California Governor Jerry Brown is going to have a very successful third term since he'll probably be able to solve - or claim he's solved - the state's budget mess next year. Brown - the Steve Jobs of politics - is going to be the beneficiary of what can only be called pent-up demand in both the venture capital business and the stock market. In other words, people who need to sell their stock to earn their keep (venture capitalists, angel investors) have plenty of customers (wanna-be shareholders). And the stock market's increasingly looking healthy enough to support large-scale stock offerings.Basically, one or more of Big Social (Facebook, Groupon, Zynga, Twitter, LinkedIn, etc.) may go public in the coming year. When they do, the knock-on effect on the regional economy is going to be significant...and that is going to lead to a surge in tax collections.
This is one of the reasons that we can't fix all our budget problems with higher taxes on the rich--if we do that, revenues are going to collapse dangerously every time there's a recession.What I said. Michael Hiltzik, the pathetic excuse for a business columnist in the LA Times, disagrees.
I won't pretend to be the world's most full-throated defender of public sector unions. If I could trade ten points of union density in the private sector for ten points in the public sector, I'd take the trade in a heartbeat. But that is, obviously, not the trade on offer. Nor is what's happening in Wisconsin merely hard bargaining during tough economic times. That would be understandable. Rather, it's an effort to destroy one of the few institutions left that fights relentlessly for the economic interests of the middle class. That's why conservatives oppose unions of all kinds, both public and private, and regardless of their faults, that's why they deserve our support.Well, it's great that he 'may not be the most full-throated supporter of public sector unions', but in fact - as a liberal - he should be their biggest opponent.
Marc tweeted this recently, and it's worth a post. Umair Haque at "Bubble Generation":
"It's the oft-unspoken thought on many lips: America's in decline. The glory days are over, the train's left the station. So: is this a great decline? Unfortunately--probably. And I'd suggest that when you take a hard, serious look into the economy--when you voyage past it's superficial, largely irrelevant position in terms of budgets, "gross product", or "unemployment"--that great decline is deeper and darker than pundits, beancounters, and politicians think, want to admit, or even suspect.
The great crisis is a story of structural decline: a decline that's hardwired into the patterns amongst this great machine's many parts. They've settled, over the last three decades and more, into fundamentally bad, toxic equilibria..."
Note that the criticisms of finance and its role that follow are coming from someone who worked in the field, including as a derivatives trader. Haque is the author of The New Capitalist Manifesto. Haven't read it yet, but based on his blog post, it looks interesting.
Marc's tweet asks if he should be depressed or challenged. Well, what do you think?
Why does the economy continue to suck? The LA Times is hosting a symposium on the topic today, and USC business professor Ayse Imrohoroglu says the answer is uncertainty:Businesses don't know what will happen to interest rates. They have trouble calculating what new workers will cost in light of potential new healthcare mandates and costs. They don't know what will happen to tax rates, which could rise dramatically. They are uncertain about increasing financial regulation and the possibility of a carbon tax. And as if that isn't enough, the soaring deficits and national debt raise very real questions about the federal government's long-term ability to meet its debt obligations.
If, in the long run, principal reductions really, truly were the most profitable way to deal with underwater homeowners, I'd expect that not only would banks figure this out pretty quickly, they'd be figuring out ways to create securitized bundles of principal reductions to sell to gullible German investors. That well can't be completely dry, can it?
So why hasn't this happened? There are a couple of obvious possibilities here. One is that the complicated nature of mortgage securitization simply makes principal reduction too hard. Once the loans have been securitized, tranched, retranched, and re-retranched, there are so many note holders with a legal stake that it's all but impossible to get unanimous agreement to do a principal reduction. Another possibility is that banks are afraid of knock-on effects: once they start reducing principal in a few cases, their entire customer base will find out what's going on and start withholding payment in hopes of getting the same treatment. Reducing principal for 10% of their customers might make sense, but banks might be afraid that there's no way to hold the line there.
There is, of course, a way out of this bind: produce more without consuming more. For all practical purposes, that means grabbing a bigger share of global markets, either by exporting more goods and services, or replacing some of the stuff we import by producing it at home.
George Soros, a major funder of progressive causes, criticized President Obama today for giving in to deficit hawks amid an economic recession. "To cut government spending at a time of large-scale unemployment would be to ignore the lessons of history," he said.Wouldn't it be nice to know what his currency positions are today vis a vis the dollar??
") that no meaningful extractions - in terms of improving the impact that the financial sector has on the rest of the economy - happened. We saved them, and instead of demanding as a part of the rescue that they go to rehab and straighten up, we handed them a bottle of Oban and the keys to the economy - again. Those decisions by our policymakers were made, in large part, because of the incestuous nature of the policy, political, and financial leadership of the country (see