pbgc

Congressional leaders reach deal to allow pension plans to cut retiree benefits

A measure that would for the first time allow the benefits of current retirees to be severely cut is set to be attached to a massive spending bill, part of an effort to save some of the nation’s most distressed pension plans. The rule would alter 40 years of…

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Reason 279 to Vote for President Obama - Protect Your Pension

Got 5 beer glasses 🍺 as a Christmas 🎄🎁 present from my brother. by thecraftbeerjunkie http://instagram.com/p/iWgbFAxNIG/

OSO - Traded As PBGC 

This could be one of the hottest beverages in the world soon.  I truly believe that.  It is a green friendly all natural beverage development that is getting attention of the NYC Elite. April 3rd it is being recognized in the Big Apple for being such a health oriented, clear colored beverage that is packaged in an environmentally conscious way.  Check it out on the stock market before it is too expensive to get in. The link below will take you to Yahoo Finance on the company that owns this beverage traded as PBGC   Remember, this is going to get a lot of press on April 3, 2012 so check it out well!  For other all natural products visit: http://scottvantage.com

#in Thanks American Airlines. Thank you for leaving a flaming bag of poo at our doorstep. 

After filing bankruptcy in November, American now has revealed that it intends to shed the responsibility of its $18.5 billion unfunded pension liability by having taxpayers cough up the dough. No this isn’t some kind of new bailout by the government. This is a legitimate obligation of the Pension Benefit Guarantee Corporation.

Like the FDIC, the PBGC is an insurance company that was set up by the US government to make sure that pensions would be paid in the event of a failure by the corporation to meet its obligations. By filing bankruptcy, the PBGC will kick in and cover the shortfall.

There will be a negotiation in the bankruptcy process that will probably mean some asset sales are set aside to fund these pensions. It is also likely that pensions will be cut by 30% once the government takes over (such was the case of Delphi in 2005), but there is no doubt that the PBGC will come up with some big money. Not surprisingly, the PBGC is itself underfunded. So, ultimately, the taxpayers will have to pay.

This is a universal problem being faced by governments and older corporations.

Jason Zweig of The Wall Street Journal pointed out a couple weeks ago that the median expected rate of return on pension assets is 7.8% among corporations and 8% for the public sector. 

If you think a well managed portfolio of stocks and bonds can beat 8% over the next ten years, then you are kidding yourself. Pension funds are conservative by nature (or at least they should be), so you can expect the fund to have about 50% in bonds. If the ten year Treasury is yielding less than 2%, then you see where the problem lies. 

If stocks return 10% per year, and you have 50% invested in stocks, then your return is 5%. If you have 50% invested in bonds and your yield is 2%, then your return is actually half that, or 1%. So, add the two halves together and you get a return of 6%.

Much more money needs to be diverted from annual cash flow into the pensions.

Ford has underfunded pension obligations of $15.4 billion. This is an increase from 2010 when the liability was $11.5 billion. Ford earned $8.8 billion in operating income in 2011. The company did reduce its debt by $6 billion to $13.1 billion and agreed to place $3.5 billion in its pension funds.

However, its clear that the pension obligations are growing faster than the company can meet them.

Regardless of who the next President is or what the political mood may be, there will be more bailouts by taxpayers. The very existence of the PBGC guarantees it.

The Pension Benefit Guaranty Corp. has an impossible job

Megan McArdle notes that there is no way the federally-backed pension insurer can set premiums appropriate to risk:

And to be fair, it’s hard to set these premiums, because what you’d really like to do is risk-rate the premiums—force firms to pay more when their firms look especially shaky.  Unfortunately, pensions look especially shaky when the firms that sponsor them look especially shaky, and the PBGC does not really want to be in the business of tipping shaky firms over the edge of bankruptcy and then … will you look at that! … assuming responsibility for their underfunded pensions.  Nor do they exactly want solvent firms to have to pay extra-high premiums in order to compensate for their idiot competitors who poured the pension fund into jackalope ranches and fur-bearing trout farms.

Walking A Type-rope Without A Net

Ever since the 1960s and particularly the Vietnam War, I have been typecast in a way that leaves me without a safety net just like so many other (stereo)type-casted individuals in our society.  Some of the top negative type-casts are:  poor people (as always),  the Middle Class  esp. public union workers (new!) , Muslims, illegal immigrants, and people of color. 

Stereotype-casting caused chaos and turmoil in my life and oppressed my ambitions as it does with all the other “types.”  So it really bothers me because it retards the progress of this great American experiment called Democracy.  We also stereotype the way we think about what one might consider philosophical ideas, instead converting them to glib commentaries that brainwash rather than enlighten.  So my random thoughts on this kind of black and white thinking:

"There’s no such thing as reverse discrimination" - Reverse is for cars. You either discriminate against people or you don’t. 

"What goes around, comes around" - Tell this to people who have worked hard, sacrificed, were generous, and had their ambitions and dreams slammed down by this recession. 

"Americans believe in second chances" - Yeah, if you’re Michael Vick or Charlie Sheen.

"It is what it is" - This is unintelligent shorthand for nonsense.  What about "it is what it isn’t, but seems like what it is?"   Where does this end?  Gertrude Stein should have ended the issue when she wrote "A rose is a rose is a rose" 80 or so years ago. Time to give it up.

"You can do anything if you work hard in America" -Keep repeating that  to me and my fellow Vietnam vets who got screwed for being patriotic.

"The self-made person" - Sorry, doesn’t compute.  We live in a family, community, and society and its structures which help one succeed.  Some people go far who are unethical and immoral.  No man or woman is an island.  No one.

"There are two sides to every story" - There are many sides to every story.  Ask different eyewitnesses to a crime and you’ll get many discriptions of the perp.

"It  happened for a reason" - What’s the reason Japan’s being punished again?  Or the Libyan people being killed by a madman?

"Artists don’t  work, don’t want a real job, and they’ll only make it when they’re dead" - Wrong on all counts.  Cadavers can’t make it.  The only people that make money off of a dead artist are the living.  And as an example of the power of art, the dictators in Bahrain destroyed the beautiful  300-ft. high Pearl sculpture in their main square because it symbolized freedom and democracy to the oppressed Shite majority.

Quote I like from yesterday’s funny pages:  “I’m not an e-reader, I’m an I-reader” — I hold the book, I turn the page, I smell the paper, I put the bookmark where I left off, and no batteries needed.

I read another pertinent quote that sums up my feelings about glib cliches.  And you might even call this a glib cliche, but I embrace it because it illustrates so well our obsession with moving on rather than learning from history.   Moreover, every generation is guilty:  “The past is a foreign country - they do things differently there” 

P.S.- more random thoughts: 

Do you know that no one understands Gadhafi because he speaks the dialect of a small Bedoin tribe, so on Al-Jazeera TV they need a translator to  make him understood to the rest of the Arab world?  Mubarak had the same issues when speaking - a unique dialect.  Because there are so many tribes in the Arab world, much of the language is better understood written than spoken.

And speaking of private vs. public sector jobs, it’s not just public sector job benefits that are under-funded. Private job benefits are too, but have been bailed out by the gov’t body called the Pension Benefit Guaranteed Corporation.  But it is  now having trouble picking up the huge tab of so many bankrupted corporations.  In fact,  Republicans are fond of quoting FDR about his lack of support for public unions.  Yet FDR thought the big business conservatives of his time were “economic royalists who practiced economic slavery.”  As that great philosopher Yogi Berra said, “Deja vous all over again.”

GAO: Union Pension Insurance Fund ‘Likely To Be Insolvent’ Within Decade

GAO: Union Pension Insurance Fund ‘Likely To Be Insolvent’ Within Decade

Despite recent congressional action, the Pension Benefit Guaranty Corporation’s (PBGC) multi-employer pension insurance program is “likely to be insolvent by the year 2024,” according to the Government Accountability Office’s (GAO) latest list of 30 “High Risk” government programs.

via GAO: Union Pension Insurance Fund ‘Likely To Be Insolvent’ Within Decade | CNS News.

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