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August 30th, 2014

8/30/2014

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As the article stated yesterday---costs for PIP are not going up----there is simply more fraud and corruption lifting the costs as with Medicare and Medicaid.  We are reforming Medicare and Medicaid because the health industry fraud sucked the Trusts dry.  That is what is happening with PIP.  The insurance and health industries are inflation costs by fraud with soaring profits and then claiming PIP needs to be dismantled because it is too costly.....same as Medicare.  So, rather than having the costs of your health care covered with this auto insurance that is required by law---you are now going to be pushed into Medicaid which now mostly covers only preventative health care.  This eliminates yet another outlet for health coverage for the working and middle-class while insurance and health industry profits soar.

Notice the Maryland Assembly is about to end PIP and push Maryland citizens into the most private and profit-driven health system in the nation---Medicaid and preventative care.
  The No Fault auto premiums are no small payment---as many times as people use it the total premium amounts paid often covered costs.

Think that at the same time, your rates go higher and higher for simply being in an accident no matter it wasn't your fault.  That is what deregulating the insurance industry looks like.  It gives them the ability to charge anything they want as laws are on the books requiring you to have some kind of insurance.  Deregulating while making insurance mandatory----watch that disposable income disappear with rate hikes.

Tort-based auto insurance means the ambulance-personal injury lawyers that you see on TV will be the only recourse for paying medical bills and we all know these lawyers pocket most of the money won in the lawsuit with the plaintiff often receiving pennies on the dollar.  So, this will cost health care more and that money will go to lawyers and it will come from taxpayer Medicaid.
So, now the insurance, the health care, and lawyers are getting a cut money that always went to actual care for the patient who will be bankrupt and/or left with little access to care.

THESE ARE NEO-LIBERAL AND NEO-CON POLICIES MOVING ALL MONEY TO CORPORATE PROFIT ON THE BACKS OF THE AMERICAN PEOPLE.


All Maryland pols are neo-liberal and neo-cons doing all of the above.

'Rates did go down initially'---before the fraud and corruption sent them soaring.

PIP and No-Fault Auto Insurance Reform


More and more states are abandoning the PIP/No-Fault form of auto insurance in favor of a tort-based set of laws. PIP/No Fault originated in the 1930s as an alternative to the often slow and expensive process of litigating claims. The intent was to speed up the process by shifting the dispute resolution from the courts to the insurance companies. In theory, this was supposed to reduce insurance rates—and rates did go down initially.

By the mid-70s, almost 20 states had some form of no-fault insurance laws. However, over time, rates again rose until "No-Fault" states had higher rates than tort-based states. Beginning in 1980, states started repealing their no-fault laws, and now only nine states (Florida, Hawaii, Kansas, Massachusetts, Missouri, Minnesota, New York, North Dakota and Utah) have mandatory no-fault laws. Eleven states plus the District of Columbia have hybrid laws (Arkansas, Delaware, Kentucky, Maryland, New Jersey, Oregon, South Carolina, South Dakota, Texas and Virginia), which are a combination of no-fault and tort systems.

The pendulum seems to be swinging back to tort-based auto insurance. What does this mean for you as a policyholder?

The Good News

Tort-based systems, in theory, give you more choices for medical payments and could save you substantial amounts of money. As an example, depending on the insurance company and coverages selected, those with Colorado car insurance (the most recent state to revert to a tort-based system) could see savings of 10 percent to 30 percent, according to several recent Denver Post articles.

The Choices

PIP, or Personal Injury Protection, is still available (in most cases), should you wish (or need) to pay for it. If you choose to drop this coverage, or if you are already under a tort-based system and don't have this coverage, you can still purchase it with most policies to cover medical expenses. However, coverage will be limited, with a general ceiling of $50,000. This additional coverage, if purchased, will pay expenses incurred by you and your immediate family for injuries resulting from an at-fault auto accident.

Since many drivers are uninsured or underinsured, it is essential that you understand the ramifications of this and make an informed decision about the "Uninsured/Underinsured Motorists" coverage option.

What if?

What happens if you are at fault? Your auto policy should pay the other person's claims. Companies normally negotiate this with each other. If you have insufficient coverage, you may have to go to court—thus displaying the tort aspect of the law. Either you or your health insurance company will pay medical expenses for you and your family once those expenses exceed your auto policy coverages.

What if you are injured by another driver who is at fault? Generally, the two auto insurance companies will work together to determine fault and pay benefits accordingly. This resolves the problem in most cases. If not, or if the amounts paid are insufficient, it may be necessary to resort back to the court system to recover damages.

What if the other driver is at-fault and has no (or inadequate) insurance? Your insurance company normally covers your medical expenses. This protection is provided under the uninsured/underinsured motorist coverage. If you do not have this coverage, your health insurance usually pays the bills, or you can sue the other party.

Consider the "Deductible Gap"

Generally, under a tort system, medical payments from your own policy are limited. However, in most cases you can choose "additional medical payments" and "Uninsured/Underinsured Motorists" coverage as part of your auto insurance policy.

After years of rising rates, many people may choose to forgo any additional coverages. Adding these coverages creates financial strain if you have high-deductible health insurance, or no health insurance at all. However, there is a potentially huge gap between the amount paid under a tort-based policy and your health insurance deductible. If you have no insurance, the out-of-pocket costs could be staggering. If you are not at fault in the accident, the tort-based system allows you to go to court to receive compensation for these costs, as well as for pain and suffering. But you must do so within a specified time period, and a lot of out-of-pocket expenses may be involved.

What does this mean for health insurance?

As more costs are shifted to the health insurance system, your insurance costs are likely to rise. This also means more people will be without health insurance.

So, what is next?

This is a good time to look at your health insurance to make sure you will have adequate coverage if you drop your PIP/No-Fault coverage. Don't wait until you're in an unpleasant situation to find out if you need more insurance. Be prepared!

_______________________________________________

This is when PIP was working in the interest of citizens and government coffers.  Insurance corporations were earning profits in the millions while the Uninsured auto insurance pool was bursting at the seams with revenue. 

NOW, HOW CAN WE DIVERT THE MONEY PAID INTO THIS FUND FOR HEALTH CARE INTO PROJECTS THAT BENEFIT DEVELOPMENT CORPORATIONS.

This is when a good program was targeted for fraud and corruption just as with the other Federal programs Medicare and Federal Housing Authority.  Working well for citizens, leaving government coffers flush to handle future events, allowing millions in profits to be earned---BUT THAT WAS NOT ENOUGH.  You see the article below was written in 1993----HERE COMES NEO-LIBERAL CLINTON TO DEREGULATE ALL THAT HE CAN SEE......this is the deregulation that sent all of this surplus in the Maryland Automobile Insurance Fund to development corporations like Johns Hopkins in Baltimore.  There's Donald Schaefer funneling money from Transporation Trusts and now MAIF to balance the budget with the public's designated money.  Baltimore Development paraded all kinds of working class and poor out to praise Schaefer who was behind creating Baltimore Development Corporations to funnel all the city's revenue from where it was to go----to where they wanted to send it.

You see the insurance corporations were able to move more and more people into MAIF clearing its rolls of all but the best of drivers.  It went from helping low-income people to subsidizing the costs of these auto insurance corporations.  It was gutted of its funds for
pet projects.  I know Ravens fans love their stadium----but most of the fans are the ones no longer affording auto insurance because of the subsidy.  Note that the Uninsured Motorist insurance had high premiums and should have paid all health care costs when needed.

Remember, this was done through fraud and corruption because this money was not to be fungible.  It needs to come back to this government coffer.



I KNOW---LET'S SEND THIS PIP MONEY TO BUILD THE NEW FOOTBALL FIELD.----M AND T STADIUM AND BALANCE THE BUDGET WITH IT.


MAIF's embarrassment of riches

March 04, 1993|
By Frank A. DeFilippo  Baltimore Sun

THE Maryland Automobile Insurance Fund has a big-time problem. It's rich. So rich, in fact, that other state agencies are itching to get their hot little hands on MAIF's $118 million surplus.

MAIF's been approached about financing a new football stadium in Baltimore. Sen. George W. Della Jr. of Baltimore has sponsored a bill that would shift $50 million of MAIF's money to the general fund. And the Schaefer administration is pilfering $5.4 million from MAIF to help balance the budget.

MAIF is Maryland's state-run insurer of last resort. Any Maryland motorist who's turned down by at least two commercial insurers is automatically MAIFed.

MAIF's rates aren't cheap.
Depending on how bad a motorist's record is, the driver's age and ZIP code, bare-bones coverage can range from $2,559 to a stick-it-to-'em high of $8,677 a year.

That MAIF should be suffering such an embarrassment of riches during a time of budget cuts and deficits is an embarrassment itself. MAIF's $118 million surplus is larger than the $100 million budget shortfall that's being plugged with keno proceeds and other money.

In theory, at least, MAIF is supposed to be non-profit. It was created in 1973 as an antidote to the no-fault insurance craze at the time, kind of an everybody's-fault approach. It's run by a board of trustees and receives no state funds, nor are its assets part of the state treasury. To settle claims, MAIF has the power to attach salaries and seize property.

Over the years, the commercial insurance companies in Maryland have pumped $137 million into MAIF. In effect, good drivers subsidize the insurance of bad drivers. In 1980, MAIF had 30,000 policies. Today it has 135,000.

Much of MAIF's excess is due to changes in the way it does business as well as some shrewd investments. At the same time MAIF has reduced rates over the past three years, it's also lowered awards. MAIF is also now doing all of its work in-house instead of farming it out to free-lance adjusters and collectors.

So it should come as no surprise that the Schaefer administration's pie-slicers approached MAIF about lending the Maryland Stadium Authority $100 million to help finance a new football stadium if Baltimore wins one of two NFL expansion franchises.

There are serious legal questions about whether the Stadium Authority has a funding mechanism for another stadium if the city is awarded a team. Because of a change in the tax code, the use of tax-free bonds to finance stadiums expired at the end of 1990.


The authority argues, though, that it's confident that it can float tax-free bonds because there have been a number of test cases around the country that might allow it.

Moreover, the authority has a bonding limit of $220 million, of which it has already used $170 million to build the new baseball stadium. The authority will pocket another $30 million over three years from lottery proceeds -- on top of the $50 million in bond money left over from the ballyard -- a total of $74 million. But a new topless football stadium will cost about $130 million. Put a lid on it, and it'll cost millions more.

So here's the catch: If the authority can't float tax-free bonds, it will have to go to market with bonds at a much higher interest rate. But before it can go to market with bonds, the authority will need the General Assembly's approval to increase its bonding capacity. This could hoist the total bond package over the spending affordability limit. Allowing this is action the legislature is reluctant to take.

It's for this reason that Gov. William Donald Schaefer is bypassing the spending affordability limit and proposing the use of transportation bonds to finance improvements to Baltimore's Convention Center. Now he's trying to scoot around the spending limit again just in case there's a football team in the city's future.

So drive carefully. Get MAIFed, and the premiums you pay could wind up helping to finance some government geegaw.

Frank A. DeFilippo writes every other Thursday on Maryland politics.

_______________________________________

Here we are just a handful of years later and what the first article stated was in fact true in Maryland----it was the hybrid model Maryland adopted that sent auto insurance money to lawyers and doctors.

Now, they are working to end hybrid and make it all tort. 
People not being able to afford strong health coverage will be preyed upon -----80% of the American people.

Again, another public program that worked fine for the people gutted and dismantled by neo-liberals and neo-cons.  Profit over people every time

Again, we are at the height of Reagan/Clinton's deregulation frenzy.
I wonder if those voters wanting small government wanted to be pushed out of driving because they can no longer afford car insurance? 

Your Public Trusts are being gutted by small government and deregulation.


Why car insurance is so high Law suits: System encourages excessive litigation, raises premiums $130 to $150 a year

.
December 23, 1996  Baltimore Sun

WANT TO LOWER your car-insurance premiums? It could happen -- if legislators in Annapolis stop catering to powerful special interests. More than 60 percent of your premium covers liability. Of that amount, 19 percent could be saved if excessive litigation and fraudulent claims were eliminated.Sadly, state legislators yawned at the problem when a gubernatorial commission sought reforms this year. Too many of them want to please trial lawyers and doctors who vigorously fight for the status quo. These special interests know that lower insurance premiums would come out of their pockets.



_________________________________________



I have talked about AIG spinoff HighStar and its connection with the Ivy League schools like Johns Hopkins.  The subprime mortgage fraudulent loans were insured here with the idea that HighStar would break from AIG with the equity and leave taxpayers to pay 100% on the dollar for the fraudulent Credit Default Swaps.   This article does a good job doing this.  Geithner was the NY FED chief that watched as trillions of dollars of fraud ran through the mortgage industry and did nothing about it----he aided and abetted the massive fraud.  What many people may  not know AIG was more a Life Insurance agency with this HighStar hedge fund sucking all its profits into their bank accounts.  Indeed, the taxpayer bailout of AIG saved the shareholders and those insured by CDS-----but it left an AIG still in business and limping along saying it is healthy when indeed it is not.  AIG Life Insurance advertises on Free TV---you know , where you get life insurance with no checkup.  Like you get a house without having a job. 

SAME THING.  THIS IS THE SUBPRIMING OF LIFE INSURANCE.


They are simply selling as many policies as they can and gaining those monthly payments knowing the coming economic collapse will bankrupt them again.

You are guaranteed to get back what you put into this Life Insurance plan-----OH REALLY????  They will spin that Life Insurance money off as they did with HighStar----probably to HighStar just as the economy is ready to crash.  THEN WE WILL HEAR----WE CAN'T PAY YOUR PREMIUMS BACK!


They will keep doing this with every business sector until you and I get rid of the neo-liberals and neo-cons that have allowed this corporate system to be deregulated with no oversight and accountability.

AIG's Collapse: The Part Nobody Likes to Talk About


Hester Peirce JUN 16, 2014 12:00pm ET

  Earlier this month, American International Group announced the departure of Robert Benmosche, the CEO who led the company through most of its recovery from the financial crisis. Now that the company’s postcrisis chapter is underway, it is worth taking a fresh look at AIG’s downfall and rescue and the implications for reform.

The standard AIG story lays all the blame for the company’s problems on AIG Financial Products—an allegedly unregulated, irresponsible, derivatives dealer hiding within an otherwise solid insurance company.

Former Treasury Secretary Timothy Geithner repeats this traditional line in his recent book, where he recounts how an aggressive “hedge fund-like subsidiary called AIG Financial Products” brought the otherwise healthy insurance company to its knees and ultimately drove it into the Fed’s welcoming arms. Former Federal Reserve chairman Ben Bernanke made a similar claim when he told Congress how angry he was about AIG’s Financial Products unit—“a hedge fund attached [to] a large and stable insurance company.” And former Commodity Futures Trading Commission Chairman Gary Gensler, with typical dramatic flair, explained that AIG’s “subsidiary, AIG Financial Products, operating out of London, brought down the company and nearly toppled the U.S. economy.”

This widely repeated narrative ignores or downplays a critical aspect of AIG’s downfall--the insurer’s securities lending program run for the benefit of its regulated life insurance subsidiaries.

An endnote in Geithner’s tome explains that securities lending was one of “AIG’s major liquidity needs” at the time of its rescue. As I describe in a recent working paper, the company got itself into hot water by lending securities from its life insurance companies’ portfolios. AIG took the cash collateral it received for these short-term loans and—in a departure from insurance industry practice—invested much of it in longer term, illiquid residential mortgage-backed securities.

The securities lending program grew from about $10 billion at the end of 2001 to over $80 billion by the end of 2007. When borrowers stopped renewing the loans, returned their securities, and asking for their cash back, AIG was in a bind—the borrowers’ cash was tied up in reinvestments. 

To meet borrowers’ demands, AIG lent more securities and used the cash collateral from new borrowers to return to existing borrowers. This solution only aggravated the problem. When CEO Robert Willumstad took the reins of AIG in June 2008, the cash drain from securities lending worried him more than AIG Financial Products’ liquidity needs.

Losses from the securities lending program threatened the viability of a number of AIG’s regulated life insurance subsidiaries. To save them from falling below minimum capital requirements, AIG pumped billions of dollars into these units.

Government rescue money was critical to this recapitalization effort. Taxpayer funds were also critical in meeting securities borrowers’ demands for cash. Securities lending counterparties received $43.8 billion in the last quarter of 2008, comparable to $49.6 billion in collateral postings and payments to AIG’s derivatives counterparties.

As consequential as it was to AIG in a time of crisis, nobody likes to tell the securities lending part of the story. First, it doesn’t feed as nicely into the vilification of derivatives that laced crisis narratives and fueled calls for an intense derivatives regulatory regime. Second, the fact that heavily regulated insurance companies got into trouble does not support the call for greater reliance on government regulators. Finally, the rescue of a deeply troubled company is less defensible than the rescue of a healthy insurance company with a troubled derivatives subsidiary.

The Fed’s contention that its loan was adequately secured rested on the supposition that apart from the derivatives unit, AIG was sound. The banks that went in to AIG in September 2008 to assess whether it was worth rescuing concluded that it was not.

As one of the private bankers subsequently explained, “The value of the company in its entirety was not necessarily sufficient to cover the liquidity need that the company had.”


Geithner recounts in his book that—looking for confirmation that a loan to AIG would comply with the legal requirement that “the Fed can only lend against reasonably solid collateral”—he asked Warren Buffett “what he thought about the earning power of AIG’s traditional insurance subsidiaries.” Buffett “was pretty positive about their underlying value, which made [Geithner] more confident that [the Fed] could meet the legal test of being secured to [its] satisfaction.” Buffett’s words of assurance to Geithner weren’t matched by a willingness to put his own money on the line; he refused AIG’s overtures to invest during 2008.

AIG was on the verge of filing for bankruptcy when the Fed stepped in with a better deal for shareholders and creditors. The government subsequently re-rescued the company by devoting additional taxpayer funds to it and softening the lending terms.
 At any of these re-rescue points, the government could instead have let the company go through bankruptcy.

By continuing to prop up AIG, the government shielded the company from the toughest regulator of all—the markets. AIG’s problems were not confined to one unregulated corner; problems also arose in full view of insurance regulators. Rather than assuming the Fed will be better than AIG’s other regulators, we ought to allow the truly superior regulator—the market—to do its job.







_____________________________________________

I spoke yesterday about Life Insurance corporations being the most leveraged and ready to collapse of the insurance industry but guess what is the next in line of threatened insurance corporations-----

THAT'S RIGHT----WORKMAN'S COMP.

They have been allowed to create the same over-leveraged financial status that will have them bankrupt with this coming economic collapse.  No more worker's compensation----

THAT'S HOW YOU GET RID OF THE NEW DEAL SAY NEO-LIBERALS AND NEO-CONS!  BLOW THEM UP AS WE DID THE HOUSING MARKET WITH FRAUD AND CORRUPTION!


Coming after more public wealth and no public justice in place to protect or give us recourse....that is what neo-liberals and neo-cons have been building these few decades-----Clinton and Obama taking the people's party and handing it to Wall Street.  Run and vote for labor and justice in all Democratic Primaries!  WE CAN REVERSE THIS!


Rapidly writing new contracts for worker's comp that they could not afford----sound familiar?


IMPLODING ALL OF THE NEW DEAL PROGRAMS TO PROTECT THE AMERICAN PEOPLE DURING HARD TIMES.


After Tower Group collapse, lingering concerns about industry’s reserve adequacy

By Adam Cancryn and Saurabh Nair, SNL Financial Posted: May 6, 2014

...................................................

Most of the concern centers on long-tailed commercial lines, particularly workers’ compensation. Claims behavior takes longer to develop than in other sectors, making it more difficult to tell how much money should be set aside even years after a policy is written. Misjudging those reserving needs can be disastrous. SeaBright Holdings Inc. sold in 2013 after reserve charges pressured its operations, and Meadowbrook’s stock dropped nearly 35% from 2012 through 2013 amid several quarters of reserve charges. Tower Group served as the highest-profile example of reserving gone wrong, with its shares losing more than 80% in the six months before it hastily agreed to a sale.

Those companies ran into problems with business written during a softer market between 2007 and 2011, when they grew their books rapidly just as the rates being charged for coverage were at their most inadequate. When claim costs far outstripped the rates they originally charged, the insurers had to quickly build up their loss reserves. Analysts now consider the 2010 accident year one of the worst performers of the cycle, attributing the troubles to low prices and more expensive claims driven by high unemployment.

“The troubles they have now is on stuff they wrote years ago,” Keefe Bruyette & Woods analyst Robert Farnam told SNL.


The 10 workers’ comp insurers with the greatest adverse development in 2013 reported an aggregate $702.6 million in charges. SeaBright and Meadowbrook did not make that list. Tower Group was also absent, as it has not yet submitted all of its filings, but it said in February that its U.S.-taxed subsidiaries recorded $269.2 million of 2013 reserve charges.

Despite the issues, the sector continues to steadily release reserves.
Companies argue that Meadowbrook and Tower Group in particular are isolated situations, driven just as much by reckless growth as the broader industry conditions.
The rest of the industry, they contend, was more prudent in writing business during the soft market, leaving it with less risk and the ability to make up for a few unfavorable accident years with better results from other parts of their books of business. The insurers themselves are also working with much more detailed data than analysts and outside actuaries, they say, allowing them to most accurately evaluate their reserves.

“We look at it on a much more granular basis, and we think we have certainly better information,” W. R. Berkley Corp. Vice President of External Financial Communications Karen Horvath told SNL. Analysts have singled out W.R. Berkley’s reserving position as one of the more concerning in the industry, predicting that its quarterly releases would soon slow. But the company in the first quarter released about $25 million, extending a string of favorable reserve development that dates back to 2007.

Even so, skeptics are not quite willing to accept insurers’ assurances as fact. They worry that companies are already drawing down their reserves for the 2012 and 2013 accident years to supplement earnings or balance out problems in earlier years, without enough data to be sure about how those most recent years will ultimately perform.


“There is just no way a company would know or have the type of certainty under which they would be able to release reserves from some of the most recent business,” said Standard & Poor’s credit analyst Siddhartha Ghosh, who warned that the workers’ comp sector will eventually have to strengthen reserves significantly. “We don’t think that’s a prudent way of addressing reserves.”

He pointed to the previous market cycle, when workers’ comp companies released $12.4 billion of reserves between 1994 and 2000 and then had to scramble to add back $10.6 billion from 2001 to 2005 to make up for their overconfidence.

The sector’s fortunes over the next several years will depend heavily on whether insurers can keep raising prices, analysts said.
The workers’ comp business is still not reliably profitable despite recent pricing actions, and low interest rates continue to pressure investment income. If companies can continue to move their prices considerably and consistently higher over the next couple years, the new premium should be enough to cover costs. If the rate hikes falter and claims from recent policies start piling up, though, the reserving actions that insurers used to buoy earnings for so long could stick them with a deficit that will take years to fill.

“It’s a simple equation,” Ghosh said. “The premium coming in has to be higher than the losses going out.”


________________________________________________
This is a pretty good analysis of the coming bond market crash.  Notice it states that the insurance market will be taken out----Life Insurance the first to go.  See why you are seeing all those Life Insurance ads requiring no medical checkup or anything-----

THEY ARE SIMPLY GOING TO POCKET THOSE MONTHLY PREMIUMS.


This was written in 2013 acting as if the crash would come in 2014 but Bernanke allowed the QE bond bubble machine to continue another year and Yellen is now having to address it as the FED is leveraged out.  The crash will come soon......the FED is simply manipulating the inevitable.

'The most vulnerable are those who can least afford to suffer losses: Seniors who are approaching or in retirement, who have shifted large amounts of their money into fixed income investments.

Your tax-free municipal bonds could tank.

Your annuities and other insurance policies could turn to dust.

Your money invested in bank and insurance company stocks could vanish right before your very eyes'.


All of this is pretty important----yet, we do not hear a thing about it from media, labor or justice, our pols---and all of these national leaders know it is coming.  Their policies created this mess and labor and justice leaders are constantly backing neo-liberals.
  It is important to have Governors and Mayors that will work through this in the people's interest and not corporate interest.

This article is not
hyperbole---it will happen.
I did edit out his marketing ---

The Next Great Bubble about to Collapse

Martin D. Weiss, Ph.D. | Saturday, January 19, 2013 at 7:30 am

130 Senator Orrin Hatch warns that the bubble has the power to “destroy the retirement savings of millions of Americans.”

Famed economist Leonard E. Burman of Syracuse University is warning the U.S. Senate of “disastrous consequences for ourselves and the rest of the world.”

Goldman Sachs … Bank of America … Morgan Stanley … Royal Bank of Scotland … JPMorgan … and Oppenheimer Funds are all warning that it could bankrupt millions of investors.

Congressman Ron Paul says, simply, “this country will be ruined.”

These and many other authorities are talking about the greatest financial bubble in human history:

A bubble that is now more than EIGHT times larger than all the stock exchanges in the United States combined.

A bubble so massive, it is four times larger than the dot-com bubble of the 1990s and the housing bubble of the 2000s combined.

Now that bubble has begun to burst.

As it implodes, it will launch interest rates into the stratosphere … crush the feeble U.S. economy … destroy major U.S. banks and insurance companies … drive your cost of living through the roof, threaten your standard of living and financial security … and push the U.S. government to the very brink of financial collapse.

But the best defense is a strong offense -- and this crisis will also create windfall profit opportunities for a select group of investors who make the right moves now.

Just a few days ago, Weiss Research analyst Tom Essaye hosted a special online summit meeting to explain exactly how, and I’ll give you a transcript of the meeting in a moment.

In our online summit, he was joined by Safe Money editor Mike Larson and Real Wealth editor Larry Edelson. Here’s the transcript…

The Next Great Bubble about to Collapse
with Tom Essaye, Mike Larson and Larry Edelson — abridged transcript

Tom Essaye: If there’s anyone who knows how to capitalize on bursting bubbles, it’s our firm, Weiss Research.



For nearly a year now, I’ve been sounding the alarm again; NOT for the bursting of a bubble in the tech sector or housing sector … but in a market that is many times larger than all the stock exchanges in the United States COMBINED.


Debt is created in the bond market. That’s where the government goes to borrow money. So do states and local governments. Companies, too.

Borrowers sell bonds — or notes and bills — that guarantee investors a certain rate of interest or “yield” over time.

Since the turn of the century, the U.S. bond market has simply exploded in size — adding $20.7 trillion in new debt.


But now, despite massive new initiatives by the U.S. Federal Reserve, the meteoric rise in prices that characterized the debt market since the turn of the century has sputtered, stalled and is now dead in its tracks.

Millions of investors all over the world — including many of the world’s richest central banks — have started to stampede for the bond market’s exit.

And now, we’re beginning to see the first cracks appearing in this massive bubble.


This chart of the PIMCO Total Return Bond Fund is a perfect picture of the bubble in the bond market — and also the beginning of the crash.

On the left side of the chart, you can see the bubble in the bond market being inflated.

On the right-hand side, you can see how prices just plunged well below their support levels.

And just look at this chart of the iShares Municipal Bond ETF: It just fell off the proverbial cliff, giving back every penny it gained since last July!

But this crash has barely begun. The last few Treasury auctions showed that bidding from foreign central banks is plunging to the lowest level in years.

In addition, U.S. investors are starting to turn bearish on Treasuries. A recent report from a top industry watchdog showed that nearly 20% of all Treasury investors have started to cut back their holdings.

Even Fitch — the normally conservative ratings firm — is warning that a massive bubble has been created in the bond market.

This is huge. Bubbles are like an enormous Ponzi scheme: They collapse when the money stops flowing in.

The moment that happens, it’s over. And it’s beginning to happen right now!

As this bubble — the greatest bubble mankind has ever seen — implodes, the consequences will be devastating for millions of unprepared investors, just like the tech bubble was and just like the housing bubble was.


The most vulnerable are those who can least afford to suffer losses: Seniors who are approaching or in retirement, who have shifted large amounts of their money into fixed income investments.

Your tax-free municipal bonds could tank.

Your annuities and other insurance policies could turn to dust.

Your money invested in bank and insurance company stocks could vanish right before your very eyes.






0 Comments

July 21st, 2014

7/21/2014

0 Comments

 
IT'S CALLED SOVEREIGN DEBT/MUNICIPAL BOND FRAUD FOLKS------NEO-LIBERALS SIMPLY FOLLOW WALL STREET'S LEAD NO MATTER WHERE IT ENDS.


I'd like to spend one more day on the bond market and the coming crash.....looking today at the public and private pensions.  Folks, neo-liberals and neo-cons look at pensions as fodder only meant to boost Wall Street profit. 

LOOK AT WHERE YOUR PENSIONS ARE INVESTED BECAUSE MARYLAND IS RUN BY NEO-LIBERALS WORKING FOR WALL STREET PROFIT AND NOT YOU AND ME!

I pointed to Maryland pol Dulaney and his focus on repatriation taxes and bond market for corporations.  The timing of this legislation is no accident----the bond market crash will place this market at the bottom ready to climb to profits just as the 2008 crash made the stock market bottom.  So, Dulaney is not warning his constituents that the bond market crash is coming and will take away most of the value recovered since the last crash-----he is only thinking of what legislation with maximize corporate profit.  THAT'S A NEO-LIBERAL FOR YOU BUT WHY IS HE RUNNING AS A DEMOCRAT????

The second point is that as you can see all of the major news journals are now reporting the crash is coming just as I have written for four years.  What I said was the plan-----and everyone knew it.
  Please consider where you get your information-----all neo-liberal media like MSNBC and NPR never mentioned these policy goals-----

I spoke of the public malfeasance behind the public pension losses last crash were politicians moved public pensions from the then safety of the bond market into a collapsing stock market in 2007 just to buoy the Wall Street banks.  THIS WAS ILLEGAL AND PUBLIC MALFEASANCE AND FRAUD. All of the pols in Maryland involved in doing this were simply re-elected and public sector unions simply agreed to cuts rather than take the fraud to court.  The failure to address the last fraud has the same thing coming with this bond crash.....public and private pensions have been used to buoy the coming bond market as investment firms jump ship. 

DO YOU HEAR YOUR POLS SHOUTING ALL OF THIS IS BAD FOR THE PEOPLE WHO ELECTED THEM???????  I DON'T HEAR A THING!


Below is a UK article that speaks to what is coming.  Look how it states the FED is considering making people stay in the bond market to stop a run.  It created the conditions for the crash and now it wants to force people to stay in......punitive exit fees.
  Remember, people went to bonds because the stock market is criminal.......they are now being forced back into this criminal market because Wall Street imploded the only safe investment ------bonds.

Can you save your pension from the great bond bubble? Why a bank rate rise could ruin your retirement...

‘Those limits will be set by each individual fund — they may put a cap on how much you can withdraw, or reduce the value by a percentage.’


By Holly Black  Daily Mail Pensions and Retirement

PUBLISHED: 18:34 EST, 17 June 2014 | UPDATED: 03:20 EST, 18 June 2014

About £800billion of savings and investments sitting in bond funds could fall in value if interest rates begin to rise.


An increase in the Bank of England base rate threatens to burst the five-year bond bubble that has seen the value of funds soar by as much as 137 per cent.

It threatens to wipe out a chunk of the life savings of an estimated 500,000 people who have put their money into bond funds, and millions more in company pension schemes.


Bond bubble: When interest rates rise the value of bonds will fall



However, while any rise in rates is likely to cause a fall in bond funds - any increases should be small, giving investors time to react. There are, though, fears that money in bond funds could be locked up.

In the U.S. there are already reports that the Federal Reserve is considering imposing punitive exit fees on anyone trying to take their money out of bond funds to halt a run on the investments.



Brian Dennehy, founder of investment research site Fund Expert, explains: ‘When there is sustained heavy selling there will almost certainly be restrictions, if you’re allowed to sell at all.


‘Those limits will be set by each individual fund — they may put a cap on how much you can withdraw, or reduce the value by a percentage.’


Bonds are essentially IOUs issued by companies and governments. In exchange for your money, they promise to pay you a rate of interest. These are not fixed-rate savings bonds offered by High Street banks and building societies, which keep your capital safe and your interest fixed.


With investment bonds the value can rise and fall, and they were often seen as a safer type of investment, as they don’t change in value very much. But because of poor rates on High Street savings accounts, bonds have become wildly popular and, as a result, prices have surged.


Someone who put £10,000 into the average strategic bond fund five years ago would have £15,500 today. The best fund would have grown to £23,700.


At risk: A substantial chunk of the £770bn of our pensions is invested in bonds



How £800billion could be trapped
Fears of a fall in value of these funds could now lead to a great bond sell-off. A bond-fund plunge has been widely expected since late 2012.



Then, the value of funds had increased by 50 per cent following the Government’s policy of printing money to boost the economy, known as Quantitative Easing. This involved the Bank of England flooding the economy with cash, by buying bonds — which led them to increase in value.


Now that QE has come to an end, and the economy is recovering, interest rates could soon rise. When this happens, the value of these bonds will fall, and the interest they are paying will suddenly seem less attractive.


Unlike with shares, the money in bonds is tied up. It means that investors may not be able to trade their bonds freely to eager buyers, leaving them trapped because no one will want to buy them.


Retail investors who have relied on bonds for the past six years have a massive £126billion of their savings tied up in these funds. But a substantial chunk of the £770billion of our pensions is invested in them, too, because many stock-market-linked company schemes move savers’ money into bonds the closer they get to retirement.


This is done to protect the cash they have built up over the years by transferring it out of supposedly riskier stocks and shares. The strategy is known as life-styling and happens automatically. But it has meant that workers are being unwittingly exposed to any potential fall in the bond market.


Thousands of investors found themselves stuck in property funds in 2008 when there was a run of people withdrawing cash from these investments. A lack of ready cash available in them meant firms were telling their customers they could not have their money.


Many property funds own entire buildings directly so that if they need to raise money they have to sell them, rather than just sell shares, which is a much quicker and easier process. Bond funds face similar problems.

Bonds have a fixed duration and if funds can’t find a willing buyer to dispose of them, they will have to hold onto the investment. That means they can’t raise any money to give back to investors looking to sell their units in the fund.

Should you hang on or try to sell?
Many fund managers are already selling their bonds. Marcus Brookes, head of multi-manager funds at Schroders’, has reduced his bond holdings to just 10 per cent of his assets and he is planning to sell more.

  ‘Returns have been amazing for too long and we’re starting to worry,’ he says. And Mr Dennehy points out that with interest rates likely to rise in ‘baby steps’, investors shouldn’t have to rush out of all of their bonds at once.

‘But you should still ask yourself why you are bothered to invest in bonds,’ he adds. ‘At best, they won’t lose any of your money this year, but I don’t think they will make any either.’


Yet this could leave investors with another dilemma. Ben Gutteridge, head of fund research at wealth management company Brewin Dolphin, explains: ‘If you are taking your money out of bonds, where are you going to put it?


‘The obvious choice is equities. But if all of your investments are equities, that’s incredibly risky.’


Because of this, investors may be forced to accept the risk of staying in bonds in a bid to spread the risk in their portfolio.

Or else they may have to pull out of the stock market completely and bide their time in cash just to make sure that they’re not losing any money.


__________________________________________

Wall Street and their pols knew people would leave the stock market for the safety of the bond market after the 2008 crash so they started immediately to create the conditions to fleece these bond investors.  Congress and Obama created legislation that pushed US bonds to the world market just as they did subprime mortgage loans they knew were fraudulent.  Watching the FED and QE create the ballooning of the bond market just to accommodate Wall Street profit knowing a bond collapse would hit Federal, state, and local governments hard.

IT IS A CRIME AGAINST HUMANITY!!!!  THESE ARE SOCIOPATHS FOLKS!


Public pensions were never too much to handle for states and local governments-----neo-liberals simply never intended to fund them just as corporations were never made to actually fund their contributions as these benefit packages required.  So, there is no pension deficit weighing on governments----it is the fiscal policy schemes that are designed to bring ever more money to Wall Street that are soaking taxpayers.  Below you see just another financial instrument that again placed public wealth in harms way.  Remember, we went through a fiscal boom last decade albeit fueled by corporate fraud so government coffers should be flush.  Rather, billions of dollars were lost to public malfeasance and fraud.  The article below shows states using pension investments that were known to be bad policy-----placing bonds into plans at the wrong time and this is not an accident.  It takes no rocket scientist to know all of these investment strategies were bad for the public.  These neo-liberals did it to hide debt to take on more debt knowing Wall Street would bring in tons of profit.


The story of Oregon is Maryland's story and Martin O'Malley and the Maryland Assembly are the stars of this public abuse.
  Now, the same thing was done for private pensions as corporations were allowed to fail to fund and place pensions into ever riskier investments everyone knew would fail.

Just think.......if we all knew years ago that the policies since the 2008 crash would implode the bond market-----do you leave state and local governments exposed to bond leveraging?  OF COURSE NOT UNLESS YOU WANT TO IMPLODE GOVERNMENT BUDGETS.

Pension Obligation Bonds: Risky Gimmick or Smart Investment?

Pension obligation bonds have bankrupted whole cities. Yet some governments are still big players. BY: Eric Schulzke | January 2013



“It’s the dumbest idea I ever heard,” Jon Corzine told Bloomberg.com in 2008 when he was still governor of New Jersey
. “It’s speculating the way I would have speculated in my bond position at Goldman Sachs.”

Corzine, who followed up his tenure as governor with a $1.6 billion investment debacle as chairman of MF Global, seemed to know a thing or two about risky ventures. In this case, he was speaking of pension obligation bonds. POBs are a financing maneuver that allows state and local governments to “wipe out” unfunded pension liabilities by borrowing against future tax revenue, then investing the proceeds in equities or other high-yield investments. The idea is that the investments will produce a higher return than the interest rate on the bond, earning money for the pension fund. It’s a gamble, but one that a lot of governments are willing to take when pension portfolio returns plummet, causing unfunded liabilities to run dark and deep.

Almost every fund has faced such liabilities from time to time, though current times have been more treacherous than others. As Paul Cleary, executive director of the Oregon Public Employees Retirement System (PERS) points out, since 1970 his state’s pension fund has suffered annual losses only four times
. But three of those losses were in the last decade, and one, in 2008, was a catastrophic 27 percent decline.

Faced with such losses -- and with a dearth of state and local revenue to make up for the shortfalls -- POBs have become a favored tool to fix pension woes. Oregon is a big player in the POB market, along with scores of its cities, counties and school districts. Other major POB issuers include California, Connecticut, Illinois and New Jersey.

The bonds took on some notoriety this past summer when two California cities, Stockton and San Bernardino, went bankrupt. Generous pensions awkwardly propped up with ill-timed POBs contributed to both debacles.


Over the years, returns on POBs have often fallen below the interest rate the state or locality paid to borrow the money, digging the liability hole even deeper
. Nonetheless, they remain popular with politicians in a revenue pinch. Politically, it is easier to borrow money to pay for pension costs than it is to squeeze an already-stressed budget. While many economists and policy analysts view them as risky gimmicks and question the high market growth assumptions that make them seem viable, POBs have defenders who believe that with careful timing they can pay off.

When Oakland, Calif., launched the first pension obligation bond in 1985, it appeared to be a reasonable strategy. It qualified as a tax-free bond that could be issued at the lower municipal bond rates. A state or city could then pivot and invest the funds in safe securities -- a corporate bond, for instance -- at a slightly higher rate. “That was classic arbitrage,” Cleary says. “You were locking down the difference between nontaxable bonds and taxable bonds.”


The Tax Reform Act of 1986 ended that strategy by prohibiting state and local governments from reinvesting for profit the money from tax-free bonds. When the concept resurfaced, the strategy called for states or localities to issue a taxable bond and leverage the higher interest rate of that bond against higher return but riskier equity market plays. So long as markets boomed, the new tactic seemed savvy. “Some people call this arbitrage, but it’s not,” Cleary says of post-1986 POBs. “It’s really an investment gamble.”

Arbitrage occurs when prices for the same product differ between two markets, allowing a nimble player to exploit the difference. “Real arbitrage is free money,” says Andrew Biggs, a scholar at the American Enterprise Institute. “But it doesn’t hang around very long.”


Safe bonds and risky equities are not the same product, but public pension accounting currently permits state and localities to treat them as if they were.
“They are counting the return on the stocks before the return is there,” Biggs says. “If you borrowed money to invest in the real world, you would factor the current value of the debt with the current real value of the stocks.”

Given the inherent risks and possible rewards, how have POBs fared? In 2010, a research team led by Alicia Munnell, director of the Center for Retirement Research at Boston College, ran some numbers to find out. The team took 2,931 POBs issued by 236 governments through 2009. They used each bond’s repayment schedule to calculate interest and principal, and then clustered them into cohorts based on the year issued. They assumed a 65/35 investment split between equities and bonds and tracked the results with standard indexes. They then produced two composite graphs -- one at the height of the market in 2007 and the second in 2009, after a crash and before recovery.

In general, bonds issued in the early stages of a stock boom performed well prior to the crash. Thus, POBs issued in the early 1990s were healthy, ranging from 2 to 5 percent net growth. Borrowings in 2002 or 2003 also looked good.


Those issued in the latter years of the 1990s or 2000, however, were in negative territory even before the 2008 crash, having suffered serious losses to their principal in the 2001-2002 downturn. After 2008, all POBs were under water -- except those issued in the trough of the collapse, which by 2009 were already pushing 25 percent gains.

Oregon’s numbers mirror Munnell’s findings. Local government POBs issued in 2002 at the depth of that market collapse and managed by Oregon PERS gained an annual average of 8.84 percent through 2012, before principal and interest on the bond. Less lucky were bonds issued in 2005. The Springfield School District’s POB earned just 5.53 percent, for example. Since that bond carried 4.65 percent interest, it likely earned roughly one point annually -- not much, but slightly above neutral. Oregon’s 2007 issuers earned just 2 percent on their investments through 2012, and are upside down today after debt service.

The same fate befell Stockton, Calif., which also came to market in 2007. Similarly, New Jersey issued a $2.8 billion POB in 1997 -- on the wrong side of another stock bubble.

“The whole thing is the timing,” Oregon’s Cleary says. “You are trying to issue them when the market has bottomed out and when interest rates are reasonable, because really what you are doing is making an investment bet. If people thought when they did POBs that they were refinancing a debt or doing a locked-in arbitrage, rather than an investment play, I’m sure they have been very surprised by the results.”


And yet that is exactly how they were sold. When Oregon voted on new POBs in 2009, the voter education pamphlet argument in favor of issuance explicitly framed the choice as a “refinance” and cast the projected returns as money “saved.”

“Just like many homeowners are refinancing their home mortgages,” the pamphlet read, “the State should take advantage of these historically low rates, which can save Oregon more than $1 billion over the next 25 years. The money saved will help reduce cuts and protect services that all Oregonians rely on.”

Because POBs demand headroom between the interest an issuer pays to borrow and the high returns promised on resulting investments, their investment strategies tend to chafe against safer portfolios. Without a hefty “discount rate” -- as the projected annual gain assumed by a pension fund is known -- the pension bonds would not be possible.

In a 2012 paper, Andrew Biggs argues that the aggressive 8 percent discount used by many states overstates likely earnings and understates risks. A fund that required $100 million in 20 years and employed an 8 percent discount rate would be “fully funded” with $21 million, Biggs notes. But if that same fund were to gain only 5 percent annually, it would need $38 million today to be fully funded in 20 years.


Many experts argue that because public pension obligations are legally binding, pension funds should be discounted at close to zero risk on the front end -- at or near the rates offered by government bonds.
“While economists are famous for disagreeing with each other on virtually every conceivable issue,” wrote then-Federal Reserve Board Vice Chairman Donald Kohn in 2008, “when it comes to this one there is no professional disagreement: The only appropriate way to calculate the present value of a very-low-risk liability is to use a very-low-risk discount rate.”

In point of fact, the 8 percent discount rate may be on its way out. The Governmental Accounting Standards Board (GASB) is launching a complex hybrid discount standard in 2014, which will affect the assumptions states make with their funds. Some fear the GASB rule will only create more confusion. Bond rater Moody’s is taking a simpler tack in weighing government pension plans, having recently proposed to shift its pension discount rate down to the level of AA taxable bonds, which are now at 5.5 percent. “Currently, discount rates used by state and local governments are all over the place,” says Tim Blake, Moody’s managing director of public finance. “Most are in the range of 7.5 to 8 percent. We need a uniform rate.”

Not surprisingly, 5.5 percent is very close to the rate at which many POBs are sold to investors.


With aggressive 8 percent discount rates now under attack by economists, oversight boards and rating agencies, issuers who counted on rosier outcomes have learned some hard lessons. Five years ago, when Connecticut State Treasurer Denise L. Nappier announced a new $2.28 billion pension bond, she noted that the state had “achieved a favorable borrowing cost of 5.88 percent, which is well below the 8.5 percent assumed long-term return on assets of the Teachers’ Retirement Fund. This will provide significant cash flow savings over the long term and a potential savings to taxpayers of billions of dollars.”

When the bond was issued in April, the Dow Jones average stood just shy of 13,000. By November, the market was in free fall. It bottomed out the following March at just over 6,600. Connecticut’s timing could hardly have been worse. As the market plunged, Pensions & Investments lit into POBs, singling out Connecticut. The editors argued that POBs shove obligations “that should have been paid as earned” onto future generations, along with the risk of the debt.

By 2010, with the market still emerging from the trough, Connecticut’s finances were as messy as ever. But now there was little appetite for more bonds. POBs “are certainly a risky proposition,” Michael J. Cicchetti, chairman of Connecticut’s Post Employment Benefits Commission, told the CT Mirror. “Things are different now than they were then.”


______________________________________________

Wall Street has the nerve to state that public sector pensions are too big of a liability for governments.  After all, Wall Street fraud caused a loss of 1/2 pension value in 2008 and the rating corporations like Moody's was ground zero for the fraud---they should know pensions are limping along!

Indeed, simply taking the assets of the three major rating corporations and pushing them into bankruptcy for their part in the fraud would have made pensions flush with cash.  RULE OF LAW WOULD HAVE SOLVED GOVERNMENT PENSION SHORTFALLS.  No one shouted this!  Did you hear your pols shouting for recovery of pension losses from fraud to make up the shortfall?  They went straight to cutting benefits.  They through pensions into bad investments just to claim they were liabilities that needed to be cut.

THAT'S A NEO-LIBERAL FOR YOU-----WORKING TO MAXIMIZE WALL STREET PROFITS AT PUBLIC EXPENSE!

Now, why should all citizens be concerned about pension fraud ----even those with no pensions? 


THE SAME THING IS HAPPENING WITH SOCIAL SECURITY!  YOUR RETIREMENT PROGRAM IS BEING RAIDED BY THE SAME PEOPLE.  DO NOT THINK IT OK FOR SOME PEOPLE TO LOSE THEIR RETIREMENTS WHEN THE PROBLEM IS CORPORATE FRAUD AND CORRUPTION AND NOT THE BENEFIT!

So while neo-liberals like Dulaney are busy making sure legislation places corporations into positions to earn grand profits-----they are setting you and I to take the losses once again.

The policy of risk-free rating is not a bad thing-----what is bad is that it comes at a time when pensions are waiting for recovery from fraud by Moody's and it comes as the bond market is ready to implode from public sector malfeasance.  Can you imagine how impossible it will be to meet these obligations after an economic crash bigger than 2008? 

THAT'S RIGHT-----THEY DO NOT WANT TO BE ABLE TO MEET THEM!  THAT IS WHY THEY ARE IMPLODING THE BOND MARKET FOR GOODNESS SAKE!


A Maryland neo-liberal running for Governor of Maryland Heather Mizeur actually stated-------if public employees gave up pension benefits we could build all these schools in Baltimore.  That is what neo-liberals do----pit people in the same Democratic base against one another.  It is not an either/or----STOP THE CORPORATE FRAUD AND PROFITEERING!

LABOR AND JUSTICE ARE THE DEMOCRATIC BASE!

Moody’s Playing Dangerous Games With Public Pension Funds

Tuesday, 07 May 2013 09:29 By Dean Baker, Truthout | Op-Ed

The bond-rating agency Moody's made itself famous for giving subprime mortgage backed securities triple-A ratings at the peak of the housing bubble. This made it easy for investment banks like Goldman Sachs and Morgan Stanley to sell these securities all around the world. And it allowed the housing bubble to grow ever bigger and more dangerous. And we know where that has left us.

Well, Moody's is back. They announced plans to change the way they treat pension obligations in assessing state and local government debt.

Instead of accepting projections of pension fund returns based on the assets they hold, Moody's wants to use a risk-free discount rate to assess pension fund liabilities. This will make public pensions seem much worse funded than the current method.

While this might seem like a nerdy and technical point, it has very real consequences. If the Moody's methodology is accepted as the basis for accounting by state and local governments then they will suddenly need large amounts of revenue to make their pensions properly funded. This will directly pit public sector workers, who are counting on the pensions they have earned, against school children, low-income families, and others who count on state supported services.

In other words, this is exactly the sort of politics that the Wall Street and the One Percent types love. No matter which side loses, they win. While public sector workers fight the people dependent on state and local services, they get to walk off with all the money.

Wall Street is expert at these sorts of accounting tricks; it is after all what they do for a living. And this is not the first time that they have played these sorts of games to advance their agenda.

The current crisis of the Postal Service, which is looking at massive layoffs and cutbacks in delivery, is largely the result of accounting gimmicks. In 2006 Congress passed a law requiring an unprecedented level of pre-funding for retiree health care benefits. The Postal Service is not only required to build up a massive level of prefunding, it also is using more pessimistic assumptions about cost growth than any known plan in the private sector.

This requirement is the basis for the horror stories of multi-billion losses that feature prominently in news stories about the Postal Service. The Postal Service would face difficulties adjusting to rapid declines in traditional mail service in any case (it doesn't help that they are prohibited from using their enormous resources to expand into new lines of business), but this accounting maneuver is imposing an impossible burden. The change in pension fund accounting could have a comparable impact on state and local governments.

Moody's change in accounting is not just bad politics, it is horrible policy. The key question is how we should assess the returns that pension funds can anticipate on the assets they hold in the stock market. Moody's and other bond rating agencies did flunk the test horribly in the 1990s and 2000s. They assumed that the stock market would provide the historic rate of return even when price to earnings ratios were more than twice the historic average at the peak of the stock bubble.

While some of us did try to issue warnings at the time (here) and (here) the bond rating agencies were not interested. As a result, when the stock market plunged, many pensions that had previously appeared to be solidly funded, suddenly faced substantial shortfalls.

It is possible to construct a methodology that projects future returns based on current market valuations and projected profit growth that maintain proper funding levels, while minimizing the variation in contributions through time. By contrast, if the pension funds adopted the Moody's methodology as the basis for their contribution schedules, they would find themselves making very large contributions in some years followed by years in which they made little or no contribution.

A state or local government that used the Moody's methodology to guide their contributions would effectively be prefunding their pensions in the same way that it would be prefunding education to build up a huge bank account so that K-12 education was paid from the annual interest. While it would be nice to have the cost of these services fully covered for all time, no one thinks this policy makes sense. We would be hugely overtaxing current workers so that future generations could get a huge tax break.

Even worse, Moody's scoring of pensions may discourage pension managers from holding stock as an asset. They would be held accountable for any losses in bad years, but would not get credit for the higher expected returns on stock. For this reason, risk averse pension managers may decide to hold safe but low yielding bonds.

This would lead to the perverse situation in which collectively invested funds held in pensions only hold safe bonds, even though market timing carries little risk for them. On the other hand individual investors, who are hugely vulnerable to market timing, would be holding stock in their 401(k)s.

That outcome makes no sense. But of course it didn't make sense that subprime mortgage backed securities were Aaa. This is Moody's we're talking about.


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May 20th, 2014

5/20/2014

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DO YOU HEAR YOUR POLS SHOUTING ABOUT HOW THESE COMMUNICATION POLICIES WILL ALL END IF LEFT TO CONTINUE?  IF NOT, THEY ARE NEO-LIBERALS AND NEO-CONSERVATIVES

The Federal Communications Commission has opened a new inbox at openinternet@fcc.gov for public comments on #NetNeutrality tell them what you think.

Stop Staples!

see video at: https://www.youtube.com/watch?v=Xtbh2rK5i9I — with Tom Dodge at STOP STAPLES PROTEST.
  Privatizing the US Post Office


I want to take this week to overview the extent we are losing our public sector and why it is important to stop it.  Republican voters need to stop listening to the mantra of small government because this is what has given us massive and systemic corporate fraud and government corruption and it is taking basic public agencies geared towards providing necessities of life.  These public agencies make the difference between first world and third world social societies and neo-liberals and neo-cons are going for the third world model.

I attended a Post Office protest this weekend as events like this occur all across the nation.  The issue is huge and yet there is no dialog.  People are being sold a bag of goods when corporations tell them the mail is outdated and not a viable service.  THE POST OFFICE USES NO PUBLIC TAX BASE AND IT HAS ALWAYS BEEN VIABLE AND IS NOW.  The problem is that neo-liberals and neo-cons are dismantling the Post Office taking all means of revenue development away and legislating hardships on the Post Office as regards pre-payment of employee benefits decades in advance-----something no other business in America is made to do.  So, Congress has declared war on this public agency tasked with the important duty of providing the American people with a quality means of communication at an affordable cost.

THE PROBLEMS WITH FINANCE FOR THE POST OFFICE IS CONGRESSIONAL LAWS DISMANTLING THIS AGENCY'S ABILITY TO GENERATE REVENUE.


I remind people to look at the goals of the corporation's in power.  As they take more and more control of government and dismantle our democracy they need to control an angry group of 300 million people and that includes making sure they cannot communicate easily.  Watch as these communication industries consolidate so as to become so large that competition is destroyed and they have free reign to soak consumers and gut services and quality.  Everyone knows this is what happens in each industry.  Imagine that cell phone costs soar as people are made to pay for every minute or share plans are priced at a few hundreds of dollars as the cost of living rises for things like health care and food.  People will not have the disposable income for the very basic need of making a phone call.  Think again about these net neutrality laws they intend to dismantle giving communications industries a green light to push rates for ordinary internet actions so high that most people will not be able to access the internet for basic things as email and accessing any site having streaming video------and that is every site.  So, most people will be priced out of internet service and access to email to a great degree.  There goes that method of communication!


PRICED OUT OF PHONE AND INTERNET SERVICE------HOW WILL MOST AMERICANS COMMUNICATE?

These same corporations are now trying to privatize and kill our Post Office as letters and mail are now the only communication they do not control.  If they are successful-----which is why your Post Office workers are protesting as hard as they can-----the mail service will end under the guise it is not profitable----at the very least the mail will be gutted in the level of service.  So, the US mail disappears as an option for communication.


HOW WILL YOUR CHILDREN AND GRANDCHILDREN COMMUNICATE IF ALL THIS HAPPENS?  BY SMOKE SIGNALS!!!!  LITERALLY.  THIS IS WHAT A THIRD WORLD NATION LOOKS LIKE.  THE PEOPLE HAVE NO RELIABLE MODE OF COMMUNICATIONS AND ARE THEREFOR LEFT DISCONNECTED.


Below you see a deliberate model of moving people first from landline phones onto cellular and then moving people towards pre-paid.  Most people are making these moves because the rates and equipment is getting more and more expensive for most.  That is because the global market is targeting people with lots of money.  Most people are now paying for their phones as we are now leasing our cars because families are becoming too poor to afford basic services.  What happens when they have most people on pre-pay cellphones?  They can do whatever they want to your ability to access any communication.
People with pre-pay and plans that sell by minute know you are becoming saturated with robo-calls and advertizing/collection calls that eat most of your time.  Think again at the growing wait for customer service and even government agencies now have long wait times on phones that make people unable to access simple service calls.  THIS IS DELIBERATE.  Most people cannot even make a call to check the status of a city water bill because of the kind of phone service they have and the dismantling of customer service across all government services.  Keep in mind that once businesses move people to a favored service----that price goes up.  So, we are losing our landline connections that are cheap and allow universal communication.
  This is not innovation----it is how you capture a market to a model you want being the only choice.

Your options in cellular will disappear.

Prepaid Cell Phones: The New Growth Industry


By Lewis Medlock 
  editor of Prepaid Phone Pro.

The landscape of the mobile cellular phone market has shifted in recent years. While the overall mobile phone market continues to grow, traditional post paid plans are shrinking in total market share. Contract plans are quickly being replaced by cheaper prepaid cell phones.

Prepaid vs. Post Paid
The two general types of mobile phone plans are prepaid and post paid. With prepaid, you pay for your minutes upfront. With post paid, you pay for minutes at the end of each month. Post paid plans require a credit check and a contract because you pay for your minutes after you've used them.

Growth Statistics
The cell phone market has grown every year since its inception, and the overall market continues to grow. In the United States, over 80% of the population now uses cell phones. That trend continues to grow, although much slower now than in previous years.

Traditional contract phone plans have been the primary niche within the cell phone market and that niche grew year after year. However, in 2008 the growth trend started to slow. From 2008 to 2009 the net additions of post-paid customers across all major carriers fell 58 percent. In 2009 the post paid subscriber growth actually reversed and the market share is currently shrinking.

Meanwhile, prepaid customers are increasing. In 2008 about 50 percent of new cell phone users signed up for prepaid cell phone service. The next year, in 2009, about 80 percent of phone subscriber growth came from prepaid plans.

Historically, prepaid phone plans have been used by two types of people: young people and people with bad credit. Because traditional post paid plans require a credit check, many people have been unable to purchase a traditional post paid cell phone. Traditionally, those people with no credit or bad credit have made up the bulk of the prepaid market. The one disadvantage of prepaid plans, up until recently, was that prepaid cell phone plans have been more expensive than post paid plans.Prepaid Is Now Cheaper
However, a few years ago the price of prepaid plans started to come down. Now prepaid cellular phone plans are significantly less expensive than post paid plans. Many prepaid carriers are now even offering unlimited minutes plans that are less expensive than comparable contract plans that have 500 minutes. The current low cost of prepaid plans and the downturn in the economy are fueling the explosive growth of the prepaid cell phone market.

Of course, the major cellular phone companies are not happy about this, since they make much more money on contract plans than they do on prepaid. There are three reasons for this is. The first is that post paid plans are more expensive than prepaid plans. Traditional contract plans can run upwards of $80 a month while a prepaid plan with the same minutes could be as cheap as $40. Second, not only do mobile phone companies make more money on contract plans, but they have a secure recurring income stream by locking their customers in with long term contracts. The third reason post paid plans are so lucrative for the cell phone companies is that they charge exorbitant rates if you go over your minutes allowance, sometime 25 or 50 cents per minute. This adds up very quickly and many people have accidentally run up huge cell phone bills of several hundred dollars.

Of course, with prepaid plans, you don't have this issue. Prepaid plans are now cheaper per minute and they don't have contracts. Also, if you go over the minutes that you've purchased, you can simply buy more minutes.

The Future of Cell Phone Plans
Contract cell phone plans continue to be popular with consumers, though. The primary reason is that the handsets that they offer are cheaper, at least up front. Many consumers continue to pick contract plans because they can't afford a $600 phone. The carriers will subsidize the price of the phone when customers sign a two year contract. In contrast, prepaid handsets are more expensive since none of the price is subsidized. Consumers have to pay full price for prepaid handsets. What consumers don't realize is that the carriers are able to subsidize the cost of the handset because they know that over the course of that two year contract they'll make up the cost of the phone (and much more.)

Prepaid plans continue to gain market share, though. They just make more sense for consumers financially. The economy has been bad for years and there's no end in sight. The lower overall cost of prepaid cell phone plans will continue to boost their popularity and more consumers will choose prep
aid plans over the traditional post paid contract plans.


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Think of how much of your use of the internet includes streaming video----advertisement with streaming video is even infused in your email with Yahoo and Google.  Net neutrality makes the costs of all internet access equal for all just as the cost of electricity coming into your house is charged the same whether you are a business using lots of electricity or a homeowner using a much smaller amount.  Both have access to as much as they need with the same conditions of contract.  Ending net neutrality says that if you pay a much higher rate you get to continue to access what is available now for everyone.....if you cannot afford these higher rates, you will be relegated to a service of slow access with all kinds of crashing and freezing that makes internet use frustrating and impossible.  We are already seeing this in Maryland today.

Most of the news we receive is now online and infused with streaming video.  The movies and video games are all streaming video----social media is infused with streaming video.....all will be too expensive to afford for most people.  The rates will climb slowly, but in a handful of years-----you will be blocked from much of access.

THERE GOES EMAIL AND BEING PART OF WEBSITE COMMUNITY CHAT LINES!


Net Neutrality


Saving the InternetBroadbandCableCybersecurityDeclaration of Internet FreedomGlobal Internet FreedomMobileSurveillanceVerizon/Cable DealSpectrumSOPA

On Jan. 14, 2014, the U.S. Court of Appeals in Washington, D.C., struck down the Federal Communications Commission’s Open Internet Order.

And on May 15, the FCC voted to propose a new “open Internet” rule that may let Internet service providers charge content companies for priority treatment, relegating other content to a slower tier of service.

Under these rules, telecom giants like AT&T, Comcast and Verizon would be able to pick winners and losers online and discriminate against online content and applications. 

We must stop the FCC from moving forward with these rules.

Here’s how we got here:

The open Internet rules, adopted in 2010, were designed to prevent Internet service providers (ISPs) from blocking or slowing users’ connections to online content and apps.

This ruling means that just a few powerful phone and cable companies could control the Internet. Without Net Neutrality, ISPs will be able to devise new schemes to charge users more for access and services, making it harder for us to communicate online — and easier for companies to censor our speech. The Internet could come to resemble cable TV, where gatekeepers exert control over where you go and what you see.

Without Net Neutrality, ISPs like AT&T, Comcast, Time Warner Cable and Verizon will be able to block content and speech they don’t like, reject apps that compete with their own offerings, and prioritize Web traffic (reserving the fastest loading speeds for the highest bidders and sticking everyone else with the slowest).

The tools ISPs use to block and control our communications aren’t different from the ones the NSA uses to watch us. Whether it’s a government or a corporation wielding these tools or the two working together, this behavior breaks the Internet as we know it and makes it less open and secure.

We must fight to ensure that the Internet we love won’t simply become a platform for corporate speech or another tool for government spying. We must protect the Internet that lets us connect and create, that rejects censorship and values our right to privacy.

The Internet shouldn’t be a walled garden. It should remain a forum for innovation and free expression. As so many startups and political activists know, open, affordable, fast and universal communications networks are essential to our individual, economic and political futures.

For our 101 on Net Neutrality, click here.

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This is a really long article on the history of the policy towards privatization.  Please take time to glance through.  It gained traction with neo-liberals Reagan/Clinton and Bush super-sized the efforts and neo-liberal Obama endorses these steps.  While you may hear your pol shout out DON'T CLOSE THAT POST OFFICE......Congress votes each time with neo-liberals joining for these policies dismantling the Post Office at every step.  Maryland has adopted all of these policies below, the kiosk as post office now being built across Maryland and will adopt the Staples policy if this pilot program is approved.   Remember, the Post Office is a viable business and can remain viable if all of its revenue sources are not taken away.

It is pension-pre-funding of hundreds of billions of dollars that guts the Post Office revenue generation.


The corporatization of the Postal Service: Post office closures, suspensions, relocations, and reductions in 2013


January 7, 2014



One of the most persistent refrains in the debate about the Postal Service is that it needs to act more like a business.  That means different things to different people, but for many, the model for where the Postal Service needs to go is to be found in Europe.  In the EU countries, where the process of liberalization has been going on for fifteen years, the government monopolies have come to an end and the marketplace has been opened to more competition.  According to free-market doctrine, the competiton was supposed to lead to lower prices and better services, but things haven't quite worked out that way.

According to a new report on the recent history of postal systems in Europe, “liberalization has not improved services and reduced prices as promised by the European Commission and others.” 
Instead, in countries where the postal systems have been deregulated and privatized, large corporations have come out the winners and average citizens and postal workers have come out the losers.

Consumers see their post offices close and get replaced by postal counters in private businesses.  The mail is delivered only two or three days a week and primarily in highly populated areas.  For postal workers, liberalization has led to lower wages and more part-time and self-employed contract jobs with little security and few benefits.

While consumers and workers get the short end, large mailers get their mail picked up more frequently, and in many cases their rates have gone down thanks to lower labor costs, cutbacks in postal services for the general public, and the special deals mailers can negotiate with the carriers.  The private shareholders in the former public monopolies and the executives of postal businesses are also coming out ahead.  Even with declining volumes in letter mail, there are big profits to be had in the mail industry.  


The corporatization of the Postal Service The citizens of the United States have never voted to privatize the Postal Service, but the process of corporatization has been going on for a long time.  With each passing year, the Postal Service acts less and less like a public service and more and more "like a business." The scenario that has played out in Europe is playing out in the U.S., just in its own way.

Since 2000, the total number of USPS employees has been reduced by a third, and part-time workers now comprise over 20 percent of the workforce.  The Postal Service outsources wherever it can — over $12 billion of its $65 billion in annual expenses go to private contractors and suppliers.  Over half of the Postal Service's processing plants have been consolidated, while the workshare system has led to the creation of a huge private-sector consolidation industry, with companies like Pitney Bowes and Quad/Graphics reaping huge profits.

Consumers aren't seeing post offices closing by the thousands, but the hours are being reduced, sometimes to two or four hours a day.  A huge network of "alternate retail access points" has been developed to replace brick-and-mortar post offices.  Collection boxes are being removed from city streets, the speed and reliability of mail delivery are going down, more customers are getting cluster boxes, postal properties paid for by taxpayers are being sold off, and the lines at post offices are as long as ever, maybe longer.

The Postal Service and Congressional leaders typically blame the service cutbacks and downsizing on the big drop in mail volumes, but the transition toward a corporatized postal system predates declining volumes by a long time.  As Christopher Shaw tells it in Preserving the People’s Post Office, there’s nothing new about efforts to close post offices, reduce window hours, get rid of collection boxes, shift to cluster boxes, and everything else we’ve been seeing. 

The first big step toward corporatization was the 1970 Postal Reorganization Act, which turned the Department of the Post Office into the Postal Service.  The process got a big boost in 2003, when President Bush appointed a Commission on the Postal Service.  Its report, which seems to have served as a blueprint for Darrell Issa’s postal reform agenda, said that while the country wasn't ready for postal privatization the Postal Service should be run more like a private business.
 The Commission recommended expanding retail services to private stores, making it easier to close post offices, outsourcing more to the private sector, offering more workshare discounts, setting up a BRAC-like commission to consolidate processing plants, “rightsizing” the workforce, and disposing of postal real estate to “provide benefits to the public in the form of moderated rate increases.”

Many of these recommendations were implemented in the 2006 Postal Accountability and Enhancement Act.  For example, PAEA directed the Postal Service to expand “alternate retail options” like vending machines, kiosks, the Internet, and “retail facilities in which overhead costs are shared with private businesses" (sec. 302).  These alternatives were not intended simply to improve consumers’ access to postal services.  They were about developing an infrastructure that would make it easier to close post offices.

Bush’s Commission came out with its report in 2003, when mail volumes were increasing. PAEA was enacted in 2006 — the year Shaw’s book was published — when mail volumes were at their peak.  Declining mail volumes thus had little if anything to do with the rationale for cutting services and closing facilities. 

The rationale then, as it is now, was about something else. 
As Shaw makes clear in his book, the goal has always been to commercialize, corporatize, and eventually privatize the Postal Service in order to enhance the profits and wealth of the corporate stakeholders of the mail industry. 

Measuring “customer satisfaction” Given the influence of these stakeholders in Congress, it’s no surprise that there is little in current postal laws — and much less in proposed legislation — to protect the interests of average consumers and postal workers.  PAEA does make a nod, however, toward showing some concern about what is vaguely described as “customer satisfaction.”  Section 3652 of the act requires the Postal Service, as part of its Annual Compliance Report (ACR) to the Postal Regulatory Commission, to report on the degree of customer satisfaction.

The main way the Postal Service fulfills this requirement is by conducting a Customer Experience Measurement (CEM) survey.  About 300,000 residential customers and 310,000 businesses rate the Postal Service’s performance with respect to each type of mail.  In most cases, around 85 percent of the respondents say they are very or mostly satisfied. 

The survey may be helpful, but a survey can only tell part of the story.  The PRC has therefore developed regulations that require the Postal Service to provide more information in order to help the Commission gauge customer satisfaction when it reviews the ACR for its Annual Compliance Determination Review (ACDR). 

According to these regulations (39 CFR 3055.91), the Postal Service must provide the following information: The number of post offices, emergency suspensions, delivery points, and collection boxes that existed at the beginning of the fiscal year and at the end of the year, along with the total number of closings, suspensions, new delivery points, and collection boxes removed and added.  The ACR must also provide data on average customer wait time. 

The main purpose of the compliance review is to determine whether or not the Postal Service is in compliance with service standards and the requirement that each type of mail cover attributable costs.  Matters involving consumer satisfaction represent a relatively small part of the review.

The Postal Service has been resistant to providing even a minimal amount of data about the subject, however.  When the PRC was first developing the section 3652 regulations in 2009, the Postal Service objected to the new reporting requirements.  Valpak, which thinks that providing services for average customers drive up its rates, supported the Postal Service in its objections.  In the end, however, the PRC argued that given the vagueness of the “customer satisfaction” requirement in section 3652, it was necessary to review more than the CEM survey results.  (See PRC Order 465.)

The compliance review does not do very much to ensure the quality of postal services for the general public, but it does provide some degree of transparency about topics like consumer access to postal services.  It may also provide some incentive for the Postal Service to keep up its ratings on customer satisfaction. 

The information that comes out as a result of the compliance review actually does something more, however.  In looking at the data on post office closings and suspensions and the growth of alternative retail access and so on, one can chart the progress of postal liberalization and see in quantitative terms how the Postal Service is slowly being transformed from a public service into a postal corporation. 

The ACR numbers The Postal Service submitted the ACR on December 27, and over the next few weeks, the Commission will review the report and then issue the ACDR sometime in March.  The Commission has asked the Postal Service to fulfill its obligation under PAEA by providing the following data (in essentially this form, as described in PRC Order No. 465).  The complete data tables are in Library Reference USPS FY13-22-2; we've put them on Google Docs here.
That is about all the regulations require the Postal Service to provide in its ACR, but the Commission will ask for more in order to prepare the ACDR.  PRC Chairman Ruth Goldway has already issued her first information request.  It asks for lists of post offices that closed and were suspended, as well as more information about CPUs, revenue data on POStPlan post offices, etc.  It’s anyone’s guess why the Postal Service doesn’t just provide the additional information to begin with, since it knows what it was asked for last time around, but the Postal Service doesn’t like to provide any more than required.

Since the PRC’s ACDR won’t be out for a couple of months, here's an overview of what happened during FY 2013 with respect to consumer access to postal services.  The Annual Compliance Report is here, the PRC Docket is No. ACR2013, and last year’s article on Save the Post Office about the ACR data and customer access is here. 


Post office closures One of the most direct assaults on people’s access to the postal system — and one of the main goals of postal liberalization — is closing post offices, but it’s also one of the most controversial.
 People value their post offices.  But corporate mailers don’t use post offices, and they typically advocate closures as a way to cut costs, avoid rate increases, and shift postal retail profits to the private sector.  That’s what has happened under postal liberalization in Europe.  In the U.K., they have closed almost half of their 23,000 post offices.  Germany closed virtually all of its government-run post offices and replaced them with privately owned retail outlets.  Sweden has very few government post offices anymore.

The Postal Service has been talking about closing thousands of post offices since the late 1970s, and the idea of replacing them with postal counters in convenience stores
(which we now see in the Village Post Office initiative) goes back decades.  But progress toward closing them has been relatively slow.  Over the past 40 years, the number of government-run post offices in the U.S. has dropped from about 36,000 to 32,000 — about a hundred closures per year.

The past year was somewhat below average for closures.  The ACR reports that the Postal Service closed 73 retail offices in FY 2013 — 60 post offices and 13 stations and branches.  That’s in contrast to the previous two years, which saw the beginning of a big push toward mass closures.  According to the PRC’s 2012 ACDR, the Postal Service closed 289 post offices, stations, and branches in FY 2012 and 382 in FY 2011.

The PRC has asked the Postal Service for a list of the closures in FY 2013, and it should be available soon.  In the meantime, there are several sources for information about post office closings.

Postal Bulletin regularly publishes discontinuances.  A list of discontinuances implemented during FY 2013 based on these announcements is here.  It shows 68 discontinuances: 58 post offices and 10 stations and branches.  It looks like all but ten of these closures were based on discontinuance studies done before the fiscal year began.

Postmasters Advocate, the publication of the League of Postmasters, published a list of its own a few weeks ago showing 70 closings during FY 2013.  That list is here.  A table based on the Advocate list, with additional information from the USPS facilities lists, is here. 

One can also search for post office discontinuances on USPS Postmaster Finder.  It shows 57 post office closures and does not include stations and branches.  A table based on Postmaster Finder is here.

These lists are largely the same, but there are several inconsistencies — closures on one list don't show up on the others.  It also appears that many of these closings did not actually occur during FY 2013.  Keene Valley, New York, for example, shows up on the lists, but it closed for an emergency suspension in 2010 over a lease issue, and it was replaced in 2011 by a Village Post Office.  Perhaps the PRC can get all this straightened out with the Postal Service so that there's a correct list of which post offices actually closed in FY 2013 after a discontinuance review.

It also appears that nearly all of the closures in FY 2013 were based on discontinuance studies that were done in 2011, before the five-month moratorium on closures when into effect in December of 2011.  If that’s correct, it should be a matter of some concern.  Much of the data on which those final determinations were based is probably out of date, and circumstances may have changed.  If the Postal Service is going to continue to close post offices based on 2011 studies, that problem will become even more pronounced.

There may also be a question about how many post offices actually closed.  In the USPS 10-K for 2012, the Postal Service reports that there were 31,150 post offices, stations, and branches in 2013, as opposed to 31,272 in 2012 — a net decrease of 122.  In the Reply Comments it filed in the exigent rate case a few weeks ago, the Postal Service said that during FY 2013 the number of retail facilities had been reduced by 155.  These numbers are both much larger than the 73 reported in the ACR.  The source of these discrepancies is unclear.


Appeals on closures The ACR doesn’t discuss post office appeals, but here’s a recap for FY 2013. Since there were so few new final determinations to close post offices issued during the year, there were very few post office appeals brought before the PRC.  Only ten appeals were filed between October 1, 2012 and October 1, 2013.  That’s in contrast to 127 for the previous fiscal year. 

Here's what happened with these ten appeals.  Two were not even considered because the appeal was filed late (in one case, by just one day late, in another, by just a few days).  Five appeals were dismissed — three because the closure was part of a relocation (even though no new location had been identified); one because it was premature (the post office was under emergency suspension, not discontinued); and one because the Postal Service withdrew the final determination.  Of the appeals that were actually reviewed by the Commission, two final determinations were affirmed, and one was remanded.  Here's a list of the ten appeals with links to the final orders.

Post Office Outcome Reason for decision Docket No. Order No. Santa Monica, CA dismissed relocation A2013-1 1558 Evansdale, IA affirmed   A2013-2 1674 Glenoaks, Burbank, CA affirmed   A2013-5 1866 Climax, GA dismissed suspension A2013-3 1852 Francitas, TX dismissed PS withdrew FD A2013-4 1737 Bronx GPO, NY dismissed relocation A2013-6 1802 Berkeley, CA dismissed relocation A2013-9 1817 Freistatt, MO not considered late appeal A2013-8 1839 Franklin Station, Somerset, NJ not considered late appeal A2013-10 Letter Fernandina Beach, FL remanded problems in FD A2013-7 1880 It does not appear that FY 2014 will be much different.  So far, three months into the fiscal year, only one appeal has been filed (on Stamford, Connecticut), and there seem to be only a handful of discontinuance studies underway.  One notable case is Redlands, California, where a historic post office is under review for closure.  If this post office is discontinued, the decision will almost certainly be appealed to the PRC.

For now, then, the Postal Service seems to have backed off of big initiatives to dismantle its legacy of brick-and-mortar post offices.
 That may change, however, if new legislation makes it easier to close post offices.  Darrell Issa’s Postal Reform Act (H.R. 2748) would help.  It would remove the prohibition on closing post offices solely for operating at a deficit; shorten the appeals process from 120 days to 60; deny a community the right to appeal a closure if a contract postal unit is opened within two miles of the closed post office; and strike “a maximum degree of” from the requirement that “the Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining.” 

Emergency suspensions The Postal Service has a long history of bending the rules on emergency suspensions in order to close post offices without going through a long discontinuance review.  In 1997, Congress became sufficiently concerned that it asked the GAO to do a report, and in 2010, the PRC initiated an investigation into the problems (the docket, PI2010-1, is still open).

The ACR reports there were 254 post offices and 56 stations and branches under suspension when FY 2013 began, and there were 99 post offices and 31 stations and branches under suspension when the year ended.  During the year, 126 post offices and 36 stations and branches were placed under emergency suspension. 

Some of these suspensions are long-standing and represent unresolved issues, while others lasted a relatively short period of time and the post office soon reopened (like after a weather-related emergency).  The PRC has previously expressed concern about how long some post offices remain under suspension without being reopened or formally discontinued, and it may need to reiterate that concern this year.

The ACR materials do not include a list of those offices under suspension, but the Chairman’s first information request has asked for one.  It will be interesting to see the reason for each suspension. 

As in previous years, many offices have closed during FY 2013 because of problems that arose when it was time to renew the lease, and in many instances, the problems seemed manufactured by the Postal Service.  In other cases, health and safety issues were cited, even though the problem seemed minor — like a little mold in the building — or long-standing and not an “emergency” at all.  In some cases, the problem was an inability to staff the office, but that too seems as though it was a problem of the Postal Service’s own making.  When it reduces hours at a post office to two or four a day and is paying $12 an hour, whose fault is it when no one wants the job?

With over 160 post offices being suspended during the year, it’s likely that in many cases the reason cited by the Postal Service is suspect.  There have been numerous news reports about suspensions in which elected officials and citizens in the community expressed skepticism about the legitimacy of the Postal Service’s claims.  People believe that the Postal Service simply wanted to close the post office and basically cooked up the “emergency.” 

A list of suspensions in FY 2013 based on these news items is here.  It contains about two dozen cases — fifteen involving lease issues; four due to unsafe building conditions (three due to mold); and five caused by an inability to find adequate personnel to run the office.  Most of these suspensions are discussed in posts on Save the Post Office, which are archived here. 

POStPlan reductions The Postal Service has been reducing window and counter hours at post offices for decades.  In 2003, for example, the Postal Service began reducing hours in many locations, such as three quarters of the post offices in Maine.   (For more on this history, see Shaw, pp. 98-100.)

The current plan to reduce hours, POStPlan, is by far the most extensive effort in this regard.  By the end of 2014, hours will be reduced at 13,000 post offices.  The process is well underway.


The ACR says that since 2012, the Postal Service has reduced hours at 7,985 post offices under POStPlan.  Of these, 1,090 post offices have been converted to two hours per day; 4,203 have been converted to four hours per day; and 2,692 have been converted to six hours daily.  A list of 8,591 offices where POStPlan has been implemented is here.

The ACR says that more than 8,400 meetings have been held with community members.  A list of 8,512 meetings held between October 9, 2012, and November 15, 2013, is here.

The ACR says that the purpose of these meetings was to discuss the new hours of operations “as well as alternatives.”  But the community's preferences on the hours are typically trumped by the Postal Service's "operational needs," and the only "alternatives" to reducing the hours — like “transitioning” services to a nearby post office or using rural carriers — also involve closing the post office.  These aren’t real alternatives, and no community chooses one of them.  In fact, the PRC ought to ask the Postal Service for a breakdown of what “options” each of these 8,400 communities have chosen.  Has a single one elected to have the post office close?  Was it really necessary to hold 13,000 meetings and send out surveys to customers at each one of these post offices?  What was accomplished?

The PRC’s first information request has asked about closures at POStPlan offices.  That could be an issue, since the whole purpose of POStPlan was to keep post offices open, not close them.  It appears that a couple of dozen POStPlan post offices closed during the fiscal year for one reason or another.  A list is here.

In the ACR, the Postal Service says that so far POStPlan has saved $171 million in annual costs.  That’s about a third of what the annual estimated savings will be when POStPlan is fully implemented.  (There’s a detailed discussion of the cost-savings here.)

The Postal Service’s estimates on cost savings don’t include lost revenue, and that too could be a question for the Commission to consider.  The Postal Service has assumed from the beginning that there wouldn’t be any significant loss in revenue.  If revenue numbers were to go down at a POStPlan post office, it was assumed that the revenues had migrated somewhere else within the postal system.  That’s almost impossible to prove one way or another, but the PRC has nonetheless asked the Postal Service to provide revenue data for all the POStPlan offices.  If a significant amount of revenue has been lost at these offices, it could raise questions about the overall impact of the plan.

The numbers on POStPlan also don’t capture a lot of what’s happening at these post offices.  In a recent news report about POStPlan implementation in Montana, for example, the part-time PMR responsible for running one office said that she finds it impossible to get all the work done without working overtime, but whenever she puts in for extra hours, she’s questioned about it, so she feels like she’s working full-time for half-time pay.  “I’ll never work for the post office again,” she vowed.  Another PMR in Montana said the reduced hours since February have no doubt cost the post office business, but he doesn’t know if customers are going to another post office or not.

Overall, POStPlan has drastically diminished access to postal services for millions of Americans, and over the coming years, things will only get worse.  Another five thousand offices will have their hours reduced in FY 2014, and every POStPlan office will be reviewed annually to see if revenues have fallen to the point that the hours need to be reduced even further.  This year the Postal Service is also going to begin reviewing Level 18 offices for hour reductions as part of the next phase of POStPlan, which would be implemented in 2016.

Post office relocations One of the biggest sources of customer dissatisfaction during FY 2013 involved post office relocations.  As with reducing the hours, this practice has a long history.  The general pattern is for the Postal Service to close a large, historic post office in the center of town and to replace it with a small retail facility outside of downtown, often in a carrier annex.  Since the post office is being “relocated,” not closed, the Postal Service says it does not need to go through a formal discontinuance process, which keeps the public’s opportunity for input at a minimum.

For many years, the Postal Service barely even considered the community’s views at all when making relocation decisions.  That changed somewhat in 1998, when the Postal Service added a section to the federal regulations (39 CFR 241.4) guaranteeing at least some opportunity for community participation in relocation decisions.  That change may have been the result of what happened in places like Livingston, Montana, where the Postal Service decided to close the landmark downtown post office and replace it with a new one on the outskirts of town.  The town protested, the case drew national attention, and the historic post office remained where it was — and where it remains today. (For more on the history of relocations, see Shaw, pp. 54ff.)



The ACR does not discuss relocations, but during FY 2013 they were a much bigger source of controversy that post office closures and suspensions.  Issues about how the Postal Service has been conducting the relocation procedures have led to an audit investigation by the USPS OIG, now underway, and several of the post office appeal cases brought before the PRC involved these relocations. 

It would be helpful if the PRC included the issue in its compliance review.  Perhaps the Postal Service could prepare a list of relocations similar to those the PRC has requested concerning closures and suspensions, with information about when the relocation notice was posted at the post office, the date of the community meeting, the final decision date, the disposition of any appeals, the new location if it has been identified, and the current status of the relocation. 

A list of relocations over the past three years based on the news is here.  It doesn’t have the dates when the decision was made or implemented, so some of them were before or after FY 2013.  A discussion of the relocation issues can be found in this recent post.

Disposal of properties The most blatant form of privatization is the transfer of public property into private hands, and the sale of post offices and other postal properties has therefore been another matter of controversy over the past year.  As with relocations, this is not a subject covered in the ACR, but for many communities, when it comes to “consumer access to postal services” and “customer satisfaction,” nothing matters more than having your historic post office sold out from under you. 

Over two thousand towns and cities have a historic post office that is a landmark presence in the community.  Many contain priceless art commissioned during the New Deal.  The Postal Service has clearly embarked on a plan to sell many of these post offices, as well as properties of more recent vintage, but it refuses to provide a list of those that have been reviewed and those that have been earmarked for disposal, so the full scale of the plan remains unknown.  The National Trust and the Advisory Council on Historic Preservation have expressed their concerns, but the sales go on.

The USPS Annual Report to Congress says that there were 44 property disposals in FY 2013 and 49 in FY 2012.  That obviously does not include facilities currently on the market or being considered for sale.  The Postal Service has not released a list of those sold or for sale, but as with relocations, there’s information out there in news articles and in information gathered by Peter Byrne for his investigation into the sale of postal properties by CBRE. 

As with relocations, the PRC should consider including the sale of post offices part of its ACDR.  Since that probably won’t be happening, a list of recently sold properties is here, and a list of historic post offices sold, for sale, or under review for sale, is here.  For more, see this post and check out Byrne’s book.

Premier and Competitive Post Offices While hours are being cut at rural post offices and historic post offices are being sold off and replaced by small leased facilities, the Postal Service has been focused on increasing revenues at a few select post offices.  Over the past two years, two new classifications of post offices have been created — Premier and Competitive.  The ACR doesn’t have anything to say about these new classes of post office, but perhaps the PRC should ask for more information about them.

In 2011, the Postal Service designated about 3,100 of its most profitable post offices as Premier.  While they represent only about 10 percent of the retail network, these post offices account for 44 percent of all walk-in and self-service kiosk revenue.  The purpose of the program is to improve the customer experience and maximize revenues at these offices by giving the staff special training and by offering special products.  When the Harry Potter stamps were released, for example, they were initially available only at Premier post offices.  During the busy holiday mailing season, hours were extended at many Premier offices.  The Premier program thus raises questions about why customers at other post offices should get second-class treatment and why products and services aren't uniformly available.  A list of the Premier Post Offices is here.

In 2012 the Postal Service designated 6,800 post offices as Competitive post offices.  At these offices, the Postal Service charges more for post office boxes than it does at its regular post offices, while providing additional services like those offered by competitors, such as email notification of mail delivery, receiving packages from private carriers, and delivery on Saturday. The Competitive post office idea has met with opposition by FedEx and private mailing centers because of the competition they represent.  Like Premier post offices, the Competitive post offices also raise the question of why some post offices would offer services not widely available.  A list of the Competitive Post Offices is here.

About 1,280 of the Competitive offices are also classified as Premier, so at these post offices, customers are getting special treatment — and paying extra for it.  A list of these offices is here.

Coming next: The year in review, part 2: Alternate access, collection boxes, delivery points, and wait time

(Photo credits: Protesting the sale of the Bronx GPO; former post office in Keene Valley, NY; Glenoaks Station, Burbank, CA; suspended post office in Climax, GA; post office in Blue Mountain Lake, NY, on the POStPlan list; post office in Berkeley, CA, approved for relocation; post office in York, PA, sold; special flower box at the Premier post office in Hartford, CT.)



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May 04th, 2014

5/4/2014

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Cindy Walsh blogs on weekdays and on weekends may talk about protests, rallies, events----or for now, the primary election.  Monday I will speak to education reform.

WE THE PEOPLE MUST ENGAGE IN POLITICS TO TAKE BACK OUR RIGHTS AS CITIZENS.  WE NEED TO SHAKE GLOBAL CORPORATE POLS OUT OF POLITICS AND WE NEED TO SHAKE UNION LEADERSHIP THAT KEEPS BACKING THESE GLOBAL CORPORATE POLS.



As we work to rebuild the democratic party from control by corporate neo-liberals to 80% of the democratic party base of labor and justice we need to work as well on how neo-liberalism has distorted our labor and justice organizations as well.  Today I want to look at Maryland labor union leaders who think Anthony Brown is someone for whom to campaign while ignoring a candidate running as a labor and justice candidate.  Don't be fooled----I am more qualified/skilled than Brown for the administrative tasks of Governor-----I simply an not connected to the Wall Street/corporate crowd.   I have solicited the Maryland AFL-CIO for a few months before they declared for Brown so they know my campaign website and where these corporate neo-liberals are taking America.  They are choosing to support global corporations and markets over what is best for their union membership.

Below you see the politicians in Maryland the MD AFL-CIO is supporting-----ALL OF THEM CORPORATE AND WALL STREET.....ANTHONY BROWN BEING THE WORST OF GLOBAL CORPORATE POLS.  Let's take a look at where O'Malley/Brown has taken Maryland and where he intends to take it.



MARYLAND AFL-CIO ENDORSES THE MOST CORPORATE OF CANDIDATES AND EVEN ONES THEY KNOW ARE BEHIND MOVING TRANS PACIFIC TRADE PACT (TPP)

Folks, this is not sour apples for not having unions support my campaign. This is a serious problem in having unions supporting the most corporate neo-liberal of candidates who they know will kill labor and justice even more.

Anthony Brown will bust public sector unions out of the water, will continue to move towards ending teacher's unions and the privatization of education. He ignores the fact that labor laws are not enforced for goodness sake making wage theft in Maryland one of the highest.

Sarbanes (SR), Hoyer, Cummings all voted for NAFTA and breaking the Glass Steagall wall that killed unions and the middle-class and they are still in office in Maryland with union support. Ruppersberger is king of all that is NSA and spying/surveillance and drone warfare for goodness sake. Why would a union push for that kind of candidate? Dulaney is a Clinton investment banker!!!!! HELLO!!!!

Cindy Walsh for Governor of Maryland ran to give people another choice rather than allowing all of this to continue. I hope union membership look for who their leaders are supporting AND STOP ALLOWING THE SAME NEO-LIBERALS KILLING DEMOCRACY AND LABOR BE RE-ELECTED.

This makes unions look bad and it will cause membership to leave as unions do not protect their membership.


Maryland State and District of Columbia AFL-CIO

2014 Primary Election Endorsements
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GOVERNOR Anthony Brown

LIEUTENANT GOVERNOR Ken Ulman

COMPTROLLER Peter Franchot

ATTORNEY GENERAL Brian Frosh



MARYLAND STATEWIDE

MD District 1 No Recommendation

MD District 2 Dutch Ruppersberger

MD District 3 John Sarbanes

MD District 4 Donna Edwards

MD District 5 Steny Hoyer

MD District 6 John Delaney

MD District 7 Elijah Cummings

MD District 8 Christopher Van Hollen

District of
Columbia At Large: Eleanor Holmes-Norton




Education:

Brown is single-handedly behind privatization of K-community colleges and corporatizing our public universities.  He has worked to end public education in Maryland.  Public sector union busting....developing tiered education with working and middle-class trapped in vocational K-college with education based on online lessons and no access to student loans, financial aid, or grants because all money for education is now being used to subsidize corporate R and D and community colleges as Human Resources.  Taxpayer are now literally paying the operational costs of corporate research and job training in Maryland while being told there is no money for funding public schools and public aid to students wanting to attend college.   THIS IS NOT A DEMOCRATIC STANCE ON EDUCATION-----IT IS REPUBLICAN.

Health Care reform:

Brown is the face of the most private and profit-driven state health system in the nation.  It literally ends public health and privatizes even the Medicaid-level care to private non-profits having no oversight and accountability.  THERE IS NO PUBLIC SECTOR PROTECTING THE CITIZENS OF MARYLAND FROM FRAUD AND ABUSE.  Medicare and Medicaid lose almost 1/2 of spending to health industry fraud in Maryland and this reform simply dismantles more agencies of oversight leaving the public completely unprotected.  Maryland is the only state in the nation opting out of Medicare oversight and simply integrates Medicare into these tiered systems with the goal of ending Medicare as a Federal program.  Brown knows that these private systems are being built with the goal of corporate health plans, public sector health plans, and Medicare and Medicaid all falling into these tiered structures with 80% of Marylanders falling into Medicaid or Bronze----all preventative care that will be handled in clinics.  This is what third world medical care looks like and life expectancy in America will drop immediately if these reforms are left in place.   THIS IS NOT A DEMOCRATIC STANCE ON HEALTH CARE----IT IS REPUBLICAN.

Public Private Partnerships:

Handing public assets and services to corporations with taxpayers paying the cost of operations and infrastructure development to maximize profits, handing the power to write all public policy to that corporation, and busting yet another middle-class sector to poverty to end public sector unions.  Brown is killing public education, public health, public transportation, handing our roads to corporate oversight, and they are now moving to hand Maryland water and waste to private corporations.  AS OBAMA STATED IN HIS MEETING WITH GERMANIES MERKEL-----AMERICA IS BECOMING A CORPORATE STATE.....MEANING THAT CORPORATIONS RUN ALL OF OUR GOVERNMENT AGENCIES.  That has indeed been Obama major achievement and O'Malley/Brown's as well.  Now, Gansler and Mizeur will advance this global corporate agenda as well-----but Brown is a Harvard guy-----Wall Street through and through just like Obama---- What other nation is a corporate state?  CHINA.


SEE WHY GLOBAL CORPORATIONS WANT BROWN TO WIN SO MUCH AND WHY BROWN IS MENTIONED OVER AND OVER IN THE CORPORATE MEDIA? YOU BETCHA!


Corporate taxation:

There is not a corporate tax break or corporate tax reduction Brown won't advance while pushing higher taxes in the form of taxes, fees, and fines on the middle and working class.  You see, neo-liberals and republicans don't care how much we pay in taxes-----as revenue falls from the end of taxing corporations and the rich----someone has to support not only running the state but subsidizing all the costs of business for global corporations.  BOTH REPUBLICANS AND NEO-LIBERALS WILL KEEP RAISING TAXES ON THE WORKING/MIDDLE CLASS TO SUBSIDIZE CORPORATE PROFIT.

Using Wall Street financial instruments to fund state projects:

Did the American people learn from the 2008 crash that fraud and corruption permeates Wall Street and government coffers and individuals lost tens of trillions of dollars in corporate fraud often tied to Wall Street's partnering with government.  Whether a privatized Fannie and Freddie ------whether financial instruments and credit bond leveraging-----all was found to be full of fraud costing Maryland hundreds of billions of dollars over a few decades....tens of billions last decade.  So, why would Brown double-down on development projects funded by Wall Street?  Do you know the economy is ready to collapse soon in a crash greater than 2008 and O'Malley/Brown has leveraged the state with debt so great as to create default on these public projects and send these public assets to corporate hands?  Think of the billion dollar school building scheme in Baltimore handing our school buildings to what will become education businesses.    THIS IS NOT A DEMOCRATIC STANCE, IT IS A REPUBLICAN STANCE.

Private and Public Sector Pensions:

Pensions were taken in 2007 from the then safety of the bond market and thrown into the collapsing stock market just to buoy the big banks.  This was fraud and public malfeasance as pension funds lost almost 1/2 the value.  These pensions need not only that lost value back but the gains from the recent BULL market that would have had these pensions flush with money.  THERE IS NO PENSION SHORTFALL-----WE HAVE NOT RECOVERED MASSIVE PENSION FRAUD.  Now, some states are actively pursuing these lost funds-----public and private sector unions fighting in court.  In Maryland-----SILENCE.  In fact, union leaders are simply agreeing to pension cuts that are not needed.  This is not about increased cost for the taxpayer-----it is about recovery of pension fraud by Wall Street. 

NOT ONE WORD FROM ANY DEMOCRATIC POL OR UNION LEADER IN MARYLAND.  THIS IS NOT A DEMOCRATIC STANCE, IT IS A REPUBLICAN STANCE.



Privatizing public transportation:

VEOLA is one of the most ruthless global corporations in the world with headquarters in Africa.  It is known for enslavement, worker abuse, profiteering and VEOLA has been brought to America to take most of public transportation in corporate neo-liberal states like Maryland.  The goal is to end public transportation and control the travel of most people to that of moving to and from work.  Public transportation was the greatest democratizing public policy in US history.  It gives freedoms and it is a cornerstone of first world quality of life.  We do not want to lose public transportation.  Secondly, privatizing the Port of Baltimore took state revenue of a few billion dollars a year and sent it to private corporations.  Now, the state revenue is a few hundred million in leases.  We have allowed a Port of Baltimore plan of global shipping to kill the Chesapeake Bay with invasive species-----crabs, oysters, and clams taken by Asian mussels for example.  Longshoremen are now being busted as yet again, middle-class wages move to poverty.  THIS IS NOT A DEMOCRATIC STANCE----IT IS REPUBLICAN.



I could go on and on.  One thing I want to say is that even conservative republicans do not like global corporate control as it is not free market-----it is naked capitalism and subsidizing winners and losers.  When a system is rife with fraud and corruption----there are no free markets.  So, when I say the above is republican policy I dare say even republicans hate these policies.  The point is -----MARYLAND HAS NO DEMOCRATIC PARTY------IT HAS BEEN TAKEN BY GLOBAL CORPORATE NEO-LIBERALS DISMANTLING OUR DEMOCRACY.

STOP ALLOWING A GLOBAL CORPORATE DEMOCRATIC NATIONAL PARTY CHOOSE OUR CANDIDATES!  THIS IS WHY ALL CANDIDATES CANNOT GET MEDIA COVERAGE DURING PRIMARIES!

My final point is this  ---------WHY WOULD A UNION LEADER SUPPORT ALL OF THIS?  TAKING THE US FROM FIRST WORLD TO THIRD WORLD IS NOT IN THE UNION MEMBER'S INTEREST.


_________________________________________
Below you see my concern about labor union leadership-----they know the article below shows where neo-liberals are taking Europe and the US and it is very, very, very bad for unions and workers.  The 1% laughs and says---unions can organize the poor.....well, unions will have no trust if they are leading the American people right into this third world structure.  We need to hear Maryland union leaders shouting as neo-liberals try to take Maryland to third world status.



THIS IS THE BIG PICTURE OF WHAT OBAMA AND NEO-LIBERALS HAVE BEEN WORKING ON THESE SEVERAL YEARS. THEY ARE SIMPLY CONTINUING ONE LONG GLOBAL CORPORATE CONSOLIDATION OF ALL BUSINESSES STARTED WITH REAGAN/CLINTON AND NOW BUSH/OBAMA.

Neo-liberals and neo-cons are global corporate pols working against labor and justice and the union leaders are pushing neo-liberals!



The French transportation global corporation is taking all of US public transportation private and that is why US global corporations are in France taking its public transportation. That is what these Trans Pacific and Atlantic Trade deals are about-----giving global corporations the right to work in a nation under their own nation's laws. French VEOLA is headquartered in Africa and comes to America working in some cases----and soon all cases---as they do in Africa... see the Super Shuttle/BWI protests in Maryland to see TPP in action. So, having US corporations taking French transportation will allow US corporations to bust unions and labor laws in France as they are doing in the US right now. Meanwhile, the same people are major shareholders in both global corporations. They are busting labor and justice in a global takeover of all public sector. Obama calls it state corporations.



As you see French unions are calling for nationalization of public sector services taken private in an attempt to counter global corporate takeover-----in the US the union leaders are pushing the pols that want to privatize all that is public-----THAT IS NOT WHAT UNIONS DO!  Remember, if we had nationalized the big banks at the collapse----we would have recovered massive fraud and the economy would be moving towards a health rather than ready to collapse yet again.



Revolting Europe On Europe, the left, labour and social movements Search

// you're reading... France   The battle for France’s national industry jewel
Posted by revoltingeurope ⋅ May 1, 2014 ⋅

France has been in a state of shock since it was revealed last week the company that built the high speed TGV train and steam turbines for EDF’s nuclear reactors was about to be taken over by the yankees. Things scarcely improved when a desperate Paris sought to bring in the Germans for an alternative bid over the weekend.

That the fate of Alstom – one of France’s largest private sector employers and seen as central to the country maintaining its position among the world’s major manufacturing powers – is in the hands of two foreign engineering giants, General Electric and Siemens, is seen as another blow to French pride. It comes amid a string of high profile company closures and record 10% unemployment, a picture that has allowed the Economist magazine to brand the country as the ‘sick man of Europe’.

For the unpopular French socialist administration, gloating from the right-wing opposition UMP party that on their watch President Nicolas Sarkozy warded off foreign predators with a multi-billion-euro bailout and temporary nationalisation, is particularly embarrassing.

Try as they might, President Francois Hollande and his Industry minister Arnaud Montebourg are struggling to show the administration’s patriotic colours. To be sure, Montebourg was behind Yahoo’s failed bid in April last year to buy French video site Dailymotion, arguing that he would not let the country sell off one of its top startups. But their overall record over the past two years is somewhat mixed. For example, that national cause-celebre of the Florange steelworks in north-eastern France. On the campaign trail in 2012 they pledged to keep the blast furnaces going after Indian multinational Tata pulled the plug, only to let them shut.

French giant run from Connecticut

Montebourg objected on Monday to the possibility that Alstom “in three days, can decide to sell 75 percent of a national jewel behind the backs of the employees, of the government, of most of the board and of the senior executives.” The bid from General Electric raised a simple problem that “the main part of Alstom, 75 percent of the businesses, 65,000 employees in the world, is going to be run from Connecticut.”

Their aim is reportedly to keep Alstom’s decision-making centre in France and protect jobs and strategic energy interests. But so far, their only solution was to bring in the Germans, and to try and flog the plan to the French as an Airbus-style “European” project, which might have worked in the past but is less likely to get a sympathetic hearing in the current Euroskeptic climate where Germany is rightly accused of imposing misery on fellow Europeans.

For General Electric, this is an opportunity to expand in Europe – and retreat from its none-too-successful transformation from a real economy engineering firm to a Fortune 100 “diversified financial” company, which invested in the sub-prime market and got its fingers burnt (a track record the French ought to be aware of). For Siemens, it is about wiping out the competition, and above all blocking the US giant’s ambitions.

But how bad is it for Alstom and does it really need rescuing? The newspapers variously report that the company is ‘coming is under pressure because its main markets for power generation and rail equipment are expected to be weak in the next few years’, that its debts are mounting, that Alstom, and that with a stock market capitalisation of a mere $11 billion, it is too small alongside giants such as GE and Siemens ($268 billion and $144 billion respectively).

Unions point out the say Alstom’s problems are much overplayed. Its order books amount to 56 billion euros, a record. In its transport division this amounts to 5 years worth of work. In any case the issue of depressed orders from power utilities affects Alstom’s rivals too.

Cost of capital

For his part, in a tweet this week, former Presidential candidate Jean Luc Melenchon identified some more fundamental problems: the ‘cost of capital, austerity and neo-liberalism’. So for the sake of balance in this debate, let’s explore the radical leader’s tweet.

1. Cost of capital: Over the past four years 1.5 billion euros has been handed out to shareholders in dividends, according to unions. Compare that to 2.3 billion euros of debts, which while below the average level in French companies, could be substantially lower if the fat cat owners had less cream. And the biggest shareholder of all – Martin Bouygues, the billionaire chairman of family conglomerate Bouygues, with a 29.4% stake – wants to sell its share to spend some money on what today are considered more lucrative ventures, perhaps telecoms. A capitalist captain of French industry who wants to bail out, heading for what he hopes are calmer waters, leaving behind him his ship and crew with a gaping hole in the hull.

2. Austerity: Alstom’s orders are heavily reliant on public procurement, and in particular the French state. But cuts in budgets due to the financial crisis and its austerity response, and the longer term EU budget straight jacket (the deficit must be no more than 3% of GDP) have had their impact. If you consider that Alstom’s clients globally are also subject to austerity plans of varying intensity and/or suffering the international repercussions, then the company’s problems are very much a result of public spending cuts. These same policies of course are the ones hurting the public finances and so are stopping the government pursuing the option unions support – nationalisation, albeit on a temporary basis.

3. Neo-liberalism: in some respects Alstom will have benefited from freer trade and greater global competition, for example orders for plant from key client EDF, now one of Europe’s largest energy companies. But greater competition has put the company under intense pressure by exactly the types of companies from the world’s more powerful capitalist nations that want to gobble it up. The Sarkozy rescue reportedly only got past EU competition chiefs on condition work was handed out to competitors, resulting in thousands of French job losses.

Pro-market policies since the early 1980s, as well as driving concentration of ownership into ever fewer hands, have moved decision-making away from centres of democratic oversight, if not control, meaning an a ‘dirigiste’ industrial policy becomes increasingly difficult.
Hollande needs not to forget the lessons of France’s relatively successful fight against globalisation which has left the country not only with a world beating rail system but with a volume car industry led by Peugeot and (whatever you think of nuclear) a formidable energy sector, and today, a rapidly growing green energy industry, led by companies like Alstom. These are sectors which provide the kind of high-skilled, high paid jobs that underpin any prosperous nation.

How about a ‘Franco-French’ solution?

So will it be a US takeover, a Franco-German solution or, as one trade union leader suggested would be best, a “Franco-French” future for Alstom? The latest in what one French newspaper has called a “national psychodrama” is that Alstom has accepted General Electric’s $17 billion offer to buy its energy division, despite government protestations. An apparent concession to ministerial pressure is that it is said to still be prepared to consider a counter-bid from Siemens. In the meantime, an independent committee will scrutinise the preferred bid from the US conglomerate and will report back at the end of next month.

Unions remain fearful that either proposed solution means big job losses and a breakup of the group. Instead they see a much more muscular role for the state in protecting French interests.


Says Christian Garnier, a CGT union rep at the company:

“For us, there is no preferred option. Whether the predator is American or German, we do not want either because in both cases it leads to the collapse and disappearance of the [Alstom] group. Siemens wants to eliminate a competitor. General Electric wants to get patents, know-how, the order book, and industrial facilities… Whatever the buyer, there will be job losses and closures. The true explanation of the proposed sale is that the largest shareholder Bouygues wants to make a capital gain by selling shares. We are being sacrificed for finance. We want the nationalization of the company. We want the state to stop its rhetoric and take action.”

Melenchon and his communist allies, who remain influential in parts of the trade union movement, say a state-led energy and transport “pole”, or cluster, is “the only guarantee of industrial independence for France”. This could be achieved, they suggest, by state-controlled train company SNCF, metro operator RATP, energy giant EDF and nuclear group AREVA  buying shares in Alstom as part of ‘new strategic cooperation agreements that are industrially, financially and employment-friendly, as well as being socially useful.”

This is a plan that will no doubt fall foul of EU state-aid rules, and other economic orthodoxies of the day, but if I were a Frenchman it would get my vote.


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April 29th, 2014

4/29/2014

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The SEC allowed US banks to leave GAAP accounting principles for an International Accounting Principles that place the protections on shareholder wealth and not the public.  As you see below, so many accounting frauds are happening now.  Accounting is a dry subject but it is behind all of the loss of control in fraud and corruption.  Please take time to glance through these postings, especially the last one!

DO YOU HEAR YOUR POL SHOUTING THAT OBAMA AND NEO-LIBERALS ARE DISMANTLING ACCOUNTING REGULATIONS JUST AS CLINTON DEMANTLED BANK REGULATIONS MAKING IT HARDER FOR THE PUBLIC TO CONVICT IN ACCOUNTING FRAUD?


I want to take a few days to look at the state of US banks several years after the massive frauds were discovered and brought down the US economy.  Bank of America and Citibank were to too largest pushers and processors of subprime mortgage loans and Citibank's CEO Robert Rubin was of course Bill Clinton's finance chief when all of the bank deregulation and breaking of Glass Steagall occurred.  It is reasonable to assume the overall plan to blow up the US real estate market was in full swing as Clinton was creating the structures for what is now global Wall Street.  The reason Citi and BOA are of importance is that they are the ZOMBIE banks....the ones that Rule of Law would have required be nationalized and taken into bankruptcy so that all assets could be sent back to creditors and victims of mortgage fraud. 

THIS IS WHAT RULE OF LAW REQUIRED BECAUSE OF THE UNQUESTIONABLE PROOF OF MASSIVE AND SYSTEMIC FRAUD.

That of course did not happen and we have yet to get justice with these two banks.  Mind you, Wells Fargo and the other big banks are equally guilty but CITI and BOA need to go.  Most economists agree that nationalizing these banks to recover fraud would not have had much more of an effect on the economy than the current stagnant and crippled economy we have today.  The second piece to this of which I've spoken earlier is that the movement of US private and public pensions from the then safety of the bond market to the stock market in 2007-2008 was done to buoy these collapsing banks.  Many of US pension money is still attached to the worst of criminal banks.  Rather than bring these banks into bankruptcy and transfer lost pension wealth to worker's, the pensioners are being told the gains of the BULL market these few years has made up the losses----only, it hasn't.

Below you see that yet another illegal game was played at the time of the crash simply to make these banks appear viable.  The idea was pretend they are OK and they can go overseas to amass new profits.  The idea was to allow the FED policy of QE take trillions of dollars of those bad loans off bank accounts to make them look healthier----the FED with $4 trillion in debt has been heard to say they will pass all that debt from fraudulent loans over to the US Treasury-----AKA, THE TAXPAYER.  The FED has reached its limit of debt that can be sustained, the massive transfer of bundled foreclosures has mostly finished (round two of the massive subprime mortgage fraud) so talk moves to reversing the policies that allowed these banks to hide debt and look healthy.


GOODBYE PENSION GAINS FROM THE LAST SEVERAL YEARS----IT WAS ALL FRAUD AND MISREPRESENTATION YET AGAIN.  JUST AS THE WALL STREET RATING AGENCIES GOT OFF SCOTT FREE FOR FRAUDULENTLY GIVING 'AAA' RATINGS TO THESE SUBPRIME LOANS---NOW BANK OF AMERICA AND CITIBANK WILL BE ALLOWED TO REVERSE THE ACCOUNTING TRICKS THAT FALSIFIED THEIR VALUE FOR YEARS AFTER THE CRASH-----ALL INVOLVING FRAUD AND CORRUPTION.


'And how did it err? It says that it properly raised its reported capital levels to offset the reported loss caused by unrealized changes in the valuation of the securities it had issued. But it also raised the capital levels to offset losses that had been realized, something it should not have done. The realized changes came when securities issued by the bank were paid at maturity or repurchased at an earlier date.

That mistake improperly increased its reported capital.

Bank of America did not explain how that the error came to happen or how it was repeated year after year. Nor did it explain why the error was discovered when the first-quarter financial statements for this year were being prepared'.


What all the US big banks did-----BOA and CITI especially ----was to leave the GAAP accounting principles method of recording debt and used an accounting model that allowed it to hide all the subprime mortgage loan and other debt making it look healthier than it was.  You then watch TV commercies toting BOA and CITI as strong and profitable banks as they expanded overseas when in fact they had enormous debt.  Again, these banks were allowed to provide false information to investors to attain business just as happened with the subprime loans.

ALL OF THIS IS FRAUD AND ALL OF THIS PLACES THE PEOPLE'S WEALTH AND INVESTMENTS IN CONSTANT RISK.




Generally Accepted Accounting Principles (United States)

From Wikipedia

Accounting standards have historically been set by the American Institute of Certified Public Accountants (AICPA) subject to Securities and Exchange Commission regulations.[4] The AICPA first created the Committee on Accounting Procedure in 1939, and replaced that with the Accounting Principles Board in 1959. In 1973, the Accounting Principles Board was replaced by the Financial Accounting Standards Board (FASB) under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to advise and provide input on the accounting standards.[5] Other organizations involved in determining United States accounting standards include the Governmental Accounting Standards Board (GASB), formed in 1984, and the Public Company Accounting Oversight Board (PCAOB).

Circa 2008, the FASB issued the FASB Accounting Standards Codification, which reorganized the thousands of US GAAP pronouncements into roughly 90 accounting topics[6]

In 2008, the Securities and Exchange Commission issued a preliminary "roadmap" that may lead the United States to abandon Generally Accepted Accounting Principles in the future (to be determined in 2011), and to join more than 100 countries around the world instead in using the London-based International Financial Reporting Standards.[7] As of 2010, the convergence project was underway with the FASB meeting routinely with the IASB.[8] The SEC expressed their aim to fully adopt International Financial Reporting Standards in the U.S. by 2014.[9] With the convergence of the U.S. GAAP and the international IFRS accounting systems, as the highest authority over International Financial Reporting Standards, the International Accounting Standards Board is becoming more important in the United States.

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Just to show how widespread these accounting frauds were----look below at the systemic nature of these frauds.  Remember, Enron and its collapse resulted by massive frauds by its accounting firm and back then----Rule of Law held Enron and the accounting firm accountable.  That hasn't happened since.

DEREGULATION HAS MADE A WILD WEST OF ALL CORPORATE BEHAVIOR AND THIS HAS OUR ECONOMY AT THIRD WORLD LEVELS OF CORRUPTION.


So, Wall Street banks were allowed to hide massive amounts of debt with accounting tricks and when the FED did the 'STRESS TESTS'  that famously allowed banks to exit government control due to BAILOUT in 2009-2010....it was all a lie.


16 Financial Shenanigans That Got Companies Into Tons Of Trouble

Eric Platt and Lucas Kawa Nov. 20, 2012,

Accounting improprieties, disclosure failures, and outright misrepresentations have gotten companies into trouble since the beginning of business. These are the accusations that Hewlett-Packard has made against software company Autonomy.

As the HP story continues to unfold, we are reminded of some past instances when confusing financial and accounting principles got some big companies on the front page for all of the wrong reasons.

In the recent past, companies have been busted for employing questionable accounting tricks, financial engineering, complicated risk metrics, and outright fraud in an effort to hide losses are inflate profits.


Special Purpose Vehicle (SPV)
Definition: An SPV is a legal entity typically used to serve as a counterparty with the main corporation. In finance it often used for securitization, but it has also been used to hide risky corporate behavior/transactions and conceal corporate relationships.

Case: The most notorious case of special purpose entities being used to distort a company's obligations is Enron, which filed for bankruptcy in 2001. Enron used SPVs to lower the appearance of its debt load and overstate earnings and equity. 

Mark to Market (MTM) AP


Definition: MTM is an accounting measure that values accounts to the current environment. Firms use mark-to-market accounting when the value of an asset or liability moves over time.


Case: Bear Stearns, the now defunct investment bank purchased by JP Morgan, reported in June and July of 2007 that its two main hedge funds (the Bear Stearns High-Grade Structured Credit Fund and High-Grade Structured Credit Enhanced Leveraged Fund) had to mark down nearly all their value, sparking concerns of contagion in the financial crisis. Banks across Wall Street suffered huge paper losses thanks to MTM.


Repo 105
AP Images/ Kristy Wigglesworth

Definition: Repo 105 is an accounting trick that defines a short-term loan as a sale. A company can then use that cash to lower liabilities before paying back the loan with interest. Generally in the repo market, companies will not exchange collateral because the time period is very short.

Case: Lehman Brothers masked extensive liabilities right before quarter-end by using this Repo 105 tactic. The company ultimately filed for bankruptcy and was sold off to different institutions (with most U.S. operations going to Barclays). 

Expense Recognition
ABetterBagofGroceries.com

Definition: Under generally accepted accounting principals, expenses should be recognized when incurred — not necessarily when the payment is made. This is known as the expense recognition principle.

Case: Diamond Foods allegedly shifted payments to walnut growers to later periods to offset costs during its fiscal 2011 year, inflating earnings as it entered negotiations with Proctor & Gamble. The stock transaction depended heavily on Diamond's share price.

Revenue Recognition
haccamopooly/flickr

Definition:  Under  generally accepted accounting principals, revenue should be recognized when the company delivers or performs the task it will be paid for — not necessarily when the payment is received. This is known as the revenue recognition principle. However, exceptions do apply.

Case: Xerox settled with the SEC in 2002 for accelerating revenue recognition of equipment sales by more than $3 billion, which increased pre-tax earnings by $1.5 billion. The company, which was supposed to record revenues both upfront and over a period of time (for servicing equipment over its usable life), moved those service revenues to the time of purchase.

Misrepresented Cash Flows
Definition: The statement of cash flows is the third major financial statement, which tallies cash generated and spent by a company during a fiscal period. This portion of the financial statement of an earnings release is one of the best ways to gauge a company's solvency and actual performance.


Case: WorldCom used its cash flows statement to hide expenses by marking operating costs, which should have been booked as expenses, as capital investments. Under that plan, WorldCom inflated cash flow by $3.8 billion and posted quarters of positive performance when it really lost money.

Channel Stuffing
Krispy Kreme

Definition: Channel stuffing is a practice where a distributor ships retailers excess goods that were not ordered to increase the accounts receivable portion of their balance sheet. Generally, the retailers then ship back the goods and the company must mark them as returns.

Case: Krispy Kreme allegedly sent franchises double their usual shipments at the end of financial quarters so the company could meet Wall Street forecasts. In 2005 the company said it would restate past financial statements.

Hiding Losses in Acquisitions
HK-DMZ on flickr

Definition: Companies can pay high prices for financial advice during a merger, and some have used that guise as a method to cover prior losses. 

Case: Japanese technology giant Olympus announced it had been hiding losses on securities investments for years by using the cover of acquisitions. When new CEO Michael Woodford called attention to strange payments made in 2008, he was subsequently fired.

Round Trip Trading alan5o5 via Flickr

Definition: This is practice where a firm trades an asset and then buys it back many times to inflate its transaction volume. However, the market-manipulation has no impact on profit (although it will bolster top line results).

Case: Dynegy was forced to pay the SEC $3 million after it was found conducting round trip trades with special purpose entities. According to the SEC, Dynegy's "overstatement of its energy-trading activity resulting from 'round-trip' or 'wash' trades — simultaneous, pre-arranged buy-sell trades of energy with the same counter-party, at the same price and volume, and over the same term, resulting in neither profit nor loss to either transacting party."

Smoothing Earnings
Definition: This is a practice where a firm smooths net income by using GAAP techniques to level off fluctuations between periods.


Case: Freddie Mac understated earnings by more than $5 billion over three years to keep earnings consistent and investors happy. According to The New York Times, Freddie Mac lost $111 million during a period it announced net income of nearly $1 billion. Freddie Mac only reported half of what it reported it earned during the third quarter of the year, stating that it earned about $1 billion rather than $2 billion.


Churning
Definition: A practice by brokerage houses where they excessively trade securities to generate commission — even when the trades do not benefit the account holder. Similarly, the practice has been conducted by insurance companies by moving clients from one policy to another.

Case: MetLife, just one of a number of insurance companies found guilty of the practice, settled with state regulators and set aside billions for claims that it moved clients from one policy to another, to generate high premiums.

Bartering
Boonsri Dickinson, Business Insider

Definition: A transaction where two companies (or people) agree to trade goods or services with each other without the use of currency. 

Case: AOL was investigated by the SEC and Justice Department for inflating revenue by using barter trades for online advertising and recognizing the trade as a sale in the period leading up to the merger with Time Warner.

Tax Evasion Philly News

Definition: Pretty simple: an illegal practice where a person or company does not pay the correct tax liabilities owed to the government.

Case: Crazy Eddie, a discount electronics retailer, evaded taxes for years before going public by "skimming and under-reporting income." This was just one of the practices the company used to bolster results. 

Back Dating Employee Stock Options Lara604 / Flickr

Definition: The process where a company offers options to an employee at a date before the actual date the option was made. Companies have done this so they can set better exercise prices to the employee (generally pushing the option into the money).

Case: Apple came under scrutiny for back dating options to employees and forced then-CEO Steve Jobs and other Apple executives to pay $14 million, plus attorney fees. 

Goodwill Impairments
Howard Lake

Definition: Although not illegal, companies have come under pressure from investors for overstating goodwill — which bolsters the balance sheet. Goodwill represents a company's intangible assets (its brand, customer relations, etc.) and often arises during a merger or acquisition.

Case: Green Mountain came under fire for its accounting of goodwill during its acquisition of Van Houtte and how its jump in assets was mainly attributable to that line item on the balance sheet. 

Value at Risk (VAR)
Chris McGrath/Getty Images

A sign on the outside of a Chase bank branch in New York City.

Definition: A tool used by financial institutions that estimates probable losses based on historic trends, prices and volatility. Firms generally report VAR data at quarter-end, with confidence intervals, and for periods stretching from one day to two weeks.

Case: JP Morgan is under intense scrutiny after reporting a $2 billion loss after publishing a VAR of just $76 million a quarter earlier for its entire credit portfolio. At that pace, the entire JP Morgan unit could have lost as much as $76 million in value in any given day (to a 95 percent confidence interval).

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Remember, these pensions were deliberately thrown into the stock market as it crashed just to buoy these big banks.  This is fraud and public malfeasance on the part of public pensions.  What will double-down on these losses if the fact that all the gains from the stock market these few years are masked by hidden debt----no real gains.

Pension fund managers were part of sending these pensions into a crashing market and as of yet very little justice has come from all these massive pension losses.  Below you see movement by pension funds to recover losses but as of yet-----the same small settlements bring nearly nothing back.  When Bank of America is forced to stop using the accounting methods hiding its debt-----stock values will fall once again.
  This article highlights the ongoing fraud as these foreclosure proceedings were handled as badly.

KEEP IN MIND THIS IS NOW HAPPENING IN THE OBAMA ADMINISTRATION AND A DEMOCRATIC MAJORITY IN THE SENATE AS ARE ALL POLITICIANS ARE SILENT.  CAN YOU IMAGINE IF ALL OF CONGRESS SHOUTED LOUDLY TO GIVE CITIZENS JUSTICE ----- THAT IT WOULD HAPPEN.

This is how we know we have corporate pols running as democrats-----NEO-LIBERALS.

Biggest US Pension Funds Get Into Fraudclosure Fray, Demand Banks "Immediately Examine Foreclosure Practices"

Submitted by Tyler Durden on 01/09/2011 20:13 -0400


  More bad news for the BofA/Wells syndicate. After on Friday two of the biggest mortgage lenders in the world were hit with bad news out of the Massachusetts supreme court, today it is seven of the nation's major pension funds, between them representing nearly half a trillion in capital, which are demanding that "the boards of directors of Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo immediately undertake independent examinations of the banks’ mortgage and foreclosure practices." The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter. The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages. But Jim Cramer on Friday said there was no urgency, and no reason to be concerned, and that this is nothing but a buying opportunity for the lemmings which jut got one step closer to the cliff.
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Let's be clear----there were trillions of dollars in subprime mortgage fraud.  The number of homes in America involved was massive.  The reason this fraud was allowed to continue and goes without justice is the goal of this entire scheme was to remove the American people from homeownership----

THE EQUITY WE THE PEOPLE GAINED OVER DECADES OF SAVING AND INVESTMENT.

    I want people who are still losing their homes to foreclosure....and Maryland is ground zero for this.....that damages to the US economy from this massive fraud need to extend to families facing long term unemployment and are now losing their homes.


Remember, all US big banks are still responsible for massive fraud but BOA and CITIBANK were the ringleaders.

Bank of America: Too Crooked to Fail The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?


By Matt Taibbi March 14, 2012 10:55 AM ET

Rolling Stone

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.



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Here you see while Bank of America was known to be in debt of a trillion or more in US fraud....it took its bailout money and expanded overseas where it invests in more high-risk and leverage as much as before the crash.  As this article shows, the Chinese are creating the environment that will hasten a collapse in our US economy this year.


Bank of America advises China default contracts to hedge debt storm Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications Bank of America's Bin Yao says markets have underestimated the risk of a monetary squeeze

 Photo: EPA By Ambrose Evans-Pritchard

2:15PM GMT 13 Dec 2013



Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014.

Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

He recommends buying credit default swaps (CDS) on five-year Chinese debt as the easiest way to “hedge the China tail risk”. These contracts spiked to 266 after the Lehman crisis and again to 206 during the ‘hard-landing scare’ of late 2011. They have since settled down to stable levels, trading this week near 66.

Bin Yao said the markets have underestimated the risk of a monetary squeeze. The central bank has already raised interest rates by three quarters of a point over the last year. Rising yields are pushing the shadow banking system closer to the brink. “We find trust loans especially troubling,” he said.

Short-term debt issuance by trust companies has jumped to $320bn from almost zero two years ago. A new study by the China Academy of Financial Research warned that the trusts face a redemption shock after promising returns of 10pc to 15pc that may be impossible to deliver.



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The American accounting system GAAP is just too burdensome with all of the defined rules that allowed accounting fraud to be easily investigated and prosecuted.  That is why we need to go with this International Accounting Standard.  In order to successfully break from any ability of the public to prosecute fraud as happened with Enron and Aurthur Anderson Accounting, the ability of Americans to file lawsuits for accounting irregularities must be curtailed.


So, they are doing to the accounting sector what was done with the financial deregulation by adopting this International system with much weaker and broadly defined rules.

MIND YOU----THIS IS OBAMA AND A MAJORITY CONTROLLED CONGRESS ALLOWING THIS.  THE SECURITY AND EXCHANGE COMMISSION IS ACTING WITHOUT ANY THOUGHT OF PUBLIC INTEREST.  THAT IS A NEO-LIBERAL FOR YOU!

DO YOU HEAR YOUR POLS SHOUTING AGAINST THIS????


The Dark Side of Global Accounting Standards

Expect loose standard-setting in the oil and gas industries and a ton of litigation if convergence hurtles down its current track, critics say.

  • David M. Katz    CFO
  If the Securities and Exchange Commission on Thursday votes as expected and allows non-U.S. issuers here to report their financials in line with International Financial Reporting Standards without reconciling them with Generally Accepted Accounting Principles, the United States will have crossed a point of no return in the movement toward a single set of global accounting standards, some experts feel.

But that doesn’t mean that many key players won’t cross that line without a fair amount of kicking and screaming.

Speaking at a roundtable discussion on global accounting standards at New York University’s Stern School of Business on Monday, Charles Niemeier, a member and former acting chair of the Public Company Accounting Oversight Board, said that he was “a bit troubled by the speed” of the SEC’s march toward the convergence of U.S. and international accounting standards.
“If we eliminate reconciliation, what have we done? I have some fear that we’re crossing the Rubicon — that we’ve lost leverage in order to get closer [to global uniformity].”

Leverage by U.S. regulators and standard-setters to push for rigor in converged standards could be lost, as well as the clout to hold individual companies to international rules, Niemeier told CFO.com. At the roundtable, the audit firm overseer disputed a basic premise of the proponents of convergence: that if the international standards are adopted in the United States, it would produce a clearer system based on solid principles rather than rule-based minutiae. “Some say Europe is principles-based. I beg to differ. It’s younger,” he said, suggesting that much of the detail in GAAP is justified by long-standing experience. Some speakers said that IFRS lacks the detail provided under GAAP to provide adequate financial reporting in a number of specific industries in the United States, particularly oil and gas and insurance.

By contrast, critics of U.S. GAAP’s complexity, including the SEC’s own advisory committee, consider industry specific guidance to be one of the U.S. accounting system’s major flaws.

At the same time, many roundtable participants worried that the U.S. legal system — also blamed for the complexity of U.S. GAAP — might trip up global accounting standards too. Under the U.S. legal system, they said, auditors feel they must adhere closely to preset rules in order to avoid being sued. In order for IFRS to take hold in the United States, there needs to be “a change in the way we look at litigation in America, where it’s a mark of honor to sue someone,” said Stern accounting professor Seymour Jones at the roundtable.


Even a decision by the SEC to recognize the International Accounting Standards Board (which sets IFRS) as a bona fide standards setter could get tested in a U.S. court, according to Stanley Siegel, an NYU law professor. “Nothing is going to stop an American litigant who has bought shares in an American company or a Brazilian company” issuing stock in the United States from questioning the validity of the SEC’s choice of IASB under Section 108 of the Sarbanes-Oxley Act, he said. (Sarbox 108 enables the SEC to designate a standard setting body’s accounting principles as “generally accepted.”).

Indeed, many seem to feel that the SEC is moving ahead too swiftly and without adequate planning for what truly looms as a major step in the direction of converged international accounting standards. Even Financial Accounting Standards Board chairman Robert Herz, perhaps convergence’s prime U.S. spear carrier feels that “a national plan” for convergence needs to be in place before target dates are set. “Before you get to a timetable,” the key players need to determine “what are the tasks to be done.” High on the plan’s priority list should be educational and regulatory requirements. Underscoring the point about education, Nieimeier said in an interview that few people at PCAOB understand IFRS.

Nevertheless, convergence seems to be proceeding apace. While the SEC has been promoting the idea of installing a single set of international standards for about 20 years, the notion has gone into high gear in the last year, according to John White, the director of corporation finance at the SEC.

The reconciliation proposal, which White and SEC Chief Accountant Conrad Hewitt will present to the commission on Thursday, would create the unprecedented existence of “two co-existing financial reporting systems in the U.S.,” White said at a Financial Executives International conference in New York earlier this week. In developing the proposal, he said, the commission had three questions to answer:

• Is there a satisfactory convergence process in place?

• Are International Financial Reporting Standards being consistently and faithfully applied?

• Is IASB up to the job of setting global financial accounting strictures?

The commission is apparently satisfied enough with the answers to go ahead with at least the first step. The percentage of public issuers in the United States that will be affected is modest, however. Just 1,100 companies out of the 11,000 entities that report their financials to the SEC are foreign issuers, and only 200 of them use GAAP. Of the remaining 900 foreign companies required to file a GAAP reconcilation report, up to 180 may qualify to take advantage of the proposal if they file their financial reports using the IASB’s version of IFRS.


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April 07th, 2014

4/7/2014

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As I showed last blog on private sector pensions, most pension portfolios had pension investments in the bond market because previously the bond market was stable and a safe investment.  You can see from this snippet from an article that a deliberate move of private sector pensions in this massive Pension Benefit Guaranty Corp happened as the stock markets crashed in 2008. 

THIS WAS DELIBERATE AND PUBLIC MALFEASANCE WITH 1/2 OF PENSION VALUE LOST FROM THE FRAUD AND LOSS OF GAINS FROM THE BULL MARKET THAT FOLLOWED.




Pension Benefit Guaranty Corp.

'The PBGC regularly updates its investment strategy. In 2004, it chose to invest heavily in bonds.[6] Under new leadership, the agency in 2008 shifted a substantial portion of its assets into stocks.[7] Because of the market decline, PBGC's equity investments lost 23% during the year ending September 30, 2008.[8]'

Today we want to look at public pensions and know that the same thing happened at state and local level as these public pensions also were thrown into a crashing market in 2007.  So, it was Bush/Obama who made sure Federal pensions were used as fodder and in Maryland it was Baltimore City and Maryland public agency heads that made sure they hit the stock market as the crash was occurring.  THIS IS FACT.  When we hear corporate NPR/APM tell us that all of American savings and retirements were lost and now they have nothing going into their old age and have to work until they drop-------THEY ARE LYING TO YOU.

DO YOU HEAR YOUR INCUMBENT SHOUTING TO BRING PENSION FRAUD BACK TO FEDERAL, STATE, AND LOCAL PUBLIC PENSION FUNDS?  EVERYONE OF THEM KNOWS THIS HAPPENED! 

As I have said before pensions were underfunded for decades with the idea that they would be eliminated.  This move in 2007-2008 was designed to cripple pension funds and to buoy the Wall Street banks that were crashing.  Throwing the American people's pensions into bank stocks allowed these investment firms to earn billions of dollars more.  I want to emphasize that the same is about to happen this year as pensions are now being used in a sovereign/municipal bond fraud as this market is now ready to implode.  EVERYONE KNOWS THIS!

It was not only the losses to these pensions at the time of the collapse, it involves all of the gains those pensions would have had in the following BULL market.  You heard about Wall Street making great gains these few years----pension gains worked with 1/2 the value and they will again lose most value with this next collapse.  The rich are moving their investments out of US stocks while pensions are used to buoy the economies overseas and state and city credit bond schemes.



YOUR UNION LEADERS AT STATE AND NATIONAL LEVEL SHOULD BE TAKING THIS TO COURTS AND IF WE HAD A FUNCTIONING PUBLIC JUSTICE ERIC HOLDER AND DOUG GANSLER WOULD BE FIGHTING FOR PENSION JUSTICE.  THEY ONLY WORK FOR SHAREHOLDER LOSSES AND WE KNOW SHAREHOLDERS PROFIT ON PENSION LOSSES.

WHAT KIND OF PUBLIC ADMINISTRATION GOES BACK TO THE SAME PEOPLE WHO DEFRAUDED THE AMERICAN PEOPLE TO MANAGE RETIREMENT SAVINGS?




May 28 2013 | 12:10pm ET  FIN Alternatives


A Maryland public pension fund has a new hedge fund consultant and a pair of new private equity managers.


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ORGANIZATIONAL STRUCTURE STATE RETIREMENT & PENSION SYSTEM

BOARD OF TRUSTEES Nancy K. Kopp, State Treasurer, Chair (chosen by Board in June, 1-year term)
Peter V. R. Franchot, Comptroller of Maryland, Vice-Chair (chosen by Board in June, 1-year term)
Appointed by Governor with Senate advice & consent to 4-year terms: Robert R. Hagans, Jr., 2015; Harold Zirkin, 2015; Thurman W. Zollicoffer, Jr., Esq., 2015; David S. Blitzstein, 2016; Linda A. Herman, 2017; F. Patrick Hughes, 2017.



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As we know Governor O'Malley was central in all public pension losses first at the level of city and then state.  We know as well he is a great big Wall Street pol who based his entire political career moving the public's wealth to the top earners.  While states handle these shortfalls in pensions victimized by massive fraud and corruption by cutting what the people receive.......O'Malley/Brown pulls their regular routine of saying one thing and doing another.  Pension contributions were cut from what the article below suggests.  Remember, this coming economic crash will gut all these pensions again especially how they are currently invested.  Above you see the State of Maryland went immediately to the Wall Street investment firms who fleeced the public in 2007/2008 to hand our pensions for investment again.  O'Malley/Brown doubled-down on Wall Street financial instruments right after this crash from massive Wall Street fraud acting as nothing had happened.  SEE WHY BROWN IS THE DARLING OF MARYLAND 1%?

The LIBOR frauds, stock transaction frauds, and illegal stock management fees all took lots of money from the people's pensions, both public and private and has yet to get justice.  A governor would be shouting this if he/she worked for the public and not wealth and profit. 

DO YOU HEAR ANY OF THE CANDIDATES FOR GOVERNOR SHOUTING AS CINDY WALSH FOR GOVERNOR OF MARYLAND HAS FOR YEARS?


Governor Martin O'Malley Announces Plans to Put Pension System on Path to Sustainability


ANNAPOLIS, MD (January 21, 2010) –
Governor Martin O’Malley outlined plans today to address Maryland’s unfunded pension and retirement liabilities and begin to put the public system on a path of sustainability.  In introducing the FY 2012 budget proposal today, Governor O’Malley committed approximately $1.5 billion to the pension system next year, nearly $1 billion more than in FY 2003.

“Some of the toughest choices we face in this legislative session are the choices we make to fix our pension system,” said Governor O’Malley.  “We owe it to our police officers, teachers and other hardworking state employees and we also owe it to our children and our taxpayers, to find a sustainable way forward that protects our commitments and maintains fiscal responsibility.  This is a bill that we have to pay and all of us have a vested interest in finding the most fair and equitable way to keep our pension commitments.”

Governor O’Malley has outlined the basic principles on which pension reform is based:

  1. Continue to maintain a public system as a critical component of recruiting and retaining the best teachers.
  2. Improve the funding level in the State and Teacher retirement system.
  3. Reduce the pension and retirement liability, and therefore, we must ask current and future members of the system to contribute more to strengthen the system and preserve benefits.
  4. Identify certain milestones so as our economic circumstances change, we can revisit some of these reforms.
Find the Governor’s full pension reform presentation here.

In each of his first four years, Governor O’Malley has submitted budgets that fully funded the State’s required pension contribution.  But despite rapid increases in this contribution, the funded status of the pension system has dropped from 95% ten years ago to a project 59% next year. 

The Governor’s proposed reforms will allow the state to reinvest more than $1 billion into the retirement system over the next six years.  These reforms will achieve 80% funding of the pension system by FY 2023 and require bi-annuals reports assessing the financial health of the pension system, including recommendation for adjustments to state funding and/or future benefits.

Current employees and retirees The Governor’s proposed pension reform has no impact on current retirees and no impact on benefits already earned by active or former employees and teachers.

For benefits earned for service in FY 2012 and future years, active employees and teachers are offered a one-time choice between:

  1. Continue to pay 5% of salary towards retirement with adjusted benefit (1.5% benefit multiplier for each future year of service rather than current 1.8% benefit multiplier).
  2. Increase contribution to retirement from 5% to 7% of pay and continue to earn benefits at the current level (1.8% benefit multiplier for each future year of service).
Future employees and teachers New employees will automatically be required to contribute 7% of salary and receive a 1.5% benefit multiplier.  In addition, year of benefit vesting will move from the current five years of service to ten years.  Early retirement age will increase from the current 55 to 60, and the benefit will be calculated on the highest five years of salary rather than the highest three years.  Finally, cost of living adjustments will be based on investment benchmarks.

In addition, the Governor announced plans to direct the appropriate Compensation Commissions to review pensions for elected officials for sustainability and fairness.

Health benefits Almost half of the unfunded liability associated with retiree health benefits relates to Maryland’s prescription drug benefit.  For current retirees, the proposes reform plan establishes a state-run Medicare Part D-like plan that mirrors the federal program but fills the current coverage gap.  In 2020, the plan transitions these retirees to Medicare Part D coverage in 2020 when the coverage gap is phased out. 

For active employees, the proposed plan aligns co-pays with national trends and raises out-of-pocket caps from $700 to $1,000 for individuals and $1,500 for couples.

The current unfunded liability of retiree health insurance stands at $16 billion.  After the proposed reforms, that figure drops by almost 50%.



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The articles below show that states actually having public justice and unions working for their membership are exposing massive statewide fraud and demanding justice.  The same conditions here in Maryland have silence from both politicians and union leaders.

I bet if a governor was elected who shouted out for justice-----labor and justice would shout as well. 

STOP ALLOWING SYSTEMIC FRAUD AND CORRUPTION END DEMOCRACY IN MARYLAND AND AMERICA!

Take a look below at the other raging Wall Street pol thinking of running for President in 2016 with O'Malley.  Now, the State of New York Attorney General was the one responsible for holding Wall Street banks accountable and as we all know------CUOMO LET THEM ALL KEEP THE LOOT. 

Below you see Cuomo feeling the pain of the people he was elected to protect but didn't.  WHAT, FRAUD IN THE PUBLIC PENSION SYSTEM?

Cuomo declared his candidacy for the Democratic nomination for New York State Attorney General in 2006
He won the general election against the Republican nominee, former Westchester District attorney, Jeanine Pirro on November 7, 2006, winning 58% of the vote.



NEEDLESS TO SAY ALL OF THE BRAVADO IN THE ARTICLE BELOW USED TO GET HIM ELECTED GOVERNOR NEVER MATERIALIZED IN CONVICTIONS OR RECOVERING FRAUD.  IT WAS AN ELECTION YEAR SCAM JUST AS THE CONGRESSIONAL FINANCIAL REFORM BILL HAS TURNED OUT TO BE.


Hedge Fund Donor List Raises Question: Is Cuomo "Governor 1% ...www.wnyc.org/blogs/empire/2012 Between June 1, 2007 and December 21, 2011, hedge fund employees, founders and their families have given Cuomo more than ...

WHY DO YOU NOT HEAR ABOUT MARYLAND'S PENSION FRAUD THAT WERE AS BAD AS NEW YORK AND CALIFORNIA?  DOES MARYLAND HAVE A PUBLIC MEDIA?  NO!



Systemic Fraud at Public Pension Funds?

New York's Attorney General Andrew M. Cuomo said on Friday that his office was issuing more than 100 new subpoenas to investment firms and intermediaries who brokered deals with public pension funds, in the latest expansion of his corruption investigation:

Mr. Cuomo said a preliminary review by his office found that as many as half of the intermediaries in pension fund transactions in New York State and New York City were not properly licensed and registered with a broker-dealer, as required by federal securities laws. Failing to register could violate both federal securities laws and the Martin Act, a sweeping state securities law.

“The troubling pattern of unlicensed agents highlights yet another systemic weakness in New York’s pension fund, creating a situation which is fraught with peril and prone to abuse,” Mr. Cuomo said in a statement.

He also conferred with the offices of 35 other attorneys general Friday afternoon by teleconference. The pension corruption inquiry has raised questions about public investment practices in other states, in particular New Mexico and California.

Afterward, Mr. Cuomo said the group had “decided to create a multistate task force to explore pension fund abuse.”

Mr. Cuomo’s office has been working with the Securities and Exchange Commission, which is conducting a parallel investigation. Federal investigators are also reviewing public investment transactions in New Mexico, and the S.E.C. is reviewing pension transactions in California.


Among the firms being scrutinized in the latest round of Mr. Cuomo’s inquiry is Wetherly Capital Group, according to people with knowledge of the inquiry. Investigators are scrutinizing whether employees of Wetherly and other firms were properly licensed when they arranged deals with pension funds in New York.

Wetherly is a Los Angeles-based placement agent firm run by Dan Weinstein, a prominent Democratic fund-raiser. In a statement, Wetherly said it was fully registered with the Financial Industry Regulatory Authority and the S.E.C.

Wetherly has come under scrutiny in California for paying a firm affiliated with Hank Morris, a top aide to Alan G. Hevesi, the former New York State comptroller, as part of an investment deal it brokered for Calpers, the giant California pension fund.

Another California firm being scrutinized in the latest round of the investigation is Gold Bridge Capital, which has acted as a placement agent on at least one deal involving the New York State pension fund.

The inquiries by Mr. Cuomo and the S.E.C., under way for two years, have focused on the millions of dollars that friends, relatives and aides of Mr. Hevesi’s gained by selling access to the $122 billion New York State pension fund. Mr. Morris and David Loglisci, another former top aide to Mr. Hevesi, have been indicted on a variety of corruption-related fraud charges, and Raymond B. Harding, the former head of the state Liberal Party, has also been charged in the case. All three have pleaded not guilty. Mr. Hevesi has not been charged.

The inquiries took on more national relevance on Thursday when Mr. Cuomo charged a top consultant to pension funds around the country, Saul Meyer, with a fraud-related felony. Mr. Meyer and his firm, Aldus Equity, which is based in Dallas, were also charged in a civil complaint by the S.E.C. Both Mr. Meyer and Aldus denied wrongdoing.

The new phase of the inquiry focuses on lobbyists, political consultants and others who brokered deals between investment firms and the New York pension funds but were not properly registered to do so.

In a preliminary investigation, Mr. Cuomo’s office found that from 2003 to 2006 — the period when Mr. Hevesi was comptroller — 22 of the 45 intermediaries used in deals at the state pension fund were not registered. In the New York City pension funds, 17 of 41 intermediaries were unregistered in deals from 2003 to this year, a review found.

While acknowledging that there could be exceptions, Mr. Cuomo said during a separate teleconference with reporters on Friday, “If you’re brokering a security, you need to be regulated.”

Thomas P. DiNapoli, the New York State comptroller, and William C. Thompson Jr., the New York City comptroller, both said this week that they would move to ban placement agents from deals with their pension funds.


Mr. Cuomo also highlighted a shortcoming in state lobbying rules, which do not require lobbyists to register with the state’s Commission on Public Integrity when they appear before the state comptroller.

The increased scrutiny on placement agents in recent years has led to concerns that lobbyists and political consultants are trying to find ways to perform similar services without registering as placement agents.

In 2007, Mr. DiNapoli met with the chief partner of the private equity firm InterMedia Partners, Leo J. Hindery Jr., and Roberto Ramirez, a lobbyist and former colleague of Mr. DiNapoli’s from the Assembly. The goal for the meeting was to convince the state comptroller’s office to increase its investment with InterMedia, which it later did. A spokesman for Mr. Ramirez has said he was not paid by InterMedia and appeared only as a friend of Mr. Hindery’s.

Mr. Cuomo would not say which lobbyists or consultants were being scrutinized, but said the intersection of unregistered agents and the pension fund was potentially “the Wild West of government relations.”Mr. Cuomo also said that pension kickbacks are a national problem:


New York state's criminal probe of kickbacks paid by companies eager to manage its $122 billion state pension fund has exposed "a national network of actors" whose schemes are ongoing, state Attorney General Andrew Cuomo said on Thursday. "This is all across the nation, and it's continuing today," the Democratic attorney general said on a conference call.

The probe, which began two years ago, has fixed the spotlight on the use of placement agents hired by investment firms to open the doors of the New York State Common Retirement Fund. Cuomo said he is also is scrutinizing lawyers and lobbyists.

The investigation is another effort to stamp out graft and the practice of "pay to play," which involves giving gifts or campaign donations to win public contracts. So far the probe has looked into the web of relationships and business contracts involving money managers, politicians and pension officials spanning the country from New York City and the state capital, Albany, to Texas, New Mexico and California.

On Thursday, the U.S. Securities and Exchange Commission, which is working with Cuomo, charged that Dallas-based Aldus Equity Partners won New York pension business because of "its willingness to illegally line the pockets of others."

The state pension fund had aimed to hire more women and minority-owned investment firms and had begun talks with one. But Aldus was chosen, Cuomo said, when the minority-owned firm "allegedly refused to pay kickbacks to Morris and another associate."

Aldus, a private equity firm, says it manages over $5 billion, and the probe already has cost Aldus clients in New Mexico and New York. Cuomo said Aldus also is active in Louisiana, Oklahoma, Texas, California, and New York City.

ANOTHER VIEW OF GIVE AND TAKE

Both Cuomo and the SEC charged that Saul Meyer, an Aldus founder, paid about $320,000 to a shell company owned by Henry Morris, a top fund-raiser for New York's former state comptroller. This led the New York state pension fund's then-chief investment officer, David Loglisci, to invest $375 million with Aldus from 2004 to 2006.

Demonstrating the power that Morris wielded over pension investments, Cuomo said Morris told a Meyer intermediary: "Tell that little peanut of a man that I can take business away as easily as I provided (it)."

Lawyers for Morris and Loglisci, who were indicted in March, say they are innocent.

On Thursday, Meyer was charged with a state securities felony and released on $200,000 bail. His lawyer Paul Shechtman said: "Time and evidence will show that Saul Meyer did nothing wrong."

Aldus knew that Morris was "working both sides of the deal," Cuomo said, by marketing funds for investments in the Aldus/NY Emerging Fund in which Morris had a 35 percent stake.

Aldus Equity lawyer Matthew Orwig faulted the SEC for acting before finishing its probe, calling the threatened legal action "appalling and careless with the law and with people's reputations." Aldus partners said they were disappointed by the "unexpected legal developments."

Aldus could face more legal peril. The New York state pension fund is weighing legal remedies against Aldus and Meyer after ending its investment with the firm. New York City pensions could cut ties with the firm, while New Mexico's governor called on the state Education Board to drop its contract with Aldus a day after ordering the state investment officer to do so.

Cuomo said that while Meyer was seeking more business with New York's pension fund, he helped Daniel Hevesi, a son of Alan Hevesi, the former state comptroller whose oversight of the state pension fund is being probed, earn a $250,000 fee on a New Mexico pension deal.

Alan Hevesi's lawyer Bradley Simon has said the former comptroller "has not been charged with any misconduct with respect to mismanagement of the New York state pension fund."

Bloomberg reports that L.A. pension is baffled by fees paid to firm in probe:


Los Angeles retirement plan managers say they’re baffled over fees paid by Quadrangle Group LLC to a key player named in New York’s pension fund kickback probe for helping the private equity firm land work in California. Quadrangle paid Searle & Co. $150,000 in connection with the Los Angeles Department of Fire and Police Pensions fund’s $10 million investment with the New York firm, which was co- founded by Steven Rattner before President Barack Obama appointed him to oversee the auto industry rescue.

Searle employed Hank Morris, a political adviser accused by New York State Attorney General Andrew Cuomo and the U.S. Securities and Exchange Commission of using the Greenwich, Connecticut, brokerage to collect “sham” placement fees from firms that manage New York pension plan money.

After the SEC this month said Quadrangle paid Morris a “finders fee” related to a New York pension fund investment, Quadrangle told the Los Angeles fund that it also had paid placement fees to him for work there. The Los Angeles fund publicly disclosed the fee April 24.

“We don’t know how or why a placement fee related to our investment in Quadrangle was made,” Michael Perez, the general manager of the Los Angeles pension, said in written responses to questions from Bloomberg News.

‘Shocked’ at News

Perez said the fund’s investment in Quadrangle was arranged through Pension Consulting Alliance Inc., which evaluates investments on its behalf. Allan Emkin, that company’s founder and managing director of its Los Angeles office, said it didn’t have any contact with Searle or Morris and worked directly with Quadrangle. Emkin said he had been unaware that Searle was paid a fee in connection with the deal.

“We were shocked when we heard about it,” Emkin said in a telephone interview.

Morris, who faces a civil SEC complaint and criminal charges by Cuomo, has denied wrongdoing. Quadrangle and Rattner haven’t been charged. Adam Miller, a spokesman for Quadrangle, declined to comment. Searle referred calls to Peter Anderson, an attorney, who didn’t respond to requests for comment.

The SEC has asked the Los Angeles fund and two of its board members for information about investment decisions and firms tied to the New York probe.

Cuomo said today that New York was formalizing agreements to coordinate its investigation with authorities in California, as well as with Connecticut, Illinois and New Mexico.

Los Angeles Connection

“We are disclosing a national network of actors, who often acted in concert,” Cuomo said. “They collaborated, they often partnered and victimized states and taxpayers all across the country.”

The SEC and Cuomo today charged Saul Meyer, the managing partner of one of the firms in the New York probe, Aldus Equity Partners, with paying Morris to secure investment business with New York. Aldus has served for more than a year as a private equity consultant to the Los Angeles pension fund. Meyer met with the fund’s board at least once, city records show.

Morris, the one-time chief fundraiser and political adviser to former New York City Comptroller Alan Hevesi, has been charged by the SEC with collecting $15 million in kickbacks from money managers doing business with New York’s pension fund. The SEC says the kickbacks were masked as placement fees and that he “rarely, if ever” provided legitimate services.

Quadrangle hired Morris as a placement agent before winning a $100 million investment from New York, the SEC said in an April 15 complaint. The firm paid Searle $1.125 million, and 95 percent of that went to Morris, the SEC said.

The Los Angeles pension approved investments in 10 private equity funds linked to the New York investigation, according to an April 2 memo to the board. Two of the investments were later canceled. Aldus Equity Partners, which was drawn into the New York probe, also advised the fund on private equity investments.

I have already written about the Mother of all stealth scams. Nothing like a huge financial crisis to bring out all the cockroaches. This hardly surprises me and remember my dire warning: Madoff was the tip of the iceberg. There will be many more fraudsters that will get nabbed in the next few years.

Just how systemic is fraud in the financial industry and at public pension funds? We don't know, but when you mix greedy placement agents with public pension fund managers who control billions, the potential for kickbacks is huge.

What can pension funds do to stop abuse before it happens? First, they should segregate duties so the person(s) making the investment has to pass through several checks, including an internal auditor, before the decision is cleared. Importantly, there should also be clear segregation of duties between those making the investment decisions and the finance professionals valuing them.

Second, pension funds need to beef their whistleblower policies so people are encouraged to report abuse. This is one of the most effective ways to stop fraud. Maybe there should be a direct link between public pension fund employees and the state's Attorney General's office or the provincial or federal Auditor General's office.

Third, have your fraud procedures verified by a certified fraud examiner (read more on CFEs by clicking here). This should include someone who scrutinizes travel/meal/entertainment expenses to make sure there is no abuse going on when some hedge fund or private equity manager is trying to woo a pension fund manager to invest with them.

Fourth, there should be tight rules governing the relationships between investment managers and the funds they invest with. If you are investing billions with Fund Z, then you should not be allowed to go work for them for a period of five years after you leave a public pension fund. This is just common sense, but you'd be surprised how common sense often falls by the wayside.

Fifth, all board decisions should be made public so they are open to scrutiny. Several of the large U.S. state plans already do this. For example, Alaska's Permanent Fund publishes its board schedule, their minutes and their consultants on their website.

Finally, on the legal front, I would ban all placement agents and place tight rules on pension consultants who recommend funds to pension funds. Do not underestimate the abusive practices of pension consultants and the potential for fraud with them. They are the gatekeepers at most U.S. pension plans.

It truly is the Wild West out there, but I am glad to see the Attorney General of New York is pursuing the pension probe and trying to clean up public pension funds.


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Corrupting public officials is a crime so as the public officials who we know were involved in these frauds are exposed we know these investment firms buying favor committed these crimes too.  You have yet to hear of these private equity people charged and prosecuted because that takes public justice.  Whether it is blowing up the Federal Housing Agency with fraud, the Federal Student Loan Agency with fraud----we are being told by Moody's and S and P -----the rating agencies that were ground zero for all of this fraud-----that public and private pensions
are just not viable anymore.

OH REALLY????????


If your incumbent politician goes after the people's pensions as the problem------if your incumbent is silent about all of this, they are neo-liberals working for wealth and profit.  These pensions are not a burden on the public-----all fraud recovery comes from these corporations.


I listened to a Governor's Forum on Education (to which I was not invited obviously) where Heather Mizeur says that the way to fund school building in Maryland is to have public employees give back some of their pensions.  THIS IS THE PHONY PROGRESSIVE IN THIS GOVERNOR'S RACE!



Monday, March 14, 2011

Corruption at CalPERS?

Marc Lifsher and Stuart Pfeifer of the Los Angeles Times report,


Scathing report alleges corruption at CalPERS
:
In a scathing report, a former chief executive of the California public employee pension fund was accused of pressuring subordinates to invest billions of dollars of pension money with politically connected firms.

A 17-month investigation also found that Federico Buenrostro Jr. — along with former pension fund board members Charles Valdes and Kurato Shimada — strong-armed a benefits firm to pay more than $4 million in fees to consultant Alfred J.R. Villalobos, who later hired Buenrostro.

The report, prepared for the California Public Employees' Retirement System by Washington law firm Steptoe & Johnson, comes amid widening attacks on public employee pension funds in California, Wisconsin, Iowa and other states for providing lavish benefits that cash-strapped governments can no longer afford.

The findings of insider dealings at CalPERS could provide fresh ammunition to Republican lawmakers here who want Democratic Gov. Jerry Brown to convert traditional pensions with guaranteed payments for life into 401(k)-type plans that rely heavily on employees' own contributions.

"Fixing California's pension problem is difficult enough without the stench of corruption and collusion that saps public confidence and gives taxpayers a reason to withhold support," said Dan Pellissier, president of Californians for Pension Reform, a group that is pushing a 2012 ballot initiative that would diminish state employee pension benefits.

Shimada, Buenrostro, Valdes and Villalobos either declined to comment or did not return calls.

Buenrostro served as CalPERS chief executive for six years, leaving in August 2008. The day after quitting, he went to work for Villalobos — a former CalPERS board member and deputy Los Angeles mayor who acted as an agent for investment firms seeking CalPERS money. The report said Villalobos hired Buenrostro with a $300,000 annual salary and gave him a Lake Tahoe condominium.

While at CalPERS, Buenrostro repeatedly "inserted himself in the investment process in a manner inconsistent with prior practice at CalPERS, pressing its investment staff to pursue particular investments without evident regard for their financial merits," the report said.

It said Buenrostro intervened with staff on behalf of Aurora Capital Group of Los Angeles to obtain investment money. Buenrostro told subordinates that Aurora was politically powerful, and that Aurora principal Gerald Parsky served on a state commission dealing with public employee benefits, the report said.

Aurora was a Villalobos client, and Buenrostro told CalPERS staffers that he would represent it once he went to work with Villalobos, the report said.


The report also noted that Buenrostro often intervened on behalf of favored private equity funds that staff called "friends of Fred."


Staffers ultimately complained about Buenrostro to the board, and those complaints "became a basis for the board's efforts to replace him as CEO," the report said.

CalPERS is the nation's largest public pension fund, with $228 billion in assets, providing benefits to about 1.6 million state and local government employees, retirees, spouses, children and other beneficiaries.

In May 2010, the California attorney general sued Villalobos and Buenrostro, accusing them of scheming to enrich themselves through self-dealing and other misconduct in seeking CalPERS investment money on behalf of clients.

According to the report, one of those investment funds — Apollo Global Management — asked Buenrostro to sign documents acknowledging that CalPERS was aware of so-called placement agent fees it was paying to Villalobos.

Several CalPERS investment officers refused to sign the disclosures, the report said — but Buenrostro did, using pasted-on letterhead to make them look more official.

Buenrostro made "representations regarding placement agent fees and related deal documents that are either demonstrably false or sufficiently suspect," the report said.

The report, citing Buenrostro's ex-wife and an unnamed girlfriend, described Buenrostro as "a puppet" of Villalobos, who the report said earned more than $50million in placement agent fees.

During his six years as head of CalPERS, Buenrostro received many valuable gifts from people and firms with financial interests in doing business with CalPERS, the report said.

When he was married in 2004, he allowed Villalobos to host the wedding at his Zephyr Cove, Nev., home. Buenrostro also traveled with Villalobos and Valdes to the Middle East and Asia — with Villalobos picking up much of the costs, the report said.

"Buenrostro does not appear to have ever disclosed these gifts or recused himself from any CalPERS matters based on any of these apparent relationships," the report said.

Valdes also pressured CalPERS investment staff to do business with Villalobos' firm, Arvco Capital Research, the report said.

In September 2000, Valdes was close to being ruled out of order for raising his voice in support of a Los Angeles real estate investment firm, CIM Group, the report said. CalPERS staff had recommended a smaller investment than originally proposed. Arvco and Villalobos received a $9-million commission on the investment transaction.

CIM also provided Academy Awards tickets to Valdes and other CalPERS people, the report said. Valdes attended in 2005 and 2006 but did not report the gifts on state financial disclosure documents.

The report also provided new details about CalPERS dealings with Medco Health Solutions Inc. before the firm was awarded a $26-million contract to provide drug benefits to members.

In May 2004, Villalobos hosted a meeting at his Lake Tahoe home with Medco CEO David Snow. Buenrostro attended.

"Soon after the May 2004 meeting at the Villalobos home, Medco agreed to retain Villalobos as a consultant and pay him $4 million," the report said.

Villalobos received a final check for $1 million immediately after the CalPERS board approved the contract, according to the report, and also received a $20,000-a-month retainer until sometime in 2009.


Last year Villalobos filed for personal bankruptcy protection, citing nearly $5million in debts to Nevada casinos. It was his second personal bankruptcy.

The report recommended that CalPERS improve accountability and reduce the risk of future abuses, including providing additional training to board members so that board business is not conducted in clandestine meetings with managers, and prohibiting the release of sensitive CalPERS information outside the organization.


This is a perfect example of serious governance gaps leaving a fund vulnerable to fraud. There is absolutely no accountability when this type of abuse goes on at the highest level. And trust me, it's not hard for a couple of guys at the top to collude and award sweet contracts to some consultant, hedge fund manager or private equity manager in return for "future favors". When you're in charge of billions, power gets to your head and you start thinking you're invincible.


This type of fraud makes me sick to my stomach. It's not common but it's going on a lot more often than people want to admit. How do I know? Let's just say I've seen things that made my skin crawl. It doesn't matter whether the investment officer has a CFA, FRM, PhD, etc., if they're crooked, they're crooked and they'll do whatever it takes to profit by abusing the power they have within a pension fund. And it's not just the large funds; in fact, some of the worst abuses happen in dinky city pension plans where corruption is rampant.

That's why I believe you have to properly compensate senior pension officers to deter this type of corruption. But that's not enough because some people are so sleazy, so greedy, they'll look to game the system and will stop at nothing to profit by abusing their power. One of the best ways to root out corruption is simply to segregate duties and implement iron clad whistleblower policies where employees can anonymously inform board members or better yet, the FBI or RCMP. That should make these idiots think twice before they abuse their power at a public pension fund.

Finally, this is a particular case that in no way reflects what's going on at CalPERS now. I think it's disgusting that some would use this report as "ammunition" to break up CalPERS or to dissolve other public pension funds. Get the governance right and you can root out corruption at most public and private pension funds.
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April 05th, 2014

4/5/2014

0 Comments

 
PLEASE TAKE A LOOK AT WHAT IS BEING DONE WITH PENSIONS AND RETIREMENT TO KNOW MUCH OF IT INVOLVES FRAUD AND CORRUPTION THAT CAN BE REVERSED WITH RULE OF LAW.  WE SIMPLY NEED TO HAVE PEOPLE IN OFFICE THAT WANT TO WORK FOR PUBLIC JUSTICE TO RESTORE MUCH OF PENSIONS AND RETIREMENTS LOST!

ALL OF MARYLAND CANDIDATES FOR GOVERNOR EXCEPT CINDY WALSH WILL WORK FOR WEALTH AND PROFIT! 

Are your labor leaders shouting about this?

Below you'll see what looks pretty boring but please glance at all the articles.  What I am showing is how private pensions shed decades ago should now be receiving lots of money from these corporations that are now earning billions of dollars each year.  The bankruptcy laws placed most of private sector pensions into the Federal Agency below with the requirements that the corporation do its due diligence and the Federal government work in the public interest.  What we see is public malfeasance by the government and a failure to collect needed revenue for these pension funds.  Without justice, all of this is being left to implode with debt just as we see happening with public pensions.

I want to look at what has been allowed to happen these several years of Obama and neo-liberal control of government....it is worse than with George W Bush.  These mergers

DO NOT MEET ANTITRUST LAW AND ARE ILLEGAL AND CAN BE MADE NULL AND VOID.  MERGERS MUST BE APPROVED ACCORDING TO PUBLIC INTEREST.

So, as much as Obama and his administration simply want to say all of these global market deals are in the public interest----they are not.  The same is happening in Maryland with O'Malley and Maryland Assembly saying all of these state contracts are creating jobs and revenue.....when they are not.

WE CAN REVERSE THESE POLICIES BECAUSE THEY ARE NOT LEGITIMATE.  IF YOU KEEP ALLOWING YOUR POLS TO ACT ILLEGALLY AS IF THE US CONSTITUTION DOES NOT EXIST----IT WILL NOT EXIST AND YOU WILL NOT BE A CITIZEN.


Republicans are doing the same so the answer is not to vote for another party-----the answer is to shake these neo-liberals out of the people's democratic party!

Today, I look at private pensions lost during the corporate bankruptcy years that started with Reagan/Clinton as a way to eliminate all labor gains.
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Regarding merger and acquisitions creating global corporations in the US:

THIS IS ONE EXAMPLE OF AN INDUSTRY AND HOW NEO-LIBERALS ARE ALLOWING RULE OF LAW TO BE IGNORED AT CONSUMER/CITIZEN EXPENSE:

I am listening to corporate NPR/APM explain the latest merger this time with airlines Delta and UK's Virgin. At the same time NPR/APM tells us that this merger is being passed by US antitrust laws and it is proper because it enhances quality and service for US consumers and it increases competition. OH, REALLY???????

CONSOLIDATION AND BECOMING A GLOBAL FORCE IS GOOD FOR THE CONSUMER? YOUR TAX MONEY IS GOING FOR THIS KIND OF PROGRAMMING.


We all know consolidation has been joined with price-fixing giving US consumers no choice but to pay whatever the market will bear. That is Wall Street for SOAKING CONSUMERS FOR ALL THEIR WORTH. This has nothing to do with antitrust.....free markets....are competition to lower prices. Instead, airlines have reconfigured their cabins so that coach passengers look like sardines paying unnecessary fees, no food and lots of delays and time schedule problems----you know----like Maryland Transit Authority. They do this because Americans have no choices and this shows that all of these mergers and acquisitions break US Commerce law protecting the public. Below you see these laws state these consolidations are limited as to whether they BENEFIT THE CONSUMER. These deals are illegal. Obama and your neo-liberal pols ran in 2008 on the platform of holding corporations accountable and stopping the merger and acquisitions and then they ignored this.

THIS IS NOT DEMOCRACY, IT IS NOT LEGAL, AND YOUR INCUMBENT IN MARYLAND IS PART OF THIS BECAUSE IT INVOLVES ALL OF MARYLAND'S ECONOMY.

I want to make another point with this Delta/UK Virgin merger deal. Delta, as with all US airlines all went through bankruptcy just to shed labor union contracts and wages and benefits. All have come out of these bankruptcies earning billions of dollars in profit while labor benefits sit in a Federal agency created just to hold these legally binding contracts. Health care benefits that include strong quality care are now being handled in this Federal agency as though these plans were the equivalent of Medicaid. Taxpayers are footing the costs of these corporation's health care contracts while they grow to earn billions in profits. This is good they say because shareholder wealth is soaring.

The answer to all of these legal labor contracts being shed and creating cost for the taxpayers is to provide the lowest quality and access of health care to these millions of US citizens.


THE REAL COST BELONGS BACK WITH THESE CORPORATIONS THAT CAN NOW EASILY MAKE THEIR CONTRACT COMMITMENTS.


Antitrust law in America:

United States antitrust law is a collection of federal and state government laws, which regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations which could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.

The Federal Trade Commission, the US Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws. The scope of antitrust laws, and the degree they should interfere in business freedom, or protect smaller businesses, communities and consumers, are strongly debated. One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.[1]


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Now, all of the soaring fuel costs were created by Wall Street market manipulation and if we had Rule of Law reinstated all of these gains would have been stopped and no soaring fuel prices would have occurred. Remember, Wall Street used market manipulation of fuel on and off for a decade having the US consumer as an ATM machine anytime oil corporations around the world had market slowdowns. This is not free market and it is illegal. Who owns all these oil corporations? Bush/Cheney and it is these same people who are the shareholders of these now global corporations. So, you gut the profits of a healthy corporation to restructure it for maximized profit----the Bains Capital approach.

Labor contracts are just like any business contract. Every time your neo-liberal says the state or city must honor its contracts it signs with businesses-----this is what makes Rule of Law and Equal Protection. It is also what makes antitrust laws work as it makes no sense to have businesses able to gut another simply to eliminate a competitor. So, Bush/Cheney wanted to consolidate the airline industry into global corporations and they allowed their oil corporations to manipulate the markets to create the environment to do this.

THIS IS ALL ILLEGAL AS IT FAILS IN ALL ASPECTS OF RULE OF LAW, EQUAL PROTECTION, AND ANTITRUST.

When your neo-liberal says -----the people in power make the laws-----that does not allow them to decide the US Constitution and Rule of Law is NULL AND VOID. They cannot selectively enforce the laws they want.

STOP ALLOWING NEO-LIBERALS AND NEO-CONS TO OPENLY SUSPEND RULE OF LAW AND IGNORE THE US CONSTITUTION. LABOR UNIONS SHOULD BE TAKING ALL OF THIS TO COURT.

We do not say-----well, the courts are fixed because we want all of this on record for when they are not fixed. Remember,

WHEN A GOVERNMENT SUSPENDS RULE OF LAW IT SUSPENDS STATUTES OF LIMITATION!

Below, you see Delta was competing with smaller airlines and the economy was running as it should. Costs were contained by competition and lots of businesses were in the mix. Then, the illegal activity of the fuel market took down the smaller businesses, allowed larger businesses to use fuel costs as an excuse to enter bankruptcy to shed labor contracts and amazingly using fuel as hostile takeover is now past.


Delta Air Lines files for bankruptcy


No. 3 airline hit by fuel costs, low-fare competitors; No. 4 Northwest follows it into bankruptcy.

September 15, 2005: 9:55 AM EDT
By Chris Isidore, CNN/Money senior writer

NEW YORK (CNN/Money) - Delta Air Lines filed for bankruptcy, making it one of two major carriers to seek protection from creditors Wednesday.

Delta (Research), the nation's third-biggest airline, has been hurt by the recent spike in jet fuel prices and growing competition from lower-cost, low-fare carriers. Less than half an hour after Delta's filing, Northwest Airlines also filed for protection from creditors.

Delta and Northwest followed United Airlines (Research) and US Airways (Research) into bankruptcy. United, the No. 2 airline, has been in bankruptcy court for almost three years. US Airways has been in bankruptcy court twice since the Sept. 11 terrorist attacks that shook the airline industry.

With those four major airlines and some smaller ones already in bankruptcy, nearly half of the industry's capacity is on carriers operating under bankruptcy court oversight.

Delta said it expects to keep flying while it seeks to cut costs and reorganize, so the immediate impact on flyers should be minimal. It is also expected to keep its frequent flyer program intact. But some smaller cities now served exclusively or primarily by Delta could be hurt as the airline trims its operations going forward.

The Atlanta-based airline, which has not had a profitable quarter since 2000, filed under Chapter 11 of federal bankruptcy laws. In Chapter 11, a company is protected from creditors while it tries to reorganize.

Analysts said this year's spike in jet fuel prices forced Delta's bankruptcy filing.

"Hurricane Katrina was probably the last straw," Ray Neidl, analyst with Calyon Securities, said shortly before the widely expected bankruptcy filing. "Nobody could have predicted $60-, $70-a-barrel oil. Things just developed that were uncontrollable factors."

But Delta's problems predate not only the hurricane, but the Sept. 11, 2001 terrorist attacks. The company has lost some $6.1 billion since the start of 2001 from its airline operations, according to First Call, which tracks corporate earnings.

Some analysts said that Delta waited longer than some of its rivals to trim costs. It did not win cost concessions from its pilots union until last October, after paying them the highest wages in the industry under a contract reached months before the Sept. 11 attacks.

"They are another example of a company that started out in a relatively stronger financial position than their peers, and they felt they were in better position to survive a shakeout," said Philip Baggaley, Standard & Poor's senior airline credit analyst. "They didn't pursue cost-cutting as aggressively as they would have if they were heading toward bankruptcy early in the (industry's) downturn."

The airline has nearly 60,000 employees and flies about 340,000 people daily in its mainline operations, which includes Delta, the Delta Shuttle and Song, its attempt to compete in the growing low-fare market.

Another problem for Delta is that it has less international traffic than the nation's other big carriers. That means it faces competition on more routes from low-fare carriers such as AirTran, JetBlue and Southwest than some of its rivals.
Scramble to cut costs

Delta had been scrambling through the strong summer travel season to cut costs and raise cash.

Last week it completed the sale one of its feeder airlines, Atlantic Southeast Airlines, for $425 million. It also announced it was cutting flight capacity at its Cincinnati hub by 26 percent.

But these and other cost-cutting moves made over the last year could not stem losses, which are forecast by analysts to extend into 2007. The company has not reported a quarterly profit, excluding special items, since 2000.

Delta flirted with a bankruptcy filing in October 2004, before getting the Air Line Pilots Association to agree to cut wages by about a third � a move that saved about $1 billion a year. The airline also cut some 5,000 jobs in the year ending in June, aside from the sale of Atlantic Southeast.

Its second quarter payroll costs were 18 percent below a year earlier, as the company spent nearly $300 million less on salary and benefits.

But soaring fuel costs caused ongoing losses. Delta's cost per gallon soared 50 percent in the second quarter from a year earlier, and has kept climbing.

The increased costs came as Delta and other carriers found it difficult to win higher fares from passengers, who have more options with the growth of low-fare rivals.

The average fare Delta received from passengers fell 1 percent in the second quarter from a year earlier, even as the proportion of empty seats on Delta jets fell.

The final cash crisis came when the bank that was processing the airline's Visa and MasterCard ticket purchases started holding back money as protection in case of a bankruptcy filing. The airline warned in August that such a move by the bank could cost $650 million by the end of October, straining its already thin cash reserves.

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Why did a US airline and US regulators allow a merger that gave a majority ownership to another country? 49% for Delta to Virgin's 51%? Because that takes this US airline out of US corporate oversight and on to UK corporate oversight and the UK has complete deregulation and corporate tax protection. So, a major US business was handed to a global corporation that will not follow US laws. Is that consumer friendly and does that meet US labor protections?

NOT AT ALL. SO, THIS MERGER SHOULD NOT BE ALLOWED.

The reasoning is that the London-New York commuters will see a benefit while the rest of the US will not. Remember, the Federal government cannot simply ignore Rule of Law and allow all of this and neither can the courts. It doesn't matter who is in charge-----EQUAL PROTECTION AND RULE OF LAW DOES NOT CHANGE. This means all of this can be reversed when Rule of Law is reinstated.


All Things Travel: Delta-Virgin Atlantic Merger Could Mean Changes For Boston Flights

By Bob Weiss, CBSBoston.com Travel Contributor July 8, 2013 5:29 PM

BOSTON (CBS) — Sir Richard Branson, the world’s best-known man in aviation, now has a new partner.

Delta Air Lines now owns 49 percent of Virgin Atlantic Airways and that means more changes will most likely happen on Boston’s number one international route.

British Airways, Delta and Virgin offer six daily flights from Logan to London’s Heathrow Airport this summer.

British Airways flies more than 50-percent of passengers flying to the UK. The flights are important for both business and leisure travelers. Great Britain also sends more visitors to New England than any other European country.

Under the new arrangement, the new code-sharing agreement will allow Delta to sell seats on Virgin flights by the end of the year. Virgin passengers will be able to connect to Delta flights in the U.S.

Delta passengers will be able to earn miles on Virgin Atlantic flights.

Delta operates in Terminal A at Logan Airport while Virgin uses Terminal E. Whether Virgin will transfer its operations to Terminal A remains to be seen. Delta is a member of The Sky Team Alliance.

The agreement gives Delta the chance to expand at Heathrow Airport where more gates will now be available. That is especially important for its New York operations; Delta is also a partner with Air France and their flights to Paris.

Next year the merger between American and US Airways should be completed. At that time, US Airways will move from the Star Alliance to the Oneworld Alliance that includes British Airways. This summer American dropped their flights to London and BA increased its service.

Alliances and code-sharing agreements are important for frequent business travelers that like to accrue mileage points for family leisure travel.

Virgin America, which is a separate company, will continue to fly routes from Boston to the West Coast. The airline was the first to offer Wifi on its flights.

Delta has been upgrading its Business Class service that now includes flat beds. Virgin features an Upper Class product. Both airlines have been increasing their on-board entertainment options.

Virgin Atlantic has its U.S. headquarters in Norwalk Connecticut.

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Virgin America is simply a global airline corporations taking spaces at all airports that the smaller airlines used to have. This is what antitrust laws are supposed to stop. This consolidation is leading to less choice which allows price-fixing and is all anti-consumer no matter how many times corporate NPR/APM tells you this is all about the US consumer.


ALL IT TAKES IS A PRESIDENT WHO REINSTATES RULE OF LAW AND APPOINTS A HEAD OF THE TRADE COMMISSION. HILLARY, BIDEN, CUOMO, AND O'MALLEY ARE READY TO KEEP THE GLOBAL GRAVY TRAIN RUNNING. MAYBE BERNIE SANDERS WILL NOT.

I KNOW CINDY WALSH FOR GOVERNOR OF MARYLAND WILL BE TAKING THESE ISSUES TO COURT! DO YOU HEAR YOUR LABOR LEADERS TAKING THIS TO COURT?

Why the American Merger Deal Could Make Virgin America a Big Winner

BY Ted Reed | 03/05/14 - 10:35 AM EST

DALLAS (TheStreet) -- Six-year-old Virgin America saw a big opportunity when the Justice Department required divestitures from American (AAL_) and US Airways in return for allowing them to merge.

Virgin America already has won the right to operate six daily round trips at New York's LaGuardia Airport and four at Washington Reagan National, using slots that American and US Airways were required to divest.

On Wednesday, the San Francisco-based carrier said it will seek two gates at Dallas Love Field that American was required to divest. Delta (DAL_) and Southwest (LUV_) are also seeking the two Love Field gates. Southwest already occupies 16 of the 20 Love Field gates.

Virgin America said that if it is awarded the gates, it would begin new service from Dallas to LaGuardia and National. Arguably, that represents a convincing case to the Justice Department that consumers would derive maximum benefit from the merger.

In particular, Love Field-National service by a new low-fare entrant would provide an alternative to American service on what became hub-to-hub flying in the merger, when Dallas Fort Worth International Airport and Washington National became hubs for the same airline. Hub-to-hub flying is typically an area where ticket prices are high.

Like LaGuardia and National, Love Field is a desirable and constricted close-in airport. It is just six miles from downtown Dallas. In October, flight restrictions imposed in 1979 will be lifted. Southwest has already said it would add flights to LaGuardia and National. Delta has said it will add LaGuardia and LAX if it gets the two gates.

Some observers questioned whether the Justice Department got all it could when it challenged the American/US Airways merger in August. The settlement was announced in November, two weeks before the parties were scheduled to go to trial.

Launched in 2007, Virgin America has built a niche as a hip, technologically advanced West Coast carrier. After moving last year to slow growth, it has started to show profits: In the third quarter, it produced net income of $37.5 million and an operating margin of 11.5%. It is said to be preparing for a public offering.

Virgin said Wednesday that if it wins the gates it would serve Chicago, Los Angeles and San Francisco as well as LaGuardia and National. It already serves Los Angeles and San Francisco from Dallas Fort Worth International Airport, but that service would end in October and Virgin would limit its Dallas operations to Love Field.

In a press release that seemed to summarize the case it will make to the Justice Department, Virgin America said it "would be the only carrier at Love Field to offer guests three classes of service, Wi-Fi, in-seat power outlets and touch-screen seatback entertainment (including live TV) on every flight." It said it "operates a new fleet of Airbus A320-Family aircraft, which are significantly quieter than the commercial aircraft currently in use at Love Field."

Also, Virgin said it "would provide vigorous competition in a market where at present one carrier controls 80% of the gates."

As part of the press release, Virgin CEO David Cush declared: "As the last major airline launched in the U.S., we've seen firsthand what happens when new entrant airlines have a chance to come into markets where a few big airlines dominate -- service improves and fares drop.

"The opening of access to these slot-constrained and gate-constrained airports is an infrequent occurrence at best, and we hope to have the opportunity to expand our network and continue doing what we do best: deliver the best product in the domestic skies, and inject sorely needed fare competition in business markets where it is currently lacking," Cush said.

When Virgin America entered the San Francisco-Chicago market in 2011 and the San Francisco-Dallas market in 2010, fares dropped in each market at the time by more than 30%, the carrier said. After Virgin America entered Newark Liberty International Airport in April 2013, fares to San Francisco and Los Angeles dropped by more than a third, the carrier said. Newark, San Francisco and Los Angeles are all United (UAL_) hubs.

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Pension Benefit Guaranty Corp.

Eastern to let federal agency pay out retirement benefits


September 19, 1990|By New York Times News Service

Eastern Airlines cleared a critical hurdle yesterday in its attempt to reorganize under bankruptcy laws by reaching an agreement to have Pension Benefit Guaranty Corp., a federal agency that oversees pension plans, take over the payment of the retirement benefits of Eastern employees.

But to satisfy the agency's concerns, Continental Holdings Inc., the parent of Eastern Airlines, must secure the payments with its assets -- a liability that some officials said could total more than $500 million-plus interest because of a shortage in the financing of the pension plan.

This could strain Continental's finances when the carrier is making progress toward building itself into one of the nation's leading carriers.

Continental's liability could beless, however, depending upon how much the assets in the pension fund earn from interest on investments.

Martin R. Shugrue Jr., Eastern's court-appointed trustee, called the settlement yesterday a "major milestone on the way to the reorganization of Eastern under Chapter 11."

Since he took over the airline in April, Mr. Shugrue has struggled to win back customers by offering low fares and promotions to stem the carrier's losses.

The agreement is good news for the 51,000 former and current Eastern workers, whose pensions are now guaranteed in full.

James B. Lockhart, the executive director of the federal pension agency, said yesterday that the settlement would "protect retirees and the insurance program from one of the largest potential losses we faced -- almost three-quarters of a billion dollars before today's agreement."

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As you see below this Federal agency that supposedly works in the interests of American citizens really has allowed these pensioners to lose all of the value of their pensions. I read a few years ago that individuals having their pensions in this agency were receiving Medicaid-level care. We see as well, as with public sector pensions.....these funds were shifted into the Wall Street stock market just at the time the market crashed. Now, the Pension Benefit Guaranty Corporation has almost $300 billion in pension liabilities and has been imploded with debt just as public pensions and 401Ks were.

None of this meets the terms of labor contracts, terms of these bankruptcy agreements, and we can be sure that corporate contributions from airlines in this case are not happening.

ALL OF THIS IS ILLEGAL!

The Affordable Care Act is designed to send all of these plans to private state health systems where all Federal responsibility for public health, from this pension benefit guaranty corporation to Medicare will end and all of what was strong, well-funded health plans will become Medicaid for All. The coming economic crash will make the level of debt for these pensions unsustainable----WHICH IS THE POINT.


ALL POLITICIANS/LABOR AND JUSTICE LEADERS KNOW THIS AND ALL MARYLAND POLS ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT. THEY ARE PROMOTING THESE CONDITIONS. STOP ALLOWING A NEO-LIBERAL DNC CHOOSE YOUR CANDIDATES. RUN LABOR AND JUSTICE IN ALL PRIMARIES.


Pension Benefit Guaranty Corp.

'The PBGC regularly updates its investment strategy. In 2004, it chose to invest heavily in bonds.[6] Under new leadership, the agency in 2008 shifted a substantial portion of its assets into stocks.[7] Because of the market decline, PBGC's equity investments lost 23% during the year ending September 30, 2008.[8]'

According to commentator Nicholas Brannick, "Despite the appearance of protection for the PBGC's interest in the event of termination, the Bankruptcy Code frequently strips the PBGC of the protection provided under ERISA. Under ERISA, termination liability may arise on the date of termination, but the lien that protects the PBGC's interest in that liability must be perfected [to be protected in bankruptcy]". Nicholas Brannick, Note: At the Crossroads of Three Codes: How Employers Are Using ERISA, the Tax Code, and Bankruptcy to Evade Their Pension Obligations, 65 Ohio St. L.J. 1577, 1606 (2004). The retention of title as a security interest, the creation of lien, or any other direct or indirect mode of disposing of or parting with property or an interest in property is a "transfer" for purposes of the U.S. Bankruptcy Code (see 11 U.S.C. § 101(54)). Some transfers may be avoidable by the bankruptcy trustee under various Code provisions. Further, under ordinary principles of bankruptcy law, a lien or other security interest that is unperfected (i.e., a lien that is not valid against parties other than the debtor) at the time of case commencement is generally unenforceable against a bankruptcy trustee. Once the bankruptcy case has commenced, the law generally stays any act to attempt to perfect a lien that was not perfected prior to case commencement (see 11 U.S.C. § 362(a)(4)). Thus, the PBGC with a lien that has not yet been perfected at the time of case commencement may find itself in the same position as the general unsecured creditors.

No insurance for defined contribution plans

One reason Congress enacted ERISA was "to prevent the 'great personal tragedy' suffered by employees whose vested benefits are not paid when pension plans are terminated."[19] When a defined benefit plan is properly funded by its sponsor, its assets should be approximately equal to its liability, and any shortfall (including benefit improvements) should be amortized in a relatively short period of time. Before ERISA, employers and willing unions could agree to increase benefits with little thought to how to pay for them. A classic case of the unfortunate consequences of an underfunded pension plan is the 1963 shutdown of Studebaker automobile operations in South Bend, Indiana, in which 4,500 workers lost 85% of their vested benefits.[19] One of ERISA's stated intentions was to minimize underfunding in defined benefit plans.

Defined contribution plans — by contrast and by definition — are always "fully funded." Thus Congress saw no need to provide insurance protection for participants in defined contribution plans. The Enron scandal in 2001 demonstrated one potential problem with defined contribution plans: the company had strongly encouraged its workers to invest their 401(k) plans in their employer itself, violating primary investment guidelines about diversification. When Enron went bankrupt, many workers lost not just their jobs but also most of the value of their retirement savings. Congress inserted trust law fiduciary liability upon employers who did not prudently diversify plan assets to avoid the chance of large losses inside Section 404 of ERISA, but it is unclear whether such fiduciary liability applies to trustees of plans in which participants direct the investment of their own accounts.

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March 21st, 2014

3/21/2014

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Corporate NPR/APM made the news of the day surround new Federal Reserve Chief Yellen and her taking of the FED baton from Bernanke at a time that the US economy is ready to collapse for the same reasons as in 2007.  So, her concern lies with protecting bank wealth and she states that Bernanke's FED policies have made sure the banks are so well capitalized and removed from the US economy that any domestic downturn or collapse will not be felt by banks!  You see her concerns.

MEANWHILE THE FED POLICY IS DESTROYING THE PEOPLE'S WEALTH FROM ALL DIRECTIONS.  THINK YOU MADE SOME GAINS ON YOUR 401K THIS BULL MARKET---WELL, IT'S GETTING READY TO CRASH AND PENSIONS AND 401Ks will lose most of those gains.

Unemployment nationally is 35-45%, banks leveraged above $600 trillion involving the bond market this time with the FED unable to contain another crash.  Now, it is the FED's mission to keep unemployment low and the economy stable.

THIS IS MALFEASANCE.


Regarding FED Chair Yellen's first policy statement:

This is my interpretation with paraphrase:


'I AM THROUGH PRETENDING THIS FED POLICY IS ABOUT ADDRESSING HIGH UNEMPLOYMENT AND MARKET STABILITY-----WE ARE PROUD TO BE A CRONY AND CORRUPT BRANCH OF WALL STREET WORKING ONLY TO ENRICH THE RICHEST'! 

This was Yellen's announcement and it even made the most corporate of mainstream anchors----Scott Pelley of CBS hang his head in shame.

We all have known the FED's policies had nothing to do with its stated mission of controlling unemployment and stabilizing the US economy, but after several years of the Obama's term and policy that created economic stagnation and an unemployment rate of 35-45% across the country with an economy ready to implode from a bond market bubble-----Yellen said, heck, we can no longer hide it.

 IT IS IMPORTANT TO SHOUT AND DOCUMENT THAT IT IS ILLEGAL FOR THE FED TO MOVE AWAY FROM ITS STATED MISSION.  IT CANNOT JUST ARBITRARILY CHOOSE TO EMBRACE POLICY THAT HARMS THE PEOPLE IT IS SUPPOSED TO PROTECT.


So, where Greenspan shouted 'LET THE MASSIVE SUBPRIME MORTGAGE FRAUD CONTINUE AT RECORD SPEED', Bernanke served saying THE CRONY WALL STREET MARKET SERVES TO MAKE A FEW THE RICHEST IN WORLD HISTORY AND THAT IS WHAT THE FED IS ALL ABOUT UNDER ME!  Yellen is posturing that she will super-size wealth inequity by using the FED in crony finance just as Bernanke did.  What the heck, US has no public justice system right now they say!  You know, Trans Pacific Trade Pact makes US law enforcement against corporations NULL and VOID and Wall Street considers TPP already in place!

Let's take a look at what Yellen is telling you and I.  After all we are peasants waiting to have law and policy pushed upon us and not citizens who write law the works in the public interest.

Manipulating inflation rates and interest rates to zero are near zero works to give corporations free money while keeping the public impoverished.  So, zero interest rates make it impossible for people to place their money in a savings account -----the goal is to force everyone back into a stock market we all know is criminal and corrupt.  If you lose money to inflation unless you place it in the stock market-----you are being fleeced.  So, for several years now the American people have lost millions of dollars to manipulated interest rates of zero.  Meanwhile, corporations are being paid by the FED not to work.....hire.....by giving them free money to invest in the stock market and expand overseas instead of growing the domestic economy.  WAIT UNTIL THESE CORPORATIONS GET RICH ENOUGH AND THEY WILL ALLOW IT TO TRICKLE DOWN WALL STREET SAYS.  Remember when Obama ran in 2007 saying he did not believe in trickle-down and yet-----that is the entire enchilada of his administration.


ZERO PERCENT INTEREST MAKES FOR PUBLIC LOSS OF MONEY IF TRYING TO SAVE IN A SAVINGS ACCOUNT.  IT IS MEANT TO FORCE YOU BACK INTO THE STOCK MARKET AND REMEMBER.....IT IS READY TO IMPLODE!

The next important issue regarding deliberately claiming low inflation when inflation is not low is that when the FED is forced to stop these manipulations inflation will soar.  Now, moderate inflation around 5% has always been a goal and is good for public wealth and the economy.  What is coming will be much higher inflation and that is really bad for the public.  Don't worry says the FED, the big banks are prepared to weather the next recession!



'Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.

Is the Fed Waging War on Bank Savers?

By: Brian O'Connell

NEW YORK (BankingMyWay) — A new white paper on Federal Reserve economic policy draws the sharp conclusion that the Fed is waging a three-pronged war on bank savers.

Obviously, the Fed, led by chairman Ben Bernanke, has held fast to its low interest rate policy since the Great Recession began in 2008, and hasn’t let up since. According to the Federal Deposit Insurance Corporation, the national average savings account rate is in the basement, at 0.14% , and the BankingMyWay Weekly Savings Rate tracker mirrors that number closely, at 0.15%.

If there’s any upside to the story, it’s that the Fed has decided to end the latest round of its monetary easing program and will likely no longer use artificial means to tamp down U.S. interest rates. But for bank savers, the damage is already done, and it’s not all just about interest rates.


Here’s a look at what one research outfit is calling Ben Bernanke’s “war on bank deposit savers” and the three ways it’s already under way:

Paltry savings rates at big banks. Big banks like Bank of America (Stock Quote: BAC) and JP Morgan Chase (Stock Quote: JPM) are offering savings rates at below 0.05%, points out FedUpUSA.org, a consumer financial advocacy organization. Since the 1960s the Fed has gone out of its way to give Americans a viable investment and savings alternative to the stock market, often keeping the key Fed Funds rate above 5%. But those days are long gone and bank deposit investors are paying the price.

Inflation is crushing bank deposit yields. In its April 2011 white paper, “Federal Reserve Punishes Savers By Subsidizing Big Banking Bailouts,” FedUSA.org argues that the Fed is trying to steer U.S. investors into the stock market, in large part by keeping interest rates so low that it isn’t worth it for investors to place their money in bank savings vehicles like certificates of deposits and money market accounts.

"The Federal Reserve is doing everything within its power to get people to spend or speculate in the stock market and hopefully over time create enough inflation to devalue our current debts,"
the FedUSA paper says. "This is why mortgage lending has gotten tougher (aside from government backed loans), getting a credit card is now for credit worthy customers and getting a small business loan is much more stringent. The purpose is to work through the current banking led fiasco by pushing on the debt to working and middle class Americans through lower savings rates and a push for higher inflation."

When inflation rises, as it has so far this year, bank CDs and money market accounts can’t keep up and thus are significantly reduced in value.

A smaller choice of consumer banking programs. Big banks and the Fed are currently entangled in a vicious wrestling match over bank fees. Front and center in that war are swipe fees that banks charge merchants who accept debit cards. The Federal Reserve is dropping those fees, from 44 cents per transaction to 12 cents per transaction, and in response, banks with $10 billion or more in assets are cutting bank credit card reward programs and are amping up bank deposit and ATM fees. The Fed just hasn’t learned a lesson that consumers already know too well – never get between a banker and his fee revenues.

Going forward, can consumers look forward to a break on the so-called ‘war on bank savers”? Probably. As rates rise, which they eventually will now that the Fed has taken its foot off the low-rate pedal, bank depositors will earn more on their savings and investments. But it won’t happen overnight. It’s going to take a while for things to wind down.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

_____________________________________

EVERYONE KNOWS INFLATION HAS RISEN THESE SEVERAL YEARS AS PRODUCTS COST MORE ----YET, THE FED HAS STATED INFLATION IS ZERO OR 1%.

Whether you are a supporter of CPI-E which changes the way COLA are calculated to address the Cost of Living today or if you are someone who knows inflation today is far greater than even CPI-E would calculate, the point is that the manipulation of inflation and COLA has gotten too far out of hand.  As we watch cereal boxes shrink considerably while prices rise....when my cat litter jumps from $6 to $10....we have considerable inflation.  Health care costs are of course the biggest inflation cost for Americans and it is not even included in the current CPI.

AS WE REBUILD THE DEMOCRATIC PARTY FOR LABOR AND JUSTICE WE NEED TO REMEMBER THESE LOSES TO SOCIAL PROGRAMS LIKE SOCIAL SECURITY AND VETERAN'S BENEFITS!


Do not think it is hyperbole when economists predict US inflation will soar when the FED is forced to change these manipulations.  Inflation may indeed hit 10-15% or higher.





 Manipulated inflation rates by government leading to lower COLA on Social Security for 2013


10:50 AM  John Williams, Shadowstats,

With the Federal Reserve and Federal government blatently manipulating the true rate of inflation in the economy, the results for 2013 are going to be a 1 or 2% COLA increase for Social Security recipients next year.



Charts courtesy of Shadowstats

Social Security recipients shouldn't expect a big increase in monthly benefits come January.

Preliminary figures show the annual benefit boost will be between 1 percent and 2 percent, which would be among the lowest since automatic adjustments were adopted in 1975. Monthly benefits for retired workers now average $1,237, meaning the typical retiree can expect a raise of between $12 and $24 a month.

The size of the increase will be made official Tuesday, when the government releases inflation figures for September. The announcement is unlikely to please a big block of voters _ 56 million people get benefits _ just three weeks before elections for president and Congress.

According to John Williams and Shadowstats, true inflation for 2012 is between 5 and 9%, dependent upon which model (1980 or 1990) one chooses to reference.  The government has manipulated real price inflation for more than two decades to ensure COLA increases are not in line with real inflation, to both save 10's of billion of dollars in benefit payouts, and to hide the fact that their deficit spending is causing massive inflation on essentials people need like food, energy, and rents.

Going into the 2012 election, the current administration doesn't want you to see the 30-80 rise in food prices over the past four years, and are making sure their media propagandists lie to you on what the real inflation rate is in the economy.


___________________________________________________________________

Bernanke and neo-liberals in Congress along with Obama have tried to pretend inflation is at zero or close when everyone knew it wasn't.  Inflation has been at 3-5% just as always with the inflation rate ready to explode as soon as the FED ponzi scheme of QE has maximized the FED's debt ratio to its limit, which is coming now.  This is why Yellen is having to back out of QE----the FED is maxed with debt.  When Yellen does this the manipulation of inflation rate will end and they will not be able to hide the fact that inflation has been higher than stated and will grow to a very high rate when QE ends and interest rates rise to normal.

Remember, inflation was manipulated to zero to make it look as though the FED policy was not hurting the economy.  At the same time these manipulated inflation rates did a number on the public's wealth yet again!  THOSE NEO-LIBERALS TRYING TO SUCK ALL THE WEALTH THE PUBLIC CAN AMASS ANY WAY POSSIBLE.  That is what FED policy has been about since the 2008 crash.  So, the zero COLA for several years lowered senior's Social Security payments by on average a hundred dollars a month as did the Veteran's payments.  This is big money for a class already teetering below the poverty line.  It is why the national debt fell during Obama's term---a success to Wall Street.  National debt paid by falling social safety net cuts while Wall Street fraud stays with the looters.

ARTIFICIALLY MANIPULATED INFLATION RATES OF ZERO CREATED THE LARGEST CUTS TO SOCIAL SECURITY IN THE PROGRAM'S HISTORY COURTESY OF NEO-LIBERALS IN CONGRESS AND OBAMA.

This is no surprise.....Obama laid out these plans in 2009.....the question is why have no democrats shouted out against all of this.  If your incumbent has not sounded the alarm these few years....THEY ARE NEO-LIBERALS AND GET RID OF THEM.



Keep in mind these inflation rates of zero are fake.....all articles on the subject show everyone knows inflation was the normal 3-5% yet the FED listed it at zero and the Federal government under Obama allowed this fake inflation rate be used for SS and Vet COLAs. 

IT WAS DELIBERATE TO IMPOVERISH FURTHER PEOPLE RECEIVING MONEY FROM A PUBLIC TRUST.

So, we need labor and justice politicians to keep in mind seniors and Vets will need these several years of losses to monthly payments replaced with higher COLAs for several years.  We may need 7% COLAs for example over a decade to make up for losses these several years.  This actually fits with progressive policy that sees Social Security increases by larger amounts as we replace all the stolen pensions and retirements with Social Security
.



Social Security COLA Doesn't Match Inflation

Retirees are falling further behind each year as medical costs rise by more than overall inflation.


By Philip Moeller Aug. 9, 2010

Last week's annual trustees' report on the financial health of Social Security showed the program did not suffer serious erosion during the past year. Current Social Security resources are sufficient to pay all benefits for the next 27 years. That's hardly the self-sustaining funding model that we'd like to see but it's good news nonetheless. However, it won't stop efforts to "fix" the program. And it won't halt the discussion over the adequacy of the annual cost of living adjustment (COLA) with which Social Security tries to keep retirees' benefits from being eroded by inflation.

Low rates of inflation in the year ended last fall caused the COLA to be zero for the first time in the 25-year history of these annual adjustments. Recipients received a one-time $250 payment, which helped compensate for that and was also pitched as an economic stimulus program.


Now, we're coming up on a second year with little if any inflation, as measured by a version of the Consumer Price Index used to determine the Social Security COLA. The index measures price changes for working people. Legislation has been introduced for another $250 payment, and AARP and other groups are lobbying for its approval.

However, the fiscal picture is much darker than it was even a year ago. And while Social Security's finances may have held up, the same is not true of the government's budget. We are awash in red ink with no end in sight to deficits. With mid-term elections this fall, just about everyone has found religion when it comes to government spending. So, the argument for another round of make-good Social Security payments is a tougher sell in 2010 than it was last year.

However, according to a recent academic study, the fairness of such a payment is beyond dispute. The study reviewed Social Security payments over many years, backed out spending on basic Medicare premiums (for part B physician and outpatient services) and other out-of-pocket medical spending, and then compared the remaining amounts with money that recipients paid for other goods. Researchers studied a group of older retirees who turned 65 in 1983 (the year the COLA began), and a second group of persons born in 1928. The authors -- Gopi Shan Goda and John B. Shoven at Stanford and Sita Nataraj Slavov at Occidental College -- found the value of recipients' benefits for non-healthcare spending had eroded by about 20 percent for men and nearly 27 percent for women. Those are big cuts: one out of every five dollars in benefits is effectively gone for men; one of every four dollars for women.

And their findings probably understate the actual ground lost, because the study did not include the cost of other health insurance premiums when considering out-of-pocket healthcare spending. Besides Part B premiums, other insurance includes Medicare Supplement, Medicare Advantage, Part D prescription drug coverage, and other private coverages. To the extent that the rise in premiums for such insurance has exceeded the overall rate of inflation, the study's findings would need to be adjusted to show further erosion in the effective non-medical buying power of Social Security benefits. And by all accounts, health insurance price inflation has far outpaced the rise in overall prices.


"Of course, these results assume no other income besides Social Security," the researchers say, "but a sizable fraction of the elderly depend on Social Security for the majority of their income: 64 percent of beneficiaries rely on Social Security for 50 percent or more of their income, and 35 percent of beneficiaries rely on Social Security for 90 percent or more of their income."

Even if funds were available, fixing this situation is no easy matter. This is because there are two root causes for how healthcare expenses erode the true value of Social Security benefits. The first is the rate of inflation for such expenses. The second is the fact that people simply use more healthcare as they age. "Even if medical costs did not rise faster than the prices of other goods," the study says, "as retirees aged, their medical spending would still tend to increase as a share of income."

There is an experimental government price index called CPI-E that is designed to measure the actual spending of retirees. It thus includes more weighting for medical costs. "The CPI-E has increased faster than the CPI-W over the past 20 years," the study says, "due primarily to the relative rise in health costs, and the fact that the elderly spend more on health care than the non-elderly, even after taking into account the availability of Medicare." Using the CPI-E to determine the annual COLAs for the study's subjects would have narrowed the gap, with men falling only 11 short of maintaining their effective buying power for non-medical items, and women falling 18 percent short.

But the financial consequences of even this seemingly simply shift are huge. Remember that 27-year estimate for Social Security sufficiency? According to one study, using the CPI-E to set annual COLAs would slice five years from that cushion all by itself. Further, like all measures of price change, the CPI-E does not even try to factor in changes in product quality. The $1,000 television set you buy today is vastly superior to the $1,000 set you could have bought 20 years ago. Such qualitative improvements have been enormous in healthcare.

With all the talk about changing Social Security, it would seem to make great common sense to take a careful look at the COLA mechanism. What good is it to put the program on a sound 75-year trajectory again if the interests of seniors aren't appropriately considered and protected in the process?

______________________________________________

You will not hear corporate media explain to you that Obama's myRA is Social Security privatization -----a republican plan to end yet another public Trust only a politician running as a democrat is doing it.  You will hear corporate NPR advertise this policy as a good thing for the impoverished masses who just cannot seem to save money themselves.

THAT'S A NEO-LIBERAL FOR YOU AND ALL MARYLAND POLS ARE NEO-LIBERALS!

Wall Street wants all of the Social Security and Medicare Trusts back in the stock market where Wall Street can use the money to maximize profit with leveraging that always sends public money out to act as fodder in investments with huge losses over and over and over.  Who wouldn't want Social Security tosses into the stock market?  EVERYONE!!!!!



'The same plan may be in the works for Social Security. In his speech, the President announced a new retirement savings program, MyRA. Although the details of MyRa are not clear, it is based on creating individual retirement accounts (IRAs) for workers who don’t currently have them'.



Obama Lays Groundwork to Destroy another Social Insurance


by MFlowers   

By Margaret Flowers

Originally published in GreenShadowCabinet.us

President Obama’s comments about the health law in his State of the Union speech lacked substance and were primarily focused on selling his law, and more insurance, to the public. He avoided discussing the root causes of our ongoing healthcare crisis and set the ball in motion to destroy another pillar of our social infrastructure, Social Security.

The bottom line of President Obama’s comments on the health law was that more people have health insurance and insurance companies can’t deny people based on pre-existing conditions. He urged everyone to make their friends and family buy insurance.

What he didn’t say is that people with health insurance in the United States still can’t afford the care they need and face bankruptcy if they have a serious health problem. And although insurance companies cannot deny policies to people with pre-existing conditions, they have a number of ways to avoid paying for peoples care.


The health law perpetuates a health system that treats health care as a commodity so that people only receive the amount of health care they can afford rather than treating it as a public good, as does every other industrialized nation. This is the root cause of the health crisis in the US. Any system that leaves healthcare in the marketplace, because it is based on generating profits for investors, will result in inequalities of access to care and rising healthcare costs.

Using a market-based model for social insurances sets a dangerous precedent. Traditional social insurances are provided by the government and are paid for through taxes. They are designed to meet the needs of the public rather than to provide a profit and so they guarantee a universal set of benefits for everyone. Each pays in according to their means.

The health law is doing the opposite. It is driving our entire health system to one that is provided by private entities and is paid for by individuals. Each person gets the amount of coverage they can afford. Those who cannot afford what they need are left to suffer. Since the health law was signed, there has been greater privatization of Medicaid and Medicare and billions of taxpayer dollars have been used to sell and subsidize private insurance. If we continue on this path, down the road Medicaid and Medicare will be rolled into the health exchanges and only private insurance will be available.

The same plan may be in the works for Social Security. In his speech, the President announced a new retirement savings program, MyRA. Although the details of MyRa are not clear, it is based on creating individual retirement accounts (IRAs) for workers who don’t currently have them.

What we do know is that Social Security has been under attack throughout the President’s time in office. Rather than doing what is needed, raising the cap, or going beyond that and raising benefits, there have been attempts to cut benefits and raise the age of eligibility. The public is being told that Social Security is in a crisis but is not being told that this ‘crisis’ is intentional. Unlike Social Security, IRAs are managed by financial institutions that profit from them. MyRa is another gift to Wall Street by President Obama.

We are living in an era of big finance capitalism, a predatory capitalism, based on the neoliberal economic model. It is being applied to every aspect of our society through dismantling of our public programs and privatization of our resources and services. Under this system, the basic necessities of each person are not guaranteed. Instead, it is designed to funnel wealth to the top by making everything into a commodity, a profit center for investors.

This path will continue until we rise up to challenge it. We must understand what is happening and that the destruction of our public programs is intentional, but not inevitable. There are solutions to the crises we face. For example, a health care system based on a non-profit Medicare for all model and a retirement system based on a stronger Social Security. These are obvious solutions, supported by a majority of Americans and logistically easy to put in place – if the government actually represented the people.

The President closed his remarks on health care by saying, “So again, if you have specific plans to cut costs, cover more people, increase choice, tell America what you’d do differently.” The last time he said that in a State of the Union speech, I tried to respond and was arrested. This time we must respond together by working to build a mass social movement that has the power to make our demands a reality.

~ Margaret Flowers MD, Serves as Secretary of Health in the General Welfare Branch of the Green Shadow Cabinet.


____________________________________________

It has been a sad state of affairs to watch the neo-liberal media and economists send out all kinds of propaganda on Social Security and threats to its future.  Keep in mind, neo-liberals are committed to ending all War on Poverty and New Deal programs----that has to happen for Trans Pacific Trade Pact to become enacted.  So, neo-liberals are creating drama around Social Security to hide the ultimate goal----myRA.  As we are fighting Chain CPI and fake inflation rates and direct cuts to how much Social Security payments will be, the policy neo-liberals are pushing simply ends Social Security as a Federal program.  You do not hear one neo-liberal economist saying anything about how myRA will end Social Security-----they are saying we won the fight to protect Social Security from Chain CPI.  Chain CPI was not good but myRA ends SS for goodness sake!


IF YOUR PUNDIT OR POLITICIAN IS NOT SHOUTING THAT myRA FROM OBAMA IS ABOUT ENDING SOCIAL SECURITY-----THEY ARE NEO-LIBERALS!

Baker, Reich, Krugman are all neo-liberal economists feeling the American people's pain yet never quite able to shout that neo-liberalism is the killer.
  They never speak to the Social Security and Medicare Trusts being raided either.  I have shown often that payroll taxes diverted to the US Treasury to the tune of almost $4 trillion dollars has been spent building the Homeland Security network and private military.



Social Security COLA to increase by 1.5 Percent in 2014
   
Written by Dean Baker  
Wednesday, 30 October 2013 10:00


Changing the basis of the COLA to the chained CPI would cut an already modest cost-of-living-adjustment.

The Social Security Administration has announced the Social Security cost-of-living-adjustment (COLA) will be 1.5 percent in 2014. Beneficiaries will begin seeing the increase in their checks in January.

It is worth noting that this COLA based on the consumer price index for wage and clerical workers (CPI-W) is likely to be lower than the rate of inflation shown by the BLS experimental elderly index (CPI-E), which is designed to reflect the purchasing patterns of the elderly. The biggest differences between the two indices are the weights assigned to health care and housing, with both components accounting for a much larger share of the CPI-E than the CPI-W.

The price of medical care services was up 3.1 percent in August from its year-ago level. The price of the CPI’s shelter component was up 2.4 percent from its year-ago level. As a result of the more rapid price increases in these components, the CPI-E would likely show a rate of inflation that 0.1-0.2 percentage points higher than the CPI-W. This would suggest that the rate of inflation seen by seniors is somewhat higher than the COLA they are now getting for Social Security.

However, this gap would increase if the COLA indexation switched to the chained CPI (CCPI-U). This index typically shows a rate of inflation that is 0.2-0.3 percentage points lower than the CPI-W. The reason for the difference is that CCPI-U incorporates the impact of substitution on consumption costs. If the price of apples rises less rapidly than the price of oranges, and people switch from consuming oranges to apples, then the CCPI would lower the weight it assigns to oranges and increases the weight it assigns to apples. This leads it to show a lower measured rate of inflation, which arguably reflects actual patterns in consumption.

While the CCPI-U may be picking up substitution patterns for the population as a whole, it is not clear that it accurately reflects substitution patterns among seniors. The goods disproportionately consumed by seniors, health care and housing, don’t lend themselves to easy substitution. Furthermore, it is not clear that seniors can substitute for other goods with the same ease as the rest of the population.

Unfortunately, neither BLS or the proponents of adopting the chained CPI for the COLA have done research on this topic.

In short, there is some reason to believe that the current COLA already does not adequately compensate seniors for the rate of inflation they experience. This problem would be worse if the basis for the COLA is changed to the chained CPI.


__________________________________________


ISN'T THIS LOL----IT IS THE FED'S REFUSAL TO SEEK JUSTICE AND RECOVER FRAUD THAT HAS SUPER-SIZED THE BANKS WITH SO MUCH WEALTH AND EXPANSION THAT WALL STREET IS NO LONGER CONNECTED TO THE US ECONOMY OTHER THAN CONTINUING TO IMPLODE IT WITH BOOM AND BURST BUBBLES.



Well, the FED policy was all about feeding free money at zero percent so corporations could do nothing for the last several years but merge and acquire and expand overseas. The FED policy was crony and corrupt by every measure and professionals have shouted for years that the FED's actions are no longer matching the goals of its mission. The banks, rather than be nationalized so as to complete investigations, recover tens of trillions of dollars in fraud, and prosecute the criminals that are systemic in the financial industry so as to start to rebuild a healthy economy were instead simply allowed to keep the loot, use it as investments in a BULL market all of which made them extraordinarily rich with other people's money! How crony is that?

The reason the FED notes that banks and corporations will not be effected by the next recessions is just that.....the FED and Obama/Congressional neo-liberals have allowed the banks to grow separate from the US economy and while still working to implode the US economy from fraud and corruption, a collapse for you and me will see Wall Street simply move its money elsewhere until it is over. The FED, Obama, and Congressional neo-liberals have indeed allowed the banks to get to just the same place as 2007 as regards collapse by super-sized leverage and fraud and corruption, this time in the bond market.

The good news for WE THE PEOPLE is that since the banks still have those tens of trillion in massive fraud and made a killing investing our money.....we get all that fraud and the gains Wall Street made from the BULL market back as soon as Rule of Law is reinstated and fraud recovered to government coffers and individual's pockets.

When we do nationalize the Wall Street banks to do this, they will become the regional banks they are meant to be. So, they may weather the coming recession caused by the implosion of the bond market, but they will not weather justice delayed! Remember, when a government suspends Rule of Law, it suspends Statutes of Limitation!



Nearly all top U.S. banks could withstand severe recession, Fed says

WASHINGTON -- Only one of the nation's 30 largest banks would not be able to withstand a severe recession and the firms collectively are in better financial position to handle economic shocks than five years ago, according to Federal Reserve stress test results released Thursday

Under the most extreme of three economic scenarios, Zions Bancorporation of Salt Lake City would be the only large bank at risk of failure because a key measure of financial strength would fall below the Fed's standard.

The Fed conducts two rounds of stress tests and next week will give what amounts to pass/fail grades for the banks after factoring in each firm's plans for dividend payments or stock buybacks this year.



“The annual stress test is one of the Federal Reserve’s most important tools to gauge the resiliency of the financial sector and to help ensure that the largest firms have strong capital positions,” said Fed. Gov. Daniel K. Tarullo, who oversees the central bank's regulatory functions.

“Each year we are making substantial improvements, which have helped make the process even stronger than when we first conducted the stress tests in the midst of the financial crisis five years ago,” he said.

The banks have a combined $13.5 trillion in assets, nearly 80% of the U.S. industry.

Under the Fed's severely adverse economic scenario, those 30 firms would lose about $501 billion over 27 months.

That scenario, designed to replicate a downturn similar to the 2008 financial crisis and Great Recession, involves a sharp rise in the unemployment rate to 11.25%, a 25% decline in home prices and a nearly 50% drop in the stock market.

Under such conditions, Zions would fall below a Fed gauge of bank health. The firm's ratio of capital to its risk-weighted assets would fall to 3.5% from the 10.5% level as of Sept. 30.

Banks are supposed to stay above 5%.

The next weakest bank was M&T Bank Corp., with a ratio of 5.9%. The nation's two largest banks fared only slightly better: Bank of America Corp.'s ratio was 6% and JPMorgan Chase & Co.'s was 6.3%.

The best performers under the scenario were State Street Corp, at 13.3% and the Bank of New York Mellon Corp. and Discover Financial Services, both at 13.1%

Overall, the combined ratio for the 30 largest banks would fall to 7.6% from 11.5%. Those same banks had a ratio of 5.5% at the beginning of 2009, the Fed said.

The Fed's two stress tests are designed to determine the strength of the nation’s largest financial institutions.

The first, whose results were released Thursday, were required by the 2010 Dodd-Frank financial reform law and measure the firms in three economic scenarios -- normal conditions, a moderate recession and a severe economic downturn.

This year, as required by the Dodd-Frank law, the Fed expanded the tests to the 30 largest bank holding companies.

Previous stress tests, which began after the crisis, looked at the top 18 banks.

The second test looks at each bank's plans to pay dividends or buy back stock. The results of the first stress test will be applied to those plans.

On Wednesday, the Fed will announce which banks will be allowed to proceed with their plans and which would first have to raise more capital. The Fed also will determine if the planning processes of the banks, which include how they project revenue and losses, are sufficient.

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March 14th, 2014

3/14/2014

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We want to thank Unite Here 7 for all of the hard work this union does for the workers it supports.  The leadership braved the civil disobedience of risking arrest to shout out as hard as they could about the abuse of workers in Maryland!

NEO-LIBERALS IN MARYLAND REALLY HATE WORKERS!



This rally in Annapolis was a powerful event.  The number of people coming to these rallies are growing and the general public is waking up and joining.  We thank workers who risks their jobs and retribution from employers to stand with unions as we rebuild Maryland's labor laws and protections.

Low-wage is not only a problem for those not finishing school or going for higher education.  It is happening to all workers no matter the degrees.  Remember, neo-liberals intend to create in the US what corporations had in third world countries and professionals earn little more than those impoverished at the bottom pay scale.  Doctor, lawyer, and Indian Chief earn next to nothing in third world countries.  It is the middle-class that has the power of voice and money to fight this and must stand with all citizens.  Remember,

AN INJUSTICE FOR ONE WILL BECOME AN INJUSTICE FOR ALL!


I want to shout out as well that labor and justice need to take the status of public private partnership to court as an illegal entity.  In this one case of the BWI workers and AirMall....you have a publicly owned airport run by Maryland Transportation Authority allowing private corporate national chains to act illegally.  They are allowing as well for those employees not to be paid what should be a public employee wage and benefit. You see, if the government owns the property then the rules of the state need to apply.  The idea that the state and localities are going to get away from protecting employees with these private partnerships and indeed, actually work to exploit these employees because it brings more money into government coffers all while protecting AirMall from corporate taxes is illegal. 

MARYLAND CITIZENS MUST NOT ALLOW A GOVERNMENT STRUCTURE THAT SEEKS NOT ONLY TO IMPOVERISH AND EXPLOIT CITIZENS FOR ITS OWN REVENUES WHILE PROTECTING CORPORATIONS FROM PAYING THEIR FAIR SHARE......BUT, AT THE SAME TIME THESE PARTNERSHIP STRUCTURES TAKE AWAY PUBLIC TRANSPARENCY AND ACCOUNTABILITY-----WHICH IS THE POINT OF PUBLIC PRIVATE PARTNERSHIPS.


If taken to court I feel certain that this status will/should be found illegal.  It will have to be taken outside of Maryland because Maryland courts have been stacked with corporate judges by O'Malley.

Rally and March in Annapolis

Public · By Unite Here Local 7


    • Thursday, March 13, 2014
    • 12:00pm
  • Asbury United Methodist Church 87 West Street, Annapolis Maryland
  • Join us as we stand in solidariy with workers at BWI Thurgood Marshall Airport.

    Busses will leave from Unite Here Local 7 offices at 1800 North Charles Street at 10 a.m. Rally will begin at Asbury United Methodist church located at 87 West Street, Annapolis, Maryland followed by a march to Lawyer's Mall.

    Why are we marching?

    Non-tipped concessions workers a BWI Thurgood Marshall Airport earn a median wage of $8.50 per hour. Only 17% of surveyed workers reported that they received health insurance through their jobs. Only 10% of surveyed workers reported that they received paid sick day. The lowest paid employees of the Maryland Aviation Authority receive $13.45 per hour. They are guaranteed health insurance, paid sick days, and a pension.

    The Thurgood Marshall Equal Pay Act creates a waqe equity supplement whereby the state of Mayland will temporarily make up the difference between the wages of concessions workers and those of the lowest-paid employees of the Maryland Aviation Authority.

    Join us as we march towards equality at BWI Thurgood Marshall Airport.

Many, many thanks to all of the 300+ of you who came out to our march today! We had a wonderful and inspiring day. More photos to come. — at Maryland State House.

_________________________________________
First, we need to acknowledge that the Maryland and local government structural budget deficits are created by massive corporate fraud and corruption and corporate welfare in the form of corporate tax breaks......it has nothing to do with public services, public employees, and public programs.

That said, we want to remind these public union leaders that 1/2 of pension value was lost to pension fraud in the 2007 economic collapse.  Throwing pensions from the then safety of the bond market into an imploding stock market in 2007 to collapsing buoy big banks is public malfeasance and corporate fraud.  It was intentional and it was duplicitous.

UNION LAWYERS NEED TO GET THAT 1/2 VALUE LOST TO FRAUD BACK ALONG WITH ALL THE GAINS THOSE FUNDS WOULD HAVE HAD IN THIS PAST BULL MARKET.

O'Malley has underfunded and defunded pensions from his tenure as Mayor of Baltimore.  It is no secret that he does not intend on public sector workers getting much if any of those promised and contracted benefits, whether pensions or health care.  Public sector unions had better know their health plans will be thrown into these private state health systems and will be worth whatever tier an employee can pay....for city and state employees who do not make much.....that will be Medicaid or Bronze at best....both mostly preventative care.


This game that Maryland media and government officials play with union leaders has two goals:  First, by threatening unions with loss of union rights or future wage increases the intent is to make the unions concede to bade deals.  DEMOCRATIC POLS WOULD NOT DO THAT!  Second, by announcing that union leaders knew of this deal that hurt its membership it undermines confidence in unions and their leadership.  This is deliberate.  Finally, when union leaders feel they must support the same politicians who place them in these positions-----they endanger the future of unions in Maryland.  So, to take the pressure off of unions and leadership to allow them to do the right thing for their membership

THE CITIZENS OF MARYLAND MUST RUN AND VOTE FOR LABOR AND JUSTICE CANDIDATES SO LABOR WILL HAVE FRIENDLY POLITICIANS AND GOVERNMENT APPOINTEES IN OFFICE.  WAKE UP-----WHAT IS HAPPENING TO THESE LABOR GROUPS WILL COME TO YOU UPPER- MIDDLE-CLASS MARYLANDERS!

Union leaders have to stop this race to the bottom and run their own candidates in primaries.  Labor cannot support neo-liberals who are killing them!

THAT'S A NEO-LIBERAL FOR YOU AND ALL MARYLAND POLS ARE NEO-LIBERALS!



Unions, pension board unhappy O’Malley cut $100M in promised payment to retirement fund


January 17, 2014 at 6:58 am

By Len Lazarick

Len@MarylandReporter.com

IMarch 15, 2011, Alvin Thornton (in suit) and union leaders head march to State House.

The largest unions representing state workers and public school teachers are upset at Gov. Martin O’Malley’s decision to permanently cut $100 million from extra payments into the state pension system. The money came from additional employee salary deductions required by a 2011 pension reform, and was intended to help cure underfunding in the pension system.

The Board of Trustees of the State Retirement and Pension System, headed by State Treasurer Nancy Kopp, is also opposed to reducing the promised $300 million payment down to $200 million. This delays the goal of funding of the state pensions system at 80% by a full year, from 2024 to 2025. The pension system was 100% funded 12 years ago, but 80% is the accepted standard for public systems.

MarylandReporter.com raised the issue at the governor’s news conference on his proposed budget Wednesday. O’Malley had not mentioned cutting the pension payment in his presentation, even though it is listed as the largest spending reduction he is proposing to balance next year’s budget.

After his explanation of the change, O’Malley was specifically asked if the public employee unions had signed off on the reduction.
The video of the Jan. 15 news conference shows O’Malley turning to Chief of Staff John Griffin and Budget Secretary Eloise Foster, and both nod their heads indicating the unions had agreed. (The video is in the video library under Jan. 15, 2014 and the exchange takes place around minute 41.)

Unions unaware of the change

Looking west from the State House steps, thousands fill Lawyer’s Mall, Bladen Street and Rowe Boulevard for the “Keep the Promise” rally against pension changes in 2011.

On Thursday, representatives of the American Federation of State, County and Municipal Employees and the Maryland State Education Association told a reporter that they were not aware of the $100 million cut in this year’s pension payment. The union representatives also seemed totally unaware that O’Malley wanted to make the cut permanent by changing the law in the Budget Reconciliation and Financing Act of 2014 (page 11) that he introduced Wednesday to implement the budget.

“AFSCME members don’t agree with the state’s decision to underfund pension contributions,” said Patrick Moran, president of  AFSCME Maryland. “We’re hopeful the state will balance its budget and make its pensions contributions — just like state employees do every year.”

But the permanent cut is exactly what Foster recommended in a report sent Wednesday to the budget committees and the Joint Committee on Pensions.

Foster’s report also includes the position of the pension board; it “strongly recommends” that the state continue to make the $300 million payment.

The board said the savings achieved by restructuring benefits should be plowed back into the pension system, which is currently only about 65% funded.

“It should be noted that of the total $300 million reinvestment, approximately two-thirds is a result of the fact that the reforms increased employee contributions,” the board said.

The 2011 pension reform legislation, which O’Malley pointed out caused “the largest public employee protest” of his administration, raised employee contributions from 5% to 7% of salary.

Cut made to balance budget, reduce structural deficit

At Wednesday’s budget rollout, from right, Gov. Martin O’Malley, Lt. Gov. Anthony Brown, Budget Secretary Eloise Foster, Chief of Staff John Griffin.

O’Malley said the proposed cut in pension payment was “due to more favorable actuarial forecasts.” But Foster’s report makes clear the motivation was to balance the budget this year and “improve budget sustainability by reducing the structural deficit.”

The cut in the pension payment will save the state $1.2 billion over the next five years. The state has not making its full annual required contribution established by the outside actuaries for more than a decade. Only last year did it approve a change to the funding method to address the shortfall.

The $300 million cap on reinvestment of pension savings was controversial in 2011 at the time the pension changes were passed. The teachers union wanted even more money put back into the system.

________________________________________

As I listened this morning to corporate WYPR regarding the fact that Maryland has one of the highest immigrant arrest by ICE and that 43% of the arrests involved people with no criminal background I waited for just one word of acknowledgement that immigrants in Maryland are being fleeced of their wages and abused in the workplace.  NOT ONE WORD. 

MARYLAND MEDIA WANTS TO SHOW CONCERN FOR IMMIGRANTS WITH THE IDEA OF 'TRUSTING' POLICE WHILE THEY ARE BEING EXPLOITED AND ABUSED IN THE WORKPLACE.

The reason Maryland media does this is that they want more immigrants to come to Maryland to be fleeced and abused to enrich the corporations committing these crimes.  Nothing hurts a corporate policy of luring immigrants to work to abuse them then reports of arrests and harassment by ICE.

THE CITIZENS OF MARYLAND ARE DEMANDING THAT NEO-LIBERALS IN THIS STATE STOP IGNORING THE FACT THAT LOW-WAGE WORKERS, BOTH IMMIGRANT AND DOMESTIC ARE OPENLY FLEECED OF THEIR WAGES JUST AS IF THEY WORKED IN A THIRD WORLD COUNTRY!

At the same time, Immigrant Justice groups must stop supporting the very politicians allowing this abuse.  Neo-liberals passing the Dream Act or Immigration Reform are doing it for Trans Pacific Trade Deal agreements, not to protect and help immigrants here now.  TPP allows ever growing numbers of high-skilled immigrants and their families will have the money to go to universities in Maryland......most domestic immigrants will not as all they earn is stolen.  Dream Act is directed at future high-skilled immigrants. Most immigrants already in America will, like low-wage Americans, be funneled through vocational tracking and job training community colleges.  This is not an American Dream, believe me.

The Senate's Immigration Bill is tied to TPP too.  It is market-based and designed not only to flood the high-skilled market with immigrant workers.....but it allows growing numbers of third world immigrants to be brought to the US and exploited just as they would be in that third world country.  Immigrants already in the US will be pushed into an even more abusive work environment if that is even imaginable. 


NEO-LIBERALS WORK FOR WEALTH AND PROFIT AT THE EXPENSE OF LABOR AND JUSTICE.....STOP ALLOWING A NEO-LIBERAL DEMOCRATIC PARTY CHOOSE YOUR CANDIDATES.  RUN LABOR AND JUSTICE IN ALL PRIMARY ELECTIONS TO SHAKE THE NEO-LIBERALS OUT OF THE PARTY!

Immigrants in America now have to know that the democratic party IS the party of the people.  It has simply been hijacked by corporate politicians that need to go.

Immigrants' Rights

The PJC’s Immigrants’ Rights Project seeks to protect and expand the rights of low-wage and poverty-stricken immigrants in Maryland. We are concerned with wage theft, consumer law issues, housing abuses and want to ensure that immigrants have access to state courts, programs and agencies.


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Wage Theft Shatters American Dream for Many Low-Income Immigrants Wage theft in the United States has reached near epidemic levels among low-wage workers.

Korean immigrant workers, represented by AALDEF, held a protest with supporters against abusive employment practices at a New Jersey restaurant in April, 2010."



  • December 27, 2011

Eight years ago, “Mrs. Kim” came to the United States from China “to pursue her American Dream,” but thanks to unscrupulous business practices familiar to many Asian immigrants working in low-wage industries, things went horribly wrong.

Kim, who did not want to use her real name because she is still involved in litigation, began life in the U.S. preparing dumplings and side dishes at a Korean restaurant in Bergen County, New Jersey.

The job went well for a few years. It was hard, but Kim was getting paid for her efforts.

“When I first started working, [the owner] agreed to pay me $600 per week,” she said. “Specific hours were not indicated, but she did indicate I would have to work over 12 hours per day.”

Though she worked as many as 17 hours a day, when the restaurant’s business started to decline, the owner began paying employees late or not paying them at all.

Kim is suing her former boss for more than $40,000 in minimum and overtime wages that have been withheld and additional liquidated damages.

“Wage and labor laws are designed to cover every worker. Immigration doesn’t come into it. But that’s not what we’ve seen in Asian-American communities,” said Shirley Lin, an attorney with the Asian American Legal Defense and Education Fund (AALDEF), who has taken Kim’s case. “We’ve seen employers push them to the extreme with long hours and abusive practices.”

Easy Targets

Lin said that employers in these kinds of situations often threaten to report the employee to immigration authorities if they challenge the abuse.

She said Asian immigrant workers in low-wage industries, like their Latino, African-American and Caucasian counterparts, are susceptible to wage theft for a variety of reasons, including language barriers, fear of deportation and a lack of education about their rights.

Wage theft in the United States has reached near epidemic levels among low-wage workers, according to a landmark 2008 national survey of nearly 4,000 low-wage workers in Los Angeles, Chicago and New York.

Seventy percent of the workers surveyed were foreign-born.

The survey, which was conducted by the Center for Urban Economic Development, the National Employment Law Project, and the UCLA Institute for Research on Labor and Employment, found over two-thirds of low-wage workers experienced “at least one pay-related violation” in the work week reported.

Furthermore, 26 percent of workers were paid less than the legal minimum wage; 76 percent of employees who worked overtime were not paid the legally required overtime rate; 70 percent of workers who performed work outside of their regular shifts did not receive any pay for this work; and 30 percent of tipped workers were not paid the tipped minimum wage.

Lacking an income, Kim said she was forced to borrow money from friends and not pay bills just to survive.

“They’re making employees suffer,” Kim said. “If you can’t run a business and pay your employees, you shouldn’t run a business. You shouldn’t take advantage of workers like this.”

She is now working at another restaurant and said she’s extremely stressed and tired from her experience with her former employer.

“I can’t sleep at night. It’s affecting my future employment because I’m not as strong. I’ve cried many tears over this employer.”

Paying the Boss

There is an added dimension to Kim’s struggles.

Her stress grew when her previous boss began pressuring employees to lend their money to support the business, another manifestation of wage theft, said Lin. Kim submitted, giving up around $55,000.

She said her boss would appear to pay her back by giving her postdated checks, but she was often told not to deposit them and when she did, the checks bounced.

“At the time I lent her money, I trusted her,” Kim said. “I thought she would share her success with her employees, but that’s not how it turned out. I helped her open a second restaurant. The owner became very greedy, borrowed money from employees and delayed paying our wages.”

Conning workers into giving loans is not the most common type of theft, which usually comes in the form of failure to pay, not paying required overtime wages, not paying for work required before and after a shift, or paying less than the minimum wage.

Kim, who has a husband and son back in China who she has not seen for eight years, said she sometimes regrets coming to the U.S. because of the stress caused by failing victim to, and fighting, wage theft.

"My husband has threatened to divorce me because of this,” she said. “My family wants me close to them, but because this is so important to me, I don’t want to give up.”

Kim’s is not an isolated case.

According to the survey by the Center for Urban Economic Development, Asians immigrants were the most susceptible to overtime abuse and off-the-clock violations compared to other racial groups studied.

Cracking Down

The problem has spurred a number of groups to try to help, including Adhikaar, which assists Nepalese, and the Chinese Staff and Workers’ Association, which aims to protect Chinese immigrants from exploitation.

Lin said workers like Kim are in a “vacuum of oversight and enforcement of our labor laws.”

“Without any government oversight, it falls upon the workers to hold the line against these kinds of unscrupulous employers.”

According to Nancy J. Leppink, deputy administrator of the Department of Labor’s Wage and Hour Division (WHD), the division has increased its number of investigators. They help to enforce minimum wage, overtime pay, record-keeping, child labor and other labor laws.

This reverses a trend cited by the Government Accountability Office, which found that enforcement actions by the WHD decreased from 51,643 in 1998 to 29,584 in 2007, despite an increase in the number of worksites and employees. The number of investigators in the WHD decreased by 20 percent during this period, falling to just 732 nationwide in 2007.

“Since  2009, the WHD has hired more than 300 investigators, bringing the agency’s total to more than 1,000 investigators,” Leppink wrote in an email. “In 2011, WHD collected a record number of back wages, which totaled $224.8 million, and helped over 275,000 workers. These additional resources, coupled with WHD’s changes to how it prioritizes its work to be more strategic, have clearly revived WHD’s enforcement program on behalf of the workers in this country.”

She added that more than 600 of WHD’s investigators speak a language other than English, including Spanish, Cantonese, Mandarin, Korean, Japanese and Vietnamese.

“Some of our WHD staff are fluent in many languages,” Leppink wrote. “We also have available a language interpretive service which can assist with translation in more than 170 languages.”

Room for Improvement

While Lin called these developments “laudable,” she’d said she would like to see the specifics of how these resources are allocated.

“Navigating a wage claim is extremely complex, and in some cases takes more than a year,” she said. “Telephonic access is a good step, but the critical stage of the investigation is [done] onsite and typically includes interviewing an employer who might be monolingual and employees who speak many different languages. The DOL should take proactive steps to figure out what communities are in more need of language access among its staff investigators.”

There still may be hope for wage theft victims like Kim. Some of these cases do have happy endings.

Earlier this month, three Korean chefs were able to recover nearly $40,000 in unpaid wages from a sushi restaurant after one, who had worked with AALDEF before, organized them to take action.


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March 03rd, 2014

3/3/2014

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CORPORATE FRAUD RECOVERY AND TPP ARE THE TWO TOP ISSUES IN THIS ELECTION RACE. IF YOUR POL IS NOT MAKING THAT FRONT AND CENTER....THEY ARE NEO-LIBERALS WORKING FOR WEALTH AND PROFIT-----LOOK BELOW AT BERNIE SANDERS SHOUTING FRAUD NEEDS TO BE RECOVERED!!!!


Regarding the continued error in the phrase 'wealth inequity':

Again Basu tries to inform listeners of regional economic prosperity while failing to speak of the economic balance that will come when massive corporate fraud of tens of trillions of dollars comes back to government coffers and individual's pockets.  Until that rebalancing occurs, we cannot know one region's economic health over another.  Now, it so happens that the areas listed by Basu are indeed the areas front and center in these massive frauds along with the national corporate headquarters around Washington DC.  

WE ARE TELLING PEOPLE REPORTING THAT THERE IS GREAT WEALTH INEQUITY THAT YOU DO NOT CLAIM A BANK ROBBER RICHER THAN THE BANK FROM WHICH HE STOLE THE MONEY.

If you listen to pundits or politically align media like neo-liberal MSNBC you will hear this mantra....WE HAVE TO REVERSE WEALTH INEQUITY and not once do they say IT'S RULE OF LAW THAT WILL DO IT! They are pretending we are back in the 1960s and simply need progressive policies as if the massive public wealth fraud never happened.  Robert Reich is a neo-liberal economist who was part of the Clinton Administration as Labor Secretary when all the policy creating this third world status of our country to gain hold.  Nafta and breaking Glass Steagall assured this massive wealth inequity and unaccountable global corporate rule would occur.  Neo-liberals like Clinton, Reich, and Obama work to see that wealth consolidation indeed occurs in any way possible...ergo, suspension of Rule of Law.

IF A POLITICIAN OR PUNDIT IS SHOUTING THERE IS WEALTH INEQUITY WITHOUT SHOUTING FOR JUSTICE FROM MASSIVE CORPORATE FRAUD-----WHICH WILL ITSELF REVERSE THIS WEALTH INEQUITY----THEY ARE WORKING FOR THOSE COMMITTING THE FRAUD.

We know of course that New York City is ground zero for the frauds and therefor little of the wealth they claim is actually theirs......it is our home equity, retirement, pensions, health care, and public assets.  WE OWN MUCH OF NYC WEALTH.  San Francisco has legitimate wealth with the TECH industry although they are evading taxes.  This area is ground zero for subprime mortgage, defense, and for-profit education industry frauds.  So, when all of that wealth is taken from San Francisco's economy....they will be ranked differently in wealth inequity.  Washington is of course ground zero for all of the Federal contract fraud in the trillions of dollars and with it are the headquarters of all of the global corporations fat with fraud.  When those fraudulent gains come back to the citizens and government coffers, that area will be ranked differently.  So, you can see that Basu's willingness to spout stats that have no basis in reality makes US media on par with the Romanian media in free press.  FREE PRESS HOLDS POWER ACCOUNTABLE....IT DOES NOT PROPAGATE PROPAGANDA.  If the people at the top think the American people are going to let the stealing of tens of trillions of dollars go------they are indeed out of touch!





Should the federal government being doing more to investigate fraud in the financial industry?  Bloomberg Poll

Yes - 93% (4385 votes)

No - 7% (322 votes)

Total Votes: 4,707 Percentages may not add up to 100% due to rounding





The assets of the big banks mostly belong to the public as bringing back fraud and recovering damages would make these global banks into the regional banks we need them to be.  There is not a bank executive known to play the most obvious roll in these massive frauds that is not back working in finance earning tons of money again.  THIS IS SUSPENSION OF RULE OF LAW AND WHEN A GOVERNMENT SUSPENDS RULE OF LAW, IT SUSPENDS STATUTES OF LIMITATION.

Below you see only an example of the costs of damages to the American people.....there are tens of trillions in actual corporate frauds yet to be recovered.  Imagine allowing rogue financial firms like Moody's and Standards and Poor (S & P)......tell government pension managers that pensions have to be cut because 1/2 their value was lost in financial fraud that has yet to be recovered.

 THIS IS THIRD WORLD AND SHOWS WE HAVE A KLEPTOCRACY IN PLACE AND WE NEED TO SHAKE THESE BUGS FROM THE RUG.  NEO-CONS AND NEO-LIBERALS ARE THE BUGS MOVING ALL WEALTH TO THESE GLOBAL CORPORATE COFFERS.


Now, we know as well that all that time writing the Financial Reform Bill and yet not implemented and enforced has the economy ready to collapse yet again.  We know as well that neo-liberals took over from the neo-cons the oversight of corporate writing of TPP.  TPP negates all of what the Financial Reform Bill does.  Do you really think your pol did not know that ending US sovereignty with all the US Constitutional protections of WE THE PEOPLE AND BILL OF RIGHTS would of course make the Financial Reform Bill null and void?  OF COURSE THEY KNEW AS THEY SPENT THE TIME SUSPENDING FRAUDULENT ACCOUNTABILITY.  We will act as though we are doing something as we ignore that no justice in massive fraud occurs.





Five years ago today, Lehman Brothers went bankrupt.


Instantly and inevitably, the house of cards otherwise known as Wall Street collapsed.

But after getting bailed out by the American taxpayers, Wall Street is doing just fine.

The people of Main Street? Not so much.

Here are some numbers to think about this Sunday morning.

    Amount the crash cost the U.S. economy: $22 trillion

    How much everyone would get if that $22 trillion were divided equally among the U.S. populace: $69,478.88

    Assets of the four biggest banks in America — JPMorgan Chase, Bank of America, Citigroup and Wachovia/Wells Fargo — when they were “too big to fail” in 2008: $6.4 trillion

    Assets of those four banks today: $7.8 trillion

    Of the 63 former Lehman Brothers employees identified by a bankruptcy examiner as being aware of an accounting scheme Lehman used to mask its true finances, number who are employed in senior financial services positions today: 47

    Number of the 25 banks responsible for the bulk of risky subprime loans leading up to the crash that are back in the mortgage business: 25

    Chances that an American voter thinks that regulating financial products and services is “important” or “very important”: 9 in 10

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BERNIE SANDERS IS THE ONLY NATIONAL POL THAT SHOUTS OUT RECOVERING CORPORATE FRAUD IS A MUST.  WHETHER DEFENSE INDUSTRY FRAUD TO PROTECT VETERANS....WALL STREET FRAUD RECOVERY....OR THE FEDERAL RESERVE....GROUND ZERO FOR GREAT FRAUD-----

IF A POL IS NOT SHOUTING THIS---THEY ARE AIDING AND ABETTING.

See why saying there is wealth inequity in America before justice reverses much of this fraud is propaganda?




    
The Fed Audit

Thursday, July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.


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Below is a good analysis of the problem in Europe which of course is the same as that in the US.  This analysis has a second value because it shows that the same model of throwing Europe into sovereign debt crisis is now being used by US neo-liberals for the next Bain's Capital gutting of wealth assets from the public sector.  Remember, it was Iceland that from the start simply allowed the banks to default from the fraud and their economy is well on its way to being healthy while the US and Europe are still held hostage by TROIKA and WALL STREET/FED.  American academics have the same analyses showing direct cause and effect....proof of conspiracy to defraud.  We have all the data needed to show all of this CDS policy was a planned conspiracy that can be easily tried in court and won.

WE NEED LABOR UNION LAWYERS TO START ACTING AS US JUSTICE DEPARTMENT IN TAKING ALL OF THIS TO COURT AND DECRYING THE JUSTICE DEPARTMENTS SUSPENSION OF RULE OF LAW!


Anyone as nerdish as I am will like this research and analysis of how the same financial scheme brought to us with the subprime mortgage loan fraud with trillions of dollars of fraudulent loans insured with Credit Default Swaps by mainly one large insurance agency.....AIG all the time knowing these loans were toxic and all would collapse.  So, the Dodd Frank financial reform was to address this and of course nothing has been done and these same people are now thinking the subprime mortgage loan fraud was such a success as tens of trillions of dollars in fraud was left with the looters now think......let's do it again.

This time rather than the goal of capturing all of the nation's real estate holdings and consolidating land ownership to a few at the top.....this fraud has as its goal blowing up the public sector by super-sizing municipal debt and imploding the economy to make a crash that would create huge sovereign debt default.  You can do that only if you again use the Credit Default Swap insurance so that as everyone else loses all their wealth, you have this insurance that protects the very people imploding the economy.  None of this is legal as banks deliberately hid sovereign debt and municipal debt with financial instruments so more debt could be taken on.....ergo, the implosion we have in Europe in 2008.

This is important because the same thing is now happening in the US these few years of Obama's term as US state governors and mayors.....like O'Malley and Rawlings-Blake are doing to you and me what was done in the PIIGS nations in Europe.  Loading up municipal debt while insuring it all with Credit Default Swaps.  You know this is a plan as municipal bonds and public debt have never been allowed to use these CDS and now they are.  So, as governors and mayors load our government coffers with tons of debt tied to Wall Street financial instruments, the investment firms are protecting themselves from loss when the economic crash comes while the public sector.......MECU and the State of Maryland/City of Baltimore will default on their terms and lose most of the investment.

AGAIN, THIS IS ALL PUBLIC MALFEASANCE....IT IS ILLEGAL AND ALL TERMS CAN BE VACATED BECAUSE INVESTMENT FIRMS KNOW THIS IS ALL FRAUDULENT.

This article below is great and it is very long so I could not copy it here.......go to the webpage to see it in its entirety to see how these 1% are working to steal all that is public!


Analysis of European Sovereign Credit Default Swap during theSovereign Debt Crisis in Portugal, Ireland, Italy and Spain.
 byBerkay OrenA dissertation submitted in partial of theMSc Finance and InvestmentAtThe University of BrightonFaculty of Management and Information SciencesBrighton Business School(May 2013)


  Abstract

This thesis has represented the determinants of sovereign CDS spreads during currentsovereign debt crisis in periphery countries namely Ireland, Italy, Portugal and Spain. The period of analysis is between 4 March 2008 and 3 May 2012. After the demise of LehmanBrothers, the sovereign CDS market has attached significant attention and the credit marketshave been issue to an unprecedented re-pricing of credit risk. Moreover, Lehman Brothersdevastated investor confidence and decrease in the availability of credit. Massive assistanceof the banks was heightened public sector deficit. Thus it has led to high level sovereign debt.This means that the risk of default of sovereign became real in periphery countries. Thisthesis has been classified three phases. Firstly an analysis of credit default swaps and their use in the financial World. Secondly development of the European periphery economy on amacro level in Portugal, Ireland, Italy and Spain. Finally the statistical approach of ordinaryleast square is to be analysed. Main purpose of this thesis will identify sovereign creditdefault swaps associated with the current sovereign debt crisis.


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We want to remember that the reason Clinton and Bush targeted the low-income mortgage market for the subprime mortgage frauds was first, they wanted to consolidate real estate ownership and second they used the Federal assistance for these loans over and over again....this is where a large part of the fraud fleecing government coffers came.  They did it on purpose because they knew they would have someone in office that would suspend Rule of Law....if not Obama, Hillary, or Romney.  Sending low-income people to higher education and placing them in homes.....under programs filled with fraud was only cover for this massive fraud.  WE KNOW IF THE INTENT IS TO DO GOOD, YOU DO NOT ALLOW MASSIVE FRAUD OF THE PROGRAM TO OCCUR.  The same is happening today in the GREEN industry as a good program is riddled with fraud allowing 1/2 of the green spending to be defrauded.  

IF NO OVERSIGHT IS GIVEN AND NO JUSTICE IN PLACE....THE INTENT WAS INDEED TO DEFRAUD.

Below is a look at just the subprime mortgage fraud....we know that financial fraud was widespread and across corporate industries as well.  So, the few hundreds of billions of dollars collected in 'settlements' does nothing for tens of trillions of dollars in fraud.  THIS IS WHY ALL PUBLIC PROGRAMS, SERVICES, AND ASSETS ARE BEING HANDED TO PRIVATE ENTITIES UNDER THE GUISE OF STARVED GOVERNMENT BUDGETS.



Wall Street Bank Fraud Massive

Details
    Written by Dan McGookey

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The New York Times reported this week that Wall Street is now predicting that its Banks will be anteing up over $50 Billion in settlement payouts with the government and others as a result of their massive fraud perpetrated through the securitized lending system during the first eight years of this Century. Even this astounding number doesn't begin to tell the story of how widespread that fraud was, or the toll it took on this Country's economy, however.

Consider the fact that tens of trillions of dollars of wealth changed hands from Main Street to Wall Street in less than a decade through the vehicle known as securitized lending. That is the process whereby a mortgage loan is magically transformed into a stock certificate or security simply by bundling it with thousands of others and then selling "mortgage-backed certificates" (or stock) in that pool of loans. The problem was that the Wall Street Bankers were able to sell the stock in the loan pool at 10-20 times the face value of the loans. And the reason we say that tens of trillions of dollars shifted from Main Street to Wall Street by virtue of the corrupt securitized lending system is because it was city and state governments, retirement funds, insurance companies and the like who were the suckers buying up the absurdly over-priced stock. In other words, the money was stolen out of the wallets and purses of all Americans.

Even through the estimated amount of the penalties is tantamount to a slap on the wrist for the Banks, it at least serves to highlight the significance of Wall Street's corruption. And the news reports of that corruption will no doubt keep coming with increasing frequency as the depth of the fraud continues to be exposed. All we can hope for is that as that happens, our own Government's complicity in the scandal will be exposed as well.

Reverse Bank Robbery

The Wall Street Banksters obviously never read or simply didn't take heed of the following preaching of Socrates:

"Rather fail with honor than succeed by fraud."

Avoiding the Foreclosure Trap

As a homeowner struggling for mortgage relief with your bank, don't forget to be mindful of the following time-honored sage advice; "Forewarned is forearmed". Realize that the fraud involved with your mortgage didn't end after your loan's origination. Because foreclosure is a profitable business, there is a very good chance the fraud is continuing, along with your victimization.


Kate Eyster and Lauren McGookey contributed to this article.

Copyright 2014 Daniel L. McGookey


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Let's look at one other corporate fraud...this one tax fraud that is wide-spread and easy to find.  The IRS could  pay down much of the national debt itself by recovering corporate tax fraud yet we are told by neo-liberals those bad republicans are defunding the IRS.....indeed, it is being starved.  Yet, the financial settlements in the hundreds of billions requires that a percentage of all settlements go to rebuilding and strengthening fraud detection and prosecution......IT IS SELF-FUNDING.  So, all we need are state pols that shout loudly that none of this is happening----IT IS THE VOICE OF PUBLIC OFFICIALS THAT WOULD FORCE THESE CROOKS TO DO THE RIGHT THING.  IT IS THEIR SILENCE THAT IS DUPLICITOUS.  

IN MARYLAND, IT WAS ALL OF THE CURRENT POLS IN OFFICE THAT ALLOWED THIS MASSIVE CORPORATE FRAUD TO HAPPEN AND INDEED MUCH WEALTH INEQUITY IN MARYLAND IS A RESULT OF THIS FRAUD AND LACK OF JUSTICE!

Joe Biden's Delaware and Harry REid's Nevada are the two states with the most international business geared to off-shoring and hiding wealth.

THIS BILL WAS PASSED IN 2006 JUST AS THE DISMANTLING OF OVERSIGHT AND DEFUNDING WAS AT ITS HEIGHT.  REMEMEBER, THE RECOVERY OF FRAUD BY THE IRS SUPPORTS ALL THE OVERSIGHT AND ACTION NEEDED. THE IRS HAS PLENTY OF MONEY TO DO THE JOB WITHOUT CONGRESSIONAL FUNDING.

Trillions in fraud here....tens of trillions there.....makes for tons of lost revenue to the economy from corporate fraud at Federal, state, and local level.  When people like Basu or Robert Reich speak of wealth inequity as needing legislation and not Rule of Law...THEY ARE WORKING FOR WEALTH AND PROFIT.





Illegal Offshore Account Tax Fraud and Transfer Price Schemes Are Two Forms of IRS Tax Fraud That Can Be the Basis Of An IRS Whistleblower Reward Lawsuit



 by Illegal Offshore Account Tax Fraud Lawyer and Transfer Payment Tax Fraud Whistleblower Reward Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud and Transfer Payment Tax Fraud are two forms of corporate tax fraud that are committed by large multinational corporations.  The IRS is offering rewards and protections for IRS whistleblowers and IRS informants that work through Illegal Offshore Account Tax Fraud Whistleblower Lawyers, Multinational Corporate Tax Fraud Whistleblower Lawyers, and Transfer Payment Tax Fraud Whistleblower Lawyers to identify tax fraud schemes that cost the United States millions of dollars.

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, illegal offshore account tax fraud whistleblowers, transfer payment tax fraud whistleblowers, and other corporate tax fraud whistleblowers to expose corporate tax fraud and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.

Illegal Offshore Account Tax Fraud Lawsuit, Corporate Tax Fraud Whistleblower Reward Lawsuit, IRS Illegal Offshore Account Tax Fraud Whistleblower Reward Lawsuit, Transfer Price Scheme Tax Fraud Lawsuit, IRS Whistleblower Reward Lawsuit, & IRS Whistleblower Payment for Detection of Fraud Lawsuit Information

In 2006, the Tax Relief and Health Care Act that was signed into law included a whistleblower reward amendment that created mandatory reward language to the IRS to create a mandatory economic incentive to encourage tax fraud whistleblowers to step forward to help the government detect large scale fraudulent schemes.  By offering large potential rewards for reporting multimillion tax fraud schemes, the IRS has received hundreds of tax fraud tips from tax fraud informants regarding taxpayer fraud and massive violations of the tax code costing taxpayers Billions of dollars.  Many of the tips already received include fraud schemes of hundreds of millions and tens of millions of dollars.  It is estimated that this programs will result in hundreds of billions of dollars or even Trillions of dollars in tax fraud being detected.

The economic incentives in the Tax Whistleblower Reward Programs are designed to encourage insider tax fraud informants and tax fraud whistleblowers with knowledge and evidence of large tax violations and tax fraud schemes to step forward and report the massive tax fraud.  The IRS is hoping that there will be several tax fraud whistleblowers and tax fraud informants that will help them detect and collect on an estimated $3 Trillion in illegal offshore accounts as well as several other tax-avoidance schemes that have been perpetrated by billionaires and millionaires as well as large corporations.

The IRS Whistleblower Reward Amendment requires the Internal Revenue Service to pay rewards to whistleblowers who exposed large scale tax fraud and taxpayer fraud including major tax underpayments, violations of the Internal Revenue Code, or other fraudulent schemes to unlawfully not pay taxes.  The IRS Whistleblower Reward Program is aimed at large multimillion dollar fraud schemes and tax violations in that the total amount of fraud or underpayment of taxes in dispute would have to exceed $2 millions.

The IRS will pay the tax fraud whistleblower or tax fraud informant if the information presented substantially contributes to the collection of money by the IRS.  As such, the tax fraud whistleblower should have inside knowledge of and documentation of the tax fraud to be successful.     

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Transfer pricing schemes involve the overpricing of imports and/or the underpricing of exports between related companies in different countries for the purpose of transferring profits or revenue out of the United States in order to evade taxes. The profits and revenue end up in a country that has a lower corporate tax rate than the US.  These fraudulent pricing schemes can be used both for stock manipulation and corporate tax fraud.  For more information on Corporate Tax Fraud Whistleblower Actions, please go to the following: Tax Fraud Whistleblower Reward Lawsuit, IRS Tax Fraud Whistleblower Award Lawsuit, and Corporate Tax Fraud Lawsuit Information web page.

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To qualify for a whistleblower award under section 7623 (b), the information must:

    Relate to a tax noncompliance matter in which tax, penalties, interest, additions to tax and additional amounts in dispute exceed $2,000,000.00

    Relate to a taxpayer, and in the case of an individual taxpayer, one whose gross income exceeds $200,000.00 for at least one of the tax years in question

If the information meets the above criteria and substantially contributes to a decision by the IRS to take administrative or judicial action that results in the collection of tax, penalties, interest, additions in tax and additional amounts, then the IRS will pay an award of at least fifteen percent, but not more than thirty percent of what the IRS collects.  26 U.S.C. at 7623(b)(1).

The IRS has authority to reduce the award to ten percent if the claim is based upon specific allegations disclosed in certain public information (e.g. government audits) and determines that the whistleblower's information was not the original source of information.  Further, the IRS also has the authority to reduce the award or not give an award if the whistleblower planned and initiated the actions that led to the tax underpayment.

The IRS Whistleblower Reward Program, Whistleblower Recovery Program, and IRS Corporate Tax Fraud Whistleblower Rewards

The Tax Relief and Health Care Act of 2006, signed into law on December 20, 2006 amended the Internal Revenue Code to provide rewards for turning in tax cheats including corporations and people that are committing tax fraud.  According to the IRS, the primary purpose behind the Tax Relief and Health Care Act of 2006 "was to provide incentives for people with knowledge of significant tax non-compliance to provide that information to the IRS."  The new program generally requires the IRS to pay rewards to whistleblowers if the information presented substantially contributes to the collection of money by the IRS.  The law created the IRS Whistleblower Office to receive, evaluate, and determine whether to pay the whistleblower an award.

The IRS has funded a robust IRS Whistleblower Program.  The new program focuses on large tax fraud and tax underpayment claims.  To qualify for the rewards, $2 million of taxes, penalties, and interest must be involved.  Individual taxpayers must have $200,000.00 of taxable income in any year.   The reward is from fifteen to thirty percent of the tax collected, depending upon the extent to which the whistleblower contributed to the additional collection.  If the IRS determines that the whistleblower's information was not the original source of information, but still contributes to the additional collection, the IRS can still award up to ten percent of the amount collected.

It is interesting to note that Congress passed the original tax whistleblower rewards law in March 1867 for people who reported tax crimes.  The law was enacted prior to a federal income tax, but was not effective because payment of the tax whistleblower reward was voluntary and no rewards were paid out until the rewards became mandatory through the 2006 amendment.

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As a Financial Fraud Whistleblower Lawyer and Securities Fraud Whistleblower Lawyer, Jason S. Coomer commonly works with other powerful financial fraud and securities fraud whistleblower lawyers to handle large Securities Fraud Whistleblower Lawsuits, Securities Fraud Bounty Actions, Commodity Fraud Bounty Claims, and other Financial Fraud Lawsuits.  He also works on Medicare Fraud Whistleblower Lawsuits , Defense Contractor Fraud Whistleblower Lawsuits, Stimulus Fraud Whistleblower Lawsuits, Government Contractor Fraud Whistleblower Lawsuits, and other government fraud whistleblower lawsuits.

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by Illegal Offshore Account Tax Fraud Paid Informant Lawyer and Transfer Payment Tax Fraud Paid Informant Lawyer Jason Coomer

Illegal Offshore Account Tax Fraud Whistleblower Lawyer, Multinational Corporate Tax Fraud Whistleblower Lawyer, and Transfer Payment Tax Fraud Whistleblower Lawyer, Jason S. Coomer, works with corporate tax fraud whistleblowers, IRS tax fraud whistleblowers, and other tax fraud whistleblowers that are stepping up and blowing the whistle on IRS tax fraud, corporate tax fraud, IRS code violations, and other forms of tax fraud.  If you are the original source with special knowledge of tax fraud and are interested in learning more about a tax whistleblower lawsuit, please feel free to contact Illegal Offshore Account Tax Fraud Whistleblower Lawyer and Transfer Payment Corporate Tax Fraud Whistleblower Lawyer Jason Coomer via e-mail message.



_________________________________


Much of the wealth Basu speaks is tied to the Washington and San Franscisco, NYC is from this massive corporate fraud.  it is not real wealth.  Keep in mind that the defense industry budget is one of the largest.  NSA can see all, yet they could not build accountability into these computer systems.  Luckily, WIKILEAKS had a download of defense industry contracting and is now being reviewed by investigative journalists and international justice organizations.


JUST RECOVERING CORPORATE FRAUD WOULD PAY DOWN GOVERNMENT DEBT AT ALL LEVELS AND MAKE ALL PUBLIC TRUSTS AND PENSIONS FLUSH WITH MONEY! DO YOU HEAR YOUR POLS SHOUTING THIS?


 Grand Theft Pentagon, Massive Waste and Fraud

Politics / US Military Nov 21, 2013 - 12:39 PM GMT

By: Stephen_Lendman

Politics

Longstanding Pentagon operations reflect a black hole of unaccountability. Reuters published a two-part report. In July, it discussed the Defense Department’s “payroll quagmire.”

It’s bureaucracy is stifling. It’s “unyielding,” said Reuters. Active duty and retired military personnel are routinely cheated. Pay errors are widespread.

Correcting “or just explaining them can test even the most persistent soldiers.” Weeks or months pass without resolution.

Some personnel are cheated on pay. Others are penalized for overpayments. Their earnings are “drastically cut” unfairly. Precise figures are impossible to calculate.

At issue is “the Defense Department’s jury-rigged network of mostly incompatible computer systems for payroll and accounting, many of them decades old, long obsolete, and unable to communicate with each other,” said Reuters.

“The Defense Finance and Accounting Services (DFAS) still uses a half-century-old computer language that is largely unable to communicate with the equally outmoded personnel management systems employed by each of the military services.”

A December 2012 Government Accountability Office (GAO) report revealed unaccountable accounting. No way exists to assure correct amounts are paid. Errors can’t be tracked.

________________________________

As neo-liberals now pretend that wealth inequity exists and not simply a failure of justice to occur in moving money back to government coffers and individual's pockets, WE THE PEOPLE MUST SHOUT LOUDLY THE TRUTH---THAT JUSTICE WILL BE SERVED!!!



Bill Black: How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics



Posted on June 6, 2013 by Yves Smith

This article is part of an ongoing AlterNet series, "The Age of Fraud."

What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that’s what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis of the 1980s to the 2007-'08 financial crash, this deadly combination always appears.

A dangerous cycle begins when prominent economists pander to plutocrats and bought politicians, who reward them with top posts, where they promote the perverse economic policies that cause fraud epidemics. Crises develop, and millions of people are ripped off. Those who fight for truth are ignored or ruined. The criminals get wealthier, bolder and more politically powerful, and go on to hatch even more devastating cons.

The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” — cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.

At the heart of Greenspan’s failure lies an ethical void in the brand of economics that has dominated American universities and policy circles for the last several decades, a brand known as “free market fundamentalism” or the “neoclassical school.” (I call it “theoclassical economics” for its quasi-religious belief system.) Mainstream economists who follow this school assert a deeply flawed and controversial concept known as the “efficient market hypothesis,” which holds that financial markets magically regulate themselves (they automatically “self-correct”) and are thus immune to fraud. When an economist starts believing in that kind of fallacy, he is bound to become blind to reality. Let’s take a look at what blinded Greenspan:

    Greenspan knew that markets were “efficient” because the efficient market hypothesis is the foundational pillar underlying modern finance theory.
    Markets can’t be efficient if there is control fraud, so there must not be any.
    Wait, there are control frauds! Tens of thousands of them.
    Then control fraud must not really be harmful, or markets would not be efficient.
    Control fraud, therefore, must not be immoral. As crime boss Emilio Barzini put it in The Godfather, “It’s just business.”

As delusional and immoral as this “logic” chain is, many elite economists believe it. This warped perspective has spawned policies so perverse that they turn the world of finance into the optimal environment for criminals. The upshot is that most of our elite financial leaders and professionals have thrown integrity out the window, and we end up with recurrent, intensifying financial crises, de facto immunity for our most elite criminals, and the rise of crony capitalism. Let’s do a little time travel to see exactly how this plays out.

How to Stoke a Savings and Loan Fiasco

The Lincoln Savings and Loan Association of Irvine, California was at the center of the famous crisis that rocked the financial world in the 1980s. A once prudently run company morphed into a casino when S&L associations became deregulated and started doing risky business with depositors’ money. Businessman, GOP darling, and anti-pornography crusader Charles Keating, ironically nicknamed “Mr. Clean,” took over Lincoln in 1984 and got the casino rolling. (It was a special kind of casino where the games were rigged – and not in favor of newlywed brides who were the subject of sexual extortion in Casablanca.) In a classic case of control fraud, Keating devoted himself to turning the company into a weapon of mass financial destruction and a source of wealth for his family. Keating’s “weapon of choice” for his frauds was accounting.

Keating went on a spree buying land, taking equity positions in real estate projects, and purchasing junk bonds. In 1985, the Federal Home Loan Bank Board (FHLBB), where I was the staffer leading the regulation efforts, grew alarmed at the new activities of savings associations like Lincoln. So we made a rule: S&Ls could not put more than 10 percent of company assets in "direct investments” – an activity that led to very large losses.

Alan Greenspan, chairman of an economic consulting firm at the time, urged us to permit Lincoln Savings to go full steam ahead. His memo supporting Lincoln’s application to make hundreds of millions of dollars in direct investments praised the company’s management (Keating) and claimed that Lincoln Savings “posed no foreseeable risk of loss.”

The FHLBB rejected Lincoln’s request to exceed the rule’s threshold because direct investments were a superb vehicle for accounting fraud – they made it easy to hide losses and to create fictional income. Nevertheless, Lincoln continued to violate the rule and created fictional (backdated) board consents with hundreds of forged signatures to make it appear that the investments were “grandfathered” under the rule. The hundreds of millions of dollars in unlawful direct investments were used for fraudulent purposes by Lincoln Savings’ controlling officers and caused enormous losses – many of them to elderly citizens who were conned into buying the junk bonds of Lincoln Savings’ holding company. The massive losses on Lincoln’s illegal direct investments were a major reason those bonds were worthless.

Hoping to use his political clout to continue the fraud, Keating hired Greenspan to lobby the senators who eventually became the known as the “Keating Five.” I remember well when these senators intervened at Keating’s request to try to prevent me and my colleagues from taking an enforcement action (or conservatorship) that would have saved over a billion dollars. (I took the notes of that meeting, which led to the Senate ethics investigation of the Keating Five.) The cronyism was so thick in Washington that William Weld, then a top Department of Justice official and later the Republican governor of Massachusetts, actually tried to gin up a criminal investigation of the regulators rather than Keating at the request of Lincoln’s lawyers who had just left the DOJ! Eventually, Keating and many of the senior managers of Lincoln Savings were convicted of felonies and Lincoln Savings became the most expensive failure of the S&L debacle.

When you look back on this expensive fiasco, you see that the work of respected professional economists was frequently called upon to support the fraudulent activities. One of the ways Greenspan tried to advance Keating’s effort to have the courts strike down the direct investment rule was to use a study conducted by a less famous economist, George Benston, who showed that S&Ls that violated the direct investment rule earned higher profits than those who didn’t. So he recommended the rule be dropped. Small problem: In less than two years all 33 of the companies Benston studied had failed. Most were accounting control frauds in which executives cooked the books to show fictional profits.

Keating had a talent for obtaining endorsements from prominent economists. He got Daniel Fischel to conduct a study that purported to show that Lincoln Savings was the best S&L in America. Fischel invoked the efficient market hypothesis to opine that our examiners provided no useful information because the markets had already perfectly taken into account any information to which we had access.  In reality, of course, this was nonsense, and Lincoln Savings was the worst S&L in the country.

Economists who pander to plutocrats have a great advantage over scholars in other fields: There is no reputational penalty among your peers for being dead wrong. Benston got an endowed chair at Emory, Fischel was made dean of the Univerisity of Chicago’s Law School, and Greenspan was made Chairman of the Fed. Those who got control fraud right and fought the elite scams and their powerful political patrons – people like Edwin Gray, head of the FHLBB, and Joe Selby, head of supervision in Texas – saw their careers ended.

Consider what that perverse pattern indicates about how badly ethics have fallen in the both economics and government.

How to Create a Regulatory Black Hole

Alan Greenspan was Ayn Rand’s protégé, but he moved radically to the wacky side of Rand on the issue of financial fraud. And that, friends, is pretty wacky. Greenspan pushed the idea that preventing fraud was not a legitimate basis for regulation, and said so in a famous encounter with Commodities Futures Trading Commission (CFTC) Chair Brooksley Born. “I don’t think there is any need for a law against fraud,” Born recalls Greenspan telling her. Greenspan actually believed the market would sort itself out if any fraud occurred. Born knew she had a powerful foe on any regulation.

She was right. Greenspan, with the rabid support of the Rubin wing of the Clinton administration, along with Republican Chairman of the Senate Banking Committee Phil Gramm, crushed Born’s effort to regulate credit default swaps (CDS). The plutocrats and their political allies deliberately created what’s known as a regulatory black hole – a place where elite criminals could commit their crimes under the cover of perpetual night.

Greenspan chose another Fed economist, Patrick Parkinson, to testify on behalf of the bill to create the regulatory black hole for these dangerous financial instruments. Parkinson offered the old line that efficient markets easily excluded fraud — otherwise, they wouldn’t be efficient markets! (Parkinson would later tell the Financial Crisis Inquiry Commission in 2011 that the “whole concept” of a related financial instrument known as an “ABS CDO” had been an “abomination”). Greenspan’s successor richly rewarded Parkinson for being stunningly wrong in his belief: Ben Bernanke appointed Parkinson — who had no experience as a supervisor or examiner — as the Fed’s head of supervision.

Lynn Turner, former chief accountant of the SEC, told me of Greenspan’s infamous question to his group of senior officials who met at the Fed in late 1998 or early 1999 (roughly the same time as Greenspan’s conversation with Born): "Why does it matter if the banks are allowed to fudge their numbers a little bit?" What’s wrong with a “little bit” of fraud?

Conservatives often support the “broken windows” theory of criminal activity, which asserts that you stop serious blue-collar crime by cracking down on minor offenses. Yet mysteriously, they never apply the concept to white-collar financial crimes by elites. The little-bit-of fraud-is-ok concept got made into law in the Commodities Futures Modernization Act of 2000, which created the regulatory black hole for credit default swaps. That black hole was compounded by the Commodity Futures Trading Commission under the leadership of Wendy Gramm, spouse of Senator Phil Gramm.

Enron’s fraudulent leaders were delighted to exploit that black hole, because they were engaged in a massive control fraud. They appointed Wendy Gramm to their board of directors and proceeded to use derivatives to manipulate prices and aid their cartel in driving electricity prices far higher on the Pacific Coast. In a bizarre irony, the massive increase in prices led to the defeat of California Governor Gray Davis (the leading opponent of the cartel) and his replacement by Governor Schwarzenegger – a man who was part of the group that met secretly with Enron’s leadership to try to defeat Davis’s efforts to get the federal regulators to kill the cartel.

How damaging was Greenspan’s dogmatic and delusional defense of elite financial frauds in the case of Enron? If you look closely, you can see that Enron brought together all the critical elements of a financial crisis: big-time accounting control fraud, derivatives, cartels, and the use of off-balance sheet scams to inflate income and hide real losses and leverage. On top of all that, many of the world’s largest banks aided Enron and its extremely creative CFO Andrew Fastow to create frauds. The Fed could have responded by adopting and enforcing mandates to end the criminal practices that were driving the epidemic, but it didn’t. Instead, Greenspan and other Fed economists championed Enron’s leadership and cited the company as proof that regulation was unnecessary to prevent control fraud. They were so extreme that they attacked their own senior supervisors for daring to criticize the banks’ role in aiding and abetting Enron’s activities.

Later, when risky derivatives activities and control frauds at large financial institutions were pushing us toward the catastrophic crash of 2007-2008, the Fed took no meaningful action based on the lessons learned from Enron. Greenspan and the senior leadership of the Fed had learned absolutely nothing, which shows how disabling economic dogma is to regulators – making them worse than simply useless. They become harmful, again attacking their supervisors for criticizing the banks’ fraudulent “liar’s” loans. When Bernanke placed Patrick Parkinson (an economist blind to fraud by elite banksters) in a supervisory role at the Fed, he sealed the fate of millions of Americans whose financial well-being would be sucked right into that regulatory black hole – and removed the ability of the accursed supervisors to criticize the largest banks.

How to Protect Predatory Lenders

Finally, we come to the mortgage meltdown of 2008, when the entire housing industry went into freefall. Central to this crisis is the story of the liar's loan — mortgage-industry slang for a mortgage that a lender gives without checking tax returns, employment history, or anything else that might reliably indicate that the borrower can make the payments.

The Fed, and only the Fed, had authority under the Home Ownership and Equity Protection Act (HOEPA) to ban liar’s loans by all lenders. At a series of hearings mandated by Congress, dozens of witnesses representing home mortgage borrowers and state and local criminal investigators urged the Fed to do this. The testimony included a study that found a 90 percent incidence of fraud in liar’s loans.

What did Greenspan and Bernanke do? Exactly nothing. They consistently refused to act.

Greenspan went so far as to refuse pleas to send Fed examiners into bank holding company affiliates to find the facts and collect data on liar’s loans. Simultaneously, the Fed’s economists dismissed the warnings from progressives about fraudulent liar’s loans as “merely anecdotal.” In 2005, the desperate Fed regulators, blocked by Greenspan from sending in the examiners to get data from the banks, resorted to simply sending a letter to the largest banks requesting information. The Fed supervisor who received the banks’ response to that letter termed the data “very alarming.”

If you suspect that the banks would typically respond to such requests by understating their problem assets significantly, then you have the right instincts to be a financial regulator.

By 2003, loan quality was so bad that it could only be explained as the inevitable product of endemic accounting control fraud and it continued to collapse through 2007 until the bubble burst. By 2006, over two million fraudulent liar’s loans were originated annually. We know that it was overwhelmingly lenders and their agents who put the lies in liar’s loans. Liar’s loans make the perfect “natural experiment” because no governmental entity ever required a lender or a purchaser (and that includes Fannie and Freddie) to make or purchase a liar’s loan. Banks made, and purchased, trillions of dollars in liar’s loans because doing so lined the pockets of their controlling officers.

The Fed’s leadership, dominated by economists devoted to false theory, was enraged when the Fed’s supervisors presented evidence of endemic control fraud by the most elite lenders, particularly in the making of fraudulent liar’s loans. How dare the supervisors criticize our most reputable bank CEOs by showing that they were making hundreds of thousands through scams?

Bernanke finally acted under Congressional pressure on July 14, 2008 to ban liar’s loans. He cited evidence of endemic fraud available since early 2006 – evidence which would have been available way back in 2001 had Greenspan moved to require examiners to study liar’s loans. Even in the face of overwhelming evidence, Bernanke delayed the ban for 18 months — one would not wish to inconvenience a fraudulent lender, after all.

We did not have to suffer this crisis. Economists who were not blinded by neoclassical theory, like George Akerlof (who won the Nobel Prize in 2001) and Christina Romer (adviser to President Obama from 2008-2010), had warned their colleagues about accounting control fraud and liar’s loans, as did criminologists and regulators like me. But Greenspan (and Timothy Geithner) refused to see the obvious truth.

Alan Greenspan had no excuse for assuming fraud out of existence, and his exceptionally immoral position on fraud and regulation proved catastrophic to America and much of the world. We cannot afford the price, measured in many trillions of dollars, over 10 million jobs, and endless suffering, of unethical economists.
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