The Other fight - Wasted Riches

New Senate committee report reveals government departments routinely waste billions upon billions of dollars each year through financial mismanagement.

The horrific events of Sept. 11 temporarily sidelined the bitterly partisan haggling about the federal budget. But a growing number of insiders on Capitol Hill are becoming convinced that the debate about how the nation’s financial resources are used may be as important as any debate concerning the “first war of the 21st century,” and very well may determine the success of future actions in that war.
       With the dust still settling from the attacks on the World Trade Center and the Pentagon, unity has been the order of the day, with little time or inclination for finger-pointing about the breakdown of intelligence, home defense and readiness. The time for this will come soon enough. There are for the moment few willing to go on record about how outrageously financial resources have been squandered during the last eight years. But the fact is that trillions of dollars have been appropriated by Congress without accountability and with no systematic means of determining whether the level of appropriation is enough or even if the money was spent for its appropriated purpose. It is almost as though the profligate “Boss Tweed” of New York’s Tammany Hall had been resurrected on the federal level (see Tweed on cover).
       Already there is talk about renewed deficit spending among both Democrats and Republicans to fund the war on terrorism and to accommodate new economic-stimulus packages, including another round of tax cuts. But critics quietly are asking how future spending needs even can be approximated without reliable accountability.
       Financial fudging in the Cabinet departments long has been a sore point for the inspectors general (IGs) and the General Accounting Office (GAO), charged with keeping an eye on waste and abuse. Now President George W. Bush has entered the fray. He is well aware that to win a war — whether it be a war on drugs, crime, hunger or terrorism — every resource is precious. He made that clear in his 2002 Management Agenda, where he said: “Without accountability, how can we ever expect results? Under my administration, we will bring this cycle of failure to an abrupt end. As president, I will hold affected agencies accountable for passing their audits not later than 2002. I will say to those in place, ‘Get your audits right.’”
       What is the “cycle of failure” to which the president is referring? While there are numerous examples of god-awful financial mismanagement among federal agencies and departments, nowhere is it worse than in the area of national security. Last year (and every year since audits have been required) the Department of Defense (DOD) not only could not produce a clean audit but was unable to account for at least $1.1 trillion (see “Rumsfeld Inherits Financial Mess,” Sept. 3).
       Little wonder the president ordered a complete reorganization of the DOD. To understand the importance of fiduciary responsibility even in a time of crisis, consider that if Defense Secretary Donald Rumsfeld and the Bush team at the Pentagon had that $1.1 trillion today, it could buy 244 Nimitz-class aircraft carriers at a cost of $4.5 billion each, 19,298 F/A18-E/F Super Hornet Fighters at a cost of $57 million each or 343,750 Bradley fighting vehicles at a total cost of $3.2 billion. Furthermore, using a reasonable estimate of $3 billion, the $1.1 trillion that is unaccounted for could pay for the construction of 367 brand-new Pentagon buildings, or seven Pentagons per state.
       Insight offers these hypotheticals to help focus on accountability and spending priorities at a time when the popular impulse may be to damn the torpedoes and speed the spending. The consensus of national-security specialists is that funding levels hardly can be blamed for the Clinton-era intelligence and policy failures that made possible the Sept. 11 attacks.
       In any case, Congress has oversight of all appropriated funds and shortly will determine how much is needed per department and agency to run the federal government for fiscal 2002. Congress for years has been concerned about how wastefully tax money is spent and is taking corrective actions to rein in the problem at all levels. In June, Sen. Fred Thompson (R-Tenn.), ranking minority member on the Senate Governmental Affairs Committee, issued the two-volume report Government on the Brink, the first in years seriously to address waste, fraud and abuse within the federal government.
       According to the Thompson report, “Because of its size and scope, and the terrible way it is managed, the federal government wastes billions and billions of your tax dollars every year. The waste, fraud and abuse reported to the Governmental Affairs Committee each year is staggering. Of course no one knows exactly how much fraud, waste and mismanagement cost the taxpayers because the federal government makes no effort to keep track of it.”
       Using data provided by a variety of official sources, including the IGs of each federal agency and the GAO, Thompson’s Government on the Brink provides a comprehensive guide to each agency’s strengths and weaknesses. What is most revealing, however, is the number of departments that simply cannot account for billions of dollars. Consider the following from the Thompson report:
       Department of Defense: “Despite the massive audit effort, the Department of Defense could not overcome the fundamental inadequacy of its financial-reporting systems and produce reliable data. The department continues to confront pervasive and complex financial-management problems that can seriously diminish the efficiency of the military services’ support operation. There is no major component of the Defense Department that can balance its books.”
       Department of Agriculture: “Because its financial management is so deficient, the department can’t ensure that its financial statements are reliable and presented in accordance with generally accepted accounting principles. For fiscal 2000 — the seventh straight year — the Agriculture Department failed its annual financial audit.”
       Department of Education: “With the exception of fiscal year 1997, the Department of Education has not received an unqualified or ‘clean’ opinion on its financial statements since its first agencywide audit. That means it can’t even balance its books once a year. Needless to say, it can’t manage its money on a day-to-day basis.”
       Department of Health and Human Services: “The Department got an unqualified or ‘clean’ opinion on its financial statements for fiscal year 2000. However, it still can’t use its financial systems for day-to-day management. The department’s clean opinion came only after billions of dollars of discrepancies were figured out many months after the end of the fiscal year.”
       Department of the Treasury: “GAO has reported that the federal government is not able to properly and consistently compile financial statements, identify and eliminate intragovernmental transactions or reconcile the results of operations in the financial statements with the budget results.”
       And these summaries are just a sample of nearly a dozen departments plagued with financial problems. Eleven of the 24 major federal agencies and departments have financial-management problems, and of those 11 none received a grade higher than D-plus from Rep. Steve Horn (R-

Rest of the article:

And these summaries are just a sample of nearly a dozen departments plagued with financial problems. Eleven of the 24 major federal agencies and departments have financial-management problems, and of those 11 none received a grade higher than D-plus from Rep. Steve Horn (R-Calif), chairman of the House Government Reform subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations. For years he has reported on the state of federal management in an annual report card.
       Despite the inability of the federal bureaucrats properly to account for their funds, their budgets remain the same or have been increased. For fiscal 2002 the president requested increases for both the DOD and the Department of Education. The total amount requested for the 11 departments and agencies unable properly to account for their money comes to nearly $1.4 trillion — some 86 percent of the total fiscal 2002 budget request of $1.9 trillion. Already this figure has been augmented in light of recent events with the supplemental $40 billion for use in the wake of the Sept. 11 attacks.
       No one is sure just how much of that $40 billion will be used by the DOD, but how it is used is important. John Schofield, communications director for the House Appropriations Committee, tells Insight: “We’re always monitoring agencies, regardless of the crisis. But there’s a broad consensus that the president needed some authority and flexibility to do some things immediately.”
       Brenna Hapes, House Budget Committee communications director, agrees. “We’re not sure yet where to expect budget increases, but we’re always looking for ways to ensure that the money given to agencies is spent wisely and appropriately. As for the $40 billion request, oversight hasn’t been our focus in the last week-and-a-half. We need to balance and make sure that we have what we need for however long it takes.” But, concludes Hapes, “we don’t want it to be carte blanche either. Congress is going to retain the authority to monitor how the money is spent, and that was a lot of the discussion surrounding the supplemental.”
       Thomas Stanton, an attorney and academic at the Johns Hopkins Center for the Study of American Government, is upbeat about how the federal government will pull it together. “This country is pretty good in a crisis and there’s good reason to get the [financial-tracking] systems working well, and I’m optimistic. Our problem has been that we didn’t have a demand for results and some agencies have done their own thing. I think a possible next step is an oversight committee that says, ‘We’re gonna give you tough love. We’re gonna work with you and move you until you’re a capable agency.’ It just can’t be a case of firing a shot over the bow and everything is going to be all right.”
       “Tough love” in the form of financial accountability may be one outcome of the crisis that began Sept. 11. Congress has acted to ensure the president has at his grasp all the resources necessary to do what is needed. Now, more than ever, it is necessary that the federal government be held accountable for responding responsibly.
Kelly Patricia O’Meara is an investigative reporter at Insight.

How Big Is the Government's Debt? - $33.1 TRILLION!

How Big Is the Government's Debt?
"When these obligations are combined with the debt held by the public, the total burden equals $33.1 trillion, or 10 times the official debt measure. This "total debt" is more than three times the size of the nation's total output in 2001, and amounts to $116,381 for every man, woman and child in America."

"With the decline of society begins, indeed, the bellum omnium in omnia war of all against all, which some philosophers observing to be so general in this world, have mistaken it for the natural, instead of the abusive state of man. And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression."
Thomas Jefferson to Samuel Kercheval, 1816. ME 15:40

Return of the 'Audits From Hell'

Former Critics of IRS in Congress Now Clamor for Tough Enforcement
Sen. Charles Grassley, Chairman, Senate Finance Committee:

Oct. 1, 1997:

"The management culture at the IRS has led to institutional arrogance and abuse of taxpayers. Substantial changes must be made to eliminate the 'we-versus-them' mentality at the agency."

March 25, 2002:

"I'm amazed at the creativity of those who like being Americans but dislike their American tax obligation. Since tax cheats are endlessly creative, the IRS has to be just as creative to catch the crooks."

7 Years Of Hell At Hands Of IRS

Which Is Worse: WorldCom or Congress?

America's Biggest Crook - Uncle Sam

U.S. Govt. Is Unrivaled Champion At Cooking The Books

Uncle Sam's Audit Gap

Government Fails Fiscal-Fitness Test

U.S. Federal Government Accounting Methods

$3,400,000,000,000(Trillion) of Taxpayers' Money Is Missing

The War on Waste - Rumsfeld Says 2.3 Trillion Dollars Missing

1.1 Trillion Dollars Missing At Defense Department

HUD Missing 59 Billion

Billions Lost By Feds

Cooking The Books At The Department Of Education

Looking For More Crooked Books? Try U.S. Government

America's Biggest Crook - Uncle Sam

No Criticism Please, We're Bureaucrats

Forget Enron - Congress Is Even Worse

Corporate Responsibility: Federal Thieves Dislike Enron Competition

THE GREAT DEPRESSION

Ran across this...

JPMorgan and Citigroup are sacrificing themselves in order to collapse the US economy.

"They" know "they" are doomed, and I even suspect that the situation went out of control much more than "they" expected...but hey, now "they" have lots of scapegoats [terrorists and greedy CEOs] that will lead the masses to believe that it was not "their" fault.

But more importantly, many people are unaware that banks are immune from war and any other disaster. You may prosecute bankers but not the banking institutions as a body. There lies the trick!

It is in "their" interest to sacrifice themselves because revealing the truth won't enable "them" to restart the whole fraudulent process after the global economic collapse.

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Extracts from the Constituent Charter of the Bank for International Settlements

(of 20th January 1930)

[Text amended on account of the renumbering of the Articles of the Statutes and sanctioned on 10th December 1969 in accordance with the conditions laid down in Article 1 of the Convention respecting the Bank for International Settlements.]

Whereas the Powers signatory to the Hague Agreement of January, 1930, have adopted a Plan which contemplates the founding by the central banks of Belgium, France, Germany, Great Britain, Italy and Japan and by a financial institution of the United States of America {some reason they can't get themselves to say Federal Reserve?} of an International Bank to be called the Bank for International Settlements;

[...]

1. The Bank for International Settlements (hereinafter called the Bank) is hereby incorporated.

2. Its constitution, operations and activities are defined and governed by the annexed Statutes which are hereby sanctioned.

[...]

5. The said Statutes and any amendments which may be made thereto in accordance with Paragraphs 3 or 4 hereof respectively shall be valid and operative notwithstanding any inconsistency therewith in the provisions of any present or future Swiss law.

[...]

10.The Bank, its property and assets and all deposits and other funds entrusted to it shall be immune in time of peace and in time of war from any measure such as expropriation, requisition, seizure, confiscation, prohibition or restriction of gold or currency export or import, and any other similar measures.

http://www.bis.org/about/chart-ex.htm

"Government on the Brink"

June 5, 2001

Washington - U.S. Senator Fred Thompson (R-TN), chairman of the Senate Governmental Affairs Committee, today released a comprehensive report documenting the daunting management problems facing the federal government. Thompson presented the recently compiled report, which includes his recommendations for addressing those problems, to Office of Management and Budget (OMB) Director Mitchell E. Daniels, Jr. at a press conference in Washington.

"For some time now, our government has been mismanaged to an extent that the average American would find shocking," Senator Thompson said. "The federal government’s core management problems have persisted for years, and, in fact, have grown worse."

Thompson’s report includes an analysis of the four biggest challenges facing the federal government:

Workforce Management
Financial Management
Information Technology Management
Overlap and Duplication

PDF Format:

"Government on the Brink" - Volume 1

"Government on the Brink" - Volume 2

Hey MB1, hope all is well! It is so good to see your name again, and have your insight and knowledge on a host of issues. Thanks.

"The Bank, its property and assets and all deposits and other funds entrusted to it shall be immune in time of peace and in time of war from any measure such as expropriation, requisition, seizure, confiscation, prohibition or restriction of gold or currency export or import, and any other similar measures."

It must surely be for the children. Of course, theirs.

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson - 1809, The Debate Over The Recharter Of The Bank Bill.

"Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs."
Thomas Jefferson to Thomas Cooper, 1814. ME 14:61.

Things to ponder.

Too Late
Just Kidding
The White House now believes that hijack ringleader Mohamed Atta met with an Iraqi agent five months before the Sept. 11 attacks

Government as Parent

TITLE 12 - BANKS AND BANKING CHAPTER 4 - TAXATION SUBCHAPTER I - FEDERAL RESERVE BANKS TEXT - Sec. 531. - Exemption from taxation
"Federal reserve banks, including the capital stock and surplus therein and the income derived therefrom, shall be exempt from Federal, State, and local taxation"

Congressman McFadden on the Federal Reserve Corporation - Remarks in Congress, 1934 AN ASTOUNDING EXPOSURE
"Mr. Speaker, on the 13th of January of this year I addressed the House on the subject of the Reconstruction Finance Corporation. In the course of my remarks I made the following statement: In 1928 the member banks of the Fed borrowed $60,598,690,000. from the Fed on their fifteen-day promissory notes. Think of it. Sixty billion dollars payable on demand in gold in the course of one single year. The actual amount of such obligations called for six times as much monetary gold as there is in the world. Such transactions represent a grant in the course of one single years of about $7,000,000 to every member of the Fed.

"Is it any wonder that American labor which ultimately pays the cost of all banking operations of this Country has at last proved unequal to the task of supplying this huge total of cash and credit for the benefit of the stock market manipulators and foreign swindlers? "In 1933 the Fed presented the staggering amount of $60,598,690,000 to its member banks at the expense of the wage earners and tax payers of these United States. In 1929, the year of the stock market crash, the Fed advanced $58,000,000,000 to member banks.

"In 1930 while the speculating banks were getting out of the stock market at the expense of the general public, the Fed advanced them $13,022,782,000. This shows that when the banks were gambling on the public credit of these United States as represented by the Fed currency they were subsidized to any amount they required by the Fed. When the swindle began to fall, the bankers knew it in advance and withdrew from the market. They got out with whole skins- and left the people of these United States to pay the piper. "My friend from Kansas, Mr. McGugin, has stated that he thought the Fed lent money on rediscounting. So they do, but they lend comparatively little that way. The real discounting that they do has been called a mere penny in the slot business. It is too slow for genuine high flyers. They discourage it. They prefer to subsidize their favorite banks by making them $60,000,000,000 advances and they prefer to acquire assistance in the notorious open discount market in New York, where they can use it to control the price of stocks and bonds on the exchanges.

"For every dollar they advanced on discounts in 1928, they lent $33.00 to their favorite banks for whom they do a business of several billion dollars income tax on their profits to these United States. "

Bombs away.

Manipulation of the financial markets became
official government policy in March 1988,
Plunge Protection Page,
-------
[Plunge Protection Denies Market Intervention]

"U.S. Working Group Has Not Met To Discuss Markets"

By Arshad Mohammed
07/16/02 16:20 ET

WASHINGTON (Reuters) - The U.S. government has not convened its top-level working group on the financial markets to discuss the slide in U.S. stocks and does not try to manage the market's daily moves, the White House said Tuesday.

"They have not met with particular reference to stock market activity because we don't try to manage stock markets' daily movements," White House spokesman Ari Fleischer said of the President's Working Group on Financial Markets.

The group, which includes representatives from the U.S. Treasury, the Securities and Exchange Commission, the Federal Reserve Board and the Commodity Futures Trading Commission, was created after the 1987 stock market crash to promote close cooperation among key agencies at times of market volatility.

There were rumors in European markets Tuesday that the group might have met to discuss the U.S. stocks slide.

Fleischer told Reuters there had been staff-level contacts among the group to discuss ways to improve corporate governance and protect employee pensions, something President Bush had asked them to study in January, but that the heads of the agencies making up the group had not met recently.

The group typically meets when the markets are disorderly and there are concerns they may cease to function properly, but it can also meet in calmer times to address complex issues facing the financial markets.

The group issued a statement after the Sept. 11 attacks and it was particularly active during the Asian financial crisis.

The Bush administration's decision not to convene the group, unofficially nicknamed the Plunge Protection Committee, may reflect a view that the recent declines in the stock market to its lowest levels since 1997 are not of that order.

The stock market has fallen steadily over the last week because of a crisis of confidence in corporate America after accounting scandals at companies like Enron Corp (ENRNQ.PK), which has caused investors to doubt earnings reported by many companies.

However, the market has not suffered any dramatic one-day plunges like its 508-point loss in the "Black Monday" crash on Oct. 19, 1987 or its 554.26-point nosedive on Oct. 27, 1997, sparked by the Asian financial crisis.
[O really, I'd say the Dow down over 440 was pretty serious.]

The Dow Jones industrial average, which has fallen roughly 7 percent over the last week, was down about 165 points, or nearly 1.9 percent, at 8,474 at 4 p.m. EDT Tuesday.

BUYERS 'RACING IN'

There was market talk in Europe Tuesday -- dismissed by many players -- that the U.S. government may have tried to orchestrate Monday's stunning recovery on Wall Street by urging institutions to buy or by buying itself.

Stocks Monday made their steepest plunge of the year and then rallied nearly 400 points for the Dow industrials to close down only 45.34 points at 8639.19.

A stock trader for a major investment bank on the Chicago Mercantile Exchange said the sharp rebound from deep declines Monday was driven by institutional buying after stocks hit critical technical levels -- not by any market manipulation.
[Ah yes, the convenient unnamed source.]

When the Dow Jones industrials breached its Sept. 21 lows and touched 8,244.87 with stock futures pointing to a 7,900 level, orders from investment banks Merrill Lynch (MER.N), Goldman Sachs (GS.N) and Lehman Bros (LEH.N) and others flooded in, traders said.

"We were absolutely dead quiet going into the September bottom. It was kind of eerie on the floor. This was not suspicious, only savvy," one futures trader said.
[Unnamed convenient source #2.]

Buyers knew that traders who had sold contracts "short" betting on further stock declines would have to start buying to cover their positions. Sure enough, the impact was explosive.

"It almost was like a gun that went off. When that Dow level was touched and held, buyers came racing in," he said.
[Or maybe more like buy programs kicked in. I watched on streamer; buyers weren't "racing in." The Dow was about to fall off a cliff.]

The New York Fed called key market players in recent days to gauge what the market needed to hear from Federal Reserve Chairman Alan Greenspan in his testimony to the Senate Banking Committee Tuesday to soothe investors, market sources said. One hedge fund adviser suggested this might have sparked the rumors of government intervention.

The New York Fed declined comment but said that as part of its role monitoring markets it speaks to participants daily on market conditions. ###
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Is the operative word here "met"?
No, they didn't 'meet'--only talked on the phone [it was their lackeys manning the computer terminals].

Note the computer-generated "buy programs" [indicated with red lines, at bottom of chart below], kicked in just as the Dow was about to fall off a cliff, Dow Pump

When the Fed/Treasury/Wall Street cabal can no longer support the market, or decide they no longer want to--coupled with mutual fund redemptions [highest in history this past month (July '02)] and foreign money pulling out--the markets are going to tank like an elevator with its cables cut.

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