General Motors Pensioners

[oldjones]

Yeah, but....

If it gets that bad that the Royal Bank, BMO, CIBC et al go broke it's not really going to matter because the result will be social anarchy anyway and we are ALL down the girgler.

Better get a gun, some bottle water, and brick up the windows then.

Or have a government with the guts to act in the country's interest, like FDR shutting the banks for a week. Insurer of last resort again, whether there's a law or not. The first government backed deposit insurance came later (also FDR) also something the banks should have done. But never trust a free market to do what should be done. Ya need kings and governments and such for that. Always have, always will, for all they too, get it wrong as often as right.

 

[fuji]

Union negociators are there to get the best deal out of the company.

Funny, I thought they were there to get the best deal for the workers, but from the deal they struck I guess they do see it your way.

Yet you say the unions are at fault for not saying, "You can't afford that pension you've promised and we're striking until you reduce it to something reasonable."

Absolutely; and not only that, for imposing wage demands on the company that clearly threatened their viability. In combination that was stupid.

The more anyone asserts the car companies are broke because the unions did it, the more they assert by implication that those GM guys weren't up to their jobs.

I think GM's management was incompetent. I am not absolving the company of blame here, I am just saying that it is shared equally with the union.

All of the people involved here can go hang together so far as I am concerned. I don't see why taxpayers should bail out the company, and I don't see why taxpayers should bail out the workers either--they are all to blame, they all took the risk together, and they will all have to live with it.

Canadian taxpayers already fund a very good free healthcare system that primarily spends its money on retired people. We have a very good OAS system and an actually sound CPP system. These guys aren't going to starve, they're going to live dignified lives, just a lot poorer than they expected.

Then again, they're the ones who were playing high stakes poker with their wages and pensions. They made a high stakes gamble and they lost the bet.

Point is we're about a decade late pulling this plug. 'Cause eveyone let the companies of the hook, contract after contract.

Note well that "everyone" included CAW, who wanted the gravy train to continue just as much as everyone else did.

No one's shown the math that's proved labour costs killed anybody

Oh give me a break. Labour costs were BY FAR the largest expense that GM faced.

Again, you misunderstand me if you think I believe GM's management was in any way competent. I don't. I think they deserve bankruptcy, and I think if they lied to anyone about the finances--which is fraud--then their personal assets should be seized and thrown into the pension fund.

But I am not about to let the workers off the hook when they were clearly, plainly responsible for a huge chunk of the problem.

 

[Rockslinger]

But c'mon Blame the Union is a stupid, dead issue. No one's shown the math that's proved labour costs killed anybody, they're just the easiest savings to grab. And no one's explained how competent car guys made such bad deals contract after contract. And such bad cars, year after year.

All this is water under the bridge. Nobody cares about the history anymore. Nobody cares who is to blame. The blunt truth is that GM is on life support with public money and it is time that we let it die a dignify death and whatever happens to the CAW workers and retirees happens WITHOUT PUBLIC MONEY.

 

[fuji]

Here's another solution, just being creative here:

1. Transfer all of the assets of GM to a new company, paying out zero to the existing GM stockholders and bondholders, who fucked up managing the company and are owed nothing.

2. Nullify the entire pension system that GM had. It ceases to exist. Transfer all of the pension money to the new company account.

3. Give ownership in the new company to the pensioners, in proportion to each individual's pension loss

4. The government would, as already promised, backstop warrenties and debts owed to Ontario suppliers, to protect consumers and other businesses from the fallout

The retired workers would then own the company, which would be free of all of its debts, including its debt to them. They could then decide for themselves what to do: Roll up the firm and pay themselves whatever they could get, continue it under new management of their choosing, whatever.

Public money would not be involved, or very little. Stockholders, bondholders would lose big. Pensioners would be able to get whatever value is left in the firm--if any--for themselves.

 

[Rockslinger]

paying out zero to the existing GM stockholders and bondholders

Not fair to shareholders and bondholders.

 

[fuji]

Not fair to shareholders and bondholders.

Oh give me a break the shareholders and bondholders are not responsible for the bankruptcy of the company????

Shareholders are DIRECTLY responsible for management of GM, and the bondholders plainly failed to negotiate appropriate covenants and are thus indirectly responsible for it too.

MAYBE you can convince me that some of the bondholders would be getting a raw deal here, in which case MAYBE they should get some small share in the new enterprise. Maybe.

The shareholders, on the other hand, really deserve nothing.

 

[Rockslinger]

MAYBE you can convince me that some of the bondholders would be getting a raw deal here, in which case MAYBE they should get some small share in the new enterprise. Maybe.

Time to turn this over to the bankruptcy lawyers. Depending on their loan covenants, the bondholders probably rank ahead of the pensioners and common shareholders.

 

[oldjones]

Not fair to shareholders and bondholders.

I'd say fuji's onto something. The pensioners, like suppliers who still haven't been paid for parts that are already in cars going out to dealers, have made good on their end of the deal, they should be first in line to be paid. And as 'owners', the shareholders have more obligation to pay out than to get paid.

After all, they got their Annual Report's in the mail, and they got to vote to continue GM's disastrous course. Unlike the union members.

 

[oldjones]

All this is water under the bridge. Nobody cares about the history anymore. Nobody cares who is to blame. The blunt truth is that GM is on life support with public money and it is time that we let it die a dignify death and whatever happens to the CAW workers and retirees happens WITHOUT PUBLIC MONEY.

Sorry, but the province already backstops their pension—inadequately as it turns out—along with lots of others. Nothing to do with GM or the present situation.

Write your MPP now that you're aware, and get it changed. Hopefully to be an adequate backstop. But as that would require adequate funding from the pension promisers, I won't be holding my breath.

 

[fuji]

Time to turn this over to the bankruptcy lawyers. Depending on their loan covenants, the bondholders probably rank ahead of the pensioners and common shareholders.

My undestanding is that in bankruptcy pension and wage obligations trump even the most senior secured bond and are junior only to the tax man. The bondholders by definition rank ahead of the shareholders, who are last in line.

I could be wrong, but that was my understanding.

Who knows maybe with some of those crazy rules they made for GM it's different than in a usual situation--my understanding is that the pension liability itself exceeds the amount of money the company has available and this is what skewers any sort of plan to bail them out. It amounts to bailing out the pension.

So the only viable way forward I can see, without throwing in loads of other taxpayers' money, is to hand the company over to the pensioners and let them appoint new management.

Who knows maybe they can run it in a way that generates a decent income.

 

[FOOTSNIFFER]

70% of the rest of taxpayers don't even have a pension fund and these guys think those people should step up to the plate with their money to ensure the viability of their fund? Don't think so.
It must be a real shock to the people in the CAW to be forced to face reality in such a brutal way....lol.

However I do think the government was slightly derelict in its duty in not insisting that the companies make good on their pension shortfalls when times were more flush...the pension arm of companies should be run on a more of an arms-length basis such that they would even be able to sue the contributors for any undercontributions. Some companies even have the gall to stuff their schemes with stock(!!) instead of cash or more diversified investments. A company I used to work for tried that; they expected us to depend on them for our current and future income.

 

[The Bandit]

If GM or the workers didn't place enough money into the Plan, why is the government responsible for paying pensions if GM goes under????

 

[binderman]

CAW more than "demanded", they used "Somali pirate" negotiation tactics. They threatened to shut down the plants. In effect, holding GM hostage. To be perfectly frank, the CAW would push your mother off a high cliff if it meant they get an extra 2 cents per hour.

very well said, its amazing how many people can't see that

 

[Rockslinger]

My undestanding is that in bankruptcy pension and wage obligations trump even the most senior secured bond and are junior only to the tax man.

I'm not sure either but I keep seeing news stories about workers picketting mothballed plants demanding their wages. Also, my broker has a client who is a recent Nortel retiree. His contractual severance payment is still unpaid and he took a 40% haircut on his contractual monthly pension.

 

[oldjones]

If GM or the workers didn't place enough money into the Plan, why is the government responsible for paying pensions if GM goes under????

Because the government long ago passed a law saying they would. It NEVER provided as much money as the pensioners are entitled to from GM, and only NOW McGuinty has noticed that letting big companies pay in at a lower rate than small companies over the years, means there won't even be enough even for that low payout the plan provides.

Rather than keep Ontario's promise to meagerly insure pension funds, he propses to pay out the fund till it's broke, then stop.

And say, "tough nuggies, all gone" to anyone else who trusted the government's word, I guess.

Actually charging the companies appropriately high premiums would have been out of the question, given that they assured government after government, "they were too big to fail". It would have cost too much, for nothing. The ones who didn't get jobs in Oshawa got them in Queen's Park.

 

[Rockslinger]

Rather than keep Ontario's promise to meagerly insure pension funds, he propses to pay out the fund till it's broke, then stop.

Let's get real. When there is no money in the fund, there is NO MONEY in the fund. It is not complicated.

 

[Malibook]

Because the government long ago passed a law saying they would.

Would you please stop making up bullshit and calling it the law?

Your flawed interpretations are not the law.

 

[Malibook]

Time to turn this over to the bankruptcy lawyers. Depending on their loan covenants, the bondholders probably rank ahead of the pensioners and common shareholders.

It looks like Obama wants to force the bondholders to accept a huge haircut.
The bondholders did not accept a big haircut offer from GM a couple of weeks ago and now Obama wants GM to offer them much less.
Even if the bondholders think they can get much more in a liquidation, it looks like this will not be allowed.
Obama is looking more and more like a fascist dictator.

http://finance.yahoo.com/news/Report-US-toughens-terms-for-apf-14902698.html
The Treasury Department wants GM to offer its bondholders a small amount of its stock in exchange for their $29 billion of GM debt, The Wall Street Journal reported Friday, citing unnamed people familiar with the matter.

The new offer is much less generous than a similar offer GM made two weeks ago, which would have included cash, new debt and a much larger portion of the company's stock, according to the report.


The Obama administration is pushing Chrysler's creditors to give up about 85 percent of the nearly $7 billion in debt they hold, according to a person familiar with the discussions who spoke on condition of anonymity because the talks are private.

Some of the company's senior lenders, however, believe that if the company goes into bankruptcy they would get a much better offer -- more than 70 cents to the dollar, the Journal said. Chrysler has said they would get much less.

 

[fuji]

Because the government long ago passed a law saying they would.

The law you quoted only says that they might not that they would and even then that the shortfall would be a loan, not a grant.

I am still waiting for a reference from you that shows that it's something stronger than that. If promises were made that the government would step up with a grant of taxpayer money I'd like to see the proof.

 

[fuji]

It looks like Obama wants to force the bondholders to accept a huge haircut.

I don't know whether this is true for sure under either Canadian or American law, but as I speculated above:

Aren't pension liabilities and wage liabilities ahead of secured bonds in bankruptcy court?

If so I think the bondholders are going to get a big haircut no matter what. If Obama walked away and let GM fail, for example, I suspect the bondholders get damn near zero out of a bankruptcy court.

I think their claims that they could get more are dreams not based in reality, a negotiating tactic. Doesn't GM in the US have the same unfunded pension liability issue as it does in Canada?

Or is the GM US pension plan actuarially sound?