Wednesday, May 27, 2009

Why High Taxes, Regulations, and Abuse of Business Does Not Work

California is one of the bigger problems (and there are some other massive problems) that the equity market continues to ignore. The 10th largest economy in the world (yes, if you take California by itself it would be in the top 10 economies in the entire world) is hemorrhaging. The land of glitz, dreams, sunshine, beaches continues to shoot themselves in the foot. It is a great microcosm of what is going on in the bigger picture. A refusal to acknowledge how serious things are and to take the pain. Of course California got themselves in this situation through bad politics trying to squash the enemy, business.

Well one of its darlings, has had enough. DaVita (NYSE: DVA), a leading provider of kidney care services with over $6 billion in revenue has said adios and heading to Denver Colorado. The company put out a press release detailing the move. Primarily among them:

The company expects to see millions of dollars in savings over time as a result of the change.

I love California. I have always said if I fail in life that my back up plan is to move to San Diego, grow my hair long, learn how to surf, and be a bum (why in the world do bum's choose to live in NYC or Chicago when you can practice bumhood in San Diego???) But the state is being as hard headed as can be in not seeing the error of their ways in making business difficult and refusing to get their own house in order. This is one glaring example of the consequences.

Thanks goes to Jody.


Mrs. Watanabe said...

Ha. I'm a lifelong Californian, and while the weather is great, the people here are MORONS (you don't realize it unless you travel out of here). Especially, the state employees. They don't realize that they're cancers, and at some point, the cancer will grow to kill the host.

These idiots (especially Ahnuld) think that throwing more money around fixes things.

Uh, California spends $50 billion of its now around $74 billion budget on K-12 education. And yet, education here is the nation's worst.

California edumacashun is the wurstThrowing more money at education is clearly not the solution; yet this is all you hear from our self-serving educators. And, I'm not a snob; I grew up lower-middle class and attended public schools all the way through.

I used to go to ball games (Lakers, Clippers..._ would talk to the people next to me... they were almost always state employees or retired state employees. Amazing. I could only afford to go once in a while..., Californians are now gradually realizing that socialism is less about killing the wealthy or benefiting the poor... and more about enrichening the state's employees. "But it's too late, baby, it's too late."

Market Seer said...

The problem though is what you describe is slowly becoming the national thought process.

"These idiots (especially Arnold) think that throwing more money around fiexes things"

Throw in Bernanke or Obama or Bush or Paulson or Summers. It is all the same. It crosses party lines.

YOU CAN'T FIX A DEBT PROBLEM WITH MORE DEBT. You just can't do it. You fix a debt problem by decreasing debt which occurs typically in 1 of 2 ways. It gets paid off or the debt holders take losses. That is why it is so absurd for the holders of debt in banks are not taking losses. You don't decrease leverage when those losses are not taken. The LOSSES have to be taken in the United States. Will it cause a chain reaction, yes, will it cause more pain, yes, will it cause a depression, probably but it will finally address the actual problem and start us on the road to recovery. You look at the Great Depression and World War 2 has something to do with getting us out of it but I would argue one the main drivers was debt levels were finally absurdly low. Lowest in decades prior. The road we are on now is total destruction through total destruction of our soverignty through the total desctruction of our currency and national credit.

Sorry, you got my on my soapbox.