Randomly Noted

The U.S.’s largest public pension funds reports further progress in its useful quest to get more publicly traded companies to adopt majority voting for directors.

Simply put, majority voting requires a director in an uncontested election to receive more “for” votes from shareholders than “withhold” votes to continue to serve on the board of directors.

The 58 companies targeted in March 2010 by The California Public Employees’ Retirement System (CalPERS) were holding onto the plurality system. Under that system, a single “for” vote could re-elect a director.

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California, meet Greece.

Illinois, meet Ireland.

Pennsylvania, meet Spain and Portugal.

It would be very helpful for the finance leaders of those states to study hard what’s going on with those European countries, especially if the White House’s deficit reduction commission is successful with a proposal to eliminate tax-free status of newly issued municipal bonds.

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Ok, it might be a little much to suggest that there’s another gold rush going on in California. But investors did flock to the state’s latest municipal bond offering and they did so in such a way – like New Jerseyans queueing up days before tickets for a Bruce Springsteen concert go on sale – that California raised the size of its offering by 25%.

This speaks in part to how investors, individuals in particular, don’t believe California will default any time soon – as colleagues Kelly Nolan and Jodi Xu noted in a story today, the state does have a $20 billion budget hole. But perhaps more so, it speaks to how investors in general are wiling to take on some risk – call it measured risk.

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President Obama announced $8 billion in high-speed rail grants today. (As a quick aside, that $8 billion is part of the $787 billion stimulus package that simply HAD to be passed immediately last year to help improve the economy in 2009.  The $8 billion is part of the majority of the $787 billion that wasn’t spent in 2009. But I digress.)

Who can be against high-speed rail? It brings distant cities closer together, making for more mobile populations, and presumably, easier access to high-job-growth areas from population centers; it’s greener than driving or flying; and of course, the point of the stimulus, it creates jobs.

The first point is true, the second not as true as it first appears, and the third true mainly in the short term. But as the states continue to fight their way through a persistent economic slowdown, let’s focus on the cost of these projects, which is enormous.

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The Los Angeles Times reports on calls in that fair city for more regulations and restrictions on convenience stores in South Los Angeles based on “links found by researchers between snack foods and obesity in poor communities.”

Let’s stipulate all the research is accurate and that obesity causes serious health problems that have real financial and social costs. And that candy bars and such are easily and readily available in convenience stores.

Still. Do we really want a government ban of snack food stores? Do we want this level of inteference in our daily lives?

Okay, freedom to get fat is not a great rallying cry and obesity is a serious issue. How about better education and more practical education, especially in poorer neighborhoods, about diet and health. How about taking the long view and working towards policies - educational and otherwise - that create economic opportunity that absolutely shrink the size of “poor communities.”

California has a budget crisis. All levels of government there should have other things to do.

Bill Gross is out today with his often-interesting monthly reflections and the most intriguing portion of October’s musings center on a broad changing of the guard away from the dominance of global finance.

Gross, the managing director of PIMCO, the big California-based bond investment firm, spends much of his latest piece bemoaning the budget and related woes of California, the now ironically nicknamed ‘golden state.’ (We’ll spare you his comments about cleaning up after dogs.)

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California is continuing its trend-setter ways. You’ll recall the giant state was out front in trying to tame auto emissions, among other things. Now it’s after big-screen televisions.

Marc Lifsher reports in The Los Angeles Times the California Energy Commission is scheduled to release new proposed energy use standards today for public comment, with a final vote in November. Maxium energy use rules for televisions would start in 2011.

The article reports mixed views from the affected industry. It will be interesting to see if other states follow suit. With the booming consumer desire for ever-larger televisions, this could be an emerging energy issue.

Lifsher reports: “The average plasma screen uses more than three times as much energy as a bulky, old-fashioned cathode-ray tube TV.”

It’s interesting to watch the evolving norm of what any given society decides to put outside the realm of market forces. What belongs to the citizens collectively? What should or shouldn’t be up for sale?

Given the cash-strapped position of many U.S. cities and states, figure more and more services will go to the highest bidder. In that vein, The Los Angeles Times reported today that the Los Angeles County Metropolitan Transportation Authority set the fees that motorists driving alone will pay to use the faster car pool lanes on two congested area freeways.

The fees will range from 25 cents to $1.40 a miles to travel in the high occupancy lanes of the two freeways, the Times said.

The linguistic irony of charging to drive on freeways was not lost on all. “Residents have raised concerns that freeways should be free,” said one official quoted in the Times article.

More Californians Will Be Searching Want Ads If State Doesn't Get Budget Act Together

With July around the corner, like next week, a new budget year begins in many states, including California. And with that new budget year for California comes cash shortages. Newswires reporter Stan Rosenberg reports the state expects to have a $2.8 billion budget gap in the first month of its budget. And that grows to $6.5 billion in September unless the government takes some drastic actions.

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This pretty much says it all: California is now the lowest-rated state in the U.S., dropping even a notch below perenially poor Louisiana. Late yesterday, two major ratings agencies (Moody’s and Fitch) downgraded California’s debt ahead of next week’s planned sale of $4 billion in new securities. Among other things, Moody’s cited the fact that California’s economy is in a recession that is deeper than most states, it continues to face liquidity issues, it has limited financial and budgetary flexibility and it is relying heavily on deficit borrowing.

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