Pension Guaranty Agency To Sue Delphi, GM
The Pension Benefits Guarantee Corp has had enough of Delphi’s ongoing pension debacle, and has warned the GM spinoff that it would file in court to seize a further $900m of the supplier’s assets. Having missed hundreds of millions of dollars in payments to its pension plan, Delphi’s still-profitable overseas operations are targeted for seizure by the PBGC. On Tuesday, reports the Wall Street Journal, the PBGC sent the second letter in the last month to urge GM to absorb at least $1.5b in Delphi’s pension obligations by the end of the month. Timing is crucial, because new pension laws which go into effect on October 1 will make such deals far more expensive. Oh yeah, and then there’s the whole bailout angle. “I can’t speak for the rest of the government, but I assume if GM is asking for assistance from the government generally, the status of the GM-Delphi pension situation would be highly relevant,” says PBGC Director Charles E.F. Millard. We couldn’t agree more. So GM and Delphi have until the end of the week to file papers that would transfer $1.5b of Delphi’s obligations to the General’s pension account. If that date is missed, Delphi’s only remaining profitable business ventures will be ghost like Swayze. With the firm likely to follow shortly thereafter, Chapter 7 style. So, why would GM endanger it’s bailout chances and kill off its largest supplier, when it’s own pension fund is actually overfunded to the tune of some $18b? Because that’s “already committed to paying off United Auto Workers medical claims, funding employee buyouts and other pending obligations.” Rock, meet hard place. Meanwhile, man the lifeboats.
The Bush tax cuts resulted in a huge increase in government revenues. It is the government spending that is out of control.
Hi, netrun Well, you can imagine that I'm concerned that our new floor, after the financial bloodbath, will be about the same level as in 1932. As the unofficial automotive historian around here, let me just briefly recount the top 8 new cars sales from 1928 through 1941, from the last full year of non-depression through the last full year of auto production before the war (numbers are approximate since Willys-Overland/Whippet numbers are only estimated) 1928: 3,163,156 1929: 4,027,036 1930: 2,477,533 (down 38.5% YOY) 1931: 1,761,665 (down 28.9% YOY) 1932: 928,648 (down 47.3% YOY) 1933: 1,447,018 1934: 1,846,811 1935: 2,338,218 1936: 3,301,406 1937: 3,398,569 1938: 1,697,151 (ouch! recession) 1939: 2,250,315 1940: 2,757,977 1941: 3,574,087 1941 didn't even equal 1929's level, when a month of 1929 already was in the depression 1941 did see one car line sell over a million per year (barely) - Chevrolet. The prior year that any company sold over a million per year was 1930 - Ford. In 1929, BOTH Ford and Chevrolet sold over 1.3 million (over 1.5 million in Ford's case, actually). So you can see, we have a significant amount of potential "drop" our current economy, using new car sales as a barometer, and gaging against the past. Hope to God it doesn't happen.
The sound of the death watch beetle grows ever louder!