The facts he states in his introduction, regarding the move to separate capital from operating budgets at the state and local level, and implemented through CAFR, tie closely to my memory. 

While the actual effects of this move may be disputed, the intention, and I believe the effect, was to separate investment in public infrastructure from the operating expenses of government.  This was intended to increase the availability of funds for infrastructure, and to reduce the competition for funding between capital and operating expenses. 

The initiative, while eventually successful, was strongly opposed by radical conservatives who saw it as a means of expanding government expenditures.  The lost that battle, but were successful in fighting much capital investment anyway - which is why our bridges and schools, etc. are in such disastrous condition. 

As for the assertion that US state and local governments, or even the federal government, has invested signifant funds overseas - I have never seen such an assertion before, know of no statistics supporting it, and find it lacks credibility and relationship to what I do know of the history of investment flows between the US and other counties. 

For example, it is well known that the Reagan and Bush administrations alike have funded their deficits through purchases of US debt by foreign investors and governments.  And that without such purchases, the value of the dollar relative to other currencies relative to the dollar would have fallen.

The artificially high value of the dollar which results reduces the cost of foreign goods in the US.  It increases the cost of US goods to potential purchasers in other countries.  At first it primarily benefited oil companies who made more money from maintaining demand from this backdoor subsidy of imported oil. 

But with the advent of free trade, the artificially high value of the dollar meant that the subsidy was extended to imported goods.  Naturally, US companies found it advantageous to import their products (as Nike) rather than make them in the US.  As the cycle progresses, we see US companies moving their production, and the technology they use to produce goods, to countries like China - as has been discussed here.

The artificially high value of the dollar, and the fact that goods produced overseas and sold here are so subsidized, works against the US - both its labor, and its producers who are unable to move production offshore.

The "strong dollar" may be the friend of the consumer of cheap imported goods.  But it is the mortal enemy, the viper at the heart, of the American worker and the long term health and welfare of our nation.

FROM WJB:

Jim:

Quoting you above "The artificially high value of the dollar, and the fact that goods produced overseas and sold here are so subsidized, works against the US - both its labor, and its producers who are unable to move production offshore."

The US Government administrators realized this in the 70's. They needed to diversify their investments before they implemented the change for the long run.

If you read the comments a little more closely in my original post above it will shed light on your own statements.

I can tell the figures and policy shifts I outlined above caught you off guard as it did to me when I learned for the first time 12 years ago that this was taking place.

I recommend that you get and look at several state; Retirement Fund CAFRs. They being Pension Fund CAFRs will list the individual investments, their value, when established and when they vest.

You will see that in each state billions are invested with the banks in the mortgage and credit card divisions. Government is now the "primary" investor with the banks in funding mortgages and credit card debt. It will also outline on a case by case basis the degree and scope of the shift to international investments.

Take a look at regular local government CAFRs.

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http://cafr1.com/STATES/ 

You will see in the note sections listed returns for local agencies. Pay special attention to the notes per "Bond dividend return" Here they are disclosing return from bond investments. (Most people are conditioned into thinking government is paying for bonds)

When you look a little closer you will find government financial Enterprise Authorities that have been established to take investments from the local governments within the state and then when the local governments have a bond issuance of which the public will repay with interest, those same local governments now indirectly use their own investment revenue held with that Enterprise authority to fund their own bond debt. Several states have now become 100% self funded on their own debt through this method.

It is also obvious to me by your comments you have not looked. You say;

"As for the assertion that US state and local governments, or even the federal government, has invested significant funds overseas - I have never seen such an assertion before, know of no statistics supporting it, and find it lacks credibility and relationship to what I do know of the history of investment flows between the US and other counties."

You were not intended to know due to the scope of the money and control involved. What is spoon fed you by the media and controlled education was designed for you not to know.

I did not know about this also until I looked twelve years ago. That is the beautiful point about the CAFRs and also why you were not aware of them. Government needed to keep their own records of the scope and growth of their plans. The CAFRs will show you the scope of the takeover by government. Something you were not intended to see.

I will give you one example of many available as shown by review of CAFRs. I will use Arizona State Government Inc. as an example.

In 1973 the state government of Arizona CAFR (Comprehensive Annual Financial Report) showed a service budget of 1.8 billion dollars with total cash gross receipts of 2.1 billion dollars or a 300 million dollar figure over the budget.

Well, in 2000 the state government CAFR showed a service budget of 14.5 billion dollars and cash gross receipts of 35 billion dollars or a mere 20 billion figure over the selectively created budget report.

I will leave you off with one last comment; The CAFR is government's Annual financial Report, the Holy Grail of accounting. It is as to religious organizations as is the Bible, the Torah, the Quran. So:

1. Why is it not on the front page of the newspapers?

2. Why is it not even on a back page?

3. Why is your editor sent it each year only not to have a clear mention of it, not a peep?

Catch what is being said here Jim by me and then LOOK FOR YOURSELF! When you do look and see, what you see will shake the foundation of what you "had" believed was going on right before you most of your life.

The truth may set you free if those shackles are not already to tight and your response conditioning is not already to well planted.

I can't wait until you discover the scope of the money involved, controlled and owned by our own local and federal governments!

Yours Truly,

Walter Burien (AKA: Bubien)
http://CAFR1.com

Prior CTA (Commodity Trading Advisor) 1979-1992
Incorporator: Hands Across New Jersey - 1990
National Sales Manager: US Trading Championship, US Investing Championship, and Money Managers Verified Ratings 1980-1992

Walter is correct in noting that I have no direct knowledge of the current status of the funds he describes.  I am surprised at the extent to which he indicated these funds have grown in size, and the extent to which local government bonds for capital investments can be funded by them, without recourse to direct bond markets.

If this is so, and I cannot dispute it, he is correct in saying that I (indeed any of us with any interest in how money flows in our economy) need to take a close look at it.

He is also correct in his presumption that having a direct financial interest of this magnitude in any form of investment will condition the decisions of those managing the investment fund - government official, private indivisual, or corporate officer, it makes no difference.

So the extent to which the public fund managers responsible for these investments have placed them in foreign assets, such as the bonds of foreign companies and governments will affect their judgements about the desirability of decisions by our government which may affect the investment.

Unfortunately, I believe that a reduction in the relative value of the dollar, which would be helpful to our exports and our employment picture, is seen as disadvantaging those in the US who hold foreign debt - which may cause them to join Greenspan and the Fed in attempting to maintain the artificially high valuation of the dollar.

But those relationships are complex.  People holding foreign currencies would see the purchasing power of the dollars those currencies convert to increase, should the dollar fall in value.  And the dollar cost of oversease vacations would increase as well.  Where do the fund managers stand on this, and what influence do they actually have on our economic policies?  I don't know.