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...on the planet, but guess who has buying them up by the billions using hard tax payer cash reserves and bonds?
State and local governments across the country are revealing themselves to be "SIV Positive" — that is, their financial advisor's and decision makers have used their investment fund monies to buy toxic and failing Structured Investment Vehicle (SIVs) financial paper — and this process growing day by day. This infectious state imperils these governments' financial survival, and engenders, as the case of in Florida shows, the slashing of vital services.
In Orange County, California which is the fifth most populous county in the United States, has now revealed that the County's Extended Fund had invested $460 million, or 20%, of the Fund's total $2.3 billion investment, into SIVs. But beyond the Extended Fund, County officials have now confessed to having another $837 million invested in "radioactive" SIVs, meaning that these are the riskiest investments and almost certainly will soon be worthless.
John Moorlach, who is a former Orange County Treasurer, and is now a County Supervisor which may have been a promotion for the man, uttered these lethal words when this news surfaced to the public, "We'll find out real quick, if we have a problem."
In 1994, Orange County California became the first County in 60 years to go bankrupt. The county's portfolio of derivatives exploded, losing $1.6 billion. The county ended up shutting down critical services across the board. This may very soon be repeated.
Then on The Dec. 5 Boston Globe, in an article "Volatile Holdings Part of State Fund", reported that the Massachusetts Municipal Depository Trust (MMDT), which holds total assets of $5.6 billion, had invested $134 million "in volatile 'structured investment vehicles.' " The MMDT fund is an investment pool meant as a place for state and municipal entities to place their monies until they need it to pay bills.
The December 5th "The Day", published in Connecticut, reports that officials overseeing Connecticut's $5 billion Short-Term Investment Fund (STIF), "might soon have to dip into their reserves for the first time in the fund's 35-year history to keep cities and towns from losing their money." The STIF had invested $100 million in the London-headquartered Cheyne SIV (pronounced Che-ney -- holy shit not hiding at all who may be connected to this), well that SIV has gone bust in a most spectacular way.
For the past month in Florida, we are seeing indispensable services on the verge of being closed. Being reported widely now in the state, are stories about the Florida's LGIP (Local Government Investment Pool) which had invested billions of dollars into SIVs, and the fund now has been frozen since last Thursday, December 6th. The fund had been subjected to a run on its funds that cut the $27 billion pool almost in half, to $14 billion before it was stopped by Florida's Gov Crist. The Dec. 5 Wall Street Journal reported the chief financial officer for the Jefferson County Florida school district, which has $4.1 million in the state's frozen fund, said that he had to stop payment on checks of $500,000 to county vendors last week so that teachers could be paid. At Florida's Clay County Utility Authority most of their cash reserve is invested in the Florida-run investment fund. The chief operating officer of the fund is very concerned about the possibility of defaulting on contracts that are already in place. The result of that would be curtailment of electricity supply to many of the Utility's customers.
Each of these states listed above have Republican Governors and republican appointed officials running their financial affairs, except for Massachusetts where Deval Laurdine Patrick took over as elected Governor in January 2007, following Rep Gov Mitt Romney. Where were the Code RED Homeland Security alerts throwing spot lights on these financial abuses much earlier? Something has been very rotten!
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