I have a friend whose mother was living her retirement from coupons on GM bonds. When the government “restructured” GM, she was put in line AFTER the unions, and lost her income.
According to THE LAW, bondholders are entitled to the first dibs when a company collapses. But if you donate millions to the BHO election campaign, you might get paid back in BILLIONS, and little old ladies living on a pension are screwed.
Rodney Johnson at HS DENT has posted an excellent review at the Dent Financial Blog.
I’ll quote the article here:
Not every loser chosen by the government is a fat cat banker making millions of dollars, or a perceived corporate bad actor such as Lehman. Many are just ordinary people, which is what makes some of the choices of the US government over the last year so much more difficult to fathom. At issue is the results of the auto industry bankruptcies earlier in the year and how the pension mess has fallen out. We have written on this subject numerous times, and today the NYT has a feature on it (NYT, B1, 10/27/09). The example “loser” is a woman who took early retirement at Delphi as the company encouraged, received a pension of $2,925 monthly since retirement, but after the end of the bankruptcy she will receive $390 monthly. That’s correct – from $3k a month to $400. I’d say that qualifies as losing.
So what was makes her a loser? Not being in a union is the short answer, but it’s not the full answer. When GM spun off Delphi in the late 1990s, the Delphi United Auto Workers were given a promise that if their pensions were underfunded by Delphi that GM would “top-up” the payments. So far, so good, as these are the dealings of private companies with their labor.
Then Delphi does indeed go bankrupt in the mid 2000s. The company quits making full contributions to their pension plans for all workers – UAW, United Steel Workers, white collar workers, etc. In fact, they make tiny fractional payments. Just as you would expect, four years and one heck of a bear market later, the pensions are all dramatically underfunded. So Delphi does what is expected of a company in bankruptcy, they kick their pension obligations to the PBGC, which pays according to a very un-generous schedule, NOT according to what your pension benefits were at the company. This is where the Delphi UAW workers hold up their trump card, the one that says GM has to “top-up” their pension payments in the event of underfunding. Still, so far so good. Except, GM is now bankrupt too.
This is where the winners and losers are sorted.
GM now agrees to make those payments. But there’s more. The steel workers, electrical workers, and other unions cry foul because only the UAW is covered. So GM graciously agrees to top up all union payments. White collar payments? No. Nada. Zip.
Where did GM get the funds to make such payments, since they were bankrupt? From taxpayers, who infused the company with $53 billion.
This is the same convoluted scheme that allowed unsecured creditors (union health trust) to jump ahead of secured creditors (bond holders).
There are real consequences to these actions. Those that control capital, both investors and corporate officers, will long remember these actions and include them in their decision-making in the years to come. To pretend that such things have no consequence is disingenuous. To treat these situations lightly, when they have such a devastating and unequal affect on people, is callous.
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The Lou Dobbs radio show pointed out yesterday that the Health and Human Services web site had a button on it that asked for “Support for Health Reform This Year”, I couldn’t believe it.
Believe it!
On the right column, there is a link to healthreform.gov, clearly an advocacy site. When you navigate there, we are told:
This is an official U.S. Government Web site managed by the U.S. Department of Health & Human Services.
How can the US government be involved in unofficial advocacy?
Is this legal? I thought our government (unlike the elected politicians) had to be neutral to politicking?
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I found this YouTube video on C3 headlines.
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I took a week off for a family vacation in Ireland. My wife has her roots there and I love the people there .. family and joyous people … until you let the government set the tune …
21% of Ireland’s youth are unemployed. What type of society does a country become when young people cannot get jobs? Set the minimum wage above the rate they are worth and you will get lots of unemployment .. lots of happy Unions .. and a call for more dole (as they call it in Ireland) to cure the “problem” .. caused by government interests.
Ronald Reagan said: “Government is not the solution. Government is the problem”. We have created a monstrous problem led by our communist leader, Barrack Hussein Obama. I call him communist because, as he said “judge me by the people I surround my myself with”.
Surely we know now that there are more than 50% of the White house staff that are avowed Marxists and/or Communists. Van Jones, Cass Sunstein, Valerie Jones, Anita Dunn … Every one devoted to Communism, Communism heroes. They extol Marxist and Socialist leaders, like Mao Tse Tung, Che, and Castro — people who have collectively MURDERED over 50 Million people … this is change we can believe in???
Unlike Ireland, the slide to socialism is subtle .. the USA slide is violent and driven by a radical white house and its Communist and Marxist staff.
GOD SAVE AMERICA!
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I know of many Canadians who flee to the United States to get health care, either because they don’t have to wait, or because the care is better.
In fact, Canada’s own federal Health Minister, Belinda Stronach, went to the USA for her cancer breast surgery.
Thomas Sowell has noted that Canadians turn to the US health care system for better care; where will we turn if we allow our system to be socialized?
An IBD editorial today notes “The Revolt Up North“. Remember that buying your own healthcare is illegal in Canada. So Canadians are suing for better service.
Canada’s high court found that “delays in the public health care system are widespread and that, in some serious cases, patients die as a result of waiting lists for public health care.” As Chief Justice Beverley McLachlin wrote, “Access to a waiting list is not access to health care.”
While Canada considers a return to a private system, the USA must avoid government takeover now.
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