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alstry (35.46)

Who is going to be paying taxes????

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June 05, 2008 – Comments (7)

Right now, 2008 is on track to be the largest government deficit in US History.

Looking forward things seem much worse.

Banks/Financial Institutions make up about 1/3 of the earnings of the S&P.  Many are making a fraction of what they made recently and many more are losing money.  Airlines are losing money.  Auto Manufactures are losing money.  Home Builders are losing money.  Restaurants are making much less or losing money.  Hotel Bookings are starting to decline.  Retailers are selling and making less.  Health Care profits are contracting.  Property Taxes are declining.  Permit Fees are evaporating.  Sales Taxes are falling.  Gas Tax revenues are falling.  Port Duty Fees are falling.

Here is a BIGGIE.  Let's day the auto industry lays off about 20% of its workers.  That is many billions in salaries that is not being paid and not paying taxes....especially if those workers can't find replacement jobs.  Same thing with the 20% of airline workers.  Or 60% of residential construction workers.  Or 80% of Mortgage Finance workers.  Or 20% of Wall Street Workers.

When the economy contracts, government revenues contract.

Basically in many industries....20% or more of the workers are being let go without being replaced.  Imagine the income taxes that will not be paid.

Most municpalities, counties, and states are very leveraged.  A 20% reduction in revenues will inevitably bankrupty many.  Just how many is unknown.  Thank goodness for MBIA and Ambac....at least they are insured in most cases.

7 Comments – Post Your Own

#1) On June 05, 2008 at 10:49 PM, alstry (35.46) wrote:

DO YOU THINK UBS SEES IT COMING??????????? 

 

June 5 (Bloomberg) -- UBS is closing its municipal bond business after failing to find a buyer for what was the third- largest underwriter of U.S. state and local government debt last year.

UBS will fire about 280 people, said Doug Morris, a spokesman. Zurich-based UBS, Switzerland's largest bank, said in May it would shutter its municipal bond division if it couldn't find a buyer.

``UBS explored a number of alternatives to exit the institutional municipals business and determined that because of the complexities of selling the business in the current market and limited market capacity for a business of this size, a sale of the business was unlikely in the near term,'' the company said in a statement.

UBS has said it plans to eliminate 7,000 jobs following $38 billion of fixed-income asset markdowns. Investment banks and securities firms in the past 10 months have cut 83,000 jobs amid losses and writedowns of $383 billion.

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#2) On June 06, 2008 at 1:03 AM, DemonDoug (82.62) wrote:

The shortfalls will be made up in part by oil, precious metals, and potash companies who are making out like gangbusters.  But the losses will be far greater than the gains.

Here's a simple prediction.  Doesn't matter whether McCain or Obama wins.  The Bush tax cuts are going to be gone after 2010.  I would also guess that if Obama wins that capital gains for the highest tax bracket will be in the 40% range or so.

Guess what? Those are both bearish for the market. :)

Our government is sowing the seeds of it's own destruction.  Things like that Ag bill that passed are emblematic of horrendously run government.  Not to mention bank and lender and housing bailouts. 

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#3) On June 06, 2008 at 2:17 AM, alstry (35.46) wrote:

The big difference between you and I is severity and timing.

When I speak of severity, I simply mean the system is now broken and a revolutionary change will have to transpire.  What that is I have no clue.

I don't know if you remember the blog I did with the condo association and a bunch of residents were paying HOA fees.  The entire structure of the condo community broke down.  Taxes are similar to a society.

Where you and I may walk on different sides of the same road is timing.  My belief is that it will occur much sooner than many think.  When exactly, I have no clue............but I just doubled my short positions:)

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#4) On June 06, 2008 at 2:36 AM, MakeItSeven (32.51) wrote:

This news is kinda buried among all the Walmart noises today.  My rough estimate is this will cost the lenders/investors about 3T in foreclosures (not counting any leverages).

“At the end of March, nearly 8.5 million homeowners had negative or no equity in their homes, representing more than 16 percent of all homeowners with a mortgage, according to Moody’s Economy.com Chief Economist Mark Zandi.”

“By June 2009, he estimates that will increase to 12.2 million, or almost one out of every four homeowners with a mortgage.”

“Homeowners with no or negative equity are more likely to fall behind on their mortgage payments or, in frustration, mail the keys to the lender and walk away from their mortgages, a phenomenon more lenders are seeing. This will only increase foreclosures, which have been surging the last two years, and further exacerbate the housing downturn.”

 

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#5) On June 06, 2008 at 3:38 PM, anchak (99.84) wrote:

Alstry...OT...since you dont put in pitches....in the early morning rush...your SCC pick went the wrong way...especially given you picked UCC correctly....ask MF to correct the direction...If you do it today...the points will come back 

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#6) On June 06, 2008 at 4:54 PM, alstry (35.46) wrote:

Who do I contact and how do I contact them?

Thanks for the heads up.

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#7) On June 06, 2008 at 11:06 PM, anchak (99.84) wrote:

Just go to the "contact us" tab .....Put the subject as wrong pick: SCC and put in the request nicely...Jake/Chris are very prompt and helpful. 

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