KeNo's Housing and Economic Portal: Monday September 21 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

'Cash For Clunkers' Drives Sales Of Foreign Models : NPR - (www.npr.org) The Cash for Clunkers program, which wrapped up Monday, was designed to help struggling Detroit car companies. But the biggest beneficiaries, according to the government, were foreign brands. According to the Department of Transportation, as of Friday, 59 percent of vehicles bought with Clunkers cash were foreign. The top two sellers were the Toyota Corolla and Honda Civic, both made by Japanese auto manufacturers. The only Detroit vehicles in the top 10 were the Ford Focus and Escape. Foreign firms control the majority of the U.S. market, but they did even better than usual during the Clunkers program. Karl Brauer, the editor of the car consumer Web site edmunds.com, says the reason is simple: The program favored gas economy, something Detroit is still working on. American automakers "tend to make better trucks than fuel-efficient cars," Brauer says. "That's shifting, but right now the imports still definitely have the advantage there." A set of problems would have been created had Congress tried to tilt the program in favor of Detroit auto manufacturers, he adds. "Then we'd have gotten into all sorts of trade issues with the program and you'd have people yelling that it was slanted unfairly to benefit the domestic automakers," Brauer says. That said, the program did help U.S. manufacturers. It cleared old inventory off dealer lots and helped encourage General Motors to bring back more than 1,300 workers to build more cars. Top 10 New Vehicles Purchased: 1. Toyota Corolla (Japan), 2. Honda Civic (Japan), 3. Ford Focus FWD (U.S.), 4. Toyota Camry (Japan), 5. Hyundai Elantra (South Korea), 6. Toyota Prius (Japan), 7. Nissan Versa (Japan), 8. Ford Escape FWD (U.S.), 9. Honda Fit (Japan), 10. Honda CR-V 4WD (Japan)

Obama Expands Car Czar's Duties - (www.washingtonpost.com) President Obama on Monday announced his selection of Ron Bloom as senior counselor for manufacturing policy. Speaking at an AFL-CIO picnic in Cincinnati, the president introduced Bloom, who has been a senior adviser to Treasury Secretary Timothy F. Geithner as part of the auto industry task force since February. Bloom, a Harvard Business School graduate, previously advised the United Steelworkers union and worked as an investment banker. "As my new point person on manufacturing, he's going to help us craft the policies that will create the next generation of great manufacturing jobs and ensure American competitiveness in the 21st century," Obama said. Bloom will work with the National Economic Council to develop and plan policy for Obama's efforts to revitalize U.S. manufacturing, the White House said. He will retain his position on the auto task force. The U.S. manufacturing industry has lost hundreds of thousands of jobs in recent years to overseas competition as some U.S. businesses have relocated abroad to take advantage of cheaper labor. Bringing an invigorated manufacturing base back to the United States was a campaign pledge Obama made last year. Bloom will be charged with reviewing U.S. competitiveness in the global economy. His job will include coordinating with the departments of Commerce, Treasury, Energy and Labor to integrate current programs with new initiatives. Bloom's appointment follows news that the U.S. manufacturing sector had expanded for the first time in 18 months and had the highest monthly output in two years. "It's a sign that we're on the right track to economic recovery, but that we still have a long way to go," Obama said in the announcement, issued Sunday.

Post offices threat adds to US property woes - (www.ft.com) The possible closing of more than 400 post offices across the US in an effort to cut costs could further dent the struggling commercial property market as rising retail vacancies continue to weigh on prices. The US postal service has said it is placing 413 of its 37,000 retail locations under review for “consolidation” as it faces a record loss of $6bn this year. The mail carrier has seen a dramatic drop in package volume because of cost-conscious Americans cutting back on sending in favour of cheap alternatives such as e-mail. “At the end of the day, it’s just more retail space that’s going to be available that’s going to put pressure on already embattled landlords,” said Victor Calanog, director of research at Reis, property research company. The US postal service operates the biggest retail network in the country, but now faces an overhang of excess capacity because mail volume is on pace to be down by 10 to 12 per cent this year. The US government accountability office warned in May that the postal service, which has a $1.5bn cash shortfall, should “take action now rather than hoping that mail volume will revive sufficiently when the economy recovers”. Greg Frey of the US postal service said that closing offices was the only choice with revenues projected to be down by more than 7 per cent this year. Of the properties facing closure, the US postal service rents about half of them and owns the rest, meaning that it will be forced to break leases or sell space while the commercial property market is plunging. Since peaking in 2007, commercial real estate prices across the US have fallen by 35.5 per cent, according to the Moody’s/Real commercial property price index. Reis estimates that retail vacancy rates at regional malls are at a 17-year high of 10 per cent and will surpass that level next year. The post office closures would add to the growing chunks of empty retail space left behind by businesses forced to pull down the shutters amid the recession. In January, Circuit City, the bankrupt electronics retailer, said that it would close its last 567 locations, leaving landlords with gaping holes in the “anchors” of their malls.

Dollar slumps to 11-month low - (www.ft.com) The dollar fell to its lowest level in almost a year on Tuesday as a rally in gold prices above $1,000 an ounce and fresh concerns over its reserve status weighed on the US currency. Analysts said the dollar was also suffering from the improvement in investor sentiment following a raft of recent data from across the world that suggested the global economy was recovering. That optimism was boosted at the weekend after G20 finance ministers vowed to continue with policies aimed at supporting the global economy. The resulting rise in risk appetite pushed investors away from the relative safety of the dollar, denting haven demand for the US currency. Derek Halpenny at Bank of Tokyo-Mitsubishi UFJ, said the dollar’s near-term prospects did not look particularly encouraging. “Gold has just broken through the $1,000 level and this, along with the dollar index approaching its lows, may well encourage another wave of speculative dollar selling,” he said. The dollar index, which tracks the currency’s progress against a basket of six major currencies, fell to a low of 77.398, breaking through the lows it hit in early August to fall to its weakest level since September 30 2008. The dollar also fell 0.7 per cent to a one-month low of $1.4429 against the euro, dropped 1 per cent to $1.6507 against the pound, lost 0.7 per cent to Y92.396 against the yen and fell 0.8 per cent to SFr1.0512 against the Swiss franc. Commodity-linked currencies also advanced, with the Australian dollar climbing 0.8 per cent to a fresh one-year high of $0.8625 against its US counterpart, the New Zealand dollar rising 0.6 per cent to $0.6964 and the Canadian dollar gaining 0.7 per cent to C$1.0701.

Cases Pile Up in Georgia Courts - (online.wsj.com) he wheels of justice in Georgia are grinding more slowly each day. Cuts in spending for the state court system have led to fewer court dates available for hearings and trials, creating a growing backlog of cases. With serious criminal matters being heard first, delays are stretching to months for many civil, domestic and minor criminal cases. The state court system, which handles more than 150,000 cases a year, had to slash spending by almost 15% in the past fiscal year, and more cuts loom. The state's budget shortfall widened to $3.7 billion over the past 18 months. Georgia judges are worried the system could stall. "We take an oath to uphold the laws and for people to have access to a judiciary," state Supreme Court Chief Justice Carol W. Hunstein said in an interview. The cutbacks, she said, "are doing real harm to the system." She said one state judge complained to her recently that it currently takes 60 days to hold a temporary hearing for a case such as family custody, which once took a few weeks at most. Shortfalls in public finances are squeezing judiciaries nationwide. According to a July survey by the Washington-based National Center for State Courts, at least 28 state court systems have imposed hiring freezes, 13 have frozen salaries and seven have planned or imposed salary reductions. Six states have furloughed court staff and six have reduced court hours, according to the center, which tracks state court data and issues. But Georgia's situation appears particularly severe. Because schedules and staffing have been reduced so aggressively, judges and attorneys say, the caseload appears to be backing up more quickly than in other states. The state Supreme Court plans to gather judges from across the state in October to determine the severity of the problem, which varies in part based on additional local cutbacks in some counties.

Fuld Says Being 'Dumped On' for Lehman Failure - (www.cnbc.com) Poor Dick…. He should be blamed for Lehman failure and all the money he pocketed over the years, but several other Wall Street executives should also be in the firing line. "You don't have a gun; that's good." That was how Richard Fuld greeted a Reuters reporter who had tracked him down to his country house in a bucolic setting beside a river and amid tree-covered slopes in Ketchum, Idaho last Friday. The man vilified for the collapse of Lehman Brothers almost a year ago, a failure that triggered the global economic crisis, seemed burdened but not crushed by the pressure of the upcoming anniversary. Standing on his gravelly driveway wearing a black fleece vest, dark gray shorts and sandals, Fuld indicated he was torn about speaking out in his own defense, partly because of ongoing litigation but also because he felt the world was not ready to listen. "You know what? The anniversary's coming up," he said. "I've been pummeled, I've been dumped on, and it's all going to happen again. I can handle it. You know what, let them line up." Fuld again emphasized his concern about what will be said and written about him in the days leading up to the Sept. 15 anniversary of the Lehman collapse but also stressed his ability to see it through. "They're looking for someone to dump on right now, and that's me," Fuld lamented and later added: "You know what they say? 'This too shall pass."' Fuld, 63, took Lehman's reins in 1994 when it was troubled and rebuilt it into the fourth-largest U.S. investment bank, a Wall Street powerhouse whose massively profitable mortgage banking machine inspired rivals' envy. Even Goldman Sachs was nervous. But it was forced to file the biggest bankruptcy in U.S. history after it choked under the weight of souring assets and lost investor confidence, and as the U.S. government and Federal Reserve failed to find a buyer and decided not to come up with a rescue package.

Congress Failed to Save Fannie, Freddie: Lockhart - (www.cnbc.com) The collapse of Fannie Mae and Freddie Mac one year ago was the result of bad government policy that took too long to be corrected, Jim Lockhart, the GSE's former regulator, told CNBC. “The problem was that Congress allowed them to be leveraged well over 100 to one, and we were asking since the day I took the job, three and a half years ago, for legislation to fix it,” said Lockhart, who recently left the FHFA to take a job with billionaire investor Wilbur Ross. “It didn’t happen until a little over a year ago and by then it was only about 40 days until the conservatorship.” Even though Freddie reported a small profit last quarter, Lockhart said he does not think that will continue. What's more, Fannie and Freddie will also not be able to repay the government in full to cover the cost of their bailouts, he said. Lockhart was more positive about the prospects for the housing market, saying he expects an increase in prices in 2010, the first in several years. “I think we are starting to stabilize,” said Lockhart. “I think some of the programs that have been put in place, they are little slow, but we are starting to get progress on the refinancing program, the modification program and certainly mortgage rates are at a point were they are very attractive.”