11-18-08

 11-18-08 Merced Sun-StarSan Joaquin River plan aims to appease districtsWaterway dispute finally settled after two decades...CAROL REITERhttp://www.mercedsunstar.com/167/story/552551.htmlA federal bill that would restore water flows and return salmon to the San Joaquin River had some local water districts worried.But amendments to the bill were agreed upon Monday, and those amendments should drown the worries of the districts.The bill will go before the Senate early next year as part of a big land-use package and would make sweeping changes to the San Joaquin River.Negotiation for some of the districts was done by the Merced law firm of Mason, Robbins, Browning and Godwin.Art Godwin, a lawyer with the firm, said growers downstream of the river were worried about seepage issues. If the river gets more water flow, water would seep into the growers' land. That could kill whatever is being grown on the acreage."We were worried about seepage and also about the cost," Godwin said. The cost has been estimated to be anywhere from $500 million to more than $1 billion. Godwin said the districts were worried that the money would run out before the restoration was finished.Another worry, especially for the Merced Irrigation District and San Luis & Delta-Mendota Water Authority on the Westside of the county, was reintroducing Chinook salmon to the San Joaquin.Currently, the spring run of the salmon only happens on the Sacramento River. But salmon were common in the San Joaquin and other rivers in the past.The salmon is a threatened species, and if it ended up in other rivers, those water districts might have to mitigate for it."The Merced Irrigation District was worried because the Merced River ends at the San Joaquin," said Godwin.The district was troubled by the possibility that the salmon might accidentally go up the Merced River, Godwin said. But fish screens proposed by the amendments would make sure that doesn't happen.Dan Nelson, executive of the San Luis & Delta-Mendota Water Authority, said the negotiations that took place over the past several weeks have satisfied the districts."We were worried that there would be increased price impacts to the third-party districts," Nelson said. The districts are considered third party because they weren't part of the lawsuit that started the restoration. The lawsuit, which focused on reintroducing fish into the river, was settled in 2006, 18 years after it was filed."The farmers in the third-party districts have developed an agricultural community that provides a valuable supply of food, fiber and thousands of jobs," said Nelson. "This community would be in jeopardy if their water supply or their ability to farm were threatened."Merced City Council to spend $14 million to improve roads...SCOTT JASONhttp://www.mercedsunstar.com/167/story/552535.htmlIn an effort to spruce up Merced's main entrances, the City Council approved Monday the issuing of $14 million in bonds to pay for major road upgrades.Top-dollar projects include $4.8 million for the G Street underpass, $1.2 million to widen Highway 59 from 16th Street to the northern set of railroad tracks.Nearly $2 million will be used to improve East 16th Street and beautify South Martin Luther King Jr. Way.An additional $2 million will be set aside for create housing for affordable housing projects. Merced will buy homes in South Merced and improve other ones.The bond is key to paying for the city's share of the $18 million G Street underpass, which is expected to be built by fall 2011. Half is being funded by state transportation money.The city began working toward issuing the bonds in January when the financial markets were stable and relatively predictable, Interim City Manager Bill Cahill said. For the past several months, the city bond market has not been acting normally."There have been some weeks when it's difficult to sell municipal tax-exempt bonds," he explained.As a result, the council gave city staff flexibility on when the bonds will be sold. It will either be late December or January.Councilman John Carlisle asked why the council wasn't paying for bond insurance, which could give it a lower interest rate. Rick Kiss, with Piper Jaffray, which is underwriting the bonds, explained the bond insurance market was one of the first to collapse as Wall Street was beset with turmoil. There were nine triple-A insurers. Now there's one, which doesn't care to insure city bonds because it has a pick of the market, he explained.As a result, the city is going to Standard & Poors for a rating, he said, which will most likely be investment grade.In news related to the underpass, the City Council approved forming a 15-member citizen advisory committee that will meet regularly to discuss the project and give input to the elected leaders.Applications can be found on the city's Web site, www.cityofmerced.org, or at City Hall, 678 West 18 St.Merced County Board of Supervisors urged to reconsider raise for CEO's wifeControversial pay increase has led to promise of more care...JONAH OWEN LAMBhttp://www.mercedsunstar.com/167/story/552538.htmlTwo steps back, one step forward might be the mantra at the county CEO's office these days.After possibly breaking public disclosure law and skirting the edge of conflict-of-interest rules, it appears the county CEO has taken steps to correct recent "mistakes" regarding an undisclosed raise for his wife.(Tatum used the word "mistakes" in a Nov. 10 interview at the Sun-Star.)The agenda for the next Board of Supervisors meeting, which is at 10 a.m. today, recommends the board rescind the resolution that would have given Iris Tatum a raise of more than $10,000.After publication of the county's Nov. 4 agenda, the Sun-Star had learned that a resolution giving County CEO Demitrios Tatum's wife a 10 percent raise had been left out of the published agenda. Neither the public nor the Board of Supervisors knew of its existence before the item was voted on.At first, county representatives explained away the missing resolution, saying everything had been open and transparent. They also said that Iris Tatum's "differential" wasn't really a raise. Later, they changed their tune, explaining that the missing item had been a clerical mistake. And, they added, it hadn't actually been put into effect because the Board of Supervisors hadn't seen the resolution. Ultimately, there would be no raise after all, they said. Now the issues will be available for public scrutiny. Agenda item 58 for today's meeting explains in its summary why it is before the board: "The CEO is returning to the board with resolutions that did not accompany board agenda items for board review and approval. In an effort to ensure a transparent process allowing appropriate oversight of county policy, the following resolutions are being brought to the board for deliberation and decision." Further in the agenda item, the reasoning for the request is expanded: "There has been uncertainty as to what action the board took regarding item 43 (Ms. Tatum's raise), therefore it is recommended the board rescind the action and reconsider the item with the full text of the resolutions before them."Last week, however, the county representatives had no such ambiguity about the board's actions. "It's not a valid vote if they didn't have that information before them," Katie Albertson explained last Friday. But on Monday she explained the new agenda as "a clarifying action."Besides these steps toward correcting past errors, Tatum himself said in an interview at the Sun-Star that he would pay special attention in the future so such questions wouldn't arise again."I'm going to look at every item, irrespective of the department it comes from. The documents will be reviewed by me first. The county counsel's office will independently audit those reports to the board," Tatum told the Sun-Star last week.That, however, may present its own set of conflict-of-interest issues if the item involves his wife.$54M loss forces Merced's County Bank to consider all optionsCounty Bank looks for new capital, investors for survival...SCOTT JASONhttp://www.mercedsunstar.com/167/story/552557.htmlFor the first time since it was hit by financial turmoil, County Bank's leaders have signaled that the institution may be for sale if new investors can't be found.County Bank CEO Richard Cupp declined Monday to say whether there are any potential suitors or saviors. "We consider every option seriously," Cupp said during a media conference call.County Bank, which is run by Capital Corp of the West, is trying to raise new money, which it has found tough to do in a weak national economy that has hurt industries well beyond lenders.The terrible market also raises doubts about the company's ability to survive, its managers wrote in the quarterly report.Cupp said it's a "precautionary legal disclosure" the company has to make because of the hits it's taken this year. "We don't want anyone to speculate beyond what's in the (report)," he said. "We are working very hard to get the bank through these challenging times."The publicly traded Valley bank, based in Merced, applied Friday to be part of the federal government's $700 billion bank bailout. It's looking to sell up to $46 million in stock as a way to inject fresh cash into its vaults.Then in its delayed third-quarter financial report, the bank holding company conceded that it may be forced to find new ownership."Additional sources of capital are required under (federal regulatory agreements), and the company has engaged a financial adviser to explore strategic alternatives, including capital raises and the sale of the bank and/or company," the report reads.In March, it hired the investment bank Keefe, Bruyette & Woods to help it seek more investors. Along with that, Capital Corp of the West posted a $54.6 million loss for the past three months. The bank said it remains adequately capitalized. However, it's been working to boost its ranking to well capitalized.So far the plan hasn't succeeded, and it may need more money given its third quarter results. "We need to raise additional capital to meet regulatory requirements and to provide an appropriate cushion against potential losses," the report reads. The company wrote off $23.5 million for its goodwill, which is the value of a business' name. It also took a $25.3 million hit for a complicated accounting issue dealing with taxes.Excluding those, Capital Corp notes its loss would have been $5.8 million. Nevertheless, it had posted a $6 million profit in the same period last year.Bad loans on land and construction projects have caused most of County Bank's woes. Recent appraisals show 50 percent to 70 percent declines. The company never had on its books subprime mortgages, which have plagued many larger lenders.The company touted that it added 4,879 accounts in the first nine months of 2008 -- most of them checking accounts. Its cash flow for the first nine months increased to $23 million from $15 million during the same time last year."Our underlying business remains strong," Cupp said. "We have been aggressive in developing new business for the bank."However, the bad news surrounding its financial reports along with the troubles on Wall Street have caused "a significant amount of customer deposit withdrawals, thus affecting the company's liquidity position," according to the report.The report goes on to explain that if more customers pull money out of the bank because of the news, it may have to borrow more or sell long-term assets to raise cash. County Bank, founded in Merced in 1977, has 500 employees across the state with 200 in Merced County. It maintains $1.9 billion in assets.Paramount Farms owners give to UC Merced for scholarshipsAgricultural giant's donation will help students from south Valley....Sun-Star staffhttp://www.mercedsunstar.com/167/story/552560.htmlUC Merced said Paramount Farms donated $250,000 to an endowed scholarship fund to help low-income students from Kern, Kings, Tulare and Fresno counties at the university."Our friends at Paramount Farms understand that higher education is a student's direct path to potential in their careers and their lives," said John Garamendi Jr., vice chancellor for university relations.Paramount Farms and its owners Lynda and Stewart Resnick have been longtime supporters of UC Merced."As a graduate of the University of California system and as a Central Valley business owner, I am proud to support the youngest of the UC campuses," Stewart Resnick said.Paramount Farms, the largest farmer of tree crops in the world, grows and processes almonds, lemons, oranges and pistachios. Paramount Farms has its headquarters in Los Angeles, with operations throughout Central California. The Resnicks also own FIJI Water, Teleflora, Paramount Citrus and POM Wonderful.University officials said Resnick's first gift of $200,000 in 2003 aided members of UC Merced's first freshman class to afford the costs associated with college. Since that first gift, about 200 UC Merced students received scholarships from the Resnicks and Paramount Farms. Additionally, the Resnicks and Paramount Farms have donated to help fund the expansion of the UC Scholars Early Academic Outreach Program to the Delano region. "I thank Paramount Farms for helping me see the UC system as an option," said scholarship recipient Jesus Medina, a freshman from Wasco. "The UC Scholars program showed me the opportunities available, but scholarships are what allowed me to come here to UC Merced."The first nine scholarships from the Paramount Farms Endowed Scholarship Fund were awarded this fall, allowing students to focus more on their studies and less on their finances, according to university officials. Modesto BeeSenate puts river restoration plan on hold...Michael Doyle, Bee Washington Bureauhttp://www.modbee.com/local/story/502948.htmlWASHINGTON -- The Senate will postpone until early next year action on a public lands bill that includes efforts to restore the San Joaquin River, lawmakers decided Monday.While not entirely unexpected, the delay disappoints those who hoped to resolve the river restoration issue sooner rather than later. It gives supporters and opponents more time to maneuver."It's unfortunate that the Senate could not move on this bill," said Rep. Jim Costa, D-Fresno.The San Joaquin River plan is one of about 150 bills folded into a public lands package designed to attract widespread political support. Other California elements include a Madera County groundwater bank project and a John Krebs Wilderness designation in the Sierra Nevada.Lawmakers had spoken of moving the massive legislation in the lame-duck congressional session this week, but that schedule proved too ambitious amid negotiations over an economic stimulus deal and auto industry bailout."Rather than move forward on the lands package, which is ... so important to a lot of senators and certainly a lot of people around the country, we're better off waiting until we come back," Senate Majority Leader Harry Reid announced Monday afternoon.The San Joaquin River bill would restore water flows next year below Friant Dam and seek to return salmon to the river channel by 2013. It is designed to settle a 20-year-old lawsuit over the loss of the once-thriving salmon run.The river plan is supported by myriad lawmakers, environmental groups and water districts. Negotiations last week appeared to resolve lingering concerns of farmers in the Los Banos area, who wanted to protect their long-term water contracts."We've been through a little bit of a roller coaster," acknowledged Ron Jacobsma, general manager of the Friant Water Users Authority, but "in many ways, the settlement today is better than what it was two years ago."Reid's decision means the bill will return in a markedly different political environment. Democrats will hold at least 57 seats in the Senate, giving them more leeway to force through legislation.Median home prices fall around US in Q3...ALAN ZIBEL , AP Real Estate Writerhttp://www.modbee.com/2020/story/503218.htmlHome prices fell in a record four out of five U.S. cities in the third quarter as low-cost foreclosures flooded the market and the U.S. housing market's decline spread throughout the country.Among 152 metropolitan areas included in the trade group's survey, 120 posted declines in median home sales prices compared with a year ago, the National Association of Realtors said Tuesday. Nationally, sales fell by almost 8 percent in the third quarter compared with the same period a year ago.Sales of foreclosures and other distressed properties made up around 40 percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.Sales fell in all but four states in the Realtors' group's report. The exceptions were Nevada, California, Arizona and Virginia, where buyers have been able to snap up foreclosed homes at a bargain."A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," Charles McMillan, the Realtors group's president, said in a statement.That's especially true in places like Sacramento and Riverside, Calif., where prices were down 37 percent and 39 percent, respectively, from last year. The two California cities had the largest annual price declines in the report.A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, foreclosure listing service RealtyTrac Inc. expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.Meanwhile many economists believe the economy has fallen into a recession that could be the worst downturn in more than two decades. As layoffs accelerate, that's likely to put further downward pressure on housing prices.Freddie Mac said last week that rising unemployment rates, tightening credit and deteriorating economic conditions "contributed to a substantial increase in the number of delinquent loans," including loans made to borrowers with strong credit.Freddie Mac has 28,000 foreclosed properties on its books, while its sister company, Fannie Mae owns 67,500.On Tuesday, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said "it is essential" to use some of the funds in the government's $700 billion financial rescue program to stem the tide of foreclosures.Fresno BeePremier Valley Bank applies for federal funds...The Fresno Bee, Business briefhttp://www.fresnobee.com/business/story/1019446.htmlFresno-based Premier Valley Bank has applied to participate in the U.S. Treasury Department's Capital Purchase Program, part of the $700 billion emergency economic plan approved by Congress last month. "This is not a bailout," said Michael Martinez, Premier Valley Bank's executive vice president and chief operating officer. "Regulators are encouraging their stronger banks to participate to leverage balance sheets and get money out into the community through loans." Friday was the deadline to apply. Bank of the Sierra opted not to participate. County Bank takes $54 million hitMerced-based parent company suffers big third-quarter loss...Tim Sheehanhttp://www.fresnobee.com/local/v-printerfriendly/story/1019435.htmlThe parent company of Merced-based County Bank, battered by the real-estate downturn, announced Monday that it lost more than $54 million in the third quarter of 2008, threatening the bank's survival. "It is uncertain if we will be able to continue," Capital Corp of the West chief executive Richard Cupp wrote in the earnings statement filed Monday with the U.S. Securities and Exchange Commission. In a conference call Monday, Cupp called the statement a "precautionary legal disclosure," but acknowledged the bank needs to raise millions of dollars -- from investors or the federal bank bailout fund -- if it is to survive. County Bank, with 39 branches from San Francisco to San Bernardino, including 11 in the Fresno area, was founded in 1977. It has been caught with a number of bad loans made to homebuilders before land values plummeted. Officials said appraised values on those unfinished properties have fallen by more than 50% in much of the central San Joaquin Valley and by as much as 70% in some instances. The company's earnings statement showed losses far higher than officials had estimated less than a week ago when the bank asked the Securities and Exchange Commission for more time to finalize its quarterly figures. Just last week, bank officials said they expected to report a net loss of $2.7 million for the quarter. County Bank only allowed about $11.5 million to cover loan losses between July 1 and Sept. 30. In addition to real estate losses, the bank had charges of $23.5 million related to its 2007 acquisition of 11 California Stockmen's Bank branches. Much of the charge on the Stockmen's Bank acquisition is due to the falling value of Capital Corp's stock, which closed Monday at $1.80 per share -- well below a high in the past 12 months of $20.80 in December. Capital Corp also took a $25 million hit as the result of complicated accounting issues over pretax losses this year and last. The company said it has hired a financial adviser to find ways to raise capital, including through sale of the bank. In the SEC filing, Cupp and Capital Corp finance chief David Heaberlin wrote that the bank needs "additional sources of liquidity and capital" to stay in business. But in the conference call, Cupp said any statement about failure or sale "is not a prediction. ... It's an estimate of what can happen if nothing else happens over a period of time." Heaberlin agreed. "It's not an eventuality we're at today," he said. "It is clearly a risk. We're not saying it's not a risk." Despite the losses, officials said in a statement that the bank remains "adequately capitalized" but added that more money is needed to return its status to "well capitalized." The bank leaders acknowledged that Capital Corp has been unable maintain the capital required under agreements with the Federal Reserve Bank of San Francisco and the state Department of Financial Institutions. The bank applied last week to participate in the U.S. Treasury Department's $700 billion emergency economic program approved by Congress last month. If the application is approved, the bank would sell up to $46 million in preferred stock to the Treasury Department. "Other than the government, there's not a lot of capital to be raised because of disarray in the capital markets," Heaberlin said. With a market value of $19.5 million, County Bank is among the smaller publicly traded banks based in the Valley. Others have said they do not expect to suffer large losses from the real estate downturn and their share prices have not declined as sharply. The largest, Porterville-based Bank of the Sierra, has even seen its shares rise in value since July 1. The bank announced last week that it did not see a need to apply for federal bailout funds. Sacramento BeeMassive poaching case draws fine, probation...Stan Oklobdzijahttp://www.sacbee.com/101/story/1406359.htmlA Gilroy man was given a hefty fine and probation for what wardens are calling one of the largest cases of poaching "since the market-poaching days of the early 1900s," California Department of Fish and Game officials said Monday.Peter Ignatius Ciraulo, 42, pleaded no contest in Santa Clara County Superior Court on Nov. 3 to three poaching-related charges for killing and keeping about 335 waterfowl over the course of the 2007-08 hunting season, said Warden Patrick Foy, Department of Fish and Game spokesman in a press release.As part of his sentence, Ciraulo will be fined $7,105, be placed on two years of probation and be forced to serve 100 hours of community service at a waterfowl conservation group, Foy said. He'll also be banned from hunting for one season, he said. Ciraulo is believed to have shot the 335 birds across Northern California, Foy said, concentrating mostly in the Sacramento and San Joaquin valleys. The birds were found frozen in a freezer at his Gilroy home, he said. All had not been plucked or dressed, Foy said."The dead birds included specimens of almost every waterfowl species that migrates into California," Foy said in a press release. The waterfowl found included several protected species such as the tundra swan and sandhill crane, he said.The possession limit in California is 14 ducks and eight geese, Foy said, well under the 253 ducks and 58 geese Ciraulo had at the time of his arrest.In addition, Ciraulo had in his possession seven live, wounded snow geese he'd shot, Foy said."There was no indication he was trying to sell them and no indication he was trying to eat them," Foy said. "There is no real rationale."Foy said catching Ciraulo was one of the biggest arrests they'd made since the early 1900s, when poachers would shoot a hundred birds and sell them to local markets. These days, someone shooting twice their limit is considered a big deal, he said.Foy said the consequences of such a grand-scale level of poaching can be devastating on a local ecosystem."If you kill that many birds, you'll see local population declines," he said. Stockton Record30 reasons for Great Depression 2 by 2011New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster...PAUL B. FARRELL, The Wall Street Journalhttp://www.marketwatch.com/news/story/well-great-depression-2-2011/story.aspx?guid=%7bB28B49B5-EFD1-4941-B57E-A2BA1545BA09%7d&print=true&dist=printMidSectionARROYO GRANDE, Calif. (MarketWatch) -- By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:First. Dot-com crashWe pinpointed the dot-com crash at its peak, in a March 20, 2000 column: "Next crash? Sorry, you won't see it coming." Bulls-eye: The dot-com bubble popped. The economy went into a 30-month recession. The stock market lost $8 trillion. And today, over eight years later, the market is still roughly 40% below its 2000 peak. See previous Paul B. Farrell. Factor in inflation and the average stock has lost well over 50% of its value. Stocks have proven to be a very big loser, a bad investment for Americans, thanks to Wall Street's selfish greed, plus the complicity and naiveté of politicians, press and public. Second. Subprime meltdownWe reported on warnings of another crash coming as early as 2004, wrote a sequel, also titled "Next crash? Sorry, you won't see it coming." Yes, we were early, but in good company. We wrote many more warning columns. Few listened. Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse. So once again, as history proves over and over, ideology trumps common sense, reality and the facts. Greed drives ideologues to blow bubbles. They pop. Crashes happen. The public is collateral damage. Third. Megabubble cyclesWe also detailed the broader, accelerating macroeconomic sweep of cycles last summer in columns like "20 reasons new megabubble pops in 2011." We summarized a long list of major warnings from financial periodicals -- Forbes, Fortune, the Wall Street Journal, Economist -- and from the voices of Warren Buffett, Bill Gross, a sitting Fed governor and a former Commerce secretary. Multiple warnings "hiding in plain sight," beginning with a Fed governor warning Greenspan in 2000 about subprime risk. But the big shocker came from the new Treasury secretary two years before the meltdown: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy." Yes, they knew. And still both Paulson, a Wall Street insider, and Greenspan's successor, Ben Bernanke, a Princeton scholar of the Great Depression, stayed trapped in denial and kept happy-talking the public for months after the meltdown began in mid-2007. Get it? While they could have put the brakes on this meltdown years ago, our leaders were prisoners of their distorted, inflexible views of conservative Reaganomics ideology. As a result, once again the "best and the brightest" failed America and now they and their buddies in Washington and Corporate America are setting up the Crash of 2011. Now it's time for my 2008 update, a look into the future where things will get far worse during the next presidential term. And given human behavior, especially in the deep recesses of Wall Street's "greed is good" DNA, it seems inevitable that no matter how well-intentioned the new president may be Wall Street and Washington's 41,000 special-interest lobbyists will drive America into the Great Depression 2. 30 'leading edge' indicators of the coming Great Depression 2Every day there is more breaking news, proof Wall Street's greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas -- anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble. Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:

1. America's credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18. Big three automakers near bankruptcy; unions, workers, retirees will suffer
19. Corporate bond market, both junk and top-rated, slumps more than 25%
20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21. Unemployment heading toward 8% plus; more 1930's photos of soup lines
22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23. China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24. Despite global recession, U.S. trade deficit continues, now at $650 billion
25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26. Now 46 million uninsured as medical, drug costs explode
27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28. Outgoing leaders handicapping new administration with huge liabilities 
29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises

Will the next meltdown, the third of the 21st Century, trigger a second Great Depression? Or will the 2007-08 crisis simply morph into a painful extension of today's mess to 2011 and beyond, with no new bull market, no economic recovery as our new president hopes? Perhaps some of the first 29 problems may be solved separately, but collectively, after building on a failed ideology, they spell disaster. So listen closely to "leading indicator" No. 30: At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions. He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government." Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'" We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's tooManteca BulletinWe're still wasting water entering a possible 3rd straight year of drought...Dennis Wyatthttp://www.mantecabulletin.com/main.asp?SectionID=24&SubSectionID=54&ArticleID=60303&TM=18394.54The drought of 1976-77 sent California to the edge.A third year would have laid waste to thousands of square miles of farmland, triggered an ecological disaster in the Delta as well on a number of rivers, plus forced severe rationing in many urban centers.But even without the harsh realities a third year of drought would have caused, there were still plenty of severe impacts.• Marin County residents lived by the creed "if its yellow its mellow" as they refrained from flushing all the time to save precious water.• Hundreds of acres of orchards and vineyards were left to die in areas of the Central Valley.• Mandatory rationing was the rule of the day in a number of Northern California cities that depended on stored water behind the great dams of the Central Valley project and State Water Project.It was against this backdrop that a massive lake at the Mission Viejo planned community in Orange County was being filled with water that flowed from Northern California hundreds of miles away through the California Aqueduct.News footage of the lake being filled enraged Northern California as did numerous TV shots showing Los Angeles residents watering yards and washing cars with abandon as if there was an endless supply of water. The state intervened and ordered the filling stopped immediately of the artificial lake designed to help sell houses.At one point, a news crew filmed an angry Mission Viejo resident slamming the decision while proclaiming that he shouldn't have to suffer because it wasn't the south state's fault "that Northern California never developed its own water system."The irony of the statement was not lost in the long simmering north-south water wars. The water flowing into Mission Viejo originated from the furthest point in California away from LA - the Lake Shasta watershed.Since then, Californians have led the way in conserving water. Farmers treated it as if it were liquid gold. Cities imposed low-flow requirements for flush toilets and instituted year-round water conservation measures. People started using less and less even in years of plentiful water.We've come a long way since 1976-77. But at the same time the state's population has swelled from 21.9 million to 37.9 million while no new water storage facilities were built.Even if more dams were built it would be at least a decade away, if that soon.California is now going through a repeat of where it was 31 years ago at the end of the second year of drought. The rainy season started with a promising rainfall but there is no guarantee it will continue or that an above average Sierra snow pack - the most critical element in California's water management - will occur.Orchards have been left to die. Farmers aren't planting crops. The Department of Water Resources has announced they may cut back water deliveries to agencies serving 25 million people and 750,000 acres of farmland by 85 percent in 2009.So where is the water going to come from?Part of the answer is easy.We are still wasting water.The proverbial dew on the pumpkin is leaving those not yet picked slopping wet with moisture. Yet you can go down any street in a California city and see automatic sprinklers running full-bore and flooding gutters on rainy days.The biggest residential use of water is irrigating lawns.A simple requirement for all new construction- residential, commercial, industrial and even city-owned landscape maintenance districts - is to have moisture sensors would go a long way. It wouldn't be an intrusive rule. New home construction, for example, only impacts the front yard landscaping that is required before the home can be occupied.How many acre feet of water does Manteca waste a year when automatic sprinkler systems come on during the rain or heavy fog when there is more than enough moisture to take care of plants and grass?The real question is why should Manteca wait until the state mandates such a requirement? We can either keep rolling the dice on drought years or we can take steps to minimize the wanton waste of water.San Francisco ChronicleState unprepared for effects of warming, report says...Jane Kayhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/18/BAPT146BFJ.DTL&type=printableDespite its tough goals to reduce greenhouse gases, California is not prepared to deal with the flooding, coastal erosion and loss of wildlife habitat that scientists are predicting in the coming decades as a result of higher global temperatures, a new report says.Inundation of the coastal shoreline from accelerating sea-level rise and storm surges threaten property, recreational activities and wildlife enclaves, yet agencies are just starting to assess these climate risks and inform local communities, said a study released Monday by the Public Policy Institute of California, a nonprofit research group.The report examines the state's capability to provide water and electricity to the public as well as protecting coastal resources, air quality, public health and ecosystems in response to climate change and extreme weather events such as wildfires. It is based on previous studies done by Lawrence Berkeley National Laboratory, UC Davis and Scripps Institution of Oceanography, among other researchers."We need to help agencies get prepared to deal with climate change," said Louise Bedsworth, a research fellow at the institute and co-author of the report. "In some areas, we need to be acting now." Providers of water and electricity are the furthest along in responding to the projections for changing weather patterns in California, according to the report.Water managers are beginning to plan for the warmer winters that are expected to bring more rainfall and less snow, dramatically reducing - perhaps by half - the Sierra snowpack.The mountain ice has provided free water storage that gets cities and farms through the dry summer months and supplies salmon and other wildlife with fresh water. Now water agencies are using tools of conservation, recycling water, desalination and groundwater banking. Electricity providers are preparing for peak use in the summer months, particularly in inland areas, the report said. They are encouraging energy-efficient construction and lighting, and alerting customers to cut back during the peaks.In recent years, water agency managers have become increasingly aware of how climate change will affect their agencies and consumers, said Peter Gleick, executive director of the Pacific Institute, a nonprofit research center in Oakland. "But there's a big difference between awareness and action. I don't think enough is being done on the ground to reduce the vulnerability of our water supplies," Gleick said.Scientists project that sea level could rise between 8 and 16 inches by mid-century, but efforts to control flooding are lagging, the report said. Flood managers haven't started to change land-use plans to ward off possible devastating floods, particularly in fast-growing parts of the Central Valley, the report added.The state is also behind in protecting coastal resources, the report said. The California Coastal Commission and Bay Conservation and Development Commission have been urging communities and agencies to incorporate sea-level rise into development plans but the measures are in infancy stages, the report said.In March, the BCDC is hosting an international symposium with Holland to tap into that nation's hundreds of years experience in dealing with rising seas and compare research on problems and solutions, said BCDC Executive Director Will Travis.California's preparation to protect wildlife from climate change is also inadequate, the report said. As temperatures rise, plants and animals will begin to try to shift to cooler, higher elevations.If conservation of habitat doesn't take climate into account, the wrong lands could be protected, the report said. The federal government has resisted considering climate change as a threat under the Endangered Species Act.What happens in California is key, the report said, because other states and even nations have been looking to California for regulatory and technical ways to reduce carbon dioxide and other greenhouse gases.California law requires an 80 percent reduction of carbon emissions below 1990 levels by 2050. The state Air Resources Board next month will release its latest plan on reductions from improved energy efficiency in buildings, increased renewable energy sources and more fuel-efficient vehicles.After President-elect Barack Obama takes office in January, the federal government is expected to grant waivers to the states to allow tougher regulations on greenhouses gases. California has been hampered by lawsuits from the auto industry, which has spent millions of dollars fighting state laws requiring cuts in tailpipe carbon emissions, a change that improves fuel efficiency.On Monday, California Attorney General Jerry Brown, along with his counterparts in other states, sent a letter to House Speaker Nancy Pelosi urging a requirement in any proposed auto industry bailout measure to include provisions to combat global warming. The states want automakers to drop their opposition to California's greenhouse gas emission standards and produce energy-efficient vehicles that cut emissions by 30 percent by 2016.The Public Policy Institute of California's study was paid for in part with funds from the Nature Conservancy, PG&E and Next Ten, a business group.Read the report online    View "Preparing California for a Changing Climate" at links.sfgate.com/ZFJX.OAKLAND6 Cal tree-sitters avoid hefty fees...Carolyn Joneshttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/18/BAIS146M7P.DTL&type=printableSix of Berkeley's Memorial Stadium tree-sitters were sentenced Monday to 50 hours of community service after striking a deal with the University of California.Alameda County Superior Court Judge Marshall Whitley imposed the sentence after the protesters pleaded guilty to contempt charges stemming from vigil in an oak grove next to Cal's football stadium that ended in September after 22 months.The tree-sitters, whose protest violated an October, 2007 court order, had hoped to stop the university from clearing the grove to make way for an athletic training center.In exchange for the protesters' guilty plea, UC agreed not to seek attorney fees, which could have totaled $10,000 per protester, said UC attorney Michael Goldstein.Three other tree-sitters, including former Berkeley mayoral candidate Zachary Running Wolf, refused to accept the university's deal and Whitley ordered them to serve five days in jail. Two other protesters are scheduled to appear at a court hearing in March.Four of the protesters also face criminal trespassing charges in Alameda County Superior Court. A hearing is scheduled for December.Contra Costa TimesFlawed house-flip plan needs revision...MediaNews editorialhttp://www.contracostatimes.com/opinion/ci_11013948?nclick_check=1LOCAL GOVERNMENTS are about to step into the foreclosed home-flipping business under a new federal program. It would help cities and counties buy foreclosed houses and fix them up for resale.The idea here is a good one: clean up neighborhoods that are becoming blighted by rundown homes that have been abandoned. The federal program, however, is underfunded and burdened with a requirement that local governments buy homes at 10 percent to 15 percent under current market value.Not only is a rapidly falling market value always easy to determine, few banks are going to jump at the chance to lose another 10 percent or 15 percent on already depressed properties.Even if the below-market-price stipulation were removed, the federal house-flip program would have a negligible impact. It would offer just $24 million for areas with the highest number of foreclosed homes, including Antioch, Richmond, Oakland and Alameda and Contra Costa counties.With such a widespread credit crisis, $24 million would be a small drop in the foreclosure bucket. Contra Costa County officials said they might be able to buy and resell 50 to 100 properties over the five-year course of the program. That number pales in comparison to the 4,000 foreclosures in the county over the past few years.Private citizens already are buying foreclosed homes at a much higher rate in hopes of making a profit when the economy rebounds. However, they often are not buying the homes that are in the worst condition. That is unfortunate. Sometimes just a few rundown, abandoned homes can have a major negative impact on a neighborhood. These are the properties that should be targeted by cities and counties with such limited funds.But any federal program, however small, that allows local governments to buy and resell foreclosed properties should not have restrictions that scare away banks.At the least, the below-market price requirement should be dropped so cities and counties can quickly make deals with banks to buy the most unsightly homes and clean up some of the most affected neighborhoods.Mercury NewsQuestions remain about high-speed rail project...Shaun Bishop, Daily News Staff Writerhttp://www.mercurynews.com/peninsula/ci_11011715Now that California voters have approved $10 billion in bonds to help pay for a new high-speed passenger rail line, Peninsula officials are trying to sort out what its impact will be on their communities and how it will affect area transit service.Caltrain has taken particular interest in the passage of Proposition 1A, the Nov. 4 ballot measure that authorized funding for the Los Angeles-to-San Francisco portion of the $45 billion, 800-mile project.Caltrain wants to replace its aging diesel locomotives with lightweight electrified cars, which will require a $785 million overhaul of its infrastructure by 2015. The agency hopes that the planned path for the bullet train — up its right of way between San Francisco and San Jose — means the two rail systems will be able to share the cost of upgrading the tracks.Officials hope all of Caltrain's advance planning work will make the Peninsula a strong candidate to become the first part of the line to be built, said spokeswoman Christine Dunn. "It's really exciting to think that we could be the first high-speed rail project in the country," Dunn said. But it will probably take at least two years before the specifics of the project — including its relationship with Caltrain — are defined, said Quentin Kopp, chairman of the California High Speed Rail Authority's board. Kopp, a San Mateo County Superior Court judge, said planners are now working on engineering, design and environmental documents for the eight segments that will make up the route from Los Angeles to San Francisco. "Up to this point, we've had very limited discussions of a very general nature," Dunn said. "I know people are very anxious to know what's going to happen next and how it's going to impact their communities, but a lot of those questions at this point are unanswered."What particularly appeals to Caltrain about the high-speed project is the proposed widening of its tracks and construction of grade separations up and down the Peninsula because bullet trains must run above or below street level. But some local officials are unhappy with the project, saying the reworked tracks will displace nearby property owners and endanger historic properties. The cities of Atherton and Menlo Park in August joined a lawsuit challenging the environmental report for the train's route, claiming it underestimates the impact it would have on communities.Despite elected officials' opposition, Menlo Park voters approved the high-speed rail bond measure while Atherton voters struck it down, according to unofficial election results updated Friday.Menlo Park voted 57.4 percent in favor of the project compared to 42.6 percent opposed out of 14,021 votes cast. Atherton rejected the measure with 46 percent in favor to 54 percent against, a margin of about 300 votes out of 3,918 cast.Critics also question the project's financing plan and whether its price tag will continue to increase, leaving taxpayers to make up the difference. The authority has not yet secured the rest of the private and federal funding needed for the project, but Kopp said he plans to head to Washington, D.C., next month to discuss federal funding with members of Congress. The high-speed rail authority also has yet to decide where the bullet train will stop, though Millbrae, Redwood City and Palo Alto have been named as potential stops. Redwood City Mayor Rosanne Foust said officials in her city will need more specifics before they take a position on becoming a high-speed stop. "We need to find out more about it — what's it mean, what's the time frame, what would be the pluses and minuses — and really understand it from a community perspective," Foust said.Santa Cruz SentinelWal-Mart truck used to smuggle immigrants...The Associated Presshttp://www.santacruzsentinel.com/usnews/ci_11013969McALLEN, Texas—Four illegal immigrants were found in the back of a Wal-Mart truck, and the driver and two alleged accomplices were accused of trying to smuggle them through a Border Patrol checkpoint. Authorities acting on a tip arrested driver Alejandro Hernandez and two other suspects Thursday just south of a checkpoint at Falfurrias, authorities said. The four Mexican nationals in the trailer were also taken into custody. Documents filed in federal court Monday allege that Hernandez, 50, unloaded a delivery at a Wal-Mart in McAllen, then stopped at a truck stop in nearby Edinburg where he picked up the four immigrants. Authorities said Leonor Gomez, 29, and her mother, Santos Gomez Moreno, had brought the immigrants to that meeting point in their van. The two women followed the Wal-Mart truck north, planning to transfer the immigrants back to the van after they all cleared the Border Patrol checkpoint, authorities said in court documents. The Falfurrias checkpoint is about an hour north of the border. Wal-Mart assisted the U.S. Immigration and Customs Enforcement agents in identifying Hernandez's truck after federal authorities were tipped to his activities. Investigators said they believe Hernandez had used his truck to smuggle illegal immigrants through the checkpoint at least a half-dozen times. "At Wal-Mart we expect our associates to conduct themselves in a lawful and ethical manner," company spokesman Don Fogleman told The (McAllen) Monitor. "This situation is of deep concern." He said Hernandez had been suspended without pay. Hernandez's attorney told The Monitor he had not yet had a chance to meet with his clientLos Angeles TimesEthanol's troubles have sapped the dreams of an Indiana townBattered by financial woes, the corn-based biofuel industry faces a shaky future, as does the town of San Pierre, which had counted on a distillery plant for its revival…P.J. Huffstutterhttp://www.latimes.com/news/nationworld/nation/la-na-ethanolplant18-2008nov18,0,7003368,print.story Reporting from San Pierre, Ind. — The air smells clean and sweet off the sprawling corn and spearmint fields, but for this unincorporated town of 156, it is the smell of failure: the failure to reap the rewards of the ethanol boom.Construction crews were scheduled to start digging up the sandy soil next spring to make way for an ethanol distillery plant in San Pierre. The plant promised to revive the town's economy, bring high-paying jobs to one of Indiana's poorest counties and double its tax rolls, a scenario that has played out repeatedly in struggling towns across the Midwest over the last three years.But last month, the developers of the San Pierre plant announced that the $62-million deal was dead. Banks involved in the project had cut off their lines of credit. Desperate calls to dozens of other financial institutions led to the same answer: No.Already battered by other market forces, the ethanol industry has been hit hard by the banking world's credit crunch, and the seemingly bright future of corn-based biofuel has been cast in doubt.In Pratt, Kan., the grinding mill machinery stands silent inside the Gateway Ethanol plant. It was open for less than six months before running out of money, and there were no bank loans available to keep it going. The firm recently filed for bankruptcy.In Royal, Ill., developers abandoned efforts to build a plant there and in six other locations, citing an inability to get financing. Plants have been shuttered, or plans for new ones halted, in Mead, Neb.; Belle Fourche, S.D.; Blairstown, Iowa; and Melrose, Minn.Less than two years ago, the idea of distilling corn into a gasoline substitute won over Wall Street and rural residents alike, with visions of reviving the weakened farm economy and investing in greater U.S. energy independence and renewable energy. Other agricultural businesses -- from local cooperatives to small-town merchants -- saw a boost, as farmers suddenly had money for new clothes, spa visits and farming equipment.Indiana was slow to join this party, in part because much of the surplus corn grown in the state is shipped to livestock producers in the U.S. Southeast or to Asia, said Chris Hurt, an agricultural economist with Purdue University in West Lafayette, Ind. And unlike states such as Iowa, South Dakota and Minnesota, Indiana legislators didn't provide state subsidies for ethanol production.In 2005, there was only one ethanol plant operating in Indiana. But by the end of 2006, after the state General Assembly pushed through millions in incentives and Gov. Mitch Daniels signed legislation mandating that state vehicles use biofuels when possible, there were plans to build at least 25 more, Hurt said.But the current credit squeeze, along with other market developments, shut down this Indiana town's ethanol dreams. It is just the latest development in a rocky year.First, corn prices jumped from around $2.50 a bushel in 2005 -- when ethanol plant construction began to take off -- to nearly $8 this summer on the futures market, before falling to below $4 this week.The cost of growing corn skyrocketed, as fertilizer and seed costs jumped as much as 40%. Meanwhile, crude oil and gasoline prices -- which determine the value of ethanol on the U.S. trading markets -- have come down, narrowing the difference between the cost of gasoline and ethanol.And the number of lawsuits -- filed by environmentalists or local residents who don't want their rural community turned into a site for industry -- aiming to block new production facilities from being built has steadily grown.There were 139 ethanol plants operating in the U.S. as of January and 61 additional refineries under construction, according to the Renewable Fuels Assn., a Washington-based trade group.But financial woes have led at least 27 plants to close, halt construction or be scrapped, according to DTN, an agricultural news and information service."There's been no credit for months," said Todd Neeley, who covers biofuels for DTN. "Even the top ethanol producers are having a difficult time getting financing. For these smaller projects, like San Pierre, they had no chance of surviving in this kind of environment."Ethanol proponents insist this is just a temporary bump in the biofuel's potentially rich future, and may inspire producers to expand their operations to create ethanol out of other cheap materials, such as crop waste, yard cuttings, or wood and forest products."There is a lot of overblown concern," said Bob Dinneen, president and chief executive of Renewable Fuels Assn., the industry's main trade group. "We are not the only industry hurt by what's happening on Wall Street. But there is plenty of room for growth once the credit markets ease."In the meantime, the dream of a revival is on hold for communities such as San Pierre.Fewer farm families now work and own the land around San Pierre where, like many Midwestern agricultural towns, residents have slowly left over the decades.The young people who stay often work factory jobs in Valparaiso (30 miles north) or the suburbs of Chicago (about 80 miles northwest). Retired city dwellers, here to escape urban life, worry about stretching their dwindling retirement funds.That's the kind of glum chatter Freda Risner hears these days in The Oasis, her bar in San Pierre."Those people on Wall Street? They don't have the sense to know how they're hurting us," said Risner, 69. "That plant could have helped the county. It could have helped save San Pierre."Outside, about all that's left of downtown San Pierre are three churches, two bars, a post office, a veterinarian and a used-car lot that never opens. Scott Harper bought the lot with his two brothers last fall as a side business near the family farm. When they heard about the ethanol project, the trio gleefully envisioned a financial trickle-down that would reach their pockets."We figured if we could just hold out long enough, the lot would do great," said Harper, 22, who lives and works on the family's farm eight miles south of town. But sales plummeted, then stalled. The brothers laid off their sole employee months ago. Now, they don't bother coming by the office. They listed the vehicles on EBay, but no one bid.For some residents, the news of the ethanol plant's demise was cause for celebration. Dawn and Jason Danford have posted red and white signs reading "No Ethanol Plant" on the edge of their corn fields.The farm couple, who helped spearhead a lawsuit to prevent the plant from being built, worried it would sap the town's water system and taint their wells. They warned neighbors and friends that the jobs at the plant would be filled by outsiders, and the tax benefits would be minor, at best."I'm not happy about the way the economy's going, but I'm grateful for anything that helped kill off that ethanol plant," said Dawn, 35, a mother of three.The land where the ethanol plant would have been is muddy and empty. Its owners, expecting the field to be bulldozed and covered in blacktop, hadn't bothered to nurture the soil. They hope that, next year, this land will be thick with corn -- to be sold to an ethanol plant 35 miles southwest of here, in Rensselaer, Ind.Is climate change to blame for string of Southland fires?Scientists say no definitive link has been demonstrated between rising temperatures and wildfire occurrence in Southern California's chaparral country...Bettina Boxallhttp://www.latimes.com/news/local/la-me-climatefire18-2008nov18,0,5392636,print.storyIs climate change to blame for the string of destructive fires that have hit Southern California in recent years?Research has shown an increase in large wildfires in some western forest regions in recent decades, particularly in the northern Rocky Mountains and, to some extent, California's Sierra Nevada.Warming is reducing the snowpack there and causing it to melt earlier, resulting in a longer, drier fire season.But scientists say no definitive link has been demonstrated between rising temperatures and wildfires in Southern California's chaparral country.In a statement after the firestorms that struck the region in October 2007, UC Merced assistant professor Anthony Westerling said that while there have been big wildfire years, no statistically significant fire trends are evident in the coastal chaparral belt."We can't finger climate change," said Dan Cayan, a climate researcher at Scripps Institution of Oceanography.The current drought in the Southwest may simply be part of the normal cycle of wet and dry spells. But looking over the next century, Cayan said, regions with a Mediterranean climate such as Southern California are expected to get drier."I have to believe that is going to make us more vulnerable to some of these more intense fire episodes."CSU may cut future enrollment by 10,000For the first time, the system might turn away qualified students. Minority and low-income groups would probably be hardest hit by the cuts, which could amount to a 10% drop in freshman enrollment...Gale Hollandhttp://www.latimes.com/news/local/la-me-csu18-2008nov18,0,5923621,print.storyThe California State University system for the first time in its history is proposing to turn away qualified students due to a worsening state budget crisis.As part of a plan to slash its 450,000 enrollment by 10,000 students for the 2009-2010 academic year, the 23-campus system, the nation's largest, will push up application deadlines and raise the academic bar for freshmen at its most popular campuses, Chancellor Charles B. Reed said Monday.The university has never tried this type of enrollment cap, and Cal State officials said they cannot be sure how it will work. While sophomore transfers and out-of-state and international students will be squeezed, California high school graduates probably will bear the brunt of the downsizing, officials said. The university typically admits 45,000 to 50,000 freshmen each year; if even half the reductions land on them, it would mean a 10% drop in first-year admissions."These are going to be kids who have done everything they're supposed to do, and told year after year they'll have this opportunity," said Kathy Rapkin, chair of the counseling department at Arcadia High School and past president and Southern California regional representative for the California Assn. of School Counselors. "These kids are not going to get a place."Gov. Arnold Schwarzenegger convened a special session of the Legislature this month to deal with a budget shortfall that could swell to $24 billion by mid-2010.Reed said the Cal State system anticipates $66 million in midyear budget cuts, and further reductions for 2009-2010. He refused to discuss whether a fee hike is in store for next year. His enrollment plan comes as demand for Cal State admission soars; applications are up 10% from the same time a year ago, officials said.Reed said he would consult with Cal State's Board of Trustees at their meeting Wednesday, but he already has the authority to impose enrollment restrictions and is planning to act soon."This is something California State University has never done," he said in a conference call with reporters.Cal State is not the only higher education institution reporting financially driven enrollment issues. The University of California said it might have to limit admission to its most popular campuses and send more students to those with extra space, typically Riverside and Merced. At the state's community colleges, actual enrollment probably won't be limited but students' access to classes may be, officials said."We won't be able to offer them the classes they need," said Diane Woodruff, chancellor of the California Community Colleges.She predicted that the lack of classes could drive away 250,000 full- or part-time students; 2.7 million are now enrolled in that system.The basic requirements for admission to Cal State are high school graduation, completion of college prep course work and a B average. Students with a C average or above can get in with good SAT or ACT test scores.A number of Cal State's sought-after campuses have for several years cut off some or all applications in the fall, but the official deadline was in the spring and some colleges accepted eligible applicants up to and including the first day of classes.This year the cutoff for many campuses is Nov. 30, and all colleges will stop taking applications by March 1. San Francisco State has set a Dec. 10 deadline.Some campuses, including Sonoma, Channel Islands, Northridge, Chico, San Jose, San Marcos and San Francisco, will continue to take all fully qualified students from their own communities. But students from other parts of California may have to show higher grade-point averages and test scores to make the cut at these and other campuses, officials said.San Diego State, Cal State Long Beach, Cal State Fullerton, Cal Poly Pomona and Cal Poly San Luis Obispo, the most popular campuses, have imposed similar academic restrictions for several years.Reed said the enrollment cutback will be felt most deeply by students of color already underrepresented in the four-year college system."Many students from under-served groups and families of color . . . are unsure about financial aid, when and how to apply . . . and do not make up their minds until spring," he said. They are "who I worry about most."Lourdes Garcia-Meza, a counselor at John F. Kennedy High School in Granada Hills, said low- and middle-income minority students at her school could be hit hard."These are good students and they worked really hard to make it at Cal State Northridge and Cal State L.A.," she said. "It's going to be heartbreaking."Cal State officials said the cap is a better option than increasing class size or dropping course sections, as they did during a previous economic downturn in the early 1990s. Many students could not enroll in the classes they wanted and dropped out, bringing enrollment figures down.Cal State currently receives $2.97 billion of its budget from the state's general fund and $1.5 billion from student fees. The system has raised fees six times in seven years. The cost of attending a Cal State college, not including housing, books and other living expenses, is about $3,800 a year.State Supt. of Public Instruction Jack O'Connell urged the state Legislature to raise enough revenue to provide higher education to all eligible students."Providing access to higher education for all qualified students is key to strengthening our economy in the future," O'Connell said in a written statement.Washington PostAdministration Moves to Protect Key AppointeesPolitical Positions Shifted To Career Civil Service Jobs...Juliet Eilperin and Carol D. Leonnighttp://www.washingtonpost.com/wp-dyn/content/article/2008/11/17/AR2008111703537_pf.htmlJust weeks before leaving office, the Interior Department's top lawyer has shifted half a dozen key deputies -- including two former political appointees who have been involved in controversial environmental decisions -- into senior civil service posts.The transfer of political appointees into permanent federal positions, called "burrowing" by career officials, creates security for those employees, and at least initially will deprive the incoming Obama administration of the chance to install its preferred appointees in some key jobs.Similar efforts are taking place at other agencies. Two political hires at the Labor Department have already secured career posts there, and one at the Department of Housing and Urban Development is trying to make the switch.Between March 1 and Nov. 3, according to the federal Office of Personnel Management, the Bush administration allowed 20 political appointees to become career civil servants. Six political appointees to the Senior Executive Service, the government's most prestigious and highly paid employees, have received approval to take career jobs at the same level. Fourteen other political, or "Schedule C," appointees have also been approved to take career jobs. One candidate was turned down by OPM and two were withdrawn by the submitting agency.The personnel moves come as Bush administration officials are scrambling to cement in place policy and regulatory initiatives that touch on issues such as federal drinking-water standards, air quality at national parks, mountaintop mining and fisheries limits.The practice of placing political appointees into permanent civil service posts before an administration ends is not new. In its last 12 months, the Clinton administration approved 47 such moves, including seven at the senior executive level. Federal employees with civil service status receive job protections that make it very difficult for managers to remove them.Most of the personnel shifts have been done on a case-by-case basis, but Interior Solicitor David L. Bernhardt moved to place six deputies in senior agency positions with one stroke, including two who have repeatedly attracted controversy. Robert D. Comer, who was Rocky Mountain regional solicitor, was named to the civil service post of associate solicitor for mineral resources. Matthew McKeown, who served as deputy associate solicitor for mineral resources, will take Comer's place in what is also a career post. Both had been converted from political appointees to civil service status.In a report dated Oct. 13, 2004, Interior's inspector general singled out Comer in criticizing a grazing agreement that the Bureau of Land Management had struck with a Wyoming rancher, saying Comer used "pressure and intimidation" to produce the settlement and pushed it through "with total disregard for the concerns raised by career field personnel." McKeown -- who as Idaho's deputy attorney general had sued to overturn a Clinton administration rule barring road-building in certain national forests -- has been criticized by environmentalists for promoting the cause of private property owners over the public interest on issues such as grazing and logging.One career Interior official, who spoke on the condition of anonymity so as not to jeopardize his position, said McKeown will "have a huge impact on a broad swath of the West" in his new position, advising the Bureau of Land Management and the Fish and Wildlife Service on "all the programs they implement." Comer, the official added, will help shape mining policy in his new assignment."It is an attempt by the outgoing administration to limit as much as possible [the incoming administration's] ability to put its policy imprint on the Department of Interior," the official said.In a Nov. 13 memo obtained by The Washington Post, Bernhardt wrote that he was reorganizing his division because the associate solicitors' original status as political appointees undermined the division's effectiveness."This has resulted in frequent turnover in those positions, often with an attendant loss in productivity and management continuity in these Divisions, despite the best efforts of the newly-appointed Associate Solicitors," he wrote.But environmental advocates, and some rank-and-file Interior officials who spoke on the condition of anonymity for fear of hurting their careers, said the reassignments represent the Bush administration's effort to leave a lasting imprint on environmental policy."What's clear is they could have done this during the eight years they were in office. Why are they doing it now?" said Robert Irvin, senior vice president for conservation programs at Defenders of Wildlife, an advocacy group. "It's pretty obvious they're trying to leave in place some of their loyal foot soldiers in their efforts to reduce environmental protection."In an interview yesterday, Bernhardt reiterated that he thinks the move is in the government's long-term interest."I believe these management decisions will strengthen the professionalism of the Office of the Solicitor and result in greater service to the Department of the Interior," he said. "However, the next solicitor and the department's management team are free to walk a different path."One senior Interior official, who spoke on the condition of anonymity to discuss personnel matters, said an incoming interior secretary or solicitor could create new political positions upon taking office and could shift Senior Executive Service officials to comparable jobs within a few months. As a general rule, career SES employees may be reassigned involuntarily within their current commuting area within 15 days, and beyond their commuting area within 60 days, but they retain their lucrative and permanent government posts. When a new agency head is appointed, he or she must wait 120 days before reassigning career SES officials.Outside groups are trying to monitor these moves but are powerless to reverse them. Alex Bastani, a representative at the Labor Department for the American Federation of Government Employees, said it took months for that agency even to acknowledge that two of its Bush appointees, Carrie Snidar and Brad Mantel, had gotten civil service posts."They're trying to burrow into these career jobs, and we're very upset," Bastani said. "Everyone should have an opportunity to apply for these positions. And certainly career people who don't have partisan bent and have 10 or 15 years in their respective fields should have a shot at these positions."Kerry Weems, acting chief of the Centers for Medicare and Medicaid Services, said he discourages political staff from moving into career slots. "It typically doesn't work out for either party," he said. Even though Weems is a career staffer, he expects to leave the administration when the Obama team takes over.Alphonso Jackson, who was HUD secretary under President Bush, warned his political appointees not to try to burrow in when the administration changed. But one of his regional directors objected to that flat-out prohibition, according to union leaders at HUD, and has told his colleagues that he has been promised first crack at a career position.New York TimesDrip Irrigation May Not Save Water, Analysis Finds...Henry Fountain http://www.nytimes.com/2008/11/18/science/18obwater.html?sq=river&st=nyt&scp=1&pagewanted=printIn an effort to make irrigation more efficient — to obtain more “crop per drop” — farmers have adopted alternatives to flooding and other conventional methods. Among these is drip irrigation, shown above, in which water flows only to the roots. Drip systems are costly, but they save much water.Or do they? A hydrologic and economic analysis of the Upper Rio Grande basin in the Southwest, published in The Proceedings of the National Academy of Sciences, suggests that subsidies and other policies that encourage conservation methods like drip irrigation can actually increase water consumption. “The take-home message is that you’d better take a pretty careful look at drip irrigation before you spend a bunch of money on subsidizing it,” said Frank A. Ward, a resource economist at New Mexico State University and author of the study with Manuel Pulido-Velázquez of the Polytechnic University of Valencia in Spain.With flood irrigation, much of the water is not used by the plants and seeps back to the source, an aquifer or a river. Drip irrigation draws less water, but almost all of it is taken up by the plants, so very little is returned. “Those aquifers are not going to get recharged,” Dr. Ward said.Drip irrigation also generally increases crop yields, which encourages farmers to expand acreage and request the right to take even more water, thus depleting even more of it. “The indirect effect is very possibly to undermine policy attempts to reduce water consumption,” Dr. Ward said.Policymakers, he added, must balance the need for more food and for farmers to make a living with water needs. “It’s fair to say that subsidies are very good for food security and very good for farmer income,” Dr. Ward said. “But they may be taking water away from other people.”CNN MoneyBuilders' confidence sinks to new lowA survey of homebuilders' assessment of the housing market shows the industry's sentiment fell in November to yet another low...David Goldmanhttp://money.cnn.com/2008/11/18/news/economy/builders_confidence/index.htm?postversion=2008111813NEW YORK (CNNMoney.com) -- Homebuilders' confidence in the housing market again plunged to a record low, dragged down by poor financial market conditions, rising unemployment and consumer anxiety, a trade group said Tuesday.The National Association of Home Builders (NAHB)/Wells Fargo housing market index for November fell to a seasonally adjusted reading of 9, the lowest recorded level since the index began in 1985. Economists surveyed by Thomson/IFR expected the index to remain at 14, the previous record low set in October.A reading below 50 indicates that builders who think home sales conditions are poor outnumber those who think the environment is positive for sales. November's reading was the sixth record low set or matched in the past seven months. "Today's report shows that we are in a crisis situation," said Sandy Dunn, NAHB chairman, in a statement. "Tremendous economic uncertainties have driven consumers from the housing market, and it's going to take some major incentives to bring them back."Builders were asked for their view of the current market, the number of buyers looking at homes and expectations for six months from now."This November data is downright atrocious," said Mike Larson, analyst at Weiss Research. "If you're looking for a glimmer of hope for the housing market, you aren't going to find it in the latest figures."Larson said builder confidence deteriorated due to the double-punch of the credit crisis and economic downturn."Ultimately, it will take lower home prices, even less building activity, and an economic recovery to lay the groundwork for a lasting market rebound," Larson said. "But that is in the future, not the present."Government intervention neededAs a result of a battered market, the Bush administration last week unveiled a new program to modify mortgages and stabilize the battered real estate market. But the plan stops short of providing direct government financial help to at-risk homeowners, something FDIC chairwoman Sheila Bair later said she supports.David Crowe, chief economist for NAHB, said he supported even more government intervention, including raising the government's $16 billion of tax credits, which were set at $7,500 per qualified buyer in July."Congress should consider significant consumer incentives such as expanding the first-time homebuyer tax credit and providing a government buydown of mortgage interest rates for home purchasers," Crowe said.Tuesday's report came a day ahead of the government's report on housing starts and building permits for October, which economists forecast will fall to a 60-year low. In September, housing starts hit a 17-year low.Shares of homebuilders were mixed Tuesday. Pulte Homes (PHM, Fortune 500) rose 3% and Lennar Corp. (LEN, Fortune 500) gained 0.2%, but Centex Corp. (CTX, Fortune 500) D.R. Horton Inc. (DHI, Fortune 500) and Hovnanian (HOV, Fortune 500) all lost more than 1%. Radian Group (RDN) traded down nearly 8%. Home prices in record 9% declineForeclosures take heavy toll on home prices but bargain hunters are re-entering worst-hit markets...Les Christiehttp://money.cnn.com/2008/11/18/real_estate/home_prices_third_quarter/index.htm?postversion=2008111813NEW YORK (CNNMoney.com) -- National home prices, driven lower by a flood of foreclosures, plummeted in the third quarter by a record 9% year-over-year, according to a report issued Tuesday.The median price of a single-family home fell in four out of five states, the National Association of Realtors reported. The national median price was $200,500, down 2.9% from the second quarter of 2008.A flood of foreclosures has driven home prices down. As many as 40% of all sales made during the three months that ended Sept. 30 were short sales pr properties repossessed by banks. These are eager sellers. The longer the banks hold the vacant homes, the more it costs them in maintenance, taxes and insurance."A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," said NAR President Charles McMillan, a Dallas real estate broker. "It's very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition."Three California markets recorded the steepest year-over-year declines in median prices: Riverside-San Bernardino, east of Los Angeles, where the median price plunged 39.4% to $227,200; Sacramento, down 36.8% to $212,000; and San Diego, down 36% to $377,300. The high volume of sales in California and other bubble-bust states may indicate a healthy trend, according to Lawrence Yun, NAR's chief economist."We have seen cases of multiple bidders on properties in California," he said. "That suggests that future price declines may be minimal."But while California saw significant declines, fully 79% of all metro areas recorded price drops for the quarter, according to Mike Larson, a real estate analyst at Weiss Research."We're clearly seeing a broadening, as well as a deepening of the declines," Larson said. "That indicates we've moved past the time when price drops were fed by bursting of real estate bubbles to one in which the broad economic downturn, marked by job losses, is taking hold."And it may get worse, according to real estate analyst Patrick Newport of Global Insight. Financial market turmoil and soaring unemployment rates worsened in October and were not captured in this report."It is too soon to tell, but we may be getting some ugly sales numbers over the next three months," he wrote in an email.A handful of metro areas showed substantial gains, led by Elmira, N.Y., where prices rose a whopping 12.5%, compared with a year ago, to $105,000. In Decatur, Ill., prices were up 8.5% to $93,400, and in Bloomington, Ill., prices rose 8.1% to $168,400.Larson said that one source of strength in these markets was commodities. Grain prices have soared, peaking at close to $8 a bushel in early summer, more than twice the average levels of the past several years. The stronger grain prices helped prop up the economies of some Midwestern cities.Prices in oil patch areas also held up better than most: Tulsa, Okla., showed a 5.1% increase to $139,800; Amarillo, Texas, recorded a 4.2% jump to $128,300; and Houston experienced a 2.8% rebound to $150,200.The lowest-priced housing market in the country was Saginaw, Mich., where the median price of a single-family home is a mere $65,800, down 22.5% year-over-year. Real estate there has been hit hard by turmoil in the automotive industry. The highest-priced market was the San Jose metro area, where the median home price was still $650,000 despite having plunged 23.5% during the past 12 monthsRegionally, single family home prices were the most stable in the South, where they fell just 3.7% to $174,200. They dropped 5.5% in the Midwest to $159,900 and 6.5% in the Northeast to $267,700. In the West, the median price fell 21.4% to $266,300.Condo markets sank nationally, down 7.1% to $210,800 for the 57 metro area markets NAR surveyed. Dallas recorded the highest gain from a year earlier, at 11.1% to $149,900. The biggest loser was San Diego, where condo prices cratered 46% to $189,900.Regionally, condo prices were unchanged the Northeast at a median of $259,000. They decline 4.8% in the Midwest to $189,400, 9.7% in the South to $165,200 and 17.8% in the West to $216,100.