Default Ahead As Cuomo Executive Budget And Its Media Puff Are Exposed As Shams

     After the committees designed the horse, the committees created the perfect leader, Andrew Cuomo, as the Very Progressive, Very Fiscally Conservative, Mario's Dauphin, and President-to-be, and as the perfect compliment to the committee's horse.
 We must not promise what we ought not, lest we be called on to perform what we cannot. ~Abraham Lincoln

    Cuomo's Executive Budget will be released on Tuesday and instead of sandwich board men, the Cuomo advance lackeys arranged the following:
1. Some sheeple were greeted by door knob hangers,with a postcard where you declare “I support Governor Cuomo’s plan to help New York families and fix a broken Albany.”  The door hangers were placed by "the Committee to Save New York to which [Cuomo] has many ties, ... the Committee ... plans to spend $10 million in its efforts."   How many sucker sheeple approved a budget which hasn't been released? 

2. Andrew "Captain Renault" Cuomo has denied any coordination with the committee whose, "first advertisement speaks generally of the need to “repair Albany’s broken finances, create jobs and grow our economy.” It features footage of Cuomo at the State of the State and lauds “a new governor who’s ready to fix Albany.”   Thank God, Andrew had promised to end the influences of special interests and lobbyists and that he placed them on his reform committees.

3. Meanwhile, the Cuomo media and polling stooges arranged for several ridiculous polls, which "found Cuomo’s favorability rating at 71 percent. Forty-eight percent of voters surveyed say Cuomo is doing a good job, and 61 percent say Cuomo represents all regions of the state."   [perhaps, only pizzeria owners were polled]
 
4. Attorney General Scheiderman is promising to really go after Medicaid fraud and, maybe, double or triple prosecutions of Medicaid fraud. Whoopy, he'll raise Cuomo's dismal 0.6% recovery of Medicaid excess to 1.2% or even 1.8%, or $0.5 billion dollars out of $29 billion dollar excess, and only if you believe a lawyer's promises.

5. Comptroller DiNapoli claiming it's worse in New Jersey, while promising a "safe" return on pension investments of 7.5%.

6. An unsourced media puff piece claimed that New York gained +37,000 jobs and New Jersey lost -30,00 jobs.  But this was at odds with Bloomberg's, "Payrolls decreased in 35 U.S. states in December, ...New York led the nation with 22,800 job cuts last month."   Did Andrew Cuomo's hack pay good money for such a embarrassing bogus puff piece?

7. To counter expected bankruptcy/default or huge increases in bond rates, the Cuomo media hacks got "financial analyst Hugh Johnson offered something ...called a reality check based on past history."   This is the theory that since they didn't default in the past, they won't default now.  Used before by Barney Frank and Chris Dodd telling us everything was alright with Fannie and Freddie, and by Madoff  whose "safe"investments returned value for decades.


Cuomo's Executive Budget failure deconstructed:
Cuomo's budget will fail to deal with the elephant in the room and will not follow eight other State's models for laws and regulations which could produce at least  $29 billion in savings per year, or even better the California model which could produce $42 billion in medicaid savings.  And Cuomo and his Medicaid Redesign Team which is filled with trough feeders will fail here.

Cuomo's budget will use the "Madoff-like" pension assumptions of 7.5% safe return on pension investments. and continue to allow borrowing to fund contributions.  This is like paying your credit card bill by charging the payment to the same card.

Cuomo will fail to budget in the required repaying of the federal government for Medicaid frauds tolerated by New York.  This is minimally estimated at $1.6 billion a year for four years or $6.4 billion needed to added to deficit or be funded.

Cuomo's leaked plan to cut 12,000 state workers will fail because it saves only $1.8 billion, if Cuomo dismisses only those with $150,000 average income+benefits.   Cuomo will more likely dismiss those with lower pay and have even lower savings.    Most likely, Albany will become many Chiefs and few Indians.

Cuomo reducing Medicaid waste and fraud by ? will be a joke, since Cuomo recovered only 0.6% of medicaid fraud while he was Attorney General.

Cuomo will fail to address What happens when New York's bond rate rises?  
NY's borrowing costs will move up from $5.6 Billion to $18.8 Billion.

How about repaying the Unemployment Insurance: State Trust Fund Loans of $3,176,873,427.71 since January, 2009; that's $3.1 billion?   Will Cuomo pass this on in higher unemployment contributions by New York Employers and watch the Cuomo Business Friendly New York fizzle?

Andrew Cuomo claims a $10 billion dollar deficit, when if he could add correctly he'd get $22.1 billion deficit,  without even counting the pension shortfall from the phony 7.5% safe return and the "Build America" funding losses.


Here's the latest Media Hack Puff piece on Monday:  
   "Captain Renault" Cuomo says, "I was shocked to learn that the state's budget process is a sham ...He said the large, automatic increases in funding are contained in arcane regulations and something he was told is called 'permanent law'."  Shut the play down, "Captain Renault" Cuomo, your Casablanca rerun with, "you're shocked to find corruption" has grown stale.    Your Budget is the sham.

   Andrew Cuomo hopes to fool you sucker sheeple, when Cuomo points his finger at the legislature and they point the finger at each other and the Governor.   See Albany Follies for earlier version of the same play/acting.
Andrew, when you run out of cash like California, will you issue $3 Cuomos?

  The pipers who must be obeyed aren't the taxpayer pipers, it's  future bond purchasers and those wanting to be paid when you run out of cash.  These pipers will say your budget is a joke:
NY+USA Debt per person from No Whining, No Federal Bailout; You Made Your Bed Of Debt, Lie In It, New York
For the USA:
1. Total public debt outstanding Dec. 20 $13,868,461,000,000
2. nation's population on April 1 was 308,745,538 
3. USA debt per person $44,805
  The federal Government can't bailout New York; it's sinking itself. 
4. New York debt per person: State-funded debt was $3,105 per person and in 2009, NY was the second most indebted State behind California.
5. This New York debt doesn't include the Pension liabilities from the present phony estimated safe return on pension investments of  7.5%, when the New York fund earned 1.1% over five years and New York State’s $132.6 billion pension fund is the nation’s third-largest.
   If we correct the pension liabilities optimistically with a 3.1% return, we get another $9,664 additional debt per person.   Making $12,769 debt per person as a better debt estimate in New York.   But now look at the 4.52 million people on Medicaid in NY (who don't pay taxes) out of a NY population of 19,541,453  which raises the New York debt per taxpaying person and each of their dependents to $16,600.

So, the party's over; the hand writing is on the wall; some of the pipers must be paid now or no more piping, nor spending cash. link to the Finance Bazaar and a proper accounting.

Link to Banquet with the hand writing on the wall.
The words, Mene, Mene, Tekel, u-Pharsin, written by a God of Justice Disrupt the Albany Victory Celebration and King Cuomo

 

Federal Bankruptcy Chapter 10 For State Bankruptcy Sent To House And Senate Leaders

The post is a repeat of "The Bankruptcy Cat Is Out Of The Bag And Some States' Bonds Will Tank" with proposed Federal Bankruptcy Law Chapter 10 which is now being faxed to the House and Senate Leadership and certain Committees' leaders.

Condensed excerpt:
To Members of Congress:
... Republicans aren't going to bailout States, but Cantor in the House says State bankruptcy will face an uphill battle and "analysts -- and states themselves -- are concerned that opening up a bankruptcy option would spook the buyers of state debt, driving up interest rates and making borrowing more expensive."

Except the cat is out of the bag, because of above linked article and Bob Brinker, Long-time Radio Financial Adviser has recommended, "The six that really jump out for me would be Arizona, California, Illinois, Louisiana, New York and New Jersey.... I would not purchase their municipal securities.....that's just my opinion."
Democrats in House and Senate must help States in trouble to force bondholders to share the burdens of fiscal excesses, since they too profited via said bonds in the excess debt. ...

Proposed Bankruptcy Chapter 10 and full text text at this link

Full text of The Bankruptcy Cat Is Out Of The Bag And Some States' Bonds Will Tank sent to:
Harry Reid, 202-224-7327;Mitch McConnell 202-224-2499
Jon Kyle 202-224-2207; John Boehner 202-225-0704
Eric Cantor 202-225-0011;Kevin McCarthy 202-225-2908
Nancy Pelosi 202-225-4188; Steny Hoyer 202-225-4300
Paul Ryan 202-225-3393 House Budget Committee
Chris Van Hollen 202-225-0375 House Budget Committee
Spencer Bachus 202-225-2082 House Financial Services
Barney Frank 202-225-0182 House Financial Services
Max Baucus 202-224-9412 Senate Finance Committee
Chuck Grassley 202-224-6020 Senate Finance Committee
Tim Johnson 202-228-5765 Senate Banking
Richard Shelby 202-224-3416 Senate Banking

While New York Pension Books Cook ,The Finger Points At New Jersey

NY's Warlocks Cooking the books in NY:
Double, double toil and trouble
Fire burn, and cauldron bubble. ~Shakespeare's MacBeth

 NY Comptroller, DiNapoli said, "Unlike New Jersey, we don’t ignore our pension fund obligations. While New York still faces significant fiscal challenges, our management of the pension fund has left us in a much better position than other states that have continuously neglected their pension fund obligations."

The Good News:   "Moody’s found that the states with the biggest total indebtedness included Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island."  "Other big states that have had trouble balancing their budgets lately, like New York and California, tended to fare better in the new rankings. That is because Moody’s counted only the unfunded portion of states’ pension obligations. New York and California have tended to put more money into their state pension funds over the years, so they have somewhat smaller shortfalls."

Now, the but:  "Pensions were considered “soft debt” and were considered separately from the bonds, using a different method.  'A more standard analysis would view both of these as liabilities that need to be paid and put stress on your operating budgets,' said Robert Kurtter, managing director for public finance at Moody’s."

Now, more buts and oh, gee:  "Moody’s is using the pension values reported by the states. The shortfalls reported by the states greatly understate the scale of the problem... The government method allows public pension funds to credit themselves for the investment income, and the contributions, that they expect to receive in the future. It has come under intense criticism since 2008 because the expected investment returns have not materialized."

Now, from this blog in November 2010: 

From Ponzi to Madoff to Hevesi to DiNapoli; New York Learns Anew About Bond Losses And A Phony Safe 7.5% Pension Return

      Madoff had promised safe returns of 10% before the economic recession began.
The SEC warns in its Ponzi Schemes – Frequently Asked Questions that Ponzi schemes share common characteristics:
          High investment returns with little or no risk
          Overly consistent returns.
    Link for Comptroller Di Napoli will reduce his hope to earn 8% percent a year to 7.5%.  Except for Madoff, who guarantees a 7.5 percent safe rate of return?  Or 7 percent?  Or 6 percent?  No junk bonds allowed.   NY's real rate of return was less than 4% for ten years.
Even worse, NY's return for past 5 years was 01.1%.   Link.

  Now more wild accounting:  Comptroller Thomas DiNapoli proposes for the state government and local governments a  pension “amortization” (i.e., borrowing) plan where the 7.5% rate won’t necessarily affect annual pension fund contributions, because they can borrow their higher payments from the pension fund. Only the Government could imagine being able to use your credit card to charge your credit card payment.
     And it gets better, "after a decade in which the New York State pension fund’s annual return on assets averaged less than half its [8%]target rate, the fund will need to jack up its taxpayer-funded contribution rates next year, Comptroller Thomas DiNapoli announced today."
That's you, the taxpayer, paying a 42% rise in your share (11.5% to 16.3%) 

Now what do you think Moody's reevaluation of NY debt will be when real world accounting is used?

Thank to Bernie Madoff for the recipes to cook the books.

Thanks for showing us how garbage budget data in means garbage budget data out.

The True Believers Chorus is readying its refrain, "If only Andrew Cuomo knew."

 C.C. Moody's, Fitch's, Standard & Poors

The US Constitution And Chapter 10 Bankruptcy For States

We the People  of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America. ~ Preamble to US Constitution

  In regard the proposed Chapter 10 Bankruptcy for States:
       Why must Bankruptcy for States be different from ordinary bankruptcy? While, Congress has the power to make laws for bankruptcy under Article 1-Section 8 of the US Constitution, the States cannot make their own bankruptcy laws because of Article 1-Section 8 of US Constitution.  Without bankruptcy, States could not void or alter contracts with State employees or bondholders or other contract holders under Article 1-Section 10 of the US Constitution.   States also must honor the judicial acts of other States involving contracts with NY State under Article 4-Section 1 of US Constitution.   And States retain all sovereign powers except those removed by the Constitution based upon Amendment 10.

The text of relevant sections of US Constitution is copied below:


Article 1
Section 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.


Article IV
Section 1. Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records, and Proceedings shall be proved, and the Effect thereof.


Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

    Proposed Chapter 10 Bankruptcy for States

The Bankruptcy Cat Is Out Of The Bag And Some States' Bonds Will Tank

To Members of Congress:
        "Congressional Republicans on Tuesday sought to put President Barack Obama on the defensive ahead of his State of the Union speech as they pressed their plans to slash domestic spending."

      Republicans aren't going to bailout States, but Cantor in the House says State bankruptcy will face an uphill battle and "analysts -- and states themselves -- are concerned that opening up a bankruptcy option would spook the buyers of state debt, driving up interest rates and making borrowing more expensive."

 Except the cat is out of the bag, because of above linked article and Bob Brinker, Long-time Radio Financial Adviser has recommended, "The six that really jump out for me would be Arizona, California, Illinois, Louisiana, New York and New Jersey.... I would not purchase their municipal securities.....that's just my opinion."

 Democrats in House and Senate must help States in trouble to force bondholders to share the burdens of fiscal excesses, since they too profited via said bonds  in the excess debt.

    Someone needs to get the bankruptcy ball rolling; so here goes.

 A Primer for a State's Bankruptcy: 

Why?   New York will go bankrupt because Cuomo is not acting to easily correct $28 Billion dollars Medicaid excesses in NY compared with others States (California).    His proposals to dismiss 12,000 State employees might account for (assuming a $100,000 per employee yearly income plus benefits) $100,000 x 12,000 = $1.2 billion dollars saved.   That's $1.2 billion out of the $10 billion he claims is the budget deficit now for the coming year. And Cuomo will add that to the measly  0.6% of Medicaid excesses Cuomo recovered.  So, Cuomo runs out of cash.  But, he's not alone, several governors will join him.  They need a cover, who'll the stiff the State bondholders and redo employee contractual benefits and pay.  It's not me (your beloved Elected Governor), it's the bankruptcy judge.

Is it Constitutional?   Yes, because the law proposed below was only modified by replacing a State's municipality with the State.   "The first municipal bankruptcy legislation was enacted in 1934.   ..., the Supreme Court held the 1934 Act unconstitutional as an improper interference with the sovereignty of the states. Ashton v. Cameron County Water Improvement District No. 1,  [Then] Congress enacted a revised Municipal Bankruptcy Act in 1937, ... which was upheld by the Supreme Court. United States v. Bekins."

How?   The proposed chapter 10 for States has identically to the existing constitutional Chapter 9 no provision for the sale of assets, nor for such to be given to creditors. Just as in Chapter 9, the bankruptcy court cannot actively mange the State's affairs, and can only approve a reorganization plan submitted by the State. And as in Chapter 9,; the State can use the bankruptcy court to enforce court orders and preclude any connected litigation elsewhere and change contractual agreements.
Details? In the proposed Chapter 10:
1. The bankruptcy judge is assigned by the Chief Federal Judge of the State;
2. A list of all creditors can be filed after filing bankruptcy petition;
3. Automatic stays of all collections against the State can be stayed; the court can fix time and manner of the filing of all claims against the State;
4. Only the State and not creditors, nor someone appointed by the bankruptcy court can propose a settlement;
5. The State retains its powers to use its property, raise taxes, and make expenditures and change non-debt contractual relationships;
6. The State can reject collective bargaining agreements and retiree benefit plans;
7. Interested parties may be heard, but no one but the State can file a PLAN for resolution of the debts and obligations.

Proposed Chapter 10:
I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text.  Other parts of this Chapter 9 would remain unchanged and be renumbered from  §§ 901-946  to §§1001 to 1046

TITLE 11 CHAPTER 9 10
  CHAPTER 9  10—ADJUSTMENT OF DEBTS OF A MUNICIPALITY  STATE
SUBCHAPTER I—GENERAL PROVISIONS (§§901-904 1001-1004)
SUBCHAPTER II—ADMINISTRATION (§§921—930  1021-1030)
SUBCHAPTER III—THE PLAN (§§941—946  1041-1046)

903. 1003. Reservation of State power to control municipalities Sovereign power

This chapter does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise, but— such State, a State law prescribing a method of composition of indebtedness of such municipality of such State may not bind any creditor that does not consent to such composition; and (2)a judgment entered under such a law may not bind a creditor that does not consent to such composition.

904. 1004. Limitation on jurisdiction and powers of court
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.

921. 1021. Petition and proceedings relating to petition 109(d) and 301 of this title, a case under this chapter concerning an unincorporated tax or special assessment district that does not have such district’s own officials is commenced by the filing under section of this title of a petition under this chapter by such district’s governing authority or the board or body having authority to levy taxes or assessments to meet the obligations of such district.  State.
(b)The chief judge of the court of appeals for the circuit embracing the district State in which the case is commenced shall designate the bankruptcy judge to conduct the case. After any objection to the petition, the court, after notice and a hearing, may dismiss the petition if the debtor did not file the petition in good faith or if the petition does not meet the requirements of this title.
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)

927. 1027. Limitation on recourse
The holder of a claim payable solely from special revenues of the debtor State under applicable nonbankruptcy law shall not be treated as having recourse against the debtor on account of such claim pursuant to section (b) of this title.

Sincerely yours, CuomoTARP.blogspot.com. [please access web site for working links not seen in Faxes]

By Fax to Chairman and ranking Minority Member of Senate and House Judiciary Committees and the Senate Subcommittee on Administrative Oversight and the Courts and the House Subcommittee on Courts, Commercial and Administrative Law
Patrick Leahy (D-VT); Jeff Sessions (R-AL)
Lamar Smith (R-TX); John Conyers, Jr. (D-MI)
Sheldon Whitehouse (D-RI); Howard Coble (R-NC)

A Bankruptcy Chill Hits Cuomo Adding To Albany's Below Zero Freeze With NY Medicaid Excesses Unaddressed And 12,000 Jobs Lost

You know you're directly over the enemy, when the flack gets heavy.

   Bankruptcy has sent a chill up the spine of the true believers and media hacks for Andrew Cuomo and other Governors facing fiscal disaster.   The Business Insider's hacks have reported, "The Cheerleading For State Bankruptcies And Municipal Defaults Is Downright Ghoulish," and Business Insider offers the following 12 reasons why State finances won't go broke: (Reasons blue, comments red)

1. Outstanding muni debt remains within historical parameters.  What was the historical parameters before the mortgage collapse, or NYC before fiscal collapse, or stock market historical values before a crash or major devaluation?

2. Interest payments absorb less than 5 percent of current expenditures.   Not after interest rates triple or more and more borrowing is needed for pension contributions.   See example of Greece or Ireland.  Link

 3. Municipal bond default is extremely rare -- less than one-third of 1 percent.  European Counties were defaulting rarely, but now cash infusions and/or  the EU insuring their bonds is not extremely rare.   Link

4. There wasn't a bubble in muni bonds, nor any exotic derivatives.   There is insurance (a derivative) on some bonds.   Will a massive default also result in an insurance default?  Isn't the actuarial basis of the insurance based on very limited expected default?  Yes.   And, lots of litigation claiming deliberate unnecessary default as a reason not to pay said insurance will result and/or bankruptcy filing by such insurers.

5. Pensions were fully funded until they had to weather back-to-back recessions.   A big lie, check out California or NY. Link CA-1/2 trillion dollars pension shortfall    NY Link     Central NY Muni.

6. Anyone claiming there are $3 trillion in unfunded pension liabilities is ignore investment earnings -- which are the majority of returns.   Hey, dopey, check out NY's Madoff style promise of 7.5% Safe Return.    Link.http://cuomotarp.blogspot.com/2010/11/from-ponzi-to-madoff-to-hevesi-to.html   or this link to California's 1/2 trillion dollar unfunded liabilities

7. Pension funds average over 8 percent returns through a diversified portfolio. Why would they invest only in fixed income?  Get real, see NY's return for past 5 years was 01.1%.   Link.

8.  Municipalities devote only 3.8 percent of their budget to pension funding: A modest increase could solve most problems.  Is that due to the phony assumption of a 7.5% Safe Return on pension investments or the borrowing by workers to fund their pensions, so they don't realize the true amount they are contributing to their pensions? Link.

9. Pension plans are legally protected. Health benefits generally are not. 

 

Bye, bye, granny, it's for the good of the State.

10. In fact, most states WILL have to scale back health benefits -- but won't default on pensions or bonds.  But NY and Cuomo, if judged by his record of failures to prosecute Medicaid frauds as AG,  will make sure the massive overspending by NY on Medicare remains. Link 1 Link 2 Link 3.

What about that  $28 billion overspending on NY medicaid?  Link.

11. Municipalities have the next 30 years to remedy any pension shortfalls.  No, the money is missing now and present contributions must be many multiples of prior budgeted amounts.   Link
See #5, 6, 7 and 8 above.

12. Mass default doesn't seem likely, but austerity does.   This opinion uses word "mass" so as to leave some smaller number of States such 6 out of 50 states.   Link to Finance Bazaar.

     Andrew Cuomo must be waiting for a bankruptcy bailout because he isn't  cutting Medicaid to California levels and saving at least $28 Billion a year?  Oh, I forgot Cuomo recovered 0.6% of Medicaid fraud.

     Although the latest fraud is, "New York's seemingly endless cavalcade of corruption continues, with the Young Adult Institute National Institute for People with Disabilities Network and five of its current and former officers ordered to pay $18 million in civil damages under the False Claims Act," as usual the defendants aren't going to jail.   "The defendants will pay $7.2 million to the United States and the rest to New York - though YAI does not admit that it did anything wrong."
   Is this to be Cuomo's new ethical standard: Cheat, steal and if you get caught, you'll have to pay some of it back. Will this be equally applied to the ordinary criminal, not in a suit and without a fancy campaign contributing  lawyer?

    .Cuomo to cut 12,000 jobs.  Link 1 Link 2   But why must New York fund this Medicaid corruption with $28 Billion dollars and then face bankruptcy and 12,000 lost jobs?

Advice to Sell State Bonds And Pending States' Bankruptcies Already Predicted On CuomoTARP Blog

 The Words of the Prophet to bondholders:  Sell now and not cry later ~ CuomoTARP Prophet

    Whereas, the NY Times reveals secret examination of States' bankruptcy, this blog had already published the simple changes necessary to create a Chapter 10 Bankruptcy for States on December 13, 2010.  see #4 below for text of law.

   Whereas, the NY Times revealed State and municipal bonds positions needed to be reduced or liquidated, this was reported earlier here on this blog multiple times.
Blog Posts:
   1. November 29, 2010,  Andrew Cuomo; A Drag Queen; And Dragging New York State Bankruptcy And NY Bond Devaluation Out Of The Closet

  Knowing what the US Supreme Court did with GM bondholders, do you believe the Supreme Court will force NY to honor NY bonds at their full value or force NY State to honor pledges to pay certain bondholders before using the money for other purposes, or just offer pennies on the dollar value of existing NY bonds? 

   

    2. Nov. 29, 2010, 

At Thanksgiving Fest, NY Bondholders And Cuomo See The Hand Writing On The NY Capital Walls

 The words, Mene, Mene, Tekel, u-Pharsin, written by a God of Justice Disrupt the Albany Victory Celebration.      CuomoTARP has obtained two translations for the handwriting "Mene, Mene, Tekel, u-Pharsin" on the walls of the NY Capital Buildings. It was the same Aramaic words the Babylonian King Belshazzar saw on the wall in Babylon around 539 B.C., 
  Now, the translation #2 for NY Bond Holders:
  Mene:  Count your bond values now
  Mene:  Count your bond values after the credit rate rises, inflation increases and bond desirability decreases  *See notes 3 and 4 below
  Tekel: Same as shekel or watch your money
  U-Pharsin;  Your bond values will be cut in half
The Words of the Prophet to bondholders:  Sell now and not cry later

      3.  Dec. 14, 2010 .  NY Bankruptcy, NY Bonds, NY Constitution, NY Pensions; The Resolution

    We look to the NY Constitution to see why New York must chose bankruptcy if it's available under Federal Law.   Would the federal government refuse to loan or give NY Money, because "Federal loans to States would so increase federal debt so as to lower the federal bond ratings?"   Yes, because there'll be no love lost in the new Congress for bailing out New York's or other States' proliferate spending when the Congress has its own problems.   New York's deficit is pegged at $15.8 Billion , but if NY gets money, California, Illinois and Michigan will also want bailout money.
Simple question: Will Congress bailout States or create a new Bankruptcy Chapter?


        When New York State runs out of money, (technically bankrupt or bankrupt if the new Chapter 10 is adopted), the NY Constitution requires the Comptroller "shall set apart from the first revenues thereafter received ...a sum sufficient to pay such interest, installments of principal. ... at the suit of any holder of such bonds."   so apply the moneys thus set apart. The comptroller may be required to set aside and apply such revenues as aforesaid, at the suit of any holder of such bonds.
    Supposedly NY Pension Benefits are protected in this article of NY Constitution § 7. ...membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.


       No way out except for New York to limit its payments to NY bondholders in federal bankruptcy action.

      4. The text of a new Chapter 10 Bankruptcy for States in,  A Moody's Downgrade Means Inevitable State Bankruptcies Need A New Bankruptcy Chapter 10 For States

          Federal debt for States' bailout will dry up after, "Moody's warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama's tax and unemployment benefit package becomes law."     There is no hope for NY or California or Illinois or Michigan except for a Federal Bailout or bankruptcy. But there's no Federal bankruptcy law applicable to the States. (See this link for more details)
      Since Congress will be reluctant to bailout States (where would it end?), we need a new Bankruptcy Chapter for State Bankruptcy to be called Chapter 10. Since States are sovereign entities and as such retain sovereign powers, Congress can simply make modifications to the present Chapter 9 for municipalities to create a United States Code Title 11 Bankruptcy Chapter 10 for States.

I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text.  Other parts of this Chapter 9 would remain unchanged and be renumbered from  §§ 901-906  to §§1001 to 1046

TITLE 11 CHAPTER 9 10
  CHAPTER 9  10—ADJUSTMENT OF DEBTS OF A MUNICIPALITY  STATE
SUBCHAPTER I—GENERAL PROVISIONS (§§901-904 1001-1004)
SUBCHAPTER II—ADMINISTRATION (§§921—930  1021-1030)
SUBCHAPTER III—THE PLAN (§§941—946  1041-1046)

903. 1003. Reservation of State power to control municipalities Sovereign power

This chapter does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise, but— such State, a State law prescribing a method of composition of indebtedness of such municipality of such State may not bind any creditor that does not consent to such composition; and (2)a judgment entered under such a law may not bind a creditor that does not consent to such composition.

904. 1004. Limitation on jurisdiction and powers of court
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.

921. 1021. Petition and proceedings relating to petition 109(d) and 301 of this title, a case under this chapter concerning an unincorporated tax or special assessment district that does not have such district’s own officials is commenced by the filing under section of this title of a petition under this chapter by such district’s governing authority or the board or body having authority to levy taxes or assessments to meet the obligations of such district.  State.
(b)The chief judge of the court of appeals for the circuit embracing the district State in which the case is commenced shall designate the bankruptcy judge to conduct the case. After any objection to the petition, the court, after notice and a hearing, may dismiss the petition if the debtor did not file the petition in good faith or if the petition does not meet the requirements of this title.
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)

927. 1027. Limitation on recourse
The holder of a claim payable solely from special revenues of the debtor State under applicable nonbankruptcy law shall not be treated as having recourse against the debtor on account of such claim pursuant to section (b) of this title.

"Paying the Piper"

      Message to Andrew Cuomo, no more waiting to fix Medicaid:  The bond market is closing in.
1.  Municipal bond sell-off reported on Fox.
2.  What is Plan B with China dumping debt? 
3.  States' Pension disaster ahead.
4. DiNapoli's 7.5% safe return makes Pension disaster likely.
5. Structural debt will sink States after Federal debt collapse.
6. US credit collapse will trickle down to State's debt.
7.  Bankruptcy in future 

Andrew, has the recurring dream affected your health?

Did you believe you'd escape the message of the  Handwriting on the Wall?

 

The party's over, the pigs must sent home and the piper must be paid

Cuomo Can Solve New York Budget Woes Without Dismissing Any State Workers With Just Medicaid Reform Using California Model

If you do what you've always done, you'll get what you've always gotten. ~ Russian proverb

    Cuomo and DiNapoli claim a budget deficit of $10 Billion dollars and New York's Medicaid costs are purportedly $58 Billion dollars.   This blog pointed out how Cuomo could reduce Medicaid in half buy adopting California's Medicaid laws and regulations.   That's $29 Billion dollars saved and would protect the Counties, who must match that amount, and their employees from cost cutting dismissals and, also NY State workers facing layoffs.
   This blog has reported the absurd amount of money, $4,556 per day spent on care for the mentally retarded in Poughkeepsie area.   Think how much it would cost to have aides at $10 an hour for 24 hours a day and a rented room with meals delivered  for $200 a day and then ask where the other $4,116 per day went.  The Federal Government saw improper billing and is demanding NY reimburse Medicaid $1.2 Billion dollars for just one year of this fraud/scam and that's just for 2006, and NY will owe the same for all the years till 2011 and this is for Poughkeepsie area only.

       This money is not going to the poor indigent needy nor the workers at the bottom doing the routine care, it's going into the mouths of the Swine, who fed at the New York Medicaid trough in their suits and pants-suits with lipstick.

Here she is.  Primed and ready to begin to run a New York Medicaid program and begin to feed at the New York Medicaid trough.    And, if things go wrong this pig can be wrapped in a CuomoTARP blanket and avoid jail, just like those in the $1.2 Billion  per year scam reported above.

It's time for Andrew Cuomo to do or not do.
 and use the rest of the Medicaid savings to deal with Pension shortfall as reported and DiNapoli's  absurd Madoff-like  assumption of a safe 7.5% return on investments.
 Failure is not falling down, but refusing to get up ~  Chinese proverb
More in earlier posts below

Will Andrew Cuomo Use Proven Medicaid Savings Plans Or Will Lobbyists Win

"Meetings are a symptom of bad organization. The fewer meetings the better." ~Peter F. Drucker

Dear Governor Cuomo:
      Send your Medicaid Redesign Team (committee) packing and preparing for their new diet.  It's reported, "Every year it's the 800-pound gorilla of the state budget, soaking up money that could be used for tax cuts to make our economy competitive, or for expanding health-care coverage, or for improving education—or for all that, and more. Medicaid is also the major component in county property taxes—and New York's excess property tax burden, now about 62 percent above the national average per capita."
        I've copied a comparison of various State's Medicaid Expenditures per person served for 2008.  The present numbers are much higher, but the comparison remains.  Note that very progressive States with large urban centers have much lower per person expenses.  Read the data and then the solution which follows.

Medicaid Cost Per Person Served, 1998
(Red States less than half New York's cost)
New York ~  $8,961

California $2,386,
Washington $2,563
Oregon $3,652
Virginia $3,740
Florida $3,607
Texas $4,419
Illinois $4,435
Delaware $4,440
Michigan $4,494
Ohio $5,346
Massachusetts $6,870
Wisconsin $5,457
Pennsylvania $5,808
New Jersey $6,856
Rhode Island $6,603


      Is there less compassion for the poor in California, Illinois, Michigan, Oregon, Wisconsin, Pennsylvania, or Washington?  No need to reinvent the wheel or waste time drafting new laws and regulations, just copy them from California or Illinois or Michigan or Oregon or Virginia or even, Texas.   Watch the Medicaid costs be cut in half, local property taxes fall and state budget be easier to balance.

Cuomo's choice: "Do or not do There is no try" ~ Yoda
or "Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel." ~John Quinton

"Governor Renault" Cuomo Is Having A Blast Repeating The Same Line From Casablanca

News Flash: Cuomo had promised to improve the business climate with no new taxes and was shocked to learn, "NY owes the Federal Government "$115 million in interest on $3.2 billion [the loan's debt is not in NY budget], the cost will be passed on to employers in the form of a tax surcharge. The chickens are coming home to roost.

Now on to Theatrical diversion, as Andrew Cuomo and The Albany Follies are remaking "Casablanca" and will highlight Andrew Cuomo's starring role as the modern Captain Renault

                 The Original Casablanca script:

Rick:   How can you close me up? On what grounds?
Captain Renault:  I'm shocked, shocked to find that gambling is going on in here!
a croupier hands Renault a pile of money
Croupier: Your winnings, sir.
Captain Renault: Oh, thank you very much.

       "Governor Renault" Cuomo was earlier "Attorney-General Renault" Cuomo investigating Medicaid corruption and some how he missed:  Evil Republicans (Congresspersons) in US House report released a "congressional report ... During a two-year investigation, 65,000 instances of prescription fraud cost U.S. taxpayers about $65 million in the top five states alone. An additional $2.3 million went to practitioners and pharmacies banned from federal health care programs, nearly 2,000 prescriptions were written for dead patients and 1,200 prescriptions were written by dead doctors."

    And in non-Medicaid fraud, "Attorney-General Renault" was shocked that in the district of Peter Rivera, a Bronx Democrat Assemblyman, "investigators were eyeing more than $200,000 in interest-free loans made from 'a state-funded community organization with strong ties to a veteran assemblyman."

    "Governor Renault"is still shocked how could they could smear him with his pure heart and label his  "New York as one of five states with the highest rate of Medicaid fraud."     Of course, all this thieving and corruption will be eliminated when ethics education is mandated. "Governor Renault" knows those poor educational-deprived victims facing criminal charges hadn't the benefit of the ethics classes, he is proposing.

     Meanwhile, "Governor Renault" will continued to be shocked when his Medicaid Redesign Team can't succeed in its goal to reduce Medicaid costs down (50%?) while maintaining and improving quality.   "Governor Renault has heard that:  1."Meetings are indispensable when you don't want to do anything." ~John Kenneth Galbraith

2. “If you want to kill any idea in the world today, get a committee working on it.” ~Charles Franklin Kettering.

3. Committees are “A cul-de-sac to which ideas are lured and then quietly strangled.”`~John A. Lincoln.

4. "Meetings are a symptom of bad organization. The fewer meetings the better."(Peter F. Drucker)

But "Governor Renault" will change that by expanding his committees and holding more meetings.

  Cuomo's Medicaid Redesign Team is flourishing and  expanding to "seeking everyone’s help in finding solutions."    The Team "is charged with recommending ways of cutting costs and improving quality and efficiency in the state’s nearly $54 billion [up from the paltry $38 Billion from Comptroller's report] health-care program for the poor. In addition to attending one of the hearings, members of the public can submit any ideas online. The panel will submit its initial report to the governor March 1, in time for recommendations to be used in crafting the 2011-12 state budget." 
      “At its current rate of growth, New York’s Medicaid program is unsustainable,” said Redesign Team Co-chairman Michael Dowling, president and CEO of the North Shore Long Island Jewish Health system."   "Governor Renault" will be shocked when the Co-chairman has not recommended a 50% reduction in his Medicaid funding and didn't they hear that cutting the growth of spending is not cutting spending? "Governor Renault" has just thanked an aide for giving him a summary of how much was contributed to his campaign by members of his Medicaid Redesign Team.

Isn't Andrew handsome in his Renault uniform; doesn't he say his lines believably; hasn't he's tried harder than anyone else?
[Now, applaud] [please, applaud]

 Do, or do not. There is no 'try.' ~ Jedi Master Yoda

P.S. Andrew hasn't been sleeping well.  He's keeps dreaming of the "Ghost of  NY yet to come."

Cuomo Follies Seeks A Stooge For Economic Development Agency While Other Stooges Rumble

Stooge –n. 1. an entertainer who feeds lines to the main comedian and usually serves as the butt of his or her jokes.

2. any underling, assistant, or accomplice. 

Inside the Albany Follies Tent: 

    Andrew Cuomo has made creating jobs, a top priority, "but he's raising eyebrows over one he hasn't filled: boss of the state's economic development agency...'No one has turned us down,' Cuomo spokesman Josh Vlasto insisted."   Cuomo needs a stooge who'll lend his name and reputation to a agency supposedly luring businesses to, as described by Cuomo, the "most unfriendly to business State."    The joke will be on the stooge when Cuomo fires him and appoints a new stooge.

    Meanwhile, more trough feeders have been invited as stooges onto Cuomo's Medicaid Redesign Team.
Imagine the discussion, where each of the trough feeders is asked to cut his gluttony in half to counter NY's twice as high rate of Medicaid expenditures compared to other States.   Things degenerated, after a question proposed at the Medicaid Redesign Team was "Which one of you will be the first to agree to a 50% reduction to your consumption or even better end your consumption?"  

Hilarious Pandemonium ensued with random comments:

 I need every drop.

Them, over there are the real pigs.

You're fatter than me.

It's bloated pigs like you that harm us innocents.

Then, laughter and squealing oinks, as two got stuck trying to get out of the door at the same time.

    Meanwhile, the judges demand more money, not cuts. 

Where's Cuomo?

"Governor Renault" Cuomo Shocked To Learn Of Pay Increases and Missing Budgets From State Authorities

   Andrew Cuomo and The Albany Follies are remaking "Casablanca" and will highlight Andrew Cuomo's starring role as the modern Captain Renault.

          The Original Casablanca script:

Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
a croupier hands Renault a pile of money
Croupier: Your winnings, sir.
Captain Renault: Oh, thank you very much.  

       The Andrew Cuomo Albany Follies includes several remakes of that same scene in Casablanca, starring the handsome Andrew Cuomo in uniform as a modern Captain Renault,  "Gov. Andrew Cuomo said he heard of raises to some State Police top brass, first reported by WNYT last night and the New York Post this morning, with “surprise and shock.”    And there was more shock, "The recently created Authorities Budget Office has released its tally of the state and local authorities that have not filed a budget, annual and/or audit report for the most recent reporting period, as required by Public Authorities Law."   And more shock, after Cuomo announced 5% reductions, ""Richard Bamberger, who has served as director of communications for Andrew Cuomo. ..was paid $140,000 in the office of attorney general, and is now up to $169,100."  And more shock, "Paterson announced a hard line hiring freeze in July, only to find out in October that 31,684 new employees had been added to the state payroll."


        The Original Casablanca Script:
Captain Renault: Oh no, Emil, please. A bottle of your best champagne, and put it on my bill.
Emil: Very well, sir.
Victor Laszlo: Captain, please...
Captain Renault: Oh, please, monsieur. It is a little game we play. They put it on the bill, I tear up the bill. It is very convenient. 

     And the Albany Follies knows how the game is played and "Governor Renault" Cuomo knows who pays the bills as, "Nearly half of the people on Cuomo's transition team and economic advisory council either are registered lobbyists themselves or work for organizations that lobby New York's state government."
 Yawn, where's the vaudeville hook?

Andrew Cuomo Recovered 0.6% Of Medicaid Budget

   Unquestionably, there is progress. The average American now pays out twice as much in taxes as he formerly got in wages.~ H. L. Mencken

       Luckily for federal taxpayers, the federal government will be prosecuting NY Medicaid fraud, because Andrew Cuomo dropped the ball on such prosecutions while he was Attorney General.  And, although NYC is named in this federal complaint, NY State had to pay it's larger share of this fraud. U.S. Attorney Preet Bharara said in a statement, "The City's alleged conduct has resulted in patients receiving more services through the program than necessary or warranted by their condition, resulting in substantial additional costs to taxpayers," 

How much of this Medicaid Fraud will NY State have to refund to the US Government?

    Cuomo was aware of many other Medicaid frauds while Attorney General as reported on this blog and NY State will have to pay the piper (US government) with refunds (at least $1.6 billion are reported on this blog) which Cuomo has ignored in his budgeting.

     Cuomo had lots of publicity for his efforts, "Cuomo, Investigating Medicaid Fraud, Issues Subpoenas to 59 Home Care Agencies," but Cuomo reported, "Cuomo Recovers Over $660 Million in Taxpayer Funds in First Three Years as Attorney General." 


     Now, do the arithmetic, NY's $38 Billion dollar budget is "more than twice the national average on Medicaid on a per capita basis," and Cuomo has recovered $660 million in three years or $220 million per year. Or if you take 1/2 of $38 billion or $19 billion dollars as excessive Medicaid in NY, Cuomo has recovered $220 million dollars out of $19 billion dollars or 1.2% of excessive Medicaid in NY or a measly 0.6% of the total NY Medicaid budget. 
  

        "Illinois lawmakers approved a 66 percent increase to the personal income tax overnight, and soon, your paycheck will be shrinking."    Illinois "tried" and didn't find enough budget cuts.   Andrew Cuomo and his committees headed nowhere "tried."

       Remember the promised 5% cuts for Cuomo's staff.   That didn't apply for, "Richard Bamberger, who has served as director of communications for Andrew Cuomo. According to state payroll records, Bamberger was paid $140,000 in the office of attorney general, and is now up to $169,100 working for the governor’s office."
     It's coming: "I'll explain everything; it's isn't my fault; I tried; more taxes is the responsible thing."

What are the odds, now, for a unpromised tax increase?
       

Jerry Brown Acts While Cuomo Fiddles With Committees And Is Slapped By Legislature.

You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. ~Abraham Lincoln 
 
"California Governor Jerry Brown unveiled a budget on Monday that included "painful" cuts to state worker pay and social services and a plan to extend tax increases ... to close a $25.4 billion deficit."  and "Alarmed at discovering that the state pays for 96,000 cellphones, Gov. Jerry Brown issued an executive order ...Requiring 48,000 cellphones to be turned in ...will save the state about $20 million a year."
 
      While on Monday, it was bye , bye, to some Cuomo's promises, "As the first week of New York’s legislative session began, the good will of lawmakers rallying around Gov. Andrew Cuomo’s top priorities gave way ...Opposing lines between the majorities of the Senate and Assembly were being drawn Monday over Cuomo’s proposal to cap the growth in property taxes at no more than 2 percent a year. Opposition also surfaced about whether to end, as scheduled, a temporary income tax hike on New Yorkers making more than $200,000 a year.... Assembly Speaker Sheldon Silver said Monday that his Democratic majority is discussing whether Cuomo’s proposed property tax cap limit of 2 percent or a lesser inflation rate is too low. Democrats also are discussing whether there should be more instances in which the cap could be suspended, such as an unexpected expense like a health care spike or big court judgment."  

    And it was bye, bye, to Cuomo's rent control and property tax cap as, "The Senate’s Republican majority strongly supports the property tax cap, ... But on Monday the Republicans refused to trade the cap for one of Silver’s top priorities. ... rent regulation in New York City on 1 million apartments, critical to the majority’s New York City base."  

       So, Cuomo will continue the Albany Follies Sideshow replacing Governor Paterson with himself and Andrew Cuomo will add his Fiddling to the performance. 
 
       Sadly, the Finger-Pointing Albany Follies' acts have grown stale.  There's no more money to spend.   The piper wants his fee. 

     Please Andrew, please don't cry; the People will understand; you tried; the committees couldn't find enough cuts; the legislature dropped the ball; it's not Andrew's fault: it's their fault. 

 

Do or not do.  There is no try. ~Yoda