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,


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. 


July jobs by city: Los Angeles has another 80,000-plus month

Los Angeles skyline

David McNew/Getty Images

Los Angeles has suffered unemployment worse that the nation as a whole for most of the Great Recession and weak recovery.

July 2012 data is out from the Labor Department for "metropolitan area employment" — the employment situation in the nation's cities. Los Angeles, part of an area that includes Long Beach and Santa Ana, notched an over-the-year increase from last July of 86,300 jobs, second only to the New York-New Jersey area, which added just over 90,000.

The July number is a bit less impressive than the June figure of 88,400.

The L.A. area has seen a big drop in its unemployment rate from last July, to 10.9 from 12.2, but the unemployment rate compared with June has moved up, from 10.3 percent. 

Many of California's cities are still enduring unemployment that's much higher than the national rate of 8.3 percent. El Centro is at nearly 30 percent — and even that's an improvement over last July's almost 33 percent rate. For what it's worth, Napa, with a workforce of similar size, has the state's lowest unemployment rate for a metro area, at 7.7 percent.


Case-Shiller: Los Angeles loses a bit of ground in June

David McNew/Getty Images

A "for sale" sign stands outside a home in Pasadena. The Case-Shiller index for June showed prices moving up slightly in L.A. for June, but not as much as in May.

June Case-Shiller numbers have just been released. The news for Los Angeles — one of the 20 U.S. cities whose home prices the index tracks — is mixed. Prices in L.A. didn't mount gains that were as strong as May, when they ticked up 2.2 percent from April. For June, the rise was only 1.7 percent, just slightly better than the 1.5 percent the city's housing market turned in for the March-April period.

Year-over-year, prices in Los Angeles were down 0.6 percent. Yes, that's a tiny drop, but it was significant enough for Standard & Poor's, the company that owns the Case-Shiller index, to call it out, in the context of a national trend of price increases since last June: "There were only six cities – Atlanta, Chicago, Las Vegas, Los Angeles, New York and San Diego – where the annual rates of change were still negative."


Los Angeles gas prices are stable but still high



Gas: It's more expensive everywhere in the U.S. But it's especially expensive in California.

The fire at Chevron's Richmond refinery in the Bay Area several weeks ago caused gas prices in the Southland to shoot above $4 a gallon on average. And there they have stayed. According to GasBuddy.com, a gallon of regular currently costs Angelenos about $4.11. That's where the average, more or less, has been for a week.

The U.S. Energy Information Administration released its weekly survey of gas prices nationally, and it shows that L.A. drivers shouldn't be shocked at the $4-plus pricing. The entire West Coast region (there are five regions in the U.S.) hit $4 on August 20, with California accounting for a notable 22 cents of that average. Take California out of the picture and West is paying $3.78 on average for a gallon of regular.

The West Coast region has seen by the largest year-over-year increase in the price of gas: 31 cents.


LAX is a regional economic force. But it still needs major work

LAX Encounter restaurant

Photo by monkeytime | brachiator via Flickr Creative Commons

LAX is a major economics force in the L.A. region. But will billions in renovations help it to maintain that status — and bring in more passengers?

Los Angeles International Airport is the sixth busiest air transportation hub in the world. According to the Los Angeles County Economic Development Corporation, it accounted for almost 300,000 jobs in L.A. county in 2011; generated more than $13 billion in labor income; promoted nearly $40 billion in economic output; and brought in $2.5 billion is state and local revenue.

LAX: the jewel in the crown of one of America's most dynamic economic regions!

Also, a facility in desperate need of fixing up. Back in April, readers of Travel + Leisure magazine ranked it the second-worst airport in the nation, behind New York's LaGuardia, where tattered memories of the Jet Set go to die. Here's the writeup:

LAX ranked at the bottom of most categories—that includes location (20th), check-in and security process (21st), impression of safety standards (22nd), baggage handling (20th), staff communication (21st), and terminal cleanliness (21st). Clearly, this worn-out airport is ready for a major Hollywood makeover.