What Does USA Stand For?

[pwcmba]

Re: What Does USA Stand For?

The Original Question Is Easy:

What Does The Usa Now Stand For?

Nothing!

[cjppjc]

Re: What Does USA Stand For?

The Original Question Is Easy:

What Does The Usa Now Stand For?

Nothing!

Well, you know that was the original question. I'm not sure if your answer is correct. I just can't think right now of a better answer. Maybe, less than it used to.

[GRG55]

Re: What Does USA Stand For?

The news comes as Chrysler races toward its April 30 deadline to complete an alliance with Italy's Fiat SpA (FIA.MI) and follows an announcement by Chrysler that it has reached an agreement with the United Auto Workers (UAW) leaders to modify its labor contract and reduce the amount the company owes a retiree health fund.
The UAW would end up owning 55 percent of the struggling U.S. automaker under the concessionary contract members must vote on by Wednesday night.

http://news.yahoo.com/s/nm/20090428/...sler_lenders_8

Fascism is a term that has been undefined for 80 years and is most closely associated with Nazism which it truly is not. The common link between both fascism and socialism as I see it is the belief that the intellectual elite are the most qualified to determine the destiny of the non elite. That people often are naturally comfortable being dictated to as long as they feel they are being taken care of by the state is the core of both beliefs. This is what made America different. The founding fathers understood the ability of the perceived elite to control the population by a democratic process. This is why they chose a republic with an electoral college not elected by the people directly but by their representatives that they elected in each state. I do not believe in the intellectual elite I believe everybody should have the right to choose their own destiny according to their own abilities.

The most eye opening thing about both of these restructurings is that the unions will be given a majority ownership position in each company. At least 39% at GM and 55% at Chrysler...

Think of it as the next evolution in "The Ownership Society"...:rolleyes:

I do not weep for the bond and shareholders as the companies are insolvent and should be liquidated. So the shareholders would be wiped out and the bondholders are still going to take a major loss. The real travesty to this is that the unions will run the companies when the government leaves. The government will leave as they are not in the business of running companies. But when they leave you will find two companies that will be controlled by the labor unions. They will not be competitive. Do you think they will negotiate lower wages or benefits from themselves? How are they going to be competitive against 100's of global car companies with cheap labor? Are they going to be more innovative? Or are they going to build what the government wants but the public will not buy.

More seriously, I am not sure I completely agree with you. The equity interests are not being "given" to the unions. The employees have a legitimate legal claim, as do the bondholders and shareholders. If they did not, they would have recieved nothing. One can probably accept that the government meddling to force a resolution means it potentially exerted undue influence in favour of some stakeholders interests over others, and perhaps therefore the unions may have benefited disproportionately...but I think its pretty difficult to argue that this is any sort of sweetheart deal for the unions. Nor can it be argued that the UAW wants its members exposed to the risks of ownership; the pattern over many decades of bargaining is exactly the opposite for both the UAW and the CAW. That they are now being forced into some sort of employee ownership "Southwest Airlines" type of model is exactly what they have fought fiercely to avoid in the past.

I feel sorry for Ford which is actually the company that should survive and benefit from less domestic competition and compete with the rest of the globe. But these restructurings will lead to the failure of Ford because they have lost all their leverage with the unions (Do you think the UAW will negotiate in good faith now that they know that if Ford fails they will own the majority of them as well) and GM and Chrysler will be able to undercut Ford because they are not in the for profit business but the labor union and pension preservation business.

As we look at GM and Chrysler we are watching a beta test for the US in general. Will the younger workers take less salary and benefits to pay the enormous legacy costs of the union workers that came before them. Or will they let the company wallow and die destroying both the pensioners and the current jobs. A similar but larger question is will the younger citizens of America now has a whole different meaning.

You raise some valid points about the "moral hazard" of bailing out failed enterprises.

Ford's only labour negotiating leverage now is the threat of plant closures and union job reductions. It really does have a problem now, and it may be that one of the unintended consequences of the government's meddling [and you just know there's going to be some unintended consequences] is that Ford relinquishes a large part of the North American market to GM/Chrysler/Fiat and is forced to concentrate it's business overseas.

If I recall correctly, one of the first things that happened at Ford shortly after Alan Mulally arrived from Boeing, is that he mortgaged everything in the company including the blue oval. I believe that is the reason Ford has not had to tap federal funding...so far. But that means the balance sheet is likely as fragile as that of GM and Chrysler, if not worse.

[BiscayneSunrise]

Re: What Does USA Stand For?

More seriously, I am not sure I completely agree with you. The equity interests are not being "given" to the unions. The employees have a legitimate legal claim, as do the bondholders and shareholders. If they did not, they would have recieved nothing. One can probably accept that the government meddling to force a resolution means it potentially exerted undue influence in favour of some stakeholders interests over others, and perhaps therefore the unions may have benefited disproportionately...but I think its pretty difficult to argue that this is any sort of sweetheart deal for the unions. Nor can it be argued that the UAW wants its members exposed to the risks of ownership; the pattern over many decades of bargaining is exactly the opposite for both the UAW and the CAW. That they are now being forced into some sort of employee ownership "Southwest Airlines" type of model is exactly what they have fought fiercely to avoid in the past.

It would be worthwhile to look at the union ownership piece at United Airlines.

In 1996, the pilots union led an ESOP with the idea they had better strategic vision and day to day capabilities than management.

During the ESOP, union rhetoric revolved around concepts about being properly rewarded and entitlement. In my mind ownership is about sacrifice and hard work; union leadership at United saw it differently. There was a infamous quote from the head of the pilot union saying "it is my job to squeeze as many golden eggs from the goose as possible without actually killing it."

There was a constant tug of war between pilots who wanted profits diverted to both pay raises and the purchase of new airplanes which would allow advancement. Other employees groups only wanted pay raises.
The executive team was hamstrung in actually trying to run a company. Any real innovation was stifled by union leadership. Highly capable and progressive managers at all levels were blackballed by union members and eased out of the company.

As union contracts came due in 2000, unions were able to use the leverage of their ownership and a friendly Clinton White House. A demoralized and hollowed out executive team conceded to unsustainable pay raises. After 9/11, when the company sought relief, the unions stood firm and refused concessions, ultimately leading to United's bankruptcy filing in 2002. The goose was squeezed just a little too hard.

Like the UAW, unions at United also had legitimate legal claims. In bankruptcy court the unions sought compensation for their equity and their pay cuts. They were ultimately awarded only pennies on the dollar, not fresh ownership. Arguably, union meddling was directly responsible for United's woes and the union employees got what they deserved. Conversely, one could say the UAW are innocent victims but I'm not certain they deserve massive amounts of equity.

As unions go, the UAW are the least worst. We will see if they can avoid the entitlement mentality of union ownership.

[marvenger]

Re: What Does USA Stand For?

I think that sums it up well. Hey, power corrupts, when society is primarily a game to establish winners and losers what else do you expect?

[GRG55]

Re: What Does USA Stand For?

It would be worthwhile to look at the union ownership piece at United Airlines.

In 1996, the pilots union led an ESOP with the idea they had better strategic vision and day to day capabilities than management.

During the ESOP, union rhetoric revolved around concepts about being properly rewarded and entitlement. In my mind ownership is about sacrifice and hard work; union leadership at United saw it differently. There was a infamous quote from the head of the pilot union saying "it is my job to squeeze as many golden eggs from the goose as possible without actually killing it."

There was a constant tug of war between pilots who wanted profits diverted to both pay raises and the purchase of new airplanes which would allow advancement. Other employees groups only wanted pay raises.
The executive team was hamstrung in actually trying to run a company. Any real innovation was stifled by union leadership. Highly capable and progressive managers at all levels were blackballed by union members and eased out of the company.

As union contracts came due in 2000, unions were able to use the leverage of their ownership and a friendly Clinton White House. A demoralized and hollowed out executive team conceded to unsustainable pay raises. After 9/11, when the company sought relief, the unions stood firm and refused concessions, ultimately leading to United's bankruptcy filing in 2002. The goose was squeezed just a little too hard.

Like the UAW, unions at United also had legitimate legal claims. In bankruptcy court the unions sought compensation for their equity and their pay cuts. They were ultimately awarded only pennies on the dollar, not fresh ownership. Arguably, union meddling was directly responsible for United's woes and the union employees got what they deserved. Conversely, one could say the UAW are innocent victims but I'm not certain they deserve massive amounts of equity.

As unions go, the UAW are the least worst. We will see if they can avoid the entitlement mentality of union ownership.

My observation is that very few people in large, complex organizations actually have a good understanding of how their business really works. I constantly have very spirited debates with colleagues who stayed in Big Oil...and find most of them, although they may be excellent technical people and/or managers, are scarcely more knowledgable than the lay public about how their industry actually works.

We live in a world where we've been taught from grade school to sub-divide complex systems or problems, breaking them down into component parts, each finally small enough that we can gain sufficient understanding of how they individually work. Unfortunately setting corporate strategies, examining competitive threats, and other actions that go on in the executive boardroom actually requires the ability to re-aggregate all the pieces mentally, and have a more systemic or holistic understanding of the organization...particularly difficult to do for large, multi-faceted organizations.

I have long been of the view that the real reason the Daimler-Chrysler marriage failed is not because the individual department or function "synergies" were not properly assessed, but because Daimler management did not, [or could not?] develop a comprehensive picture of how the "one" merged company would function and what new strategic opportunities, unavailable to either of the individual companies, would be possible ost-merger. I have a picture of lots of activity drawing departmental organization charts, "cross-functional matrices" [a favourite of the management consultants], normalizing HR policies, setting up committees to select "best practices", tons of money pouring into the black hole of systems integration, all against the usual backdrop of maneuvering for the plum assignments...but nobody actually having any real clue why the merger should have occurred in the first place.

I've heard that a near-death experience almost always changes people. We'll have to see how the players in GM and Chrysler have been changed, if at all, by their corporate near-death experience.

[GRG55]

Re: What Does USA Stand For?

I agree with you that employees have a claim but according to the law they would I believe be an unsecured creditor. The labor contract could be rejected in bankruptcy and reopened to negotiation or just terminated (penty of case law on this) . I believe the pension obligation is also an unsecured claim and as such can be reduced substantially and then the Pension Guarantee Corp would pay a reduced amount of the pension money to the workers (plenty of case law on this). This is a much cleaner solution and is the law. The bondholders are the secured creditor. They took the risk of lending capital and the workers benefited from that risk and took the benefit of the money in the form of salaries and benefits. They took no risk. Now how it is equitable that they be made whole (or given the opportunity to be made whole by being converted to ownership equity) but the bondholders get crushed. In normal times this would never happen. I am not being cynical here but their are ridged bankruptcy rules which prioritize claims and pay according to the rule of law. A secured creditor never gets less then an unsecured creditor ever. The secured creditors need to be made as whole as possible before the unsecured are even considered otherwise they just convert to chapter 7 and liquidate the assets which they have a secured claim on and everyone else packs up their toys and goes home with nothing if they do not sell the assets for more then the secured claim. I believe this is why the government is strong arming everyone outside of the jurisdiction of the bankruptcy court. I am not being cynical here but do you think any of these bondholders have a CDS held by AIG. So they are told by the government take the haircut and we will make you whole through AIG (taxpayers). Once again this would not happen in normal times and I doubt it would happen in a full fledge bankruptcy fight in the courts. With out the political shield the unions would be in a much worse position under the law then the secured bond holders and rightfully so because it is the law with years of case history. But we now live in a world of change. EJ is right you cannot invest in this enviornment. I would never lend any money to a Union Contracted company as a bondholder based upon the precedent being set.

Ford also sold assets (Jaguar and Rangerover) and shutterd plants to raise capital. They also are producing better trucks (any F-150 fans?) and are seriously trying to compete with the international players by taking painfull steps to reinvent their lines. To Mulally's credit he came in made the hard decisions and excecuted quickly as he new time was of the essence in order to make Ford more competitive. They should be given every opportunity to survive and thrive with the orderly disolution of GM and Chrysler through bankruptcy. Not only would they be able to buy the better assets they would be able to negotiate better terms with the labor unions. It is better for the american auto industry and america for it to be done that way. Instead we get Zombie Car Companies to keep the Zombie Banks company.

The bondholders are not secured. That is why they are getting what they feel is a raw deal. If the bondholders were secured they would, as you say, be ahead of most [if not all] of the claims of the employees.

Further, if they were secured they would be negotiating from a position of much greater strength and therefore the deal would look much different from the one being proposed.

Finally, it is because the bondholders in question are unsecured that it is probably in their interests to negotiate a resolution and avoid bankruptcy court. Secured bondholders would have no such fear. Unsecured bondholders on the other hand are on par with other unsecured creditors [of which there are plenty], and are at the mercy of the court if they don't settle in advance...even if that settlement is "on the day, on the courthouse steps"

General Motors Plans Debt Exchange Prior to June 1 Bond Payment

April 22 (Bloomberg) -- General Motors Corp., trying to restructure before a U.S. bankruptcy deadline of June 1, won’t make a bond payment due on that date because it plans a prior debt exchange.
“A successful bond exchange is an essential element of our out-of-court restructuring efforts, and we are working aggressively to launch an exchange,” GM spokeswoman Renee Rashid-Merem said. “That exchange could still be in process on June 1. Therefore we would not expect to make the June 1 bond payment.”

GM Chief Executive Officer Fritz Henderson needs to convince unsecured bondholders to reduce $27.5 billion in debt to less than $9.2 billion and equity or file for bankruptcy court protection by June 1...

[charliebrown]

Re: What Does USA Stand For?

hello cb here
i am a former united manager 1997 - 2002. I was hired after the esop. rank and file hated the esop. the esop was forced upon them by the executive management team. either esop or we'll outsource you. catering was the first to be outsourced. after catering and a few other divisions were outsourced the employees caved. they took big benefit and salary cuts in exchange for ual common stock.

The depressed salary structure made it very hard to hire top talent.
also if you quit, you could unload your stock so we also lost some good people when the stock hit a high in 97-98?? also the internet boom was going so if you were good you could cash out your ual stock and get a better paying job somewhere else.

anyhow, i was not privy to union rules and contracts in my postion. management had their mess ups too. i dont think they anticiapted the change the internet would have on the industry. united's business model was to sock it to the business traveler. At the same time many companies were getting rid of their travel desks and having their employees book their own travel. most chose price line, expedia etc. and they found a cheaper flight on a competitor.

other bone headed moves ...
-- attempt a merger with an even worse airline u.s. air.
--repaint aircraft blue on the bottom, grey on top. i suppose a saftey guy was asked about that??
--repaint aircraft again with the ted logo.
--have literally 300 fares between chicago and denver with 90% of the volume on 10 fare codes. the costs to conceive, manage, file the fares are huge and for what, not to mention the passenger feels like he's on lets make a deal.
-- fly 5 or 6 different airframes, each one requiring a specially trained flight crew, parts inventory, and mechanics, cabin configuration, on and on.

Yes pilots make a lot of money, but ... they are in charge of 100M dollar aircraft and 200 lives. They should get paid big bucks, but it seems like the current fare structure does not support their salary. The model is really broken. I think? that it takes about 30gal of fuel to fly a passenger from chi - san fran on a reasonably loaded plane. sometimes it seems that the fare doesn't cover the fuel. No im not a pilot.

airplanes as you now are extreemly expensive, do capacity planning wrong and you own too many aircraft. everyone seems to follow the same model so when you do own too many so does everyone else so you end up parking aircraft in the desert. A high risk game to be sure.

[GRG55]

Re: What Does USA Stand For?

hello cb here
i am a former united manager 1997 - 2002. I was hired after the esop. rank and file hated the esop. the esop was forced upon them by the executive management team. either esop or we'll outsource you. catering was the first to be outsourced. after catering and a few other divisions were outsourced the employees caved. they took big benefit and salary cuts in exchange for ual common stock.

The depressed salary structure made it very hard to hire top talent.
also if you quit, you could unload your stock so we also lost some good people when the stock hit a high in 97-98?? also the internet boom was going so if you were good you could cash out your ual stock and get a better paying job somewhere else.

anyhow, i was not privy to union rules and contracts in my postion. management had their mess ups too. i dont think they anticiapted the change the internet would have on the industry. united's business model was to sock it to the business traveler. At the same time many companies were getting rid of their travel desks and having their employees book their own travel. most chose price line, expedia etc. and they found a cheaper flight on a competitor.

other bone headed moves ...
-- attempt a merger with an even worse airline u.s. air.
--repaint aircraft blue on the bottom, grey on top. i suppose a saftey guy was asked about that??
--repaint aircraft again with the ted logo.
--have literally 300 fares between chicago and denver with 90% of the volume on 10 fare codes. the costs to conceive, manage, file the fares are huge and for what, not to mention the passenger feels like he's on lets make a deal.
-- fly 5 or 6 different airframes, each one requiring a specially trained flight crew, parts inventory, and mechanics, cabin configuration, on and on.

Yes pilots make a lot of money, but ... they are in charge of 100M dollar aircraft and 200 lives. They should get paid big bucks, but it seems like the current fare structure does not support their salary. The model is really broken. I think? that it takes about 30gal of fuel to fly a passenger from chi - san fran on a reasonably loaded plane. sometimes it seems that the fare doesn't cover the fuel. No im not a pilot.

airplanes as you now are extreemly expensive, do capacity planning wrong and you own too many aircraft. everyone seems to follow the same model so when you do own too many so does everyone else so you end up parking aircraft in the desert. A high risk game to be sure.

And selling a perishable commodity to boot...because when a plane leaves the ground every empty unsold set is immediately worth less than day old bread.

Tough business to be in for sure. Which I why I could never quite understand the attraction for people like Freddie Laker, Don Burr, and even Richard Branson. Prestige maybe?

[GRG55]

Re: What Does USA Stand For?

Thanks for the clarification. I had a bad source with a conflict between secured and unsecured. I must admit I did not read it carefully. I will try and be more diligent in the future.

This is our community fliped42, and that's what we do around here...filter through the MSM and FIRE economy BS and try to help each other try to piece together and understand what the real picture is. Your presence and contribution is valued!

[vanvaley1]

Re: What Does USA Stand For?

I think I have read that in the U.S., something like 20% of the populations controls something like 80% of the wealth. If this is true, and if the current political parties represent the 20%, it seems that a 3rd party organized along class lines might be competitive. I know that Americans do not enjoy talking about class, so I apologize in advance if I offend anyone.

I wouldn't mind belonging to the "Middle Class Party". Anybody got some startup capital? Maybe we can borrow it from the banks?

[Rajiv]

Re: What Does USA Stand For?

For those interested in reading a very good study of wealth distribution in the US, please see Edward N. Wolff's "Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze," June, 2007. (Download the full text pdf file.)

[vanvaley1]

Re: What Does USA Stand For?

For those interested in reading a very good study of wealth distribution in the US, please see Edward N. Wolff's "Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze," June, 2007. (Download the full text pdf file.)

Doe the IMF or some other agency track the wealth distribution of the world using the same or similar methodology that this author does? Is this data compiled by countries then distributed for analysis purposes for political/economic purposes? Do leaders use these type of studies for directing social changes, strengthening social contracts, or are they just useless studies?

[nero3]

Re: What Does USA Stand For?

My feelings about the US is that it went from being a young, optimistic country such as China and India today, in the first part of the 1900 century, to becoming a hollowed out empire, there are not many reasons for the apparent prosperity anymore, other than the printing press and that the world still takes dollars, and that it still have the strongest military. However, my negative feelings towards the US did not start before after 9/11, and the chase that followed. I guess, the US, the productive US died from the 1980-s when the debt bubble began.

[snakela]

Re: What Does USA Stand For?

I read a good one a few days ago on some other site. USA is now USGS ( for goldman sachs)