United We Default - WSJ
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Buster, it is the American way plus the top management will still get their big $$$ for screwing up the company.
Remember, we try to keep politics out of here, but... I gotta' agree about health care. If you work for a Fortune 500 company, you get health insurance for under $400 a month.
If you don't work for a Fortune 500, your health insurance premiums for comparable benefits to the Fortune 500 employee will be most of an average man's monthly pay.
I won't say what the solution is, because that would be political.
I will say our current health care situation is going to change, dramatically, within the next 10-15 years. Maybe better, maybe worse, but not the same.
There isn't always a happy ending. United could simply go out of business, would that be a better deal for the employees? Sure, you can say that United should have fully funded its pensions and put them in a lockbox. Just like the Feds do with Social Security, right?
Maybe one day citizens will understand that the individual needs to have control over their own retirement money, and the individual will choose the level of investment risk they can tolerate.
Controlling your own money seems to be a radical extremist idea to some
Maybe one day citizens will understand that the individual needs to have control over their own retirement money, and the individual will choose the level of investment risk they can tolerate.
Controlling your own money seems to be a radical extremist idea to some
During the late '90s, GE made more money from its pension plan than it did from the NBC network. When I was a treasury manager for a Fortune 500 company, my boss, a very bright CPA, found a way to book the excess pension assets into an income account.
These assets had accumulated through decades of conservative actuarial assumptions and invest policies. Subsequently, the need to meet profit objectives without the actual operational revenues became paramount in order that upper level management received bonuses.
Without having the actual financial records before me, my guess is that the roaring stock market of the 90's begat the same thing for these airlines and automakers.
The only owners of airline stocks are airline employess and their pension funds. Without these two investors, these stocks would crater.
No pension system becomes defunct in a few years. It takes many years of abuse and mismanagement.
These assets had accumulated through decades of conservative actuarial assumptions and invest policies. Subsequently, the need to meet profit objectives without the actual operational revenues became paramount in order that upper level management received bonuses.
Without having the actual financial records before me, my guess is that the roaring stock market of the 90's begat the same thing for these airlines and automakers.
The only owners of airline stocks are airline employess and their pension funds. Without these two investors, these stocks would crater.
No pension system becomes defunct in a few years. It takes many years of abuse and mismanagement.
Investing in the company you work for shouldn't be a "risk"
Eljefino, I think you're right. Thetime of government bailouts should end for the airline industry. Let the chips fall.
I'm sure there are planes, coveted gate positions at good hub airports, etc., that a competitor like Southwest (with a viable business plan) would love to buy at auction. Put the money in the pension plan first before other debts are paid off. Most of the day-to-day employees would find jobs with another, expanding carrier. The same number of people are flying. Management can pound sand.
Remember after 9/11 the almost instantaneous bailout of all the major airlines; they are in the fed's pocket quite securely. United should be allowed to implode to teach a lesson to the other carriers.
Remember after 9/11 the almost instantaneous bailout of all the major airlines; they are in the fed's pocket quite securely. United should be allowed to implode to teach a lesson to the other carriers.
The airline industry in Canada has been just as sad. Just recently the 3rd biggest company folded and the next day airfare doubled in price so let's hope things work out. One of the other companies has been bancrupt for a long time but keeps spending billions on new aircraft.
As for me? I drive to my destination unless somebody else is paying. I think I'll keep away from long term profit sharing too. If I join a start-up and want to make my money in 5 years I'll go for it because I'm young enough to try again if things go bad. Gambling long term with pensions has worked out for many people including my grandfather but lots of corporations fold. Besides, I'm probably not going to be fortunate enough to stay with any one company for life.
Steve
As for me? I drive to my destination unless somebody else is paying. I think I'll keep away from long term profit sharing too. If I join a start-up and want to make my money in 5 years I'll go for it because I'm young enough to try again if things go bad. Gambling long term with pensions has worked out for many people including my grandfather but lots of corporations fold. Besides, I'm probably not going to be fortunate enough to stay with any one company for life.
Steve
"Prices doubled"? I don't think so. They increased between 5 and 10% according to a couple of on-line booking websites...
John.
John.
We had a friend of the family visit the week JetsGo or whatever it was folded and that was the increase she saw. I suppose the prices have went down since then but keeping the prices below operating cost won't help profitability. If I wanted to make money in the air industry I'd bid on contracts and then lease equipment when needed. Aircraft ownership isn't too attractive in my eyes.
Steve
Steve
Try flying that SW business plan overseas or check a bag on them domestically.
SW airlines business plan exists currently at the faultering airlines expense. Similar to Walmart using the Government for employess "benefits". SW as it grows will succumb too.
Airlines are a commodity to the consumer and as such must be priced accordingly with some government oversight as they CANNOT consistantly cover their costs unless they have pricing power and in the current system none do. Deregulation was a joke world wide, allowing the cycle of start and shutdown to legally launder investors monies into the pockets of the managments and controlling interests of the same recycled investment groups.
What I am afraid we will see is chinese owned low ball airlines offered domestically and especially internationally. As soon as the current administration can get the cabotage and ownership laws changed.
Then we can have Chinese communist trained pilots and aircraft flying our civil reserve air fleet hauling US troops to war. Think Globally.
And why you are thinking globally remember that the current airline employees (which in the mechanics, weather,dispatch, scheduling, and pilots jobs are highly trained , federally licensed positions) will garner little or NONE of their retirement plans as the incompetent managements of these companies ( as Groucho so accurately informs) steal them with tacit government approval.
Amazing to me that some wiped out USAIR or United employee hasn't AK-47'd the guys with the golden parachutes in the above cartoon.
I agree that the air system needs to change but paying a participant of a pension pennies on the dollar is wrong regardless of your politics.
Sheep don't fight and the American people hide behind the flag and talk tough, when the real threat is in the corporate boardrooms.
[ May 16, 2005, 08:52 AM: Message edited by: Terry ]
SW airlines business plan exists currently at the faultering airlines expense. Similar to Walmart using the Government for employess "benefits". SW as it grows will succumb too.
Airlines are a commodity to the consumer and as such must be priced accordingly with some government oversight as they CANNOT consistantly cover their costs unless they have pricing power and in the current system none do. Deregulation was a joke world wide, allowing the cycle of start and shutdown to legally launder investors monies into the pockets of the managments and controlling interests of the same recycled investment groups.
What I am afraid we will see is chinese owned low ball airlines offered domestically and especially internationally. As soon as the current administration can get the cabotage and ownership laws changed.
Then we can have Chinese communist trained pilots and aircraft flying our civil reserve air fleet hauling US troops to war. Think Globally.
And why you are thinking globally remember that the current airline employees (which in the mechanics, weather,dispatch, scheduling, and pilots jobs are highly trained , federally licensed positions) will garner little or NONE of their retirement plans as the incompetent managements of these companies ( as Groucho so accurately informs) steal them with tacit government approval.
Amazing to me that some wiped out USAIR or United employee hasn't AK-47'd the guys with the golden parachutes in the above cartoon.
I agree that the air system needs to change but paying a participant of a pension pennies on the dollar is wrong regardless of your politics.
Sheep don't fight and the American people hide behind the flag and talk tough, when the real threat is in the corporate boardrooms.
[ May 16, 2005, 08:52 AM: Message edited by: Terry ]
Terry I am humbled,Stevequote:
Originally posted by Terry:
Try flying that SW business plan overseas or check a bag on them domestically.
SW airlines business plan exists currently at the faultering airlines expense. Similar to Walmart using the Government for employess "benefits". SW as it grows will succumb too.
Airlines are a commodity to the consumer and as such must be priced accordingly with some government oversight as they CANNOT consistantly cover their costs unless they have pricing power and in the current system none do. Deregulation was a joke world wide, allowing the cycle of start and shutdown to legally launder investors monies into the pockets of the managments and controlling interests of the same recycled investment groups.
What I am afraid we will see is chinese owned low ball airlines offered domestically and especially internationally. As soon as the current administration can get the cabotage and ownership laws changed.
Then we can have Chinese communist trained pilots and aircraft flying our civil reserve air fleet hauling US troops to war. Think Globally.
And why you are thinking globally remember that the current airline employees (which in the mechanics, weather,dispatch, scheduling, and pilots jobs are highly trained , federally licensed positions) will garner little or NONE of their retirement plans as the incompetent managements of these companies ( as Groucho so accurately informs) steal them with tacit government approval.
Amazing to me that some wiped out USAIR or United employee hasn't AK-47'd the guys with the golden parachutes in the above cartoon.
I agree that the air system needs to change but paying a participant of a pension pennies on the dollar is wrong regardless of your politics.
Sheep don't fight and the American people hide behind the flag and talk tough, when the real threat is in the corporate boardrooms.
JHZR2
Staff member
Terry,
Excellent points!
you have sparked my curiosity: other than for motor oil (because the selection is excellent), I dont buy anything at wal-mart. I cant really stand the store, and prefer smaller stores and regional chains.
Anyhow, what is this about wal-mart using the gov't for employees' benefits???
Thanks,
JMH
Excellent points!
Anyhow, what is this about wal-mart using the gov't for employees' benefits???
Thanks,
JMH
Terry, there is very little difference between a government subsidized industry and a government owned industry.
If the U.S. would let China put U.S. companies out of business, shame on them. The U.S. carriers must be creative and tough, not top heavy like a lot of U.S. companies.
If the U.S. would let China put U.S. companies out of business, shame on them. The U.S. carriers must be creative and tough, not top heavy like a lot of U.S. companies.
I think what Terry was referring to was the University of California at Berkely study that showed that Wal-Mart employees were forced to access government handouts at a higher rate than other workers in a typical community.
For every Wal-Mart that exists varying governments pay hundreds of thousands of dollars per year in low income benefits.
Typically Wal-Mart employees need very high rates of government assistance to meet their daily needs and its not uncommon for Wal-Mart employees to access government programs such as food stamps, earned income tax credits, low income medical assistance, pell grants (for college), low income government housing, and many other programs to help out what Bill Clinton called the working poor.
People love shopping at Wal-Mart because of low prices but Wal-Mart has low prices because their employees live in poverty. The same employees turn to the government for desperation help when they need help and then governments raise your taxes to pay for it.
Berkely is an incredibly liberal school but their numbers are pretty accurate. Wal-Mart put out a bunch of propaganda to counter the Berkely claims but a lot of it was lies.
I live in a small town and Im a friendly guy and I know people who work for Wal-Mart and they struggle. I mean STRUGGLE. Im not talking the high school kid with an after school job either. Im talking people that depend on their paychecks to pay their bills.
The damage done to communties such as Murray of Ohio in Lawrenceburg Tn closing down so lawnmowers can be made in China and sold in Wal-Marts is another issue worthy of being addressed and that saddens me.
Id say that Terry's comments are right on the money. Wal-Mart puts a big sign on their buildings claiming Always Low Prices and while those low prices are great for consumers their side effects are less auspicious and they have a termite effect on the cornerstone building blocks of our economy which in a nutshell is the absolute critical need for workers to be able to find good jobs in America.
Happy Motoring All,
Bugshu
For every Wal-Mart that exists varying governments pay hundreds of thousands of dollars per year in low income benefits.
Typically Wal-Mart employees need very high rates of government assistance to meet their daily needs and its not uncommon for Wal-Mart employees to access government programs such as food stamps, earned income tax credits, low income medical assistance, pell grants (for college), low income government housing, and many other programs to help out what Bill Clinton called the working poor.
People love shopping at Wal-Mart because of low prices but Wal-Mart has low prices because their employees live in poverty. The same employees turn to the government for desperation help when they need help and then governments raise your taxes to pay for it.
Berkely is an incredibly liberal school but their numbers are pretty accurate. Wal-Mart put out a bunch of propaganda to counter the Berkely claims but a lot of it was lies.
I live in a small town and Im a friendly guy and I know people who work for Wal-Mart and they struggle. I mean STRUGGLE. Im not talking the high school kid with an after school job either. Im talking people that depend on their paychecks to pay their bills.
The damage done to communties such as Murray of Ohio in Lawrenceburg Tn closing down so lawnmowers can be made in China and sold in Wal-Marts is another issue worthy of being addressed and that saddens me.
Id say that Terry's comments are right on the money. Wal-Mart puts a big sign on their buildings claiming Always Low Prices and while those low prices are great for consumers their side effects are less auspicious and they have a termite effect on the cornerstone building blocks of our economy which in a nutshell is the absolute critical need for workers to be able to find good jobs in America.
Happy Motoring All,
Bugshu
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Hmmm ...seems to me there was an evolution from pension plans being shelters ..to them being considered taxable assets to the corporation. Pension funds used to house the excess profits in terms of "over funding". This, in my minds eye, allowed the corporation to retain assets and not have to pay taxes ..nor have their shareholders pay taxes on the dividends. When this regulation altered their status from shelter to asset ..they also allowed them to be funded to a limited degree. Some appeared to only have to cover their current obilgations and provide additions to meet the future demand portioned for the current year (I'm not saying this right, but you had to ONLY provide XX amount of growth which may not keep pace with all upramps in future obligations). This naturally depended on if it was a defined benefit or defined contribution. Pension "trusts" can be complex and I don't pretend to know that much about them. I know our collective bargaining unit had a pathetic defined benefit package ..which was backed totally in cash ..but the managment package was backed with a composite of cash and company (and other) stock.
You've also got to index this with "practical growth and worth". For example, anyone who had a "boom" in company held retirement stock during the 80's ...surely had some unreal expectations to holding on to that value since the value of the stock was enflated due to unique and temorary market influences.
Does anyone remember Peoples Airline? They were a flash in the pan. The growth was tremendous and one female middle manager was on one show and said how her initial stock purchase (for taking the then revolutionary approach to employee ownership/investment) was worth a million $$$.
Did she ever see a million $$$?? Nope.
You've also got to index this with "practical growth and worth". For example, anyone who had a "boom" in company held retirement stock during the 80's ...surely had some unreal expectations to holding on to that value since the value of the stock was enflated due to unique and temorary market influences.
Does anyone remember Peoples Airline? They were a flash in the pan. The growth was tremendous and one female middle manager was on one show and said how her initial stock purchase (for taking the then revolutionary approach to employee ownership/investment) was worth a million $$$.
Did she ever see a million $$$?? Nope.
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