Let's see if Mr. Kerry wins, if he will crack open the Investment vs Debt issue?

Posted  FYI

From: WJB

Subj: Re: CAFR vs total debt
Date: 10/24/04


From Walter J. Burien, Jr.
October 23, 2004


In a message dated 10/23/04 7:23:31 PM US Mountain Standard Time, ajfishman@[SNIP].com writes:

> Mr. Burien:
>  If what you say is correct about the CAFR in the states and federal
>  government, how does this effect the total debt reckoning of the US? I have
>  read the total generational debt for the whole US is $44 trillion. It would
>  seem that the CAFR reports hardly make a dent in this.

>  Arnie Fishman
>  --

REPLY FROM: Walter Burien


I am speechless!

I started national disclosure June 8th of 1998 of the CAFR and the structure behind it and you are the very first individual to have the bing, bing light go off to the point of asking me a question that hits directly home as to the relevance of the whole "core" issue. I am ecstatic! There is hope in the void of public comprehension! That hope as shown from your inquisitive mind, it lives! It lives!

Well, back to Earth, and back to business.

My estimate of both federal and local government's investment assets is a conservative 60 trillion dollars.

That 44 trillion in debt you mention, one of the core issues is; How much of that debt is being funded from that 60 Trillion of investment assets government holds?

The shift in the last 30 years has been for local and federal governments to take surplus revenue and use it to fund their own debt obligations for themselves. Missouri is a good example. They now fund their own bond issuance's and have refinanced all old debt that was funded by the private sector at a 1/4 point lower using their own investment assets.

Locking in the public to pay this debt creates substantial "non-tax" income for local and federal government coffers outside of standard budget reports and creates the "vehicle" which can take a standing asset and then turn it into a debt by investment on the balance sheets.

The Financial Investment Enterprise operations that local governments create to fund their own debt, are created in where that Enterprise operation does not have taxing authority. Thus, no public approval is needed for its creation and the investments held are not secured for collection. Being not secured for collection, giving the investment a "potential" for total loss, investments can be zero (0) valued until maturity.

With this technique being used the "Investors" with these Enterprise operations [the cities, county, state, school districts, and other enterprise operations] can exempt disclosure or offset value of the investment principle due to that potential for total loss but they must disclose income from the return on that principle that is derived from funding their own debt. The "pooled" investments from many local governments with these Enterprise Investment operations for the purpose in self-funding of debt also defuses the direct link to any specific local government per "one to one" funding of their own debt.

Additionally noted is that local and federal government investment operations [Primarily Pension asset management] will also use investment revenue to fund consumer debt, both mortgages, credit card debt, plus determine the cost of insurance premiums based on investment as the primary investor with the insurance companies. Here also government has taken over as the primary investor in the debt income and insurance premium return business.

Well, the above is some Bing, Bing info for you to help you burst forward with your new comprehension, as you have shown by your question presented to me above.

So, it is not just a question of debt vs assets, but assets plus investment revenue vs the reality of "net" debt.

A very Happy and ecstatic,

Walter Burien

PS: To find local government CAFRs to download off the Internet, do a Google search for CAFR. About 15% of local government CAFRs completed are now available for downloading from local government links on the Internet. The other 85% are available only by hard copy. As of 2001 about 84,000 separate local government CAFRs or Combined Financial Statements were completed. I also note that prior to my efforts for national disclosure as of 1998 the general public did not know about the CAFR. Starting in 1999 due to that disclosure coming out, changes were made as to the showing of totals in the combined financial columns. So, GET BACK ISSUES, pre 1999 for comparison with the current year CAFR. The comparison of a pre 1999 CAFR and a current CAFRs is essential in spotting the changes in disclosures of standing balances made.


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