On Feb 27, 2011, at 10:37 AM, mike wilson wrote: > On 27/02/2011 17:28, frank theriault wrote: >> On Sun, Feb 27, 2011 at 11:20 AM, Bob Sullivan<[email protected]> wrote: >>> And Frank, >>> I want to tell you something that will make you happy. >>> We visited rich friends in a gated community in Naples Florida. >>> 4 people on their block were early retirees from General Motors. >>> Their pension benefits were capped at $72K. >>> (I know that's a lot, but it's a lot less than they were getting.) >>> And the highest ranked among them has already sold and move back to >>> Michigan. >>> They were all drawing money from 'defered compensation plans', >>> where GM held back some salary to pay them later at a lower tax rate. >>> Guess what. In bankruptcy, all those funds go to the creditors. >>> It puts a 6 figure crimp in their lifestyles... >>> Regards, Bob S. >> >> That doesn't make me particularly happy, Bob. First of all, I'm sure >> these people worked hard for their money, often working long hours, >> weekends, with many business trips and lots of pressure. I may not >> agree that the work they did was for the betterment of all, but they >> had every right to rely on agreements made with their company and to >> pattern their life accordingly. >> >> The fact that due to GM making bad decisions they lost their pensions >> or a portion thereof only means that creditors got that money - and >> I'm sure that banks reaped most of that benefit. I'd rather see the >> money in the hands of an individual than a huge faceless corporation. >> >> I don't think there's anything happy about your story. > > Agreed. If they had been in a union, it would hopefully not have allowed > those funds to be kept in a place available to creditors. Did GM actually go > bankrupt? > > -- GM declared bankruptcy and was reorganized as two companies: one held the bad assets, and the new GM held the good assets. It was a necessary step due to way too many dealerships that had become non performers but had franchise agreements that compelled GM to continue to keep them in business. It was also necessary due to onerous obligations to the union. Many of those agreements were made at a time when the Detroit automakers monopolized the U.S. car market. The union would strike, and the automakers would give them whatever they wanted and roll it into the price of the cars. That usually meant taking quality out.
Now, many of GM's union obligations have been brought more in line with reality, although they are still more of a burden than other automakers have to contend with. Toyota, Honda and most other foreign automakers build cars in non-union U.S. factories, located in right-to-work states (states with laws barring compulsory union membership). The lack of union commitments on the part of other auto manufacturers made the Detroit automakers union contracts untenable if they were to compete. GM has already paid back a substantial amount of its government loans, and the government has been selling off its GM stock at a profit. The same is happening at Chrysler, although at a slower pace. The industry bailout was well planned and well executed. It saved a major U.S. industry and an entire region, and in the end, it will cost the taxpayers nothing. Paul > PDML Pentax-Discuss Mail List > [email protected] > http://pdml.net/mailman/listinfo/pdml_pdml.net > to UNSUBSCRIBE from the PDML, please visit the link directly above and follow > the directions. -- PDML Pentax-Discuss Mail List [email protected] http://pdml.net/mailman/listinfo/pdml_pdml.net to UNSUBSCRIBE from the PDML, please visit the link directly above and follow the directions.
