Wednesday PM December 2nd, 2009
by: Ed Mayberry, December 2, 2009 9:12:53 pm
A Houston federal judge has signed an order ending an eight-year-old lawsuit by Enron shareholders and investors who had accused various financial institutions of participating in the accounting fraud that led to the once mighty energy giant's downfall. The lead plaintiffs in the case, the regents of the University of California, asked U.S. District Judge Melinda Harmon to dismiss claims against the remaining defendants--several banks and individuals--in the case because of court rulings that have ended any chances of recovering additional monies. Harmon's ruling won't affect the more than $7.2 billion settlement that has already been obtained in the case. The settlement is the largest in history in a U.S. securities fraud case.
A $9 million settlement from Enron for its role in the 2000-21001 Western energy crisis includes money to be distributed by Avista Utilities to customers over the next 12 months. Enron reportedly made almost $2 billion in profits from its electricity trading operations in Western states those years. The states of Washington, California and Oregon and some California utilities settled with Enron for $1.52 billion.
With jobs still scarce around the country, the government says unemployment either got worse or stayed the same in most of the nation's metro areas in October. The Labor Department report comes one day before the Obama administration holds a "jobs summit" at the White House. Economists, academics and corporate executives will be talking about how the government can spur the creation of jobs. In 162 of the 372 metro areas tracked by the Labor Department, the jobless rate rose. It was unchanged in 42 other areas, and dropped in 168 areas. A month earlier, the picture had improved in about two-thirds of the areas. The worsening numbers mirror the unemployment rate, which jumped to 10.2 per cent in October.
Employers announced 50,349 planned job cuts in November—the fewest number of monthly cuts since December 2007—according to Challenger, Gray & Christmas. The November total is 9.6 per cent lower than the 55,679 job cuts announced in October.
CEO Space business trainers host a forum in Houston tonight to foster business and entrepreneurial growth. There are a lot of antiquated strategies that are ineffective in the rapidly changing business environment, according to business trainer Berny Dohrmann. He says life lessons are learned in such a manner that businesses find out that they receive more from giving than taking and that through teaching they are actually learning."Well, I think it's moving from competitive capitalism and pyramidical structures of fear and punishment for exploitation, which you have in, say, most of the broadcast organizations, to a more cooperative culture and a cooperative form of capitalism which you have and have always stood for at NPR. You are a cooperative culture, you're a business family, and you feel that in the work environment, where you're there. That's why your turnover is so low and people are so dedicated to public broadcasting. But that is the feature that we need to change in regulatory climate for our nation. We need a cooperative capitalism that is totally reportable, totally accountable, fully transparent and has no secrets. And we're lobbying very heavily in the beltway for these new regulatory changes so that we could have a new form of capitalism."
Dorhmann speaks at the Indigo Hotel this evening at seven.
The economic recovery is gaining traction as shoppers spend a bit more and factories bump up production. A new Federal Reserve survey finds "economic conditions have generally improved" since the last report in late October. Eight of the Fed's 12 regions reported "some pickup in activity or improvement in conditions." Four regions--Philadelphia, Cleveland, Richmond and Atlanta--described conditions as "little changed" or "mixed." The survey adds to evidence that the economy is back on its feet, after being knocked down by the worst recession since the 1930s.
Industry estimates show that electronics sellers and online merchants thrived in November, particularly at the start of the holiday shopping season. But the numbers also indicate that sales of clothing and luxury items--except for jewelry--were weak. Jewelry was the good news, with Mastercard SpendingPulse sales figures showing the sector rising 4.6 per cent in November. Overall, the SpendingPulse analysis finds that November sales proved to be a "mixed bag." The results raise some worries that some sectors could face tough going in the critical countdown to Christmas, as frugal Americans grapple with job insecurity and tight credit. Fat discounts apparently drove shoppers to stores and online over Thanksgiving weekend. An analyst is predicting they won't come back until the season's final hours when bargains are even better. Meanwhile, the International Council of Shopping Centers is trimming its November sales growth forecast. The group cites more shoppers who say they're putting off holiday shopping compared with a year ago.
Treasury Secretary Timothy Geithner is affirming the administration's intent to soon end the $700 billion financial bailout program. Geithner did not provide details, but says the government is close to the point at which "we can wind down this program" and end it. "Nothing would make me happier," he told the Senate Agriculture Committee. Some lawmakers have been agitating for an exit from the politically unpopular bailout program that was put in at the height of the financial crisis last year. Geithner also says legislation to bring transparency to the global, unregulated $600 trillion derivatives market was needed soon to restore confidence in the U.S. financial system.
Treasury Secretary Geithner is pleased Congress has made progress in crafting legislation to impose new oversight on complex instruments blamed for hastening the financial crisis. Geithner says legislation to bring transparency to the global, unregulated $600 trillion derivatives market is needed to restore confidence in the U.S. financial system. A major sticking point in Congress involves companies that use derivatives to hedge against risk. Some lawmakers want to exempt the so-called "end users" from new requirements in the overhaul legislation. But Geithner says he's pleased by "the convergence on good policy"' that has occurred.
Congress is working to extend the estate tax. The current federal estate tax law is scheduled to disappear for one year before returning in 2011 at a higher rate. But the House is expected to vote as early as tomorrow on an extension. The bill would permanently extend the current top rate of 45 per cent on estates larger than $3.5 million. Smaller estates would continue to be exempt from the tax. The Senate is considering similar legislation, but is busy trying to overhaul health care. Senators would have to scramble to take up the estate tax this month. Extending the tax would raise about $14 billion a year. Some Republicans and small business groups call it a "death tax" and want it permanently repealed.
Bank regulators say nearly 26 per cent of U.S. households have little or no access to banking services, and the problem hits poor and minority families the hardest. The Federal Deposit Insurance Corporation says many black, Hispanic and Native American populations struggle to access savings accounts and other services critical to financial security. The agency says 71 per cent of the households that have no access to banks earn less than $30,000 a year. The data come from the second FDIC survey to review access to basic banking services. It's part of an effort to bring the so-called "unbanked" into the financial mainstream. The Census Bureau conducted the survey on behalf of the FDIC.
The Internal Revenue Service wants the names of U.S. taxpayers who have foreign accounts with companies owned by indicted billionaire R. Allen Stanford. The IRS filed a summons in federal court in Dallas. It says a list of Stanford investors would help the agency check whether anyone is evading taxes by failing to report money in foreign accounts. The request appears to be part of a crackdown against taxpayers who avoid taxes by stashing money overseas. Last month, nearly 15,000 Americans disclosed billions in offshore bank accounts under a voluntary program allowing most to avoid criminal prosecution if they paid back taxes and interest. The government accuses Stanford of running a $7 billion ponzi scheme.
The mood around Odessa was glum when the city missed out on a one-of-a-kind coal power plant to be built through a public-private venture. But when word came that Mattoon, Illinois, was chosen as the site for FutureGen plant, most involved in pitching Odessa for the $1.5 billion near-zero emissions plant got to work to bring something similar to West Texas. City officials and Seattle-based Summit Power have worked for two years to utilize the legwork that went into applying for FutureGen. And believe they are days away from learning whether they've snared $350 million in stimulus funds from the Department of Energy to build a commercial power plant. An announcement was expected before the United Nations Climate Change Conference, which begins Monday in Copenhagen.
Demand for gasoline slumped last week, even though millions of people took to the road for Thanksgiving. An analyist at the Oil Price Information Service says once the holiday was over, people cut back on driving. The weak demand, coupled with plentiful supplies of oil and gasoline, caused the price of oil to drop below $77 per barrel. Auto club AAA says the price at the pump rose slightly overnight to a new national average of $2.62 a gallon. A gallon of regular unleaded is more than six cents cheaper than last month. But it's up almost 82 cents over than the same time last year, when pump prices were in free fall. Gasoline prices dipped to about $1.61 per gallon last December. No one expects a similar decline this year.
ConocoPhillips says it will spend $11.2 billion on capital projects in 2010, a ten per cent drop from estimated 2009 spending. The nation's third-largest oil company previously said it would cut capital expenditures and sell off assets to help pay off debt and improve its cash position amid sagging profits. About 86 per cent of the capital program will support ConocoPhillips' exploration and production segment, while its hard-hit refining and marketing segment represents about 12 per cent of the program, the company said.
A new government-funded study says wind farms have no measurable effect on property values. The Department of Energy's Berkeley Lawrence National Laboratory analyzed nearly 7,500 single-family homes sales between 1996 and 1997 near 24 wind farms in nine states. The findings conclude there wasn't a widespread impact on property values within a five-mile radius of wind power projects. Homeowners opposed to wind farms say the projects spoil skyline views and scare off potential buyers. Groups that have traditionally opposed wind farms are already criticizing the report, saying the methodology is flawed.
A Delta Air Lines executive is urging other carriers to be careful not to increase the amount of flying they do too quickly. Chief Financial Officer Hank Halter said at a New York investor conference that even if a modest recovery occurs in 2010, the world's biggest airline hopes the industry maintains flat capacity. Capacity is measured by the amount of available seats a carrier offers, times the miles flown. Halter says Delta could eventually increase capacity one to two per cent once demand shows strong signs of coming back. He says demand won't really gain steam until passengers feel that the recession is firmly in the rearview mirror and it is safe to spend. Many carriers have shed capacity over the last 18 months.
Newspaper executives and editors gathered in India from around the world heard calls to seek more payment for their content on the Internet as they decried their industry's sharply falling advertising revenues. A newspaper executive from Germany said "this is a critical moment in our industry. ... If we don't dare to take these first steps, no one else will." He also said newspapers must demand of search engines "fair share, fair search." In other words, content providers should be compensated even for very short strings of content, and the search results should not be manipulated unfairly against the original content providers.