No more Twinkies - Hostess out of business

[GenuineRisk]

This is from a balloon-juice post about the auto industry in 2008, but it applies here, too, other than I don't think Mitt has weighed in on the fate of Twinkies, probably because he doesn't eat junk food:

THE TRAGEDY OF THE AMERICAN AUTOMOBILE INDUSTRY:A Play in Three Acts
Dramatis Personae
BIG THREE, a manufacturer of automobiles
UAW, Big Three’s employee
MITT ROMNEY, an idiot

ACT ONE
BIG THREE: I have plans to build automobiles, but I need labor to do so!

UAW: I will labor for you if you will pay me $40 per hour.

BIG THREE: I will not pay you $40 per hour.

UAW: But I need to save for my inevitible retirement, and any health concerns that may arise.

BIG THREE: I will pay you $30 per hour, plus a generous pension of guaranteed payments and health care upon your retirement.

UAW: Then I agree to work for you!

ACT TWO
UAW: I am building cars for you, as I have promised to do!

BIG THREE: I am designing terrible cars that few people want to buy! Also, rather than save for UAW’s inevitible retirement when I will have to pay him the generous pension of guaranteed payments and health care that I promised, I am spending that money under the dubious assumption that my future revenues will be sufficient to meet those obligations.

ACT THREE
UAW: I have fulfilled my end of the deal by building the automobiles that you have asked me to build.

BIG THREE: Oh no! I am undone! My automobiles are no longer competitive due to my years of poor planning and poor judgment!

MITT ROMNEY: This is all UAW’s fault!

[jms62]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

I am just shocked

[bigrun]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

Nice farewell package for the top boys...Did all the employees get a 'mustering out' package... Yeah, they told them to bend over..

[bigrun]

Originally Posted by GenuineRisk

This is from a balloon-juice post about the auto industry in 2008, but it applies here, too, other than I don't think Mitt has weighed in on the fate of Twinkies, probably because he doesn't eat junk food:

THE TRAGEDY OF THE AMERICAN AUTOMOBILE INDUSTRY:A Play in Three Acts
Dramatis Personae
BIG THREE, a manufacturer of automobiles
UAW, Big Three’s employee
MITT ROMNEY, an idiot

ACT ONE
BIG THREE: I have plans to build automobiles, but I need labor to do so!

UAW: I will labor for you if you will pay me $40 per hour.

BIG THREE: I will not pay you $40 per hour.

UAW: But I need to save for my inevitible retirement, and any health concerns that may arise.

BIG THREE: I will pay you $30 per hour, plus a generous pension of guaranteed payments and health care upon your retirement.

UAW: Then I agree to work for you!

ACT TWO
UAW: I am building cars for you, as I have promised to do!

BIG THREE: I am designing terrible cars that few people want to buy! Also, rather than save for UAW’s inevitible retirement when I will have to pay him the generous pension of guaranteed payments and health care that I promised, I am spending that money under the dubious assumption that my future revenues will be sufficient to meet those obligations.

ACT THREE
UAW: I have fulfilled my end of the deal by building the automobiles that you have asked me to build.

BIG THREE: Oh no! I am undone! My automobiles are no longer competitive due to my years of poor planning and poor judgment!

MITT ROMNEY: This is all UAW’s fault!

Poor Mitt...the 47% whacked him...at least he has a nice retirement package..

[Cannon Shell]

Originally Posted by jms62

"Grow our Economy" . Such a simple solution. Problem is how can you grow your economy when those that purchase goods and services that cause the growth dont have any money? Why? Because their jobs which provide them with money have been shipped to The Third world. One comapnies wages are another companies revenue.

With much respect, your policies of reducing taxes has not worked for many a year. With all due respect you continue to be locked in a 1980's time warp repeating the same tired mantra.

These are extrodinary times and require extrodinary measures. Playing nice with those that have hijacked capitialism require thinking not found in a 1950's Economics textbook which most all of us have been operating from. But as I said before those that make the rules are owned by those that benefit from the rules so we are stymied. It will require a violent uprising for this country to ever get back on track.

Reducing taxes on individuals is far different than reducing corporate tax rates, capital gains, etc. You want to get caught up in the chicken or egg argument. The idea that you can penalize businesses into hiring people is not supported by any reasonable theory. These times are no more extraordinary than any other time in our history just different because the world is different. Being that the global economy is so much larger and we are not as soley in control of our own destiny as we were in the past dwelling on certain segments while ignoring others is folly.

In sports the saying is "winning solves everything". Growing the economy solves most issues. It isnt easy to do especially with politicians pandering for votes, the voters wanting something regardless of which party is in charge (yeah everyone wants something whether it be social programs, tax cuts, prefered status, etc.) and most people being too stupid to realize this.

[jms62]

Originally Posted by Cannon Shell

Reducing taxes on individuals is far different than reducing corporate tax rates, capital gains, etc. You want to get caught up in the chicken or egg argument. The idea that you can penalize businesses into hiring people is not supported by any reasonable theory. These times are no more extraordinary than any other time in our history just different because the world is different. Being that the global economy is so much larger and we are not as soley in control of our own destiny as we were in the past dwelling on certain segments while ignoring others is folly.

In sports the saying is "winning solves everything". Growing the economy solves most issues. It isnt easy to do especially with politicians pandering for votes, the voters wanting something regardless of which party is in charge (yeah everyone wants something whether it be social programs, tax cuts, prefered status, etc.) and most people being too stupid to realize this.

You say these arent extordinary times but Never in the history of our country were we at a point where improving business didnt directly translate into jobs for the country. And your reasonable theory is again from 1950's text books. The game has completely changed, countries like China and India are not buying our products as they are protecting their economies . We are not and we are getting absolutley crushed. I hope you are right and I am wrong but I am not seeing that at this point.

[Cannon Shell]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

Actually the failure of business is rarely blamed on greedy unions as most businesses dont employ union workers. But so often those that do are led into bankruptcy by union leaders which choose to hold a hardline even if it means that the actual union members are going to wind up in worse shape.

A good example is when the Meadowlands deal was being negotiated the union which the tellers were members of was hell bent on maintaining the status quo. Under the NJSEA labor costs were causing much of the losses due to the fact that as attendance waned and the use of modern technology (self betting machines) the necessity of the tellers was hugely diminished. Yet because the NJSEA consistently caved in to unions, a large number of overpaid, unnecessary tellers were on the books. There were some days where there were more tellers working than simulcast patrons. When Gural came in to try to buy the Meadowlands and more or less save the track (and the union jobs by proxy) they refused to budge even a little. Eventually the union had to circumvent its own rules and cede power away from its negotiating committee and membership to an executive board to prevent the entire racetrack deal from falling apart. What it came down to there was the tellers union had to be willing to accept a deal where 75% of its membership stayed employed at 80% of their salaries because the alternative was 100% of their membership was going to get 0 percent.

When a small group of mostly unnecessary employees can undermine a project that employs and impacts thousands of people you often see the true colors of union leaders. Often the membership isnt to blame as they are just normal people trying to make a living. But the political nature and take no prisoners attitude of the heads of these unions and their unwillingness to actually try to compromise in order to make the best of a bad situation can not be overstated.

[Cannon Shell]

Originally Posted by jms62

You say these arent extordinary times but Never in the history of our country were we at a point where improving business didnt directly translate into jobs for the country. And your reasonable theory is again from 1950's text books. The game has completely changed, countries like China and India are not buying our products as they are protecting their economies . We are not and we are getting absolutley crushed. I hope you are right and I am wrong but I am not seeing that at this point.

There are some simple rules in economics. Growth is good, lack of growth is bad. Doesn't matter what year.

If we tax our companies more and hold them to harsher regulations, how could they possibly produce a product that would be competitively priced with similar products made in China or India?

The reason that the Walton family is really rich is because they figured out that our society values pricing over all else. Do you really think that Americans are going to start paying 5x as much for the same products because they are American made?

[jms62]

Originally Posted by Cannon Shell

There are some simple rules in economics. Growth is good, lack of growth is bad. Doesn't matter what year.

If we tax our companies more and hold them to harsher regulations, how could they possibly produce a product that would be competitively priced with similar products made in China or India?

The reason that the Walton family is really rich is because they figured out that our society values pricing over all else. Do you really think that Americans are going to start paying 5x as much for the same products because they are American made?

If companies charge 5x what they are charging now someone will come in much lower and eat their lunch. Let the market decide. Maybe the solution is execs should only be making 1000 times
what their lowest paid employee makes instead of 1,000,000 times.

[jms62]

Originally Posted by Cannon Shell

Actually the failure of business is rarely blamed on greedy unions as most businesses dont employ union workers. But so often those that do are led into bankruptcy by union leaders which choose to hold a hardline even if it means that the actual union members are going to wind up in worse shape.

A good example is when the Meadowlands deal was being negotiated the union which the tellers were members of was hell bent on maintaining the status quo. Under the NJSEA labor costs were causing much of the losses due to the fact that as attendance waned and the use of modern technology (self betting machines) the necessity of the tellers was hugely diminished. Yet because the NJSEA consistently caved in to unions, a large number of overpaid, unnecessary tellers were on the books. There were some days where there were more tellers working than simulcast patrons. When Gural came in to try to buy the Meadowlands and more or less save the track (and the union jobs by proxy) they refused to budge even a little. Eventually the union had to circumvent its own rules and cede power away from its negotiating committee and membership to an executive board to prevent the entire racetrack deal from falling apart. What it came down to there was the tellers union had to be willing to accept a deal where 75% of its membership stayed employed at 80% of their salaries because the alternative was 100% of their membership was going to get 0 percent.

When a small group of mostly unnecessary employees can undermine a project that employs and impacts thousands of people you often see the true colors of union leaders. Often the membership isnt to blame as they are just normal people trying to make a living. But the political nature and take no prisoners attitude of the heads of these unions and their unwillingness to actually try to compromise in order to make the best of a bad situation can not be overstated.

Well stated

[Cannon Shell]

Originally Posted by jms62

If companies charge 5x what they are charging now someone will come in much lower and eat their lunch. Let the market decide. Maybe the solution is execs should only be making 1000 times
what their lowest paid employee makes instead of 1,000,000 times.

I'm confused now. You touted protectionism and now you want to let the market decide? For example if we were to slap huge tariffs on imported tshirts (or ban) from the far east and American companies were encouraged to start producing tshrts do you really think that they wont cost far more to produce and because of the lack of an open market charge more?

The salaries of executives of these corporations are more or less meaningless to the bottom line of the company.If a company makes a billion dollar profit what difference does it make if the CEO gets a 5 million dollar bonus? Trying to rein in pay in private enterprise will lead to more companies being based in the Isle of Mann or Aruba.

[Rupert Pupkin]

Originally Posted by GenuineRisk

Well, apparently while Hostess was failing, the CEOs were making sure they got theirs before 18,000 people lost their jobs:



http://gawker.com/5961444/dont-worry...pany-collapsed

I love how the failure of businesses is always blamed on greedy unions (how dare they expect their employers keep their end of their contracts!) but it's just shrugged off when the guys at the top loot the company on the way out.

I don't condone the behavior of either side in most of these cases. CEOs should not be making huge amounts of money when their company is doing lousy. By the same token, union workers should not expect to be getting raises and having huge pensions when their company is losing money.

I have done some work for a hedge fund for about 14 years. When things are going well, they have been generous to me. A few years back they were doing very well and they gave me a nice pay raise. But after about a year things went south and they told me that they could no longer afford to pay me the higher wage. They said they would have to go back to paying me what they were paying me before I got the raise. I didn't complain in the least bit. I totally understood the situation. The company was really struggling and they could no longer afford to pay me the higher wage. I had no problem with that.

I don't understand why people complain in those types of situations. When things are bad, everyone should have to bite the bullet.

[jms62]

Originally Posted by Cannon Shell

I'm confused now. You touted protectionism and now you want to let the market decide? For example if we were to slap huge tariffs on imported tshirts (or ban) from the far east and American companies were encouraged to start producing tshrts do you really think that they wont cost far more to produce and because of the lack of an open market charge more?

The salaries of executives of these corporations are more or less meaningless to the bottom line of the company.If a company makes a billion dollar profit what difference does it make if the CEO gets a 5 million dollar bonus? Trying to rein in pay in private enterprise will lead to more companies being based in the Isle of Mann or Aruba.

They can only charge what people are willing to pay regardless of the cost to produce. My solution to companies moving out of the country is to levy high tariffs on their products just like India and China do to our products. I would also not allow these foriegn companies to be listed on our stock exchanges. Your strategy amounts to business as usual and we know that no longer is working. Having said that we will continue business as usual and contine to circle the drain.

[GenuineRisk]

Originally Posted by Rupert Pupkin

I don't condone the behavior of either side in most of these cases. CEOs should not be making huge amounts of money when their company is doing lousy. By the same token, union workers should not expect to be getting raises and having huge pensions when their company is losing money.

I have done some work for a hedge fund for about 14 years. When things are going well, they have been generous to me. A few years back they were doing very well and they gave me a nice pay raise. But after about a year things went south and they told me that they could no longer afford to pay me the higher wage. They said they would have to go back to paying me what they were paying me before I got the raise. I didn't complain in the least bit. I totally understood the situation. The company was really struggling and they could no longer afford to pay me the higher wage. I had no problem with that.

I don't understand why people complain in those types of situations. When things are bad, everyone should have to bite the bullet.

Rupert, it's not an equivalent situation. I'm assuming you were working without a contract, or that, in the event you were, the raise was not something promised in your contract; it was an extra goodie they gave you. I'm also assuming the heads of the company didn't give themselves a raise at the same time as they returned your salary to where it was a year previous (I don't know if you receive benefits from them, if so, I am also assuming they didn't cut those benefits. If I am incorrect, please correct me, and I apologize for incorrect assumptions). Compare with this from an actual Hostess employee:

I am a Hostess employee. Hostess stopped our pension contributions a yr & a half ago. Then they gave the top execs pay raises of 30-80%. They offered new contracts: no pension payments (no retirement plan at all for union employees, but company management still gets contributions to their retirement plans) for another 2 & 1/2 yrs, and then a 75% reduction in pension when they do start paying into it again; we have to pay an ADDITIONAL $200/ mo for health insurance; They took away our last cost of living raise; they gave us an 8% wage cut on top of that; they are outsourcing all of the office work to Manilla; they are closing 12 plants. THIS WAS ALL PART OF THE CONTRACT THAT WENT INTO EFFECT LAST MONTH!!

So, it wasn't a case of overpaid employees refusing to take a hit; it was a case of rank-and-file employees finally saying "Enough" after years of having their contracted compensation taken away and taken away by execs who continued to give themselves raises and compensation.

http://blogs.wsj.com/corporate-intel.../tab/comments/

Fact is, union members have taken cuts and done givebacks in many, many industries, and in return, the CEOs continue to give themselves rewards, and then complain that these very middle-class contracts cost too much money. Contracts that they agreed to years before, and now are unwilling to honor. And yet, somehow the companies can afford numerous six- and seven-figure CEO salaries.

There are several accounts at that link from Hostess employees. Well worth the read, to get an idea of what they've been going through the past several years.

[Rupert Pupkin]

Originally Posted by GenuineRisk

Rupert, it's not an equivalent situation. I'm assuming you were working without a contract, or that, in the event you were, the raise was not something promised in your contract; it was an extra goodie they gave you. I'm also assuming the heads of the company didn't give themselves a raise at the same time as they returned your salary to where it was a year previous (I don't know if you receive benefits from them, if so, I am also assuming they didn't cut those benefits. If I am incorrect, please correct me, and I apologize for incorrect assumptions). Compare with this from an actual Hostess employee:



So, it wasn't a case of overpaid employees refusing to take a hit; it was a case of rank-and-file employees finally saying "Enough" after years of having their contracted compensation taken away and taken away by execs who continued to give themselves raises and compensation.

http://blogs.wsj.com/corporate-intel.../tab/comments/

Fact is, union members have taken cuts and done givebacks in many, many industries, and in return, the CEOs continue to give themselves rewards, and then complain that these very middle-class contracts cost too much money. Contracts that they agreed to years before, and now are unwilling to honor. And yet, somehow the companies can afford numerous six- and seven-figure CEO salaries.

There are several accounts at that link from Hostess employees. Well worth the read, to get an idea of what they've been going through the past several years.

You are correct. I was working with no contract.

I agree with you that CEOs should not be getting pay raises when employees are getting pay cuts.

[Antitrust32]

Originally Posted by Cannon Shell

The reason that the Walton family is really rich is because they figured out that our society values pricing over all else. Do you really think that Americans are going to start paying 5x as much for the same products because they are American made?

That and the Walton's were tight with the Clinton's.

Hillary Clinton was on the board of directors for Walmart, the Clinton's are big supporters of Walmart.

hmm.. I wonder why Bill Clinton was so excited to sign the free trade agreement with China.... to help Walmart maybe??

http://articles.cnn.com/2000-10-10/p...PM:ALLPOLITICS


Clinton has as big of a hand in this economic mess as any of the other players do.

[cal828]

http://www.businessweek.com/news/201...m-ireland-move

Here is an interesting article from BloombergBusinessweek. I guess we can't expect companies not to move their corporate headquarters, if we have what seems to be a corporate tax code that is so high, but do we have to reward them for doing so by giving them tax breaks for moving?

[Rupert Pupkin]

Originally Posted by cal828

http://www.businessweek.com/news/201...m-ireland-move

Here is an interesting article from BloombergBusinessweek. I guess we can't expect companies not to move their corporate headquarters, if we have what seems to be a corporate tax code that is so high, but do we have to reward them for doing so by giving them tax breaks for moving?

I wouldn't call it a tax break. Companies are currently allowed to deduct the cost of moving. If the law was changed so that a company could not deduct the cost of moving overseas, that wouldn't stop anyone from moving. The cost of moving is negligible.

[cal828]

Originally Posted by Rupert Pupkin

I wouldn't call it a tax break. Companies are currently allowed to deduct the cost of moving. If the law was changed so that a company could not deduct the cost of moving overseas, that wouldn't stop anyone from moving. The cost of moving is negligible.

Probably so. I don't imagine that they have to set up much of a corporate headquarters in other countries. Negligible or not, the cost to the treasury of the US is not negligible, but don't get me wrong, if corporate taxes in the US are onerous, I think they should be lowered.

http://www.nytimes.com/2012/04/29/bu...pagewanted=all

Here is another interesting article from the New York Times. Sounds like a bit of shell game. All perfectly legal of course.

[jms62]

Originally Posted by cal828

Probably so. I don't imagine that they have to set up much of a corporate headquarters in other countries. Negligible or not, the cost to the treasury of the US is not negligible, but don't get me wrong, if corporate taxes in the US are onerous, I think they should be lowered.

http://www.nytimes.com/2012/04/29/bu...pagewanted=all

Here is another interesting article from the New York Times. Sounds like a bit of shell game. All perfectly legal of course.

If you tax rate was 50% but they gave you write offs to reduce it to a point that you get a refund then what is your tax rate? Do other countries with low tax rates also allow the practice of write offs?