« December 31, 2006 - January 06, 2007 | Main | January 14, 2007 - January 20, 2007 »
I didn't realize the Democrats had re-captured the White House in the 2006 elections. How else to explain the following headlines.
#1. The administration is effectively raising taxes on big oil companies, courtesy of John J. Fialka and Russell Gold of the Wall Street Journal:
The Bush administration said it is raising royalty payments it charges producers of oil and natural gas in the deeper waters of the Gulf of Mexico, apparently to appease critics in Congress who say the government has failed to collect all of the royalty payments owed it from past Gulf production.The increase, announced by Interior Secretary Dirk Kempthorne, would raise the required federal payment on new leases from the current equivalent of one barrel out of every eight produced to one barrel out of six. The higher rate will boost federal royalty revenues by $4.5 billion over 20 years, according to the Interior Department.
2. The National Oceanic and Atmospheric Administration says we should worry about global warming. Courtesy of Andrew Revkin in the New York Times:
A lot of government scientists have said it.But until yesterday, it appeared that no news release on annual climate trends out of the National Oceanic and Atmospheric Administration under the Bush White House had said unequivocally that a buildup of greenhouse gases was helping warm the climate.
The statement came in a release that said 2006 was the warmest year for the 48 contiguous states since regular temperature records began in 1895. It surpassed the previous champion, 1998, a year heated up by a powerful episode of the periodic warming of the tropical Pacific Ocean by El Niño. Last year, another El Niño developed, but this time a long-term warming trend from human activities was said to be involved as well.
“A contributing factor to the unusually warm temperatures throughout 2006 also is the long-term warming trend, which has been linked to increases in greenhouse gases,” the release said, emphasizing that the relative contributions of El Niño and the human influence were not known.
A link between greenhouse gases and climate change was also made in a December news conference by Dirk Kempthorne, the secretary of the interior, as that agency proposed listing polar bears as threatened under the Endangered Species Act.
Posted by dan at 11:03 AM
Barry Ritholtz passes along this howler.
California Company Announces ‘No Mortgage Payment for 12 Months’
RISMEDIA, Jan. 8, 2007-How does "No Mortgage Payment for One Year" sound? Mortgage Payment Deferral, Inc., in Roseville, California has just released a patent pending mortgage program that allows homeowners to defer anywhere from 3 to 36 months of their mortgage payments. The new program is called 12 Month Deferral or 12MoDef. What's more, this new product can be applied to ANY type of refinancing loan."I was inspired to create 12MoDef with the idea that a year without mortgage payments could give someone financial freedom and stability for a better future," says Jeremiah Miller, President of Mortgage Payment Deferral, Inc. "Everyone has their own reason for using 12MoDef. Many of our clients are making job changes, starting families or struggling with a new business venture; while some are being crushed by meeting the monthly financial burden of their mortgage payment AND credit card debt. A year without the stress of a mortgage payment allows people to reassess their financial situation and regain control of their life again." Miller notes that for clients close to retirement age, the freedom of 12MoDef, allows them to take advantage of "maxing out" their 401K contributions as well. . .
12MoDef works by setting aside some equity of a home into a trust account for the benefit of the homeowner. Each month, the appointed trustee ensures that the mortgage payment is made to the correct lender. The homeowner receives a monthly statement which combines their current mortgage statement and trust account statement. During the payment deferral period, the homeowner keeps more of their income each month, is guaranteed on-time mortgage payments, and earns an aggressive rate of interest on the money in the trust account. At the end of the deferral period, the trust account is closed; the borrower is given all of the earned interest and they resume making their mortgage payment.
Mortgage Payment Deferral, Inc. will be offering 12MoDef to selected mortgage brokers and banks on a nationwide basis in 2007. Until then, the only lender licensed to offer 12MoDef is Harbinger Mortgage Solutions, a licensed mortgage broker located in Northern California.
Noted without comment.
Posted by dan at 09:20 AM
the one-eyed man is king. D.R. Horton reports preliminary results for the quarter that just ended. The bad news: compared with the prior year quarter, the number of orders was off 23.5 percent, and the dollar value of orders was off 27.5 percent. The average price of a home on which an order was taken in the quarter was about 5 percent lower than in the year-before quarter. None of this can be good for margins.
The good news: the cancellation rate was *only* 33 percent in the quarter than ended December 31, 2006, compared with 40 percent for the quarter than ended at the end of September 2006.
Posted by dan at 11:01 AM
An interesting potential byproduct of the cooling housing market: fewer start-up businesses. The Financial Times reports:
The Global Entrepreneurship Monitor, the world's most comprehensive study of start-up activity, found the percentage of people who were either thinking of going into business or had just started a new venture slid substantially in the US last year.Rebecca Harding, executive director of GEM, said the decline in house prices had a particular impact in the US because people felt they had less of a financial cushion to support a business risk.
Posted by dan at 10:55 AM
Who is the latest tree-hugging, earthy-crunchy, image-concerned institution to become obsessed with energy conservation, biofuels, and general earth-friendliness? The U.S. military. Masood Farivar reports in the Wall Street Journal:
In the year ended Sept. 30, the Defense Department spent, by its estimate, $13 billion on fuel amounting to 134 million barrels of oil for the year, up from 107 million barrels of oil in 2000. The wars in Afghanistan and Iraq led to a surge in fuel use in that period, according to the Defense Energy Support Center, a government agency that buys fuel from private-sector companies and supplies it to the armed forces.The most recent figure is more than the entire nation of Sweden . . .
As energy prices have surged and volatility has increased in important oil-producing regions, the military is redoubling efforts to rein in consumption through conservation, increased fuel-efficiency measures and greater use of alternative energy. The effort picked up in earnest following the 2005 Atlantic Ocean hurricanes, which devastated the Gulf Coast, lifted prices to records and highlighted the vulnerability of supplies. . .
The Pentagon is planning to spend more than $2 billion in the next five years on energy initiatives, which could help spur development of energy sources for use in other sectors. "The contribution [the military's efforts] will make will be in leadership rather than actual conservation," said Rep. Roscoe Bartlett, a Maryland Republican, who last year formed a bipartisan panel called the Defense Energy Working Group to study the issue. . .
The effect of the Pentagon's interest in conservation and alternative energy can be seen from military bases and hangers to the battlefields of Iraq and Afghanistan. In late July, Marine Corps Maj. Gen. Richard Zilmer, commander of U.S. forces in Iraq's insurgent al-Anbar province, asked for a shipment of mobile solar panels and wind turbines to supplement gas-guzzling generators at bases under his command.
Cutting "the military's dependence on fuel for power generation could reduce the number of road-bound convoys" and U.S. casualties resulting from insurgent attacks on U.S. supply convoys, Gen. Zilmer wrote in a memo. The Army's Rapid Equipping Force, the unit responsible for processing such requests, has contracted SkyBuilt Power of Arlington, Va., to build four hybrid power stations for delivery this spring.
Posted by dan at 10:35 AM
The Wall Street Journal today runs an excerpt from what looks to be a fascinating new book by Stephanie Capparell on Pepsi's efforts to recruit an African-American marketing team in the late 1940s and to expand its presence in the African-American market.
Posted by dan at 10:28 AM
Another raging, anti-capitalist leftist for universal health care, or something like it: Republican California Governor Arnold Schwarzenegger. Pretty soon we'll start publishing our own list of Republicans, successful businessmen, and CEOs for national health care. It already includes Starbucks CEO Howard Schultz, billionaires Mortimer Zuckerman and Wilbur Ross, and Republican candidate Mitt Romney. Send your nominations to moneybox@slate.com
Posted by dan at 10:17 AM
My latest in Slate, on Apple's options backdating episode.
Posted by dan at 10:15 AM
Justin Lahart continues the "don't call the housing bottom just yet" meme in today's Wall Street Journal. His reason: the large number of unoccupied homes for sale.
Here is one reason to be careful about calling a bottom now. A large number of homes for sale are unoccupied.In the third quarter, there were 5.7 million vacant housing units for sale or rent, accounting for a record 4.6% of all U.S. homes. The average in the 1990s was about 3.5%.
To get this ratio back to normal, 1.3 million vacant homes would need to be occupied. For comparison sake, economists polled by Blue Chip Economic Indicators expect construction to begin on about 1.6 million homes this year. With so many empty homes out there, one wonders why builders would bother breaking ground on new ones.
Why indeed? Check out the data on housing permits issued. In November, they were down 31.3 percent from November 2005.
Posted by dan at 09:49 AM
There they go again. As part of its continuing crusade to make it seem as if everybody is doing great in the current economy, the Wall Street Journal editorial page once again resorts to dishonest numbers. On Saturday, the editors wrote:
"As for all the inevitable political complaints that these new jobs are all lousy, average hourly non-supervisory wages have now climbed 4.2% over the past 12 months, or twice the official rate of inflation."
Sigh. Again with the averages? In an economy in which gains are not distributed equally, charting averages can be quite misleading. It would be far more useful to look at median wages. Is there any evidence that median wages, which haven't grown much, if at all, in real terms over the last several years, are rising at twice the rate of inflation?
Posted by dan at 08:41 AM
A strange article by Robert Pear in Sunday's New York Times. He leads off the piece thusly:
Democrats want the government to negotiate lower drug prices for Medicare beneficiaries, but insist that the government should not decide which drugs are covered.Many economists and health policy experts see this as a paradox. The only way to get big savings and discounts, they say, is to steer patients to certain preferred drugs.
The article goes on to quote several peoiple, but not many economists and health policy experts who see this obvious paradox. The sources quoted in the piece are two Congressmen (Rep. Rahm Emanuel and Rep. John Dingell), Dr. Alan M. Garber, director of the Center for Health Policy at Stanford University (a health expert), AARP head William Novelli, and James R. Lang, former president of Anthem Prescription Management. Three of the sources don't see the obvious paradox. One of them, health expert Alan Garber does. So does Mr. Lang, a veteran of a business that would be harmed if the government was a better negotiator on its own behalf. So, where are the economists and health policy experts who see this paradox?
Posted by dan at 08:36 AM
A two-fer in yesterday's New York Times: My "Economic View" column on how the government overstates new home sales, and a piece on investing in in South Africa.
Posted by dan at 07:51 AM