Just when you thought it was safe to come out of the shark invested waters of big time finance comes word that America's car company - literally - GM, lost $4.3 billion 2009 covering the period from its emergence from bankruptcy in July through the end of the year.
So, GM accomplished that in only about six months.
Remember that its old corporate leadership said it would never need government money, then flew into Washington to beg for government money on a private jet, then got sent home to ponder their own stupidity, then drove from Michigan to Washington in the equivalent of the Joad family pick-up, then telling its bond-holders that it was too bad they were going to get approximately nothing for their paper, then selling a 60 percent stake to the U.S. government … after all that, and with a new leadership team, they still lost $4.3 billion.
How's that investment working out for us so far?
And that's the good news.
According to the "Pensions & Investments" website, GM and Chrysler will have "to make required contributions totaling $14.92 billion to their pension plans by 2014 to comply with federal funding requirements, according to a Government Accountability Office report."
Of that, $12.3 billion is GM's problem.
Let's see. This is 2010. GM lost north of $4 billion last year. In addition to making that up, they will have to find an additional $4 billion per year in profits just to make their pension plan contributions.
But, wait! The two largest stockholders in GM are you and me (61 percent). That means we're responsible for that money. As luck would have it there is an insurance fund for pension plans - similar to the FDIC for banks. It's called the Pension Benefit Guaranty Corporation (PBGC).
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The best thing about the PBGC is … it's fun to say. Go ahead. Try it. P…B…G…C. Now faster PBGC. See?
Where was I? Oh, if a company defaults on its pension plan contributions then the PBGC makes up some portion of that shortfall. As an example, according to the General Accountability Office (GAO) because former GM subsidiary Delphi Corporation "terminated its pension plans, the PBGC estimates it will have to finance about $6.2 billion of Delphi's pension funding shortfall."
We don't own Delphi, but we do own GM which puts the U.S. Treasury Department in something of a bind because the federal government is the major shareholder , the pension plan funder, the pension plan administrator; the insurer (through the PBGC); and, if GM defaults and the PBGC can't cover the pension liabilities, the insurer of the insurer.
This Socialism thing is a lot more complicated than I thought.
NEW TOPIC:
Maybe every Friday we'll take a quick look at the polls - as long as their good. Last night, RealClearPolitics listed four surveys measuring President Obama's job approval which were taken (at least in part) during April. Of them
-- Fox News had President Obama's approval rating at 43-48 (-5)
-- Gallup had the President at 49-46 (+3)
-- Rasmussen was at 47-53 (-6)
-- CBS had the President at 44-41 (+3)
Note that even the two which have Obama with a higher approval than disapproval rating still show him under 50 percent. Whatever glow he might have generated from the health care legislation has dimmed, and every day that passes is a day closer to the November 2 mid-term elections.
The other measure which political professionals look at in a non-Presidential year is what is called the "generic ballot." That is a question which is something like: "If the election were being held today, would you vote for the Republican candidate or the Democratic candidate?"
The idea is, in many Congressional Districts the incumbent's name is typically well known, and at this stage any challengers are not well known. So pollsters get a sense of what the electorate is thinking by asking that "generic ballot" question.
-- The Fox News poll has Republicans +4 (43-39)
-- Gallup has the generic ballot as a tie (46-46)
-- CNN/Opinion Research GOP +4 (49-45)
-- USA/Gallup has Republicans +1 (46-45)
If we don't go broke propping up GM over the next seven months, Republicans might be looking at a pretty good election day.
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