Didn't the housing bubble generate revenue for state and federal governments?

[Toucano]

It seems that the inflated prices and over-valuation would have generated tax revenue.

Lots of people got paid commissions (taxable income) and property taxes were paid on inflated valuations, right?

Has anyone seen anything about this in the media?

[daa]

1. True

That is why state revenue fell off a cliff. It is well documented.

[Toucano]

7. I am developing a theory

that the bubble was exploited by the administration to fund their tax cuts for the rich.

If local governments hadn't also experienced a boom in revenue in the high growth areas, the budget cuts from the feds would have been more painful, more quickly.

[glowing]

2. Yes, and there is a huge revenue problem going on in a lot of states..

Look at California and Florida..

Florida, two years ago, was above budget and wondering "hmm, what should we do with this extra money".. I suppose putting it in a CD and letting the value appreciate for a "rainy day" would have made just too much sense.

[Toucano]

5. I have some friends from West Palm Beach, FL and their property taxes were CRAZY!

It was a real problem for retirees on fixed incomes, too.

[gopbuster]

6. Lehman dumped 842 milion of toxic debt on the state of Florida...

***note this was from 2007 I believe****

snip

Lehman Brothers was the same firm that had sold the state fund $842 million of mortgage- backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show. ``At the time, I never knew it was Lehman Brothers that actually sold us these investment







http://www.bloomberg.com/apps/news?pid=20601109&sid=aj3K4H7aXnBM&refer=exclusive

[Toucano]

8. What a cluster fuck. n/t

[glowing]

15. Worse, they bought the package with employee pension funds, and it

was set up thru Jeb Bush's company... he was the go between in the deal.. really bad all around.

[lurky]

3. Local governments especially.

Property taxes pay for schools, police, etc.

[Auggie]

4. And many homeowners are now having their homes re-accessed.

Local governments are in for it.

[lurky]

9. That's going to hurt.

Especially since so many public schools are hanging by a thread already.

Who wants to bet they try to use this as an opportunity to privatize?

[Auggie]

11. That's what I'm expecting. Schools, fire, police, city services...

It was all planned. Years ago.

[lurky]

14. Oh, hey look. There they go.

And from a Democrat, no less :(

New State Panel to Study Privatizing Public Assets

[Igel]

10. And local and state governments were, shall we say,

reckless with the revenue?

They often put it towards on-going programs, increasing them in ways that'll be painful and politically inexpedient to cut, so the politicians could claim credit for the money taken from others and paid to others for to actually the stuff.

Usually the first response when revenues are cut is to turn to the credit markets in hopes of a short-term loan to tide them over a brief economic downturn (which is fine, if the downturn is brief), or they seek to restructure long-term debt to reduce interest costs. Or they try to acquire long-term debt to pay for things that they need, thought they could afford, but suddenly can't pay for and can't do without. None of these options is real easy these days. Perhaps in December. Perhaps not.

The meltdown on Wall Street over the past month or so has hit New York city and state in the fiscal tuckus. They'll have to do without the big salaries of some people, who spent lots of money. And since NY's tax structure is progressive, leaning heavily on the highest earning 5-10% of the workforce, the 5-10% that will have their incomes reduced by the heftiest percentage, they'll have the same problem that Calif. had when Silicon Valley "right sized". Relying on what amounts to a small tax base for a hefty proportion of your revenues is a risk--one that often pays off, but which sometimes fails.

As with other kinds of fiscal recklessness, it's often those least able to live without a few paychecks who will actually suffer the most.

[SoCalDem]

12. the housing bubble was the ONLY thing driving the ecoonmy

and hiding the unemployment figures.. That's why Greenspan reminded us all how "strong" the housing market was..and why he bailed as soon as he saw weakness they could no longer hide..

At its heart, just WHAT IS "our economy" these days?

paycheck-to-paycheck, non-savers, credit-card users, all buying services and foreign goods from each other...driving cars we cannot afford...cars that chug $4 gas we buy on credit, living in houses we will never pay off, and could not afford if we had to pay cash for our day to day living expenses..raising kids who graduate college owing more than our first houses cost us, in saner times..

[Toucano]

13. Good point.

The manufacturing base is all but gone.

Agriculture is highly mechanized, requiring less labor.

Even service jobs have been outsourced.

What a nightmare!