Explaining Southern California's economy

Did a desperate business decision by IndyCar lead to Dan Wheldon's death?

IZOD IndyCar World Championships at Las Vegas

Jonathan Ferrey/Getty Images

Randy Bernard, IndyCar's CEO, was hoping for a spectacular end to the racing season. IndyCar got the tragic death of Dan Wheldon instead.

At the New York Times' Wheels blog, Jerry Garrett offers a quietly disturbing account of the events leading up to Indy 500 winner Dan Wheldon's death in a horrific multi-car crash at Las Vegas Motor Speedway yesterday. The short version is that the racers were worried, even fearful, about the track and the setup for the race, which had been designed to conclude the IndyCar season with a bang. 

It's only a matter of time before the spotlight falls square on the decisionmaking of IndyCar CEO Randy Bernard. This is a guy who was a former bull riding promoter, brought over to IndyCar to inject some life into a moribund open-wheel racing series, where the marquee event is the Indianapolis 500 and everything else is an afterthought. 

Clearly, an injection of life wasn't what the racing world got yesterday, as too many cars went too fast on a small track, leading to the carnage that killed Wheldon and ended both the IndyCar season and superstar racer Danica Patrick's open-wheel career on a very somber note. (Patrick is moving to NASCAR full-time next season.)

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California has the solar jobs, but will it ever have the solar scale?

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Solyndra

A Solyndra solar rooftoop installation.

Here's some good news for the solar industry, in the aftermath of the Solyndra scandal. The LA Times reports that California is basically SolarLand, USA:

California's solar jobs tally was more than four times greater than runner-up Colorado, which had 6,186 solar jobs.

The Golden State ranked first in the nation for generating electricity from both photovoltaic solar panels and concentrated solar power systems that use mirrors to create steam to run turbines, the study said.

The report goes on to anticipate 24 percent industry growth over the next year, taking the total number of California jobs up to about 50,000 (there are currently about 25,000). 

That sounds great, but as I've pointed out before, will it be enough? No one has really ever questioned that solar is growing as an industry. The problem is one of scale: Can solar ever attract enough investment to rival traditional sources of power generation, particularly super-cheap coal? 

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Tweet of the Day: America in hock

Today's Tweet of the Day comes from David Wessel (@davidmwessel), the Wall Street Journal's economics editor. It speaks for itself. But it doesn't necessarily tell the whole story. The U.S. government may be financing 36% of its spending. But how much is that financing costing?

The yield on the 10-year treasury has been falling for quite some time, recently dipping below 2 percent before recovering, but still hovering well below 3 percent. In other words, the government can borrow as much as it wants for practically nothing.

When you have to finance 36 cents on every dollar you spend, this is a position you want to be in. Worldwide, people still think the USA is safe place to stash their cash.

Follow Matthew DeBord and the DeBord Report on Twitter.

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Worry at the LA port as holiday shipments fail to materialize

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David McNew/Getty Images

A truck passes shipping containers at China Shipping at the Ports of Long Beach and Los Angeles, the busiest port complex in the U.S. (File photo 2008)

If you believe that the Port of Los Angeles is a reliable indicator of the holiday retail season, then signs for a Merry Christmas are not very good. This from the L.A. Times:

International trade is one of Southern California's most important sources of relatively high-wage blue-collar employment. More than half the state's 1.1 million cargo-related jobs are located in the region, where a boost in cargo would have had an immediate effect on the amount of work available to dockworkers, truck drivers, warehouse and distribution center staff, railroad workers and others.

Instead, cargo traffic through the Port of Los Angeles showed a slight overall decline in September, down 0.8% to 705,623 cargo containers, compared with 711,613 a year earlier. Imports through the nation's largest container port were down 0.2% to 372,655 containers. The only bright spot was in U.S. exports through Los Angeles, which continued on a course toward a new record, up 26.6% to 176,954 containers.

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Saving the economy: Infrastructure spending isn't enough

Occupy LA

Eric Richardson / Blogdowntown

Participants in Occupy Los Angeles rally on the steps of City Hall after marching from Pershing Square on Saturday, Oct. 1, 2011.

At Business Insider, Henry Blodget offers a plan to save the economy. In the process, he says that he's choosing sides in a religious-econo war, between the big-spending Keynesians on one side and the no-spending Austrian School economists on the other (this is a super-shorthand version of the major economics debate of the past 100 years). His solution? Massive infrastructure spending:

  • The government should construct and pass a long-term budget plan that
    • Minimizes short-term pain, while
    • Getting the long-term deficit under control
  • This budget plan should be designed to benefit all Americans, not just special-interest groups or different classes or industries
  • This budget plan can theoretically include an increase in short-term spending designed to minimize the country's pain, as long as it also includes a decrease in long-term spending (again, right now, the world is willing to lend us as much money as we want)
  • One form of government spending that unequivocally benefits all Americans is infrastructure spending (when the projects are finished, America has the infrastructure)
  • Infrastructure spending would help America address another reality that has emerged in the past three decades—the reality that the infrastructure of many countries in Europe, Asia, and other regions has vaulted past that in the US and made the US look like a second-world country
  • Infrastructure spending would boost employment in one sector of the economy hammered by the recession—construction
  • Infrastructure spending would involve fewer of the conflicts and misaligned incentives that infuriate many Americans about "entitlement programs," extended unemployment benefits, welfare, food stamps, and other government expenditures that seem to encourage sloth and laziness and "socialism"
  • The 10-year government budget designed to get us out of our current predicament, therefore, should probably include a massive, multi-year infrastructure spending program.

This makes a lot of sense and sticks to the Great Depression playbook, when Harold Ickes oversaw the Public Works Administration and built much of the heavy-duty infrastructure that we assoiciate with that period and the recovery from the crisis. But just as it wasn't enough on its own in the 1930s, it won't be enough in the 2010s. 

For that, the other half of the Great Depression playbook needs to be used. This is the Works Progress Administration, overseen by Harry Hopkins. Its focus was simple and short-term: jobs, jobs, jobs.

Infrastructure spending is the perfect way to find detente between the Keynesian spenders and the Austrian no-spenders because it represents investment rather that, bluntly stated, waste. If you're going to spend, spend long-term and build what the country needs to be competitive in the future. Who can argue with that? In fact, there's aready bipartisan enthusiasm for infrastructure spending. 

But what do you do about, for example, 12 percent unemployment in California — right now? If you follow the Hopkins rules, you throw money at the problem, spending now and asking questions later. At best, you restore dignity and save citizens from the threat of long-term unemployment; at worst, you pump money into some pointless endeavors that won't yield much of anything in 30 years, but will at least attack the problem of idle human capital.

Occupy Wall Street and its offshoots have shown us that there's a lot of rage and frustration in the land. Rebuilding the nation's infrastructure is a great, partial solution. But if we're going to stave off the potential social fracture that now looms, we need to get the unemployed to work, and we need to do it a lot faster than the time we'll need to approve bridges, tunnels, and roads.

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