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6, 2000 April, 2000

Highlights—July 18, 2009

  • Associated Press, courtesy of Forbes: Indiana has no alternative to troubled welfare system. By Ken Kusmer. Excerpt: Indiana welfare officials considering canceling the state's privately run welfare system have no backup plan in place, and critics say it will be hard to undo the privatization of 1,500 state case workers more than two years ago. Anne Murphy, secretary of the Family and Social Services Administration, confirmed last week that the system led by IBM Corp. and Dallas-based Affiliated Computer Services Inc has so many problems that Indiana could cancel the 10-year, $1.16 billion contract. She asked IBM to submit a "corrective action plan" as part of a process that could result in cancellation of the contract if changes aren't made by the end of September.
  • Jim Hightower: Hoosiers Discover the Cost of Privatization. Full excerpt: It was a proud day for the governor. In December 2006, he stepped to the lectern, full of confidence: "No decision we've made," he told the assembled media, "is more clearly in the public interest." Gosh, if that was his best decision, I'd hate to see one of his bad ones.

    He's Mitch Danials, governor of Indiana and an ideological absolutist on the virtues of privatizing government, and he was announcing his hallmark plan to outsource that state's administration of food stamps, Medicaid, and other welfare benefits for poor folks. No need for all those government case workers, Daniels declared, because the needs of welfare recipients can be better met the corporate way – with efficient computers and call centers.

    IBM was given a $1.1-billion contract from the state to take charge. Taxpayers, boasted the governor, will reap "a billion dollars in savings," while low-income families will enjoy the stellar service of the private sector.

    Serving a public need, however, is not as easy as designing computer software. More than two years into the task, IBM's stumbles and fumbles include lost paperwork, frustrating runarounds, poorly-trained staff, inadequate equipment, and rejection of qualified applicants. The rate of mishandled food-stamp cases, for example, has more than tripled since IBM took over.

    To try to fix this mess, the state has now issued a list of 200 reforms that IBM must achieve, giving it until September to shape up. The changes include hiring additional staff and managers, which will eliminate much of the highly-touted "savings" that privatization was to bring. A state official says bluntly: "It's possible we'd have to cancel the contract."

    The so-called "efficiencies" of privatization are actually only achieved by shortchanging service and eliminating the personal touch – and that's no way to run a public program.

  • The Register (United Kingdom): IBM: Revenues down, profits up in Q2. By Timothy Prickett Morgan. Excerpts: In the second quarter ended on June 30, IBM reported total sales of $23.25bn, down 13.3 per cent, more or less in line with other big players in the IT sector. And its gross profits were down 8.8 per cent to $10.6bn. But through the magic of cost cutting (including surgical layoffs), of integration of its global businesses (meaning consolidating and offshoring major operations such as managing its customer support centers or supply chain, but IBM never admits that), of acquiring small, profitable software and services companies, and of exiting unprofitable commodity businesses, IBM was still able to boost net earnings by 12.2 per cent to $3.1bn.

    If the economy moves from a recession to a full-blown depression, presumably IBM's profits, thanks to its oft-professed "business model", would shoot right through the roof.

    Anyway, whatever IBM is doing to cut costs and boost margins - and chief financial officer Mark Loughridge has been understandably vague over the past several quarters about "workload rebalancing" and other initiatives that are driving margins - it is working out better than expected, because IBM is now saying that it can hit $9.70 per share earnings in 2009, up from its previous guidance of at least $9.20 from earlier this year, and putting it well on track to its goal of delivering $10 to $11 EPS in 2010. (As if anyone except Wall Street cared about EPS, which IBM largely makes happen through the billions and billions of dollars it expends buying up mountains of its own shares.) ...

    The margin expansion story - and the reason why IBM is throwing off cash and is able to buy back so much of its shares - is happening in its two services groups. Global Technology Services, the part of IBM that does outsourcing and technical support, reported sales of $9.1bn, down 9.8 per cent, but gross margins were 34.8 per cent (up 3.2 points), getting close to the margins that IBM has on hardware. Global Business Services, which does business process engineering, application outsourcing, and systems integration, reported sales were off an eye-opening 15 per cent, but gross margins here were also up, to 27.2 per cent (an increase of 1.4 points). Loughridge said that while outsourcing revenues were down in the quarter because existing customers were tightening their belts, other customers were looking for ways to cut costs and IBM's signings for new strategic outsourcing and business transformation and optimization contracts rose by 13 per cent to $6.7bn. IBM's total signings across the two services groups came to $14bn in the quarter, and the company had a $132bn service backlog as it exited the quarter, about the same as it had last year.

  • The Motley Fool: Big Blue's Pink Slip Party Turns Green. By Tim Beyers. Excerpts: Once more, IBM is a growth story. Big Blue last night reported a 17.8% year-over-year bump in per-share earnings during 2009's second quarter, besting last quarter's 4% gain. But this isn't your average growth story. IBM suffered a 13.3% decline in revenue -- better than the 15.3% drop that Intel endured, but far short of Google's 2.9% gain. Cost cuts and share buybacks created earnings growth where organically, there was almost none.

    And the cuts were massive. Gross margin improved better than two percentage points, thanks to IBM's "strategic transformation" -- headcount reductions, plus some added efficiencies -- while other income and expenses fell 18.8% during the quarter. In short, IBM cut costs and realized efficiencies far faster than its revenue fell.

  • Wall Street Journal: Delayed Retirements Are Boon and Bane for Firms. By Kelly Greene and ANne Tergesen. Excerpts: In a recent survey of more than 2,200 U.S. workers by consulting firm Watson Wyatt Worldwide, 44% of respondents age 50 or older said they plan to postpone retirement; half of those say they plan to work at least three years longer than previously expected. That has added pressure on companies struggling to reduce payroll as profit dwindles. It also threatens to clog the pipeline for companies that want to bring in new blood. ...

    Some employers are taking steps to make themselves more attractive to younger workers, who may fear a shortage of promotion opportunities. International Business Machines Corp. in December created an online tool to boost its internal mentorship program, in which older, more experienced employees share knowledge with younger workers, says Mary Ann Bopp, manager of IBM's mentoring programs. In turn, senior employees are seeking "reverse mentors" to learn about, for example, online social networking. Since December, more than 3,500 employees have signed up to be mentors and more than 2,600 co-workers have sought them out. "There was huge demand," Ms. Bopp says.

  • AARP: Economic Fears Make Retirement a Dream Deferred. But retirees looking for work find fewer jobs, fierce competition. By Michael Zielenziger. Excerpts: If the value of his house and his stock portfolio weren’t so shaky, Orville Teising, 67, wouldn’t be out looking for work. Having retired after a career in sales but with a nest egg shrinking significantly, “my wife, Rochelle, and I don’t have enough money to stay in our house indefinitely,” says Teising, who lives in Mill Valley, Calif. “Those savings, which we were planning to live on in our 80s, declined by 30 percent last year, so my wife’s now back to work as a psychotherapist, and me, I’m out looking. But it’s not that easy.” ...

    A survey by the Conference Board, a nonprofit research group, shows that Americans over 55 have had their confidence in the economy shaken. In January 2008, its index measuring how confident Americans over the age of 55 felt about the future stood at 84.6. By last February, that figure had plummeted to 22.1, although it has since recovered some ground. This sense of insecurity is making older Americans willing to work longer. In March 2001, before the first signs of the collapse of the Internet stock bubble, 32.8 percent of Americans above the age of 55 considered themselves part of the labor force—either working or seeking work. Today the comparable rate is 40.2 percent.

  • Yahoo! IBM Retiree message board: "Re: IBM High Deductible PPO - UHC in Florida" by "mr_quarkwrench". Full excerpt: Remember, IBM is self insured. It just uses companies like UHC and Blue Cross to mishandle the paperwork. There are no kickbacks because the money is IBM's in the first place. Don't give up, spend a few cents on stamps and appeal every denial. In the last 5 years I've had to appeal between 1/4 and 1/3 of the claims and by the second or third try I usually win. I have an ongoing chronic cancer. -- Don
  • Yahoo! IBM Retiree message board: "Re: IBM High Deductible PPO - UHC in Florida" by "torbilll". Full excerpt: Quite right, and I am sorry that you have a cancer problem that gives you so much first hand experience. I would add that, for these standard PPO plans that IBM offers, I think that there is a single administrator - UHC, Blue Cross, etc. - for each state, for efficiency purposes.

    I have to tell you about my experience with the most basic of claims, submitted to UHC. For over 10 years, my wife and I have gone to Costco in the fall and gotten our flu shots. They give us a piece of paper to document the procedure and our payment, and I submit two claims forms, one for me and one for her. The shots are $20 each.

    I do not recall of a single instance in which UHC did *not* deny the claims. Every year I go around and around with them over two $14 checks that they owe us. It is always a different excuse. My fight with UHC over flu shot claims has become a tradition and standing joke at our house. In the last few years, I almost always win.

    The UHC all-time best excuse for denial came three years ago. They told me that the claims were denied because the paperwork was unreadable. I told them that I had copies, and that the paperwork was readable on my copies, and they had the originals, so their denial was inappropriate. They told me that they scan the originals, and that their scanned images were unreadable. I told them to pull the originals. They refused, and denied my verbal appeal. Can you believe this bizarre situation? They deny my claim on the basis of a problem that they caused in their process.

    I called IBM HR. HR helped me out, and got things fixed with UHC in a few minutes, and I got my $28.

    In the 10 years that I have been fighting with UHC over these piddly-ass claims, their former CEO walked away with about a billion dollars in compensation. Think about that for a minute.

    People think that Obama is nutty to want to tamper with the free market by insisting on a public plan option. I am a very strong believer in the free market, but this market is not free. It is rigged, and we are captives, and no matter what laws Congress passes, the United Healthcare's of the world will find ways to screw ordinary people who lack relentless persistence. If Congress passed a law tomorrow stating that companies had to work with original paperwork, not scanned images, UHC would hire a blind reviewer who would claim that my claim was not readable - the UHC's of the world will always be one step ahead of legislation. The real reason we need a public plan is so that ordinary people can just walk away rather than be subjected to this kind of nonsense, year in and year out, from companies like United Healthcare.

    I started on Medicare in May. I have been to the doctor several times with problems. In each case, Medicare just paid. No fighting, no denials, they just paid what their agreement with me says they should pay. I feel like I have died and gone to heaven. Torbilll

  • Yahoo! IBM Retiree message board: "Re: IBM High Deductible PPO - UHC in Florida" by "nancydrew0909". Full excerpt: I have to add an amen to this. I get a mammogram every year. Every year UHC tells me that the plan pays for $0 of it.

    Every year I have to appeal, and appeal. On the second appeal, they pay me. For a while, they kept telling me that my doctor put the wrong code on the form. Of course, when I asked, or she asked, what code she was supposed to put, they wouldn't tell her or me.

    Last year, I pasted the part of the policy lingo that says they pay for mammograms, on the form (I don't use staples anymore; they denied a claim one year because of staples). That worked on the first try. But there is no predicting what will happen this year. And they know they have me. They are sole supplier. What they don't know is how stubborn IBM taught me to be.

    I feel bad for people who don't have the energy or knowledge to fight the giant insurance companies. Thank goodness my Mom has Medicare. If I had to do her fighting and mine, I wouldn't have time to work the job I took after IBM retirement.

  • USA Today: CEOs openly oppose push for say-on-pay by shareholders. By Del Jones. Excerpts: Top executives have taken a relentless public thrashing as they lay off workers and fight to keep stock prices above the floor. In a suffering economy, no one seems happy with leadership, and the image of CEOs has sunk so low that their approval scores are now south of those serving in Congress. But no matter how low their image sinks, nor how shrill the outrage, executives have remained steadfast in their opposition to one thing: They are roundly against legislation that would force companies to let shareholders vote on CEO compensation packages. ...

    President Obama, who co-sponsored say-on-pay legislation while in the Senate, remains in support, as is the Democrat-controlled Congress. Likewise the public at large. Focus groups have been describing CEO pay with words such as "obscene" and "immoral" rather than words like "excessive" or "overly generous" as in the past, says Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick. ...

    CEOs have opinions like everyone else, but the public rarely sees that side because positions on anything controversial risk upsetting customers. When they feel compelled to take a stand at odds with the public, it is usually articulated by trade associations and lobbyists, so as to put CEOs and the companies they run at arm's length from controversy. Not this time. Even though say-on-pay legislation is almost a sure thing, CEOs and former CEOs contacted by USA TODAY spoke out against it, both forcefully and individually. "Say-on-pay is just another government regulation and intrusion into free enterprise," says Howard Putnam, former CEO of Southwest and Braniff airlines. ...

    CEO median compensation at S&P 500 companies rose 23% from 2003-2008 despite going down 7.5% to $8 million from 2007 to 2008, according to Equilar, which tracks executive compensation. John Castellani, president of the Business Roundtable, an association representing CEOs of companies with more than $5 trillion in annual revenue, says shareholders have always had the ability to enforce say-on-pay by using the shareholder resolution process. That makes legislation unnecessary, he says. ...

    CEOs are not unanimous in their opinions, even where it comes to pay. Patrick Byrne, CEO of Internet retailer Overstock, says he is more concerned about CEOs influencing boards than shareholders influencing CEOs. "The CEO is hired by shareholders. He works for them, just like a farmhand works for the folks who own the ranch," says Byrne, among the CEOs who support say-on-pay legislation. He says CEOs "capture" their boards, leaving shareholders unrepresented. Real estate developer Don Peebles, recently named by Forbes as one of the 20 wealthiest African-Americans, also supports say-on-pay. He says CEOs who have no significant ownership often have compensation packages designed to reward them on the upside, but they suffer few consequences on the downside. "There is no real alignment of interests," Peebles says.

  • Bright Future Jobs: Durbin Bill Will Prohibit the Placement of Visa Staff on a Client's Site. Excerpts: Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them. The U.S. Department of Labor (DOL) has said: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.” Some companies that discriminate against American workers are so brazen that their job advertisements say “H-1B visa holders only.” And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.

    To address these problems, the Durbin-Grassley bill would, among other things:

    • Require all employers who want to hire an H-1B guest-worker to first make a good-faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.
    • Prohibit the blatantly discriminatory practice of “H-1B only” ads and prohibit employers from hiring additional H-1B and L-1 guest-workers if more than 50% of their employees are H-1B and L-1 visa holders.

    The L-1 visa program allows companies to transfer certain employees from their foreign facilities to their U.S. offices for up to seven years. Experts have concluded that some employers use the L-1 program to evade restrictions on the H-1B program because the L-1 program does not have an annual cap and does not include even the minimal labor protections of the H-1B program. As a result, efforts to reform the H-1B program are unlikely to be successful if the L-1 program is not overhauled at the same time. The Durbin-Grassley bill would institute a number of reforms to the L-1 visa program, including establishing for the first time a process to investigate, audit and penalize L-1 visa abuses.

New on the Alliance@IBM Site
  • Job Cuts Status & Comments page
    • Comment 07/11/09: Had to laugh - while looking for my next job, I came across an IBM ad seeking a PM for a US contract. They specifically said they preferred a *non-degreed* individual but also had a PMP and other IT certifications. Command of the English language only had to be "basic." Nice wish list. Reading between the lines, I'd say they are looking to low-ball on salary. Silly me, I thought I was doing the right thing when I earned a B.S. and M.B.A. But all it did was earn me a place in the bread-line as far as IBM is concerned. RA'd in 2009. I can't imagine a person being a very effective project mgr in the US with only a basic knowledge of English. -JohnBoy-
    • Comment 07/13/09: Just posting here wondering if anyone can shed more details on IBM's new GDF strategy. Sounds like a complete reversal of all the work from home, work Flex stuff they have been tell us is great for years. Now we all have to move to one of three sites and be one big happy family. The only problem is how many people actually want to go out and try to sell there home right now. And of course the only other choice is to "volunteer" resign. I actually ran into an old manager of mine the other day and he told me that they are not even giving people any moving allowances or any assurance that if you relocate you won't be RAed a week later. Is this even legal, its surely not ethical. -GDF'ed in 2010-
    • Comment 07/15/09: "We who were retiring (bridged to retirement) signed a second document for this saying that we would not become re-employed by IBM. Younger workers can be rehired." IBM doesn't want experienced. skilled workers anymore. Shame on them! Once IBM can't make any decent profits anymore to get to their projected EPS (earnings per share), and that day is coming, they will get desperate and then ask for their veterans to come back just to survive. It's happened at other big companies who followed the same practice of forcing early retirement to it's workers. Remember: IBM is a company that looks at a horizon and never over it. It's a terrible pitch to customers that IBM has more than half it's workforce having 5 years of experience or less. It shows the company has no real experience and collective expertise. This is showing itself more and more these days and customers and prospective customers are reacting to it. If IBM wants to force out all experienced, veteran employees it is their loss, not yours. -anonymous-
    • Comment 07/16/09: Rumours going around about end of July RA's in Canada. -anonymous-
    • Comment 07/16/09: Does anyone know how the GDF bull goes? If one is financially, emotionally or physically in no shape to move, will the RA package be offered? The move is from RTP to Boulder, CO. -NoLongerDadsIBM-
    • Comment 07/16/09: In regards to GDF's IBM management considers the day to day activities in managing outsourcing as a commodity. FACT They also consider that as a commodity, it should be cheaper than what they pay to employees above band 5... FACT Where does that leave anyone who doesn't want to commute to a GDF or one who seeks to grow their careers in IBM? Use your head... you already know the answer.

      I mentioned the reduction on the PM's before it happened, as well as other actions. The writing is on the wall. Sam made commitments to the street on eps for stock. They will reach it..by slashing jobs and back filling with cheap staff in GDF's. The rumor mill about band 5 being the highest is correct..FACT There will be a few exceptions, but not many at all.

      Customer sat is irrelevant now days. Cost is the primary factor for outsourcing. Many top level clients are figuring out IBM is cutting North American Staffing and there fore cost:They now want their contract costs reduced.

      Its a race to the bottom for IT folks. It's over within IBM. The street is not much better. There is jobs and some companies do pay a decent wage, but when IBM gets this going, you can be assured others will follow. TCS (Tata) is already more cost competitive and ibm has to compete with their low overhead... these moves are to align with those costs. I always felt that customer facing roles would be safe.. I did to my peril. Keep your resume up to date and take as much educational opportunities that you can. DONT count on a long term job. Look out for you and not ibm... its not the same ibm it was 10 years ago...those days are gone. Good luck to all... -sore sphincter

    • Comment 07/16/09: When your friends and family ask you how your job is going, tell them. Tell them exactly what's happening. Tell them that you are constantly under the threat of losing your job because IBM is looking to offshore it to a 3rd world country. Tell them that not only this, but IBM is encouraging IBM USA employees to quit and take jobs in 3rd world countries, where they will be re-banded, re-salaried, and will no longer be paying into Social Security, Medicare, or US taxes. Tell everyone you know. Shine the spotlight. Sunshine is the best disinfectant. -Spread-The-Word-
    • Comment 07/17/09: Revenues are down by 13% and profits are up by 12%. That is a *lot* of cost-cutting to make up the difference. Where is all this cost-cutting coming from? How long can they sustain this? It's kind of bizarre. -Anonymous in Rochester-
    • Comment 07/17/09: On the GDF issue, is there anyone out there who has refused to move and received a severance package? If so, what was the strategy you followed to gain the package? I was already RA'd on April 27th after 12 years so I'm asking for several of my friends who just received news a couple of days ago. They are pretty much shaking in their shoes and are afraid to ask anyone. Get this... they are forced to "apply" for their own positions that are being moved to Boulder. Can you effin' believe that? I definitely can and never thought I'd witness these days. I remember brimming with passion about my company when I went to the LEADing@IBM conference in Armonk, 2006. What a laugh... -NoLongerDadsIBM-
    • Comment 07/17/09: I was RAed in Feb 2009. I signed a severance document and now I am collecting UI. Recently I obtained a job posting that describes my former position to a "T". When I was RAed I was working reduced hours on maternal LOA program. Can I sue IBM for discrimination? Discrimination against working mothers? Any tips? I was not a union member. -a_mom-

      Alliance reply: I am sorry for your job loss and the effect it has on you. I understand your feelings of betrayal. Yes, you may file a lawsuit; however, you need a good amount of evidence that you were discriminated against. It is a very hard row to hoe. Find an attorney, and present her/him with your reason for litigation. Listen to her/him carefully, when they elaborate on what I've just said. Many, many people have gone before you. This will not be the first time IBM has been sued; nor the last. IBM continues to fire people at will, because they are AT WILL Employees. Regardless if you are a working mother, working father, single, married, divorced, white, black, asian, brown, christian, jewish, muslim, hindu, atheist or whatever, IBM doesn't care about you; and has plenty of legal funds to fight you in court. This is why we continue to remind everyone that visits this web site: You are an AT WILL EMPLOYEE. You have no employment contract and you have no bargaining power while you are an IBM employee. You all need to organize, NOW. It is truly the only way to move forward, toward any kind of job security, benefits, and fair treatment on the job.

  • General Visitor's Comment page
    • Comment 07/13/09: to -IVEBEENMISLED- is this the first you hear of IBM overbilling customers. Wow you are really in the dark. It is common practice for IBM to have employees bill 44 hours per week to customer accounts (billable time), when in reality some of that time is devoted to other endeavors. Also think about this one. IBM charges a premium for work performed after hours and on weekends but the employees do not see a premium in their pay for performing that work -Anonymous-
    • Comment 07/16/09: big congrats to Sam et al on the apparent growth in profitability. http://money.cnn.com/2009/07/16/technology/IBM_earnings.reut/index.htm I'll need to review the details in order to see whether this is actual growth, or just a delta in profit by killing off long term employees. In either case, Kudos to IBM execs for spinning their story to the investors. (Sad though, that the zero strike stock options MAY have reduced the overall margins. Because, when ya think about it, allowing execs to purchase stock for zero ZERO ZERO dollars, and immediately turn them back to IBM at market price, then hmm, that dilutes the EPS. Right a*****es? -big congrats-
    • Comment 07/16/09: Now the IBM executives smell blood. Not the competitions: the remaining IBM employees in the USA. Specifically those IBM employees in the two business units that under performed in the just announced 2nd QTR. report. The Armonk feudal lords will now want at least $11 per share target for YE 2010 now. It simply makes them more filthy $$$rich$$$. If you are in those two business units expect an RA real soon and your job might very well be in jeopardy now. Since IBM revenues are still down overall the only way to make those two units look somewhat better is to increase profits by even more cost cutting and pocketing those costs as a perceived business profit -lookoutnow-
  • Pension Comments page
  • Raise and Salary Comments IBM CEO Sam Palmisano: "I am pleased to announce that we will not only be paying bonuses to IBMers worldwide, based on individual performance, but that they'll be funded from a pool of money nearly the same size as last year's. That's significant in this economy -- and especially so, given the size of the 2007 pool. Further, our salary increase plan will continue, covering about 60 percent of our workforce. As always, increases will go to our highest performers and contributors. We should all feel good about the company's ability to invest in people in these very concrete ways."
    • Comment 07/11/09: Salary = 40000; #Yrs Since Raise = 5; %Raise = 1; Band Level = 8; This Yr-PBC = 3; Message = hi -sdsa-
    • Comment 07/11/09: Band Level = 8; This Yr-PBC = 2+; Years Service = 25+; Hours/Week = 50; Div Name = ITD/SSO; Message = To Old-Timer: IBM isn't giving US workers raises because they are trying to level the playing field with the 3rd world countries. We make too much. They have the choice of 1) Firing us or 2) Keep driving our pay and benefits down to be more in line with BRIC. They're using a combination of the two to do their dirty work. It's not just IBM, it's ALL the outsourcing I/T companies. The entire industry needs to have representation! And the computer workers need to start taking care of themselves and organize. -miss understanding-
    • Comment 07/12/09: Salary = 145000; #Yrs Since Raise = 1; %Raise = 2.3; Band Level = 10; This Yr-PBC = 2+; Job Title = Sales; Years Service = 20; Hours/Week = 40; Message = Glad to get a raise since sales are not as good as last year. -no name-
    • Comment 07/13/09: Salary = mid 60's; #Yrs Since Raise = 1; %Raise = 1.5; Band Level = 7; This Yr-PBC = 2+; Job Title = PM; Years Service = 13; Hours/Week = 50+; Div Name = IGS; Location = NC; Message = this division has gone down hill the last 2 years due to LEAN and now all these GDF and overseas moves...my job was fun but now I dread it -shocked-
    • Comment 07/13/09: Salary = 55000; #Yrs Since Raise = 1; %Raise = 1.4; Band Level = 4; This Yr-PBC = 2; Job Title = ssr; Years Service = 23; Hours/Week = 40+; Location = southeast; Message = Haven't heard anything about raises- Anonymous-
    • Comment 07/14/09: Salary = 41000; #Yrs Since Raise = 1; %Raise = 2.1; Band Level = 3; This Yr-PBC = 1; Job Title = specialist; Years Service = 25; Hours/Week = 42; Div Name = stg; Location = btv; Message = They took away $5500 in January by removing aws and gave back $900 in July. Great deal. I am making less now than 7 years ago. Maybe corporate should forego raises for a few years and give it to the little people who do all the work. It makes a lot of people feel expendable with bad morale. All this from a company that makes billions of dollars. Thanks Sam -joe-
    • Comment 07/14/09: So how is your raise folks? Happy at the worst raises IBM has given out despite RECORD 2008 PROFITS? Why don't we get a contract so we can get better raises in collective bargaining? Next year there might not be any raises or worse maybe an across the board pay cut for all. -raises_sux-
    • Comment 07/14/09: Salary = well below midpoint for sure; #Yrs Since Raise = 1; %Raise = 00000; This Yr-PBC = 2+; Message = What a rude shock. I checked my pay stub today. NO RAISE. I thought it was said all PBC 2+ will get a raise? What's going on? Sam, what did you say? Your worse than a thief: a liar. -Anonymous-
    • Comment 07/14/09: Salary = 119,000; #Yrs Since Raise = 8; %Raise = 0; Band Level = 8; This Yr-PBC = 2; Job Title = Adv Software Engineer; Years Service = 10; Hours/Week = 40+; Div Name = AIM; Location = NE; Message = Well I wish I knew who the raises went to? it wasn't me that's for certain...I'm so very disgusted at this point...you can tell the raise getters tho...big smile...all happy....Hell I knew 2+ ratings that got 1 percent. These people are so cheap its pathetic...where is the incentive to work hard if they don't give you any sort of raise for years...and to think...I wanted to work at this Company because of its NAME and its reputation...I guess I'm the fool..... -JustnotAppreciatedIGuess-
    • Comment 07/15/09: For those of you that are content with a paltry 1% raise or for those that got no raise but still feel so grateful, fortunate, and lucky to have a job still in the IBM: Don't get complacent. Thousands of you, and I mean thousands, will continue to lose their jobs before 2011. I hope I am so wrong about this but the trend of IBM trying to increase profits with loss of revenue means only one thing: the need to trim more jobs so the Armonk executive elitists can make more $$$ to line their greedy pockets! All they care about is themselves and use IBM to do their bidding. Do yourselves a favor if you want to still work in IBM: get a contract to protect you job as best you can. The Armonk executives all have at least an unwritten contract saying that their job is secure for as long as they want (they have a long term retention bonus program as well) and their bonuses are about guaranteed. -anonymous-
    • Comment 07/15/09: I guess judging by this forums sparse activity yesterday either you folks are so darn busy to even check your pay stub yet or are in plain shock at non-existent or paltry and insulting raises/ Well what is it? -whatssup?-
    • Comment 07/15/09: Salary = 83K; #Yrs Since Raise = 0; %Raise = 2; Band Level = 8; This Yr-PBC = 2+; Job Title = SW Engineer; Years Service = 8; Hours/Week = 45-50; Div Name = STG; Location = Tucson; Message = Can't complain with 2%. The most I heard from my dept was 2.5% -anonymous-
    • Comment 07/15/09: Salary = $150,000 US; #Yrs Since Raise = 1; %Raise = 3; Band Level = 9; This Yr-PBC = 1; Years Service = 31; Hours/Week = 48; Div Name = GBS; Location = USA; Message = no comment -anonymous-
    • Comment 07/16/09: Salary = 48,000; #Yrs Since Raise = 1; %Raise = 3.0%; Band Level = 7; This Yr-PBC = 2+; Years Service = 8; Hours/Week = 50+; Location = RTP; Message = Have been a band 7 for 6 years, the 3% bumped me from $48K to $49K, still woefully underpaid, but now totally convinced I will never ever be equitably paid by IBM. Will limit my hours per week by simply "logging off". No more 50+ hours.....That phony spiel I got when hired "we know the salary is low, but we will get you moved up quickly", was just the usual IBM propaganda speech, all spin and zero truth. -Concerned-
    • Comment 07/16/09: Salary = 76000; #Yrs Since Raise = 1; %Raise = 2; Band Level = 8; This Yr-PBC = 2+; Years Service = 14; Hours/Week = 80 (yes); Location = Atlanta; Message = Won't even attempt to find new employees when they are funded already. Lose a team member, get more work. -Anon-
    • Comment 07/16/09: Salary = 89000; #Yrs Since Raise = 2; %Raise = 0; Band Level = 8; This Yr-PBC = 2; Job Title = Senior I/T Specialist; Years Service = 15; Hours/Week = 40; Location = NY Message = No raise as expected . Manager thanked me for the hard work and said SHE was thankful just to have her job. Whatever. I'm just curious .. what is the salary range for managers? first and second level at least. -LisaB-
    • Comment 07/16/09: #Yrs Since Raise = 1; %Raise = 1.3; Band Level = 9; This Yr-PBC = 2+; Job Title = PM - AXP Account; Hours/Week = does it matter?; Message = Was told 1.3% was fantastic considering the average in my group of 200 or so was 1.0%. I am still trying to find the right mix of logic, reason and sanity that will make me profoundly say I am one of the lucky ones. Granted 1.3% is better than 0% but I cannot see this being too much of a difference. -anonymous-
    • Comment 07/16/09: Salary = $86000 NZD; #Yrs Since Raise = 1; %Raise = 1; Band Level = 7; This Yr-PBC = 1; Job Title = IT Specialist; Years Service = 6; Hours/Week = 40-50; Location = New Zealand; Message = PBC of 1 with a 1% increase. Are there any statistics out there for band ranges for New Zealand? Is it as simple as using the ranges already given and calculating in NZ.. 86k nz equates to 55k US? -still_looking-
    • Comment 07/16/09: Salary = 77K; #Yrs Since Raise = 0; %Raise = 1.7; Band Level = 7; This Yr-PBC = 2+; Job Title = hw engineer/scientist; Years Service = 8; Hours/Week = 40; Div Name = STG; Location = USA Message = Did anyone else see our CEO's note to all employees today.. Best 1st, 2nd, or 3rd quarter ever in income for IBM. Not the best raise for me. -hw_engineer-
    • Comment 07/16/09: "Can't complain with 2%. The most I heard from my dept was 2.5% -anonymous-" Gee, this is exactly the sentiment IBM wants. A 2% raise is about half the level of inflation. IBM used to give raises so you can actually can have more money and even beat inflation. Next year you'll say : "Can't complain with 0%. All I heard from my dept was 0%" Trust me it'll get better NEXT YEAR if you are still in IBM and not RA'ed by then! AT WILL EMPLOYEE with NO CONTRACT = less and less raises and bonuses. -anonymous-
    • Comment 07/17/09: >curious .. what is the salary range for managers? first and second level at least. -LisaB- In marketing first lines have the same range as Band 9 or 10 employees, depending on the scope of that managers responsibility. In non-marketing organizations live development, I believe first lines may be more like band 7 or 8. This is from observing first line development managers moving into non-management field marketing roles and it being either a lateral move or a promotion. -Anonymous-
    • Comment 07/17/09: Salary = 100000; #Yrs Since Raise = 1; %Raise = 1; Band Level = 10; This Yr-PBC = 2+; Job Title = engineer manager; Years Service = 31; Hours/Week = 40-50; Div Name = stg; Location = pok; Message = I'd rather forego 1% and have the resources in the company to get the job done that I need to do, and want to do. -joe schmo-
  • PBC Comments
    • Comment 07/16/09: PBC 1 = 1% raise. WTF??? Why bother working for IBM? -stickitSam-
  • International Comments
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • TPM Media: Bill Moyers shines light on the health insurance mess - a Journalistic Best. Excerpts: There are so few mainstream investigative journalists in this country anymore, I have to wonder in whose pockets the MSM has cozily slipped--and why. When one of our best investigative newspapers has slipped to such depths that it's publisher invites health insurance execs hellbent on killing any hint of public options to hobnob with, and thus lobby, top-level White House officials at a private soiree in her own home (but only if they fork over $25,000), and when nobody else seems to notice or care, we can give up any remaining quaint notion of a watchdog press. ...

    Last week, Bill Moyers brought to our attention two important stories. (See above for the first one) On "Bill Moyers Journal" on PBS Friday night, Bill talked with Wendell Potter, a former Cigna exec turned whistleblower. In Potter's own startling words (startling not because we didn't know, but because a former insider, someone who, less than two years before, was a practicing purveyor of these professed sleazy tactics, said them):

    "The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them, that if you even consider that you're heading down the slippery slope towards socialism... I think that people who are strong advocates of our health care system remaining as it is, very much a free market health care system, fail to realize that we're really talking about human beings here, and it doesn't work as well as they would like it to... They are trying to make you worry and fear a government bureaucrat being between you and your doctor. What you have now is a corporate bureaucrat between you and your doctor... The public plan would do a lot to keep [health insurance companies] honest, because it would have to offer a standard benefit plan. It would have to operate more efficiently, as does the Medicare program. It would be structured, I'm certain, on a level playing field so that it wouldn't [have an] unfair advantage [over] the private insurance companies. Because it could be administered more efficiently, the private insurers would have to operate more efficiently."

    The interview is a half-hour long. Later into it he outlines the insurance industry's efforts to discredit Michael Moore's documentary, "Sicko", when they saw the truth in it and were afraid the American people might believe it, too. This to me was a stunning admission, the entire interview an astonishing piece of journalism--again, not entirely surprising, but I saw a door opening, enough for us to wedge our foot in. Wan rays of sunshine about to turn dazzling, if only we can keep the momentum going.

  • Bill Moyer's Journal: With almost 20 years inside the health insurance industry, Wendell Potter saw for-profit insurers hijack our health care system and put profits before patients. Now, he speaks with Bill Moyers about how those companies are standing in the way of health care reform. Editor's note: Wendell Porter's interview is startling...it is "must see TV" if you are at all interested in understanding how the United States health insurance industry manipulates Congress and the public.
  • New York Times: House Health Plan Outlines Higher Taxes on Rich. By Robert Pear and David M. Herszenhorn, Excerpts: Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000. Employers who do not provide health insurance to workers would generally have to pay a fee or penalty to the government. The fee would be equal to 8 percent of wages for an employer with an annual payroll of more than $400,000.
  • New York Times editorial: A Strong Health Reform Bill. Excerpts: While the Senate continues to struggle over its approach to health care reform, House Democratic leaders have unveiled a bill that would go a long way toward solving the nation’s health insurance problems without driving up the deficit. It is already drawing fierce opposition from business groups and many Republicans. This is a bill worth fighting for.

    The bill would require virtually all Americans to carry health insurance or pay a penalty. And it would require all but the smallest businesses to provide health insurance for their workers or pay a substantial fee. It would also expand Medicaid to cover many more poor people, and it would create new exchanges through which millions of middle-class Americans could buy health insurance with the help of government subsidies. The result would be near-universal coverage at a surprisingly manageable cost to the federal government. ...

    Predictably, the idea of raising taxes this way has critics outraged, with some charging that it is unfair to require a small sliver of the population to bear the brunt of the cost. The wealthy have benefited greatly from Bush-era tax cuts, and their incomes have risen disproportionately in recent years. It seems proper that they should contribute heavily to an effort that is vital to hard-pressed Americans and to the long-term health of the economy.

  • New York TImes: Why We Must Ration Health Care. By Peter Singer. Excerpts: You have advanced kidney cancer. It will kill you, probably in the next year or two. A drug called Sutent slows the spread of the cancer and may give you an extra six months, but at a cost of $54,000. Is a few more months worth that much?

    If you can afford it, you probably would pay that much, or more, to live longer, even if your quality of life wasn’t going to be good. But suppose it’s not you with the cancer but a stranger covered by your health-insurance fund. If the insurer provides this man — and everyone else like him — with Sutent, your premiums will increase. Do you still think the drug is a good value? Suppose the treatment cost a million dollars. Would it be worth it then? Ten million? Is there any limit to how much you would want your insurer to pay for a drug that adds six months to someone’s life? If there is any point at which you say, “No, an extra six months isn’t worth that much,” then you think that health care should be rationed. ...

    Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals. ...

    Rationing health care means getting value for the billions we are spending by setting limits on which treatments should be paid for from the public purse. If we ration we won’t be writing blank checks to pharmaceutical companies for their patented drugs, nor paying for whatever procedures doctors choose to recommend. When public funds subsidize health care or provide it directly, it is crazy not to try to get value for money. The debate over health care reform in the United States should start from the premise that some form of health care rationing is both inescapable and desirable. Then we can ask, What is the best way to do it? ...

    In Britain, everyone has health insurance. In the U.S., some 45 million do not, and nor are they entitled to any health care at all, unless they can get themselves to an emergency room. Hospitals are prohibited from turning away anyone who will be endangered by being refused treatment. But even in emergency rooms, people without health insurance may receive less health care than those with insurance. Joseph Doyle, a professor of economics at the Sloan School of Management at M.I.T., studied the records of people in Wisconsin who were injured in severe automobile accidents and had no choice but to go to the hospital. He estimated that those who had no health insurance received 20 percent less care and had a death rate 37 percent higher than those with health insurance. This difference held up even when those without health insurance were compared with those without automobile insurance, and with those on Medicaid — groups with whom they share some characteristics that might affect treatment. The lack of insurance seems to be what caused the greater number of deaths.

    When the media feature someone like Bruce Hardy or Jack Rosser, we readily relate to individuals who are harmed by a government agency’s decision to limit the cost of health care. But we tend not to hear about — and thus don’t identify with — the particular individuals who die in emergency rooms because they have no health insurance. This “identifiable victim” effect, well documented by psychologists, creates a dangerous bias in our thinking. Doyle’s figures suggest that if those Wisconsin accident victims without health insurance had received equivalent care to those with it, the additional health care would have cost about $220,000 for each life saved. Those who died were on average around 30 years old and could have been expected to live for at least another 40 years; this means that had they survived their accidents, the cost per extra year of life would have been no more than $5,500 — a small fraction of the $49,000 that NICE recommends the British National Health Service should be ready to pay to give a patient an extra year of life. If the U.S. system spent less on expensive treatments for those who, with or without the drugs, have at most a few months to live, it would be better able to save the lives of more people who, if they get the treatment they need, might live for several decades. ...

    One final comment. It is common for opponents of health care rationing to point to Canada and Britain as examples of where we might end up if we get “socialized medicine.” On a blog on Fox News earlier this year, the conservative writer John Lott wrote, “Americans should ask Canadians and Brits — people who have long suffered from rationing — how happy they are with central government decisions on eliminating ‘unnecessary’ health care.” There is no particular reason that the United States should copy the British or Canadian forms of universal coverage, rather than one of the different arrangements that have developed in other industrialized nations, some of which may be better. But as it happens, last year the Gallup organization did ask Canadians and Brits, and people in many different countries, if they have confidence in “health care or medical systems” in their country. In Canada, 73 percent answered this question affirmatively. Coincidentally, an identical percentage of Britons gave the same answer. In the United States, despite spending much more, per person, on health care, the figure was only 56 percent.

  • Political Irony: Republicans are fearful of health care reform not because it will be bad, but because it will be good. Excerpts: Senator Bernie Sanders makes the excellent point. The Republicans try to scare us that socialized medicine will be terrible, but the truth is that we already have socialized medicine in this country — it is run by the Veterans Administration. If any politician tried to get rid of the VA health benefits, they would quickly lose their job.

    Likewise, the Republicans try to scare us that single payer health insurance will be horrible, but the truth is that we already have single payer health insurance in this country — it is called Medicare. And any politician who tried to get rid of Medicare would also find themselves quickly out of a job. In fact, even Dubya added a prescription benefit to Medicare.

    So when Republicans try to scare you by throwing around terms like single payer or socialized medicine, it isn’t because they won’t work or won’t be popular, they are scared that they will work and they will be popular. Of course, that’s if the Republicans don’t manage to purposely make health care reform horrible (like they did with the prescription drug benefit they added to Medicare).

    The Anonymous Liberal makes the point that in order “to adopt the Republican position on health care requires believing that every other country in the world is wrong, that their policy experts are misguided and their citizens confused. Indeed it requires believing that the American people themselves are wrong, that despite endless opinion polls to the contrary, people in this country really love the system we have.

  • New York Times: Mass. Panel Backs Radical Shift in Health Payment. By Kevin Sack. Excerpts: A high-level state commission recommended Thursday that Massachusetts seek to rein in health care costs by radically restructuring the way doctors and hospitals are paid. The commission’s action kicks off the second phase of a health care overhaul that has succeeded in covering nearly every resident of the state but done little to slow the relentless growth of spending.

    The recommendations, if approved by the legislature and Gov. Deval Patrick, would make Massachusetts the first state to end the practice of paying health care providers for each office visit, laboratory test or procedure. Instead, primary care physicians, specialists and hospitals would group themselves into networks that would be responsible for a patient’s well-being and would be compensated with a flat monthly or annual fee known as a global payment.

  • Huffington Post: My Interview with President Obama on Health Care Reform. By Dr. John LaPook. Excerpts: The biggest news from yesterday's interview: President Obama has changed his position from the campaign trail and now believes that health care insurance should be mandated for all Americans, with a hardship exemption. ...

    A critical flaw in the current system -- and one that must be addressed in any overhaul -- is that the same people who refuse to pay for a recommended course of action are the ones who consider the appeal of that decision. And, lo and behold, they usually end up agreeing with themselves! In more than two decades of medical practice, I have spent countless hours trying to get various services covered by payers. One encounter -- when I tried unsuccessfully to get a stomach-acid lowering pill approved for a patient who needed it -- ended up as an example of twentieth-century frustration in Letters of the Century.

News and Opinion Concerning the U.S. Financial Crisis
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.

  • Wall Street Journal: Offshore Tax Evaders Deserve No Sympathy. By James B. Stewart. Excerpts: Do you know anyone with a Swiss bank account? I don’t, which is probably no surprise since the whole point is secrecy. But evidently there are plenty of Americans who do—at least 52,000 at UBS alone—whose identities the Internal Revenue Service and the Department of Justice are trying to learn.

    In light of this highly publicized investigation into tax evasion, I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security.

    But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and due-process protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion.

    That is evidently why California billionaire Igor Olenicoff parked hundreds of millions of dollars with UBS, and subsequently pleaded guilty to a felony count of filing a false tax return. His former UBS banker, Bradley Birkenfeld, pleaded guilty to conspiracy and testified that UBS bankers prospected for wealthy U.S. clients eager to avoid taxes at art shows, musical performances, yachting regattas, golf and tennis tournaments—anywhere “rich people hang out.” They even served as couriers to avoid money transfers that might be detected by U.S. surveillance, according to Mr. Birkenfeld’s testimony.

  • Workforce Management: GM Retirees Who Lost Health Care Benefits in Bankruptcy Fight to Get Them Back. Excerpts: The new GM emerged from bankruptcy Friday, July 10, with a leaner workforce and less debt. One reason is that, with the help of the Treasury Department, the Detroit automaker will not have to pay for the health care of thousands of retirees. But now some of those retirees are fighting back.

    While retirees represented by the United Auto Workers will have a partially funded health care trust managing their health benefits, more than 50,000 retirees represented by three unions—the IUE-CWA, the United Steelworkers and the International Union of Operating Engineers—will have no money from the automaker to fund the more than $3 billion in health care obligations. ...

    To that end, the union published advertisements in major newspapers Tuesday, July 14. In a half-page advertisement in The Wall Street Journal, Debra Turner, a 51-year-old GM retiree with multiple sclerosis, stands next to a wheelchair with a caption that reads: “This Wheelchair Is My Future Once the U.S. Treasury Stops My GM Health Care.” The ad, perhaps unintentionally, also underscores the very argument GM has made—namely that health care costs for retirees who are not eligible for Medicare are too costly for the company to maintain

  • The Huffington Post: Shattering the Right vs. Left Prism Once Again: The Wall Street Journal Goes After Goldman and the Bank Bailout. By Arianna Huffington. Excerpts: Yesterday's opinion section of the Wall Street Journal offered convincing proof that those who want a progressive financial policy and those who simply want to save capitalism are in agreement about the madness of the administration's Wall Street policies. There, on the editorial page of the capitalist Bible, was a piece taking repeated shots at Wall Street darling Goldman Sachs. And, over on the opposite page, a two-fisted op-ed by former hedge-fund manager Andy Kessler in which he labels the government bailout of Wall Street "a dumb move" and "a bust." ...

    The Journal's take -- "We like profits as much as the next capitalist. But when those profits are supported by government guarantees or insured deposits, taxpayers have a special interest in how the companies conduct their business" -- is actually more in keeping with that of Robert Reich, who says that "Goldman's resurgence should send shivers down the backs of every hardworking American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs.... Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street."

  • New York Times: The Joy of Sachs. By Paul Krugman. Excerpts: The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us? First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

    Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

    Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.

    Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.

    Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.

    Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. Other banks invested heavily in the same toxic waste they were selling to the public at large. Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers. And Wall Streeters have every incentive to keep playing that kind of game.

    The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand. And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong.

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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