Mish's Global Economic Trend Analysis

$10,000 Scholarship for College Student Bloggers
Greek Strikes on Eve of Critical Vote; Expect Violence
Restaurants to Mitigate Health Care Costs by Cutting Hours; Reflections on Productivity
Don't Throw Your Vote Away; Reflections on "Lesser of Two Evils"

$10,000 Scholarship for College Student Bloggers

Posted: 06 Nov 2012 02:39 PM PST

Are you in college and are you a blogger?
If so you are eligible to Win a 10,000 Scholarship.

Scholarship Requirements

Your blog must contain unique and interesting information about you and/or things you are passionate about. No spam bloggers please!!!
U.S. citizen or permanent resident;
Currently attending full-time in post-secondary education in the United States; and
If you win, you must be willing to allow us to list your name and blog on this page. We want to be able to say we knew you before you became a well educated, rich, and famous blogging legend.

Applications were taken starting October 28, 2012 and the submission deadline is November 13, 2012.

Please see the link at the top for details.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Greek Strikes on Eve of Critical Vote; Expect Violence

Posted: 06 Nov 2012 12:45 PM PST

In spite of all the huffing and puffing and bluffing, once again the Greek puppets will likely dance to the strings of the Troika and pass austerity measures required for Greece to get the next tranche of money.

Unions, lawyers, pensioners, and workers in general are not pleased with Prime Minister Antonis Samaras and have planned a major series of strikes.

I expect violence if Samaras musters the votes to pass the bills. There is likely to be violence before the vote as well.

Please consider Greeks Plan Strikes On Eve of Votes

On Monday, public-transit workers, taxi owners and journalists around the Greek capital walked off the job in protest of the €13.5 billion ($17.3 billion) austerity and reform package to be voted on Wednesday. On Tuesday and Wednesday, all public-sector services are expected to be frozen in a 48-hour general strike called by the country's two umbrella unions—private sector GSEE and public sector Adedy—bringing chaos to the Greek capital.

They are to be joined by lawyers, engineers, hospital staff, power workers, telecommunications workers, dentists, local government employees, bank personnel, teachers, dock workers, air-traffic controllers and radio technicians—who are planning either all-day walkouts, or shorter work stoppages.

Most analysts say the government is expected to narrowly carry the austerity vote Wednesday, as well as the 2013 budget vote on Sunday.

On Monday, Greece submitted to Parliament a draft bill cutting public servants' salaries and pensions, and increasing the retirement age as part of the austerity plan being demanded by international creditors.

Pensions would be cut by up to 15%, depending on income levels, retirement bonuses for public-sector employees would be slashed by up to 83% and the retirement age would be raised to 67 from 65 years old. Other changes include dropping Christmas and Easter bonuses paid to public-sector employees, deregulating sectors such as taxis, and introducing labor reforms.

The problem, however, is Greece's increasingly wobbly coalition, which remains riven by internal dissent. The three parties that make up the coalition—the conservative New Democracy, the Socialist Pasok and small Democratic Left—nominally control 176 seats in Greece's 300-member Parliament. But the Democratic Left has said it would abstain from the vote Wednesday because of a dispute over the labor reforms, while there are signs that a handful of Pasok lawmakers may break with the party ranks and not back the austerity program.

As a result, Wednesday's vote could squeak by with only a wafer-thin majority of three to six votes, say analysts, raising questions about the long-term cohesion of the coalition, formed in June after closely fought national elections left no party with an absolute majority in Parliament. A collapse of the coalition could lead to fresh elections and give the opposition, radical-left Syriza party—which opposes the terms of Greece's €173 billion bailout—a chance to grab power.

One curious aspect of this vote is everyone seem to think it will pass (even if by a slim margin). In votes for prior austerity measures, there appeared to be more doubt than now.

If there is massive violence ahead of the vote, then perhaps it does not pass.

The journal notes "If elections were held today, only 20% of Greeks respondents said they would vote for New Democracy—down from 29.7% in June—while Pasok saw its support cut almost in half to 6.5%, and Democratic Left by a third to just 4% and Syriza would garner 23% support, down from 26.9% in June."

Those percentages total only 53.5%. If all of those parties are losing votes then where are the votes going? Here's the depressing answer: the Neo-Nazi Golden Dawn party.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Restaurants to Mitigate Health Care Costs by Cutting Hours; Reflections on Productivity

Posted: 06 Nov 2012 07:46 AM PST

NPR "Restaurant News" confirms exactly what I have been saying about Obamacare: Restaurants to Mitigate Health Care Costs by Cutting Hours.

"What we're seeing is that this health care law puts unique challenges on chain restaurants," said Rob Green, executive director of the National Council of Chain Restaurants. "The law will have cost implications on a lot of different business sectors, but restaurants and retail are in the bull's eye."

Specifically, two parts of the PPACA may raise costs for restaurant chains: The definition of full-time employees as those who work 30 or more hours per week, rather than the traditional 37-40 hours per week, and the fact that the law applies to any business with more than 50 employees — a number some say will discourage franchise growth.

Orlando-based Darden Restaurants Inc., which operates more than 2,000 restaurants under the Olive Garden, Red Lobster, LongHorn Steakhouse and other brands, is currently testing limiting some employees to 29.5-hour work weeks in some markets. "This is just a test," said Rich Jeffers, the casual-dining company's director of media relations and communications. "This is something we're trying at some locations…we're trying to figure out the optimal mix [of employees] for our restaurants."

Currently, about 75 percent of Darden's employees are part time and 25 percent are full time, he said. "We're looking at it now instead of waiting until the eleventh hour," he noted, adding that Darden had not made any decisions based on the analysis.

Jimmy John Liautaud, chief executive officer of Jimmy John's Gourmet Sandwiches, spoke Monday on Your World w/ Cavuto on the Fox News Channel about possible ramifications of the health care law.

During the interview with talk show host Neil Cavuto, Liautaud said his company will be forced to cut employee hours as a result of the PPACA. However, Jimmy John's has not yet reduced hours or raised prices, he said.

"We're not doing it now," he said. "But we have to bring [employees] down to 28 hours. There's no other way we can survive it, because we think it will cost us 50 cents a sandwich."

Liautaud added, "It's very expensive just to pay the penalty as well. We have to manage around it." The penalty for not offering health insurance to employees, he said, is $2,000 per employee. That means if a company has 40 or 50 employees at a specific restaurant location, not offering health care could cost up to $100,000.
The law may also adversely impact franchisees who want to grow their businesses beyond the 50-employee threshold, said Matthew Haller, vice president of public affairs at the International Franchise Association. "It puts people who want to grow at a disadvantage," he said. "The costs are very real and very scary."

David Barr, a Kentucky Fried Chicken franchisee who owns 22 locations thinks most franchisees aren't looking at the law closely enough, he added.

One aspect of the law that Barr believes franchisees need to pay more attention to is the "measurement period," or the time during which employee hours will be measured to determine their status as full time or part time. Barr's 12-month measurement period begins in January 2013, meaning that he has to start analyzing employee statuses now, he said.

Barr is currently looking at employees who work between 30-33 hours per week and will likely be reducing their hours to below the 30-hour threshold, he said.

Misdiagnosing the Setup

Reader "Flapping Eagle" says I have it wrong and Obamacare will cause unemployment to rise. Here is his logic:

When you can only work 25 hours at a job, you have ample time to work two jobs.

In this situation the better low-wage employees will all quickly have two jobs freezing out a large number of people from any job. I can easily envision a scenario where a Red Lobster and an Olive Garden work out a system of schedules so that the good employees can get 25 hours at each restaurant with no scheduling conflicts.

Remember I said it first, this will cause unemployment to go up, not down as many are suggesting.

Flap

Flawed Analysis

Did you catch the flaws in Flap's analysis?

I responded to Flap as follows: Many, perhaps most of these part-time workers have hours or shifts that change week to week. Moreover, they are expected to be on call in case someone is sick. Scheduling two 25 hour weeks, both subject to change and call-ins does not work!

Furthermore Red Lobster and an Olive Garden are part of the same chain. The employer, Darden Restaurants, would increase full-time employment if it did what Flap suggested, and that is precisely what the chains want to avoid.

Reflections on Productivity

This will be resolved in the manner that I said, with one more peculiarity that I failed to mention earlier. Productivity will go down. People want more hours and get less of them. Morale will suffer.

Also, some of these new hires are marginal. I have run into the issue twice already. I have had clearly new, as well as inept waiters at two different Olive Gardens in the past month.

Restaurants are hiring to avoid Obamacare ramifications, and that hiring has lowered the unemployment rate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Don't Throw Your Vote Away; Reflections on "Lesser of Two Evils"

Posted: 05 Nov 2012 11:26 PM PST

I have unwaveringly stated I will not vote for either president Obama or Mitt Romney. That position has not changed.

I wrote about that point of view on September 19 in QE to Infinity and Beyond; Mish for President?

In response, I received quite a few emails from people stating they would indeed write in "Mish" for president.

I deeply appreciate the support. However, here we are on election eve (or election morning depending on your time zone), and I need to tell you something slightly different.

The reason is not all states count write-in votes. For example, in Illinois, write in votes are only counted if someone declares write-in candidacy via a specific date.

I missed the Illinois deadline. I also missed any other such deadlines in other states as well.

Stand Up and Be Counted

So as much as I appreciate the support, I have to advise, that if you want your vote to be counted, you likely have to vote for an official candidate.

Sadly, that means you cannot vote for Ron Paul, for me, for yourself, or anyone other than an official declared and filed candidate.

Dissatisfied With Obama and Mitt Romney?

Are you disastified with the mainstream Republican and Democratic candidates?

If so, I wonder if you are not in the majority. Yet, people will foolishly vote for one or the other on the misguided grounds of "lesser of two evils".

Reflections on "Lesser of Two Evils"

Here is my basic thought. If you keep voting for the lesser of two evils, then you will continually be presented with two evil choices! (Use your own definition of evil).

Does either of these candidates represent mainstream US thinking? I think not. So why not opt out of such choices?

Here's the deal. In all but a handful of states, the election has already been satisfied. For example, if you live in California you may as well piss in the wind as to go vote for Mitt Romney.

Likewise, if you live in Montana, a vote for Obama is a wasted vote. So why do it?

Don't Throw Your Vote Away

My friend Arkady "Ari" Kamenetsky on the Right Condition blog suggests the same thing in his article Why voting third party is exactly the opposite of throwing your vote away.

Ari posts an amusing flowchart leading voters to a choice that says vote for the Libertarian candidate Gary Johnson. The flowchart has some mathematical flaws (such as infinite loop connections that cannot be resolved), yet his article is a sound one.

Specifically Ari asks ... "Are you tired of the two party system? Are you tired that every 4 years the choice becomes less and less obvious? Are you tired of voting for the same big spending, big military, big prohibition, less rights and more intervention party? Do you even believe that there are two parties anymore? Unless your entire political concern lies somewhere in the abortion/religion/homosexuality triangle then you are probably yearning for more."

Well my answer to Ari's first question is "yes". I am indeed tired of the choices presented. I wrote in Ron Paul in the last two elections and was going to write in "Mish" for this one.

However, I want my vote to be counted. Therefore, I am going to vote for Libertarian candidate Gary Johnson.

Gary Earl Johnson is an American businessman, a former Governor of New Mexico, and the Libertarian Party nominee for President of the United States in the 2012 election.

Several months ago I took a survey that showed I had 96% of my views in common with Ron Paul and 95% in common with Gary Johnson.

Clearly I have 100% of my views in common with myself, but 95% is good enough.

Even if you have far less in common with Johnson, if you live in a decided state, then you have nothing to lose by voting for him, and everything to gain.

If you do not like either Obama or Romney, please consider a protest vote for Johnson because that will be counted but a vote for Mish may not be.

Apologies if you did not see this in time. I meant for this post to go out much sooner.

Don't Throw Your Love (or your vote) Away

I offer this musical tribute for your vote.

Link if the above video does not play: The Searchers - Don't Throw Your Love Away

Election Night Coverage With Mish on National Radio

Regardless of the outcome, I will be on Coast-to-Coast national syndicated radio with George Noory to discuss the election results and the impact on the stock market and jobs.

The broadcast starts at midnight Central, 10 PM Pacific.

Click here for a station in your area, many of which have an internet broadcast feed, even if none are close by.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Economy News

6.11.12

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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