Jeromie or Robert help to understand these?

[anarchist]

Federal Government: Tax Receipts on Corporate Income, Annual, Billions of Dollars     and what is this?
click on the change from year ago option.


http://research.stlouisfed.org/fred2/series/FCTAX?cid=107

M1 Money Multiplier how bad is the updated graph?
click on the 5 yr range

http://research.stlouisfed.org/fred2/series/MULT

[Jeromie]

Those corporate  taxes do not pay for much , do they. They sure do not do much to cover even the military expenses the defense corporations depend on.   The growth in corporate income tax receipts after 2000 was due to the huge profits in real estate and it's financing plus some rigorous tightening  in the area of repatriation of earnings.  The profits inside the US were so pronounced a lot of  companies repatriated foreign earnings, and paid the US tax, to put the money into domestic hot spot profit points.

 The collapse of those corporate tax revenues is due to the crash of the US economy.  The corporate losses are so vast that net operating losses  for 2008 and 2009 may be carried back for five years. Thus, you not only pay no taxes and get refunds of estimates paid in 2008, you get a refund of taxes paid for the preceding five years.  The US has had carrybacks for the last 70 plus years. The norm for decades was back three and up five. Now it is back five and up 20.

The graph shows tax collections net of  refunds. I can see the possibility of 2009 corporate tax collections getting near zero unless Obama finds a way to reverse what has happened. That, or it is already beginning to correct.


Notice that the vaunted multiplier effect that everyone thinks is printing money is now no more.  Fifty years ago, we had  tests in Money and Banking  about the derivation of that sacred 3 to one ratio.    Now it is zero because the money being lent never reaches  the depositors and spenders that generate the GDP of the real economy . Instead , it just floats around the finance sector. Then, horror of horror that they do not want you to understand is that there was a bank run in 2008 and money fled the system.   That brought on the crash after Lehman collapsed . A lot of money came back in the banks sequentially in September, October and November, but it is just parked inside the finance sector.   Hence, why Obama desperately wants to force the banks to lend to the real economy.

The three to one multiplier effect died slowly because it became more and more difficult for loans to finance growth.    More and more money went to refinance  rather than finance.   Like charge card payments forcing you to cut personal spending to pay the monthly minimum.   Just an analogy.

[anarchist]

The graph shows tax collections net of  refunds. I can see the possibility of 2009 corporate tax collections getting near zero unless Obama finds a way to reverse what has happened. That, or it is already beginning to correct.

how can it be beginning to correct when the commercial real estate market is starting to collapse. From what I understand the banks have not started to take the loss from these shopping centers and other real estate shutting down. the banks are more or less not calling in the loans when they default, just ignoring them. how long can they do this?

[Jeromie]

I do not see it correcting either unless Obama finds ways to cover the commercial collapse.  Just as an example.  General Growth filed its long anticipated Chapter 11 bankruptcy . This was very well thought out.  157 out of 158  malls  owned by GG also filed for Chapter 11 in their own right.  I can see these entities living under the creditor stay for the next five years and eventually  emerging  with present shareholders as Class B shareholders.   Not paying the mortgage except out of available funds for the next few years is a nice way to stay alive.  There are all kinds of variants on this.   I can see big Condo's doing the same thing through their associations. That is especially true when 75 % of the units were never sold and are held  by the general  and specialty contractors by reversion  under lien laws.   I saw this stuff personally in the last real estate crash. 


Ingenuity.   Take over the big banks to cover the other side of all these methodologies.  Then sit on the loans till they work out.

[anarchist]

thanks good description.