The debate over how much higher education leaders in California should get paid grinds on. California Watch reports:
California Faculty Association has launched a new online ad targeting pay packages for California State University executives — more backlash from the board of trustees' decision in July to pay a new campus president $100,000 more than his predecessor on the same day they approved increases in student tuition....The ad, launched last week, features Monopoly money raining down on a smiling Rich Uncle Pennybags. It links to an online petition that says CSU leaders are "out of touch" and presses for "a new pattern of public service that is appropriate for leaders of a public institution." Some 3,000 people have signed the petition so far.
The controversy stems from Elliot Hirshman, San Diego State University's new president, getting a big raise over the former president, Stephen Weber. The question is: Are college presidents really worth this kind of scratch? Especially when the state that employs them is dealing with a major fiscal crisis?
Bank of America, the country's second-largest bank (or first, depending on if you go by assets rather than market cap), is in a heap of trouble. Its CEO, Brian Moynihan, is presiding over a restructuring that's supposed to refocus the mega-bank on its core consumer business. This means massive layoffs — 30,000, according to various published reports. There's also been speculation that BofA will try to sell Merrill Lynch, the investment back it acquired after the financial crisis. But there's also speculation that Merrill would be absorbed into BofA and become something far less than the top-level i-bank it was back in the day. That's speculation for you! Heads one day, tails the next!
Countrywide is also a major factor. The subprime mortgage lender was picked up by BofA just before the financial crisis and its portfolio of bad loans is often pointed to as the biggest drag on BofA's performance. There's a nightmare scenario in which BofA puts Countrywide into bankruptcy and then witnesses federal regulators take control of the bankruptcy proceeding — and BofA.
Irvine-based Broadcom is dropping $3.7 billion to buy NetLogic Mircrosystems, in an all-cash deal. Who says there's no tech juggernaut in SoCal (with deep pockets, to boot)? This is the LA Times' David Sarno on Broadcom earlier this year: "With nearly three-quarters of its 8,300 employees devoted to electrical engineering, the company has been able to storm markets where it had little experience, often dominating them within a few years." (Bloomberg, LAT)
Blame Germany for all this stock-market volatility? With a Greek debt default looking inevitable, the big question is whether the country stays in the Euro. And if it exits, what's next for Italy and Spain? (Bloomberg)
Blame the machines for all this stock-market volatility? Hmmm…not sure. But automated trading now accounts for 60 percent of "daily turnover" in four major markets. (NYT)
It was a short week but a lively one. I kept myself busy blogging about everything I could find that was relevant to the SoCal economy. In case you missed anything, here are some highlights from this week's DeBord Report. Enjoy!
The President called for increased infrastructure spending in his speech last night, pointing to the many construction workers who are currently unemployed and, among other things, the need for upgraded schools. It's unclear how much of his $447-billion jobs bill would go toward this objective. But the argument for investing in infrastructure and investing now is strong. Here's the Washington Post's Ezra Klein:
Because of the recession, construction materials are cheap. So, too, is the labor. And your borrowing costs? They've never been lower. That means a dollar of investment today will go much further than it would have five years ago -- or is likely to go five years from now. So what do you do?
Invest! I should reveal that Ezra made this recommendation almost a year ago, when the yield on the 10-year Treasury note was a 2.7 percent — quite a bit higher than today, when the yield fell to a record 1.89 percent before edging up to 1.93 percent.