CBS 60 Minutes Finally Gets One Right
Greg Hunter’s USAWatchdog.com
I have been pretty hard on “CBS 60 Minutes” for doing fluff interviews with Fed Chief Ben Bernanke and not asking the hard questions that would be obvious to a freshman journalism student. In all fairness, I have to admit last Sunday’s story called “The Day of Reckoning” was an eye opening, hard hitting piece. It was about the dire financial troubles that are overwhelming many state budgets. My only criticism–“60 Minutes” is a little late coming to the party. But as that old cliche’ goes, “better late than never.”
Since this website was launched nearly a year and a half ago, USAWatchdog.com has mentioned many times the dire financial situation many states face. California alone is $19 billion in the hole, and Illinois is basically a deadbeat when it comes to paying its bills. CBS broke some new ground with this story. Banking analyst Meredith Whitney predicted as many as 100 “sizeable” municipal bond defaults in 2011! It is one thing to read a great quote, it is quite another to see some one’s face when they say it. Facial expressions say much more than words can ever capture. Take, for example, Ben Bernanke’s quivering lips when he said that it was a “myth” the Fed was “printing money”–priceless! Please enjoy the 60 Minutes story below that went out of its way to NOT sugar-coat the truth.
Now the problem is broken out by state and even city (http://blacklistednews.com/Municipal-Bond-Market-Crash-2011%3A-Are-Dozens-Of-State-And-Local-Governments-About-To-Default-On-Their-Debts%3F-/12011/0/13/13/Y/M.html).
Back in 1970, Harry Browne, in his first bestseller (How You can Profit from the Coming Devaluation), heavily pushed for investment into munis, claiming that the interest was tax-free. Up until his death, that’s all Browne did (as well as tout precious metals, and Swiss bank accounts).
With investors withholding investment into munis, and even pulling out, cities and states (state bonds) will be forced with one of two choices: raise taxes, or live within their means. I really believe that politicians will choose the former, as they know nothing of the latter. If there are any “cuts,” politicians will pick on the elderly, the young, the sick, and the weak; Matthew 25:40 be damned as they do what they can to save the size of their salaries, as well as their highly paid cronies.
“Shrinking the size of government” means exactly that. Get rid of the bureaus and departments, reduce the size of government, fire most of if not all of the “workers,” shrink the pay of politicians. Make being a mayor or council member a part-time job again. Let the armed citizen be the police, you’ll see a dramatic drop in incidents then. Have the people oversee government actions, chances are crime and corruption will be reduced.
Excellent material Greg-
My initial thoughts after watching the clip? Christie-Whitney 2012! These two actually get it. Christie is actually executing solutions strategies.
One can only imagine the intense levels of anger that will be present from those receiving rich benefits from states and munis as they get whacked over the coming months. 2012 election is sure to offer plenty of firewroks as the cancer continues to fester.
Kudos to you greg…great story again….Sorry I have not been around. I was rushed to hospital on friday night. I should been home on the 24th…however as this article proves our govt will only let us know what they think we can handle. Keep our economy stable..what a joke.
my best regard to you and your readers.
Dr. Neal J. Houston
ps happy holidays to all
Thank you for posting this – I missed it on TV. I worked for state government (large public university) for almost 5 yrs and took a voluntary retirement buyout package last June. As soon as stimulus money was received, all the buzz about budget cuts stopped and people continued on with their uninterrupted lives. But I thought, more cuts will come when the stimulus runs out, and that group won’t get anything but a layoff notice. I knew I wanted to leave there anyway, so I applied for the lump sum of money. I thought I could find other work of some kind, because I always have in the past, but haven’t. It looks like I will soon lose my house. I know I took a risk by willfully leaving a job, but I just wanted to say that it is good that budget cuts are happening because I have never seen such waste of money as I did working for the state. As a whole, I saw a group of people who had a very secure sense of entitlement that they could never be fired, and therefore put in minimal effort while collecting very good salaries and benefits. There was no accountability required of deans and department heads, and state and federal dollars were used at their own discretion, and not necessarily for what it was given for.
The best qualification you could bring to HR was being related or married to someone already on staff. I’m sure this doesn’t surprise anyone, but it was pretty tough to watch while earning a salary that did not even meet basic expenses. (I’m not related to anyone there; I got a job in a department where they can’t keep anyone more than a few months – Research, i.e., federal grant funding)
Also thank you for the mortgage information you provide and are helping to expose. My mortgage is not part of the sub-prime mess. I have received letters from my mortgage company saying “please call, we can help”, which include the number for the HUD hotline. I have had 5 conversations with them both (different people), only to be told there is no help.
It’s easy to be hard-hitting when presenting a story in which it is difficult to pin blame on one specific group of individuals. It would have been real easy to focus the blame spotlight in the Federal Reserve piece. U.S. government, Wall Street, and the Federal Reserve.
What was presented in this 60 Minutes segment is the consequences of a nation being stripped of nearly all of its manufacturing capabilities.
Immediately after Meredith Whitney’s interview on 60 minutes MSBN interviewed several Muni Bond “experts” who attempted to make the case that: Meredith Whitney’s ” numbers simply don’t work “. The “experts” and “reporters” informed viewers the Muni Bond market as a matter of fact is huge and even if several hundred billions of dollars are at risk of default those amounts are less than 10 % of the total Muni Bond market in the United States [ Therefore, why the alarm ?].
To be fair, Meredith Whitney’s “calls” have not been 100% correct in the past 12 months. Her expertise is Banks and Banking Practices.
I would be interested if you could you investigate further and post a comment on the above. Thank you.
Greg. We read and hear about these problems constantly. Just the other day Gov.-elect Brown in Calfornia said something like “he had no idea that the financial mess in CA was as bad as it was”. We have an electorate that votes out one politician in favor of another to “fix the mess”, then when they do the things that will address some of the issues, those fixes impact the voters, they don’t like how it impacts them, so they vote in someone else that will fix the problem “without touching me or my family”. Not until a crisis occurs that hits everyone HARD will the politicians actually fix the problem as there will be no other choice.
Greg, Its a know fact that the rating agencies are fraudulent. They were still giving Enron AAA status when it was know that there were problems. Meredith Whitney is the bomb. You can not trust the rating agencies but you can trust Meredith.
Bernake can just print up a $trillion and buy up the bonds, problem solved lol. Then again municipalities are not banks and they are not Bernake’s buddys so it will probably be TARP II for the states. All these pensions will probably become worthless by way of default or currency debasement anyway so what does it matter? Your not going to be able to retire in 20 years on even a hundred thousand a year, it will be worth ten thousand a year or less in todays worthless paper by then. Two of my girlfriends friends are married to Ma. state troopers and I like giving them and their co-workers crap at partys but they really do not seem to be able to grasp the fact that one way or another they are not going to be getting what was promised them. Not my problem, I think they are grossly overcompensated anyway. I could pay three productive construction workers a decent wage with one “officers” yearly salary for which they produce, not very much, in my opinion. It’s like watching 6 city workers with two 10 ton trucks spend a whole morning patching a two square foot hole in the pavement. I could do it myself in fifteen minutes with a wheel barrow. Governor Christie is absolutely correct, if the state and local workers do not think they earn enough then they should move into the private sector and demand what they are worth, they would all be on food stamps in a month lol!
The other problem that never is addressed is the solution to the current financial system.
All of the states have in their power the right to Restore the Glass Steagall Act of 1933. The Glass Steagall Act shuts down the crippling bailout program and writes off all of the derivative debt owed to Wall St and the International Banksters. Another ‘New Deal’ is clearly necessary.
To recover, we launch the major infastructure project known as NAWAPA, the North American Water and Power Alliance, which has been collecting dust since the 1960’s. It immediately employs 4 million highly skilled workers and will involve a continental effort by Canada, the United States and Mexico. High speed maglev trains, nuclear energy and the biggest water dams on the planet are on the drawing board. Details of NAWAPA are at the LaRouchePAC site.
This entire solution requires the current president, Barack Obama be removed from office, using section 4 of the 25th Amendment of the Constitution. Why? Because the President and Congress are against the restoration of the Glass Steagall Act.
I could not believe Gov Elect Brown did not know that California was in big trouble. Where has he been living? Thank you for the comment.”
There’s a reason they call him “Moonbeam”.
I always liked Governor Brown but think he dropped too much LSD in the 60’s and fried his brain……….hence Governor Moonbeam! I continue to get him and Peter Fonda mixed up in “Easy Rider” except Brownie actually played the part in real life!
so what do we do to protect our 401ks and iras?
When are people going to get it? This is not a recession, it’s not a depression, it’s a collapse!
We are lied to as children about the Easter Fairy, the Tooth Bunny and a lot of other things I could mention (religion??? All those priests are such *nice* men, you can trust them, Johnnie…!) We are lied to by our teachers (you really think American history happened the way we were told?), by our politicians (still looking for those WMD’s and Bin Ladin?) and by the church. If someone comes along and tells the truth, they are called ‘conspiracy theorists’ and a warrant comes out for their arrest.
Billions are stolen by act of Congress (don’t ask, don’t tell what the money was used for…) and given to the same people who blew up the economy with malice aforethought. Now that we know we were lied to once again, is the money being clawed back? Are the scammers at Goldman Sachs and JP Morgan and Bank of America being hauled away in leg chains? No, but Bradley Manning is being held in solitary confinement.
A society that cannot tell itself the truth cannot survive, and does not deserve to. Get ready for the crash, stock up on food, water filters, medicine, gold, silver, lead and lead delivery systems. Americans are so spectacularly ignorant, once they figure out their SS checks and food stamps are not forthcoming ‘due to budget cuts’ they’ll even be angry at the wrong people. 330 million people and only a tiny fraction have a clue. I dunno, maybe we deserve what’s coming. Ignorance and sloth has to have a price.
I’m a case manger for people with disabilities, were a private company that get paid by medicaid and state funds for people who do not have medicaid. You would not believe the cuts that came into effect July 1 2010. Our company is big but I don’t see us making it for the next 6 months. we serve over 300 clients with schizophrenia and Bi polar disorders. We have had to discharge a lot already and they almost immediately require hospitalization or jail and that cost a lot more that our services. I like hearing you on the radio and I remember when you were on TV. When other countries stop using the dollar watch out. China and russia alreay have a deal between them.
“Government is a broker in pillage, and every election is a sort of advance auction in stolen goods.” ~ H. L. Mencken
If we could clone Governor Christie, I’d want at least 10,000 of him, to serve as governor in every state, & occupy every seat in every legislature, everywhere in this country!
If we could do just that, most of our troubles would evaporate pretty quick.
Hi Greg, I’d love to watch the video but it is blank on the page here. My computer usually plays these things so what’s up? I went to the 60 mins site but can’t locate a video – only stories. Any help please? Maybe a specific link to the exact video? Thanks, Brian (Australia)
I remember Meredith Whitney dogging Ron Paul and others for calling this out over 2 years ago. Too little too late – 60 minutes is stating the obvious because they now have to – anyone that doesn’t know this and far worse is happening is dead.
I have to agree with Ronco. State & local bailout talk has been around for a long time. Merideth Whitney’s appearance on 60 Minutes may be the signal to CYA and get out of the riskiest munis. When this kind of talk reaches mainstream media, it’s probably time to back out and/or go short.
Question for Greg etal: I read somewhere that States cannot really go bankrupt, and that only cities and smaller entities can go BK. If Greg or anyone else can confirm or deny, I’d appreciate it. This seems relevant to the current topic.
Keep up the good fight, Greg.
Funny, when it comes to FED collusion/machination we get a laughable fluff piece–states, not so much. Working in government, and knowing the depths of the Ponzi scheme, I have said a la Europe, “austerity measures…coming to a town near you.” This statement had formerly been met with a blank stare from cohorts. Numerous budget-busting solutions are now being proffered to offset the ongoing lack of federal and state monies: layoffs, pension reconfiguring, hiring freezes, pay cuts, etc. Now that blank stare has evolved into one that is reminiscent of a deer caught in the headlights. Yep, now it’s our “town” and the danger is undeniable…unavoidable…unwieldy and is quickly bearing down. Austerity.
Downsizing bloated, wasteful state (and federal) government is in order, but I find it ironic that the culprits behind the greatest heist in human history get the fluffy pillow treatment. Well not really considering CBS ownership.
Nothing to see here…move along. The feudal lords have all under control. How ‘bout those Bears? Hand me a cold one will ya? Boy, this weather is unbelievable….
USAWatchdog keep up the good fight. I’m in your corner!
I think that not enough people understand that there is no way out. The only choice is default. It is not a qustion of if, but a question of when we default.
A dollar is debt. The more money there is, the more debt there is. A dollar is born into existence as debt with interest. So let us imagine a simple economy where there are three people in the economy: Greg, Sam, and me the banker. On day 1 I lend Greg $1.00 at 5% interest. I print a dollar out of thin air and give it to Greg. I also lend Sam $1.00 at 5% interest. There is now a total of $2.00 in the economy. However, I am owed $2.00 plus interest, so there is not enough money in the entire economy to pay me back. Even if Greg gets Sam’s dollar, Greg can pay me back but Sam can’t and must default. If you multiply this simple lesson by 14 trillion, you will start to get a picture of the truth: It is mathematically impossible to pay the debt whether it be personal, local, state, or federal. The only choice is default. There is no political or economic solution because we have been gamed by a money system that our forefathers warned us against. Dollars are not money, they are debt.
Ergo, if we started paying every dollar in existence toward debt, all the money would be gone and we would still owe the federal reserve money. IT IS A PONZI SCHEME!!!!! Anyone who thinks any politician is going to find a solution to a mathematical impossibility is daydreaming. We must default and 10% of the muni bonds is the tip of the iceberg. Buy gold and silver, it’s real money!!!!
I live in California, the central valley, which is ground zero for a bad economy. As I have written before, homes vacant, businesses closed, loss of jobs everywhere, people scared. What is amazing is that Califoria knows the money steam (taxes)is drying up and the deficit will be much larger next year but won’t acknowledge it. The State Capital white shoe boys are finding ways of increasing income without calling it a tax increase. A perfect example is if you get into a small fender bender and call the police,after the police come out you get over a $300 plus bill from the state for going to the scene and making a report; if there are injuries its a lot more. Can you imagine paying twice, first in taxes for our “states finest” to serve (vastly overpaid now) then you get hit for their salaries again when they actually show up and serve. A firehouse in a nearby town has a gardner to mow the small lawn in front an prun a few small bushes, seems the fire personnel have never learned to operated a lawnmover. Greg, the States such as California never learn, refuse to cut wages or benefits from their elite, and will not stop the spending. Now Greg, do you know why states like this one, New Jersey, etc. the dead beats won’t slash the fat? Simple, they are waiting for the bailout. Make no mistake about it, I bet you a donut that Jerry Brown will be on a plane to Washington DC as soon as he swears in. Now Greg, any bets on what Washington will do?
Being a fellow Californian I wonder if you have read Prop 26 which passed by majority during the past election cycle. Although the courts will certainly have their say, this proposition will make for interesting debate regarding “fees” in California. I read the text of the initiative again and again–it’s that good. Here is an excerpt and a link to the proposition:
SECTION 1. Findings and Declarations of Purpose.
The people of the State of California find and declare that:
(a) Since the people overwhelmingly approved Proposition 13 in 1978, the Constitution of the State of California has required that increases in state taxes be adopted by not less than two-thirds of the members elected to each house of the Legislature.
(b) Since the enactment of Proposition 218 in 1996, the Constitution of the State of California has required that increases in local taxes be approved by the voters.
(c) Despite these limitations, California taxes have continued to escalate. Rates for state personal income taxes, state and local sales and use taxes, and a myriad of state and local business taxes are at all-time highs. Californians are taxed at one of the highest levels of any state in the nation.
(d) Recently, the Legislature added another $12 billion in new taxes to be paid by drivers, shoppers, and anyone who earns an income.
(e) This escalation in taxation does not account for the recent phenomenon whereby the Legislature and local governments have disguised new taxes as “fees” in order to extract even more revenue from California taxpayers without having to abide by these constitutional voting requirements. Fees couched as “regulatory” but which exceed the reasonable costs of actual regulation or are simply imposed to raise revenue for a new program and are not part of any licensing or permitting program are actually taxes and should be subject to the limitations applicable to the imposition of taxes.
(f) In order to ensure the effectiveness of these constitutional limitations, this measure also defines a “tax” for state and local purposes so that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by simply defining new or expanded taxes as “fees.”
SECTION 2. Section 3 of Article XIII
LINK TO FULL TEXT: http://cdn.sos.ca.gov/vig2010/general/pdf/english/text-proposed-laws.pdf#prop26
PS “White shoe boys”…yeah, Celente baby!
Bubble America is about to POP! And it won’t be pretty.
quote from the NY Times business section 12/22 about Pritchard, AL where the town stopped payments to town retires …..
PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry
We can only hope that we have a summer to prepare for the winter if our currency crashes
Correction: Kalifornia’s budget shortfall for this fiscal year is about 28 billion according to Governor elect Moonbeam.
Our budgets have a systemic and chronic problem. We over spend revenues by at least 20% every year. Our legislature tries to increase taxes and fees in hopes of raising capital; however, JFKs dictum that raising taxes in a recession decreases revenue is true.
A defecit of 19 billion sounds so nice (I wish it were true!). It does not tell the real story.
WASS (we are so screwed!)
Well, we just have to wait and see what happens. In the meantime we put up with the Razzle Dazzle. The big question is, who is right. Who is telling the truth. As far as I am concerned “60 Minutes”, is too little, too late, to help as the damage is done. To put it harshly, will the News Media end up like Goldman Sacks and their employees go out and get concealed weapons permits. This may be an example of the blowback of trying to save face. “Oh, we tried to warn you”, is not going to get it. Especially for people in positions of the public trust. In all the years of this fiasco going down, was there one reporter who had the rocks to expose what was really going on in the markets. What? They didn’t jump at the chance for a Pulitzer? You have to be a fool to say nobody had any inclinations of what was happening.
I agree with, signalfire.
Keep up the good work, Greg.
An article in the WSJ just today! Municipalities filing Chapter 9.
Love your blog Greg. Keep up the great work!
Consider for a moment that the 60 Minutes stories regarding the common topic of the economy are in fact masterfully planned. In a nutshell: First Bernanke. Then Whitney. Result: Muni bond sell-off and exodus to treasuries and stock market = boost to economy = improved Fed reputation and position of power stabilized. Why? There are those who get Fed help and those that do not. The Haves and Have Nots. The ability to create and distribute money is powerful and those with that ability like it so. Do you find it interesting that Buffet dumped $2.6 Billion in munis over the last several years while client retirement accounts were being driven towards this investment for the past several years? What’s next? Probably the present postions in tresuries, which the Fed is a major buyer, will be dumped onto the new crowd, the Greater Fool. Meanwhile funds will be directed to the next bubble – the commodity sector – which the Insiders have already been well positioned and pumping-up. This is a classic Pump & Dump scam being masterfully pulled off by dumbing down the populace with Old News. The Trillions of $ of Middle Class savings is too tempting to resist.
The fact that Walter Burien has shown that the Comprehensive Financial Reports (CAFR) of governments show they have gazillions socked away (revealing their true condition) will never be discussed on any MSM. This piece is to add to the FED/NWO effort to ruin the world’s finances so they may offer their bogus currency and control us. That is all.
That really was a fantastic explanation you gave on the debt problem. Thanks.
Today, I was going through the New York Times and once again, noticed another hit piece. I used to be very naive about journalism, but now I’m not. It’s pretty obvious that this story was planted and/or pushed either by the Fed or by the administration. It’s laughable.
I encourage everyone to read it.
Agree with Jim Shores. Everyone should view the video which explains the CAFR. Thank God for men like Walter Burien. Wake up American sheeple … you’re about to be slaughtered!
The truth is unless we get ahold of the private cartel of banks called the federal reserve, nothing is going to change. We have to get a currency that can’t be printed out of thin air. Ron Paul is absolutly correct about the state of the economy and what the federal reserve is doing. He has been screaming about this for more then 30 years, I’ve been screaming about it for 20. Until we deal with the federal researve nothing is going to change. This debt currency and the associated interest placed upon it to put it into circulation has to end once and for all. Congress created this nightmare, congress has to abolish it once and for all.
The banks who crafted this mess, like JP morgan, B of A, Goldman sachs, need to fail and the debt discharged. The big nightmare is the dirivitive markets. 1500 trillion? they leveraged 30 times the output of the entire planet and get away with it? All worthless paper and we as taxpayers have to bail them out? Its impossible!!!
The sooner this crashes the better off we will be, because if this drags out much longer there will be no hope at all. I could go on and on, but what do you think of what I just said?
She,s OVER Rover!
Great column, thanks again!
There is much that the “60 Minutes” story leaves out. Still, it’s nice to see that a propaganda machine from pre-cable days has the guts to run something. I know of no “runs” to sell munis, but then, these are the types that believe in the “…full faith of credit…” of the United States government, and will be burned in the end. My heart and prayers goes out to these people, as many muni bondholders are our elderly. Hopefully their children will wake up, and sell this garbage in time.