Explaining Southern California's economy

Econ 474: Spending v. Cutting, Paul Krugman v. Niall Ferguson.

Here's a quick primer on the difference between "Keynesians," who want to spend money to get the economy going, and "austerians" (a little play of words of "Austrians," an anti-Keynesian school of economics), who insist that we need to cut back, belt-tighten, and stop racking up debt. In the video, Henry Blodget of Business Insider sits down with Niall Ferguson, a Harvard professor and historian who hasn't just taken up a strongly anti-Keynesian stance since the financial crisis but has also argued that America's about to go down the imperial drain, and fast.

Ferguson's performance is masterful in its bet-hedging. For example, he wants to find a ceiling for U.S. borrowing — but the debate we had earlier this year about...the ceiling for U.S. borrowing displeased him.

Anyway, you get the idea. He's not in agreement with New York Times columnist and Nobel-winning economist Paul Krugman. Krugman and Ferguson have actually knocked heads at the same event, with Ferguson repeating his argument that markers for U.S. debt are OK "until they aren't," maintaining that the big risk for the USA is a loss of investor confidence. Krugman, for his part, insists that the multi-billion post-financial-crisis stimulus bill wasn't big enough.

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Occupy Wall Street: Out of gas?

The Occupy Oakland protesters set a fire

AFP/AFP/Getty Images

The Occupy Oakland protesters set a fire on trash to make a barricade as the police officers form a line to disperse the protesters on November 3, 2011 in Oakland, California. AFP Photo/ Kimihiro Hoshino (Photo credit should read KIMIHIRO HOSHINO/AFP/Getty Images)

At MarketWatch, Jon Friedman thinks so — and looks no farther than his ink-stained brethren for blame:

The media, serving as a proxy for the general population, are impatient and bored by what outwardly seems like a marked lack of progress.

No less an authority on American social movements than folk singer Joan Baez, a notable dissident during the eras of the Vietnam and nuclear protests, said: “I’ll be convinced when it develops a real direction. ... So far it’s hard to tell.”

The only time someone gets excited about the protests these days is when some external force intervenes, such as when New York Mayor Michael Bloomberg attempted (unsuccessfully) to clear the park, purportedly to clean it.

Bummer. Althought those involved with the Occupy Oakland wing of the movement might disagree, as protestors there clashed with police over an effort to shut down the city's port. 

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Poverty in America: In the Midwest, a forever recession

This has been provoking much discussion today. It's a Brookings Institution report on the "re-emergence" of concentrated poverty in America. In the video, Alan Berube lays it out in brief and makes one very interesting — and alarming — marco point: In the cities of the Midwest, "the recession that started at the beginning of the decade never really ended." 

The coasts have fared better. However, Berube also observes that concentrated poverty isn't just an urban phenonomeon any longer; it's moved into the suburbs. We've seen this in California. The UCLA Anderson Forecast that came out earlier this year indicated that the state is separating into two distinct regions or zones: the coast, where unemployment is moderating and growth is resuming; and the inland areas, where economic stagnation is setting in.

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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. 

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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.

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