Offshore Inn for International Real Estate, Overseas Jobs, Asset Protection, Expatriate Resources and Overseas Retirement
It is a peculiar irony. A year ago, the the UK’s Inland Revenue began a crackdown on offshore savings. Banks operating out of the Channel Islands and the Isle of Man had to hand over details of British customers, and depositors who confessed were rewarded with an amnesty. Thousands did and many must have given up on offshore savings. Inadvertently, the taxman’s crackdown must have saved some depositors from the collapse of the offshore subsidaries of Icelandic banks.
Thousands were not so lucky and could now lose most of their savings …
Consider if you will be a sole proprietorship, partnership or corporation.
‘You’re so lucky, being able to work abroad.’ I’ve forgotten how many times I’ve heard that statement.
If you have assets, you are most likely a target. When your assets are visible, you are the bullseye.
Do you need a job? Just got a question? Pop it in here and you’ll get an answer from our Inn Team.
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Treasury secretary Tim Geithner, who arguably belongs in prison for his role in the AIG bailout coverup, is back in the news again.
Please consider Geithner Says U.S. Will ‘Never’ Lose Aaa Debt Rating.
Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”
Geithner said investors around the world turn to U.S. Treasury securities and dollar-denominated assets whenever they are worried about global stability. That reflects “basic confidence” in the U.S. and its ability to bounce back from the global recession, he said.
Moody’s Investors Service Inc. last week said the U.S. government’s bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade.
The U.S. plans to rein in the deficit once the labor market recovers, Geithner said.
Famous Last Words
Notice Geithner’s condition to rein in the deficit “once the labor market recovers”. The problem is meeting that clause. A labor market recovery might be a decade away or more depending on the meaning of “recovery”.
In response to Geithner’s pomp …
My friend “HB” says “File under famous last words”.
My friend “BC” says “Geithner serves stateless elites who can say this with full confidence that their wealth and privilege will remain intact no matter what happens to the real US or global economy and sovereign debt situation in the US and the world. The key for those of us not secure within the rentier Power Elite caste is to continue to make arrangements for escape plans to try to mitigate the worse effects of sovereign defaults, currency devaluations, capital controls, confiscation, etc.”
Meaning Of Never
I want to focus on the meaning of “never”. Is this the start of one of those what’s the meaning of ‘is’ kind of discussions we had with Clinton? I hope not.
Please note Moody’s rare display of courage to downgrade Enron from investment grade to junk on November 8, 2001.
On December 2, 2001 Eneron filed bankruptcy.
Notice how Moody’s displayed remarkable courage and foresight with a timely downgrade of Eneron from investment status to junk a full 3 weeks before Eneron was delisted. Indeed the chart shows how much on the ball Moody’s was (and still is).
Game Is Rigged
Bear in mind that the big three rating agencies (Moody’s, Fitch, and the S&P) have government sponsorship, thus the game is rigged. Please see Time To Break Up The Credit Rating Cartel for details.
As long as the game is rigged (and it is very rigged), US debt will continue to be AAA rated until even pathetic Moody’s cannot take it anymore, or governments sponsorship of the big three ends.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Despite fears to the contrary, the apparent presidential victory of Viktor Yanukovych in some ways bolsters the democratic gains of Ukraine’s Orange Revolution, says Steven Pifer.
Just to show you how the deck is stacked against true patriots in favor of union members who have their hands in your pocket, please consider this email from “Stacked Deck” in response to Colton California Considers Disbanding Fire Department.
“Stacked Deck” writes …
Hi MishI’m a big follower of your blog. I love what you are doing, please keep up the good work.
It’s interesting that you say Volunteer Fire Departments are the optimal arrangement. I am a 14 year veteran of a “Volley” department in New Jersey, and I have to say the deck is severely stacked against us.
Here’s why.
My father, a 40 year member of our department, joined when he was 21 (the earliest he could back in the day, now we need to be 18 with a GED or diploma). At that time, it was all on the job, and Friday night drill training. Some who felt more motivated would attend fire school if they wanted to, and perhaps attend special classes at the National Fire Academy in Maryland.
Now, as of about 20 years ago, it is mandated that all volunteers in the state must at minimum have Firefighter 1, HAZMAT training, and Blood Borne Pathogens training via the state, and maintain a certain number of credits and continuing education, as well as call levels to stay active. We give 2 Fridays a month, and countless other days for training, and ride approximately 400 calls a year. It’s a big time commitment, but we are motivated and love to do it.
In essence, for me to stand as a volunteer, I must have the same training as a recruit for any paid department in NJ. Firefighter 1 is a 165 hour class that requires at minimum a 3-4 month nightly class schedule, along with all day Saturday live burn training. The time commitment is enormous, especially for a person who is focused on working to maintain a home in an upper-middle class neighborhood. Factor in kids, and a dual income family, and you get the idea as to how this will play out.
The bar is set to high for most who will get little benefit out of becoming a member of the department.
These mandates are all set by the state firemen’s association that is chock full of ex-paid jocks, who are determined to get more and more union jobs in towns they have yet to infiltrate. Princeton and the surrounding communities are a huge example of this. They used to have multiple fire houses and a pool of over 300 volunteers.
As it gets more expensive to live there, they lose the most likely applicants for a volunteer corps, and the bar is set too high. The last I heard they had under 100 left now, and are looking to hire day-call guys to cover. The state mandates that township are required to maintain a certain amount of day-call men, and in comes the union.
Now they are looking to implement another 13 week program to mandate that any officer must complete a 13 week course called Fire Officer 1. Currently, there is only a requirement of I-200, which is basic incident command, which is about 3 evenings of training.
If they can’t mandate out at the firefighter level, at least they’ll try and get in from top down, forcing municipalities to hire a full-time chief or line officers, who in turn will automatically earn 100k+.
The bar keeps getting set higher and higher, with no end in sight. They are systematically trying to ensure there are more paid jobs in New Jersey, at taxpayer expense of course.
Most volunteer departments are trying to fight it, but they rarely take us seriously, as though fire doesn’t burn us the same way because we’re not paid for it, yet we still have all the same training and qualifications.
I work full time on Wall Street, come home most of the time after 12 hours or more, then go to the firehouse for an hour to go on duty and work on maintaining the firehouse and our equipment plus a short training stint.
All told, we calculated that our 54 member department sacrificed over 15,000 man hours between calls, drills, maintenance, and our community outreach programs. And we operate on a budget of around $25,000 from the township, and $30,000 worth of donations or so a year to our Firemen’s Association.
They want to take that option from us, and replace it with paid jobs, because the unions want as many jobs as possible.
I know I save my township well over 3 million a year in salary and pension payments. I’m proud of that. I only hope that it can continue.
“Stacked Deck” is one of the true patriots of this world. He sacrifices his time for the benefit of his community.
Of course the union will argue about proper training etc. I say let the people decide. Put the issue straight to the voters as to what kind of protection they want and at what cost. Even if cities want paid fire departments, there is no reason those jobs should have to be union.
Unions continue their drive to rule all aspects of our lives. The cardinal rule is unions are never satisfied. They will suck the last drop of blood out of every community until the community dries up and shrivels away or goes bankrupt feeding the beast.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Statement
Joshua Kurlantzik argues, “the age of global human-rights advocacy has collapsed.”
President Obama’s decision to skip an upcoming summit in Spain set off a European reaction that highlighted areas of conflicting interests between the EU and the U.S., says CFR Europe expert Charles Kupchan.
Over the weekend I received an email from Irishscot2, a poster on MarketWatch, regarding seasonal adjustments to the unemployment rate.
Hi MishI believe the seasonal adjustment is no longer valid given that anticipated job creation down the road has not and will not be happening. I expect late spring to reverse the January effect heading into the elections. If so, a perfect political storm brewing because of their models!
Irishscot2
Irishscot2 compared the unadjusted numbers to the seasonally adjusted numbers on a percentage basis. I could not tell much from the raw data he sent, so I asked for his spreadsheet and he graciously obliged.
It is difficult to visualize raw numbers, especially trends in percentage differences, so I added a column and a couple of graphs to the spreadsheet. Here are the results.
Seasonally Unadjusted Unemployment vs. Unadjusted Unemployment
click on chart for sharper image
The above chart shows how the BLS smoothes the unemployment rate to account for seasonal trends. It also give as hint as to an increasing magnitude of that smoothing.
To highlight the month to month variances, I added a column to show the amplitude of the seasonal adjustments. The result is this chart.
Unadjusted Unemployment Minus Seasonally Adjusted Unemployment
click on chart for sharper image
Seasonal Adjustment Highlights
The problem is in the increasing amplitude of these swings, in both directions. It really makes you wonder just what the hell the BLS is doing and why.
I have data charted all the way back to 1999. Prior to January 2009, the biggest January swing was .6 percent, in both 2004 and 2003. In 2008 the January swing was only .5 percent.
The amplitude of January swings in both 2009 and 2010 was .9 percent, way outside the data range for the last 10 years, by a factor of 50 percent (.3/.6).
Likewise, the prior swings in October peaked at -.4 percent on a couple of occasions but hit -.7% in October 2009.
Unless it’s different this time (I figure it is not) a reversion to the mean that slightly overshoots in a May-June timeframe will lop off a whopping 1.3 percent off the posted seasonally adjusted rate of 9.7 percent just announced.
In other words, all things being equal (no job gains or losses), we could expect to see the unemployment rate approach 11% by May! Of course we have to factor in actual job growth (or lack thereof). We also have to factor in census bureau hiring.
Heaven knows what census hiring will do to the BLS algorithms. Your guess is as good as mine. However, whatever it does, census hiring will also revert to the mean.
Also remember that it takes 100,000 to 120,000 jobs per month just to hold unemployment rate steady. Think that’s going to happen? If so (and again discounting census hiring), then you are living in Bizarro world along with everyone else who thinks the unemployment rate is going to come crashing down.
Real World Analysis
As unbelievable as this may sound, some people do live in the real world, reporting on real data, about real jobs.
Please consider TrimTabs: Here’s Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported
TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January. Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs. We believe the BLS has underestimated January’s results due to problems inherent in their survey techniques.While the BLS originally reported job losses of 4.2 million in 2009, TrimTabs reported 5.3 million, a difference of more than a million lost jobs.
Since July 2009, TrimTabs estimates and the BLS estimates have diverged again. While the tax data points to a weak job market, the BLS estimates point to a steadily improving job market. We believe the job market is much worse than the BLS is reporting and that in January 2011, when the BLS revises their estimates for 2010, their April 2009 through December 2009 results will move much closer to TrimTabs’ results.
The BLS has seriously underreported job losses for the past two years due to their flawed methodology. TrimTabs has identified the following four problems:
1.The BLS employment estimate is based on a survey, and not on an actual count of employees. While the BLS survey is large and supposedly designed to capture the complex nature of the employment market, it is still a survey and therefore subject to error. TrimTabs believes that rapid changes in an employment cycle cannot be captured by surveys.
….
Real-Time tax withholding data shows that wages and salaries declined an adjusted 1.0% y-o-y. In January 2009, wages and salaries declined 5.0%. If the labor market were improving, we would expect a positive year-over-year growth rate. The fact that tax withholding data is still declining year-over-year suggests that the labor market is still contracting.
The BLS added a whopping 1.92 million jobs to their survey results in January. That is the spike shown in the second chart above. The number is so preposterous one might wonder if it was purposely preposterous. Census hiring may add to the preposterousness of it all, depending on what the BLS does with its models.
However, unless the administration can pull a kangaroo out of a hat, those BLS seasonal distortions will fall on the hard rocks of reality, real jobs, by real people, as opposed to figments of imagination from some very imaginative people at the BLS.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
In a move I wholeheartedly endorse, Colton considering cost of disbanding fire department, contracting out.
In the latest effort to find better - and cheaper - ways of operating, Colton officials are exploring the possibility of disbanding the city fire department and contracting with an outside agency.The City Council unanimously approved contracts totaling $187,570 with San Francisco-based consulting firm Harvey M. Rose Associates, LLC to perform “operational performance audits” of the Fire Department and Colton Electric Utility.
The city’s fiscal woes are well known. The recession has forced the closure of many businesses, resulting in huge drops in sales tax, the city’s top income source.
New City Manager Rod Foster, who began his tenure in December, proposed the audits so an unbiased outside source could evaluate the fire and electric departments for efficiency and provide recommendations for increasing revenue to help fund city services. Both audits will begin this week and should be completed within three months, Foster said.
The hope is that the audits will provide several recommendations that will save money to help close a $950,000 deficit city officials have projected at the onset of the fiscal year that begins July 1.
Business owner Gary Grossich says Colton pays too much for its fire services. If faced with companies that provide the same product, it’s common business sense to go with the one that charges the least, he said.
“It only makes sense to get the same service for less money,” Grossich said. “I think that’s what (the audit is) going to show. They’re going to find out that we’re paying substantially more than other cities our size in our area that have contracted out (fire services.)”
Highland, which has a population of about 52,000, roughly the same as Colton, budgeted about $4.2 million for its fire and paramedic contract with CalFire in this fiscal year.
One by one, cities ought to contract out fire department services. If unions want the job, they can lower their cost. It is that simple, at least it should be.
All it takes is one major city to do the right thing to cause a nice cascade. Colton isn’t huge, but at 48,000 population or so, it is not “tinytown, population 1,800″ either. Trends have to start somewhere. Let’s hope Colton follows through given that it did waste $187,570 of taxpayer money when the solution should have been obvious.
By the way, the best solution is to have volunteer fire departments, but any step towards that end is a step in the right direction.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
The San Francisco Chronicle has an interest story about Automatic Raises For Muni Drivers.
So much for the idea of saving $8 million by having Muni drivers give up their raises next year. Even if Muni drivers were game, they can’t forgo their raise because they are required in the city charter, which guarantees that they are the second-highest paid transit operators in the nation.With the raise issue off the table, the union is being pushed to consider other concessions, such as allowing Muni to use part-time drivers and ending or reducing premium pay benefits for such things as working at night or training other drivers. Or, Muni operators could start contributing to their retirement account.
Supervisor Sean Elsbernd has another option: pass a proposed ballot measure he’s pursuing for the June ballot that would remove the formula-based pay provision and make the pay scale for Muni operators subject to collective bargaining. Elsbernd’s proposal, vehemently opposed by the transit union and generally given a cool reception from several of his colleagues and the mayor, will be considered by the Rules Committee on Thursday for placement on the ballot.
No matter how poorly they perform, or how broke the city is, San Francisco muni workers have a guaranteed second highest pay schedule in the nation. One would have to be absolutely out of his mind to go along with such nonsense. Yet, the mayor does not want to do a damn thing about it.
Oregon Pension Board Ponders Rate Increases
Oregon’s pension plan (like that of nearly every other state) is massively underfunded. But no one wants to increase employer rates to properly fund it.
Inquiring minds are reading Public pension board to vote on employer rate increases.
Under current rate-setting rules, public agencies and the taxpayers that support them face a 170 percent spike in biennial pension contributions starting in 2011 — a collective $1.5 billion budget hit — to start digging out of the pension fund’s actuarial hole.The market plunge lopped $17 billion off the value of the Oregon Public Employee Retirement Fund. Despite a strong recovery last year, the $51 billion fund still has a shortfall of approximately $14 billion, with 75 cents in assets for every $1 in liabilities.
The board has been lobbied by public employers and unions to temper any rate increases because of the impact on the already strained budgets of municipalities, school districts and public agencies across the state. The dilemma is whether it can do so without further compromising the funded status of the system or pushing the obligation off on future generations.
PERS-covered employers currently pay an average rate of 12.4 percent of payroll to cover retirement benefits. The system has a contribution rate collar that normally limits rate changes to 3 percent of payroll per biennium. But when individual employer’s funded status is less than 80 percent the collar doubles, and their rates jump by 6 percent of payroll costs.
A 6 percentage point increase would leave average employer rates above 18 percent in 2011.
The depressing reality in Mercer’s models is how little the increased contributions under either the current or revised policy actually budge the system’s funded status. Even if the pension fund’s investments earn 8 percent annually for the next decade, the system’s funded status only reaches the 80 percent level in 2019. If that’s the case, employers will face further rate increases in 2013 and 2015.
“Even if market consistently deliver strong returns, we’re moving to a higher level of contributions for the next decade,” said PERS board chairman James Dalton, a former Tektronix executive. “It’s going to take a long time to recover. It’s a different environment.”
If, on the other hand, returns are closer to the system’s average over the last 10 years — 4.5 percent — the actuarial deficit will grow precipitously.
Employers need to pay 18% of salaries to fund pensions
If returns are poor it will quickly be 20%, then 24%. When does someone finally have the guts to tell the union freeloaders to go to hell or to raise rates to what is needed so there is a public outcry. Instead …
The Oregon Pension Board Eases Rate Hikes.
The board of the Oregon Public Employees Retirement System has voted to take some of the edge off a coming increase in employer pension rates.Rates are rising because of the 2008 stock market downturn. The new policy bases them on a sliding scale tied to how well-funded each employer’s pension fund is.
PERS Executive Director Paul Cleary characterized the move as based more on fairness than to provide rate relief.
Under the old policy, the investment declines most participating pension plans have suffered would have triggered an automatic 6 percent rate increase for employers.
The new policy means that better-funded pension plans within PERS will have smaller rate increases than public employers with plans hit harder by the economic downturn.
Oregon Buries Head In Sand
As expected, the pension board, stuck its collective head in the sand, pretending the problem will go away. It won’t.
Double Dipping Sheriffs
Thoroughly disgusted minds are reading about sheriff officials double and triple dipping.
Though highly unusual, the methods San Luis Obispo County’s two top sheriff officials have adopted to double and even triple their incomes are entirely legal.In an interesting twist, San Luis Obispo County Under Sheriff Steve Bolts is taking home between $640,000 and $772,000 this year in retirement benefits and an hourly salary, while his boss, Sheriff Pat Hedges, takes home $340,000, according to calculations based on dates provided by Bolts.
“I can see people saying this is double or triple dipping,” Bolts said. “But this is the pension plan and I am not hiding anything. All of that money is mine anyhow.”
The principal reason for Bolts’ hefty income is the Deferred Retirement Option Program (DROP). Adopted by the board of supervisors in October 2006, DROP allows county employees to simultaneously collect both their full wages and benefits along with their full retirement for a period of no more than five years.
Currently, sheriff’s department personnel retire under a pension formula that allows members to retire at age 50 with 90 percent of their salaries.
Question of Relativity
This kind of behavior will not change until public outcry forces it. Pray tell, exactly what does it take for the taxpaying public to revolt against this kind of union greed and arrogance?
I have had several email exchanges with teachers who just do not get it, and thankfully many more who are interested in an actual discussion of the issues.
The issue at hand is the defined benefit pension system is flat broke. The issue is NOT that police unions are worse (they are), firefighter unions are worse (they are), transportation unions are worse (they are), but rather what is actually mathematically supportable.
All public unions are a problem.
Inevitably I hear about “living wages”. Well one of the reasons living wages are so high in the first place is unions (all of them) demand a free lunch (to varying degrees) that the private sector does not get.
I discussed the issue at length in Are Teachers To Blame For Economic Illiteracy?
Everything Is Relative (But It All Matters)Dear “California Teacher”
The whole defined benefit scheme in general is broke. Cities will go bankrupt unless something is done. That is a simple mathematical statement of fact.
Yes, relatively speaking, teacher salaries are not as problematic as police or firefighter salaries, but is that a sound reason to avoid fixing a fundamental problem with teacher pensions and union rules that protect the worst employees?
I am infuriated with police and firefighters retiring at age 50 with 90% of top salary. However, just because something is less of a problem does not mean it is not a problem.
Teachers email me saying they are underpaid, police and firefighters email me telling me that their life is on the line, bureaucrats of all sorts email me saying what they do is important. To top it off, warmongers email me in support of defense spending because they have a job at a defense contractor.
In short, everyone wants an exception for their group and everyone thinks what they do is necessary. Unions spread fear if they do not get what they want. The teachers’ unions, along with police and firefighters, are the most adept at spreading fear. Politicians are afraid to take on unions, and exempt themselves from the mess by increasing their own pay and benefits as well.
The only sensible thing to do is reduce benefits. Taxing the already overburdened private sector, which does not get such benefits, cannot and will not work.
There is absolutely no basis, none, nadda, zippo, zero, etc., for teachers to assume they deserve a pension plan paid at taxpayer expense, that the private sector does not get.
One teacher “ADL”, went so far as to write:
You conveniently don’t bother ever mentioning is that when you become enrolled in either CalPERS or CalSTRS (most teachers are STRS) you no longer pay into social security so that does not accrue for you any longer. So, it is good that teachers have some kind of retirement to look forward to.
My reply:
I conveniently overlook that?I will gladly take away your union pension and propose you pay into SS instead. Indeed, I think that is a great idea. I suggest you promote it!
Indeed, public employees should have to do what the rest of the country does. Politicians should not be an exception either.
Thus, I highly recommend ending the unjust disparity to which “ADL” refers. The solution is very easy. Teachers should give up their pension plans and pay into social security.
I commend “ADL” for his fine suggestion.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
In Steel Tariffs Show Protectionism On The Rise, I noted that 145% steel pipe and steel grating tariffs would bring a reaction from China.
Who Benefits From This?Essentially no one. Potentially a few hundred steel workers get jobs back, but everyone using those products has to pay more. Demand will slow and price pressures will increase on everyone using those products. In aggregate, more jobs will be lost as a result of these tariffs than gained.
And that is just on the surface. Think China will not react? A nice clear message would be for China to cancel plane orders from Boeing or industrial goods from GE. Even if China is not so overt in its message, it is foolish to think there will be no repercussions over this.
The rising tide of protectionism is not a good thing. It never is.
105% Tariffs On US Chickens
Retaliation for 145% steel tariffs (on top of huge tire tariffs) has arrived: China announces anti-dumping steps on US chicken.
China announced anti-dumping duties of up to 105.4 percent Friday on imports of U.S. chicken products, adding to trade strains with Washington.The case comes amid mutual accusations of protectionism by Beijing and Washington which both say will hurt efforts to end the global economic downturn.
A preliminary investigation concluded U.S. exports were being sold at improperly low prices that harmed Chinese competitors, the Commerce Ministry said. It said importers must post a bond until a final decision is reached.
Beijing launched the investigation in September after Washington raised duties on imports of Chinese-made tires despite vigorous opposition from China.
The two governments also are embroiled in disputes over access to each other’s markets for steel pipes, movies and books and other goods.
The chicken duties take effect Feb. 13 and apply to whole birds, chicken sausage and other products, the Commerce Ministry said. Included are chicken feet, which most Americans throw away but which are a delicacy in southern China.
Companies that appealed the ruling will pay lower duties of 43.1 percent to 80.5 percent, the ministry said. Tyson Foods Inc. will be charged the lowest rate, while Pilgrim’s Pride Corp. is at the top end of that range.
Importers that did not appeal will be charged 105.4 percent, the ministry said.
Tire Tariff Recap
This all started with tires, and the irony of tires is US manufacturers did not even want protection.
In what is widely considered a test case of the president’s union support, Obama slaps duties on tire imports from China.
U.S. President Barack Obama slapped steep additional duties on tire imports from China on Friday in a move that pleased domestic labor groups but drew a strong rebuke from Beijing.The United Steelworkers union, which represents workers at many U.S. tire production plants, filed a petition earlier this year asking for the protection. It said a tripling of tire imports from China to about 46 million in 2008 from about 15 million in 2004 had cost more than 5,000 U.S. tire worker jobs.
The ITC had recommended starting with a 55 percent tariff that would fall to 45 percent in year two and 35 percent in year three. The steelworkers asked initially for a quota of 21 million that would grow by 5 percent each year.
Analysts expect Friday’s action to encourage other labor groups or domestic manufacturers to seek relief under Section 421, which does not require petitioners to prove unfair trade practices are responsible for a surge in imports.
No American tire manufacturer supported the case and one, Cooper Tire, publicly opposed it.
Tire Tariffs Seen And Unseen
Flashback September 14, 2009: Obama Risks Global Trade War With Misguided Tariffs
First steel, now tires. Let’s see how China responds. China might put import duties on meat hurting US farmers, or perhaps they decide to buy planes from Airbus instead of Boeing. Perhaps they simply buy fewer planes from Boeing.For now let’s assume 5000 jobs would be “saved” by this measure. Let’s total up the gains and losses from the Tariffs.
Gains From Tire Tariffs
- 5,000 Jobs
Losses From Tire Tariffs
- China reduces orders for planes and/or imposes agricultural tariffs in response. China will retaliate somehow those are possible examples how.
- Costs go up as production shifts from China to US or elsewhere.
- Millions of US consumers temporarily have to pay unnecessarily high prices for tires as long as normal supply chains disrupted.
- Fewer dock workers are needed as both imports from China and exports to China drop
Let’s revisit those gains. Does anyone really think 5,000 jobs are coming back to the US as a result of this action? Better yet, did we really lose 5,000 jobs in the first place as a result of tire imports from China?
Let’s explore those questions with a look at tire production.
Tire Production Before And After Tariffs
The Washington Post article As Cheaper Chinese Tires Roll In, Obama Faces an Early Trade Test has a graph of tire production. I duplicated the chart and doubled it up showing what I believe to be the before and after effects of the tariff. Annotations in blue are mine.
click on chart for sharper image
Tire workers gained nothing as manufacturing will shift somewhere else. However the price of tires is likely to rise up on account of production disruptions.
Arguably 5,000 steel workers saved jobs. However, those jobs come at the expense of higher prices on buyers and also at the expense of chicken farmers forced to bear the brunt of retaliation.
Think anything is gained by Tariffs?
Think again.
This has a chance of escalating way out of control if Obama decides to label China a currency manipulator.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Washington Post:
Mortgage bankers group sells D.C. offices to Bethesda company
The Mortgage Bankers Association, its membership expert in real estate, sold its $90 million headquarters in downtown Washington on Friday for $41 million.The industry lobbying group has struggled financially in recent years, as the market collapsed and lending dried up, with members dropping out as they lost their jobs. Its membership fell to 2,500 from 3,000, officials said in 2008
“It’s a little bit of irony that in the middle of the mortgage crisis brought on by the bad lending practices of many members of the Mortgage Bankers Association that they got caught up in the same problem,” said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal research group.
Grand Rapids News:
Saugatuck Township asks voters to approve new tax to fight lawsuits seeking lower property taxes.
Township Board Trustee Jim Hanson said lawsuits by developers and people who try to get property taxes reduced are draining the township’s budget.
Amazingly the city of Saugatuck, Michigan is asking voters to approve a tax hike to fight those seeking tax reductions.
Telegraph:
Labour invents 33 new crimes every month
Thanks to Labour, it is now illegal to swim in the wreck of the Titanic or to sell game birds killed on a Sunday or Christmas Day – eventualities overlooked by previous governments.Labour has made 4,289 activities illegal since the 1997 election, at a rate of about one a day – twice the speed with which the previous Conservative government created crimes.
Gordon Brown was the worst offender, with his government inventing 33 new crimes a month. Tony Blair’s administration made 27 new offences each month.
Some of the more inventive crimes dreamt up by Labour include “disturbing a pack of eggs when directed not to by an authorised officer” and reporting the door of a merchant ship to be closed and locked when it isn’t.
Liberal Democrat home office spokesman Chris Huhne, who brought the figures to light, will criticise the government’s administrative binge in a speech tonight.He will say Labour has spent 12 years “suffering from the most acute and prolonged bout of legislative diarrhoea”.
A Look At Prius
The above by explicit permission.
I will try and have a new one every Sunday.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Joshua Kurlantzick argues that America will not be giving way to Asia as the global hegemon anytime soon.
The New York Times has an interesting article Is Debt Trashing the Euro? It could easily be subtitled How Unions Destroyed Greece. The same thing is happening here. Let’s take a look.
DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year.“Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.”
As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget.
“The risk of contagion is a real one,” said Scott Thiel, the head of European fixed income at the asset management firm BlackRock in London. “Investor sentiment is now focused on countries like Spain and Portugal, where fundamentals are weakest.” He said that for now, he saw little risk for Italy, given the relative stability of its economy.
“We have a centralized monetary policy, but we allow budgets and wages to move in different directions,” said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. “Without a political union, in the long run the euro zone cannot last.”
Indeed, as core economies like those of France and Germany show signs of economic recovery, Greece, Portugal, Ireland and Spain are just entering savage recessions. Spain, the largest of the peripheral economies, announced last week that the number of its unemployed had reached four million — the highest in its history — and warned that the country’s deficit might be worse than previously thought.
TO be sure, Mr. Damianidis is among the smallest of actors in this saga.
Yet his sense of entitlement shows how hard it will be for governments in Portugal, Spain and Italy to persuade their citizens to accept cuts demanded by Brussels as well as bond investors.
The bonuses, he concedes with a smile, have nothing to do with his skill as a high school teacher. “Over the years, whenever workers would strike, they would in some cases get a bonus,” he said, as he sat in a local union office here.
For decades, both conservative and socialist governments in Greece have rewarded the demands of public sector unions with higher pay and more jobs.
In 2009, striking farmers were paid 400 million euros by the government — and this year they are back again, having briefly closed Greece’s border with Bulgaria. Protesting dockworkers extracted big payouts from the government in November. And the country’s tax collectors went on strike on Thursday even though their services are needed more than ever.
Striking is a bit of a national sport in Greece. Last month, the country’s unionized prostitutes took to the streets, protesting unlicensed competition from Russian and Eastern European immigrants.
With concessions and accessions, the country’s budget has become bloated. In Parliament, for example, the administrative staff has increased to 1,500 from 700 in the last few years, even though the number of members of Parliament has remained the same. Last year alone, 29,000 public-sector workers were hired to replace 14,000 who retired, according to the finance ministry.
“There is no end,” said Stefanos Manos, a former minister for the economy in the 1990s and a persistent critic of what he considers spending abuses in Greece. “The hiring and the spending is uncontrollable.”
Errors In Policy Errors In Logic
Mr. Damianidis asks “Why should I as a worker pay for the errors in policies?”
The answer should not be too hard to find: It was those errors in policy that gave unions clowns what they wanted, bankrupting the country. The unions unjustly benefited from their strikes, so it is the unions who should pay the price now.
Greek Farmers Block Highway
Aris Messinis/Agence France-Presse — Getty Images
“Calling for higher prices, Greek farmers blocked a highway last month. The government, running in the red, has long used cash to appease such constituencies. “
Union Greed and Gall in Nevada
Please consider UNION PROTEST: Education supporters rail at rally
A raucous crowd of more than 600 teachers and parents blasted potential state budget cuts for K-12 education during a rally Saturday at Chaparral High School organized by the Clark County Education Association, the teachers’ union. While state Democratic leaders and school and union officials all spoke, some of the biggest applause lines were shouted from the gymnasium bleachers.
Signs like “Will teach for food” and “A pay cut is a tax increase” expressed anger at the governor’s recommendation to cut teachers’ salaries by 6 percent to help close a budget gap brought on by the economic crisis.
Another sign, “Taxes not axes,” uttered what was missing from politicians’ speeches: the mention of any new taxes. The sign holder was Joan Kissling, a science teacher at Brinley Middle School.
Instead of cutting the budget, Kissling said the state needed to raise taxes “on food, whatever it takes.”
Brainwashing Kids
Notice the greed and gall of teachers demanding taxes on food that will fall disproportionally on those who can least afford it, just so they can keep their bloated pensions and undeserved salaries.
Those who wish to see how unions brainwash kids for their benefit, can watch the “Not on my Back” Teacher Rally slideshow.
Union Protest In Utah
Please consider Thousands rally at Capitol to protest retirement bills.
Thousands of public employees including teachers, police officers, firefighters and retirees rallied at the Utah State Capitol Saturday, urging lawmakers against a massive restructuring of retirement benefits.
[See article to play video - Blogger cannot handle this type -Mish]
Several bills will go before the Legislature this session with proposed cuts to the current pension system, 401(k) matching and changes to the practice known as “double dipping.”
A lawmaker sponsoring two of those bills says changes are needed to prevent a catastrophe, but those at the rally have huge concerns.
Public employees who gathered at the Capitol Saturday are worried lawmakers are proceeding too quickly with those changes without really studying the issues. They feel the changes could hurt the recruitment of quality employees in the future.
Sen. Dan Liljenquist, R-Bountiful, has proposed a set of bills that would cut pension system benefits for new employees and do away with the existing 1.5 percent 401(k) match.
If these bills pass, public employees hired after July 1, 2011 would not be eligible for the current pension system plan. Instead, they could either put 8 percent of their salary into a 401(k) type of program or put part of it into a defined benefit pension plan with greatly reduced benefits.
Utah Unions March In Favor Of Their Own Demise
For more on the Utah proposal, please see Bill to End Defined Benefit Plans Under Consideration in Utah.
The amazing thing about the Utah protest is that existing union members would not have to give up anything in Liljenquist’s proposal. His plan only affects new hires after July 1, 2011.
Essentially the Utah union clowns are marching in favor of their own demise given that something has to give, either current salaries and benefits, or future salaries and benefits.
It is amazing how stupid unions can be.
Insanity In Phoenix
Disgusted minds are reading Phoenix gives OK to 2% tax on food.
Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year.The 2 percent food tax will take effect April 1 and expire after five years, though Mayor Phil Gordon said the council has the option of reversing its decision after it hears from the public during 15 budget hearings planned for this month.
Phoenix shoppers who buy paper towels, toothpaste and other non-food items at a grocery store already pay an 8.3 percent sales tax, 2 percent of which goes to the city. But Phoenix has not taxed food items since the early 1980s.
Sign Of Failure
Inquiring minds are reading Phoenix food tax increase a sign of failure.
On Sept. 11, 2007, Phoenix voters were asked to approve an 11 percent increase on the general sales tax that, it was promised, would result in 500 more police and firefighters. On Tuesday, the Phoenix City Council voted to impose a five-year, 2-cent sales tax on food purchased from grocery stores – to save the jobs of 500 police and firefighters. Media reports say Phoenix officials intend to use the food tax revenues to stop staffing cuts announced in January for the police and fire departments.Taxes are a poor substitute for doing the heavy lifting of re-thinking, reorganizing, and re-prioritizing government. Phoenix City Councilman Sal DiCiccio has pointed out that the average cost for a Phoenix city employee is $100,000. In just the past six years, the City of Phoenix budget grew by 59.6 percent, more than double the sum of inflation and population growth.
The current economic downturn started early in 2007, but the fiscal 2010 budget was the first time that Phoenix actually reduced overall spending. Operating expenditures were cut by just 0.6 percent. The General Fund budget, currently only 44 percent of the total budget, saw its first reduction in fiscal 2009.
Clearly, there is a failure by the City of Phoenix to address fundamental reform in the face of shrinking tax revenues.
Tax The Poor To Benefit The Rich
In 6 years the Phoenix budget increased a whopping 59%!
Earth To Phoenix City Council: At contract renewal time, the unions will be asking for a raise. Will you up the taxes to 4%, then 8%, then 12%? When will you and your bloated bureaucracy have the decency to tell union thugs to go to hell?
Phoenix voters, please stand by council members Sal DiCiccio, Bill Gates and Peggy Neely. They deserve your support. Give the rest of the complete fools the boot, including the mayor. Then elect a mayor willing to declare bankruptcy. That is your only hope.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
In light of actual policies coming from Congress and the Obama administration you may be surprised to learn Americans Reject Keynesian Economics.
Richard Nixon once said, “We’re all Keynesians now.” But that was a long time ago, and it’s certainly not the case anymore (if it ever was).While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.
In fact, 59% think Keynes had it backwards and that increasing the deficit at this time would hurt the economy rather than help. To help the economy, most Americans (56%) believe that cutting the deficit is the way to go.
83% Blame Deficit on Politicians
Placing blame squarely where it belongs, 83% Blame Deficit on Politicians’ Unwillingness To Cut Spending.
Eighty-three percent (83%) of Americans say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes.A new Rasmussen Reports national telephone survey shows that just nine percent (9%) of adults put more blame on the unwillingness of taxpayers to pay more in taxes.
Ninety-four percent (94%) of Republicans and 91% of voters not affiliated with either major party place the blame on politicians, and two-thirds (66%) of Democrats agree.
Just 11% of all voters now think the government spends taxpayers’ money wisely and well. Seventy-eight percent (78%) do not believe that to be true.
Again, 90% or more of GOP voters and unaffiliateds don’t think the government handles taxpayers’ money well, compared to 54% of Democrats.
Republicans Trusted More On Key Issues
Please consider Trust on Issues
Voters now trust Republicans more than Democrats on nine out of 10 key issues regularly tracked by Rasmussen Reports.But the latest national survey finds that the two major political parties are much closer this month on the top issue of the economy. Forty-six percent (46%) of voters trust the GOP more on economic issues, while 42% trust Democrats more. Another 12% are undecided. Last month, Republicans held an 11-point edge on the issue and had a 12-point lead in November.
In fact, the latest results mark the highest level of trust in Democrats on economic issues since last May.
Among voters nationwide, 81% see the economy as a very important issue.
Among voters not affiliated with either party, Republicans lead 45% to 32% on economic issues over Democrats. Mainstream voters heavily favor the GOP on economic issues, 58% to 28%. Those in the Political Class trust Democrats more, 84% to 16%.
The plurality of voters (37%) still doesn’t know which party to trust more on government ethics and corruption, an issue voters place second in terms of importance. Democrats now hold a small 33% to 30% edge on the issue, after the parties were tied in January.
Republicans hold double-digit leads over Democrats in terms of trust on the issues of taxes, health care, Social Security, immigration and abortion. In January, Republicans held just a three-point lead on health care.
Forty-six percent (46%) of voters favor a tax cut for all Americans, while 35% are opposed. Forty-one percent (41%) prefer a budget deficit with tax cuts over a balanced budget that requires higher taxes, but 36% favor the opposite approach.
On national security, Republicans are trusted more by a 49% to 40% margin after leading by 17 points in January. This marks the first poll to show Republicans earning less than 50% of voters’ trust on the issue since August of last year.
Recent polling shows that voter confidence in U.S. efforts in the War on Terror is near its lowest level in recent years. Only 36% of voters say the United States is safer today than it was before the terrorist attacks on September 11, 2001, marking the lowest level of confidence since Rasmussen polling first asked the question in 2002.
Partisan Trends
Here’s some encouraging news on partisan trends. The Number of Unaffiliateds Jumps to Highest Total Since 2007.
In January, the number of Americans identifying themselves as Democrats fell another tenth-of-a-percentage point. Now the number of Democrats is at the lowest level recorded in more than seven years of monthly tracking by Rasmussen Reports.However, in January, the number of Republicans in the country dropped by nearly two percentage points.
Currently, 35.4% of American adults view themselves as Democrats. That’s down from 35.5% a month ago and 36.0 two months ago. Prior to last month, the lowest total ever recorded for Democrats was 35.9%, a figure that was reached twice in 2005.
The number of Republicans is now down to 32.3%. The number of Republicans in the country has stayed between 32.3% and 34.05% in every month for the past 18 months.
The number of adults not affiliated with either major party is now up to 32.3%. That’s the highest number of unaffiliateds since the summer of 2007.
This is a welcome trend as it shows ambivalence if not outright mistrust of both parties. It is also a sign that we are going to see a lot of turnover this Autumn. Let’s hope so. I am increasingly of the point of view Republicans stand a good chance at recapturing the House.
When In Doubt, Vote Them Out
I see no reason to trust either party. Moreover, I am hoping voters decide to adopt my policy “When In Doubt, Vote Them Out”, this autumn. Of course, you should also vote out those you know without a doubt are pathetic, starting with anyone whose grand solution is to raise taxes or spend more money.
We need to send a message to Congress and a nice clean sweep would do it.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
While pondering the already stressed housing situation, please consider What Remodelers Need to Know About the EPA’s Lead Paint Rule.
The U.S. Environmental Protection Agency’s Lead: Renovation, Repair and Painting rule governing the work of professional remodelers in homes where there is lead-based paint was published in the Federal Register on Earth Day, April 22. The rule will take effect in April 2010.The rule addresses remodeling and renovation projects disturbing more than six square feet of potentially contaminated painted surfaces for all residential and multifamily structures built prior to 1978 that are inhabited or frequented by pregnant women and children under the age of six.
1. Training and Certification
Beginning in April 2010, firms working in pre-1978 homes will need to be certified. Along with the firm certification, an employee will also need to be certified as a Certified Renovator. This employee will be responsible for training other employees and overseeing work practices and cleaning. The training curriculum is an eight-hour class with two hours of hands-on training. Both the firm and Certified Renovator certifications are valid for five years. A Certified Renovator must take a four-hour refresher course to be recertified.
2. Work Practices
Once work starts on a pre-1978 renovation, the Certified Renovator has a number of responsibilities. Before the work starts this person will post warning signs outside the work area and supervise setting up containment to prevent spreading dust. The rule lists specific containment procedures for both interior and exterior projects. It forbids certain work practices including open flame or torch burning, use of a heat gun that exceeds 1100°F, and high-speed sanding and grinding unless the tool is equipped with a HEPA exhaust control. Once the work is completed, the regulation specifies cleaning and waste disposal procedures. Clean up procedures must be supervised by a certified renovator.
3. Verification and Record Keeping
After clean up is complete the certified renovator must verify the cleaning by matching a cleaning cloth with an EPA verification card. If the cloth appears dirtier or darker than the card the cleaning must be repeated.
A complete file of records on the project must be kept by the certified renovator for three years.
…..
I am not sure how many homes still have lead paint (remember paint on top of paint on top of paint, not just fresh paint) , but those that do are going to cost a lot more to remodel starting Earth Day, April 22.
Addendum:
Here are a few comments worth considering.
Black Swan: This looks like a law contrived by the big home builders.
Hell Is Like Newark: I took the certification course for the new EPA rules last week. I figured it will add about $1500 to $2000 in costs to a typical suburban home when I upgrade the insulation in a home.
Hell Is Like Newark: Enforcement hasn’t been worked out yet. Some States like NY are choosing to enforce it on their own. Contractors will likely have to show their EPA certifications when the renew their permits. The EPA could also offer a part of the $32,500 fine for non-compliance to local building departments if they inspect job sites to make sure the rules are being followed.
Taperwood: Speaking with a little knowledge of the building industry, this will be one of the most ignored laws in the business. Like the speed limit, it simply cannot be enforced. The pre-1978 housing stock is enormous, and the government wants these homes upgraded as quickly as possible. They are cutting their legs out from under themselves.
Mish: Not so fast Taperwood. I think you underestimate the willingness of states, especially California, to punish businesses, hoping to bail out BART and other insanities.
Lori In NC: I love great old architecture, especially some of the older homes that we have here in the US. I find it sad to think that this might deter folks from buying older historical homes that need repair and restoration.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
In response to Are Teachers To Blame For Economic Illiteracy? I received more emails than on anything else I have ever written.
I expected a lot of hate mail from teachers but that was not the case. Most were positive or at least neutral. Many of them are worth printing and indeed I will do bigger sampling later.
Here is an email from Canada that offered a concrete suggestion on one particular problem.
A Canadian Teacher Writes:
Hi Mish,I teach and class size has not been shrinking everywhere. In British Columbia, the student to teacher ratio has increased 10%. Smaller class size provisions were completely stripped and teachers were left with a huge workload and pay falling much faster behind the cost of living than other public sector workers.
The biggest waste of taxpayer’s money is inclusion.
When we were growing up students were held back if they did not meet academic requirements and students that you find in a classroom today were in special programs. For example, I have a 16-year-old girl with about grade 1 skills and nothing will ever change that.
Given a pile of coins, it takes her 5 minutes to figure out which coins add up to $1.38. She is also more like an 8-year-old then a 16-year-old and highly disruptive. The education system truly is never going to do anything for her. Unfortunately, she puts a huge stress on the class everyday and is required to be there. I have another with about grade 3 skills.
These kids will never graduate with a high school diploma, but they will get a leaving certificate.
Instead they should be in a completely separate program that does not worry so much about academics for them. This grade 1 ability girl is never going to be independent and she knows she cannot do math and it absolutely kills her self esteem and it is awful for her to be there daily.
Inclusion has truly increased a teacher’s workload at the same time reduced the overall quality of education. A lot of what teachers were fighting for with smaller classes was to deal with the much larger range of student ability in a classroom.
It seems to me that it was more economical to not have these kids in a regular school program and to require students to repeat or go to summer school if they are not keeping up academically.
Teachers have lost a lot of control over kids who now understand there is no summer school consequence for just deciding they don’t feel like doing their work. They get passed ahead regardless of academic ability because inclusion says keep them with their grade level peers.
Thanks “Canadian Teacher”.
I could not use her name out of fear of reprisal. Teachers are just not allowed to say anything against administration or school board decisions. Clearly this is a failed policy decision.
Is this a result of “No Child Left Behind” kinds of programs like we have here in the US?
Such policies ensure that in any class with such disruptive students, all children (in that class) will be left behind. No doubt the parents of such kids think their students deserve $million programs to help their kids catch up.
Sorry folks. We need some rules.
Proposed Rules
Teachers should be more than baby sitters, and students who are disruptive and hopelessly behind should be kicked out of school. “No Child Left Behind” programs that push kids along whether they are ready or not, really means “All Children Left Behind”.
Keeping hopeless teachers in the system does the same thing. It is high time for merit pay for teachers as well as “combat pay” for exceptional teachers willing to teach in troubled inner-city schools. Unions are against both those ideas.
Addendum:
There are a few good responses to this post already.
Waxwing:
No Child Left Behind = No Child Gets Ahead
Tin Hat:
A teacher friend of mine claims that a class can only learn as much as the slowest student.In these cases, the brilliant are marginalized in favor of those who, through no fault of their own, can not learn. This kind of setting is not only bad for the gifted and the average, it’s bad for the challenged. Every one loses.
Society has a very serious problem of playing pretend. Pretend deficits don’t matter, pretend the challenged can keep up, pretend the smart aren’t dumbed down, pretend rewarding failure creates success, pretend globalism works, pretend banks are solvent, pretend jobs don’t matter, pretend unemployment is under 10%, pretend the market is sound, pretend Capital Hill listens to their constituents, pretend campaign donations aren’t bribes, pretend the US hasn’t gone corporatist, pretend the economy has recovered…pretend, pretend, pretend.
Gildas:
Social engineers refuse to recognize the difference between stupidity and ignorance: the latter can be corrected, but the former cannot be because it is innate.Ignorance abounds in education, and stupidity seems to be catching up.
Steve:
When I started High School, way back in the 70s, I went to a very academically rigorous School. There were different tracks for students with different abilities. I was placed in advanced math, science and English tracks. I loved it. After years of sitting in classes waiting for the other students to catch up I was finally challenged and forced to push myself.But then we moved. We moved to a progressive area outside San Francisco that embraced the new doctrine of “inclusion”. The worst readers were lumped with the best readers. Those who couldn’t add and subtract were lumped with those who were ready for Trig and Calculus. This meant that everything was always geared to the slowest.
There were no advanced classes in math or science or anything else because that was thought to stigmatize the less intelligent and make them feel dumb. Some teachers didn’t believe in grades. Some teachers didn’t believe in homework. It was SO very progressive.
The end result was that my last three years of high school were a waste. I’ve always resented the fact that my education was stunted because the needs of the slow, the average and the uncaring students were put above those of the best students. The few who loved to learn and were capable of making great progress were shunted aside.
And this was back in the day before disruptive students and hostile parents became the norm. I shudder to think what High School must be like for the academically gifted now.
Our public school system now exists primarily to babysit and to regiment and to perpetuate the jobs of educators. It’s not about education because only one in ten students even cares about learning. I’d be perfectly happy to see the massive bureaucratic public school systems broken up. Let people keep their taxes and send their kids to private schools. Let a variety of private schools spring up that serve the needs of various students - schools that would be free to boot the bad apples. People recoil in horror when you mention this idea but the public school system is a perfect candidate to be privatized.
Indeed, public education should be privatized. Disruptive kids would be kicked out of class. Pay would be on merit. Those left behind would be those who should be left behind. What a difference!
Steve B via Email:
Mish, if you haven’t discovered him, John Taylor Gatto has a couple of books on the topic of Public Schooling that I consider must reads.If you want to read him online, you can do so here: Underground History of American Education.
He wrote a more succinct summary of that material and you can get that from Amazon:
Weapons of Mass Instruction: A Schoolteacher’s Journey through the Dark World of Compulsory SchoolingRegards,
Steve B
Thanks Steve B.
In looking that up, I see a book that John Taylor Gatto endorses on the back cover. It’s called Radical Unschooling - A revolution Has Begun.
Gatow writes: “Full of brilliant common sense! Mrs. Martin takes us behind the curtain to see in rich detail what alternative education really looks like when it bestows on its subjects the freedom to choose. Every parent who feels compelled to give their kids into the care of total strangers should read this book.”
Shannon via Email writes:
Great read, Mish.All things have a price. It’s how we make decisions on everything we do. I’m sure you’re well aware of this. And, if this is true, then what is the price of an education? This is the great unknown. Of course, we can tally all the money that comes in and divide it by the number of students and say this is the cost of an education, but such numbers are distorted.
In a socialistic industry such as education, it is impossible to attach any meaningful price tag to the product. The parents of the students have a belief that the education is free. This in turn sends a signal to the industry that there is no scarcity of resources (mainly money).
When there is a belief of no scarcity in resources, there are no free market forces to keep the checks and balances in place and spending always gets out of control.
I send my kids to a private school and because of the rising cost of resources in the public sector it is driving up the cost in the private sector (I’m almost priced out of the market).
I would love to see the public education competing on the free market with a private education. When that happens then the true price of an education would be revealed and all jobs related to this industry would have their day of reckoning.
This “price” would also force parents to be more active in their kid’s education and take away the “baby sitter” effect for the teachers. The free market would fix everything wrong with the system. I know… this is merely a dream.
P.S. I’ve started getting into the habit of asking people the price question for everything… especially for our military and war. It works great and really gets them thinking.
Keep up the great work!
Shannon
Thank you Shannon.
That was a tremendous response.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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In a welcome display of fiscal sanity, Utah state Senator Dan Liljenquist has proposed doing away with defined benefit plans for state employees. His proposal would eliminate such plans for new hires, effective July 1, 2011.
The Salt Lake Tribune covers the story in Retirement rumble ready to roll.
Depending on whom you talk to, the state retirement system that covers 182,000 current and former public employees is either a toxic mess, or a system that suffered a setback but doesn’t need an urgent overhaul.That disagreement — surely to be one of the defining battles of the 2010 session — will be thrust into the forefront in the coming days as Sen. Dan Liljenquist, R-Bountiful, plows ahead with his bills to restructure the retirement system, and the public employee unions push back with opposition from the thousands of members they represent.
The economic slump cost the state 22 percent of the pension fund’s overall value and blew a $6.5 billion hole in the long-term needs.
The state can either keep pumping $400 million into the system — enough to hire 8,000 new teachers — or it can change the system to ensure its long-term stability.
A set of bills Liljenquist is proposing would essentially do away with the state’s defined-benefit pension system for new employees. Instead, those hired after July 1, 2011, could either put 8 percent of their salary into a 401(k)-style program, or put part of it into a defined benefit pension plan with greatly reduced benefits.
Audry Wood, executive director of the Utah Public Employees Association, said everyone recognizes the damage done by the economic downturn, and they are not opposing changes, if they are needed. “What type of employees are you going to be able to recruit offering benefits like that?” she asks. “You’re going to have crappy benefits and crappy pay?”
I propose Ms. Wood stand on the corner and hold up a sign “Workers wanted. No benefits” and see how many apply. For every qualified person that does, I propose firing one union employee.
Liljenquist’s proposal would guarantee the benefits of all existing workers. The alternative is probable bankruptcy of the pension fund, all for the sake of future hires they have not even met.
“We are going to meet 100 percent of our obligations to current employees,” Liljenquist said. “I can look my neighbor in the eye who’s 15 years in [as a public employee] and say, ‘I’m doing this for you.’”
Given the horrendous shape of Utah’s pension plans, Liljenquist’s plan is extremely generous. However, in a blatantly stupid act, the labor unions have a rally planned to protest the proposed changes. Unions always want more.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Inquiring minds are questioning the solvency of the Chinese banking system. Please consider China Defaulting Loans Soar, Insolvency Lawyer Says.
Non-performing loans in China have risen into the “trillions of renminbi” because of poor lending practices, an insolvency lawyer said.“We work really closely with SASAC, the state-owned enterprise regulator in China, and there are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China that no one is doing anything about,” Neil McDonald, a Hong Kong-based business restructuring and insolvency partner with Lovells LLP, said at an Asia-Pacific Loan Market Association conference yesterday. “At some point there’s going to be a reckoning for that.”
China’s government is tightening controls, including banks’ reserve ratios, to prevent record lending from fueling inflation. The Shanghai office of the China Banking Regulatory Commission warned yesterday that a 10 percent fall in property values would treble the number of delinquent loans in the city. Liu Mingkang, chairman of the CBRC, said Jan. 4 that loans were channeled into stock and property speculation last year, which China has been taking measures to stop. CBRC’s press officer is not immediately available for comment today.
Chinese banks issued a record 9.6 trillion yuan ($1.4 trillion) of new loans last year as part of a 4 trillion yuan stimulus package aimed at bolstering growth through the global financial crisis.
Should property prices fall 10 percent in Shanghai, China’s second-most-expensive property market, the ratio of delinquent mortgages would almost triple for the city’s banks to 1.18 percent, according to the Shanghai branch of the CBRC yesterday, citing a stress test based on Sept. 30 figures. A 30 percent decline would cause the ratio to jump almost fivefold, the agency said.
Fitch Ratings said Dec. 17 that Chinese banks’ capital strength is probably more “strained” than it appears as lenders use more off-balance sheet transactions to make room for loans.
I am amazed at the number of people sucked into the “China Story”, about how undervalued the RMB is, and what amazing growth China has. The real story is China is a command economy, printing trillions of RMB, funding numerous apartment complexes, malls, and even entire cities where no one lives.
In centrally planned economies, when the government says lend, banks lend. Supposedly this is “growth”. It isn’t. One must not mistake Ponzi financing for growth.
The US, led by Hillary Clinton and president Obama, is putting enormous pressure on China to float the RMB, in expectation that it would rise and US exports would soar. I believe that if China floated the RMB on the Forex markets, it might crash.
Mike “Mish” Shedlock
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