FedUpUSA

Archive for February 13th, 2010

FDIC and Federal Reserve Protector of the Big Banks – Four Institutions with Bank of America, JP Morgan Chase, Wells Fargo, and Citibank make up 55 Percent of all FDIC Backed Assets. Big Banks Pillaging the Middle Class.

Posted by mybudget360

The FDIC provides deposit insurance at 8,099 institutions.  Collectively the FDIC overlooks $13.247 trillion in assets at these institutions.  Instead of feeling protected you should feel weary because the FDIC deposit insurance fund is insolvent.  Now the assets at these institutions range from softer side financial instruments like CDs and regular deposits but keep in mind that saving accounts are actually viewed as liabilities on the balance sheet of banks.  This is money owed to you, the typical American saver.  What is more nefarious is that these banks label high flying “assets” like commercial real estate loans and home equity lines as assets.  In other words banks are optimistically pretending that many of their toxic assets are worth more than they claim they are really worth.  And what is even more disturbing is the too big to fail banks make up the bulk of the FDIC total asset pool.  Out of 8,099 institutions 4 banks in Bank of America, JP Morgan Chase, Wells Fargo, and Citibank make up 55 percent of that total asset pool:

Source:  FDIC, Bank Financial Statements

In the last couple of weeks, there has been much scolding being thrown at Greece for their spendthrift ways.  Yet has anyone really even looked at the balance sheet of our banks and country?  In fact, Americans are carrying nearly as much household debt as our annual GDP.  This is the so-called assets on the banks balance sheet:

The big four banks have been pushing households for over three decades at a blistering pace to go deeper into debt.  The middle class has been sold a bill of goods with the faux prosperity of the last few decades.  Certainly we have been able to consume more and purchase more goods but where has this led us?  We are now witnessing the highest foreclosure rate since the Great Depression.  Unemployment and underemployment has now pushed the rate up to levels unseen in generations.  Banks have become pushers of debt to the middle class and in reality, it was all a front to consolidate power in their corporatacracy.  The fact that only four banks control 55 percent of all banking assets is simply amazing.  It is an oligarchy in the banking sector.  And the troubled bank list keeps growing but the bigger banks will have no chance of failing (their risk is now transferred to the public):

Now why would there be a growing number of problem banks if the economy were truly recovering?  Your typical banks has to deal with the real world just like most businesses.  They don’t have the luxury of expecting bailouts for every misstep that they take.  They also interface with the middle class of America that are seeing their ability to keep up become harder and harder.  Everyone is being sold that “we need to tighten our belts” while these big banks are dolling out billions in taxpayer bonuses and somehow are adding no actual benefit to the real economy.  This is the conclusion of 40 years of irresponsible growth in the banking sector.  Finance was never intended to be a big part of our economy but that is what we have gotten over the years:

The trend is rather unmistakable.  Manufacturing topped out in the 1970s and the financial sector has grown nonstop and only this gigantic financial mess has slowed its growth.  Yet keep in mind where this slow down has occurred.  There are many more efficient and better run smaller banks and they have had to tighten their belts like everyone else but the too big to fail have gone on shopping sprees acquiring toxic mortgage outfits and investment firms like Bear Stearns or Merrill Lynch.  How is this part of the cutting back plan?  It is more of a coup from the corporatacracy to cement their concentrated power.

The big four are also part of the biggest issuers of credit cards.  As you may have noticed these banks while speculating on Wall Street and turning enormous profits in their investment units have done very little in advancing the cause of the middle class.  Instead, they have now gone after good credit standing customers to ring out every penny in absurd fees and gimmicks.  Some argue that people should simply not spend.  Well, if the American public had the same access to the U.S. Treasury and Federal Reserve I assure you that the playing field would be very different yet some of these people have the inability to see the macro picture of what is occurring.  You can’t tell the public to act one way while so much money is funneled back to the top.

The biggest propaganda fraud is how big banks try to confuse the public that they have actual choice in the various credit cards they have to offer.  Just because you can put a puppy on your card doesn’t mean a big bank won’t gouge you for every penny you have.  Take a look at the top credit card issuers:

*In Billions of $USD

The big four banks show up in the top six institutions.  As you can see our banking system is largely concentrated in a few hands and the Federal Reserve is merely concerned in protecting these gigantic institutions even if it means using middle class Americans as cannon fodder in this economic battle.  Even with mortgage rates, we keep hearing how wonderful rates are.  Well of course because we are destroying our U.S. dollar to allow banks to borrow at near zero percent!  And this is sold to the public as good?  Why not let the average American borrow directly from the Federal Reserve and get the same terms at near zero percent?   We are then told that banks need to verify the actual data.  How well did that turn out in this massive housing bubble decade?

The bottom line is the big banks are getting bigger in this current structure. This is unhealthy for the system.  Why?  Banks that ran inefficiently and took on too much risk should fail.  That is the nature of business.  If you run a horrible restaurant you will lose customers and ultimately fail.  With banking, as long as you serve enough crap throughout the system you will eventually rise to the top and then become part of the corporatacracy that is somehow unable to fail.  To the contrary, they have expanded and grown while every other business has to compete with tougher restrictions.  Even a basic definition of capitalism is sufficient to show us that banking is operating in a socialistic handout from D.C. to Wall Street.  In the end it is the middle class that suffers from this concentration of power in a few banks.

The Impossible Math of Debt Backed Money… and why we WILL take an Evolutionary Step

by Nate

THE PROBLEM:

All money in the United States, except coins, is created as someone’s debt. When our nation spends more than it takes in, a deficit is created and our government “borrows” the money mainly from commercial banks. As the debt builds, so does the interest. As the interest takes up a larger percentage of the budget, real programs get squeezed.

The latest example of the squeeze is Obama’s announcement cancelling future manned space flights. No more advancing the human race in space, it’s too expensive. NASA’s total annual budget? $18 billion. Amount spent on interest on just the current national debt? At the traditional rate of 5% it will total more than $700 Billion in 2010! But guess what? While the Treasury Department reports that “only” $383 billion was spent on interest last year…,

…the real amount of money spent on interest last year alone nearly equals the total amount of money our government takes in!

Please let that sink in.

That’s right, this is no joke! Yes, that chart from the Treasury is completely misleading – as in deceptive. In fact, when all the money spent buying down interest rates is considered, we are actually spending ALL of our nation’s income, or more, just for the privilege of using our own money system!

Consider that by the end of 2010 we will have $14.3 Trillion just in current debt, just at the Federal level. “Deficits don’t matter,” right? Yet we are seeing debt driven events ripple around the globe. And since the end of 2008 through September of 2009, the U.S. Federal Reserve had committed $6.4 Trillion just aimed specifically at programs designed to keep interest rates low! And that is conservative, in fact it can be said that the purpose of nearly all the backstops and bailouts was to keep the cost of debt low! This would include backstops like the one given to the FDIC to prevent bank panic from spreading… is that not in effect buying down interest rates? Of course it is. Total commitments? More than $11 Trillion as of September 2009.

If that’s too much of a stretch for you, let’s be really conservative and only look at the amount of money actually invested by the Federal Reserve during that timeframe to buy down rates, about $1.5 Trillion! The largest section of this money went directly into buying up mortgage paper through the GSEs.

So, we spent $1.5 Trillion, at least, buying down interest rates, the sole purpose of which is to mask the debt load. This is because debt saturation has occurred and at normal interest rates, the debt load cannot be supported by incomes. That is true on all levels.

If you combine the amount the Treasury spent directly on interest in 2009, $383 billion, and add it to the $1.5 Trillion used to keep rates low, then it can and should be said that the Treasury actually spent at least $1.88 Trillion on interest!

How much money did the Federal Government take in? $2.2 Trillion is all. Remember, comparing debt or interest to GDP is a FALSE argument, a Red Herring. Income is the only thing that matters when it comes to carrying debt.

$2.2 Trillion in income, $1.88 Trillion in real interest expense. How are we looking?

This conservative estimate means that we actually only have about $320 billion to spend on everything else that’s not interest related. States going bankrupt? Roads in disrepair? The value of your retirement falling? Jobs hard to find? People going hungry?

According to www.federalbudget.com, this is how Congress currently spends our money. Note that their Treasury Department expenditures exceed $700 Billion in 2010, and that just the top three budget items exceed the total amount of revenue collected by our government. That’s without any mention of the amount spent to keep rates low.

Have you ever been trapped by logic? When this happens to your brain, it will know it. Oh sure, you may try to weasel your way out, but deep inside you will know you’ve been had.

To those who think this can reverse or that it was a one-off expenditure, you simply do not understand the exponential growth that is occurring, nor will you see the parabolic collapse that is coming.

The collapse of debt has already begun in the private sector, but the government is simply picking up that collapse and creating a parabolic growth phase of government spending and government debt. Here it is presented in the Fed’s own charts… What exponential growth? This exponential growth:

That chart spans more than the past century and is experiencing a classic parabolic blow off move that has gone quite vertical. Parabolic moves ALWAYS collapse, it is just a matter of when. When this curve collapses, it is going to be very painful for many people indeed.

Looking at that chart, is there anyway possible to believe the budget forecasts stating that the deficit is going to start coming down soon? What would that mean to the economy if it really happens at this point? Would the economy still be growing or would it be shrinking? Are those light bulbs I see coming on? Pretty illuminating isn’t it?

Okay, now we’ve seen that our outlays (spending) are skyrocketing, let’s take a look at the collapse of current receipts, again our nation’s income, but this time let’s view it in terms of year over year change. Here you will see a historic collapse of tax revenue on the Federal level:

The chart of outlays has moved into a parabolic blow off phase upwards, while at the same time the chart of current receipts has already peaked and is now collapsing downwards. This, of course, is causing deficits to enter a parabolic move of their own – the Fed refers to this deficit as our “national savings.”

The hollow words “deficits don’t matter” echo through my mind. They are spoken in the arrogant tone of supposedly educated people who continue to spread their debt backed manure. Of course they spread this manure knowing that it fertilizes their returns.

The stench of that manure ripens further as many argue that we can simply print money without debt and that will inflate existing debt away. That is a comical notion if you understand that it requires income to service debt and that the rate of debt expansion is far outstripping the rate of income growth.

If that math doesn’t convince you that change is about to come to our monetary system, then nothing will! Remember the housing bubble? “Real estate never goes down,” remember? I was one of the few who was warning about it early on, but now everyone seems to think they saw it coming. Do you see this coming as well? Or, do you believe that it’s possible to “inflate away debt…” even though your money is backed by debt?

YES, absolutely the rules are going to change, that’s exactly what I’m saying. But I’m also saying that the rule changes will not be simply printing money within the same old framework.

The day after the TARP program was announced in November 2008, I wrote a paper called Death by Numbers. In it, I simply added up all the debts on the personal, corporate, and Federal Government levels and demonstrated how the same people are ultimately responsible for all the debt on each level to the tune of $303,053 per man, woman, and child in the United States – more than $1.2 million just for my family of four, and this did not include the debt on the state and local government levels. People were stunned, you cannot argue the numbers, yet nothing has changed. Besides getting worse that is.

Recently I updated the math in an article called Zombie Nation – The Rise of the Mathematical Plague. In it I added the cost of additional debt, not counting the trillions spent bailing out mortgages in the GSEs, and showed that each worker in the United States is now responsible for $704,530 each! This is an impossible math situation as the average wage simply cannot support that much debt, especially when interest is considered.

Now, through demonstrating how much of our income actually goes to interest on our debt, we are demonstrating the same bad math just expressed in another manner. But let’s have some fun and challenge the sanity of those who believe that adding debt will cure a debt problem by asking a couple of pretty easy questions…

“The hollow words “deficits don’t matter” echo through my mind. They are spoken in the arrogant tone of supposedly educated people who continue to spread their debt backed manure. Of course they spread this manure knowing that it fertilizes their returns.”

“Is it possible to add money to inflate away debt in a system in which money is backed by debt?”

This is what many people are saying will happen, right? Of course the fact is that almost all of our money is backed by debt. Creating more money means creating more debt. The real question becomes how do incomes keep up with the debt creation? Are they? Of course not…

Next question:

“In a system in which money is backed by debt, what happens to the supply of money if you decrease the quantity of debt?”

Of course the supply of money would fall! Do you see the dilemma that is created when you back your money with debt? We can’t pay back our debts without decreasing the supply of debt backed money, and if we do that, then the economy will suffer. But if we continue to pile on debt, then more and more of our money will go to pay interest and our economy will suffer. Those are the choices we are presented with in our current Federal Reserve Debt based system.

Thus we are damned if we do, and damned if we don’t. And it’s not just us who are damned. The entire world is built around the same clearly unsustainable system.

This begs the question, “Why is our system built like that, and to whose benefit was it made that way?”

I think you know the answer to that question – this current system was built around the Federal Reserve Act that was passed in the year 1913, and it took the money power from Congress and moved it to the private banks and bankers.

The very same interests that created this monetary conundrum are telling us “consumers” that we need to spend more to get their credit (debt) flowing again! LAUGH OUT LOUD, that is hilarious! Then they use the money created and the tax dollars that flow to them from us CITIZENS to buy the political and judicial systems! Talk about irony of ironies, the money system doesn’t even belong to them, it belongs to us! We don’t have to pay anyone for the right to use our own monetary exchange system, that notion is simply ludicrous, yet we have all been living under that system our entire lives!

Simply put, our money system was stolen from us. We can either take it back or we can continue to swim in the manure, the choice is ours, not theirs.

The globe is saturated with debt. Adding one dollar of debt now subtracts 15 cents from GDP.

The velocity of debt is zero, the debt saturation point. Adding additional debt will only cause future defaults and falling employment.

This debt saturation is causing default waves that ripple around the globe. Subprime in the U.S., Banks in the U.S., Commercial Real estate, etc. Now the debt bombs are detonating in Dubai, then Greece, in Portugal, Spain, Ireland, and even Japan. The bombs are just waiting to explode in England, Germany, the rest of Europe, and even China. Even if the bombs don’t explode immediately, the debt smolders causing global economies to suffocate. Germany is the latest to report that despite all the efforts to prevent it, their GDP is simply not growing (neither is ours in reality).

Our statistics are not comparable with bygone eras. Debt saturation has caused a phase transition and attempts to cover-up this transition have resulted in huge distortions of the truth. Below is a chart published by SG Cross Asset Research showing their computations of net liabilities to GDP. This includes liabilities that are off balance sheet, and they far exceed the liabilities carried on balance sheet:

Yes, our governments are insolvent. Insolvent being a condition in which you can no longer service current debts. That has already occurred in the United States. That is why we resorted to “Quantitative Easing” and why we use several methods to artificially buy down our interest rates. If we could have continued to borrow more money at normal rates we would have but we didn’t and we can’t as the stress in our debt auctions is now showing time and again.

We can show that insolvency in the math in several different ways. Thus you are a witness to the biggest lie and accounting scandal in the history of mankind. No, that is not an exaggeration, it is a fact, a very sad fact that we are all going to have to face one way or the other and soon.

To all those who point to this (Democrat/ Republicans!) and that (bad assed unions who are ruining our country) and claim the other thing (banks need to lend more, lol) regarding our economy, all I can really say is that your eye is way off the ball. The game of debt backed money with the ever escalating interest going to private individuals is nearing an end… the mathematical outcome of the game was decided before it ever started.

If you view the current situation objectively, you will come to the inescapable conclusion that the rules of the game must change. Who is it that is going to bring those new rules to you? The same people who created the current debt backed system? Have you heard of any solutions that address this root of the problem? Are you waiting to be rescued, or are you hiding in your bunker?

THE SOLUTION:

Yes, printing money without debt is an alternative, but that doesn’t make the current debt go away and it doesn’t bring spending back to match income. The quantities of money required to be printed would be so vast that you would soon find yourself printing trillion dollar bills.

Another solution would be to buckle up, spend FAR less, tax FAR more, and default on current debts. The economy will suffer hugely and for decades as a result, and in the end, with debt backing our money the result would be that eventually the same old cycle would repeat as the next debt bubble builds anew.

The inescapable conclusion is that if you live inside of a debt backed box, our nation and human kind will continue to be held back.

There is only one right answer for the long haul, for the good of our nation and of the world. That answer is to replace the Federal Reserve Act with the provisions of Freedom’s Vision. This will return the money system to Congress and to the People where it belongs. It will cleanse the debts and derivatives to lessen leverage in the economy while restoring balance sheets, not just for our Federal Government, but for States, Banks, Businesses, and Individuals.

Implementing Freedom’s Vision will:

1. Avoid the disaster about to unfold – regardless of how we get there, by inflation or deflation, the math of debt that underlies our currency does not work. This would break that math and preempt the negative events that are going to follow should we fail to take action.

2. End the practice of debt backed money for our Federal Government. Lower taxes and more productivity result.

3. Provide direct and immediate relief for people in debt, accomplished in a way that’s fair to everyone including those who are not in debt and without creating excessive price inflation, deflation or a giant “moral hazard.”

4. Provide direct and immediate compensation for those who are savers and have been damaged by past practice.

5. Provide relief for States, almost all of whom are in deep debt trouble.

6. Cleanse the banks and financial businesses of unserviceable debts and derivatives and would ensure that they stay that way. All banks would survive the transition, immediately benefiting from improvements in our citizen’s balance sheets. The same process would be used to cleanse other financial like businesses.

7. Businesses, both large and small, would immediately benefit from our citizens and the banks improved balance sheets.

8. Unfunded liabilities would immediately get better with zero percent price inflation.

9. Limits on special interests would separate their money from politics lessening the pressure to continually increase the quantity of money. This allows long term decision making. Special interests associated with the banking, oil, defense, food, insurance, and other industries would no longer have their huge pull. Thus politicians would not have to focus on spending our resources on special interests, but instead on the interests of the people. Budget pressures would decrease as a result.

10. States would exercise more control over their own destiny. Lower taxes on the state level, more productivity. Low cost money would become available to repair and upgrade current infrastructure and to build the infrastructure of tomorrow’s commerce.

11. The powers possessed by the central banks would be greatly diminished freeing our country and others from their methods of control via debt, now even issued worldwide by the IMF. Countries would no longer be working to pay central banks interest. Instead they would work to develop their own rule of law. Their productive labors could be used to improve their own infrastructure, to feed and cloth themselves, and to build a future for themselves. In other words, they need to be taught how to fish, not simply given a fish and asked to pay it back forever and ever.

12. No price inflation eroding away future savings. People who take on reasonable debt could once again make progress towards paying it off.

13. Massively supports education, underpinning progress so that we may continue to lead the world in innovation and the production of meaningful technologies.

14. Provides a national mission – focused on creating the energy and infrastructure of the future. REAL and meaningful economic growth would ensue and massive new employment would result.

Many argue that such a plan is not possible or is too difficult to implement. Some feel that collapse must happen first while others do not see the threats at all.

As I look back through history, here is what I see: I see that mankind has been making a steady march towards progress. I see the evolution to the Magna Carta, then to our own Constitution. I see the evolution of economic theory, although painfully slow, it has progressed from rudimentary trade, theories of self-interest, to Adam Smith’s Invisible Hand, to an understanding of supply and demand. I see monetary systems and their progression from sea shells, to wooden sticks, to metal coins, to gold, to paper, to digital.

Now THE major hurdle to overcome is how debt backs our money. We CAN and we WILL overcome this obstacle. It is the next step in the progression, a step that will be taken. To think that we will not progress goes against thousands and thousands of years of history. It will happen because the math of debt is forcing it to happen, it is the only logical conclusion. Nature has a way of pointing in the right direction. When that direction is clear, you know it, it is just, the math supports it and therefore it will last and become the next step forward for humankind.

Yes, “it’s the DEBT, Stupid!” It time to get on with Freedom’s Vision!

Neil Young – Rockin’ in the Free World:

“Mistaken” Foreclosure Or Felony Criminal Conduct?

Posted by Karl Denninger

Oh, the Tampa Bay fishwrapper tries to claim that this was a “foreclosure” on the wrong house:

SPRING HILL — Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.

Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.

Let me be clear: To foreclose on something you must first be holding a mortgage on that thing.

Bank of America did not “foreclose” on anything as the home in question was purchased for cash and thus owned free and clear. 

Bank of America had no more right to be present upon that property for any purpose whatsoever than a crack dealer, gangster or other street thug.

The firm, by their proxies acting at their direction, allegedly unlawfully broke into someone’s home, stole their possessions and destroyed them, and then unlawfully denied the rightful owners access to their own property.

In the State of Florida (and many other states), if you do this while someone is present in their home, you are presumed to be acting with the intent to do great bodily harm or worse, and the occupant(s) are authorized under the Castle Doctrine to use deadly force to stop you.

Bank of America will undoubtedly claim it was all an “innocent mistake.” 

But that’s not likely to hold water if this allegation proves up:

The bank had an incorrect address on foreclosure documents — the house it meant to seize is across the street and about 10 doors down — but the Cardosos and a Realtor employed by Bank of America were unable to convince the company that it had the wrong house, the suit states.

In other words Bank of America allegedly was told they were attempting to seize the wrong house and yet did it anyway.

Lawsuit?

This looks like criminal conduct to me with the line being crossed when the bank refused to listen to their own Realtor who told them they had the wrong house.

If I was to try such a stunt myself I would be lucky if I was not filled full of .40 caliber holes by the occupants of said home and I would deserve exactly that fate for not only attempting to seize the wrong house but intentionally and willfully ignoring warnings that I was trying to seize the wrong house.

Of course when you’re a big TARP’D bank and everyone in our government including the President himself has declared that you are effectively above the law things are just a bit different than when you’re an ordinary person with an obligation toward law and order.

This is the bank’s alleged reply:

“We have reached out to the Cardosos’ representatives and hope to have the opportunity to work with them to properly assess and address their allegations,” the statement said. “We are reviewing the allegations in the lawsuit, the actual events that led to them and the causes of those events, and will consider any hardship that resulted.”

Bank of America will consider? 

Bank of America will assess?

How about this response to your lawyering jackasses:

Blow it out your ass Bank of America.

This is MY reply and is addressed to ALL AMERICANS:

Do you support this sort of crap?  Is this what AMERICA stands for?  Breaking and entering into someone’s PAID IN CASH home DESPITE being warned they had the wrong house, stealing and destroying the contents thereof and other acts that, were you or I to engage in them would rightfully result in felony prison time – or worse?

If you do not, then you have an affirmative obligation to not only not do business with these SPECIFIC Banksters yourself but also to refuse to do business with anyone who does.

Further, YOU have an affirmative obligation if you live in this area and honor the rule of law to DEMAND that the District Attorney bring FELONY CRIMINAL CHARGES against everyone involved up and down the line for the unlawful act of entering upon this property, taking and destroying the contents therein and unlawfully denying the rightful owners access to their home.

Mistakes stop being innocent errors when you are told of your mistake and yet continue pursuit of your wrongful conduct, and if this newspaper account is accurate that is exactly what happened.

THE POWER TO STOP THIS CRAP STARTS WITH WE THE PEOPLE.

Mathematical Proof: Companies Manage Earnings

By Barry Ritholtz

The WSJ reports today on a study that confirms what everyone has known for years: That many firms manage their earnings, pulling all manner of shenanigans to beat the street.

The way this form of fraud was detected was rather ingenious: The lower than mathematically expected incidences of the digit “4? in corporate earnings releases. (“X.4? to be precise) This simple statistical insight was due to an analysis of normal random distribution. “When the authors ran the earnings-per-share numbers down to a 10th of a cent, they found that the number “4? appeared less often in the 10ths place than any other digit, and significantly less often than would be expected by chance.”

Why?

By finagling the 0.4 to a 0.5, accountants then get to round up to the next higher number. Hence, 12.4 cents is “managed” to 12.5, which then becomes rounded to 13 cents per share.

They dub the effect “quadrophobia” — fear of fours.

Here’s the WSJ:

“A new study provides further evidence suggesting many companies tweak quarterly earnings to meet investor expectations, and the companies that adjust most often are more likely to restate earnings or be charged with accounting violations.

The study, which examined nearly half a million earnings reports over a 27-year period, reached its conclusion by going beyond the standard per-share earnings results that are reported in pennies and analyzing the numbers down to the 10th of a cent.

That deeper look showed that companies tend to nudge their earnings numbers up by a 10th of a cent or two. That lets them round results up to the highest cent. Investors often snap up shares of companies that beat earnings expectations, even by a cent, and, likewise, sell off shares of companies that don’t make their numbers.”

I love the euphemism “meet investor expectations” as opposed to the more colloquial “lie cheat and steal.”

It also points out the need for the SEC to develop a Department of Quantitative Analysis filled with math geeks and computers, doing nothing but sifting through data looking for investor fraud. I’d bet they would get more convictions than the rest of the SEC combined. (If someone in the SEC would call me, I’ll help you set it up).

On an unrelated note: The WSJ yet again takes an academic study that proves Wall Street cheats and liars and runs it on a Saturday. Recall the first Option Repricing article they did that that caused quite a ruckus — a Saturday publication as well. If the historical pattern holds, this article will continue to have legs for the next 2 years, eventually leading to resignations and indictments.

States to Senate: Send More Federal Aid

NEW YORK (CNNMoney.com) — States are looking to the federal government for more help balancing their budgets, but the Senate is not heeding their call.

Federal aid to the states was among the top priorities in an early Senate job creation bill, as well as in a $154 billion measure passed by the House in December. But it has fallen off the list as Senate Democrats look to craft legislation that will attract bipartisan support.

Senate Majority Leader Harry Reid, D-Nev., on Thursday unveiled a jobs bill that does not contain state aid. A Senate Democratic aide said Reid hopes to back a state aid measure in the future. Republican support, however, remains questionable.

Experts and state officials say they need to know now whether they’ll get more funds. Governors are currently crafting their budgets and, for many, it will be their third year of contending with massive deficits due to declining tax revenues.

States are looking at a total budget gap of $180 billion for fiscal 2011, which for most of them begins July 1. These cuts could lead to a loss of 900,000 jobs, according to Mark Zandi, chief economist of Moody’s Economy.com.

“State and local government spending is a very important driver of the national economy, especially when the private sector is faltering,” said Jon Shure, deputy director of the Center on Budget and Policy Priorities’ State Fiscal Project.

To close this gap, governors and lawmakers will be forced to lay off state employees, cut services and postpone capital projects, said Michael Bird, federal affairs counsel for the National Conference of State Legislators.

The cutbacks will all work against an economic recovery.

Already, states laid off 44,000 workers in the 12 months ending in January, according to federal labor statistics.

In California, for instance, Gov. Arnold Schwarzenegger is proposing deep cuts to health care, education, the state workforce and social services programs. The governor is looking to Washington D.C. for $6.9 billion for its fiscal 2011 budget, on top of the $6 billion in stimulus funds it is using.

“We believe that providing funds to states will provide the flexibility critical to jumpstart our economy and create jobs,” said Eric Alborg, communications director of the California Recovery Task Force.

Oh really, Mr. Schwarzenegger?  The only places you can find to cut are the ones that will hurt people the most?  Perhaps you could explain justification for this list of city employees?  Keep in mind, that this list is from 2008 and the salaries of these workers have gone up nearly 50%.   Unfortunately, this is not limited to just California; they are merely one example.  This is going on in all states to one degree or another and within local municipalities.  These municipalities are all using the same scare tactics in order to make excuses and justification for raising taxes on citizens.  The REAL truth of the matter is that they merely want to line their own pockets with exorbitant salaries.  Why do you think the unions are always supporting the so-called ‘budget cuts’?  Because they don’t apply to them. 

Massachusetts, meanwhile, is counting on $600 million in federal Medicaid funds that have yet to be approved by the Senate. The state needs the money to close a $3 billion budget gap for fiscal 2011, which comes on top of the $9 billion deficit it has closed over the past two years.

Without that money, “everything has to be on the table,” said Cyndi Roy, budget spokeswoman for Gov. Deval Patrick.

While many Democratic lawmakers on Capitol Hill back another federal bailout of the states, Republicans have said they don’t think it’s the best way to create jobs.

A recent Congressional Budget Office report showed that sending money to the states for needs other than infrastructure does spur hiring, but not as much as increasing aid to the unemployed or cutting employers’ payroll taxes.

Still, CBO Director Douglas Elmendorf said in testimony Friday that providing aid promptly would probably have a significant effect on employment and economic output.

“Without further aid from the federal government, many states would have to raise taxes or cut spending by more than they would if aid was provided,” Elmendorf said. “Such actions would dampen spending by those government and by households in those states, and more state and private jobs would be lost.”

Not only would state workers be impacted, but government contractors and suppliers would be too, Shure said. If the states curtain their spending, the companies that do business with them will likely downsize too.

Though the most recent version of the Senate jobs bill does not contain state aid, House Speaker Nancy Pelosi, D-Calif., on Friday urged her peers on Capitol Hill to take up the issue.

“We will work to ensure that critical pieces of the House-passed Jobs for Main Street Act are enacted into law — including investments in our roads, bridges, and public transit systems, support for job training initiatives, and funding to keep police and firefighters on the streets and teachers in the classroom,” Pelosi said.