There is a Institutional conspiracy being perpetrated against the People of Earth!
This is the FINANCIAL component.
I have discussed CAFRs (such as found in Walter Burien, Clint Richardson, and Jerry Day‘s CAFRs’ investigations). I also reported on Detroit’s bankruptcy scam. However the ongoing fraud continues in Detroit because a appellate Judge overruled the original dismissal of this fraudulent case. If Detroit can beat this attempt to steal pensions then the next American city is better armed.
Below are a few bullet points from the excellent report on the fraudulent “Detroit bankruptcy” ~ Ron
Detroit is Not Broke!
[Below are only some of the key concepts to consider for Detroit’s bankruptcy claims attempt to “legally” rob the people of billions of dollars.
Simply another revenue source for the banksters…]
[IS DETROIT BROKE, OR OUT OF MONEY?]
“There is one glaring omission of coverage, whether Detroit is, in fact, broke!
Some research [must be] given to whether Detroit is, in fact, out of money.
Note; I didn’t say, “whether Detroit is bankrupt.”
Bankruptcy is a legal finding.
Being out of money is a statement of fact.
There is a crucial difference, as we shall see.”
[Question the fundamental assumption: Is Detroit BROKE or OUT OF MONEY? Is there a reason to question the officials on everything in complete distrust? YES!]
[CAN YOU FIND THE CORRUPTION, OR DECEPTION(s)]
“Detroit is a particular homing beacon for political corruption, with an ex-Mayor in jail for extortion, racketeering and bribery”
[Why would the D.C. crowd decide to bail out the international and foreign bankers, earlier it was Chrysler corp., but today will not consider helping the 4th largest municipality in the USA?]
“In fact, the current Administration spends three times as much on aid for Columbia as it does for Detroit and could easily afford to help out one of America’s major cities, if it chose to, and if Congress allowed it.”
[FOLLOW THE MONEY, COMPREHENSIVE INDEPENDENT AUDIT!]
The first thing to understand is the difference between a budget report and a Comprehensive Annual Financial Report (CAFR).
1. A “Budget Report” is a selective funding of x accounts from x resources (set up to be primarily funded with taxation and it is for “the year”)
2. An “Annual Financial Report” is the showing of “all” income: Investment; taxation; and Enterprise, plus the “accumulated wealth over decades. Budgets are for the year, an AFR is for it all since creation of the entity. Could be a showing for several decades if be, for over a century.
There is a big difference between a 1-year budget and an Annual Financial Report.
A correct analogy would be: The budget to operate your car vs. your statement of net worth.
The public has been played with the biggest shell game of selective presentation there is allowing for massive fortunes to be made by the inside players over the last several decades with the full symbiotic cooperation of the syndicated media, controlled education, and BOTH political parties…
“Every” investment fund large and small is a power base. Where that money is invested determines what company; real-estate venture, etc., is made or broken. Thus in line with that, never a mention of the 184,000 AFRs of the corresponding local governments..nor the many thousands of specialty investment funds they contain. I note gov pension funds facilitate the same power base. Paying employee benefits from the return on the funds is an after thought for the government players. Where the funds are invested and with whom is the primary focus.
“Considering that the city’s state-appointed democracy-robbing bankruptcy attorney, Kevyn Orr, is a Washington D.C. attorney and partner at the law firm of Jones Dayare, which is representing Peabody Energy against the coal miners in bankruptcy proceedings, one ought to question any so-called public servant who is saying an entity is broke nowadays.”
“If you take a look at why they say they are broke, what they are doing is extending the pension and other liabilities out 30-years as if (it’s) a liability to be paid in full today. They funnel off much of their “annual” budgetary funds to meet 100% funding today and (this) is why (they use) the buzzword of “in debt” and “pensions short”. They only project out their income 1-year and project liabilities out 30.”
“The burden of unfunded pension liabilities varies enormously from state to state, according to a new Moody’s Investors Service report, “Adjusted Pension Liability Medians for US States.” Measures comparing the size of each state’s adjusted pension liabilities to its financial resources show a few states facing negligible liabilities and other states with liabilities significantly greater than their annual revenues“. Moody’s uses measures comparing the size of adjusted net liabilities to state resources in its credit analysis because they are indicative of the strain the liabilities are likely to place on finances. Adjusted net pension liability relative to governmental revenues is the measure Moody’s employs in its states’ rating methodology scorecard.”
So, Moody’s, a top ratings agency, is using revenues alone, not total assets, to determine whether there will be a shortfall in future liabilities.
Furthermore, as this Reuters article, coming out the following day (June 28), points out (emphasis added):
“The shortfall numbers in these studies, to put it simply, are all over the place. There are many variables that go into these models, but the main factor that causes variation is the expected rate of return on the assets in the plans. The official assumed return on the assets that are held in trust to pay pension liabilities is 8 percent, according to the Public Fund Survey. Fiddling with this projected rate of return can cause swings in the amount of unfunded liabilities. The Moody’s study uses an unconventional assumption. According to the Adjustments to state pension liabilities document:
Accrued actuarial liabilities will be adjusted based on a high-grade long-term taxable bond index discount rate as of the date of valuation (of the fund).
Rather than using the average historical investment return rate of 8 percent, Moody’s uses a return on a taxable bond index . This return would be no higher than that on a basket of high-rated corporate bonds ranging from 4.4 to 6.2 percent, the FT says. The problem with using this rate is that we have been in a five-year period of zero-interest rate policy while the Federal Reserve has artificially suppressed interest rates to promote financial stability and spur economic growth”. Moody’s model, in periods of artificially suppressed interest rates, has enormous flaws .”
In fact, Moody’s itself seems to recognize the negative impact on projected pension returns of its new methodology, based on the “Pensions Final Adjustments” report sent to me by David Jacobson, their AVP – Communications Strategist, Public Finance Group (Page 4): “Because interest rates are currently at an historic low, the market approach to measuring liabilities results in much larger current total liabilities than those reported using the conventional governmental approach.” The very fact that Moody’s and others are using expected rates of return, which are additionally “all over the place,” demonstrates how these ratings firms are forecasting liabilities years, if not decades, into the future, just as Burien and Richardson say. And there are more reasons to suspect the expected rates of future return are geared low, perhaps too low. The Journal of Accountancy’s June 25, 2012 article “GASB vote places unfunded pension liabilities on government balance sheets” says (emphasis added):
“GASB on Monday approved Statement No. 67, Financial Reporting for Pension Plans , and Statement No. 68, Accounting and Financial Reporting for Pensions . Statement No. 68 will require governments with defined benefit pension plans to disclose a “net pension liability” on their balance sheets.
That liability equals the difference between the total pension liability and the value of assets set aside in a pension plan to pay benefits. The statement calls for immediate recognition of more pension expense than is currently required. This includes immediate recognition of annual service cost and interest on the pension liability, plus the effect of changes in benefit terms on the net pension liability.
[FIND THE UNREPORTED INVESTMENTS, RETURNS ON INVESTMENT, DIVIDENDS, OTHER ASSETS, AND FUNDS]
“We are already sitting at over $12 billion in current assets, despite the CAFR statement of net assets claiming only $11 billion. And we’ve only looked at two types of funds.
How about the “discretely presented component units” (page 62-63)?
They have assets of over $500 million, long-term debt of $166,728,140, and only reported as $214,130,890 or less than half their asset value.
Then you can read how some tricks work in the “Notes to financial statements“:
(j) Deferred Revenue Deferred revenue represents revenues received, but for which the revenue recognition criteria have not been met . Accordingly, these revenues are deferred until such time as the revenue recognition criteria is met. (So why don’t they refer liabilities until they are actually current liabilities?)”
Take action — click here to contact your local newspaper or congress people:
Audit the Detroit CAFRs
Scott Baker is a Senior Editor and Writer at Opednews, and a blogger for Huffington Post.
Scott Baker is President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist group.
READ FULL REPORT: Detroit is Not Broke!