Mortgage lenders in trouble. Inflated housing prices in decline with foreclosures on the rise. Capital for major deals drying up amid a broad credit squeeze and fears of a recession.


A description of summer 2007 in Los Angeles?


Try 1989, as the savings and loan debacle unfolded, and S & Ls; the major mortgage lenders of their day failed left and right after making scores of bad investments, led by Irvine-based Lincoln Savings and Loan.


It was the kind of doom-and-gloom economic news that, like today, generated worries about the region's future, especially after sharp defense cuts caused the worst recession in 60 years.


But less than a decade later the economy roared back thanks to entrepreneurs and established business owners who seized on the growth industries of international trade, entertainment, professional services and anything Web related.


A lesson it doesn't hurt to be reminded of.


"When there is an economic downturn, new growth sectors arise," said Joseph Magaddino, professor and chair of the economics department at California State University Long Beach. "It's often hard to see what those sectors will be in advance, but the region is fortunate because it has a fair amount of entrepreneurial spirit that helps when the economy is faced with difficulties."


Even now, the stage is being set for the forces that will drive the next boom of the economic cycle. This special section of the Business Journal looks at some of these businesses and industries, how they've managed to dodge the bullets so far and how they are planning to seize opportunities to boost their own fortunes and drive future economic activity.


They range from entrepreneurs who buy foreclosed home properties at county courthouses, to credit unions that fund mortgages out of their own deposits, to vulture investors who see big profits from scooping up distressed debt many others avoid.


Also included are venture capitalists, who are experiencing less competition these days from private equity firms used to making leveraged deals on easy-money terms. And then there are traditional bankers who are finding that there conservative practices, such as only making mortgages to prime borrowers, are serving them well in turbulent times.


Cyclical recessions


Sometimes it's easy to forget, but in the last 50 years, L.A. has gone through seven recessions some with barely a scratch and others, like the one in the early 1990s, nearly knocking the region's economy out cold. Several were related to defense cutbacks, while others were driven or exacerbated by other factors, from the Arab oil embargo of the early 1970s to the rise in the prime interest rate to more than 20 percent in 1980.

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