The Market Ticker
Commentary on The Capital Markets- Category [Federal Government]

Here's an interesting take on the whole "Scotland" breakaway issue, and it directly bears on the United States as well.

We often hear that a state "can't" secede successfully, for the simple reason that the Federal Government controls too much of the economy and that if, say Texas, was to say "**** you" the result would be the immediate collapse of the Texan-cum-nation economy.

Not so fast, kemosabe.

There is a downside to massive debt accumulation by a sovereign and so-called "modern finance", and it is the rise of derivatives at gross multiples of the debt outstanding.

"Gross" means 10x, 100x, even 1000x the underlying actual amount of debt out.  And all of these derivatives have trigger events at which point they become payable.

Said "credit events" virtually always include a "reorganization" clause, which includes secession or partition of the underlying political entity.

So who's got the hammer?  It's not the Federal Government and most-importantly it does not matter whether or not the Federal Government recognizes the secession or whether they try to show up with guns and put it down.

No, rather it is the States that have said hammer, just as Scotland has said hammer.

The reason the UK is freaking out is because if Scotland secedes all of the derivatives on UK sovereign debt trigger, and while that may not sound all that awful since they haven't defaulted (yet) the protection evaporates and that triggering means that holders of said derivatives can force delivery on the derivative contract!

This also means that should any US State, or collection of States, decide to do the same thing the US Government's ability to deficit spend is likely to instantly end irrespective of whatever threats are made to send in the tanks.

This is not the 1800s and all the bleating about indivisible political unions is in fact about the drunken, addicted fashion that our nation (and England) have been intentionally destroying currency value via deficit spending.

Secession, whether ultimately put down by force of arms or not, instantly ends the ability to do that and that is more-frightening to these politicians than Satan himself appearing in the Capitol Rotunda.

It is well beyond the point where someone needs to call the US Federal Govermment's bluff -- the question is which state(s) have the balls to do it?

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Huffington Bullcrap has once again tried to play the gender warrior card, this time with the so-called "Paycheck Fairness" act that was (again, and properly so) killed in The Senate.

Senate Republicans on Monday blocked for the fourth time a bill that would strengthen federal equal pay laws for women.

The Paycheck Fairness Act would ban employers from retaliating against employees who share salary information with each other, impose harsher penalties for pay discrimination and require employers to be able to show that wage gaps between men and women are based on factors other than gender.

Sounds good, right?

Who could oppose equal pay for equal work?

You'd be wrong.

For the most part, we already have that.

Note (from the same article)

Women working full-time in the U.S. earn an average of 77 cents for every dollar men earn, according to the Census Bureau. A small portion of that gap, economists say, is due to employers paying women less than men for the same work.

What's the rest?

Two factors -- a choice not to work in the same professions or under the same demands, and time voluntarily taken off for other pursuits (specifically, family pursuits.)

If I take two months off for the birth of a child I should expect to be penalized for that in my advancement through my career.  It's a choice to have children, and it's further a choice as to how I structure my affairs in doing so.  It is not the employer's responsibility to subsidize, support or otherwise pander to my personal choices.  It is my responsibility; after all, I get all of the enjoyment (that is, the benefit) out of raising said kids, yes?

But look at what the bill actually says, provides and requires:

(2) Despite the enactment of the Equal Pay Act in 1963,
many women continue to earn significantly lower pay than men
for equal work. These pay disparities exist in both the private
and governmental sectors. In many instances, the pay
disparities can only be due to continued intentional
discrimination or the lingering effects of past discrimination.

Economists say otherwise; we are now declaring as a matter of Congress something that is a lie.

Worse, look at the proscriptions:

(a) Bona-Fide Factor Defense and Modification of Same Establishment
Requirement.--Section 6(d)(1) of the Fair Labor Standards Act of 1938
(29 U.S.C. 206(d)(1)) is amended--
(1) by striking ``No employer having'' and inserting ``(A)
No employer having'';
(2) by striking ``any other factor other than sex'' and
inserting ``a bona fide factor other than sex, such as
education, training, or experience''; and
(3) by inserting at the end the following:
``(B) The bona fide factor defense described in subparagraph
(A)(iv) shall apply only if the employer demonstrates that such factor
(i) is not based upon or derived from a sex-based differential in
compensation; (ii) is job-related with respect to the position in
question; and (iii) is consistent with business necessity. Such defense
shall not apply where the employee demonstrates that an alternative
employment practice exists that would serve the same business purpose
without producing such differential and that the employer has refused
to adopt such alternative practice.

So now an employer has to prove a negative.

The employee doesn't have to prove the employer discriminated based on gender (and not, for example, because said person was incapable of maintaining a 24x7 call due to being a single parent with a toddler at home, or because they took two months off to have said kid) -- the employer has to prove, in each case where such an allegation is made, why the difference exists and there must be no opinion ensconced in same -- in other words, it must be something like "education, training or experience" and it must be not a business preference but rather necessity.  Further, the employee can retrospectively devise such an "alternative practice" and the employer must accept it, irrespective of whether they find it equivalent, desirable or whether it comes with additional cost and, if so, how much cost it entails.

Remember, the test is not "reasonable business practice" it's business necessity.

Good luck with proving all of that, and if you can't you're breaking the law on a mere allegation.

The people that come up with this crap need to have a little Swastika branded on their foreheads as does anyone who supports this sort of Nazi garbage.  As anyone who has any knowledge of formal logic knows proving a negative is damn near impossible -- and that's on a good day.  

In many cases it is impossible, which turns such legislation into a shakedown machine.

The violence this sort of legislation does to business is immense.  Even in the 1990s it was broadly illegal to discriminate on the basis of gender.  But it was also very ill-advised to do anything that might be interpreted that way, no matter the justification.  I could not, for example, ask a female applicant if she intended to start a family and take off for a couple of months to give birth -- and it didn't matter how business-critical the job was either.  

The smaller the firm and more-specialized your position, that is, the better you are at it and the more different you are than the other people who work there the more this ****s you as an employee and the worse it is for the employer too.   Grabbing someone random off the floor in customer service to answer the front desk phone is no big deal -- as long as half your customer service people aren't out with the flu (and yeah, that does happen!)  But who do you grab to be the on-call dude that can fix a fileserver that is offline with a cryptic error message at 3:00 AM? 

Before I ran MCSNet I worked in two positions for two different firms that expected me to be "on call" pretty-much 24x7 for this exact reason.  They meant it too; that pager went off a lot, and when it did I was expected to respond, including going into the office at 0-dark-****me.

That would have been flatly impossible if I was a single parent of a toddler.  Incidentally, I later was such a single parent (many years later) and turned down a material number of contract jobs after selling MCSNet for this exact reason -- I could not meet the (reasonable, from the customer's point of view) demand for on-call response any time, day or night, which might happen to include hopping in a car or airplane.

Is it discrimination if the employer requires this of the job and refuses to hire someone who can't meet that requirement, or fires someone who says they can and then leaves them in the lurch when the time comes and that fully-disclosed and expected part of their job thus cannot be fulfilled?

I say no; I was well-compensated for those expectations (fully-realized expectations at that in terms of what was expected of me) and there was nothing wrong with the employer for expecting it, or with me in accepting the job under those conditions.

You're entirely within your rights to pursue a path in life that has "balance", as you define it.  But you're not entitled to demand that other people mold their requirements to you.  Doing so is theft, incidentally, and when you enlist the government to shove a gun up someone else's ass to make them accommodate your personal choice the proper word for it is extortion.

There would be something very wrong with my insistence that said employer make available some "other means"; for example, that the firm spend money to outfit my apartment with some means of completely remotely logging into any of said machine(s) to do whatever.  Remember, the test up above is business necessity and no alternative available (nobody said anything about "at reasonable cost", "easily", or "with equivalent operational risk.")

Yes, maybe 9 times out of 10 I could have remoted into the machine in question somehow -- if an accommodation was made for it when that was originally designed!  Today, for example, I have an IPMI port on the servers that I commonly use for exactly this reason -- so I can get into them from a remote location.  Then?  There was no such port on the servers in question.

There was probably a way to build something that might do the same thing, or buy it, but at what cost and operational risk when the alternative is that I get in my car and drive to the office, which presents neither cost or operational risk?  Oh, and what happens when it's a bad port on the switch that's the cause of the problem -- something that you can determine in 10 seconds by looking at it, but if you're in your underwear on a remote -- not so much.

Finally there is a provision in the bill that bars "no salary disclosure" policies.  As a former employer I can tell you exactly why those policies exist and they have perfectly-defensible business purpose.

Many times someone has the "same" job but a different salary.  A huge percentage of the time it is actually unlawful or exposes the employer to lawsuit for the employer to disclose why.  The reason may be related to disciplinary action, performance and demonstrated ambition, or something that is very job-related but private between the employer and employee.  I can come up with dozens of reasons without trying very hard, some of which come with an actual legal stricture and all of them come with at least an ethical reason to keep my mouth shut as the guy on the hiring side of the desk.  People get "chances" all the time in life with employers taking a risk on the possibility that despite what looks like a bad hire it's really a good one -- and sometimes you think things are going the other way too.  Some disciplinary matters are quite serious and yet they have little in common with the standards of proof in a courtroom, nor should they -- ever.

As soon as you allow people to talk about pay you set up a situation where you can be accused of disparate pay for equal work and there is nothing you can say to refute the allegation.  Of course if the government gets involved you'll get to make your case, but that's not the problem -- the problem is that the morale destruction that occurs in the meantime, and for which you have no defense, is enormous.  This bill not only bars such policies but further and far worse, makes illegal retaliating against someone who does this even if it causes a severe morale problem in the firm you are unable to address.

At MCSNet there was no "formal" policy barring talking about salary between employees but it was communicated quite clearly that any sort of action that fomented dissent among the staff was very likely to result in you being fired.  If you were crazy enough to start comparing notes against the other people in the department come payday you could, but if that led someone to stick their head in my door and demand to know why Joe made less than Jane, when I had a very good reason for the difference but could not, either legally or ethically, discuss why, your ass was out the door.  And the simple fact of the matter is that unless Joe and Jane were hired yesterday for the same position it was very likely, based on their different abilities, desires, drive and job performance, that a year or two later they'd have different salaries!  (As an aside, given the email I've gotten, yes, I know the NLRA's "fuzzy" interpretation by the NLRB specifically considers any sort of discussion between staff that is for "collective protection" a "protected activity"; have at it and there was no bar on doing so.  Nonetheless the fact remains that this is yet another thumb-on-the-scale as a reason not to start or run a business that employs people today, and if you don't understand that you're not very bright.)

This is a bad bill that fuels the grievance industry in this country, it imposes a burden of proof that is impossible to meet, it requires "accommodations" irrespective of cost or business risk and bars all of the above as a determining factor in salary!

**** that and **** anyone who supports it.

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