Mish's Global Economic Trend Analysis

---

Union-Busting is a "Godsend"; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids Posted: 02 Jul 2011 08:25 PM PDT Congratulations to Governor Scott Walker for sticking to his guns. The state of Wisconsin is far better off because of it. So are taxpayers. Most importantly, so are the school kids. Please consider Union curbs rescue a Wisconsin school district "This is a disaster," said Mark Miller, the Wisconsin Senate Democratic leader, in February after Republican Gov. Scott Walker proposed a budget bill that would curtail the collective bargaining powers of some public employees. Miller predicted catastrophe if the bill were to become law -- a charge repeated thousands of times by his fellow Democrats, union officials, and protesters in the streets. Now the bill is law, and we have some very early evidence of how it is working. And for one beleaguered Wisconsin school district, it's a godsend, not a disaster. The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous. In the past, teachers and other staff at Kaukauna were required to pay 10 percent of the cost of their health insurance coverage and none of their pension costs. Now, they'll pay 12.6 percent of the cost of their coverage (still well below rates in much of the private sector) and also contribute 5.8 percent of salary to their pensions. The changes will save the school board an estimated $1.2 million this year, according to board President Todd Arnoldussen. Of course, Wisconsin unions had offered to make benefit concessions during the budget fight. Wouldn't Kaukauna's money problems have been solved if Walker had just accepted those concessions and not demanded cutbacks in collective bargaining powers? "The monetary part of it is not the entire issue," says Arnoldussen, a political independent who won a spot on the board in a nonpartisan election. Indeed, some of the most important improvements in Kaukauna's outlook are because of the new limits on collective bargaining. In the past, Kaukauna's agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums. Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke, who represents the area and supports the Walker changes. At least for the moment, Kaukauna is staying with WEA Trust, but saving substantial amounts of money. Then there are work rules. "In the collective bargaining agreement, high school teachers only had to teach five periods a day, out of seven," says Arnoldussen. "Now, they're going to teach six." In addition, the collective bargaining agreement specified that teachers had to be in the school 37 1/2 hours a week. Now, it will be 40 hours. The changes mean Kaukauna can reduce the size of its classes -- from 31 students to 26 students in high school and from 26 students to 23 students in elementary school. In addition, there will be more teacher time for one-on-one sessions with troubled students. Those changes would not have been possible without the much-maligned changes in collective bargaining. A tip of the hat to the Washington Examiner for an excellent article. Taxpayers are better off. School kids are better off Class sizes are down Struggling school districts now have a budget surplus Teachers' unions did not want this of course. Why? Because they are blatant liars that's why. There is not a damn thing unions do for kids. Every action by public unions is for public unions and no one else. The results are in. Elimination of collective bargaining is one of the best things, if not the absolute best thing one can do for school kids. There is no other rational way of looking at this. We need national right-to-work laws, elimination of prevailing wage laws, and the end of all public union collective bargaining as soon as possible. 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.

Preposterous Statements - Jim Rogers: "No Food at Any Price"; Barton Biggs: " U.S. Needs Massive Infrastructure Program" Posted: 02 Jul 2011 07:52 AM PDT It does not help your case when you make absurd statements to support your views. All it does is damage your credibility. Here are a couple of completely unrelated viewpoints that will show what I mean. "No Food at Any Price" Speaking on food shortages, Jim Rogers says Global Agriculture Supply Worsening May Spur Food Shortages The global agriculture supply situation has worsened and a failure to boost food production fast enough to meet demand may lead to shortages, said investor Jim Rogers, chairman of Rogers Holdings. "We've got to do something or we're going to have no food at any price at times in the next few years," Rogers said in a Bloomberg Television interview with Rishaad Salamat today in Singapore. "I still own agriculture. If I found something to buy, I would buy it." Rogers likes agriculture. Maybe he's right, and maybe not. However, the notion "We've got to do something or we're going to have no food at any price at times in the next few years" is one of the more blatantly absurd things regarding food shortages that I have ever heard. US has record grain forecasts. Even if you do not believe those forecasts, the US is going to have a good crop. How does that translate to "no food"? The short answer is "it doesn't". Many reported shortages are weather-related. Some "alleged" shortages are not shortages at all, but unavailability because of government price controls. The rest of the "shortage" problem is higher prices caused by speculation and/or rampant inflation in China and India. The idea there will be no food at any price is absurd. There may not be food available at government mandated prices, but that is certainly not what Rogers said. "U.S. Needs a Massive Public Works Program" Barton Biggs Says U.S. Needs a Massive Public Works Program Don't expect the economy to perk up any time soon. The U.S. and Europe are set to grow at an anemic pace for the foreseeable future unless the government can step in with an enormous fiscal stimulus, according to a veteran investor. Speaking exclusively with The Wall Street Journal, Barton Biggs, managing partner at multibillion dollar hedge fund Traxis Partners, painted a bleak outlook for the developed world with only huge government intervention likely to improve things. On the final day of the Federal Reserve's bond-buying program, Mr. Biggs dismissed a further round of the so-called quantitative easing as a possible solution. It was meant to lower borrowing costs and simulate investment. Instead, Mr. Biggs, former chief global strategist for U.S. investment banking powerhouse Morgan Stanley, demanded the U.S. government temporarily return to ideas used in the Great Depression as a way to get the country back to higher growth. "What the U.S. really needs is a massive infrastructure program … similar to the WPA back in the 1930s," he says. He suggested financing such building through the sale of U.S. Treasuries. Failure of Japan It amazes me that apparently bright people can neither think nor see. Biggs is proposing the same medicine Japan tried. Where did it leave Japan? After 20 years of infrastructure projects, Japan has government debt to the tune of 200% of GDP and is still mired in deflation. Looking Down the Road Demographics and debt levels now are both far more precarious than they were in the 30's and 40's. Worse yet, Davis-Bacon and prevailing wage laws guarantee government will overpay for what it gets. What if we tried the idea anyway? What if we fixed everything in 5 years? The economy would boom for 5 years, then what? How would the US pay back that debt? What would happen to jobs the moment the projects finished? How would our children and grandchildren pay back that debt? No Painless Solution, No Free Lunch The very last thing the US needs is a massive infrastructure program paid for via the printing presses. Instead, we need to cut military spending, scrap Davis-Bacon, scrap prevailing wage laws, get rid of government workers, reduce public worker pensions, and get the budget in shape before the US becomes the next Greece. Will that cause pain? Of course it will. However, Biggs wants a free lunch. If printing money solved problems, Zimbabwe would be the wealthiest nation on the planet. Biggs Cannot See, Hear, Think It would help if Biggs could look at Greece, or Spain, or Portugal, or Ireland. Those countries show what happens when debt gets excessive and the bond market takes matters into its own hands. The logical conclusion is Biggs is cannot see, hear, or think. Perhaps Biggs is simply talking his short-term book with complete disregard to what his proposal would do to our children and grandchildren, so that he could have one last party. 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.

You are subscribed to email updates from Mish's Global Economic Trend Analysis To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610