December 2007


The New Yorker

The Mail
Responding to a November article that addressed sovereign wealth funds, Sanford M. Jacoby, a professor at UCLA Anderson School of Management, corrected the reporter's claim that public-employee pension funds account for forty per cent of all institutional investment in the U.S. - saying that in fact, these funds account for only eleven per cent of institutional investment.  This letter to the editor appeared in the Dec. 24&31 issue.

Los Angeles Times
How a Bank Fell Victim to Loan Fraud
Recent FBI reports on mortgage fraud show there has been an eightfold increase since 2002 - and few cases compare to a three-year scam that used trumped-up appraisals to fraudulently secure $142 million in loans from Lehman Bros. and another prominent lender.  As home values skyrocketed earlier this decade, "banks gave money to anybody with a pulse," says Ryan Ratcliff, and economist with the UCLA Anderson Forecast.   This article appeared on Dec. 31.

Los Angeles Daily News
Our Predictions for the New Year
Analysts initially projected a 2008 turnaround for California's troubled residential real estate market, but that's now been pushed to 2009 and possibly 2010.  "We've read this story for most of 2007 and the economy has pretty much lived up to our expectations, as bad as they were," says Ryan Ratcliff, an economist with the UCLA Anderson Forecast.  This article appeared on Dec. 31.

The San Jose Mercury News
In Hindsight: 2007 in Silicon Valley - We Should Have Seen it Coming
Could the housing slump hurt California's economy after all?  Even though they are not ready to declare a recession, economists with the UCLA Anderson Forecast are certain that growth will slow.  "November rolled around and a lot of things hit the fan," says Ryan Ratcliff, one of the Anderson Forecast economists.  This article appeared on Dec. 30.

TheStreet.com
UCLA Investor's Three Best-Performing Holdings
Each January, the 10 "fellows" of the Student Investment Fund (SIF) at UCLA Anderson School of Management are given a pre-approved list of about 150 companies that they may invest in.  The list is a result of all the previous SIF fellows' analyses, and current fellows have the flexibility to remove or add stocks from the list throughout their tenure.  According to current SIF President Daniel Aobdia, MBA class of 2008, to add or remove stocks, SIF fellows need to perform a detailed stock analysis.  "Therefore, the approved list we hand over to incoming fellows will be significantly different that the one that was handed to us," says Aobdia.  This article, a snapshot of UCLA Anderson School of Management's approximate $2 million Student Investment Fund, appeared on Dec. 27.

The New York Times
Home Prices Fell Faster in October
The decline in home prices accelerated and spread to more regions of the country in October, leading many experts to worry how the broader economy will handle an expected increase in foreclosures and a resulting decrease in consumer spending.  "Finance is not local," says Edward Leamer, director of the UCLA Anderson Forecast.  "The availability of mortgages at extremely easy terms affected every home in the United States."  This article appeared on Dec. 27.

The Wall Street Journal
Pace of Decline in Home Prices Sets a Record
As U.S. home prices continue to fall, new data indicates a slowdown in the number of Americans moving to states that once led the housing boom, including Nevada, Florida and Arizona.  According to Edward Leamer, director of the UCLA Anderson Forecast, recent price cuts by builders may have reduced the demand in the short term because they encourage potential buyers to expect further discounts.  This article appeared on Dec. 27.

MSN Real Estate.com
From Home Builders to Landlords, Here's a Quick Look at Those Who Floundered and Fared Well in the Year's Tough Housing Market
For many in real estate, 2007 was a year they'd rather forget, but the U.S housing crisis did not deter foreign investors from snapping up condo buildings, luxurious second homes and other distressed properties in U.S. cities.  The combination of sliding real-estate prices and a weak U.S. dollar made many prime properties a steal, says Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management.  "It is presenting extraordinary opportunities to many foreign investors."  This article appeared on Dec. 27.

MSN Real Estate.com
Could Rising Gas Prices Kill the Suburbs?
Rising fuel costs are being blamed for everything from soaring utility costs to lower retail sales and higher airline tickets - and now experts say high gas prices could reshape U.S. cities.  According to Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management, once Americans realize that high-cost gas is here to stay, high commute prices will pull more homeowners to live in central cities and push for more public transportation.  "If you or I come back to Los Angeles 15 years from now, we are not going to see the persistent pattern of building single-family detached homes farther and farther into the desert."  This article appeared on Dec. 26.
 
BusinessWeek.com
Growing Education Under the Microscope
Hoping to counter recent criticism questioning the value of management education and business school research, the Association to Advance Collegiate Schools of Business (AACSB) has convened a committee to examine the overall impact of business schools on society.  Committee member and AACSB chair Judy Olian, dean of UCLA Anderson School of Management, discussed the committee and the potential impact of its findings in this BusinessWeek interview.  "I don't think a study like this has been done before," says Olian.  "The notion of relevancy to the marketplace is central to every mission statement that business schools have."  This article appeared on Dec. 26.

The San Jose Mercury News
2007 Was the Year of Subprime Meltdown
With Gov. Schwarzenegger declaring a fiscal emergency earlier this month, ripples from the year's subprime crisis have finally hit state and local government budgets.  Economists at the UCLA Anderson Forecast said these expected cuts in government spending will hit the economy in 2008, providing another wet blanket on any growth.  This article appeared on Dec. 26.

Los Angeles Business Journal
2007 Year in Review
Even though the writers strike has had an impact on the small business community that relies on the entertainment community, some economists doubt the strike will be as severe as initially portrayed.  "The strike will only have a moderate impact in Southern California," says Jerry Nickelsburg, an economist with the UCLA Anderson Forecast.  "It is nowhere near the problems in the housing market or in the 90s during the contraction in the aerospace industry."  This article appeared on Dec. 24.

Los Angeles Times
Job Data Stir Fears of State Recession
Most economists around the state are still reluctant to predict recession, but they agree that sharp declines in the rate of job creation portend trouble in the coming year.  "We see substantial weakness in real estate and employment growth below 1% through 2009," says Ryan Ratcliff, an economist with the UCLA Anderson Forecast.  "It will be pretty slow in 2008 and better in 2009."  This article appeared on Dec. 22

Associated Press
People's Choice Awards Being Revamped
On strike for seven weeks now, the Writers Guild of America, already flexing its muscle by refusing to participate in the Academy Awards and Golden Globes, has said no to the People's Choice Awards.  Will the cancellations be costly to the local economy?  Not according to Jerry Nickelsburg, an economist with the UCLA Anderson Forecast, who says that if the writers strike lasts as long as 1988's walkout of 153 days, the overall net loss to the economy would wind up at about $380 million, only about 0.1 per cent of the overall Los Angeles economy.  This article appeared on Dec. 20 and was reprinted across the country in publications such as The Las Vegas Sun, Fresno Bee, LA Daily News, The Examiner (Wash. D.C.), New York Post, Miami Herald, Chicago Tribune, Seattle Times, Orange County Register, Hartford Courant and Newsday.

Builder Magazine (online)
Land Prices Hit Five-Year Low in Southern California
As land prices in Southern California go down, home builders, the usual buyers, aren't able to take advantage of the reduced lots, as most are already saddled with debt due to the housing crisis.  But there are buyers out there, including investment giant Morgan Stanley, which has just purchased 11,000 acres from Lennar Builders.  "There will be a variety of tactical approaches that will allow builders to get nonperforming assets off their balance sheets, but also allow them to get back into the game quicker," says Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management.  This article appeared on Dec. 20.

Variety
WGA Strike Taking Toll on L.A.
How much the writers strike will impact the local economy was the subject of a hearing held by the Los Angeles City Council's Housing Community and Economic Development committee this week.  And depending on the duration of the strike and who's doing the forecasting, experts estimate the strike may end up costing anywhere from $380 million to $2.5 billion.  Jerry Nickelsburg, an economist with the UCLA Anderson Forecast, suggested the strike's impact would amount to about $380 million in lost economic activity if it goes five months, in part because the entertainment industry is much more diverse than it was during the last WGA strike.  This article appeared on Dec. 19.

KTLA-TV CH 5 (LA)
Prime News
UCLA Anderson Forecast economist Jerry Nickelsburg discussed the economic impact of the writers strike on this local news program.  This segment aired on Dec. 19.

KNBC-TV CH 4 (LA)
News At Five
UCLA Anderson Forecast economist Jerry Nickelsburg discussed the economic impact of the writers strike on this local news program.  This segment aired on Dec. 19.

KNX-AM 1070 (LA)
Business Hour
UCLA Anderson Forecast economist Jerry Nickelsburg discussed the economic impact of the writers strike on this local news program.  This segment aired on Dec. 19.

San Diego Daily Transcript
Despite Downturn, Many High-Priced ZIP Codes Remain Stable, Continue to Appreciate
So far, the real estate downturn has had limited impact on prices in certain wealthier enclaves where buyers can afford to pay top dollar and sellers are less inclined to lower prices.  According to Edward Leamer, director of the UCLA Anderson Forecast, higher income communities will see much smaller price declines because they appreciated less during the boom years and sellers can afford to wait longer to sell their homes.  "In higher prices ZIP codes owners think they're immune and they can just hold out."  This article appeared on Dec. 19.

BusinessWeek.com
Video Views: UCLA's Global Outlook
UCLA Anderson School of Management Dean Judy Olian discussed Anderson's renewed focus on global business and sustainability in response to growing student interest in these areas of study.  This video interview aired on Dec. 19.

MSNBC.com
MSNBC Panel Sees Slow Growth But No Recession
Economists polled for a year-end economic roundtable agree that the economy will continue to slow, but will skirt an all-out recession.  Edward Leamer, director of the UCLA Anderson Forecast, believes a strong labor market and continued wage gains have helped blunt the impact of the housing downturn, and the weak dollar has helped boost exports.  And since manufacturers haven't staffed up as much since the last recession in 2001, Leamer says, "We just don't see the manufacturing sector losing enough jobs for it to be a real recession."  This article appeared on Dec. 19.

Los Angeles Times
On a Once-Thriving Palmdale Street, Foreclosure Is in the Air
The Bush administration's plan asking lenders to freeze low interest rates on some adjustable mortgages may have given Wall Street a lift, but many in the housing industry criticize the plan saying it offers too little, too late.  Edward Leamer, director of the UCLA Anderson Forecast, says the plan focuses on a sliver of individuals at risk of foreclosure but ignores the bigger picture.  "Californians need to get interested in buying again."  And Leamer says that won't happen until prices inflated by the shaky loans of recent years fall further.  This article appeared on Dec. 18.

Financial Times
Fortuitous Pairing Has Been Life-Transforming
While attending the Fortune Magazine/State Department International Women Leaders conference this year, UCLA Anderson School of Management Dean Judy Olian was assigned to mentor fellow attendee Pauline Mwangi, who was creating a program to train emerging woman entrepreneurs in Nairobi.   Mwangi spent a week at UCLAAnderson attending classes and meeting with professors who specialize in microfinance as well as with students interested in entrepreneurship in the developing world.   "Learning how they think about microfinance and the developing world helped me think about how I could expand my program back home," says Mwangi.  Ms. Mwangi is currently working with five UCLA Anderson students on a field study project that will assess whether her Nairobi program should expand into the hospitality industry.  "Microfinance is becoming a big part of the conversation on campus," says David Weisz, UCLA Anderson MBA class of 2008 and a member of Mwangi's team.  "It appeals to business students because it's about leveraging economic principles to do good in the world."  Dean Olian, who has spent time in Nairobi with Ms. Mwangi, adds that UCLA Anderson students and faculty have learned as much from Ms. Mwangi as she did from them.  "It is a humbling and transformative experience to see how people can in a small way make a huge difference."   This article appeared on Dec. 17.

Associated Press
Writers Guild Files Labor Complaint
Union officials representing striking Hollywood writers filed an unfair labor practices complaint claiming studios violated federal law by breaking off negotiations.  According to Daniel J.B. Mitchell, a professor at UCLA Anderson School of Management, it's not unusual for opposing sides in a labor dispute to file such complaints in an attempt to turn up the bargaining pressure.  This article appeared on Dec. 14 and was reprinted in the Chicago Sun-Times and the Pioneer Times-Journal (NM).

The San Bernardino Sun
Bill Would Increase Loan Limit
Congress voted to increase Federal Housing Administration loans to $417,000 for qualifying buyers, but the increase may not have much of an impact in California.  "In California as a whole, there are very few places where (the new) conforming loan limit is enough to buy a house, especially for first-time buyers," says Ryan Ratcliff, an economist with the UCLA Anderson Forecast.  "There are too many bigger issues pulling against us."  This article appeared on Dec. 14.

Minnesota Public Radio
MidMorning With Kerri Miller
UCLA Anderson Forecast economist Jerry Nickelsburg discussed the economic impact of the writers strike on the Los Angeles economy on this national news program.  This segment aired on Dec. 13.

USA Today
Is It Enough to Prop Up the Economy?
Does the recent quarter-point interest rate cut by the Federal Reserve mean that they are worried about a recession?  With a slumping housing market, elevated energy costs, and tightening conditions in credit markets, many economists share their worry.  But economist Edward Leamer, director of the UCLA Anderson Forecast, points to the job market as the reason why a recession isn't a certainty.  According to Leamer, there is little fat to trim from company payrolls these days, and that means it is unlikely companies will cut the 2 million workers he estimates would be needed for the economy to sink into a recession.  "Be calm, my friends.  Be calm."   This article appeared on Dec. 12.

UCLA Today
Faculty Mentors Offer Vital Support to Student-Athletes
Transitioning to the rigors of campus life can be especially difficult for the student-athlete, and that is why UCLA runs a year-long mentoring program, pairing up freshman athletes with faculty members who mentor them on everything from time management and accountability to academic and personal issues.  "Most athletes compete with Ivy League-level students, and having a mentor gives them more self-confidence," says Donald Morrison, a professor at UCLA Anderson School of Management and a mentor with the program.  This article appeared on Dec. 11.

The Christian Science Monitor
In Pockets of Foreclosure, Housing Woes Spread Block By Block
On the outskirts of Modesto, new neighborhoods that sprang up during the height of the housing boom where residents paid high prices for the most exotic mortgages are now being saddled with a high volume of foreclosures.  According to Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management, when banks try to unload foreclosed properties at fire-sale prices, home values in the neighborhood go down and can trigger more foreclosures.  "Default begins to feed on itself."  This article appeared on Dec. 11.

WJR-AM 760 (Detroit)
Mitch Albom Show
UCLA Anderson School of Management Professor Christopher Tang discussed the impact of outsourcing on the production of the Nintendo Wii and how this has contributed to a shortage of the product in the market.  This segment aired on Dec. 11.

The Christian Science Monitor
Trims With a Nick of Nostalgia
For years, the trend in the haircut business was toward unisex salons, but now there seems to be a shift back to salons and shops aimed specifically at men or women.  "Hair salons are more than just a place to get your haircut," says Alfred Osborne, professor and senior associate dean at UCLA Anderson School of Management.  "It's about the experience."  This article appeared on Dec. 10.

CBS (national)
The Early Show
Edward Leamer, director of the UCLA Anderson Forecast, discussed what effect the just announced mortgage rate freeze will have on the housing market on this national news program.  This segment aired on Dec. 7.

Los Angeles Times
Bush Loan Plan Could Help Hundreds of Thousands Keep Their Homes
President Bush's plan to slow the mortgage meltdown could help some homeowners, but   the plan's effect on the larger economy remains unclear.  Edward Leamer, director of the UCLA Anderson Forecast, says the Bush plan does exactly the opposite of what is needed to revive the housing market by artificially propping up housing values.   "The market needs buyers," says Leamer, and they need to be lured by lower prices and lower mortgage rates.  According to Leamer, the Bush plan "is deleterious to both these ends" by enabling people to stay in houses they can't afford while driving lenders to raise rates on new mortgages.  This article appeared on Dec. 7.

Los Angeles Times
Mortgage Relief Program a Slap In the Face to Some
Some are reacting poorly to the government-backed program set to ease terms on some subprime mortgages, saying they resent the idea of rushing to help a segment of society that may not have acted so responsibly in the first place.  But others believe another deep fall in the housing market could drag the economy into recession.  "The first-order objective would be to avoid a further deepening of already serious problems in housing markets," says Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management.  "What's going on here is concern that this issue is big, broad and of such significant consequence that it could seriously hurt the U.S. economy."  This article appeared on Dec. 7.

The Wall Street Journal
Why the Wii Is Still Hot Item In Short Supply
Persistent shortages of the Nintendo Wii have led to speculation by angry consumers that Nintendo is deliberately keeping supplies short to create more hype for the product, but Nintendo claims they simply did not anticipate the high level of demand for the game console.  According to Christopher Tang, a professor with UCLA Anderson School of Management, Nintendo may be missing opportunities when it allows others to profit from the shortage by charging premiums,. But he says this isn't entirely a bad thing because it creates hype.  "Psychologically, it's better if the customer is begging for the product."  This article appeared on Dec. 6.

UCLA Anderson Forecast - December 6, 2007
The Sluggish Economy Will Continue
In their fourth quarterly report of 2007, UCLA Anderson Forecast economists continue to predict that they see no recession on the horizon, but suggest that there will be plenty of troubles ahead regardless.  Articles about the report appeared in the following publications:  Associated Press, Reuters, UPI, Smartmoney.com, Los Angeles Times, Contra Costa Times, San Francisco Chronicle, USA Today, Xinhua (China), China Daily, The Desert Sun, Kansas City Star, Lincoln Journal Star, San Bernardino Sun, Toronto Star, US News & World Report, The Sacramento Bee, The San Jose Mercury News, Los Angeles Daily News, La Opinion, San Diego Union Tribune, and The Long Beach Press-Telegram and received radio and television coverage on the following stations: Bloomberg, CNBC-TV Closing Bell, KCBS-TV (CBS) L.A., KNBC-TV (NBC) L.A., KABC-TV (ABC) L.A., KTTV-TV (FOX) L.A., KTLA-TV (CW) L.A., KMEX-TV (UNI) L.A., KCAL-TV L.A., KGTV-TV (ABC) S.D., XETV-TV (FOX) S.D., KMIR-TV (NBC) Palm Springs, KRON-TV (IND) S.F., KTVU-TV (NBC) S.F., KPIX-TV (CBS) S.F., SIRIUS RADIO,  WINS-AM (N.Y.), KQED-FM (NPR) S.F., KFWB-AM L.A., KNX-AM L.A., KFI-AM L.A., KROQ-FM L.A.,  KPCC-FM (NPR) L.A., KGO-AM S.F., and KOVCR-AM Sacramento. 

KCRW-FM 89.9 (LA)
Which Way LA?
Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA Anderson School of Management, discussed the Federal plan to freeze mortgage rates and whether the plan will help California's foreclosure crisis as a guest on this local NPR program.  This segment aired on Dec. 5.

BusinessWeek.com
UCLA: Looking for Leadership
According to Lydia Heyman, director of MBA admissions at UCLA Anderson School of Management, evidence of past leadership and future potential are high on the list of qualities that the school looks for in an MBA candidate.  Heyman detailed the UCLA Anderson application process in this online Q & A.  This article appeared on Dec. 5.

South Florida Sun-Sentinel
South Florida Jewish Families Wrestle With Hanukkah's Increasing Commercialism
Hanukkah, known as the Festival of Lights, has become more like the festival of gifts in many Jewish homes.  According to Ely Dahan, a professor of marketing at UCLA Anderson School of Management, immigrant Jews saw how Christmas dominated the month of December and sought to create a parallel holiday.  "It's a combination of the financial motivation of businesses that turn holidays into shopping opportunities, and coming to the U.S. and assimilating into the culture."  This article appeared on Dec. 4.

Los Angeles Times
Teacher's Draft Reform Plan
As the Los Angeles Unified School District (LAUSD) struggles to figure out how to turn around its troubled schools, the teacher's union has called for local, grass roots control over schools that will give teachers more breathing room to formulate curricula.  William Ouchi, a school-reform expert and management professor at UCLA Anderson School of Management, understands why the teachers are asking for more control: "They've observed for 30 years the failure of the management of the LAUSD."  This article appeared on Dec. 3.

Los Angeles Times
Writers Strike Just a Drop in L.A.'s Bucket
Responding to a story detailing the potential impact of the writers strike on the Los Angeles economy, Daniel J.B. Mitchell, a professor at UCLA Anderson School of Management, pointed out that if you want to panic about the Los Angeles economy, worry about the real estate bust, the shaky stock market or the falling dollar.  This letter to the editor appeared on Dec. 2.

Media Relations