| Incredible Letter from CEO of Titan to France Minister of Industrial Renewal, Blasting French Unions and USA: "How Stupid Do You Think We Are?" Posted: 19 Feb 2013 04:45 PM PST I like it when people speak their minds. I like it even more when they are correct and they blast government officials at the highest levels. And I especially like it when the person blasting government is a prominent person. Thus I am pleased to report an incredible letter from the CEO of Titan to Arnaud Montebourg, Minister of Industrial Renewal of France, criticizing not only French unions but unions in the USA. Via Google translate from Les Echos, please consider Incredible Email From the CEO of Titan to Montebourg. "Les Echos" received a copy of the letter which the President of the American Titan told the Minister of Industrial Renewal why he threw in the towel on purchasing the Goodyear plant Amiens Nord, in a very direct style. "How Stupid Do You Think We Are?" Here are some excerpts I transcribed from an image of the letter posted on Les Echos. Dear Mr. Montebourg:
Goodyear tried for over four years to save part of the Amiens jobs that are some of the highest paid, but the French unions and French government did nothing but talk.
I have visited the factory a couple of times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three. I told this to the French union workers to their faces. They told me that's the French way!
The Chinese are shipping tires into France - really all over Europe - and yet you do nothing. In five years, Michelin won't be able to produce tire in France. France will lose its industrial business because government is more government.
Sir, your letter states you want Titan to start a discussion. How stupid do you think we are? Titan is the one with money and talent to produce tires. What does the crazy union have? It has the French government. The French farmer wants cheap tire. He does not care if the tires are from China or India and governments are subsidizing them. Your government doesn't care either. "We're French!"
The US government is not much better than the French. Titan had to pay millions to Washington lawyers to sue the Chinese tire companies because of their subsidizing. Titan won. The government collects the duties. We don't get the duties, the government does.
Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour and ship all the tires France needs. You can keep the so-called workers. Titan has no interest in the Amien North factory.
Best regards,
Maurice M. Taylor, Jr.
Chairman and CEO Morry "the Griz" Taylor A quick internet search led me to Maurice Taylor Taylor was nicknamed "The Grizz" by Wall Street analysts for his tough negotiating style. Taylor has transformed Titan from a small wheel manufacturing business to a global producer of off-highway wheel and tire systems. Taylor has been in the wheel manufacturing business for over 30 years, and has worked with Titan in various sales, engineering and management positions. He attended Michigan Tech. Taylor served as president and CEO of the company from 1990 to 2005, when he became chairman and CEO.
In 1996, Taylor ran as a Republican candidate for President of the United States, campaigning to bring sound fiscal management and business know-how to Washington. Further Reading For further reading, please consider economically insane proposal by French president Francois Hollande "Make Layoffs So Expensive For Companies That It's Not Worth It" Given that any clear-thinking person should quickly realize that if companies cannot fire workers they will be extremely reluctant to hire them in the first place, it should be no surprise to discover French Unemployment Highest in 14 Years (And It's Going to Get Much Worse). In France, Government spending amounts to 55% of total domestic output. For discussion, please see Hollande's Honeymoon is Over; 54% of Voters Unhappy; Unions Promise "War" in September. Please note that the French Labour Minister says France Totally Bankrupt Finally, please consider Illusions of Stabilization. I Expect things in France to get worse at an accelerated pace. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| About That Surprise California Budget "Surplus": There is No Surprise and No Surplus Either Posted: 19 Feb 2013 11:50 AM PST Last month writers were all aglow on the state of finances in California. For example ... Accounting Anomaly Today we learn the surprise $5-billion bump in revenue in January is likely an accounting anomaly as a result of tax changes. The surge of revenue that showed up unexpectedly in state coffers last month may well be offset by a revenue dip in coming months, according to Gov. Jerry Brown's administration. The surprise money has been the source of much speculation in the Capitol. Unanticipated tax receipts filled state coffers with more than $5 billion beyond initial projections for January — more tax dollars than are allocated to the entire state university system in a year.
The revenue bump was historic. But the question for budget experts was whether lawmakers could begin allocating the windfall toward government programs and tax breaks — or whether the money amounted to an accounting anomaly.
Brown's budget office now advises in an official cash report that it is probably the latter. The report says the extra money was "likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts."
That is: Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in. Surprise! Surprise! Surprise! There is no surprise. Are you surprised by the non-surprise? I am not. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| European Reader Offers Insights on Upcoming Italian Election Posted: 19 Feb 2013 09:49 AM PST Reader "AC" who is from Italy but now lives in France has some very interesting thoughts on the upcoming elections in Italy. "AC" writes ... Hi Mish,
Italian elections will take place this weekend.
A hung Parliament is likely. This is due to the highly fractionated political landscape in conjunction with electoral law that favors such an outcome.
In the Chamber of Deputies (the lower house of Italy's parliament) voting rules give extra seats to the largest party by popular vote. Senate seats (the upper house) are allocated on a regional basis.
Chamber of Deputies Analysis
- The Center-Left coalition (Bersani) is losing steam but will likely end up with the highest percentage of votes.
- The Center-Right (Berlusconi) is recovering strongly and cannot be entirely discounted.
- Monti's center coalition will likely score poorly, between at 10 and 13%.
- Rivoluzione Civile (far left) will likely score between 4 and 6%, and may be unable to reach the Chamber access threshold (4%).
- Beppe Grillo's Movimento 5 Stelle (Five Star Movement) is again on the rise. Movimento 5 Stelle may even reach 20% and become the second largest party in the country.
- The first wild card is a high and rising number of undecided voters.
- A second wildcard factor is the recent rise of "Fare per Fermare il Declino" (literally "Act to Stop the Decline", acronym FiD), a primarily Libertarian party founded less than a year ago.
Grillo's public meetings are getting "oceanic", he is attracting many people disappointed with this political class with a very populist program.
In the campaign you can hear some extremely populist proposals, most of them from Grillo, Berlusconi, and Rivoluzione Civile.
Populist Proposals
- Give back Real Estate tax collected in 2012 (Berlusconi)
- Forbid foreclosure of the main house of a person or a family in case of delinquency (Grillo and Berlusconi). Imagine the effect on mortgage issuance!
- Give a minimum guaranteed survival wage from the government to all those are unemployed (Grillo, Rivoluzione Civile).
- Even Monti is promising to cut taxes, the same taxes he decreed (and that center-left and center right approved as well).
Assuming the Center-Left hangs on to win the Chamber, the outcome in the Senate is crucial as to whether or not there is a hung Parliament. The regions are, Lombardy, Veneto, Lazio, Sicily, Campania. By far the most important is Lombardy, with the highest number of senators.
In regards to the Senate outcome, it's important to look at a very recent rise of FiD, "Fare per Fermare il Declino".
FiD was founded by a liberal/libertarian economic journalist (Oscar Giannino) and free-market oriented economists, some of them teaching in the US.
FiD has a program of 10 main points. They have a "pro-market" agenda, not a "pro-business" agenda. The party is extremely disappointed with the policies of Berlusconi and Monti.
They want to stay on the euro, deeply cut public spending, and deeply cut taxes as well. They also want to reduce public debt via sales of public assets, cut highest pensions, and reform the job market.
Their proposals are the most libertarian ever seen in Italy and extremely aggressive by Italian standards.
The party has very little support from media and no "brand awareness" yet they seem to be in a fast upward trend in social media. Some FiD messages and campaigns are going viral, perhaps a sign that something is brewing.
FiD may be able to overcome the access threshold for Chamber at national level and for Senate as well in some key regions. That would be an amazing result. It would probably be the first time that in a "Club Med" country the crisis makes stronger a libertarian party instead of far right or far left.
Another key point is that a significant turnout for FiD could be at the expense of Berlusconi or Monti, especially in the 2 key regions, Lombardy and Veneto. Should that happen, it could help the center-left get the relative majority it needs to avoid a hung Parliament.
Best regards,
AC Addendum: Turmoil in FiD I received the above email a couple days ago. This morning "AC" penned me regarding turmoil in the Fermare il Declino camp that is likely to sink the party. She writes ... Hi Mish
The news today is FiD is in trouble because Zingales (one of the party founders) left after discovering that the party President (Giannino) discussed having a degree from the US that he does not really have. Giannino is considering stepping down to not undermine the credibility of the party. This will likely have a strong effect on the share they get and therefore on their indirect effect on the elections.
The story is rather strange. Apparently the degree was mentioned on a website, not even posted by Giannino, yet this seems enough to sink FiD. Sadly many politicians in Italy intentionally lie and on much more serious things, but this seems OK with the voters.
Best regards,
AC It's safe to add this revision to the number of election wildcards in Italy. Yet, if AC's previous analysis is correct, it will strengthen the odds of a hung parliament as disgruntled voters may sit out or choose between Movimento 5 Stelle or Berlusconi's Center-Right party. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Opting Out of Obamacare (the Unaffordable Health Care Act); Not Even Labor Unions Want It Posted: 19 Feb 2013 12:45 AM PST Obamacare, officially known as the "Affordable Care Act", is quickly proving to be so unaffordable that neither businesses nor labor unions want anything to do with it. In increasing numbers, US business complain about 'Obamacare' costs (but they are not the only ones). David Dillon, chief executive of the Kroger supermarket chain, told the Financial Times that some companies might opt to pay a government-mandated penalty for not providing insurance because it was cheaper than the cost of coverage.
Nigel Travis, head of Dunkin' Brands, said his doughnut chain was lobbying to change the definition of "full-time" employees eligible for coverage from those working at least 30 hours a week to 40 hours a week.
Some restaurants, including Wendy's and Taco Bell franchises, have explored slashing worker hours so fewer employees qualify for health insurance, arguing that they cannot afford the additional healthcare costs. Other businesses are deliberately keeping headcounts below 50.
The penalty for not providing coverage is $2,000 per worker. According to the Kaiser Family Foundation, a non-partisan policy group, the average annual cost to employers of insurance is $4,664 for a single worker and $11,429 for a family.
Companies with more than 50 workers have to pay a penalty if they do not provide full-time employees with health insurance. The employees can instead buy private coverage subsidised by the government on new insurance exchanges. Not Even Labor Unions Want It If it's costly for businesses, labor unions must like it. Right? Wrong. The Washington Time reports Labor unions that pushed Obamacare through want out Unions, or rather the professional class of union leaders, were vehement supporters of Obamacare's federal takeover of health care. Now that they've had a chance to actually read the 2,801-page bill and "find out what is in it," they are upset and want out.
Major unions like the AFL-CIO and the Teamsters are now demanding that they be allowed to stay on their current health care plans and receive government subsidies to cover the increased costs some of Obamacare's provisions will impose on lower-income workers. They want to eat their government cake and have it too. What else is new? Who would foot the bill? You guessed it: We, the taxpayers.
The rank hypocrisy of Obamacare-backing unions began almost immediately after the passage of the bill three years ago, with hundreds of thousands of union workers being exempted from the law through waivers from the Obama administration.
In total, more than 1,200 entities were granted waivers from President Obama's signature legislation, the vast majority of them labor unions. In fact, unions representing 543,812 workers received waivers, while only 69,813 employees at private firms, many of them small businesses, managed to secure a waiver.
The same unions that fought tooth and nail to impose this program on all Americans used million-dollar lobbyists to make sure they didn't have to play by the same rules as the rest of us.
Readers will recall Mr. Obama's constant mantra: "If you like your health care, you can keep it." Not so. According to the Congressional Budget Office, more than 7 million Americans will lose their employer-based insurance thanks to Obamacare. Unintended consequences always come back to haunt us, and try though they might, government actors are incapable of overturning economic law by mere decree. Job Market Distortions I have commented on the labor market distortions of Obamacare many times. Here is a brief recap: Since the "Unaffordable Care Act" defines full-time employment at 30 hours, many businesses are cutting back the number of hours employees can work to 25. In turn, this led to more hiring, all part-time jobs of course. Some medium-sized businesses reduced employment to under 50 workers and other businesses turned to consultants to get around the act. Now businesses are investigating opting out of the plan even for full-time employees. Other than social pressures and disgruntled employees, why not? Arguably, every business should opt out and pay the penalty. Businesses could even give a nice subsidy to its employees and come out ahead. Let voters see for themselves just how "affordable" Obamacare is. As a primary benefit, if enough businesses do opt out, there will be massive voter support to scrap or at least overhaul the damn program. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More  |
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