The Vilages’
DAILY SUN
October 28, 2009
Gas prices climb
as crude oil futures fall
By DAVID R. CORDER, DAILY SUN
THE VILLAGES – Gasoline prices hit a new recent high in The Villages while crude oil future prices settled lower Monday for the first time in days.
The dichotomy left consumers and market watchers wondering whether the lower crude oil prices signaled a return to relative price stability in the wake of this recent unexpected run-up in local gasoline prices.
“We do not know if this is just a one-day anomaly or whether this is something that really reflects a turnaround in crude prices,” AAA Auto Club South spokesman Gregg Laskoski said.
Prices ranged from around $2.69 a gallon for unleaded regular gasoline Monday in The Villages as crude oil futures settled down $1.82 on the New York Mercantile Exchange at $78.68 a barrel.
The price drop in crude oil futures came as the U.S. dollar traded up against the European dollar, the Euro, CME Group, parent of the NYMEX and Chicago Board of Trade, reported Monday.
Anytime the dollar trades lower, speculative investment traders typically seek profits in the commodities markets, said Jim Smith, president and chief executive officer of the Florida Petroleum Marketers & Convenience Store Association.
Such influence concerns market watchers like Smith because they cite speculative investment activity as the reason for the record high crude oil and gasoline prices recorded a year ago this summer.
The market dynamics have not changed, Smith argued, with U.S. crude oil inventories still up and motorist demand for fuel still down.
Such an aberration in supply-demand economics tells Smith other forces are at work — speculative investors.
“Where oil speculators are concerned, the phrase would be any port in the storm,” Smith said of their investment market strategies. “Quite frankly, they’ve entered back into the marketplace. And they’ll take advantage of the marketplace anyway they can.”
Concern over the recent run-up in prices poses serious complications as the U.S. economy recovers, noted David Denslow, a University of Florida professor and research economist.
If gasoline prices return to summer 2008 levels of $3 to $4 a gallon, Denslow acknowledged, consumers and businesses could face even more dire consequences this time around.
Neither might have the resources to absorb that type of price increase, Denslow said, which could result in even greater job and business losses.
“That’s money that’s not available for normal expenditures such as food, clothing, school and health-care costs,” Denslow said. “So it does hurt retail sales.”
It would be even worse for restaurateurs.
“Restaurants are particularly hurt, because people have less discretionary income,” Denslow said. “The restaurants already are confronted with an increase in minimum wage costs that took effect in January.”
That could result in fewer jobs, Denslow said.
“At the low end, it’s become very hard to get jobs,” Denslow said. “So this would hurt.”
However, Denslow remains optimistic about the dynamics of this recent influx of speculative investment in the oil futures markets.
“I don’t think the huge funds will be able to hold up the price of oil all that much,” Denslow said. “They’re gambling. They’re putting money on the bet that the price is going to rise. That’s a bet the world economy is going to grow very fast. It doesn’t grow that fast, and they lose.”
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David R. Corder is a reporter with the Daily Sun. He can be reached at 753-1119, ext. 9066, or at david.corder@thevillagesmedia.com.
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October 28, 2009
Obama financial reforms
advance in Congress
Reuters – President Barack Obama delivers remarks at a Democratic Senatorial Campaign
Committee (DSCC)/ Democratic …
WASHINGTON (Reuters) – The Obama administration made gains on Tuesday in its push for U.S. financial reform, unveiling a landmark bill to tackle systemic risk in the economy and winning congressional committee approval for a measure to expose hedge funds to more government scrutiny.
The systemic risk bill would grant vast powers to a new systemic risk regulatory council, the Federal Reserve and the Federal Deposit Insurance Corp to monitor and address risks to economic stability posed by shaky financial holding companies.
Those deemed severely undercapitalized by the council could be restructured or even shut down by regulators. Managers could be dismissed, credit exposures limited, pay and bonuses restricted, acquisitions and new ventures blocked.
In a measure meant to reverse decades of weakened oversight of Wall Street and the banks, the bill aggressively asserts government power to prevent bailouts like last year’s rescues of AIG, Citigroup and Bank of America.
It also attempts to shift the cost of future financial stabilization efforts toward industry and away from taxpayers by forcing financial firms with more than $10 billion in assets to foot the bill for any losses from Federal Deposit Insurance Corp actions to resolve the problems of failing firms.
President Barack Obama said on Tuesday the bill was urgent and crucial to prevent excessive risk-taking by big firms.
“We cannot meet these tests with a set of small changes at the margin,” Obama said in a letter to Barney Frank, chairman of the House of Representatives Financial Services Committee, that also stressed the importance of building a stronger financial system in which no firm was “too big to fail.”
If approved by Congress, where industry lobbyists and Republicans were certain to push back against it in weeks ahead, the bill would form the centerpiece of a sweeping effort by Democrats to tighten bank and capital market oversight.
After the worst financial crisis since the 1930s, Treasury Secretary Timothy Geithner told a packed room of Wall Street dealers and bankers on Tuesday they could not look America in the eye and argue that financial regulation is fine as it is.
Geithner said the financial system was tragically fragile after the crisis and the government must respond by adding new regulations and strengthening old ones.
“It’s a war of necessity, not a war of choice,” he said at the Securities Industry and Financial Markets Association annual meeting in New York. “And it’s a just war.”
Another part of the administration’s reforms — requiring hedge funds and private equity firms to register with the government — won approval from Frank’s committee on Tuesday.
The committee already has approved bills to form a new watchdog agency to protect consumers of mortgages and credit cards, and to regulate over-the-counter derivatives.
The full House was expected to vote as early as Thursday on the financial consumer watchdog bill, also a central piece of the administration’s reform program.
Frank will meet this week with House Agriculture Committee Chairman Collin Peterson to reconcile their panels’ OTC derivatives bills, said Commodity Futures Trading Commission Chairman Gary Gensler on Tuesday at a roundtable meeting.
The CFTC is working with both panels, which are targeting a vote on the House floor for a single bill next week, he said.
Frank’s committee was expected to vote on Wednesday on a bill to regulate credit rating agencies. The panel put off for now a proposed bill to set up a new National Insurance Office to monitor insurers, which are now policed at the state level.
While House Democrats have been making steady progress on financial reforms, despite stiff resistance from lobbyists and Republicans, the Senate has been moving very slowly.
Key lawmakers in the upper chamber of Congress are still far apart of key issues, including the consumer watchdog, known as the Consumer Financial Protection Agency, aides said.
—–
(Reporting by Kevin Drawbaugh, Rachelle Younglai, Lisa Lambert, Ross Colvin and Charles Abbott, with Al Yoon and Walden Siew in New York; editing by Carol Bishopric)
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October 29, 2009
The recession may be over at last
— so what now?
AP – In this Oct. 27, 2009 photo, a contractor worker installs a sprinkler system that uses recycled water …By JEANNINE AVERSA, AP Economics Writer – Thu Oct 29, 6:09 pm ET
WASHINGTON – After a record four straight losing quarters, the economy finally grew again. It was hardly a boom, and it was almost all because of government spending. But it was enough to change the question from when the recession will end to whether the recovery will hold.
Unlike past rebounds that were driven by the spending of everyday Americans, this one appears to hinge on spending by businesses, foreigners and — until it runs out — the government.
Helped in large part by federal support for spending on cars and homes, the economy grew at an annual rate of 3.5 percent from July through September, the government said Thursday.
It was the first time the economy grew at all since the spring of 2008, and one economist, Brian Bethune of IHS Global Insight, estimated it would have been more like an anemic 1 percent without the popular Cash for Clunkers rebates and an $8,000 tax credit for first-time homebuyers.
But the government help is only temporary, and without it, consumer spending is likely to weaken. If shoppers clam up as credit stays tight and jobs remain scarce, the economy could tip back into recession.
President Barack Obama called the report “welcome news,” but acknowledged that “we have a long way to go to fully restore our economy” and recover from the deepest and longest slump since the 1930s-era Great Depression.
The return of economic growth puts the White House in a delicate position: The president wants to take credit for ending the recession, but unemployment is still causing pain and anxiety throughout the country.
Millions have yet to feel a benefit from the recovery in the form of a new job or even an easier time getting a simple loan. Even those with jobs are reluctant to go on a spending spree. The values of their homes and 401(k)s remain shrunken.
“The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well,” Obama said.
The rebound ended the record streak of four straight quarters of economic contraction and gave the stock market its best day in months. The Dow Jones industrial average gained nearly 200 points.
Whether the recovery can continue after the government supports are gone is unclear. Economists predict growth will be slower as the benefit of the $787 billion stimulus package fades.
And next year could be even slower than that. A rising number of analysts say the economy will grow at a 1 percent rate in the first quarter — perhaps more if Congress extends the tax credit for homebuyers.
Christina Romer, Obama’s chief economist, has acknowledged that the government’s stimulus spending has already delivered its biggest economic jolt.
Federal government spending rose at a rate of 7.9 percent in the third quarter, on top of an 11.4 percent rate in the second quarter. And businesses increased spending on equipment and software at a 1.1 percent pace, the first increase in nearly two years.
For now, the economy will have to keep counting on businesses replenishing their depleted stockpiles and replacing outdated equipment.
“A good part of the demand we’re seeing is because companies have to reorder to replenish inventories,” said Herb Goetschius, president of McNichols Co., a Florida maker of metal gratings and other products. “Because they can’t build new plants right now, they are spending more on repairs and maintenance.”
Businesses that slashed their stockpiles of goods in the second quarter cut them more slowly from July to September. Now that inventories are at rock-bottom levels, even the smallest increase in demand will probably lead factories to produce more.
Helped by a cheaper dollar, exports of U.S.-made goods to foreign customers should help support the recovery, analysts said — particularly as economies improve in Asia and Europe. A modest recovery in U.S. housing will likely contribute, too.
“Those will be the driving forces of this recovery,” said economist Ken Mayland of ClearView Economics. “I think this is one recovery that is going to probably be the least dependent on consumers.”
In 1980, businesses led an economic recovery. It quickly fizzled, and the economy fell into a severe recession in 1981 and 1982. The unemployment rate climbed to 10.8 percent, the post-World War II high. Today, it stands at 9.8 percent.
For now, economists say the risks are low that the economy will suffer a so-called double-dip recession. They hope businesses will spend enough to sustain the recovery. But the possibility can’t be dismissed.
By itself, growth in a quarter doesn’t mean a recession has ended. For example, this recession began in December 2007, according to the panel of academics in charge of declaring the beginnings and ends of downturns — even though the economy grew that quarter.
“Even if we’ve turned the corner, we know it’s a long way before we’re completely recovered,” Romer, chair of the White House Council of Economic Advisers, said in an interview with The Associated Press. “You can’t have an unemployment rate of 9.8 percent and not be deeply troubled.”
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October 30, 2009
Flat incomes, weak consumer
spending raise concern
AP – In this Oct. 7, 2009 photo, a Best Buy saleswoman, lower, gives change to a customer at
Best Buy in Mountain …
By MARTIN CRUTSINGER, AP Economics Writer
WASHINGTON – Flat incomes suggest more weakness ahead in consumer spending, reinforcing concerns about a ho-hum holiday shopping season and a sluggish economic recovery.
“This recovery is going to be very weak. Consumers are in no position or mood to spend. Their wages are down and they can’t get credit,” said Sung Won Sohn, an economics professor at California State University’s Smith School of Business.
Concerns about the economy sparked by disappointing government data on spending and incomes sent stocks down Friday, erasing the previous day’s big gains. The Dow Jones industrial average lost about 250 points, and broader indexes also fell.
The Commerce Department reported that personal incomes were stagnant in September while the all-important wage and salary category dropped 0.2 percent, as unemployment rose.
Consumer spending — which accounts for 70 percent of total economic activity — dropped 0.5 percent, the first decline in five months and the biggest since December.
The spending retreat reflected a sharp falloff in auto sales following a spike in August from the government’s Cash for Clunkers program.
The overall economy, as measured by the gross domestic product, actually grew at a 3.5 percent rate from July through September, signaling an end to the longest recession since the 1930s.
But analysts said the income and spending report underscored fears about a weak recovery. The most pessimistic worry the nation could be headed for a double-dip recession as consumers, concerned about further job losses and their tattered investment holdings, refrain from spending.
Some analysts believe that GDP growth, which received a big boost from the government’s stimulus programs in the third quarter, will slow to 2 percent or less in the current quarter.
David Wyss, chief economist at Standard & Poor’s in New York, said a recent spike in energy prices and other problems will depress sales in coming weeks, giving the nation’s retailers another lackluster shopping season.
Gasoline prices have risen for 17 straight days to a new high for this year of $2.695 per gallon, according to auto club AAA. The increase will add about $50 a month to the typical customer’s gas bill, meaning less to spend at stores during the holidays.
Sliding incomes and rising energy costs further darken the outlook for consumer spending during the holidays. People who do spend will stick to discounters like Wal-Mart Stores Inc. and Target Corp., and continue shying away from big-name department stores like Macy’s, said John Lonski, chief economist of Moody’s Capital Markets Group. Price will be key again this year.
“It most definitely limits the upside for consumer spending and scares the wits out of retailers,” Lonski said, adding that consumers are “going to spend as though the economy is still in a recession.”
“If you don’t make it, you can’t spend it, especially with the access to credit much reduced,” he said.
A second report Friday showed that wages and benefits including health care rose just 1.5 percent for the 12 months ending in September. That’s the smallest increase for the Labor Department’s Employment Cost Index on records that date to 1982.
The Obama administration also released a new report that said about 650,000 jobs had been saved or created under the government’s $787 billion economic stimulus program. Congress is currently debating expanding certain elements of that program including unemployment benefits and the first-time homebuyers tax credit. Many private economists said the new income and spending report showed the need to do that.
Unemployment, currently at a 26-year high of 9.8 percent, will edge up to 9.9 percent when the government releases the October jobless report next week and will peak at 10.5 percent in the middle of next year, Wyss said.
Last month’s spending drop resulted in a boost in the savings rate to 3.3 percent of after-tax incomes, from 2.8 percent in August. Many analysts believe households will keep striving to increase savings and replenish nest eggs that were crushed by last year’s stock market crash. That also would hold back spending in the months ahead, weakening the recovery.
But inflation remains in check. An inflation gauge tied to consumer spending edged up just 0.1 percent in September, after a 0.3 percent August rise. Excluding food and energy, the gauge rose 1.3 percent over the past year, well within the Federal Reserve’s comfort zone.
Fed officials meet next week and economists believe they will again keep a key interest rate at a record low.
___
AP Economics Writer Christopher S. Rugaber in Washington, AP Retail Writer Emily Fredrix in Milwaukee and AP Energy Writer Mark Williams contributed to this report.
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November 1, 2009
LETTERS, OPINIONS, & COMMENTARY
Posted by sherrie1690 under Commentary, Letters, OpinionsLeave a Comment
LOCAL LETTERS
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CALL COMMISSIONERS AND SAY “NO DEAL”
When haulers take trash over the county line, small business gets the shaft.
Small businesses don’t have the volume or political connections to negotiate lower trash rates. Haulers use the county’s high rates and flow control policy to justify expensive pickup. Then they take the trash over the county line, dump at a cheaper landfill, and pocket the profit.
By turning a blind eye to offenses, county officials collude in theft from their own residents.
Instead of being outraged on the people’s behalf, the BPW looked for technical loopholes. Trash didn’t go to another landfill, they said; it went to a transfer station in Grand Traverse.
Instead of seeking restitution for stolen revenue, they recommend that the people pay a $1.2 million debt to expand the landfill for the benefit of a private company.
The video presented to the BPW showed an American Waste truck picking up garbage from mom and pop businesses in Buckley . The truck left Buckley, crossed the county line, topped off in Kingsley, and wound up at a Grand Traverse transfer station.
Did Wexford collect one dime on trash taken to the transfer station?
Did Buckley businesses benefit from lower trash rates because their garbage went out of county?
Does our solid waste plan allow trash to leave the county except under emergency situations?
The answer to all these questions is no.
The taxpayers have sunk roughly $19 million into landfill operations and expansion.
Should that investment be handed over to a company that pulled revenue out of the county?
Should taxpayers be strapped with construction debt that benefits American Waste?
Should we become a 23-county dumping ground because American Waste says so?
Call your commissioner and say, “No deal.”
Rita J. McNamara
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COMMISSIONERS HAVE ANOTHER BAD PLAN
Wexford County has an unprofitable landfill that has contaminated the aquifer in Cedar Creek Township. Much of the funds set aside to close the landfill went toward the new county courthouse. Commissioners spent a fortune to rectify contamination problems, but failed. They spent even more installing a water system, but were so high-handed and treated people so unfairly that lawsuits were brought against the county.
Wexford commissioners also found a way to make the rest of the county pay for their mistakes. They couldn’t raise taxes. However, they fixed it so individuals and businesses in Wexford must pay much more for waste disposal in their own county than if they hired an outside company–which they aren’t allowed to do.
For several years Wexford commissioners have discussed plans which all involve taking in trash from 21 outside counties at cheap rates, but forcing our residents and local businesses to pay high rates in order to sell the landfill. Negotiations were with three companies: TransGreen, Waste Management, and American Waste.
Haulers from American Waste charge expensive waste pickup fees to local businesses due to Wexford’s high rates and flow control policy. Yet citizens have brought evidence to the commissioners’ attention that this waste is not being dumped in our landfill. Results: Our businesses are charged more for pickup; our landfill makes no money; and it’s against Wexford’s policy. Did our commissioners call for an investigation? No.
They again ignored citizens’ concers and voted 7-2 to sell out to American Waste. (Commissioners McKeever and Beck voted against it.)
I suggest we call our commissioners to say “NO” to this sale. And if they can’t come up with better plans, we need to vote them out!
Sherrie Fuscone
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