Explaining Southern California's economy

Faster foreclosures and loan mods mean less money for homeowners

U.S. Foreclosure Rates Rise As Bank Repossessions Soar

Kevork Djansezian/Getty Images

The LA Times has a story today about the accelerating foreclosure process. The bottom is that banks are ramping up their foreclosure activities, after allowing them to lag for various reasons over the past few years. 

There's a day-of-reckoning quality to this. Absent some kind of massive federal assistance program to homeowners who are either losing or about to lose their houses — beyond what's already been enacted — this means that the housing market will soon be hit with a large number of "real estate owned" (REO) properties. 

I blogged recently about a Federal Reserve white paper that proposes a solution to this foreclosure crunch, in the form of investor-owned rentals. The rental market is picking up and there's a need for more single-family residences, which shouldn't be surprising given all the families that are losing their homes to foreclusure. 

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Dylan Ratigan and the DeBord Report in Pasadena, January 17

I'll be having a conversation with MSNBC's Dylan Ratigan on January 17, at Southern California Public Radio's Crawford Family Forum. Ratigan has a new book out, "Greedy Bastards: How We Can Stop Corporate Communists, Banksters, and Other Vampires from Sucking America Dry," which is just as peppery as it sounds. We'll probably be talking LOTS about it. 

You can RSVP for the event here (it's free) if you're planning to be in Pasadena that night. Believe me, Ratigan has a strong point of view on how we wound up in our current financial mess and how we can get ourselves out. He's well worth listening to.

As a taste, I've posted his now-legendary rant on "The Dylan Ratigan Show." He speaks disparagingly of "extraction" and how it's killing the economy. What's extraction?

Come down to the Crawford Family Forum next Tuesday night at 7 p.m. and find out!

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Game on! Warren Buffett to be bankrupted by GOP Congress

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Scott Olson/Getty Images

Warren Buffett, chairman of Berkshire Hathaway, attends the Allen & Company Sun Valley Conference.

Last year, Warren Buffett wrote a much-cited and blogged-about op-ed for the New York Times arguing that rich people don't pay enough taxes. Fine, responded the anti-tax Republican crowd, suggesting that if Buffett was so hot to part with his money, he could always write the government a check.

A change to tax forms was proposed, allowing wealthy taxpayers to pay more, to reduce the national debt. And now Buffett is saying that he'll match, from his vast fortune, dollar-for-dollar whatever Republcian members of Congress voluntarily contribute.

The U.S. national debt currently stands at $15.2 trillion, about a trillion more than the entire yearly GDP of $14.5 trillion. Warren Buffett is worth about $50 billion. The average net worth in Congress was about $750,000. Rep. Michael McCaul of Texas, a Republican, is worth $294 million.

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100 words or less: The Fed's latest Beige Book

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AP Photo / J. Scott Applewhite

The Federal Reserve Building in Washington, DC.

Macroeconomic data! What could be more interesting, besides actuarial tables on dental malpractice and the fashion choices of aging corn farmers? 

In the interest of...brevity, I will now attempt to summarize, in 100 words or less, the Federal Reseve's most recent "Beige Book," a high-level snapshot of the U.S. economy.

Here we go.

The economy. Ehhh. Manufacturing was mixed, housing crummy, shopping and cars — good, good. Banking and financial services was all over the place, farming grew (heh, heh), and oil and coal...well, let's just say dirty energy is having a day in the sun. Hiring is picking up but wages aren't. Inflationary pressure on prices is building slightly but not yet showing up in the marketplace. Construction, sluggish. Renting versus buying? Renting is trending up. Healthcare hiring was uneven, but temporary staffing increased. Finally, tourism was a clear bright spot, and the big winner, city-wise, was New York, New York, baby!

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Who is Tom Barrack, the latest billionaire to covet the Dodgers?

Bill Shaikin of the LA Times is reporting that Tom Barrack, an LA-based billionaire real-estate investor, has joined the ever-expanding list of potential bidders for the Dodgers. The team was put into bankruptcy by embattled owner Frank McCourt and has to be sold to somebody by April 30.

Prospective somebodies include Rick Caruso and Joe Torre; Magic Johnson; Mark Cuban; and a furtive Connecticut hedge-fund billionaire, Steven Cohen

Barrack ads some new local flavor to the action. I feel obligated, however, to explain how the various Very Rich Men who are interested in owning the team made their money — and what that could tell us about how they'd run the Dodgers.

I've already tackled how Steven Cohen amassed his hedge-fund billions. Now I'll take a look at Barrack.

At base, the guy does real estate. From the helm of his $34-billion private-equity shop, Colony Capital in Santa Monica, Barrack manages this most debt-intensive of investments. His mojo is to zero in on "distressed" assets — properties that could be worth a lot more than their apparent face value and, being real estate, provide an obvious form of collateral to use for leverage — and, to put it simply, fix them up. This is from a New York Magazine profile of Barrack, a 63-year-old USC grad, that appeared in late 2010:

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