Explaining Southern California's economy

Harvey Weinstein still thinks Silicon Valley is stealing his content

Kris Connor/Getty Images for The Weinstein C

Harvey Weinstein speaks during a panel discussion after a screeing of the documentary "Bully" at MPAA in Washington, DC. The producer has become an outspoken critic of the "Open Internet," calling it "stealing."

In the ongoing battle between Hollywood and Silicon Valley over the future of entertainment,  two major events - one tragic, the other, comical - have defined the last few weeks.

The tragedy was the apparent suicide of "Open Internet" activist Aaron Swartz. It provoked an outpouring of support for Swartz's at-times radical vision and returned the debate about whether online content should roam free of copyrigh to the national agenda. 

The comedy was Kim Dotcom, whose Megaupload site was shut down by the U.S. government last year on the grounds that it was enabling Internet content piracy. Dotcom (not his real name) rolled out a new site last weekend, from the relative safety of New Zealand. He isn't even messing around with the "upload" part any more; the new site is simply called "Mega."

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CA unemployment rate holds steady at 9.8 percent in December

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A job seeker pauses as he fills out an application during a job fair in Northern California.

California's unemployment was unchanged from November at 9.8 percent, the Labor Department reported Friday.

Since December 2011, however, California has experienced a substantial drop in its jobless rate, from 11.2 percent. Over that period, the state added 225,900 new jobs, second only to Texas, with 260,800.

So why didn't California's unemployment rate drop more in December? Because the state earned the dubious honor of losing the most jobs of any U.S. state: 17,500. This reverses a trend of California adding jobs at a decent clip, a highlight in an otherwise sluggish recovery.

California's unemployment rate remains a full two points higher than the nation's 7.8 percent.

In December 2012, sectors that shed jobs in significant numbers were professional and business services and trade, transportation, and utilities. Construction actually saw modest gains, an indication that the housing recovery in the state isn't losing momentum.

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Why California saw fewer foreclosures than other states in 2012

Foreclosure

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For sale signs are posted on a foreclosed house in Glendale. In 2012, foreclosures fell off in many California cities, but seven still finished in the top 20.

The housing crisis was also a foreclosure crisis, and many homeowners in California lost their homes. But the situation in the state improved in 2012.

One reason for this is that California is a so-called non-judicial state; i.e., it does not require that foreclosures be overseen by the courts. That allows foreclosures to be completed more quickly. And that is why  judicial states -- those that require court oversight of foreclosures, such as Florida -- surpassed California and other non-judicial states in the number of foreclosures.

That prompted Irvine-based real estate analysis firm RealtyTrac to report on Wednesday that 2012 was the “year of the judicial foreclosure.”

I wrote about this last year:

The process is streamlined [in California], to avoid a lawsuit. 

Ironically, this is supposed to make things easier on the homeowner, but the robosigning scandal that put the brakes on foreclosures by banks was largely confined to states where the foreclosure process is judicial. Borrowers who could seek legal recourse were a bigger problem than borrowers who couldn't, at least not as easily.

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The 'Facebook Effect' that wasn't in California

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Facebook founder and CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters. The social network's IPO didn't deliver the big capital gains taxes that California was counting on.

On Wednesday, KPCC's Julie Small caught up with the California state finance department and reported on the "Facebook Effect" that failed to live up to intial expectations. The state of California had anticipated a windfall from the sale of stock by employees of the gargantuan social network after its initial public offering.

We all know how the IPO went: it was a massive disappointment. Facebook opened at $38 a share and hasn't climbed back to that offering price since Day 1 of trading. Now it's bumping around in the high $20 range, but it fell below $18 earlier this year. 

California still collected a decent amount of tax revenue from Facebook employees and investors who sold stock. But the finance department had initially projected almost $2 billion; it got half that.

This is sad, but there's a far sadder factor at play, and it's called...the "Facebook Effect!"

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California 'shadow inventory' of real estate drops through October

Foreclosure

Kevork Djansezian/Getty Images

For sale signs are posted on a foreclosed house in Glendale, California. According to CoreLogic, fewer homes in the state are headed for bank ownership.

There are more signs that the housing market is improving. Real estate analytics firm CoreLogic has just released new data on the so-called “shadow inventory” of homes. Those are properties that have delinquent mortgages, are headed into the foreclosure process, or have been foreclosed and belong to the bank, but haven't yet shown up in real estate listings.

"Don’t be afraid of the shadows," is CoreLogic's message. Why? Because nationally the shadow inventory has declined more than 12 percent since last year. During the three months that ended in October, California saw the second largest drop in the type of mortgage delinquencies that typically lead to foreclosure — almost 10 percent, behind Arizona at just over 13 percent.

California has a housing shortage at the moment. That means there’s demand for these properties. So any home that's on the verge of emerging from the shadows will rapidly find a buyer. In a statement, CoreLogic chief economist Mark Fleming addressed the national shadow inventory situation:

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