September 2007


Associated Press

Traders Betting On Home Price Declines
Home prices continue to fall, triggering a sharp cutback in consumer spending and leaving many to speculate about a possible recession.  "It's going to be a distressingly long time before we get back to normal," says Edward Leamer, director of the UCLA Anderson Forecast, who predicts a 20 percent price slide over three or four years in once hot real estate markets like California, Nevada and Florida.  This article appeared on Sept. 26 and was reprinted in the San Francisco Chronicle, the Hartford Courant, BusinessWeek.com, MSN.com, and the Tampa Tribune.

American Enterprise Institute for Public Policy Research (Journal)
Economic Outlook -- The U.S. Heads for Recession
A recent change in outlook for the U.S. economy has been linked to an abrupt shift in the Federal Reserve policy stance from one that emphasized inflation risks to one that focuses more on the risks of slowing growth.  Along with credit market problems and weakening consumer spending, presentations at this year's Jackson Hole economic symposium influenced the change in Fed thinking.  One of the major themes to emerge from the symposium was featured in a presentation by Edward Leamer, director of the UCLA Anderson Forecast, who pointed out that over the last half century every housing downturn compared to the one currently underway has translated into a recession.  This article appeared on Sept. 26.

Los Angeles Times
Lack of Urgency on National Debt is a Scary Stance
Today's national debt represents about 38% of the overall economy, and with increased war costs and growing entitlement programs, many experts believe the debt will continue to climb.  According to Edward Leamer, director of the UCLA Anderson Forecast, this is a huge problem.  "We're getting older as a nation and we're not preparing for it.  There are a lot of Americans who are 40 or 50 years old who are relying on the federal government to take care of them.  The reality is that we won't be able to do that."  This article appeared on Sept. 23.

Bloomberg
Bailout Won't Stop Subprime Blowup
According to Edward Leamer, director of the UCLA Anderson Forecast, last week's interest rate cut by the Federal Reserve will have little impact on borrowers facing mortgages that are adjusting.  "It's not going to alter the housing situation, or clarify defaults and delinquencies," says Leamer.  This article appeared on Sept. 23 and was reprinted in the Detroit Free Press.

San Francisco Chronicle
California Gov. Earl Warren Had a Challenging Health Care Plan in the 1940s
A state provided, single payer health insurance plan, funded with the help of a payroll tax was proposed back in the 1940's by former Republican governor Earl Warren -- but he was spread too thin, and never garnered enough popular support for his idea.  According to Daniel J.B. Mitchell, professor with UCLA Anderson School of Management, California's current Governor is pushing infrastructure and water bonds at the same time as health care, so history seems to be repeating itself.  "You only have so much energy as governor," says Mitchell.   This article appeared on Sept. 21.

Associated Press
California Adds 21,000 Jobs in August
The employment up tick in California in August was primarily due to a gain in government jobs and doesn't account for the coming cutbacks announced by giant mortgage lender Countrywide Financial.  "This theme is going to play out over the next year and a half," says Ryan Ratcliff, an economist with the UCLA Anderson Forecast.  "We're just seeing the tip of the iceberg."  This article appeared on Sept. 21 and was reprinted in the Los Angeles Daily News.

Los Angeles Times
UCLA Grooms Salon Owners for Success
Oakland salon owner Suzanne Van Houten used to complain that her salon was run by her employees, not her.  But after enrolling in UCLA Anderson's Executive Salon Management Program Van Houten has turned her business around.  The Program, which school officials developed after hearing similar complaints from salon owners and managers, has drawn participants worldwide.  According to Alfred E. Osborne, program faculty director and Anderson senior associate dean, the goal of the program is to give salon entrepreneurs an "MBA-like experience without having to go to business school." This article appeared on Sept. 20 and was reprinted in the San Francisco Examiner, the Seattle Times, and the Providence Journal.

LA Weekly
Playa Vista Quicksand
By ordering the developers of the Playa Vista project to revise their environmental-impact report, California's Court of Appeal has stopped the controversial development dead in its tracks, but it's still unclear if the court's ruling means the project will be brought to a halt permanently.  Eric Sussman, a lecturer at UCLA Anderson School of Management, doesn't think so, citing the pressure for housing on the Westside and the developers' tenacity.  "There hasn't been a roadblock they haven't encountered."  This article appeared on Sept. 19.

National Public Radio -- Morning Edition
Marketplace
Edward Leamer, director of the UCLA Anderson Forecast, commented on how the recent interest rate cut will affect the housing market on this national news program.  This segment aired on Sept. 19.

Financial Times
Heads of Charities Face Pay Scrutiny
Executive pay at the biggest U.S. charities and foundations rose at more than twice the rate of inflation last year, in spite of growing public scrutiny.  David Lewin, a professor at UCLA Anderson School of Management, said non-profit groups "are pushed towards higher pay for executives because of the rapidly rising pay of executives in the corporate world."  This article appeared on Sept. 19 and was reprinted on MSNBC.com.

Newsday
Crucial Test for New Boss
As the Federal Reserve struggles to make decisions on interest rates, some critics say that no matter what they do, it won't alleviate the crisis in the housing market, which is at the core of the Fed's worries.  Edward Leamer, director of the UCLA Anderson Forecast, says that even if the rates were zero, the fact that housing prices are continuing to drop and show no signs of leveling off makes it impossible to buy one because "you would lose too much money" so the Fed "becomes impotent."   This article appeared on Sept. 18.

AACSB eNEWSLINE
Getting Creative About Entrepreneurship
UCLA Anderson School of Management Dean Judy Olian writes about preparing business students for the multiple forms of entrepreneurship and what business schools can do to improve their entrepreneurship offerings.  "There's more to entrepreneurship than knowing how to create and run a small business," says Dean Olian, also the current chair of AACBS International.  "Entrepreneurs need imagination and skills to invent new products or services, lead innovation, assume risk, and, in the case of social entrepreneurs, they need the passion to tackle critical social concerns."   This opinion piece appeared on Sept. 17.

Los Angeles Times
For Real Estate Agents, Bus Bench Blitz Ads Hold Curbside Appeal
In today's high-tech advertising environment, some companies say that placing ads on bus benches is a way to stand out amid all the online clutter.   Carol Scott, professor of marketing at UCLA Anderson School of Management, says "We're in a greater state of receptivity when we're not in front of our computers.  People stopped at a light, with nothing to do, see a name and it registers."  This article appeared on Sept. 16.

San Francisco Chronicle
Even Renters are Caught in the Credit Crunch
As mortgage standards tighten and the housing market continues to stall, apartments in the Bay Area are becoming more expensive and harder to find.  "The rental market is saying build more, but the pathology is that even though the rental market needs more, the declining asset value prevents builders from responding," says Edward Leamer, director of the UCLA Anderson Forecast.  This article appeared on Sept. 16.

Los Angeles Times
Ad Slogan is a Subtle Shift for Wal-Mart
For years Wal-Mart's customer pitch has been honest and consistent: "Always low prices."  Now Wal-Mart has a new slogan: "Save money. Live better."   And the message seems to be less about saving a few bucks and more about improving one's quality of life.   "This is about saying that if you're middle class and upwardly mobile, it's OK for you to go to Wal-Mart," says Harold Kassarjian, professor emeritus at UCLA Anderson School of Management.  This article appeared on Sept. 14.

Los Angeles Times
Wave of Bad News Drives Up Oil Prices
With supply worries pushing the per barrel price of oil futures above $80, many experts fear the economy and consumer spending will be adversely effected.  But Edward Leamer, director of the UCLA Anderson Forecast, disagrees.  "In the '70's, when oil shot up in price, the economy suffered very badly.  But in the 1980s and 1990s, we got used to it.  Now it's harder to detect any impact on the overall economy," says Leamer.  This article appeared on Sept. 13.

UCLA Anderson Forecast -- September 12, 2007
"Will Universal Healthcare Make Us Well?"
In their third quarterly report of 2007, UCLA Anderson Forecast economists continue to predict that a recession is not imminent.  Prominent industry leaders also discussed the economics of healthcare reform and the financial effects reform would have on business, the community, government and individuals.  Articles about the report and discussion appeared in the following publications:  Associated Press, Reuters, UPI,  Bloomberg, CnnMoney.com, Forbes.com, MarketWatch.com, Smartmoney.com,  Los Angeles Times, Contra Costa Times, Los Angeles Business Journal,  Budapest Business Journal, San Francisco Chronicle, USA Today, The Chicago Tribune,  The Salt Lake Tribune,  The Seattle Times, Xinhua (China), The Star (Malaysia),  Investor's Business Daily, The Detroit News,  The Baltimore Sun, The Sacramento Bee, The San Jose Mercury News, The Oakland Tribune, Los Angeles Daily News, La Opinion,  San Diego Union Tribune, The Orange County Register, The Press-Enterprise,  and The Long Beach Press-Telegram and received radio and television coverage on the following stations: 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., KGO-TV (ABC) S.F., KRON-TV (IND) S.F., KTVU-TV (NBC) S.F., KPIX-TV (CBS) S.F., KRIS-TV (NBC) Corpus Christi, KGET-TV (NBC) Bakersfield, KQED-FM (NPR) S.F., KCRW-FM L.A., KFWB-AM L.A., KNX-AM L.A., KROQ-FM L.A.,  KPCC-FM (NPR) L.A., KGO-AM S.F., and KOVCR-AM Sacramento. 

Los Angeles Business Journal
Vulture Investors, Contrarians Still Pick Up the Scent of Cash
With stock markets volatile and real estate prices sliding, daring investors have opportunities to profit off distressed debt and other risky investment vehicles -- but investors would be smart to choose wisely, as credit rating agencies are still downgrading many funds.  "We've been in a Goldilocks economy," says Edward Leamer, director of the UCLA Anderson Forecast.  "But that's behind us."   This article appeared on Sept. 10.

Los Angeles Business Journal
MBA Programs
In the number two position, UCLA Anderson School of Management followed Pepperdine's Graziadio School of Business and Management in the number of degrees awarded during the 2006-2007 term.  Graziadio awarded 671 degrees, while Anderson awarded 617.  The Los Angeles Business Journal publishes this ranking annually.   This listing appeared on Sept. 10.

Bloomberg
New York, California Metro Prices May Decline
As defaults climbed, half of the 20 biggest providers of so-called prime jumbo loans have sold or shut mortgage units this year, or gone bankrupt.  According to Stuart Gabriel, professor of finance and director of the Ziman Center for Real Estate at UCLA Anderson School of Management, if the squeeze in jumbo loans continues there will be a "significant" fall in housing prices.  "Home prices in many coastal markets in California and on the eastern seaboard make the consumer highly reliant on the availability of jumbo mortgages," says Gabriel.  "The tighter the underwriting, the sharper the fall back in demand."   This article appeared on Sept. 10.

Christian Science Monitor
Race Your Way to a Boost in Pay
As cheaper, less time-consuming alternatives to getting an MBA degree crop up around the country, some think doing professional education on the cheap may come with trade-offs.  "You might not do a whole lot of strategic thinking and strategic planning and global strategy on the marketing side," says Judy Olian, dean of the Anderson School of Management and chair of the Association to Advance Collegiate Schools of Business (AACSB).  "But 10 years from now -- after you've been promoted out of your technical expertise -- you might need to do that, and lo and behold, you've got that in the MBA degree."  This article appeared on Sept. 10 and was reprinted in the Tri-Star Observer (Pennsylvania).

Los Angeles Times
Countrywide Cuts Heighten Loan Crisis
With the announcement that home loan giant Countrywide Financial Corp., a major employer in the West San Fernando Valley and Ventura County, will be cutting nearly 20% of its workforce, Southern California residents may feel anxious.  But according to Stuart Gabriel, professor of finance and director of the Ziman Center for Real Estate at UCLA Anderson School of Management, he does not see any evidence of serious economic problems spreading beyond the housing sector.  This article appeared on Sept. 8.

National Public Radio
To the Point
David Shulman, senior economist with the UCLA Anderson Forecast, discussed the turmoil in the economy and whether a recession is looming on this national news program.  This segment aired on Sept. 7.

Reuters
Citi's Rhodes Sees Credit Woes Taking Economy Toll
As the turmoil in the credit markets continue to take a toll on the U.S. economy many experts have suggested that banking regulators, including the Federal Reserve, should have acted more swiftly on subprime loans.  In a paper presented to a Fed conference last week, Edward Leamer, director of the UCLA Anderson Forecast, gave the central bank a failing 'F' grade for underestimating the role of housing in triggering recessions.  This article appeared on Sept. 6.

Daily News
Recall Madness
Due to an increase in manufacturing outsourcing and consumer demand for cheaper products, a growing number of nationwide recalls illustrates a potential threat to product quality and safety.  "A lot of companies are outsourcing to China and, on top of that, it's impossible for them to oversee the nitty-gritty details of production," says Christopher Tang, a professor at UCLA Anderson School of Management.  "As the supplier is pressured to lower the cost, something has to give."  This article appeared on Sept. 6 and was reprinted in the Long Beach Press-Telegram.

USA Today
Economists Divided on Recession
At the Federal Reserve's annual conference in Jackson Hole, experts were divided over whether the U.S. was heading towards a recession.   In his report delivered at the conference, Edward Leamer, director of the UCLA Anderson Forecast, said that the Fed may have laid the groundwork for the current housing bust and credit market turmoil by cutting interest rates too low earlier in the decade.  It's "best to remember that the teaser rates for (adjustable-rate) mortgages came from Washington, D.C., not from Wall Street."  This article appeared on Sept. 4.

Los Angeles Business Journal
It's Boom Time for Busy L.A. Builders
Despite real estate woes, construction in Los Angeles County is at record levels, and a renewed investment in infrastructure is helping to drive the boom.  "Most of the big infrastructure investments were made quite some time ago," says Daniel J.B. Mitchell, a professor at UCLA Anderson School of Management.  "In the meantime, you've got a lot of traffic congestion and the concerns ramp up and you get to a breaking point.  The state is kind of on a kick of infrastructure.  That seems to be the era we are in."   This article appeared on Sept. 3.

Financial Times
Aggressive Fed Action on House Prices Foreseen
Federal Reserve governor Frederic Mishkin told central bankers and economists gathered for the annual Jackson Hole symposium that policymakers should not wait until a decline in house prices leads to a fall in gross domestic product, but should react immediately.  He cited an earlier message delivered by Edward Leamer, director of the UCLA Anderson Forecast, who illustrated that a sharp decline in residential investment had almost always in the past been followed by a recession.  This article appeared on Sept. 3.

Bloomberg Television
On the Markets, Morning Call, Morning Markets, Money & Politics
Edward Leamer's report,  giving the Feds an 'F' grade for failing to prevent the housing bubble and not stepping in to do more as the market unwound, was cited on four national news programs.  Leamer is the director of the UCLA Anderson Forecast.  Segments aired on Sept. 3.

The New York Times
Few Expect a Panacea in a Rate Cut by the Fed
The Federal Reserve's main weapon for restoring confidence in the mortgage market -- reducing its benchmark federal funds rate on overnight loans between banks -- may have little effect on fears about credit quality.  "The reason there isn't a market for these credits is that people don't know what price they should be trading at," says Edward Leamer, director of the UCLA Anderson Forecast.  "That's not going to be affected by a small change in the federal funds rate."  This article appeared on Sept. 2 and was reprinted in the International Herald Tribune.

Bloomberg
Mishkin Says Banking System Can Cope With 'Stressful' Markets
At its annual economic symposium, The Federal Reserve came under fire for not taking actions to stem predatory leading practices during the mortgage boom.  Edward Leamer, director of the UCLA Anderson Forecast, states in his paper presented at the symposium that central bankers should focus on housing investment because it is the "most important sector in our economic recessions."  This article appeared on Sept. 1 and was reprinted in the Contra Costa Times and in New Zealand Herald on Sept. 4.

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