Mideast Revolution Trumps Wisconsin’s Political War

Just when we were starting to adapt to living in these accursedly interesting times, the times have waxed positively exciting. Uh-oh. Who’d have believed that the full-tilt political battle going on in Wisconsin would get pushed below the fold by riots in…Tripoli? And yet, that’s how the news was played over a weekend stretched to three days by a Monday holiday. From a news perspective, one of the most interesting things about both of these watershed events is that their respective outcomes seem predictable.  In Wisconsin, as well as in every other state where the issue is put to a legislative vote, the public-employee unions seem likely to lose simply because the states are bankrupt — or soon will be if existing salary and benefit agreements are not either voided or cut back drastically.  

As for Tripoli and the rest of a caliphate yearning to be born, the would-be dictator-for-life will fall and Islam will triumph. There is reason to think this could occur, over the next several years, without much further violence. On this matter we cite the public statements of Yusuf al-Qaradawi, a charismatic Egyptian cleric recently returned from exile in Qatar whom some are calling Egypt’s Khomeini. While the 84-year-old Qaradawi presumably agrees wholeheartedly with the goal of bin Laden and al Qaeda to subjugate the world under Islamic law, he has argued that this objective and all others dear to fundamentalists can be achieved through the ballot box, since Islamists have been winning just about every election in which they’ve participated. 

Peaceful Islamic Revolution? 

It would be ironic if the Arab world embraced Islamic rule peacefully even as public-employee unions in the U.S., their backs to the wall, turned violent in a last-ditch battle for survival.  The possibility of this occurring is not so farfetched when one considers that it will be impossible for state and local governments to honor supposedly ironclad contracts with their workers. These agreements established defined-benefit pension plans and blue-chip healthcare plans that offer current employees and retirees better coverage than most top-level executives in the private sector receive. Can the state afford them? Definitely not. Will the unions gain the support of the 88% of workers who are non-unionized?  Not as long as they continue to enjoy retirement benefits that private-sector workers can only dream about. 

It seems equally doubtful that the stock market will continue to climb a wall of worry that by now has encompassed every realm of the U.S. economy save the banks.  In making such a prediction, however, we’d prefer to rely on purely technical data rather than on the hearsay of a supposed economic recovery that relatively few Americans have experienced first-hand. On that score, our proprietary indicators suggest that the possibility of a major top in the stock market is as high as it’s been since the Mother of All Bear Rallies began almost two years ago.  If you’re interested in our precise targets for the S&P Index, the Dow and other widely followed vehicles, you can receive a free seven-day trial subscription to Rick’s Picks by clicking here. This will also give you access to a 24/7 chat room that draws traders from around the world, as well as to Rick’s Picks’ daily trading recommendations and real-time updates for stocks, index futures and commodities. 

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  • ebear February 23, 2011, 10:23 am

    “It would be ironic if the Arab world embraced Islamic rule peacefully”

    It would be even more ironic if the Islamic world embraced secular democracy, and yet that’s what I see happening.

    I would make comparisons to Latin America. It’s still contentious and corrupt, but nowhere near as murderous and oppressive as it was 20 or 30 years ago. Elections are more frequent and generally clean. With few exceptions, militaries have returned to the barracks, and while not the perfect climate for economic growth, what is being produced is more fairly distributed.

    FWIW, my money’s on the emergence of secular societies that broadly reject Islamic Fundamentalism. I base this on the observation that most of these nations have young populations whose main desire is to attain the social, political and economic freedom we take for granted.

    The bed-sheet monarchs and black robed clerics are two sides of the same coin. Neither has anything to offer, and more and more people are starting to notice.

    Islam, like the Catholic Church in its day, will be transformed. That’s the way of all religions: resist until change is inevitable, then adapt or become obsolete.

    ebear

    “asian brothers come listen to me,
    respect your sisters if you want to be free.” –Asian Dub Foundation.

  • Robert February 22, 2011, 11:15 pm

    I thought this was a cool (but very heavy) video that is very relevant to today’s topic:

    http://www.youtube.com/watch?v=Xbp6umQT58A

  • John Jay February 22, 2011, 10:03 pm

    Wisconsin public schools increased per pupil spending from $4956 in 1998 to $10791 in 2008.
    The results:
    1998- 32% of 8th graders are “proficient” in reading.
    2008- 32% of 8th graders are “proficient” in reading.
    Money well spent!
    Let’s give those teachers another raise!
    http://cnsnews.com/news/article/two-thirds-wisconsin-public-school-8th-g

    • DG February 22, 2011, 11:45 pm

      johnjay

      your data is consistent with national experience. Between the 70’s and the 2000’s inflation adjusted education spend doubled and test results were flat to slightly lower. Internationally, we have fallen WAY behind. Spend good money after bad? Next thing you know, bankers will demand we repay them for their bad business decisions.

      Client #9 and waiting for superman are a couple of very interesting documentaries now out. “9” is about the Spitzer takedown and “Superman” is about education and the ridiculous deathgrip the teacher’s unions have on education reform.

      The irony is that the good teachers, which are likely 75% of them, are being tossed in the garbage with the 25% that stink. And that is why it is called a union. Supporting the union supports the worst teacher as if they were the best. Which is unfair to the best. Revolt!

      On Spitzer, now that we have some time and history for reflection, funny that most of his critics are now either convicted felons or epic failures. If we had any semblance of law, they likely would all be discredited felons. BTW, I thought it was funny that his main girl at the service complained about him because he liked to get his money’s worth. chuckle. That’s what happens when government employees spend their own money!

  • A. Rand Fan February 22, 2011, 5:18 pm

    I’d like to think the Middle Eastern People are fighting for a freedom that’s been denied them. Hopefully the extremists don’t take over and eventually lead to WW3. Time will tell. On the other hand, Wisconsin protesters and probably more to come across America are trying to cling to something they never should have had. Unionizing government workers is wrong IMO. Especially for the individual worker who hasn’t the choice to join the union or not. As Scott Walker said Wisconsin government workers received their protections/rights way back in 1905. What’s interesting is how the Democrats will fund their campaigns when they lose a good chunk of the union money.

    • Rich February 22, 2011, 8:16 pm

      Thinking of 0 & Co as anti-PATCO Gipper, despite protestation claims to the contrary.
      Unions will not let go easily. They suffered beatings and bullets to get started.
      That’s from where the violence may come, in a reverse unwinding of their founding.
      They learned fast and crushed skulls with lead pipes at my grandfather’s mill to force organization which out him out of business as they did C, GM et al…

    • A. Rand Fan February 23, 2011, 4:32 am

      The company my Dad worked for had a union run shop. He wasn’t in it being a field engineer troubleshooting the boilers they made ounce in production. The company went out of business getting obliterated by the more competitive non-union run shops operating in and out of the country. That’s probably why the non-government unions are a much smaller group percentage wise than the government ones.

  • Rich February 22, 2011, 5:14 pm

    While reading Rick’s timely essay, Rockefeller and Ford calling out Pinkerton and the Purple Gang for anti-union enforcement immediately came to mind.
    It appears in turning over GM to governments and unions, and Wisconsin to the Unions, the current administration may appear to have an opposite agenda paralleling the Middle East.
    As several perceptive posters here observed, sometime there is an implicit order behind the chaos. Follow the money.
    Speaking of which, agreeing with Rick, maybe FAZ>7 will finally too have its day in the sun…

    • Rich February 22, 2011, 5:16 pm

      PS Just returned from 2000+ mile road trip.
      Highest gasoline prices were seen upon returning to the Sierra Alps, $3.85 Chevron unleaded.
      Most previous market declines were preceded by jumps at the pump.
      Just sayin’…

    • Rich February 22, 2011, 8:10 pm

      PPS
      Did see lots of orange logo BNI/Santa Fe Trains hauling coal, food, oil NEW and S. Kudos to WEB yet again…

  • Redou February 22, 2011, 5:11 pm

    How are Wisconsin public employee unions and Egyptian protesters similar?

    By taking to the streets (or the halls of the state house) they hope to achieve a better future.

    Alas, it seems hopeless for both groups.

    Wisconsin public employees are fighting for a piece of a diminishing pie. Egyptian protesters
    think a more popular ruler(s) will get them a bigger slice.

    Unless the fundamental problems are addressed, the pie in both nations will continue to shrink. The protests will increase
    in the US for many years to come, in Egypt,
    after a new regime is installed, the new government will crack down. Nothing much will
    change.

    Overpopulation, Corruption, Lack of Education,
    Crony Capitalism, Drug Usage, Crime, Excessive government, Lack of a work ethic,
    Lack of a savings ethic, Lack of morality, Poor diet, Lack of exercize, Avoidance of personal responsibility, Compromised Journalists, Excessive litigation, the machines taking over the work that people used to do, Entrenched Special Interests.

    These are some of the Real Problems that affect both nations. How is hollering in the
    Square (or in the State House) going to fix
    these problems?

    • Benjamin February 22, 2011, 6:19 pm

      You forgot the other common point…

      Now, for all I can say about republicans, at lest they stood their ground when it came to fighting ObamaCare and cap n’ tax. Murbarak and Gaddafi ran away. Some Wisconsin democracts ran away… So here’s to those most recent additions to Valhalla:

      http://www.youtube.com/watch?v=BZwuTo7zKM8

      They had the stones to just up and run, when no one else would!

  • JimK February 22, 2011, 3:41 pm

    I have followed the predictions of Lindsay Williams, a preacher who for many years had a ‘deep throat’ from Atlantic Richfield telling us what the ‘elite’ were planning – including the oil run-up in ’08, how high it would go, how far it would drop afterward and why – and he was dead-on. In October, he said there would be major conflict in the Mid East within the year, but that it would be a smoke-screen for the real show, which would be a growing alliance between China and Russia that would completely reshape the world.

    Now, I come across an unattributed article in Puppetworld Press (puppet99.com) headlined: “Rothschilds Stage Revolutions in Tunisia and Egypt To Kill Islamic Banks In Emerging North African Markets”. It states that “These Rothschild revolutions are done under the pretense of bringing democracy and deposing despots, but the real aim is to initially create chaos and a leadership vacuum, then quickly offer a solution: install a puppet that will do the economic bidding of the Rothschilds. The citizens gain freedom of speech and association, but become economic serfs.
    These revolutions are most likely coordinated at the highest levels by the Rothschild’s International Crisis Group. Mohamed ElBaradei is already being touted as a new leader for Egypt. ElBaradei is a trustee of the International Crisis Group. Another board member of this group is Zbigniew Brzezinski. George Soros sits on the executive committee. The later two are ubiquitous front men for the Rothschilds.”

    • Rick Ackerman February 22, 2011, 5:26 pm

      Ah, those nefarious Jews again! The ubiquitous Rothschilds could probably foment a revolution on Mars if there were Islamists there, or communists, or fascists, rosicrucians, bankers, coptics, Bantu warriors, homosexuals, Freemasons or what-have-you to do their bidding.

  • les February 22, 2011, 1:07 pm

    about the Arab world mess right now, where is the voice of bin Laden anyway? is he actually dead?

    • Steve February 22, 2011, 4:18 pm

      The current rebellion in the Arab world is secular, and more the product of C.I.A. anarchy movements. Again, it is probable that the funding for these movements is coming via the C.I.A., or through shell companies of the C.I.A., or via an information gathering corporation the supports C.I.A. funding of foreign anarchy to that company can spy on consumers to sell advertising. The current ongoing in Egypt is not religious, but; secular anarchy.

  • donniemac February 22, 2011, 1:00 pm

    Collective bargaining covers more than wages. If you have ever worked in a poorly managed factory/office/facility, you would understand why the workers need a voice as strong as management’s voice. The fiscal part of the bill is not in dispute, what is causing the protests by the left is the attack on the unions’ existence by eliminating collective bargaining and the paycheck deduction for union dues. At first, I was supportive of Walker et al. as the issue of the cost of benefits is becoming a drag on states, and federal, budget. Several things changed my mind, first, the unions agreeing to the proposed benefit cuts, second, the enormous tax cut benefits given to business in this session, and third, the governor and controlling party doing exactly the same thing that Republicans complained about Democrats doing in the past Congress. Running rough shod over the minority party, refusing to listen to the other side’s concerns, kind of makes the Republican/Tea Party bitching last year about that behavior in Congress hypocritical. So this has the potential to be the Democrats “Tea Party” moment, and unfortunately, even more polarization in the USA political arena.

    There are 3 ways to balance a budget. Increase income, decrease expenditures, or a combination of both. What I see happening is not a meeting of the minds as to what should be done to get our economy growing again, but one party intent on using this downturn to remove all tax obligations of those who have benefited the most by our current system and the other party trying to come to terms with reality of less. And the outcome could be brutal. IMHO, the Republican party needs to get off the “No New Taxes” mountain. I ofter wonder if this current group of Republican politicos that are elected to office could raise taxes to meet a national emergency, like what happened during WWII. Any definitive statement that paints you into a corner will come back to haunt you, no matter what side of the political spectrum.

    We as a nation need to have a serious discussion about the future obligations and responsibilities of the USA, both here at home and abroad. Until that happens, we are going to be in great turmoil, and the eventual outcome may be a hard lurch to either the left or the right, and having extremists running the (any) country is not a good thing.

    • Steve February 22, 2011, 4:13 pm

      Hard for me to understand. The U.S. has been ram rodded by extremist mobocracy for over 100 years, with a true one party monarchy in succession. In D.C. the legislators all play together, pray together, live together, and all look down on US. This part and party of the new caste system.

      The Unions seem only to fear the fact that they can no longer force a worker into the union and force a worker to pay for political rants that are not believed in by all. In other words, if I want to be a teacher I must pay union dues to a mobocratic body in rebellion or I cannot be a teacher. Therefore most teachers teach mobocracy.

      It appears to be the loss of forced income that the unions fear.

    • Benjamin February 22, 2011, 6:32 pm

      “If you have ever worked in a poorly managed factory/office/facility, you would understand why the workers need a voice as strong as management’s voice. ”

      Or we could just let natural law put said poorly run business OUT of business. And if the company couldn’t attract and keep competent workers, well, that would happen, wouldn’t it? And if people had the option to not fund said failure…

      But that’s neither here nor there. They can still negotiate their wages without we the people having any say. Seems democrats and mid-east dictators aren’t the _only_ ones on the run. And that’s all they need to continue going on as they have for… what year did they start these unions?

  • Benjamin February 22, 2011, 8:55 am

    Wisconsin’s governor isn’t even proposing any serious changes. Union employees (except firemen and police) will have to contribute a little more to their pensions and health insurance. The left has spun this into an all out war on bargaining “rights”, even though the bill still allows them to negotiate wages (with everything else requiring a vote, but hell, with wages not covered _is_ there is anything else?!). It’s almost like the governor is begging them to give themselves a raise, especially if they’re cops and firefighters. So if anything, the Wisconsin taxpayer will be the ones up in arms, not govt union employees.

    Even though things have since gone beyond Tunsia and Egypt, there are plenty of similarities between the latter and Wisconsin. Nothing changed. Murbarak left, but that only put the military and the vice president in charge. No ownder Egyptians are still restless, which in turn is causing the military to threaten more drastic measures. But that’s only part of the larger plan, which I suspect is to get the people there so pissed off that they would side with and support extremists. Just like in many other countries…

    http://original.antiwar.com/justin/2011/02/20/nationalism-democracy-and-the-arab-awakening/

    So even though it’s “still too early to say”, here’s my prediction: Change derailed in the face of rising threats to national security (as interventionists would have it). The debt ceilings will be raised however high they need to be in order to keep things going as they are.

    • Other Paul February 22, 2011, 5:18 pm

      Benjamin: “The debt ceilings will be raised however high they need to be in order to keep things going as they are.”

      Exactly.

      The Federal Reserve and Treasury are monetizing the US debt almost weekly to the tune of billions of dollars.

      How long can this situation persist without the dollar value tanking?

      One thing we’re seeing from the terrible, bloody events in North Africa is the old story of what people in power do when they flee, they take as many/much valuable, portable assets with them as possible.

      The Fed “saved the day” when the dollar was cratering in the 70s and early 80s by raising interest rates. That option is out now, as the Fed and US Gov’t have elected zero interest rates as the cure.

      The direction is “printing/mouse-keying” dollars into existence until the world’s flu is cured. As Rick has pointed out many times, we’ll eventually get the full-blown depression we should have accepted in 2008. The Wisconsin governor and unions want to compromise and postpone the inevitable crash in wages and benefits.

      I’ll assume that QE3 will be the loaning to states by the US Treasury. What’s another trillion or so more debt kick the can another few feet down the road?

  • Chris T. February 22, 2011, 8:55 am

    Rick:’
    ” Not as long as the former continue to enjoy retirement benefits that private-sector workers can only dream about. ”

    I would rephrase that as follows:

    “…that private-sector workers can no longer afford to finance”

    After all, not only do we dream about largesse such as you mention, we are the ONLY ones paying for it.
    We all here know that, but seems to still have not set in out ther in general.

    As to Mario’s point:
    That seems fully right, with respect to how China REALLY works, but the 20 year horizon is too narrow.
    China has the world’s longest, and deepest running history of “functioning” as a corrupt society, and much of its many problems throughout the centuries were the direct result.

    Just too literary/artistic places that mention it in passing:
    In Bertolucci’s last emperor, we see the Forbidden City;s treasuries burn, why?
    Because the emperor had just announced a final accounting, and the courtiers/eunuchs/and other guvmints officials coudl only prevent being discovered by destroying everything, and hiding the empty storerooms that way.

    Another great place, where it is shown in passing is in Clavell’s TaiPan and Noble House.
    True those examples above are of recent vintage (in terms of China’s history, 150 years IS recent vintage), but illustrative nevertheless.

    As to the mention of global blood boiling, viz -a-vis Rick’s mentioning a PEACEFUL change, I refer any and all to the recent assessments by Gerald Celente of just that geographical/cultural/religious region.
    He foretells the current development as just the first step towards various and sundry civil wars, morphing into, what he calls, the first great conflict of the 21st century.
    With his track-record and wide reaching look, seems very plausible.
    Especially considering that we will be sticking our spoon into that boiling cauldron and will certainly help stir it up (unquestionably), no matter how ill-advised that will be. Count on that one.

    Finally, what could make things in China much worse than ever before is the discovery and taste of another state of being.
    Heretofore, most of China has only know one thing, and that is a rural, poor, subsistence, with a more or less quiet (China is THE country with the longest and bloodiest history of revolution) acceptance of the things as they are being ones lot in life.

    NOW, that has changed. Many have what they never had before, many others have seen it, and are wishing for it too. If that goes away, its worse than if none of these had ever had it in the first place.

    This perception is even true here, stateside. People have not internatlized that their lot in life is declining, which is why for decades they have borrowed to keep up. They could have adjusted, by having and doing with less than mom and dad, but that can’t be.

    And until that realization has sunk in, we have not hit bottom. When it does, then maybe (hopefully?) is the moment when the shoe-shine boy gives Bernard Baruch a stockt tip….

  • mario cavolo February 22, 2011, 8:05 am

    Hi Rick & All,

    As Rick so well offers his commentary on dark situations existing in the U.S. and the MidEast, allow me to add a “classic” dark situation in China, so that everyone here can understand those dynamics..

    Reported today…”Alibaba.com Ltd. shares fell the most in more than a year after the company said an internal probe found more than 2,300 vendors used its website to defraud global buyers, prompting the chief executive officer to quit….Some Alibaba employees were responsible for allowing sellers to create bogus storefronts..” etc….

    This is the kind of normal reality in the Chinese economic society which America doesn’t experience. Incredibly high levels of fraud, pirating, copying, with middle-level employees of most companies actively engaged in accepting “hongbao”…which is a red envelope filled with cash, or any other typical and regular cash kickback….THIS is the gray cash economy I’ve spoken about here, that Credit Suisse alluded to but not directly stated in their report a few months back. In China the vagaries are fed by a regular, normal understanding in business, ALL businesses, that mid-level managers routinely and normally arrange to receive kickbacks from suppliers, partners, customers of their company as side deals; while this may be extreme corruption to someone in the West, it has become regarded as normal and accepted morally driven by the low salary structure of the society during the past 20 years, gov’t folks included, as pervasive and normal, for example, as “lobbying” $$ influencing biz in the U.S. In other words, the reason the company boss doesn’t fire the store manager for taking kickbacks is because they them self did too when they were the store manager; it is pervasive in the society.

    I feel its an important point of understanding for anyone looking at what is really going on underneath the rise of Asia led by China and its implications. By extension, what is the potential for economic stress related protests, violence and instability relative to the American and Middle Eastern circumstance.

    I sense global blood coming to a boil; how in hell the stock market can keep rallying in these circumstances would indeed have to be meth-crack induced going forward.

    Elsewhere, it was mentioned that as “Da Boyz” could use their massive funds to manipulate markets up, they could also do so downward; and it seems to me regarding the AG commodities (and oil) they freakin’ better do that soon before societies start spinning out of control with protests, violence, etc.

    The reason I consistently say I don’t agree with the doomsday scenarios is because I believe the various govt’s /big biz have the ability to respond, to make new decisions in the face of disaster to avoid such disasters. Of course I could be very very wrong about that.

    Cheers all, Mario

    • Dave February 22, 2011, 9:04 am

      “This is the kind of normal reality in the Chinese economic society which America doesn’t experience. Incredibly high levels of fraud, pirating, copying, with middle-level employees of most companies actively engaged in accepting “hongbao”…which is a red envelope filled with cash, or any other typical and regular cash kickback….THIS is the gray cash economy I’ve spoken about here”

      Mario, leave it to the Chinese to emulate and make cheap knockoffs of American ingenuity. In the USA, it’s called the Mafia.

    • Cam Fitzgerald February 22, 2011, 4:50 pm

      I am really surprised to hear that corruption there is so common place Mario, having never been over to China myself nor seen how business there functions first-hand.

      My impression was always that the government there took a dim view of lawbreakers and was more than prepared to dole out stiff penalties for those who crossed the line. At least, that is what we have been reading in the news since forever.

      And that’s why I appreciate your first hand insights form that part of the world buddy! Perhaps one day you might do a story and open a few more eyes to how business really operates over there. You know, like a brief guide on to how to survive the obvious pitfalls of doing business in Asia or something like that.

      If kickbacks are all so common then you need to price that into the cost of doing business there, right?

    • Cam Fitzgerald February 22, 2011, 5:32 pm

      By the way Mario, remember last week when I was saying how bullish I was starting to feel?

      Yeah, well that high has pretty much worn off already. I think I just let myself breathe in a little too much of the fumes of a market gone crazy and it took control of my senses.

      I am almost back to normal thank God, but the headache is killing me. As Rick has pointed out, the technicals have never been giving clearer signals that a major top is here and I have to defer to those who have better insights than me on that score.

      It is naturally easy to lose perspective living up here in Canada where we have still not (to this day even) seen much more than a few minor bumps since the credit crisis broke. Heck, I do not even know of one single person in my own circle who lost their job, closed a business, had a vehicle repossessed, gone bankrupt, lost a home, had to take a pay cut or faced a serious drop in their standard of living. No yet anyway.

      Actually, things have just gotten better and better for many and business is doing well for the most part. Home and auto sales are still relatively brisk. Pretty much everyone is still spending like there is no tomorrow and we have just learned that our average debt to income ratio has reached a new record and now sits at 150.

      That in itself is a very big worry of course as we head back into times of high energy costs and rising interest rates which could easily put the brakes on this economic miracle in short order. It is just that the jobs picture is still fairly bright that the party has never ended.

      Our bubbly cities like Vancouver where condos are now selling in excess of 700 dollars per square foot just cannot be sustainable. And yet prices continue to rise and defy all pundits despite all the alarm bells ringing off the hook everywhere else in the world.

      It is pure madness.

      Employment levels meanwhile have easily returned to pre-recession highs and jobs growth is actually on a tear up here. Just off the top of my head, I think that Canada generated double the number of jobs than the US in January which is just astonishing for a population only one tenth the size of America’s.

      The commodity boom has certainly helped but at the same time it has seen our dollar rise above parity again.

      I have to wonder, at what point does the continued rise in energy costs begin to weigh down the recovery everywhere and by virtue then send the Canadian economy back into slow growth. More importantly, at what point do rising energy and interest costs during an inflationary run-up across Asia slow down growth everywhere else as they respond to the pressures there and consumption again declines here at home?

      See what I mean? The fumes were just not strong enough to keep me positive for long at all. Now where is that Hooka?

    • mario cavolo February 22, 2011, 7:34 pm

      Hi Cam!

      That’s the point! Its so normal its not “corruption”.

      Believe me I do want to write that story, expose lots of the inside secrets of China’s culture, but in doing so I in fact invite the potential to piss off someone and get a knock on the door and booted out of the country, not something I want to bring upon myself in this timeframe. Cheers, Mario