PIIGS of Our Own: Firing Line

One of our own PIIGS, the state of New Jersey, is being sued for running a Ponzi scheme.
Author:
Publish date:

NEW YORK (

TheStreet

) -- A couple of months ago,

I detailed how states in our own nation were facing their own debt crisis

, in the same way as Europe's PIIGS (Portugal, Iceland, Ireland, Greece and Spain). Our "PIIGS" are California, Illinois and New Jersey.

In a report on the front page of

The Wall Street Journal

Thursday we find that the feds have sued the state of New Jersey. No, it wasn't a Federal Communications Commission lawsuit for polluting the airwaves with five reality shows. The suit came from the

Securities and Exchange Commission

, which charged the Garden State with lying to investors.

Yup, you read that right. My home state (Parkway Exit 44) has been sued for securities fraud.

While peddling bonds to unsuspecting investors, New Jersey apparently forgot to let them know that two of the state's largest pension funds were more or less Ponzi schemes. These funds weren't even close to being properly funded, and you can only guess where the money from these bonds was heading. In terms a caveman could understand, a Ponzi scheme uses money from new investors to pay old ones.

Now if I were to take a play from the Obama administration, I would place the blame squarely on former governor Jon Corzine and the Democrats for turning the Garden State into a cesspool of unions, kickbacks and out-of-control spending. After all, the current governor Chris Christie has only been in office for seven months. So it's all Bush's ... errr, I mean ... Corzine's fault.

But I wouldn't stoop so low as to employ Obama's "not my fault" excuse matrix.

Christie recently battled the state legislature and wielded his veto pen to attempt to put New Jersey on a financial crash diet. But this is his mess now, and he better get cracking. He also needs to fire whoever was responsible for this fraud ... unless of course they're in a union.

Speaking of the president, where is he on this issue? When

Goldman Sachs

(GS) - Get Report

came under fire for the Abacus deal (where alleged clueless institutional investors were "defrauded" by the evil Death Star), the president used that case as one of his torches for his populist attack on Wall Street.

The SEC case against Goldman was used to help ram through "financial reform."

Apparently this was financial reform only for Wall Street and not the government.

I for one am looking forward with interest to when the SEC charges the federal government with the same charges that it leveled at the Soprano State.

The victim? Our investors and bankers: the Chinese. I believe we are defrauding these poor investors and they have a strong case.

The U.S. continues to spend as if there were no tomorrow, and the government has massive liabilities in the form of Social Security and Medicare and Medicaid. Oh, and it has made hundreds of billions of dollars worth of bailouts.

Firing Line: I look forward to seeing the civil SEC charges against the U.S. for doing what the Snooki State did, but I won't hold my breath. Somehow the federal government has different rules for itself. By the way, Illinois, you still owe me a $900 state refund from 2009. Maybe it's in the mail ... I'll go check.

-- Written by Matthew "Whiz" Buckley in Boca Raton, Fla.

At the time of publication, Buckley had a bearish position in Goldman Sachs options.

Matthew "Whiz" Buckley is a partner at

Fox3 Options LLC,

a provider of options education and practical applications for options traders of all levels. He is also the founder of Strike Fighter Financial LLC, a business-consulting firm specializing in leadership development, risk management and strategic planning for Fortune 500 companies and related organizations. Buckley flew the F/A-18 Hornet for the U.S. Navy. He's a graduate of TOPGUN, has close to 400 carrier landings and flew 44 combat sorties over southern Iraq. After leaving active duty, he served as a managing director at a Wall Street volatility arbitrage options firm and was a founder and the CEO of a financial media company. He is an internationally recognized speaker and combined his experiences in the military and corporate America in his book "From Sea Level to C Level."