Badlands Journal
Reply to McEwan...Badlands Journal Editorial Board
We are going to preface this detailed reply to Bill McEwen’s Fresno Bee Sunday column, “Valley on verge of a catastrophe,” with three remarks:

  1. Environmentalists did not create the drought. In fact, it is possible the drought would have been less severe if environmentalists’ warnings about global warming had been heeded earlier.
  2. Environmentalists did not create the economic depression now overwhelming the San Joaquin Valley. Finance, insurance, and real estate special interests created the economic depression, now spreading around the world. Their basic weapon was fraudulent securitized mortgages. Valley environmentalists, who opposed a number of development projects, actually fought finance, insurance and real estate interests in, among other places, the congressional district with the highest foreclosure rate in the nation, when Rep. Dennis Cardoza, Shrimp Slayer (then of Merced), local government, media (particularly the McClatchy Chain) which were making money hands over fists on real estate advertising, were pumping the speculative boom for all it was worth. Environmentalists, not land-use authorities or the media, called for developers to pay for the infrastructure to mitigate for their subdivisions. Furthermore, eco-justice groups have consistently called for decent housing, sanitary water supplies, better education and working conditions for the Valley’s farm workers. And when a blatant example of racism regarding citizenship occurred in a McClatchy newspaper in the Valley two years ago, it was environmentalists, as the McClatchy board of directors will remember, who protested the strongest, while MAPA wouldn’t touch the issue.
  3. On-lines sources of news and commentary like Badlandsjournal.com and lloydgcarter.com and countless others regionally and across the nation would not have thrived as well as they have if the mainstream media had not sunk from a fairly decent level of journalism back into something out of Upton Sinclair’s The Brass Check (1919).

Fresno Bee
Valley on verge of a catastrophe...Bill McEwen
California's water system is failing.
To view the water system as separate from finance, insurance, real estate, agribusiness and the political system in their pay is unacceptably obtuse and the premise launches this article off on its erring way. The water system flowing through the San Joaquin Valley is a product of decades of oligarchic scheming, bribery and greed. If this history of corruption, going back nearly to passage of the federal Reclamation Act is finally snared in its own lies, overall this is an excellent result. Federal subsidized water has brought great wealth to a few, who systematically corrupted reclamation law, and misery to the many along with incalculable harm to wildlife and the natural resources of the region.
And now the House of Representatives is about to break it completely by providing $88 million to bring salmon back to the San Joaquin River.
The alternative to the House approval of the San Joaquin River Settlement is a return to federal court in Sacramento, where Judge Stanley Karlton has promised he will rule according to the actual laws broken to establish the Friant-Kern Canal, which will create a situation worse than what Friant Water Users and environmentalists have agreed to.
Don't get me wrong. I'm for restoring the San Joaquin River below Friant Dam.
But the plan that Congress is expected to approve in a few days will cripple the Valley economy and create an environmental nightmare.
Agribusiness crippled the Valley economy and its politics from the start. It is faintly possible, though unlikely until existing political and agribusiness leadership shuffles of its mortal coil, that destroying the feudal economy of the south Valley would provide the region an opportunity to get all the way to the 18th century.
The problem with the plan is that it only puts water in the riverbed. There isn't another spending bill dealing with farmland retirement and the spike in unemployment that will occur if land goes fallow.
There's also no acknowledgment that farmers with significantly reduced access to river water will pump groundwater until the aquifer is degraded and exhausted.
And McEwen doesn’t acknowledge that the demand for the Friant-Kern Canal, like its equivalent below the Mendota Pool on the west side of the Valley arise from degradation and exhaustion of wells in Tulare, Fresno, Kings and Kern counties 50 years ago. It was that degradation and exhaustion of groundwater that created the political economic drive for these water projects.
Finally, there isn't a dime for infrastructure to offset the effects of cutting water deliveries to farms.
Decent housing for farm workers? Sanity water supplies for them? That sort of thing probably doesn’t belong in an omnibus wilderness bill, but we will be watching to see the efforts in these directions made by Valley congressmen in the future.
By this point in this erring article, the author has completely forgotten that the real water-delivery cuts this year are caused by drought, not by Rep. Nunes’ “radical environmentalists” or Radanovich’s “eco-terrorists,” even by Sen. Feinstein or any other malevolent San Francisco Hetch-Hetchy sippers.
If you're wondering who to blame for this pending disaster, look no further than Democratic Sen. Dianne Feinstein, the key player in the river's restoration settlement.
So, now congressmen Radanovich and Costa are blaming it all on Feinstein despite carrying the Settlement bills in the House. Bad Faith, Thy name is Fresno.
Based on what she has shepherded through the halls of Washington, D.C., you would think that no one on her staff read studies prepared by the Congressional Research Service on river restoration and the extreme poverty in the San Joaquin Valley.
Feinstein was still a San Francisco supervisor when the 160-acre Limitation was finally defeated in the south Valley. Nevertheless, it is possible that her staff is sufficiently intelligent to realize that Westlands’ 600 growers in the poorest congressional district in the nation created that poverty by some of the most exploitive labor relations in the nation.
You also would think that the environmentalists pushing restoration are on another planet -- ignorant of the world recession, the economic plight of many Valley residents and California's water crisis.
Right. The environmentalists came from the planet of Judge Karlton’s courtroom with a verdict in their favor after 20 years of waiting. Karlton advised them to work with the Friant Water Users Authority and they did, fashioning an agreement both sides, with the exception of the Perpetually Dodging Upton of Madera, submitted to Congress for funding in late 2006, in a bill carried by Radanovich, sabotaged by San Joaquin River tributary interests (downstream irrigation districts all of which are in the district of Rep. Dennis Cardoza, Shrimp Slayer-Maryland). So, the Friant Water Users are also “pushing” this settlement.
If we are going to go planetary in our rhetoric, what planet does the south Valley come from? The Planet of Denial of Law: environmental law, labor law, and the laws of nature.
The study on river restoration repeatedly states that the loss in jobs and the environmental consequences created by reduced irrigation flows can only be offset by improved water management.
Not, obviously, modeled on years of extreme drought.
In addition, the parties to the settlement of the long-running lawsuit filed by environmentalists over the destruction of the lower river have said this time and again: river water will be recirculated, recaptured and reused for the benefit of both the habitat and farms.
So where is the money for river recirculation and raising the height of Friant Dam to capture more Sierra runoff?
It's missing because the environmentalists aren't really interested in such things, and they have Feinstein in their hip pocket.
Again, back to the planet of the actual Settlement, there are two sides: environmentalists and water users. Both agreed to the Settlement before Congress. The idea that environmentalists have Feinstein in their hip pocket is too ludicrous to acknowledge, but it follows from the false premise of this whole errant excursion: that two Valley congressmen, Radanovich, first, then Costa, were not completely involved in this bill and that it would have gotten through the House without them. This is just nothing but a smokescreen for Costa and Radanovich to hide behind from their agribusiness contributors.
I've got another question: Where is the conscience of Congress? It always has turned a blind eye toward the Valley, ignoring the impoverished lives of the people who pick the nation's food and fiber.
Setting aside for a moment the ludicrous notion that Congress has a conscience, Congress approved the entire Bureau of Reclamation water project on both sides of the Valley. The federal government has primary responsibility for the Delta. After terminating the Bracero Program in 1964, Congress has done its very best to blind itself to illegal immigration for the aid and benefit of California agribusiness. Congress passes the laws that create the subsidies for much of the production of the south Valley – from cotton to milk, particularly in Tulare County, largest dairy county in the nation, neighboring Kings County, where J.G. Boswell Co. is the largest cotton producer in the nation.
Actually, during the 1960s, the Office of Economic Opportunity did not ignore “the impoverished lives of the people” here. At the time, although of many races, most of them were American citizens or at least resident aliens. At that point, the Valley had both feet planted in the 20th century. Something had to be done and was done about that. The result is that today many farm workers come from places in Mexico like western Oaxaca barely touched by another 20th-century event, the Mexican Revolution. So, farm labor lost three or four centuries in the last 40 years. And Cesar Chavez was prize fighter, wasn’t he? In any event, it remains to be seen if organization by tribe, clan and village can gain power against industrial agribusiness.
Now, with unemployment hitting 40% on the Valley's west side because of the drought and judicial rulings protecting the delta smelt, Congress is about to sock farmers and their workers in the gut in towns such as Exeter, Tulare and Chowchilla.
And salmon. What about the north coast fishery? This will be the second year with no commercial or sports salmon-fishing season. If you want to talk selfish interest, which is all this article amounts to, what about the selfish interests of California commercial sea fishermen? They don’t count at all? Absolutely no recognition of any selfish interest but Fresno’s? Commercial fisheries also employ people from Mexico, but they just aren’t “farmers and their workers,” because there is a very special relationship between “farmers and their workers.” Uh-huh. People get into real rhetorical problems trying to justify moral quagmire of the farm labor situation in California agribusiness.
We are spending more than a trillion dollars to shore up banks, bail out automakers and keep people in their homes.
What sense does it make to spend $88 million to put thousands of people in the Valley out of work? And what sense does it make to base San Joaquin restoration on bringing back salmon to their southernmost habitat?
Aside from the issue of who is making the decision to bail out banks and why, although we the people are paying for it, the proximate cause of farm-worker unemployment this year is going to be drought. As for the number of people that will suffer unemployment, we can just begin by noting the dripping hypocrisy of official Fresno’s solicitous concern for farm workers. Passing through the manifold layers of anxiety not mentioned here – for example probably quite rational fears of some social unrest in the region – we think that at the bottom we’ll find the eternal Valley grower fear: that workers will migrate and that – Heaven Forbid! – the rains will come again and growers will face a labor pool sufficiently diminished to exact a higher wage, the end of civilization as the south valley understands the concept.
Again, I refer to the Congressional Research Service study that says "all or many environmental factors may need to be favorable to permit this species to complete its migratory life history."
I'm not a scientist, but global warming would appear to make a salmon revival in the river a long shot.
       We’re not Fresno journalists but it seems to us that
       "all or many environmental factors may need to be 
       favorable to permit” the continuation of the ruinous
       agribusiness that has gone on in the south  
                                Valley for decades.
Unless Congress spends for river recirculation, land retirement and a Valley-directed economic stimulus package, only enough water to make the San Joaquin a "real" river below Friant should be diverted from farms.
Again, the Friant Water Users signed off on the deal, carried through the House by Radanovich and Costa.
Salmon should only be reintroduced if scientific studies show that they can thrive in the river.
And canal water should only have been introduced into the south Valley when scientific studies could show a sustainable agriculture, economy and society would thrive. Scientific evidence that they would not thrive was at all times available when these “mistakes” were made. And they weren’t mistakes. They were extremely deliberate actions to corrupt the purpose of the Reclamation Act, backed by tremendous political will and bags of cash to all the right places. What was lacking and is lacking is any sense of care for land, community or environment – from the witless scale of the farming to 150 years of ruthless exploitation of labor to the ceaseless whining for more handouts from government.
In fact, since the rightwing is blathering all over the tube about “socialism,” it raises the question: what could possibly be more dysfunctionally “socialist” than south valley agribusiness?  
Decades ago, the government made a huge mistake: diverting almost all of the water out of the lower San Joaquin. It's on the verge of compounding that mistake by trying to fix the river on the cheap and without regard to the disastrous effects on the communities reliant on irrigation water.
When the Senate approved the public-lands bill that included the $88 million, Feinstein said that restoring "the once-mighty" river was one of her "top priorities."
How about making the people who rely on that water to feed, clothe and house their families a priority, too, senator?
Since concern for “farmers and their workers” is so sincerely and deeply felt in the editorial offices of the Fresno Bee, we suggest the local McClatchy outlet begin a campaign to tax the farmers to support “their workers” in these harsh times of severe drought. The Bee and Fresno, Madera, Tulare, Kings and Kern county governments might begin their research into the viability of such a plan by consulting the excellent research done by the Environmental Working Group on farm subsidies in their region at http://farm.ewg.org/farm/index.php?key=nosign. Eighty-eight million dollars is peanuts compared to what farmers in that region haul down annually from the government to farm subsidized crops on subsidized federal water since federal water delivery began to the south Valley.
But, that’s just the emergency/drought solution – farmers taking care of “their workers” when there is no farm work due to a naturally occurring drought. Historically, similar things have happened in times of flood, too.
The longer-term solution would be to tax agribusiness to make up for the historic exploitation of farm workers with education and public health and services. The contradiction there, of course, is that the educated children would not want to do farm work, anymore than anyone who does it wants to do it because, although there are many who actually enjoy it (there is mores satisfaction in it than in a lot of jobs), the miserable pay and the poverty one must endure for the privilege of doing farm work take all the pleasure out of it. Therefore, the problem of a decent wage once again arises, which is the end of the conversation, if there ever was any conversation possible with agribusiness in the south Valley, which communicates only by the most preposterous, wolf-crying propaganda.
However, while we are on the subject of restoration, what about restoration of the toxic soils of the west side? Federal money for such a project might employ a lot of workers and it would be a good project if the money did not get siphoned off into agribusiness pockets, about as unlikely a prospect as are the current deep sentiments for farm workers expressed in the pages of the Fresno Bee.
The greed and corruption of Fresno has been so naked that even the University of California, an extremely ethically disadvantaged institution, was unwilling to locate its San Joaquin Valley campus there, where it was meant to go.
Merced Sun-Star
Merced on eve of Wal-Mart report's issue
Citizens can get a copy of the hefty document and have 60 days to weigh in on its findings...SCOTT JASON. The Modesto Bee contributed to this report.
The much-anticipated and long-delayed report chronicling the proposed Wal-Mart distribution center's impact on Merced will be released Wednesday.
Once slated to be issued in November 2006, the report kicks off formal debate about whether the controversial project should be built.
Printed copies and digital versions on CD will be available in the lobby of City Hall beginning at 11 a.m. The city printed 85 copies and made 200 CDs. It will also be on the city's Web site.
City staff will hold a question-and-answer session to explain how the public can be involved.
Though the release isn't meant to be political, it's likely that the project's supporters and opponents may make a strong showing of support to send a message about their causes.
To some, it'll provide an unbiased account of how the project would forever change the landscape and should persuade leaders to think long and hard about the warehouse.
And for others, it means the city would be one step closer to giving the go-ahead to the nation's leading employer, which pledges that there'll be 600 full-time jobs on the first day of operation; that figure would grow to 900 by year-end, according to the global retailer.
Wal-Mart wants to build the center on 230 acres between Childs and Gerard avenues. At capacity, more than 450 trucks would come and go each day.
The review analyzes how building the 1.2 million-square-foot warehouse would affect the city's roads, water and air quality. It also suggests ways to lessen problems created by the development.
Wal-Mart first proposed building a distribution center in 2005. The report was initially slated for release in November 2006, but it continued to get bumped back.
Given the controversy surrounding the project, Wal-Mart and the city opted to have another set of eyes critique the report for any holes or mistakes. The company will reimburse the city for the costs.
An environmental impact report is required for big projects under state law.
The public will be able to read the draft report and offer their comments by sending letters to City Hall or by sending an e-mail to espinosak@cityofmerced.org.
The city is unveiling an extended, 60-day timeline so people can digest the inch-and-a-half-thick report with double-sided pages. The last chance to comment will be 5 p.m. April 27.
EDAW, the nonpartisan firm writing the report, must respond to each question and comment before releasing the final version that goes before the City Council.
The number of letters will determine how long it takes before the final report is released.
In the case of Riverside Motorsports Park, the last controversial project in the county, it took 10 months before the final report was released because there were more than 1,000 postcards and hundreds of letters.
It's hard to gauge the amount of public input that the distribution center will receive, city planner Kim Espinosa said.
"Most (reports) get 10 or 12 letters," she said. "I think we'll get quite a few more."
For a copy
Merced will release the environmental impact report about the proposed Wal-Mart distribution center at 11 a.m. Wednesday in City Hall's lobby.
A printed copy of the report costs $45 and technical appendices are an additional $45. A free copy of the CD with both volumes is available to the public. Additional copies of the CD are available for $5 each. The report will also be on the city's Web site, www.cityofmerced.org. For more information, call the Planning Department at (209) 385-6858.
UC Merced students discuss removal of Chicano book
District took 'Bless Me, Ultima' off sophomore reading list...DANIELLE GAINES
Two teachers from Orestimba High School, upset that a book has been removed from their class reading lists, met with UC Merced students on Monday night.
The educators -- Catherine Quittmeyer, chairwoman of the English department, and Andre Powell, English teacher -- spoke to about a dozen Chicano literature students and future teachers on the university's campus.
"This was an event for the students; a lot of them want to become teachers," Quittmeyer said. "This is something I wish I was able to ask questions about when I was becoming a teacher."
The Newman-Crows Landing Board of Education voted in early February to remove Rudolfo A. Anaya's award-winning novel "Bless Me, Ultima" from the sophomore required reading list at Orestimba High School.
The removal stemmed from a parent complaint about the anti-Catholic tone of the book and its sexually explicit scenes. The school board and superintendent focused on the number of curse words in the book when contemplating a ban.
The UC Merced event was organized by professor Manuel M. Martin-Rodriguez.
"This is a literature that has had a terrible history of being censored, banned, removed," Martin-Rodriguez said. "As a professor of this literature, you want to try to do something about it."
One of his students, Lucia Perez, graduated from Orestimba in 2007.
Anaya's novel had been part of the sophomore honors curriculum at the school for more than a decade. The advanced literature students read more than 60 novels and plays before graduation, Quittmeyer said.
"Honestly, out of all the books we ever read, I never thought 'Bless me, Ultima' would ever be banned," Perez, who is now a sophomore at UC Merced, said.
Written by Anaya in 1972, "Bless Me, Ultima" is set in New Mexico and profiles a Latino boy maturing, asking questions concerning evil, justice and the nature of God, and trying to reconcile American Indian religion with traditional Roman Catholicism. The boy turns often to Ultima, a caregiver of sorts, for help as he grows.
The book was spotlighted on former First Lady Laura Bush's must-read list, and is also the literature selection for this year's state high school academic decathlon competition.
Perez is now re-reading the novel as part of the required readings for a literature course at UC Merced. She said the book's content never alarmed her.
"I didn't even notice there was profanity," Perez said. "It is not what I remembered from reading it; I remembered a lot about Ultima and how she helped him grow."
Perez hoped inviting her former teachers to UC Merced would allow her current classmates to ask questions and decide for themselves whether the book was appropriate for 10th graders.
Richard Fauss, district superintendent, said that he and other board members were not invited to Monday night's talk. Nor would they likely attend a meeting that "is not even in our county, let alone in our attendance area," Fauss said.
The superintendent also said the book is not banned.
"The book is far from banned," Fauss said. "We have lots of copies on campus and the students can check them out as they wish from the library."
Fauss couldn't put a number to the availability of books on campus, but said there are "quite a few."
Orestimba High School enrolls about 750 students from Newman and Crows Landing in Stanislaus County.
Quittmeyer said the school has received dozens of copies of the book in the mail since the classroom ban became international news.
According to its policy, the school board cannot reconsider their decision for 12 months.
Powell and Quittmeyer said more than anything else, they were concerned with the precedent this board decision has set.
"Yes, we're fighting for this book," Powell said. "But we are also fighting for all other books. This opens the door (for more censorship)."
Modesto Bee
Flight school received several FAA warnings...Ken Carlson
The Sierra Academy of Aeronautics in Atwater received three warning letters from the Federal Aviation Administration since 2005 for lapses in aircraft maintenance and inspections and for other violations.
The flight school at Castle Airport recently created headlines twice in a three-week period when its flight instructors made emergency landings near Turlock Municipal Airport and Turlock Lake following engine failures. Neither the flight instructors nor trainees were injured during the incidents, which occurred Wednesday and Jan. 27.
In November, a 26-year-old Sierra Academy student was killed when a plane's propeller hit him in the head.
The FAA said it is focusing more attention on the school, where students from China undergo initial training to become pilots in their home country. The school has 51 airplanes and 155 students.
"Any time a flight school experiences an accident, we work more with that school to try to improve their safety practices and their risk management programs," said Ian Gregor, an FAA spokesman in Los Angeles.
"In Sierra's case, we have increased the amount of surveillance we're doing on the school, and we are actively working with them to improve their safety culture."
In October, the FAA warned the academy for not doing the required inspections on an aircraft used for flight instruction. According to federal regulations, training aircraft must receive an annual inspection and inspections after every 100 hours of service.
The academy, also operating as KS Aviation Inc., received another warning letter in January 2005 for reckless operation of an aircraft, operating an aircraft that wasn't airworthy and operating an aircraft that didn't have a flight manual. The school was run out of Livermore at that time.
In February 2005, Sierra was cited for four violations, including not performing required inspections and failing to keep inspection and maintenance records. Between 1994 and 2002, the academy was slapped with three warning letters for records violations and ordered to pay $3,500 in fines.
Sierra officials did not return calls to discuss its enforcement record.
Gregor said warning letters are on the lower end of the FAA's enforcement scale. More serious violations can result in letters of correction and fines, and repeated violations and negligence can result in license suspension or revocation.
Other similar flight schools have cleaner records.
For example, the Mazzei Flying Service in Fresno has no violations for maintenance and inspection issues in the past five years. It did receive a warning for not meeting a pilot testing requirement in October 2008 and was ordered to correct a drug-testing issue in 2005.
Rainbow Air Flight Academy in Long Beach had no record of violations in the past five years.
Sierra Academy has trained students from foreign countries for more than 40 years. It was based in Livermore before signing a 10-year lease with Castle Airport in late 2005. It closed its Livermore facilities and moved the remaining operations to Atwater in early 2007.
Merced County leases the Castle facilities to generate revenue and create jobs. A county spokeswoman said the county has a good relationship with Sierra, though there are some unresolved lease payment issues.
"They do owe some money to the county for last month's rent and withheld utility payments," said Katie Albertson, spokeswoman for the county. "We have been talking with them to resolve those issues and expect full payment in the next couple of days."
A lease agreement with another flight school, American School of Aviation, didn't go so well at Castle. Merced County grounded the flight school in June for not having liability insurance and forced the eviction of 100 students from dormitories over unpaid water bills. Many of the students had come from India to learn to fly and went home without completing their training.
Fresno Bee
US Supreme Court denies appeal in Wyo. eagle case...BEN NEARY,Associated Press Writer
CHEYENNE, Wyo. A member of the Northern Arapaho tribe who killed a bald eagle for use in a Native American ceremony could face up to a year in jail after the U.S. Supreme Court decided not to hear his appeal.
The court's ruling Monday is the latest turn in a long-running legal dispute over the rights of American Indians to kill eagles for religious purposes.
Winslow Friday has acknowledged that he shot and killed a bald eagle without a permit on the Wind River Reservation in central Wyoming for use in his tribe's 2005 Sun Dance.
The high court ruling means that Friday will face a misdemeanor charge in federal court in Wyoming. He could face up to a year in jail and a $100,000 fine if convicted.
John Carlson, a federal public defender in Denver, represented Friday in the Supreme Court appeal. He said that both he and Friday are disappointed by the court's decision.
"A single bald eagle is taken for the Northern Arapaho Sun Dance, which has been held since time immemorial, and it results in criminal sanctions," Carlson said. "But bald eagles get electrocuted on electric utility lines in Wyoming and elsewhere, and little or nothing happens."
The bald eagle was removed from the list of threatened species in 2007, following its reclassification in 1995 from endangered to threatened. However, the species remains protected under the federal Bald and Golden Eagle Protection Act.
U.S. District Judge William F. Downes in 2006 threw out the charge against Friday. The judge ruled it would have been pointless for Friday to apply for a permit to kill the eagle because of the federal government's "callous indifference" to the religious concerns of American Indians.
The federal government appealed Downes's ruling to the 10th Circuit Court of Appeals in Denver. A three-judge panel of that court reinstated the charge against Friday last year.
The U.S. Solicitor General's Office argued against Friday's request to have the Supreme Court review his case. Attempts to reach lawyers and others there for comment on Monday were unsuccessful.
Carlson said he had warned Friday that the Supreme Court wouldn't take his case, but said that didn't make the decision any less disappointing.
"If it's a legal and political issue for me, but for him, it's personal," Carlson said. "He now faces a trial."
Changes in bird population are signs of climate change...Editorial
A wave of the binoculars to citizen scientists. The field observers and feeder watchers who participate in the National Audubon Society's annual Christmas Bird Count have provided base line information for studies that challenge us to deal with ecological disruption.
Using bird counters' data collected during the past 40 years, scientists say bird migrations clearly are changing, with the most likely explanation being global warming.
Over those decades, average January temperatures rose in the lower 48 states by 5 degrees Fahrenheit, and birds seemed to be wintering farther north.
Audubon's study confirms the reports: 58% of the observed species -- 177 of 305 -- showed significant movement northward. Bird species also moved inland from warm coastal areas.
In a separate study using computer modeling and bird counters' data, Audubon California's scientists William Monahan and Gary Langham projected effects on birds from low, moderate and high greenhouse gas emissions.
"On average, California's landscapes will lose 6% of their bird species under low emissions, 14% under moderate emissions and 19% under high emissions," they wrote.
From the Swainson's hawk to the yellow-billed magpie, the scientists pinpoint how species and regions would fare.
The "hot spots of loss" in the south include areas of the Mojave and Sonora deserts, Coast Range, eastern Sierra Nevada and Central Valley. In the north, the Modoc Plateau and portions of the Cascade and Coast Range would suffer the most severe losses under the high emissions scenario.
Why should anyone care if birds range northward or disappear? As the health of the birds goes, Langham says, so does the health of the habitat.
What is the best course of action? Cut greenhouse gas emissions, target areas for conservation and move toward clean energy.
Protecting bird habitat, after all, is protecting our own quality of life.
Sacramento Bee
Court rules for state in American Indian land case...Associated Press Writer
PROVIDENCE, R.I. -- The U.S. Supreme Court on Tuesday limited the federal government's authority to hold land in trust for Indian tribes, a victory for Rhode Island and other states seeking to impose local laws and control over development on Indian lands.
The court's ruling applies to tribes recognized by the federal government after the 1934 Indian Reorganization Act.
The U.S. government argued that the law allows it to take land into trust for tribes regardless of when they were recognized, but Justice Clarence Thomas said in his majority opinion that the law "unambiguously refers to those tribes that were under the federal jurisdiction" when it was enacted.
The ruling comes in a case involving the Rhode Island-based Narragansett Indian Tribe and a 31-acre tract of land that the tribe purchased in rural Charlestown, about 40 miles south of Providence.
At issue was whether the land should be subject to state law, including a prohibition on casino gambling, or whether the parcel should be governed by tribal and federal law.
The dispute dates to 1991, when the Narragansetts purchased the land for economic development and to build an elderly housing complex, which remains incomplete.
State officials feared the tribe would create a tax-free zone that might undercut local businesses or build a casino. Lawyers for the state argued that the tribe cannot remove its land from state control using the Indian Reorganization Act because the Narragansett tribe was not recognized by the U.S. government when the act passed 75 years ago.
In the state's view, Congress passed the law to help tribes that lost millions of acres during a forced assimilation campaign that began in 1887, a timeline that made the Narragansetts ineligible.
But Rhode Island lawmakers disbanded the Narragansetts in 1880, and the tribe sold off nearly all its remaining land soon afterward. The federal government formally recognized the tribe in 1983.
Indian rights advocates said Congress intended for the law to set a new standard for future relationships with all tribes, regardless of when they were recognized.
The 1st U.S. Circuit Court of Appeals in Boston rejected the state's argument that Rhode Island should be the applicable authority. The high court reversed the appellate ruling.
Justice Stephen Breyer, who joined the majority opinion, indicated that it is possible that tribes not recognized by the federal government before the 1934 law might still have been under federal jurisdiction "even though the federal government did not believe so at the time." As an example, Breyer said, the government has acknowledged that some tribes were mistakenly left off a list the Interior Department compiled following the law's enactment.
But Breyer said he did not foresee that possibility for the Narragansetts.
Only Justice John Paul Stevens fully dissented from Thomas' opinion, which he called a "cramped reading" of the 1934 law.
Gov. Don Carcieri and Attorney General Patrick Lynch could not immediately comment on the ruling, their spokespeople said. Jack Killoy, an attorney for the Narragansett Indian Tribe, said he had not read the decision and could not immediately discuss it.
The case is Carcieri v. Salazar, 07-526.
Stockton Record
Lodi not alone in Wal-Mart fight...Daniel Thigpen
Years in the making, a planned Wal-Mart Supercenter is delayed because a judge ruled the proposal's environmental studies aren't sufficient.
Yeah, this all sounds familiar. But it's not Lodi. It's the small town of Delano, just north of Bakersfield.
To Lodi residents exhausted by the interminable Wal-Mart Supercenter ordeal and all its legal wrangling, studies and delays: At least you're not alone.
Sure, six years is a long time to debate a single issue - in this case, whether the mega-retailer should build a new, larger store in west Lodi. But consider it par for the course.
With about 200 Supercenters planned throughout the country in 2008 and an additional 170 a year for the next three years, there are plenty of war stories.
They can be found on numerous Web sites, such as walmart watch.com, an anti-Wal-Mart site where blog posts about protests and lawsuits provide near-daily fodder.
While the details are different in the dozens of communities Wal-Mart targets for new stores, the experiences often parallel Lodi's: Some residents fret about growth squashing mom-and-pop stores, city leaders plead for the new jobs and tax dollars, and Wal-Mart vows to fight for its right to set up shop, often for months or years.
"They have a habit of circling around a community and never really going away," said Al Norman, who runs sprawl-busters.com and is one of the most nationally recognized anti-Wal-Mart voices. Norman first fought Wal-Mart in 1993, when he and other opponents stopped the discount chain from opening in his hometown of Greenfield, Mass.
Wal-Mart says it has thousands of supporters in the communities it plans for stores.
"Generally speaking, many people see us as part of the solution, such as stimulating the economy and creating jobs," said spokeswoman Amelia Neufeld. "In most cases, opposition is based off of miscommunication."
Wal-Mart has stuck around Lodi since it was learned more than six years ago they wanted to anchor a 40-acre shopping center at the corner of Lower Sacramento Road and Kettleman Lane.
Since, the retailer has weathered court battles, protests and revised studies. The City Council is expected to again weigh in on the project next month - a re-vote of a previous approval after opponents said city leaders violated open meetings laws.
Even then, there are more bureaucratic steps remaining before Wal-Mart is a done or dead deal - if more lawsuits aren't filed in the meantime.
Other local Wal-Mart efforts, too, have dragged on. In Stockton, a planned Wal-Mart at Spanos Park West still has not been built. After lower courts ruled that the city's 2004 approval of the store was illegal, the case is before the California Supreme Court awaiting a ruling.
So what gives? Why does Wal-Mart so often ignite skirmishes when Targets and Costcos fail to enflame community passions as frequently?
One marketing expert says it's in part because many people associate negative corporate concepts with Wal-Mart, whether the fear is the destruction of small-town business or other perils associated with the brand - and regardless of whether such fears have merit.
That stigma makes it difficult for local officials, who often push for Wal-Marts because they're hungry for the jobs and tax revenue, said Rob Frankel, a national marketing consultant.
"That's not the battle that's being fought here," he said. "It's being fought on the right side of the brain, in the hearts of the community."
That idea is overblown, Neufeld said. As an example, she said 6,000 people applied for 300 jobs at a new Wal-Mart in Modesto.
"When you talk to our customers," she said, "having a place for them to shop, especially during these tough economic times, people are looking for ways to save, especially on food items."
San Francisco Chronicle
U.S. greenhouse gas rules for cars under study...Juliet Eilperin, Washington Post
The Obama administration is considering establishing national rules for regulating greenhouse gas emissions for automobiles, according to White House officials, a move backed by both auto manufacturers and some environmentalists.
For weeks, administration officials have been meeting with car companies as well as green groups and representatives from California - which is awaiting word on whether it will receive a federal waiver to regulate greenhouse gas emissions from vehicles - to try to broker a deal on the issue. On Sunday, Carol Browner, assistant to the president for energy and climate, said she and others backed the idea of a single standard for cars and trucks.
"The hope across the administration is that we can have a unified national policy when it comes to cleaner vehicles," Browner said at the Western Governors' Association meeting in Washington.
On Monday, a White House official who asked not to be identified because the policy has yet to finalized said Browner's comments did not mean the administration was seeking to usurp Congress' role in regulating carbon dioxide and other emissions linked to global warming.
"The administration recognizes that these are hard times for the auto industry, and we are exploring a process to develop a national policy for autos within the context of larger restructuring negotiations," the official said. "The administration is engaged with Congress to pass cap-and-trade legislation, which the president believes is far superior to a regulatory approach using the existing Clean Air Act. If (the Environmental Protection Agency) finds that greenhouse gases endanger health or welfare, the next steps would be taken thoughtfully and with input from all stakeholders."
The administration is already counting on cap-and-trade legislation passing to generate new revenue for the federal government. Office of Management and Budget Director Peter Orszag told reporters the budget Obama will release this week includes the money that would flow from auctioning off pollution allowances under a cap-and-trade scheme.
Several auto industry officials said they backed the idea of a universal fuel-efficiency standard aimed at curbing greenhouse gases, even if it is stricter than the country's current goal of achieving a fleetwide average of 35 miles per gallon by 2020. California's proposed rule would produce a fuel-economy standard of roughly 42 mpg.
Greg Martin, General Motors' Washington spokesman, said automakers and consumers are seeking "certainty and consistency" when it comes to fuel efficiency.
Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers, said her group was encouraged by the administration's recent moves. "We were hoping the Obama administration could come in and hit the refresh button on this debate."
State foreclosure moratorium has wide loopholes...James Temple
Gov. Arnold Schwarzenegger signed into law a 90-day moratorium on California home foreclosures on Friday, but consumer advocates argue wide loopholes will prevent the legislation from significantly slowing repossessions.
The bill, introduced by Sen. Ellen Corbett, D-San Leandro, as a trailer to the California budget package, covers owner-occupied homes where the first loan was recorded between Jan. 1, 2003 and Jan. 1, 2008.
"Many people in our communities are facing the terrible specter of foreclosure," Corbett said. "I'm just trying to find a way to help."
Under the law, however, state regulators can grant loan servicers exemptions - allowing them to foreclose - if the lenders have a mortgage modification program in place that meets some combination of various criteria. Among them: a deferral of a portion of the principal, lowered interest rates for at least five years or an extension of loan terms.
"Can they defer $1,000 for 30 years and call that complying?" said Joe Ridout, spokesman for Consumer Action. "It appears that that would be following the letter of this legislation. The heart appears to be in the right place, but the teeth aren't."
In order to earn an exemption under the state law, a lender's modification program would have to include an adjustment in monthly mortgage payments "targeted" at 38 percent of a borrower's income. That's a looser standard than those already put forward in several federal programs, including the Homeowner Affordability and Stability Plan laid out by the Obama Administration last week, which sought to lower payments to 31 percent of income.
"It was a step backward from where things were going from an industry standpoint and a federal standpoint," said Kevin Stein, associate director of the California Reinvestment Coalition.
He also noted that having a modification program and actually granting loan workouts are two different things for lenders - and the law doesn't appear to speak to the latter.
Corbett said she agreed with several of the critiques of her bill, but was limited from more aggressive measures by federal banking regulations.
"I would have liked to have written a much stronger bill," she said.
Bankers, however, would have preferred she didn't write the bill at all. A letter of opposition from the California Bankers Association, California Mortgage Bankers Association and other financial trade groups said a foreclosure moratorium will create uncertainty, delay economic recovery and stifle home sales.
Beth Mills, spokeswoman for the California Bankers Association, said struggling borrowers and their lenders already have more than enough time to search for mutual solutions. A state law passed last year increased the required period from first notification to final sale by 30 days, to a total of 141. More time is not the silver bullet to every troubled loan, she said. The law will go into effect in late May
Bob Egelko: Keeping judges squeaky-clean
With a $3 million conflict-of-interest case from West Virginia hanging over the nation's judiciary, a state task force rolled out a plan Monday to keep the shadow from spreading to California.
The panel's idea: Require judges to disqualify themselves from any case in which they received at least $1,500 in contributions from either side.
While the idea was batted around at a San Francisco meeting of the Commission for Impartial Courts, the U.S. Supreme Court was preparing for a hearing next week on a suit by a mining company whose $50 million jury verdict against a rival was wiped out by West Virginia's highest court.
The deciding vote was cast by Justice Brent Benjamin, who got $3 million for his campaign from the CEO of the rival firm and then refused to remove himself from the case.
California, like West Virginia, lets individual judges decide whether campaign donations from someone appearing before them would cause a reasonable person -- like, for example, the opposing party -- to conclude they were biased.
William MacLaughlin, a Los Angeles Superior Court judge who heads the state task force, said mandatory removal for a $1,500 gift would "show the public that a West Virginia case isn't going to happen here."
Not everyone in the audience of judges and court officials was convinced, particularly when MacLaughlin proposed the same standard for the state's six regional appeals courts.
"You're going to have panel-fixing like crazy," said Judith McConnell, an appellate justice in San Diego, predicting that wily and well-heeled litigants would rig their three-member panels by sprinkling $1,500 contributions among jurists they didn't like.
After a public comment period that starts March 15, the proposal heads to the state Judicial Council, and from there to the Legislature.
Santa Cruz Sentinel
Attorney: Arrested animal rights activists were exercising free speech; '...Jennifer Squires
Supporters of the four animal rights activists arrested by the FBI last week say the activists were exercising their free speech rights as nonviolent objectors trying to increase the public's awareness of animal cruelty in University of California research centers.
"It's strange. They act like these people are speaking completely out of context," said attorney Christine Garcia of the Animal Law Office in San Francisco. "These people are just vocalizing the reality of what these vivisectors are doing."
Garcia, who is representing Joseph Buddenberg, 25, of Berkeley, said what her client and his co-defendants -- one-time Cabrillo College student Nathan Pope, 26, of Oceanside and former UCSC students Adriana Stumpo, 23, of Long Beach and Maryam Khajavi, 20, of Pinole -- are accused of doing are actually constitutionally protected activities.
Read breaking crime news on the Cops and Courts blog
"This is sort of silly in a way," said Jerry Vlask, spokesman for the Animal Liberation Press Office. "They're targeting people who are doing above-ground demonstrations and calling what they're doing terrorism. ... I don't really know why they think this is going to make any kind of a difference."
The foursome are accused of being involved in demonstrations in front of homes of UC Berkeley researchers in October 2007 and January 2008, as well as a protest and home invasion attempt at the California
Street home of a UC Santa Cruz researcher in February 2008. In that attack, which occurred during a child's birthday party, the scientist's husband suffered minor injuries.
Garcia, who briefly represented Pope last fall when he was accused of perjury, said the four were targeted by investigators because their demonstrations drew the public's attention to the biomedical researchers' work, which she called "a dirty little secret."
The researchers "are actually having to face it. They're actually having to realize that they're responsible for these deaths of animals," Garcia said. "They don't like to hear that. I think they just don't like being accountable to the public at large for those deaths."
Vlask, a physician, said he and his organization, which is not directly affiliated with any activist group, believe the research is unnecessary.
"I can tell you we're not going to learn anything torturing these animals in labs," he said. "These people are wasting millions of dollars injecting methamphetamines and making tweakers out of monkeys."
Buddenberg and Khajavi are scheduled to appear in U.S. District Court in San Jose on Thursday. Pope and Stumpo, who were arrested in Charlotte, N.C., are being extradited back to California.
The suspects will be charged at least in part under the federal Animal Enterprise Terrorism Act, which carries a penalty of up to five years for each violation. However, Garcia said the law is overbroad and prime for constitutional challenges. It also may encourage protesters to go to greater extremes because the law carries the same penalty for a wide spectrum of demonstrations, Vlask said.
"It's making people who were formerly willing to protest and hand out leaflets ... Those people are saying, Heck, I can spend five years in prison for doing these things but I can pour some paint stripper on a guy's car or even light it on fire,' " and get the same punishment, Vlask said.
The foursome is not accused of involvement in the July firebombings at the homes of two UCSC scientists. Those attacks remain under investigation, the FBI reported.
Monterey Herald
Lead bullet ban shows success
Condors get poisoning from game animals...KEVIN HOWE
Hunters in the California Condor range appear to have been almost unanimous in complying with new state hunting regulations that ban bullets containing lead for hunting where condors scavenge.
The ban went into effect last year to prevent the big birds from ingesting lead bullets or shot from carcasses left by hunters and then suffering from lead poisoning. Scientists say the condors are particularly susceptible to lead poisoning and studies have contended that the major cause of death among the carrion birds has been from swallowing lead.
Nancy Foley, chief of law enforcement for the state Department of Fish and Game, reported at the state Fish and Game Commission's February meeting in Sacramento that game wardens have found hunters to be 99 percent in compliance with the ban, hunting with copper or other nonlead bullets in Central and Southern California condor country. She said only 63 warnings and nine citations needed to be issued for illegal possession or use of lead ammunition in the condor range.
According to the Center for Biological Diversity, 169 condors were flying free in the wild at the end of 2008, 87 of them in California.
The Ridley-Tree Condor Preservation Act, signed into law in 2007, requires hunters to use nonlead ammunition for hunting big game such as deer, elk, pigs and bighorn sheep, and shooting coyotes.
The state Fish and Game Commission approved additional regulations in 2007 expanding the nonlead requirements to hunting of nongame mammals and birds and prohibiting the use of lead .22-caliber and smaller rimfire cartridges for nongame hunting in the condor range, which includes all or parts of 13 central and southern counties, including all of Monterey and San Benito counties, and seven deer-hunting zones. 
Washington Post
Court orders EPA to reconsider soot threshold...DINA CAPPIELLO, The Associated Press
WASHINGTON -- A federal appeals court is pressing the Environmental Protection Agency for a better explanation of how the Bush administration's limit on the amount of soot and dust allowed in the air protects public health.
The court on Tuesday returned the standard to the EPA, arguing that the agency's explanation was inadequate. The decision in the long-standing controversy found soot limits by the Bush administration unjustified, and leaves it up to the Obama administration to set a new one.
More than a dozen states, along with environmental groups, sued the EPA seeking to lower the standard, arguing that the Bush administration ignored science and its own experts when it decided in 2006 not to lower the nearly decade-old annual standard.
The U.S. Court of Appeals for the District of Columbia ruled that the EPA failed to adequately explain, in view of the risks, why its standard is sufficient to protect public health. The court also found that the agency had acted unreasonably and contrary to the law when it set the secondary standard _ aimed at protecting the public from haze _ at the same level.
The appellate judges stopped short of vacating the current standards, saying that the defect in the agency's reasoning was curable and that even a flawed standard was better than none to protect public health.
"This is a real chance for the EPA to get it right, and to set standards that are truly based on the need to protect people's health," said Frank O'Donnell, president of the advocacy group Clean Air Watch.
The EPA said that it would review the decision to ensure that science and the law are followed.
Soot is comprised of microscopic particles released from smokestacks, wood-burning stoves and automobiles that contribute to haze and can burrow into lungs. Breathing in soot can cause lung and heart problems.
The court's decision is the latest in a series of legal opinions that have found problems with Bush administration air pollution policies.
Last year, an appeals court ruled that a Bush plan to control mercury pollution at the nation's coal-fired power plants violated the law by allowing utilities to purchase emission credits instead of actually reducing emissions. The Obama administration dropped the appeal of that case and said it is working on its own plan to curb mercury emissions.
In July 2007, the court threw out the Bush administration's Clean Air Interstate Rule, which required 28 mostly Eastern states to reduce smog-forming and soot-producing emissions that can travel long distances in the wind. The court has since reinstated the rule while the EPA makes court-mandated changes.
On the Net:  U.S. Court of Appeals District of Columbia Circuit:http://www.cadc.uscourts.gov
New York Times
Environmentalists Advance on Emissions...CORNELIA DEAN
The Supreme Court cleared the way Monday for the Environmental Protection Agency to issue new regulations on emissions of mercury, lead, arsenic and other pollutants from the nation’s coal-fired power plants.
Environmental groups hailed the action as a final blow to Bush administration efforts to frustrate tight regulation of the emissions, but any new Obama administration rules may draw their own court challenges.
The justices’ action involved a suit brought by environmental organizations, Indian tribes and 14 states including New York, New Jersey and Connecticut. The suit charged that the Bush administration had acted improperly in trying to create a separate regulatory regime for the coal-fired plants rather than subjecting them to the general requirements of the Clean Air Act.
The groups prevailed last year in a lower court, but the Environmental Protection Agency in the Bush administration, with the support of industry groups, appealed the ruling to the Supreme Court. On Monday, the court declined to hear that appeal. Obama administration lawyers had filed papers seeking the appeal’s dismissal.
Coal-fired plants produce about half the nation’s electricity, but they are a major source not just of heat-trapping gases but of pollution as well. Mercury is a particular concern. While airborne concentrations are usually low, when mercury falls to earth it enters streams, rivers and estuaries and can accumulate in the form of methyl mercury in the flesh of fish.
James Pew, a lawyer for Earthjustice, a nonprofit environmental law firm that represented environmental groups challenging the Bush administration, said he hoped the Obama administration would quickly move to produce new regulations.
But Jeff Holmstead, the head of the environmental strategies group at Bracewell & Giuliani, a law firm that represents many utility companies, said “there’s no way in the world” the court’s decision not to hear the case was the end of the matter.
“If the administration does something aggressive, it will be challenged by the industry,” said Mr. Holmstead, who in the Bush E.P.A. led efforts for the administration’s alternate approach. “If they do something not aggressive enough, they will be challenged by environmental groups.”
CNN Money
Home prices in record drop
S&P Case-Shiller national index down 18.2% in final three months of 2008...Les Christie
NEW YORK (CNNMoney.com) -- Home prices declined at a record pace around the nation in the final three months of 2008, according to an industry report released Tuesday.
The S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% during the last three months of 2008, compared with the same period in 2007.
Case-Shiller's index of 20 major metropolitan areas fell 18.5%, also a record.
"The broad downturn in the residential real estate market continues," said David Blitzer, chairman of the Index Committee at Standard & Poor's, in a statement. "There are very few, if any, pockets of turnaround that one can see in the data."
All 20 metro areas in the 20-city index recorded declines, with home prices falling more than 20% in eight of those cities. National home prices have dropped 26.7% since they peaked during the second quarter of 2006.
In a separate release from the government, the Federal Finance Housing Agency (FFHA) reported that prices on its home purchase index fell 8.2% during the quarter on a year-over-year basis, and 3.4% compared with the third quarter of 2008.
The government index, which used to be known as the OFHEO home price index, differs from the S&P Case-Shiller index in that it only compares sales of homes that are purchased with so-called "conforming loans", ones guaranteed or bought by mortgage giants Fannie Mae and Freddie Mac.
Homes purchased without financing or ones too expensive to qualify for a Fannie-Freddie loan are not counted in the FFHA statistics.
No slowdown
The decline does not seem to be slowing - just the opposite. The average home price dropped 2.5% between November and December in the 20 top metro areas. That was a larger increase than the 2.3% drop a month earlier.
"The deterioration in U.S. home prices continues apace, with the rate of decline picking up steam late last year," said Mike Larson, an analyst with Weiss Research."Rising foreclosure activity is putting pressure on prices, as lenders are increasingly pursuing a 'take what we can get' selling strategy."
Karl Case, the Wellesley economist who, with Yale economist Robert Shiller, co-developed the index, pointed out during a news conference following the index's release that the markets experiencing the steepest falls also enjoyed the biggest run-ups during the boom.
"Those markets were driven by subprime lending expansion from the summer of 2003 on," he said. "After the [Federal Reserve's lowered interest rates] to fight against the recession of 2001, subprime took off like gangbusters."
Sun Belt cities suffered the worst declines, with Phoenix down 34%, Las Vegas off 33% and San Francisco lower by 31.2%. Denver fared best, down 4%, while Dallas was lower by 4.3% and Cleveland slid 6.1%.
Of the nation's three largest housing markets, New York home prices dipped by 9.2%, prices in Los Angeles dropped by 26.4% and Chicago prices declined 14.3%.
Despite the drop in home prices, which has given affordability a big boost, the pace of home sales continues very weak. Existing homes have been selling at an annualized rate of fewer than 5 million, down more than 40% from the peak.
New home sales, at an annualized rate of about 331,000, are at their lowest level since the Census Bureau began keeping records back in 1963.
The worst may be yet to come, according to Peter Schiff, president of Euro Pacific Capital, an investment firm specializing in overseas investments and a noted bear on home prices.
"Prices are going to continue to fall," he said. "They have to reflect economic reality."
That reality includes stock prices down to their lowest level in nearly 12 years. "Where would real estate prices be if they went back to where they were 12 years ago?" said Schiff.
The index statistics do not contain a lot of good news for the future, according to Case.
"We'll learn more in the spring market," he said. "Sales should pick up and we'll begin to see how well the president's program is working. There's no evidence in the data to tell us that home prices will bottom out."
U.S. Economy: Consumer Confidence, Home Prices Slump (Update1)...Bob Willis and Timothy R. Homan
U.S. consumer confidence collapsed this month and home values plunged in December, the latest evidence of a deepening economic slump that Federal Reserve Chairman Ben S. Bernanke today warned may last into 2010.
The Conference Board’s confidence index dropped more than anticipated to 25, the lowest level since data began in 1967, the New York-based research group said today. Another report showed home prices dropped a record 18.5 percent from December 2007.
Bernanke called for “strong” action by policy makers as the Obama administration tries to mend the breach in confidence with stimulus plans aimed at creating jobs and keeping Americans in their homes. Macy’s Inc. and Home Depot Inc. led retailers’ shares higher on profits that topped analysts estimates after cutting payrolls and inventories as sales slumped.
“We’re in for a pretty long haul and the recovery won’t be quick and particularly strong when it comes,” said Julia Coronado, a senior economist at Barclays Capital Inc. in New York. “Chairman Bernanke has been saying this and President Obama has been saying this and consumers are getting the message. We just can’t seem to find the end to this housing downturn.”
Stocks advanced the most in a month, halting a six-day drop, after Bernanke said banks didn’t need to be nationalized. The Standard & Poor’s 500 index rose 4 percent to close at 773.14. Treasury securities fell as stocks rallied.
More Than Anticipated
The drop in confidence exceeded even the lowest estimate of the 72 economists surveyed by Bloomberg News. The median forecast called for the index to drop to 35, and projections ranged from 26.7 to 42.
Growing pessimism over employment prospects contributed to the slump in confidence. The share of consumers who said jobs are plentiful slumped to 4.4 percent from 7.1 percent last month. The proportion of people who said jobs are hard to get increased to 47.8 percent, the highest level since 1992.
Americans also grew more concerned about their financial well-being in future months. The gauge of the outlook for the next six months decreased to 27.5, also the lowest on record, from 42.5 in January.
The share of respondents expecting their incomes to rise over the next six months dropped to 7.6 percent from 10.3 percent.
‘Bottom Falls Out’
“Just when you think confidence can’t go any lower, the bottom falls out of it, and you can be sure the rest of the economy is not far behind,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, which had the lowest forecast. “If consumers’ spending matches their flagging spirits, this recession is going longer and deeper.”
The drop in home prices reflected 20 metropolitan areas with records going back to 2001, according to S&P/Case-Shiller. All the regions were down during the period, led by a 34 percent slump in Phoenix and a 33 percent slide in Las Vegas.
Prices fell as banks seized real estate from delinquent borrowers. President Obama said last week his new $275 billion housing program will help about 9 million homeowners lower monthly payments in a bid to keep new foreclosures in 2009 below last year’s all-time high of 2.7 million.
“As long as home prices are falling, the financial system and the economy will continue to unravel,” Mark Zandi, chief economist at Moody’s Economy.com, said in an interview. “It will cost millions of tax dollars to try to prevent additional foreclosures from coming on the market and gutting prices further, but it will cost millions more if we do nothing.”
Obama Stimulus
The day before unveiling the housing plan, Obama signed into law a $787 billion recovery bill that includes tax relief, infrastructure spending and aid to distressed states aimed at creating or saving 3.5 million jobs.
Even with lending rates near record lows and the government moving to prop up housing, foreclosures this year may reach about 3.1 million, surpassing last year’s, said Zandi.
The drop in home values is contributing to the decline in spending because home equity was a major source of cash for purchases of expensive items like autos during the housing and credit booms.
Macy’s, the second-biggest U.S. department store, today said net income dropped 59 percent in the quarter ended Jan. 31, as sales at stores open at least a year dropped 7 percent. An even bigger decline in stockpiles during the period prevented profit from declining even more.
Home Depot, the largest home-improvement retailer, beat estimates after curbing costs by closing its Expo design chain and also holding down inventory.
Other merchants are still struggling. Target Corp., the second-largest discount chain, said fourth-quarter profit fell 41 percent after it cut prices over the holidays and set aside more money for unpaid credit-card balances. Target said last month it’s eliminating 9 percent of its headquarters workforce and suspending raises for executives.
“The customer’s very tentative,” J.C. Penney Co.’s Chief Executive Officer Myron Ullman said on a conference call with investors this month. “They’re buying what they need and they’re being very smart about how they spend their money.”
Housing Prices in 20 U.S. Cities Fall a Record 18.5% (Update2)...Timothy R. Homan and Courtney Schlisserman
Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.
The S&P/Case-Shiller index’s decrease exceeded forecasts and compares with an 18.2 percent rate of decline in November. The gauge has slid since January 2007, and year-over-year records began in 2001. The Federal Housing Finance Board said separately prices in 2008 fell a record 8.2 percent.
Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.
“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.”
Economists forecast the 20-city index would fall 18.3 percent from a year earlier, according to the median of 28 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 19 percent.
Quarterly Figures
Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in December, led by a 34 percent drop in Phoenix, a 33 percent slide in Las Vegas and a 31 percent decline in San Francisco.
S&P/Case-Shiller also released quarterly figures for home prices nationally. That measure showed an 18.2 percent drop in the three months through December from the same period in 2007, compared with a 16.6 percent year-over-year decline in last year’s third quarter.
“The broad downturn in the residential real-estate market continues,” David Blitzer, chairman of the index committee at S&P, said in a statement. “There are very few, if any, pockets of turnaround that one can see in the data.”
The Washington-based housing finance board said its fourth- quarter figure was 3.4 percent lower than the prior quarter, on a seasonally adjusted basis, the largest three-month decline on record. Prices fell as banks seized real estate from delinquent borrowers.
Consumer Confidence
Confidence among U.S. consumers plunged to a record low this month, signaling spending will slump further as unemployment soars. The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today.
Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
The 20-city index is down 27 percent from its 2006 peak.
Home prices decreased 2.5 percent in December from the prior month, exceeding the November decrease of 2.3 percent, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month. Phoenix and Las Vegas also showed the biggest one-month declines.
Housing Starts
Other housing reports have shown the four-year slump is likely to continue. Homebuilders broke ground on the fewest houses on record in January, the Commerce Department said last week. Declining construction has hurt economic growth for the last three years and is likely to weigh further in the first quarter of 2009.
The glut of unsold homes is forcing builders to cut back on construction. Toll Brothers Inc., the largest U.S. luxury homebuilder, this month said its first-quarter revenue plunged 51 percent.
“The past five months have been among the most difficult in U.S. economic history,” Toll Brothers Chief Executive Officer Robert Toll said on a conference call Feb. 11. Homebuyers are worried they may lose their jobs and won’t be able to sell their existing homes, he said.
Foreclosure filings in the U.S. soared 81 percent last year to 2.3 million, the highest on record, according to RealtyTrac Inc., an Irvine, California-based seller of default data. The group said in a Feb. 12 statement that foreclosures rose 18 percent in January from a year earlier.
Obama last week also signed into law a $787 billion stimulus package that includes tax breaks and increases in government spending designed to stem what a survey of business economists showed may be the longest recession in more than three decades.
Financial Times
Citi close to deal with Treasury...Francesco Guerrera in New York
Citigroup and the US Treasury are nearing agreement on a deal that would give the federal government a stake of about 40 per cent in the troubled bank in exchange for bolstering its depleted capital base.
People close to the situation said no agreement had yet been reached and the government had yet to give its approval to the plan proposed by Citi, which stops short of outright nationalisation. But they added that negotiations between Citi’s executives and Treasury officials had made progress since the weekend and an announcement could come as early as Wednesday or Thursday.
Insiders say the deal, first revealed by the Financial Times, centres on the conversion of part of the government’s $45bn of preferred shares into Citi’s common stock – up to a stake of about 40 per cent. Other shareholders, which include sovereign wealth funds and pension funds, would also convert some of their $30bn-plus of preferred stock into shares. Citi, which is headed by Vikram Pandit, might add more capital through an equity offering. The moves would boost Citi’s capital base by adding more common stock without forcing the government and other investors to spend more money. But it would severely dilute the holdings of other shareholders.
Crucial details, such as the price of conversion and the stake the government will hold in Citi, are still to be finalised, people familiar with the talks said.
Citi declined to comment.
In recent days, the capital markets have been unnerved by uncertainty over the terms of the deal, the likely losses to be suffered by equity and bond investors and the effects on Citi’s operations. Citi shares were up more than 12 per cent to $2.40 by early afternoon in New York. However, the cost of protecting against a default on Citi’s debt continued to rise and was trading around its record high – a sign of investors’ fears the new plan would hit bondholders.
Regulators are due to begin “stress testing” banks’ ability to withstand a sharp economic downturn. The government has said it does not want to nationalise the banks but has not ruled out taking large stakes in ailing institutions as a temporary measure.
Bank of America, which has already received $45bn from the government, has been seen as the next institution in line for another rescue but it has said it is not in talks with government officials.