Early Briefing: The Econ 101 Reality Check
According to her syllabus, the topic of the day in Professor Lynne Kelly's graduate microeconomics class at Howard University Thursday was to be cost analysis. But the headlines highlighted another shift in the government's bank-bailout strategy; another toilet flush of the stock market; another day of credit chaos around the world.
The headlines won. Kelly abandoned her notes for an hour-long improv on the latest dispatches from the economic front.
She is not alone. According to economics and business teachers at area colleges and high schools, lecturing in this tumultuous time has been like trying to conduct a symphony even as someone keeps rewriting the music. Lesson plans that have been accurate for years are silent on credit default swaps and primary dealer credit facilities. Finance textbooks that were up-to-date at the beginning of the semester are suddenly missing whole layers of government involvement in the banking sector. Few professors started the term with a PowerPoint slide on the end of capitalism.
"I've put away the book for a while," Kelly said. "There is just something new almost every day."
Metro staff writer Steve Hendrix goes back to school. Read his account here.
In other news:
*Freewheeling American capitalism may be falling out of fashion on Wall Street, but in the western suburbs of Northern Virginia, it is driving one of the greatest home-buying sprees the region has ever seen.
The epicenter of the boom is Prince William County, where enterprising investors are scavenging the wreckage of the housing bust at a furious pace. Last month, 1,116 homes were sold in the county, a 235 percent increase from the same period last year and more than in any other September on record, according to the Northern Virginia Association of Realtors.
The buying frenzy is the silver lining of a staggering decline in home values. With banks choking on a glut of empty, foreclosed properties, the median sale price for detached single-family houses in Prince William plunged 41 percent in the past year, from $405,000 to $239,900. In September, 118 homes in the county sold for less than $100,000, and many foreclosed townhouses sold for less than $70,000. One three-bedroom Manassas townhouse recently sold for $43,500, even though it was assessed at $273,100 in 2007.
"Prince William County is a fire sale," said Joey Remondino, a "ridiculously busy" real estate agent with StoneHouse Realty in Manassas. "People are looking for amazing deals, and I'm writing offers as fast as I can," he said.
*As District officials continue to review what went wrong with a jobs program that overspent its budget by $30 million, a Washington Post examination has found that the city's willingness to pay private organizations thousands of dollars in fees for each student contributed to the overspending.
Overwhelmed by 20,000 job-seekers, the D.C. Department of Employment Services agreed, sometimes frantically, to pay 35 vendors to work with them. City officials ignored a cost limit imposed in past years and failed to monitor how the money was spent, according to The Post's review.
Vendors took advantage of the lack of oversight; some charged more than their contracts allowed and others made changes to their service agreements. A dance company, for example, billed the city $4,150 per student to teach ballet and modern dance, four times the amount agreed upon in the contract. And a nonprofit group collected its full payment of $180,000 even though it fired several tutors and academic coaches.
*Even as a searing credit crunch slows construction across the region, District officials Thursday announced the selection of a developer to turn a vacant building into a mix of market-rate and affordable housing.
At a news conference, Mayor Adrian M. Fenty (D) and community leaders said that the 26-unit condominium project would inject new life into a long-dilapidated patch of 14th Street in Brightwood, just south of the Walter Reed Army Medical Center.
George Mavrikes, a partner on the development team, said the project is attractive because the affordable units make it easier to obtain what is elusive to many builders these days -- construction loans.
*Discovery Communications, the Silver Spring-based owner of the Discovery television network, will introduce a free-TV channel in Britain early next year to promote its subscription channels and expand outside the United States.
The new channel will be on the Freeview platform, chief executive David M. Zaslav said Thursday. Freeview is a free digital-TV service currently in more than 15 million British homes. The channel will show content from Discovery as well as other producers, Zaslav said.
*Sirius XM Radio said it may issue stock to repay $1.05 billion in debt that matures next year. The New York-based satellite radio company asked shareholders to approve a reverse split of its stock and an increase in the authorized shares, according to a regulatory filing.
The reverse split would help Sirius, whose shares closed Thursday at 39 cents, keep its Nasdaq Stock Market listing by pushing the price of the stock back over $1.
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