Explaining Southern California's economy

The top 10 California and LA business stories of 2011

Uprooted South Pasadena Tree wind storm

Kevin Ferguson/KPCC

10. A MIGHTY WIND IN PASADENA. Little did the hamlet of Pasadena know that on the night of November 30, hurricane-force Santa Ana winds would howl through the "urban forest" and bring down tree after tree after tree. Houses were damaged. Cars were crushed. The total cost of cleanup could hit $5-6 million. Weeks after the disaster, Pasadena is still hauling away the damage.

Mercer 17192

Kevork Djansezian/Getty Images

9. THE DODGERS FEUD. Dodgers owner Frank McCourt's contentious divorce and dispute over who really owned the team rapidly degenerated into a battle between McCourt and the commissioner of Major League Baseball, Bud Selig. MLB assumed control of the Dodgers in April, but by late June McCourt put the team into bankruptcy. His countermove ultimately didn't work, and by November he'd given up. A new owner will now have a chance to pay upwards of $1 billion for one of baseball's most famous franchises.

Mercer 18124

Lintao Zhang/Getty Images

8. APPLE IS THE BIGGEST COMPANY IN THE WORLD! On August 9, Apple's market cap hit $337 billion, briefly sending it past ExxonMobil as the world's most valuable company. It was quite a comeback for Apple and an at-the-time still-ailing-and-not-yet-dead Steve Jobs. The company had more than fully recovered from near bankruptcy in the late 1990s. Sadly, Jobs wouldn't recover from cancer. But he did get to experience a brief moment of joy at the company he started in a California garage challenging a pillar of the "old" economy.

Mercer 11465

California High Speed Rail Authority

7. HIGH-SPEED RAIL COST OVERRUN. A high-speed rail line linking Los Angeles to San Francisco was slated in 2008 to cost $43 billion. Voters responded to that estimate by voting yes on a ballot measure to fund the project. But by 2011, the cost had increased to a whopping $98.5 billion. Would voters still support the project? They might, if they understood that the cost of additional highways and airport runways could cost $170 billion.

Mercer 18426

Karen Bleier/AFP/Getty Images

6. AMAZON TAX DEAL. A spat over collecting online sales tax in California put the state and the giant retailer Amazon on a collision course. Amazon was gearing up for a battle at the polls in 2012. But then the entire thing was settled amicably (sort of) with both sides agreeing to kick the can down the road for a year. Maybe in the meantime Congress will act. Or perhaps California's budget woes will clear up... Want to calculate the odds of either of those outcomes?

Mercer 19056

Mario Tama/Getty Images

5. BANK OF AMERICA DEATHWATCH. The banking giant saw its stock price decline 60 percent over the course of the year, at one point in December dropping below $5 a share. The big problem? The neverending challenge of fixing Countrywide, the subprime lender that BofA acquired before the financial crisis. Some bloggers actually started a BofA death watch. Why should Californians care? Maybe because of the $200 billion in deposits in SoCal alone.

Mercer 12396

AP Photo/Damian Dovarganes

4. FORECLOSURE SETTLEMENT — NOT! The big banks would very much like to settle with the states on the illegal-foreclosures matter. There's $20 billion on the table, and the Obama Administration wants the states to take it and call an end to the agony. But California's Attorney General, Kamala Harris, along with the AGs of several other states, including New York and Nevada, isn't going along. So it could be game-over for the deal.

Mercer 20725

Solyndra

3. SOLYNDRA SOLAR SCANDAL. California solar startup Solyndra flamed out in spectacular fashion in August, declaring bankruptcy and disappearing almost immediately $1 billion is private investment and most of a $535 million Department of Energy loan guarantee. The meltdown of a former greentech high-achiever morphed into a political crisis, with critics aggressively questioning the role of the Obama Administration in "picking winners" involved with campaign donors, as well as whether the DOE had any business acting like a venture capitalist.

Jerry Brown Introduces January California Budget

Justin Sullivan/Getty Images

2. THE CALIFORNIA BUDGET BATTLE. You knew California's budget was going to be a mess when, back in June, Jerry Brown became the first governor since 1901 to veto a spending plan, bucking the Democrats who supported it. By July, a new budget was in place. But by the end of the year, it was clear that hoped-for revenues weren't going to materialize, and so "trigger cuts" would kick it. And this wasn't all she wrote. The state's finances look to be deplorable for the remainder of the decade.

Occupy LA - Deadline Night at City Hall

Eric Richardson / blogdowntown

1. OCCUPY LA STAKES A CLAIM. Following in the footsteps of Occupy Wall Street, Occupy LA took up residence in a tent city on the City Hall lawn. There they peacefully protested, right across the street from police headquarters, as the mayor and the City Council tried to figure out what to do. But by the evening of Nov. 29, the game was up. The 99%ers, demonstrating against inequality in America, were sent packing by the authorities. Will their protest continue in 2012?


Yesterday, I blogged about the Top 10 business stories for 2011, on a national and even international scale.

Today, I'm getting closer to home, with the Top 10 California and Los Angeles business stories. I'm sure I left a few out — the AEG downtown football stadium plan, for example — but it was a pretty lively year. The choices were tough.

From the Great Pasadena Wind Storm right through high-speed rail cost overruns, the Amazon tax deal, a foreclosure settlement that wasn't, the Dodgers soap-opera, and of course Occupy LA, business and breaking news consistently intersected in 2011 in the Golden State.

Could 2012 possibly generate more stories? We'll soon find out...

Read More...

Live-blogging the LA Auto Show

BMW Offers Previews Two New Electric Concept Vehicles

Spencer Platt/Getty Images

Update: I spent a some time talking about the show with Larry Mantle on Airtalk this morning, with Eddie Alterman of Car and Driver and Ed Hellwig of Edmunds Inside Line. Check it out.

I'll be roaming the floor of the Los Angeles Auto Show for the next two days, checking out new cars, green cars, concept cars, and the business of cars in Southern California. I'll also be tweeting, so if you want to follow me, check out my Twitter feeds, below.

Look for photos, insights, and even some video. The LA Auto Show is the first big car show for the global industry, kicking off a season that runs for months and travels around the world.

The industry has taken its share of lumps over the past few years. The financial crisis nearly killed both Chrysler and General Motors — and seriously threatned Ford — but the Big Three are back, racking up profits quarter after quarter. 

Read More...

Tweet of the Day: Income inequality in New York...and Los Angeles!

Today's Tweet of the Day comes from @TheEconomist and refers to this post, which analyzes a metric of inequality known as the Gini coefficient as it relates to income distribution in the U.S.

That sounds technical, the but the upshot is that if you are close to zero on your Gini, you're very equal, whereas the closer you get to 1, the more unequal you are.

The most unequal place in the U.S., in terms of  income, is the New York area, at 0.501 (tied with Santa Fe, NM, but representing a much larger population, obviously). That's why Occupy Wall Street picked Lower Manhattan as its first protest site. Although you could also say that they picked it because...well, that's where, you know, Wall Street is.

I know, I know, you're shocked. But wait! LA is also pretty unequal — and not too far behind New York, at 0.483. The point is that the worst places in the U.S. for inequality are also the best places to make a lot of money. The question is, Are the populations in the these regions becoming hoplessly divided into haves and have-nots? And is there really anything that we can or want to do about it?

Read More...

September jobs report: Cause for optimism?

Military Career Fair Held At Washington Convention Center

Alex Wong/Getty Images

Jobs are not easy to come by in this economy, but at least a second recession now seems unlikely.

The BLS released the preliminary September employment numbers this morning. Unlike last month, when the economy added an adjusted 57,000 private-sector jobs, this month the economy managed 103,000. 

This was a lot better than some forecasters had predicted (the revised August numbers, +57,000 versus the Big Zee-Roh, were also welcome). Before today, I had seen September numbers ranging from zero to 130,000. The ADP report, a much-watched measure that comes out before the government total, anticipated 91,000 — the same number it anticipated last month — so the fact that we came in well above that is a cautiously positive sign.

The BLS report should quash speculation that we are heading for a double-dip recession, or that we're in some kind of quasi-recession right now. Felix Salmon doesn't think so — he's making more of a long-term malaise argument — but if we can avoid some kind of debt cataclysm in the Eurozone, then we may be able to turn the ocean liner at this point.

Read More...

The 'Millionaire Tax' in Southern California

President Obama has come out swinging, as the USA struggles to get its financial act together. A nearly $500 billion jobs bill has now been followed by a proposal to raise taxes on Americans making more that $1 million a year. Those on the left love the idea; those on the right have labeled it class warfare. In an effort to invoke an extremely rich dude who has strongly advocated that rich people pay more in taxes, Obama has taken to calling it the "Buffett Rule," after billionaire investor Warren Buffett.

I just want to know how much money it would bring in. And at a local level, roughly how many people in Southern California would get hit with the new tax, in the event that it actually gets passed. This isn't Kansas, after all — if you live in or around Los Angeles and San Diego, you are in a major millionaires region. In 2009, the Los Angeles metro area had almost 234,000 millionaires, according to statistics cited by the LA Times. I figure LA has even more now.

Read More...