An accountant could book as revenue the unrealized holding gains of assets in a pension fund, but that doesn't mean they aren't still on the books and assets of the company. I think the real problem with pensions and the reason we're at where we are is that for many years, the government allowed companies to unfund pensions. GM is still dealing with that. They still allow companies to underfund pensions to an extent, but they HAVE to by law fund their pensions in an amount equal to their service cost today (which is essentially the present value of all the benefits that employees will get when in retirement). But when acturarial assumptions go bad and pension assets go bear, coupled with bad economic times in a few areas of the economy, you end up with what we have today.
United We Default - WSJ
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Terry nad Bugshu, one might say that the money that Wal-Mart saves consumers allows that cosumer more money to pay the higher local taxes that fund government assistance programs.
Not my argument, just one argument.
Drew, accountants can do a whole lot with journal entries. If you've been following AIG's problems with Eliot Spitzer, it's all about whether reinsurance premiums should be recognized as income or long term loans. At the end of the day it makes little difference to the AIG's financial health, but makes the income ststement look a lot different.
As far as pensions go, changing the assumed rate of return on assets on an actuarial basis from 4% to 5%, may be just 1%, but the delta is 25%. This is where the trouble starts.
Suddenly an aggressive investment approach which hits a bad patch in the market, is playing catch up for decades.
Not my argument, just one argument.
Drew, accountants can do a whole lot with journal entries. If you've been following AIG's problems with Eliot Spitzer, it's all about whether reinsurance premiums should be recognized as income or long term loans. At the end of the day it makes little difference to the AIG's financial health, but makes the income ststement look a lot different.
As far as pensions go, changing the assumed rate of return on assets on an actuarial basis from 4% to 5%, may be just 1%, but the delta is 25%. This is where the trouble starts.
Suddenly an aggressive investment approach which hits a bad patch in the market, is playing catch up for decades.
Terry...you are the man.
Groucho,bugshu, as always I appreciate your sage input.
The part of compensation known as"pensions and benefits" originally were used by corporations to hold down labor costs by allowing the management to manipulate and use that forward looking asset and or liability ( depending on the "need" accounting wise( and favorability politically) of the day.
Since WW2 ended the TOTAL compensation of a given US employee has declined , while costs and productivity has increased.
Bugshu is sharing most of the documenting data on my walmart crack. Walmart is a cutthroat competitor and doing what they can to win and make a profit. If there is truly to be a LEVEL PLAYING FIELD in the US labor market then ideally the Government should NOT give any one business a leg up actively or passively. Most good conservatives ( whatever that means) would agree, until its their job that gets hammered. In the real world there is no level playing field or generous corporations, there is leverage and negotiating for YOUR best interest, something the individual US worker has forgotten between paying their Credit card min payment and watching the "Simpsons" after working to long for too little TOTAL compensation.
Notice that the real participants in the process, politicians and corporate execs, board members set the tone and most of the rest of us dance.
My point is not what is right and wrong but wondering out loud why the US worker is such a sucker.
I know that if I save say 15% in purchases at walmart that is does not compensate for the 30+% as a business owner and professional, I end up paying in taxes ( includes all payroll and other).
Its all about what you honestly value yourself at and marketing yourself. Agreements are made to be broken because the corporate moguls ,tell the little people , "things change". As a individual try that approach and ask for a raise or time off ?
The part of compensation known as"pensions and benefits" originally were used by corporations to hold down labor costs by allowing the management to manipulate and use that forward looking asset and or liability ( depending on the "need" accounting wise( and favorability politically) of the day.
Since WW2 ended the TOTAL compensation of a given US employee has declined , while costs and productivity has increased.
Bugshu is sharing most of the documenting data on my walmart crack. Walmart is a cutthroat competitor and doing what they can to win and make a profit. If there is truly to be a LEVEL PLAYING FIELD in the US labor market then ideally the Government should NOT give any one business a leg up actively or passively. Most good conservatives ( whatever that means) would agree, until its their job that gets hammered. In the real world there is no level playing field or generous corporations, there is leverage and negotiating for YOUR best interest, something the individual US worker has forgotten between paying their Credit card min payment and watching the "Simpsons" after working to long for too little TOTAL compensation.
Notice that the real participants in the process, politicians and corporate execs, board members set the tone and most of the rest of us dance.
My point is not what is right and wrong but wondering out loud why the US worker is such a sucker.
I know that if I save say 15% in purchases at walmart that is does not compensate for the 30+% as a business owner and professional, I end up paying in taxes ( includes all payroll and other).
Its all about what you honestly value yourself at and marketing yourself. Agreements are made to be broken because the corporate moguls ,tell the little people , "things change". As a individual try that approach and ask for a raise or time off ?
The same union types that are today btching about medical benefits/pensions as they are retiring are the ones who cared not at all about that stuff 20 years ago. All they were interested in were wage increases. They turned down very generous company matching plans for their 401 plan and instead opted for the instant gratification of higher wages..which were promptly spent. Not bashing unions..just an observation from my up close and personal experience.
Many people are in the position that they are in bc they didn't save and plan for the future.
Many people are in the position that they are in bc they didn't save and plan for the future.
There are owners / investors in companies that are absolutely heroic. There are owners / investors in companies that are snakes and deserve to be horsewhipped.
Years ago Larizza industries was the #1 top rated supplier to General Motors. Even JD Powers rated them the top supplier in the automotive industry. They took quality very seriously, made good money, paid their employees a decent wage and overall it was a good solid company in which I was happy to have invested a good portion of my savings.
There was a VP from Chemical Bank that ran an investment portfolio for the bank and he controlled enough interest that he was the top #1 voting stockholder in the company. He owned enough stock that he was calling the shots behind the scenes and there was nothing anybody could do about it. Management was pretty much his lapdog to be honest about it. Chemical Bank loaned the company huge amounts of money when they started up and needed it and then forced the company to convert the debt to stock when they didnt have the cash to pay it back and then told the company how to run their business after they took over control of the stock.
At the height of success for LII this utter sleazebag decided to rape the company and line the pockets of Chemical Bank. I owned some stock and called him up to "discuss" the issue with him and lets say that after much discussion that we had issues. Frankly, to be nice about it we probably wanted to kill each other. He wanted to rape the company and I wanted Larizza to run a business and we had a great difference of opinion. I saw jobs, business, opportunity and more being flushed down the toilet so this greedy idiot could make $2 per share extra for the quarter.
I hung up with the guy and sold my stock. It wasnt pretty but I got out.
This guy killed Larizza. I mean he killed it. He might as well have been an arsonist and just set fire to all the facilities. In the end, He didnt make a penny because the stock he owned went in the toilet after he raped the company but Im sure he felt good in the short run as he posted up good numbers for a quarter or two. To make a very long story short, I was right and he was wrong and I couldnt get anybody to listen to me because he had a doctorate in finance and ran Billions of dollars for a major bank and I was just a grumpy Texas good ole boy.
Larizza is no more, and you cant find it and its been chopped to a million pieces and absorbed and restructered and GM still wonders why others have passed it on the quality rankings.
*Sigh*
There are some solid people in the investment world but there are some pieces of dirt lower than snakes bellies out there as well.
Investors and business owners that fight to pay employees living wages and serve customers and run their businesses "RIGHT" are heroic and deserve our respect.
There are others that raid pension funds and spend money that is employee compensation for the work they do and in Texas we call that theft. Not everybody that should go to jail arrives there safely. If you raid a pension plan then you arent any different than the crack head that breaks into a house and steals a TV. You are a thief.
I really despise thieves and those that wear the white collars and sit behind big desks in the towers of finance are the worst of them all.
Happy Motoring All,
Bugshu
Years ago Larizza industries was the #1 top rated supplier to General Motors. Even JD Powers rated them the top supplier in the automotive industry. They took quality very seriously, made good money, paid their employees a decent wage and overall it was a good solid company in which I was happy to have invested a good portion of my savings.
There was a VP from Chemical Bank that ran an investment portfolio for the bank and he controlled enough interest that he was the top #1 voting stockholder in the company. He owned enough stock that he was calling the shots behind the scenes and there was nothing anybody could do about it. Management was pretty much his lapdog to be honest about it. Chemical Bank loaned the company huge amounts of money when they started up and needed it and then forced the company to convert the debt to stock when they didnt have the cash to pay it back and then told the company how to run their business after they took over control of the stock.
At the height of success for LII this utter sleazebag decided to rape the company and line the pockets of Chemical Bank. I owned some stock and called him up to "discuss" the issue with him and lets say that after much discussion that we had issues. Frankly, to be nice about it we probably wanted to kill each other. He wanted to rape the company and I wanted Larizza to run a business and we had a great difference of opinion. I saw jobs, business, opportunity and more being flushed down the toilet so this greedy idiot could make $2 per share extra for the quarter.
I hung up with the guy and sold my stock. It wasnt pretty but I got out.
This guy killed Larizza. I mean he killed it. He might as well have been an arsonist and just set fire to all the facilities. In the end, He didnt make a penny because the stock he owned went in the toilet after he raped the company but Im sure he felt good in the short run as he posted up good numbers for a quarter or two. To make a very long story short, I was right and he was wrong and I couldnt get anybody to listen to me because he had a doctorate in finance and ran Billions of dollars for a major bank and I was just a grumpy Texas good ole boy.
Larizza is no more, and you cant find it and its been chopped to a million pieces and absorbed and restructered and GM still wonders why others have passed it on the quality rankings.
*Sigh*
There are some solid people in the investment world but there are some pieces of dirt lower than snakes bellies out there as well.
Investors and business owners that fight to pay employees living wages and serve customers and run their businesses "RIGHT" are heroic and deserve our respect.
There are others that raid pension funds and spend money that is employee compensation for the work they do and in Texas we call that theft. Not everybody that should go to jail arrives there safely. If you raid a pension plan then you arent any different than the crack head that breaks into a house and steals a TV. You are a thief.
I really despise thieves and those that wear the white collars and sit behind big desks in the towers of finance are the worst of them all.
Happy Motoring All,
Bugshu
At any airline, their employees are a dime a dozen. What would United employees rather have.....
A. Keep the Pension plans & bankrupt United (or)
B. No pension plan & United stays afloat
My dad worked 25 years for PanAm, if you are employeed at any airline.....you have to expect to get shafted sooner or later.
A. Keep the Pension plans & bankrupt United (or)
B. No pension plan & United stays afloat
My dad worked 25 years for PanAm, if you are employeed at any airline.....you have to expect to get shafted sooner or later.
Bugshu, you are the man!
So very true.
In the company I work for, I have been present for 7 cost cutting - reorganization busness cycles. The first thing to be cut is employee benefits, followed by a collapse of employee morale, followed by loss of product quality to the customer.
The executives do look brilliant for about 3 quarters, then the rot sets in, followed by the inevitable sale to a new owner.
Pensions are great, my father has one. Being employeed in the Tech sector, I never had any kind of pension, only 401K's. Despite agresssive savings and sacrifice, my standard of living in retirement will not equal my father's. There is a real reason (a pension plan reduces profit to management and investors) why pensions are in financial disfavor.
Unless Congress steps in and halts the pension default process, you can be ASSURED that it will become a standard cost cutting practice, and the taxpayers will be placed on the hook again (just like the savings and loan default).
For those who think it is better someware else, think again. The world looks at what the USA does in the financial arena, and copies what our financial types do, or worse. China will follow the Japanese example, have their day in the sun as the low cost vendor of choice, then succumb to the increasing costs of their workers rising standard of living.
In the company I work for, I have been present for 7 cost cutting - reorganization busness cycles. The first thing to be cut is employee benefits, followed by a collapse of employee morale, followed by loss of product quality to the customer.
The executives do look brilliant for about 3 quarters, then the rot sets in, followed by the inevitable sale to a new owner.
Pensions are great, my father has one. Being employeed in the Tech sector, I never had any kind of pension, only 401K's. Despite agresssive savings and sacrifice, my standard of living in retirement will not equal my father's. There is a real reason (a pension plan reduces profit to management and investors) why pensions are in financial disfavor.
Unless Congress steps in and halts the pension default process, you can be ASSURED that it will become a standard cost cutting practice, and the taxpayers will be placed on the hook again (just like the savings and loan default).
For those who think it is better someware else, think again. The world looks at what the USA does in the financial arena, and copies what our financial types do, or worse. China will follow the Japanese example, have their day in the sun as the low cost vendor of choice, then succumb to the increasing costs of their workers rising standard of living.
Many of these pension plans are no more than elaborate pyramid scemes. Taking todays income and using it to fund yesterdays obligations. How long do those usually last again?
No more a 'pyramid sceme' than insurance. I'm sure you have homeowners and auto insurance.
My payments went to take care of the folks in Florida who got hit by the hurricanes and that's cool with me. Theirs will cover me if I get dinged with hail.
Well the biggest one of them all, Social Security, has lasted over 70 years, and won't go broke for about another 20 years.
United already IS bankrupt, so they are way beyond that choice. United was heading down the toilet the summer BEFORE 9/11. The large network airline business model has never worked. Delta, Continental, American and Northwest are all in trouble. Every one of them lose money on domestic travel, while international makes the money. If PanAm stayed international only maybe it would still be in business.quote:
Originally posted by LT4 Vette:
At any airline, their employees are a dime a dozen. What would United employees rather have.....
A. Keep the Pension plans & bankrupt United (or)
B. No pension plan & United stays afloat
My dad worked 25 years for PanAm, if you are employeed at any airline.....you have to expect to get shafted sooner or later.
Domestic customers love low fares, but you cannot price your product below cost forever. Government takeover of United's pension plans should only be part of a total liquidation of the airline.
Not quite. Insurance works by collecting payments from a large number of people and spreading the risks across the same group. Stop paying in and your insurance stops.If you have a claim it's paid by all members of the group as are all other claims.
Pension plans work by collecting money from the current profits to pay to an ever increasing number of people who are no longer helping to generate those profits.
Short sided thinking by both management and the unions. They made an agreement for what are in effect defered payments by the company to the employees. Good for the company in the short term, and good for the employees if the company can continue to make greater and greater profits that can pay for the ever increasing cost of the plan. A classic pyramid.
And doomed like every other one...
[ May 24, 2005, 01:22 AM: Message edited by: jsharp ]
That's because the SS well never runs dry. Unlike the US government which can and will raise taxes to cover any shortfalls, private companies need to have income they actually earned to cover their expenses.
Although in the case of these plans, being backed by a government backed insurance corp, I suppose the same thing will happen. The taxpayers will end up covering the amount the companies can't.
Watch what happens with the GM and Ford obligations if either of those companies goes chapter 11...
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Before we drift too far into forbidden territory, you can maybe see how just about everything boils down to a managed "jobs" program ..and should be viewed as population management.
Some manage to escape the transitional events the evolutions (golden parachutes, etc.) ..but the bottom line is that there is no prosparity of that magnetude that is going to be afforded large segments of the society. It can't work. If every income earner had started the max IRA contribution when they came into being, then allegedly everyone would be a millionaire at retirement. The side effect would be that everything would cost a million. The main thing that most of us are upset about is the unrealistic expectation of ease and comfort that we believe we deserve based on promises. When you have such a large mass of the population earmarking moneys from the current available cash pool, there just isn't enough to maintain it ...just swap the IRA example I gave and look at it from demand levels instead of supply. It just can't work. This may have worked if we didn't have such surges in populaton and didn't have a majority of our population heading for the same retirement cliff in such mass numbers.
So ..the goverment insures the funds ...the companies are gone ..and the population figures out the rest via the economy.
What do you do when you run out of gas?
Some manage to escape the transitional events the evolutions (golden parachutes, etc.) ..but the bottom line is that there is no prosparity of that magnetude that is going to be afforded large segments of the society. It can't work. If every income earner had started the max IRA contribution when they came into being, then allegedly everyone would be a millionaire at retirement. The side effect would be that everything would cost a million. The main thing that most of us are upset about is the unrealistic expectation of ease and comfort that we believe we deserve based on promises. When you have such a large mass of the population earmarking moneys from the current available cash pool, there just isn't enough to maintain it ...just swap the IRA example I gave and look at it from demand levels instead of supply. It just can't work. This may have worked if we didn't have such surges in populaton and didn't have a majority of our population heading for the same retirement cliff in such mass numbers.
So ..the goverment insures the funds ...the companies are gone ..and the population figures out the rest via the economy.
What do you do when you run out of gas?
I would think a plan like SS could work in some form because there are larger numbers of people paying in each year. Retirement plans like the airlines and auto industries however never seem to make it to the point where the number of retirees levels off and the company is still able to pay the obligations.
Right. And that folds back into another reason why SS can keep running. us.gov has the biggest credit card of all.
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Well, the auto industry is sustained on debt. Ford, GM, and DC finance their own continued sales. You can't quite do that in the airline industry. In the auto industry you have the same "loser" motion you do in the airline industry ..but airlines can sustain very little debt since they are a service oriented industry with very few assets. There's no residual value to travel. Basically our auto companies put forth a given value to their products that may or may not reflect their real or future worth. They then accomodate the populations abilty to purchase these products in a manner that allows the enterprise to function. The real numbers in "gain or loss" are pretty much ignored. That's what you do in a jobs program. The real deal is the trains keep moving ..and not the balance sheet.
What you see in the airline industry in terms of pension ills would be just as bad in the auto industry if they didn't have debt capacity. They're now running out of that and you're seeing the effects.
They've got bigger credit cards than the airline industry.
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