Who's going to buy their cars?
???
Who's going to buy their cars now? Everyone has pulled back on spending?
or if they were bailed out? Bail outs will still lead to layoffs, there will be no protection for employees....?
Care
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Who's going to buy their cars?
???
Who's going to buy their cars now? Everyone has pulled back on spending?
or if they were bailed out? Bail outs will still lead to layoffs, there will be no protection for employees....?
Care
chapter 11 would FORCE them in to focussing on what makes them money, and get rid of this ''throw what you got against the wall and see what sticks'' approach....imo.
Chapter 11 is exactly what the CEO's want. Then they can write off all those pensions they promised.
Union workers gave up immediate pay raises for pensions. The Big 3 promised Pensions because those were future costs. Better to promise something in the future than have to give something now.
OMG, the more I remember, the more I get mad about this bullshit. Back in 05 or 06, Bush passed the Pension Protection Act. It said that companies could spend their pension funds because we were in a recession and of course the Republicans only know how to spend/borrow their way out of a financial mess.
Thank God the Democrats won this election. If they didn't, the Big 3 would just go bankrupt and start over again, only all the employees and retirees would be FUCKED!!!
Care, I think you need to rethink your tough stance. I don't think you realize what you are saying. Do you really want tax payers to start paying for all those pensions/retirees? Do you really want the big wigs at the big 3 to get to wipe the slate clean and start over and continue paying themselves millions of dollars a year while they lower the line workers wages and take away his healthcare benefits? I didn't know you got conservative all of the sudden.
I'd buy a new American car tomorrow if I could afford it.
I don't really need one, and lord knows I cannot afford one, but if I had the dough I'd put some of it back into the economy.
The multibillionaires ought to start spending money here in the USA like crazy.
Lord knows they're the only people who've got it to spend.
It's not the pensions as much as the employee and (especialy) retiree medical. Somthing that only American companies need to pay for.
Chapter 11 is exactly what the CEO's want. Then they can write off all those pensions they promised.
Union workers gave up immediate pay raises for pensions. The Big 3 promised Pensions because those were future costs. Better to promise something in the future than have to give something now.
The PPA only allowed employers to pull assets out of plans that were funded at a 120% rate or higher so that they could avoid the IRS imposed penalties. One of the big corporate deduction tricks is overfunding your pension plan when you have profits. As contributions to a qualified pension plan can be deducted on the 1120, if a company had a taxable profit at the end of the year they could just throw it into the pension trust as the excise tax for an over contribution was less than the corporate marginal rate. The plan is then over funded so in a lean year the corporation could avoid plan contributions as it was overfunded to begin with.OMG, the more I remember, the more I get mad about this bullshit. Back in 05 or 06, Bush passed the Pension Protection Act. It said that companies could spend their pension funds because we were in a recession and of course the Republicans only know how to spend/borrow their way out of a financial mess.
Thank God the Democrats won this election. If they didn't, the Big 3 would just go bankrupt and start over again, only all the employees and retirees would be FUCKED!!!
Care, I think you need to rethink your tough stance. I don't think you realize what you are saying. Do you really want tax payers to start paying for all those pensions/retirees? Do you really want the big wigs at the big 3 to get to wipe the slate clean and start over and continue paying themselves millions of dollars a year while they lower the line workers wages and take away his healthcare benefits? I didn't know you got conservative all of the sudden.
Trust me on this, Chapter 11 is exactly what the corporate officers and directors dont want. The majority of Officer & Director compensation is paid in the form of Equity which becomes worthless in reorganization. Under a Cpt 11 William Clay Ford will personally lose about $20M, while Mulally $28M. In addition, the Ford Supplemental Executive Retirement Plans are funded through what are called Rabbi Trusts which are considered assets subject to creditor claims in a Chapter 11.
Unlike the Officers, the pensions of the workers are guaranteed by the Pension Benefit Guarantee Corporation and any renegotiation would leave current plan assets intact. What they would do is probably adjust the actuarial assumptions in the plan for calculating the benefit so that the annual funding requirements would be easier to meet.
The PPA of 2006 was set up because businesses were overfunding their retirement plans. How a defined Benefit plan works is that there is a calculation of how much it will cost today to provide an employee with benefit $X in the future. What happened in the 90s and 00s was that the assets in the plan were growing at say 7.5% while the actuarial assumption calculated in the 60s or 70s provided a rate of 3%.
What happened was that there were all these old union negotiated contract plans that had accumulated more assets than were required to pay benefit costs required based on a 7.5% growth rate. Excess pension contributions are penalized under the pre PPA so that companies would be forced to over contribute due to the collective bargaining agreement (or be in violation of ERISA) and then pay IRS penalties and excise taxes on the excess contribution.
Of course 2 years after the PPA gets passed our equity markets are in the toilet so the assets funding the pension plan drop and now the plan goes from being over funded to underfunded almost overnight.
The big 3 need to be able to renegotiate the contracts given a reasonable rate of return (like the long term AFR IMHO) so that the plans do not become so overfunded during a boom cycle. This has nothing to do with the benefit or pension payments made to employees, it has to do with the assumptions used to calculate the required contributions.
The PPA only allowed employers to pull assets out of plans that were funded at a 120% rate or higher so that they could avoid the IRS imposed penalties. One of the big corporate deduction tricks is overfunding your pension plan when you have profits. As contributions to a qualified pension plan can be deducted on the 1120, if a company had a taxable profit at the end of the year they could just throw it into the pension trust as the excise tax for an over contribution was less than the corporate marginal rate. The plan is then over funded so in a lean year the corporation could avoid plan contributions as it was overfunded to begin with.
Dont buy the line of BS FoMoCos officers and directors are selling, they want a bailout to save their Executive Pensions and equity holdings, not to avoid layoffs. Layoffs are inevitable at this point and that sucks, but what would suck more is using tax dollars to fund the executive pension and stock purchase plans.
Obviously they will not tell the American public that the reason for the bailout is to save the top .1% of FoMoCos employees & contractors from loosing hundreds of millions of dollars, but thats what they are in fact pitching for.
Trust me on this, Chapter 11 is exactly what the corporate officers and directors dont want. The majority of Officer & Director compensation is paid in the form of Equity which becomes worthless in reorganization. Under a Cpt 11 William Clay Ford will personally lose about $20M, while Mulally $28M. In addition, the Ford Supplemental Executive Retirement Plans are funded through what are called Rabbi Trusts which are considered assets subject to creditor claims in a Chapter 11.
Unlike the Officers, the pensions of the workers are guaranteed by the Pension Benefit Guarantee Corporation and any renegotiation would leave current plan assets intact. What they would do is probably adjust the actuarial assumptions in the plan for calculating the benefit so that the annual funding requirements would be easier to meet.
The PPA of 2006 was set up because businesses were overfunding their retirement plans. How a defined Benefit plan works is that there is a calculation of how much it will cost today to provide an employee with benefit $X in the future. What happened in the 90s and 00s was that the assets in the plan were growing at say 7.5% while the actuarial assumption calculated in the 60s or 70s provided a rate of 3%.
What happened was that there were all these old union negotiated contract plans that had accumulated more assets than were required to pay benefit costs required based on a 7.5% growth rate. Excess pension contributions are penalized under the pre PPA so that companies would be forced to over contribute due to the collective bargaining agreement (or be in violation of ERISA) and then pay IRS penalties and excise taxes on the excess contribution.
Of course 2 years after the PPA gets passed our equity markets are in the toilet so the assets funding the pension plan drop and now the plan goes from being over funded to underfunded almost overnight.
The big 3 need to be able to renegotiate the contracts given a reasonable rate of return (like the long term AFR IMHO) so that the plans do not become so overfunded during a boom cycle. This has nothing to do with the benefit or pension payments made to employees, it has to do with the assumptions used to calculate the required contributions.
The PPA only allowed employers to pull assets out of plans that were funded at a 120% rate or higher so that they could avoid the IRS imposed penalties. One of the big corporate deduction tricks is overfunding your pension plan when you have profits. As contributions to a qualified pension plan can be deducted on the 1120, if a company had a taxable profit at the end of the year they could just throw it into the pension trust as the excise tax for an over contribution was less than the corporate marginal rate. The plan is then over funded so in a lean year the corporation could avoid plan contributions as it was overfunded to begin with.
Dont buy the line of BS FoMoCos officers and directors are selling, they want a bailout to save their Executive Pensions and equity holdings, not to avoid layoffs. Layoffs are inevitable at this point and that sucks, but what would suck more is using tax dollars to fund the executive pension and stock purchase plans.
Obviously they will not tell the American public that the reason for the bailout is to save the top .1% of FoMoCos employees & contractors from loosing hundreds of millions of dollars, but thats what they are in fact pitching for.
And then we will experience the joy of a government-run car industry.
Won't that be peachy.
And then we will experience the joy of a government-run car industry.
Won't that be peachy.
the UAW is more interested in that raise than they are the survival of the company that pays the wage. Why do you suppose that GM is actually profitable in every other country but the United States? The reason is that GM does not have a high cost built into each unto produced crippling them when they produce a vehicle. The other thing is that GM is able to produce vehicle that are more responsive to the market where those costs do not have to be made up by high cost vehicles like SUV's and big trucks. So go ahead and give the 25 Billion dollar 3 month survival kit and wait for the Chapter 11 three months from now, but consider this, would not that 25 billion be better spent as an unemployment extension benefit for those put out of work by Chapter 11.
The exec's are more worried about their raises and their bonus' than they are about the success of the company too, trust me.
The CEO can go be a CEO for another company. Or he can go be on the BOD of some other company.
Or, he can just go retire with the $5 million dollars he just gave himself.
Did you read the rules? I got that from an insider. Again, rule 1, feed the generals first. Rule 2, don't forget rule number one. That's not a joke.
I'll get details from my VP brother this weekend and post what he tells me on Tuesday. We're going deer hunting. It's a long ride up north and he loves to hear himself talk. LOL. But he's a cool vp. He's actually liberal. BUT, he will probably agree that a company doesn't necessarily want to go bankrupt.
But, he now works for a auto supplier that went bankrupt. His job is to clean house and to make them more efficient. He says walking into the building, or seeing the extravagent lunches they put on, you wouldn't be able to tell that they were in bankruptsy. They are dionosaurs. Doing things like they did 20 years ago. Old farts who don't know how to bring their companies into the 21st century, blabla.
He told me something about what happens to the stocks when a company goes bankrupt. I think the major shareholders are protected. Like, the new companies stock gets set at a pretty high amount to begin with, so all the old stakeholders can recoup.
Ah, I'm talking out of my ass. It was a conversation we had last year. Let me ask him again and I'll try to take notes. LOL.
Or, he can just go retire with the $5 million dollars he just gave himself