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Highlights—July 28 2012

  • Poughkeepsie Journal: Cutbacks fuel IBM's 2Q earnings increase. Analysts wonder: Is it sustainable? By Craig Wolf. Excerpts: IBM Corp.’s rising profits despite falling revenues, a feat achieved by cutting costs, including jobs, may be hard to sustain if this bellwether company’s report Wednesday proves to be a sign of a sagging economy. With many economists fearing exactly that, less money coming into Big Blue’s door could signal a tough road ahead. And, the mid-Hudson’s part of IBM showed the worst results in the report, with big computers and microchips down substantially.

    From Wall Street’s viewpoint, the bottom line looked good. Earnings per share of stock rose 11 percent to $3.34, and profit jumped 6 percent to $3.9 billion, IBM said Wednesday. But revenues were on the shrink, down 3 percent to $25.8 billion, and the magic of rising earnings from falling sales only points to boosting of productivity, which means cuts.

    Such financial engineering has its limits, said one analyst.

    “You can only do that for so long; eventually you have to come up with new customers,” said Robert Djurdjevic, president of Annex Research in Maui, Hawaii. ...

    As for “workforce rebalancing,” which means job cuts and often involves transferring work from the U.S. to other countries, the expenses of that came to about $150 million for severances, Loughridge said. The drop in revenues concerned Djurdjevic. The report is out “ and so is the truth about its slow or no-growth trends. In fact, it’s getting worse,” he said.

  • Albany Times-Union: Talk of a chip plant deal. Analyst predicts future acquisition of IBM unit by GlobalFoundries. By Larry Rulison. Excerpts: If GlobalFoundries expands again in New York state beyond the $4.6 billion computer chip factory it has in Malta, it might do so by buying IBM's semiconductor business, which includes Big Blue's chip fab in East Fishkill. Speculation has been swirling for several years as the two companies have forged one of the closest alliances in the industry, dating to the creation of GlobalFoundries in 2009. ...

    But rumors reached new heights Thursday at an industry conference in London when a respected European semiconductor analysis firm called Future Horizons predicted GlobalFoundries, which is backed by the oil-rich government of Abu Dhabi, would eventually gobble up IBM's chip division. ...

    Both GlobalFoundries and IBM declined comment, saying they don't respond to speculation. However, in presentations made to New York state officials, GlobalFoundries has said the next factory it builds in Malta — if it were to do so — would be 450-mm compatible. Read more: http://www.timesunion.com/business/article/Talk-of-a-chip-plant-deal-3706495.php#ixzz222vOU96q

  • I, Cringely: Are Indian high schoolers manning your IBM help desk? By Bob Cringely. Excerpts: The theory of outsourcing and offshoring IT as it is practiced in the second decade of the 21st century comes down to combining two fundamental ideas: 1) that specialist firms, whether here or overseas, can provide quality IT services at lower cost by leveraging economies of scale, and; 2) that offshore labor markets can multiply that price advantage through labor arbitrage using cheaper yet just as talented foreign labor to supplant more expensive domestic workers who are in extremely short supply. While this may be true in the odd case, for the most part I believe it is a lie.

    This lie is hurting both American workers and the ability of American enterprise to compete in global markets.

    My poster child for bad corporate behavior in this sector is again IBM, which is pushing more and more of its services work offshore with the idea that doing so will help IBM’s earnings without necessarily hurting IBM customers. The story being told to support this involves a supposed IT labor shortage in America coupled with the vaunted superiority of foreign IT talent, notably in Asia but also in Eastern Europe and South America. ...

    I already wrote a column about the experience of former IBM customers Hilton Hotels and ServiceMaster having no trouble finding plenty of IT talent living in the tech hotbed that is Memphis, TN, thus dispelling the domestic IT labor shortage theory.

    This column is about the supposed advantages of technical talent from India. ...

    It’s ironic that in the USA, with its supposed IT labor shortage, we can hire college graduates for jobs that in India are filled by high schoolers. Yet in India IBM admits that the majority of its GDC workers lack university degrees. They certainly don’t advertise this fact to customers, nor do they hide it I suppose because they don’t have to. What customer is going to think to ask for Indian resumes? After all this is IBM, right? Yeah, right.

    Selected reader comments follow:

    • Although this might have changed since I retired IBM used to send potential customers to the Boulder site for “The Tour”. The customer sees the shiny data center with it’s big board and a bunch of US workers running around assuming this is what they will be getting. Nothing is ever mentioned that the system operators are in Brazil and server application support is in India.
    • I know this same thing to be true of India’s strategy for software development. When I worked for Qualcomm, a large chunk of work was sent to India. We were being invoiced for 40 “senior software developers” and 8 “architects”. Turns out that out of the 48, we’d actually been given 1 architect and 3 senior engineers; the rest were new grads, well excuse me, some of them had up to 2 years of experience. We didn’t even dig into the college degrees (or lack thereof). Simply appalling. The sad thing is that our expectations were so low to begin with, we didn’t really even notice the lack of quality or productivity, they simply performed (or didn’t perform) as expected.
    • I say let them eat cake! Make sure there is full transparency, don’t let them hide anything, make sure this continues to be reported on and let the market decide. If IBM leadership thinks this is good business let them follow that strategy straight into irrelevancy & obscurity. If the employees of IBM are not soldiers of conscious and cannot say or do something then they will end up looking back on this one day and wonder why no did something about it while they still had a chance. I now say Nuff said!
    • Not true Cringely, my sense is that it could be a difference in terminologies used. In India, after high school, you do your graduation (4-yr engineering course, a 3-yr bachelor in science or economics or computer applications course etc) and then do a 1-3 year “post-graduation” course (3-yr masters in computer applications, 1 or 2-yr MBAs,1.5 yrs masters in technology or m.tech). What we call graduate students would be under-grad students in US and what we call post-grad students is grad students in the US. Thus, the folks working in IBM are not high schoolers, they’re people with a 3 or 4-yr degree AFTER their 12th grade. No one in India stands an iota of chance of getting an IT job anywhere in an Indian or multi-national with a 12th grade certificate. There are far too many engineers or other science degree folks (let alone humanities) aspiring for these.
      • Robert X. Cringely says: While your interpretation is interesting I don’t think it reflects the reality of THIS particular situation. I’ve read the IBM docs on this (dated June 27th) and it is pretty clear they are referring to people who don’t have the degrees or certificates you describe.

        IBM has two things going on here: 1) they are having trouble providing quality support to customers, and; 2) they, too, are under pressure to make more money from less resource. This particular project appears to be intended to address both issues. They want to raise the quality of support by getting more graduates (that’s good) and once they have more graduates they want to raise prices to customers to reflect that higher level of professionalism.

        IBM has two things going on here: 1) they are having trouble providing quality support to customers, and; 2) they, too, are under pressure to make more money from less resource. This particular project appears to be intended to address both issues. They want to raise the quality of support by getting more graduates (that’s good) and once they have more graduates they want to raise prices to customers to reflect that higher level of professionalism.

    • Anybody who has even a little bit of knowledge about Indian Software industry would know that it would be almost impossible to find a job without a college degree in Engineering, Computer Science, Information Technology etc. You can question the quality of that degree – you can question the number of years of experience. But to say that “non-graduates” work in IBM is to show your ignorance about the topic.
      • Robert X. Cringely says: I don’t say it, IBM SAYS IT. It’s their program and we are using their definitions. Do you think I make this stuff up?
    • Canadian IBMer says: As an IBM employee, I am extremely happy that somebody is exposing the truth about IBM. No, Cringely is not making stuff up or being overly negative about IBM. The reality is, the majority of IBM employees hate IBM. The working environment is extremely toxic and everybody knows that only executives are winning. We’re having difficulties getting good interns these days because even THEY know that IBM is a company that is more for the MBA than the computer science grad.
    • It is about costs, pure and simple. Nothing more or less, specifically salary and health care benefits. Everything else is secondary. Indian workers come FAR cheaper than their American counterparts and many do not carry the burden of health care benefits. As the cost of living in India is, eh, rather different than in this country, the economies make outsourcing so obviously GOOD that management across America cannot resist it. OH, well, GM just did and is bringing IT back inside and canning, among others, IBM. Good for them.

      Cheaper yes but QUALITY service is never NEVER EVER discussed, by the shareholder boards or the true believers. And yet IBM has lost Hilton, Disney, AstraZeneca, Amgen, Texas, Indiana and others because of poor service delivery. Read that bad quality work. AS IF THIS IS GOOD THING FOR IBM???

      The loss of the Texas Data Center project is particularly galling. I was with a business partner during the Akers years and if ANYTHING IBM IS A DATA CENTER company. Apple does not do data centers. AND IBM could not build and manage one for Texas. That should be a wake-up call to the true believers. Thos J. Watson Jr., and Sr., would be turning over in their graves.

    • Canadian IBMer says: I can hazard several potential reasons why the quality sucks: 1. IBM employees in GBS are rated based on billable hours. Never mind performance or quality of work. I once received nothing but glowing reviews from my clients but my billable was lower than the average (despite being over 85%) so I received the second lowest rating possible with no salary raise. It is to NOBODY’s advantage to do the work well and quickly. Management only cares about 1 thing: Billable hours. Remember that.

      2. IBM wants to sell you something new within 2 years anyway. If you think about the rapid cycle of IT evolution, what is new today will be old in about 1 year. Who cares about the quality of the application that they are building? As long as it gets done right?

      3. IBM bills A LOT for each of their consultants. I can assure you that IBM’s profit on me per hour is HUGE. If you sign a contract for $100K, it doesn’t buy you as many developer hours as you would think. (And they aren’t going to lower that per person price mentioned in #2). This is why Indian developers are so great.

      4. If there are good Indian workers, IBM manages to hire the worst ones. I once had to send an email explaining a technical component… did so in 1 sentence. My Canadian colleagues understood me immediately but the Indians were lost. So I sent another paragraph elaborating (being extremely articulate). Still didn’t understand. I ended up spending a full hour composing an email with pictures. It was a how-to manual at this point. Another time, I worked with an Indian who supposedly had a Masters on the topic of databases. I ended up teaching HIM about databases (and I never took a database course in my life!). My Canadian born Indian colleague was so fed up with the quality of the Indians that he fired them and hired a Chinese Canadian contractor to do the work.

      I don’t know if other people have experienced other issues…

    • I was involved in setting up an Indian service center in Mumbai last year. We staffed about 20 people initially, intending to expand to around 40 people, doing IT and Finance. We contracted with a couple of local firms for the recruiting, and got hundreds of resumes.

      And a bunch of those resumes – supposedly vetted by the recruiters – were duplicates. Names and addresses changes, but otherwise perfect copies. In one case the photocopy was identical down to the dust marks.

      We phone-screened applicants, and then had them come in for face-to-face interviews. In two cases the person showing up for the interview was not the person phone-screened – completely different voice/accent.

      The recruiters even admitted that the problem goes worse. If you hire someone, the person that actually shows up may yet be a different person from the face-to-face, different from the phone-screen.

      In short – the resumes are almost worthless. Not completely, but if a bunch are untrustworthy, how do you tell the real ones from the fakes/padded/copies?

    • I suspect IBM might be recruiting people having diplomas as opposed to university degrees. No doubt that there are thousands of institutions doling out “IT diplomas” to every Tom, Dick and Harry here in India (It’s a multi billion rupee business with interests of several politically connected families involved); having said that, from among these thousands there are some highly reputable organizations as well, several of the top engineering colleges also have a diploma course almost mirroring the university level course. I am quite certain that HR of IBM India would have good sense to know one type of institution from another.

      This post of yours, to think of it, is a classic example of cultural misunderstandings between the two countries.

    • I work for one of the largest Indian IT companies, and the quality of the off shore resources is abysmal in general. There are a few competent employees, don’t get me wrong, but the bar here in the states is much higher than that in India. The off shore guys are loaded with Microsoft certs, yet often lack basic skills without being provided a step-by-step checklist. I would question the quality of their colleges or at least the worth of their degrees.

      You can’t just tell them what needs to be done and assume they will go and do it. The mindset is completely different, often lackadaisical. In the middle of conference calls or even actual in-process activities, I have had off shore guys leave to go to lunch or even just leave at the end of their shift! They often have to rely on public transportation, so they have to leave before the last bus. One network engineer recently made a major error that brought a customer network to a virtual halt for more than half a day, and was trying to leave for the day before we could reverse the change. They seem to have no concept of what it means to focus on completing the task at hand.

      We’ve had clients in the U.S. Australia and Europe on the brink of leaving, having dealt only with the off shore group, that the US on shore resources were able to salvage and gain as a customer.

      I’ve seen the revolving door, too. The off shore guys are generally good for about 4-6 months, then they’re gone, when we may be on a project for 2 years.

      The major problem is that they have such a huge population to draw on, they’re all interchangeable. They throw bodies at a problem and eventually it will get solved. They have people RTFM on the job to figure out a system. The bottom line is that they really could be the juggernaut if they could do more than cram for certification tests or college exams. The Chinese also, except their lack of communication skills.

    • Building, integrating, and running systems and networks is something that takes years to master. I’ve been doing this for 15 years – and I’m learning something new every day. I deal with the ineptitude of H1B and offshore employees and vendors on a daily basis. I believe also that offshoring can work – if the correct integration of the employees into the operations are accomplished – and more importantly, as long as money is not the deciding factor.

      I have the feeling that when all is said and done, the people who championed outsourcing will ‘win’ on a personal level for saving their company money on the books. I also believe they will be vilified by their coworkers for all the hidden costs those workers will have to absorb due to their decisions.

    • The folks in India are hard-working people and certainly they have tremendous opportunities ahead of them with the generosity IBM is providing them. So… India –> +1; Sharedholders –> +1; US employees –> -1; Customers –> -1.

      Anyway, I digress, I cannot tell you how many times I have heard others in IBM saying “management” permits them to fill an open position as long as the resource comes from India. This is for PM and Executive-level positions alike. Myself, personally I applied twice for Exec-level positions only to be told by the IBM’er requesting the position that they had to withdraw the listing because management instructed them to fill it from another country (India). Spot-on Bob.

    • As a Dubuquer, I have to work with India staff a lot. We used to have two good contacts there, but now we have none. I thought Dubuque was a turnover factory, India is worse. I think they’ve the same ‘retention’ philosophy only multiplied several times.

      IBM doesn’t think IBM experience is worth anything. They’ll forget cost of living adjustments and consider a 1% raise a fair compensation for a 1 PBC rating. They noticed that there was high turnover and raise the salary bracket of incoming people, but didn’t adjust current worker pay.

      So their logic: You have someone with 2 years experience at IBM leaving because say they were at 28k and they wanted 32k because of increase in efficiency of projects xyz ( or maybe the fact that rent increased a stupid amount in Dubuque ). Management won’t grant it, person leaves. HR sees the reason as pay, figures it’s a good idea to get someone with 2 years experience at a widget co and pay them 40k.

      Repeat process for anybody who learns this is happening. Any that stay IBM thinks is a bonus.

      IBM isn’t the only one that does this, though I think IBM is the only one that takes fresh grads and non IT certified folks and trains them, so there’s that.

  • Austin American-Statesman: IBM blames City of Austin for ongoing billing problems, says it's owed $4 million. By Marty Toohey. Excerpts: IBM is demanding the City of Austin pay the company $4 million by the middle of next week and says the city, not IBM, is responsible for problems plaguing a computer system that processes bills for electric, water and trash service.

    In a letter sent Wednesday to city officials, IBM says it has finished its obligations under a 2009 contract and that the city should pay the company by Aug. 1 the money it says it's still owed. Otherwise, the company says, it will start the "dispute resolution" process spelled out in the contract. ...

    The city intends to pay IBM the rest of the money it's owed only "when they complete the job and deliver a fully functioning system," spokesman Ed Clark said, adding that IBM is largely to blame for the billing snags that he says have cost the city more than $8 million and counting.

    The company's sharply worded letter comes days after a Statesman open records request revealed correspondence in which city officials detailed numerous complaints about IBM's work to company executives. Austin Energy's chief operations officer, who is overseeing the installation of the new system, paints a picture of missed deadlines, broken promises and general shoddiness on the company's part.

    Earlier this year, IBM and the State of Texas parted ways over a failed $863 million project to merge the data centers of 28 state agencies into two upgraded and streamlined facilities. The state had been trying to fire the company; in March, the two agreed to split the tab, and IBM ended its involvement.

    The Austin City Council decided in May 2009 to hire IBM for $55 million to install the new system and manage it for five years. The system is the means by which the city collects about $2 billion annually in charges for electric, water, trash and other city services. It was meant to be an improvement over a system that, while sound, was nearly a decade old and incapable handling technological changes such as "smart meters," city officials say.

  • New York Times: Private Pension Plans, Even at Big Companies, May Be Underfunded. By Floyd Norris. Excerpts: After years of poor investment returns, the pension funds of the United States’ largest companies are further behind than they have ever been. ...

    Of the 500 companies, 338 have defined-benefit pension plans, and only 18 are fully funded. Seven companies reported that their plans were underfunded by more than $10 billion, with the largest negative figure, $21.6 billion, reported by General Electric.

    The other companies with more than $10 billion in underfunding were AT&T, Boeing, Exxon Mobil, Ford Motor, I.B.M. and Lockheed Martin. JPMorgan Chase had the largest amount of overfunding, $1.6 billion.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Private Pension Plans, Even at Big Companies, May Be Underfunded" by "madinpok". Full excerpt: Unfortunately, the NY Times article doesn't cite any details about how they came up with the claim that the IBM pension plan is underfunded by over $10 billion.

    But digging through the 2011 annual report, you can find a line item that says: Total Underfunded Plans: $(19,232) ($ in millions)

    That's $19.2 billion. But this number is deceiving. It includes US and non-US plans, plus non-qualified pension obligations for the executives and retiree medical benefits.

    The non-qualified pension obligations and medical benefits have no trust fund behind them. IBM pays those expenses out of operating income each year.

    If you look strictly at the US qualified pension plan, which directly affects the pension payments for most of us here, it is underfunded by $1.1 billion, or less than 2%. I think that is the number that people should be worried (or not worried) about.

    The non-US qualified pension plans are in slightly worse shape and underfunded by about 6.5%

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Private Pension Plans, Even at Big Companies, May Be Underfunded" by "madinpok". Excerpts: I dug into this a bit more and the NY Times article is based on a report from S&P Dow Jones Indices. ...

    I don't think most US retirees have much to worry about at this point. If anyone needs to worry, it is executives and other highly paid employees who receive non-qualified pension benefits and those in some foreign countries where their plans are more severely underfunded.

  • Yahoo! IBM Employee Issues message board: "Re: 2nd qtr earnings out" by "Kevin W". Full excerpt: I really don't think the executives have figured it out; if they have then they simply don't care. eMail after eMail about how profits are up, free cash flow is up, ROI is up, etc etc, all great and wonderful stuff up. However notes also state, no raises, no commissions, no etc.

    The conflict cannot remain forever. As jobs outside of IBM open up people will move on their own. This saves IBM the RA costs.

    Now as to whether they care or not, I cannot say. All I can say is it does not appear they care. The only thing important to IBM is meeting the 2015 plan, the reduced headcount. I think they have given up on which portion of the headcount they keep.

    And from a corporate perspective why should they care? There are nearly 7 billion people in the world, let us say 3.5 billion are working age, lets further say that only 500 million are educated enough to hold a job, then 50 million are technically savvy enough and have the skills needed. The company is only 400,000 in size. The math is in the corporations favor.

  • Yahoo! IBM Employee Issues message board: "Re: Transition to Retirement...'Roadkill'" by "Tom Jones". Excerpts: You and I left under the same circumstances, a IBM Human Resources structured plan to get rid of older workers before their Defined Benefit Pension maximized. Make no mistake, IBM and other Corporations were on a "plan" to get the money, from the Defined Benefit Pension plans.

    Gerstner walked away with $2.4 Billion, became the one of Richest 400 Americans in 1999 (more wealth than 150 million Americans) and did it with the "Creative Scheme" that was allowed by Accounting Rule changes with Ronald Reagan. "Mergers and Acquisitions, Leveraged Buyouts, Downsizing, Right Sizing, Restructuring" were some of the Buzz words used in those days with one objective, "Use creative accounting to get to the Defined Benefit Pension plans."

    IBM was not the only Corporation who raided the Defined Benefit Pensions, as there were 128,000 of those plans, deferred income of employees since WWII, that the Corporations got a tax break, that grew Tax Deferred.

    But, with the Accounting Rule Change that happened shortly after Ronald Reagan became President, thanks to Donald Reagan, Wall Street Banker of Merrill Lynch, the Defined Benefit Pensions could be used to boost Profits (aka Vapor Profit at IBM, reduced Revenue but higher profits of Gerstner days), used to create "Top Hat" Supplemental Executive Retirement Accounts for Executives (from the employees Defined Benefit Contributions (reduced wages) since WWII, and other purposes, restructuring and paying off debt.

    So how much was taken to do all this?

    Well, in 1985, according to the Federal Reserve, $10.3 Trillion (of the $80 Trillion total wealth of the USA) was in Pension Reserved. To put this in perspective, $10.7 Trillion represents the Home Equity of every American in 1985.

    Today, after the Merger and Acquisitions (THINK BAIN CAPITAL) and other "creative accounting" there are only 26,000 defined benefit Pension plans still existing, worth about $2.6 Trillion. Over 100,000 disappeared over the two decades.

    And they got away with it.

    The Corporations broke the basic law regarding Defined Benefit Pensions (the Pension could not be changed if the changes were less beneficial for the beneficiaries (employees) but they did it anyway. Remember when IBM lowered from 1.5% to 1.35% and capped the years to 30? That was a change, that did not benefit older employees.

    Where were the law enforcers? Remember the "Get the Government off our backs?". That meant Law Enforcement of the Defined Benefit Pensions (Congress underfunded law enforcement operations so "The Government was off the backs of the Financial Thieves of Defined Benefit Pension plans

    Then, came the Housing Scams, the other $10.7 Trillion in 1985 of the average American. Last I heard, the home equity value went down 40%, so less than $6 Trillion and not soon to recover.

    So, if you think all this is "just coincidence" and "the market at work", or just bad luck, THINK again.

    A well executed Plan and they got away with it.

    In the meantime, the average 65 year old has less than $50,000 in their Retirement Savings and cannot quit working(even though half the 65 year olds have health issues that prevent them from working full time) and the recent college Graduates cannot find a job because the baby boomers cannot quit work to give up their space to the Recent College Grads.

    Just follow the Money, and you will find the answer.

    As mentioned on this board before start with Ellen Schultz's book "Retirement Heist", or "Winner take all Politics", along with the Financial Crisis Inquiry Commission Report available on line from the Stanford University Website, "The Great American Stickup", or "Heist the Movie".

    We, the average American, had a Financial War declared on us, but did not know it. We just had too much money in our Defined Benefit Pension plans since WWII and Too Much Home Equity in 1985 for the Banksters and Corporations to ignore. They are pretty clever, developed schemes to get the money and succeeded in stealing it.

  • Yahoo! IBM Employee Issues message board: "Re: Transition to Retirement...'Roadkill'" by "trexibmer". Full excerpt: Tom, very nice observations! Also Watson Wyatt, now known as Watson Towers (how trite, to mention another Watson, eh?) was hired by IBM as a consultant to influence the steal of the pensions and lie about it to help IBM get away with it all.
  • Yahoo! IBM Employee Issues message board: "Re: Transition to Retirement...'Roadkill'" by "Tom Jones". Full excerpt: Here is a link to Ellen Schultz interview on NPR: http://thedianerehmshow.org/shows/2011-10-06/ellen-schultz-retirement-heist

    Gerstner stole our Pension Funds, and Bain Capital stole the Pensions of the Merger and Acquisitions of the Companies they took over.

    Baby boomers cannot retire, College kids cannot get the baby boomers jobs.

    Baby boomers have no money. They did not have time to make up the lost Defined Benefit Pension funds.

    In 1985, according to the Federal Reserve, there were 128,000 Defined Benefit Pension Funds worth $10.3 Trillion. To put in perspective, Home Equity of all Americans was $10.7 Trillion of the total Wealth of the USA in 1985 of $80 Trillion.

    Today, there are 26,000 Defined Benefit Pension funds, covering Unions (they have a contract), Public Employees, Federal Employees, Post Office (500,000 Union members) School Teachers also Union, Military, and Congress (US Senators and Congressmen). As near as I can glean the value of those plans are now $2.6 Trillion.

    Gone, about $7.7 Trillion. Kind of explains how the Richest Point 1%, about 150,000 families consist of of 49% Corporate Executives and 19% Financial Banksters and other Banksters.

    Bain was a "Merger and Acquisition" Specialist in "Wealth Extraction", not "Wealth Creation". The Money "Extracted" the largest, was the Defined Benefit plans they raided.

  • Bloomberg: S&P 500 Pension Cuts May Ease Competition Risk: Chart Of The Day. By David Wilson. Excerpts: Efforts by General Motors Co. (GM) and other companies to reduce pension obligations to employees may be essential for them to prosper worldwide, according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist. ...

    “Many U.S. corporations have been attempting to address pension costs recently,” the New York-based strategist wrote. “This may be the key for the future health” of their business, he wrote, because many international competitors aren’t saddled with comparable expenses.

    Selected reader comments follow:

    • Unless we could project salaries/wages would rise in some corresponding fashion, this is how a previously enviable standard of living in the United States becomes a memory...I'm glad I just turned 62 for Social Security eligibility!.
    • Instead of keeping faith with their employees Big Companies are paying themselves gigantic bonus's and executing stock buyback plans. Some of this will be corrected if Congress gets off the dime and passes something that will help create jobs and help the economy rebound. Getting health care costs under control would go a long way to bending this cost curve.
    • Sure, those current low interest rates hurt pension fund income projections, but be careful what you wish for...a rise to the 25 year average would make the pensions solvent, but the government even more insolvent. I'd also like to know how, after decades of under-funding pension reserves while distributing corporate profits, these corporations are not guilty of fraud...it's not like they didn't know they had these obligations coming; they simply chose current profits over preparing for future responsibilities. And don't blame "unexpectedly low returns"...if I take a mortgage and then my job changes and I have less income, does the bank give me a pass on my shortfall while I continue to lived as I did previously? I don't think so, and I don't see corporations wriggling out of obligations to pensioners any differently.
  • Yahoo! IBM Pension and Retirement Issues: "Re: Surviving spouse" by "madinpok". Full excerpt: If you die before officially retiring, by law the benefit your spouse receives is 50% of your vested pension. The law does not allow you to change this, except when you actually retire. Whether you are an active employee, out on LTD, or have left IBM and are working elsewhere, or simply have not started collecting your pension doesn't matter.

    One of the risks of leaving IBM and not starting your pension immediately is that you are stuck with the 50% J+S option until you actually start collecting your pension. If you want it to be something higher than 50%, that may be a risk you don't want to take. Or, you should protect dependents with adequate life insurance in the meantime.

  • U.S. Senate Committee on Health, Education, Labor & Pensions: The Retirement Crisis and a Plan to Solve It (PDF). Excerpts: The retirement crisis will have significant repercussions. As older Americans transition out of the workforce, either voluntarily or involuntarily, many will find that they cannot afford basic living expenses. They will be forced to make the difficult choice between putting food on the table and buying their medication. The retirement crisis will put an enormous strain on our families, our communities, and our social safety net.

    The retirement crisis is directly attributable to the breakdown of the traditional “three-legged stool” of retirement security – pensions, savings, and Social Security. Defined benefit pension plans used to play an enormous role in providing a reliable source of retirement income, but the pension system has been in decline for decades. At the same time, stagnant wages and rising costs are making it harder and harder to build up a nest egg through a retirement savings plan (e.g., a 401(k) or IRA) or otherwise. Fortunately, Social Security is still strong, but it was always intended to be supplemented by other sources of retirement income.

    am committed to ensuring that middle class families have a secure retirement. That is why I have been holding a series of hearings in the Senate Committee on Health, Education, Labor, and Pensions to highlight the state of retirement security and better understand how we can improve the system. This report summarizes the key findings from those hearings and includes two bold proposals to address the retirement crisis. Specifically, I propose providing universal access to a new type of retirement plan – Universal, Secure, and Adaptable (“USA”) Retirement Funds – that can deliver real retirement security for all working Americans. I have also proposed improvements to Social Security that will increase benefits and make the program stronger for future generations.

  • Yahoo! IBM Employee Issues message board: "Re: National Right to Work Act" by Paul Sutera. Full excerpt: Take your pick, the severance packages negotiated by European countries that have unionized IBM workers are more generous than US severance packages. This has protected parts of Europe from severe layoffs. If you think IBM would be willing to pay 2 years severance to a 20+ year employee just to get them out the door - follow the numbers.

    The "at-will" unprotected US worker (as well as those in UK, Canada and other non-union countries) have been ruthlessly mined for RAs. The layoffs in Germany, France and Italy have been far fewer percentage-wise than the US layoffs. This may change but remember, Ginny is focused on short-term profits.

    Right now we've heard the UK workers are being approached yet again... they keep mining the same non-unionized high-pay countries like UK, Australia, Canada, US, Ireland for layoffs. There is no immediate burst of new profits from paying a 2 year severance package to an IBM Germany worker. IBM has skirted this issue somewhat in Germany by hiring temporary employees to replace retired German workers, but there again, EU countries limit these to certain percentages.

    Dang socialists, always looking out for the peasants! Unemployment rates are still lower in Germany than in the US, even with the severe EU downturn.

  • Investment News: Pension plans keep more retirees out of poverty, reduce reliance on public assistance. Study: Defined-benefit pensions not only aid seniors but also provide a public service. By Darla Mercado. Excerpts: Retirees aren't the only ones who benefit from receiving a defined-benefit pension; the plans help curtail government spending.

    Defined-benefit pensions, which provide retirees with steady income for the remainder of their lives, are becoming a thing of the past as employers use defined-contribution plans and place more retirement savings responsibility on workers.

    But those income payments are a major factor behind keeping older American households out of poverty and less reliant on public assistance, according to research released Thursday by the National Institute on Retirement Security, a nonpartisan resUearch organization.

    “Defined-benefit income is especially valuable in keeping middle-class families in the middle class when they retire,” said Diane Oakley, executive director of the NIRS.

  • Glassdoor IBM reviews. Selected reviews follow:
    • It's a below average company” Current Project Manager in Delhi (India). Pros: –Too much process oriented. Too cumbersome in terms of getting the small things done, which looses its relevance by the time it's done. Not a good company in terms of paying, even increments are never matching the rising inflation. Cons: Its appraisal system is highly unscientific. Too much process oriented. Too cumbersome in terms of getting the small things done, which looses its relevance by the time it's done. Not a good company in terms of paying, even increments are never matching the rising inflation. Advice to Senior Management: The company has lost its charm with the employees. It's the old reputation which is working but after sometime may not be working.
    • Great brand to work but be ready for politics” Current Executive in Delhi (India). Pros: – Awesome salary package, nice remuneration. Background verification and criminal records are checked. The HR picks the best people from everywhere. Cons: Office politics, bad housekeeping, management problem is high. The facilities are provided by the company but they are not maintained properly. Advice to Senior Management: Give opportunities on unbiased basis. The attrition is high because employees are not satisfied, they work only because it is a brand to work with.
    • Good place to start a career and learn the ropes” Former Anonymous Employee. Pros: Working with smart, driven people. Education, ability to travel. Cons: –Long hours, below average pay, totally sales driven culture. Advice to Senior Management: Refocus talent management.
    • Great people throughout my 28 years here, but the company is not what it used to be” Current Advisory Software Engineer in East Fishkill, NY. Pros: - Wonderful people to work with, caring managers. Cons: - Benefits diminished over the years. - Always cutting back means smaller teams, getting less done, frustration due to limitations. - Company doesn't seem to care as much about its people as it used to. - More eager to offshore work to lower wage countries, than to hire US employees. Advice to Senior Management: Increase pay and other cash benefits. Add more people to allow getting more done. Make employees feel more needed.
    • Awesome company, awfully managed” Former Project Manager in Chennai (India). Pros: Flexible work hours, mega accounts, great experience, totally process driven, employee friendly policies, great cross cultural experience, great brand value. Cons: Biased people managers, sycophancy and not hard work wins promotions and good grades. There is an expectancy that an employee will spend money from his/her own pocket to do IBM business. No recognition of talent. Advice to Senior Management: – Keep a counter check on the people managers' powers - totally incompetent and undeserving candidates get grades and promotions. Is management aware of this? Make the redressal forum more accessible to the employee. Where does an employee go when he/she needs to report gross negligence of duty on the people managers' part? I was at a loss and so I quit the company in spite of all the benefits. In my case, I even brought it to the next level manager's notice - to no effect. both of them got grade progressions and promotions and left the account! Manager mafia?? Conduct exit interviews - I did not have one.
    • Good benefits, bad rating system” Current Advisory Software Engineer in Littleton, MA. Pros: Good benefits. Online training available. If you're fortunate enough to be dealing with new research, it can be fascinating and exciting work. Cons: Quota system for performance ratings (X% must fail). Yearly layoffs in US disguised as "resource adjustments". Emphasis on following process rather than innovating. Advice to Senior Management: End the quota system for performance ratings. Allow acquired companies to continue innovating.
    • Great workplace, great work life balance” Former Applications Developer in Bangalore (India). Pros: – Free from faults plaguing Indian IT companies (little respect to employee satisfaction being the prime one), it is a great workplace. Cons: Because of the humongous size, extra-ordinary opportunities for career advancement are hard to come by.
    • IBM is not what you would expect...” Current IT Specialist in Rio de Janeiro (Brazil). Pros: - Solid company, good benefit pack; - Health and dental insurance; - Job stability; - Home-office.

      Cons:

      • Too much management
      • The rules of the game are always changing
      • If you succeed you will receive more work than any human can take
      • Your salary will be the as good as your negotiation skills, I know some folks that work the same job as I and receive half of what I receive.
      • Management is not as experienced as you would expect -- I've found cases where my salary and experience would be a bigger than my managers and team leaders.
      • Project managers are not experienced at all. If you remove the jargon from 60% of the project managers you'll end up with empty shells and bullies.
      • Too much clients to support (I'm currently supporting +10 different clients), and the problem with this is that the level of support get's a lot lower
      • Attending IBM's policies is more important than client satisfaction (something every IBMer eventually find's out). Participating of the mandatory training's or internal meetings is by far more important than attending client's critical meetings.
      • If you're not physically located where most of your team is, or if you work on home-office, you won't be remember for nothing. As an example, me and some folks from my team were forgotten from the list for hardware upgrade this year.
      • Unreal targets and prices. IBM many times dump the prices and targets to win a contract, as a result you end up working 18h a day without overtime and if you refuse you get accused of not being a team player.
      • The culture of the company is too strong for some folks -- you end up having the craziest and unattached from reality conversations about the current state of the market, and how everyone is supposed to work for free on the holidays.
      • Depending of your project, prepare to work with really old technology (I'm currently working with some products that are out of support for over 10 years).
      • Lean GDF methodology, you'll discover that it's bad for the client and for the employees, as it tries to put a factory mindset on services and consulting, which in my humble opinion is just plain stupid. - I've replaced many folks from USA and Canada, as their job's got outsourced to Brazil, and as they got fired at the end of the project, from what I've seen, most were not treated with the proper respect and considerations that a employee with 20+ years deserve.

      Advice to Senior Management: - Kill Lean GDF; - Hire better management folks; - Understand that not all the needs are fulfilled just for being an IBMer.

    • Big Name. Don't care for employees” Current Anonymous Employee. Pros: 1. Big Name. Good on resume for future employment. 2. Exposure to large projects. Cons: 1. Employees treated as slaves. 2. Too many Asians talking in their own language midst people from other states, countries and client. 3. Too much reliance on contractors instead of its own practitioners. 4. Comparison for standard of living adjustment, and bonuses compared with people you have not worked within the division and people are not given chance to prove that they can match the others in the division (e.g. working on multiple projects). Advice to Senior Management: – 1. PM's (Project Executive) need to behave like PM's and not like a person in his village in Asia and talking to his local people.
    • IBM: Acquisition, take the money and run fast to another job offer.” Former Project Manager in Atlanta, GA. Pros: A good job to have while looking for another one. Cons: Low pay, RA's, ranking is a joke, blue washing another joke and too many "new" programs that never get off the ground. Advice to Senior Management: Get a backbone!
    • Company of no free will”. Former Project Manager in Helsinki, Southern Finland. Pros: Company is stable. It has a good articles to sell. Good reputation on working markets. Cons: People will never take the responsibility about their own work. They are always blaming someone else. In case you need something to be handled quickly, it must be approved on top level first, which is from Finland organization point of view - Top level Finland -> top level Nordic -> top level Europe -> top level US. And based on that nothing happens on time. Advice to Senior Management: Wake up and start living in today's world and not in 50's.
  • Alliance for Retired Americans: Friday Alert (PDF). This week's articles include:
    • President Obama Woos Older Voters in Florida
    • New Senate Report on “Retirement Crisis”
    • Alliance Members Say: Let’s Not Be the Last Generation to Retire
    • Health Law Saves $3.9 Billion on Prescriptions for People with Medicare
    • Wisconsin Alliance President to Tell Democratic Leaders of Need for Social Security and Medicare
    • CT Alliance Activist Named to State Panel
    • More Photos from Biden Event
  • New York Times opinion: Our Ridiculous Approach to Retirement. By Teresa Ghilarducci. Excerpts: Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

    In my ad hoc retirement talks, I repeatedly hear about the “guy.” This is a for-profit investment adviser, often described as, “I have this guy who is pretty good, he always calls, doesn’t push me into investments.” When I ask how much the “guy” costs, or if the guy has fiduciary loyalty — to the client, not the firm — or if their investments do better than a standard low-fee benchmark, they inevitably don’t know. After hearing about their magical guy, I ask about their “number.”

    To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security. ...

    If we manage to accept that our investments will likely not be enough, we usually enter another fantasy world — that of working longer. After all, people hear that 70 is the new 50, and a recent report from Boston College says that if people work until age 70, they will most likely have enough to retire on. Unfortunately, this ignores the reality that unemployment rates for those over 50 are increasing faster than for any other group and that displaced older workers face a higher risk of long-term unemployment than their younger counterparts. If those workers ever do get re-hired, it’s not without taking at least a 25 percent wage cut.

    But the idea is tempting; people say they don’t want to retire and feel useless. Professionals say they can keep going, “maybe do some consulting” or find some other way to generate income well into their late 60s. Others say they can always be Walmart greeters. They rarely admit that many people retire earlier than they want because they are laid off or their spouse becomes sick. ...

    It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?

  • Yahoo! IBM Pension and Retirement Issues: "Re: Our Ridiculous Approach to Retirement" by Kathi Cooper. Full excerpt: "The 401k system has failed..." No kidding?
  • Yahoo! IBM Pension and Retirement Issues: "Re: Our Ridiculous Approach to Retirement" by Jim Askew. Full excerpt: Like so many things in America today, we need to follow the money. The 401k system has been a failure in terms of funding our retirement, but it's been a huge success for Wall Street where it provides a huge amount of income for banks and investment firms. Isn't worshipping and enriching Wall Street what America is all about now?

    Traditional pensions, on the other hand, were cost effective, safe, secure, and incurred very low fees. We had to get rid of them...not enough money for the billionaires.

    A few years ago there was a big push to privatize Social Security. Yeah, that's all we need...still another income stream for billionaires at the expense of the working (forever) class.

  • Yahoo! IBM Pension and Retirement Issues: "Re: Our Ridiculous Approach to Retirement" by "ibmexe". Full excerpt: We definitely don't need 20x our annual income in financial wealth. That is WAY out of line of what others recommend...and most of those are also too high. Raises this question...does this person NOT read what other retirement specialists recommend?

    If you actually had 20x, a quick calculation shows that if you invested that at 3% annually, it would last 35 years if you withdrew 1x your annual income every year. That's longer than the life expectancy of a 55 year old. Add about $25K/year for SS and you get 1.25x you annual income every year if your annual income was $100K pre-retirement.

    But the actual fact is that you don't need 1X your annual income. Many years ago the Harvard Business School came out with a 70% recommendation. That's too high as well. Figure you can come out pretty well with 50%, part of which is SS and a very small or even no pension. So her estimate is 2X too high at least.

    Another thing that turns me off completely is her mentioning "your number". That's reminiscent of the ING TV ads. Suspect she works with/for ING. ING specializes in "managed funds", the sole purpose of which is to enrich ING through their outrageous management fees on top of their loser funds. But that in itself pales in comparison to ING managed retirement annuities. These are complete "rip-offs" since these investments are solely targeted to their worst performing funds.

    She does not offer a single example of the "managed retirement annuity fund" that she advocates that has made any gain whatsoever. Count me out on her proposal. ...even though I realize that there are many 401k's not nearly as good as IBM's. That's something that needs correcting...but there are other ways of achieving this goal that do not involve "retirement specialists" like her mismanaging our money while collecting outrageous fees.

  • Alliance for Retired Americans: Deficit Reduction Plans Threaten to Cut Social Security, Medicare & Medicaid Update: Summer 2012 (PDF). Excerpts: Unless Congress acts before the end of the year, automatic cuts in federal spending are scheduled to occur in January 2013 via a process known as “sequestration.” Both Social Security and Medicaid are protected from these automatic cuts, while Medicare fees to providers can be cut by two percent. Medicare recipients’ benefits would not be cut by sequestration.

    Some in Congress are working to stop the cuts by passing an alternative deficit reduction plan. While nobody knows for sure what this plan will look like, many in Congress have started looking back at proposals included in the deficit reduction plans of Bowles-Simpson, Rivlin-Domenici and the Republican budget. ...

    Congress may soon revisit these proposals when considering ways to avoid the automatic cuts and reduce the deficit. This is troublesome because these plans cut Social Security, Medicare and Medicaid, while giving tax breaks to the wealthiest. Congress needs to know that deficit reduction should include solutions that will re-start the economy, build jobs and stand up against cuts to these critically important programs. Review chart on back for more information...

  • Wall Street Journal: No Settlement in Infosys Whistleblower Lawsuit. By Dhanya Ann Thoppil. Excerpts: The whistleblower who sued Indian outsourcing company Infosys Ltd. for alleged violation of U.S. work visa laws said both parties have failed to settle the issue out of court. Jack Palmer, a principal consultant working at Infosys, who filed a lawsuit against India's second-largest software exporter, said in an email to Dow Jones Newswires late Tuesday that the case is set to go to trial on Aug. 20. ...

    He accused Infosys of using short-term business visit visas to get around the issuance of expensive and a limited number of work visas meant for high-skilled labor. His suit led to a probe by U.S. authorities, including an inquiry by a U.S. Senate subcommittee. Infosys has previously denied any wrongdoing.

  • MSN/Money: Poverty rising among US retirees. Failing health is especially likely to push older retirees over the edge, researchers say, and problem is expected to worsen. By Emily Brandon, U.S. News & World Report. Excerpts: Growing numbers of older Americans are spending their retirement years in poverty, according to a recent Employee Benefit Research Institute study (.pdf file). The proportion of older people living below the poverty line has been growing steadily since 2005, and many of those people are falling into poverty as they age and spend down their savings. ...

    One of the biggest drivers of poverty in old age are failing health and the associated medical costs. Most retirees living below the poverty line (70%) have suffered acute health conditions such as cancer, lung disease, heart problems or stroke, compared with 48% for those above the poverty line, according to health and retirement study data. And almost all senior citizens living in poverty (96%) have some sort of health condition, such as high blood pressure, diabetes, psychological problems or arthritis, versus 61.7% of retirees with incomes above the poverty line.

    "Medical expenditures go up for the elderly as they age, and medical expenses have been rising over the past decade very rapidly," says Sudipto Banerjee, a research associate at EBRI and the author of the report. "A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly."

  • Human Resource Executive Online: No End to Exorbitant CEO Exit Packages. While shareholders can often justify severance and pension payments, what really makes headlines is compensation in the form of separation agreements and payouts determined at the end of a CEO's tenure. And, as recent examples indicate, there's no end in sight for those roiling headlines. By Knowledge@Wharton. Excerpts: Leo Apotheker, the former CEO of Hewlett-Packard, resigned last September after just 11 months on the job -- but he left with a $13.2 million severance package.

    Craig Dubow, the former CEO of newspaper publisher Gannett, resigned in March after six years at the helm and walked away with $32 million.

    Eric Schmidt, who led Google for a decade, resigned in January 2011, exiting with an astounding $100 million golden parachute.

New on the Alliance@IBM Site
Minimize
  • Job Cut Reports
    • Comment 07/23/12: I just quit. I was a contractor. Prior, I was an IBMer for 33 years and a contractor for three years. It was effecting my health. I feel so bad for those left behind. -WSRK-
    • Comment 07/23/12: To u2whoer's point, the question by Bill C. Shope - Goldman Sachs Group Inc., and subsequent reply by Mark Lougridge tells it all. The proceeds from the sale of IBM's Point of Sale business is the blood money used to fund U.S. based 2H12 Roadkill. Here is the link to the Q&A session. Look for the Bill C. Shope area of the text, for additional pathetic details... International-Business-Machines-management-discusses-q2-2012-results-earnings-call -$20in15 Roadmap Roadkill-
    • Comment 07/23/12: The use of foreign IBM contractors on New York State contracts, and just as bad, the rationale for doing so, needs to be highlighted with a deluge of e-mails and phone calls to New York's leadership. It's bad enough New York has allowed IBM to extort taxpayer money over the years, but this latest revelation is over the top. -Think-
    • Comment 07/23/12: Strange that IBM can get away with H1, L1 visa holders for government contract work when the actual truth is that in order to comply with the contract requirements the workers must be US based. I guess the visa makes them US based. Ironic huh? -Anyone-Accountable?-
    • Comment 07/23/12: Voluntary separation has started in the UK. No idea on numbers. -Same old same old-
    • Comment 07/24/12: Help me out here. If IBM has been and will be laying off, HP has been laying off, Cisco is laying off 2% more on top of what has occurred, etc etc then why are ANY H1B, L1, or other foreign workers being allowed in to the US? Don't the staffing reductions demonstrate over supply of workers and hence the spigot should close? I walk around my neighborhood which has several big tech firms nearby and all I see now are foreign folks who weren't here even 4 years ago. I have nothing against anyone, but the law of supply and demand is being manipulated. Who do we collectively write, call, email to say enough is enough, look around at the decimated US workforce? -I've Been Mauled-
    • Comment 07/24/12: to -Anyone-Accountable?- I think that all the tricks they come up with to exterminate the IBM US workforce will come back to bite them in the arse. It's a game. Get a big contract, promise them the moon and stars, put a bunch of people on the account that are about 10% as productive as US based employees, shield them from the customer by puppets like SDMs and DPEs...but sooner or later the customer gets wise and unfortunately by that time IBM has royally screwed up their systems and whatever project it was hired to do. It does not matter, because IBM has already made a ton of money by doing nothing for the customer. It does not matter where the offshore people sit. The fact is...the plan does not work as we have seen over and over again by lost contracts. Unfortunately by the time IBM wakes up (and Wall Street, too) it will be too late and IBM will be back where it was in the 90's. So being the cycle again....and again. The only thing constant is change. Lots of fat cats will get even fatter in this process. It's a plan, and the only ones benefitting from it are the ones on top. -WakeUpAmerica-
    • Comment 07/24/12: Remember the days when US Govt or Corporate accounts that had strict Federal Regulations could only be supported by employees in the USA. Then IBM started pushing offshoring and suddenly we started seeing India based employees with Boulder e-mail addresses so that the client didn't know about the switch. It was supposed to be a well hidden secret, but it wasn't. Now, somehow, any account seems to be able to be supported from offshore sites. One of these days this all is going to come back to bite companies where it counts the most. Had to contact the HP Cust Support Desk last night for my own notebook and bingo, I got their US based centers and was told they are bringing more and more back onshore. -NeverChanges-
    • Comment 07/25/12: After 24 years (most with 1+ reviews) I've been told to find another position. Former project coworkers tell me they were told I'll be training engineers in India to take over my responsibilities. Pig's ass, IBM! I'd rather stick needles in my eyes. -TooMuchExperience-
    • Comment 07/25/12: You can write to your New York State Senator and Assemblyperson by entering who is my New York State Senator or who is my New York State Assemblyman. An employees union is the best way to curb corporate abuses but government needs to know they still work for us, and not only greedy corporations. -Anonymous-
    • Comment 07/25/12: Job cuts in UK wide and respected candidates to leave IBM in Sept no numbers yet roadlkill is in action -Joe-
    • Comment 07/25/12: I am glad I am not the only one who has to shake my head and say wtf did I just read. Loughridge speaks in some corporate double talk that is alien to me. Sounds like just bullsh*&. Who really understands all of that garbage? And the questions are definitely staged. Why not have a REAL q&a session with your employees? -Babylon-
    • Comment 07/25/12: SWG1, hearing from an excellent source that the Rational group is on the menu as "Burnt Toast" for breakfast. Good luck -SWG/RTP'er-
    • Comment 07/26/12: -TooMuchExperience-: I hope you can get 25 years and 1 nanosecond in just for the simple fact you will get another 6 months of severance health insurance through IBM before COBRA kicks in. And IBM sure seems bent on stopping you for entering their Quarterly Century (i.e. Survivors) Club and your induction luncheon, maybe the only meal or bread scrap, you can ever have on them now. I hope you also don't get cheated out of the FHA even as measly as it will be. Yup, don't trust this Blue Pig. They will do ANYTHING to save a shill as a cost cut since this upper management has NO CLUE on how to grow real revenues. I can't understand why the vast majority of IBMers feel a union is not necessary and do nothing to try for one. Gosh, they need a union BIG TIME. -over_and_out-
    • Comment 07/26/12: @Anonymous- what you say is true, the government works for US and not the corporations, however, the corruption with lobbying has the government in the back pocket of these corporations. You will only influence corruption with a better smelling rose (money). It would be easier to influence IBM itself than the Government. Look at what happened in Wisconsin as a good example. -Unionize-is-your-only-hope-
    • Comment 07/26/12: Boohoohoo I am supposed to feel sorry that execs aren't getting a pay raise this year when they get tons of other perks, i.e. options, etc? ohhh Please, I haven't had a raise since 2003, ask the senior VP about his "special" parking space for his Porsche? I bet he doesn't subscribe to the bell curve analysis of salary structure that pushes everyone to the middle pretty much guaranteeing no increase year on year. -Boohoohoo-
    • Comment 07/27/12: All I have to say is that when my RA finally comes through, it is going to be a sad day for the manager who has to sit across the conference room table from me when I take a job working for the customer. What did Dr. Seuss say? "Oh the Places You'll Go...." -gadfly-
    • Comment 07/28/12: I had finally left IBM after numerous years of service while my credit was being stolen by managers. All of a sudden, these H1B visa turned permanent resident IBMers want to LinkedIn with me. Years in IBM, they never friends me, now they want to connect ? These H1B visa workers are on the same pay scale as you and I. DO NOT believe they are being mistreated. The only difference is they are quiet, do not support union and very manageable. They are the obedience group and will do dirty job for IBM .Hence, they got all IBM love, many becomes your first and second line manager. Don't be surprise they are the one who turn your name in to be RA. -DO NO TRUST H1B-
    • Comment 07/28/12: -gadfly-, It is a kick for IBMers who have been hired by customers because we know the inside scoop on how the company is operating these days and the direction they plan on going to accomplish Roadkill. When I was RA'd earlier this year, I was approached to work for my old client on a project oversight team to monitor contract compliance/project, reporting and actual SLA status. And I'm not the only ex-IBMer they have approached to hire. -Ex-IBMer-
    • Comment 07/28/12: -gadfly- I would suggest if you are RA'ed just say nothing and walk away. Don't dump on the manager or tell them who you are going to work for. Get as much as they give you and just leave. If you burn the manager you might find that he/she will burn you with your potential employer. IBM managers are not allowed to give out recommendations or performance history. If you burn them they will give your prospective employer a "wink and nod" implying you were not a good employee. Just food for thought and good luck. -benthere-
    • Comment 07/28/12: Let's not say what we want to do if we get RAed. Let's organize and fight RAs. You don't understand that with an RA if you have 15 years or more IBM service you likely lose significant retirement benefits that were promised to you. For instance, you'll probably lose the FHA (even though it might only be enough for 2-3 years of retirement health premiums it's something you were told you'd get for retirement). You might also be unemployed longer than you think. You might not get the increased or same salary you think you'll get, you might even have to work as an IBM contractor and get further abused by the big blue pig, etc. Let's do something positive instead of resigning to getting caught up in any future RA(s). IBMers need a union contract now! Let's do it now. We have the power. -anonymous-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • The Week: Why both parties should embrace ObamaCare's state exchanges. Largely lost in the fight over ObamaCare is a worthy provision that lets states develop insurance systems that are right for them — but they must act soon. By Bill Frist. Excerpts: When the new health care reform law was being debated in 2009 and 2010, everyone talked about "death panels." When challenged in court, everyone debated the individual mandate. After last month's Supreme Court decision, the conversation has now switched to Medicaid. During all of this, however, we have largely ignored what is perhaps the most innovative, market-driven, and ultimately constructive part of the law: State exchanges.

    Originally a Republican idea, the state insurance exchanges mandated under the Affordable Care Act (ACA) will offer a menu of private insurance plans to pick and choose from, all with a required set of minimum benefits, to those without employer-sponsored health insurance. These exchanges are expected to bring health insurance to an additional 16 million Americans. Unlike the Medicaid expansion, these Americans will gain private insurance, and can choose the plan that's right for them. ...

    As a doctor, I strongly believe that people without health insurance die sooner. Sure, they can eventually go to an emergency room. But it is often too late. They wait longer to get a breast lump checked out. They wait until their nagging cough turns into a fulminant pneumonia. They skip preventive care and then show up to the ER with severe, costly, late-stage symptoms that are harder and more expensive to treat.

    State exchanges are the solution. They represent the federalist ideal of states as "laboratories for democracy." We are seeing 50 states each designing a model that is right for them, empowered to take into account their individual cultures, politics, economies, and demographics. While much planning has yet to be done, we are already seeing a huge range in state models. I love the diversity and the innovation.

  • New York Times: U.S. Women Have More Trouble Paying Medical Bills. By Ann Carrn. Excerpts: Women in the United States have more trouble paying for medical care than women in other countries, even if they have health insurance, an analysis of women’s health care by the Commonwealth Fund has found.

    According to the study, women in the United States said they had problems paying medical bills at double the rate of women in 10 other countries – all of which had universal health coverage — that were used for comparison. About a fourth of women in the United States 19 to 64 years old had medical bill problems, compared with 12 percent in France and 4 percent in Germany.

    Just half of women in the United States said they were confident they would be able to afford care if they became seriously ill, compared with nearly all women in Britain and three-fourths in the Netherlands and Switzerland.

  • Huffington Post: Surprise! A Nice Little Gift From ObamaCare Directly to Millions of Us. By Wendell Potter. Excerpts: The medical loss ratio (MLR for short) spells out the percentage of premium revenue insurers collect from policyholders that they actually pay out in medical claims. The more of our premium dollars our insurers use to pay for our medical care and improve our health, the higher the ratio. In 1993, before the conversion of many nonprofit insurance firms to for-profit status, the average MLR was 95 percent, meaning that insurers were paying out 95 cents of every premium dollar for our actual health care. Fifteen years later, that average had dropped to about 80 cents. Why? Because the less insurers pay out in claims, the more is available for profits. As you might imagine, Wall Street is very happy indeed when the MLR is constantly falling. And that's why shareholders and financial analysts are constantly pressuring insurance company executives to do all they can to keep pushing the MLR down.

    One of the reform law's most important provisions -- the one that that insurance firms and Wall Street despise most -- is the one that sets the minimum allowable MLR, effective last year, at 80 percent for policies sold to individuals and small businesses. For large groups it's 85 percent. If insurers' MLRs drop below those percentages, they have to send rebate checks to their policyholders. Really.

    That reckoning came last week for insurance companies that violated the law in 2011. Checks from insurance companies to individuals are now pouring into mailboxes all across the country, and if the one received by a friend in Tennessee is an indication, most Americans are wondering what the heck is going on. Nobody, certainly not the local media, had clued them in on the fact that they might actually be able to put a few bucks in their pockets because of ObamaCare. ...

    ... Golden Rule in Tennessee didn't even come close to meeting the MLR guideline. UnitedHealthcare had to acknowledge that in 2011, Golden Rule spent only 70.9 percent of a total of $35.9 million in premium dollars it collected from policyholders in the Volunteer State on health care. "Since it missed the target in your State by 9.1 percent of premiums it received, Golden Rule must refund 9.1 percent of your health insurance premiums... " The company went on to tell Gary: "This refund is required by the Affordable Care Act -- the health reform law."

    You can be sure insurers not only hate that they are required to send out those rebate checks, they really hate it that they must tell policyholders the Affordable Care Act made them do it.

  • New York Times editorial: A Formula for Cutting Health Costs. Excerpt: No matter what happens to President Obama’s health care reforms after the November elections, the disjointed, costly American health care system must find ways to slow the rate of spending while delivering quality care. There is widespread pessimism that anything much can be achieved quickly, but innovative solutions are emerging in unexpected places. A health care system owned and managed by Alaska’s native people has achieved astonishing results in improving the health of its enrollees while cutting the costs of treating them.

    At a recent conference for health leaders from the United States and abroad at the native-owned Southcentral Foundation in Anchorage, the Alaskans described techniques that could be adopted by almost any health care organization willing to transform its culture. Such a transformation would require upfront financing for training, data processing and the like, but the investment should rapidly pay off in reduced costs.

  • The Commonwealth Fund: Medicare Works: Public Program Continues to Outperform Private Insurance in Ensuring Access to Care and Providing Financial Protection. By Karen Davis and Kristof Stremikis. Excerpts: The Medicare program continues to do better than private coverage for working-age adults when it comes to fulfilling the main purposes of health insurance—providing access to care and adequate financial protection from burdensome medical bills, according to Commonwealth Fund research published July 18 in the health policy journal Health Affairs. The study also found that elderly beneficiaries who opted for private Medicare Advantage coverage over traditional Medicare plans were significantly more likely to experience problems accessing care and to give their plan a fair or poor rating.

    In addition, elderly Medicare beneficiaries with either traditional or private coverage gave higher ratings to their insurance plans than people with employer or individual insurance. After adjusting for income, health status, and the presence of chronic conditions, we found that only 8 percent of Medicare beneficiaries ages 65 and older rated their insurance as fair or poor, compared with 20 percent of adults with employer insurance and 33 percent of those who purchased insurance on their own (Exhibit 1). Adults with employer-based insurance or individual insurance reported medical bill problems at almost double the rate of Medicare beneficiaries. And about one-fourth of Medicare beneficiaries went without needed care because of costs, compared with 37 percent of adults with employer coverage and 39 percent of those with individual coverage.

  • The Financial Times: The GOP should reform – not repeal – Obamacare. By David Frum. Excerpts: “Repeal and replace” has been the Republican slogan against the giant Democratic health reform enacted in 2010. But replace with what?

    High quality global journalism requires investment. The reform, for all its many, many faults, did one important thing: extend health insurance coverage to almost all Americans. A Republican alternative should aspire to do the same. That statement is controversial in today’s GOP. It should not be. Universal coverage need not mean higher costs, nor more statism. But how to get there while meeting Republican concerns?

    Here are four ideas for the next Republican Congress and president...

  • The Commonwealth Fund: State Health Insurance Exchange Laws: The First Generation. By Sara Rosenbaum, J.D., Nancy Lopez, J.D., M.P.H., Taylor Burke, J.D., L.L.M., and Mark Dorley, M.P.H. Overview: Overview Health insurance exchanges are the centerpiece of the private health insurance reforms included in the Patient Protection and Affordable Care Act. As of May 2012, 13 states, together with the District of Columbia, had taken legal action to establish exchanges, through legislation or executive order. State implementing laws are essential to the translation of broad federal policies into specific state and market practices. Overall, the laws in the 14 jurisdictions vary, but they tend to show a common approach of according exchanges much flexibility in how they will operate and what standards they will apply to the insurance products sold. In all states, these "threshold policies" will be followed by policy decisions, expressed through regulations, guidelines, and health plan contracting and performance standards.
  • Bloomberg/BusinessWeek: After Repealing Obamacare, What Would Romney Replace It With? By Elizabeth Dwoskin. Excerpts: There’s a lot we don’t know about Mitt Romney—such as what’s in his 2009 tax returns, or his position on a number of important issues. One thing we do know: As president, he would “act to repeal Obamacare” on his first day in office.

    Which is why it’s interesting that, as Robert Pear of the New York Times points out, a top Romney aide is also serving as an adviser to states looking to set up the state health-care exchanges that are at the heart of the Affordable Care Act. Former Utah Governor Michael Leavitt, a Romney friend who was George W. Bush’s secretary of Health and Human Services, has advised states including New Mexico and Pennsylvania on how to start the exchanges, where low- and middle-income people and small businesses without health plans will be required to buy insurance. Leavitt has also helped states prepare to expand their Medicaid rolls, something some GOP governors, such as Florida’s Rick Scott, hotly oppose.

 

News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"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.

  • Reuters, courtesy of Huffington Post: Super-Rich Hold Up To $32 Trillion In Offshore Havens: Report. Excerpts: Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday. The study estimating the extent of global private financial wealth held in offshore accounts - excluding non-financial assets such as real estate, gold, yachts and racehorses - puts the sum at between $21 and $32 trillion. ...

    The report also highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.

  • Huffington Post: Half Of American Households Hold 1 Percent Of Wealth. By Dan Froomkin. Excerpts: The share of the nation's wealth held by the less affluent half of American households dropped precipitously after the financial crisis, to 1.1 percent, according to new calculations by Congress's nonpartisan research service.

    By contrast, the share of total net worth held by the wealthiest 1 percent of American households continued rising, hitting 34.5 percent in 2010. The top 10 percent's share was 74.5 percent.

  • Huffington Post: Mitt Romney Avoided Major Tax Hit By Shifting Stock Of Offshoring Firm. Excerpts: Mitt Romney saved himself hundreds of thousands of dollars in taxes in 2010 by transferring stock in two companies from his personal account to a nonprofit entity he set up. The stock maneuver included $172,397 in shares of Sensata Technologies, a company now under fire for a high-profile effort to offshore central Illinois jobs to China.

    Sensata produces sensors, switches and various mechanical controls. The Attleboro, Mass.-based company is owned by Bain Capital, the private equity firm Romney founded, and it already does most of its work in overseas plants. A remaining factory in Freeport, Ill., garnered national attention when remaining workers began pleading with Romney to exercise his influence over Bain Capital to save their jobs. ...

    Sensata employee Cheryl Randecker, who will be laid off under Bain's offshoring plan for the Freeport plant, criticized Romney in a video interview with HuffPost on Wednesday. "We continue as Americans to move our jobs overseas, thinking about the dollar ... instead of putting people first like this country was based on," Randecker said. "We actually just want Governor Romney to come and sit down and talk to us and explain why he continues to outsource jobs to the Chinese and other countries. And we need the jobs ... not the minimum-wage jobs, but the good-paying jobs that you can actually raise a family on." ...

    Rebecca Wilkins, an attorney with Citizens for Tax Justice, said such nonprofits are a convenient way for the wealthy to earn tax breaks today for donations that might not be doled out for years. "Wealthy taxpayers can front-load their deductions and get huge taxpayers subsidies," she said in an email. "For example, someone who wanted to give $1 million to his church every year could give $10 million to his private foundation and let the foundation give it to the church over the next decade or so. In the meantime, he gets the $10 million deduction in the current year -- saving millions of dollars in income taxes while keeping control of the money through the foundation's trustee."

    Gaulrapp, the Freeport mayor, said that Bain brought Chinese workers to town last summer so that the American employees could train their successors. "It's pretty insulting," said Gaulrapp, a Democrat serving in the nonpartisan mayoral job. "It's like being asked to dig your own grave."

  • BusinessWeek: What's Romney Hiding in His Tax Returns? By Joshua Green. Excerpts: As George Will and many others have noted, there must be something truly damaging in Romney’s pre-2010 tax returns for him to willingly endure the criticism and scrutiny that has accompanied his refusal to release them—a refusal he reiterated on Friday, even as the issue, and the matter of his departure date from Bain Capital, has engulfed the campaign. “The cost of not releasing the returns are clear,” Will said on ABC’s This Week on Sunday. “Therefore, he must have calculated that there are higher costs in releasing them.”

    So what could it be that Romney is so determined not to disclose?

    Last night I had dinner with some (non-Bain) private equity executives, and I took the opportunity to quiz them on the topic and test my own theories about Romney’s tax returns. Let me emphasize that I have no idea what is in those returns, and neither did anyone I spoke with. What follows is unfounded, though not implausible, speculation. The most intriguing scenario that emerged about what could be lurking in those returns is as follows...

  • New York Times Opinion: American Exceptions. By Timothy Egan. Excerpts: The two great bottom-line phrases of modern life are: “Put your money where your mouth is” and, regarding fact-checking and getting to the meat of any operation, “Follow the money.”

    Mitt Romney’s mouth is certainly in this country. “Believe in America” is his campaign mantra, as ubiquitous as a pop-up flag on his Web site, and bannered at every rally. The president’s policies, he said this week by way of comparison, “are extraordinarily foreign.”

    But Romney’s own money is somewhere else, showing that he’s willing to bet against America — its currency, its tax system, its safety as a place for capital. Anyone who wants to lead this nation, and stashes millions of dollars in foreign banks, overseas financial havens and byzantine accounts in countries without tax or regulation, had better be prepared to defend that financial betrayal.

    Yet Romney will not defend it, even though there’s a decent free-market argument for how his fortune found a refuge offshore. ...

    Romney has shown the same instincts as Eduardo Saverin, a co-founder of Facebook with a net worth of about $2 billion, who chose to renounce his United States citizenship and park his money elsewhere rather than pay American capital gains taxes. This despite the fact that the richest 1 percent in the United States are paying the lowest tax rate in 80 years. ...

    On the campaign trail this spring, Romney recalled traveling abroad as an executive at Bain Capital, “standing a little taller, a little straighter, because I knew I had a gift that others didn’t have, and that was, I was American.” In all likelihood, he was visiting his money overseas at the time of this epiphany.

    Or he could blame it all on President Obama, as his inept surrogates have been trying to do — saying that the president’s onerous tax policies have driven good capitalists like Romney to seek shelter in the Swiss alps or the Cayman sands.

    The only problem with that argument is that Romney’s overseas investments span the Clinton, Bush and Obama years. Vanity Fair detailed a Bermuda corporation “wholly owned by W. Mitt Romney” set up in 1997. By the time of his 2010 tax returns — the only full year Romney has revealed — a full 55 pages of his return “are devoted to reporting his transactions with foreign entities.”

  • Washington Post opinion: Libor fraud exposes Wall Street’s rotten core. By Elizabeth Warren. Excerpts: The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system.

    The London interbank offered rate is a benchmark for a range of interest rates, and the misdeeds making headlines have to do with how those rates are set. If insiders can manipulate the basic measurement of a loan — the interest rate — there is rot at the core of the financial system.

    The British financial giant Barclays has admitted to manipulating the rate from 2005 to at least 2009. When the bank made a bet on the direction in which interest rates would turn, the Barclays employees who submit data for calculating interest rates would fake their numbers to help Barclays traders win the bet. Day after day, year after year, bet after bet, Barclays made money by fixing bets for its own traders.

    We don’t know who else was fixing bets. Other big banks, including some of the largest in the United States, are under investigation. Barclays doesn’t appear to have acted alone, and it is clear that its fixes weren’t secret deals by rogue traders. Traders put requests to manipulate the rates in writing and even joked about delivering champagne to those who helped them.

    It is also clear that many of those who didn’t have a fixer — including consumers, community banks and credit unions — lost money. Barclays padded its bottom line by taking money from everyone else. It won when it shouldn’t have won — and others lost when they shouldn’t have lost. The amount of money involved is staggering. On any given day, $800 trillion worth of credit-related transactions are linked to Libor rates.

    In most markets, consumers could simply take their business elsewhere once they learned that the scales were rigged. But interest rates are different. Everyone who borrows money on a mortgage, credit card, student loan, car loan or small-business loan — basically, everyone — is affected by a crooked market on Libor. According to the Federal Reserve Bank of Cleveland, in 2008 more than half of all adjustable-rate mortgages were linked to Libor. Even those who didn’t borrow but saved for retirement or their children’s future got hit with interest rates that had been faked.

  • The Fiscal Times: U.S. Cities Get Fleeced in Libor Scandal. By Merrill Goozner. Excerpts: It seemed like a good idea at the time.

    In the two decades before the 2008 financial collapse, the investment banking industry sidled up to state and local finance officials with an offer they couldn’t refuse. Instead of issuing plain vanilla 30-year fixed-rate bonds to build roads, schools and parking garages, why not sell variable rate bonds at lower rates and buy a swap that would fix the total payment at something lower than what they’d pay in the fixed-rate market?

    It was supposed to be win-win. The government agency got a slightly lower rate, while the investment bank earned fees. If the variable bond’s rate rose above the fixed rate target – the scenario that government finance officials feared most – the swap counterparty (the banks often off-loaded the instruments to speculators) paid off the government agency. If the variable bond rate went down, the swap payments moved in the other direction: from taxpayers to speculators. Either way, the government’s total cost was supposed to stay fixed. ...

    As the world has learned in recent months, the banks behind Libor have been reporting incorrect lower rates to make their finances appear more stable. Government investigators and regulators are also investigating allegations that bank insiders manipulated the Libor rates to benefit their proprietary trading desks.

  • AlterNet: 6 Ways Big Banks Screwed Grandma in the Price-Fixing Scandal That's Rocking the World. Grandma's finances will almost certainly never recover from the LIBOR scandal. And, needless to say, she never asked for it. By Alexander Arapoglou and Jerri-Lynn Scofield. Excerpts: Every business day at 11am, London time, something critical to the world economy happens. Leading "reference banks" are asked what they believe borrowing rates to be. Based on what they say, LIBOR (London Interbank Offered Rate) is set for that day. Those rates then flow through to the broader economy. They determine how trillions of dollars of loans, mortgages and derivatives are priced.

    Barclays has admitted that from 2005 to 2007, individual traders nudged LIBOR both higher and lower to suit the investments they were holding in their trading books. They did this in order to maximize their profits. Traders get bonuses based on their profits and losses, and some couldn’t resist the temptation to massage their results to show the biggest gains possible. ...

    The revelations have triggered a political furor in the U.K.— but nothing comparable, so far, in the U.S. But this might soon change if a two-year investigation concludes that any U.S. reference bank — including Bank of America, Citibank and J.P. Morgan Chase, or even all three – was in on the fix.

  • ThinkProgress: 20 Prominent Republicans Who Want Romney To Release More Tax Returns Right Now. By Annie-Rose Strasser. Excerpts: Mitt Romney continues to resist pressure to turn over more tax returns. In an interview today he said he is “simply not enthusiastic about giving them hundreds or thousands of more pages to pick through, distort, and lie about.”

    The call for more information about Romney’s financial past, however, is bipartisan. A poll released today found fifty six percent of all voters, including sixty one percent of independents, think that Romney should release twelve years of returns.

    These fifteen prominent Republicans are calling on Romney to release more tax returns, now...

  • Smirking Chimp: Republicans Filibuster Bill Ending Tax Breaks For Shipping Jobs Out Of Country! By Dave Johnson. Excerpts: Senate Republicans today FILIBUSTERED to block a bill ending the tax breaks companies get when they send our jobs out of the country -- and giving a few breaks to companies that hire here. The question now: will this get reported to the public? Will they be told this was a Republican filibuster, or just that "The Senate" "blocked" the bill? And will we ever know which companies -- and countries -- paid Republicans to kill this bill.

    According to GovTrack.us, the Bring Jobs Home Act:

    Amends the Internal Revenue Code to:

    (1) grant business taxpayers a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the United States and relocating it within the United States, and

    (2) deny a tax deduction for outsourcing expenses incurred in relocating a U.S. business outside the United States. Requires an increase in the taxpayer's employment of full-time employees in the United States in order to claim the tax credit for insourcing expenses.

  • AlterNet: Corporation That Paid Nothing In Taxes For Four Years Tells Congress It Pays Too Much In Taxes. By Travis Waldron. Excerpts: Over a four years period from 2008 to 2011, Corning Inc. was one of 26 companies that managed to avoid paying any American income taxes, even though it earned nearly $3 billion during that time. In fact, according to Citizens For Tax Justice, the company received a $4 million refund from 2008 to 2010. That didn’t stop Susan Ford, a senior executive at the company, from telling the House Ways and Means Committee this week that America’s high corporate tax rate was putting her company at a disadvantage:
    American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home.

    Ford told the committee that Corning paid an effective tax rate of 36 percent in 2011, but as CTJ notes, she is counting taxes on profits earned overseas that haven’t yet been paid and won’t be unless the company decides to bring the money back to the United States. Corning’s actual tax rate in 2011, according to CTJ’s analysis, was actually negative 0.2 percent.

  • New York Times essay: A Nation That’s Losing Its Toolbox. By Louis Uchitelle. Excerpts: The Obama administration does worry publicly about manufacturing, a first cousin of craftsmanship. When the Ford Motor Company, for example, recently announced that it was bringing some production home, the White House cheered. “When you see things like Ford moving new production from Mexico to Detroit, instead of the other way around, you know things are changing,” says Gene B. Sperling, director of the National Economic Council.

    Ask the administration or the Republicans or most academics why America needs more manufacturing, and they respond that manufacturing spawns innovation, brings down the trade deficit, strengthens the dollar, generates jobs, arms the military and kindles a recovery from recession. But rarely, if ever, do they publicly take the argument a step further, asserting that a growing manufacturing sector encourages craftsmanship and that craftsmanship is, if not a birthright, then a vital ingredient of the American self-image as a can-do, inventive, we-can-make-anything people. ...

    Traditional vocational training in public high schools is gradually declining, stranding thousands of young people who seek training for a craft without going to college. Colleges, for their part, have since 1985 graduated fewer chemical, mechanical, industrial and metallurgical engineers, partly in response to the reduced role of manufacturing, a big employer of them.

    The decline started in the 1950s, when manufacturing generated a hefty 28 percent of the national income, or gross domestic product, and employed one-third of the work force. Today, factory output generates just 12 percent of G.D.P. and employs barely 9 percent of the nation’s workers. ...

    “In an earlier generation, we lost our connection to the land, and now we are losing our connection to the machinery we depend on,” says Michael Hout, a sociologist at the University of California, Berkeley. “People who work with their hands,” he went on, “are doing things today that we call service jobs, in restaurants and laundries, or in medical technology and the like.”

    That’s one explanation for the decline in traditional craftsmanship. Lack of interest is another. The big money is in fields like finance. Starting in the 1980s, skill in finance grew in stature, and, as depicted in the news media and the movies, became a more appealing source of income. ...

    Craft work has higher status in nations like Germany, which invests in apprenticeship programs for high school students. “Corporations in Germany realized that there was an interest to be served economically and patriotically in building up a skilled labor force at home; we never had that ethos,” says Richard Sennett, a New York University sociologist who has written about the connection of craft and culture.

  • Huffington Post: Austerity's Big Winners Prove To Be Wall Street And The Wealthy. By Zach Carter. Excerpts: The poor and middle classes have shouldered by far the heaviest burdens of the global political obsession with austerity policies over the past three years. In the United States, budget cuts have forced states to reduce education, public transportation, affordable housing and other social services. In Europe, welfare cuts have driven some severely disabled individuals to fear for their lives.

    But the austerity game also has winners. Cutting or eliminating government programs that benefit the less advantaged has long been an ideological goal of conservatives. Doing so also generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens.

    U.S. financial interests that stand to gain from Medicare, Medicaid and Social Security cutbacks "have been the core of the big con," the "propaganda," that those programs are in crisis and must be slashed, said James Galbraith, an economist at the University of Texas. ...

    That solicitude for the profits of big corporations shows up in Simpson-Bowles too. The plan offers multiple corporate tax reform proposals, but one, which calls for shifting to a so-called territorial tax system, would be especially advantageous to Morgan Stanley and other Wall Street banks. It would allow U.S. companies to permanently avoid paying U.S. taxes on overseas income, including money stashed in offshore tax havens like the Cayman Islands. According to a 2008 report by the Government Accountability Office, Morgan Stanley operates 273 sub-companies headquartered in such tax havens.

    While Social Security advocates have attacked the plan, the Business Roundtable, a lobbying group for corporate CEOs, has praised Simpson-Bowles. So has Peter Peterson, who served as Richard Nixon's commerce secretary before founding Blackstone Group, a major private equity firm. Peterson has long advocated cuts to Social Security and Medicare, and he started a think tank devoted to federal debt reduction in 2008. ...

    "Austerity policies are literally a redistribution from the bottom of the income spectrum to the top," said Dorian Warren, a professor of political science at Columbia University and a fellow at the Roosevelt Institute, an economic policy think tank. "In Wisconsin, both wealthy people and businesses got tax breaks, while middle-class and working-class employees of the state essentially got crushed."

  • Financial Times: US lawmakers propose greater SEC powers. By Shahien Nasiripour. Excerpts: High quality global journalism requires investment. A bipartisan pair of senior US lawmakers are to introduce legislation on Monday that would expand the authority of the main securities regulator to pursue larger penalties against companies and individuals accused of wrongdoing.

    Jack Reed, Democrat from Rhode Island, and Chuck Grassley, Republican from Iowa, want the Securities and Exchange Commission to be able to levy fines equal to the amount of investor losses in the most serious fraud cases. The lawmakers cited the recent case of two former Bear Stearns hedge fund managers who were charged with fraud that cost investors $1.6bn. The SEC settled with both for a total amount of about $1m.

    The SEC has been repeatedly criticised for reaching allegedly lax settlements with companies accused of violating securities laws. In a 2011 case against Citigroup, a federal judge refused to approve a settlement in part because the SEC had demanded mere “pocket change” from a big bank accused of misleading buyers of a mortgage-related security. ...

    “Some of these institutions that are too big to fail have also become too big to care. If they look at the bottom line and see they can break the law, get caught, pay a nominal fine, and still profit, the cycle of misconduct will continue,” said Mr Reed, who chairs the Senate subcommittee that oversees the SEC. Mr Grassley likened relatively small fines for Wall Street companies to “the cost of doing business”.

  • Huffington Post: Tricks, Traps, and Accountability. By Elizabeth Warren. Excerpts: As we mark the one year anniversary of the Consumer Financial Protection Bureau (CFPB), I've been thinking about how for years leading up to the 2008 financial crisis, I asked students in my contract law class to read a credit card agreement -- either an offer that they'd received in the mail or the actual agreement they'd signed onto -- and answer some basic questions. Some were easy: When is your bill is due? Do you get points? The students always answered those.

    The next questions went to the heart of the deal: Does your credit card have an arbitration clause, preventing you from suing in court if the company cheats you? No one knew. How long it would take you to pay off a $1000 purchase with interest if you paid the minimum monthly payment? They didn't know. And when I assigned that basic question as homework, almost all of them spent hours knee deep in fine print without finding an answer.

    Markets work when people can evaluate the prices and risks of different products, then pick the ones that work best for them. But when the terms of the deal are hidden, competition doesn't work. And customers aren't the only ones who are hurt. If a small bank with a limited advertising budget offered a better card, no one could figure that out and switch. That had been the state of the consumer credit market for years.

    Following deregulation in the 1980s, a number of big banks figured out that they could build a very profitable business based on deception -- tricks and traps buried in fine print, teaser rates that hid the true costs of mortgages, and obscure terms (like double-cycle billing) than no one understood. They sold a lot of mortgages, credit cards and other loans, sometimes deliberately targeting people they knew wouldn't be able to pay in order to rake big fees off the top before they sold the loans to someone else. ...

    The new CFPB was designed to level the playing field for small players -- families, students, seniors, community banks, credit unions, small businesses. It aimed to cut complexity out of the system, mowing down the fine print that hid bad surprises, using easy-to-read forms, and getting rid of tricky language. It aimed to let people make apples-to-apples comparisons when shopping for financial products, so people could evaluate three mortgages head-to-head or the terms of three student loan offers. The new agency was also designed to be a cop on the beat to make sure that even the biggest banks follow the law.

    Not surprisingly, the Wall Street banks fought against the consumer agency, but it was passed into law because more than 200 groups and countless people came together to create real reform. ...

    And just this week, the CFPB announced that its first public enforcement action will require Capital One to refund two million consumers a total of $140 million, in addition to paying a $25 million penalty, as a result of the company's deceptive and misleading practices on credit cards.

    Progress is unmistakable, but the fight over CFPB's existence continues. The big banks, their lobbyists, their friends in Congress, and even Mitt Romney have pushed for repeal of the new agency. Despite the pressure, the new agency stays focused on its mission, helping make sure that everyone -- no matter how big -- has to follow the same rules.

  • The New Yorker: Bankers Gone Wild. By James Suroweicki. Excerpts: In order to work well, markets need a basic level of trust. As Alan Greenspan said, in 1999, “In virtually all transactions we rely on the word of those with whom we do business.” So what happens to a market in which the most fundamental assumptions turn out to be lies? That is the question in a scandal that has roiled the banking industry all summer. The LIBOR (London Inter-bank Offered Rate) index is the most important set of numbers in the global financial system. Used as a benchmark for interest rates around the world, it’s assembled by asking a panel of big banks to estimate what it would cost them to borrow money today, if they had to. Hundreds of trillions of dollars in derivatives, corporate loans, and mortgages are pegged to these rates. Yet we now know that for years LIBOR rates were rigged. Barclays has agreed to pay nearly half a billion dollars to regulators for its manipulations, and a host of other big banks are under investigation for similar misdeeds.

    Rigging LIBOR was shockingly easy. The estimates aren’t audited. They’re not compared with market prices. And LIBOR is put together by a trade group, without any real supervision from government regulators. In other words, manipulating LIBOR didn’t require any complicated financial hoodoo. The banks just had to tell some simple lies. ...

    The most striking thing about this scandal is that it was predictable—the way LIBOR was designed practically invited corruption—yet no one did anything to stop it. That’s because, for decades, regulators and people in the financial industry assumed that banks’ desire to protect their reputations would keep them honest. If banks submitted false LIBOR estimates, the argument went, the market would inevitably find out, and people would stop trusting them, with dire consequences for their businesses. LIBOR was supposedly a great example of self-regulation, evidence that the market could look after itself better than regulators could.

  • Washington Post opinion: The secret in Mitt Romney’s tax returns. By Richard Cohen. Excerpts: To paraphrase Rhett Butler, I don’t give a damn if Mitt Romney releases more of his tax returns. I expect to learn nothing from them, aside from the fact that he is very rich and has paid less in taxes than he has acknowledged. He has probably taken advantage of all the loops and dodges in the tax code, piling trusts on top of trusts, securing wealth for Romneys yet unborn — gelt unto the third generation, little taxed, slightly taxed or taxed not at all.

    “Let me tell you about the very rich,” F. Scott Fitzgerald once wrote. ’Scuse me, Scotty, let me tell you about them: They don’t pay much in taxes. ...

    By and large, the tax filings tell you nothing you don’t already know. But the refusal to release them is a different matter. In Romney’s case, this is his one and only stand on principle, an odd example of political bravery. He has flipped on abortion, gun control and, of course, health-insurance reform, his signature achievement as governor of Massachusetts. But not on releasing his taxes. Others have been recalcitrant. Ronald Reagan didn’t want to do it (he charged his daughter Maureen interest on a loan) but ultimately did. ...

    It’s impossible to know what Romney is not revealing. But it is instructive to contrast him to his father, George, who was an auto executive and governor of Michigan. When George Romney ran for president in 1968, he released 12 years of income tax returns. But he was essentially salaried — his remuneration set either by statute or by a board of directors — and so really he was divulging little. Maybe more important, he actually made something (cars) or did something (governed). His son not only manufactured nothing but earned his wealth the new way — by financial manipulation, leveraging and such. On paper, it could look ugly.

    For Mitt Romney, there are no assembly lines, no factories or mines — just back offices and computer terminals and such esoterica as the infinitesimal difference between what the Libor rate should be and what it is. He was loyal to no company, no industry — just to his investors. The making of such money is concealed, based on the exotic manipulation of numbers and the disregard of people. Only a relatively few know how to do this sort of thing, and they don’t much like to talk about it. Romney, as we already know, is one of those people. He hides his taxes not because it would reveal anything new about him, but because it would reveal what he has always known about us: We’re suckers.

  • Financial Times: The banking firemen won’t prevent fires breaking out. By John Gapper. Excerpts: High quality global journalism requires investment. Nearly four years after the Wall Street bailout, the beneficiaries of the US government’s support are battered and unpopular, but still in business. Meanwhile, the regulators that rescued them are in trouble.

    The Libor affair is the latest scandal to affect the already low reputation of the big banks. It adds to most taxpayers’ feeling that they were forced to support a set of institutions that did not deserve it. “They should be enraged by the broken promises to Main Street and the unending protection of Wall Street,” writes Neil Barofsky, the former special inspector general of the troubled asset relief programme.

    Mr Barofsky’s book Bailout renews his lengthy grudge match with Tim Geithner, the US Treasury secretary, whom he saw as over-sympathetic to Wall Street. “I find that deeply offensive,” Mr Geithner complained haughtily to Charlie Rose of PBS this week when faced by the notion that, as former president of the New York Federal Reserve, he was too close to the industry. ...

    Apart from a general reluctance on the part of modestly paid and under-resourced supervisors to battle with wealthy, assertive bankers, they were held back by a philosophy that trading was a professionals’ market in which everyone knew how to take care of themselves. Various scandals have disproved that.

    As Adair Turner, chairman of the UK Financial Services Authority, said this week, it is possible for a banker “to make huge amounts of money out of a multi-step chain which connects ill-informed investors in one country to ill-informed subprime borrowers in another, and still go home believing [he is] a fine upstanding member of society”.

  • Political Irony: Tightwad Obama. Excerpts: Republicans have repeated the lie that Obama is a big spender so often, that even some democrats believe it. But the fact is that federal spending under Obama has increased at the lowest rate since Eisenhower wound down the Korean war. Adjusted for inflation, federal spending under Obama has gone down. Even not adjusted for inflation, in Obama’s first budget (for fiscal year 2010), spending in raw numbers went down 1.8%. And in his budget for 2013 spending is scheduled to fall 1.3%. How does this compare to other presidents?

  • The Fiscal Times: Are the Banks Too Big to Fail, Manage and Regulate? By Merrill Goozner. Excerpts: Treasury Secretary Timothy Geithner’s admission on Wednesday that he failed to blow the whistle on the Libor scandal and former Citigroup chairman Sandy Weill’s call to break up the banking behemoths seem at first blush to have little in common.

    But they are, in fact, two sides of the same coin.

    Weill admitted on CNBC’s Squawkbox that the 1999 repeal of the depression-era ban on combining lending banks with investment banks failed by creating institutions that are too big to manage and too big to fail.

    “What we should probably do is go and split up investment banking from banking,” Weill said in televised comments that ricocheted around financial markets and the Internet throughout the day. Weill was one of the original gravediggers for Glass-Steagall when he engineered the merger of Citibank and Traveler’s Insurance in 1998.

    “Have banks be deposit takers, have banks make commercial loans and real estate loans,” he said. “And have banks do something that is not going to risk the taxpayer dollars, that’s not going to be too big to fail.”

  • In These Times: The 1% will get a tax cut no matter who wins in November. By David Sirota. Excerpts: For all the superheated rhetoric of yet another election cycle, it's as clear as ever that the Republican and Democratic parties in Washington pretty much support the same economic policies. Indeed, any honest perusal of congressional votes proves that the party establishments are roughly the same when it comes to financial deregulation (less of it), job-killing free trade (more of it), bailouts (more of them) and corporate taxes (less of them). ...

    President Obama kicked it off with his claim last week that he wants to stop “another tax cut for the wealthy.” As supposed proof, he asserts that by proposing to extend all of the Bush tax cuts except those applying to top marginal tax rates, he will make sure everyone “making over $250,000 a year [will] go back to the income tax rates [they] were paying under Bill Clinton.” In response, Republican presidential nominee Mitt Romney, who wants every Bush tax cut extended, played his role in the kabuki theater, claiming Obama “plans on extending [the tax cuts], just for certain classes of Americans”—an idea that he says “will kill jobs.” Not surprisingly, almost every news outlet echoed it all, insisting that this is an epic dispute over whether to only extend “the Bush-era tax cuts for people earning less than $250,000 a year,” as the New York Times put it.

    There's just one problem: Obama, Romney and the media are all lying.

    Because of America's progressive tax system, all taxpayers under Obama's plan—including those making more than $250,000 a year—will get a tax cut on their first $250,000 of income. According to the Institute for Taxation and Economic Policy, this means that Obama's initiative, which would cost $150 billion, will give a one-year $20,130 tax cut to the top 1 percent of income earners. Meanwhile, the $210 billion Republican plan would give that income group a $70,790 tax cut.

    In other words, this supposedly monumental debate isn't over whether to punish or further enrich households in the top 1 percent—both proposals do the latter. Instead, this is a minute dispute over whether the tax code should give each of those households the equivalent salary of one butler (Obama's plan) or three butlers (Romney's plan). For every other income group, the two proposals are identical.

  • Smirking Chimp: The Nakedness Of Their Greed. By Richard Eskow. Excerpts: It's truly unbelievable: At no time in modern memory has the privileged class been richer, the middle class more endangered, or the number of people in poverty been so high. And yet the Republican Party, whose leaders are overwhelmingly wealthy themselves, is openly and shamelessly proposing to give more tax cuts to millionaires and billionaires - including heirs and heiresses who have done nothing to earn their riches - while actually raising taxes on millions of poor and middle class people.

    There will be a time to engage in argument. But first let's take a moment to gaze in wonder at the nakedness of their greed. ...

    Yesterday the Senate voted on a Democratic proposal to extend the Bush-era tax breaks for all income below $250,000 per year. Everybody would get that tax break, even billionaires. Taxes would go up for anything earned above that amount, and for some kinds of investment income. The bill would also preserve a number of tax breaks for middle class and lower-income working people.

    Forty-eight Senators voted against the Democratic bill. Forty-four of them then promptly voted for the Republican proposal, which would keep the Bush tax cut for earnings above $250,000 - a cut which provides greater and greater tax breaks as you climb the earnings scale toward "millionaire" status and eventually ascend to the rarefied atmosphere of the billionaires' club. ...

    The GOP bill would actually increase the average tax bill for 25 million households who earn less than $250,000. The Republican proposal would also end the Tuition Tax Credit, raise the "marriage penalty" (hey, welcome to our world, gay newlyweds!), and increase the tax burden for working families with kids.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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