Two Weeks Is Forever In A Red State
I know that few in any Red State remember back more than a month. We might even be able to demonstrate statistically that less than 50% can even remember back TWO WEEKS!
As the lead-in for this post, I'm going to show what was going on just two weeks ago:
The number of U.S. workers filing first-time applications for unemployment benefits dropped to a three-month low last week, a sign the job market is rebounding. Wall Street expected a small increase in initial claims. The average forecast of economists surveyed by Dow Jones Newswires and CNBC called for a gain of 1,000 claims. The numbers suggested employers are expanding payrolls at a robust pace in November.
Now let's see what just got announced today [Same source]:
The number of U.S. workers filing first-time applications for unemployment benefits climbed to a 10-week high last week, fueling worries that the job-market recovery is losing steam. Wall Street had expected a drop in initial jobless claims. The forecast of economists surveyed by Dow Jones Newswires and CNBC called for decline of 14,000 claims.
The common threat between these two articles, beside the main topic of 'initial jobless claims', is WALL STREET - you know, the guys Bu$hCo wants to scrap Social Security for? The ones who will take your hard-earned money and promise you that you might get some of it back when you're too old to be a productive employee?
Let's see who well that's playing at IBM!
International Business Machines Corp. declared that it plans to put its new workers on a 401(k) savings plan, excluding them from its cash-balance pension plan starting Jan. 1. This decision runs contrary to the previously stated policy of maintaining cash-balance pension plan for younger employees as those are better options for the young workers who plan to shift employers later in their careers.
The cash balance plan is an account that grows each year with the addition of employee contributions, while 401(k) savings plans like any other traditional plan will calculate benefits based on the number of years the employee spent on the job.
The problem with cash balance plans is that they do not allow long-term employees to benefit from the number of years they spent with the company. In fact, statistics show that they can lose up to 50% of their benefits.
That can prove to be very important, and many GM workers are now finding out. Just yesterday, they were saying this about negotiations with GM:
General Motors Corp., the world's biggest automaker, has pledged to avoid plant closures and layoffs in Europe as it seeks to return its money-losing European operations to profitability, worker representatives said Wednesday.
GM Europe said when it announced the cost-cutting drive in October that it intended to save about $665 million a year, but board chairman Carl Peter Forster said Tuesday the company wanted to save even more.
Worker representatives have said they hoped firings could be avoided by having GM Europe offer workers severance pay or by setting up special new companies subsidized with government jobless benefits.
"Our joint goal is to try to make the restructuring socially bearable and create fair conditions for the location of production capacities in Europe," Franz said Wednesday.
So what news today?
General Motors' loss-making European division is to cut 12,000 jobs in a bid to save $665m (£347m) annually. The redundancies will affect a fifth of its workforce, with 10,000 positions going at Opel plants in Germany.
The rest of the jobs will be lost at Ellesmere Port in the UK, and sites in Belgium, Spain and Sweden, GM said. GM said about 15% of managerial positions would be cut but none of its 11 plants would be closed.
In Germany, where GM employs 32,000 people, about 2,500 staff have already agreed to take early retirement. About 6,000 of the jobs would be going from Opel's main German plant at Ruesselsheim, near Frankfurt.
In addition, talks with unions have resulted in a programme that will offer severance packages of up to 200,000 euros ($265,000; £138,000) as well as retraining and job placement.
Yeah, that works SO well here in the US! We might even get to review that progress soon based on this tidbit:
GM said separate agreements are currently being negotiated with workers in other countries.
There's nothing to suggest that American workers aren't included in this.
Meanwhile, across Detroit from GM headquarters:
Ford Motor Co. on Thursday said president Nick Scheele and vice chairman Allan Gilmour will retire, effective Feb. 1.
Scheele, 60, has been with Ford for 38 years, and most recently led the "Back to Basics" turnaround effort under chief executive Bill Ford.
Gilmour, 70, is retiring from Ford a second time, after re-joining the company in 2002 to become its vice chairman, and its chief financial officer through July 2003.
Let's see what paupers these guys are - from a report released in Apri of 2004:
Bill Ford's pay: $14.7 million
Receiving no salary, his 2003 compensation is stock grants, options of 4.6 million shares
Nick Scheele, President and COO $3.1M
Despite receiving the highest salary — $1 million — president and chief operating officer Nick Scheele’s $3.1 million total package was worth slightly less than his subordinates. Scheele’s $825,000 bonus was less than Padilla’s $900,000, but greater than Thursfield’s $750,000.
Padilla is replacing Scheele.
Allan Gilmour, Vice chairman $5M
Vice Chairman Allan Gilmour’s compensation for 2003 was valued at just under $5 million, the proxy showed. Besides his $912,500 salary and a $750,000 bonus, Gilmour was awarded stock valued at $2.3 million.
Sure is a good thing that they can collect Social Security while there's still some left! What would they have done if they were airline pilots?
To buy labor peace in the stormy summer of 2000, United Airlines boosted wages and pension benefits for its pilots and mechanics. United figured it could finesse how to pay for the promises later. That is, once everything got back to normal and the airline could go back to charging business travelers sky-high fares. But life never did get back to what United and its employees had considered normal.
Now United is struggling to emerge from two years in Chapter 11 bankruptcy amid high fuel costs and brutal competition from discounters.
The $8.3 billion in pension promises it has made but not paid for could break the airline. United must pay more than $4 billion of that obligation in the next four years. Consequently, United has said it will terminate its four defined-benefit pension plans and replace them with 401(k) defined-contribution plans.
They screw up, and the worker - however skilled - pays the costs.
That has sent shock waves through the ranks of United's employees and retirees and through the halls of the Pension Benefit Guaranty Board, the agency that takes over troubled pension plans, invests the assets and pays retirees with the proceeds.
Termination of the United plan means the PBGC likely will wind up with United's pension shortfall. It's also likely to wind up with US Airways' shortfall. US Air has ended its pilots' pension fund and has said it will do the same to its other funds. Including those "probable" liabilities, the PBGC estimates its long-term deficit will more than double to $23.3 billion this year, up from $11.2 billion last year.
The PBGC rightly fears United's and US Air's terminations could prompt other financially shaky airlines to follow them into bankruptcy and pension termination.
U.S. Rep. John Boehner, R-Ohio, chairman of the House Education & Workforce Committee, has raised the specter of such a domino effect in the airline industry. "If the PBGC is forced to assume the airline industry's nearly $30 billion in pension liabilities, workers and retirees will be left with reduced benefits and taxpayers could be left with a huge bill," he said as he outlined principles for reform legislation in September.
Hey, Boehner [No jokes, guys! This is serious!] - didn't you hear George say that 'It's Your Money'? He just isn't going to allow anyone to raise taxes just to cover unfunded pension liabilities that his contributors took for themselves! And you a Republican!!!
There's another angle to be looked at, courtesy of the Teamsters:
In the 1960's and 1970's, the Teamsters' huge Central States pension fund was a wellspring of union corruption. Tens of millions of dollars were loaned to racketeers who used the money to gain control of Las Vegas casinos. Administrative jobs were awarded to favored insiders who paid themselves big fees. A former Teamster president and pension trustee was convicted of trying to bribe a United States senator.
Yet for nearly half a million union members who are expecting the fund to pay for their retirement, those may have been the good old days.
"There never were benefit cuts in the 1970's," said Wayne Seale, 52, a long-haul driver from Houston and one of about 460,000 Teamsters participating in the fund. "We were happy. We were being taken care of."
Starting in the early 1960's, the fund loaned tens of millions of dollars for investments in Las Vegas casinos, including the Desert Inn, Caesars Palace, Stardust, Circus Circus, the Landmark Hotel and the Aladdin Hotel, according to a history by Edwin H. Stier, a former federal prosecutor hired by the union as part of its efforts to clean house.
The loans in those days typically involved a front man who signed the papers and a crime family raking off cash behind the scenes. The loan approval process involved kickbacks, threats and, in at least one case, a kidnapping. By the time Hoffa disappeared in 1975, the Central States pension fund had loaned an estimated $600 million to people connected with organized crime, according to Mr. Stier, who resigned his union appointment in April after questioning the union's ongoing commitment to rooting out corruption.
But many of the loans did serve their intended purpose, making money to pay for Teamsters' retirement benefits. The hotels, casinos and other real estate projects, not all of which were connected to organized crime, were generally profitable, according to Mr. Stier, and before his disappearance Hoffa saw to it that his loans were repaid.
Since 1982, under a consent decree with the federal government, the fund has been run by prominent Wall Street firms and monitored by a federal court and the Labor Department. Money managers promised pension funds big returns, and to get the big returns they began to add riskier assets to pension portfolios than pension funds had used before. Sleepy bond portfolios were livened up with stocks. Venture capital, junk bonds, securities of companies in developing countries and other exotica began to appear in pension funds.
These investments could be risky, but the industry argued that losses, even big losses, in one year did not matter because a pension fund was a long-term proposition; over time, the losses would be recouped by even bigger gains. Buoyant markets reinforced this thinking in the 1990's, even though by then unionized trucking was in deep decline, and the Central States' ratio of active workers to pensioners was shifting perilously.
There have been no more shadowy investments, no more loans to crime bosses.
Yet in these expert hands, the aging fund has fallen into greater financial peril than when James R. Hoffa, who built the Teamsters into a national power, used it as a slush fund.
If the pension fund fails, it will be taken over by a government insurance program. In that case, some Teamsters would lose benefits.
It just goes to show ya - rich man wins, poor man pays. So who were the bigger crooks after all? Is this not lighting off warning skyrockets over the Bu$hCo plan to privatize Social Security? It should! Read this:
"Stocks are not a hedge against long-term fixed liabilities," said Zvi Bodie, a finance professor at Boston University who has long challenged conventional pension investment strategies. "For many, many years, right down to the present day, the dominant belief among pension investment people is fundamentally wrong. Now that's a big problem."
For the most part, the entire Social Security liability can be calculated as a fixed expense, with a percentage growth of the liability linked per-capita to the numbers of new retirees each year. Experts have been warning us for years that this was going to become a problem, since exploited for political gain by Bu$hCo.
The funds were 'invested' Hoffa-style into Federal debt instruments, which are now the main source of funding for Bu$hCo wars via sales to foreign countries. The intention was to have sufficient taxes available to pay off the bonds in time to fund to increased Social Security liability. But beginning with Ronald Reagan's 600 ship Navy, and continuing through the various war spending programs of both Bu$h (mis)Administrations, there was nothing left to replace the funding necessary to redeem these bonds but more bond sales at higher interest rates - to foreign countries. Remember - taxes were 'relieved'. There are no funds from taxes to assist with this promised liability.
So here you, the typical Red State worker, sit with your Social Security being squandered, your pensions being taken by corporate executives, your increased medical benefits costs being handed to you with a fork lift, your wages being cut, (if you still have a job, that is), and qualifying for less unemployment insurance (if you don't still have a job).
Aren't you glad that you voted last month for 'moral values', instead of bread-and-butter issues - like your adjustable-rate mortgage?
"Responding to a weak labor market report that showed November job growth to be far less than had been anticipated, long-term yields, and that includes mortgage rates, reversed last week's hike and fell to the previous week's level," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"However, many other indicators remain strong and this we think will lead the Federal Open Market Committee to raise short-term rates another quarter point to a target of 2-1/4%, putting upward pressure on frequently adjusting ARMs," Nothaft said.
But that's OK - you still have a job! Or do you?
Job cut plans accelerate
Survey: Firms set 104,530 November cuts, ending first 3-month stretch at that level since '02.
Hit by rising health care and energy costs, employers announced more than 100,000 job cuts in November, capping the first three-month stretch above that level since early 2002, an outplacement firm said Tuesday. The September through November totals mark the first time that announced job cuts have topped 100,000 for three or more straight months since January to April of 2002, the firm said.
Challenger, Gray & Christmas Inc. said companies announced 104,530 job cuts in November, up 5.1 percent from a year earlier and 2.6 percent from October. The telecommunications and auto industries were among the industries with the heaviest job cut announcements over the last three months, Challenger said in its report. "Higher health care and energy costs for employers and employees are definitely taking a toll. Companies are being forced to enact more cost-containment measures to protect profits," the firm's CEO John Challenger said in a statement.
Anthony Chan, senior economist at JPMorgan Fleming Asset Management, said the numbers -- especially the increase in announced layoffs from a year earlier -- were a 'bit of a concern' given the recent weakness in the job market. "We may be hitting a soft patch in fourth-quarter hiring," he said, pointing to last week's disappointing November jobs report.
U.S. employers have announced 930,690 job cuts this year, down 19 percent from the same period a year earlier. But if December cuts reach 69,310, it will mark the fourth straight year with 1 million cuts announced by U. S. employers.
The report also noted that a new Business Roundtable survey of CEOs at major companies found that 20 percent expect employment to fall in the coming months, up from 12 percent in the previous survey.
Challenger said the economy's biggest worry is that a "large number of lower-middle class and middle-class Americans struggling to make it paycheck-to-paycheck will be short of discretionary income during the holiday shopping season."
Wal-Mart has already figured this out!
In addition to job cuts, the pace of job creation has been sluggish during the current expansion. The number of jobs created since the last recession ended in November 2001 has been the lowest of any economic recovery in the United States since World War II. "We've fallen far short of prior economic expansions," said JPMorgan Fleming's Chan.
"We're about 5-1/2 million (jobs) short of where would be today if this were a typical expansion."
But employers have apparently pushed workers as hard as they can, as demanded productivity increases are taking their toll:
The U.S. economic outlook dimmed on Tuesday after reports said business productivity grew more slowly in the third quarter than first estimated, labor costs rose and other indicators signaled softening activity. Chain store sales fell in the crucial shopping period after Thanksgiving, planned job cuts climbed during November and a survey of consumer confidence waned in possible pointers that the economy tempered its pace in the final months of the year.
The Labor Department said nonfarm business productivity, or worker output per hour, grew at a 1.8 percent annual rate in the July-to-September period -- the slowest clip since the fourth quarter of 2002. The slowdown in productivity was traced to a rise in hours worked, which grew at a rate of 2.4 percent in the third quarter, the fastest pace since third quarter of 1999 as companies ran operations for longer to maintain output. This had been initially reported as a 2.1 percent growth rate.
It also nudged up growth in unit labor costs to a 1.8 percent pace in a potential boost to inflation.
We all know what happens when the boss's payroll increases too much! He CUTS workers' jobs!
Wall Street had expected an upward revision to productivity growth to a 2.0 percent rate from an originally reported third-quarter pace of 1.9 percent. Productivity in the second quarter grew at a rate of 3.9 percent. "The data tells us that companies have pushed existing workers as far as they can and that is why they are increasing employment. But this is also adding to their labor costs," said Gary Thayer, chief economist at A.G. Edwards & Sons.
Higher unit labor costs also backed views the Federal Reserve will stick with a measured pace of rate increases and lift its benchmark funds rate a quarter percentage point to 2.25 percent at its next meeting on Dec. 14. "The Fed is watching productivity growth very closely and assumes that it is higher (on a trend-basis) than the current pace. If it stays this low it could change the Fed's view of inflation. But not at this stage," Thayer said.
So worries about pink slips - now firmly tied in the minds of the labor class by the frequent news reports to notices of increased inflation - cause reduced spending at the time of year most businesses collect most of their annual profits:
A report from employment consultant Challenger, Gray & Christmas warned this could crimp consumer spending at a critical time for the economy. A survey of consumer confidence told a similar story, with Investor's Business Daily and TechnoMetrica Market Intelligence reporting that their economic optimism index fell modestly to 54.5 in December after dropping to 55.1 in November. A reading above 50 indicates optimism.
Indeed, U.S. retailers continued to report disappointing sales in the key week after the Thanksgiving Day holiday, which kicks off the Christmas shopping season. A report by Redbook Research, an independent company, showed sales in December to-date were down 0.8 percent compared with November. A separate report, from the International Council of Shopping Centers and UBS, found sales fell 1.7 percent last week, compared with a 1.5 percent decline the previous week.
Reduced profits also leads to increased layoffs, and the demand to improve productivity will once again be unleashed. This might also spur additional offshoring by employers seeking to avoid having to share the economic pain.
But you were more worried about whether gays could get married or not. About whether the United States should be governed under the Constitution as we have for over 200 years, or by 'God's Law' from Leviticus as interpreted by self-proclaimed experts who's cell phones hold God's private number for immediate consultation.
You ignored all the evidence that you were being lied to by Bu$hCo - and now you get to pay for it - along with all the rest of us.
You better hope that Rapture is coming! Otherwise, you are going to experience Hell firsthand!
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