Is the stock market going to tank?

[ICEHOCEY77]

He is. He's also likely right. This bankruptcy will make AA more competitive, should be good for them in the long run.

besides that whole shareholders being completely wiped out thing, might be able to get value on some secured debt but equity? forget about it.

[LeeLau]

No i wasn't serious. Shareholders are zero.

New American common shares will be competitive because they've erased their debt. God only knows why other airline stock are up on this news. Old American shares (ie AMR- soon to AMRQ) are worth precisely zero

[PNWbrit]

There is something deeply fucking wrong with bankruptcy laws in this country.

[JimmyCarter]

Long: new american shares
Short: employee pension

[PassTheDutchie]

Long: new american shares
Short: employee pension

Sadly funny but true.

[LeeLau]

It used to be a nice game to go long senior debt as its usually secured by hard valuable assets - like aircraft or landing rights. And short the bankruptco's commons. Confused people would invariably buy the bankruptco's common shares not realizing that they were buying expensive abrasive toilet paper. But this trade got crowded a long time ago.

EDIT - if anyone wants to play that dangerous game. AMR (which I will add is bankrupt and is ultimately destined to go to zero) may rise on day 2. 3 4 post bankruptcy. It'll do so on less volume than day 1 of bk - which is today. Smart shortsellers start on day 2 and then go to town on day 3. There's fundamental reasons for this mostly to do with mob psychology but i wont' bore with the details.

PNWbrit - no doubt. Corporate Chapter 11s are a lot cleaner than many individual person's chapter 11s; best examples are student loans which attach to the bankrupt student even post-bankruptcy. Corporate entities have better lobbyists. Students don't have any lobbying power to speak of

[ass-to-mouth]

QEGlobal. Wall St bloodsuckers win again, and again, and again....

[Benny Profane]

Long: new american shares
Short: employee pension

And guess who's going to be paying that pension now? Yup, you, the taxpayer! You wonder why they didn't do this sooner.

[4matic]

And guess who's going to be paying that pension now? Yup, you, the taxpayer! You wonder why they didn't do this sooner.

Nope!

A. PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in traditional private-sector pension plans called defined benefit plans. If your plan ends (this is called "plan termination") without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law. Our financing comes from insurance premiums paid by companies whose plans we protect, from our investments, from the assets of pension plans that we take over as trustee, and from recoveries from the companies formerly responsible for the plans, but not from taxes. Your plan is insured even if your employer fails to pay the required premiums.

[XXX-er]

When a defined benifits pension fund is under funded is the company on the nut to make up the difference ?

[schuss]

When a defined benifits pension fund is under funded is the company on the nut to make up the difference ?

If they're still operating - yes. If they fold, there's usually extra insurance around it to cover, as well as the PBGC stuff above.

[4matic]

When a defined benifits pension fund is under funded is the company on the nut to make up the difference ?

Yes, if not in bankruptcy they are supposed to fund the pension out of pocket to maintain solvency. That's the reason that:

1. Public pensions are a fraud on taxpayers because there is no risk to the "company" or pensioner. Shortages are funded on the backs of taxpayer.

2. Even with all the uncertainty I far prefer a self directed retirement because I control my own destiny.

[XXX-er]

how much on the nut, I always wonder how safe my DB pension is in vue of the current world situation ?

I got the letter telling me the pension was only 92% funded so they wanted to take 10 yrs to make it up instead of a mandated 5 yrs, they included a ballot but no stamped envelope and stated that if they didnt hear from a certain % they would just go ahead with that plan... it didnt take much for the retiree's to organize and voted that one down

we were given advice that it is better to fix a problem sooner than later and since its IBM ... they got lots of fucking money to fix it sooner than later

edit ; we were given the choice to go defined contribution or stay with defined benefit, at a certain years-of-service staying DB was clearly the best deal, I seem to remember 18 yrs or so was the number, full DB after 30yrs of service at any age,which means I qualifyed at 48 ... I stayed DB

[4matic]

how much on the nut, I always wonder how safe my DB pension is in vue of the current world situation ?

I got the letter telling me the pension was only 92% funded so they wanted to take 10 yrs to make it up instead of a mandated 5 yrs, they included a ballot but no stamped envelope and stated that if they didnt hear from a certain % they would just go ahead with that plan... it didnt take much for the retiree's to organize and voted that one down

we were given advice that it is better to fix a problem sooner than later and since its IBM ... they got lots of fucking money to fix it sooner than later

IBM is safer than most (all) sovereigns. 92% is probably better than 99% of all DBP's. I heard new IBM employees are on 401k? No more DBP?

[JimmyCarter]

My dad's airline pension is now in the hands of the PBGC and worth several cents on the dollar. He's obviously thrilled.

[XXX-er]

IBM is safer than most (all) sovereigns. 92% is probably better than 99% of all DBP's. I heard new IBM employees are on 401k? No more DBP?

I am not even entirely sure what a 401K is because I believe that is an American invention and this is IBM Canada I am refering to eh?

Anybody in Canada who has the DB would have chose it about 18yrs ago, there are only about 7000 people left in the plan and they are dieing off at an ever increasing rate altho its probably not as fast as the good old days when the average IBM'er used to die <3yrs after retirement SO they gave everyone a 12K policy to pay the funeral costs ...cradle to grave

Yeah I thot 92% is pretty damn good and according to my IBM stock bought on payroll deductions we are currently making assloads of money ...its funny how I still say "we"

[Brock Landers]

how much on the nut, I always wonder how safe my DB pension is in vue of the current world situation ?

I got the letter telling me the pension was only 92% funded so they wanted to take 10 yrs to make it up instead of a mandated 5 yrs, they included a ballot but no stamped envelope and stated that if they didnt hear from a certain % they would just go ahead with that plan... it didnt take much for the retiree's to organize and voted that one down

we were given advice that it is better to fix a problem sooner than later and since its IBM ... they got lots of fucking money to fix it sooner than later

edit ; we were given the choice to go defined contribution or stay with defined benefit, at a certain years-of-service staying DB was clearly the best deal, I seem to remember 18 yrs or so was the number, full DB after 30yrs of service at any age,which means I qualifyed at 48 ... I stayed DB

Im not sure of the details of IBM, but it sounds like they want the beneficiaries of the pension to agree to a 10 year term to lessen the weight of that 8% nut they need to make up. 8% of the pension plan at an IBM is probably a few billion dollars, so instead of taking their company's cash flow/profits and fund the pension over the mandated 5 years, it would do it over 10.

Retirees may not give a shit since theyre probably shareholders too, though if the company can afford it its probably better to make everyone happy and explain to shareholders in the short term they need to fund.

92% funded isnt all that bad- the financial crisis in 2008 crushed many plans. What is difficult for companies is that in times where pension asset values decrease (stocks go down), present values of liabilities go up (rates decrease), and the ability of the company to make contributions decreases (tougher economic environment, often lower profits).

Not sure i even stayed on topic. Whatever. Lunchtime

[LeeLau]

Al - I wouldn't worry too much about IBM. If they go down then we (the world) have bigger problems.

In the last year there were quite a few AMR senior pilot retirements. Apparently they could elect to retire and take lump-sum payments instead of taking the annuity. AMR up ~~ 35% today.

[XXX-er]

^^ that is pretty much what happened Brock Landers, some retirees thot that IBM saying if they didn't hear from you they would assume it was ok to mess with your pension was weak sauce and sneaky, some people had moved so didn't get a letter or if they got the letter its the mothercorp worrying some old people, as long as I get the money I don't care and yeah most of these Retirees would have collected 100's maybe 1000's of shares on payroll deduction ... the 15% discount from the twice yearly offering price was free money

thanx lee based on your advice I will take a more aggressive position on acquiring more ski gear

[up an down]

Nope!

A. PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in traditional private-sector pension plans called defined benefit plans. If your plan ends (this is called "plan termination") without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law. Our financing comes from insurance premiums paid by companies whose plans we protect, from our investments, from the assets of pension plans that we take over as trustee, and from recoveries from the companies formerly responsible for the plans, but not from taxes. Your plan is insured even if your employer fails to pay the required premiums.

pbgc is underfunded.. so either more $ from companies or more $ from taxpayers or reduced pension payouts, or a combination of the three...

[Hugh Conway]

pbgc is underfunded.. so either more $ from companies or more $ from taxpayers or reduced pension payouts, or a combination of the three...

ding ding ding!


un-fucking believable how many times the commercial carriers have entered bankruptcy in the last couple decades and the fuckers on wall street keep handing over OPM. Bout fucking time one of them ends up like this:
Attachment 104959

[4matic]

pbgc is underfunded.. so either more $ from companies or more $ from taxpayers or reduced pension payouts, or a combination of the three...

Which is the reason AIG and GM had to be bailed out. Pay me now or pay me later.

The underfunding will slowly subside as more companies phase out DBP's so there is no immediate danger in the PBGC.

[AdironRider]

Not really. I'm looking at the total cost, which, at 1% over a long period adds up. Besides, what makes him so smart? If he had some inside knowledge, I'd pay him 10%, otherwise, I'll do it myself.

And if he had inside information, hed be going to jail and youd most likely lose all your money. Have at it hoss!

Its not that hes some super fucking genius when it comes to financial planning, but hes good enough for two blue collar workers like my parents to pay the 1%, take the 7% average take home (thats over 15 years with this same guy), and never have to really put any effort into an area they know absolutely nothing about. Thats the point which you clearly seem to miss. For me and you it seems like a losing deal, but for most American who don't give enough of a crap to educate themselves on investments, its a pretty good deal.

[4matic]

And if he had inside information, hed be going to jail and youd most likely lose all your money. Have at it hoss!

Its not that hes some super fucking genius when it comes to financial planning, but hes good enough for two blue collar workers like my parents to pay the 1%, take the 7% average take home (thats over 15 years with this same guy), and never have to really put any effort into an area they know absolutely nothing about. Thats the point which you clearly seem to miss. For me and you it seems like a losing deal, but for most American who don't give enough of a crap to educate themselves on investments, its a pretty good deal.

7% over 15 years with reinvested dividends would not have beaten the SP500 so why pay 1%?

[JimmyCarter]

7% over 15 years with reinvested dividends would not have beaten the SP500 so why pay 1%?

Assuming the 7% is post fee, it's pretty close (96-10 is about 6.7% with dividends). Throw in added stability (?) and why not?