Thursday, April 23, 2009

an item recieved in the mail

I spent more than 20 years in the Information Systems world, computers. I have programmed computers, designed accounting systems for computers, written books about computers and managed hundreds of computers. For years most of my friends were also in computer systems. One by one they lost their jobs and wandered off onto the void. It became harder and harder to get jobs in information systems regardless of experience.

The last time I was in a large data center I was the only American citizen in the building. I'm not exaggerating. Everyone working in the data center was from South Asia. Every one working in the data center was working on an H1b visa. A visa that allows American companies to bring technical expertise from outside the U.S. if no such expertise can be found within the U.S. Of course, persons with H1b visas are supposed to be paid the same as their American counterparts which don't exist because if they did exist there would be no need for H1b visas holders.

I got this via email. My own opinion is that we should drop the H1b visa program altogether. It's clearly been abused. This is food for thought.

Durbin bill introduced today: takes discrimination of US workers head-on!
Legislation offered today by Senators Durbin (D-IL) and Grassley (R-IA) may finally remove the handcuffs that have long prevented effective federal policing of H-1b job outsourcing based on discrimination against US workers.
"Congress needs to put their "big-boy pants" on and fast-track this bill up to the President's desk," demanded Conroy. "IT professionals are now poised to join with the AFL-CIO and other national groups to make corporations play fair - now. No nation can remain strong when laws allow corporations to bypass its own citizens."
"We're thrilled that Senators Durbin and Grassley are requiring employers to seek local talent first. They recognize that American IT professionals have the talent, know-how and experience to push America’s economic recovery into high-gear," said Donna Conroy, a former IT professional and Director of Bright Futrue Jobs.

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

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

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

Here's the entire release:

Who We Are: is a grassroots lobbying campaign dedicated to counteracting claims that Americans can’t do science and technology. We lobby to require employers to seek local talent for US job openings before recruiting abroad.

Our exposure of federal government documents declaring that the H-1b law’s intention is to bypass the US workforce resulted in the introduction of the bipartisan Durbin-Grassley “"The H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007" (S. 1035). We were instrumental in securing the passage of a Cook County resolution urging passage of the Durbin reform bill in September, 2007.

Donna Conroy
Chicago, IL

Wednesday, April 08, 2009

To the shores of Tripoli

International It’s rough out there: the headline in the New York Times reads, “Pirates Seize Ship With U.S. Crew Off Coast of Somalia.” Few things change.

Old Ironsides sits in Boston harbor as a reminder that when push comes to shove the U.S. Navy can and does act worldwide in the interests of both the US and other nations. In 1803 she was designated the flagship of the U.S. Mediterranean Fleet and was used to blockade, bombard and intimidate the Barbary pirates.

Trouble began in July 1785, when the Barbary pirates from Algeria captured two American ships and the Dey of Algiers held their crews captive for a ransom of nearly $60,000. Thomas Jefferson, then minister to France, opposed the payment of tribute and proposed an association of countries to deal with them. Jefferson argued that "The object of the convention shall be to compel the piratical States to perpetual peace." The plan fell through when both England and France continued to pay ransoms.

When Jefferson became president in 1801 he rejected Tripoli's demands for an immediate payment of $225,000 and an annual payment of $25,000. The pasha of Tripoli then declared war on the United States. President Jefferson quickly dispatched a squadron of naval vessels to the Mediterranean. Jefferson said in his first annual message to Congress: "To this state of general peace with which we have been blessed, one only exception exists. Tripoli, the least considerable of the Barbary States, had come forward with demands unfounded either in right or in compact, and had permitted itself to denounce war, on our failure to comply before a given day. The style of the demand admitted but one answer. I sent a small squadron of frigates into the Mediterranean. . . ."

Ultimately a small force of marines was sent to re-install the hereditary ruler of Tripoli. The U.S. marines raised a mercenary army of Arabs and Greeks and began the difficult march across the Libyan Desert towards Tripoli, winning a bloody victory in the outlying town of Derne. Just as soon as victory was assured the marines were informed by messenger that the war was over. The treaty that was signed guaranteed the return of American prisoners but little changed. North African piracy continued until France brought the era to an end by invading and colonizing most of North-West Africa.

Monday, April 06, 2009

The Boston Globe threatens bankruptcy – good riddance

Local All politics is local: This morning I walked the half mile to the train station with my daughter’s dog hoping to pick up a copy of the Boston Metro. There was a time when the Globe and Herald had boxes where, for a quarter, you could pick up an hours entertainment (if you call news entertainment – and I do) while the filthy industrial grade train rumbled and swayed its way into Boston. Those boxes are gone. Neither the Globe nor the Herald tries to sell papers anymore. They gave up paperboys years ago claiming that paperboys were unreliable. Maybe they became that way, a generational thing I suppose.

The metro box was empty save for a religious diatribe some intellectual vagrant deposited in the hopes of a miraculous conversion. It was empty the last time I looked too. I don’t know if it was empty because they didn’t fill it with enough papers or they too have stopped promoting their paper. I walked home empty handed.

The very first article I ever sold to a newspaper was a 300 word story about the development of teenage cabals. I was paid $30, or 10 cents a word. That was in the mid 1960’s. By the mid 1990’s I was paid $50 per story by Community Newspapers, still about 10 cents a word. Today Community Newspapers doesn’t buy stories and I won’t write for free as a matter of principle.

The last time I tried to sell anything to a Boston newspaper was back in the early 1980’s. Both the Globe and the Herald had the attitude that I should consider it an honor to get a byline in their paper never mind that the honorarium for a 1500 word story that took me 2 weeks to research and write wouldn’t pay my rent. At least back then you could rework the article and resell it until the Globe decided that they owned the article in all its forms forever. That decision made it impossible to earn a living as a freelance journalist in Boston and I stopped reading it Globe. There is no news in the Globe and just because it occasionally gets a Pulitzer Prize is no reason to read a newspaper with no news.

The joke was that the Wall Street Journal had more news on its front page than the Boston Globe had in its entire paper was not far from the truth until recently. Now the Happy News/Pretty News contagion has infected even the Wall Street Journal making it almost impossible to find “news” anywhere in print. Most newspapers have become nothing more than advertising mediums wrapped around AP and Reuters feeds. Who cares? Between Yahoo and the still useful New York Times web site I don’t need to read a printed paper. I’d like to read a paper, it’s more substantive than TV and more relaxing than the web but without news its worthless and without paying writers a decent wage why would I expect anything more than rewritten press releases or egotistical, self indulging pronouncements passing for news. I wouldn’t and I don’t.

I still have to wonder why a newspaper with over 300,000 paying subscribers can’t make money. When the New York Times paid over a billion dollars for the Globe many freelance journalists wondered why they didn’t just create a new newspaper for far less. If the Boston Globe goes out of business, and I think it will and should, someone will eventually step up to the plate and for very short money create a daily newspaper worth reading again.

Of course if all print newspapers go broke and freelance writing for the World Wide Web doesn’t begin to pay better I wonder if we could be on the edge of another dark age. I’ve often wondered if anyone bothered covering the last meeting of the Roman Senate.

Friday, April 03, 2009

First twitter of the year

First thunderstorm of the year
spring and flickering lights,
a glass of wine and an open fire
chilly, raw,
not yet summer.

Bankers: After accounting rules change no more excuses

National Lead, follow or get out of the way: In a bow to industry and Congressional pressure the Financial Accounting Standards Board (FASB) change the accounting rules governing banks and other financial institution by weakening the Mark-to-Market rule. The Mark-to-Market rule has been criticized by many in the financial press as the prime cause for the financial meltdown that occurred last fall.

The previous interpretation of the rule stipulated that if there is no market for a security then its implicit value on a banks balance sheet is zero. This makes a great deal of sense when we are dealing with items like Asset Backed Securities whose underlying value cannot be determined or Credit Default Swaps whose market has evaporated. When the mortgage bubble burst a large number of very large financial institutions discovered that when the Mark-to-Market rule was applied to their balance sheet they were technically bankrupt. This was the immediate cause of the financial gridlock that occurred in October 2008.

The new rule by the FASB allows greater latitude by banks in interpreting the rule. FASB said that the objective of the rule change was to allow banks to determine what an asset could fetch in an "orderly" market but would not include "distressed" or fire-sale transactions. In other words, banks are now free to fantasize what an asset might be worth if an "orderly" market can be found. The U.S. Government is attempting to create a market for these "toxic" or "legacy" assets. One dissenting FASB member said, "I’m afraid that this change will result in fewer impairments being recognized, and I don’t think it will help the investor have confidence in the balance sheet."

The FASB is charged with setting accounting rules for American industry. The rules often have unintended consequences such as the financial industry meltdown of this past fall. Since the IRS recognizes FASB rules as defining how a company recognizes profit and loss a change in FASB rules can have far reaching effects.

A FASB rule change in the early 1990’s virtually eliminated the equipment leasing industry. Equipment leasing is halfway between renting and finance and the FASB has long struggled with how to interpret this. For example with equipment rental the rental company depreciates the equipment and recognizes rental income as ordinary income. With equipment finance, the purchaser of the equipment gets to depreciate the equipment and deduct the interest expense while the bank must amortize the income over the life of the mortgage. Leasing is just like finance except the leasing company still owns the equipment until the lessee buys it at the end of the lease. In a typical lease, a lessee pays two or three month of the lease upfront – this is the typical profit fro a leasing company. The leasing company would then sell the cash stream generated by the lease to a bank while retaining ownership of the equipment. Thus a leasing company would recognize income upfront and the "residual" at the end of the lease when the lessee purchased the equipment at "fair market value," typically 5-15% of the initial cost.

A FASB rule change required leasing companies to amortize their profit (typically the first 3 months payment) over the life of the lease while also recognizing income from the residual over the life of the lease as well. Thus leasing companies had phantom income from residuals while not being able to recognize income when they received it so while a leasing company might be flush with cash they showed an immediate negative balance on their books while at the same time owing taxes on income they may or may not ever receive. Thus with a small accounting change the FASB put most equipment leasing companies out of business.

Banks Get New Leeway in Valuing Their Assets

Wednesday, April 01, 2009

China wants its cake and eat it too

International it’s a mean place out there: The U.S. Dollar is the worlds "reserve currency." That means that most international transactions are conducted directly or indirectly in U.S. Dollars. The price of oil, grains and precious metals are all set in U.S. Dollars. For example if someone in Dubai wants to buy gold from someone in France the transaction is made, directly or indirectly, in dollars. The price of gold is specified in U.S. Dollars but if the actual transaction is conducted in Euros then the price of the commodity reflects the value of the Euro relative to the U.S. Dollar. This really irks the Chinese.

The Chinese are the largest holder of U.S. Dollars, somewhere around $2 trillion, and have an interest in seeing that money retain its value. The U.S. economy dwarfs that of all other countries including China and Russia, only the European Union comes close which is why the Dollar is the world’s primary currency and why other currencies are "pegged" to the Dollar. By pegging the local currency to the U.S. Dollar a country with a smaller economy is able to create external value for its currency. A Walmart coupon may have a $10 face value for anything purchased in a Walmart store but unless it can be exchanged for $10 in U.S. currency it has little value to anyone shopping at K-Mart. The Chinese currency only has value in so far as it can be exchanged for Dollars. This concept has a bruising effect on the egos of totalitarian rulers.

The trouble is that the Chinese have too many Dollars because they have artificially kept the value of their currency low relative to the Dollar. This keeps the price of Chinese goods low and the price of U.S. goods high on the international market. Our economy is large enough to tolerate this up to a point. Eventually the Chinese will have sold us everything we can afford to buy and will have all our money. Not really, of course, but that’s the idea behind an imbalance of trade taken to reductio ad absurdum. The larger a claim the Chinese have on our economy the less our money is worth. A dollar doesn’t buy what it used to. The Chinese don’t like that but one wonders if their totalitarian rulers have bothered to consult with professional economists. Eventually, whether the Chinese like it or not, the value of their currency must rise relative to the U.S. Dollar. The Chinese require payment in Dollars but if the Chinese allowed payment for their goods in Chinese Yuan then someone would have to buy those Yuan with some other currency and each currency would then float to its "natural" level.. This is true regardless of what currency becomes the "reserve currency" of the world. As long as the U.S. economy is the worlds dominant economy the U.S. Dollar will remain the defacto world currency.

Currently 1 Chinese yuan = 0.146323 U.S. dollars.


China Urges New Money Reserve to Replace Dollar
Asia split over China's "war of nerves" with U.S.