Friday PM September 24th, 2010
by: Ed Mayberry, September 24, 2010 10:09:00 pm
Sales of new homes had their second-worst month on record in August, signaling that the housing market remains a severe weak spot for the economy. The Commerce Department says last month's new home sales were unchanged from a month earlier at a seasonally adjusted annual sales pace of 288,000. Sales were down by 29 percent from the same month a year earlier. The only time sales were slower was in May, when the sales pace was 282,000, the worst on records dating back to 1963. July's results had been the worst on record, but were adjusted upward. High unemployment, tight credit and uncertainty about home prices have kept people from buying homes. Government tax credits boosted the market earlier in the year, but those expired in April.
Orders to U.S. factories for big-ticket manufactured goods fell by the largest amount in a year. But excluding the volatile transportation sector, orders posted their best showing in five months. The Commerce Department says that orders for durable goods dropped 1.3 percent last month, reflecting a huge drop in aircraft demand. But when looking at orders without aircraft and autos, orders rose two percent. It reflected strong gains in demand for primary metals such as steel, heavy machinery and computers.
The average price of gasoline in Texas is holding steady at $2.57 this week. The weekly AAA Texas price survey said the national average dropped two cents to $2.71, keeping the Texas average significantly below the national mark. The agency said a major pipeline closure disrupted the flow of Canadian crude oil to the midwest last week, but oil prices stabilized on news that the pipeline might restart. The cheapest average price in Texas is San Antonio at $2.52. The most expensive gas is in Amarillo at $2.69.
Former Enron CEO Jeff Skilling’s attempt to get a new trial is set for November 1st in Houston. The Supreme Court last June questioned whether Skilling was properly convicted on 19 counts for leading a conspiracy that led to Enron’s collapse. Defense attorney Daniel Petrocelli told Bloomberg that the verdicts were tainted by an invalid legal theory and should be retried with reliance on so-called honest services theft. Skilling is serving a 24-year sentence in federal prison in Englewood, Colorado.
Questions over how Houston spent money from the Department of Housing and Urban Development when Bill White was mayor and earlier could force the city to return more federal funds. The Houston Chronicle reports that the review involves housing grants. White in 2003 was elected to the first of his three terms as Houston mayor. The Democrat is now running for governor. Houston in 2008 agreed to repay more than $15 million to HUD. Mayor Annise Parker, who took office in January, said she was aware of “no recent developments” with HUD and the city is in talks with the agency over problems that date to 2001. Katy Bacon, with White's gubernatorial campaign, says the Houston Hope program was successful and White had worked effectively with HUD to get things done and resolve issues.
President Barack Obama's $30 billion small community business lending program faces one big challenge: many of the community banks and businesses it's supposed to help don't want it. The lending program is part of a bill that passed the House of Representatives and awaits the president's signature. The legislation contains a mix of tax cuts and credits aimed at helping small businesses. The centerpiece of the bill is an effort to make billions of dollars available to community banks for loans to small businesses. It seems like a simple effort to unclog a credit pipeline that has been blocked since the financial meltdown two years ago. But interviews with community bankers and small business owners show a reluctance to participate.
The Internal Revenue Service is scaling back a new requirement that large corporations disclose on their tax returns whether they are taking tax breaks that might be unacceptable to the government. IRS Commissioner Doug Shulman says the agency is responding to complaints from firms that some of the disclosures are too burdensome. Large corporate tax filings are often complex, with some firms taking tax breaks that fall into a gray area of tax law. Starting this year, the IRS is phasing in a requirement that large firms flag those “uncertain tax positions” for IRS examiners to improve enforcement.
House Speaker Nancy Pelosi isn't ruling out a vote to extend soon-to-expire tax cuts before lawmakers go home to campaign in the next week or two, even though Senate Democrats have abandoned plans to vote before the November 2nd election. President Barack Obama has been pushing for a vote by year's end to extend middle-class tax cuts. But House Democrats--much like Senate Democrats--are divided over whether to vote on the measure before the election. The most sweeping tax cuts in a generation, enacted in 2001 and 2003, are due to expire in January. Republicans want to extend all the tax cuts. Obama and Democratic leaders in Congress want to extend them for individuals making less than $200,000 and married couples making less than $250,000.
Louisiana Senator Mary Landrieu says she will block a Senate vote to confirm the nominee to a key White House economic office to protest the six-month moratorium on deepwater oil and gas drilling in the Gulf. Landrieu, a Democrat, says she will object to a vote on Jacob Lew to head the Office of Management and Budget until the administration lifts or significantly modifies the moratorium imposed after the BP oil spill. She says she is not convinced the White House understands the seriousness of the job losses and other economic problems caused by the moratorium. The Senate Budget committee approved Lew's nomination on a 22-1 vote, setting the stage for a vote by the full Senate in the coming weeks.
Hertz says its last bid for Dollar Thrifty was its final offer, one day after its rival Avis topped it. Hertz says it is standing by its offer valuing Dollar Thrifty at $50.25 per share, compared with an avis bid valued at $53 per share, or about $1.52 billion in cash and stock. Hertz and Avis have been in a fight over Dollar Thrifty, which caters to leisure travelers that both companies want access to. Shareholders of Dollar Thrifty are scheduled to vote on Hertz's offer next Thursday.
The U.S. Department of Education says it will take more time to finalize new regulations that would cut off federal aid to for-profit college vocational programs with high student debt levels and poor loan repayment rates. The for-profit college sector has waged an intense campaign against the so-called gainful employment rule. The government was to publish the rule by November 1st. The department said it would publish regulations would address sections of the gainful employment rule, but wait until early 2011 to issue the final regulations. It will take more time to consider tens of thousands of comments it has received and hold hearings.
Between damaged household finances and rising tuition, college-bound students are feeling a double-edged squeeze these days. Some families find they're choosing between expanding their search or opting for less expensive options such as state schools or community colleges. Some students are choosing to live at home, instead of in a dorm. Other families are taking on additional debt to make up the difference. For freshman Griffin Boyle of McLean, Virginia, the best choice was living at home and studying at a nearby university, instead of going out-of-state. Financial planner Ivan Nalibotsky says most families are still “licking their wounds” after the economic meltdown. He's advising families to try to avoid raiding retirement savings to pay for college.
Associated Press President and CEO Tom Curley says an enforcement mechanism needs to be created to help curb unlicensed used of news on the Internet. Curley made the remarks during a speech in Nashville to a training program run by Associated Press managing editors. Curley says an effort is under way tracking Websites engaged in content “scraping.” He also says a voluntary digital registry AP is offering can help it and newspapers find new moneymaking opportunities from online licensing and advertising. Curley says the registry “is a start--we need to kick it up.” Some 900 newspapers have signed up for the registry and 700 are receiving real-time tracking data.
The number of rigs actively exploring for oil and natural gas in the U.S. dropped by 11 this week to 1,650. Houston-based Baker Hughes says that 967 rigs were exploring for natural gas and 673 for oil. Ten were listed as miscellaneous. a year ago this week, the rig count stood at 1,017. Texas lost 12 rigs. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.