CAFR summary: if $600B ‘fund’ can’t fund $27B pension, $16B budget deficit, why have it?

Let’s summarize what we’ve documented so far about the data of California’s 2011 Comprehensive Annual Financial Report (CAFR) and what it means for the state’s 12 million households (22-minute television interview to explain this data here):

So the natural question is if the state’s withholding of $600 billion in our cash and investments does not fund pensions, address a budget deficit, or prevent devastation to infrastructure, how can we best restructure the purpose and use of OUR MONEY for optimal public benefits?

I see three obvious solutions.

I asked this of my two state representatives, Senator Carol Liu and Assemblymember Anthony Portantino. Carol and her consultant, Robert Oakes, has not yet answered this question. Anthony responded, but failed to address the question.

I’m also addressing law enforcement whether such non-disclosure of withheld taxpayer cash and assets by public officials is a crime while they tell us the only option is our austerity.

I’ll write with updated status of Senator Liu, Assemblymember Portantino, and law enforcement agencies.

Remember, this is a case study where I’m investing my time to explore and document this issue in the public interest. You are welcome to do the same 🙂

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  • Dave

    So Carl, you are proposing to raid the investment funds of the CALPERS pension fund? 400 billion of these investments are the states retirement funds. I hear day in and day out that it is UNDERFUNDED and we must slash the retirees pensions! Pete Wilson right wing cronies have tried to do that twice now. There is no EXTRA in that fund to rob to pay for day to day operations. All the other funds you listed were mostly voted in under the initiative process, so the taxpayers of California wanted those funds there for their intended purpose! Roads, clean water, tobacco education etc… Sacramento cannot legally tap them. That is what the taxpayers voted for. You think you have uncovered some vast conspiracy, but this is just normal business in a state that is the worlds 7th largest economy. Raiding the pension plans of elderly retiree’s who put their 40 years in is not the answer to California’s woes! The state is in trouble because of declining tax revenue from high unemployment and reassessed property values from the housing collapse. This and the world economic crisis was brought on by an unholy alliance between our elected leaders and the major banks of the world running us into massive debt. There may be 600 billion in funds, but the state still has billions more in unfunded liabilities.

    • Carl Herman

      Thank you, Dave, for providing all the usual propaganda in one paragraph. You also fail to meet any professional or academic standard for refutation because you did not address the CAFR facts that the so-called “pension fund” only provides 4% of pension money, among those listed that you ignore.

      But I very much appreciate your perfect demonstration of bluster and emotional distraction from the facts that activists and concerned citizens can expect.

      You’ve done a wonderful job. Thank you again.

      Btw: I recommend that you reconsider your work as a minion to the 1%. Supporting policies that kill in the millions, harm billions in their global application of austerity and debt, and loot trillions has consequences to your future. You’ll have what you work for. I suggest a “Scrooge conversion” with benefits of truth, love, and competitive cooperation. But hey, that’s your call. Good luck with the future you choose.

  • gozounlimited

    In August 2009 California was covering its budget shortfalls by issuing IOUs to pay for services, making it the first state to issue its own fiat currency since the Civil War. The program ran into trouble when banks announced they wouldn’t keep cashing the IOUs.

    JP Morgan agreed to lend California $1.5 billion to fund the program to redeem the IOUs creating a
    plausible case that this was an indirect bailout by the US government of California. JP Morgan is deemed to big to fail, and can borrow from both the Fed and at reduced costs in the market because of its status. This makes it far easier for the bank to lend confidently to California. What’s more, JP Morgan can assume that if California were to come close to defaulting on the loan, the US government would bail out California.

    The risk to JPMorgan was virtually nil: The loan was repaid the next month in late September, when the state sold $10.5 billion of so-called revenue anticipation notes, or RANs — securities that would mature the following Spring. Individual investors flocked to the RAN offering as a place to stash cash, because the notes offered much more lucrative returns than money market funds and other short-term accounts paying next to nothing.

    Read more:
    Then again …… Calif. Borrows $6.7 Billion Cash From JPMorgan-Led Group ….in Oct. 2010

    California needed a loan from JP Morgan for two weeks even though lawmakers delayed about $5 billion of subsidies for schools and colleges until later in the year, to ease the two week cash crunch.

    California agreed to pay 1.4 percent on $10 billion to the banks, which also included Goldman Sachs Group Inc., for the bridge loan (at a cost of 140 million …. for a two week bridge loan).

    The bridge loan was California’s second in as many years. Treasurer Lockyer borrowed $1.5 billion in August 2009 from JPMorgan at an annual interest rate of 3 percent after a similar budget impasse forced the state to issue IOUs to pay some bills. The loan was repaid when Lockyer sold $8.8 billion of short-term notes a month later and used some of the proceeds to repay the debt.

    Everyone wanted to get in on the two week cruise …. so JPMorgan’s $3.125 billion loan was the largest of the group, followed by Goldman Sachs’s $1.5 billion. Wells Fargo & Co. lent $1 billion, followed by $500 million from Citigroup Inc., $325 million from Morgan Stanley and $250 million from the Golden 1 Credit Union.

    read more:
    And Again …..

    Instead of taking a (two week/monthly) loan from JP Morgan, in February 2012 California sold $1 billion of short- term notes to Barclays Plc and JPMorgan Chase & Co. to pay bills after tax collections in the biggest U.S. state by population trailed budgeted amounts, according to the treasurer’s office.

    Lockyer in July 2011 secured a $5.4 billion interim loan from Goldman Sachs Group Inc. (GS), Wells Fargo & Co. (WFC), and six other banks and investors. The treasurer took the loan anticipating a possible credit-market disruption as Congress debated raising the nation’s debt ceiling.

    Two months later he borrowed another $5.4 billion through revenue-anticipation notes that were supposed to carry the state through June. State and local governments commonly sell such notes to bolster cash flow until more tax receipts arrive later in the fiscal year. California repaid the interim loan with proceeds from that sale.

    The California Public Employees’ Retirement System, the largest public pension in the U.S., with $235.5 billion of assets, agreed last month to let the state delay making a $527 million payment until April to cover worker benefits.

    read more:
    QUESTION…..Why is California paying, millions, billions to borrow money for two weeks, one month, or ‘just in case’ the treasurer loses access to the credit market due to inaction by the U.S. Government to increase the Debt Limit? The only plausible answer would point to incompetence or fraud….and I’m pretty sure we can rule out incompetence. It is clear millions if not billions has been diverted form California Taxpayers, Counties, Universities and Pension Funds to fund a big fat fraud benefiting select investors.

    Create the Crisis…..Create the Cure …..

    • Carl Herman

      Well said and documented, gozounlimited. Thank you.

      • gozounlimited

        LOVE …. that You Are What You Is.

    • gozounlimited

      Criminogenic Environments, Bubbles and Financial Crises

      William Black, Associate Professor of Economics and Law, UMKC, and Henry Pontell, Professor of Criminology, University of California at Irvine speak at the UMKC Law Review Symposium. Recorded November 11, 2011.

      see video (Pt. 1):

      see video (Pt.2):

      • gozounlimited

        Speaking of Criminogenic Environments, Bubbles and Financial Crises

        With No Oath, No Answers …. another waste of time and taxpayers dollars in the effort to get to the truth. Instead the actors in our congressional circus appeared content today just getting another dose of evasion from Mr. Dimon.

        Mamma, Daddy’s Getting The Belt Out ….. after getting really miffed, Mr. Dimon officially removed himself from any Senate regulatory dialogue … in essence defying the House Financial Committee to figure out regulation for themselves. (Pretty much explaining Congressional Financial Ignorance.)

        Too Small To Live Off …. Where’s the compassion Jack? Rep. Al Green asked Mr. Dimon if he could meet with him after the hearing to discuss income inequality and poverty in his district. Before Mr. Dimon could embarrass himself Mr. Bachus (chair) poopooed the idea and closed the session.

  • windcatcher

    Gonzounlimited: Great educated, logical volley into the morally decadent and corrupt side of the enemy.
    The corrupt legislators and Justice Departments are intransient and not acting in the public interest.
    Traditionally, when the public does act it will be a crazy mob and they hang every corrupt S.O.B -French Revolution style.
    That is something that every legislator, banker and complicit government drone should be thinking about.