Scraping Skies, Hitting Bottom
The recent news that Dubai may make a stunning financial belly-flop probably shouldn’t be surprising. After all, Dubai is now finishing construction of the world’s tallest building.
If you said, “Huh?” here’s the explanation: There’s a correlation between tall buildings and falling fortunes. A Deutsche Bank economist 10 years ago came up with the Skyscraper Index, in which he postulated that unusually tall buildings tend to get built (or announced to be built) just before recessions, depressions and financial panics.
Examples abound. The Metropolitan Life Tower in New York was the world’s tallest building for a few years; its construction was announced a couple of years before the Panic of 1907. Three buildings in New York – the Chrysler Building, 40 Wall Street and the Empire State Building – were constructed about the same time and each had a claim as being the world’s tallest, although the claim was brief for two. All three flung open their doors just in time to usher in the Great Depression.
Time to Chill on Global Warming
I’m not a climatologist. I had to look up the word just to spell it. I don’t pretend to understand the science behind global warming.
But it turns out that some big-name climatologists apparently don’t understand what’s going on with global temperatures, either. And they may have hidden what they don’t know.
In the last week or so, we learned that computer hackers broke into the Climatic Research Unit at a British university and pulled out about 1,000 e-mails and 3,000 documents. And now, for all the world to see, are indications that some of the world’s top climatologists were manipulating data that baffled them or trying to hide evidence that didn’t support their belief in man-made climate change.
And they didn’t like anyone asking pesky questions, either. They wrote of the need to maintain a unified front against skeptics, to blacklist researchers who dared to question some of the man-made global warming science and to cut off scholarly journals that published contrary opinions. One wrote of how he’d delete stuff if he got hit with a Freedom of Information Act request.
Making L.A. a Class-First City
L.A.’s business community last week got a much needed signal that the Los Angeles Unified School District finally may be poised for some big improvements.
It’s just a sign, but it was the most concrete one yet when 181 groups bid to take over management of 36 failing schools. Many more schools could be taken over under the plan. The idea is to get some fresh blood managing schools. The new operators presumably will be able to innovate, mainly because they’ll be free of many of the stifling mandates from the central office.
Now, of course, plenty can go awry. Maybe in the coming weeks and months the winners will be chosen more on politics than merit. Maybe the new operators won’t be free to innovate as much as we were led to believe. Maybe the outcomes won’t be as good as we hope. LAUSD does have a record of disappointing us.
Putting Price on Prosecutions
I have no idea if Donald T. Sterling discriminated against minorities in renting apartments he owns in the Koreatown area of Los Angeles. The Justice Department said he did, and a couple of weeks ago it got him to pay $2.73 million – a record – to settle allegations. Sterling’s lawyer said he didn’t, adding the prosecutors “could not identify a single individual” who was wronged. (Since Sterling has had similar allegations made against him in the past, it does make you wonder, though.)
But we’ll never know. The issues won’t get aired out in court because the matter was settled in a nice, quiet back-room deal.
I hate that. We have a perverse system in which prosecutors’ targets – often conspicuous business figures like Sterling, who, besides his real estate empire owns the Los Angeles Clippers – have zero financial incentive to fight any allegation against them. If they lose, they lose big. If they win, they lose a huge amount of money for legal bills and a couple of otherwise productive years. It’s your classic lose-lose situation, and it’s why insurance companies typically force business people to settle, which is what happened in Sterling’s case, his lawyer reportedly said.
Small Businesses Need Party Favors
Big companies are starting to dance it up. Wall Street firms are almost back to prerecession levels; Goldman Sachs’ third quarter revenues doubled and earnings tripled. Even Ford and General Motors have gotten a whiff of smelling salts.
But smaller companies on Main Street? They’re not at the party.
Just last week, the Credit Management Association of Burbank released its third quarter survey of 800 credit managers across the western United States, and 64 percent said their collections of trade credit remain no better than fair. Worse, 74 percent see no change in the near future.
Trade credit is heavily used by medium and smaller companies; it is an unsecured loan that is repaid when goods are sold. So the fact that most companies are reporting that collections of such credit are only fair and that three out of four companies don’t see any improvement soon, well, that doesn’t exactly portend a quick bounce back for smaller companies.
Could Long Beach Sail Ahead?
I shook my head in pity when I looked at the Port of Long Beach over the last couple of years. Poor thing, I thought. It sure is getting hurt by its bigger neighbor, the Port of Los Angeles.
But last week, I started thinking exactly the opposite. The L.A. port is helping the Long Beach port. In fact, thanks to L.A.’s missteps, Long Beach might be able to sail right past Los Angeles and become the nation’s No. 1 port.
The reason I went full astern, nautically speaking, is because of recent events.
Notably, a couple of weeks ago, the Port of Los Angeles boosted to $205,000 the payments it can give to the well-connected lobbying firm headed by former Congressman Richard Gephardt to push for a change in federal law. That change would allow the L.A. port to do what it most wants: upend the longstanding system that relies on independent and contract truck drivers (the ones who pick up and deliver cargo containers at the port) and replace it with a system in which drivers would be employees of big companies. That way, the employee drivers could be unionized by the Teamsters. The Teamsters, by the way, helped Mayor Antonio Villaraigosa, a former union organizer, craft the employee-driver rule.
Proper Way to Toy With Rival
It was about a year ago when Mattel of El Segundo won its eye-widening court case that put it on the path to take over the line of Bratz dolls from MGA Entertainment of Van Nuys.
Oh, sure, other skirmishes followed, but for the most part, the big doll brawl was finished last year. And it was the end of one audacious, memorable corporate fracas.
Wait a minute. Hold on to your Barbies. Maybe it’s not the end.
MGA a few months ago unveiled a line of dolls called Moxie Girlz that could be mistaken for Bratz dolls. There are four multiethnic Moxie dolls, much like the four Bratz dolls, and they have huge eyes and wear fashionable clothes, much like Bratz. (However, they are slightly less sexualized, from which parents like me can take some small comfort.) And since they retail for $19.97 each, they even cost about three bucks less than a Bratz doll.
Seeing Through Pot-Shop Haze
Ever get a number in your head that, like an old song, you just can’t get out?
The number that’s been stuck in my head is 1,600. That’s the number of medical marijuana dispensaries that could be operating just within the city limits of Los Angeles.
I say “could be” because no one knows. It’s just a guesstimate. I got it from the article published in the Aug. 31 issue of the Los Angeles Business Journal headlined “Growing Like a. …” It said the city put a moratorium on marijuana dispensaries two years ago after 187 were authorized. But after that time, almost 800 additional shops opened, using – some might say “exploiting” – a loophole that essentially allowed them to fill out a form and open a shop.
But that’s not the end. Additional pot shops opened without even bothering to fill out the form. How many? The Pico Neighborhood Council wondered that, too. It conducted a survey and found 17 dispensaries that opened after the moratorium and 11 of those had not filled out the form.
Wrong Way on Olvera Street
Watching the city of Los Angeles try to manage a business is kind of like watching Tom DeLay dance. Man, it sure hurts the eyes.
The latest evidence is the city’s handling of the retail tenants on Olvera Street. It’s painful to see.
Olvera Street, where Los Angeles was born, was a little state historic park that was turned over to the city of Los Angeles 20 years ago. The few score of retail tenants have been there for years, many for decades, serving as kind of an anchor for the touristy street between downtown and Chinatown. Many of the businesses sell Mexican tchotchkes, enchiladas and stuff, and they claim they don’t make much money. But they don’t pay much rent, either.
Until now. The city has decided that it’s time to double the average rent and boost the common-area maintenance fees. As reported in last week’s issue of the Los Angeles Business Journal, merchants that have fallen behind in their rents are being kicked out, such as a glass-blowing shop that had been there for three decades.
Serious Issue, Dubious Report
An official state report on the cost of regulations on small businesses in California was released last week, and it sure had some eye-popping numbers. The total cost of regulation was $134,122.48 per small business in California in 2007, the report said, and indirect business taxes not generated or lost were $57,260.15 per small business.
My first reaction: Wow! My second reaction: Wait a minute.
Those numbers – the ones that ended with 48 cents, etc. – stopped me. After all, this is the kind of report based on all manner of broad assumptions and multipliers, so to somberly report figures so exact, so down-to-the-cent picky, implies a precision that simply doesn’t exist and shouldn’t be pretended. It’s an immediate red flag.
And if you read the report, what stands out is that it relies on data that Forbes magazine gathers to make its many lists, the ones that compare cities and states in terms of their business friendliness.
A scholarly report based on Forbes’ rankings? There’s another red flag.