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Los Angeles Mayor Antonio Villaraigosa.
KPCC's Brian Watt reported recently that LA Mayor Antonio Villaraigosa wants to extend the city's business tax holiday "indefinitely." Which could be interpreted as the mayor saying that he wants to get rid of the business tax altogether — rather than simply extend the holiday for another four years, as some city council members have suggested. (Currently, new businesses are exempted for three years.)
LA is facing a budget deficit, of around $250 million, which sounds like a lot but isn't really that bad, given the dreadful nature of the economy. Meanwhile, the business tax is expected to bring in something like $425-$440 million this fiscal year. That sounds pretty good, but the complaint is that LA's business taxes are so high that they actually cost the city money, in terms of lost revenue from other taxes that would flow from increased business activity.
It's often noted that California has the world's eight largest economy. This depends on how you do that math. At $1.9 trillion, the Golden State is just south of Italy on the IMF list (at number 9). But...Italy is having some rather severe financial difficulties at the moment. So if its GDP slips — and it's already slipped pretty far — and California's increases, will California move up? Then we can lock Brazil in our sights! Then the UK!
Actually, before we get too excitied, we should remember that if California were in Europe, we'd be in serious trouble.
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The European currency Euro logo stands in front of the European Central Bank (ECB) in Frankfurt/M., western Germany on August 4, 2011.
Greek gets a new government. Italy will soon get a government. And still the markets aren't calmed. The Dow flirted with a 400-point drop all day before closing at minus-389. Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy have finally just come out and said it: There should be two Europes — one run by...Germany and France, with the Euro as its currency; the other limping along with whatever's left in the Franco-German wake.
For critics of the Euro — and there have been plenty since the single currency was introduced in the 1990s — this is an "it's about time" moment. But even relative supporters are yelling surrender. At the Financial Times, Martin Wolf throws up his hands:
Will the eurozone survive? The leaders of France and Germany have now raised this question... If policymakers had understood two decades ago what they know now, they would never have launched the single currency. Only fear of the consequences of a break-up is now keeping it together. The question is whether that will be enough. I suspect the answer is, no.
There's a problem in the venture capital world. The amount of venture funding flowing into startups has been reduced by the financial crisis, but VCs are still looking to make money off new technology businesses. Biotech is another story. A mobile application or social networking website can turn to gold far quicker than a biomedical play.
"[Information] technology has faster exits than biomedical," said Dr. Jacob Levin, Assistant Vice Chancellor of Research Development at the UC Irvine Medical Center. "The burden of the FDA approval process isn't there. It can take eight years to get a new technology or treatment approved."
According to Levin, the dreaded "valley of death" — the point at which a startup moves from early stage funding to more serious investment, commercialization, and revenue — for biomedical is "expanding." This is a major challenge in Southern California, where biotech is often viewed as the region's answer to Silicon Valley's tech juggernaut.
It's looking more and more like the Euro is toast. It's game over for Greece, and now Italy's bond yields have moved above 7 percent. Why is that such a big deal? Allow CNN to explain:
The 7% level is significant because that was the mark Ireland and Portugal crossed shortly before receiving bailouts from the European Union and International Monetary Fund. Ireland's actually rose above 8%, while Portugal's breached 9%. And yields for Greek bonds touched the 10% mark.
Italy's overall financial picture isn't especially terrible — people there have not borrowed themselves into a personal hole. It's just that the country's public finances are in tatters. And the third largest economy in Europe can't be in tatters. My Twitter feed isn't optimistic, as the Storify grab below demonstrates.