(CNN Student News) -- March 18, 2009
Housing Starts Up - Explore the numbers behind an unexpected increase in new home construction.
AIG Latest - Dive into the details of a controversy involving bonus payments made by AIG.
NASA to the Moon? - Hear why funding concerns could ground NASA plans for a mission to the moon.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CARL AZUZ, CNN STUDENT NEWS ANCHOR: Today's show spans from Mrs. Yeupell's classes in south Texas to Mr. Six's classes in Seoul, South Korea! Here with CNN Student News, I'm Carl Azuz.
AZUZ: First up, some unexpected news from the housing market, where construction of new homes actually increased last month. Experts had expected the number to go down the same way it had for the past seven months, but a government report says February bucked the trend with a 22% jump in the amount of construction projects that broke ground - that's compared to January. So, does this mean things are looking up? Poppy Harlow breaks it down.
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POPPY HARLOW, ANCHOR, CNNMONEY.COM: All right, so the February new home starts report was better than expected, much better than expected. But let's dig deeper on these numbers and take a look at what is really behind them and just how far we have to go.
If you look at the February reading that we got on Tuesday morning, it was a 22% increase from the January levels. However, this was still the third-lowest reading that we've seen on record. So, there's a long ways to go. But the increase can be accredited mainly to an 80% pop in terms of multi-family homebuilding. What does that mean? It's essentially the building of condominiums and apartments.
And there are a number of reasons behind this. Some economists are saying it's Americans simply trading down: giving up the dream of owning a home right now to possibly owning an apartment. Other economists are saying builders are sort of hedging their bets, building apartment complexes, hoping to rent until the market levels off and they can actually sell these apartments. And some are saying this reading is just really an anomaly because we had a warmer than expected February. So, all of those things could be contributing. But when you look at the building permits number for last month, there was an increase. Again, we were expecting a decline; we got an increase of 3%.
However, what you want to look at in this is that it's a modest increase. People look at building permits as an indication of what is to come in terms of housing starts. So, some say it's not that strong an indicator for the months ahead.
So, in terms of breaking it down by states when you look at the country, pull up this map for you and show you what we saw, because in three regions we did see increases in housing starts. In the South, an increase of more than 30%. Even better when you look at the Midwest: an increase of about 58.5%. It was the Northeast, though, that benefited the most. Last month, 88.6% increase from just January in terms of homebuilding in the Northeast.
However, the West once again taking a hit, a decline of more than 24% in terms of that new home construction last month in the West. And when we talk about the West, we're really looking at states like California and Nevada and Arizona that have been already hit extremely hard by foreclosures mounting and also by plunging home values. So, another hit for the West.
What you want to think about when we look at these numbers, folks, is this is one month's reading, one month of a surprising gain. We are still, in terms of February's number, off 50% from where we were just a year ago. So, keep that in mind. The headline: a surprise to the upside, but you've got to look in-depth and see what these numbers actually mean.
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Word to the Wise
MICHELLE WRIGHT, CNN STUDENT NEWS: A Word to the Wise...
retention (noun) the act of being kept in service or employed
AZUZ: Some retention bonuses are raising a lot of controversy right now because of who's paying them: AIG, an insurance company with millions of clients in more than a hundred countries around the globe. According to the New York state attorney general, AIG gave 73 employees bonuses of more than a million dollars each. The issue here is that the company has received $173 billion in bailout funds from the federal government. Taxpayers bailed out AIG because it lost a ton of money from its financial products division, and that is where those 73 employees who got the bonuses work! 11 of them already quit! But AIG says it was legally required to make the payments. The employees had contracts that were signed before the company accepted the government money. It's also planning to reduce bonus payments for 2009.
But the situation has lawmakers steaming. President Obama calls the bonuses "an outrage," and he's looking for legal ways to block them. He says it's hard to understand how these employees received any bonuses, much less millions of dollars in extra pay. Congress is also weighing in. Senate Democrats are considering a tax specifically on these bonuses. One lawmaker estimated that it could return about 90% of the payments. However, the chairman of the Senate banking committee said that's just one idea that the Senate is considering.
Over in the House, lawmakers are looking into ways to force AIG to return any money used for bonus payments or to renegotiate the bonuses. The concern with that plan is that it's not clear what authority Congress might have to force AIG to take those steps. The company's chief executive officer, Edward Liddy, took over after the contracts that led to these bonuses were created. Even so, he's expected to face intense questioning when he meets with members of Congress today.
WRIGHT: It's time for the Shoutout! How many countries are involved in building the international space station? If you think you know it, shout it out! Is it: A) 5, B) 9, C) 12 or D) 16? You've got three seconds -- GO! 16 nations, led by the U.S., are helping to build the orbiting outpost. That's your answer and that's your Shoutout!
Shuttle docks at ISS
AZUZ: The space shuttle Discovery is there right now, helping to expand the international space station. The shuttle and its crew arrived at the ISS yesterday. They're delivering the final parts for a solar power system. This will allow the station to double its crew to six people. They're also dropping off a Japanese astronaut, who is replacing one of the current ISS crew members.
AZUZ: That space station is in orbit about 250 miles above the Earth's surface. But NASA has its sights set on a future mission, one that's a little farther away. We're talking a trip of about 240,000 miles to a little place called the moon. But as Sean Callebs explains, without funding, the mission may never get off the ground.
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SEAN CALLEBS, CNN REPORTER: This is how NASA sees the future: taking a four-man capsule to the moon, but not until 2020; An ambitious program called "Constellation." But the agency could be hampered by a problem space pioneers faced more than half a century ago, concerns deftly spelled out in the 1983 movie "The Right Stuff."
FRED WARD, ACTOR, AS GUS GRISSOM, NASA ASTRONAUT: That's right. No bucks, no Buck Rogers.
CALLEBS: Work is moving forward on the successor to the space shuttle, which flies for the last time next year. But funding for space science is always at risk. While engineers work, the Obama administration is evaluating NASA's budget against the reality of a sky-high federal deficit.
STEVE COOK, NASA: Great nations have always been explorers. If you look through history, the great nations that have always brought technological change, economic change have always been the leaders, have always been those on the cutting edge of exploration throughout history.
CALLEBS: The Gulf Coast has a lot at stake. Work is already going on in the Michoud Assembly Center, just outside New Orleans, for that planned moon mission. The Stennis Space Center in Mississippi is testing a new booster rocket. And Huntsville, Alabama, long known as "Rocket City," is the hub of the engineering design. It's also home of former NASA scientist Homer Hickam.
HOMER HICKAM, FORMER NASA SCIENTIST: A lot of us true believers have over the years said, "Hey, we gotta get out of lower Earth orbit. We gotta go somewhere in order to energize the space program, and energize the people."
CALLEBS: You may remember Hickham as the "rocket boy" from the 1999 film "October Sky." The world has changed dramatically from those early days.
HICKAM: You got to remember, we were all terrified of the Russians back then, and it was like us against them, and we were all very competitive against the Communists. We've got to beat them.
CALLEBS: NASA says it needs about $3 billion in 2009 for the Constellation moon mission program, $3.25 billion in 2010, then it spikes up to more than $6 billion in 2011. With the space shuttle retiring next year, it will be at least five years before the U.S. ventures into space again, leaving Russia, China, India and Europe a substantial window to get ahead.
COOK: We don't want to be sitting here watching everybody else going out there, because they are going to do it.
HICKAM: NASA is a can-do agency, but you have to give it a job to do and also the tools to do it, which means money. They need the money to make this happen.
CALLEBS: In simple terms: no bucks, no Buck Rogers. Sean Callebs, CNN, New Orleans.
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AZUZ: Don't forget, it's Women's History Month! We're putting together special reports all throughout March. You can find our first two at CNNStudentNews.com! And while you're there, head to the Spotlight section and check out our Learning Activities and One-Sheet on Women's History Month.
Before We Go
AZUZ: Before we go, lots of people cheat on their diets around the holidays, but this is nuts! Of course, there's a reason for this gastronomic gorging: It's the Saint Patrick's Day Sandwich Slamm, where competitors cram their craws with corned beef on rye. The winner took home $5,000 -- along with the world's worst case of heartburn -- after putting down an amazing 16 and three-quarters sandwiches in just 10 minutes.
AZUZ: That's enough to make anyone turn green. We'll let you chew on that one for a while. I'm Carl Azuz.