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alstry (35.76)

It's getting MUCH WORSE MUCH FASTER!!!!!!!

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July 20, 2008 – Comments (5)

The following was taken from Mish's Blog and rearranged to clarify the issue(factual correctness is maintained):

 

Georgia State tax collections...were off 1.1 percent for the entire fiscal year [HOWEVER] tax collections were down 9.4 percent in June, the final month of fiscal 2008.

With the economy continuing to sputter, state government is going to have to spend $600 million in reserves just to pay its bills for the recently completed fiscal year.

Gov. Sonny Perdue said because of the tax collection decline, the state will have to use $600 million of its $1.5 billion reserve fund to balance last year's budget.

In anticipation of the slow economy, the governor already had ordered state agencies to come up with plans to cut 3.5 percent of their budgets this year.

In the final three months of fiscal 2008, overall tax collections were down 7.3 percent over the same period in fiscal 2007, according to the Georgia Department of Revenue. Corporate income taxes plummeted 26.7 percent, and sales tax collections fell 8.6 over the same months in fiscal 2007.

http://globaleconomicanalysis.blogspot.com/2008/07/georgia-state-tax-collections-down-94.html

GEORGIA IS IN SERIOUS TROUBLE.  TAX RECEIPTS ARE IMPLODING AND THE TREND IS GETTING MORE NEGATIVE BY THE MONTH!!!!!!!!!!

With a deficit of $600 million last year and almost 10% decline in June, the goofy governor wants to cut the budget by only 3.5%?  3.5%??????

The trend is getting much worse, receipts could easily be down by over 20% as the year progresses which would turn a $600 million dollar deficit into over $10 Billion dollar deficit before the year is out!!!!!!!!!(remember, the $600 million dollar deficit was based on only a 1.1% fiscal year decline....imagine the deficit for a 10-15% decline in revenues....what about a 20-25% decline in tax receipts-corporate receipts were down over 25% in the final quarter of the fiscal year)

IMAGINE WHAT WILL HAPPEN TO CORPORTE TAXES WHEN NOL CARRYBACKS KICK IN!!!!!!

This is the kind of analysis the analysts and government officials FAIL to give you.....yet.

5 Comments – Post Your Own

#1) On July 20, 2008 at 9:00 PM, alstry (35.76) wrote:

State governments employ about 15 million workers.

http://sourcebook.governing.com/subtopicresults.jsp?ind=580

The Federal government employs about 2 million workers.

http://www.bls.gov/oco/cg/cgs041.htm

The total U.S. workforce is about 160 million people.

Right now, about 8.5 million people are unemployed constituting approx 5.5% of total workforce.

http://www.bls.gov/news.release/empsit.nr0.htm

Can you imagine what will happen to unemployment rates if states have to cut 20% of their budgets?

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#2) On July 20, 2008 at 9:46 PM, alstry (35.76) wrote:

AP
Paulson braces public for months of tough times


Sunday July 20, 5:47 pm ET

Treasury chief braces people for months of tough times ahead, says US banking system is sound

http://biz.yahoo.com/ap/080720/paulson_economy.html

Does any really believe a word this guy says anymore?  Not too long ago he said all was fine....clearly he must have been joking and forgot to tell us. 

Just months of tough times ahead???  State tax revenues are just starting to evaporate!!!!!!!  Businesses are shutting down every week compounding the negative effect.  Hundreds of thousands of employees losing their jobs with many more slated for the chopping block.  Airlines cutting flights and shutting down completely leaving cities like Las Vegas and Orlando stranded and strapped for business.

The effects of much of the above won't really be felt for a few months. 

Just months of tough times ahead???  The only thing that will last months is Mr. Paulson's job as Secretary of Treasury.......and don't you think he knows it.

If we are already facing turmoil in the banking system....what do you think things will look like in a few months as the layoffs take effect and the announced closures of businesses actually shut down?  What will happen to municipal bond debt coverage when receipts fall to the point where cities start missing payments.  You think Ambac or MBIA will be there solvent to pay off on municipal debt?

This is a mess and getting worse day by day.

Who is fooling who when you have an army of foolians to pitty the fool.

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#3) On July 20, 2008 at 10:56 PM, lquadland10 (< 20) wrote:

Fan and fred are both private and public. Japan China and Russia own most of the inside private mortgages Backed by the US government. Like your or my houses. They only take what they think are good. The problem is they are fraught with corruption and bad spending over the years and just getting their accounts in order. Now these country's own 1/2 of the American homes. Banks like Chase and Bank of America have to many sub prime defaults and second liens and don't have enough cash on hand to lend for new mortgage. So they have to sell the good ones to fan and fred. to get the system going.No bank wants to inter loan money to other banks because they don't think they will get the money back and they don't have the money any way. So until they free up fan and fred not much will happen. Then reg. banks will deal with rising credit card delinquency and  defaults on second lines of credit defaults and the withdraw of money of savings accounts just to make ends  meet and the regular will have even less money to  spend and will have to raise more to keep  open and also the repay the  FED  in Sept. that they borrowed to  keep going. Oh and they also have to pay the FIDC more money because more banks are failing. It is getting really bad out there.Oh yea they have to save fan and fred for usa russia china japan so they say.Every one who is private will get paid first so don't buy the stock in real life only for caps.  Also there is talk that if the Gov. (you and me) don't save them we will loose our  AAA rating to AA and then you will see everything double in price. 8 dollar gas 4 dollar bread and 8 dollor milk. I personally looking at a depression because did I forget the comptroller said we as a country are 53 trillion dollar in debt as a nation? If we don't change we will be bankrupt by 2057 and this was in March? This was before the FED and congress starting bailing out anyone and everyone so how much closer are we to in now? Buy Gold.

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#4) On July 21, 2008 at 4:01 AM, DemonDoug (98.90) wrote:

I'm not sure if you were the one al, but I believe you were the first one to start harping on state employment as being a huge factor in the current recession.  Props to you on that.  And yes, the lying fatcat liars should all be locked up and rot in jail for the next 25 years, at which point there will be no more medicare to care for them medically. :)

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#5) On July 21, 2008 at 5:32 AM, alstry (35.76) wrote:

From the WSJ:

Mervyn's LLC, the long-struggling California department-store chain, is fighting for survival as some of its vendors have halted shipments to the company and key lenders have pulled financing, according to people familiar with the situation.

In recent days, Mervyn's executives have been trying to persuade vendors to ship merchandise to the retailer for the crucial back-to-school season. If that effort fails, the company could be forced to file for bankruptcy protection as soon as this month and shut down, according to these people. Mervyn's operates 177 stores in seven states, mostly in California.

http://online.wsj.com/article/SB121659710322668977.html

Assuming 100K feet per store, we are looking at over 15 million square feet of retail space possibly going dark.

If you just take Mervyn's and Steve and Barry's, we are contemplating over 40 million square feet of retail space.

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