As a political news junkie and a person concerned about the fiscal future of our culture I have watched with more than a little interest the woes that have befallen the USA. Throughout the country there have been stories of municipalities, counties and States that are either currently bankrupt or on the verge of insolvency.
The main culprit has been labor agreements negotiated by long gone politicians with public sector unions that provide many services including those defined as essential such as police and firefighters.
The typical scenario has been that very lucrative contracts were provided to those workers by the then in power politicians. Subsequently, when these politicians had retired with their own cushy pensions, it became time to pay these unionized workers their bargained for benefits - except there no longer was enough money to fulfill those obligations.
The American solution was to honor those agreements, lay off current workers, deplete services beyond bare-bones and legislate away the ability for public unions to collectively bargain in the future.
Interestingly, the province of Ontario is attempting a similar strategy with its education workers (teachers, support staff etc.). The result has been a stand off between the Union and the Government. In the middle, feeling the brunt of the dispute are students being denied extra-curricular activities due to the educators "work to rule" response.
Today, the Ontario Education Minister announced an imposed agreement upon the teachers' union. Basically, the new contract replaces the previously agreed upon, bargained for "Collective Agreements". The Province has unilaterally negated previously agreed upon, legally binding contracts.
Although I am not a big union supporting person I do find it concerning that contracts can be so cavalierly ignored. Our culture, law, and commercial system is based upon the concept of "binding contractual agreements" mutually negotiated and upheld by the judicial system.
It seems to me that changed economic circumstances (unless an express term of the agreement) shouldn't form the basis for one of the parties to unilaterally change the terms of a contract.
At what point is every contract between any parties subject to amendment or being declared void just because one of the parties made a bad bargain?
This is a dangerous precedent being set by the Ontario Government. This can cut both ways if it becomes the law of the land. I sympathize with the Provincial Government in its efforts to be fiscally responsible and try to "live within its means"; however, what happens to the sanctity of the contract?
Thursday, January 3, 2013
Sunday, March 25, 2012
Jack Layton's Legacy
On the day that James Cameron the Canadian Director of the film "Titanic" has completed only the 2nd dive ever to the deepest point on Earth New Democrats are awakening to a new political world that could either have them heading the same direction as Cameron or, perhaps, scaling the heights of modern Progressivism under their new leader Thomas Mulair.
The new leader of Canada's Loyal Opposition has made it known that he has no plans to forge an alliance with the Liberals and that his current highest priority is to mend fences with any aggrieved NDP Party faithful after the bruising leadership conference held this past weekend.
The leader of the opposition's first test will be the gauging of his response to the Harper Government Budget to be delivered this Thursday. Finance Minister Jim Flaherty is sure to announce some serious cuts to various government departments and lay offs of public sector jobs across the country. The tea leaves indicate that the Governement will emphasize measures to boost the economy & stimulate job creation as a response to 5 months of poor employment numbers.
There will be significant attention given to the policies that affect the sustainability of the major social programs such as Old Age Security. Canada has survived the recent economic collapse fairly well and has been the envy of those south of the border as the USA has experienced much harsher effects arising from the croney capitalism, Wall Street deception & fraud, and the Obama Administration's inadequate policies of the past number of years. The issue of the day now is whether Canada can continue to support its enviable social programs and grow its economy while its southern trading partner struggles to re-assert itself as the world's leading financial system.
The new leader of Canada's Loyal Opposition has made it known that he has no plans to forge an alliance with the Liberals and that his current highest priority is to mend fences with any aggrieved NDP Party faithful after the bruising leadership conference held this past weekend.
The leader of the opposition's first test will be the gauging of his response to the Harper Government Budget to be delivered this Thursday. Finance Minister Jim Flaherty is sure to announce some serious cuts to various government departments and lay offs of public sector jobs across the country. The tea leaves indicate that the Governement will emphasize measures to boost the economy & stimulate job creation as a response to 5 months of poor employment numbers.
There will be significant attention given to the policies that affect the sustainability of the major social programs such as Old Age Security. Canada has survived the recent economic collapse fairly well and has been the envy of those south of the border as the USA has experienced much harsher effects arising from the croney capitalism, Wall Street deception & fraud, and the Obama Administration's inadequate policies of the past number of years. The issue of the day now is whether Canada can continue to support its enviable social programs and grow its economy while its southern trading partner struggles to re-assert itself as the world's leading financial system.
Monday, May 9, 2011
Canadian Election
The Conservatives marched to a majority government by sweeping the election held May 2, 2011. PM Harper received a resounding mandate to govern for at least the next 4 years as the Canadian electorate rejected the Liberals reducing them to 3rd party status.
The headline news was the rise of the NDP to lead the Opposition with representation of over 100 seats in the House. This is unprecedented and more then doubled any previous number of seats it had ever held in any one session of Parliament since it's inception.
The Bloc Quebecois lost all but a handful of seats (3 or 4 depending upon re-counts) in Quebec as the NDP became the dominant party in that Province. The Green Party even managed to gain it's 1st seat ever in B.C. as it's leader now will be represented.
Canadians voted for stability; they affirmed the leadership of Harper & rejected Ignatieff. In fact Iggy lost his seat and has been put out to pasture as a lecturer at the University of Toronto. The Liberals seem to be in a quandry as they try & determine their future. Clearly they don't want Bob Rae as their leader as the Globe & Mail reports that they are planning on deferring any leadership decision for a year or more so as to avoid that eventuality.
The NDP were absolutely thrilled with their showing but, as many commentators noted, this strong showing took seats away from the Liberals & insured a majority government for the Conservatives. In fact, the NDP will yield less power now than they did in the last minority session. During the last Parliament the NDP held the balance of power and thus had significant influence on policy. Now, even though they have more than doubled their number of seats, they will have no influence. The Conservatives, with their majority, do not need the assitance of any other party to push their agenda. At least Leyton will have the loudest voice from the impotent minority side of the House as the leader of the Loyal Opposition.
I believe this is all good news for Canada.
The headline news was the rise of the NDP to lead the Opposition with representation of over 100 seats in the House. This is unprecedented and more then doubled any previous number of seats it had ever held in any one session of Parliament since it's inception.
The Bloc Quebecois lost all but a handful of seats (3 or 4 depending upon re-counts) in Quebec as the NDP became the dominant party in that Province. The Green Party even managed to gain it's 1st seat ever in B.C. as it's leader now will be represented.
Canadians voted for stability; they affirmed the leadership of Harper & rejected Ignatieff. In fact Iggy lost his seat and has been put out to pasture as a lecturer at the University of Toronto. The Liberals seem to be in a quandry as they try & determine their future. Clearly they don't want Bob Rae as their leader as the Globe & Mail reports that they are planning on deferring any leadership decision for a year or more so as to avoid that eventuality.
The NDP were absolutely thrilled with their showing but, as many commentators noted, this strong showing took seats away from the Liberals & insured a majority government for the Conservatives. In fact, the NDP will yield less power now than they did in the last minority session. During the last Parliament the NDP held the balance of power and thus had significant influence on policy. Now, even though they have more than doubled their number of seats, they will have no influence. The Conservatives, with their majority, do not need the assitance of any other party to push their agenda. At least Leyton will have the loudest voice from the impotent minority side of the House as the leader of the Loyal Opposition.
I believe this is all good news for Canada.
Sunday, May 8, 2011
How Markets Fail
Just finished a very informative, enlightening book called "How Markets Fail" by John Cassidy. This book traced economic principles from the time of John Stuart Mill and Adam Smith as they developed to create the atmosphere that resulted in the great collapse & bubble burst that started in 2007 and continues to today.
Cassidy is highly critical of Utopian Economics, the influence of the teachings from the University of Chicago School of Economics and the policies that resulted & were implemented by the "Maestro" Alan Greenspan.
Principles such as game theory, rational irrationality, invisible hand, prisoner's dilemma, myopic behavior, excessive risk taking and opacity vs. transparency were all part of the narrative. Very educational, very interesting but a challenging read.
Cassidy's conclusions were that we should be pursuing a robust financial system not by seeking the most advanced but rather by implementing the most reliable methods. He proposes a blend of the free-market and reasonable government regulation. He asserts that there are places where the government is required and best placed to monitor the market influences that could run amok should pure self interest be allowed full reign.
The final message of this book is that Utopian Economics must be replaced with reality-based economics. However, he was not all that hopeful that this could occur as traditional economic training is counter-productive for such a result. Academics are most comfortable with their mathematical models and are ill equipped to teach the reality based lessons that must be understood for the growth of practical economics. As a result his prediction is that we are destined to not learn from history but rather it will be repeated. There will be new bubbles and more dire consequences in the future.
In fact, as I write this entry there are opinions being communicated that we are on the verge of another bubble even larger than that from which we have just emerged and that the consequences will be even graver than we are currently enduring. In fact the commentators at Business Week are calling it the Granddaddy of all Bubbles .
Sunday, February 20, 2011
All the Devils Are Here
My study of the 2008 Financial Crisis has continued. The book that had impressed me the most has been The Big Short by Michael Lewis - then I read All the Devils Are Here by Bethany McLean and Joe Nocera. It blew me away.
This is a methodical recounting of the policies & players that created the environment that faciltated the great housing bubble of the 2000 - 2007 period. This bubble has brought the world economy to its knees and this book serves as a reporting of those events. The complicated influences that created this travesty are organized and explained in this treatise.
According to this analysis there is plenty of blame to go around. Greedy traders, misguided regulators, sleazy subprime companies, cowardly legislators, and clueless ill-informed home buyers all played an essential part.
The authors go back decades to locate the source of the problem; they follow the events from those early mistaken policies clear through to the final act - the near total collapse of the US economy with the tragic consequences resulting throughout the world.
They provide excellent detailed reporting about the players and their companies that all profitted from but also caused the housing bubble that collapsed the economy including the sleaziest - Angelo Mozilo & Countrywide Financial, the deceptions of Roland Arnall at Ameriquest, the meglomaniac Hank Greenberg of AIG, the overly ambitious Stan O'Neal of Merrill Lynch, the greed & hypocrisy of Lloyd Blankfein at Goldman Sachs, the failures of Franklin Raines at Fannie Mae, the foolishness of Brian Clarkson at Moody's, and, the arrogance & fall of Alan Greenspan at the Federal Reserve.
It all unfolds like a Greek tragedy, everything that seemed right turned out wrong; however, and this is unfortunate, the people that caused this mess not only are not punished but rather they are handsomely financially rewarded.
A great review of this book can be found at Falkenblog and not only would I highly recommend the book but I also would direct you to that review.
This is a methodical recounting of the policies & players that created the environment that faciltated the great housing bubble of the 2000 - 2007 period. This bubble has brought the world economy to its knees and this book serves as a reporting of those events. The complicated influences that created this travesty are organized and explained in this treatise.
According to this analysis there is plenty of blame to go around. Greedy traders, misguided regulators, sleazy subprime companies, cowardly legislators, and clueless ill-informed home buyers all played an essential part.
The authors go back decades to locate the source of the problem; they follow the events from those early mistaken policies clear through to the final act - the near total collapse of the US economy with the tragic consequences resulting throughout the world.
They provide excellent detailed reporting about the players and their companies that all profitted from but also caused the housing bubble that collapsed the economy including the sleaziest - Angelo Mozilo & Countrywide Financial, the deceptions of Roland Arnall at Ameriquest, the meglomaniac Hank Greenberg of AIG, the overly ambitious Stan O'Neal of Merrill Lynch, the greed & hypocrisy of Lloyd Blankfein at Goldman Sachs, the failures of Franklin Raines at Fannie Mae, the foolishness of Brian Clarkson at Moody's, and, the arrogance & fall of Alan Greenspan at the Federal Reserve.
It all unfolds like a Greek tragedy, everything that seemed right turned out wrong; however, and this is unfortunate, the people that caused this mess not only are not punished but rather they are handsomely financially rewarded.
A great review of this book can be found at Falkenblog and not only would I highly recommend the book but I also would direct you to that review.
Tuesday, June 29, 2010
The Big Short
Just finished Michael Lewis' fine book about the housing crash called "The Big Short". I would highly recommend this read to anyone. I have read just about everything I can get my hands on regarding the Too Big to Fail scenario. All of what I have read to date has been from the perspective of the top of the heap (i.e.) Paulson, Bernenke, Geithner and the heads of the big investment banks. This book is fascinating as it analyzes the same events from the bottom of the pyramid. He follows a handful of hedge fund managers that early on figured out the housing mess and shorted the market to make huge profits. It is a remarkable tale of how they determined everyone in the mainstream was either wrong, crooked or so greedy that they didn't want to change the status quo.
The real tragedy of course is that they were the only ones that saw the fallacy of the economy at that time. As a result we are all still paying a heavy price for the greed and malfeasance of the oligarchy that runs the banking industry in this country.
In any event if you have the interest & the time I highly endorse this book.
The real tragedy of course is that they were the only ones that saw the fallacy of the economy at that time. As a result we are all still paying a heavy price for the greed and malfeasance of the oligarchy that runs the banking industry in this country.
In any event if you have the interest & the time I highly endorse this book.
Wednesday, June 23, 2010
Afghanistan Commander Ousted
I am not sure what to think just yet regarding this McChrystal controversy. I have read the Rolling Stone article and really didn't find it that objectionable. Most of the piece was rather benign and the elements that seemed to agitate the DC folk were mostly attributed to his subordinates. What is clear is that there was a lack of good judgment by having a journalist privy to these comments that seemed to be made amongst compatriots behind closed doors.
I am certain that this is another problem for the Obama Administration. This is another irritant that when added to all the other stuff on their platter provides a significant challenge to their ability to adhere to the task at hand.
Within the besieged White House they must be starting to feel like a large prey such as a bear or buffalo being taken down by a pack of wolves - none of the wolves in and of themselves could challenge the larger prey but with each of them distracting and nipping at the large beast they eventually prevail.
The most common question at the West Wing today must be - what can happen next?
These are the times when experience matters - we know that the adults in both the Bush Administrations persevered, we know that the Clinton people had executive experience and acquitted themselves well; what will historians say about the Obama people? The problem is that we will not have the benefit of coolly studying these times through the lens of history - we are living them & the stakes are incredibly high on all fronts.
I am certain that this is another problem for the Obama Administration. This is another irritant that when added to all the other stuff on their platter provides a significant challenge to their ability to adhere to the task at hand.
Within the besieged White House they must be starting to feel like a large prey such as a bear or buffalo being taken down by a pack of wolves - none of the wolves in and of themselves could challenge the larger prey but with each of them distracting and nipping at the large beast they eventually prevail.
The most common question at the West Wing today must be - what can happen next?
These are the times when experience matters - we know that the adults in both the Bush Administrations persevered, we know that the Clinton people had executive experience and acquitted themselves well; what will historians say about the Obama people? The problem is that we will not have the benefit of coolly studying these times through the lens of history - we are living them & the stakes are incredibly high on all fronts.
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