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Wednesday, May 20, 2009

Great Recession Roundup — May 20, 2009

Items of Interest:

Michael Finnegan / Los Angeles Times:
California voters exercise their power — and that's the problem — Residents relish their role in the lawmaking process, but they share the blame for the state's severe dysfunction. — Californians are well known for periodic voter revolts, but on Tuesday they did more than just lash …

Tim Cavanaugh / Reason: Massive California ballot initiative fail
Eric Bailey / Los Angeles Times:
California voters kill budget measures — Only salary curbs survive in a rout of Schwarzenegger's slate of reforms — Reporting from Sacramento — The “big five” elected leaders — Schwarzenegger and the legislative chieftains from both houses — are slated to begin closed-door meetings today upon …
Carol Platt Liebau / Townhall.com: Slaughter the Sacred Cows!
Jennifer Steinhauer / New York Times:
Calif. Voters Reject Measures to Keep State Solvent — A smattering of California voters on Tuesday soundly rejected five ballot measures designed to keep the state solvent through the rest of the year. — The results dealt a severe setback to the state's fragile fiscal structure …
Megan McArdle:
Is California Too Big to Fail? — So what about California? A reader asks. Ummm, that's a tough one. No, wait, it's not: California is completely, totally, irreparably hosed. And not a little garden hose. More like this. Their outflow is bigger than their inflow...
Tom Golisano [billionaire founder of Paychex] / NY Post:
ADIOS, NEW YORK -- TAXED OUT OF THE STATE -- I LOVE New York. But how much should it cost to call New York home? Decades of out-of-control budgets, spending hikes and relentless borrowing have made New York simply too expensive.

Politicians like to talk about incentives -- for businesses to relocate, for example, or to get folks to buy local. After reviewing the new budget, I have identified the most compelling incentive of all: a major tax break immediately available to all New Yorkers. To be eligible, you need do only one thing: move out of New York state.

Last week I spent 90 minutes doing a couple of simple things -- registering to vote, changing my driver's license, filling out a domicile certificate and signing a homestead certificate -- in Florida. Combined with spending 184 days a year outside New York, these simple procedures will save me over $5 million in New York taxes annually...
Mark Thornton & Chetley Weise / Mises.org:
The Success of the Great Depression Tax Revolts [PDF] --
And the taxpayer, not content with thus ruining political science, added insult to injury by damning all its chief ornaments as thieves, and by swearing that he would never let them rook him again. His bellow was now for the most rigid economy, and he swore that he would have it if the heavens fell. There was no holding him while the fit was on him. In many American cities public expenditures were actually reduced.
The existence of tax revolts throughout America during the Great Depression is news to most people. Even trained historians are surprised to learn the about the existence of such tax revolts. American history textbooks and vehicles of popular culture such as motion pictures and novels are devoid of any information about such tax revolts. The Great Depression is generally thought of as a period of personal sacrifice, patriotism and comradely, not tax revolts.

Historians tend to downplay the role of tax revolts in history and even Charles Adams, the great historian of tax revolts, overlooks the tax resistance movement of the Great Depression...
NY Times:
Consumers Are Dealt a New Hand in Credit Cards -- At first glance, the sweeping credit card legislation that passed the Senate on Tuesday looks like a huge victory for consumers. The bill, after all, contains relief from penalty fees and certain interest rate spikes.

But for people who pay off their bills each month, and milk the card rewards programs for everything they’re worth, there is some cause for concern...
David Lazarus / LA Times: Credit Cards: Hurting the Good to Help the Bad
FT Alphaville.com
A delinquent spike -- So, by the end of Q1 this year, almost 8 per cent of all US single family mortgages were classified as delinquent. That’s up from 3.73 per cent year-on-year - and a jump from 1.6 per cent at the end of Q1 2006.

Note that this spike is in spite of all the housing relief measures introduced by the US Treasury - and is happening at a time when official US rates are close to zero...

delinquentcy rates: single-family residential mortgages
Calculated Risk:
Residential Rental Market and Inflation -- Goldman Sachs tracks the rents at a large number of apartment REITs - and rents are now falling (excerpted from research report with permission):
REITs tend to adjust more rapidly to changing market conditions than the typical landlord, so changes in their behavior are useful signals of turns in the market ... Public REITs typically report the rent increases they have achieved on a year-over-year, comparable-unit basis with each quarterly filing. ... [the tracked] REITS managed 300,000 units that were comparable to the year-before period in the first quarter of 2009 ... In the first quarter of 2009, the major REITs collectively reported an outright decline in rents for the first time since 2004...

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia