10-18-08

 10-18-08Merced Sun-StarGovernor's panel says California must fix water system...SAMANTHA YOUNG, The Associated Presshttp://www.mercedsunstar.com/167/story/504150.htmlWEST SACRAMENTO -- California must retool how it uses, moves and stores water to meet the state's growing population and protect public health and the environment, a panel appointed by the governor said Friday.In its final report, the seven-member Delta Vision Blue Ribbon Task Force said Californians should consider a long-ago defeated idea to pipe water around the Sacramento-San Joaquin Delta and build new dams."The delta is going to hell, the ecosystem is deteriorating rapidly and has been for years," said task force chairman Phil Isenberg. "The current governance in the delta is not working."A new plumbing system was among a host of strategies recommended Friday by the panel Gov. Arnold Schwarzenegger charged with crafting a new master plan for the delta.The proposals reflect nearly two years of work on how best to restore the delta's ailing ecosystem, secure state water supplies and protect residents who live in the delta area. A Schwarzenegger cabinet committee will consider the recommendations and advise the governor and the Legislature by the end of the year.Persuading lawmakers to follow the panel's blueprint could be a challenge. Democrats in the state Legislature have long opposed dams, and delta farmers and residents are already banding together to oppose a canal that would pipe water to some 23 million Californians and Central Valley farmers.State residents in 1982 defeated a plan approved by the Legislature to build a similar but larger canal. Northern Californians saw it as a water grab by their neighbors to the south."The interesting question here is, having come up with a commonsense approach, will it survive?" said Gary Bobker, program director of the Bay Institute, a nonprofit environmental organization. "We have a window of opportunity where people of opposing viewpoints all understand things have to change."The goal is to partially shift California's water delivery system away from the delta, a fragile maze of levees, islands, river channels and sloughs that is home to some 55 species of fish, including the threatened delta smelt and salmon whose populations have crashed in recent years. Experts say the area is susceptible to rising sea levels, earthquakes and levee breaks.Studies in the last few years have shown more than 30 levees could crumble in a large magnitude earthquake. That could cut off water supplies for several years and cost the state as much as $40 billion.The report recommends lawmakers explore a system to simultaneously channel water through part of the delta and pipe water south from the Sacramento River through a canal.Isenberg said strengthening the delta and building a canal would give the state an insurance policy in a natural disaster because the state would have a backup way to send water if one of them fails.The panel said the Department of Water Resources and other agencies should decide the size and location of a canal by 2010, as well as where to put dams. The department is currently studying various proposals for a canal, which it estimates could cost between $12 billion and $24 billion, but maybe as much as $80 billion.Jonas Minton, a water policy adviser at the Planning and Conservation League, said the state must show that building a canal and dams are worth the price."The details will make or break it," Minton said. "It's a good framework but the Legislature is going to need to see some real data on costs and benefits."Unlike those in previous proposals, panel members said their canal wouldn't siphon additional water to send to Southern California and the Central Valley. They said in most years, less water likely would be taken from the delta. Linens N Things, Mervyns closing Merced stores...The Associated Presshttp://www.mercedsunstar.com/167/story/504170.htmlNEW YORK -- Merced will soon have two more empty big box stores.Mervyns LLC, which filed for Chapter 11 bankruptcy protection in July, said Friday that it plans to begin liquidation sales at its remaining 149 stores and wind down its business.Earlier in the week, Linens N Things, which has 371 stores across the nation, announced it would be closing down. Mervyns runs one store in the Merced Mall and it had a staff of 75 a month-and-a-half ago, Merced city spokesman Mike Conway said Friday.Mervyns officials referred calls for comment to its corporate media office, which declined to elaborate on the press release it issued.Linens N Things, on West Olive Avenue, reported a staff of 20 last year, Conway said. People waived signs in North Merced advertising its closeout sales. "It's a sign of the national economy's hardships once again landing in Merced," Conway said. "We're sorry to hear we have more people losing jobs here. We're hoping things turn around quickly."...Modesto BeeGovernor's delta panel sees water, habitat changes...Source: The Delta Vision Blue Ribbon Task Force.http://www.modbee.com/state_wire/story/466903.htmlThe governor's Delta Vision Blue Ribbon Task Force on Friday approved a plan to help secure California's water supply and restore the ecosystem of the Sacramento-San Joaquin Delta. To become law, the Democratic-controled California Legislature and Republican Gov. Arnold Schwarzenegger would have to approve it. The key recommendations include:- The Legislature should establish two equally important goals for the delta: restoring its ecosystem and ensuring a reliable supply of water for the state.- Congress should designate the delta as a National Heritage Area, as one of the country's most distinctive and culturally significant regions. The California Legislature should designate the delta as a new state recreation area to spur its economy and tourism.- Restore 100,000 acres of habitat in the delta for native fish and wildlife by expanding tidal marshes, seasonal grasslands, open water and floodplains. Create a state-run conservancy to coordinate the restoration.- Decide where and how big new dams and facilities to channel water from the delta should be by the end of 2010.- Complete a regional emergency response plan for the delta by 2010.- Cut per-capita water use by 20 percent by the end of 2020 and 40 percent by 2050, partly by investing in alternative water supplies such as recycling and reusing water, storm water and desalinated water.- By 2030, operate a two-channel system to funnel water from northern California to Southern California and the San Francisco Bay Area where most Californians live. Direct water through the eastern part of the delta and build a pipeline from the Sacramento River to move water to state and federal pumps in the south delta.- Create a delta government council appointed by the governor and approved by the state Senate to make a mandatory plan for state and local government making land-use decisions.- Set guidelines for how much river water should flow through the delta. Allow more water to be exported to cities and farms during wet years if it doesn't harm fish.- Regulate discharges from wastewater plants, farms and urban runoffs.Wal-Mart seeks growth in small town China...WILLIAM FOREMAN, Associated Press Writerhttp://www.modbee.com/24hour/world/story/467402.htmlLOUDI, China — Maoming, Wuhu and Loudi.They're Chinese cities so far in the boonies that Lonely Planet doesn't even bother to mention them in its popular travel guide. But Wal-Mart has found them, as the company makes an aggressive push into China's smaller markets.China's economic growth is rapidly spreading out from the main cities like Beijing and Shanghai into the hinterlands, where the middle class is taking off. In a report last year, the consulting firm A.T. Kearney said 75 percent of the middle market is expected to be in tier-two and tier-three cities by 2017.These cities are "small" only by the standards of a country with 1.3 billion people. For example, Wuhu in eastern China has 2.3 million people and Maoming in the south has 6.8 million, providing a strong consumer base as incomes rise.In response, retailers are pushing into the hinterlands, including American coffee chain Starbucks Corp. and French store Carrefour SA. Carrefour, the world's second-largest retailer after Wal-Mart, is the largest foreign retailer in China.Faced with saturated markets at home, these retailers are increasingly looking to emerging economies such as China to drive sales growth. Wal-Mart's attempt to gain a bigger foothold in China is anchored in smaller cities: Only three of the 30 outlets Wal-Mart Stores Inc. opened in China last year were in Shanghai, Beijing and Shenzhen. The rest were in provincial capitals or other cities."I think the capacity for growth in China might exceed that of the U.S., if you look at it in the long term," Terrence Cullen, Wal-Mart's vice president of development in China, said in an interview in his office in Shenzhen, the southern boomtown across the border from Hong Kong.Wal-Mart said its China sales rose 32.2 percent in the second quarter, while international sales overall were up 16.9 percent.But experts warn there are risks in smaller markets. People are not as well-off, so it's harder to turn a profit. Local suppliers may be less reliable, a concern in a country plagued by quality scandals, including the recent discovery of contaminated baby formula blamed for killing four infants and making thousands sick.Moreover, the big-bang growth strategy - opening stores across China - requires a bigger investment than the gradual expansion the company pursued in the U.S.Two of the newest stores are in Loudi (pronounced lou-DEE), a steel and mining town of 4 million people in central China. It's just down the road from Shaoshan, the birthplace of late leader Mao Zedong - who would likely be horrified to hear that a flagship of American capitalism has moved into his neighborhood...In the United States, Wal-Mart started with a single store in Arkansas in 1962 and built up its distribution network slowly, opening stores in adjacent counties and avoiding big leaps, said Emek Basker, a University of Missouri economics professor who has done extensive research on Wal-Mart's growth. The company had a conscious policy to open outlets only within a day's drive of its distribution centers, she said...Wal-Mart is being outmaneuvered by Carrefour because its executives have taken too long to understand the China market and add stores, said Burt P. Flickinger III, managing director of retail consulting firm Strategic Resource Group. Carrefour, with $4.3 billion in sales, ranked sixth among all retailers in China in 2007, according to the China Chain Store & Franchise Association. Its sales were up 24 percent over the previous year.Wal-Mart was 13th, with sales of $3.1 billion, a 42 percent increase over the previous year. The American chain also owns a 35 percent stake in Trust-Mart, which operates about 100 stores in 34 Chinese cities...Fresno BeeCalifornia unemployment rate steady at 7.7 percent...DON THOMPSONhttp://www.fresnobee.com/state_wire/business/v-printerfriendly/story/944598.htmlCalifornia's jobless rate held steady at 7.7 percent in September, remaining for a second month at its highest level since March 1996, according to the latest state figures released Friday. The state's unemployment rate, compiled by the California Employment Development Department, is higher than the national rate, which also was unchanged at 6.1 percent in September. Despite the state rate leveling off, there's no way of telling yet if unemployment has peaked, said department spokesman Kevin Callori. The state's jobless rate also leveled off last spring before jumping again. The closely watched University of California, Los Angeles' Anderson Forecast last month predicted that unemployment will continue to increase in coming months as consumers snap shut their purses."We're at the end of the housing-driven recession but at the beginning of the consumer-driven recession," said Stephen Levy, director and senior economist at the Center for the Continuing Study of the California Economy in Palo Alto. "The job losses are continuing at about 10,000 a month. No way is this leveling off." He predicted Friday that the state could see the unemployment rate climb to around 9 percent as the economic downturn lingers for a year. Tax revenues will continue to fall as one consequence, further damaging a weeks-old state budget already projected to be more than $1.3 billion in the red. State leaders have begun considering more cuts in services, while some legislators are suggesting tax increases. Unemployment is still lower than the early 1990s recession, when the rate climbed to nearly 10 percent. The rate fell below 5 percent early in the new century and before the housing bubble burst.The state survey estimates that 1.425 million people were unemployed in California last month. That's up by 4,000 over August, and up nearly 400,000 from September 2007, when the state jobless rate was 5.6 percent.Of the unemployed, the state says 548,300 people were laid off while 133,800 left their jobs voluntarily. California, which accounts for about 11 percent of the nation's jobs, tied with Mississippi in August for the nation's third highest unemployment rate, behind Michigan and Rhode Island. September's state-by-state breakdown by the U.S. Bureau of Labor Statistics won't be released until Tuesday. With the ongoing housing and credit slumps, construction and financial jobs were among six worst-hit categories that together lost 18,800 jobs in September, the state reported. "Those are the two weaker areas, although it looks like the construction job loss eased since the first five months of the year. At least that appears to be slowing down," Callori said. The job loss trend accelerated in the financial sector, however. Overall, though, the categories of trade, transportation and utilities were the biggest losers in September, down by 6,300 jobs.Since a year ago, construction, manufacturing and financial jobs are down nearly 176,000 jobs. Construction accounted for the biggest chunk of that number, down 8.7 percent or nearly 77,000 jobs. The overall unemployment numbers include agricultural workers and the self-employed. A smaller sampling of non-farm employers found a decline of 11,600 jobs during September and a drop of 77,200 jobs since a year ago. Meanwhile, five categories including manufacturing, teaching and health services saw a combined increase of 7,200 jobs in September and nearly 99,000 from a year ago...More than a half-million Californians received unemployment insurance benefits in September. That was a slight decline from August but a significant increase from the more than 345,000 getting benefits a year ago. New unemployment claims of 53,418 were up slightly from August and up sharply from less than 40,000 claims in September 2007. More than 84,000 Californians have exhausted 13-week extensions on their original 26 weeks of unemployment benefits, said department spokeswoman Loree Levy. It would take an act of Congress before they can again begin receiving an average of $307 a week. Meanwhile, the state unemployment insurance fund is expected to run out of money in January, after paying out more than $2.4 billion in the last three months. The state will borrow from the federal government once the fund runs dry, with no interest penalty unless the state fails to repay the money by next September.The fund is projected to have at least a $1.6 billion deficit by the end of 2009, growing to $3.5 billion by the end of 2010 unless the Legislature boosts the fund's revenue or cuts its payouts. Currently, employers pay between $104 and $434 into the fund annually for each employee...US agency cuts SoCal kangaroo rat habitat...10/17/08 15:09:49http://www.fresnobee.com/384/story/945317.htmlThe U.S. Fish and Wildlife Service is reducing habitat for Southern California's endangered San Bernardino kangaroo rat by two-thirds. The decision designates a total of 7,779 acres of habitat for the animal instead of the previous 33,295 acres. Agency spokeswoman Jane Hendron said Friday the reduction was suggested for a variety of reasons. They include better information about core populations and new mapping technology that allows scientists to determine exactly what areas are critical to the animal's conservation. Ileene Anderson, a biologist with the Center for Biological Diversity, says the move will accelerate the animal's slide into extinction. Sacramento BeePanel: Quenching California's thirst requires a canal - and more...Matt Weiserhttp://www.sacbee.com/101/story/1324013.htmlIndependently, neither water users nor environmental groups have the full solution to meeting the water demands of a thirsty and growing California, a governor-appointed panel concluded Friday. But together they might.The state's Delta Vision Task Force ended nearly two years of study Friday by declaring that, with a finite supply of water at its disposal, California must do more of everything to meet its water needs.That includes building some type of canal to divert fresh water around the Sacramento-San Joaquin Delta, the task force concluded – this state's most controversial water proposal for two generations. It also includes more dams, aggressive statewide conservation and unflinching enforcement of existing water laws to protect the environment.The plan's central theme is that water supply and a healthy environment should be co-equal goals."We've got to end this view that water users can rub environmentalists into the ground or vice versa," said Phil Isenberg, chairman of the task force and one-time opponent of a canal. "I used to say the Delta would be better off if nothing happened. Well, that's not true."At the core of the panel's work is the Delta itself, the largest estuary on the West Coast and hub of the state water system.Delta water serves 23 million Californians from Silicon Valley to San Diego, a supply threatened by weak levees on Delta islands.Floods, a rise in sea level, earthquakes – or some combination of the three – are likely to contaminate Delta waters in the future, triggering a statewide water, and economic, crisis.The task force favors a "dual conveyance" strategy to protect that water supply. This includes building a new canal around the Delta's perimeter and bolstering existing channels through its center.The system could allow more water to be diverted whenever there is a surplus. In lean years, more storage – both in dams and below ground – would mean less diversion, which would be better for the environment.Strict new diversion rules and 100,000 acres of restoration projects would help restore threatened fish species.Isenberg, former mayor of Sacramento and state legislator, was appointed along with six others by Gov. Arnold Schwarzenegger nearly two years ago to identify solutions for the Delta and the state's water supply.Their work has been praised by both water users and environmentalists as the most independent and complete look at the Delta's problems.That doesn't mean both sides like everything about it.Water agencies object to a proposal for a new regional governance system to police water diversions and land use. It would consolidate the more than 200 government agencies that now loosely regulate the 740,000-acre Delta."It doesn't seem like what we need is a new legal structure," said Laura King-Moon, assistant general manager of the State Water Contractors. "We need the existing legal structure to come to grips with what the ecosystem is going to look like once we separate water (delivery) from the ecosystem."Environmental groups are noncommittal about a canal and new dams."The big issue in the Delta is how you operate the thing," Barry Nelson, senior policy advocate at the Natural Resources Defense Council, said of the canal. "We'll support good projects, we'll oppose bad projects. Basically, the devil is in the details."The task force included Southern California business leaders as well as green-leaning politicians from the north.It is proposing new Delta levee safety standards that vary with land use, new state parks and a federal historic designation to boost tourism and preservation efforts.The task force gathered evidence that conservation, whether on farms or in cities, has not reduced statewide water demand. It recommends aggressive new water-saving targets statewide, including loss of water rights for those who waste or misuse water.None of the task force goals can be achieved without action by Schwarzenegger and the Legislature. Many proposals require new laws to be enacted – in some cases as soon as eight months from now.A committee of Schwarzenegger's Cabinet leaders is charged with reviewing the proposals in December and making recommendations to the Legislature."Is the administration going to embrace this? Will the Legislature tackle some of the hard issues?" asked Gary Bobker, program director at the Bay Institute. "I don't know if the urgency is there, given all the other things going on."But levee expert Raymond Seed, a task force member and UC Berkeley engineering professor, hopes public pressure forces politicians to act.Water users, he said, now know they can't get reliable supplies without a healthy environment. And environmentalists realize they can't repair habitat without financial help from the water users."What we have now is a historic and broadly based consensus," Seed said. "And that's too precious to let slip."The full report is online at www.deltavision.ca.gov. High-speed rail plan skirts Sacramento...Tony Bizjakhttp://www.sacbee.com/101/story/1323916.htmlWhen it comes to high-speed rail, Sacramento voters can be forgiven if they feel like the caboose.Even if next month's long-awaited $9.95 billion state construction bond measure passes, it's unlikely Sacramento will see the first bullet trains rolling in for years to come – critics say maybe never – and that worries some leaders.The measure is being billed as a big-time game-changer on the California transportation and economic landscape. Electric trains running up to 220 mph would one day course across the state, spreading jobs and prosperity, especially in the Central Valley, proponents say. And it would take about 2.5 hours to go from San Francisco to Los Angeles – a boon to business travelers and Disneyland-bound vacationers fed up with crowded airports and tedious intra-state drives.That's the long-range view.The Nov. 4 ballot proposal, Proposition 1A, is just seed money to get things started.It provides less than one-fourth of the $45 billion estimated price tag for completing the 800-mile system linking Sacramento, the Bay Area, the Central Valley, Los Angeles and San Diego.The state's plan is to solicit local and federal funds and private money for the system, segment by segment, over time.The Legislature recently changed the ballot measure to say some bond money may be used for segments anywhere along the planned routes – Sacramento included – if that region steps forward with a workable plan and matching funds.But state High-Speed Rail Authority representatives have made it clear they will focus first on the workhorse section, running between San Jose and Los Angeles, with slightly slower extensions to San Francisco and Anaheim.Construction could start in 2011. The first trains may run by 2020, proponents say.Rail Authority executive Mehdi Morshed said his agency's studies indicate the first segment will be a moneymaker – and income would be used to extend the line to Sacramento and San Diego.That's the rub for Sacramento."Unless somebody builds the San Francisco to Los Angeles segment, Sacramento will never be built because it will never pencil out," Morshed said. "You need to have the cash cow (first)."He estimates the system could reach Sacramento by 2025, possibly sooner...The bullet train's S.F.-L.A. segment will run through the Central Valley from Merced south, boosting economies in the southern part of the Valley before the system is extended to Sacramento."The nation is littered with the remains of places that were left behind as rail lines were built," Cabaldon said. "As residents of the Sacramento region, we ought to be voting with eyes wide open."...While Sacramentans weigh their vote, a taxpayers group has sued the High-Speed Rail Authority for failing to publish an up-to-date business plan by the Sept. 1 deadline."We want the voters to get the information they need," Howard Jarvis Taxpayers Association President Jon Coupal said.Rail agency head Morshed said the report was delayed by the state budget impasse, but has sponsored a recent series of economic impact reports that concluded the rail project would create hundreds of thousands of jobs statewide and increase business cross-pollination.However, economist Shawn Kantor of the University of California, Merced, who studied the Central Valley for the rail authority, said his report focused mainly on southern Valley cities and did not look in detail at Sacramento.Sacramento, with the biggest economy in the Valley, should benefit from synergy with other Valley cities as they grow, he said"The Sacramento area is going to grow regardless of whether there is a high-speed rail or not," Kantor said. "Sacramento is better connected on the Interstate 80 corridor, and already connected by train."Some Sacramento rail proponents have expressed disappointment that the initial line likely will enter and exit the Central Valley through the Pacheco Pass near Merced, rather than Tracy – closer to Sacramento...Stockton RecordPeripheral canal urged for DeltaTask force issues final report on troubled waterway...Alex Breitlerhttp://www.recordnet.com/apps/pbcs.dll/article?AID=/20081018/A_NEWS/810180317SACRAMENTO - A governor-appointed task force on Friday recommended both a peripheral canal and sending fresh water through the Delta as a partial solution to the state's water woes.The 6-0 vote ended 20 months of deliberations over the future of the largest estuary on the West Coast.Friday's action was largely a formality, since the task force had already endorsed what's known as "dual conveyance."Now it'll be up to the policymakers to decide what to do."It's been an arduous process," said Phil Isenberg, the former Sacramento mayor who chaired the task force. "I thought the probability of a unanimous vote out of this task force was about 3 percent. It's complex and so controversial that I didn't think it would work. It did."Unchanging in their position, canal critics said Friday that the task force's decision was predetermined."It doesn't surprise me," said Stockton attorney Dante Nomellini, who represents farmers in the central Delta. "I think the decision was made before they started the process."He maintains that only surplus water not needed in the Delta was supposed to be exported to cities and farms to the south. Now it's the exports that get priority.Friday's report is not just about a peripheral canal. Some other details:» The task force recommends a major change in how the Delta is governed. Currently, more than 220 federal, state and local agencies have their fingers in the pie, making for a sticky mess.» Too much water has been promised to too many people. The report says water rights have allocated 8.4 times as much water as actually flows into the Delta in an average year.» The environment and water supply should be legally established as co-equal goals.» Thousands of acres of Delta lands should be converted to open water or wetlands to help the ecosystem, while flood bypasses also should be established on the San Joaquin and Mokelumne rivers. This concerns some farmers who are worried about losing their land.» The task force did note the importance of the Delta as a place, even recognizing its "delightful dive bars" as a slice of the cultural cake.Canal controversy aside, the task force members said Friday they believe that after decades of stalemate - a peripheral canal was proposed but defeated by voters in 1982 - warring parties are inching toward consensus."They are now more desperate. They've lived with the logjam that has existed for half a century now," said Raymond Seed, a task force member and professor of engineering at the University of California, Davis.If the Delta goes, water districts and environmentalists "both go down together," Seed said.Friday's decision was made before specific plans for a peripheral canal have been released. The canal would likely be smaller than the ditch proposed in 1982, but questions of how it would be operated and at what times of year remain unanswered."We're going to have to wait and see what comes out of it, and then we're going to fight like hell," Nomellini said.San Francisco ChronicleGovernor's panel warns delta must be fixed...Kelly Zitohttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/18/MNIR13JKJI.DTL&type=printableA task force appointed by the governor warns that California must amend its laws and build new dams, canals and desalination plants or face economic and ecological disaster.The state must elevate environmental needs for water to a standing equal to that of human needs to restore the state's ailing water network, a report by the Delta Vision Blue Ribbon Task Force said.Though the system is under extreme strain, it is uncertain whether the sweeping recommendations for the Sacramento-San Joaquin River Delta will fare any better than earlier attempts.Members of the task force, however, insist this time is different. If nothing else, the ominous forecasts for the delta are putting all groups - farmers, urban users and environmentalists - on notice.Stakeholders "are coming into alignment," said task force member Ray Seed."We've run out of alternatives," he added. "If this opportunity is lost, all is lost with it."Members of the task force met Thursday and Friday in Sacramento to finalize and adopt the Delta Vision Strategic Plan, the fifth and final plan to achieve two main goals: ensure a reliable water supply for a booming population and repair the habitat damage incurred during decades of pumping water to farms and cities through a 1,300-square-mile estuary that is home to almost 900 species of birds and fish.The plan, two years in the making, now goes to the Delta Vision Committee, chaired by Secretary for Resources Mike Chrisman. The committee is scheduled to send recommendations to the governor by the end of the year; supporting legislation is expected in 2009.New oversight neededIn unveiling its study, the task force recommended creating a new delta oversight council that it said would not repeat the missteps of CalFed, a coordinating body formed in the mid-1990s that held many of the same goals as the Delta Vision group. CalFed's lack of leadership and accountability doomed many of its initiatives, according to the task force. The California Delta Ecosystem and Water Council would replace CalFed. It would have the power to allocate funds for projects and would be legally obligated to work on improving the delta.Its five to seven members would be appointed by the governor and confirmed by the state Senate."It would be a small, agile, accountable entity with oversight and responsibility," said task force member Sunne Wright McPeak.According to Tim Quinn, executive director of a group that represents more than 450 water agencies in California, the council would be "the most powerful bureaucracy in the state of California.""Nothing like it has ever been attempted. If you control the money, you control the authority."The task force's report represents the latest in a series of policy efforts aimed at fixing the delta over the past four decades. In the past several years, however, drought, legal restraints on delta pumping, crashing fish populations and worsening water quality lent more urgency to bolstering a system that delivers water to about two-thirds of California.In addition to new dams and reservoirs, the plan calls for other measures, including: designating the estuary a National Heritage Area by 2010, increasing the amount of recycled water in the state to 1.5 million acre-feet annually, and cutting California's water use 20 percent by 2020.'Positive development'Environmental groups lauded the conservation recommendations and the move to legally establish ecosystem restoration and water supply as "co-equal" goals. "It's a significant, positive development," said Cynthia Koehler, a lawyer at Environmental Defense Fund. "There's a certain amount of bravery in this. They're moving into some new areas that will be very productive."But other environmental advocates remain concerned about the recommendation for a "dual conveyance" system - that is, strengthening the existing levees within the delta that channel water to pumping stations and building a separate pipeline that diverts water from the Sacramento River north of the Capitol to pumping stations in the southern delta.Rather than big-ticket canals, groups such as the Natural Resources Defense Council suggest that conservation and recycling could solve many of the problems facing the delta. Task force chairman Phil Isenberg, however, argued that the parallel systems offer a necessary insurance policy against earthquakes, floods and rising oceans.Many Central Valley farmers support the canal as well as new dams and reservoirs.They were less enthusiastic about the task force's heavy emphasis on state water rights laws that define water as a public trust and subject to reasonable use. Task force members maintain that existing laws must be enforced to ensure that water is not wasted and that authorities don't continue to promise more water than can be delivered. As it stands, the state Water Resources Control Board has issued permits promising 3.4 times the amount of water available during high-flow years."It doesn't matter that there's a right to get water that doesn't exist," said Isenberg. "But it's hard to develop a coherent water system when you see this level of discrepancy between water rights and supply."Some in the agriculture industry see a different agenda, though. Because California courts have held that the definition of reasonable use may evolve over time - water needs in 1930 are starkly different from those now - farmers worry that the provision will be used to shift water to other users."We think there's a public trust value in a locally grown food supply," said Chris Scheuring, lawyer for the California Farm Bureau. "At least the public trust shouldn't act to push agriculture off the map. All our food will come from the Third World."Delta Vision Committee's major recommendations-- Make water supply and delta ecosystem restoration equal in state laws.-- Apply for the designation of the delta as a federally recognized Natural Heritage Area by 2010. This would allow a large-scale preservation that would bring together public and private partnerships.-- Develop a regional economic plan to support increased investment in agriculture, recreation, tourism and other resilient land uses.-- Modify the Water Recycling Act of 1991 to add a statewide target to recycle 1.5 million acre-feet of water annually by 2020.-- Enact legislation now that would encourage water agencies to use water desalination to triple the current statewide capacity to generate new water supplies by 2020.-- Develop and construct new surface and groundwater storage and conveyance facilities by 2020.-- Develop and enact a comprehensive plan to improve delta levees.-- Enact legislation that would create a new oversight group for the delta.To read the full report go online to: links.sfgate.com/ZFDE.Rule advances to ease mining waste dumping...H. JOSEF HEBERT, Associated Press Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/10/17/national/w141632D15.DTL&type=printableThe Interior Department has advanced a proposal that would ease restrictions on dumping mountaintop mining waste near rivers and streams, modifying protections that have been in place — though often circumvented by mining companies — for a quarter-century.The department's Office of Surface Mining issued a final environmental impact analysis Friday on the proposed rule change, which has been under consideration for four years. It has been a top priority of the surface mining industry.It sets the stage for a final regulation, one of the last major environmental initiatives of the Bush administration, after 30 days of additional public comment and interagency review.The proposed rule would rewrite a regulation enacted in 1983 by the Reagan administration that bars mining companies from dumping huge waste piles — known as "valley fills" — from surface mining within 100 feet of any intermittent or perennial stream if the disposal adversely impacts water quality or quantity.The revisions would require mining companies to minimize the debris they dump as much as possible, but also would let them skirt the 100-foot protective buffer requirement if compliance is determined to be impossible."The new rule will allow coal companies to dump massive waste piles directly into streams, permanently burying them," warned Joan Mulhern of Earthjustice, among the environmental groups that have fought the practice known as mountaintop removal mining widely used in Appalachia, especially in West Virginia, Kentucky and parts of Virginia and Tennessee.Mining companies remove vast mountaintop areas to expose the coal. While they are required to restore much of the land, the removal includes many tons of rocks, debris and other waste that are trucked away and then dumped into valley areas, including stream beds.Despite the 100-foot buffer requirement, environmentalists estimate hundreds of miles of streams have been impacted, some of them obliterated, because of lax enforcement of the 1983 restrictions or different interpretations of the federal rule.This proposed rule "legitimizes mountaintop removal and its most damaging effect which is putting valley fill and sludge into streams," Mulhern said.Jason Bostic, vice president of the West Virginia Coal Association, said the group was disappointed about the proposal to require companies to minimize waste. But he said of the 100-foot stream buffer revision: "We're relieved that the rule clearly enunciates congressional intent that valley fill construction and coal refuse construction can take place in intermittent and perennial streams."The Office of Surface Mining maintains that the 1983 rule "has never been applied as an absolute prohibition of mining activities near a stream," according to a fact sheet included in the rulemaking. It acknowledged there has been confusion about the rule among federal and state regulators.The revisions are an attempt to clarify the situation, the fact sheet says.The mining agency, in a statement issued Friday, said the proposed changes reflect a "slightly positive" improvement in environmental protection because it would require coal companies to minimize impacts of the dumping by reducing the amount of wastes and the disposal areas.Mulhern called that "a sham" and said the agency "did not even study, among available alternatives" the option of strictly enforcing the stream buffer rule that has been on the books since 1983."Instead they pretended that the existing stream buffer law does not apply. ... They claim their rule is better for the environment when the exact opposite is true," she said.Contra Costa TimesBillions of fish, fish eggs die in power plants...JIM FITZGERALD Associated Press Writerhttp://www.contracostatimes.com/environment/ci_10755158BUCHANAN, N.Y.—For a newly hatched striped bass in the Hudson River, a clutch of trout eggs in Lake Michigan or a baby salmon in San Francisco Bay, drifting a little too close to a power plant can mean a quick and turbulent death. Sucked in with enormous volumes of water, battered against the sides of pipes and heated by steam, the small fry of the aquatic world are being sacrificed in large numbers each year to the cooling systems of power plants around the country. Environmentalists say the nation's power plants are needlessly killing fish and fish eggs with their cooling systems, but energy-industry officials say opponents of nuclear power are exaggerating the losses. The issue is affecting the debate over the future of a nuclear plant in the suburbs north of New York City, and the facilities and environmentalists are closely watching the outcome here to see how to proceed in other cities around the country. The U.S. Supreme Court is expected to rule this term in a lawsuit related to the matter. The issue's scope is tremendous. More than 1,000 power plants and factories around the country use water from rivers, lakes, oceans and creeks as a coolant. At Indian Point plant in New York, the two reactors can pull in 1.7 million gallons of water per minute. Nineteen plants on or near the California coast use 16.3 billion gallons of sea water every day. Most of the casualties are just fish eggs, and for many species, it takes thousands of eggs to result in one adult fish. The U.S. Environmental Protection Administration, which counts only species that are valuable for commerce or recreation, uses various formulas and says the number of eggs and larvae killed each year at the nation's large power plants would have grown into 1.5 billion year-old fish. Environmentalists note that even fish that die before maturity contribute to the ecosystem as food for larger fish and birds, and as predators themselves on smaller organisms. But once they've gone through the power plant, they become decomposing detritus on the river bottom and have moved from the top to the bottom of the food chain, said Reed Super, an environmental lawyer specializing in the federal Clean Water Act. "This is a really significant ongoing harm to our marine ecosystem," says Angela Haren, program director for the California Coastkeeper Alliance in San Francisco. Technology has long existed that might reduce the fish kill by 90 percent or more. Cooling towers allow a power plant to recycle the water rather than continuously pump it in. New power plants are required to use cooling towers, but most existing plants resist any push to convert, citing the huge cost and claiming that most fish eggs and larvae are doomed anyway. "We're not killing grown fish," says Jerry Nappi, spokesman for Entergy Nuclear Northeast, owner of Indian Point. "If we were killing billions of grown fish you'd be able to walk across the Hudson on their backs." And Nappi says the fish population in the Hudson is stable, despite a recent study commissioned by Indian Point opponents that said 10 of 13 species were declining. He also says an insistence on cooling towers could lead to Indian Point's closing and a sudden power deficit in the New York metropolitan area. "What you're really talking about is a $1.5 billion hit on the company, and then it becomes an economic decision whether they want to stay here," he says. He believes talk of cooling towers is "a backdoor attempt by some to shut down Indian Point." A recent ruling dealt at least a small blow to Entergy's efforts. The state Department of Environmental Protection, which is pushing for cooling towers, said the simple fact that so many fish eggs are destroyed each year at Indian Point is proof of an environmental impact, and Entergy can no longer maintain that it's not adversely affecting the river. There's still months of argument ahead, but the ruling could be influential. "We'll be very interested to see how that comes out," says Katie Nekola, an attorney for Clean Wisconsin, which failed to force cooling towers at the Oak Creek plant on Lake Michigan but won a $105 million settlement. State agencies in California also are working on new regulations that should limit the numbers of fish killed, in the Pacific Ocean and other bodies of water. According to the Nuclear Regulatory Commission, nuclear plants drink from other familiar bodies of water as the Mississippi River, Chesapeake Bay, Lake Michigan, the Gulf of Mexico and the Atlantic Oceans. Water used for cooling does not become radioactive. Most plants without cooling towers use a system in which water is continuously pumped in, used for cooling, and returned. Various types of barriers are used to keep adult fish out of the system; Indian Point uses screens with holes measuring a quarter-inch by a half-inch. However, fish that are blocked by the screen can become caught on the screen by the force of the water intake. To rescue them, the screens rotate, and as they come out of the water a spray of water knocks the impinged fish into a trough, which is directed back to the river. A California state report says 9 million fish are caught on nets there every year. Even turtles, seals and sea lions are occasionally caught. Environmentalists believe many fish and other creatures are killed in this process, or are injured and die later. "When you hit a deer in your car, just because it gets up and runs away doesn't mean it's not going to die," Haren said. But Ed Keating, environmental manager at the nuclear subsidiary of Public Service Enterprise Group Inc., said that probably only 1 percent of the fish caught get killed on the screens. Dara Gray, environmental supervisor at Indian Point, says there's no reason to believe that any fish are injured or killed by being caught on the screen. In the process known as closed-cycle cooling, used mostly in newer plants, the number of fish and eggs sucked in or impinged is sharply reduced because cooling towers use so much less water. Even if a power plant draws its cooling water from a river, it uses that water over and over again and rarely needs to replenish. Some plants with cooling towers don't have to worry about fish at all. PSEG Fossil has plants in New Jersey that now take treated wastewater from sewage plants.Los Angeles TimesCalifornia congressional delegation: split scorecard...Bettina Boxall...Greenspacehttp://latimesblogs.latimes.com/greenspace/2008/10/environmental-s.htmlCalifornia's U.S. senators, Democrats Dianne Feinstein and Barbara Boxer, got top grades from the League of Conservation Voters in the environmental group's annual congressional scorecard. Both earned 100, as did 14 of the state's House members, giving the California delegation more perfect scores than any other state.But being the diverse place that California is, the delegation also racked up its share of zero scores -- 11, to be precise. The ratings were based on 11 Senate and 13 House votes, most of which dealt with energy issues. Feinstein and Boxer consistently supported renewable energy and energy efficiency, according to the league, which has been rating Congress on environmental matters for 30 years.California's U.S. senators, Democrats Dianne Feinstein and Barbara Boxer, got top grades from the League of Conservation Voters in the environmental group's annual congressional scorecard. Both earned 100, as did 14 of the state's House members, giving the California delegation more perfect scores than any other state.But being the diverse place that California is, the delegation also racked up its share of zero scores -- 11, to be precise. The ratings were based on 11 Senate and 13 House votes, most of which dealt with energy issues. Feinstein and Boxer consistently supported renewable energy and energy efficiency, according to the league, which has been rating Congress on environmental matters for 30 years.The league gave a rating of A+ to  Reps. Barbara Lee (D-Oakland), Ellen O. Tauscher (D-Alamo), Pete Stark (D-Fremont), Anna G. Eshoo (D-Menlo Park), Michael M. Honda (D-San Jose), Zoe Lofgren (D-San Jose), Lois Capps (D-Santa Barbara), Howard L. Berman (D-Valley Village), Adam B. Schiff (D-Burbank), Henry A. Waxman (D-Beverly Hills), Maxine Waters (D-Los Angeles), Jane Harman (D-Venice), Linda T. Sanchez (D-Lakewood) and Susan A. Davis (D-San Diego).The "F" class included Reps. Wally Herger (R-Chico), Dan Lungren (R-Gold River), Devin Nunes (R-Tulare), Kevin McCarthy (R-Bakersfield), Elton Gallegly (R-Simi Valley), David Dreier (R-San Dimas), Ed Royce (R-Fullerton), Gary G. Miller (R-Diamond Bar), Dana Rohrabacher (R-Huntington Beach), John Campbell (R-Irvine) and Rep. Duncan Hunter (R-Alpine).Washington PostMines to Get Freer Hand to Dump WasteNew Rule Eases Water Protections...Juliet Eilperinhttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/17/AR2008101702942_pf.htmlThe Interior Department is poised to issue a final rule that will make it easier for mountaintop mining companies to dump their waste near rivers and streams, the agency announced yesterday.The environmental impact statement released Friday afternoon by the department's Office of Surface Mining overhauls a 1983 regulation protecting water quality that has been regularly flouted by mining companies. It marks the next-to-last step in a 4 1/2 -year battle over how companies should dispose of the rubble and slurry created when they blow the tops off mountains to get to the coal buried below.The revised rule will take effect after a 30-day review by the Environmental Protection Agency, making it one of the last significant changes to environmental regulations by the Bush administration.For a quarter of a century, the government has prohibited mining operators from dumping "valley fills," massive piles of debris created by mountaintop removal, within 100 feet of any intermittent or permanent stream if the material harms the stream's water quality or reduces its flow.Mining companies have frequently disregarded the law: By the administration's estimate, about 1,600 miles of streams in Appalachia have been wiped out by such activities since the mid-1980s.The revised rule calls on companies to avoid the 100-foot stream buffer zone "or show why avoidance is not possible," said a statement from the Office of Surface Mining. If they do dump the waste in the buffer zone, they must try to minimize or avoid harming streams "to the extent practicable."The agency said the change in regulation would have a "slightly positive" effect on the environment "because it requires coal mining operations to minimize certain impacts," but Joan Mulhern, senior legislative counsel for the environmental law firm Earthjustice, called the environmental impact statement "totally inadequate.""It didn't even include the alternative of actually enforcing the rule on the books," she said. "The implications of this ruling are devastating, they're widespread and they're irreversible."Mountaintop-removal mining -- which is both less expensive and somewhat safer than traditional underground mining -- is used widely in West Virginia and Kentucky, and to a lesser extent, in Virginia and Tennessee. The practice provides access to valuable low-sulfur coal seams but generates large amounts of waste. While companies are required to restore the land they have bulldozed and dynamited in order to reach the coal, they are left with large amounts of rubble and sludge that is usually trucked away to other valleys.Environmentalists have been feuding with state and federal agencies for more than a decade over how to interpret the 1983 law. A federal court ruled in the environmentalists' favor in 1999, but that judgment was overturned two years later. President Bill Clinton pushed to restrict dumping of mining waste but left office before enacting any changes. The Bush administration has been seeking to rewrite the law since it took office.Before the rule takes effect, Environmental Protection Agency administrator Stephen L. Johnson must certify in writing that the new regulation complies with the Clean Water and Clean Air acts and determine that the environmental impact statement is adequate.Mulhern said that she hoped Johnson would block the rule, but if he does not, environmental groups will fight the regulation in court: "I can't imagine a circumstance in which this is not going to be challenged by environmental groups."Saving the Desert Southwest...Tom Kenworthy,  former Denver-based correspondent for The Post and USA Today, is a senior fellow at the regional policy institute Western Progresshttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/17/AR2008101702386_pf.htmlLate last month, my wife and I took one of our semi-regular treks in the Grand Canyon, a two-day, 23-mile hike from the North Rim down to the Colorado River and back up, to the South Rim. As always, it was a test of aging knees, a massage for the soul and a total immersion in geology and natural spectacle.Even more than usual, it was a reminder of the sometimes erratic course of our collective stewardship of the red rock country of the desert Southwest.Today we take protection of Grand Canyon National Park for granted. But a little more than a century ago, the canyon was being overrun by speculators filing mining claims, building toll roads and establishing other commercial enterprises. In a 1903 visit, President Theodore Roosevelt signaled his intention to protect the canyon as a national monument; he achieved the designation five years later. "Leave the Grand Canyon as it is," Roosevelt said. "You cannot improve upon it. What you can do is keep it for your children, your children's children, all who come after you."If only the Bush administration would heed that advice and apply some of Roosevelt's wisdom to the landscapes north of the canyon in Utah. But as it prepares to leave office, the administration is working quickly to hand over much of southern Utah to the oil and gas industry and off-road-vehicle enthusiasts.In less than two months this summer, the federal Bureau of Land Management released six new proposals for managing 11 million acres of public land in Utah. Under the plans, which will soon become final and will then govern activities on these lands for the next two decades, 80 percent of some of the Southwest's most spectacular treasures will be open to oil and gas development. Dirt-bike riders and all-terrain-vehicle drivers will have 17,000 miles of overland travel routes. Some 85 percent of roadless areas that the bureau itself acknowledges have great wilderness value will be sacrificed. A half-million acres protected as "areas of critical environmental concern" will lose that status.Last month the Salt Lake Tribune editorialized: "The Bureau of Land Management under the Bush administration is trying to make a clean sweep of it before President Bush leaves office," favoring "all-terrain vehicles and energy development over wildlife, water, scenic beauty and archaeological treasures."What the Southern Utah Wilderness Alliance rightly calls a "legacy of destruction" is just the latest chapter of a decades-long fight to preserve this remote corner of America, a place where the Western writer Wallace Stegner said that "much of the wilderness is unique, unmatched in any part of the world."Some of that history came back to me as we drove south of Moab toward the canyon. At the height of the Great Depression, Interior Secretary Harold L. Ickes proposed to create a 4.5-million-acre national park stretching from the outskirts of Moab all the way south to the San Juan River and west to the Escalante River.Ickes's audacious idea died in the arms of Utah politicians who preferred grazing, mining and other development. FDR saved a piece by creating Capitol Reef National Monument, now a national park. In 1964, Congress established Canyonlands National Park, and 32 years later President Bill Clinton designated nearly 2 million more acres as Grand Staircase-Escalante National Monument.To some, all that protected federal ground is enough. But southern Utah is big country, full of canyons large and small, hidden gardens of plant and animal diversity, endless rock formations that dazzle the eye, and rich archaeological reminders of ancient Pueblo culture. There's a lot more that deserves much better than what the Bush administration has in store for it.In the midst of a presidential election campaign and a global economic meltdown, it's probably too much to ask of the public to rise up and put the brakes on. But maybe the next administration and Congress can reverse direction."The Utah deserts, and plateaus and canyons are not a country of big returns," Stegner wrote, "but a country of spiritual healing, incomparable for contemplation, meditation, solitude, quiet, awe, peace of mind and body."In these troubling times, we need to preserve as much of that as we can.New York TimesLast-Minute Mischief...Editorialhttp://www.nytimes.com/2008/10/18/opinion/18sat1.html?sq=endangered%20species&st=cse&scp=4&pagewanted=printAll presidents indulge in end-of-the-term environmental rule-making, partly to tie up bureaucratic loose ends but mainly to lock in policies that their successor will be hard pressed to reverse. President Bill Clinton’s midnight regulations were mostly good, including a rule protecting 60 million acres of national forests from road-building and most commercial development. Not surprisingly, most of President Bush’s proposals are not. Exhibit A is a set of six resource management plans covering 11 million acres of federal land in Utah. They would open millions of acres to oil and gas drilling and off-road vehicles, risking priceless cultural artifacts and some of the most breathtaking open spaces in America. The plans, each more than 1,000 pages, were dumped on an unsuspecting public in the last few weeks by the Bureau of Land Management.The bureau claims that it wasn’t trying to pull a fast one and that drafts were available months ago. But the final documents are what count. The public now has only a few short weeks to register objections before the secretary of the interior makes them final. Why the rush? The agency says it had to wrap things up before it ran out of planning money. What we are really seeing, though, is the last gasp of the Cheney drill-now, drill-everywhere energy strategy; one last favor to the oil and gas drillers and the off-road vehicle enthusiasts before a more conservation-minded president (both Senators Barack Obama and John McCain have far better records than Mr. Bush) comes to town.Environmentalists are also suspicious of the Interior Department’s recent proposal to revoke a longstanding if rarely used regulation that gives Congress and the interior secretary emergency powers to protect public lands when commercial development seems to pose immediate environmental dangers. Dirk Kempthorne, the interior secretary, decided that the rule was unnecessary after Representative Raúl Grijalva of Arizona and about 20 other members of the House Natural Resources Committee ordered him to withdraw about 1 million acres near the Grand Canyon from new uranium mining claims to give officials time to assess potential damage to the air and water. Arguing that the committee did not have a quorum and that he had other means of guarding against damage, Mr. Kempthorne not only refused to obey the committee’s order but proposed to rescind the departmental rule requiring him to obey it. The public has been given 15 days to comment, after which Mr. Kempthorne will be free to jettison the rule. Mr. Kempthorne is also pressing ahead with plans to scale back important protections required by the Endangered Species Act by eliminating some mandatory scientific reviews by the Fish and Wildlife Service of federal projects that could threaten imperiled animals and plants.The new rule — which could be made final at any moment — would allow projects likes roads, bridges and dams to proceed without review if the agency in charge decides they would cause no environmental harm. The National Audubon Society and other groups have compiled an extensive list of cases in which the agencies misjudged the threat and Fish and Wildlife Service scientists had to intervene to protect the species. Some of the administration’s recent regulations have been helpful — one tightening pollution controls on small engines like lawnmowers, another tightening lead emissions. But others could cause serious and lasting damage. And there are still three nerve-racking months to go before Mr. Bush leaves office.Shouldn’t We Rescue Housing?...Joe Nocera  http://www.nytimes.com/2008/10/18/business/18nocera.html?_r=1&oref=slogin&ref=business&pagewanted=printNow that the government has “saved” Wall Street — at least for the moment — hasn’t the time finally come to save Main Street too? The Treasury Department just pumped $125 billion into the country’s largest financial institutions, and it promises to use another $125 billion — more, if necessary — to recapitalize regional and community banks. They are vital steps. This week, at long last, the credit markets thawed, at least a little, and the global recapitalization of the banking system is the reason.But the job isn’t done yet. The government now needs to tackle what R. Glenn Hubbard, the former chairman of the Council of Economic Advisers under President Bush, calls “the elephant in the room”: the continuing decline of housing prices. That decline means more and more homeowners are saddled with “impaired mortgages” (to use the current lingo), meaning their homes are worth less than what they owe on them. They didn’t necessarily do anything wrong; they just bought a house near the peak of an unsustainable bubble. Now they have little economic incentive to keep making mortgage payments. Of course, millions of additional homeowners did make a big mistake: they took advantage of “liar loans” and other too-good-to-be-true deals to buy homes they couldn’t afford. Many are still in those homes, hanging on for dear life. Many others have already faced foreclosure proceedings.I’ve seen estimates suggesting as many as one out of every six homeowners has a troubled mortgage. This is an enormous social problem. It is also a continuing economic problem. In the year since the crisis began, the world’s financial institutions have written down around $500 billion worth of mortgage-backed securities. Unless something is done to stem the rapid decline of housing values, these institutions are likely to write down an additional $1 trillion to $1.5 trillion. In other words, we ain’t seen nothin’ yet.And please don’t raise the specter of moral hazard, the notion that people who did dumb things need to take their lumps so they won’t do it again. First of all, you would have to be an absolute idiot to repeat the folly of the housing bubble, even if you don’t lose your house in the crisis. I contend that this financial crisis is going to cause an entire generation to become debt-averse, as our parents were after the Depression. Second, there is the question of justice. For Wall Street, which made plenty of its own dumb mistakes, moral hazard went out the window the minute the government realized what a catastrophic error it made when it allowed Lehman Brothers to go bankrupt. The government is not going to let another big institution fail. Why should homeowners have to pay more for their sins than Wall Street is paying for its sins? As anger across the country rises, this is becoming a political issue as well.Yes, there were lots of Americans who were not greedy or foolish during the housing bubble, and many resent the idea that their neighbors might get a bailout they don’t deserve. They need to get over themselves. If housing prices keep falling, many millions of additional homeowners will find themselves, through no fault of their own, with underwater mortgages. Besides, foreclosures damage property values for everyone, not just those losing their homes. Finally, and perhaps most important, the housing bubble and its aftermath form the core problem from which all other problems flow. If the government doesn’t do anything about it, the economy will remain in chaos. Banks will still be afraid to write mortgages because they won’t trust the value of the collateral. Giant financial institutions will continue to post multibillion-dollar write-downs. And homeowners will continue to face the stark reality that their primary asset is in jeopardy. And yet, so far the government’s response to this part of the crisis — the part that most directly affects voters, for crying out loud — has been anemic. The Hope for Homeowners program, signed into law in July, is both too complicated and too narrow. The new $700 billion bailout bill contains some toothless pleas to help homeowners. Efforts to jawbone the mortgage industry have largely failed. Just a few days ago, the chairman of the Federal Deposit Insurance Commission, Sheila Bair, publicly broke with her counterparts at the Treasury and the Federal Reserve and criticized the Bush administration for not doing enough for homeowners. “We’re attacking it at the institution level as opposed to the borrower level, and it’s the borrowers defaulting,” she told The Wall Street Journal. “That is what’s causing the distress at the institution level. So why not tackle the borrower problem?”Why not, indeed. It turns out there are plenty of plans out there to do just that. But not one has broken through to gain wide backing. For instance, both presidential candidates have homeowner assistance plans, but they are poorly conceived and would cost the government billions of additional dollars. Mr. Hubbard, now the dean of the Columbia Business School, and a Columbia colleague, Chris Mayer, say they believe the answer lies in having “the Bush administration and Congress allow all residential mortgages on primary residences to be refinanced into 30-year fixed-rate mortgages at 5.25 percent (matching the lowest mortgage rate in the last 30 years), and place those mortgages with Fannie Mae and Freddie Mac,” as they wrote recently.A Yale economist named John D. Geanakoplos suggests a new system to “modify mortgage loans to keep homeowners in their homes,” as he put it in a recent paper. He also says the government should give financial incentives to renters to buy homes — and thus create a floor for housing prices. Both of these ideas are far better than the proposals of the two candidates. But recently a proposal came across my desk that I believe is so smart, and so sensible, that I hope our nation’s policy makers will give it a serious look. It comes from Daniel Alpert, a founding partner of Westwood Capital, a small investment bank. I have quoted Mr. Alpert frequently in recent columns, because he has been both thoughtful and prescient on the subject of the financial crisis.Here’s his idea: Pass a law that encourages homeowners with impaired mortgages to forfeit the deed to their lenders but allows them to stay in the homes for five years, paying prevailing market rent. Under the law Mr. Alpert envisions, the lender would be forced to accept the deed, and the rent. After five years, the homeowner-turned-renter would have the right to buy the home back, at fair market value, from the lender.There are so many things I like about this idea that I hardly know where to begin. Let’s start with the fact that it doesn’t require a large infusion of taxpayers’ money. Indeed, it doesn’t require any government money at all. It also doesn’t let either homeowners or lenders off the hook, as many other plans would. The homeowner loses the deed to his home, which will be painful. The lending institution, in accepting prevailing market rent, will get maybe 60 or 70 percent of what it would have gotten from a healthy mortgage-payer. (Rents are considerably lower than mortgage payments right now.) That will be painful too. Moral hazard will not be an issue.As Mr. Alpert told me the other day, his proposal “admits the truth: the homeowner doesn’t have equity, and the lender has taken a loss. They should exchange interest, but not in a way that throws the homeowner out in the street.” Which is the other key part of his plan. It has the best chance of preventing, as he puts it, “the massive disruption of the economy and the social dislocation” that will come from large numbers of foreclosures. And it is the continuing foreclosures that are likely to cause housing prices to fall so hard that they will drop below the real value of the shelter. That, of course, is exactly what happened during the bubble, albeit in reverse — prices wildly overshot the true value of the home — and it has to be prevented on the way down. Otherwise we face further economic calamity.Why did Mr. Alpert choose five years? Two reasons. First, he feels confident that housing prices will have stabilized by then. “We continue to have a growing population,” he said. “And there is zero chance there will be a material increase in housing stock over the next five years that will exceed demand. Those two factors alone will cause housing to stabilize.”Second, he says five years will give the renters enough time to get their financial affairs in order — to pay down their various debts and save enough to make the 10 percent down payment an F.H.A. loan requires. (Many of the homeowners affected by this plan would be eligible for F.H.A. loans, Mr. Alpert believes.) If they don’t have enough for a down payment, they would have to leave, of course, but it would be far less disruptive to the economy than it would be right now, in the middle of the crisis.Does the plan have stumbling blocks? Sure it does. One obvious one is that ideologues will view its being mandatory as an improper “taking” of homeowners’ property rights and a violation of the mortgage contract. But, as Mr. Alpert puts it, “the homes involved are economically without value to the existing homeowners.” He adds, “What the plan buys is time to heal for both sides in a fairly equitable and controlled manner.”Mr. Alpert calls his plan “The Freedom Recovery Plan.” On my blog (www.nytimes.com/executivesuite), I have linked to Mr. Alpert’s detailed description of how it would work, which runs eight pages. I have also posted a series of short “comments” that he sent me recently, which outline the severity of the problem. I encourage you to read both documents, and weigh in on the plan’s merits.That goes for you, too, government policy makers. I acknowledge that this may not be the perfect solution. It may have some fatal flaw that neither Mr. Alpert nor I can see. But if you don’t like this idea, it is incumbent upon you to come up with something better. Actually, it’s long overdue.CNN MoneyMall's demise could doom communitySharp jump in store vacancies and a frozen credit market could force closures, resulting in loss of vital revenue and jobs...Parija B. Kavilanz...10-16-08http://money.cnn.com/2008/10/16/news/economy/mall_economy/index.htm?postversion=2008101616NEW YORK (CNNMoney.com) -- With thousands of stores closing in the economic downturn, the increase in empty space at the nation's shopping malls is leaving a hole in the hearts of once-vibrant communities.In some cases, one-quarter or more of shopping centers are now empty, and the decline - or even the demise - of a mall can have a devastating economic and social impact "When a mall closes, you have a significant loss of jobs, even though these are typically low-paying jobs," said Scott Hoyt, senior director of consumer economics at Moody's Economy.com.Malls also provide significant tax revenue to communities through property tax, said Zenia Kotval, associate professor of Urban and Regional Planning at Michigan State University.Kotval said small towns are dependent upon this money to balance budget deficits, and to fund local services and infrastructure development.In tough economic times, shortfalls arise - a scenario playing out in the village of North Randall in Cuyahoga County, Ohio.Shopping stifledThe Randall Park Mall has been a main source of revenue for North Randall, a suburb of Cleveland that has a population of about 1,000.But a challenging economic and competitive climate has crippled business - and the 32-year-old shopping center, once the largest enclosed mall in the greater Cleveland area, is closing. The current weakness in consumer spending, which has stymied retail sales nationwide, finally forced the mall to shut down.Cuyahoga County Commissioner Peter Lawson Jones said the once-booming mall had been struggling for a decade."When the mall and the (nearby Thistledown) racetrack were booming, the community had more money than it could stand," Jones said. Besides jobs, he said the village's residents also depended on revenue from the mall to fund basic services such as security and free snow plowing for senior citizens.Now, the demise of the mall and sluggish patronage at the racetrack have almost put the village of North Randall on "deathwatch," Jones said.The situation is so bad that the village can no longer provide its own security for its residents. "The Cuyahoga County Sheriff's Office is patrolling North Randall," Jones said.Unless the village figures out how to revitalize the 1.5 million square feet of mall space, Jones fears that North Randall "could become the first municipal fatality in North Ohio." "It could simply cease to exist as a city," he said.Vacancies on the rise...in a down market, a defunct mall is unlikely to be replaced with any new economic activity for some time, said Suzanne Mulvee, a real estate economist with real estate research firm Property & Portfolio Research (PPR), Inc. Credit freeze: Another big problemOne big obstacle to any type of large scale redevelopment in North Randall or anywhere else is the ongoing credit market lockdown.Industry experts said this could make it very hard for commercial real estate developers to borrow money for financing construction work...PPR's Mulvee said malls are being hit hard from all angles. "More than 6,000 (locations of) national chains this year have announced closings, and 50% of those are in malls," she said...Although its rare for a mall to close, and a lot has to happen before it does, any further deterioration in the retailing environment could spur closings, Friedman said."If [mall] occupancy rates go down even further then it could get very frightening out there," Friedman said.Global ResearchParsing Mr. Paulson’s Bailout Speech: The Unprecedented Giveaway of Financial Wealth...Michael Hudsonhttp://www.globalresearch.ca/index.php?context=va&aid=10597Mr. Paulson’s bailout speech on Monday, October 13 poses some fundamental economic questions: What is the impact on the economy at large of this autumn’s unprecedented creation and giveaway of financial wealth to the wealthiest layer of the population? How long can the Treasury’s bailout of Wall Street (but not the rest of the economy!) sustain a debt overhead that is growing exponentially? Is there any limit to the amount of U.S. Treasury debt that the government can create and turn over to its major political campaign contributors? And is it too much to say that we are seeing the end of economic democracy and the emergence of a financial oligarchy – a self-serving class whose actions threaten to polarize society and, in the process, stifle economic growth and lead to the very bankruptcy that the bailout was supposed to prevent?Everything that I have read in economic history leads me to believe that we are entering a nightmare transition era. The business cycle is essentially a financial cycle. Upswings tend to become economy-wide Ponzi schemes as banks and other creditors, savers and investors receive interest and plow it back into new loans, accruing yet more interest as debt levels rise. This is the "magic of compound interest" in a nutshell. No "real" economy in history has grown at a rate able to keep up with this financial dynamic. Indeed, payment of this interest by households and businesses leaves less to spend on goods and services, causing markets to shrink and investment and employment to be cut back.Wearing blinders to avoid confronting any reality that would suggest that banks cannot make money ad infinitum by selling more and more credit – that is, indebting the non-financial economy more and more – government officials such as Treasury Secretary Paulson or Federal Reserve Chairman Bernanke are professionally unable to acknowledge this problem, and it does not appear in most neoclassical or monetarist textbooks. But the underlying mathematics of compound interest are rediscovered in each generation, often prompted by the force majeur of financial crisis.A generation ago, for instance, Hyman Minsky gained a following by describing what he aptly called the Ponzi stage of the business cycle. It was the phase in which debtors no longer were able to pay off their loans out of current income (as in Stage #1, where they earned enough to cover their interest and amortization charges), and indeed did not even earn enough to pay the interest charges (as in Stage #2), but had to borrow the money to pay the interest owed to their bankers and other creditors. In this Stage #3 the interest was simply added onto the debt, growing at a compound rate. It ends in a crash.This was the flip side of the magic of compound interest – the belief that people can get rich by "putting money to work." Money doesn’t really work, of course. When lent out, it extracts interest from the "real" production and consumption economy, that is, from the labor and industry that actually do the work. It is much like a tax, a monopoly rent levied by the financial sector. Yet this quasi-tax, this extractive financial rent (as Alfred Marshall explained over a century ago) is the dynamic that is supposed to enable corporate, state and local pension funds to pay for retirement simply out of stock market gains and bond investments – purely financially and hence at the expense of the economy at large whose employees are supposed to be gainers. This is the essence of "pension-fund capitalism," a Ponzi-scheme variant of finance capitalism. Unfortunately, it is grounded in purely mathematical relationships that have little grounding in the "real" economy in which families and companies produce and consume.Mr. Paulson’s bailout plan reflects a state of denial with regard to this dynamic. The debt overhead is self-aggravating, becoming less and less "solvable" and hence more of a quandary, that is, a problem with no visible solution. At least, no solution acceptable to Wall Street, and hence to Mr. Paulson and the Democratic and Republican congressional leaders. The banks and large swaths of the financial sector are broke from having made bad gambles in the belief that money could be made to "work" under conditions that shrink the underlying industrial economy and stifle wage gains, eroding the market for consumer goods. Debt deflation reduces sales and business activity in general, and hence corporate earnings. This depresses stock market and real estate prices, and hence the value of collateral pledged to back the economy’s debt overhead. Negative equity leads to bankruptcy and foreclosures...It is a con game. Financial gains have soared since 1980, but banks and institutional investors have not used them to finance tangible capital formation. They simply have recycled their receipt of interest (and credit-card fees and penalties that often amount to as much as interest) into yet new loans, extracting yet more interest and so on. This financial extraction leaves less personal and business income to spend on consumer goods, capital goods and services. Sales shrink, causing defaults as the economy is less able to pay its stipulated interest charges.This phenomenon of debt deflation has occurred throughout history, not only over the modern business cycle but for centuries at a time. The most self-destructive example of financial short-termism is the decline and fall of the Roman Empire into debt bondage and ultimately into a Dark Age. The political turning point was the violent takeover of the Senate by oligarchic creditors who murdered the debtor-oriented reformers led by the Gracchi brothers in 133 BC, picking up benches and using them as rams to push the reformers over the cliff on which the political assembly was located. A similar violent overthrow occurred in Sparta a century earlier when its kings Agis and Cleomenes sought to annul debts so as to reverse the city-state’s economic polarization. The creditor oligarchy exiled and killed the kings, as Plutarch described in his Parallel Lives of the Illustrious Greeks and Romans. This used to be basic reading among educated people, but today these events have all but disappeared from most people’s historical memory. A knowledge of the evolution of economic structures has been replaced by a mere series political personalities and military conquests...Shortly after Mr. Paulson’s Monday speech a Dutch economics professor, Dirk Bezemer, wrote me that: "In my thinking I liken it to a Ponzi game where in the final stages the only way to keep things going a bit longer is to pump in more liquidity. That is a solution in the sense that it restores calm, but only in the short run. This is what we now see happening and – despite the 10% stock market rally today – I am still bracing myself for the inevitable end of the Ponzi game – suddenly or as a long drawn out debt deflation." He went on to explain what he and other associates of mine have been saying for many years now: "The actual solution is to separate the Ponzi from the non-Ponzi economy and let the pain be suffered in the first part so as to salvage what we can from the second. This means bailing out homeowners but not investment banks, etc. The qualification to this general approach is that those Ponzi game players whose demise is a real ‘system threat’ need support, but only with punitive conditionalities attached. And just like Third World countries, they won’t have a choice."Neither the Treasury nor Congress is helping to resolve this problem. The working assumption is that giving newly created government debt to the banks and Wall Street will lead to more lending to re-inflate the real estate and stock markets. But who will lend more to the one-sixth of U.S. homes already said to have fallen into negative equity territory? As debt deflation eats into the domestic market for goods and services, corporate sales and earnings will shrink, dragging down stock prices. Wall Street is in control, but its policies are so shortsighted that they are eroding the underlying economy – which is passing from democracy to oligarchy, and indeed it seems to a bipartisan financial kleptocracy.Financial TimesHedge fund manager slams ‘idiot’ bankers...James Mackintosh in London...10-17-08 http://www.ft.com/cms/s/0/b0a40c72-9c83-11dd-a42e-000077b07658.html?nclick_check=1A hedge fund manager who made what is thought to be one of the biggest percentage profits of all time bowed out of the business on Friday with a fierce attack on the “idiots” running big banks who were willing to take the other side of his bets.Andrew Lahde, founder of California’s Lahde Capital, used his farewell letter to investors to round on the US “aristocracy” able to pay for their children to gain a top-class education.Mr Lahde, who has made tens of millions of dollars from his highly successful bets against the financial and property sectors during the past two years, also called for the legalisation of cannabis and said he was now dropping out to spend time with his money.Saying he was “in this game for the money”, Mr Lahde went on to mock those who traded with him. “The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking.”“These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.“All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”Mr Lahde is one of the few hedge fund managers to have correctly predicted the subprime crisis. One of his funds made a return of 870 per cent last year. Money is now being returned to investors as the remaining business is shut down.On Friday, Mr Lahde said he would no longer run other people’s money, preferring to concentrate on managing his own, and urged wealthy hedge fund managers and corporate chieftains to “throw the Blackberry away and enjoy life”...