Ruminations – 17jan2012 [updated]

George Rebane

We have long heard that ‘stupid is forever’, and now we have indelible proof of that proposition.  Moonbeam has no clue that California has a systemic fiscal disaster on its hands.  His proposed budget for FY2013 is $95.4B when he adds up all the transfers to the general fund from raiding every other kind of account imaginable.  But the pinhead’s piece de resistance is the brilliant idea of taxing the bejeezus out of the upcoming stock cash-ins resulting from recent IPOs that he projects the fortunate employees of those companies will exercise.  His own Legislative Analyst’s Office is telling him not to hold his breath until he collects all those one-time state income taxes.

But what really frosts me is the depth of ignorance that progressives have about what has been going on in the state.  We already depend on a small cohort - the top tenth - of wage earners to pony up almost 75% of the state’s budgets, and almost every 3-digit type knows that continuing on this policy is sheer lunacy.  So what does Moonbeam do?  He doubles down on stupid, and is now trying to convince everyone that he’s solving California’s long-term crisis with a one-off short-term tax bounce that itself is based on la-la land accounting.  Meanwhile, he's driving more companies out the state with economy killing green initiatives that seem to multiply like weeds.  And our liberal neighbors are cheering him on as they continue sending to Sacramento people with big bulbous red noses wearing funny looking large shoes.  (There’s more, and the details are here.)

‘Can a Nonexistent Congress Issue $1.2T in Debt?’ asks Daniel Horwitz of RS Redstate.  While contemplating this, we recall that through an historic decision by the Chief Community Organizer, this same Congress was made “non-existent” through the claim that it is reposing in blissful recess.  The CCO then rushed through a recess appointment on another czar whose job is to keep the promised fundamental transformation on schedule.  So, without even so much as a wink-wink from behind the teleprompter, our fearless leader brazenly plays the game from both sides of Recess Street.

[update] You remember CALPERS, the California state employees pension outfit that was supposed go forward making 7.5% on its portfolio to work off its members' hundreds of billions of unfunded liabilities.  Well, it seems that reality is striking home and things are going the other way (as CALPERS was warned by all).  The funds manager has just decided to write down one fifth of its real estate portfolio taking a haircut that will range between 30% and 50%, not counting the appreciation it could have had on the initially invested monies.  The investments were made during the real estate bubble for which government employee pension funds, along with Fannie and Freddie, were somehow left out of the fulminations and fury that unions and occupiers continue to heap on “the banks”.

Comments

[Russ Steele]

"Joseph Vranich, an Orange County businessman who advises companies on avoiding high taxes and regulations, said the cost savings now are up to 40 percent for employers who leave California. An average of 5.4 larger companies (100 or more employees) leave per week, versus 3.9 in 2010 and 1 per week in 2009, Mr. Vranich said."

Moonbeam better hurry up, or there will not be any companies left in the state to tax.

[billy T]

http://latimesblogs.latimes.com/california-politics/2012/01/jerry-brown-chris-christie-california-taxes.html xoxoxoxoxo

[Dixon Cruickshank]

The worthless bastad is down to counting on secrectaries to cash-in IPO options - they worked for no cash, hopeing this works. Liberials really have no shame, down to picking on single mothers with some hope to hit it kinda big - jesus

[Russ Steele]

Brown will present his budget fantasy at 10 am this morning. You can hear and see it here: The Bee will be broadcasting the governor's address live at sacbee.com/live. You'll also find it at CalChannel. Live audio also will be available on Capital Public Radio station KXJZ-FM 90.9 in Sacramento.

[George Rebane]

Spot on Dixon (1111pm). The overwhelming number of IPO beneficiaries are the low and mid-income employees for whom the IPO is the once in a life reward moment for which they took the risk of working their butts off for years in a very intense and iffy environment, often asking for large sacrifices from their families. Then government swoops in and defines them as 'millionaires' for a year and pillages their nest egg.

[Douglas Keachie]

I always thought that it was the Ben Ali Shriners of Sacramento who sent those kinds of people here?

http://www.flickr.com/photos/keachie/4985111164/in/photostream/lightbox/

[Douglas Keachie]

Generally speaking, those at the bottom of the IPO situation pay scale do not get much, and are already being paid a wage. Those with the rights to a million or more shares are those who had the money to invest and make the startup go, and probably already own the rights to 10 million MORE shares outright, as founding partners. At the bottom of the scale I participated in Victor Computers, a database called "Salvo," and a computer store in Orinda that went belly up. I also worked with Lee Felsenstein on several projects that went nowhere, after Osbourne folded and Adam became a book publisher.

[Douglas Keachie]

In short, you lives and you takes your chances. After all that roller coastering, I returned to teaching, with a solid background in computing (compared to almost all others in the public schools) as we had bills to pay.

[George Rebane]

DougK 1206pm - Generally speaking, middle class workers who have invested of themselves in start-ups that do a successful IPO have in the tens of thousands made their 'go to hell' money in such ventures. Short of starting your own business, and working it to success over many years, investing sweat equity is the main source of such success stories. However, our tax policy is designed to drastically reduce those amounts.

[billy T]

Darn, I missed the speech. Heard the Gov had a great quote. I might use that someday, "It is said that the road to hell is paved with good intentions and digging ourselves into a deep financial hole — to do good — is a bad idea." A masterful politician he is. Something for everybody and something for everyone to hate. Heard the Sac to Bakersfield train is still on. Hey, doesn't Amtrak already take ya to Bakersfield, where you gotta hop a bus to get to LA? Well, I sure am glad us taxpayers received the estimate of 39 million clams for that stretch when we approved the measure. What else did I miss?

[billy T]

Speaking about money, this article caught my eye when the California native mentioned the word "cesspool" more than once during the interview http://seattletimes.nwsource.com/html/sundaybuzz/2017284947_sundaybuzz22.html

[billy T]

The new list of the best run states in the Union, California has slipped to 50th. Sad, very sad to see the Great State of California in the bottom layer of the outhouse. Surely Moonbeam has a clue by now. State debt per capita: $3,660 (21st highest)
> Pct. without health insurance: 18.5% (8th highest)
> Pct. below poverty line: 14.5% (tied for 21st highest)
> Unemployment: 11.9% (2nd highest)

California has moved down one slot on from last year to earn the title of the worst-run state in the country. In the fiscal year 2009, the state spent $430 billion, roughly 14% of all the money spent by states in that year. Compared to its revenue, the state spent too much — California had the 10th lowest revenue per person, and spent the 15th most per person. California is the only state in the country to be rated A-, the lowest rating ever given to a state by S&P. Despite the huge amount the state spends each year, conditions remain poor. California has the second-lowest percentage of adults with a high school diploma in the country, the second-highest foreclosure rate and is tied for the second highest unemployment rate in the U.S.

Read more: Best and Worst Run States in America — An Analysis Of All 50 - 24/7 Wall St. http://247wallst.com/2011/11/28/best-and-worst-run-states-in-america-an-analysis-of-all-50/#ixzz1kFVySZZd