Only A Matter Of Time?

Daniel subscribes to Barron's so we don't have to. Daniel Gross (11.28.05):

"GM and its unions recently agreed to shift $15 billion of such costs onto employees, but that represents just a fraction of the company's total retiree health-care liability. Such obligations are only partly reflected on the auto maker's balance sheet, but under a proposed change in accounting rules, soon could appear in their entirety." More Capitalists For Universal Health

"For many companies, stockholders' equity is going to get wiped out,' says Michael Moran, a vice president in the portfolio-strategy group at Goldman Sachs and the author of the table nearby, which lists the 45 Standard & Poor's 500 companies with the biggest health-care liabilities." "Were General Motors to apply the proposed accounting to its balance sheet, it would have to add another $33 billion of retiree health-care obligations". This would "eliminate shareholders' equity of $28 billion (as of the end of 2004)." All of it. One fell swoop. Gone. Daniel continues:

"And what's the deal with ExxonMobil? The company is a cash-machine on steriods, and just reported the best quarter ever by an American company. And yet according to the chart accompanying the article, it has only funded 8.2 percent of its retiree health-care liabilities. Again, further evidence that big U.S. companies are simply choosing not to meet the obligations they freely made to employees."