From Pajamas Media…

But almost all of the discussion, when it comes to UAW culpability, has been on wages. The even larger issue, though, is the elephant in the room that seemingly no one discusses, even when given a political opportunity. For instance, I saw a “debate” on Fox News recently in which the Democrat defending the union said that it was partly management’s fault because of the poor quality of the cars, and the Republican failed to respond. And it’s not like people are unaware of it, at least people familiar with the industry. The issue isn’t wages — though those are a problem — so much as work rules. UAW work rules, which have evolved over the many decades since the passage of the Wagner Act, are the biggest reason that General Motors is uncompetitive with its non-union American counterparts.

What are work rules? They are agreements negotiated in the contract between management and the union covering how the employees are to be classified, how many breaks they get, how much time off they get, who can do which jobs, how discipline is to be enforced, etc. The goal of the rules is not to enhance productivity or production quality. It is to provide opportunities for featherbedding, increase numbers of (overpaid) jobs for union workers, and minimize how much they have to actually work. This is important because it’s at least in theory possible that the industry could be making money even at current wages, if they could be provided with the flexibility to increase worker productivity.

The article is full of little anecdotes to back up the author’s point. I have seen enough with my own eyes that I have no doubt that his point is correct.

But I still blame management for the problems. The power of unions is easy to overstate. A lot of times they are used as an excuse by managements for not doing their jobs.

Moreover, management could have refused to agree to those restrictions on their authority. But a lot of times, upper management thinks that such rules are relatively harmless compared to paying more money. I think they tend to think that all monkeys are the same. So they don’t feel like they are losing much when they give up the right to reward the better monkey.

From Euro Intelligence….

Frankfurter Allgemeine has cracking scoop this morning, having obtained an internal memo from the economics ministry, which expects a slump in growth of more than minus 3 per cent for next year, by far the worst economic decline in German post-war history. The ministry plans to make this forecast official in its annual economic report, due out January.

Worse still, the decline in the present quarter is estimate at 1.25-1.75%. Note these are actual, not annualized figures.

Does anyone remember when the Fed use to focus on “Core Inflation?” The argument back then was that you should exclude volatile things like Energy and Food to get a true picture of the underlying inflationary pressures. Now get this from the Fed Report….

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

Why don’t they strip out Energy and Food prices to get a true picture of the underlying inflationary pressures? As Megan McArdle notes…

The fall in the CPI was driven almost entirely by energy prices, without which the price index was flat.

When the CPI was high, people argued that interest rates should not be raised because underlying cause for the high CPI numbers was a rise in volatile energy prices. Now those same people argue that we need to cut rates because volatile energy prices are falling. I just don’t get it.

Even relative optimists like Felix Salmon are starting to get a little worried. At the closing of his post dealing with today’s cuts he says…

Did we really need a zero interest rate policy, or Zirp, on top of this? It would be great if we could get some reassurance from FOMC members that they understood the downside of today’s move and know what they’re doing. Because it really worries me.

Editors Note: The “This” in the above quote is referring to the Fed’s promise to print money and intervene directly in the markets.

From Spiegel….

Evidently the Romans and Germans fought a bloody battle in the third century AD, said archaeologist Petra Lönne. Some 1,000 Roman legionnaires may have been involved in the fight.

Intriguingly, the find includes more than 300 iron projectiles that were fired by powerful Roman torsion weapons known as scorpions (scorpio), which could catapult heavy darts with a high velocity and deadly accuracy. It had a range of 300 and was portrayed in the opening battle scene of the Hollywood movie “Gladiator.”

“The bolts were found densely clustered,” said archaeologist Henning Hassmann.

Historians say the discovery of the battlefield is so significant because it appears to refute the assumption that the Romans withdrew from Germania after their defeat by an alliance of Germanic tribs at the battle of the Teutoburg forest in 9 AD.

This longer article from Spiegel has more details. As best as they can tell, some German’s took a stand on the hill. There, they got pounded by the scorpions and Roman auxiliaries. After pounding the Germans for a while, it seems that the Romans attacked the hill from two different sides of the hill. They seem to think that the Romans won.

From Brad Setser….

In October, China was about the only central bank adding to its reserves (I suspect, it hasn’t formally released its reserves data). Most central banks were selling. That shows up in the US TIC data. South Korea, Brazil, Mexico, Russia and Ukraine were all net sellers of long-term US Treasury bonds …

The big central bank flow was a reallocation away from Agencies toward Treasuries. And specifically toward short-term Treasury bills.

China increased its holdings of short-term Treasury bills by a stunning $56 billion while also buying $10 billion of long-term Treasuries. That flow alone would have been enough to cover the trade deficit in the absence of any offsetting outflows.

You have got to admire China’s determination to make this all work. But how much longer can the prop us up.

(I know, I know, people can stay stupid for longer then I think. But I have to believe they are pushing their limit)