The Unions Need Verizon More Than Verizon Needs the Unions

45,000 Verizon employees are now on strike — in the middle of the worst economic downturn since the Carter administration.

The union members are employees of Verizon’s ailing wireline business and they are demanding that Verizon use profits from it’s successful wireless business to subsidize the poorly performing wireline business.

The wireline business is suffering for two main reasons. The first is technological — customers are choosing to drop wired telephone service in favor of wireless service. This leaves traditional local telephone carriers with high-cost infrastructures to maintain and fewer customers to pay for this maintenance. These companies are seeing falling revenue, without any corresponding drop in operating costs. This is obviously not a sustainable situation. The wireless business, on the other hand, is experiencing customer growth which is causing revenue growth to exceed the costs of new infrastructure.

The other cause for the poor relative performance of the wireline business is the unions themselves. The wireless business is profitable because the non-unionized employees are able to rapidly adjust their work procedures in response to improving technology and changing customer demands. Similar progress in the wireline business is hobbled by union rules which restrict changes in the work environment.

The wireline division is less profitable than it used to be. The unions are asking Verizon to take money away from the non-unionized employees of the wireless division and give it to the unionized employees of the wireline division. This is a ridiculous demand and one which Verizon does not need to grant — because of the current economy.

Striking During a Recession

Striking workers typically take short-term or part-time jobs to supplement their incomes during a strike. Very few such jobs are available at this time, due to the current 9+% unemployment rate. Huge numbers of part-time jobs are already being held by people who are unable to find full-time employment.

On the other side, Verizon will have little trouble hiring either temporary or permanent replacement workers for the striking union employees. Many of the union employees are semi-skilled customer service representatives which can be easily replaced by new trainees. Many others are electricians and outside plant personnel — who utilize almost exactly the same skills as the millions of construction workers who have been put out of work by the current “Great” recession.

Moreover, Verizon can also lean on non-unionized management employees to work longer hours to fill-in for unionized employees during the strike. The current economy makes it almost impossible for these employees to quit or to refuse to work the extra hours — because there are no other jobs available for them if they lose their positions at Verizon. In addition, even small bonuses from Verizon will go a long way to encouraging them to support the company during this strike.

The union members need to understand that we are now living under a new economic reality. This is the change we voted for. This great recession is a direct result of economic policies created by the Democratic congress and the Obama administration. We, the American people, voted for high unemployment when we voted to raise the minimum wage, increase the regulatory burden on American businesses, and increase the total tax rate for American businesses — even though it is already higher than any other economically advanced nation. This recession didn’t just happen — we created it. We created it and now we must live with the consequences.

The Stock Market Hasn’t Hit Bottom Yet

If you are thinking of jumping into the stock market in response to the recent nine day market plunge, don’t. Here’s why.

Timing

The stock market tends to bottom out about 90 days before the end of a recession. Does anyone believe this “Great” recession will be over in 90 days?

Perspective

The market is still overvalued at 11,383. Remember that it stood at 6,630 as recently as March of 2009. The market has a lot of room left in this correction.

Corporate Earnings

Corporate earnings are looking grim. Corporations have kept earnings reports looking good by shrinking their American workforces. This trend has pretty much run it’s course — there isn’t much left to cut. This means that corporate earnings reports are soon going to more accurately reflect the market reality — and that reality is not good.

Unemployment

Unemployment is out of control. The official unemployment numbers are only holding below 10% with the help of some shady government bookkeeping. Unemployed Americans aren’t buying goods and services — because they can’t afford to. This keeps corporate profits down, which is reflected in stock prices.

Fiscal Conservatism

The Obama administration’s gross mismanagement of the economy and fierce anti-business rhetoric has scared many businesses and investors into sitting on their investment capital instead of putting it to work in the market.  There are trillions of underutilized dollars sitting on the sidelines.  Until those dollars get back into the game, there will be no real economic recovery — and there is no sign that those dollars will be ready to move before the next election.

Real Estate Values

Real estate is poised to continue it’s free-fall through 2011 and 2012.  Single-family homes are likely to lose an average of 10% of their value over the next year.  When Americans home values decline they have less money to spend on goods and services, which depresses corporate profits, which pushes the stock markets down.

Conclusion

There will be a right time to get into the market.  Probably that time will be as soon as the market prices in the results of the next election.  This will likely be 90 days before the election, but could be much earlier if Obama’s defeat appears to be certain.

Obama Administration Refuses to Prosecute Official for Corruption

Raymond Jefferson got caught. A whistle-blower at the Labor Department reported him for three different instances of improperly steering government contracts to friends and associates. Mr. Jefferson resigned after an internal investigation found him guilty.

Jefferson wasn’t a low-level bureaucrat operating deep within the bowels of the federal government. After Jefferson donated $2,250 to Barack Obama in 2008, the President appointed him as the head of the Veterans Employment and Training Service.

A report by the Labor Department’s inspector general states that Jefferson exhibited behavior “which reflects a consistent disregard of federal procurement rules and regulations, federal ethics principles and the proper stewardship of appropriated dollars.”

Here’s where the story gets interesting. The Obama administration has decided not to pursue prosecution of Obama’s fellow Harvard grad and ex White House Fellow. Jefferson won’t go from Fellow to felon, purely because the Obama administration is making the decision to let him get away with stealing from the U.S. taxpayers.

To borrow a quote from Obama’s friend Bill Ayers, “Guilty as hell, and free as a bird.”

Will Malaysia Become the Next Iran?

Malaysia has been ruled since 1957 by the UMNO (United Malays National Organization) party. This has led to intense frustration with the never-changing regime, particularly among the youth of the nation. Democracy has effectively been held inactive while the same extremely limited group of people wield power over twenty-eight million people.

Looking for a way out of this effective dictatorship, many Malaysians have turned to Islamist extremism. A recent study, Values Dreams Ideals: Muslim Youth in Southeast Asia, shows us the facts on the ground. The study is the work of the Goethe-Institut and the Friedrich Naumann Foundation for Freedom. In October and November of 2010, they conducted a poll of Muslim youth in Malaysia and Indonesia. Here’s what they found.

While only 60.4% of Malaysians are Muslims, 71.6% of Malaysian Muslim youth believe that the nations constitution should be replaced with Sharia law. 69.3% of the young Muslims believe that wearing the head scarf should be mandatory for females — even though the practice was only introduced in Malaysia in the 1980s.

99.4% of Muslim youth in Malaysia believe that it is not OK to be homosexual, 97.5% believe that it’s not OK to watch pornography,98.4% believe that it is not acceptable to have sex before marriage, and 67.5% believe that people who choose to drink alcohol should be whipped.

80% of the youth don’t believe that the U.S. invasion of Afghanistan was justified — most likely because 62.4% of them believe that Osama bin Laden was an Islamic freedom fighter. A ridiculous 78% of the youth actually believe that there will be peace in the world once the Muslim-Israeli conflict reaches a final solution.

66.3% of Muslim youth above the age of 21 have never bothered to vote — perhaps because 86.1% of them believe that “A strong man should bring order to our country.” This is a perfect recipe for totalitarianism.

Iran was one of the most apparently stable, modern, peaceful, and prosperous nations in the Middle East before the Islamist revolution in 1979. With a government which is not responsive to democratic forces, a large religious educational system, a largely religious legal system, and large numbers of agitated youth who believe that Islamist dictatorship is the correct path to bring order to their nation, Malaysia is heading down the same path which brought death and destruction to Iran.

Your $4,679 Credit Card Bill

TransUnion reports that the average American owes $4,679 in credit card debt. Are you in better or worse shape than average?

Whichever way you answered that question — it doesn’t really matter. Why? Because your government is spending so much money that it makes your own debts appear minuscule in comparison. The average American taxpayer owes $130,127 in federal government debt. That is the portion of the total federal debt owed by each individual taxpayer — i.e. you. Why worry about a little credit card debt when your share of the federal government debt is more than 27 times as large?  Compared to the bureaucrats in Washington, you are a financial genius.

Worse, that $130,127 doesn’t cover payments that the bureaucrats promised to make, but never got around to finding funding to pay for.  You the taxpayer are responsible for those “unfunded liabilities” — to the tune of $1,027,308 per taxpayer.  Now how worried are you about your $4,679 credit card bill?

A reasonable person might wonder how all this debt will ever be paid off.  It may be a surprise to the people living high off the hog in Washington D.C., but the average American doesn’t have $1,027,308 to pay for all of those promises.  The average American is still trying to figure out how to pay of the $4,679 they owe on their own credit cards.

I have come to realize that the bureaucrats have no intention of ever paying off this debt.  In fact, they are voting now to increase the debt limit so that they can borrow more.  If you owed $1,027,308 on your credit cards — would you ask the credit card companies for a limit increase?  Do you think they would give it to you?  Do you really want the federal government to approve a credit limit increase for itself — when you are on the hook to pay off those debts?  Think about it.

Only 16% of Americans Believe the Economy is in Good Shape

CNN hired Opinion Research Corporation to conduct a poll of Americans concerning their views on the economy.  Take a look at the results.  Americans are now more pessimistic about their economic future than at any time since this polling began — in 1997.  This includes the Y2K scare, the attacks on America on 9/11, and the real estate recession of 2008.

The poll asked “How would you rate the economic conditions in the country today — as very good, somewhat good, somewhat poor, or very poor?”  Less than 1% of Americans responded “Very good” — something which has never happened before.  Only 16% had a positive view of the current economy, while 84% stated that the current economy was poor.

Looking forward to next year, and Barack Obama’s hopes for a second term, an amazing 40% of those polled believe that the economy will be good, while 59% believe it will be poor.  59% completely blows away the previous record of 50%.  These are the worst results on record, but still far too optimistic.

The truth is that the economy is in bad shape and will not improve unless we make the right decisions and follow then with the right actions.  In WorldBank rankings, the United States has fallen to below Singapore, Hong Kong, New Zealand, and the United Kingdom as a desirable nation to do business.  A large portion of the problem is our federal tax code, which ranks #62 in the world — below nations like Tunisia and Djibouti.  The total real tax rate for American businesses is 46.8% — which is directly responsible for the current 9.2% unemployment rate.  Moreover, it takes an average of 187 hours for a business to complete and file the tax forms — more than four weeks every year which could be spent on improving operational efficiency, providing customer service, or seeking out new markets.

The economy is built on business — on investors and business people getting together and trying to earn money by meeting a customers desire.  Government over-regulation makes it difficult for investors and businesspeople to get together, it makes it difficult for business to start up and to hire individuals, it makes it difficult to bring new products and services to market, and it makes it difficult to do all of this at a price which is competitive with companies which are based in more freedom-oriented nations.

There is no question of whom to blame for our current economic woes — it’s us.  It is our fault, the American voters.  We continue to vote for more government, more regulations, more giveaways, more taxes, more of everything from an institution with a history of doing almost nothing well.  This is the “change” we voted for.  If we wanted a different world, we should have voted differently.