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More Tax Revenue Declines, Parabolic Gold



March 13, 2008 – Comments (8)

Every day it seems another form of government is reporting how much revenues are missing expectations and the need for more cuts.

New Jersey is the latest, with revenue so far down the governer now wants to do deeper cuts than the $2.7 billion proposed recently.

The single item that got my attention the most was fuel tax, "motor fuels tax revenue was 33 percent under budget."  I don't know the structure of this tax, but how the heck do things like fuel tax drop by 33%?????

One thing is clear, all levels of government, federal, state and municipal, are reporting serious short falls in revenue.


Bespoken has a warning about gold.  They have plotted the price of gold versus the USD and gold is parabolic. Look at the chart and if that's the kind chart you like to buy, go for it...  It looks like a good way to take a hit to me...

8 Comments – Post Your Own

#1) On March 13, 2008 at 7:05 PM, goldminingXpert (28.63) wrote:

Only safe gold play is to go long a good miner like Jaguar Mining (JAG) and short a garbage one like Goldcorp (GG). The bullion is way too dangerous to own here... when the DX rebounds to 80, it's lights out on the commodity bubble.

About the revenue drops-- are people going to the black market economy... just a wild thought... taxes are obscene in New Jersey, or at least they were the last time I was there.

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#2) On March 13, 2008 at 7:43 PM, alstry (< 20) wrote:


Corzine, in an interview later today on CNBC, said the U.S. economy may go into a worse recession than many expect because of a decline in consumer spending and higher costs for energy and food. He said port shipments have dropped 15 percent, the state lost 9,000 jobs in January and sales tax collections are dropping.

Lower spending and higher costs?  What about trillions in debt no one can repay.....forget about swaps.

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#3) On March 13, 2008 at 8:57 PM, FleaBagger (27.54) wrote:

Declines in consumer spending don't cause recession. I know that sounds stupid because you hear all the time how we're going into a recession because of a lack of consumer spending, but I'm right. They do often coincide because they are both symptomatic of a decline in the productive labor. Productivity is up, you argue, but what productivity? Contractors for waste-of-space bureaucrats? That "productivity" doesn't produce anything, so it masks declines in wealth generation and fruitful employment, distorts the economy, and hides the fact that the current administration effectively (but not officially) increased nondefense gov't employment many times over.

So when we stop producing things people want, and start sorting mail for the welfare state, the country becomes poorer, and the statistics on employment and "productivity" stay the same or keep growing. Inflation erodes the purchasing power of stagnant wages, and consumer spending drops shortly after the country has become poorer by producing less wealth.

What's the difference? The difference is that if we all grew, made, or built good things and saved our money, we wouldn't be in a recession. Our economy would just be less oriented to shiny, pretty things like iPods.

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#4) On March 13, 2008 at 9:47 PM, ATWDLimited (< 20) wrote:

Hey as anew Jersey resident I will tell you. Jobs left as stated before, energy and food prices soared, less money to spend on other goods, business left NJ cause they have outrages property taxes, business taxes, and every other tax under the sun. THe government is a massive juggernaut of idiocy, they over tax, stifled the economy, loaded up on debt and seek to micromanage everyones lives.

As for your analysis, gold is not dropping, cause the problem is a circle, oil prices inflate due to weak dollar, this inflates food and costs of goods, this slows the US growth more, this in turn puts massive debt on the government of states and the fed. this makes the dollar even weaker, etc. You get the point. Read my blog on silver and my gold analysis, cause for now its beating your dinky US economy. 

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#5) On March 13, 2008 at 9:47 PM, FourthAxis (< 20) wrote:

I'll be honest, gold freaks me out too.  You don't have to look any farther than my "rec" for GLD.  However, consider if possible whether the demand is parabolic too?  I like this idea for commodoties and energy more than gold but...


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#6) On March 13, 2008 at 9:57 PM, leohaas (30.09) wrote:

The numbers quoted are for the month of December 2007. I would not draw big conclusions based on one month's data. I suggest you take a look at the numbers for the 2nd half of 2007. But something really needs to happen.

"The single item that got my attention the most was fuel tax, "motor fuels tax revenue was 33 percent under budget."  I don't know the structure of this tax, but how the heck do things like fuel tax drop by 33%?????"

That is an error in the Bloomberg article. Follow the hyperlink in the article (or this one) and you'll see that fuel tax was 5.4% under budget. It is a flat tax per gallon (14.5c, if I am not mistaken). By the way, the NJ fuel tax is the lowest in the nation (and no doubt way lower than dwot's Canada).

However, the low fuel tax is about the only low tax in NJ. In all other tax categories, NJ is a leader. Overall, NJ tops the nation in personal tax, and is #2 in business tax.

All these taxes are driving businesses and rich residents away. That is a big part of the problem. In addition, NJ has taken on way too many obligations:
 - state and local governments are bloated
 - people in NJ love home rule: every intersection is its own township with its own school district, bureaucrats, and police force
 - too much money has been borrowed in the past
 - benefits for workers at all levels are unusually high
 - the NJ supreme court forces the tax payers to contribute massive amounts of money to urban schools
 - pension obligations have been neglected.

I am not sure how to fix this mess. Severe cutting (way more than Corzine has proposed so far) must happen. In particular, the long-term obligations must be renegotiated. And businesses must get a break.

PS. I am a NJ resident looking to move out of the state long term. 

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#7) On March 13, 2008 at 10:05 PM, FleaBagger (27.54) wrote:


Don't move to Virginia. There are 3-5 annual taxes/fees for your car, depending on which county you're in, and there's a property tax, income tax, and a sales tax, as well as bad traffic here in the northern part of the state.

I hear Texas is nice, but I couldn't stand the weather. 

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#8) On March 14, 2008 at 8:04 AM, dwot (28.81) wrote:

goldminingXpert, Goldcorp is garbage alright.  I've looked at that stock extremely closely and it needed gold about $1000 to support about a $20 price.

alstry, I'm thinking it is going to be a worse recession then people think as well, and then with "recovery" just flat and not much ability to get ahead.

FleaBagger, I tend to think the income required to debt servicing is more the problem.  I would absolutely agree about the declines in "real" productivity.  One of the things I thought about quite a bit when I was in Britain was, "where's the foundation of the economy?"  They were so used to importing and strongly of the belief why produce it when you can import it cheap, so you look around and what do they do?  Not much besides the financial market type stuff, and even that is leaving, for example, the London metal exchange now has competition from the Shanghia exchange.  Who's going to get China's business?  I've been saying the pound is in big trouble for a while.  And the US...  The number of "fluff" jobs is over the top.  That people make a career out of being something like a health broker is extremely problematic...

ATWD, perhaps others under tax...  Net effect, business goes to where taxes are the least and governments have constant revenue problems and constantly underfund their promises.

On gold, when I think about it, that chart is more showing the loss of purchasing power of the US dollar as it declines against other currencies.  I don't think there is inflation in it since the last peak.

FourthAxis that world population graph concerns me.  Would be nice to think over population plays out as the graph shows...

leohass, I looked at the report, the reporter must have read the line below.  Fuel tax is higher in Canada.  I got gas yesterday, 1.42/liter, about $5.37 a gallon...


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