Newsletter: California Inc: Defusing the debt-limit bomb
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.
Many Social Security beneficiaries were left wondering if they’ll have trouble making ends meet after the federal government announced that there would be no cost-of-living increase for next year. This is just the third time in 40 years that low inflation has erased an annual bump in payments. Meanwhile, California's unemployment rate dropped below 6% in September for the first time since 2007. But the state added way fewer jobs -- just 8,200 -- than expected. The long march to economic recovery continues.
Looking Ahead
Strike vote: Faculty at all 23 campuses of California State University will start voting Monday on whether to go on strike. Management is offering a 2% across-the-board pay hike, and the union is demanding a 5% increase, with an additional 2.65% boost for faculty at the lower end of the pay scale. The voting period ends Oct. 28.
Decision time, eh? Canadians go to the polls Monday to elect a prime minister after a campaign in which economic issues were central. Among the key issues in the election have been climate change, trade relations with the U.S. and the Keystone XL pipeline, which would carry tar-sands oil from Canada to refineries in Texas.
Airport upgrades: Orange County supervisors are set to vote Tuesday on a $102-million contract for improvements at John Wayne Airport. County staffers recommend that the contract go to Swinerton Builders, which completed the airport’s $48.5-million parking structure in 2010. The work would include seismic retrofits and upgraded lighting, electrical, heating and cooling systems.
Ferrari IPO: Italian luxury carmaker Ferrari is expected to announce the final pricing of its initial public offering Tuesday before its shares go on sale Wednesday on the New York Stock Exchange. Ferrari is separating from parent company Fiat Chrysler. The stock is expected to sell at $48 to $52 a share. Fiat has owned at least part of Ferrari since 1969. It merged last year with Chrysler.
Air bag hearing: U.S. auto safety regulators will hold a public meeting Thursday to report on the sweeping recall of Takata air bags. Vehicle manufacturers started recalling cars with faulty air bag inflators last year after incidents in which the devices exploded and injured drivers and passengers. In May, Takata agreed to a recall 19.2 million U.S. vehicles. So far, 4.4 million inflators have been replaced.
The Agenda
Today's Business section dips into the wonky — and politically perilous — waters of the federal debt limit. Another showdown on raising the ceiling is nearing, and people on both sides are looking for ways to defuse an unusual budgetary mechanism that has ignited brinkmanship and threatened the shaky U.S. economy. Last week, Treasury Secretary Jacob J. Lew warned Congress that it needed to increase the $18.1-trillion limit by Nov. 3 or risk a federal default.
Story Lines
Here are some of the other stories that ran in The Times Business section in recent days that we’re continuing to follow:
Going rogue: A top Volkswagen executive blamed a handful of rogue software engineers for the company's emissions-test cheating scandal and told outraged lawmakers that it would take years to fix most of the nearly half million vehicles affected in the U.S. "This was a couple of software engineers who put this in for whatever reason," Michael Horn, VW's U.S. chief executive, told a House subcommittee hearing.
SeaWorld to sue: SeaWorld San Diego's parent company said it would sue the California Coastal Commission over conditions the state agency imposed that would ban killer whale breeding in the marine theme park. SeaWorld Entertainment called the restrictions on its expansion project “overreaching.” The upshot, it said, would be that its killer whale show would eventually end when all of the orcas die in captivity.
Twitter layoffs: Twitter CEO Jack Dorsey may have spoken too soon in June when he described the company's direction as “extremely strong and beautiful.” The San Francisco microblogging site will cut 336 jobs, or 8% of its global workforce, creating what it says is "a smaller and nimbler team." Also last week, L.A. Clippers owner Steve Ballmer disclosed that he now owns 4% of Twitter's stock — more than Dorsey owns.
Beer merger: Another round of mergers is sweeping the beer industry. Anheuser-Busch InBev agreed to buy rival SABMiller in a blockbuster deal valued at $110 billion that would create a behemoth in the global beer market. It follows InBev's purchase last month of Golden Road Brewing in Los Angeles. "For AB InBev, mergers and acquisitions are part of their DNA," said Eric Shepard, executive editor of Beer Marketer's Insights.
No naughty bits: Another major hotel company is saying no to porn. Hyatt Hotel Corp. said it would pull all adult fare from entertainment systems in its guest rooms. Hyatt is following the lead of Marriott International and Hilton Worldwide. Hospitality experts say the move was motivated by a steady drop in revenue from in-room entertainment as more guests turn to the Internet to download movies, games and video clips.
What We’re Reading
And some recent stories from other publications that caught our eye:
Workers' comp: A strong offering from ProPublica about efforts by companies to opt out of state workers' compensation and write their own rules. Texas lawyer Bill Minick is leading the charge, saying he wants to rework "one of the pillars of social justice that has not seen significant innovation in 100 years."
Enough's enough: When is it time to pull the plug on a struggling start-up? Re/code says Uber Chief Executive Travis Kalanick offered this advice to 1,200 budding entrepreneurs at UCLA’s Royce Hall: “When you are talking about, ‘I will lose my sanity for real,’ that’s when it’s time to move on.”
Missed opportunity: Apple Music’s free trial period is over. Variety notes that Apple won’t say how many subscribers have signed up. But the entertainment trade publication says this much is clear: “An opportunity was blown.”
Dangerous work: What's the country's deadliest workplace? Believe it or not, according to the Minneapolis Star Tribune, it's the family farm "with fatality rates above other high-risk industries such as mining and construction."
Disappearing data: Information, they say, wants to be free. But what happens when digital info enjoys so much freedom, it disappears from sight? As the Atlantic puts it: “Until you lose something big on the Internet, something truly valuable, this paradox can be difficult to understand.”
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.
