Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

So many executive orders, so much twitter. What to do? Well, discuss it here for one...

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TrueTexan
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Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by TrueTexan »

Be prepared for a rough ride not just because of the pandemic but the long lasting after effects.
The coronavirus pandemic is not only a massive health crisis — it is also a massive economic crisis. Economist and long-time New York Times columnist Paul Krugman has warned that “markets are implicitly predicting not just a recession, but multiple years of economic weakness.” And similarly, journalist Catherine Rampell, this week in her Washington Post column, outlines some of the many ways in which the pandemic could inflict economic misery on state and local governments in the United States for “some time to come.”

“States are facing huge shortages — and not just of ventilators, masks and health-care personnel,” Rampell warns. “They’re about to confront enormous budget shortages too. This is the sleeper issue of the current economic crisis, and aiding states now could well be the difference between a brief recession and a prolonged depression.”

States, Rampell explains, will likely be facing a “major drop” in tax revenue — from sales taxes to income taxes.

“Among the biggest problems are the expected declines in sales tax collections, which make up about a third of state revenue,” Rampell asserts. “With millions of retail stores, restaurants and other businesses shuttered, sales on which those taxes are based have stopped. Even the early-pandemic panic-buying is unlikely to help because groceries, medications and other necessities are often exempt from sales taxes.”

At the local level, Rampell adds, a sharp decline in revenue from property taxes is another strong possibility.

“Tax money that would normally be withheld from people’s paychecks this year will also be depressed while people are out of work, suggesting revenue shortfalls will continue for a while,” Rampell notes. “Depending on how long layoffs last, they could eventually start to depress property values too — and thus, the property taxes that disproportionately pay for schools and local services. Which suggests there could be reverberating fiscal effects for years after this pandemic ends.”

Different states, according to Rampell, are likely to be hurting in different ways — and that includes states “whose economies are especially dependent on tourism” such as Florida and Nevada as well as states with energy-driven economies like Texas and Oklahoma. And because of “stock market declines,” Rampell observes, states that are “dependent on capital gains revenue” like New York and California will “take a huge hit.”

“High-fixed-cost public transit systems everywhere will suffer as they lose rider revenue,” Rampell predicts. And because the U.S. is confronting a “public health emergency,” she writes, Americans can expect “even more demand for public services than usual.”

This week, Republicans and Democrats in Congress have been vigorously debating the elements of a huge economic stimulus package. But for state and local governments, Rampell warns, even that package might not be enough.

“Unlike the federal government, most state and local governments are legally required to balance their budgets,” Rampell explains. “Without more federal help, states and cities shouldn’t expect a swift snapback from this crisis. Instead, they should brace for a downward spiral — of service cuts, deteriorating conditions for households and businesses, and depressed economic conditions for years to come.”
https://www.rawstory.com/2020/03/brace ... pared-for/

In 2008 we had some problems with the decline in property values is some locations causing a reduction in State and Local taxes and services. This could be a lot worse, more like what was seen in 1929 but with more grief due to the COVID 19 virus.
Facts do not cease to exist because they are ignored.-Huxley
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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by senorgrand »

The thing is, even if we somehow eliminated Covid19 today, our economy would likely crater just because of the drop in consumer confidence.

Who's going to buy a car or bass boat or hire an extra worker after this?
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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by TrueTexan »

senorgrand wrote:
Fri Mar 27, 2020 4:53 pm
The thing is, even if we somehow eliminated Covid19 today, our economy would likely crater just because of the drop in consumer confidence.

Who's going to buy a car or bass boat or hire an extra worker after this?
Well as for the Pickup Truck and Bass Boat. The MAGAhatters will keep on buying and then complain about the Dems taking away their jobs.
Facts do not cease to exist because they are ignored.-Huxley
The illegal we do immediately; the unconstitutional takes a little longer-Kissinger
Reasoning will never make a Man correct an ill Opinion, which by Reasoning he never acquired.-Swift

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by highdesert »

Nancy Pelosi mentioned they're already working on another stimulus to support states and local governments who are carrying the bulk of this epidemic, they do need help. One reporter mentioned that California's rainy day fund which IIRC is $21 billion will be spent very quickly.
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by YankeeTarheel »

I've been expecting the balloon to burst as soon as the insane trillion dollar tax giveaway of 2017 was passed. And...if you live in a Blue state and own your home, your taxes probably went up..ours certainly did. Some fuckin' tax cut!

Nothing like a Republican to eat the seed corn--every time they come into office.
""If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you." -- LBJ

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by sig230 »

Again, these are all points that have been covered in EVERY pandemic response scenario. None of those effects come as a shock to anyone except the willfully ignorant.
To be vintage it must be older than me!

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by YankeeTarheel »

There's the short Furor translation dictionary:
"Nobody knew/anticipated" --> "I, alone, was too fuckin' lazy to learn what was going on or listen to the experts."
"A lot of people think..." --> "I (and me alone) think ...something I pulled out of my suety butt!"
"Many, Many people/Doctors/..." --> "Nobody said anything so I just made this up and pulled it out of my suety butt!"
"Everyone/Everybody thinks/supports..." --> "My 35%-45% base of brainless thralls who believe any bullshit I throw at them"
""If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you." -- LBJ

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by CDFingers »

Suety butt. Must gouge out mental image....

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by CDFingers »

A blistering condemnation of this administration and its response to this virus--their indifference, incompetence, and greed is behind this coming financial catastrophe.
Suffice it to say, the Trump administration has cumulatively failed, both in taking seriously the specific, repeated intelligence community warnings about a coronavirus outbreak and in vigorously pursuing the nationwide response initiatives commensurate with the predicted threat. The federal government alone has the resources and authorities to lead the relevant public and private stakeholders to confront the foreseeable harms posed by the virus. Unfortunately, Trump officials made a series of judgments (minimizing the hazards of Covid-19) and decisions (refusing to act with the urgency required) that have needlessly made Americans far less safe.

In short, the Trump administration forced a catastrophic strategic surprise onto the American people. But unlike past strategic surprises – Pearl Harbor, the Iranian revolution of 1979, or especially 9/11 – the current one was brought about by unprecedented indifference, even willful negligence. Whereas, for example, the 9/11 Commission Report assigned blame for the al-Qaida attacks on the administrations of presidents Ronald Reagan through George W Bush, the unfolding coronavirus crisis is overwhelmingly the sole responsibility of the current White House.
https://www.theguardian.com/commentisfr ... plnews_d-1

25th Amendment. Don't make us go lower.

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by lurker »

for the last couple of years i've had the sneaking suspicion that the US economy is a hollow shell much like an over-inflated balloon and that all it will take is a prick to burst the bubble.

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by featureless »

Me too, lurker.

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by lurker »

featureless wrote:
Sun Mar 29, 2020 10:03 am
Me too, lurker.
and we know just the prick to do it

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by TrueTexan »

lurker wrote:
Sun Mar 29, 2020 10:02 am
for the last couple of years i've had the sneaking suspicion that the US economy is a hollow shell much like an over-inflated balloon and that all it will take is a prick to burst the bubble.
When we gauge our economy now how well the stock market and the rich are doing rather than how well the people are living is the big mistake. The wealth of the nation has been and under Trump will continue to be sucked upward to the oligarchy.

We can look at the economic boom of the 1950s and compare that today. A large portion of the boom was in the working class Blue Collar and White Collar. We also had an income tax rate that was geared to higher rates for the wealthy. The government then spent that money on infrastructure building that created jobs. Now we have a tax structure that takes from the people and gives to the rich.

I am reminded of this quote and think if any CEO today would say this with a straight face.

We accept our responsibilities as a corporate citizen in community, national and world affairs; we serve our interests best when we serve the public interest. We believe that the immediate and long-term public interest is best served in a system of competing enterprises. Therefore, we believe we should compete vigorously, but in a spirit of fair play, with respect for our competitors, and with respect for the law. In communities where IBM facilities are located, we do our utmost to help create an environment in which people want to work and live. We acknowledge our obligation as a business institution to help improve the quality of the society we are part of. We want to be in the forefront of those companies which are working to make the world a better place. (1969)
Thomas Watson Jr. IBM

Only two come in mind. Maybe Elon Musk and Tim Cook.
Facts do not cease to exist because they are ignored.-Huxley
The illegal we do immediately; the unconstitutional takes a little longer-Kissinger
Reasoning will never make a Man correct an ill Opinion, which by Reasoning he never acquired.-Swift

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Re: Looking Ahead: Economics columnist zeroes in on a creeping financial catastrophe we’re not prepared for

Post by sig230 »

TW may have said that but IBM succeeded with FUD, marketing Fear, Uncertainty and Doubt.
To be vintage it must be older than me!

From Deep South Texas

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