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Thursday, February 05, 2009 3:55 AM


The Game Is Up


Inquiring minds are noting similarities between the implosion in Ireland and the implosion in California. Let's take a look starting with In Ireland, "the game is up"

DUBLIN — At 2 a.m., with time for compromise running out, the Irish prime minister finally presented his emergency plan for the floundering economy to the country’s trade union leaders.

He proposed an average 7 percent reduction in gross pay for bureaucrats, teachers, police, firefighters, road cleaners and everyone else on the public payroll, in the form of a levy to finance their pensions.

He made clear that without an agreement the government would do it anyway.

Inevitably the union leaders said “No.” They couldn't sell it to their members.

The country’s trade union leaders will meet in the coming weeks to decide whether they will follow French trade unionists and organize strikes.

David Begg, the Irish Congress of Trade Unions general, warned of a “revolution” from lower-paid public workers.

With calls for everyone — including those financially well off — to share the pain, highly-paid broadcasters on RTE, the government-subsidised TV and radio station, volunteered to take a 10 percent pay cut.

The ramifications of the economic crisis are being felt across Irish society: In the private sector there are now 300,000 unemployed. Some 10,000 people are losing their jobs every month and unemployment is predicted to rise from 6 percent to 10 percent this year.
Schwarzenegger Plan for Furloughs Upheld by Judge

Meanwhile, back in the states, Schwarzenegger Plan for Furloughs Upheld by Judge.
California Governor Arnold Schwarzenegger can order thousands of state workers to take two unpaid days off a month to cut $1.4 billion from the budget, a judge ruled.

Superior Court Judge Patrick Marlette in Sacramento, California, today ruled in favor of Schwarzenegger in a lawsuit brought by employee unions seeking to block the furloughs. Schwarzenegger said yesterday that he would lay off workers to achieve the savings if he lost in court.

“I cannot help but recognize the huge impact this will have on state workers,” Marlette said at a hearing today in Sacramento. “My job is not to rule if this is the right solution but whether his action is authorized by law.”

The unpaid days off, scheduled to begin Feb. 6 for 238,0000 workers, amount to a 10 percent pay cut, according to labor unions that oppose them. Schwarzenegger, a Republican, ordered the furloughs to help conserve cash.

California, the most-populous U.S. state, is anticipated to have $42 billion less than it will need to pay for schools, police and other services through June 2010 because the recession and stock market have lowered tax revenue.
Counties Threaten Tax Revolt

Mercury News is reporting Counties threaten tax revolt against California budget
California counties are throwing another wrinkle into the state's cash crisis as Gov. Arnold Schwarzenegger and legislative leaders try to agree on a way to erase a $42 billion budget deficit.

Several counties are considering some form of tax revolt—either filing lawsuits or delaying tax payments to the state—because the governor has proposed withholding payments to them for as long as seven months in a move to preserve cash.

Local governments already are missing out because the state has imposed a 30-day payment delay to counties. That was part of a move by the state controller to delay refunds to taxpayers, money for college tuition-assistance programs and payments to state vendors.

The Riverside County Board of Supervisors authorized staff to file a lawsuit, while elected officials in Colusa County decided to impose a 30-day delay on sending any taxes and fees it collects to the state.

"We will have to shut the doors," said Kim Dolbow-Vann, a supervisor in Colusa County, north of the state capital. "We don't have the borrowing capacity" to backfill delayed payments.

Los Angeles County also is considering payment delays. County Supervisor Don Knabe said it's important to know whether the state's threat to withhold money is legal.

Schwarzenegger's finance spokesman, H.D. Palmer, said it's not clear whether the withholdings would have a significant effect on state government. Counties collect property taxes, which go to public schools.

Palmer suggested the state could in turn withhold sales tax revenue from the counties because the state needs to ensure it has enough cash throughout the year to pay its debt.

"We don't put these proposals forward lightly," Palmer said. "We will move heaven and earth to ensure that bond holders will be paid on schedule."
Lovely. No one want to pay anyone while expecting to get paid. What a mess.

Winter of Discontent

In the UK, Brown Faces Winter of Discontent as Workers’ Anger Mounts.
Spreading strikes, reduced workweeks and tens of thousands of job cuts are throwing British Prime Minister Gordon Brown back to the 1970s.

With 16 months before he has to call an election, Brown is facing the toughest test of a Labour premier since James Callaghan’s so-called Winter of Discontent in 1979, after which the party was cast out of office for almost two decades.

“They’ve sold us down the river,” said Charles Hilton, 61, an electrician from Hull in northern England who was out on strike yesterday with local oil-refinery workers. “We’re going to see civil unrest in this country. It’s already started. It will grow unless things are sorted.”

Matthew Worley, a history lecturer at Reading University and author of a book on the Labour Party in the 1920s and 30s, sees a parallel to Depression-era politics.

“There was a big fear of unemployment; a lot of people saw themselves as skilled people yet they were being undermined not by better labor, but by cheaper labor,” Worley said. “And you see again the idea that what happens somewhere else today will happen to us next.”

Also reminiscent of the 1930s is the growing presence of a nationalist party. The anti-immigrant British National Party has had representatives at all of the demonstrations at refineries and plants, said Simon Darby, its deputy leader.
Unions and government workers are resisting pay cuts in California, Ireland, and the UK. However, concession have to be made, and so they will. Obama might foolishly grant California a temporary reprieve with emergency funding, but that will only delay the inevitable. Realistically speaking, the game is up.

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