Explaining Southern California's economy

Visual Aid: Andy Rooney calls its quits, may have to steal more bread now

He's been doing it since 1978. He's 92. And now he's finally quitting. Andy Rooney will no longer contribute his endearingly grumpy broadcast-ending segments to CBS's "60 Minutes." I assuming Andy will be OK, even though he says he invests in the stock market without really knowing what he's doing and steals bread from restaurants to save money. I'd embed these videos, but CBS won't allow it! 

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Photo: Stephenson Brown/Flickr

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Solyndra: Not about jobs, not about paybacks, but about…power

The Solyndragate feeding frenzy continues. There's blood in the water. The companies two top executives have taken the fifth in Congressional testimony. The Washington Post has done an expose. The New York Times has done an expose. The LA Times has done an expose after the Post and the New York Times did their exposes. Republicans are making plenty of noise about how Solyndra was somehow a corrupt undertaking designed to funnel taxpayer money to Obama supporters. It was also a stimulus boondoggle. And in California, it was a risky bet on precious few jobs.

My KPCC colleague and Pacific Swell blogger Molly Peterson and I have been talking about Solyndra for weeks. She provided a nice shout-out to several of the posts I've written on the topic at DeBord Report — and provided me with an opportunity to zero in on what's really going on with green energy funding.

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Visual Aid: Are falling gas prices telling us bad things about the economy?

I'm all about gas prices today, having already posted on the topic here and here. The price of gas is falling nationally, but there are some unusual things about how that's happening. I got the above chart from GasBuddy.com — it shows gas-price fluctutations over the past six years. There are two big spikes: in the summer of 2008, when the price got above $4 per gallon; and...the past spring, when the price climbed over $3.87 per gallon. One big difference between then and now: in 2011, we have 9.1 national unemployment. In 2008, in was under 6 percent. 

I've highlighted a stable period between the peaks. I think you have to factor in unrest in the Middle East when you look at the price increase in late 2010 and much of 2011. But what we're seeing now is the price of gas responding to a national economic forecast that expects sluggish growth and continued high unemployment.

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Be thankful for expensive gas — and a gas tax?

Matt Yglesias makes a useful point about gas prices that I think applies to all of us in car-mad Southern California: 

It’s important to see that under present circumstances, anything that succeeds in promoting robust economic recovery would raise the price of gasoline….After all, unemployment’s 9.1 percent. If it fell to 7 percent, that would mean a large increase in the share of Americans who are commuting to work on a daily basis. And the United States of America is both a large country, and one in which commuters consume an unusually large quantity of gasoline as they go about their business. Consequently, 2.1 percent of the American workforce shifting from unemployed to employed means a meaningful increase in the consumption of gasoline.

The global oil markets are complex and don't always make sense at the pump. The price of oil falls, but the price of gas remains high. Or at least higher than we think it should be. I won't even get into the various issues involved, which range from refining capacity to OPEC production planning. There's a reason why some economists spend their entire careers looking at this single commodity. 

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Reportings: Jumbo loans shrink; broken tax system; Suskind disappoints; gas ain't cheap

Los Angeles will be hit harder than the rest of the country by decision to downsize jumbo loans that the federal government guarantees, from $729,750 to $625,500. "Real estate professionals are bracing for the policy change to hit California hard, as buyers begin learning that they may no longer be able to afford the higher-priced homes they had been considering. The California Assn. of Realtors estimates that more than 30,000 California buyers statewide will face bigger down payments, higher mortgage rates and stricter requirements under the adjustment." (LAT)

 

Harsh words for taxes, from John Steele Gordon in of all place the Wall Street Journal: "Before the modern era…the federal tax system was manifestly unfair by any reasonable standard, grossly biased in favor of the well off. Ironically, attempting to fix that unfairness is what has brought us to the present moment, with a federal tax system that is grotesquely complex, often arbitrary, and corrupted by mutual back-scratching between members of Congress and influential lobbyists." (WSJ)

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