Of all the trends, perhaps the most worrisome is the failure of highly touted 401(k) private savings accounts to replace fast-disappearing traditional pensions. Not only do millions of workers not save enough, or like West drain their 401(k)s well ahead of retirement, but all the risk of making wise investment choices and planning for retirement now falls entirely on workers who have no training to deal with it.
Possibly the biggest threat to retirees' living standards has been the demise of traditional pension plans in the private sector. For decades a mainstay of retirement, so-called defined-benefit pension plans are those in which employers promise to pay a fixed amount of money to their retirees each month for life. Those plans flourished after the 1940s as big carmakers, steelmakers and other industrial firms needed to build and keep a large, skilled, loyal work force and buy labor peace. Promising lifetime checks to retirees became common. By 1980, about 60% of U.S. workers in private industry were covered by defined-benefit pensions. For millions of workers, having a pension simplified their retirement planning, since all a worker had to do was cash a check each month.
This brief documents where the declines occurred. This information is interesting and important in its own right. But the declines also highlight the fragility of our emerging pension arrangements. Today the declines were divided equally between defined benefit and defined contribution plans, but in the future individuals will bear the full brunt of market turmoil as the shift to 401(k)s continues. Much of the reform discussion regarding private sector employer-sponsored pensions has focused on extending coverage. But the current financial tsunami also underlines the need to construct arrangements where the full market risk does not fall on pension participants.
Did you hear, for example, that Louis Gonda had to put two of his jets up for sale? Some years ago, insurance megapower AIG bought one of Gonda’s companies for a ton of cash and a bale of AIG’s high-priced stocks. But, AIG recently tanked, requiring an $85 billion taxpayer bailout to keep from going under. As a result, Mr. Gonda’s AIG stock is now barely worth the paper it’s printed on.
So, to make ends meet, Louis is selling his Gulfstream V and Gulfstream G550. Total asking price is $108 million, but I’ll bet you could get the pair for a cool $100 million. Also, while Gonda still has luxury homes in California and Manhattan, he had to sell another one for $2.4 million, eating a $300,000 loss on the sale.
The cruelest blow for Gonda, however, is not in cash, but in prestige. Last year, he was number 286 on the Forbes list of America’s 400 richest people – but with the freefall in AIG’s stock price, he’s been unceremoniously dropped from the list. Oh, bitter gall! Word is, he’s down to his last billion.
The superrich are being squeezed. For example, instead of ordering four bottles of wine at a thousand dollars each for dinner, many top corporate executives are said to be ordering only two bottles. And you thought you had problems.
Polly Onet, whose company, Ober, Onet & Associates, specializes in planning large parties, said the first signs of a slowdown appeared last summer. One woman recently planning a surprise party for her husband decided not to hire a headliner to perform, which can cost $150,000 to $1 million. The hostess also told Ms. Onet that she wanted a “grunge” look, rather than making the space look elegant. “Is the family hurting or is it scaling back for appearances?” she said. “In many cases it is probably some of both.” And she said that several days ago a hedge fund, which she declined to identify, postponed a January party at the Museum of Natural History.
The United States has the highest inequality and poverty in the OECD after Mexico and Turkey, and the gap has increased rapidly since 2000, the report said. France, meanwhile, has seen inequalities fall in the past 20 years as poorer workers are better paid. ...
"Greater income inequality stifles upward mobility between generations, making it harder for talented and hardworking people to get the rewards they deserve," he said in a statement. "It polarizes societies, it divides regions within countries, and it carves up the world between rich and poor."
Then last spring Blue Shield of California stunned them with a rejection notice. Baby Ava, their happy, healthy 7-pounder, was born with a minor hip joint misalignment. Her pediatrician said it was nothing serious and probably temporary. Still, Blue Shield declared the infant uninsurable. The company foresaw extra doctor visits, "the need for monitoring and an X-ray." Ava's slight imperfection "exceeds . . . eligibility criteria for acceptance," Blue Shield said. "I was enraged, baffled; I just could not understand," recalled Jennifer, 36.
The family's experience is symptomatic of the nation's healthcare crisis. Ineligible for group insurance, millions of Americans are paying more for individual policies that offer less coverage and expose them to seemingly arbitrary exclusions and denials. The health insurance system has become increasingly expensive and inaccessible. It leaves patients responsible for bills they understood would be covered, squeezes doctors and hospitals, and tries to avoid even minuscule risks, such as providing coverage to a newborn with no serious illness.
At the heart of the problem is the clash between the cost of medical care and insurers' need to turn a profit.
"I think there's been a myth that all uninsured children have uninsured parents, and so if we cover the parents we can cover the kids," Dr. Jennifer DeVoe of Oregon Health & Science University, who led the study, said in an interview. "In most cases the parents have insurance through work at reduced rate or no cost, but adding their family is unaffordable," DeVoe added.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism. According to previously undisclosed internal F.B.I. data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels. ...
In 2004, one senior F.B.I. official, Chris Swecker, warned publicly that a flood of fraudulent mortgage deals had the potential to become “an epidemic.” Yet the next year, as public warnings about fraud in the subprime lending markets began to approach their height, the F.B.I. had the equivalent of only 15 full-time agents devoted to mortgage fraud out of a total of some 13,000 agents in the bureau.
And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance.
Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.
That is certainly the case with the hundreds of billions of dollars being used to bail out the banks. The public has a real interest in keeping the banking system functioning. It has zero interest in subsidized the pay checks of wealthy bank executives or enriching the bank's shareholders, which Secretary Paulson is now doing.
There is no question about what is going on here. The public is providing massive subsidies to the country's major banks. The terms of the bailout were far more generous than what the banks could get from the private market. As a result, banks that might not have survived otherwise, or at least would have been forced to make serious cutbacks, can now keep operating as they had been. This means that their high level executives will continue to draw salaries in the millions or tens of millions of dollars. It also means that the shareholders will continue to receive dividends.
If you could read the e-mails that pour into my office from Vermont and across the country, you would realize how furious the American people are at the greed, incompetence and irresponsibility of the Masters of the Universe on Wall Street who made billions while they drove our financial system to the brink of the abyss. Middle-class citizens of this country do not believe that they, who had nothing to do with causing this financial meltdown and who already have suffered as a result of Bush’s reckless policies, should have to pay for Wall Street bailouts. They are absolutely right. Congress must demand that the cost of any bailout should be paid by those who benefitted financially from Bush’s policies and those who can best afford it. I proposed an income surtax of 10 percent on families earning more than $1 million a year. I will continue to fight so that any bailout is progressively funded.
In terms of any federal intervention, we need to insist that if the government buys mortgages and mortgage-backed paper – the so-called ‘toxic assets’ – it should be at current market prices, not at the price the lender set at the time of the loan. We should require equity stakes for taxpayers – something a British initiative seems to have forced Secretary Paulson into imitating. We also need to follow the British model of demanding that banks taking taxpayer money put taxpayer interests ahead of corporate profits, executive payouts, and risky investment strategies. Congress, as soon as possible, needs to reverse years of deregulation, and require accountability and transparency in the financial industry. It is beyond insane that tens of trillions of dollars of credit default swaps are circulating with no one knowing who owns these complicated instruments or what role they play in the financial markets. We also must pass new anti-trust legislation to make sure that in the future no entities are “too big to fail.” If a financial institution is too big to fail, it is too big to exist.
It is difficult to understand why we should be taxing people who make $40,000 a year to boost the paychecks of bankers who make more than $1 million a year and in many cases more than $10 million a year. Senator McCain has called Senator Obama a socialist because Obama believes that it is O.K. to impose higher tax rates on rich people than poor people. Senator McCain considers this sort of redistribution unacceptable.
But, if redistribution from the rich to the rest of the country is socialist, what do you call the upward redistribution that Congress approved in the bailout package? It's hard to justify taxing people who make $40,000 a year to benefit bankers who make more than 100 times as much. ...
he bailout also did not prevent the banks from paying out dividends to shareholders, as was done in the United Kingdom when they injected capital into their banks. This restriction makes sense not only as a punitive measure but also as a way to help the banks build capital. Every dollar paid out in dividends is a dollar that is not going towards building up capital. Stopping dividend payments should hasten the date at which the banks have sufficient capital without relying on help from the government.
The failure to seriously restrict executive compensation or prohibit dividend payments, coupled with the relatively generous terms given the banks on the capital obtained from the government, shows that the bailout was not just about keeping the financial system operating. It was also about giving money to the banks' executives and their shareholders.
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
People are people; that's right, each one of the 400K+ IBMers around the world is different. It is important that you found a good fit with interviewers, as hopefully these are the people you will work and interact with more than with the remaining 400K+.
One of the aspects of IBM that make it so different and so unique is that it is not just an SI. It is also a software company, a hardware company, a research organization, etc etc etc. At least in theory, your career opportunities will be richer here than elsewhere.
Oh, and yes, IBM is a process-driven company. If you enjoy an ad-hoc environment "liberated" from rules and process, GBS might not be for you. If on the other hand you have previously experienced such sheer chaos and have now matured to appreciate process, take heart; IBM does process very well. I kid you not, process can be enjoyable when it actually facilitates getting things done.
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