6 minutes ago
Monday, November 12, 2012
And So It Begans
Trouble with the economy is just beginning my friends.
Hostess is just the latest symptom of the sickness, along with the Stock Market and restaurants, like Papa Johns.
Welcome to the Greater Depression.
If Romney had been elected last Tuesday the press would already be calling the most recent Stock Market crash "Romney's Recession".
I haven't been following the Hostess deal until today, but here are the basic facts: Interstate Brands- the Hostess predecessor- went thorough bankruptcy a few years ago, and came out as Hostess. Now Hostess is in Bankruptcy, and as part of the reorganization has renegotiated their union contracts, which included an 8% pay cut and greater contributions towards their health insurance. Welcome to the New Normal. These changes tended to upset the unions, who promptly went on strike, in selected locations.
Hostess had now closed those locations.
The unions will scream and shout. And then go on on unemployment for 99 weeks. Welcome to the New Normal.
If another company buys the plant and reopens it, it most likely will not be a union plant, and the wages will be lower again by 50%. So, if those workers do happen to find employment there, they won't be down by their 8%, but by 50%, or more.
But that is what has to happen. Companies can't compete by paying a union wage.
Apparently they can't compete anymore by having employees work over 28 hours a week either. Welcome to the New Normal.
People will have less and less money, and its not just from crashing wages. If the reports are to be believed, $2,000 to $4,000 a year more will go to the Federal Government because of the repeal of the Bush tax cuts in January; $40 to $80 a week, or thereabouts. About a tank of gas, depending on what you drive; unless it starts going up, like I expect it to.
And the cost of fuel will drive everything else up; everything that requires energy to manufacture, package or ship.
Food and fuel going up; paychecks going down. Guess who gets squeezed in the middle?
Anybody still trying to get by earning a wage.
Welcome to the New Normal.