KeNo's Housing and Economic Portal: Tuesday March 27 Housing and Economic stories

Monday, March 26, 2012

Tuesday March 27 Housing and Economic stories

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TOP STORIES:

California's Greek Tragedy - (online.wsj.com) Long a harbinger of national trends and an incubator of innovation, cash-strapped California eagerly awaits a temporary revenue surge from Facebook IPO stock options and capital gains. Meanwhile, Stockton may soon become the state's largest city to go bust. Call it the agony and ecstasy of contemporary California. California's rising standards of living and outstanding public schools and universities once attracted millions seeking upward economic mobility. But then something went radically wrong as California legislatures and governors built a welfare state on high tax rates, liberal entitlement benefits, and excessive regulation. The results, though predictable, are nonetheless striking. From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.

Solyndra Is Blamed as Clean-Energy Loan Program Stalls - (www.nytimes.com) More than $16 billion in loans authorized five years ago by Congress to develop fuel-efficient vehicles has yet to be disbursed, with applicants for the money complaining that the Energy Department is crippling plans for greener cars and trucks at a time of rising gas prices. Some companies contend that the loans, administered by energy officials, have dried up because of a political firestorm that followed the bankruptcy last year of the solar panel company Solyndra, which had received a federal loan from a related program. The bankruptcy fed Republican criticism of the Obama administration’s handling of clean energy loans because one of the investors in Solyndra was a major fund-raiser for the president.

Carlyle Owners Took $398.5 Million Payout Before IPO - (www.bloomberg.com) Carlyle Group LP (CG), in a transaction nine months before it filed to go public, saddled itself with debt to pay owners including William Conway, Daniel D’Aniello and David Rubenstein a $398.5 million tax-deferred dividend. The private equity firm borrowed $500 million from Abu Dhabi’s Mubadala Development Co. in December 2010, saying it would use part of that to expand investment products. Instead, it paid out almost 80 percent of the money to existing owners, according to regulatory filings. Separately, the Washington- based firm negotiated bank credit giving it the option to distribute an additional $400 million prior to its initial public offering, lending agreements filed last month show. The deals, which echo the dividend recapitalization private equity managers use to extract cash from the companies they acquire, leave Carlyle’s future shareholders with the cost of servicing the debt.

States Keep Axes Sharpened - (online.wsj.com) States are moving to cut jobs and other spending to close budget deficits, even though their protracted fiscal crisis is easing a bit in an improving economy. State governments are confronting a combined $47 billion gap between projected revenue and costs for the fiscal year that starts in July, according to the Center on Budget and Policy Priorities, a left-leaning think tank. While that figure is high historically, it is less than half the budget shortfall that states confronted a year ago and down from $191 billion three years ago. For the coming year 29 states have projected deficits; that is down from 42 a year ago and 46 the year before. Tax receipts in many states have risen in recent months as companies post higher profits and more people find jobs. And several states lowered their costs with earlier rounds of budget cuts. But for many, revenue gains haven't kept up with surging costs for health care and pensions. Meanwhile, federal stimulus funding is drying up.

California's State Treasurer Is Getting Pummeled By His Wife's Sex Tape Scandal – (www.businessinsider.com) It has been a rough year for California State Treasurer Bill Lockyer. After struggling through state budget and pension crises, the 70-year-old Democrat is now embroiled in a convoluted soap-opera scandal involving his young wife and what the San Francisco Chronicle reports as a sex tape she made with a guy she met in rehab. Revelations of the sex tape came to light after Lockyer's 40-year old wife, Nadia, an Alameda County Supervisor, called police on Feb. 3 after she was allegedly assaulted in a motel by an "ex-boyfriend."