August 2010

It's California Budget Crisis Season again

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It's that time of the year again.
No, not Christmas. It's the time of the year when the state of California starts paying its bills in IOU's.

California lawmakers passed a bill to let recipients use state IOUs to pay fees and taxes owed to the government in Sacramento, if the warrants are issued.
The bill, from Assemblyman Joel Anderson, a San Diego Republican, passed the Senate unanimously. It requires all state agencies to accept registered warrants issued to pay for goods and services. The Assembly unanimously approved the measure in September.

The state could start handing out these IOU's as soon as two weeks from today.

One thing you can count on is that blame and suggestions on how to fix the budget mess will start flying fast and furious. Some ideas will be crazy. Some reasonable, but long on image and short on impact. Many good ideas will never be considered.
What is also sure to happen is you will see a blizzard of numbers. Some will be created out of thin air. Most will be half-truths. Almost none of them will give you an honest perspective on what the actual problems are.

That's why I am presenting this essay, so that you can make a rational judgment for yourself.

SEC Expands Shareholders vote power

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The SEC has voted to allow shareholders more power to elect corporate board members.

The SEC’s rule would allow shareholders who own 3 percent of a company’s voting stock to nominate board members. To prevent short-term investors from swooping in to shake up a company, shareholders must own their stock for three years before proposing candidates. Shareholders must own their stock outright and cannot use borrowed shares to count toward the 3 percent threshold.

This is amazing the SEC vote was 3-2, considering who owns 3% of one company stock? There is a nonbinding vote on executive pay:

Also under the new law, shareholders will be able to weigh in on pay packages for top executives. Nonbinding votes on executive pay will be held at least once every three years.

The Wall Street Journal:

The "proxy access" rule, which passed the commission on a 3-2 vote, would require companies to print the names of shareholder board nominees directly on corporate ballots if certain conditions are met.

Cities & States Selling the Family Silver - WSJ

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The Wall Street Journal has a headline story, Facing Budget Gaps, Cities Sell Parking, Airports, Zoo. Great, cities and states are selling off public assets which we paid for with tax dollars.

Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.

California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it's parking meters. In Louisiana and Georgia, airports are up for grabs.

So, who is buying, literally, America away from her citizenry? One is Morgan Stanley of bail out fame, all the while Morgan Stanley has tax havens to avoid paying U.S. taxes.

The most popular deals in the works are metered municipal street and garage parking spaces. One of the first was in Chicago where the city received $1.16 billion in 2008 to allow a consortium led by Morgan Stanley to run more than 36,000 metered parking spaces for 75 years. The city continues to set the rules and rates for the meters and collects parking fines. But the investors keep the revenues, which this year will more than triple the $20 million the city was collecting, according to credit rating firms.

Must Read Posts for August 22, 2010

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On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read Post #1

It appears there is a strong correlation to income inequality and national economic implosions. One of our themes on The Economic Populist is without a strong U.S. middle class and American labor force, there is no national economy.

Must Read Post #2

This is almost off the wall. The Wall Street Journal has an article, The End of Management. They discuss the bureaucratic nightmare called corporations and their never ending managerial organizational charts and roadmaps. The problem is the article solutions proposed often involve global labor arbitrage. Not everyone can sit around working on open source for free. Additionally, it is well documented that bidding per project is a method to pay below minimum wage for advanced software and engineering skills. No job security, benefits or even per hour pay. While I heartily agree that corporate management is arcane, one must figure out a way to provide stable income, retirement, benefits for people to produce.

Mexican Business Pleads With Government to Stop the Drug Violence

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Mexican Businesses ran full page newspaper ads pleading with Mexico President Felipe Calderón to stop the drug violence that has now hit their business capital, Monterrey. That's desperate.

A surge of drug violence in Mexico's business capital and richest city has prompted an outcry from business leaders who on Wednesday took out full-page ads asking President Felipe Calderón to send in more soldiers to stem the violence.

The growing violence in Monterrey, long one of Mexico's most modern and safe cities, is a sign that the country's war against drug gangs is spreading ever further from poorer battlegrounds along the border and into the country's wealthiest enclaves.

Residents opened their newspapers Wednesday morning to find the ads taken out by Mexican business leaders, begging the government to send more military into the city. "Enough already," said the notice that ran in national and local papers, criticizing what it said was a slow response of police against "criminal bands that in every act look to establish a new boundary of terror."

Nearly 23,000 people have died in Mexico as a result of drug violence since 2006. Mexico is as dangerous as Iraq or Afghanistan.

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