Jesse's site always includes articles of interest on the left side, for the brave of heart.
When OS is feeling brave, he reads one. This one, about ATT's creative accounting methods to avoid having to tell shareholders the ugly truth of its pension obligations, makes for interesting reading.
When things get too ugly, let's just pretend all those pending losses actually occurred in the past. Stuff the future down the Memory Hole.
But, in the end, the reality remains:
The accounting change does not affect AT&T's cash flow or pension funding requirements. Its pension and post-retirement benefit obligations totalled $87 billion at the end of 2009, the latest figure reported. The plan assets are $28.7 billion less.
"The underlying economics of AT&T's underfunded post-retirement liabilities remains unchanged, and is a significant drag on value when appropriately accounted for," said Sanford Bernstein analyst Craig Moffett.
Well, yes, in matter of fact, these things do matter.
Pretty audacious, is it not? OS thinks that they are playing 'chicken' with the culture. After all, they're imbedded in all fifty states, have a huge employee base (much of it unionized), and T sits in pension funds from sea to shining sea.
So, when things melt down (not if, when), we'll see T execs in front of Congress and every state legislature, demanding cash and/or tax rebates and breaks forever, lest T collapse, taking all those employees, customers and pension funds down with it.
Or Da Fed will declare it a bank, and the cash pipe will be opened.
Wait for it. It's coming.
This is not a rant about accounting. It is a rant about a business culture that has decided that reality is for suckers.
Why anyone's pension plan carries one share of T, following this announcement, will be a mystery.
(Disclosure: No position in T. Not a chance of that ever changing, either.)
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