"Government ‘help’ to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off."
–Ayn Rand

Jim Sinclair’s Commentary

The 2006 Formula cranks along.

Revenues are going to tank, as expenses go wildly higher into 2012. MOPE of course denies this by claiming a diametrically opposed forecast.

"Through the first three quarters of 2009 state and local tax revenues totaled $875 billion, nearly 8% below the $951 billion collected in the first three quarters of 2008. In the same period, federal receipts were down nearly 19%."

State, Local Tax Revenues Decline 7%
By CONOR DOUGHERTY

State and local tax revenues fell 7% in the third quarter of 2009 from a year ago, the Census Bureau said in a report underscoring how the economic downturn is stressing government collections.

Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period, the Census Bureau said. Income taxes plunged 12% to about $58 billion. Together, sales and income taxes make up roughly half of state and local tax revenue.

"We expect continued weakness well into 2010 if not further," said Lucy Dadayan, an analyst at the Rockefeller Institute of Government at the State University of New York.

Property taxes increased 3.6% in the third quarter compared with a year ago. But as property assessments catch up with falling residential and commercial real-estate values, property-tax revenues are expected to be weak. That will have a particularly severe impact on local governments, which fund much of their operations from property taxes.

"At minimum, cities will be working through the catastrophic drops in revenue for the next 18 months to two years," said Mark Muro of the Brookings Institution’s Metropolitan Policy Program.

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Jim Sinclair’s Commentary

Somewhat different from the universal USA bullishness on a banner year in 2010. Of course above "Expectation" in the "New Normal" of high levels of unemployment, low consumer demand and over the top Federal demand for money with lower international demand for Treasuries.

The upcoming year then clearly will be remembered as the year of legerdemain.

Merkel Says Economic Downturn Will Continue
12/31/2009 5:11 AM ET

(RTTNews) -  German Chancellor Angela Merkel has warned that the economic situation in Europe’s largest economy could deteriorate before improving again.

In her traditional New Year’s address, Merkel bluntly told the country that it cannot expect the economic slump to be over quickly. "Some things will initially be more difficult next year before they can improve," she said.

Merkel promised to fight for new international rules for financial markets so that a repeat of the financial crisis can be avoided.

She vowed that her centre-right government would work with business leaders and banks to ensure German firms, especially small and medium-sized ones, could escape the credit crunch.

Merkel also said that industry and environmental protection authorities should find a way to work together following "setbacks" such as the climate change conference in Copenhagen.

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Jim Sinclair’s Commentary

No problem getting the funds. The USA will simply issue more treasuries.

The Fed, while "testing repos" and "thinking about Fed CDs," will purchase the largest single amount of US debt, taking QE to infinity.

Government to give GMAC another $3.8 billion
Financial services firm has already received $12.5 billion in taxpayer money
updated 4:51 p.m. MT, Wed., Dec . 30, 2009

NEW YORK – The government gave GMAC Financial Services another $3.8 billion in cash and took a majority stake in the auto lender, aiming to stabilize the company as it struggles with big losses in its home mortgage unit.

The fresh infusion is on top of $12.5 billion in taxpayer money Detroit-based GMAC has already received from the government. The new aid will boost the federal government’s ownership in GMAC to 56 percent, from 35 percent, and means the U.S. now holds a majority stake in three companies that it bailed out with taxpayer funds ― GMAC, General Motors and insurer American International Group Inc. The government also has taken control of mortgage giants Fannie Mae and Freddie Mac.

Shoring up GMAC has been a major component of the Obama administration’s massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles.

GMAC needs much of the aid to prop up its mortgage division ― Residential Capital LLC, dubbed ResCap, which struggled with big losses on mortgages gone bad as the housing market collapsed. The company said it would take $3.3 billion in mortgage-related write-downs, part of a $3.8 billion expected charge in the fourth quarter. GMAC is also preparing to sell off mortgage assets in an effort to reduce volatility.

Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management. Still, with the additional stake, the government will have the right to appoint two additional directors to the company’s board, bringing the total to four of nine, Treasury officials said.

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Jim Sinclair’s Commentary

Pakistan’s Army initiates a new strategy to win the hearts and minds of the people.

This initiative requires a great deal of bravery on the part of the Pakistan Army.

Pakistan raid kills ‘Arab, Sudan fighters’

MIRANSHAH, Pakistan — Pakistan commandos raided a private hospital before dawn in a Taliban stronghold near the Afghan border Thursday, killing four foreign militants and a woman, officials said.

Troops laid siege to the private clinic in Wana, the main town of South Waziristan, at 2:00am (2100 GMT) sparking gun battles until around 7:00am (0200 GMT), local administration and intelligence officials said.

A security official said the raid followed a tip off that wounded militants were brought to the hospital from Sherwangi, a Taliban-dominated area where Pakistan has been pressing a major offensive.

"Commandos and security forces raided the hospital. Militants fired on the troops and in the gunfight, which lasted more than four hours, four militants and a woman were killed, while 22 others were arrested," said the official.

"One soldier was also injured. The three dead militants appear to be Arabs and one of Sudanese origin," the official added.

The identity of the woman was not initially clear, the official said.

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