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Guest Post: The Boom Before The Bust

Tyler Durden's picture




 

Submitted by The Pragmatic Capitalist

We're at a truly fascinating crossroads in modern economic times.  Financial theory as we have come to know it will be changed forever based the recent actions of Ben Bernanke and global central bankers.  Millions of textbooks will be rewritten in the coming 10 years and careers will either flourish or die on the back of the actions of these bankers.  Those in favor of Bernanke's legendary helicopter drop are celebrating a 6 month rally in equities, but a vital piece of the recovery puzzle remains missing.  While Bernanke and Co. fire up the printing presses, and the banks sell the recovery hook line and sinker to the investing public, we continue to see very weak consumer trends.

As we sit on the one year anniversary of the demise of Lehman Brothers it's most appropriate to ask what we have achieved over the last few months and years in regards to policy action.  Many say we avoided the second great depression and praise Bernanke for his innovative and swift actions.  Others (myself included) believe we have simply kicked the can down the road and foresee an end to Bernanke's career that very much mirrors Mr. Greenspan's.  As we noted back in August, Bernanke's real report card is less than impressive:

  • 4 million lost jobs
  • 4.6 percentage point surge in the unemployment rate
  • 20% decline in the S&P 500
  • 30% plunge in house values
  • A 3.5% reduction in real GDP per capita
  • 11% decline in the trade-weighed dollar
  • 109 failed banks (almost matching the total from the prior 13 years combined)

If you think about the cause of the credit crisis (excessive debt, excessive leverage and a banking sector that is too large and too powerful) and what we have solved in the last year it's actually quite apparent that we haven't solved any of the structural problems that actually caused the crisis.  The debt in this country is still extraordinary, leverage is making a comeback and the banks have grown larger in what has to be the most incredible power grab in modern economic times.  Meanwhile, Bernanke is like the doctor who keeps the cancer patient on life support, but can't for the life of him, figure out how to extract the cancer and create a healthy self sustaining life.  The system still has the cancer, but the recent shot of Demerol has the patient feeling better.  50% better. 

At the heart of this problem is the consumer.  The bankers will tell you that our long-term structural problems reside in the banks (which is why they needed our help in the first place, remember?), but in reality this is a consumer driven problem.  And the problems confronting the consumer are many.  Unfortunately for Bernanke these are long-term structural problems that can’t be fixed with a printing press and a helicopter.  The consumer continues to struggle under the weight of high debts, stagnant wages and massive job losses. The latest consumer credit report, however, showed that the deleveraging in the private sector is actually picking up steam:

Meanwhile, for the bankers, it is business as usual. We can be certain that Christmas 2009 will be disappointing for everyone's children in the United States except for those whose parents are employees of Goldman Sachs and JP Morgan - record bonuses are coming.

Unfortunately for the Fed and Bernanke you can lead a horse to water but you can't make it drink. Lending is a two sided coin and as consumers continue to tighten their purse strings they simply aren't borrowing at a rate that the government would like to see. This throws quite a wrench in Bernanke’s reflation plans. Much to Ben Bernanke's dismay the velocity of money simply isn't budging. You can drop money from a helicopter, but if there is no one to borrow it then your hopes for a credit driven recovery become very dim.

Even the incentives such as the cash for clunkers program prove to be having little positive impact on borrowing and overall retail sales as investors simply reallocate spending money.  It will be interesting to see what sort of impact this program has on long-term spending.  The early signs from the back to school season are nothing to cheer about.  It looks like mom and dad bought a new car, but decided junior didn’t need the textbooks for school.  The near-term positives of the government stimulus appear fine in theory, but are only compounding our long-term problems.  The U.S. government is borrowing money to help debt-laden consumers borrow money to purchase an asset they likely don't need.  The sheer stupidity behind such a government program is literally mindboggling.   Meanwhile, in return for their generous bailout money, the bankers continue to jam taxpayers with higher credit card rates and more stringent lending standards.  BNP elaborates:

One reason consumers may not be responding expansionary Fed policy is that lending standards continue to tighten and terms are expensive. Spreads between the rates charged on auto loans and Treasuries remain elevated, although it is worth noting that auto loan rates are available only through May. However that is not likely the whole story, consumers have lost tremendous amounts of wealth and income and face continued uncertainty about job security. It is worth noting that amongst all of the green shoots in housing and manufacturing, consumer spending overall has remained very subdued. Unlike the labor market, consumer spending does not tend to lag the cycle, but help lead it so we continue to believe a subdued recovery seems likely.

Many have already crowned Bernanke as the next "Maestro" (sounds familiar, right?), but we will not know whether Bernanke succeeded for many years.  Ignore the talking heads who tell you that Bernanke saved the global economy.  The same mistake was made by many back in the 90's when Greenspan tried to print his way out of trouble. Thus far, all we know is that Bernanke has whipped out the same exact cheap money playbook that Mr. Greenspan always turned to.  The curse of cheap money has been felt by everyone over the course of the last 30 years as we promote an unstable and deeply harmful boom bust cycle:

David Rosenberg of Gluskin Sheff said it best:

All the growth we are seeing globally this year is due to fiscal stimulus; not just here in Canada and the U.S., but also in Korea, China, the U.K., and Continental Europe too. For 2010, the government’s share of global growth, by our estimates, will be 80%. In other words, there are still very few signs that organic private sector activity is stirring. For a Keynesian, government stimulus is necessary, but the question for an investor is the multiple one attaches to a global economy that is still relying on a defibrillator. The problem is that governments do not create income or wealth, and today’s stimulus is really a future tax liability. Curiously, that future tax liability is likely going to pose a roadblock for the return to a “normalized” $80 operating EPS estimate that strategists are now starting to pen in for 2011.

Albert Edwards of SocGen foresees a continuation of the deleveraging cycle that will be carried on the back of consumers:

The problem is that after the boom there will be a bust. The issue now is one of deleveraging and the deflation that is starting to unfold. The problem is that Bernanke is a slave to Milton Friedman’s view of the Great Depression (at Friedman’s 90th birthday Bernanke promised that the Fed would never allow another Great Depression to occur). The Australian economist Steve Keen’s observation that “Bernanke’s dilemma is that he is living in a Minskian world while perceiving it though Friedmanite eyes explains his actions to date. It also explains why he will fail.

Will Bernanke succeed using the same cheap money game plan that Greenspan used?  Perhaps in the short-term, but in the long-term it's likely that Edwards is indeed correct.  We are simply promoting a boom bust cycle that is built on no real organic strength as is evidenced in recent consumer trends.  As Anna Schwartz said, we are fighting "the last war" and she is deeply concerned that we have lost it.  The Fed has vowed to print our way out of this mess while allowing mistakes to go unpunished.  The long-term bulls are dancing in the streets in recent weeks despite stock prices that are still 20% off their highs, 10% unemployment, a dead consumer and housing prices that are 30% off their highs.  Don’t lose sight of the forest for the trees here.  This isn’t a sprint we’re experiencing; it is likely to be a marathon.   They say history has a way of repeating itself and this movie looks like one I’ve seen one too many times during the Greenspan era….The best thing that might result from all of this is that Ben and company actually are fighting the “last war”.  Rather, the “last war” we allow them to so foolishly start….Unfortunately for the rest of us, that likely means we have more booms and more busts ahead of us. 

 

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Sun, 09/13/2009 - 22:53 | 68426 straightershooter
straightershooter's picture

A dead Consumer

That's why Bernanke cannot succeed.

Consumer, as a whole, hit the ceiling of debt limit and broke. A dead consumer implies a dead business ( consumers are the final payer of all business activities) and a dead government ( consumers are the ultimate payer of all taxes). Unless Bernanke can figure out a way to revive the consumer, all his printing efforts can only window dressing the balance sheet side of financial institutuions and capital market, but not repairing the income side of consumers which ultimately dictate that the income side of financial institutions and businesses must suffer and face inevitable collapse via bankruptcy.

Bernanke will become the FED chairman presiding the greatest second great depression and prove that his PH D thesis is nothing more than nothing, a failed Friedmanism ( or that Fried Man).

Mon, 09/14/2009 - 00:46 | 68483 chumbawamba
chumbawamba's picture

I definitely hit the debt limit.  I purposely maxed out my credit cards into the Summer and then stopped paying my bills when I got cut off.  I call it the Private Citizen Bailout Facility, or the Obama Bailout for short. You should try it, too!  Be sure to change your telephone number on all your accounts so when the banks start calling they'll have some bogus number to dial.  I have my auto-attendant running interference for me.

Debtor's Revolt!

I am Chumbawamba.

Mon, 09/14/2009 - 02:25 | 68514 BM (not verified)
BM's picture

I think everyone who disagrees with the idiocy that's currently happening in the banking industry - the bailouts, outright lying about losses via mark-to-fantasy accounting, record bonuses..., should stop paying for mortgages, max out credit cards, and withdraw all deposits. instead of whining about how the life is unfair to poor me.
it is your money in their bonuses. from your deeply underwater mortgages, and from your usurious rate credit cards.
while the bankers enjoy their record bonuses, you'll be saddled in debt for decades. brace yourselves.

Mon, 09/14/2009 - 10:24 | 68658 chumbawamba
chumbawamba's picture

Exactly.  I also closed my bank accounts.  Well, truth be told, my bank closed them (after 15 years of being with those fuckers!)  But I guess they didn't like the negative balance for over a month.  Stupid bastards.

GROW SOME FUCKING BALLS, AMERICA.

I am Chumbawamba.

Mon, 09/14/2009 - 10:19 | 68653 molecool
molecool's picture

"I call it the Private Citizen Bailout Facility"

LMAO - snort!!!

I'm cracking up over here... sniff...

Mon, 09/14/2009 - 19:11 | 69335 Anonymous
Anonymous's picture

What can they do to you? Didn't they change the law so they can garnish wages if you don't pay all your maxed out cards?

Mon, 09/14/2009 - 08:09 | 68566 Spartacus
Spartacus's picture

Goldman’s O’Neill Sees ‘Silly September’ as Yen Appreciates

http://www.bloomberg.com/apps/news?pid=20601087&sid=abvf8tiNFG74 Look at this arsehole's arrogance. Scant regard for Japanese, I would say.
Sun, 09/13/2009 - 22:59 | 68427 Pizza Delivery Man
Pizza Delivery Man's picture

"The bankers will tell you that our long-term structural problems reside in the banks (which is why they needed our help in the first place, remember?), but in reality this is a consumer driven problem."

Actually, in reality the real problem is the government. The relationship between the consumer and the banker were brought together by the government. This is understandble. There were people who wanted votes, they offered people things they couldn't afford, and the politicians influenced GSE's to provide what (the politicians) promised. That behavior cascaded through every facet of our economy and as such we were ushered into the age of irresponsibility.

This problem in it's origin began with politicians promising things to people they couldn't afford...The very first dominos that fell didn't begin with investment banks, it began with GSE's (FNM/FRE). As unpopular as this might sound WS banks were a victim, just like the consumer.

Business is based on trust. When the trust is gone, it's time to move on...

Mon, 09/14/2009 - 05:50 | 68537 Anonymous
Anonymous's picture

WS banks were a victim? Just like the consumer (was a victim?)

I thought I'd heard everything, but, there YOU are.

The only victims here are those who saved their money, consumed frugally, and paid their bills on time.

We have gone thru looking glass, Alice.

Mon, 09/14/2009 - 08:20 | 68571 SlimeyLimey
SlimeyLimey's picture

... and people believing them.

"This problem in it's origin began with politicians promising things to people they couldn't afford..."

Mon, 09/14/2009 - 09:06 | 68593 Anonymous
Anonymous's picture

"There were people who wanted votes, they offered people things they couldn't afford, and the politicians influenced GSE's to provide what (the politicians) promised."

Actually the problem lies with people who believed the promises that politicians made but should have rejected as untenable.

Mon, 09/14/2009 - 13:53 | 68873 cougar_w
cougar_w's picture

OK, self-serving pols are a huge part of the problem.

However, they have been bought by the financial industry (remember the repeal of G/S?) therefore much of what they do that is wrong is at the behest of their masters.

The fact that a few large financial institutions were allowed to implode (Lehman) or be absorbed (Merrill) is meaningless as it works in favor of certain other financial giants, who had it in for Lehman for sure.

The fact that regional banks are going belly up is likewise meaningless for the same reason.

That shareholders are being punished is meaningless because the playerz pulling the strings are making off with the loot, and will create new enterprises with their winnings or just sit back and watch Rome burn.

Let's not confuse the financials industry with key playerz; the playerz have no more loyalty to their industry than they do to the taxpayers, and see businesses as hosts to be bled dry. This has been going on for 30 years, and is a large part of the reason that America has lost such a huge portion of its manufacturing base to offshoring and outsourcing. Shareholders will be burned, but most of the participants in the industry itself are now playing the end game and just want to maximise their individual wealth until the wheels come off.

At all turns in this drama the taxpayers will pay. Bailing out failed banks looted into bankruptcy, paying bonuses, rescuing depositors and shareholders. Bled until there is nothing left. And after that, the taxpayers get the ashes.

Maybe it had to be this way. Maybe it always would end like this. But it's a sad commentary, and probably the idea of free-market capitalism at the global scale will die as a result. I don't know what comes after, but you might have to look back 600 years to recognize it.

Sun, 09/13/2009 - 23:08 | 68431 Anonymous
Anonymous's picture

there is a great article by barry eichengreen http://en.wikipedia.org/wiki/Barry_Eichengreen

in the sept oct issue of foreign affairs about the dollar's stance as international reserve currency and the likely future of the SDR, the renminbi and the yen.

i'm no expert and i defer to barry's expertise in his claim that the tremendous inertia behind the system impedes any sudden changes to the status quo, but I think he doesn't give enough treatment to changes in political/military developements that could result in various nations rapidly changing their policies vis vis reserve currrencies and the imf.

furthermore, he doesn't mention russia and opec's push to sell oil in non-dollar currencies. And i believe that is relevant to the discussion.

i really feel that someone from zerohedge should post the article, or call barry and at least put up some discussion or a posting on it.

Sun, 09/13/2009 - 23:44 | 68443 Anonymous
Anonymous's picture

I don't see any miraculous new productivity gains (like debt securitization of the '80s, or the PC of the '90s, or real estate flipping of the '00s, etc.) coming along anytime soon to drag us out of this great recession... I think many Americans are taking this opportunity to permanently stop adding more crap made in China to their overflowing houses. Consuming is so yesterday! Let's instead take this opportunity to improve our world by picking-up some trash or coaching little league or putting burning bags of dog shit on bank execs doorsteps or something more life-enriching like that.

Mon, 09/14/2009 - 01:01 | 68491 Anonymous
Anonymous's picture

I like all those suggestions ;-))

Sun, 09/13/2009 - 23:44 | 68444 KeyserSöze
KeyserSöze's picture

Chapter 2  is called "The Name of the Game is Bailout" Creature from Jekyl Island  -1998  (Surmized from previous books see ZH for links on Mullins)

I am getting kinda sick of people thinking that Ben is stupid.  ...STOP!

They have managed to convince many of us that debt is good as if it is noble to have debt and credit much like a crack addict who needs a fix. 

I am not trying to be insulting just rather pissed at what we as country have allowed ourselves to become, stupid -mindless  collective drones who accept the status quo and believe that these people are stupid.  Seriously...

BEN AND ALL THE BANKERS KNOW EXACTLY WHAT THE F&*K THEY ARE DOING, WE JUST REFUSE TO EXCEPT THE REALITY THAT SOMETHING LIKE THIS EXISTS IN THIS "FREE COUNTRY". 

At some point there will be a very rude awakening. Very rude awakening! 

We (as a country) will either shrivel in the corner like the meager politically correct sheep we have become or they will be thrown out on their ass like Andrew Jackson did....judging by our fat uneducated population I think we are in BIG BIG trouble....

Mon, 09/14/2009 - 00:17 | 68467 Anonymous
Anonymous's picture

When the music stops, some people are going to find out that there are more angry people with weapons than the giant piles of cash can stop.

Some of those pulling the levers have lost sight of the simple fact that when push comes to shove, they're vastly outnumbered. If the pitchforks come out, no government, police force, or military can save them.

This is a simple military fact.

Mon, 09/14/2009 - 10:29 | 68661 chumbawamba
chumbawamba's picture

That's why they have Blackwater.  Er, I'm sorry, Xe.

I am Chumbawamba.

Mon, 09/14/2009 - 10:34 | 68667 Anonymous
Anonymous's picture

That's very true. I don't think the powers that be realize that if the general population reaches a breaking point they will full on kill them. I think our corporate overlords can only comprehend the consequences in terms of finance or lawsuits. They need to realize that their lives could be at risk.

Right now my fear isn't the people at large but one or two completely broken disillusioned folks gradually morphing into the next McVeigh with Wall St. in the cross hairs.

Mon, 09/14/2009 - 13:44 | 68853 Anonymous
Anonymous's picture

What are these angry mobs even waiting for if it's such a forgone conclusion? Lack of balls?

Mon, 09/14/2009 - 13:58 | 68876 cougar_w
cougar_w's picture

There will be no revolution. The spirit of forging one's own destiny was lost 3 generations ago.

And we are 3 generations away from getting that spirit back. but 60 years of deprivations will certainly do the job.

cougar

Mon, 09/14/2009 - 11:08 | 68694 Anonymous
Anonymous's picture

I can tell you that I was in DC on Saturday for the march. I'd say there were enough pissed off (Taxpayers) people to pack about 8-9 Rose Bowls.

Mon, 09/14/2009 - 14:00 | 68879 cougar_w
cougar_w's picture

That many people could be rounded up and sent to Wyoming within 3 hours.

When we get to 40 million people at the barricades, I'll be impressed.

cougar

Sun, 09/13/2009 - 23:45 | 68445 MinnesotaNice
MinnesotaNice's picture

Very well written paper...

"As Anna Schwartz said, we are fighting "the last war" and she is deeply concerned that we have lost it."

I am with Anna on this one... that is what I feel everyday...

Mon, 09/14/2009 - 00:13 | 68461 TheGoodDoctor
TheGoodDoctor's picture

What is "the last war"?

Mon, 09/14/2009 - 00:54 | 68487 MinnesotaNice
MinnesotaNice's picture

It is referenced in the article referring to the 'boom-bust' economic cycles that we keep creating... we will eventually loose the 'war' and it will be one big 'bust'.

Mon, 09/14/2009 - 13:14 | 68798 ZerOhead
ZerOhead's picture

Speaking of busts... the one shining thing about these high unemployment levels is that the quality of strippers in the clubs has never been better!

Mon, 09/14/2009 - 00:35 | 68476 Hephasteus
Hephasteus's picture

I can't agree with ya. This "thing" is getting it's butt kicked. Harder and harder day after day.

Mon, 09/14/2009 - 00:56 | 68488 MinnesotaNice
MinnesotaNice's picture

Anna is referring to the futility of the boom-bust cycles we keep creating... the jig will be up and it will just be a big 'bust'.

Mon, 09/14/2009 - 15:33 | 69027 cougar_w
cougar_w's picture

Seems like TPTB assume the occilations are self-damping. They don't have to been. The system may have no stable equilibrium toward which it swings. If not, it may eventually swing far enough to one extreme to break.

A broken system does not come back. It is replaced. Replacement is a very ugly and long-term prospect from which nothing now present will emerge intact.

cougar

Sun, 09/13/2009 - 23:45 | 68447 lynnybee
lynnybee's picture

You can lead a customer to the store, but, you cannot make him open his wallet.

 

 

Sun, 09/13/2009 - 23:47 | 68448 alien-IQ
alien-IQ's picture

Slightly off topic but I thought I'd mention something that was brought to my attention

Sept. 11, 2001 Dow closed @ 9605

Sept. 11, 2009 Dow closed @ 9605

What are the odds of this? Is this mere coincidence?

Mon, 09/14/2009 - 00:15 | 68464 Pizza Delivery Man
Pizza Delivery Man's picture

No...Goldman Sachs planned it

jk

Mon, 09/14/2009 - 05:22 | 68532 Anonymous
Anonymous's picture

there is absolutely no chance of that happening
as a random act of kindness but certainly as a
planned act of cruelty....

that was a signal from the oligarchy to other
oligarchists that they are in control and
that some traumatic event is imminent....

shit is going to fly by the barrel....my guess
is that 20 days from now or on 9/20 we will see a dramatic
catastrophe either in the states or overseas....

this is not a joke....the rockefellers, bundys,
harrimans, bushes, and windsors have something
evil in store for us....

Mon, 09/14/2009 - 08:50 | 68584 Anonymous
Anonymous's picture

after looking at the calendar i say that we are 20 business
days from a mess....

Mon, 09/14/2009 - 12:21 | 68743 perfectlyGoodWh...
perfectlyGoodWhiteBoy's picture

We didn't trade on Sept 11.

Sun, 09/13/2009 - 23:52 | 68449 Lionhead
Lionhead's picture

Here's some real time proof of lack of consumer green shoots. As an ex Customs broker, this time of year should be the busiest for imports. Not this time; watch Dry Ships stock zoom tomorrow. Extremely bullish...

http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html

 

Mon, 09/14/2009 - 09:40 | 68616 Anonymous
Anonymous's picture

I happened to drive the length of the Long Beach (California) port 10 days. Hardly saw a ship. Having never been there before I thought 'Maybe it's because it's Sunday....'

Mon, 09/14/2009 - 16:11 | 69105 Anonymous
Anonymous's picture

And acres upon acres of U-P locos and train cars are being parked on the storage rails in San Bernardino, CA.

Even the hobos are complaining about transportation problems.

Nuthin' like a good old fashioned post-recession inventory ramp up.

YeeHaw !!!

Sun, 09/13/2009 - 23:55 | 68450 Anonymous
Anonymous's picture

What happens with simultanneous asset deflation and currency implosion...our houses and all the crap we buy is getting cheaper, but the dollar is cratering at the same time...

What would things look like with a strong dollar....it would be horrific...

Mon, 09/14/2009 - 00:13 | 68454 TumblingDice
TumblingDice's picture

"We can be certain that Christmas 2009 will be disappointing for everyone's children in the United States except for those whose parents are employees of Goldman Sachs and JP Morgan - record bonuses are coming."

A hopeless optimist might interpret this as a good trend. Maybe will see the decoupling of happiness from money. (indeed this could lead to a decoupling of our society from this dirty money that we know as the federal reserve note... *fingers crossed*)

They might get a Lexus for Christmas but they'll have to wonder why everyone hates their daddy. Children of The Salt of the Earth will hopefully find that family and friends are the true measures of wealth.

Mon, 09/14/2009 - 00:21 | 68468 Pizza Delivery Man
Pizza Delivery Man's picture

Goldman Sachs/JPM didn't steal from the taxpayer.

Government officials GAVE them the money.

If traders at GS/JPM are driving nice cars on your dime don't blame them...

Look at the politicians who handed it to them on a silver platter.

If someone gave me a million dollars...I'd take it.

Mon, 09/14/2009 - 01:44 | 68503 Anonymous
Anonymous's picture

The reason the government gave them the money is because GS/JPM gave politicians substantial campaign contributions. If GS/JPM is buying influence so that politicians act on their behalf at the expense of the general interest, then I will go ahead and blame them as well.

PS: I love this site.

Mon, 09/14/2009 - 04:06 | 68526 Anonymous
Anonymous's picture

it takes two to tango.

Mon, 09/14/2009 - 04:40 | 68528 Anonymous
Anonymous's picture

Good grief !!

Who was it who gave all that stolen money to
Goldman Sux & JP Mendacious PDM???
Would it have been Hanky Panky.
His former employer being???
Who does BBernanke work for??
Either you are very dry with your sense of humour or a GS troll.
regards

Mon, 09/14/2009 - 00:26 | 68472 JohnKing
JohnKing's picture

Not to worry about the holidays, Obama will be rolling out "Cash for Christmas".

Mon, 09/14/2009 - 00:08 | 68456 kujo
kujo's picture

Falling tax reciepts will be the next crisis; beyond what we are already seeing on state levels, especially in small towns and rural counties. The scourge of rural America, meth, is comsuming all available resourses in terms of law enforcement and health care and family services and the very soul of many of these communties. We have to figure some way to deal with this or we risk the very backbone of our country. I think we start by becoming active on a local level economocally and politically. Get to know your neighbors, start co-ops, neighborhood watches, whatever.  It's really the only way to build any type of political power.  This may be our only hope for a peaceful resolution. People are pissed, those who are paying attention anyway.

Mon, 09/14/2009 - 00:45 | 68481 Anonymous
Anonymous's picture

As a muni analyst, I can assure the dear readers that the above post is true. Municipalities mostly rely on property taxes to fund operations. Furthermore, in almost all states the local govt. receives its share of property taxes based on the prior years' valuations. I.e. The City of Cleveland, OH, is right now receiving tax receipts based on Jan. 1, 2008 valuations. Assuming that the county assessors do their job correctly, and reflect the devaluation of real estate from 1/1/08 to 1/1/09, we could see revenue drops of 10-30% from today's already reduced levels.

Mon, 09/14/2009 - 13:08 | 68788 ZerOhead
ZerOhead's picture

I thought the mil rates were derived from the municipal budget divided by total assessed value base. Property value drop would not affect net municipal receipts. The revenue drop would be  primarily due to those who could not pay the taxes... they'll get that back when they foreclose... maybe.

Mon, 09/14/2009 - 06:49 | 68547 bonddude
bonddude's picture

US federal income tax projected at down 38% has been all over the news.

By the way-people do know their "neighbors". Have you seen the gun and ammo sales?

Mon, 09/14/2009 - 07:50 | 68561 kujo
kujo's picture

That's beautiful

Mon, 09/14/2009 - 13:09 | 68791 ZerOhead
ZerOhead's picture

In an ugly kinda way...

Mon, 09/14/2009 - 00:15 | 68463 Handle with care
Handle with care's picture

I think Stiglitz puts it perfectly  "Too often, we confuse ends with means. ... a financial sector is a means to a more productive economy, not an end in itself."

 

Pouring trillions into attempting to restore an artificially pumped up financial sector to its bubble levels was not the best use of a nation's treasure.  Now that money is gone, the funds aren't there to rebuild and support the truly wealth creating parts of the economy.

 

This may go down in history as the decision that doomed a nation.  America doesn't have enough money (or credit) to try again.  It was a one shot deal and the chance was wasted.  And the tragic thing is that the people knew it was the wrong decision and their leaders ignored their protests and gave the money to the banks anyway.

Mon, 09/14/2009 - 06:53 | 68549 bonddude
bonddude's picture

"zombie" up those banks then feed them the soylent green (or Obama care).

Mon, 09/14/2009 - 00:16 | 68465 JR
JR's picture

Obama’s speech today in Federal Hall on Wall Street in New York is intended to stampede the bulls on Wall Street; and without a Zero Hedge debt cap to hold the banker herd back, every single piece of property that Americans own is sure to get trampled in the onrush of socialism for the bankers.

For what’s good for the bankers, in Obamaspeak, is good for the greater good of all, i.e., you.

More eruditely, as anthropologist Lewis Henry Morgan put it in his “masterpiece” that inspired Marx and Engels: “The interests of society (Obama’s and the bankers’) are paramount to individual interests, and the two must be brought into just and harmonious relations.  A mere property career (ie the building of your little homestead and nest egg) is not the final destiny of mankind, if progress (continued central control in the hands of the bankers) is to be the law of the future as it has been of the past.”   Harrumph…

Or more simply put by Michelle Obama in 2008: “The truth is, in order to get things like universal health care and a revamped education system, then someone is going to have to give up a piece of their pie so that someone else can have more.”

That someone who’s “going to have to give up a piece of their pie” is you.

Yours and Michelle’s “pie,” of course, is the private property, savings and income you have earned from years of careful planning, hard work, pursuing ambition, innovation and, more often than not, a lifetime of sacrifice.

As the government slices off more of your “pie” for its growing legions of non-taxpayers and non-producers and other feeders at its lavish table, a few groans of angry protest can be heard ‘neath the growing crush of its taxes and inflation, i.e.,  “mobs” in previously “civil” town halls; a “racist heckler” in the sacred hall of Congress…

Sadly, Americans can shout all they want…and the trillions will still flow to the banks of the Potomac as their cries fall upon the deaf ears of the feeders.  But try holding back your tax payment to voice a legitimate protest against a predatory, corrupt government and the reaction will be so fast your won’t know what hit. A knock on the door by the iron fist of government can take your house and everything you own. Wages can be garnished, credit frozen, your job gone…  Such is the status of free speech in America, circa 2009.

These modern days the biggest chill on free speech is not embarrassment, ridicule or even fear of bodily harm, nor fear of fine and imprisonment as retribution for non payment. No, the chill that’s constantly hanging overhead is threat by the state to confiscate all your property and throw your family out into the streets.

Such power to silence is not unique.  Sam Adams had difficulty in persuading people to stand with him in criticism of one of the world’s most powerful military governments—the British Monarchy.   Lord North no doubt had Adams’ name written down and on his list of troublemakers for when the trials began.

Adams was likely the poorest signer of the Declaration of Independence.  His friends had to provide him with a suit and the money to travel from Boston to Philadelphia. The signers pledged life, honor and fortune above their names, but Adams had already allowed a prosperous business to fall apart in his relentless drive for American independence. Ironically, it was Adams who years before had demonstrated that the “essential natural rights” of British citizens established by British law could not be legally violated by Parliament. One of those rights, he said, was the right of every man of “quietly enjoying and having the sole disposal of his property.” Now, says Michelle Obama, that “pie” must be shared so “someone else can have more.”

The great libertarian author Isabel Paterson called property rights nothing less than the essential foundation for liberty:

“How can a man speak freely if there is no spot on which he and his audience have the right to stand? How can he practice his religion if he has no right to own a religious edifice, or to his own person? How is a free press to exist if the materials are not in private ownership?”

With our government’s assault on property rights, with the chilling of free speech lately expressed in the “just shut up” remarks by the president of the United States, Americans need, nay must, direct this banker-driven socialist train from Hell to a dead-end siding track.

Mon, 09/14/2009 - 00:20 | 68469 Anonymous
Anonymous's picture

If they want my pie, they can damn well come and try to take it.

Mon, 09/14/2009 - 06:59 | 68551 bonddude
bonddude's picture

Adams was a great lawyer and a great and honest man.

Mon, 09/14/2009 - 00:25 | 68470 JohnKing
JohnKing's picture

We should think about abolishing the Fed.

Mon, 09/14/2009 - 00:31 | 68475 digalert
digalert's picture

The consumer (fuel) is empty. While uncle Ben plays his games, Timmy lies while issuing more bonds, Obama is in n. dakota or wherever the hell he went, congress plays their political bickering and America marches on Washington. Corruption is at the top, the prez is lying, congress is lying, MSM is lying and the crooks are allowed to carry on in broad daylight. With them they bring unemployment, stagnant wages, halfed 401k's, halfed home equity, debt up the gazzoo, restricted credit/lending, distrust, higher taxes and empty wallets. Sorry uncle Sam but this train has run of gas. Can we push for CAP & TAX now.

Mon, 09/14/2009 - 00:46 | 68482 Budd Fox
Budd Fox's picture

I love this website..I think it gives an unusual angle, and it has interesting insights (not insiders..LOL) on markets.

But I would like to try to bring everyone back on a more objective path than the one of black helicopters (jettisonig dollars or not..) and evil Govt.

Bernanke's most relevant academic achievement was studying the Great Depression.

Now, even after this "unrealistic" rally, the proportionate decline in stock market's wealth remains greater than the Great Depression.

Global trade volumes have just barely upticked from a downward spiral that position them proportionately lower than tthe Great Depression at the same stage.

What Bernanke's has observed, was that at this phase in the Great Depression, monetary policy was too tight and began, erroneously, to be tightened again...causing the long slide down in Industrial Production that ended only in 1937.

Byall indexes we are tracking or doing worse than the Great Depression numbers so far...except in World Industrial Production which is showing signs of an uptick...that we don't know if it is due just to stock replenishings or will turn in a real green shoot.

Only sure thing is Central Bank discount rates are far lower than they were then and that money supply is far higher than it was then.....although so far the speed of circulation and the growth of M2 and M3 velocity...have not turned yet.

That is what terrifies the Fed...and will have them keeping increasing the money supply...even jettisoning it from helicopters.

The rally in stocks will continue in synch with the monetary policy, so keep staying long..as the tape is telling everyone.

Gold skyrockets only because is a sort of "neutral" currency and investors everywhere perceive the fiat money creation as a threat they have to hedged against...that's all.

The question is simple...if the people running the monetary policy are the evil criminals you all are lamenting....what else the could have done?

What alternative they had?

Let the soup queues happen ? Let the economy "heal itself" causing MUCH more pain to joe sixpack of what he is enduring now??

What else these guys should have done ? 

Mon, 09/14/2009 - 01:03 | 68493 JohnKing
JohnKing's picture

They should have let failure happen. If you run an institution levered at 30 or 40 to 1 you need to be in an institution. This notion that "they had to do something" is erroneous as we are seeing the fruit of that particular "we have do something" being played out now. IBs still playing games at the expense of the economy. Like an earlier post or poster said, the financial industry is a support mechanism for the economy, not to be confused with the economy itself.

If Kamikaze Ben had dumped all of his recent malinvestment into job producing businesses, we would have an economy. Why weren't local banks getting wet with Bennies dollar shower?

Mon, 09/14/2009 - 01:24 | 68498 apache10
apache10's picture

Amen, brother!

Mon, 09/14/2009 - 05:35 | 68534 Anonymous
Anonymous's picture

precisely correct....as the pace of life has
accelerated relentlessly (because of the debt
based and chronically inflated / debased frn)
and as control freak
type a personalities have come to power creating
emergencies and panics ex nihilo so has the
shrill call to do something....it is a false
and evil call - all contrived but camoflaged
by plausible deniability....

doing something only advances the cause of the
plutocratic elite as it deepens their claws into
the body of the nation....it is the reichstag
fire to put out the flames of independence
and freedom....

liquidate the failed banks, reinforce moral
hazard, and open the soup lines until recovery
appears - preferably on the carcasses of dead
banksters and oligarchists....

and reintroduce a moral currency - gold....

Mon, 09/14/2009 - 01:05 | 68494 michigan independant
michigan independant's picture

Support HR1207 Phil Gramm right? Oh, the food banks do need your help.

And yes many seen this coming before you. The joke how many work here, about half.

Mon, 09/14/2009 - 05:58 | 68539 Anonymous
Anonymous's picture

Was it too much to ask for Paulson to set up an audit committee to assure that the money he gave------ $3000,000,000,0000------- to the IBs, AIG, came to them with at least one word of accountability? Does it seen kosher to you that a two page document asking "how much do you want?" don't tell me what you want it for, was a horrendous ripoff of the people?

Does that strike you as something he could have done, that any fiduciary would have done?

That's for starters.

Absent that single tactic, one realizes that Paulson didn't give a shit because his only concern was to make certain Goldman Sucks, Lord Blankfein, and Jamie Dimon at JPMorgan
continue to run the world as joint Kings, the people be damned.

Mon, 09/14/2009 - 07:24 | 68553 bonddude
bonddude's picture

Well now isn't that the point? They HAVEN'T even done what the fuck they said they would with all the stim,tarp,shovel ready blah,blah,blah...not nearly.

Instead, they bought the GSEs after over-inflating their balance sheets by letting every Tom, Dick and Harry pee in the "pools", crammed down the legal and prior positioned bond holders in favor of an ineffective auto workforce while "firing" the and CEOs gave away all kinds of money to spurious projects that were straight ripoffs (Barofsky-haven't heard that name much) etc,etc,etc...

 

Mon, 09/14/2009 - 11:14 | 68702 JR
JR's picture

Budd Fox, you ask, even if the people running the monetary policy are the evil criminals that many here are lamenting, what else could Bernanke have done but increase the money supply, even jettisoning it from helicopters, understanding as he does that at this stage in the GD monetary policy was tight and tightening--"causing the long slide down" in the 1930s in Industrial Production. 

Let me answer that. He could start by telling us where he's dropped all those trillions in dollars of our money that he's refusing to reveal.  Secondly, The Pragmatic Capitalist gives a pretty good list of "what else" Ben's already done in this stage of our “recession” as he studies it in parallel with that of the Great Depression. Says PC, Bernanke's real report card is less than impressive (when graded by we the victims, of course, not the bankers:

  • 4 million lost jobs
  • 4.6 percentage point surge in the unemployment rate
  • 20% decline in the S&P 500
  • 30% plunge in house values
  • A 3.5% reduction in real GDP per capita
  • 11% decline in the trade-weighed dollar
  • 109 failed banks (almost matching the total from the prior 13 years combined).

As far as the bankers are concerned, Professor Ben gets a big red apple, of course.

Take a look at who just got bigger as the economy boomed and busted from their bubbles and derivatives gambling, and as the stock market resumes its upward drift off the transferred wealth of taxpayers, retirees and savers.  For that matter, take a look at the capsized investment ships lying wrecked under water from all the bankers’ booms and busts, and then take a look at which vessels again are bringing back to port the untold riches that once were the property of someone else.

Do the names JPMorgan (Rothschild)/Goldman Sachs et al. strike a familiar note?

Mon, 09/14/2009 - 01:02 | 68492 Anonymous
Anonymous's picture

Budd Foxx, read about the 1920 depression. Never heard of it - most people haven't. Industrial production and GDP numbers fell through the floor. FED and Fed. government did NOT do a thing. Some pain and I believe growth continued after 18 months.
We live in a pain free, recession free, fat free, consequence free, failure free illusory world.

Mon, 09/14/2009 - 01:20 | 68497 Anonymous
Anonymous's picture

"straightershooter" has it right.

Those consumers who aren't already "dead" - broke, unemployed,without prospects - are in JUSTIFIABLE
fear that they will soon end up that way too.

Virtually every family in America has relatives or
friends who are sunk or tapped out. When that happens,
it's time to "swing out the lifeboats" - chop spending
to what is absolutely essential, save everything you can,
pay down and eliminate as much debt as possible, and
"stock up" on emergency essentials -canned goods, dry
stores, and above all GUNS AND AMMUNITION.

No amount of propaganda from Barry O. is going to change this. Bankster bonuses and ersatz "stock market rallies"
will only fuel a tectonic anger that is building as we speak.

The "tea parties" over health care will seem like a picnic
once GS and JPM announce their Christmas bonuses ....

Mon, 09/14/2009 - 02:36 | 68518 Anonymous
Anonymous's picture

great post you quoted some of the greats perfectly and succinctly. The time bomb cometh.

Mon, 09/14/2009 - 02:42 | 68520 Anonymous
Anonymous's picture

meanwhile chicago area malls looking filled again like its 199. we are conditioned to believe the recovery ??

Mon, 09/14/2009 - 10:29 | 68660 Thoreau
Thoreau's picture

i've noticed the same phenomena in georgia - around atlanta. folks are shopping/spending like madmen. one last drunken orgy.

Mon, 09/14/2009 - 04:46 | 68530 Anonymous
Anonymous's picture

Thanks for all the solutions/alternatives offered in this article!

I guess some people just like to complain...

Mon, 09/14/2009 - 05:44 | 68536 Anonymous
Anonymous's picture

Failure will happen. At the time of the great depression, America had the worlds largest reserves of natural wealth, Oil, Minerals, Labor in the world.

From this, we fared rather well in WWII, and enjoyed a very long expansionary cycle that probably will not be repeated.

The US situation, namely, net importer of oil and just about everything else, paper currency not backed by anything of real value, and a feckless and greedy populace not accustomed to actually working for a living, does not portend a happy ending, IMO.

Good luck.

Mon, 09/14/2009 - 12:55 | 68767 McGriffen
McGriffen's picture

I don't think meat & sugar rations during WWII count as "faring well"...lol

Post world-war II, i think the GI bill and Eisenhower's bad boy called the interstate highway helped tremendously (in addition to the MArshall plan to rebuild European trading partners).

The US sits on stores of natural gas and coal, top 5 ranking world-wide in both.  But we can't be troubled to access or export those, since we all know, it's just 'dirty' stuff and bad for you.

Mon, 09/14/2009 - 06:33 | 68545 Basque
Basque's picture

An economic depression is formed by poverty not by excessive wealth.

Wealth is created in production processes and destroyed in consumption, so, obviously, necessarily, a depression is due to weak production and can not be due to an insufficient consumption. This is, should be, obvious.

In ancien times, economíes were barter economies. Our modern economies are barter economies. All economies, at a fundamental level, are always barter economies.

If consumers can not buy enough this is not due to weak demand but a weak offer. The problem of unemployment, which affects consumers, is not due to a shortage of jobs but a shortage of wages. (Real) Wages are not formed by dollars but by the real goods that can be bought with those dollars. Real wages are formed by actual production so that unemployment is due to a shortage of production rather than overproduction.

All this is what provides the most basic law of economics, Say's Law. The size of the demand must necessarily be equal to the size of the offer, not because a complex and mysterious mechanism equalize these two quantities, as Keynes, who always was an perfect idiot, thought but by a much more fundamental reason: the size of the aggregate demand must necessarily be equal to the size of the aggregate offer simply because the aggregate demand and the aggregate offer are the same thing.

In the economy we have a shoemaker buying bread and paying the purchase with shoes. If not sold enough bread is because there are not enough shoe production. Poverty is always due to insufficient production.

How is it possible that suffering the american economy a massive overcapacity of production americans fail to create the wealth that will save them from depression? Americans suffer an economic depression because they are too rich? Because they produce so much wealth that then they can not buy all that excessive wealth? Of course not. Only an idiot as Keynes would think something so absurd.

The american economy is not suffering from overcapacity of production. The problem of the american economy is, of course, the opposite: the american econmy does not have sufficient capacity to produce wealth, so americans are moving into poverty.

A producer is always also a consumer. A baker produces bread but consumes flour.

Are General Motors o Ford, the car makers, americans producers o american consumers? Well, they are american consumers, big, monstruous consumers disguised as producers. The greater the activity of GM poorest will be america, just because GM is a huge disguised consumer. A car manufacturer produces wealth (cars) but also consumes wealth (labor, energy, steel). The (net) production value is the difference between the value of what it produces and the value of what it consumes.

As the value of steel, labor and energy consumed by american car manufacturers is greater than the value of cars they produce, their production is a negative output. Is consumption, not production.

Thus the problem of the american economy is over-consumption and insufficient production. To fix this problem the first thing is to expose parasite gigant consumers disguised as producers.

Mon, 09/14/2009 - 12:51 | 68765 JR
JR's picture

Great analysis, Basque.

Mon, 09/14/2009 - 07:24 | 68554 Ned Zeppelin
Ned Zeppelin's picture

Interesting posts.  Went to a party Saturday and talked to a person in charge of hiring at a fixed income firm.  He said the party there is well underway, with multimillion dollar guarantees, bonuses and other goodies.  It has never been better, I was told, and these guys are making money like you would not believe.  Maybe this is all about trickledown economics; trader gets the Aston washed, hands the guy a $5 tip, guy with $5 tip buys macaroni and cheese for dinner. That works.

Pizza Delivery Man: GS and JPM didn't steal our money, the government gave it to them? Like a gift, a birthday present? I respectfully submit this is not how our corrupt political process works at that level.  No way. I personally am certain that GS and JPM demanded the money and our corrupt, "bought and paid for" and captive traitorous officials "gave" them my money. Hank Paulson is a poster child for this crowd. "What Goldman wants is good for all of us." Expressions of good intentions do not mask the nature of the transaction, one rooted in greed and corruption. I for one would like our AIG money back for starters.  I'd be pretty certain the "systemic risk" doctrine is doublespeak for "end of their economy," not mine.  I don't want fixed income traders to extravagantly prosper by extracting wealth while the common man struggles and our greater economy falters.  And I'm no communist or socialist, just anti-oligarch. I don't want to take their money away, but I sure never would have propped them up last fall. They should have all gone down, and We The People would have survived by the government and the Fed taking equally dramatic measures.  Rule by the elites (which is what we've got) is a disaster, as their greed and arrogance knows no boundaries, and it leads to violence.  French revolution and all that fun stuff. We need policies that benefit and enrich all, not the few.

The pitchforks will surely be there to greet them if they do not wake up and understand their prosperity under these circumstances is ultimately dangerous.

Rant mode off.

 

Mon, 09/14/2009 - 09:55 | 68632 Sancho Ponzi
Sancho Ponzi's picture

Those that think Paulson and others were not threatened during that now infamous meeting with the Bankster 9 are being naive. Anyone present at the meeting who denies there were threats is lying. Period.

Mon, 09/14/2009 - 13:06 | 68784 McGriffen
McGriffen's picture

I think Paulson was doing the threat-making...just like he did a few months later to Kenny.

"its like this fellas...head I am right, tails you are wrong"

Mon, 09/14/2009 - 15:02 | 68970 Anonymous
Anonymous's picture

Lessee:

Continued Poverty and Unemployment+Bankster Bonuses+
Unresponsive Government+Desperate Population that is
ARMED= Revolution.

Not as in 1776 - More like France 1789.

85 Broad St. is the New Bastille.

Jacobins and Thermidor - I can hardly wait.

Mon, 09/14/2009 - 08:00 | 68564 Anonymous
Anonymous's picture

The banks are pretty much guaranteed to topple over if they don't get broken up. 96% of notional derivative value rests in just the top 5 banks. Several of those banks are carrying 500 and 600 percent of their tangible equity as derivative market value on their balance sheets. To think, we thought is was necessary to break up ma bell, but the industry that holds us hostage gets a free pass and a multi-tiered bailout: http://boombustblog.com/Reggie-Middleton/1138-Any-objective-review-shows...

Mon, 09/14/2009 - 10:11 | 68646 Anonymous
Anonymous's picture

Isn't that how the banks were allowed to save themselves in the past by giving them bailout money so that they can make enough money ( trading currently) to slowly get rid off toxic assets without hurting their balance sheet and after that start making loans? This will take few years.

Mon, 09/14/2009 - 10:18 | 68651 Anonymous
Anonymous's picture

Was it really YOUR money?? Tapayers money yes, but inflated from the very fiat, credit, bubble creating policies that you now claim to despise.

Mon, 09/14/2009 - 11:40 | 68721 Anonymous
Anonymous's picture

I am like God, and God like me. I am as large as God, He is as small as I. He cannot above me, nor I beneath Him be. Silesius, 17th Century.

Mon, 09/14/2009 - 12:58 | 68770 Anonymous
Anonymous's picture

I run a small newspaper in Ohio. We've noticed recently several ads for trees. People in our town are digging up trees in their yards and trying to sell them. Imagine that.

Mon, 09/14/2009 - 14:43 | 68935 JR
JR's picture

The treeless recovery!

Mon, 09/14/2009 - 13:30 | 68828 Anonymous
Anonymous's picture

1) The policies set in place by the leaders of the marchers caused most of the current gov deficit

2) the removal of rules governing finance, denigration of the enforcement mechanisms, and subervsion of the judiciary by putting in "we think collective wisdom/law is bad" judges caused a lot of damage.

Its especially bad in LA and Orange Counties of California; many senior judges are Reagan Republican the law is bad judges (except for their friends who do quite nicely, thank you for asking). Thus many of the mortgage companies originating the crap placed themselves in those locals, knowing it was very unlikely they would have any problem with the origination of liar loans, packaged and sliced.

I believe the OC bankruptcy should have let them know they were not as smart as they thought. But no. They still think they are the smartest in the room.

3) Thieves such as Chumbawamba bragging about their stealing via credit cards and so forth as the smart way to go is fine as short term solution for selfish pigs themselves but bad for everyone as a whole.

I would argue, however, this country has enjoyed enormous wealth because, hitherto, its word was on the whole usually good. I could have made a lot more $ being a scumbag but whatever the difficulties I do not intend to start being a scumbag now. Nor one of the teabagging idiots, blaming the demos for messes their own caused or failed to prevent.

4) Bernacke and the rest of the higher level hacks are now the captian of a ship in the storm. Not responsible for the storm; trying what they can under difficult circumstances; and most east to 2nd guess.

Mon, 09/14/2009 - 14:33 | 68918 JR
JR's picture

Captain Bernanke was the bankers’ representative.  Nobody has ever been chairman of the Federal Reserve System without being selected by the Federal Reserve banking cartel.  The Federal Reserve banking cartel caused the storm and Captain Bernanke sailed the Good Ship U.S. right into the teeth of the winds.  And anybody who says the Captain was not part of the storm has credibility problems.

Mon, 09/14/2009 - 13:34 | 68832 Anonymous
Anonymous's picture

Dear Mr. President:

Please find below my suggestion for fixing America's economy.

Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan.

You can call it the Patriotic Retirement Plan:

There are about 40 million people over 50 in the work force.

Pay them $1 million a piece severance for early retirement with the following stipulations:

1) They MUST retire. Forty million job openings - Unemployment fixed.

2) They MUST buy a new American CAR. Forty million cars ordered- Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage- Housing Crisis fixed.

4) They MUST buy their own health insurance....... Health Plan for seniors just fixed!!!

It can't get any easier than that!

If more money is needed, have all members of Congress pay their taxes...

Mon, 09/14/2009 - 13:52 | 68867 Anonymous
Anonymous's picture

Regarding property tax rates, municipalities/library/school/park boards pass a budget, and those amounts are collected from each property owner. If property values go DOWN, then the tax rate per property goes UP. The amount of money to be collected stays constant.

Some assessors around the country are now lowering assessments on property. Those assessors are planning their future run at a higher political office (look, I'm the guy who lowered your property tax assessment!). The assessors also know that actual property taxes will not go down, the assessment just determines your relative percentage of what has to be paid. If everybody's tax rate goes down, but the amount levied by each unit of government stays the same (or even goes up) then how can anybody's taxes go down? It's a shell game.

And if you don't pay, government will take your property and sell it for the taxes owed. Whoever pays the unpaid taxes gets title to your property.

Do NOT follow this link or you will be banned from the site!