Confusing signals are coming out about what the apparent inevitable bankruptcy of Chrysler will mean. But, I do think this will be another stake driven into the idea of having real pensions anymore–which is kind of shocking given how many people just lost much of their retirement in the greed-is-good collapse of economy. I’ll explain. But, first, on the bankruptcy:

   It’s not clear yet what is the extent to which the Administration will guarantee the pensions and health care of UAW members in the event of a bankruptcy. There appears to be some deal that the UAW has agreed to, or perhaps is simply leaning towards, that will remove the union’s objections to the bankruptcy. In a bankruptcy, agreements, like the ones made on health care to set up a health care trust for retirees, end up at the mercy of a bankruptcy judge who can tear up collective bargaining agreements and impose new conditions in order to satisfy some plan to help the company survive. Bankruptcies rarely are good for workers.

   But, what are the terms of the proposal? Depends who you believe. The New York Times says:

But the negotiations have taken a new direction. Treasury now has an agreement in principle with the U.A.W., whose members’ pensions and retiree health care benefits would be protected in the event of a bankruptcy filing, said the people with knowledge of the discussions, who asked for anonymity because they were not authorized to discuss the case.

   The Wall Street Journal is less definitive about how sweeping the protections would be:

The UAW, Chrysler and the Treasury have reached a tentative agreement to partially protect union members’ pension and retiree health-care benefits under bankruptcy, said these people. The deal needs to be ratified by union members and courts. [emphasis added]

   It’s simply likely that no one really knows what the deal is right now. We’ll see.

   But, what is abundantly clear is that any further erosion in real pensions–by real, I mean DEFINED benefit pensions where you know exactly how much you will get each month, no matter what the stock market does–in this deal will have a cascading effect throughout the economy. Other auto companies are certainly going to try to get rid of defined benefit pensions. And, what do you think will happen in other industries if the industry–auto–that was a leading light decades ago, thanks to the UAW’s fights, in providing real pensions to its workers throws that legacy off?

   And, again, to underscore, it strikes as the height of irony that, at the every moment that people throughout the country are ripping open envelopes carrying their shriveled up 401(k) statements, we, as a society, are witnessing the further decimation of a retirement with dignity.