McDuck's Account Talk

[McDuck]

Re: Greg's Account Talk

Today COB, I went from 100% F to -> 25%F 25%C 25%S 25%I.
I'm looking to stay very short term (not past the 31st) and hope to make 2 or 3 percent.

There was a rally in the last 30 minutes that caused my buy-in price to be one % higher.

MTD % Chg as of Friday COB
G Fund +0.09%
F Fund +1.87%
C Fund -1.75%
S Fund -1.21%
I Fund +2.89%

-----------------------------------------------
Below is chart of S&P and Dow for the last 3 months.

 

[McDuck]

Re: Greg's Account Talk

Madoff Investors May Be Protected By Government

Judge Says Those Duped Need Aid Under The Securites Investor Protection Act

Dec 15, 2008 7:24 pm US/Eastern
John Slattery

NEW YORK (CBS) ― Federal investigators remain at the investment offices of disgraced investor Bernard Madoff, scouring through records to learn the scope of what may be the biggest Ponzi scheme ever in the United States.

The numbers are staggering, the losses far-reaching.

The scheme was operated out of the so-called "Lipstick Building" on Third Avenue. Bernard Madoff Investment Securities LLC occupies three floors and may have bilked investors of $50 billion.

Prosecutors say it was a classic Ponzi scheme. The firm paid-off earlier investors with money from new investors. It collapsed amid a nervous economy when some people wanted their money out.

"I believe he was a polished, polished, highly sophisticated schemester," said investors' attorney Mark Mulholland.

Mulholland's Long Island firm represents some 100 investors that could grow to several hundred who claim they lost millions.

"University endowments, pension funds; the scope seems to be limitless and affects little people too," says Mulholland.

In addition to publisher Mort Zuckerman; Fred Wilpon, owner of the Mets; former Philadelphia Eagles owner Norman Braman; there were the modest investors who put their faith in Madoff.

"We lost our life savings," said investor Joan Sinkin.

Brooklyn transplants to Florida, Sinkin and her husband Arnold said they lost 85-percent of a nearly $1 million investment.

"We were able to do things to enhance our retirement. Then in 72 hours, we were bankrupt," she said.

It's charged at least 50 charities were bilked, including a charitable fund set-up by the family of Senator Frank Lautenberg of New Jersey.

Meanwhile, a federal judge on Monday threw a lifesaver to investors who may have been duped, saying they need the protection of a special government reserve fund set up to help investors at failed brokerage firms.

U.S. District Judge Louis L. Stanton ordered that clients of Madoff's private investment business seek relief under a federal statute created to rescue cheated investors. Stanton also ordered that business be liquidated under the jurisdiction of a bankruptcy court and named attorney Irvin H. Picard as trustee to oversee that process.

Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme, which has ensnared several major banks and prominent figures as victims and could result in as much as $50 billion in losses.

Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash.

The order came just days after federal prosecutors charged Madoff with securities fraud, saying he had admitted to orchestrating a massive Ponzi scheme. Madoff is free on $10 million bail after he was charged with securities fraud last week.

Ira Lee Sorkin, Madoff's lawyer, declined to comment.

SIPC President Stephen Harbeck said in a statement that the fund's task will be harder than in other bankruptcies because of the size of the misappropriation and the condition of the defunct firm's records.

Harbeck said it would be unlikely that the trustee can transfer the firm's customer accounts to a solvent brokerage firm. He added that it was impossible at this point to determine what share each investor might hold in any remaining assets.

From its inception through December 2007, the SIPC has advanced $507 million and made possible the recovery of $15.7 billion in assets for an estimated 626,000 investors, the fund said on its web site.

Several major banks including Spain's Grupo Santander SA, Britain's HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Man Group PLC, France's BNP Paribas and Japan's Nomura Holdings reported falling victim to Madoff's alleged Ponzi scheme.

© 2008 CBS Broadcasting Inc.

 

[McDuck]

Re: Greg's Account Talk

http://www.foxnews.com/story/0,2933,467396,00.html

The Conservative Young America's Foundation has released its list of Politically Correct Abuses of 2008.

Topping the list is California’s Yuba College, which banned a student from handing out gospel literature or face possible expulsion. The school also limits free speech to just two hours each week in designated free-speech areas.

The list includes Minnesota’s University of Saint Thomas which banned a pro-life speaker but hosted a transgendered activist who believes God is a black lesbian.

Then there is Deerfield High School in Illinois which required literature students to read the book "Angels in America: a Gay Fantasia on National Themes."

Also included is a Claremont, California Elementary School that barred students from dressing like pilgrims and Indians during Thanksgiving to avoid racial stereotypes, Florida's Gulf Coast University which tried to do away with Christmas activities in favor of an ugly-sweater competition and Columbia University for its handling of a student election on the question of returning the Navy Reserve Officer Training Corps to campus.

 

[McDuck]

Re: Greg's Account Talk

Animal Spirits

http://farmer.sscnet.ucla.edu/NewWeb/JournalArticles/ANIMAL%20SPIRITS.pdf

 

[McDuck]

Re: Greg's Account Talk

% Chg day
G +0.01%
F +0.58%
C +5.12%
S +6.06%
I +5.95%

% Chg MTD
G +0.12%
F +2.63%
C +1.97%
S +2.02%
I +9.47%

 

[McDuck]

Re: Greg's Account Talk

Stocks surge as Fed pledges broad economic support

Tuesday December 16, 6:03 pm ET

Stocks surge as Fed slashes interest rates to record lows, pledges broad support for economy

NEW YORK (AP) -- A surprised Wall Street bolted higher Tuesday after the Federal Reserve's historic decision to further slash interest rates and provide broad support to revive the troubled economy.

The Dow Jones industrials surged 360 points, or 4.2 percent, and broader indexes jumped more than 5 percent after the central bank said it will use "all available tools" to jump-start the economy. It also set its target for the rate at which banks lend to each other to a range of zero to 0.25 percent, the lowest level on record.

Demand for long-term government bonds increased and pushed yields to record lows.

The promise of further government action and a Swiss-army-knife approach for mending the economy damped concerns that policymakers were running low on tools to fan the economy by further lowering interest rates.

The idea that the Fed will likely proceed with plans to snap up government and mortgage debt made it easier for investors to place bets that the central bank will do what is necessary to help bring an end to the longest recession in a quarter-century.

"Today was a reminder that the Fed was on the case," said Jim McDonald, director of equity research at Northern Trust in Chicago. "It was a reaffirmation of their willingness to be very aggressive."

"What we heard today was not revolutionarily different but it was a reminder that they are committed to using their balance sheet to the fullest extent to repair the financial markets and stimulate the economy."

The Fed's unprecedented move to lower its fed funds target rate to a range of zero to 0.25 percent rather than a fixed point was a surprise. The move is an acknowledgment that rates in the marketplace had been well below the Fed's 1 percent target, which it set at its previous meeting on Oct. 29. The central bank also cut the lending rate for loans directly to banks.

Many analysts had expected the Fed would cut its fed funds rate to 0.5 percent from 1 percent.

"In some senses the whole point of this meeting was to say 'Quit watching interest rates, watch the other things that we can and will do,'" said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

Jack A. Ablin, chief investment officer at Harris Private Bank, said the fact that the Fed targeted a range for its fed fund rate indicates that policy makers did not want to bring the rate all the way to zero. Such a move could have had problematic implications for money market funds, whose fees could then outpace yields.

The Dow rose 359.61, or 4.20 percent, to 8,924.14 after having been up about 100 in subdued trading ahead of the Fed's announcement.

Broader stock indicators also rose. The Standard & Poor's 500 index advanced 44.61, or 5.14 percent, to 913.18, and the Nasdaq composite index rose 81.55, or 5.41 percent, to 1,589.89.

The Russell 2000 index of smaller companies rose 30.28, or 6.69 percent, to 482.85.

The number of stocks advancing outnumbered those declining by 5-to-1 on the New York Stock Exchange, where consolidated volume came to 5.81 billion shares, up from 4.37 billion on Monday.

Demand for government bonds surged. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.27 percent from 2.53 percent late Monday. The yield on the 30-year fell to 2.78 percent from 2.99 percent late Monday.

The yield on the three-month T-bill -- whose yield has at times gone negative due to frenzied buying -- was at 0.02, flat with late Monday.

The dollar was mostly lower against other major currencies, particularly the euro. Gold prices rose.

Light, sweet crude fell 91 cents to settle at $43.60 a barrel on the New York Mercantile Exchange.

Battered financial stocks led the market's advance. Goldman Sachs Group Inc. reported its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter. But investors were apparently relieved that the loss wasn't wider and sent the stock up $9.54, or 14 percent, to $76.

Other financial names jumped. JPMorgan Chase & Co. rose $3.72, or 13 percent, to $32.35, while Wells Fargo & Co. gained $3.71, or 14 percent, to $29.78.

For the gains in stocks to hold, McDonald said the credit markets need to show signs that fear is dissipating.

"The credit markets now need to show some improvement," he said.

Stocks have shown advances since their Nov. 20 low. Trading has been less volatile than it had in the previous three months. In the past 54 trading days, 18 had moves of at least a 5 percent. In the previous 53 years there had been only 17 days with moves greater than 5 percent.

Since Nov. 20, the Dow is up 18.2 percent, the S&P 500 is up 21.4 percent and the Nasdaq is up 20.8 percent.

The rate decision came on a day when investors received two more pieces of evidence on Tuesday that the economy was worsening: The Commerce Department reported a 18.9 percent drop in new home construction in November, while the Labor Department said consumer prices sank by 1.7 percent.

Richard E. Cripps, chief market strategist for Stifel Nicolaus, said the recent string of downbeat economic readings could eventually convince Wall Street that the economy has hit a bottom and could be poised for a modest recovery. In past downturns, the data remain weak long after the economy has began to recover.

"The idea is it's so bad that maybe it doesn't take much to go up from here," he said.

Wall Street remained nervous about the growing list of firms and individual investors affected by investment manager Bernard Madoff, who is accused of scamming investors.

Madoff, former chairman of the Nasdaq stock market, was arrested Thursday in what the Securities and Exchange Commission is calling one of the biggest Ponzi schemes on record. Investors of all sizes -- from major banks to small charities -- may record losses of more than $50 billion. Firms invested in his fund include such major European banks as HSBC Holdings PLC, Banco Santander, BNP Paribas, and Royal Bank of Scotland Group PLC.

Markets overseas were mixed. Japan's Nikkei stock average fell 1.12 percent, while Hong Kong's Hang Seng index rose 0.55 percent. Britain's FTSE 100 rose 0.74 percent, Germany's DAX index rose 1.61 percent, and France's CAC-40 rose 2.07 percent.

Copyright © 2008 Yahoo!

 

[McDuck]

Re: Greg's Account Talk

TSP officials face leadership challenges

By Brittany R. Ballenstedt
December 15, 2008

Officials overseeing the Thrift Savings Plan have met with a member of President-elect Barack Obama's transition team to discuss leadership issues as well as future changes to the plan, the TSP's legislative director said on Monday.

At a monthly meeting on Dec. 15, TSP Legislative Director Thomas Trabucco said he talked with an Obama representative last week and advised him that all the terms of the Federal Retirement Thrift Investment Board's five members have expired. They are serving as holdovers, but can be replaced at any time.

"Our enabling legislation set up staggered terms to support policy continuity and ongoing institutional knowledge through overlapping service at the board level," he said. "These goals are being frustrated at this time."

On a nonpartisan basis, the White House nominates three board members, while the House and Senate each nominate one person. Of the current board, two members' terms have been expired since 2006; the remaining three terms expired in 2007 and earlier this year.

Three of the board's officials -- Alejandro Sanchez, Andrew Saul and Gordon Whiting -- received bipartisan approval from the Senate Homeland Security and Governmental Affairs Committee in May, but the Senate leadership pulled the nominations just before the Memorial Day recess, Trabucco said.

The fact that all five board members are currently in holdover status stymies the appointment overlap designed to provide continuity and maintain institutional knowledge of TSP oversight, especially through presidential transitions. With all members in holdover status, the board could experience complete turnover if the nominations are not confirmed by the end of this congressional session.

Trabucco noted that during the last presidential transition from Clinton to Bush, when only two members were serving terms, Clinton made two additional recess appointments on Jan. 3, 2001. "That brought the number of members serving in staggered terms to four during that transition," he said.

TSP officials have apprised Senate leadership and the Bush administration of their concern, according to Trabucco. Members of the Employee Thrift Advisory Council, which consists of labor unions and other federal employee groups, also have written the Senate leadership and the Obama transition teams of their support for the pending board nominees, he said.

"Although the hour is late," he said, "it is my hope that this situation can be addressed in the next few weeks."

Trabucco said TSP officials also advised the Obama representative of legislation that passed the House in July that would have allowed automatic employee enrollment and changed the default fund for indecisive investors. Officials expressed support for those provisions, and he said they were still examining the possibility of adding a Roth option to the TSP.

TSP officials also will be meeting with the new leadership of the House Oversight and Government Reform Committee early next year "to get a sense of what their interests are going to be ... and what we've got on our plates for the 111th Congress," Trabucco said. Last week, House Democrats elected Rep. Edolphus Towns of New York to replace Rep. Henry Waxman of California as chairman of the committee, while Republicans voted to confirm Rep. Darrell Issa of California to replace retiring Rep. Tom Davis of Virginia as ranking member.

Meanwhile, officials noted that investments in the TSP fell to $198 billion in November, down from a high of $234 billion in May. "This is not the way we'd like to see things go," said Renee Wilder, director of the TSP's Office of Research and Strategic Planning.

Wilder also said TSP participation dipped in November to 84.4 percent, down from 85 percent in October and a high of 86 percent in May. The participation rate is at its lowest since September 1997, she added.

The number of loans and withdrawals were lower in November than TSP officials anticipated, Wilder said, but still were running slightly higher than in 2007.

"It's a tough time for anybody to be an investor," said Gregory Long, executive director of the plan. "But we are doing our best to communicate with our participants and get through this challenge."

Long added that the board will provide a demonstration of its new Web site redesign at a board meeting in May 2009. Officials said they also plan to examine the financial health of its annuity provider -- Metropolitan Life Insurance Co. -- to determine whether it is licensed in all 50 states. Such licenses would ensure financial protection by state insurance funds, officials said.

(C) 2007 BY NATIONAL JOURNAL GROUP, INC.

 

[McDuck]

Re: Greg's Account Talk

Sunday, December 14, 2008
60 Minutes: Where's the Bottom?

 

[James48843]

Re: Greg's Account Talk

Greg-

Why did you just move to stocks? You were doing "last month, best month" for a while.

What did you see that encouraged you to move? What put you over the top to move to stocks?

Thanks

 

[McDuck]

Re: Greg's Account Talk

Greg-

Why did you just move to stocks? You were doing "last month, best month" for a while.

What did you see that encouraged you to move? What put you over the top to move to stocks?

Thanks

I went from 100%G to 100%F on December 1st COB because of LMBF method. And the F-fund has done well since then (up about 1.5%).

I went to stocks on Monday the 15th COB (25%F 25%C 25%S 25I).

Today Wednesday COB, I'm pulling 10% out of both the C and S funds.

This is all in the auto-tracker.

 

[McDuck]

Re: Greg's Account Talk

Peter Schiff's father, Irwin Schiff, wrote a (comic!) book that helps to explain how our economy and fiat money system works:

http://www.scribd.com/doc/7500410/Ho...t-Irwin-Schiff

If you don't mind the comic-book format you might find the online book worth reading. I think it's both entertaining and educational.

 

[XL-entLady]

Re: Greg's Account Talk

And if I wasn't a Lady I would tell both Long and Boucher to sit on it and rotate. .... :embarrest:

 

[wv-girl]

Re: Greg's Account Talk

And if I wasn't a Lady I would tell both Long and Boucher to sit on it and rotate. .... :embarrest:

They really don't care, it is not their money. Now we have been labeled 'market timers' -- like in these times it is so shamefull---oh no --the stigma... Well call me anything you want at least I'm not broke or braindead enuff to listen to his garbage.

Oh and Lady, it is not un-Lady like to tell them to stick it where the 'sun don't shine'.

 

[Gumby]

Re: Greg's Account Talk

And if I wasn't a Lady I would tell both Long and Boucher to sit on it and rotate. .... :embarrest:

There is nothing wrong with being blunt.

 

[McDuck]

Re: Greg's Account Talk

The UAW Reneges

INVESTOR'S BUSINESS DAILY

Posted 12/24/2008

The government gave the Big Three a $17.3 billion bailout based on the idea that both management and the unions would make concessions. Now the UAW says no thanks. Can we have our money back?

Last week's deal was supposed to hold both the managers' and unions' feet to the fire. In handing out the taxpayer money, the White House insisted the auto union cut worker pay roughly to the levels of their successful competitors, Toyota, Honda and Nissan.

For $17 billion in emergency bailout cash and possibly much more later, it was a reasonable request. As President Bush said, "The time to make the hard decisions to become viable is now — or the only option will be bankruptcy." He added that a deadline of March 31 for the industry to prove its "viability" and other limits "send a clear signal to everyone involved."

Well, if so, the United Auto Workers didn't get it.

Just days before Christmas, the UAW let it be known it'll fight any concessions on wages and benefits. "An undue tax on the workers" is how union boss Ron Gettelfinger described it as the UAW reneged on the deal almost before the ink was dry.

This will go down as one of the most cynical acts of political manipulation ever. The UAW agreed to one thing with President Bush, knowing full well President-elect Barack Obama and congressional Democrats were big recipients of union largesse and would let them slide. They read the situation correctly.

Democratic Rep. Barney Frank this week called union concessions an "unfair assault on working men and women" — a not-accidental echo of Gettelfinger's comments.

But the only real assault on "working men and women" here is the enormous cost this bailout will entail — a cost that all working taxpayers will have to bear and which some analysts think will ultimately total $75 billion to $125 billion.

And the UAW hopes you'll pony it up and give them a free ride.

U.S. automakers are in trouble for two reasons. One, they have massive legacy costs on their books to take care of retired workers, and two, their labor costs are much higher than their competition.

Recent estimates put average UAW worker compensation at $55 an hour to $73 an hour, vs. $45 for the transplant automakers. So at a minimum, UAW workers are $10 an hour more expensive to hire than the 114,000 workers who toil at transplant auto plants situated mostly in the non-union South.

Simply put, unless the UAW makes concessions, a bailout can't work. It will be a financial impossibility. The U.S. automakers' high labor costs, coupled with the 2,000-plus pages of work rules and union requirements under the most recent labor deal, will keep them from achieving the productivity they need to compete.

The U.S. automakers are bleeding $6 billion a month. Better to pull the plug now and force them into bankruptcy, where radical restructuring — including cuts in union pay and benefits — wouldn't be optional but mandatory. That's the industry's only hope.

Copyright 2000-2008 Investor's Business Daily

 

[McDuck]

Re: Greg's Account Talk


http://javascript<b></b>:self.close();

Ford's success tops industry wish list

Thursday, December 25, 2008
Daniel Howes

The headline jumped off the page: "Ford Fusion is hybrid champ."

Now that's what we're talking about, Detroit, a new model coming from the Motor City that potentially outperforms, outshines and out-greens the foreign-owned competition -- and stands as an incontrovertible rebuke to the Detroit-can't-do-it crowd in Congress and around the country.

"The buzz you see -- that Ford's different, they've got a plan, they're working it" -- is exhilarating to Ford Motor Co. CEO Alan Mulally, he told me Wednesday. "I still believe we're one-and-a-half to two years ahead of where anyone thought we'd be. The only thing we're fighting is the external situation" of an economy slipping deeper into recession and the possibility of rival General Motors Corp. ending up in Chapter 11.

Yes, today is Christmas Day. Yes, we're all beyond weary with talk of bankruptcy and bailouts, haircuts for bondholders and concessions for the United Auto Workers, elimination of brands, closing of dealers, shuttering of plants and central control of a business that government thinks it understands. But doesn't.

So here's a Christmas wish list for an industry poised to enter what's arguably the three most pivotal months of its 100-year history:

• First, that Ford's we're-different-from-the-rest schtick will stand up, will be bolstered by new products to be launched next year and will gain traction among would-be buyers. More, that Detroit's No. 2 automaker will avoid being forced to access federal money and to accede to silly political conditions driven more by politics than business.
• Second, that GM will execute the most crucial business plan in its post-war history without surrendering its independence or destroying the underlying value of its remaining brands. No simple task, that. Rick Wagoner & Co. are pledged essentially to deliver a bankruptcy-style restructuring outside of bankruptcy -- the final chance to answer legions of skeptics.
• Third, that someone in the new Democratic Congress or the Obama White House will realize the absurd folly of dictating product decisions for Detroit's automakers with no regard for market demand or oil prices. Won't work, unless the goal is wanton destruction of taxpayer capital to score points with narrow special interests (which it partly is).
• Fourth, while we're on Washington, that United Auto Workers President Ron Gettelfinger will realize that playing the victim card in the can-we-avoid-bankruptcy talks will be a loser in the Bigger America. Blaming the meanie GOP won't help his union or Detroit's beleaguered two -- GM and Chrysler LLC -- stay alive.
• Fifth, that Congress and Team Obama will consider tax incentives for the purchase of new cars and trucks in the massive stimulus package now in the works. If the goal is to spur economic activity -- and it is -- selling more metal would help the automakers, ease the burden on the federal loan lifeline and juice local economies across the country.
• Sixth, that the deep troubles afflicting Detroit's auto giants will prod Michigan Gov. Jennifer Granholm and the state Legislature to get serious about structural reform come January. However, when the automakers emerge from this crucible -- and they will, in some form -- the state's revenue and per-capita income outlook will be dramatically different than it is now, let alone what it was.
• Finally, that the wags outside the Detroit Bubble would remember that those facing this Grand Reckoning are real people, too. They have children, mortgages and dreams; they've been poorly served by leaders who didn't lead, who denied the reality of their predicaments, who mostly avoided radical change until they had no choice.

Reveling in their discomfort is the worst kind of Schadenfreude, especially at a time of year when joy shouldn't come at the expense of others.

detnews.com/howes.

Find this article at:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20081225/OPINION03/812250377

 

[McDuck]

Re: Greg's Account Talk

Cutting Worker Costs Key To Automakers' Survival

by Jenny Gold

NPR.org, December 23, 2008 · For decades, U.S. automakers have been paying more for the same hour of work than foreign manufacturers with plants in the U.S.

Last week, President Bush extended a $17.4 billion lifeline to General Motors and Chrysler, requiring significant restructuring that includes making hourly employee costs competitive with Toyota, Honda and other foreign companies by the end of 2009. If GM and Chrysler fail to make the changes, they face bankruptcy, the president said.

The current per-hour employee cost for U.S. automakers is around 50 percent higher than the costs for their foreign counterparts. The difference, however, is not simply a matter of hourly wage. As it turns out, the real wage discrepancy mostly comes down to retiree benefits.

Retiree Costs

Here's how it breaks down: An hour of labor at a U.S. auto plant costs around $74, while the same hour of work at a Toyota or Honda plant is closer to $50. That $24 difference is cited as one reason Detroit has had trouble competing in the car market. Take-home pay is comparable, averaging around $29 per hour for GM, Chrysler and Ford, and around $27 an hour for the Japanese manufacturers. (Ford, which says it has enough cash to survive in the short term, was not part of the bailout.)

But, as part of their contract agreements with the United Auto Workers, the Detroit Three also pay the cost of health care for life for their retirees, along with a generous pension package.

Those retiree "legacy costs" mean an extra $16-$18 per hour in costs compared to the $3 per hour that the Japanese automakers spend in retiree benefits, according to the Oliver Wyman consulting firm that publishes the Harbour Report, a labor productivity analysis for car manufacturers.

That differential reflects two distinctions between U.S. and foreign automakers, says Michelle Hill, a vice president at Oliver Wyman in Troy, Mich.

First, the foreign manufacturing plants tend to be newer than the Detroit Three's U.S. plants, meaning there are fewer retirees who need benefits. Between GM and Chrysler, there are 325,000 retirees receiving benefits. The foreign automakers have just a tiny fraction of the number of retirees to care for, Hill says.

The Union Difference

Second, the workers at the foreign auto companies are not unionized, which means they have not bargained for the generous retiree benefits of a UAW worker. That means no defined pension plan and no health care for life. So even as the number of foreign autoworker retirees increases, the legacy costs should not reach those of the U.S. automakers.

Foreign manufacturers have "learned from the mistakes of the U.S. automakers, and their retiree costs probably won't be as high," Hill says.

In 2007, the extra legacy costs amounted to an additional $1,800 for each car the Detroit Three produced. But now, with the auto market suffering and production down significantly, the retiree costs are spread out over fewer cars. A drop in production has also meant fewer workers are needed. The companies are encouraging early retirement, increasing the number of retirees even further.

$3,000 More Per Car

Legacy costs now tack on an additional $3,000 to each American car that rolls off the assembly line , Hill says.

Not surprisingly, the UAW is loath to give up benefits for retirees. "We're willing to do more, but we want to see what other people will do before we have to continue to draw that last drop of blood," UAW president Ron Gettelfinger told Fox Business News.

The UAW says it has already made serious concessions. In a labor agreement last year, the union agreed to a two-tier wage and benefit structure, which would significantly reduce employee costs for many future hires by cutting hourly wages to around $15, significantly reducing pension benefits and eliminating retiree health care.

The plan has started to work in some factories, but with few new workers being hired, Hill says, the two-tier structure has yet to make a significant difference for the Detroit Three.

Shifting Retiree Costs

The 2007 labor agreement would also reduce legacy costs in the long term by shifting the high cost of retiree health care benefits to the UAW with a program called the Voluntary Employees Benefits Association (VEBA). The automakers promised billions of dollars so that the union could cover the future medical expenses for retirees, but the companies don't have that kind of cash right now. As part of the government's new $17.4 billion loan package for GM and Chrysler, President Bush told the UAW it must take half of its payments in weakened company stock.

Patrick Anderson of the Anderson Economic Group, a consulting firm in East Lansing, Mich., that does extensive work for the auto industry, says wage structure and legacy costs are only part of the problem.

Jobs Bank In Doubt

Another weakness, he says, are the work rules that make it "significantly harder to put workers on actual production jobs." Anderson points to the jobs bank program, which guarantees laid-off workers benefits and most of their wages while they wait for work.

The jobs bank is already much smaller than it has been in the past. But, Anderson says, it has "historically required the Detroit Three to pay for more hours of work in order to get an hour of work on the assembly line accomplished," and has therefore made it difficult for the U.S. automakers to compete with foreign manufacturers. The jobs bank program is also on the chopping block under the new $17.4 billion bailout plan.

So far, the Detroit Three and the UAW have avoided specifics when discussing plans to make their employee costs more competitive. But Hill says it's definitely doable.

"With the VEBA [retiree benefits program] and the tier wages in place, I think they're going to be within the $5 mark of the Japanese," she says. Maybe not by the end of 2009, as the bailout requires, she says, but by 2010 or 2011, the Detroit Three have a real shot at making a comeback.

 

[McDuck]

Re: Greg's Account Talk

 

[Handballer]

Re: Greg's Account Talk

Yes, but what has he done for us lately.

 

[McDuck]

Re: Greg's Account Talk


This isn't your grandfather's New Deal

Taylor Armerding

December 27, 2008 03:37 am

—

I'm a big fan of infrastructure — especially infrastructure that works.

I like to ride on well-paved roads as much as anyone. I like feeling confident that a bridge I am crossing is not in danger of collapse. I don't want sewage to back up from the street into my shower. I want the water coming out of my tap to be pure. I want an electrical grid reliable enough so the lights come on when I flip the switch. I don't want to worry about brownouts in summer or winter.

And, yes, as we all know, much of our infrastructure, from one end of the country to the other, is old, creaky, rusted, potholed or in other kinds of trouble. Even not-so-old things. I'm pretty confident driving down my local streets. The Big Dig tunnels? Not so much.

So I am not opposed in principle to President-elect Barack Obama's proposed 21st century version of FDR's Works Progress Administration, whereby millions of unemployed people will supposedly build the roads, bridges and electrical grids to carry us for another 70 years.

I don't really expect it to stimulate the economy. You don't have to be smart to know that while government can print money, it can't create wealth. The actual value will have to be drained from the private sector, or borrowed. For an example of how such activity fails to stimulate an economy, please see Japan: circa 1990s. That country has a colossal debt hangover that still dwarfs that of the U.S.

But, economic stimulus or not, there is a desperate need for infrastructure improvement. We never seem to get around to it when the economy is humming along, so why not do it when it's tanking? While government has its hands in thousands of areas where it ought not to be, infrastructure is one of its legitimate missions.

It sounds pretty simple, too. Hire millions of able, motivated workers, and in five years there will be gleaming bridges and highways; lightning-fast, convenient, clean mass transit; odor-free sewage treatment plants; a secure, expanded electrical grid; and thousands of new wind turbines and solar collectors dotting the landscape, freeing us from the grasp of Big Oil.

But, it is not so simple, largely because "work" means something quite different today than it did when FDR was supposedly riding to the rescue (Plenty of people forget, or don't know, that the Great Depression lasted through two of Roosevelt's terms. Things didn't really improve until after the U.S. got into World War II).

In 1935, most of the people hired by the WPA had been standing in bread lines. They were desperate to work and were thrilled to be getting a paycheck of any amount. They didn't demand an employee handbook spelling out health coverage, vacation time, sick days, personal leave, funeral leave, uniform allowance, OSHA compliance, sexual harassment policy, family leave, step raises and pension benefits. They just wanted to, you know, work.

The future ObamaCorps will, I'm afraid, be much different. As soon as they're hired, employees will all be recruited to join unions, and since Obama favors forcing workers to declare their preference for or against a union in front of "fellow workers" (otherwise known as union goons) instead of by secret ballot, he will be creating yet another massive unionized work force that will be more interested in job security than actually doing a job (See: UAW job bank).

What will happen when these projects finally end, if they ever do? Will the union contracts require the federal government to keep those workers on, or pay them unemployment for the next five years? These are not idle questions.

Also, back in the 1930s, workers actually got something done in a reasonable amount of time. Today's regulatory thicket combined with environmental jihadists can drag out the process for years, or block projects entirely.

As this paper has reported, bridge-building technology has apparently regressed. These days, the state estimates it will take two, three or even more years to rebuild a puny bridge of only a few hundred feet, while 60 years ago it took just two years to build the entire Tobin Bridge in Boston — a span of 1,525 feet.

And wind power? Let's not forget that a private firm wanted to put wind turbines off Cape Cod, but our fervent environmentalist, U.S. Sen. Ted Kennedy, has blocked it. Local communities are busy banning wind turbines by "regulating" them.

Perhaps it will be different. Perhaps if everybody just holds hands and recites "hope and change" enough times, regulations will melt away and unions will stop demanding ever-higher pay for less work.

Don't bet on it. We desperately need better infrastructure. But I'm afraid that five years from now, we will have spent hundreds of billions with not much to show for it.

Taylor Armerding is a staff columnist.

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