WORD HAS IT there are three distinct camps over in the olde Hawai`i State House; Speaker Calvin Say’s, the perennial Scott Saiki-Sylvia Luke dissident hui, and the newly Electeds who seem to be Calvin’s current problem. At least one it would seem, can’t be bought off as easily as the others and holds a key vote. We’ll hold that name in reserve until the matter is finally settled and we know if they finally sold out or hopefully stuck to their convictions.
SOME SAY that AFL-CIO employee Representative Roy Takumi could be a compromise candidate and should that play out, the House would have followed the State Senate in electing a compromise leader — which might at least give one hope that the 2011 Legislative Session will have some less-corrupt, keener minds dealing with the fiscal and management mess Hawai`i now faces. It could happen!
GOVERNOR BEN CAYETANO ONLY THOUGHT the cupboard was bare when he took office in 1994. New Hawai`i Governor Neil Abercrombie is facing an historic State deficit including untold $Millions in unfunded government employee healthcare, pension, and retirement benefits. While Hawai`i may not be facing the overwhelming debt load of some states, there is some straight talk about unionized government employee benefits coming from, among others, New Jersey’s Governor Chris Christie. Now resembling California and facing a $10.7 billion deficit, Governor Christie told Bloomberg that many “…states’ pension and debt costs have grown to be ‘unsustainable.’ Benefits, education and health care will be reduced in many states, he said in an interview aired last [Sunday] night on CBS Corp.’s ’60 Minutes.’ ‘The day of reckoning has arrived,’ said Christie, 48, a first-term Republican. Areas such as education and pensions ‘were third rails of politics. We are now left with no alternatives.'”
IT’S NOT THIS BAD IN HAWAI`I — YET. The same ’60 Minutes’ broadcast also featured a segment, “The Day of Reckoning “with Meredith Whitney — the brilliant, no-nonsense financial analysis who had correctly predicted the growing trouble at U.S. banks like Citigroup before the 2007 meltdown. She observed, “States fiscal stress may trigger a spate of [bond] defaults among local municipalities.” “You could see 50 sizable defaults amounting to ‘hundreds of billions of dollars.'” Now under attack from Wall Street, Whitney said the numbers easily add up ‘if you really do the work.'” The Post article said, “The week’s smackdown of Wall Street analyst Meredith Whitney continued unabated yesterday as more naysayers came out to challenge the star analyst’s recent comments that up to 50 to 100 US cities could default on their municipal bonds over the next 18 months.” Whitney appropriately suggested that her Wall Street critics are protecting their portfolios.
Time will tell of course, but should such municipal bond defaults indeed occur, Hawai`i will really be in a truly royal mess as the bond market tanks. No bond market, no sales or refinancing of existing state bonds and no construction. No construction, no union jobs. No union jobs, major dislocation and unrest in the very sector that assured the new Hawai`i Governor’s election. Yes, Abercrombie won by 17 points, but that margin could quickly evaporate by the next election — if the national and international economies get as bad as some are now predicting.