Thread: $73 an Hour
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[email protected] clare@snyder.on.ca is offline
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Default $73 an Hour

On Sat, 13 Dec 2008 23:07:36 -0600, F. George McDuffee
wrote:

On Sat, 13 Dec 2008 01:01:28 -0600, F. George McDuffee
wrote:

On Fri, 12 Dec 2008 18:09:59 -0800 (PST),
wrote:
snip
Yes, I have wondered about this, but was told my limited knowledge of
Economics was at fault, that I didn't comprehend that for you and me,
if we wanted a cup of coffee, we had to pay $2 upfront. In the
business world, you just promise to pay at some later date, and are
given pieces of paper as securities. Which may turn out to be
valueless.

snip
--------------------
There is nothing wrong with your understanding of
economics/finance. In this case what was actually happening was
ignored because it was dressed up as something else, in this case
an ERISA "pension plan."

snip
---------
some follow-up on my first response.

In many cases the public accounting/auditing firms shares
responsibility for this problem. When the books of a publicly
traded corporation are reviewed by the outside auditors, they are
expected to give an opinion of the business as a going concern,
which has been interpreted in the US as the likelihood of
bankruptcy in the next year. While not all bankruptcies can be
forecast, there was an increasingly high likelihood of bankruptcy
and the inability to continue as a going concern for all three
Detroit car companies over the last several years. Ford was the
only one to draw the logical conclusions, undertake the required
reorganizations/restructuring on a crash basis, and accumulate
the cash required.

AFAIK, none of the auditors [Chrysler is not a publicly owned
company and has not been externally audited since its purchase by
Cerberus] ever issued a qualified (that is negative) "going
concern opinion."
for some insight see
http://accountingmalpractice.com/000...ga-200206b.pdf
http://papers.ssrn.com/sol3/papers.c...&srcabs=427682
also see
http://portal.acm.org/citation.cfm?i...=portal&dl=ACM
http://ideas.repec.org/p/tky/jseres/2005cj142.html
and many more google on "going concern opinion"

Note that very few of these sites are US.

For an example of how a "qualified going concern opinion" is
addressed in Japan see
http://www.sanyo.com/news/2008/05/22-4en.html

The accounting for pensions in Japan was also much more strict,
particularly after their financial implosion and "lost decade"
(now approaching a lost generation). For a summary of their
actions click on http://www.ica2006.com/Papiers/3009/3009.pdf
again google on "going concern" pensions for more info and note
the scarcity of US sites.

It is clear that the dangers of the *NON* "going concerns" to the
pension plans [among other things] are well known/documented to
the accountants and actuaries. In the US and many other
industrial countries these dangers are simply ignored, when the
businesses (and the fees) are large.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).



The banks, Accounting firms, stock traders, automotive management, and
UAW share quite evenly the blame for the collapse of the north
american auto industry (and north american manufacturing on the
whole).

And GM has been standing with one foot in the grave and the other on a
bannana peal since about 1973.