Explaining Southern California's economy

Domestic oil boom: Occidental could buy Yates Petroleum for $3 billion

TO GO WITH AFP STORY: Commodities-oil-en

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Occidental Petroleum could be a buyer for Yates Petroleum, a family owned oil company that owns fields in New Mexico.

Los-Angeles based Occidental Petroleum is looking for more growth. It's coming off a weaker 2012 third quarter than the prior year, with profits down over 20 percent, and has a new CEO, Stephen Chazen, who wants to prevent a further slide. But rather than do as some analysts have suggested and buy back stock — a reliable way to boost a flagging share price — Chazen could be going shopping. And Yates Petroleum, a family-owned company, could be the prize.

Things are rough in the oil business right now, with refineries catching fire in California and superstorms ravaging the supply infrastructure in the Northeast. In this context, Occidental's third quarter slide is understandable. But the word on the street is that Chazen wants to move the needle on the company's stock price, which is well off its high of $115, achieved in 2011. 

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Case-Shiller: Los Angeles holds steady with home price gains in August

Existing Homes Sales Jump More Than Forecast

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Homes in Santa Clarita, California. The August Case-Shiller index shows prices moving back to 2003 levels.

It might be safe to call a housing bottom at this point. The monthly Case-Shiller home prices index has just come out for August, and it shows prices increasing in 19 of the 20 cities the index tracks. 

This is from the release:

The 10- and 20-City Composites recorded annual returns of +1.3% and +2.0% in August 2012 – an improvement over the +0.6% and +1.2% respective annual rates posted for July 2012.

For Los Angeles, the story is much the same as it has been for the entire year so far: slow and steady progress. The August increase exactly matched the July increase, at 1.3 percent. April, May, and June were all higher, but only in May did the city exceed a 2-percent gain.

Although compared with last August (the Case-Shiller data lags by two months, which is why we're getting August numbers in late October), the situation is markedly improved over July. Los Angeles saw a 2.1 percent increase year-over-year for August; in July, prices only increased by 0.4 percent.

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Sam Adams founder Jim Koch 'brews the dream' of small business in Los Angeles

Sam Adams brewer and Boston Beer Company founder Jim Koch, right, speed coaches a small businessperson at an event in Los Angeles.

Los Angeles is becoming the U.S. center of alternative small-business lending. Over the summer, California-based microlender Kiva unveiled a new program to loan modest amounts of money to entrepreneurs in the region. Now one of America's most famous brewers has gotten in on the act.

"This all came from my experience starting Sam Adams in my kitchen 28 years ago," said Jim Koch, a cofounder, chairman, and public face of the Boston Beer Company, which kicked off the American craft-beer — or microbrewing — revolution three decades ago.

Koch was talking about Samuel Adams Brewing the American Dream, his company's microlending initiative, which debuted in Los Angeles this month with an event at the Grace E. Simons Lodge near Dodger Stadium. The program has two objectives: provide financing for food, beverage, and hospitality businesses that are too small to pursue truly big bucks; and furnish those entrepreneurs with high-caliber advice, in the form of mentoring and coaching.

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Home foreclosures continue decline in California

Stockton, CA Leads Nation In Rate Of Foreclosures

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Cars drive through downtown Stockton, California. The city tops the list of U.S. cities for foreclosure activity in the third quarter, according to RealtyTrac.

California is in an interesting position when it comes to home foreclosures. On one hand, according to RealtyTrac's just-released third-quarter Metropolitan Foreclosure Market Report, the state still has some of the highest foreclosure rates in the entire country, with bankrupt Stockton leading the pack. 

On the other hand, California cities continue to see substantial year-over-year declines in foreclosure activity. San Francisco, Los Angeles and San Diego saw their foreclosures plummet, by 36, 29 and 26 percent, respectively. 

On its face, this sounds like pretty good news. But as I reported earlier this week, the foreclosure crisis hit California so hard that its cities have a long way to go before the situation normalizes.

RealtyTrac compared 2012 to 2008 in political terms — What does the situation look like for areas that went for Obama versus McCain? — and found that counties carried by Obama have seen big improvement on the foreclosure front.

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The story behind Moody's review of California cities

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The ratings agency announced that it's reviewing more than 30 California cities for bond-rating downgrades. However, Los Angeles could get an upgrade.

Moody's, the big ratings agency, announced last night that it's reviewing the bond ratings of 32 California cities including Santa Monica, Glendale, Huntington Beach, and Long Beach. The reviews are for downgrades, mostly, but two of California's biggest cities - Los Angeles and San Francisco - are under review for bond-rating upgrades. This is particularly good news in L.A.'s case, given the city's looming $200 million budget deficit.

This action didn't come out of nowhere. Back in August, Moody's emphasized that although municipal debt defaults are exceptionally rare, bankruptcies in Stockton, San Bernardino, and Mammoth Lakes — along with the general fiscal stress that California cities are under — compel the agency to review the 95 Golden State municipalities whose debts it rates.

Tuesday's announcement is the culmination of that exercise. All the cities Moody's is reviewing may not be downgraded, but the agency's examining one-third (the review process will take about 90 days). The pension-obligation bonds of eight cities were downgrades. That indicates how serious a problem funding legacy pensions has become for some cities in the state.

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