July 2007 Archives

July 2, 2007

Schwarzenegger, French president discuss trade and global warming

Governor Schwarzenegger’s toured European last week and stopped in France, where he discussed trade, global warming and politics with French President Nicolas Sarkozy. After a 30-minute talk, Schwarzenegger said he admired Sarkozy “tremendously” and believed the president would “put a new energy in the relationship between France and other countries, and our state.” Both pledged to work together on ways to reduce greenhouse gas emissions. Schwarzenegger called Sarkozy “fresh new blood for politics in the world, because he is a politician that believes in inclusion and not in making everyone the enemy, which we have seen so many times in politics.” The Governor said he also was studying France’s method of using public-private partnerships to build schools, highways, rail lines, energy plants and other projects. Schwarzenegger and Sarkozy also discussed the possibility of twin trade missions next year, with French officials promoting their country’s products in California and Schwarzenegger returning to France. The Governor has previously organized trade missions to China, Japan, Mexico and Canada for his business associates and Corporate supporters. An additional trade mission to India is planned for the fall.

Filed under Foreign Relations, France, Governor Schwarzenegger by

UCLA Forecast says U.S. is “close” to a recession

The sharp drop-off in growth in the first quarter of 2007, and the expected weak second and third quarters of less than 2% growth, caused the widely watched UCLA Anderson Forecast, a leading national economic forecaster, to conclude that although we may not actually be in a recession “it is certainly close.” The Anderson Forecast saw the slowed economy as lasting longer than previously expected. Weakness in the housing market and higher gasoline prices are starting to affect consumer spending. California, hit by a “double-whammy” from construction and mortgage finance, foreshadows a drag on the rest of the economy.

“Weakness in the real estate sector will finally spill over into the job market as the combination of job losses in construction and real estate finance pull overall payroll job growth in California to less than 1% for the next five quarters. Unemployment will rise to 5.5% and broad measures of real output (Gross State Product and Personal Income) will grow at a less-than-average rate of just-below 3%. The Forecast believes that weakness in the housing sector will finally spill into consumption spending, noting that retail sales stalled in April and that auto sales have been weak.

With housing and consumption both “down,” the strength of the national economy lies in the rest of the world. “The global economy is booming,” the report states “Indeed, it is the strength of the global economy that is powering the stock market to new highs (and) it is no accident that the Wall Street rally is being led by the giant global corporations who are benefiting most from the worldwide expansion.”

Filed under California Economy, U.S. Economy by

July 10, 2007

California population to reach nearly 60 million by 2050

If you think California is crowded now, just wait until 2050. The Department of Finance predicted Monday that California will have 59.5 million residents when the state reaches the mid-century mark — nearly 22 million more than today. The San Francisco Chronicle reports that Hispanics will make up 52 percent of the population in 2050, up from 36 percent currently. Whites, now 43 percent of the population, will drop to 26 percent, while Asians’ share will grow by one percentage point to 13 percent and blacks will decline from 6 percent to 5 percent, according to the department’s forecast. Hispanics are projected to become a majority of the population by 2042.

Filed under STATE OF CALIFORNIA by

More on the funding of Schwarzenegger’s luxury junkets

The Los Angeles Times has written still another expose of Governor Schwarzenegger’s use of shadowy “non-profit organizations” funded by “undisclosed donors” to pay for his foreign trips- euphemistically called “trade missions” . The California State Protocol Foundation, one of the most notorious of these groups, is closely associated with the California Chamber of Commerce, and is widely thought to be a vehicle used to curry favor with the Governor by major corporations and others with business before the State.

By giving to this foundation, donors can avoid having their identities made public, because these charities are not governed by the disclosure rules that apply to campaign contributions. And they can donate unlimited amounts to the nonprofit, which is not subject to contribution ceilings the way campaign accounts are, the Times reported. In addition, The protocol organization is a 501(c)(3) nonprofit, also known as a public charity and donations to these groups are tax deductible- which may technically be legal but is a clear abuse of the purpose of non-profit organizations.

Governor Schwarzenegger stays in luxury hotels and flies in top-of-the-line private jets when he travels overseas. “That jet for those international jaunts is extremely expensive,” a source told the LA Times, “China was probably well north of $100,000.” The protocol foundation’s expenditures have exploded since Schwarzenegger began using it — from $55,000 in 2003 to $1.8 million in 2005 and $1.3 million last year. Nonprofit monitors say it is almost impossible to justify routine spending of charitable dollars on aircraft that can cost $6,000 to $10,000 an hour to lease.

A foundation spokesman told the Times that the returns are “sufficient to demonstrate how the foundation pursues its mission of relieving the taxpayers of the cost burden of certain government activities, especially those related to international trade and diplomacy.” That’s all well and good, but aren’t these trade missions supposed to be for the benefit of all California business- not just Schwarzenegger’s business associates and campaign contributors? Remember the guy who was going to be “the Governor for all the people” and who would “shun special interest money”. He now resides over a State government that has grown increasingly hostile to small business interests, and an administration that is almost completely closed to all ideas and input from ordinary citizens.

The times said that “most of Schwarzenegger’s foreign sojourns have been trade missions, though his critics say the trips really are little more than junkets designed to boost his international profile.” Count us now to be among them. While we were ecstatic when Schwarzenegger got elected, in the area of international business development his administration has become more and more corrupt. In fact, this abuse of non-profits to fund junkets is strikingly similar to the corruption scandal of lobbyist Jack Abramoff, now serving time in a Federal Penitentiary for his actions.

The California Governor’s economic development and international trade activities were not supposed to be focused on making Arnold Schwarzenegger the most successful and internationally known person in the world, they were supposed to be for all of us- and in that regard, he is failing miserably. Someone close to him needs to tell him he is on the wrong road- a very dangerous road.

Filed under California Government, Governor Schwarzenegger, Opinion, Philanthropy by

July 23, 2007

Southern California homes sales at 14-year low

According to a report in Reuters, June home sales in southern California fell to their lowest in 14 years and the slump hit the region’s most affordable markets east of Los Angeles hardest, according to a report released on Tuesday. The report by DataQuick Information Systems said a total of 20,166 new and resale homes were sold in June in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties last month, marking a rise of 1.5 percent from the prior month and a decline of 36.2 percent from a year earlier. The region’s home sales have been declining from year-earlier levels since October 2005, raising concerns that the downward trend could cause the broad California economy to suffer.

Filed under California Economy, Real Estate and Housing by

Google links censorship with free trade

According to Forbes For the past several months, Google has been quietly lobbying the U.S. government to include restrictions against Internet censorship as a stipulation in free trade agreements with other countries. This newsletter has been- and possibly still is, blocked and censored in China- we wholeheartedly agree with this policy:

The California-based Internet giant says that barriers to the free flow of information over the Web restrict commerce and economic development, and should therefore be considered barriers to free trade as well. “Given the recent history that we’ve seen with respect to certain countries starting to censor the free flow of information over the Internet, we believe it really should be a top priority for our government,” says Pablo Chavez, Google’s Washington policy counsel. It’s a new approach to an area of international trade that is still largely undefined. If an Internet company operating in a foreign country is suddenly exposed to censorship, it has virtually no recourse. Google, it seems, wants to get the rules in writing up front…

The company has also not said specifically how it seeks to alter trade agreements or which free trade deals would be affected. Google first alluded to its anti-censoring efforts last month in a blog post on its Web site, after the Associated Press ran a story on the issue. Strangely, the discussion quickly died down.

Since then, it has had another round of discussions with officials at the State Department (which typically has jurisdiction over censorship issues), USTR and on key Congressional committees. In its recent negotiations, Google is pushing four key points: that free information flows are important for the global economy, that trade should not be restricted by the regulation of the Internet, that all players on the Web are treated fairly and that laws should be put in place to make any Internet restrictions transparent. Google says it has received a positive response from government officials.

Filed under China, Media and Entertainment by

State’s job growth stagnates

Dragged down by the real estate slump, California’s employment engine ground to a near standstill in June with a net gain of only 400 positions, according to a report in the Los Angeles Times. As expected, financial activities and construction were the biggest losers among six sectors that posted employment declines in June, according to the state Employment Development Department report.

Reflecting layoffs by troubled sub-prime mortgage lenders and the big chill in home building, the financial activities sector lost 5,700 jobs, while construction shrank by 5,300. By comparison, the four other declining sectors lost a total of 5,900 jobs. “Slowing state job growth has been primarily caused by the slowdown in residential building and resale activity,” said Stephen Levy, senior economist for the Center for the Continuing Study of the California Economy. “A continuation of the slowing will cause problems for this year’s and next year’s state budget.”

Unemployment ticked up by 0.2% in the Inland Empire and by 0.4% in San Diego, where home construction has slowed, said Steve Cochrane, an economist with West Chester, Pa.-based Moody’s Economy.com, a consulting and forecasting firm. The Central Valley may be the next major area to be hit by problems tied to sub-prime mortgage delinquencies, Cochrane added.

Overall, California’s unemployment rate held steady at 5.2%. By comparison, the state jobless rate was 4.9% in June 2006, and the U.S. rate was 4.5% last month, unchanged from May. A steady unemployment rate means the number of jobs is growing at about the same pace as the number of people seeking them. The state has matched the national job growth rate for the last year, Levy said, although unemployment has risen here but not in the nation because the state labor force has grown by nearly 300,000.

Since June 2006, the state’s employers have added 204,700 jobs, an increase of 1.4%, for a total last month of 15.3 million. Sectors gaining jobs last month were led again by the educational and health services category at 8,600. Government employers added 4,600 jobs, while the leisure and hospitality sector hired 3,300 workers. Other services added 600 jobs, and professional and business services added 200.

Some of the slack in the housing market is being taken up by continued construction activity in the commercial real estate market and by motion picture and film production, said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. Movie studios “are rushing to get productions done” ahead of possible labor-related disruptions related to contract negotiations with screen writers, actors and directors late this year and early next, he said.

Filed under California Economy, Real Estate and Housing by

Armenia Trade Office criticized

The Los Angeles Times has published a highly critical review of California’s sole international trade offices- a privately fund office for the small country of Armenia. The California-Armenia Trade Office in Yerevan is a legacy of a confused period for the State in international business development as lawmakers struggle to determine the proper role of the Government in this area. At the time when the Legislature was closing the other trade offices, California’s influential Armenian-American community convinced then to accept private funding in exchange for official status and recognition.

Critics consider it ludicrous to put the state’s sole overseas trade office in such a small and isolated country. If California were a nation, it would have the world’s eighth-largest economy, they note. Armenia ranks 128th. The contract with the state required a minimum of $150,000 (amount of business) for 2006, a June 30 report from the Schwarzenegger administration to the Legislature said. The report cited only one significant achievement, a deal between a North Hollywood spirits importer and Safeway to market a high-end Armenian vodka. “It appears the trade office did not successfully complete any of the priorities set forth in the contract,” read a letter signed by Dale E. Bonner, secretary of the California Business, Transportation and Housing Agency, which oversees the trade office.

What’s more, critics warn that bureaucrats in Sacramento don’t have the money to effectively supervise the operations of a faraway entity. Bonner noted in his letter that the Scott legislation did not provide “budget authority for direct supervision or ongoing oversight.” As a result, the state could be legally liable for any misconduct by unsupervised representatives working in a part of the world not known for especially honest or stable governments. “This is an invitation to a scandal,” said Jock O’Connell, a veteran trade consultant in Sacramento. “They’ve created a system that allows a private company to obtain for a ridiculously small amount of money the right to represent California commercial interests in a distant country, while effectively prohibiting any state agency from looking into the activities of the people who are representing us overseas.”

Filed under Armenia, California Government, California Legislature by

July 26, 2007

Foreclosures soar in California

The Los Angeles Times Reports:

A sagging real estate market and tighter lending standards are exacting a growing toll on Californians, forcing them from their homes in record numbers, figures released Tuesday show. Foreclosures soared to 17,408 for the three months ended June 30, an increase of 799 percent from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of six-year slump. Separately, Countrywide Financial Corp. — the nation’s largest mortgage lender — reported a sharp rise in delinquencies, even among customers with good credit. That sent shivers down Wall Street, helping to trigger a 226-point plunge in the Dow Jones industrial average. Although a relatively small fraction of homeowners face eviction, the concern is that a flood of foreclosures will further weaken housing prices — and make people less willing to spend money.

Because to the bad news from the housing sector there seems to be a growing consensus that the economy is headed for a recession, or at the very best a slow down.

Filed under California Economy, Real Estate and Housing by

Canaan Partners invests in India-based career social networking portal

Canaan Partners, a $2.4 billion global venture capital firm, today announced it has led a joint investment with The Entrepreneur’s Funds and Miven Venture Partners in techTribe, India’s leading career networking portal. techTribe is a software company that enables current and future Indian technology professionals to enhance their careers through social networking. The investment will be used to expand techTribe’s sales and marketing infrastructure in India and to drive new revenue growth. Alok Mittal, Canaan’s managing director in India, will be named to the techTribe board of directors.

Filed under India, Venture Capital by

South Korean Company Buys SeaSpace

The San Diego Business Journal has reported that Allied Defense Group Inc., a Vienna, Va.-based defense contractor, announced July 25 that it has sold subsidiary SeaSpace Corp. of Poway for $1.7 million. Acetopia Holdings of Seoul, South Korea, purchased the company. Allied said the sale reflects an ongoing business plan to “eliminate losing business operations” to deliver value to shareholders. SeaSpace provides satellite ground operations and processing software and was established in 1982.

Filed under Mergers and Acquisitions, South Korea by

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