Saturday, May 10, 2008

AP: Trade deficit narrows more than expected

The following appeared in the Saturday May 10, 2008 issue of the St. Paul Pioneer Press, Page 2C.

The U.S. trade deficit narrowed sharply in March as demand for imports ell by the largest amount since the last recession was ending. Analysts forecast that trade would continue to be one of the economy's few bright spots this year.

The March deficit totaled $58.2 billion, down 5.7 percent from February, the Commerce Department reported Friday. It was a much larger improvement than had been expected.

Imports totaled $206.7 billion in March, down $6.1 billion from the February level, a drop led by a 5.9 percent decrease in America's foreign oil bill.

Exports, which have been one of the few strong points in this period of weakness, dipped 1.7 percent in March to $148.5 billion, but that was still the second-highest level on record. For the first three months of this year, exports were up 17.6 percent over the same period a year ago.

Friday, May 9, 2008

Newest National Debt Statistics posted

The National Debt as of May 8, 2008

Held by Public: $5,227,965,998,741.94
Intragovernmental Holdings: $4,136,827,077,212.01
Total (May 8, 2008): $9,364,793,075,953.95

Interest Payments
April 2008 - $22,362,345,451.78
FY to date - $243,903,652,968.47

Gifts to reduce the public debt

March 2008 - $517,816.28
FY to date - $1,405,285.81


Wednesday, May 7, 2008

AP: Steel pennies make cents to lawmaker

The following Associated Press story appeared on page 3A of the Wednesday May 7, 2008 issue of the St. Paul Pioneer Press.

WASHINGTON - Further evidence that times are tough: It now costs more than a penny to make a penny. And the cost of a nickel is more than 7-1/2 cents.

Surging prices for copper, zinc and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.

"With each penny and nickel we issue, we will be contributing to our national debt by almost as much as the coin is worth," said Rep. Luis Gutierrez, D-Ill., who chairs the House panel that oversees the U.S. Mint.

Copper and Nickel prices have tripled since 2003 and the price of zinc has quadrupled.

A penny, which consists of 97.5 percent zinc and 2.5 percent copper, cost 1.26 cents to make as of Tuesday. And a nickel - 75 percent copper and the rest nickel - costs 7.7 cents, based on current commodity prices, according to the Mint.

That's down from the end of the 2007, when even higher metal prices drove the penny's cost to 1.67 cents. The cost of making a nickel then was nearly a dime.

Gutierrez estimated sriking the two coins at costs well above their face value set the Treasury and taxpayers back about $100 million last year alone. A lousy deal, lawmakers have concluded. On Tuesday, the House debated a bill that directs the Treasury secretary to "prescribe" - suggest - a new, more economical composition of the nickel and the penny. A vote is expected later in the week.

Unsaid in the legislation is the Constitution's delegation of power to Congress "to coin money (and) regulate the vlaue thereof."

The Bush administration, like others before, chafes at that.

Mint Director Edmund Moy told House Financial Services Chairman Barney Frank, D-Mass., that the Treasury Department opposes the bill as "too prescriptive" in part because it does not explicitly delegate the power to decide the new coin composition.

Sen. Wayne Allard, R-Colo., is expected to present the Senate with a version more acceptable to the administration in the next few weeks.

Other coins still cost less than their face value. The dime costs a little over 4 cents to make. The quarter costs almost 10 cents. The dollar coin, meanwhile, costs about 16 cents to make, the Mint said. - Associated Press

Fed auctions another $75B to banks

The following appeared on page 2C of the Wednesday May 7, 2008 issue of the St. Paul Pioneer Press.

Battling to relieve stressed credit markets, the Federal Reserver said Tuesday it has provided a total of $435 billion in short-term loans to squeezed banks since December to help them overcome credit problems. The central bank announced the results of its most recent auction - $75 billion in short-term loans - the 11th such auction since the program started in December.

It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March. The housing, credit and financial crises have weakened the economy and threaten to push it into recession. In the latest auction, commercial banks paid an interest rate of 2.220 percent for the loans.

Farmland prices may be bubble waiting to burst, group warns

The following appeared on page 3C of the St. Paul Pioneer Press Wednesday May 7, 2008 edition.

By Tom Webb

Farmland prices are booming across the Midwest, fueled by higher crop prices and speculative bidding.

Now, a Minnesota policy group warns that farmland fever has entered a bubble phase, and urges lawmakers, growers and rural lenders to confront it now, before the party ends and the fallout destroys a new generation of farmers and rural business.

"Minnesota agriculture is riding high - perhaps too high to be sustainable," Minnesota 2020 said in a report released Tuesday.

Prime Minnesota cropland that once grew gasps at $4,000 an acre is now fetching $5,000, even $6,000 an acre. In North Dakota, one survey found that farmland prices rose 46 percent last year, bid up not only by farmers, but also hunters, retirees and speculators.

Matt Entenza and Roger Moe, two former DFL legislative leaders, both have memories of how a similar boom in the 1970s fueled the disastrous farm crisis of the 1980s. Back then, "a lot of farmers took on a lot of debt because they thought prices wouldn't go down," Entenza said. When prices collapsed, it proved ruinous for rural Minnesota.

Now, the liberal-oriented 2020 policy group worries that history is repeating itself. Entenza urged farmers to understand that "debt is their enemy," and use these good times of high crop prices and land values to pay down debt, not borrow lots more.

"Folks said the Internet boom wouldn't end, folks said the housing boom wouldn't end," Entenza said, later warning, "These (farm) prices will burst, and if they (farmers) end up with a lot of debt, they will go down."

The group is asking state government to fully fund a University of Minnesota debt-management program that was helpful in the 1980s. And it wants policymakers to re-examine old policies and programs that once proved useful at keeping rural businesses alive, farmers on the land and communities thriving.

Meanwhile, corn prices continued to soar, moving sharply higher Tuesday on worries about planting delays.

Tuesday, May 6, 2008

Fed says banks are tightening credit

The following appeared on page 2C of the Tuesday May 6, 2008 issue of the St. Paul Pioneer Press.

The Federal Reserve reported Monday that more banks are tightening lending standards on home mortgages, other types of consumer loans and business loans in response to a spreading credit crisis. The Fed said the percentage of banks reporting tighter lending standards was near historic highs for nearly all loan categories.

The survey, conducted in April, found that nearly two-thirds of banks surveyed had tightened lending standards on traditional home mortgages with 15 percent saying those standards had been tightened considerably. But the survey found that the tougher lending standards extend far beyond home mortgages to other types of consumer debt such as credit cards and home equity lines of credit.

[My comments: Considering the last post, why doesn't the Fed just open up it's discount window to consumers and help the mortgage industry out. Why does CONGRESS have to do everything. Oh wait, they don't want to take the risk that other banks have. Yes, let the taxpayer bail everyone out so we don't have to seems to be the prevailing wisdom on Wall Street and in Washington. Shame! Shame!]

Bernanke: Congress must act to end mortgage crisis

The following appeared on page 2C of the Tuesday May 6, 2008 issue of the St. Paul Pioneer Press.

[My comments: Congress intervening in the market is exactly what GOT us into this mess in the first place. Congress mandated that certain demographic groups get loans regardless of their ability to pay. Mortgage lenders, meanwhile, loosened their standards to comply with the law. Now look at us! This Congressional/governmental intrusion into the private market has to stop.]

Bernanke: Congress must act to end mortgage crisis

A rising tide of late mortgage payments and home foreclosures poses considerable dangers to the national economy, Federal Reserve Chairman Ben Bernanke warned anew Monday as he urged Congress to take additional steps to alleviate the problems.

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy," Bernanke said in a dinner speech to Columbia Business School in New York. "Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It's in everybody's interest," he said.

Some 1.5 million U.S. homes entered into the foreclosure process last year, up 53 percent from 2006, Bernanke said. The rate of new foreclosures looks likely to be even higher this year, he said.

To provide more relief, Bernanke again called on Congress to give the Federal Housing Administration, which insures mortgages, more flexibility to help distressed borrowers at risk of losing their homes.

Sunday, May 4, 2008

Home prices keep sinking

The following article appeared on page 3C in the Wednesday April 30, 2008 St. Paul Pioneer Press.

Home prices keep sinking
Foreclosure filings double, hit record in first quarter

By J.W. Elphinstone
Associated Press

NEW YORK - In a bad omen for sellers and lenders this spring home-selling season, the erosion of house values is accelerating and foreclosure filings are doubling, new data showed Tuesday.

A closely watched index of home prices in 20 cities fell almost 13 percent in February from a year earlier, a record for the seven-year old S&P's/Case-Shiller Home Price index. The report follows news that foreclosure filings between January and March also hit a new high, and comes a day after the government said the number of vacant homes on the market also hit a record.

"Month-to-month, it gets consistently worse," said the index committee at S&P, noting February also marked the sixth-straight month all 20 cities experienced declines. "The slope is one direction. There is no sign of a bottom."

He said 17 of the metro areas the index tracks reported record annual declines, led again by Miami and Las Vegas.

Charlotte, N.C., was the only city to post an annual gain - 1.5 percent - but Blitzer noted Charlotte's positive returns continue to diminish with each month and it was the last city in the index to reach its peak.

Nevada posted the country's worst foreclosure rate in the first quarter, RealtyTrac Inc. said Tuesday, with one in every 54 households receiving a foreclosure-related notice.

Nationwide, one in every 194 households received a foreclosure filing during the quarter, more than double the same period last year.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity.

National Debt Clock