachers their jobs in school districts and public universities across the country. The 250,000 figure is significantly higher than the 30,000 jobs the administration said last week were created or saved by businesses that won federal contracts under the stimulus law. It also represents an early preview of jobs numbers being announced in two weeks associated with education spending and federal grants awarded under the stimulus effort.
Financial companies that were shored up by taxpayer money are now paying their employees big bucks in compensation and benefits. The chairman of the Senate Banking, Housing and Urban Affairs Committee says that's a source of outrage in the country. One company that has received government money, Goldman Sachs, has said it has set aside $16.7 billion for compensation so far this year. That's more than a half-million dollars per employee. Democratic Senator Chris Dodd of Connecticut says such companies need to understand that what they are doing is an outrage. Dodd says the government should look into taking action to get those companies to back up and reconsider what they are paying out. Dodd appeared on NBC's Meet the Press.
Home buyers and renters could benefit from a program being unveiled today by the Obama administration. Officials say the goal is to provide hundreds of thousands of affordable mortgages for working families, and to allow the development or rehabilitation of tens of thousands of affordable rental properties. The program will operate under a law passed last year to bolster the housing industry. It will feature two parts--a new bond purchase program to support new lending by housing finance agencies and a temporary credit and liquidity program to improve access by housing agencies to credit sources for their existing bonds.
One of the most active exploration companies on the Marcellus Shale natural gas formation says it is using a water-recycling system it devised. Oil and gas company Range Resources said it's reusing all of the water it recovers from newly drilled wells in its core exploration area in southwestern Pennsylvania. That adds up to millions of gallons of water it is reusing in Washington County. The Fort Worth-based company says the recycling is cutting drilling costs, water use and trucking traffic while eliminating the dumping of wastewater into waterways. Solids are filtered on location from the flowback before the water is piped above ground to a central impoundment. There it is mixed with fresh water to reduce salt and reused.
With Democrats in charge in Washington, supporters of so-called "net neutrality" rules seem poised to finally push through requirements that high-speed Internet providers give equal treatment to all data flowing over their networks. These rules are intended to guarantee that internet users can go to any Web site and access any online service they want. Phone and cable companies, for instance, wouldn't be able to block subscribers from using cheaper Internet calling services or accessing online video sites that compete with their core businesses. Yet making that happen is proving thorny--and it's likely that the courts and perhaps even Congress will ultimately get involved. The Federal Communications Commission is to vote Thursday on a proposal to begin to begin crafting regulations to prohibit broadband providers from favoring or discriminating against Internet traffic. Broadband providers such as Dallas-based AT&T contend that after pouring billions of dollars into their networks, they should be able to operate those networks as they see fit. That includes offering premium services over their lines to differentiate themselves from competitors and earn a healthy return on their investments.
The book is closed on the 2009 State Fair of Texas after fairgoers spent almost $26 million on food and ride tickets during its 24 days. The fair set a single-day sales record for food and ride coupons Saturday with $3.4 million being sold the day of the annual Texas-Oklahoma football game. More than 92,000 people attended the game. At the annual youth livestock auction, livestock raised by young Texans sold for more than $1 million. Phoenix 1 Restoration and Construction paid a record $96,000 for the grand champion steer. A group of state fair food concessionaires paid $20,000 for the reserve grand champion. The Tom Thumb Food & Pharmacy chain bought the grand champions in the lamb, swine, meat goat and broiler categories. The 2010 State Fair of Texas is scheduled for a run of September 24th-October 17th.
Texas Instruments' third-quarter profit and sales inched past the improved expectations the chip maker gave last month, though they still saw a decline from a year earlier amid the economic downturn. Texas Instruments said it earned $538 million during the quarter--down four per cent from the same period a year earlier. Sales fell 15 per cent to $2.88 billion. The results surpassed the company's September forecast and topped analysts' expectations. TI said its largest division, which makes analog chips used in digital music players and other gadgets, saw 20 per cent growth for the second quarter in a row.
This week, investors will be treated to new economic reports ranging from wholesale inflation to new housing construction. Tomorrow, the government reports on new housing construction as well as the producer price index, the main gauge of inflation at the wholesale level. Wednesday, the Federal Reserve releases the regional economic round-up known as the Beige Book. The leading indicators come Thursday and existing home sales should be out on Friday.