January 14, 2016: the note on the Commonwealth of Massachusetts generated a "sidebar" discussion; see comments. Coincidentally, having just sent a note to another reader, I received a follow-up comment (see below). My reply is really poorly-written and not ready for prime-time, but it is what is is, a reply to a comment about GE moving to Boston.
Without question GE is doing the right thing.
1. Connecticut is in the backwaters of New England.
2. Boston is the center of New England. The absolute center. On the East Coast, NYC is #1; Boston is #2; Washington would not even make the top ten list if the capitol was not there.
3. For purely financial reasons, Texas might have been better but "Connecticut/New England" culture would never have adapted to Texas. No ocean (at least not near Dallas). No yachts.
4. Boston is the #2 financial center of the US -- in some sense -- better than NYC; perhaps more accessible than NYC.
5. 25 universities and colleges in Boston metroplex; top-notch MBAs (Harvard), engineers (MIT), medical technology (Mass General/Tufts). My hunch is that GE had been looking at Boston for quite some time; they used CT taxes as the excuse to move.
6. Everyone will focus on the money side of the story; I'm thinking of the quality of life; access to MBAs and engineers; access to capital (dollars); access to Cape Cod.
Huge story.The reader (see comments) is absolutely correct: the progressive/liberal/Rachel Madcow philosophy that GE seems to have accepted will fit right in with Boston politics. A win-win for everyone.
Reuters is reporting: Petrobras cuts spending plan again as oil-price drop bites.
Petróleo Brasileiro SA, Brazil's state-controlled oil producer, on Tuesday slashed its investment plan for the third time in just over six months as it tries to preserve cash to pay its debt, the industry's largest.
With planned 2016 investments of $20 billion, versus $27 billion in June, Petrobras also trimmed its outlook for oil production in Brazil this year by nearly 2 percent to 2.145 million barrels per day from 2.185 million bpd.
The production cut underscores the difficulties facing Chief Executive Officer Aldemir Bendine during Brazil's worst recession in at least 25 years and with its currency, the real, in a tailspin.
"Every day Petrobras is under more and more pressure," said Fabio Fuzette, who runs Sao Paulo investment fund Antares Capital. "If oil prices stay low, I'm not very hopeful. We will likely see more of the same shortly."Although North Dakota's daily production of about 1 million bopd is half that of Brazil's, it is interesting that one could argue that North Dakota's production "rivals" that of Brazil's -- at least in the same ballpark.
MetLife will divest itself of its "bread and butter." The US government has determined that MetLife poses a threat to the US financial system if it fails. US bureaucrats have calculated that if all of MetLife's insureds die on the same day, the event would take down the US financial system (I can't make this stuff up).
MetLife Inc. doesn’t believe it poses a risk to the financial system. But it isn’t waiting to find out if courts agree.
The insurer is seeking to divest a large piece of its U.S. life-insurance unit as part of a plan to ease some of the capital burden it is expected to face under new federal regulations, the company said Tuesday.
Under the plan, the company would spin off, sell or take public a business that has been at its core for decades: selling life insurance and other financial products to individuals and families across the U.S. MetLife is one of the best-known sellers of financial protection to American households.That may or may not be interesting. The reason this article caught my attention: it explains why GE got out of the financial business. I always thought GE got out of its financial business for "business reasons." I was wrong. The government forced GE to get out. From the linked article:
MetLife would be following in the footsteps of General Electric Co. , one of the other four nonbank firms labeled systemically important. In April 2015, it made one of the biggest strategic moves in its long history by laying out plans to get out of the banking business and refocus on the conglomerate’s industrial operations.We might see the same with AIG:
The move comes as American International Group Inc., another nonbank designated as systemically important, has faced pressure from billionaire investors Carl Icahn and John Paulson to split into three separate companies to reduce the capital burden and boost shareholder returns.Pocahontas is watching this closely. And probably ordering a case of champagne.
Interestingly enough, these moves by GE and MetLife, and possibly by AIG, could be a boon to shareholders. See disclaimer, yada, yada, yada.
This is an incredibly interesting story. Michael Dell is about to make billions. The story is interesting enough without my comments.
ATT is mentioned in the article. See disclaimer, yada, yada, yada.
It's my understanding that the individual 57 US states, unlike the US government which can print money, must balance their state budgets on an annual basis, or maybe a biannual basis if they have a biannual budget. I could be wrong. Whatever.
The AP is reporting that time is running out for the Commonwealth of Massachusetts. The Commonwealth may not be so wealthy. I would link the story over at the Boston Globe but their paywall is pretty tough to tunnel through, so I won't even see their ads. Whatever. So, from something called boston.com, the same story -- in fact, I think it's the very same story:
Gov. Charlie Baker has ordered nearly $50 million in spending cuts as part of a plan to erase a state budget shortfall.
In a letter late Friday to state lawmakers, the Republican said his administration is projecting a $320 million deficit in the budget for the fiscal year that ends July 1. The projected shortfall is based on current revenue forecasts.
Baker said officials also have identified $55 million in additional non-tax revenues, mostly federal reimbursements.
So, back-of-the-envelope: $320 million deficit, minus $55 million from federal reimbursements, minus another $50 million in governor-mandated spending cuts = a deficit of $215 million, and les than seven or eight months to get it right.
Just one more reason, Boston is burning the midnight oil to get GE to relocate from Connecticut where taxes are in the mesophere to Massachusetts where taxes are only in the stratosphere.
By law, Massachusetts governors are empowered to make mid-year budget cuts if anticipated revenues won’t be enough to cover expenditures. Such cuts are limited to executive branch agencies.
With a $50 million-cut-to-the-executive-branch, just how big is the "governor's budget"? I assume a lot of folks are updating their resumes.Other areas — like state education spending and state aid to local cities and towns — are off limits.