Amazing, but not atypical of a lot of thinking in this country these days:
The union that brought the 85-year-old baker of Twinkies and Wonder Bread to its knees is holding out hope that a buyer will salvage chunks of the company and send the union’s members back to work, even as Hostess Brands Inc. gears up for a fire sale.
While Hostess has said the shutdown would result in the loss of more than 18,000 jobs and place the fate of more than 30 American brands in jeopardy, union President Frank Hurt said he believed there was “more than a good chance” that a buyer quickly would swoop in to buy the profitable parts of the company and give his union’s members their jobs back.
Give them “their” jobs back?
See, if I was a buyer, the last people I’d hire are those whose inability to think beyond what the union demanded they do that caused a company to liquidate and “their” jobs to go away. Because I’d not want to give them the chance to gum up the works at my company. So I’d ensure that they understood that “their” jobs went with Hostess.
By the way, Frank Hurt isn’t hurting. He’s still got his six-figure job with the union that “their” jobs, since gone, helped pay for.
Said Teamster Luigi Peruzzi, a Hostess driver in Detroit for 25 years:
“I think they [the Baker's union]made a terrible choice based solely on terrible information from their leadership.”
Not that their “leadership” will suffer for it or anything.
If you’re at all concerned about the economy, the answer is likely “not very well”:
U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.
Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.
At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms’ expansion plans.
Why are we seeing this happen? As it stands, most corporate spenders see no possibility of the hostility toward corporate America easing and also view whatever is to come in January concerning taxes and tax policy to likely be a lose-lose for them however it goes:
Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.
Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.
Or, as before the election, an unstable business climate persists which does not provide any incentive to expand, spend or hire. In fact, as indicated above, it is providing precisely the opposite incentives. It’s one reason the GDP forecast for the country has been downgraded again to 1.5% (Mexico, for heaven sake, has GDP growth of 3.2%).
But when you vote for the status quo, well, you get what you vote for — enjoy.
In a case study of cutting your nose off despite your face, union members who walked out on strike at bankrupt Hostess Brands (makers of Twinkies and other well known products) and refused to return to work by yesterday have forced the company into liquidation. Of the 18,000 workers who will lose their jobs, about one-third were union members.
The company had offered a compensation package that had cuts (to include an 8% pay cut). These were necessary during bankruptcy reorganization to keep the company afloat. The union refused the package and walked out.
Apparently, 100% of nothing is much better than 92% of something … especially in this job market.
Congratulations Bakery, Confectionery, and Tobacco workers and the Grain Millers International Union, among others. You put the capital “S” in Stupid, Selfish and Shortsighted (a crown previously held by the former union members of Eastern Airlines).
But I’m sure this will somehow end up being blamed on “greedy Capitalists” and be declared a “market failure” by the usual suspects.
The cultural corruption of entitlements should, by now, be well known. But it also is just as well known that our current system incentivizes the “Santa Claus” form of government vs. that of the night watchman. The end state is inevitable. It isn’t a matter of “if” but “when”.
“The more government takes in taxes, the less incentive people have to work. What coal miner or assembly-line worker jumps at the offer of overtime when he knows Uncle Sam is going to take sixty percent or more of his extra pay? Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.” – Ronald Reagan
You’d think that would be self-evident. Apparently it’s not. And if you doubt that, watch what happens next year as our “leaders” try to figure out how to get us to pay their way out of the mess they’ve made (and for which we’ve never, ever held them accountable).
All I could do when I read this was laugh. And laugh. And laugh:
The Danish government has said it intends to abolish a tax on foods which are high in saturated fats.
The measure, introduced a little over a year ago, was believed to be the world’s first so-called “fat tax”.
Foods containing more than 2.3% saturated fat – including dairy produce, meat and processed foods – were subject to the surcharge.
But authorities said the tax had inflated food prices and put Danish jobs at risk.
Gee, Econ 101 strikes again.
And we know we’re a nation of math scholars – NOT.
Seriously though, you shouldn’t have to be a math scholar to understand what constitutes unsustainable fiscal conduct. We seem to be a nation in denial. So was Greece and reality didn’t pay a bit of attention to their desire to ignore the math that put them in the situation they now enjoy. We, however, continue to think we’ll be an exception to reality.
Good luck with that. From Zero Hedge:
The amount of debt required today to create a single dollars’ worth of GDP today is clearly unsustainable. However, the current Administration has been increasing Federal debt at a run rate of more than $1.2 Trillion annually to date. The understanding of the impact of increasing debt on economic growth is crucially important to understand.
As we discussed recently in “Debt and Deficits: Killing Economic Prosperity” it is “the economic impact of spiraling debt levels that have eroded economic growth. Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host.
The current Administration, however, is trapped into the belief that “big government” is the solution to the long term economic ills. However, a simple look at the impact of debt increases on economic growth tells us that this approach is misguided.
It is not “misguided”, it is flat wrong. And there are tons of examples to make the point. But, we’ve just seen the status quo given another 4 years to redefine “unsustainable” into something from which we can’t recover (btw, 4th quarter GDP has been downgraded to 1.5%).
The good news?
Well the good news is “lady parts” will be “safe” for those 4 years unless, of course, the unsustainable crashes and then, well, I guess the Sandra Flukes of the world will have to find a new provider of contraception.
A law the country didn’t want and upheld by a ridiculous Supreme Court ruling is now beginning to have it’s predicted effect:
Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee.
Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.
The shift is one of the first significant steps by employers to avoid requirements under the health-care law, and whether the trend continues hinges on Tuesday’s election results. Republican presidential nominee Mitt Romney has pledged to overturn the Affordable Care Act, although he would face obstacles doing so.
That’s really going to help the job situation, isn’t it?
When is government ever going to learn that its intrusion into the private affairs of men always has consequences, and, when they are outside the legitimate function of government in a free society, the effect is usually negative.
Congratulations Democrats, you’ve done it again.
I don’t know how many times we have to point these out or how many ways we have to illustrate that government has no business trying to pick winners and losers, because usually, as with most centralized planning organizations, they get it wrong. Why? Because they’re absolutely blind to signals from the market. Government’s picks are founded more in preference than reality:
Obama touted it in 2010 as evidence “manufacturing jobs are coming back to the United States,” but two years later, a Michigan hybrid battery plant built with $150 million in taxpayer funds is putting workers on furlough before a single battery has been produced.
Workers at the Compact Power manufacturing facilities in Holland, Mich., run by LG Chem, have been placed on rotating furloughs, working only three weeks per month based on lack of demand for lithium-ion cells.
The facility, which was opened in July 2010 with a groundbreaking attended by Obama, has yet to produce a single battery for the Chevrolet Volt, the troubled electric car from General Motors. The plant’s batteries also were intended to be used in Ford’s electric Focus.
The 650,000-square-foot, $300 million facility was slated to produce 15,000 batteries per year, while creating hundreds of new jobs. But to date, only 200 workers are employed at the plant by by the South Korean company. Batteries for the Chevy Volts that have been produced have been made by an LG plant in South Korea.
Talk about outsourcing.
Workers are furloughed for one week every month. And guess who pays for that week?
Boileau pointed out the workers who are on furloughs one week a month are eligible to collect unemployment for that week, and he said the company covers the contributions to their individual benefits during the period.
Reality check commonly ignored when it comes to government:
“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry, or only those who made individual decisions to invest would have lost their money, not taxpayers.”
Instead, government has “socialized” the loss.
The market has moved on – natural gas is cheap and plentiful. It is the future, at least the near future. That’s where everything is going.
Meanwhile, the government continues its near unbroken string of picking losers … not that anyone who knows a thing about economics and markets should be the least surprised. Unlike many other things, this is not “unexpected”.
Ye olde “a picture is worth 1,000 words”:
IBD has the article. One of my favorite myths is the Bush “tax cuts” (tax rate) and deregulation cause the recession. Yeah, not so much:
It’s a standard Obama talking point. But it’s not true. Bush’s tax cuts did not cause the last recession.
In fact, once they were fully in effect in 2003, they sparked stronger growth — generating more than 8 million new jobs over the next four years, and GDP growth averaging close to 3%.
Those tax cuts didn’t explode the deficit, either, as Obama frequently claims. Deficits steadily declined after 2003, until the recession hit.
Nor was Bush a deregulator. Conservative Heritage Foundation’s regulation expert James Gattuso concluded, after reviewing Bush’s record, that “regulation grew substantially during the Bush years.”
Even the Washington Post’s fact-checker, Glenn Kessler, gave Obama’s claim three out of four “Pinocchios,” saying “it is time for the Obama campaign to retire this talking point, no matter how much it seems to resonate with voters.”
What did cause it? What we’ve been saying since it happened, that’s what:
The housing bubble. And that, in turn, was the result of a determined federal effort to boost homeownership by, among other things, pressuring banks to lower lending standards.
So while the rest of the surrogate media “fact checks” Romney, here’s a basic fact check on Obama. And yes, if you’re still wondering … he’s full of it.
Here’s how markets work. From Toyota:
It said today it will not release its proposed mass-market mini e-car, the eQ. The reason: there’s no demand for it, not while battery technology is failing to provide comparable range to a tank of petrol. The natural gas boom in the US has seen prices of the fuel plummet, in turn reducing the cost of electricity generated by burning it. The Japanese car maker said today it will release 21 hybrid gas-electric models in its line-up by 2015.
“The current capabilities of electric vehicles do not meet society’s needs, whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge,” said, Uchiyamada, who spearheaded Toyota’s development of the Prius hybrid in the 1990s.
Here’s the market not working because of government intrusion (and ownership):
Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts.
Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.
It currently costs GM “at least” $75,000 to build the Volt, including development costs, Munro said. That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part ofPresident Barack Obama‘s green energy policy.
A pity these things have to be continually pointed out. But, of course, it won’t stop those who want government to decide what we should be driving instead of consumers and think subsidies will foster that desired behavior.
Two non-partisan government agencies — the Congressional Budget Office in Washington, D.C. and Parliament’s Select Transport Committee — conclude that during the next decade at least, the giveaways will have little impact on sales of plug-in hybrid and all-electric vehicles, or on gasoline consumption and greenhouse-gas emissions. Their main beneficiaries: affluent purchasers who’d buy the vehicles anyway.
“… during the next decade at least …?” Love that caveat, don’t you? They never work if it is something consumers don’t want. See current example for proof. In the case of the market, it’s moved on … and much faster than government can react. As usual, government has backed a loser.
The frenzy over shale gas deep under Ohio and other states has the makings of a different kind of rush on the nation’s highways. Businesses, cities, metropolitan transit systems and even school districts across the nation are edging toward a switch from diesel and gasoline to natural gas. Converting cars and light trucks to use either gasoline or natural gas is expensive. And heavy trucks designed specifically for natural gas also cost more than conventional diesels. But at current prices, engines that can run on natural gas cut fuel bills in half or better.
And GM has the Volt. You have to laugh at the fact that the central planners invariably always get it wrong.
You’d have think we’d have learned that by now, wouldn’t you?