By Joe Scudder – Re-Blogged From Eagle Rising
In addition to public unions facing a pension crisis, General Electric may soon be begging for a bailout.
Naturally, the news that reports on the disaster that is heading for General Electric also tries to downplay the news. The company allegedly has years to find a way to solve their pension problem. But financial news always tells the public that they have a long time before it is “time to panic.” But that is the problem: If you wait that long to panic, it is too late.
Bloomberg reports, “The $31 Billion Hole in GE’s Balance Sheet That Keeps Growing.”
The article acknowledges the problem:
At $31 billion, GE’s pension shortfall is the biggest among S&P 500 companies and 50 percent greater than any other corporation in the U.S. It’s a deficit that has swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street and pacify activists like Nelson Peltz.
Part of it has to do with the paltry returns that have plagued pensions across corporate America as ultralow interest rates prevailed in the aftermath of the financial crisis. But perhaps more importantly, GE’s dilemma underscores deeper concerns about modern capitalism’s all-consuming focus on immediate results, which some suggest is short-sighted and could ultimately leave everyone — including shareholders themselves — worse off.
And then tells us there’s nothing to worry about yet.
Nobody is suggesting that GE is in imminent danger of defaulting on its pension obligations and many analysts say the company still has years to address the bulk of its shortfall.
Economic analyst Mike Shedlock raised doubts about this assurance from Bloomberg.
But notice that the pension crisis is caused by the Federal Reserve policy of the last decade that we were assured would save the economy.