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Highlights—August 17, 2013

  • Australian Business News: The architects of Qld Health's payroll disaster. By Charis Palmer. Excerpts: Where are they now? Queensland's Newman Government has called for the public servants involved in Queensland Health’s failed payroll project to be held to account after a damning report was handed down by inquiry commissioner Richard Chesterman last week.

    The question is, who's left to reprimand?

    The two individuals that came under the strongest criticism were former CorpTech executive director Barbara Perrott, and contractor Terry Burns. Both have since retired. ...

    IBM in the spotlight. In the aftermath of the report, Queensland Premier Campbell Newman directed his angst firmly in the direction of executives from the system's supplier, IBM.

    IBM executives involved with the failed project did not - at least in comparison to their public sector peers - leave it with their career in tatters.

    Lochlan Bloomfield, the executive that led IBM’s bid, was found to have acted in breach of his employer’s business conduct guidelines. He remains IBM’s commercial and public sector lead in Queensland.

    Bloomfield admitted misusing a competitor’s confidential information, observing without objection a colleague’s distribution of information “leaked” from CorpTech. He was also found to have sought and gained unauthorised and unlawful access to competitor information from CorpTech’s database. Probably most damning, Chesterman also found Bloomfield to be dishonest in his testimony to the Commission.

    After initially stalling on the issue, IBM admitted Bloomfield had received two bonuses for his efforts in 2008 - a profit sharing payment $55,000, and a “Service Eminence Award” of $12,000 for helping secure the whole-of-government deal. ...

    Bill Doak, the IBM executive in charge of the entire prime contractor program of work IBM was tasked with, personified IBM's attitude to the project.

    During his testimony, Doak acknowledged few material deficiencies in the payroll system after it went live, despite overwhelming evidence to the contrary. Doak was recently promoted to a regional role at IBM, as public sector lead for growth markets.

    Last week iTnews asked IBM if any action had been taken against those IBM employees found to have breached the company’s own conduct guidelines. The company declined to comment, referring back to an earlier statement in which the company said it did not accept many of the findings of the inquiry.

    It's hard not to conclude that winning lucrative government projects, regardless of how or if they are delivered, is what is ultimately rewarded.

    As Chesterman himself aptly noted, success has many fathers, but failure is an orphan.

    Selected reader comments follow:

    • IBM (and it is not alone here) has a very long list of these kind of infractions in almost every part of the globe. Some people want to accept that this is just the nature of ALL business; it is not. It is the nature of some businesses and their culture but there are others who wish to be good corporate citizens and do try to follow the rule.

      Running these kind of procurement processes requires experience and if you don't have it, you need to get it and be very cautious indeed if you do not want to repeat this kind of outcome.

      The ugly truth, is that some people see this as a way to build a better than average retirement fund and are prepared to sell any personal integrity they may have had for monetary gain - they do so in the knowledge that they are rarely brought to account and global companies can of course simply shift a slightly "on-the-nose" but monetarily successful staff member somewhere else. Does this sound familiar?

    • People are discounting the evidence given that Health Dept kept changing the goalposts for IBM. A good provider will accommodate that but obviously you pay for extras.
    • No they're not, that is normal practice, and is built into an SDLC. It doesn't excuse a system that fails miserably. You should read the article above. In it you will note that various public servants were shunted, sacked and retired, while IBM employees were rewarded, promoted and simply carried on as usual. It is clear that IBM preferred profit over quality in this case. They probably realise they may have to sit on the bench until the next Qld election, but then it will be back to business as usual.
  • Washington Technology: IBM fighting for lost Customs contract. By Nick Wakeman. Excerpts: IBM Corp. has filed a bid protest over a Customs and Border Protection contract that went to Lockheed Martin. The value, according to Deltek, isn’t huge at $67.8 million over five years, but the contract is to provide software development and operations and maintenance for the Automated Commercial Environment System or ACE.

    IBM won ACE, also known as Customs Modernization, in April 2001 and it had a $5 billion price tag. The contract was to streamline the processing of imports coming into the United States, but after the Sept. 11 terrorist attacks, the contract took on more of a homeland security focus.

    The project had its troubles over the years with delays and cost overruns, but IBM has used it as a launching point for customs modernization and border management and protection projects around the globe.

    So, the loss of the contract had to be a surprise. [Attempts to get comment from IBM have been unsuccessful so far.] ...

    At the time of the award, the contract was the largest IBM had won since selling its Federal Systems Division in 1993. “We’re back,” Tom Burlin, vice president of the federal business, crowed at the time.

  • Yahoo! Finance: IBM Attracts Short Sellers as Revenue Growth Slips. By Aaron Pressman. Excerpts: It used to be said that no one ever got fired for buying IBM. But lately, the tech giant has become targeted for selling — selling by stock shorters betting IBM’s share price will fall.

    The total number of IBM shares sold short hit 18.3 million last month, up from 13.4 million at the end of 2012, according to data from Nasdaq OMX. New figures for this month won’t be released until August 26.

    “IBM is an F,” says Brad Lamensdorf, co-manager of the actively managed Ranger Equity Bear Exchange-Traded Fund. IBM is the top position in the $200 million stock-shorting fund. ...

    Big companies renting time on cloud servers from Amazon and others don't need to buy their own servers from IBM. And rented cloud-based software from Salesforce.com and its ilk can replace all manner of IBM's software and service offerings. Some cloud products are based on open-source standards, providing even lower-priced competition for IBM. ...

    The bigger problem is that the parts of IBM benefiting from the cloud, such as outsourcing and consulting, produce a lot less of Big Blue’s profits than the segments that are hurt by the cloud, including sales of servers and integration software.

    Overall, businesses that generate about 49% of IBM’s revenue will be helped by the spread of cloud technology, and units producing 38% will be hurt, according to Credit Suisse analyst Kulbinder Garcha. At first glance, these numbers seem pretty beneficial to IBM.

    But all revenue is not equal. IBM’s businesses being hurt by the cloud may produce less revenue but they have higher profit margins and brought in 58% of IBM’s pre-tax income.

    The biggest problem is in IBM’s vast software division. The unit, which includes everything from the Lotus Notes email platform to Cognos business analytics, produced $25.4 billion of IBM’s $104.5 billion of total revenue last year. But it had a pre-tax profit margin of about 37% versus 7% margins in hardware and 16% margins in services, Garcha notes.

    IBM is losing market share in four of its five largest software businesses, according to analysts. IBM’s own cloud offering is growing fast – 70% last quarter, the company said. But it's still small and may not be able to generate much profit amid so much competition.

    Selected reader comments follow:

    • IBM cannot attract talents and engineers to work for them because its salary is not competitive in Silicon Valley. Google and Amazon pays 30%-50% more. Even HP pays better than IBM. And IBM is stilling cutting benefits to meet Street target. When a tech company cannot attract talents, it is a dead company.
    • Mid-management has already cannibalized the talent that they had. Now, they are turning on each other—lots of litigation in the works from their fraudulent claims about their software and hardware capabilities. And, all of the outsourcing has amounted to a pile of digital junk yards while the execs pocketed the difference of what was suppose to be saved. No upside...the mentality has been short term lowest common denominator for too long!
    • IBM is only surviving as it is due to aggressive cost-cutting measures that have been in place for several years. They continue to move off-shore as fast as is possible.
    • IBM shot itself in the foot by pretty much turning itself into an Indian company. Off-shoring is so passé and was an economic myth to start with. We've hired IBM to consult on a $40 million project and when their consultants arrived, it was like we had an Indian invasion in the company. Everyone of them was flown in from India. Communicating with them was a nightmare, not to say much of their hygiene during meetings, etc. Needless to say the project failed miserably and IBM ended up getting paid $0.00 from us per the deliverables in the agreement.
    • I've seen projects were they were billing $200/hr for these workers; and paying them $20/hr for their work. Now, here's the mystery—where did the money go? Into the pockets of PMP managers. Those guys are making a killing. And, they couldn't care less about what gets done. Their attitude is "get mine, and get out."
    • Ron...No, actually, the PMP managers did not get the money. The Senior Account Manager and up the chain got the money. Do you have a PMP?
    • IBM has become a management-driven company. It was extremely helped by the 2008 recession when people looked at IBM as a safe place to put their money vs. the rest of the world, which is almost entirely responsible for the stock price drive up to $200 (just like gold to $1900). Top down, in a tech company, only works when the top is a tech genius, who understands how it works and how to get it done. They left IBM years ago; now the only way IBM thinks it can increase profits is cutting costs which is burning them ask we speak.
    • IBM used to have a covenant between employees and management and the best of both were rewarded for creativity and commitment. That covenant was broken by folks who had all the ethics of tobacco executives; who took all the savings extracted from the lives of employees for themselves as bonuses; who destroyed IBM as a place for a professional to work. Live by the sword—die by the sword.
    • While this article makes some interesting points, it misses the KEY issues affecting IBM. It is NOT about cloud computing and all this silliness. This is about IBM focusing on the bottom line at the expense of the top line (which can't be manipulated so easily) via financial gimmicks that have cut employees, benefits, jobs and ultimately now employee morale and revenue through the bone. Not only that, but over $140 Billion spent on ill-timed stock buybacks instead of investing in EMPLOYEES/CLIENTS/REVENUE is the straw that is breaking the camel's back. So, how pathetic. Here is a company that cut itself to the bone, doing all it can to please the Wall Street Gods via the bottom line, only to now have the hedge funds sense this vulnerability in revenue and profit quality to now begin to move on it with short positions. This is just disgraceful.
    • MBAs drove IBM into a margin search business. IBM is not a tech company anymore; it is a service company in search of margins, not innovation. IBM management put all its eggs in India without considering any geo-cultural impact on their decision. IBM is very behind in cloud offering and they don't have talents to deliver....they are about to hit a bump...this one will be huge.
  • The Globe and Mail (Canada): IBM faces a new challenge: doubters. By David Milstead. Excerpts: The company’s performance in the last two years has been middling, however, and some analysts see signs of the beginning of a new, third act – one that threatens to be much less rewarding for shareholders.

    This week brought new evidence of the stresses on the company, when IBM announced that most of the employees in its U.S. hardware division will be asked to take a week off with reduced pay, as it attempts to cut costs.

    The forced furloughs highlight IBM’s struggle to maintain a double-digit growth pace for its earnings per share despite sales that have actually declined over the past two years. Big Blue has missed Wall Street’s revenue expectations more often than not in recent quarters and much of its business is under competitive pressure.

    The business model that propelled the company in recent years – one based on cutting costs and selling assets to fund revenue-boosting acquisitions and share buybacks – is becoming more difficult to maintain. Already, the company’s cash flow is deteriorating, raising the question of just how good IBM’s vaunted earnings growth has been.

    “Organically, we believe IBM is effectively in decline,” Kulbinder Garcha, an analyst with Credit Suisse Securities, wrote this week in downgrading IBM’s shares to “underperform.” ...

    In recent years, the company has turned to acquisitions of smaller software companies to fuel growth. By Mr. Garcha’s reckoning, Big Blue has bought 34 companies since 2010 and paid an average multiple of three times sales for them.

    The problem is that the average price-to-sales multiple for small to mid-sized software companies is now 6.7, meaning future acquisitions are likely to be far more costly. At the same time, Mr. Garcha says, IBM has fewer lower-margin businesses to sell off to fund its software buying spree.

    Analyst Brian Marshall of International Strategy & Investment Group LLC sees similar issues. He believes nearly all of IBM’s growth in operating income over the last decade has come from the company’s ability to expand its gross profit margin by shifting out of hardware and into software and services.

    But potential acquisitions that could significantly boost IBM’s financial picture are now becoming scarce. Even a $1-billion software company with 90-per-cent gross margins would add little to IBM’s margins, as Big Blue now books more than $100-billion in sales per year, Mr. Marshall says. An acquisition like that could cost $5-billion to $6-billion, he suggests, and ultimately add just 1 per cent to IBM’s earnings per share. (Mr. Marshall has a “cautious” rating on IBM.) ...

    Making that adjustment means IBM has one of the largest discrepancies among large tech companies between its free cash flow and its net income, he says. Most of IBM’s big tech peers, like Microsoft Corp., Apple Inc. and Xerox Corp., produce a dollar or more of free cash flow for every dollar of net income they report. For IBM, the figure will be more like 60 cents in 2013, he figures.

    This also means that while IBM looks cheap on a price-to-earnings basis, it’s the most expensive of the large tech companies when its enterprise value – market capitalization, plus net debt – is compared to its free cash flow.

  • Computer Reseller News (Australia): IBM ban confirmed by QLD premier. By Charis Palmer. Excerpts: Queensland Premier Campbell Newman has announced IBM will not be allowed to enter any new contracts with the State Government until it improves its governance and contracting practices.

    Newman also today used Parliament to attack the internal culture at IBM and named individual IBM employees involved in the failed Queensland Health payroll project following the release of a report into the initiative yesterday. ...

    Newman today singled out current IBM employees Lochlan Bloomfield, William Doak and Joseph Sullivan over their role in the project.

    “The inquiry found that Mr Lochlan Bloomfield, who led the bid, acted in breach of his employer's business conduct guidelines, misused competitors’ confidential information and endeavored to gain unauthorised and unlawful access to its competitor’s information," Newman said.

    "The inquiry also found Mr Bloomfield was not honest in his testimony to the commission."

    He said the inquiry had found another employee, Doak, had "acknowledged few material deficiencies in the system after go live, in the face of so much evidence to the contrary. This did him no credit.”

    Newman said he was particularly appalled that IBM had told the commission Joseph Sullivan, who sought access to competitor information during the bidding process, no longer worked for IBM Australia, when the commission had later located him in London where he was working for IBM United Kingdom.

    “I don’t want people of this character working on government projects in this State,” Newman said.

    “I don’t want companies that have this sort of culture doing work for the people of this State.”

    IBM has rejected many of the findings in the Chesterman report, arguing the majority of the issues impacting the project were out of its control.

  • GigaOM: Battle for fed cloud heats up: IBM, one of ten winners, claims the big prize. By Barb Darrow. Excerpts: So, this is interesting. On Wednesday, a press release comes in from IBM. Big Blue, it read, was “awarded 10 year $1 billion cloud hosting contract to assist US Department of Interior’s move to cloud computing.” This, an IBM spokeswoman said, is the company’s largest cloud contract to date — and is larger than the $600-million secret CIA cloud contract which was awarded to Amazon in a decision contested by IBM and now is in limbo. But I digress.

    My first thought on this new contract was: “Wow! IBM one ups AWS on this whole CIA cloud unpleasantness.” But after reading further and talking to some people, it turns out that IBM is one of ten companies — Aquilent, AT&T, Autonomic Resources, CGI, GTRI, Lockheed Martin, Smartronix, Unisys and Verizon are the others — that qualified to supply technology and services under this admittedly huge deal. ...

    That IBM went so public with this speaks volumes. The IT giant wants to show it’s a leading contender to win billions of dollars worth of government cloud computing projects coming online under the federal government’s “Cloud First Initiative.” This particular contract was awarded months ago, but implementation was held up because one losing bidder, CenturyLink, contested the findings. That appeal was denied in July but the 10 winning vendors have been known for months.

    Look, this is no doubt a big win for IBM, but it is also a big win for 9 other companies none of which issued press releases. Just saying.

  • The Register: IBM snaps up banking security biz Trusteer, won't say what it paid. Reveals plans to extend Israel-based R&D facility. By John Leyden. Excerpt: IBM's plans to set up a cybersecurity software lab in Israel will bring together more than 200 Trusteer and IBM researchers and developers, focusing on mobile and application security, as well as advanced fraud and malware detection. The lab will be an addition to IBM’s existing research and development facilities in Israel.
  • Seeking Alpha: Is It Time To Buy The Dip In IBM? Excerpts: Introduction: After International Business Machines announced Q2 earnings, I wrote a Seeking Alpha article titled IBM and the Media Attempt to Obscure Its Declining Business Results. As an admirer of IBM for decades, I was not happy to write a critical article of what for years was the large-cap U.S. growth stock, but we all have to adjust to changing realities.

    Most articles about IBM are analytical; the company, its divisions, etc. have been studied thoroughly.

    This article takes more of a contextual, questioning approach in discussing whether IBM is attractive to new money looking for an equity in which to invest.

    Noting that management sold 17% of the 1.1 million shares it collectively owned within the past six months, and as usual purchased no shares, let's begin by noting operational trends. ...

    In its earnings release, IBM asserts that excluding a billion dollar "workplace rebalancing" charge from GAAP earnings was done because doing so is "most indicative of operational trajectory."

    That's a questionable assertion; I take it as an important clue in deciding whether to be long the stock. Here's the reasoning.

    When companies operate in secular growth fields and then fire and lay off large numbers of people two years in a row, that is indicative of a negative operational trajectory, or at least one that has failed to meet management's expectations. Repeated "one-time" large severance costs imply more than IBM would like us to believe about its trajectory.

    The fact of repeated layoffs is actually indicative of operational trajectory, at least for part(s) of the company. Management appears to have it backwards. It could have avoided creating an impression that it focuses overly much on EPS as it defines it by using GAAP for this charge, and later breaks it out for investors to make of it what they will.

    Defining "operational" or "one-time" expenses is a slippery matter. If company A hires IBM to consult on technology integration, that is also a one-time business win. Yet IBM wants us to put a generous P/E on earnings that flow from this "win," though when the job ends, that business is non-recurring (all else being equal). At the same time, "one-time" cash severance costs do not count, in management's view. ...

    The Street catches on: As mentioned, there was a skeptical tone to a number of the questions on the conference call, and Thomson First Call reports a slight drop in analysts' ratings on IBM stock. Last week, Mr. Garcha of Credit Suisse slapped a $175 price target on the stock when it was in the $190s. I concur with a key point he made.

    The current exclusive focus on 'EPS based valuation is distorting. ...

    In the last 10 years, IBM's revenues have grown only 1.6% annually. That has translated to about 6% revenue growth per share given all the share buybacks (and 12% EPS growth). Every penny of the money used to invest in (speculate in?) IBM's own stock is money that was not spent growing the business. Are we now seeing the results of an excessive focus on financial engineering?

    IBM is not the financial powerhouse that it once was, especially for those of us who remember the IBM of 3-5 decades ago. At the end of Q2, it had a bit under $7 B in working capital, against $26.3 B in long-term debt, a gap of $19 B. It's one thing for a cash-rich, debt-free company to make accretive buybacks, but IBM needs growth, not pro forma EPS. I now question the buyback strategy. ...

    Conclusion: IBM is priced as a growth stock, but lately it has been acting like a cyclical one. It also is not priced as a value stock.

    There are enough questions about the sustainability of margins, and whether management is overly focused on making its EPS numbers, that I think that it makes sense to watch IBM stock but not buy it.

    If management begins buying the shares, likely I will do so also.

  • InformationWeek: IBM's Cloud Business: Ex-Employee Divulges Shortfalls. By Doug Henschen. Excerpts: IBM's cloud computing revenues are smaller and less "cloud-intensive" than customers and Wall Street analysts might think. That's the claim of a former IBM employee who backed up more than a few of his/her critical assessments of the vendor's cloud prowess with a number of confidential internal documents shared with InformationWeek.

    The documents put IBM's 2012 cloud-related revenue at $2.26 billion, a figure the company has declined to disclose publicly. In 2011, IBM did issue a roadmap that set forth the goal of reaching $7 billion in annual cloud revenue by 2015, so the much lower figure raises doubts about whether the company is on track. ...

    Noteworthy is data that shows that roughly half of current IBM cloud revenues are tied to hardware, in many cases systems used to run customers' private clouds or partner clouds. "This is not what your readers would think of as cloud," said the former IBM employee, who reached out to InformationWeek after reading a column I wrote challenging IBM to be more transparent about its cloud revenue. "They will think of Amazon EC2, Salesforce.com and IBM SmartCloud as real cloud. Not stuff sitting on their data center floor."

    It's unclear whether IBM's re-characterization of certain hardware sales is a factor in a current Securities and Exchange Commission investigation of the company's cloud revenue, as divulged in IBM's second-quarter financial filings. ...

    Where cloud compute capacity is concerned, the embrace of x86-based systems and standards is cannibalizing IBM's higher-margin mainframe and Power server businesses, says Kulbinder Garcha, an analyst with Credit Suisse, which downgraded its rating on IBM's stock on Aug. 6. ...

    As for IBM's ability to compete with its own IaaS offerings, internal documents supplied by the former employee detail the formidable competition IBM's SmartCloud Enterprise (SCE) faces from Amazon Web Services. One document shows SCE to be generally less expensive than AWS offerings at low levels of service and capacity utilization, but the cost advantages shift to AWS at higher service and utilization levels. ...

    Those are just five of the more than 20 gaps cited in the document, most of which exist because "the nature of Amazon's business and infrastructure required it to lead in cloud innovation. IBM's didn't," Babcock observes. While Amazon was steadily building AWS over the last six years, he says, "IBM did not extensively develop middleware for the cloud that aids application deployment and management. It did not develop a native NoSQL approach to data management. And IBM clearly missed the boat on cloud-based data warehousing, a spot where it could have excelled." ...

    IBM didn't provide answers to a number of questions InformationWeek presented with key facts from the hundreds of pages of documentation shared by the former employee. The depth, detail, profusion of company acronyms, use of company presentation formats and citation of company locations and executive names strongly suggest that the documents are authentic.

    The former employee, who says he/she was "resource actioned," says the motivation for sharing the documents is "protecting customers and ex-colleagues by getting the truth out," and the reason for doing so anonymously is fear of losing outstanding severance payments. InformationWeek's motivation is to shed light on the state of cloud competition not only with the likes of Amazon, but also Hewlett-Packard, Microsoft, Oracle and SAP. ...

    In an internal document in which IBM shared customer assessments, one customer was quoted saying "no company I can think of is more difficult to deal with for contracting." This assessment prefaced a detailed plan to offer simplified, SaaS-only contracts that offer better "clarity and transparency" on terms, conditions and policies.

  • Forbes: 10 Things IBM Is Teaching The World About Winning In The Next Decade. By Mark Fidelman. Excerpts: When asked by CXOs about the future of business in the next few years — mobile technologies, social business networks, social data analytics, artificial intelligence, smart ecommerce — I find myself referring to innovations emerging within IBM.

    We can’t predict with any certainty what the future of business holds, but we do know that adaptive businesses have a much higher likelihood of survival. We also know that in order to be more adaptive businesses need to have a complete picture of their employees, partners and customers. “Siloed data results in a siloed customer experience. The best brands are using data to build a single, integrated view of their customers <partners and employees> and building highly segmented campaigns geared to a unique individual brand experience,” IBM’s Tami Cannizaro told me. And from my point of view, that’s the foundation for a winning strategy for the next 10 years.

    Most of the business leaders I speak with feel apprehensive about the huge technology shifts that have enabled their customers’ unprecedented power and most executives feel unprepared to handle it. But after investigating all of the new solutions coming out of IBM, I am convinced they are well ahead of the curve and the company to watch for insights into how to prepare for a complex future. ...

    4. The Fight for Talent is Key. I agree with Say Lim, Vice President of IT at Fluor when he expressed to me, “To build a company for the next 100 years you need to have talent. To attract this talent you need to have the social tools that will attract and keep younger talent, position the organization as innovative and progressive to clients and allows the organization to think globally and act locally.”

    Indeed the fight to keep the most talented and resourceful people will become even more challenging in the future as these people will be presented with myriad opportunities as a result of being well known online. If you don’t offer these people the means to be successful and to build on their careers and experience, expect them to leave your organization quickly. Furthermore, in order to retain talented employees, IBM is developing its Retention Analytics solution which provides a data-driven approach to understanding employee attrition patterns within a business. For example, if an organization is seeing employee turnover rates that are above average, it can quickly investigate and correct the issue.

    Clearly, we’re entering a new phase in the employer/employee dynamic, and the most successful companies will prepare for it. ...

    Note: I was a guest of IBM at its recent Smarter Commerce conference, along with about a dozen other “VIP Influencers”. There was no obligations to write an article, just an invitation to observe the future.

  • Yahoo! IBM Retiree Information Exchange message board: "End of Verizon discount for retirees?" by "swegnson". Full excerpt: Today I received, for the first time in 2 1/4 years of retirement, an email from Verizon telling me that "To continue to receive your discount, please validate your employment or affiliation within 30 days". They go on to say that "It's easy to renew with our online validation process." That process requires that you either "validate by Work Email Address" or "Please provide a copy of your pay stub either electronically or by mail to validate your current employment." Nowhere in the process or in the FAQs do they mention retirement or retirees. Does anyone have experience with this new process that suggests that retirees may retain the Vz discount?
  • Yahoo! IBM Retiree Information Exchange message board: "Re: End of Verizon discount for retirees?" by "madinpok". Full excerpt: This topic has been covered ad nauseam in the thread starting here: http://finance.groups.yahoo.com/group/ibmpension/message/76384.

    The bottom line is that the discount with Verizon is for IBM employees only and not for retirees. It's been that way for years, but Verizon has been very lax about it. Now, it appears that Verizon, like IBM, is looking for ways to enhance revenue any way they can.

    You may be able to trick Verizon into thinking you are still an employee by submitting a check stub from your pension check. If you use direct deposit, you can print out a Payment Verification statement from the NetBenefits web site. It might be good enough to fool them. What have you got to lose?

  • Christian Science Monitor: IBM purchases Israeli cybersecurity company. IBM announced its purchase of Trusteer, a company that helps protect organizations against security breaches. By Katherine Jacobsen. Excerpts: International Business Machines purchased the Israeli cybersecurity company, Trusteer, helping IBM add another layer against hackers. As part of the transaction, IBM is opening a software lab in Israel that will focus on mitigating security threats in software. The lab will bring in more than 200 Trusteer and IBM researchers and developers, according to IBM’s press release.

    IBM did not disclose how much Trusteer cost, but Israeli financial newspaper Calcalist puts the cost at more than $800 million, according to Tech Crunch.

  • Bob Cringely articles concerning IBM:
  • Glassdoor IBM reviews. Selected reviews follow:
    • Excellent skills development, fantastic global experience” Executive (Current Employee), Somers, NY. I have been working at IBM full-time for more than 10 years. Pros: – 1) Challenging work. 2) Excellent global experience. 3) You can gain a variety of assignments in very different business units without changing companies. Cons: 1) Finance runs the company so it's impossible to get reasonable resources—people or pencils. 2) Bureaucracy is rampant, so it takes a long time to get anything done and a sense of urgency is squashed. 3) Leaders (even mid-level executives) are generally not trusted to do the right thing and every decision is scrutinized. This leads to the disenfranchisement of the leadership team and the feeling that they don't own their decisions. You can surmise what the downstream effect of that is. Advice to Senior Management: Let the very intelligent people (technologists, managers, executives, etc.) have the latitude to do what you hired them to do: use their brains and talent to make good decisions and run the business. Stop second guessing them and stop Finance and their risk aversion from taking away any decision-making power they had.
    • Great company—glorious past and bright future” Senior Managing Consultant (Current Employee), Armonk, NY. I have been working at IBM full-time for more than 3 years. Pros: Brightest minds, strong culture and very promising leadership which is heading the company in the right strategic direction. Cons: Too much focus on work from home. Advice to Senior Management: Compensation and employee benefits can be improved. Yes, I would recommend this company to a friend.
    • The elephant has stopped dancing even though the music is still playing.” Advisory Software Engineer (Current Employee), San Jose, CA. I have been working at IBM full-time for more than 8 years. Pros: Don't want to appear too negative but the pros have been overtaken by the cons. IBM was in a good position and is losing ground at an astonishing rate. It's not too late yet though.

      If you are fresh out of school you might find the first few years rewarding and I would say you will definitely learn a lot. But be prepared that it will come to a halt eventually (see cons). If you find a start-up or smaller/younger company which interests you, go that route right away instead. It's worth taking the risk.

      Work life balance is OK at IBM. Also depending on the team you may be allowed to work remotely which is definitely a big plus.

      Cons: IBM is trying to save money on everything and they for sure don't do it wisely. Motivation and salary growth are low. Forget about fancy hardware/equipment right away. Every year you will get more unpleasant surprises, e.g. the 401K lump sum employer match at the end of the year BS, the performance bonuses. And market-based adjustments for sure aren't fair either—provided you even get them. And then there are those resource actions which defy any logic. Cheap labor will get IBM what it pays for in the long run.

      Advice to Senior Management: 1) SALARY: Pay fair and value good work with the respective bonuses. Many good engineers are leaving because they are frustrated about the rewards they get for their work and where the company is heading to in general. 2) PROCESSES: Let them allow to be more flexible. Seriously it has become quite ridiculous over the years with all the rules, tools, cycles, approvals, guidelines...you name it. 3) TOOLS: This is a good time for a Churchill quote: "Give us the tools and we will finish the job" 4) CUTS: If you have to cut, don't forget to cut the senior management chain to keep everything in proportions. No, I would not recommend this company to a friend

    • Clueless and Not Succeeding” Senior Engineer (Former Employee), Research Triangle Park, NC. I worked at IBM full-time for more than 10 years, Pros: Many of the old IBM ways still exist, such as lots of great first-line managers who used to get lots of training in how to be a great manager; lots of team spirit and willingness to be helpful; and some optimism still remains.

      Cons: This is no longer a fun place to work. Middle and senior management think it's all about them and their careers and not the products. Also, there are not enough people left to produce good products any longer. Quality is severely suffering. Also, everyone works from home, so it's like everyone has checked out, just collecting pay checks.

      Advice to Senior Management: Go back to the old IBM culture that used to work so well, which fundamentally included respecting and empowering your employees. Also, you are not all Steve Jobs, so by all of you senior managers sticking your noses so deeply into everything you are grinding the normal development processes to a snails crawl and frustrating everyone. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • When treated like a resource, not so good. When treated like a person...priceless.” Anonymous Employee (Current Employee). I have been working at IBM as a contractor for more than 8 years. Pros: I worked for IBM full time for eleven years. In those days, the 1980s, people were treated like they mattered. It was more of a partnership between management and the technical folks. There was no micromanagement. If you needed to take a class, you could just book a flight, and away you went. (No kidding). It was a happy place because people were interested, in each other, not just the work.

      Cons: The legacy of the CEO, Frank Cary (1973-1981), was beginning to take hold in the late 1980s. He decided that only management should have the authority to pick "winners" from various projects. Prior to that time, the model was defined to allow the marketplace to pick the successful projects. So the Personnel Department changed their name to Human Resources and the rest was history. Today I work as a IBM consultant, so I know what is happening there now. The regular employees are treated like cogs in a machine. Senior management's only concern is to raise the EPS. Lower management's only concern is to please senior management. The technical people just get to do what they're told and no one is looking out for them. No raises, bonuses, or overtime pay.

      Advice to Senior Management: You need to go back to the Watson, Leonard model of allowing various departments to work on different projects and let the "marketplace" pick the winners. Otherwise, in the end, some senior managers will "bail out" with their golden parachutes and the stockholders will do well. But the company will be gutted of quality technical people. And you won't be able to attract any replacements. No, I would not recommend this company to a friend.

    • Product Manager” Anonymous Employee (Former Employee). I worked at IBM full-time for more than 8 years. Pros: Challenging job with ability to learn and gain knowledge in specific product sets. You have to because a lot of talent has left so the learning curve is steep. Cons: The company has changed drastically going from a fantastic company catering to employees to now catering to execs. Benefits diminishing, morale decreasing, and salaries going stale. Management teams across the board are under pressure so there hands are tied; it is unfortunate because strong talent is getting away and no one blames them for doing so. I'm not optimistic about the outlook for this company.
    • IBM Global Services - Neutral - better of many consulting companies.” Anonymous Employee (Current Employee). Pros: Benefits; Salary; Stability; Basically good place to be if you just want to earn a living. Cons: Utilization driven growth; Sales take precedence over skills. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Little future in hardware” Advisory Engineer/Scientist (Former Employee), Research Triangle Park, NC. I worked at IBM full-time for more than 10 years. Pros: Reasonable benefits. Interesting work. Great co-workers. Cons: All the hardware jobs are being moved to China or sold off to the highest bidder. Powerless local management and everything run by the accountants in head office. Advice to Senior Management: Stop thinking and acting only one quarter ahead. And stop treating your highly skilled workforce as if they were stupid. The productivity scheme is broken and all you are doing is demotivating staff by having fixed quotas of good, average and bad performers. Bonuses are laughably small and no matter how hard you work you are at the mercy a manager that likely has little clue what you do and has to argue with peers for any thing you might get. IBM used to be one of the best employers but no more. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Senior Consultant” Senior Consultant (Current Employee), Toronto, ON (Canada). I have been working at IBM full-time for more than a year. Pros: Great people to work with. Training on many different business topics is available for employees. Amazing work-life balance. Cons: Complex promotion process. Employees have to write a 20-page document as a part of the process, which wastes a lot of time for both writers and reviewers. Advice to Senior Management: Needs to spread out resources more. Too many concentrated in Toronto while business at Western part of Canada is growing. Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.
    • Not good. A long time ago it was a good place to work but not any longer.” Managing Consultant (Former Employee), Costa Mesa, CA. I worked at IBM full-time for more than 7 years. Pros: Some groups allow work from home. Cons: Poor raises. Benefits are expensive. No loyalty to its employees, even the ones who are solid contributors. The only loyalty big blue has is to its earnings. Advice to Senior Management: Improve the morale of your employees. Show some loyalty. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Nicely paced work but too many managers.” Systems Engineer (Current Employee), Dubuque, IA. I have been working at IBM as a contractor for more than a year. Pros: The team is really great to work with. If you provide status of your work on time then you are good. There's always help from others on the team. Cons: Too many managers make it difficult to juggle between projects. Sometimes when the company feels the crunch they will lay off people and that will increase the workload of the ones that they did not lay off. Advice to Senior Management: Take care of good workers by appreciating their work and giving them incentives to stay. Yes, I would recommend this company to a friend.
    • Would not recommend to work for this company” Product Manager (Former Employee), London, England (UK). I worked at IBM full-time for more than 7 years. Pros: Well respected brand in the industry. Some great individuals at a non-management level. Reasonable pension benefits. Above average number of vacation days can be accrued. Great insight into the challenges of running such a large/mature organization. Some roles enable a great work/life balance (little true accountability).

      Cons: Very bureaucratic—too much process/red tape. Weak senior management. Statistically led strategy—often focused on the wrong numbers. Ambiguous appraisal system—highly subjective. Culture of apathy/acceptance of mediocrity by those who are disenfranchised. Overly enthusiastic/corporate line by those who are career driven. Easy to become institutionalized. Limited feeling of contribution to success of the organization. Job role protectionism is common.

      Advice to Senior Management: A great organization is driven by great leaders. It is YOUR responsibility to set the tone and culture of the company. Telling people to be enthusiastic as opposed to cultivating that environment are two very different things. Large organizations can create such an environment—Apple and Google are examples of innovation and dynamism at the macro-level. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • Exhilarating confusing frustrating” Sales (Current Employee), New York, NY. I have been working at IBM full-time for less than a year. Pros: Terrific talent and resources. Every client knows IBM. Very broad set of product portfolio. Lots of conferences and training. Cons: Do-it-yourself environment with poor thinly-spread sales support. Lots of churn and new managers who are only interested in their own careers at IBM. Disconnect and dysfunctional relationship between two main business groups and client team not working together with sales. Advice to Senior Management: Train FLMs better and have them spend more time with their reports as well as clients. I'm optimistic about the outlook for this company.
    • Got laid off 2 weeks before my 25th service anniversary.” Senior Software Engineer (Former Employee), Austin, TX. I worked at IBM full-time for more than 10 years. Pros: It's a good place to gain experience. Don't count on a lifetime career there anymore. Cons: No loyalty to employees. It's all about the stockholders. Advice to Senior Management: What happened to Respect for the Individual? Thomas Watson would not approve. No, I would not recommend this company to a friend.
    • Great colleagues but not a good paymaster” Senior Consultant (Current Employee), London, England (UK). I have been working at IBM full-time for more than 7 years. Pros: Good brand recognition. Diverse service offering. Wide choice of projects. Decent work life balance. Cons: Below average salary, hardly any raise. Ridiculous bonus. Bureaucratic. Need to know somebody in senior management to get promoted. Advice to Senior Management: Reduce internal bureaucracy to improve employee productivity. Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.
    • Financial Analyst” Anonymous Employee (Former Employee). I worked at IBM full-time for more than 3 years. Pros: I'm really not sure what to put here. I guess, maybe, a bit of work location flexibility. Can work from home here or there, but I do have a feeling that you get penalized for it subconsciously. Cons: Well, it's a factory pretty much. And it's hard, hard unmeaningful work. Many analysts don't even understand the products they are analyzing. Management is a bid of a joke. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Sr. Program Manager” Senior Program Manager (Current Employee), San Francisco, CA. I have been working at IBM full-time for more than 10 years. Pros: I can work from home. Flexible hours is a big plus if you have kids to pick up from school or do errands during the day time. Cons: It is not really a great company for Type A personality who wants to get things done the most efficient and effective manner. No or hardly any pay raises, and below market salary the longer you work at the company. Advice to Senior Management: Focus more on employees development. Stop doing just lip service with no funding to attend class/courses. No, I would not recommend this company to a friend.
    • Senior Manager” Senior Manager (Current Employee). I have been working at IBM full-time for more than 10 years. Pros: Good at long term strategy. Strong reputation and advantage of size to leverage. Relatively stable. Management open about employee doing different assignments. Strong at project and process management. Cons: Over committed to market. Focus on taking cost out. Lots of talented resources but not able to leverage. Mediocre when it comes to rewarding employee. Advice to Senior Management: Unless you invest and reward people, in long term company will suffer. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Highly recommended company to work at” Account Executive (Former Employee), Wichita, KS. I worked at IBM full-time for more than a year. Pros: Salary. Environment. Multicultural environment. Great management. Vacation paid. Cons: No cons, I am happy with my experience. Advice to Senior Management: Invest on international employees; they are great asset to the company. Yes, I would recommend this company to a friend.
    • Big and good brand, useless management” Sales Support Student/Intern (Former Employee), Dublin (Ireland). I worked at IBM as an intern for less than a year. Pros: Big company and leading brand in the field. Cons: Completely number-driven management, often unable to look beyond the current quarter. Lower and middle management fairly distached from actual work done by their employees. Advice to Senior Management: Engage more with the day-to-day work of employees to get the ability to qualify the numbers reported. No, I would not recommend this company to a friend.
    • Good company but managers are too busy to care about employees.” Project Coordinator (Former Employee), Kansas City, MO. I worked at IBM full-time for more than 10 years. Pros: Good company, great benefits...very little given to employee outside of salary. Cons: Managers don't really care about the well-being of the employee. Advice to Senior Management: Take Care of your people for a job well done. Yes, I would recommend this company to a friend.
    • It is what you make it” Market Segment Manager (Current Employee), Southfield, MI. I have been working at IBM full-time for more than 10 years. Pros: Great opportunity to change priorities by building business case for areas of new investment, great global exposure. Cons: You spend too much time on the most urgent matters and not enough time on the most important matters. Put another way, executives create fire drills based on posturing to other executives. Advice to Senior Management: Allow more bottoms-up management of the business. Yes, I would recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Going down” Advisory Engineer/Scientist (Current Employee), Austin, TX. I have been working at IBM full-time for more than 10 years. Pros: Great people who soldier on despite lousy pay and lousy expectations for promotions or bonuses. I was content to stay there for that reason only. Cons: Management fixated solely on $20 EPS goal for 2015, which they are trying to achieve but slashing payroll and spending to the bone. I really think the intent is to milk the cow to death and walk away from the carcass. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
  • Glassdoor IBM Canada reviews
    • professional working environment but with heavy workload” Anonymous Employee (Former Employee). I worked at IBM Canada. Pros: I like the flexible working style and professional working environment; they provide the training courses for the employees, which is good for individual. Cons: The workload is pretty heavy so that overtime is needed, Depending on the manager, sometimes, work overtime does not have any compensation. Another thing is, everyone in the company is just a number.
  • Smirking Chimp: We Are Going To Live Forever. By Dave Johnson. Excerpts: “People are living longer so we have to increase the Social Security age.” You hear that a lot. Here is why this is just wrong.

    “Life expectancy” is a technical term used in statistics. It almost always means “life expectancy at birth” instead of what people think it means: life expectancy at age 65. But lots of people confuse the meaning of “life expectancy” with “longevity.” ...

    But in the current Social Security discussions, people are making this mistake. Here is an example from Fox News, Longer Life Expectancy Straining Social Security, Analysts Say,

    When President Franklin D. Roosevelt signed Social Security into law in 1935, it was a lifeline to poor seniors and an easy promise to keep – the retirement age was 65 while life expectancy was 63, noted Rep. Paul Ryan, R-Wis., a member of President Obama’s fiscal commission.

    “The numbers added up pretty well back then,” he said with a chuckle. “It was never designed to be a program that would last 25 or 30 years and so that’s one of the reasons why there is so much fiscal pressure on it.”

    For Social Security we need to look at life expectancy at age 65, not at birth. In 1940 men who reached 65 were expected to live another 12.7 years and women another 14.7. By 1990 that had increased to 15.3 for men and 19.6 for women. ...

    In fact, the original designers of Social Security understood this and designed the system to account for such increases. And the 1983 changes in Social Security revised that, and projected the numbers to exactly where they are today. The program is sound and actually has a huge surplus saved up for the future.

    Here is another very important thing to know: those gains in longevity — the numbers that show people are actually living a few years longer — have mostly gone to the high earners, not to the regular working people who depend on Social Security. So changing the age of retirement or cutting the amount it pays because of age increases would hurt the very people who are not living longer! ...

    This is about human priorities — we can afford to increase Social Security the same way we could afford to bail out Wall Street, the same way we could afford to invade Iraq, the same way we can afford to give oil companies huge tax breaks and the same way we continue to pump trillions into the military budget. It is about assigning priorities.

  • Alliance for Retired Americans Friday Alert. This week's headlines:
    • Social Security’s 78th Birthday Receives Generous Attention
    • North Carolina Governor Signs Law that Threatens the Voting Rights of Seniors
    • AFL-CIO to Target Six Republican Governors in 2014
    • Contact Your Members of Congress During Summer Recess
New on the Alliance@IBM Site

Job Cut Reports

  • Comment 08/07/13: Question on UI benefits/LOA for an RA'ed employee with over 30 years. I was RA'ed on 6/12, with my last day on 7/12. I applied for NY UI on 7/15 as suggested, only to find out my claim is being investigated because IBM said I was on leave. I guess technically I did retire even though I was on the cash balance plan and took the lump sum as a roll-over into my 401K—no monthly payments. My question: can/should I show my separation agreement paper that was signed to get my severance to UI to prove that I was RA'ed? Would anything on the agreement jeopardize my UI benefits? Any other suggestions? Thanks! -Happy to be out
  • Comment 08/07/13: -Happy to be out-: I hear IBM is starting to play hardball with those they RA'd or are trying to force to retire. Why they got the disrespect for their former employee, time or money for, it is beyond conscionable. You can't be on leave being RA'd unless you retired with the "bridge." Once you're RA'd your IBM employment was terminated. Plain. Simple. Irrefutable. I would do what you mentioned. In NY, if you are "able, willing, and ready" to still work then you can collect UI no matter what IBM contends after you are RA'd. YOU determine when you want to stop working, e.g. RETIRE. Not IBM. IBM wants folks that are 30 years eligible to retire so they pay less in UI premiums, I reckon. And the money IBM has to pay in the UI premiums, of course, hurts their profits and that almighty IBM god like EPS towards 2015. -da_facts-
  • Comment 08/07/13: Here is another kick in the @@@@. I was contacted today by the IBM ESC aka Fidelity because my status has not been updated from being on LOA to retired since I was "selected" for the RA. Hummm, I wonder if the delay is due to IBM trying to hold on to my 401k match for as long as possible. I have started the escalation with my former manager. Everyone please verify your status because there is a defined window for your medical benefits enrollments. -Willie Rae-
  • Comment 08/07/13: By the way...the STG furlough is including employees on leave of absence (STD in particular). -Not_Surprised-
  • Comment 08/07/13: Ummm Ginni, remember your video rant at employees after Q1 where you wanted 24 hr response for customers? How does that fit with telling employees required to do such to take a hike for a week? What are we supposed to tell customers "Sorry level 2 is on furlough, you'll have to wait?" Hope you plan on being around for some calls from pissed off CIO's -Longtimer-
  • Comment 08/08/13: "IBM stock in slow but steady decline forces DOW to lose ground" Way not to go IBM. Fuzzy pseudo accounting math and no understanding of a revenue stream and losing thousands of qualified workers by RAing them is doing you in. -IBM$tinks-
  • Comment 08/08/13: Lou may have gotten the elephant to dance in the past, but this company has become a dinosaur, and we all know what happened to the dinosaurs...stock continuing downward spiral today -Shaun-
  • Comment 08/09/13: VOI "Wall Street/hedgefund masters" -- The hedge funds are shorting IBM, you'll likely see short interest rise. All the "Street" people I talk to think IBM is a joke. 2 major banks on the street are materially cutting back on IBM services and mainframe. -look closer-
  • Comment 08/10/13: Do any of you think that you will get off Scott-free and NOT work during that furlough week? I'm betting that YOU will be called in somehow to fix a mess or a deal with a customer issue or a critical problem, etc. AND you won't get paid for it. IBM will will again, and eek out more blood from employees, while saving on costs. There is NO way, IBM will be able to function on a skeleton crew for 2 weeks in a row without s**t hitting the fan and blowing back on the employee. Good Luck! -miss_understanding-
  • Comment 08/11/13: Please advise if it is legal to have both salary and hourly system administrators performing the same job function. The pool I work in is setup this way and it causes a lot of friction. -Working4Free-
  • Comment 08/12/13: Cognos India is under fire now. Late task week, around 50 people were effected. Many teams were dissolved. Products 2 months away from GA were dumped. The effected people have been asked to find new projects internally within a month's time. No clarity on what happens if you don't find a project. It's finally coming here too.. -Anonymous-
  • Comment 08/12/13: I was laid off and forced to take retirement April 2009. After almost 31 yrs at IBM, I am very disappointed at how the company is ruining itself, as witnessed by the comments on this posting. Early in the 2000's IBM established a email for a non IBM management member of the board of directors. the board member reviewing the emails changes each month. Maybe sending comments to the board of directors directly might get some attention. the email address is... nonmanagementdirectors@us.ibm.com -Anonymous-
  • Comment 08/13/13: Large STG RA to hit sales this week. Ginni will slant the news as poor performers are being let go but we all know the truth. Heard it will be large. -STG anon- Alliance reply: Make sure Alliance gets the RA packs so we can validate and prove that the RA took place. Send RA packs to: ibmunionalliance@gmail.com.
  • Comment 08/13/13: More cuts coming, folks. IBM apparently has lost its contract with Customs and Border Protection to its former teammate Lockheed Martin. Big Blue has filed a protest to hang onto the work it has held since 2001. -DarthVaderMentor-
  • Comment 08/13/13: Ginni, you cannot be very bright with this furlough idea of yours. Just when you need all hands on deck for the 3rd quarter you take out part of your sales force. Oh, you did not realize that you mistakenly included part of your sales force in the furlough? No surprise here with the sloppy way your ship is being run and the misleading sales numbers you are being fed so lower-level executives can make their bonuses. Ginni, it all goes back to the lack of ethics and morality in your people who have just been following your lead. Want to fix IBM, you and your cronies better set a better example or be surprised when IBM crumbles from the inside. -Anonymous-
  • Comment 08/13/13: You have to love how tone deaf Ginni is. Today we get a big "Think Friday" email touting Ginni's next brilliant idea (let me tell you what this new thing called Cloud is *roll eyes*). Only problem is that it will be rolled out during one of the two mandatory furlough weeks for US STG. So if you drew that week as your furlough week... -Respect_for_the_individual-
  • Comment 08/13/13: Has anyone who has been RA-ed had problems with the Expertise Assessment (EA)? My manager has been bugging me to get my EA done. I didn't think this mattered much as I will be leaving in September due to the layoff. I was shocked to find out (after I submitted it) that my manager asked me to CHANGE how I rated myself. He wanted me to go back and lower my assessment levels for many of the items. This seems to me that he is trying to justify the layoff in my records. I am not planning on changing anything at this point, but I'm guessing he will just go in and make the changes himself. WTF!!! -dun-4-
  • Comment 08/14/13: dun-4, do not change any of your EA. Your manager is probably adding it to his justification for your RA (for the record). If he told you to make changes via phone send him an e-mail to cover yourself stating that although he has directed you to make changes, you are choosing not to at this time. Then print/backup a copy of the EA and email for your records. You never know when it will come in handy down the line. IBM has been known to place people on do-not-rehire lists as well as providing more information then they are legally allowed to when a future employer has call to verify your employment at IBM. Remember one of the questions many other companies ask is...would you rehire this person. -ex-IBMer-
  • Comment 08/15/13: Thanks for your help ex-ibmer. My manager went in and changed my EA. Got the note that the ratings were lowered. He also set up a meeting to discuss hundreds more. I have 26 days to go, and it looks like it is going to get ugly. The point that really disgusts me...that EA had items that I had not updated in years. Some of the dates showed 2007 as the last time the skill was updated. So, now after 6 years, this becomes important?

    I agree it is a way to justify what a 'crappy employee' I have been the past 29 years. After all, working 50 - 60 hour works weeks for years on end, giving up vacation time, holidays, family events, etc for IBM wasn't good enough for them. Now that have to tarnish the reputation it took years to build. I don't give a crap about this place anymore, but I do care about my next employer and I do not want any of this to come forward with me. I hope I find another job soon. My worst nightmare is to return to this place as a contractor! -dun-4-

  • Comment 08/14/13: i am a contractor at STG. i was told at noon Aug 13th that Aug 14th is my last week. So much for the courtesy of a 2-week notice. IBM has lost it values. Glad I'm gone. -Anonymous
  • Comment 08/14/13: The department I was laid off from in May has fallen behind and the remote manager said. "Would it help if we had a person come over from TSTL to assist you?" What a joke. When I was there we were busy but not "behind. Even if I made it through the May layoffs I probably would have been let go this week. Too bad now for those affected; Unemployment has been reduced to 20 weeks and the max benefit is $335 per week. And no Federal extension thanks to our wonder Governor. (Editor's note: The writer is undoubtedly referring to North Carolina. See North Carolina’s Deep Cut to Jobless Benefits Takes Effect Amid Protests.) -Ghost of Contractor's past-
  • Comment 08/14/13: anonymous from 08/12/13: Take your personal choice holidays before your separation. You lose any left if you don't take them all before the 30 days are up! If you don't take all your EARNED vacation before you are separated, you will get paid only for the vacation days you didn't take that you earned until the separation date. (If you took more than your EARNED vacation days [like you took ALL of your remaining vacation already for the year] IBM deducts it from your severance check.) The Alliance has all this info for you: http://www.endicottalliance.org/news/survival.htm -da_facts-
  • Comment 08/14/13: Attending the online TLE (Technical Leadership Exchange), live from Beijing. As an American IBMer, I feel entirely left out and demoralized. Clearly, this TLE was directed to the Asian continent—not Americans. Thanks a lot, IBM, for rubbing our noses in the fact that it is all over for IBMers in the USA. There is no future for us. There are no career aspirations for us—not in IBM. -Anonymous
  • Comment 08/14/13: I was fired in June in BTV after 29 years and 4 yrs shy of SS, but am lucky to receive the pension which ends up about 1/3 of my salary. I've talked with a couple people that were also let go the same day in BTV (and 1 friend in EFK) and finding a job is not easy and it burns especially here in VT where we can't collect unemployment with a pension as NY can. Just wanted to share. -edda-
  • Comment 08/14/13: Heard a rumor that a big AXE RA on STG is coming. Get ready! No mercy!!! Chop, chop!!! -Get ready!-
  • Comment 08/15/13: @Get ready!- YES, seems to be an Oct target for next RA. Not sure if it only affects STG. Start looking now ! -Still employed, but in control-
  • Comment 08/14/13: Cisco announces it's laying off 4,000 in 2014. At least they have nads enough to make a public announcement instead of hiding in the weeds. Common Ginny, grow some... -Roadmap Roadkill-
  • Comment 08/14/13: To the person who asked about what to do about vacation time if RA'd. First, use personal choice days first. If you took any vacation already this year change them to personal choice for the number allowed for the year. Secondly, vacation is prorated...so if you are RA'd after 6 months, you get half of your vacation. Whatever you didn't take you get in $. I think that everyone should claim the first x days of the year as their personal choice days until used up and only then start taking vacation days. -gone in vermont-
  • Comment 08/16/13: I'm not surprised by IBM's cloud struggles. I was part of a team of software developers who were farmed out into lesser positions a couple years ago after our project was outsourced. There was so much more that we could have contributed in areas like cloud. Instead, we rotted away in positions far below our skills. I wanted to be part of the solution, but you would have to have experienced IBM's asinine ways to fully appreciate how incredibly skilled and vibrant developers can wind up with atrophied skills relative to those of employees in companies that truly reward "innovation that matters" and "respect for the individual", and the other sadly hollow phrases murmured regularly by management. I'm SOOOOOOOOO grateful that it's over -free-at-last-
  • Comment 08/17/13: NCResident: I think you can file for UI once you are unemployed in North Carolina. The laws for UI (in N.C.) have changed though. I don't see anything in this webdoc that says accepting a severance agreement stops you from claiming UI until you exhaust your severance (or after 6 months from date of separation). Your tax on your severance is taken out when the severance check is given to you as a lump sum so why shouldn't be able to get UI? But reason sometimes doesn't prevail in fairness. Apply for UI and contact your local representative. What really stinks is IBM HR in RTP is callous and frankly incompetent and doesn't help you folks understand your employment rights! -anonymous-
  • Send the RA pack to ibmunionalliance@gmail.com so we can validate and count the number of workers fired. Names are confidential.

How Does the Furlough Affect You & Your family

  • Comment 08/06/13: Businesses and government agencies operating under budget constraints sometimes use furloughs to place workers on temporary unpaid leave without terminating their employment. Some employers regularly place seasonal workers on furlough, as is often the case with construction workers. You may be eligible for unemployment insurance as a furloughed worker, but receiving the benefits depends on correct and timely filing of claims and compliance with labor laws that determine what constitutes a legitimate furlough. Jam your state's Unemployment office with claims if you are eligible. Don't let this beast win! -Sorry_Furlough_People-
  • Comment 08/06/13: Where is the outrage amongst IBM employees? It's certainly not here at the Poughkeepsie site. We have sat idly by too many times while our compensation has been raided and still we act like sheep being led to slaughter. -Disgusted-
  • Comment 08/06/13: Everyone take the same week. And the other week, do nothing while getting paid. Let them feel the pain. Turn off the computer, turn off the phone. Let them rot. -American_Greed-
  • Comment 08/06/13: If you are a W-2 IBM contractor and are furloughed more than one consecutive week of work (e.g. one week and one day), file for UI. You may even get one day of UI benefits or at least get your "elimination, unpaid UI week" credit. In many US states you are qualified to received benefits since you are an "at will" of IBM contractor and "no work = no pay and no benefits" W-2 employee. -Advice-
  • Comment 08/06/13: While I have seen other major firms do this, they do this across the board and shut the whole office down including power etc.. and they do it in a week where most employees don't mind... Xmas week thru new year. Option to either use remaining time off or loss of pay. I see them do that for few years now.

    The IBM STG way of doing this comes in more like a punishment for low performance. It would have been nice if IBM asked employees to opt in more for this specific cost saving step voluntarily....and put it as investment. If IBM gains, then return investments. Just like the government bailout. I am sure many Employees would be willing to invest. IBM, Don't steal from employees.. it just increases dissatisfaction and eventually a hit to productivity. You do more harm than gain, and share holders wont be dumb for too long to realize the IBM's plans for road to hell. -Jus-

  • Comment 08/07/13: It is clear that IBM's top management focus on financial engineering gimmicks, while neglecting its employees, particularly sales and client-facing services folks and by extension, IT clients...is now taking a huge toll on revenue, employee morale and client satisfaction. This is now a perfect storm, ready to go out of control. The last time we saw this type of turmoil at IBM was just before/during and just after the transition from Akers to Gerstner.

    Clearly, if there is not a return to treating employees, clients and revenue growth as INVESTMENTS rather than afterthoughts, and quickly, then, we will see a change of top management, once again, and based on all that we see happening, don't be surprised if this happens sooner rather than later. It will be interesting to see if they will look internal or external for the new leadership.. -Anonymous-

  • Comment 08/10/13: I haven't heard about another furlough action in Software Group. I'm a contractor now, but was a regular employee. Software Group is furloughing all its contractors for 6+ weeks: August 15 through September 30. That's 11% of the year. Presumably this action is to salvage the third quarter. What happens in the fourth quarter? -aContractor-
  • Comment 08/15/13: 4Q (Oct seems to be the month) count on more layoffs; seems a few people are already getting early info on it. -Still employed, but in control-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • New York Times: When a Co-Pay Gets in the Way of Health. By Sendhil Mullainathan. Excerpts: Economists specialize in pointing out unpleasant trade-offs — a skill that is on full display in the health care debate.

    We want patients to receive the best care available. We also want consumers to pay less. And we don’t want to bankrupt the government or private insurers. Something must give. ...

    What is a surprise is that amid these complex issues, one policy sidesteps these trade-offs. A few drugs — such as beta-blockers, statins and glycogen control medications — have proved very effective at managing hypertension, heart disease, diabetes and strokes. Most insurance plans charge something for them. Why not make drugs like these free? Not for everyone, but just the groups for whom they are provably effective.

    In traditional economics, such a policy creates waste. The basic principle is moral hazard: consumers overuse goods that are subsidized. This is why people fly in business class when they’re on an expense account but in economy when it’s on their own dime.

    In health care, a doctor or patient might order an extra test casually, just because it’s free. This is inefficiency at its worst: from money spent on costly procedures to tests and medicines that provide little medical benefit, some actions are undertaken only because someone else picks up the check. To discourage this waste, insurance plans charge co-payments. The logic is simple: if patients face costs, they will think more carefully about the benefits.

    But people don’t always follow a cost-benefit logic. Consider a patient recovering from a heart attack. A small cocktail of drugs may cost a trivial amount — say, $5 — yet it reduces the risk of subsequent heart disease mortality by as much as 80 percent. That’s a good deal, but as many as 50 percent of people fail to take these medications regularly. ...

    The problem here is the exact opposite of moral hazard. People are not overusing ineffective drugs; they are underusing highly effective ones. This is a quandary that two colleagues — Katherine Baicker, a professor of health economics at Harvard, and Josh Schwartzstein, a professor of economics at Dartmouth — and I call “behavioral hazard.”

  • Associations Now: AARP Launches Online Resources to Educate Americans on ACA. By Katie Bascuas. Excerpts: 14%: The percentage of surveyed Americans who understood common insurance terms such as deductibles, copays, and coinsurance, according to a recent study from researchers at Carnegie Mellon University. Only 11 percent could accurately calculate the cost of a four-day hospital stay. The survey “suggests a big reason for the confusion that’s been largely overlooked: The public doesn’t understand how health insurance works in the first place,” NPR reported.

    In an attempt to educate Americans about the new healthcare law, AARP launched two websites last week that provide information and resources to help consumers determine what benefits may be available to them. ...

    One of the resources, HealthLawAnswers.org, is an online tool that creates customized reports detailing what benefits may be available to users based on information they input, such as their location, gender, age, and current level of insurance coverage. A similar tool for business owners was launched last month by the White House, The Washington Post reported.

  • New York Times opinion: The Cure for the $1,000 Toothbrush. By Tina Rosenberg. Excerpts: Here is a basic fact of health care in the United States: Doctors and hospitals know what they charge, but patients don’t know what they pay. As in any market, when one side has no information, that side loses: price secrecy is a major reason medical bills are so high. In my previous column, I wrote about the effect of this lack of transparency on the bills patients pay out of pocket.

    We know about these bills, which hit us directly. What most people don’t know, because the costs are hidden, is that the same imbalance exists with insurance. The employers and employees who buy health coverage have delegated vigilance over health care costs to insurers — but insurers, for the most part, have gone AWOL. ...

    What Texas811 did first was drop Blue Cross and its P.P.O. and become self-insured. That means that the company itself paid claims up to a certain amount, and bought an insurance policy that kicked in after that. This isn’t revolutionary – self-insurance is how it’s done for about a third of the insured work force. After one unsatisfactory year, Texas811 signed up with GPA, a Dallas-based company that administers claims for about 230 workplaces like municipalities, school districts, retail businesses.

    The difference was astounding.

    Under Blue Cross’s P.P.O., the company had been paying $10,000 per visit for dialysis patients. Now it was paying $975. Other costs dropped commensurately. After the first year, the company lowered premiums by 3 percent and increased coverage, providing free vision, dental and life insurance to all its employees, including part-timers. “We saved so much money we were able to hire a third-party contractor to establish a medical clinic in our office,” said Marrs. “We provide a free primary care physician in our office to all employees and their dependents.”

  • Lewiston, Maine Sun-Journal: America needs cost-effective universal health care. By Julie Pease, M.D. Excerpts: In recent months, the people of Maine have witnessed activity by many different players in the health care system as Maine moves to implement the Affordable Care Act.

    We’ve seen Gov. Paul LePage veto the expansion of MaineCare, which will leave 70,000 Mainers without access to health care. We’re watching MaineHealth and Anthem try to exclude local hospitals and providers in order to gain “market share” in the upcoming insurance exchange.

    We’ve seen highly paid hospital lobbyists and executives successfully persuade Gov. LePage and the Legislature to repay the state’s hospital debt. We’ve learned that businesses are being granted a reprieve from the mandate to offer health insurance to their employees, although individuals remain subject to the mandate beginning in January 2014. Even with ACA subsidies, many of the individual insurance options in the marketplace will be either inadequate or unaffordable for many Mainers. ...

    In Maine, an estimated 1,800 individuals and families declared bankruptcy in 2012 due to medical costs. Although some of these people were insured, the majority had health insurance that was inadequate to cover the high costs of medical care. There are 130,000 Mainers who continue to have no health insurance at all; thousands more are under-insured.

    When people are under-insured or have no insurance, they delay getting necessary health care and they don’t fill life-saving prescriptions due to cost. That leads to poor health outcomes. When people delay too long, the outcomes are catastrophic. In Maine, someone dies every three days because of lack of health insurance (over 130 deaths per year). ...

    On the occasion of the 48th anniversary of Medicare, I urge Congress to implement real health care reform by improving and extending Medicare to every person in the United States.

    A single universal system would give everyone the same access to quality health care regardless of health, wealth, age or employment. It would allow patients to choose their physicians, rather than having insurance companies choose for them. It would spare people the specter of bankruptcy if any family member should have a serious accident or illness. It would help struggling families and small businesses by funding health care with progressive taxes rather than unaffordable insurance premiums. It would eliminate labor-management disputes over health care benefits.

    An improved Medicare system would also allow the government to negotiate fair prices for pharmaceuticals, medical devices and health services, and would make it easier to identify and eliminate fraud. It would reduce costs of health care by eliminating the extraordinary and unnecessary administrative waste generated by the private health insurance industry and by the bureaucratic complexities of the Affordable Care Act.

    America needs cost-effective universal health care as exists in every other industrialized country. No other nation uses our unique private insurance system which penalizes the sick by charging them more, by reducing their benefits, or by denying care altogether. None allow private insurance companies to place profit over coverage. All of them encourage health care by reducing or eliminating deductibles and co-pays. And all of them provide better care to more people for less money than we do. ...

    We must move beyond the bureaucratic, complex, expensive and limited reforms offered by the Affordable Care Act. Instead, let’s improve the popular Medicare program and expand it to cover everyone.

  • The Commonwealth Fund: Two Americas. By David Blumenthal, M.D. Excerpts: Economists at Harvard University recently reported that geography is a particularly powerful predictor of economic mobility in the United States. For those of us who work in health care, this should not be surprising: we already have abundant evidence that where you live matters a lot when it comes to health and the quality of care you receive. Increasingly, the U.S. is not one country, but two―divided geographically by persistent, troubling differences in people’s access to affordable, high-quality health care.

    This is a clear message of The Commonwealth Fund’s state and local scorecards on health system performance, which have documented these divisions over much of the past decade. And the message will be reinforced in our newest health system scorecard, which focuses on low-income populations in the U.S. (look for it next month). Certain regions of the country―the Northeast and Northwest, parts of the Midwest, the North-Central states―regularly perform well. Other regions―generally the South, Southeast, and Southwest―perform poorly. The former have health outcomes that are among the best in the industrialized world. Results in the latter look more like those of developing countries in South Asia, South America, and Latin America. ...

    Our recent local scorecard documented consistent 10-to-20-percentage-point differences between high- and low-performing regions on a host of measures related to health care access, quality, and costs. Gaps between the best- and lowest-performing areas are staggering. For example, the proportion of adults with health insurance in the leading regions is more than 50 percent higher than in the lagging areas, while the rate of potentially preventable mortality in the best region is one-third of that in the worst. ...

    Unfortunately, many of the states that lag in health care performance are choosing not to expand eligibility for Medicaid under the Affordable Care Act. We know that insurance coverage, including Medicaid, improves access to care and results in improved health for previously uninsured people. States skipping expansion will also miss an opportunity to lower the costs of uncompensated care for their hospitals and forgo an infusion of federal dollars for traditionally underserved and rural areas. Uneven implementation of the ACA, therefore, could increase preexisting disparities in the health and health care available in high- and low-performing areas of the U.S.

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.

  • Washington Post opinion: Social immobility erodes the American dream. By Fareed Zakaria. Excerpts: If there’s one issue on which both the left and right agree, it is the crisis of declining mobility. The American dream at its core is that a person, no matter his or her background, can make it here. A few weeks ago, four economists at Harvard and the University of California at Berkeley released a path-breaking study of mobility within the United States. And last week the Journal of Economic Perspectives published a series of essays tackling the question from an international standpoint. The research is careful and nuanced, yet it does point in one clear direction. The question is, will Washington follow it?

    For more than a decade, it has been documented that Northern European countries do better at moving poor people up the ladder than the United States does. Some have dismissed these findings, pointing out that the United States cannot be compared with places such as Denmark, an ethnically homogeneous country of 5.5 million people. But Miles Corak of the University of Ottawa points out in his contribution to the Journal of Economic Perspectives that Canada is a very useful point of comparison, being much like the United States. (The percentage of foreign-born Canadians is actually higher than the percentage of foreign-born Americans, for example.) And recent research finds that people in Canada and Australia have twice the economic mobility of Americans. (The British are about the same as Americans but much worse than Canadians and Australians.)

  • The Financial Times: How the wealthy keep themselves on top. By Tim Harford. The more unequal a society, the greater the incentive for the rich to pull up the ladder behind them. Excerpts: When the world’s richest countries were booming, few people worried overmuch that the top 1 per cent were enjoying an ever-growing share of that prosperity. In the wake of a depression in the US, a fiscal chasm in the UK and an existential crisis in the eurozone – and the shaming of the world’s bankers – worrying about inequality is no longer the preserve of the far left.

    There should be no doubt about the facts: the income share of the top 1 per cent has roughly doubled in the US since the early 1970s, and is now about 20 per cent. Much the same trend can be seen in Australia, Canada and the UK – although in each case the income share of the top 1 per cent is smaller. In France, Germany and Japan there seems to be no such trend. (The source is the World Top Incomes Database, summarised in the opening paper of a superb symposium in this summer’s Journal of Economic Perspectives.) ...

    I set out two reasons why we might care about inequality: an unfair process or a harmful outcome. But what really should concern us is that the two reasons are not actually distinct after all. The harmful outcome and the unfair process feed each other. The more unequal a society becomes, the greater the incentive for the rich to pull up the ladder behind them.

    At the very top of the scale, plutocrats can shape the conversation by buying up newspapers and television channels or funding political campaigns. The merely prosperous scramble desperately to get their children into the right neighbourhood, nursery, school, university and internship – we know how big the gap has grown between winners and also-rans.

    Miles Corak, another contributor to the JEP debate, is an expert on intergenerational income mobility, the question of whether rich parents have rich children. The painful truth is that in the most unequal developed nations – the UK and the US – the intergenerational transmission of income is stronger. In more equal societies such as Denmark, the tendency of privilege to breed privilege is much lower.

    This is what sticks in the throat about the rise in inequality: the knowledge that the more unequal our societies become, the more we all become prisoners of that inequality. The well-off feel that they must strain to prevent their children from slipping down the income ladder. The poor see the best schools, colleges, even art clubs and ballet classes, disappearing behind a wall of fees or unaffordable housing.

    The idea of a free, market-based society is that everyone can reach his or her potential. Somewhere, we lost our way.

  • Smirking Chimp: The Fast-Food Strikers Are Fighting for All of Us. By Richard Eskow. Excerpts: Fast food workers have been conducting one-day strikes for better wages and working conditions in several American cities. They've also been doing much more than that: They're shown the entire country real leadership. They're fighting for all of us, and their fight is our fight. ...

    Workers at McDonald's, Popeye's, Taco Bell, and Long John Silver, most of whom earn the minimum wage of $7.25, are asking for an increase to $15 per hour. That's exactly what they should do. It robs workers of their dignity and their rights -- "life, liberty, and the pursuit of happiness," remember? -- to ask for anything less than a living wage.

    And the current minimum wage is not a living wage.

    In fact, if the minimum wage had kept pace with inflation, it would be more than $16 today. These fast-food workers have pitched their wage request exactly right.

    What's more, corporations like McDonald's can easily afford it. McDonald's makes a perfectly acceptable profit in Australia, where the minimum wage is $14.50 and workers just negotiated a15 percent raise. Its profit margins are very high -19.82 percent in 2012, compared with the consumer services industry average of 4.9 percent- which means that greed, not the desire for a decent return, is why it underpays its workers. ...

    The fiscal argument for raising these workers' wages parallels the argument for raising the national minimum wage. Most minimum wage workers work for large corporations, and large corporations are making historically high levels of profit.

    What's more, by keeping millions of their workers below the poverty level, these corporations are draining the public's coffers whenever the government is forced to step in to provide Medicaid, food stamps, and other supplemental assistance.

    Funny how many corporate CEOs tell us the Federal deficit is "urgent," then suddenly disappear when this issue is raised. ...

    These fast-food workers should be celebrated for their courage. They began their actions without the benefits of union membership or the support of organized colleagues around the country. That's not an accident. Our increasingly corporate-dominated political process has systematically weakened the rights of workers to organize and work toward their own best interests.

    As a result we've seen an erosion of many other workplace rights, too: The right to healthy working conditions. The right to a decent income. The rights of privacy. Even, in some cases, the right to go to the bathroom when necessary.

  • BusinessWeek: The Shrinking Federal Deficit Hurts a GOP Argument. By Mike Dorning. Full excerpt: Republicans are threatening a government shutdown this fall, citing runaway federal spending. That could be a tough sell. The U.S. budget deficit is at its lowest point in four years.
  • Smirking Chimp: 8 Signs the Rich Have WAY Too Much Money. By Richard Eskow. Excerpts: The statistics about wealth inequality in this country are both astonishing and alarming. But statistics can’t tell the entire story if they’re presented in isolation. Our country is increasingly being turned into a plaything for the ultra-rich.

    Here are seven signs that the ultra-wealthy Americans have way too much money. ...

    3. Corporate profits and wealthy income. Corporate profits are capturing more of the nation’s income than they have for more than half a century. They stood at 14.2 percent as of the third quarter of 2012, which is higher than they’ve been since 1950, and their after-tax performance has stayed just as robust since then.

    At the same time, the portion of our national income which goes to employees is the lowest it’s been in nearly half a century. (More here.)

    Wall Street greed and criminality caused the crisis of 2008, but government efforts since then have concentrated on rescuing banks, and on boosting stock market performance and other forms of profitability for corporations. And it shows: Corporate earnings have risen by more than 20 percent each year on average since then, while disposable income has only risen by a meager 1.4 percent on average.

    And even that isn’t equitably distributed. A recent study showed that the top 1 percent of earners has capture 121 percent of income gains since 2008, while the rest of the country fell behind. The top 10 percent’s share of income is the highest it’s been since 1917—and maybe longer. This imbalance isn’t an act of God or a force of nature. It’s the result of a series of bad policy decisions, about workplace rights, taxation, and where we expend our government’s resources. ...

    5. Just 400 families have more money than 60 percent of the entire country. ... A mere 400 households have more net worth among them than is held by more than 60 percent of all US households. That comes to more than 60 million households, who among them possess less than these few families.

    Americans are accustomed to feeling horrified at South American countries or medieval principalities in which a few powerful families rule over a struggling population. Guess what? In today’s USA, ancient feudalism lives again. ...

    7. Lucky or not, they’ve got a lot of control over our government. “Of the people, by the people, and for the people”? That’s still true—for a few very rich people. The Sunlight Foundation offers these staggering statistics:

    A mere 31,385 people – less than 0.01 percent of the nation’s population – contributed 28 percent of the country’s total political contributions. Nobody was elected to the House or Senate without their money.

    As the Sunlight Foundation also notes, this elite group contributed at least $1.62 billion to political campaigns in 2012. (They probably also contributed the lion’s share of the $350 million in “dark money” which was spent that year.) Their median donation of $26,584 is larger than the average household income in this country.

    84 percent of Congress took in more from the 0.01 percent than they did from all other donors combined. ...

    Gerrymandering has turned the House of Representatives into such an unrepresentative body that Republicans now control it despite a 1.4 million loss to Democrats in the popular vote. It’s like they say: You get what you pay for. ...

    8. They control the media, too, which means they control what we see and hear as 'news.' ... Thirty years ago, 50 companies controlled 90 percent of all the media in this country. Today it’s six companies.

    Those six companies include GE, owner of serial corporate criminal GE Capital, and Newscorp, owned by the scandal-plagued Rupert Murdoch. (The others are Disney, Time Warner, Viacom, and CBS)

  • The Fiscal Times: Wall Street Bonuses To Get Another Bump. By Suzanne McGee. Excerpts: Wall Street may feel as if it’s suffering – coming under more intense scrutiny from regulators, and anxious about the impact of the Federal Reserve’s much-anticipated “tapering” of quantitative easing. Its most recent crop of earnings reports have suggested otherwise, though. The Street is doing quite nicely – and, according to a just-released survey from compensation consulting firm Johnson Associates, so are many of its employees.

    Those workers who have hung on to their jobs through the most recent round of cutbacks can look forward to significantly higher bonus payments in the new year, the Johnson Associates survey finds. On average, securities industry employees took home cash bonuses of $121,900 in 2012, up 9 percent from the prior year, according to a report released earlier this year by the New York State Comptroller.

  • Economic Policy Institute: Social Security Is the Only Reason Most Americans Can Afford to Retire. By Ross Eisenbrey. Excerpts: As we celebrate the 78th birthday of Social Security today, it’s worth noting the vital role the program continues to play in Americans’ retirement security. Though Americans are increasingly turning to savings in 401(k)-type accounts, Social Security remains the most reliable and equitable system of retirement savings. The expected stream of Social Security benefits for a household at the median is not very much less than for a household in the top 10 percent—in 2008, the median household age 65-69 had $315,300 of Social Security wealth, while a household at the 90th percentile had $643,100, a little more than twice as much.

    By contrast, the savings in IRAs, 401(k)s and similar retirement accounts are strikingly unequal. The amount of private retirement savings in individual accounts is nine times greater at the 90th percentile than at the 50th. In 2010, households whose income was in the middle fifth percentile of incomes had, on average, only $34,981 in individual retirement savings, while households in the top fifth of incomes averaged $308,674. Other than high-income households, who receive most of the federal subsidies for IRAs and 401(k)s, virtually no one has enough savings to generate substantial retirement income. Social Security wealth and retirement income, on the other hand, are broadly shared.

  • They're STILL Saying Taxes And Spending Hurt The Economy. By Dave Johnson. Excerpts: Serious People were saying that budget deficits hurt the economy. Then we increased taxes on the rich so now deficits are wayyyyy down. So Serious People are saying that taxes hurt the economy. Or is it spending on schools and infrastructure that is going to kill the economy. Wait, it's the new health care law — millions of people getting coverage is going to kill the economy. How come Serious People never complain that cutting schools, infrastructure maintenance, Social Security, scientific research (and other things We the People spend money on to make our lives better) really, actually does hurt the economy?

    Last year the Congressional Research Service (CRS) took a look at the actual record of taxes and economic growth and issued a report, Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945. The report reported,

    Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth.

    Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. The share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. The evidence does not suggest necessarily a relationship between tax policy with regard to the top tax rates and the size of the economic pie, but there may be a relationship to how the economic pie is sliced.

    Translation from government to English: The top tax rate used to be over 90% and capital gains taxes used to be much higher. At that time economic growth was much higher. Then they dramatically lowered tax rates for the rich and economic growth went waaaaay down. (However, they can't say for sure that cutting taxes on the rich caused the huge drop in economic growth.) Also the tax cuts didn't boost saving, investment or productivity growth. BUT the rate-lowering appears to have caused incomes to concentrate at the top, which has screwed and squeezed the rest of us.

  • New York Times op-ed: Moment of Truthiness. By Paul Krugman. Excerpts: Or has our political system been so degraded by misinformation and disinformation that it can no longer function?

    Well, consider the case of the budget deficit — an issue that dominated Washington discussion for almost three years, although it has recently receded.

    You probably won’t be surprised to hear that voters are poorly informed about the deficit. But you may be surprised by just how misinformed.

    In a well-known paper with a discouraging title, “It Feels Like We’re Thinking,” the political scientists Christopher Achen and Larry Bartels reported on a 1996 survey that asked voters whether the budget deficit had increased or decreased under President Clinton. In fact, the deficit was down sharply, but a plurality of voters — and a majority of Republicans — believed that it had gone up.

    I wondered on my blog what a similar survey would show today, with the deficit falling even faster than it did in the 1990s. Ask and ye shall receive: Hal Varian, the chief economist of Google, offered to run a Google Consumer Survey — a service the company normally sells to market researchers — on the question. So we asked whether the deficit has gone up or down since January 2010. And the results were even worse than in 1996: A majority of those who replied said the deficit has gone up, with more than 40 percent saying that it has gone up a lot. Only 12 percent answered correctly that it has gone down a lot.

    Am I saying that voters are stupid? Not at all. People have lives, jobs, children to raise. They’re not going to sit down with Congressional Budget Office reports. Instead, they rely on what they hear from authority figures. The problem is that much of what they hear is misleading if not outright false.

    The outright falsehoods, you won’t be surprised to learn, tend to be politically motivated. In those 1996 data, Republicans were much more likely than Democrats to hold false views about the deficit, and the same must surely be true today. After all, Republicans made a lot of political hay over a supposedly runaway deficit early in the Obama administration, and they have maintained the same rhetoric even as the deficit has plunged. Thus Eric Cantor, the second-ranking Republican in the House, declared on Fox News that we have a “growing deficit,” while Senator Rand Paul told Bloomberg Businessweek that we’re running “a trillion-dollar deficit every year.”

    Do people like Mr. Cantor or Mr. Paul know that what they’re saying isn’t true? Do they care? Probably not. In Stephen Colbert’s famous formulation, claims about runaway deficits may not be true, but they have truthiness, and that’s all that matters. ...

    Put it all together, and it’s a discouraging picture. We have an ill-informed or misinformed electorate, politicians who gleefully add to the misinformation and watchdogs who are afraid to bark. And to the extent that there are widely respected, not-too-partisan players, they seem to be fostering, not fixing, the public’s false impressions.

  • Huffington Post: The U.S. Has The Worst Income Inequality In The Developed World, Thanks To Wall Street: Study. By Mark Gongloff. Excerpts: Hey, who says America is in decline? The U.S. is still more awesome than the rest of the world at making at least one thing. And that thing is income inequality.

    A new paper by economists Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez lays out just how much better at making inequality the U.S. is than everybody else and tries to explain how it got that way.

    Since the 1970s, the top 1 percent of earners in the U.S. has roughly doubled its share of the total American income pie to nearly 20 percent from about 10 percent, according to the paper. This gain is easily the biggest among other developed countries, the researchers note. You can see this in the chart below, taken from the paper, which maps the income gains of the top 1 percent in several countries against the massive tax breaks most of them have gotten in the past several decades. (Story continues after chart.) ...

    So how did America get so darn great at ratcheting open the chasm between the haves and have-nots? Thank the dynamic duo of Wall Street and Washington, which have been working so well together for the past few decades to make laws that favor banks. Turns out this Axis Of Making It Rain has also been making laws that favor the exorbitantly wealthy. Win-win. Unless you are poor, in which case: Sorry, be born to richer parents next time, maybe?

    One thing you'll notice in this chart is that, typically, the bigger the tax cuts given to the 1 percent (the horizontal scale on the chart), the bigger the income inequality. This is consistent with other studies that have shown the tax code has a big effect on income distribution. That's one way Washington has boosted inequality: By slashing taxes on the rich, for freedom and growth and trickling down on the poor. Unfortunately, the paper points out, contrary to what you will hear from conservatives, lower tax rates on the wealthy offer no obvious benefits to growth, or to the poor. ...

    That something is Wall Street, more or less, as Matthew O'Brien of The Atlantic points out. The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy. Again, this is consistent with other studies that have attributed much of the rise in in inequality to the pay being sucked up by bankers and overpaid CEOs.

  • New York Times editorial: No Banker Left Behind. Excerpts: The Detroit bankruptcy case has been cast as a contest between bondholders and pensioners that can be resolved only by shared sacrifice.

    In principle, we have no problem with that, though in practice, the pensioners’ fair share will have to take into account their extreme vulnerability: Public pensions are not federally insured and many municipal retirees do not receive Social Security.

    What we do have a problem with is shared sacrifice that does not seem to apply to the big banks that abetted Detroit’s descent into bankruptcy. ...

    This much is clear: The banks’ 25 percent hit is nothing compared with the city’s suggested 90 percent cut to the pensions’ unfunded liability — which will result in benefit cuts that would be disastrous in both human and political terms and that the State of Michigan must prevent from happening.

  • AlterNet: Did You Know the Deficit Is Shrinking? Most Americans Don't, Thanks to Shameless Deficit Hawk Propaganda The deficit is down 37.6 percent for the first 10 months of 2013. But half of Americans think it’s growing. By Lynn Stuart Parramore. Excerpts: Remember all those deficit hawks who screamed that the federal deficit is spiraling out of control and must be stopped with spending cuts that have a funny way of hurting the pocketbooks of the most vulnerable Americans? Their excuse for ripping us off has been literally disappearing, but a new Google survey shows that not only do the vast majority Americans not know it — half of the public actually believes that the deficit is growing.

    Here are the facts: The U.S. budget deficit has been shrinking at a rapid rate over the last few months. The deficit peaked at 10.2 percent of GDP in 2009, but over the past four quarters, it has shrunk to a mere 4.2 percent of GDP. What’s more, the Congressional Budget Office predicts that the deficit will fall to 2.1 percent of GDP in 2015.

    Why such a disconnect? Unfortunately, disgraceful propaganda has left the public misinformed and confused. ...

    Deficit hawks like Simpson and Bowles, and their grand funder, hedge fund billionaire Pete Peterson, go on promoting the nonsense that the deficit is the major economic problem of 2013 despite the obvious facts and a growing consensus from economists that such a claim is utterly absurd. Incredibly, they do it even after the faulty work they relied on to make their case – a paper produced by two Harvard economists, Carmen Reinhart and Kenneth Rogoff – was discredited by a mere grad student in one of the great academic revelations of our time. Even conservative economists are bowing to reality. The folks over at the conservative American Enterprise Institute, for example, have come to the conclusion that austerity is a terrible idea and that without proper stimulus, the U.S. economy would look a lot more like Europe’s, where individual countries without sovereign currency have been forced to go the austerity route. It’s getting increasingly hard to deny that things have gotten pretty ugly over there because of deficit hawks and their ilk.

    But deficit hawks are paid well to misinform the public. They write reports. They get corporate honchos to help them run campaigns with innocent-sounding names like “Fix the Debt.” They build websites. They write articles. They hold conferences. They pay off think tanks – even progressive ones – to play ball with them. And the corporate dominated major media frequently are happy to play along. On it goes, until the lies repeated to the public take on the ring of truth.

    The deficit hawks have been more than spectacularly wrong. They have impacted policy in a way that turned the attention of Washington away from what it should have been focused on all along – jobs. Instead of a deficit commission, Obama should have called for a jobs commission to address the fact that hard-working people have not been able to find jobs to feed their families because of a Wall Street-driven financial crisis. ...

    One might hope that the reality emerging will help squelch the calls to recklessly cut government investment in the economy. But there’s a big problem: Deficit lies benefit the 1 percent in the short-run. Rather than shrinking the deficit, what the short-sighted, greedy rich in America really want to shrink is their tax liabilities, which is why they don’t want to pay for things like education, infrastructure, and social safety net programs that benefit the population and ultimately help keep the economy humming. The financiers among them would also dearly like to privatize things like Social Security so that they can collect fees on American retirement accounts. The corporate honchos like the way austerity drives up unemployment and drives down wages because they hold the mistaken view that keeping workers stressed and vulnerable is good for their bottom line. They want people like Larry Summers to head the Federal Reserve, who, while in the White House as the president’s chief economic adviser , famously presided over a stimulus program many economists warned was way too small.

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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