UAW Concessions?

[Galahad]

You're so biased against the Big 3 that there's no point in having this conversation. Objective rating groups rate many American cars well above their foreign counterparts (and for the sake of logic, I'm limiting "foreign cars" mainly to the best - Toyota and Honda - because there's no point in even getting into a quality discussion about a Kia or a Daewoo or a Nissan, etc.).

Personally, I drive an 11 year old American built minivan with over 200K miles on it. It still runs well and gets decent mileage, and while I'd like to have a newer one for some of the features, there's no mechanical reason to be thinking about a replacement yet.

Individuals driving what they love and own and swear by are probably not good arguments, for my side or for yours. But Consumer Reports does not rate American cars above Hondas and Toyotas. That JD Powers does in some categories is interesting - perhaps they are getting better. But my Hondas would have to such before I have any motivation to go back. The same is true of you and your minivan. Once you make the switch and are happy with your new "brand" going back isn't even logical. That's were the market is. GM blew it 20 years ago. No one owes them the courtesy of going back.

I rented a Cobalt recently too. I stand by my assessment (such as it is - see my caveat above). Not even in the same ball park as my 99 Honda, 04 Honda or 06 Honda - probably not even my 97 Honda before that.

 

[Galahad]

AIG may be able to change the salaries but it appears that they are not.
How many people at AIG, Citigroup and the others that are being bailed out have not only given up raises and/or bonuses but have taken a pay cut?

Do we really know what AIG is doing with their salaries? My company is a fortune 500 financial company. We have shed 20% of our workforce in the last year. Directors and VPs have taken significant pay cuts. Managers are on pay freezes. Those below that continue to get raises pretty much as normal. If I were to tell you my company's name, you will not have read any stories about layoffs or pay cuts so you wouldn't have known it was done.

If AIG should not have been bailed out as it was, that is no argument in favor of a bail out for auto companies.

 

[Galahad]

If that's the case, why aren't the wounds at AIG being allowed to run their course?

Probably because the extent of the pain that AIG's failure would cause goes well beyond what GM's failure would cause. Yes, I've read the arguments here about suppliers and threats of 50% unemployment. But AIG is the largest insurance company in the U.S., perhaps the largest in the worlds and thus defaults by them on their obligations would put far more companies and individuals at risk than any single manufacturing industry would. It is why the bail out was focused on banks and finance. Not to reward fat cats but to keep the money flowing. Helping individuals or even "industries" sounds good, but it won't solve the problem of frozen markets.

 

[manning]

No, our country wasn't founder on capitalism. Up until the turn of the last century, we were an anti-corporate society. AND then up until WWII, we were a tremendously, tremendously practiced protected our industries.

Our current form of capitalism is not that old. AND guess what, for all of those other countries the people in the US aspire to be like, guess what, they protect and subsidize their industries.

Oh yes it was.

Capitalism - an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

 

[Galahad]

Oh yes it was.

Capitalism - an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

I agree that it was founded on, among other things, capitalism. But I'm thinking that the poster meant "corporatism" or something like that. I which case I think he's right. The founders would not be impressed with mega-corporations that seem to be really running things these days.

 

[daughtersrus]

Do we really know what AIG is doing with their salaries? .

AIG to Pay Millions To Top Workers

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111304446.html?hpid=topnews

Why aren't you (and others) calling for restructuring the pay and benefits for their employees? Because they don't belong to a union?

If AIG should not have been bailed out as it was, that is no argument in favor of a bail out for auto companies.

Why not have everyone play by the same rules? You get a bailout, you cut the salaries and benefits of your employees and you stop spending money on trips, bonuses and other perks.

 

[daughtersrus]

But AIG is the largest insurance company in the U.S., perhaps the largest in the worlds and thus defaults by them on their obligations would put far more companies and individuals at risk than any single manufacturing industry would. .

Can you provide the link to the statistics regarding this?

Not to reward fat cats but to keep the money flowing. .

Why is it then, that they are not required to take a cut in pay and benefits or pay back the bonuses that they earned?

 

[Galahad]

AIG to Pay Millions To Top Workers

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111304446.html?hpid=topnews

Why aren't you (and others) calling for restructuring the pay and benefits for their employees? Because they don't belong to a union?

Essentially yes. But I'm probably not making the case clearly. A union contract prevents GM from doing anything of immediate consequence to reduce labor costs. Any cut they make has lasting legacy costs. Employees that are at-will can be fired at any time without a severence, meaning that the company can reduce costs NOW. I'm not "calling" for restructuring so much as I'd like to see it even possible. Unions make it imposible.

Why not have everyone play by the same rules? You get a bailout, you cut the salaries and benefits of your employees and you stop spending money on trips, bonuses and other perks.

Fine with me.

 

[Galahad]

Can you provide the link to the statistics regarding this?

No I can't. The conclusion is intuitive given the scope of the economy and what banks and insurers do in an economy. I'd frankly be a lot more alarmed with U.S. economy that doesn't have a financial industry left than one that doesn't have a manufacturing idustry left (not to be construed as advocating the demise of manufacturing).

Why is it then, that they are not required to take a cut in pay and benefits or pay back the bonuses that they earned?

Fine with me.

 

[S. C.]

AIG to Pay Millions To Top Workers

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/13/AR2008111304446.html?hpid=topnews

AIG to Pay Millions To Top Workers
Move Comes on Heels Of Revised Bailout


By Carol D. Leonnig
Washington Post Staff Writer
Friday, November 14, 2008; Page D01

American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant.

News of the payments to top AIG talent comes as the federal government has just put more money into saving the company from bankruptcy, beefing up the total public commitment to $152 billion. Meanwhile, members of Congress are questioning the company's expenditures -- including lavish business trips to resorts -- during a time when taxpayers are on the hook for the bailout.

AIG's troubles stem from bad bets it made guaranteeing and buying risky mortgage investments. On Monday, the U.S. government announced that it would have to expand its rescue of the company to nearly double the $85 billion loan it first provided in September when AIG was unable to pay billions of dollars in claims.

Treasury officials said earlier this week that they had imposed some of the most stringent limits ever on AIG executives' bonuses and compensation in exchange for the broader bailout.


AIG's plans to crack open its deferred compensation bank for payments early next year is conveyed in a two-sentence paragraph buried inside a quarterly financial report filed with the Securities and Exchange Commission on Monday. But some compensation experts and AIG stakeholders yesterday said they considered the exodus of $503 million in AIG money dubious at a time when the company is drenched in red ink. The company reported losses this week that brought total losses to $37.63 billion for the first nine months of the year.

AIG spokesman Nicholas Ashooh said yesterday that the company is desperately trying to keep top talent from leaving, and that giving them deferred compensation works as a carrot to keep them on board. He said more than 6,000 employees are covered by AIG deferred compensation plans, but declined to name any employees or the number of top executives who will receive the early payouts.

Companies over the past 20 years have increasingly use deferred compensation as a way to attract and retain highly paid executives. Under these plans, top talent can postpone taking some of their large annual salaries for years -- often until a set date -- and can put off being taxed on it. Some wait to take the funds until they retire, when they would presumably be in a lower tax bracket.

Most deferred compensation plans are arranged to encourage employees to stay at a company by holding money back, not paying it out early. Ashooh acknowledged that the company takes a significant risk that employees will leave immediately after they receive their deferred earnings in the first quarter of 2009. But he stressed that the funds are not from the government.

"This is not taxpayers' money they are going to run away with," Ashooh said. "We are trying to take the incentive away for people to leave now, until we have time to get the company running right again."

The issue of taking deferred compensation ahead of schedule arose during the Enron scandal, when top company executives who had reason to know the company was financially ailing quietly demanded that their staff pay them their deferred earnings ahead of schedule.

"If this involves putting the same responsible parties first in line [for AIG money], that is clearly not appropriate," said Lee Wolosky, an attorney for Starr International, the largest shareholder of AIG stock. "Half a billion dollars could clearly be better spent paying back the American taxpayer, rather than rewarding the same executives responsible for AIG's current condition."

Congress has also been complaining about how AIG's top executives are running the company and spending AIG money while taxpayers are bearing the brunt of keeping it afloat. Rep. Henry A. Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, has been investigating how AIG has spent taxpayer money and demanded documents specifically on its bonus and compensation plans.

 

[fkj2]

AIG to Pay Millions To Top Workers
Move Comes on Heels Of Revised Bailout


By Carol D. Leonnig
Washington Post Staff Writer
Friday, November 14, 2008; Page D01

American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant.

In THIS economy, there's plenty of "valuable workers" available. Cut 'em loose, let 'em go.

AIG is an atrocity too, and it's another slap in every taxpayer's face to have them get bailouts and then flaunt it in our faces with their "sabbaiticals."

 

[daughtersrus]

Essentially yes. But I'm probably not making the case clearly. A union contract prevents GM from doing anything of immediate consequence to reduce labor costs. Any cut they make has lasting legacy costs. Employees that are at-will can be fired at any time without a severence, meaning that the company can reduce costs NOW. I'm not "calling" for restructuring so much as I'd like to see it even possible. Unions make it imposible.







Fine with me.

But none of that is happening with AIG. Should they be forced to since they're taking our money or should they be allowed to spend it as they wish on trips, bonuses, benefits...?

 

[daughtersrus]

AIG to Pay Millions To Top Workers
Move Comes on Heels Of Revised Bailout


By Carol D. Leonnig
Washington Post Staff Writer
Friday, November 14, 2008; Page D01

American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant.

News of the payments to top AIG talent comes as the federal government has just put more money into saving the company from bankruptcy, beefing up the total public commitment to $152 billion. Meanwhile, members of Congress are questioning the company's expenditures -- including lavish business trips to resorts -- during a time when taxpayers are on the hook for the bailout.

AIG's troubles stem from bad bets it made guaranteeing and buying risky mortgage investments. On Monday, the U.S. government announced that it would have to expand its rescue of the company to nearly double the $85 billion loan it first provided in September when AIG was unable to pay billions of dollars in claims.

Treasury officials said earlier this week that they had imposed some of the most stringent limits ever on AIG executives' bonuses and compensation in exchange for the broader bailout.


AIG's plans to crack open its deferred compensation bank for payments early next year is conveyed in a two-sentence paragraph buried inside a quarterly financial report filed with the Securities and Exchange Commission on Monday. But some compensation experts and AIG stakeholders yesterday said they considered the exodus of $503 million in AIG money dubious at a time when the company is drenched in red ink. The company reported losses this week that brought total losses to $37.63 billion for the first nine months of the year.

AIG spokesman Nicholas Ashooh said yesterday that the company is desperately trying to keep top talent from leaving, and that giving them deferred compensation works as a carrot to keep them on board. He said more than 6,000 employees are covered by AIG deferred compensation plans, but declined to name any employees or the number of top executives who will receive the early payouts.

Companies over the past 20 years have increasingly use deferred compensation as a way to attract and retain highly paid executives. Under these plans, top talent can postpone taking some of their large annual salaries for years -- often until a set date -- and can put off being taxed on it. Some wait to take the funds until they retire, when they would presumably be in a lower tax bracket.

Most deferred compensation plans are arranged to encourage employees to stay at a company by holding money back, not paying it out early. Ashooh acknowledged that the company takes a significant risk that employees will leave immediately after they receive their deferred earnings in the first quarter of 2009. But he stressed that the funds are not from the government.

"This is not taxpayers' money they are going to run away with," Ashooh said. "We are trying to take the incentive away for people to leave now, until we have time to get the company running right again."

The issue of taking deferred compensation ahead of schedule arose during the Enron scandal, when top company executives who had reason to know the company was financially ailing quietly demanded that their staff pay them their deferred earnings ahead of schedule.

"If this involves putting the same responsible parties first in line [for AIG money], that is clearly not appropriate," said Lee Wolosky, an attorney for Starr International, the largest shareholder of AIG stock. "Half a billion dollars could clearly be better spent paying back the American taxpayer, rather than rewarding the same executives responsible for AIG's current condition."

Congress has also been complaining about how AIG's top executives are running the company and spending AIG money while taxpayers are bearing the brunt of keeping it afloat. Rep. Henry A. Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, has been investigating how AIG has spent taxpayer money and demanded documents specifically on its bonus and compensation plans.

But since they're non-union, many people don't care what AIG does with the bailout money.

 

[fkj2]

But since they're non-union, many people don't care what AIG does with the bailout money.

You know what; I respectfully disagree.

I think AIG got its aid package slipped in under the radar (yet another Sunday rescue). The American public didn't have the chance to call their representatives and complain.

 

[dvcgirl]

You know what; I respectfully disagree.

I think AIG got its aid package slipped in under the radar (yet another Sunday rescue). The American public didn't have the chance to call their representatives and complain.

Ahhhh....I've become a big fan of the Sunday Night Rescues.

Hey, we may get another one this weekend......woo hoo!

Anyone interesting in owning Citi?

You just may be the owner by Monday morning.......we'll get a hell of deal. It's trading around $3.75 at this point.....down 90% or so. Not too bad.

Just think....since the government started "helping"....the bank stocks are down nearly 70%.

Maybe it's time for us to just let this thing work itself out.

 

[ScottJ]

No our Country was not found upon capitalism, this is a modern myth.

Alexander Hamilton was basically our economic founder. This is pure fact and can no way be debated.

Hamilton along with Adams along with Washington (Washington was basically a figure head) believed in a strong central government, subsidizing business, and protecting it through tariffs(mercantilism). Hamilton and Adams strongly believed in mercantilism (which we founded upon) and imperialism.

If you have read on Jefferson and Madison, they believed in the common man should be protected from big business giving states and individuals. Jefferson gained this belief after much time in France and his desire to more like the French. (Washington, Adams and Hamilton wanted to be more like the British).

Let's see, Hamilton, Adams and Washington were mercantilism and imperialist. Jefferson and Madison were socialist before their time(Jefferson was somewhat of a romantic even in economics, he strongly believed in the small farmer). Capitalism was just being accepted as an economic theory when the US was founded.

Even after our original economic system faded. Protectionism and anti-corporatism lasted for much of the next 100 to 120 years. Protectionism and anti-corporatism are not part of capitalism, our government even broke up Standard Oil.

We were not founded upon capitalism.

Hamilton would have been in huge support of the bailouts currently in the US. Once again, mercantilism, strong central government supporting powerful industry and private citizens.

I have even brought into consideration our tax structure or other historical tidbits of our Country into this discussions which opens up so many other reasons why we were not founded on capitalism and our current form of capitalism is only about 40 to 50 years old.

 

[ScottJ]

ALLAN MELTZER (faculty director), Carnegie Mellon University: "There were bids on the floor for AIG. AIG, it didn't take the bids. It thought it could get a better deal from the government. That's a bad way to run the system.

We can't afford to run a system and we won't be able to where the bankers make the profits and the public takes the losses. That just is not viable."

Hmmm, once again, why did we bail out AIG when it had bids on the table???

 

[Cor44432]

So it's ok for the CEO of Ford to say he's "comfortable" with his 21 MILLION
dollar salary.........but the front line assembly worker needs to make concessions
and put taking care of his/her family at risk??

Around 8% of the cost of each vehicle is labor costs........maybe someone in
corporate should look at concessions somewhere in the other 92% of costs
first.

 

[Galahad]

No our Country was not found upon capitalism, this is a modern myth.

Alexander Hamilton was basically our economic founder. This is pure fact and can no way be debated.

Hamilton along with Adams along with Washington (Washington was basically a figure head) believed in a strong central government, subsidizing business, and protecting it through tariffs(mercantilism). Hamilton and Adams strongly believed in mercantilism (which we founded upon) and imperialism.

If you have read on Jefferson and Madison, they believed in the common man should be protected from big business giving states and individuals. Jefferson gained this belief after much time in France and his desire to more like the French. (Washington, Adams and Hamilton wanted to be more like the British).

Let's see, Hamilton, Adams and Washington were mercantilism and imperialist. Jefferson and Madison were socialist before their time(Jefferson was somewhat of a romantic even in economics, he strongly believed in the small farmer). Capitalism was just being accepted as an economic theory when the US was founded.

Even after our original economic system faded. Protectionism and anti-corporatism lasted for much of the next 100 to 120 years. Protectionism and anti-corporatism are not part of capitalism, our government even broke up Standard Oil.

We were not founded upon capitalism.

Hamilton would have been in huge support of the bailouts currently in the US. Once again, mercantilism, strong central government supporting powerful industry and private citizens.

I have even brought into consideration our tax structure or other historical tidbits of our Country into this discussions which opens up so many other reasons why we were not founded on capitalism and our current form of capitalism is only about 40 to 50 years old.

You're splitting hairs with respect to modern every day use of the terms. What most people here mean by capitalism is "not communism".

I would disagree with you about the extent to which Washington was just a "figurehead" and the extent to which he favored a strong central government.

 

[daughtersrus]

You know what; I respectfully disagree.

I think that you are in the minority here at least. There are many posts here were people defend non-union companies being bailed out by saying that they are not being forced to pay salaries because of a contract but yet even with AIG being non-union, they are continuing to pay obscene salaries to the people that got them into the mess to being with. If it's not a union/non-union issue, why is it that many are not calling for restructuring of the salaries of all of the companies that have received money from a bailout?