Monday PM November 2nd, 2009
by: Ed Mayberry, November 2, 2009 4:11:00 pm
Enron's former broadband finance chief received one year's probation, including nine months' home confinement, for falsifying company books. Kevin Howard's sentence came under a deal with prosecutors for his June 1st guilty plea. Prosecutors had counseled leniency for U.S. District Judge Vanessa Gilmore's sentence. They stipulated that Howard didn't benefit personally from any fraud committed at Enron, which collapsed in December 2001 under the weight of faked accounting. Howard had been tried twice, first in 2005 in a proceeding that ended in a hung jury, then in 2006 that ended in convictions that Gilmore tossed out.
Pentagon auditors have told the army's primary support contractor in Iraq to cut its work force there or face nearly $200 million in penalties. Houston-based KBR is responsible for everything from mail and laundry to housing and meals under a $33.8 billion, ten-year deal signed in 2001. Auditors say the company has increased employee levels while U.S. troops steadily leave the country forcing the U.S. government to pay far more in labor costs in Iraq than it should. The October 26th audit was obtained by the Associated Press. Defense auditors have challenged billions of dollars in charges. And KBR's critics, many of them Democrats on Capitol Hill, have accused the company of gouging the government during a time of war. KBR's responses disagree with many of the audit's conclusions.
A helicopter crash on takeoff from a platform in the Gulf of Mexico left two men injured and the aircraft in the water. A spokesman for Broussard, Louisiana-based Rotorcraft Leasing, which serves the oil and gas industry, says the cause of the crash isn't known yet. Operations Director Gerry Golden told the Associated Press that the accident site is about 75 miles southeast of Galveston. Golden says the helicopter was bound for another platform and people nearby witnessed the crash Sunday morning. He says the chopper's floats deployed and a boat helped rescue the pilot and the passenger. A Coast Guard helicopter was dispatched to transport the pair to the University of Texas Medical Branch for treatment of back injuries. Golden says both men sustained non-life threatening injuries.
The Institute for Supply Management says U.S. manufacturing activity grew in October at the fastest pace in more than three years. The trade group of purchasing executives says manufacturing grew in October at the fastest pace since April 2006. The ISM index read 55.7 last month, compared with 52.6 in September. It's the third straight reading above 50, which indicates growth.
Construction spending in September posted a better-than-expected performance, powered by the largest jump in housing construction in more than six years. The advance spurred hope that the battered housing sector is starting to turn around and will provide support for the overall economy as it struggles to emerge from the worst recession since the 1930s. The Commerce Department says that total construction spending was up 0.8 per cent in September, much better than the 0.3 per cent drop that analysts had forecast. The August performance was revised down to show a 0.1 per cent drop rather the 0.8 per cent gain first reported. The overall increase reflected a 3.9 per cent rise in spending on residential construction, the biggest jump in housing activity since July 2003. Economists believe that this sector is starting to rebound and should help support an economic recovery.
The volume of signed contracts to buy previously occupied homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month. The National Association of Realtors says its seasonally adjusted index of sales agreements rose 6.1 per cent from August to 110.1. It was the highest reading since December 2006 and more than 21 per cent above a year ago. Economists surveyed by Thomson Reuters expected the index would be level at 103.8. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales.
President Barack Obama says the public and private sectors must find more ways to create jobs to continue the nation's climb out of an economic recession. Obama said the economy has pulled back “from the brink” but still has a long way to go, especially in creating jobs. The president said job losses would continue for weeks and months to come and called for bold, innovative action by his administration, Congress and the private sector to create more good-paying jobs. Obama made the remarks at the start of a White House meeting in the Roosevelt Room with economic advisers. The session was open to reporters and streamed live on the White House Web site.
Former Massachusetts Governor Mitt Romney says the time has come to stop the economic stimulus program, contending that it has not worked as the Obama administration planned. Three days after the Obama White House touted the program as creating or saving some 650,000 jobs, Romney said in a nationally broadcast interview that “the stimulus that the president and the Congress passed is not what's helped the economy.” Romney said on CBS's The Early Showthat the administration's stimulus plan “didn't work” and he said the reason things seem to be ticking up in the business world is because the “private sector” has regained its equilibrium on its own.
Southwest Airlines pilots have approved a new five-year labor contract that the union president said has smaller pay raises than his members wanted. The union says the vote for ratification was about 87 per cent, with about 93 per cent of eligible pilots casting a ballot. The new contract includes pay raises, increases in retirement contributions and more job protection, according to the union. Union President Carl Kuwitzky said that while his group “never considered this a home-run contract, our members felt it contained enough positive gains in a short-term deal to constitute ratification.” The pilots narrowly rejected a company proposal in June. Kuwitzky said union negotiators went back to the table to address areas that pilots felt were lacking.
Workers at U.S. airlines and railroads would have an easier time forming unions under a rule proposed by the National Mediation Board. The new rule would allow employees to organize if a majority of those voting favor a union. Current rules require a majority of an entire work group to vote for a union in order for it to be certified. That means a worker choosing not to vote at all is effectively casting a 'no' vote. The issue lies at the center of a dispute at Delta Airlines. Unions representing flight attendants and ground workers who worked for Northwest Airlines before it was bought by Delta want the new rules to cover elections for workers at the combined carrier. The airlines oppose the change.
The Supreme Court will decide whether the National Labor Relations Board, normally made up of five people, can make decisions with only two members in place. The NLRB has operated with only two members--and three vacancies--for more than a year because Democrats who retook control of Congress in 2006 objected to President George W. Bush's labor policies and refused to confirm his nominees. But the two NLRB members have continued to issue decisions, making about 400 in the last 16 months.
Ford was the only Detroit automaker to dodge direct government aid and bankruptcy court. It surprised investors by reporting a profit of nearly $1 billion in the third quarter. Ford is forecasting a “solidly profitable” 2011. The automaker says earnings were fueled by U.S. market share gains, cost cuts and the cash for clunkers program, which drew flocks of buyers to showrooms this summer. The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn't posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments. Ford, based in Dearborn, Michigan, reported third-quarter net income of $997 million. Its profit forecast for 2011 was a step above previous guidance of break-even or better for the year.
Government investigators say the U.S. government is unlikely to recover all of its investment in General Motors or Chrysler because the companies' value would need to “grow substantially above what they have been in the past.” A Government Accountability Office report is the latest review to cast doubt on the likelihood that taxpayers will fully recoup more than $80 billion invested in the two U.S. automakers. Treasury officials told the GAO that they are considering initial public offerings or private sales to dispose of the government's nearly ten per cent stake in Chrysler and 61 per cent share of GM. But government officials won't say when that could happen because they don't want to undermine the potential return on the investment.
The Treasury Department says its will need to borrow $276 billion in the current quarter as it struggles to manage the government's books pending a decision by Congress to boost the debt limit. The department's projected borrowing for the October-December period is down sharply from an estimate of $486 billion it made in August. The improvement reflects the winding down of a program designed to help support the economy that was created at the height of the financial crisis last year. The move will delay the point at which the government will hit the current debt ceiling of $12.1 trillion to give Congress more time to approve an increase.
Publishing online creates a new set of problems for newspapers. Some people ask to have stories “unpublished,” while others leave nasty, unsigned comments on articles. Now some newspapers are appealing to their own readers for advice. The readers are taking part in six “Online Journalism Credibility” projects that were sponsored by the Associated Press managing editors group and detailed at APME's conference in St. Louis. In Texas, the Victoria Advocate lets readers contribute blogs, comments, calendar items, photographs and even stories to the Web site. Editor Chris Cobler says that when the newspaper commissioned a study of 400 readers, gauging their trust of newsroom-generated content versus that submitted by readers, respondents appeared to value straight news much more than content with opinions. For instance, at a town hall meeting on the subject this month, Cory Garcia of Victoria said he likes the idea of being able to blog online, but worries that civil discourse can become uncivil. Now the newspaper is considering a disclaimer on reader blogs and might create a board of readers who would discuss Internet ethics.
It's no longer “Sir” Allen Stanford. The panel awards that approves candidates for knighthood in the Caribbean nation of Antigua and Barbuda has voted to rescind the honor granted to Texas financier R. Allen Stanford in 2006. The chairwoman of the National Honors Committee says the panel voted unanimously to revoke Stanford's title. Jacqui Quinn-Leandro said the panel took the action because of the embarrassment Stanford caused the country with the alleged ponzi scheme he ran from his Antigua-based offshore bank. The vote needs the signature of the governor general but that is considered a formality. The country has never before revoked such an award. U.S. authorities accuse Stanford of leading a $7 billion ponzi scheme by promising inflated returns to about 28,000 investors on certificates of deposits at his Antiguan bank. Stanford denies the allegations.