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.
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
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:
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.
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.
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…
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?
This post of yours, to think of it, is a classic example of cultural misunderstandings between the two countries.
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.
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.
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.
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.
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.
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.
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%
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.
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.
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.
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.
“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:
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.
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.
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.
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.
Advice to Senior Management: - Kill Lean GDF; - Hire better management folks; - Understand that not all the needs are fulfilled just for being an IBMer.
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?
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.
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.
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...
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.
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."
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.
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.
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.
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.
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.
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.
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...
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.
"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.
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.
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.
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."
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...
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.”
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.
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.
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.
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...
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.
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.
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.
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."
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”.
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.
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.
“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.
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”.
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.”
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.
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.
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.