California Bet 2% Of Its Budget On Facebook's Stock Price Remaining High
from the oops dept
California, a state that has had budget problems for years, apparently bet approximately 2% of its budget on the idea that Facebook's stock would remain at or above $35 and that a bunch of insiders would sell, racking up tax revenue for the state. However, with the stock continuing to drop, the state's fiscal analyst is now warning that perhaps over a billion dollars in expected tax revenue may be at risk. The state's budget is $91.3 billion, and that was built on the assumption that a successful Facebook IPO and insider sales (at an average price of $35) would bring in $1.9 billion. Of course, the stock has been in decline since its IPO, dropping below $20, hence the concern.What I love about the linked article, however, is that the Bloomberg reporter sought to get a comment from Facebook over this (the company declined). What did he think Facebook would have to say? That it would try harder? That it felt bad that the state overestimated its stock price just about as much as the company itself did? I would imagine that budget overruns by the state due to Facebook's falling stock are pretty far down the list of priorities for Mark Zuckerberg these days...
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Filed Under: california, stock, taxes
Companies: facebook
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California didn't bet anything. They didn't take 2% of their budget and bet it on black on a roulette table. They made budget assumptions based on something, which didn't turn out to be true. The lack of truth is enough that many lawsuits are pending over the issue.
The state of California did nothing wrong. They apparently were as mislead as all of the early IPO investors.
Mike once again dips to yellow journalism to try to score points, all that is missing is a silly graphic to back it up.
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Sure they did.
Counting chickens before they are hatched dependent upon the stock market? The market is risky. Don't bet what you can't lose.
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Perhaps it's better to explain that they were trying to fill their budget, and gladly accepted numbers that were a little speculative. No betting though.
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I guess the only silver lining is that Detroit didn't invest their day-to-day money the same way. It disappeared into the pockets of the Kilpatrick Machine long before it could make it that far.
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although some investment is done by the states, it's usually surpluses.
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Cuz weed is soooo hard to come by. /s
Puff puff give MF
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How many fools invested in facebook, hoping it would pay off? Not me. A fool and his money are soon departed.
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Who do I call and harrass?
Who do I call to complain to about this ridiculous assumption that someone made?
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How about...
I know governments have to try to project revenues, but it seems to me that potential profits from Facebook insider selling should have been treated as a windfall if successful, not a line item for expected future revenue.
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Wait...
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If you've ever played one of their shitty games just look at the massive ad spam.
I'm don't even log on Facebook anymore because they keep fucking everything up by "fixing" shit that was not broke in the first place.
I got sucked into the little pay to win games but after deleting my FB it feels good to hunt for the next big thing.
I know the two contradict themselves when I say "I deleted it and I don't even log"
Here's why Facebook loves to keep your shit anyways even if you do delete it.
Evil fuckers :/ oh well nothing on it of value anyways. No phone or valid address or a full name lol.
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The whole dog and pony show that Facebook IPO revolved around was a mess from the start.
These politicians gambling on the value of a stock being sold by it's investors living in their state is a shame. It's a form of gambling with them looking for any excuse to bail them out of their wild spending spree and you're just looking at another example. Truth in finances has been missing not just from the state of California but also from other states as well as the Federal government. All of them seem to be trying to balance the books by gaming the system with betting on eggs that haven't hatched yet.
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CalPERS is goin' down...
Kevin Williamson wrote “GASBombed, The accounting-standards board is about to nuke state and local budgets — and it’s about time.” May 15, 2012
http://bit.ly/LlE3a2
Excerpt from article:
“CalPERS, the gargantuan California public-sector pension system, managed to avoid making adequate pension contributions for years by convincing the state legislature (which was only too willing to be convinced) that the Dow would hit 25,000 in 2009. (It didn’t. And it also may not hit 28,000,000 by 2099, as CalPERS predicted.) The legislature used those numbers to justify an enormous increase in pension benefits for California’s public-sector parasites, at a theoretical cost of $0.00: “No increase over current employer contributions is needed for these benefit improvements,” the fairy tale went. Those who want a stronger government whip hand over the investment industry should consider how governments act when they are investors.”
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The problem comes in that the budget, in a process that can only be described as "dumb-ass", is set based on projected revenues. An economy can collapse, with very little warning, inside of a budget cycle. Which leaves the state screwed, until the economy rebounds.
The economy does always rebound. And CA usually leads it. (for various reasons, not least of which IS that ef'd up tax code.)
CA pays more in federal taxes than it receives in federal services. People in net consumer states (and I'm talking about some of the flyover and YOU Mr.southeast), need to temper your rhetoric. When your state economy is actually PAYING for the services it receives, I'll be much more inclined to give it a listen. Or, you could go "money where your mouth is Tea Party" and simply decline all those federal services. Set an example. Say "no" to unemployment money, highway funds, welfare, medicare, etc.
For those in Cali that don't like it: move. There are 49 other states to choose from :)
(I came from CA, where I've through more than one boom-bust. I've lived all over the map in the US (TX, NY, KS, TN, NJ, NE, etc.). Now I live abroad, with the goal of gaining citizenship in other countries. (For future security, should the US royally screw up and elect a republican disaster, again). CA is still my fave place.)
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Fakebook
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This shows the jooish connection
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And a budget has nothing to do with the financial health of a state, business or household. It's nothing but a tool.
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