Economy UP

“Current unemployment data + Liberal spin - record record hiring = ?

The liberal's spin does not add up. According to liberal mathematics the unemployment rate would be twice what it actually is.

Facts kill liberals.”

“LOL, facts, record record hiring, LOL. bbw, I must say, you really do crack me up.

Well here is the *AVERAGE* monthly job creation rate by president for last 50-60 years in thousands of jobs.

175k jobs, your "record record month" doesn't even come close to Clinton's AVERAGE, Carter's AVERAGE, or LBJ/Vietnam's AVERAGE, and it's only for one month!



Worse, we are adding new people that need jobs to the job's market much faster than in all these other presidencies.

LOL, "facts kill liberals", you really do crack me up... are you sure you haven't stopped snorting cocaine?

175k isn't even close to "record record growth", on a scale of 1 to 5 it is a 2!!!!!

And that is going back to the days of Carter and further back!
last edited: 1/09/05 12:07:26 AM”

“BTW... Reagan has a great second term all around. Why? He spent his entire second term reversing all of his first term programs. He undid his tax cut plan, and others. Did you know Reagan actually *INCREASED* capital gains taxes in his first term?

(But he undid this increase in second term).

Reagan gets solid marks for fixing his errors, and even though Jr. got re-elected, I was hopeful that someone would kick him in the head to be more like Reagan II, but, unfortunately, all his top agenda items are still empowering inheritance babies and monopolies.

The new "cut asbestos liability" thing? Well, who has the world's most asbestos liability?

Halliburton

Where did H get the liability from? When Cheney bought out Dresser Industries, the company that Bush Sr. got his very first job at... and their principle product was making asbestos.”

“Music for America is the preeminant source for economic data?

Sorry the numbers from the cartoon chart do not jive with the facts. Liberals will post anything, but the facts.”

“This got dropped from the link, LOL.

Source: Bureau of Labor and Statistics (www.bls.gov)”

“I am actually kind of disappointed BBW, most Bush-lackeys listen to enough talk radio that they've 1001 counterpoints.

Is this really the best you got? To discredit things purely based on the source of the info?

Just because someone says 'X' and you don't like that person ... does not mean it isn't observationally accurate!
last edited: 1/10/05 1:04:25 PM”

“Well then, you should not have any problem locating the data on the web site.

Good Luck.”

“That's okay, I'll pass on your trolling, but I did find another fun graph:



And here's another using same data, different time horizon.
http://www.aflcio.org/yourjobeconomy/todayseconomy/jobgrowth.cfm

And every chart google pops up in it's top hits shows numbers like those. Curiously absent is any hard data from the White House, LOL.

So bbw, if you say those numbers are all lies, lies, lies, why don't you show me something that, what is it you say? Uses *FACTS* to demonstrate the fantasy you seem to believe in?”

“We just went through two elections that were almost completely the same after four of the most divisive and consequential years in recent times. Same states for the Republicans. Same states for the Democrats.

Facts don't really matter anymore. People have picked their sides and now it's about getting out vote and hammering the system to work in a particular way.

A logical argument one way or the other doesn't matter anymore.”

“trail turtle can stick with his phoney graphs.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=atX15IfW7UAM&refer=home”

“Girls, girls.......”

“Bankruptcy advisers are hiring extra staff amid fears that an end to the global credit boom could spark a surge in business failures in the US and Europe.


Unusually loose lending conditions have encouraged record borrowing by speculative-grade companies, with leveraged buy-outs and debt refinancing on both sides of the Atlantic generating more than $100bn of deals in the past eight months.

But last week's fall in the price of US Treasury bonds, coinciding with signs that bankers are struggling to complete riskier corporate bond issues, has added to a sense of nervousness in some quarters.

Although corporate default rates remain low, some fear the legacy of recent private equity buy-outs and hedge fund investments in distressed debt will be a swath of over-leveraged companies ill-equipped to survive in less benign conditions.

PwC, the largest corporate recovery adviser, said it was hiring insolvency specialists in sectors such as retailing, utilities and telecommunications in preparation for the expected fall-out.

Scott Bok, president of Greenhill & Co, an investment bank specialising in merger advice and restructuring, also predicts the cycle will end with a lot of companies in trouble. “In many of the deals being done today you can foresee the debt restructurings to come in a year or two,” he said.

Last week, the Financial Stability Forum, a group of national and international central banks and regulators, pointed to the levels of liquidity as one of the main risks to the stability of the global financial system.

Following a meeting in Tokyo, the FSF said that, according to some of its members, tight credit spreads and low long-term interest rates suggested some in the market might be underpricing risks. It urged banks and investors to monitor their exposures by stress-testing what would happen in the event of a market shock. Chuck Prince, chief executive of Citigroup, said: “The possibility of a liquidity bubble around the world concerns me. A very cautionary thing is that it feels like the world is changing and traditional indices may not give a complete picture.”

continued...”

“State revenues are up 7.9% over last year.”

“Somerset County, one of the state's more affluent areas, with sprawling estates and corporate campuses, has earned a notable distinction, according to a report from the New York office of the Bureau of Labor Statistics.

Average weekly wages at companies in Somerset County fell 6.9 percent during the third quarter of 2004 vs. a year earlier, the latest figures available.

http://www.nj.com/business/ledger/index.ssf?/base/business-0/1117776668309220.xml&coll=1”

“Indeed, Somerset County was the only one of New Jersey's 15 largest counties to see a drop in wages

Statewide, average weekly wages rose 2.8 percent, to $876. That's 20 percent higher than the national average, but the growth rate lagged the national increase of 4 percent.

*******

LOL, this guy really works hard to find bad news. Negativity as a political strategy is working for Liberals.”

“He's not a liberal. He's a moderate. Don't place labels on him.

If being negative means telling the truth, then he'll be negative. Don't you like the truth?

Being negative is what this country is about. It's patriotic to be negative.

He loves this country, but it must be changed. He won't stop until this country is different, because he loves it.
last edited: 6/04/05 11:15:41 AM”

“The economic picture is mixed. There are still strong job creating forces and low interest rates.

On the other hand, overall debt is soaring - both the federal debt and household debt are sky rocketing. We are more and more depoendent on China and Japan to keep buying our debt. Oil prices continue to grow. We continue to use a huge proportion of the worlds oil output, while posessing about 3% of the reserves.”

“The economic picture is mixed, because liberals are always looking for the negative side of every issue. Housing and business investments are up which generate debt. Oil is below 50 dollars a barrel. The United States uses a lot of oil, but leads the world in manufactured goods. It is a mixed economic picture, but Liberals only look at half of the picture.”

“The economic report on NPR last night was indeed a good one. Wall Street reacted poorly.

Job growth was under what they were hoping for, but it was increased.

The general tenor seems to be that it's improved, but too soon to tell whether it's for real or not.

But it beats going in the other direction.

Oil continues to be a concern despite the decrease in prices.”

“The lack of Job growth has been over reported for the past four years.

Current unemployment is below pre-9/11 numbers. Huh? We had a historic attack on the US? It had an effect on the economy?

The left operates in a vacuum that ignores world events unless it serves their cause. Since 2000 the liberals cause has been to cry foul.”

“bacpac, youre always griping "the liberals this" and "the liberals that", and you say theyre negative? /sarcasm font/o wait, youre just telling it like it is /end sarcasm font/
last edited: 6/05/05 11:24:52 PM”

“CB - You read that as negative? I thought he was being positive. He's saying there is a reason why the economy was shaken, yet unemployment figures are still below pre-9/11.”

“no, i read bacpac as negative.”

“Well geez. He's saying the numbers are better despite being attacked, and that's negative?

I wonder if you'd think it would be positive if the numbers were worse!?

I never understood why the left think's that what's good for American is a bad, and what's bad for America is good, yet they claim to be patriots. LOL.”

“I am just saying that ignoring the positive is negative.”

“im just saying, in general,bacpac is a very negative person. 99 percent of what he posts is either a cutting personal remark, or a variation on "liberals are whiners" or "liberals are stupid" etc

pedxing, one of the most fair and balanced posters on the board, is inexplicably the target for some of bacpacs most harsh cut-downs”

“gotcha - thought you were talking about his post - thanks cb”

“99 percent? That is not true.”

“but here i am making personal remarks that will lead nowhere, so i digress”

“ok. 98.7

anyways, i digress. i must say, in your defense, sometimes i find you funny and almost likeable, baccy. im sure alot of it is just dry humor that just doesnt translate in this medium. ive run into that problem myself”

“I say in my own defense that my most ardent detractors have their facts wrong.

You are wrong. Is that negative? No it is the truth. Don't choke on it.”

“im sure alot of it is just dry humor that just doesnt translate in this medium. ive run into that problem myself

I know what you mean.

Sometimes I try those da#@ smiley faces, but can't seem to figure them out.

:) : ) :-) ;) ;-)

There is definitely a trick to that.

oops - I thought "da#@" would be automatically censored.
last edited: 6/06/05 8:38:48 PM”

“let us just say "most of the time", and i will be right. you are truly delusional if you do not see the truth in it.”

“I could not be less delusional.

Your crawfishing speaks to your character, not to mine.”

“2 poops will see this conversation as my negativity.”

“99%”

“GM Plans to Cut 25,000 U.S. Jobs by 2008

http://news.yahoo.com/s/ap/20050607/ap_on_bi_ge/general_motors_outlook;_ylt=ApTZ9daWqP4X_xCT.1Vvty2s0NUE;_ylu=X3oDMTA2MTQ3MTFjBHNlYwN0cw--

Yep the economy looks great!”

“You're right. Maybe they should fire all the robots.”

“No need to they will be moving them to China. I saw on Lou Dobbs tonight that GM will be outsourcing as much as it can in an effort to be profitable again.”

“Simple solution: Make unions illegal. They're destroying the country.”

“Damn those liberal, America-hating financial markets... always searching for the negative in George's Utopia:



http://news.ft.com/cms/s/5d33c9de-d6f6-11d9-b0a4-00000e2511c8.html

Alan Greenspan, Federal Reserve chairman, on Monday night highlighted the unusual behaviour of global bond markets, and acknowledged that investors might be correctly signalling a period of economic weakness ahead.

Mr Greenspan, in remarks prepared for delivery via satellite to a conference in China, pointed to the "unusual behaviour" of market-determined long-term interest rates.

Since last June, the US central bank has raised short-term interest rates from 1 per cent to 3 per cent but the yield on the 10-year Treasury note has declined by about 80 basis points to just under 4 per cent.

Emerging market bond spreads have fallen to low levels, and the spread of investment grade corporate bonds and junk bonds over Treasury bonds has declined.

"The economic and financial world is changing in ways that we still do not fully comprehend," Mr Greenspan said.

Some analysts have suggested the market signal meant the Federal Reserve would soon end its interest rate tightening cycle. Mr Greenspan acknowledged that "policymakers need to be able to rely more on the markets' self-adjusting prices and less on officials' uncertain forecasting capabilities".

Mr Greenspan said: "One prominent hypothesis is that the markets are signalling economic weakness. This is certainly a credible notion."
[...]”

“Yeah, things aren't good in the motor city. Now I understand why the union lots all have "no foreign cars allowed" signs. Too bad the big 3 didn't tryto produce something to compete with the foreign cars a long time ago.”

“They were making tons of money on gas hog SUVs.

One thing our system is not good at is spending research money in anticipation of long term trends. The next quarter is the long term.”

“My good friends at Trail Talk please protect yourselves from the next bubble burst. It is like a boil that has formed on your butt. It is going to have to be drained and treated to get better. It is difficult for you to do it all by yourself but, even more difficult to ask someone else for help. Professional help is available, but if you try hard enough you can do it yourself. Lance that boil and get out of debt. It will drain and ooze for a while but soon it will heal and the pain will go away.

Bateaux



In Treating U.S. After Bubble, Fed Helped Create Threats
Low Rates Bolster Economy, But Housing, Foreign Debt Appear Out of Sync

By GREG IP, Staff Reporter, The Wall Street Journal

(June 9) - By many yardsticks, the Federal Reserve's response to the bursting of the stock and tech-spending bubbles in 2000 has been a remarkable success. The 2001 recession was mild and economic growth since has been brisk. Employment is up and inflation remains within the Fed's hallowed zone of price stability.

But five years after the stock market's peak, the economy faces other threatening imbalances: a potential housing bubble, rock-bottom personal saving rates and a gargantuan trade deficit. Ticking time bomb! And the Fed's post-bubble prescription bears some responsibility for all three. Fed officials acknowledge as much but say the alternatives were worse.

By slashing short-term interest rates to 45-year lows, the Fed encouraged Americans to borrow more, gave them little reward for saving and helped ignite a surge in housing prices. President Bush and Congress joined in with steep tax cuts that boosted household purchasing power. All that spending contributed to a growing U.S. economy, a steady increase in imports and -- given that Americans are so eager to borrow and foreigners so eager to lend -- a mountain of foreign debt. The punch was spiked and the party was great but the hangover may be pretty rough! This is pleasant for Americans as long as it lasts. But Fed officials, international financial watchdogs and private economists say it can't. At some point, American consumers must spend less, save more and rely less on foreigners' savings.

How that will happen puts the nation in uncharted territory: After treating a bubble, how does the Fed manage the side effects of its medicine?

"We have done what no other economy has done before, faced with an asset bubble," Lawrence Lindsey, a former Fed governor and Bush adviser, said at a recent panel discussion. Praising both the Fed's rate cuts and Mr. Bush's tax cuts, he said, "This is the first time in history the textbook economic policy... was used, and worked. The problem is, once you finish that chapter of the economic texts, you turn the page and the page is blank -- because no one has gone through the process before."

The Fed is confident these imbalances will be resolved with little pain. As it raises interest rates, consumers will slow their spending and save more. Foreigners' appetite for U.S. goods will rise. The engine of U.S. growth will shift smoothly from consumers and government to business investment and exports. Fed Chairman Alan Greenspan might address this when he testifies on the economic outlook to Congress today.

But a minority of economists warn of a more damaging scenario. Some say the Fed has simply replaced the stock-market bubble with one in housing, which could burst. That would sap the consumer spending that mortgage refinancing and home-equity loans have fueled. Or foreign investors could stop buying U.S. stocks and bonds, sending the dollar down and inflation up, prompting both the Fed and bond market to jack up interest rates sharply. In either case, the U.S. economy could slow sharply or fall into recession. Lets see your SUV, your motorcycle, your boat, your kids braces and last weeks meatloaf were all bought with your home equity loan. What if that equity goes south? Hum?

Faced with an asset bubble, a central bank has two choices: Prick it early or wait for it to burst and try to contain the damage. The Fed in 1929 and the Bank of Japan in 1989 tried the first route, raising interest rates in response to rapidly rising asset prices. The result in the U.S. in the 1930s was depression and deflation. In Japan it was stagnation and deflation that continues today.

In the 1990s, Mr. Greenspan chose the second route. As long as the prices of goods and services were stable, he would leave the stock market alone. When the stock bubble finally burst, the Fed cut short-term rates aggressively beginning in 2001 and then held them at a 45-year low of 1% through early 2004 until the Fed was sure the threat of deflation had receded.

Mr. Greenspan knew his strategy carried risks. But he saw far greater ones in responding timidly as the collapse of the biggest asset bubble in history wiped out more than $5 trillion in shareholder value, and terrorist attacks, war and corporate scandal rattled confidence. The economic expansion to date suggests he was right, and the odds are that he will retire as scheduled next January with his reputation for economic stewardship intact. But if a collapse in housing prices or a run on the dollar triggers a new recession, Mr. Greenspan's legacy may be different. The Fed is conducting a "crucial experiment" in post-bubble monetary policy, says Edward Chancellor, a financial historian. "We don't know what the outcome is yet."

Lower interest rates normally operate through several channels. They encourage consumers to buy things on credit today instead of saving to buy the items later. They boost stock and home prices, which makes the owners of those assets wealthier and more willing to spend. They encourage businesses to borrow and invest. And they depress the dollar, boosting exports.

But after 2001, some of these channels were blocked. Businesses, burdened with a glut of unused equipment from the bubble years and cowed by geopolitical and regulatory uncertainty, didn't borrow to invest. And the dollar didn't fall initially, but rose because foreign economies were in even worse shape than the U.S.'s. This meant the economy relied disproportionately on the one channel that did respond: consumers. They bought record numbers of houses and cars, mostly on credit. They also borrowed against their houses' appreciated values, allowing them to spend more still. Credit smedit, I don't want to work I just want to bang on a drum all day! To Mr. Greenspan, who had studied housing and mortgage markets all his life, this came as no surprise. "Households have been able with increasing ease to extract equity from their homes, and this doubtless has helped support consumer spending in recent years, complementing the traditional effects of monetary policy," he observed in August 2003.

A Worse Alternative

Accused by some of fostering excess, Fed officials responded that the alternative was worse: a deeper recession and the risk of deflation -- a period of generally falling prices, which can worsen a downturn by making it harder for workers and companies to repay debts. In a February 2003 speech Fed Governor Donald Kohn, one of the central bank's principal monetary-policy strategists, agreed low interest rates had had an outsize impact on car sales, home construction and housing prices. But that "has kept more people employed and reduced the risk of deflation," he said.

By January 2004, the expansion seemed entrenched enough for Mr. Greenspan to declare victory: "Our strategy of addressing the bubble's consequences rather than the bubble itself has been successful." While "large residues" of household and foreign debt remained, they would not be a barrier to growth; such imbalances, he suggested, would dissipate with time.

Instead, they have grown. "The magnitude of these imbalances is increasingly moving into unfamiliar territory," Mr. Kohn said in April. Since his February 2003 speech, house values have risen 25% and total mortgage debt by 28%, while after-tax incomes have expanded just 13%. The household saving rate, a low 2% in 2000, has fallen to 0.9%. A growing share of mortgages have gone to speculators and people making little or no down payment. House "prices have gone up far enough since then -- relative to interest rates, rents and incomes -- to raise questions," Mr. Kohn said in April. Lets see incomes have risen 13% and house prices are rising at twice that rate, looks like a brick wall coming to me! Savings rate goes from a whoping 2% to 0.9! Yea, I don't to work I just want to bang on a drum all day! Dangerous Zone


More From WSJ.com


· What the Apple Switch to Intel Means for Consumers
· In Treating U.S. After Bubble, Fed Helped Create Threats
· Michael Jackson's Other War, Stave Off Financial Disaster


Meanwhile, the current-account deficit, the broadest measure of the shortfall on trade and investment income between the U.S. and the rest of the world, has moved into a zone that many economists consider dangerous. It stands today at 6% of gross domestic product, the nation's total output of goods and services, up from 4% in 2000. To finance it, the U.S. now borrows about $2 billion a day from foreigners. As the foreign debt mounts, so does the risk that investors will demand a higher interest rate or lower dollar to keep on lending. Those people in China are great, they would never demand a return on their money would they? Surely if the dollar goes south they won't sell, hunh? To be sure, a major cause of the U.S. current account deficit is that weak European and Japanese growth reduces demand for U.S. exports. And China's fixed exchange rate keeps the prices of Chinese goods artificially low, giving its television sets, bicycles and barbecue grills an edge in the U.S. market.

But the U.S. saves so little that when the U.S. cuts taxes and consumers take out mortgages, the money to finance both increasingly comes from abroad, in particular, foreign central banks. Those banks purchase U.S. dollars to keep the greenback high against their own currencies, thereby supporting their exports to the U.S. They then invest those dollars in U.S. bonds, in effect providing the financing for Americans to buy those exports.

Since 2000, foreign-brand cars have surged to 43% of the U.S. market from 35%, according to Motorintelligence.com. So that is why 25,000 at GM just got canned! Hey GM start building what people want or you are toast! Most people can't afford a $40,000 SUV that gets 12 MPG! In the meantime, foreign holdings of U.S. Treasury bonds and bonds backed by Americans' home mortgages have jumped 80%.

In the first quarter of this year, General Motors Corp. made more money on mortgages than on cars or car loans. Since the beginning of 2001, the number of Americans employed in manufacturing has fallen by 2.8 million, or 16%, while the number in residential construction, real estate and banking has risen by 766,000, or 14%. Lay offs in construction take hours, not days not months. The day the boom ends those housing jobs are toast.
"If I were a biologist I'd call this a perfect example of symbiosis," former Fed Chairman Paul Volcker mused in a February speech at Stanford University. As a student of biology I was forced to learn all about them der osis-mosis, sent me into a great kentosis! "Contented American consumers matched against delighted foreign producers. Happy borrowers matched against willing lenders. The difficulty is, the seemingly comfortable pattern can't go on indefinitely." So happy together! I-can't-see-me-buying-from-nobody-but-China-for-all-my-life!
Almost every economist agrees. The debate is over how, not whether, the global economy rebalances: Will it be smooth, through some combination of declining dollar and accelerating foreign demand? Or will it be chaotic, with a dollar collapse, much higher U.S. interest rates and perhaps a global recession?

Mr. Volcker thinks a crisis is likely. Investor confidence could fade "at some point," he said, with "damaging volatility in both exchange markets and interest rates."

His successor is more sanguine. Capitalist economies, Mr. Greenspan believes, always have imbalances but are also continuously reallocating resources and capital to correct them. Thus, imbalances seldom become crises. "The number of forecasts of crises...is far in excess of the number of crises that actually occur," Mr. Greenspan told a recent audience in Chicago. "There is something equivalent to an invisible hand which continuously is readdressing market imbalances to reach equilibrium."

Fed staff research shows that in the past, when a big, rich country has a large current account deficit, it usually narrows without crisis. Homes may be overvalued but are much harder to trade than stocks and thus unlikely to collapse abruptly. Fed officials expect home prices to stagnate while incomes advance, bringing affordability back to historic ranges.

Having helped create today's imbalances, Fed officials acknowledge some responsibility to reduce them. By raising rates, Mr. Kohn explained, the Fed will make saving more attractive, slow the rise in housing prices, and "thereby lessen one of the significant spending imbalances." And Mr. Greenspan adds, "an increase in household saving should also act to diminish borrowing from abroad," narrowing the current account deficit.

That benign scenario has yet to unfold. Business investment is growing but by less than the Fed had expected. And while the trade deficit narrowed sharply in March, for the first quarter as a whole it hit a record of $694 billion on an annualized basis, or 5.7% of GDP. Meanwhile, even as the Fed raises short-term interest rates, long-term interest rates, which are set on markets, have actually declined, a development that baffles Mr. Greenspan. Since mortgage rates are tied to long-term bond yields, home prices have advanced at one of their fastest rates yet over the spring. Mr. Greenspan has acknowledged "a little froth" in the housing market. A little froth! My new beer keg machine has a little froth. This is a gosh darn Tsunami!
Added Weight

What should the Fed do? Mr. Volcker, focusing on the current account deficit, thinks the Fed ought to put added weight on keeping inflation under control. "I am worried about a tendency to relax our guard," he said. It is critical foreigners remain confident that "those trillions of dollars they are piling up are going to be protected against inflation." Some of today's Fed leadership shares this view: The Fed can minimize the odds of crisis by keeping inflation down, which means erring on the side of higher interest rates.

Mr. Lindsey, on the other hand, believes the Fed should worry less about inflation and more about keeping the housing market from sinking. "You don't want to collapse asset prices," he says. "You want to give people time to adjust in a gradual way." He thinks the Fed should slowly raise its target for short-term interest rates, now at 3%, to 3.5%, and then stop. A loaf of bread will cost 25$ but morgage rates will be 5% Mr. Kohn, in his April speech, made it clear the Fed would not let imbalances deter any necessary action to keep inflation down: "We should not hesitate to raise interest rates to contain inflation pressures just because it might set off a retrenchment in housing prices, just as we were willing to keep rates unusually low as house prices rose rapidly." That was a really long winded way of saying get your azz out of debt before the freight train hits!









06/09/05

Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved.”

“Federal Reserve Chairman Alan Greenspan today expressed overall confidence in the nation's economy despite worries about a potential housing bubble and the economic fallout from spurting oil prices.

"Despite some of the risks that I have highlighted, the U.S. economy seems to be on a reasonably firm footing, and underlying inflation remains contained," Greenspan said in prepared testimony before the Congressional Joint Economic Committee.

http://www.latimes.com/business/la-060905econ_lat,0,5762436.story?coll=la-home-headlines”

“Poor are those that trust Greenspan. Dr. Greenjeans waited too long to pull away the punch bowl before the tech bubble and he will wait too long before pricking the housing bubble. I saw that one coming and with some luck and smart moves it made me wealthy.
Every dog has to scratch his own azz in life. I see a meltdown coming that nothing but time and hardship will erase. We can only live on the credit card so long before the bill comes due. I have positioned myself to ride out any storm. I'm completely debt free and have 5 times my annual salary saved. Over 50% of my current salary goes to the bank. The wolves will pull down the weak and I will be ready to buy. Come along for a ride on the train or get ran over by it, it is up to you.”

“Everybody loves to brag about how much there property value has increased. Along with that so called value comes the taxman.

PROPERTY REPORT:
Hitting the Roof
Homeowners Push for Limits
As Property-Tax Bills Soar;
States Try Various Measures




By RAY A. SMITH
Staff Reporter of THE WALL STREET JOURNAL
June 8, 2005; Page B1



When Rhode Island dentist Harvey Waxman retired in 2000, he planned to immerse himself in woodworking, gardening and sailing his boat on nearby Narragansett Bay. Then the property taxes on his two-bedroom home in North Kingstown jumped to $17,000 from $7,000 in four years.


Harvey Waxman of North Kingstown, R.I., became a tax-limit activist after his annual property tax bill jumped to $17,000 in 2004 from $7,000 in 2000. Dr. Waxman dropped his hobbies and founded RIGHT, or Rhode Island Gets Honorable Taxation. Today, he travels the state giving speeches calling for changes in the way property taxes are levied. "It just became so clear to me that something was flawed with the system," he says.


His campaign may pay off. John J. Loughlin II, a Republican state representative, plans to introduce a bill next year that takes a page from Dr. Waxman's proposal, stating that property taxes for existing homeowners should be based on the amount the owner paid the prior year rather than on a home's fluctuating market value.


As home prices have soared across much of the country, property tax bills have often followed. That has prompted the rise of tax activists like Dr. Waxman, who are demanding cuts or at least a slowdown in the increases. Some states and local governments have responded, though many remain cash-strapped despite the increased property-tax revenue. Last year, lawmakers in Illinois and Pennsylvania passed property-tax relief bills in the wake of outcries from angry homeowners. Earlier this year, Maine's legislature passed a bill that boosts the state's share of school funding, caps the spending on government and expands tax-break programs. In New Hampshire, the state Senate is expected to vote this week on a plan to eliminate the statewide property tax. Candidates for New Jersey's governorship are trading dueling plans to cut property taxes.


"The outcry is loud now because the increases are taking place at a quite accelerated level over a shorter amount of time," says Daniel R. Mullins, an associate professor of public affairs at American University in Washington, D.C.

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Property taxes are usually set and collected by cities, towns and counties to fund schools and local services such as police and fire protection, roads and garbage collection. Tax rates and increases vary widely depending on a local government's financial health and the strength of its housing market, so it's hard to generalize about tax increases nationally. But many homeowners are frustrated that their tax bills are going up because homes in their towns are selling for higher prices, and not because they are seeing increased or better services from their municipalities.


David Whetsell, a 60-year-old heating and air-conditioning technician in Lexington, S.C., where property taxes have risen 20% a year since 2000, last year started STOPTAX.org. The group pushed heavily for legislation to eliminate property taxes for homes. Such a bill has been introduced by a Republican senator and is expected to be taken up in the state legislature's next session beginning in January.


For Peyton Gannaway, a 66-year-old retiree who lives in Crystal Bay, Nev., it was the 233% increase in the tax bill on his five-bedroom waterfront home in 2003 that got him to join a local tax revolt group and protest the increases. "It was pretty breathtaking," says Mr. Gannaway, who unsuccessfully sought a reduction in his bill. He says he understands that home prices are soaring but he is certain "the cost to run the county sure didn't go up that much." In March, Nevada's legislature voted to limit annual tax bill increases for owner-occupied homes to just 3%. Well-known tax groups have taken up the cry as well. The theme of the National Taxpayers Union's annual conference being held in Washington, D.C., next week is "preparing citizen activists for the next major push of the tax revolt as well as local limits on property taxes," says Peter Sepp, a spokesman for the group. Some taxpayers are also angry because the federal alternative minimum tax affects more people each year and doesn't allow property taxes to be deducted.


The citizen-led efforts resemble, at least in spirit, the revolt that produced California's landmark Proposition 13 in the 1970s. After seeing their property tax bills soar, homeowners there passed an initiative that rolled back property taxes and limited the ability of municipalities to raise them. But the current group of protesters, aware that in some cases Proposition 13 led to big cuts in schools and local services, in most cases don't want to handcuff local governments but instead want a say over future increases.

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Property taxes as a share of national income often go up after recessions or government budget crunches as municipalities struggle to replace declining sales and income-tax revenue with more reliable property-tax money. Says David H. Bradley, a policy analyst with the Center on Budget and Policy Priorities in Washington, "if the historical trend holds, property taxes will stabilize or decline over the next several years -- without the need for tax revolt-type limitations."


The wild card in the current situation is housing prices. Municipalities generally haven't raised tax rates -- assessments have gone up, leading to higher tax bills, even at the same rate. The question is, if home prices continue to rise, will municipalities actually cut their tax rates to compensate?


Given that state and local budgets are stretched despite the increase in tax revenue from higher assessments, widespread cuts in property-tax rates appear unlikely. Economic growth needs to be strong enough to boost sales and income-tax revenue, some of which trickles down to local governments. "Even with the improved economy and legislated tax increases, state tax revenue on average remains about 7% below its 2000 peak," says Donald Boyd, director of the fiscal studies program at the Nelson A. Rockefeller Institute of Government, the public-policy research arm of the State University of New York.


States are also getting hurt by cuts in federal aid. In fiscal 2004, the gap in federal funds to states to pay for federal mandates totaled $26.6 billion; in fiscal 2005, it totals $31.9 billion, according to the National Conference of State Legislatures. The states' woes led to cuts in aid to cities and towns, leading them to rely more on property taxes.


To be sure, revenue is higher in some fast-growing states, making property-tax increases harder to defend. But sales and income tax revenue is down in 36 states since 2000, and the median decline for those states is 8%, while in the 14 states where revenue is up, the median increase is 2.1%, according to the Rockefeller Institute. That revenue figure is adjusted for inflation and population growth.


Despite the uproar, there's evidence that property taxes haven't gone up as much as home prices. According to an analysis of housing and property-tax data conducted by Robert Tannenwald, an economist at the Federal Reserve Bank of Boston, median home prices rose at an annualized rate of 8.2% from the fourth quarter of 2001 to the fourth quarter of 2004, while property-tax collections trailed with a rise of 6.0%. That's partly because the value of rental homes and commercial property didn't appreciate as much as owner-occupied homes. Also, some jurisdictions lowered tax rates because assessments were high.


That doesn't mollify homeowners like 68-year-old Jerry Joseph in Potomac, Md., a Washington suburb. "With increased property taxes and increased [real-estate] development, you'd think they'd have enough money to not have to raise property taxes or give significant reductions," he says. The Montgomery County Council in Maryland last month approved a measure that slows property-tax-bill increases. "We heard from a lot of residents and we listened," says council President Tom Perez.
last edited: 6/09/05 3:48:55 PM”

“You are a man without a cause.

If I buy a house for $100,000 and the value of the property goes to $500,000 and the government taxes me for the value of the property...

I sell.

Pity poor me, Pity poor Harvey.”

“Lucky you if you bought that house for $100,000. You will not be the one left holding the bag. Kinda like tech stocks back in the 90's. If you invested in the early stages you made money but if you bought at the top you lost your azz. Those buying overpriced real estate now are going to lose their azz. I bought my primary house for 40% less than the previous owners back in 1992. I've bought real estate all the way up this climb but we are at a top. If you bought years ago sell. If you are buying now watch out, because I'm waiting with cash to buy your loss.”