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Comments
Basically, 401k's are what you make of them. Plus, it's not like defined benefit plans like pensions and such are truly guaranteed in stone anyway. Don't they get cut or eliminated altogether from time to time, depending on how well the company managed the assets?
In re Unions: Chinese tires get tariffs (at last)
Is this protectionism for unions - are any plants UAW? - or is it a bad thing to protect jobs. Most of the US name automakers are actually foreign-owned companies, aren't they?
2014 Malibu 2LT, 2015 Cruze 2LT,
http://www.cartoonstock.com/directory/d/dutch_boy.asp
That's for sure. My father-in-law lost 1/2 his monthly pension when the PBGC took it over after LTV went belly up. Those who had less than 30 years service basically got nothing, so much for the guarantees of a pension. Thankfully my FIL invested in a 401k during his working years and it has saved him from still having to work.
Our 401k, IRA, 529 accounts (plus I made plenty this year in my personal brokerage account) have all rebounded to at or above 07 balances, but I do try to manage them to reduce our risk while boosting returns. Still got many years of working left.
Interesting your view on Boeing....agree it's all a waste of time. Thanks for the insights. Clearly, change in management/staff relationships needs to take a much higher road than the past Union-displayed negotiations techniques...you hit me, I hit you is so Mafia!
Greed on either side just delays optimum business conditions for all involved.
Regards,
OW
The UAW was founded on the thug mentality that was so 1930s. They never gave it up. You can tell from the baseball bat wielding young UAW members. Add to that the mentality that really believes a guy with just a high school diploma or less is entitled to a high paying job, equal to or greater than someone that has a college degree. That was the past, and the important part of the message Obama gave to school kids. Without a college degree you will probably be flipping burgers. Unless you are one of the lucky ones that get a job at Walmart.
I am glad to be gone from the aerospace business and it's lack of loyalty and confidence in it's workers. It was a good job with good benefits yet it was horribly insecure to deal with on an ongoing basis.
I would think that approaching the Ford case with the UAW's...that the UAW's should try and breed more security by helping their Company through tough debt-laden times. Or is that too practical a way to think here? :sick:
2021 Kia Soul LX 6-speed stick
You can get it w/ the 3.0 V-6 as well.
Nope, just a smaller version of the 3.6L. No braver buying a Buick than a Toyota.
These pensions are invested in the stock market. If the market takes a big hit, these pensions would be UNDERFUNDED. Yeah, I get it. These so called investment gurus are nothing to say the least. The majority fail to beat the S&P average. Also get the GOP wanting to invest SS in the stock market. Always wanting to take care of their buddies on Wall Street. Can you imagine the investment management fees from this amount of money? Now can you defend Bush and his Wall Street buddies with any face?????
DD also thinks that all of the companies have to downsize and wait out the storm which is expected to be 48 months. However, if no one fuels the economy (consumers) we could have the same lost decade that Japan had.
No question that some financial advisers over charge. Kind of like UAW members and the leeches they have for leaders.
Even though you like to deflect away from the problems the UAW has created in the auto industry I will try to get you back on track. Just as you have said Pensions are in the same stock market as the 401K. So what is your beef? Or maybe I should ask this. Why should a corporation suffer all the loss when the market goes South? They put money into a pension plan that is set aside for employees. The market goes down the the Feds come in and force them to dump in good money after bad. It is no wonder the corporations bailed out of defined pension plans like rats from a sinking ship. Poorly run companies like GM were just so ignorant they thought they were too big to fail and did not plan for the future. The difference between us is you want the government to tell you when to get up and when to go to bed. I would rather do my own investing and take the risks myself. I was also very instrumental in getting our company to match funds in a 401K in addition to their contribution to the Teamster Pension plan. The more diversity in your portfolio the safer you are in these downturns. Quite frankly I don't trust any of them enough to put all my eggs in one basket. That would be the people in the UAW. Blinded by greed and poor leadership.
In the past it was not so much that companies had pension funds invested in the stock market that was the problem, but rather that the pension funds were, in many cases, 100% funded with the company's own stock (think Enron). When the company tanked, so did the pension fund.
Feds come in and force them to dump in good money after bad
Probably, but there's another side to that. When the plan was doing good (stock market or company stock up), the feds allowed 'em to terminate the plan and take the excess money. So now you're left with a plan who's assets were sufficient when the plan was terminated (market up), but may not be so when the market turns down again. But, since the plan has been terminated, I don't think the company has any further obligation to fund it, though I may be wrong in this regard.
Enron is a great example of a company screwing its employees. They did have a 401K loaded with Enron stock. When the crooks started selling off their stock the employees were blocked in their individual 401Ks. So you had a lot of sad stories in that whole mess.
The design of Enron's 401K savings plan, he says, contributed substantially to employee losses. Enron limited employees' investment freedom from the start by matching their contributions only with company stock and by preventing employees from selling that stock until age 50.Enron 401K
If a pension plan was terminated the employees were supposedly given a comparable amount in a 401K to invest as they wished. For those that took the high risk high yield investments that lose on every down turn, who's fault is it? DD would like to blame Wall ST or the GOP. When someone like himself gets lucky and makes a lot of money on the Capitalist stock market he likes to act like he was the smart one. He wants it both ways. He likes taking the bounty of the Capitalist society and wants to be protected by a Socialist ideology. Much like the elites that run this country and the world.
That is the UAW in a nutshell. They want all the bounty and none of the risk.
There may be more efforts to reinforce the Unions beyond giving the UAW life after bankruptcy at the expense of the taxpayer and automakers' futures.
The union mentioned in the article was SEIU.
2014 Malibu 2LT, 2015 Cruze 2LT,
"Waaah! M-m-my g-g-girlfriend broke up with m-m-me! I loveded-ed her!"
"Well, as Socrates would say..."
What jobs are available to Philosophy majors anyway? Professorships teaching Philosophy to other suckers...I...I mean other Philosophy students? Man, talk about a subject that tells the business world "I'm only here to fool around whilst at college, I really don't know what I want to do when I grow up!" :P
2021 Kia Soul LX 6-speed stick
Ford would be selling a lot more if the government had not stepped in to keep that failure of a company GM from bellying up. The governement protectionism is not helping Ford. Look how militant the UAW is toward Ford - they may still drive F into failure.
No more defendable than the worst of union abuses.
Of the 267 ballots cast, 199 were in favor of de-certifying the election that made them members of the International Association of Machinists. The company was pleased; the union was disappointed.
The local plant makes rear fuselage sections for Boeing's 787, a new fast-selling lightweight jet that has been delayed by snags with suppliers and an eight-week strike last year by the IAM.
Boeing has said it would consider North Charleston and its manufacturing hub outside Seattle, among other sites, for a new 787 assembly plant. A decision is expected by the end of the year.
I love to cut and paste! There's no union for the Int'l Cut and Past Workers, is there? I wouldn't want to cross the picket line!
Regards,
OW
Gary, correct me if I'm wrong but, if the people who are paid to manage the pension funds (just like the people that are paid to manage 401k's) did their jobs right, then when the market rebounds, the fund should get paid back in spades, based on the buy low (down market) sell high (booming market) principle. One would think that, just like a 401k, even with rules, the potential for making big money exists.
For example; lets say a companies pension fund is worth $1.09 billion. It's liabilities are $1 billion. That $1 bil should be in "safe" investments, while the other $90 mil can be gambled with more aggressively. If the company needs to add say, $5,000 per active employee per year, they should be required to, regardless of the pension's worth. This SHOULD keep the pension overfunded, even in lean years.
This statement says it all about pension failures in my mind:
".....Poorly run companies like GM were just so ignorant they thought they were too big to fail and did not plan for the future."
You say you would rather do your own investing. I like to too, only to a certain extent. I feel a lot safer "doing it myself" and choosing my own investment strategies in my 401k and stock portfolio because SOMEONE ELSE is taking care of my pension. If it were all left up to me, I'd be spending time I don't have investigating investments, or paying someone else to do it. Either way, SOMEBODY is making a living off of planning for my future.
I just want to point out that if high returns are desired by shareholders the CEO folk will take higher risk. Hence, they are rewarded with high CEO/executive compensation. Whats wrong with safe sure thing in some of these institutions? Like banks used to have/offer prior to deregulation.
Nissan and Toyota also bet the farm on the profitable SUV market. Their workers will also suffer along the UAW workers, whom through no fault of their own, are to suffer for the greed mentality. The short term profits are what drive the corporate world and profits are what drive CEO/executive compensation.
You really don't think that someone wouldn't buy GM as parts/divisions? I'm sure China is chomping at the thought of having the distribution channels alone.. For that matter they could aquire it (GM) entirely and pay cash.
http://seekingalpha.com/article/153574-ford-takes-advantage-of-cash-for-clunkers-
http://www.businessweek.com/1999/99_08/b3617008.htm
http://www.allbusiness.com/finance/102356-1.html
http://www.filife.com/stories/indexes-beat-most-actively-managed-funds-sp-says
http://www.scdhec.gov/health/disease/stdhiv/hopwa.htm
http://www.city-data.com/forum/south-carolina/743301-record-unemployment-lower-p- ay-likely-increase.html
http://www.thestate.com/local/story/930939.html?RSS=local
I say let the Chinese buy it. I imagine Barry will be more than ready to sell before long. The UAW would see what tough management is like with the Chinese running the show. The greedy bunch running GM the last 20 years have buckled to the UAW and now we are stuck with the result.
There was plenty of greed to go around. The UAW workers and leaders were just as greedy as the management when it came to selling high profit SUVs. Besides that is what the people wanted in the decadent 90s. They all cut a fat hog during that time and should have saved some for the future. Not my fault if people live on OT when they are making a fortune, then go broke when the OT is gone. 1000s of greedy UAW workers fit in that picture.
Somebody would have bought the PROFITABLE parts, and GM would have been sliced a lot more than it has been. Somebody buying would have been highly motivated to make it profitable, more than the US Govt will be.
With GM still having overcapacity, it hurts Ford, the company that has NOT accepted tax money and has been much better managed.
Google "lazy portfolio" for a low-maintenance approach to investing that relies mainly on index funds that don't try to beat the indices. Once you've set it up, you spend only a couple of hours once or twice a year tweaking it. I've been doing this for the past 4 years with Vanguard funds (don't work for Vanguard but love their low fees & great customer service) & am quite happy with the results. It's a great way to get rich slowly. I only wish I could have started doing this 30 years ago.
Now let's step back for a look at the bigger picture. The golden age of private sector defined benefit pension plans ran from about 1950 until 1980. (By 1985, many companies - my old employer included - were shutting down these plans & replacing them with defined contribution plans.) Even then, only those who worked for large corporations - a minority of the American work force - were covered. I don't think that any "new economy" corporation (Intel, Microsoft, etc.) offers a traditional pension plan & I can't imagine that any future corporation, no matter how large or successful, will take on that burden.
Bottom line: unless new laws are passed to force companies to offer traditional pensions - no one is seriously proposing this - almost all of us who don't work for government will plan our own retirement, whether we want to (I do) or not.
Now only will they get gold-plated care worth of a congressman (exempt from healthcare mandates on us little folk) but they will have their high cost plans that may break their companies insured, insured by us little folk paying taxes to Uncle Obama or whoever the next president is.
What's wrong with this picture of special treatment for unions? :P
2014 Malibu 2LT, 2015 Cruze 2LT,
I am happy that I have my Alaska Teamster multi employer pension plan. Not all plans are run as well as ours. Including the Teamster International pension plan. When it comes to corporate plans, no thank you. I worked 9 years for Pacific Telephone and get ZERO pension from them. I worked with a fellow that had 15 years with AT&T and he got a whopping $207 per month at age 65. He then spent 17 years as a manager with RCA. They gave him a $38k cash taxable settlement in lieu of a pension when they were bought out by GE. He ended up working till he was 75 years old in the Teamster job to get a pension he could live on. Negotiating as much matching contribution into a 401K is the best choice with the least risk. If you want to gamble your 401K you are free to do that. I consider that better than the company gambling your retirement and losing.
The difference being ideology. Either we are free to make our own choices or we are wards of the state. Some here mistakenly believe you can have it both ways.
Poor workmanship, lousy attitude, unskilled yet severely overpaid, overcome by the welfare-entitlement attitude that is destroying our cities...what else CAN they think about it???...you think folks bought Hondas and Toyotas because the Big 3 products were textbook examples of QUALITY???...I hardly think so...the Big 3, by and thru the UAW, made boat-anchor junk and thought we wouldn't care...well, we did care, and we bought an alternative product...
You can try and defend the UAW all you want, the American consumer made their choice and deserted the Big 3 in droves...GM and C are bankrupt and still the UAW is probably waiting to strike somewhere...how anyone can defend the UAW with a straight face amazes me (altho, DD, I really can't see your face here, but I can try and give you one of mine...:)...)
The verdict on that strategy is not easy to render. Certainly, the sales of Hughes' parts and the spinoff of E.D.S. have been lucrative, even taking into consideration inflation and additional investments. When G.M. shareholders approved the spinoff of E.D.S. five years ago, the company's $2.5 billion purchase was worth $27.6 billion. And after paying $5 billion for Hughes in 1985, G.M. has since sold its pieces for $9.5 billion to Raytheon, $3.75 billion to Boeing, and, in its latest deal, EchoStar will pay $26 billion.
http://www.nytimes.com/2001/10/30/business/with-hughes-sale-gm-buries-a-discarde- d-strategy.html
Another diversion. What does financial mismanagement have to do with the UAW? Two wrongs don't make a right! :P
At last, we agree. Add the mis-managed UAW layer to that fact and it's curtains!
Regards,
OW
I would agree. They also left out selling controlling interest in GMAC the only US money maker they owned at the time. They were still strapped with old bad contracts with UAW retirees that just won't go away. There is no way that GM can make enough money selling cars in the USA. Even with VEBA taking over the retiree health care it looks bleak.
I'll bet a good many that will join these shelters across the company WERE in Unions. :P
Thier Own Worst Enemy
Regards,
OW
With that in mind, G.M. sold more than $14 billion of bonds in 2003 and put the proceeds into its pension fund, making up for the preceding years' losses. It also put in the proceeds of the sale of its Hughes Electronics, for a total contribution of more than $18 billion. That was far more than the minimum required that year.
The big contributions got rid of the fund's shortfall. This also gave GM special treatment, as accounting rules go, and thereby beefed their bottomline.
Then, over several years, G.M. overhauled its investment portfolio, replacing billions of dollars worth of stocks with bonds, and adding derivatives to make the duration of the bonds better match the schedule of payments to retirees.
Bond prices can swing too, but G.M. plans to hold the bonds for their interest, not sell them. The company believed the interest payments would be more than enough to produce the $7 billion owed to retirees every year.
The salaried retirees say that they'll be even worse off than the UAW workers. The head of their retiree association is quoted in the Detroit News as saying that he thinks they'll end up losing 50-60% of their pension if the plan is taken over by the PBGC.
So their blowing off organizing is going to cost them. Can't say the UAW didn't make them the offer. However, both will lose in the medical benefits, which are uncovered by the GM and or under the PBGC. Then again there is a fund operated by the UAW to cover some of the retired members. How big and how much is yet to be seen.
This is a perfect reason/example for having a union/UAW representing workers. The non-union folks certainly got the short end of the stick here. You can certainly bet on if they could go back in time, they would have opted for representation.