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Thread: U.S, Steel Plants Closed To Facilitate Theft Of Pension Funds

  1. #1
    Veteran Member Madeline's Avatar
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    Why Did U.S. Steel Companies Close?



    The public's perception is that very high labor costs forced the U.S. steel industry to collapse, but that is only one part of a more complex scenario. The owners of companies were unjustly enriched -- some would say engorged -- by cash on deposit inside pension trust funds for the benefit of retirees and workers, which may have been as much as $15 billion in total. Laws in place to prevent this kind of theft proved to be inadequate, especially in the face of failure to investigate and prosecute on the part of the DOJ, under Dubya and then Obama.

    These articles linked below give a snapshot view of this.

    This bit of history matters because the thieves have already made off with the loot. The profits from closing U.S. steel companies has been harvested. The public needs to adjust its views as to the viability of this industry in the U.S. accordingly; the companies are no longer Al Baba's Cave.

    Whether new owners or the old owners, reorganized, can make a profit now, with help from Trump's tariff's or other protection from cheap imported steel cannot be evaluated without all the "dark money" and moving parts laid bare.

    ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He unlocks hidden value in floundering Rust Belt companies by jettisoning their pension plans. His approach, copied by executives at airlines and other troubled companies, can make the people who rely on him very rich. But it may be creating a multibillion-dollar mess for taxpayers later.

    As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down the pension plan, leaving a federal program to meet the company's $3.7 billion in unfunded obligations to retirees. That turned the moribund company into a prime acquisition target. Wilbur L. Ross, a so-called vulture investor, snapped it up, combined it with four other dying steel makers he bought at about the same time, and sold the resulting company for $4.5 billion -- a return of more than 1,000 percent in just three years on the $400 million he paid for all five companies.

    *Snip*
    Whoops! There Goes Another Pension Plan - The New York Times
    Last edited by Madeline; 2nd March 2018 at 02:44 AM.
    Thanks from Friday13, Blueneck and BigBob

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    Veteran Member EnigmaO01's Avatar
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    Isn't this what Romney's firm specialized in?
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    Above the FRAY Friday13's Avatar
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    Yep...our Secretary of Commerce, like so many in the Trump admin, is just another greedy asshole.
    Thanks from Madeline and BigBob

  4. #4
    Veteran Member Madeline's Avatar
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    Quote Originally Posted by EnigmaO01 View Post
    Isn't this what Romney's firm specialized in?
    Lots of blame to go around. The CRIMINAL conduct was engaged in by the companies' executives and IMO, in some cases, the labor unions. The crimes they committed were facilitated by the lawyers, actuaries, accountants, bankers and everyone else who got rich off this debacle. Romney worked for Lehman Brothers, as I recall, and whether that particular firm was involved in THIS set of thefts, IDK. I also don't know if Romney was in any position to impact these transactions.

    And of all the bad actors involved, it's actually the bankers/corporate raiders who bear the least moral culpability, IMO. They owed no duty to anyone, apart from themselves. You cannot say the same about the companies' owners, or the trustees on these pension plans, or the labor unions.

    It's not exactly the plot of "Wall Street", but it's similar. These thieves count on ordinary Americans being too math-phobic to trace the evils back to those human beings who committed them and who profited from them.

    Note: Obviously, anyone's criminal liability is JMO in regards to these events, as nobody has ever been prosecuted and now, they never will be. The statute of limitations (among other factors) fully insulates them now from prosecution even if anyone in power had the intestinal fortitude to try.
    Last edited by Madeline; 2nd March 2018 at 02:57 AM.
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  5. #5
    Veteran Member Madeline's Avatar
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    Quote Originally Posted by Friday13 View Post
    Yep...our Secretary of Commerce, like so many in the Trump admin, is just another greedy asshole.
    Not many who are prominent in American commerce are any better, IMO. Fucking sociopaths, the whole collection of them. But as much fun as it is to trash them, the point of this thread is to explain that the profit motive for CLOSING U.S. steel companies does not still create a barrier to profitability for them as going concerns in future.
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  6. #6
    Above the FRAY Friday13's Avatar
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    Quote Originally Posted by Madeline View Post
    Not many who are prominent in American commerce are any better, IMO. Fucking sociopaths, the whole collection of them. But as much fun as it is to trash them, the point of this thread is to explain that the profit motive for CLOSING U.S. steel companies does not still create a barrier to profitability for them as going concerns in future.
    So the fact that our 80 year old secretary of commerce is the vulture capitalist star of the OP is irrelevant? OK
    Thanks from BigBob and Madeline

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    Quote Originally Posted by Madeline View Post
    Lots of blame to go around. The CRIMINAL conduct was engaged in by the companies' executives and IMO, in some cases, the labor unions. The crimes they committed were facilitated by the lawyers, actuaries, accountants, bankers and everyone else who got rich off this debacle. Romney worked for Lehman Brothers, as I recall, and whether that particular firm was involved in THIS set of thefts, IDK. I also don't know if Romney was in any position to impact these transactions.

    And of all the bad actors involved, it's actually the bankers/corporate raiders who bear the least moral culpability, IMO. They owed no duty to anyone, apart from themselves. You cannot say the same about the companies' owners, or the trustees on these pension plans, or the labor unions.

    It's not exactly the plot of "Wall Street", but it's similar. These thieves count on ordinary Americans being too math-phobic to trace the evils back to those human beings who committed them and who profited from them.

    Note: Obviously, anyone's criminal liability is JMO in regards to these events, as nobody has ever been prosecuted and now, they never will be. The statute of limitations (among other factors) fully insulates them now from prosecution even if anyone in power had the intestinal fortitude to try.
    Quote Originally Posted by Madeline View Post
    Not many who are prominent in American commerce are any better, IMO. Fucking sociopaths, the whole collection of them. But as much fun as it is to trash them, the point of this thread is to explain that the profit motive for CLOSING U.S. steel companies does not still create a barrier to profitability for them as going concerns in future.
    The sociopathy is inherent in the creation of the defined benefit promise in the first place. What a defined benefit promise ultimately says is this: 1) you pay (x) amount now, and 2) you get a defined (y) amount in 30 years, regardless of whether there's money in the pot in 30 years or not. If it's not there, someone else, some unrelated third party, will be forced to pay you. That should be illegal. Another reason it should be illegal is because this is technically payment for services received now. You expend the time and energy now, I benefit from your services now... yet someone else is likely going to be on the hook for paying you in three decades. The timing of the actual payment relative to who benefits from the service when... should be illegal in the case of pensions.

    By and large, pensions are shit. Company pensions are shit. State and local pensions are shit. Union pensions are shit. And if it weren't for the supreme powers of a federal government and central bank, federal pensions would be shit too. Pensions are an abysmal failure of a policy tool, and there is sweeping support for this. They do not work. "Oh but they would work if only (insert scapegoat here) wasn't a crook!!!" It really doens't matter anymore who in particular one wishes to scapegoat for the bewildering, broad failure of defined benefit pensions. The failure is real.

    I am skeptical as to the vague claims about what "terminating pensions" actually entailed. When pensions fail, they fail. There is often no actual "raiding" them that goes on. They can and do fail without necessarily being "raided." It is often not true that someone went in and took the money literally out of the pension fund. That's not to say it has never happened, but I have seen a lot of people claim that was what was happening, when that very literally was not what was happening.

    One of the primary ways pensions can fail is because the benefits were promised based on a formula, and the formula was based on a past prediction about what would happen in the future, and the prediction did not come true. Contributions into pension funds were based on formulas that projected the fund's long-term average annual returns, and when those returns turn out to be significantly lower than the original prediction, the benefits that were promised as fixed automatically exceed the actual money that will ever be there to pay them. So one way to fix that is to dial back the original promised benefit. When this happens, people claim that managers are "raiding" the funds, as in literally going in and withdrawing money from them. This is usually false. Usually the money failed to be in the fund to pay out in the first place. Dialing back benefits doesn't take any money out of anything. It makes the payouts less so that the fund can remain solvent.
    Last edited by Neomalthusian; 2nd March 2018 at 01:18 PM.
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    Southern Strategy Liberal OldGaffer's Avatar
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    Romney had looting pension funds down to an art form.

    Thanks from labrea and Madeline

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    Rent Free in Lefty Heads excalibur's Avatar
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    Yeah, let 's divert this to Romney. LOL


    From the OP:

    ... especially in the face of failure to investigate and prosecute on the part of the DOJ, under Dubya and then Obama.
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  10. #10
    Veteran Member Madeline's Avatar
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    Quote Originally Posted by Friday13 View Post
    So the fact that our 80 year old secretary of commerce is the vulture capitalist star of the OP is irrelevant? OK
    Of course not. These people have tremendous power, and they wield it to benefit those they see as "entitled". Usually, fellow billionaires.

    But....the steel industry made Andrew Carnegie wildly rich, during the 19th century. Those factories made others wealthy through to the end of the 20th century (or thereabouts).

    IF -- and yes, this is a BIG IF -- American steel can create profits again, with some government help now (but not forever), then the greed and covetousness of men like our Secretary of Commerce will support that industry here.
    Thanks from BigBob

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