U.S. Home Construction Bust May Last Until 2011

The latest upswing in housing sales encouraged some to think we've reached the bottom of the housing downturn. Others indicated that the surge in sales was based on major developers offering deep discounts to reduce inventories. Meanwhile national inventories of homes for sale reached record highs.

U.S. Home Construction Bust May Last Until 2011 - Bloomberg.com
By Bob Ivry and Brian Louis

May 29 (Bloomberg) -- New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.

Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.

``We've fallen way below trend because we soared way above trend during boom times,'' Seiders said in an interview. ``The upswing will be relatively slow, unlike earlier cycles.''

The inventory of unsold homes is the largest since the Chicago-based National Association of Realtors started counting them in 1999 and house prices have suffered the steepest drop since the Great Depression, according to the realtors' group. Defaults and foreclosures also may rise as about $650 billion of loans to subprime borrowers, those with poor or limited credit histories, reset at higher interest rates by 2009.

``We're still being hit pretty hard by the subprime-related mortgage market problem,'' Seiders said. ``One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales.''

Sales of new homes rose 16 percent in April, the highest increase since 1993, the Commerce Department said last week... The biggest gain in new-home sales in 14 years was made possible by homebuilders who cut prices more in April than in any month since 1970. The median new-home price fell 11 percent to $229,100 from $257,600 a year earlier, the reported showed.

Environmental Idols

Curtis White gives an interesting perspective on the nexus of environmental activism, Cartesian logic and corporate malfeasance. He points to inconsistencies, at the philosophical level, that leave environmental advocates unable to change the "very fabric" driving the continued degradation of ecosystems world wide. He's right. Perhaps in a few years he will write an equally articulate article describing how fundamental critiques are professionally marginalized, excluded from the political process and of negligible impact on how capital motivates corporate resource allocation. What to do?

The Idols of Environmentalism | Curtis White | Orion magazine

"The problem for even the best-intentioned environmental activism is that it imagines that it can confront a problem external to itself. Confront the bulldozers. Confront the chainsaws. Confront Monsanto. Fight the power. What the environmental movement is not very good at is acknowledging that something in the very fabric of our daily life is deeply anti-nature as well as anti-human. It inhabits not just bad-guy CEOs at Monsanto and Weyerhaeuser but nearly every working American, environmentalists included.

It is true that there are CEO-types, few in number, who are indifferent to everything except money, who are cruel and greedy, and so the North Atlantic gets stripped of cod and any number of other species taken incidentally in what is the factory trawler’s wet version of a scorched-earth policy. Or some junk bond maven buys up a section of old-growth redwoods and “harvests” it without hesitation when his fund is in sudden need of “liquidity.” Nevertheless, all that we perceive to be the destructiveness of corporate culture in relation to nature is not the consequence of its power, or its capacity for dominating nature ("taming," as it was once put, as if what we were dealing with was the lion act at the circus). Believing in powerful corporate evildoers as the primary source of our problems forces us to think in cartoons."

Global carbon emissions in overdrive

Global carbon emissions in overdrive | csmonitor.com
Global emissions of carbon dioxide are growing at a faster clip than the highest rates used in recent key UN reports.

CO2 emissions from cars, factories, and power plants grew at an annual rate of 1.1 percent during the 1990s, according to the Global Carbon Project, which is a data clearinghouse set up in 2001 as a cooperative effort among UN-related groups and other scientific organizations. But from 2000 to 2004, CO2 emissions rates almost tripled to 3 percent a year – higher than any rate used in emissions scenarios for the reports by the Intergovernmental Panel on Climate Change (IPCC).

If the higher rate represents more than a blip, stabilizing emissions by 2100 will be more difficult than the latest UN reports indicate, some analysts say. And to avoid the most serious effects of global warming, significant cuts in CO2 emissions must begin sooner than the IPCC reports suggest. At the moment, no region of the world is "decarbonizing its energy supply," the analysis says.

The Poverty Business

The Poverty Business - Business Week

In recent years, a range of businesses have made financing more readily available to even the riskiest of borrowers. Greater access to credit has put cars, computers, credit cards, and even homes within reach for many more of the working poor. But this remaking of the marketplace for low-income consumers has a dark side: Innovative and zealous firms have lured unsophisticated shoppers by the hundreds of thousands into a thicket of debt from which many never emerge.

Federal Reserve data show that in relative terms, that debt is getting more expensive. In 1989 households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004 the discrepancy had soared to 56.1%. Roughly the same thing happened with mortgage loans: a leap from a 6.4% gap to one of 25.5%. "It's not only that the poor are paying more; the poor are paying a lot more," says Sheila C. Bair, chairman of the Federal Deposit Insurance Corp.

Once, substantial businesses had little interest in chasing customers of the sort who frequent the storefronts surrounding the Byrider dealership in Albuquerque. Why bother grabbing for the few dollars in a broke man's pocket? Now there's a reason.

Armed with the latest technology for assessing credit risks—some of it so fine-tuned it picks up spending on cigarettes—ambitious corporations like Byrider see profits in those thin wallets. The liquidity lapping over all parts of the financial world also has enabled the dramatic expansion of lending to the working poor. Byrider, with financing from Bank of America Corp. (BAC ) and others, boasts 130 dealerships in 30 states. At company headquarters in Carmel, Ind., a profusion of colored pins decorates wall maps, marking the 372 additional franchises it aims to open from California to Florida. CompuCredit Corp., based in Atlanta, aggressively promotes credit cards to low-wage earners with a history of not paying their bills on time. And BlueHippo Funding, a self-described "direct response merchandise lender," has retooled the rent-to-own model to sell PCs and plasma TVs.

California Provides Cautionary Tale to Eco-Elite

The Unbearable Whiteness of the Green Movement
By Van Jones, Grist Magazine

California Provides Cautionary Tale to Eco-Elite

The idea for Prop 87 was brilliant in its simplicity: California would start taxing the oil and gas that we extract from our soil and shores. And those dollars would go into a huge, "clean-energy" research and technology fund.

Many states and nations have similar excise taxes. But California would have been alone in dedicating the revenues to inventing alternatives to carbon-based energy sources. Had it passed, money from oil would have been used to find a replacement for oil.

It was a brilliant idea. And at first, the measure was polling off the charts.

But in the end, Californians voted the measure down. Why? Because big oil convinced ordinary Californians that the price tag for them would be too high for them to bear.

Agrarian reform Venezuela style...

Clash of Hope and Fear as Venezuela Seizes Land - New York Times

For centuries, much of Venezuela’s rich farmland has been in the hands of a small elite. After coming to power in 1998, and especially after his re-election in December, President Hugo Chávez vowed to end that inequality, and has been keeping his promise in a process that is both brutal and legal.

Mr. Chávez is carrying out what may become the largest forced land redistribution in Venezuela’s history, building utopian farming villages for squatters, lavishing money on new cooperatives and sending army commando units to supervise seized estates in six states.

The violence has gone both ways in the struggle, with more than 160 peasants killed by hired gunmen in Venezuela, including several here in northwestern Yaracuy State, an epicenter of the land reform project, in recent years. Eight landowners have also been killed here.

U.S. Sets New China Duties

U.S. Sets New China Duties - WSJ.com
Move Opens Door For a Wide Array Of Trade Complaints
By GREG HITT
March 31, 2007; Page A3

WASHINGTON -- The Bush administration imposed new economic sanctions against China, a vivid reflection of the increasingly tough climate in the U.S. toward free trade -- particularly with Beijing.

The new duties apply narrowly to complaints that Chinese producers of glossy, high-quality paper used in books and magazines are unfairly subsidized by their government -- just $224 million of annual imports, or less than 1% of the total goods and services Americans buy each year from China.

But the action is likely to have much wider ramifications. It opens the door to a potential rush of similar complaints by American manufacturers, from steel to plastics producers, that face stiff competition from the Chinese. And it signals, more broadly, an increasingly harder line on trade emerging both at the White House and in Congress.

Home Depot down 30% in first quarter

Housing market is a wreck for Home Depot profit - MarketWatch
Expect more of the same, CEO warns; hirings still continue
By Jennifer Waters & Angela Moore, MarketWatch
Last Update: 4:41 PM ET May 15, 2007

CHICAGO (MarketWatch) -- Home Depot Inc., still smarting from the faltering U.S. housing market and a host of operational issues, on Tuesday posted a 30% drop in quarterly profit and warned that earnings for the year will fall to the low end of projections.

"This was a difficult first quarter for us," Chief Executive Frank Blake conceded on a conference call with analysts. It was his first quarter as CEO, after assuming the position in January. "While we expected a tough quarter, this was worse than we anticipated."

US vows to punish China and others for undervaluing their currencies

While the US prepares to punish China for pegging the Yuan to the dollar and China telegraphs a response regarding the risks that would pose to their economy it might be worth reading an outside of consensus perspective . I'd take the last article, the outside perspective, with a grain of salt. Seems like gold dealers see a percentage in increasing fears of US economic weakness, but absent hyperbole there are a few comments there that seem worth reviewing...

A few excerpts:

Congress to press China over its undervalued currency - Los Angeles Times

Legislators target nations that manipulate their money. Critics say it's the wrong approach.
By Molly Hennessy-Fiske, Times Staff Writer
May 10, 2007

WASHINGTON — Democrats in Congress have been pushing an ambitious trade agenda, promising to assist displaced American workers and reduce the trade deficit. Now they're taking on the global currency market — vowing to pass legislation to punish China and other Asian countries for undervaluing their currencies.

China: No Currency Change Ahead of Talks
Tuesday May 15, 10:25 am ET
By Joe Mcdonald, AP Business Writer

China Rules Out Major Currency Moves Ahead of Washington Talks

BEIJING (AP) -- Chinese officials on Tuesday ruled out major changes demanded by U.S. lawmakers in Beijing's currency controls ahead of a high-level meeting and called on critics in Congress not to politicize trade disputes.

Beijing is making progress in allowing its currency to trade more freely, but acting on U.S. appeals to move more quickly could disrupt the economy, said the officials. They briefed reporters on next week's meeting in Washington on condition they not be identified by name.

A senior Finance Ministry official said China wouldn't permit a backlash against financial markets and its "harmonious society," using Beijing's term for efforts to spread China's new prosperity to its poor majority.

The Russian Bear, Chinease Dragon, and US Dollar :: The Market Oracle :
By Jim Willie CB
Editor of the “HAT TRICK LETTER”

Russia and China have become a major problem. Everywhere one turns, there is Russia & China at odds with the United States . We have the Great Bear in a conflict over energy, Iran , military installations, and central bank policy. We have the Great Dragon in a conflict over currency reform, banking reform, copyright enforcement, trade matters, human rights, and central bank policy.

Armed with a combined account of almost $1600 billion, these two giants are in a Battle of Titans with the United States for geopolitical control. With the financial shift to developing nations comes a natural push toward geopolitical control. The USEconomy and USDollar have never been in a weaker position. The bear and dragon know it well, and have taken steps to wrest more power and influence.

NEW KIDS ON THE FOREX RESERVES BLOCK

In 2000, all changed. Russia and China hit the scene. The ill-fated decision during the Clinton Administration to grant Most Favored Nation status to China opened the door to a labor arbitrage. The result was over three million US manufacturing jobs sent to China . US corporations justify their abandonment of US workers, shedding fringe benefit costs at the same time, by claiming the low-cost solutions benefit both their financial structure and the USEconomy. The trade gap would next grow even while the USDollar would be devalued by 25% to 30% in the next few years...

China captured a large slice of that exported US-based inflation. Moronic economists actually claimed that the USEconomy was exploiting the Asian lower labor costs, as we sold them our high-grade debt. China began to accumulate its MOUNTAIN OF US $-BASED DEBT in its FOREX account. Foreign reserves held in the land of the Great Dragon enjoyed a head start, measured at $160 billion in the year 2000, having grown to $1202 billion by early 2007. Now the sleep walkers running US policy regard the Chinese yuan and gigantic FOREX mountainous reserves account as a problem...

The cooperation identified by constructive contracts between US corporations to build Chinese factories took a respite in 2002 and 2003, but clearly resumed to surpass $15 billion annually in 2004 and 2005 each year. If one needs to point fingers at the new problems with China, look no further than US corporate executives who plowed tens of billion$ into China, killed off US jobs, and have fed the dragon. However, the end of the rigid yuan currency regime was removed in July 2005 with little progress to show in a yuan upward revaluation. A relatively small 7% rise in the yuan since then pales by comparison to the 55% rise in the euro currency (versus US$) since 2001, and 15% rise in the euro in roughly the same time frame as the yuan has been relaxed, but not freed. The ineptitude of USGovt leaders has been exposed, when dealing on the economic and financial chessboard with patient and crafty Beijing leaders.