KeNo's Housing and Economic Portal: Friday May 29 Housing and Economic stories

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Battery makers vie for US aid - (www.reuters.com) A handful of US battery makers is scrambling for government support ahead of a deadline this week as the US struggles to win back lost ground from Asian competitors in one of the world’s next important technologies. The race is also the first test of how the administration will use the near-$190bn in stimulus money earmarked this year to support “green” technologies, from alternative fuels to energy-efficient building materials. Advanced batteries are seen as a strategic technology, given their importance to electric and hybrid vehicles, and their military applications. As with the chip industry two decades ago, the US has lost the lead to manufacturers in Asia that have invested in high-volume manufacturing. “The US and the Europeans have been asleep at the switch,” said Paul Beach, head of business development at Quallion, a battery maker that hopes to raise up to $200m with support from the stimulus funds. “This industry probably couldn’t get kick-started without this,” he added. “US companies are already well behind in process manufacturing technology,” added Jim Greenberger, head of a consortium of small battery makers that is looking for $600m to build a joint manufacturing plant. “As bad a state as our auto industry is in right now, it will be much worse if we don’t start building [battery] cells in the US.” Many of the breakthroughs in the lithium-ion technology used in advanced batteries were made in Japan, and most manufacturing is centred in Japan, South Korea and China. With finance hard to come by, how the US uses the $2bn of stimulus money set aside for advanced battery makers could shape the industry. Applications are due on Tuesday, with a decision on how to use the money expected as early as July. That is months ahead of decisions about how to apply the rest of the stimulus money, which are expected to play a similarly critical part in structuring other parts of the “green tech” industries. “There’s absolutely no question the government will be picking winners and losers” in the environmental technologies, said Brian Fan, head of research at the Cleantech Group.

Las Vegas house prices plummet toward ZIP - (www.lasvegassun.com) Ten Las Vegas ZIP codes reported drops of more than 60 percent in home sales prices from 2008’s first quarter through March, according to a research firm that tracks regional sales. Thirteen of 56 ZIP codes in the Las Vegas Valley reported median sales prices below $100,000 in the first quarter. The drop in prices spurred 10,733 sales, a 30 percent increase from the first quarter of 2008 to 2009’s similar period. Overall, the median price of homes sold in Southern Nevada, including Laughlin and Mesquite, fell 40 percent in the first quarter to $150,000 or $84 per square foot, according to San Diego-based DataQuick. The firm reported that 89103 in Spring Valley, an area bounded by Spring Mountain Road to the north, Tropicana Avenue to the south, Rainbow Boulevard on the west and Interstate 15 on the east, reported an 83 percent decline to a median price of $88,000. That ZIP code is in unincorporated Clark County, but Las Vegas and North Las Vegas reported some steep drops as well. One of the lowest median prices of any ZIP code was $45,500 or $39 per square foot in 89101, which includes areas surrounding downtown Las Vegas. That’s a 75 percent drop from the first quarter of 2008. The drop sparked 112 sales between January and March, a 167 percent increase over 2008. Prices fell 77 percent in 89102, an area southwest of downtown Las Vegas, to $98,000. Despite the price decline, sales in that area fell 52 percent. The lowest median price of any ZIP code was in 89030, the area surrounding downtown North Las Vegas, at $39,000 or $34 per square foot. That’s a 78 percent drop from 2008, but it spurred the biggest increase in sales in the valley. The 195 sales in the first quarter was a 354 percent increase.

As Detroit Crumbles, China Emerges as Auto Epicenter - (www.washingtonpost.com) America's auto titans are dismantling their global empires. But across the Pacific, it's as if the global economic forces that have pummeled Detroit never struck. Chinese auto sales are up, and this year China is projected to displace Japan as the world's largest car producer. Now, the auto world is buzzing that China's auto industry may try to pick up the pieces of Detroit -- at a bargain. Chinese companies have tried to dampen speculation, issuing regulatory filings that deny bids to buy Ford's Volvo or General Motor's Saab. But there's little doubt among analysts that Chinese automakers are interested in the United States and that Detroit's automakers are interested in them. Buying up iconic brands such as Hummer or Saturn could supply Chinese automakers with the technological expertise to help them leapfrog past long-established competitors, said Kelly Sims Gallagher, a lecturer at Harvard University's Kennedy School of Government, who wrote a book on Chinese automakers. "That's where Chinese firms are weakest," she said. "They have world-class business and manufacturing capabilities now. What they still lack is technological know-how, systems integration, being able to design new vehicles from scratch and get them to a manufacturing line."

Buyout Firms Elude Fed as OTS Lets Private Equity Acquire Banks - (www.bloomberg.com) The Office of Thrift Supervision is opening a door the Federal Reserve has closed, allowing leveraged buyout firms to take control of banks amid the worst financial crisis since the Great Depression. The OTS, which oversees about $1 trillion of assets at U.S. thrifts, approved MatlinPatterson Global Advisers LLC’s purchase of Flagstar Bancorp Inc. in Troy, Michigan, and may allow similar takeovers. That puts the agency at odds with the Fed, which has told private-equity companies it won’t permit a firm that isn’t regulated as a bank to own a majority stake in a lender, even if it walls off its investment in a so-called silo deal, according to a Fed lawyer who declined to be identified. “This may give buyout firms the opportunity to make controlling investments that the Fed has denied,” said Patricia McCoy, who teaches banking and securities regulation at the University of Connecticut School of Law in Hartford. “The OTS has an interest in keeping remaining thrifts alive with fresh capital, and private equity is one of the only options available.” Blackstone Group LP and Carlyle Group, the world’s two biggest LBO firms, are among those eager to snap up banks on the cheap after global losses tied to the credit crisis topped $1.4 trillion and slashed the valuations of lenders. While the Fed has set out guidelines that allow private-equity investors to increase their minority stakes in lenders it regulates, it has taken the position that conflicts exist when an LBO firm owns a bank and non-banking interests, said two people with knowledge of the matter.

Pension Gap at $334 Billion Forces U.K. Dividend Cuts - (www.bloomberg.com) The 220 billion pound ($334 billion) hole in U.K. corporate pensions may push companies to cut dividends, damping the recovery in Europe’s largest stock market. The 1.17 percentage point drop in corporate bond yields since October is forcing companies from BT Group Plc to BAE Systems Plc to set aside more cash for future obligations. London-based BT slashed its dividend by 89 percent last week to support a plan for more than 340,000 current and retired employees. More will follow, adding to the biggest dividend reductions in Europe since at least 1997, according to data compiled by Paris-based Societe Generale SA and UBS AG in Zurich. U.K. companies are the most susceptible because English corporations typically run pension funds, unlike the rest of Europe, where the state is responsible for retirees. “Pension managers are caught in the perfect storm,” said Chetan Ghosh at Investment Solutions Ltd. in London, which oversees more than $13.8 billion. “Bond yields are falling and stocks have not recovered from last year’s sell-off. This will increasingly be a problem through 2011.” Dividend reductions would add pressure to share prices already battered by the global recession and the region’s first annual net gain in equity sales since 2005. ‘Under-Funded’: BT, the U.K.’s largest phone company, and BAE Systems, Europe’s biggest arms maker, rank with British Airways Plc and Dusseldorf, Germany-based ThyssenKrupp AG, Germany’s largest steelmaker, as having a “high risk” of using cash to shore up pensions, Societe Generale said in a report last month. BAE Systems plans to contribute an additional 200 million pounds to help cover its U.K. pension deficit and $250 million for its U.S. plan. London-based British Airways, Europe’s third- largest airline, may have to set aside more money for its growing pension deficit, analysts at Paris-based brokerage Oddo Securities wrote in a March 6 report.

At Geithner's Treasury, Key Decisions on Hold - (www.washingtonpost.com) Seven weeks after the Treasury Department announced that it was ousting General Motors chief G. Richard Wagoner Jr. in the federal bailout of the company, he is still technically on GM's payroll. Wagoner's removal has been held up because senior Treasury officials have yet to decide whether he should get the $20 million severance package that the company had promised him. The delay is one of many hitches that have slowed a host of important policy actions in the four months since Timothy F. Geithner became Treasury secretary. While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren't being made, interviews with a broad range of federal officials show. Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department's top ranks. But some of the officials also cite the Treasury's ad-hoc management, which is dominated by a small band of Geithner's counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add. One of the department's signature initiatives, considered vital for getting at the root of the financial crisis, aims at relieving banks of their toxic assets. But to those familiar with the program, it remains unclear who will decide some of the practical details, such as whether foreign firms will be allowed to participate in the funds that buy the assets. This uncertainty is slowing the rollout of the program, which in any case has proven daunting to design. Announced in early February, it may not launch until July, officials say. In March, Treasury officials clashed over a $15 billion initiative to use money from the federal bailout package to free up credit for small businesses. Geithner's counselors pressed to announce the program quickly, despite protests from the career staff members who said it would not work. Unable to raise the issue with Geithner himself, the staff members appealed directly to the White House but were rebuffed, according to sources familiar with the episode.

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