California, no longer the dream state

Job seekers wait in line to enter a job fair in Concord, Calif.

California, a state so large that its economy dwarfs most nations, now has another, less cheery, claim to fame: It is one of the states hardest hit by the country’s unemployment woes. The California jobless rate hit 10.1 percent in January, up from 5.9 percent when the recession began in December 2007. Only Michigan, South Carolina and Rhode Island reported a higher unemployment rate for the first month of the new year, when the national average was 7.6 percent. While other states with exceptionally high unemployment rates are suffering from severe downturns in specific sectors that power their economies — such as Michigan’s auto industry — in California, the state is dealing with a broad array of problems, more similar to the country as a whole, economists say.        Breaking News

Renters in limbo as porperty owner defaults on loans

Chandler, Ariz., police officers confront residents of the Alante at the Islands apartment complex last week at a meeting called to discuss what the renters would do next.

Nicholle Krause first noticed the weeds sprouting in the usually well-manicured grounds of her 320-unit apartment complex in Chandler, Ariz., in December. Soon, signs of neglect began multiplying: Garbage spilled over from the dumpsters, the water in the swimming pool turned a slimy pea green and the grounds were infested by swarms of bees — especially alarming because Krause is severely allergic to bee stings.

“I couldn’t even go outside to enjoy where I live,” said Krause, a 21-year-old office worker who pays $827 a month for a one-bedroom apartment with garage space. “I shouldn’t have to pay $800 a month to live in a … hole.”

It wasn’t until early March that Krause and other residents learned why the complex – the alluringly named Alante at the Islands — was rapidly going to seed. The property owner, Irvine, Calif.-based Bethany Holdings Group, had abandoned the complex and a dozen other large rental properties in the greater Phoenix area after defaulting on hundreds of millions of dollars in loans.        Breaking News

Next shoe to drop for U.S. job seekers: lower wages

NEW YORK (Reuters) - With “no end in sight” for U.S. job losses amid a recession that could stretch into 2010, American workers will soon have to contend with another blow to their confidence: stagnant, or even falling wages.

Job seekers — already coping with the highest unemployment rate in a quarter century, their savings mugged by a plunging stock market — can also expect lower pay once they land a new job, labor market experts say, because the current downturn shows no signs of turning around anytime soon.“There’s no end in sight,” said Tig Gilliam, chief executive of Adecco Group North America, the third-largest U.S. employer behind Wal-Mart Stores and the postal service.

“March is going to be the same, and I don’t see anything that will make April better.”Lower wages, in turn, could further erode the outlook for the U.S. economy by hurting consumers’ spending power.  The government’s February employment report showed 651,000 jobs eliminated outside the farm sector, while losses in the previous two months were revised upward. The unemployment rate jumped to 8.1 percent, highest since 1983.        Breaking News

Beware Sites Promising Big Government Stimulus Checks for a Fee

The Federal Trade Commission is warning Americans to beware of scams offering to get them some of the federal government's $787 billion stimulus. The scams will likely cost you money instead of getting you money.

“I Got a $12,000 Stimulus Check in Less than 7 days. Get Yours!” Over the past week, this attractive-sounding offer appeared in a Google text ad. Other ads have claimed “Obama’s Giving You Cash” and touted “$40,000 [y]ou don’t ever have to pay back!”

But both the Federal Trade Commission and the Better Business Bureau are cautioning consumers about ads that promise easy access to government money, ads that they say have multiplied since passage of the economic stimulus package.

“The bottom line on this is, these are scams,” says Eileen Harrington, acting director of the FTC’s Bureau of Consumer Protection. “The stimulus is not passing out checks to individual consumers.”        Breaking News

Obama orders crackdown on gov’t waste: 40 billion in savings

WASHINGTON (Reuters) - President Barack Obama on Wednesday will order a crackdown on waste and cost overruns in U.S. government procurement that he estimates will save up to $40 billion a year, an administration official said.

Elected on campaign promises of sweeping change and greater accountability in Washington, Obama, who took office on January 20, will sign a presidential memorandum seeking to “reform our broken system of government contracting,” the official said.

The president will unveil his plan at a White House ceremony at 10:00 a.m. EST, nine days after holding a “fiscal responsibility” summit where he pledged to make curbing procurement excesses, especially in defense spending, one of his top priorities.        Breaking News

One in five U.S. homeowners are underwater

One in five U.S. homeowners with mortgages owe more to their lenders than their homes are worth, and the rate will increase as housing prices drop in states that have so far avoided the worst of the crisis

NEW YORK (Reuters)- One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows.

About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic.

The percentage of “underwater” borrowers rose to 20 percent from 18 percent.  Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows.

First American said the value of residential properties fell to $19.1 trillion at year-end from $21.5 trillion a year earlier, with half the decline in California. Forty-three U.S. states and Washington, D.C., were included in the study.        Breaking News

Manufacturing and Construction showing persistent weakness

WASHINGTON – A private measure of the nation’s manufacturing sector contracted for the 13th straight month in February, but at a slower pace than expected. Construction spending also shrank.

The reading suggested to some economists that the decline of the ailing factory sector could be bottoming out, though they expect a recovery is still far in the future.

The Institute for Supply Management, a trade group of purchasing executives, said Monday its manufacturing index actually rose to 35.8 from 35.6 in January. Analysts had expected a drop to 33.8, and a reading below 50 indicates the sector is shrinking.        Breaking News

Housing recovery plan is heading in the wrong direction

How to rescue housing? The Obama administration doesn’t have a plan — or, more accurately, it has only half a plan. It presupposes that preventing or minimizing home foreclosures is a formula for revival. It isn’t.

Almost everyone agrees that a housing recovery is essential for a broader economic upswing, in part because housing’s collapse brought on the recession. Mortgage delinquencies triggered the financial crisis. Tumbling home prices (down 26 percent from their peak) ravaged consumer confidence, borrowing and spending. Since late 2007, housing-related jobs — carpenters, real estate agents, appraisers — have dropped by 1 million, a quarter of all lost jobs.

Housing’s distress is too much supply chasing too little demand. Huge inventories of unsold homes have depressed prices and construction. Given that prices rose too high in the “bubble” — homes were affordable only because credit was dispensed so recklessly — much of this painful adjustment was unavoidable. But that process should be mostly complete.        Breaking News

Worst year ever for Berkshire Hathaway

Insurance, Stock Holdings Are Hit; Buffett Warns of Bubble in Treasurys

The man considered by many to be the greatest investor of all time just had his worst year ever.  Berkshire Hathaway Inc., the large holding company steered by Warren Buffett, reported Saturday that its far-flung empire, ranging from insurance to ice cream to underwear, took some big hits from the sharp economic downturn in 2008.

A common metric Berkshire uses to track performance, book value per share, fell 9.6% in 2008, its biggest decline since Mr. Buffett took over the company in 1965 when it was a family-run East Coast textile maker.  Berkshire’s report was yet another stark sign of the severity of the financial crisis that continues to roil stock markets and businesses around the world. It was only the second year in more than 40 years that Berkshire’s book value per share fell; it was down 6.2% in 2001.         Breaking News

Family man cracks under pressure: robs bank

Bruce Windsor listens Friday as a judge tells him he faces kidnapping and robbery charges.

Police say the 43-year-old owner of a real estate company walked into the Carolina First Bank in Greenville, South Carolina, late Thursday with a mask and a handgun.

In court documents filed Friday, police said he forced two bank employees into an office at gunpoint and demanded money. Police arrived minutes later with the suspect still inside, touching off a tense 90-minute standoff before he released the hostages and surrendered.

His actions were “out of character” for a man who has never been in trouble with the law before, friends and relatives said. His tearful sister, defending him as he stood before a judge, said, “He must have just snapped under the pressure.”  In his initial appearance for a bond hearing, Windsor was in an orange jail jumpsuit, shackled and with his hands cuffed.

In a quiet voice, he answered “yes, sir” as the judge explained the charges to him: two counts of kidnapping, one count of robbery and two counts of pointing firearms at a person, charges that could carry more than 30 years in prison if convicted.        Breaking News