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6, 2000 April, 2000

Highlights—October 17, 2009

  • Channel Register (United Kingdom): 'Amateur' IBM brings down Air New Zealand. By Joe Fay. Excerpts: The boss of Air New Zealand has launched an astonishing attack on IBM after a catastrophic system crash crippled the airline and left passengers stranded. The massive IBM letdown could see the vendor turfed out of its contract with the New Zealand flag carrier.

    The chaos was down to a crash at the airline's mainframe, which is in the care of IBM. The outage downed the airline's check-in desks, online bookings and call centres on Sunday, Aussie paper The Age reports. An airline spokesman told the paper that it appeared a power failure caused the initial outage, but things were compounded by a delay getting a backup generator up and and running.

    CEO Rob Fyfe placed the blame squarely on IBM in an email, which inevitably hit the media almost immediately. "In my 30-year working career, I am struggling to recall a time where I have seen a supplier so slow to react to a catastrophic system failure such as this and so unwilling to accept responsibility and apologise to its client and its client's customers," he thundered.

    "We were left high and dry and this is simply unacceptable. My expectations of IBM were far higher than the amateur results that were delivered yesterday, and I have been left with no option but to ask the IT team to review the full range of options available to us to ensure we have an IT supplier whom we have confidence in and one who understands and is fully committed to our business and the needs of our customers."

  • Local Tech Wire (RTP, NC): Huge black eye for 'amateur' Big Blue – Network crash outrages airline exec. By Rick Smith. Excerpts: Thinking about outsourcing your mission critical applications and information technology infrastructure? Then read closely the following e-mail from Rob Fyfe, chief executive officer of Air New Zealand ...

    The Kiwis were throwing hand grenades at IBM on Sunday after its outsourced-to-Big Blue systems crashed. More than 10,000 passengers were affected by the collapse of the airline’s check-in, reservations and call center systems. How fast did IBM get the airline back in the air? By 1:30 p.m. – four hours later, according to New Zealand media reports. ...

    Wonder if the folks down under believe today that outsourcing to save money and reduce headcount was such a wise investment after all. Perhaps. But you can bet that the bottom line for IBM is reviewing its own internal contingency plans and backups – like that generator. Interesting, isn’t it, that this outage comes just a few days after news broke that IBM’s mainframe business is under investigation for non-competitive tactics?

  • Hudson Valley Times Herald-Record: IBM exec's arrest leads to 'cheering in the halls'. STG chief is part of hedge fund insider trading ring, prosecutors say. By George Spohr. Excerpts: An IBM executive who oversees the company's operations in East Fishkill and Poughkeepsie was arrested on insider trading charges Friday. Robert Moffat, 53, of Ridgefield, Conn., senior vice president and group executive at IBM's Systems and Technology Group, was part of a hedge fund insider trading group that federal prosecutors say reaped $20 million in insider profits. Prosecutors say the ring of six also included Raj Rajaratnam, one of the wealthiest men in the country, and Danielle Chiesi, a Bear Stearns executive. ...

    One of the complaints in the case, filed in U.S. District Court in Manhattan, centers on Chiesi's desire to keep her friend, Moffat, at IBM to aid the insider trading scheme. Chiesi and Rajaratnam were heard discussing Moffat on a government wiretap of a Sept. 26, 2008, phone conversation. “Put him in some company where we can trade well,” Rajaratnam was quoted in the court papers as saying. The complaint said Chiesi replied: “I know, I know. I'm thinking that, too. Or just keep him at IBM, you know, because this guy is giving me more information. ... I'd like to keep him at IBM right now because that's a very powerful place for him. For us, too.” ...

    Moffat is high up in the mid-Hudson IBM food chain, with some of the top managers there reporting to him. Employees in IBM's Systems and Technology Group make up the largest bloc of the company's more than 9,000 workers in the mid-Hudson. “I have talked to a few IBMers today, and there seems to be a lot of cheering in the halls of IBM over his arrest,” said Lee Conrad, national coordinator of the employee-backed Alliance@IBM. “Employees are fed up with the executives of the company who seem to not care about the plight of the working people.” ...

    Some of that ill will is because some of the most severe cuts in the mid-Hudson have been under Moffat's watch. “I believe it is indicative of the corporate culture inside IBM now,” Conrad said. “It is all about greed. Slash jobs and payroll while the executives continue to get rich on bonuses, compensation and stock options.”

  • Associated Press, courtesy of the Poughkeepsie Journal: Major IBM exec charged in insider trading case. Also accused of improper trading in IBM shares. Excerpts: A separate criminal complaint in the case said Moffat and another defendant conspired to engage in insider trading in the securities of IBM. Kerry Lawrence, an attorney representing Moffat, said: “He’s shocked by the charges.” IBM spokesman Douglas Shelton said the company has no comment at this time.

    Selected reader comments concerning the above article follow:

    • I hope u spend the rest of your life in jail. Is that why we get crappy bonuses? I guess your career is over huh BOBBY? and for what? You gonna get it... No breaks...
    • When he was in IBM's Global Services division, he slashed jobs and sent them overseas with no regard for the employees. I guess his bad KARMA has caught up with him!
    • Gee - maybe IBM should lay HIM off and strip HIM of all pensions and benefits in the same manner as happened to so may very dedicated employees who had NO control over the business.
    • So Bob Moffat is finally getting what he deserves. He is miserable to work for. You know under his guise you can't get a raise unless you distinguish yourself from your peers! So now Mr. Moffat is in good distinguished company like Bernie Maddoff and others. Corporate America has gone from a great place to work to feeling like you are accused of a crime and are treated like a criminal. All to make someone at the top, like Mr. Moffat, can look good!
    • Karma working at its best. The guy came in STG, knowing nothin, starting the cut sales and pre-sales teams. What in the hell was he thinking about? Wait, that could be his way to drive up/down stock price to profit. I always thought IBM treats their sales force like their center... Anyway, what a V day for those laid -off former IBMers.
    • It really is sad that this one man's actions, if proven true, will confirm so many peoples (IBM employees and others) belief that executives in this country are interested in nothing but the bottom line ---- money in their pockets at the expense of all employees working for them. Gone are the days of caring for the employee or caring for the community they are located in....keep the stock prices up so executives whose salaries and bonuses are based on that keep going up. Unfortunately there are a few (very few) good leaders out there, but actions like this put a huge black cloud over them too. As a side note - just wondering how much of IBM's stock price today is attributed to this one man and how much money all IBM executives have lost today!!!!
    • I hope they put him in prison in India, China, or Hungary where all of our American jobs have gone. let him experience some 'outsourced prison' life...
    • Again another case of corporate greed going on in this country at the expense of the American workers. In the mean time our politicians continue to cater to these types of people and the companies they work for. These companies have no loyalty to the American worker anymore but they want our sons and daughters to fight so they can continue there greed at our expense. We need to get out of this denial we are in about what's going on in our country

  • CNN/Money: Scandal hits corporate role models IBM, McKinsey. Excerpt: Bob Djurdjevic, an Annex Research analyst who has been covering IBM for over 30 years and is himself a former employee, said the news came as a shock. "If there's any company that's always been a model of pristine behavior, being above it all, it was IBM," he said. ...

    The charges, stemming from wiretaps, included accusations that Moffat passed on to hedge fund New Castle Group insider information on Advanced Micro Devices Inc, obtained through IBM's business negotiations with the company. He is also accused of passing on information on IBM itself ahead of the company's quarterly results, as well as those of Sun Microsystems while IBM was looking at its books for a possible acquisition. The FBI said Moffat was one of the IBM executives conducting due diligence on Sun. ...

    Coincidentally, IBM sells software to aid companies' compliance policies and prevent insider fraud as part of its portfolio of technology services, software and servers.

  • Associated Press, courtesy of Forbes: Advocates say Ind. welfare revamp needs overhaul. By Charles Wilson. Excerpts: Social services advocates say Indiana's $1.34 billion effort to privatize welfare is a failure and should be replaced by a new system based on more personal contact between welfare recipients and caseworkers. Members of advocacy groups held a news conference Tuesday where they outlined a proposal they hope to have introduced during the 2010 state legislative session.

    Advocates said the state needs a new welfare system, not just a return to the government-run system that was in place before Gov. Mitch Daniels signed a 10-year contract with Armonk, N.Y.-based IBM, Dallas-based Affiliated Computer Services Inc. and their partners in 2006. ...

    One key proposed change is closer contact between welfare recipients and caseworkers. One of the chief criticisms of privatization, which has been rolled out to about one-third of the state's welfare recipients, is that it replaced personal human contact with call center workers who weren't adequately trained in welfare regulations.

  • The Register (United Kingdom): IBM wrings more profits out of declining Q3. Excerpts: IBM has not tried to defy the gravity of the economic meltdown, but rather has used it as a means to wring more profits out of its business, and in the third quarter Big Blue continued to expand its bottom line even as its top line continued to shrink. In the quarter ended in September, IBM posted revenue of $23.6bn, down 6.9 per cent, a much smaller revenue decline than in the prior two quarters. And through cost cutting in sales, marketing, research, development and interest, the company was able to boost net income to $3.2bn, an increase of 13.8 per cent.

    Outsourcing is clearly not only a good business, but good for business, as Big Blue has been shifting big chunks of its support and supply chain operations overseas for the past several years. ...

    IBM's Global Services behemoth had a 6.7 per cent decline in sales in the third quarter, to $13.8bn. The company broke the business into two pieces just to keep Global Services from looking lopsided compared with the other IBM business groups, and in Q3, Global Technology Services (which includes outsourcing, business technology optimization, and maintenance services) accounted for $9.4bn in sales, down 4.4 per cent.

    Meanwhile, Global Business Services (which includes the nearly indefinable gobbledygook of business transformation services that IBM got through its acquisition of the consulting biz of PricewaterhouseCoopers plus systems integration and application outsourcing) accounted for $4.3bn in sales, down 11.5 per cent.

  • JobVent: Reviews of jobs we Love and Hate. Working at IBM--Reviews by Employees. Selected employee reviews follow:
    • From Houston, TX — 10/13/2009. 9 year IBMer has seen this company go down the tubes. As others have stated, your peers are generally motivated, brilliant folks who are overworked and underpaid. The company keeps firing people and shipping jobs overseas, but the talent and, more importantly, ownership is just not the same. Customers have started taking notice and we are losing deals due to poor support. Pay used to be above average, now is stale even as other benefits and bonuses have eroded.

      PBC rating system is bogus, it's all about your manager's opinion of the job you're doing. Working from home is great, but the number of hours offsets that. I'm seriously considering bailing for a local job with fewer hours. There are no education or training opportunities here (and even if there were, there's no time to do them, because we are so short staffed that there aren't enough people to do the work even when everyone is here, let alone when someone is taking vacation, training, etc) and IBM has lost all of their respect for the individual.

      There was a time when we had the opportunity to do the right thing, but that has passed and now the only thing that matters are quarterly earnings. Customer sat is in the tank and employee morale is at an all time low. Advice: don't join IBM if you have another viable alternative, and if you are an IBM employee in the US, like me, your days are numbered.

    • From Florida — 10/12/2009. IBM treats employees like disposables. There is no future working in such a horrible place. Worst job I ever had.
    • From NY — 10/12/2009: In 10 years, I've received a few pay raises. None recently. Respect: There's respect for people at IBM, but often lack of respect for people's time (meetings at all hours, expectation to work overtime). Benefits: Benefits are good except that there is no longer a pension. Health insurance probably similar to most companies. Job Security: Non-existent. I've seen the very best people laid off -- especially in the last 12 months. This makes working at IBM very stressful. Work/Life Balance: Good for those like me who work from home and don't travel too much. Career Potential/Growth: Very hard to move around the company and move from position to position. I have seen a few other people do very well in advancing their careers but most seem to have difficulty in achieving career growth. Location: I work from home, so location is good! Co-worker Competence: I work with some of the very best people, very competent. Unfortunately, even the competent people are often laid-off! Work Environment: Again, like location, it's very good if you work from home. The disadvantage is that you never get the chance to meet your manager or management chain face-to-face. It can be fine if you have a good manager, but bad if your manager is so-so (or even bad). I've had both -- mostly so-so managers.
    • From Midwest — 10/11/2009. IBM treats it's employees so poorly that it boggles the mind why anyone would choose to stay. I'm so glad that I left, and have a good job now with a company that values my work. IBM was a great company at one time, but those days are long gone. People are stressed out & over-worked. Raises are nonexistent. And every year the company continues to cut benefits & outsource American jobs. Like Nero fiddling while Rome burned; Sam and his cronies are bleeding the company dry.
    • From Raleigh, NC — 10/11/2009. Good employees shouldn't have to worry about their job every waking day. The IBM US population is down to 28% of the total IBM population worldwide. Raises are poor, bonuses even worse. Award pay outs can take up to one year because even though IBM shows record profits quarter after quarter, they can't cut a measly 2500 - 5k check to an employee for an award that was granted in 2008. DO NOT JOIN IBM IF YOU LIVE IN THE US.......
    • From Atlanta,GA — 10/11/2009. I was in Sales, however we are run by accountants , all we heard was budget cuts budget cuts... NO Strategy and no help from management just make cold calls and log them... Everything is about management reports and how it looks upstairs.. Thank god I left on my own terms after many many years . IBM is not the company it used to be. I would never recommend them to anyone to work for. The way they are continuing on expense cuts will lead to their downfall....
    • From Rochester, MN — 10/10/2009. Pay (after 10 yrs) is no where near market level for the experience, type, and amount of work that you do. Very little respect or support from management. Benefits cut every year. ABSOLUTELY NO JOB SECURITY, especially in last 5 years. A lot of unpaid OT expected, weekend and holiday work expected. I have worked with a lot of different people, and I must say these people were the most intelligent, hard-working people I have ever met.... not that management would ever recognize it. Work@Home was allowed and encouraged, but that may be changing as well. No future for US employees - I would not recommend working for this company.
    • From Wichita, KS — 10/09/2009. The executives seem so focused on financial trickery in order to achieve their bonuses that they continually drain the company of it's true resources instead of truly leading the way into the future. They lack vision to grow & evolve, but rely instead on shell games and sleight of hand tricks that won't last forever.
    • From Chicago, IL — 09/16/2009. I am a new college hire and already hating this monstrous company. I am still coping with the fact the company recruiting team totally lied to me and hundreds of other candidates about their positions and roles. IBM recruits only the best students from U.S. college campuses and right out lies about their positions and opportunities for advancement within the company. I was hired to be a Consultant in my specified college field and now I am doing something that is completely different and does not add any value to my long-term career goals. Although I have been here for 3 months I can already detect the unnecessary layers of management who do absolutely nothing for the company or subordinates but just earn a paycheck.

      Started out on the “bench” because there are not enough projects (yet they are still hiring people) and even though this situation isn’t my fault I will still get penalized during my performance review at the end of the year. I have had to struggle and compete for “few opportunities” (of which many I am not qualified for because I am a new college hire) through nonsense and time wasting interviews and BS. It is a complete nightmare begging to get a freaking project especially doing something that I have little interest for or don’t care about at all! I wish I would’ve found this board before I accepted my offer with this giant wasteland.

  • Harvard Law School's Human Rights Program: Lawsuit Filed Against IBM, Ford, General Motors, Daimler, and Barclays for Committing Human Rights Violations in South Africa During Apartheid. Excerpts: Human rights attorneys have filed a lawsuit in the Southern District of New York alleging that five multinational companies collaborated and acted purposefully with the South African government to commit human rights violations including apartheid, itself a crime against humanity. Other claims allege complicity in extrajudicial killings, torture, de-nationalization, and cruel, inhuman and degrading treatment during the apartheid regime. The companies named in the suit are Barclays Bank PLC (Barclays), Ford Motor Company (Ford), General Motors Corporation (GM), Daimler AG (Daimler) and International Business Machines Corporation (IBM). ...

    The complaint details how each of the five companies aided the apartheid regime. In addition to the automobile companies, Defendant IBM actively implemented apartheid by knowingly producing race-based identity documents that stripped plaintiffs of their nationality and citizenships and restricted their travel.

  • American Public Media's Marketplace: Case checks business roles in apartheid. Gretchen Wilson reports. Excerpts: For the past seven years, a pair of lawsuits has been making its way through the federal court system. Five multinational companies, names you'll definitely recognize, have been accused of working with the former apartheid government in South Africa -- of selling it the tools that government then used to brutally suppress the South African population. When the cases eventually go to trial, perhaps by early next year, they may become a new standard for corporate accountability overseas. ...

    Things like extrajudicial killings, rape, abduction of people, torture. Marjorie Jobson heads the Khulumani Support Group for survivors of apartheid violence, which supports the litigation. She says these firms knowingly sold South Africa's government the tools to carry out these atrocities. For example, she says IBM designed computer technology to track and restrict the movement of millions of black South Africans, including people like Masemola. JOBSON: The actual hardware, the maintenance contracts and all the software to run this system were all developed by IBM.

  • Austin Statesman: IBM gets 8-year Austin utility billing contract. Excerpts: IBM Corp. signed an eight-year contract from the City of Austin to install and manage a new utilities billing system. The system involves billing for the city’s electric, water and wastewater systems.

    Selected reader comments concerning this article follow:

    • By dennisl59, October 13, 2009 11:10 AM | IBM wins the contract, then sub-contracts it all out to H1-B’s who’ll forget to backup the data, systems will fail, and then? Fingerpointing, Lawsuits, and the Contractors move on to screw another project up. In my opinion.
    • By Larry October 13, 2009 11:21 AM | I can hardly wait, I wouldn’t be surprised if this wasn’t a replay of the State Data Center consolidation, a freaking disaster. Now, I know I will have to read my meter myself to see if I am being billed correctly.
    • By Bitsy October 13, 2009 11:23 AM | Who in their right mind gives these long contracts? Why commit so long to something that probably won’t work? Isn’t IBM responsible for all of the state computer processing? How well is that working????
    • By B October 13, 2009 11:28 AM | The folks at IBM are the crooked jerks behind the failed Austin Data Center used to supply some state agencies. How stupid is this city????
    • By RobH October 13, 2009 11:30 AM | More job losses for people who live right here in Austin right now. These jobs will be contracted out to H-1B visa workers.
    • By Armen Hammer October 13, 2009 11:55 AM | People, please give IBM the benefit of the doubt here. They have done a stellar job of consistently using the taxpayers dollars to line the wallets of those who continue to award them projects no matter the colossal disasters they continue to hand back to the taxpayer. Someone over there IS doing their job. What was that Austin Data Center Consolidation project worth? Something in the 875M area? Do you know what kind of Data Center can be built (turn key) with new equipment for 875M? A nice one, not that toxic blob of failed crap they built and can't seem to make work Properly. “I rip-off the taxpayer because they let me. I am IBM”. Cheers.
    • By Brian October 13, 2009 12:27 PM | Maybe now the Nazi collaborating IBM is providing utility payment services for COA perhaps we won’t be charged that darn “convenience fee” for paying online with a debit card.
    • By keith October 13, 2009 12:33 PM | Actually you probably will continue to be charged a ‘convenience fee’. I live outside of Austin and my provider utilizes a third-party for their payment system, and they charge $2.95. god knows that IBM is gonna milk this for as much as they can. But what I find funny is that IBM was contracted by the state, yet they’ve screwed that up
    • By enough October 13, 2009 1:11 PM | Another Indian Business Machines win.
    • By Mike October 13, 2009 1:39 PM | This is an excellent time to go solar! Or Wind…..or coal…or anything that gets you off the Austin grid. By the time IBM is finished with the new city billing system we will all be in the dark drinking water from puddles. Didn’t anyone with the city bother to look at their record?!!!
    • By just4junc04 October 13, 2009 2:44 PM | City of Austin - please tell me your kidding!! Don’t you read your own city newspaper and the horrid, unfortunately true, stories of how IBM has screwed up the State agency Data Center? Whoever made this decision is a real moron. OR is sitting on a beach in Cancun, sipping drinks on IBM’s (soon to be Austin citizen’s) dime. The stupidity in this city never fails to amaze.
    • By ScrappyDooDoo October 13, 2009 4:17 PM | Yeah great now when my electric bill is wrong I’ll have to call some third world sweat shop???
    • By BOHICA2 October 14, 2009 8:20 AM | To answer some of your questions, the state data center contract is not going well. By and large, costs to the state have gone up and services gone down. Picture a graph with two lines going in steep and opposite direction. All I can say is, one of the things IBM cannot get right, among many others, is the billing part. You’re right, better check your meters against what IBM/city of Austin is billing you. City of Austin morons have done it again. Make no mistake, jobs are going to be lost here in Austin. These jobs are going to India and Boulder CO.

  • Associated Press, courtesy of Local Tech Wire (RTP, NC): You're fired, IBM - Indiana terminates $1.34B contract. Excerpts: Indiana fired IBM Corp. on Thursday as the lead contractor on an ambitious, $1.34 billion project to automate applications for food stamps, Medicaid and other welfare benefits. Gov. Mitch Daniels said the state informed IBM that it will lose its 10-year contract within 60 days because the Armonk, N.Y.-based company made too little progress to fix poor service as required by a corrective action plan ordered last spring. ...

    IBM spokesman John Buscemi said the company believed it was making progress under the corrective action plan submitted July 1. The recession and high unemployment led to more demands on the welfare system, making the changes more difficult, he said. "IBM rejects the state's claims and believes the state's actions are unjustified," Buscemi said. Asked whether the company was considering suing the state, he said: "IBM will take action as appropriate to protect its rights under its contract with FSSA."

  • Bizcovering: What Do People Think About Sam Palmisano’s $21m 2008 Compensation? Excerpts: Executive compensation is always a matter of discussion from the board, to Wall Street and the ordinary worker. But Sam P.’s compensation is under particular scrutiny since he has laid thousand of US IBM employees off in the last few years.

    Sam’s compensation includes a $1.8 million salary; $5.5 million performance-based bonus; stock options and awards worth an estimated $12.22 million at the time they were granted; and $1.44 million in perks and other compensation (personal use of a company aircraft). ...

    What’s interesting is that the company saw bigger gains in 2008 than 2007: IBM reported revenue of $103.6 billion in 2008, up 5% from 2007’s $98.8 billion. Income for the year ended Dec. 31 came in at $12.3 billion compared with $10.4 billion in 2007, a jump of 18%.

  • Poughkeepsie Journal: IBM earnings increase 18 percent in third quarter. By Craig Wolf. Excerpt: IBM is the biggest private employer in the mid-Hudson Valley. Employees, retirees and others often own the stock. Shareholders have been making out better than employees, the former seeing gradually rising share prices over the last year and the latter seeing successive rounds of downsizing.

    Selected reader comments concerning the above article follow:

    • I think they really just need to completely shut down fishkill and poughkeepsie, turn off all the lights and direct all the work to India or brazil effective immediately. That will REALLY increase profits! 10/15/2009 9:07:48 AM
    • Unfortunately the profits are only mainly due to expense reductions (firing Americans to hire overseas). At some time this ability will diminish. Oh yes, and just where is the next generation of Americans going to work? Since you are so happy about your stock price I hope you don't have kids that are going be be heading into the workforce in the future. I do and am very concerned about it. We are mortgaging our future for immediate reward. Sounds like what caused the market to crash doesn't it?
    • Get ready for the next wave of layoffs. They're on the drawing board. Sam and the boys have committed to hitting aggressive targets regardless of the economy and by god they'll hit them. No concern for the long term erosion of customer satisfaction, just short term financial gains that directly enrich Sam. It's obscene what's going on. But Sam can walk away with his millions so what does he care. The latest financials are mostly driven by cost reductions including hundreds of jobs every quarter. No money for education, awards, raises, etc. Just be thankful we'll keep you around another quarter (mostly because we haven't figured out how to move your job offshore yet). For all you IBMers that will now come to the defense of your company, just remember one thing. Your job could be next.

  • Wall Street Journal: Business Fends Off Tax Hit. By Neil King Jr. and Elizabeth Williamson. Excerpts: The Obama administration has shelved a plan to raise more than $200 billion in new taxes on multinational companies following a blitz of complaints from businesses. A contingent of Silicon Valley chief executives, for example, traveled to Washington in late September to speak out against the proposal to change how the federal government taxes overseas profits. They came away from meetings with key congressmen relieved. ...

    The story of the business community's campaign against the tax changes and the Obama administration's eventual retreat offers a window into the often uneasy relations between the White House and the corporate world. It suggests that an administration that was critical of business at the height of the financial crisis is becoming more accommodating. The White House, through a series of presidential lunches and other outreach, is trying to soothe tensions with multinational companies. ...

    Critics long have complained that the provision encourages companies to avoid U.S. taxes by expanding production on foreign soil. On the campaign trail last year, President Barack Obama promised repeatedly to "end tax breaks for companies that ship jobs overseas." ...

    Companies ranging from Microsoft Corp. to General Electric Co. to International Business Machines Corp. put the topic at the top of their Washington agendas. Many CEOs and business lobbyists say the proposal -- and the rhetoric used to push it -- betrayed a tone-deafness on business issues among the president and his advisers. White House officials say the issue has often dominated discussions during meetings with CEOs. ...

    When Mr. Obama addressed a gathering of CEOs at a Washington hotel on March 12, IBM Chief Executive Samuel Palmisano asked the president about the deferral issue. The provision, Mr. Palmisano said, "has been very, very important" in helping U.S. companies compete abroad. "So what we really are asking for," he said, "is just an open dialogue."

  • Washington Post Writers Group, courtesy of AlterNet: The Great Challenge of Our Time: Re-Creating America's Great Middle Class. By Marie Cocco Excerpts: The challenge of our time is to re-create America as a middle-class nation. The idea does not find voice in the cacophony of the 24-hour news cycle. It has no place in the media's daily digest of gossip, false controversy and ideological cant. It is barely mentioned in the halls of power, where the very officials who capitalize on the economic angst of working people to win election forget that this raw anguish -- not the sophisticated arguments of lobbyists and campaign donors -- is supposed to motivate them every day.

    It is easy to blame the financial crisis, Wall Street's breathtaking bonuses or the culture of excess that glittered until we found ourselves on the precipice of a second Great Depression. In truth, we've been dismantling the economic foundation of the middle class for more than three decades.

    How many of you, having previously held a presumptively secure job with a solid company, are now working as a "contractor" or "consultant"? The trend toward taking employees off the payroll only to hire them again as contractors -- without health benefits, pensions, sick days, vacations -- began in the 1970s with janitors, construction workers and truckers. Now highly skilled technology workers who helped transform the global economy are among the downsized, the outsourced, the contracted-out.

    When IBM was an icon of American enterprise, I could not imagine that I would one day follow veteran IBM workers through the halls of Congress as they buttonholed lawmakers. They'd been stripped of their promised pensions and told to make due with a less generous "cash balance" plan that effectively reduced benefits for the most experienced and loyal workers. ...

    But now they are just cogs in a new economy in which business seems to have unilaterally rewritten the rules of the workplace. Example: Hundreds of companies stopped making contributions to employee 401(k) retirement plans in the wake of the financial crisis. There is no way to force a resumption of funding when the economy rebounds. The government has abetted all this with decades of hands-off regulation. Example: At current staffing and budget levels, it would take the Occupational Safety and Health Administration 133 years to inspect each workplace under its jurisdiction one time, according to a recent study by the National Employment Law Project.

    Soon the political discussion will shift from the need to keep propping up the economy to the need to reduce the deficit and debt. Then we are certain to hear that Social Security and other "entitlements" are the problem and must be curtailed. In fact, Social Security has sufficient funds to pay full benefits through 2037 -- a cushion no other government program can claim. Medicare, while under financial strain, has done better at containing costs per beneficiary than private health insurers, according to government studies.

    The myths that led us to this pass did not materialize by chance. They were conjured up by conservatives intent on dismantling the New Deal society that reigned through the 1960s -- a society that produced the world's most robust middle class. They are fed by lawmakers in both parties who depend on campaign contributions from powerful interests.

    Fight the myths. Break the back of the corrupt campaign finance and lobbying systems. These are hard political tasks. But being pushed further down is harder, still. Because no one knows where the new bottom lies.

    This is my final column. Thanks to my loyal readers and dedicated regional editors who have kept a place in their papers and in their minds for the kind of journalism I have worked to provide.

New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 10/15/09: Canada 100 cuts Toronto/Edmonton/Calgary ITS/SSO -JustAnotherNumber-
  • General Visitor's Comment page
    • Comment 10/04/09: Reading that email from that exec got me thinking about the Global Delivery Team; Anyone know if there is a team in each division? Or is there a HQ team that dictates to the peons? How do these employees sleep at night knowing that they are directly responsible for thousands of employees being fired? I'm sure they all get huge bonuses if they meet their targets and deadlines. ***Join the Alliance*** -anon- Alliance Reply: I don't think anyone cares "How these employees sleep at night". You shouldn't either. If you're still at IBM, you need to focus your attention on organizing those that are still there, also. If you've been RA'ed; then you could still help organize those that are still there. Your realization of all that IBM has done to its employees, should be repeated to those left inside IBM. Maybe some of them will wake up and decide they want to change things.
    • Comment 10/05/09: I'll tell you how they sleep at night. Like babies. When you are that far up in the company, you are so far removed from the everyday person, that all those people are just a number on a spreadsheet. The execs have a whole team dedicated to crunching numbers and doing research. One exec says to the other "Hmmm....what would happen if we reduce headcount across the US by X%" (Fill in X with whatever number you want). They give this info to their team of number crunchers. The numbers are run. If they like what they see, they do some research on what implications would arise if they take this path. What part of the business will break? Will customer sat suffer? When the reports come back, they go over the info and make the decisions. Not one individual is ever considered. It's all numbers and research reports.

      When the changes are implemented it's a done deal unless something breaks. (And it hasn't yet). Of course, all the peons at the bottom just keep working harder and harder to get things done, so we're actually shooting ourselves in the foot by doing this. We think we'll be rewarded with better raises, more job security, maybe a promotion. This is not the case. It actually proves to the execs that they made a wise business decision. It also encourages them to make similar decisions.

      I think things will be changing in the future, although I'm not sure when that point will be reached. Right now, there are still lots of ibmers who have a sense of pride in their work, and go the extra mile. Eventually if we don't unionize, those workers will be forced out. They will be replaced by workers who only do 'a, b and c' and couldn't care less if 'd and e' get done. That's when the sh*t will hit the fan. It's happening in the BRIC countries already. That's why they're finding those workers are only good at cookie cutter type work. They don't think outside the box, nor are they interested in it. -miss understanding-

    • Comment 10/06/09: Just found out from a project manager that IBM's goal is to have all affected accounts moved offshore (GR), or moved to a GDF by the end of 2010. That means that the very last possible date for the very last account to move over to the new model will to be completed by end of 2010. It does not mean that this cannot be completed sooner. If the writing on the wall isn't clear to everyone at this point, nothing will ever get through to these folks. Keep thinking you won't be affected....and you'll soon get the surprise of your life. Unionize now, or enjoy your next job hunt. -dun-4-
    • Comment 10/07/09: Anyone else notice there hasn't been any "spirit" events this year? Could be that we have nothing to celebrate? -ano
    • Comment 10/09/09: I just received an email that IBM will kick off a "Global Employee IT Satisfaction Survey....with a random sample of IBMers worldwide" in mid-October. I don't even know what to make of this, unless their 'random sample' will be 95% BRIC countries getting all the work and happy about it. (they are happy about it, right?) -anonymous-
    • Comment 10/09/09: -anon- The "spirit" events seem to depend on the site this year. Southbury had one in just last month. Incidentally, Southbury has had continuing job cuts this year. Maybe this has something to do with who gets the spirit events? I guess those IBM site directors that pursue whatever funding they can get can decide to get into the "spirit". I always considered these events to be used as distractions. They don't really celebrate anything and are always used for other motives than company spirit. -sby_willie-
    • Comment 10/09/09: I was RA'ed from IBM in 2006. I'm currently a State of Connecticut employee. Being in a union and having great benefits, like a REAL pension and lifetime health care ROCKS. Last spring the threat of cuts loomed, but Instead of having massive layoffs of those who aren't managers' pets, the union negotiated for concessions that we could all live with. Every member was able to have their say by voting on the union's proposal. We agreed to a wage freeze and furlough time over the next 3 years. We're having 3% of our salaries taken and put into a fund, to ensure our health care benefits stay viable in the future. The state ran a retirement incentive program, which added 3 years service (for calculating pensions) to those who qualified. It was THEIR CHOICE as to whether employees volunteered to take the package. Having so many people leave makes work difficult for those of us left behind, because very few of those positions will be replaced. There were NO layoffs. -Unions Rock-
    • Comment 10/09/09: dun-4- A co-worker told me his mgr told him straight out, he cost IBM approximately $120.00 an hour including all benefits, and that IBM could find an Indian for $30.00 and hour, I guess it's only a matter of time IBM replace most of it's NA employees with GR -Anon- (moved from job cuts reports)
    • Comment 10/09/09: @dun-4- You are correct on your analysis. I thought about it and believe they also consider "salary" in which older person they select. Tend to keep those on old plan past 55 and up to band 7. Tend to take out the band 9 and upward. It is all carefully calculated out. -Young Lady-
    • Comment 10/12/09: The largest portion of the total cost applied to each employee is "Corporate Apportionment". This is an accounting trick used the spread the expenses associated with non revenue producing employees. The 3,500 Greedy bastards need feeding at outrageous rates but do not produce any income. Consequently the lower level troops need to cover the expenses and it is apportioned across via labor and Burden rates applied to each individual. This is a loosing battle because as headcount is reduced, the L&B rate increases because management structures are not being decreased and the remaining employees still have to generate revenue to cover the turts at the top. You will also find that the BRIC countries do not contribute to the overhead costs associated with maintaining the top heavy over compensated, useless management structure in the US. This is another example of why the labor rates in some locations cannot be met by US locations. The fools at the top are simply riding the horse into the ground and getting all they can for themselves before the whole organization implodes into itself. -Anonymous-
    • Comment 10/13/09: >Could this be the quarter IBM finally get's exposed in regards to it's financial engineering and outsourcing smoke and mirror strategies? It will happen, but not this quarter, I think. They had a lot of one-time costs early in the year for the layoffs. But those are over now and they'll be 'saving' a lot of money during the last quarter. I predict revenues will decrease further this quarter, but costs will decrease even more, leading to increased profits. Eventually, it will all come crashing down, but not right away (IMHO). -Anonymous-
    • Comment 10/16/09 I think the street's on to IBM's tactics. Read the financial report myself and any idiot can see IBM is bleeding itself dry to maintain/increase profit while sales are eroding. Why else would investors be punishing IBM stock today? A couple more quarters like this and the implosion is a foregone conclusion. The only ways to fix this are growing the business through a superior product, respecting the employees and understanding where the intelligence in your business resides. -LowlySDM-
    • Comment 10/16/09 Glad to see the SEC finally get an IBM executive. I hope they continue to investigate until Sam, Lou and their ilk take the perp walk also. Greedy thieving bunch of bastards deserve jail. Maybe the President will start to think twice about listening to Sammy boy. Guess Moffat forgot to do his business conduct course that year. Freeze his assets while you dig deeper SEC. See people. IBM Management is NOT invincible. Join the union and continue to kick their asses. -Exodus2007-
    • Comment 10/16/09 Finally we get to see a Senior Vice President loose his job and get indicted. Bob Moffat has done more to damage the IBM Brand by being indicted for insider trading than even Three Finger Lou. I can't help but wonder how many other customer's confidential information has been compromised by him. He signed off an many RA's while forgetting all about IBM's Annual Business Conduct Guidelines. I met this turkey and I'll be that when he get's the chance to cop a plea more than a few of the 3,500 Greedy Bastards will also be taking the Prep Walk. CNN just reported that the investigation included wire taps. Bet there are a lot of phone calls going to attorneys this afternoon from Armonk. Hopefully Slumdog Sam and Randy are the next two to be indicted. Bernie please keep several bunks reserved and warm in Butner, N.C. for IBM Executives. -Anonymous-
  • 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."
  • PBC Comments
  • International Comments
    • Comment 10/15/09: Country = Canada; Union Affiliate = N; Job Title = Advisory IT Specialist; IBM Division = ITS; Message = We were told last month by management that we are gone end of November. All our departments work moving to Brazil and India. These people who are taking over our jobs were sent to Canada so we could train them face to face. What a joke. Just found something terribly wrong about that, so I did not make myself available , only pointed them review documentation we have. Just unbelievable is the fact that I was rated a 1 this year. Just received a 2.5% raise and all for nothing. Going to get as much online education as I can these next few weeks and move on. Lousy way to end career with what was once a great company to work for. -JustAnotherNumber-
    • Comment 10/16/09: Country = uk; Union Affiliate = no; Job Title = IT Specialist; IBM Division = ITS; Message = Hi, After 15 years I am out of here. the company stinks, Handed in my resignation and boy am I happy. 8K extra a year at new company and every year the staff get at least a pay rise equal to inflation. IBM the company that looks after its shareholders first and cares not a jot for its employees. A policy that is so shortsighted that will end in tears for all. -UKIBMER-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Washington Post: North Dakota Scandal Raises Concerns About Health Co-op Route. By Karl Vick. Excerpts: For the North Dakota insurance sales reps, March may have been the ideal time to enjoy the swim-up bar at a resort on Grand Cayman Island. But back on the northern Plains, where temperatures were below zero, policyholders at Blue Cross Blue Shield of North Dakota were less delighted when they learned about the trip for 66 staff members and guests.

    Word of the $238,000 Caribbean retreat broke last winter, compounded by news of other perks: $15 million in executive bonuses over five years, $400,000 for charter flights and $35,000 for a vice president's retirement party. And when the ensuing uproar cost Michael Unhjem his job as chief executive, his landing was softened by a $2.5 million severance payment. The golden parachute had been added to his contract after his 2006 drunken-driving arrest, a state audit pointed out.

    In an era in which stories of corporate excess have become common, the drama of North Dakota's dominant insurer resonated deeply here, largely because the state's nonprofit Blue Cross Blue Shield is essentially a cooperative, owned by policyholders. It is an arrangement close to the model promoted by powerful lawmakers as an alternative to the "public option" that would put the federal government in the insurance business. The legislation that the Senate Finance Committee will probably approve Tuesday calls for the creation of health insurance cooperatives in all 50 states and the District.

    A liberal group here argues that the North Dakota scandal illustrates the danger of assuming that the cooperative model would assure virtuous behavior, especially in an industry awash in money. "Call it cooperative, call it mutual, call it private insurance," said Don Morrison, executive director of NDpeople.org. "If what we want is to have quality health care at a price people can afford, it's not coming from the culture of private insurance. If this is a model, let's get real."

  • New York Times: Lobbyists Fight Last Big Plans to Cut Health Care Costs. By David D. Kirkpatrick. Excerpts: As the health care debate moves to the floor of Congress, most of the serious proposals to fulfill President Obama’s original vow to curb costs have fallen victim to organized interests and parochial politics. ...

    Lobbying by doctors, hospitals and other health care providers, meanwhile, dimmed the prospects of various proposals to cut into their incomes, including allowing government negotiation of Medicare drug prices and creating a government insurer with the muscle to lower fee payments. “The lobbyists are winning,” said Representative Jim Cooper, a conservative Tennessee Democrat who teaches health policy. ...

    But along the way, the White House and the Senate Finance Committee have cut deals for political support with lobbyists that may circumscribe the cost cuts, potentially including the recommendations of the commission. For example, the White House and the panel’s chairman, Senator Max Baucus, Democrat of Montana, reached an agreement with the drug industry for its companies to contribute a total of $80 billion — but no more — over 10 years in reductions to their government payments. Many Democrats would like to see the government negotiate far lower prices for the Medicare drugs it buys. But drug industry lobbyists say — and the debate on the finance bill appears to confirm — that Mr. Baucus’s agreement to limit the industry’s costs excludes such price negotiations. Now the drug lobbyists are pushing to be sure the Medicare commission could not force negotiations either. The relevant text of the bill is still being written.

  • Huffington Post: CIGNA Employee Flips Off Mother Of Dead Girl Denied Transplant. By Rachel Weiner. Excerpts: A CIGNA employee gave the finger -- literally -- to a woman whose daughter died after the insurance giant refused to cover her liver transplant. Hilda and Krikor Sarkisyan went to CIGNA's Philadelphia headquarters, along with supporters from the California Nurses Association, to confront the CEO Edward Hanway over the death of her 17-year-old child. In 2007, Nataline Sarkisyan was denied a liver transplant by the company, on the grounds that the operation was "too experimental" to be covered. Nine days later it changed its mind, in response to protests outside its office. It was too late: Nataline died hours later.

    "CIGNA killed my daughter," Nataline's mother Hilda told security. "I want an apology." Sarkisyan was not able to speak to Hanway; a communications specialist talked to her instead. After their conversation, employees heckled the group from a balcony; one man gave them the finger. CIGNA called the police and had the family and their friends escorted from the building.

  • New York Times: The Annual Task of Choosing an Insurance Plan. By Lesley Alderman. Excerpt: If, like many people, you typically default to your current options, I have one word of advice: Don’t. Health insurance costs will be higher, and doing nothing could potentially cost you hundreds of dollars. My job today is to highlight the main trends this year in employee health benefits. Over the next few weeks, my colleague Walecia Konrad and I plan to delve into more specific elements of open enrollment, including the pros and cons of high-deductible health plans and how to select a new health insurer.
  • New York Times: Insurance Industry Assails Health Care Legislation. By Robert Pear. Excerpts: In a blistering new attack, the health insurance industry said Sunday that health care legislation drafted by Senate Democrats would drive up premiums, rather than making coverage more affordable, as the White House contends. A lobby for the industry, America’s Health Insurance Plans, focused its criticism on a bill likely to be approved Tuesday by the Senate Finance Committee. ...

    Scott Mulhauser, a spokesman for Democrats on the Finance Committee, said: “This report is untrue, disingenuous and bought and paid for by the same health insurance companies that have been gouging consumers for too long. Now that health care reform grows ever closer, these health insurers are breaking out the same tired playbook of deception. It’s a health insurance company hatchet job.”

  • Kaiser Health News: Democrats And Reform Advocates Lash Back At Insurers. Excerpt: Reactions and Democratic push back are beginning to be evident after the release Monday of an insurance industry-sponsored report (.pdf) that warns premiums could wind up costing $4,000 more by the end of decade if a proposed health overhaul is implemented, the Associated Press reports. The report isn't "worth the paper it's written on," AARP Executive Vice President John Rother said. The retiree's association has supported health reform (Alonso-Zaldivar and Werner, 10/12).
  • New York Times editorial: Reform and Your Premiums. Excerpts: After months of seeming mostly supportive of health care reform — and just before the Senate Finance Committee was set to vote on its bill — the leading industry trade group issued an inflammatory and utterly self-serving report alleging that the committee’s bill would drive up premium costs for Americans by thousands of additional dollars a year. ...

    Most analysts already agree that the industry’s report was so deliberately skewed to produce frightening results that it deserves little credence. The analysis was commissioned by the trade group America’s Health Insurance Plans and prepared by PricewaterhouseCoopers, a big accounting firm. It looked only at four components of the Finance Committee’s bill that have the potential to drive up premiums while ignoring other components that would likely drive down the cost of insurance for huge numbers of people.

  • New York Times op-ed: A Hatchet Job So Bad It’s Good. By Paul Krugman. Excerpts: In the past, the insurance industry’s power has been a major barrier to health-care reform. Most notably, the industry paid for the infamous “Harry and Louise” ads that helped kill the Clinton plan. But times have changed. Last weekend, the lobbying organization America’s Health Insurance Plans, or AHIP, released a report attacking the reform plan just passed by the Senate Finance Committee. Some news organizations gave the report prominent, uncritical coverage. But health-care experts quickly, and correctly, dismissed it as a hatchet job. And the end result of AHIP’s blunder may be a better bill than we would otherwise have had.

    For 2009, it turns out, is not 1993. Once again, Republicans have tried to kill reform with smears and scare stories. But all they seem to have killed with their cries of “socialism” and warnings about “death panels” is their own credibility. Some form of health-care reform is highly likely to pass. So it’s a different game than it was 16 years ago. And it’s a game that the insurance industry apparently doesn’t know how to play. ...

    There’s also another point, which House Speaker Nancy Pelosi has stressed. Part of the opposition to a strong individual mandate comes from the sense that Americans will be forced to buy policies from a greedy insurance industry. Giving people, literally, another option — the right to buy into a public plan instead — would defuse that opposition. Even with stronger exchanges and a public option, health reform would probably increase, not reduce, insurance industry profits. But the insurers wanted it all. The good news is that by overreaching, they may have ensured that they won’t get it.

  • Yahoo! IBM Retiree Information Exchange message board: "Re: Proof is in the pudding" by "Bart Bartholomew". Full excerpt: Scare tactics is exactly correct. I hope that we all know that the health insurance companies are scared to death. They are so scared, that they are spending $1,000,000 a day ... yes, a day! ... so that their lobbyists can line the pockets of our esteemed Senators and House members to get them voting the way the insurance companies want. To these Washington D.C. crowd, it doesn't matter about anyone else. They're in fat city reaping the rewards of being our representatives. Right!

    Please sit back and think about it. Why would anyone not want vast improvements in our U.S. health care system unless they already had theirs and were being given funds and other perks to throw out scare tactics, delays, negativism, etc? The citizens of other countries look at this debacle in absolute amazement. We should, too.

  • Yahoo! IBM Retiree Information Exchange message board: "Re: Proof is in the pudding" by "gfretwell2000". Full excerpt: Why does anyone think the government can do ANYTHING cheaper? I always hear about the difference in overhead between insurance companies and Medicare but they don't mention the fraud and waste rate of Medicare (15-20% by some estimates) and that doesn't take into account that Medicare's accounts receivable department is the IRS, off their budget.

    BTW if we put all the medical insurance companies out of business there would need to be another bailout to deal with the millions of employees put out of work. If the government really wants to get in the health care business, why not just open clinics and compete at the base level. That would take the pressure off the ERs and provide medical care cheaper than the "market" ... if the government could actually be cheaper at anything.

  • Yahoo! IBM Retiree Information Exchange message board: "Re: Proof is in the pudding" by "davlanta". Full excerpt: What waste fraud and abuse are you talking about? I have heard that term my entire life and no matter who is elected to get rid of "waste fraud and abuse" it never happens. So unless you can identify something I doubt it exists to the extent (20% or much else) you claim. Typically, when fraud is identified, it is by businesses, like that guy with the big red bus against heath care now, he scammed Medicare. Here in Georgia there were some conservatives scamming Medicare. But like criminals, when they are found out they are busted.

    If you think that 1300 private insurance companies, trying to scam old people and cover half their issues, like the prescription drug plan, without controlling costs is absurd. You overlook this is NO LONGER theory; the rest of the world does it better cheaper, period. That is fact and and can't be spun.

    After the last decade, where the stock market is lower and less people are employed than the beginning of the decade, I wonder why anyone could think that private does much of anything right.

  • National Public Radio (NPR): Selling Sickness: How Drug Ads Changed Health Care. By Alex Spiegel. Excerpts: Prescription drug spending is the third most expensive cost in our health care system. And spending seems to grow larger every year. Just last year, the average American got 12 prescriptions a year, as compared with 1992, when Americans got an average of seven prescriptions. In a decade and a half, the use of prescription medication went up 71 percent. This has added about $180 billion to our medical spending.

    While there are more medicines on the market today than in 1992, researchers estimate that around 20 percent of the $180 billion increase has absolutely nothing to do with the number of medications available, or increases in the cost of that medication. ...

    Until the 1980s, the kind of people who sold stuff like packaged goods were completely different from the kind of people who sold stuff like prescription drugs. In those days, drugs ads were for doctors, not the public. They were designed by people who worked at these small, technically minded medical advertising companies and targeted this small, technically minded audience.

    "Nobody had ever thought that these drugs should be or could be advertised to the patients. It was just outside of people's brains," Davis says. "They thought that only doctors could understand the products. They're technical products. They're scientific products." ...

    It used to work like this: Doctors decided what to prescribe. Drug companies — through medical advertisers — tried to influence doctors. Patients did what they were told. The only problem, says Davis, was that the system wasn't working out for the drug companies. For them, the system was much too slow.

    Because doctors exclusively held the keys to the kingdom, drug companies spent enormous amounts of time and money trying to get their attention. To give you a sense, the average doctor got around 3,000 pieces of mail a year from the drug industry, and to break through this noise often took years. And so Davis, who had previously only sold packaged goods, approached William Castagnoli, the then-president of a large medical advertising company. The two came up with a solution: They would advertise directly to the patient. They'd get the patient to go in and ask the doctor for the drug. "Pull the drug through the system," Davis says with a certain amount of glee. ...

    Today, drug companies spend $4 billion a year on ads to consumers. In 1997, the FDA rules governing pharmaceutical advertising changed, and now companies can name both the drug and what it's for, while only naming the most significant potential side effects. Then, the number of ads really exploded. The Nielsen Co. estimates that there's an average of 80 drug ads every hour of every day on American television. And those ads clearly produce results: ...

    Whether the increase in the number of prescription drugs taken is good or bad for patient health is an open question. There's evidence on both sides. What's not up for debate is this: By taking their case to patients instead of doctors, drug companies increased the amount of money we spend on medicine in America.

  • NPR: How The Modern Patient Drives Up Health Costs. By Alex Spiegel. Excerpts: Moore cares for modern patients. They're the people who come in with specific requests for medications and procedures. And oftentimes they get what they ask for, whether they need it or not. This consumer-driven health care is part of what's driving up costs across the country.

    The patients come in quoting commercials they've seen on TV, requesting pills or diagnostic tests, describing new treatments for diseases they're convinced they have. "Five or six times a day, people come in saying, 'I looked this up on the Internet.' Or, 'I saw this and I wonder if I could have this?' " Moore says. Sometimes her patients are right; more often they're wrong, she says. But Moore isn't judgmental about their self-diagnoses. She views it as a natural response to the ocean of health information that surrounds every modern person, and relates it to her own experience in medical school. ...

    Finally, in the 1990s, attempts to save money on health care encouraged Americans to get treatment through health maintenance organizations (HMOs). The idea was that primary care physicians would be put in charge of patients and given a fixed amount of money for all care. This would give the doctor an incentive to improve the overall health of the patient, because the healthier the patient, the more money the doctor could keep. The system, however, led to more denials of tests, medications and operations, which, says Zebley, was shocking to patients.

    "They became angry and started researching why they should get things," he says. "Because oftentimes, physicians — hate to say it — but the physicians were looking out for their bottom line, and if they withheld services they could make more money." And so, says Zebley, patients started going online. "It was very rudimentary then, but people also looked things up in the library and photocopied things from the library. [Then they'd come in and] say, 'I think I have this, I think I need this.' "

  • New York Times books: One Injury, 10 Countries: A Journey in Health Care. By Abigail Zuger, M.D. Excerpts: With all due respect to the seminar room, the boardroom, the hearing room and the Oval Office, a better vantage point than any of them for evaluating and redesigning our health care system is the hospital room (window bed, please). The chair next to the bed isn’t bad, either.

    Some of us perch on one or the other almost every day, observing the tangled mess that is our current system and mentally designing a dozen better alternatives. But for those who wind up in bed or a chair only when tragedy strikes, T. R. Reid’s new book provides an excellent substitute perspective.

    Mr. Reid, a veteran foreign correspondent for The Washington Post, knows from personal experience that there are indeed a dozen better alternatives. International postings from London to Japan familiarized him with many of the world’s health care systems. Then a chronic shoulder problem offered the opportunity for an unusually well-controlled experiment: Mr. Reid decided to present his stiff shoulder for treatment around the world.

  • Washington Post: Hidden Costs of Medicare Advantage. Plans' Free Perks Are Subsidized By Government. By Philip Rucker. Excerpts: Patrick Higney, 66, doesn't want to give up the freebies that come with his zero-premium Medicare Advantage plan: free aspirin and free Band-Aids, a free blood pressure machine and a free ear thermometer. Nancy Smyth, 68, wants to keep the free gym membership that comes with the Medicare Advantage policy she bought from Health Net, a private HMO. And John Kizer, 72, hopes his plan will continue to offer free prescription eyeglasses and free hearing aids. ...

    Seniors in this Sun Belt retirement haven and across the country revel in the free perks that private insurance companies bundle with legally mandated benefits to entice people 65 and older to forgo traditional Medicare and sign up for private Medicare Advantage policies. The trouble is, the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care.

    "It's a wasteful, inefficient program and always has been," Sen. John D. Rockefeller IV (D-W.Va.) said at a recent hearing. At its core, Rockefeller added, Medicare Advantage is "stuffing money into the pockets of private insurers, and it doesn't provide any better benefits to anybody." ...

    Medicare Advantage was established in the 1970s (under a different name) when private insurers convinced Congress that they could deliver care at lower costs than Medicare. The program blossomed in the late 1990s when Congress bolstered it with millions in additional federal subsidies to for-profit HMOs. It has proven popular among younger, active seniors who had managed-care plans as workers, and about a quarter of Medicare's 45 million beneficiaries are enrolled.

    Many private plans require no additional monthly premiums, yet the government pays an average of $849.90 in monthly subsidies to insurance companies for a person on Medicare Advantage, according to the Kaiser Family Foundation. That is about 14 percent more than the government spends on people with standard Medicare, according to the nonpartisan Medicare Payment Advisory Commission.

    "The promise of Medicare Advantage and Medicare HMOs was to save the government money, to save consumers money, all the while providing additional benefits and coordinating care," said Joseph Baker, president of the Medicare Rights Center. "That promise has been unfulfilled overall because the plans are overpaid by the federal government at this point."

  • Governing: Does the Patient Know Best? Myth #10: Consumers can make the best decisions about their medical care. By Arthur Garson Jr. and Carolyn L. Engelhard. Excerpts: We consumers buy all kinds of things. We read Consumer Reports, read the instructions about how to use things, and we make choices. In medical care, we are not as likely to do as well in our decisions as we do with shirts, cars and auto insurance.

    The shirt decision is absolutely clear: We can try it on, see how it looks, know exactly what it costs, and even bring it back tomorrow if we don't like it. The car is sort of like the shirt: Some can even be returned within 30 days, but we don't know how well it was constructed or how long it will last. When we are getting the oil changed in our automobile, we look for the lowest price, or we take it to the dealer or a nationally recognized chain, or we go where our brother-in-law takes his car. Sound familiar? We do the same with medical care, although it often seems like we have even less information than we do for our other day-to-day decisions. In fact, we may not. Do the repair shops post their results for "fixing unknown engine knocks"? Do the car insurers tell you "the percent of claims paid in three days"? The point is we make decisions every day without complete information and on "faith" that the result will turn out well. ...

    Having a high deductible means that patients must make even more decisions about how to spend their out-of-pocket dollars. Most studies have shown that when patients pay for their own care, they skimp on both necessary and unnecessary health care. In these kinds of cases, physicians can guide patients toward receiving appropriate care, but studies suggest that even with physician advice patients will forgo appropriate visits, tests and important preventive care if it is perceived as unaffordable. This is particularly troublesome for those who are low-income or chronically ill, but it affects others as well. ...

    To get back to our car analogy, the Web site CarCare.org advocates a "consumer-directed" approach to caring for your car. The site advises that "taking an active role in maintaining your vehicle is the best way to avoid costly repairs down the road." Sound familiar to the advice to get a flu shot or a mammogram, or to visit the dentist? Similarly, many patients will not heed advice about "preventive maintenance" when it comes to their bodies, despite available information. Whether as a result of federal policy or private insurance actions, medical decision-making will continue to be shifted toward an "informed" consumer-patient through mandates and higher out of pocket spending. We must be prepared for the response of the patient who has little interest, motivation, or financial resources to direct his or her health care when needed, and, instead, says to the doctor (as a car owner might say to the mechanic for transmission trouble), "Fix it. Don't tell me how, just fix it."

  • Huffington Post: Obama Owes Progressives Answers Tonight in San Francisco on Three Health Care Questions. By Jamie Court. Excerpts: Sure every American will have access to an insurance policy because there will be no preexisting condition limitation, but they will also have a duty to buy one. Insurers will have no duty to hold down their prices or profits. Obama campaigned against mandatory health insurance under the premise that the problem isn't that people don't want to buy insurance, it's that they cannot afford it. Yet nothing in the Senate Finance Committee plan makes health insurance more affordable.

    Drug companies don't have to reduce their prescription drug prices after the industry lent its support and more than $100 million in advertising dollars to President Obama's efforts. Doctors, hospitals and insurers have no limits on their price gouging. Fairer insurance rules - like elimination of prices linked to medical condition and limits on out of pocket costs to individuals - will help, but not if Americans have to buy an insurance policy they cannot afford in the first place. ...

    A recently dismissed California case involving the death of a teenager after a denial of liver transplant by Cigna has highlighted the need for greater legal protections for consumers. Seventeen year old Nataline Sarkisyan died after the denial of the transplant but a loophole in the law prevents her family from taking the insurer to court over the death since the insurance was provided through a private employer. Nataline's family was only allowed to refile a lawsuit for emotional distress because an insurance executive made an obscene gesture to the family at a rally outside of CIGNA's headquarters.

    132 million Americans have no remedy if an insurer's denial kills their loved one when the coverage is provided through private insurance. This is due to an errant Supreme Court ruling on the Employee Retirement Income Security Act or ERISA. The lack of accountability allows HMOs and insurance companies to deny access to care without fear of reprisal. "I want to get rid of this ERISA law," Hilda Sarkisyan, Natline's mom, told the Los Angeles Times, "and replace it with Nataline's law." If you can sue an insurance executive if he flips you the bird, you should be able to sue a health insurer if the company kills a loved one. Obama should call explicitly for this change.

  • OpenSecrets: Curious Clusters of Cash: Major Lobbyist-Client Connections among Health Care Interests. Excerpts: When the lobbyists included in this analysis call on Capitol Hill, they're likely comforted by the knowledge that a sizable number of campaign contributions associated with their client have already been delivered to the member of Congress they've come to lobby. This database aims to reveal how the campaign donations of individual lobbyists and their clients enhance the political power of the organizations they're paid to represent. This extra giving by lobbyists doesn't necessarily indicate a planned or coordinated effort with health care firms to solidify their support among key members of Congress. But whether coordinated or not, these clusters of lobbyist-client giving clearly illustrate the intensity with which health-related organizations are attempting to influence Capitol Hill.

    The table below details the political contribution patterns of lobbyists who represent health-related organizations that have themselves donated to a federal politician and that have hired at least 10 lobbyists who've made political contributions to the same politician. Within these criteria, the "# of Members" column details the number of congressmen to whom an individual lobbyist has contributed, while "# of Clients" shows how many of the lobbyists' clients have also donated to the same congressional representatives. The column "Total from Lobbyist" indicates the amount of money a lobbyist has donated to congressmen. The column "Total from Clients," meanwhile, indicates how much money the various clients of that lobbyist have collectively donated to congressmen. Data included in this table reflects contribution and lobbying activity between 2007 through the second quarter of 2009.

  • Denver Post: Heavy infant in Grand Junction denied health insurance. By Nancy Lofholm. Excerpts: Alex Lange is a chubby, dimpled, healthy and happy 4-month-old. But in the cold, calculating numbered charts of insurance companies, he is fat. That's why he is being turned down for health insurance. And that's why he is a weighty symbol of a problem in the health care reform debate. ...

    By the numbers, Alex is in the 99th percentile for height and weight for babies his age. Insurers don't take babies above the 95th percentile, no matter how healthy they are otherwise. "I could understand if we could control what he's eating. But he's 4 months old. He's breast-feeding. We can't put him on the Atkins diet or on a treadmill," joked his frustrated father, Bernie Lange, a part-time news anchor at KKCO-TV in Grand Junction. "There is just something absurd about denying an infant." ...

    The Langes, both slender, don't know where Alex's propensity for pounds came from. Their other child is thin. No one in their families has a weight problem. The Langes are counting on the fact that Alex will start shedding pounds when he starts crawling. He is already a kinetic bundle of arm- and leg-waving energy in a baby suit sized for a 9-month-old. They joked that when he is ready for solid food, they will start him on Slim-Fast.

  • Jim Hightower: Lobbyists Take a Soak. Excerpts: Here's a startling number: 13,000. That's the number of corporate lobbyists in Washington, DC. Adding to their clout are the thousands of corporate executives who jet into our nation's capitol city periodically for closed-door sessions with key lawmakers and regulators. If you wonder why such crying public needs as health care for all and environmental protection are constantly bent to serve private corporate interests – look to this army of hired guns and executive-suite dandies.

    But let's concede that influence peddling can be hard work. Such tasks as glad-handing and passing out campaign contributions – that'll tucker you out.

    That's why the Ritz-Carlton is so crucial to the system. This swank hotel is a Washington oasis for frazzled lobbyists and executives. For one thing, no tacky tourists are there to bother the swells, for room rates at the Ritz start at $599 a night and run up to $5,800. Then there're the little touches.

    For example, where else do guests get a "Bath Menu" in their room? "Choose from an assortment of butler-drawn baths to ease your concerns," says the menu. "A personal attendant will be pleased to draw the bath of your choice." The menu offers The Inaugural Bath, with mineral salts "from the depths of the bright blue sea;" The Capitol Bath, with lavender, sea salts, and a libation of your choice; and The Cherry Blossom Bath – actually, rose petals are substituted for cherry, but you do get a glass of champagne and strawberries.

    Each bath adds 50 bucks to the bill of the soaking influence peddler. But hey, as the Bath Menu explains, a little rub-a-dub-dub is not an expense, it's "a reward at the end of a successful business day." They soak us, then they take a soak, writing the whole thing off as the cost of doing business!

  • Jim Hightower: Goofing Up Health Care Reform. Excerpts: America's shouting match over health care reform has turned completely goofy ­ and I'm not talking about confused seniors at teabag rallies getting red-faced with anger after being told by the right-wing scare machine that "government is trying to take over Medicare." No, I'm talking about our United States Senators.

    Take Max Baucus. Please! He's the lightweight Montana Democrat to whom President Obama entrusted the heavy job of shepherding health care reform through the upper chamber. It was like asking Tweety Bird to lift a bowling ball.

    Baucus, backed by unanimous and enthusiastic support from every Republican on his committee, has merrily jettisoned reform after reform that the industry opposed. For example, an amendment to require drug-price discounts for low-income seniors with multiple chronic illnesses: Killed. The provision to include a not-for-profit, public insurance option to increase competition, provide consumer choice, and keep insurance corporations honest: Gone.

    Why? Baucus said his goal was to produce a bill that could win the industry's support and get the 60 votes needed to overcome a Republican filibuster.

    That's it? That's his goal? If the meek ever inherit the earth, Baucus will be a land baron! Why isn't it his goal to produce the best health care there is for all of the American people? Why has he let Republicans (who were voted out of office last year in part because of their failure to deal with people's health care needs) control the terms of the debate and the content of the Democrat's bill? Why doesn't he take a couple of testosterone shots and reach out to the 65% of Americans (including 47% of Republicans and 63% of doctors)who support the public insurance option. Why doesn't he rally them to kick the selfish health insurance lobbyists right in the butt ­ and do what needs to be done for America.

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 On Track To Award Record Pay. By Aaron Lucchetti and Stephen Grocer. Excerpts: Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture. Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal. ...

    The rebound also reflects growing confidence by some Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the crisis. So far, regulators and lawmakers have focused on making sure pay practices discourage excessive risk-taking, leaving to companies the question of how much is too much.

  • The Consumerist: WSJ 1999: "If This Is A Bubble, It Sure Is Hard To Pop". By Ben Popken. Excerpts: just found this awesome Wall Street Journal front page from 1999 covering the first time the Dow broke 10,000. It's full of unintentionally hilarious crap that gives keen insight into how we got into this economic catastrophe in the first place. Full-size inside. Here are a few choice headlines, subheads and phrases:
    • "Dow Industrials Top 10,000"
    • "If this Is a Bubble, It Sure Is Hard To Pop"
    • "Yes, the Values are Dizzying, But They Also Reflect Economy's Rare Strength
    • "The Dow Jones Industrial Average closed above 10000 for the first time yesterday, capturing in a single number both the astonishing success and giddy exuberance of the U.S. economy this decade."
    • "Maybe we have entered a new era of prosperity and profits that represents such an extraordinary break with the past that historical comparisons are meaningless."
    • "A record share of Americans participate in the market, either directly with stocks or indirectly through mutual funds, and a record share of their wealth is tied up in stocks."
    • "Online trading is turning personal computers into slot machines"
  • Huffington Post: Rewarding Failure: The Bail-Out Bonuses on Wall Street Continue. By Robert Creamer. Excerpts: Prepare for a new firestorm of completely justified populist outrage. Some of the country's largest Wall Street firms have set aside billions of dollars for bonuses to executives and traders -- many of whom are the same people whose reckless risk-taking led to the current recession. Amazingly, giant insurance conglomerate AIG is currently scheduled to pay another $198 million in bonuses next March.

    Remember that AIG's sale of unregulated "credit default swaps" helped trigger the financial collapse that led to the recession. "Credit default swaps" were essentially insurance policies that, if the underlying financial instrument fell below a certain price, AIG would insure the loss. Only problem was, that since the "credit default" business was completely unregulated, AIG had no capital requirements to guarantee that they could pay off. To prevent what they thought might be a world-wide systemic meltdown, the Government was ultimately forced to invest $180 billion of taxpayer money, and now owns 80% of the company. But earlier this year AIG actually paid $168 million in bonuses to executives and traders in the company's Financial Products Division that had run the "credit default swap" program, causing universal outrage. ...

    But AIG is only the tip of the iceberg. According to the Washington Post, J.P. Morgan Chase has set aside $2.78 billion in compensation for its investment bankers for the third quarter - a 28% increase over the same period last year. J.P. Morgan Chase is able to pay those kinds of bonuses because the financial bailout by the taxpayers has put it - and the other big Wall Street Banks -- in a position where they will generate very strong profits in the third quarter. J.P. Morgan Chase itself will generate profits of $3.59 billion - the strongest results in two years. ...

    Just as surely as America had to change the policies that had made it vulnerable to terrorist attacks on September 11, 2001, we have to change the policies that made us vulnerable to the attack of the Wall Street speculators that culminated in the collapse of Lehman Brothers on September 15, 2008.

  • New York Times: Bailout Helps Fuel a New Era of Wall Street Wealth. By Graham Bowley. Excerpts: Even as the economy continues to struggle, much of Wall Street is minting money — and looking forward again to hefty bonuses. Many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes? ...

    Titans like Goldman Sachs and JPMorgan Chase are making fortunes in hot areas like trading stocks and bonds, rather than in the ho-hum business of lending people money. They also are profiting by taking risks that weaker rivals are unable or unwilling to shoulder — a benefit of less competition after the failure of some investment firms last year. ...

    A year after the crisis struck, many of the industry’s behemoths — those institutions deemed too big to fail — are, in fact, getting bigger, not smaller. For many of them, it is business as usual. Over the last decade the financial sector was the fastest-growing part of the economy, with two-thirds of growth in gross domestic product attributable to incomes of workers in finance.

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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