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Friday, December 23, 2011
Mike and Chantell Sackett vs. the EPA
The couple wanted to build a picturesque Idaho home. Instead they were accused of building on a wetland. Now the Supreme Court will hear their case
When Mike and Chantell Sackett paid $23,000 for a lot near the banks of Priest Lake in northern Idaho in 2005, they thought they were buying the site for a picturesque new home. They got a lot more: a long feud with the Environmental Protection Agency and now a Supreme Court case that could bolster the rights of landowners facing costly demands from the federal government.
Four years ago the Sacketts were filling in their lot with dirt and rock, preparing to build a simple three-bedroom home in a neighborhood where other houses have stood for years. Then three federal officials showed up and demanded they stop construction. The agency claimed the .63-acre lot was a wetland, protected under the Clean Water Act.
The Sacketts say they were stunned. The owners of an excavation company, they had secured all the necessary local permits. And Chantell Sackett says that before work began, she drove two hours to Coeur d’Alene, Idaho, to consult with an Army Corps of Engineers official. She says the official told her orally, though not in writing, that she didn’t need a federal permit. “We did all the right things,” she says.
The EPA issued an order requiring the Sacketts to put the land back the way it was, removing the piles of fill material and replanting the vegetation they had cleared away. The property was to be fenced off and the Sacketts would be required to submit annual reports about its condition to the EPA. The agency threatened to fine them up to $32,500 a day until they complied.
The Sacketts instead tried to get a hearing in federal court, seeking a declaration that their property wasn’t a protected wetland. The plot is not connected either to the lake or a nearby creek, though Mike Sackett, 45, says part of the land got “wet” at times in the spring. “We sued because we wanted our day in court to say, ‘This is not a wetland,’ ” he says. Two lower courts turned the couple away, saying they could not make that argument until the EPA asked a federal judge to enforce the order. That left the Sacketts in limbo. Restoring the property as the EPA demanded made no sense to them. It would cost hundreds of thousands of dollars, they say, and if they ultimately won the case they’d have to clear the land a second time. But defying the order potentially meant racking up $32,500 in fines each day—and perhaps criminal liability if they continued with construction—while they waited for the EPA to decide whether to pursue the case. “It’s an unenviable choice,” says Damien M. Schiff of the Pacific Legal Foundation, a Sacramento-based property rights group that is representing the couple for free. “It’s really almost no choice at all.”
The Sacketts appealed to the Supreme Court, asking for the right to go straight to a federal judge. The high court agreed to hear the case in its fall term. It is being watched closely by environmentalists and property rights activists because of its potential scope. A ruling in the Sacketts’ favor would blunt one of the agency’s favorite enforcement tools. Each year it issues up to 3,000 “administrative compliance orders” to businesses and individuals, demanding an end to alleged environmental violations and applying enough pressure that those who are accused typically give in before the agency has to justify the action before a judge.
“The compliance order tool is one of a few mechanisms that EPA has to resolve, and resolve quickly, pollution problems,” says Jon P. Devine, a senior attorney with the National Resources Defense Council. The EPA argues the rules are reasonable. While fines may accrue, they won’t actually be assessed until the Sacketts have a chance to make their case to a judge, it says. Agency officials declined to be interviewed.
In taking on the case, the high court told the two sides to discuss in their filings whether the EPA’s procedures are so unfair that they violate the Sacketts’ constitutional right to due process. A ruling in favor of the landowners on those grounds would reverberate beyond the EPA, potentially forcing both state and federal agencies to seek court permission before trying to enforce rules.
Some environmental advocates believe the agency made a mistake in letting a case with such appealing plaintiffs reach the Supreme Court. The Sacketts haven’t dared to touch their land since the dispute began. Their dream house is on hold; they live in a rental nearby. It’s a problem for the EPA that the Sacketts “feel like the mom and pop who are getting the heavy hand of government brought down on them,” says Catholic University law professor Amanda Cohen Leiter, who sides with the agency. “I can imagine the court being sympathetic to these particular plaintiffs and issuing … an overbroad ruling as a result.”
Capitalism and the Right to Rise
In freedom lies the risk of failure. But in statism lies the certainty of stagnation.
Congressman Paul Ryan recently coined a smart phrase to describe the core concept of economic freedom: "The right to rise."
Think about it. We talk about the right to free speech, the right to bear arms, the right to assembly. The right to rise doesn't seem like something we should have to protect.
But we do. We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.
That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or nothing. People understand this. Freedom of speech, for example, means that we put up with a lot of verbal and visual garbage in order to make sure that individuals have the right to say what needs to be said, even when it is inconvenient or unpopular. We forgive the sacrifices of free speech because we value its blessings.
But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself.
Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and we demand more laws. We see an industry dying and we demand it be saved. Each time, we demand "Do something . . . anything."
As Florida's governor for eight years, I was asked to "do something" almost every day. Many times I resisted through vetoes but many times I succumbed. And I wasn't alone. Mayors, county chairs, governors and presidents never think their laws will harm the free market. But cumulatively, they do, and we have now imperiled the right to rise.
Woe to the elected leader who fails to deliver a multipoint plan for economic success, driven by specific government action. "Trust in the dynamism of the market" is not a phrase in today's political lexicon.
Have we lost faith in the free-market system of entrepreneurial capitalism? Are we no longer willing to place our trust in the creative chaos unleashed by millions of people pursuing their own best economic interests?
The right to rise does not require a libertarian utopia to exist. Rather, it requires fewer, simpler and more outcome-oriented rules. Rules for which an honest cost-benefit analysis is done before their imposition. Rules that sunset so they can be eliminated or adjusted as conditions change. Rules that have disputes resolved faster and less expensively through arbitration than litigation.
In Washington, D.C., rules are going in the opposite direction. They are exploding in reach and complexity. They are created under a cloud of uncertainty, and years after their passage nobody really knows how they will work.
We either can go down the road we are on, a road where the individual is allowed to succeed only so much before being punished with ruinous taxation, where commerce ignores government action at its own peril, and where the state decides how a massive share of the economy's resources should be spent.
Or we can return to the road we once knew and which has served us well: a road where individuals acting freely and with little restraint are able to pursue fortune and prosperity as they see fit, a road where the government's role is not to shape the marketplace but to help prepare its citizens to prosper from it.
In short, we must choose between the straight line promised by the statists and the jagged line of economic freedom. The straight line of gradual and controlled growth is what the statists promise but can never deliver. The jagged line offers no guarantees but has a powerful record of delivering the most prosperity and the most opportunity to the most people. We cannot possibly know in advance what freedom promises for 312 million individuals. But unless we are willing to explore the jagged line of freedom, we will be stuck with the straight line. And the straight line, it turns out, is a flat line.
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US mayors decry rise in poverty, homelessness
US mayors sounded an alarm Thursday over deepening economic woes after a survey of 29 cities from Los Angeles to Washington showed worrying rises in homelessness and poverty-related food aid.
"Here is the richest country in the world (and) we have people who cannot find a place to live," said Kansas City Mayor Sly James, who co-chairs a task force on hunger and homelessness for the US Conference of Mayors.
"We are failing" to address critical issues of homelessness and the use of food stamps, which is "increasing, not decreasing," he told reporters on a conference call to discuss the survey.
The government has reported that 46.2 million people nationwide were living in poverty in 2010 and that the rate climbed to 15.1 percent, up from 14.3 percent a year earlier.
Of the 29 cities surveyed -- all of which have more than 30,000 residents -- 25 reported increased requests for emergency food assistance in the past year.
In Kansas City, Missouri, the rate of food aid spiked by 40 percent, the highest increase in the survey, followed by Boston and Salt Lake City with a 35 percent increase and Philadelphia with 32 percent. Food aid requests in San Francisco dropped by 11 percent.
Unemployment was the primary cause of hunger, according to the cities, whose total emergency food budget as a group last year was $272 million.
And the cities are not expecting improvements. All but two predicted emergency food requests will increase next year, with three-quarters of the cities forecasting shrinking food aid budgets.
"It is not surprising that the combination of increasing demand and decreasing resources is the biggest challenge that they would face in that effort to address hunger in the next year," said Mayor Terry Bellamy of Asheville, North Carolina.
Homelessness across the surveyed cities rose an average of six percent, according to the report. Especially hard hit was Charleston, South Carolina, where homelessness rose 33 percent, Cleveland, Ohio (21 percent) and Detroit, Michigan (16 percent).
Two out of three cities surveyed predicted their homeless numbers will grow in the next year.
The report said more than a quarter of homeless adults were "severely mentally ill," while 13 percent were US military veterans.
"We should be ashamed of ourselves for allowing veterans who fought for this country... to find themselves living on the street," said James, the Kansas City mayor.
An average of 18 percent of homeless people seeking assistance were turned away, in part because there were not enough beds in homeless shelters.
Washington’s Glacial Pace Won’t Ice NFIB’s Fight to Repeal Obamacare
You don’t need the farmer’s almanac to predict the next big chill about to hit every state in the union. If President Obama’s new health law isn’t stopped, the hiring freeze on small employers will damage America’s economy more than any Alberta Clipper ever could.
Between the biting wintry blasts of his health insurance tax, aptly known as the “HIT,” and this unconstitutional mandate to force Americans to buy health insurance, the president’s Patient Protection and Affordable Care Act will lengthen unemployment lines and melt more than $87 billion from small businesses, employees and individuals within a decade.
Would you hire people to sit around and do nothing in your small business? Certainly not. But Washington, where it snows taxpayer dollars year-round, remains cool to free enterprise.
Many misguided policymakers give Main Street the cold-shoulder, claiming that you and millions of other entrepreneurs simply refuse to create jobs. They say you’re hoarding big piles of cash like Ebenezer Scrooge. They ignore the reality that the excessive regulations, unreasonable taxes and burdensome paperwork that they themselves create frosts hiring opportunities and locks the economy in the cooler.
They should read the NFIB Research Foundation’s forecasts that states future private-sector job losses caused by the health tax will rise faster than the barometric pressure advancing an arctic cold front. Employer-sponsored health insurance stemming from the HIT will nip in the bud between 125,000 to 249,000 jobs in 2021 alone. But the heaviest burden will fall on small businesses like yours, accounting for nearly three-fifths of the losses.
The financial harm to small-firm owners, employees and the self-employed could reach nearly $300 billion over 20 years, severely impacting more than two million small businesses, 12 million employees, the self-insured, as well as 26 million people who now enjoy employer-sponsored coverage. Already struggling families will see premiums leap $5,000 over a decade.
On Capitol Hill, NFIB has gained the support of many pro-small-business members of Congress to repeal the HIT and protect your company. In the Senate, Republican Conference Chairman John Barrasso of Wyoming, Finance Committee Ranking Member Orrin Hatch of Utah and Small Business Committee Ranking Member Olympia Snowe of Maine are leading their colleagues in a rollback effort. In the House, Louisiana Rep. Charles Boustany, a Ways and Means Committee member, heads a bipartisan group of 94 co-sponsors determined to defend you from this tax.
And the Supreme Court has agreed to hear our argument that the president’s demand to buy insurance is unconstitutional. But until the high court strikes down the law or Congress votes for full repeal, we will continue to fight the health tax and its mandate that will deny you the opportunity grow and create the jobs necessary to thaw this frigid economy.
Rest assured, NFIB will never cease its efforts in Washington to put this bad law and its anti-small-business tax scheme on ice once and for all.
Dan Danner
President and CEO, NFIB
Bluewater Wind Collapse: Liars Lose
The demise of the Bluewater Wind offshore wind project was inevitable. The final approved contract simply didn’t provide adequate returns to justify the massive investment required to build it. The assumptions used for Public Service Commission July, 2008, approval were lies. Honest information was presented and ignored including the comparative cost of power produced by offshore wind to conventional sources and about how those higher costs would eliminate more jobs than the wind farm created.
· The contract was discounted by a third the going rate of other offshore wind projects creating an insurmountable financial disincentive for investment. It appears the goal was to keep the project alive long enough for development inertia to allow price re-negotiation.
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Estimated cost per month for residential consumers was still too high so project costs were spread over more customers, the size of the project was reduced, and the estimates of future prices for conventional power were exaggerated until supporters got the cost estimate they needed for approval
· The economic benefit of the project was greatly exaggerated
· Permitting and construction timelines were overly optimistic
The initial review of the Bluewater project found the monthly cost to consumers would be ten times the final figure of $.70/month. The initial estimate was the correct answer and the project should have been rejected at that point. A recent review, using slightly less exaggerated future electric rates, raised the estimate to $2.42/month. Using realistic pricing in the contract and realistic future electric prices for conventional power yields a real cost to residential consumers of $6 to $7/month.
Supporters still claim the primary problem is lack of adequate federal government subsidies. Existing federal subsidies for wind power include a 30% tax credit plus loan guarantees. It was known when Bluewater was approved the subsidies would expire at the end of 2012. It was also known the offshore project could not be built that quickly. Expecting an extension was wishful thinking.
Subsidies were never intended to continue forever. The onshore wind industry used the credits to jump start the industry. Thirty five percent of all new electric generating facilities built since 2007 are wind powered. The cost of power from the latest wind projects, even without subsidies, is almost competitive with natural gas. Many states are requiring the use of renewable energy so onshore wind should continue to be successful without further subsidy.
Offshore wind technology has benefited from the experience of large European offshore projects and the same technological gains that have driven improvements in onshore windmills. The problem is it simply costs about three times as much to build in the ocean as on land (offshore oil drilling costs ten times more than onshore drilling). There is no magic research bullet or economy of scale that is going to change that basic fact. If we want more unreliable wind power now it needs to be onshore.
The Fuel Cell Tariff was sold using a similar strategy but with no “off button” to end the contract.
Who Causes Income Inequality? It’s The 99%
In his Nov. 3 New York Times column, "Oligarchy, American Style," Krugman lamented: "We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only."
I'd ask Krugman this question: Who's putting all the money in the hands of the few, and what do you think ought to be done to stop millions, perhaps billions, of people from using their money in ways that lead to high income and wealth concentration?
In other words, I'd like Krugman to tell us what should be done to stop the millions of children who make Joanne Rowling rich, the millions who fork over their money to the benefit of LeBron James and the hundreds of millions of people who shop at Wal-Mart.
I'd like to end this discussion with a bit of a personal note. The readers of this column know that I never make charges of racism. Rowling is an author, and so am I. In my opinion, my recently published book "Race and Economics: How Much Can Be Blamed on Discrimination?" is far more important to society than any "Harry Potter" novel.
I'd like to know what it is about me that explains why millions upon millions have not purchased my book and made me a billionaire author. Maybe Krugman and the Wall Street occupiers have the answer.
China's epic hangover begins
It is hard to obtain good data in China, but something is wrong when the country's Homelink property website can report that new home prices in Beijing fell 35pc in November from the month before. If this is remotely true, the calibrated soft-landing intended by Chinese authorities has gone badly wrong and risks spinning out of control.
The growth of the M2 money supply slumped to 12.7pc in November, the lowest in 10 years. New lending fell 5pc on a month-to-month basis. The central bank has begun to reverse its tightening policy as inflation subsides, cutting the reserve requirement for lenders for the first time since 2008 to ease liquidity strains.
The question is whether the People's Bank can do any better than the US Federal Reserve or Bank of Japan at deflating a credit bubble.
Chinese stocks are flashing warning signs. The Shanghai index has fallen 30pc since May. It is off 60pc from its peak in 2008, almost as much in real terms as Wall Street from 1929 to 1933.
"Investors are massively underestimating the risk of a hard-landing in China, and indeed other BRICS (Brazil, Russia, India, China)... a 'Bloody Ridiculous Investment Concept' in my view," said Albert Edwards at Societe Generale.
Tuesday, December 20, 2011
Eurozone crisis poses military risk, warns defence chief General Sir David Richards
Defence chiefs are drawing up plans to cope with the potential military fallout from the eurozone crisis, according to General Sir David Richards.It is understood that Armed Forces planners are looking at the possibility that a new global financial crash could undermine the defence forces of key British allies.
The head of the Armed Forces warned that economic issues pose a “strategic risk” to Britain.
Senior British commanders and officials are concerned that US plans to cut defence spending will be followed by other allies in Europe and elsewhere.
Reductions in allied military capabilities could put a greater burden on Britain’s stretched forces in Afghanistan and elsewhere, it is feared.
The military planning work has come to light after The Daily Telegraph disclosed last month that British embassies in the eurozone have been told to prepare emergency plans for the demise of the euro and the possible civil disorder that could follow
Senior ministers are increasingly convinced that the break-up of the single currency is a real possibility. Economists suggest that the failure of the euro could cause EU economies, including Britain’s, to shrink by up to eight per cent.
Gen Richards, the Chief of the Defence Staff, said economic issues present the biggest threat to Britain and its interests in the world.
“I am clear that the single biggest strategic risk facing the UK today is economic rather than military,” he told the Royal United Services Institute
“Over time, a thriving economy must be the central ingredient in any UK Grand Strategy. This is why the eurozone crisis is of such huge importance not just to the City of London but rightly to the whole country and to military planners like me.”
The Armed Forces are facing painful cuts and the loss of tens of thousands of personnel, but Gen Richards said that such austerity was necessary.
“The country’s main effort must be the economy. No country can defend itself if bankrupt,” he said.
He used his speech to raise questions about the ability of European economies to sustain their armed forces. He asked: “What impact will fiscal restraint and slow recovery have on European defence capabilities?’’
Gen Richards also noted that America, which is facing deep defence cuts, has said it will switch the focus of its main military effort from the Atlantic to the Pacific and south-east Asia.
That means “less emphasis on Europe and her problems,” he said. Gen Richards also accepted that Britain’s defence cuts carry risks, but insisted those risks were acceptable.
“It will mean taking risk. But managing risk is ultimately what we do and none of us in the Armed Forces are discomforted by the challenge,” he said.
The Armed Forces will need to “combine realism with imagination”, he said.
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Ford says production begins for 2012 Ford Focus Electric
COMMENT: The availability of electric cars from Ford, GM, Toyota, Nissan and other major manufacturers is why the subsidies to Fisker will likely be money thrown away.
DETROIT -- Ford said today that production has begun for the 2012 Ford Focus Electric, an all-electric car expected to be certified for a fuel efficiency rating of more than a 100 miles per gallon.
The Focus Electric battery pack can be recharged in half of the time it takes the Nissan Leaf to fully recharge, Ford said this morning.
According to Ford, the battery can be recharged in just more than three hours using a 240-volt charging station, about half the charging time of the 2012 Nissan Leaf.
Ford’s rollout of electrified vehicles began in December 2010 with the 2011 Ford Transit Connect Electric – a small commercial van built in collaboration with Azure Dynamics.
The Chevrolet Volt, introduced last December, can travel about 35 miles on a single charge before an onboard gas generator kicks in to provide electricity so that the car can travel an additional 375 miles. The all electric Nissan Leaf, also introduced last year, can go up to 100 miles on a single charge.
The Focus Electric also is expected to get 70 to 100 miles on a full charge depending on customer driving behavior.
Ford has priced its Focus Electric at $39,995, essentially the same price as the Chevrolet Volt, and more than the Nissan Leaf, which starts at about $35,200.
Buyers will qualify for a $7,500 federal tax credit, which directly reduces the price they pay.
Ford dealers in California, New York and New Jersey are now taking orders. Consumers can choose options and accessories online at www.ford.com/electric/focuselectric/2012/. By selecting a special paint coating or leather seats, the price can reach $41,485.
The rollout of Ford’s electrified vehicles began in December 2010 with the 2011 Ford Transit Connect Electric — a small commercial van built in collaboration with Azure Dynamics.
Two small electric minivans also are planned for 2012: A C-Max Energi plug-in hybrid and a C-Max gas-electric hybrid.
Ford said it expects its C-Max Energi, a plug-in hybrid, to deliver a 500-mile driving range and better fuel economy equivalent in electric mode than the Toyota Prius plug-in hybrid.
The new C-Max Hybrid is targeted to achieve better fuel economy than Toyota Prius v, which gets an estimated 44 miles per gallon in the city and 40 on the highway.
FBI, SEC probe Wilmington Trust
Investigations allegedly involve fraud related to real estate loansOnce-venerable Wilmington Trust, a more-than-century-old banking institution taken down by bad real estate loans, is now the subject of an FBI criminal probe, and a federal grand jury has been impaneled to hear evidence, people close to the investigation say.
The U.S. Securities and Exchange Commission in New York also is pushing forward with its own investigation.
Wilmington Trust was swallowed up earlier this year by M&T Bank Corp. of Buffalo, N.Y., at a fire-sale price after an 11th-hour takeover deal was announced in November 2010.
The Delaware bank company's third-quarter financial information was so alarming that its businesses faced the possibility of "significant regulatory actions," the company said in its proxy statement. The announced sale price per share was about half the share price on the previous trading day. The sale resulted in shareholders' losing millions of dollars, including many small Delaware investors who had held on to thousands of shares of Wilmington Trust stock.
Michael Zabel, spokesman for M&T, said the bank is aware of the ongoing SEC matter. "It's regarding a matter that predated M&T involvement," Zabel said.
As for an FBI investigation and grand jury, Zabel said those proceedings are "typically private."
"I don't have any official information," he said.
U.S. Attorney Charles M. Oberly III declined to comment Tuesday. Judith Burns, a spokeswoman for the SEC, also declined comment, saying all investigations are private.But people familiar with the FBI investigation said it involves fraud related to real estate loans in Delaware.
Earlier this year, unhappy shareholders filed a securities class-action lawsuit in federal court in Wilmington, alleging a massive securities fraud perpetrated by "one little clan" of top executives who "took the company to the race track" while hiding behind the bank's reputation for stability and safety. According to the civil lawsuit, the problems rested mostly with former Chairman Ted Cecala, former President Robert V.A. Harra Jr., former Chief Financial Officer David Gibson and former Chief Credit Officer William North.
Wednesday, December 14, 2011
How jobs could be created
Assuming we can all agree that the main ingredient to the economic recipe of capitalism is low unemployment, a state in which people are working and spending their money which creates demand in the marketplace to be filled with increased supply thus more jobs to generate that supply, then let’s proceed on the grounds of how best to foster job creation.
Although the present reality is a state of elevating despair, in truth Delaware has a golden opportunity to once again usher in an era of economic expansion by doing the one thing that defines our capitalistic brand of economy. That one thing is trusting the marketplace to work.
Of course, government has a role in regulating industry and commerce because there truly is no “free” market. But, that role of regulation does not imply the additional role of manipulation which has become the hallmark of the new normal. State governments all over the country are scrambling to plug the hole in the proverbial dam. For many it has become a panic situation as more and more hard working folks are finding themselves with no job at which to work hard. And the heretofore result of all the governmental dart throwing has been increased unemployment with a scarce few hopeful rays of light.
Perhaps a more productive approach would be to let the marketplace determine the direction of our economy instead of the government trying to promote certain sectors. So let’s see if we can apply that time tested logic to breaking the vicious cycle we find ourselves in. Furthermore in our thinking, let’s be quirky and give our idea a name. Maybe we should use an acronym. Oh, I don’t know…how about JOBS? It can stand for “Just Open Barriers to Success”.
What do I mean by opening barriers? Stated in the simplest form I can muster it means removing obstacles and clearing the road so businesses can truck along with as little interference as possible. In the end, the key to job creation is establishing an environment in which growing businesses want to expand, relocate or invest right here in our little state.
There are typically five interests to which those growing businesses pay attention when they consider where their expansion, relocation or investment will occur. These five are: Labor, Taxes, Regulation, Infrastructure and Quality of Life.
There is not enough space in this article to give each a fair shake as there are many facets to them, but I will give a brief airing. First, how can Delaware provide a more enticing labor market for prospective employers? The best answer to the question is passing a Right to Work law that eliminates mandatory union enrollment in closed shop environments. Allow each worker to decide whether they want to be in the union and give each business the opportunity to show its workforce how accommodating they can be when in competition with the union. This will lower the cost of doing business and open one barrier to success.
Second, we need to reverse the recent trend of increasing taxes. With acknowledgment that there was an insignificant reduction put into the current budget, the real pill would be a return to pre-2008 levels for both personal and corporate taxes and an elimination of the estate tax. Delaware is losing its standing as having a business friendly tax environment and that will be detrimental in due course. Currently this is one more barrier that needs opened.
Third, it is imperative that we cease and desist applying further levels of regulation on businesses as this increases costs and has the reverse effect on both the bottom line and employment. We can argue about current regulations later; for now stop adding new ones. The business community can and will adapt to whatever is before them but does not like the uncertainty of not knowing what else is coming down the pike.
Now the fourth interest is where government can shine. We do need improved infrastructure and state of the art innovation in providing companies with access to markets. This can be in the form of actual physical access through roads; but also exists as intangible access through trade agreements and appealing incentives to potential out of state authorities and consumers. Another important aspect of infrastructure is high functioning Police and Fire Departments and EMS services. Properly funding these services and providing access to markets is where our state government should be exerting its largest amount of energy and resources.
Last, but by no means least, is Quality of Life. The two most important items here are Healthcare and Education. Let me just say this about education, as it is near and dear to my heart having four children currently in the public school system. The first step to improving our educational game and climbing to the top of the ladder is opening the classrooms to the innovation of each individual teacher. Let the classroom be an incubator of ideas on how to best instruct and motivate children to learn. Companies who are looking to expand or relocate here in Delaware truly care about the quality of education its future workforce is receiving. And I personally believe our teachers are more than capable of blowing us away with their ideas.
Shaun Fink
Millsboro, DE
Shade Tree Economist and Professional in the Insurance and Financial Services Industry
It's Time to End the Riverdance
Wilmington’s Riverfront Development Corporation (RDC) received $3.5 million through the state’s capital budget in July, bringing the taxpayers’ total investment in the riverfront since 1995 to over $280 million. Now, starting with a $2 million request, the RDC is proposing that taxpayers pick up as much as one-third of the tab for a $39 million hotel at the Riverfront’s public entrance. Is this simply throwing more money down a rat hole?
Certainly, seed capital from government was necessary to get the ball rolling in the riverfront area. And there have been some positive results. The City, county and state governments have gained back about 20% of the taxpayers’ investment through wage, income, property and gross receipts tax revenues. The public infrastructure and activity has attracted over $650 million in private investment.
All is not coming up roses, however. Blockbuster events have not worked at the convention center and overall event activity is down. While the major restaurants appear to be doing fine, two-thirds of the retail space next to the convention center is vacant and there are ample condos for sale. The perception, not the reality, of poor public safety, and the lack of easy access still seem to be constraints to retail trade.
The RDC’s argument for the subsidized hotel seems to be “if you build it, they will come.” It is hypothesized that a 10 story hotel with 180 rooms will attract mid-sized conferences and conventions. With a hotel, the RDC claims that it will no longer be a “ward of the bond bill.”
The proposal is complicated by conditions in the hotel market. The New Castle County hotel market is already over supplied. As of 2007, compared to the Philadelphia metropolitan area, NCC had about 60% more hotels per 100,000 population and per 100,000 private jobs, and roughly half the sales revenue per hotel. Since 2007, employment and payroll among NCC’s hotels has fallen, as have occupancy rates.
The City already has four fine hotels. These are largely supported by the active corporate law industry bringing a steady stream of well paid visitors. As a small city, Wilmington does not have the density of entertainment and other attractions that help drive the convention trade.
The Delaware Hotel and Lodging Association, whose members have been paying the gross receipts taxes that help to subsidize RDC, rightfully want to know if the state will now make capital funds available to all Delaware hotels.
While the RDC has withdrawn its initial $2 million request, they are expected to return to the feed bag. The solution to this dilemma is simple. During the past five years the RDC has received over $10
million from the state capital budget. Since the RDC is now 16 years old, it is time to leave home. In next year’s bond bill give the RDC a graduation gift of $5 million. That will be the end of pouring taxpayers money into the riverfront.
The RDC can then decide what the most effective use of the $5 million would be. It could put all of it into the hotel venture. Or it could use some of the money to attract an anchor store to drive retail traffic to the moribund Shipyard Center. Or it could improve access to the riverfront (a prominent entrance way with decent signage on Justison Street?) Or it could use the money to continue to pay employees for the next five years.
This would relieve the state, the legislature and the Delaware Economic Development Office from having to decide if granting the next request will finally send the RDC into remission from its addiction to public funds.
Since its birth, in 2011 dollars, nearly $300 million of taxpayers’ money has been used to “raise up” the RDC. Now, make the final gift and allow it to live independently, to sink or finally swim.
Dr. John E. Stapleford, Director
Is The Pawn Shop The New Spot For Holiday Shopping?
GARDEN CITY (WWJ) - Doing your holiday shopping at the pawn shop? WWJ’s Sandra McNeill reports that’s not so odd anymore.
Tom Blaine owns the Garden City Exchange and says his business though October is already up 49 percent over December of last year. The bad economy means he’s getting people selling new and high-end electronics like iPads and he says the popularity of reality shows mean people aren’t as embarrassed to shop there.
“Sometimes I’m sure they are. They might want to try and make it look as new as possible,” said Blaine. “But, you know, times are tough. People don’t mind as much. They’re looking for a deal more than anything.”
Shopper Jason Miller has no problem buying gifts there.
“Yeah, it’s a good place to shop. You know, you get a good deal on everything,” he said. “My daughter plays video games and everything for like the (Nintendo) Wii. So, if I found some good deals on Wii games I’d come up here and pick ‘em up.”
Brian Lesher says it’s better than the mall.
“They’re selling, you know, mass-produced stuff. You know, where you can find more unique stuff here at pawn shops,” said Lesher.
Lesher said he once bought a girlfriend a diamond ring at the pawn shop. And, no, he didn’t tell her where it came from.
“It’s the thought that counts, right? If it looks good, I mean, you shouldn’t ask questions like that,” he added, with a laugh.
Blaine said he does provide brand new boxes with jewelry purchases.
Saturday, December 10, 2011
USPS aims to close 250 processing plants, cut 30,000 jobs
WASHINGTON (AP) - Already mocked by some as "snail mail," first-class U.S. mail will slow even more by next spring under plans by the cash-strapped U.S. Postal Service to eliminate more than 250 processing centers. Nearly 30,000 workers would be laid off, too, as the post office struggles to respond to a shift to online communication and bill payments. The cuts are part of $3 billion in reductions aimed at helping the agency avert bankruptcy next year. They would virtually eliminate the chance for stamped letters to arrive the next day, a change in first-class delivery standards that have been in place since 1971.
The plan technically must await an advisory opinion from the independent Postal Regulatory Commission, slated for next March. But that opinion is nonbinding, and only substantial pressure from Congress, businesses or the public might deter far-reaching cuts.
Many postal customers will be upset.
"The post office is a mainstay of America, and the fact that these services will no longer be available is absolutely crazy," said Carol Braxton of Naperville, Ill., as she waited in line at a mail sorting center Monday with the holiday shipping season picking up steam.
"Well I'm not happy about them, but what else can you do with this economy? If they're getting ready to go bankrupt, it's better to cut back than to go totally bankrupt," said Deborah Butler of Brandywine, Md., who was at a Washington, D.C., post office. "You still need them. Because everybody can't afford the other ones, like express mail and things like that. .Even though the world is computer literate, everybody doesn't have computers."
At a news briefing in Washington, postal vice president David Williams said the post office needs to move quickly to cut costs as it seeks to stem five years of red ink amid steadily declining mail volume. After hitting 98 billion in 2006, first-class mail volume is now at less than 78 billion. It is projected to drop by roughly half by 2020.
The agency already has announced a 1-cent increase in first-class mail to 45 cents beginning Jan. 22.
Williams said in certain narrow situations first-class mail might still be delivered the next day _ if, for example, newspapers, magazines or other bulk mailers are able to meet new, tighter deadlines and drop off shipments directly at the processing centers that remain open.
But in the vast majority of cases, everyday users of first-class mail will see delays. The changes could slow everything from check payments to Netflix's DVDs-by-mail, add costs to mail-order prescription drugs and even threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.
The Postal Service faces imminent default _ this month _ on a $5.5 billion annual payment to the Treasury for future retiree health benefits and expects to have a record loss of $14.1 billion next year.
"Are we writing off first class mail? No," Williams said. "Customers are making their choices, and what we are doing is responding to the current market conditions and placing the Postal Service on a path to allow us to respond to future changes. We have to do what's in our control to put the Postal Service on sold financial ground."
The cuts would close 252 of the nation's 461 mail processing centers beginning next spring. They would result in the elimination of roughly 28,000 jobs. The number of employees varies by processing facility but generally ranges from about 50 to 2,000. Cincinnati, Boston, Orlando and New Orleans are home to some of the largest centers.
Because the consolidations typically would lengthen the distance mail travels from post office to processing center, the agency also would lower delivery standards. Currently, first-class mail is supposed to be delivered to homes and businesses within the continental U.S. in one to three days. That would lengthen to two to three days, meaning mailers no longer could expect next-day delivery in surrounding communities. Periodicals could take two to nine days.
About 42 percent of first-class mail is now delivered the following day. An additional 27 percent arrives in two days, about 31 percent in three days and less than 1 percent in four to five days. Following the change next spring, about 51 percent of all first-class mail is expected to arrive in two days, with most of the remainder delivered in three days.
The Postal Service initially announced in September it was studying the possibility of closing the processing centers and published a notice in the Federal Register seeking comments. Within 30 days, the plan elicited nearly 4,400 public comments, mostly in opposition.
Catalogue companies worry they won't be able to predict when their catalogues will arrive and therefore when to add staff to handle increased call volumes. Small business owners say sluggish first-class mail will slow their businesses because merchandise and payments will spend more time in transit.
On Monday, postal customers said they valued having mail service but also acknowledged the realities of the Internet in everyday life.
"The post office services that we need as a nation are just too big at this point, so things have to be cut and there is nothing that can be done to change it other than email goes away," Ron Connor of Naperville, Ill., said as he walked into a local post office branch.
Lily Ickow, from Silver Spring, Md., said the post office needs to find other ways than wide-scale cuts to reach profitability. "It's definitely too bad," she said at a Washington post office. "I think the Postal Service is necessary personally. ...It would be useful to see if there are ways that they could innovate and come up with other types of services."
Separate bills that have passed House and Senate committees would give the Postal Service more authority and liquidity to stave off immediate bankruptcy. But prospects are somewhat dim for final congressional action on those bills anytime soon, especially if the measures are seen in an election year as promoting layoffs and cuts to neighborhood post offices.
Postmaster General Patrick Donahoe has been pushing for congressional changes that would give the agency more authority to reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs.
But the agency also opposes current provisions in the House and Senate legislation that would require additional layers of review before it could close post offices and processing centers.
The Postal Service, an independent agency of government, does not receive tax money, but is subject to congressional control on major aspects of its operations. The changes in first-class mail delivery could go into place without permission from Congress.
Maine Sen. Susan Collins, the top Republican on the Senate committee that oversees the post office, believes the agency is taking the wrong approach. She says service cuts will only push more consumers to online bill payment or private carriers such as UPS or FedEx, leading to lower revenue.
The Senate bill would refund nearly $7 billion the Postal Service overpaid into a federal retirement fund, encourage a restructuring of health benefits and reduce the agency's annual payments into a future retiree health account. No other agency or business is required to make such health prepayments.
Dennis Kucinich, D-Ohio, a member of the House committee that oversees the agency, said he would fight the postal changes.
"This privatization plan is bad for Americans, bad for businesses, bad for the economy and bad for workers. We can do better than to dismantle the Postal Service and privatize its operations," he said.
Ruth Goldway, chair of the Postal Regulatory Commission, said the commission will be reviewing the proposal closely to ensure that the Postal Service can continue its mission of providing adequate, effective service in a fair manner to all parts of the U.S. She said, "I think if the Postal Service does not respond to public concerns, it will bear the consequences of that itself."
Jim Rogers: US Falling Into 'Deeper Trouble,' Faces 2013 Depression Read more: Jim Rogers: US Falling Into 'Deeper Trouble,' Faces 2013 Depression
The United States economy never really emerged from the recession that began in 2008 and is possibly headed for a more chronic depression, and the prognosis for recovery doesn't look good, especially in 2013, says international investor Jim Rogers...........CLICK HERE TO FINISH ARTICLE AND VIEW MUST SEE VIDEO
Geithner backs EU crisis plan, stresses ECB role
(Reuters) - Treasury Secretary Timothy Geithner threw his weight on Tuesday behind a Franco-German plan to tackle the euro zone's sovereign debt crisis and said the European Central Bank had to play a major role in any solution.
Geithner offered his support after Standard & Poor's agency fired a second warning shot at the bloc in 24 hours by threatening to cut the credit rating of its rescue fund.
German Chancellor Angela Merkel and French President Nicolas Sarkozy want to change the EU treaty to impose mandatory penalties on euro zone states that exceed deficit targets, aiming to restore market trust and prevent the crisis spiraling out of control.
Geithner said he was encouraged by moves towards "fiscal union" - under which euro zone states would obey a common set of tight budget rules - and stressed the central role in tackling the crisis of the ECB, which has been reluctant to take decisive steps until governments get to grips with their budget problems.
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Speaking after talks in Berlin with German Finance Minister Wolfgang Schaeuble, Geithner said euro zone countries needed reforms to lay the foundations for the economic growth which is essential if Europe is to solve its debt problems.
He also called for "reforms to create the architecture of fiscal union to make monetary union more viable for the long run". Likewise, governments and central banks needed to offer financial support to protect the European financial system and allow states to borrow at sustainable interest rates.
"The ECB has been playing a central role in this crisis. It's obviously going to continue to do that. Of course ultimately, these things only get solved by governments and central banks doing what's necessary, but their rules are different," Geithner said.
He also met ECB President Mario Draghi in Frankfurt before an EU summit in Brussels on Thursday and Friday, a sign that Washington shares the view that the event may be a decisive moment for the global economy.
Geithner will also meet the leaders of France, Italy, Spain, and EU institutions to press for decisive action.
Draghi has signaled that a euro zone "fiscal compact" could encourage the ECB to act more decisively. It has been reluctant to buy up debt from distressed euro states more aggressively, arguing that doing so would take pressure off governments to fix their finances.
CONTINUING DISAGREEMENTS
A few hours after Sarkozy and Merkel announced they would put their plan involving changes to the EU treaty to the Brussels summit, Standard and Poor's put the credit ratings of 15 countries, including Germany and France, on review late on Monday for a downgrade by one to two notches.
The U.S.-based agency cited "continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis".
S&P went a step further on Tuesday, placing the top-notch rating of the euro zone's 440 billion euro rescue fund, the European Financial Stability Facility (EFSF), on negative watch since it depends on the creditworthiness of the currency bloc's six AAA-rated countries.
European Council President Herman Van Rompuy, who will chair the summit of the 27-nation European Union this week, proposed giving a bigger, permanent euro zone rescue mechanism the status of a bank that would allow it to access ECB funding.
Germany has so far opposed any such move, which it says would breach a treaty ban on the ECB financing governments.
Van Rompuy said tighter budget oversight sought by Paris and Berlin for the 17-nation euro area could be achieved quickly with only minor tweaks to the EU treaty, that might not require full ratification procedures in many countries.
"To restore market confidence in the euro area, and to ensure the political sustainability of solidarity mechanisms, it is crucial to enhance the credibility of our budget rules (deficit and debt levels) and to ensure full compliance," he wrote in a report to EU leaders obtained by Reuters.
He also said the issuance of joint euro zone bonds should be a long-term objective, challenging another German red line in a text likely to be the object of heated negotiations.
S&P warned of slowing economic growth amid so much austerity, predicting a 40 percent chance of a fall in euro zone output. A downgrade could automatically require some investment funds to sell bonds of affected states, making those countries' borrowing costs rise still further.
Merkel brushed off the S & P threat, saying: "What a ratings agency does is its own responsibility." Her finance minister, Wolfgang Schaeuble, said the wake-up call was S&P's way of urging European leaders to act.
But Jean-Claude Juncker, chairman of euro zone finance ministers, said he was astonished by S&P's announcement, which he called "a wild exaggeration and also unfair" because it failed to take account of Italy's new austerity plan.
In Paris, Sarkozy's office said S&P had taken its decision last Tuesday, before both the Italian budget and the Franco-German plan for stricter budget rules.
SPANISH BOOST
Sarkozy and Merkel say they want treaty changes to be agreed in March and ratified after France wraps up presidential and legislative elections in June.
They won a boost on Tuesday when incoming Spanish Prime Minister Mariano Rajoy said he would support a new treaty. Although not yet in office, Rajoy is expected to meet Merkel and Sarkozy and outline his policies at a congress of European conservative leaders in Marseille on Thursday.
However, some other EU governments, notably Britain, Ireland and the Netherlands, are reluctant to amend the EU treaty, either due to euroskeptics at home or because they fear losing possible referendums on ratification.
British Prime Minister David Cameron, under pressure from the euroskeptic wing of his Conservative party, said he would demand safeguards, such as ensuring the EU's market is not distorted by closer cooperation between euro zone countries.
"Euro zone countries do need to come together, do need to do more things together," he told BBC TV. "If they choose to use the European treaty to do that, Britain will be insisting on some safeguards too. And as long as we get those, then that treaty can go ahead. If we can't get those, it won't."
However, Merkel and Sarkozy said that if countries such as euro outsider Britain blocked a treaty change for all 27 EU members, the 17 states that use the common currency could proceed with an agreement on their own.
Anxious Greeks Emptying Their Bank Accounts
Many Greeks are draining their savings accounts because they are out of work, face rising taxes or are afraid the country will be forced to leave the euro zone. By withdrawing money, they are forcing banks to scale back their lending -- and are inadvertently making the recession even worse. Georgios Provopoulos, the governor of the central bank of Greece, is a man of statistics, and they speak a clear language. "In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November the decline continued on a large scale," he recently told the economic affairs committee of the Greek parliament.
He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.
The raid on bank accounts stems from deep uncertainty in Greek households which culminated in early November during the political turmoil that followed the announcement by then-Prime Minister Georgios Papandreou of a referendum on the second Greek bailout package.
Papandreou withdrew the plan and stepped down following an outcry among other European leaders against the referendum, and a new government was formed on Nov. 11 under former central banker Loukas Papademos. That appears to have slowed the drop in bank savings, at least for the time being.
Bank Withdrawals Worsening Crisis
Nevertheless, the Greeks today only have €170 billion in savings -- almost 30 percent less than at the start of 2010.
The hemorrhaging of bank savings has had a disastrous impact on the economy. Many companies have had to tap into their reserves during the recession because banks have become more reluctant to lend. More Greek families are now living off their savings because they have lost their jobs or have had their salaries or pensions cut.
In August, unemployment reached 18.4 percent. Many Greeks now hoard their savings in their homes because they are worried the banking system may collapse.
Those who can are trying to shift their funds abroad. The Greek central bank estimates that around a fifth of the deposits withdrawn have been moved out of the country. "There is a lot of uncertainty," says Panagiotis Nikoloudis, president of the National Agency for Combating Money Laundering.
The banks are exploiting that insecurity. "They are asking their customers whether they wouldn't rather invest their money in Liechtenstein, Switzerland or Germany."
Nikoloudis has detected a further trend. At first, it was just a few people trying to withdraw large sums of money. Now it's large numbers of people moving small sums. Ypatia K., a 55-year-old bank worker from Athens, can confirm that. "The customers, especially small savers, have recently been withdrawing sums of €3,000, €4,000 or €5,000. That was panic," she said.
Marina S., a 74-year-old widow from Athens, said she has to be extra careful with money these days. "I have no choice but to withdraw money from my savings," she said.
Bad Loans
The shrinking Greek bank deposits compare with bank loans totalling €253 million. Analysts say the share of bad loans could rise to 20 percent next year, or €50 billion, as a result of the recession. This in turn will worsen the already pressing liquidity problems faced by Greek banks.
He needs most of his money to make loan repayments for a small car. "How can I clear my account? There's hardly anything in it," he says. He started learning German two months ago and wants to leave Greece. "As soon as possible!"
Nikos pauses and looks down. He quietly utters words that must be painful for a proud Greek. "It would be best to change nationality."
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