Most Californians Have Insufficient Insurance Coverage

Owning real estate has inherent risks. From burglary to floods and fires, your possessions or your home itself could be damaged substantially by forces outside of your control. Fortunately, we have insurance to deal with those exact circumstances. In fact, when we handle an escrow for a real estate transaction involving a lender, the buyer is almost always required to get fire insurance (especially in California) before the purchase is allowed to go through. The lender (usually a bank) provides the buyer with the capital they need to purchase the property, so it makes sense that the lender would want to protect their investment in case of a disaster like a fire.

Over the past few weeks, many California home-owners were struck by tragedy when forest fires did damage to thousands of homes, some burned completely to the ground. In the aftermath, now that the fires have been contained, they have to figure out exactly how far their insurance coverage will get them since homeowners on average tend to be significantly underinsured. Insurance companies, like all other companies, are in business to make a profit. They don't want to pay any more money than they have to, so if you're one of the unfortunate Californians having to deal with this, you really need to be proactive.

Even if your home isn't in one of the current fire zones, you need to be vigilant for the future, because these forest fires have become an almost-yearly feature for Californians. Be careful with every document you sign regarding your insurance coverage. In order to maximize their profits, especially in a high-risk state like California, some insurers have been adding extra provisions to policies when customers come in for seemingly-routine renewals. The new provisions will often limit coverage for smoke damage (as opposed to damage from actual flames) or will set a short time limit within which a customer must report such damage.

One of the most common issues that homeowners run into is not being insured enough. Often, it's because of the rising costs of building materials. Now, insurers suggest that you get coverage for more than what you think you need. You can overapproximate material and labor costs, and some policies even let you include upgrades for changes to the house's wiring or for the cost of personal property, like televisions and computers. To get coverage for those products, though, you should take a video of your home and its contents, to provide proof to your insurance company if they try to give you a hard time about it.

Some insurance companies have decided to leave California entirely, stating that it's too expensive to provide insurance in an area so prone to wildfires. Others charge incredibly high rates, set exorbitantly expensive to make sure they can cover their costs in the case of a disastrous wildfire. One state-sponsored program, the California FAIR Plan, provides less costly coverage than most private companies, but will only provide up to $1.5 million in replacement costs, so you should think carefully about whether you would be sufficiently covered before you purchase such a plan.

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California Law Requires Majority Renewable Energy Sources by 2030

Energy efficiency is a popular topic around the world, especially when being discussed in relation to transportation and construction. The fact is, every time a new vehicle is produced or a new building is constructed, the total amount of energy usage in the world goes up. However, if engineers and designers are able to make the new products more energy-efficient than the ones they are replacing, then over time, energy consumption can realistically be reduced significantly. The main reason that many people oppose using "green" sources of power, like solar or wind, is that the types of equipment needed to produce and store renewable energy have very high initial costs when compared with non-renewable resources like gasoline and coal. Over time, the costs tend to be offset by lower electricity costs, but it can be difficult for a new homeowner to come up with an extra $10,000 or more to put up solar panels.

A law passed in California will make it so that new homeowners will no longer really have a choice on the matter. Surprisingly, the unanimous approval of the bill by the California Energy Commission was preceded by very little debate, which just goes to show how much of a priority clean energy is for Sacramento lawmakers. The new law now requires that, by 2030, over half of the energy used in the state will have to come from renewable resources (i.e. non-carbon fuels). Additionally, the electricity pricing scale in California is getting restructured over the next year. The new pricing is expected to adjust the rates based on what time of day electricity is being used. So, more energy-efficient homes (especially those with the capability of storing power) will be able to save money.

Even though California is already the country's leading state in terms of renewable energy sources like solar panels, solar power only provides about 16% of the state's total energy (significantly less than the future 50% requirement). In order to meet the expectations, builders/designers have two ways to incorporate solar power: they could design all new homes with solar panels on the roof, or they could design neighborhoods with a central hub of solar panels that can be used to supply power to all homes in the surrounding community. Analysts expect that the addition of solar panels to new construction houses will raise the price by at least $8,000. Although the electricity cost savings over years of solar panel usage will outweigh the extra cost over time, some homeowners might instead choose to "lease" the panels, by which they pay a monthly rate to use the solar panels instead of buying the panels outright.

There are other sources of green energy that don't involve solar panels, but many of them require a very large investment in local infrastructure. Generally, wind energy and nuclear power are difficult to collect on an individual basis. It's not like designers could realistically put up a wind turbine in every backyard. So, although the panels are costly and the technology still needs time to advance, solar energy seems to be the only way of accomplishing the legally-mandated goal by 2030 without having a private company take over the electricity grid. It's hard to tell what options will be cheaper in the long run, but for now, solar seems to be the safest bet.

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Federal Law Prohibits Banks, Escrow, and Title Companies from Participating in the Sale of Marijuana-Related Businesses

The sale and consumption of marijuana, both medicinally and recreationally, is a pretty controversial topic throughout the United States. Some view marijuana as a dangerous substance that should be banned, comparable to hard narcotics like cocaine or methamphetamine. Many others view marijuana as a substance that should have limitations (similar to the sale of alcohol and tobacco), but not be completely illegal. Then, there's the even deeper issue of medicinal versus recreational usage. Some believe that marijuana should only be used when absolutely necessary (i.e. as a diagnosed treatment for a legitimate medical condition like glaucoma or nausea caused by chemotherapy), and some believe that cannabis isn't dangerous enough to be limited much, if at all.

The main difference between cannabis and substances like tobacco and alcohol is a lack of information. While there has been plenty of research done on the health effects of tobacco (cancer, asthma, etc.) and alcohol (impaired motor skills, liver disease, etc.) and even the effects on a fetus, there really isn't enough evidence to make a conclusive ruling on marijuana. However, for a while, it didn't matter whether marijuana was healthy or not. It didn't matter if it could impair motor skills or give a smoker asthma, because the sale and/or consumption of marijuana was illegal in the U.S., both on a federal and state level.

Over a decade ago, several states (California being one of the first) began to legalize medical marijuana, which could only be purchased from a licensed dispensary with a prescription from a doctor. Then, much more recently, states began legalizing recreational marijuana usage. However, that doesn't mean much from a business standpoint, because although marijuana is now legal in California, it's still illegal according to federal law. That may change within the next several years, but as of this moment, the law is the law, and that's all there is to it.

Because marijuana is still illegal federally, many businesses that must comply with state law (such as escrow/title companies), are not permitted to participate in any transactions regarding businesses that handle the sale of marijuana. In fact, in April of 2017, several national title companies received a memorandum from the Office of the Chief Underwriting Counsel that if the title company gets any indication from a buyer, seller, or broker that the Land will be used for growing, processing, distributing, or dispensing any types of marijuana-based products, they aren't allowed to be involved in the handling of any escrow or other funds of any type, issue any type of zoning coverage, or issue title insurance (except with the inclusion of an exception related to violation of federal law). This policy even applies to an entrepreneur looking to buy property that they will then rent out to tenants who may be involved in the marijuana industry,

Federal laws are taken very seriously by businesses involved in escrow and the transfer of funds, including banks. Banks are federally chartered, insured by the FDI, and use the Federal Reserve wire system. If those banks start breaking federal laws (even laws that don't exist at the state level), the bank can lose its charter and FDIC insurance, and eventually get shut down altogether. Just like banks, escrow companies lose their legal ability to operate if they break federal laws, especially in the financial realm, and for most of those businesses, it simply isn't worth the risk of getting involved in any transaction that might violate federal law.

For that reason, escrow companies (just like title companies and banks) don't take part in transactions involving property (or businesses) that are connected to the marijuana industry. It can be next to impossible for an entrepreneur to start that kind of business with a loan from a bank, because banks won't provide the loans and title companies won't close the sale (a closing is usually required by a lender). However, in some situations (where the sale is an all-cash offer, with no financing), there are law firms with real estate experience that can close real estate transactions. As of now, federal law makes it nearly impossible to do business in the cannabis industry if you need bank financing or plan to go through an escrow company. The laws may change in the future, but for now, it is what it is.

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Robocallers Use Out-of-State Loopholes to Evade Strict California Regulations

Robocalls, even from a company or political platform that you feel connected to, can be annoying at the best of times. Recently, there was a controversial legal battle centering around freedom of speech, the conclusion of which was that the state of Montana technically has the legal right to pass a law banning robocalls, even those of a political nature. At the very least, this decision could help Montanans to crack down and have specific rules regarding such calls, in an attempt to reduce the number, if not do away with them altogether. Interestingly enough, discovers David Lazarus in his L.A. Times article, California has some pretty strict laws regarding robocallers. It just so happens that nobody follows them.

Politicians in California have found loopholes to get around the laws regarding robocallers. According to the California Public Utilities Code, every robocall within California is required to begin with a live person and the name, phone number, and address of the organization making the call. Then, the live operator has to ask permission and get consent before playing the pre-recorded message. Only if every single one of those criteria is met is the robocall legally permissible. Of course, because most people are so accustomed to illegal robocalls, a call meeting those criteria tends to resemble telemarketing more than robocalling, which, of course, has its own set of negative responses.

Californian homes get constant robocalls from the beginning of election season all the way to election day. The way that most get away with the robocalls without technically breaking state law is by designing the calls to originate outside of the state. If the robocall is coming from a computer server in another state, technically it doesn't require a live operator or affirmative consent or really any other regulations before playing the message. Of course, even though this strategy avoids breaking state laws, it may be breaking federal laws, although that doesn't stop much. According to federal law, robocallers can't call cell phones (again, something that still happens all too often), but the federal policy has no restriction on robocalls to landlines. Even though many people have given up their landlines over the years, there are still several million throughout the country that can be targeted.

As you can see, there are restrictions on when and how a political representative can place robocalls. However, those regulations can be easily side-stepped. There is a potential solution, though. Because the callers can avoid state regulations by making the calls from another state, this can be prevented by passing a regulation that prohibits political robocalls from being placed out of state. If the political groups have to place their calls from in state, they will be forced to follow the state regulations, which would reduce annoyance and frustration among many recipients. Of course, this would severely limit the scope of a political group's reach, but at least they would be able to better target voters interested in their specific platform.

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California has Potential to be a Strong Contender in Amazon's Search for New Headquarters

Last week, an exciting opportunity arose for cities throughout North America. Amazon Inc. announced its plans to expand further by building a second headquarters, dubbed HQ2. Since the announcement, mayors and governors across the United States have been submitting proposals and offering tax incentives to the giant company, trying to get Amazon to choose them. According to Andrew Khouri's L.A. Times article, California won't be offering quite as much as other states when it comes to tax incentives, but instead, will be relying on its inherent attractiveness as a metropolitan area with good weather, education opportunities, and skilled laborers.

In some states, like Wisconsin or Nevada, billions of dollars in subsidies and tax incentives are offered to manufacturing and tech companies looking to make a move. They hope that the tax incentives they provide initially will be paid off in the future by thousands of more jobs in the area and an improvement in the housing market. Wisconsin is in the process of working out a $3 billion package with television producer Foxconn. In 2014, Nevada's $1.3 billion package earned them Tesla's lithium-ion battery factory, a factory that Governor Jerry Brown has been vying for.

The amount of money being offered may not matter as much for landing the Amazon deal. Amazon is one of the wealthiest companies in the world, and they have made the parameters of their new headquarters well known. They are looking for a metropolitan area with skilled workers, desirable housing, good distribution routes, and a strong base of customers. With its shipping ports, high quality of life, and many prestigious public universities, California could be a strong choice for Amazon's second headquarters.

Analysts believe that Amazon's main purpose in being so public about their search is to try to get competing offers from different cities so that they can use them to leverage a better tax incentive package from whichever city they actually want for their headquarters. That's why they believe that California has a good chance. Research shows that around 90% of the time, companies would choose the city they chose whether they got the same incentive package or not. It really seems to be up to California itself to shine. Either Amazon wants to build HQ2 here or the company doesn't. The amount of money being offered is unlikely to make much of a difference.

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Latest Fortune 500 List Contains 53 California Companies

The well-known "Fortune 500" is a list of 500 of the nation's top companies, published each year in a list by Fortune Magazine. The companies are those that bring in the most revenue and show the highest profits, which means they are likely to do well in the coming year. Basically, they are the 500 best companies on the market in a given year. Many, especially in recent years, are tech companies, and some have even been on the list for many years, even decades in some cases. According to Makeda Easter's L.A. Times article, of the 500 companies, 53 are based in California.

While California is not the number one state in regard to their number of Fortune 500 companies, California falls in a close second behind New York's 54 companies. The remaining 400 or so companies have headquarters spread throughout the rest of the country. California has two companies ranking in the top 10 of the Fortune 500 list: Apple is in third and McKesson Corp. is fifth. Trends show that California's biggest earners are technology companies and pharmaceutical/biotech companies.

Even with some companies having difficulties with slowing sales or scandals within their board of directors, California companies still improved quite a bit this year. Chevron came in 19th place on the list and Wells Fargo unexpectedly rose to 25th place, even after recent bad publicity. In Los Angeles specifically, construction company Aecom was in 161st place, real estate firm CBRE Group was in 214th, and Reliance Steel & Aluminum Co. placed 320th.

The percentage of companies with women CEOs that make it onto the Fortune 500 list is very small, only about 6.4% of the 500 companies. However, of the 32 companies on the list with women CEOs, 7 of those companies are based in California. Apple Inc., which is based in Cupertino, California, made the largest profit this year, at approximately $46 billion, but Wal-Mart still holds the number one spot on the Fortune 500 list based on revenue alone. Approximately two-thirds of the US's total GDP come from the 500 companies on the list. If trends continue as they have been, California's companies could end up being the most valuable on the list in time.

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California Tourism Indutry Grows for Seventh Consecutive Year

Tourism can be a huge economic boost for any given state or country. Tourists stay at hotels and motels, they eat at restaurants, and they shop at stores, all of which can help to stimulate the local economy. Big cities like Paris, New York City, and London are popular tourist destinations, but cities throughout California, especially Los Angeles and San Francisco, have been booming over the past several years. In fact, according to Makeda Easter's L.A. Times article, research shows that California's tourism industry has grown every year for the past seven consecutive years.

Data showed that spending on travel in California was up 3.8% last year to $126.3 billion. Over a million jobs in the state are involved in the tourism industry, up 2.5% from the year before. Even tax revenue was up from tourism-related expenditures. Tax revenue was over $10 billion last year and tourism incorporated nearly 3% of the state's GDP (gross domestic product). Not only is California generally a popular tourist destination, economists believe the continuing improvement of its tourism industry could be due to economic growth around the country and the world.

As the global economy improves, people have more money to spend and feel more stable and willing to spend the money. Because of that, they tend to take more vacations and spend more money on travel. Research shows that California is the number 1 tourist destination in the country. Its tourism industry is 2.5 times bigger than that of Florida, which has just as many tourist attractions and theme parks as California. Additionally, of the hundreds of millions of tourists each year throughout California, many of them come from different parts of California itself, rather than from out of the state or from other countries.

California tourism is expected to keep going strong. Some theme parks, such as Disneyland, are undergoing changes and renovations that they hope will bring in more visitors, but only time will tell if the improvements will succeed. People like to visit California for its weather, beaches, and popular social scene, but as the value of the dollar continues to increase, people may look to travel outside of the country for vacation. California can be a very expensive place to live, so people's preferences can change pretty quickly. Maybe next year will be the eighth consecutive year of growth. We'll just have to wait and see.

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California's Wine Exports Reach Record-Breaking Levels

Of the various foods that California produces for export, many have faced hard times over the past couple of years, mainly due to the scarcity of water throughout the state. Almonds, California's largest export, grow on trees that require gallons of water to grow properly. Those almond trees have suffered over the past couple of years, and, even though rainfall has increased, the trees may not recover, at least not any time soon. Fortunately, even though the almond market has hit rough times, other exports from California have reached record levels. In his L.A. Times article, Geoffrey Moan discusses increased exports of American wines in 2016, led by California's brands.

Even with the increased strength of the dollar, a limited water supply, and high tariffs, which all had limiting effects on the wine exports, foreign trade revenue still increased from $1.49 to $1.62 billion in 2016. Of all of the wine exported from the United States, around 90% came from California. Not only did the volume of wine increase, so too did the prices of those wines. Golden State labels have gained higher prestige in foreign markets, and vintners take advantage of that "premiumization" to mark up the wines. It seems to be a good business strategy that hasn't negatively impacted demand while still increasing revenue.

The single country that imported the largest amount of U.S. wine was Canada, accounting for $431 million in table wines. Behind them came Germany and Britain who, along with the rest of the countries in the European Union, imported a total of $685 million in American wines. Behind them came Mexico, Switzerland, and several Asian countries, who collectively accounted for the remaining portions of U.S. wine export revenue. Wine exporters have faced some difficulties with laws in British Columbia and other areas that prevent retailers from carrying foreign wine brands, but exports have still increased despite such restrictions.

Exporters throughout the U.S. expect that the demand will continue increasing, so limits on foreign retailers could pose future issues. While some exporters are working with foreign governments to try to gain equal access to their markets, other exporters make "trade tours" through the countries that import the most product, to renew their relationships and remind importers of their company's commitment to the wine market. While American wines have plenty of domestic demand, which is why the wine industry depends much less on exports than other industries, vintners are focusing on foreign markets mainly because they represent the best opportunity for fast growth. Their work right now will help to define their growth in the industry in years to come.

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Proposed Bill to Help Widowed Spouses Renegotiate Mortgage Rates

Under current practice in California, if a widowed spouse is an owner of their home, but wasn't on the mortgage note at the time of their husband or wife's passing, obtaining a loan modification can be extremely difficult. Often, when the overall household income goes down due to a spouse's death, the surviving spouse will have trouble coming up with the monthly payment on a mortgage that was determined earlier on based on two salaries instead of just the one. Additionally, laws don't protect widows and widowers from being foreclosed upon while trying to get their bearings. Fortunately, as described by Andrew Khouri in his L.A. Times article, a few Senators have proposed a bill to try to help people stuck in that kind of predicament.

A common practice by banks in these situations is called "dual tracking." Dual tracking simply means that a bank is pursuing a foreclosure while also negotiating a modified mortgage with the client at the same time. Through that method, banks are able to cover all of their bases and make sure that they don't get stuck in an endless cycle of paperwork. Unfortunately, that leaves widowed homeowners trapped. While loan servicers will generally accept payments from the surviving spouse, they rarely can get through all the red tape around proving ownership before the foreclosure has completed. So, in many of these situations, unless the surviving spouse has some way of making up the difference in monthly loan payment for long enough to hold off a foreclosure, they end up losing their home due to no real fault of their own.

One of the benefits to homeowners of the new bill being proposed is that dual tracking will be banned. In other words, foreclosure proceedings are put on hold while all of the required documentation is taken care of. Only once the lender and borrower have finished negotiating the loan modification can any necessary foreclosure continue. This provision in the bill can hold off foreclosure for a limited amount of time, but it only applies to major financial institutions. Smaller banks are exempt from the regulations, which makes sense since smaller lenders are less able to afford to grant extensions on their loans.

The bill, Senate Bill 1150, has been amended a few times and has since been passed by the Senate and Assembly. One important amendment added to the bill was a three-year sunset provision, which means that the bill will have to be formally renewed every three years or it will be thrown out. Legislators hope that the new laws will help to fix the system that punishes widowed homeowners for factors beyond their control. Since the bill has already been passed, all that is left is for the governor to sign it into law. Then, we shall see how much the system really changes.

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Google Fiber Set to Make Debut in Irvine

We all know the frustration of slow internet. Not only can it delay our work, it can make relaxing at the end of the day an arduous process. The endless buffering, the error messages, and the snail-paced downloads are annoying at best, and anger-inducing at worst. Fortunately, no matter how slow your internet speed is now, technology has been growing in leaps and bounds over the last several years. In fact, Google has been working on a new type of high-speed internet connection called Google Fiber. According to Andrew Khouri, in his L.A. Times article, some apartments in Orange County, California, are even getting a chance to try it out before anyone else.

The Irvine Company, a private real estate company that owns a large portion of the rental property in the city of Irvine, California, just released a statement that Google Fiber is being made available in many of its properties. While they didn't reveal many specifics about when the internet will be made available, Google has stated that their beachhead market will be small businesses and some apartment communities in Irvine. Irvine Co. is Orange County's largest landlord, and as such, is drawing even more interest through their sudden move to provide this highly-sought-after amenity.

Google Fiber isn't just slightly more powerful than normal internet; it can reach speeds up to 40 times faster than the average broadband connection. Housing developers, business owners, and many others are doing everything they can to get a foot in the door with Google Fiber, knowing that the ultra-high-speed internet can be a huge benefit for personal use or for prospective home-buyers. Analysts believe that having the high-speed internet that Google Fiber offers will be a way for commercial landlords to quickly draw in new renters.

Google released a statement recently that said that the roll-out of Google Fiber will be limited. The properties will be limited to those located in Irvine that already have the necessary "existing fiber infrastructure." Fortunately for the Irvine Co., they have been designing their buildings with extra empty conduits since the 1980s, which could make it easier to install Google Fiber without much hassle. While Google said a while ago that they are also looking at Los Angeles and San Diego for a roll-out of the new technology sometime in the future, Google failed to provide further information on the matter. If Google Fiber is as successful as expected in Irvine, it will likely spread very quickly throughout the state, country, and even to various other areas around the world. Everyone wants faster internet, and this could be the technology that gives it to us.

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"365 by Whole Foods" Market Boasts Lower Prices and Higher Efficiency

This week, Whole Foods opened their "365 by Whole Foods Market" in Silver Lake, the first of a set of 13 such stores to be built around the country this year. The supermarket chain's new style of smaller store has already interested many customers in its first couple of days, and the company expects the fad to grow rapidly. In her L.A. Times article, Samantha Masunaga describes the new type of store and some of the ways it differs from the classical Whole Foods supermarket.

365 is Whole Foods' first smaller format store. However, it features many high-tech options and better deals than their regular stores, making it a highly sought-after alternative. People, especially Millennials, go to Whole Foods because they are looking for healthier, organic food options. However, eating healthier is often costly, and most people have pretty inflexible budgets when it comes to groceries. Therefore, when shoppers found out that 365's products were the same, but at a cheaper price, they flocked to the new store.

On Wednesday morning, when the store opened its doors for the first time, the parking lot was full and then some.  Interested shoppers circled the lot, having trouble finding a spot to park their cars, but when they finally got into the store, they were amazed by what they found. While the 365 has a smaller selection than a normal Whole Foods, its prices are significantly cheaper, which, too many Millennials with little disposable income, is a worthwhile trade-off. Additionally, the displays of produce feature electronic readers that measure the weight of fruits or vegetables and print stickers based on the measurement. In that way, the check-out process is quick and easy, saving time for both customers and employees.

Besides the reduced variety, the new 365 will also be missing Whole Foods' signature deli counter. However, it still has a large salad bar and a variety of pre-cooked hot food items. Analysts believe that 365 is likely Whole Foods' response to losing their share on the health food market. Other stores like Ralphs and Target have begun to provide organic options for their customers, which means Whole Foods is facing much greater competition in a once-blue ocean. Over the past three quarters, Whole Foods has shown declining sales, but the management hopes that the smaller, less cost-intensive 365 stores will help to turn that around over the coming year.

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Disneyland to Incorporate Surge Pricing in Response to High Demand

Nearly 40 years ago, Robert Crandall, the then chairman of American Airlines, first employed a "dynamic pricing" system through which customers could get "super saver" fares, which adjusted based on demand and seat availability, among other factors. Since then, dynamic pricing has spread throughout many markets, which has caused surge pricing to be more of a normal part of the economy. As described by James Peltz, in his L.A. Times article, Disney became one  of the most recent companies to join airlines, online retailers, and ride-sharing applications in employing dynamic pricing.

While Disney's decision to incorporate surge pricing at Disneyland and its other theme parks may have come as a surprise to many customers, business analysts saw it as the sensible move for the company. Airlines are able to fill more seats without becoming overbooked using dynamic pricing because the pricing strategy encourages customers to buy seats on days where demand is usually lower. In that way, both customers and airlines can benefit. Customers are able to get a discounted price while airlines are able to sell tickets and fill seats on an otherwise underbooked flight. In much the same way, Disney will be able to control daily traffic to some extent.

Under the new policy, visitors will have prices ranging from a 4% discount on low-traffic days to a 20% surcharge on exceedingly busy days. This plan allows Disney to follow the same laws of supply and demand that all businesses do. Disney's supply is limited since they can only allow a certain number of visitors at any given time. Very often, especially in the summer months, when many people are out of school or are able to take time off from work, more people want to enter the parks than can be safely admitted, so some have to be turned away. This is bad for business, because it reduces the number of tickets Disney can sell, and it leaves potential customers with a bad taste in their mouth and make them less likely to want to return to the park in the future.

So, rather than turning away potential customers, surge pricing can convince customers that their day of enjoyment at the park might be more worthwhile if rescheduled to a different day. If they visit the park on a low-traffic day, the visitors will not only receive reduced prices, they will also be in a much less crowded park, which will allow them to enjoy more rides and attractions. Dynamic pricing has become more prevalent in the society because of improvements in computing technology. American Airlines was able to employ surge pricing originally because they had a computing system that allowed them to easily compare prices and availability, enabling them to sell seats at competitive prices. For most businesses, dynamic pricing was impossible until their data became much more computerized.

From ride-sharing services like Uber to the stock market to auto dealerships, dynamic pricing has spread throughout most markets. Data is key in determining competitive pricing. Teams use data from previous games and sales of merchandise in order to determine which games will be most in demand, and therefore should have the most highly-priced tickets. Pricing for hotels can be determined based on the events happening in the area and the level of demand for short-term housing. In general, improvements in computing technology have made pricing a huge part of sales and have improved the profit margins of many businesses. In the future, dynamic pricing will likely spread to every business, thus giving customers a choice. A potential customer may not like the increased price, but when it comes down to it, they can either take it or leave it. Every customer has the choice whether to purchase something or not.

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New Research Involves Renewing Groundwater Supplies, Not Filling Reservoirs

In a test on a potential new way to reduce the effects of California's recurring drought conditions, researchers are looking not to expand reservoirs, but rather find a way to funnel the excess rainwater from the El Nino winter back into the groundwater, where it can be put to better use during the drier seasons. Currently, the majority of rain runs off into the ocean, simply because a large portion of the land is covered in concrete or asphalt, which doesn't allow rainwater to permeate. Through this ongoing experiment, depicted in Geoffrey Mohan's L.A. Times article, the water is instead redirected to the fields of involved farmers, where the water is able to seep into the soil.

While creating new reservoirs and expanding existing reservoirs could accomplish the same goal, the experiment aims to show that it can be accomplished more naturally and cheaply. Simply by harnessing the power of gravity, storm runoff could be forced into irrigation channels. From the irrigation channels, several fields in succession can be watered before the rest of the runoff can make it to nearby lakes and rivers. Once upon a time, farmers used only surface water and groundwater to tend to their crops. In this day and age, the groundwater levels are so depleted, especially during drought seasons, that there isn't enough water to make that system feasible.

That system could once again become helpful for farmers and common folks alike, once the groundwater levels have been put back to normal. Through a large-scale application of the concepts present throughout the experiment, everything from wells to reservoirs could be filled with the rainwater that would normally be wasted as runoff to the ocean. Unfortunately, not very many people have volunteered to be a part of the study. Some are, quite reasonably, simply unwilling to risk their trees in the event that the experiment ruins them. More often, state or federal agencies control the water in dams and canals and put up a lot of red tape due to their worries that the water may benefit people who aren't paying for it.

The research is risky, but well worth it in the long run. The water might spur fungal disease in the trees, but it also might kill off worms and mites. The test measures whether the concentration of contaminants like nitrogen-based fertilizers increases in the total groundwater and what effects that might have on the ecosystem. In general, the experiment is looking to make sure whether this would be an effective way to store water for use in drier times. From what has been measured so far, the irrigation hasn't ruined the test trees, but it will still be a while before significant results can be found.

According to researchers' approximations, there are about 3.6 million acres of agricultural land in California alone that have the proper characteristics to make them usable in groundwater-refilling projects. The only issue is that everyone would have to work together to make this concept a reality. For the first few years, crop yields will likely decrease due to the plan, which will make many farmers want to drop out. However, if they all stick it out to the end, the groundwater levels would eventually become properly equilibrated, which would extremely dampen the effects of future drought conditions in the area. It would just take a lot of cooperation between individual farmers and governmental agencies, as well as a unified belief that renewing the environment will have far more positive effects, both economically and otherwise, in the long  run than making a quick buck today.

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Health Insurance Providers Face Scrutiny Due to Upcoming Mergers

Competition is a major key for keeping product prices low. When that competition is removed, whether by government interference or as a natural effect of the free market, a single company or small group of companies can effectively gain a monopoly on the supplies of a specific type of good or service, which would give them the ability to charge as high a price as they want. It is that situation that many individuals fear may occur in the health care industry. Chad Terhune, of the Los Angeles Times, describes in his article the various mergers currently in the works between health care providers, and the effects that these mergers, if successful, could have on the average American.

For employers and employees alike, these mergers could have huge effects. If all of the pending mergers are approved, then three companies will have control of the majority of the healthcare market, which could lead to a forcing-out of smaller, competing businesses, which could grant them more control. Currently, the companies have the following goals: Anthem Blue Cross Inc. aims to buy out Cigna Corp. for $54.2 billion, Aetna Inc. wants to take over Humana for $37 billion, and the smaller company Centene is looking to acquire Health Net Inc. for $6.8 billion. In the end, Anthem, Aetna, and United Health Group could be at the top of the industry, in California at least.

Many opponents to these mergers fear that the benefits that these health care providers receive by expanding will not be passed on to consumers. In fact, they fear that the new power earned by the companies might lead them to increase rates, forcing customers to pay more or try to find an alternative provider, which would be quite difficult to accomplish in a short time period. They also want to make sure that these large companies have restrictions and extra rules making them focus on improving patient care. Partly in response to the issues raised by opponents, the Department of Justice is having anti-trust officials investigating each of these deals, but in general, state approval determines the end result.

States tend to put the most regulations on the health insurance market. So, in the end, it is usually up to your specific state to decide what conditions the merging companies will have to meet, including holds on premium increases and general network standards. There are, however, existing issues in the system, involving a patient's ability to get insurance at all, as well as the affordability of the patient's final choice. Often, health insurance providers will set a limit on the amount of coverage they will provide to specific patients, depending on the patients' health and medical history. In some instances, this can actually help the common customer. For example, Anthem at one point declared that it would provide a maximum of $30,000 in coverage for knee and hip replacements. Because of this limit, customers were forced to shop around to find a medical practice that would do the procedure for a lower price, which forced about 20% of hospitals to lower prices so as to not lose the business.

Proponents of the mergers hope that similar situations will occur in the future of the health insurance industry. They hope that, as the companies gain more control, they will be able to force medical providers to lower prices to keep the demand constant. They expect that consumers will see a lowering of overall costs, both to hospitals and to the insurance providers as well. For now, there is no real way to determine definitively whether the mergers will be positive or negative for the common American. In all likelihood, the mergers will be approved by the Department of Justice. So, these three companies will almost definitely become the leaders in the industry. The only question might be the level of restriction placed on these companies by each state.

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Faraday Future to Break Ground on Billion Dollar Nevada Plant in 2016

Like its competitor, Tesla Motors, electric car start-up Faraday Future has decided to open up shop in Nevada. Faraday Future, a new, relatively small rival to the other electric car producers, was debating among California, Nevada, Louisiana, and Georgia for their billion dollar production facility, but eventually made their decision and will start construction in the beginning of 2016. a main factor influencing Faraday's decision was an offered package of over $300 million in tax incentives by Nevada legislators, According to company executives, this wasn't the only reason, though, and a more detailed analysis of the choice is made in Chris Kirkham's and Ivan Penn's L.A. Times article.

Faraday Future, which is branded as an electric car company, has not yet produced an electric car. One of the company's founders and primary backers is Chinese media mogul, Jia Yueting, who has a net worth of several billion dollars and is ranked as China's 17th-richest person. Many of Faraday Future's top executives previously worked for Tesla and luxury car companies like BMW and Porsche. As such, they have quite a bit of experience with electric vehicles and the selling points behind them. The market for electric vehicles, while it is still undetermined based on Tesla's sales over the past decade, has the potential to grow larger, especially as people become more environmentally conscious and try to find ways to be more energy efficient.

Nevada legislature offered similar perks to Tesla Motors a year ago. With the help of $1.3 billion in tax abatements, Tesla began work on a $5 billion factory outside of Reno. While Faraday only received a $335 million deal, that is still nothing to scoff at, and will go a long way toward creating more jobs in Nevada and producing vehicles that rely more on renewable energy sources rather than fossil fuels. These deals, which might look to some like a waste of money on the part of legislators, can actually be quite beneficial to the state as a whole due to the production of jobs and the increase in goods for export to other states and other countries. The money in tax incentives that Nevada is providing to these companies can be earned back many times over by increased productivity over the long-term future.

Faraday's business model must be pretty sound for the state to take a risk and invest in them and in the hope of domestic growth in the future. Faraday doesn't just get the $335 million immediately; they have to prove that their company is moving forward. According to legislators, Faraday will not receive all of the tax abatements and other promised perks until it has invested at least $1 billion toward construction of the plant. Even without help from the tax incentives, Faraday's investment could pay off very well in the long run. As gas prices stay low, more individuals are going back to larger SUVs, since they can better afford to fill up the tanks of such automobiles. However, if and when gas prices rise again, people will be more interested in the fuel efficiency of electric vehicles and hybrids. So, as companies like Faraday and Tesla start getting ready now, they may be able to have their production running smoothly by the time demand for electric vehicles increases again.

While the tax incentives helped Faraday to make their final decision of Nevada, there were aspects of the other potential states that could have made them better choices. California, Louisiana, and Georgia all have direct ocean access, which means that they have ports and, therefore, make shipping and receiving of products and parts much simpler. Between California and Nevada, the latter has more wide-open spaces in which to build large factories. All in all, Nevada, which lacked direct access to seaports, still provided close enough access to make shipping of parts not too much of a nightmare in transportation. Highway 15 provides Nevada an almost direct route to the West Coast's ports, which, when combined with the tax incentives, made Nevada a better choice for Faraday's base of production. While we don't know whether California's legislature offered similar tax incentives to convince Faraday to choose the Golden State, in the end, Faraday made its choice, taking the best deal for itself while also benefiting the state of Nevada.

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New Glass Technology Creates Thinner, More Durable Screens

Millions of people in the United States and around the world own smartphones, devices that can cost as much as $800. A huge fear among such individuals is that they will drop or otherwise break their phone, especially its most fragile component: the screen. Dozens of iPhone and Android users break their screens every day, to the extent that there are stores that have been opened specifically to repair smartphone screens and make other repairs. According to Tracey Lien's article, in the L.A. Times, a company called Corning Inc. has a way to make broken screens a thing of the past.

Where windows, soda bottles, and automobile windshields are made of various types of thick glass such as the common soda lime, Corning Inc. has been working on thinner, more durable alternatives for the past several years. Two of Corning's current projects, Willow Glass and Gorilla Glass, are far less breakable than classical glass, and can be made as thin as 0.1 millimeter, In a demonstration, Waguih Ishak, one of Corning's Research Center Directors, showed how a piece of normal glass could be cracked pretty easily whereas even when he exerted his full force on a piece of Willow Glass, he couldn't even leave a scratch.

Glass is formed by the superheating of sand, found mainly on coastlines where it has been created by the erosion of ocean waves on rocks. Glass has been made for thousands of years, and some archeological evidence even shows that ancient Mesopotamian civilizations had found a way to make a form of glass. Corning Inc., however, has advanced so much further than the primitive and brittle glass made accidentally as a byproduct of metalworking. Their products are so thin and flexible that they are able to be rolled up for shipping. Razor-thin willow glass can be shipped in rolls around the world for use in smartphones, televisions, and, one day, maybe even space shuttles.

As Ishak states, while plastic can become yellow and deteriorate, glass won't deteriorate. Furthermore, plastic is far more permeable than glass, meaning that a water can pass through a plastic screen on an electronic device in mere hours where it would take billions of years to pass through glass. So, it seems that Corning's creations really are breakthroughs in the field. A substance that is impermeable to water, can bend without breaking, doesn't deteriorate with age, and is crack and scratch-resistant seems almost too good to be true.

Lien's interview with Ishak provides us with a lot of information on their process while still keeping Corning's trade secrets. For the past few decades, the process involved superheating sand and other materials, then letting it slide down the side of a trough, allowing gravity to form the fused liquid into solid sheets of Willow Glass. Once the sheets are formed, a secret blend of chemicals are used to protect the glass against cracks and scratches. Recently, Corning came up with a method that involves using a roller to make the glass sheet even thinner than what gravity can do, enabling the glass to reach a minimum 0.05-millimeter thickness.

According to Ishak, however, 0.05 millimeter is by no means the thinnest they could make with future advancements in technology. The thinner they can make the glass, the more room there is for a bigger battery, which will extend usage time. Ishak dreams of the day in the not-so-distant future when the the technology inside the device catches up with the glass and allows designers to make smartphones that can fold or tablets that can be rolled up like a piece of paper. Ishak admits that this technology is not around yet, but is certain that when the electronics are ready, Corning Inc. will be on the team, bringing the world the newest technologies of the future. Even so, more durable and longer-lasting electronics are nothing to scoff at, and Corning certainly seems on its way to great things.

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Disney Prices Soar Due to High Demand

Back in 1955, when Disneyland first opened its gates, the one-day admission price for an adult was $3.50. After inflation adjustment, that price would be about $31 today. While that admission price included only 8 ride tickets, extra tickets could be purchased for 35 cents each. To put that in perspective, If a visitor to the park wanted to go on every single one of Disneyland's original 38 rides, it would have cost about $65 in today's money, a stark contrast to the current admission price of $99. In his article, Michael Hiltzik of the L.A. Times investigates some of the reasons why Disney's prices have so greatly outpaced inflation.

Most recently was an increase in the price of Disneyland's unrestricted annual pass, from $779 to $1049. This nearly 35% increase has even the most loyal customers accusing Disney executives of greed, especially since very few new attractions have been added to the park which might help make visitors consider the raised price worthwhile. According to Hiltzik, however, the decision to raise prices is probably not greed-based. Hiltzik believes that Disney's reasons are far more logistic than economical.

Even though Disney's average price of $99 for admission may seem high, especially when measured against the inflation rate, Disneyland still has thousands of visitors per day, from Southern California as well as the rest of the country and the world. Unfortunately, since Disneyland is a park on a limited plot of land, they have a maximum number of guests they can accept at any given time. Sometimes, especially during summer and the holiday season, when people have time off of work and school, Disney has had to close its gates and turn away potential customers simply because it was at maximum capacity.

Hiltzik thinks that this may be why Disney is continuously raising prices to seemingly outrageous levels. Since the $99 cost doesn't seem to be enough to reduce demand, Disney may be raising prices in the hope that people will have to save up money longer and therefore not come to the park as often. While it is not Disney's intention to force customers away, when the park can only house a certain number of people without causing a fire hazard, it needs to find some way to reduce the demand while still maintaining income.

This demand-controlling measure, while upsetting many customers, is not likely to reduce demand as much as some might think, says Hiltzik. While Southern Californians, one of Disneyland's target demographics, may reduce their visits, analysts expect that tourists and other visitors will still bring in enough for Disney to make the same amount of money, if not more, than before while also preventing overcrowding. It's a win-win situation for Disney and for those who can afford the higher prices. As the prices go up, the amusement park will have fewer people, thus enabling visitors to be able to go on more rides and see more attractions without waiting in long lines.

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Rising Insurance Costs in High Fire-Risk Areas

When a home is purchased with a mortgage, using a loan from a bank, the bank will always require the homeowner to get insurance in order to make sure their investment is protected to some extent. Insurance, while a necessity, can be a costly addition to one's monthly or yearly bills. Since an insurance company wants to stay in business, it charges higher rates to provide insurance to individuals in high-risk areas: flood zones, fire zones, earthquake centers, etc, so that it will have the money to pay off claims involving fixing or rebuilding of affected properties. For people like John Stoffan in Samantha Masunaga's L.A. Times article, the costs of fire insurance in drought-parched California make the state almost too costly to bear.

The Stoffan family, whose Northern California home survived various wildfires around Yosemite National Park throughout the years, is finding that their insurance rates may actually be the reason they finally jump ship. The house itself, as well as the county in which it is situated, are considered to be "high-risk" for insurance companies. Even after having installed fire-resistant plants, developed "buffer zones" of areas without any plants surrounding the property, and created holding areas to keep thousands of gallons of water on hand, insurance companies have doubled rated in the past year.

The past four years of dry conditions have made things worse for those living near large forests. The combination of summer temperature and lack of water can turn a forest into a raging wildfire with the merest spark. Because of this risk, home-owners like the Stoffans, no matter how many preventative measures they take, are stuck between a rock and a hard place. They need insurance to have a mortgage to own a home, yet the insurance rates are unaffordable and getting worse. What is their alternative?

While all are hoping for a good winter to break California's dry spell, many are considering moving out of the area altogether. Others have found more creative options to reduce their insurance costs. Some people, like Alpine's Mollie Jacques, have been able to find significant discounts by using insurance companies based in other cities. For Jacques, her choice to switch to an insurance company 100 miles from her home saves her over $700 per year. Some homeowners have even been refused insurance completely and have been forced to use the California Fair Plan Association to have some, albeit limited, coverage.

Communities are coming together in these fire-prone areas to try to make their homes and surrounding land as safe as possible. Since insurance companies determine rates through statistics involving fire department preparedness, water supplies, and availability of emergency communication. With the help of the California Fire Safe Council, a nonprofit organization, such communities are able to purchase wood chippers and other machinery to help clear dry brush and other flammable material. The more prepared a community becomes for a wildfire, the better rates insurance companies will provide. It comes down to economics. Insurance companies will charge a lot of money for taking on a huge financial risk. The more you lower that risk for the insurance company, the less money they will require you to pay.

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Devaluation of the Yuan Affects California's Economy

To shopping centers throughout the Southland, busloads of Chinese tourists are a necessary and regularly expected source of income. Especially in summer months, some places like the Beverly Center get an average of 70 such buses per month, full of tourists ready to spend. Shan Li, Samantha Masunaga, and Andrew Khouri wrote recently in their L.A. Times article about how recent devaluation of the Chinese yuan could have positive and negative effects on various California businesses.

Where 2.2 million Chinese tourists to the U.S. spent nearly $24 billion in 2014, 12.6% more than in 2013, many expect that such spending will likely slow down in the coming months. Up until recently, tourists found that their money would stretch much further on brand-name products in California than in China, but as the yuan loses value, that is beginning to change. Furthermore, even as a decrease in tourism hurts stores and shopping centers, it also affects sales on a larger scale. For certain luxury brands, like Coach, a decrease in sales to tourists leads to a decrease in earning, which causes stock prices to fall.

The current economic trifecta in China (slowing of the economy, devaluation of the currency, and a crackdown on political corruption) has led tourists to become more careful with their spending, according to Li, Masunaga, and Khouri. However, they point out that while the yuan loss in value hurts local retailers, it can actually be quite helpful for importers. For U.S. businesses that import Chinese products, the devaluation of the yuan means that the dollar stretches much further than it did before. Since importers will take advantage of this situation and increase purchasing, experts predict that California's ports will get plenty of use in the coming months. This will help to provide jobs for dockworkers, truck drivers, and warehouse workers.

Unfortunately for exporters, such positive outcomes are not likely. They are expected to suffer far more than local businesses due to the fact that import taxes in China can range as high as 20 to 30%.
Some tourists who come to the U.S. regularly anyway to visit family or send their children to summer camp may continue shopping in the U.S. for such luxury goods, but it wouldn't make economic sense for Chinese companies to continue importing American goods when the value of the yuan is so far outweighed by the value of the dollar. Costs would be much higher, especially on top of the exorbitant import taxes, and so it would be unlikely that American exporters would find business improving while the yuan's devaluation continues.

As Louis Glickman once said, "The best investment on Earth is earth." Analysts expect that as the yuan's value continues to plunge, Chinese investors will slow down the purchase of American products and focus on American real estate. Since the dollar remains relatively steady, many such investors will prefer to "park" their money in a building, rather than hold onto the quickly-devaluing cash. The increasing prevalence of property investment could help to dull the effects of the reduction in retail. However, economists warn that China's economy is connected to our own. If China's economy starts to fail, then that won't be good news for the U.S.

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Foreign Purchases of Some American Businesses Face Government Examination

7/20/15 - The Committee on Foreign Investment, an agency through the United States Treasury Department, is responsible for deciding whether to approve or deny any attempted purchase of an American company by a company based in another country. Some such buy-outs are simple and easily approved. Others, like the purchase of Micron Technology Inc., as discussed by James F. Peltz, in his L.A. Times article, require much more discussion and consideration.

The Committee on Foreign Investment only tends to take issue with purchases when they may affect national security. For example, in 2005, a major Chinese oil company called CNOOC Ltd. made an offer of $18.5 billion to purchase Unocal Corp., a California-based oil company. Politicians took issue with this proposed buy-out because they feared that foreign ownership of the American oil provider could possibly cause major problems for the future of American energy security. Eventually, due to complaints and protests regarding the deal, CNOOC Ltd. decided to retract its offer.

More recently, another Chinese company, Tsinghua Unigroup Ltd., has reportedly been preparing a $23 billion offer for the purchase of Micron Technology Inc., a major manufacturer of dynamic random-access memory chips. While Micron claims that no offer has been received yet, Peltz’s sources believe that the deal may not go through anyway, even without interference from the Committee on Foreign Investment. Micron’s stock prices in December were at $36 per share, and while those prices have dropped throughout the year, analysts still believe that the expected offer of $21 per share will not be enough to convince Micron to sell.

Were such an offer proposed by Tsinghua Unigroup and accepted by Micron, it is unlikely that the sale would be approved without a struggle. The Committee on Foreign Investment would have to come up with some pretty compelling reasons to grant approval for a state-owned Chinese country to gain control of one of the only major American producers of memory chips, found in so many devices from smartphones to personal computers. Memory chips are everywhere, in the public sector and in the government, and the change in ownership could pose a security risk, especially after the large number of recent cyber-attacks that have been traced back to China.

Having spent over $200 billion, last year alone, on importing integrated circuits, China, like other Asian countries, wants to become more independent and work on developing its own network of memory chip production, rather than continuing to purchase from America and other countries. Unfortunately for them, they will probably not achieve this goal through a purchase of Micron. Between the Department of Defense’s responsibility to protect national security and Micron’s high stock prices, it is more than likely that this Micron deal will end the same way as Unocal Corp.’s did.

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