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.
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(Excerpt) Read more at nysun.com ...
Please add your credentials to this statement so we know how to evaluate it.
The health care cost figure includes living retirees so your arithmetic is faulty.
Excellent post, your no. 51. Absolutely.
Now, imagine if the Governemnt didn't allow your competitors to undersell you. You'd have no problem, would you?
That's the way it was in the 1930s. Government created the Detroit/ Union cartel. Payback time now.
"My next car will probably be an American Honda."
Well, unlike coosamtn, I've been extremely impressed with my 2003 Acura MDX, which is the first car I've owned that has been totally, utterly flawless.
Maybe coos' "Accura" was a cheap knock-off, like those "Rollex" watches guys sell from their raincoats on city corners in New York? ;-)
Maybe it was a Yugo that had been re-badged.
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