What I see is an elected official in deep denial: How much is a money losing community hospital worth?

And how much federal tax money will have been pissed away on construction that will never fetch more than 20 cents on the dollar in the real estate market.

Lafontaine: Selling hospital is ‘not viable’ ~ Dwayne Bremer

Last month, a consultant told the Hancock County Hospital Board that he believed HMC was worth between $14 million to $22 million.

Hancock County Board of Supervisors President Blaine Lafontaine said Friday that he believes that number is “very low.”

According to Lafontaine, HMC received much more than $22 million from the federal government to rebuild the hospital.

“I don’t have the exact figures, but it could be between $80 million to $100 million,” Lafontaine said. “Selling the hospital is not a viable option at this time. Our conversation needs to be on how to enhance the hospital.”

The truth is $14 million may be too high when you factor in the consistency of the 15% operating losses which can’t be sustained unless one subscribes to the Mayor Fillingame theory of economics. Further, any valuation that is a function of earnings or cash flow indicate a money losing business is worth exactly zero. Worse is the fact the supervisors are fooling themselves thinking the problem can be solved by growing the population of the county. Continue reading “What I see is an elected official in deep denial: How much is a money losing community hospital worth?”

Economics 101: Of course there will be an economic benefit to some if the costs are socialized

I’d encourage everyone that makes public policy around here to read and carefully consider the following:

Experts will calculate impact of Peter Anderson festival ~ Mary Perez

Normally this is the kind of story a hometown newspaper usually butchers but Perez does a good job here. This I’d predict sight unseen because the laws of economics are no different on the Mississippi Coast from the rest of the country. The Peter Anderson Festival is a bad deal for the local taxpayers and despite the so called experts weighing in attempting to prettify the socialization of losses on the backs of the taxpayers to pecuniary benefit of another party:

“We know for every dollar we spend on advertising, a tourist comes in and spends $13,” said Richard Chenoweth, a commissioner with the CVB in Jackson County.

“This is one of the premier festivals — it gets all the awards,” he said. “But the actual impact, I don’t think anyone knows.”

Renee Areng, CVB director, said, “We’ll have a better idea of the impact after this year.”

Actually Perez’s article gives everyone a very good idea of the impact of the Festival. I do not know that I buy Chenoweth’s $1 for $13 spending assertion but for the sake of argument let’s run with those numbers to get the implied cost benefit of spending a tax dollar on tourism advertising which is $13 * 7% =.91 or 91 cents in sales tax. Forget the 2011 study that calculated an economic impact of $23 million dollars for the Festival because it is likely not worth the paper it is written on but more on that in a bit. What do actual sales tax numbers say? Continue reading “Economics 101: Of course there will be an economic benefit to some if the costs are socialized”

The kind of math politicians seem to love…..

Because if private business people cut such deals they would quickly find themselves insolvent:

Two New Orleans-area lawmakers draft legislation to rein in film tax credit program; critics say proposals are too timid ~ Gordon Russell

And here is the key verbiage:

State-sponsored studies have found that Louisiana taxpayers get less than 25 cents back in tax money for every $1 they invest in the film program

Spending a dollar to gain a quarter is an economic fools game but politicians across the south seem eager to continue squandering tax dollars in such a fashion. I’d personally rather the state put that money in roads, bridges, education and if that means there will be no more locally shot films so be it. In fact, everyone seems to understand these taxpayer handouts are the only reason Hollywood is here.

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule ~ Friedrich Nietzsche

Allstate’s financial shenanigans hit the press: Deferred Tax Assets, That’s Allstate’s Stand….

Given the current financial mess that resulted from unsound and ill advised financial practices my total amazement at certain of the state insurance regulators for allowing insurance companies to count such silly things as deferred income taxes in their capital computations is mind boggling. Anyone else remember the industry meme the past 6 months repeated by paid insurance industry shills like Robert Hartwig of the Insurance disInformation Institute that this was a bank problem and that insurers were financially strong? Financially strong enterprises don’t spend time getting regulatory blessing to cook their books. In fact I’ll go a step further and publicly advise what I’m telling my paying clients, If your bank or insurer counts silly things like their net deferred tax asset as capital, run don’t walk for the door. Simply put it means they are in severe financial distress. In Allstate’s case details have emerged in the national media as to the extent of their problem. We begin at the WaPo:

Allstate, the big insurer, last week declared that despite unprecedented trouble in the markets, it remains financially strong.

But tucked deep inside a company report is evidence that Allstate changed its bookkeeping last year in ways that improve its financial appearance.

One accounting change added $347 million. Another delivered a year-end boost of $365 million.

Allstate’s actions illustrate a broader risk to investors, policyholders and people looking for insurance. Insurers have been asking regulators to let them operate with thinner financial cushions or to pad those cushions with assets they could not otherwise count. For anyone trying to assess the companies’ financial strength, the changes can cloud the picture. That could make it harder for people to make sound decisions when buying policies or annuities to protect their families.

This next blurb caused me to shake my head, in the small business world such slack is rarely cut a borrower or small town bank that’s insolvent but then again the guys and gals in small business don’t have armies of high priced lobbyist or revolving door employment arrangements with these state regulators: Continue reading “Allstate’s financial shenanigans hit the press: Deferred Tax Assets, That’s Allstate’s Stand….”