Sony Pictures Entertainment Inc., based in Culver City, will be laying off about 450 people and eliminating 100 open positions to cope with declining DVD sales. Most of the cuts at the studio will occur by the first week of March and will be in the home entertainment and information-technology units in the United States.

The company, a subsidiary of Japan’s Sony Corp. also cut back last March, when it laid off nearly 250 people and eliminated nearly 100 open positions. Company staff was informed of the latest cuts in a memo Monday and through videos by the studio co-chairs on an employee Web site. “Our industry is affected by two things: It’s affected by the economy, of course, and it’s affected by technology,” co-chair Amy Pascal says in the video. “Over the last two years, it’s changed people’s DVD buying habits, which has had a huge effect on our company and the industry at large.”

The home video market has been declining as people have not been buying videos as often, and instead turn to rentals, which are far less profitable for the industry.

In a rare uplifting moments after the unspeakable tragedy and human suffering in Haiti, this video shows the Los Angeles Urban Rescue team being cheered with chants of “USA” after saving a woman from the rubble of a collapsed building.

China has unilaterally declared that their depute with Google over censorship and strong evidence of government sponsored hacking will not affect U.S. Trade relations, but do they get to make that call?  

“Any decision made by Google will not affect Sino-U.S. trade and economic relations, as the two sides have many ways to communicate and negotiate with each other,” Chinese government spokesman Yao Jian told a news briefing in Beijing.

Well of course the two sides have many ways to communicate with each other – that is not the point. If one party to a trade agreement censors and blocks the content of the other party, then of course it should it should be a trade issue.  In the tit for tat world of diplomacy, if they block the content from one of our companies, then shouldn’t we block one of theirs?

California buys a huge amount of Chinese imports, but they don’t by nearly as many of our exports. One of our strongest industries in the movie industry – but only 20 foreign films are even allowed to be shown in that country each year. The rest of the movies we produce here are simply pirated (i.e. stolen) there, Can you imagine if we said to China, “we will only allow the products from 20 of your manufacturers in our country each year”. Now they are blocking, and possibly even attacking, one of California’s other great industries – Internet services.

It is not at all disrespectful to China to expect our government to respond to blocking and censorship with reciprocal actions that affect Chinese companies. That is how a mature trade relationship works. Mr. Yao Jian has it wrong. This is exactly the kind of thing that should affect trade and economic relations – this is a trade issue.

UPDATE: Evidence that the Obama Administration may be looking at these blocking and censorship issues from a more sensible “fair trade” perspective, might be found in a speech Secretary of State Clinton plans to give on the issue on Thursday. From a column by Andrew Ross in today’s San Francisco Chronicle:

“The Internet is integral to the international trading system,” said Ed Black, CEO of the Computer & Communications Industry Association, who is scheduled to meet with Clinton on the matter this week. “China cannot limit the free flow of information and still comply with its international trade obligations.” “You can’t lecture the Chinese on human rights,” said another industry executive. “You won’t get anywhere with that. So, it’s best to treat it as a trade issue.”

Should the administration go that route, it will enlarge the can of U.S.-China worms already growing around the latter’s increasingly protectionist economic policies. “Greater control of the Internet is part of a wholesale tightening up of the Chinese economy,” said an executive with a high-tech trade organization that is also due to meet with Clinton. “It’s about protecting domestic industries and pushing indigenous innovation. But they’re doing it in blatantly discriminatory, brazenly unfair ways.”

California will be sending a 72 member urban rescue team to assist with the humanitarian efforts in Haiti.   According to an AP report, California Task Force 2, organized by the Los Angeles County Fire Department, began getting ready shortly after the magnitude-7.0 quake devastated impoverished Haiti. The team includes firefighters, paramedics, emergency room doctors, search dogs and handlers, heavy equipment specialists and engineers trained in rescues from collapsed structures.

This is from Governor Schwarzenegger’s press release about his proposed budget:

To achieve $1.4 billion in General Fund savings, Governor Schwarzenegger proposed 15 percent reduction in state personnel costs achieved by modifying employee compensation and reducing our workforce budget … as follows:
   *   Employees will be required to contribute an additional five percent towards their retirement costs;
    * An across the board five percent reduction in all salaries;
    * A five percent reduction in the cost of the state workforce payroll implemented by executive order S-01-10 requiring all department directors to reduce their payrolls by five percent.

This sounds a little too incremental for me.  Certainly most State employees can take a five percent hit – they have pretty good jobs, but this isn’t getting to the root of the problem.   What about eliminating Civil Service postions all together?   Put government workers under employment contracts instead – even generous ones.  Then they could stop paying pensions as well, something none of the rest of us get. 

The UCLA Anderson Forecast for the third quarter of 2009 has just been released, and says that while this huge recession may have ended, unemployment will stay in double digits and the “negative impact of the downturn will last well into the next decade”. Unemployment going to get worse and is expected to rise to 12.7 percent in the fourth quarter of 2009. Though the economy will be growing in 2011, it will not be generating enough jobs to drive the unemployment rate below double digits until 2012. Economist Jerry Nickelsburg called the unemployment situation “ugly” and will remain so for some time to come. “More rapid growth than can be expected over the next twelve months would be required to bring the unemployment rate down,” he said.

There is one possible silver lining in all these dark clouds, however – exports may be improving. According to Nickelsburg, “In trade and manufacturing, there is new evidence that demand for California-produced goods is increasing. He believes that the keys to the California recovery are exports of manufactured and agricultural goods, a recovery in U.S., increased public works construction and increased investment in business equipment and software.

With a long history of bad moves and missed opportunities, California has soured on Governor Schwarzenegger. In spite of his “nice guy” image, a field poll just released shows that only 27 percent of residents approve of Schwarzenegger’s job performance while 65 percent disapprove. This is That’s the lowest approval rating for any California governor in 50 years – except for Gray Davis who registered a 22 percent approval rating in 2003 just before voters recalled him. Voters are even more disgusted with the State Legislature with only a 13 percent approval rating – the lowest in 25 years. “It’s brutal,” Field Poll director Mark DiCamillo said to the San Francisco Chronicle. ” ‘How low can we go?’ is an open question. Voters don’t think we’ve bottomed out yet.”

Apple Inc. has quit the U.S. Chamber of Commerce because the group has been too critical of proposed steps to cut pollution. This seems like a good move. The U.S. Chamber of Commerce represents many of the really huge Corporations in the U.S., but has never shown any real interest in small business concerns, or in the rest of our society for that matter. As reported in San Francisco Business Times:

The Cupertino computer and popular electronics business is just one of several businesses, including Nike Inc. and PG&E Corp., that have criticized the chamber’s stance. Nike resigned from the chamber’s board of directors but stayed as a member of the group. The U.S. Chamber of Commerce criticized proposed “cap-and-trade” legislation passed by the House of Representatives and due to come before the Senate. Apple’s vice president of worldwide government affairs, Catherine Novelli, sent a letter to Thomas Donohue, president and CEO of the chamber, in which she said, “We would prefer that the Chamber take a more progressive stance on this critical issue.”

California was the second-largest loser of manufacturing jobs — 123,400 — over the past year, according to the U.S. Bureau of Labor Statistics. Only Ohio lost more more jobs than the Golden State: 127,000. A report by the Milken Institute released earlier this summer reached a similar conclusion, but noted that the state is hemorrhaging high-tech manufacturing jobs at an even higher rate than in traditional manufacturing industries. California’s employment in this high-wage, high-skill segment is down 23 percent from 2000 levels, as opposed to declines nationally of 19 percent and the peer states’ average of 16 percent. In fact, from 2003 to 2007, encompassing the recovery of the high-tech sector, the peer states gained 24,000 high-tech manufacturing jobs while California lost almost 16,000.

“Widespread misconceptions about the manufacturing sector in California are part of the problem,” said Perry Wong, senior economist and one of the authors of the report. “People don’t understand that manufacturing is an integral part of the high-tech and clean-tech economy. If Californians want to build the future economic recovery on high-tech and retain highly skilled workers, they have to address the underlying issues of this sector now.”

Los Angeles was the nation’s biggest loser in employment during the past 12 months, according to figures released by the U.S. Bureau of Labor Statistics. The Los Angeles area lost 240,100 jobs between July 2008 and the same month this year, the biggest decline in raw numbers anywhere in America. The second biggest losers were the Chicago and New York City markets with losses of 206,200 and 157,900 jobs, respectively.

California’s unemployment rate climbed to 11.5 percent in May, the highest in modern record-keeping, the U.S. Department of Labor has reported. Last month, California lost 68,900 jobs, and in the past 12 months a staggering 739,500 jobs have disappeared from the state. If you include part-time workers seeking full-time work plus workers who have given up looking for traditional employment, the jobless rate could be as high as 25 percent, exceeding the national unemployment levels in the worst part of the Great Depression. Economists project that the layoffs will continue to rise at least through the end of this year and probably into 2010, even if the economy starts to recover.

Most of the cutbacks came from government: 11,400 job cuts in federal government and 2,800 from state and local agencies, as municipalities scaled back their services to cope with the crippling effects of tax declines and budget cuts. Adding to the decline in government employment, every major job category lost jobs in May except for education and health care, which added 2,100. Construction companies cut 11,300 positions; manufacturing, 10,400; professional and business services, 10,900; retail, wholesale, transportation and utilities, 8,300; leisure and information, 8,100; and hospitality, 2,700.

As shocking as these numbers are, what is even more shocking is that the State Government doesn’t seem to be doing anything about it, as they are mostly concerned with their own survival. Early indications are that the Obama administration stimulus money is going mostly to save the jobs of existing State workers and bureaucrats, who are already doing relatively well. Very little of the funding seems to be going into job creation, economic development or innovative programs to help small business.

The Obama administration has refused requests for emergency assistance from senior State government officials. Calling California, “one of the biggest remaining threats to the economy” the Washington Post reported that top state officials have gone hat in hand to the administration, armed with dire warnings of a fast-approaching “fiscal meltdown” caused by a budget shortfall. Concern has grown inside the White House in recent weeks as California’s fiscal condition has worsened, leading to high-level administration meetings. But the Post reported that federal officials are worried that a bailout of California would set off a cascade of demands from other states. The administration is also concerned that California will enact massive cuts to close its deficit aggravating the state’s recession and further dragging down the national economy. After a series of meetings, Treasury Secretary Timothy F. Geithner, top White House economists Lawrence Summers and Christina Romer, and other senior officials have decided that California could hold on a little longer and should get its budget in order rather than rely on a federal bailout.

California’s ports are getting quieter and the state’s huge export slump is getting worse. According to a report in the Sacramento Bee, exports from California fell 25.5 percent in April from a year earlier, figures compiled Wednesday by Sacramento trade consultant Jock O’Connel reveal. The shipments from California’s ports, totaling $9.25 billion, represent the worst April in four years. Earlier this year, exports were falling at about a 20 percent rate. O’Connell said the new figures show a turnaround is a ways off despite signs on the national level that the economy might bottom out soon. O’Connell told the Bee that the export decline was widespread. The volume of cargo leaving the ports of Los Angeles and Long Beach was off 18 percent. Exports from San Francisco International Airport fell 34 percent. For the state, April marked the sixth straight month of declining exports. O’Connell added that imports at California’s ports fell 28.5 percent, demonstrating the global spread of the recession.

The respected publication “The Economist” has called California “the ungovernable State”. They certainly have a point- the Goverment here is a total mess, and voters are in a foul mood about tomorrow’s special election – and they should be, our government has failed us, and has many, many structural problems, but our leaders have failed us also. We have a government with absolutely no foresight, and Arnold Schwarzenegger, our part-time Governor, deserves his share of the blame. With all of California’s problems, our “lack of leadership” is certainly the most serious. Here are an excerpt and the full article can be read here:

ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis… A good outcome is no longer possible. California now has the worst bond rating among the 50 states. Income-tax receipts are coming in far below expectations. On May 11th Arnold Schwarzenegger, the governor, sent a letter to the legislature warning it that, by his latest estimates, the state will face a budget gap of $15.4 billion if the ballot measures pass, $21.3 billion if they fail. Prisoners will have to be released, firefighters fired, and other services cut or eliminated. One way or the other, on May 20th Californians will have to begin discussing how to fix their broken state.

Only a minority of Californians bother to vote, and those voters tend to be older, whiter and richer than the state’s younger, browner and poorer population… Those voters, moreover, have over time “self-sorted” themselves into highly partisan districts: loony left in Berkeley or Santa Monica, for instance; rabid right in Orange County or parts of the Central Valley. Politicians have done the rest by gerrymandering bizarre boundaries around their supporters. The result is that elections are won during the Republican or Democratic primaries, rather than in run-offs between the two parties.
Representative democracy is only one half of California’s peculiar governance system. The other half, direct democracy, fails just as badly. California is one of 24 states that allow referendums, recalls and voter initiatives. But it is the only state that does not allow its legislature to override successful initiatives (called “propositions”) and has no sunset clauses that let them expire. It also uses initiatives far more, and more irresponsibly, than any other state.

The Sacramento business journal is reporting “huge” demands for California bonds: Investors were more enthusiastic about buying California debt than expected, putting in orders for $6.54 billion in general obligation bonds in a sale by the state Treasurer’s Office that ended Tuesday State officials had expected to sell $4 billion. The extra cash will allow officials to restart more stalled projects that were halted in December due to the state’s cash crisis. Treasurer Bill Lockyer’s office said there was “huge” demand from both individual investors and institutional buyers such as mutual funds. Officials have not determined which of 5,300 halted projects should be allowed to proceed. Until this sale, the tight credit market and the state’s prolonged budget crisis kept California out of the bond market for nine months.

The UCLA Anderson Forecast, an economic think tank, has linked the current national recession to slumping international economic conditions that will impact the timing and pace of any national recovery. The Forecast asserts that a turnaround in the U.S. economy depends upon a recovery in world trade. The report also states that regardless of the steps taken by the U.S. government, national solutions will not be enough to restore growth and therefore global solutions are essential. In California, it’s forecasted that the economy will remain in turmoil for the foreseeable future as the twin sector engines of consumers and construction continue to drag, according to a press release that summarized the report.
More on UCLA Forecast says National Recovery depends on World Trade

California came in dead last in a national ranking of the best states to do business, according to Chief Executive magazine. Finishing just ahead of California in the 2009 rankings were New York, Michigan, New Jersey and Massachusetts. Texas was ranked first.  The magazine evaluated states on natural resources, regulation, tax policies, quality of living, education and infrastructure, among other categories. Chief Executive magazine said states that perform well in the rankings tend to have lower taxes and little unionization. California ranked 48th in “cost of business” and “business friendliness.”

Fifty members of the San Francisco Chamber of Commerce have taken a business trip to Washington D.C. to protest the “anti-junket” attitudes that have gripped Congress and the public after several incidents of abuses by bailed out financial firms. As reported in the San Francisco Chronicle:

Big business is cutting back on convention travel these days, afraid of being branded as lavish spenders in a down economy. And that’s having a real impact on cities like San Francisco, where conventions and business meetings have a huge impact on our economy. That’s the message a delegation of the city’s civic leaders will deliver to Congress today, specifically asking the Northern California congressional delegation to help tone down the criticism of such business meetings. The San Francisco officials are concerned that businesses that otherwise would send employees to meetings and spend appropriate sums on food and entertainment will increasingly cancel meetings out of fear they will be singled out on Capitol Hill and by the public as overindulgent. “They don’t want to be on the front page of the newspaper or on the 11 o’clock news, seen as frivolously spending money even though it is for legitimate purposes,” said Joe McInerney, the president and chief executive officer of the American Hotel & Lodging Association, based in Washington. The San Francisco Chamber of Commerce-led delegation, consisting of some 50 participants, is in Washington to ask members to keep in mind the economic contribution of travel and tourism while they negotiate proposed restrictions on recipients of federal emergency funds. They do not want legitimate business travel chilled because of extravagant spending by others… “We do not want to support irresponsible extravagance, but we also do not want to discourage business from holding conventions and meetings so they can spend appropriately on entertainment in San Francisco,” said Steve Falk, the chamber president. Among those suffering the consequences of a falloff in business are service employees, he said. “While we understand the need for transparency, we want to make sure that legislation (covering emergency fund recipients) does not have the unintended consequences of impacting negatively on the hospitality workforce,” said Mariann Costello, vice president of Scoma’s restaurant in San Francisco, who is among the chamber delegation.

Chancellor Angela Merkel of Germany and California Governor Arnold Schwarzenegger jointly inaugurated CeBIT, one of the top annual fairs in the technology industry. CeBIT exhibits computers, software and communications products, mainly for corporate and manufacturing buyers. At the event this year, California has been declared ‘partner,’ an honorary status usually awarded to entire nations.  Schwarzenegger, speaking in both English and German to an invited audience, highlighted California’s advanced computer technology.  “Technology is really our great hope for creating extra revenues and stimulating the economy — especially green technology is where the action is,” said Schwarzenegger.  Speaking in English, our Austrian-born governor said environmental-technology companies represent the only sector of California’s economy that is creating jobs.  Schwarzenegger praised Germany’s commitment to renewable energy and the reduction of greenhouse gas emissions, and attacked economic protectionism. “The world is the marketplace … and the only way we can protect the consumer is if we let the consumer choose from products all over the world no matter where they come from,” he said. The Governor also tried to encourage the executives attending to be more upbeat, “”Losers whine but winners move forward in a strong and powerful way and I know that everyone who is here at the CeBIT is a winner!” In spite of the upbeat speeches, to mood at CeBIT was reported to be gloomy as a result of the worldwide economic slowdown and slump in the computer industry.  This year’s CeBIT has suffered a 25-per-cent slump in exhibitor numbers to 4,300.

The Wall Street Journal ran an article describing how thing might be getting pretty rough here:

As Sacramento squabbles over the state’s $42 billion deficit, Californians are getting a bitter taste of what’s to come after the steep budget cuts that are inevitable when legislators and Gov. Arnold Schwarzenegger finally hammer out a deal… “Before it gets better, it’s going to get a lot worse,” said Joseph Valentine, director of Contra Costa County’s Department of Employment and Human Services. The department, which administers social services such as food stamps, has cut 12%, or $25 million, of its budget. It has managers answering reception-desk phones, and Mr. Valentine expects another round of cuts… While Sacramento talks, money is drying up in places like Contra Costa County, where 40,000 families have applied for 350 available slots for Section 8 vouchers — a federal subsidy that allows low-income families to rent in the private market. “The level of desperation is just heartbreaking,” said Joseph Villareal, executive director of the Contra Costa Housing Authority.