UCLA Anderson School of Management Blog

Continuing Slowdown In California Housing/Construction Sector Is Hitting Inland Regions Harder Than The Coast

UCLA Anderson Forecast Director Ed Leamer has been making the media rounds lately, explaining to folks why the U.S. economy is growing -- but not recovering. Those who follow this blog and the Anderson Forecast know tale Leamer is telling by now; that the U.S. Gross Domestic Product (GDP) is growing at a "normal" rate in the 2-3% range, but that a recovery requires 5-6% growth in order for the economy to "return to trend" and, essentially, get to where it would have been had there not been a recession in the first place.

One factor creating the gap between normal growth and recovery growth is in employment, where Leamer estimates millions of jobs were lost for good as U.S. workers compete with robots, technology and foreign workers willing to do the same work for less money. These jobs are permanently lost and these workers will need retraining to find work in other sectors. 

In the interview below with KNBC's Conan Nolan, Leamer offers the Forecast's take on the California economy (along with some thoughts on the national economy). Leamer echoes his colleague, Forecast Senior Economist Jerry Nickeslburg in describing how continuing problems in the housing and construction sectors are hitting inland California more than the coast. 

 KNBC divided the interview into two parts. Here is part two:

 

 

UCLA Anderson Presents Loeb Awards In 13 Categories Tuesday Night In NYC; Washington Post's Steven Pearlstein Receives Lifetime Achievement Award and Fortune's Hank Gilman Receives Lawrence Minard Editor Award

Last night, UCLA Anderson and the Gerald Loeb Foundation presented Loeb Awards in 13 categories last night. The ceremony took place at Capitale in New York City. The Loeb Awards were established fifty-four years ago by the late Gerald Loeb to honor journalists who make significant contributions to the understanding of business, finance and the economy. UCLA Anderson School of Management has presented the Loebs since 1973.

The 2011 Loeb Award winners were chosen from a record number (518) submissions. A panel of preliminary judges pared the entries down to between four and six finalists in each category; then a panel of final judges selected a winner (or winners) of the Loeb Award.

Here are the 2011 Gerald Loeb Award winners, by category:

• Large Newspapers: "Deep Trouble" by Ben Casselman, Russell Gold, Douglas A. Blackmon, Vanessa O"Connell, Alexandra Berzon, Ana Campoy, The Wall Street Journal
• Medium & Small Newspapers: "Seniors for Sale" by Michael J. Berens, The Seattle Times and "Hounded -- Debtors and the New Breed of Collectors," by Chris Serres and Glenn Howatt, Minneapolis Star Tribune
• Magazines: "End-of-Life Warning at $618,616 Makes Me Wonder Was It Worth It," by Amanda Bennett and Charles R. Babcock Bloomberg Businessweek
• Commentary: "Paul Krugman Columns," by Paul Krugman, The New York Times
• Breaking News: "Flash Crash" by Tom Lauricella, Peter A. McKay, Scott Patterson, Jenny Strasburg, Robin Sidel, Carolyn Cui, Mary Pilon, The Wall Street Journal
• Beat Reporting: "Education, Inc,," by Daniel Golden, John Hechinger, John Lauerman, Bloomberg News
• News Services: "Profiting from Fallen Soldiers," by David Evans, Bloomberg News
• Explanatory: "Edifice Complex," by David Nicklaus and Tim Logan, St. Louis Post-Dispatch
• Online Enterprise: "What They Know," by Julia Angwin, Emily Steel, Scott Thurm, Christina Tsuei, Paul Antonson, Jill Kirschenbaum and Jovi Juan, The Wall Street Journal
• Blogging: "Liveblogging Yahoo Earnings Call in 2010 (They're Funny!)," by Kara Swisher, All Things Digital
• Personal Finance: "Student Debt," by Ron Lieber, The New York Times
• Television Enterprise: "Remington Under Fire: A CNBC Investigation," by Mitch Weitzner, Scott Cohn, Jeff Pohlman, Emily Bodenberg, Steven Banton and Gary Vandenbergh, CNBC
• Business Books: "More Money Than God: Hedge Funds and the Making of a New Elite," by Sebastian Mallaby, The Penguin Press

The Loeb Awards includes two special awards for career contributions: the Lifetime Achievement Award, which was given to Steven Pearlstein, associate editor and columnist for The Washington Post, and the Lawrence Minard Editor Award, which went to Hank Gilman, deputy managing editor of Fortune. In addition, winners of 13 competition categories were named at the banquet. Following is a list of the 2011 Loeb Awards recipients.

 

Subprime Is Not Necessarily A Synonym For Disaster

Earlier this month, reports surfaced that Ally Financial Inc. (said to be the nation's largest auto loan lender) was ramping up their subprime car loan business. The company, formerly known as GMAC Financial Services, is (according to an item in the Huffington Post) plans to go public later this year and, as the HuffPo put it "is making the case that subprime loans for used car buyers are not about to produce the same results that they did in the housing market a few years ago -- a near-collapse of the financial system."

 Ally's case for subprime auto loans is rooted in the current demand for cars and the expectation that profits on such loans will outweigh defaults. Still, there are critics of the plan, fueled by the memory of subprime home loans and their relationship to the national recession suffered earlier in the decade.

Romain Wacziarg, Associate Professor of Economics, doesn't necessarily agree with the critics. In a recent interview with the UCLA Anderson Blog he said, "There is nothing wrong with subprime lending necessarily. It depends on what the conditions are for the loans."

Wacziarg was not commenting specifically on Ally's plans, they were directed towards subprime lending in general. "What made subprime home loans a problem were the conditions. Very often the loans had very low rates to start, then would balloon up. Meanwhile, the risk was passed on down the chain. Those writing the loans, they didn't care. They were after volume and the commissions were good. So, it's not subprime per se that's the problem."

"There's nothing wrong with a low-income loan program," Waczjarg said. "Such a program allows people with bad credit to get loans they couldn't get otherwise, but the interest rates are higher due to the risk by the lender. So, everybody's happy."

Inspirational Alumni Inspire Others To "Dream More, Do More and Become More"

(Pictured: Dean Judy Olian. Photo by Carol Zou)

This afternoon, Dean Judy Olian hosted a luncheon for UCLA Anderson's 100 Inspirational Alumni -- a select group of graduates selected as representatives of the enormous depth and breadth of leadership and impact among the school's 37,000 alumni.The list of 100 Inspirational Alumni were selected as part of Anderson's 75^th Anniversary celebration.

In her remarks, Olian commented that she spent last night perusing the accomplishments of the inspirational 100,  noting "that is't quite remarkable what each of you has accomplished. It's absolutely humbling, inspiring, awesome. It teaches us so much about how we should live our lives." The dean took to quoting John Quincy Adams to describe the assembled group. “If your actions inspire others to dream more, learn more, do more and become more, you are a leader,” she said. 

After lunch, Assistant Professor Noah Goldstein spoke generally about the accomplishments and contributions made by the Anderson faculty, then specifically about his own work research in methods of persuasion. Anderson students Alexey Aleshin ('11) and Tyler Gonzalez ('11), both working towards an MD/MBA and partners in an entrepreneurial venture called Enhanced Diagnostics (a 2011 Knapp Competition semi-finalist) discussed their work and the support they've received from the Anderson entrepreneurial community. 

Sheryl Sandberg, COO of Facebook: "The information technology revolution has changed the world ... "

 

Many of our readers had the opportunity to see and hear Facebook COO Sheryl Sandberg's truly terrific commencement address a week or so ago. Still others offered us some nice feedback from our "live tweeting" of Sandberg's speech. 

Sandberg, who earned her MBA at Harvard Business School, spoke from the heart, offering her own experiences at forward-thinking companies like Google and Facebook as examples of how to lead and how to manage. Among Sandberg's words of wisdom were several gems of simple wisdom, including "To get to the truth, honesty must be rewarded" and "Don't just learn what people think, learn what they feel." 

Alas, soundbites don't do her commenement address justice. So, with that, we present Sheryl Sandberg's commencement address to the UCLA Anderson Class of 2011 here for you experience for yourselves.

 

 

NPR Reports "Miserable Job Market Leads Many To Stop Looking" -- Here's Why

NPR did a story last week that discussed why so many unemployed people had stopped looking for work. 

The word "discouraged" pops up a few times.

Here's what UCLA Anderson Forecast Director Ed Leamer told NPR:

"I think a lot of people have high aspirations for themselves," he says. "They've got an education; they have work skills. And often, the particular skills that they have to offer are not the ones that are in demand anymore. Then, slowly over time, the aspirations fall. Some people will just give up, but others will accept jobs that are below what they expected to get."

 

To read about why many folks are having a tough time looking for work, click here for the NPR story.

Richard Rumelt's Tells CNBC About HIs Latest Book -- Good Strategy, Bad Strategy

Richard Rumelt is UCLA Anderson's Harry and Elsa Kunin Chair in Business and Society. His latest book -- Good Strategy, Bad Strategy -- hits shelves and kindles in July. Last week he appeared on CNBC to discuss the GS/BS. He says "It's really about strategy, not only in business, but in politics, in military affairs in non-profits," Rumelt said. "I'm trying to say that there's a core of good strategy in all of these different activities and that pattern is a recognition of what is the problem that you're trying to overcome."

He's then asked for some examples of "good strategy."

 

To view Richard' Rumelt's entire CNBC video and hear more about Good Strategy, Bad Strategy, please click here. 

To learn more about Good Strategy, Bad Strategy - visit the official website here. 

To visit the Strategy Land, blog, please click here. 

 

Go Bruins? Not Tonight ... Let's Go Canucks -- and Francesco Aquilini, EMBA '94

Around here, it's always: "Go Bruins." 

But not tonight.

Tonight is Game 7 of the Stanley Cup Finals between the Boston Bruins and the Vancouver Canucks. With all due respect to the many members of the UCLA Anderson community with ties to the Boston area, the rallying cry on campus today is "Let's Go Canucks" as we eagerly await the NHL's championship-deciding game. You see, Vancouver's chairman is Francesco Aquilini, a member of Anderson's Executive MBA Class of 1994. 

When he's not running the hockey team and serving on the NHL's Board of Governors, Aquilini is the Managing Director of Vancouver-based Aquilini Investment Group Inc., a private, family-run business founded almost 50 years ago by his father, Luigi Aquilini. According to the Canucks' web site, "The Aquilini Investment Group owns and manages a diversified national real estate portfolio that includes commercial properties, multi-family residential apartments and condominiums for sale, office buildings, hotels, golf courses, and land held for future development."

The series to this point has been a classic. The home team has won all six games. The Canucks have won three nail-biters by scores of 1-0, 3-2 (OT), and 1-0 while Boston has won three games handily 8-1, 4-0, and 5-2. Tonight's finale will be played in Vancouver's Rogers Arena (more casual hockey fans might recall the building as the 2010 Olympic hockey venue where Canada topped the United States 3-2 in the gold medal game.) 

Game 7 will be televised in the United States on the NBC network at 5 pm Pacific Time. 

Best of luck to Francesco Aquilini and the Canucks. (We're back to "Go Bruins" tomorrow.)

NHL.com's predictions for Game 7

 

Larry Fink ('76) Offers Some "Serious Optimism" -- Ed Leamer Says No "Double-Dip"

Tomorrow is the UCLA Anderson June Forecast conference. The specific content of the national and California forecasts won't be officially revealed until then; though Forecast Director Ed Leamer's appearance on CNBC's The Kudlow Report last Friday offers a preview of Leamer's latest forecast.

Show host Larry Kudlow opened the segment, which featured Leamer and Encima Global President David Malpass, with a bit of "serious optmism" courtesy of Larry Fink ('76), CEO of BlackRock and the man for whom UCLA Anderson's Lawrence and Lori Fink Center for Finance and Investment. Fink believes jobs are systematically returning in the U.S. 

 

Kudlow then turned to Leamer to ask him for his forecast, wondering if where he sees a "double-dip" recession (he doesn't) and where he sees GDP heading in the next few years. 

 

Lew Leeburg Retires After Six Decade Relationship With UCLA Anderson

Lewis E. (Lew) Leeburg (BS ’54, MBA ‘64 Ph.D. ‘71) who came to UCLA Anderson in 1987 after a 31-year career with IBM and who served as Executive Director of IS Associates has retired. He also served as a lecturer at Anderson.

Prior to returning to Anderson, Leeburg held a variety of positions at IBM, including manager of the Los Angeles Scientific Center. He played a key role in developing IBM’s grant programs for business schools, especially the Management of Information Systems grant to 13 business schools in 1984-1985. Leeburg also held a variety of industry volunteer positions, related to both academia and business, including time as the first secretary and also treasurer for ICIS; he is a former board member of the Society of Information Management (SIM) and is a former member of the executive committee for the Southern California chapter of SIM.

Marking the occasion of his retirement, Leeburg participated in an interview with Frank Mottek of KNX 1070/CBS News. He told Mottek that IS Associates “were started to advance education for those in the IT community … for networking and for support, including financial support of Anderson and that original focus stayed with us all these years. We found new ways of doing those things, but that’s still the focus.”

To listen to the entire interview with Lew, click the link below. 

Leeburg

 We wish you all the best Lew ... thanks for all you've done for the UCLA Anderson and IT communities.

To read an interview with Lew as he discusses his career, click here.