By Brian Proffitt

By Mark Hinkle

Bill Gates steps down as the Chairman of Microsoft on July 1st to transition to full time philanthropic efforts with the Gates Foundation. However, I wonder how effective Bill will be other than writing checks. You see Bill’s never played well with others.

• Microsoft v. United States
  
• Microsoft v. AOL (Netscape)
• Microsoft v. Apple
• Microsoft v. Sun

At a speech on Monday for the Institute of Systems Biology he gave a speech followed by a Q&A session he reportedly answered one poor chap’s questions on whether open source methodologies would be used in his research.

Gates responded with the following:

“There’s free software and then there’s open source,” he suggested, noting that Microsoft gives away its software in developing countries. With open source software, on the other hand, “there is this thing called the GPL, which we disagree with.”

Open source, he said, creates a license “so that nobody can ever improve the software,” he claimed, bemoaning the squandered opportunity for jobs and business. (Yes, Linux fans, we’re aware of how distorted this definition is.) He went back to the analogy of pharmaceuticals: “I think if you invent drugs, you should be able to charge for them,” he said, adding with a shrug: “That may seem radical.”

Touché Bill. Of course competing with the monopoly that is Microsoft requires radical measures. Competition among desktop operating systems is pretty much non-existent. It even looks like Windows will someday become the OS of choice on the current Linux-based  OLPC project.

Now children in the poorest nations in the world who might have been given a chance to learn about free and open source software will be given Windows. Hooking them early, like handing out crack cocaine in kindergarten and waiting until graduation to start selling to the addicts.

Without compromise there is no progress. In the software world Gates was the Godfather he didn’t need to work with anyone until the Justice Department ruled against him. Even as the richest man in the world he’s got to work together with researchers and others if he wants to be successful. Too bad he didn’t learn anything about open source’s collaborative values it might have served him well as he tries to help cure disease and improve world health standards.

I have to wonder if he will be able to make the transition from dictator to do-gooder or if he will just write checks?

For more Mark Hinkle, visit his Socialized Software blog.

Taken from http://blog.linuxtoday.com

Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980’s and early 1990’s. That cost taxpayers about $250 billion in today’s dollars.

S&P added that saving Fannie (FNM) and Freddie (FRE, Fortune 500) might cost so much that the federal government’s AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.

Fannie Mae and Freddie Mac both help the mortgage market function by purchasing pools of loans and packaging them into securities.

So it is crucial for the mortgage industry for the two agencies to continue functioning smoothly.

The two companies are known as government-sponsored entities because they have Congressional charters, which implies that the federal government is behind them.

Fannie did not comment about the S&P report. According to a statement from Freddie, the firm said the S&P report was just “a scenario analysis, not a prediction” and added that “Freddie Mac remains a well capitalized company.”

Victoria Wagner, a S&P credit analyst who worked on the report, said S&P isn’t predicting that Fannie and Freddie would necessarily need a bailout at this time.

But she and other analysts are concerned about the impact more problems could have on the mortgage market since the two companies have become increasingly important to the health of the industry. Both companies are forecast to report more losses this year due to declining home prices and rising mortgage defaults.

Risks increasing

Wagner pointed out that at the end of January, 82% of all mortgages in the U.S. were backed by one of the firms, up from only 46% in the second quarter of 2007.

Fannie and Freddie primarily back so-called conforming loans, those made to borrowers with good credit and large down payments. But even limited exposure to subprime loans hasn’t stopped them from running up huge losses as home prices tumbled and foreclosures soared.

And Fannie and Freddie’s role in the mortgage and real estate markets is likely to grow, as Congress recently allowed them to back larger mortgages, up to $729,750, up from the previous limit of $417,000.

The Office of Federal Housing Enterprise Oversight (OFHEO), which regulates both firms, also recently lowered the capital requirements for Fannie and Freddie in an effort to pump $200 billion more into the credit markets.

The new loan limits will increase the risks and losses for Fannie and Freddie, said Wagner and other experts.

The high priced markets where homeowners and buyers need larger loans are now the ones seeing steep home price declines. And the default rates on larger loans are greater than the smaller loans that had previously been the core of their business.

“I don’t think the message is a bailout is necessary or imminent,” Wagner said. “But they’re facing this increased role at a time that their own credit performance is suffering from the rifts in the housing and mortgage markets. They’re both projecting much higher losses than we’ve seen in some time.”

Some see bailout as more likely

But other experts expect that declining home values will force more borrowers who have a Fannie- or Freddie-backed loan to stop making payments in the coming months, rather than continuing to make payments on a home now worth less than their loan balance.

Rising job losses may also make it difficult for other borrowers who formerly had good credit to stay current on their mortgage payments.

“The real fundamental problem is real estate prices have been falling and they might fall substantially more,” said Robert Shiller, a Yale University economist who argued for years that a bubble was forming in real estate prices. “OFHEO and Fannie and Freddie never considered the possibility of a massive real estate correction.”

Some economists suggest that if investors start to see problems in the performance of loans backed by Fannie and Freddie, they’ll dump them. And that would force the federal government to step in.

“I would say there’s at least a 50-50 chance of some sort of bailout. I’m not saying it will necessarily cost $1 trillion, but they’ll need some kind of help, and it very well could happen this year,” said Dean Baker, co-director of the Center for Economic and Policy Research

Investors are signaling growing concern as well. The yield premium for securities backed by Freddie and Fannie compared to the yield on Treasury bills has grown to about 2.25 percentage points from 1.7 percentage points at the beginning of the year. That’s a sign that the investors see a greater risk of Fannie and Freddie running into bigger problems.

And OFHEO, in its annual report this week, said that while Fannie and Freddie have made progress clearing up accounting problems that had dogged both firms, they remain “a significant supervisory risk.”

The agency added that since current home price declines are without precedent, the firms will have a difficult time correctly pricing the risk of the mortgages they’re backing.

But Jaret Seiberg, financial services analyst for policy research firm Stanford Group, said Fannie and Freddie ultimately should be able to weather the storm though simply because there is no question that the government would bail them out.

So there shouldn’t be a crisis of confidence about their future in the way that there was for investment bank Bear Stearns before the Fed stepped in and agreed to back $29 billion in potential losses so JPMorgan Chase (JPM, Fortune 500) could buy Bear Stearns (BSC, Fortune 500).

“What has allowed Fannie and Freddie to continue to operate when the private mortgage-backed security market dried up is their implicit government guarantee,” said Seiberg. 

TAKEN FROM money.cnn.com

Texas is king of the hill when it comes to corporate headquarters.

The Lone Star State passed New York as home to the most big companies in the latest list compiled by Fortune magazine.

Texas now boasts 58 headquarters, three more than New York, the previous No. 1, and California, with 52.

 

Business experts say it’s a matter of simple economics – Texas attracts companies with its low taxes, affordable land and large labor force.

“Cost is overwhelmingly the No. 1 driver,” said Albert W. Niemi Jr., dean of the business school at Southern Methodist University, who wrote his doctoral thesis about companies leaving the Northeast for the Sun Belt 30 years ago.

Irving-based Exxon Mobil Corp. remained the biggest Texas-headquartered company by 2007 revenue, and No. 2 nationally, behind Wal-Mart Stores Inc. Exxon Mobil, however, was more profitable, earning $40.6 billion.

High oil prices helped land another Texas oil company, Houston-based ConocoPhillips, at No. 5 in the national rankings, according to the magazine. San Antonio-based AT&T Inc. jumped from No. 27 to 10th place.

Four of the largest six corporations in Texas last year were oil companies, but the state’s economy is more diverse than it was a generation ago.

Other Texas companies on the magazine’s list include technology, such as Dell Inc., three of the nation’s biggest airlines, two of the biggest homebuilders, an insurer, a hospital company and the largest garbage hauler around.

Houston has the most Fortune 500 companies in the state, 25. Dallas boasts 12 – its suburbs are home to seven more – and San Antonio has four.

A few smaller cities also got in on the act: Grapevine, Pittsburg and The Woodlands have one each, as does El Paso.

Texas has been attracting big companies from out of state for nearly three decades, including American Airlines in 1979, and Exxon (before it bought Mobil) and J.C. Penney in the following decade, all from New York.

In recent years, Fortune 500 companies such as Tenet Healthcare Corp. and – just last year – engineering and construction company Fluor Corp. moved in from California.

The reverse Gold Rush from California to Texas has concerned West Coast officials for years. In 2004, consultant Bain & Co. surveyed big companies for a California business group and found that half planned to shift jobs out of state or at least stop expanding in California because of high costs, including taxes. Of that group, 27 percent said they would go to Texas, more than any other state.

Lyssa Jenkens, chief economist for the Greater Dallas Chamber of Commerce, said there is a snowball effect – once a few big companies move in, others follow.

“If you move to Dallas-Fort Worth or Houston, you’re in the company of other large companies,” she said. “They like to be near each other because there are all kinds of services for corporate headquarters – law, accounting, engineering, (information technology) services.”

A spokeswoman for Gov. Rick Perry’s office said it’s just good business for companies to move here.

“Texas is a state where people can risk their capital with the opportunity to see a positive return on their investment,” said Perry spokeswoman Allison Castle.

“Part of the overall success of the Texas economy is a result of corporate CEOs choosing to relocate and grow their businesses in Texas where we have what they need to succeed: smart people, regulatory certainty, low taxes and a quality of life unmatched by any other state,” she said.

Some companies look at Texas but walk away. The state engaged in a very public courtship of Boeing Co. in 2001 but lost to Chicago.

By several measures, the Texas economy has performed better than the national economy recently, although it hasn’t been immune to the broader slowdown.

The unemployment rate in Texas rose in March to 4.3 percent, but it remained lower than the national average of 5.1 percent. The number of jobs in Texas has grown 2.1 percent since March 2007, compared to a nationwide increase of just 0.4 percent.

Texas employers have added jobs in trade, leisure-related businesses, health care and oil and gas exploration, according to state figures.

The rapid growth, however, threatens to overtax the state’s roads and schools and add to air-quality problems.

Traffic is already daunting in Houston, Dallas and Austin. Niemi, the business school dean, said he’s seen projections that the Dallas-Fort Worth area could grow to 9 million people in 15 years.

“The negative of all this growth is the problem of infrastructure – traffic and air quality,” he said. “Can you imagine Dallas with 2.5 million more people in 15 years?”

TAKEN FROM www.dallasnews.com

Even if you know nothing about the music industry, you probably know this: People don’t buy albums anymore. Everyone is aware of this, mostly because this phenomenon is reported on constantly. The soundtrack to High School Musical was considered a commercial success by selling 2.9 million units in all of 2007; seven years before, Britney Spears was able to sell 1.3 million copies of Oops! . . . I Did It Again in a single week. That disparity should be shocking, but it isn’t — by now, anyone who (even casually) follows the music industry is inundated with similarly grim statistics all the time. Interestingly, these stories tend to make music fans happy. People hate corporate record labels and love reading about how the industry is failing. As such, the media coverage of plummeting music sales almost always focuses on how labels are losing money. But this coverage usually ignores an economic element that is less tangible but more interesting: What is happening to all the money not being spent on music?

In 1999, the total revenue from all music sales (albums and singles) was $14.2 billion. By 2006, it was barely more than $10 billion, including downloads. While considering that staggering difference, assume the following suppositions are true:

• The music-buying population in 1999 wasn’t that different from the music-buying population in 2006. Some people stopped buying music and some younger people started, but the overall demographic base is mostly identical in size and scope.
• The quality of the music produced in those respective years was not significantly different. In other words, no one is going to argue that sales only went down because the music got worse; the public’s interest in sound is static.
• The price of music in stores stayed roughly the same.

This being the case, it would seem there are two elementary reasons why the decline in revenue happened: a) illegal file-sharing and b) heightened consumer selectivity. File-sharing has been written about extensively, so there is no need to readdress it here. The term “heightened consumer selectivity” is really just a manifestation of iTunes — if someone is obsessed with the song “1 2 3 4″ but has no interest in the Feist catalog, he can acquire the single for ninety-nine cents instead of blowing sixteen dollars on a full album he’d never play twice. But here’s where the math gets less clear and more meaningful: These trends don’t involve everyone. Your grandma is not using LimeWire. The 2.6 million people who love the Eagles are still going to Wal-Mart to buy the physical CD. In practice, it’s only a select class of computer-savvy consumers who are making this dramatic revenue shift happen — almost exclusively music fans under the age of forty who a) used to buy a few albums every other Tuesday but b) now buy virtually none over the course of an entire year. This specific underclass was the collective beneficiary of the aforementioned $4.2 billion difference from 2006; that number represents money they would have spent on music in 1999, but were able to save. So I wonder: Where did all that money go?

When the Associated Press did its (now annual) story about How the Music Industry Is Failing this past January, it tried to answer my question with one sentence: “The recording industry has experienced declines in CD album sales for years, in part because of the rise of online file-sharing, but also because consumers have spent more of their leisure dollars on other entertainment, like DVDs and video games.” This is a rational explanation supported by the precipitous commercial rise in both idioms. (Video-game revenue has more than doubled since 2000, and DVD sales grew from $2.5 billion in 2000 to $23.4 billion last year.) The only problem is while CDs, DVDs, and video games are physically similar, and they’re sold in the same outlet, the experiences they offer aren’t logically connected. I don’t see why not having to pay for a Band of Horses album would make a person any more likely to buy a copy of Knocked Up, as opposed to buying four gallons of gas or a pair of sunglasses or a turtle. I don’t think young people swap out items in their “leisure” budget that explicitly. What seems more likely is that this extra $4.2 billion — unequally distributed among all the music fans who didn’t pay for music in 2006 — entered the overall economy in lots of disparate ways. And while we’ll never know exactly where all those bones disappeared, my specific theory is this: A lot of the money not spent on music in the twenty-first century is being used to pay off credit-card debt that was incurred during the nineties. In other words, not paying for In Rainbows today is helping people eliminate the balance they still owe for buying Mellon Collie and the Infinite Sadness when they were broke in 1995.

During the early eighties, it was difficult for college kids to get credit cards; at the time, parents still needed to be cosigners. But when that policy changed in the early nineties, it instantly became effortless for any slack-jawed student to get a credit card. Subsequently, the percentage of young adults (ages eighteen to thirty-four) with credit-card debt increased 5.6 percent from 1989 through 1998. But after 1998, it started to decrease; by 2004, it was lower than it was in 1989. Now, there are myriad reasons why this happened, but here is one potential factor: Napster — and the entire file-sharing era — launched in 1998. It seems entirely plausible that the money college students saved by stealing MP3’s played a critical role in paying down whatever they owed on Visa cards they never should have applied for in the first place. I suspect that if Shawn Fanning had pioneered a safe, socially acceptable way to electronically shoplift from Target in 1997, people would have jumped on that bandwagon instead.

Whenever writers try to explain the collapse of the music industry, they inevitably blame the labels themselves; they point out how wasteful and inefficient the corporate structure was at places like Elektra and Chrysalis, and how unfair it is to charge kids so many dollars for a disc that costs pennies to make, and that modern consumers have come to the realization that “music longs to be free.” This may all be true, but I’m not sure it’s a viable explanation for things like huge layoffs at Def Jam. Lots of industries succeed despite being poorly modeled. What happened is this: Young people needed more money to pay for their rising levels of self-imposed debt, so they unconsciously gravitated toward the first technology that provided a cost-saving alternative. Because four-minute digital-song files are relatively small (and thus easily compressed), ripping tracks for free became the easiest way to eliminate an extraneous cost. It wasn’t political or countercultural, and it had almost nothing to do with music itself. It was fiscally practical. It was the first, best solution.

People didn’t stop buying albums because they were philosophically opposed to how the rock business operated, and they didn’t stop buying albums because the Internet is changing the relationship between capitalism and art. People stopped buying albums because they wanted the fucking money. It’s complicated, but it’s not.

Find this article at: http://www.esquire.com/features/chuck-klostermans-america/klosterman-0408

taken from www.esquire.com

 

Technology makes it possible to run a business from practically anywhere on the planet. But what if your business partner lives in a different city or a different time zone? How do long-distance partners make it work?

The answer appears to be with lots of planning and smart use of technology. And even in the best long-distance arrangements, an old-fashioned in-person meeting now and then seems to reignite the spark.

Kathi Elster, an author and consultant who specializes in interpersonal relationships at work, says she has encountered many long-distance partnerships and never seen anyone break up over it.

“The frustration usually comes when there is a time difference, like if someone is in India or China, and the other has to be up in the middle of the night to communicate,” Ms. Elster said. “You rely on e-mail, cannot do a lot of talking and the subtleties can get lost. So you do miss things.”

Still, she says, these arrangements generally work, especially if the partners have a high level of trust in each other. “It’s not going to work if one person has to fly out to see what is going on because the other isn’t pulling their own weight,” she added.

In early 2006, Ben Finkel and Andrew McClain, friends from Brown University, started Fluther.com, an online knowledge-sharing collective, when both were living in San Francisco. But Mr. McClain had plans to move to Los Angeles to pursue a side career in acting.

The two had some concerns about whether the business would survive Mr. McClain’s move and dual career. So they included language in the initial draft of their partnership agreement protecting Mr. Finkel in the event Mr. McClain could not commit the necessary time to the business.

As it turned out, they abandoned those provisions by the time they completed their agreement because they were satisfied with how things were working out.

The subject of planning comes up often in talks with long-distance partners. “If you are a mature business person, you understand that a detailed communication structure is required for success in any partnership, whether across the hall, across the room, or across the country,” said Richard Sloan, who runs the small- business radio show and Web site, StartupNation, with his brother, Jeff. The Sloan brothers themselves are now putting that observation to a test.

After five years of running their company together out of a 3,500-square-foot office in Birmingham, Mich., Richard has just moved to San Francisco, a market that has become increasingly important to their business. They set up a regularly scheduled weekly telephone call. “And for a six-month period of time before my move, we ran the business this way even though we were both still in the same city,” Mr. Sloan said.

Mr. McClain, who works out of his home in Los Angeles, and Mr. Finkel, who works in a co-working space in San Francisco, say they rely heavily on communications technology. But sometimes it can be a cause for frustration. “The problem is when the technology does not work,” Mr. Finkel said. “When you really want to have a conversation, you can go from shoddy cell reception to iChat to Skype and none of them are working. At some points we would have been better with a landline from the 1950s.”

The two say they prefer to be able to see each other when they converse and to share views of what is on each other’s computer screens.

“We have probably been through about 20 communication tools,” Mr. Finkel said. “In the old days, we used something called Bosco’s Screen Share, but then Leopard, Mac’s new operating system, came out with a snazzier version.”

This technology raises some privacy issues, according to Mr. McClain and Mr. Finkel. So they have learned to be careful after a few instances of leaving the camera on and walking away from the computer without logging off. “Once, when Andrew forgot to turn off the camera and his girlfriend started typing, I could see her,” Mr. Finkel said. “But she didn’t have the headphones on so I couldn’t tell her.”

The partners say they value meeting in person. “Every three months or so, I will either go to San Francisco or Ben comes to Los Angeles and we recharge the battery of personal connection,” Mr. McClain said.

Some partners see geographic distance as a boon. In 2000, while living in Orlando, Fla., Melinda Tomasello and Pamela Grimes started Originality Inc., a design firm specializing in custom and corporate gifts.

When Ms. Grimes’s husband was transferred to Washington about a year and a half into their business, she moved, along with him and their two children. Ms. Grimes soon started joining organizations and attending trade shows in the Washington area, which opened a new market for Originality. “These are two big hot spots in the country, so it is great for us,” Ms. Tomasello said.

The company has incurred modest costs, mostly in upgrading technology, to accommodate Ms. Grimes’s relocation. But they say much of that might have happened had they remained in the same city since they had each always worked out of their own home offices. They say that two software tools have proved particularly helpful: Billingorchard.com to keep track of electronic billing and Quickbooks for accounts payable.

“With these programs, we can share information even though our computers are not networked,” Ms. Grimes said. “We are just waiting for Quickbooks to add a feature to track all of the purchase orders. Right now we track those separately.”

They have had some mishaps, mostly when items have been shipped to the wrong office. “We are very careful now when we order things to be very clear. ”

Flying Cart, a company that provides tools for small businesses to create online stores, is run by three partners who live in different cities. The three founders all have connections to the University of Wisconsin in Madison, but only Mr. Beerman still lives in that city: Rishi Shah lives in Chicago, where he moved to pursue another job, and Margo Baxter, a triathlete lives in Austin to be near her trainer.

Mr. Shah says working remotely keeps them focused. “For a time, Margo and I worked side by side in Madison for a month in a half. We went to a coffee shop together and worked side by side each day. At first it was amazing. We were totally focused and totally pumped. But by the third week, we kept bugging each other and our productivity level went down. I am working on sales and she is working on development and when we work apart, we just get so much more done.”

Still, there are challenges. “When you are starting up, you can get demoralized really quickly,” Mr. Shah said. “When you’re alone and frustrated, you don’t always have an area to vent. That’s why we have weekly meetings over Skype.”

TAKEN FROM www.nytimes.com

 

Think back to your first job at the local ice cream shop. Working after school, 15 hours per week at $7 an hour was enough to fulfill your wishes, hopes and dreams. (Let’s be honest, back then, none of us wished for much more than a reciprocated crush and a big allowance.)

Those days have long since passed. Unless you’re a waged worker (paid hourly) like 59 percent of U.S. workers are, according to the Bureau of Labor Statistics, you probably don’t have a clue what your salary translates to per hour.

The median household salary is $48,201, according to the 2006 U.S. Census Bureau report. This makes the average hourly rate $23.17 based on a 40-hour workweek.

We’ve made a list of jobs in various industries; each position earns between $20 and $30 per hour and is experiencing job growth through 2016, based on data from the BLS.

Here are 10 jobs that earn more than $20 per hour:

 

TAKEN FROM edition.cnn.com

Cash-strapped consumers are cutting back on coffee

The demand for expensive coffee has been hit by the US housing slowdown and economic downturn.

Starbucks has cut its forecasts for 2008 profit, blaming an economic environment that it describes as “the worst in the company’s history”.

The coffee chain giant said conditions had been especially bad in California and Florida, which account for one third of its revenue in the US.

It expects full year earnings to be “somewhat lower” than last year’s.

Uncertain times

Results for the first three months of 2008 will be announced on Wednesday 30 April.

Starbucks said it expected earnings per share for the quarter to be about 15 cents (8 pence), down from 19 cents in the same period of 2007 and well below Wall Street forecasts.

More precise forecasts for the year as a whole were not possible, it said, because of the uncertainty about current economic conditions.

“The current economic environment (has been) marked by lower home values and rising costs for energy, food and other products that are directly impacting our customers,” said Howard Schultz, Starbucks’ chief executive.

Starbucks shares fell 12% in after-hours trading.

TAKEN FROM news.bbc.co.uk

NEW YORK (CNNMoney.com) — The damaged housing and home construction markets will continue to take a beating at least through the end of the year, according to economists who spoke Thursday at a forecast conference sponsored by the National Association of Home Builders.

The economists said the deterioration of the housing market helped the U.S. economy slip into a recession that will continue through June. They said high oil prices will continue to hamper consumer spending, and the ongoing credit crisis will make home financing difficult, stalling a housing recovery until at least 2009.

Plummeting home prices negatively affect homeowners’ wealth, and some mortgage borrowers have found that the value of their homes has fallen below the price of their mortgages, sending some homeowners into foreclosure. One economist forecast that before all is said and done, the housing crunch will have cost Americans $400 billion in lost home value.

“All this downward momentum in home prices is really screwing up the financial markets,” said NAHB chief economist David Seiders, adding, “Housing production will continue to drag on the economy until the first quarter of 2009.”

Though the tax rebates from the government’s economic stimulus package are expected to trigger a rise in consumer spending and confidence, any bounceback in housing is forecast to be slow - a bad sign for the overall economy.

“After the stimulus checks take their effect, the economy will will need something else to support it in the first quarter of 2009, or else the economy is in trouble,” said Seiders.

The conference was held in Washington.

Another trade group, the National Association of Realtors, reported Tuesday that sales by homeowners fell 2% in March despite home prices falling 7.7% in March and 8.2% in February - the largest year-over-year price drop on record. The median home price in the United States has tumbled 12.8% since the record high reached in July 2006, and existing home sales have been in a virtual free-fall since July 2007.

But the economists said the housing market is nearing its bottom, with existing home sales bottoming out toward the end of 2008 and sales of new single-family houses picking up perhaps as early as the second half of 2008.

“We’re not out of the woods yet, and recovery will be very tepid,” said Global Insight economist Nariman Behravesh, who predicted net home sales will enter “small positive territory” in the second half of 2008.

Though Behravesh forecast continued recovery throughout 2009 and 2010, he said there is legitimate concern that home prices could again slip in the first quarter of 2009 after the effect of the stimulus package wears off.

A homebuilders’ recovery may take a bit longer than the real estate market’s comeback, according to the economists.

“The explosion of single-family building permits in 2003 to 2005 produced an unsustainable, unprecedented run-up in the building economy,” said Seiders.

But when the housing market crashed, new housing permits “fell off a cliff,” according to Seiders, returning to levels not seen since the 1991 recession. That left a huge glut of unoccupied new homes on the market without many potential buyers.

According to the National Association of Realtors report released Tuesday, there were 4.1 million available for sale, representing nearly a 9.9 month supply. Such a high inventory competes directly with builders, as they have to curtail construction projects on new homes until supply and demand levels are more balanced.

But economists remained optimistic that a turnaround for builders would come in 2009.

“The housing market will not regain any balance until sales resume,” said JPMorgan Chase economist Jim Glassman. “But this may be the worst of it.”  

TAKEN FROM /money.cnn.com

The UK’s biggest banks have lost a test case about overdraft charges.

A judge has decided that the Office of Fair Trading (OFT) can rule on the fairness of the charges, which many customers have been trying to reclaim.

Mr Justice Andrew Smith said his judgement did not necessarily mean the charges were unfair.

But the decision opens the door for the OFT to demand that banks cut their charges, unless any subsequent legal appeals are successful.

Thousands of cases currently on hold in the county courts will be frozen until 22 May, by which time the banks must decide whether they are going to appeal against the ruling.

Any additional High Court hearings after that date may further delay those claims.

‘Victory’

This does not necessarily mean they [the charges] are unfair Mr Justice Andrew Smith Q&A: Bank charges Reaction to the judgement Why I took my bank to court

Since the beginning of 2006, hundreds of thousands of customers have reclaimed hundreds of millions of pounds from their banks, arguing the charges were too high and unfair.

The banks have consistently argued that their charges were fair and reasonable.

Campaigners have welcomed the judge’s ruling as a victory for consumers.

“The banks should do the right thing now and concede defeat, agree with the OFT what constitutes a fair unauthorised overdraft fee and refund their customers as soon as possible,” said Doug Taylor, personal finance campaigns manager at Which?.

But Angela Knight, of the British Bankers’ Association, said: “We need to take what the judge has said very carefully and not jump to conclusions. This is the start of a process.”

The judge decided against the OFT on two points. He said most of the banks’ terms and conditions were plain and intelligible.

And he added that the charges could not be challenged under common law.

Test case

This judgement means the OFT should be able to decide what a fair charge would be for unauthorised overdrafts.

READ THE FINDINGS   Bank charges judgement [536KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here

The OFT described the ruling as an “important early milestone” for its investigation into an area of “high consumer interest”.

“We are continuing our investigation into the fairness of these terms and will consider our position after reviewing the detail of this judgement,” added the OFT statement.

Both the banks and the courts have been deluged with claims since the beginning of 2006, which they were finding very difficult to deal with.

But since both sides agreed to stage the test case, tens of thousands of claims have been put on hold in either the county courts or with the Financial Ombudsman Service (FOS).

The BBC has estimated that last year the banks refunded about £784m to nearly 378,000 customers.

‘Snowballing situation’

Paul Tilley, a law student from Southampton, was one of those customers.

He says he won back £4,000 including interest after his bank imposed charges for exceeding his overdraft limit.

He has an outstanding claim with another bank and hopes the test case will force banks to change their behaviour.

“Looking at my statements from the time, they were taking up to £180 a month off me in charges, it then left me short for paying my bills.”

“As a result my payments bounced, I then went over my overdraft again.”

“It was a snowballing situation.”

Further cases

The OFT first agreed last July, with seven banks and the Nationwide building society, to stage the test case to decide if it had the power under consumer contract regulations to regulate overdraft charges.

The issue of the OFT’s jurisdiction was then thrashed out during 14 days of complicated High Court hearings in January and February.

At stake is not only the ability of aggrieved customers to reclaim their charges but also the ability of the banks to generate an estimated £3.5bn a year in income from levying them.

If the banks eventually suffer a complete defeat on the issue, then it has been widely predicted that they will try to recoup their losses by abandoning the long standing policy of so-called “free banking” for customers in credit.

Instead, monthly or annual charges could be introduced as standard for running an ordinary current account.

TAKEN FROM news.bbc.co.uk

AP) — The two biggest U.S. warehouse retail chains are limiting how much rice customers can buy because of what Sam’s Club, a division of Wal-Mart Stores Inc., called on Wednesday “recent supply and demand trends.”The broader chain of Wal-Mart (WMT, Fortune 500) stores has no plans to limit food purchases, however.

The move comes as U.S. rice futures hit a record high amid global food inflation, although one rice expert said the warehouse chains may be reacting less to any shortages than to stockpiling by restaurants and small stores.

Sam’s Club followed Seattle-based Costco (COST, Fortune 500) Wholesale Corp., which put limits in at least some stores on bulk rice purchases.

Sam’s Club declined to say if this is first time it has restricted sales of bulk foods. The limits affect 20-pound bags, not retail-sized portions. Costco President and CEO Jim Sinegal declined to discuss the issue Wednesday with an AP reporter.

Sam’s Club said it will limit customers to four bags at a time of imported jasmine, basmati and long grain white rice.

Higher prices ahead

The warehouse chain caters heavily to small businesses, including restaurants. Sam’s Club spokeswoman Kristy Reed said she could not comment on whether the problem was caused by short supplies or by customers stocking up in anticipation of higher prices.

USA Rice Federation spokesman David Coia said there is no rice shortage in the United States.

“It’s possible that small restaurants and bodega-type neighborhood stores may be purchasing rice in larger quantities than they do typically to avoid higher prices,” Coia said about the warehouse chain restrictions.

A smaller chain, Natick, Mass.-based BJ’s Wholesale Club (BJ, Fortune 500), said it is not imposing limits for now.

“At the present time, BJ’s Wholesale Club is not limiting the amount of rice purchases made by our members, but, due to the current market situation, that could change at any time,” spokeswoman Sharyn Frankel said in a statement.

In New York’s Chinatown, shop owners said that they haven’t seen people stocking up amid fears of rice shortages.

iReport: What are you paying for food?

At Bangkok Center Grocery, one of the main suppliers of Thai food products in New York City, manager Tom Pongsopon said the price of a 25-pound bag of Jasmine rice at his Chinatown store has gone up from $15 to $20 in a matter of months.

“We have enough for now, but I’m not sure about the future,” Pongsopon said.

The Sam’s Club restriction is effective immediately at all locations where quantity restrictions are allowed by law. It does not apply to other staples such as flour or oil.

“We are working with our suppliers to address this matter to ensure we are in stock, and we are asking for our Members’ cooperation and patience,” Reed said in a statement.

Sam’s Club has 593 stores compared with 2,523 Wal-Mart Supercenters that combine a full grocery section with general merchandise.

Costco has 534 warehouses worldwide, most of them in the United States.

Wal-Mart spokeswoman Deisha Galberth said Wal-Mart stores have no plans for restrictions similar to those at Sam’s Club.

“We are not seeing any signs of concern in the supply chain that would cause us to limit the sales of any items,” Galberth said.

Investors react

U.S. rice futures soared to an all-time high Wednesday as investors bet that surging world demand will continue to pressure already dwindling stockpiles. Rice for the most actively traded July contract jumped 62 cents to $24.82 per 100 pounds on the Chicago Board of Trade, after earlier rising to a record $24.85.

Relentless demand from developing countries and poor crop yields have pushed rice prices up 70 percent so far this year, raising concerns of severe shortages of the staple food consumed by almost half the world’s population.

The steep increases have followed similar jumps in the price of wheat, corn and soybeans that have added to Americans’ growing grocery bill and led to violent food riots in poor countries including Haiti, Senegal and Pakistan.

Most of the rice eaten in the world is consumed within 60 miles of where it was grown, said Nathan Childs, an economist and rice expert with the U.S. Department of Agriculture. Traditionally very little of it was traded in the world market.

But as populations crossed borders, the taste for specialty rices such as the Indian basmati, or Thai jasmine rice, which grow only in their areas of origin, spread.

U.S. production of long grain and medium grain rice is strong, and the global crop is larger than ever, Childs said. But with some of the principal exporters of the higher-priced rices, such as India and Vietnam, shunning foreign sales to control prices at home and the cost of food generally going up, the price of rice has been climbing to new heights.

What adds to the price spike — and the run on specialty products like basmati — is that rice consumers tend to be very loyal. The market is highly segmented by type of rice and quality, and buyers will generally not take a substitute, Childs said.

“California’s had a pretty good crop, but basmati and jasmine consumers have a history of not switching,” he said. “They could always have bought cheaper Calrose. But they don’t.” 

TAKEN FROM /money.cnn.com