The Crash of 2008?, billions in write downs and bond insurers collapsing Options

[Livyjr]

AND AS THE BUSHIAN FINANCIAL MESS IN AMERICA CONTINUES TO GO GLOBAL, WE HAVE ...

"China shares hit 19-month low on economic fears - Shanghai Composite share index falls 5.2 percent on jitters over inflation, slowing economy"

By ELAINE KURTENBACH, Associated Press

Last updated: 5:02 a.m., Monday, August 11, 2008

SHANGHAI, China -- China's benchmark Shanghai Composite Index fell 5.2 percent Monday following the release of economic data showing wholesale price inflation jumped to its highest level in 12 years in July.

The Shanghai index closed at 2,470.07 on Monday, down 135.65 points.

That was its lowest close in more than a year and a half.

The Shenzhen Composite Index of China's smaller, second market plunged 6.6 percent to 698.37.

Airlines, textile exporters and refiners led the decline.

Two of three major publicly traded airlines dropped by the daily maximum 10 percent.

The government reported Monday that the producer price index rose 10 percent in July over a year earlier, its highest rate of increase since 1996 and a jump over June's 8.8 percent rate.

Such increases, fueled by rising energy and raw materials costs, add to pressure on consumer prices, complicating Beijing's effort to rein in politically sensitive inflation.

Chinese investors have become increasingly jittery over the economic outlook amid signs that the malaise afflicting the U.S. and Europe might be spreading to Asia, with corporate earnings bound to suffer.

Analysts said the start of the Beijing Olympics last week had quashed any lingering hopes for a games-related rally.

"Investors still think the market is weak," said Qian Qimin, a strategist at Shenyin Wanguo Securities.

"They are disappointed," he said.

So-called "B-shares," which are denominated in U.S. dollars and take up only a small segment of market volume, fell sharply in Shanghai, dropping 9 percent and helping to pull the composite index lower.

Stricter foreign exchange controls and a strengthening of the U.S. dollar against the Chinese yuan could be leading speculative investors to pull out investments that had been targeting gains in the local currency, said Zhang Linchang, a strategist at Guotai Junan Securities in Shanghai.

"It's hard to calculate, but it's possible that hot money is leaving China because of that," Zhang said.

The U.S. dollar was trading at 6.8583 around 0800 GMT on the over-the-counter market, down from Friday's close of 6.8592.

In share trading, a steadying of global crude oil prices failed to buoy airlines amid concern over weakening passenger demand.

Among the airlines hitting the daily downside limit, flag carrier Air China ended at 7.82 yuan and China Eastern Airlines dropped to 6.17 yuan.

China Southern Airlines dropped 9.9 percent to 6.09 yuan.

China Eastern Airlines announced late Sunday that a deal to sell a strategic stake to Singapore Airlines and Temasek Holdings, the investment arm of the Singaporean government, was off after they failed to meet Saturday's deadline for reaching a final agreement.

Oil refiner China Petroleum & Chemical Corp. fell 5.4 percent to 10.69 yuan and PetroChina plunged 5.54 percent to 13.80.

Aluminum giant Chinalco also fell by the 10 percent limit, to 10.38 yuan.

Property developer China Vanke slumped 5.6 percent to 7.11 yuan.

------

Bonnie Cao in Beijing contributed to this report.

[Livyjr]

"Paulson: Bush right on Wall Street `hangover' quip - Treasury secretary agrees with Bush's comment on Wall Street having financial hangover now"

Associated Press

Last updated: 1:42 p.m., Sunday, August 10, 2008

WASHINGTON -- Treasury Secretary Henry Paulson, a former investment firm executive, says "absolutely there's a lot of truth" to President Bush's comment that Wall Street "got drunk and now it's got a hangover," in understanding the current economic climate.

But asked about Bush's remark, the former Goldman Sachs chairman and chief executive acknowledged Wall Street has played a role in the current downtown, particularly in its borrowing and lending practices.

"Absolutely there's a lot of truth to what the president said."

"And in terms of Wall Street, there was too much leverage in the system and more leverage than was appropriate and more than people recognized, because the leverage came into the system in the form of highly complex, structured products, which were difficult to understand," Paulson said.

"So there was excess leverage, excess complexity."

The president, in an unguarded moment, made the comment at a political fundraiser in Houston last month after asking members of the audience to turn off their video cameras.

The request was ignored and a snippet wound up on a blog.

The media was barred from the event.

"There is no question about it."

"Wall Street got drunk," the president said.

"That's one reason I asked you to turn off your TV cameras."

I am somewhat surprised at the seeming total lack of commentary by Americans in America on these words from the complete idiot George W. Bush on Wall Street being "drunk" ....

HOW COULD IT HAVE GOTTEN THAT WAY?

WHO WERE THE BARTENDERS?

OH!

That's right ...

BUSHIAN appointee Ben Bernanke and BUSHIAN CUE-BALL-HEAD Henry "HANK" Paulson ....

And New York State Attorney General Eliot "I LIKE YOUNG PROSTITUTES WITH BIG HOOTERS" Spitzer had his hands in there, too .....

And they are all collectively THE GOVERNMENT ....

And so ....

[Livyjr]

AND IN THE MEANTIME ....

"Most companies in US avoid federal income taxes - Report says most corporations pay no federal income taxes; lawmakers blame loopholes"

By JENNIFER C. KERR, Associated Press

Last updated: 5:12 a.m., Tuesday, August 12, 2008

WASHINGTON -- Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.

"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.

The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name.

It said companies may escape paying such taxes due to operating losses or because of tax credits.

More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said.

Combined, the companies had $2.5 trillion in sales.

About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.

The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005.

For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.

Dorgan and Levin have complained about companies abusing transfer prices -- amounts charged on transactions between companies in a group, such as a parent and subsidiary.

In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities.

The GAO did not suggest which companies might be doing this.

"It's time for the big corporations to pay their fair share," Dorgan said.

--------

On the Net:

Government Accountability Office: http://www.gao.gov

[Livyjr]

"Paulson: Bush right on Wall Street `hangover' quip - Treasury secretary agrees with Bush's comment on Wall Street having financial hangover now"

Associated Press

Last updated: 1:42 p.m., Sunday, August 10, 2008

WASHINGTON -- Treasury Secretary Henry Paulson, a former investment firm executive, says "absolutely there's a lot of truth" to President Bush's comment that Wall Street "got drunk and now it's got a hangover," in understanding the current economic climate.

But asked about Bush's remark, the former Goldman Sachs chairman and chief executive acknowledged Wall Street has played a role in the current downtown, particularly in its borrowing and lending practices.

"Absolutely there's a lot of truth to what the president said."

"And in terms of Wall Street, there was too much leverage in the system and more leverage than was appropriate and more than people recognized, because the leverage came into the system in the form of highly complex, structured products, which were difficult to understand," Paulson said.

"So there was excess leverage, excess complexity."

The president, in an unguarded moment, made the comment at a political fundraiser in Houston last month after asking members of the audience to turn off their video cameras.

The request was ignored and a snippet wound up on a blog.

The media was barred from the event.

"There is no question about it."

"Wall Street got drunk," the president said.

"That's one reason I asked you to turn off your TV cameras."

I am somewhat surprised at the seeming total lack of commentary by Americans in America on these words from the complete idiot George W. Bush on Wall Street being "drunk" ....

HOW COULD IT HAVE GOTTEN THAT WAY?

WHO WERE THE BARTENDERS?

"Wachovia to cut 600 more jobs than earlier planned - Wachovia plans to cut 600 more jobs than previously expected; total now 11,350"

Associated Press

Last updated: 8:02 p.m., Monday, August 11, 2008

NEW YORK -- Wachovia Corp. said Monday it plans to cut 600 more jobs than it previously expected as it works to reduce expenses in the face of staggering losses tied to mortgage debt.

According to its quarterly filing with the Securities and Exchange Commission, the bank now expects to eliminate 11,350 positions, including 6,950 active employees and 4,400 open positions.

All of the additional job cuts will be in the bank's troubled mortgage business.

Last month, upon reporting an $8.86 billion second-quarter loss, the Charlotte, N.C.-based bank said it planned to eliminate 10,750 positions, including 6,350 active employees, most of them related to mortgages.

Separately, Wachovia also reported in its quarterly regulatory filing that it has recorded an additional $500 million in legal reserves related to its ongoing settlement discussions with regulators concerning the sale of auction-rate securities, helping to swell the bank's second-quarter loss to $9.11 billion.

The bank also said the SEC was considering civil or administrative proceedings against it in connection with an ongoing investigation into possible misconduct in the company's municipal derivatives group.

Wachovia estimates that the job cuts and other cost-cutting initiatives will generate or preserve more than $5 billion in Tier 1 capital, a measure of a bank's financial strength, by the end of 2009 and further enhance its liquidity position.

Wachovia's current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation's housing boom.

With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments.

Shares rose 28 cents to close at $18.21.

[Livyjr]

THIS FOLLOWING IS A STORY THAT I HAVE A PERSONAL CONNECTION WITH AS A NEW YORK STATE RESIDENT AND ALSO AS AN ENGINEER IN NEW YORK STATE ....

BY THE LAWS ON ADVERSE ENVIRONMENTAL IMPACTS IN NEW YORK STATE WHICH HAVE BEEN LAWS SINCE THE 1970's, THIS STORY SHOULD NEVER HAVE BEEN ....

THE LAWS AS THEY ARE WRITTEN WOULD HAVE PREVENTED THIS FROM HAPPENING ....

BUT TO ENCOURAGE MORE AND MORE DEVELOPMENT, THE PROTECTIVE LAWS WERE SCRAPPED ....

I PREDICTED EXACTLY THIS HAPPENING TWENTY YEARS AGO IN 1988 AS A RESULT OF THE NEGLIGENT SCRAPPING OF THOSE LAWS WHEN IT WAS MY DUTY AS A PUBLIC OFFICIAL IN RENSSELAER COUNTY WHERE THIS JUST HAPPENED TO PREVENT THIS FROM HAPPENING BY APPLYING ENGINEERING PRINCIPLES AND OVERSIGHT TO DEVELOPMENT IN NEW YORK STATE ......

TO PREVENT THIS FROM HAPPENING, IT WAS NECESSARY TO SAY NO ....

NO WAS UNACCEPTABLE, HOWEVER ....

NO GOT IN THE WAY OF BIG MONEY IN PLAY ....

FOR SAYING NO AND MEANING IT, I WAS LOCKED OUT OF MY OFFICE .....

THE BULK OF MY RECORDS AND EVIDENCE WERE DESTROYED ....

AND I HAD A CAMPAIGN OF VIOLENCE UNLEASHED AGAINST ME WHICH LASTS RIGHT TO THIS DAY ....

AND NOW AS PREDICTED, THE CHICKENS COME HOME TO ROOST ....

AND THIS IS ONLY THE BEGINNING ...

And so ...

"Rensselaer mayor blames development for flooding - Homes and business must be inspected before National Grid restores service"

By KENNETH C. CROWE II, Staff writer, Albany, New York Times Union

Last updated: 10:53 a.m., Tuesday, August 12, 2008

RENSSELAER -- Mayor Dan Dwyer blamed rapid development in East Greenbush and North Greenbush for adding to the storm runoff that spilled into tributaries of the Hudson River Monday and flooded low-lying sections of the city.

"There is a lot of growth going on up there."

"It's more than can be handled," Dwyer said at a news conference this morning where he assessed damage from a storm that left more than 30 flood victims looking for help from the Red Cross.

Dwyer said development at the University at Albany's East Campus on the edge of neighboring East Greenbush and new shopping centers in that town and North Greenbush are sending more run-off into the system.

He told reporters that the state should build a retaining pond at the East Campus to keep some of the water from pouring into his city, which lies between East Greenbush and North Greenbush and the Hudson River.

Meanwhile, some residents are being allowed back in to assess damage, but inspections must be done before National Grid can restore power to 27 homes and two business that were flooded Monday.

The severe flooding that swamped low-lying sections of the city Monday forced 33 people to visit an emergency shelter and damaged 37 homes, officials said.

As of early this morning, damage was found to homes on nine different city streets, officials said.

Flood waters rose as a torrential storm hit Rensselaer Monday afternoon.

It was jut the latest heavy storm to hit the area since June.

So far more than 14 inches of rain have been dropped on the area.

The city will remain in a state of emergency into today, Dwyer said.

Six streets were closed Monday evening and firefighters used a boat and a jet ski to search homes after heavy rain left more than five feet of water in some parts of the city.

Amtrak service also was closed between the city and Hudson for a few hours Monday afternoon because of flooding on the tracks.

wyer said at least 16 homes in the city were evacuated and the American Red Cross of Northeastern New York had set up a shelter in City Hall.

Dozens of residents made their way to the shelter Monday evening for food and water.

The flooding began to subside Monday evening and Dwyer said the six closed streets Broadway, Willow, Sixth, Lawrence, East and South could be opened Tuesday morning once they are inspected.

Widespread hail and flooding was reported Monday throughout the region.

[Livyjr]

I am somewhat surprised at the seeming total lack of commentary by Americans in America on these words from the complete idiot George W. Bush on Wall Street being "drunk" ....

HOW COULD IT HAVE GOTTEN THAT WAY?

WHO WERE THE BARTENDERS?

OH!

That's right ...

BUSHIAN appointee Ben Bernanke and BUSHIAN CUE-BALL-HEAD Henry "HANK" Paulson ....

And New York State Attorney General Eliot "I LIKE YOUNG PROSTITUTES WITH BIG HOOTERS" Spitzer had his hands in there, too .....

And they are all collectively THE GOVERNMENT ....

And so ....

AND SPEAKING ABOUT WALL STREET IN ELIOT SPITZER'S NEW YORK STATE BEING DRUNK, ALRIGHT ....

UP HERE, WE SAY THAT WALL STREET HAS A REAL GOOD DOSE OF ELIOT SPITZER'S GALLOPING TROTS ....

And so ...

"NY AG expands auction-rate securities probe"

By STEPHEN BERNARD, Associated Press

Last updated: 2:42 p.m., Monday, August 11, 2008

NEW YORK -- New York Attorney General Andrew Cuomo said Monday he is expanding his investigation into the collapse of the auction-rate securities market to include JPMorgan Chase & Co., Morgan Stanley and Wachovia Corp.

Last week, Cuomo's office and the Securities and Exchange Commission reached settlements that forced Swiss bank UBS to repurchase $18.6 billion in the securities, while Citigroup agreed to buy back $7 billion of the securities.

UBS will also pay a fine of $150 million, while Citigroup will pay a $100 million fine.

"This is an industrywide problem," Cuomo said in an interview.

"This is not about one or two institutions."

"We are now working with the other players in the industry."

Cuomo sent letters to JPMorgan, Morgan Stanley and Wachovia telling them that his office is reviewing the banks' behavior in the sale of auction-rate securities.

The attorney general will determine if the banks knowingly misrepresented the safety of the securities when selling them to investors.

Morgan Stanley spokesman Mark Lake said the New York-based investment bank has "been and continues to cooperate fully with the regulators and (has) been working with clients since February to provide liquidity on a case-by-case basis."

A Wachovia spokeswoman said the Charlotte, N.C.-based bank is meeting with regulators.

JPMorgan declined to comment.

Cuomo said meetings with banks have been ongoing for "weeks, if not months."

"We've had conversations with these banks," Cuomo said.

"We think the banks are eager to resolve the matter."

The $330 billion auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week.

A number of companies and retail clients invested in the securities because they could treat their holdings almost like cash.

The bond-like investments were widely held by many institutional and individual investors and were seen as highly liquid, money market-like investments.

However the market for them collapsed in February amid the downturn in the broader credit markets.

Regulators have been investigating the collapse in the market to determine who was responsible for its demise.

UBS and Citigroup agreed to repurchase the securities at par value as part of the settlement.

Any customers who sold the securities at a loss after the market failed will also be reimbursed.

Shares of JPMorgan rose $1.10, or 2.7 percent, to $42.17 in afternoon trading as the broader market rose.

Morgan Stanley shares rose 48 cents to $45.52.

Wachovia shares rose 44 cents, or 2.5 percent, to $18.37.

[Livyjr]

"Paterson calls for $1 billion more in budget cuts"

By VALERIE BAUMAN, Associated Press

Last updated: 5:42 p.m., Monday, August 11, 2008

ALBANY -- Legislative leaders were noncommittal Monday to New York Gov. David Paterson's plan to cut at least $600 million from the state budget in Medicaid, pork barrel spending and aid to local governments.

Paterson proposed $1 billion in spending cuts for the Legislature to consider at its special session Aug. 19, suggesting they try to find at least $600 million to cut.

With about a week before the one-day session, Senate majority Leader Dean Skelos and Assembly Speaker Sheldon Silver had little to say about the governor's proposal, which they had just received on Monday.

The plan would not include any reductions in school spending.

"We will review the proposals advanced today by the governor and will continue to work with the governor and with our colleagues in the Senate," Silver said in a written statement.

Skelos applauded the governor for taking steps to reduce spending, but offered a few reservations.

"It's important that the governor and Legislature not take any actions that would force local governments to raise their local taxes," Skelos said in a statement.

Paterson suggested the state cut financial aid to local governments by $250 million, about 6 percent.

Silver pointed out that his chamber had forecast a recession months ago.

Skelos noted that Senate Republicans had passed the governor's tax cap and said New York needs to do more to root out Medicaid fraud.

But neither specifically supported any cuts.

Among Paterson's proposals is cutting $50 million in funding for the City University of New York.

He's already trimmed a similar amount in the State University of New York system.

The biggest proposed reduction would be $505 million in Medicaid funding, including $169.4 million cut from nursing homes and $99.4 million from hospitals.

The Greater New York Hospital Association and SEIU, a union representing health care workers, described the cuts as "staggering" and warned they "would devastate New York's health care infrastructure and severely threaten access to care."

"In just a few short weeks we have gone from suggestions of shared sacrifice to making hospitals and nursing homes into sacrificial lambs," said William Van Slyke, vice president of the Healthcare Association of New York State.

Comptroller Thomas DiNapoli said Paterson's proposed cuts come when "New York State is facing serious fiscal challenges and spending well beyond our means."

Paterson ruled out tax increases "for the time being," including the Assembly Democrats' call for a higher income tax on those making $1 million or more.

The proposal doesn't include reducing state school aid, which was boosted a record $1.8 billion in April to more than $21 billion.

Education spending is pushed by the strongest lobbyists in Albany, including the New York State United Teachers union and the state School Boards Association.

Another $132 million in Paterson's proposal would come from postponing some legislative programs approved this year, but he didn't identify them.

He would also limit pork barrel spending by legislators and his office to $100 million for specific programs, charities and projects.

Paterson said he wants cuts that will offset future years of overspending.

When Paterson called for spending cuts July 29, the majority Senate Republicans and Assembly Democrats immediately ruled out trimming their highest priority programs.

Both chambers opposed cuts to school aid.

Any cuts to education, health care and pork barrel spending for projects lawmakers support in their districts will likely be tricky in this election year.

Without making the cuts, Paterson said the Legislature may be forced to return to Albany in November to address the deficit.

His two-year plan would cut $2.6 billion, if supported by the Legislature.

New York City Mayor Michael Bloomberg said "the governor has taken the tough next step."

In April the Legislature approved a $122 billion budget that increased spending by $5 billion, or 4.5 percent, over the previous fiscal year and added $11.5 billion in new debt that will be issued over several years.

That followed the 2007-08 budget that increased spending 8 percent.

------

Associated Press writers Michael Gormley in Albany and Sara Kugler in New York contributed to this report.

[Livyjr]

"JPMorgan Chase: More mortgage market losses for 3Q - So far, 3rd quarter has shaved off $1.5B from JPMorgan Chase's mortgage-backed assets"

Associated Press

Last updated: 7:02 a.m., Tuesday, August 12, 2008

NEW YORK -- JPMorgan Chase & Co. revealed Monday that it has incurred more substantial losses in its mortgage investments so far in the third quarter than it did in the previous three months.

In a regulatory filing to the Securities and Exchange Commission, the bank said turbulence in the credit markets has caused it to lose about $1.5 billion, after hedges, in its mortgage-backed securities and loans to date in the July-to-September quarter.

That's more than the $1.1 billion markdown the bank took in its investment bank's portfolio during the second quarter.

As of June 30, the New York-based bank had $19.5 billion in exposure to prime and Alt-A mortgages, $1.9 billion in exposure to subprime mortgages, and $11.6 billion in exposure to commercial mortgage-backed securities.

During the second quarter, JPMorgan Chase -- which in March bought the investment bank Bear Stearns & Cos. -- posted a 53 percent drop in profit after marking down its investment portfolio, writing off more consumer loans as unpaid, and bulking up its reserves for further loan losses.

[Livyjr]

"There is no question about it."

"Wall Street got drunk," the president said.

"That's one reason I asked you to turn off your TV cameras."

"Fed holds first auction for 84-day loans - Fed auctions another $25 billion in loans in an effort to combat a serious credit squeeze"

By MARTIN CRUTSINGER, Associated Press

Last updated: 10:32 a.m., Tuesday, August 12, 2008

WASHINGTON -- The Federal Reserve has auctioned another $25 billion in loans to the nation's banks and given them more time to pay the money back in an effort to combat a serious credit squeeze.

The Fed announced Tuesday that the money would be loaned at a rate of 2.754 percent.

In the latest auction, the Fed offered the loans for an extended period of 84 days, rather than the 28-day period for the previous loans.

It marked the Fed's latest attempt to be innovative in providing the nation's banking system with the cash it needs to combat a serious credit crisis stemming from mounting mortgage loan losses.

The credit squeeze hit with force a year ago and the central bank has shoveled out billions of dollars in loans.

From September through April it also was aggressively cutting interest rates to keep the financial turmoil from pushing the country into a deep recession.

The Fed's interest-rate setting panel met again last week and for the second meeting held interest rates unchanged amid concerns that lowering rates further could stoke inflation pressures.

Fed policymakers instead indicated that they are likely to hold rates steady for an extended period.

That signal bolstered financial markets that had been worried higher inflation pressures might prompt the Fed to start raising rates even though the economy remains weak.

The latest Fed auction was held on Monday with the results announced Tuesday.

It saw 64 bidders seeking a total of $54.8 billion in funds.

The Fed had announced that it would auction off $25 billion for 84 days.

In two weeks the Fed will auction $75 billion in loans for 28 days.

The Fed began the auction process last December in an effort to increase use of its discount window borrowing facility, believing that the auctions would help remove the stigma that banks feared was attached to their petitioning for direct loans from the Fed's discount window.

[Livyjr]

"Budget deficit soars to $102.8 billion in July - Federal budget deficit soars in July, pushed higher by stimulus payments, failed banks"

By MARTIN CRUTSINGER, Associated Press

Last updated: 3:02 p.m., Tuesday, August 12, 2008

WASHINGTON -- The federal budget deficit soared in July, pushed higher by economic stimulus payments and $15 billion in outlays to protect depositors at failed banks.

The Treasury Department reported that the deficit for July totaled $102.8 billion, nearly triple the $36.4 billion deficit recorded in July 2007.

The deficit outstripped the $97 billion gap that Wall Street economists had been expecting for July.

The Treasury said outlays were pushed up by $15 billion because of payments the Federal Deposit Insurance Corp. made to depositors at failed banks.

The Treasury report did not identify the banks but federal regulators seized the assets of California-based IndyMac Bank, the largest regulated thrift to fail in U.S. history.

The FDIC is expected to be successful in recovering much of its outlays for failed banks, in part by selling the assets of seized institutions.

The FDIC has also raised the possibility that it will increase insurance premiums on healthy banks to cover the cost of what are expected to be rising bank failures as the current credit crisis unfolds.

Besides the payouts by the FDIC, government outlays were increased by the final bulk mailings of government stimulus payments in July.

The July deficit also looked worse than the July 2007 deficit because last year's figure was artificially deflated by timing issues that shifted about $19 billion in normal outlays into the prior month.

So far this year, the budget deficit totals $371.4 billion, more than double last year's deficit through the same time period of $157.4 billion.

The Bush administration recently revised its forecast for this year's deficit, lowering it from an estimate of $410 billion, down to $389 billion.

However, the Congressional Budget Office is more pessimistic, projecting the deficit for this year will total $400 billion when the current budget year wraps up on Sept. 30.

For the 2009 budget year, which begins Oct. 1, the administration is now projecting a deficit of $482 billion, which would be the highest in dollar terms in history, surpassing the old mark of $413 billion set in 2004.

Through July, government revenues total $2.094 trillion, down 1 percent from the same period a year ago.

Revenues have been weaker this year, reflecting the sharp slowdown in the overall economy.

Government spending so far this budget year totals $2.466 trillion, 8.5 percent higher than a year ago.

That's in part due to the $168 billion stimulus package Congress passed at the beginning of the year in an effort to keep the country out of a deep recession and because of increased spending for the wars in Iraq and Afghanistan.

[Livyjr]

"Retail sales drop for first time in 5 months - July retail sales dip 0.1 percent as shoppers shun autos and face higher gas bills"

By MARTIN CRUTSINGER, Associated Press

Last updated: 3:52 p.m., Wednesday, August 13, 2008

WASHINGTON -- Retail sales delivered the weakest performance in five months in July as shoppers shunned autos while they paid more for gas.

With the mass mailings of $92 billion in rebate checks now just a memory, there is concern the fragile economy could slow even more in the second half of this year.

The Commerce Department reported Wednesday that retail sales fell 0.1 percent last month, the first decline since a 0.5 percent tumble in February.

It was a worse showing than the flat reading economists had been expecting and followed a revised but still weak 0.3 percent reading for June.

Analysts said retail sales would have been more feeble without the $92 billion in rebate payments the government sent out in May, June and July.

Those checks helped to counter plunging home prices, rising unemployment and soaring gasoline prices.

The bulk mailings are now over, though, leaving economists worried about what will happen next to spending.

"Cautious and uncertain consumers are watching their wallets and with the back-to-school shopping season under way, that does not bode well for retailers," said Joel Naroff, chief economist at Naroff Economic Advisors.

Department store operator Macy's Inc. said Wednesday that its second-quarter earnings dropped slightly and warned that full-year profits will be below Wall Street expectations.

Susan Taylor-Demming, of Naperville, Ill., said the squeeze on the family budget has meant, among other things, that she drove to New Jersey with her two daughters for a summer vacation rather than fly.

"Play dates instead of water park adventures," she added.

Gasoline prices have been falling since hitting a high of $4.11 per gallon in early and that should help consumer spending in coming months, economists said.

But they wonder if that will be enough to offset the loss of the stimulus checks.

David Wyss, chief economist at Standard & Poors in New York, said he believed consumers will spend about 60 percent of the money they receive in the first three months after getting the check, deciding to save the rest.

That would be similar to the pattern seen when the government used tax rebates to fight the 2001 recession.

The overall economy grew at an annual rate of 1.9 percent in the April-June quarter, helped in part by the stimulus payments.

Wyss said he was looking for growth of around 2 percent in the gross domestic product in the current July-September quarter.

But he forecast the GDP would shrink in the final three months of this year and the first three months of next year, as the impact of the rebate checks wears off.

Two consecutive quarters of falling GDP is the classic definition of a recession.

Other economists said they also were looking for negative GDP then.

Nigel Gault, chief U.S. economist at Global Insight, a Lexington, Mass., forecasting company, said he believed GDP would shrink at an annual rate of 0.7 percent in the fourth quarter of this year and drop by 0.4 percent in the first quarter of next year.

He said he was looking for these declines even with the help the economy will get if energy prices keep falling.

"I think there are too many negatives and the negatives are too large for a gasoline price decline to change the story significantly," he said.

At the White House, presidential spokesman Tony Fratto noted that the weakness in July retail sales reflected a big drop in auto sales during the month and other "substantial headwinds faced by households" such as high gasoline prices.

Auto sales fell by 2.4 percent in July -- another dismal month for automakers who saw sales activity plunge to the lowest level in 16 years as the weak economy and rising job layoffs severely dampened demand.

Excluding the big drop in autos, retail sales would have posted a 0.4 percent increase.

While that was a positive reading, it was still the weakest showing for sales excluding autos in five months.

Much of what little strength there was in July came from a 0.8 percent jump in sales at gasoline stations because of surging prices rather than increased demand.

The Federal Highway Administration said Wednesday that Americans drove 12.2 billion fewer miles in June than the same month a year earlier.

Given the poor start to the third quarter, Democrats in Congress have begun to push for a second stimulus package to keep the economy afloat in coming months.

So far, the Bush administration has opposed it in part over concerns about what further stimulus activity will do to the budget deficit.

The administration is already projecting the budget gap will hit a record of $482 billion next year.

In other economic news, the Labor Department reported that surging oil prices helped to send import prices up by 1.7 percent in July and left them rising by 21.6 percent compared to a year ago, the biggest year-over-year reading on record.

------

AP Business Writer Ellen Simon in New York contributed to this report.

[Livyjr]

"Median home prices fall around US - Median home prices fall in 75 percent of US metropolitan areas in trade group report"

By ALAN ZIBEL, Associated Press

Last updated: 3:42 p.m., Thursday, August 14, 2008

WASHINGTON -- Median home prices fell in more than three-quarters of U.S. cities in the second quarter, the latest sign of the breadth of the housing market decline, according to new data Thursday.

Nevertheless, home sales rose in areas where the market is flooded with foreclosures, indicating that borrowers are taking advantage of steep discounts.

Nevada and California, battered by a housing market bust, were the only states to show sales gains in the second quarter compared with a year earlier, according to a report by the National Association of Realtors.

Sales were up 18 percent in Nevada compared with last year, after median prices fell by nearly 24 percent in the Las Vegas area.

Sales in California were up 3.7 percent.

Prices in Los Angeles, Riverside and Sacramento have plunged by 30 percent or more, according to the NAR's data.

Nationally, sales fell by 16.3 percent in the second quarter compared with the same period a year ago.

In recent months, the biggest home sales gains "have been in some of the markets with the steepest and fastest price drops," said Lawrence Yun, the trade group's chief economist.

"Buyers in these areas are responding to deeply discounted home prices."

The Realtors group said median prices for existing single-family homes dropped in 115 of 150 metropolitan areas in the April-June period, while 35 metro areas saw prices increase.

Among the bright spots, prices of homes sold rose by more than 7 percent in Yakima, Wash., Binghamton, N.Y., Amarillo, Texas and Charleston, W.Va.

Nationally, the median home price -- the point where half the homes sold for more and half for less -- fell to $205,700 in the second quarter, down by 7.6 percent from the same period a year ago, when the median sales price was $206,500.

As foreclosures soar, banks and mortgage investors are also facing a pileup of foreclosed properties on their books and are cutting prices dramatically.

Foreclosure listing service RealtyTrac said that it had more than 750,000 foreclosed homes in its database of properties for sale, equal to about 17 percent of the 4.5 million U.S. homes that were up for sale in June.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said.

That means one in every 464 U.S. households received a foreclosure filing last month.

Christopher Thornberg, a principal with Beacon Economics in Los Angeles, said the mortgage crisis has moved far beyond the subprime loans that started to go bust last year, especially as borrowers start to default as a result of the job losses.

He said, "It's every part of the housing market that's getting whacked right now."

[Livyjr]

"US foreclosure filings surge 55 percent - Foreclosures in US rose 55 percent in July as housing market continued to sink"

By ALAN ZIBEL, Associated Press

Last updated: 4:12 p.m., Thursday, August 14, 2008

WASHINGTON -- The number of homeowners stung by the dramatic decline in the U.S. housing market jumped last month as foreclosure filings grew by more than 50 percent compared with the same month a year ago, according to data released Thursday.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said.

That means one in every 464 U.S. households received a foreclosure filing last month.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions.

More than 77,000 properties were repossessed by lenders nationwide in July, the company said.

Nevada, California, Florida, Arizona, Ohio, Georgia and Michigan had the highest foreclosure rates.

Foreclosure filings increased from a year earlier in all but eight states.

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure.

Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.

The mortgage crisis has moved far beyond the subprime loans that started to go bust last year, especially as borrowers start to default because they have lost their jobs due to the sour economy, said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.

"It's every part of the housing market that's getting whacked right now," he said.

As foreclosures soar, banks and mortgage investors are also facing a pileup of foreclosed properties on their books and are cutting prices dramatically.

RealtyTrac noted that it had more than 750,000 foreclosed homes in its database of properties for sale, equal to about 17 percent of the 4.5 million U.S. homes that were up for sale in June.

To speed up the disposition of the 54,000 foreclosed properties it owns, Fannie Mae is opening offices in California and Florida and is considering selling those properties in bulk to investors.

"I do not think this is a time to be holding onto (foreclosed properties) hoping for a better day," CEO Daniel Mudd said last week.

It remains to be seen how much the government's intervention will stem the housing crisis.

President Bush last month signed sweeping housing legislation that aims to prevent foreclosures by allowing homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan.

The number of foreclosures "could start to stabilize as early as the first quarter of next year if the government program gains any traction," said Rick Sharga, RealtyTrac's vice president for marketing.

"That's really the unknowable right now."

The bill is projected to help about 400,000 households.

However, consumer advocates fear that lenders will simply put their highest-risk loans into the program, and borrowers will default anyway, leaving taxpayers on the hook.

The Congressional Budget Office estimates that about 35 percent of borrowers that enter the refinancing program will default.

Even with government help, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value by the end of next year, predicts Moody's Economy.com.

In the RealtyTrac report, the Cape Coral-Fort Myers area in Florida was the metro area with the highest rate of foreclosure, followed by three California cities: Merced, Stockton, and Modesto.

Las Vegas ranked fifth.

Separately, the National Association of Realtors reported Thursday that median home prices fell in more than three-quarters of U.S. cities in the second quarter.

Nevertheless, home sales rose in areas where the market is flooded with foreclosures, indicating that borrowers are taking advantage of steep discounts.

Nevada and California, battered by a housing market bust, were the only states to show sales gains in the second quarter compared with a year earlier.

Nationally, sales fell by 16.3 percent in the second quarter compared with the same period a year ago.

------

On the Net:

RealtyTrac Inc.: http://www.realtytrac.com

[Livyjr]

"Consumer prices surge, job market remains strained - Consumer prices rising at fastest rate in 17 years while labor market remains under strain"

By MARTIN CRUTSINGER, Associated Press

Last updated: 5:33 p.m., Thursday, August 14, 2008

WASHINGTON -- Inflation is running at the fastest pace in 17 years, the job market is under further strain and foreclosure filings are surging.

A raft of gloomy economic data on Thursday represented a setback for those hoping to see signs of better times ahead and it may keep the Federal Reserve jammed between rising inflation and slowing growth.

The Labor Department reported that consumer prices shot up by 0.8 percent in July, double the increase that economists had expected.

The rise was only slightly lower than the 1.1 percent surge in June that had been the second-highest monthly increase in the last 26 years.

The big gains left inflation increasing by 5.6 percent over the past year, the largest 12-month jump since the period ending in January 1991.

Core inflation, which excludes volatile food and energy costs, rose 0.3 percent in July, slightly higher than the 0.2 percent increase that economists had expected.

For the past 12 months, core inflation has risen by 2.5 percent, the highest 12-month change since February.

The biggest price pressures came in the energy and food sectors, just as they have all year.

But the price gains spread to other areas, too -- clothing costs jumped by the largest amount in a decade, airline fares rose sharply and the cost of hotel rooms and tobacco products also climbed.

"For the average American, these inflation numbers are very bad news."

"It means that their purchasing power has been cut and their wages aren't going very far," said Mark Zandi, chief economist at Moody's Economy.com.

Indeed, the Labor Department said in a separate report that average weekly wages, after adjusting for inflation, fell by 3.1 percent in July compared to a year ago, the biggest year-over-year decline since November 1990.

Wall Street rebounded on Thursday, propelled by a further drop in oil prices and investors taking advantage of bargains in financial stocks after two straight days of heavy declines.

The Dow Jones industrial average rose 82.97 points to close at 11,615.93.

Some economists said they believed this could be the last truly terrible inflation report.

Energy prices have been falling since hitting a peak last month and food prices are expected to moderate given reports of likely bumper harvests for corn and soybeans.

But other analysts worried the July price report could be a signal that inflation is not going to moderate quickly because the long surge in energy prices is now starting to spread to other sectors of the economy.

William Dunkelberg, chief economist for the National Federation of Independent Business, said the store and restaurant owners represented by his organization report that inflation is now their No. 1 problem.

They are being forced to raise prices on their customers because their suppliers are hiking prices.

"All of their costs are rising very quickly and they are getting hammered," Dunkelberg said, noting that 42 percent of the businesses in the latest NFIB survey reported raising prices, the highest percentage in a quarter-century.

John McDonald, 64, of Chicago, said that he had definitely noticed the price increases when he goes food shopping.

"We're retired and you can see it in the grocery stores," he said.

He and his wife have switched to cheaper brands when they could.

The Labor Department also reported Thursday that the number of newly laid off workers filing for unemployment benefits fell by 10,000 last week to 450,000.

But that decline was less than expected and left the four-week moving average at the highest level in six years.

The number of people receiving jobless benefits rose to 3.42 million, the highest level since November 2003.

Separately, the number of foreclosure filings jumped by more than 50 percent in July, according to Irvine, Calif.-based Realty Trac Inc.

The National Associated of Realtors reported that median home prices fell in three-fourths of the cities it surveyed in the April-June quarter.

Democrats, who hope to win control of the White House in the November elections, said the new reports were evidence of failed Republican economic policies.

"Today, we got the truly shocking news that inflation hit a 17-year high of 5.6 percent," Jason Furman, economic policy director for Democratic presidential candidate Barack Obama, said in a statement.

"Families have now lost an entire decade's worth of raises to inflation as weekly earnings adjusted for inflation lies below the level they reached in August 1998."

Sen. Charles Schumer, D-N.Y., noting the news on inflation, rising jobless claims, soaring mortgage foreclosures and falling real incomes, said, "If this administration were competing in the 'bad economic policy' Olympics, they'd receive four gold medals today."

Responding to the new economic reports, White House press secretary Dana Perino said, "It will take some time for the economy to turn around."

She called the high jobless claims figures "not welcome" but said unemployment at 5.7 percent in July still remained lower than it has been in past periods of economic weakness.

On inflation, she said that crude oil and gasoline prices both hit all-time highs in July and have since fallen.

Douglas Holtz-Eakin, McCain's top economic advisor, said that Obama's economic policies would result in higher taxes and wasteful government spending.

"Obamanomics is lavish government spending that must be paid for by new tax increases on a struggling economy," Holtz-Eakin said in a statement.

In July, energy prices jumped by 4 percent, driven upward by a 4.1 percent rise in gasoline prices, which last month were 37.9 percent higher than a year ago.

After hitting a record of $4.11 per gallon in mid-July, gasoline prices have been falling in recent weeks, now averaging $3.79 per gallon, according to the survey by auto club AAA and the Oil Price Information Service.

Crude oil prices are also down about $30 per barrel from a peak in early July and analysts are hoping that this decline will help relieve some of the pressures on energy costs.

Food costs shot up by 0.9 percent in July, reflecting higher costs for a wide variety of products.

Over the past 12 months, food prices have risen by 6 percent, the biggest jump in decades.

The Agriculture Department reported Tuesday that this year's corn and soybean harvests will be among the largest in history, though, easing fears that had been fueled after heavy flooding in the Midwest in June.

The new inflation report puts the Federal Reserve in a difficult spot, caught between a desire to keep interest rates low until the economy shows signs of rebounding and the growing threat of inflation.

Private economists said they still believe the Fed will choose to leave interest rates unchanged for the rest of the year, however.

------

AP Business Writer Christopher Rugaber contributed to this report.

[Terra]

Nevada and California, battered by a housing market bust, were the only states to show sales gains in the second quarter compared with a year earlier, according to a report by the National Association of Realtors.

Sales were up 18 percent in Nevada compared with last year, after median prices fell by nearly 24 percent in the Las Vegas area.

We bought and rented out a house earlier this year that went into foreclosure at an absolute steal. We had been looking for another that was a manageable size for our teen son - Small enough he can afford the utilities yet large enough for him to live in comfortably with a roomie. Last week we finally found an absolute gem that someone had poured their heart into with customized Mexican tile and gorgeous woodwork. It needs painting inside and out and a new roof - that's it.

The price after haggling the bank equaled $45 a sq ft on a 9000 sq ft lot with 2 car garage. It's absolutely crazy what houses are selling for here and that deal was far too good to pass up... I just looked at it as investing now in his future - giving him that one little boost that will get him started into adulthood.

Every morning when I hit the new MLS listings there are still between 25-50 new foreclosures each day.

Vegas had or still has the highest rate of foreclosures, but it will also recover faster than the other cities that are being hit so hard.


... I also heard today about a house going up for Auction for ONE DOLLAR and it almost didn't sell. Unreal, I've never seen anything like this mess, I'm glad we don't need to sell our home right now.

... The people responsible for writing these loans to people who in no way could afford them are some of the worst kind of crooks - and that we are paying to bail their companies out, while the executives stuffed their pockets and our elected officials protect them angers me to no end.

[Livyjr]

... The people responsible for writing these loans to people who in no way could afford them are some of the worst kind of crooks - and that we are paying to bail their companies out, while the executives stuffed their pockets and our elected officials protect them angers me to no end.

It is a thing of "energy" to me, Terra ....

"What are you going to put your energy to use today doing?"

People who are "rip-off" artists work at it full time, or as full-time as they can, anyway ....

That is what they put their energy into doing ...

And their "victims" in their turn don't put their energy to use in protecting themselves from being a food source for these predators ...

And I think today that people in America have had the "YOU CAN GET SOMETHING FOR NOTHING" belief inculcated in them from the time that they were born ....

"A DOLLAR AND A DREAM!"

For the scammers, of course, it is THE BIG SCORE ....

And these ready and willing "victims" are to them virtual manna from heaven ...

You don't have to hunt your victims down ....

They willingly come right to your front door to get screwed and fleeced ...

YAHOO!

And the cycle goes on, until we get to here ...

Because for the scammers, the BIG SCORE of yesterday is never big enough ....

So then, there needs to be an even bigger score ....

And if you are going to make the BIG SCORE by ripping off people, or scamming them, then you need people to prey on ....

Predators and prey ...

It is an ages-old relationship ...

BIG FISH EATS LITTLE FISH ...

A long time ago, I came to the conclusion that the only way to beat that equation if I didn't want to be a predator or the prey of one was to get right off of the food chain ....

BUT ....

That was only after having gotten some of my own personal experience with rip-off artists and how persuasive and friendly they can be ....

And I did go in with my own eyes open, but obviously not seeing ...

When I got back to here from Viet Nam, my father had given me a piece of land, but I couldn't afford a house, so I went and looked at "mobil homes" as a way to get shelter for the time being, assuming that i could always improve my "lot in life" as I went along ...

My first concern as a wounded veteran was to get my life back in order and to begin to somehow rehabilitate myself ...

I got sold a bill of goods by a salesman and bought what turned out to be a piece of junk ...

The issue was sheathing under the aluminum siding, and under the metal roofing ....

I specifically asked about that, because it is cold up here and the roof would have to be able to support snow and ice ....

"OF COURSE," the salesman said ...

"WHY, THEY WOULDN'T LET US EVEN SELL THEM UP HERE IF THEY WEREN'T MADE FOR THIS CLIMATE!"

And then he took me to the front of the trailer and showed me a sticker on it that said, "meets with all applicable codes and regulations" ...

Well, there weren't any ....

And there was no sheathing ...

I found that out after the roof began leaking like a sieve in the first winter, when I called the state Attorney General and was told that nobody in state government up here gave a damn about what kind of cheap **** people like me were getting sold ...

The state didn't regulate trailer sales or construction, and the sticker meant nothing, because there were no codes for trailer construction ...

So there I was ....

It is how it goes, Terra, since it did ....

I now call it THE PASSION PLAY, all of this what is going on now ....

All of this what is making you feel anger ...

I avoid anger myself to the greatest degree that I can because it ***** up my health in a hurry ....

But it is still there ...

But more than that is INCREDULITY ...

The sense of disbelief that with all of our laws and rules and regulations and what-not, that this mess could even have happened, and now that it has, it is being covered over, rather than being ripped apart like a log full of grubs being confronted by a hungry bear ....

INCREDULITY or a sense of disbelief at the POLITICAL POWER that is wielded in this, OUR alleged country, by these SCAMMERS and rip-off artists ....

They in many ways, Terra, are the upper crust of our society over here ....

It is a powerful statement, all of this what is going on right now ...

THE PASSION PLAY ....

And so ...

[Livyjr]

"Industrial output up 0.2 percent in July - July industrial output rose by a better-than-expected 0.2 percent despite utility decline"

By MARTIN CRUTSINGER, Associated Press

Last updated: 12:32 p.m., Friday, August 15, 2008

WASHINGTON -- Industrial output rose in July at a slightly better pace than expected as a further rebound in the auto industry offset a big plunge in output at the nation's utilities.

The Federal Reserve reported Friday that industrial production edged up 0.2 percent last month.

That was half the pace of the 0.4 percent gain in June, but it did surpass analysts' expectations for flat production in July.

The increase reflected a 0.4 percent gain in output at manufacturing plants.

Motor vehicles and parts showed the biggest increase in manufacturing, advancing for a third straight month.

These gains were not seen as signaling a sustained rebound, however, given the problems facing the auto industry this year.

Instead, the rebound in auto activity was viewed as a temporary improvement because a strike ended at parts supplier American Axle.

Even with the recent gains, production at auto plants remained 10.4 percent below where it was a year ago as automakers struggle with slumping demand due to the weak economy and the big spike in gasoline prices, which has hurt sales of their once-popular sport utility vehicles.

The modest increases in June and July production had followed three straight monthly declines.

The manufacturing sector has been battered by the prolonged slump in housing and the multiple problems in the auto industry.

Many economists viewed the slight strength in the past two months as temporary given what's ailing the broader economy.

"Unfortunately, housing activity continues to worsen, job losses continue, inflation is rampant, credit is more difficult to obtain and firms remain cautious about capital investments," said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI.

"We think manufacturing will remain in a slow, shallow, downward trend until early 2009."

Other analysts noted the industries that did well in July were for the most part connected to exports, which have been booming this year as declines in the dollar have boosted the competitiveness of U.S. products in foreign markets.

"Without the lifeline from the rest of the world, the manufacturing picture would be a lot darker," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm.

The 0.4 percent increase in manufacturing helped to offset a big 1.9 percent drop in output at utilities, a decline which followed a 2.3 percent surge the previous month.

Both changes were seen as weather-related.

The big June jump came from hotter-than-normal weather requiring increased electricity production.

The decline in July reflected a return to more normal weather which meant a drop in utility output compared to the previous month.

Output in the mining sector rose a strong 0.9 percent, matching the increase of the previous month.

The gains in this sector have been paced by strong activity in oil and natural gas production.

With all the changes, the nation's factories, mines and utilities operated at 79.9 percent of capacity in July, up slightly from June when the operating rate was 79.8 percent of capacity.

That level remained below the average operating rate of 81 percent seen over the last 25 years.

While the surge in U.S. export sales has been a bright spot, there is concern that this boom may not last given spreading weakness in major overseas markets in Europe and Japan.

[Livyjr]

HERE IS A REAL GOOD LOOK AT WHY NOT HAVING CORRUPT ENGINEERS AND PUBLIC OFFICIALS IN OUR COMMUNITIES IS A DESIRABLE THING, HERE IN OUR AMERICA ...

"Ala. county faces biggest US municipal bankruptcy - Alabama county facing biggest municipal bankruptcy in US history; sewer project created a mess"

By JAY REEVES, Associated Press

Last updated: 3:22 p.m., Friday, August 15, 2008

BIRMINGHAM, Ala. -- Alabama's largest county appears headed for the biggest municipal bankruptcy in U.S. history, a $3.2 billion mess created by the nation's credit crunch and a colossal, corruption-riddled sewer project.

Politicians in Jefferson County -- which has 658,000 residents and includes the state's biggest city, Birmingham -- are struggling to find a way out of the jam, but they have mostly abandoned talk of raising taxes and fees after running into fierce opposition at raucous public meetings.

On Thursday, with their options running out, the county commissioners all but threw up their hands and decided to let the voters weigh in on Election Day with a nonbinding referendum on whether to file for bankruptcy.

"The entire nation is watching to see how we handle this," said Jeff Sewell, an assistant county attorney.

"This is a question of character as well as one of finance."

A bankruptcy filing by Jefferson County would shatter the previous record of $1.7 billion, set by Orange County, Calif., in 1994.

A Chapter 9 bankruptcy filing would put interest payments and lawsuits against the county on hold, giving it time to put its finances in order and negotiate more favorable terms with its creditors.

But it could also lead to tax increases, spending cuts and layoffs among the county's 4,000 employees.

And it could damage the county's credit rating for years to come, making it more expensive to borrow money and more difficult to finance the infrastructure improvements that can draw industries to Birmingham, a banking and medical-research center once known as the Pittsburgh of the South, back when it was a steelmaking powerhouse.

The county got into trouble after it was forced by the courts to undertake a huge upgrade of its sewage system to meet federal water standards and stop raw and partially treated waste from being dumped into streams.

Acting at the suggestion of outside advisers, the county borrowed money for the project on the bond market in a complex and risky series of transactions.

When the mortgage crisis hit and banks began tightening up on their lending, the interest rates on the debt ballooned.

The nearly completed sewer project, under construction since 1996, is now burdened with a debt of $3.2 billion.

The crisis has come amid a federal bribery-and-kickback scandal involving contracts awarded on the project.

Twenty-one people have been convicted in the still-unfolding case, including contractors, engineers and two former county commissioners.

Federal investigators say some of the deals by which the project was financed were corrupt, with politicians suspected of steering investment business to friends for kickbacks.

But they say the corruption didn't directly lead to the runaway debt.

Because of the project's costs, water rates have gone up 329 percent since 1997, with the average customer now paying about $65 a month.

Those increases, combined with the investigation of possible sweetheart deals, have left taxpayers angry and distrustful.

"I'm just really disgusted with the incompetency of these officials," said resident Frank Denney, an engineering consultant.

The graft investigation reached a shocking point last year with the bribery conviction of former Commissioner Chris McNair, whose daughter was one of the four black girls killed in an infamous racist church bombing in Birmingham in 1963.

McNair, who oversaw the sewer work from 1996 until he resigned in 2001, was sentenced to five years in prison.

Among those still under suspicion is former Commissioner Larry Langford, who was elected mayor of Birmingham last year in a landslide.

He has denied any wrongdoing.

The county has won repeated extensions from its creditors since March, with the latest one running through mid-November.

After that, it is unclear how long the crisis can go on.

Jefferson County isn't alone with money problems.

Leaders in Vallejo, Calif., voted to file for bankruptcy in May, citing a $16 million deficit blamed on declining tax revenue linked to a large number of foreclosures.

A decade ago, Orange County cut its budget and workforce to help it climb out of bankruptcy, and Vallejo wants to void its labor contracts to save money, a move that is being fought by the unions in court.

A majority of the Jefferson County Commission has come out against filing for bankruptcy.

"I am firmly convinced that bankruptcy or default would irreparably harm this county," said chairwoman Bettye Fine Collins.

The head of the state pension system, David Bronner, has instead proposed that it buy the sewer system for as much as $1.4 billion to give the county an immediate infusion of cash so that it can put its affairs in order.

Then, after a few years, the sewer system would be sold back to the county.

"It's a nice, safe utility."

"But it has to be clean."

"It can't have $3.2 billion in debt on it," Bronner said.

[Livyjr]

"Retailers face frugal shoppers through 2009 - Retailers' earnings reports show widening gap between discounters and apparel sellers"

By ANNE D'INNOCENZIO, Associated Press

Last updated: 5:52 p.m., Friday, August 15, 2008

NEW YORK -- The lower profits and muted outlooks this week from retailers such as J.C. Penney Co., Macy's Inc. and Nordstrom Inc. are heightening concerns among investors that shoppers' focus on necessities and buying at discounters could linger well into next year.

At least one mall-based merchant -- Tween Brands Inc. -- expects shoppers' fixation on low prices to remain even when the economy rebounds.

"I don't see how consumer spending turns around anytime before the second half of 2009," said Ken Perkins, president of research company RetailMetrics LLC.

"Where are the new sources of funds coming from for the consumer?"

"Clearly, the earnings reports show that we are living in a discretionary versus nondiscretionary world."

The divide, seen this week as discounter Wal-Mart Stores Inc. posted higher earnings and raised its outlook, will likely be on display again next week as luxury retailer Saks Inc. and Gap Inc. are expected to announce sluggish results.

Even Target Corp., which is set to report second-quarter results Tuesday, has stumbled in recent months as its stores have a heavy emphasis on clothing and home furnishings.

Penney's chairman and chief executive, Myron "Mike" Ullman, told investors after the company reported a 36 percent drop in second-quarter profits and lowered its outlook that he expects "the environment to remain difficult" into next year.

"We know our customers are struggling," said Ullman, who believes that back-to-school sales will be weaker and also occur later this year than they did a year ago.

While oil prices have declined in recent weeks, gas at the pump still remain high.

And shoppers are contending with higher prices on daily basics such as food that are not keeping up with their wages.

The deteriorating economy overseas, which has been dragged down by U.S. economic woes, could also further derail the job market here, Perkins said.

But even low-price operators like Wal-Mart have their own challenges.

The company raised its full-year earnings forecast after second-quarter profit rose more than expected, helped by tight inventory controls and a renewed focus on low prices that is attracting financially squeezed shoppers around the world.

But the company said sales at established U.S. stores during the current quarter would grow just 1 percent to 2 percent, a sharp decline from the second-quarter's 4.5 percent increase as the benefits of the federal stimulus checks dry up.

Same-store sales are considered a key indicator of a retailer's health.

The good news for retailers is that while they can't control the economy, they can monitor their expenses, particularly by reducing inventory.

Such moves helped Penney and others to reduce markdowns on the selling floor, resulting in better-than-expected profits.

But retailers can only slash so long.

At some point, they need shoppers to splurge on items like fashions.

And the latest reports showed consumers' growing appetite for cheaper apparel.

Nordstrom said that conditions at its mainstay department store business remain difficult, while its discount stores called Nordstrom Rack have maintained strong sales growth.

Nordstrom's same-store sales fell 9 percent in the second quarter, while Nordstrom Rack enjoyed a 6.3 percent gain.

Tween Brands saw same-store sales drop 11 percent at its Limited Too stores in the second quarter, but rise 3 percent at its lower-priced Justice stores.

The company is converting nearly 600 Limited Too stores to the Justice brand in what Perkins called a "bold" move.

Penney predicted that total sales would drop by a low-single digit percentage in the third quarter and that same-store sales would drop in the mid-single digits in the same period.

The company earned $117 million in the three-months ended Aug. 2, down from $182 million a year earlier.

Net sales fell 2.5 percent to $4.28 billion, while same-store sales dropped 4.3 percent.

Penney said it expects third-quarter earnings to be 70 cents to 75 cents per share.

Analysts polled by Thomson Reuters project 76 cents per share.

Like other department stores, Penney is stepping up the number of exclusives it has in the store to differentiate itself from competitors.

For the back-to-school season, Penney introduced six new lines aimed at teens and young adults, compared with only one last year.

Earlier this year, Penney unveiled American Living, an exclusive collection that is part of an alliance with Polo Ralph Lauren Corp.

The collection is the biggest brand launch in Penney's history.

Ullman told investors that the back-to-school launches had "good initial customer response."

But the company is working with Polo Ralph Lauren to lower price on some American Living items that didn't fare well.

[Livyjr]

THIS FOLLOWING IS A STORY THAT I HAVE A PERSONAL CONNECTION WITH AS A NEW YORK STATE RESIDENT AND ALSO AS AN ENGINEER IN NEW YORK STATE ....

BY THE LAWS ON ADVERSE ENVIRONMENTAL IMPACTS IN NEW YORK STATE WHICH HAVE BEEN LAWS SINCE THE 1970's, THIS STORY SHOULD NEVER HAVE BEEN ....

THE LAWS AS THEY ARE WRITTEN WOULD HAVE PREVENTED THIS FROM HAPPENING ....

BUT TO ENCOURAGE MORE AND MORE DEVELOPMENT, THE PROTECTIVE LAWS WERE SCRAPPED ....

I PREDICTED EXACTLY THIS HAPPENING TWENTY YEARS AGO IN 1988 AS A RESULT OF THE NEGLIGENT SCRAPPING OF THOSE LAWS WHEN IT WAS MY DUTY AS A PUBLIC OFFICIAL IN RENSSELAER COUNTY WHERE THIS JUST HAPPENED TO PREVENT THIS FROM HAPPENING BY APPLYING ENGINEERING PRINCIPLES AND OVERSIGHT TO DEVELOPMENT IN NEW YORK STATE ......

TO PREVENT THIS FROM HAPPENING, IT WAS NECESSARY TO SAY NO ....

NO WAS UNACCEPTABLE, HOWEVER ....

NO GOT IN THE WAY OF BIG MONEY IN PLAY ....

FOR SAYING NO AND MEANING IT, I WAS LOCKED OUT OF MY OFFICE .....

THE BULK OF MY RECORDS AND EVIDENCE WERE DESTROYED ....

AND I HAD A CAMPAIGN OF VIOLENCE UNLEASHED AGAINST ME WHICH LASTS RIGHT TO THIS DAY ....

AND NOW AS PREDICTED, THE CHICKENS COME HOME TO ROOST ....

AND THIS IS ONLY THE BEGINNING ...

And so ...

"Rensselaer mayor blames development for flooding - Homes and business must be inspected before National Grid restores service"

By KENNETH C. CROWE II, Staff writer, Albany, New York Times Union

Last updated: 10:53 a.m., Tuesday, August 12, 2008

RENSSELAER -- Mayor Dan Dwyer blamed rapid development in East Greenbush and North Greenbush for adding to the storm runoff that spilled into tributaries of the Hudson River Monday and flooded low-lying sections of the city.

"There is a lot of growth going on up there."

"It's more than can be handled," Dwyer said at a news conference this morning where he assessed damage from a storm that left more than 30 flood victims looking for help from the Red Cross.

"Flood damage eclipses $20M - Rensselaer mayor says city will pursue government funds to pay for cleanup after Monday deluge"

By KENNETH C. CROWE II, Staff writer, Albany,New York Times Union

First published: Friday, August 15, 2008

RENSSELAER - The city suffered more than $20 million in damage Monday when floodwaters rushed down Quackenderry Creek, through the Hollow neighborhood and into downtown, Mayor Dan Dwyer said Thursday afternoon.

The exact amount hasn't been calculated yet, but the tally is growing, Dwyer said.

"It's over $20 million," Dwyer said.

The estimate includes damage to the city's new public works garage on Willow Street, city highway equipment caught in the flood, the cost of clearing creek of debris and silt, repairs to city streets and other infrastructure, replacement of destroyed culverts and other problems caused by the high water Monday afternoon.

"We're going to have to get the help from the government," Dwyer said referring to state and federal assistance.

From pp.45-47, PLANNING THE SUBDIVISION AS PART OF THE TOTAL ENVIRONMENT, Division of General Engineering and Radiological Health, New York State Department of Health, Hollis S. Ingraham, Commissioner - 1974

SECTION V - DRAINAGE AND FLOOD CONTROL

Every realty subdivision (five or more lots of under five acres each) must provide adequate facilities for the proper drainage of natural waters from the land, the prompt drainage of storm and thaw waters from the site, and the prevention of inundation and flooding conditions caused by rising waters in the flood plain of surface streams and other bodies of water.

In short, the subdivision must be located on relatively high and dry ground or preparation of the site must provide this protection.

In addition to protection against surface waters, the area must be located where the ground water level is sufficiently low to assure freedom from difficult structural conditions for homes and other buildings and for private and public subsurface utilities and facilities such as on-site sewage treatment plants.

The availability of ground water for water supply purposes must not be affected, either in terms of quantity or quality.

OBJECTIVES OF DRAINAGE AND FLOODING CONTROL FOR SUBDIVISIONS

No subdivision will be approved if the soil and the general geological and terrain conditions fail to give assurance that the site is dry and capable of being kept dry and free from unwanted standing water and swampy areas.

Dwelling sites shall not be subject to partial or complete inundation or flooding by rising waters in streams, lakes or other bodies of surface water.

Approval or disapproval of subdivision development plans must be based on firm knowledge of local geological and topographic conditions, the effect of artificial grading and other topographic modifications on drainage, soil erosion and percolation conditions.

Consulting engineers, planners and developers must recognize that the conversion of open land into an urbanized community will result in the replacement of permeable land areas with impervious buildings and roofs, paved streets and parking lots.

Inspection of sites and ground water conditions by developers, followed by similar on-site inspections by local public health engineers and other officials are intended to prevent development investments in areas that do not assure optimum environmental conditions.

ENVIRONMENTAL FACTORS AFFECTING DRAINAGE AND FLOOD CONTROL FACILITIES

The effects of draining of the land and of flood control are not limited to the area being utilized for the subdivision.

Site conditions are affected by the total environment of the entire region.

Similarly, the methods used to assure "high and dry" conditions in the subdivision can and often do affect part or all of the entire region of which the residential development is a part.

Water drained from one area, such as from swamps, quarries, pits or other low-lying land, will flow into nearby waters or onto adjoining land areas.

The creation of new impervious areas can result in the shedding or rain water or freshet waters to low points off the development site.

Changes in topography caused by massive earth movements in developing a subdivision site can affect natural flows in other sections of the same water basin, just as such practices in neighboring areas can affect the subdivision site.

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In similar manner, the development of re-charge basins and impoundment areas, off-site, adjacent to the subdivision or upstream on the same watershed, may impair the flow of surface waters from the subdivision site or may raise the groundwater level and affect basements of structures or subsurface utilities and facilities.

Such off-site and on-site facilities must be planned and operated in the manner that will assure proper environmental conditions in the total region.

The location of subdivision housing in known flood plains will be prohibited.

Long-range regional water resources plans will show whether lands now free from flooding will become subject to such conditions because of future water resources developments in the watershed.

*********

These and other factors must be weighed in planning and developing subdivisions.

DESIGN GUIDELINES FOR DRAINAGE AND FLOOD CONTROL ACTIVITIES

The points of discharge of surface waters must be chosen with care to prevent inundation or other damage to nearby lands.

Changes in land contour should be discussed with local planning agencies, public works officials or other involved authorities.

This post has been edited by Livyjr: Aug 17 2008, 05:34 PM