Explaining Southern California's economy

Was Crowell Weedon's misadventure with credit default swaps really that big a deal?

To go with India-society-books-politics,

MANAN VATSYAYANA/AFP/Getty Images

Ayn Rand is a heroine to some libertarians — and at least one former bond investor in L.A.

The L.A. Times has an interesting story today about Crowell, Weedon & Co., which reporter E. Scott Reckard characterizes as a "regional brokerage based in Los Angeles" that "has preached old-fashioned stock and bond picking to its clients since the depths of the Great Depression." The impression at the paper that Crowell Weedon is seriously old-school goes back a ways: Tom Petruno wrote about the firm in 2007, under the headline "They make money the old-fashioned way," a reference that anyone who paid attention to investment marketing in the late 1970s will get.

Here's what happened: In 2008, the firm's head of bond trading, Robert Gore, set up a sideline operation to play the housing downturn. Gore was a housing bear as early as 2006, and the LAT points to his website as proof. The trades he was running were proprietary, meaning the firm basically set him up with funds drawn from Crowell Weedon's own accounts to establish his positions — positions that used the now infamous derivatives known as credit default swaps to short mortgage-backed securities. 

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Meet Mark Spitznagel, Ron Paul's L.A. hedge-fund guy

Ron Paul Continues Iowa Campaign Tour

Justin Sullivan/Getty Images

LE MARS, IA - DECEMBER 30: Republican presidential hopeful U.S. Rep Ron Paul (R-TX) speaks during a town hall meeting at the Le Mars Convention Center on December 30, 2011 in Le Mars, Iowa.

Ron Paul — Republican presidential candidate, GOP congressman from Texas, father of Sen. Rand Paul, libertarian, and dogged foe of the Federal Reserve — is touching down in Los Angeles on March 20 for a fundraiser. If you think Paul, with his desire to return the U.S. to the gold standard (bimetalism, actually, using gold and silver) and his tendency to subject Fed Chairman Ben Bernanke to lengthy disquisitions on inflation, is a litle bit different, just wait until you get a dose of the guy who's hosting this Bel Air shindig, at the former residence of Jennifer Lopez.

He's Mark Spitznagel, a very successful hedge-fund manager whose Universa Investments is based in Santa Monica. There are hedge-fund managers and there are hedge fund managers. Spitznagel is definitely in the latter category. He plies his trade in an exotic corner of the industry, making huge bets on statistically improbable events, now colloquially known as "black swans," after the 2007 book of the that title by Nassim Taleb.

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The Tea Party is a political movement; Occupy is about protest

AP Photo/The Enterprise, Wayne Tilcock

In this Friday, Nov. 18, 2011, photo University of California, Davis Police Lt. John Pike uses pepper spray to move Occupy UC Davis protesters while blocking their exit from the school's quad Friday in Davis, Calif. Two University of California, Davis police officers involved in pepper spraying seated protesters were placed on administrative leave Sunday, Nov. 20, 2011, as the chancellor of the school accelerates the investigation into the incident.

Just a quick comment on this segment from this morning's Airtalk broadcast. The issue is whether the Tea Party is getting media treatment equal to the Occupy Movement. 

I'd have to say probably not. But then again, this isn't an apples-to-apples comparison. The Tea Party is a political movement: it's an evolution of the Republican Party's libertarian element, which has been a factor, albeit a minor one, for decades. Occupy is a protest movement: it's not running anyone for office but rather complaining about the way the U.S. has allowed equality to stagnate under pressure from a global financial system run amok.

Both groups are angry about the current state of affairs. But their plans of action, strategies, and execution are different in trajectory. The Tea Party wanted to elect candidates and enter the mainstream political conversation. Occupy aimed to...take up space and provide a physical representation of what was really a fairly inchoate sense that something has gone horribly wrong with the nation. 

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Why the Occupy Movement is getting kicked out — and why it doesn't matter

Occupy Wall Street Camp In Zuccotti Park Cleared By NYPD Over Night

Mario Tama/Getty Images

NEW YORK, NY - NOVEMBER 15: Occupy Wall Street protesters and police stand outside Zuccotti Park after police removed the protesters from the park early in the morning on November 15, 2011 in New York City. Hundreds of protesters, who rallied against inequality in America, have slept in tents and under tarps since September 17 in Zuccotti Park, which has since become the epicenter of the global Occupy movement. The raid in New York City follows recent similar moves in Oakland, California, and Portland, Oregon. (Photo by Mario Tama/Getty Images)

UPDATE: KPCC is reporting that Occupy LA — which hasn't yet been shut down and is actually right across the street from police headquarters — may become a kind of "oasis" for Occupy movements that have been forced out of public sites. It would be quite a trek for Occupy Wall Streeters. But you never know. It's getting cold in New York...

In the very early hours of Tuesday morning, New York City police descended on Zuccotti Park in Manhattan, the site of the original Occupy Wall Street movement, and cleared the site of protestors. Almost 200 people who refused to go quietly were arrested. 

Tensions are mounting at other Occupy sites around the country. In Oakland, protestors have been particularly aggressive. In Los Angeles, they're been mostly peaceful. But it's becoming increasingly clear that, despite a high level of political support in many cities, local governments are losing patience with 24/7 demonstrations at public sites. 

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