On Wednesday, I attended our local CFA society luncheon at Nick's. The meal, alone, is reason enough to make the trek to Fondren, but this week's presentation added to the value.
Dr. Eugenio Aleman, Senior Economist at Wells Fargo Securities, had flown in with his PowerPoint slides and his quiet demeanor to address the condition of the U.S. economy. It was quite enlightening.
First, Dr. Aleman pointed out that federal spending has been declining in the last few years. Seriously? With his graphs, he showed the clear bump ups in spending corresponding to recessions in the economy but says our current condition is not alarming. He is not a deficit hawk.
Next, he spent time showing facts and figures on the state of our employment. Clearly, the weak jobs numbers reported from month to month have much to do with the decline in government jobs. But Dr. Aleman says that it's not just any government job that is the problem. While federal government jobs have remained stable, we have lost considerable positions on the state and local level.
States and municipalities, facing declining tax revenues, slashed government payrolls and added to the pain of unemployment. The decline in federal government support adds to this problem. When I looked at those figures, I thought of an immediate and easy fix.
Interest rates are at all-time lows. We expect the Federal Reserve to keep rates low until sometime in 2015. Mississippi has a stellar credit rating...
SO--
Why not have the State of Mississippi go to the bond market? Our universities have been screaming about the list of on campus projects that have gone undone. We have roads and bridges in need of repair. Certainly, there are many other projects that could help improve our lives and economy.
Why not take advantage of the low interest rates and lever up? Low cost money locked in for several years would accomplish two things. First, we get stuff done!! Second, getting stuff done means more Mississippians have jobs.
This all just seems too easy and too sensible. Then I remembered our legislature and Governor-- not an ounce of sense among the bunch! Oh, well, it was a good thought.
Independent, Fee-Only Financial Advisor
