Walter Burien, who's been the super-sleuth of CAFR reform for over 20 years, sent out a short memo to his followers yesterday. Here is part of it:
NOTED BY CARL HERMAN:Walter responded to my article, 'Developed' nations now $50 TRILLION in debt; literally, figuratively bankrupt for infrastructure, public services with the following brilliant 400 words:
REPLY FROM WJB:
"Please, please, please understand the following:If you were married to a Super Model who was gorgeous, and everyone kept telling you she was fat and ugly, after a while would you doubt yourself to think that she is fat and ugly?
Per that debt, the following three points apply:
Enron promoted their profit and hid their debt. Government does the exact opposite: they promote debt and hide profit.
With the changes in government accounting over the last 15 years, now they project out "liabilities" 35 years cross-matched with 1 year of income. If Bill Gates, you, or I did the same, we all would look like we are on death's financial door.
Government back during the 70's, 80's, and 90's had so much cash coming in the door they did not know what to do with it all. So, the scheme went into effect of promoting debt, and then funding that debt with their own cash: turning cash into debt as an investment for them, and as a "parking zone" for that cash. Well, today if you start cross-matching that local and federal government debt with the investor of that debt, after connecting the dots, you will find that 65% + of that debt is "self-funded" or cross-matched with other local or federal investment funds. You may have the county funding the city debt, and the same city funding the county debt. The enterprise operation owned by the city may be funding the city debt, a local government may have 500 million invested with a bank, brokerage, or insurance company, and that institution is now funding 500 million of that same local government's debt. A state may have massive investment capital in China, and now the same state will have the investment manager in China fund the state's new bond issue which makes the funding "look" like it is coming from China, and so on, and so on, and so on.
The public was played as useful idiots per this scheme with the one side of the coin promoted of the debt. The public is now convinced that their gorgeous model wife is fat and ugly, when in fact she is just as gorgeous as ever and even more so. If government debt was cross-matched with government investments, and then offset against each other, you may just have 80% of that "government debt" evaporate with the stroke of a pen. Please don't get caught into promoting the useful idiot line of government debt...
Please share my comments with anyone you know who is currently "promoting" the one-sided view of the coin per government debt, and share with whomever else you think needs to know the points brought forward above.
Walter Burien - CAFR1.com
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