As we wait for the national economy to take off, we are reminded daily that local economies engaged in heavy tax-and-spend policies that support massive public projects or large welfare regimes are losing traction each day. Progressive ideology with respect to budgets and spending can bring down even the mightiest.
In this case it is bringing down Superman.
In 1886 Samuel P. Colt founded the Industrial National Trust Co as the foundation for financial dealings. Named after and raised by his uncle, famed firearms inventor and business man, Samuel would be a prominent player in the history of Rhode Island his entire life (and afterlife, too).
In 1928 he built what is still the largest building in the state, commonly called The Superman building for its likeness to the Daily Planet building in the old television show.
In a few days the building will go dark. The last tenant, Bank of America (Industrial Trust became Industrial Bank, which became Fleet Bank which was acquired by Bank of America) will not renew its lease of 20% of the building. This is a truly sad day for the state but a harsh reminder of the regressive nature of high taxes and regulations and corruption.
It's less important that the state's ideology has led it to be among the first to abolish the death penalty, legalize medical marijuana and even legalize some prostitution; its notion of freedom hasn't applied to business or facilitating success.
The legacy of Industrial Bank was impressive as it survived the massive turn on banks during the Panic of 1907 and Great Depression because of its reliance on maritime and agrarian business.
Turning out the Lights
High taxes have ruined Rhode Island but the state is so entrenched with this way of raising revenue it's hard to see how it can reverse course.
Of course these high tax regimes aren't just problems for states like Rhode Island, New York, New Jersey and California but entire countries are going down this slippery slope so fast it's hard to imagine them not having to crash before finding a way to take a more sensible approach.
On a starry winter night in Portugal
Where the ocean kissed the southern shore
There a dream I never thought would come to pass
Came and went like time spent through an hourglass
It's been a long fall since the glory years during the Age of Discovery for Portugal. Many historians trace the beginning of the fall to 1578 and the "Battle of Three Kings" that saw King of Portugal Sebastian I come to the aide of deposed Sultan Abu Addallah Mohammad II against Sultan Abd Al-Malik I and the Ottoman Empire. Despite being warned Sebastian felt it would be a glorious reminder of Portugal's greatness and a way to preserve ocean routes from the ambitious Ottoman Empire.
It wasn't even close!
Landing in Morocco with just 24,000 men (including 6,000 Moors) Sebastian I faced an army possibly five times larger. His forces were quickly outflanked by cavalry and swamped. When the dust settled 15,000 in the Portuguese force were captured, while 8,000 died including the king.
Fast forward to the nation plunging into Communism that saw the nationalization of iron, steel, breweries, shipping companies, ship yards, radio, television, glass, mining agriculture and fishing industries and we see the seeds of today's problems.
A massive brain drain and halt to foreign capital and plus the rapid growth of debt. From 1973 to 1988 government debt surged 400% to 74% of GDP. The nation began to unwind nationalization in 1975.
Then the Socialists took over!
It's been a typical tax and spend economy with the government playing too large a role and the private sector virtually non-existent. So, perhaps it shouldn't have been a surprise that the Constitutional Court struck down four of nine austerity measures the nation agreed to in return for a 78.0 billion Euro bailout.
So, there is a fair amount of anxiety as massive tax hikes were deemed constitutional and now the Portuguese government must find 1.3 billion in "austerity" from other sources and it's hard to image what it could be considering nothing else has worked. Of course Germany and Finland and others are worried this could be another chance for nations to accept a bailout without putting in measures that could redress the source of original problems.
I'm still not sure why, after equity futures were higher, the market opened lower. I suspect it was news out of Portugal or lingering angst over the jobs report on but there wasn't much angst over that news on Friday. Maybe it was powers that be attempting to shake out weak sisters but most have been out of the market for years. I will admit some have come back and can be spooked with relative ease. Be that as it may, the market slowly climbed higher building up momentum into a huge surge into the close.
Volume was weak on the buy and sell sides.