And now for the economic news

In case anybody didn't know it, the State of California's budget is in an awful mess. Revenues are short, expenses are high, and job growth has been moderate, at best. It's a big problem, and no one seems to have any easy answers. If you were the governor, what would you do? Well, our governor, Governor Schwarzenegger that is, wants to kill puppies. Ok, not really, but that's how the story broke in the press.

Now first of all let me say that I like the governator. I mean that. The man is on a mission to get the state moving, but unfortunately he is up against a government that refuses to move - a government that can best be compared to a wad of gum stuck on the sidewalk. He is pushing and prying and chiseling away, trying his best to get this wad of a government to do something, but it has been inert and unyielding for so long that even the ironman himself can barely get it to budge. Finally, the matter came to a head last week when the governor proposed cutbacks at the state's animal shelters (hence the reference to killing puppies) and all hell broke loose.

Like I said, I like the governor, and not being acquainted with the facts I can't debate the merits of the governors case, but I seriously doubt he is the monster that some have tried to make him out to be. He is trying to balance the budget, and with that in mind I have an alternate proposal to make. That is, why cut back on the animal shelters when there is a reliable source of revenues already at hand? I should admit that I came up with this idea some time ago and I still believe it will work. Simply stated, we can call it "Casinos on Campus".

Before you start screaming let me give some background. There was a story a few years ago about internet gambling where it was revealed that college students, accessing the internet through their campus networks, were one of the major sources of revenue for online casinos. When I heard the story I thought this was silly. Here we have state colleges and universities starved for money, allowing their students to send their dollars overseas into the coffers of offshore internet gambling operations. Why not put legal casinos right there on campus for the students to use, I thought, and use those gambling revenues to provide services right there where they are needed.

One major drawback, of course, is that students typically do not have enough of an income to support major casinos on campus. This is a problem, I admit, but it is also true that most students have major credit cards, and isn't that how they are currently funding their gambling addictions anyways. How about a credit card drawn against an open-ended line of credit secured by their existing student loans? That would make sense, and would allow each student to gamble (and lose, one would expect) as much as he or she likes without having to repay the debt until after graduation. I think this will work. I really do. This is not a modest proposal. So governor, if you're listening...

But tell me Tony, where should I invest my money today?

When investing, I think it is important to look at the broad trends underlying the economy. Don't get caught trying to cash in on the latest hot tip, but take a broader approach and look at the fundamentals. If you look at investing that way then I think you'll agree that one major trend, perhaps the major trend today, is the growing income gap between rich and poor. As you probably know, the average executive today earns over 400 times what the average worker does, and that gap is likely to grow much wider as equities continue to rise and wages continue to stagnate.

I am not alone in tracking this and many analysts are taking a close look at what this widening income gap means for future investments. The consensus seems to be to invest in those areas likely to benefit from an increasing concentration of wealth, such as leisure (hotels, travel, casinos), fashion, and real estate. But I say there is another side to that coin, i.e., poor people still have to eat.

With that in mind I think a good alternate course would be to invest in those areas that service the needs of the poor. Things such as drugs, prositution, and cheap handguns, for example, seemed poised for explosive growth as the dispossed in our society seek new sources of revenue. Why just look at the newspaper if you don't believe me. San Francisco's murder rate is already at more than 50 this year, and they have even surpassed the 31 or so murders in Oakland, their traditional rival across the bay. The trend is clear and rather than fight it, the prudent investor should see it as an opportunity.

It's true that investing in drugs, prostitution and cheap handguns is not easy for the average investor, so a mutual fund from a local street gang may be the best way to play this market. If that is not possible then there is another more indirect way to invest your money.

Casinos on Campus.