Thursday, July 23, 2009
Getting ready for the weekend, cleaning off my desk and crossing my fingers that a resurgent stock market means better economic times ahead. Let's get to it:
* ... The (MESSY) STATE OF CALIFORNIA: Once the envy of the country, the Golden State has become the punching bag for the nation. People now talk about California the way they used to talk about Mississippi. Our Legislature is totally dysfunctional, the two parties talk past each other and cater to the extremes at both ends while meanwhile the special interests (state employee unions etc) rule the day. Consider the following excerpt from a recent column:
"The (state) Senate is not dysfunctional-it is nonfunctional. The problem is that neither the institution nor its members are accountable to 'We the people.' Instead members concern themselves with personal and partisan agendas."
Sounds like California right? Well, this is a story about the New York legislature, which apparently is afflicted with the same paralysis and lack of leadership as our own. Written by Gerald Benjamin and Mario M. Cuomo, this column appeared in the Wall Street Journal and was brought to my attention by Ray Dezember, the retired banker who may singly be the most influential man in town. Affectionately known as "Mr. Bakersfield," Ray is known for his personal generosity and his deep involvement and love for our community. He passed this column along to me with a personal note saying California needs a state constitutional convention to get out of this mess.
This is precisely what Benjamin and Cuomo argue, that things are so bad in New York that only rewriting the rules can save the state. Ray is among a growing number of folks who believe the same is true for California, that between the initiative process and gutless legislators, we simply need to rewrite the rules and start anew, focusing on the core issues facing our state. The Cuomo column ends this way, and rings true for California:
"Albany can show that it is genuinely interested in considering reform by putting the convention question on the ballot. Alternately it can ignore calls for change. This, of course, would further reinforce the cynicism of New Yorkers and push them further away from public life - and from democracy. If the legislature wants to avoid this fate, which is of its own doing, then it should take up the calls for reform."
That's Ray shown in the photo below along with Californian publisher Ginger Moorhouse and me, shortly after Ray retired from our Board of Directors.
* ... SAN JOAQUIN'S INDIAN CONNECTION: As reported earlier this week, troubled San Joaquin Bank announced a recapitaliization that will bring $38 million into the bank from a group of Indian investors. This is good news for the local bank, which has been under the screws of federal regulators who are concerned about "impaired" development loans on the books. CEO Bart Hill said the investment would be enough to stabilize the bank, but there are a series of steps that must be taken before the money can leave India and get to the bank. Meanwhile, the bank filed a "Form 8-K" which details the transaction, and this notes that San Joaquin can and will continue to look for yet more investors. If you're curious about this stuff, and want to read the names of the Indian investors, check out the Form 8-K here.
* ... WAITING ON THE TOUR: Meanwhile, local cycling enthusiasts are waiting to hear if Bakersfield's bid to host a leg of the 2010 Amgen Tour of California will be approved. A large group of local business leaders, supported by the city of Bakersfield, are supporting this move to bring this premier professional cycling event to Kern County next year. This would be a sure-fire winner in terms of tourism and showing off our community, so keep your fingers crossed. If you want to keep up with the progress of our bid, check out the website here. That's a photo of past winner Levi Leipheimer below.
* ... A TOUCH OF OILDALE IN LA: Local photographer Felix Adamo passes along word that a gallery in Los Angeles is featuring six Bakersfield artists and their art of Oildale. The exhibit runs Aug. 1-29 at L2kontemporary, located at 990 North Hill Street, No. 205. Felix says one of the artists is our own Jill Thayer, North High and CSUB graduate. Make sure to check it out if you're down in Los Angeles.
Wednesday, July 22, 2009
Wonderful piece in today's New York Times on the state of California, where nobody can seem to agree on just about anything and the recession has left us with few options. Social services are being cut, state workers furloughed and laid off, tuition is being raised and Sacramento is a picture of a dysfunctional mess. Sometimes it takes an outsider to see things more clearly and this is as good a roundup as one can expect. Read the complete story here. A couple key excerpts:
"We are now the state that can’t,” said Stephen Levy, the director of the Center for Continuing Study of the California Economy, a private research organization in Palo Alto. “It can’t agree on its water problem. It can’t balance its budget, it can’t decide what to do with prisoners, and it’s still fussing about its immigrants. And this is not the end of our economic problems. This is the beginning.”
"...In the end, we do not know for sure whether the California public really wants the California dream anymore,” said Bruce E. Cain, a professor of political science at the University of California, Berkeley. “The population is too diverse to have a common vision of what it wants to provide to everyone. Some people want the old dream, some want the gated privatized version, and some would like to secede and get away from it all.”
Tuesday, July 21, 2009
Turns out we can thank the Obama stimulus package for bringing some much needed jobs to Kern County. The New York Times is reporting that a new power plant that turns coal and waste petroleum into cleaner-burning gas has won the support from state and stimulus funds. The paper says the plant was awarded a $308 million grant from the American Recovery and Reinvestment Act and is the largest grant yet from the Department Energy's Clean Coal Power Initiative. Thanks to Trish Reed, head of investor relations over at the Kern Economic Development Corp., for alerting me to this story. (you can read the full piece here)Said Trish:
"Hydrogen Energy’s 250-megawatt facility will take petroleum coke (left over from refining), then will filter out 90 percent of its carbon dioxide for permanent underground storage in an adjacent oil field in Elk Hills, where it will also help with enhanced oil recovery. The hydrogen will power the plant’s turbine electrical generators."
A quick look at Rep. Kevin McCarthy (R-Bakersfield) on the House floor today, in action.
Monday, July 20, 2009
Locally owned San Joaquin Bank had a bit of good and bad news for its investors and shareholders today. First the good: the bank is getting a much needed infusion of capital, to the tune of $38 million, from a group of Indian investors. Like banks across the country, San Joaquin has been struggling as its real estate portfolio continues to deteriorate, and it's now working under some stringent federal guidelines for troubled banks (read the earlier post here) Bart Hill, San Joaquin's CEO, says they hope to get the $38 million soon. He said the money is coming from 11 different Indian families and the issuance of 8.1 million in new shares would give the Indians 62 percent of the company's outstanding shares and two seats on the bank's board. This is huge news for the bank, which has been battling a series of nasty and destructive street rumors about its future. Public institutions like banks live and die on the confidence of the street, and the folks at San Joaquin have been doing everything they can to restore confidence in the bank.
Now here's the bad news: at the same time the bank announces the recapitalization, it is also amending its first quarter results to reflect an even worse loan and earnings environment. Some facts:
* The company originally reported it had $105.5 million in classified loans, but based on new information and consultations with the Federal Reserve, those classified loans are now $163 million. Of those loans, the bank expects that $98 million are now "impaired" compared to the original estimate of $61.6 million. Not good.
* The bank originally reported net charge offs of $858,000 in the first quarter, and that has now been raised to $10.7 million. Whew!
Bart told me that "real estate values were just cascading in the first quarter," but he now seems "some bottoming signs... I'm seeing a turn."
Beyond San Joaquin's fortunes, it's important to look at what this means for our local economy in a larger sense. San Joaquin was like any other bank and now is stuck with collateralized loans that are deemed "impaired." The loans are constantly scrutinized and reappraised, and the restatement of first quarter earnings simply means the market has a ways to go before we begin to see normal again. In other words: we're still in the middle of the shakeout, and until we move through it, banks like San Joaquin will continue to struggle.
For a complete story, check out The Californian Tuesday or look for it on bakersfield.com
Always amazed (and often pleasantly surprised) at the stuff making the rounds on the internet these days. The internet is by nature a source of unwashed and unfiltered opinion, so you have to be careful what you believe. And nothing seems to stir up passions in Bakersfield like an attack on the Second Amendment. One prominent businessman forwarded an email to me today saying the Senate was moving toward making gun owners register their weapons on their tax returns next year. Snopes.com is a good source to check these rumors and of course this one also was not true. Then, perhaps an hour later, I get another email forwarding an interview that rocker Ted Nugent gave with the editor of Texas Monthly on gun ownership. Ted is famous for saying what he means, in the bluntest of terms. Here he is:
I would have overlooked story in the Los Angeles Times' sports section had it not been for a Twitter alert from a friend on the east coast. The story, a bitter-sweet tale of great accomplishment and a horrific fall from grace, focuses on Steve Dalkowski, who according to this story may have been one of the hardest throwers in the history of baseball. (read the entire piece here) Dalk as he was known ended up battling the bottle, in and out of Bakersfield, and spent his time with the minor league teams that played at Sam Lynn ball park out in Oildale. The piece was written by Ron Shelton, writer-director of "Tin Cup" and "Bull Durham." Photo taken for the LA Times by Ringo H.W. Chiu.