Oct
30
The Council on Revenues, which does quarterly forecasts of Hawaii state tax revenues, has decided in a rare extra meeting that its forecast, already bearish, was too optimistic.
Governor Lingle had been preparing spending cuts based on the council’s prediction of a meager 1% increase in revenues in the current fiscal year. Now she has been told it expects 0.5% shrinkage.
Some economics on the council actually wanted to make the forecast even more dire than that, but Paul Brewbaker, economist for Bank of Hawaii, current chairman of the council, argued that it would be better to wait and see what results from the Wall Street rescue, which is only beginning to be implemented.
It is difficult to imagine, however, a scenario in which the council will find itself doing anything other than making another downward revision.
Falling oil prices have helped the economy — Matson just announced a fourth cut in its fuel surcharge, to 25%, effective Sunday — but no one expects oil to return to where it used to be. Indeed, even a partial return to normality in credit markets would likely spur oil price increases.
While Hawaii’s banking industry remains rock-solid and copper-bottomed — Bankoh this week posted a $47 million third quarter profit while First Hawaiian Bank had net income of $55 million, improving asset quality while increasing its lending — the Wall Street financial universe is still being sucked into a black hole of debt and lost confidence.
The single most alarming new development has to do with AIG, the world’s largest insurance company, which insured so many risky investments that a lot of the financial houses we’ve read so much about are counting on AIG, not the government, to bail them out by paying off on its risky paper insurance policies.
The problem is that AIG hasn’t got that kind of money. Insurance companies always assume they will have to make good on a low percentage of their policies, so when they get hit by a hurricane — real or metaphorical — they find themselves instantly in trouble.
AIG got an emergency loan from the Federal Reserve Board, more than $240 million. But The New York Times reporting in Thursday’s editions that sources say the company has burned through most of that cash already, raising suspicion that it was in a deeper hole than it said.
(AIG’s bread-and-butter car and home insurance policies, untouched by all this, remain solid, and would find ready buyers among rival insurers if AIG needed to sell them. In fact, it’s a real shame that a perfectly good insurance company is getting slimed over one division.)
The thing is, Hawaii state officials, who are required by the state constitution not to run in the red, need to realize that the situation could get worse. The spending cuts they have so far contemplated could be the minimum they will have to confront.
Every state worker should look for micro-savings that could add up to save a few jobs. And dismissal is deserved by any official, however high-ranking, who tries to hold his breath until the rest of turn blue, by deliberately targeting the most popular programs for cuts in the hope of a groundswell of support for a particular program.
Oct
29
The mayoral debate
Filed Under Sunrise on KGMB9 | 2 Comments
For the first time, mayoral debates were broadcast statewide covering all the counties that had races this year, and I’m happy to be with the station that did it. It was also enjoyable to involve your emailed questions.
The only tough part for me was that we had to pick a very few questions out of, as it turned out, more than 150 sent in. And believe me some of the ones we didn’t get to were really good.
I saved some and hope to mention them on the next Ask Howard webcasts.
One of the things I liked about the debate was that its structure revealed a lot about the personalities of the candidates. For example, you got to see how gentile and mutually respectful are Angel Pilago and Bill Kenoi, the Big Island mayoral candidates, while Mufi Hannemann and Ann Kobayashi are both clearly struggling with the painful realization that they ain’t pals no more.
Then, too, all of the candidates know that whoever wins will be in for a tough term due to the economic downturn and the tricky trash and traffic problems each island faces. This alone is doubtless a stress factor, made worse by the fact that part of the electorate clearly is skeptical about their abilities to deal with these problems and even their motivations for doing so.
The election is in less than a week.
Oct
29
The yen starts to help Hawaii
Filed Under Sunrise on KGMB9 | 2 Comments
In July it took 110 yen to buy a dollar. Now it takes about 95 yen to do so. I’ve been saying for days this should help snag us some extra Japanese visitors. Well, it’s already happening.
With 27 days still to count in October, Japanese arrivals by air are down only 7.5% from last year at the same time, after being down 18% in September and almost that bad in the three months prior to that.
In raw numbers, more than 100,000 Japanese have flown here since October began and we’re only about 4,000 away from matching the September tally with more days still to tote up. Even now we’re getting more than 3,000 visitors a day from Japan.
This could keep up for awhile. The organizers of the Honolulu Marathon recently said their Japanese registrations are way up from last year. The Japanese make up the lion’s share of participants in that race, which is held in early December when the rest of our tourist business is having a long winter’s nap or something.
The biggest year-to-year declines right now are from the West Coast to Maui and the Big Island. More radio contests in Los Angeles and San Francisco!
Lloyd Unebasami, the chief administrative officer of the tourism authority and now also the acting CEO, came on “Sunrise” this morning and made an interesting point. I asked him if there was any way of knowing if he needed still more money for marketing this winter, expecting him to say it was impossible to know this early whether the downturn in arrivals would worsen further. Instead he said it was impossible to know where our hotel tax revenues would be at that juncture.
We’re on working in unchartered territory here.
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