vineri, 4 februarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Prime Healthcare accuses SEIU of Extortion; Cell Phone Graft, Pay Extortion by California Prison Guards; FireFighter Fraud in Nevada

Posted: 04 Feb 2011 04:29 PM PST

I have many times accused public unions of winning contracts by extortion, bribery, graft, vote buying, and getting into bed with administrators. Thus, I am not surprised to learn that Top Rated Hospital System, Prime Healthcare Services, Stands Up To Union's Extortion Campaign
Prime Healthcare Services (PHS), the largest for-profit hospital system in California and the only for-profit system among Thomson Reuters' Top 10 Health Systems in 2009, announced today that it has been the victim of an extortion campaign by the Service Employees International Union – United Healthcare Workers West (SEIU) over the past year.

According to PHS' officials, SEIU's extortion campaign began approximately 12 months ago when PHS rejected SEIU's demands for a "quick" deal for SEIU members at PHS' Centinela Hospital Medical Center so that SEIU could avoid a challenge from NUHW, an upstart union formed by disgruntled SEIU members. SEIU initially threatened to expose "dirt" on PHS, disseminate reports based on Medicare data, and claim that these reports showed that Medicare patients were acquiring serious blood infections like septicemia at PHS' hospitals even though SEIU knew that the Medicare data identified conditions present on admission; not hospital acquired conditions.

SEIU stepped up its extortion campaign in February 2010 by having CtW Investment Group (CtW), an investment fund created by SEIU and other unions, make false and misleading statements to Medical Properties Trust (MPT), a publicly traded real estate investment trust which serves as PHS' landlord and/or lender at several of its hospitals.

In a February 2, 2010 letter to MPT's Board of Directors, CtW falsely claimed that PHS' hospitals did not comply with California's earthquake safety laws, had infection control problems, had engaged in Medicare, fraud, and faced potential losses of millions of dollars. After MPT received CtW's letter, it conducted its own investigation into the allegations and found them to be baseless.

In April 2010, SEIU included both the SEC and State Senator Denise Ducheney, a long-time supporter of the SEIU, in its extortion campaign against PHS. In an April 2, 2010 letter to the SEC, CtW repeated its false claims against PHS and urged the SEC to interfere with MPT's planned stock offering.
....

PHS will continue to stand up against SEIU and has made a criminal referral to the United States Attorneys' Office regarding SEIU's activities. At the same time, PHS urges all interested parties to carefully scrutinize SEIU's propaganda and any articles which rely on such propaganda and urges elected officials to investigate SEIU's activities before they have disastrous consequences on the healthcare delivery system.

PHS has acquired financially distress hospitals that were in bankruptcy, near bankruptcy, and/or on the verge of closure and turned them around into well performing community hospitals that provide quality health care to all members of the community and serve a critical role in the healthcare safety net. Rather than attacking PHS, SEIU and those misinformed politicians should be applauding PHS' efforts to save community hospitals and employing more than 8,000 California workers.
California Hospital Alleges SEIU Extortion

Union Watch a project of the California Public Policy Center discusses the situation in its report California Hospital Alleges SEIU Extortion.
In a meticulously detailed press release issued on February 2nd, Prime Healthcare Services (PHS), the largest for-profit hospital system in California, announced they are victim of an extortion campaign by the Service Employees International Union – United Healthcare Workers West (SEIU) over the past year. What PHS is going through is a classic example of tactics the SEIU often employs with companies who won't accede to their demands.

One of the contributing editors to Union Watch, Dave Bego, has written a book "Devil at My Doorstep" that chronicles his battles with the SEIU when they attempted to unionize the workers in his company. Throughout his book he emphasizes that what his company has gone through is consistent with a strategy of intimidation and extortion used by the SEIU whenever they encounter resistance.

Here are a few of the tactics imposed on Prime Healthcare Services by the SEIU:

January 2010 – Threaten to Tarnish Company Reputation

PHS rejected SEIU's demands for a "quick" deal for SEIU members at PHS' Centinela Hospital Medical Center so that SEIU could avoid a challenge from NUHW, an upstart union formed by disgruntled SEIU members. SEIU initially threatened to expose "dirt" on PHS, disseminate reports based on Medicare data, and claim that these reports showed that Medicare patients were acquiring serious blood infections like septicemia at PHS' hospitals even though SEIU knew that the Medicare data identified conditions present on admission; not hospital acquired conditions.

February 2010 – Make False Claims to Company's Lender

The CtW Investment Group, an investment fund created by SEIU, falsely claimed that to Medical Properties Trust (PHS' landlord and/or lender at several of its hospitals), that PHS' hospitals did not comply with California's earthquake safety laws, had infection control problems, had engaged in Medicare fraud, and faced potential losses of millions of dollars. MPT conducted its own investigation and found the allegations to be baseless.....
Best Way to Deal with Fraud and Extortion

I commend Prime Healthcare Services for standing up to the extortion efforts of the SEIU.

The best way to deal with fraud and extortion is to eliminate it. Public union extortion will not go away until public unions go away. They should be illegal. Public unions do not serve the public. They serve no one but themselves and they will go to any lengths to do so, including fraud, extortion, and outrageous demands.

Union Prison Guards Smuggle Cell Phones to Prisoners

The Los Angeles Times reports California prison guards union called main obstacle to keeping cellphones away from inmates
Lawmakers struggling to keep cellphones away from California's most dangerous inmates say a main obstacle is the politically powerful prison guards union, whose members would have to be paid millions of dollars extra to be searched on their way into work.

Prison employees, roughly half of whom are unionized guards, are the main source of smuggled phones that inmates use to run drugs and other crimes, according to legislative analysts who examined the problem last year. Unlike visitors, staff can enter the facilities without passing through metal detectors.

While union officials' stated position is that they do not necessarily oppose searches, they cite a work requirement that corrections officers be paid for "walk time" — the minutes it takes them to get from the front gate to their posts behind prison walls.

Putting metal detectors along the route, with an airport-like regimen involving removal of steel-toed boots and equipment-laden belts, could double the walk time, adding several million dollars to officers' collective pay each year, according to a 2008 Senate analysis.

Since then, cellphones have proliferated exponentially in California's state lockups. This year, state Sen. Alex Padilla (D-Pacoima) is calling on Gov. Jerry Brown to "put the [search] issue on the table" in contract negotiations with the California Correctional Peace Officers Assn.

"Everybody coming into the state Capitol building has to go through a metal detector…. You even get searched when you go to a Lakers game," said Padilla, who for three years has sponsored unsuccessful legislation to crack down on the contraband phones. "Why don't we have that requirement at correctional facilities, of all places?"

Brown, whose campaign received generous financial support from the union and who made one of his few public appearances between the November election and his January inauguration at the union's annual convention in Las Vegas, would not say whether searches are under review.

More than 10,000 cellphones made their way into California prisons last year — up from 1,400 in 2007, said corrections spokeswoman Terry Thornton. Two of those wound up in the hands of Charles Manson, who is serving a life sentence for ordering the ritualistic murders of actress Sharon Tate and six others in 1969.

The phones can fetch as much as $1,000 each behind prison walls, according to a recent state inspector general's report, which detailed how a corrections officer made $150,000 in a single year smuggling phones to inmates. He was fired but was not prosecuted because it is not against the law to take cellphones into prison, although it is a violation of prison rules to possess them behind bars.

Analysts for the Senate Public Safety Committee who studied last year's legislation left no room for doubt about who they believed was responsible for most of the unauthorized phones.

"All indications are that the primary source of cellphones being smuggled into prisons is prison staff," they wrote. "The committee has been presented no evidence of visitors who are properly screened through metal detectors being responsible for the problem."

Guard union spokesman JeVaughn Baker said pointing the finger at corrections officers is all wrong.

"Sure, there are instances where officers have brought them in," Baker said. "But to say that prison staff are the most likely smugglers of cellphones is simply inaccurate."
Galling Statements

Look at that galling jackass statement from union spokesman JeVaughn Baker. I suppose the cell phones flew in.

And what idiot negotiated paying unions "walk time" from the front gate? I'll tell you: some administrator or politician in bed with the unions.

Firefighters' e-mails indicate abuse of sick leave, overtime

Please consider Firefighters' e-mails indicate abuse of sick leave, overtime
Some Clark County firefighters appeared to have worked with their supervising officers to improperly use sick leave, according to e-mails obtained by the Review-Journal.

One firefighter in April arranged sick days and overtime days for July.

"I will need July 17, 19 and 21 off (sick of course) and my last day of work will be the 23rd," the firefighter wrote. "I would like to work overtime on July 1, July 5. Thanks for being so nice about this and working with me. I really, really appreciate it!"

In one message, a supervisor wrote:

"There were a couple of vacation slots open on the 21st, but I couldn't put you in them because your request came less than 24 hours in advance. You've been entered as Sick on that day."

In another message, a firefighter said he would "rather take vacation than call off sick."

"You got it," the battalion chief replied.
Many of those firefighters make as much as $200,000 a year collecting overtime the day after they arranged to be sick. Taxpayers have to pay this. And the union is not satisfied. They want more and more and more taxes to pay for this.

Please read the rest of the article for more galling details.

Private Industry Would Not Put Up With This

I am infuriated reading these articles. And I have dozens more that I do not even have time to report on. Every day I see article like this. Private industry would end these practices in one second flat.

Unions have the gall to tell me they "earned" those contracts. Bulls***. It is all bribery, extortion, and graft. Fraudulent contracts should not be binding and benefit haircuts are needed. Unions can face reality or reality will face them in bankruptcy court.

Eventually people are going to elect mayors and governors willing to tell unions to their face "Go To Hell". It's starting in some states already.

The proper way to eliminate the problem is to eliminate public unions entirely. In the meantime any step in that direction is a step in the right direction.

Thus I highly endorse the brave actions of Ohio State Senator Shannon Jones for her bill to Kill Collective Bargaining for State Employees.

It is not easy to stand up to union extortionists who will lie, cheat, and steal to get what they want. However it's a battle that must be fought.

If Governor Brown had any concern for California, he would put proposals on the California ballot to rein in these abuses. Please see California Budget Poker: Republicans May Raise the Stakes in Jerry Brown's Special Election Bet for details.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Labor Force and Unemployment Statistical BS

Posted: 04 Feb 2011 11:19 AM PST

I had no idea what to expect in today's jobs report. ADP projected 187,000 jobs but has been wildly off numbers reported by the BLS. Economists expected +146,000 jobs. The actual establishment survey report shows +36,000.

I knew huge revisions and methodology changes were coming this month would make gaming the report a crap-shoot. However, the amazing thing in the jobs report was not the number of jobs, but the statistical sleight-of-hand in the unemployment rate.

Statistical BS

The unemployment rate (based on the household survey), unexpectedly fell from 9.4% to 9.0%. How did that happen?

Based on population growth, the labor force should have been expanding over the course of a year by about 125,000 workers a month, a total of 1.5 million workers. Instead, (for the entire year) the BLS reports that the civilian labor force fell by 167,000. Those not in the labor force rose by 2,094,000. In January alone, a whopping 319,000 people dropped out of the workforce.

To get the unemployment rate down from 9.8% to 9.0%, you simply do not count two million workers. Look on the bright side, at this rate we will be back to full employment in no time.

Huge Downward Revisions

One way to make recent numbers look better is to revise the historical data downward. Today we have a third massive backward revision since the beginning of the recession.

"The total nonfarm employment level for March 2010 was revised downward by 378,000 (411,000 on a seasonally adjusted basis). The previously published level for December 2010 was revised downward by 452,000 (483,000 on a seasonally adjusted basis)."

Decade of Revisions Next Year

"The population control adjustments introduced with household survey data for January 2011 were applied to the population base determined by Census 2000. The results from Census 2010 will not be incorporated into the household survey population controls until the release of data for January 2012."

Hallelujah, the recent census report will provide fertile ground to revise away anything the BLS wants.

January Jobs Report

Please consider the Bureau of Labor Statistics (BLS) January 2010 Employment Report.

The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.

Unemployment Rate - Seasonally Adjusted

Bear in mind, were it not for millions of people allegedly dropping out of the labor force over the last year, the unemployment rate would be over 11% right now.

Nonfarm Payroll Employment - Seasonally Adjusted

Establishment Data



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Index of Aggregate Weekly Hours



The average workweek for all employees on private nonfarm payrolls fell by 0.1 hour to 34.2 hours in January. The manufacturing workweek for all employees rose by 0.1 hour to 40.5 hours, while factory overtime remained at 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.1 hour to 33.4 hours; the workweek fell by 1.0 hour in construction, likely reflecting severe winter weather.

In January, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents, or 0.4 percent, to $22.86. Over the past 12 months, average hourly earnings have increased by 1.9 percent. In January, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.5 percent, to $19.34.
BLS Birth-Death Model Black Box

The big news in the BLS Birth/Death Model is the BLS is going to move to quarterly rather than annual adjustments.

Effective with the release of January 2011 data on February 4, 2011, the establishment survey will begin estimating net business birth/death adjustment factors on a quarterly basis, replacing the current practice of estimating the factors annually. This will allow the establishment survey to incorporate information from the Quarterly Census of Employment and Wages into the birth/death adjustment factors as soon as it becomes available and thereby improve the factors.

For more details please see Introduction of Quarterly Birth/Death Model Updates in the Establishment Survey

In recent years Birth/Death methodology has been so screwed up and there have been so many revisions that it has been painful to watch.

It is possible that the BLS model is now back in sync with the real world. Moreover, quarterly rather than annual adjustments can only help the process.

The Birth-Death numbers are not seasonally adjusted while the reported headline number is. In the black box the BLS combines the two coming out with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance. Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth-Death Number Revisions

Inquiring minds note enormous backward revisions in Birth-Death reporting. Here is the chart for 2010 that I showed last month.

Birth Death Model Revisions 2010 (as reported last month)



Birth Death Model Revisions 2010 (as reported this month)



Is this new model going to reflect reality going forward?

That's hard to say, but things were so screwed up before that it is unlikely to be any worse. One encouraging sign is several negative numbers in the recent chart. January would have been negative too, had they shown it. Historically there were only 2 negative number every year, January and July. That anomaly broke November of 2010.

Household Data



In the last year, the civilian population rose by 1,872,000. Yet the labor force dropped by 167,000. Those not in the labor force rose by 2,094,000. In January alone, a whopping 319,000 people dropped out of the workforce.

Households Stats
  • The number of unemployed persons decreased by about 600,000 in January to 13.9 million, while the labor force was unchanged. (Based on data adjusted for updated population controls)
  • The number of long-term unemployed (those jobless for 27 weeks or more) edged down to 6.2 million and accounted for 43.8 percent of the unemployed.
  • After accounting for the annual adjustment to the population controls, the employment-population ratio (58.4 percent) rose in January, and the labor force participation rate (64.2 percent) was unchanged.
  • The number of persons employed part time for economic reasons declined from 8.9 to 8.4 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
  • In January, 2.8 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
In January 2010 the number of people working part time for economic reason was 8.3 million. 12 months later the total has gone up by 631,000.

Table A-8 Part Time Status



click on chart for sharper image

There are now 8,407,000 workers whose hours may rise before those companies start hiring more workers.

Table A-15

Table A-15 is where one can find a better approximation of what the unemployment rate really is.



click on chart for sharper image

Grim Statistics

Given the total distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is hard to discuss the numbers.

The official unemployment rate is 9.0%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

While the "official" unemployment rate is an unacceptable 9.0%, U-6 is much higher at 16.1%. Moreover, both the official rate and U-6 would be much higher were it not for huge numbers of people dropping out of the workforce.

Things are much worse than the reported numbers would have you believe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Unemployment Rate Drops to 9% in Otherwise Anemic Jobs Report; Weather Blamed; Huge Downward Jobs Revisions; 30-Year Treasury Yield at 9-Month High

Posted: 04 Feb 2011 08:45 AM PST

I will get to my usual jobs report shortly, but first I want to point out some revisions by the BLS.

"The total nonfarm employment level for March 2010 was revised downward by 378,000 (411,000 on a seasonally adjusted basis). The previously published level for December 2010 was revised downward by 452,000 (483,000 on a seasonally adjusted basis)."

It's pretty tough to blame those revisions on the weather, but they did blame today's jobs number (a mere +36,000) on the weather. I will slog through the BLS report later today, but first take a look at the treasury reaction.

Yield Curve 2011-02-04



click on chart for sharper image

Treasury Yields Soar

Bloomberg reports U.S. 10-Year Yield Climbs to 9-Month High on Employment Report
Treasuries fell, pushing the yield on the 10-year note to the highest in nine months, after the U.S. unemployment rate unexpectedly dropped to the lowest level since April 2009, fueling speculation the labor market will improve.

U.S. 30-year bond yields also rose to a nine-month high as Labor Department data showed the jobless rate fell to 9 percent last month and employers added 36,000 jobs, less than forecast, as storms swept the nation.

Last month's gain in nonfarm payrolls was the smallest increase in four months and followed a 121,000-job rise in December that was larger than initially reported. Payrolls were projected to climb 146,000, according to the median forecast in a Bloomberg News survey of economists. The jobless rate fell for a second month. It was 9.4 percent in December.

"This is one of those lies, damned lies and statistics moments," said Mitchell Stapley, the Grand Rapids, Michigan- based chief fixed-income officer for Fifth Third Asset Management, which oversees $22 billion. "You saw that 9 percent, and the market's reaction was 'that can't be right.' You've got people dropping out of the workforce. There's some statistical anomaly at work."

Payrolls in construction and transportation, industries most affected by bad weather, dropped in January, while factory employment rose the most since August 1998.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Ohio Bill Will Kill Collective Bargaining for State Employees

Posted: 03 Feb 2011 11:39 PM PST

Congratulations to Ohio State Senator Shannon Jones for introducing Senate Bill 5 to End Collective Bargaining in Ohio.
Section 1. It is the General Assembly's intent that sections of the Revised Code be amended, enacted, or repealed to prohibit the state and state employees and state institutions of higher education and their employees from collectively bargaining, to abolish salary schedules for public employees and instead require merit pay, and to make various other changes to the Collective Bargaining Law.
Finally!

I have been waiting for states to do this.

Bear in mind AFSCME has already organized a massive call-in to protest the bill. I found out about the proposal from "Craig" who sent me this email.
Hello Mish,

Due to some mix-up in email addresses I get all the AFSCME email propaganda (I am not an AFSCME member nor do I live in Ohio)

If you don't already know about it, I thought you might find this bill pending in the Ohio state senate interesting.

Been a long time reader of your blog. Thanks for the good work.

Craig
More Good Ideas From Shannon Jones

Senator Shannon Jones has many other good ideas as well. A December 21 Columbus Dispatch Article on Collective Bargaining itemizes them nicely.
Allowing state workers to unionize "hamstrings us in our ability to manage our costs," Jones said. Eliminating collective bargaining "means we can start having real discussions about merit. People should be paid and promoted based on merit."

"If we're going to have collective bargaining in the state, we must have a system where we encourage people to bargain in good faith and they have equal ability to gain and lose," Jones said. "The way the system is set up as it relates to safety forces in particular, they hold a lot of power over these local communities."

Other changes Jones is considering:

  • Eliminate from state law automatic pay increases for longevity, known as steps. Jones said these could still be negotiated.
  • Require more accurate disclosure of pay raises to the public, including step increases. "You shouldn't be able to say you didn't get a raise when it's a raise we called something else," Jones said.
  • Eliminate the law that gives teachers 15 sick days per year. This would be negotiated, Jones said.
  • Prohibit schools and local governments from picking up any part of an employer's pension contribution.
  • Prohibit employers from paying more than 80 percent of the costs of health-insurance premiums.
Shannon, if somehow you see this, we salute your common-sense proposals. Here's another one for you: Pass a bill prohibiting union dues from being used for political purposes. Better yet, eliminate public unions entirely. They certainly do not serve the public.

Phone Your Senators

The email Craig passed along directs members to an AFSCME e-Action Network that will forward you to to your state senator after a brief bit of pro-union propaganda.

To call in, you will need to know your senator's name. Here is an Interactive Map of Ohio Senate Districts that will help find the name if you do not know it.

After you determine your senator's name, please click on the above AFSCME link, enter your phone number, and you will get a callback in 10 seconds. Disregard the propaganda and request your senator to vote Yes on Senate Bill 5.

Tell your senator that collective bargaining drives up costs and it is time for merit pay. While you are at it, ask for a bill that will stop union dues from being used for political purposes.

It is a scam in and of itself that public unions can waste taxpayer dollars with organized call-in processes like these. It shows you just what you are up against. However, as long as the procedure is out there, it makes sense to voice your opinion too.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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