Merced Sun-Star
December sets new record for lost homes in Merced County
About 700 houses went into foreclosure...SCOTT JASON
Merced County foreclosures skyrocketed last month, hitting a record high since they became a rampant problem both locally and across the nation.
Seven hundred homes went back to the bank in December, according to figures compiled by real estate agent Andy Krotik. The month before, 470 went into foreclosure. In 2007, 218 homes were lost in December.
The recent data suggest that the foreclosure crisis is worsening locally with no immediate end on the horizon. However, first-time home buyers and even investors have been nabbing well-priced homes.
"The first-time home buyer is the one bailing out the country," Krotik said. "If they weren't around, we'd be in deep trouble."
The surge, Krotik explained, can be attributed to the foreclosure reform law the state passed during the summer. It requires more contact between homeowners and lenders to see if they can keep the home out of foreclosure.
The legislation, to a large extent, just delayed the inevitable.
"What a failure," Krotik lamented. "They didn't account for people not wanting (mortgage) workouts."
For many people, it's strictly a business decision. They don't want to have to pay off a $400,000 home that's lost half its value, Krotik said.
Stunning as the foreclosure figures may be, he said far worse numbers are probably on the way. January, February and March will each see close to 1,000, he predicted.
Demand for homes, however, mirrors the market's peak just a few years ago, he said. Between 400 and 500 homes were sold in December, which is typically one of the weakest months in real estate.
The firm where Krotik works sold about 100 homes in the month, the year's best. Well-priced homes in good neighborhoods are selling above the asking price, he said.
While Rep. Dennis Cardoza, D-Merced, has proposed a law to help homeowners refinance at a lower, fixed-interest rate, Krotik believes the market should correct itself.
"As long as (buyers) have access to good, fixed loans, I don't think they (the government) need to do anything," he said.
About 90 percent of the home sales that go through Residential Pacific Mortgage are bank-owned, branch manager Bob Nutcher said. About a quarter of those loans are Federal Housing Administration loans.
Even after foreclosures taper, they'll continue to happen as people lose their jobs, he said. Prices may be near the bottom, but he wouldn't venture a guess.
"In my opinion, real estate will never be this cheap," he said. "It's great to see the young couples that are able to buy a home."
Kelsey takes reins as chairwoman of Merced County Board of Supervisors
She wants to set 'practical' goals for supervisors in '09...CORINNE REILLY
A new county vagrancy ordinance. More thoughtful decision making. Prudent, practical spending. Better protections for taxpayers.
Those are some of the goals Merced County Supervisor Deidre Kelsey hopes the Board of Supervisors will realize in 2009. Kelsey, who has sat 13 years on the board, will serve as its chairwoman for the next 12 months.
The five-member board selected her for the largely ceremonial post last week. Immediately after her appointment, Kelsey gave a short speech outlining challenges the county will face in 2009 and her aspirations this year for the board.
"The thing I really want to be cognizant of this year is that we really need to be practical," she said. "There are an awful lot of financial challenges out there."
Kelsey said a top priority should be the creation of jobs to bring down the county's high unemployment rate, which stood at 13.3 percent in November.
"The Valley's economy has really suffered because we've relied so much on the building booms we've had over the past few years, and that's not going to be happening now," Kelsey said. "Agriculture has been our base, and it should remain our base."
She said the county will probably have to place most capital projects on hold because of the economic downturn, including the construction of a new downtown county government center and a new building to house the District Attorney's Office.
Kelsey called for several specific undertakings by the Board of Supervisors in 2009:
The board should commission a study to examine the county's housing inventory and how the recent building boom has affected the values of existing homes. Kelsey said she believes overbuilding has depressed existing home prices considerably. "We need to understand that relationship," she said.
The board should create a county vagrancy ordinance to address homelessness. "We need to put together something that works for the county and (its six) cities," she said.
The county should alter the process by which it makes large land-use and policy decisions to include more public discussion and more time for board members to reflect on those discussions. For instance, Kelsey said, anytime the board must vote on whether to approve a large development, it should discuss the project and then wait a week before voting, instead of voting the same day.
The board should revamp its bonding policy for new development applications to ensure that county taxpayers aren't left to pay developers' debts when their projects don't come to fruition.
"There have been a number of situations lately, specifically with (the Riverside Motorsports Park), where the county has been left holding the financial bag for projects that don't make it through the process," Kelsey said. "I don't think the public is obligated to pay for those kinds of things."
As the board's chairwoman, Kelsey will preside over all supervisor meetings this year. Supervisor Jerry O'Banion was selected to serve as vice chairman.
Public Notice
NOTICE OF PUBLIC HEARING to consider adoption of environmental findings and determinations in conformation with the California Environmental Quality Act and confirm the approval of the re-establishment of the Enterprise Zone in Merced County
NOTICE OF PUBLIC HEARING A Public Hearing will be held by the Board of Supervisors of the County of Merced, State of California, on Tuesday, January 27, 2009, at 10:00 a.m. in the Board Room, Third Floor, County Administration Building, 2222 M Street, Merced, California to consider adoption of environmental findings and determinations in conformation with the California Environmental Quality Act and confirm the approval of the re-establishment of the Enterprise Zone in Merced County, and to solicit citizen input. PUBLIC HEARING DATE: January 27, 2009 TIME: 10:00 a.m. PLACE: Board of Supervisors of the County of Merced Third Floor, County Administration Building, 2222 M Street Merced, CA The County of Merced is the lead agency for the re-establishment of the Enterprise Zone within certain unincorporated portions of Merced County, and within the Cities of Atwater, Dos Palos, Gustine, Livingston, Los Banos and Merced. The re-establishment of the Enterprise Zone includes 42,730 acres of land within both incorporated and unincorporated portions of Merced County which are considered to be disadvantaged economic areas. The project objective is to generate new private sector economic growth in disadvantaged areas of Merced County and the six cities (Atwater, Dos Palos, Gustine, Livingston, Los Banos, and Merced) within Merced County by providing access to a variety of incentives for increased employment and business investment within those areas. The achievement of project objectives will permit Merced County and its six cities to continue to compete effectively with nearby counties which have adopted Enterprise Zones and to sustain or accelerate existing commercial and industrial development opportunities. The County has previously circulated a Draft and a Final Environmental Impact Report (EIR) on the proposed project for agency and public review in compliance with the California Environmental Quality Act (CEQA), and the EIR was certified by the Board of Supervisors on September 2, 2008. The Enterprise Zone is generally located in the following areas: lands designated by the General Plan and zoned industrial and commercial within the corporate boundaries and spheres of influence of the six cities, and within unincorporated Merced County; lands designated by the County General Plan and zoned agricultural which have special conditional use permit approval, generally for agricultural-industrial use; County General Plan designated commercial development areas around interchanges on Interstate 5; and other parcels, connecting roads and highways, essential to maintain contiguity of all the industrial and commercial areas and parcels in the proposed Enterprise Zone. The Board will be considering adopting the environmental findings of fact and a statement of overriding considerations in compliance with CEQA and make final confirmation of the approval of the re-establishment of the Enterprise Zone within Merced County. If you plan on attending the public hearing and need a special accommodation because of a sensory or mobility impairment/disability, please contact the Board of Supervisors office at (209) 385-7366 or TTY 1-800-651-5111 to arrange for those accommodations to be made. Legal January 13, 2009
Modesto Bee
Calif. probes threats against animal researchers...last updated: January 12, 2009 11:55:18 AM
DAVIS, Calif. -- University of California, Davis, officials are on alert after an animal rights group says it sent letter bombs to two researchers.
The scientists work in the university's Primate Research Center. A group calling itself Revolutionary Cells - the Animal Liberation Brigade posted the bomb warnings on the Internet on Saturday.
Authorities say the group used pipe bombs in 2003 against an Emeryville business that was doing work for an animal testing company. The bombs did minor damage and no one was injured. The group also was blamed for an unsuccessful attempt in 2007 to blow up a UCLA researcher's van. The FBI considers it a terrorist organization.
University spokesman Andy Fell says no suspicious packages had been found as of Monday.
California education not what it used to be…PIA LOPEZ , THE SACRAMENTO BEE
California still is among the richest and most highly educated states. Whee. Hurrah. Drinks all around. Let's pat ourselves on the back.
Good news in these bleak budget times, eh?
Not so fast.
Tom Mortenson, senior scholar at the Pell Institute for the Study of Opportunity in Higher Education and publisher of the Postsecondary Education Opportunity newsletter, believes California is arrogantly riding on its past.
He has just released a report on higher education, prepared for the California Faculty Association (see www.calfac.org/calattheedge.html). He told me Thursday he was "stunned to see how far and how fast California has fallen." In the share of adults with a bachelor's degree, California was No. 1 or No. 2 from 1977 to 1987. Today the state is No. 13. Not too shabby, but clearly we're slipping.
The really bad news, however, is in the share of adults who are high school graduates. In one generation, California has dropped from the top to the bottom. The state was No. 1 or No. 2 from 1977 to 1987; today we're at No. 49. Ouch.
Part of the shift is a change in population. Today we have more children coming from a lower- income background than in the past.
Twenty years ago, one-third of kids in our public schools were lower-income; today it's more than half. But, as Mortenson's data shows, our changing population isn't the only issue.
Even a decade ago, we did better preparing lower-income kids than we do today. For example, in 1996-97, 30 percent of lower-income 18- to 24-year-olds were in college. Today, only 10 years later, that has dropped to 21 percent. We're in the bottom half of states on this.
Overall, our willingness to spend money on higher education has been declining.
In 1980, California spent $12.86 for every $1,000 of state personal income on higher education -- ranking 11th in the nation.
Today, a generation later, that has dropped to $7.71 per $1,000 of personal income -- ranking 21st in the nation. California remains above average, but that's hardly a consolation; the state is on a downward slide.
How did we get here?
Lillian Taiz, president of the CFA and a history teacher, believes this decline didn't just come out of nowhere. There have been a number of tipping points, but term limits for legislators, she believes, has led particularly to "the worst of short-term thinking in a world that demands long-term vision." The result is that we've seen a slow erosion of education as the engine of progress and opportunity in California.
The idea of upward mobility, however, is deeply rooted in American thought and practice. Thomas Jefferson, in launching the University of Virginia, sought to nurture the talents of all classes: "We hope to avail the State of those talents which nature has sown as liberally among the poor as the rich, but which perish without use, if not sought for and cultivated."
Californians ought to reclaim that tradition -- even in these difficult economic times. As Taiz says, "As a historian, I'm an optimist. The only option is to do things differently. We're all in this together and we need to change the things that got us here."
Past economic crises have brought out the can-do spirit admired in Americans the world over. So let's get to it. Let's set goals for college participation and figure out how to reach them even in tough budget times.
Fresno Bee
EPA's Voluntary Reporting Program Fails to Deliver Data Needed to Determine Safety of Nanomaterials, Report Shows...Environmental Defense Fund...Press Release
Voluntary Approach Captures Only a Thin Slice of Nanomaterials in Use or Development in the U.S. WASHINGTON, Jan. 13 /PRNewswire-USNewswire/ The U.S. Environmental Protection Agency (EPA) has acknowledged that its voluntary approach to reporting has yielded only limited information on a small fraction of the hundreds of potentially toxic nanomaterials already in commercial use or in development in the United States, according to Environmental Defense Fund (EDF).
In an "interim report" (http://www.epa.gov/oppt/nano/nmsp-interim-report-final.pdf) issued nearly a year after launch of its Nanoscale Materials Stewardship Program, EPA disclosed that it has received submissions addressing less than 10 percent of the more than 1,000 nanomaterials EPA identified as likely to be in commercial production. Moreover, the voluntary submissions contain scant environmental health and safety data, and much of the information they do contain is kept secret from the public because the companies submitting the data claim it is confidential business information (CBI).
"EPA's voluntary approach has failed to provide both EPA and the public with critical data on the full range of nanomaterials in production and use in the United States," said Dr. Richard A. Denison, a senior scientist at EDF, who advised EPA on its approach to nanomaterials as a member of the National Pollution Prevention and Toxics Advisory Committee (NPPTAC) (http://www.edf.org/page.cfm?tagID=908). "With hundreds of nano products already on the shelves, EPA has squandered precious time while it slowly developed and pursued a program that informed stakeholders cautioned would not yield what was needed."
While still claiming the Nanoscale Materials Stewardship Program to be "successful," EPA's report concedes that the program has come nowhere close to assembling a full picture of research and commercial activity involving nanomaterials. The report's other findings include:
--  The submissions encompassed only 1/7 of the unique 
     chemical structures on which nanomaterials in use or
     development are based.
--  Toxicity and environmental fate data were provided for at   
     most a few percent of these nanomaterials, confirming that
     only a small fraction of all nanomaterials have been        
     sufficiently studied despite their rapid commercialization.
--  EPA acknowledged it cannot determine whether participants
     submitted information on all or only a subset of              
     nanomaterials they produce, and whether information  
     submitted for a given nanomaterial was complete or
     selective.  EDF had predicted precisely this problem because
     of EPA's failure to include these metrics in the design of the
     Nanoscale Materials Stewardship Program
--  Only four companies have agreed to consider conducting 
     any testing, leading EPA to conclude that "most companies 
     are not inclined to voluntarily test their nanoscale
"We welcome EPA's statement that it is finally 'considering how to best use testing and information gathering authorities under the Toxic Substances Control Act' to address the remaining gaps in information," Denison concluded. "More than three years ago, the National Pollution Prevention and Toxics Advisory Toxics Advisory Committee advised EPA (http://www.epa.gov/oppt/npptac/pubs/nanowgoverviewdocument20051125.pdf) immediately to begin developing such mandatory measures as a supplement to the voluntary program, recognizing it would not be sufficient. EPA now needs to refocus its energies on these critical tasks.
A list of companies participating in the Program is below.
Environmental Defense Fund, a leading national nonprofit organization, represents more than 500,000 members. Since 1967, Environmental Defense Fund has linked science, economics, law and innovative private-sector partnerships to create breakthrough solutions to the most serious environmental problems. For more information, visit www.edf.org.
Companies and associations participating in EPA's Nanoscale Materials Stewardship Program (as of December 8, 2008; see www.epa.gov/oppt/nano/stewardship.htm#participants)
Submissions under the Basic Program
BASF Corporation
Bayer Material Science
Dow Chemical
General Electric
International Carbon Black Association
Nanophase Technologies Corporation
Office ZPI
PPG Industries
Pressure Chemical
Quantum Sphere
Sabic Plastic Innovations
Sasol North America
Selah Technologies, Inc.
Showa Denk KK
SouthWest NanoTechnologies, Inc.
Showa Denko KK
SouthWest Nano Technologies, Inc.
Strem Chemicals
Swan Chemicals Inc.
Synthetic Amorphous Silica and Silicate Industry Association
Two companies with identities claimed as Confidential Business Information
Additional Commitments to Submit Information under the Basic Program
Angstron Materials
eSpin Technologies
Evident Technologies
Luna Nanoworks
Nanocyl North America
One company with identity claimed as Confidential Business Information
Commitments to Participate in the In-depth Program
Selah Technologies, Inc.
SouthWest NanoTechnologies, Inc.
Swan Chemicals Inc.
   Contact:Jennifer Andreassen,
Removing cats to protect birds backfires on island...MICHAEL CASEY, AP Environmental Writer
BANGKOK, Thailand It seemed like a good idea at the time: Remove all the feral cats from a famous Australian island to save the native seabirds.
But the decision to eradicate the felines from Macquarie island allowed the rabbit population to explode and, in turn, destroy much of its fragile vegetation that birds depend on for cover, researchers said Tuesday.
Removing the cats from Macquarie "caused environmental devastation" that will cost authorities 24 million Australian dollars ($16.2 million) to remedy, Dana Bergstrom of the Australian Antarctic Division and her colleagues wrote in the British Ecological Society's Journal of Applied Ecology.
"Our study shows that between 2000 and 2007, there has been widespread ecosystem devastation and decades of conservation effort compromised," Bergstrom said in a statement.
The unintended consequences of the cat-removal project show the dangers of meddling with an ecosystem - even with the best of intentions, the study said.
"The lessons for conservation agencies globally is that interventions should be comprehensive, and include risk assessments to explicitly consider and plan for indirect effects, or face substantial subsequent costs," Bergstrom said.
Located about halfway between Australia and Antarctica, Macquarie was designated a World Heritage site in 1997 as the world's only island composed entirely of oceanic crust. It is known for its wind-swept landscape, and about 3.5 million seabirds and 80,000 elephant seals migrate there each year to breed.
Authorities have struggled for decades to remove the cats, rabbits, rats and mice that are all nonnative species to Macquarie, likely introduced in the past 100 years by passing ships.
The invader predators menaced the native seabirds, some of them threatened species. So in 1995, the Parks and Wildlife Service of Tasmania that manages Macquarie tried to undo the damage by removing most of the cats.
Several conservation groups, including the International Union for Conservation of Nature and Birds Australia, said the eradication effort did not go far enough and that the project should have taken aim at all the invasive mammals on the island at once.
"It would have been ideal if the cats and rabbits were eradicated at the same time, or the rabbits first and the cats subsequently," said University of Auckland Prof. Mick Clout, who also is a member of the Union's invasive species specialist group.
Clout and others said the Macquarie case illustrates the struggle that Australia and New Zealand have had trying to remove invasive species from their islands, mostly in a bid to protect seabird populations. They have targeted dozens of islands over the past few decades with mixed success.
Cats were removed from Little Barrier island off New Zealand, but it took a second campaign against a growing rat population. On the remote Campbell island off New Zealand, authorities successfully removed sheep, cattle, cats and rats in one of the biggest eradication projects to date.
"The whole ecosystem is recovering superbly," Clout said of Campbell island.
Liz Wren, a spokeswoman for the Parks and Wildlife Service of Tasmania, said authorities were aware from the beginning that removing the feral cats would increase the rabbit population. But at the time, researchers argued it was worth the risk considering the damage the cats were doing to the seabird populations.
"The alternative was to accept the known and extensive impacts of cats and not do anything for fear of other unknown impacts," Wren said.
The parks service now has a new plan to use technology and poisons that were not available a decade ago to eradicate rabbits, rats and mice from the island.
The project to be launched in 2010 will use helicopters with global positioning systems to drop poisonous bait that targets all three pests. Later, teams will shoot, fumigate and trap the remaining rabbits, Wren said.
Some of the earlier critics are now behind this latest eradication effort to remove the island's last remaining invasive species.
"Without this action, there will be serious long-term consequences for the majestic seabirds...and for the health of the island ecosystem as a whole," said Dean Ingwersen, Bird Australia's threatened bird network coordinator.
Sacramento Bee
Will Kempton: 10 highway projects deserve a fast track...Will Kempton is the director of the California Department of Transportation.
California's economy is in the tank, the victim of a worldwide recession. While economic woes have affected many state and local governments, the Golden State has been hit particularly hard. This paper reported a loss of 2.6 million jobs nationally in 2008. The numbers for California are just as bad, if not worse, and forecasts show that unemployment in the Sacramento region will reach 10 percent this year.
This is why Gov. Arnold Schwarzenegger has made economic stimulus a key feature of his 2009-10 budget plan, and why job creation is at the heart of his proposal to relax environmental and permitting requirements for a small number of highway projects that can be moved forward this year.
These 10 projects will pump $1.2 billion into the economy and will create nearly 22,000 jobs. This is a conservative number based on projections provided by the California Business Roundtable, but regardless of the actual figure, these projects will produce jobs now, and that is what the state's economy needs.
In a column published in The Bee Jan. 8, Richard Seyman of the Environmental Council of Sacramento implies that the governor wants to "eliminate" environmental protections in the process of delivering the 10 projects in question. What the governor originally proposed was an exemption from the California Environmental Quality Act and a permit streamlining process to accelerate the delivery of this targeted work in a way that would still protect the environment.
The proposal is very similar to exemptions from CEQA that have been granted by the Legislature in the past, and would require Caltrans to consider and mitigate identified impacts for the projects. All 10 of the projects have already completed environmental reviews or are well along in the process. Four of the projects are within the existing state right of way, and only six require an accelerated permitting process.
To make his case, Seyman focuses on the proposed Highway 50 High Occupancy Vehicle lane project included in the list of projects that the governor is seeking to advance. This project is part of the 20-year Regional Transportation Plan, meaning it has been approved by the Sacramento Area Council of Governments and has met air quality conformity requirements for the region. In addition, the HOV lanes are a part of Measure A, a sales tax-funded program that garnered the support of 75 percent of area voters in November 2004.
With respect to consideration of a transit alternative in this corridor, there is already a light-rail line running parallel to Highway 50.
Moreover, the HOV lanes proposed as part of the project will also be used by buses, and these lanes will serve as fixed guideways for rubber-tired transit. In terms of impacts from greenhouse gas emissions, the Legislature previously exempted projects funded with voter-approved bond dollars from any analysis.
This exemption was put in place through 2011 to allow those bond-funded projects to move forward without this analysis because it is widely recognized that an appropriate methodology has not been developed, and it will take some time for an acceptable process to be in place. For some reason, the Highway 50 project was excluded from that exemption, but it is reasonable to assume that this project should also have been exempted.
As Seyman points out, the Highway 50 project is under a court order to redo the environmental document, a process that would normally take another 18 months. Caltrans intends to comply with the court order, but as part of the CEQA relief the governor has requested, we hope that the delays brought about by the litigation can be avoided and that unreasonable requirements can be modified. Seyman also suggests that the CEQA process is intended "to ensure that a sound, science-based analysis is available so decision makers and the public can make the best choices." I agree. It is unfortunate, however, that the CEQA process is frequently misused to stop or delay projects because litigants just don't want to see the improvements built.
We are facing an economic and budget crisis of monumental proportions. We need to balance consideration for the environment with the need to create jobs.
Ten projects. $1.2 billion of additional work in 2009. A streamlined permit process during an economic emergency.
Mitigation for identified environmental impacts. Nearly 22,000 jobs for Californians sorely in need of work. A shot in the arm for the worst economy we've faced in decades.
A reasonable approach? You be the judge.
Stockton Record
Wal-Mart opponents cry foul over meeting
City Council left people out in cold, foes say...Daniel Thigpen
LODI - Opponents of a proposed Wal-Mart Supercenter in Lodi want the city to reverse a key decision last month that kept the project alive because, they allege, the city suppressed City Council meeting attendance and broke state open meetings laws.
The opponents are threatening to sue if the city does nothing, possibly entangling the divisive retail project, which has been delayed by legal challenges for years, in yet another protracted court battle.
During a December meeting that attracted more people than could fit inside the Carnegie Forum, the Pine Street facility where council meetings are held, dozens of people were forced to stand outside for hours and listen to the proceedings over loudspeakers.
That, an attorney for Wal-Mart opponents contends, violated the Ralph M. Brown Act, which governs meetings of public bodies.
"An open meeting is not one where the only choice to attend is to sit in near freezing temperatures ... particularly when the city could have easily postponed the meeting in order to meet in a facility capable of providing seating for all concerned," wrote Davis' attorney, Donald Mooney, in a Jan. 6 letter to Lodi officials. Mooney represents Citizens for Open Government, one of two groups against the Wal-Mart project.
City leaders Monday defended their actions. The City Council will meet behind closed doors this morning to decide how to respond.
One option may be to re-do the City Council meeting in a bigger gathering place. While Lodi's elected leaders weren't willing to endorse an alternative before meeting with the city attorney today, most agreed they wanted to avoid another lawsuit.
"Always, when it doesn't go your way, you try to find a way to have some sort of litigation," Mayor Larry Hansen said. "I just feel like we did everything we could to accommodate people."
More than 200 people crowded the Carnegie Forum on Dec. 10 to speak out on the proposed 216,710-square-foot Supercenter. The store would anchor a 40-acre shopping center at the southwest intersection of Lower Sacramento Road and Kettleman Lane.
After a more than six-hour meeting in which dozens of supporters and foes addressed city leaders, a split City Council that night overturned a previous Planning Commission denial of the project's environmental impact study.
It was a key vote but not the final say.
Anticipating more people to show up than the roughly 150 seats, including overflow, available inside, city staff handed out numbers two and a half hours before the start of the meeting to divvy up seats on a first-come, first-serve basis.
Mooney, who did not return a call for comment Monday, and other opponents said that action allowed Wal-Mart advocates who showed up early to pack the house.
When opponents asked the council to postpone the meeting and hold it elsewhere, a divided council rejected their request. City staff scrambled outside to take names of people wishing to speak on the project.
Dozens of people, inside and outside the building, left before public comment began more than two hours after the start of the meeting.
Attorneys for Wal-Mart wrote the city Monday urging officials to move their project forward without any more delays.
Another Planning Commission meeting on the Supercenter proposal, this time to consider the project's use permit and other elements, is tentatively scheduled for Wednesday at Hutchins Street Square, a larger venue than the previous meeting.
Median S.J. home price hits $165,000...Bruce Spence
Sales of existing homes in San Joaquin County jumped in December - typically a slow month - after a November slowdown as the prices of homes in foreclosure continued to slide. The median sales price fell to $133,000 in Stockton and $165,000 countywide.
"I'm telling the guys at work it's time to buy," said Tom Poust, a Stockton trucker who bought a foreclosure house at auction last year and will soon start looking for another to buy. "It's cheaper to buy than to rent. It's a terrific time to buy, and it keeps getting better and better."
Foreclosures continue to dominate the existing home market, accounting for 84 percent of all December sales. That has meant steady declines in median sales prices as foreclosure asset managers continue to cut prices to try to get properties off their books.
In Stockton, that has meant a 47 percent drop in prices in 12 months alone, from $250,000 in December 2007 to $133,000 last month, according to figures from the Grupe Real Estate-TrendGraphix monthly sales report, based on Multiple Listing Service data.
TrendGraphix figures date from January 2002, at the start of the last housing boom. The median sales price for Stockton that month stood at $155,000.
Stockton-area real estate brokers report that 2008 turned out to be their best sales year ever.
Ben Balsbaugh, residential sales manager for PMZ Real Estate in Stockton, said 2008 sales totaled 7,500 homes, a fivefold increase from 1,500 in 2007.
Mike Collins of Collins Realty in Stockton said that because the San Joaquin County real estate scene has been the center of foreclosure woes, the area actually found itself in a different position last year.
"All the bad foreclosure press created a lot of good deals for buyers and a good buyer's market," he said. "So that was the good news that came out of the bad news."
He predicted that because of lower prices and low interest rates, this year's market will very much resemble that of 2008.
"Median sales prices may go lower, but they can't go much lower," he said. "Some people pay that much for a high-end luxury car."
Interest rates have been dropping, reaching a national average of about 5 percent, according to last week's weekly survey by federal mortgage giant Freddie Mac.
Although that may pull some people toward buying a house, Collins said, concerns about the slow economy and job security may make others hesitate about buying.
November trade deficit drops to lowest level since ’03 (6:19 a.m.)
WASHINGTON (AP) — The trade deficit plunged to the lowest level in five years in November as a deepening recession slashed demand for oil by a record amount. Imports from China also fell by the largest amount on record.
The Commerce Department reported today that the trade deficit narrowed to $40.4 billion in November, a 28.7 percent decline from October’s deficit of $56.7 billion. The bigger-than-expected decrease left the deficit at its lowest level since November 2003.
The trade deficit through November is running at an annual rate of $688.2 billion, down from the 2007 imbalance of $700.3 billion. The 2007 deficit had represented the first decline after five years of record highs.
Economists expect the trade deficit will fall even more sharply this year as the recession further cuts demand for imported products.
For November, exports of goods and services dropped by 5.9 percent to $142.8 billion, the smallest level in 14 months. This reflected big declines in sales of American farm products, autos and heavy machinery.
Imports fell by an even larger 12 percent to $183.2 billion, the lowest level in 2½ years. The huge decline was led by the largest-ever drop in crude oil, reflecting a record fall in the average price of a barrel of crude. Total petroleum imports were down 36.5 percent to $23.6 billion. Analysts predicted further declines in the months ahead, since oil is now trading more than $100 below its all-time high of $147 per barrel set in July.
The politically sensitive deficit with China shrank by 17.5 percent to $23.1 billion in November, the smallest imbalance since June. The big drop reflected a record decline in imports from China as shipments of consumers goods, from cell phones to toys and clothing, all fell. U.S. exports to China also were down sharply, reflecting smaller shipments of metals, computers and aircraft.
American manufacturers are finding themselves battered by a recession that has cut into demand at home and in their biggest export markets in Europe and Asia.
Alcoa Inc., the world’s third largest aluminum company, reported late Monday that it lost $1.19 billion during the fourth quarter of last year as demand for aluminum plunged. Pittsburgh-based Alcoa last week announced plans to lay off about 13 percent of its global work force by the end of this year.
Other big exporters also have been hurt. Aircraft manufacturer Boeing Co. announced last week that it planned to cut about 3 percent of its work force as the weakening global economy has cut into demand for new orders for jetliners, and Caterpillar Inc. said last month that it planned to cut executive pay by up to 50 percent in 2009 because of weakening global demand.
Economists are concerned that the global downturn could worsen protectionist pressures as politicians respond to demands to shelter their domestic manufacturers by raising trade barriers to foreign goods.
Attention is focused especially on the U.S. given that President-elect Barack Obama won the election with strong support from labor unions, who argued for years that the Bush administration was failing to do enough to protect American workers from unfair foreign trade practices.
Obama has pledged to push through Congress a second stimulus package approaching $800 billion over two years in an effort to keep the recession from deepening further. Economists believe that even with the stimulus boost, the current downturn will not end until the second half of this year.
For November, the deficit with Canada, America’s biggest trading partner, shrank to $3.3 billion, a drop of 43 percent and the smallest imbalance in six years.
The deficit with the European Union fell by 41.7 percent to $5.6 billion, while the imbalance with Mexico dropped by 26.8 percent to $3.5 billion. Because of the fall in oil prices, the deficit with the Organization of Petroleum Exporting Countries dropped to $5.6 billion, the lowest level since April 2004. The U.S. recorded a small surplus of $800 million with the countries of South and Central America, the first surplus with this region since April 1999.
New Scientist
Top 11 compounds in US drinking water...Rowan Hooper 
A comprehensive survey of the drinking water for more than 28 million Americans has detected the widespread but low-level presence of pharmaceuticals and hormonally active chemicals.
Little was known about people's exposure to such compounds from drinking water, so Shane Snyder and colleagues at the Southern Nevada Water Authority in Las Vegas screened tap water from 19 US water utilities for 51 different compounds. The surveys were carried out between 2006 and 2007.
The 11 most frequently detected compounds - all found at extremely low concentrations - were:
• Atenolol, a beta-blocker used to treat cardiovascular disease
• Atrazine, an organic herbicide banned in the European Union, but still used in the US, which has been implicated in the decline of fish stocks and in changes in animal behaviour
• Carbamazepine, a mood-stabilising drug used to treat bipolar disorder, amongst other things
• Estrone, an oestrogen hormone secreted by the ovaries and blamed for causing gender-bending changes in fish
• Gemfibrozil, an anti-cholesterol drug
• Meprobamate, a tranquiliser widely used in psychiatric treatment
• Naproxen, a painkiller and anti-inflammatory linked to increases in asthma incidence
• Phenytoin, an anticonvulsant that has been used to treat epilepsy
• Sulfamethoxazole, an antibiotic used against the Streptococcus bacteria, which is responsible for tonsillitis and other diseases
• TCEP, a reducing agent used in molecular biology
• Trimethoprim, another antibiotic
The concentrations of pharmaceuticals in drinking water were millions of times lower than in a medical dose, and Snyder emphasises that they pose no public health threat. He cautions, though, that "if a person has a unique health condition, or is concerned about particular contaminants in public water systems, I strongly recommend they consult their physician".
Christian Daughton of the EPA's National Exposure Research Laboratory says that neither this nor other recent water assessments give cause for health concern. "But several point to the potential for risk - especially for the fetus and those with severely compromised health."
Daughton says the contamination surveys help people realise how they are intimately and inseparably connected with their environment. "The occurrence of pharmaceuticals in the environment also serves to make us acutely aware of the chemical sea that surrounds us," he says.
Modern life
While the US government regulates the levels of pathogens in US drinking water, there are no rules for pharmaceuticals and other compounds, apart from one: the herbicide atrazine. The atrazine levels measured by Snyder and colleagues were well within federal limits.
Snyder says water utilities could make drinking water purer. But the costs of "extreme purification" - far beyond what is needed for safety alone - are huge in terms of increased energy usage and carbon footprint. Ultra-pure water might not even be safe, adds Snyder.
The widespread occurrence of pharmaceuticals and endocrine disruptors reflects improved detection techniques, rather than greater pollution, says Snyder. Contamination is a fact of modern life, he adds.
"As we continue to populate and aggregate, our wastes will certainly accumulate where we live," he says. "We as a species have decided to live a modern life, with pharmaceuticals, plastics, transportation - therefore we must accept that there will be a certain degree of contamination."
Santa Cruz Sentinel
Concrete demand down across the board by county contractors...SHANNA MCCORD
SANTA CRUZ -- The jobs that call for concrete -- from new bridges and sidewalks to pool decks and outdoor pizza ovens -- have taken a nose dive in the past year, forcing Santa Cruz County contractors like Tom Ralston to drastically cut prices to stay alive during a lackluster economy.
Ralston, whose grandfather started Tom Ralston Concrete in 1928, says the waning number of projects has driven him to roll back customer prices to the level the company charged in the 1980s.
"I've reduced my profit margin to 1 percent. If I can make a 1 percent margin right now, I'm lucky," Ralston said. "There's less work out there and more competition for whatever work is available."
Last week's news of Cemex shuttering the Davenport cement plant for at least six months beginning March 9, and laying off about 125 workers, didn't surprise Ralston and other local concrete contractors, who have watched demand for their work shrivel amid the flagging economy.
Cemex, a worldwide company whose Davenport factory mostly serves customers in the San Francisco Bay Area and the Central Valley, cited California's moribund housing market as the primary reason for the temporary closure. Company officials say they plan to rehire the local work force when the economy snaps back and cement demand picks up.
Cement, the main ingredient in concrete, was scooped up at incredible levels nationwide during the past five years as the new housing market boomed, homeowners spent large chunks on elaborate upgrades and local governments poured money into new roads, bridges and highways.
The heavy demand for cement in recent years even had some cement manufacturers relying on imports to keep pace.
However, cement demand nationwide fell nearly 13 percent in 2008, and is expected to drop further this year, by as much as 12 percent, according to the Portland Cement Association, an organization based in Illinois that conducts research and market development for the cement industry.
The association expects to see a rebound in cement demand in the second half of 2010.
Ralston, who buys the bulk of his concrete from Granite Rock Inc. in Watsonville or Las Animas in Santa Cruz, says he's decreased his concrete purchases 40 percent in the past year to keep the company's overhead low due to fewer projects on the books.
Graniterock Chief Executive Officer Bruce Woolpert said his company, which buys cement from a plant in Cupertino, has suffered some of the same business constraints as Cemex, though not to the point of calling for a suspension of operations or mass layoffs.
Woolpert said half of all concrete sold in California is used for residential construction, which has been a segment of the economy hardest hit because of sub-prime mortgages and the fallout from a record number of foreclosures.
Woolpert believes the lower demand for Graniterock's concrete has leveled off, though he doesn't expect to see an increase soon.
"The Salinas housing market is still quite a difficult market for us," Woolpert said. "I don't think we've seen the bottom there yet. Santa Cruz is kind of OK, not wonderful."
The California Building Industry Association said 2008 saw the lowest level of new home building in the state since 1954.
Fewer than 64,000 new homes, condominiums and apartments were built in 2008, which was down 43 percent from 2007 when permits were issued for more than 105,000 housing units, the building association said.
Projections for this year point to an even lower level of new home construction at an estimated 62,000 units.
"California's economy can't afford another year of depression in the housing sector," the building association's President Robert Rivinius said. "Studies show that the state economy benefits greatly when housing production is operating at healthy levels."
Woolpert praised Cemex as a vital business and employer in Santa Cruz County.
"I hope the plant reopens," he said. "It's an important source of cement."
Monterey Herald
Chevron pledges $2.5 million to university...The Associated Press
DAVIS, Calif.—The University of California, Davis is getting a $2.5 million endowment from oil giant Chevron Corp. for a chair to head energy efficiency research.
The new Energy Efficiency Center director will oversee research on energy efficiency technologies in buildings, agriculture and transportation. Creation of the position was announced Tuesday.
University chancellor Larry Vanderhoef says the new director will be tasked with bridging academic research with real-world applications.
The Chevron endowment is the latest gift by an oil company to a California university to study energy issues. The University of California, Berkeley in 2007 received a $500 million grant from another major oil company, BP PLC. That sparked a debate on campus about the role of corporations in academic research.
Los Angeles Times
Schwarzenegger proposes major Cal Grant cuts
California's main financial aid program for college students may stop covering rises in tuition. Meanwhile, UC and Cal State officials are gearing up for 10% fee increases...Gale Holland
Gov. Arnold Schwarzenegger is proposing major cuts in Cal Grants, the state's main financial aid programfor college students. The most significant change would involve abandoning the state's commitment to cover any rise in tuition for grant recipients, and it comes as officials at both the University of California and California State University are gearing up for 10% fee increases in response to the yawning state budget gap.
The Legislature in 2000 guaranteed middle- and low-income students who meet certain financial and academic benchmarks nearly full offsets of their fees, which have escalated sharply in recent years.
Judy Heiman, an analyst with the state legislative analyst's of
ice, said "decoupling" the fees and the grant funding might not cut too deeply the first year, but could quickly add up if fees continue to jump as they have in the last decade. "It will be 4-5% this year, then maybe 10% or even 20-30%," she said. "It could get to the point even students with full grants can't afford to pay fees."
The governor's $87.5 million in proposed reductions -- about 10% of the total $880-million Cal Grant budget -- also would eliminate an aid program that helps returning adult students and would slash the grant money available to state students attending private colleges and universities. Cal Grants and a fee waiver program are the state's primary financial aid vehicles. Other aid is provided by the federal government, colleges and universities.
A spokeswoman for the governor said he "understands how difficult these cuts will be" but is responsible for leading the state through the economic crisis. "The governor doesn't want to cut programs and he doesn't want to raise taxes, but in the face of a $42-billion budget deficit and with the Legislature's failure to pass a comprehensive solution, we're simply running out of options," she said.
Washington Post
Expanding Facilities Get Relief From EPA
Pollution Permit Program Streamlined...Juliet Eilperin
The Environmental Protection Agency issued a new rule yesterday that will make it easier for industrial plants, refineries and paper mills to expand operations without applying for new pollution permits under the Clean Air Act.
The rule, part of the Bush administration's ongoing effort to revamp a pollution-control program known as New Source Review, says that when expanding or modernizing plants calculate their emissions to determine whether they need to install new control measures, they are not required to include emissions from unrelated activities at the same plant.
Robert J. Meyers, principal deputy assistant administrator in the EPA's office of air and radiation, said the agency determined that it did not make sense to count emissions from distinct projects collectively if they did not have "a substantial economic and technical relationship."
But environmentalists said the rule, which applies to about 3,500 facilities nationwide, could make it easier for the facilities to expand without limiting harmful emissions.
"It's a classic loophole," said John Walke, clean air director for the Natural Resources Defense Council, an advocacy group. "What they've done is to allow industry to ignore these pollution increases, which decreases the likelihood of cleanup obligations."
It was unclear how many plants will no longer have to apply for modification permits because of the policy change: Facilities typically need to apply when they emit an additional 40 tons a year of a major pollutant, though the requirement varies depending on the pollutant and the location of the source. Michael Ling, associate director of the EPA's air quality policy division, said the impact of the new rule would be "negligible."
Still, industry representatives hailed the decision as a last-minute regulatory relief from the Bush administration, which has been working on the matter for more than two years.
"Frankly, I'm a little surprised they've gotten to this," said Bryan Brendle, director of energy and resources policy at the National Association of Manufacturers. Brendle added that his association "supports any sort of simplification and streamlining of a fairly cumbersome program" such as New Source Review.
The EPA also decided yesterday to abandon another rule change it had contemplated enacting under the Clean Air Act, which would have further narrowed the number of activities in a production line that count toward a facility's overall pollution threshold.
The agency postponed making a decision on a third proposal, known as "netting." Under the proposal, an expanding or modernizing plant could bypass a rule requiring it to analyze whether a particular project would increase its emissions so long as the change is not anticipated to dramatically boost the facility's overall pollution level.
Meyers said the administration's changing of course by rejecting one rule change and postponing another "really shows we listened closely to public comments."
Brendle said that manufacturers had hoped the administration would approve the original troika of changes but that "one is better than nothing."
New York Times
Research Ties Human Acts to Harmful Rates of Species Evolution...Cornelia Dean
Human actions are increasing the rate of evolutionary change in plants and animals in ways that may hurt their long-term prospects for survival, scientists are reporting. Hunting, commercial fishing and some conservation regulations, like minimum size limits on fish, may all work against species health.
The idea that target species evolve in response to predation is not new. For example, researchers reported several years ago that after decades of heavy fishing, Atlantic cod had evolved to reproduce at younger ages and smaller sizes.
The new findings are more sweeping. Based on an analysis of earlier studies of 29 species — mostly fish, but also a few animals and plants like bighorn sheep and ginseng — researchers from several Canadian and American universities found that rates of evolutionary change were three times higher in species subject to “harvest selection” than in other species. Writing in The Proceedings of the National Academy of Sciences, the researchers say the data they analyzed suggested that size at reproductive maturity in the species under pressure had shrunk in 30 years or so by 20 percent, and that organisms were reaching reproductive age about 25 percent sooner.
In Alberta, Canada, for example, where regulations limit hunters of bighorn sheep to large animals, average horn length and body mass have dropped, said Paul Paquet, a biologist at the University of Calgary who participated in the research. And as people collect ginseng in the wild, “the robustness and size of the plant is declining,” he said.
The researchers said that reproducing at a younger age and smaller size allowed organisms to leave offspring before they were caught or killed. But some evidence suggests that they may not reproduce as well, said Chris Darimont, a postdoctoral fellow in environmental studies at the University of California, Santa Cruz, who led the work. The fish they studied that are reproducing earlier on average have far, far, far fewer eggs than those who wait an additional year and grow a few more centimeters,” he said in an interview.
Dr. Darimont said it was unknown whether traits would change back if harvesting were reduced, or how long that might take.
The researchers also noted that the pattern of loss to human predation like hunting or harvesting is opposite to what occurs in nature or even in agriculture.
Predators typically take “the newly born or the nearly dead,” Dr. Darimont said. For predators, targeting healthy adults can be dangerous, and some predator fish cannot even open their mouths wide enough to eat adult prey. Animals raised as livestock are typically slaughtered relatively young, he said, and farmers and breeders retain the most robust and fertile adults to grow their herds or flocks.
But commercial fishing nets and other gear that comply with conservation regulations typically trap large fish while letting smaller ones escape. Trophy hunters typically seek out the largest animals. And for some fish in some areas, as much as 50, 60 or even 80 percent of the stock may be caught every year.
“Targeting large, reproducing adults and taking so many of them in a population in a given year — that creates this ideal recipe for rapid trait change,” Dr. Darimont said.
Some fisheries scientists have said their studies of fish stock had not shown a correlation between fishing intensity and growth rates. And some wildlife conservationists question the idea that hunting can have harmful effects on species.
Dr. Paquet said that although he had confidence in the new findings, he knew there would be questions about the analytical methods he and his fellow researchers used. “That’s expected,” he said. “That’s how science proceeds.”
He said he had anticipated that the work would be “contentious” among trophy hunters. “Essentially, we are saying, ‘You should not do this because it is having effects even you might not like,’ ” he said.
Daniel Pauly, who directs the Fisheries Center at the University of British Columbia, said the new findings “make sense.”
Though Dr. Pauly said he had not seen the new work, he recalled similar changes in black chin tilapia, fish that live in brackish water. He said in an interview that he had studied the fish more than 30 years ago, when he was a young graduate student doing field work in Ghana.
After decades of heavy fishing, the size of the typical adult fish had shrunk to about 10 centimeters from about 15 centimeters. But at the time, he said, “I did not realize what was happening.”
Some fisheries managers are already suggesting that conservation regulations should be changed to safeguard larger fish in protected species. “Lots of people argue for that because the big ones are so fecund,” Dr. Pauly said. But he said customers in fish markets typically prefer larger fish. And if fishers are not permitted to keep the big ones, they “must catch enormous quantities of fish to have a good tonnage.”
Lennar Provides Data on Ventures After Fraud Accusations...Andres Ross Sorkin
Lennar, the No. 2 U.S. homebuilder, again denied on Monday treating its joint ventures like a “Ponzi scheme” and tried to counter the allegation by providing fresh data on those ventures, Reuters reported.
The statement came in response to accusations made last week by Barry Minkow, who had served time in prison for stock fraud but now investigates fraud. The accusations were made in a letter to the Securities and Exchange Commission.
Those charges pounded the Miami-based company’s shares down 20 percent on Friday, Reuters said. The shares were down another 7.2 percent at $8.49 during afternoon trading on the New York Stock Exchange on Monday amid a broad decline in homebuilder shares. The Dow Jones U.S. Home Construction Index fell 5.7 percent.
“While it is not Lennar’s practice to respond to false and scurrilous allegations in the context of litigation, Lennar has a responsibility to its shareholders and the public to respond to their legitimate requests for information,” the company said in a statement.
Lennar denied the allegation by Mr. Minkow, a California pastor who now works for The Fraud Discovery Institute, that the builder had used its joint ventures as a “Ponzi scheme,” using older ventures to fund new ones.
Mr. Minkow also claimed Lennar had violated a written agreement and wired one of its subsidiaries $37.5 million from “The Bridges,” a high-end California housing and golf joint venture between Lennar and an entity that later become Briarwood Capital.
Lennar denies the charge and counters that Mr. Minkow is working for Nicolas Marsch, who contributed the $37.5 million and whose civil litigation against Lennar was recently dismissed by a California Superior Court judge.
On Friday, Lennar said the accusations were “false and inflammatory” and said it was investigating possible wrongdoing by Mr. Marsch and Mr. Minkow, saying they may have tried to illegally obtain information relating to Mr. Marsch’s legal proceedings against Lennar.
The company said in its Monday statement that it would take “appropriate action against the responsible parties” but could not be reached to explain what actions it might take, whether they would include a libel suit and against whom.
Mr. Minkow also had accused Lennar of improperly giving its chief operating officer, Jon Jaffe, a mortgage and of profiting from the now bankrupt “LandSource” venture while the California Public Employees Retirement System lost about $1 billion.
In its statement, Lennar denied that it gave Jaffe a mortgage and acknowledged that Jaffe did use a line of credit secured by a mortgage to buy Lennar stock.
Mr. Minkow’s claim that Lennar caused the other LandSource investors and lenders to lose money is false, the company stated.
“The lenders and investors are large institutional entities who conducted their own extensive due diligence with the aid of independent experts,” Lennar said.
Wall Street analysts have long lamented Lennar’s extensive use of the joint venture land-buying structure, which requires a relatively low level of official disclosure.
Lennar has investments in 116 such entities, down from 214 on November 30, 2007 but still far more than any of its rivals, said Morningstar analyst Eric Landry, according to Reuters.
Mr. Landry deemed Mr. Minkow’s report “flimsy,” and told Reuters that it did not cause him to worry that he had missed signs of outright fraud on Lennar’s part; but he does think Lennar has used the joint venture structure too much for its own good.
“Investors will tolerate the opaque nature of the joint venture structure when land prices are going up,” Mr. Landry told Reuters. “But when land prices are going down, the company loses the benefit of the doubt.”
In its Monday statement, Lennar also disclosed information about its joint ventures in advance of the publication of its annual report and said it would be working to provide more information to analysts and investors in the coming weeks.
JPMorgan analyst Michael Rehaut noted approvingly that Lennar has reduced its exposure to joint ventures and in particular has cut its recourse debt, in which lenders can hold Lennar responsible for failure to repay, to $520 million from $1.03 billion at the end of 2007.
Mr. Rehaut rates Lennar’s shares “relative overweight” and sees the builder outperforming its peers in the next year.
Like most U.S. homebuilders — which are two years into a sharp downturn — Lennar’s shares are well off their 2005 highs. Over the past 12 months, they have lost 34 percent of their value, a steeper decline than the Dow Jones U.S. home construction index’s 10.6 percent decline.
CNN Money
Bernanke: More bank bailouts needed
The Fed chairman endorses Obama's proposed economic stimulus plan, but says more help for banks is needed to fix the economy...Chris Isidore
NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Tuesday that President-elect Barack Obama's proposed fiscal stimulus package could help the economy, but he added that additional bailouts of financial institutions may also be needed to bring about a sustained economic recovery.
Bernanke, speaking in London, said that the nearly $800 billion plan being discussed by the incoming Obama administration and the newly elected Congress "could provide a significant boost to economic activity." He did not comment on or endorse any specifics of the nearly $800 billion.
But Bernanke cautioned that the plan is "unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system."
Bernanke suggested that more banks and financial firms are likely to need additional capital injections from the government, and that further guarantees of their debt could be necessary, in return for the federal government receiving further equity in the firms.
The Fed chairman also said that "removing troubled assets from institutions' balance sheets, as was initially proposed for the U.S. financial rescue plan," might also be needed to supplement any further investments in banks.
One critic of the bank bailout agreed that more help might be needed for financial firms and that Bernanke was correct to suggest that the government look at all options for helping banks.
"Everything he's saying is right; we have a lot of tools and we have to use them wisely," said Barry Ritholtz, CEO and director of equity research for research firm Fusion IQ. But Ritholtz added that the bailout has already been mismanaged by the Treasury Department.
"The problem is that the time for that kind of thinking was five months ago," Ritholtz added.
What the Fed has done so far
Still, in addition to the actions taken by the Treasury to help banks, the Fed has made many moves to try and stimulate the economy. It has lowered interest rates to near zero, and has also pumped more than $1 trillion into the economy through various lending programs.
This has created some concerns about the Fed's balance sheet, and whether or not it can continue to fund more rescue efforts without causing long-term damage to the economy, such as sparking inflation.
Bernanke dismissed this risk, however, saying that inflation appears well-contained in the near term. And he said despite the fact that the Fed is taking on much riskier assets than normal as collateral, he does not believe there is a major risk of having those loans go bad.
"The Federal Reserve has never suffered any losses in the course of its normal lending to banks" and Wall Street firms, he said.
Bernanke said that some of the steps taken by the Fed so far to pump money into banks will be unwound quickly once markets start to return to normal.
But he added that the Fed expects that in order to address problems in the credit markets, it will have to hold onto mortgage-backed securities it is in the process of currently buying for a long time.
Bernanke also reiterated that the Fed will probably need to leave its key interest rate near zero for an extended period of time. Still, even with rates near zero, he argued that the central bank still has many tools at its disposal to address the economic crisis.
He added that the Fed is in a far better position to address economic problems than the Bank of Japan was when it left rates near zero for several years earlier this decade.
Regulatory changes, global cooperation needed
Bernanke also stressed the need for cooperation by central banks around the globe. He said that what the Fed, Congress, and other nations do in response to the worldwide economic crisis is crucial to determining how quickly a recovery takes place, but he conceded that the "timing and strength of the recovery are highly uncertain."
The chairman said it is also clear there will need to be changes in the regulation of financial institutions, both in the United States and in coordination with governments around the world.
But he added that he is a strong believer in free markets and the benefits they bring, despite the crisis in the global financial markets.
"What we've learned in this case is not necessarily that we need a lot more regulation," he said in response to a question following his speech. "We need to think what went wrong...We need to think very hard about how to fix it."
He concluded that, while better regulation is necessary and will have to be addressed soon, it is not the most pressing need at this moment.
"It's good advice in general if there's a fire burning, you try to put it out first, and then think about the fire code," he said.