Corporate tax revenue plunged 45 percent Deficit Doink

Corporate tax revenue in the past five months has plunged 45 percent from a year earlier. Individual tax collections were the lowest since May, 1985.

This does not bode well for the future. I guess this explains why income tax rates are going up. It remains to be seen if corporation will end up paying more tax--unlikely. One thing is clear, we won't be seeing increases in capital gains taxes paid any time soon.
Also,

• budget deficit rose$192.8 billion (lower than forecast)
  
• revenue dropped 17 percent to $87.3 billion
  
• Rising foreclosures and 14 straight months of job losses are cutting tax receipts
• individual income taxes fell 64% to $8.7 billion (yikes, the lowest monthly total since May 1985)
• The deficit in 2008 totaled a record $459 billion

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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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Economists question budget's economic assumptions

Does anyone really know?

GDP plays the biggest role in determining the accuracy of deficit forecasts because weaker-than-expected growth swells government payments for such things as unemployment benefits and food stamps and reduces tax receipts.

True.

In its budget, the administration predicted that the overall economy, as measured by the gross domestic product, will shrink by 1.2 percent this year but will grow by a solid 3.2 percent in 2010. That growth would be followed by even stronger increases of 4 percent in 2011, 4.6 percent in 2012 and 4.2 percent in 2013.

Impossible to predict.

By contrast, the consensus of forecasters surveyed by Blue Chip Economic Indicators in February predicted that the GDP will fall by a larger 1.9 percent this year and then increase at weaker rates of 2.1 percent in 2010, 2.9 percent in 2011 and 2012 and 2.8 percent in 2013.

Everybody has an opinion.

"When a country is griped by a financial crisis, the ensuing downturn often lasts much longer than normal," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "I think this downturn is gong to last longer and the rebound will be fairly anemic."

Trends tend to persist.

But Mark Zandi, chief economist at Moody's Economy.com, said he believed the extent of the downturn will be more severe than the administration's forecast for this year and that this will prompt even larger policy responses on the part of the government, including increased help for homeowners facing foreclosure and another stimulus from Congress a year from now.

This guy is really smart, I bet even he hopes he is wrong.

Conclusion. Stocks going lower.

Source: Economists question budget's economic assumptions

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Bob DeMarco is a citizen journalist, blogger, and Caregiver. In addition to being an experienced writer he taught at the University of Georgia , managed on Wall Street at Bear Stearns, was CEO of IP Group, and is a mentor. Bob currently resides in Delray Beach, FL where he cares for his mother, Dorothy, who suffers from Alzheimer's disease. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. His content has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, BlogCritics, and a growing list of newspaper websites (15). Bob is actively seeking writing assignments and syndication.

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Food for thought on the Budget Deficit

One thing that is being overlooked in this budget deficit mess is payback. If these TARP loans get paid back the future deficits are likely to be better than is currently being forecast in the market.
New bull market down the road? Remember these factors always influence stock market action:

• Perception
• Better than expected
• Consumer and investor confidence

Feel free to comment or share you thoughts on this and the budget deficit.

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Restoring Financial Stability: How to Repair a Failed System (Wiley Finance)

$1.75 trillion Deficit

The big number is bad enough but this amounts to 12 percent of Gross Domestic Product. Once again I have to start wondering to myself, is the U.S. in for a future downgrade of its bonds. The thought of this is horrific.

Highlights:

• $250 billion in new aid to the financial industry (could be $750 billion)


• $635 billion for nation’s health-care system (first down payment)


• $75 billion this year for Iraq and Afghanistan war

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Sources and more information:
In President's Budget Plan, Broad Agenda and a Few Gaps
Obama’s Proposes Up to $750 Billion More for Bank Aid
Obama budget moves toward universal health care

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Option ARM--The Toxic Mortgage

Debt Binge--The Perfect Financial Storm

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Has Chinese reserve growth stopped?

I ran across an interesting discussion of Chinese external surpluses over on the Peterson Institute website. The article entitled Is China Losing Its Appetite for External Surpluses? contains an interesting discussion about China’s official holdings of foreign exchange reserves. Some are concluding that China is experiencing substantial capital outflows. Nicholas Hardy's take on the issue is that it could be explained by "the use of foreign exchange to clean up the balance sheet of the Agricultural Bank of China (ABC)".

Either way China's holdings of foreign exchange reserves bears close watching in the months ahead as this could become a major issue in both the stock and bond markets. Discussion and analysis of this issue is likely to create increased volatility in the bond markets. It might be a good idea to pay attention. This could also lead to some good trading opportunities.

In the past clean ups of the balance sheets of state-owned banks, the forex used was not transferred from official reserves to Central Huijin (which is now part of the China Investment Corporation, China’s sovereign wealth fund) until just before the clean up was undertaken. I believe this practice has not changed and that centrally funded write-offs of nonperforming loans of the Agricultural Bank of China could account for $90 billion to $100 billion of the “unexplained capital outflow” in the fourth quarter of 2008. Thus the combined centrally financed injection of capital, which has been reported, and nonperforming loan write offs, which have not been reported, for the Agricultural Bank of China could have reduced officially reported official foreign exchange holdings by $110 billion to $120 billion.

Is China Losing Its Appetite for External Surpluses?

exchange