Wednesday PM February 3rd, 2010
by: Ed Mayberry, February 3, 2010 9:02:11 pm
Transportation Secretary Ray LaHood now says he misspoke when telling owners of recalled Toyotas to stop driving them. Instead, LaHood says take the vehicles to dealerships to get them repaired. LaHood told reporters it was "obviously a misstatement" when he told a House panel earlier today that he would advise owners not to drive recalled vehicles. The remark came during testimony to the Appropriations Subcommittee on Transportation. Toyota's most recent recall in the U.S. affects 2.3 million vehicles with the potential for sticking gas pedals. Toyota says recalled vehicles that have not experienced problems with their accelerator pedals are safe to drive. Toyota says the problem is rare. The automaker is shipping a fix to dealerships around the country this week.
Transportation Secretary LaHood says he plans to speak with Toyota President Akio Toyoda about the automaker's spate of recalls in the United States. LaHood confirms that the government is investigating potential electrical problems in Toyota vehicles. LaHood said he will call Toyoda in the coming days to make sure the Japanese automaker is aware of the government's concerns about safety issues. The secretary says the National Highway Traffic Safety Administration will conduct an investigation into electronic throttle control systems and potential electromagnetic interference in the nation's fleet of vehicles.
Toyota is giving U.S. dealers payments of up to $75,000 to help win back customers' trust in the wake of the massive safety recall. In a letter obtained by the Associated Press, Toyota Group Vice President Bob Carter thanks dealers for extending service hours and providing car washes and other services. Carter says the payments will help with those measures. Toyota is sending checks this week based on the number of cars each dealer sold last year. Dealers who sold fewer than 500 cars will get $7,500. Dealers who sold more than 4,000 will get $75,000.
The Japanese government says it's received 14 complaints in Japan about brake problems with Toyota's popular Prius hybrid. Toyota's sales are being battered in the U.S. after recalls of top-selling models to fix a gas pedal that can stick in the depressed position. The new Prius gas-electric hybrid, which went on sale last year, is not part of the recalls, which extend to Europe and China and cover nearly 4.5 million vehicles. The 14 complaints include an accident in July 2009, in which a Prius crashed head-on into another car at an intersection. A Japanese transport ministry official says all the brake complaints involve vehicles made in Japan. The National Highway Traffic Safety Administration has received about 100 complaints in the U.S. involving the brakes of the new model Prius. Two involved crashes resulting in injuries.
Federal safety officials have widened their investigation of Toyota's sticky gas pedals to see if the same problem could exist for other automakers. The National Highway Traffic Safety Administration has sent a letter to CTS, the Indiana company that made the pedals behind Toyota's recall of millions of vehicles. The safety agency wants to know more about pedals that CTS made for other auto companies. CTS says it makes pedals for companies like Honda, Nissan and a small number of Ford vehicles in China. CTS been adamant that the issues are limited to Toyota alone. Other automakers have also said their pedals are based on different designs and aren't at risk for the same problems.
Gasoline futures jumped nearly two percent today after the government reported a surprise drop in the nation's supply. Retail gas prices have tumbled for three straight weeks. The Energy Information Administration reported that gasoline stockpiles fell by 1.3 million barrels last week. Supplies sank as U.S. refineries continued to churn out less fuel. The EIA report said refineries are operating at the lowest level on record, other than a few weeks in 2008 and 2005 when hurricanes ripped through the Gulf of Mexico and forced many to shut down. Benchmark oil for March delivery added 22 cents at $77.45 a barrel on the New York Mercantile Exchange.
A private trade group says the economy's service sector grew in January for the first time since September while job losses are moderating. The Institute for Supply Management said its service sector index rose to 50.5 last month from a revised 49.8 in December. Any reading above 50 signals growth. Economists polled by Thomson Reuters had expected a reading of 51. The group's employment index showed job losses moderating. It improved to 44.6 in January from 43.6 in December. The service-sector gauge is closely watched because service jobs comprise more than 80 percent of non-farm U.S. employment. The service sector is highly dependent on consumer spending, which powers about 70 percent of the economy.
Weatherford International is closing its Pearland manufacturing facility on Magnolia at the end of July, according to the Houston Chronicle. Some employees will be reassigned to other Houston-area Weatherford locations. The Swiss-based company cites weaker demand for products and services, including downhole products made at the Pearland plant.
The Texas Emerging Technology Fund is awarding a $3.5 million research superiority grant to the University of Houston's Texas Center for Superconductivity. The funding will help recruit top scientists and researchers for the center's Applied Research Hub. Governor Rick Perry says the money will encourage the commercialization of the technology. The hub's initial focus is to develop and commercialize a second generation superconducting wire that will improve the efficiency, security, stability and environmental compatibility of the electric power grid.
The Treasury Department says it expects to hit the government's debt ceiling by the end of February, putting pressure on Congress to raise the limit from its current level of $12.4 trillion. Treasury said it is working closely with Congress to raise the ceiling. The Senate has approved legislation to increase it by $1.9 trillion to $14.3 trillion, but the House has yet to pass the measure. Congress approved a smaller increase of $290 billion in late December, allowing the government to borrow for about two more months. On Monday, the Obama administration released a budget that projects this year's deficit will reach $1.56 trillion, an all-time high. As a percentage of the economy, it is the highest since World War II.
Federal Reserve Chairman Ben Bernanke expressed concerns about the economic recovery during a ceremonial swearing-in for another four-year term. In brief remarks to staffers, Bernanke said that while the economy is growing, "far too many people remain unemployed, foreclosures continue at record rates and bank credit continues to contract." One of the Fed's challenges is protecting its independence from Congressional meddling, he said. Another is making the Fed more open and accountable about its operations. And another is improving its oversight of banks. Lawmakers have complained about deficiencies in those areas. The Fed "cannot hope" to solve the nation's economic problems on its own, Bernanke said.
President Barack Obama's decision to drop NASA's back-to-the-moon program is creating an outrage in cities that depend on space jobs, not only here in Houston, but elsewhere. There's frustration over what workers perceive as the waste of almost $11 billion if the Constellation program is closed down, as well as national access to space. In Huntsville, Alabama, some worry the plan to shift America's space program will also hurt the country's spirit and inspiration. Huntsville is where German rocket scientists first figured out how to send people to the moon. There are currently 2,500 people working at NASA's Marshall Space Flight Center in Huntsville on the $100 billion moon project. Those jobs aren't in any immediate danger because Congress still must approve Obama's budget proposal. But the president's plan is certainly a jolt to the area. Huntsville Mayor Tommy Battle is asking Obama to reconsider. He says the cuts will affect jobs as well as the country's space psyche.
Employers last month announced plans to reduce payrolls by 71,482 workers—the highest job-cut tally in five months, according to Challenger, Gray & Christmas. The outplacement consultant says heavy job cuts could continue in retail and other sectors through the first quarter. The current surge is due to heavy downsizing in the retail and telecommunications sectors. Retail cuts included many of the seasonal positions added between October and December.
California-based Support.com plans to hire more than 100 work-from-home online technology solution engineers within the next 100 days in Houston. The online technology services provider is seeking full-time and part-time workers to handle calls from consumers who have problems with computers, printers and other devices.
Treasury Secretary Tim Geithner says Congress can recoup "outrageous" bonuses for AIG employees through a new bank fee in President Barack Obama's proposed budget. American International Group is set to pay out about $100 million in a fresh round of bonuses to employees. Geithner called the bonuses, which were negotiated years ago, an "outrageous failure of policy." Geithner the House Ways and Means Committee to support the new fee as a way of getting the money back. The fee, which would be assessed on certain liabilities of the largest firms in the financial sector, would raise about $90 billion over the next decade.
Some rank and file Democrats in the House are trashing President Barack Obama's plan to give businesses that add workers a new $5,000 tax credit for each job they create. Democratic Representative Mike Thompson of California said businesses won't hire new employees unless they have work for them to do. Democratic Representative Lloyd Doggett of Texas said companies that have struggled to keep workers would lose out while those that got rid of workers could get the credit by replacing them. The lawmakers challenged Treasury Secretary Tim Geithner at a House Ways and Means Committee hearing to come up with a better way to create jobs.
The Treasury Department says it will invest up to $1 billion in small banks that serve poor communities as part of the Obama administration's efforts to spur more lending to small businesses. The money will come from the $700 billion bank bailout fund. About 210 banks, thrifts and credit unions that are certified by the Treasury Department as "community development financial Institutions" will be eligible. The banks will pay only two percent interest on the investments, compared with the five percent that large banks were required to pay under the Troubled Asset Relief Program. The details of the proposal, first outlined in October, were announced a day after President Barack Obama pushed a separate effort to shift $30 billion in TARP funds to a small business lending program.
A French court is deciding whether to call off a much-awaited trial on the deadly crash of a Concorde supersonic jet on a technicality. The trial on who should be held responsible for the crash that killed 113 people in 2000 has opened for a second day of debates. A lawyer for Continental Airlines says the indictment did not provide counterweights to accusations against the defendants, as is required. Investigators say the crash was triggered by a metal strip on the runway that had fallen from a Continental DC-10, a claim the U.S. carrier rejects. Continental and five aviation industry employees are accused of manslaughter.
Interviews and records show that U.S. Representative Joe Barton has earned nearly $100,000 from an interest in natural gas wells purchased from a campaign donor who advised him on energy policy. The Dallas Morning News cited land records show the Republican from Arlington purchased his interest from Walter G. Mize. Mize is a Cleburne businessman who donated more than $30,000 to Barton's campaign and urged him to create a federal oil and gas research program that was included in a 2005 energy law. Barton says his investment is legal and was publicly reported in accordance with federal law and ethics rules. He says his investment doesn't conflict with his legislative responsibilities. Congress is considering energy legislation that would boost demand for natural gas.
A newly published report says the overall amount of money spent worldwide on soldiers, weapons and war has been largely unaffected by the recession. The study by the London-based International Institute for Strategic Studies says between 2006 and 2008, the world's defense budgets actually rose from $1.3 trillion to $1.55 trillion, and they likely continued to climb even more in 2009. But the think tank says the rise may not be as significant as the figures suggest because they reflect the effects of the fluctuating dollar. Mark Stoker, the institute's defense economist, says in 2008, defense spending was 2.56 percent of the global GDP, compared to 2.6 percent in 2004, which is not much of a change. Stoker says the rate of increase in defense spending around the world is expected to slow in the next few years--especially in Europe and the U.S.--but emerging economies such as Brazil, India and China are expected to increase military spending.
A new report says colleges and universities suffered a big drop in charitable contributions in 2009--the steepest drop in at least 30 years. The report by the Council for Aid to Education says giving dropped an average of almost 12 percent nationwide in 2009. Individual giving dropped in both dollars and the number of people giving. The report says the biggest drops were in gifts for endowments and new buildings. Ann Kaplan, director of the survey, says she wasn't surprised by the numbers. She says, "we knew that this was going to be a bad year." Stanford University raised the most money in 2009, taking in more than $640 million. But that's still a drop in income of $175 million for the school. Harvard came in second, but it suffered a $50 million drop. Kaplan says many universities are expecting 2010 to be a better year, because some donors were waiting to see the stock market improve before making some planned gifts.