Mish's Global Economic Trend Analysis

Oklahoma House Passes ObamaCare Nullification Bill; Legal Showdown Coming?
One Man’s Fight Against Union Power
Extremely Difficult to Keep Up With Economic Stupidity
Merkel Coalition Doomed; Italy Exit Only a Matter of Time?

Oklahoma House Passes ObamaCare Nullification Bill; Legal Showdown Coming?

Posted: 14 Mar 2013 03:50 PM PDT

The US Supreme Court ruled Obamacare is constitutional. Legislators in the state of Oklahoma have a different idea.

The New American reports Oklahoma House of Representatives Passes ObamaCare Nullification Bill.

By a vote of 72-20, the state House of Representatives passed House Bill 1021, a bill that if signed into law would stop the Patient Protection and Affordable Care Act (known as ObamaCare) at the borders of the sovereign state of Oklahoma.

The bill's primary proponent is State Representative Mike Ritze (R-Broken Arrow). A board-certified family practice physician and surgeon, he is particularly aware of the threat to liberty and good health care posed by ObamaCare.

In an exclusive conversation with The New American, Dr. Ritze reported that the debate in the House was passionate and included testimony from a partially paralyzed colleague who stands to lose his medical coverage as a result of the mandates of ObamaCare.

Ritze recognizes ObamaCare for what it is: a federal attack on life, liberty, and property.

"There is no provision in Article 1, Section 8 of the United States Constitution where the states delegated to Congress the authority to make a citizen purchase health care or pay a fine," Ritze said. "The Patient Protection and Affordable Care Act is an example of federal overreach and my legislation will authorize the state via the will of the People to ignore it and ban the enforcement of it."

"They fail to understand how the country is supposed to operate," Ritze added. "As Alexander Hamilton wrote in The Federalist, No. 33: 'It expressly confines this supremacy to laws made pursuant to the Constitution.' Alexander Hamilton got it right. Congress and the Supreme Court got it wrong.

HB 1021 will now be presented to the state Senate where it is sponsored by State Senator Nathan Dahm (R-Tulsa). When asked by The New American about the prospect for passage of his bill in the state Senate, Dr. Ritze said there is a 50/50 chance the bill will make it to the governor's desk.

Two Questions

The two questions at hand are whether the state Senate will go along, and then if Republican governor Mary Fallin will sign it.

Should that happen we will have a legal showdown on our hands.

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

One Man’s Fight Against Union Power

Posted: 14 Mar 2013 12:38 PM PDT

This is a guest post about trials of Dave Bego, author of the book "The Devil at Our Doorstep," written by Ed Ring at UnionWatch, a non-partisan public policy watchdog group located in California.

Entrepreneurs in the Silicon Valley should pay close attention to the experiences of Dave Bego, the Indiana businessman who started a company from scratch. By 2006, after years of unrelenting toil and sacrifice by Bego and his family, Executive Management Services, Inc. (EMS) had expanded into 38 states and had 5,000 employees. Bego now had something so valuable it became an attractive target for unionization.

Bego's story, which he has written about in two books and has turned into a one-man information crusade, is not unique. But his decision to fight back is very unusual, and his account of how his company was targeted has gone largely unreported. The details of his fight reveal a frightening lack of legal protection for company owners and their workers from union intimidation, as well as a dated, shamelessly abused set of exemptions shielding over-zealous union organizers from legal sanctions.

A UnionWatch article from December 2012, "The Special Privileges And Exemptions of Public Sector Unions," references several compilations of how unions escape many of the laws that govern the rest of us, but hearing about what actually happened to Dave Bego makes it far less academic.

It is conventional to assume that if somebody is critical of a union's tactics, they must be anti-union. But even Dave Bego, who fought the SEIU for years, believes that unions have a legitimate role to play in a capitalist democracy. Bego, in an ad placed in the Indianapolis Star, offered to hold a secret ballot election among the employees to decide whether or not they wished union representation. As stated publicly in this ad: "EMS is very willing to let its employees vote in a secret ballot election conducted by the federal government to decide whether they want to be members of your union or not… we have encouraged you to seek an election since your first contact with EMS" (see EMS ad "Dear SEIU, Please Fish or Cut Bait").

The problem unions have with a secret ballot election, apparently, is that the union might lose. When union representatives met with Dave Bego, and during all of their subsequent campaign of pressure and intimidation, what they wanted him to do was sign a "neutrality agreement" (view actual neutrality agreement presented to Bego). Here are highlights of what a neutrality agreement does:

The employer shall not "take any action or make any statement that will directly or indirectly state any opposition by Employer to the election by its Employees of a collective bargaining agent."
The employer will sign a letter provided by the union, and distribute this letter to all employees, that is "assuring Employees of Employer's neutrality in the matter of their union organizing."
"Employer shall provide within five (5) business days a list of the names and addresses of all Employees within classifications subject to this Agreement."
"…union will then present Employer with signed authorization cards or a petition memorializing individual Employees' desire to be represented by Union for purposes of collective bargaining."
Once the union has submitted union authorization cards from 50% of the employees, if management cannot come to terms with the union during the collective bargaining process, they must submit to binding arbitration.

What a neutrality agreement does is enforce the process known as "card check," whereby instead of voting in a secret election whether or not employees want union representation, the union organizers gather individual signatures on consent forms. Armed with the home addresses of every single employee, the union has three years to target individuals, one by one, until 50% of them sign the card. This process, currently only legal if and when an employer signs a neutrality agreement, would become law of the land if the union-supported, misleadingly named "Employee Free Choice Act" ever becomes federal law.

Because the unions wanted Bego to sign a neutrality agreement, he refused on principle, because doing so would have denied his employees the right to a secret ballot election. That's when the troubles started.

As summarized in Bego's book, "The Devil at Our Doorstep," the SEIU embarked upon a campaign of persuasion that relied on laws designed to give unions an advantage over employers. Here are some examples of rules that impose double standards on the conduct of unions vs. employers during union organizing campaigns:

The "Persuader Rule," which requires employers to publicly disclose all relationships with outside firms who may assist them to resist unionization. Not only are unions exempt from this rule, but because most employers have never encountered a union campaign before, they have no choice but to solicit outside advice on the legal issues as well as on how to effectively communicate with their employees. This rule gives the unions an opportunity to then attack anyone consulting with the employer.
The "Posting Rule" requires employers to post union provided printed material in their workplace, saying, for example, that all employees have the right to unionize – with contact information. But the employer does not have the right to post anything reminding employees that they are not compelled to vote for unionization.
Rules prohibiting "Interrogation," or "Promising," meaning an employer cannot meet with employees during a union campaign and ask them (i.e., "interrogate" them) what is wrong, or what can be done to improve work conditions. Similarly, during a union campaign an employer cannot remedy work conditions; that is "promising."
Unions are exempt in many states from laws that make stalking an individual a crime, as well as laws that make many forms of extortion a crime.

In order to hold a secret election, the union has to get 30% of a company's employees to sign a petition asking for a vote. To do this, their operatives approached EMS employees – over and over – on their way to work, in the parking lots, and sometimes even followed them home. They enlisted the support of local clergy, who organized blockades of buildings where Bego's employees worked.

Because EMS provides contract janitorial services, the unions organized demonstrations outside these buildings, intimidating the building owners in an attempt to get them to change vendors. They sent letters to the press and to EMS clients alleging "unfair labor practices" which in most if not all cases were without merit. Indeed, in November 2007, EMS filed a set of counter-charges (view EMS Unfair Labor Practice Charges Against SEIU), and in the subsequent NLRB hearing the ruling was in favor of EMS. Even the NLRB felt the union had gone too far.

These "corporate campaigns" occur every day across America. Most employers cannot withstand the pressure from the unions. At one point, the union campaign against EMS included enlisting children on Halloween night to go trick-or-treating in Bego's neighborhood, and after being given candy, they gave each resident a union flyer:

While Bego has managed to successfully fight the SEIU, at least so far, most people can't stand up to the intimidation that appears to be standard procedure for unions who operate a corporate campaign. Not only the company owners, but their family, their employees, their suppliers, and their customers face harassment.

Sometimes this harassment escalates into vandalism and violence, with laws in place that create for unions a higher threshold before such acts become criminal. But the unions are lobbying for even more laws to assist them in their corporate campaigns. For example:

Unions have now won the right to form "micro-unions," where they can carve out small groups of employees and hold a union election. If a union can't get 30% of an entire retail store to sign cards calling for an election, they can now get 30% of the employees in one department of that store to sign the card, and an election will be held for that particular department.
Unions are pushing to lower the time period between when cards are submitted requesting an election from 48 days to 18 days; the so-called "Quick Elections" rule. This creates a significant advantage for the unions, because it takes time to communicate to employees that they are not compelled to vote for unionization. Many employees who have signed cards calling for an election believe that they are required to vote for unionization because they signed the card requesting the election.
Legalizing the "Card check" method of unionization, via the perennially introduced "Employee Free Choice Act," would enforce the terms of a neutrality agreement on employers without their consent. Unions could then approach employees individually until they collected signatures from 50% of the workforce, eliminating the secret election ballot.

Eliminating unfair union advantages, currently built into federal law, would not necessarily eliminate unions. In a recent speech at an event sponsored by the Heritage Foundation (view speech – begins at 5:40), Bego emphasized that some workplaces probably would benefit from unionization. But unions must play by the same rules as the companies they negotiate with, employees should have a right to a secret ballot in elections concerning unions, and nobody should be forced to join a union.

Silicon Valley entrepreneurs come from a variety of ideological leanings, but it is accurate to state that most of them support Democratic political candidates. Perhaps this, combined with their extraordinary personal wealth, blinds them to the agenda of unions, despite the fact that public sector unions already control California's state and most of its local governments and their unsustainable financial demands are contributing to the insolvency of those institutions.

If the Silicon Valley business elite want to maintain control of the companies they founded, and preserve the vitality of the new industries they helped create, they should take a careful look at the proper role of unions in 21st century America. Because the rules governing unions and union organizing are at a tipping point. If union-friendly legislation continues to emanate from Washington D.C., and Sacramento, the Silicon Valley may find itself on the front lines of a battle for which they are entirely unprepared.

End Guest Post

The only way to stop such abuses is to curtail union priveleges especially public union privleges.

Three Needed Solutions

We need National Right-to-Work Laws
We need to scrap Davis-Bacon and all prevailing wage laws at the state and national levels
We need to end collective bargaining of public unions

Please support Senator Rand Paul's efforts on right-to-work legislation.

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

Extremely Difficult to Keep Up With Economic Stupidity

Posted: 14 Mar 2013 10:00 AM PDT

I find it increasingly difficult to keep up with economically stupid proposals.

Commenting on central bank foolishness is a full time job in and of itself. Factor in unions, Keynesian and Monetarist clowns, and I hardly get any sleep. Economic nonsense in France, Spain, and elsewhere in Europe sends the situation over the top.

For example, I previously commented Housing Construction in France Lowest in 50 Years; Hollande Responds With Measures to Support Building "For the Public Good"

Housing starts in France will fall to 280,000-300,000 in 2013, the lowest level in 50 years according to developer Nexity. The government wants 500,000 units per year.

Housing Starts Insanity

Reader Tim Wallace helps put that insanity into perspective. Wallace writes ...

Hello Mish

I was astounded to see that France wants 500,000 units of housing starts. According to the World Bank in 2011 France had a population of 65.5 million people. This compares to the USA population of 311.6 million from the same source. Therefore France is approximately 21% the size of the USA. For the USA to have an equivalent number of housing starts to population (the people who would get the units) we would need to have 2,380,952 starts!

We know how that would end.

Indeed, we do know how this would end.

The US is currently running about 890,000 housing starts annually, on a seasonally adjusted basis. And Hollande wants an equivalent 2,380,952 starts "for the public good".

US housing is distressed. However, France is in the midst of a bubble now burst, and it is beyond stupid to keep building anywhere in the face of falling demand.

Next Case (Also From France)

Via Google translate, please consider France to investigate Skype for failing to register as a telecommunications operator.

After successfully extorting Google, the Government of Francois Hollande has its eye on Microsoft and Skype service.

The French telecoms regulator ARCEP has asked prosecutors to investigate the VoIP service owned by Microsoft, Skype, for failing to register as a telecommunications operator, according to the agency said in a statement. Skype's sin would have been to several requests obey not the regulator to register as an "operator of electronic communications."

French law requires all operators to allow emergency calls and free legal interception of calls. The excuse they are using the French to consider Skype as a telecommunications operator is that it allows voice calls to landlines and mobiles in France and worldwide. However, the laws of the European Union do not consider that neither Skype or similar services are telecommunications companies.

So, the real reasons behind this decision could be two. First would be the complaints of local operators. Stéphane Richard, CEO of France Telecom, had protested what it considers unfair competition from services such as Skype. His company, in a statement, praised what he considers "a positive first step towards a more balanced regulatory environment."

But more likely is the fact that as the French telecommunications operator Microsoft would have to pay taxes in France for all income achieved Skype on the French market.

Reflections on "Unfair Competition"

Corporations always consider it "unfair" when any other company can do things faster, smarter, or cheaper than they can. The buggy whip industry once protested cars.

Today, land-line telecom companies have to compete with wireless and they don't like it. Now, we see protests about VOIP (voice over internet protocol).

Technology marches on. But France does not like it. The French solution is to tax Skype because it has an "unfair advantage".

This is an age-old unwinnable argument.

Petition of the Candle Makers

The ultimate irony is France's preposterous "unfair advantage" argument was lampooned by French economist Frederic Bastiat back in 1845 when he penned 'Petition of the Candle Makers'.

In his article, candle makers were incensed that the light of the sun could be had for free. The sun's unfair trade advantage was to the "detriment of fair industries" who could not compete against the sun's price.

Something had to be done to "shut off as much as possible, all access to natural light, and thereby create a need for artificial light" so that "industry in France will encouraged".

How and Why We Forget the Obvious

It is a simple statement of fact that the more goods and services we receive for our money, the better off we all are. The cheaper, the better!

Time and time again we forget free trade and lower prices are a benefit!

We forget because unions, socialists, and corporations forced to compete against the sun (or Skype), scream "unfair advantage" at the top of their lungs, via political contributions to politicians willing to "tax the sun" to be re-elected.

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

Merkel Coalition Doomed; Italy Exit Only a Matter of Time?

Posted: 14 Mar 2013 01:47 AM PDT

About a week ago I started exchanging emails with reader Bernd who lives in Germany. He claims that the anti-euro movement in Germany is far bigger than mainstream media lets on.

The question is who to believe, and I cast my lot with Bernd.

I have been down this path twice before, the first with reader "AC" who is from Italy and called the rise of Beppe Grillo a year before mainstream media ever mentioned the guy, let alone treated him seriously.

The second setup regards reader "Bran" who lives in Spain. Bran sends me most of the Spanish links that I translate.

Currently I am 2-for-2 on who to believe.

Nonetheless, let's first consider the other side of the story as presented in Tuesday's Eurointelligence report offering the following comments on a recent German poll that shows 26% of Germans would back anti euro-party.

We want to caution readers not to translate the survey result by TNS-Emnid, according to which 26% of Germans would consider backing an anti-euro party, with the likely results to be achieved by the party that established itself this week – the "Alternative für Deutschland", run by a group German professors and journalists. The TNS-Emnid polls also shows that the support for an anti-euro party among 40-49 year old is around 40%.

Reuters quotes Emnid chief Klaus-Peter Schoeppner saying an anti-euro party would only gain about 2 or 3% - as most of the anti-Europeans see themselves well catered for by the CDU and the FDP.

That's our view as well. You already have plenty of true Eurosceptic parties in Germany. So why bother?

Why Bother? Really?

Eurointelligence thinks the "Alternative für Deutschland" AfD party will only get 3% of the vote because there are plenty of "true Eurosceptic parties in Germany".

Really?

Let's tune in to reader Bernd who writes ....

Currently Germany has 6 Parties in Federal Parliament: CDU, CSU, FDP, SPD, Green Party (Grüne), Left Party (Die Linke).

The current Government is made up of CDU/CSU/FDP under Chancellor Merkel.

CDU, CSU, FDP, SPD, and the Green Party are basically all promoting the same program, a mainstream nanny state agenda which is typical for Europe and for Germany. Their main thrust is towards a centralization of power in Europe to the detriment of the Germany, with the Euro being the conduit.

They seek to relinquish as much power to Brussels as possible as fast as possible. They are using the crisis of the Euro to bring this about. All these parties have voted for ESF and ESM with an overwhelming majority. Bailing out banks is also very highly on their agenda and is not up for discussion.

The parties differ in minor points. While SPD and Grüne promote an immediate introduction of Eurobonds with a complete disregard of the Maastricht Agreement, CDU/CSU/FDP promote a slower integration, with a possible return to the Maastricht Agreement and the no bail out clause, after the crisis is over.

The Left Party is against bailing out the banks, but otherwise they have a pure socialist agenda, coupled with a complete withdrawal of the German Army from all foreign activities. They also promote European Integration, even faster than the rest.

At this moment the German voter has absolutely no chance to voice his displeasure with the Euro/EU politics and policies. There is simply no party and no candidate with a program to reflect his desire.

49% of German voters are very displeased about current EU policies and about the pro Euro stand of our Government.

The new Party (AfD = Alternative für Deutschland), which is currently under formation will need 2000 signatures in each State of Germany to be admitted for the coming elections. This will not be a problem at all.

AfD has a clear program, but far beyond a single issue. The main point is a return to Maastricht, to "no bail out" and to the creation of a mechanism to exit the Euro in a legal and orderly fashion for all Eurozone members. It's agenda also includes a clear position against lobbyists, the introduction of popular votes for major issues, and a popular vote for further integration into the EU.

The latest Emnid poll shows that 26% of voters are prepared to consider the new party and its program. Emnid is a very highly regarded and well reputed polling agency. It is almost certain – under these current circumstances – that AfD will be in the next Parliament with 10% of votes or so, if not much higher.

I still expect CDU/CSU to be the strongest single party. However, they will not be able to muster a majority with their current coalition partner FDP. FDP is actually in serious danger to fall below the 5% barrier. Current polls see them at 3%.

CDU/CSU will try to form a coalition with SPD, who might still come in second. SPD says that a coalition with CDU cannot be possible under Merkel's leadership.

CDU/CSU might also try to form a coalition with the Green Party, who have not put up such a demand. However, I doubt that CDU/CSU/Green Party will have a majority.

More likely is a coalition of SPD/Green Party and Linke, however that coalition probably has too slim a majority to be stable.

All things considered, it will be very difficult to form a stable Government in Germany next time around. AfD has no power to form a coalition, but they may have the power to block a pro-Euro walk through by the other parties.

Throughout Merkel's career she has changed her opinion on many major matters at will. The one and only thing she stands for is the Euro and further European integration, but this go around that position is going to cost her votes. If CDU/CSU see a rise of the AfD with a serious number of voters largely from their pool of votes, you will see an anti-Merkel movement even inside CDU/CSU.

Expect unrest in the party prior to elections if polls in favor of AfD show any major support.

I think Merkel is in serious danger to not be the next chancellor. And yes, I think you could be the first to carefully speculate along those lines!

Best wishes
Bernd

Underestimating Backlash

Bernd's scenario sounds quite plausible to me, just as I believed "AC" regarding the rise of Beppe Grillo.

I asked Bernd for comments on the above Eurointelligence piece and he replied ...

"For Reuters to quote Emnid pollster Schoeppner with a statement that most anti-Euro Germans feel well catered for by CDU or FDP is outright unbelieveable. I doubt that quote is true, because it makes absolutely no sense at all. There is no indication that CDU or FDP has any room left for anti-Euro types."

Attempt to Stifle Discussion

In another email, Bernd offered these thoughts on "Alternative für Deutschland"

Mainstream media will do anything in their power to keep AfD out of any public discussion. Should that strategy not work, the media may spin a Neo-Nazi accusation which traditionally would be the death of any new party. However, the excellent names of the founders, and the fact that many of them are former CDU or FDP members makes that tactic highly risky.

In Germany, due to our history, you cannot win on a platform like Wilders in Holland or the Nationalists in Finland. AfD must always walk a fine line, never openly promoting a "Germany go it alone" strategy, or worse a "we know better" strategy. Change must be brought about in a civilized and democratic fashion. If they manage that, they will be fine. A mighty task ahead!

Four Time Bombs of the Chancellor

Via Google translate from Der Spiegel, Wolfgang Münchau writes Euro crisis: The four time bombs of the Chancellor

Until recently, everything went like clockwork for the Chancellor. ECB chief Mario Draghi had the euro crisis put an apparent end last summer - the purchase of government bonds calmed the markets. Merkel recommended Draghi as the savior of the euro.

The crisis is not yet returned to its full extent, but since the election in Italy, optimism has faded. We're back at one of these dangerous turning points. I see four possible developments before the election that can be dangerous.

The greatest danger is currently out of Italy. The country is in a worsening recession and is paralyzed by a political crisis . To survive in the euro, Italy needs internal reforms and external concessions that Germany rejects. After my conversations there in the past week, the only hope for a modern and stable governments in the next five years in a generation change at the top of both major parties. The Partito Democratico is torn. Party leader Pier Luigi Bersani , who is now trying desperately to form a government, and his young challenger Matteo Renzi, Mayor of Florence, are bitter rivals. Between the two there is a gap of about two generations.

A euro exit of Italy only a matter of time?

There is a small chance that this generation succeed. Likely from today's perspective, however, is a new, non-democratically elected government of technocrats that will strengthen the radical forces in the medium term. In this scenario, it would amount to an absolute majority of Beppe Grillo's to anti-establishment movement. My interlocutors in Italy consider this scenario now for the more probable. Whether it actually comes to the promised referendum on the euro, is not clear. But it's not really important. From the current recession would mean a depression, because who is already investing in Grillo In this scenario, a euro exit would be Italy's only a matter of time. .....

The fourth risk for Merkel is the incumbent in this week's anti-euro party . I can see its not to the Bundestag, but certainly the possibility of success respect, the Union may cost valuable votes. The experience of the euro crisis shows that everywhere, even in Germany, a breeding ground for protest movements arose. And thus also the elections are unpredictable.

My forecast is that Merkel on Euro will fail politically. The question for me is only if this is done before the election or sometime thereafter.

Quite a Change

That is one hell of a change for Wolfgang Münchau who was optimistic about the Case for a grand coalition in Italy following the election.

I am aware that almost every Italian political expert says this is not possible because of the confrontational style of politics and dozens of other reasons. I respectfully disagree. Italian parties have no experiences of a grand coalition, so much is true. Then again, the German politicians who entered grand coalitions in 1967 or 2005 did not either. Grand coalitions are certainly not a good way to govern countries over long periods because they leave radical fringe parties thriving in opposition. A grand coalition would leave Mr Grillo as the effective leader of the opposition. But grand coalitions can work well for a finite, predefined period, say for one parliamentary term.

Münchau is co-founder and president of Eurointelligence which makes the Eurointelligence comment "You already have plenty of true Eurosceptic parties in Germany. So why bother?" all the more peculiar.

If I am not mistaken (but I cannot find the reference) Münchau was not worried about Beppe Grillo before the election.

Regardless, Münchau is now thinking clearly about the setup in Germany and Italy (in terms of what is likely), even though he objects to the idea.

The best hope now is to get everyone on board for a peaceful dismantling of this doomed-from-the-beginning experiment, or it is going to splinter in a dozen pieces in the worst possible way at the worst possible time.

Wine Country Conference

I am hosting an economic conference on April 5 in Sonoma, California. Proceeds go to the Les Turner ALS Foundation (Lou Gehrig's Disease).

Please see My Wife Joanne Has Passed Away; Stop and Smell the Lilacs for my association with the disease.

To learn about the economic conference with world-class speakers including John Hussman, Michael Pettis, Jim Chanos, John Mauldin, Mike "Mish" Shedlock, Chris Martenson with guest moderator Lauren Lyster and other Special Guests, please visit Wine Country Conference April 5, 2013

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

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14.3.13

Mish's Global Economic Trend Analysis

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