|Schwarzenegger … It’s not borrowing, it’s a gift from the future …|
Update (07-17-08) ... the ULTIMATE DERIVATIVE ...
We have all seen what effect the Wall Street Wizards and their derivative products have had on our economy. So it comes as no surprise that Schwarzenegger wants to create his own brand of derivative by securitizing the California Lottery's cash flow for the next 15 years ...
"Schwarzenegger suggested in May that the state 'securitize' $15 billion over three years from Wall Street by promising future lottery revenues to investors. The plan would sell $5 billion in bonds immediately to help offset the deficit. Schwarzenegger has insisted the plan is not a borrowing scheme and called it 'a gift from the future.'" <Source: CapitolAlert.com>
Dumbkopff: By definition bonds are a form of borrowing -- "A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing." Perhaps we should forgive him, as he is probably reading the script supplied by his democrat friends on Wall Street. He either doesn't understand or is lying to California's legal citizens.
Original Blog Entry ...
Arnold Schwarzenegger – Republican In Name Only – once again was confronted with his lack of leadership since 2003.
The man who claimed he was “too rich to be bought” has proved to be a more prolific fundraiser than his predecessor Gray Davis and his creation of special foundations has masked any number of special interest contributions; which are seemingly earmarked for the governor’s lavish lifestyle and travel expenses.
Claiming to be “for the people” by being a “post partisan” governor, Schwarzenegger overlooked a significant number of opportunities to appoint qualified Republicans to important positions of influence, Schwarzenegger appointed hard-core left-leaning democrats. Even his Chief of Staff is a hard-core life-long leftist lesbian democrat.
But his most stunning failure is his inability to curb the profligate spending of the democrat-led legislature and lead California away from a $16 BILLION deficit in times when the state’s revenue exceeded population growth and the inflationary cost of living.
Schwarzenegger proved that he could do little else than “strike poses” as he resorted to financial legerdemain to solve the last budget crisis by papering over the crisis with funds transferred from other state accounts, issued bonds and accounting tricks.
This year the Governor was hoping to sell the rights to the California Lottery revenue stream so that the proceeds would erase much of the existing deficit and he could continue to play the “governator” hero of the people role he has come to narcissistically cherish. To illustrate Schwarzenegger’s total lack of financial acumen, media reports aside, we present the following quote.
From Capitol Alert.com …
Lawmakers are seriously considering grabbing money from local government and transportation funds to balance this year's $15.2 billion budget deficit, say advocates for those programs.
Gov. Arnold Schwarzenegger and lawmakers on both sides of the aisle have repeatedly proclaimed in public that they want to tackle the state's structural budget problems -- not just paper over the budget with borrowing to get out of town.
In an interview with The Bee on Wednesday, Schwarzenegger reiterated his opposition to new borrowing.
"Any time you go and do those things, it's maybe one way of getting out of the situation and coming up with a compromise, but I don't think it's the right way to go," said Schwarzenegger.
“He insisted his lottery proposal was not borrowing. ‘Borrowing means that you have to pay back. But this is a gift from the future,’ he said.”
Yeah right, gift from the future!
“At the same time, the governor's office has been involved in the discussions about taking the transportation and local government funds, advocates say.”
“The transportation and local government borrowing would come from two sources.”
“The first would transfer property taxes away from local governments to area schools. That would lower the amount of school spending that musts come out of the state's general fund, helping balance the state's books.”
“The second would divert gas sales tax revenues from transportation projects -- such as highway construction and mass transit -- to the state's general fund. Voters similarly restricted that practice in 2006, with provisions akin to the limits on taking funds from local government.”
“Earp said that while the raid is allowed by law, ‘It was never meant to deal with the structural deficit. It was meant to deal with a short-term cash flow problem.’"
Perhaps Schwarzenegger is watching too many science fiction movies and does not realize that the selling the future revenue stream of the California lottery is exactly the same as borrowing the money now and paying it back with future revenues … no different from selling bonds – except the purchasers would be allowed to keep all of the money earned with enhanced lottery promotions which seek to plague the poorest among us. Between Indian Gaming compacts and the lottery – we are rolling the dice on our future.
Continuing with our WTF day …
|The Rehabilitation of Franklin Raines …|
What’s wrong with Fannie Mae and Freddie Mac: Let’s ask the guy who ripped off Fannie Mae for millions with crooked accounting. Surely his opinion counts for something?
Why the Washington Post would ever give editorial space to Franklin Raines, the politically-connected power broker who was found to have cooked Fannie Mae’s books to earn multi-million dollar bonuses is beyond me. The Washington Post article, “The Help Fannie and Freddie Need,” made the case that Fannie and Freddie were sound entities and do not need a government bailout.
From the Washington Post …
“Don't bail out Fannie Mae and Freddie Mac. They don't need it. The losses they face are not surprising, given what's happened to housing prices. They have more than enough capital to meet their cash obligations when those become due, which is the most basic definition of solvency. They also have hundreds of billions of dollars' worth of unencumbered assets that can be used as collateral for secured borrowing, were that to become necessary. The recent Treasury proposals do not change these facts.”
“What the companies need from Washington is policy clarity. I say this not just on the basis of my experience as an executive at Fannie Mae but also because of my experience as director of the Office of Management and Budget and my time as an investment banker in the 1980s, when I helped solve the problems of cities and states in financial crisis.”
Followed by Raines advice to President Bush, Federal Reserve Secretary Bernanke, Treasury Secretary Paulson and everybody else on his list. (see the reference link if you want to read the full-on drivel from Raines)
The Post identified Raines with this blurb …
“The writer was chairman and chief executive of Fannie Mae from 1999 to 2004 and served as director of the Office of Management and Budget in the Clinton administration. He receives a pension and deferred compensation from Fannie Mae and owns stock in the company.”
Sounds great, BUT … what the paper failed to point out was …
From Wikipedia …
“On December 21, 2004 Raines accepted what he called ‘early retirement’ from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses.”
In 2006, the OFHEO announced a suit against Raines in order to recover some or all of the $50 million in payments made to Raines based on the overstated earnings initially estimated to be $9 billion but have been announced as 6.3 billion.
“Civil charges were filed against Raines and two other former executives by the OFHEO in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused. On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller. The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. Raines also agreed to donate the proceeds from the sale of $1.8 million of his Fannie stock and to give up stock options. The stock options however have no value. Raines also gave up an estimated $5.3 million of ‘other benefits’ said to be related to his pension and foregone bonuses.
“An editorial in The Wall Street Journal called it a ‘paltry settlement’ which allowed Raines and the other two executives to ‘keep the bulk of their riches.’ In 2003 alone, Raines's compensation was over $20 million.”
“A statement issued by Raines said of the consent order, "is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me by OFHEO."
“In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk.”
This man is a thief. He stole money from his shareholders with his suspect accounting games as surely as if he had robbed them with a gun. There were so many accounting failures that Fannie Mae may have spent well over $1 BILLION dollars to audit itself. In addition to accounting problems, there was the little matter of double dipping in the Fannie Mae foundation and massive lobbying expenses to persuade Congress to keep the money flowing and the regulatory hand light … which are also not mentioned.
It is believed that this article is the first in a series in an attempt to rehabilitate Raines reputation so that he can take a larger place in the Obama Administration. He currently serves as an advisor to Obama on housing issues.
Like I said, this was a WTF day …
It is amazing. Political smoke and mirrors. And the press is apparently not doing its part to fully disclose what seems to be going on behind the scenes at government. It seems that they are all jockeying for the right to be included in Barack Obama’s trip to Iraq.
What can YOU do?
Now that we have seen what is happening in California, I urge my fellow Californian’s to simply vote out all of the incumbents in favor of a fresh start. Both political parties have sold us out as they jointly plundered the California Treasury. And let’s send this aging movie star back to Hollywood where nothing is as it really seems and the reality is tightly scripted. The thought of Schwarzenegger serving as the Energy Czar in an Obama Administration is beyond belief.
As for Obama, we can plainly see that he is apparently an old-fashioned Chicago politician who is at home among thieves, terrorists, bigots and the anti-America left. If it wasn’t for the polarization of Hillary Clinton and the prospect of Bill Clinton returning to the White House, Obama would never have become the heir apparent.
But he is clearly unworthy of the office of the presidency as he is too inexperienced, too radical, too untrustworthy … and is an empty suit with a preacher’s oratorical skills. Nothing more, nothing less.
Question what you are now seeing in the media. They have failed to do their job and we, all of us legal Americans, are being railroaded to an uncertain future which marks the decline of the United States as the great nation it once was. We are selling off our nation piece-by-piece at the same time we are diluting our national culture with illegal aliens who are demanding citizenship – so they can, sometime in the future, vote us out of our own house.
It is now time to take action and make your voice and vote count. While McCain is not much better than Obama, hopefully his vice presidential choice will be a stabilizing influence and that we can threaten Congress with a devastating recall should they continue to undermine the United States. What truly is needed is another party – one not made up of a coalition of far-left radicals and freaks, one that works for the people instead of feathering their own nest and the nests of their friends at our expense. I cannot see how the corrupt, chaotic and increasingly far-left democrat party can survive. Where are the honorable men like Joe Lieberman and Zell Miller?
VOTE LIKE YOUR FUTURE DEPENDS ON IT – AS IT SURELY DOES!
Quote of the Day: Hollywood and Washington are the only two places in this great nation where perception trumps reality and the players award themselves bonus money for what should have been rather that what really was.” -- steve
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“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius “A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell “Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar “Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS
"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius
“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell
“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar
“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS