Avoiding Global Deflation

There’s a relatively recent analysis entitled “The Deflationary Impact of the Coming U.S. Commercial Real Estate Bust,” by Sean Daly, posted May 27, 2010 on Seeking Alpha, that reminds us the commercial real estate bubble hasn’t gone anywhere. And if you count the vacant windows in the strip malls, it isn’t hard to see the reality. Daly goes further, and in nearly 3,000 words of commentary, quotes, captions and attributions, and over a dozen charts, explains that commercial real estate loans generally have five year maturities, and the ones negotiated during the bubble boom are coming due starting in 2011. Daly also observes that the ultimate victims this time will be the 8,000+ community banks, not the big banks and Wall St. firms. Among Daly’s conclusions as to the deflationary impact of all this is this decidedly non-trivial gem: “this vicious cycle [widespread insolvency of community banks] starts to hurt the local economies just as the municipal bond defaults start to occur…worse case, the real estate industry in China goes bad and the two downturns hit the global economy at the same time.”

As noted on a June 8th post entitled “The China Bubble,” using data from USA Today, MoneyLife, 60 Minutes, China Expat, and others, real estate values in China have appreciated at 3 to 5 times their rate of GDP growth for a decade, commercial vacancy rates may already […] Read More

Fighting Union Power

If you have concluded, like I have, that 21st century labor unions in America nearly always create more harm than good, and if you have concluded, like I have, that the fight against union power is increasingly tilted in favor of the unions, it is easy to become overwhelmed. After all, the primary focus of CIV FI is to explore ways to restore financial sustainability to public institutions, and more generally, to our economic life in the wake of the debt bubble. Why is more and more of our content focused on the rise of unions?

It isn’t as though unions never had a place in our national dialogue, or a role in the fight to implement humane work rules, workplace safety, and better wages. But even as many of my liberal friends often proclaim, the role once relegated to unions now belongs under the government – and the role of government in this regard should be to create uniform basic minimums that employers must adhere to, not become unionized itself, and create laws and regulations that favor unionized employees to the detriment of everyone else.

There are so many facets to the abuse, corruption, wealth-destruction, economic decline, loss of freedoms, undermining of democracy, extortion and outright theft that comes with unions today, that volumes could be written about the problem. Public sector unions have hijacked our public employee workforces, taken away their incentives to excel, bribed them with over-market wages and ridiculously over-market benefits, introduced massive inefficiencies to government […] Read More

The Axis of Wall Street & Unions

One of the greatest misconceptions on the left may be the suggestion that “us” refers to workers (hopefully unionized workers), along with government programs and regulations, and “them” refers to big business, their friends on Wall Street, and their puppets in government. At the risk of merely presenting an opposing paradigm that is equally over-simplified, here are some alternative scenarios. The open-minded reader may find them instructive.

For over a decade, Wall Street has enjoyed an incestuous and exploitative relationship with public sector unions, because public employee pension funds have poured more new money into their equities markets than any other single source. This isn’t leveraged money or trading turnover, either, this is new money, cold hard cash that is transferred from the pockets of taxpayers into government payroll departments and turned over to the pension funds. In the United States each year, the pension fund contributions of 25 million government workers – at $10,000 per year each, which is probably a very conservative estimate – pour over 250 billion dollars into Wall Street.

The way Wall Street seduced public sector unions into thinking they could ask for retirement benefits that, on average, are quadruple what the average private sector worker can expect from social security is the single biggest example of how Wall Street seduced the entire nation into believing they could enjoy a quality of life far in excess of what they actually were earning. Public sector union leadership can hardly be blamed for believing that their trillion […] Read More

The Empathy of Competition

It isn’t as if anyone isn’t able to hear the warnings of the reactionaries or feel the resentments of the radicals. But beyond both legitimate fears and illegitimate hatreds is a deeper bond among humans that no messenger of tribalism or religion or race or national patriotism or even privilege can erase – the empathy of competition.

We see it in the Olympics every two years, as they alternate between summer and winter games, and take us all to every corner of the world. We see these games attract athletes from every nation and engage the passions of the world.

An even better example of this empathy of competition would have to be the World Cup soccer tournament – or football – as the rest of the world calls the game. Nearly every nation sends a team, with 64 surviving the qualifying rounds. Every fourth year, as spring comes to an end and on through the summer solstice, through even U.S. Independence day on the 4th of July, the tempers and timelines of the world run a mite slower, as billions of people dedicate hours – in countless cases every hour they can spare – to following this greatest of global tournaments.

On Friday July 2nd a very tired team from Uruguay eked a hardfought and lucky decision over an inspired team from Ghana, in a match that exemplified the intense drama of all the games. With overtime expired and one kick left, the Uruguayan defenders desperately repelled shots at […] Read More