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alstry (34.98)

The Mother of All Credit Crisis

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May 04, 2008 – Comments (5)

States depend on sales and income taxes for about two-thirds of their revenue, according to the National Conference of State Legislatures.

http://www.signonsandiego.com/uniontrib/20080504/news_1h04slump.html

Projections made in March are already being revised downward.  Property values dropping like a rock which force adjustments in property taxes.  Sales transactions dropping like a flock of pigeons in Picadilly Circus.  And massive layoffs going to gut income tax revenues.

Florida has already cut its revenue estimates by a billion dollars since March.  CA, the most populous state in America, has been increasing its deficit estimate by about $4 Billion every other month....expect the new number to jump from $16 Billion to $20 Billion in a few weeks(About $600 for every man, woman, and child....whoops, now we know where Calfornians should send their tax rebates).

In the past few years, municipal and state governments have borrowed and spent trillions on new found income growth from rising property taxes and usage fees.  Now that income is evaporating.  Imagine what happens when municipal bonds start defaulting around America.  Pension funds, Retirement planning, Bank Portfolios......

5 Comments – Post Your Own

#1) On May 04, 2008 at 8:43 AM, alstry (34.98) wrote:

ANOTHER RETAILER ABOUT TO GO DOWN???????

(MarketWatch) - Bakers Footwear Group Inc. reported late on Friday that fiscal fourth-quarter net income jumped after a one-time gain, on 11% lower sales and 6.8% lower same-store sales.

The St. Louis operator of 249 mall-located shoe stores also said that "despite its strong disagreement, and despite the improvement in the company's fourth-quarter fiscal 2007 results and the rebound in April 2008 month-to-date sales," its auditors expressed doubt about whether it could continue in business. Report this comment
#2) On May 04, 2008 at 8:47 AM, alstry (34.98) wrote:

If my estimates are right, over the next 12 to 18 months, we could see 10,000 stores shutter around the country.

Just current announces, such as Linens 'n' Things, HomeDepot, Starbucks, and others...we are well over 1000 store closings.  If you factor cancelled openings, the number would be much higher.

Think of the decrease in sales taxes, income tax, and employment evaporation just from the above?

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#3) On May 04, 2008 at 11:10 AM, dwot (43.21) wrote:

No question I am a late comer to looking at financial issues.  I suppose it was about 2 years ago that I started to follow a group of stocks before I started investing in the summer of 2006.

It was a full 6 months before I heard or read a word about derivatives.  No wonder people are oblivious to the dire straights of the financial system.  I did a lot of searching for a few days and found very little information.  All I found was there were so many of these things they made the US economy look small.

Slowly I get more information.  I was quite concerned that it would unwind quickly, but now I think this is still very early in the unwinding.

The time line for the Depression was actually amazing.  Florida's real estate market peaked in 26 and then the bottom on the stock market wasn't in until 32 or 33.  So, now we have a real estate market that peaked country wide anywhere from 2005 to 2007.  There are some markets that relatively speaking, aren't bubbled.  So, I think we are at the beginning of a 2-5 year downward cycle. 

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#4) On May 04, 2008 at 12:09 PM, abitare (31.83) wrote:

aligned in thinking... Borders Books is going down.....

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#5) On May 04, 2008 at 12:36 PM, EScroogeJr (< 20) wrote:

alstry, from your mouth to God's ear. I certainly wish we had a rerun of the Great Depression. Unfortunaly, I see no chance of that, and I cannot delude myself with the hope of snatching the wealth of the previous generation for 30 cents on the dollar. If we could only reeelect George W. for the third term...

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