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This excerpt appeared in today's Seattle Times which seems to bolster the
bearish views: If you wish to read the entire article the e-version is on
http://seattletimes.nwsource.com/ - Larry Z, Seattle
Pension Losses will hurt many Firms' bottom Lines.
By Alwyn Scott, Seattle Times business reporter.
Already reeling from accounting suspicions and a prolonged stock-market
decline, many of the nation's biggest and oldest companies are facing another
threat to their stability. Corporate pension funds at large companies are
running short of money. Rather than earning income on their investments,
these large pools of wealth that pay out benefits to retirees are suffering
losses along with the stock market.
The pain will begin to hit corporate bottom lines this year and next as
hundreds of companies start recognizing the losses on their earnings reports
- and start putting in more money to shore up underfunded plans. The bad
news could ripple into the stock market. Earnings are one of the key drivers
of stock prices, and a recovery in earnings is supposed to help power the
market higher. If the market decline deepens, some foresee a vicious cycle in
which lower earnings push down stock prices, further depressing pension
assets, which in turn reduce earnings.
Z.
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