$15 MINIMUM WAGE: THE STRAW THAT WILL BREAK CALIFORNIA’S BACK

Strict gun laws, asinine and superfluous regulations, a second-rate education system, domineering labor unions, unpayable public debts, rotting infrastructure, and mind-boggling housing costs. Which state are you thinking of right now? Is it California? I bet it’s California.
Over the years the People’s Republic of Kalifornia has developed quite the reputation for oppressive rules, dysfunction, and unsustainability; both financially and environmentally. Financially speaking the state has been on the precipice for some time. In recent years several of their cities have declared bankruptcy, and overall the state has one of the highest debt per capita ratios in America. It’s a big effing mess with no clear solutions in sight. There really isn’t any way that California, the biggest economic powerhouse in America, can sustain its current course.
California can however, hasten its demise with crackpot left-wing policies that are sure to ruin their economy, like raising the minimum wage.
A deal to raise California’s minimum wage to $15 an hour by 2022 was reached Monday by Gov. Jerry Brown and state legislators, making the nation’s largest state the first to lift base earnings to that level and propelling a campaign to lift the pay floor nationally.

This post was published at The Daily Sheeple on MARCH 30, 2016.

Reinventing the Neel

As you probably heard by now, Neel Kashkari was named president of the Minneapolis Fed.
Ordinarily, when a regional Federal Reserve bank gets a new president, it is not national news. Patrick Harker at the Philly Fed – crickets.
But Neel Kashkari is something of a celebrity. Most recently, he ran for governor of California. He had some good ideas that didn’t involve raising state income taxes to exorbitant levels. He even beat incumbent Governor Jerry Brown so badly at their only debate that Brown refused to participate in any more debates.
But in the end, it was hard for Kashkari to shed the Republican stigma in California – even as a pro-choice, pro-marriage-equality Republican. He lost, but not ignominiously. Nobody expected a Republican to win in California.
Before that, Kashkari ran equities at PIMCO (a big deal), but most people remember him for being the administrator of TARP, otherwise known as the Troubled Assets Relief Program, otherwise known as ‘The Bank Bailouts,’ conducted under Treasury Secretary Hank Paulson in 2008-2009.
Before that, Kashkari worked at Goldman Sachs.
Pretty good resume for a guy who is 42. I am 41, and I’ve done some cool stuff, but not that cool.
Outside of the resume bullet points, who, exactly, is Neel Kashkari?

This post was published at Mauldin Economics on NOVEMBER 12, 2015.

What Does California Gov. Jerry Brown Know about the Next Crash and Recession that We Don’t?

California was America’s Greece in 2009. It had excellent wine and olive oil. But tax revenues were collapsing. The deficit ballooned. Its credit rating was cut to the lowest of any state in the US. It couldn’t borrow at reasonable rates. And when, under Gov. Arnold Schwarzenegger, it couldn’t pay its bills with real money, it sent fancy-looking IOUs to its suppliers.
Today, California is flush with money. The economy in the coastal areas has bounced back. Unemployment, while still high in some areas, continues to drop. The budget is on its second annual ‘surplus’ in a row. Capital gains taxes from the booming tech sector, the soaring stock market, the white-hot property sector, and all kinds of other investment activities, on top of some ‘temporary’ tax increases, triggered a flood of revenues – $6.7 billion more than Brown’s office had estimated just in January.
OK, no one can figure out how to deal with the unfunded pension and healthcare liabilities. But what the heck, lawmakers at the Democratic stronghold are now fighting over how to spend the ‘surplus.’ They’ve got till June 15 to figure it out and pass a budget or their pay will be docked.
Gov. Jerry Brown, sworn in for his fourth and final term in January – he’d served two terms in the 1970s – is putting his stamp of frugality on the budget, trying to stem the flood of spending proposals. But lawmakers need to be reelected, votes need to be bought, special interests need to be satisfied, and so the money needs to flow.

This post was published at Wolf Street on June 11, 2015.