Explaining Southern California's economy

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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Why the IRS needs our pity

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Tim Boyle/Getty Images

The top of a form 1040 individual income tax return.

The Internal Revenue Service: As tax season kicks off, we're reminded that no other federal agency is held in higher contempt. But the IRS is struggling with issues beyond its image. According to this story in USA Today, its "budget is too small and its workload too heavy" for the IRS to do its job. And this is while additional cuts to the IRS budget are being considered by Congress:

Driving the IRS workload increase is increasing complexity of federal tax laws and regulations and frequent changes in the tax code — an estimated 579 changes in 2010 alone that had to be explained to taxpayers, entered in IRS computers and added to the agency's auditor training programs.

Ah, the complexity bugaboo. This may increase the IRS workload, but given that tax collections are the government's main source of revenue, this is a problem that urgently needs solving. Especially for people like me, who advocate for a far more complex tax code, managed by more powerful technology.

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The Dodgers, dollars, and development

Dodger Stadium Bleachers

pvsbond/Flickr (cc by-nc-nd)

The bleachers stand empty at Dodger Stadium in Los Angeles, California.

AirTalk had a great segment today on the many bidders for the Dodgers, currently in bankruptcy, but in need of a buyer from embattled owner Frank McCourt by April 30. Host Larry Mantle was joined by Bill Shaikin of the LA Times and KPCC's own Nick Roman to assess the suitors.

To me, it boils down to money guys versus sports guys, with the recently announced Rick Caruso-Joe Torre partnership as the best of both worlds. That said, McCourt controls the sale, as Shaikin pointed out. And so it may be that the team winds up going to the highest bidder.

I don't think anyone can outbid hedge-fund billionaire Steven Cohen. He has enough money to buy the team two or three times. 

But Nick made a strong case for developer know-how. Cohen made his bones on Wall Street as an aggressive trader. He rarely owned anything for more than a few days. In some cases, he probably bought and sold huge numbers of assets in a few hours.

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