Everybody feels bad -- so why are stocks and consumer spending up?

Sales of Los Angeles hotels are brisk

With the hospitality business in recovery and some financially troubled properties coming to market, sales of hotels in Los Angeles County have increased dramatically in 2011, a real estate brokerage said.

Investors have spent $550 million so far this year on such properties as the Kyoto Grand Hotel and Gardens in downtown Los Angeles and the Sheraton Universal Hotel Los Angeles in Universal City, a 77% increase from the same 10-month period in 2010, real estate brokerage Jones Lang LaSalle said in a report.

Los Angeles is one of the largest tourism markets in the country and second to New York as the top-ranked destination for overseas visitors, the report said. Historically, Los Angeles’ most well-known attractions have been Hollywood studios, Santa Monica beaches and Beverly Hills shopping. However, downtown Los Angeles has come into its own following a decadelong renaissance.

“The revitalization of the downtown Los Angeles market, along with an increased volume of international and overnight visitors continues to be a key driver for the economy,” said John Strauss, a managing director at Jones Lang.

Downtown Los Angeles is seeing a flood of foreign and domestic investment in major development projects. Korean Air plans to demolish the 896-room Wilshire Grand Hotel north of Staples Center and replace it with a $1-billion mixed-use complex with office, retail and residential components, along with a luxury hotel. The existing hotel is slated to close at the end of the year.

Also planned downtown near L.A. Live is a 22-story hotel to be operated as both a Residence Inn by Marriott and a Courtyard by Marriott starting in 2014. Other hotel brands and developers are shopping for sites to build new inns, real estate brokers said.

Los Angeles is projected to host more overnight visitors this year than it has in a decade — an increase bolstered by strong international tourism specifically from Australia, Britain and Japan. International visitors represent one-fifth of the city’s tourist arrivals and generate more than one-third of tourist spending. The number of foreign visitors last year increased 18%, providing a boost to the Los Angeles hotel market.

Revenue produced by L.A. County hotel rooms is expected to continue to increase next year, the report said, but sales probably will be down because the number of properties available for purchase will diminish.

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-- Roger Vincent

Photo: L.A. Live in downtown Los Angeles. Credit: US Presswire

Scam Watch: Acne treatment, StubHub email, real estate loans

Acne-fighting app -- There are smartphone applications for just about anything -- programming your television’s DVR, researching cocktail recipes or finding a Yelp-approved Thai restaurant within a mile. But one company went too far by claiming its app could clear up acne, the Federal Trade Commission said. The FTC obtained a court order prohibiting AcneApp and AcnePwner from making acne-treatment claims. The mobile applications were sold on Apple’s iTunes store and the Android marketplace and claimed to treat acne with colored lights emitted from smartphones. The app sold for $1.99 on iTunes and 99 cents on the Android marketplace, the FTC said. Nearly 15,000 people paid for the app. Three people who marketed the apps settle a lawsuit with FTC by agreeing to no longer market the products.

StubHub email -- Email inboxes are filled with danger. Click on a link in an email and you could add malicious software to your computer. People down on their luck may find bogus emails announcing they've won foreign lotteries -- all they have to do is pay the taxes upfront. And now there’s this one: emails that appear to come from StubHub ticket marketplace, but actually are attempts to steal your credit card information. People who get the emails are asked to sign in to their StubHub accounts; anyone who does so gives away their user name and passwords, enabling third parties to begin making fraudulent charges to the credit cards, the Better Business Bureau said in a recent bulletin. Anyone who believes that they fell victim to this scam should immediately change their StubHub passwords, alert credit reporting agencies and contact StubHub at safety@stubhub.com.

Real estate loans -- A West Covina woman has been sentenced to nine years in federal prison for running a fraudulent investment scheme that took in about $6.9 million from more than 150 victims. In addition to the prison term, Guadalupe Valencia was ordered to repay $5.2 million to victims. Valencia had pleaded guilty in December to mail fraud, wire fraud and tax fraud. Prosecutors said Valencia ran her scheme out of the Downey offices of Real Estate & Loan Consultants and R.E. Equity Group Inc.  from 2001 to 2009. She told investors that she would use their money to make real estate loans and loans to small businesses. But instead of making the investments, she used the money to make payments to early investors, prosecutors said.

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Scam Watch: Investments, seniors, credit cards

-- Stuart Pfeifer

Photo: Prototype of an Android phone. Credit: David Paul Morris / Bloomberg

Mr. Hoenig Goes to Washington

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

To fix a broken financial system and to oversee its proper functioning in the future you need experts. Finance is complex, and the people in charge need to know what they are doing. One common problem, manifest in the United States today, is that many leading experts still believe in some version of business as usual.

Today’s Economist

Perspectives from expert contributors.

At the height of the Great Depression, Marriner S. Eccles was summoned to Washington from Utah, where he was a regional banker. He helped remodel the Federal Reserve through the Banking Act of 1935 and then became its first independent chairman; the Fed board had previously been headed by the Treasury secretary.

Perspectives from expert contributors.

Mr. Eccles was not a fan of big Wall Street firms and their speculative stock market operations; rather, he understood and identified with smaller banks that lent to real businesses. Mr. Eccles was the right kind of expert for the moment. Who has the expertise to play this kind of role in our immediate future?

Thomas Hoenig, the former president of the Federal Reserve Bank of Kansas City, has long been a strong voice for financial sector reform along sensible lines. Within the official sector, he has spoken loudest and clearest on the most important defining issue: “Too big to fail” is simply too big. And last week he took a major step toward a more prominent role, when he was nominated by President Obama to be vice chairman of the Federal Deposit Insurance Corporation.

The F.D.I.C. is not as powerful as the Fed, but in our current financial arrangements, it does play a critical role. The Dodd-Frank legislation has its weaknesses, but it gives the F.D.I.C. two important powers.

First, with regard to big banks, the F.D.I.C. can help force the creation of credible “living wills” — explaining how the bank can be wound down if necessary. If such wills are not plausible then, in principle, the F.D.I.C. could force simplification or divestiture of some activities. Second, the F.D.I.C. is now in charge of “resolution” for mega-banks, i.e., actually closing them down and apportioning losses in the event of failure.

One important concern is whether the F.D.I.C. has enough clarity of thought and — most critically — enough political support to take the pre-emptive actions needed to make our biggest banks smaller and safer. (For more specific suggestions – and some disagreement – on what exactly is required to strengthen financial stability, you can watch two speeches made on Oct. 21 at a George Washington University law school symposium: Sheila Bair, the former F.D.I.C. chairwoman, spoke first and I spoke immediately after; my remarks start around the 49-minute mark.)

The F.D.I.C. senior team is already strong, with a great deal of experience handling the problems of small and midsize banks. The current acting chairman, Martin J. Gruenberg, was vice chairman under Ms. Bair. These are not people who are easily intimidated by big banks. And Mr. Gruenberg is highly regarded on Capitol Hill, where he worked for the Senate Banking Committee for nearly two decades. (Disclosure: I’m on the F.D.I.C.’s Systemic Resolution Advisory Committee, which meets in public; I’m not involved in any personnel or policy decisions.)

I have been a strong supporter of Mr. Hoenig in recent years, endorsing his views and arguing in the past that he should be named Treasury secretary.

In the current mix of Washington-based policy makers, Mr. Hoenig would be a great addition. He spoke out early and often against “too big to fail” banks. In early 2009, his paper “Too Big Has Failed” became an instant classic. It is worth reading again because it contains a number of forward-looking statements that remain important. Perhaps the most relevant for his F.D.I.C. role:

Some are now claiming that public authorities do not have the expertise and capacity to take over and run a “too big to fail” institution. They contend that such takeovers would destroy a firm’s inherent value, give talented employees a reason to leave, cause further financial panic and require many years for the restructuring process. We should ask, though, why would anyone assume we are better off leaving an institution under the control of failing managers, dealing with the large volume of “toxic” assets they created and coping with a raft of politically imposed controls that would be placed on their operations?

This sounds very much like the basis for a sensible strategy of thinking about Bank of America, which is in serious trouble — and where the F.D.I.C. should consider a more proactive intervention.

The European debt situation is also threatening to spiral out of control, with potentially serious consequences for our financial sector. If you have not yet reviewed the details of Bill Marsh’s graphic from The New York Times on Oct. 23, I strongly recommend it — but you’ll need a big computer screen or the ability to print out on a very large piece of paper. (The picture is literally big, 18 by 21 inches; there is also a nice interactive version that lets you look at various scenarios.)

We do not know how these or other shocks will hit our financial system. Nor do we know exactly who will fall into what kind of trouble.

We need experts at the helm with sensible judgment and the right priorities – and with a good understanding of what kind of financial system we really need. We also need policy makers who have strong support from across the political spectrum, including on Capitol Hill.

Mr. Hoenig is exactly the right person for the moment.

Podcast: European Debt, Settlement Talks, Fed Policy and Jim Collins

European leaders reached agreement this week on a far-reaching package aimed at resolving the Greek debt problem, recapitalizing vulnerable banks and bolstering the euro zone’s financial rescue fund. Stock markets around the world rallied on the news.

But in the new Weekend Business podcast, Nelson Schwartz, a Times financial writer, says that the details of the plan are vague — and that many questions remain. There have been several European rescue packages, with euphoric reactions in the market, but the mood has dampened after each one, he says, and it may well do so again.

Gretchen Morgenson discusses the settlement talks under way between financial institutions that may be responsible for mortgage foreclosure misconduct and, on the other side, state attorneys general and the federal government. As she writes in her Sunday Business column, actual cash payments of $1,500 are envisioned in a possible settlement for people who were erroneously evicted from their homes. This may strike people who have lost their homes as a low figure, she suggests.

In a conversation with David Gillen, Jim Collins discusses a new book, “Great by Choice: Uncertainty, Chaos, and Luck — Why Some Thrive Despite Them All,” which he wrote with Morten T. Hansen. An article adapted from the book appears in Sunday Business.

And Christina Romer, the Berkeley economist who was chairwoman of the Council of Economic Advisers, discusses her suggestions for a new approach at the Federal Reserve. In the Economic View column in Sunday Business, she recommends that Ben S. Bernanke, the Fed chairman, take bold action, much as Paul Volcker did when he was the chairman years ago. Mr. Volcker began to target the growth of the money supply in his fight to curb inflation. Now, she says, the Fed should begin to target nominal growth of the gross domestic product in an effort to restore vitality to the economy.

You can find specific segments of the podcast at these junctures: Europe’s debt accord (35:33); news headlines (28:22); Jim Collins (25:16); the mortgage settlement talks (15:17); Christina Romer (10:06); the week ahead (2:01).

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.