He was just offered IBM's unusual early-retirement plan—which many employees believe is just a dodge to avoid paying them severance. ...
This employee points out that it is also a way to get IBM out of paying severance, which would be a big chunk of cash for long-time employees. This person worked for IBM for 29 years. His dad had a 30-year career at IBM, too, he said.
IBM is aiming to reduce costs so it can deliver earnings per share of $20 to investors by 2015, according to its Roadmap 2015 plan—but employees are bearing the brunt of the pain, we're hearing. "They are driving the company into the ground with their Roadmap 2015," said our contact in manufacturing. "I received their ridiculous offer which is just another method, for the worst HR department in history, to try to chisel people out of severance and save the company money."
This person manages a team of people. Last week, IBM also told him that the company would no longer be paying any of them overtime: "But, we were actually told, if you'd like to come in and 'help out' they would compensate us with comp time. What a joke. ...
"Morale could not be any lower, and respect for upper management any lower. Wall Street loves IBM management, but they are the pits, hated internally and distrusted by nearly all their employees," says this employee.
Employees believe that IBM is trying to cut its U.S. headcount by 60 percent—down to 40,000 from its current estimated number of 90,000. It's shifting many jobs overseas, employees have told us. IBM stopped disclosing its U.S. headcount in 2010. So far this year, IBM has laid off about 1,800 workers in the U.S. and Canada, although it has not disclosed these layoffs. That stat comes from an IBM watchdog organization, Alliance@IBM.
Since I have gone on the FHA it has had pretty stable premiums from year to year. I do not feel this will last as I believe IBM is/was receiving government handouts to keep retiree medical insurance in place and to offset increases. This all goes away in 2014 if I recall the details correctly. I also would not be surprised to see IBM and other large companies try to shift retirees to the health exchanges in 2014 as result of the subsidy loss.
When the FHA was first announced I calculated that it was only intended to last 4-5 years as a way to bridge to Medicare. I also remember IBM publicly stating the intent was 4 to 5 years coverage around the same time the FHA was shoved on us. While other folks mileage may vary it appears to be accurate for me.
Retiree medical coverage is one of the things I push with my legislators as needing to be protected under ERISA. But as folks around here know it is hard enough to keep the current protections let alone expand them.
What I base my suspicions on is the decreasing number of retirees on the old and older retiree medical plans and attrition of folks before they are eligible for the FHA. This is a case of diminishing returns that at some point will not be worth the effort to IBM. Of course there are factors such as when the FHA, I loosely say, "contribution" is credited for tax purposes. If it is at the time of earning then I guess IBM could keep it up for a long time without spending a dime of what is owed. If it is when paid out then it will eventually die out. Of course IBM might have figured out a way to double dip and take a credit on both ends.
After having the FHA thrust upon me and IBM dropping commitments on a whim I treat the FHA like Personal Choice Holidays. Use them up first since there is no guarantee you will be able to use them when you truly desire to.
Cons: Unfortunately, the IBM culture over last 2 years has moved from a strategic to tactical approach with an intense, zealot-like focus on weekly cadence and pipeline. Management by edict is now the norm with little collaborative effort. “Every man, woman and child for themselves” is the new company mantra, or should be. Very little effort is invested in employee development, strategic asset development and long-term client relationship building. Overall client satisfaction is at or near historic lows by nearly all measures. The need to cut costs, to always make “the numbers” and drive share price has cast a long, dark shadow over the long-term viability of IBM’s inherit ability to innovate and deliver real, meaningful long-term value to its clients.
Advice to Senior Management: To IBM Leadership I would say, work to strike a better balance between results and strategy and fostering people, Will Ginny stop slashing and burning to make her profit numbers and realize that the path to long-term growth has to be more balanced? Will IBM's famous 360 degree management feedback processes be reinstated? Will long-term strategy development be fostered and rewarded across all levels of the organization? The answers to these questions should begin to paint the mile markers on the roadmap for the future at IBM.
Cons: The 2015 Road Kill (Road Map) has the focus of senior management who have the most to gain from the share price hike and this is to the detriment of the IBM's employees, clients and long term viability of the company. The span of control is crazy and I have the greatest respect for the 1st line managers here trying to keep the business going and the team together. Senior management in Oz think they are leading, they are just feathering their own nest and following Ginni and her exec teams direction. The workload is not sustainable and sending more work to low skilled workers is not the answer. The hiring process has been busted for years and no one is fixing it. I have seen many good senior resource managers fail to fix this. Management feedback surveys have ceased...I know there is a good reason for that.
Advice to Senior Management: Sending work to low skill workers must stop. This is crazy and the last two years has proved it does not work. All 1st line managers need proper training not the internal BS. Throw the hiring and onboarding process out with the dishwater and get one that really works. The RA's about to happen in June 2012...management in Oz must push back. We already are so low on good workers and you want to get rid of some more???? Bring back the management surveys but include the responses from 1st line managers into the senior VP's performance results. You will reap the rewards.
Cons: Locally, no relevant benefits except for the usual insurance package (no meal vouchers, recreation/wellness vouchers, significant bonuses, etc.) Due to the complexity of the organization certain activities are difficult to perform. Management personnel sometimes comprises of unskilled individuals for the job. Some job names are sometimes too pompous when the activities are merely administrative. Promotions mean much more work and responsibilities with absolutely no salary increase. Many good projects have no budget but the management expects results, however, the projects fail shortly after launch or remain stalled due to lack of resources.
Advice to Senior Management: If you want to improve the service quality, you MUST improve the way you treat your employees, especially the ones that were faithful to the company for several years and own the knowledge to keep the game going. Knowledge means power, by losing people with knowledge you lose the power over the market...and a great deal of respect.
Cons: 1. Base Compensation - your market intelli and what your manager tell you are not compatible. So where else is this not the case. 2. Additional Comp - seek and read the rules carefully. IBM is not giving $$ away. 2012 is perceived as an employers Market. 3. At companies the size of IBM you work within policy and procedures, approval limits, etc. If you are entrepreneurial, you will chase down the approval routes and document each one on the road to getting things done. If you are not entrepreneurial you will find the IBM policy and procedures, approval limits, a great selective buffer to actually NOT getting anything done.
Advice to Senior Management: From director level up, hire more from the outside for a fresh perspective on balancing risk with change.
Cons: Consistently driving down costs means consistently driving down salaries, reducing meaningful training, using inexperienced Indians offshore, meaning that we end up sorting out more and more problems. Somehow we get the blame as the customer facing end. IBM's myopic focus on the earnings per share target means that delivering quality to customers, employee satisfaction, indeed any marks of a quality employer have gone by the board. It is now all about hype; delivering a good job slightly over budget is far worse than delivering a bad job on-time. In 8 years my actual annual take home has dropped by about 15 - 20% due to allowances and bonuses being stripped off.
Advice to Senior Management: Lower management needs to start making decisions rather than simply being a conduit. Otherwise what is the point of them? Upper management needs to address the poor morale (always below 50% now) before the rot goes so far it becomes obvious to the outside world.
Focus group participants told us that they believed employer reluctance to hire older workers was their primary reemployment challenge, and several cited job interview experiences that convinced them that age discrimination was limiting their ability to find a new job. Moreover, many experts, one-stop career center staff, and other workforce professionals we interviewed said that some employers are reluctant to hire older workers. Because of legal prohibitions against age discrimination, employers are unlikely to explicitly express a lack of interest in hiring older workers; however, one workforce professional told us that local employers had asked her to screen out all applicants over the age of 40.
Selected reader comments follow:
I was wrong on all counts -- and still am. The Republican issue bothers me the most of all. But I think there is a middle finger salute for that. :-) which I give my own party every time I pull the trigger at the ballot box now
HP used to have a business model based on innovation, making new, useful physical technology. It made enormous piles of highly profitable cash... right up until they stopped doing it, circa 1998-1999 (in the printing group, at least). I can see BOD's getting excited about some new business model and going after it with gusto... but don't they ever learn? It's been 13 years, and HP has been a laughingstock the entire time. Isn't it time to go back to what worked? Ignore Wall Street for a few years and get the mojo back?
HP. Stop it with the politically correct, safe and sane SF Bay Culture thing. You've given it a couple decades, it does not work. Get back to where you once belonged, make some money, have some fun.
HP employees --just like IBMers-- know how to grow the business and are in touch with what customers need and want. You think HPers don't want to save their jobs? Would be a buffoon if you think not. Those who dare try informing the top brass by empowering innovation and drawing attention to areas of the business that must improve -- are the first to go... been there, done that. And I do not see that same m.o. at European branches of these same companies, btw, for their egos aren't as large as ours.
The mandatory, old school, top-down approach to running a business is a death sentence. Google (for now) and smaller start-up firms of our day are agile, not managed from top down, and empower innovation while respecting that future success is solely due to human capital.
The L-1B visa gives employers access to a large labor force that has very few rights in the workplace. First, employers are not required to pay L-1B visa beneficiaries a minimum or prevailing wage. Workers are not in a position to negotiate better wages, because they can be easily fired, which renders them out of status and requires that they leave the country immediately. Second, the L-1B visa is not a long-term investment in the U.S. economy since only a small fraction of L-1B visa beneficiaries will be sponsored by their employers to stay in the U.S. permanently. The L-1B visa is really about businesses having ready access to a powerless, low-wage workforce.
The L-1B visa also has a significant impact on U.S. workers. U.S. workers can be fired and replaced with L-1B visa beneficiaries. A report by the Department of Homeland Security, Office of Inspector General in January 2006 found “[t]hat so many foreign workers seem to qualify as possessing specialized knowledge [that it] appears to have led to the displacement of American workers.” Labor unions support the use of nonimmigrant visas for high-skilled workers, but also strongly support assessing the impact of work visas on the U.S. workforce.
The L-1B visa is largely a black box. We do not know how many beneficiaries are currently working in the U.S., where they are working, what their qualifications are, and how much they are earning. We should have answers to these very basic questions and a thoughtful debate before the standard for “specialized knowledge” is weakened. ...
Editor's note: I can attest that IBM abuses the L-1B visa program extensively. Before leaving IBM recently, most of my IGS projects were staffed with over 50% (and sometimes nearly 100%) employees from IBM India here on L-1B visas. The IBM India employees included program managers, developers, database administrators, business analysts, and others...hardly employees with "specialized knowledge." In fact, many of the IBM employees were newly hired into IBM India and their first IBM job was in the United States on an L-1B vista.
Unlike the H1-B visa, which is more closely monitored, the L-1B visa program has provided IBM with a means to bring unlimited numbers of offshore employees to the U.S. to staff projects, instead of employing North American employees. It is a travesty.
They have not given raises in several years, this past year, managers ( they do look at Alliance website) basically 1st line managers give you a 2 or 1 , they get told by upper mgmt to reduce all PBC's by one, they are artificially finding ways to get rid of people.
There is an IBM BUBBLE, so keep stock for time being, let them artificially raise stock price, but 2015 or maybe late 2014, then all of us that have stock, wait until it peaks then sell, because the IBM after 2015 is going to be a crap Yahoo. On the current course, they will fail, ask people to retire, make promises they will not keep. They are betting on filling the gap with Indian and Chinese that provide crap. IBM is a bubble, They will be the next Netscape -Anonymous-
This is true with IBMers that believe they will survive RA's if they"do things" IBM's way; knowing in the back of their mind that they too, will get RA'ed eventually. IBMers that visit this site, pro-union or anti-union are aware of the truth. Yet, some comments that have appeared here in the past, suggest that there are IBMers that don't know Alliance exists. The ignorance of IBMers NOT knowing, never quite shrinks in proportion to the RA's that occur. Why? Because those IBMers that find out about Alliance don't tell their co-workers that they know out of fear of being 'caught' and immediately put on an RA list.
If a few IBMers with the "Great Escape" ideas and notions were to form a committee and reach out to IBMers that DON'T know Alliance exists; but are silently suffering from the fear of an RA just like everyone else...then the process to change EVERYONE's situation could truly escalate and IBM would 'lose' their grip of fear as a tool to destroy US IBM jobs. THINK about it. -Cooler_King-
Why do we as employees and ex employees waste our time trying to second guess them? We should give them the credit they deserve and learn from them before its too late. We should collectively get our own employment contracts with benefits, bonuses and severance and retirement packages defined in them. What's good for the goose is good for the gander. The faster the "99%" realize that the only way to change corporate America's culture is through labor unions the faster America will recover. You simply cannot legislate fair treatment. You cannot expect someone to negotiate in good faith if nothing forces them to the bargaining table. If Nascar removed all design and engine restrictions why would a crew chief restrict his car in any way? It would be silly to do so, so to think that IBM is going to stop squeezing profits out of your pockets and stop working you like a dog just because its not fair to you or that someone outside of IBM is going to force them to stop is equally as silly.
Stop being a victim. If you want to occupy something to help your cause occupy the union voting booth. This applies not just to IBM but every job in America. Stop playing the helpless victim. JOIN and RECRUIT. -Exodus2007-
If the law is partially or fully overturned they’ll draw up bills to keep the popular, consumer-friendly portions in place — like allowing adult children to remain on parents’ health care plans until age 26, and forcing insurance companies to provide coverage for people with pre-existing conditions. Ripping these provisions from law is too politically risky, Republicans say.
"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.
This was supposed to be the big one. At 2,300 pages, the new law ostensibly rewrote the rules for Wall Street. It was going to put an end to predatory lending in the mortgage markets, crack down on hidden fees and penalties in credit contracts, and create a powerful new Consumer Financial Protection Bureau to safeguard ordinary consumers. Big banks would be banned from gambling with taxpayer money, and a new set of rules would limit speculators from making the kind of crazy-ass bets that cause wild spikes in the price of food and energy. There would be no more AIGs, and the world would never again face a financial apocalypse when a bank like Lehman Brothers went bankrupt. ...
Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man – no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. In a furious below-the-radar effort at gutting the law – roundly despised by Washington's Wall Street paymasters – a troop of water-carrying Eric Cantor Republicans are speeding nine separate bills through the House, all designed to roll back the few genuinely toothy portions left in Dodd-Frank. With the Quislingian covert assistance of Democrats, both in Congress and in the White House, those bills could pass through the House and the Senate with little or no debate, with simple floor votes – by a process usually reserved for things like the renaming of post offices or a nonbinding resolution celebrating Amelia Earhart's birthday.
The fate of Dodd-Frank over the past two years is an object lesson in the government's inability to institute even the simplest and most obvious reforms, especially if those reforms happen to clash with powerful financial interests. From the moment it was signed into law, lobbyists and lawyers have fought regulators over every line in the rulemaking process. Congressmen and presidents may be able to get a law passed once in a while – but they can no longer make sure it stays passed. You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again. "It's like a scorched-earth policy," says Michael Greenberger, a former regulator who was heavily involved with the drafting of Dodd-Frank. "It requires constant combat. And it never, ever ends."
That the banks have just about succeeded in strangling Dodd-Frank is probably not news to most Americans – it's how they succeeded that's the scary part. The banks followed a five-point strategy that offers a dependable blueprint for defeating any regulation – and for guaranteeing that when it comes to the economy, might will always equal right.
The Chase disaster gives us a much-needed a glimpse into our corrupt political system, its Wall Street paymasters, and the media voices that allow people like Dimon to escape scrutiny.
The JPMorgan Chase story is the story behind the financial crisis that has thrown millions of people out of work. It's the story behind our ever-growing wealth inequity. It's the story behind Washington's inability to prosecute criminal bankers, regulate reckless ones, and propose the economic solutions the rest of us urgently need.
Predictably, the pundits who aid and abet people like Jamie Dimon are dismissing this story's importance, pointing out that $2 billion (it could become much more) pales against the $19 billion in profit Chase reported last year. But it was potentially $2 billion earned through crime. And more importantly, this story isn't just about Chase's errors and crimes. It's much bigger than that. ...
Depending on the day and the measurement used, JPMorgan Chase is now the largest or second-largest bank in the world. Its Japan operation alone has been cited by that nation's regulators as a systemic risk because of its size. If Chase began to collapse because of risky betting, the government would be forced to step in again. Jamie Dimon knows that. It's a lot easier to gamble when you know somebody else will be forced to bail you out if you lose too much.
Chase, like the other mega-banks, has systematically engaged in criminal activity for years. At the same time, it has used its vast wealth to corrupt our political and regulatory systems. And it has been aided and abetted by willing collaborators in the media, every step of the way. It gave up nearly three quarters of a billion dollars in settlements and surrendered fees to settle one case alone -- that of bribery and corruption in Jefferson County, Alabama. Chase has paid out billions to settle charges that include perjury and forgery (in its systemic foreclosure fraud and abuse), investor fraud, and sale of unregistered securities. And these charges were for actions that took place while Jamie Dimon was the CEO.
Born, head of the Commodity Futures Trading Commission from 1996 to 1999, was one of the earliest observers to warn about the dangers of unregulated derivatives. She was thwarted in her efforts to impose regulation in the late 90s despite the cautionary tale of LTCM, a hedge fund that needed a government bailout in 1998 after making risky bets on credit derivatives and government bonds. As a Public Citizens report released Monday, "Forgotten Lessons of Deregulation: Rolling Back Dodd-Frank's Derivatives Rules Would Repeat a Mistake that Led to the Financial Crisis," points out, Born and other regulation advocates at the time cited LTCM as a prime example of the need for regulation and the risks of the market's opacity.
JPMorgan's $2 billion trading loss suggests the need for derivatives regulation is as urgent as ever. "As long as we don't have derivatives reform in place, this kind of loss can occur without any advanced warning," Born, now a retired partner at the law firm Arnold & Porter, said.
About two-thirds of bachelor’s degree recipients borrow money to attend college, either from the government or private lenders, according to a Department of Education survey of 2007-8 graduates; the total number of borrowers is most likely higher since the survey does not track borrowing from family members.
By contrast, 45 percent of 1992-93 graduates borrowed money; that survey included family borrowing as well as government and private loans. ...
In the last decade, even as enrollment at state colleges and universities has grown, some states have cut spending for higher education and many others have not allocated enough money to keep pace with the growing student body. That trend has accelerated as state budgets have shrunk because of the recent financial crisis and the unpopularity of tax increases.
Nationally, state and local spending per college student, adjusted for inflation, reached a 25-year low this year, jeopardizing the long-held conviction that state-subsidized higher education is an affordable steppingstone for the lower and middle classes. All the while, the cost of tuition and fees has continued to increase faster than the rate of inflation, faster even than medical spending. If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years, according to the Department of Education.
In a different way, though, Citizens United is a distinctive product of the Roberts Court. The decision followed a lengthy and bitter behind-the-scenes struggle among the Justices that produced both secret unpublished opinions and a rare reargument of a case. The case, too, reflects the aggressive conservative judicial activism of the Roberts Court. It was once liberals who were associated with using the courts to overturn the work of the democratically elected branches of government, but the current Court has matched contempt for Congress with a disdain for many of the Court’s own precedents. When the Court announced its final ruling on Citizens United, on January 21, 2010, the vote was five to four and the majority opinion was written by Anthony Kennedy. Above all, though, the result represented a triumph for Chief Justice Roberts. Even without writing the opinion, Roberts, more than anyone, shaped what the Court did. As American politics assumes its new form in the post-Citizens United era, the credit or the blame goes mostly to him.
All of this deficit hysteria today - when just over ten years ago we had such a large a budget surplus that we were projected to pay off our entire debt in ... ten years! That's right, Ten Years Ago We Were Paying Off The Nation's Debt. But Then We Elected Obama.
Just ten years ago this country was running huge surpluses and paying off its debt. But then we elected Obama and all hell broke loose. Oh, wait...
Between the time ten years ago when we had big surpluses and were paying off the debt and now when we are told the "Obama spending and deficit" mean we have to cut back on the things We, the People do for each other, something happened. Something changed. The things that happened, the things that changed, are being ignored in the current DC discussion about what we need to do to fix things.
Something happened. We had a surplus, and it was replaced by massive deficits. The last Bush budget year had a deficit of $1.4 trillion!
Why We Have A Deficit. What happened under Bush? We cut taxes on the rich and doubled military spending. (And started wars.) And don't forget collapsing the economy, forcing people onto unemployment and food stamps. That is why we have a deficit. We have a deficit because of tax cuts for the rich, huge military budget increases and the consequences of deregulating corporations.
Tom Udall of New Mexico and Jeff Merkley of Oregon were prophetic in wanting to change Senate rules, he said. “The rest of us were wrong, or most of us, anyway,” he added. “What a shame.”
Since 2007, Democrats have been forced to try to break Republican filibusters 360 times — by far the highest rate in Congressional history. Ending them requires Democrats to get over a 60-vote hurdle. If Mr. Reid helped enact the proposal of the two senators, he would instantly make Congress more efficient and more democratic.
The plan would prevent the filibuster from being used abusively, without eliminating an important tool to give a minority party a voice. Among other changes, filibusters would require 10 senators to start, and members would have to speak continuously on the floor to keep it going. In current practice, a single senator can simply declare a filibuster against a measure. This rule change could have been enacted on a simple majority vote on the first day of the session. But Mr. Reid and other Democrats did not want to lose the ability to obstruct the Republican agenda if they lost control of the chamber.
On Monday, four Democratic congressmen, including John Lewis of Georgia, got so frustrated that they filed suit against the Senate, saying its filibuster rule is unconstitutional and illegally nullified their legislative votes. They argue that unlimited debate was never envisioned by the Constitution, and that supermajorities were required only in unusual cases, like overriding a veto or treaty ratification.
Politicians aren’t the only hypocrites favoring the filibuster when it is good for their side and opposing it when it benefits the other. In 1995, when Republicans controlled Congress and there was a Democrat in the White House, The New York Times said the filibuster had to go. It had become “the tool of the sore loser” and “an archaic rule that frustrates democracy and serves no useful purpose.” ...
I have previously argued that if Republicans believe they will retake the White House next year, they would be wise to cut a deal with Democrats on the filibuster now while they are sympathetic to the idea. A year from now, when Senate Democrats are back doing the same thing to Republicans that Republicans are now doing to Democrats, Republicans will regret not acting when both parties think they may benefit from filibuster reform.
An official who actually wanted to help the country rather than appeasing the Tea Party might have remembered what happened a year ago, after Mr. Boehner first made that extortionate demand. The bond rating agencies said the country’s credit and reputation had been seriously damaged, and the government lost its AAA credit rating. (Mr. Boehner shamelessly blamed Mr. Obama for that on Tuesday.) The Federal Reserve warned of “catastrophic” and “calamitous” effects if Republicans carried through on their threat to default. The stock market sank, and Congress’s approval rating has never recovered. ...
Washington’s need to deal with the long-term deficit can be met only with a combination of new revenues and rational cuts, not extortion. The overly deep cuts in last year’s deal were necessary only because Republicans refused to end tax cuts for the rich. ...
Some members might be willing to reach a deal, but Mr. Boehner’s decision to again threaten a default shows that he is an unreliable budget negotiator. President Obama failed to recognize that last time, and Congressional Democrats gave in too easily. We hope both are hearing the message this time around. ...
The Romneys own three properties now: a La Jolla, Calif. beach house that they bought for $12 million in 2008 but was reassessed last year at $8.7 million (a local agent thinks that even that figure is “pie in the sky” today), a townhouse condo in Belmont, Mass purchased for $895,000 in 2010 and an $8 million summer compound in Wolfeboro, N.H., on the shores of Lake Winnipesaukee, consisting of a main home, a converted stable and other land. ...
Mitt Romney’s Total Wealth: $230 million
“We were able to help create over 100,000 jobs,” Romney said of his tenure at Bain, the venture capital and corporate buyout firm he founded. “On the president’s watch, about 100,000 jobs were lost in the auto industry and auto dealers and auto manufacturers, so he’s hardly one to point a finger.”
It was an unusual line of defense for Romney considering that the Obama administration’s rescue of the auto industry is one the president’s most popular accomplishments, especially in critical midwestern battlegrounds like Ohio, Pennsylvania and Michigan. The federal bailout of two of the Big Three domestic auto companies has been widely considered a success, and Democrats have attacked Romney for instead advocating a managed bankruptcy in a New York Times op-ed titled, “Let Detroit Go Bankrupt.”
The Obama campaign, citing data from the Bureau of Labor Statistics, said auto industry employment actually increased by about 102,000 jobs since Obama took office in January 2009. ...
The Post’s Fact Checker determined that Romney’s claim that he created 100,000 jobs at Bain was unproven and untenable.
As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.
Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on.
Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses.
He noted that the press coverage of Romney’s “prairie fire of debt” speech failed to note two things.
It is on Sargent’s second point to which I want to add. Talking Points Memo put out this handy graph, highlighting where the federal red ink comes from. ...
At the top you see “Wars in Iraq and Afghanistan.” During the George W. Bush presidency those costs were financed through supplemental spending that was not part of the appropriations process. In short, the funding was kept off the books. But in a speech to a joint session of Congress in 2009, a newly inaugurated Obama announced the end to that deceptive budgetary practice.
This week, however, the story changed. On Monday, a JPMorgan official told The Times that the trades — which have since ballooned to at least $3 billion — started out as allowable, but had “morphed into something” that crossed the line. On Tuesday, at the bank’s annual shareholder meeting, Mr. Dimon echoed that statement, calling for rules to ensure that permitted trades don’t “morph into something different.”
It might sound as if Mr. Dimon, whose lobbyists have led the charge to undermine Dodd-Frank, is calling for more and better rules. If only. We still don’t know the details of JPMorgan’s disastrous bets. But the Volcker Rule was supposed to be clear: federally insured banks would not be allowed to make speculative bets with their own capital. The problem is that Mr. Dimon and other bankers have been fighting to make the regulations as loose and vague — and as prone to morphing — as possible.
And before JPMorgan’s losses were disclosed, the bankers were almost certain to get what they wanted. In October, regulators issued proposed rules that were weak and toothless, and the final version due this summer isn’t expected to be any better. ...
Without a strong Volcker Rule, taxpayers — via deposit insurance and bailouts — will continue to be on the hook for risky trades that boost bankers’ pay when things go well but that can wreak havoc on the financial system and broader economy when they blow up. ...
For anyone who forgot what happened during the financial meltdown, the JPMorgan debacle should leave no doubts about the need for tougher regulations. The banks cannot be allowed to keep to their risky business as usual. The country cannot afford it.
In 2011, Hanauer says he paid an effective federal tax rate of 11 percent. He occupies the upper echelon of an elite group of Americans, the top 1 percent of all earners, who have amassed the lion’s share of the nation’s wealth gains over the past several decades. Many economists expect he and his class of entrepreneurs to fuel the country’s next great engine of growth.
Like a lot of self-made rich guys, Hanauer has developed a theory on how to fix the ailing economy. He preaches it in op-ed columns, television interviews, political gatherings, and casual conversations with Seattle’s innovation royalty. He was invited to give a speech this spring by the organizers of TED, the nonprofit that has grown famous for commissioning “TED talks” on such diverse topics as the nature of innovation, the science of global warming, and the need to spread contraceptives throughout the developing world. Hanauer’s pitch took five minutes at the TED University conference on March 1. Afterward, organizers seemed keen to post it on their website. Then in May, they abruptly told him his remarks were too controversial, too political for TED, and wouldn’t be published online.
The disqualifying notion at the center of Hanauer’s talk was that the innovators and businessmen are not, in fact, “job creators”—that the fate of the economy rests instead in the hands of the middle class. So Hanauer wants to tax rich guys like himself more, to pay for investments to nurture middle-class families.
“We’ve had it backward for the last 30 years,” Hanauer said at the TED conference. “Rich businesspeople like me don’t create jobs. Rather, they are a consequence of an ecosystemic feedback loop animated by middle-class consumers.” When the middle class thrives, he said, “businesses grow and hire, and owners profit.” Emerging research from high-powered experts across the ideological spectrum backs that economic inversion. Their work shows how America’s long-term prosperity is in jeopardy because the middle class is struggling and the super-rich are pulling away.
More and more, however, he has been coming out with statements suggesting that he is, in fact, a dangerous fool.
The latest: JPMorgan’s loss was no biggie:
This was a loss to shareholders and owners of JPMorgan and that’s the way America works Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain. The $2 billion JPMorgan lost someone else gained.
Hey, when Lehman Brothers lost a lot of money, that was money someone else gained. No problem, right?
Can Romney really not understand that key financial institutions are different from any old business — that when they fail they can wreak havoc? And can he really not understand that for that reason taxpayers are ultimately on the hook for large losses — and that JPMorgan in particular has government-guaranteed deposits?
A number of super PACs have become de facto arms of the two political parties, whose leaders can help raise money for the groups within legal limits of $5,000 per individual. But once introduced, those same PACs can hit up donors for unlimited amounts on their own and then use those funds to help the party candidates. So far, the fundraising has primarily benefited conservative organizations such as the Club for Growth, the Congressional Leadership Fund and American Crossroads, the group connected to George W. Bush’s former White House adviser Karl Rove, which plans to spend up to $100 million on House and Senate races through its super PAC and nonprofit arms.
Overall, congressionally focused super PACs have raised $100 million so far this election cycle, including $28 million by American Crossroads, according to FEC data.
Democratic-leaning groups have lagged badly by comparison. House Majority PAC has reported raising $4.5 million since last year, primarily from unions, and had $1.7 million on hand at the end of March. ...
Liberal groups have been hobbled by widespread reluctance among Democrats to support unlimited-spending groups, which have been criticized by President Obama and others as unhealthy for democracy. But Democratic strategists say donors are coming around. “It’s no secret that it’s not the way we would prefer to do things,” said J.B. Poersch, a strategist for Majority PAC, which is focused on bolstering Senate Democrats. “But we’re also recognizing that we have no choice but to compete. . . . You can’t just give away the store.”
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