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• IBM: The information services company that refuses to divulge information. Excerpts: It is ironic that a company that advertises itself as an information services company and wants to build a smarter planet refuses to divulge crucial information and wants the planet kept in the dark. But that is the case with IBM. Take job cuts. Last year IBM cut an estimated 10,400 jobs. This information came from Resource Action documents sent to the Alliance. The true number, which is probably higher, is only known to corporate executives. On March 1st another 2900 jobs were cut. Probably higher. Once again only IBM knows the true number and appears to be violating the intent of the WARN Act.

  The jobs were cut all across the United States and some in Canada. What locations and communities had job cuts? Nobody knows because IBM no longer gives out that information. Now IBM has decided that it will no longer inform employees, the government, communities, the media, or stockholders how many employees work at IBM in the United States.

  From now on only the global headcount number will be reported. It is clear why IBM is doing this. The US employee population is shrinking due to off shoring. IBM is also displacing US workers with foreign workers (at lower pay) brought in to work on US client accounts. Meanwhile headcount in India and other countries is increasing.

  In fact, IBM India had an employee population of 94,000 in 2008. At the end of 2009 IBM USA had an employee population of 105,000, down 30,000 in just a few years. But with IBM no longer giving out headcount by country we will not know when IBM USA goes below IBM India in headcount. Is this important?

• To Alliance@IBM supporters: The Alliance is the only organization that advocates and supports IBM employees and ex-employees. In fact, there are few like it in the Information Technology field. It is always difficult to keep an organization like this alive, but as a supporter you know how important it is that we exist. We are calling on you today to help keep us alive another year by joining as a member or associate member. See our online forms below. As our membership has dropped, it is imperative that we gain new members or this organization and web site will cease to exist. Help us keep our organizing and advocacy work alive!
• General Visitor Comments: Due to a lack of membership growth the comment sections will be closed until we see sufficient growth in full membership, associate membership or donations. Many of you that visit our site have not yet joined, but seem to value its existence. The only comment section that will remain open will be Job Cuts Reports. If you have information that you want the Alliance to know about please send to ibmunionalliance@gmail.com. Information of importance will be put on the front page of this web site. To join go here: Join The Alliance! or here: Join The Alliance!
• Tell-A-Friend! Take action! IBM must employ US workers on ALL Government contracts! Pass your message on to your friends and colleagues, and invite them to sign up for Alliance@IBM.
• Job Cut Reports
  • Comment 4/18/10: To -Hegedus: I also saw a presentation file several years ago that showed a target of only 20% of the IBM workforce to be located in the USA. That was broken out into 10-15% as landed resources (foreigners brought in on visas) and therefore 5-10% as Americans (assumed to be both USA citizens and legal workers). -anonymous-
  • Comment 4/18/10: Given what I just posted, that the USA workforce is targeted to be 20% of the IBM workforce (therefore 80,000), I would not be surprised to see the USA workforce actually reduced to even 50,000 in the next few years. This year seems on target to go below 100,000 as the reliance on foreign workers continues to escalate. And consider how many of that 100,000 here are imported foreign workers. -anonymous-
  • Comment 4/18/10: As a current customer of IBM, it is easy for us to see what is going on. The IT employees who transferred to IBM are being fired (RA’d). At first, their positions were not being backfilled. Now our former employees are systematically being replaced with recent graduates of foreign universities (the contract specifies that services must be provided in-state). There is no doubt that we would have much better service if our contract was being serviced by experienced and fairly treated IBM employees. But there isn’t much that we can do about the situation because we have something that the IBM employees do not have - A CONTRACT. -Former IBM'er-
  • Comment 4/19/10: I made it through the last RA. I am an Alliance member. Soon after the last RA, I started receiving available job listings. I asked other coworkers if they were receiving them as well. The answer was NO. I am wondering if anybody else is receiving these emails and if it is an indication that I am on the next RA list. Just curious. -Uncommon Cents-
  • Comment 4/20/10: To Uncommon Cents - now that you mention it, I DID start getting emails about open job openings, they were coming from contracting firms I thought, and I just ignored them. They started coming a few months before I was RA'd. I hope for your sake the whole thing is a coincidence.... it is NOT fun to be in this position (I was RAd Mar 31 2010). btw... thanks to RAd last Jan and "anon" for your replies to my FL unemployment questions... appreciate the advice. -screwed2-
  • Comment 4/20/10: To -Former IBM'er-: There is something you can do. I worked for big blow and was ra'd. Now I am in charge of an IT department. When it came time to refresh the servers and other equipment, I kicked IBM out the door. We were paying them thousands a year in maintenance contracts and would have spend 100k on new IBM equipment but I went with other brands and kicked them to the curb. -anon-
  • Comment 4/21/10: "IBM incurred $560 million in expenses during the quarter for"workforce rebalancing," a phrase it uses to refer to job cuts. That was up significantly from $265 million in the same period last year. The most recent cuts will yield "substantial" savings for IBM in later quarters, Loughridge said. "The company's performance in Q1 can be attributed partly to improved efficiency" . Efficiency? How can IBM be efficient if they continually have to do their rebalancing act. That would show they are not efficient. The global economy is in a world recession still. No wonder the IBM stock price didn't bounce up on this supposedly dazzling 1Q10 report. Is IBM also cooking the books ala Enron? -anonymous-
  • Comment 4/21/10: To various posters: From the Business Week article on home page link ... "IBM on Monday reported first-quarter earnings of US$1.97 per share on $22.9 billion in revenue, a rise of 16 percent and 5 percent, respectively, over the same period last year. Net income was $2.6 billion, a jump of 13 percent." The key here is revenue (sales) only grew 5%. The increase in net income of 13% was largely due to reduced expenses. The accounting equation for an income statement is Revenue - Expenses = Net Income (or profit). There's a big difference in net profit due to increased revenue vs cuts in expenses. That's why Wall Street reacted the way it did and stock fell. -annonymous-
  • Comment 4/21/10: Just want to say Thank YOU SAM! I was RA'd in March and within 3 weeks I got a great job with a competitor for much more $$$ and all thanks to the training I received and the education that was paid for by my uncle SAM. Regardless of what "big" corp you work for - manage your career - if there are any training/educational programs you can avail of - then do so - even if you must pay for them yourself. FYI - I found "Big Blow" carries alot of clout - pay it up in interviews - Other big corps are impressed. P.S. - dont bother being bitter - IBM has moved on and so must we - to bigger and better. -Anonymous-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform

• New York Times: Will Write-Offs for Retiree Health Care Kill Jobs? By Uwe E. Reinhardt. Excerpts: In my most recent post, I wrote about the corporate write-offs prompted by the health care bill in connection with prescription drugs for retired workers. I argued that these write-offs do not constitute an overall destruction of wealth, as has been claimed, but merely a redistribution of wealth. The shareholders of the affected corporations may be a bit less wealthy while others in society gain wealth. ...

  Employers will have to make these added tax payments, because they will no longer be able to deduct from their taxable income that part of their outlays on prescription drugs for retirees that will actually be paid for by government in the form of a 28 percent federal subsidy. It does seem odd to have allowed corporations to treat as a tax-deductible expense an expense they did not actually have, as the Medicare Modernization Act of 2003 allowed them to do. The recent health care bill has removed that oddity. ...

  In his remark, Mr. Fronstin states in prose an economic theory that economics professors explain to their students by means of simple algebra. Namely, employers provide their employees health benefits not out of the kindness of their hearts, but as a coolly calculated substitute for paying workers more cash take-home pay to attract and retain them. After all, in an effort to attract and retain workers, an alternative to offering them health benefits would be simply to offer them more cash. ...

  Promises to active workers to cover the cost of some of their health care after retirement are part of the “health benefits” that substitute for cash take-home pay in setting their total compensation — what economists call the market price of labor. By contrast, an employer’s outlays on healthy care of former workers who have already retired do not enter the total compensation packages with which employers seek to attract or retain workers.

  Editor's note: In IBM's case, the company promised lifetime retiree medical while reducing employee pay, then later reneged on that promise as a way of boosting current earnings, and thereby increasing executive bonuses. ...

  Of course, that total compensation of the prospective or currently active employee may or may not include a promise to provide that new worker, too, with health benefits after that worker has retired. Corporations are free at any time to offer or to stop offering such retiree health benefits to new workers. (Editor's note: Or, in IBM's case, to drastically reduce or eliminate promised retiree health benefits to existing workers.)

News and Opinion Concerning the U.S. Financial Crisis

"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: Looters in Loafers. By Paul Krugman. Excerpts: Most discussion of the role of fraud in the crisis has focused on two forms of deception: predatory lending and misrepresentation of risks. Clearly, some borrowers were lured into taking out complex, expensive loans they didn’t understand — a process facilitated by Bush-era federal regulators, who both failed to curb abusive lending and prevented states from taking action on their own. And for the most part, subprime lenders didn’t hold on to the loans they made. Instead, they sold off the loans to investors, in some cases surely knowing that the potential for future losses was greater than the people buying those loans (or securities backed by the loans) realized.

  What we’re now seeing are accusations of a third form of fraud. We’ve known for some time that Goldman Sachs and other firms marketed mortgage-backed securities even as they sought to make profits by betting that such securities would plunge in value. This practice, however, while arguably reprehensible, wasn’t illegal. But now the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That’s what I would call looting.

  The main moral you should draw from the charges against Goldman, though, doesn’t involve the fine print of reform; it involves the urgent need to change Wall Street. Listening to financial-industry lobbyists and the Republican politicians who have been huddling with them, you’d think that everything will be fine as long as the federal government promises not to do any more bailouts. But that’s totally wrong — and not just because no such promise would be credible. For the fact is that much of the financial industry has become a racket — a game in which a handful of people are lavishly paid to mislead and exploit consumers and investors. And if we don’t lower the boom on these practices, the racket will just go on.

• Washington Post: The Tea Party: Populism of the privileged. By E.J. Dionne Jr. Excerpts: The Tea Party is nothing new. It represents a relatively small minority of Americans on the right end of politics, and it will not determine the outcome of the 2010 elections. In fact, both major parties stand to lose if they accept the laughable notion that this media-created protest movement is the voice of true populism. Democrats will spend their time chasing votes they will never win. Republicans will turn their party into an angry and narrow redoubt with no hope of building a durable majority.

  The news media's incessant focus on the Tea Party is creating a badly distorted picture of what most Americans think and is warping our policy debates. The New York Times and CBS News thus performed a public service last week with a careful study of just who is in the Tea Party movement. Their findings suggest that the Tea Party is essentially the reappearance of an old anti-government far right that has always been with us and accounts for about one-fifth of the country. The Times reported that Tea Party supporters "tend to be Republican, white, male, married and older than 45." They are also more affluent and better educated than Americans as a whole. This is the populism of the privileged. ...

  Asked about raising taxes on households making more than $250,000 a year to provide health care for the uninsured, 54 percent of Americans favored doing so vs. only 17 percent of Tea Party backers. This must be the first "populist" movement driven by a television network: Sixty-three percent of the Tea Party folks say they most watch Fox News "for information about politics and current events," compared with 23 percent of the country as a whole. The right-wing fifth of America deserves news coverage like everyone else, and Fox is perfectly free to pander to its viewers. What makes no sense is allowing a sliver of opinion to dominate the media and distort our political discourse.

• New York Times op-ed: Gambling With the Economy. By Roger Lowenstein. Excerpts: While the Securities and Exchange Commission’s allegations that Goldman Sachs defrauded clients is certainly big news, the case also raises a far broader issue that goes to the heart of how Wall Street has strayed from its intended mission. Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody. In essence, they were simply a side bet — like those in a casino — that allowed speculators to increase society’s mortgage wager without financing a single house. ...

  The mortgage investment that is the focus of the S.E.C.’s civil lawsuit against Goldman, Abacus 2007-AC1, didn’t contain any actual mortgage bonds. Rather, it was made up of credit default swaps that “referenced” such bonds. Thus the investors weren’t truly “investing” — they were gambling on the success or failure of the bonds that actually did own mortgages. Some parties bet that the mortgage bonds would pay off; others (notably the hedge fund manager John Paulson) bet that they would fail. But no actual bonds — and no actual mortgages — were created or owned by the parties involved. ...

  As it considers its financial reform options, Congress’s first priority should be to end the culture that “financializes” every economic outcome, that turns every mortgage or bond issue into a lottery — often with second- and third-order securities that amount to wagers on wagers of numbing complexity. ...

  The government would not look fondly on Caesar’s Palace if it opened a table for wagering on corporate failure. It should not give greater encouragement for Goldman Sachs to do so.

• Wall Street Journal: A Backlash in Europe Has Politicians Calling for a Goldman Ban. By Marcus Walker in Berlin and David Enrich in London. Excerpt: Goldman Sachs Group Inc. is in danger of losing business with a key group of clients as a result of the fraud allegations it faces: governments in Europe and the U.S. Politicians in the U.K. and Germany are starting to call on their governments to cut ties with Goldman, which has long been one of the top financial advisers to European policy makers. U.K. Liberal Democrat leader Nick Clegg, riding high in opinion polls less than three weeks before national elections, said on Tuesday that Goldman "should now be suspended in its role as one of the advisers to the government until these allegations are properly looked into." His comments follow Prime Minister Gordon Brown's recent characterization of Goldman's alleged behavior as "morally bankrupt."
• New York Times opinion: Dance of the Derivatives. By Gail Collins. Excerpt: Americans are certainly in the market for some leadership on the subject of derivatives. It’s hard to even figure out how to worry about them, since we have no clue exactly what they are, beyond bets on whether prices will go up or down. Try to think of derivatives as being like the Tribbles in that classic “Star Trek” episode. For all of history, there was no such thing. Then somebody found the first ones, which looked cute and made soothing noises. We liked them fine, until the population grew to be worth about $600 trillion. When they got into the financial engine, all hell broke loose. And there is absolutely no political percentage in allowing them free run of the ship.
• Jim Hightower: Killing the Competition. Full excerpt: If you ever wonder what happened to America's good ol' free enterprise, can-do, competitive spirit – look to the airlines. They have become no-can-do, anti-competition behemoths, whining that to "improve competitiveness," they must be given antitrust exemptions, allowing them to merge into even fewer and bigger corporations so they can... well, reduce competition! Yes, in their alternate (and perverse) universe, airline CEOs claim that to increase competition, they must have less of it.

  As a top honcho of American Airlines recently explained: "We have an industry that is too fragmented, with too many competitors, and with different ideas of capacity, pricing, and strategic activity," Golly, "many competitors... with different ideas of capacity, pricing, and strategic activity" is precisely what Adam Smith hailed as the perfect model of free enterprise.

  Meanwhile, here comes Glenn Tilton, top dog at United Airlines, who has long been a podium pounding evangelist for the gospel of merging airlines to restore consistent profits. Well, yeah, Glenn, glom every airline into one or two, and you can extort all sorts of profits from your customers. It's called monopolization, and any goober can make profits from that rigged deal.

  Of course, Glenn's business model is the oil industry, where he helped merge Texaco into Chevron. That one hardly benefited consumers or our country. At United, Tilton has shown that his only business skill is abusing others – he's knocked down his own employees, slashed service, and socked his customers with ridiculous fees. Now he wants to take over US Airways and bring his executive magic to that company.

  Who needs theses self-serving slugs? Thank goodness they're not trying to run a hot dog stand in New York City – the competition would kill them!

• New York Times op-ed: Don’t Cry for Wall Street. By Paul Krugman. On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.” Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.

  More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America. ...

  Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier. These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.

  So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was. And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes” for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis. ...

  But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?

• Wall Street Journal: Goldman's Tourre Foresaw Subprime Chaos, Emails Show. By Susanne Craig and John D. McKinnon. Excerpts: Newly released emails show that Goldman Sachs Group Inc. trader Fabrice Tourre foresaw the meltdown of the subprime-mortgage market and compared the product he helped create to a "Frankenstein turning against his own inventor." The new documents about Goldman Sachs also included some emails released by Senate investigators in which top Goldman executives cheered the gains they were reaping as subprime-mortgage securities collapsed in value in 2007. ...

  The emails also show other Goldman officials cheering the news that some mortgage-related securities were being downgraded by credit-rating firms in late 2007. Top trader Michael Swenson said that as a result of the downgrades, certain payments Goldman owed to investors would "go to zero." "Sounds like we will make some serious money," responded another executive, Donald Mullen.