60 Minutes: What We Need to Know About the Looming Financial Crisis that Almost No One is Talking About

Written By: Robert Cox

Steve Kroft and the 60 Minutes Crew catch up on what we’ve been trying to say here since 2008 — the day of reckoning approaches.

By now, just about everyone in the country is aware of the federal deficit problem, but you should know that there is another financial crisis looming involving state and local governments.

It has gotten much less attention because each state has a slightly different story. But in the two years, since the “great recession” wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole iln their public pension funds.

The states have been getting by on billions of dollars in federal stimulus funds, but the day of reckoning is at hand. The debt crisis is already making Wall Street nervous, and some believe that it could derail the recovery, cost a million public employees their jobs and require another big bailout package that no one in Washington wants to talk about.

60 Minutes asked Chris Christie to explain how it got so bad.

2 thoughts on “60 Minutes: What We Need to Know About the Looming Financial Crisis that Almost No One is Talking About”

  1. everybody schould watch this vidoe!!!!
    I had commented the other night about it is only going to get worse.

    I had not seen this video at that time, but this is exactly what i was afraid of!!!

    The SHI#%&*… Is going to hit the fan soon with our economy!!!!!

    You think you are going to have to worry about
    Tires being stolen off parked car’s????

    people are going to get very desprate when they cant feed there kids or pay the highest utillitie and water, insurance, and mortgage rates in the

    What happens when middle america goes to to the welfare dept that they have been paying for with there tax dollars all these years and there is no money for us!!

    tell me ????
    Because it is allready happening!!!
    More and more middle americans on un employment are applying for food stamps ,energy assistance , health insurance,and the system is making it harder and harder for people to get it .

    what happens then?????????????????????

    I wil tell you ! Thats when they say we are in a modern day depresion!!!

    The banks call in all the notes !
    People get trown out on the street!
    Soup lines set up!
    Crime sky rockets !
    Public oppinon of goverment get violent!

    And then what hope for a THIRD world war to bail
    out the economy!!!

    Rember to foget the past ,means you are doomend to relive it!!!

    lets all say a prayer !!!!!!

  2. What We Also Need to Know about the Looming Financial Crisis tha
    What We Also Need to Know about the Looming Financial Crisis that Almost No One is Talking About…did everyone forget how this mess was created?

    It’s a fact that reckless mortgage practices, lack of transparency, and a severe lack in oversight in critical sectors of our economy are to blame for this economic downturn, certainly not the hard working men and women. (D. Hughes 2010)

    The Truth about the NYS Pension System

    • Despite the mismanagement and multiple cases of fraud within the state pension fund, The New York State Pension Fund is still one of the strongest and best funded pension systems in the country, NYS is 107% funded, however;

    • During the “good times,” multiple states decided to “ride the wave” and failed to fund state pensions and make actuarially required payments now resulting in larger pension bills to municipalities across the country.

    • Wall Street, the biggest culprit “who created this mess” is adamantly supporting the politicians because it would be more beneficial to them (the private sector) to have defined contribution plans rather than defined benefit plans (our current pension). Why? Its all about money and risk!!! Risk shifts from employers to employees and money management firms/ investment bankers will earn substantially more in fees from defined contribution plans (International Firefighter, August/ September 2010) why would we reward those who have placed the economy in the position that it’s in!

    It’s a Fact

    • Pension Fund fraud has run ramped by politicians, oversight members, investment firms, and others that are now using public-sector employees as a scapegoat for their failure

    • Politicians are using the public sentiment and spreading lies about pensions to advance their political career and protect their largest campaign contributors (Wall Street) from the truth

    • Public sector stepped up to the plate, Tier 5 was adopted and newly hired public-sector employees must contribute 3 percent of their income annually along with many other changes…what has the private sector done, TAKE MORE.

    State Public Employees Have Always Shared in Sacrifice; I will use Fire Fighters as an example because that is who we represent.

    Despite the change in the pension system

    • Firefighters job role has expanded from fighting fires to now serving the public as a total emergency response department that has a new elevated risk of death, injury and the potential of contracting many diseases

    • Firefighters die on average 6-10 years less a general male population

    • Lack of NFPA recommended standards including adequate personnel throughout the country has increased injuries to firefighters some resulting in unwanted early retirements

    The Public-Sector is not against reform. Here are many examples of Fraud that has cost the Pension Fund millions, let’s start here!

    Since 2007, New York State Attorney General Andrew M. Cuomo has been conducting an investigation into the state’s $122 billion pension fund.

    • Millions of dollars and other favors that friends, relatives and aides of the former state comptroller, Alan G. Hevesi, gained for helping steer business to Mr. Hevesi while he was the sole trustee of the fund. (NY Times, September 1st 2010)

    • Fees paid to outside intermediaries and bribes to associates of pension fund officials. The investigation, also being conducted by the Securities and Exchange Commission, has widened to include pension funds in other states. (NY Times, September 1st 2010)

    • The Quadrangle Group in April 2010 agreed to pay $12 million to settle allegations that it paid kickbacks to win lucrative business from the New York State pension fund.

    • On March 19, 2009, Hank Morris and David Loglisci, aides to Mr. Hevesi, were charged with 123 counts — including bribery, grand larceny, money laundering and fraud — in an indictment that said they had turned New York’s pension fund into a criminal enterprise. The scheme netted them and other Hevesi associates tens of millions of dollars in kickbacks from firms investing the fund’s money, the indictment said. Mr. Loglisci pleaded guilty on March 10, 2010, to securities fraud, saying he helped steer pension money to political contributors to Mr. Hevesi and to companies that paid kickbacks to Mr. Morris. (NY Times, September 1st 2010)

    • Riverstone followed its joint venture partner, the politically connected Carlyle Group, which paid a $20 million settlement in connection with dealings between the pension fund and investment funds sold under the Carlyle/Riverstone name.(NY Times, September 1st 2010)
    • In September 2009, four investment firms — HM Capital, Levine Leichtman Capital Partners, Access Capital Partners and Falconhead Capital — agreed to pay $4.5 million in settlements. WHY? The firms “politically connected” hired to help investment firms gain access to the pension fund officials. At stake were highly lucrative management fees. (NY Times, September 1st 2010)

    • Investment firms regularly do business with public pension funds and often donate large amounts of money to elected officials overseeing the same funds.
    STOP BLAMING Public-Sector Employees

    That’s not all
    • NY Times reporter Steven Greenhouse reported that getting tough with unions during down economic times “is good politics” (NY Times, June 27th 2010)

    • The sprawling investigation into New York’s pension investments hints at a much bigger problem. Mr. Cuomo says “favors were being exchanged for contracts to invest pension money”— has mushroomed into a broad look at more than 100 firms by attorneys general in at least 30 other states.” (NY Times, June 27th 2010)

    • “What has developed is a corrupt system, where Wall Street, various fiduciaries, politicians and corporate managers are draining America’s savings,” (Frederick S. Rowe NY Times, Sept 2009).

    It Hasn’t Stopped-Fraud still runs ramped
    • ALBANY — Attorney General Andrew M. Cuomo said on Friday that his office was issuing more than 100 new subpoenas to investment firms and intermediaries who brokered deals with public pension funds. (Danny Hakim, NY Times, May 2009)

    • So far, there have been six guilty pleas in Attorney General Andrew Cuomo’s investigation of the real and potential abuses surrounding New York’s $129 billion public pension investments. The most important and revealing of these came Wednesday, when David Loglisci, the former chief investment officer of the pension fund, admitted flatly that he had violated state securities law. (Editorial: NY Times, March 2010).

    • Elliott Broidy, a California venture capitalist, pleaded guilty on Thursday to charges that he helped his company land a lucrative deal with New York’s public pension fund by giving nearly $1 million worth of illegal gifts to state officials. Editorial: NY Times, March 2010). Look at that, an outsider penetrating the New York State Pension Fund!
    Fact is, our economy is failing for multiple reasons, none of which is connected to the Private Sector Employee.
    There’s more!
    Other large contributors to the collapse in the economy.

    Everyone knows AIG

    American International Group was the largest insurance company in the United States before it suddenly collapsed in September 2008 under the weight of bad bets it made insuring mortgage-backed securities. The company was bailed out by the Federal Reserve (TAX PAYERS), $182 billion making it the biggest federal bailout in United States history, that’s 50 billion more than the entire NYS Pension!

    And then…AIG paid $165 million in bonuses, including some to members of the trading unit that had caused its collapse. Why? AIG said “it has to honor contracts established before its government bailout.” PLEASE-OUR TAX DOLLARS HELPED MAKE AIG EMPLOYEES VERY HAPPY FOR CHRISTMAS…thanks guys! Nothing like “really sticking it to the tax payer”
    In July 2010 AIG agreed to pay $725 million to three Ohio pension funds to settle claims of accounting fraud, stock manipulation and bid-rigging.

    What else has helped cause our economy to collapse?

    The most controversial decisions was awarding the banks that were AIG’s trading partners 100 cents on the dollar to unwind debt insurance they had bought from the firm. Critics have questioned why the government did not try to wring more concessions from the banks, which would have saved taxpayers billions of dollars. (Editorial: NY Times, March 2010).

    What Really Hurt the Economy!

    AIG and Goldman Sachs were involved in credit default swaps: They are financial instruments that serve to protect against a default by a particular bond or security. They were invented by Wall Street in the late 1990s as a form of insurance. Between 2000 and 2008, the market for such swaps ballooned from $900 billion to more than $30 trillion. In sharp contrast to traditional insurance, swaps are totally unregulated. They played a pivotal role in the global financial meltdown in late 2008. (Editorial: NY Times, March 2010).
    and, Goldman Sachs helped sell bundles of mortgage-backed securities and then used swaps to bet that they would go belly up. (Editorial: NY Times, March 2010).

    Fraud, lies, manipulation of politicians, investment groups and actions of many other private-sectors is a direct result of the economic downturn and now misguided and misinformed focus into the municipal worker.

    Public Sector employees are not the problem!
    Oh yeah, Private Sector Bonuses are to hit an all time high this year-business as usual.

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