Random Thoughts: Carbon Trading, Airport Parking Fees, Freddie Mac Losses, Student Loans

I am traveling today so here are a few interesting articles to ponder until later tonight.

California unveils draft cap-and-trade rules

California on Tuesday released draft rules for its landmark greenhouse gas cap-and-trade plan that will be the most ambitious U.S. effort to use the market to address global warming.

State law requires California to cut its carbon dioxide and other greenhouse gas emissions to 1990 levels by 2020. Measures will range from clean vehicle and building rules to the cap-and-trade system that lets factories and power companies trade credits to emit gases that heat up the earth.

New estimates of plan costs, including suggestions on how much support to give industry, won't be available until an independent advisory group issues a report next year.

The draft avoids what may be the toughest issue -- how much to rely on auctions of credits, which would require power companies and the like to buy permission to pollute. The emitters want allowances given to them, especially early on.

California businesses regularly criticize the plan as going too far too fast -- and costing too much. Whether the net effect of the plan will be a new green economy or disaster for overburdened businesses is still hotly debated.

Coming soon: Just what we need ... Derivatives trading in carbon tax credits

Japan Airlines faces $1.1 billion hedging losses

JAL has been hedging currencies, interest rates, and fuel prices and is believed to have incurred losses of 100 billion yen ($1.1 billion).
Crippled Japanese carrier Japan Airlines is facing massive losses on derivatives trading.

JAL has been hedging currencies, interest rates, and fuel prices and is believed to have incurred losses of 100 billion yen ($1.1 billion).

Some contracts are now subject to early calls after the Japanese carrier applied for a debt moratorium earlier this month.

Cleveland Hopkins airport cuts parking prices

Airline travelers received a holiday surprise this week from Cleveland Hopkins International Airport: A 50 percent discount on parking until Jan. 15.

That knocks the price for the hourly and daily garage down to $7 a day and the long-term garage to $5 a day.

"It's the holidays," said Cleveland Hopkins spokeswoman Jacqueline Mayo. "We are the parking of choice. We are on-site. We are easy, fast and convenient."

All good vibes aside, the airport is apparently battling for customers.

As the number of flights out of Cleveland Hopkins has dropped during the past year, the number of passengers has fallen 15.2 percent during the first nine months of this year compared to the same period last year.

While Mayo said there is no ongoing price war, the decrease in flights means there are fewer people using the airport's parking lot as well as the off-site parking lots like Park Place Airport Parking.

"Typically, things that happen at the airport we see that in our business as well," said Melanie Chavez, principal at Chavez Properties, which owns Park Place as well as Airport Fast Park. "We have noticed it is a little soft."

Park Place, which offers complimentary water and newspapers on pickup, dropped its prices to $5 a day from Oct. 27 to March 31, 2010 in an effort to "incent the customers because there's just fewer," Chavez said.

Thanksgiving week is typically one of the busiest travel times of the year for Hopkins and more than 100,000 passengers traveled from Monday to Monday last year, Mayo said.

Freddie Mac: Taylor, Bean loss may be significant

Mortgage finance company Freddie Mac said Monday it could lose $500 million or more as a result of the bankruptcy protection filing of Taylor, Bean & Whitaker Mortgage Corp.

In a regulatory filing with the Securities and Exchange Commission, government-backed Freddie Mac said Taylor, Bean received and processed some of Freddie Mac's borrower funds through Colonial Bank, which was shut down by regulators in August.

Freddie said it filed a proof of claim for about $595 million against Colonial Bank on Nov. 18. That money includes payoff funds, borrower payments of mortgage principal and interest, as well as taxes and insurance funds received by Taylor, Bean on loans.

Freddie Mac said it's unable to estimate its total losses related to the bankruptcy filing, but noted that the amount "could be significant."

Taxpayers will pony up money for the GSEs once again. When does it stop?

College Graduates Struggle To Repay Loans

November brings a nerve-racking deadline for May's college graduates: It's time to make the first payment on their student loans. With this year's tough job market, many graduates don't know how they'll come up with the money. Many are asking for deferments, and some may have to default.

But a new federal law designed to ease the pain of repayment may help some make it through this tough time.

Living On Parental Subsidies

Samantha Green graduated from Indiana University in May with a $50,000 debt, a degree in journalism and a burning desire to start her career in Chicago. So far, the only job offers she has gotten are temporary or minimum-wage sales jobs.

"It's just not something that's a good fit for me," says Green, who is doing odd jobs to earn some money. Her job prospects are so poor that her parents have been helping pay her rent, electric bills and groceries. Now they're covering her $300 monthly student loan payments, too.

Student Loan Defaults On The Rise

An absolutely dismal job market has driven the student loan default rate to about 7 percent, nearly twice what it was in 2006. About a quarter of a million people who were supposed to start paying their student loans in 2007 still are not.

And that does not include 2009 or 2008 graduates.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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