The voters of California did not pile on the anti-Obama rally that swept the rest of the country and remain true blue the day after. But there are several terse memos being sent by voters as a result of the mid-term elections:
Memos to Silicon Valley:
- Governor of California is not an eBay auction item. Meg, spending $140 million of your own money is not going to get you elected Governor.
- We’re rejecting Prop 24 to take away tax breaks for business because we want you to create jobs not send more of them to China or India —get the message?
- We’re still green but not suicidal so we’ll keep the AB32 shuck and jive a while longer by rejecting Prop23 (Yes 39%/ No 61%) BUT we are approving Prop 26 reclassifying impact fees as “taxes” and requiring a 2/3 vote (Yes52%/ No 47%) so don’t think you can pile on ‘carbon administrative fees’ without a fight. We may be green but we are not suicidal!
- Parks are nice but. We love our state parks but we’ve told you before keep your hands off the vehicle license registration fee—it is not a Xmas tree you can add revue grabbing ornaments to because you don’t have the guts to make tough budget decisions. So we’re rejecting Proposition 21 to add parks fee to vehicle registration cost (Yes42%/No 57%).
Memos to Congress:
- Barbara, you are not a very good senator but Carly outsourced 30,000 HP jobs to China so you are dodging this bullet but don’t consider this a good performance report.
- Nancy, they may still love you in San Francisco but you blew it big time so you are out as Speaker so give back the keys to that private jet.
- A pox on all your districts, all of you are now on probation because we, the voters, are approving Prop 20 and rejecting Prop 27 thus stripping the State Legislature of the authority to reapportion Congressional seats and are assigning it to the independent redistricting commission. We expect to see real roller derby competition in future elections so you better make us happier.
Memos to State Legislature:
- Balance the Budget the Old Fashioned Way—and we mean it! We’re approving Prop. 22 meaning you lawmakers will no longer be able to dip into local funds to solve state budget problems.
- Who is accountable for this budget mess? We’re approving Proposition 25 removing the 2/3 vote required to pass the state budget for two reasons. We’re tired of the minority holding up the majority from passing a budget on time by playing games. And we want to hold the majority responsible for passing a balanced budget and living with the consequences. So get your job done and quit messing with us.
- Forgetaboutit! You can forget proposition 27 to eliminate the new independent redistricting commission we approved last election. What part of ‘hell no’ don’t you understand. We’re also stripping you of the power to reapportion Congressional districts too by approving Prop 20.
Memo to Druggies and Old Hippies
- What are you potheads smoking? OK we admit we inhaled a time or two but you have got to be kidding if you think we’re going to legalize drugs even marijuana and bring the Feds down on us. Mostly, this is just not a good example to set for our kids. Yes we know the prices will come down, tax revenues will go up and we will hurt the gang drug profits badly but Oaksterdam is too much, too soon.
This morning in California it feels a little like we’re emerging from an episode of the TV show Fringe where the characters flash from one universe to another battling each other.
While San Francisco will welcome home the World Series Champion Giants with a parade, in some ways it is de ja vu all over again as Jerry Brown is again Governor but this time San Francisco Mayor Gavin Newsome is along for the ride as the natural inheritor of the Governor Moonbeam title in his election as Lt Governor. While the results are not final it appears that Democrats will sweep almost all the major state offices.
With a few notable exceptions Californians clung to familiar faces. Senator Barbara Boxer seems to have survived the fight of her political life against Carly Fiorina who has yet to concede the race until the count is official. Nancy Pelosi was easily reelected to Congress but lost her job as Speaker of the House. My own Congressman Democrat Jerry McNerney appears to have lost his bid for re-election in one of the few competitive seats in the Golden state to a conservative GOP lawyer.
There are a lot of tea leaves being read today.
Moody’s reports that American business is sitting on $1 trillion in cash because it is too uncertain about taxes, health care costs, regulation and the political battles ahead. This isn’t new news but it is just as shocking as when we heard it before.
The biggest hoarders by sector were technology companies at $207 billion, pharmaceuticals at $124 billion, energy at $105 billion, and consumer products at $101 billion stored up waiting for better times and better deals. Moody’s said the most likely use for this cash would be share repurchases to shore up stock price and acquisitions with many great buying opportunities in consolidating markets.
The recession and the long slow recovery has given companies plenty of reasons to cut costs, plant and equipment capital investment and reduce operations to bare bones levels while simultaneously restructuring debt and pushing out maturities to conserve cash. This cash hoarding behavior seems to be getting worse too as Moody’s reports $943 billion of cash and short-term investments on hand at US companies through July 2010 up from $775 billion in December 2008. Since the US penalizes companies for bringing profits back from overseas more than 25% of this cash hoard is being parked in off shore accounts being used to stimulate recovery in Asia and elsewhere.
“This cash hoard would be enough to cover a year’s worth of capital spending and dividends and still have $121 billion left over.” —–Moody’s Investors Service
The top 20 companies holding large corporate cash balances make up 37% of the total cash on hand with $346 billion on their balance sheets Moody’s estimates including $39.86 billion as CSCO; $36.79 billion at MSFT; $30.06 billion at GOOG, $23.64 billion at ORCL and $21.89 billion at F to round out the top five in cash holdings.
So while Senator Barbara Boxer runs scathing political ads charging her opponent for US Senate Carly Fiorina with shipping HP jobs overseas, she is simultaneously holding a fund raiser at CSCO hosted by CEO John Chambers telling the assembled employees that she has “Silicon Valley’s back” in the battles ahead. While that might be good politics for both Boxer and Chamber, CSCO is hedging its bets by keeping a lot of that nearly $40 billion in cash parked offshore or using it to invest in job creation in India and elsewhere.
To get America back to work, reduce our deficits, improve our competitive advantage and leverage the economic engine that is the American economy we must create a political and business climate more conductive to domestic production and growth.