Thanks to Matt Taibbi’s wonderful article “The Great American Bubble Machine,” I was inspired to do some more bailout math.
It looks to me like Goldman Sachs won big on the bailout. They got a $13 billion windfall from the AIG bailout. They got a $10 billion bailout in TARP that they paid back when they were ready. They got to become a bank holding company so they can raise capital using the FDIC credit. Can you imagine how cheap your borrowing rates would be if you could offer your creditors a federal guarantee? So your credit card rate would be 2% instead of 36%.
OK, the Fed lent the big banks $8.7 trillion. However, it is secret where that went. So we will not even count how much Goldman got from that or how much they made lending that money back to the U.S. government to finance the deficits that are increasing daily, in no small part thanks to Goldman.
And we are not counting how much Goldman made on shorting the housing market or on the take down of Bear Stearns and Lehman. We bet it was a lot, though.
Now, it turns out relative to the 2008 period that Goldman paid out $4.7 billion of compensation, of which their CEO got $42.9 million. During the same period—are you ready—their total US tax bill was $14 million.
OK, so let’s compare this to a potential California bailout. California needs $24 billion to balance their budget. If the federal government gave California $13 billion and loan them $10 billion, like they did Goldman, California would have to make $1 billion in cuts. However, if California refinanced their debt with the federal credit, as Goldman has been authorized to do, that would sufficiently reduce California’s cost of borrowing, that they should then have no deficit at all.
California would not pay out $4.7 billion in bonuses. They would also not pay $14 million in taxes to the federal government. However, if California does experience a real shock doctrine budget balancing exercise, the result will be a spiral down in the economy, leading to significant cuts in tax revenues to both California and the federal government. So figure the savings for federal revenues could be substantial.
The advantage of letting California hit the wall, is that then Goldman, their partners and their syndicates can buy up lots of land and businesses for cheap. Meantime, Californians can be busy working to pay the taxes to fund the billions gifted to Goldman so they can buy California. Californians will also have to work harder to make up for their losses on their defaulted California municipal bonds.
Think of this as a neighborhood leveraged buyout — except this time it could be an entire state. Indeed, another year of this and it could be an entire country.
Ever wonder how much money could be made shorting the California municipal bond market? Surely, there is a derivatives play…
Walter Burien, who has devoted years to the study of Comprehensive Annual Financial Reports, has shown that in 1999 ALONE, by investing OUR tax monies, OUR government EARNED a total of 8.5 TRILLION Dollars, AFTER expenses. That’s 8.5 TRILLION THEY earned in ONE year on OUR MONEY. Mr. Burien: “Keep in mind, Government only wants you to see one side of the picture; The DEBT. This is so that you will turn your back to the debt in fear or disgust and look the other way. Now, look at how much money OUR Government has to employ, buy off, and CONTROL; the BEST Marketers, Psychologists, Strategists, Takeover Specialists, Entertainment Propagandists, etc. etc. etc. Could it be that OUR very own Government over the last several decades has been promoting to those fortune 500 companies, MANY of which our Government OWNS, through Bond – Loan investment / stock ownership [EXAMPLES: 82% stock ownership of Microsoft Corporation, Disney 61%, AOL – Time Warner 58%, EXXON 72%] that they should manufacture abroad, so that Government would realize greater returns on their investments of OUR money, at the direct expense of WE THE AMERICAN PEOPLE in terms of JOBS and OUR OWN wealth retention, thus ACCOMPLISHING the laying of the groundwork for “balancing” world wealth, which is the primary foundation block of nothing other than the NEW WORLD ORDER? OUR Government wouldn’t do that for a few extra trillions of NON-TAX-INCOME dollars right? Well, sorry to have to break it to you but you’re WRONG. In the 60’s, most government investment funds were restricted to a cap of 5% to a maximum of 10% invested outside of the USA. By 2000, that restriction has been increased in many a case to over 45% and in some cases no restriction at all per percent of International investments held.
http://tpmmuckraker.talkingpointsmemo.com/2007/05/how_immigration_judge_spots_we.php
Walter Burien again: “You now know the primary reason why Gorbechev went democratic, more money = more control. We showed Gorbachev the blueprint for true communism. In Russia’s past, the state openly owned everything. In the USA the state truly owns everything, but through walls of well-masked corporate veils created over the decades. The US Government now has more control over more wealth amassed from the people then old Russia ever thought was possible or ever dreamed about.” For the Hegelian ochestrators of our “free” America and world, the function of a Parliament or a Congress is purely psychological; merely to “allow” individuals to feel that their opinions have some value, and to allow government to take advantage of whatever wisdom the ‘peasant’ may accidentally demonstrate. As their patron saint Hegel put it: “By virtue of this participation, subjective liberty and conceit, with their general opinion, (individuals) can show themselves palpably efficacious and enjoy the satisfaction of feeling themselves to count for something.” War, the organized conflict of nations for Hegelians, is merely “the visible outcome of the clash between ideas”. Following the outbreak of war in 1939, Social Creditor C.H. Douglas said, “The international money marketeers care no more for the immolation of the peoples of a continent that for the death of a sparrow”; and “Unfortunately the world is in the grasp of theorists to whom misery and death of millions is a grain of sand beside the working out of their designs”.
Perhaps this clip from an article today provides some insight into the reason behind the contrived financial crisis in CA….
“Bass said the governor’s demands include changes to allow the state to more easily hire contractors, a reduction of money the state puts into the state employee pension system, and the building of a ‘massive new computer system that we would use in determining public assistance.'”
Bass is the current Speaker of the CA Assembly
Article clipping from SF Chronicle
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/07/MNTC18JU36.DTL
If you start mapping out the financial ecosystems in a place with a really smart group of people and just keep at it…over time the matrix truly does dissolve. And there is all sorts of leverage.
I should do a collection of all my place based stories in one place. Well, I guess that is my book. Back to the salt mines…
OMG, Texas does a wonderful job with its CAFR, showing each Fund in detail, with balances down to the penny!
https://fmx.cpa.state.tx.us/fm/pubs/cashrpt/07/html/index.php
However, ultimately, I find Catherine’s location-based idea of analyzing funding to be an essential tool for properly analyzing public sources and uses. It would be wonderful to be able to map a community across FED, State & local funding sources and uses…. I’m sure the discoveries would be amazing. Great article from 2002, Catherine:
“I was told the day after I left that the preparation of place-based financial accounting and statements had been terminated.
That was one of the reasons I turned down the opportunity to serve at the Federal Reserve and instead started Hamilton upon leaving the Bush Administration. It was the reason why we at Hamilton built Community Wizard. The Community Wizard made it possible for anyone to put together a sources and uses statement for government activities (taxes, time use, spending, credit, regulation, operations, and more) in their community. An easy step was just linking to the Consolidated Financial Reports (CAFRS). The shock of finding so much in the way of hidden assets and where the money was really going was always a pleasure to watch. Why should the finance committee chairmen of the political campaigns be the only ones to see the information on how the money works by place?
Luis Mendez, one of my partners at Dillon Read, visited me in Washington in 1996. He said that Wizard was a stupid idea that would not work. Things were hopeless, he said. I showed Luis a printout of the CAFR for his community of Bronxville, New York. When he saw the figures, he exploded in rage. The first item was $4 million of flood insurance. This was the worst form of corruption, Luis said. Apparently, Bronxville was on a hill. The next day Luis spent two hours on the phone with the Deputy Mayor of Bronxville going through each item and informing him this was all going to stop. Apparently, things were far from hopeless, once one had the information. It just took one good map to see how to fix thousands of little things, one at a time.”
Bert:
I just printed out the 299 page CAFR for 2008 (apologies to the trees — it will become compost in my garden after shredding). I don’t have time to delve into it until later this week. It’s time to dig deeper — although I don’t trust government documents as a rule.
You should come to the Financial Permaculture summit in Hohenwald. We will have a track on mapping financial ecosystems including an exercise that will be VERY interesting,
Catherine
This CA financial crisis is really quite intriguing as I merely start to scratch the surface. So, I check out State Controller John Chiang’s page on the fiscal “crisis” and all I find are references to CASH receipts and CASH outlays and CASH shortages.
http://www.sco.ca.gov/eo_news_fiscalissues.html
Chiang has created a pretty graph showing CASH shortfalls for the 2009 fiscal year, but where in the heck is the pro forma income statement and balance sheets? He’s just showing cash flow, and discussing everything in terms of CASH. This is semantic deception at its most ludicrous.
Catherine, have you found a full set of pro forma (ie projections) financial statements for CA for FY2009? If you’ve already posted a link, then I’ve missed it. But if not, I’d certainly appreciate some direction, as we can’t tell anything without these.
P.S. I did check out Chiang’s daily cash receipts tracker and found that the state is about $700M short of its goals for end of April 2009 (collecting actuals of $37.6B versus projected of $38.3B), but one really can’t assess the significance of this without a complete set of pro formas.
http://www.sco.ca.gov/taxtracker.html
Bert:
The gist of what Walter is saying about the CAFR’s dovetails with what I found on the mortgage/community wizard side, so I assume it is true. No doubt, these extraordinary pools were the basis of much fun in the derivatives market, as, among other things, derivatives will allow you to buy up a lot of things without your name being on anything.
Catherine
The scam is so enormous it is beyond belief. Why is no one talking about this? It is extremely simple to demonstrate the fraud.
1940’s Secret “Corporate” Tactic By Which Government Took All!
By Walter Burien
05/10/09
http://cafr1.com/Secret.html
Many people have asked for a simple explanation as to the intent behind the CAFR and what happened over the decades?
Well, in a nut shell here is the foundation block that allowed government to take it all over by investment.
It started in the mid 40’s and grew into what we have in government now seventy years latter come 2009.
Government started out as a “pay as you go” structure. By transforming into a corporate liability company over the decades, this gave them the ability to use “advance projections” to strip annual operating funds and create advance forward liability accounts whereby in doing so they were able to by stealth build numerous “wealth bases” of equity in many designated fund balances separate from the budget reports that were exclusively presented for public viewing.
When looking at the “whole picture” through the CAFR and sub investment fund reports noted per gross income, only 1/3rd is tax income whereas when you look at a budget report for the year it gives the impression per gross income that nearly 100% is tax income. Very deceptive when only one side of the coin is presented.
Budget reports are presented giving the false impression that it “is” the true financial picture and it is far from it. What is shown is primarily tax income for a “selective grouping” of accounts where tax income is collected and expended.
Review a few CAFR surplus reviews – http://cafr1.com/ShowMeTheMoney.html
The takeover by government was primarily orchestrated by attorneys, both private and acting from within the Judiciary on the city, county, and state level. Many private associations were created since the 40’s to push government along into becoming an administrative clearing house for revenue collection and control with many of these private associations calling the shots and firmly entrenched in the ever expanding cash flow from the trough. Laws were “created” as each and every push was moved forward to consolidate and expand the takeover by government as the public was masterfully entertained with distraction, misdirection, and misinformation due to the money involved.
Where has all this brought us today? I strongly recommend that all look at their local “County” CAFR. I have noticed a disturbing trend being forcefully implemented by the attorney complex in control today. (65% of Governors, Senators, and Congressmen are now attorneys) The place to look in your County CAFR is the Statistical Section at the end of the report. Currently most counties will give a ten year or a six year showing of the growth.
Many County CAFRs that I have looked at from the eastern side of the country show that over the last six to ten years:
1. There was a 100% increase in property taxes collected.
2. There was a 100% to 135% increase in the money pouring into the judiciary.
3. There was a 100% to 115% increase in the money pouring in to the prisons run by the county.
One thing I found particularly interesting was that even though their was over a 100% increase in cash flowing into the prisons, the prison average daily population had decreased in many a cases. Also I took note that the personnel working for the prisons was the largest employee base working for the county.
Now there were modest increases in social services programs for the youth, adults, and elderly, but nothing in comparison to the take being facilitated by the attorney complex for Judiciary and Prisons. It appears the trend is gearing up to “process” more people through the courts and prisons based on the money being applied.
Has the increase in processing the people started yet? By the numbers as of 2007 it appears not yet. I have a feeling though by 2010, they will be in full swing and who knows, the reader of this post may just be the lucky recipient of this expanding government service..
The middle class natives are getting restless with massive increases in forced taxation, home confiscations, job loss, and a weakened economy from the last and massive wealth transfer of trillions taken from one hand and transferred to the other hand through international market derivative manipulation. I still would like to know how many trillions of dollars ended up in those off-shore government accounts for a clear showing of profit held in “the other hand”.
I will give you an example County CAFR to look at here from 2007. It is from York, PA. – http://cafr1.com/STATES/PA/COUNTY/York2007CAFR.pdf
I am not picking on York but the showing in their statistical section is a clear example of what is brought forward in this article. Look at theirs and then look at your own county CAFR to see if the same findings are evident in your own.
We all are the end target of our government’s intent. Where they apply the money and the showing of their own growth establishes their intent.
Look and comprehend. It is your asses that are on the line in the end. Either by paying the bill or as a forced beneficiary of the structure created, or in some cases both.
When the people realize the true end result of allowing attorneys to takeover and run the show and when the people take true action to stop it, then maybe the tide will change. Until then, the stench of death will grow nearer and in most probability ever present in the air as the ever-expanding made “legal” plunder and theft out of opportunity continues unabated..
TREASON: “Treason doth never prosper; what’s the reason? For if it prosper, none dare call it treason.” Sir John Harrington, 1561-1612
Sent FYI from and truly yours,
Walter J. Burien, Jr.
P. O. Box 2112
Saint Johns, AZ 85936
email: WalterBurien@CAFR1.com
Tel.(928) 445-3532
O here’s something that might be of interest also…
King Alfred 901 “If any man is found taking usury, his lands wlll be confiscated, and he will be banished from England.”
1215 King John and King James 1566… “If a man is found taking usury, his lands will be confiscated. It is like taking a mans life, and it must not be tolerated.” pg. 32 Cantelon
Edward another interesting parallel can be found in Nehemiah 5:3-13 with the exacting of usury and the mortgaging of lands and even borrowing money to pay ones tax. It’s amazing how nothing ever changes. From Egypt to Babylon, to Palestine to Rome, Britain, and now America. Unbelievable!!!!
I love the bible!!!!
Cheers
Jerry
This is an extremely interesting video.
“The Biggest Game InTown” about the Government CAFR wealth shell game
http://video.google.com/videoplay?docid=6703413885850200097
Found this on Counterpunch:
http://counterpunch.com/brown07022009.html
Another answer to solving California’s economic crisis…..now will/would the central bankers allow such an action if attempted??that is the $24.3 billion question…or are IOU’s the solution and the downgrading of it’s bonds by Fitch to follow???
The Jun, 30 2008 balance sheet for California was release recently and can be downloaded at:
http://www.sco.ca.gov/ard_state_cafr.html
Page 28 of the Controller’s report shows:
current assets = approx $50B
total assets = $143B
Net assets $25B
Note from report:
“Changes in Net Assets
The expenses of the primary government totaled $209.4 billion for the year ended June 30, 2008. Of this amount, $87.4 billion (41.7%) was funded with program revenues (charges for services or program-specific grants and contributions), leaving $122.0 billion to be funded with general revenues (mainly taxes). The primary government’s general revenues of $110.1 billion were less than the unfunded expenses. As a result, the total net assets decreased by $11.9 billion, or 25.3%.”
Doesn’t sound like there is any emergency in California. So Net Assets decreased by $11B last year, what’s the emergency?
Catherine, would you care to comment because I cannot reconcile the media hype with the basic financial statements.
Here’s an interesting parallel from 3-4 thousand years ago. Genesis XLVII 15-22
15. So when money failed in the land of Egypt, and in the land of Canaan, then all the Egyptians came unto Joseph, and said, Give us bread: for why should we die before thee? for our money is spent.
19. Why should we perish in thy sight, both we and our land? buy us and our land for bread, and we and our land will be bond to Pharaoh: therefore give us seed, that we may live and not die, and that the land go not to waste.
20. So Joseph bought all the land of Egypt for Pharaoh: for the Egyptians solde every man his ground, because the famine was sore upon them: So the land became Pharaoh’s
21. And he removed the people unto the cities, from one side of Egypt even unto the other.
22. Onely the land of the priests bought he not: for the priests had an ordinarie of Pharaoh and they did eate their ordinarie which Pharaoh gave them: wherefore they sold not their ground.
First leveraged buyout??