Mayor's budget reflects earnest promise to weather the so-called Great Recessionin HPN Blog
Los Angeles Mayor Antonio Villaraigosa's recently released $7.2 billion budget proposal for Los Angeles City for the fiscal year 2012-13 appears to reflect an earnest commitment to weather the Great Recession while ensuring safe neighborhoods, strong communities, more efficient municipal services, and long-term financial health, by closing an estimated $238 million deficit through expenditure cuts.
It pledges to drastically reducing the City's projected gap between revenue and spending, by prioritizing a strengthening of cash reserves and establishing a $211 million Reserve Fund. This would be the largest reserve set aside since 2002.
Regrettably, the proposal says, the new budget will entail workforce reductions. Since the start of the so-called Great Recession, which banker captured statisticians and Republican and Democratic politicians proclaimed is over, the general fund civilian workforce has been cut by one-third, from nearly 14,000 positions to roughly 9,000 positions.
The 2012 budget proposes to eliminate an additional 669 authorized positions. Further, a majority of sworn and civilian employees have agreed to increase their contribution toward their retirement benefits, and a pension reform plan will increase the civilian employee retirement age from 65 to 67.
Unfortunately, many of the austerity measures employed by federal and state governments are not actual solutions for a deepening economic crisis, and may actually do nothing to address the fundamentals that caused the world economic collapse. Austerity measures may actually make matters worse.
Since 2008, Los Angeles and most other large cities in the northern hemisphere have had to confront the most challenging budget situations in generations. But none of the city leaders have ever seen anything like the current recession in their lifetimes, and consequently, they are hard pressed to formulate solutions to the economic collapse.
Likewise, federal elected officials, and state and federal judges, have either been slow for a lack of capacity to understand, or in most cases simply averse to admitting they are simply cogs within a system that has been intellectually captured and made accessory to rampant perverse incentive and the self-exacerbating crimes of economic disintegration.
The so-called Great Recession ain't getting better by a long shot, and it ain’t going to get better for a long time, unless the fundamentals are confronted. And that doesn't mean for some phony politician to make a speech about creating jobs - when there can be no jobs without demand, no demand without real government regulation of Big Brother's financial masters, and no justice until the higher Courts genuinely respect the rule of Law and the Constitution.
There can be no genuine recovery unless more of our elected politicians have the courage to come to grips with the fact that the future for many Americans, and their neighbors around the world, has been stolen. Yes, stolen, because traders working for America's most powerful banks and brokerages destroyed investors worldwide in the secondary market, a market which was chiefly responsible for the American boom years between 1950 and 2007. It was the market perfected under the Eisenhower administration that allowed banks to sell off their mortgage loans to others, and thus be able to continue making more loans. It provided liquidity and economic flexibility.
But instead it was used in a securitization scheme wherein all the big banks competed for market share, originating an ever increasing supply of too-good-to-be-true high yielding (payment shock) mortgages that had already been presold through empty mortgage backed securities shells before the borrowers were ever steered into their loans and signed on the dotted line. It was those toxic mortgage backed securities, sold to unwitting investors, overseas banks, pension funds, and retirement funds, on the international secondary mortgage market, that wiped out investors worldwide and destroyed the secondary market, which in turn froze liquidity, and technically bankrupted the banks and brokerages that were not betting on the collapse with derivatives called Credit Default Swaps.
What can be done? Well, aside from bringing down taxes ten percent across the board, what can be done, and what would have been a lot easier and cheaper to do back in 2008 is:
1. For the bankster controlled government to have instead stood behind the built to fail mortgage backed securities, admitted that the regulators failed to regulate, and then made all the investors and retirement funds around the world whole. That would have been a hell of a lot cheaper than backstopping preferred central banks, and funding for instance AIG so that Goldman Sachs could collect on its bets against both borrowers and investors. Backstopping the victims, the investors and pension funds, would have kept the secondary market alive, and instilled trust in the USA, and we wouldn’t be having the housing nightmare, and money squeeze, and the increased pressures for war that exist today.
2. Next, the government needed to, and still needs to, take a more forceful hand in making sure that mortgagors caught in escalating payment shock mortgages have options to have those toxic loans modified, and that includes empowering the Courts to write them down on a case by case basis.
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