It has just been reported that the Christian Democrats, Chancellor Angela Merkel's party, just lost power in the state of Baden-Wuerttemberg. What makes this important is that the Christian Democrats, a rather conservative political party, have been in power in Baden-Wuerttemberg since 1953. The Green Party won the majority with 24% of the vote and is likely to form a coalition with the Social Democrats who got 23% of the vote. It is speculated that the Greens' anti-nuclear stance helped them achieve victory after the disaster in Japan. I have a feeling that many voters are going to regret this move, but still, the vote it demonstrative of the kind of animosity some may be having for Merkel who has in favor of increasing the EU bailout fund. It will be interesting to see what Germans opt to exchange nuclear power for.
I will end with another example of the kind of effect high taxes and regulations have on business. In a letter to Illinois Gov. Pat Quinn, CEO of Caterpillar Doug Oberhelman warns of leaving the state due to the recent income tax increase:
The chairman and CEO of Peoria-based Caterpillar Inc. is raising the specter of moving the heavy equipment maker out of Illinois. In a letter sent March 21 to Gov. Pat Quinn, Caterpillar chief executive officer Doug Oberhelman said officials in at least four other states have approached the company about relocating since Illinois raised its income tax in January.Kudos to Texas Governor Rick Perry, South Dakota Secretary of the Governor's Economic Development Office J. Pat Costello, and other states for trying to court Caterpillar to leave Illinois. Soon enough, Quinn and like-minded Democrats will be voted out of office for increasing taxes to the point of driving away business.
"I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest," Oberhelman wrote in the letter obtained Friday by the Lee Enterprises Springfield bureau. "The direction that this state is headed in is not favorable to business and I'd like to work with you to change that."
And just one more sign of the growing real-estate bubble in China: China Construction Bank's 2010 Profit Rises 26% as Interest Margins Widen.
Update- Just one more example of the kind of unforeseen effect of government regulation:
Wells Fargo Stops Enrollment in Debit Rewards
Another bank is ending its debit rewards program. Wells Fargo says it will stop enrolling new customers in its debit card rewards program as of April 15. The San Francisco-based bank says customers who are already enrolled in the program will continue to earn rewards for now.Thank God for the infinite wisdom of Barney Frank and Chris Dodd.BackgroundWells Fargo says the change is the result of a pending new regulation that is expected to dramatically limit the fees banks can collect from merchants whenever customers swipe their cards.The cap on fees was mandated last year under the financial overhaul known as the Dodd-Frank Act. The current proposal would cap fees at 12 cents per transaction, versus the current 1 percent to 2 percent of the transaction amount.The banking industry says the change could slash its debit swipe fee revenue by as much as 90 percent.A final rule is expected from the Federal Reserve by April 21, unless Congress delays the deadline.