Santelli Explains Why A Broke California "Likes" A Hot Facebook IPO
The unsurprising and yet depressingly real budget data from California today should shock no-one and CNBC's Rick Santelli provides the most succinct and even more saddening reality check on the situation this morning as he points out the $15.7 billion shortfall and how cuts and compromise will fill that gap. His sane response to the implicit rise in taxation that this compromise realistically requires will mean - happy feet as Californians leave the state. His rant is one of the best but a little later in the day, the problem appears to be on its way to being fixed by none other than the hoody-in-chief himself. According to Bloomberg, Facebook Inc.’s initial public offering likely will account for 20 percent of California’s personal income growth this calendar year, the state fiscal analyst said. The state expects personal income to grow 4.9 percent in 2012. If the Facebook IPO were excluded, that would total 4.0 percent, the agency said. Money paid to company executives, investors and insiders would equal 1 percent of all personal income in 2012, the agency said. So two things come to mind: 1) we sure hope there are more mega-IPOs due next year to fund CALI's shortfall or we may have to pull the 'transitory' or unsustainable card out of the drawer; and 2) how will all those Facebook employees (and the corporation itself) feel when they start facing higher taxes (as Saverin just pre-emptively did?). Will they follow Santelli's happy feet out of the state? In the meantime, it would appear that the Facebook IPO is just the snake-oil medication that everyone needs - how could the IPO go wrong?