Tuesday, February 22, 2011

Another Bubble coming?

I just ran across an interesting article here...

What does this mean? To the untrained eye (mine), it strongly implies businesses and consumers are cutting back on tech purchases. Which, in turn, suggests that many (most?) don't have confidence in where we appear to be heading economically. More than just the movers and shakers, but all the way down to the little guys.

Combine that tidbit with the continuing strong efforts of Washington (specifically the president) along the following lines... risky loans being backed by taxpayer funds - bank, auto and energy bailouts - and the biggest topic in the news: union bailouts at all levels (local, state, federal)...


It looks like more and more people are reading the tea leaves and deciding, "Why chance spending money today, you will likely need tomorrow?" There's also the un-stated comment (except from the crowing of far-right pundits), "Is he intentionally trying to make the Republic Fail, or can he *really* be THAT incompetent?"

Combine this approaching technological pin-prick with your recent (and excellent) post on trade deficits and a general economic conundrum of our own making, and one wonders if even more challenging and difficult times may indeed lurk ahead.

Just some points to ponder...

- Steve


  1. There's no doubt in my mind we're headed for another economic down turn which could easily make this last recession seem like a walk in the park. It kind of makes me wish I had become a Pastor like Howard, since a lot more people are going to be doing a lot more praying...

    Now, as to your snide remarks about Obama and bailouts, I'm particularly incensed by the "union bail-out" line.

    As far as Wisconsin is concerned, mostly what we're hearing from the Right are profound and intentional distortions of fact. For starters, average public employee salaries there have been vastly inflated. Neither are these numbers adjusted for levels of education.

    Overall, public employees in Wisconsin with college degrees make marginally less than their counterparts in the private sector - even when you add in benefits. Public employees without degrees make marginally more. Got that? When you average it all out, public and private employees in Wisconsin make about the same compensation.

    But even THAT average is misleading. Governor Walker has exempted police and firefighters from his union busting legislation. And yet he, and all the pundits on the Right, are including police and firefighter incomes in their calculations of average public employee income. This further distorts the picture because police and firefighters generally make a great deal more than other public employees who do not have college degrees.

    So, if you want to illustrate the difference between what public and private employees in the state of Wisconsin make, why would you include salaries of individuals like police and firemen - when neither THEIR compensation or union bargaining rights are part of the issue?

    I'll tell you why. They're doing it to make you believe a huge compensation gulf exists between private employees and (only) the public employees they are trying to strip of bargaining rights. Which is patently false.

    And no, Barak Obama is neither an incompetent nor ineffective President. Frankly, the bail-outs your talking about were all under weigh long before Obama drove up to the White House. His only guilt, if it even qualifies as such, is not wanting to preside over the abrupt collapse of the entire U.S. economy.

    You may have misunderstood my last post. What I was trying to demonstrate is that the situation we find ourselves in is the natural consequence of our own economic success as a nation. As a result of that success, we now find ourselves competing internationally with countries who are just simply willing to work harder for less money than we ourselves require to maintain the standard of living we are now accustomed to.

    So, instead of lowering our standard of living, we are burdening ourselves with massive amounts of debt - BOTH public and private. Sooner or later this habit of borrowing on the future is going to catch up to us.

    And by the way, if you want a real model of incompetence, compare Obama, who inherited a recession and a ten trillion dollar debt, to Bush, who came to office in a booming economy with five trillion in debt - not to mention a budget SURPLUS.

    Who's kidding who?

  2. A not-unexpected response, I see... ;-)

    1. IMHO, *both* Bush and Obama will eventually be viewed as economically incompetent, albeit for different reasons. And somewhat less incompetent on foreign policy issues, again: for different reasons. Both will get 'failing grades' almost completely across the board... And note that both Ideology and Good Intentions mean *ZERO* on this point.

    2. The 'bailout' issue with respect to Wisconsin is about far more than salary compensation, and you know it. The benefit package and unfunded long-term liabilities are a far greater problem than salary. Besides, bargaining rights concerning SALARY were deliberately left off the table and remain intact.

    3. Generally speaking, there is also the obvious issue with bargaining between unions and bureaucrats without the one holding the ultimate financial accountability (taxpayers) being allowed effective and unbiased representation at the table. There is a severe problem when politicians are most concerned about staying in office and bowing down before union voters. For too long, government officials have merely conceded to union demands for this and that perk or benefit, since they know THEY are not on the hook for it. Unlike private enterprise, government is not profit driven, thus: there is very little (if any) concern over getting value for the dollar spent. And please notice I didn't mention political parties or ideology because that topic is irrelevant to the issue at hand.

    4. BTW - I have *NO* problem with private sector unions in general (provided membership or contracts are not mandatory by law). That said, I disapprove of public sector unions on principle - too much conflict of interest between workers (also voters) and their bosses (elected public officials). Why can't government jobs be fully opened to whoever will do it for X pay? Isn't that what "put it up for bid" means? (Another over-simplification, I know, but you get the idea.)

    5. And why do unions find it necessary to bring protesters from out-of-state to Wisconsin? Is this a proper use of union dues? Is there not enough support among the LOCAL citizenry for the union position? Why are affected union workers apparently not willing to take UNPAID days off to exercise their right to protest? All legitimate questions...

    6. Just who is not negotiating in Good Faith? At what point do the interests of the taxpayer take a back-seat to the desires of a public-sector union? (Why does it seem like the phrase "we must find a way to compromise", is defined as "give ME whatever I want.") A snide comment and unworthy. Sorry.

    7. Wisconsin is an early example of where the next financial battleground will be. To me, the 'demands' being made by the state are NOT unreasonable when compared to what private sector employees have generally available. The union is still getting a great deal, but apparently the loss of power - over its own members, the bureaucrats, and the taxpayers - is too much to ask. *sigh*

    8. Like you, I am FAR more worried about the entire economic situation as a whole: the circus in Wisconsin is small potatoes... and a distraction at best.

    - Steve

  3. I'm afraid you've missed a few crucial details here, which wouldn't be surprising if you are getting your news from mainly conservative sources.

    First and most glaringly, "bargaining rights concerning SALARY" were NOT left off the table. The legislation restricts those rights to maximums determined by increases in the cost of living. I would hardly call it bargaining when one side (the government) can start negotiations with whatever figure they please, whereas the union's starting position is already fixed to a maximum as prescribed by law.

    Next, the accusation that the unions are "bringing protesters from out of state" is a cannard. "Out of state" sources, primarily in the person of the viciously anti-union Koch brothers, pumped millions into the Republican campaigns in Wisconsin. As a matter of fact, the Koch brothers were the largest contributor to governor Walker's gubenatorial campaign. Are you suggesting the unions should limit themselves to "in state" resources, yet allow Republicans to go looking for allies where ever they please? Come on man.

    And as for the "unfunded liability" issue...


    Steve, compensation is compensation, no matter what you choose to call it. I already said - clearly - in my comment, that when you add together all wages and benefits, public employees earn about the same on average in Wisconsin as private sector employees do. I even went a step farther and showed that when you compare the average wages of the public employees who are actually covered by this legislation to their private counterparts, they make LESS.

    Do the math here. A teacher who enters public service with a masters degree is making a trade-off: accepting lower present compensation in exchange for a future benefit in the form of a retirement pension. That teacher's counterpart in the private sector makes more money on the average and has every right to invest that extra compensation in whatever retirement plan he or she chooses - or for that matter - none at all. But the point is, if a private sector employee invests in a retirement plan, that plan is his or her's to control - NOW AND FOREVER. Public employees don't have that option, and must depend on the good will of the government to look out for them down the road.

    So, what the state is doing is going to a teacher who has invested several years of their life in a public service career, and telling him or her that they intend to change the economic factors on which they originally based their decision. The private sector counterpart can still go merrily along, contributing their extra compensation to whatever form of retirement plan they care to, but the teacher is now stuck. Not only are they going to be saddled with lower average salaries, which they knew they would going in, but now they're faced with losing most of the principle benefit (a pension) for which they agreed to endure lower compensation in the first place.

    Steve, I can't believe you would consider this situation to be fair. Sure, its a cruel world, we're all grown-ups and sometimes we have to fight for what's coming to us. But the state of Wisconsin wants to get in the ring only after the union has had both hands tied behind its back. That's not right. You can spout politics all you want, blow bubbles with it or fry it in canola oil, but that still doesn't make it right.

    And frankly I'd rather align myself with those people who undertake the largely thankless task of providing my kids and community with all the important services we could not do without.


  4. If we want to state the teaching profession is a somewhat thankless job, I agree 100%. But this isn't about what is best for 'the children'.

    But those contracts (and public sector employment in general) require extreme steps to GET RID of the incompetents. It has been suggested (elsewhere) that simply FIRING the worst 10% of teachers (and replacing them with 'average' teachers) would increase student performance by as much as 50%. In the private marketplace, there are options to the employer that are (apparently) not available in the public sector.

    Yes, arguably, workers made personal economic plans under those contract provisions. I agree that we have an ethical and moral obligation to honor those contracts. *BUT* there is NO REASON why we must CONTINUE TO DO SO! Maybe this specific point is being lost in the noise.

    You cannot avoid that fact that the unions have become far too powerful in the political process. Unions (today) exist for the express purpose of maintaining the existence of the Union - not fighting 'for the children' or anyone/anything else. If I remember the numbers right, private sector unions are only about 10% of the workplace, public sector unions are around 40%. Why? Could it be related to the idea that BOTH sides at the public sector bargaining table each have a hand in the taxpayer's pocket? Which leads me (again)...

    You sidestepped the issue of using ballot box threats as a means to get favorable treatment at the negotiating table, too. And, yes, that absolutely DOES happen. I'm not sure how to 'fix' it, other than to eliminate public sector collective bargaining rights COMPLETELY. That seems a drastic measure, but what other option is there?

    - Steve