California’s economy is in a state of turmoil, but between attractive yields on the state’s muni bond exchange traded funds (ETFs), as well as the recent passing of the King of Pop, Michael Jackson, could the economy have enough going for it to help it bounce back?
Before we get into how Michael Jackson could help, Joel Kotkin for Forbes poses the question: “Who Killed California’s Economy?” He’s rounded up a list of five possible suspects. Whodunnit?
- Arnold Schwarzenegger: The Terminator has lacked any consistency or authenticity, going from tough governor to ultra-green terminator to anti-liberal interest guy. Over the course of this identity crisis, high -tech jobs have left the state, while there have been huge setbacks in the construction, manufacturing, warehousing and agricultural sectors.
- Public Sector: Fat pensions and unlimited political power leave many in California who don’t care about the economic environment. California’s 356,000 workers and their unions, who make up the best-organized, best-funded and most powerful interest group in the state, think this way. Is this labor aristocracy part of what has killed the spirit.
- Environment: California’s environmental activists once did an enviable job protecting coasts and mountains, expanding public lands and working to improve water and air resources. In California today, everyone who makes a buck in the private sector–from developers and manufacturers to energy producers and farmers–cringes in fear of draconian regulations in the name of protecting the environment.
- Business Community: Some members of the business elite, such as those in Hollywood and Silicon Valley, tend to be too self-referential and complacent to care about the bigger issues. Others have either given up or are afraid to oppose the dominant forces of the environmental activists and the public sector.
- Californians: For those of us still here, the ones paying the bills and getting nothing in return, we must be very cautious about handing more power to the state’s leaders. Much of the middle class has left the state and it will take more than structural reforms to turn around the fundamental economic drivers of the state.
As for Michael Jackson, the tourism factor may turn out to be a huge boost for California’s economy. Neverland Ranch could still be a tourist destination, even though for the time being visitors can only peer from the outside in. Michael Jackson will be buried in the Hollywood Hills, temporarily, his family says. People will flock to visit this internationally famous pop icon for years to come. This leaves us with a crazy scenario for California’s economy and what drives it: His death means a world where even Michael Jackson impersonators could experience fame and riches, says Mike Schuster for Minyanville.
- PowerShares Insured California Muni Bond (PWZ): up 6.9% year-to-date; yields 4.61%
- SPDR Barclays Capital California Muni Bond (CXA): up 2.8% year-to-date; yields 4.16%
- iShares S&P California Municipal Bond (CMF): up 1.1% year-to-date; yields 3.63%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.