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Highlights—January 16, 2010

  • I, Cringely: IBM 2010: Customers in Revolt. By Bob Cringley. Excerpts: For the past 2-3 years I have been a pain to IBM, correctly pointing-out a number of policies and actions by the computer giant that have shown a pattern of disrespect to employees and customers alike. I can’t argue with IBM’s financial performance but I can argue that this performance has come at a cost that is too high for the people of IBM and even for IBM customers, which is why my 2010 prediction for Big Blue is Customers in Revolt.

    Top management at IBM has nearly always come from the sales side of the business and it is that sales side that has been outdoing itself quarter after quarter helping IBM earnings to grow even in a recession. It doesn’t hurt, of course, that lots of IBM revenue comes from its international operations and has benefited from a weak dollar. But a fair amount of this success — at least on the services side — comes from very aggressively bidding for work.

    But what happens if your bid is too low to actually make money for the company? At IBM, ironically, that’s not a problem for the sales people. It is a problem for the people charged with actually performing the services.

    According to IBM customers I have spoken to, the company seems unable to create a solution and put a price to it that anyone would accept so the sales organization appears to sell almost anything at whatever price they can get. They collect their commission and move on to the next deal, leaving behind a mess for the service organization to deal with.

    Dealing in this case means cutting costs to the point where the contract is profitable even if not truly fulfilled. Because there is such a big disconnect between the price of the contract and the cost needed to deliver it, crazy things are done, starting with offshoring on a massive scale.

    While offshoring is not intrinsically bad, it leaves almost nobody working in the data centers, which are necessarily back in the U.S. When the server folks are thousands of miles from the equipment, how does the equipment get installed? Who does the hands-on work? If a machine breaks, how long does it take to get someone there to fix it? IBM customers are learning the rueful answers to these questions.

    IBM is also building several new “global delivery centers.” One of these is in Dubuque, Iowa. Why Dubuque? It is my understanding that IBM hopes to reduce its labor costs and one way to do this is by choosing remote locations like Dubuque with few locals who could qualify to be IBM techs or engineers. Experienced IBMers being downsized in places like New York won’t move to Dubuque, so they can be replaced with cheaper (and younger) labor. Dubuque’s lack of native talent means IBM can staff the centers with mostly foreign H1-B personnel, again so they can pay them less and have no long-term benefits exposure.

    I find it difficult to see how customers benefit from these global delivery centers.

    But wait, there’s more! The offshoring, the spin off of network work to AT&T, the “global centers,” the new internal processes are not much compared to the latest IBM ploy I’ve heard about — the use of used equipment. To save money on its outsourcing contracts, I have been told that IBM is refurbishing old equipment and substituting it for new. The customer pays a service/lease rate for new, but in the IBM data center what’s actually in the rack is used hardware. Since IBM holds the title and lease and customers never visit the data centers anyway, the customers don’t know.

  • The Greater IBM Connection on LinkedIn: You have an Hour One on One with Sam Palmisano. No handlers, just you and Sam with an open agenda. What would you discuss with him? Selected contributions follow:
    • IBM has taken its eye off the customer and focused on the stockholder, and the result has been a loss in market share and the massive downsizing that started in August 2001; which I was part of. Why? IBM's greatest strength was in the core competencies held by us as consultants. Wouldn't it have been more prudent to change the corporate focus to the consumer and empower each of us to meet their needs with innovation, inventiveness, and vision?
    • I would ask him why they keep firing/resourcing or whatever those who can lead with excellence. I live through many resource actions where they just cut the heart right out of our ability to deliver with quality. Finally just couldn't take it anymore. DE's, Sr Archs, 1 PBC top performers just jettisoned. It didn't make any sense at all. Why Mr. Sam why??
    • I would tell Sam some stories from my personal experiences as an IBM employee who took early retirement after 31 years. I would tell him about the feelings stirred by silver spoons that welcomed the birth of each of my 4 children. I would tell him about the occasion of my father's funeral in a small town in West Virginia, after which I was approached by a representative from the nearest IBM branch office, wishing to express condolences on behalf of IBM. I would thank him for the tuition refund program and the graduate work study program that allowed me to earn degrees in math and computer science while working at IBM. I would tell him of the many friends and colleagues I had while working at IBM, some of whom I'm still in touch with. I would remind him that it was this feeling of loyalty and connectedness that made IBM the great company that it is today, and ask him if these feelings are still being engendered, and if not, why not?
    • I worked for IBM for 27 years. I dedicated my life to IBM and made many personal sacrifices with the promise of lifetime medical and an annuity pension. IBM was built on the basic beliefs established by Thomas Watson and the one fundamental belief that was lost was, 'Respect for the Individual'.

      My passion for IBM and our customers turned my blood blue. My customers trusted me and were dedicated customers because of my 'added value'. In 1999 all that changed.

      My conversation would be about how important IBM employees are to the leadership of the corporation. I would express how dedicated I was to IBM. Give examples of how my customers had the same contagious commitment to IBM products and services. I would express my grief over the perpetual layoffs as a way as cutting costs. I would express my deep sadness in the loss of my love of the IBM culture - and loss of my profound sense of pride that I once had.

      Finally, I would let him know that in my life after IBM, as a decision maker, IBM is not 1st on my list for a source of products of services because of loosing my annuity pension and medical benefits. IBM cannot be trusted because of this...

    • I would tell Sam to pay attention to the Global Pulse Surveys. Happy employees are productive employees. And employees are not happy right now. Fear is the primary motivating factor now, and this works during a recession - but as soon as the world economy improves, IBM will be losing it's most talented staff in droves. I would tell Sam to talk to staff level employees about what they need to become empowered to do their jobs, to bring back the concepts of long term planning, career development, training and respect.
    • I hope that Sam takes a great interest in reading this blog as it provides truthful valuable insight other than his immediate "Go to Swat Team" entourage. There's nothing more priceless than feedback from the ground and frontline troops. Any thoughts Sam ? I would like to tell Sam that changes in company direction (e.g. from customer support to leadership) should mean that existing employees skilled at supporting customer initiatives should be given the time needed to develop the necessary skills for the new world instead of being let go since their skills no longer fit the IBM marketing focus. An employee that was valuable and delivered profits for many years deserves the opportunity to continue to work with the company in these new roles.
    • @jean: IBM has changed completely since your days there. There IS a wonderful world outside of IBM. See it and enjoy it, even while you are still at IBM. Ignore your manager's request to be available 24/7 and complete 70 hours per week of work. Practice true work/life balance on your own terms. Turn off your cell phone after 7pm. Take 48 hours to respond to emails. Take 2 hour lunches and sip wine with old friends. Insist on traveling business class for air trips longer than 8 hours - or don't go. Keep dead fish in your office desk in Armonk. Play by your own rules. Beg, borrow and steal all ideas of others - it's a dog-eat-dog world and every person for themselves. But most importantly, never listen to your manager's advice on career. Your talents and abilities go way beyond what is recognized at IBM.
    • I would ask him if he realizes that people like me are voluntarily leaving IBM because they don't feel valued as employees? I would ask him if he clearly sees what is going on within the company. These people are top performers, with an unbelievable work ethic that would do anything for the company. In many cases, they are long-time employees, like myself with 21+ years. They know what it was like to be valued and rewarded for their work. These people are the core of the business, and built IBM into the respected company it was. To leave is so difficult, but basically, these people really have no other choice since the writing on the wall is so obvious. I would ask him if he realizes that this is going on at IBM, and would like him to explain why this is the case.

      Due to the demand that billable targets are met we are often assigned to projects where we do not have the skills required and must do our best to "rise to the occasion". This has the adverse affect on customer service since without the required skills, we cannot deliver anything better than the customer could obtain for themselves from their own staff. Meanwhile, because we are working on these projects there is no available time for getting additional skills.

    • I would ask him why he is so disconnected from the field. This is a company that tolerates and, ins some cases, promotes mediocrity. Having come to IBM via an acquisition, my experience at IBM is one that is definitely not a sales culture but more so a Wall-Street driven culture. Its a perfect laboratory for the peter principle. Sorry to burst the bubbles of you career IBM'ers but even your largest competitors still manage to have a sales driven culture.
    • This may sound cold and calculating to many, but it needs to be appreciated (not understood) in order to rationalize the actions of IBM the commercial entity.

      In IBM, unlike the military and other non-profit organizations, an individual who is not in a lettered Band position is a resource, not an asset. IBM touts talent and loyalty all the time, but those are only tools to keep the talent product inventory shrinkage at a minimum. Talent and skills are product, just like servers, screws, etc. Although some individuals may display it temporarily or even permanently (there are always some decent people in the company who will risk everything for ethics or spiritual reasons) for a variety of reasons at certain times, the company has no room for compassion, nostalgia or any other natural human emotion. This is after all, just a business like any other. The only goal, the only thing that matters, is profit as defined by the accounting circumstances of the moment.

      As a now famous IBM executive once told me to my face in the cabin of a Gulfstream at 30K feet above Austin one time, repeating what he said to a group of Austin IBMers 10 + years ago: "If you want loyalty, go get a dog. If you want nostalgia, become a historian. We're here to make money, not to feel good or be fulfilled."..and I was told first hand from Lou himself personally that he was one that had what it takes to be up at the top.

      When you are a resource, your skill and talent is part of a supply chain, just like product inventory. The sooner you realize this, the sooner you realize that only those with unique and valuable (to the firm and to the leadership) will not be considered for one of the famed past and future RA's.

      The question is for each and every one of us is what are you going to do about it? Many graduates of the firm have moved on and succeeded in other endeavors, even in their "early" forced retirement years. Some pragmatists in IBM offer advice in saying: "leave IBM before it leaves you". Whatever it may be, don't look back unless you are an attorney or historian, because only they can make use of the past. Look forward. Your future is so bright you need sunglasses! Ask folks like John Chambers, John Thompson, and the list goes on. Keep moving forward and don't look back. Sam is the past, not the future for you.

    • Richard: You make excellent points and are exactly correct regarding the goal of the corporation: profits. However, I must disagree that staffing decisions are based on skills inventory. Your comments imply that those with unique skills are valuable is not correct. Skills inventory is not the criteria for being selected for layoff.

      Anyone that knows me knows that I had highly unique skills at a large IBM site of about 3000. Literally, I was the only person on site who had my specialized skill. I was selected for a resource action. Without exception, every staff level person who worked with me and/or knew of my role, was confused by my selection. Comments to me included "I can't understand your selection. It makes no sense. Who is going to do your job ?" My response was that was no longer my concern. The reality is that my role at the site is now outsourced, but it involves IBM confidential information (long term planning) and thus would be better kept in house.

      So, one might wonder why I was selected. There is a simple answer. I was the oldest and highest salaried staff person in my department. Age and wage discrimination. This is the great undiscussed activity in business today masked by the recession. Smart people know it is happening, and has been going on for years. Yet, because of fear and selfishness, nobody is willing to make this an issue.

      It's important that people understand that if you are over 50 years old, you are 7 times more likely to be laid off than the average IBMer. Whomever said "leave IBM before it leaves you" hinted at this age issue, and hit the nail on the head.

    • I'd discuss the limits to innovation that any company of IBM's size, brand stature, and customer concentration can have. There's not a lot he can do about that, but it sets the stage. I'd then discuss how all the propaganda about being an innovation company rings hollow when these limits are hit. And finally I'd discuss how the above leads to causing the truly innovative risk-taking employees to leave or be laid off... completing the cycle.
    • Ditto to Dan Clark's remarks. And, if IBM is truly global, consider making all job reductions with a global mentality. The balance of talent should be made my skill and not geo. I know people are being resourced in the US because of the ease of doing it here, versus in Canada or Europe or generally elsewhere, regardless of the level of skill. IBM should rethink that model, especially because many jobs do not need to be geographically located.
  • The Economic Times (India): IBM to scale up India BPO operations; plans to hire 5,000. Excerpts: Betting big on the India story, global IT giant IBM plans to scale up its BPO operations in the country and would hire 5,000 staff. "We plan to focus more in the services sector by opening more BPO centres in India. We would recruit at least 5,000 people to support this expansion," IBM Poland's senior advisory consultant, Selby Mascarenhas, said in New Delhi. ...

    The IT major has decided to scale up its outsourcing operations in India at a time when many global companies, hit by the financial turmoil, have downsized their outsourcing contracts. At present, IBM has BPO facilities in major cities like Mumbai, Hyderabad, Pune, Gurgaon and Kolkata. Rather than moving to smaller cities, IBM would prefer to expand its existing centres by opening new units, he said.

  • Romsey Advertiser (United Kingdom): MPs unite to challenge IBM pension changes. Excerpts: Four south Hampshire MPs have backed a Commons motion challenging IBM on its retirement plans. Nearly 100 MPs from all parties have now signed up to the parliamentary motion calling on the US technology giant to protect the pension benefits of its employees. They include the Eastleigh MP, Chris Huhne; Romsey MP, Sandra Gidley; Winchester MP, Mark Oaten; and Gosport MP, Peter Viggers. It comes after mounting concern by IBM employees at Hursley. ...

    The Unite union claims hundreds of angry IBM workers have been joining up in readiness to fight the proposals, which they say will have “a devastating effect” on future pensions. It calculates that people in their mid-50s could typically lose up to £200,000. IBM adjusted its plans after staff consultation, but concerns remain.

  • BBC: Debate on the IBM pension scheme. Excerpt: Liberal Democrat MP Sandra Gidley led a debate in Westminster Hall on 13 January 2010 on IBM's pension scheme. The computer giant announced last July it was consulting on the closure of its final salary pension scheme to existing members of its UK workforce. Ms Gidley said the firm announced the change - which will affect more than a quarter of IBM's 20,000 UK staff - "out of the blue". The Hampshire MP said long-serving employees felt the government was offering them no protection against IBM's "bully boy tactics". Work and Pensions Minister Angela Eagle said the issue remained a matter for IBM, but added that she was sympathetic to members of the firm's pension scheme. Ms Eagle said she hoped IBM's board would take note of the anger and worry the decision had caused many of its employees.
  • InformationWeek: Exclusive: IBM Reorganizes Software Group. By Doug Henschen. Excerpts: IBM's Software Group has reorganized its vast portfolio and more than 50,000 employees into two units: Software Solutions Group and Software Middleware Group. In the process it has promoted two executives and reassigned long-time executive Ambuj Goyal. The Software Group realignment was outlined in memo sent out this morning by senior vice president and group executive Steve Mills. A copy of the memo was obtained by Intelligent Enterprise. IBM declined to comment on the moves, but a source inside the company confirmed the memo's authenticity.
  • BizCovering: Ibm Management Initiated Separation Rule for The Day in 2010. Excerpts: Oh yea of little faith looking to stick your heads in the sand, looking for any shred of hope about how IBM operates, those of you who would like to believe that IBM has ethics – you need a check up from the neck up. Some have asked for confirmation of what this site has been saying while most others agree strenuously with the predictions. For you doubting Thomas’s one case in point:
    “Rather than make a formal announcement and cop to itself, to Wall Street, and its employees that it is making layoffs despite what it heralded as a stellar 2008, IBM is sticking to its practice of doing tactical “resource actions” within departments throughout its geographical regions. “The layoffs have started and IBM is still denying it to the press. Dozens of people at my location (about 150 employees here) received their pink slips today. They have 30 days to find a new job within IBM or they will be officially on the dole. I have also spoken to an employee at another location. Their entire group of 30 was given their ‘resource action’ notice today. Doesn’t matter what IBM is saying publicly. It’s happening.”
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "madinpok". Full excerpt: What you are describing is normal. In my group, the PBC projection process starts around the end of January. The funny part is that most of the employees haven't even written their PBC objectives yet and the managers are determining how they will be rated on those objectives. And if an employee actually does better than expected, it is VERY difficult for a manager to increase their rating. The whole PBC process is a big joke. Except for that fact that they may fire you based on what you get.
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "lastdino1". Full excerpt: This is not new news. The only exception is that the ranking is done before the PBC number is assigned. Managers do the ranking in late Dec or early Jan and do a roll up to the 2nd line. They fight out who is ranked where and the 2nd line makes some changes based on either ass kissers or super performers. Once the ranking is done they get the PBC distribution from HR. Usually 3% 1's and 5% 3's. The 2 and 2+ people are split at 70/30. They still use the Jack Welch model of turning over (firing) the bottom 3-5%. Also back in the late 90's the management team started to become a younger group because some of the older managers were having problems in having to fire seasoned vets. The best bet is to learn to manage your 1st and 2nd level mgr if you want to stay in the game. Some call it ass kissin so name your poison. Life's a bitch and then you retire.
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by Michael Nalasco. Full excerpt: I agree, ibm still has a large older work force that is trying to hang on until they can retire. That is why ibm still uses the outdated and totally unfair PBC program and the RA system. Think of ibm as a sniper in a tree weeding out the older (i.e. higher paid) employees who are like sheep in a field. Each sheep tries to hide and thinks they will not be picked off, until it happens. It is a shame that the sheep don't turn into Lions and unionize. There will be a time, in the no so far future, where the older, Watson style era employees will retire, and the newer, less dedicated employees will see that, PBC's, RA's and other unfair ibm practices are draconian, and simply leave big crappy blue.

    P. S. When I was laid off from ibm, and went back to college in 2003, I took an unofficial poll from the college students in Burlington, concerning their potential employment towards ibm. NOT ONE OF THEM WANTED to work for ibm! They had all seen and heard of the way ibm was treating employees, taking away retirements, and simply did not want to join a company that was so obviously greedy. Instead they wanted to work for smaller, higher paying companies and use 401K's to control their retirements.

  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by Michael Nalasco. Full excerpt: I was a guest in a unit meeting in February of 09 and the manager actually put up a chart with the bell curve for PBC ratings. 10% ONES, 70% TWO and TWO PLUS and 15% THREE. Can't make it clearer than that. So, if your unit was absolutely superior you would still have a number of THREES.
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "blueserv". Full excerpt: There's nothing inherently wrong with the PBC model that IBM has chosen. The politics of any Performance Management/Review system are always going to play favorites; it's just human nature. The trouble is that IBM misuses the process as a weapon to threaten/beat employees with, instead of as a tool for improvement/motivation.

    Performance review at IBM is a joke; it has been for years. At best, PBC's leave us scrounging for scraps (little or no raises for years), while management continues to live like royalty. It's just an excuse to decimate the American workforce; deny fair wages & benefits to honest, hard-working employees. Basically creating a slave labor workforce while Sam & his elite associates become rich beyond anyone's dreams.

    Someone asked earlier, "Why would any good employees remain..." - I honestly don't believe they will. I think that IBM is currently poised to make an epic "race to the bottom", as the last of the employees who can retire on the traditional plan are able to leave.

  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "zimowski". Full excerpt: Can't say that my performance ratings changed very much following the introduction of the PBC system - they were just as subjective as ever, but what infuriated me was the fact that it became my responsibility to write the summary of my accomplishments for the year. To me this always seemed like a huge delegation of responsibility and work from management to non-managerial employees, with little benefit to the employees. I'm sure that I attributed too much value to this task, but it helped me understand that the ratings I received were, to a large degree, predetermined. Never did quite understand what my manager(s) did with all the time they saved.
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "nyjints5". Full excerpt: I thought it was ridiculous that I had to write a summary of my accomplishments for the year in my PBC. Especially since my manager usually ignored what I had written, and wrote his/her own evaluation of my performance instead. Nothing I wrote about with regard to what I had done was ever used in determining my rating. Also, I agree, everybody's rating had been pre-determined anyway, long before a final PBC was submitted. Would someone please explain to me how any of the above is fair and equitable treatment of IBM's employees?
  • Yahoo! IBM Employee Issues message board: "Re: Smart Play - Barron's article" by "nyjints5". Full excerpt: IBM used to say they only hired the best from a very large pool of candidates. That was one of the reasons that the attrition rate was very low. I can only surmise that IBM's hiring practices have gone down the tubes if they have to fire so many people each and every year.

    The old appraisal system worked fine, rankings had been a part of the management game since I made first line manager in the early 70's. The rankings then where mainly done to ensure pay for performance, mangers ranked employees based on amount of salary versus contribution. This ensured that a manager had to be able to justify why the higher performing employee was so far done on the salary ranking. Being new or and old timer was not a justifiable reason unless plans where in place to correct that situation.

    In those days the span of control was usually a reasonable number and managers knew and worked with their employees. The manager usually wrote the appraisal, the employee development plan with input from the employee. Employee retention, growth, promotability was a joint responsibility between the manager and employee. I remember one of the worst sins a manager could make was to have an employee mention that any rating was a surprise to the employee. The old system seems to me to have worked very well until the Greedy bastards took over the company and decided that they would rape the employees, retirees and stockholders simply to enrich themselves.

  • The Register (United Kingdom): IBM software: big, blue and boring in the 2010s. By Austin Modine. Excerpts: IBM's vision for software ain't what it used to be. Biggie Blue's venerable software biz will doubtlessly roll right along into the new decade - make no mistake - but where's the drive and risk taking that made the company actually cool back 10 years ago? One can't help but feel IBM software is settling back into the legendary dullness that became its hallmark when reading this interview with the man at the helm of IBM software - senior vice president Steve Mills, speaking about how IBM is looking at the technology landscape in 2010 and beyond. Here's the highlight reel: IBM software will keep on trucking with it's Smarter Planet software, follow right along with the industry in cloud computing, and fill in the gaps where necessary.
  • eWeek: Tech Worker Shortage, H-1B System Challenged. By Don E. Sears. Excerpts: The report, entitled "Gaming the System: Guest Worker Visa Programs and Professional and Technical Workers in the U.S.," pokes holes in guest worker programs and sheds light on the core issue of wage reduction for technical professionals in the United States and expansion of guest workers into newer fields such as health care and education. The report touches on the oft-cited abuse and mistreatment of guest workers from foreign countries, as well as closely examining near-stagnant wages for U.S. workers and H-1B visa holders.

    The report looks at real-world examples of wage abuse based on 2008 wages of several technical H-1B visa holders, including one whom Mabemah, based in Ocoee, Fla., paid $11.20 per hour for a Web developer job—well below the prevailing wage for that occupation. It also cites the example of a director of Medical Information Technology who made $11.90 an hour at The Pediatric Associates in Montrose, Colo. Tactics for wage repression of H-1B visa holders cited in the report include:

    "Employers often set lower salaries by: selecting a survey source with the lowest salaries, misclassifying experienced employees as entry-level, giving an H-1B visa holder a lower job title than [his or her] work requires, or citing wages for a low-cost area of the country while the H-1B holder is unlawfully transferred to a higher-cost area."

    The executive summary of the report expresses several of its key findings, (PDF) including U.S. graduation rates in STEM (science, technology, engineering, math) fields:

    "Claims of shortages necessitating these programs, especially in the STEM fields, have been widely disputed and are not borne out by basic economic indicators. A Congressionally-mandated study released by the National Research Council found that, "the current size of the H-1B workforce relative to the overall number of IT professionals is large enough to keep wages from rising as fast as might be expected in a tight labor market. ... If a genuine labor shortage existed, wages in these fields would have risen dramatically in ways they have not. ... In addition, unemployment rates in this sector have increased dramatically over the past year, with engineers reaching their highest unemployment rate since at least 1972. Graduation rates in the STEM fields also indicate that the United States is producing enough graduates to meet the employment needs of the industry."

    "This whole concept of shortages is bogus; it shows a lack of understanding of the labor pool in the USA," Videk Wadhwa, a professor at Duke University's Master of Engineering Management Program, said to Baseline Magazine in 2008. Wadhwa also rejected the shortage notion based on wages. "It doesn't add up. We live in a free economy," Wadhwa told Baseline. "If we were sitting in a government-controlled economy it would be one thing, but in a free economy what happens ... when shortages begin to develop is that prices rise and the money compensates for the shortage."

  • ChannelWeb: Five Notable Tech Layoffs Of 2009. By Jennifer Bosavage. Excerpt: #1. IBM. In 2009, IBM lost approximately 10,000 workers, according to various published reports. That number included roughly 4,500 people at IBM's Global Business Services unit and an additional 1,600 positions in its applications services business. Some of those positions were outsourced, while others were lost due to restructuring. The company did announce it was hiring 500 customer service call center workers in Boulder, Colo. -- over the next five years. In addition, those annual job salaries will range from $23,000 to $38,000 -- considered low for the tony Colorado region.
  • Yahoo! IBM Employee Issues message board: "Re: Ibm Triples Us, Canadian and Uk Layoffs in 2010" by "beentherehavetheshirt". Full excerpt: Hate to burst the common sense bubble here, but the numbers you see are probably closer than you want to consider. The numbers for first quarter are coming out now, pretty much in keeping with tripling last years. Remember, IBM does not have to report the contractor employees they layoff. Given that IBM has been forcing the hiring of contractors for many years now they could virtually strip the rest of their employee force in CA, US, and the UK while giving the appearance of making a much lesser gouge.

    Not sure why you would find it over the top to say that 30k would be cut in all 3 countries. IBM actually laid off more workers than that last year in those locations. They just do it very quietly and without fanfare.

    If you are thinking to offset the projected layoffs with all the new hires IBM is touting think again. The new jobs are at near poverty pay levels, and in no way reflect the wages being taken out of the communities where the cuts do take place.

  • Yahoo! IBM Employee Issues message board: "Re: Ibm Triples Us, Canadian and Uk Layoffs in 2010" by Lee Conrad, President of the Alliance@IBM. Full excerpt: OK, let's break this down a bit. There are about 18,000 employees in Canada, about 20,000 in the UK and 105,000 in the US. Given an equal split then Canada and the UK would lose half their employees this year. The US would see cuts similar to 2009, which is probable.

    I just haven't received any info from my sources saying that 30,000 in these 3 countries in 1 year is true, which was my point.

    Do I believe the US population will continue sliding down? Yes.

    One of our sources, even said it on the comments section of the Alliance, that he believed IBM US was working its way to 70,000 employees working at the company in the US in a few years. That's a lot of people and pretty close to the 30,000 number. If IBM keeps cutting 10,000 a year we will be there shortly. Of course we are all guessing at the "real" numbers. There is no doubt though that job cuts WILL happen.

    But if these numbers are true employees need to be deeply concerned and angry. We have heard that IBM's job cuts in the US seriously disrupted some accounts. It goes without saying that executive management has their heads up their... if they think more job cuts are the answer.

    If we had a union contract and recognition the company would be obliged to tell us the truth.

  • Yahoo! IBM Pension and Retirement Issues message board: "Up In the Air" by Kathi Cooper. Full excerpt: OK class, your assignment for this week is to go see Up In the Air starring George Clooney. In lieu of a book report, we can discuss the social ramifications after you get home from the movies. Kathi
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Up In the Air" by "ignatz713". Full excerpt: Kathi, I haven't seen this movie yet, but do you remember the movie Falling Down with Michael Douglas? He played a man whose life was ruined by the company for which he worked and he got even, in his own way. It was made in 1993, interestingly the TFL years. In this movie, Michael Douglas met a man on the Staten Island ferry, and this man shared with Douglas's character that he had just been 'sodomized' (aka FIRED) by IBM.

    I remember my shock at hearing that word at the time. Little did I know that 16 years later, I too would be 'sodomized' by IBM. Fascinating, don't you think?

    It sounds like Up In The Air is similar? I didn't get that image of the movie at ALL from the trailer on television. I thought it was a happy, yippee movie about air travel, much as lastdino (no surprise there at the mendacity) would have us think. It seems now that I have to make a point to see this movie. Thanks, Kathi.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Up In the Air" by Kathi Cooper. Full excerpt: Did you catch the line (something like) "If IBM can fire people over a T1 line, so can we, and save money too!" The researchers on this script deserve an Oscar of their own. Kathi
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Up In the Air" by "north99manverm". Full excerpt: It is nothing like "falling down". In "up in the air" the fired people are really part of the scenery or set. The focus of the movie is on george clooney, the guy who does the firing and basically has no emotional attachment to anything or anyone other than his road warrior life style and his miles. It is notable that he has no problem dealing with the boredom of solo travel. He flies in, does his thing, flies out. The shots of the fired people are just there to show that their pain affects him not at all.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Up In the Air" by Bill Lederer. Full excerpt: I saw the movie last week. It brought back a lot of memories of my travels on IBM's dime. As a Buyer for the East Fishkill plant, I did quite a lot of traveling. It was rather nice always flying Business Class, (for more than two time zones). Remember the travel to Japan? You got to spend two days in Hawaii, to make up the "jet lag". All the first class hotels and steak dinners. Then I worked for two years, (1990-1992), teaching for the IBM Quality Institute, out of Thornwood. I spent almost all my time on the road, traveling almost 80,000 miles in a two year period. I traveled exclusively on American Airlines. I collected a pile of Frequent flyer miles and they gave me a bunch of First Class upgrades. Then there was all the Marriott rewards. I took my wife on a lot of nice trips.

    I remember the 1993 Michael Douglas, "Falling Down". That was the year I left IBM, at 49 years old, and 25 years with the company. Bill Lederer.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Up In the Air" by Jim Askew. Full excerpt: Um, as someone who is "always on the road for big blue" I can assure you that traveling for the company today is *nothing* like what you encountered in the 80's and early 90's. For example, economy class travel is now required for *any* flight, even 16 hour flights to Asia. And, although you'll sometimes get into a Marriott, IBM's preferred chains are Holiday Inn Express and Hampton Inn. Rental cars are now "B" class...think Ford Focus or smaller. Requiring employees to rent "B" class cars instead of "C" class (typically a Toyota Corolla) saves the company one big fat dollar a day. That shows you how much the company values its current employees! We're not worth a dollar a day to drive a safe car.
  • Los Angeles Times opinion: Giving corporations an outsized voice in elections. Voters stand to lose out if the Supreme Court treats political spending by businesses and other big-money players as protected speech. By Monica Youn. Excerpts: Corporations are pitching a bizarre product -- a radical vision of the 1st Amendment. It would give corporations rather than voters a central role in our electoral process by treating corporate political spending as protected speech. If this vision becomes reality, businesses and other big-money players will spend billions either hyping their preferred candidates or running attack ads against elected officials who don't support their preferred agenda. Voters will be forced into a couch-potato role, mere viewers of the electoral spectacle bought and paid for by wealthy companies.

    The Supreme Court's decision in the hotly anticipated campaign finance reform case Citizens United vs. Federal Election Commission -- which may be announced as early as Tuesday -- will show whether a majority of the Roberts court is buying their argument.

    The case may be the turning point in a concerted, decades-long ideological campaign -- the "corporate free speech movement," as Robert L. Kerr and other scholars have chronicled. As far back as 1971, Lewis F. Powell Jr. (whom President Nixon would shortly nominate to the Supreme Court) sent a confidential memorandum to his friend Eugene Sydnor Jr. at the U.S. Chamber of Commerce arguing that corporate interests needed to take advantage of a "neglected opportunity in the courts." Because "the judiciary may be the most important instrument for social, economic and political change," the memo said, the chamber and other corporate interests should develop a cadre of constitutional lawyers to file lawsuits and amicus briefs to push a corporate-friendly legal agenda in the Supreme Court.

  • Associated Press, courtesy of Forbes: Hewlett-Packard CEO got $24M pay package for 2009. By Jordan Robinson. Excerpts: Hewlett-Packard Co. CEO Mark Hurd got a pay package in latest fiscal year the company valued at $24.2 million, according to an analysis of a company filing Tuesday. The package represents a 29 percent drop from the year before, partly because Hurd got a much smaller bonus as HP battled a tough year in which technology budgets were devastated, and the company's revenue and profit fell. ...

    HP's proxy filing with the Securities and Exchange Commission comes as the company is undergoing a big transformation. With the $13.9 billion acquisition of Electronic Data Systems in 2008, HP is changing into a services powerhouse that competes with IBM Corp. for some of the most lucrative technology deals - long-term contracts for outsourcing and other services that can carry high profit margins.

  • Wall Street Journal: IBM Chief Cites Limits of Resources. By Paul Glader. Excerpts: The world economy "has stabilized somewhat" but resource constraints will linger, International Business Machines Corp. Chief Executive Samuel Palmisano said in a London speech to business and government leaders. "Stimulus programs are making an impact, but they cannot and should not last forever," said Mr. Palmisano, according to a copy of the speech provided to The Wall Street Journal. "In fact, for the foreseeable future, we will be faced with addressing many pressing global issues with less, rather than more, resources."

    He also urged government leaders to spend stimulus funds in areas where IBM sells products and services. IBM is increasingly looking to sell or manage computer hardware, software and services to cities, hospitals and other organizations.

  • BusinessWeek: IBM May Not Be the Patent King After All. IBM wins more U.S. patents than any other company, but Microsoft's are worth much more money, says a study conducted for Bloomberg BusinessWeek. By Steve LeVine. Excerpts: No one beats IBM on patents. For 17 years running, Big Blue has been granted more U.S. patents than any other applicant, raking in an ­unprecedented 4,914 in 2009. That tally is more than the number of patents granted last year to Microsoft, Hewlett-Packard, Oracle, Apple, Accenture, and Google combined. IBM's worldwide portfolio now covers more than 40,000 inventions for everything from microprocessors for video games to the ­erasable read-write CD.

    Nonetheless, a study conducted for Bloomberg BusinessWeek by Ocean Tomo, a Chicago intellectual property consulting firm, concludes that IBM's collection of U.S. patents over the past five years ranks only eighth in value. No. 1 is Microsoft, which ranked third, with 2,906 patents issued last year. "The arms race approach doesn't pay off," says Mark Chandler, general counsel of Cisco Systems. "It doesn't do you a lot of good just to have a lot of patents." ...

    IBM may be shortchanging itself, according to the Ocean Tomo study. To determine the firepower of companies' patent portfolios, the consulting firm analyzed five years of patents awarded to the world's 1,000-largest public companies by revenue. Among the dozens of measuring sticks Ocean Tomo used to judge the significance of a company's breakthroughs were the number of prior patents cited, patent renewal payments, and litigation. In all, Microsoft's portfolio was assessed at 3.3 times that of IBM's. "This is something that IBM people won't accept, but it's accurate nonetheless," says Steve Lee, president of Ocean Tomo's patent-rating division. He says IBM's portfolio includes a large number of service-related patents, which do not command as high a price as the video-game and software patents that heavily weigh in Microsoft's portfolio.

New on the Alliance@IBM Site
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  • "Historic event, IBM Argentina chooses their union representatives" From IBM Argentina Unionists. Excerpts: Between January 12 and 19th, and for the first time ever, elections for the CEPETEL trade union representatives will be held at IBM Argentina. "The company has been notified, as well as the outsource company's, IBM partners in their fraud." "Unionized workers of IBM all around the world , members of the IWIS International, the national press, and also senators and deputies from Argentina have also been notified", says the Cepetel members. Finally, and after some time of hard work, the moment approaches when IBM Argentina workers will be able to choose their representatives. "So little time has passed since we started to gather, and a lot less since we decided to join the Cepetel labor union to begin to organize ourselves", said the members of the union. ...

    It's the first time in 85 years of IBM in Argentina that the workers will be able to choose their representatives. "We can be part of a new story, different from being mere spectators and victims of authoritarianism on the part of our employers" All workers will be able to vote, whether they are Cepetel affiliates or not, IBM workers or outsourced. "If you want to improve your work conditions, you have to vote; if you believe IBM is not paying you what you deserve, you have to vote", the announcement says.

    For more information, check out: http://www.gremiodeinformatica.org.ar/Elecciones-de-Delegados-en-IBM.html

  • Job Cut Reports
    • Comment 1/17/10: I work in mainframe support in Canada. We have been 'training our replacements' in Argentina for several years now. Just recently I started hearing that Argentina is 'no longer financially competitive'. Rumour is that further transfer of support to Argentina will cease and actually be terminated. I cannot help but believe this is related to the success of Argentina IBMers in unionizing. -Jonesy-
  • General Visitor's Comment page
    • Comment 1/11/10: Has anyone figured out the new bench policy? Everyone I ask seem to be aware of it but very fuzzy about the details, including management. I'm on the bench right now, and it appears that so are a lot of others. Do we get a tap on the shoulder after 4 weeks on the bench? Do we get offered to leave with a severance package? I think at that point you have a say if you want to leave or stay, but after 4 more weeks you do not have a choice: you are leaving IBM. My question is, do you still get the severance package? -GettingReady-
    • Comment 1/11/10: Re: the Bench Process - while I'm not 100% sure - I believe it's 8 weeks on the bench then you are given some sort of package to leave/exit IBM. How long have u been on the bench? If you take vacation/personal choice holidays that will NOT count towards bench time. So you may want to do that buy time. Although a word of caution if you do get the axe and you've taken ALL your vacation in January/February - you will OWE IBM money. Vacation is accrued on a monthly basis. So, depending on when you were hired, etc. you may owe back quite a bit of money. Although, I doubt they put much energy into recouping funds from ex-employees. But, who knows. You really should be working CLOSELY with your RDM to find a project and to advise you on the process. I wouldn't waste any more time waiting for someone to contact me The current IBM doesn't help anyone - it's dog eat dog. Good Luck. -zlisted employee-
    • Comment 1/14/10: It was just announced to SWG Sales Staff that no commission will be paid until rep’s hit a minimum of 55% of their quota. So that means the months you are working to hit that #, you take home nothing but base.. -Good Times-
  • 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 1/14/10: Salary = €33300 $48,335; #Yrs Since Raise = 1; %Raise = 1.5; Band Level = 6; This Yr-PBC = 2; Job Title = Development Support engineer; Years Service = 4; Hours/Week = 37.5; Div Name = Information management; Location = Ireland; Message = I started in manufacturing and then IBM bought the company I worked for. I was then able to move into a more technical role that paid €25k after 9 months because my salary was behind others and I switched roles again manager was able to secure increase above normal for me. Not sure what to expect this year, salary went up 1.5% last Jan with no explanation.. Even manager was confused as to why! -Anonymous-
    • Comment 1/16/10: IBM USA employees beware. IBM UK started the Employee Salary Programme (ESP) last year and is only rewarding the TOP performers. So the handwriting could be on the wall for the change to the IBM USA salary program and the Growth Driven Pay (GDP) perhaps? PBC 2+ supposedly got raises last year. Will IBM still reward the PBC 2's (PBC 2 or 2+) employees this time around? -anonymous-
    • Comment 1/18/10: Band Level = 8; This Yr-PBC = 2; Job Title = FTSS; Location = UK; Message = Meet the 2010 Technical Sales "Incentive" Plan, basically the same as the 2009 plan which was universally condemned, including the VP of Technical Sales in the UK. Another example of screwing the workers out there delivering the results. -anonymous-
  • PBC Comments;
    • Comment 1/11/10: Years Service = 27; Prior Yr PBC = 2+; This Yr PBC = ? Message = If this is your second (2nd) consecutive '3" PBC appraisal, you will be getting a ISAP. You'll have 15 days to decide whether you choose to take the package or try and improve. If you decide to 'improve' you have 30 days from that date to improve. If your manager decides that you don't improve, you'll get no money that the ISAP offers. (it's like an mini RA Package) The whole PBC process is seriously flawed. Employees have NO leverage -you are at the mercy of your manager and HR. Remember HR is for management - not for you!!!! JOIN THE UNION! -zlisted employee-
    • Comment 1/13/10: Band Level = 4; Years Service = 25; Prior Yr PBC = 2+; This Yr PBC = 2; Prior Yr Bonus = 1500; Message = Just had My Yearly PBC evaluation at East Fishkill NY that during the year provided stellar performance. During prior Years I have always been a 2+ performer. Too my dismay my manager gave me a one-page write up on all my major accomplishments that were all positive. Thanking me for working through my lunch hour during a time of limited manpower and working by myself. Well I thanked him for such a nice review and was dumb founded when he gave me a solid two. I didn’t realize it than but a coworker told me that you do not get a variable pay if you were rated a two. Now I am having second thoughts about signing my PBC and will have to ask my manager what this is all about! Looking for PBC advice at E. Fishkill? -PBC What!-
    • Comment 1/14/10: Band Level = 8; Years Service = 16; Prior Yr PBC = 1; This Yr PBC = 2; This Yr Bonus = ?; Message = Have been a 2+/1 performer for 8 years and now have a 2 rating. Hmm. -Annoyed- Alliance Reply: Annoyed enough to join the union and start organizing?
    • Comment 1/16/10: This Yr Bonus = nil; Prior Yr Bonus = some; Message = It's that time of year again where you will see you PBC number. Prepare to get a PBC 2 or even a 3 now. IBM is accelerating the process of managing you out. IBM is hell bent on making their 2011 EPS and will do anything to you to get there. By making the EPS the executives become even richer than ever and you will either be poorer one way or the other with or without a job in IBM. -PBC'ed-
    • Comment 1/16/10: Band Level = 4; Years Service = 28; Prior Yr PBC = 2+; This Yr PBC = 3; This Yr Bonus = 0; Prior Yr Bonus = ?; Message = Word on PBC’s is that there is a rising of the bar to eliminate head count by utilizing“managed out” business tactics. I have a friend that works in facilities at IBM E. Fishkill NY and was forced from a Band 5 to a Band 4 because of a change in departments. Now during his PBC review and too his dismay was told that he now rated a 3 performer. When he went to is second line manager to complain was told that nothing could be done about it. Looks like they will get their Yearly US 11,000 head count quota reduction one way or another. -Drowned Rat on a Sinking Ship!-
    • Comment 1/17/10: Band Level = 8; Years Service = 9; Prior Yr PBC = 1; This Yr PBC = 1; This Yr Bonus = TBD; Prior Yr Bonus = 9%; Message = Best stories I heard last year 1) Promotion to band 9 with increased travel requirements and new project management responsibilities with a HUGE 0.009% pay increase. 2) In response to above, an ex-manager explained that you don't promote employees because they are good, you've got to play a little game because once you do they get the automatic. 3) Instead you give an employee doing higher level band work a high ranking a few years to bring up their pay, then you promote them. -Zippy-
    • Comment 1/18/10: Band Level = 8; Years Service = 13+; Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = ?; Prior Yr Bonus = 5.5%; Message = Told I was a top performer but guess not extraordinary :P -justanothernumber-
  • International Comments
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • New York Times op-ed: Learning From Europe. By Paul Krugman. Excerpts: As health care reform nears the finish line, there is much wailing and rending of garments among conservatives. And I’m not just talking about the tea partiers. Even calmer conservatives have been issuing dire warnings that Obamacare will turn America into a European-style social democracy. And everyone knows that Europe has lost all its economic dynamism. Strange to say, however, what everyone knows isn’t true. Europe has its economic troubles; who doesn’t? But the story you hear all the time — of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation — bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.

    Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it. In any case, the statistics confirm what the eyes see.

  • Wall Street Journal: Support Grows for U.S. Health Exchange. By Janet Adamy and Laura Meckler. Excerpts: The White House wants to include a national health-insurance exchange in the health bill, which would give House Democrats one of their top remaining demands, according to an official involved in the discussions. At issue is who would run the new insurance exchanges that would allow consumers to comparison-shop for health coverage. The House's version of the health overhaul calls for the federal government to run a single, national exchange, while the Senate's version would let states run their own exchanges.
  • The Hill: After learning of campaign donations, Dems turn up heat on insurance companies. By Alexander Bolton. Excerpts: Nineteen Senate Democrats on Wednesday called for the health insurance industry to lose its long-held anti-trust exemption after news surfaced that insurance companies have spent millions in a concealed effort to oppose healthcare reform. ...

    Insurance companies such as Aetna, Cigna and UnitedHealth Group poured as much as $20 million into the U.S. Chamber of Commerce to fund ads attacking the healthcare bill, according to a report in National Journal. While spending millions in private to oppose the bill, insurance companies adopted publicly neutral stance, perhaps fearing a backlash from Democrats in the White House in Congress. ...

    Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and 18 Democratic colleagues released a letter calling for the final health bill to include a provision stripping the insurance industry of its exemption. “There is simply no reason for health insurance and medical malpractice insurance companies to be exempt from Federal laws prohibiting price fixing, bid rigging, and market allocation,” the lawmakers wrote. “These acts hurt consumers, drive up health care costs, and should be prohibited in the health insurance industry, as they are in virtually every other industry.” ...

    Liberal advocacy groups have also blasted the industry and its trade association, America’s Health Insurance Plans (AHIP). “AHIP has paid lip service to reform while paying the Chamber to oppose it,” said Richard Kirsch, national campaign manager of Health Care for America Now, a coalition of liberal and labor groups. “Insurers rigged and gamed the political system the same way they do with people’s health insurance claims and medical care,” he said “We simply cannot trust the health insurance industry to act in anyone’s best interest but its own.”

  • MarketWatch: Will health reform help pry open U.S. job lock? Coverage keeps many tethered to unwanted jobs, blocks entrepreneurs. By Kristen Gerencher. Excerpts: If a health-care overhaul becomes law more people may feel emboldened to start businesses or change jobs because they'll no longer fear having to go without health insurance. In talking about the price tag of proposed health-coverage expansion, it's easy to overlook one of the current system's distortions: Job lock, the phenomenon of workers staying put in their jobs for the medical benefits, even though they might be more satisfied and productive starting their own company or switching to a smaller employer.

    Their fears of going without appear justified: 28% of the self-employed were uninsured in 2008, as were a third of workers in businesses with fewer than 25 employees, according to the Kaiser Family Foundation. The overall portion of Americans who are uninsured is much lower at about 15%. ...

    The status quo is hurting business creation and job mobility, according to research done by Robert Fairlie, an economics professor at the University of California-Santa Cruz. "We're finding reasonably consistent evidence that people who are employed are delaying or not starting a business because of their fear of losing health insurance," he said. ...

    "Millions of people are making decisions about whether to fuel our economy as entrepreneurs and create jobs because of health care," he said. "It's so anachronistic for a country and society that prides itself on rolling up our sleeves and individualism why we should have a system that prevents people from doing that in any significant numbers."

    The U.S. has among the lowest share of employment in small businesses compared with its international peers, according to a study of internationally comparable data authored by John Schmitt, senior economist with Center for Economic and Policy Research, a nonprofit research group in Washington. "The data don't support the idea that universal health care is bad for small business because almost every country that has universal health care has a demonstrably larger small-business sector than the United States," he said.

  • Washington Post editorial: Health-care reform should put an end to pay-for-delay by drug companies. Excerpt: A loophole in existing law allows manufacturers of brand-name drugs to pay competitors to keep cheaper, generic versions off the market. If there's to be health-care reform this year, it ought to close that loophole. Such "pay-for-delay" schemes cost consumers an average of $3.5 billion a year in potential savings, according to a recent report by the Federal Trade Commission. The federal government also loses by being forced to pay billions for higher-priced medications needed by patients covered under government health insurance programs.
  • Wall Street Journal: J&J Is Accused of Kickbacks to Omnicare on Drug Sales. By Jonathan D. Rockoff. Excerpts: In the latest case in the government's campaign against abusive drug-marketing practices, the Justice Department charged Johnson & Johnson with paying "tens of millions of dollars in kickbacks" to a nursing-home pharmacy company to boost sales of J&J drugs to nursing-home patients. Prosecutors, in a complaint filed in federal court in Boston Friday, accused J&J of illegally paying Omnicare Inc. to buy J&J medicines and recommend their use to nursing homes. Under the arrangements, prosecutors alleged, Omnicare's annual purchases of J&J medicines nearly tripled to more than $280 million. ...

    J&J also sponsored Omnicare's annual national managers meeting at a Florida resort, spending as much as $50,000 each year from 1999 to 2004, the complaint said. In return, J&J sales managers could play golf with Omnicare managers and talk about why the pharmacy should buy more J&J drugs, the complaint said. The complaint was prompted by whistleblowers Bernard Lisitza and David Kammerer, former Omnicare employees who no longer work at the company, said Mr. Lisitza's lawyer, Michael Behn.

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.

  • New York Times op-ed: The Other Plot to Wreck America. By Frank Rich. Excerpts: There may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

    What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.

    The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

  • New York Times: Banks Prepare for Big Bonuses, and Public Wrath. Excerpts: Everyone on Wall Street is fixated on The Number. The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen. ...

    Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.

    Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average. ...

    This year, compensation will again eat up much of Wall Street’s revenue. During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation. That figure includes salaries, benefits and bonuses, but at several companies, bonuses make up more than half of compensation.

  • New York Times: Obama Weighs Tax on Banks to Cut Deficit. President Obama will try to recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, administration and Congressional officials said Monday. ...

    The general idea is to devise a levy that would help reduce the budget deficit, which is now at a level not seen since World War II, and would also discourage the kinds of excessive risk-taking among financial institutions that led to a near collapse of Wall Street in 2008, the officials said. But the president also has a political purpose — to respond to the anger building across the country as big banks, having been rescued by the taxpayers, report record profits and begin paying out huge bonuses while millions of Americans remain out of work. ...

    Any fee that the president proposes is likely to exempt smaller banks, an official said. Community banks carry particular clout in Congress given their presence in nearly every member’s district. “Those that caused this train wreck ought to be the ones to pay to clean up the mess,” said Stephen J. Verdier, an executive vice president at the Independent Community Bankers of America. “The community bankers are every bit as much the victims as the average taxpayer in all this, so any tax ought to be devised with those principles in mind.”

  • New York Times editorial: Tax Them Both. Excerpts: The White House is talking about levying a tax or fee on large banks to recover the $120 billion it spent to bail out the financial system. That is a good place to start, but it shouldn’t stop there. President Obama and Congress should also impose a windfall tax on the huge bonuses that bailed-out bankers plan to pay themselves over the next few weeks. This is an issue of fairness and sound public policy. The Treasury needs the money. A fee may also get banks and bankers to rethink the way they do business — something the much-promised, far-too-delayed and increasingly watered-down financial regulatory reform effort is unlikely to do. A permanent tax or fee imposed on the nation’s largest banks could reduce future risks by discouraging big banks from getting even bigger.

    Let’s be clear, the crisis spawned by banks’ recklessness has cost the country a lot more than $120 billion. Any calculation must also include the deepest recession since the 1930s and the loss of more than seven million jobs. What profits banks have made since then have not come from lending to credit-strapped businesses. They are trading profits made possible by trillions of dollars in cheap financing from the Federal Reserve.

    The crisis occurred because banks that had grown too big to fail came too close to failure — driven by a reckless pursuit of risk and profit. Credit froze, and the government was forced to put enormous public resources at their disposal to keep them afloat. Though all that public money has pulled banks back from the brink, some too-big-to-fail banks have since got even bigger by swallowing their weaker brethren. That means, if they get in trouble, they could wreak even greater havoc on the economy. A levy on these financial giants would help by putting a brake on this consolidation — making the largest banks somewhat less profitable and steering investment and other resources into smaller banks, which, if they failed, wouldn’t take the rest of us with them.

  • Wall Street Journal: Panel Rips Wall Street Titans. By John D. McKinnon and Michael R. Crittenden. Excerpts: Republicans on the bipartisan panel expressed more sympathy for banking-industry leaders. Panel member Keith Hennessey, a former economic adviser to President George W. Bush, said it might be "more interesting" to talk to executives of the firms that didn't survive. He also suggested the government played a role by letting the largest banks take on too much risk.

    Among banks, the stakes could be highest for Goldman Sachs and Mr. Blankfein. His bank has been under intense public fire for its decision to pay out billions of dollars in bonuses to its employees just a year after the firm, as well as others, accepted government money to bolster their balance sheets. In an effort to diffuse the anger, Mr. Blankfein gave a number of interviews and speeches in 2008, although the charm offensive backfired on occasion. In November he told a British-based reporter he is just a banker doing "God's work," a remark that reverberated around the world. Top Goldman advisers spent hours prepping Mr. Blankfein this week.

  • Workers' World: Unemployment, cutbacks deepen. Fight needed for jobs, housing, services. By Fred Goldstein. Excerpts: The latest job reports for December should convince workers that all the talk about economic recovery coming from the media pundits is just hot air. The only recovery is the bankers’ bonuses and the corporations’ profits. And the time to fight back against layoffs, foreclosures and cutbacks is now. In December 85,000 more jobs were lost, bringing the total in the last two years to 8 million. The total official unemployment rate remained at 10 percent, but that is only because 661,000 workers stopped looking for jobs and were not counted. If they had been counted, unemployment would have jumped to 10.4 percent.

    A number which gives a truer picture of the dire situation for the workers is the so-called official “underemployment” figure. This includes the 15.3 million workers who have looked for a job in the last four weeks and are officially out of a job; the 2.5 million workers who are “marginally attached” to the work force; and 9.2 million workers who are forced to work part-time even though they need a full-time job. Together these figures add up to 27 million workers — or almost one in five workers who are officially unemployed or underemployed!

  • Wall Street Journal: Banks Set for Record Pay. By Stephen Grocer. Excerpts: Major U.S. banks and securities firms are on pace to pay their people about $145 billion for 2009, a record sum that indicates how compensation is climbing despite fury over Wall Street's pay culture. An analysis by The Wall Street Journal shows that executives, traders, investment bankers, money managers and others at 38 top financial companies can expect to earn nearly 18% more than they did in 2008—and slightly more than in the record year of 2007. The conclusions are based on an examination of securities filings for the first nine months of 2009 and revenue estimates through year-end. ...

    The surge in bonuses comes barely a year after the government bailed out the U.S. financial system amid the worst economic crisis in generations. This year major U.S. banks and securities firms are poised to pay their employees a record amount in compensation and benefits—about $145.85 billion, according to the Journal's analysis.

  • New York Times editorial: Whose Bonuses Are They? Excerpt: For the sake of fairness, Congress should pass a one-off windfall tax on bonuses. After all, what profits the banks had in 2009 were largely underwritten by taxpayers, who pumped in billions of dollars of capital, covered losses from the collapse of the American International Group and guaranteed the debts of Fannie Mae and Freddie Mac. The Federal Reserve lent hundreds of billions against shoddy collateral that no one else would touch and the Federal Deposit Insurance Corporation guaranteed loans worth hundreds of billions more.
  • New York Times op-ed: Bankers Without a Clue. By Paul Krugman. Consider what has happened so far: The U.S. economy is still grappling with the consequences of the worst financial crisis since the Great Depression; trillions of dollars of potential income have been lost; the lives of millions have been damaged, in some cases irreparably, by mass unemployment; millions more have seen their savings wiped out; hundreds of thousands, perhaps millions, will lose essential health care because of the combination of job losses and draconian cutbacks by cash-strapped state governments. ...

    And this disaster was entirely self-inflicted. This isn’t like the stagflation of the 1970s, which had a lot to do with soaring oil prices, which were, in turn, the result of political instability in the Middle East. This time we’re in trouble entirely thanks to the dysfunctional nature of our own financial system. Everyone understands this — everyone, it seems, except the financiers themselves. ...

    But the truth is that the United States managed to avoid major financial crises for half a century after the Pecora hearings were held and Congress enacted major banking reforms. It was only after we forgot those lessons, and dismantled effective regulation, that our financial system went back to being dangerously unstable. ...

    But there was nothing accidental about the crisis. From the late 1970s on, the American financial system, freed by deregulation and a political climate in which greed was presumed to be good, spun ever further out of control. There were ever-greater rewards — bonuses beyond the dreams of avarice — for bankers who could generate big short-term profits. And the way to raise those profits was to pile up ever more debt, both by pushing loans on the public and by taking on ever-higher leverage within the financial industry. ...

    Wall Street executives will tell you that the financial-reform bill the House passed last month would cripple the economy with overregulation (it’s actually quite mild). They’ll insist that the tax on bank debt just proposed by the Obama administration is a crude concession to foolish populism. They’ll warn that action to tax or otherwise rein in financial-industry compensation is destructive and unjustified. But what do they know? The answer, as far as I can tell, is: not much.

  • Washington Post: What Karl Rove got wrong on the U.S. deficit. By David Axelrod. Excerpts: So, let's review a little history: The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus -- with a projected 10-year surplus of $5.6 trillion. When the Bush administration left office, it handed President Obama a $1.3 trillion deficit -- and projected shortfalls of $8 trillion for the next decade. During eight years in office, the Bush administration passed two major tax cuts skewed to the wealthiest Americans, enacted a costly Medicare prescription-drug benefit and waged two wars, without paying for any of it.

    To put the breathtaking scope of this irresponsibility in perspective, the Bush administration's swing from surpluses to deficits added more debt in its eight years than all the previous administrations in the history of our republic combined. And its spending spree is the unwelcome gift that keeps on giving: Going forward, these unpaid-for policies will continue to add trillions to our deficit.

    This fiscal irresponsibility -- and a laissez-faire attitude toward the excesses of the financial industry -- helped create the conditions for the deepest economic catastrophe since the Great Depression. Economists across the political spectrum agreed that to deal with this crisis and avoid a second Great Depression, the government had to make significant investments to keep our economy going and shore up our financial system.

    That is why President Obama and Congress crafted the American Recovery and Reinvestment Act. Despite Rove's assertion, it is widely accepted that the difficult but necessary steps Obama took have helped save our economy from an even deeper disaster. And while Rove conveniently ignores that it was President Bush -- not Obama -- who signed into law the $700 billion Troubled Asset Relief Program bailout for banks, the Obama administration's rigorous stewardship added transparency and accountability that have cut the expected cost of that program by two-thirds.

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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