Sunday, May 23, 2010

US agencies have billions, trillions in investments while crying budget deficits

Gerald Klatt and Walter Burien are unrecognized heroes. These individuals are national leaders who have communicated how government agencies conceal American taxpayers’ money in surplus accounts that collectively total trillions of our dollars. The data is found in government agencies’ Comprehensive Annual Financial Reports (CAFRs).

What CAFRs reveal is a communist-style policy whereby the US taxpayers surrender enormous assets to the state, who then “invest” these collective trillions that swell in these accounts. Concurrently, taxpayers are informed of budget deficits to either squeeze more taxes from them and/or cut public services. To add insult to injury, the state lies in omission by never reminding Americans of their hard-earned and withheld trillions as they eliminate jobs, reduce education, and attack the quality of our lives.
The American Constitution is a contract of limited government whereby the public informs and is informed by our representatives. CAFRs are damning public documents that expose “leadership” from Left and Right as exactly what leading economic voices have said: an absolutely corrupt and self-serving oligarchy.
Let’s look at the economic data revealed in CAFRs.
For example, California has a budget deficit of ~$20 billion. The combined investments of CAFRs for the state of CA, Los Angeles County, and the City of Los Angeles is over $450 billion; over 22 times the amount of the budget shortfall (documentation page numbers below).
California claims they need this money mainly for public employee retirement benefits. Let’s check that story. The CAFR data shows current member contribution pays for all retiree benefits except for $1.8 billion (net cost). If just these three state agencies surrendered their withheld money back to the public instead of lording over it as communists, each Californian would receive ~$15,000. To pay for the shortfall in the retirement account, each individual could be taxed $50.
Why has political “leadership” and corporate media not informed American taxpayers of this option and publicly submitted this data for professional and independent economist cost-benefit analysis to provide other options?
The answer to that question is also the answer to the question of how political "leadership" gets away with Orwellian unlawful wars.
So far, we’re only considering three CAFRs in the state of California. The comprehensive reality is far more dramatic. If you combine all of California’s ~10,000 government agencies’ CAFRs, the combined total according to Walter Burien’s sampling analysis is $8 trillion. Let’s say Walter’s way-off. For argument’s sake, let’s say the total is less than half; only $3.5 trillion. If that was returned to the public, each Californian would receive $100,000.
Walter says he’s confident in his documentation that every state has overtaxed and seized Americans’ hard-earned money in outrageous sums.
Obviously, we need independent auditing of all state CAFRs and independent economic cost-benefit analyses to make our choices clear of how the public benefit is best served. Californians oppressed under a $20 billion dollar budget deficit that cuts essential public services while not considering taxpayers’ trillions “invested” in our names is among the worst choices imaginable.
It’s criminal.
It’s Orwellian.
To put this into an analogy, I’ve modified the one used by Walter:
This is like a juvenile claiming he needs money because his front pants pocket is empty, which he dutifully shows (budget). What he's not telling you is that his back pockets have over 100 times the money he says he "needs" (shown in various places of the CAFRs). Whenever he's asked about the money in his back pockets, which he never volunteers in discussing his empty front pocket and never invites for consideration to move some into the front pocket, he says, "Oh, that money is designated for other uses. I can't touch that." So far, the silence of corporate media and political leadership from Left and Right has brought us to today. Of course, "I can't touch that" is a lie of omission because it can be touched the moment policy changes. So the real issue is the heart of economics: what are the costs and benefits of different choices?
Here’s the specific data and documentation:
  • California pension and “other” trusts investments total $367 billion. Net pension benefits payable from that $367 billion in 2009 was $1.8 billion (retiree payouts minus current member contributions). Subtracting other liabilities ($48 billion in securities lending obligations that seemed to be borrowed from retirement funds- page 212), the state of California is holding onto over $300 billion of the public’s money that could be used for other purposes (pages 48, 49 of the report).
  • The misleading information on pages 154-155 suggests retirement funds are not fully funded. However: over $300 billion is held in investments for $1.8 billion in net benefits. How many votes do you think our present policy would receive from the California public given the alternative of receiving ~$15,000 now and paying a $50 tax every year.
  • The investments: $143 billion in “equity securities” (stocks), $92 billion in debt securities (page 83-84). $72 billion is dependent upon foreign markets (page 88).
  • The UC system had a budget deficit for this ending school year of $0.65 billion. The policy response was to deny 2,300 students enrollment, lay-off over 2,000 faculty and staff, furlough teaching days and cut 10% salaries, and raise tuition by 32%. For less than one-third of one percent of the investment total of California, UC would have been fully-funded and those reductions eliminated.
  • California’s 20,000 laid-off teachers could be rehired at $70,000/year for $3.4 billion; less than 1% of these three CAFR “investments” total.
  • One cost of this deception: Governor Schwarzenegger announced a 41 percent cut for the 2010 budget in "general government" services including elimination of CALWORKS (welfare to work and child-care program, which will affect 1.4 million people, two thirds of them children), and sharp decreases in health and welfare programs for single mothers, low-income children, foster youth, the disabled, and senior citizens.
  • Los Angeles County has $52 billion in investments (pages 61-63), the City of Los Angeles has $36 billion (page 80). Both have drastically cut programs. Both have pension plans underfunded by current members by less than 2% of their investment totals.
Below is Walter Burien’s 10-minute introduction to his video explanation of CAFRs. Walter claims that investments are only the most obvious section where CAFRs reveal hidden public money in plain sight; other areas include advanced forward liabilities accounts (overestimates and/or retained money for far-distant projects), states buying their own debt, profits from state-run enterprises (like recycling), and possible other areas requiring full and independent audits to discover.

I conclude with my usual resources for comprehensive understanding and suggestions for action. This has some repetition or the above information along with additional resources:
Fellow Americans: literally for the love of God, it’s time.
It’s time for our men and women in government and military to choose: either stand with the US Constitution you’ve sworn to support and defend against all enemies, foreign and DOMESTIC, or remain complicit in ongoing Wars of Aggression, mass murder of our soldiers and our fellow humans in other lands and throwing trillions of our tax dollars to do so, pushing the world ever-closer to an apparently planned and desired nuclear Third World War (and here), and guilty of what Dr. Martin Luther King called “Silence is Betrayal” (before the US government assassinated him according to the only trial conducted for his murder).
Over 5,000 US soldiers have been killed so far as pawns of the civilian and military brass tyrants. Multiples more have been crippled physically and emotionally. There is no end in sight to current wars; indeed, the US is expanding them into Pakistan and Yemen and threatening more war with Iran. The dead are comforted by God; their families are devastated by the loss of their loved-ones. The crippled and their families face a range of challenges; many so severe that a total of 6,000 US veterans commit suicide every year. One-third of all US homeless men are veterans.
It’s time for our men and women in the military and government to refuse all orders associated with our unlawful wars and preparation for unlawful war with Iran over one gram of medical isotope worth $75,000 in 20% enriched nuclear fuel. It is hard to imagine a more ridiculous case for war.
It’s time for our men and women in the military and government to stand with the American public who declare in a ratio of 9 to 1 that our government no longer represents them under the US Constitution.
It’s time: exercise your 1st Amendment right to freedom of speech and press, and to petition the Government for a redress of grievances. Please provide this article to all Americans if you find it helpful to stop current and future unlawful wars.
Our military was duped into these wars with calculated "Big Lies;" our trusting young men and women took an Oath to support and defend the US Constitution that supersedes the Nazi insert of “placing the mission first.” The Claus von Stauffenberg faction of US military and government must act to end this soulless mass-murdering; this loveless series of unlawful wars and unlawful orders, if we want a future we’re proud to build.
This choice is up to our men and women in uniform and government for leadership. I provide:
Choose well; our collective future, and your future, depend upon it. I appreciate your attention to these facts and encourage your further study and action consistent with your own self-expression.
It's time: please share this article with all who can benefit. If you appreciate my work, please subscribe by clicking under the article title (it’s free). Please use my archive of work to help build a brighter future.
Policy response: Gandhi and Martin Luther King advocated public understanding of the facts and non-cooperation with evil:
"One thing we have endeavoured to observe most scrupulously, namely, never to depart from the strictest facts and, in dealing with the difficult questions that have arisen during the year, we hope that we have used the utmost moderation possible under the circumstances... We have an abiding faith in the mercy of the Almighty God, and we have firm faith in the British Constitution. That being so, we should fail in our duty if we wrote anything with a view to hurt. Facts we would always place before our readers, whether they are palatable or not, and it is by placing them constantly before the public in their nakedness that the misunderstanding between the two communities in South Africa can be removed."
- Mohandas K. Gandhi, Indian Opinion (1 October 1903)
For Gandhi’s evolved view of British evil in 1922, read this passage from Freedom’s Battle.
Gandhi concluded the effective response from the public was non-violent, non-cooperation with unjust British rule until the British themselves realized their engagement in immoral acts with an educated and non-cooperative public was inconsistent with their own values.
To consider:
"If we are to have peace on earth, our loyalties must become ecumenical rather than sectional. Our loyalties must transcend our race, our tribe, our class, and our nation; and this means we must develop a world perspective. No individual can live alone, no nation can live alone and as long as we try, the more we are going to have war in the world. Now the judgment of God is upon us and we must either learn to live together as brothers or we are all going to perish together as fools."
--Inscription on Dr. Martin Luther King’s statue, Moorehouse College, Atlanta
"The day that hunger is eradicated from the earth, there will be the greatest spiritual explosion the world has ever known. Humanity cannot imagine the joy that will burst into the world on the day of that great revolution." -- poet Federico García Lorca
Comments policy: I present a professional level of discourse based on facts. I welcome questions and comments that are civil and pertain to the article topic. Here, readers are welcome to argue for any inaccuracy of factual claim and/or need for inclusion of other facts. Readers are welcome to interpret facts however they wish and welcome to any policy position. They are not welcome to misrepresent facts. Facts are objective, measurable, and independently verifiable.
That is how freedom looks. Freedom is not an allowance of whatever, whenever, however. We censor behavior of drivers beyond strict limits, censor many behaviors as fouls and out-of-bounds in sports. We censor people in relationships and business from certain acts, and can fire them upon violation. You censor in your place of business those who distract and/or damage your work. You fire destructive people from relationships, and would never invest your time or money for a sport that did not strictly censor behavior.
Our government is paradoxically based on censorship: “deriving their just powers from the consent of the governed” means any behavior outside constitutional limits is forbidden. This is the paradox of freedom: freedom is only realized within limits.
In these articles, I write for the highest level of factual accuracy and will manage comments with that commitment. Comments and questions are welcome ONLY from those who chose factual integrity.
Please consider that I’m among hundreds of writers who have documented our own government’s disclosure of propaganda programs to support their wars. My articles are subject to such propagandistic attack from comments that use typical rhetorical fallacies to distract readers from the facts. I invite readers to sharpen their ability to discern such propaganda. They are characterized by a combination of: denying facts without evidence, ignoring key facts in lies of omission, lying about verifiable facts as lies of commission, diverting attention through unsubstantiated belief in an alleged expert, irrelevant data, straw-man attack that distorts the facts, ad hominem attack of insults to the messenger, vile comments to repulse readers, and focus on minutia.
I will use such comments to point-out the propaganda or delete them at my discretion. Again, all relevant and polite questions, and factually accurate comments are welcome. As a professional educator I’m in agreement with my experience and research: we learn best from multiple perspectives in mutual commitment to understand the facts, see those facts from diverse points-of-view, and consider various policy proposals of what we should do.
"But now, after having once and for all put to the test the judgments of men, I here again approach these same questions regarding God and the human mind, and at the same time treat the beginnings of the whole of first philosophy, but in such a way that I have no expectation of approval from the vulgar and no wide audience of readers. Rather, I am an author to none who read these things but those who seriously meditate with me, who have the ability and the desire to withdraw their mind from the senses and at the same time from all prejudices. Such people I know all too well to be few and far between. As to those who do not take care to comprehend the order and series of my reasons but eagerly dispute over single conclusions by themselves, as is the custom for many-those, I say, will derive little benefit from a reading of this treatise; and although perhaps they might find an occasion for quibbling in many spots, still it is not an easy matter for them to raise an objection that is either compelling or worthy of response."
- Rene Descartes, Meditations on First Philosophy, 1641, "Preface to the Reader." This book is usual reading in college philosophy courses today. Descartes is considered the founder of modern philosophy, the founder of analytical geometry (which led to calculus), and a founder of the Scientific Revolution. Descartes was well-known in his age, but highly controversial. His work was condemned by the Roman Catholic Church in 1633, and his books put on the Index of Prohibited Books in 1663. The University of Utrecht condemned his work in 1643, where he had previously taught.
For those involved in support of US government-sponsored disinformation in whatever versions of Operation Mockingbird that are active, I invite you to consider the quality of human relationships you wish to create. National security and a brighter future is not a function of fear, manipulation, and control. Our best security follows cooperation, justice under the law, dignity, and freedom. Working for your best imagined self-expression of virtue may include a unique contribution from the inside of your agency. Public attraction to the stories of Star Wars and the Harry Potter books/movies recognize that our society’s jump to civilized relations for all of us might require support from people within the “dark side” acting as covert agents for building a brighter future. Another option is becoming a whistle-blower; Project Camelot is a popular venue for people in sensitive positions. Ultimately, I recommend a Truth and Reconciliation process to exchange full truth for no prosecution, explained in detail at the link. Please consider the wisdom of your own “Scrooge conversion” to act for the benefit of building a brighter future for all humanity rather than propagandizing for your controlling, manipulating, and loveless “masters’” psychopathic policies of violence and suffering.
“Scrooge was better than his word. He did it all, and infinitely more; and to Tiny Tim, who did not die, he was a second father. He became as good a friend, as good a master, and as good a man, as the good old city knew, or any other good old city, town, or borough, in the good old world. Some people laughed to see the alteration in him, but he let them laugh, and little heeded them; for he was wise enough to know that nothing ever happened on this globe, for good, at which some people did not have their fill of laughter in the outset; and knowing that such as these would be blind anyway, he thought it quite as well that they should wrinkle up their eyes in grins, as have the malady in less attractive forms. His own heart laughed: and that was quite enough for him.”
Los Angeles County: We’re home to 10 million people and are the media capital of the world. If we are to build a brighter future, the broadest picture must be communicated. Los Angelinos will play leading roles in communicating these issues’ importance to all humanity and in context to the economic and security concerns of local communities and families, as I explain above. These issues are ongoing “current events” of literally trillions of our collective dollars that directly effect billions of human beings, around the world who we touch in L.A.’s media market and where so many of us have family and friends, and locally with the per household tax burden for trillions of our collective dollars. Current US wars cost every L.A. County household ~$30,000 to $50,000 in long-term costs; over $100 billion total. To put this in perspective, California’s state budget deficit is $20 billion; the source of unemployment cutbacks and shortages of services. The most important impact on our local communities are often the broadest topics.

Hawaii Film Industry Booming

What recession? The movie business is booming in Hawaii.The Department of Economic Development and Tourism said estimates film and TV production will bring in $181 million in 2010. And that’s not counting “Pirates of Caribbean: On Stranger Tides,” which will bring in another $85 million.“It's very, very busy in Hawaii right now, thankfully. I think the film office and our creative industries division is dedicated to making sure we have a vibrant film and television economy and you can see that right now,” said Georja Skinner, chief officer of the Creative Industries Division.“Like any other time, there's feast and famine, but right now we've got a lot of productions coming in. It looks like the tax breaks are going to get put back in by the legislature and that's going to draw a lot more projects to Hawaii,” said Michael Rivero, who was working on Lost, and is now part of the Hawaii Five-0 crew.Last year, the Hawaii Film Office suffered major cutbacks. Now, those who are left are working extra hard to help set things up for big productions. All these productions are great for the state economy. Just the "Hawaii Five-0" production brought about 150 people to Waikiki, where they set up a production office, and house cast and crew in a major hotel.Clint Eastwood was just directing a film on Maui titled “Here After.” Adam Sandler will be shooting “Pretend Wife,” another feature film in April and May.Skinner said it is always good when Hawaii products are featured, like George Clooney in an aloha shirt.“One would hope we would see a lot of local fabrics, local clothing and a lot of local color in films,” said Skinner.

Greece prepares for massive new strike

Greece prepares for massive new strike
A worker sits between docked ships during a 24-hour labour strike at port of Piraeus near Athens May 20, 2010. Thousands of Greeks will march on parliament on May 20 in the first major anti-austerity rally since three people died in a massive demonstration this month.



Massive general strikes by the Greek public sector will all but paralyse much of the country as Greek trade unions launch another 24-hour general protest against planned additional austerity measures.

Transport services, including international trains linking Greece with Bulgaria and Romania, as well as shipping and domestic flights, are expected to be severely disrupted or cancelled. According to Bulgarian media, some, if not all Bulgarian and Greek border crossing points, might be temporarily closed for traffic, causing additional concern for those who need to travel.

Greece's main civil service and public sector unions say they represent about 2.5 million workers, while according to local media, organisers say that they hope more than 100 000 people will join the protests. Although most protesters are believed to be legitimate protesters, authorities fear that a hardcore, anarchist element could participate, prompting fears of renewed violence after a strike in Athens two weeks ago led to the deaths of three people in a bank blaze.

Greeks are angered by spending cuts and tax and pension-age rises planned in return for a 110 billion euro emergency bail-out - a measure designed to curtail debt and spending - and fresh budget cuts of 30 billion euro over three years.

Greece's current public deficit, which is worse than the 12.7 per cent initially thought, and stands at 13.6 per cent, is supposed to be cut down to three per cent in three years.

The strike will close government buildings, schools, banks, and reduce hospitals to an emergency skeleton staff.

It was confirmed by the Bulgarian state rail company BDZ that the protests will result in major disruption to traffic between the two countries. Four international trains, two in the morning and two in the afternoon on May 20 between Sofia and Thessaloníki, will be cancelled.

"All passengers who lost their tickets for the international trains will be reimbursed by BDZ," the statement said. Passengers will be able to receive their money back in full or reschedule for another date.

In spite of wide public opposition, including protests and violence that turned deadly, the rescue package for Athens from the European Union and the International Monetary Fund was agreed earlier in May as part of tough new austerity measures to help Greece curb its soaring debt and deficit.

Because of the turmoil in the Balkan state, the European single currency fell to its lowest level against the dollar since 2006, amid concerns that debt problems will undermine Europe's recovery from the global economic crunch.

Massive Demonstration In Romania Protesting Austerity Measures

(RTTNews) - Romania's workforce held a demonstration on Wednesday to protest the government's new austerity measures that cut jobs and wages.

The demonstration by some 20,000 people, who gathered in front of the government headquarters in capital Bucharest to protest planned government wage-cuts, was one of the largest mass protests that the Eastern European country witnessed since the fall of Communism in 1989.

Six-month-old centrist government of Prime Minister Emil Boc was forced to announce austerity measures to bolster the country's struggling economy and to meet a July deadline set by the International Monetary Fund (IMF) for the fifth tranche of a 20 billion-euro ($25 billion) loan.

The IMF has said it will disburse its next installment of aid only after Romania enforces a credible plan to reduce its budget deficit to 6.8 per cent of the Gross Domestic Product.

The demonstrators, belonging to the country's five largest trade union confederations, were protesting a 25-per cent cut in public-sector wages, a 15-per cent cut in pensions and unemployment benefits, the curtailing of child and child rearing allowances by 15 per cent, and the trimming of the wages of employees of state-owned companies.

They accuse the government of laying too much burden on the low-paid employees and the poorest social categories.

They have called for a general strike later this month if their demand for a more equitable sharing of the burden of austerity measures is not met.

Hard-hit by the global recession, Romania is in dire need of the external financial assistance promised by the IMF.

by RTT Staff Writer

The Mysterious CAFRs: How Stagnant Pools of Government Money Could Help Save the Economy

For over a decade, accountant Walter Burien has been trying to rouse the public over what he contends is a massive conspiracy and cover-up, involving trillions of dollars squirreled away in funds maintained at every level of government. His numbers may be disputed, but these funds definitely exist, as evidenced by the Comprehensive Annual Financial Reports (CAFRs) required of every government agency. If they don't represent a concerted government conspiracy, what are they for? And how can they be harnessed more efficiently to help allay the financial crises of state and local governments?

The Elusive CAFR Money


Burien is a former commodity trading adviser who has spent many years peering into government books. He notes that the government is composed of 54,000 different state, county, and local government entities, including school districts, public authorities, and the like; and that these entities all keep their financial assets in liquid investment funds, bond financing accounts and corporate stock portfolios. The only income that must be reported in government budgets is that from taxes, fines and fees; but the investments of government entities can be found in official annual reports (CAFRs), which must be filed with the federal government by local, county and state governments. These annual reports show that virtually every U.S. city, county, and state has vast amounts of money stashed away in surplus funds. Burien maintains that these slush funds have been kept concealed from taxpayers, even as taxes are being raised and citizens are being told to expect fewer government services.

Burien was originally alerted to this information by Lt. Col. Gerald Klatt, who evidently died in 2004 under mysterious circumstances, adding fuel to claims of conspiracy and cover-up. Klatt was a an Air Force auditor and federal accountant, and it's not impossible that he may have gotten too close to some military stash being used for nefarious ends. But it is hard to envision how all the municipal governments hording their excess money in separate funds could be complicit in a massive government conspiracy. Still, if that is not what is going on, why such an inefficient use of public monies?

A Simpler Explanation


I got a chance to ask that question in April, when I was invited to speak at a conference of Government Finance Officers in Missouri. The friendly public servants at the conference explained that maintaining large "rainy day" funds is simply how local governments must operate. Unlike private businesses, which have bank credit lines they can draw on if they miscalculate their expenses, local governments are required by law to balance their budgets; and if they come up short, public services and government payrolls may be frozen until the voters get around to approving a new bond issue. This has actually happened, bringing local government to a standstill. In emergencies, government officials can try to borrow short-term through "certificates of participation" or tax participation loans, but the interest rates are prohibitively high; and in today's tight credit market, finding willing lenders is difficult.

To avoid those unpredictable contingencies, municipal governments will keep a cushion of from 20% to 75% more than their budgets actually require. This money is invested, but not necessarily lucratively. One finance officer, for example, said that her city had just bid out $2 million as a 30-day certificate of deposit (CD) to two large banks at a meager annual interest of 0.11%. It was a nice spread for the banks, which could leverage the money into loans at 6% or so; but it was a pretty sparse deal for the city.

Meanwhile, Back in California


That was in Missouri, but the figures I was particularly interested were for my own state of California, which was struggling with a budget deficit of $26.3 billion as of April 2010. Yet the State Treasurer's website says that he manages a Pooled Money Investment Account (PMIA) tallying in at nearly $71 billion as of the same date, including a Local Agency Investment Fund (LAIF) of $24 billion. Why isn't this money being used toward the state's deficit? The Treasurer's answer to this question, which he evidently gets frequently, is that legislation forbids it. His website states:

Can the State borrow LAIF dollars to resolve the budget deficit? No. California Government Code 16429.3 states that monies placed with the Treasurer for deposit in the LAIF by cities, counties, special districts, nonprofit corporations, or qualified quasi-governmental agencies shall not be subject to either of the following: (a) Transfer or loan pursuant to Sections 16310, 16312, or 16313. (b) Impoundment or seizure by any state official or state agency.

The non-LAIF money in the pool can't be spent either. It can be borrowed, but it has to be paid back. When Governor Schwarzenegger tried to raid the Public Transportation Account for the state budget, the California Transit Association took him to court and won. The Third District Court of Appeals ruled in June 2009 that diversions from the Public Transportation Account to fill non-transit holes in the General Fund violated a series of statutory and constitutional amendments enacted by voters via four statewide initiatives dating back to 1990.

In short, the use of these funds for the state budget has been blocked by the voters themselves. Bond issues are approved for particular purposes. When excess funds are collected, they are not handed over to the State toward next year's budget. They just sit idly in an earmarked fund, drawing a modest interest.

What's Wrong with This Picture?


California's budget problems have caused its credit rating to be downgraded to just above that of Greece, driving the state's interest tab skyward. In November 2009, the state sold 30-year taxable securities carrying an interest rate of 7.26%. Yet California has never defaulted on its bonds. Meanwhile, the too-big-to-fail banks, which would have defaulted on hundreds of billions of dollars of debt if they had not been bailed out by the states and their citizens, are able to borrow from each other at the extremely low federal funds rate, currently set at 0 to .25% (one quarter of one percent). The banks are also paying the states quite minimal rates for the use of their public monies, and turning around and relending this money, leveraged many times over, to the states and their citizens at much higher rates. That is assuming they lend at all, something they are increasingly reluctant to do, since speculating with the money is more lucrative, and investing it in federal securities is more secure.

Private banks clearly have the upper hand in this game. Local governments have been forced to horde funds in very inefficient ways, building excessive reserves while slashing services, because they do not have the extensive credit lines available to the private banking system. States cannot easily incur new debt without voter approval, a process that is cumbersome, time-consuming and uncertain. Banks, on the other hand, need to keep only the slimmest of reserves, because they are backstopped by a central bank with the power to create all the reserves necessary for its member banks, as well as by Congress and the taxpayers themselves, who have been arm-twisted into repeated bailouts of the Wall Street behemoths.

How the CAFR Money Could Be Used Without Spending It


California, then, is in the anomalous position of being $26 billion in the red and plunging toward bankruptcy, while it has over $70 billion stashed away in an investment pool that it cannot touch. Those are just the funds managed by the Treasurer. According to California's latest CAFR, the California Public Employees' Retirement Fund (CalPERS) has total investments of $360 billion, including nearly $144 billion in "equity securities" and $37 billion in "private equity." See the State of California Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009, pages 83-84.

This money cannot be spent, but it can be invested -- and it can be invested not just in conservative federal securities but in equity, or stocks. Rather than turning this hidden gold mine over to Wall Street banks to earn a very meager interest, California could leverage its excess funds itself, turning the money into much-needed low-interest credit for its own use. How? It could do this by owning its own bank.

Only one state currently does this -- North Dakota. North Dakota is also the only state projected to have a budget surplus by 2011. It has not fallen into the Wall Street debt trap afflicting other states, because it has been able to generate its own credit through its own state-owned Bank of North Dakota (BND).

An investment in the State Bank of California would not be at risk unless the bank became insolvent, a highly unlikely result since the state has the power to tax. In North Dakota, the BND is a dba of the state itself: it is set up as "the State of North Dakota doing business as the Bank of North Dakota." That means the bank cannot go bankrupt unless the state goes bankrupt.

The capital requirement for bank loans is a complicated matter, but it generally works out to be about 7%. (According to Standard & Poor's, the worldwide average risk-adjusted capital ratio stood at 6.7 per cent as of June 30, 2009; but for some major U.S. banks it was much lower: Citigroup's was 2.1 per cent; Bank of America's was 5.8 per cent.) At 7%, $7 of capital can back $100 in loans. Thus if $7 billion in CAFR funds were invested as capital in a California state development bank, the bank could generate $100 billion in loans.

This $100 billion credit line would allow California to finance its $26 billion deficit at very minimal interest rates, with $74 billion left over for infrastructure and other sorely needed projects. Studies have shown that eliminating the interest burden can cut the cost of public projects in half. The loans could be repaid from the profits generated by the projects themselves. Public transportation, low-cost housing, alternative energy sources and the like all generate fees. Meanwhile, the jobs created by these projects would produce additional taxes and stimulate the economy. Commercial loans could also be made, generating interest income that would return to state coffers.

Building a Deposit Base


To start a bank requires not just capital but deposits. Banks can create all the loans they can find creditworthy borrowers for, up to the limit of their capital base; but when the loans leave the bank as checks, the bank needs to replace the deposits taken from its reserve pool in order for the checks to clear. Where would a state-owned bank get the deposits necessary for this purpose?

In North Dakota, all the state's revenues are deposited in the BND by law. Compare California, which has expected revenues for 2010-11 of $89 billion. The Treasurer's website reports that as of June 30, 2009, the state held over $18 billion on deposit as demand accounts and demand NOW accounts (basically demand accounts carrying a very small interest). These deposits were held in seven commercial banks, most of them Wall Street banks: Bank of America, Union Bank, Bank of the West, U.S. Bank, Wells Fargo Bank, Westamerica Bank, and Citibank. Besides these deposits, the $64 billion or so left in the Treasurer's investment pool could be invested in State Bank of California CDs. Again, most of the bank CDs in which these funds are now invested are Wall Street or foreign banks. Many private depositors would no doubt choose to bank at the State Bank of California as well, keeping California's money in California. There is already a movement afoot to transfer funds out of Wall Street banks into local banks.

While the new state-owned bank is waiting to accumulate sufficient deposits to clear its outgoing checks, it can do what other startup banks do - borrow deposits from the interbank lending market at the very modest federal funds rate (0 to .25%).

To avoid hurting California's local banks, any state monies held on deposit with local banks could remain there, since the State Bank of California should have plenty of potential deposits without these funds. In North Dakota, local banks are not only not threatened by the BND but are actually served by it, since the BND partners with them, engaging in "participation loans" that help local banks with their capital requirements.

Taking Back the Money Power


We have too long delegated the power to create our money and our credit to private profiteers, who have plundered and exploited the privilege in ways that are increasingly being exposed in the media. Wall Street may own Congress, but it does not yet own the states. We can take the money power back at the state level, by setting up our own publicly-owned banks. We can "spend" our money while conserving it, by leveraging it into the credit urgently needed to get the wheels of local production turning once again.

It’s Official: U.S. Government Website Declares There Are No Conspiracies

Last week I posted a video commercial from the CFR that promotes all of the “wonderful” things it does. Now, the U.S. Department of State’s Bureau of International (Dis-)Information Programs website has a whole page called, “Conspiracy Theories and Misinformation.” No, gang, there’s nothing on the page about Weapons of Mass Deception Destruction, the Warren Commission Whitewash Report, or how the “Federal” Reserve causes—not prevents—inflation. The site is referring to “misinformation” that many conspiracy researchers have been dispensing in books, radio and TV shows, blog sites, etc. for the past decades.

By the way, according to this website, I guess Murray Rothbard must have been a “Marxist”:

“Economic conspiracy theories are often based on the false, but popular, idea that powerful individuals are motivated overwhelmingly by their desire for wealth, rather than the wide variety of human motivations we all experience. (This one-dimensional, cartoonish view of human nature is at the heart of Marxist ideology, which once held hundreds of millions under its sway.)”

Similar to what I wrote in the CFR video post, Conspiracy Realists Theorists are obviously starting to ruffle the Banksters’ feathers. Not enough to stop the oncoming NWO/OWG Orwellian nightmare, but enough that the Banksters now have to create websites such as this to try to counter the growing headway that is being made in exposing their true goals.

17 States Now Filing Versions of Arizona's Immigration Bill SB 1070

One of America's national organizations fighting against illegal immigration is announcing that 17 states are now filing versions of Arizona's SB 1070 law which is designed to help local police enforce America's existing immigration laws.

Numerous national and local polls indicated that 60-81% of Americans support local police enforcing immigration laws.

"Our national network of activists have been working overtime trying to help the state of Arizona and the brave Arizonans who have passed this bill," said William Gheen, President of Americans for Legal Immigration PAC. "Arizona no longer stands alone and we have now documented state lawmakers filing, or announcing they will file, versions of the Arizona bill in seventeen states! We will not stop until all states are protected from invasion as required by the US Constitution."

ALIPAC has documented the following 17 states are following Arizona's lead in response to citizen pressure.

ARKANSAS, IDAHO, INDIANA, MARYLAND, MICHIGAN, MINNESOTA, MISSOURI, NEBRASKA, NEVADA, NEW JERSEY, OHIO, OKLAHOMA, PENNSYLVANIA, RHODE ISLAND, SOUTH CAROLINA, TEXAS, UTAH

Americans for Legal Immigration PAC (ALIPAC) has helped to pass some form of immigration enforcement legislation in over 30 states, while the group has also gained a national reputation for defeating legislation designed to give licenses, in-state tuition, and other taxpayer benefits to illegal aliens in 20 states.

ALIPAC's President, William Gheen is a former campaign consultant, Legislative Assistant, state lobbyist, and Assistant Sgt-At-Arms staffer in North Carolina who has turned his local experiences into a political battle plan by driving the national operations of ALIPAC.

"The Federal government has been hijacked by special interests that are neglectful of their duties and even hostile towards the rightful citizens of America," said William Gheen. "It is incumbent upon our states to protect American lives, property, jobs, wages, security, and health, when the Executive Branch fails to honor its Constitutional responsibility to do so by enforcing our existing border and immigration laws."

Americans for Legal Immigration PAC lobbied state lawmakers and AZ Governor Jan Brewer to pass SB 1070, which strictly prohibits racial profiling while empowering local police officers to enforce immigration laws.

ALIPAC's activists have been working for almost four weeks now to encourage state lawmakers across the nation to file versions of SB 1070, to help alleviate boycotts and other political antagonism towards Arizona. Citizen activist are being asked to call, e-mail, visit, and fax their state lawmakers to encourage them to support existing SB 1070 type bills or to file them as soon as possible.

For a list of the 17 states joining Arizona's push for this kind of legislation, and to view the associated documentation, please visit our tracking link for updated information at....
http://www.alipac.us/ftopict-196989.html

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Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

EPA May Not Force BP to Change Dispersants

A day after the Environmental Protection Agency gave BP 72 hours to start using a "less toxic" dispersant to help control the massive oil leak in the Gulf of Mexico, the agency told ABC News today it may allow BP to keep using the same chemicals.

The oil company is accused of dishonesty and use of a toxic chemical dispersant.

The EPA on Thursday gave BP 24 hours to find a better dispersant and 72 hours to begin using it.

The EPA said testing had determined that the use of the dispersant Corexit had killed up to 25 percent of all organisms living at 500 feet below the surface in areas where the dispersant was used. A top BP executive defended the use of Corexit on "Good Morning America" today.

"The EPA had to approve and the Unified Command and the Coast Guard had to approve the use of that product. It is approved and in fact we've been using it and it has been effective," BP chief operating officer Doug Suttles told "Good Morning America" today. "It's making a difference in this fight to try and keep this stuff from coming to shore."

Though Suttles said BP will continue to search for a better alternative, he said "right now we cannot identify another product that is available that's better than [dispersant] Corexit."

EPA spokeswoman Adora Andy told ABC News today, "It's not that Corexit is banned. It's not that they have to stop using it because they're using it right now. But it's just that they need to switch over."

If the 72-hour window passes without a suitable alternative found, the EPA will demand BP prove it investigated a number of alternatives and explain why they were not chosen, according to Thursday's statement. Beyond that, the EPA would not comment on consequences of a missed deadline.

EPA made its demand for a "less toxic" dispersant Thursday after criticism grew over the effects of Corexit.

"Any living organism that contacts this stuff, particularly the mixture of dispersant and oil, is at significant risk of acute mortality," said marine biologist Rick Steiner.

Suttles said he had not seen any evidence of the toll the dispersant is taking on marine life, he admitted that using the chemicals involves "tradeoffs."

"I haven't seen any evidence to show that," Suttles said today. "We're doing extensive monitoring as is NOAA (National Oceanic and Atmospheric Administration) and the EPA."

FDIC: 'Problem' Banks at 775

WASHINGTON—A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.'s list of "problem" institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.

Poor loan performance in other sectors also continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said in a briefing on Thursday.

"The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility," FDIC Chairman Sheila Bair said.

There were 702 on the FDIC's "problem" bank list at the end of 2009 and 252 at the end of 2008.

FDIC officials said they expected the number of failed banks to peak this year after climbing steadily over the past three years. Regulators have shut 72 banks so far this year, more than double the number closed by this time last year. Ms. Bair said regulators were preparing for a steady pace of additional closures through the end of the year. A total of 237 banks have failed since the beginning of 2008.

The failures continue to strain the FDIC's fund to protect consumer deposits, although officials signaled they were confident they had enough cash on hand to deal with the expected spate of failures, without having to assess new fees on the banking industry. The agency's deposit insurance fund stood at negative-$20.7 billion at the end of the first quarter, a slight improvement from the end of 2009.

"We have the necessary industry-funded resources to complete the cleanup," Ms. Bair said, in a reference to the fees that the agency assesses on banks for insuring their deposits.

Banks, squeezed by problem loans and the continued recession, responded by reducing their lending. The industry's total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without taking into account these accounting changes, lending would have declined for the seventh straight quarter, as banks cut back across most major lending categories.

"There is a lot of credit distress still in the mortgage-portfolio area," FDIC Chief Economist Richard Brown said at the FDIC briefing.

FDIC officials said they saw some signs for optimism. The total $18 billion, first-quarter profit reported by U.S. banks and thrifts was the highest since the first three months of 2008 and more than triple the profit recorded in the first quarter of last year. More than half of insured banks reported growth in net income during the quarter—the highest level in more than three years—and firms set aside less money to reserve for future losses.

The FDIC data suggested that the largest U.S. banks were faring better than their smaller rivals. The former enjoyed the largest year-over-year increase in earnings and saw the biggest reduction in loan-loss reserves, or the money they must set aside to account for future, expected losses on loans. Ms. Bair said the rate of decline in lending by larger banks also slowed in each of the past two quarters.

Courts quash cuts, add to state's budget woes

(05-22) 04:00 PDT Sacramento - -- Courts in recent years have crushed attempts by California to cut spending by billions of dollars and have forced the state to spend hundreds of millions more than planned.

Designated cuts to health and human services that were rejected by federal courts alone have resulted in $4.5 billion in lost savings over the past three years, according to Gov. Arnold Schwarzenegger's administration.

Prison health care costs have doubled to more than $1.9 billion since 2006, when a federal judge ordered a federal receiver to take control of prison health services.

"The judicial branch is now a full player in the budget because the decisions they are making have an impact on what the governor and Legislature can or cannot do," said H.D. Palmer, spokesman for the Department of Finance. "The judiciary does not have to deal with the fiscal consequence of the rulings - they say you can't do a spending reduction, but we have to come up with another $100 million in cuts somewhere else."

This year, the Republican governor is blaming the courts for some of the most controversial cuts contained in his budget proposal for the next fiscal year, which starts July 1. He says judges' mandates left him no option but to propose the wholesale elimination of programs, including welfare.

The governor is also seeking relief from the nation's highest court. On May 13, Schwarzenegger announced that 22 states joined California to ask the U.S. Supreme Court to review court decisions that blocked states from reducing public services. The states want a ruling barring suits by private parties against cuts to programs that are funded jointly by the state and federal government.

Among the court cases California lost this year is one in which federal judges blocked the planned reduction of Adult Day Health Care services, a Medi-Cal program that provides nearly 37,000 elderly and mentally infirm Californians with daytime care and supervision. Schwarzenegger wanted to reduce eligibility and limit the number of days the program is provided to save the state more than $35 million over three years.

Some of the groups that filed the lawsuits said they had no choice because elected officials failed to do their jobs or took actions that were blatantly illegal.

Change needed

State Senate President Pro Tem Darrell Steinberg, D-Sacramento - who supported an unsuccessful suit to fight Schwarzenegger's line-item veto cuts last year - said the "myriad of lawsuits speak to how desperately this structure of government needs to be changed."

"The things we can do under this broken system are stitches and Band-Aids, and that's why this year we're out of those options," Steinberg said. "The (court orders affecting prisons) are symptomatic of a larger problem - the desire for more but an unwillingness to confront the costs of providing more."

The problem won't be going away any time soon, even if reforms to the budget process are made.

Numerous court cases are still pending, including more than two dozen lawsuits challenging Schwarzenegger's furloughs of more than 200,000 state workers. Those cases threaten to punch even bigger holes in the state budget in the future. In the furlough case, a judge has warned that the workers might be entitled to back pay.

On Thursday, school districts and parents announced a lawsuit against the state arguing that elected officials have failed in their constitutional obligation to adequately fund public schools. The suit could take years to adjudicate, but if successful, could completely change how much money California must pump into public education. Longtime observers say there's nothing new about the budget being carved up by lawsuits. Court challenges tend to increase during tough budget times, said Santa Clara University law school Professor Gerald Uelmen.

"I don't think this is a new phenomenon - budget cuts frequently result in lawsuits," he said.

Some suits necessary

Some suits are necessary because there's a lack of political will to pour funding into certain areas, said Jeanne Woodford, a former director of the California Department of Corrections who worked for the department for more than 25 years. She said that a number of lawsuits filed by the nonprofit Prison Law Office on behalf of California inmates have resulted in necessary reforms, including the federal receivership overseeing health care and the oversight of mental health and dental programs.

The receivership was created in 2006 after a judge ruled that inadequate care was causing the premature deaths of about 50 inmates a year. "Sometimes it really takes a lawsuit to make things happen, for a variety of reasons, the primary one being it's not politically correct to spend money on prisons," said Woodford.

Don Specter, director of the Prison Law Center, said state prison officials agreed that changes made as a result of one suit were "helpful and necessary" and would not have happened without a court order.