California Fools Californians Into Higher Taxes Again


With the help of the mainstream media and its rags, the California Public Employees Retirement System (CalPERS) is yet again using its over $233 in reported investment fund wealth to somehow claim it is in a deficit, despite having an investment return this fiscal year.

(Note here that the actual gross fund balances are generally many billions higher, and were reported as $245,848,527,000 in 2011, and $204,727,543,000 in the 2010 CAFR’s.)

USA Today put out the following story, which was of course originally printed from the false-news clearing house, Associated Press:

“SACRAMENTO, Calif. – The nation’s largest public pension fund collected a dismal 1% annual return on its investments, a figure far short of projections that will likely bring pressure on California’s state and local governments to contribute more money, officials said Monday.

The return reported by the California Public Employees’ Retirement System was well below its projected return of 7.5% for the fiscal year that ended June 30.

The investment returns are critical because taxpayers are on the hook for the difference if the pension funds fail to meet their performance targets.

“The last 12 months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns,” said chief investment officer Joe Dear. “It’s a clear reminder that we must remain focused on performance, risk and internal controls in today’s financial environment.”

The fund was most impacted by a negative -7% return on global equities. Half the pension’s assets are in equities, Dear said.

The fund, known as CalPERS, runs a $234 billion pension system for more than 1.6 million state employees, school employees and local government workers…”

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In this first three paragraphs we can see the entire scam played out in front of us, as told from a master story-teller who is trying to sell sunglasses to a blind man. But even a blind man should be able to read between the lines here…

So far, we have learned that the CalPERS Pension fund has earned a 1% increase in its investment portfolio, which for this year would have been over $2.2 billion dollar in gains on investments. Yes, that’s $2,200,000,000 when spelled out properly. And this is of course reported as bad news!

Why?

Simply because CalPERS did not reach its “projected” goal. It wished upon a star, and failed to reach that star. It did not lose value or money, it only failed to miss its desired gains. It still did fine, and has no problems whatsoever meeting its “obligations” to pensioners. In fact, if CalPERS liquidated all of its investments today at today’s market value it could easily pay future pension benefits for the next 15-20 years.

So what’s the problem?

That’s just it, there is no real or tangible problem. You see, governments across the country are crying broke or bankruptcy based on this type of situation – hiding assets with future liabilities, without reporting the future assets that will pay for those liabilities. With billions in assets, all of this hoopla is based on nothing more than throwing a temper tantrum because the CalPERS fund didn’t reach what it wanted to reach this year.

It’s true. Nothing bad has actually happened here, as we will see in a moment. But the government creates any excuse it can in order to collect higher taxes,  or to funnel as much taxpayer money into the pension system. Case in point: here the article states that “California State and local governments (will be forced to) contribute more money“. In other words, the government wishes to keep its investment wealth untouched instead of liquidating it to pay for pension obligations to its employees. And so it will raise taxes instead, as the article states here: “taxpayers are on the hook for the difference if the pension funds fail to meet their performance targets.” Remember, taxes fund government. So government contributions means taxpayer contributions, despite the fact that taxpayers receive absolutely no benefits from the pension system, only employees of the government receive pension benefits.

Now imagine if Target, Bank of America, General Electric, or any other corporation out there forced all people in America or in an individual State or local government to pay for its private employee’s pension fund costs. How would that make you feel? Well, that is how the pension fund system works, as this article tells you.

Note here as well that the so-called “loss” on the equity value of stock and investments does not represent a loss of the actual number of stocks or investments. Just because a stock goes down in value for a 1 year period, does not mean that it will stay down. The same amount of stock is still held, and that physical equity has not changed, only this years value.

For instance, the following capital gains for 2010 and 2011 fiscal years were stated by the CalPERS pension fund in its Comprehensive Annual Financial Report:

CalPERS (2011) – $41.1 billion gain in net assets after all benefits paid.

CalPERS reports 20.7% investment return for fiscal year

“The California Public Employees Retirement System (CalPERS) reported a 20.7 percent return on investments in preliminary estimates for the one-year period that ended June 30, 2011.

This is our best annual performance in 14 years, said Rob Feckner, CalPERS Board President. For the second straight fiscal year, the Pension Fund exceeded its long-term annualized earnings target of 7.75 percent.”

(Source –> http://www.opalesque.com/IndustryUpdates/1880/CalPERS_reports_investment_return_for_fiscal_year188.html)

CalPERS (2010) – 13.3 % increase with a $23.2 billion gain in net assets after all benefits paid.

“The California Public Employees’ Retirement System, the largest U.S. public pension, earned a 12.5 percent return in 2010, led by gains in private equity and U.S. stocks, Chief Investment Officer John Dear said.

The $228 billion pension fund earned 17.3 percent from domestic equity and 21.5 percent in alternative investments such as private equity, Dear said today. Its real-estate portfolio lost 5 percent while its fixed-income investments gained 12 percent“.”

(Source –>http://www.bloomberg.com/news/2011-01-20/calpers-earned-12-5-return-in-2010-chief-investment-officer-dear-says.html)

–=–

Also, in 2009 fiscal year, as with all fiscal years, the Comprehensive Annual Financial Report show the following contributions from employees and separately from taxpayers (government).

Employees: $4,154,388,000

Taxpayers: $7,605,532,000

And here is a USA Today article with the headline:

Calpers posts 16.7% gain for fiscal year

SAN FRANCISCO (Reuters) — Calpers, the biggest U.S. pension fund, earned a 16.7% return on its investments in its fiscal year ended June 30, (2004) best returns in six years, the fund said Tuesday.

(Source –>http://www.usatoday.com/money/markets/us/2004-08-10-calpers-portfolio_x.htm)

And in 1998, CalPERS reported a record 19.5% gain in its investment portfolio. Yipee!

So the question you might be asking yourself is… Why don’t the taxpayers get a refund of all of that money they are putting into the pension system when there is a good year, when we have to be “on the hook” to support the fund with more taxpayer money in a bad year?  Not that this was really a bad year, mind you.

–=–

Notice here that I am not mentioning 2008 in this list, and instead giving the reader the impression that CalPERS has gained every year in its portfolio. That is what the news does, you see, but not me. In 2008, Calpers lost a butt-load of asset value to the tune of $58.8 billion due to the financial crash of that time. This was big news of course.

The point here is that a portfolio such as this is designed to acquire as many assets as possible, knowing in advance that those assets will go up and down in the short term, but is designed for the long term. A slow year or a loss is expected every once in a while, of course, and events happen and the economy goes bad and the strengthens again. This is an established reality that any long term investor will tell you.

So let’s here what CalPERS itself says about this years portfolio:

Press Release
July 16, 2012
External Affairs Branch

CalPERS Reports Preliminary 2011-12 Fiscal Year Performance of 1 Percent

Real estate portfolio earns nearly 16 percent exceeding benchmark

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today reported a 1 percent return on investments for the 12 months that ended June 30, 2012, falling short of its benchmark that returned 1.7 percent. CalPERS assets at the end of the fiscal year stood at more than $233 billion.

The small gain – despite continued volatility in world markets and economies – was helped by improved performance of CalPERS real estate investments. Investments in income-generating properties like office, industrial and retail assets returned approximately 15.9 percent, outperforming the pension fund’s real estate benchmark by more than 3 percent.

CalPERS performance was negatively impacted by significant allocations to U.S. and international public equities.

“The last twelve months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns,” said Joe Dear, CalPERS Chief Investment Officer. “It’s a clear reminder that we must remain focused on performance, risk and internal controls in today’s financial environment.”

CalPERS 1 percent return is below the fund’s discount rate of 7.5 percent, a long-term hurdle lowered recently in response to a steady decline in inflation and as part of CalPERS routine evaluation of economic assumptions. CalPERS 20-year investment return is 7.7 percent.

It’s important to remember that CalPERS is a long-term investor and one year of performance should not be interpreted as a signal about our ability to achieve our investment goals over the long-term,” said Henry Jones, Chair of CalPERS Investment Committee…

Returns for real estate, private equity and some components of the inflation assets reflect market values through March 31, 2012 (not June 30, 2012). Final performance including the last quarter of the fiscal year will be available after asset valuations are completed.

Investment returns are based on compounded daily earnings over the year, including continuing member contributions and benefit payments, and do not precisely correspond to one-year changes in CalPERS overall portfolio market value.

(Source –> http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2012/july/preliminary-returns.xml

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In another listed report, the CalPERS system shows that “CalPERS Outperformed Its 7.5 Percent Target 13 out of the Last 20 Fiscal Years (FY 1992/93 – FY 2011/12).

–=–

So what does this all mean?

Remember, this reported bad thing of an over $2 billion gain in net assets for the fiscal year is being reported after all benefits have been paid out to the employees of this pension fund. And so there is no loss at all for the year, and this gain is all profit for the fund.

Also notice that for the last 20 years, this fund has attained an above average return on investments, 7.7% compared to the desired 7.5%. This is the wonderful aspect of the CAFR – it allows you to see previous cycles so as to not be fooled by media sound bites. Here, CalPER’s confirms the data in the financial statements that prove that this fund is wealthy beyond even the stated CalPER’s long term goals.

Simply put, this whole media frenzy was a false flag scare tactic – utilizing incomplete information for the CalPERS fiscal year report as stated by CalPERS to pre-program the people of California to accept unnecessary and unneeded increases in taxation, and all for a pension fund that will benefit the taxpayers in no way whatsoever.

We will not know the true statement of CalPERS financial situation until the Comprehensive Annual Financial Report (CAFR) is released for fiscal year 2011-2012, sometime in the next couple of months.

The problem is, most taxpayers have never heard of the CAFR, and place blind trust in their government and their media when they report such ridiculously contradiction data-sets as we have seen here from the Associated Press. And as government forces taxpayers to contribute taxpayer money into the public pension systems of the Federal, State, County, municipality, and district funds on an involuntary basis every year, the taxpayer base looses over $900 billion into the either of public pension black hole each year. This is to say nothing of what the employees of government are also forced to contribute.

If Walmart or Haliburton corporations required taxpayers to fund their pensions at no benefit to the taxpayers in any way, there would be riots in the street tomorrow.

And if they tried to get away with trying to convince the people (or for that matter the IRS) that their over $2 billion dollar gain in investments was somehow a bad thing or was somehow a loss requiring more taxpayer infusions into the Walmart or Haliburton corporate structure, there would be attorneys, accountants, CEO’s, and Board members hanging from the nearest tree…

What gives America?

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–Clint Richardson (realitybloger.wordpress.com)
–Saturday, July 21, 2012

CAFR School: The Public Reading Of The CAFR


In this dramatically droll and boring school board meeting, the school district’s board is visited by its chosen and contracted auditing firm, for which a representative of that firm monotonously explains to the board the Comprehensive Annual Financial Report (CAFR) that it has completed for the district. I am posting this recorded school board video recording not for your viewing enjoyment, but for proof positive that all school boards and other local, district, county, and state governments are fully aware of and must acquiesce and approve their CAFR reports in a board or council meeting. Do not ever let any government tell you that they do not know what the CAFR is. They are lying. They may not be able to read it, but they know it exists and know they aren’t supposed to know what it really says! Ignorance is no excuse for malfeasance…

CAFR discussion begins at 2:23 in this video:

Let there be no doubt about this standard government accounting practice.

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–Clint Richardson (realitybloger.wordpress.com)
–Tuesday, February 21, 2012

Federal Reserve Notes Are Backed By Gold


Retraction: After many quite personal attacks on my character, it has been pointed out to me that the “gold” in question is pledged to the Federal Reserve specifically as collateral, meaning that the Treasury must pay the contract if the Federal Reserve calls in the “collateral”. I don’t mind being wrong, and will always endeavor to correct such mistakes. But I must say the abuse is intolerable (in the comments below) from what are supposed to be the good guys; “the people”. This gives little hope of our future as an organized group of people. I apologize for being tricked by this misleading writing, and hope to correct that here:

Here is a comment from Walter Burien, correcting my error:

The report Clint sent out was a trap he fell into after certain circumstances of reporting changed to hide the assignment of the Treasury gold to the FR.

Most would not have caught the word play for misrepresentation now revised in the reports including maybe myself if I looked for the first time now. Being that I looked over a decade ago, that is why I caught it.

In reference to Clint: “This is the problem with most Americans today.” and that is 99% not accurate in reference to Clint.

He has done what 1 out of a million would do and that is take the time and have the intelligence; fortitude; and will to “look”. We all get caught in traps from time to time. You should not diminish him for having done so…

Note 19 on page 101: “Notes to the Financial Statements” and line item values listed.

Page 102. The key phrase is the last sentence:

“All of the Department of the Treasury’s certificates issued are payable to the Federal Reserve banks.”

Being gold certificates issued by the Treasury, the word “payable” means payable in gold.

Now I did notice they are doing something differently then they were doing in 1999. They are now “floating” the certificates back and forth between the federal reserve member banks redeemable in dollars and foreign currency. There is no physical gold that changes hands, just the paper certificates. I mentioned to look at the 1999 Federal AFR being the wording and the swaps of certificates were not being done then and there was no word play. The “gold was pledged to the Federal reserve by “gold certificates” to do what they do. If the Federal Reserve called up those certificates, the FR got the gold in redemption of those certificates.

As I mentioned I put out a CAFR1 post eight years ago on that point and Opps, the gang had to cover their asses in extended word play and the new certificate swaps to blur what they did in the “give up” of the gold by certificates issued at $42 oz.

Hell probably hit the fan when the full Congress and the Senate realized what had been done and thus implemented the gold certificate swaps to generate money for the Treasury.

If the Federal Reserve had ever “called up” the original certificates issued and took possession of the gold, the Treasury would not have had the ability to profit off the gold certificate swaps. The treasury would no longer have the gold in their possession to do so. I note the gold certificates is a VERY small percentage of the value listed in the Federal Reserve’s AFR.

Being that I now have had to focus on this issue, I now understand the play push to audit the Federal Reserve “members” of if which done would collapse the Federal Reserve’s participation of and from member banks. It was used as a pressure point to accomplish several points. One to force the FR into taking on more US Debt between the members (as the increase is noted in both the FR and Federal Government’s AFR report’s notes) and also probably to force the ability to use the gold certificates (never redeemed for the physical gold) through in and out swaps in trade mandating return of the certificates (owned by the FR) on call where the “Treasury” directly benefited from that activity.

–Walter

***Note that Walter alludes to the most important aspect here: the collusion – not competition – between the Federal Reserve and the Treasury. And the gold, of course, can’t just be ignored. It is the peoples wealth pledged without acquiescence to contract.

.

And here was the original post:

It is always good to know that the sacrifices I’ve made and the endless hours of research I’ve done don’t just fall on deaf ears…

I received an email a couple of days ago from a reader of my blog, who went above and beyond the call of duty to verify the research in my recent videos, not just taking it at face value. If only all of us did this with each others research, we would no doubt have a whole lot less confusion in our search for “truth”.

Besides my gratitude, I would also offer this man my highest accommodation of valor (if I had one) for taking the time to not only find the Comprehensive Annual Financial Reports (CAFR’s) I mentioned, but to read them and link them in his email.

Thank you, sir!

I’d like to share that email here…

“John Smith” wrote:

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–Begin excerpt–
————————

Fact: The Federal Reserve Notes are backed by gold.

Yes, you read that right. The Federal Reserve notes are backed by gold.

Hitler (Joseph Goebbels) was right when he said, “If you repeat a lie enough times, people will believe it (paraphrase).”

I know what you are thinking. OK, John. Prove it.

If you look at page 453 and 490 of  the 2009 Annual Financial Report of the Federal Reserve (CAFR) you will see there actually is collateral held against Federal Reserve Notes. This means the money we use is backed by something.

(LINK – http://www.federalreserve.gov/boarddocs/rptcongress/annual09/pdf/ar09.pdf)

What is it backed by?

There is the Gold Certificate Account (The Fed has the gold and the Treasury has the certificates.)

How much gold?

$11,037,000,ooo. worth of gold. This can also be found on page 61 of the Federal Government’s CAFR.
(LINK - http://www.gao.gov/financial/fy2010/10notes.pdf)

How many (troy) ounces (of gold) is backing the Federal Reserve Notes? On page 62, the last paragraph reads:

“Gold is valued at the statutory price of $42.2222 per fine troy ounce. The number of fine troy ounces was 261,498,900 as of September 30, 2010, and 2009. The market value of gold on the London Fixing was $1,307 and $996 per fine troy ounce as of September 30, 2010, and 2009, respectively. Gold totaling $11.1 billion as of September 30, 2010, and 2009, was pledged as collateral for gold certificates issued and authorized to the FRBs by the Secretary of the Treasury. Gold certificates were valued at $11.0 billion as of September 30, 2010, and 2009, which are included in Note 19—Other Liabilities. Treasury may redeem the gold certificates at any time. Foreign currency is translated into U.S. dollars at the exchange rate at fiscal year-end. The foreign currency is maintained by various U.S. Federal agencies and foreign banks.”

 

How much money (Federal Reserve Notes) is in circulation?

All of that hard and easily liquidated currency is known as the M0 money supply. This includes the bills and coins in people’s pockets and mattresses, the money on hand in bank vaults and all of the deposits those banks have at reserve banks. According to the Federal Reserve, there was $908.6 billion in the M0 supply stream as of July 2009.

(LINK -  http://www.federalreserve.gov/releases/h41/20090730/)

What is the real value of the Federal Reserve Notes?

This can be viewed 2 ways (statutory value or market value).

Let’s do some calculating:

The statutory price of gold is $42.2222 per ounce. The Fed is holding 261,498,900 ounces of gold This equals to $11,041,058,855.58 ($11 billion). There is $908,600,000,000 ($908 billion) in circulation. According to the statutory price of gold, the dollar is worth $.012 (Just over 1 cent per dollar).

The market price of gold is $1,307.00 per ounce. The Fed is holding 261,498,900 ounces of gold. This equals to $341,779,062,300.00 ($341.7 billion). There are $908,600,000,000 ($908 billion) in circulation. According to the market price of gold, the dollar is worth $0.37 (37 cents per dollar).

(Note: The average market price of gold is actually over $1,600 for November)

I guess the dollar really isn’t worth a dollar (in gold).

Warning: My lack of funds are being compensated by my knowledge.

———————-
–End excerpt–
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Again, my congratulations to John for taking the initiative to research and verify the facts (instead of just insulting the messenger).

.

–Clint Richardson (realitybloger.wordpress.com)
–Monday, November 21, 2011

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