Arnold’s Ramblings 3-1-2011

All these attacks against Governor Scott Walker of Wisconsin and his plan to reduce state employee costs in Wisconsin (and close a budget deficit) and reduce collective bargaining rights of the unions. Most polls show that Americans support Walker’s efforts. Most Americans believe (rightly or wrongly) that the state employee unions pay package is too much. But Arnold is more interested in the Democrats who escaped to Illinois rather than permit a vote. The media says that Governor Walker MUST allow them their say (which they would have in the state Senate had they stayed) and that Governor Walker MUST negotiate with the Democrats. Arnold is perplexed as usual. When Speaker Pelosi froze out Republicans, the media applauded her actions. When President Obama had said that there would be no negotiating with Republicans, the media applauded that. And when President Obama actually negotiated with the Republicans over the extension of tax cuts; the media attacked President Obama. How could President Obama negotiate with the (evil) Republicans?

Nothing makes sense anymore! As I read through the news (and I use that word rather loosely) it continues to be very disjointed. More states are considering ways to reduce the compensation of the state and municipal workers. The unions are accusing the Republicans of destroying the middle class. Even Democrats such as Governor Cuomo of New York are looking to cut compensation. Virtually every comparison of compensation by the state and municipal unions indicate that their compensation plus benefits is about 50% higher than the comparable private sector compensation.

Over the years Arnold has gotten into BIG trouble regarding teacher compensation plus benefits. Many (many, many, many) years ago when my wife was a speech therapist in the public schools; your humble writer had a series of unsuccessful discussions with teachers unions advocates. At the time, Arnold was working an average of 75 hours per week in the private sector. Arnold was salaried (which meant no overtime compensation) and Arnold worked an average of 48 weeks a year (with vacation, sick time and holidays). And Arnold’s compensation was about 50% higher than his wife’s. She (Arnold’s wife) worked 6 hours a day, about 34 weeks a year. So Arnold worked about 3600 hours a year; his wife worked 900 hours a year. The teachers were all screaming that they should be paid the same as Arnold. Arnold said that the teachers should work 3600 hours a year, then they would be entitled to the same compensation. But, the teachers had a great pension; Arnold had no pension. The teachers had other benefits, Arnold did not have and the teachers did not consider that part of their respective compensation. The teachers (except my wife) said that they worked thousands of hours at home. But within the 6 hours of day of work, the teachers had one hour (or more) of open time to complete their work; and the vast majority of teachers complete all of their work during that time.

The DJIA still looks higher maybe after a small correction.
Gold looks higher to maybe $1500 to $1600, then a correction. We will see how strong the correction is.
The dollar looks lower; then it should rally up for the rest of the year.
Oil looks higher for the time being; with all of the goings on in the Middle East.
Interest rates are down a bit to 4.5% on the 30 year Treasury; and rates should start to rise.
Real estate prices are clearly lower in virtually every market.
The economy still looks lower. 4th quarter GDP was revised down to 2.8%, and should still be lower yet.

Disclaimer: Arnold’s Ramblings Inc. and/or its writers, representatives, employees, shareholders, executives and affiliates may have a financial interest in any security recommended to readers or otherwise mentioned. Nobody associated with this website or Arnold’s Ramblings Inc. is a registered investment advisor. Everyone should review investment materials in detail and with due dilligence when possible, and should consult proper counsel prior to investing. All information and advice presented by Arnold’s Ramblings Inc. is believed to be accurate and reliable when posted, but cannot be guaranteed.

Copyright 2011 Arnold’s Ramblings Inc., All Rights Reserved.


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Arnold Goldin
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