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.

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. 
                            

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. 

Pension Debts And Warren Buffet Sink New York's Budget Into Huge Debt

The chickens come home to roost

    New York's "Madoff-like" promised 7.5% safe return on pension investments chickens are headed home to roost.   Warren Buffet says 6.0% would be a better rate.    It is reported as  "The State Pension Time Bomb" where,  "Poor accounting rules and flagrant irresponsibility have sped up the states’ day of reckoning."  This blog previously in November 2010 reported:   link

      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.
  Comptroller Di Napoli has reduced 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.

A report in the August issue of Governing, called New York State, the nationwide pension leader with Pension liability: $141 billion.    The NY Times, agrees and had  "How to Cheat a Retirement Fund", an "approach that assumes, as economists generally do, that even corporate accounting standards in this area are too lenient, public pension underfunding is about $3.5 trillion, or one-quarter of gross domestic product."

  "Private pension plans must discount their liabilities based on a market rate—typically, a corporate or U.S. government bond rate—which is often much lower than the plans’ projected returns." 
*Return US Treasury: 10-MONTH NOTE 10-15-2010 2.475%
  There appears to be a large difference between 2.475% and 7.5% and DiNapoli's assumed drop from 8% to 7.5%.

Bottom line: New York's balance sheet is tipped by an unfunded pension liability of up to $143 billion dollars.  Already, the New York Debt per person including local debt is $24,195. (For a family of four that is about $97,000.)
Now add another $143 Billion divided by 19.4 million (NY Population) to add another $ 7,341 to that $24,195.

NY State and local debt per person $24,195
NY unfunded pension debt per person $7,341

NY total debt per person $31,536 

USA debt per person $44,805 (Dec 2010)    
Who would lend money to such a debtor?

Federal Medicaid Block Grants Will Destroy Cuomo's Budget By $47 Billion Dollars

         The party's over.

    At least $46.8 billion dollars will be added to New York's Medicaid expenditures, when Congress in the next budget year beginning in October changes to a block grant for Medicaid as proposed in the next federal budget, and California will support block grants for Medicaid.

      Last year's New York State's share of Medicaid expenditures was $13.8 Billion and the cap on next year's expenditure will be $15.1 Billion (+9.4%), which is matched by an equal contribution of $15.1 billion by NY Counties.

Here are the Medicaid comparisons by State.
Medicaid Cost Per Person Served, 1998
(Red States less than half New York's cost)
New York ~  $8,961
California $2,386
Washington $2,563
Oregon $3,652
Virginia $3,740
Florida $3,607
Texas $4,419
Illinois $4,435
Delaware $4,440
Michigan $4,494
Ohio $5,346
Massachusetts $6,870
Wisconsin $5,457
Pennsylvania $5,808
New Jersey $6,856
Rhode Island $6,603

       If the federal Medicaid block grant rate is at the Texas rate per recipient (Texas $4,419), New York's Medicaid total Federal Reimbursement (State +County) will be reduced ($4,419 divided by $9,861 x $30.2 billion) to $13.6 Billion.  But, New York's total predicted Medicaid expenditure (Federal+State+County) cap was $60.4 billion, or New York needs to find an additional  ($60.4-$13.6)  $46.8 billion dollars.  And New York will find no sympathy or support from California for replacement with Medicaid block grants, as California will gain tremendously due to California's $2,386 lower rate.

      Now add that $46.8 billion to all the delusional revenue predictions in Cuomo's budget.    Will that  additional $2,412 per person ($46.8 billion divided by NY population of 19.4 million) or $9,648 for a family of four be funded with new taxes or added to the New York's Debt per person including local debt of $24,195?    Where will the Counties get their increased share? And this will be repeatedly added in future years.

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
link to poem

Andrew Cuomo Faces Steep Interest Rates Or Default With Highest State/Local Debt Per Person Or About $97,000 Per Family Of Four

What is the Credit Rating for New York's indebtedness?

    Let's look at New York's outstanding debt, which will affect New York's ability to borrow more money when Andrew Cuomo's Budget fails to produce desired revenue.  (See blog post below or link)   New York leads California in official debt per person by 29% and greater than the average for all States by 73%.    The grim numbers are below.

        From governmentspending.com
State   Gross Local and State Debt    Population  Debt per person
                      in billions                           millions        dollars
California       371.2                                 32.8          $11,317
New York      281.9                                 19.4          $14,531
Florida            128.4                                19.3          $ 6,653      
Michigan          72.2                                10.0          $ 7,220
Texas               210.6                                25.4          $ 8,291
All States    2,617.4                            311.4          $ 8,405

     But, New York State's Pension Plans use a fraudulent Madoff like safe return of 7.5% to calculate Pension reserves.  (The actual rate of return for the past 5 years was 1.1%).   If we correct the pension liabilities optimistically with a 3.1% return, instead of the 7.5% fraudulent rate we find another $9,664 additional debt per person, raising the New York Debt per person including local debt to $24,195.  For a family of four that is about $97,000.

    The USA and its States will face borrowing problems, as reality sinks in:
US finances near worst in World
Moody's cracks the whip on Britain
The exact cost of bad decisions by government bodies, whether they be the U.S. Congress, state legislatures or local city councils, is often hard to quantify.
Now, the simple questions, if you wanted to invest in State Bonds?
1. Which State is most heavily in debt per person?  NY
2. Which State balanced their budgets? not NY
3. Which made outlandish predictions of revenue and now wants to borrow to finance their spending excesses? NY
3. Would you demand a large premium in interest rates to lead to New York over other States?  Yes

How many ads will be needed to be purchased in the future to convince you Cuomo's promised good intentions excuse his failures? 

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

Cuomo Needs Borrow An Unbudgeted Additional $807 Per Taxpaying Person And Each Of Their Dependents

 The People's piggy bank is empty, Andrew.

The Grim Debt Economic Reaper will cut down Cuomo's Budget Fantasy.

The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.    And research shows all Cuomo's estimates of growth in the New York Economy are shown as fantasy by "Rogoff and Carmen M. Reinhart, a University of Maryland economics professor, have done research showing that once government debt surpasses 90 percent of GDP, average growth rates slide 4 percent."


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


And Cuomo's budget has a real deficit of $22.1 Billion and not Cuomo's assumed $10 billion dollars with impossibly optimistic expected tax receipts and ignored other multi-billion dollar expenditures.

       Doing the arithmetic for Andrew Cuomo, we discover Cuomo needs to borrow just for the coming year an additional $12.1 billion to his already budgeted borrowing or $807 dollars  per taxpaying person and each of their dependents.

Who'll lend us this money which we can't pay back, Andrew? 

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.

New York Bonds Are Down Rated Based On Cuomo's Executive Budget

Rating the Cuomo Executive Budget for Bond Purchasers

  The Cuomo 2011-2012 Executive Budget is like fancy curtains placed in the window hiding a burnt out interior in the house.   First,  there is the new folly presented by Cuomo:
1. Cuomo expects government bureaucrats and committees could design programs to save money. (SAGE Spending and Government Efficiency, Medicaid Redesign Team, 10 regional Economic Development Councils, Right-sized Youth Detention into community-based programs, Mandate Relief Resign Team) Link to Committees.  Grade D

2. Cuomo in his first sentence proposes to "eliminate a $10 billion dollar deficit without raising taxes or borrowing" and then he is borrowing $5.6 Billion dollars.    Grade F

3. Cuomo says, "New York is number one in education spending and number 34 in results and number one in healthcare spending and number 21 in results."  Cuomo expects the same State workers running these programs will change their stripes, now that Cuomo is Governor?    Grade -Delusional/Incomplete

4. Cuomo has a creative "funds shift [that] would result in the use of state bond proceeds for payment of a portion of debt service on MTA revenue bonds."   Grade F

Then there is the Cuomo folly reported yesterday on this blog:

 5. Cuomo's budget will fail to deal with the elephant in the room and will not follow eight other State's models for laws and regulations which could produce at least  $29 billion in savings per year.  And Cuomo and his Medicaid Redesign Team  is filled with trough feeders.  Grade-Delusional/Incomplete

6. Cuomo's budget  used the "Madoff-like" pension assumptions of 7.5% safe return on pension investments. and continue to allow borrowing to fund contributions.     Grade F
 
7. Cuomo will fail to budget in the required repaying of the federal government for Medicaid frauds tolerated by New York.  This is minimally estimated at $6.4 billion needed to added to deficit or be funded.    Grade F

8. Cuomo reducing Medicaid waste and fraud is a joke, since Cuomo recovered only 0.6% of medicaid fraud while he was Attorney General.    Grade -Delusional/Incomplete

9. Cuomo forgot what happens when New York's bond rate rises?  and NY's borrowing costs will move up from $5.6 Billion to $18.8 Billion.       Grade D

10. 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.     Grade F

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


New York State Bonds will be rated overall Grade D- and the multiple delusional/incompletes show an impossibility of improvement.

     The good News is Moody's acts slowly on bonds.  Their downgrade of Egyptian Bonds reported on Monday, many days after any sane person would have.

      In further regard of Bond Rating Firms:  The Financial Crisis Inquiry Commission established  by Congress and signed by the President Obama in May 2009 reported on page 25: "We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction. The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the rating agencies." [link to full report 600+ pages]
You still have time to sell your New York Bonds before they are devalued.  Or, you can hold on to your bonds and then later join the class action suit against rating agencies to recover losses. 

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

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

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

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

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

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

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

Andrew Cuomo Needs To Lead By Example And Cut His Office's Budget By 25% As California's Brown Has

"Setting an example is not the main means of influencing another, it is the only means." ~Albert Einstein

    Andrew Cuomo, lead by example!  Cut your office budget in your State of the State Speech coming up.
    1. Will Cuomo create an example and cut his staff budget by 25%, as this has been done by California's Governor Brown?

2. Will Cuomo follow California's Governor Brown and
a. to take aim at several tax breaks and subsidies that have been fiercely guarded by the business lobby;
b. paring back the state's welfare program;
c.reducing what doctors and healthcare providers are paid to care for the poor;
d. trimming funding for the State University of NY;
e.warn school officials: "Fasten your seat belt; it's going to be a rough ride;
and f. target state business tax formulas?
But, so far, what's Cuomo doing at the state level, he's "seeking a quick deal to cap the growth of local property taxes,"  while not addressing local costs imposed by the state as reported in Senate Majority Leader Skelos' concern that, "said schools and local governments need relief from costly state mandates on construction and in programs to make a tax cap work."
   Wake up call to Cuomo: capping the growth of local spending is not reducing your State spending nor reducing State mandates requiring certain local spending.   The state needs cuts in spending, not caps or cuts in increases on  future spending.
  Time to bury the big old lie: Cutting the growth of spending is not cutting spending.

   It's put up or shut up at the State level, Andrew!  If you can't cut your office's budget by 25% and go after medicaid frauds and excesses, welfare excesses, education,  business subsidies, and cut legislative salaries by 25%, why should anyone follow your non-example?
Continue reading the post just below:  Trust In Andrew Cuomo's Inaugural Speech Was Not Verified to follow up.

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

Cuomo, Medicaid, And New York Budget Headed Nowhere

   Jesus knew their thoughts and said to them: "Any kingdom divided against itself will be ruined, and a house divided against itself will fall." ~ Luke 11:17

      How will Cuomo deal with, "Nearly half of the people on Cuomo's transition team and economic advisory council either are registered lobbyists themselves or work for organizations that lobby New York's state government ?   Particularly, the lobbyists for Medicaid providers?  

    "The flood of [NY] taxpayers' money that Medicaid has poured into the hands of providers has spawned a militant, aggressive health-care lobby that threatens and targets individual legislators, and that spends millions on advertising apparently designed to convince the public that any Medicaid cuts would result in patients dying in the hallways of hospitals."
      This [$38.7 billion] program costs the taxpayers over $1,300 a year for every man, woman and child in the state. Directly (through their own taxes) and indirectly (through taxes paid by businesses from which they buy goods and services), the average family of four in New York is paying over $5,000 a year to support the [NY] Medicaid program.

    Looking at NY spending, we have this budget item list which omits only the spending budgeted for the sacred cow of education.  Where do we make the cuts?  All data here is  from "Comptroller 2010 Report on Financial Condition of NY State." prepared in March 2009.
From the $38.7 billion  for Medicaid
   or the $4.2 billion spent for public welfare
   or the $4.8 billion spent for public safety
   or the $5 billion spent for transportation
   or the $0.8 billion spent for Environment and Recreation
   or the $0.2 billion spent for business regulation
   or the $6.4 billion spent for General government
   Or a total $60.1 billion

  As of 3/31/2010, 16% or $9.8 billion of NY's debt was issued as budget relief.  This number was corrected by DiNapoli in an Albany Follies Sideshow by adding another billion dollars to this budget relief in Dec. 2010, thus $10.8 billion is claimed as required.  Now from which of the above categories in the State Budget is Cuomo going to take this $10.8 billion from?   But, the fiscal reality is that the Albany Clowns are using a grossly low number when next year's budget needs to cut $22.1 billion.  

Read from the Public Policy Institute of New York State: Medicaid: Wreaking Havoc in Health Care and discover:
1. Our costs for Medicaid are well over twice the national average.
2. The two larger states, California and Texas, have almost three times our population—but combined, they spend only a bit more than New York on Medicaid.
3. New York's costs are so far out of line that the state sticks local governments with a substantial share—and that, in turn, is a major reason our property taxes are so high.   (And Cuomo promises to cap property taxes?)
4. New York's Medicaid  is "the mother of all mandates," in which Albany by fiat orders local governments to pay almost $3.7 billion a year of the cost.  This mandate hits taxpayers directly in their property taxes (except in New York City, which collects much of the cost through its own personal income tax)

    Then, what about the $1.2 billion needed to be refunded to the Federal Government?

      What will Cuomo do when "Nearly half of the people on Cuomo's transition team and economic advisory council either are registered lobbyists themselves or work for organizations that lobby New York's state government?   The Grand Army of the State of New York Transition and Economic Advisers will have one part working against the other.

 Expect lots of sound and fury signifying nothing, while Albany children recite new words to an old ditty:

Oh, The grand Cuomo of New York,
He had ten thousand committee men;
He marched them up to the top of the Capital hill,
And he marched them down again.

And when they were up, they were up,
And when they were down, they were down,
And when they were only half-way up,
They were neither up nor down.

 

Then, bankruptcy and sticking it to the "rich" bondholders

link ~ bankruptcy law

link ~ budget impossibility 

link ~ Hand writing on the wall for NY bondholders
link ~ Why bondholders will be greatest losers (NY Finance Bazaar) 

Hope And Change Offered Anew With Cuomo And His Same Old Cronies

Every decent man is ashamed of the government he lives under. ~H. L. Mencken

    The Albany Follies CHANGE with a new folly as, Gov.-elect Andrew Cuomo says he won't let taxes rise, that he'll get spending under control, once and for all.   "The ugly details: Since 2000, New York's population grew at a paltry 2.1 percent, versus 9.7 percent nationally. As a result, New York not only loses those two House seats, it'll also miss out on billions in federal cash," and with $12,769 debt per person in New York. and his credit card taken away.

News Flash: The HOPE and CHANGE of Green Jobs fizzle in New York even with large government subsidy as SpectraWatt plans shutdown.
 

     Have HOPE, some people learn from failure, Cuomo appointed his prior lackeys who helped him fail miserably. Steven Cohen, now Cuomo’s counselor and chief of staff, will be secretary to the governor.   Mylan Denerstein was named governor’s counsel, moving from executive deputy attorney general for social justice.  Former State Supreme Court Justice Leslie Leach, now executive deputy attorney general for the division of state counsel, will be appointments secretary.   Benjamin Lawsky, deputy counsel and special assistant to the attorney general, will be the governor’s chief of staff. He was general counsel to the Cuomo campaign. 

      Howard Glaser, director of state operations and senior policy adviser, was a senior manager at the U.S. Department of Housing and Urban Development in the Clinton administration, while Cuomo was HUD secretary, and presided over $59 billion dollars missing. 
Hold tight to your wallet with this new gang in town.

    Do you have HOPE in Andrew Cuomo to CHANGE a decades-old political mentality that seeks to soak the rich and handcuff business to please special-interest groups -- unions, lawyers, radical environmentalists?

     Is HOPE and CHANGE and Cuomo's collection of failed operatives a fool's delight?

  How many Cuomos ($3 note) will it take to CHANGE your mind and give you HOPE?

$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.