Thursday, May 12, 2005

Suite Crime

Jim Hightower talks about crime in the suites.

And, yesterday was a doozy.

United Airlines is going to reneg on its responsibilities to its employees in order to come out of bankruptcy. They wouldn't let us do that to a credit card company.

Here is the story:

Judge OKs termination of United Airlines pensions
Associated Press
May. 10, 2005

CHICAGO - A federal bankruptcy judge approved United Airlines' plan to terminate its employees' pension plans on Tuesday, clearing the way for the largest corporate-pension default in American history.

The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency.That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.

But the cost will be painful to its employees, who stand to lose thousands of dollars annually off their pensions when they are assumed by the Pension Benefit Guaranty Corp.

Do you see what they are doing?

They are socializing these costs by placing them on the government's Pension Benefit Guaranty Corp. And PBGC will be broke way before social security gets there. Besides, if we wanted to save social security, we would quit stealing from it.

The PBGC, the federal agency responsible for protecting pension checks for millions of Americans, is running a deficit of $9.7 billion. It ended 2000 with a surplus of $9.7 billion. The Center on Federal Financial Institutions, a non-profit research group, this week released a report saying the PBGC could run out of money as soon as 2020.

US Airways, which filed for bankruptcy reorganization last September, has already paved the way by not making payment of $110 million due to its employee pension plans.

In a bankruptcy court filing, the airline said it would be "irrational" to pay because it "provides no benefit" to helping the company survive. Bradley Belt, executive director of the federal Pension Benefit Guaranty Corp., said his agency needs a stronger legal claim on the assets of companies that skip payments. Belt called the statement "remarkable."

Because of the US air bankruptcy, and because of the termination, US Airways Capt. Dave Butterfield, 57, says he'll collect $44,000 a year from the PBGC vs. the $90,000 that he had expected.

Then there is this story.

GM, Ford bonds cut to 'junk' status
May 5, 2005: 4:49 PM EDT

S&P drops bond rating for automakers to 'BB,' the second-highest junk rating, citing financial woes.

NEW YORK (Reuters) - Standard & Poor's cut General Motors and Ford debt to junk status Thursday in a move that will reduce the automakers' avenues for raising funds as they struggle with global competition and rising healthcare costs.

The cuts could raise borrowing costs for the nation's two biggest automakers as investors seek higher rates on the bonds they buy in return for the elevated risk of default.

Investors have dreaded a cut to junk for GM, in particular, for fear it may cause turmoil in the market for investment-grade as well as junk bonds.

Investment funds prohibited from owning junk bonds could be forced to sell billions of dollars of GM and Ford debt.

GM has about $300 billion of outstanding long-term debt including secured notes. GM's management strategies may be ineffective in addressing the company's competitive disadvantages, S&P said in a statement, but the company should have no trouble meeting its cash requirements in the near term.

General Motors and Ford probably have some retired employees too.

Then there is this piece on CEO pay.

In 2004, the average CEO of a major company received $9.84 million in total compensation, according to a study by compensation consultant Pearl Meyer & Partners for The New York Times. This represents a 12 percent increase in CEO pay over 2003. In contrast, the average nonsupervisory worker’s pay increased just 2.2 percent to $27,485 in 2004.

In 2000, CEO pay ratios over the average houly worker were 500 to one.

In 1980, they were just 50 to one.

What’s wrong with CEOs taking a disproportionate share of the wealth?

The problem is that excessive CEO pay takes dollars out of the pockets of shareholders—including the retirement savings of America’s working families. Moreover, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company, its shareholders and employees.

If the largest corporations can overpay their executives,

and then stiff their aged employees who have retired,

and then say in public on the record that it would be "irrational"

to pay them because it "provides no benefit"

to helping the company survive,

then it is clear that they have become public psychopaths.

And the need for an earthfamily is even all more clear.

Oh yes,

And they should be hung.

Earthfamily Contents



Anonymous Anonymous said...

Can an electorate whose votes are influenced by the threat of Gay Marriage be trusted to vote in the interest of protecting our constitutional gaurantees or conserving our hallowed institutions? Such bogus issues make cachophonic nonsense out of the electoral process. The buck is passing around so fast that it's become a blur.
Somehow deconstructionist anarchy and mandatory sentencing are concomitant ideals in the ultraconservative panoply. -- FM

12:52 AM  
Anonymous Anonymous said...

this kind of corporate behavior seems to be the norm these days. Is anyone watching or caring? I think the great electorate is lost in its playoffs and payoffs.

7:11 AM  
Anonymous Anonymous said...

nice work OZ, I love the way you piece these stories together. MS

1:30 PM  
Blogger Chus said...

This is what I think: United Airlines Bankruptcy

10:16 AM  

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