Is Hotness a Store of Value?

Is Hotness a Store of Value?

Gisele Bundchen is the richest, most powerful and the most currency-savvy supermodel in the world. Ben Bernanke is the current head of Fed and an afficianado on helicoptering. Below is a short excerpt from a debate between Gisele Bundchen and Ben Bernanke on the topic of the US economy, the weak dollar and the sub-prime loan crisis. Hosted by Jim Lehrer.

Jim Lehrer: First question for Gisele. Gisele you’ve recently announced you will no longer accept payment from modeling jobs in dollars. Can you talk about that decision?

Gisele: Well I was partying at Bugee in London recently and an American was trying to grease the bouncer to get in. He dropped one of the dollars he had in his hand on the ground and the bouncer looked at him and said. ‘Hey, pick up that trash’. I thought it was funny because the same guy had just thrown his cigarette butt on the ground and the bouncer didn’t seem to care about that. I got to thinking – are cigarette butts more valuable than dollar bills? So I changed my policy to protect my assets. Like gold and oil my hot assets have intrinsic value and are immune to inflation, I thought my contracts should reflect that.

J: Ben, your rebuttal?

B: I believe that the Federal Reserve’s success in reducing and stabilizing inflation and inflation expectations is a major reason for this improved economic performance.

J: Ok, good one Ben, but if inflation is under control why is everyone selling their dollars?

B: The Federal Reserve is committed to maintaining low and stable inflation and I’m very confident that we’ll be able to do that.

J: Genius. Gisele, back to you. Exactly how hot are?

G: Well that’s interesting because I’ve been trying to decide that myself. My old answer used to be “pretty f*cking hot”. But when I tried to have my assets insured the insurance company wanted a “more meaningful agency rating”. So I showed my assets to S&P and they rated them AAA which I felt was pretty good until I found out subprime loans have the same rating. Now I’m just a dumb model but come on I’m WAY hotter than a basket of subprime loans -

J: Great points. Ben, would you rather have a basket of subprime loans or have Gisele show you her assets?

B: Decisions of the Fed are made in conjunction with all the members of the board and I am not in a position to comment on future actions. But I will — YES.

J: It was an either or question.

B: I know. My answer remains YES.

Fin

6 Reasons Why a Dollar Crisis Is Imminent

• The U.S. dollar is sliding dangerously close to a steep cliff -- a possible point of no return at which the currency could collapse and America could join the ranks of the world's banana republics.

click to enlarge

For more than thirty years, the U.S. has resisted the restructuring, austerity and market forces required to restore the health, competitiveness and potential of its economy.

Extending a long-running policy of neglect, denial, short-sightedness, political expediency and corruption, for the past two years, the Federal Reserve has tried to prop up the increasingly uncompetitive and defective U.S. economy with what amounts to unprecedented amounts of money printing -- still in effect and slated to expand. The government as a whole has increasingly spent beyond its means, doubled down on debt and pushed the limits of inflation risks as it milks the outdated perception of the dollar as a "safe haven" for all it's worth.

The bill is coming due and the table is being set for the biggest currency crisis ever. Almost all of the key ingredients are in place for a crisis of confidence that will threaten to overwhelm all efforts to contain it -- something beyond the magnitude of currency crises that unraveledMexico in 1994, Asia in 1997, Russia in 1998, and Argentina in 1999. The similarities are now beyond disturbing.

What are the key factors?

1) Financial excess: Key measures of financial excess -- a U.S. budget deficit at 10% of GDP, overall credit amounting to as much as 350% of GDP, a projected $100 trillion more in entitlement obligations than the federal government can currently cover, and more than $1 trillion in state pension underfunding -- are now well into the levels that undermined other countries during currency crises and rendered them insolvent, bankrupt or close to it.

2) Diminishing competitiveness: The gift of hindsight now shows that outside of housing and finance, the U.S. economy was hollowing out over the past 30 years. A withering export base and increasingly lopsided growth (as opposed to broad-based, diversified growth across multiple industries) were telltale signs in Mexico, Russia, Thailand and elsewhere that a country would have trouble paying its bills to creditors abroad.

3) Pre-existing economic pain: A high unemployment rate -- roughly 10% and as much as 20% under broader measures -- will limit the willingness of policymakers to make the tough choices needed to get the country's house in order. As they've already demonstrated, politicians are more likely to continue trying to limit the pain and take the easy way out in the shortrun -- borrowing more and printing more money -- instead of taking real steps to demonstrate the country will be able to pay its bills to creditors abroad without devaluing the dollar (in other words, cut back on spending, raise taxes, reform the economy in a way that bolsters export receipts).

4) Heightened political risk: Ahead of the November midterm elections, the U.S. faces a degree of policy uncertainty we haven't seen since the 1930's and arguably since the years leading up to the Civil War (maybe even further back, the currency chaos after the Revolutionary War). The two parties are both historically weak and want to take the U.S. economy in radically different directions -- Democrats, led by President Obama, toward more government control, greater intervention in the economy and higher taxes and Republicans, increasingly pressured by the Tea Party, toward sharply less government, lower taxes and less intervention in the economy. Unusually critical midterm election this November may set a permanent course or lead to policy paralysis. This is the kind of political uncertainty that formed the backdrop to multiple currency crises, including Mexico's 1994 crisis, which preceded presidential elections.

5) Rising rates abroad: Real, stronger growth outside the U.S. is prompting central banks in Canada, Australia, Latin America, China and elsewhere to tighten credit, while the Fed loosens, inflates and all but signals it wants to let her rip and weaken the currency. That means growing downward pressure on the U.S. dollar. It was the raising of short-term rates in the U.S. through the late 1990's that put Mexico, Asia (particularly Thailand) and Russia under pressure to allow their currencies to collapse.

6) Weak and defective financial system: Large numbers of U.S. banks countinue to fail on a monthly basis across the U.S. The federal government recently announced a stealth $30 billion bailout of credit unions highlights lingering problems. It continues to bankroll massive losses at Fannie Mae and Freddie Mac and has effectively nationalized mortgage finance. We still have inadequate disclosure on the true extent of bad loans -- a key wildcard that led to loss of confidence in Asian and other financial crises. We still don't know the full extent of the black hole. Banking guru Meredith Witney expects a new round of top-line pressure on all the big banks over the coming year.

There you have it: Flagging competitiveness, an inflated exchange rate, chronic deficits, ballooning debt ratios, economic stress, heightened political risk and a defective banking sector. These are the ingredients of a currency meltdown.

Against this backdrop, as we've seen in past currency crises, speculators eventually take advantage of a status quo they correctly see as unsustainable. They take short positions and/or hedge by buying gold and other protection. Ultimately, central banks can't resist reality and the pressure of the market.

Two additional factors could soon be in play:

1) Capital flight: From elites, top investment funds and banks. The sharp drop of trading volume on U.S. equity markets, heavy inflows into commodity funds, hedges such as gold and even farmland and outflows into overseas markets funds and ETFs may be early omens. There is also growing evidence of human capital flight from the U.S., as the business climate continues to deteriorate and high-skill individuals seek higher after-tax returns from themselves abroad.

2) Violent conflict: The Chiapas Rebellion in Mexico intensified anxiety of the country's management in 1994. Current potential flash points include Iran/Israel/The Middle East, North Korea, the South China Sea and China-Japan.

To paraphrase a previous article:

...if Europe -- also under pressure to take the easy way out of economic underperformance -- joins the U.S. and Japan in the devaluation game, in more earnest than it already has, we'll be in an all-out race to the bottom to export economic depression and inflation -- stagflation -- to one another. Hence the growing lack of confidence in all paper currencies and gold's surging price.

Combined with growing protectionist sentiment and repeated stock market head-fakes, this mess, combined with weakness in the West, Chinese resource hoarding and military buildups, flash points across Asia and the Middle East, is looking more like the early stages and negative feedback loops of the Great Depression, the Weimar Republic and the run up to the Second World War.

Invest (buy gold, silver, other precious metals, farmland-based securities) or divest (out of U.S. currency and dollar-denominated equities and bonds) accordingly.

Guest Post: Carry Trade 2 - Extremely Long Dollar Love

Submitted by JM

Revolutions happen when broken parts of existing structures reassemble themselves in novel ways. Today’s Japanese carry trade will become something completely new: currency jettison.

This coming Yen carry trade is going to fundamentally change Japan. Next time, Miho Maejima won’t be hungry for yield. She has no yen for it: the carry trade will be driven by exchange rate volatility hedging. She’ll handcuff the government to the bedpost and go for full-on dollarization. When she does, shorting yen is the best trick on the planet.

Dollarization to control currency volatility happens a lot. It is not even a radically new event in Japan, but it will go viral and mutate into a radically new species of carry trade. The utter abandonment of the yen to de-risk will end any return crash. And the Japanese semi-democracy (that designation applies to all nations, not just Japan) must allow it to happen. Aging pensioners are both creditors and voters: the only possible adjustment they can make to the coming sovereign crisis is by getting entirely out of yen.

Only if the aging samurai in charge let all that is parasitic in the financial system crumble will dollarization be averted. Either way, the Gordian debt-knot will find resolution. Creditors will take it hard.

Sort of. Spurned creditors get their pound of flesh. And this is why in the end the dollarization of Japan will not be a short-term affair. Not only will deposits be dollarized. Liabilities and claims will be dollarized too. Monetary policy itself will be reinitialized to dollars. The idiot-elite in charge will ultimately want to get some turf back, but the handcuffs won’t be coming off for a long time.

I don’t need to tell you that this has import far beyond Japanese shores. Japan won’t be the only country to dollarize, and to possibly abuse a term, the world dynamical system will be coupled with even greater synchronicity.

Japan won’t be the only country to dollarize. Get ready…the dollar love you are going to feast your eyes on will be the next Black Swan in and of itself.

I. Translating Dollarization into Other Idioms

Dollarization is nothing new under the sun: just an extreme from of exchange-rate pegging that strips a state of its monetary authority but leaves unchanged its fiscal authority. It’s like a gold standard only pragmatic. The underlying is based on multi-dimensional faith, not a pricey rock.

At its essence, dollarization is just another riddle of globalization. In one way it centralizes power; in another, it devolves it. To understand this, we need to fire up the way-back machine again.

The way-back machine takes us this time to the land of the scorpion-men and Pazuzu. Its substratum is infused with millennia-old social structures that do their thing independent of late-comer add-ons like government. Its society is intensely conservative and hesitant to discard anything from the hollowed past and as a result, black-swan resistant. Arabic provides a common language, psychology, and overtone shared with its neighbors. Political organization is centralized with a tendency for competing rulers to harness the power of society by controlling the religious, military, economic, and other forces that constitute the state.

The country is Lebanon. Despite its ancient rhythms it is intractably Francais with a long tradition of absent restrictions on cross-border finance. Lebanon is also a contemporary senseless tragedy: once the financial center of the Middle East, sophisticated, elegant, and clever—and utterly destroyed by civil war. Lebanon boasts women of truly luscious face and figure who take pains to be beautiful. Their allure is both pleasing to the eye and touching. Touching because the serious, tender care they take to be breathtaking is not reducible to mere fashion sense. The lipstick and fragrant eye-closing memory-conjuring feminine hair we take for granted is in Lebanon defiance, a statement of the constancy of human spirit amid suffocation. Such antique splendor and recent disaster is mother to the only person our generation can offer as Omar Khayyam’s kindred spirit.

II. Dollarization in Depth

Remember that before the civil war Lebanon was an international financial hub, dealing in petrodollars. Few if any restrictions were placed on capital movements. Its sophisticated banking system offered foreign currency accounts to residents and foreigners alike, which didn’t really take off until a large bank run in the late 1960s wiped out about 20% of total deposits.

Throughout the 1970s, dollars stayed around 20% of total deposits, even when civil war started, and households hoarded cash as basic financial architectures started to break down. This is where serious inflation and currency depreciation started as a result of government failure. By 1979 there was a secular shift out of Lebanese pounds and into dollars. At the time foreign currency was used as a store of value against inflation or exchange rate depreciation.

When Israel intervened in 1982, pretty radical swings in the exchange rate changed the motive for dollarization to volatility hedging. After the Israelis withdrew, the rush out of pounds began. The weakened central government did not inspire confidence in a stable future. This government also co-opted the country’s savings to finance its deficits through oh, let’s call it quantitative easing. Within two years, the dollarization ratio skyrocketed from around 35% to 70% of all deposits.

A credible government was established in 1992ish and the situation normalized 1996ish. This historical prelude is embedded in the USD/LBP exchange rate above.

Want a history lesson, look at the Exchange Rate. Lebanese contemporary history quantified, 1964-2009

Normalization is not just shown in the exchange rate. The nerve cord of even rudimentary market economies is the yield curve. I conjecture that since 36 months is Lebanon’s version of the long bond, the 3 month is a note equivalent to 2yr US govvies. All the way through 2009, yields are in secular decline. This is very good news flow for a country coming out of a 15 year civil war. There is not a well-functioning secondary market for T-bills, and the rate in the primary market acts as the key reference rate for the nominal economy. However, the thorough-going dollarization of the economy ensures that market pressures are absorbed in part by other means.

Sick or healthy? Check Treasury Yields: 1977 to 2009

However, the stability has made little dent in Lebanese dollarization. In fact, dollarization is largely unchanged because creditors contract in dollars now, not Lebanese pounds. The term nature of debt combined with creditor aversion to volatility creates strong reinforcement of dollarization. Deposit dollarization is more sensitive to inflation at times, but the relationship (particularly from 1997 to 2002) demonstrates that dollarization is entrenched in spite of falling inflation rates. Only annual inflation rate data is available for Lebanon, and the monthly data points are interpolated.

From 1994 to 2009 the ratio of liabilities and claims denominated in foreign currencies (mostly dollars) ranged from 90 to 82 percent. Dollarized private sector deposits ranged from 50 to 80 percent. The data suggests that these deposits are sensitive to changes in inflation up to a threshold. These ratios are key adjustment mechanisms within the Lebanese economy.

Remember what I said about creditors getting their pound of flesh? Well, anybody who lends capital just before massive currency devaluation gets their ass handed to them, period. As a result, form then on they denominate credits in another currency. This is profoundly destabilizing as it could trigger waves of bankruptcy, as wages and revenue would probably yen. It is ironic how “debt jubilee” plans make no difference at all in the end.

Sick or healthy? Check Treasury Yields: 1977 to 2009

Looking deeper, there is a lot of sophisticated behavior going on. The data shows that Lebanese hold somewhere around 50-80% of their liquid capital and Lebanese creditors denominate nearly all of their capital in dollars as risk minimal investments that generate real return unconnected to domestic inflation.

That is not to say they aren’t sensitive to other macroeconomic factors, in particular monetary shocks emanating from the United States or global benchmark interest rates. A bank in Lebanon stated that foreign currency deposit rates are linked to LIBOR less a margin. Lebanese pound deposits are linked to CD rates and ultimately T-bills.

With the other 20-50% of liquid capital, Lebanese seek nominal returns generated from speculative positioning with respect to domestic inflation, and keep a portion of capital (checking deposits) in liquid domestic currency even if it sometimes delivers a negative return.

Humans are cunning and supremely adaptive to changes in environment. The environment of Lebanon required return to be measured in real, not nominal terms.

III. Generalized Empiricism

It is true that Japan has experienced no 15 year civil war, but it stoically endured 15 years of policy hell that has destroyed credit ratings at every level, immiserized nearly everyone and forced destabilizing carry trades on the world. Japanese society is also strongly predisposed toward consensus-building and adherence to hierarchy. In this way it has similarities to Middle Eastern society. And just as Lebanon is Francophile, Japanese society is intractably Americanized: uniquely where the tea ceremony and the Styrofoam cup (page 11) coexist in harmony.

Just as the Lebanese adapted to their environment, so will the Japanese, and it will mean they will look for liquid stores of wealth and a stable medium of exchange. Since dollar assets provide exchange rate volatility hedging and real return, they won’t look back. Creditors because of their economic necessity, and debtors—with what remaining political influence they have—will dollarize the Japanese economy.

1. There is a close link between currency depreciation and dollarization. Once bitten, twice shy.
2. Under persistent government policy abuse, human beings become clever, and they adapt by ignoring nominal returns and focusing on real return. Dollarization is a consequence of this.
3. Human beings develop sophisticated behavior to both maximize and hedge returns.
4. Creditors initialize dollarization and make it nearly irreversible, because they anchor their claims independent of government intrusion, and well in advance of any potential inflation increases.
5. Currencies may plummet, but if the state doesn’t die, they won’t die. They become ghosts of their former selves, relegated to simple unit of account and marginalized transactions.
6. Many countries will dollarize, with tacit sovereign approval or not.
7. The world interest rates and asset prices will be even more tightly correlated going forward
8. The human race is truly marvelous. Only humans can adapt to the arctic, the Sahara, the Himalayas, the jungle. Only humans can reconstruct complexity on the smoldering ruins of war, pestilence, and famine. We rival rats and cockroaches in the survival game because our collective strategy is to re-shape the world to our preferences.

IV. Post-Endgame

For the last 5,000 years, the central problem of the planet has been civilization. This will continue in the 21st century through globalization. The core of the problem is that governance models are in flux and weakening. Power is devolving down from states toward the individual, even as the state struggles for retrenchment. There is a decisive balance needed between state order and personal freedom. This continuous tension is the defining characteristic of social existence. Lebanon’s short-lived Cedar Revolution was just another manifestation.

The tension is dangerous in that risks and threats are less domesticated. They are ambiguous in kind and imprecise in degree. The associated large scale and persistent economic volatility implies widespread social contract breakdown. Dollarization is an expression of this. People decentralize away from localized nation-state influence, but the increased interconnection of all people and places dramatically reduces the variance of possible behaviors at the global scale. The world looks more like extremistan by the day.

There will be attempts and pretexts to justify state retrenchment, to constrict territorial state’s coils around man’s desire for life without legalized extortion. Trading this or any worldview for that matter will be difficult.

And it is true that government encroachment on living things is not nearly as burdensome as it once was. The course of state diminishment can even continue on unimpeded. It may not be able to get much turf back.

seal beach,seal beach,seal beach

2010

The 2010 United States Census^[7] reported that Seal Beach had a population of 24,168. The population density was 1,853.3 people per square mile (715.6/km²). The racial makeup of Seal Beach was 20,154 (83.4%) White, 279 (1.2%) African American, 65 (0.3%) Native American, 2,309 (9.6%) Asian, 58 (0.2%) Pacific Islander, 453 (1.9%) from other races, and 850 (3.5%) from two or more races. Hispanic or Latino of any race were 2,331 persons (9.6%).

The Census reported that 23,943 people (99.1% of the population) lived in households, 22 (0.1%) lived in non-institutionalized group quarters, and 203 (0.8%) were institutionalized.

There were 13,017 households, out of which 1,866 (14.3%) had children under the age of 18 living in them, 4,891 (37.6%) were opposite-sex married couplesliving together, 788 (6.1%) had a female householder with no husband present, 283 (2.2%) had a male householder with no wife present. There were 383 (2.9%)unmarried opposite-sex partnerships, and 66 (0.5%) same-sex married couples or partnerships. 6,312 households (48.5%) were made up of individuals and 4,340 (33.3%) had someone living alone who was 65 years of age or older. The average household size was 1.84. There were 5,962 families (45.8% of all households); the average family size was 2.65.

The population was spread out with 3,151 people (13.0%) under the age of 18, 1,176 people (4.9%) aged 18 to 24, 4,076 people (16.9%) aged 25 to 44, 6,513 people (26.9%) aged 45 to 64, and 9,252 people (38.3%) who were 65 years of age or older. The median age was 57.3 years. For every 100 females there were 78.8 males. For every 100 females age 18 and over, there were 76.3 males.

There were 14,558 housing units at an average density of 1,116.4 per square mile (431.0/km²), of which 9,713 (74.6%) were owner-occupied, and 3,304 (25.4%) were occupied by renters. The homeowner vacancy rate was 2.0%; the rental vacancy rate was 4.4%. 17,689 people (73.2% of the population) lived in owner-occupied housing units and 6,254 people (25.9%) lived in rental housing units.

[edit]2000

As of the census^[8] of 2000, there were 24,157 people, 13,048 households, and 5,884 families residing in the city. The population density was 2,099.5 inhabitants per square mile (810.3/km²). There were 14,267 housing units at an average density of 1,240.0 per square mile (478.6/km²). The racial makeup of the city was 88.91% White, 1.44% African American, 0.30% Native American, 5.74%Asian, 0.18% Pacific Islander, 1.28% from other races, and 2.16% from two or more races. Hispanic or Latino of any race were 6.43% of the population.

There were 13,048 households, out of which 13.8% had children under the age of 18 living with them, 38.2% were married couples living together, 5.3% had a female householder with no husband present, and 54.9% were non-families. 48.8% of all households were made up of individuals and 34.5% had someone living alone who was 65 years of age or older. The average household size was 1.83 and the average family size was 2.65.

In the city the population was spread out with 13.3% under the age of 18, 4.0% from 18 to 24, 21.5% from 25 to 44, 23.7% from 45 to 64, and 37.5% who were 65 years of age or older. The median age was 54 years. For every 100 females there were 78.3 males. For every 100 females age 18 and over, there were 75.4 males.

The median income for a household in the city was $42,079, and the median income for a family was $72,071. Males had a median income of $61,654 versus $41,615 for females. The per capita income for the city was $34,589. About 3.2% of families and 5.5% of the population were below the poverty line, including 6.2% of those under age 18 and 5.3% of those age 65 or over.

[edit]Economy

The major employer in Seal Beach is the Boeing Company, employing roughly 1,000 people. Its facility was originally built to manufacture the second stage of the Saturn V rocket for NASA's Apollomanned space flight missions to the Moon and for the Skylab program. Boeing Homeland Security & Services (airport security, etc.) is based in Seal Beach and Boeing Space & Intelligence Systems (satellite systems and classified programs) is headquartered in Seal Beach. Boeing is the world's largest satellite manufacturer.

[edit]Top employers

According to the City's 2009 Comprehensive Annual Financial Report,^[9] the top employers in the city are:

#	Employer	# of employees
1	Boeing	1,000
2	Siemens Medical Solutions	200
3	Target	200
4	First Team Real Estate	150
5	Farmers & Merchants Bank of Long Beach	150
6	Bixby Ranch Company	135
7	Kohl's	121
8	Spaghettini Grill and Lounge	105
9	Albertsons	100
10	Custom Building Products	96
11	Autism Partnership	95
12	P2F Holdings	85
13	Health Net	75
14	Original Parts Group	75
15	BakerCorp	71

[edit]Arts and culture

"Anaheim Landing" on an 1875 map.

[edit]Annual cultural events

The Lions Club Pancake Breakfast in April and its Fish Fry (started in 1943) in July are two of the biggest events in Seal Beach. There has been a Rough Water Swim the same weekend as the Fish Fry since the 1960s. The Seal Beach Chamber of Commerce sponsors many events, including: a Classic Car Show in April, a Summer Concert series in July & August, the Christmas Parade in December along with Santa & the Reindeer. Also in the fall is the Kite Festival in September.

[edit]Other points of interest

Anaheim Landing (now Seal Beach), 1891.

On Electric Avenue where the railroad tracks used to run, there is the Red Car Museum [1] which features a restoredPacific Electric Railway Red Car. The Red Car trolley tracks once passed through Seal Beach going south to the Balboa Peninsula in Newport Beach. Going north into Long Beach you could then take the Red Cars through much of Los Angeles County.

Seal Beach is also home to the Bay Theatre, a popular venue for independent film and revival screenings.

The Seal Beach National Wildlife Refuge is located on part of the Naval Weapons Station Seal Beach. Much of the refuge's 911 acres (3.69 km²) is the remnant of the saltwater marsh in the Anaheim Bay estuary (the rest of the marsh became the bayside community of Huntington Harbour, which is part of Huntington Beach). Three endangered species, the light-footed Clapper Rail, the California Least Tern, and the Belding's Savannah Sparrow, can be found nesting in the refuge. With the loss and degradation of coastal wetlands in California, the remaining habitat, including the Bolsa Chica Ecological Reserve in Huntington Beach and Upper Newport Bay in Newport Beach, has become much more important for migrating and wintering shorebirds, waterfowl, and seabirds. Although the refuge is a great place for birdwatching, because it is part of the weapons station, access is limited and usually restricted to once-a-month tours.

[edit]Recreation

Seal Beach on a crowded summer afternoon

The second longest wooden pier in California (the longest is in Oceanside)^[10] is located in Seal Beach and is used for fishing and sightseeing. There is also a restaurant (Ruby's Diner) at the end of the pier. The pier has periodically suffered severe damage due to storms and other mishaps, requiring extensive reconstruction. A plaque at the pier's entrance memorializes Federal Emergency Administration of Public Works, 1938, Project No. Calif. 1723-F, a rebuilding necessitated by storms in 1935. Another plaque honors the individuals, businesses, and groups who helped rebuild the pier after a storm on March 2, 1983, tore away several sections. Most prominent was a "Save the Pier" group formed in response to an initial vote by the City Council not to repair the pier. The ensuing outcry of dismay among residents caused the City Council to reverse its stance while claiming the city lacked the necessary funds. Residents mobilized and eventually raised $2.3 million from private and public donors to rebuild the pier.

Surfing locations in Seal Beach include the Seal Beach pier and the river-"Stingray Bay" (or Ray Bay—the surfer's nickname for the mouth of the San Gabriel River—the stingrays are attracted by the heated water from several upstream powerplants). Classic longboard builders in the area include Harbour Surfboards established in 1959 in Seal Beach and Bruce Jones Surfboards in Sunset Beach. The classic surf trunks of Kanvas by Katin in nearby Sunset Beach are world famous.

The 'USA Water Polo National Aquatic Center, where the men's and women's US Olympic water polo team s train, is located on the US Military Joint Forces Training Base in Los Alamitos, adjacent to Seal Beach. The facility is also used for major water polo tournaments, swim classes, and swim teams.

A marina for recreational craft operated by the City of Long Beach is adjacent to Seal Beach.

[edit]Government

Seal Beach, City Hall.(National Registered Historic Place)

The city is administered under a council-manager form of government, and is governed by a five-member city council serving four-year alternating terms.

In the state legislature Seal Beach is located in the 35th Senate District, represented by Republican Tom Harman, and in the 67th Assembly District, represented by Republican Jim Silva. Federally, Seal Beach is located in California's 46th congressional district, which has a Cook PVI of R +6^[11] and is represented by Republican Dana Rohrabacher.

[edit]Education

Seal Beach is currently under the Los Alamitos School District. Younger students (K-5) go to McGaugh Elementary School or Hopkinson Elementary School. Students in grades 6-8 attend either Oak Middle School or McAuliffe Middle School. High school students go to Los Alamitos High School. Until 2000, the Orange County High School of the Arts was part of Los Alamitos High School. In 2000, the school district suffered a major blow when the community lost the Orange County High School of the Arts to Santa Ana, where it is now located.^[12]