California signal of whats coming for FED http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/02/BAMA17D21B.DTL Sales taxes may fall short of already gloomy forecasts The state may get more bad fiscal news this week when the state controller makes his final tally of April sales taxes. It's no secret that the recession is taking a toll on the state's thinning coffers, but more troubling is that revenue is coming in slower than pessimistic forecasts. April, the state's largest tax-collection month, has fallen short of expected revenue by more than $1.8 billion in personal and corporate income taxes. The state was $750 million behind projected tax collection on April 1. There's good reason to believe April's sales tax receipts may disappoint, too. New car sales the first three months of this year fell by 43 percent compared with the same period last year, according a report last week by the California New Car Dealers Association. Auto-related sales tax (car sales, parts, etc.) make up about 20 percent of the state's sales tax receipts, said Paul Warren, a revenue and taxation analyst for the Legislative Analyst's Office. That adds to what should be another huge budget deficit for Gov. Arnold Schwarzenegger and the Legislature to wrangle over this summer. California's tax receipts so far are about $2.5 billion behind projections for the current fiscal year and the Legislative Analyst's Office forecast a revenue shortfall of $8 billion next year. If voters reject Proposition 1C (borrowing against future state lottery sales) along with 1D and 1E (shifting taxes for children and mental health programs to other uses), the state would be short another $6 billion. http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/03/BAMA17D21B.DTL This article appeared on page B - 2 of the San Francisco Chronicle © 2009 Hearst Communications Inc. | Privacy Policy | Feedback | RSS Feeds | FAQ | Site Index | Contact
I agree with most of your points. IMO the decline in tax revenue is the main reason why the fed pursued the QE policy (Bernacke probably realized this through his FedWire reports). I find it interesting you are shorting the dollar (I'm actually on the other side of the trade). Just curious, do you see both treasuries & the USD tanking simultaneously?