Mish's Global Economic Trend Analysis

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Kenosha Teachers' Union Decertified in 63-37% Vote; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids Posted: 16 Sep 2013 01:29 PM PDT Common sense won out twice in Wisconsin in the past two weeks. On September 11, Wisconsin Act 10 upheld in another federal court challenge. A federal judge on Wednesday dismissed one of the lawsuits challenging Act 10, Gov. Scott Walker's budget repair bill in 2011 that eliminated most collective bargaining powers held by Wisconsin public unions. U.S. District Court Judge William Conley dismissed the constitutional challenges in Laborers Local 236, et al. v. Walker, et al. Conley ruled that the plaintiffs "failed to state a claim for relief under either the First or Fourteenth Amendments." The unions claimed that Act 10's collective bargaining restrictions interfered with municipal employees' rights to association, assembly and speech under the First Amendment, and that it violates the Equal Protection Clause "by treating individuals represented by a collective bargaining unit different than unrepresented individuals." "Under Act 10, general employees remain free to associate and represented employees and their unions remain free to speak; municipal employers are simply not allowed to listen," Conley wrote. Conley also ruled that governments can treat represented employees differently than unrepresented employees in regards to bargaining over wages and employment conditions. It goes to reason that if government does not have to listen to the union, then the union is useless. Acting in advance of the ruling, Wisconsin's Third Largest Teachers Union Decertified on August 31st. Vincent Vernuccio, Director of Labor Policy at the Mackinac Center for Public Policy, told the MacIver News Service, "recertification is needed to keep unions responsible to their members and to allow the change necessary to remove ineffectual representation. It is simply democracy and majority rule." Vernuccio pointed out that most workers do not have this option across the nation and is thankful that public workers in Wisconsin have this opportunity. "The teachers simply did not see the value in the representation the union was offering," Vernuccio said. Now that the union has been decertified, it can no longer represent Kenosha Unified School District teachers during any negotiations. It also ends the automatic deduction of union dues on teachers' paychecks. Brett Healy, President of the MacIver Institute agrees that taxpayers continue to benefit from Act 10. "Act 10 has truly changed everything here in Wisconsin. The fact that teachers, in what once was one of the largest and most partisan local unions in the state, would voluntarily choose not to join the union is astounding. Act 10 gave these hard-working men and women the freedom to choose and they are telling big labor just exactly how they feel about forced-participation and the unions' boorish behavior," Healy said. Bingo. No one should be forced to join a union to get a job. And no one should have to pay union dues either. People can still join unions if they want. So there are no legitimate rights lost. I commend Governor Scott Walker. And the school children of Wisconsin as well as taxpayers are already benefiting. Teachers can now teach, educators do not have to bargain with bullies, and teachers can put more money in their pockets instead of contributing to unions. Actual Results Actual results speak for themselves as Union curbs rescue a Wisconsin school district. The Kaukauna School District, in the Fox River Valley of Wisconsin near Appleton, has about 4,200 students and about 400 employees. It has struggled in recent times and this year faced a deficit of $400,000. But after the law went into effect, at 12:01 a.m. Wednesday, school officials put in place new policies they estimate will turn that $400,000 deficit into a $1.5 million surplus. And it's all because of the very provisions that union leaders predicted would be disastrous. In the past, Kaukauna's agreement with the teachers union required the school district to purchase health insurance coverage from something called WEA Trust -- a company created by the Wisconsin teachers union. "It was in the collective bargaining agreement that we could only negotiate with them," says Arnoldussen. "Well, you know what happens when you can only negotiate with one vendor." This year, WEA Trust told Kaukauna that it would face a significant increase in premiums. Now, the collective bargaining agreement is gone, and the school district is free to shop around for coverage. And all of a sudden, WEA Trust has changed its position. "With these changes, the schools could go out for bids, and lo and behold, WEA Trust said, 'We can match the lowest bid,'" says Republican state Rep. Jim Steineke. Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids As I said on July 2, 2011 Union-Busting is a "Godsend"; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids Also consider Collective Bargaining neither a Privilege nor a Right. I commend Wisconsin Governor Scott Walker for his brave stand to end slavery in Wisconsin. I also commend Senator Rand Paul's effort in pursuing a national "right-to-work" law. It is time to abolish collective-bargaining slavery once and for all. A properly written national "right-to-work" law would help do just that. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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.

CSU Receives 49% in Bavaria State Election; Assessing the National Impact for Merkel on September 22 Posted: 16 Sep 2013 09:27 AM PDT CSU soared to an absolute majority in the Bavaria state election. The results look like this +- 0.2% or so. CSU: 48.7% SPD: 20.5% Freie Waehler: 8.7% Die Grünen: 8.5% FDP: 3.2% Others: 10.4% Majority for CSU Freie Waehler is the Bavaria Eurosceptic party and Die Grünen is the Green Party. Inquiring minds may be wondering how 48.7% constitutes a majority. It does because majorities are based on the percentage in government, not the percentage of voters. Recall that the threshold for participation is 5%. For determining parliamentary majorities, CSU received over 50% of the votes that count (the first four groups above). The National Election Outlook Assessing FDP Chances of Making Parliament If these results hold for the national elections on September 22, FDP may very well be out, as I have suggested on numerous occasions. Assessing AfD Chances of Making Parliament AdP did not run in the Bavaria election. However, the vote looks good for AfD because most of the Freie Waehler voters will likely support AfD in the national elections. Assessing CDU/CSU Chances Alone It is possible CDU/CSU does not need any coalition (grand or otherwise). The math would look something like this CDU/CSU: 43% SPD: 22% Die Grünen: 9% Die Linke: 9% AfD: 4.5% FDP: 4.5% Others: 8% In that scenario, it would be 43:40 (again discarding everything below the 5% threshold), with no need to form a coalition. Assessing the Red-Green Chances The odds of SPD + Die Grünen without Die Linke are zero. The odds of SPD + Die Grünen + Die Linke are shrinking. The Green Party once had 15% of the vote but may not get 10%. Combine that with the fact that SPD did worse than expected in Bavaria. If neither FDP nor AfD makes it into parliament, and if SPD can get 26-28% of the vote, and if both the Greens and the Left get 9% or more, then the Red-Green coalition with Die Linke can achieve a majority. That seems like a long shot now, but it is not impossible. Much will depend on voter turnout combined with complacency setting in for CDU/CSU combined with apathy for the smaller parties. Even IF SPD + Die Grünen + Die Linke can form a mathematical majority, both SPD and the Greens would have to be willing to form a coalition with Die Linke. That is not out of the question, but party leaders have said they won't. Are such statements believable or not? Assessing a Non-Grand Coalition If AfD makes it into parliament without FDP (a very good chance now), then CDU/CSU + AfD could form a coalition.  If AfD makes it into parliament with FDP (but at the expense of CDU/CSU), then things get more complicated depending on exact percentages. Some combinations of CDU/CSU +- FDP +- AfD would be in play. If FDP makes it into parliament without AfD then the same Yellow-Black coalition as now will rule (CDU/CSU + FDP) . This scenario has diminishing chances. Assessing the Grand Coalition If none of the above happens, a "Grand Coalition" of CDU/CSU + SPD will happen. So what has changed since before the Bavaria election? Not much. There are still many scenarios in which there is no "Grand Coalition". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com 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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