“If mind is common to us all, then we have reason also in common – that which makes us rational beings. If so, then common too is the reason which dictates what we should or should not do. If so, then law too is common to us all. If so, then we are citizens. If so, we share in a constitution. If so, the universe is a kind of community. In what else could one say that the whole human race shares a common constitution. ”
~ Marcus Aurelius
President John F. Kennedy once said, “ We choose to…do [these] things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”
President Kennedy was addressing mankind’s efforts to go to the moon. His words express precisely how I feel about researching and writing The State of Our Pension Funds for the 2017 Annual Wrap Up. It’s also how I feel about spending two decades looking for trillions of dollars missing from federal accounts.
Addressing the pension funds meant coming full circle to where my journey began – the journey that led me to start the Solari Report. It began with my efforts in the mid-1990’s working with government and pension fund officials to help the American people navigate the financial impact of globalization.
My proposals were inspired by my simulations of county-by-county financial maps. These are described in my online book Dillon Read & Co. Inc. and the Aristocracy of Stock Profits – https://dillonreadandco.com. If we had re-engineered government spending from a negative return on investment to taxpayers to a positive return – and done so in a manner that generated significant capital gains for pension funds by creating financial wealth in our local and general economies made possible by the application of new technologies – we could have created sufficient wealth to ensure that the pension funds could fulfill their obligations to beneficiaries, including the baby-boomer generation.
Of course that would mean subjecting government spending and investment to the law governing appropriations and federal finances as well as performance criteria rather than using the government to generate “fees for our friends,” to launder money for political purposes and to shift our accumulated savings behind the wall of national security secrets.
My proposals were not adopted. Instead, the leadership of the financial system engineered a financial coup d’etat – significantly deepening the negative returns of government spending and investment. This included simply shifting trillions of dollars out of the US government behind the wall of national security state secrecy. It also included creating false flag events and falsifying the evidence to justify wars without end while rounding up minorities and railroading them into prison labor camps to serve the military, other government agencies and their corporate contractors and vendors at taxpayer expense.
I first learned of this plan from the President of CalPERS, the California Public Employees’ Retirement System, the largest pension fund in the country. The CalPERS President warned me in the spring of 1997, “They have given up on the country. They are moving all of the money out starting in the fall.” That was the fall of 1997 – the beginning of fiscal 1998. Billions started to go missing from the Department of Housing and Urban Development (HUD) as HUD, with the help of the Treasury, the Federal Reserve, the NY Fed and Department of Justice, began to engineer the largest housing and mortgage bubble in our history.
This was no accident. Fed Chairman Alan Greenspan and Secretary of Treasury Bob Rubin are very smart men – they knew exactly what they were doing.
Trillions also started to go missing from the Department of Defense (DOD). Our pension funds, including CalPERS, traded our savings for increasingly fraudulent mortgage paper and US Treasuries – essentially IOUs for which we were liable as homeowners and taxpayers – whose value was steadily debased by aggressive monetary policy and bailouts. Our pension funds became a primary source of assets to be transferred as well as to finance the coup d’etat.
The moral of my personal story is that the President of the CalPERS understood what was happening. Nevertheless, CalPERS proceeded to finance a fraudulent housing bubble and the transfer of trillions out of the US government. This can only mean that CalPERS governance and management serve an agenda other than the one dictated by the law and ethics. This is evidence of a profound conflict of interest – a serious failure of integrity. Perhaps it is evidence that a deep state controls our pension funds as well as our government.
Now CalPERS says that the pension funds it manages have funding shortfalls. Is that the case, or is something more complex, even sinister, going on? These are questions I address in The State of Our Pension Funds.
I wanted to write this piece to change the narrative. To control trillions of capital centrally, our financial leadership must first control the narrative that allows them to do so – even when there are clear indications that something is wrong. Here is how I describe this issue in The State of Our Pension Funds:
“There is a statue of A. Philip Randolph, the civil rights leader, in Union Station in Washington DC with a message for those who pass by it in the Nation’s capital:
‘At the banquet table of nature, there are no reserved seats. You get what you can take, and you keep what you can hold. If you can’t take anything, you won’t get anything, and if you can’t hold anything, you won’t keep anything. And you can’t take anything without organization.’
If we are going to change the future of retirement and pension benefits in a more positive direction, it is essential to organize. Step one is to change the narrative.
The official narrative, which has abundant facts and data to spin, instills panic and blame. It says “Oh, God! We didn’t save enough. It’s our fault. We’re to blame. We haven’t been sufficiently disciplined, so now we’re just going to have to cut benefits. There is just not enough money.”
Here is an alternative – and more accurate — narrative. If $21 trillion can disappear from HUD and DOD, let’s get it back and fully fund our pension funds. If we can loan or gift $20+ trillion to the banks, what is the problem? Let’s do the same for our pension funds!
Politics is first and foremost a negotiation over who gets what resources. If we want to stop the harvesting, the first step is to change the narrative. We don’t have a pension fund crisis; we have a political plan. That plan created the pension fund crisis. It’s time to change the plan.”
This week one of our subscribers sent the public statement of Stephen Cassidy, the former Mayor of San Leandro California, speaking to the San Leandro City Council in a recent public session in which CalPERS gave a presentation on pension costs.
Mayor Cassidy’s presentation:
Rapidly increasing employee pension costs pose a grave threat to San Leandro's solvency. Absent action by the City Council, programs and service we rely upon for our safety and quality of life in San Leandro will suffer significant budget cuts in the coming years even if the economy continues to expand. I outlined solutions that must be undertaken to avoid the impending fiscal disaster on February 13, 2018, at a City Council work session after a representative from CalPERS gave a lengthy presentation on employee pension costs. The video for the entire meeting can be accessed at http://sanleandro.granicus.com/MediaPlayer.php?view_id=2&clip_id=1025Background on San Leandro Budget CrisisThe City Council last year approved a two-year budget that included an operating deficit for the first time since San Leandro emerged from the Greet Recession. San Leandro is having to draw down reserves to cover its deficit which stands at $8.2 million this and next fiscal year.The good news is the City’s reserves for economic uncertainty are strong, standing at $23 million at the beginning of this fiscal year. The bad news is the City is projecting operating deficits for the next decade with reserves for economic uncertainty being exhausted in 4 years.What is the cause of the deficit? First, it is not a lack of revenue. For the first time ever, since 2015, San Leandro’s General Fund revenues exceed $100 million. The local economy is booming. Plus, Measure HH passed in November 2014 boosted sales tax revenue by $10 million. As recently as 2015, the City had a General Fund surplus of $12 million. But in 2015, employee salary and benefit costs were $42 million annually. Next fiscal year the cost for employee salaries and benefits is projected to reach $55 million.Driving this surge is the annual bill San Leandro must pay CalPERS for pension benefits. In 2005, the bill the City paid CalPERS was $5 million. This fiscal year the bill is $12.5 million. In 5 years, the CalPERS bill is projected to rise to $24-$30 million annually. In short, San Leandro has an expenditure driven structural deficit due to exploding employee pension costs.Every new dollar in revenue the City earns over the next 5 years will have to be dedicated to paying the CalPERS bill. But it will not be enough. The City will burn through its reserves triggering devastating cuts to services and programs.
Posted by Stephen Cassidy, Former Mayor on Wednesday, February 14, 2018
Full video of the San Leandro city council session, including CalPERS presentation on pension costs.
In Mayor Cassidy’s presentation, he stated:
“The City Council, the City Manager and the Finance Director, you need to leave CalPERS. You’re never going to get honest advice, without an inherent conflict of interest. Most of you are members of CalPERS. You need to withdraw from CalPERS yourself. Your next contract with the City Manager needs to be a contract that does not include CalPERS. Otherwise you’re getting the wolf telling you how to have proper security at the chicken coop.”
~Stephen Cassidy, Former Mayor of San Leandro, California addressing the San Leandro City Council, February 13, 2017
As I watched his presentation, all I could think was: “Mayor Cassidy, you have no idea the extent to which the fox and his friends have been dining out on your chickens for decades.” I also wanted to underscore that leaving CalPERS should not mean letting CalPERS and the State of California off the hook for their liabilities. I would suggest a deeper investigation of the governance and management decisions that resulted in CalPERS staggering losses on its real estate portfolio during the financial crisis are in order in light of the President’s statement to me in 1997.
Hopefully, you will have an idea about the fox and his friends and your pension funds after you read The State of Our Pension Funds. I hope this knowledge will improve your ability to navigate the impact of the underfunding of pensions on you, your family, your community and your network. If this knowledge arms a sufficient number of people, it can make a difference in what we collectively can return to the pension fund “banquet table” from what has been siphoned, drained and stolen.
The future can turn out well. I know of no economic reason for want or poverty. However, a positive future will require that a large number of people turn our attention from the distraction du jour and attend to what is really happening in our state, local and federal budgets and in our pension and retirement funds. Follow the money.
Don’t let your narrative be controlled centrally. Bust up the narrative. Don’t let your money be controlled centrally – build family wealth that you govern independently. If you want real change, you are going to have to stop the drain from your pocketbook and your pension.
If we each do what we can, a mighty army arises.