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Jed Kolko: Trulia’s Real Estate Crystal Ball for 2012

by Jed Kolko on December 21, 2011

Huffington Post…

My crystal ball is never as crystal-clear as I’d like, but I do think that we can expect a gradual economic recovery to move the housing market a few steps back toward normal in 2012. Even so, we still have a long ways to go. As we exit 2011, prices still not have rebounded after their huge declines, inventories are still well above normal, and the foreclosure rate is still far higher than before the bubble. Even the best possible 2012 won’t get us halfway back toward normal. Before getting into the predictions, let me be upfront about what I’m assuming. After 14 months of job gains, I expect the economy to continue its slow but determined recovery. I don’t do my own macroeconomic forecasts, but every single one of the fifty-ish economic forecasters surveyed by the Wall Street Journal expects the economy to grow throughout 2012, and that makes sense to me . Of course, any unexpected severe political or financial crisis could tip us back into recession, and then all bets are off. Here’s to hoping that doesn’t happen. My five predictions for housing in 2012: Delinquencies will go down, but foreclosures will go up. Fewer borrowers will fall behind on their payments next year, thanks to the strengthening economy and refinancings. The share of delinquent borrowers is already down more than a quarter from the peak a couple of years ago. But many borrowers who fell behind on their payments during the housing crisis are still in limbo: last year’s robo-signing controversy threw a wrench in the gears of the foreclosure process. That means that some delinquent loans haven’t yet entered the foreclosure process, and even fewer moved all the way through foreclosure — especially in Florida and other states where foreclosures require a longer legal process. Once a settlement is reached with banks over robo-signing in those states, we’ll see a new wave of foreclosures and foreclosure sales that’s long overdue. It’s a necessary step in getting the housing market back to normal even though it will be painful for people who lose their homes — and will rattle American’s confidence in the housing recovery. Rents will rise — which is a bad thing. With fewer people buying homes and more people losing their homes to foreclosures, the rental market is only going to get tighter especially in older, dense cities like New York , Washington DC and San Francisco . High rents will hold back economic growth if businesses can’t pay workers enough to have a roof over their heads. Squeezed city-dwellers won’t get relief until late 2012: that’s when a wave of new multi-unit construction projects that started late this year will be completed and available for rent. To tackle growth-killing high living costs in the priciest cities head on, local governments need to get rid of height restrictions and arduous permitting processes, which hold back urban construction and push development to the suburbs. Mortgage rates will inch up — which will probably be a good thing. A stronger economy will push Treasury bonds and mortgage rates up because inflation becomes more likely and investors demand higher rates to hold bonds. The Fed’s “Operation Twist” will prevent rates from rising too much, but other forces could push rates up higher or, alternatively, send them falling. If investors think the U.S. government will have trouble paying its debt — which they might if the government can’t agree to raise the debt ceiling or narrow the deficit — they’ll demand higher rates because of that risk; but global economic uncertainty — even here at home — could lower American interest rates if investors think American bonds are safe relative to other investments. Got whiplash yet? You’re forgiven. Lots of factors can push rates up or down. For the housing market, which direction rates go is less important than why. Gradual economic recovery is good news for the housing market even if it means higher mortgage rates — that’s what I think will win out next year. We’ll have higher rates for a reason we can cheer. Government will sit on its hands. In election years, politicians don’t take risks : they’re more talk and less action, so don’t expect any bold housing policy reforms next year. What’s more, with the housing market now recovering, we’re not in enough of a crisis to force political opponents together. The time has passed for bold government action on housing. We’ll look back wistfully on the modest policy wins of 2011: borrowers who’ve kept up their payments can now refinance under the expanded HARP program , and the government is planning ways to sell or rent out vacant homes it owns (which will probably be announced in early 2012). But these targeted policies won’t move the needle on national foreclosures, sales or prices. Smart cities are hot. In 2012, the local housing markets that will enjoy rising prices, new construction or both, are those that start the year with stronger job growth and fewer empty homes holding back the market. Based on these factors, along with other leading indicators, here are my top five cities to watch: Austin, TX , and Houston, TX . The bloom’s not off the yellow rose of Texas . Steady job growth and a construction revival make Austin and Houston two of my five cities to watch. Texas isn’t hung over from the housing boom like the other big states of the South and West, so there’s little to hold back growth. Honorable mention to Fort Worth and San Antonio . San Jose, CA . Wasn’t California at the center of the foreclosure crisis? Didn’t prices there fall more than everywhere else in the country? Yup. But there’s no such thing as the California housing market: California is almost as diverse as the U.S. Even though prices plummeted and foreclosures skyrocketed in inland California, the coast is another world. San Jose’s perennially tight housing market makes it faster to bounce back. The San Jose market — which includes most of Silicon Valley — has rapid job growth and the lowest vacancy rate in the country. Suburbs of Boston, MA . This Cambridge – Newton – Framingham market just west of Boston has a strong jobs engine and, like most of New England, missed the worst of the housing bubble. Honorable mention goes to Worcester , one step further west, and Boston’s northern suburbs around Peabody . These areas all benefit from offering more bang for the buck than crowded, expensive Boston: this is because most people looking to move are searching in more suburban or smaller areas than where they live now. Rochester, NY . That’s my hometown, and knowing what’s happened to Kodak and other pillars of the local economy, I was surprised when Rochester scored on the top 5 list. (I applied the same formula to all cities and did not have my thumb on the scale.) Prices — which fell little during the boom — are stable, and the economy has weathered blow after blow and is expanding. What do these markets have in common? Three — Austin, San Jose, and the area west of Boston — are technology centers. In those three metros, as well as in Rochester, a center of high-skill manufacturing industries, education levels are well above the national average. As the recovery proceeds, smart cities are leading the way. During the housing boom, the go-to cities tended to be lower-skill, lower-education metros. But in 2012, smart is hot: it’ll be the revenge of the nerds. Links to Trulia Insights blog posts: Jobs Report Bodes Well for Housing Asking What Our Country Can Do For Housing Where Construction Activity is Rumbling The Federal Government’s Re-Fi Plan: The Good, The Bad and The Ugly Renting Out Government-Owned Homes is the Right Move – But Probably Wouldn’t Make Any Difference to You Where Vacancies are High

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Jed Kolko: Trulia’s Real Estate Crystal Ball for 2012

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Obama Shares Round Of Beers With Unemployed Construction Workers

by AP on October 12, 2011

Huffington Post…

ORLANDO, Fla. (AP/The Huffington Post) — President Barack Obama has joined four unemployed construction workers in Florida for a round of beers on a day his jobs bill met defeat on Capitol Hill. Obama met with the group at Harp and Celt Restaurant & Irish Pub in downtown Orlando. He solicited opinions on the jobs situation and said he was trying to figure out how to get the construction trades back to work. The workers – three unemployed pipe fitters and one unemployed plumber – drank Budweiser and Obama had a Guinness. They all toasted: “To more jobs!” Obama held the meeting between fundraisers in Florida as Senate Republicans – and two Democrats – turned back an effort to open debate on the president’s $447 billion jobs bill. Obama says the bill would create construction jobs. The White House Pool Report, written by Carol Lee of the Wall Street Journal , offers some more details: POTUS, with a pint of Guinness, cheers with unemployed construction workers – “To more jobs…” Motorcade was rolling at 6:58 pm and stopped at 7:01 pm for President Obama’s visit with unemployed construction workers an Irish bar in downtown Orlando. When pool entered, Mr. Obama was already seated with the construction workers (names below) and Orlando Mayor Buddy Dyer at a table inside Harp and Celt Restaurant & Irish Pub on Magnolia Avenue. The bar smelled like stale beer. It was mostly empty except some workers, WH staff and a couple of people in the back who appeared to be customers eating and drinking. POTUS and the construction workers sat at a table near the door. The wooden table had a half eaten large plate of nachos in the middle. Apparently the construction workers had been eating them, as they had small plates in front of them. There were 4 bottles of Budweiser on the table. Two were in front of construction workers and one in front of Mr. Dyer and POTUS, but POTUS, then Mr. Dyer, ordered a Guiness instead. One worker had a Corona, and another had a soda. Mr. Obama, seated with his back to the door, was in shirtsleeves. A lifesize cardboard pint of Guiness was propped up behind him in a corner. POTUS told the workers part of the reason he wanted to stop by is because “Buddy and I” are trying to help create jobs. “You guys are what this country’s all about,” Mr. Obama said. POTUS said he wanted to get sense from the unemployed construction workers what they’re seeing, how projects are going. One man told POTUS he had worked at the Amway Center. Pool couldn’t hear much of the conversation. A version of “Landslide” was playing in the bar (not Fleetwood Mac, maybe Smashing Pumpkins?) As the group of six talked, someone brought POTUS a Guinness. “Look at that,” he said, examining it. “Now that looks good.” Mr. Dyer thought so too. “Is that a Guinness?” he said. “Can I get one of those, too?” POTUS then raised his glass and the construction workers raised theirs. “To more jobs,” he said. And they clinked glasses. See more pictures below:

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NOT AGAIN: California’s Unemployment Rate Rises For Second Month In A Row

September 17, 2011

By Don Thompson, Associated Press SACRAMENTO, Calif. (AP) — California’s jobless rate grew for the second straight month in August to 12.1 percent, led by continued sluggishness in the construction industry, the state Employment Development Department said Friday. The unemployment rate had been declining since March until it spiked back to 12 percent in July. California’s rate is the second highest in the nation, behind Nevada’s 13.4. “I would say it’s a flat market,” said Brad Kemp, director of regional research with Beacon Economics in Los Angeles. “I just think we have to get used to the fact that slow growth is the path that we’re on, and I don’t think that’s going to change anytime soon.” Nonfarm payroll jobs fell by 8,400 during the month, with the construction industry suffering the biggest decrease, down 7,200 jobs. The unemployment rate was a slight improvement from a year ago, when it was 12.4 percent. During the 12-month period that ended in August, California gained 171,000 jobs, even as nearly 2.2 million residents remained jobless. Kemp said the uptick in last month’s unemployment rate shows the state should not expect any dramatic improvement for at least the next year. Two factors are contributing to the slow recovery, he said. First, employers began adding jobs last year when it looked as if the economy was rebounding. With uncertainty prevailing, they are absorbing those jobs before hiring again. Also, any growth in private industry jobs is being offset by public sector layoffs, as state and local governments adjust to lower revenue. The state reported that six categories lost 17,500 jobs in August: construction; information; financial activities; educational and health services; other services; and government. Five categories added 9,100 jobs last month. They were mining and logging; manufacturing; trade, transportation and utilities; professional and business services; and leisure and hospitality. “You’ve got to have a long-term vision of the economy getting better before you see employers making any significant moves,” Kemp said. Aside from California and Nevada, Florida, Georgia, Michigan, Mississippi, North Carolina, Rhode Island and South Carolina all had unemployment rates of greater than 10 percent. The national unemployment rate remained at 9.1 percent for a second month. While construction firms and governments have been dropping jobs, retail hiring was up last month for only the second time since January, said Kevin Callori, a spokesman for the state’s Employment Development Department. Moreover, manufacturing jobs have increased in nine of the past 11 months, adding 22,000 jobs over that 11-month period. That reverses a trend that saw a loss in manufacturing jobs in 34 of the 38 months ending Sept. 2010. “Over the year, we’re still doing pretty well,” Callori said.

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Denise Bode: After a Scorching Week, Wind Power Lessons From the Texas Heat Wave

August 11, 2011

It’s over, for the moment — Electricity Reliability Council of Texas( ERCOT), the company that manages the Texas utility system, said Monday that it doesn’t expect peak electricity demand this week to surpass last week’s record levels. As he did after a sudden freeze stressed the Texas system in February, ERCOT CEO Trip Doggett credited wind power with a critical contribution during last week’s power emergency. Doggett said electricity from wind farms recently installed along Texas’ Gulf Coast began flowing at just the right time to help meet peak demand in the late afternoons. With that in mind, some lessons from the week’s real-world experience with substantial amounts of installed wind generating capacity on a large utility system: Adding wind power makes a utility system more reliable, not less. Balancing electricity supply and demand is a complex task, and utility system operators are used to turning various types of power plants on or off to match demand as it rises and falls throughout the day. Even though wind energy is variable, it varies slowly — unlike conventional power plants, which can fail instantaneously — and can be a critical component in times of need. For three straight days in the real world last week, wind made the difference between keeping the lights on and the air conditioners running — and rolling blackouts. No power plant runs 100 percent of the time. Throughout last week’s heat wave, as in February’s freeze, the Texas utility system was bedeviled by outages of conventional power plants due to extreme weather. According to an Aug. 2 blog article by Elizabeth Souder of the Dallas Morning News, “The high temperatures also caused about 20 power plants to stop working, including at least one coal-fired plant and natural gas plants.” Souder noted that a spokesman for ERCOT, “said such outages aren’t unusual in the hot summer…” This is fascinating, since the rap on wind is that it’s not dependable because “sometimes the wind stops blowing.” In the real world, sometimes it also gets too hot or too cold for the supposedly dependable fueled peaking power plants to operate properly. Geographic dispersal of wind farms makes their electricity production more dependable. This is something that seems intuitively obvious — the wind is usually blowing someplace — and has been predicted by a host of studies. Last week, it became crystal clear, as the Gulf Coast wind farms, which provide some 13 percent of Texas’s overall wind generation, accounted for as much as 70 percent of the wind-generated electricity being provided during peak hours. The reason for this is that winds are often low in west Texas, where most of the state’s wind farms are located, on very hot days, while ocean breezes blow more strongly. Generation from offshore and coastal land-based wind matches up well with summer demand peaks. Again, this is a phenomenon that has been predicted by studies. During a heat wave in the Northeast in July, Cape Wind, the company that hopes to install a large offshore wind farm off Cape Cod in Massachusetts, said its meteorological data showed the project would have been producing at full capacity during peak demand hours. The Texas experience bears that out, with ERCOT CEO Doggett telling the Austin American-Statesman , “We’d love to have more development of coastal wind. And we’re hoping their ability to generate during the peak hours may encourage more development in that area.”

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Congress Leave Aviation Workers Without Paychecks

August 2, 2011

WASHINGTON — The failure of Congress to authorize a budget for the Federal Aviation Administration has put some 4,000 agency employees and tens of thousands of contractors temporarily out of work . But even some FAA workers who haven’t been furloughed find themselves in a peculiar financial jam. Roughly 40 FAA inspectors have been asked to continue working despite the stoppage because their jobs are important for air safety. Yet since Congress hasn’t allocated money to the agency, these employees have to cover their own travel expenses until the shutdown is resolved. Although their wages and expenses will eventually be recouped, these workers will end up covering work-related credit charges — and possibly interest — until funding is freed up. The inspectors are among the thousands who will suffer the real consequences of congressional deadlock. “It’s incredibly unfair,” FAA Administrator Randy Babbitt said in a conference call with reporters on Tuesday. “We can neither pay them nor compensate them” for their expenses until the shutdown ends. Babbitt and transportation secretary Ray LaHood had urged the Senate to pass a bill Tuesday before the chamber breaks for recess and lawmakers head home, leaving thousands out of a job until September. Sen. Barbara Boxer (D-Calif.) asked her colleagues to pass a House bill without its most controversial elements, but Sen. Tom Coburn (R-Okla.) objected to Boxer’s request. Largely lost in the all-consuming debt ceiling debate, the FAA shutdown is now closing in on two weeks. The agency hasn’t had a long-term funding plan since 2007, instead relying on a series of short-term extensions, the last of which expired July 22. House Republicans have left Democrats with few attractive options. The most recent short-term funding bill passed by the House cuts money for rural airports, including several that lie in states with Democratic senators . Meanwhile, the long-term funding bill passed by the House would make it harder for air and rail workers to unionize, a provision that could infuriate the labor community. With the process stalled, Democrats fumed over what they described as a shotgun approach to negotiating by Republicans. “The House Republicans’ insistence on attaching anti-worker provisions to an aviation bill has brought about a terrible stalemate that is hurting the economy,” Sen. Jay Rockefeller (D-W.Va.) said in a statement. “From day 1, House GOP leaders admitted openly — almost proudly — that they were doing this to gain ‘leverage’ toward a larger goal — undermining worker rights.” House Majority Whip Steny Hoyer (D-Md.) said the FAA standoff is just the latest example of how House Republicans have put politics ahead of good faith efforts to pass legislation. “They were clearly prepared to let America default for the first time in history on its debts unless they got their way,” Hoyer said. And now, “They were prepared to leave Washington … with almost 4,000 federal employees out on the street.” As a result, Senate Majority Leader Harry Reid was “confronted with a terrible decision” of either passing the GOP bill or not reauthorizing the FAA, Hoyer added. LaHood said he has been in continuing talks with lawmakers and hoped Democrats would “swallow hard” and pass a bill that many of them found distasteful. “The only option that we have is the House bill that a lot of senators don’t like,” LaHood said, arguing that too many jobs were on the line. “We are smack dab in the middle of the construction season. We … have heard many, many grandiose speeches by members of Congress about creating jobs and putting people to work. This is not the way to put people to work.” President Obama called the impasse “another Washington-inflicted wound on America,” and on the Senate floor, Boxer said the Republican maneuvers amounted to “hostage taking.” Although the rural airport service cuts amount to a mere $16.5 million, the stalemate has already cost the federal government more than $250 million in airfare taxes that can’t be collected until legislation is passed. Worse yet, the stoppage has taken paychecks out of the pockets of thousands of public- and private-sector workers who were either furloughed or saw their projects temporarily shuttered. According to the FAA, the lawmakers’ spat has held up $2.5 billion that should be going to airport projects across the country. The trade group Associated General Contractors of America estimates that the stoppage has affected 70,000 workers, many of whom have been told to go home until the FAA money comes through and the stop-work orders are lifted. Most FAA employees have not been furloughed, since some workers’ funding is secure regardless of the reauthorization bill. But other workers aren’t so fortunate, like Michael Weatherby, a computer specialist who was furloughed 11 days ago. Weatherby, who normally works at the William J. Hughes Technical Center at Atlantic City International Airport in New Jersey, said the irony isn’t lost on him that congressional leaders might take flights home for recess without passing an FAA bill. “All I hear is jobs, jobs, jobs out of Washington, and here they are to put us out of work,” said Weatherby, who works on cybersecurity issues. Weatherby, 43, said the furlough has put serious financial strains on his family. Although his wife continues to work her job with Atlantic County, the two have to support not only themselves but her elderly parents as well. Weatherby said he’s already started dipping into his savings and doesn’t know how long it will last. His colleagues have started using their vacation time and have been told they should start applying for unemployment. “It’s getting desperate at this point,” he said. “The senselessness of all this is amazing.” Jennifer Bendery and Michael McAuliff contributed to this report.

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Paul Sylvester: Big Infrastructure Projects Have High Risks but High Rewards

July 7, 2011

Commentators in the United States often lament the country’s seeming loss of will to take on the kinds of big infrastructure projects that made the nation great in the first place; founding the Tennessee Valley Authority in the 1930s to provide electricity and economic development to Tennessee and six neighboring states; providing long distance road travel throughout the lower 48 states by constructing the Interstate Highway System beginning in 1950s; and, of course, landing men on the Moon in the Apollo program of the 1960s, which spurred scientific and technological innovations that continue to today, just to name a few. China meanwhile seems to be getting on with the business of building a 21st century country. A new, $5 billion US, 2,525 kilometer (1,575 mile) railway between Beijing and Hong Kong was completed in 1997, and there are plans to spend $100 billion US to lay down tracks for a 12,000 kilometer (7,500 mile) high-speed railroad, running trains at speeds up to 300 kilometers (185 miles) per hour. The Three Gorges Dam is the world’s largest and costliest ( estimated at $30 billion US or more) hydro power project ever undertaken, with a capacity to produce of 18,000 megawatts of electricity. The reality of a non-democratic country boldly building big things intended to service a large modern state challenges the paradigm taught for decades that only democracies can produce such successes. It is with this background that news reached us on Canada Day (July 1) that the Innu Nation of Labrador ratified the New Dawn Agreement , marking another step toward the start of the Lower Churchill Project, a hydroelectric development that will transmit electrical power from Labrador, across the Strait of Belle Isle, down to the island of Newfoundland, and then across the Cabot Strait into Nova Scotia, with the possibility of exporting excess power to the rest of the Maritimes and New England. It is an audacious plan undertaken by two Canadian provinces, Newfoundland and Labrador and Nova Scotia, with a combined population of only about 1.5 million people. It should remind us that the ability to tackle big infrastructure projects is still alive in North America, and inspire us to embrace similar projects elsewhere. The project in Atlantic Canada is estimated to cost between $6-$9 billion CAD (the Canadian and US dollars are approximately at parity at present) for construction of a 824-megawatt generating facility at Muskrat Falls on the lower Churchill River in Labrador; a 1,100-kilometer (680 mile) transmission link to the island of Newfoundland, including 30 kilometers (19 miles) of submarine cable; a maritime link to Nova Scotia including 180 kilometers (112 miles) of submarine cable; and other transmission infrastructure. The New Dawn Agreement includes provisions for native peoples in Labrador to receive a royalty of five per cent of net project revenue and payments of $2 million CAD per year until the project first begins generating commercial power, expected to be in 2017. Forty per cent of the electricity output will be sold to customers in Newfoundland, replacing the current oil-burning facility that generates electricity on the island; 20 per cent will provided to Nova Scotia customers, representing almost 10 per cent of the province’s domestic needs; and the remaining 40 per cent will be available for sales to other parts of the Maritimes or in the United States. There is an option to expand the development significantly later, by building a 2,250-megawatt hydroelectric plant at Gull Island, further upstream on the lower Churchill River. The project is not without its challenges or critics. Taxpayers in Newfoundland and Labrador will be burdened with the capital costs of the development and electricity prices for customers will inevitably increase. Even Nalcor Energy , the provincial crown corporation power utility responsible for the project in Newfoundland and Labrador estimates that customers in the province will pay about 15 cents per kilowatt hour for electricity in 2017 compared to about 10 per cent today. Some have argued that the total project costs are likely to be closer to $15 billion CAD so the costs to taxpayers may be much more than those predicted now. The project is already behind schedule and it is unclear if power will really begin flowing by 2017. Some have doubted that markers for electricity generated by the project will exist in New England and other eastern U.S. states in the coming decades if local sources of energy continue to be available, particularly natural gas hosted by shale rocks, which seems much more abundant than was thought even just a few years ago. While many of these concerns may be true, what many miss is that big infrastructure projects are, by their very nature, high risk, high reward enterprises. One does not go into them lightly but, at the same time, one should not let their uncertainties provide cover for a lack of courage to take them on. Intangibles play a role in predicting the future. In this case, hydroelectric power generation has a small carbon footprint compared to many other energy sources, and it is very possible that in the years to come, this source of energy will become highly valued in a world struggling mightily to reduce greenhouse warming. This is not to say that damming rivers and flooding lands does not have adverse environmental impacts and perhaps other technologies such as wind and solar power seen as even more “environmentally-friendly” will be more appropriate for some regions than hydroelectric plants. Which leads to the final point — debating when and where to tackle big infrastructure projects, and which ones, is still an advantage held by democracies.

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Look Out, Employers: Labor Shortages Could Give Workers The Upper Hand

July 5, 2011

The mining and software industries have at least one thing in common. A labor scarcity, or a shortage of skilled workers, could affect the profit margins for both of them, according to a report issued by Fitch Ratings Tuesday afternoon. “Investors would be well served to identify companies in sectors confronting tight and/or fragmented labor supply,” the report reads. These sectors include technology, natural resources (such as oil and gas, or mining), and unionized industries like autos and airlines, the report claims. The inability of certain sectors to find appropriately skilled workers would indicate some level of structural unemployment, an economic scenario in which joblessness remains high because of a mismatch between laborer skills and employer needs, rather than a lack of consumer demand. Under these conditions, the report warns, labor inflation in these certain sectors could result in reduced output and lower profits for employers. However, the situation, specific to a small number of industries, might be masked by the overall national unemployment rate, currently stuck at 9.1 percent , according to the report. The Fitch report cites mining as one sector where a modest labor force and heavy union activity could push wages higher. The report notes there were 23,000 mining and natural resource job openings in May. According to the Bureau of Labor Statistics, though, mining has added 115,000 jobs since October 2009, including 7,000 new jobs in May of this year. Another industry to watch is shale drilling, according to the report. Since different kinds of shale can vary so widely, skilled laborers in this area have highly specialized knowledge, which makes them “not fully interchangeable,” in Fitch’s phrasing. Shale drilling is undoubtedly a dynamic industry; it’s been reported that between the fourth quarter of 2009 and the first quarter of 2011, 72,000 people got hired as a result of drilling in the Appalachian-area Marcellus Shale rock formation. However, there were only about 9,300 new jobs created, according to The Wall Street Journal , and the positive impact of the drilling on local communities is a matter of some debate . A third industry that could be affected by labor shortages, according to the Fitch report, is the tech sector, where companies are being forced to lay out more and more generous stock options in order to attract the best talent. In the past year and a half, numerous sources have reported that skilled labor is harder to come by, more or less across the board . Manufacturing, tech, construction, accounting, and farming are among the sectors where the available jobs reportedly outnumber the qualified workers. While the Fitch report concludes that “broad based inflation may not be an immediate threat,” given the enervated state of the U.S. economy, it adds that “localized inflation pressures may have meaningful impacts on margins and project timetables in select industries.”

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U.S. Regulators: Progress Being Made Towards Global Financial Rules

June 16, 2011

WASHINGTON — Federal regulators said Thursday they are collaborating with other nations on rules intended to prevent another global financial crisis. The topic was raised at a congressional hearing looking into whether last year’s financial overhaul could drive business overseas and hurt the U.S. economy. House Republicans are trying to weaken or kill the law before regulators finish writing rules opposed by the banking and financial community. Regulators, meanwhile, have said they will miss next month’s deadline to complete some of the rules a year after President Barack Obama signed the law. Federal Reserve Gov. Daniel Tarullo, Treasury Department official Lael Brainard and other regulators told a House panel they have made progress in coming up with new capital requirements for banks together with officials overseas. On the House floor Thursday, lawmakers voted to adopt legislation that would delay by more than a year new rules for reporting trades in derivatives, the complex financial instruments blamed for helping precipitate the 2008 financial crisis. The amendment to the bill funding the Agriculture Department and the Commodity Futures Trading Commission would require the CFTC to first have other rules in place to help it collect derivatives market data. The bill also would slash by 44 percent the Obama administration’s funding request for the CFTC for the budget year starting Oct. 1, to $172 million. The value of derivatives depends on the future price of some other investment. They have ballooned into a $600 trillion market. Regulators say they pose a threat to the stability of the financial system. Wall Street executives, appearing later before the House Financial Services Committee, maintained that the stricter financial rules could crimp U.S. firms, hurt the economy and cost jobs. “The regulatory pendulum clearly has now begun to swing to a point that risks hobbling our financial system and our economic growth,” Barry Zubrow, the chief risk officer of JPMorgan Chase & Co., told the panel. Brainard, the Treasury undersecretary for international affairs, said officials have been working “tirelessly” to create a level playing field of financial regulation across the U.S., Europe, Asia and other business centers. “There are some who would argue that the United States is moving too fast, that we should wait to see what other countries implement,” Brainard testified. “I do not agree. I would argue that by moving first and leading from a position of strength, we are elevating the world’s standards to ours.” Rep. Spencer Bachus, R-Ala., the committee’s chairman, warned that a coming “tsunami” of regulations could “push capital, industry and jobs right out of the country.” Democratic lawmakers defended the overhaul but some voiced concern about specific rules being considered, such as the stricter capital requirements for financial institutions deemed by regulators to pose a potential threat to the system. John Walsh, the acting comptroller of the currency whose Treasury Department agency oversees national banks, said he was concerned that if the capital requirements were “taken too far, we may limit the availability of credit that is needed for economic growth.” Walsh has disagreed with other federal regulators on how stringent the new capital requirements should be.

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Tightening Supply Boosts Industrial Rents

June 16, 2011

The industrial sector is growing faster than expected, largely a result of a shortage of “suitable and available properties,” according to CB Ric read more

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Economic Uncertainty Hampers Construction Outlook

June 15, 2011

Rising construction material costs and continued economic uncertainty are two of many factors tempering the construction outlook through year-end, according FMI

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"Bosnia-Herzegovina Real Estate Report Q3 2011 … – Abort America

June 4, 2011

BMI Methodology – How We Generate Our Industry Forecasts – Construction Industry – Bank Lending – Real Estate /Construction Business Environment Rating – Table: Weighting Of Indicators – Project Finance Ratings Indicators …

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$969m top bid for Boon Lay Way site « mypropertyblog

June 3, 2011

The third highest bid of $785.1 million or $820 psf ppr came from a Keppel Land-led joint venture together with Perennial Real Estate . Other participants in the tender were Frasers Centrepoint, … CMA, CMT and CapitaLand’s wholly-owned unit, CapitaLand Commercial , submitted their bid through JG Trustee and JG2 Trustee in a joint venture . CMA holds a 50 per cent stake in the venture, CMT has a 30 per cent stake, and CapitaLand owns a 20 per cent stake. …

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Dov Seidman: Going Flat: Creating the Freedom to Succeed

June 2, 2011

Business leaders often state they’re going flat because they want employees to “think outside the box.” I want to “push back” on their reasoning. I resist the urge to “push back” because I’m trying to eliminate concepts associated with traditional organizational structures from my leadership vocabulary. What if leaders of flat organizations invested as much effort in inspiring people to build cultures without “boxes” by constructing a new mindset for the behavior they want as they invest in deconstructing the vertical and functional restraints that limit space in hierarchical structures? My own company, LRN, is working to answer this question on our own flat journey. Tearing down our vertical structure was easy. Building a new self-governing mindset is where the real work begins. The right balance needs to be struck between governance, leadership and culture, one that provides enough of each to guide crucial decisions such as who gets to spend money (how much) and who gets rewarded (how). As we studied other flat journeys, we saw a need to strike a “Freedom From/Freedom To” balance. Eliminating old structures gives organizations freedom from micromanaging, lengthy approval processes and other obstacles — it creates space. But maximizing the value of this space means giving people the freedom to collaborate, to make quick decisions, to innovate and much more. This freedom to self-govern requires behaviors, derived from shared values, that align to achieve a shared mission. These days, many companies share the belief that a flat structure is a necessity in a flattened world. David de Wetter, a senior organizational alignment consultant with Towers Watson, reports that the use of flat, or “matrix,” organizational structures is growing. Yet, de Wetter also notes that these organizations often contend with a “matrix tax.” This tax manifests itself in the form of slower and less effective decision-making due to the lack of a clearly defined mission and objectives. Constructing Self-Governance How can leaders dodge this tax and construct a self-governing mindset? It takes time, deliberate work and a lot of attention to the following activities: How we lead: Relinquishing traditional modes of control often feels uncomfortable to leaders. Along different stretches of our flat path, I certainly have felt vulnerable. While the deconstruction represents a top-down effort, the construction of a self-governing culture is an “everybody effort.” At LRN, four democratically elected councils have joined our executive council as the primary shapers of our new approach. These teams are deciding how our company will organize and behave. Despite occasional leadership discomfort, we have found that leaders should continue to believe in, project the vision for, and support the evolution toward a flat structure and a self-governing mindset as an essential way of thriving amid 21st century business conditions. How we speak: The uncertainty that accompanies the move to a flat structure and self-governing mindset — as well as ongoing external uncertainty — increases the need for language that conveys with certainty that individual efforts are aligned. In our company, we are trying to replace hierarchical language (e.g., “superior,” “need-to-know basis,” “employee,” “customer”) with terms that support a self-governing mindset (e.g., “collaboration,” “colleagues,” “partners”). This attention to language extends to a new approach in which “functions” have been replaced with “mindsets” that describe how we are helping our organization achieve our mission, rather than identifying our specific expertise and seniority level. For example, our “Enable” mindset (previously called IT, HR, finance, etc.) focuses on the valuable internal collaboration needed to keep our business moving forward. How we manage performance: One of our colleague councils developed a new performance review standard in which colleagues select their own leaders and networks of colleagues to assess their performance. While we offer guidelines for selecting these leaders (e.g., they should be colleagues who have led a team you were on and who are most knowledgeable about your work), the decision resides with our colleagues. How we recognize and reward performance: Jason Fried, co-author of Rework (Crown Business, 2010) and co-founder of Chicago-based software firm 37signals, notes that his company values “horizontal ambition” over “vertical ambition.” The flat company values employees who love what they do and who continually strive to improve upon their passion. To live this value, the firm rewards high-performing employees with additional responsibilities in their area of interest rather than with management positions. It also helps, Fried reports , that the company pays above-market salaries and gives people “plenty of freedom to make their own decisions about the projects they’re working on.” Yet these rewards would not help stimulate desired behaviors if Fried did not complement 37signals’ flat structure with this self-governing mindset. Achieving the kind of mindset that enables flat structures to succeed requires a lot of this type of thinking. No boxes at all, just freedom to pursue our highest and best work.

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Asian Activities Report for June 2, 2011: Ord River Resources (ASX:ORD) Signed Engineering, Procurement and Construction Memorandum with NFC (SHE:000758)

June 2, 2011

Asian Activities Report for June 2, 2011: Ord River Resources (ASX:ORD) Signed Engineering, Procurement and Construction Memorandum with NFC (SHE:000758)

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China ACM Announces Board Changes

May 27, 2011

BEIJING–(Marketwire – May 27, 2011) – China Advanced Construction Materials Group, Inc. ( NASDAQ : CADC ) (“China ACM”), a leading provider of eco-friendly ready mix concrete and related technical services in China, today announced the appointment of Joanna Wang to its Board of Directors. The Company also announced that Larry Goldman and Dennis Slavich resigned from the Board of Directors this week. With the recent appointment of Jin Tao, China ACM maintains a total of seven directors, four of whom are independent.

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Beck Hires Harri Jarvenpaa as Senior Designer

May 23, 2011

  ATLANTA, GA (May 23, 2011) – The Beck Group’s Atlanta office said today that Harri M. Jarvenpaa (top right photo) , AIA, LEED AP, has joined the team as a senior designer. Harri has more than 15 years of experience in healthcare design and complex high-rise mixed-use construction. In his new role with Beck, Harri will manage pre-development services, conceptual design and facilitate meetings with municipal zoning and code officials. During his career, Harri has managed and designed projects in Georgia, Texas, Florida, Colorado, North Carolina and Virginia. The majority of these project budgets were between $50 million and $100 million. “Harri has extensive experience in healthcare design and construction,” said Fred Perpall (lower  left photo by KARL W. RITZLER/Special from Atlanta Journal Constitution) managing director of Beck’s Eastern Division. “This skillset will be a great asset to our design team.” Before joining Beck, Harri was a senior designer with The Peacock Partnership in Atlanta. His career has also included positions with The Preston Partnership and Smallwood, Reynolds, Stewart, Stewart and Associates. Harri is a member of the American Institute of Architects and the U.S. Green Building Council. He holds a Bachelors of Architecture from Mississippi State University. Dallas-based Beck is a full-service builder. Beck is in the business of devising solutions for clients needs through the development of real estate, the design of architecture and interiors and the construction of buildings.  Beck serves a wide range of industries, including arts, corporate, healthcare, entertainment, religious and education. Beck has more than 500 employees, many of whom are LEED-accredited professionals, working from a network of offices in Atlanta, Austin, Dallas, Denver, Fort Worth, Mexico City, San Antonio and Tampa. For more information, go to www.beckgroup.com .   Contact: Laura Dudebout O: 404.965.5023 C: 678.642.4301 ldudebout@wilbertnewsstrategies.com

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Hitachi Construction to resume pre quake’s output capacity

May 16, 2011

Hitachi Construction to resume pre quake’s output capacity

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Flavia Colgan: The Cost of Construction

April 15, 2011

I have come on as a producer of a project I feel very strongly about and I know this community will as well. It is about worker safety and the unnecessary deaths that occur every day across America and what we can do to change it. I have teamed up with Cavelight Films to finish Cost of Construction . The film uncovers the national scandal surrounding a series of controversial deaths that happened on the most expensive commercial construction project in United States history — all happening on the Las Vegas Strip, called CityCenter. The film investigates a pattern of hazardous deregulations, overturned violations, and dangerous negligence at the highest corporate and governmental levels exposing a national safety system in crisis. This story is untold and effects many Americans. We have been working on the documentary for three years and it is almost done. We are just looking for some finishing funds to update, get the interviews folks were to scared to give a few years back, and make sure it can look as great and be as powerful as the story deserves. We already have interest in terms of distribution and placement so the film will be seen. Please check out our kick-starter page . An average of 16 workers continue to die each day in America. In the wake of the BP oil rig explosion and the high profile 2008 crane accidents in New York City, this production comes at a critical time. Currently in production, the film features Pulitzer Prize winning journalist Alexandra Berzon, Congressman and former Chair of the House Committee on Education and Labor George Miller, various national and local officials, union leaders as well as families of deceased construction workers. The Story On June 26, 2006, cameras roll as the MGM Mirage Corporation demolished one of the oldest hotels on the Las Vegas Strip to make way for the largest and most innovative project ever attempted called CityCenter. Six skyscrapers designed by world-renowned architects comprised of cutting-edge hotels, casinos, restaurants, spas and luxury condos, CityCenter is redefining the Las Vegas Strip: 9.2 Billion dollars spent. 6,000 rooms created. 65 acres of land developed. But being the biggest comes at a price: 6 construction workers dead. 1000 injured. 1 national safety system in crisis. Why Now: Have we learned our lesson? Cost of Construction’s in-depth look at the issues surrounding the CityCenter project has implications that reach beyond the construction industry. At its core, this is a story about the complexity of corporate and personal responsibility during an era of massive government deregulation. The construction fatalities at CityCenter were not isolated events. From the recent wave of deadly crane accidents in New York City to the devastating oil spill in the Gulf, it is clear that our national safety system is in crisis. Cost of Construction will lead us to present day and examine what President Obama’s administration is doing to ensure worker safety. Are President Obama’s new Labor Department and OSHA appointees a step in the right direction? What new laws and regulations are being enacted? Are the current state and federal regulators equipped to manage the next CityCenter-sized project? Or are we in for another heartbreaking lesson in the true Cost of Construction? It is important for all OHS professionals to watch OHS regulation and programs that operate and develop in the United States for the spread of US culture is, in many countries, introducing a perspective on the law that increasingly is out of sync with the laws and values in one’s local country. It could be argued that Lord Young’s recent review of OHS and the “compensation culture” in the UK is an example of the US cultural spread. Please help us bring this story to the nation and be a voice for those who should have been heard for years. These deaths do not need to happen and those responsible should be called to task. Our laws must change to save lives and do what is right! Thank you in advance for anything you can do.

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Don McNay: Wisdom from a Wealth Wizard

April 10, 2011

Investment guru Pete Mahurin of Bowling Green is often described as “the Warren Buffett of Kentucky.” Tom Eblen and Al Smith compared Mahurin to Buffett in their newspaper columns. Lexington Mayor Jim Gray, who serves with Pete on the board of Gray Construction, has also used that description. Mahurin was a high school physics teacher who got into the investment business and became one of Hilliard Lyons’ top producers. He owns banks. He sits on the boards of major industrial companies. He made a great fortune but has spent all of his seventy-plus years in small town Kentucky. I once emailed Pete about the Buffett connection, and he wrote, “I never took a business class in school and have read very few business books. Things by and about Buffett interest me. Books about high functioning people interest me. From Roosevelt (Teddy and FDR), Lincoln, House of Morgan to Johnny Unitas, things about how people achieve, fascinate me. People like Ervin Houchens, Bill Gatton, Owsley Brown as well as high functioning people the age of my 30 year old daughter, stimulate and motivate me.” Jim Gray passed along a quote from Pete, in which he said, “The best utilization of an extra bucket of feed is to give it to your best milk cow. In other words, do what you do best. Focus on what’s important, nurture that service or product with resources, and improve, improve, improve.” Focus on high achievement and gifted people seems to be part of Pete’s DNA. He puts his money where his mouth is. He and his wife, Dixie, funded an endowed professorship in Gifted Studies at Western Kentucky University, one of the few such endowed professorships in the country. They stepped up to the plate again last year to allow the World Council for Gifted and Talented Children to move from the University of Winnipeg to Western’s campus. Like Warren Buffett, Pete is a lifelong Democrat and champion of the capitalist system. In his Courier Journal piece, Al Smith quoted Mahurin as saying, “I consider the Democrats still a party of hope and opportunity. I was poor on a farm, but Democratic programs enabled me to slip in the side door, or kick in the back door, and attend this great party called capitalism. Today, my family and I can walk in the front door anywhere in the country.” Pete has the common sense of a man who grew up in Short Creek, (Grayson County), Kentucky and achieved higher than those from wealthy families and Ivy League pedigrees. What he learned from childhood was that one has to seize opportunity when it is front of him. Jim Gray passed along a story in Pete’s own words: “When I was young, all the little communities in my area had a baseball team. One Sunday afternoon someone on the other team hit a little pop fly that at least 3 of us were close enough to catch. Three of us ran toward it, and all stopped, waiting for another person to catch it. No one did, and the base runners ran around the bases. We lost. Fifty years later I realized why that memory remained fresh and bitter. It was not that we lost, or that an error was made. Losing because I failed to act stuck with me forever while failures made attempting to execute faded away.” I’ve spent nearly 30 years around the financial business. I’ve known a lot of “paper gurus” who can talk a decent game but really don’t practice what they preach. Mahurin walks the walk with his numerous contributions to charity and encouraging other entrepreneurs. But his talk when he talks, Gray compares to “divine wisdom.” In a previous Huffington Post piece, I called Pete, “the person we should be moving our money to.” I would feel better about Pete running the economy than the Wall Street bankers who pushed us to the edge of disaster. http://www.huffingtonpost.com/don-mcnay/the-person-we-should-be-m_b_841520.html Don McNay, CLU, ChFC, MSFS, CSSC of Richmond, Kentucky, is an award-winning columnist, structured settlement consultant and Huffington Post Contributor. He is the author of the book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery. He has appeared on the CBS Evening News With Katie Couric along with numerous other television and radio programs. You can read more about Don at www.donmcnay.com McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field

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Behind Facebook’s Big Freebie

April 9, 2011

This week, Facebook did something that would be unthinkable for most tech companies: it created a product cheaper, more efficient and more environmentally sound than the industry standard, then provided explicit instructions detailing exactly how to build it. Under an initiative dubbed the Open Compute Project , Facebook released designs for the technology powering its new data center in Prineville, Ore., which Facebook says is 38 percent more efficient and 24 percent cheaper to run thanks to its custom engineering. Facebook framed the effort as a means of encouraging collaboration in the tech industry, advancing “best practices” in the construction of data centers and upholding its commitment to openness. But the PR-speak belies a high-stakes bet placed by the world’s largest social network that could have far reaching implications for its balance sheet and those of its competitors. To most of the social networking site’s 500 million-plus users, Facebook is entirely virtual — an intangible but interactive screen of likes, pokes, chats and status updates that exists only in the ether. Though Facebook produces neither sneakers nor iPods nor any other physical good, the company owns a factory in the form of its Prineville data center. The racks of servers in central Oregon not only power the online experience that keeps users coming back for more, they also manufacture Facebook’s key moneymaker: its advertising. Now, Facebook is giving away the blueprints for that factory, in what appears to be a gamble that the move will help it leverage the expertise of thousands of engineers worldwide to further refine its data center technology, lower the cost of powering its site and, in so doing, squeeze extra dollars out of its ads. Because the cost of creating and serving up a Facebook ad has little direct correlation with the ad’s price, any savings in the expense required to deliver that content, via more efficient data centers and servers, translates directly into extra profit for the company. Even the slightest improvements to its factory can translate into more dollars for Facebook. Google, which has carefully safeguarded the secrets to its hyper-efficient data center, has an army of engineers it can task with improving its servers. On the other hand, Facebook, which is growing but still small — with several thousand employees to Google’s more than 20,000 staffers — has far more limited means. By opening up its data center designs, Facebook is now able to solicit suggestions from thousands of experts worldwide and potentially tweak its technology quickly with fewer people. “When they make this know-how available publicly, Facebook can effectively crowdsource its expertise because it leverages a much larger community than they have available to them internally,” said Stephen O’Grady, principal analyst at Redmonk . “As smart as the Facebook community is, they’re not necessarily going to be as smart as the whole rest of the industry, which now has access to this technology.” Sharing its blueprints may gain Facebook not only free manpower, but cheaper equipment. The company’s bet, analysts say, is that giving away intellectual property will help it foster an ecosystem of competing vendors that will drive down the cost of parts. “They’re hoping to catalyze a competitive vendor ecosystem so that they can put things out and get competitive bids for the servers that they need,” said Forrester analyst Rich Fichera. “In order to do so, they have to open [the technology] up enough that it is of interest to others besides themselves.” There are also less tangible benefits to opening up the company’s technological know-how, such as currying goodwill among the tech community, which looks favorably on information sharing. Experts note that the Open Compute Project, by lowering barriers to entry, could potentially provide a boost to future Internet startups looking for a way to save money on data center costs. Though Facebook runs the risk their IP freebie fails to reap the financial rewards it may hope to see, by disseminating the designs in the first place, the company is sending a strong signal on what it sees as its own competitive advantage: software, brand and users, but not hardware. “[The Open Compute Project] really is a big deal because it constitutes a general shift in terms of what how we look at technology as a competitive advantage,” O’Grady said. “For Facebook, the evidence is piling up that they don’t consider technology to be a competitive advantage. They view their competitive advantage in the marketplace to be their users.”

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Obama Talking Energy Policy As Gas Prices Climb

March 30, 2011

WASHINGTON — Facing pressure to curb rising gasoline prices, President Barack Obama is calling for the U.S. to reduce its oil imports by one third by 2025, a lofty goal likely to run into significant obstacles. The White House said Obama will seek to reduce the U.S. dependence on foreign oil by boosting domestic energy production, increasing the use of biofuels and natural gas, and making cars and trucks more fuel-efficient. Obama planned to outline these steps during a speech Wednesday at Georgetown University. In a speech Tuesday in New York City, Obama pointed to rising gasoline prices to underscore the need for a comprehensive energy plan. “We’ve still got a lot of work to do on energy,” the president told an audience of donors at The Studio Museum in Harlem. “The last time gas prices were this high was 2008 when I was running.” Obama contrasted his approach to an energy slogan popular among Republicans. “The other side kept talking about `drill, baby, drill.’ That was the slogan,” he said. “What we were talking about was breaking the pattern of being shocked by high prices” and then lulled into inaction. Obama is far from the first president to set out to make the country more energy independent. U.S. presidents dating back to Richard Nixon had similar goals that achieved little success; the U.S. continues to be the world’s top oil consumer and gets more than 60 percent of its oil from foreign sources. Still, the White House is eager to show that the president understands the burden rising gasoline prices have on middle-class Americans, particularly as his re-election bid draws near. Gas prices have jumped more than 50 cents a gallon this year, due in part to a spike in oil prices amid instability in the oil-rich Middle East. Last week, gas prices averaged $3.58 a gallon nationwide, according to AAA’s daily survey. Even if U.S. consumption of oil drops, it will have little if any impact on gasoline prices, since oil is priced globally and increased demand from China and other developing nations continues to push prices up. Republicans put the blame for the increased costs on Obama’s policies, pointing to the slow pace of issuing permits for new offshore oil wells in the wake of last summer’s massive Gulf of Mexico spill and an Obama-imposed moratorium on new deep-water exploration. GOP leaders have also assailed the president for saying last week in Latin America that he wanted the U.S. to be a “major customer” for the huge oil reserves Brazil recently discovered off its coast. “The problem isn’t that we need to look elsewhere for our energy. The problem is that Democrats don’t want us to use the energy we have. It’s enough to make you wonder whether anybody in the White House has driven by a gas station lately,” Senate Minority Leader Mitch McConnell, R-Ky., said Wednesday. In order to meet his goal of cutting oil imports by one third, Obama will call Wednesday for new incentives for companies to speed up oil and gas production on current and future leases. An Interior Department report released Tuesday said more than two-thirds of offshore leases in the Gulf of Mexico are sitting idle, neither producing oil and gas nor being actively explored by the companies who hold the leases. The department said those leases could potentially hold more than 11 billion barrels of oil and 50 trillion cubic feet of natural gas. Obama will also call for increased use of biofuels and the construction of four new advanced biofuel plants in the U.S. within the next two year. However, advanced biofuels – fuels made from non-food sources such as wood chips, switch grass or plant waste – are still in their infancy and cannot yet be made in amounts similar to corn ethanol. Congress has directed more money to research and development of those fuels in recent years as some critics of corn ethanol have linked the diversion of corn for fuel to rising food prices. The president will also order government agencies to ensure that by 2015, all new vehicles they purchase are alternative-fuel vehicles, including hybrid and electric. Obama has previously set a goal of putting 1 million electric vehicles on U.S. roads by 2015. Administration officials said Obama’s plans would require significant spending on research and development, though they offered no cost estimates. Officials said Obama also would reaffirm his support for nuclear power, which has come under intense scrutiny in recent weeks after an earthquake and tsunami in Japan severely damaged a nuclear power plant there. As a result of the crisis, U.S. government regulators are reviewing a wide range of issues potentially affecting the 104 U.S. nuclear power reactors, including safeguards to protect them against natural disasters and terrorist attacks. ___ Associated Press writers Mary Clare Jalonick, Matthew Daly and Jonathan Fahy contributed to this report.

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Raymond J. Learsy: Nuclear Nay-Sayers and the National Interest

March 28, 2011

The events in Japan as they relate to issues of nuclear energy have been an urgent and important clarion call to all regarding the safety of our nuclear facilities and the role nuclear energy will play in our energy future. It is an issue of vital importance to the nation given its impact on global warming, national security and the economy. It is an issue that needs be examined openly and not simply left to those who are pre-programmed to present us with the familiar saws railing against nuclear energy with the tailwind of current events at their back. Almost the first out-of-the-box of nuclear energy dismissal was Rep. Ed Markey (D-Mass.) who on March 13, but two days after the tsunami hit Japan, set forth a list of nuclear policy objectives ranging from a call to imposing a moratorium on siting new reactors to requiring a review of the U.S. Department of Energy’s loan guarantee program, without which the construction of new facilities would be brought to a screeching halt. All points certainly to be put on the table, but Markey’s haste to be out front bespeaks where he is coming from. His views were more succinctly enunciated but a week later on March 20th speaking to ‘ Face the Nation ‘, he was quoted: “the nuclear industry as an electrical-generating part of our mix for the future” would likely “meet its maker” in light of the recent tragedy in Japan. Coming from the ranking member of the house Energy and Commerce Committee one can well imagine what lies ahead. Then we have Mr. Gregory Jaczko, head of the Nuclear Regulatory Commission testifying before the Energy and Commerce Committee about the nuclear situation in Japan. His testimony was broadcast around the world and fueled growing criticism of Japan’s government handling of events while frightening all who were paying attention. The New York Times would banner headline its first page on March 17, ” U.S. Sees ‘Extremely High’ Radiation Level at Plant, Focusing on Spent Fuels Impact ” and went on to write “More Dire Appraisal of Crisis Creates Split With Japan.” In these situations perhaps it is best to err on the side of caution. Yet in the retrospect of now twelve days since Jaczko’s testimony, it would appear the Japanese assessment was closer to the mark. Interestingly Gregory Jaczko worked as a Congressional Science Fellow on Representative Markey’s staff. Jaczko also seved as Senator Harry Reid’s science policy advisor. And therein lies the rub. Senator Harry Reid (D-Nev), probably more than anyone in public office has slowed down to a virtual halt the expansion of nuclear power in the United States (not a single nuclear power plant has been built here since the late 1970′s) by forcing the shutdown of the multi-billion Yucca Mountain, Nevada repository project for nuclear waste. In doing so he enormously complicated the siting of new plants and the safe handling of spent fuels, an issue now again in laser-like focus in response to the Japanese disaster. Without a program to effectively deal with nuclear waste, pools holding spent fuels at nuclear plants in the United States are even more heavily loaded than those at the Japanese reactors. Yet no plan has emerged to replace the Yucca Mountain repository, ( NYTimes : ” Japan Nuclear Crisis Reviving Long U.S. Fight On Spent Fuel ” 03.24.11). Certainly at Harry Reid’s insistence, President Obama told his Department of Energy to withdraw their application for the construction license for Yucca Mountain facility that was submitted to the Nuclear Regulatory Commission (NRC). When the Energy Department sought withdrawal of their license application last June, a panel of three administrative law judges maintained there was no provision in law to do so and rejected the NRC’s request to withdraw. The issue was automatically appealed to the full five member NRC . With one commissioner having recused himself the NRC voted 2-to-2 leaving the commission deadlocked thereby failing to override the panel of judges ruling. Thus the administrative judges’ ruling was left to stand. However Commission Chairman Jaczko has refused to bring the matter to a final vote, continuing to leave the issue unsettled, much to the consternation of many in Congress, not to speak of the utility industry and raising the question altogether, to whose benefit? Solution to the waste disposal problem has been under endless examination. Some years ago this writer proposed, at risk of being pilloried, siting such a facility in northern Alaska much in keeping with the effectively resolved Russian depots on the Novaya Zemlya archipelago in the Northern Arkhangelsk region (please see ” Nuclear Waste: ‘Not in My Backyard!’ Then Whose? ” 07.07.06) Another crucial initiative that could play a major role and has in many national nuclear programs such as that of France as but one example, is the reprocessing of spent fuel to recover plutonium produced in uranium powered reactors for reuse as reactor fuel. It is an issue that has been off the table in the U.S. since the 70′s when Jimmy Carter banned the process because of proliferation concerns (please see ” Climate Change and Nuclear Energy: America’s Missed Opportunity “, 12.13.09). Certainly the benefits and risks inherent in a nuclear energy program are enormous. It is important for the nation’s future when all is said and done, in spite of the current reaction to events in Japan, that the benefits attributable to nuclear energy are given temperate and fair consideration in all policy assessments.

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Greg Becker: Why Helping Only ‘Main Street’ Won’t Fix The Economy

March 24, 2011

All small businesses are not the same. Until this is registered and embraced by our legislators, this country will not succeed in its efforts to promote economic growth through innovation or unleash our full capacity to compete globally. As a participant in Treasury’s Access to Capital Conference held Tuesday in Washington D.C., I was invited to speak on a panel about fostering growth and innovation for high growth small businesses, with a specific focus on the role that debt can play. I was appreciative of the opportunity to represent the needs of truly innovative companies that contribute substantially to U.S. GDP, U.S. competitiveness and U.S. job creation. When the agenda arrived I was surprised. The conversation about innovation was set up once again as a general conversation about funding small business — any small business. High-growth small businesses are fundamentally different from “Main Street” small businesses. Main Street small businesses – businesses that, even if successful, intend to stay small and grow at a slower pace — are important to the health of our communities and are an important part of our overall economy. But the needs of “Main Street” small businesses require different support and regulatory reform than high-growth, mainly venture capital-backed companies. High-growth small businesses are critical to our nation’s economy for a host of reasons. Using companies that receive venture capital backing as a proxy for the high-growth sector more generally, the data clearly demonstrates that relatively small investments — on the order of 0.2 percent of GDP — have generated roughly 11 percent of all U.S. private sector employment and the equivalent of 21 percent of U.S. GDP. Venture-backed companies outperform the broader economy, whether measured in terms of job growth or revenue growth. They create new, long-lasting companies and industries: from information technology, biotechnology, semiconductors and online retailing to emerging industries such as clean technology, social media and cloud computing. They are an important source of growth for more mature businesses, across the broader economy. The innovative technologies they develop and commercialize contribute to U.S. productivity growth and economic competitiveness. And they improve Americans’ quality of life by expanding access to information, providing higher quality goods and services, improving health care quality and access, and fostering a more sustainable environment. As discussed in a letter I gave to Treasury secretary Geithner’s team and during the Treasury Conference today, we believe that there are five areas policymakers should focus on as part of an innovation agenda: promote a culture of entrepreneurship by providing an environment that is conducive to risk taking; develop our talent pipeline through a combination of sound education and immigration policies; create a robust idea pipeline by funding research and development and focusing on commercializing new innovations; ensure that there is adequate, appropriate risk capital to meet the needs of growing companies; and develop policies that promote sound, predictable, competitive markets. In addition, I provided three specific actions the administration can take immediately to support entrepreneurs and foster growth of our nation’s most innovative companies: 1) Treasury should work with the Federal Reserve, the SEC and other agencies to ensure that the Volcker Rule is implemented in a way that does not artificially restrict the flow of capital into innovative companies. Congress included the so-called “Volcker Rule” in the Dodd-Frank financial services reform bill in order to get banking entities out of activities it saw as highly risky. Specifically, it prohibited banks from engaging in proprietary trading and from investing in or sponsoring hedge funds and private equity funds, other than as specifically set forth in the statute. When one reads the legislative history, it is clear Congress did not intend for the Volcker Rule to artificially restrict the flow of capital to venture capital funds and, through these funds, to startup companies. Venture capital drives the innovation sector, and does not present any of the risks the Volcker Rule was designed to address. However, Congress failed to explicitly distinguish venture funds from private equity/buyout and hedge funds in the statute. In January of this year, the Financial Stability Oversight Council issued its Report and Recommendations on the Volcker Rule . The Council noted that “a number of commenters suggested that venture capital funds should be excluded from the Volcker Rule’s definition of hedge funds and private equity funds because the nature of venture capital funds is fundamentally different from such other funds and because they promote innovation.” It stated its belief that “the issue raised by commenters in this respect is significant” and recommended that the regulatory agencies charged with implementing the Volcker Rule carefully evaluate the range of funds and other legal vehicles that fall within Volcker’s definition of private equity and hedge funds, and consider whether it is appropriate to narrow the statutory definition by rule in some cases. Regulatory agencies should take up the Council’s recommendation and implement the Volcker Rule in a way that does not restrict the flow of capital from (and through) banks to venture capital funds and through these funds to startup companies. 2) The Administration should urgently address the FDA approval process and the broader regulatory environment affecting life science companies. The delay, cost, and uncertainty of the FDA approval process and the overall burden of the U.S. regulatory environment for life science companies have grown significantly in recent years. This trend is having a strong, negative effect on the life sciences sector. Investors and entrepreneurs are increasingly less likely to start, grow, and fund new businesses in the United States, electing to re-focus their efforts overseas (including in Europe) and/or on other less capital intensive, less risky sectors of the innovation economy. The results of a recent survey of Silicon Valley Bank’s early stage technology companies clearly illustrate the negative impact the regulatory environment is having on life sciences companies. When compared to their peers in the software/internet and hardware sectors, life science companies are: less optimistic about their business outlook in 2011, significantly more likely to report challenges to their business growth, less likely to say they will hire new employees in the coming year, and significantly more likely to cite regulatory/political issues as a major challenge. In fact, 64 percent of life science companies sector listed the regulatory/political environment as a challenge. For life science companies, it was a bigger issue than finding talent, accessing equity or debt financing, competition, and a bigger problem than scaling their operations for growth. And when we asked what makes it appealing to keep their businesses in the United States or move them overseas, life science companies were two to three times more likely than hardware and software/internet companies to cite the regulatory environment as a reason to move abroad. There is a real risk that, if we do not take steps in the very near term, our regulatory system will drive innovation and investment in medical technologies overseas, leaving U.S. entrepreneurs and investors focused on more capital efficient and/or less risky sectors. This will have a serious, negative effect not only on the robustness of the innovation sector per se, but on our country’s leadership in medical technology and its ability to use these technologies to address our health care challenges. 3) The Administration can work with Congress to adopt a meaningful, effective co-lending program to meet the needs of clean energy companies. One of the pockets in which there is a clear shortage of capital is the clean energy sector — in particular, in capital intensive areas such as energy generation, and for capital intensive projects such as the construction of commercial-scale facilities. These projects present regulatory, commercial, market and operational risks that place them beyond the risk appetite of commercial lenders. For the past two years, we have tried to work with the Department of Energy to create a co-lending program within DOE’s overall loan guarantee program that would help meet the needs of smaller, more innovative companies in the clean energy sector. To date, DOE has declined to go down this path. As a result, in our view, the DOE loan guarantee programs have not addressed the very real needs of smaller clean energy companies in a meaningful way. Treasury could work with the Office of Management and Budget and other relevant federal agencies to implement a co-lending structure for smaller clean energy companies and projects. We believe the government can build upon the Export-Import Bank’s very successful co-lending approach to leverage — rather than try to replicate — private sector lending expertise. Such an approach would help ensure that taxpayer funds are used wisely; provide a framework within which credit scoring could be done rapidly and responsibly; and dramatically increase the impact the loan guarantee program could have on the United States’ efforts to promote energy innovation. Our policy makers are pursuing the right goals. We just need to make sure they have a special focus on those companies that can make a substantial impact and create an environment in which they can actually make it.

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New Home Sales Plunge To Record Low In February

March 23, 2011

WASHINGTON — Sales of new homes plunged in February to the slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market. New-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes, the Commerce Department said Wednesday. It’s the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy. New-home sales now account for just 5 percent of total home sales so far this year. They typically represent closer to 15 percent in healthier housing markets. There were just 186,000 new homes available for sale in February, the lowest inventory in more than four decades. The median price of a new home dropped nearly 14 percent to $202,100, the lowest since December 2003. The median is now 30 percent higher than the median price of resold homes – twice the typical markup. In response, homebuilders are cutting their selling prices and building more inexpensive homes, pushing down sales prices. They are struggling to compete with a wave of foreclosures, which has lowered the price of previously occupied homes. High unemployment, tight credit and uncertainty over prices have also kept many potential buyers from making purchases. “Falling housing prices of existing homes are robbing demand for new houses and until that changes, the housing market will be in trouble,” said Yelena Shulyatyeva, an analyst at BNP Paribas. Last year was the fifth straight year of declines for new-home sales after they reached record highs during the housing boom. Economists say it could take years before sales return to a healthy pace. Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders. Many builders are waiting for new-home sales to pick up and for the glut of foreclosures to be reduced. But with 3 million foreclosures forecast this year nationwide, a turnaround isn’t expected for at least three years. “We fully expect further price declines in order to help clear inventory from the market although this problem is more acute in the existing home market than the new home market,” said Dan Greenhaus, chief economic strategist for Miller Tabak + Co. Homebuilders have taken notice. Residential construction has all but halted. Builders broke ground last month on the fewest homes in nearly two years. And building permits, a gauge of future construction, sank to their lowest in more than 50 years. By contrast, sales of previously occupied homes have fallen by a more modest 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. New-home sales fell to record lows last month in almost every region of the country. Sales dropped 57.1 percent in the Northeast, 27.5 percent in the Midwest, 14.7 percent in the West and 6.3 percent in the South. Those are record lows in each region except the West, which recorded its lowest sales pace in October. Harsh winter weather that dumped record amounts of snowfall over much of the Northeast and Midwest, along with rare snowstorms in Texas, had an impact on February sales. Given the pace of new-home sales, it would take nearly 9 months to clear them off the market. Economists say a six-month supply of homes is healthy.

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Buying A New Home Makes Less Sense After Foreclosure Crisis

March 23, 2011

WASHINGTON — A new home, the dream of many would-be buyers, makes less and less financial sense in many places. A wave of foreclosures has driven down the cost of previously occupied homes and made them even more of a comparative bargain. By contrast, new homes have become more expensive. The median price of a new home in the United States is now 48 percent higher than that of a home being resold, more than three times the gap in a healthy housing market. Such a disparity can be a drag on the economy. New homes represent a small fraction of sales, but they cause economic ripples, bringing business to construction and other industries. Sluggish new-home sales deprive the economy of strength. “A lot of people are saying, ‘If I can get a great deal on a home already on the market, why go through the headaches of getting a new home?’” says Mark Vitner, a senior economist with Wells Fargo. “There’s a relatively small group of people who have the credit, have the down payment and are secure in their jobs that can go out and buy new.” The gap is widening because prices of previously occupied homes are falling fast, pulled down by waves of foreclosures and short sales. A short sale occurs when a lender lets a homeowner sell for less than is owed on the mortgage. New homes aren’t directly affected by such sales. The median price of a new home – the price at which half the homes sell for more and half sell for less – has risen almost 6 percent in the past year to $230,600, even though last year was the worst for sales in nearly a half-century. Slowed by those higher prices, new-home sales have plummeted over the past year to the lowest level since records began being kept in 1963. The government provides fresh data on new-home sales Wednesday. By contrast, sales of previously occupied homes have fallen almost 3 percent in the past year. Prices have dropped more than 5 percent. In February, the median price for a resale was $156,100, according to the National Association of Realtors. That adds up to a price difference of $74,500, or 48 percent, the highest markup in at least a decade. In healthier markets, a new home typically runs about 15 percent more, according to government data. Home prices and sales still vary sharply among metro areas. Cities with more foreclosures tend to have more resale homes that have languished on the market and are priced at a bargain. That makes new homes in those areas comparatively expensive. In Atlanta, for instance, where foreclosures accounted for one in every 23 homes sold last year, the median price of a previously occupied single-family home was $109,900, about 12 percent lower than a year ago, according to the Georgia data firm Smart Numbers. The median price of a new home was more than twice that. “That’s as much of a difference as we’ve ever seen,” said Steve Palm, president of Smart Numbers. “New homes can’t compete, and that means jobs.” An average of three jobs and $90,000 in taxes are created for each home built, according to the National Association of Home Builders. In some areas, older homes were more expensive before the housing market bust. That was especially true in urban neighborhoods with little or no room left to build on. But now, buyers get their pick even in some of the trendiest places. That’s what Robert Rost is finding in central Phoenix. Rost doesn’t want to commute far to his job. He’s been looking for a home for about five months but can’t find new properties in the neighborhoods where he wants to live. “I don’t want to commute 45 minutes to an hour a day one-way,” the 38-year-old computer engineer says. Homebuilders have taken notice. Residential construction has all but come to a halt. Builders broke ground last month on the fewest homes in nearly two years. And building permits, a gauge of future construction, sank to their lowest in more than 50 years. Many builders are waiting for new-home sales to pick up and for the glut of foreclosures and other distressed properties to be reduced. But with 3 million foreclosures forecast this year nationwide, a turnaround isn’t expected for at least three years. Don Eyler, who has owned E and R Construction in Terre Haute, Ind., for three decades, blames the banks. He says people are still interested in having a custom-built home but can’t finance the purchase. Tighter credit has made it harder to get larger loans. Eyler typically built eight homes a year before the housing boom and bust. Now, he’s averaging just about five. And he’s making less profit on each. “We hope we can stay in business until it gets better, but the turning point is this year,” Eyler says. “If it doesn’t change, we’ll have to do something different.” Contributing to higher new-home prices is the rising cost of building materials. Fewer new homes sold means fewer jobs added to an economy struggling with 8.9 percent unemployment. About 2.2 million overall construction jobs have disappeared since the housing boom went bust. That’s nearly a third of the people the industry employed in January 2007. Workers in residential construction have fared even worse than other construction employees. Homebuilders cut nearly 1.3 million jobs in that time, or 39 percent of total payrolls. Besides generating jobs in construction and other fields, new-home purchases tend to help the economy because buyers are more likely to buy new furniture, appliances and other amenities. There’s also the psychological factor. In good times, most homes rise in value. But new homes historically have risen faster – by an additional 1.5 percent a year, according to Realtors and census data. When homes appreciate in value, people feel they have more money. So they spend more. “When you have more net worth, especially in your home, you feel richer,” says Chris G. Christopher Jr., senior principal economist at IHS Global Insight. ___ AP Business Writers Christopher S. Rugaber in Washington and Alex Veiga in Los Angeles contributed to this report.

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Case for Green Buildings Grows Stronger for Owners, Occupants

March 10, 2011

Evidence continues to stack up in the form of updated studies by CoStar Group, CB Richard Ellis, McGraw Hill Construction and other commercial real estate leaders that green practices are reducing long-term operating and occupancy costs, improving occupant health and boosting employee productivity – though not all those variables are fully understood or measureable as yet. Those were among the findings of the spring update of “Current Trends in…

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Construction Insurance and Surety Broker Vincent Walsh Joins RFF & Associates as Senior Vice President

March 4, 2011

He Brings 40 Years of Experience to Garden City, NY-Based Firm That Is a National Leader in Construction and Surety Brokerage

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UK PMI Construction Hits 8-Month High as Weather Improves; Pound Extends Gains

March 2, 2011

UK PMI Construction Hits 8-Month High as Weather Improves; Pound Extends Gains

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Beijing Breaks Ground In Bahamas With $3.4 Billion Mega Resort

February 21, 2011

NASSAU, Bahamas — Chinese and Bahamian dignitaries celebrated Monday as workers broke ground on what is being billed as the largest project of its kind in the Caribbean – a megaresort that will be financed and largely built by Beijing. Baha Mar, a $3.4 billion complex on Nassau’s Cable Beach, will employ some 8,000 workers and is projected to generate a 10 percent boost to the Bahamas gross domestic product, according to development company Baha Mar Ltd. The development plan calls for four hotels with a total of about 2,250 rooms, as well as a golf course, retail space, a convention center and what the developer says will be the largest casino in the Caribbean. It is scheduled to open in December 2014 and is aimed largely at North American consumers, who make up the vast majority of tourist visitors to the Bahamas, said Don Robinson, president of Baha Mar Ltd. In overall size, it will be comparable to the Atlantis resort on nearby Paradise Island. But that project was built in stages over a number of years, not all at once like Baha Mar. Robinson said the resort’s ambitious scope is part of its marketing plan, an effort to capture the public’s imagination and attract tourists who have abandoned the Bahamas for other destinations. “The vision was a large destination resort that would drive visitation,” he said in an interview with The Associated Press before the ceremony. “Anything smaller became less of an ability to increase the market. It needed to be large enough on the world stage that it could significantly drive demand.” Caribbean tourism took a steep dive with the global economic downturn, but there have been signs of life: Hotel room revenue in the region rose about 3 percent and occupancy edged up 1 percent last year, compared with 2009, according to travel industry watcher STR of Nashville, Tennessee. The crisis forced some developers to scale back plans made in rosier times, but Baha Mar appears to be wagering that it can create a destination resort and keep people spending money at stores and shops within the walls of the complex, said Jan Freitag, vice president for global development at STR. “The question is: Is that a good enough driver in this economic environment?” Freitag said. For the resort’s concrete and steel main structure, Baha Mar hired China State Construction Engineering Co. Ltd., which brought in the Export-Import Bank of China to finance the project when a previous partner dropped out. This is the first tourism project outside China for either of the state-owned enterprises, Robinson said. As part of its agreement with the Bahamian government, Baha Mar will import about 7,000 Chinese construction workers in stages. The project is also expected to create about 4,000 construction jobs for local workers, the developer said. “The great geographical distance between our two countries has not impeded our friendship,” Chinese Ambassador Hu Dingxian said at the groundbreaking ceremony. “This project is evidence.

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DATA SNAP: US Jan Housing Starts Jump 14.6%

February 16, 2011

========================================================== U.S. Housing Starts Jan Dec ! Consensus: ! Total Starts: +14.6% -5.1%r ! +0.2% ! Single-Family: -1.0% -8.4%r ! Actual: ! ! +14.6% ! ========================================================== By Alan Zibel and Andrew Ackerman WASHINGTON -( Dow Jones )- Home construction in the U.S. rose to the highest level since September last month, an indication of life in the battered sector. Construction of homes and apartments rose 14.6% from a month earlier to a seasonally adjusted annual rate of 596,000 from a downwardly revised 520,000 in December, the Commerce Department said Wednesday. New building permits, a gauge of future construction, fell 10.4% to an annual rate of 562,000. A month earlier, permits had posted a 15.3% monthly gain as builders sought approval before building codes changed in Pennsylvania, California and New York state. Economists surveyed by Dow Jones Newswires expected housing starts would rise 0.2% to an annual rate of 530,000 in January. Permits had been projected to plunge to a rate of 545,000. The month’s results were driven by a 77.7% gain in multifamily construction, a volatile part of the market. Single-family homes, which made up about 70% of all starts, fell by 1.0% from a month earlier. Compared with the same month a year earlier, overall new-home construction was down 2.6% Home construction remains low due to weak demand from buyers. While some people are buying houses, many of those are foreclosures and other previously owned homes rather than new ones. Even as the housing market struggles, the U.S. economy has been picking up. Gross domestic product increased by 3.2% in the October to December quarter of 2010, after rising 2.6% in the third quarter. As foreclosures continue to pour onto the market, meanwhile, the U.S. homeownership rate has been falling. In the fourth quarter of 2010, 66.5% of Americans owned homes, down from 67.2% a year earlier and the lowest rate since the end of 1998, according to the Census Bureau. New-home sales were down 7.6% in December from a year earlier, the latest government data showed. Aside from low demand, builders have also had problems getting financing to start projects. New-home construction last year peaked in April, but then fell sharply with the expiration of tax incentives for first-time purchases. Housing starts in December fell 5.1% from a month earlier, revised from an originally reported 4.3% monthly decrease. The Commerce Department data showed that regionally, housing starts in January increased 41.8% from a month earlier in the Northeast, 36.4% in the Midwest and 15.8% in the South. Construction fell 9.7% in the West. Actual housing starts, without seasonal adjustments, rose to 38,200 in January from a downwardly revised 33,700 in December. Lumber and commodities markets watch those numbers closely to gauge demand. The Commerce report can be found at http://www.census.gov/const/newresconst.pdf -By Alan Zibel, Dow Jones Newswires; 202 862 9263; alan.zibel@dowjones.com (MORE TO FOLLOW) Dow Jones Newswires Copyright

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Dean Baker: Arithmetic and the Fannie/Freddie Fix

February 10, 2011

Arithmetic is a skill that is in short supply among economists in policymaking positions. The Obama administration is about to come out with its plans for replacing Fannie and Freddie. The word in the media is that the administration will propose a range of options, with one option maintaining a Fannie/Freddie type structure and one option going to a completely private system for the main sector of the housing market. (Presumably the Federal Housing Authority would remain in place even in the private system to provide credit to moderate income households.) The third option, that apparently many Washington policy wonks are smiling upon, is a hybrid system with private institutions buying mortgages with a government guarantee standing behind them. (Depending on the construction, the government may either guarantee the institution or the mortgage backed security — more likely it will be the latter.) According to a new paper by Moody’s, this sort of hybrid system will reduce the cost of a 30-year mortgage by 90 basis points (9/10ths of a percentage point) compared to a purely privatized system. The Moody’s analysis also calculates that it will raise house prices by 8 percent compared to a privatized system. There are some reasons for skepticism about the Moody’s estimates of the cost advantages of the hybrid system, most notably that the spread between jumbo mortgages, which are not bought by Fannie and Freddie, and conformable mortgages that go into the Fannie and Freddie pools has generally been just 25 basis points. Even in the current environment, it is just 75 basis points, so a spread between mortgage rates in a purely private system and hybrid of 90 basis points seems somewhat high. But let’s just take the Moody’s estimates at face value and have some fun with numbers. The median house price is currently around $170,000. Prices are still falling, but let’s assume for the moment that we freeze them at their current level. Let’s see what the picture looks like. I got the mortgage rates by assuming that the typical 30-year mortgage rate under the current system has been around 6.0 percent. The Moody’s paper assumes that it will rise by about 20 basis points under their hybrid system. This gives us a 6.2 percent rate. If we add another 90 basis points for the purely private system, we get the 7.1 percent rate shown above. So taking the estimates from the Moody’s analysis exactly as written, we find that the hybrid system will save the buyer of the median home about $8 a month on their mortgage. The basic story is that the benefit of the lower interest rate is largely offset by the fact that buyers will have to pay more money for their house. So, is it important to set up a whole new system of finance, with all the regulatory problems with which we are now quite familiar, in order to save homebuyers $8 a month on their mortgage? But wait, there’s more. One big obstacle to homeownership is the downpayment. In both cases we have assumed a 20 percent downpayment, the standard for a conformable mortgage. In the case of the private system this requirement means that homebuyers would need $31,280 in cash. In the case of the hybrid model, following Moody’s estimates, they would need to come up with $34,000 in cash. That might not be easy for many first-time buyers. But wait, there is still more. In most parts of the country people pay property taxes on their homes. Let’s assume that the tax rate is 1.0 percent, which is somewhere near the average. Let’s see what happens to those monthly payments now. Hmmm, now it looks like our homeowner comes out somewhat worse under the hybrid system. It seems that their savings on mortgage payments is more than offset by higher property taxes. This one is not looking really good. But, in the spirit of old-fashioned late night TV commercials, there is still more. The current value of residential real estate is around $16 trillion. if we take the Moody’s numbers at face value then it will fall by roughly $1.3 trillion to $14.7 trillion under the private system. The housing wealth effect is around 6 percent, meaning that an additional dollar of housing wealth leads to 6 cents in additional consumption each year. This means that this should lead to a decrease in annual consumption and an increase in annual saving of around $78 billion, a bit more than 0.5 percent of GDP. This would be a large increase in saving. While higher savings (and less consumption) would not be helpful at the moment, with the unemployment rate near 9.0 percent, when the economy is near full employment, higher savings means more investment and more growth, at least in standard economic models. And increasing savings by a half percentage point of GDP is a big deal. So, what have we learned about the relative merits of the private system and the hybrid model? Well the hybrid model will mean slightly lower monthly mortgage payments, but this benefit is likely to be offset by higher property taxes. The higher house prices in the hybrid model will mean that it will be more difficult for first-time buyers to come up with a downpayment. And, the wealth effect associated with the higher house prices in the hybrid model will mean lower savings and less growth. We could also point out that financial intermediaries (e.g. Goldman Sachs and J.P. Morgan) would stand to make more money on housing in a hybrid model, but there is no reason to get into such details.

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Rubicon Enhances Management Team, Completes OSHA Training and Safety Standards Implementation

February 8, 2011

Leading Construction Management for Critical Facilities Provider Meets Influx of OSHA Regulations for the Industry, Adds Safety Director Steve Klein to Drive Safety Programs

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Pound Surges Higher As UK Construction Returns to Growth

February 2, 2011

Pound Surges Higher As UK Construction Returns to Growth

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U.S. Markets Focus on Construction and Manufacturing

February 1, 2011

U.S. Markets Focus on Construction and Manufacturing

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Robert Lenzner: People Don’t Imagine The Worst Until It’s Upon Them

January 18, 2011

“I believe that people will not imagine the worst until it’s upon them.” These are Canadian mining mogul Frank Giustra’s words of wisdom at the start of 2011 about the fate of the dollar, and America’s burgeoning financial difficulties. This is a lesson for investors everywhere. Don’t deny reality. Deal with painful policy decisions now. No one thought that U.S. subprime mortgages would infect the entire planet. But, had the central banks of the U.S. and Europe not responded to the emergency with trillion dollar dollops of emergency cash, emergency guarantees and emergency loans, we might have experienced a global depression. No one realized that AIG’s $500 billion credit default swaps — which were not hedged with even a dollar of insurance — were financial hari kari, corporate suicide by an excess that threatened the very fabric of all markets. No one understood that Citigroup’s off-balance-sheet financial engineering — mortgage backed bonds leveraged by selling worthless commercial paper to unsuspecting central banks — meant the nation’s largest bank was insolvent. So, what overhanging financial problems have we been “kicking the can down the road?” Meaning, what pending matters have we waited until the last possible moment to deal with? Americans seem unconcerned by European sovereign debt problems and the cost of the crisis to the European banking community, like the leading German, Spanish, French and British banks, which have trillions on the line to the sovereign debtors. State governments have been “kicking the can down the road” of their financial condition and now must face painful cuts in services as well as a showdown with public service unions over the cost of benefits like Medicaid in New York State which has $63 billion in unfunded liabilities. The estimate of unfunded public pension fund liabilities nationwide is $2.5 trillion to $3.0 trillion — and there are no feasible plans to deal with this extraordinary problem. Some states are selling assets (Arizona is selling its capitol building) and leasing them back just to have funds to pay the current expenses. This is the classic case of “kicking the can down the road,” and cannot go on forever if the infrastructure of these states is not improved. Then, there the nation’s mortgage debt, which is larger than the current market value of many millions of homes. There is no bold solution for the prospect of declining home prices. This amounts to a pure depression in the home building industry. Did you know that 40% of the increase in jobs during boom years came from the construction industry? Lastly, there’s China, where inflation is higher than reported, where unrest is growing, where real estate companies are in financial trouble, and where official statistics are looked at circumspectly. The rush to invest in China could be causing problems not well understood in the west.

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In The Pipeline: CoStar Development and Construction News for Jan. 2 – 8, 2011

January 4, 2011

Happy New Year. CoStar Group’s In The Pipeline is a column on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project — and sign up to be added to our distribution list to receive future In the Pipeline columns by e-mail. Read previous columns and articles. Private Construction Spending Dips in November

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David Isenberg: The Ecstasy and Agony of SIGAR

November 19, 2010

One of the consequences or perhaps accomplishments is the better word, of the use of private military and security contractors in the U.S. wars in Afghanistan and Iraq has been the heightened emphasis on finding the proper means to detect, investigate, fraud, waste and abuse when it occurs. One of the means the U.S. government has chosen to accomplish this is the creation of the Special Inspector General (SIG) office. In fact, to date it has created three of them: the Special Inspector General for Iraq Reconstruction (SIGIR), headed by Stuart W. Bowen, Jr., the Special Inspector General for Afghanistan Reconstruction (SIGAR) headed by Arnold Fields, a retired Marine general, and the Special Inspector General of the Troubled Asset Relief Program (SIGTARP). How is that working out you ask? Well, the message is mixed, if the events of yesterday are any indication. On the plus side yesterday the Senate Subcommittee on Contracting Oversight held a hearing entitled, ” Oversight of Reconstruction Contracts in Afghanistan and the Role of the Special Inspector General .” The purpose of the hearing was to examine the role of the Special Inspector General for Afghanistan Reconstruction (SIGAR) in providing independent oversight of reconstruction contracts in Afghanistan. Seemingly SIGAR is keeping busy. Here is an excerpt from Mr. Field’s testimony: The U.S. engagement in Afghanistan is now in its 10th year. Since 2002, the United States has invested over $56 billion dollars in the reconstruction of Afghanistan. President Obama has requested an additional $16.2 billion dollars for FY 2011. That would bring the total reconstruction funding to more than $72 billion, surpassing the $57 billion that the Congress has appropriated for Iraq’s reconstruction. Since receiving full funding in June 2009, SIGAR has moved aggressively to fulfill its Congressional mandate to conduct, supervise, and coordinate audits and investigations of programs, operations, and contracts utilizing reconstruction funds. We have conducted audits and investigations in 22 of Afghanistan’s 34 provinces. Over the last 18 months, SIGAR has issued 34 audit reports and made more than 100 recommendations. We made 23 recommendations just in the last five reports. These audits addressed more than $4.4 billion in reconstruction spending and have already helped produce important improvements in the way U.S. agencies are implementing the reconstruction program. Moreover, we have published nine comprehensive quarterly reports to the Congress. SIGAR has developed a robust investigations capability. We have 89 ongoing investigations of contract and procurement fraud, as well as corruption. SIGAR investigators, who, on average, have 24 years of prior experience investigating complex financial crimes and contract fraud, are part of the US and Afghan effort to track cash shipments out of the Kabul airport. SIGAR has also conducted joint investigations that have already resulted in four convictions and the ordered repayment of millions of dollars to the U.S. Government. In regard to private security contractors this was noteworthy: One important goal of the new contracting guidance is to prevent U.S. funds from undermining the reconstruction effort by unintentionally fueling corruption, financing insurgents, or strengthening criminal networks. In this regard, SIGAR has been particularly concerned about the role and cost of private security companies (PSCs) and their subcontractors. We are currently conducting an audit of a USACE task order for private security services. Our audit is not only reviewing contract planning, management and costs, but it is also identifying subcontractors. We expect this audit to be completed early next year. We have plans to initiate three more audits related to PSC contracts this year. The first will identify all the PSCs operating in Afghanistan, as well as the costs of their services to the U.S. government since 2007. The second will determine the ability of military commanders to track convoys guarded by PSCs. The third will be a focused contract audit of a PSC contract. SIGAR is also watching the statements and actions of Afghan officials regarding the use of private security contractors and the related impact on costs to the American taxpayer. These changes that have been announced could have a dramatic impact on the existing reconstruction effort and our planned work. So it appears that just like SIGIR before it that SIGAR is doing necessary and valuable work. Indeed, Stuart Bowen testified that SIGs can be an extremely effective cross-cutting accountability tool in complex, multi-agency operations and concluded that the U.S. government would benefit from the creation of a permanent SIG for contingency operations. In his written statement he noted: Hybrid hiring models that provide stability for core staff and maintain flexibility of temporary contingency-specific surges would retain that capacity in a permanent organization. A statute establishing a single contingency SIG could be enacted, providing core authorities, including adequate jurisdiction and personnel authorities, and providing, as is the case for SIGIR and SIGAR, that the agencies administering programs must provide space and support in-theater. A permanent core staff of about 25, at a cost of roughly $5 million per year, could design strong internal controls, high-quality plans, and structures for consistent productivity – ensuring a consistent oversight baseline in the chaotic world of contingency operations. The existence of this core staff would eliminate the need to develop new administrative capabilities (such as budgeting, human resources, information technology, and logistics) each time another overseas contingency operation arose. We would support the use of excepted-service personnel authorities for the core staff so as to keep the core staff’s ethos as close as possible to the standards that will be demanded of the staff brought in temporarily to deal with specific contingencies. The decision to deploy the SIG to a specific contingency could be made by the Congress, or by the President or some other executive branch authority pursuant to statute. Various “modules” ranging from $8 million to $24 million per year in incremental costs could be envisioned to supplement the core staff to cover specific contingency operations. A look at the combined FY 2010/2011 budgets for SIGIR and SIGAR puts the average cost of Special IG oversight at $60 million annually. Combining these functions into one office could potentially save $20 million per year. Call it unfortunate but the need for SIG’s is not going to go away, even when all U.S. forces are out of Iraq and Afghanistan. There will be other contingency operations. They may not look like Iraq or Afghanistan. They may occur in Haiti, or Pakistan, or Yemen, or somewhere that is least expected. All indications point to an increase in national security challenges in failed or fragile states. When decisions are taken to engage in stabilization and reconstruction, ensuring the oversight of multiple federal agencies acting in the same space will continue to be a difficult problem, as will be the challenge of quickly deploying appropriate permanent agency oversight personnel. At the same time, given resource constraints, the U.S. government will have to address reconstruction and stabilization much more economically, efficiently, and effectively. A Special Inspector General for Overseas Contingency Operations can fill this need. It is a mistake not to deploy oversight at the earliest possible stage of a stabilization and reconstruction operation. We need to be able to do so quickly and efficiently. Unless we do so, oversight will be far from what is required, money will be wasted, and program managers, senior leadership in the agencies, and the Congress will be insufficiently informed – and we will be doomed to repeat the mistakes of the past. So what’s the bad news? Well, a bipartisan group of senators has asked the president to remove Arnold Fields as head of the SIGAR, after a negative review this summer put his agency’s law enforcement status at risk and prompted the Justice Department to consider suspending the agency’s law enforcement powers. Critics question the quality of reports by the agency. A major complaint is that SIGAR tends to follow the lead of the joint contracting corruption task force, which comprises officials from various agencies. One reviewer said the agency should perform more audits that expose contracting fraud and then find mechanisms to ban those contractors. Even worse yesterday Sen. Claire McCaskill, head of the subcommittee, released new information regarding a sole-source contract awarded by SIGAR to Joseph Schmitz, a former Defense Department Inspector General. Mr. Schmitz, who resigned from the Defense Department in 2005, received $96,000 for approximately two months’ work as an “Independent Monitor” of SIGAR’s investigations division. The decision to hire Mr. Schmitz, who left government service to work for Prince Group LLC, the parent company of the private security company formerly known as Blackwater, infuriated congressional critics. In a letter to Obama in late September, McCaskill, along with Sens. Tom Coburn, R-OK, Chuck Grassley, R-IO, and Susan Collins, R-ME, called SIGAR a “failing organization” in need of new leadership. An analysis by Coburn’s staff shows that inspectors general at the Pentagon, State Department and U.S. Agency for International Development and for Iraq reconstruction have all been much more efficient than SIGAR at generating savings and recoveries. During the hearing, McCaskill also noted that an audit cited by Fields as an example of SIGAR’s prowess was based largely on work done by the inspector general at USAID. Yesterday, the Project on Government Oversight jointed the senators in urging the removal of Fields. POGO noted : One criticism levied against the SIGAR by the four Senators was its failure to have a meaningful strategic plan for auditing and investigations. An IG’s strategic plan is a critical tool used to decide what issues should be given priority and is especially important when there are numerous issues competing for the attention of relatively few auditors and investigators. Observers have pointed out that some SIGAR audits have duplicated what is already known. For example, a January 2010 audit by the SIGAR on U.S. assistance for the construction of a power plant in Kabul “updates and builds upon the audit report issued by the Office of the Inspector General of the U.S. Agency for International Development (USAID) in November 2009,” according to the SIGAR audit. The USAID IG audit was issued only two months earlier. In another example, an August 2010 SIGAR report on “U.S. Reconstruction Efforts in Afghanistan Would Benefit from a Finalized Comprehensive U.S. Anti-Corruption Strategy,” which took eleven months to finish, reads like a summary of news reports and previous assessments. “It shouldn’t take eleven months to compile information mostly contained in news reports,” said POGO Investigator Jake Wiens. While these are not characteristic of all of SIGAR’s audits, they are two out of the eleven audit reports SIGAR has produced in 2010. Last year, most of its earliest audits were severely criticized in a memo written by Hill staffers and obtained by Foreign Policy’s blog, “The Cable.” As POGO has written in a report on IGs, reaction is one of the best means of measuring an IG’s impact. Congress has often unfavorably compared the SIGAR to the Special Inspector General for Iraq Reconstruction on this basis.

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Joel Epstein: How the Unions Can Help LA Pay for the Wilshire Subway Extension

November 12, 2010

With the Democrats licking their wounds and the Republicans and Tea Partiers licking their chops, it is time to trot out some old ideas for funding the construction of public transportation in LA. There are no new ideas, just recycled old ones. Inspired by the mid century unions which built housing for their members, my latest epiphany concerns the feasibility of using union and public pension fund money to fund LA’s overdue public transportation projects. For starters I passed the idea by LAANE’s executive director, and the chief deputy to María Elena Durazo , Executive Secretary — Treasurer of the Los Angeles County Federation of Labor. Both seemed to think I’m a crackpot. Maybe so, but good ideas come from all over, and several other local civic leaders have encouraged me to keep at it. If you care about LA and mobility around the region you have probably heard something about the 30/10 Initiative and the 12 transit projects the Mayor, Metro , and others have been working to realize for a year or more through some combination of federal transportation grants and loans. Let’s face it, after the midterm election we’re in a new world. Even though the new Congress is sure to include public transportation enthusiasts from both sides of the aisle, advancing 30/10 has just gotten that much harder. In all likelihood, support for the plan will now come at best in piecemeal fashion, leaving many Angelenos gasping for the hoped for mobility solutions that 30/10 promised. What is more, the public remains divided over anything that is going to cost them more at tax time. It is true that County voters passed the half cent transportation sales tax known as Measure R in 2008, but who is to say they will support another tax or surcharge or whatever name we slap on it to accelerate the 30/10 projects. This reality presents no small obstacle to 30/10 and frankly always did. But what if the big unions in LA and elsewhere stepped up and said they are going to invest some of their pension money in Metro’s building project? Every investment needs a quid pro quo and with unemployment in LA still at near record highs, jobs are the quid — or is it quo? — in this deal. Sure, some will say Big Labor is just creating higher priced union jobs for their members with this idea. Yes, that’s one of the outcomes and perhaps the key reason the LA Labor Federation’s Durazo and national labor leaders like AFL-CIO President Richard Trumka should care about and look into it. But that is not the only thing the plan does. With more public transportation projects funded sooner, the plan benefits all of us who long for the day we can ride the Wilshire Subway from downtown to the VA, light rail from the South Bay to Figueroa or some form of fast public transportation from the San Fernando Valley to the Westside. Union and public pension fund investment in public transportation may be the economic shot in the arm LA needs, but President Obama and a divided Washington just can’t, or won’t, deliver. To understand the feasibility of all of this I spoke with an investment management advisor from the Union Labor Life Insurance Company (Ullico) . Founded in 1927, Ullico offers insurance, commercial lines of credit and other investment products and services. As of 2008, Ullico’s J for Jobs Fund, a product of the company’s Real Estate Investment Group had invested $2.3 billion in a variety of union labor real estate construction projects. According to REIG News these investments include LA Live-Phase II, the Red Building in West Hollywood and Horizon at Playa Vista; as well as hotels, casinos and office buildings in New York, Las Vegas and elsewhere. Though I am still struggling to find out what sort of returns investors actually realized on this pooled real estate investment fund, given the slump in the market I’d be surprised if the unions saw the promised and hoped for mid-teen percentage returns. Ullico told me they are just now starting to raise money for a new $750 million to $1 billion infrastructure fund and that in principle this fund might include public transportation infrastructure investment. Ullico says “might” because frankly other sorts of infrastructure investments like power plants may produce better investment returns than public transportation, which tends require a subsidy to operate once built. And this is to say nothing of investors’ well founded concern that large infrastructure projects tend to run over budget as in the case of NY/NJ’s ARC transit tunnel, New York’s Second Avenue Subway and Boston’s Big Dig. One seasoned Wall Street municipal finance expert told me that while he likes my idea, Wall Street or the unions or whoever is investing needs details and a set of real cost projections. In other words, the deal has to pencil out or there is none. Well no one ever said doing 30/10 or a union funded investment in public transportation infrastructure construction would be easy but isn’t it worth a try? On a recent conference call with the Mayor and the Deputy Mayor for Transportation both said my idea wouldn’t work. But when I persisted, asking whether they had actually approached Labor’s Durazo with the idea of using union pension money to help finance part of 30/10 the Mayor responded, “no.” While I can appreciate the unions wanting the largest possible return on investment, if you don’t have a job generating income to invest in your pension then the issue of higher returns is moot. In this idea I see an opportunity to put thousands of union workers back to work building stuff that LA needs, as opposed to another casino on the Las Vegas strip. Even if those Las Vegas construction jobs are union work, no LA union member needs to be investing in them. Industry practice says lower interest paying infrastructure projects like the Wilshire subway can be bundled together with other projects paying better returns, for a decent average return. Who knows? Maybe if done right, the projected returns of my Union Public Transportation Investment Fund (UPTIF) will appeal to non-union investors as well. Durazo and Trumka, I hope you are reading. UPTIF is an idea worth considering.

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Brigid O’Farrell: Women Want to Work Construction. Let’s Help Them Get Jobs.

November 4, 2010

After the crash, the downturn was dubbed a “mancession.” As the meme continues to circulate, the Roosevelt Institute’s New Deal 2.0 blog asked leading thinkers to help sort fact from fiction. Are men suffering more than women in a weak economy? Is Washington doing enough to address female unemployment? How do we ensure a jobs agenda that’s fair and equitable? In the final part of the series, ” The Myth of the Mancession? Women & the Jobs Crisis “, Brigid O’Farrell calls for a full employment policy that benefits women ready to work in non-traditional trades. In this Great Recession, there is no question that the construction industry has been hard hit. Unemployment for construction occupations was almost 20% last year and reached a record 26% in February 2010, according to the U. S. Department of Labor . But is the laid-off electrician who was earning $856 a week, and is likely a union member with health benefits, suffering more than the home health aid still earning $430 a week, with no benefits and no union? Are men in the higher-paying construction industry suffering more than women in the lower-paying health care sector or women who are more likely to be single parents and living in poverty ? Who is suffering more, however, is the wrong question. Everyone but the very rich are suffering in this recession. In the 21st century, the federal government needs to have both a short-term stimulus program and a long-term economic plan that supports creating good jobs and decent wages for all workers without discrimination based on gender or race. It needs to have a jobs agenda that is fair and equitable. Government policies should not support one group of workers at the expense of others. Stimulus money going to the depressed infrastructure industry needs to create jobs that are equally accessible to men and women, minorities and non-minorities. Stimulus money in the new green energy industry should create jobs and actively recruit workers regardless of gender and race and not reinforce discrimination prohibited by law. Let’s focus more closely on women in the predominantly male, blue collar world of construction trades. Yes, there are women in these jobs. It is important to note that according to the Department of Labor in 2005 , before the recession began, only slightly fewer women had joined the construction trades, about 274,000, than had become lawyers, 290,000. There were slightly more tradeswomen than women physicians, 268,000. Women, however, had become 30% of lawyers and 32% of doctors, but fewer than 5% of the electricians, plumbers or bricklayers. Despite three decades of equal employment policies, job training programs, and thousands of women showing that they are interested in and capable of performing this work, the jobs remain segregated and the women who are there are joining the unemployment lines. Tradeswomen and researchers have identified many of the barriers to women’s employment in skilled trades, including the socialization of young girls, employer discrimination in hiring and promotion, male coworker and union hostility, and lack of enforcement by government regulators. There is also evidence to support the kinds of outreach and training programs, as well as organizational changes, that are needed to recruit more women, end hostile workplace environments and sexual harassment (which can be life threatening in these jobs), reform employer personnel systems, and engage unions and employers in positive changes for hiring, training, promoting, and retaining women. These programs begin with vigorous enforcement of the laws, especially Executive Order 11246 , which is under the jurisdiction of the Department of Labor and prohibits gender discrimination by government contractors. The Office of Federal Contract Compliance Programs (OFCCP) established the first goals for women in apprenticeship and skilled trades in 1978. The Obama administration and Congress have undertaken several initiatives to address gender segregation in construction trades while increasing employment. Earlier this year, Secretary of Labor Hilda Solis met with tradeswomen, advocates, and researchers to discuss the barriers and successes for women in the trades. Patricia Shiu, director of the OFCCP, and Sara Manzano-Diaz, director of the Women’s Bureau, have held hearings around the country. The Engineering News-Record reports that Shiu’s office, which enforces the executive order, is reevaluating what “good-fair effort” means, and she declared that, “In order for the numbers to change, we have to be willing and able to enforce the laws that we implement, and we are.” There are no goals set for women and minorities to receive infrastructure jobs under the American Recovery and Reinvestment Act. But the stimulus program does include $20 million for grants in transportation and technology training and includes supportive services for women, minorities, and other disadvantaged groups. The Women’s Bureau has again awarded over one million dollars in grants for outreach and training for women in apprenticeship and nontraditional occupations, the WANTO program . Congressman Jared Polis, from Colorado, has introduced H.R. 4830 , the Women & Workforce Investment for Nontraditional Jobs Act. This Women WIN Act would authorize up to $100 million for recruiting, training, and retraining women in nontraditional jobs and establish a national commission to hold hearings and make policy recommendations. Are these actions enough? Not yet. Policies and programs need to be supported with budgets and staff who implement rewards and penalties. It is too early to measure the effects of new initiatives or to predict the outcome of proposed legislation, but the movement is in the right direction. Hard economic times are not a reason to deny women the right to jobs they have shown they are interested in, that they are fully capable of performing, that they need to support their families, and that they have been denied access to in the past because of their gender. Government money must be spent without discrimination against women or people of color. While it is well known that the Roosevelt Administration didn’t solve the problems of employment discrimination, in 1948 Eleanor Roosevelt was instrumental in providing a human rights framework for achieving equality in the workplace. Written while she was chair of the United Nations Human Rights Commission, the Universal Declaration of Human Rights specifies in article 23 that everyone has a right to a decent job, fair working conditions, a living wage, no discrimination, protection from unemployment, and a voice at work. Perhaps we should put more effort into achieving a full employment policy under a human rights framework, instead of arguing about who is suffering more in a recession and how to divide limited resources in ways that reinforce gender stereotypes. Cross-posted from New Deal 2.0 .

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John Salama, Army Corps Worker, Charged In Iraq Contract Bribes

October 13, 2010

NEWARK, N.J. — An employee of the U.S. Army Corps of Engineers took hundreds of thousands of dollars in bribes from a construction company seeking contracts for projects in Iraq worth millions of dollars, according to a criminal complaint filed Wednesday. John Alfy Salama Markus, also known as John Salama, made an initial court appearance Wednesday afternoon, where U.S. Magistrate Mark Falk ordered him released on $500,000 bond secured by property. He did not enter a plea. Markus faces charges of conspiracy to defraud the United States and money laundering. The money laundering count carries a 20-year maximum prison sentence. Also charged in the alleged scheme was Ahmed Nouri, also known as Ahmed Bahjat, vice president of a construction and engineering company seeking work in Iraq. Nouri was still at large Wednesday. Markus’ attorney, Stacy Biancamano, said he was a soldier in Iraq before working for the Army Corps of Engineers and had earned a Purple Heart and Bronze Star. According to the criminal complaint, Markus, an Egyptian-born U.S. citizen who lived in central New Jersey, monitored contracts as a project engineer for the Army Corps of Engineers in Iraq in 2007 and 2008. It was unclear from the complaint whether Markus was a civilian or military employee, and Biancamano did not immediately return a phone call seeking further comment Wednesday. The complaint alleges Markus took bribes from Nouri in exchange for providing confidential information to Nouri’s company, Iraqi Consultants & Construction Bureau, about bidding negotiations on certain projects. Markus also allegedly steered Army Corps of Engineers projects to Nouri, including a $6.25 million project to enhance security at the Bayji Oil Refinery in central Iraq for which Markus allegedly received at least $200,000 in bribes. Citing Army Corps of Engineers records, the complaint alleges four more contracts were awarded to ICCB in the summer of 2007 totaling approximately $6.3 million. For those projects, Markus allegedly sought $550,000 in bribes. The U.S. attorney’s office alleges Markus deposited the bribes in bank accounts in the Middle East and in the U.S. and used the money to build a $1.1 million house for himself and his wife in Nazareth, Pa. They had previously lived in Belle Mead, N.J. In a November 2007 e-mail, Markus wrote to Nouri, “I saved a lot of money for you guys and I need at least 400K form ICCB for all the work I done for you I made you a lot of profit,” the complaint alleges.

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Zachary Karabell: The China Blame Game

September 30, 2010

So bipartisanship isn’t dead. By a vote of 348-79, Democrats and Republicans alike put aside their acrimonious differences and agreed, at least for a moment, to stop blaming each other for the sad state of American economic life. Instead, they agreed to blame China. The bill authorizes the president of the United States to impose tariffs on Chinese goods in response to what it considers an illegal subsidy of Chinese exports in the form of an undervalued currency. It helps that the supporters in the House know that this bill has precious little chance of becoming law; it will not pass the Senate and it is unlikely that it would be signed into law by Obama if it ever came to that. As a result, the bill is the perfect campaign gesture, bombastic, angry, self-righteous, and without much real-world consequence. The office AFL-CIO union leader Richard Trumka issued a statement that encapsulated the thinking behind the bill: “the House of Representatives voted to put an end to the Chinese government’s currency manipulation, which has destroyed millions of good American manufacturing jobs. For more than a decade, the Chinese government has deliberately manipulated the value of its currency, ballooning our trade deficit with China and costing American communities good jobs….Working people continue to mobilize to elect candidates who will put America’s workers first and are committed to rebuilding an economy that values working people. This November we will send a powerful message that we will support those who vote for an economy that works for everyone.” The idea is that there is direct line between China, its currency, its exports of lower-cost goods to the United States, and the erosion of middle-class life and now soaring unemployment. But U.S. manufacturing has been bleeding jobs for decades, since the early 1970s, when the Rust Belt began to decay faced with competition from the likes of Japan and Germany. That continued almost unbroken for the next decades, as countries ranging from Taiwan to Mexico became the low-cost producers (remember Ross Perot’s famous warning about NAFTA in 1992 and “the giant sucking sound” of jobs heading south-of-the-border?). California and the state of Washington were hit hard by cuts in defense spending in the early 1990s, and industry throughout the country shed jobs as technology and robotics allowed fewer workers to do more. China is simply the latest example of these trends and hardly a cause. What’s more, the recent loss of millions of jobs since 2008 has everything to do with the collapse of the construction and housing industries along with the near-death of the Big Three American auto makers than with any competitive challenge from China. China has become a large car market for General Motors, but not for export to the United States: for sale in China. It would take a massive leap unsupported by any fact to lay the demise of the U.S. auto industry at the feet of China, or for that matter hold China responsible for the sub-prime and derivative debacles. Those are the cause of recent job loss. Furthermore, China has been revaluing its currency, nearly 20% between 2005 and 2008 and now nearly 3% since June when the government resumed that policy having shelved it during the midst of the global financial crisis. It is in the domestic interest of the Chinese government to raise the value of their currency because they are focused on building up on internal, domestic consumption market. They have no wish to be dependent long-term of the vagaries and whims of American consumers, and higher purchasing power for Chinese consumers is the answer. They are not revaluing quickly enough to suit an America stuck in second gear and looking for someone to blame, but revaluing they are. Of course, reason and fact aren’t driving these measures. Emotion, anger and frustration are. There are good reasons to be angry with the state of affairs in this country and frustrated by the inability of the political class to do more than contribute to the confusion. But blaming China for a series of domestic challenges is not an act of strength or courage. It is an act of desperation, and the only saving grace is that this measure is a gesture, not an actual law – yet. But it suggests that the only thing Congress can agree on is how to shoot ourselves in the foot, which requires minimal skill and even less aim. Railing against Beijing may feel empowering, but seriously grappling with growth, investment, infrastructure and innovation, well that would actually be empowering.

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Pay Gap Persists For Women In Management

September 28, 2010

The pay gap for women in management has narrowed slightly over the past decade and women remain underrepresented in management positions, according to a report from the Government Accountability Office. In 2007, even though they made up 47 percent of the U.S. workforce, women filled 40 percent of management positions — an increase of one percent since 2000. Female managers earned 81 cents for every dollar earned by male managers in 2007, up from 79 cents in 2000. That’s an average salary of $52,000 for women and $75,000 for men. Compared with their male counterparts, “female managers in 2007 had less education, were younger on average, were more likely to work part-time, and were less likely to be married or have children,” the GAO reported. But women in the workforce have made strides in terms of education. Fifty-one percent of women managers had a college education, compared with 56 percent for men. The proportion of women managers with a college degree has tripled since 1970, according to GAO. “Women are closing the education gap, but as this report underscores that hasn’t translated into closing the pay gap,” said Rep. Carolyn Maloney D-N.Y.), chairwoman of the Joint Economic Committee, which is holding a hearing on the report on Tuesday. “It is disappointing that management moms earn 79 cents for every dollar management dads earn and that number hasn’t budged since 2000.” The pay gaps varied across industries, from 78 to 87 cents compared with male managers, and in the construction and transportation industries, women were more than proportionately represented in management positions. “The persistence of pay gaps between men and women managers in the same industries underscores the urgent need for Congress to act on the Paycheck Fairness Act, to strengthen Equal Pay protections and help erase wage discrimination from the workplace,” said Christine Owens, director of the National Employment Law Project. “The GAO report also underscores how much more needs to be done to make sure our public policies and private employment practices support working families and provide them the flexibility they need to achieve and advance in the workplace while also caring appropriately for their families.” The GAO cautioned that the report did not prove discrimination against women: “Our analysis neither confirms nor refutes the presence of discriminatory practices. Some of the unexplained differences in pay seen here could be explained by factors for which we lacked data or are difficult to measure, such as level of managerial responsibility, field of study, years of experience, or discriminatory practices, all of which can be found in the research literature as affecting earnings.” Mothers made up 14 percent of managers, a figure little changed in seven years. “When working women have kids, they know it will change their lives, but are surprised to learn it also changes their paychecks,” said Maloney. “At a time when families are increasingly relying on the wages of working moms, paycheck fairness is one sure way to boost family incomes and improve kitchen table budgets all across America.” Click HERE to download a PDF of the GAO’s report.

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Dan Smith: Better Transportation Investment Creates More Jobs

September 16, 2010

With almost one in ten American workers currently unemployed, smart investment in infrastructure is an efficient way to create jobs right now. The job creation potential of infrastructure has been well-documented. Economists Mark Zandi and Alan Blinder, for example, explain in a report they coauthored that every dollar spent on infrastructure yields $1.57 in economic growth. To generate the most jobs, every study has shown that it is important to prioritize investments in public transportation. Academic analysis concludes that public transit generates 31 percent more jobs per billion dollars invested than similar spending on highways. Models developed with the Federal Highway Administration likewise show transit investments generate 19 percent more jobs. Similarly, an analysis of U.S. Department of Transportation data shows that 2008 stimulus dollars spent on public transportation projects created up to twice as many jobs as highway spending for the same amount of money. The consistent finding is clear: to create jobs, invest in public transportation. For spending on highways, it is important that money be directed to repair and maintenance rather than the construction of new highways. Too many roads and bridges across America remain in a state of disrepair that pose dangers and cause costly delays. Although investment in highway repair does not create as many jobs as public transit, it creates 9 percent more jobs per billion dollars than building new highway miles, according to the same studies. Additionally, the long-term development of a national high-speed rail network could be critical to rebuilding America’s declining manufacturing sector. Auto factories that were shut down during the last decade could be reopened and repurposed to manufacture the new railcars and bullet trains of the future. Better Transportation Investment Reduces our Dependence on Oil Our transportation system consumes more oil than the entire economy of any other country in the world, other than China, according to Department of Energy data. The disastrous consequences of our oil addiction were on full display last spring when billions of gallons of oil spilled into the Gulf. Our over-reliance on oil is also a national security concern, as it forces our nation to rely on foreign regimes which are often hostile or unstable. Investing in more and better public transportation is critical to reducing America’s oil dependence because it provides more energy-efficient ways to travel. Existing public transit reduced the amount of gasoline America used in 2006 by 3.4 billion gallons, according to an analysis of EPA data. The U.S. PIRG Education Fund calculated that this saved us over $9 billion in gas costs. Not surprisingly, metropolitan areas with better public transit systems accounted for most of these oil savings. To partially pay for the proposed investment, President Obama rightly calls for cutting government subsidies for oil companies. There is no reason why corporations, like Exxon-Mobil and BP, that make billions in profits should receive public handouts and tax subsidies. These unnecessary tax breaks and subsidies should be eliminated, and the savings should be used to pay for cleaner, more efficient transportation projects. Better Transportation Investment Reduces Congestion and Pollution In addition to creating jobs and reducing our oil dependence, investment in public transportation and high-speed rail would reduce traffic congestion and global-warming pollution. For instance, the Texas Transportation Institute’s 2007 Annual Urban Mobility Report calculated that public transit prevented over 500 million hours of delays in 2005, saving the country more than $10 billion. Also, our transportation system accounts for a full third of the country’s global warming pollution. The U.S. PIRG Education Fund calculated that public transit reduced emissions of harmful global warming pollution by 26 million metric tons in 2006. That is equivalent to taking almost 5 million cars off the road. Better Transportation Investment Means Less Earmarks, and More Results In addition to providing much needed funding for more public transportation, President Obama’s plan seeks to spend our transportation dollars more efficiently. Over 100 federal programs would be consolidated under the proposal, similar to a 2009 proposal by U.S. House Transportation and Infrastructure Committee Chairman James Oberstar. President Obama also proposes to allocate money based on performance, rather than earmark-driven politics. Such reforms are essential to ensuring that we get the biggest bang for our buck. With the economic recovery slow to pick up steam, President Obama’s call for a new transportation bill is a timely opportunity to spur job growth now while making crucial investments in America’s future. We strongly encourage you to write an editorial urging Congress to move forward with President Obama’s proposal for comprehensive reform and the reauthorization of the surface transportation bill.

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Sage North America Appoints Jon Witty General Manager of Construction and Real Estate Business

September 7, 2010

IRVINE, CA–(Marketwire – September 7, 2010) –  Sage North America announced today the appointment of Jon Witty as Vice President and General Manager of its Construction and Real Estate business in the Sage Business Solutions (SBS) division. A former Microsoft executive with more than 25 years of experience in the technology and ERP markets including the construction and project management vertical, Mr. Witty is responsible for driving Sage’s business strategy and initiatives in the construction and real estate market. Sage is a leading global provider of business management applications and services for small and mid-size businesses (SMBs) with more than 6.2 million customers worldwide.

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Kimberly Freeman Brown: On Labor Day, Partnerships That Work For a Clean Energy Economy

September 5, 2010

By American Rights at Work Executive Director Kimberly Freeman Brown and BlueGreen Alliance Executive Director David Foster This Labor Day, America is facing a dizzying array of problems, none more acute than the twin crises of how poorly we treat our workers and how appallingly we treat our planet. In case anyone believes these issues are distinct and need to be addressed separately, let’s remember some of this year’s grisly headlines: * ” Massey Accident, Worst Since 1970, Claims 29 Miners ” * ” Families bid farewell to 11 men killed in Gulf rig explosion ” * ” 5 workers killed in explosion at Middleton, Conn., power plant ” While the environmental and labor disasters at Massey Energy’s Upper Big Branch Mine, the BP oil rig, and the Kleen Energy natural gas plant have topped the news, the everyday struggles of working people have continued unabated. Struggles such as the construction worker forced to work more hours for less pay, building outdated structural designs in dangerous conditions. Or the tomato picker breaking her back in a hot, pesticide-soaked field, gathering vegetables destined for a supermarket shelf. Or the factory worker forced into an ever-faster production line that spits out toxic byproducts, putting his health and safety at risk with little or no healthcare benefits. These conditions are the reality faced by millions of America’s workers. But we do not have to accept them as the cost of doing business in this country. There is a better way. Years ago, labor and environmental advocates realized that in order to preserve our environment and create jobs in America, investing in a clean energy economy was critical. Today, green jobs are growing, and America’s workers must benefit from the full potential and promise of the green economy. There are a select number of forward-thinking employers already paving the way toward a green economy . They are collaborating with their employees as equal partners, respecting their decision to join unions, and creating good, green, union jobs — where workers receive family-sustaining wages, fair benefits, safe workplaces, and retirement security. Green builders such as Oregon-based Gerding Edlen Development are paving the way. Having led the first LEED-Platinum certified renovation of a building on the National Register of Historic Places, Gerding Edlen sees its highly-trained, union workforce as key to its success. As CEO Mark Edlen says, “Union workers bring the skill set, creativity, and workplace safety the company needs to execute such complex projects: that’s why Gerding Edlen uses union labor.” Not surprisingly, the firm has topped the Oregon Business Journal’s annual list of the best green companies to work for two straight years, and has been voted one of Oregon’s most admired companies at least four years in a row. In the agriculture industry, Eurofresh is transforming vegetable production through its sustainable growing practices. Food safety is a top priority at the Arizona-based company, which credits the union-led orientation and training programs for raising production standards. All of its produce is greenhouse-grown, reducing land and water use, and is certified pesticide residue-free — protecting the health of consumers, workers, and the environment. Perhaps most exciting of all, the new clean energy economy is bringing good manufacturing jobs back to the United States. United Streetcar, a subsidiary of Oregon Iron Works, is building the first American-made modern electric streetcars in almost 60 years. And the company is doing more than easing congestion and reducing pollution through its streetcars through good, green jobs in Oregon — its dedication to using U.S. suppliers is reigniting an entire industry. United Streetcar today produces the first modern streetcars to comply with “Buy America” provisions: 70 percent of its trams’ components are domestically produced, and the company is striving to use entirely U.S.-made components. As a result, orders with United Streetcar create or save jobs at vendors across America, from manufacturers of fiberglass and flooring to seats and wheel sets. All of these environmentally-responsible innovators are exciting, and they are made possible by the skill and expertise of America’s union workers. Together with their forward-thinking employers, these employees are proving that we can build a win-win economy in which businesses thrive, the planet prospers, and workers share in the success they help create. This Labor Day, as the country reels from one labor and environmental disaster after another, the United States needs the leadership of pioneering employers like these — visionaries who recognize that in the 21st century, respect for workers, respect for the planet, and respect for the bottom line are, in fact, one and the same. Kimberly Freeman Brown is Executive Director of American Rights at Work Education Fund, an educational and outreach organization dedicated to promoting the freedom of workers to form unions and bargain collectively, which just released its new report The Labor Day List: Partnerships that Work . David Foster is Executive Director of the BlueGreen Alliance , a national partnership of nine U.S. labor unions and two of America’s largest environmental organizations — uniting nearly nine million members and supporters — that is dedicated to expanding the number and quality of jobs in the clean energy economy. # This article was published originally in The Hill ‘s Congress Blog .

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Immigration Boosts Wages, Employment And Productivity, Fed Study Finds

August 31, 2010

Champions of strict immigration reform, be warned: there may be an economic consequence to tightening America’s borders. Immigration is actually good for employment, wages and productivity , according to a new study from the San Francisco Fed. States that have had a large influx of immigrants tended to produce more, hire more and pay workers more than states that have few new foreign-born workers, argues a study released today by a visiting scholar at the San Francisco Fed. For every one percent increase in employment from immigration, the study finds, a state will see a .4 to .5 percent increase in income per worker. In conducting the study, Giovanni Peri, an associate professor at University of California, Davis, compared output per worker and employment in states that have had large immigrant inflows with data from states that have few immigrant inflows. Peri found no evidence that immigrants “crowd-out” employment for American citizens. Peri concludes that immigration boosted states’ output, income and employment because the economies “[absorbed] immigrants by expanding job opportunities rather than by displacing workers born in the United States.” Further, the results of the study support the theory that U.S.-born workers and immigrants tend to take different occupations, says Peri. The study uses a hypothetical illustration to explain: “As young immigrants with low schooling levels take manually intensive construction jobs, the construction companies that employ them have opportunities to expand. This increases the demand for construction supervisors, coordinators, designers, and so on. Those are occupations with greater communication intensity and are typically staffed by U.S.-born workers who have moved away from manual construction jobs. This complementary task specialization typically pushes U.S.-born workers toward better-paying jobs, enhances the efficiency of production, and creates jobs.” Check out a brief of the study at the NBER’s website . (The full study is available for purchase.)

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David Isenberg: Hardly an Unalloyed Virtue: PMSC in Afghanistan

August 25, 2010

The recent news that President Hamid Karzai has ordered a four-month phase out of all private military and security companies (PMSC) in Afghanistan has occasioned much commentary, but there has been a lack of hard facts. For example, who exactly is working there now and which companies would have to leave?. Press reports stated there were 52 PMSC registered with the Afghanistan Ministry of Interior but gave no details as to who there were. Burt, as it happens, the UN Working Group on the use of mercenaries as a means of violating human rights and impeding the exercise of the right of peoples to self-determination, investigated that very subject. In a report dated June 14, it noted: The Government of Afghanistan has also stressed the need for prompt adoption of procedures to regulate and monitor the activities of these companies, saying that the lack of rules governing the activities carried out by PMSCs created a culture of impunity dangerous for the stability of the country. Civil society had a negative perception of the large presence of PMSCs, in particular with regard to the difficulty of differentiating the legal army and police from foreign troops, PMSCs or even illegal armed groups. A comprehensive regulation [more on this below] was adopted by the Council of Ministers in February 2008 and is still in force today. The Regulation led to the licensing of 39 Afghan and foreign companies1 and the registration of their personnel and weapons. The Regulation, if properly implemented, is an important step to ensuring monitoring and accountability of PMSCs. In a footnote the report notes “The Working Group was informed during its regional consultation with the Asia Group on 26-27 October 2009 that the Government of Afghanistan had recently extended the number of licensed companies to 52, with 27 national and 25 international PMSCs.” According to the report, “It is difficult to estimate with accuracy the number of PMSCs in Afghanistan as there are reportedly some Afghan PMSCs not registered with the MoI. According to the information received, the estimated number of PMSCs operating in the country until early 2008 varied between 60 and 90 companies. In addition to local companies, foreign PMSCs were in the majority registered in the United States and the United Kingdom, with some in Canada, Germany, South Africa and the Netherlands. Third-country nationals are also being recruited by international PMSCs. The number of PMSCs may increase given United States troop surges and NATO operations.” Many commentators have speculated that Karzai’s call for phasing out PMSC is primarily a political move to relieve pressure on his administration for various alleged corruption. That may be so, but the UN report provides evidence that PMSC are a legitimate security concern: The presence and activities of PMSCs in Afghanistan are very much interconnected with the large number of unauthorized armed groups of various kinds on Afghan territory. The Ministry of the Interior (MoI) has estimated that no fewer than 2,500 unauthorized armed groups were operating in those provinces under governmental control, which represent less than half the territory of the country. Many de facto non-State armed groups have used the regularization process for PMSCs to disguise their groupings as private security companies, reinforcing the perception that PMSCs were a threat to stability. Existing PMSCs — especially local companies but also some international ones — became a “reservoir” for adoption and legalization of armed individuals with military skills who in the recent past had belonged to unauthorized military groupings. … In Jalalabad, for example, the Working Group was informed that the Afghan National Police in the province of Nangarhar had counted 500 private security entities operating in the eastern region which were not registered with the MoI. These illegal entities, with a minimum of five men, fall under the definition of illegal armed groups and should be dismantled. By comparison, there were only six PMSCs registered with the MoI operating in the area. Another example would be this: The Working Group received information about the involvement of PMSC contractors in robberies, kidnapping, interrogation, torture of detainees and irregular and abusive house inspections. The MoI confirmed cases of excessive use of force.. In one case, local private security contractors are alleged to have shot seven adult males and injured one child in what appear to have been extrajudicial killings. On 27 October 2008, the international military forces (IMF) and Anti-Government elements (AGEs) engaged in an exchange of fire in the Haft Asyab area, Saydabad District, Wardak Province, which killed 11 AGEs and injured 12 others. During the fighting, private security contractors working for the RWA Road and Construction Engineering Company entered Hakim Khail village in the Haft Asyab area and, according to witnesses, entered a house, forced out the adult males inside and shot them one by one. A child who tried to run away was allegedly shot in the back. Other reports state that five people were killed by IMF air strikes during the operation. No information has been provided on whether this incident has been fully investigated and anyone prosecuted. Considering the fragile state of Afghanistan one can see that having more people with guns is a source of concern, regardless of the intended purpose. Exactly how many PMSC there are and how many guns they have is unknown. The report states: The exact number of PMSC personnel is difficult to ascertain and the Government was not able to provide the Working Group with statistics. According to academic studies, the estimated number of PMSC personnel varied from 18,000 to 28,000 before the adoption of the Regulation. The Regulation imposed a cap of 500 personnel per registered company, although it seems that was not rigorously enforced, with a number of companies employing a higher number of personnel. This number is likely to increase in the coming months given increased insecurity due to the growing insurgency attacks. The number of PMSCs will also increase to match the deployment of additional military forces as announced by the American President with the new United States strategy for Afghanistan. Already by August 2009, the total number of PMSC personnel contracted by the United States Department of Defense had increased by 19 per cent. At the end of October 2009, the Working Group was informed by the Government of Afghanistan that, with the increase in registered companies from 39 to 52, 24,690 personnel were operating in Afghanistan, of whom 19,928 were nationals and 4,772 international employees. … According to data of the Kabul Police, 35 private security companies possessed 4,968 units of registered weapons of various types in 2008 (registered under the names of 1,431 employees). The police authorities informed the Working Group that private security companies possess no fewer than 44,000 registered and unregistered weapons. A total of 17,000 weapons were confiscated by the Ministry of the Interior (MoI) within the framework of the DIAG (Disbandment of Illegal Armed Groups) programme, while another 18,000 were officially registered as belonging to 39 licensed companies. The Comprehensive Regulation adopted in February 2008 led to the licensing of 39 Afghan and foreign companies and the registration of their personnel and weapons. Of the 39 companies, 18 were Afghan owned and 21 were foreign or international, with 10 registered in the United States, 8 in the United Kingdom and 3 in other countries. Who are the companies? They are: Country of origin/ Name of company Afghan (18) ARGS, Asia Security Group (ASG), Burhan Security Service, Commercial Security Group (Guards Service) CSG, Good Knight Security Services, IDG Security, ISS (also known as SSI) – International Specialized Services, Kabul Balkh Security Services, Khorasan Security, NCL Holdings LLC., PAGE Associates, Pride Security Services, Shield, Siddiqi Security, SOC – Afg, Tundra SCA, WATAN Risk Management, White Eagle Security Services UK (10) Aegis Defense Services Ltd, ArmorGroup Services, Blue Hackle, Control Risks (CR), Edinburgh International, Global Risk Group, Hart Security, Olive Group, Saladin Security Afghanistan, TOR US (8) Xe Services/Blackwater USA, DynCorp International, EODT Technologies Inc./GSC, Four Horsemen/ARC, REED Inc., RONCO, Strategic Security Solution International Afghanistan (SSSI), US Protection and Investigations (USPI) Other (3) Australia: Compass Canada: GardaWorld (as Kroll) Dubai: UNITY-OSG Interestingly, or perhaps better put, ironically, considering the example and claims of some other PMSC trade associations who love to talk about the high ethical standards they require of their member companies, the report notes: Following the example of Iraq and the establishment of a Private Security Company Association of Iraq (PSCAI) “to discuss and address matters of mutual interest and concern to the industry conducting operations in Iraq”, the main international companies in Afghanistan have been grouped together in a Private Security Company Association of Afghanistan (PSCAA). However, the PSCAA Chairman told the Working Group that PSCAA had not been registered formally as an association or an NGO in accordance with national laws and remained more of an informal club or network of international security companies. Its influence and role have remained limited to preserving the interests of the companies and it has not adopted a code of conduct for the industry and does not monitor the conduct of its members.

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Garrett Johnson: Fairy Tales and History Rhymes

August 16, 2010

Perhaps the worst insult you can hurl at a politician these days is to give him the middle name of “Hoover.” Such as George Hoover Bush and Barack Hoover Obama . 80 years later Herbert Hoover is still the standard for the “do-nothing” president in the face of economic collapse. Like most easy comparisons, these examples lack details. That’s because the names are there for the purpose of accusation, rather than enlightenment. However, if you dig down into the individual economic policies of Hoover, Bush, and Obama, the story gets much more interesting. As Mark Twain once said, “History doesn’t repeat itself, but it does rhyme.” I’m not going to try and find direct connections in this essay, just broad picture comparisons. If the reader confuses the two, then that will only mean I was justified in writing this. Hoover the conservative Once the stock market crashed and the economy began dumping, Hoover looked for a scapegoat, and found it in the form of Mexican-Americans. The Mexican Repatriation ran from 1929 to 1937. Around 500,000 people were either forced, or convinced to leave America for Mexico. Hoover, hoping to appease the restrictionists, chose the less-permanent option of virtually eliminating visas for Mexican laborers and by bolstering the Immigration Service, which had grown from a minor government operation to a force that included a border patrol of nearly 800 officers… They raided union halls, dances, social clubs and other ethnic enclaves where people without papers might be found. Their tactics favored intimidation over legal procedure. Suspects were routinely arrested without warrants. Many were denied counsel, and their deportation ‘hearings’ were often conducted in the confines of a city or county jail. Frightened and ignorant of their rights, many suspects volunteered to leave rather than suffer through deportation The problem was that 60% of them were legal American citizens. In many ways this was a precursor to the the Japanese-American Internment during WWII, but has been almost totally left out of the history books. The federal government has still not apologized for this travesty. Nothing like the Mexican Repatriation is currently happening, although Arizona’s immigration law was a faint echo. The fact that the xenophobes are resorting to “terrorist babies” only shows how detached they are from the mainstream. After broad congressional victories by the Democrats in the November 1930 elections, Congressional attitudes towards relief began to soften. Congress approved a bill which would make available one-half of the adjusted compensation from the Soldier’s Bonus Act of 1924 . Hoover vetoed the bill in February 1931. This eventually led to the politically disastrous Bonus March of 1932. Hoover the progressive Until the summer of 1931 there was realistic hope that the Depression would end soon. Laissez-faire economic policies dominated all political circles, even in the Democratic Party. There had been no federal actions to the severe economic downturns in 1873, 1893, and 1920, and still the economy had bounced back in a couple years. Outside of socialists and communists, there was no serious proposals for direct federal aid to the unemployed. The failure of Creditanstalt in May of 1931 changed all that. Within a few months the Austrian government was broke. This led to a run on German credit, and finally a crash in British Sterling, which led to Britain leaving the gold standard. By September of 1931 the economic crisis had jumped from Wall Street to Europe and now back to Wall Street. America was rocked by the first severe banking crisis of the Great Depression that wasn’t centered in farming states. In 1931, 2,294 banks in the U.S. failed. And so in October 1931, Hoover set out to rescue Wall Street . How was he going to do that? By using the Federal Reserve Banks to swap out illiquid mortgage-backed securities with sound Treasuries. Does that sound familiar? It should, because the Federal Reserve has been doing that non-stop since the spring of 2008. President Bush was just following Hoover’s Plan. On January 15, 1932, Hoover signed into law the Reconstruction Finance Corporation . This was a continuation of the Wall Street bailout. In addition to bailing out banks, mortgage companies, and insurance companies, it also bailed out railroads. It did this through a combination of loans and buying equity in banks. The RFC continued to exist until the 1950′s. Much like the 2008-2009 bailouts, Hoover’s bailouts approached fixing the economy from the top-down, taking care of the wealthy and powerful first . The RFC was derided by populist critics as “bank relief” and “a millionaire’s dole”–criticisms echoed today by all those who see George W. Bush’s Troubled Asset Relief Program and Obama’s own Public-Private Investment Program as outrageous giveaways…Critics raised the same criticisms they would raise about Obama’s bailout plans seventy-eight years later. If the banks get a bailout, why not everyone else? Were bailouts only for the rich? Although Hoover had declared that the agency was “not created for the aid of big industries or big banks,” a record of its operations revealed that most of its money had indeed gone to a very few of the country’s biggest financial institutions… The recipients of some $642 million of the RFC’s loans–nearly half its total expenditures–were not revealed at all. Hoover, like Obama, had insisted on secrecy to keep the proceedings from being “politicized,” but, inevitably, this fear of politicization in the end only led to more politics…. The RFC’s deliberations were understood–with good reason–not as effective management but as insider dealing: common financial practice through the 1920s, but politically and morally insupportable at a time when millions of Americans were losing their jobs, their homes, and their savings, and when some were literally dying of starvation. Just like the RFC, the 2008-2009 Wall Street bailout was plagued with corrupt, insider dealing , ethics violations , and obvious conflicts of interest . Like during the RFC, Wall Street is hoarding the bailout money , thus failing to help out the economy. More than any other item, the failure of the RFC has been echoed into our present economic crisis. The 2008-2009 Wall Street bailout was nothing more than the RFC written large. A month later, Hoover signed into law the first Glass-Steagall reform law . This law was aimed at expanding credit. To accomplish this, rules regarding what the Federal Reserve could accept for rediscount purposes, such as commercial paper, was expanded. Expanding the range of acceptable assets is exactly what the Federal Reserve began doing in 2009 with its quantitative easing program . By no small coincidence, the Bank of Japan followed this route in 1999. Every time in history this method has been tried to expand credit it has failed, yet governments keep doing it. Finally, on July 21, 1932, with the Great Depression now three years old and the wealthy taken care of, Hoover enacted the first piece of legislation that helped working America, Emergency Relief and Construction Act . The money was to be dedicated to state and local public works projects, as well as state-level relief projects, much like Obama’s 2009 stimulus bill. While a noble idea, Hoover didn’t take it far enough (Obama made the same mistake 80 years later). The money was only allocated to states if the state could prove that its own resources were insufficient for legitimate relief needs. By March 1933, the money was exhausted. By the time Franklin D. Roosevelt was inaugurated, the federal government was financing over 60 percent of all relief nationally. In the end, the $300 million in relief loans to the states was never repaid, and the federal government had permanently entered the field of public assistance. The Hoover Dam broke ground in 1931, but Hoover could hardly take credit for it since it was Coolidge who authorized the project in 1928. Also in July 1932, Hoover signed into law the Federal Home Loan Bank Act . This was to be Hoover’s most lasting legacy. Like Obama in 2009, Hoover felt compelled to address the foreclosure crisis sweeping America. The idea was to reduce foreclosures while encouraging home ownership and home construction by increasing the supply of money available to registered institutions in the form of home loans. Unfortunately, Hoover’s efforts were overwhelmed by the size of the problem. Much to President Hoover’s great disappointment, however, the credit program was a complete failure. While 41,000 homeowners applied for FHLB loans in the first two years after its enactment, the government agency administering the program approved just three applications. 80 years later, Obama’s own efforts at curbing the foreclosure crisis would fail . His efforts at boosting the housing market would also fail . “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.” — Rexford Guy Tugwell As the economy contracted, government spending expanded, and to pay for it, Hoover went after the rich . Between 1930 and 1931, government spending increased from 16.4% to 21.5%. To pay for it, in 1932, Hoover raised taxes. Most Americans saw their tax rates double, with the top rate rising from 24% to 63%. Conservatives today are having a heart attack over a 3% tax hike on the rich when Bush’s tax cuts expire. Can you imagine what they would do if Obama wanted to hike the tax rate on the rich by 2.5 fold while doubling the estate tax?!? I’ll tell you what their reaction would be. It would be something like this: During the 1932 elections, Franklin Delano Roosevelt blasted the Republican incumbent for spending and taxing too much, increasing national debt, raising tariffs and blocking trade, as well as placing millions on the dole of the government. [8] He attacked Herbert Hoover for “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of leading “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, accused the Republican of “leading the country down the path of socialism.” The Results of Half-Measures Hoover’s Wall Street and credit market bailouts failed. Late in 1932 another wave of bank failures struck. Then just before FDR took office, on February 14, 1933, the state of Michigan announced an eight-day bank holiday. This set off a wave of panic through the rest of the nation’s banking system. By Inauguration Day 32 states had closed their banks and the rest of the states were using deposit restrictions. America’s financial system was in complete ruin. Obama is likely to avoid this outcome, but that doesn’t mean he hasn’t duplicated Hoover’s mistakes. Every instinct the president has honed, every voice he hears in Washington, every inclination of our political culture urges incrementalism, urges deliberation, if any significant change is to be brought about. The trouble is that we are at one of those rare moments in history when the radical becomes pragmatic, when deliberation and compromise foster disaster. The question is not what can be done but what must be done… Much like Herbert Hoover, Barack Obama is a man attempting to realize a stirring new vision of his society without cutting himself free from the dogmas of the past–without accepting the inevitable conflict. America needs a bold, broad restructuring of our economic system. We need systemic financial reforms, as opposed to the token effort Congress has given us. We need a real Pecora Commission . Not the token effort we’ve seen so far. Until Washington gets serious about reforms, we will continue to lurch from crisis to crisis.

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Kingsgate Consolidated Limited (ASX:KCN) Construction Contract Finalised With Ausenco (ASX:AAX) For The Chatree North Plant Expansion

August 16, 2010

Kingsgate Consolidated Limited (ASX:KCN) Construction Contract Finalised With Ausenco (ASX:AAX) For The Chatree North Plant Expansion

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Mark H. Ayers: There is No Tomorrow…America Needs Job Growth Now!

August 13, 2010

By any objective measure, our national economy is not in recovery, but rather is still in serious trouble. The latest July figures from the U.S. Department of Labor show that unemployment remains at a very high 9.5%, while in the construction industry the jobless rate continues to hover at or near 20% nationwide and many of the unemployed have been without a job for over 6 months. The skilled construction workers who have built this great country are growing increasingly desperate, and yet, politicians of both parties and the mainstream media are ignoring their suffering. People like Andrew Fonger. Andrew is in his mid-30s, and lives and works in the Washington, DC area as a member of Local 10 of the International Union of Elevator Constructors. He is married and the father of a 1 year old daughter. While the media likes to say that Washington, D.C. is recession proof because lobbyists and lawyers are fully employed, try telling that to Andrew. He has been unemployed since January, and like millions of other Americans, Andrew is facing excruciatingly painful decisions. He and his wife have already had to eliminate any notion of putting money aside for their daughter’s college education, because what little savings they have, combined with what Andrew collects from unemployment insurance goes exclusively to make the payments on their home and to meet the $1,100 per month payment required for Andrew to retain his health benefits under COBRA. And like far too many Americans these days, Andrew is facing the prospect that “when the savings are gone, the next thing is the house.” Or take Jackie Partridge, a member of the Bricklayers and Allied Craftworkers Local 7 from Colorado, who has also been unemployed for over seven months. Her skills and hard work used to earn her a weekly paycheck over $800. Now she is on her second extension of unemployment benefits with two teenagers to support. She says: I thought about maybe getting two $10 jobs somewhere, and I can’t. I’ve got two kids that aren’t over 18, and I’m the only caretaker. And I can’t afford to be away from them for 20 hours a day… And even my son, he’s 15, and he wants to get a job, and there’s not even anything for him to try to help out. Both Andrew and Jackie are skilled construction professionals, who have completed extensive multi-year apprenticeship programs and have years of on-the-job experience. Unfortunately, those skills are sitting idle while our infrastructure and schools crumble. They both are even looking for work outside the construction industry, despite their skills which normally make them highly desirable to many employers. It breaks my heart to hear their stories and hundreds of thousands just like them, when I know that there isn’t a community in this country that doesn’t have a bridge, school, or power plant that needs retooling. We all know that during these past several months Jackie and Andrew could have been gainfully employed, growing the wealth of the U.S.A. Not only would their work add value on its own, but it would benefit the small businesses that overwhelmingly make up the construction industry, generate revenue for manufacturers, and increase tax receipts for state, local and the federal governments. Furthermore, as they continue to remain unemployed, there is a corresponding decline in income and consumer demand. In a recession, that kind of decline can degenerate into a vicious downward spiral, as those who are still employed, seeing the threat of unemployment looming, choose to save rather than spend. As a result, demand is further reduced, more people are laid off, and the downward spiral continues. Our nation can no longer to ignore the suffering of the unemployed who so desperately want to get back to productive work. Nor can we afford to indulge our leaders’ penchant for delay and political posturing, which comes at the expense of millions of working American families who are hurting. What we need now are bold approaches to economic recovery that will produce jobs. Our economy needs job-creating investments, because tax breaks won’t cut it. Why would they, when U.S. corporations are already sitting on $1.8 trillion in cash. In fact, corporate profits today are greater than they were at the height of the most recent bubble, and yet job creation is virtually at a standstill. With statistics like these staring them in the face, the time is now for policymakers in Washington to develop initiatives that will put America’s skilled construction workers back on the job. Businesses are sitting on their mountains of cash, because they do not foresee sustained demand for their goods and services. Extending the Bush tax cuts for the wealthy will not solve this problem. What we need are investments that will boost demand and create long-term economic growth – investments like re-building our nation’s infrastructure for the 21st century and transforming the way our nation develops and uses energy. Tax breaks for the wealthy never built a bridge or an airport. They never increased American productivity by reducing traffic congestion, increasing broadband service, or creating a modern energy grid. The most fundamental step in boosting our economy is to get American workers back on the job. Getting people back to work affects the momentum of the economy, which ultimately creates the cycle of private-sector job creation that we need. It’s impossible to overstate the threat that this crisis of unemployment poses to the well-being of the United States. Entire communities – both rural and metropolitan – are going under. We need to immediately build on the successes of the American Recovery and Reinvestment Act and use scarce federal dollars in the most efficient way to boost demand and get the unemployed back to work. You can find Andrew and Jackie’s stories and others just like them, whose struggles during this recession have gone ignored on BackOnTheJob.org. Until we simultaneously tackle the jobs crisis facing the construction industry and our dilapidated infrastructure, our nation will not get back on track, nor will we be able to build the shining, hopeful, 21st century vision of America that President Obama was elected to build. And that, brothers and sisters, would be a tragedy for all the Andrews and Jackies waiting and hoping to get back on the job. Mark H. Ayers is the President of the Building and Construction Trades Department, AFL-CIO – an alliance of 13 national and international unions that collectively represent over 2 million skilled craft professionals in the United States and Canada.

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