The Breakdown | Explaining Southern California's economy

Barnes & Noble Nook: That other tablet — and a $1 billion business

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As I and others have argued, there is no tablet market — there's an Apple iPad market. That said, the Amazon Kindle Fire has come on strong, suggesting that there may be room for an iPad competitor at lower price points (the Kindle Fire sells for $199). We know that consumers will go ga-ga over a cheap tablet that as designed to compete with the iPad. This is why the HP Touchpad found life at $99 and why the BlackBerry PlayBook may gain users if it goes on sale for around the same price. But these were tablets that were envisioned as $500 iPad killers. Who wouldn't want one at a monster discount?

Then there's Barnes & Noble's Nook. There are several models, but the Kindle Fire/iPad competitor (in as much as the iPad can really have a competitor) is the Nook Tablet, priced at $250. Here's where things get interesting. B&N is talking about spinning the Nook off as it's own company. And as DealBook reports, Nook Inc. could be worth almost $1 billion:


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Wine Report: Red wine may prevent cancer in women

KPCC's Stephanie O'Neill reported today in a new study that suggests moderate red wine consumption may reduce the risk of breat cancer for women. This finding contests previous research that indicated alcohol raised women's cancer risk.

I've actually been watching the back-and-forth over the health benefits of moderate wine consumption for more than decade now. I'm very glad to see that real science is being focused on the issue. But I also strongly (and unscientifically) believe that one of the best things about drinking wine is that it creates a context for reduced stress.

Yes, there may be compounds in wine that lead to better health. But wine also compels people to stop, relax, sip, mellow out, spend time with friends. This gets even better when wine is consumed with food at meals. The idea is that you unplug for a while and concentrate on the human-ness of being human.


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California's 'structural deficit': What does it mean?

California Gov. Jerry Brown released his 2012 budget plan yesterday. It contains a lot of numbers, but one set of them is especially important: the size of the "structural deficit." The 2011-12 fiscal year is projected to end up $4.1 million the red. If there are no new taxes or cuts to spending in 2012-13, as Brown has proposed, the shortfall is expected to be $5.1 million. That makes the total deficit for 2012-13 $9.2 billion. 

The chart above shows what this looks like over time. 

So what exactly is a structural deficit? Basically, it's the deficit you can't escape. Here's a snappy defintion, from

In a structural deficit, things are so out of balance that a country (or state, or municipality, etc.) will post a deficit regardless of how well the economy is doing. In a strong economy, revenues (tax receipts, etc) rise due to increased economic activity (more jobs, more spending, etc). With a structural deficit, the strength of the economy is irrelevant - a deficit will be posted regardless.. 

How do countries get rid of structural deficits? 

1. Cut spending. 

2. Raise revenues (usually through tax increases). 

Neither of these options are too appealing for politicians, which is why many structural deficits continue to linger. 


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Unemployment falls to 8.5 percent on good December jobs report


The Bureau of Labor Statistics released its December 2011 employment report this morning. The economy added 200,000 jobs last month and the unemployment rate fell to 8.5 percent from 8.6 percent.

This wasn't the blockbuster 325,000 jobs-added number that the ADP report predicted yesterday. But it was much higher than the 125-150,000-ish consensus among various economists. 

On the (slight) downside, the November jobs total was revised down to 100,000 from 120,000. That meant that the earlier 8.6 unemployment rate had to be revised to 8.7 for the period. Still, it's 8.5 now. 

The big question is whether this momentum can be sustained — whether the jobless rate will keep edging down or inch back up. But it does start off 2012 on a positive note. So far, the markets have responded tepidly, suggesting that an improving employment situation is "priced in" — already accounted for — and that traders are more worried about Europe and its ongoing currency crisis than they are about jobs in the U.S.


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Brown budget makes case for California tax increases

Justin Sullivan/Getty Images

California Gov. Jerry Brown revealed his 2012 budget today — earlier than his office had planned, due to an error or technical glitch that caused the budget to be posted prematurely on the Department of Finance's website.

The budget doesn't really sugar-coat the challenges that the state faces, although as the L.A. Times points out, the deficit situation has improved greatly:

[The budget] paints a better fiscal picture than just a year ago, when the state faced a $26-billion deficit. Brown's budget anticipates closing the current gap through a combination of spending cuts and the tax increases, which would kick in at year's end, providing $4.4 billion in revenue.

Ah, the tax increases. Brown laid them out back in December, when he published an open letter on the governor's website. I posted on the plan at the time:


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