Here's some information as to bookeeping by Federal Government. For more info. go to: http://www.cafr1.com which goes into the trillions they are hiding from us of our own money. Under this, the debt is a scam to keep us paying into funds they then can steal from by this fraudulaent bookeeping method. Or go to the site here mentioned at http://www.solari.com
EXCERPT BEGINS
Missing Money
and Government Slush Funds




One of my accomplishments in the Bush Administration was to persuade the Office of Management and Budget to allow us to create a legal requirement that HUD and its component parts have a Chief Financial Officer (CFO) and audited annual financial statements with actuarial studies, and then to require it of all the other federal credit programs. After we won OMBâs support, the notion of CFOs, accrual statements and outside audits caught on all round the government.

One of the reasons the âmissing moneyâ problems have come to the fore is that GAO is continually announcing that such and such an agency can not produce audited financials as required and the amount of the adjustments without documentation it requires to get the agency and the US Treasury to agree is such and such.

In March 2000, the HUD Inspector General testified that HUD would not publish financial statements for fiscal 1999 and that the undocumentable adjustments made so far to balance the books was $59 billion. A close reading of the undecipherable preliminary audit indicated that, in fact, the number was $17 billion in fiscal 1998 and $70 billion on the asset side and $59 billion on the liability side in fiscal 1999.

As a practical matter, since HUD was assuring us that their systems did not work and that they had simply not bothered to check their accounts and cash balances in the old fashioned way using paper and pencil, we had no numbers of any meaning. In fact, anything was possible.

Worse yet, GAO reports of the Treasury accounting systems âboth as to their reliability and control by private contractorsâ are also disturbing. With little or no âinfo-sovereigntyâ, the internal controls are insufficient to assure that cash balance reconciliation between an agency such as HUD and Treasury are accurate.

When an agency can issue government guarantees and not record what they have issued correctly and then write checks that are not recorded correctly, then one or more of the players that handle the money --the Treasury, the Federal Reserve Bank of New York, AMS or Lockheed-- may be in a position to steal literally hundreds of billions of dollars with no one the wiser except those enjoying the fruits.

Such a thought seemed far-fetched not that long ago. Indeed, in 1994 after the first FHA/HUD financial audit was published, a mortgage banker came to see me. He was a serious engineering type who clearly worked hard and mastered the details of his business. He was distressed, he said. For decades he had been keeping a tally of total outstanding FHA/HUD mortgage insurance credit. He had brought printouts of his database for me. It turned out that the governmentâs published financial statements showed the amount outstanding was substantially less than the actual amount outstanding. He was sure.

I assumed that the guy was crazy. If what he said were true, then the US Treasury and the Federal Reserve would have to be complicit in significant fraud, including securities fraud. This was inconceivable. To this day, I regret not accepting a copy of the printouts from his databases. I wonder if they might have illuminated what our Wizard and other portfolio tools were about to find. They might have helped explain why our efforts to distribute information on the HUD outstanding mortgage and defaulted mortgage portfolios inspired such opposition and distress.

The indications are growing that Treasury and OMB are engaging in fraudulent transactions and that the key financing, accounting and payments systems are run by contractors who are either in on the deal or turn a blind eye. What this means is that the financial disclosure provided by the federal government may be essentially meaningless.

It does not take long to realise that in a world with no financial controls âwith the fox in control of the chicken coopâ anything is possible.

Life in the federal government is an endless series of shortcuts under impossible political stress and risk. With no internal financial controls, things can go far off course with no way for reasonable people to stop it.

The allegations about HUD missing money and slush funds that have come my way in the last few years are many and I have no way to sort through what is fact and what is fiction. At some point, however, there is merit to the saying that was thrown in my face so many times over the last six years, âwhere there is smoke there is likely to be fire.â

Here are some of them:

1. HUD is being used to finance covert intelligence and military operations and research projects both domestically and globally.
2. Some of this funding is âblack budgetâ; that is, it is not disclosed to or approved by Congress. That means it is in violation of the US Constitution.
3. HUD is one of the federal slush funds used to manage the accounts for domestic narcotics trafficking and to inventory profits on-shore where they are safe from foreign interference
4. State and local housing agencies that are used as local managers and distributors of HUD mortgage credit and subsidies are part of the money laundering chain. Allegations regarding the Arkansas Finance Development Agency, ADFA, give examples of how this works.
5. One of the mechanisms used to provide slush fund monies is with mortgage securities that are created in whole or in part with fraudulent mortgages. Churning mortgage defaults back through HUD supports debt service.
6. The Treasury conspired with winning bidders to rig some of the HUD loan sales
7. The HUD loan sales were used to launder money from abroad back into the Treasuryâs Exchange Stabilisation fund (ESF).
8. PROMIS software was used by winning bidders-to help them submit winning bids.
9. Treasury, DOJ, and the intelligence agencies all have access to PROMIS as do one or more other governments, including Israel
10. Slush fund monies were used to fund the Treasuryâs ESRâs funding of Swiss reparations to the Jewish victims of Nazi seizures.

While it would be nice to learn the truth of what fraud, if any, has transpired, what is important is to get our tax dollars managed properly and if money is missing, get it back. Scandals and blame games are not as useful as getting a proper system of resource management in place and recovering any stolen money.

For three years now I have listened to descriptions by retired military and intelligence folks about why so much money has gone missing at HUD and HUDâs role in a series of slush funds around the government.

The reality is that I have no idea what is true and what is false, what is information, what is exaggeration, what is misinformation and what is disinformation or incompetence. I am simply not qualified to say.

What I do know from twice trying to help run HUD on a financially responsible basis is that what they are saying is compatible with what I have experienced over the last twelve years. Nothing that I have experienced would indicate that their allegations are not feasible. I am convinced that some combination is true.

In 2000 I visited with a senior staff assistant to the Chairman of one of the appropriations committees for HUD. I asked him what he thought was going on at HUD. He said, âHUD is being run as a criminal enterprise.â

Based on the documentary evidence, that is absolutely correct.


How the Money Works:
the Destruction of Neighbourhoods

The model works about the same in every country, although the particulars vary between domestic and international agencies and the military and enforcement bureaucracies. Some call it the securitisation process. Some call it corporatisation. Some call it privatisation. Some call it globalisation.

What this means in laymanâs terms is that the management of resources is centralised. This is done through a system of securitisation based on privilege and coercion rather than merit and the rule of law.

From the viewpoint of the neighbourhood there are six ways to centralise local capital:
1. First, you consolidate all retail sales into a few large corporations, including franchise operations, cutting out local small business.
2. Second, you outsource (âprivatiseâ) all local government functions to a few large corporations or subject them to such an overwhelming amount of federal regulation that they can be controlled and managed for the benefit of a few large corporations and their investors.
3. Third, you buy up all the land and real estate, or encumber them with mortgages in a way that is as profitable as possible and allows you to get control when you want it.
4. Fourth, you finance the entire process with the profits from narcotics and organised crime that you market into the neighbourhood. This enables you to finance your expansion in a manner that lowers your cost of capital in a way that conveniently lowers the initial price of your investment and/or weakens your competition. I buy your business and land with your money at a fraction of the cost. No one sells her home faster and cheaper than a mother trying to make bail or pay a lawyer to save her family from jail or death. That is why narcotics trafficking is the ultimate form of neighbourhood leveraged buyout.
5. Fifth, you leverage all of this with tax shelters, private tax-exempt bonds, municipal bonds, government guarantees, and government subsidiesâall protected with complex securities arrangements.
6. Sixth, you ensure that the only companies and mutual funds allowed meaningful access to capital are those run by syndicate-approved management teams.

To raise significant campaign funds candidates for political office appoint syndicate-approved management teams. Investment syndicates define the boundaries of managed competition that cycle all capital back through their pipelines. That means the only local boys who can make good are those who play ball with the syndicate.

In this way the private equity in a community can be extracted at a near infinite rate of return to investors and a negative rate of return to taxpayers.
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I used to have a partner who would always say, âCash flow is more important than your mother.â If you want to understand anything, sit in the top guyâs chair and simulate the cash flows. Everything becomes very clear quickly.

Put yourself in this manâs shoes: It is 1996, and you are the Secretary of the Treasury, Bob Rubin. Your job is to keep the stock market up and the deficit financed. While you would like the economy to be good, the reality is that you need the profits and capital gains of the men who run all the money to be healthy and for their reinvestment to cycle back through your financial systemâs pipeline.

To do this, you are dependent on the $500 billion to $1 trillion per annum of money laundering that passes through the American banking system, as estimated by the Department of Justice.

To get a proper idea of the importance of this flow to the banks that are your charge, imagine for the sake of example that the banks earn fees and commissions of 1% on those volumes. (Considering that the source of that money is illegal, 1% is almost certainly too low.) That amounts to $5 to $10 billion in pre-tax profits. Clearly, you need that number to grow. You need worldwide capital to move through your pipelines.

One way to keep that flow growing is with government credit. Government credit supports the capital markets and prospective capital gains from those markets attracts more money. The growth of federal and federal supported credit was simply stupefying during the 1990âs. Republicans and Democrats tripped over each other in the competition to slap out ever more.

Another way is to run your enforcement, intelligence and military operations to consolidate the money laundering market and overall capital flow into those financial institutions that cycle the deposits and investments though the US financial markets. If you were Bob Rubin and the members of the National Security Council in 1996, you would have felt the pressure to keep the cash flow that comes through your pipelines growing. There was an election to win.

The1996 Presidential campaign was an unusually partisan one. The competition for fundraising was intense âinvolving lots of alleged money laundering schemes that tied into money abroad. Needless to say, the nostrum âitâs the economy, stupidâ that informed the 1992 Democratic campaign and victory still held. That meant that for the incumbents to win, the stock market needed to be high and interest rates and gold prices low.

With substantial fundraising coming from the states (New York, California, Texas, Florida and the DC area) representing the highest money laundering flows, the reality of raising money was brought home by ex-CIA chief William Colbyâs statement in 1995 that the drug cartels may now be calling the shots at all levels of government. Rumours abounded about money laundered into campaign coffers from government credit and deals extended to Russia and China.

Global money laundering and capital attraction is a lot easier with federal credit. No one needs to bother about credit quality, and it is readily marketable around the world. A significant amount of federal credit, whether on balance sheet through HUD, VA or Farmers Home, or off-budget through FDIC and the GSEâs, backs the US mortgage finance system. It may seem counter intuitive to imagine that federal credit could be a vehicle for money laundering, but in reality it is simplicity itself.

It is well explained in Gary Webbâs book, Dark Alliance. It was published in 1998 after he was fired from the San Jose Mercury News for publishing the expose of the same title in 1996. In it, Ricky Ross, the dealer who led the crack cocaine explosion in South Central Los Angeles, explains to his Iran Contra supplier that he has a cash problem. The problem is that he has millions in cash underneath his bed and it just keeps growing. What can he do with the cash? The supplier says, âDonât you know, you buy real estate.â So Ricky bought a string of properties. He wasnât alone. Some estimates of the volume of Florida real estate transactions funded by illicit cash are as high as 70%. The lesson is clear. Publicly traded homebuilding and mortgage banking operations can be both a turbo-charged cash and capital gains machine. As of 1996, homebuilding and mortgage banking was unimpeded by any money laundering enforcement.

At the Money Laundering Alertâs annual conference in Miami in the spring of 2000, I asked the senior representative of the US Treasuryâs money laundering group, FinCen, what plans they had for protecting the federal credit programs particularly the ones in homebuilding and mortgage banking from money laundering. To her credit, she answered, ânot only do I not know the answer to your question, I do not know enough about the federal credit programs to understand your question.â

I then visited the vendor fair. All the software providers who helped banks comply with money laundering regulation said that their banking clients would not let them near their mortgage banking subsidiaries, which were booming. A visit with the Lexus-Nexus affiliate indicated that the only reference he could find to money laundering enforcement in US homebuilding and mortgage banking indicated that HUD was the responsible enforcement authority -- which means there was none.

Government deficit financing both in the US and worldwide has for decades depended on an ever-expanding illegal narcotics trade. Narcotics had been a banking business from the beginning, controlled for the benefit of those who wanted large pools of deposits to finance new investments or to take in payment for trade from those who could not access credit.

As head of the arbitrage desk at Goldman Sachs for many years, Rubin would have seen the process by which organised crime profits, cycled through Wall Street, bought up corporate America through mergers and acquisitions and leveraged buyouts. This was a game he must have understood.

Catherine Austin Fitts is the President of Solari, Inc, an investment advisor created to invest in equity managed by solaris, investment databanks and investment advisors for places of up to 10,000 people. She is a former Assistant Secretary of Housing-Federal Housing Commissioner in the first Bush Administration, a former managing director and member of the board of Dillon, Read & Co, Inc (now UBS) and President of The Hamilton Securities Group, Inc. Catherine provides risk management services to investors through Sanders Research Associates in London. She writes âThe Real Dealâ column for Scoop Media New Zealand.



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