Documentary: The Corporation Nation

I convinced a friend of mine to watch this vid...someone with reasonable intelligence that I thought would really be all over this thing... EPIC FAIL.

She watched it, but claims that it is way over her head and that she just doesn't get it. She also doesn't believe that the average person could ever get it.
Me: "What is there to get? What exactly don't you understand?"
Her: "Everything. I don't understand financial statements. Plus, the guy seemed kind of radical, weird, and wacko to me."
Me: "What in the world would give you that impression?"
Her: "I'm not really sure. I just don't understand what he was driving at."

Epic fail. Discouraging.

dys

I'm sorry to hear that; and even though I'm not surprised, I think it's good you tried. The seed is planted, and that's all you can do with people like her.

It recently occured to me that these CAFR can be used in ways seemingly unrelated to government. For example, if you work for a company that is crying poor and doing layoffs or outsourcing, this can be verified by looking at the CAFR. Perhaps in certain situations people that have been shafted by disingenuous big corporations could surreptitiously get this info out to current employees or even clients of these big corporations (disclaimer: I'm not advocating for anything illegal). Anyone know how to get ahold of CAFRs that aren't published online?

dys

That's a great idea! Now that I'm past the shock of how much money the government CAFRs hide, I wonder what sorts of back-rubbing crony-enriching shenanigans they are hiding as well. I know that Catherine Austin Fitts said that in some New York town, their CAFR revealed payments for expensive flood insurance, despite being located on a hill. So who benefited from the government taking out that worthless insurance? Who else is benefiting?

Quote:

---

Originally Posted by lapis

That's a great idea! Now that I'm past the shock of how much money the government CAFRs hide, I wonder what sorts of back-rubbing crony-enriching shenanigans they are hiding as well. I know that Catherine Austin Fitts said that in some New York town, their CAFR revealed payments for expensive flood insurance, despite being located on a hill. So who benefited from the government taking out that worthless insurance? Who else is benefiting?

---

You know, that's a great question. I actually found someone in real life that is somewhat interested in this scandal. The question he kept asking me: "Who is benefiting from this?" Of course I can speculate- I'd imagine hedge fund managers, government finance employees like treasurers (by the way, in some CAFRs they list employees that put together the CAFR- interesting and valuable info) who have extremely cushy jobs, and connected private entrepenuers that know how to score government contracts. I'd also imagine that kickbacks, payoffs, and all forms of bribery whether 'legal' or not are rampant. BUT I can't point to sources that demonstrate specific info on this. I wouldn't even know how to track that info down. Any thoughts, Lapis?

dys

Quote:

---

Originally Posted by dys

You know, that's a great question. I actually found someone in real life that is somewhat interested in this scandal. The question he kept asking me: "Who is benefiting from this?" Of course I can speculate- I'd imagine hedge fund managers, government finance employees like treasurers (by the way, in some CAFRs they list employees that put together the CAFR- interesting and valuable info) who have extremely cushy jobs, and connected private entrepenuers that know how to score government contracts. I'd also imagine that kickbacks, payoffs, and all forms of bribery whether 'legal' or not are rampant. BUT I can't point to sources that demonstrate specific info on this. I wouldn't even know how to track that info down. Any thoughts, Lapis?

dys

---

You're probably right about that. I thought I could get a tiny insider's look when I asked my friend what she thought.

It makes me think that not everyone even in government knows how much information these reports contain, and their technical nature probably discourages them from looking into them if they don't have to.

After I wrote that last sentence, I decided to watch a small portion of a video that Clint posted to his blog:

CAFR School: The Public Reading Of The CAFR

The CAFR part only took about 15 minutes. It was presented by someone working for the firm Malloy, Montague, Karnowski, Radosevich & Co. (MMKR), which prepares internal audits for a lot of school districts in Minnesota.

Obviously 15 minutes isn't enough time to go over the whole CAFR. He confined his reporting to the first few pages of the CAFR and the General Fund.

I found a couple of interesting things:

• He kept mentioning how low property taxes "impacted" the budget.
  
• He said some of the terms used in the report had changed.

For instance, reserved and designated fund balances have been changed to non-spendable, commited, assigned and non-assigned.

It sounds like they took a couple of semi-technical vague terms and made them even more technical and harder to understand. I wonder if this is because of the growing awareness of CAFR reports? Small as it is?

When I first heard the accounting firm's name, I thought it was a much larger firm that also helps government agencies do these CAFR reports (and that's another revelation--it appears that all these government agencies are hiring accounting firms to prepare and/or audit the CAFRs. And guess who is ultimately paying these firms?).

This is what it says on its website on the page for Governmental Entities:

"Assistance with the preparation and review of Comprehensive Annual Financial Reports (CAFR’s)"

Back in 2008 this firm was created from a merger of two companies. I thought this was interesting:

Marcum & Kliegman LLP merges with forensic accounting firm

Marcum & Kliegman LLP, Certified Public Accountants and Consultants, has announced its merger with RosenfarbWinters LLC, the largest forensic accounting firm in the New York metropolitan area. As a result of the merger, RosenfarbWinters is changing its name to M&K Rosenfarb LLC (MKR). In spite of an overall downturn in the economy and unfavorable job numbers, the accounting industry is still growing. "There is absolutely no shortage of available positions at M&K," states Marcum & Kliegman's Managing Partner Jeffrey M. Weiner. "With offices in New York City, on Long Island, and now in New Jersey, Marcum & Kliegman looks to grow from approximately 500 employees to more than 1,000 within the next 3 years." [Nice work if you can get it....at taxpayers' expense. ::) ]

I had a very fruitful discussion with a bright dude from another forum. Before I get to the discussion, the result of the discussion was the realization that this CAFR thing is a gigantic hedge by TPTB against grass roots movements. Onto the discussion: it pertained to the price of oil:
Me: "Government owns the oil companies. They could slash the price of oil in half tomorrow if they wanted."
Him: "How? 'Ownership' is divided 185,000 ways."

So, you see, even if certain of us were able to come together and get our particular district or county or town or township to change their proxy voting, it would be still be useless because we would be vastly outgunned in the boardrooms unless we could get MOST of these government corporation to go along.

dys

tagging for the video.

Well guys, I caught a huge break in understanding this thing. There is a guy that I know, a high level executive that works for a hospital (not a government corporation). After pestering him for the last few months or so, he was finally willing to sit down and talk to me about how this thing works from an insider's perspective.

First of all, he confirmed that there are 2 sets of books that are maintained for most corporations. He said that most mid level executives are aware that there are investments and that those investments are maintained/recorded/reconciled/etc through the second set of books- the CAFR- but those investments are totally off limits to use for what is typically thought of as the budget. He said that anyone that wants to advance anywhere in the company quickly learns that it is a no no to even bring up the 2nd set of books as far as using the money or assets to bridge budget gaps or use for R&D, or anything really. They (the midlevel executives) are told that there is a certain rainy day threshhold that must be maintained for the safety of the company (this excuse sounds familiar, we've heard it before). Of course, the details of that threshhold and/or how it is decided upon is secret info. He also told me that as he moved up in the company, he eventually was made privy to who is in charge of these assets, what they are, who benefits, etc...but he wouldn't tell me anything more about that. He told me "dys, I know you, you'll be calling these guys if I tell you, and I can't have that". He also confirmed that there are huge conflict of interests present in the investments; and that many of the stock investments also have proxy voting power.

Keep in mind that the hospital this guy works for is fairly SMALL. If this exists for a small company, what is true hidden power of major corporations?

dys

bump