Corporate debt is at record levels with some major firms at risk of having their bonds reduced to "junk" status:"
- General Electric is freezing the pensions of 20,000 U.S. salaried workers to reduce billions in future pension obligations and trim debt.
- About 700 employees in its supplemental pension program, geared toward executives, will also have their pension benefits frozen.
- The company said the change won't impact already retired GE workers.
- General Electric announced it will freeze the pensions of 20,000 U.S. salaried workers, a measure designed to reduce its pension deficit and trim debt. The move will shave GE's pension deficit by as much as $8 billion and its net debt by as much as $6 billion.
As part of the pension freeze, the industrial conglomerate said it will freeze supplementary pension benefits for approximately 700 employees who became executives before 2011. Supplemental pension plans are typically designed for higher-ranking employees and offer benefits beyond the typical pension plan.
"Returning GE to a position of strength has required us to make several difficult decisions, and today's decision to freeze the pension is no exception," said Kevin Cox, chief human resources officer at GE.
- Interesting.
Will the Federal Reserve Make Trump a New Herbert Hoover? Is the US Economy Primed for a 1929-style Shock? - Global Research
"On September 25 the corporate bond debt of Ford Motor Co., which unlike GM refused government nationalization in 2008, has just been downgraded to 'junk' status by Moody’s, who said Ford faces 'considerable operating and market challenges…' It affects $84 billion in company debt...."
"Moody’s estimates that at least 47 other multi-billion US corporations are vulnerable to junk downgrades in a sharp economic downturn or with rising interest rates. The most mentioned are the aerospace and electrical conglomerate GE which among other things makes jet engines for troubled Boeing."
Very little changed on Wall Street in the wake of the Great Recession, and it appears some of the same malignant forces that caused that crises are ready for an encore.