Just a quick blurb to say I read that Hostess has spent 8 of the last 11 years in bankruptcy. I personally would have been preparing for the company's collapse, fault be damned.<br><br>-- Brian<br><div class="gmail_extra">
<br><br><div class="gmail_quote">On Thu, Nov 22, 2012 at 11:20 PM, Phil Turmel <span dir="ltr"><<a href="mailto:philip@turmel.org" target="_blank">philip@turmel.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<div class="im">On 11/22/2012 01:27 PM, <a href="mailto:simontek@gmail.com">simontek@gmail.com</a> wrote:<br>
> You know if you have 2 billion in sales, and 2.5 billion of debt, or<br>
> loss per year, it doesn't mean your doing well. They just mention the<br>
> revenue. Not the profit.<br>
<br>
</div>Not only that, but they don't mention the pension obligations. When<br>
demand shrinks, the supplier(s) must also shrink. But companies that<br>
haven't phased out defined benefit pensions can't shrink those future<br>
payments. So in addition to cutting the workforce *count*, the supplier<br>
must cut the *remaining* worker's pay and benefits to cover the promises<br>
to retirees and soon-to-retire workers.<br>
<br>
While I don't know the details, I suspect there are legitimate<br>
grievances about executive compensation in the failing Hostess company,<br>
but those are numerically insignificant to crisis as a whole.<br>
<br>
Not that work rules and other burdens unions place on employers aren't<br>
problems, either, of course. The real tragedy is the faith generations<br>
of Americans have placed in "traditional" pensions and ideas about<br>
retirement. (The whole idea of retiring while still healthy, at a set<br>
age, is hardly "traditional".)<br>
<br>
Brace yourself, because the defined benefit bind that Hostess is being<br>
eviscerated by is the same ratio problem of current workers (payers) vs.<br>
retirees (payees) that is building in our Medicare and Social Security<br>
systems. Other than scale, the only difference is that Hostess can<br>
neither borrow at Fed rates, nor print its own money.<br>
<br>
(Government also plays by different rules on maintaining appropriate<br>
pension reserves, but that doesn't address the fundamental flaw in<br>
defined benefit systems.)<br>
<br>
Lots of big companies figured this out years ago, and started protecting<br>
their employees with defined *contribution* plans. That seems to many<br>
to be a bad trade, but I'm sure Hostess retirees would be delighted<br>
today if they had them.<br>
<span class="HOEnZb"><font color="#888888"><br>
Phil<br>
</font></span><div class="HOEnZb"><div class="h5">_______________________________________________<br>
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</div></div></blockquote></div><br><br clear="all"><br>-- <br>The fact is that the average man's love of liberty is nine-tenths imaginary, exactly like his love of sense, justice and truth.<br>He is not actually happy when free; he is uncomfortable, a bit alarmed, and intolerably lonely. Liberty is not a thing for the great masses of men. <br>
It is the exclusive possession of a small and disreputable minority, like knowledge, courage and honor.<br>It takes a special sort of man to understand and enjoy liberty — <br><br>and he is usually an outlaw in democratic societies.<br>
<br>-- H.L. Mencken, Baltimore Evening Sun (12 February 1923)<br><br><br>
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