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Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985.  Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand (which is now part of PricewaterhouseCoopers).  She attended the University of Michigan and Wayne State University.

  • Net neutrality: Speak out now, for or against...

    [View: utility/ :550:0] Video of John Oliver on Last Week Tonight, [warning regarding language] via YouTube If you want a painless way to learn about the ostensibly boring (but important) topic of "Net Neutrality," then listen to the John Oliver piece. Unfortunately, you have to be willing to endure a lot of bad language. Basically, phone/cable companies (specifically, Comcast , Verizon and AT&T ) want to end the practice of equal access to internet bandwidth. They want to implement a two-tier system that would allow big phone and cable companies premium access, and slower access for the rest of us. The Slate article linked below does a summary of some of the salient points of the issue: " Traditionally, with a few exceptions, the cable and phone companies have not blocked particular websites or discriminated in favor or against any of them. For the past decade, the FCC has made it clear it would punish a cable or phone company for deviating from providing 'neutral' access. In January, the FCC lost an important court decision, which said that the FCC does not have the authority to stop phone or cable companies from discriminating against websites or creating “'ast' and 'slow lanes' on the Internet—unless the FCC chooses to act under a particular part of the law known as Title II. Rather than act under Title II, FCC Chairman Tom Wheeler has proposed a rule that would permit the phone and cable companies to engage in discrimination, subject to fairly useless conditions. The FCC has received tens of thousands of citizen comments and stern letters from open Internet supporters in the Senate and Congress. The president—who repeatedly promised that he would ensure neutral access to the Internet without paid-for fast lanes—has provided almost no support for Wheeler, with the White House issuing distancing press statements. The chairman’s two fellow Democratic commissioners critiqued his plan publicly. " Oliver provided additional perspective regarding some of the operational tidbits regarding the big phone/cable companies. And almost everyone has agreed with him. But on the other side of the issue--in favor of the two-tier system are: Comcast, Verizon and AT&T politicians and citizens who oppose "anything Obama is for" the FCC chairman, Tom Wheeler, and Jon Healey, who wrote an opinion piece this week in the Los Angeles Times that has some internet traction Healey makes the point that Oliver is mainly a comedian, and should not be taken seriously. He also says, " The real question is what's the best way to preserve the Internet as an open platform for innovation and content, without interference from the cable and phone companies that dominate the market for broadband connections ." He mentions that many conservative and liberal observers oppose the FCC messing with the current open situation. These are not really arguments that support his opposition to Oliver's position. Nevertheless, the headline seems to be opposed. Since this is an issue which will have a major effect on everyone who uses the internet, it is probably important to have an opinion and to take advantage of a unique opportunity to state your opinion at the highest level. In case you want to actually comment where your comments will count, contact the FCC yourself at this website: Source: " John Oliver’s Hilarious Net Neutrality Piece Speaks the Truth...and nothing but ," by Marvin Ammori, Slate, June 6, 2014. " John Oliver finds humor in net neutrality, but loses the facts ," by Jon Healey, The Los Angeles Times Opinion , June 5, 2014. F ollow up: What arguments can you make IN FAVOR OF a change in the law to allow two-tiers of internet band width? Weigh those arguments against strengthening protections to keep the internet open. According to the Slate article, what are the more nuanced Business Law issues that are part of the net neutrality issue?
  • Tiny Hachette publishing is taking on Amazon

    image from the prnewswire Michael Pietsch (rhymes with "beach"), the CEO of the Hachette Book Group, is in a battle with Amazon over pricing and availability issues regarding manipulation of the market for books. All of the other book publishers are waiting to see what happens. Other publishers have been afraid to take a stand against Amazon, because of Amazon's tremendous clout. Amazon has huge volume and it is willing to sacrifice profits in pursuit of market share. Not every publisher can afford to pursue that strategy. But Pietsch seems willing to get the issues on the table in order to not lose everything in the long run. Unfortunately, because Amazon and Hachette have signed confidentiality agreements, the nitty-gritty details of their dispute remain secret. Nevertheless, other publishers guess that Amazon is trying to sell Hachette e-books at bargain prices, and Hachette is trying to maintain their profit margins. One tactic that Amazon is using to prevail in this fight is to deliver this message to potential customers wanting to buy a Hachette title: Image from Amazon...when they are trying to delay shipping your book, whether they have it or not... This is a risky strategy for Amazon, because delays tend to annoy customers. Amazon's "branding" includes being customer-friendly, so any delay tactic might tarnish their image. Nevertheless, it also thwarts sales of Hachette titles--especially for those customers who are loyal to Amazon via their Amazon Prime relationship, or those who have an Amazon gift card to spend. Other customers take the bait and switch to another title recommended by Amazon when they are on a Hachette author's pages. The "currently unavailable" strategy is also used by Amazon in dealing with independent, single-book-inventory booksellers (who know they have delivered inventory to Amazon's warehouses). Even if the titles are somewhere in Amazon's inventory, Amazon can put these low volume items on the back burner without tarnishing their reputation for delivery within two days...if they say the title is "currently unavailable." The roots of this dispute go back to before the 2012 Justice Department anti-trust lawsuit against book publishers. Five publishers were found to have conspired to raise e-book prices. They'd banded together to try to maintain their profits in the face of the Amazon undercutting of prices. [See: " Can eBooks get past the price-fixing scandal? "] The settlement included a two-year period where Amazon was allowed to discount e-book prices. That agreement has expired, and now Hachette is stepping up and bargaining on principle. Pietsch insists that books are a special kind of product and cannot be treated like some of the other mass-produced items sold by Amazon. A major Hachette author, James Patterson, supports Pietsch and has said, " Amazon also, as you know, wants to control bookselling, book buying, and even book publishing, and that is a national tragedy. ” Other booksellers may want Hachette to win, but like scared schoolchildren in the face of a bully, they are standing quietly on the sidelines, fearful of the retaliation that has already been directed at Hachette. Meanwhile, some customers are upset by Amazon's policies. " If Amazon thinks I don't care about its silence, it's wrong. I take it personally that the company doesn't think it owes me even a half-baked explanation for why I can't buy some books from it, " complained Jack Shafer, writing for Reuters .In addition, some legal observers think that Amazon is risking government anti-trust action. Who will "win" in the long run? Source: " Hachette Chief Leads Book Publishers in Amazon Fight " by Jonathan Mahler, the New York Times, June 1, 2014. " Amazon Absorbing Price Fight Punches ," by David Carr, the New York Times, June 1, 2014. F ollow up: Read the articles and previous post linked above. In hindsight, do you think that the anti-trust suit brought against the publishers in 2012 may have had the unintended consequence of creating a better environment for an Amazon monopoly? Give your reasons. What do some established authors think are the risks of this stand-off? How might this affect sales? What are the marketing and potential sales issues for Amazon, and for the publishing industry as a whole?
  • California dream or tragic corruption?

    image from Two widely divergent opinions are expressed in the linked article. Corruption and collusion are alleged by those supporting one side of this issue. Fairness is alleged by those supporting the other side. In any event, the issue--a loan program for California high school graduates without U.S. citizenship--highlights how divergent opinions can be when money is involved. The communication techniques on both sides of the issue can be identified and analyzed by a critically-thinking reader. What arguments are emotional? What arguments are fact-based? How are hyperbole used by each side? Identify, for each side, the selection of only those facts that support their position. Demographic predictions for the state of California--and their implications for business--seem to have been ignored by both sides. Nevertheless, demographics are usually a major factor in the business economy. Source: " Senator Lara Announces the California Dream Loan Program–College Loans for Illegal Aliens " by Stephen Frank, California Political News and Views, April 4, 2014. F ollow up: Putting your personal feelings aside, analyze the positions taken in the linked article with respect to principles of business communication. What effect might SB 1210 have on small business in California? Read the demographic data on Report P-1(Race) as you form your thesis. Comment on the communication techniques used by those posting comments to the linked article.
  • Wanna make $21 per hour at McDonald's? Move to Denmark

    image from reuters In Denmark, there are two McDonald's wage levels: $21 per hour applies to adults 18 years of age and over. $15 per hour is the minimum wage for workers under 18 years old. Even the lower wage level is more than double the minimum wage for adults in the U.S.--and it exists in a public policy environment where health care is universal. These wage levels were not McDonald's idea. They were bargained for by a union--and putting that union in place required years of work. Sometimes the discussion in the U.S. media around the minimum wage ignores the profits being made by large corporations. The talking points center on the hurdles all costs are for small businesses just starting up. An additional argument for a higher minimum wage is that boosting wages for the lowest paid workers also boosts the salaries of entry-level professionals. This might mean less profit for stockholders of corporations like McDonalds--or fewer bonuses at the highest levels of management. Nevertheless, it also might mean that the social service costs of low-income wage earners are shifted away from middle class taxpayers and onto the corporations who are profiting from the labor provided at these low wages. What do you think? Source: " I’m making $21 an hour at McDonald’s. Why aren’t you? , " by Louise Marie Rantzau, Reuters: The Great Debate , May 15, 2014. F ollow up: One definition of the "minimum wage" is a " living wage ": the wage level that, with full-time work, can support a four person family at a lowest-rung middle class level. What do you think would be the living expenses at this level? What are the pros and cons of raising the minimum wage in the U.S.? What would be your definition of "minimum wage"? Is the concept of a "living wage" relevant? Would one wage work for the entire country? Research the wages paid at Chipotle, Costco and Walmart. How do minimum wage laws affect large corporations and small businesses differently? Have you ever supported yourself while being paid a minimum wage? Explain how that worked or didn't work. Read the article to find out how working for the current U.S. minimum wage affects others, if you do not have experience of your own.
  • Berkshire Hathaway: TRUST is matter what others say

    [View: :550:0] video from WSJ: Woodstock for Capitalists Charlie Munger, vice chairperson of Berkshire Hathaway ,was at " Woodstock for Capitalists " recently. Munger is a long-time friend of Warren Buffet. Munger's take-away quote: “ By the standards of the rest of the world, we overtrust. So far it has worked very well for us. Some would see it as weakness.” The statement was a response to the overwhelming trend in businesses and educational institutions to "lawyer up." In addition, businesses are now spending millions on consultants that specialize in (minimum-possible) compliance with regulations. Munger's point was that a better use of business energy is to hire those you trust...and to skip creating an environment of distrust and policing. The Rock Center for Corporate Governance (Stanford University) is studying Munger's thesis with respect to its validity and efficacy as corporate policy. Source: " Berkshire Hathaway Promotes Trust , " by Andrew Ross Sorkin, the New York Times , May 5, 2014. F ollow up: How much does Berkshire Hathaway spend on corporate counsel? Why is this unusual, and what other policy is unusual with respect to other corporations' behavior? Could it constitute "negligence," as suggested in this article? Munger has said (regarding the policy in Roman times), " If you build a bridge, you stood under the arch when the scaffolding was removed .” What do you think this means, in terms of being a metaphor for modern corporate behavior? In what other (major) ways is trust important to business transactions?
  • Two Giant Banks Face Criminal Charges

    image of banks in Paris and Zurich by Jacques Brinon/Associated Press and Arnd Wiegmann/Reuters Two banks are under criminal investigation by the U.S. Federal government. What is interesting is this: neither of the banks are American banks. Being investigated are the BNP Paribas Bank in Paris and Credit Suisse Bank in Zurich. The crimes under investigation are: Credit Suisse: offering tax shelters to Americans BNP Paribas: doing business with countries such as Sudan, which is now blacklisted by the U.S. Facing criminal charges could mean revoking the banks' charters to operate in the U.S., which would mean they couldn't do business. Article authors refer to this as analogous to the death penalty. But since Federal guidelines require analyzing the effect this would have on the business before the penalty is enacted, it is unlikely that the full penalty would be applied. This requirement continues to be invoked throughout discussions of wrongdoing. So...what does "facing criminal charges" really mean? The penalty being considered is " temporarily suspending the bank’s ability to transfer money through New York branches on behalf of foreign clients, a move that could undercut the bank’s revenue." Hmm. That doesn't seem very harsh. In the BNP Paribas case, fines might also be incurred. It sounds like a cost of doing, that is. Their actions seem to be "above the law." Sources: " Two Giant Banks, Seen as Immune, Become Targets , " by Ben Protess and Jessica Silver-Greenberg, the New York Times , April 29, 2014. F ollow up: What does "above the law" mean? What are the hurdles involved in prosecuting these cases? What are the banks really trying to avoid in these cases?
  • Accounting skills linked to moral high ground

    image by Javier Jaén from the article linked below Americans don't understand much about accounting and finance. Jacob Soll , a professor of history and accounting at the University of Southern California, thinks that this lack of cultural literacy in accounting may be partially responsible for the unfettered lack of morality and self control exhibited by financial institutions in modern life. He makes the point that when accounting skills were pervasive in society, people viewed keeping things in balance as a moral prerogative as well. In the heyday of the Dutch East India Company and the Medici financiers in Italy, portraits of businessmen were painted with the individuals actually doing accounting, or with their books of account in prominent display. The basis essence of double-entry accounting is fairness and equality in each business transaction. Debits = Credits. According to Soll, as a society we have left the understanding of these accounting basics concept to "specialists and computerized banking." He suggests, " If we want stable, sustainable capitalism, a good place to start would be to make double-entry accounting and basic finance part of the curriculum in high school, as they were in Renaissance Florence and Amsterdam ." It can't hurt. Source: " No Accounting Skills? No Moral Reckoning ," by Jacob Soll, New York Times opinionator , April 27, 2014. F ollow up: Do you want to get started on your accounting literacy? Check out this link from the Accounting Coach. Summarize what you learned. What is the historical significance of the Dutch East India Company?
  • What "the 1% don't want you to know": Paul Krugman on Thomas Piketty

    image is from an interview at, via VIMEO According to Paul Krugman 's analysis of newly observed changes in the structure of the U.S. economy, if you are not part of a family in which you will get a piece of inherited wealth--you and your own heirs are doomed. Not only will you never be rich--you and your family will become poorer with each those with inherited family wealth become richer. The focal point of the interview linked above between Bill Moyers and Paul Krugman is the new book by Thomas Piketty of the Paris School of Economics: Capital in the Twenty-First Century . In the book Piketty delineates how 67% of the increase in the top-heavy distribution of wealth that has occurred since the 1970's is the result of huge raises given to corporate executives. These huge salaries, combined with tax and other governmental policies in the U.S., have created the perfect storm for the formation of an oligarchical economic structure that has now become hard-wired and institutionalized. Krugman makes the additional point that wealth is now so concentrated that it is invisible to most of the public--the shear size of the fortunes are out of the realm of what the average person can understand in terms of wealth management. The impact of this wealth concentration on middle and lower income people in the United States is much more pronounced than it is in Europe because governmental policies in Europe create a higher standard of living for the poorest 20% by providing health care, higher minimum wage and other income and social service support. book image from Krugman experienced reading Piketty's book as as "Eureka!" moment, as it showed how radically the economic structure had changed when analyzed over the long term. The book also pointed out that o nce wealth is held in the hands of the oligarchical few, it becomes nearly impossible to change the laws to tax the wealthy at a greater rate. The concentrated wealth has gained control over public policy as well. Can the situation be changed--to favor real competition and the growth of small businesses and the middle class? I'm going to read the book to find out... Source: " Bill Moyers w/Paul Krugman: “What the 1% Don't Want You to Know ” " by bobswern, the Daily Kos , April 18, 2014. F ollow up: According to Paul Krugman, what forces might counter the oligarchical situation which we now find ourselves in? [this is about 18 minutes into the interview] What is the "high r, low g" economy that Krugman refers to? According to Bill Moyers and tax analysts, how many times greater are top management salaries more than low income workers, based on recent tax data?
  • Offshore tax havens mean higher taxes for individuals

    The graphic above illustrates how much in additional taxes is paid by each person by state, due to corporate and wealthy individuals' use of offshore tax havens. I live in California...and I'd love to have my state tax bill reduced by $1,783. What is an "offshore tax haven" exactly ? These are banks in other countries, such as Switzerland and several island nations, with low tax rates and laws that provide secrecy regarding financial transactions. Corporations and wealthy individuals--even though they are required under penalty of perjury to report all income on the U.S. tax returns regardless of where it was earned--can sometimes hide illegally obtained income and the earnings on that income in such banks. Jordan Belfort, the " Wolf of Wall Street ," was imprisoned partly due to his illegal use of a Swiss tax haven. Some states, such as Montana and Oregon, have taken steps to close the tax haven loophole by applying the same kind of taxation formula used for companies who do businesses in several states. The report, by the U.S Public Interest Research Group, " Closing the Billion Dollar Loophole " provides a roadmap for how this is done and what it can accomplish. In addition to tax revenues lost by states, the federal government has losses as well. The Congressional Research Service estimates these to be $90 billion to $100 billion annually . This results in more money out of the pockets of tax-paying individuals. Perhaps a tax overhaul is needed so that the tax system is perceived as "fair." The businesses would not have to waste creative energy pursuing tax avoidance, and could focus more on positively improving their products and their bottom lines. Sources: " How Much Do Offshore Tax Havens Affect You ," by the U.S. Public Interest Research Group, via Upworthy, April 15, 2014. " How states can reclaim $1 billion from offshore tax havens ," by Niraj Chokshi, The Washington Post , January 31, 2014. F ollow up: What do you think? What kind of tax rule changes might encourage businesses to "buy-in" to the tax system and increase voluntary compliance with tax law?
  • "bots" pretending to be humans is a new form of ID theft

    image from pandodaily Bots pretending to be human is a new form of ID theft...but instead of targeting you and me and our credit cards online...the arena is "digital ad theft." Internet researchers believe that at least a third (and in some arenas up to 60%) of all internet traffic is not human. It is trained computers working those mouse buttons. Computers are clicking on the Eye Creams and Diet Miracles and other products appearing in ads online. So, if an advertiser thinks they are getting 500,000 hits on their ad that appears in the Facebook margin...they are not getting their money's worth if the ad "viewer" is a robot trained to click ads.The computers don't represent potential sales. Of course, software has been developed to detect non-human mouse movements or click timing. But then more sophisticated robot ad clickers are developed. It escalates. One company specializing in spotting digital ad theft is White Ops . Tamar Hassan, Chief Tech officer of White Ops, says that digital ad fraud can be more lucrative because there is a cost to obtaining the credit card number and the high risk of being prosecuted for fraud, because there are real human beings who are harmed. These risks are less with digital ad fraud, so ad fraud presents a "business opportunity" for the criminally minded. Sources: " Digital advertisers losing the 'bot arms race' ," by David Weinberg, Marketplace American Public Media , April 14, 2014. F ollow up: What are the marketing issues for the "big box" company mentioned in the article? How does the digital ad criminal make money?
  • Lobbying community leaders to work against their communities

    Wouldn't millions of Americans be happy to have the choice to use pre-filled-in tax returns? Even according to the IRS, tax filing is expensive: Why would religious leaders, small town politicians, and a state NAACP official write letters to newspaper editors and op-ed pieces that spoke against such an option. The arguments they used was that the option would hurt low-income people and create a conflict of interest for the IRS, who could misuse their power against vulnerable taxpayers. As it turns out, the indignant individuals arguing against the implementation of the super-simplified tax system had been lobbied by individuals like Emily Pflaster, who works for Intuit's public relations firm, JCI Worldwide . Intuit makes the tax preparation software called Turbo Tax . Intuit's public relations reps did not point out some of these particulars, which were articulated by ProPublica : return-free filing would allow million of taxpayers to do their returns in minutes returns could be filed for free the IRS would use information that is already submitted by banks and employers...and taxpayers could review the items and make adjustments this program has been endorsed by former President Reagan and President Obama Also, according to ProPublica's research, Intuit spent over $2.6 million last year on lobbying. Sources: " TurboTax Maker Linked to 'Grassroots' Campaign Against Free, Simple Tax Filing ," Liz Day, ProPublica via Mother Jones , April 14, 2014. F ollow up: Describe the difference between "Grassroots" campaigns and "Grasstops" campaigns Would you take advantage of a pre-filled-in tax return option? Why or why not? Who are the ideal candidates for this option?
  • Flash Boys: An insight into high speed--and seemingly "unfair" trading

    View the Bloomberg TV interview with Michael Lewis and Brad Katsuyama Michael Lewis's new book, Flash Boys , is about the chasm between stock market traders in the business world and the programmers--many from Russia--in the new environment of high-frequency trading. Brad Katsuyama was a trader new to Wall Street who worked for the Royal Bank of Canada (RBC). He had an outsider's view of the trading system, based on norms from his Canadian work experience. He expected to understand trading transactions. When his employer, RBC, bought Carlin Financial there was a bit of a culture shock. Carlin's CEO, Jeremy Frommer , was not the same kind of grounded trader that was the RBC norm. In addition, Frommer headed a company that championed super-fast computer trading. But this trading did not work as it was supposed to work, according to logical norms. Here is what started happening: " Before RBC acquired this supposed state-of-the-art electronic-trading firm, Katsuyama’s computers worked as he expected them to. Suddenly they didn’t. It used to be that when his trading screens showed 10,000 shares of Intel offered at $22 a share, it meant that he could buy 10,000 shares of Intel for $22 a share. He had only to push a button. By the spring of 2007, however, when he pushed the button to complete a trade, the offers would vanish. In his seven years as a trader, he had always been able to look at the screens on his desk and see the stock market. Now the market as it appeared on his screens was an illusion ." This meant that Katsuyama could not do his job the way he had always done it. He needed accurate information to be able to buy and sell stock for his clients. But his electronic screens showed him trades that would vanish whenever he took any action. At first, he thought it was an Information Technology problem, but the IT folks thought it was "user error." Then the IT folks blamed the distance between markets, and the number of people on the system. But these were never factors before. Finally Katsuyama hired Rob Park, a technology guy, to work with him in a two-way conversation that would shed some light on these transactions. RBC gave them a budget to conduct trading experiments...which led them to discover that if they approached only ONE trading exchange with a possible transaction, the screen data would be accurate. But if they approached multiple exchanges, transactions would disappear the moment the trader tried to act on information. They got a programmer, Allen Zhang, involved. Acting counter-intuitively but effectively, Zhang designed a program that would delay transactions a couple of milliseconds so that all the buy or sell orders would arrive at the exchanges at the same time. For some reason, this eliminated the problem of the disappearing transactions. The article goes on to explain further complications and elucidations involving this trading, explained fairly straightforwardly for someone interested in Wall Street finance. The earnest approach of Katsuyama and his colleagues--to fixing and understanding the trading system--almost makes high finance seem like a regular business. For the whole story, read the book, Flash Boys: A Wall Street Revolt by Michael Lewis. Sources: " The Wolf Hunters of Wall Street ," by Michael Lewis, New York Times Magazine , March 31, 2014. ...and the Bloomberg video linked above. F ollow up: Do you think that these risks described are blown out of proportion? Can these high speed trades be controlled and understood by the average investor after all? What is the role of regulation in this environment? Do you think it is best undertaken privately, as was done by the Royal Bank of Canada? What are the pros and cons of private regulation? What does "RBC nice" mean? How would that compare to the "Wolf of Wall Street" mentality?
  • Nothing is safe: Heartbleed coding flaw breaks encrypted financial transactions

    image from How much of a problem is the Heartbleed coding mistake that endangered every encrypted financial transaction? According to Bruce Schneier, a cryptographer and security consultant: " I've been saying that on a scale of one to 10, this is an 11 ." There are public policy issues that are arising with respect to Heartbleed ( i.e .the NSA and other security organizations have known about the vulnerability, and have most likely taken advantage of it--without informing citizens and consumers). But, like many business problems--fixing the blame and finding those who abetted the crime does not help the "victims"--which are the millions of us who have been using online banking and retailing sites over the last few years. What do we do about this? The basic advice is: Don't change your password until you are sure the site has fixed its vulnerability problem; and DO change your password for every single institution with which you transact online business. Although it may seem daunting to make a list of all of the sites with which you have done business, and systematically go through them one by one to change the password--that hassle pales in comparison to dealing with identity theft once it has occurred. Make sure you don't forget to change your passwords on Google, Facebook and Yahoo--who have already admitted that they were affected by Heartbleed. They have already fixed the flaw on their side. Some institutions have said that the flaw did not affect them, but others have claimed the issue was "industry-wide" with respect to banking institutions. But if you have used the same password on more than one site--if your password was used on a vulnerable site, it is out there and can be tapped to invade your identity on sites that said they were safe. Sources: " Flaw Calls for Altering Passwords, Experts Say ," by Molly Wood, the New York Times , April 9, 2014. F ollow up: Have you changed your password for Google, Facebook, and/or Yahoo yet? If not, why not? Have any institutions informed you that their site was vulnerable? Have they encouraged (or required) you to change your password? What was the procedure like? How long did it take? Share your experience with others and encourage them to protect their identities as well.
  • Social media manipulates General Motors' reputation

    [View: utility/ :550:0] Mary Barra, CEO of General Motors talking to her employees about the vehicle recall in a recent video If video does not appear above, see link to video here . "Damage control" looks different in the modern age of social networking. General Motors' recent problems with the ignition switches of several of its vehicles has created a public relations problem. GM's response has utilized social media on at least three fronts. First, a video--supposedly a speech to GM employees--is available in the public domain. Second--the Facebook page of GM is responding to customer issues--maybe not always successfully: image from Third, GM is at least listening in to Twitter complaints...and responding. One Alaskan mother, Lauren Munhoven, tweeted a complaint. GM listened and helped her with her Saturn Ion by paying the ferry cost to get her car fixed, and getting her a rental car. Munhoven posted her thanks on Twitter. GM is also using old school methods of snail-mail notices of recalls, and call centers to help with customer problems. I found it quite compelling that part of the message was that the cars were safe to drive IF there were no other items attached to the keys--like no key ring. These apparently could be bumped or could weight the ignition switch in a way that the problems ensued. The mixed message--that there is an ignition problem but that the customer might be partly to blame because they use a key ring--might not be the best message to be putting out to the public. In this modern age of social media, customers who are outraged can "flame" GM's service--that is, negatively report their experience to as many others as might be tantalized by the customer message. It remains to be seen how this plays out in GM sales. By the way, there is another Facebook page called GM Recall Survivors . From what I've read on it, it seems more to be about those who have not survived. Source: " G.M. Uses Social Media to Manage Customers and Its Reputation ," by Vindu Goel, New York Times , March 23, 2013. Follow up: What effect would a text message from GM Customer Care have on your confidence level if you were a Cobalt owner? Evaluate Mary Barra's video as a communication vehicle to GM employees, and as as public relations piece "spinning" the defective part debacle.
  • Long-term care insurance hikes rates 90%

    image from The above chart represents nursing home costs increases, which are probably at the root of the rate hikes charged by private insurers. If you are a student, you are probably more interested in the health-care options of Obamacare than in long term care insurance. But because your parents are more likely to be drawing on long term health insurance, its cost and viability might be of some concern to you. The main "bright line" of sustainability and fairness separates the positions on long term care along the same line as it does on general health care: Does the private insurance marketplace provide better coverage per dollar, or would a government-sponsored "single payer" plan be better? One couple with private long-term insurance, provided by John Hancock, was recently informed that their premiums would almost double from last year to this year: Up to $3,714.38 for the husband and $4,642.97 for the wife. On a percentage basis, this represents a 90% rate increase. Nothing has changed about the couple themselves, but the marketplace of nursing care costs and the possibility of future claims has caused the insurance company to hike the rates. To put it more clearly: this couple, the Holtzmans, have been paying premiums for 10 years. They have never made a claim. Still, their premiums have increased this much. " This seems unconcionable ," Holtzman said. Would this happen with single-payer, government-sponsored insurance? Probably not. We have not seen these kinds of spikes in Medicare insurance payments, and that is the currently operative single-payer plan that is in place in the U.S. What does this mean in terms of risk management on an individual level? Source: " Feeling ill effects of private long-term care insurance ," by David Lazarus, The Los Angeles Times , March 25, 2014. Follow up: Would you buy long term care insurance? Do you want your parents to be covered by this insurance, or are you willing to take over their care if they become disabled for a long period of time?
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