Prodigal Andrew Cuomo Is Spending And Spending
The Albany Follies Show's expenses continue their steep climb. Where will Cuomo get the money, when Cuomo and Silver hacks give 27% raise to judges over three years. That was slightly less than the 31% expected by Chief Judge Lippman as reported here in Cuomo And Chief Judge Lippman Dance Around Phony Budget Numbers On The Albany Titanic Barge which described The earlier Albany Follies Show as:
New York Taxpayers Find The Local Tax Cap And Balanced Budget Were Only To Fool The Suckers
Didn't Cuomo promise local taxes would be capped at 2%?
Did Cuomo insert a weasel clause in his tax cap?
What balanced budget? Will more taxpayers flee?
Weasel ~ n. 2. a treacherous or sneaky person. Did Cuomo insert a weasel clause in his tax cap?
What balanced budget? Will more taxpayers flee?
Weasel out ~v. to back out of a situation in a sneaky or cowardly manner
The pension funding tax increases faced by schools due to Comptroller DiNapoli's decrees that were reported previously on this blog in Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds, are now being reported for municipalities. New York State Comptroller Thomas DiNapoli decrees state and local governments will cough up more money for their workers' pensions. The average contribution rate to the state pension fund for public workers will rise from 16.3 percent of salaries to 18.9 percent. The average for the police and fire retirement system will rise from 21.6 percent to 25.8 percent. The Comptroller admitted that "the Common Retirement Fund has had two consecutive years of strong investment returns. However, we are still incorporating the market loss of 2008-09 into our employer contribution rates." The Comptroller continued with, "It's true the contribution rates are going up and that's a consequence of the severe market decline in 2008 and 2009, but the good news is that we're on the road to recovery, and if you look at the long history of the fund, we've always weathered difficult economic times — we'll get through this tough time as well,"
Local taxpayers discover Cuomo inserted weasel clauses in his local property cap so that schools and "municipalities could pass some of the higher pension costs on to property taxpayers because the state's new property tax cap has an exclusion for part of the pension hikes." And so Cuomo has an excuse which he forgot to mention when he was prancing about congratulating himself on not raising taxes. "The Cuomo administration argued the exemption balances out the damage done by the 2008 financial crisis, which made less pension fund money available. With less money from the fund, localities are forced to fill the gap."
Now, hold your wallet really tightly
Cuomo forgot to include in his NY State budget increasing state worker pension contributions by 3.6%. Now, add this to the judges' raises Cuomo's committee will add today at their final meeting.
[Link to judges' salary and Cuomo.]
When will Comptroller DiNapoli and Cuomo tell us that NY State, its schools and local governments need to fund their retiree health benefits of $56.3 Billion In Presently Unfunded Liabilities. Bye, bye, Cuomo's balanced New York State budget.
If you think this local tax increase is bad, wait till you discover that these increases are based upon Comptroller DiNapoli's lowering the promised safe rate of return on pension investments from 8.0% to 7.5%. Luckily, DiNapoli and Cuomo are running public pension plans where the federal law allows an assumption of an 8.0% or 7.5% return on investments without criminal penalties and joining Madoff in prison does not result. A real safe yield rate for private pensions would be the US Treasury 10 year rate of 1.99% to 2.16%. Such a safe rate would mean the increases in pension contributions required could be calculated from DiNapoli's present increase based upon a rate reduction from 8.0%-7.5%=0.5% to a true safe rate reduction of 8.0% -2.0% = 6.0%. Since 6.0% is 12 times 0.5%, the required pension contributions should be 12 times DiNapoli's present increases. Or, 59.5% of salary for public workers and 72.0% of salary for police and fire.
The taxpayer wagon trains will be forming in your community soon. Texas, Florida or Wisconsin or bust.
See New York Exodus As Tax Payers Flee At The Highest Rate In USA
New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee?
Where's The Independent Audit Of NY Pensions?
The independent audit overview of New York Pension funds is here at this blog for now. So as the relentless hounds of economic reality circle in on Cuomo and New York State Pension Finances, here are some of the latest reports:
1. E.J. McMahon, a senior fellow at the conservative Manhattan Institute for Policy Research, said the asset levels of virtually all public pension funds are below 2007 levels despite the recovery of the market in 2009 and 2010. "Pension funds promise returns on investments -- 7 percent to 8 percent or more a year ...They still think there is a 'long-term norm,he said of fund managers. The events of the last two months are a reminder of how wrong that might be."
2. "Because so many government pension systems are underfunded, their managers have been chasing high returns by betting heavily on volatile investments ...Even with the run-up in the market earlier this year, New York’s pension assets were still some $9 billion lower than their peak in 2007 — before the financial crisis."
3. Teacher pension fund joins California auditor's high risk list
While California has an independent auditor making a report, in New York we have the Pension Fund Manager, DiNapoli, making his own audit. The New York Controller claims he can make safe investments with a 7.5% return and his own audit confirms it? Can the Comptroller walk on water, too?
See in regard teacher's pensions: Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds
See in regard NYS pension costs: New York State Will Likely Default And Rating Agencies Will Be Liable If They Fail To Properly Rate NYS Bonds
1. E.J. McMahon, a senior fellow at the conservative Manhattan Institute for Policy Research, said the asset levels of virtually all public pension funds are below 2007 levels despite the recovery of the market in 2009 and 2010. "Pension funds promise returns on investments -- 7 percent to 8 percent or more a year ...They still think there is a 'long-term norm,he said of fund managers. The events of the last two months are a reminder of how wrong that might be."
2. "Because so many government pension systems are underfunded, their managers have been chasing high returns by betting heavily on volatile investments ...Even with the run-up in the market earlier this year, New York’s pension assets were still some $9 billion lower than their peak in 2007 — before the financial crisis."
3. Teacher pension fund joins California auditor's high risk list
While California has an independent auditor making a report, in New York we have the Pension Fund Manager, DiNapoli, making his own audit. The New York Controller claims he can make safe investments with a 7.5% return and his own audit confirms it? Can the Comptroller walk on water, too?
See in regard teacher's pensions: Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds
See in regard NYS pension costs: New York State Will Likely Default And Rating Agencies Will Be Liable If They Fail To Properly Rate NYS Bonds
And NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible
Cuomo's Dog And Pony Show Is Run Over By A Herd Of Elephants
"Knowing how to count is important for a Prince."
Governors Cuomo and Christie ran their Port Authority Sideshow Act where a $4 toll increase is announced and the two governors come to the rescue and lower it to a $1.50 increase. Yeah for our heros, Cuomo and Christie, and their script writers. The play acting continues in New York as the heroic Cuomo struts triumphant after "members of New York’s largest union of state employees, in a begrudging acknowledgment of the increasingly hostile mood toward public workers, have agreed to accept major wage and benefits concessions sought by Gov. Andrew M. Cuomo."
"Savings from the five-year contract are expected to total $73 million this fiscal year, part of the $450 million in cuts that Mr. Cuomo’s budget counted on extracting from the state work force." But, "A day after his members ratified a new five-year contract, Civil Service Employees Association President Danny Donohue said his crew has sacrificed enough - and opposes Gov. Cuomo's drive to reduce long-term pension costs."
So Cuomo has a $450 million dollar saving, while NY State has not funded its retiree health benefits of $56.3 Billion In Unfunded Liabilities and NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible with losses of up to $7.3 trillion dollars. Poor Andrew may have had difficulty with arthimetic in school and not learned that there are a thousand millions in one billion and a million millions in a trillion.
$450 million is 0.8% of $56.3 billion. $450 million is 0.006% of $7.3 trillion.
Governors Cuomo and Christie ran their Port Authority Sideshow Act where a $4 toll increase is announced and the two governors come to the rescue and lower it to a $1.50 increase. Yeah for our heros, Cuomo and Christie, and their script writers. The play acting continues in New York as the heroic Cuomo struts triumphant after "members of New York’s largest union of state employees, in a begrudging acknowledgment of the increasingly hostile mood toward public workers, have agreed to accept major wage and benefits concessions sought by Gov. Andrew M. Cuomo."
"Savings from the five-year contract are expected to total $73 million this fiscal year, part of the $450 million in cuts that Mr. Cuomo’s budget counted on extracting from the state work force." But, "A day after his members ratified a new five-year contract, Civil Service Employees Association President Danny Donohue said his crew has sacrificed enough - and opposes Gov. Cuomo's drive to reduce long-term pension costs."
So Cuomo has a $450 million dollar saving, while NY State has not funded its retiree health benefits of $56.3 Billion In Unfunded Liabilities and NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible with losses of up to $7.3 trillion dollars. Poor Andrew may have had difficulty with arthimetic in school and not learned that there are a thousand millions in one billion and a million millions in a trillion.
$450 million is 0.8% of $56.3 billion. $450 million is 0.006% of $7.3 trillion.
Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds
"The sky is falling and the taxpayers fleeing" ~ Economic Grim Reaper on impending fiscal collapse.
Could Andrew Cuomo be arithmetically challenged in regard the NY Pension underfunding and other impending disasters with his budget? Yes. Could Andrew be a silver spoon fed son of Mario whose head is swelled with dreams of his coming Presidency? Yes Could Cuomo believe he lives under different rules of ethics because his father Mario anointed him, Governor and President? Yes, because that explains how Cuomo took a $45,000 campaign check from a law firm while Cuomo's deputies were probing one of its attorneys for his role in the pay-to-play pension scandal.
Meanwhile, Comptroller DiNapoli still touts his achievement that "in September 2010, the Fund [teacher's] lowered its assumed investment rate of return to 7.5 percent." No honest retirement fund can safely earn 7.5% in today's market, except if you are Bernie Madoff. A private pension manger would be spending time in jail for such lying fraud. But Dinapoli wasn't done with misleading and fraudulent claims of solvency for pension funds he managed. He was touting the great returns his funds earned in a one year period such as "Domestic public equities returned 17.6 percent, while international public equities returned 14.3 percent. Real estate investments yielded a 26.7 percent return, while private equity investments generated an 18.9 percent return. The Fund’s emerging markets equities returned 16.1 percent, while Treasury Inflation-Protected Securities yielded 9.7 percent and core fixed-income investments returned 8 percent." But DiNapoli forgot to mention that those returns were from huge earlier losses in 2009 recession. "John Cardillo, a spokesman for the teachers' retirement fund, said the fund is still trying to make up for a steep decline two years ago."
Even worse for those teacher funds, the schools now are paying based on DiNapoli's phoney improved safe rate of return which he lowered from 8% to 7.5%. The schools complain that "in 2010, the pension rate was 6.2 percent of payroll and forced schools to collect about $926 million. Now at 11 percent, schools will have to pay nearly $1.7 billion, according to preliminary estimates." Wait till the schools and ultimately the taxpayers discover that an honest safe rate of return for pension funds would be slightly above the 10 year treasury bond rate or very generously 3%. Doing the arithmetic: going from 8% -3% =5% is ten times greater than going from 8%-7.5% = 0.5%. So a 3% safe rate of return would require the schools pay ten times the present increase of (11%-6.2% =) 4.8% to an increase of 48%, which must be added to the prior 6.2% for 54.2% of salary to be contributed to the pension funds. And wait, Cuomo and DiNapoli forgot to tell schools they have to fund retiree health benefits.
How will schools do it with Cuomo's budget cap law? Will more taxpayers flee? Wanna buy some NYS bonds?
New York State Will Likely Default And Rating Agencies Will Be Liable If They Fail To Properly Rate NYS Bonds
Copy of letter sent August 16, 2011
To: Moody's Investors Service, Inc.,101 Federal Street, Suite 1900, Boston, MA 02110
Standard and Poors, 55 Water Street New York, New York 10041
Fitch's, One State Street Plaza, New York, NY 10004
Dagong Global Credit Rating Co.,Ltd
29/F, Unit A, Eagle Run Plaza, No.26 Xiaoyun Road,Chaoyang District,Beijing, P.R.China 100125
Re: US Rating agencies will face a large liability for improper ratings for NY State Bonds. Default/bankruptcy coming shortly. Catastrophe in waiting: Average NYS non-financial sector income of $50,400 a yr. results in less net income than average NYS dole benefit of $42,000 a yr.
Dear Rating Agencies:
How long do the rating agencies think this can continue in NY State? While NY State pays the average public assistance person $42,000 a year in benefits according to Lou Dobbs's radio show on 8/15/2011, the average non-financial sector NY State income was $50,400.* And NY State relies more heavily on personal income tax for its revenue than other States.* When will the federal government cut off NY State's Medicaid program which is run as a fraud, where NY State mischarges the federal government $22 billion dollars to fund its non-medicaid State budget? Andrew Cuomo's business friendly NY has fizzled. Meanwhile, Andrew Cuomo failed to begin to change the NY Constitution to end unaffordable pension costs.
"A word to the wise is sufficient." The US based rating agencies will have a large liability, if NY State bonds are improperly rated. The future possibility of repaying NY State bonds not backed by a dedicated revenue source is non-existent. NY State bonds finance State agencies as well as State government. Some bondholders, such as Thruway bonds or Dormitory bonds, receive first dibs on revenues, if the State doesn't pay on time. Other bonds are backed by the full faith and credit of NY State without a dedicated revenue source. But if the State doesn't have enough cash in revenue, how can it pay?
These are the details:
First, this is the text from NY State Constitution: §7. After July first, nineteen hundred forty, 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. (Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.)
Then, in regard retiree costs:
1. Although, Chris Christie reformed pension and benefit costs in New Jersey, Andrew Cuomo failed to ask this session of the Legislature for a Constitutional Amendment to change the above clause which prohibits NYS from changing any retirement contractually promised benefits, such as Health Insurance and Pensions. Such an amendment must first be passed by this and then the next legislative session and then finally approved by the voters.
http://cuomotarp.blogspot.com/2011/08/rating-agencies-informed-as-new-york.html
2. NY State has not funded its retiree health benefits which were part of State workers' contracts with NYS and are constitutionally protected. NewYork Adds $56.3 Billion To Its Unfunded Liabilities
3. NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible. All the undeposited funds needed to properly fund the pension funds and the losses of up to $7.3 trillion dollars are liabilities of NYS. Any higher taxes to fund this shortfall would create a stampede of taxpayers getting out of NY State..
Then in regard taxpayers
4. Taxpayers are fleeing NYS at the largest rate in the USA. Who'll repay the bonds?
5. NY State has the highest local and State debt per person and the second highest taxes paid per person of any State but New Jersey. New York Debt per person including local debt is at $24,195. For a family of four about $97,000. Will NYS raise taxes even higher and borrow more?
6. Andrew Cuomo will not attract business or its potential taxes to NYS because NYS has the next to lowest business friendly rating of all the States. When NY businesses repay the $ 3.6 billion dollar Unemployment Insurance loan to the Federal government this November 2011, NYS will become a business pariah.
7. What happens when the millions of NYS taxpaying residents earning the average non-financial $50,400 or less discover their net income is less than the average dole recipient's $42,000 a year? Do they leave the State or go on the dole?
Then, in regard State revenues:
8. The NY Comptroller predicts rising numbers of non-taxpayers in the NY State Medicaid system*.
9. NY State funded 14% of its budget this year with one time funds that will not be available in future years.
10. Andrew Cuomo's Budget director says, he has no ability to finance spending commitments already. This was recorded at a 7/20/2011 hearing of Cuomo's Commission on Judicial Compensation: "We don't even have the ability to finance the spending commitment that are already in place, said Robert L. Megna."
The Bottom Line:
Sincerely yours,
CuomoTARP.blogspot.com
*See Financial Condition Report for Fiscal Year 3/31/2010
P.S. Please access website for working links to all data.
To: Moody's Investors Service, Inc.,101 Federal Street, Suite 1900, Boston, MA 02110
Standard and Poors, 55 Water Street New York, New York 10041
Fitch's, One State Street Plaza, New York, NY 10004
Dagong Global Credit Rating Co.,Ltd
29/F, Unit A, Eagle Run Plaza, No.26 Xiaoyun Road,Chaoyang District,Beijing, P.R.China 100125
Re: US Rating agencies will face a large liability for improper ratings for NY State Bonds. Default/bankruptcy coming shortly. Catastrophe in waiting: Average NYS non-financial sector income of $50,400 a yr. results in less net income than average NYS dole benefit of $42,000 a yr.
Dear Rating Agencies:
How long do the rating agencies think this can continue in NY State? While NY State pays the average public assistance person $42,000 a year in benefits according to Lou Dobbs's radio show on 8/15/2011, the average non-financial sector NY State income was $50,400.* And NY State relies more heavily on personal income tax for its revenue than other States.* When will the federal government cut off NY State's Medicaid program which is run as a fraud, where NY State mischarges the federal government $22 billion dollars to fund its non-medicaid State budget? Andrew Cuomo's business friendly NY has fizzled. Meanwhile, Andrew Cuomo failed to begin to change the NY Constitution to end unaffordable pension costs.
"A word to the wise is sufficient." The US based rating agencies will have a large liability, if NY State bonds are improperly rated. The future possibility of repaying NY State bonds not backed by a dedicated revenue source is non-existent. NY State bonds finance State agencies as well as State government. Some bondholders, such as Thruway bonds or Dormitory bonds, receive first dibs on revenues, if the State doesn't pay on time. Other bonds are backed by the full faith and credit of NY State without a dedicated revenue source. But if the State doesn't have enough cash in revenue, how can it pay?
These are the details:
First, this is the text from NY State Constitution: §7. After July first, nineteen hundred forty, 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. (Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.)
Then, in regard retiree costs:
1. Although, Chris Christie reformed pension and benefit costs in New Jersey, Andrew Cuomo failed to ask this session of the Legislature for a Constitutional Amendment to change the above clause which prohibits NYS from changing any retirement contractually promised benefits, such as Health Insurance and Pensions. Such an amendment must first be passed by this and then the next legislative session and then finally approved by the voters.
http://cuomotarp.blogspot.com/2011/08/rating-agencies-informed-as-new-york.html
2. NY State has not funded its retiree health benefits which were part of State workers' contracts with NYS and are constitutionally protected. NewYork Adds $56.3 Billion To Its Unfunded Liabilities
3. NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible. All the undeposited funds needed to properly fund the pension funds and the losses of up to $7.3 trillion dollars are liabilities of NYS. Any higher taxes to fund this shortfall would create a stampede of taxpayers getting out of NY State..
Then in regard taxpayers
4. Taxpayers are fleeing NYS at the largest rate in the USA. Who'll repay the bonds?
5. NY State has the highest local and State debt per person and the second highest taxes paid per person of any State but New Jersey. New York Debt per person including local debt is at $24,195. For a family of four about $97,000. Will NYS raise taxes even higher and borrow more?
6. Andrew Cuomo will not attract business or its potential taxes to NYS because NYS has the next to lowest business friendly rating of all the States. When NY businesses repay the $ 3.6 billion dollar Unemployment Insurance loan to the Federal government this November 2011, NYS will become a business pariah.
7. What happens when the millions of NYS taxpaying residents earning the average non-financial $50,400 or less discover their net income is less than the average dole recipient's $42,000 a year? Do they leave the State or go on the dole?
Then, in regard State revenues:
8. The NY Comptroller predicts rising numbers of non-taxpayers in the NY State Medicaid system*.
9. NY State funded 14% of its budget this year with one time funds that will not be available in future years.
10. Andrew Cuomo's Budget director says, he has no ability to finance spending commitments already. This was recorded at a 7/20/2011 hearing of Cuomo's Commission on Judicial Compensation: "We don't even have the ability to finance the spending commitment that are already in place, said Robert L. Megna."
The Bottom Line:
- a rapidly rising NYS expenditure for retiree and others' benefits
- a reduced number of businesses in NYS paying taxes and paying workers
- more NYS Medicaid non-taxpayers
- taxpayers fleeing the State
- NY State will run out of cash from its diminishing revenue sources
- NY State either defaults or goes bankrupt if Congress enables State Bankruptcy by a new law
- a tax revolt when those millions earning the average non-financial income of $50,400 or less realize that the average NYS dole recipient receives $42,000 yr. in benefits
And the US rating agencies would be sued by all the suckers still holding devalued and defaulted NYS bonds. And Dagong may have protected foreign investors and exposed the hopeless finances in New York State.
Sincerely yours,
CuomoTARP.blogspot.com
*See Financial Condition Report for Fiscal Year 3/31/2010
P.S. Please access website for working links to all data.
Rating Agencies Informed As New York State Pension Funds Have Estimated Losses of $7.3 Trillion Dollars
Letter: August 11, 2011
Dear Sirs: You are promising to report on States. New York State is liable for its Pension funds' losses and underfunding. This is to inform you that NY State Pension Funds have estimated losses of approximately $7.3 trillion dollars and NYS's assumption of a safe return of 7% can only be characterized as a fraud. It is not possible for NYS to fund its Pension obligations and/or losses through taxes or by changes in employee contributions which are contractually determined, because of the NY State Constitutional Provision copied here:
#7. After July first, nineteen hundred forty, 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. (New. Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.) Note that Andrew Cuomo is making no efforts to amend the NY Constitution in regard pensions.
In regard to New Jersey, it was reported that, "to justify an 8.25% interest assumption assets were in investments that could possibly generate that return so, as of May 31, 2011, the plan’s $74.7 billion was allocated 27% in domestic equity, 30% in bonds, 20% in international equity, and 17% in alternative investments. With only about $300 million in employee contributions coming in over the last two months, while $1.3 billion in payouts left on top of this 10%+ investment drop the plan likely has about $65 billion this morning." In New York State things are worse, because of NYS Constitutional restrictions on Pension Changes and the trillions of dollar size.
The NYS Comptroller reports:
The following table summarizes the market values for March 31, 2010 and 2009 (In Thousands):
Asset Type 3/31/2010 Market Value %of total
Domestic Equity $ 51,495,373 38.9%
International Equity 21,178,608 16.0
Private Equity 12,799,735 9.7
Absolute Return Strategy 3,817,538 2.9
Real Estate 5,551,078 4.2
Core Fixed Income 33,726,066 25.4
Mortgage Loans 845,721 0.6
Short-term Investments 3,086,085 2.3
Total Investments $ 132,500,204 100.0%
Market losses have exceeded 10% in both domestic and international equities with estimated losses of $7.3 trillion dollars for NYS's portfolio. Real Estate is substantially decreasing in value in NYS. Get a good laugh at the 119 page long list of funds held by NY State and ponder how the NY State Comptroller can keep tabs on such a large number of funds.
Based on Market Values as of March 31, 2010.
Annualized Rate of Return
1 Year 3 Years 5 Years 10 Years
Total Fund 25.87% -1.68% 4.16% 3.75%
Domestic Equity 51.70 -4.10 2.20 0.52
International Equity 56.77 -5.00 5.52 2.72
Private Equity 11.61 2.40 12.82 8.56
Absolute Return
Strategy 14.95 -0.44 3.29 —
Equity Real Estate -27.77 -17.65 -0.11 9.56
Core Fixed Income 7.92 7.00 6.06 7.57
Treasury Inflation
Indexed Securities 5.01 5.75 4.34 —
The Core Fixed Income and Treasury Inflation Indexed investments cannot expect to earn anywhere near the 7% assumption. In its latest action, the Federal Reserve has frozen interest rates for the next two years and 10 yr Federal returns would be for the next two years at 2.14%, not 7.0%.
Bottom line is New York State has an estimated $7.3 trillion dollars in Pension losses and no possible way to fund them, nor to earn 7.0% safe return with 10 yr. Treasuries at 2.14%. Please read my prior post New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee? concluding with, Who'll repay the bonds?
As you, the rating agencies, may note in the new law suit against Bank of America, there will be consequences for those not reporting truthfully. Please also be aware of Federal Law Title 18 as to who may be charged in a federal criminal action.
TITLE 18 PART I CHAPTER 1 #2. Principals
Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.
Sincerely yours,
CuomoTARP.blogspot.com
P.S. Please access website for working links to all data.
To: Moody's Investors Service, Inc.
101 Federal Street, Suite 1900
Boston, MA 02110
Standard and Poors
55 Water Street New York, New York 10041
Fitch's
One State Street Plaza, New York, NY 10004
Re: Trillions in losses and fraudulent pension asset assumptions in New York State, also, New Jersey. Potential civil and federal criminal liability101 Federal Street, Suite 1900
Boston, MA 02110
Standard and Poors
55 Water Street New York, New York 10041
Fitch's
One State Street Plaza, New York, NY 10004
Dear Sirs: You are promising to report on States. New York State is liable for its Pension funds' losses and underfunding. This is to inform you that NY State Pension Funds have estimated losses of approximately $7.3 trillion dollars and NYS's assumption of a safe return of 7% can only be characterized as a fraud. It is not possible for NYS to fund its Pension obligations and/or losses through taxes or by changes in employee contributions which are contractually determined, because of the NY State Constitutional Provision copied here:
#7. After July first, nineteen hundred forty, 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. (New. Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.) Note that Andrew Cuomo is making no efforts to amend the NY Constitution in regard pensions.
In regard to New Jersey, it was reported that, "to justify an 8.25% interest assumption assets were in investments that could possibly generate that return so, as of May 31, 2011, the plan’s $74.7 billion was allocated 27% in domestic equity, 30% in bonds, 20% in international equity, and 17% in alternative investments. With only about $300 million in employee contributions coming in over the last two months, while $1.3 billion in payouts left on top of this 10%+ investment drop the plan likely has about $65 billion this morning." In New York State things are worse, because of NYS Constitutional restrictions on Pension Changes and the trillions of dollar size.
The NYS Comptroller reports:
The following table summarizes the market values for March 31, 2010 and 2009 (In Thousands):
Asset Type 3/31/2010 Market Value %of total
Domestic Equity $ 51,495,373 38.9%
International Equity 21,178,608 16.0
Private Equity 12,799,735 9.7
Absolute Return Strategy 3,817,538 2.9
Real Estate 5,551,078 4.2
Core Fixed Income 33,726,066 25.4
Mortgage Loans 845,721 0.6
Short-term Investments 3,086,085 2.3
Total Investments $ 132,500,204 100.0%
Market losses have exceeded 10% in both domestic and international equities with estimated losses of $7.3 trillion dollars for NYS's portfolio. Real Estate is substantially decreasing in value in NYS. Get a good laugh at the 119 page long list of funds held by NY State and ponder how the NY State Comptroller can keep tabs on such a large number of funds.
Based on Market Values as of March 31, 2010.
Annualized Rate of Return
1 Year 3 Years 5 Years 10 Years
Total Fund 25.87% -1.68% 4.16% 3.75%
Domestic Equity 51.70 -4.10 2.20 0.52
International Equity 56.77 -5.00 5.52 2.72
Private Equity 11.61 2.40 12.82 8.56
Absolute Return
Strategy 14.95 -0.44 3.29 —
Equity Real Estate -27.77 -17.65 -0.11 9.56
Core Fixed Income 7.92 7.00 6.06 7.57
Treasury Inflation
Indexed Securities 5.01 5.75 4.34 —
The Core Fixed Income and Treasury Inflation Indexed investments cannot expect to earn anywhere near the 7% assumption. In its latest action, the Federal Reserve has frozen interest rates for the next two years and 10 yr Federal returns would be for the next two years at 2.14%, not 7.0%.
Bottom line is New York State has an estimated $7.3 trillion dollars in Pension losses and no possible way to fund them, nor to earn 7.0% safe return with 10 yr. Treasuries at 2.14%. Please read my prior post New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee? concluding with, Who'll repay the bonds?
As you, the rating agencies, may note in the new law suit against Bank of America, there will be consequences for those not reporting truthfully. Please also be aware of Federal Law Title 18 as to who may be charged in a federal criminal action.
TITLE 18 PART I CHAPTER 1 #2. Principals
Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.
Sincerely yours,
CuomoTARP.blogspot.com
P.S. Please access website for working links to all data.
New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee?
Who pays the bonds off, when the taxpayers flee.
Did the media (including Fox News), the politicians of both parties and the media pundits lie to you that the US would/could default on its debt? Alan Greenspan said on Sunday,""The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default."
Are New York politicians or the sycophant New York media to be trusted? Will New York debt be downgraded? Unlike the federal government, New York can quickly default.
Here's a buyer's guide to New York State bonds or more likely a seller's guide:
1.NY Businesses Howl At $21.25 Per Worker, While Cuomo's Budget Will Require An Additional $478 Per Worker In November.
2. New York State has the highest debt per person in the USA ($24,195) and the second highest taxes per person ($6,884). Andrew Cuomo's Budget director says, he has no ability to finance spending commitments already. This was recorded at a 7/20/2011 hearing of Cuomo's Commission on Judicial Compensation: "We don't even have the ability to finance the spending commitment that are already in place, said Robert L. Megna, who was speaking on behalf of Governor Andrew Cuomo, who appointed three of the commission's seven members."
3. Cuomo's New York Comes In Second To New Jersey For The Most Taxes Per Person. New York's Taxes paid by residents as percentage of income are 12.1% "The state [NY] has one of the highest state and local tax collections per capita, an average of $6,884. According to the Census Bureau, the top ten counties in the U.S. with the highest property taxes as a percentage of home values are all in New York."
4. Rating Agencies Informed As Cuomo's Budget's Imagined $ 4.3 Billion In Revenue Increases Disappears
a. The Cuomo Business Friendly Bubble Burst, when NY was ranked 49th out of 50 States as Business Friendly. While the Cuomo stooge at the NY Economic Development Agency described his own policy as "anyone proposing nano-scale technology in Syracuse should be taken out to the woodshed."
b. Cuomo's expected tax revenues took another dive into red ink with latest report. "A gauge of manufacturing in New York State showed the sector unexpectedly contracted for the second month in a row as new orders worsened, while core inflation rose at its highest pace in three years."
c. This business contraction affects the revenue increases which finance Cuomo's spending. Cuomo had balanced his budget with imagined revenue increases and Cuomo used temporary sources for 14.7% of his budget revenue, such as, Federal stimulus money (threatened in present federal debt debate), "voluntary contributions" from NY Power Authority and other authorities (they'll charge you higher rates) and delaying paying NY State Income Tax refunds.
d. Cuomo's unrealized revenue fantasies reported by the Comptroller include:
i. Personal Income tax receipts in 2011-2012 will increase $2.9 billion or 7.9% (but decreased employment reported)
ii. User taxes and fees (sales and tobacco taxes)will increase $467 million or 3.3 % (but tobacco tax increase will fail link 1 link 2 and workers earning less or unemployed spend less)
iii. Business taxes will increase $894 million or 12.3% (but business declines)
iv. Payroll Tax will increase $63 million or 4.6% (but, rising unemployment including State layoffs decrease payrolls)
A budget shortfall of $4.3 billion dollars must be borrowed this year.
5. New York Pension Books are Cooked
6. Cuomo has a "funds shift [that] would result in the use of state bond proceeds for payment of a portion of debt service on MTA revenue bonds."
7. Cuomo's budget used the "Madoff-like" assumption of a 7.5% safe return on pension investments. and continues to allow borrowing to fund contributions.
8. Cuomo failed to budget in the required repaying of the federal government for Medicaid frauds. This is minimally estimated at $6.4 billion.
Finally, 9. Who'll repay the bonds? New York Exodus As Tax Payers Flee At The Highest Rate In USA. New York State businesses also will flee. Small-business lobbyist Mike Durant noted, New York has "consistently ranked worst or in the top three worst in business climate. You can't suck every penny out of people and expect them to remain in New York."
cc: Moody's, Fitchs , Standard and Poors
New York Exodus As Tax Payers Flee At The Highest Rate In USA
Wanna locate a business in New York? Pharaoh Andrew beckons.
Wanna not be taxed for the Cuomo fantasy? Join the largest Exodus in the USA. The Promised Land ain't New York.
New York State attains another new high with "the greatest loss nationally of residents to other states for the second decade in a row." Small-business lobbyist Mike Durant noted, New York has also "consistently ranked worst or in the top three worst in business climate. You can't suck every penny out of people and expect them to remain in New York." This is added to New York's other trophies such as Cuomo's New York Comes In Second To New Jersey For The Most Taxes Per Person where Cuomo lost out by a small margin.
And while New York's Taxes paid by residents as percentage of income are 12.1%, " [NY] has one of the highest state and local tax collections per capita, an average of $6,884. According to the Census Bureau, the top ten counties in the U.S. with the highest property taxes as a percentage of home values are all in New York."
New York State and Cuomo have the largest debt of any State in the USA with New York Debt per person including local debt at $24,195. For a family of four about $97,000. How many more business will leave NY when they discover that NYS must repay in November the Unemployment Insurance: State Trust Fund Loans of $3,176,873,427.71 ; that's $3.1 billion? Business which leave quickly could avoid a $478 per worker assessment.
To Businesses, taxpayers, government leeches. Cuomo promises something for all of you.
Wanna pay the highest taxes?
Wanna get the highest benefits for not working?
Wanna get a framed portrait of Pharaoh Andrew for veneration within your home?
Wanna buy a bridge?
Or join the taxpayer's Exodus.
Wanna not be taxed for the Cuomo fantasy? Join the largest Exodus in the USA. The Promised Land ain't New York.
New York State attains another new high with "the greatest loss nationally of residents to other states for the second decade in a row." Small-business lobbyist Mike Durant noted, New York has also "consistently ranked worst or in the top three worst in business climate. You can't suck every penny out of people and expect them to remain in New York." This is added to New York's other trophies such as Cuomo's New York Comes In Second To New Jersey For The Most Taxes Per Person where Cuomo lost out by a small margin.
And while New York's Taxes paid by residents as percentage of income are 12.1%, " [NY] has one of the highest state and local tax collections per capita, an average of $6,884. According to the Census Bureau, the top ten counties in the U.S. with the highest property taxes as a percentage of home values are all in New York."
New York State and Cuomo have the largest debt of any State in the USA with New York Debt per person including local debt at $24,195. For a family of four about $97,000. How many more business will leave NY when they discover that NYS must repay in November the Unemployment Insurance: State Trust Fund Loans of $3,176,873,427.71 ; that's $3.1 billion? Business which leave quickly could avoid a $478 per worker assessment.
To Businesses, taxpayers, government leeches. Cuomo promises something for all of you.
Wanna pay the highest taxes?
Wanna get the highest benefits for not working?
Wanna get a framed portrait of Pharaoh Andrew for veneration within your home?
Wanna buy a bridge?
Or join the taxpayer's Exodus.
NY Businesses Howl At $21.25 Per Worker, While Cuomo's Budget Will Require An Additional $478 Per Worker In November
Andrew Cuomo promised Hope, Change and Business Friendly.
New York businesses are howling because "The state is subsequently levying an "Interest Assessment Surcharge," which is based on a percentage of total taxable wages paid between October 2009 and September 2010. The maximum of $21.25 per worker applies to any employee making more than $8,500 yearly. The levy applies to every employer, including non-profits and local governments."
Wait till they get the bill for $478 per worker required in November because Cuomo did not fund repaying loans for unemployment insurance from the federal government in the NY state budget.
In the picture, note that the man in white is stealing from the man watching. He is looking skyward to cause others to look up instead of at the deceivers. link
What will the illusionist, Andrew Cuomo, do with the Unemployment debt of $3.3 Billion dollars borrowed from the federal government, which he must repay this year, which was forgotten in his budget? As of January 21, 2011, New York State, one of 30 States, borrowed $3,343,758,375.70 from the federal government for paying Unemployment Insurance. Six States, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full. Since Cuomo didn't budget for this in his budget, he must be planning to pass it through to NY businesses at an average $478 per worker due from employers.
http://cuomotarp.blogspot.com/2011/02/cuomos-smoke-and-mirrors-will-allow.html
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