joi, 14 aprilie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Appalling Suggestions by California Teachers' Association Would Make Students Political Pawns for Union's Greedy Coercion Efforts; "Brain Dead" CTA

Posted: 14 Apr 2011 03:54 PM PDT

Leave it to the California Teachers' Association to prove without a doubt they will do anything to get their greedy ways. CTA suggested tactics include making students political and personal pawns of teachers' by handing out assignments for kids to draw on photos of state legislature members.

Please consider Calif. Teachers Union Gives Shocking Protest Instructions: Harass Legislators, Shut Down Roads, Co-Opt Fire Drills
The California Teachers Association is planning a week's worth of Wisconsin-style protests and rallies, from May 9-13, to "force legislature to pass tax extensions."

That's the short term objective of the "State of Emergency" protests, according to the website for the rallies. The longterm objective is to, "educate and convince communities to change tax structure and achieve tax fairness in order to achieve adequate, stable and ongoing funding for public education and essential public services."
Please see the article for more details. Inquiring minds may also be interested in seeing the 10-page State of Emergency Action Items by the California Teachers' Association.

Galling Proposals

  • Take ½ photo of Assembly members and have kids draw the other half with a message stating what they want for their teachers.
  • Moment of silence for every teacher RIF'd
  • Encourage college students to wear gray for the entire week – especially during finals week to mark the slow death of higher education
  • Student Video Contest: Have contest for youth to create a video about what education costs would mean to them


State of Emergency

Yes there is a "state of emergency". The emergency is the California Teachers' Association is brain dead, uncaring, and greedy beyond belief. You have to be brain dead or greedy to make kids political pawns in an effort to coerce money out of taxpayers.

Time and time again teachers' unions step up to the plate an hit balls out of the park when it comes to proving how greedy they are and how little they care for the kids.

One additional proposal was "Work to the Contract" everyone would do ONLY what they are supposed to do according to the contract.

Brilliant!

Teachers feel kids are short-changed so they want to guarantee it stays that way. This is additional proof (not that any is needed) union recommendations are entirely about the self-serving desires of teachers, and not about the kids at all.

Teachers should teach, not get kids involved in their own personal, political, and self-serving pet peeves.

Any teacher who tries any of the actions I mentioned above should be fired on the spot.

Unfortunately it is impossible to fire any teacher over this. In fact, it is impossible to fire teachers for blatant incompetence and it is even impossible to fire teachers for sexual misconduct. Union rules prohibit it.

Strong actions are needed to remedy this otherwise hopeless situation.

Strong Actions Needed

  • Pass national right-to-work laws
  • Scrap Davis-Bacon and other prevailing wage laws
  • Remove all collective bargaining powers of public unions

By that score, Wisconsin Governor Scott Walker fell far short of what needs to happen. Nonetheless, I commend Walker for taking a huge step forward. Senator Rand Paul and Congressman Ron Paul need to carry forward with national right-to-work laws and the scrapping of Davis-Bacon.

Note that under the above proposals, unions could still exist, but cities and states would not have to bargain with them.

Collective Bargaining is Slavery

Forced collective bargaining is nothing more than slavery. I have made the case and will continue to repeat the case until it sinks in.

For details please see


One thing we have going for us is that asininity proposed by the California Teachers' Association is bound to upset a lot of people who do not want their kids politically brainwashed by greedy teachers for the self-serving agenda of the teachers' unions.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Greek 10-Year Government Bond Yield Exceeds 13% First Time, Portuguese Yield Approaches 9%; Credit Default Swaps US vs. Europe

Posted: 14 Apr 2011 10:53 AM PDT

Greek and Portuguese Euro-based sovereign debt yields hit new highs today with the Greek 10-Year sovereign bond yield topping 13% for the first time in the history of the Euro.

Greece 10-Year Yield 13.27%



Portugal 10-Year Yield 8.88%



5-Year Credit Default Swaps US vs. Europe

Here is an interesting chart from Chris Puplava at PFS Group (Financial Sense) comparing default risk in the US vs Europe.



click on chart for sharper image

Note that government default risk is higher than corporate risk in Europe. The opposite is true in the US.

The market clearly believes there is risk of default on Portuguese and Greek government bonds and so do I.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Recession by End of Year?

Posted: 14 Apr 2011 01:03 AM PDT

John Taylor, CEO of FX Concepts, a currency trading firm with $8 billion under management says "We'll be in a recession by the end of the year. Three reasons: QE2 will end, Republicans are running the House, and the price of gas is heading up."

Video



Taylor also takes a look at global currency programs in foreign exchanges and he also discusses the problems facing the ECB.

Here is a link to the Taylor video if the above frame does not play.

Eurozone Interest Rates

Taylor thinks interest rates should be 5% in Germany and 0% in Greece but that is impossible. I don't know where they should be because rates should be set by the free market not a bunch of central planners. Moreover, it was government bureaucrats not the free market that created an EU currency union with no fiscal controls on individual countries..

I believe there is no correct solution as to where rates should be. Some countries will be on the short end of the stick regardless of what the ECB does.

Recession Odds Depend on Definition

If one defines a recession as measured by 2 consecutive quarters of negative GDP it is possible but highly unlikely. Taylor does think we see two consecutive quarters of negative growth. On that I disagree.

However, the NBER, the official arbiter of recessions, does not define recessions that way. The NBER looks at a range of factors and pegged the last recession as starting in November 2007, well before there were two quarters of negative growth.

Regardless, I think a significant global slowdown is coming and a reasonable chance we see a recession in 2012 heading smack into the next presidential election.

Those waiting for a fully inverted yield curve signal or even a 2-year treasury inversion with the 10-year treasury will not get a signal because the Fed has the short-end of the curve artificially pegged at zero percent while the long-end of the curve is pressured by huge budget deficits.

However, we could see inversion on parts of the curve. For example 2-year treasuries could invert with 3-year treasuries, 5-year treasuries with 7-year treasuries, or 7-year treasuries with 10-year treasuries. The current spreads are 53 basis points, 32 basis points, and 61 basis points respectively. The one to watch closely is the 5-year to 7-year spread.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


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