Archive for the ‘Development’ Category

Companies Are Stocking Up on Durable Goods

Wednesday, November 30th, 2011

American companies ordered more heavy machinery, computers and other long-lasting manufactured goods in September, an encouraging sign for the shaky economy.  The increase in demand for these durable goods suggests businesses are staying with investment plans, despite slow growth and a lack of consumer confidence.

Durable goods are products expected to last a minimum of three years.  Core capital goods are products that have nothing to do with defense or aircraft.  The gains are driven by tax breaks given to businesses for investments made this year, an incentive Congress approved last December to boost the lethargic economy.

“Demand for big ticket items seems to be alive and well,” said John Ryding, an analyst at RDQ Economics.  “Outside of the volatile transportation sector, the gains in durable orders were broad based in September, and point to a manufacturing sector that continues to expand at a solid rate.”

“Despite the understandable concern about economic growth, businesses are still investing,” said Jennifer Lee, senior economist at BMO Capital Markets.

Robust demand for core capital goods is a strategic reason why economists expect an annual growth rate of 2.4 percent in the 3rd quarter.  That would be a major improvement from the first six months of the year, when the economy expanded at just 0.9 percent, the worst growth since the recession ended more than two years ago.  A 2.4 percent growth rate could ease fears that the economy is on the verge of sliding back into a recession.  Even so, the growth rate needs to nearly double to make a substantial dent in the unemployment rate, which remained stuck at 9.1 percent in September for the third consecutive month.

“Manufacturing is in pretty decent shape, and this ends the quarter on a high note,” said Brian Jones, a senior U.S. economist at Societe Generale, who accurately forecast demand for non-transportation equipment.  “We’ve got decent momentum going into the 4th quarter.”  Orders for computers and related products jumped as much as six percent.  A Commerce Department report is projected to show the world’s largest economy grew at a 2.5 percent annual pace in the 3rd quarter, an increase of the 1.3 percent rate in the previous three months.  Societe Generale’s Jones said the gain in durable goods demand has the potential to bring GDP growth for last quarter closer to three percent.

Boeing, the largest American aircraft maker, received 59 airplane orders in September, compared with 127 the preceding month.  September’s decline came on the heels of a 25 percent gain in August.  Orders for non-defense capital goods excluding aircraft jumped 17 percent at an annualized rate compared with an 11 percent increase in the previous three months, an indication that business investment is picking up.

Additional indicators show that manufacturing, which accounts for approximately 12 percent of the economy, continues to grow.  The Institute for Supply Management’s factory index rose a full point to 51.6 in September, compared with 50.6 in August.  A level greater than 50 indicates that expansion is taking place.  Industrial production advanced in September on demand for items such as cars and computers, according to the Federal Reserve.

According to Mike Shea, Managing Partner and Trader at Direct Access Partners LLC, “The number wasn’t bad, and having a decent number in durables is far better than having a bad number, since with the overhang of Europe, if we were getting lousy data here, then we wouldn’t have anything to hang our hats on.  If not for what was going on in Europe, this market would be running on all cylinders.  The summit in Europe is the tradable event.  We could have one hundred percent earnings positive surprises today, we could have great economic data come out, all of that could come in rosy domestically, but if the news out of Europe is judged to be bad, none of what happens in the U.S. will matter.  This market will not shrug off a lousy plan coming out of Europe.  It will not shrug off any plan that is not fundamentally based in reality.”

Companies Are Stocking Up on Durable Goods

Wednesday, November 2nd, 2011

American companies ordered more heavy machinery, computers and other long-lasting manufactured goods in September, an encouraging sign for the shaky economy.  The increase in demand for these durable goods suggests businesses are staying with investment plans, despite slow growth and a lack of consumer confidence.

Durable goods are products expected to last a minimum of three years.  Core capital goods are products that have nothing to do with defense or aircraft.  The gains are driven by tax breaks given to businesses for investments made this year, an incentive Congress approved last December to boost the lethargic economy.

“Demand for big ticket items seems to be alive and well,” said John Ryding, an analyst at RDQ Economics.  “Outside of the volatile transportation sector, the gains in durable orders were broad based in September, and point to a manufacturing sector that continues to expand at a solid rate.”

“Despite the understandable concern about economic growth, businesses are still investing,” said Jennifer Lee, senior economist at BMO Capital Markets.

Robust demand for core capital goods is a strategic reason why economists expect an annual growth rate of 2.4 percent in the 3rd quarter.  That would be a major improvement from the first six months of the year, when the economy expanded at just 0.9 percent, the worst growth since the recession ended more than two years ago.  A 2.4 percent growth rate could ease fears that the economy is on the verge of sliding back into a recession.  Even so, the growth rate needs to nearly double to make a substantial dent in the unemployment rate, which remained stuck at 9.1 percent in September for the third consecutive month.

“Manufacturing is in pretty decent shape, and this ends the quarter on a high note,” said Brian Jones, a senior U.S. economist at Societe Generale, who accurately forecast demand for non-transportation equipment.  “We’ve got decent momentum going into the 4th quarter.”  Orders for computers and related products jumped as much as six percent.  A Commerce Department report is projected to show the world’s largest economy grew at a 2.5 percent annual pace in the 3rd quarter, an increase of the 1.3 percent rate in the previous three months.  Societe Generale’s Jones said the gain in durable goods demand has the potential to bring GDP growth for last quarter closer to three percent.

Boeing, the largest American aircraft maker, received 59 airplane orders in September, compared with 127 the preceding month.  September’s decline came on the heels of a 25 percent gain in August.  Orders for non-defense capital goods excluding aircraft jumped 17 percent at an annualized rate compared with an 11 percent increase in the previous three months, an indication that business investment is picking up.

Additional indicators show that manufacturing, which accounts for approximately 12 percent of the economy, continues to grow.  The Institute for Supply Management’s factory index rose a full point to 51.6 in September, compared with 50.6 in August.  A level greater than 50 indicates that expansion is taking place.  Industrial production advanced in September on demand for items such as cars and computers, according to the Federal Reserve.

According to Mike Shea, Managing Partner and Trader at Direct Access Partners LLC, “The number wasn’t bad, and having a decent number in durables is far better than having a bad number, since with the overhang of Europe, if we were getting lousy data here, then we wouldn’t have anything to hang our hats on.  If not for what was going on in Europe, this market would be running on all cylinders.  The summit in Europe is the tradable event.  We could have one hundred percent earnings positive surprises today, we could have great economic data come out, all of that could come in rosy domestically, but if the news out of Europe is judged to be bad, none of what happens in the U.S. will matter.  This market will not shrug off a lousy plan coming out of Europe.  It will not shrug off any plan that is not fundamentally based in reality.”

New World Trade Center Is Rising From the Ashes

Monday, September 12th, 2011

In the nearly 10 years since the 9/11 tragedy, the site that once seemed impossible to redevelop is very much alive.  The World Trade Center redevelopment and the electrifying changes going on in Downtown New York City — 56,000 new residents (doubled that of before the attacks) and 300 new tenants (since 2005) must be onto something good. The site’s transformation has been “a piece of cake,” quipped Silverstein Properties CEO Larry Silverstein. We’re seeing a quick metamorphosis Downtown, and the impact on values is just beginning, according to Silverstein. “It’s nothing short of extraordinary.” The site will have as much impact (if not more) as Rockefeller Center was to New York City in the 1930s. 

Construction on 1 WTC and 7 WTC is progressing, the latter to be the last of the towers to collapse on 9/11 and the first to be rebuilt.  At 1,776 feet in terms of structural height, with the spire, 1 WTC will be the tallest building in the Western Hemisphere, taller than the Willis Tower in Chicago. The structural steel for the 72-floor 4 WTC is currently at 40 stories with completion planned for 2013 and will have 2.3M RSF.  The expected completion dates for all of the WTC properties are: the National September 11 Memorial & Museum this year; 1 WTC, the vehicle security center, and 4 WTC in 2013; the transportation hub in 2014; 3 WTC in 2015; and 2 WTC beyond that.

According to the Lower Manhattan Development Corporation, “LMDC is charged with assisting New York City in recovering from the terrorist attacks on the World Trade Center and ensuring the emergence of Lower Manhattan as a strong and vibrant community. The centerpiece of these efforts is the creation of a permanent Memorial remembering and honoring the thousands of innocent men, women and children lost in the terrorist attacks. The Lower Manhattan Development Corporation was created in the aftermath of September 11, 2001 by then-Governor George Pataki and then-Mayor Rudolph Giuliani to help plan and coordinate the rebuilding and revitalization of Lower Manhattan, defined as everything south of Houston Street.  . LMDC is charged with ensuring Lower Manhattan recovers from the attacks and emerges even better than it was before. The centerpiece of LMDC’s efforts is the creation of a permanent memorial honoring those lost, while affirming the democratic values that came under attack on September 11.”

 Writing on the Plots and Plans website, Carter B. Horsley says that “In the best of all cities, if not worlds, the design for a redeveloped World Trade Center site would include a memorial for the almost three thousand people lost in the September 11, 2001, terrorist attacks that demolished the center’s twin towers, a decked-over West Street to reunite Battery Park City with the rest of Lower Manhattan, an expanded transportation terminal that would better unite Downtown with Midtown and the rest of the Metropolitan region, and a stunning new architectural project that would reassert Manhattan’s international architectural prominence. The redevelopment should also afford the city the opportunity to significantly bolster the downtown community’s cultural assets with the inclusion of some important institutions such as new homes for the Museum of the City of New York and the New York City Opera. Fortunately, the site is large enough to accommodate all of these components as well as meeting the contractual needs of the Port Authority of New York & New Jersey to replace the 11 million square feet of commercial and retail space that had existed on the site.”

“After 9/11, we found ourselves with a clear mission to rebuild 7 World Trade Center quickly,” said Robin Panovka, a partner at Wachtell, Lipton, Rosen and Katz, who provides legal counsel to Silverstein Properties. “But there were tremendous obstacles in the way, and it’s really how those obstacles were overcome, through cooperation with the Port Authority and the other players, that led to rebuilding of 7 World Trade Center and is now leading to the rebuilding of the larger site where the Twin Towers once stood,” Panovka said. “The result is this beautiful building, 7 World Trade Center, built partly on land the builder didn’t yet own or lease, without customary agreements among the major stakeholders.  It’s that kind of cooperation, vision and guts that led to the success of this building and is fueling the rebuilding of the whole World Trade Center site.” 

As the world’s largest and most complex construction site, the new World Trade Center will be home to a national memorial and museum of emotional and engineering complexity, the nation’s tallest skyscraper, a transportation hub that will serve 250,000 commuters every day, and upscale retail. It will also be home to thousands of workers moving into 10 million SF of new office space.

Fannie and Freddie to Marry?

Tuesday, August 2nd, 2011

Mortgage finance giants Fannie Mae and Freddie Mac might find themselves merged into a single government-run entity.  Representative Gary Miller (R-CA) is set to unveil a bill that would create a utility-like entity and phase out government-controlled Fannie Mae and Freddie Mac.  The new company would buy mortgages and repackage them as government-backed securities.  The major difference from Fannie and Freddie lies in the fact that it would not have shareholder investors.  The National Association of Homebuilders and the National Association of Realtors are expected to support the proposal, which reflects concerns by the industry, consumer groups and some policymakers that a complete withdrawal of government support for home lending could make the housing recession go further downhill.

A competing proposal by Representatives Gary Peters (D-MI) and John Campbell (R-CA) would create a minimum of five private companies to replace the two co-called government-sponsored enterprises, or GSEs.  The point of contention for many lawmakers is whether to provide a government backstop for mortgages and on what terms to provide the guarantee.  House Financial Services Committee Chairman Spencer Bachus (R-AL) is trying to forge a consensus among Republican members.  Any bill that is generated by Bachus’ committee and is passed by the Republican-led House would likely still be in jeopardy once it reaches the Democratic-controlled Senate.

“There was the idea that people were so tired of taxpayer losses related to housing that the traditional housing lobby would not be able to retaliate effectively,” said Jim Vogel, chief of agency debt research at Memphis-based FTN Financial. “It’s time to start waving the housing flag again.”

That would represent a sea change from February, when the Treasury Department recommended selling off Fannie Mae and Freddie Mac holdings within 10 years; Jeb Hensarling (R-TX) wanted to do it in half that time.  Since then, homebuilders, real estate agents, investment banks, civil rights leaders and consumer advocates have lobbied to retain a government role — including the unspoken federal guarantee behind Fannie Mae and Freddie Mac.  Congress created the programs as private companies to expand home ownership.

Already, the government is slowing its efforts to prop up the housing market.  Beginning this fall, the cap on Fannie and Freddie-backed mortgages — loans where taxpayers are on the hook if borrowers don’t pay — will decline in some regions.  At the height of the housing crisis, Congress raised the cap to $729,750 in areas where homes are most expensive.  After October, that will fall to $625,500.  The limit varies by county.  Mortgages that are too expensive to get backing from Fannie and Freddie are called jumbo loans and usually have higher interest rates and require larger downpayments.  That maximum was set by Congress in 2008 in an attempt to ensure that borrowers could continue to obtain loans in particularly expensive housing markets during the credit crunch, especially in prime real estate locations, such as New York, Los Angeles and Washington, D.C.

The Deal Book column in the New York Times thinks that the idea of merging Fannie and Freddie is not as outrageous as it may at first seem.  “Consider the math: For the first six months of this year, both companies spent $1.825 billion in overhead costs combined; on an annualized basis, that means the companies are spending about $3.65 billion.  Given that the companies do pretty much the same thing – buying mortgages from banks, insuring them and creating mortgage-backed securities – there might be opportunities for savings if many of their managers and staff are, to put it politely, redundant.  Conservatively, a combined Fannie and Freddie could probably cut a third of its overhead and staff, saving some $1.2 billion annually.  The way Wall Street values companies, that means – presto – billions more in value, perhaps as much as $18 billion or $19 billion, could be created overnight.”

“It would instill a huge amount of confidence. The market will know that both entities combined will have much more consistent, stable margins,” John Lekas, chief executive of Leader Capital, an investment firm, said on CNBC last week. He added that it “doesn’t cost taxpayers one nickel.”

Additionally, Fannie and Freddie are on track in 2011 to spend about $1.8 billion on what is known as “foreclosure costs,” which means maintaining and selling thousands of homes that became part of their ownership portfolios after the owners were unable to pay the mortgage.  The costs are staggering, given that Fannie and Freddie together own approximately 153,000 foreclosed homes. “This is just one of the costs that Fannie and the rest of us will pay to dig out of a very big hole,” says Karen Petrou, of Federal Financial Analytics.  When she says “the rest of us,” she is telling the truth.  Fannie Mae’s tab to American taxpayers is up to $86 billion since September 2008 when it was taken into government conservatorship.  During the 1st quarter of 2011, Fannie racked up $488 million in foreclosure-related expenses, including holding costs (insurance, taxes and maintenance); valuation adjustments for changes in market value; gains/loss when the property is sold; legal fees; eviction costs; weatherization costs to prevent pipes from bursting; costs to secure the property; and repair costs.

“We want to make sure that we’re comparable with the market or with the neighborhood,” said Elonda Crocket, a Fannie Mae executives who is part of the management team of its massive portfolio of foreclosed properties.  The goal is to stabilize the neighborhoods where there are foreclosed homes and get the properties to a condition where first-time homebuyers want to purchase them.  “We want to make sure that we can maximize our return on the investment,” she said.  In 2010, Fannie Mae repaired 87,000 foreclosed homes.

“It makes them — I think — indisputably the largest purchaser of paint and general appliances for these homes they’re fixing up,” said Guy Cecala, publisher of Inside Mortgage Finance.  “If they don’t maintain the houses, then the neighborhoods go downhill, other people are put at risk and the housing crisis gets worse because you have still more downward pressure on overall house prices,” Petrou said.

Walkability Factor Increases Property Investment Values

Wednesday, July 27th, 2011

According to a recent study, a 100-point scale, a 10-point increase in walkability increases property values by one to nine percent, depending on the property.  Chicago – with a Walk Score of 74 — was one of the nation’s most walkable cities.  The others are New York, Boston, San Francisco, Washington D.C., and Philadelphia.  The least walkable cities are Jacksonville, Nashville, Charlotte, Indianapolis, Oklahoma City, Memphis, Fort Worth, Kansas City, San Antonio, El Paso, Austin and Phoenix.

The report examined the impact on walkability and investment returns on more than 4,200 apartment, office, retail and industrial properties over the past decade.  Gary Pivo and Jeffrey D. Fisher compiled the data using performance information from the National Council of Real Estate Investment Fiduciaries and walkability data from Front Seat.  The study defines walkability as “the degree to which an area with walking distance of a property encourages walking trips from the property to other destinations.”

The Loop and the Near North Side were rated as Chicago’s most walkable neighborhoods with Walk Scores of 96 each.  Just five percent of Chicagoans live in car-dependent neighborhoods.  Illinois’ most walkable city is Forest Park – in the near western suburbs — with a Walk Score of 82; the least walkable is Godfrey – near downstate Alton — with a score of just 20.

GE Enters the Solar Power Business

Wednesday, June 29th, 2011

The nation’s largest conglomerate – General Electric – is getting into the solar business in a big way with the firm’s announcement that it is investing $600 million to build a new solar-panel manufacturing plant as it pursues what it thinks could be a $3 billion business by 2015.  The firm, already a leader in renewable energy, has designed a thin-film solar panel that converts sunlight to electricity more efficiently than any other product currently on the market.  The firm, a leading manufacturer of wind- and natural gas-powered electric turbines, plans to open a factory in an as-yet unknown location by 2013.  The facility will employ 400 workers and produce enough solar panels annually to power 80,000 homes.

“The biggest challenge today for the mainstream adoption of solar is cost, and the way you move cost is efficiency,” said Victor Abate, vice president of GE’s renewable energy unit.  “We see ourselves continuing to push that and continuing to move efficiency and as a result the costs of solar continue to come down.”  According to Abate, a decision on where to locate the factory will be made within the next three months.  The decision will be based on criteria including proximity to GE’s research centers, available space, and state and local government incentives, Abate said.  GE expects to make a decision before the end of the year at the latest.

GE’s entry into the solar business comes at an excellent time.  Solar panel installations are expected to surge in the next two years as the cost of generating electricity from the sun approaches that of coal-fueled plants. Large photovoltaic projects would cost $1.45 a watt to build by 2020, half the current price, according to Bloomberg New Energy Finance estimates.  Solar is feasible against fossil fuels on the electric grid in sunny regions such as the Middle East.  “We are already in this phase change and are close to grid parity,” said Canadian Solar chief executive Shawn Qu.  “In many markets, solar is already competitive with peak electricity prices, such as in California and Japan.”

Solar photovoltaic system installation has the potential to nearly double to 32.6 gigawatts by 2013 from 18.6GW last year, according to New Energy Finance.  Manufacturing capacity worldwide has quadrupled since 2008 to 27.5GW annually; 12GW of production will be added in 2011.  Canadian Solar had about 1.3GW of capacity and is expected to reach 2GW in 2012, Qu said.


Writing in Time’s “Ecocentric” column, Bryan Walsh says that the new plant is “Good news for solar advocates and bad news for competitors — General Electric is ready to break into the solar cell business in a major way.  The $218 billion company announced today that it had built a solar module with the highest-ever efficiency rate for cadmium-telluride thin film — the most popular low-cost solar technology — at 12.8 percent, according to independent testers at the National Renewable Energy Laboratory.  That announcement came as GE told reporters that it intends to manufacture those solar modules at a 400-MW factory — in what would be the biggest such facility in the U.S. — that is set to open in 2013.  GE also completed the acquisition of PrimeStar Solar, the Colorado-based thin-film manufacturer, which will complement its recent acquisition of the power conversion company Converteam.”

Offshore Cape Wind Farm Gets the Go-Ahead

Wednesday, May 4th, 2011

The controversial Cape Wind Energy Project – to be constructed in Nantucket Sound between Cape Cod, Nantucket and Martha’s Vineyard in Massachusetts – has been given the green light by Secretary of the Interior Ken Salazar.  “The Department has taken extraordinary steps to fully evaluate Cape Wind’s potential impacts on environmental and cultural resources of Nantucket Sound,” Salazar said.

The nation’s first offshore wind farm Cape Wind will see 130 wind turbine generators constructed; each will have a maximum blade height of 440 feet and will be arranged in a grid pattern several miles offshore.  When completed, Cape Wind will produce enough electricity to power about 400,000 homes on Cape Cod, Martha’s Vineyard and Nantucket.  Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement approved the wind farm’s construction and operation.

Cape Wind – which was first proposed 10 years ago — has faced opposition from everyone from local Indian tribes to fishermen to the Kennedy family, whose six-acre compound in Hyannis Port overlooks Nantucket Sound.  “Taking 10 years to permit an offshore wind project like Cape Wind is completely unacceptable,” Salazar said.  Representative Edward Markey (D-MA) said “Let’s get this wind project built, and keep this American clean energy momentum pushing us ahead like a down east breeze.”

The opposition did not resonate on the national level and so the Interior Department used Cape Wind as a test case for offshore energy projects and green-lighted one major regulatory step after another.  Those who forcefully opposed the wind farm include The Cape Cod Times, Cape Cod Chamber of Commerce, and the government of the Town of Barnstable.  Many older residents say resistance to Cape Wind was an exact copy of the opposition to the creation of the Cape Cod National Seashore Park 50 years ago.

According to Salazar, the Cape Wind project could create as many as 600 to 1,000 jobs, and jump start a network of similar renewable wind farm projects up and down the Atlantic coast, which has the potential for tens of thousands of new jobs for Americans.  He criticized the process, which delayed the construction of America’s first offshore wind farm for 10 years, saying, that the Obama administration wants to streamline the permitting process in the future.  “After a thorough review of environmental impacts, we are confident that this offshore commercial wind project — the first in the nation — can move forward,” said Michael Bromwich, who directs Interior’s Bureau of Ocean Energy, Management, Regulation, and Enforcement.  “This will accelerate interest in the renewable energy sector generally and the offshore wind sector specifically, and spur innovation and investment in our nation’s energy infrastructure.”

While Cape Wind has found a buyer for 50 percent of its output, it has not for the other half.  Dennis Duffy, Vice President, said the company was “confident” it would find a customer for the other half.  The approval comes as the state proposed to redefine a different federal ocean area that also is under consideration for offshore wind.  The state wants the federal government to remove approximately half of a 3,000-square-mile area south of Massachusetts from potential wind development to protect vital fishing grounds.

“We submitted a proposal that would move the Commonwealth towards (making Massachusetts the nation’s offshore wind energy leader) while safeguarding waters important to our commercial fishing industry,” said Richard K. Sullivan Jr., state Secretary of Energy and Environmental Affairs.

United States in Third Place in Developing Clean Energy Sources

Wednesday, April 20th, 2011

The United States has fallen to third place – behind China and Germany – in the development of clean energy sources, according to a new report from the Pew Charitable Trusts. Investment in global clean energy expanded significantly in 2010 to $243 billion, a 30 percent increase over 2009.  China, Germany, Italy and India were among the nations that were most successful at attracting private investments.  China solidified its position as the world’s clean energy leader.  Its 2010 investment record of $54.4 billion in 2010 represents a 39 percent increase over 2009.  Germany ranked second in the

G-20, up from third last year, after experiencing a 100 percent increase in investment to $41.2 billion.  The United States’ 2010 investment totaled just $34 billion, a 51 percent increase over the previous year.

“The United States’ position as a leading destination for clean energy investment is declining because its policy framework is weak and uncertain,” said Phyllis Cuttino, director of Pew’s Clean Energy Program.  She said that the U.S. could lag behind even more as competitors adopt renewable energy standards and incentives for investing in solar, wind and other forms of clean energy.  “We are at risk of losing even more financing to countries like China, Germany and India, which have adopted strong policies such as renewable energy standards, carbon reduction targets and/or incentives for investment and production,” Cuttino said.

“The United States remains the global leader in clean energy innovation, receiving 75 percent of all venture capital investment in the sector, a total of $6 billion in 2010, but the U.S. has not been creating demand for deployment of clean energy.  As a result it is losing out on opportunities to attract investment, create manufacturing capabilities and spur job growth.  For example, worldwide, China is now the leading manufacturer of wind turbines and solar panels,” says Michael Liebreich, CEO of Bloomberg New Energy Finance.

China’s goal is to install 20,000 megawatts of solar energy by 2020; the European Union intends to generate 20 percent of its power from renewable sources over the same timeframe.  In the United States, 30 states have policies requiring utilities to buy more electricity from renewable sources.  Although the federal government has incentives in place to cut project costs, there’s no nationwide mandate for clean energy.

The website 247wallstreet.com believes it doesn’t really matter who leads the world in alternative energy creation – as long as global effort continue.  According to Douglas McIntyre, “Most of the data does not matter much.  The fact that China invests such a large amount in clean energy does not mean it will not sell products based on that technology to U.S. firms.  China will export manufactured wind and solar infrastructure just as it does everything else.  Green technology is hardly a strategic asset.  The Chinese are as anxious to make money from their investment as U.S. companies.  If any proof is needed, many Chinese and US alternative energy firms are listed on stock exchanges.  Green is a business as much as it is a movement.”

Unfortunately, McIntyre says, solar and wind energy are not as powerful a source as many believe.  Solar energy doesn’t work at night unless the user has a storage device such as a battery; cloudy weather can make the technology unreliable.  Solar technologies are also quite costly and need significant land to collect the sun’s energy at useful rates.  Wind energy is intermittent in most areas.  Additionally, wind turbines typically are not connected to the American power grid, making the energy it produces difficult to deliver effectively to places where it could replace coal-powered electricity.

McIntyre notes that “America has a nearly inexhaustible supply of coal.  Nuclear energy projects may be delayed by the effects of the Japan earthquake, but its growth in the U.S. is inevitable because the country needs to produce more energy within its borders.  Investment in solar and wind energy may be up, particularly in China.  That does not matter much if the two sources do not work as well as others that are currently available.”

Click here to read a discussion about nuclear power by Amy Goodman of Democracy Now.

Signs of Confidence Sprouting in the Construction Industry

Tuesday, April 12th, 2011

The recent construction industry mantra of “Wait until next year” may be coming to fruition in 2011, according to a recent survey conducted by ENR.  The 1st quarter of 2011 Construction Industry Confidence Index (CICI) survey soared to 51 on a scale of 100, a significant increase from the 43 percent reported in the 4th quarter of 2010.  The rise marks the first time the CICI has risen above 50 since March of 2009 and provides hints of a market that is stabilizing.  The survey of 679 construction and design executives suggests that the market has hit bottom and should improve throughout the year.

The uptick in market confidence is in step with the most recent CONFIN-DEX survey conducted by the Construction Financial Management Association.  This survey of contractors, general contractors and civil contractors spiked to 131 from 117 on a scale of 200, said Mike Verbanic, the organization’s director of marketing.  The most encouraging statistic is the increase that measures current business conditions, which rose to 145 from 129, again on a scale of 200.  “What makes these indices doubly reassuring is that our members are not wild gamblers, so their responses are measured and based on conditions they see,” according to Verbanic.  CFMA’s survey found some bad news in the financial conditions index, which rose to 116 from 105.  “These indices show that CFMA members expect demand to increase, but that credit and project financing may lag,” said Anirban Basu, CEO of Sage Policy Group, Inc., an economic consulting firm.

Although relatively few survey respondents plan to start office construction projects anytime soon, the strongest sectors are hospitals and healthcare facilities; distribution centers and warehouses; multi-family residential; retail; hotels and hospitality; and entertainment.  Fully 27.6 percent of respondents said client access to credit is an ongoing problem, while 51.8 percent said that access to credit is easier now than just a few months ago.  An additional 20.7 percent believe that access to credit is easing.

Construction companies are concerned about the price of materials.  A significant 80.3 percent of respondents said they are experiencing pressure on the cost of materials and equipment.  The cost of steel, copper and gas were mentioned most often.  According to Basu, the Producer Price Index has shown substantial price pressure recently.  “The dollar has been softening recently and there is evidence that commodity speculators have become more active in the metals markets,” he said.

AmeriCorps Funding Is on the Congressional Chopping Block

Monday, April 11th, 2011

Budget cutters on Capitol Hill are aiming their scissors at AmeriCorps, which was created in 1993 when President Bill Clinton signed into law the National Community Service Trust Act. With the stroke of a pen, Clinton created the Corporation for National and Community Service and brought domestic community service programs under a single umbrella organization.  This legislation built on the first National Service Act signed by President H.W. Bush in 1990 as part of his “Points of Light” campaign.  AmeriCorps is a network of national service programs that engage Americans in a year of public service to meet the nation’s needs in education, public safety, health, and the environment.

Writing in The New Republic, former AmeriCorps member Tiffany Stanley says “Now, 17 years after its creation, AmeriCorps is on the chopping block.  The most recent continuing resolution passed by the House would cut all federal funding for the agency that oversees the program, the Corporation for National and Community Service (CNCS), effectively wiping out AmeriCorps.  Ending the program would not only eliminate jobs for the 85,000 individuals who serve each year through AmeriCorps, it would also significantly burden organizations like Habitat for Humanity, Teach for America (TFA) and City Year that depend on AmeriCorps participants for their cost-effective labor.”

“This is potentially a devastating disaster, a civic tsunami,” said Karen Baker, California state Cabinet secretary for service and volunteering.  AmeriCorps is one of many programs targeted for cuts by the House of Representatives’ new Republican majority, which campaigned on a promise to slash spending in Washington.  The House’s conservative caucus, the Republican Study Committee, disagrees with the living stipends and education awards offered to AmeriCorps members.  “With the federal budget going $4.3 trillion — plus interest -=-into the red in just the last three years, paying people to ‘volunteer’ is not an appropriate use of taxpayer money,” caucus spokesman Brian Straessle wrote.  A House of Representatives spending bill approved in February cuts $1.15 billion for the Corporation for National and Community Service, effectively shutting down the federal agency that operates AmeriCorps.

According to Stanley, AmeriCorps had much bipartisan support throughout its history.  “Perhaps the most objectionable element of the proposal is that many of the programs that AmeriCorps funds are exactly the kind that so-called compassionate conservatives are supposed to support,” she writes.  “Rather than offering a government hand-out, AmeriCorps-backed programs like Habitat for Humanity which require low-income recipients to work alongside volunteers.  (As Newt Gingrich once wrote:  ‘I am proud to work with Habitat for Humanity, which helps poor people build their own homes.’)  And, over the years, AmeriCorps’ efficacy has won over a host of conservatives, including John McCain and Colin Powell.”

Exactly what do AmeriCorps members do?  Stanley notes that “Corps members spend a year or two in the most blighted neighborhoods in America, serving in non-profits, social service agencies and community- and faith-based organizations.  They teach in schools, clean up parks, create affordable housing, and respond to natural disasters.  Last year, for example, 650 AmeriCorps members serving with Habitat for Humanity helped manage 200,000 volunteers, completing 3,500 houses.”

Representative Hal Rogers (R-KY), the House Appropriations Chair, claims the cuts are necessary and will “weed out excessive, unnecessary and wasteful spending, making tough choices to prioritize programs based on their effectiveness.”  Considering that AmeriCorps attracts more than $800 million annually from private and non-federal resources, Stanley says that its proven results and sound funding hardly makes it “excessive” or “wasteful.”

A Boston Globe editorial also questions cutting the AmeriCorps program.  “Beyond that, the national service program has become an incubator for initiatives — in areas ranging from housing to urban education –promising a more entrepreneurial, participatory approach to addressing public needs.  This kind of innovation should appeal to budget-conscious lawmakers, even if it involves some up-front expense.  The national service agency mobilizes more than five million Americans — mostly unpaid volunteers — who fan out into schools, food banks, senior developments, homeless shelters, and other areas in need of experienced hands.  Some Republicans look askance at the modest stipends offered by some of the service programs.  AmeriCorps members, for example, scrape by on about $12,000 in living expenses during their year of service.  What Republicans ignore is that each AmeriCorps member is expected to recruit 30 or more unpaid volunteers.  And that the commitment to public service lasts long after the stipend disappears.  Thankfully, many senior Republicans, including former President George W. Bush, have stepped forward to defend it as a means of leveraging Americans’ community spirit.  Even in a time of deficits, when all acknowledge that some worthy programs will have to be cut, the agency looks completely out of place on the chopping block.”