10-23-08 Wall Street JournalCalifornia Home Sales Revive, But Not Without Intense Pain...Michael Corkery and Jonathan Karp...10-22-08http://online.wsj.com/article/SB122462963345656289.html?mod=googlenews_wsj#printModeLOS BANOS, Calif. -- In this California city, one of the hardest hit in the national housing crash, there's good news: Homes are starting to sell again.Investors and first-time home buyers are snapping up foreclosed houses here, with the number of local sales up almost fivefold from this time last year. While the volume of existing-home sales across the U.S. fell 10.7% in August from the previous year, according to the National Association of Realtors, there are signs that the most damaged of markets are starting to heal themselves. Across hard-hit California, sales volumes rose 65% in September compared with a year ago, said MDA DataQuick, a San Diego-based real-estate information service.The bad news is that the latest round of sales is unleashing another round of pain in cities such as Los Banos, a commuter community in California's Central Valley. With home prices already down 66% from their peak here, most homeowners owe more on their mortgages than their houses are worth. Successive deals bring new low prices, leaving remaining owners with little incentive to keep current on outsized mortgages.Some stop paying, pocketing the money while they wait for their lenders to kick them out. A few lose their homes only to stay on as renters, paying hundreds of dollars less a month. Every fifth house in this onetime real-estate boomtown is in some state of the foreclosure process.Until markets like this are sorted out, there's little hope for calm in the global financial system. As banks and governments survey the wreckage of residential real-estate investments, the central mystery is how to value the trillions of dollars in securities that are tied to U.S. mortgages. These securities are so hard to value in part because no one knows when normalcy will return to places like Los Banos.Economists and politicians offer two main prescriptions. Many say the government should buy these homeowners' expensive mortgages and reduce the loan amounts to reflect current values, a taxpayer-funded effort to put a floor under the housing market. Others say such intervention would reward those who bought homes they couldn't afford, and prolong the inevitable pain of a necessary housing contraction. These people say the market should continue its own path toward equilibrium.Neither option would be pretty, judging by homeowners' experience here.Los Banos, a city of about 36,000 people, lies in Merced County near the center of the Central Valley, a fertile expanse that has long drawn opportunity seekers -- Basque sheep farmers, dairy farmers from Portugal, migrants fleeing the Dust Bowl states during the Great Depression. Many of their descendants live here still.This decade, Los Banos drew commuters from Silicon Valley, 80 miles to the northwest, and the construction workers who built their houses. Its housing market took off as builders, lenders and the government helped more people realize the dream of homeownership.Dairy farms and fields of tomatoes gave way to cookie-cutter houses on the likes of Bentley Drive, Chianti Court and Riesling Street. Subprime lenders poured in, making cheap loans with few questions asked. Builders offered to pick up the tab for their customers' closing costs.Home prices soared. In 2005, one local builder was selling three-bedroom homes for $300,000 -- more than three times what it asked for a similar design in 2000.Many lenders catered to buyers with shoddy credit, who qualified for "affordability" loans with low payments that typically ramped up over time. In 2006, 45% of the home mortgages and refinance loans in Los Banos were high-rate loans, most of which would be considered subprime, compared with a national average of 29%, according to a Wall Street Journal analysis of federal mortgage data. The town's top lenders included Countrywide Financial, New Century Financial and divisions of Golden West Financial and Washington Mutual -- all former highfliers in the mortgage business whose holdings later turned toxic.Sister Next DoorClaudia Pedroza and Veronica Banuelos were among the home buyers. In 2006, the sisters and their husbands bought new houses next door to each other in a subdivision surrounded by fields just outside Los Banos. Ms. Banuelos paid $350,000 and Ms. Pedroza paid $375,000 for similar four-bedroom homes with three bathrooms and cavernous living rooms.Property records indicate that the Pedroza and Banuelos families took out loans for nearly 100% of the price from Bank of America Corp. In the Pedrozas' case, the bank worked with the national nonprofit Acorn Housing Corp. as part of a program to help first time home buyers. The home builder, Hovnanian Enterprises Inc., funded $12,000 or more in closing costs for each home.A California state housing agency also chipped in a $11,200 loan toward the Pedrozas' purchase. Ms. Pedroza figured that with her husband bringing home $3,200 a month as a house painter, the family could afford the monthly mortgage payment of about $2,000. Ms. Banuelos, a college student, said the payments were affordable for her husband, who also had ample work as a house painter.Indeed, the housing boom brought jobs to many local residents and attracted new businesses, with Starbucks and Target going up on the same street as a slaughterhouse and the local office of the Hay Growers Association.But the market turned in 2007, and now the Merced metropolitan area leads the U.S. in many indexes of misery. By the third quarter of this year, 12.3% of home loans were delinquent in Merced County, the highest in the nation, according to Equifax and Moody's Economy.com. Merced has also seen some of the country's sharpest home-price declines. It has the highest share of owners who owe more on their houses than they're currently worth.Ms. Pedroza lost her home to foreclosure when her husband's painting jobs vanished and the couple fell six months behind on their payments... Now, on the block where Ms. Pedroza and Ms. Banuelos bought homes, five of the 16 houses are empty with brown lawns, a typical sign of a foreclosed property...Such dramas are repeated throughout California, where the U.S. housing market is arguably at its most troubled. Following years of big profits for bankers and home builders in this state, one-fifth of all outstanding U.S. mortgages by dollar value -- and a higher percentage of risky loans -- are written on homes here. Of the 25 metropolitan areas with the largest home-price declines in the past 12 months, 16 are in the state, according to Zillow.com, a real-estate research Web site.Those woes weigh on the financial system. Though California represents about 12% of the nation's population, its homes account for 34% of the loans in a typical mortgage-backed security, according to Fitch Ratings. "California doesn't have a Wall Street problem. Wall Street has a California problem," says Christopher Thornberg, principal at Los-Angeles based Beacon Economics and member of the California Controller's Council of Economic Advisors.Downward SpiralSuch issues are at the heart of a debate among policy makers and economists about how to mend the nation's housing market.There's growing momentum for the government to stem the slide in home prices. Federal Deposit Insurance Corp. Chairman Sheila Bair said last week the government should do more to help homeowners. Republican presidential candidate Sen. John McCain has proposed the Treasury spend $300 billion to buy up troubled mortgages and reduce the principal on the loans to reflect current values.Others believe government intervention will derail the market mechanisms and postpone the eventual return to equilibrium. Sen. Barack Obama opposes using taxpayer money to intervene in the housing market, advocating instead that the government pressure lenders to alter mortgage terms and change bankruptcy codes to allow judges to do the same. Congress has already passed the Hope for Homeowners program, which aims to put 400,000 borrowers in more affordable loans.Plus, some economists say the market is already correcting itself without federal intervention. The volume of home sales in California is rising even as the national average continues to fall. At the same time, median prices in the state fell in September, down 34% from the previous year, to $283,000, according to MDA DataQuick...Free MealsThe bust is apparent throughout town. Storefronts in its older strip malls are empty. Citywide, sales-tax revenue is down 15% from initial projections and the city is also bracing for big declines in property-tax revenue. The free-meal program at the Los Banos Rescue Mission served 1,110 meals last month, more than triple the levels in July."People are in survival mode," says Steve Hammond, the pastor of the nearby Bethel Community Church, which runs the mission. Mr. Hammond is also the chairman of the Los Banos Planning Commission. This month, Mr. Hammond missed his own mortgage payment for the first time, after his wife lost her secretarial job. "As Christians we believe in paying our debts," Mr. Hammond said. "But we just can't do it."...Merced Sun-StarDespite declining home prices, tax assessments still rising for some Merced County properties...Jonah Owen Lambhttp://www.mercedsunstar.com/167/story/511573.htmlWhen Joseph Thome of Los Banos got his property taxes in the mail this year, he was stunned -- it had been raised. Despite reductions in home values nearing 40 percent across the county this year, Thome saw his home value increase."The assessor shows that my house is worth more now, this year, than it was last year," said Thome. "And the year before the same thing happened." Thome, who built his house in 1988, was billed $1,576 this year, about $30 more than last year. Not a massive increase, but as he looks around all he sees are housing prices tanking. Houses that sold for $400,000 in 2005 are selling for half that today. It doesn't add up that his house is worth more this year, he said.As home values plummet across the state and county from the bursting housing bubble, so too do many property taxes drop. But for some long-time home owners like Thome, tax rates are rising because of California tax law.Proposition 13, passed in 1975, set up the current property tax system, explained Kent Christensen, Merced County's assessor. The measure was initially marketed to voters to protect elderly home owners from onerous tax increases because of spikes in the real estate market. Now, property values are assessed on a property's market value at the time of purchase, said Christensen. So if you bought a house in 1988 for around $150,000, like Thome, it's still assessed on that value, plus an allowable increase of 2 percent each year. Even if the market value of Thome's house had increased four-fold, as was the case for many homes during the boom, the property tax rate can only increase by 2 percent each year. Now, as housing values have tanked, some homeowners are still seeing a rise in taxes because their older home's market value hasn't fallen below its initial purchase value. All this means the county assessor's office has been a busy place lately, partly due to confusion over property taxes."It's been hectic here," said Christensen. "They are just telling us it's too high."Besides dealing with complaints, Christensen's office has reassessed the values of all of the more than 3,000 properties sold in the county this year. In January of each year, all 85,000 properties in the county are reassessed. Despite the complaints, overall property values in the county are down, Christensen said. But this reduction has been uneven. In some places, he noted, housing values are at 1990s levels. In other places only 5 percent change has occurred. As of January 2008, the county's total property value has been reduced by $500 million. That means about $5 million in lost revenue, Christensen estimated.But come 2009, he expects to lower the value of 30,000 to 40,000 properties. "It's going to be a greater reduction in 2009," he said.This financial fall out will hurt Merced County, but the problem reaches further.Eva Spiegel, spokeswoman for the California League of Cities, said that since property taxes are a big chunk of city revenues, their reduction will have a massive impact. Cities across the state have already been cutting nonessential programs in preparation for shortfalls in the coming year. "Many, many cities have already instigated significant reductions," she said. But statewide, property values, surprisingly, went up in 2007 by more than 9 percent, according to the State Board of Equalization. But these increased numbers across California belie the impact that property tax reductions will have in most municipalities, said Mark Baldassare, president of the Public Policy Institute of California. This is not the first time this has happened. "I think we've seen a couple of other downturns in the economy during the 30-year history of Prop. 13 that have had an impact on property taxes and state and local budgets," said Baldassare.In the late '80s and early '90s, housing values dropped across California. At the time it affected the ability of local governments to meet their obligations, said Baldassare.In the past, this cycle of boom and bust eventually turned around, he said. The budget shortfalls in lean times were made up when the economy recovered.In the meantime, Thome in Los Banos will pay a little more property tax each year. Unless, that is, things get even worse.Schwarzenegger wants federal help for California homeowners...The Associated Presshttp://www.mercedsunstar.com/167/story/511584.htmlLONG BEACH -- The federal government should move swiftly to enact a second economic stimulus package to help teetering homeowners or face another possible crisis -- banks stuck with a massive stock of vacant homes, Gov. Arnold Schwarzenegger warned Wednesday.A day after urging congressional leaders to consider a new jolt for the ailing economy, the Republican governor said Washington needs to "put money into the housing market."California has been devastated by the mortgage crisis, with thousands of foreclosures and median home prices falling sharply."The key is to make people stay in their homes," the governor said during a panel discussion with investor Warren Buffett. "I think that this is the direction that the second economic stimulus package should go in."Money should be used to buy loans, he explained, after the value of homes has been adjusted to reflect lower market prices.His proposal appeared to mirror John McCain's prescription to ease America's mortgage crisis. The Republican presidential candidate has proposed a $300 billion plan for the government to buy bad mortgages and renegotiate them at a reduced price.Democrat Barack Obama wants a mandatory 90-day freeze on some foreclosures.Schwarzenegger warned that if banks seize a large number of homes, their condition and value can quickly deteriorate without regular maintenance. He imagined swimming pools turned into breeding grounds for mosquitoes.He also called for more spending on large-scale construction projects, such as roads and bridges. The letter did not mention troubled homeowners.Schwarzenegger's appeal for urgent federal help comes at a time when foreclosures have ravaged the California market, jobless rates are climbing and Sacramento contends with an ongoing budget crisis.This week, the governor said he will summon legislators back to the state Capitol, barely a month after passage of an overdue state budget. In a troubling sign, tax revenues have already slipped $3 billion below expectations.The governor wants to address the shortfall in this year's budget and figure out how to stimulate the sputtering economy. Letter: Is there a limit on property taxes?...RICHARD ANDERSON, Mercedhttp://www.mercedsunstar.com/177/v-print/story/511590.htmlEditor: I am retired on a fixed income and being asked to approve another school bond. I just received my 2008-09 property tax bill that shows I am already paying on a Merced High School bond, a Merced College assessment and a Merced City School bond. Is there any limit as to what the taxpayer is asked to approve and pay, or is it just whatever the traffic will bear?Modesto BeeFeds reject protest to nuclear waste storage plan...ERICA WERNER, Associated Press Writerhttp://www.modbee.com/state_wire/story/472698.htmlFederal regulators ruled Thursday that a radioactive waste storage plan can go forward at a California nuclear power plant without further study of whether it's safe from terror attacks.The Nuclear Regulatory Commission voted 3-1 to deny the novel objection from the activist group San Luis Obispo Mothers for Peace, which had won a federal court ruling forcing NRC to consider its arguments.The decision OKs PG&E's plans to store spent nuclear fuel in aboveground casks at its Diablo Canyon power plant near San Luis Obispo, Calif.Dry cask storage is increasingly common at nuclear power plants around the country.Mothers for Peace had contended there wasn't sufficient study of whether the casks planned for Diablo Canyon could withstand potential terror attacks while protecting human health and the environment, but the NRC said no more study was needed."The NRC staff and PG&E provided essentially uncontradicted evidence that the probability of a significant radioactive release caused by a terrorist attack was low, and that the potential latent health and land contamination effects of the most severe plausible attack would be small," commissioners wrote in their order.NRC staff studied what they said were plausible attack scenarios that couldn't be made public for national security reasons, and concluded that even the worst-consequence scenario would result in such a low dose of radiation that it wouldn't cause long-term health problems for plant neighbors.Commissioner Gregory Jaczko dissented, contending that NRC staff didn't address potential attack scenarios raised by Mothers for Peace and made insufficiently supported assumptions that the probability of a terror attack was low."Combining this with the fact that the agency's message all along has been 'trust us to have looked at this information that we refuse to give you access to,' I would say the agency is standing on a very weak foundation to reject" the position of Mothers for Peace, Jaczko wrote.Mothers for Peace has indicated it was prepared to continue its challenges if the NRC gave it an unfavorable ruling, but a spokeswoman didn't immediately respond to a request for comment Thursday.Following Mothers for Peace's win in federal appeals court in 2006, the attorneys general of New York, New Jersey and Massachusetts challenged NRC decisions on similar grounds, and those are pending.The ultimate outcome of the Diablo Canyon case could have broader ramifications for the nuclear power industry, which is anticipating growth as nuclear power attracts more interest as an energy source that doesn't generate greenhouse gas emissions.The industry is hampered by the question of disposal of radioactive waste. A federal permanent underground repository planned for Yucca Mountain, Nevada, has been delayed by cost overruns and political opposition and the Energy Department's best-case opening date is now 2020.Meanwhile, more than 50,000 tons of spent fuel is piling up at nuclear reactors nationwide. Spent nuclear fuel is in dry storage at 47 power plant sites, a number that's expected to increase to 70 by 2020, according to the Nuclear Energy Institute, an industry group.Used nuclear fuel rods are first moved into cooling ponds at power plants, and when those fill up, as is happening at Diablo Canyon, they're put in dry cask storage.The NRC says the casks are designed to withstand severe accidents such as being hit by an automobile in a tornado. The casks to be used at Diablo Canyon are made of inner and outer carbon steel shells that are filled with 30 inches of concrete and weigh up to 170 tons when fully loaded with spent fuel.Sacramento BeeFarm Bureau Federation files suit to stop Yolo County plans for re-entry prison...Hudson Sangreehttp://www.sacbee.com/yolo/story/1321068.htmlLawyers from the California Farm Bureau Federation filed a lawsuit today on behalf of Yolo County farmers who oppose the county's proposal to let the state build a reentry prison near the town of Madison.The lawsuit claims the plan to build a 500-bed prison in what is currently an alfalfa field violates state farmland-conservation and environmental-protection laws and the county's own general plan.County supervisors offered the site to state corrections officials to build a reentry prison in exchange for a $30 million grant to expand the county jail in Woodland. Residents of Madison and other rural areas of the county have strongly opposed the plan.The farm bureau is one of the most powerful agricultural groups in the state, with 91,000 members in 56 counties. It's Yolo County branch -- the plaintiff in the lawsuit -- has 1,300 members. Capital PressDrought stresses rice farmers, waterfowlFewer flooded fields means less money from hunting leases...Hank Shawhttp://capitalpress.com/Main.asp?SectionID=67&ArticleID=45520Millions of ducks and geese have begun winging their way south to California's rice fields - but the birds are finding less water to rest in because of a two-year drought that is expected to stress the rice farmers as much as their avian visitors.Sacramento Valley rice farmers have flooded their fields after harvest ever since the state largely barred them from burning their leftover rice straw; flooding rots the straw, which farmers can turn back into the soil come spring.This year water supplies are so short some farmers may not be able to get water for decomposing the rice straw after Oct. 31, and most of those who can will see prices soar. "I think what you're going to see is people flooding up and getting the water deep before Oct. 31 and hope it holds - or they'll hope for rain," said Don Bransford of the Glenn-Colusa Irrigation District, which oversees the water supplies for roughly 100,000 acres of rice in the valley.Phil Nickerson runs the West Valley Flyway Club, a duck club within the irrigation district. He said in his area, only about 7,500 acres are expected to be flooded. Last year irrigators flooded 25,000 acres.Nickerson said prices for water are four times as much as they were last year - so much higher that he is flooding only six fields for hunters this year, instead of 22. That hurts Nickerson's income, just as it does for all the farmers who lease out their land to hunters every winter. An average four-man blind in the valley can generate more than $5,000 to a farmer. But if they can't get water, "they're going to lose that revenue," Bransford said.Leo LeGrande farms rice around Willows. He said he expects far fewer fields to be flooded in his area, as farmers decide to spend the money for extra diesel fuel and to chisel or disc the rice straw back into the soil.LeGrande also said that if the winter is dry, fewer fields will be planted in rice next spring, too, as farmers sell their allotted water to Southern California. All of this will hurt the waterfowl, he said."Ducks are like rice farmers," LeGrande said. "They need water like we need water. Your ducks are going to be concentrated more, and you might get some problems with disease."There was an outbreak of disease among ducks and coots late last winter. Packing too many birds in too small an area can create conditions ripe for avian flu, cholera or botulism poisoning.Greg Mensik, of the U.S. Fish & Wildlife Service, said his agency will be watching out for that, "but what we need to remember is that the amount of water we've seen in recent years is not what we had in the 1970s - there's a whole lot more flooded fields now," he said.Mensik said waterfowl have no problem feeding on dry ground if there are wetlands nearby for them to hang around in. But Mensik said if all the farmers are disking or chiseling their leftover rice, the waste grain that waterfowl need won't be available. "It's going to be a challenge," he said. San Francisco ChronicleChange certain for the delta, report says...Kelly Zitohttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/23/BAO313MGE2.DTL&type=printableWith or without human intervention, the Sacramento-San Joaquin River Delta will change radically in the future, the result of climate change, invasive species and earthquakes, according to a new scientific report.With implications for everything from drinking water supplies in California to urban planning, the study's authors hope their work will help policymakers to revive an ecosystem widely recognized as on life support."The delta is in crisis," said Joseph Grindstaff, director of the CalFed Bay-Delta program, sponsor of the report and the state agency that oversees the delta. "Now and in the next year or two, we'll make really important decisions - this report is a foundation."Grindstaff and others spoke during a gathering in Sacramento on Tuesday for the release of "State of Bay-Delta Science, 2008," a 174-page report detailing the history of the delta and its myriad problems today.The CalFed report, unveiled during a three-day conference on the delta, pulls together information from several other recent, influential studies.A report earlier this year by the Public Policy Institute of California, for instance, recommended the building of a so-called peripheral canal, a massive pipeline that would route water from the Sacramento River to pumps in the southern delta. Last week, the governor-appointed Delta Blue Ribbon Task Force concluded some kind of conveyance system is necessary, along with new dams, reservoirs, desalination technology and a new governing body for the delta that would replace CalFed, an agency often criticized as ineffectual.The CalFed report did highlight a handful of key points, including recent data showing dwindling groundwater supplies and land levels in the Central Delta declining to 30 to 40 feet below sea level by 2200.Of immediate concern is the fate of crashing fish populations within the 1,300-square mile estuary. The delta smelt, a tiny fish that smells like cucumber, remains the most imperiled due to increasing toxicity, warmer water and to large-scale killings by giant pumps that send water around the state.In response, a federal judge last year slashed water exports from the delta, adding urgency to plans to fix the hub of a system that supplies water to 23 million urban and rural Californians. In their report, CalFed scientists said some "last ditch" efforts may be the answer to preserving species like the delta smelt. Those include freezing the fish's genetic material, genetically engineering the fish's ability to withstand higher water temperatures, or creating hatcheries, or "zoos" for the fish."When you look at how the delta will change, it will probably become uninhabitable for some species ... the delta smelt being one of the prime examples," said Michael Healey, former lead scientist for CalFed and editor of the report.To safeguard the dozens of endangered delta plants, Healey suggested depositing their genetic material into seed banks.U.S. Fish and Wildlife Service spokesman Al Donner acknowledged that smelt populations "are going low, and lower and lower." But he said his agency is focused first and foremost on protecting the species and minimizing any harmful impacts. Donner had not seen the study's discussion of saving genetic material.One of the most significant conclusions of the report had less to do with solutions to a specific problem and more to do with a more comprehensive approach to the delta. Decisions on the delta come not just from global warming and fish spawning data, authors said, but also from diverse groups - urban and rural communities, environmentalists, industry and government.Work on the delta has been characterized by "constant tension," according to report author Richard Norgaard. "The delta depends on all of us working together."Read the report   View the entire report at: links.sfgate.com/ZFEBForeclosures in California on steep rise...James Templehttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/23/BUNK13N0PS.DTL&type=printableNearly 80,000 California homes fell into foreclosure during the last three months, a more than three-fold annual increase that suggests numerous government interventions and industry promises have done little so far to help struggling borrowers hold onto their keys.The news of the unrelenting rise came on the same day the head of the Federal Deposit Insurance Corp. told Congress that government could do more to help those at risk of defaulting on their mortgages. Statewide trustee deeds recorded, which reflect actual homes repossessed, soared 228.4 percent year-over-year to 79,511 during the third quarter, according to San Diego research firm MDA DataQuick. Across the nine-county Bay Area, 12,093 homes fell into foreclosure, up 273 percent.Contra Costa County saw the most foreclosures, 3,662, and Santa Clara County experienced the biggest rise, 428 percent. Marin and San Francisco counties registered the fewest trustee deeds, 149 and 192, respectively.The glimmer of good news was that the pace of regional and statewide foreclosure increases decelerated, and defaults, the first step in foreclosure proceedings, appear to have flattened.California notices of default reached 94,240 during the quarter, up 29.9 percent from a year ago and down 22.5 percent from the preceding quarter. The decline, however, largely reflects a procedural change in California's formal foreclosure process that took effect in September, DataQuick said. Without that, the numbers would have been about the same as in the second quarter.In the Bay Area, mortgage companies filed 15,027 notices of default, up 44.1 percent from the prior year and down 18.8 percent sequentially."What's interesting is that the surge in activity certainly did level off during the second and third quarters," DataQuick president John Walsh said. "A lot of the market's distress is working its way through the system and the spectacular jumps in activity may be behind us."To date, most of the programs enacted through the $700 billion federal bailout package have been directed at loosening credit markets and propping up the banking industry. FDIC Chairman Sheila Bair told the Senate Banking Committee on Wednesday that the bill grants the government authority to help borrowers, by using loan guarantees to encourage mortgage servicers to refinance troubled homeowners into more affordable products. Under such a program, the government would share any losses on the new loans with the lenders, though it would also partake in the gains.The Federal Housing Administration launched a similar program earlier this month, under the Housing Economic Recovery Act passed in July. The $300 billion Hope for Homeowners scheme allows banks to refinance certain customers into fixed-rate FHA loans if they write down the mortgages to 90 percent of the new appraised value of the home. The FHA agrees to cover the unpaid balance if the loans go into foreclosure.The early results from the program haven't been disclosed.Los Angeles TimesReview: 'The American Southwest: Are We Running Dry?'The need for conservation in the U.S. Southwest is a dire issue, but weak spots in tonight's program dilute the message...Tony Perryhttp://www.latimes.com/entertainment/news/reviews/tv/la-et-runningdryweb-2008oct23,0,5507551,print.story“The American Southwest: Are We Running Dry?” is an earnest primer on the challenges facing the region's overstretched water supply in an era of drought and expansive growth.With excellent graphics and aerial photography, "Running Dry," which airs at 8:30 p.m. Thursday on KCET, runs through the problems facing the seven states that depend on the Colorado River -- too many people chasing too little water, added to concerns about pollution and cost. As long as water flows from the tap, the public is largely unconcerned about the future. "Running Dry" hopes to change that with an examination of burgeoning cities, sprawling desert suburbs and isolated rural areas.In the Southwest, growth is a kind of civic religion founded on the belief that water will be found -- somewhere, somehow -- to support it."They're not giving up," says U.S. Sen. Pete V. Domenici (R-N.M.). "They're going to use the water until hell burns over and continue to grow."The lesson of "Running Dry" is that it's time for even greater conservation, recycling and desalination, and a more cooperative spirit among often feuding water interests.Tim Brick, board chairman of the Metropolitan Water District of Southern California, suggests that public support for recycling water would be greater if the phrase "toilet to tap" were replaced by "showers to flowers."Sad to say, actress Jane Seymour's narration, with her delicate English accent, has a lecturing tone that is off-putting. Also, the ever-present background music is annoying. "Running Dry" often veers from water-documentary to water-district infomercial.Still, the issue of water quality and quantity is crucial in the Southwest and the world. If the U.S. can't solve its problems, its ability to lecture others is limited."You can't teach temperance from a bar stool," said Rep. Edward J. Markey (D-Mass.).Home foreclosures hit record high in CaliforniaOver the last three months, 79,511 homes were taken back by lenders, up 228% from last year. Experts predict the number will continue to rise...William Heiselhttp://www.latimes.com/business/la-fi-foreclose24-2008oct24,0,427930,print.storyA record number of homes were lost to foreclosure in California over the last three months, up 228% from last year to a high of 79,511 homes. MDA DataQuick reported that more homes were taken back by lenders in the three months ended Sept. 30 than at any time since the company started tracking foreclosures in 1992.In the previous three months, which also set a record, 63,316 homes were lost to foreclosure. That's a huge swing from an all-time low just two years ago of 637 in the second quarter of 2005.Nationally, RealtyTrac Inc. reported that the number of homes being repossessed was up 126% over the last three months, totaling 250,091 homes from July to September. The five states with the most foreclosures were California, Florida, Michigan, Arizona and Texas.At the same time, California saw a sharp decline in activity from banks taking the first steps toward foreclosure. The number of default notices that lenders send to homeowners fell last quarter for the first time in three years, down 22.5% from last quarter but up 29.9% from the same period last year.Housing experts say that change is the direct result of a new state law that forces lenders to make repeated attempts to contact a homeowner before foreclosing on the home."If that procedural change hadn't kicked in during early September, indications are that third-quarter default filings would have been about the same as the record number filed in this year's second quarter," DataQuick said in a press release.Housing experts continue to predict that foreclosures will rise for the rest of 2008 and into 2009 before hitting their peak."It will get worse," said Jeff Lazerson, the president of Mortgage Grader, an online mortgage clearinghouse. "It's going to be driven by unemployment and underemployment, and we're seeing those numbers go up. I think we won't see a peak until at least next year."Washington PostJob Losses Accelerate, Signaling Deeper Distress...Neil Irwin and Michael S. Rosenwaldhttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/22/AR2008102203709.htmlEmployers are moving to aggressively cut jobs and reduce costs in the face of the nation's economic crisis, preparing for what many fear will be a long and painful recession. The labor market has been weak all year, with a slow drip of workers losing their jobs each month. But the deterioration of the job market is now emerging as a driver of economic distress, according to a wide range of data and anecdotal reports from corporate America. In September, there were more mass layoffs -- instances in which employers slashed 50 or more jobs at one time -- than in any month since September 2001, the Labor Department said yesterday. And nearly half a million Americans have filed new claims for unemployment benefits in each of the past four weeks, the highest rate of such claims since just after the terrorist attacks seven years ago. Anecdotal reports suggest that the hemorrhaging in the job market has only begun. Companies that announced plans this week to cut jobs include Internet company Yahoo (1,500 positions), pharmaceutical company Merck (7,200), National City bank (4,000) and Comcast, the cable company (300). The weakening employment outlook is part of the reason that investors have become more fearful of a deep, prolonged recession -- fears that led to yet another miserable day on Wall Street yesterday, with the Dow Jones industrial average down 514 points, or 5.7 percent... The nation's unemployment rate was 6.1 percent last month, not astronomical by historical standards. But the rate was up from 5 percent in April, and many forecasters now expect it to hit 7 percent or more by the end of this downturn. The construction and manufacturing sectors have been losing jobs for more than a year. But lately, job losses have begun or accelerated in a wide range of other fields. Retailers, stung by less consumer spending, cut 87,000 jobs in the three months ended in September. Employment services shed 100,000 positions in that span, reflecting the fact that companies are slashing temporary jobs. The leisure and hospitality industry cut 51,000 jobs, as people had less money to stay in hotels and eat in restaurants... Automakers Apply Brakes to NASCAR...Liz Clarkehttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/22/AR2008102203343_pf.htmlFor decades, the success of NASCAR's brand of high-octane, fender-banging stock-car racing has been intertwined with the fortunes of the U.S. automotive industry. NASCAR victories represented a nod to Detroit's ingenuity. And showroom sales, in turn, were credited to the exploits on race day. As the marketing adage went: "What wins on Sunday, sells on Monday!"But with the Big Three U.S. automakers struggling to survive, they have begun to dramatically scale back their financial involvement in NASCAR, threatening the economic model that has driven the sport's popularity. Other corporate sponsors that helped transform stock-car racing from a workingman's pastime into the country's dominant form of auto racing also are scaling back their investment as a result of the sagging economy. Some companies may not renew their commitments -- many of which run more than $10 million -- when current contracts expire."The U.S. enjoyed a pretty robust economy that enabled the sport to grow, but that has changed significantly in the last six months," said Terry Dolan, manager of Chevy Racing. "And it's probably going to drastically affect what the sport may look like 12 months from now."Sports of all stripes are feeling the brunt of the global economic crisis. With season-ticket renewals lagging in the National Basketball Association, Commissioner David Stern has announced cuts in staffing at league offices. The National Football League is revisiting its labor agreement with players as a potential way of paring expenses. The Washington Nationals still haven't found a buyer for naming rights to their new baseball stadium, while Philadelphia's NBA arena is bracing for another name change now that its rights holder, Wachovia Bank, has been gobbled up by Wells Fargo.Individual and Olympic sports, which rely on corporate money more heavily, are feeling the squeeze as well. The U.S. Olympic Committee lost its $1 billion sponsorship from General Motors following the Beijing Games. In January, golf's hallowed Masters tournament lost its sponsorship from Cadillac. And insurance giant AIG, which averted collapse only after the federal government bought 80 percent of the company, is bowing out of its long-standing sponsorship of the U.S. Davis Cup tennis team, the Associated Press reported last week.But NASCAR is expected to get hit harder than traditional stick-and-ball sports because of its overwhelming dependence on corporate dollars. The 43 cars that start every race are essentially 200-mph billboards, advertising Miller beer, M&Ms, Office Depot -- virtually every product in the basket of American consumer goods -- not to mention the U.S. Army and, as of last Sunday, the Federal Communications Commission, which is using the No. 38 Ford to publicize next year's conversion to digital broadcasting.Corporate sponsors account for roughly 80 percent of the typical NASCAR team's budget -- roughly four times the percentage of an NFL team, which gets the majority of its revenue from the league's lucrative TV contracts and ticket sales.But just four months before the 2009 season-opening Daytona 500, two of NASCAR's most revered teams, Petty Enterprises and Dale Earnhardt Inc., are searching for sponsors to bankroll four of the six racecars they intend to field between them.To stay marginally competitive, seven-time NASCAR champion Richard Petty sold a controlling interest in his family's race team to an investment firm, Boston Ventures, earlier this year. Three other NASCAR teams have raised capital in the same manner. Now Petty Enterprises is entertaining three proposals to merge with a rival team -- among them, the one founded by the late Dale Earnhardt -- to remain viable."Nothing could stay as hot as NASCAR was," said Peter DeLorenzo, a former automotive advertising executive and editor of the Autoextremist.com blog. "It had to have some sort of a correction."No sport came from more humble roots than NASCAR, which sprang from Southern dirt tracks, where moonshine runners faced off to prove whose souped-up Buick or Chevy was faster. Once the wild sport developed a following, automakers started funneling money to the front-running cars and touting their victories in newspaper ads to lure fans to their dealerships.NASCAR teams were still fairly modest operations as recently as 1992, when Alan Kulwicki drove a Ford Thunderbird to the Winston Cup championship with a team of 19 people, including the secretary.Today, Hendrick Motorsports, which appears en route to its eighth championship this season, boasts more than 500 employees and a racing compound that could double as headquarters for NASA."The first year when I went to [work at] Hendrick, I was getting accused of not spending enough money!" recalled Robbie Loomis, a former crew chief for four-time champion Jeff Gordon who now manages Petty Enterprises' two-car team. "This is the toughest economic times we've ever experienced."But the cutbacks by Detroit's Big Three -- General Motors, Ford and Chrysler -- have struck at stock-car racing's heart.Automakers fund NASCAR on several levels: making direct payments to flagship teams; providing technical expertise; setting up elaborate sales displays on racetrack grounds; buying title sponsorships of races; and equipping tracks with fleets of vehicles.GM's annual investment alone was rumored to be $120 million-$140 million at the peak of its involvement in NASCAR. But it severed sponsorships with Bristol Motor Speedway and New Hampshire Motor Speedway this summer, and deeper cuts are promised as part of GM's $10 billion cost-savings program.Ford officials announced yesterday that while they were extending their contract with Roush Fenway Racing -- its most decorated team in the elite Sprint Cup ranks -- they were also ending all direct financial support to teams in NASCAR's Nationwide and Truck series, considered developmental leagues. Dodge took a similar step in pulling out of the truck series, which also is losing Sears's Craftsman brand as its title sponsor at season's end.NASCAR spokesman Ramsey Poston concedes that the sport is feeling the effects of the slowing economy, with unsold tickets, sponsor-less teams and slipping TV ratings. But relative to other sports, he said, NASCAR remains the most compelling vehicle for reaching consumers."We're still averaging 120,000 fans per Sprint Cup event, we remain the number two sport on television, and 17 of the 20 highest-attended sporting events are NASCAR events," Poston said. "All of those fundamentals continue to be strong."But even optimists in the garage project lean times ahead.Said J.D. Gibbs, president of Joe Gibbs Racing: "We're no different than any other business: Everyone is going to have to be real careful in the next few years."Gibbs Racing is fortunate in that all three of its primary sponsors -- Home Depot, FedEx and M&M/Mars -- are signed through 2009. But plans to add a fourth race team are on hold until economic conditions improve.The cost of sponsoring a front-running NASCAR Sprint Cup team is $20 million to $25 million a year. And belt-tightening alone can't compensate if a team loses a sponsor that accounts for $15 million to $20 million of that.Automakers originally involved themselves with stock-car racing to experiment with new technology and incorporate those findings into the design of production cars. Today, NASCAR is essentially a marketing tool -- a platform for Ford, Chevy, Dodge and Toyota to show off their range of models to an enthusiastic, automotively inclined crowd.A study by J.D. Power found that 56 percent of Ford owners classify themselves as race fans. The connection is even stronger among owners of Ford's F-series pickups, with 65 percent identifying themselves as NASCAR fans.The argument is similar for the roughly 100 Fortune 500 companies that have sponsored NASCAR cars. Whether selling consumer goods or services, corporate America has been eager to tap into NASCAR's uncommonly brand-loyal fans.But if corporations simply don't have the money, their marketing investment in NASCAR is likely to drop."With the global economic situation, I expect corporate America, when their contracts come up, not to renew at quite as strong a rate. The money just isn't on the table," DeLorenzo said. "NASCAR is really a glass-half-full bunch, but they're having trouble masking the fact that this is really affecting them. I think they never really believed a day would come when Detroit's almost-blind embracing of NASCAR would even wane."CNN MoneyWaMu swap sellers sidestep big lossInvestors who sold default protection on failed Seattle-based thrift appear face much smaller loss than those who bet on Lehman Brothers…David Ellishttp://money.cnn.com/2008/10/23/news/companies/wamu_auction/index.htm?postversion=2008102314NEW YORK (CNNMoney.com) -- Investors who wagered that Washington Mutual would somehow survive the latest market turmoil will have to pay far less than some had feared.According to the final results of an auction of complex financial instruments called credit default swaps held Thursday, banks and other investors who sold these insurance-like products will have to pay 43 cents on the dollar to investors who bet that WaMu would default on its debt, according to Creditfixings.com.That's higher than an earlier estimate from Creditfixings.com of about a 36 cents on the dollar payout. But at a similar auction held earlier this month regarding Lehman Brothers, investors who bet on the fallen Wall Street firm lost more than 91 cents on the dollar on credit default swap contracts.Credit default swaps act as a form of insurance. Corporate bondholders sometimes purchase these products to protect themselves in case a company is unable to make their debt payments or goes bankrupt, as was the case with both WaMu and Lehman Brothers.Other investors also use credit default swaps -- even if they don't own the company's debt -- as a way to make side bets about a company's health.Investors feared during the Lehman Brothers auction on October 10 that troubles in the credit default swap could have exacerbated the recent turmoil in broader financial markets.Stocks were whipsawed that day and some traders blamed concerns about the auction and the impact it would have on many already struggling banks for much of the volatility that day.Yet buyers and sellers of Lehman credit default swaps managed to settle those claims earlier this week without any major fallout amongst financial institutions or the broader market, which many feared could happen.Just $5.2 billion is expected to trade hands between investors that bet on a Lehman default, according to the Depository Trust and Clearing Corporation, which handles trades in over-the-counter markets such as credit default swaps, as some institutional investors both bought and sold credit default swaps.Still, Thursday's auction offered yet another glimpse at this long-ignored market, which some estimate to be worth $55 trillion. Over 500 parties participated in Thursday's WaMu auction, including major global financial institutions such as Bank of America (BAC, Fortune 500), Barclays (BCS), Citigroup (C, Fortune 500) and Goldman Sachs (GS, Fortune 500). That number dwarfed the more than 350 banks and investors that took part in Lehman's auction. What remains unclear is whether the payments related to the WaMu's credit default swaps will surpass that of Lehman.Yet in some ways, Thursday's auction brings the WaMu tale one step closer to the end.Saddled by toxic home loans, WaMu struggled for months and tried numerous remedies to shore up its problems, including a $7 billion private equity investment and the expulsion of long-time CEO Kerry Killinger.But fallout in the U.S. mortgage market and waning confidence in the company proved too much for the Seattle-based thrift.Washington Mutual (WM, Fortune 500) collapsed on Sept. 29, making it the biggest bank failure in the nation's history. Federal regulators seized the company's banking operations, only to turn around and sell them to JPMorgan Chase (JPM, Fortune 500) for $1.9 billionThe Guardian (UK)Wells Fargo plays down $24bn loss at Wachovia• Loss more than price to be paid for the lender by rival • Value of takeover deal falls as share price takes a hitJill Treanor and Chris Tryhorn The Guardian, Thursday October 23 2008 Article historyThe stricken US bank Wachovia reported yesterday the biggest quarterly loss of any bank since the onset of the credit crunch.by Jill Treanor and Chris Tryhornhttp://www.guardian.co.uk/business/2008/oct/23/wells-fargo-wachoviaThe $24bn (£14.7bn) of losses amount to more than the total price being paid for the North Carolina lender by its rival Wells Fargo, which was last night playing down the impact of the figures on the combined business.The losses for the three months to the end of September - which compare with earnings of $1.62bn in the same quarter last year - were caused by an $18.8bn write-down on the value of loans and securities and a further $4.8bn to cover losses expected in the future.The loss is even greater than the $12bn reported by the Swiss bank UBS in the first quarter, one of the biggest losses recorded since the US sub-prime mortgage crisis started to reverberate around financial markets a year ago.Robert Steel, Wachovia's president and chief executive, said: "Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive. We look forward to the opportunities that lie ahead as we join forces with Wells Fargo." He added: "The market environment changed more precipitously than anyone had expected." Steel was forced to seek a saviour for Wachovia earlier this month, just weeks after insisting the bank was strong enough to remain independent. The losses at Wachovia helped knock sentiment in the wider stockmarket yesterday, which was unnerved by concerns over the US economy. The Dow Jones industrial average was off as much as 400 points by mid-afternoon in New York. Shares in Wells Fargo were knocked following the news from Wachovia.Wachovia was running into trouble even before the collapse of investment bank Lehman Brothers last month. Many of its woes stem from its decision to buy the Californian mortgage lender Golden West Financial two years ago at the height of the housing boom and now causing the write-downs that have driven it deep into the red. Wachovia has written off $6.6bn in credit losses arising from the acquisition of Golden West Financial - and the housing woes are far from over. It has also forecast $26.1bn in mortgage-related losses next year.Giving an insight into the US housing market, Wachovia said that in an area of California south-east of San Francisco, borrowers owe an average of 66% more on their loans than their homes are worth.After the collapse of Lehman Brothers caused mayhem in the financial markets, the US government stepped in to help Wachovia by agreeing to limit its losses to allow a rescue takeover of its retail banking operations by Citigroup.But just four days later Wells Fargo jumped in with a bid for the whole bank, winning the support of the Wachovia board. After threatening legal action at having its plans thwarted, Citigroup decided to walk away.John Stumpf, president and chief executive of Wells Fargo, stood by the deal yesterday despite the grim figures. "Wachovia's third-quarter results were very much in line with our expectations," he said. "We're more encouraged than ever by what we've seen in their franchise and we're pleased that Wachovia's team continues to focus on serving customers," he added.Wells Fargo, which structured the deal without the need for the guarantees offered to Citigroup, initially agreed to pay $15bn for Wachovia. But the offer is decreasing in value in line with the fall in the Wells Fargo share price and is now worth closer to $14bn.Wells Fargo is planning to raise $20bn of new capital once the deal is completed and insisted yesterday that these plans would not be affected by Wachovia's woes.But the precarious conditions in the financial markets and the weakening condition of Wachovia has encouraged the Fed to hasten the approval of the deal.Profits in Wachovia's retail banking division fell 48% to $857m, while its corporate and investment bank lost $703m, compared with a $212m profit in the same quarter last year. The capital-management arm lost $499m. 10-23-08 MeetingsCity of Merced November meetingshttp://www.cityofmerced.org/civica/filebank/blobdload.asp?BlobID=6744Nov.   3 City Council/Redevelopment agency, 7:00 p.m.          5 Planning Commission, 7:00 p.m. ...To be cancelled        17 City Council/Redevelopment agency, 7:00 p.m.        19 Planning Commission, 7:00 p.m. ...To be cancelled Merced County Hearing Officer November meetings...8:30 a.m.http://www.co.merced.ca.us/planning/pdf/schedule.pdfNov.   3, 2008         17, 2008 Merced County Board of Supervisors November meetings...10:00 a.m.http://www.co.merced.ca.us/bos/pdfs/bos_calendar.pdfNov.   4, 2008         18, 2008 Merced County Planning Commission November meetings...9:00 a.m.http://www.co.merced.ca.us/planning/pdf/schedule.pdfNov.   5, 2008         19, 2008 MCAG November Calendarhttp://www.mcagov.org/November  6 - Technical Planning Committee MeetingNovember 12 - Technical Review Board MeetingNovember 20 - Governing Board Meeting Joe Oliveira , ChairMCAG Governing BoardIn my year as Chair of the MCAG Governing Board, I'd like to continue the course my predecessor set out, one of cooperation and collaboration. MCAG is the one organization where city and county leaders can get together to discuss and solve issues that are important to us as a region. We continue to build positive relationships with each other. It's very important to the residents of Merced County that their elected officials work well together and work efficiently. Meeting as an MCAG Board helps us pay more attention to the larger picture: how to support each other, how to work with our neighboring cities and counties, and how Merced County fits into the goals for the entire San Joaquin Valley. We concentrate on transportation, transit, and solid waste, but we have to make those decisions with a knowledge of how they will affect air quality, water, the environment, economic development, and other considerations. Merced County is changing. We are growing. There is no turning back the clock. Instead, we have to act wisely to deal with the changes in front of us.