[ale] Way OT - the death of Twinkies

[Brian Stanaland]

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.

-- Brian


On Thu, Nov 22, 2012 at 11:20 PM, Phil Turmel <philip at turmel.org> wrote:

> On 11/22/2012 01:27 PM, simontek at gmail.com wrote:
> > You know if you have 2 billion in sales, and 2.5 billion of debt, or
> > loss per year, it doesn't mean your doing well. They just mention the
> > revenue. Not the profit.
>
> Not only that, but they don't mention the pension obligations.  When
> demand shrinks, the supplier(s) must also shrink.  But companies that
> haven't phased out defined benefit pensions can't shrink those future
> payments.  So in addition to cutting the workforce *count*, the supplier
> must cut the *remaining* worker's pay and benefits to cover the promises
> to retirees and soon-to-retire workers.
>
> While I don't know the details, I suspect there are legitimate
> grievances about executive compensation in the failing Hostess company,
> but those are numerically insignificant to crisis as a whole.
>
> Not that work rules and other burdens unions place on employers aren't
> problems, either, of course.  The real tragedy is the faith generations
> of Americans have placed in "traditional" pensions and ideas about
> retirement.  (The whole idea of retiring while still healthy, at a set
> age, is hardly "traditional".)
>
> Brace yourself, because the defined benefit bind that Hostess is being
> eviscerated by is the same ratio problem of current workers (payers) vs.
> retirees (payees) that is building in our Medicare and Social Security
> systems.  Other than scale, the only difference is that Hostess can
> neither borrow at Fed rates, nor print its own money.
>
> (Government also plays by different rules on maintaining appropriate
> pension reserves, but that doesn't address the fundamental flaw in
> defined benefit systems.)
>
> Lots of big companies figured this out years ago, and started protecting
> their employees with defined *contribution* plans.  That seems to many
> to be a bad trade, but I'm sure Hostess retirees would be delighted
> today if they had them.
>
> Phil
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The fact is that the average man's love of liberty is nine-tenths
imaginary, exactly like his love of sense, justice and truth.
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.
It is the exclusive possession of a small and disreputable minority, like
knowledge, courage and honor.
It takes a special sort of man to understand and enjoy liberty —

and he is usually an outlaw in democratic societies.

-- H.L. Mencken, Baltimore Evening Sun (12 February 1923)
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