Posted on 03/22/2005 2:49:46 PM PST by quidnunc
It's hard to believe that the bond rating of General Motors may soon fall to junk, but it's true. Last week, GM announced an expected loss of $850 million, about $1.50 a share, for the first three months of 2005. The company slashed its profit forecast by $2 billion for the year.
It's troubling news, obviously, for GM's shareholders and employees. But if more Americans paid attention to the troubles facing General Motors, they might grasp the urgency of America's Social Security crisis. General Motors is going bankrupt for the same reason Social Security is going under: unfunded liabilities in the form of promised benefits to retirees.
Over the decades, union leaders have won such generous pension and healthcare benefits for GM employees that today GM is the world's largest private consumer of health care, covering the medical costs of more than 1 million people. Health care represents more than $1,000 worth of cost, on average, in every vehicle General Motors produces, its chairman, Richard Wagoner, has said.
GM spends more on health care than on steel. The health-care costs — about $5.5 billion a year and growing — are fixed. GM's unfunded health-care obligations amount to $57 billion. GM also holds America's largest private pension obligation. The company estimates its total future American pension costs at $87 billion.
The company's total market valuation stood last week at $16.39 billion. General Motors was once the leading car manufacturer in the world. Today, it's a pension fund and a health maintenance organization with a relatively small car-making operation on the side.
-snip-
(Excerpt) Read more at nysun.com ...
those born in 1964, will be 100 years old in 2042..
Now, that sounds like a Dimocrit's math to me.
Go for Made in Taiwan. They're not communists.
No, no calculator.. duh.. 78...
check it twice..
Baby boomers are those born between 1942 and 1964..
Those born at the beginning of the baby boom would be 100.. not the end..
I did all those "calculations" some weeks ago, and just "dredged" my memory for the numbers. Shoulda double-checked my recollections..
Yeah, rub it in..
See #63..
When i t comes to automobiles, I prefer "ENGINEERED IN JAPAN".
Muleteam1
I'm annoyed at the impact on my project. I've already worked out a satisfactory alternative that should keep EMD happily in the fold and still avoid trashing the project. Sometimes the best laid plans are overcome by events.
I don't know what it is that the Japanese and the European designers know that American designers don't, but the Yanks sure seem determined not to learn.
Too late! The unions have ruined American industry and will never admit it or back down, even when the jobs disappear. Big dinos do not survive.
You mean the airline that dressed its stewardesses in bunny outfits? Those were the days, weren't they? "Fly me" indeed!
One stupid statement.
Already posted but more should read it. Another company done in by Hitlery Care and unions.
I would agree that American car designers seem to have lost the ability to learn, but I would have to say that European autos of comparable price are as wrench-philic as American autos. European auto makers simply know that most Americans associate high price with quality and use this to their advantage.
Muleteam1
Well, some say if you were born 1956-1965 you are NOT a boomer but a member of generation jones. I have nothing in common with boomers, and I was born in 1961.
The article fails to point out that the last of the "baby boomers" i.e., those born in 1964, will be 100 years old in 2042..
I'm not claiming to be a math whiz, but I'd check your numbers.
Fast living!!!!!!
I did a GIS on it.. interesting.. you have a point, maybe there is an interim generation..
The shot was at the Dims, with a little rub to you. If you're here, you've got to be OK.
Then why does my calculator tell me they'll be 78 that year?While social security is in dire need of restructure, and protections from congressional financial shenanigans, ( virtual embezzlement ) such mis-representation and scare tactics are inexcusable..
The "Social Security Trust Fund" is entirely irrelevant to the discussion of the solvency of Social Security. The SSTF is simply a bunch of government bonds - or, to be precise, government obligations. Any day of the week, you can write yourself an IOU for $10 trillion and have your very own "Trust Fund" - if anyone is fool enough to take your promise to pay $10 trillion some time in the future. Just so, the government can write more IOUs to itself and proclaim that "Social Security is solvent for the remainder of eternity." The only limitation is the willingness of the world economy to finance the increased debt. At some point, that doesn't happen - and what will happen then is what started to happen in the 1970s. Stagflation.There is no magic date for the pending insolvency of
Social Securitythe federal government. Thebabyretirement boom will just gradually make it harder for the government's current revenue to cover its Social Security obligations and have anything left over forpork barrelessential projects.
Would the statement cause a tsunami on Wall Street?
What if they decided to close their losing market...North America and move their operations to say, India? Iraq?
Could it happen or am I high?
What happens to the stock value if they go bellyup and move overseas?
I think it will have severe ramifications for the entire American Economy.
Also it becomes the Democrats' poster child for why private accounts is a "very bad idea".
I tell ya. President Bush has his hands full. God Bless Him.
GM's announcement last week roiled the bond market.
If they declared bankruptcy, there would be a huge ripple effect throughout the Midwest. (Just look at the affect their announcement on their $2 billion ad budget made last week)
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