Article 43


Sunday, May 31, 2009

Innovation and Ignorance

Who are the Richistanians?  They are CEOs who have moved their companies abroad and converted the wages they formerly paid Americans into $100 million compensation packages for themselves.  They are investment bankers and hedge fund managers, who created the subprime mortgage derivatives that CURRENTLY THREATEN TO COLLAPSE THE ECONOMY.  One of them was paid $1.7 billion last year.  The $575 million that each of 25 other top earners were paid is paltry by comparison, but unimaginable wealth to everyone else.
- Paul Craig Roberts, Return Of The Robber Barrons, August 7, 2007

CIOs and other business leaders can’t afford to let recent broad but clearly protectionist comments from President Obama intimidate them from pursuing the BUSINESS PRACTICES that will LET THEM CREATE the MOST COMPETITIVE PRODUCTS and services possible by fully LEVERAGING GLOBAL SOURCES of talent and innovation as well as global sources of raw materials and FINISHED GOODS. Because it’s those companies that will succeed, which means they’ll grow, which means they’ll need to hire new engineers and designers and marketers and developers and salespeople and production workers and accountants and drivers and managers.
- Bob Evans

VoIP is one of the best innovations of modern telephony for our generation, along with the internet that revolutionized global communication and freedom of speech.

Nobody doubts that.

I think Author Evans in the second article is mixing apples with oranges in his support of outsourcing, while people like Senator BYRON DORGAN, and CNN anchor LOU DOBBS are a little closer to the TRUTH.

Is Evan’s a NEOCON?



The Value Of VoIP
Quicker, Better, Wiser

B Gene Marks
May 29, 2009

Nikhila Rao’s company needed a better phone system. This was last fall, when the recession was already in full swing. But Rao knew she had to act sooner rather than later. “Customer responsiveness is the key to our success,” says. “Even though we’re small, we have to show that we’re agile.”

Rao’s five-person outfit, Cincinnati-based Graphet Inc, earns its consulting fees by using fancy software and statistical modeling to help large companies--from food and beverage makers to paper and plastics producers--manage their energy usage. Such data can save these firms perhaps hundreds of thousands of dollars a year, in part by participating in state and federal programs that Graphet helps facilitate.

The trick: getting the giants to notice her in the first place. “Selling to the big guys when you’re small can be a struggle,” says Nikhila. “Getting in the door takes the right infrastructure. A good phone system is [the difference between] life and death to us.”

Six months ago, Graphet was still using a Ma Bell system stuck in the 1970s. Remote employees couldn’t connect; traveling employees couldn’t be reached and customers got busy signals (remember those?). When people did get through, many couldn’t get routed to the right person to help them. Meanwhile, Graphet continued to grow. “Fortunately for us, saving energy is the talk of the town,” says Rao. But she knew she would lose her competitive edge if she didn’t upgrade her system, downturn be damned.

Through a third-party vendor, Rao purchased a “Voice over IP” phone system, including software from CISCO (which routes the calls and plays nicely with her existing Windows operating system), as well as phone units for each user. With VoIP (the “IP” stands for Internet Protocol), calls travel over data networks like the Internet, rather than via traditional phone lines that are expensive to maintain. Total cost of the installation: $12,000, financed over three years--not a trivial investment for a small company in a recession, but one that continues to prove its worth.

Start with Graphet’s two employees who work from home. They have handsets that plug right into their home computers, connecting them to the company phone system through their own broadband connections. Now calls to the main number are sluiced to their home phones; if not answered, they bounce back to a live person or voicemail, without callers knowing. Better yet, customers who once got busy signals when they tried calling employees at home now get routed to another person, to voicemail or even to a cellphone.

“Whenever a customer calls, they’re sure to get hold of a live person--or at least leave a message for the right person,” says Rao. “We were never able to do that before.”

Graphet’s new phone system also came with “softphone” software that hooked any laptops to the phone system as well, via a wireless Internet connection. To listen and talk, all remote employees need is a cheap headset.

It gets cooler still. The voicemail system navigates callers through a simple automated directory. Any messages get converted into sound files that can be e-mailed, forwarded or saved.

How dependable is VoIP versus traditional phone lines? Rao says she hasn’t noticed any difference in the number of dropped calls or overall service. If the system acts up, Graphet can call a 24-7 hotline, administered by Cisco, to work through any glitches.

Rao estimates that switching to a VoIP system has cut her telecommunications bill by roughly a quarter. But shaving costs isn’t the biggest benefit. “When we’re dealing with big customers, we have to appear to be bigger,” she says. “We need to look professional. We need to be accessible. We wouldn’t be able to survive if we didn’t make this investment.”

Gene Marks is owner of Marks Group, a technology consulting firm, and author of The Streetwise Small Business Book of Lists.




Global CIO: The Ugly And Dangerous Prejudice Against Outsourcing

If American businesses yield to the anti-outsourcing caterwaulers, then don’t be surprised to see them go after other equally legitimate business tools next.

By Bob Evans
March 25, 2009

So EXPLAIN this one to me: When great IT companies develop new products and services that offer significant value to CIOs, we call it innovation. But when CIOs employ outsourcing to remain competitive and create new customer value, the outrage industry calls it anti-American and screeches about the loss of OUR JOBS.

This ugly and ill-informed nonsense has been going on for the past 10 years, which is about 10 years too many. Because if American businesses begin to yield even a single inch to the anti-outsourcing caterwaulers, then don’t be surprised to see them go after these equally legitimate business tools next:

Cisco says its new Unified Computing System could help CIOs cut IT operating costs in the data center and elsewhere by up to 35%, and surely some of that savings would come from reduced head count owing to more automation and more built-in intelligence. But wait—what about the loss of “our jobs” from such an approach—doesn’t that make the use of such advanced technology unpatriotic?

What about some of the lower-cost alternatives being offered by Salesforce dot com and other successful SaaS vendors? If the cloud offers a simpler way to run applications, then that means fewer support jobs will be required—so are cloud and SaaS companies therefore responsible for decimating tens of thousands of “our” IT jobs?

Last week, Hewlett-Packard signed a $50 million deal with Korea’s Shinhan Bank. To get the work done, should HP shuttle U.S.-based workers back and forth from Korea since HP is, after all, based in the United States and should therefore deploy only “our jobs” on the Shinhan Bank project? And that comes on top of HP senior VP Marius Haas recently citing his company’s far-flung development operations in India, Costa Rica, and Europe: “It’s a COMPETITIVE ECONOMY and you go where the TALENT is.”

Oracle says that because of the challenging global economy, it’s adjusting its hiring practices in the consulting sector by “load-balancing with contractors and integrators” rather than hiring more full-time professional-services employees. Hey, wait a minute—what about “our jobs”? According to the protectionist lobby, shouldn’t Oracle be forced to hire more full-timers and tell all of those contractors and integrators to get busy laying off the workers whom Oracle had been planning to retain to handle the consulting work?

On top of those examples, how about all the other highly intelligent IT products this industry has created in the past 10 years, all of which without question have led to the reduction or even elimination of various types of jobs: virtualization, systems management, network monitoring, rapid-development tools, Web-native software, and many more? Will they be taxed and regulated, or just pilloried as destroyers of “our jobs”?

CIOs today are being asked to squeeze costs aggressively while also keeping alive innovative projects that will lead to competitive advantage when the global economy improves. Neither those CIOs nor their companies can afford to ignore the very tangible benefits of tapping into the best sources of talent and skills and value the global market has to offer out of fear that some protesters or politicians will carp about it publicly.

And they should stick to their guns for two reasons: first, because doing so makes great business sense; and second, because of the hypocrisy shown by so many of the political class who live by the rule of do as I say, not as I do. Based on precedents, one of the likely carpers will be Sen. John Kerry, who for many years rode stylish motorcycles made in foreign countries: Ducatis from Italy and BMWs from Germany. Most people would say that if those are the bikes he wants to road, go right ahead. But personal preferences aside, Euro-biker Kerry will look to score political points as one of the tub-thumpers who tries to intimidate American corporations into cutting back on outsourcing even though it’s in the best interests of those companies and their shareholders and their customers and, yes, their employees to engage in outsourcing.


Just this week, U.S. Rep. Robert Brady of Pennsylvania described as “outrageous” the plans of JPMorgan Chase to accelerate the integration of Washington Mutual and BEAR STEARNS by stepping up its business with Indian outsourcing firms.

“We would like to remind you that the taxpayers of the United States of America contributed $25 billion to your company to help stabilize our economy, not send jobs overseas,” Brady recently wrote to JPMorgan CEO Jamie Dimon, as reported by my colleague Paul McDougall.

In the same vein, those CIOs and other business leaders can’t afford to let recent broad but clearly protectionist comments from President Obama intimidate them from pursuing the BUSINESS PRACTICES that will LET THEM CREATE the MOST COMPETITIVE PRODUCTS and services possible by fully LEVERAGING GLOBAL SOURCES of talent and innovation as well as global sources of raw materials and FINISHED GOODS. Because it’s those companies that will succeed, which means they’ll grow, which means they’ll need to hire new engineers and designers and marketers and developers and salespeople and production workers and accountants and drivers and managers.

Like every other person with a pulse, my heart goes out to those Americans—as well as workers in other countries—who through no fault of their own have lost their jobs in this global economic slowdown. And without question, some of those job losses have come as a result of CORPORATE DECISIONS TO SHIFT THOSE JOBS from the United States to other countries. But this current round of jobs being moved around the globe is not an isolated occurrence, it’s not something specific to our troubled times right now in 2009, and it’s not the CAUSE OF the rising unemployment in this country.

If U.S. firms are to remain competitive in the global economy, they need to be free to conceive, create, sell, and ship products in whatever combinations of locations and processes that yield the greatest chances for success. If that means making cars in the United States as Honda and Mercedes and Toyota do, then that’s terrific. If it means the iPod is “proudly designed in California” but is built in the Far East from components supplied from multiple countries, then that’s terrific as well. And if it means U.S.-based companies employ outsourcers to help them create great products and services that are sold around the world—thereby creating more jobs for that company in this country—then that’s equally terrific as well.

In addition to the comments above from HP’s Marius Haas, consider these remarks from execs at IBM and Sun Microsystems on the same subject of the futility of protectionist policies in a massively interdependent global economy, as noted in a Global CIO blog last week:

IBM’s Edward Orange, emphasizing that IBM manufactures products and delivers services in 170 countries, echoed Haas’ point: “IBM goes wherever the talent and the market is.” Orange is the Asia-Pacific director for IBM’s Lotus unit, the article said.

Sun’s Joe Hartley was even more blunt: “The policy may shrink global trade in the long run. Not every job can be outsourced. But a job has to be done at the right place and at the right time,” according to the Economic Times, which also offered these statistics: Indian subsidiaries of U.S. companies such as IBM, Sun, Microsoft, Oracle, and HP together employ over 150,000 people. IBM, which has more than 70,000 employees in India, sees no merit in U.S. government’s protectionist policies.

These are indeed hard times, but the approach that will GET US OUT OF THIS mess is the spirit of American innovation and determination, which over the past 200 years has created the highest standard of living the world has ever known with dazzling breakthroughs in medicine, manufacturing, higher education, entertainment, space exploration, PHARMACEUTICALS, and much more. Going into the 21st century, we have the opportunity to leverage that priceless spirit of American innovation and determination with not only the remarkable IMMIGRANT entrepreneurs who’ve CONTRIBUTED SO MUCH to this country but also with GLOBAL PARTNERS in countries across the globe who currently serve as our partners in every industry. To attempt to cut off those enormously valuable partnerships and collaborations, and to attempt to turn the clock back 50 years and magically define what “our jobs” are, will only ensure that today’s hard times stay with us for many years to come.


Posted by Elvis on 05/31/09 •
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Wednesday, May 27, 2009

H-1B workers Outnumber Unemployed Techies

By Patrick Thibodeau
May 27, 2009

As UNEMPLOYEMENT AMONG TECH WORKERS increases with the recession, the U.S. government is raising broad questions as part of a federal case over H-1Bs about the CONNECTION of visa fraud to the unemployment of IT workers.

The government’s interest in H-1B fraud-related unemployment turned up in court filings in a case in U.S. District Court in Iowa against a New Jersey IT firm, Visions Systems Group in South Plainfield, NJ, which was indicted in February on visa-related fraud charges.

[ InfoWorld’s Bill Snyder ARGUES the H-1B visa has got to go, but doesn’t support the proposal by Sen. Charles Grassley to lay off foreigners first . Meanwhile, the Senate approved strict rules on the hiring of H-1B workers . | Get sage advice on IT careers and management from Bob Lewis in InfoWorld’s Advice Line blog and newslette. ]

Visions Systems was included in a sweep that led to arrests of some 11 people in six states [6]. The government, in announcing its action, said the companies and people involved were “displacing qualified American workers,” but didn’t identify how many. In court papers filed last month, the U.S. indicated it may be getting ready to do just that.

The U.S. said it is “prepared to demonstrate to the court the manner in which the defendant’s schemes, along with similar schemes by similar companies have substantially deprived U.S. citizens of employment.” The government then points out that ”in January of 2009, the total number of workers employed in the information technology occupation under the H-1B program substantially exceeded the 241,000 unemployed U.S. citizen workers within the same occupation.”

The U.S. government’s brief doesn’t explain to what extent fraud is responsible for tech worker unemployment, or cite sources for its data. Estimates of the size of the tech labor force depend on what government labor categories are included.

One analysis by the TechServe Alliance (formerly the National Association of Computer Consultants), found that tech employment was down nearly 200,000 [7] from December, after reaching a high 4.1 million in November.

The exact size of the H-1B labor force in the U.S. is uncertain because of a lack of accurate data. The U.S. sets a cap of 85,000 H-1B visas annually.

In the case of Vision Systems, the U.S. said the company “consistently HIRED ONLY FOREIGN WORKERS in order to fill information technology positions within the United States.” The government said “although the exact amount of loss to U.S. citizen workers has not yet been determined, there is no question that the amount of lost wages and benefits to U.S. citizens has been substantial.”

Vision Systems attorneys, in court papers, dispute these allegations, and said “there is no exclusivity to a job’s seeker’s chance to apply for a job,” and that anyone could apply. Vision Systems is fighting the charges and has filed for dismissal.

Regarding the broader issues raised by the government, Vision Systems attorneys suggested that the U.S. is politicizing the case, and that the government is arguing “that there is something illegitimate about the entire H-1B visa program, not just specific applications of it.”

There are interesting arguments being raised in the courts by the U.S. over the H-1B visa. The U.S. Department of Homeland Security, in its case fighting the Programmers Guild [8] and others from overturning the extension allowing foreign nationals with technical degrees to work on student visas from one year to 29 months, argued that the H-1B visa is needed to avoid a competitive disadvantage.


Posted by Elvis on 05/27/09 •
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Tuesday, May 26, 2009

Alcatel-Lucent Revival


All roads will eventually lead to super-fast LTE, says telco boss
The super-fast mobile broadband technology LTE is the way of the future, says technology giant Alcatel-Lucent.

By Helen Twose
New Zealand Herald
May 26, 2009

In Auckland for the launch of Telecom’s new mobile network, Philippe Keryer, president of the French-based group, said LTE, rather than WiMAX, would be the technology of choice for mobile operators upgrading from 3G technology.

"LTE is a unique opportunity for Alcatel-Lucent because it is the first time you have one single technology which is positioned as an evolution of both the CDMA world and the GSM UMTS world,” Keryer said.

He said the company could leverage its number one position in CDMA - Alcatel-Lucent built Telecom’s existing mobile CDMA network and its new W-CDMA XT Network - and the fact that it had continued to invest “massively” in W-CDMA.

Keryer said recognition of its expertise was the announcement this year that Alcatel-Lucent, in partnership with Ericsson, would build an LTE network for Verizon Wireless in the United States.

VERIZON WIRELESS - part-owned by Vodafone Group - plans to commercially launch the LTE network in 2010. Verizon said field trials had delivered peak download speeds of 50 megabits per second - roughly 25 times faster than the mobile networks now deliver in New Zealand.

Keryer said the backing of a big operator such as Verizon to deploy such new technology was a very strong statement about Alcatel-Lucent’s position in the market.

Asked how Telecom might choose to deploy LTE in the future, given its position of having networks based on both CDMA and W-CDMA technology, Keryer said how and when Telecom might make the leap to LTE was “definitely their choice”.

But the availability of the high-speed mobile technology was helping Telecom think about the smooth and natural evolution of its networks to LTE in the future.

Keryer said that despite WiMAX promising similar capabilities to LTE “it’s absolutely obvious that LTE is the technology of choice for all mobile operators for their evolution towards broadband”.

He said the speed at which mobile operators moved to LTE depended on how long they would rely on their current 3G networks.

“But the long-term view is that all the roads are leading to LTE when it comes to mobile operators,” Keryer said.

This view was taken into account when Alcatel-Lucent made its STRATEGIC OUTLOOK announcements late last year.

The company said it would reduce its spending on WiMAX technology in favour of LTE.

Keryer said WiMAX was more likely to be deployed as a “last mile” connection in a traditional fixed-line network than as the technology of the future for mobile operators.

He said the telecommunications environment had not been left unscathed by the economic downturn.

Alcatel-Lucent’s FIRST QUARTER RESULTS, announced this month, showed year-on-year revenues had fallen 6.9 per cent.

The company said it expected the market to continue to shrink between 8 and 12 per cent in 2009.

Keryer later flew to China, where Alcatel-Lucent was one of the first Western companies to enter that market with a Government joint-venture.


LTE - Long Term Evolution: The next wave of mobile technology promising super-fast wireless broadband speeds.
Commercially available in the United States in 2010.

Both GSM-based networks in New Zealand (Vodafone, Telecom XT Network and 2degrees) and CDMA networks (Telecom’s current mobile network) could be upgraded to LTE.

No indications have been given when LTE might come to New Zealand.

Alcatel-Lucent: French-based technology giant formed out of the merger of Alcatel and Lucent in 2006.

More than 77,000 staff and 16.98 billion in revenue.

Major clients in the region include Telstra and Telecom.




Alcatel-Lucent, Placecast marry location with mobile ads
Alcatel-Lucent and1020 Placecast team up to offer carriers location-relevant brand messaging, advertisements

By Sarah Reedy
Telephony Online
May 21, 2009

Alcatel-Lucentis trying its hand at mobile advertising with the help of location-based advertising provider 1020 Placecast. The companies today announced plans to jointly provide mobile operators and brands with location-targeted ads based on Alcatel’s geofencing technology and Placecast’s location-targeting capabilities.

ALCATEL-LUCENT ALREADY PROVIES AD-INSERTION for IPTV but is hoping to capitalize on the burgeoning market for relevant mobile ads and the equally hot market for location-based services (LBS). The platform lets consumers opt in and provide operators with a list of the stores and brands from which they would like to receive content and information. They can also set the parameters of the service how often they receive ads from each individual brand, at what times or in what form - SMS or MMS. The ads they receive can come in the form of the classic Starbucks coupon example or a notice when their favorite line at a nearby Target is on sale.

“When you add in a click-to-call or click-to-map, the relevancy of that message greatly increases the effectiveness of the marketing over showing a user a standard ad,” said Alistair Goodman, chief executive officer of 1020 Placecast. “Part of what is unique about the combination of our technologies is the ability to create that offering and do it at scale.”

Placecast works with the advertisers to create scalable, location-based messaging campaigns for mobile, and Alcatel-Lucent manages and delivers the content on the carriers behalf. Alcatel-Lucent’s geo-fencing technology lets the advertiser create certain regions for targeting as broad or specific as they want. When the consumer enters that geofence, Placecast delivers a proximity-based ad or marketing campaign. Alcatel-Lucent won֒t reveal exact locations, just the fact that the consumer entered a designated geographical area. Mark Disbrow, head of Alcatel-Lucent’s LBS business, said they adhere to the privacy requirements of any carrier they work with.

Alcatel Lucent, along with Telcordia, is a member of the TM Forums Counter Encounter, an initiative for service providers and suppliers to determine how to best manage content and generate revenue from mobile services. Advertisements are one aspect of what it will take for carriers to successfully enter the content business, according to Grant Lenahan, Telcordia’s vice president and strategist of service solutions. He stressed that mobile ads have to give consumers something in return, and location by itself isn’t necessarily the most targeted way to reach someone on mobile.

“When you use location with OTHER INFORMATION, you can make a much better DETERMINATION OF WHAT SOMEONE’S INTERESTED IN,” Lenahan said. They may have just called three tire stores and drive by a Starbuck’s en route to the tire store, and you’re going to send them a coffee ad? Lets rethink that one. People keep focusing on LBS, because they’ve heard it before and its simple. It’s one piece of context. It is important, but Im frustrated that people think itҒs the only one. There is so much more richness in the network.

Disbrow said that by letting consumers pick the brands they are interested in and the kinds of content they want to receive and when, Alcatel-Lucent and Placecast’s platform enables a higher level of targeting without having to mine any consumer data. Since the market for both mobile ads and LBS is still relatively new and hindered by PRIVACY AND SECURITY CONCERNS, the companies are providing an entry point for carriers and brands that may otherwise not consider mobile.

Interest is growing, however, according to an ABI Research report released yesterday. The firm found that spending on mobile marketing and advertising in 2009 has been flat compared to 2008 if not slightly growing. Considering that ad spending has decreased in most other forms of media, its encouraging news for the industry. That being said, ABI found that if an advertiser or brand had mobile in their experimental budget, it most likely got cut due to the economy. If it was already an established part of the marketing mix, spending was maintained or upped.

Placecast already doing a number of mobile ad campaigns, according to Goodman, and has found that most brands are either eager to test mobile advertising or they are already beginning to incorporate it to their overall media budget. In Placecast’s experience, the economy is actually driving them to be more open to test mobile and learn from it. The companies have not announced any operator or brand partners, but Placecasts existing customer base includes FedEx, BMW and Nike.

“Weve reached a point in time where there as many owners of mobile phone over the age of 35 as under the age of 35,” Goodman added. Marketers are aware that media consumption patterns are shifting, consumers are spending a lot of time getting information on their devices and they are working hard to integrate that into their marketing plans.



Three US Operators to Launch LTE in 2010

Pulkit Chandna
Maximum PC
June 19, 2009

Netizens around the globe are eagerly awaiting a wireless broadband solution at par with cable or DSL in terms of speed. Long Term Evolution (LTE) is a 4G wireless broadband technology that can establish parity between wireless broadband and wired/fixed internet services. The list of wireless operators keen on rolling out LTE services at the earliest is swelling.

According to ABI Research, a dozen operators across the globe have positioned themselves to launch LTE services in 2010. Verizon Wireless, US Cellular and MetroPCS Wireless are the three US-based operators that figure on the list.

Infrastructure equipment vendors like Huawei, NEC, Fujitsu, Alcatel-Lucent, Ericsson, and Starent are experiencing a windfall as operators prepare themselves to launch LTE services. However, regulatory impediments in some parts of the world mean that a large chunk of people will be deprived of this almost divine wireless bliss until regulators put the necessary spectrum on the block.



A dozen operators to launch LTE services in 2010, says ABI Research

By Meiling Chen
June 17, 2009

The tally of wireless operators committed to deploy LTE networks and offer LTE-based services to their subscribers in 2010 has climbed to at least 12, according to ABI Research. By the following year nearly 34 million users worldwide are forecast to subscribe to the new ultra-fast data services, which promise speeds rivaling those available via cable or DSL.

“Spectrum availability is the primary factor impacting deployment plans,” commented ABI senior analyst Nadine Manjaro. “In countries where telecommunications regulators are making appropriate spectrum available, many operators have announced plans to launch LTE. These include the US, Sweden, China, and others. Where no such spectrum allocations exist, operators are postponing LTE plans.”

The first operators intending to deploy LTE include US-based Verizon Wireless, MetroPCS Wireless, and US Cellular; NTT DoCoMo and KDDI in Japan; TeliaSonera, Tele2 and Telenor in Europe; and China-based China Mobile, which intends to launch in 2011. KT and SK Telecom are expected to launch in Korea 2010, but there has been little fanfare so far.

These commitments are good news for infrastructure equipment vendors. A few operators have already announced the contracts they have awarded. Alcatel-Lucent, Ericsson, and Starent are the winners of a major set of contracts from Verizon Wireless. In Japan, NTT DoCoMo, in addition to tapping Ericsson, is also supporting local vendors NEC and Fujitsu, ABI noted.

TeliaSonera has chosen Ericsson and Huawei Technologies, while its fellow Scandinavian operators Tele2 and Telenor are also thought likely to settle on Huawei, which is proving a formidable competitor, according to ABI.

“The operators are looking for strong partners,” said Manjaro. “Operators want to know their vendors will stay in business, that they will have equipment ready early, and that they are financially strong enough to collaborate in developing new services and solutions, “ added Manjaro.


Posted by Elvis on 05/26/09 •
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Monday, May 25, 2009

Old Maternity Leave Doesn’t Count

The case is AT&T CORP. V. HULTEEN 07-543.


Washington Times
May 18, 2009

Women who took maternity leave before it became illegal to discriminate against pregnant women can’t sue to get their leave time to count for their pensions, the Supreme Court ruled Monday.

The high court overturned a lower court decision that said decades-old maternity leaves should count in determining pensions.

Four AT&T Corp. employees who took maternity leave between 1968 and 1976 sued the company to get their leave time credited toward their pensions. Their pregnancies occurred before the 1979 Pregnancy Discrimination Act, which barred companies from treating pregnancy leaves differently from other disability leaves.

Dallas-based AT&T lawyers said their pension plan was legal when the women took pregnancy leave, so they shouldn’t have to recalculate their retirement benefits now. Congress did not make the Pregnancy Discrimination Act retroactive, they said, so the women should not get any extra money.

A majority of the justices agreed.

“A seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA,” wrote Justice David Souter, who will retire next month.

Justices Ruth Bader Ginsburg and Stephen Breyer dissented. By making it illegal to discriminate against women on pregnancy leave, “Congress intended no continuing reduction of women’s compensation, pension benefits included, attributable to their placement on pregnancy leave,” Ginsburg said.

The decision could affect thousands of women who took pregnancy leaves decades ago and now are headed toward retirement.

A closely divided 9th U.S. Circuit Court of Appeals said that time should count in determining pensions.

The Bush administration had urged the court to reverse the San Francisco-based appeals court, with Justice Department lawyers arguing that a decision favoring the women might harm other employees who could lose expected benefits if the company cannot afford to put more money into the pension system.

AT&T lawyers said their leave policy now complies with the 1979 Pregnancy Discrimination Act, but argued that the law does not retroactively apply to old pregnancy leaves. They also said their claims should be invalid because they didn’t make it decades ago, when the company first made the decision affecting seniority.

Lawyers for the four women argued that each reduced retirement check that they receive is “a fresh act of discrimination.”

The Supreme Court in 2007 did not accept that argument from Lilly Ledbetter, who sued her company for discrimination after finding out after almost two decades that she made less than her male peers. The Supreme Court, in a 5-4 vote in May 2007, threw out her complaint, saying she had failed to sue within the 180-day deadline after a discriminatory pay decision was made.

The first bill signed into law by President Barack Obama reversed that decision by saying each new discriminatory paycheck would extend the statute of limitations for an additional 180 days.


Posted by Elvis on 05/25/09 •
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Sunday, May 24, 2009

Poison In The System


This was the largest single act of class warfare in the modern history of this country. It is a direct attack on the American peoples ability to be able to stabilize their homes and their neighborhoods. This single vote will define the careers of everyone. We are back to taxation without representation, to markets that are openly rigged.
- Dennis Kucinich, Bailout Betrayal, October 5, 2008

Every plan weve heard from Treasury amounts to the same thing an attempt to socialize the losses while privatizing the gains.
- Paul Krugman, Biggest Con Job of 2009, March 3, 2009

The real economy is sinking fast and, with it, any hope for a quick recovery. Policymakers are completely at a loss. The public knows that things are far worse than they are being told.
- Mike Whitney, May 1, 2009

Credit Default Swaps; The poison in the system

By Mike Whitney
Information Clearinghouse
May 24, 2009

In a little more than a decade, Credit Default Swaps (CDS) have ballooned into a multi-billion dollar industry which has changed the fundamental character of the financial system and increased systemic risk by many orders of magnitude. CDS, which were originally created to reduce potential losses from defaulting bonds, has turned into a cash cow for the big banks, generating mega-profits on, what amounts to, nothing more than legalized gambling. In the case of insurance giant AIG, losses from CDS transactions has already cost the American people $150 billion, and yet their still has been no serious effort in Congress to ban them once and for all. Even worse, CDS is the root-cause of systemic risk which connects hundreds of financial institutions together in a lethal daisy-chain that threatens to crash the entire system if one of the main players goes under.

CDS contracts are not cleared on a centralized exchange nor are they government regulated. That means that no one really knows whether issuers of CDS can pay off potential claims or not. It’s a Ponzi-insurance racket of the first order. AIG is a good example of a company that gamed the system and then walked away with millions for its efforts. They sold more CDS than they could cover and then--when the debts started piling up around their eyeballs--they trundled off to the Fed for a multi-billion dollar bailout. Fed chief Bernanke later said that he was furious over the AIG’s fiasco, but it didn’t stop him from shoveling the losses onto the public ledger and making the taxpayer the guarantor for all AIG’s bad bets. Keep in mind, that AIG was selling paper that had zero capital backing, an activity is tantamount to counterfeiting. Still, no one has been indicted or prosecuted in the affair. Defrauding clients and then sticking it to Joe sixpack has become de rigueur on Wall Street.

CDS have spider-webbed their way into every corner of the financial system lashing-together banks and other financial institutions in a way that if one defaults the others go down too. This is what’s really meant by “too big to fail”; a euphemism which refers to the tangle of counterparty deals which has been allowed to spread--regardless of the risk--so that a handful of banksters can rake in obscene profits. CDS has become the bank cartel’s golden goose; a no-risk revenue-generating locomotive that accelerates the transfer of public wealth to high-stakes speculators. If it wasn’t for the turbo-charged profits from derivatives transactions, many of the banks would have already gone belly up. 

From Dr. Ellen Brown:

“Credit default swaps are the most widely traded form of credit derivative. They are bets between two parties on whether or not a company will default on its bonds. In a typical default swap, the protection buyerӔ gets a large payoff if the company defaults within a certain period of time, while the protection sellerӔ collects periodic payments for assuming the risk of default…

In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion - ten times the gross domestic product of all the countries in the world combined.”
("Credit Default Swaps: Evolving Financial Meltdown and Derivative Disaster Du Jour”, Dr. Ellen Brown, globalresearch dot ca)

The numbers boggle the mind, but they are real just the same, as are the losses, which will be eventually shifted onto the taxpayer. That much is certain.

Treasury Secretary Geithner has recently sounded the alarm for more regulation, but it’s just another public relations stunt. Geithner is an industry rep whose sole qualification for the job as Treasury Secretary is his unwavering loyalty to the banking establishment. He has no intention of increasing oversight or tightening supervision. All the BLATHER ABOUT CHANGE is just his way of mollifying the public while he tries to sabotage congressional efforts to re-regulate the derivatives market. In the next few weeks, Geithner will probably roll out a whole new product-line of reforms accompanied with the usual claptrap about free markets, innovation and “protecting the public’s interest”.  It’s all fakery; just more tedious sleight-of-hand carried out by agents of the banking industry working from inside the administration. Fortunately, sad sack Geithner is the world’s worst pitchman, which means that every word he utters will be parsed by scores of bloggers trying to figure out what he really means. That will make it especially hard to for him to pull the wool over the public’s eyes again.

Swaps originated in the 1980s as a way for financial institutions to hedge against the risk of sudden price movements or interest rate fluctuations. But derivatives trading took an ugly turn after congress passed the Clinton-era Commodity Futures Modernization Act of 2000. The bill triggered a sea-change in the way that CDS were used. Industry sharpies figured out how to expand leverage via complex instruments balanced on smaller and smaller morsels of capital. It’s all about maximizing profits with borrowed money. CDS provided the perfect vehicle; after all, with no regulators, it’s impossible to know who’s got enough money to pay off claims.  Besides, gambling on the creditworthiness of bonds for which one has no “insurable interest” can be fun; like taking out an insurance policy on a rivals home and waiting for it to burn down. This is the perverted logic of Wall Street, where every disaster ("credit event") turns into a fortune.

Cleaning up the financial system doesn’t require a complete ban on CDS. There is a solution to this mess, and it’s not complicated.  There needs to be strict regulatory oversight of all issuers of CDS to make sure they are sufficiently capitalized, and there needs to be a central clearing-platform for all trades. That’s it. (Note: There are serious questions about the Intercontinental Exchange, or ICE, due to its close connection to the banks) Geithner is trying to torpedo the nascent reform-effort by proposing bogus fixes that preserve the banks monopoly on the derivatives issuance. He’s the banks main water-carrier. Now we can see why the financial industry is consistently the largest contributor of any group to political campaigns. They need friends in high places so they can continue their scams without interruption.

“Too big to fail” is a snappy PR slogan, but it’s largely a myth. No financial institution is too big for the government to take into conservatorship; to put the bad assets up for auction, replace the management and restructure the debt. It’s been done before and it can be done again without damaging the broader system. The real problem is separating healthy financial institutions from insolvent ones now that the whole system is stitched together in a complex net of counterparty deals. Credit default swaps form the bulk of those counterparty transactions, which makes them the main source of systemic risk. To fix the problem, current contracts must be either unwound or allowed to lapse, while new contracts must be traded on a central clearinghouse where regulators can decide whether sellers are adequately capitalized or not.  The Fed’s solution--underwriting the entire financial system to prevent another Lehman Bros. fiasco---doesn’t address the fundamental problem; it just puts more pressure on the dollar which is already beginning to buckle. The question now is whether Congress will pull their heads out of the sand long enough to do the people’s work and pass the laws that will re-regulate the system. There is a remedy, but it requires action, and fast. Without course-correction, the prospect of a derivatives meltdown gets bigger by the day.


Posted by Elvis on 05/24/09 •
Section Dying America
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