Summer of our discontent...Badlands Journal editorial board
The following articles about declining freight shipments -- from coastal ports to railroads to trucking companies -- raises an important question. In previous boom-bust cycles of speculative residential real estate investment, in the bust phase, capital flows into commercial real estate development. This was certainly anticipated here. The idea of finance, insurance and real estate (FIRE) was that you could create fraudulent mortgages, bundle and securitize them and sell them the whole world over...forever, in a constantly escalating real estate market that would provide and endless arena for speculation, because, as we all now know, the United States, having declared the end of history (political, economic, military, environmental), now created history any damned way it wanted to.
It didn't quite work out that way. What has happened is an economic depression, most keenly felt in areas like Merced, Modesto and Stockton, which for months have topped the national rollcall of shame for their astronomical foreclosure rates.
Now comes Obama, the cool president, with a stimulus package that has trickled down to us in the form of $2 million to pay workers to scrape burnt rubber marks off the Castle runways, seal cracks and repaint lines. This is presented in Sonny Star, the local McClatchy gigolo press, as a forward-looking move to transform the former Stategic Air Command airport into a commercial airport for Merced, i.e. a brilliant investment in infrastructure. In Sonny's line of work, asking questions is discouraged. The irony of the story is delightful, but the delight is muffled by the sense the story fell like a tree in a forest devoid of human contact.
Rubber marks occur on every commercial airport runway from JFK to Beijing and Suva, Fiji Islands. So, Dude, I'm not saying don't get out your putty scraper and go stand in line, but let's call this what it is, Works Progress Administration, putting people to work now doing what they can do now. You don't need a UC Merced education to do the job. And the job will last a whole "several weeks". That's Progress, Obama-style. Don't know how much you'll get paid to scrape rubber marks, but, hey, a job's a job, particularly in a depression.
The depression is what is causing the decline in freight shipments. But, if the stimulus package and the glorious Merced County leadership that earmarked Castle rubber-mark removal at a top priority can provide several week's work to some folks (if not entirely out-of-county specialists in rubber-mark removal), we been genuinely "stimulated."
We've gone from an economy in which you could borrow $250,000 on a house that cost you $90,000 before the boom started, to one in which if you're lucky you can scrape rubber marks off the runway for several weeks and maybe pay the rent on the duplex by the tracks for another month.
The political spin on the stimulus money is absurd. Infrastructure for what? A commercial airport for Merced? First, we already have an adequate one. People are leaving Merced in moving vans, not coming to it by air. Secondly, there is the question of the perpetually unstable feeder airline companies, who come and go to Valley airports according to the slightest economic breezes.
There was a recent announcement, also in the Sun-Star, that a new bank has come to town, with the interesting name, Rabobank. It describes itself in the business press as a "California-based community bank Rabobank, N.A." In fact, it is much more than that. It is a Netherlands-based international bank with assets of $800 billion, 9 million customers, and operations in over 35 countries worldwide. Although its flak (see below) presents it as a nearly humble (but very successful) Dutch farmers' cooperative bank, late last year Rabobank bought a 7.5-percent share in the Rothchild bank holding company.
The tie-up will see Rothschild and Rabo launch a joint assault on the food and agriculture industries. -- MailOnline (UK), 11-19-09.
But, again according to Raboflak, it will be "a classic community bank" assault on the food and agricultural industries. They've already established several offices in Tulare County, top dairy county in the nation. And down in Bakersfield, the land 'o cotton and oil, they got a Rabo Bank Arena and Convention Center. One of those branches is in Dinuba, one of three towns studied by Walter Goldschmidt in the 1940s in his critical work on how agribusiness destroys farming towns, As Ye Sow. They've also got one in Hanford, closer yet to King Cotton in Kings County. Rabobank is also established in Roseville, where every developer who is anybody, nationwide, has an office.
Rabobank is a very big deal. The moment of its arrival rhymes with the other depression, when A.P. Giannini bought up little one-branch Valley banks and created Bank of America, now a zombie bank. It is a sad commentary on California and on the Valley that, in this crisis, we find ourselves without the energy and commitment to do what the Dutch-farmer founders of Rabobank did: create our own bank. Oh well, we tried that and got County Bank instead. Has Rabobank arrived to recreate prosperity or to pick the bones clean? There is definitely a mood of hope in the nation, but when the president tells you he's going to send "trainers" to teach the Afghans how to fight, and the economic crisis will be solved with bank bailouts before bank regulation, you gotta wonder what hope is worth, rationally speaking.
Badlands Journal editorial board
Stimulus to deliver $2 million to Merced County for Castle Airport
Airport will use money to improve runway...SCOTT JASON
More than $2 million in economic stimulus money will be landing in Merced County to revamp Castle Airport.
The U.S. Department of Transportation announced $42 million for California's airports with $2.25 million to rejuvenate Castle Airport's 3.6 million-square-foot runway.
Castle Commerce Center director Mark Hendrickson said the work will help transform the airport from a former Air Force Base to a commercial hub.
"This is another step in our evolution," he said.
The county ultimately hopes to host a commercial passenger airline service. It wants Castle, which was an Air Force base until 1995, to thrive as an economic hub for Merced County.
The Federal Aviation Administration received $1.1 billion through the American Recovery and Reinvestment Act.
The money is meant to fund safety, security and other issues at airports.
For Castle, the money will pay to have workers scrape off burnt rubber from landings, reseal the concrete and repaint markings.
The county will award the bid before June 16 and expects the work to last several weeks.
Hendrickson said the county approved spending $394,000 on design studies so that more projects can be eligible for funding.
It's looking to land about $5.5 million in stimulus funding for Castle as more money becomes available.
Weekly US rail shipments fall 14.7 percent...The Associated Press
WASHINGTON Shipments carried by U.S. railroads fell 14.7 percent last week compared with a year earlier, a major industry trade group reported Thursday.
The Association of American Railroads said freight carried on the tracks for the week ended March 21 totaled 276,030 carloads.
Volume tumbled 13 percent in the West, where cargo is primarily carried by Union Pacific Corp. and Burlington Northern Santa Fe Corp. Volumes plunged 17 percent in the East, where freight is mostly hauled by CSX Corp. and Norfolk Southern Corp.
Intermodal volume fell 12.9 percent from a year ago. Intermodal involves moving freight from one method of transportation to another, such as truck to rail.
So far this year, shipments on U.S. rails are down 15.6 percent compared with the same period in 2007.
Harder to Keep on Truckin'...John Lindt
Visalia - With fewer goods coming in and out of West Coast ports, freight haulers large and small are seeing a decline in business in the 25 to 30 percent range, idling trucks and forcing some truckers to look for work elsewhere.
A Plaza Avenue trucking firm in Visalia, TLN Inc., will put on hold a planned new warehouse in the industrial park because of the slowdown, despite the fact this week the city is expected to give the project a green light.
“There's so much warehouse space in the Visalia industrial park it makes no sense for us to build more even though we would like to,” says company President Kathe Newsome. “You can get all the space you need at 25 cents a square foot,” says Newsome. “We will put the project on hold for two or three years and hope it gets better.”
TLN Inc. is a small company with 22 trucks and 46 trailers. The company had plans to build its office at 1212 N. Plaza where it parks its trucks. The company, operating here for 15 years, employs 35 and earlier this year told the Voice it hopes to grow to add another 15 employees.
Newsome says local trucking firms have simply parked their fleets in many cases – some with for sale signs on them.
Newsome says trucking rates are down about 25 percent with a fierce scramble for business among those who are left. She has scorn for middlemen and brokers who undersell the guy who does the hauling.
Newsome says drivers are walking through the door every day looking for work – some who have given up on their rigs. “That's where we get some of our best drivers.”
Big firms are in trouble too with the slide in demand hurting profits, including publicly traded Knight Transportation that has a big hub in Tulare.
According to a recent survey, 21 percent of truckload carriers suggested that they were likely to consider liquidating in the coming six months.
In its most recent financial statement, Knight said “a substantial number of small and midsized carriers have been forced into bankruptcy due to tight credit, high and volatile fuel prices, and challenging industry pricing. “We believe that this dynamic could eventually set the stage for tighter industry capacity,” the company said.
Heartland Express – another large carrier – said, “High fuel prices, a tightening economy, and tight credit drove many in the industry to bankruptcy. This, along with the harsh realities of declining freight volumes, will make it an even tougher operating environment and more difficult for the weaker carriers to survive.”
Container traffic shipped from the big ports of the state has collapsed in recent months. The L.A. and Long Beach ports, for example, account for 40 percent of U.S. inbound container movements. Business is the worst it has been in 25 years.
The L.A. port has announced that container traffic through L.A. fell 33 percent in February with ports down 35 percent on imports and inbound traffic just 28 percent.
Rail traffic is down 22 percent at Union Pacific through March 7, the company announced.
Trucking firms that once had a presence in Visalia, including Condor, are now gone. Real estate broker Doug Burr says the company-owned by DATS Trucking has relocated to Fresno, leaving a 16,000-square-foot trucking terminal at Plaza and Goshen Avenue vacant.
Rabobank, N.A. to Open Branches in Merced, Atwater, Turlock and Los Banos
California-based community bank Rabobank, N.A. has applied to establish two branches in Merced. The bank also filed applications with the Office of the Comptroller of the Currency (OCC), its federal regulator, to open branches in Atwater, Turlock and Los Banos.
“With all of the recent banking changes, we saw the need for a strong community-oriented bank in this region,” said Jim Lokey, president of community banking. “It has long been our goal to expand northward in the Central Valley to complement our existing branch network and to better serve our agricultural and business customers here. Now seemed an opportune time.”
Headquartered in California, Rabobank, N.A. has 83 branches serving the non-metropolitan areas in the state -- in the Central Valley, along the Central Coast, and in the Coachella and Imperial Valleys. The Central Valley branches are in Roseville, Fresno, Visalia, Reedley, Dinuba, Hanford, and Bakersfield (3). The bank employs more than 1,600 California residents throughout its network.
“Rabobank is a community bank in the classic sense,” said Lokey. “Our employees are deeply involved in local organizations and non-profits and the bank supports their efforts with donations to those community groups. Local advisory boards help keep us in touch with community issues and each region of the bank is overseen by a regional president so that decision-making is as close to the customer as possible.”
“On the banking side, money that customers deposit at Rabobank is invested back into the community through loans to local businesses and individuals. We look forward to being part of the community here in Merced.”
The bank’s applications are subject to the approval of the OCC after a 30-day public comment period.
Rabobank had deposits of $4.8 billion and assets of $8.7 billion at year-end 2008. The bank had a capital ratio of 13.87% at year end. Federal regulators consider banks well-capitalized when the ratio is 10% or greater.
“We are proud to say that we are well capitalized and can meet the lending needs of our customers without government assistance,” said Lokey. “Our reputation as a safe, sound and secure bank is built on conservative policies and prudent decision-making.”
Rabobank, N.A. is part of the Rabobank Group, which is triple A rated by Standard & Poor’s and Moody’s Investors Service and was rated one of the world’s safest banks in February by Global Finance magazine.
Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and banking products to California farmers, ranchers, input suppliers and agricultural manufacturers. With 83 retail branches and 14 commercial banking centers, we serve the needs of communities from Sacramento to the Imperial Valley through local decision making and active community involvement by our employees. www.rabobankamerica.com
Note: N.A. stands for “National Association,” designating that the bank is nationally chartered.
VP/Advertising and Communications Manager
Rabobank was founded as a finance cooperative over a century ago by Dutch farmers. What began in the 1890's as a collection of small rural banks financing local farmers in the Netherlands has since grown into one of the world's 25 largest banks. Today, we are one of the largest financial services providers in the world, with over USD 800 billion (Euros 570.5 billion) in assets, 9 million customers, and operations in over 35 countries worldwide.
Rabobank's name is derived from two cooperative banking groups which operated in the Netherlands throughout the 20th century: the Cooperative Central Raiffeisen Bank, and the Cooperative Central Farmer's Credit Bank (or 'Boerenleenbank' in Dutch). In 1972, they merged and formed one central cooperative bank - the Cooperatieve Centrale Raiffeisen-Boerenleenbank, or Rabobank.
Rabobank first expanded outside the Netherlands in the 1970s, in order to continue serving our clients as they conducted business overseas. Rabobank's presence in the Americas began with the opening of our Curacao office in 1978. Our New York office opened in 1981, and since then Rabobank has grown to become a leading financier to the entire pan-American food and agriculture sector, and the bank of choice for thousands of local customers in California and Chile.
Reflecting our heritage, Rabobank today remains a cooperative membership institution, much as we were 110 years ago. We are not a shareholder driven institution - rather, Rabobank is a self-owned company, owned by the central Rabobank, its subsidiaries, and local cooperative banks in the Netherlands. We do not distribute dividends, but instead reinvest profits in the growth of our local businesses.
We have also remained true to our agricultural roots and have continued to finance farmers while extending our financial strengths to all segments of the agriculture industry, as well as select retail and business banking markets.
At Rabobank, our core focus is to create value - for our clients, our employees, and our local communities. With our tremendous financial strength, century of agricultural experience, unparalleled global expertise, and unshakeable commitment to customers, it is no wonder that Rabobank is the bank of choice to clients across the Americas and around the world.
Dutch bank Rabobank buys 7.5 per cent stake in Rothschild...Simon Duke
The Rothschild dynasty has sold a stake in its 200-year-old investment bank to one of Holland's largest financial institutions.
Rabobank is buying 7.5 per cent of Rothschild Continuation Holdings, the parent company for the family's British and Swiss operations.
The Dutch bank joins Jardine Matheson as the sole outside investors in Rothschild.
The Hong Kong trading house bought a 20 per cent stake from Royal & Sun Alliance three years ago.
The tie-up will see Rothschild and Rabo launch a joint assault on the food and agriculture industries.
Rothschild bankers have given advice on a myriad deals in the food and drinks sectors.
Last year they advised on the takeover of British brewer Scottish & Newcastle by Dutch rival beer company Heineken.
Figures unveiled yesterday showed that Rothschild, which does not finance big corporate deals, has emerged relatively unscathed from the financial crisis.
Pretax profits rose by over 30 per cent to £458.7million in the year to the end of March.
Rabo's Sipko Schat will also join the board of Rothschild.
Santa Cruz Sentinel...As We See It: Why we're examining public pay
The Sentinel today is publishing salary data regarding Santa Cruz County public employees. On Page A1 of today's print edition, reporter Kurtis Alexander analyzes this data. A complete database of these salaries can be found online at santacruzsentinel.com.
Why are we doing this?
Yes, it's public information, but, if you work for the county, you might not want everyone in your neighborhood, much less the vast Internet audience, to know how much money you make. Indeed county officials and some employees have asked us not to publish the data.
Once you look at it, you can see why.
The top tier of public employees working for the county are paid exceedingly well. What's more, while many people in the private sector have seen their wages decline, or have even lost their jobs, the county's 10 highest paid administrators saw their pay rise an average of 12.3 percent last year, according to the Sentinel survey. The number of public employees making more than $200,000 rose from one to six. Many employees have racked up tens of thousands of dollars in overtime pay, as well.
County administrators say the high pay is simply the cost of remaining competitive with other counties. Unless top employees are compensated well, they say, they might well take other publicly funded jobs, perhaps in neighboring counties where the pay is even higher.
With the economy in tatters, you might expect elected representatives to take a tougher stance. But, the county Board of Supervisors themselves saw their salaries rise 9 percent in 2008.
We don't know too many taxpayers working in the private sector who have seen raises like that in recent years. Especially not if their workplace is projecting a deficit of $25 million, which is what the county faces.
Most county employees, of course, aren't paid nearly so well. In fact, administrators are asking all county employees, including rank-and-file workers represented by the Service Employees International Union, to consider a pay freeze for the next fiscal year starting July 1. Most of these SEIU employees got raises between 3 and 7 percent last year.
While most of the executive pay raises were negotiated in 2007, it's hardly a secret that public employees, working in all sectors of government, have seen their pay rise dramatically in recent years. So have retirement and health benefits, which can be worth 20 percent of base salary.
But times have changed, and while counties and cities probably could afford generous employee compensation when tax revenue was pouring in, a severe drop-off in these revenues can cause financial problems.
Much of the increase in public employee compensation took place during the dot-com boom of the 1990s, followed by the housing bubble of the aughts. Local governments spent on bigger salaries, raises, benefit packages, overtime and staffing. Today, these expenditures would seem unsustainable.
But that's a matter for a well-informed public and our representatives to discuss. At a time when Californians are facing tax hikes and drastic cutbacks in funding for schools and in services for the needy, we think taxpayers should know where their money is going.
Idle rail cars creating neighborhood blight...Information from: Star-News, http://www.newschoice.com/
MONROVIA, Calif. -- An ugly recession legacy has San Gabriel Valley officials railing against unused railroad freight cars piling up on neighborhood tracks.
Residents near a three-mile stretch of track from Monrovia to Irwindale along the proposed Gold Line extension complain the stored rail cars have attracted graffiti vandals and vagrants.
The freight cars are owned by BNSF Railway. Railroad spokeswoman Lena Kent says declining shipments have forced them to use rail space to store the idle cars.
BNSF is using the track under an agreement with Metrolink, which owns the rails. The cities of Irwindale, Arcadia and Monrovia want BNSF to come up with a graffiti abatement program or allow them to send in their own cleaning crews
Coho killed after water diverted to protect crops...Information from: The Press Democrat, http://www.pressdemo.com...4-5-09
HEALDSBURG, Calif. -- Officials say endangered coho salmon were killed after a sudden drop in the water level of a Russian River tributary this week due to the siphoning of water used to protect crops from frost damage.
The fish deaths come as a multi-agency task force is set to meet on Tuesday in Sacramento, where officials will discuss how to protect crops from the cold without threatening fish in the Russian River system.
Dan Torquemada of the National Marine Fisheries Service says his agency, the state attorney general and the Sonoma County district attorney are all investigating this week's fish kills.
Last year another fish kill occurred, prompting Tuesday's meeting.
The fish die when farmers pump water for frost protection, causing water levels in the Russian River and some of its tributaries to fall dramatically, stranding the fish.
Saving salmon must be part of state's water planning...Editorial
Gov. Schwarzenegger wants "comprehensive water reform" to be one of his legacies. This includes moving water through or around the Sacramento-San Joaquin Delta, increased water storage, statewide conservation and habitat restoration.
It's a worthy to-do list, supported by many valley legislators and spearheaded by Sen. Dave Cogdill of Modesto. Yet it doesn't go far enough.
Saving our salmon must be a significant part of the governor's agenda. Otherwise, he could leave office with the state's prized salmon fisheries sinking into oblivion.
It's happening on the tributaries of the San Joaquin River, where the number of spawning salmon have dwindled into the hundreds. On the Sacramento River, 66,000 salmon returned this season, a tenth of the number from 2002.
Schwarzenegger has supported Klamath River restoration and provided aid to out-of-work salmon fishermen. But his administration hasn't done nearly enough to improve river conditions in the valley, where these fish confront a range of perils.
The giant pumps near Tracy, which suck up young fish and alter the estuary's flows, are one such peril. Unscreened water diversions are another. But there are more. The water itself can be deadly. Water warmer than 74 degrees kills juveniles; the San Joaquin River frequently is warmer.
Once in the ocean, there are other stresses. Scientists know the natural "upwelling" of nutrient-rich currents that generate salmon food has diminished. Yet, biologists have pointed out that chinook salmon have been declining for 150 years, even when ocean conditions were favorable.
With a more environmentally friendly administration in the White House, there's an opportunity for California to help salmon in all our rivers recover. The 1992 Central Valley Project Improvement Act calls for at least a doubling of salmon populations on a "long-term sustainable basis." To meet this goal, California must learn from successes. These include dismantling obsolete dams that block important habitat and restoring other habitat.
Predators are another danger to young salmon trying to reach the ocean from the Tuolumne, Stanislaus and Merced rivers. Striped bass, in particular, have moved up from the delta into our rivers and often lurk in flooded gravel pits waiting for the 6- to 8-inch juvenile salmon to swim past. Then they feast.
It's why the Modesto and Turlock irrigation districts support Assembly Bill 1253, which would remove the two-fish limits on striped bass in the delta. Many sportsmen disagree, saying stripers and salmon have coexisted since the bass were imported around 1880. But in previous decades, stripers stayed in the delta. Now, some scientists believe they have moved to where their favorite food source -- young salmon -- live. By allowing fishermen greater takes of these voracious predators, young salmon might have a better chance to survive.
More important is habitat restoration, such as the good work being done by Tuolumne River Trust and Friends of the River. Planting low-lying areas with native trees and shrubs provides good habitat for young salmon when these areas are flooded.
None of this comes easily or cheaply. Flooding land for salmon means less for agriculture or other habitat. Keeping water cold enough for out- migration means releasing more water.
California's salmon are in dire straits. We need a cohesive plan that takes into consideration habitat restoration, removing predators and allowing the population time to recover. Schwarzenegger must make salmon a key part of his water agenda.
Court to decide if good lawyers can get more money...The Associated Press
WASHINGTON The Supreme Court will decide whether a judge can award more money to winning lawyers because the judge thought they did a good job.
The high court on Monday agreed to hear an appeal from the state of Georgia over attorney fees for lawyers who sued to force dramatic changes in Georgia's foster care system.
U.S. District Judge Marvin Shoob awarded them $10.5 million in attorney fees, a $4.5 million enhancement on top of a $6 million award. Shoob said he increased the award because of the exceptional results that children's advocates achieved. The 11th U.S. Circuit Court of Appeals refused to overturn his decision.
The class-action lawsuit against Georgia, settled in 2005, prompted the state to reduce worker case loads, improve investigations into abuse and prevent overcrowding in foster homes. Gov. Sonny Perdue, one of the defendants in the lawsuit, authorized hiring 500 additional child welfare workers.
Shoob said the attorneys deserved the award because their lawsuit had beneficial results despite the state's resistance to reform. The state settled the case after fighting it for nearly three years.
Lawyers for Georgia say appeals courts around the nation have split on whether a judge can give lawyers extra money based on their performance.
The case is Perdue v Kenny A., 08-970.
Los Angeles Times
Ports' clean-rig program puts truckers in more comfortable driver's seat
Dumping exhaust-spewing rides for new trucks that offer comparative luxury is one advantage of complying with the L.A. and Long Beach harbor complex's lower-emissions effort...Ronald D. White
The cargo is pretty much the same -- a rusty 40-foot container filled on a recent morning with 50,000 pounds of Asia-bound hay cubes. The trip on a recent Saturday also was unchanged: the few miles between the 51-year-old Los Angeles Harbor Grain Terminal and the TraPac Inc. terminal at the Port of Los Angeles.
But that's where the similarities end.
Heriberto S. Perez Jr. used to drive an exhaust-spewing 1988 Freightliner that lurched through the streets on the strength of air-polluting diesel fuel. The truck had no air conditioner, a broken window and only a fraction of its original power.
FOR THE RECORD:
In an earlier version of this article, the first name of Heriberto S. Perez Jr. was incorrectly spelled Herberto.
Now he travels to and from the local ports in a sparkling new 2009 Kenworth T800 liquefied natural gas truck with a drive train that derives 95% of its power from natural gas.
Such a truck never would have been seen at the harbor before October, when the ports of Los Angeles and Long Beach launched an ambitious plan to replace 16,800 older rigs by 2012 with the nation's lowest-emissions fleet.
The Kenworth required just one smooth try to latch on to a container and its chassis, and it pulled away as if the 250-ton load weighed almost nothing. Inside the quiet, almost stylish, air-conditioned cab, there was no hint that 5% of the truck's power came from diesel fuel. The only odor: the familiar organic compounds known as new car smell.
"After my old truck, which was banned from the ports in October, this feels like I'm driving a Cadillac," said Perez, of Fontana, who is leasing the rig and at first had to deal with suspicion from his wife when he was no longer coming home smelling like a tailpipe.
"She wanted to know where I had been," Perez said. "She figured I wasn't going to work."
The truck wasn't an easy call for Perez, an independent owner-operator responsible for his own rig. If he wants to continue driving to and from the Port of Los Angeles, he's been told, he will have to become an employee of a certified trucking concession under stipulations of the clean-truck program. That requirement has been challenged in federal court by the American Trucking Assn. and the Federal Maritime Commission.
Last month, the U.S. 9th Circuit Court of Appeals ordered a lower court judge to reconsider her refusal to block the provision requiring all independent owner-operators to become employees. Perez was pleased, preferring the freedom of being his own boss and setting his own hours and rules.
"I have a seven-year truck lease, and what happens if I'm not an employee in five years like they said I have to be? I can't drive the truck?" Perez said.
In the meantime, Perez drives exclusively for the Los Angeles Harbor Grain Terminal.
The terminal handles exports -- grains, mostly -- from Midwest farms, transferring them from rail cars to traditional cargo containers for the trip across the Pacific. Pound for pound, however, like most U.S. exports, they are worth only a fraction of the finished-goods imports bound for U.S. store shelves. That makes it difficult for shippers to pay the $70-per-container clean-truck fee that the ports require for cargo hauled by trucks that don't meet 2007 pollution limits.
Grain terminal Vice President Dwight Robinson had already begun hearing from customers who were considering a switch to the Port of Oakland, which does not yet have a clean-truck fee. Robinson and Grain terminal President Howard Wallace had been huddling with drivers, brainstorming on how they might acquire trucks new enough to be exempt from the fees.
Enter Perez, with a personal credit rating so far north of 700 that he would be the envy of most Wall Street bankers. Armed with a $105,000 grant from the ports' clean-truck program, Perez came back to Wallace and Robinson with hard numbers on just how much hauling he would need to do to pay off the lease and handle the much higher insurance on the $185,000 Kenworth.
It works out that Perez needs to get more jobs than the other truckers, who drive older rigs. On Saturday, for example, with 13 available drivers, at least three of the 10 jobs scheduled were being held for Perez. So far, it hasn't caused any friction with the other truckers, Grain Terminal officials say.
Back at the ports, Perez's rig doesn't stand out much among the other trucks. At the TraPac terminal and the nearby SSA Marine terminal, about half the vehicles have that dull primer paintlike finish and faded chrome look typical of older port trucks suffering from long exposure to diesel exhaust and salty air. The other half are an assortment of gleaming new Macks, Sterlings and Kenworths, with the occasional new Volvo sprinkled in.
The difference between old and new is something that can be sensed almost immediately as trucks line up at terminal gates.
When they are new enough to be certified as clean idlers, the fumes are barely perceptible or nonexistent. When the vehicles are older and dirtier, the gunk accumulates in the nostrils, throat and lungs.
"I don't come home nauseous from all those diesel fumes anymore," Perez said.
Although he now sits apart from that in a climate-controlled cab, Perez still has stresses to deal with.
Valid radio frequency identification tags on his truck, which identify him as a qualified driver and note the status of his truck, sometimes show up as invalid on terminal gate scanners. That kicks him out of the line. Delays at the terminals put him perilously close to missing that crucial number of jobs he has to reach to cover the costs of the new truck.
But he'll take them, given the benefits he would have never expected at this time last year. Among them, a new truck suspension that means his back no longer feels as if his vertebrae have been rearranged by the end of the day. And the new truck filters out quite a bit of the headache-producing noise of other truck engines, air brakes, rail crossing signals, rail car clanking, locomotives and yard cranes.
"I almost don't mind waiting anymore -- almost," Perez said.
The dam infrastructure problem
New report says over 1,800 dams pose significant risk to human life. Fixing them will cost billions, but can we afford this in addition to roads, bridges and other projects?...Steve Hargreaves
NEW YORK (CNNMoney.com) -- Kentucky's Wolf Creek dam has been a hazard for years.
Some 150 miles northwest of Nashville, the 270-foot high, 1950s era dam on the Cumberland River has been leaking for decades.
The problem seems to have gotten worse in recent years. The dam poses such a threat that in 2008 counties down river installed emergency evacuation horns.
Although the Army Corps of Engineers is working aggressively to fix the problem and says the dam should be stable in seven years, the consequences of a breach are huge. The pent-up water in Cumberland Lake would spread over over 200 miles - flooding Nashville. The Corps estimates over 100 lives could be lost, and cause over $3 billion in property damage.
It's against this backdrop that the American Society of Civil Engineers recently said over 1,800 dams nationwide are deficient, and their failure could result in loss of life. That's almost a five-fold increase from 2001.
"There's a huge gap between what we've been able to repair and what we need to repair," said Brad Larossi, a dam safety manager who helped author the engineer society's report. "And the number has been growing dramatically."
The price tag to fix these worst-case dams is around $8 billion, said Larossi. Fixing all the dams that need repair - estimated at over 4,000 - would run closer to $50 billion.
The question is: Do we need to spend all that money and how immediate is the threat?
The $50 billion would have to come out of money for roads, bridges, schools or other infrastructure projects.
And while a breach at Wolf Creek could be a serious situation, especially due to its proximity to Nashville, experts say most dam failures would be gradual and quite predictable.
"Although the numbers are alarming, there's nothing in this report that would suggest a disaster movie scenario," said Douglas McCoach, vice president of planning and urban design at RTKL Associates, an architecture and planning firm.
McCoach said focusing on the worst-case dams is a good idea, while gradually chipping away at the others on a piecemeal basis.
What makes a bad dam
While the image of a huge Hoover Dam-type structure with a big crack in itis what most people think of when they hear the words "dam failure," in reality it's not usually that dramatic.
There are a handful of reasons engineers could deem a dam "deficient," said Larossi, and they don't usually have to do with giant cracks.
It could be that the technology to predict earthquakes has gotten much better since the dam was built, and what was once though as a very unlikely event has gotten a bit more likely. In those cases, the dam needs to be strengthened structurally.
Or it could be that meteorology has improved. Old rainfall predictions that said flooding seemed unlikely, now may say flooding is more likely. That would mean the spillway, the part of a dam that allows water to flow over it without damaging the structure, needs expanding.
Or, like in the case of Wolf Creek, it could be that the dam is experiencing "seepage." That's where water is leaking into the dam's foundation and eroding the soil beneath it. But as with Wolf Creek, it's a problem that has gone on for decades and officials seem to be managing it.
"Dams generally don't collapse out of nowhere," said Martin Doyle, an assistant professor of geography at the University of North Carolina Chapel Hill. "It happens during flood events. People know it's coming, and they usually are evacuated."
Still, Doyle was quick to point to all the old dams across the United States, and say that sooner or later they will all need to be dealt with.
Most dams posing the greatest danger are in the eastern part of the country, for two reasons.
First, they tend to be older. But the eastern part of the country is also more densely populated. One of the reasons there's been such an increase in high risk dams, said Larossi, isn't because the dam itself has deteriorated, but rather because more people have moved closer to it.
That increases the chances of loss of life or property in the event of a breach, and immediately bumps the dam up into a higher risk category even if the dam is in excellent condition.
What can be done
The engineering society recommends more funds for dam repair and inspection, more emergency planning, and greater public education, among other things.
Fifty million dollars were set aside in the stimulus bill to repair dams run by the Department of Agriculture, but that's all that was allocated specifically for dam work, said Larossi.
He's calling on Congress to approve $200 million to shore up the most dangerous dams over the next five years.
A small start, he said, but one that can begin to chip away at the problem.
Bank woes nowhere near over - analyst
Loan losses will exceed Great Depression levels, says Mike Mayo of Calyon Securities...Julianne Pepitone
NEW YORK (CNNMoney.com) -- The percentage of loans that banks will need to write off will exceed levels seen during the Great Depression, according to a bank analyst's report Monday.
The report helped send bank stocks and the overall market lower as of mid-afternoon trading.
Mike Mayo of Calyon Securities gave the banking industry an "underweight" rating, citing "the ongoing consequences" of banks' increased risk-taking.
"The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators," Mayo said in the report.
These "sins" created front-load earnings and pushed costs further down the line, Mayo said. Now those costs are appearing and many of the current problems being experienced are only midstream, he added.
Mayo initiated coverage of 11 major U.S. banks, each of which he gave an "Underperform" or "Sell" rating. Those in the underperform category included Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), and JP Morgan Chase (JPM, Fortune 500). Banks labeled sell included Fifth Third Bancorp (FITB, Fortune 500), SunTrust, (STI, Fortune 500) and U.S. Bancorp. (USB, Fortune 500)
Mayo's prediction about loss ratios topping Depression era levels was not new. Mayo, who had worked at Deutsche Bank before joining Calyon Securities, made the same forecast in a report for Deutsche Bank on March 11. But Monday's report highlighted continued concerns about the financial sector.
Suffering U.S. banks face a three-fold problem: higher structural risk, cyclical pressures, and "catch-22 government actions," Mayo said.
Structural risk comes from issues with assets other than mortgages - which have already punished banks' balance sheets - that are likely to accelerate and create a "rolling recession," in which asset classes fall one after another, Mayo said.
The cyclical pressures of mortgages and an acceleration in cards, consumer credit, construction, commercial real estate and industrial will cause the loan losses-to-loans ratio to increase to 3.5% by the end of 2010 from the current 2%. The Great Depression's peak was 3.4%, according to the report.
Finally, government faces a difficult task in attempting to boost the financial sector, Mayo said.
"The government can go easy on the banks but, if so, (that) would leave many of the toxic assets on balance sheets," he said. But, he noted, overly tough actions will make banks scramble for capital.
Loans have been marked down to only 98 cents on the dollar on average, Mayo noted, which may indicate new government actions might not help as much as expected.
The report suggests banks' issues are widespread and multi-faceted, and Mayo stressed that many of the financial sector's problems are only midstream.
"The impact of excessive risk, while already seen, still has more to go," he said.
California Foreclosures Jeopardize Renters as Banks Seize Homes...Ari Levy and Dan Levy
April 6 (Bloomberg) -- Laura Hecox was baffled when an officer from the San Diego County sheriff’s department came to her home in February and said she was being evicted. She hadn’t missed a rent payment on her four-bedroom house since moving there a year-and-a-half earlier.
“They told me to leave, to get a few things together,” said Hecox, 37, who lives with and supports her four kids and mother. “I got booted out just like that.”
Hecox didn’t know the home she was renting in Chula Vista, California, about 10 miles north of the Mexican border, was in foreclosure because her landlord was a year behind on mortgage payments. The new owner was a group of investors led by JPMorgan Chase & Co., the third-biggest U.S. home lender.
In California, home to the most foreclosures in the country last year and about 5 million renter households, residents who are current on rent payments face eviction by banks unwilling to be landlords. At least one-third of the state’s 267,000 foreclosure sales in 2008 were rental units, said Dean Preston, executive director of Tenants Together, a San Francisco-based non-profit group for renters’ rights.
While thousands of tenants search for places to live, banks are losing out on the potential to collect monthly rent checks and flooding the market with empty houses that are declining in value. That’s because they don’t have the infrastructure or staff to deal with rental buildings, said William Acheson, an analyst at Benchmark Co. LLC in New York.
“Banks are notoriously bad property managers,” said Acheson, who tracks real estate investment trusts. “If they can sell them at a 60 percent discount, they will,” he said.
Biggest Home Lenders
Bank of America Corp., JPMorgan and Wells Fargo & Co. account for more than half of residential mortgages nationally, and are the biggest home lenders in California, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. All three are facing surging defaults from tumbling home prices and the highest unemployment in a quarter century.
“We don’t have the capacity to be long-term landlords,” said JPMorgan spokesman Gary Kishner in response to a question about Hecox. “We work with tenants on their transition from a property and that may include cash for keys.”
The bank said it placed an eviction notice on Hecox’s door in September. It was addressed to the landlord and “all others in possession,” according a copy of the document.
More than 20 percent of properties in the U.S. facing foreclosure are rentals, according to a December report from the National Low Income Housing Coalition in Washington. Renters make up about 40 percent of families facing eviction.
$1 Billion in Rent
In California, more than 225,000 people in rental units lived in properties that went through foreclosure last year, according to a March 31 report from Tenants Together. The group estimates they occupied about 81,500 units.
Were banks to rent all those properties, they could collect more than $1 billion in annual rent, based on the median California rent in 2007, according to the U.S. Census Bureau.
Hecox, who works the overnight shift at a job-referral service, was met at her front door in the early afternoon on Tuesday, Feb. 24, by an officer from the sheriff’s department and a real estate agent. They told her the home had been sold at an auction and she needed to leave. Hecox had been paying $2,250 a month, half from government assistance.
The property was taken back by the lenders on Aug. 29 at an appraised value of $243,000, 60 percent less than the outstanding balance on the mortgage, according to the trustee’s deed. JPMorgan’s Washington Mutual Inc. unit serviced the loan, which had been wrapped up into a security, and now has the property in its name.
Officers serve eviction notices when ordered by the court and aren’t responsible for determining who occupies a property, said San Diego County Assistant Sheriff Kim Quaco. He said an eviction notice was posted on Hecox’s door 11 days before she was forced to leave.
Fannie Mae and Freddie Mac, the mortgage-finance companies under federal control, have formal policies for renting to tenants. Starting in January, the companies hired property managers to reach out to renters and offer them new leases at market rates.
Management fees equal about 10 percent of a renter’s monthly payments, said Norman Miller, professor of real estate at the University of San Diego.
The costs are outweighed by the economic benefits, which include the income stream from monthly checks and the upkeep provided by renters, according to Freddie Mac spokesman Brad German, who said about 20 percent of the 29,000 properties that they own nationwide are occupied by a former owner or renter.
“Vacant properties can be magnets for vandalism and crime and also have a negative effect on property values in the immediate vicinity,” said German, in an interview from McLean, Virginia.
Rising delinquencies contributed to fourth-quarter losses at Charlotte, North Carolina-based Bank of America, which owns Countrywide Financial Corp., and at San Francisco-based Wells Fargo, owner of Wachovia Corp. JPMorgan, in New York, recorded a 76 percent decline in profit.
Bank of America spokeswoman Jumana Bauwens said the company follows Freddie and Fannie policies on any of their loans it services and is examining the programs to see if they are “viable for our organization.”
Wells Fargo spokesman Kevin Waetke, referring to a document released by the bank in April 2008, said the bank deals with renters on a case-by-case basis. It doesn’t have a “summary eviction” policy, he said.
“We make every effort to work with the current tenants and provide them adequate notice to make other housing arrangements,” Wells Fargo said in the statement.
Banks should be following the lead of Fannie and Freddie, said Kevin Stein, associate director of the California Reinvestment Coalition, which works on behalf of low-income communities. He’s proposing solutions, including re-renting to tenants, keeping utility companies from shutting off power and hiring brokers to ensure local and state laws are followed.
Most California cities require new owners give tenants 30- 60 days to move, according to the state Department of Consumer Affairs
In the San Francisco area, where 70 percent of units are renter-occupied, and in Los Angeles, local ordinances forbid owners of most buildings from evicting without “just cause,” such as missed payments. Six other states and Washington D.C. offer tenants some protection, according to the National Low Income Housing Commission.
Lenders, grappling with surging defaults, are either ignoring or are unaware of the laws and are punishing renters who have done nothing wrong, said Preston of Tenants Together.
“A common thing after foreclosure are efforts to get tenants to move out without going ahead and serving them the legally required notice,” said Preston, who started a hotline in February to help tenants in foreclosure. “They’re under no legal obligation to move out just because someone tells them they need to.”
Renters occupy about a quarter of all San Francisco buildings that receive default notices, the first stage of the foreclosure process, said Phil Ting, the city’s assessor- recorder. Trustee sales, the last stage of the process in which foreclosed properties are sold to new owners, increased 133 percent to 667 last year and could double again in 2009 as unemployment rises, he said.
Ting and other San Francisco officials began sending letters last year to tenants in buildings that got default notices, advising them of names and phone numbers of housing- assistance groups.
“We were hearing horror stories where the owner was either totally checked out or had been foreclosed on,” Ting said in an interview at his City Hall office. “Tenants came home, their building was padlocked and the power was turned off.”
Genevieve Hilpert, a 35-year-old nursing student from Cameroon, said her San Francisco landlord left the U.S. in June last year and asked her to send $550 rent checks to a relative in Fairfield, California.
In December, Hilpert received a letter from a lawyer in Davis, California, representing Bank of America’s LaSalle Bank NA, the owner of the house following a Nov. 19 foreclosure sale. The letter demanded details of Hilpert’s lease agreement, which she had made orally with the old landlord, and threatened to evict her if she didn’t respond.
Hilpert refused a cash offer from Bank of America to leave. She wrote to the lawyer with the help of Housing Rights Committee of San Francisco, asking where to pay her rent, and said she hasn’t gotten a reply. Bank of America’s Bauwens said the bank is working on the case.
“They made me feel like I don’t deserve to live here,” Hilpert said.