| Professor at Alaska University Chimes in on Public Unions and the Situation in Wisconsin Posted: 25 Mar 2011 02:08 PM PDT A few days ago I received an email from Roland Stearns, a professor at University of Alaska in Anchorage. He copied me on a response he sent to Randi Weingarten, president of AFT a self-proclaimed "union of professionals" . Weingarten asked professor Stearns to "take the pledge in support of fairness, justice, democracy and workers' voice." I am pleased to report that professor Stearns took a stand against the coercion, bribery, and slavery tactics endorsed by those in favor of collective bargaining and union extortion. Here is professor Stearns reply to Randi Weingarten and the AFT... Dear Mr. Weingarten,
I am a professor, Vietnam era Veteran and, technically a member of a "minority" who would like to express my firm and absolute conviction that collective bargaining - when it consists of forcing anyone against his or her preference to join a group of any kind - may no more be termed a "right" than forcing someone to sit in one place on the bus - calling that forced seating a "right".
For years during and after my MM and Ph.D. studies (completed with 3.98 GPA) I lived largely debt free on incomes averaging $8,000 to $10,000 a year, on occasion less, and did so without expecting anyone to pick up my tabs.
I have been the recipient of both union members' bullying and mobbing as a high school student while doing summer work to save for my college expenses all the way through to the present-day when as a Veteran my own situation under Alaskan law have been dismissed as some kind of exceptional irrelevancy to the union agenda.
It is the purest definition of a corrupt process to force membership in any group hired by government and then, in any way, manner, shape or form, use involuntarily collected funds of that group to influence a political process that literally picks the taxpayer's pocket.
I am not writing this as an indictment of the great majority of fine educators. I am, however, writing this as an absolute indictment of the political, self-aggrandizing corruption and whining of those who do, indeed, disgrace the profession. We need to drop most of the pretense of bigger paychecks and benefits "for the children".
Respectfully,
Roland Stearns, Ph.D.
Anchorage, AK Issue of SlaveryI frequently receive such emails but I will only post them if I can use a name. Roland graciously agreed. I thank Roland Stearns for his brave public stance because there is little doubt he will soon be under attack by those who support slavery and coercion. I am particularly pleased by Stearns' comparison of union "rights" to tactics in the South that allowed whites the "right" to displace blacks in seating on buses. Rights of unions must not and cannot be allowed to interfere on the rights of other to NOT belong to a union, or pay union dues if they do not want to. The "right to work" is a universal right and union slavery advocates stand firmly in favor of slavery on this point. For more on the slavery aspect of public unions and collective bargaining advocates, please see Here is a short list from the article of those in support of slavery. - Paul Krugman, a Nobel prize winning economist and writer for the New York Times
- Bill Maher, an extremely popular stand-up comedian and host of HBO Real Time with Bill Maher
- Stephen Colbert host of Comedy Central's The Colbert Report
- Harold Meyerson, a columnist for the Washington Post.
- Yves Smith author of the site Naked Capitalism and one of the most popular economic bloggers country
- Rick Ungar, a writer for Forbes magazine.
Read the links. I make a case, point by point. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| US Consumer Confidence Lowest Since Nov 2009, France 8 Month Low, South Korea 23 Month Low, UK Record Low; Icing on Three Little PIIGS' Cake Posted: 25 Mar 2011 10:59 AM PDT In the wake of falling US consumer confidence, let's take a look at global consumer confidence headlines starting with the US. US Consumer Confidence Lowest Since November 2009Bloomberg reports U.S. Consumer Sentiment Fell More Than Forecast in MarchThe Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 67.5, the lowest level since November 2009, from 77.5 in February, the group said today. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.
Gasoline prices hovering near the highest levels since October 2008 are straining the finances of American households, whose spending makes up about 70 percent of the world's largest economy. While unemployment has fallen for three months, Japan's earthquake crisis led to a plunge in stock values, at one point wiping out all of 2011's gains.
The decline in sentiment was foreshadowed by other gauges. The Bloomberg Consumer Comfort Index dropped last week to the lowest level since August as consumers' assessment of the economy dimmed. The confidence gauge, which tends to inversely track fuel prices, slid to minus 48.9 in the week to March 20 from the prior week's minus 48.5.
The current conditions gauge, which reflects Americans' perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, decreased to 82.5 from 86.9 the prior month. Future Expectations Gauge Plunges ZeroHedge has a nice chart of Consumer Confidence "Expectations"The Expectations component had its fifth largest drop in history, plunging from 72 to 58. This is a lower reading than that recorded when the "recession", according to the NBER at least, was still raging. As a reminder the recession ended with "expectations" at 70. Consumer Expectations Index at 57.9 South Korean Consumer Confidence Drops to 23-Month Low Please consider South Korean Consumer Confidence Drops to 23-Month Low After Japan QuakeSouth Korean consumer confidence fell to the lowest level in almost two years, damped by Japan's strongest earthquake and political unrest in the Middle East. Retailers' stocks dropped in Seoul trading.
The sentiment index declined to 98 in March from 105 in February, the fourth monthly drop, the Bank of Korea said in an e-mailed statement in Seoul today. A number below 100 indicates pessimists outnumber optimists.
"Consumer confidence worsened so sharply, boding ill for private consumption and also economic growth," said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. "If oil prices stay above $100 a barrel for another month, sentiment will deteriorate further, prompting the central bank to pause interest-rate increases next month."
The Bank of Korea raised rates for the second time this year on March 10 after inflation exceeded its target ceiling for two consecutive months. The benchmark seven-day repurchase rate now stands at 3 percent. Consumer prices climbed 4.5 percent last month. U.K. Consumer Confidence at Record LowAre things so bad in the UK they cannot get worse? Somehow I doubt that. Meanwhile please ponder U.K. Consumer Confidence at Record Low on Economic WorriesU.K. consumer confidence fell to a record low in February as Britons grew more pessimistic about the sustainability of the economic recovery and the outlook for jobs, Nationwide Building Society said.
An index of sentiment dropped 10 points to 38, the lowest since records began in 2004, the customer-owned lender said in an e-mailed report today. A measure of whether now is a good time to spend dropped 18 points to 52, also the lowest since the survey began.
The U.K. economy shrank in the fourth quarter, while inflation has soared to twice the Bank of England's 2 percent target. Bank of England policy makers have split four ways as they debate whether to focus on boosting the recovery or curbing price pressures, and voted on March 10 to keep the benchmark interest rate at a record low of 0.5 percent.
"The labor market remains fragile" and "inflation is showing few signs of easing," Gardner said. Oil prices have risen 37 percent in the last six months and U.K. unemployment rose by 27,000 in the three months through January to 2.53 million, the highest since 1994.
A gauge of consumers' future expectations fell 14 points to 50 and an index of their view of the present situation slipped 3 points to 20, the lowest in 18 months, the report showed.
"High inflation has led many to expect interest rate rises by the summer, which may in turn have fanned concerns about mounting pressure on household budgets," Gardner said. He sees rates on hold "until the back end of 2011." EU Consumer Confidence drops to -10.6 FXStreet reports EU Consumer Confidence drops to -10.6 in MarchThe EU consumer confidence index worsened slightly to -10.6 in March, compared to the revised -10.0 it recorded the month prior and the -11.0 which was expected. French Consumer Confidence at 8-Month LowBloomberg reports French Consumer Confidence Declines on Higher Energy PricesFrench consumer confidence fell to an eight-month low in March as surging energy costs sapped spending power and President Nicolas Sarkozy readied a new wealth tax.
An index of sentiment fell to 83 from 85 in February, national statistics office Insee said today in an e-mailed statement. That was the lowest reading since July.
With oil prices up more than 40 percent in a year, French motorists are paying more for gasoline while the government is planning electricity-price increases for later this year. That's slashing spending power at a time when joblessness remains stuck near a seven-year high.
Sarkozy's government is preparing an overhaul of a tax on the nation's wealthiest households and the anti-immigration National Front is surging in opinion polls. Look on the Bright SideBeing the ever-optimist, I like to look on the bright side. Please consider German consumer confidence rises on wage hopes. German consumer confidence is rising as workers expect wages to increase in 2011, according to a survey by market research group GfK.
GfK said its forward-looking index for March had risen to 6.0 from a revised 5.8 in February.
The group also said that falling unemployment was giving consumers a greater feeling of security. Such is the nature of the ECB's "One Size Fits Germany" Interest Rate Policy. Icing on the Three Little PIIGS' CakeWe all know there's nothing quite like a mix of income tax tax hikes, high gasoline prices, rising food prices, and 7-year high jobless rates to boost consumer confidence. Interest rates hike by the ECB will be icing on the three little PIIGS' cake. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| S&P Nightmare Scenario: Spanish Housing Prices Drop by 45%, GDP Drops by 20%, Interest Rates Hit 17%; Portugal May Need $99B; Missteps by Merkel Posted: 25 Mar 2011 02:48 AM PDT In the wake of the collapse of the Portuguese government comes the not unexpected news Portugal May Need $99 Billion RescueA bailout for Portugal may total as much as 70 billion euros ($99 billion), two European officials with direct knowledge of the matter said, as credit-rating cuts threatened to deepen Portugal's debt woes.
Preliminary calculations put the cost of a lifeline from 50 billion to 70 billion euros, said the officials, who declined to be named because the issue is confidential. Portugal continued to rule out a rescue after the parliament's rejection of budget cuts led Prime Minister Jose Socrates to offer to quit.
"It's pretty inevitable" that Portugal will need a rescue, said Jacques Cailloux, a London-based economist at Royal Bank of Scotland Group Plc. "The market will deteriorate in the absence of other measures going through. There is obviously the risk of further downgrades, which will become anticipated by the markets and be a self-fulfilling prophecy." Some Weigh Restructuring Portugal's DebtDoes Portugal need $99 billion as stated by Bloomberg or $113 Billion as estimated by the New York Times? The real question is when does restructuring the debt of Ireland, Greece, and Portugal start? Please consider Some Weigh Restructuring Portugal's DebtAs Europe struggles to come to grips with its debt crisis, which has deepened with the collapse of Portugal's government after it pushed for yet another round of budget cuts, three numbers stand out: 12.4, 9.8 and 7.8.
Those are the interest rates currently paid on 10-year government bonds for Greece, Ireland and Portugal. That they remain so high — compared with just 3.24 percent on German bonds — shows that investors remain unconvinced that Europe's haphazard strategy for bailing out troubled, highly indebted countries has succeeded a year after it began.
As heads of state huddled in Brussels on Thursday, with a possible rescue of Portugal on their minds after similar bailouts of Greece and Ireland, the question remained: would Europe accept a resolution it has long resisted — forcing investors to take a loss on their bond holdings to keep the crisis from spreading?
A bailout of Portugal — perhaps to the tune of 80 billion euros ($113 billion) — remains the most likely if not the safest possibility, because it could prove to be another stop-gap measure that might not keep the crisis from spreading.
As the number crunchers from the European Central Bank, tax experts from the International Monetary Fund and other members of the bailout bureaucracy prepare to descend upon Portugal, preaching more budgetary pain and sacrifice, some economists argue that the smarter approach would be to restructure Portugal's existing debt instead of piling more of it on. Can Merkel Make Up Her Mind?German Chancellor Angela Merkel has wasted a lot of political capital by proposing much needed sovereign debt haircuts then changing her mind under pressure from ECB president Jean-Claude Trichet. Moreover, many Germans are upset by her wishy-washy constantly changing bailout proposals that are in violation of the Maastricht Treaty. In the wake of the nuclear crisis in Japan, she is accused of playing politics regarding her switch on nuclear energy. Now she is balking about an EU proposal she accepted just 4 days ago. Please consider EU Cuts Future Aid Fund's Start-Up Capital After Germany Balks. European Union leaders cut the startup capital for the future euro emergency aid mechanism after German demands to make smaller upfront payments stoked fresh concerns about Europe's effort to quell the debt crisis.
As speculation swirled that Portugal will be the next victim of the crisis, the leaders bowed to German Chancellor Angela Merkel's call to pare the fund's paid-in capital as of 2013 to 16 billion euros ($23 billion), less than the 40 billion euros foreseen in a March 21 accord.
"It was a difficult debate with Germany," Luxembourg Prime Minister Jean-Claude Juncker told reporters after the first session of an EU summit in Brussels early today. "Germany found that in the compromise agreed last Monday it would have to pay in too much. So we had to tackle that issue."
With Merkel's party trailing an opposition bloc in the polls before a March 27 regional election, the sparring over the future emergency support system reflected domestic political pressure on leaders in Europe's wealthier north to limit aid to struggling southern economies.
Merkel's renegotiation of the three-day-old financing accord punctured the EU's proclamation of a "comprehensive" anti-crisis strategy, including tougher sanctions on excessive budget deficits and national pledges to increase competitiveness.
German political jitters over propping up debt-swamped states dominated the crisis response last year, with Merkel delaying aid for Greece and calling for bondholder losses that hastened Ireland's plunge into the fiscal abyss. Spotlight on SpainThe Wall Street Journal reports Spain Takes Turn in Debt SpotlightPortugal's admission that it will probably need a financial bailout raises a question that will shape the outcome of the euro zone's debt crisis: Is Spain next?
The cost of saving Spain, a €1.1 trillion ($1.56 trillion) economy, would dwarf previous bailouts and could test the financial strength of Europe as a whole.
But if Spain can continue to repair investors' trust, as in recent weeks, then Europe stands a chance of containing the debt crisis to three countries, Greece, Ireland and Portugal, whose combined economies are half the size of Spain's.
Spanish bonds and stocks, including those of banks, rose Thursday despite the downgrades and concerns that Spanish lenders could be hit by the deepening crisis in neighboring Portugal.
Spain's borrowing costs have stabilized and come down slightly in recent months, whereas investors have continued to dump bonds of the three smaller crisis-hit countries.
Spain's budget deficit, at 9.2% of GDP last year, remains too high for comfort, but was down from more than 11% in 2009. Spain improved its credibility with investors by meeting its deficit-reduction target, despite overspending by some regional authorities. This year's deficit target of 6% is achievable, said economists, but might require extra fiscal measures if economic growth disappoints.
The economy grew at an annualized rate of 0.9% in last year's fourth quarter, marking another contrast with Greece, Ireland and Portugal, which stayed mired in recession. Spanish consumer spending is falling thanks to mass unemployment and households' efforts to reduce their debts, but Spanish exports are doing better than expected, growing at an annualized 16.6% last quarter. Spain's Capital Shortfall "Substantially" Higher than Bank of Spain AdmitsSpanish lenders face a capital shortfall that's "substantially" higher than an estimate by the Bank of Spain because they haven't accounted for all of their real-estate losses says Jesus Ecinar, founder of the largest property website in Spain. Please consider Bank of Spain Underestimates Funding Gap Faced by LendersSpanish lenders face a capital shortfall that's "substantially" higher than an estimate by the Bank of Spain because they haven't accounted for all of their real-estate losses, according to Jesus Encinar, founder and chief executive officer of Idealista.com.
As much as 15.2 billion euros ($21 billion) is needed by Spanish banks to meet new capital requirements, the central bank said on March 10. Encinar, 40, said the eventual shortfall may be between 80 billion euros and 100 billion euros. A spokesman for the Bank of Spain declined to comment on his estimate.
"Property portfolios are still mostly valued at prices dating from the boom, rather than current values," Encinar said during an interview at his office in Madrid. Home prices in some parts of Spain have dropped about 40 percent since the market's peak in 2007, according to his 10-year-old company, the country's largest property website.
Savings banks alone have taken on land worth 23 billion euros after borrowers defaulted on their loans, according to data from the Bank of Spain. Land prices have fallen as much as 80 percent in the past four years and the valuations used by lenders are "pure fantasy," Encinar said.
On March 15, Spanish Finance Minister Elena Salgado said that estimates of lenders' capital needs by rating companies aren't comparable with those of the Bank of Spain and the firms should explain their methodology.
While the Bank of Spain does a "simple subtraction" to see how much capital is needed to meet the new rules, the rating companies make "presumptions on the amounts our lenders would need to cope with certain eventualities."
Inflated Prices
Banks and other financial-services companies advertise homes at prices that are as much as 12 percent higher than privately owned properties, according to Idealista. In return, they offer better mortgage terms, Encinar said. In some cases, banks only grant mortgages for homes that they own.
"We tried to inform the banks about the market value of their properties, but they won't reduce prices because it would affect the data that the banks are giving to the Bank of Spain," he said. Spain's Nightmare ScenarioNearly every day of the week I receive emails from my friend Bran who lives in Spain. Many of the links Bran sends are in Spanish. Sometimes he translates the highlights. Today he writes ... An S&P "nightmare" scenario quoted by El Pais, not only assumes a fall in housing prices by 45%, it also assumes GDP to fall by 20% between 2011 and 2015, a destruction of a quarter of today's jobs and interest rates to reach 17%. In this worst case scenario Spanish banks and savings banks would need an injection of public capital of €64bn, equivalent to 6% of GDP. Spanish speaking readers may wish to consider " La agencia parte de una caída del PIB del 20% y una destrucción del 25% del empleo" English Speaking readers can follow this Google translation: S&P believes that in an extreme case the bank would need 64,000 millionRight now, the two things propping up the Euro are Trichet's expected rate hikes and speculation that Spain will not need a bailout. Both are questionable ideas to say the least. I happen to think the "nightmare" scenario is the realistic one. If so, those who think Spain will not need a bailout need to think again. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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