Explaining Southern California's economy

Is Bank of America gouging small businesses?

Bank Of America To Cut Tens Of Thousands Of Jobs In Restructuring Effort

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Welcome to 2012, small business owners who have lines of credit with Bank of America! You are about to see what a struggling banking giant will resort to when survival is at stake. This is from the Los Angeles Times:

The...bank is demanding that [small business] customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.


Dow 13,000? Not this year, but that's OK

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The final day of trading on the stock markets had ended. The Dow closed down about 70 points. But let's take a look back on 2011, a volatile economic year if there ever was one. For the year, the DJIA was up 5.6%, despite all the turmoil. If you had put $1,000 in an index fund that tracks the Dow, you would have made fifty-six bucks! More importantly, you would have stayed ahead of the rate of inflation or about 3.4 percent. So your return would have legitimately increased your wealth.

For comparison, you would have had a tough time getting even 1 percent on a 12-month CD. 

This doesn't factor in dividends — the money you get paid to hold a company's stock — and if historical averages are anything to go by, simple stock price appreciation in the Dow suggests that a percentage slightly below 5 percent is to be expected (although there will be both much better and much worse years). So in the end, 2011 beat the historical return and beat the rate of inflation.


We can hear them now! Blowback forces Verizon to cancel fee

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What a difference a day makes! Exactly one day after Verizon Wireless said it was going to charge customers a $2 fee for processing credit and debit card bill payments, it backed off on the plan, after customers went ballistic.

I'm going to call myself cynical on this one and suggest that Verizon Wireless has just shot down a trial balloon. Earlier this year, big banks were also compelled to ditch plans to charge customers higher debit-card fees, so Big Red had to know what it was up against. 

But why not make the announcement, as a form of real-world market research? Customers have spoken.

Of course, the fact the the FCC said it was going to investigate the fee might have had something to do with Verizon's decision.


Recent college grad who went to expensive college concludes that college is still worth it!

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Students throw their mortarboards in the air during their college graduation.

Here's a strange yet useful report, from the LA Times' Money & Company blog. Sarah Millar, "now gainfully employed as a research analyst at ConvergEx Group in New York," but a recent graduate of Trinity College (class of 2011) has produced, all on her own, a report analyzing whether college is worth the increasingly higher price. 

I can't track down the actual report, nor determine where the LAT got it, so I'll have to trust them on this one when they excerpt Millar's conclusion: "The bottom line of this analysis is that college pays, literally and figuratively," Millar writes.

Money & Company indicates that Millar has researched all the right government and private sources. Millar's LinkedIn profile does indicate that she's been working at ConvergEx for a few months, so it's safe to assume that she's at least somewhat trained in data analysis. Bit before landing the job, she labored as a manager at something called Johnson's Popcorn. I'm going to assume it was part-time and summers.


Clinton speaks, rich people, the end of email: DeBord Report talks with Andy Dean

I went on "America Now with Andy Dean" again yesterday to talk about a few recent blog posts, including one on Bill Clinton's Herculean speaking fees, good rich people and bad rich people, and the end of email. The wonderfully conversational Darryl Parks was filling in for Andy, and we bantered for a while. I've embedded the broadcast, above.

I've been on this show a few times now and richly enjoyed each experience. You can check the segments out here and here.

Follow Matthew DeBord and the DeBord Report on Twitter.