Explaining Southern California's economy

What the MF Global bankruptcy means to you

MF Global Holdings Ltd Files For Bankruptcy

Mario Tama/Getty Images

MF Global: Lehman all over again? First victim of the European debt crisis? Or something even worse?

You may have heard by now that MF Global, a somewhat obscure Wall Street investment firm run by former Goldman Sacher and former New Jersey Governor Jon Corzine, imploded on Monday, declaring bankruptcy after failing to find someone to buy it. MF Global might also have illegally diverted money from client accounts to its own trading operations.

The firm is now being looked at as either (1) a sort of junior Lehman Brothers — which makes sense, as Corzine was trying to move MF Global into a spot in the much-reduced-by-the-financial-crisis firmament of investment banks — or (2) the first victim of the European debt crisis. 

At MarketWatch, Brett Arends goes a bit farther, pointing out that MF Global's abrupt meltdown will directly affect average investors, because those investors' mutual funds and pension funds were mixed up with Corzine's wannbe Goldman and its risky bet on European sovereign debt. 

Read More...

Long-term unemployment: Is education the solution?

Mercer 9197

Justin Sullivan/Getty Images

As the economy begins turning around, some CA local governments still struggle with high unemployment

An inquiry about job loss and the struggling economy sent out to our Public Insight Network prompted an interesting response from Scott Hutton, who has engineering training and management experience, but who has been out of work for a long stretch of time and is beginning to question his skills:

I have been debating whether to spend what money I have left on professional training courses and certificates to perhaps make up for the lack of advance degrees.  Or, pursue coursework in computer engineering to try to land a job in the IT field.  IT seems to still have some future here even in Los Angeles.  But, this would be an investment using the last bit of money I have.

The conventional wisdom says that Scott probably should invest in himself and acquire the skills he needs to remain competitive. He doesn't have the benefit of an employer to turn to for additional job training. So he needs to finance it himself, and history indicates that these kinds of investments, while somewhat risky, can pay off.

Read More...

Tweet of the Day: Income inequality in New York...and Los Angeles!

Today's Tweet of the Day comes from @TheEconomist and refers to this post, which analyzes a metric of inequality known as the Gini coefficient as it relates to income distribution in the U.S.

That sounds technical, the but the upshot is that if you are close to zero on your Gini, you're very equal, whereas the closer you get to 1, the more unequal you are.

The most unequal place in the U.S., in terms of  income, is the New York area, at 0.501 (tied with Santa Fe, NM, but representing a much larger population, obviously). That's why Occupy Wall Street picked Lower Manhattan as its first protest site. Although you could also say that they picked it because...well, that's where, you know, Wall Street is.

I know, I know, you're shocked. But wait! LA is also pretty unequal — and not too far behind New York, at 0.483. The point is that the worst places in the U.S. for inequality are also the best places to make a lot of money. The question is, Are the populations in the these regions becoming hoplessly divided into haves and have-nots? And is there really anything that we can or want to do about it?

Read More...

How to succeed in business: Get technical?

Mercer 19995

José Goulão/Flickr

A meeting of computer programmers.

On Monday, I posted about a new startup called Codeacademy and whether it makes sense to think of programming as an essential skill, right up there with reading and writing and math. I based the post on thoughts offered by Fred Wilson, a New York-based venture capitalist at Union Square Ventures, at his blog, A VC.

But another USV guy, Andy Weissman, also posted on Codeacademy (at the separate USV blog) and commented on my post (making good use of Disqus, a commenting technology that USV has invested in). 

Yes, it's a bloggy, bloggy world.

Anyway, as if on cue, this story appeared in the New York Times — it's all about how the advertising business is desperate for people with "quantitative" skills:

A talent gap is growing between the skills that many new advertising jobs require and the number of people who have those skills. The dilemma, one familiar to many industries across the country, is particularly acute for jobs that require hard-core quantitative, mathematical and technical skills....The talent pool, advertising technology company executives say, is not a deep one. And those who have the skills are in high demand, often fetching annual salaries that can reach $100,000.

Read More...

The Dodgers, the McCourts, Bud Selig, and the dictatorship of Major League Baseball

Mercer 17196

Kevork Djansezian/Getty Images

Frank McCourt has lost control of the Dodgers franchise as Bud Selig and the Major League Baseball association has seized ownership.

It's not clear to me that big-time sports is a business in any meaningful sense of the term. It seems based on economic principles drawn from the pre-capitalist era, when circuses roamed the landscape and people put their faith in shamans. But the way the Dodgers/McCourt psychodrama is playing out here in LA has led me to revise my view. Major League Baseball isn't even charming in some retro-feudal sense. It operates like a backwater banana republic, ruled by the iron hand of a Maximum Leader, Commissioner Bud Selig.

The sports media seem to have accepted this yucky paternalistic arrangement, which is worrisome. Here's Bill Plashcke in the LA Times:

Bud Selig owes us. The baseball commissioner who allowed a seriously underfunded McCourt to take the team from desperate Fox in 2004 owes us a strong and viable owner this time.

Selig will pick the person, believe me. No sports commissioner has a stronger influence over who is allowed entry in his league. Selig will pick this owner like he has picked other owners, but never before has his selection been more important, more mandated, and more tied to his legacy.

Selig owes us. He owes Los Angeles a well-funded, competitive-minded businessperson who understands that the Dodgers are about a family experience, Hollywood entertainment and, most important, winning.

Read More...