Mish's Global Economic Trend Analysis

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Douglas County Colorado Proposal Seeks to Terminate Collective Bargaining of Teachers' Unions Posted: 25 Aug 2012 07:33 PM PDT Three members of the Douglas County School Board have floated proposals to terminate dealings with teacher's unions. Three board members proposed three separate ballot questions, each chipping away at what have been traditional district-union relationships in the affluent county south of Denver. Should the district be prohibited from using public funding for the compensation of union leaders? Should the district be prohibited from collecting union dues from employee paychecks on the union's behalf? Should the district be prohibited from engaging in collective bargaining with the union? Board members are expected to vote at their Sept. 4 meeting on which of the questions – or all or none of them – to place before voters on Nov. 6. School boards have until Sept. 7 to submit ballot language to their county elections officials. Three Superb Ideas Hopefully this is the start of a trend because those are three superb ideas. I commend the board members for those ideas. Willfully dealing with public unions when you don't have to is blatantly stupid. Unions are 100% guaranteed to increase costs and reduce productivity, then demand tax hikes on top of it, while whining the whole while "it's for the kids" The clear-cut way to do something for the kids would be to eliminate the unions and pass some of the saving on to hire more teachers. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Home Sellers Get Realistic in Australia; Mining Companies Going Bust in Record Numbers; Australia Headed for Disaster Zone Posted: 25 Aug 2012 09:11 AM PDT Real estate agents in Australia who assured everyone for years there was no housing bubble and home prices would only ever go up because there was a "shortage of houses" are now telling everyone who is stuck in a house they cannot afford that they have prices too high. What this means of course is real estate agents are selling few homes, thus making little in commissions so they need prices to come down. What the agents don't realize is this is the beginning of a trend and home prices, some drastically reduced already, still have much further to fall. The Sunshine Coast Daily reports Sellers get realistic with cuts The prices of some Sunshine Coast properties have been slashed by a million dollars as owners look to shift homes that have been stewing on the market for up to four years. A Sunshine Beach property that was on the market in 2008 for $2.6 million has been reduced to $1.595 million while a Cooroy property for sale for $3.15 million in 2009 has been discounted $1.155 million. A list of the top 25 discounted properties from the SQM Research shows prices discounted between 24% and 40%. The head of SQM Research, Louis Christopher, said the discounting was the result of vendors being forced to correct unrealistic price expectations. "Many are not willing to accept where the buyers are at. They can't handle, psychologically, that this is what their property is worth," he said. The discounting on the Sunshine Coast was not confined to any area or price range. SQM's list showed price cuts at beachside locations from Mooloolaba through to Noosa Heads and Rainbow Beach, and out to the hinterland villages of Mapleton, Cooroy and Imbil. In Due Time My Little Pretty This article is sure to trigger complaints "It's only the Sunshine Coast" or some other such nonsense as if large cities and more populated areas will not be affected to this degree. In due time my little pretty, all in due time. Back in the Solar System   By the way, the article said sellers are realistic. What the writer meant was "back in the solar system" as opposed to "realistic". Until homes are selling in normal transaction volumes for sustained periods, sellers will not really be "realistic". Risk of Recession? Remember how the boom in China was guaranteed to prevent falling prices for iron ore and other commodities? Recall that such nonsense was supposed to prevent a recession. More reality has set in as Australia faces growing risk of recession in 2013 ONE of Europe's biggest banks today warned of the growing risk of recession in Australia in 2013, as prices for its key commodities such as iron ore and coal spiral lower. The warning by Deutsche Bank comes amid rising concern that Australia's mining investment boom, which has insulated the commodity-rich economy from a global slowdown, is waning, leading to mine expansions being scaled back and mounting job losses. Policy makers are "dangerously complacent" about the risk now arrayed against the $1.4 trillion economy, which relies heavily on prices paid for its biggest exports - iron ore, coal and gas - for its prosperity. The assessment stands in stark contrast to the upbeat appraisal by the RBA, which earlier this month upwardly revised its forecast for economic growth in 2012 to 3.5 per cent, from 3 per cent. The RBA today said it expected the mining investment boom to peak during 2013-14, but added the timing of the peak was uncertain. Also today, corporate insolvencies hit a record high in the year to June 30, according to the Australian Securities and Investment Commission. Mining states are among the worst hit, it said. "We see one of the mining boom states, Queensland, showing one of the most dramatic increases in corporate failures," ASIC said. "Western Australia's financial year company failure figure is also the highest on record for that state." Mining Companies Going Bust in Record Numbers The idea the investment boom will keep going until 2014 is complete nonsense given mining companies are going insolvent at record highs. The upward GDP revision by the Reserve Bank of Australia is also nonsense. One really has to wonder what those clowns are smoking. Iron Ore Prices Near Three-Year Low The Financial Times reports Iron Ore Prices Near Three-Year Low. Iron ore prices have fallen to their lowest since late 2009 as steelmakers in Europe curtail purchases, forcing miners to sell their output in the congested Asian market. Iron ore traders and brokers said Vale of Brazil, the world's largest iron ore miner, was diverting part of the material usually identified for European steel mills into the Asian spot market at the precise moment Chinese consumption slows down, forming a glut. Iron ore has been a cash-cow for the mining sector during the past five years and the current drop in prices is affecting substantially the profitability of blue-chip miners Vale and London-listed Rio Tinto, BHP Billiton and Anglo American. Cost of Chinese steel has also plunged to levels last seen nearly three years ago, emphasising the depth of the slowdown in the world's second-biggest economy. Analysts at Nomura said they were "very concerned" that Chinese steel mills had increased production at the same time as prices fell and many of them had struggled to make a profit. "The recent collapse in steel and iron ore prices suggests to us that we have reached the point in the cycle where a major destock is required," Nomura said. "If production is not cut voluntarily, imbalances will continue to build, increasing the risk of a large, involuntary cut in steel production." Last month the China Iron and Steel Association said domestic steelmakers saw profits plunge 96 per cent in the first half compared with a year ago, turning the industry into a "disaster zone". Disaster Zone for Corporate Profits China has slowed, as predicted in this corner, and commodity prices, especially coal and iron ore are taking a hit. Growth in China will slow much further over the next decade and that pain has yet to be felt. Here are a few pertinent links August 16, 2012: Pettis on Debt, Currency Wars, Commodity Prices and Capital Flight; China FDI Contracts 8.7% YoY, 8th Drop in 9 Months   March 30, 2012: The Dating Game: Michael Pettis Challenges The Economist to a Bet on China   August 22, 2011: Long-Term Outlook for China, Europe, and the World; 12 Global The housing bust coupled with a commodity bust and a commercial real estate bust is going to turn most of Australia into a disaster zone for profits. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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