LMAO: US Government Fails Audit--GAO Can't Render Opinion on Bogus US Financial Statements

Attention owners of US government bonds! The Government Accountability Office was unable to render an opinion on the 2010 consolidated financial statements of the US government because of "widespread material internal control weaknesses, significant uncertainties, and other limitations." Not that this is anything new; the GAO has not signed off US government financial records for the last 14 years, indicating that even US auditors are unwilling to expose themselves to potential jail time for assisting the US in the largest financial fraud in history. Quick question: If you heard that a publicly traded corporation was unable to get their auditors to sign off on their financial statements, what is your first thought? If you are like me, you would be racing to the computer to short as much stock as my margin account will allow. After all, the first indication of fraud is when even the auditors refuse to sign off on financial statements. Is this perhaps why we have seen US bond yields surge recently as the smart money begins to move out of US government debt? We shall see.

According to the GAO the major accounting problems included:

1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.

I was not particularly surprised that the DOD was the worst offender considering their new slogan "What some call fraud, others call good business." The military-industrial complex has been stealing trillions through illegal bid rigging, kickbacks, and procurement fraud for years. The GAO goes on to say that an estimated $125.4 billion in improper payments, information security across government, and tax collection activities were detected. This is generally accounting-speak for massive fraud with nobody really knowing where the money really went.

Another interesting tidbit from the report, which should not come as a surprise to anyone, was that the GAO was not able to sign off on the 2010 statement on Social Security. The obvious reason is that Social Security is nothing more than a bookkeeping entry with no trust fund. Not even Enron's auditor Aurthur Anderson would have the balls to attest to the accuracy of the mythical Social Security trust fund. But I love it how politicians herd the sheep to the financial slaughterhouse by insisting Social Security is solvent and a promise to future generations. The only promise, of course, is that you will likely starve to death relying on Social Security to provide you with any retirement.

The only question left to ask is how long will it take for US bond holders to see that that they have lent money to a fraudulent reporting entity, engaged in a massive shell game of debt and money printing? That is probably a question for the Chinese to be asking themselves right now. Got gold?

Black Swan Insights 



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