Mish's Global Economic Trend Analysis

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Poisonous Illinois; Caterpillar CEO Threatens to Leave Illinois over Taxes; Illinois Attorney General Wins Dubious Honor "Prevailing Wage Award" Posted: 27 Mar 2011 12:43 PM PDT To prove how totally fooked the state of Illinois is, simply read Madigan honored with "prevailing wage" award So allied are the unions with Madigan, they honored her in Bloomington on Wednesday. As WJBC reported: Illinois Attorney General Lisa Madigan accepted an award from the state's Building Trades Council in Bloomington for her previous pro-union legislation. The Reuben G. Soderstrom Prevailing Wage Award is given annually. Madigan says she's honored and will continue with the same work. She says she's now working on a bill to enhance penalties for criminal violations of the prevailing wage act. Madigan says under the law, violations would be a class four felony. Madigan says it would penalize people evading the law, and create a level playing field for those following the law. The bill also allows state, local and federal law enforcement agencies to get relevant documents from contractors and reduces the notice time contractors have before government inspection of documents. Prevailing Wages Laws are Criminal If there is anything criminal here it is prevailing wage laws. They force cities, municipalities, counties to pay a "prevailing wage" which means a union wage. It does no good to send out bids when all the bids will be based on the same wage. It's no use going to a non-union shop because you have to pay a union wage regardless of what you do. Pat Quinn wants businesses to move to Illinois. No business in their right mind could possibly think Illinois is a good place to do business. Some are stuck here because moving costs are too high, and I suppose some might want to come here specifically to take part in Illinois graft, undoubtedly the highest in the nation. The fact remains Illinois is owned lock-stock-and-barrel by unions. Everything here costs more because of it. Caterpillar CEO Threatens to Leave Illinois Please consider Caterpillar CEO's letter talks of leaving Illinois 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. "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." Oberhelman said he's being actively courted to move. "I have been called, 'cornered' in meetings and 'wined and dined' -- the heat is on," Oberhelman wrote. "Before, I never really considered living anywhere else and certainly never considered the possibility of Caterpillar relocating. But I have to admit, the policymakers in Springfield seem to make it harder by the day." Oberhelman also sent along correspondence Cat has received from other states. "I stand ready to help convince you to relocate or expand in the fiscally conservative, low-tax Lone Star State," wrote Texas Gov. Rick Perry in a Jan. 24 letter. "I encourage you to consider South Dakota as a place for your business to grow and prosper," noted J. Pat Costello, secretary of the South Dakota governor's economic development office. Nebraska Gov. Dave Heineman wrote in February to say, "In Nebraska, we balance our budget by controlling spending, not by raising taxes." Republican leaders, who unsuccessfully fought Quinn on the tax hike, say the letter confirms why they were opposed to the increase. "These are the kinds of letters we fear," said Patty Schuh, spokeswoman for Senate Minority Leader Christine Radogno, R-Lemont. "Even more worrisome are the hundreds of businesses being wooed that we don't know about." Schuh said the tax hike and the state's worker compensation costs on businesses "make Illinois a hostile environment, prime for the picking." Poisonous Illinois Illinois is not "hostile" to business, Illinois is downright "poisonous" because of high corporate taxes, absurd prevailing wage laws, forced collective bargaining, a massive pension mess, and copious amounts of taxpayer unfriendly legislation. It is time for national right-to-work laws to end the forced slavery of collective bargaining and it's also time to kill Davis-Bacon and all poisonous prevailing wage laws at the state level as well. Unions like to point out studies that show union work is no more expensive than non-union work. It's true because of poisonous prevailing wage laws force it to be true. For details please see Thoughts on the Davis Bacon Act For details regarding the slavery aspect of collective bargaining, please see Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You! Collective Bargaining neither a Privilege nor a Right Illinois desperately needs right-to-work legislation. Lisa Madigan is hell-bent on taking things the opposite direction. One might think that Illinois would get the the message given changes that are happening in Wisconsin, New Jersey, New York, and to some extent even California. However, Illinois Governor Pat Quinn, House Speaker Michael Madigan, Attorney General Lisa Madigan (daughter of Michael Madigan), are bound and determined to suck every drop of taxpayer blood in Illinois and give it to the unions. Why Caterpillar would think of staying in this corrupt union hellhole if they have any reasonable choice is beyond me. 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.

100,000+ Protest in London against Budget Cuts; Growth Expectations Fall Short; UK Standard of Living to Decline; US vs. UK Deficit Reduction Plans Posted: 27 Mar 2011 01:16 AM PDT By some estimates, as many as a quarter million people took to the streets in London protesting budget cuts by British Prime Minister David Cameron. The protesters held signs "Defend Our Public Services". Those signs should have read "I Want to Raise Your Taxes". As with every public union protest everywhere, the rally in London has nothing to do with defending public services and everything to do with "Save My Sorry Ass". Thus, it's no surprise that Cameron's budget plans have not gone over very well with the 300,000 public workers who will lose their jobs under his austerity package. Moreover, Prime Minister Cameron and Chancellor George Osborne are sticking with plans to balance the budget by 2015 even though recent growth expectations have fallen far short of the mark. Tens of thousands march in London to protest budget cuts The International Business Times reports Tens of thousands march in London to protest budget cuts Violence has broken out on the streets of central London, England has tens of thousands of people have demonstrated to express their opposition to drastic spending cuts by the British government. Organizers claim that more than a quarter of a million people have appeared at the march, far more than expected. It is believed to be the largest union-organized event in Britain in more than two decades years; and the biggest overall public march in the nation since the invasion of Iraq in March 2003. The Conservative-Liberal Democrat coalition led by Prime Minister David Cameron plans spending cuts of about $131-billion over the next five years, including slashing about 300,000 public sector jobs. Protesters marched from Victoria Embankment to Hyde Park, where Brendan Barber, the general secretary of the Trades Union Congress (TUC), which organized the march, spoke. Many protesters held up banners which read: "Don't Break Britain", "No to Cuts" and "Defend Our Public Services", "The noise in Whitehall was deafening as thousands of protesters banged drums, blew whistles and shouted anti-cut slogans, slowly making their way towards Trafalgar Square," a BBC reporter said. Interest on National Debt is Part of the Undisclosed State of Affairs Chancellor Osborne is not exactly being 100% forthright about the UK's fiscal state even if they can balance the budget by 2015, something I highly doubt. Please consider Britain's leaders should come clean on the true depth of the fiscal crisis The UK's fiscal retrenchment, we are told, is being conducted at an "extraordinarily ambitious pace". Last week's annual Budget statement pledged to "eliminate the structural deficit by 2014/15". George Osborne told the House of Commons that "Britain has a plan and is sticking to it". The Chancellor won't be cowed by claims his efforts to get the UK back on the fiscal straight and narrow will do more harm than good. He is right, of course – but only up to a point. The Labour party's most senior figures, in defiance of their education and intelligence, keep claiming that Osborne's actions are "driven by ideology, rather than necessity". This is absurd. Anyone who argues that rapidly addressing the fiscal catastrophe Labour left behind is anything other than absolutely crucial either knows nothing about global bond markets, or is so blindly ambitious, so determined to close their eyes to the facts, as to be unfit for public office. Having said that, Osborne is also ignoring the facts – if to a slightly lesser degree. Because the UK's fiscal retrenchment won't be over by 2015 – when the deficit, on last week's numbers, falls roughly to zero. That won't be the end of our budgetary problems. It won't even be the beginning of the end. It will merely be, if we're lucky, the end of the beginning. In 2009, the UK spent £31bn – around 6pc of total tax receipts – on debt interest payments. That's money down the drain. By 2015, we won't have reached, in Churchill's words, some "broad sunlit upland". After four more years of deficits, debt services costs, according to last week's Budget, will by then be £67bn a year – or almost 10pc of total tax receipts. These shocking numbers are also likely to be under-estimates, given the UK's massive "off-balance-sheet" liabilities and the Treasury's benign assumption of future gilt rates. The lack of true fiscal retrenchment, together with rising inflation and its impact on welfare payments, means that the Office for Budget Responsibility now estimates debt service costs will be £4.7bn higher during the current fiscal year than Osborne forecast during his last budget. That's equal to more than a penny on income tax. Over the next five years, on last week's numbers, total debt service costs will now be some £18bn higher than before. Why aren't Osborne and Co. explaining these catastrophic realities and their impact on our medium-term ability to maintain our public services, using them to rally support for austerity measures that are long overdue? Why aren't such stark facts thrown back into the face of those who claim that the Tories' retrenchment plans are "driven by ideology rather than necessity"? The answer is fear and a lack of respect. Fear that the British public would be critical of such candour. And a lack of respect for their intelligence. Budget Estimate Falls Short Inquiring minds note Billions added to 2011 budget after growth falls short of the forecasts expectations Even as he proclaimed a Budget for Growth, George Osborne admitted that the economy would expand more slowly this year than he had hoped. The Chancellor was also forced to set out plans to borrow £45.6 billion more than planned over the five years starting next month. The office blamed the gloomier forecasts on the economy shrinking in the final three months of last year and higher-than-expected inflation. Overall, the Government will have to borrow £45.6 billion more than expected between 2011-12 and 2015-16. Despite steady reductions in the annual government deficit, the national debt – the total stock of outstanding borrowing – will continue to rise, reaching £1.36 trillion by 2015-16. The interest Britain pays on that debt will also rise. The OBR said that debt interest will be £48.6 billion in 2011-12, £4.7 billion higher than its last forecast. By 2015-16, the Government will be paying £66.8 billion on debt interest, more than the budget for the Department of Education. Standard of living to fall for two years The Telegraph helps explain the state of affairs with this comic on Standard of Living. Bright Side of Things I seriously doubt Cameron can balance the budget in 4 years. However, being the ever-optimist, I feel obliged point out the bright side of things: Over the long haul, the fewer the government workers the better. The bigger the miss in budget expectations, the more public workers will have to be fired to balance the budget. The pertinent question is "Will Prime Minister Cameron lose his nerve?" On that unfortunately, I am not so optimistic. UK vs. US in Budget Balancing Assuming government does not give into demands, it's a sign of success when hundreds of thousands of public workers protest budget cuts. Measured by protests alone, the British appear to be making some sort of effort to rein in the deficit. Hats off to the British. Unfortunately, there is little success in the US except at the state level. On this side of the Atlantic, we are stuck with Republicans and Democrats who will not cut defense, Democrats who will not cut entitlements, and neither party willing to do anything but bicker on how to cut anything more than $20 billion out of a massive $1.6 trillion deficit. 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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