David M. Katz, CFO.com | US
June 14, 2006

Global Economic Equilibrium

I would like to suggest a theory for a globalized free market economy. Specifically, there would be an idea of global economic equilibrium, not unlike thermodynamic equilibrium. Under the latter, when a warm object comes into contact with a coll object, the temperature of the former decreases while then temperature of the latter increases until the two objects are at the same temperature.

I would like to suggest this idea for demographic outlooks as they affect benefit costs for employees in such matters as manufacturing cars in the United States (for example), or China for sale in China. A young population such a the Chinese population, with a highly subsidized "benefits" cost by a communist government has the effect of subsidizing the cost of car manufacture. However, as the Chinese population ages, their employee costs will approach U.S. costs, thereby resulting in global economic equilibrium.

This may take many years and it may not help today's generation of Baby Boomers in the U.S. However, this may be a fact of economic life that has not been considered to date. Thank you.

Posted by Carol Caruthers | Jun 15, 2006 2:57 PM ET

Pension Plan Accounting Changes

It is absurd to think that some companies, especially privately held ones, will not freeze their pension plans to avoid the huge impact that the proposed laws will have on equity and cash flows. This change is going to diminish retirement funds and plans for a lot of people.

Posted by Jim Christie | Jun 15, 2006 9:54 AM ET

It's time for gutless managements to unravel the mess..

Companies with managements with IQ's greater than that of a doorknob know the answer...freeze the defined benefit plans and funds the accrued benefits. Start 401K's and let the employees figure out their pension investments. It is time to graduate out of the 1930's.

Posted by GARY CADEMARTORI | Jun 14, 2006 8:29 PM ET

Putting Pension Positions on the Balance Sheet

Nice of Mr Tweedie to point out that companies can always cut back dividends to fund pension deficits.One more nail in the coffin of defined benefit pensions unless you don't mind becoming a financial institution as well as whatever business you're in, as IBM said.

Posted by Raymond Darke | Jun 14, 2006 6:49 PM ET