Cuomo's High Tech Future For New York Looks Not To Be Profitable

"Dreams of windpower, green jobs and high tech sugar plums danced in his head."

         Cuomo and New York State awoke from their fanciful dream of a profitable high tech computer chip factory in Malta, New York to discover the company, GlobalFoundries needs cash and is willing to give up future tax credits which would offset future taxes.   GlobalFoundries wants to trade $700 million in tax credits it has coming to it at a tremendous discount. According to two well-placed public officials, the computer chip manufacturer building a giant factory in Malta approached state leaders recently and sought $165 million in cash promptly.   Although NY State rejected the request, because where would NY State get that cash with all its budget woes.

       Do Cuomo and NY State realize unprofitable facilities always close.   They don't stay open to keep jobs and tax revenues flowing.  Gone are Cuomo's dreams of income tax revenues from the future 1,600 employees and the expansion of local business serving the future employees and the company.   GlobalFoundries said, "We have been exploring many different proposals. ... Whether or not we build out the site will be a business decision based on various considerations, including customer needs and the state's ability to continue to partner with us."

Will Cuomo become a crony capitalist and further investor and the taxpayers become the paying suckers? 
Will this be Cuomo's Solyndra in New York, where NY State loses its $665 million dollar investment already spent?

The windmills in Lake Erie fail.    Two NY solar energy plants close.  Computer chip manufacturing is endangered.  The NYS high tech future fizzles.  What new jobs and income tax revenues will Cuomo expect now?
How will NY State pay off its 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:

• 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

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 liability

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.

Now look at Comptroller's investment returns reported last in 2010

                    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. 

Cuomo's New York Comes In Second To New Jersey For The Most Taxes Per Person

Wanna buy a New York bond? a bridge?

     First, New York State and Cuomo lost out to California for the most "business unfriendly State,"  as The Cuomo Business Friendly Bubble Bursts.   Then New York State and Cuomo lost out to New Jersey by a small margin as the State where residents pay the most in taxes. 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."
 
  New York State and Cuomo come in first with New York Debt per person including local debt at $24,195. For a family of four about $97,000.  Which is the largest debt of any State in the USA.

     "S&P said then there was "at least" a one-in-two chance that it would cut its US rating within the next 90 days, an act that would almost certainly send Washington's cost of borrowing shooting up."  "A downgrade of the US sovereign rating, or a "selective default" rating on its bonds, could also force the downgrade of the ratings of individual states and local governments."

    New York State's budget has at least an unanticipated $2 billion dollar deficit according to State Budget Director.   Unlike Washington D.C. where money can be printed, New York State must borrow.

    How will NYS repay in November the Unemployment Insurance: State Trust Fund Loans of $3,176,873,427.71 ; that's $3.1 billion?

 What happens when New York's bond rate rises?   NY's borrowing costs go up from $5.6 Billion to $18.8 Billion? 

     Which State's bonds will be downgraded first? Bankruptcy will come to look attractive, but Congress must act first. 
                            

New York State Budget Director Reports A $ 2+ Billion Deficit That Must Be Considered Before Judges' Pay Raised 40% Or More

  "All animals are equal, but some animals are more equal than others," or judges deserve wage increases BUT you don't.

Or, New York's headed to default and the Judge's pay increase could be the final straw.

    New York State must learn that the bond market punishes prodigal State spending, whether it's a Country or New York State. "Early on Thursday morning, after seven hours of talks, Germany and France reached a common position on a second bailout of Greece but details of the accord were not revealed."

    While in Albany on 7/20/2011, New York State Budget Director, Robert Megna, told the Commission on Judicial Compensation that New York State has a 2+billion dollar deficit already and although the judges might demand, want or deserve more, New York State has run out of money.  The Commission heard lots of self-serving praise of NYS judges by lawyers and the judges themselves and how they needed or deserved a large raise.  And, the Commission heard of rampant corruption by NYS judges which was ignored both at the Appellate level and in the Court of Appeals and was covered up by the New York Commission Judicial Conduct headed by Robert Tembeckjian.  

     Near the end of Commission testimony, T. Finnan from CuomoTARP told the Commission that the NY State's deficit is more likely to be $5+ billion as a minimum.  With the judges expecting a raise to $194,000 to $220,000, Mr. Finnan pointed out the Governor claims only $170,050.   Mr. Finnan noted the Budget Director's earlier testimony about a $2+ billion deficit was just the beginning of the increasing deficit this year for NYS.  T. Finnan continued his testimony which paralleled his written submission copied below:

Some States have Surpluses While Cuomo Heads to Default With His Commission Considering 61% Raises For NY Judges on 7/20

Remember when, Gov. Cuomo, said he would cut his $179,000 salary by 5% to $170,050 and that he intended to reduce other salaries of the governor's staff, including the governor's secretary, counsel, director of state operations, counselor and chief of staff. Well things have changed and NY judges want $220,836 and Cuomo wants a commission of hacks to decide.
On Wednesday, July 20, 2011, the Commission to raise judges' pay will hold the only hearing.   Here's what they need to hear. Will judicial raises be the straw that breaks the camel's back? Cuomo has created another committee to do the dirty work of giving judicial raises of up to 61%, while Cuomo hides behind them grinning. While some States have budget surpluses, such as Indiana having $1.2 billion dollars, New York has smoke and mirrors hiding default or bankruptcy.  The Cuomo budget revenue predictions were all smoke without any fire and the $4.3 billion dollars expected in increased revenue has vanished with the smoke.
Earlier this year, the Cuomo Medicaid Redesign Team created smoke promising Medicaid savings, when all it did was to replace last year's NY State Medicaid expenditure of $13.8 billion with a cap on this year's expenditure at $15.1 billion, while forgetting that NY won't have the federal stimulus of $5.9 billion received last year.
Meanwhile Cuomo has used mirrors to divert attention from the recommendation of Chief Administrative Judge Ann Pfau to the 2011 Commission on Judicial Compensation to increase judicial pay up to 61%.    Cuomo needed the mirrors to not upset his negotiations with the peons, aka ordinary employees of NY State, to freeze wages for three years in a tentative, five-year contract agreement with Public Employees Federation.    In the Cuomo allegory of Animal Farm, Napolean, aka Andrew, will explain to the other lesser animals that "All animals are equal, but some animals are more equal than others," or judges deserve wage increases BUT you don't.
Judge Pfau goes on to spout about Fairness, Objectivity, Regularity and finally about Institutional Integrity.  But what Judge Pfau forgot was common sense.  New York State has run out of money, people are leaving the State because the taxes are too high and the employment possibilities shrinking.  While President Obama calls for shared sacrifice, NY Judges demand a 61% pay hike.

   The answers to the Judge Pfau's pleadings are:
1. Fairness must extend to all those lesser earning peons who don't want to pay Judges more and receive less for themselves.   Fairness to the People is restitution made to victims of judicial corruption.
2. Objectively, the peons don't trust the courts and its scandals and know why the reported 129,000+  complaints to ExposeCorruptCourts.blogspot.com were ignored.
3. The only Regularity in New York is more taxes, more corruption, more greed, more debt, and more people leaving the State.
4. The NY Court Institution is a joke.  The Chief Judge is charged with crimes.  The Center for Judicial Accountability documents the huge New York Judicial Corruption and says,“[no] mechanisms are in place and functioning to remove judges who deliberately pervert the rule of law and any semblance of justice and whose decisions are nothing short of ‘judicial perjuries’, being knowingly false and fabricated.  Such judges, willfully destroying the lives of countless New Yorkers, the wellbeing of our state, and our democracy as a whole, are unworthy of their current salaries and benefits – being paid by hardworking New Yorkers.”

   This Commission on Judicial Compensation is just another Cuomo "slight of hand" to divert blame from him and legislators.  What should the commission do about judicial raises in New York?   Don't give any raises.  New York Debt per person including local debt is $24,195. For a family of four that is about $97,000. link    The State will run out of money this year. Borrowing will become impossibly expensive.  Cuomo claims he should get only $170,050 to be Governor.

Greece is the harbinger of New York State to come.  The anger of the People will turn on the greedy Judges and their enablers, including this commission.   There is no money to pay these raises.  Only fools or scoundrels reward failure and wastefully spend other people's money.    For the sake and safety of the judges and yourselves, say, "judges, share the sacrifice; New York State is broke; the NY debt is already the largest in the USA; no raises, because the people and the ordinary NY State worker are not getting raises."
This Commission on Judicial Compensation is just another Cuomo "slight of hand" to divert blame from him and legislators.  What should the commission do about judicial raises in New York?   Don't give any raises. New York Debt per person including local debt is $24,195. For a family of four that is about $97,000. link    The State will run out of money this year.   Borrowing will become impossibly expensive.  Cuomo claims he should get only $170,050 to be Governor.

      Greece is the harbinger of New York State to come.  The anger of the People will turn on the greedy Judges and their enablers, including this commission.   There is no money to pay these raises.  Only fools or scoundrels reward failure and wastefully spend other people's money.    For the sake and safety of the judges and yourselves, say,"judges, share the sacrifice; New York State is broke; the NY debt is already the largest in the USA; no raises, because the people and the ordinary NY State worker are not getting raises."

Rating Agencies Informed As Cuomo's Budget's Imagined $ 4.3 Billion In Revenue Increases Disappears

Charles Dickens advises Andrew Cuomo:  Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.


     Poor Andrew Cuomo praised Obama's economic policies this month, but Cuomo does not have Obama's ability to print money to accommodate revenue shortfalls.   When Cuomo's budget doesn't get enough revenue, he must borrow or increase taxes and those nasty bond purchasers will demand higher interest rates.

      First, 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."  Then, 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."

       This business contraction affects the revenue increases which finance Cuomo's spending in his budget.  The Comptroller in his "Report on the State Fiscal Year 2011-2012" says a "structural imbalance" exists because general fund spending growth is still more than double projected revenue growth.  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.  Cuomo's unrealized revenue fantasies reported by the Comptroller include:
1. Personal Income tax receipts in 2011-2012 will increase $2.9 billion or 7.9% (but, see decreased employment reported above)
2. User taxes and fees (sales and tobacco taxes)will increase $467 million or 3.3 % (but, see tobacco tax increase will fail link 1  link 2 and workers earning less or unemployed spend less)
3. Business taxes will increase $894 million or 12.3% (but, see above business results)
4. Payroll Tax will increase $63 million or 4.6%  (but, rising unemployment including State layoffs decrease payrolls)
The total fantasy budget's revenue increases of $4.3 billion dollars will not materialize.  A budget shortfall of $4.3 billion dollars must be borrowed this year.

     When Cuomo borrows this $4.3 billion, will the bond rating agencies downgrade NY debt and force up borrowing costs in the Cuomo budget, or will they understand that Cuomo meant well?  What will happen when those other things that Cuomo forgot to fund in his budget need borrowing to fund them, such as:
1.  New York Pension Books are Cooked
2  The Cuomo 2011-2012 Budget proposes to "eliminate a $10 billion dollar deficit without raising taxes or borrowing" and then is borrowing $5.6 Billion dollars.
3. 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."
4. 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.
5. Cuomo failed to budget in the required repaying of the federal government for Medicaid frauds. This is minimally estimated at $6.4 billion.
6. Cuomo forgot what happens when New York's bond rate rises and NY's borrowing costs  move up from $5.6 Billion $18.8 Billion. 

     All of the above ignores the Medicaid fraud by NY State, which Cuomo defended as NY Attorney General, and which, if Congress block grants Medicaid, Cuomo could immediately end.   See letters to Congress on this blog.  link 1     link 2

    The following letters were sent to the ratings agencies:
Letters by registered mail:  CuomoTARP.blogspot.com   July 18, 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

Re: protecting buyers of NY bonds and your potential liability.

Dear Sirs:
    Attached is a copy of the latest 7/18/2011 post on CuomoTarp.blogspot.com.    The Financial Crisis Inquiry Commission established  by Congress had reported on page 25: "We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction." You realize your potential liability, if this occurs with NY State Bonds.    There will be lots of angry NY State Bond Holders who will look for compensation for your scienter (knowing) neglect and/or malfeasance, if you fail to act appropriately.        
         NY Debt per person including local debt for a family of four is about $97,000 (the highest in the USA).    Bob Brinker already recommended seniors leave the high tax States.   You need to protect NY State Bondholders with truthful ratings

      Also consider the Letters to Congress on this blog dated July 12, 2011 and May 23, 2011 which show a proven moral hazard and criminality in NY State Government and the likelihood of financial fraud.

Sincerely yours,
CuomoTARP.blogspot.com

Note: all links are available on the CuomoTARP.blogspot.com website where a copy of this letter is posted.
Attached: Blog post dated July 18, 2011

P.S. Tomorrow's 7/19 post will concern more lack of fiscal irresponsibility by NY Government and its committees and the costs thereof which must be borrowed in this fiscal year.

NY Like NJ Forgot To Fund Retiree Health Benefits And NY Adds $56.3 Billion To Its Unfunded Liabilities

   The Ithaca Journal falsely reports,"New York's [pension]plans aren't underfunded."   They must be comparing with the pending NJ disaster of a $120 billion dollar pension shortfall.  But NY pensions assume a 7.5% return on pension assets when they only earned 1.1%.  NY's unfunded pension debt is estimated at $143 billion dollars.   When NJ defaults, NY would soon follow.

     But what about funding retiree health benefits liability.  Pew reports, "States had only about $31 billion, or 5 percent, saved toward their obligations for retiree health care benefits."    NY had $56.3 billion dollars in retiree health benefits unfunded and according to Pew had 0.0% in its retiree health benefits funding account.   While NJ had $66.7 billion in retiree health benefits, also funded at 0.0%.

     New Yorkers now have another $56.3 billion dollars divided by 19.4 million NY population = $2,902 debt per person to add to the already calculated $24,195 State and local debt per person (link). We have a new higher total of $27,097 State and local debt per person or $108,388 for a family of four.

      Is the NY pot blacker than the NJ kettle?   Will investors want NY bonds or NJ bonds?  Neither NJ or NY can't withdraw from the USA like Greece and issue their own worthless currency to pay off its bondholders. 
  
      But in Albany, the thinking is, "What debt crisis?  Our pensions are 100% funded, aren't they?  We can fund retiree health benefits next year, right?  Andrew Cuomo has brought Hope and Change and balanced the budget, right?" Although, Andrew Cuomo had promised to throttle lobbyists in NY, "Spending on lobbying in New York tops $200 million in 2010."   And lobbyists are controlling his committees. 

  Meanwhile out in the cruel dark financial world outside Albany, China is reducing its holding of US debt.  link to China and NY debt      link to NY bondholders lose big in NY bankruptcy/default

And now the Chinese Debt Master holds the ball, and now he lets it go,

And now the air is shattered by the force of Cuomo's blow.

Oh, somewhere in our favored land the sun is shining bright;

The band is playing somewhere, and somewhere hearts are light,

And somewhere men are laughing, and somewhere children shout;

But there is default in Albany,  the mighty Cuomo has struck out.


link to poem

Rating Agencies Need To Revalue New York Bonds To Avoid Liability

Gold hits $1,500.   A Creditor: One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions. ~ from Ambrose Bierce's Dictionary


Letter by registered mail:  CuomoTARP.blogspot.com
April 19, 2011

To: Moody's Investors Service
175 Federal Street, Suite 501, Boston, MA 02110
Standard & Poors
55 Water Street New York, New York 10041
Fitch's
One State Street Plaza,  New York, NY 10004

 
Re: protecting buyers of NY bonds and your potential liability.

Dear Sirs:
         You have been sent a copy of Three Billion Dollar Medicaid Fraud By New York State dated April 13, 2011.    The Financial Crisis Inquiry Commission established  by Congress reported on page 25: "We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction."   You realize your potential liability, if this occurs with NY State Bonds.            

     Standard+Poor’s lowered its outlook for U.S. debt to “negative” from “stable,” and woke up Washington.  NY debt must follow.  Comptroller DiNapoli's cash report for end of March reported, "All Funds tax collections were $926.3 million below initial projections included in the SFY 2010-11 Enacted State Budget, but slightly above projections made March 3."    This is double talk, which means he knew on March 3, 2011 that the revenue predicted in our budget wasn't coming, so we revised our figures lower, so he could report we received more than expected.

   The rating agencies must properly rate NY bonds based on the above mentioned letter and
   1. Cuomo's budget expects more money in cigarette taxes, but that is dashed by expected crime wave of smuggled cigarettes. link 1  link 2
   2. The World new economic reality is reported in  Andrew Cuomo; A State Bankruptcy And NY Bond Devaluation  where factors outside of NY control the bond market for NY bonds. 
   3.  New York Pension Books are Cooked
   4. New York Bonds Are Down Rated Based On Cuomo's Budget because
a.  The Cuomo 2011-2012 Budget proposes to "eliminate a $10 billion dollar deficit without raising taxes or borrowing" and then is borrowing $5.6 Billion dollars.
b. 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."
c. 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.
d. Cuomo failed to budget in the required repaying of the federal government for Medicaid frauds. This is minimally estimated at $6.4 billion.
e. Cuomo forgot what happens when New York's bond rate rises and NY's borrowing costs will move up from $5.6 Billion $18.8 Billion.  
e. Cuomo forgot about repaying the Unemployment Insurance: State Trust Fund Loans of  $3.1 billion.   Cuomo must pass this on in higher unemployment contributions by New York Employers and watch the Cuomo Business Friendly New York fizzle. 
f.  Fitch Downgrade Added $2.99 Billion in Deficit To Andrew Cuomo's Budget Farce
g.New York has the highest State+local debt per person in USA at a total debt per person of $31,536 compared to USA debt per person of $44,805.
h. Andrew Cuomo's Hope For Increased Tax Revenues Was False  because he hasn't budgeted the State's payment of the entire unemployment and extended unemployment benefits of laid off workers, such as the 500 court employees which are just a beginning of NY State layoffs.  These unemployed will reduce Personal Income Tax receipts,User Taxes and Fees, and Business Taxes (larger unemployment reduces earnings from businesses)
i. New Yorkers paid $48 billion in property taxes in 2010 with the highest local property taxes in USA, 74% above national average.

       Bob Brinker recommends seniors leave the high tax States.   New York has the highest taxes.  Andrew Cuomo's Business Friendly Puff Pieces will Fizzle As Reality And Medicaid Block Grants Close In.
Who'll be left to repay the bonds? Please do your duty and protect buyers of New York Bonds with up-to-date ratings.

                                              Sincerely yours, 

                                              CuomoTARP.blogspot.com

Note: all links are available on the CuomoTARP.blogspot.com website where a copy of this letter is posted.
Attached:  Three Billion Dollar Medicaid Fraud By New York State In Cuomo Budget Sent To Congress For Oversight  dated April 13, 2011

Will Andrew Cuomo Charm The Bond Market For The State With The Highest Debt Per Person?

The economic grim reaper has his eyes on New York as the most indebted per person State.

      Did you think the debt problem at the federal level was bad?  New York has the highest debt per person of US States at a total debt per person of $31,536 compared to USA debt per person of $44,805.   Meanwhile, the Chinese and foreign barbarians are closing in on US bonds and the underlying State bonds, because of federal and state budget excesses.  Low bond interest rates or selling  a bond will be fond memories, because of excessive debt per person.

These are the reports from outside:

Think US Debt is a problem; look at the States
How NY's Madoff like assumption of 7.5% safe return on investments will creates a giant deficit.
US follows the path of Greece and Portugal
US dollar becoming toxic
US debt increases despite budget agreement.
Inflation to return
Gas prices inflate

Will Cuomo's charm help?  Buy this bond at the old interest rate and a framed  iconic picture of Andrew Cuomo with an aura and the words "More Than Just Hope" will be provided for personal devotional use. 

New York's Budget Is Now Cuomo's Budget And Default His Responsibility

     Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos laugh and smile as they pass Cuomo's budget.   Now, Andrew Cuomo owns the New York State budget.  He can't blame the legislators for passing his budget.  So, who will Cuomo blame when the revenue fails to come in and the massive borrowing begins?

     Now, there is Joy in Albany as Andrew Cuomo passes his budget and Cuomo comes to bat.  But, all the flaws reported in this blog in Cuomo's Executive budget are still there.  Most importantly, New York will run out of cash because of
1.  fantasy revenue predictions. 
2.  $3.6 billion in required spending is missing from the budget . 
3.  Cuomo's hidden taxes on business will discourage new business in New York. 
4.  Cuomo has ignored the pending suit to increase judges pay and its additonal cost to the State.  
5.  Counties and Cities will have to raise taxes to pay their 9.4% increase in Medicaid costs which is the largest expense in their budgets?

But, Hope as Cuomo comes to bat:

Then from 5 million throats and more there rose a lusty yell;

It rumbled through the Hudson valley, it rattled in the Albany dell;

It knocked upon the Adirondack mountains and recoiled throughout the State,

For Cuomo, mighty Cuomo, was advancing with his budget's plate.

There was ease in Cuomo's manner as he pranced into his place;

There was pride in Cuomo's bearing and a smile on Cuomo's face.

And when, responding to the cheers, he lightly doffed his hat,

No stranger in the crowd could doubt 'twas Cuomo at the bat.

Ten million eyes were on him as he rubbed his hands in Albany's dirt;

Five million tongues applauded when he wiped them on his shirt.

Then while the writhing tort lawyer ground the ball into his hip,

Defiance gleamed in Cuomo's eye, a sneer curled Cuomo's lip.

And now the cap on medical malpractice sphere came hurtling through the air,

And Cuomo stood a-watching it in haughty grandeur there.

Close by the sturdy batsman the malpractice cap unheeded sped-

"That ain't my style," said Cuomo. "Strike one," the doctors said.

From the crowds, black with people, there went up a muffled roar,

Like the beating of the storm-waves upon Long Island's shore.

"Kill them! Kill the lawyers!" shouted someone in the band;

And it's likely they'd a-killed them had not Cuomo raised his hand.

With a smile of Christian charity great Cuomo's visage shone;

He stilled the rising tumult; he bade the budget farce go on;

He signaled to the mandate relief pitcher, and the mandate relief spheroid flew;

But Cuomo still ignored it, and  Steve Levy said, "Strike two."

"Fraud!" cried the maddened millions, and the echos answered fraud;

But one scornful look from Cuomo and the People were awed.

They saw his face grow stern and cold, they saw his muscles strain,

And they hoped that Cuomo wouldn't let a ball go by again.

The sneer is gone from Cuomo's lip, his teeth are clenched in hate;

He pounds with cruel violence his silver spoon upon his plate.

And now the Chinese Debt Master holds the ball, and now he lets it go,

And now the air is shattered by the force of Cuomo's blow.

Oh, somewhere in our favored land the sun is shining bright;

The band is playing somewhere, and somewhere hearts are light,

And somewhere men are laughing, and somewhere children shout;

But there is default in Albany — mighty Cuomo has struck out.

Would you buy NY Bonds knowing?

New York State Debt per person including local debt is $24,195.  For a family of four that is about $97,000. That is the highest in the USA.  And surprise, Cuomo's budget revenue predictions were a farce.

The Hand Writing Was On The Wall For Cuomo And New York Bondholders As All US Government Debt Is Dropped By World's Largest Bond Fund

    "The words of the Prophet were written, Sell now and not cry later " ~ CuomoTARP

   "Bill Gross, who runs the World’s Biggest Bond Fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits." 

    Note: Bill Gross dumps the bonds first, then makes the announcement, so as not to devalue his holdings before sale or let buyers know he was dumping the bonds.  

   See the words of the prophet in the reprint of the Thanksgiving Post on this blog predicating the devaluation of NY Bonds and the subsequent increase in interest rates requiring a large budget increase to cover the higher rates.    Also, link to Rating New York Bonds

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 (King Cuomo, Silver, Paterson and Sampson in their blue uniforms with their new committees behind them)
  *picture described in note #1 below

  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., *See historical note #2 below

        Translation #1: Mene, Mene, Tekel, u-Pharsin translates to Number, number, weigh, divide in two."   And the meaning is the same, for both King Andrew and King Belshazzar, "God has numbered your remaining days in power; your number is up; you've been weighed and found deficient; and your State will be divided up financially and given to its creditors."

 A Creditor: One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions.
~ from Ambrose Bierce's Dictionary

Chinese creditors crack their whip on the Bernanke/Obama money printing scheme.  

Follow the economic reality trickle down below:
    China and Russia have decided to renounce the US dollar

     Fears of Domino Effect Pervade Europe: Loss of Confidence Extends From Ireland to Spain, Portugal; Bond Spreads Widen as Euro Tumbles


     Belgium's debts to record levels in situation made worse by broken political system

    Now, see the world economic reality trickle down into NY on this blog: 
    another $6.8 Billion missing from the Cuomo Budget Plan.  

    NY Comptroller, DiNapoli, now promises safe returns of 7.5%  (or Madoff has a bridge for Sale)


    The Final Prophecy: from the Ghost of NY Yet To Come: the Trophy of Total Fiscal Failure. 
  

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

*note 1 The hand-writing upon the wall is a print etching and aquatint, hand-colored  by Js. Gillray  and shows  Napoleon, Josephine, French soldiers and women seated at feast with dishes "Bank of England," "St. James," "Tower of London," and "Roast Beef of old England." Napoleon looks in horror at hand of Jehovah pointing to words in sky: "Mene mene, tekel upharsin."  

note 2 from Daniel 5:25–28: "And this is the writing that was inscribed: mina, mina, shekel, half-mina. This is the interpretation of the matter: mina, God has numbered the days of your kingdom and brought it to an end; shekel, you have been weighed on the scales and found wanting; half-mina, your kingdom is divided and given to the Medes and Persians.
That very night King Belshazzar is slain, and Darius the Mede becomes King. (The end of the Babylonian Empire and the beginning of the Persian/Mede Empire)

note 3 short course with graphs showing inverse relationships of bond prices, interest rates, inflation

note 4 simpler explanation of bond value changes

Fitch Downgrade Adds $2.99 Billion in Deficit To Andrew Cuomo's Budget Farce

      The downgrading begins as Fitch begins CYA.  Fitch has announced, "In valuing pension liabilities in its credit analysis of states and local governments, the rating agency will now assume a return on assets of 7 percent, lower than the average return of 8 percent used by most pension plans. That translates to an increase in the average plan liability of 11 percent."
       This throws Cuomo's budget into the trash.  After Madoff, only a fool would accept even a 7% "safe" rate of return on investments as sensible.  NY State uses a 7.5% 'safe return on its pension investments.    But, 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.

       New York's pension fund as of March 31 was nearly $56 billion below the level it would have attained if it had achieved its 8 percent target rate of return for the past five years.

     When Thomas DiNapoli lowered [from 8% to 7.5%] the expected rate of return for the state's $125 billion pension fund, ...[the State] contributed 88% of the $3.4 billion invested in employee pensions last year, according to the fiscally conservative Citizens Budget Commission.  So assuming another drop from 7.5% to 7.0% would require the State to contribute the same 88% of $3.4 billion, or Cuomo's budget just added another $2.99 billion in deficit.

The Hand Writing was on the Wall

Fiscal Conservative Andrew Cuomo's Shell Game Is Borrowing From The Pension Fund To Contribute To Pension Fund

 "I am not a crook!" ~ Richard Nixon

Shell game scam alert: Will there be something left for the bond holders, or the pensioners, or any taxpayers capable of paying for it?  Or nothing left anywhere?

     What's Andrew Cuomo or Comptroller DiNapoli doing about borrowing from the pension fund to pay contributions to the pension fund in 2011?  Nothing, it's not so described in his budget or in his announced agenda. 


      Amortized means payments are extended over future years.

  From Empire Center for New York Policy, "Starting in fiscal 2011-12, the contribution rates used to calculate the state’s pension bill will be allowed to increase by only one percentage point a year, starting at this year’s capped level. Billed contributions above that amount in any given year can be spread, or amortized, over 10 years, payable to the pension fund at a rate pegged to interest on taxable bonds, generally in the neighborhood of 5 percent. As part of the deal, the minimum contribution level is permanently fixed at 4 percent. Local governments have been given the option of joining this “rate mitigation program,” and many are already choosing to do so."

This is the applicable law: NY State Law RSS - Retirement and Social Security
Title 2 - ESTABLISHMENT, MANAGEMENT, SUPERVISION AND FINANCING
19-A - Employer contributions for the two thousand ten - two thousand eleven fiscal year and subsequent fiscal years. (allowing amortization or paying in this year's contribution over many years)

     Pension Plan or Ponzi Scheme?  "Now there is a new claimant to the title of Ponzi Perfection — The State of New York.…Another oddity of the plan is that the pension fund, which assumes its assets will earn [7.5%] percent a year, would accept interest payments from the state that would probably be 4.5 percent to 5.5 percent."   "'Mr. DiNapoli, the comptroller, said: “We would view it more as an extended-payment plan.” 

       This NY State Shell Game also allows Municipalities to Borrow from Pension Fund to make Required Pension Fund Contributions

      Is this Fiscal Insanity by the Fiscally Conservative Andrew Cuomo, or a scam?   This is another reason why New York will default or go bankrupt.   If this was a private company, they'd all be headed to jail, or, for the insane, to the asylum.

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

How States And Municipalities Could File For Bankruptcy

Debts are nowadays like children begot with pleasure, but brought forth in pain. ~Moliere

 Clearing up the State and Municipality Bankruptcy Reports:
          Latest News flash: "For state governments, though, there are no printing presses and no lines of credit. States can actually run out of money"  "In the previous two budget years, the federal government ended up bailing out struggling states. In fiscal years 2010 and 2011, states received a combined $127 billion in federal bailouts ... to cover more than a third of the total shortfall."  "Washington is in a tizzy over the ever-expanding federal debt."
       Earlier in the News: it's reported that a Michigan Town Is Left Pleading for Bankruptcy, but the State of Michigan isn't giving permission, because the state fears opening a floodgate for other municipalities.  That's not the case in New York where NY law allows bankruptcy filing by any municipality with State permission already granted under NY Local Finance Law §85.80 Authority for municipality or emergency financial control board to file petition under federal statute. A municipality or its emergency financial control board in addition to, or in lieu of, filing a petition under this title, or the city of New York or the New York state financial control board, may file any petition with any United States district court or court of bankruptcy under any provision of the laws of the United States, now or hereafter in effect, for the composition or adjustment of municipal indebtedness.

         Earlier News:  The fear of state insolvencies has spooked various bond fund managers, who fear management fee decreases, after a report that, "The U.S. government will face pressure to bail out struggling states in the next 12 months, said Meredith Whitney."    Meridith Whitney also said, "U.S. states won’t default,  Instead, they will cut aid to local governments, putting them at greater risk."  The new Congress is now under even greater restraints on borrowing.  And Cuomo has promised to cap local taxes and Cuomo can't now shift State expenses to local governments without them going bankrupt.

          Some people have faith in the claim some bondholders have over pledged revenue, but that is exactly the pledge that could be removed by a bankruptcy court.   The Conservative Heritage Foundation has, "Congress should consider a way for states to file for bankruptcy or its fiscal equivalent. While such a law would raise some serious federalism issues, as long as states are allowed to enter into bankruptcy voluntary, it could be constitutionally acceptable."

        Simple questions: 1. Will Congress borrow more money and increase the deficit to bailout States?

2. Will bond holders with pledged revenue still get paid first or even in total?  (See Finance Bazaar)

3. Will Congress pass a State Bankruptcy Chapter 10?

4. Will New York Bondholders get hurt?

Answers;  1,2 NO      3,4  YES

The Hand Writing Is On The Wall for New York State

A Ron Paul Or A Cuomo And Fixing Your New York Tax Withholding Rates

 "A fool and his money are soon parted."

        Will New York follow California and give I.O.U.'s for tax refunds?   Should this cause you to correct your New York Income Tax Withholding rates?


   Here's a California I.O.U. called a"registered warrant"

But the big California banks didn't want to honor these California warrants. and they were illiquid for using directly for purchases, but the Cuomos would be traditional script which could be used for purchases and bill payments, if someone will take them.
                      A proposed "Cuomo"

$3                               NEW YORK TREASURY I.O.U.                               $3

Tender for all non- public debts if someone will take it

New York Comptroller, Thomas DiNapoli   In Cuomo and in New York State we trust

Backed by the Full Faith And Credit of New York State

$3                                 Three Dollars                                  $3

Nicknamed "the Cuomo"  NY State can print plenty of these to give to you.   Why a $3 dollar value?

       An alternate currency is in use in Mid-Michigan, such as a Ron Paul half troy ounce of silver or a gold Ron Paul

       Of course, the NY script (I.O.U. or the Cuomo) would be backed by the full faith and credit of Andrew Cuomo and NY State, but it could only be used if it was willingly taken, because of
Article I Section 10 of the Constitution: 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 anything 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, 


         Which would you take a Ron Paul half troy ounce of silver  or some Cuomos or some California "warrants"?

        While pondering, sell your New York bonds, change your NY Income Tax withholding so you don't get a refund.