Saturday, February 1, 2014
What They're Hiding
It's pretty obvious that almost everyone who stops by this blog knows the government is lying. They manipulate or flat out misrepresent the numbers to make themselves look good or set up circumstances that benefit them. Everyone seems to accept that. Yet the buck (so to speak) doesn't stop there, it isn't just the Federal government that lies.
We have a piece of property in a smallish to medium sized town and predictably as the 2009 crash and decline began to have an effect on the town's coffers they raised property taxes, sales taxes and some use fees. Of course they did all that so they wouldn't have to stop services supposedly as they would bring in more money to offset pension payments and other liabilities.
The problem is it was a flat out lie. Just like Illinois, Oregon and other states found out, raising taxes never brings in the amount they hoped for and in the long run ends up costing them more. Ever really check the financials of states with high tobacco use taxes? The overall effect now is it actually costs those states more to collect the taxes than they get from them.
From the top all the way to the bottom not a one of the various government entities is funded to the levels they claim as all of it is dependent on future tax approximations and revolving bond sales. The first is continually dropping with those hoped for numbers never appearing and in many cases costing more to implement and the second is in danger of going away completely as Bond holders continue to be threatened and scalped in favor of failing pensions.
Now you might say so what? Why do I care about the Bond Holders they knew the risk. Why this may in fact be true and I somewhat agree with this sentimentality the flip side of that is scalping the bond holders carries with it some serious repercussions and unless you are going to get enough to 100% fund all liabilities you will have to go back to those Bond Holders soon with your hat in your hand so to speak.
Now keep in mind all these entities are 65%, 75% or so funded only by counting on future Bond sales. Take those away and well the picture begins to get a tad bit darker.
Even ignoring the fact that Bond Holders are in fact covered by contractual law while other liabilities are not because Constitutionally governments are not suppose to be entering such contracts. Hence why Federal Law trumped a recent State Constitution addition in the Detroit case. We begin to see the true scope of the problem. Once Bond Holders desert you your only options are higher taxes, that end up costing more to collect or, and this one is my favorite part, becoming an investor with the fund yourself....
Ya if your fund thinks it's going to make up it's fiscal liabilities by investing I guess there is now one vehicle no longer available to it. You guessed it no more Bonds.
Now what do you think has traditionally paid off the highest yields and more importantly how much of the partially funded accounts are being credited to current Bond holdings? A scalping of Bond Holders will in fact hit the other various Pension Funds across the country hard. So in effect those hoping for pensions are in fact also Bond Holders.
We haven't even gotten to the part where an unstable Bond investing environment causes capital to flee even from the other securities and into more tangibles. Thereby further reducing future gains that are invested in other vehicles.
Far too many of us see investment class and think rich people but the fact is that investment class and pensioner are by this stage of the game one and the same as it was the only way those funds could stay solvent.
If you believe a financial collapse is likely or even possible then you must realize it is all connected and nothing is safe.
Keep Prepping Everyone!!!!