Well, it was just a matter of time. Every other major, U.S. airline had taken a trip through bankruptcy court in the last 10 years, and now American Airlines, via its parent AMR Corp., has gone in. AMR cites two, big causes: fuel costs and labor costs. Ignore the former; it's all about the latter. AMR will use 1113 to reject the current collective bargaining agreements, 1114 to severely curtail retirement benefits, and 29 USC 1341 to do a distress termination of the pension plans and foist them on the Pension Benefit Guaranty Corporation (i.e. we taxpayers). No word about a pre-pack plan, but you can bet there has been a bunch of negotiating going on. Watch the first-day motions to see who is pulling the levers. You can be sure it isn't the unions, who haven't even been invited to a side table.
It's easy to feel sorry for retirees losing pensions, but these tended to be real Rolls Royce models, while the rest of us muddle along with Yugos (Actually, mine is more of a skateboard.), so it isn't hard to see how companies can't keep funding them. There are two things that gripe me, though. First, it's apparently OK for a multinational corporation to walk away from obligations like these, but morally reprehensible for poor schlubs to bail on economically absurd mortgages. Sorry, that's hypocritical horse hockey. Second, AMR entered into these contracts with its eyes wide open and led by the managerial geniuses who will be running the reorganization and who are unlikely to take any kind of meaningful haircut for putting the airline in this position. If you want to talk about rewarding failure, start right there.
Agribusiness Is The Problem, Not The Solution
Sunday, November 27, 2011 at 3:22 PM
Winterbotham Parham Teeple, one of SoCal's main BK houses, recently noted on its blog that rising grocery bills are playing havoc with family budgets. I commented that the real culprit is the decades-long romance of government and the banks with industrial agriculture at the expense of small farms. Winterbotham is trying to soft-pedal the price increases as business as usual. I'm having none of it, and you can call me a conspiracy nut-case all you want, but U.S. ag policy for over 60 years has had the uniform effect of continuously shrinking the percentage of the population that can feed itself. What does that mean? Control. As Mark Twain put it, "Show me where a man gets his corn pone, and I'll show you where he gets his opinions."
Anyway, I posted my comment a week ago, and it has yet to be let out of moderation, even though I know more about ag commodities and policies than everyone at Winterbotham combined (Not a brag. Fact.). So here it is:
"Yes, we would all like to maximize profits, but Agribusiness has had singular forms of assistance. Since WWII it has had a federal agricultural policy designed to drive people off the land, and since 1970 it has had a matching financial industry policy. We now have 90% of the population divorced from the land and wholly dependent on industrial food delivery (We have also become a net food importer, perhaps the greatest absurdity produced by our economic system.). When people tried to become less dependent, Agribusiness acquired new allies. A pliant USPTO granted patents on every strain of seed presented to it, allowing Agribusiness to send cease and desist letters to anyone with the temerity to save seeds for planting. And all producers have to comply with all regulations (regulations that Agribusiness loves to wail about but that it in fact uses to drive small “competitors” out of business), and if they don’t, the USDA, FDA, and state agricultural agencies will sweep in, destroy their operations, and even jail them, as if they were cooking meth.
In other words, Agribusiness has used government and bank assistance to create a captive market and continues to do so. So yes, there is plenty of reason to object to unrestricted price increases."
Anyway, I posted my comment a week ago, and it has yet to be let out of moderation, even though I know more about ag commodities and policies than everyone at Winterbotham combined (Not a brag. Fact.). So here it is:
"Yes, we would all like to maximize profits, but Agribusiness has had singular forms of assistance. Since WWII it has had a federal agricultural policy designed to drive people off the land, and since 1970 it has had a matching financial industry policy. We now have 90% of the population divorced from the land and wholly dependent on industrial food delivery (We have also become a net food importer, perhaps the greatest absurdity produced by our economic system.). When people tried to become less dependent, Agribusiness acquired new allies. A pliant USPTO granted patents on every strain of seed presented to it, allowing Agribusiness to send cease and desist letters to anyone with the temerity to save seeds for planting. And all producers have to comply with all regulations (regulations that Agribusiness loves to wail about but that it in fact uses to drive small “competitors” out of business), and if they don’t, the USDA, FDA, and state agricultural agencies will sweep in, destroy their operations, and even jail them, as if they were cooking meth.
In other words, Agribusiness has used government and bank assistance to create a captive market and continues to do so. So yes, there is plenty of reason to object to unrestricted price increases."
The Latest On Harrisburg
Wednesday, November 23, 2011 at 1:28 PM
Bankruptcy Judge Mary France has dismissed Harrisburg's Chapter 9 petition, ruling the city did not have the authority to file under state law. See this post for my initial comments on the filing last month. Mayor Linda Thompson and a minority of the city council have fought the filing all along. I have not seen the ruling, but apparently it was based on two grounds: 1) Act 26 that the Pennsylvania legislature passed this year bars Harrisburg from filing, and 2) the authorizing resolution was invalid because it was not presented to the city solicitor first.
We'll see how this plays out. First, I question whether Act 26 is actually constitutional, regardless of Judge France's ruling that it is. Given that it targets Harrisburg alone among all the municipalities in Pennsylvania, it has to be vulnerable to an equal protection challenge. Second, if the council can get around Act 26 and wants to refile, it can streamroll the city solicitor. The law only requires that the resolution be presented to the city solicitor, not that he approve it. "Here's this resolution we're going to pass. Don't like it? Pound sand!" Believe me, I've been to that rodeo more than once.
If the decision stands, the mayor and the council minority are going to learn you should be careful what you wish for. Once a receiver takes over, their authority is going to be reduced to the name plaques on their doors. And maybe not even that.
We'll see how this plays out. First, I question whether Act 26 is actually constitutional, regardless of Judge France's ruling that it is. Given that it targets Harrisburg alone among all the municipalities in Pennsylvania, it has to be vulnerable to an equal protection challenge. Second, if the council can get around Act 26 and wants to refile, it can streamroll the city solicitor. The law only requires that the resolution be presented to the city solicitor, not that he approve it. "Here's this resolution we're going to pass. Don't like it? Pound sand!" Believe me, I've been to that rodeo more than once.
If the decision stands, the mayor and the council minority are going to learn you should be careful what you wish for. Once a receiver takes over, their authority is going to be reduced to the name plaques on their doors. And maybe not even that.
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