Explaining Southern California's economy

California's budget: Hostage to the rich

California Budget

Rich Pedroncelli/AP

Gov. Jerry Brown discusses the cuts he has already made to help reduce the state's budget deficit from nearly $20 billion last year to a gap of about $9.2 billion as he unveiled his proposed $92.5 billion 2012-13 state budget at a Capitol news conference in Sacramento, Calif., Thursday, Jan. 5, 2012. California faces a smaller budget deficit in the coming fiscal year but will require nearly $5 billion in cuts to public education if voters reject Brown's plan to raise taxes in the fall.(AP Photo/Rich Pedroncelli)

The Los Angeles Times' Anthony York reports on a...disagreement between the Legislative Analyst's Office and California Gov. Jerry Brown. Brown's budget plan, released prematurely last week, calls for tax increases that would generate almost $7 billion in additional revenue each year, bringing the state deficit down to zero in five years — the time frame for the tax hikes.

Not so fast, says the LAO: it will only be $4.8 billion in 2012-13, then $5.5 billion thereafter.

Here's York:

The wide discrepancy is the latest split over numbers between the administration and the Legislative Analyst's Office. Last November, the Legislative Analyst's Office released a revised estimate for the state’s current budget picture. Less than a month later, Brown’s department of finance came back with estimates that were $1.5 billion higher than the Legislative Analyst's Office numbers.

In its analysis Monday, the Legislative Analyst's Office said that predicting just how much Brown’s tax measure would bring in is difficult because it is dependent on income taxes from upper earners. That money varies wildly from year to year.

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Where is the January Effect in the stock market?

A trader shows a graph illustrating stoc

MIGUEL MEDINA/AFP/Getty Images

We got a nice bump in the markets at the dawn of the new year, but ever since then, results have been...well, pretty unremarkable. The Dow has been bumping along in a fairly narrow range, around the 12,400 level. So where's the vaunted "January Effect"— the idea that people sell stock in December to book some tax losses, then pile back in when the markets re-open after the holiday season.

The answer comes in one word: Europe.

Wall Street isn't going to budge until it either gets some great earnings news from U.S. companies or sees some progress on Europe righting its listing financial states. This is from AP, via the Washington Post:

Greece, Ireland and Portugal have all been bailed out but the fear in the markets is that much-bigger Italy and Spain may end up needing financial assistance. The yield on Italy’s benchmark ten-year bonds on Monday continued to hover around the 7 percent mark, widely considered to be unsustainable in the long run.

On the growth front, the two leaders told reporters that European nations should compare the continent’s best labor practices and implement them, as well as figure out how to use European funds to create jobs.

Their focus on the wider economy has come as mounting signs the 17-nation eurozone is heading for a recession have emerged over recent days, including figures Monday showing a bigger than anticipated 0.6 percent decline in German industrial production in November.

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In California, the housing crisis has also ruined the view

August Foreclosures Rise To Highest Since Level Beginning Of Housing Crisis

Joe Raedle/Getty Images

I was emailed this story from the San Gabriel Valley Tribune last week, about how Norman's Nursery is relocating what amounted to a semi-permanent landscaping forest from the San Gabriel Valley to Ventura Country. Why? The housing crisis has pushed the company's sales down 60 percent. And the effect?

The removal of thousands of boxed trees, shrubs and ornamentals stored along a one-mile stretch of Arrow Highway on the northern border of Irwindale and Baldwin Park has already had an aesthetic impact. The flat land adjoining the Santa Fe Dam was leased from the Army Corps of Engineers by Norman's Nursery for growing plants. The large swath of potted trees, plants and shrubs placed side by side and in rows formed a greenbelt that has existed for more than 20 years, Norman said. At first glance, it appeared as if the trees were permanently planted there.

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The Gadget Age comes to an end

Report Reveals Motor Vehicle Gadgets Cause Accidents

Peter Macdiarmid/Getty Images

My old blogging colleague from my days at CBSnews.com, Erik Sherman, has some bad news for the gadget business:

For many years, experts kept talking about convergence and how amazing it would be for consumers. Well, it has finally arrived and, yup, it's pretty cool for regular people. But converged devices means that consumer won't need nearly as many gadgets, and fewer will be sold.

Erik brings this up as the Consumer Electronics Show (CES) opens in Las Vegas. He also references this dispiriting post from Kara Swisher at AllThingsD, which lays out some grim holiday sales numbers:

Blu-ray players: Down 17 percent.

Camcorders: Down 42.5 percent.

Digital picture frames: Down 37.5 percent.

GPS: Down 32.6 percent.

HDD: Down 25.1 percent.

Mice and keyboards: Down 7.1 percent.

MP3 players: Down 20.5 percent.

Multifunction printers: Down 9.9 percent.

Point-and-shoot cameras: Down 20.8 percent.

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The New Yorker says that AEG's Philip Anschutz owns LA

Mercer 20333

AEG

Thanks to LAObserved for pointing to this summary of Connie Bruck's big profile of Philip Anschutz and AEG, in the current issue of The New Yorker. The title says it all: "The Man Who Owns L.A." And for the man who owns LA, it's all about getting an NFL team to betray its current fans and commit to the Southland:

Anschutz, who lives in Denver, is intensely private and does little to publicize his ownership of A.E.G. or any of his other business activities. [AEG President Tim] Leiweke wants to create what he calls “the final piece of the puzzle for L.A. Live”: an N.F.L. stadium, to be built adjacent to Staples Center. With a deployable roof, the stadium is intended to house—in addition to football games and Super Bowls—concerts, international soccer games, wrestling and boxing matches, N.C.A.A. Final Fours, and major religious gatherings. Los Angeles has not had an N.F.L. team since 1995, when the Rams and the Raiders, tired of playing in antiquated stadiums, left the city. Leiweke began his campaign last February, with a lavish public event to announce a deal he had made with the Farmers Insurance Company: in exchange for a reported seven hundred million dollars over thirty years, the planned stadium would be named Farmers Field. It was the largest naming-rights deal in sports. The next step will be the most challenging. Anschutz has pledged to spend more than a billion dollars to build the stadium, but he and Leiweke must reach a deal both with the N.F.L. and with one or two teams to move to L.A.

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