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Sunday, February 07, 2010 2:27 AM


How Unions Destroyed Greece; Union Greed and Gall in Nevada; Union Protests In Utah; Taxes on Food in Phoenix


The New York Times has an interesting article Is Debt Trashing the Euro? It could easily be subtitled How Unions Destroyed Greece. The same thing is happening here. Let's take a look.

DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year.

“Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.”

As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget.

“The risk of contagion is a real one,” said Scott Thiel, the head of European fixed income at the asset management firm BlackRock in London. “Investor sentiment is now focused on countries like Spain and Portugal, where fundamentals are weakest.” He said that for now, he saw little risk for Italy, given the relative stability of its economy.

“We have a centralized monetary policy, but we allow budgets and wages to move in different directions,” said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. “Without a political union, in the long run the euro zone cannot last.”

Indeed, as core economies like those of France and Germany show signs of economic recovery, Greece, Portugal, Ireland and Spain are just entering savage recessions. Spain, the largest of the peripheral economies, announced last week that the number of its unemployed had reached four million — the highest in its history — and warned that the country’s deficit might be worse than previously thought.

TO be sure, Mr. Damianidis is among the smallest of actors in this saga.

Yet his sense of entitlement shows how hard it will be for governments in Portugal, Spain and Italy to persuade their citizens to accept cuts demanded by Brussels as well as bond investors.

The bonuses, he concedes with a smile, have nothing to do with his skill as a high school teacher. “Over the years, whenever workers would strike, they would in some cases get a bonus,” he said, as he sat in a local union office here.

For decades, both conservative and socialist governments in Greece have rewarded the demands of public sector unions with higher pay and more jobs.

In 2009, striking farmers were paid 400 million euros by the government — and this year they are back again, having briefly closed Greece’s border with Bulgaria. Protesting dockworkers extracted big payouts from the government in November. And the country’s tax collectors went on strike on Thursday even though their services are needed more than ever.

Striking is a bit of a national sport in Greece. Last month, the country’s unionized prostitutes took to the streets, protesting unlicensed competition from Russian and Eastern European immigrants.

With concessions and accessions, the country’s budget has become bloated. In Parliament, for example, the administrative staff has increased to 1,500 from 700 in the last few years, even though the number of members of Parliament has remained the same. Last year alone, 29,000 public-sector workers were hired to replace 14,000 who retired, according to the finance ministry.

“There is no end,” said Stefanos Manos, a former minister for the economy in the 1990s and a persistent critic of what he considers spending abuses in Greece. “The hiring and the spending is uncontrollable.”
Errors In Policy Errors In Logic

Mr. Damianidis asks “Why should I as a worker pay for the errors in policies?”

The answer should not be too hard to find: It was those errors in policy that gave unions clowns what they wanted, bankrupting the country. The unions unjustly benefited from their strikes, so it is the unions who should pay the price now.

Greek Farmers Block Highway



Aris Messinis/Agence France-Presse — Getty Images

"Calling for higher prices, Greek farmers blocked a highway last month. The government, running in the red, has long used cash to appease such constituencies. "

Union Greed and Gall in Nevada

Please consider UNION PROTEST: Education supporters rail at rally
A raucous crowd of more than 600 teachers and parents blasted potential state budget cuts for K-12 education during a rally Saturday at Chaparral High School organized by the Clark County Education Association, the teachers' union. While state Democratic leaders and school and union officials all spoke, some of the biggest applause lines were shouted from the gymnasium bleachers.

Signs like "Will teach for food" and "A pay cut is a tax increase" expressed anger at the governor's recommendation to cut teachers' salaries by 6 percent to help close a budget gap brought on by the economic crisis.

Another sign, "Taxes not axes," uttered what was missing from politicians' speeches: the mention of any new taxes. The sign holder was Joan Kissling, a science teacher at Brinley Middle School.

Instead of cutting the budget, Kissling said the state needed to raise taxes "on food, whatever it takes."
Brainwashing Kids

Notice the greed and gall of teachers demanding taxes on food that will fall disproportionally on those who can least afford it, just so they can keep their bloated pensions and undeserved salaries.

Those who wish to see how unions brainwash kids for their benefit, can watch the "Not on my Back" Teacher Rally slideshow.

Union Protest In Utah

Please consider Thousands rally at Capitol to protest retirement bills.
Thousands of public employees including teachers, police officers, firefighters and retirees rallied at the Utah State Capitol Saturday, urging lawmakers against a massive restructuring of retirement benefits.



[See article to play video - Blogger cannot handle this type -Mish]

Several bills will go before the Legislature this session with proposed cuts to the current pension system, 401(k) matching and changes to the practice known as "double dipping."

A lawmaker sponsoring two of those bills says changes are needed to prevent a catastrophe, but those at the rally have huge concerns.

Public employees who gathered at the Capitol Saturday are worried lawmakers are proceeding too quickly with those changes without really studying the issues. They feel the changes could hurt the recruitment of quality employees in the future.

Sen. Dan Liljenquist, R-Bountiful, has proposed a set of bills that would cut pension system benefits for new employees and do away with the existing 1.5 percent 401(k) match.

If these bills pass, public employees hired after July 1, 2011 would not be eligible for the current pension system plan. Instead, they could either put 8 percent of their salary into a 401(k) type of program or put part of it into a defined benefit pension plan with greatly reduced benefits.
Utah Unions March In Favor Of Their Own Demise

For more on the Utah proposal, please see Bill to End Defined Benefit Plans Under Consideration in Utah.

The amazing thing about the Utah protest is that existing union members would not have to give up anything in Liljenquist's proposal. His plan only affects new hires after July 1, 2011.

Essentially the Utah union clowns are marching in favor of their own demise given that something has to give, either current salaries and benefits, or future salaries and benefits.

It is amazing how stupid unions can be.

Insanity In Phoenix

Disgusted minds are reading Phoenix gives OK to 2% tax on food.
Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year.

The 2 percent food tax will take effect April 1 and expire after five years, though Mayor Phil Gordon said the council has the option of reversing its decision after it hears from the public during 15 budget hearings planned for this month.

Phoenix shoppers who buy paper towels, toothpaste and other non-food items at a grocery store already pay an 8.3 percent sales tax, 2 percent of which goes to the city. But Phoenix has not taxed food items since the early 1980s.
Sign Of Failure

Inquiring minds are reading Phoenix food tax increase a sign of failure.
On Sept. 11, 2007, Phoenix voters were asked to approve an 11 percent increase on the general sales tax that, it was promised, would result in 500 more police and firefighters. On Tuesday, the Phoenix City Council voted to impose a five-year, 2-cent sales tax on food purchased from grocery stores – to save the jobs of 500 police and firefighters. Media reports say Phoenix officials intend to use the food tax revenues to stop staffing cuts announced in January for the police and fire departments.

Taxes are a poor substitute for doing the heavy lifting of re-thinking, reorganizing, and re-prioritizing government. Phoenix City Councilman Sal DiCiccio has pointed out that the average cost for a Phoenix city employee is $100,000. In just the past six years, the City of Phoenix budget grew by 59.6 percent, more than double the sum of inflation and population growth.

The current economic downturn started early in 2007, but the fiscal 2010 budget was the first time that Phoenix actually reduced overall spending. Operating expenditures were cut by just 0.6 percent. The General Fund budget, currently only 44 percent of the total budget, saw its first reduction in fiscal 2009.

Clearly, there is a failure by the City of Phoenix to address fundamental reform in the face of shrinking tax revenues.
Tax The Poor To Benefit The Rich

In 6 years the Phoenix budget increased a whopping 59%!

Earth To Phoenix City Council: At contract renewal time, the unions will be asking for a raise. Will you up the taxes to 4%, then 8%, then 12%? When will you and your bloated bureaucracy have the decency to tell union thugs to go to hell?

Phoenix voters, please stand by council members Sal DiCiccio, Bill Gates and Peggy Neely. They deserve your support. Give the rest of the complete fools the boot, including the mayor. Then elect a mayor willing to declare bankruptcy. That is your only hope.

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