Thursday morning headlines

Big inflation jump: U.S. consumer prices last month were 5.6 percent higher than a year earlier, with the L.A. area posting a 5.7 percent increase (here's the BLS report). Fuel and food were largely behind the increase, which was higher than economists had expected. It was also the sharpest annual increase since January 1991. From the NYT:

The Fed has signaled repeatedly that it has no plans to lower interest rates, given the threat inflation poses to the economy. Lowering rates could stimulate more economic activity, but such a move would risk inflating prices further. Thursday’s C.P.I. report cements that view, and suggests that a rate increase could come sooner rather than later. Still, central bankers face a difficult scenario. The American economy continues to deteriorate: consumer spending is bad and likely to get worse; home prices continue to fall; and Wall Street has been unable to shake a credit crisis that keeps hurting big institutions. Stock prices are down too, further eroding household wealth.

No surprise on foreclosures: California saw an 85 percent increase in filings last month from a year earlier, which breaks down to one filing for every 182 households. Filings increased 5 percent from June. But here's a bit of good news: For the first time since April, Stockton did not have the highest foreclosure rate (Cape Coral-Fort Myers, Fla. now has that honor). “It may have finally found its point of saturation,'' said RealtyTrac's Rick Sharga. Not that the state wasn't well-represented in the top 5. Cape Coral is followed by Merced, Stockton and Modesto. (Bloomberg)

Greenspan muses: And we're still listening, even though his prognostications about housing and the economy have been a little off the mark. For what it's worth, the former Fed chairman sees housing prices starting to stabilize in the first half of next year, but he cautioned that "prices could continue to drift lower through 2009 and beyond." From the WSJ:

Mr. Greenspan's housing forecast rests on two pillars of data. One is the supply of vacant, single-family homes for sale, both newly completed homes and existing homes owned by investors and lenders. He sees that "excess supply" -- roughly 800,000 units above normal -- diminishing soon. The other is a comparison of the current price of houses -- he prefers the quarterly S&P Case Shiller National Home Price Index because it includes both urban and rural areas -- with the government's estimate of what it costs to rent a single-family house. As other economists do, Mr. Greenspan essentially seeks to gauge when it is rational to own a house and when it is rational to sell the house, invest the money elsewhere and rent an identical house next door. "It's the imbalance of supply and demand which causes prices to go down, but it's ultimately the valuation process of the use of the commodity...which tells you where the bottom is," Mr. Greenspan said, recalling his days trading copper a half century ago.

Tax standoff: One part of the state's budget stalemate centers on a Schwarzenegger proposal that would allow many large financial companies, among them subprime lenders, to receive tax breaks that are millions of dollars greater than currently available. This is really part of a larger debate about how businesses are allowed to write off losses. The Dems want to suspend loss write-offs for three years, saving the state $1.1 billion a year. Business groups would put the more generous tax breaks in effect once the suspension ended. From the LAT:

The new tax breaks would ultimately permit financial institutions to use this year's losses to claim refunds against large tax bills they paid in 2006 and perhaps 2005, years when they had record profits. Business lobbyists who support the tax breaks point out that companies can already claim them on their federal taxes.

Speaking of Sacramento: Remember the container fee for the ports of L.A., Long Beach and Oakland that was supposed to reduce congestion in L.A., Long Beach and Oakland? Well, hold everything. After the bill passed both legislative houses, aides to Gov. Arnold Schwarzenegger proposed last-minute changes that would move some of the money to a statewide transportation fund, where it might not be used in L.A., Long Beach and Oakland. Think Central Valley. (LAT)

The battle for UnionBank: Mitsubishi’s effort to acquire the rest of the California bank it doesn't already own really reflects the banking troubles in Japan. "Yes, they can grow overseas -- they can grow their loans, they can do acquisitions -- but they just can't deal with this domestic problem," bank analyst Kristine Li told Reuters. Even the overseas efforts are running into trouble: UnionBank turned down the $3 billion offer, saying that it undervalues the bank.

Japan's slack economy is only headed for worse, which is likely to further squeeze bank earnings. Property developer Urban Corp this week folded under $2.4 billion in debts, the latest in a stream of bankruptcies among property firms. Real estate firms have been waylaid by steep price rises for construction materials and as the tougher economy has slowed demand for homes. Analysts have been watching the recent spike in bankruptcies, which means that banks will likely need to raise their provisions against bad loans, and further rein in lending. Li said that given such conditions, MUFG might not want to part with the $3 billion to take over UnionBanCal.

Will Skechers get spurned?: That's the betting this morning on a $142.8 million offer by Manhattan Beach-based Skechers for shoe maker Heelys Inc. In late May, a lower bid was turned down. Heelys made a name for itself with its skater-type shoes that allow wearers to glide around much like they are on roller skates. But the fashion rage has pretty much run its course.
(AP)

Dealing with day laborers: Home improvement stores wanting to set up shop in L.A. must include day-labor centers with shelter, drinking water, bathrooms and trash cans. Councilman Bernard C. Parks, who first proposed the ordinance four years ago, said he would now work on existing home improvement stores. (LAT)

Actors taking sides: Tom Hanks, Alec Baldwin, Felicity Huffman, Marcia Cross, Rob Lowe and Patricia Heaton are among the actors who have endorsed Unite for Strength, which is the faction looking to unseat the Screen Actors Guild's current leadership. Membership First, which is made up of the SAG incumbents, has Joely Fisher, Keith Carradine and Scott Bakula on its side. Ballots will be sent out to SAG's 120,000 members on Tuesday, with the vote tabulated on Sept. 18. (Variety, LAT)