States Facing Deficits in 2010

1. Washington – The state tax collections for Washington is said to be down again. Thus, the state’s budget deficit is said to have increased by about $1 billion. According to the new revenue forecast, it is said that the state will get about $810 million less than what was previously hoped for the next state budget. It has also been said that it will take some time to recover from this situation.

2. California – California perhaps symbolizes the budget crisis because of the massive shortfall that it has faced and the measures the state has been forced to take like worker layoffs and reduction of aids to the university, massive cuts on education and social services. In the last year the state is said to have gone through about $6 billion budget gap. Moreover according to the assumption of the state’s Legislative Analyst’s Office the state may have to face about $20.7 billion budget gap during the next budget.

3. New Jersey – According to reports this state is going to have the third-highest budget shortfall for the financial year 2011, the first two being Nevada and Arizona. There have already been $800 million cuts in the budget. In addition to this, the state’s unemployment fund will have to face about $1.2 billion deficit. This, it is assumed will trigger an increase in tax on the employers.

4. Arizona – Just like California, Arizona too is one of the worse hit states facing mostly the housing crisis. As per the lawmakers, there has been a 30 percent budget gap in this state in the current year.

5. New York – New York is already said to have faced $3 billion budget deficit, which is expected to double by the next fiscal period. As a result Gov. David Paterson delayed payments to schools, hospitals, and cities so as to keep the State finances above water.

Effect of Home Sales on State Budgets

According to the Bureau of Economic Analysis (NAR) in 2009 the median priced home in Washington and California was $336,400 and $548,700 respectively, and the income derived from the sale of a home was $94,748 and $149,564 respectively. In New Jersey the income generated from the real estate industry was $32,463. The median priced home in this state was $360,700 and the income derived was $101,022. The median priced home in New York was $229,100 and the income was $66,785. In Arizona and Nevada the median priced home was $253,600 and $301,100 respectively and the total income derived was $73,369 and $85,633 respectively. However, with the decline in home sales the income of the states too has dropped; negatively affecting state budgets’ top line.

As a result of the deficit, state revenues continue to subside, which will very quickly trickle down to hardships for public employees and a negative consumer demand shift in months to come. In order to cope with this problem, states will have to modernize their revenue system and increase interstate cooperation, but the issues tied to lower revenues may be impossible to ail until employment and consumer demand make sizeable recoveries.

This was a guest post by Jason Holmes. He is a regular writer with Debt Consolidation Care (http://www.debtconsolidationcare.com/) and is also a contributory writer with other financial sites.

There’s one aspect to financial markets and individuals’ livelihood, which has become commonplace to economies around the world. Like the proverbial 900 pound gorilla in the room, the risks tied to stagnant labor markets are obvious. However, relative stability in Asian economic growth and Western stock markets has pushed the implications surrounding unemployment from the center of the room towards the corner. This week we’ll be focusing on the state of the labor market in Korea and how it compares to other developed markets abroad. We will identify differences in labor conditions and data collection, then look at ways that Korea can improve its employment situation for future success.

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September 2, 2010 -In 1933 the Gold Standard was pushed aside and the United States Dollar (USD) officially became tied to nothing. Later in 1944, during a gathering of global leaders in Bretton Woods, New Hampshire, international exchange rate policies were put in place to assure the system of “floating” global currencies. Yet it would be the Mr. John Maynard Keynes who went on to define this exchange of paper money as “fiat currency”, or money where the “material substance… is divorced from its monetary value”. More recently it has become crucial to have an understanding of what currencies are worth relative to each other and to actual assets, because the value of this floating paper is changing more erratically every day. Here we re going to look at what is moving Asian currencies now and whether these moves make since over the long term.

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August 12, 2010 -From a Western financial professional’s perspective, South Korea has traditionally been overlooked. The most familiar big three finance hubs in the East were forged in Singapore, Hong Kong, and Tokyo. However, Korea is redefining itself as a major marketplace for a specific breed of financial product, for better or worse, broadly labeled “derivatives”. For those having flash backs to calculus at the thought of the word, don’t fret… you’re actually on the right track. Here we’ll give a crash course on derivatives and their place in financial markets, inspect their recent appearance in emerging markets, and theorize as to the effect they will have on Korea’s global financial presence and the economy as a whole.

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August 5, 2010 -Korea is a land of limited space and high population. It’s borders surround just under one-hundred-thousand square kilometers, making the land mass a bit larger than the U.S. state of Indiana, with a population of approximately 48,000,000; over seven times that of Indiana. It’s safe to say that the result of these basic observations has for years been a high demand for real estate in Korea. This week we’ll discuss the state of the South Korea real estate market by investigating the Korean “Jeonse” (key money) lease process, deciphering broader implications of economic downturns on the industry, and looking for answers to the looming supply of unfilled apartment skyscrapers in years to come.

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July 15, 2010 -Surprising the world now twice in six months by leading rather than following the G20 nations, South Korea has spearheaded dual mandates which have put the central Bank of Korea (BOK) on the offensive. Clearly Korea hasn’t forgotten the woes of 1998 and 2008, when the KRW dropped precipitously and twice scarred the investment portfolios of international players. It is now certain that currency protection is the name of the game in Seoul. This week we’ll identify how Korea’s monetary policy stacks up against its rival “Asian tigers”, and determine where Korea may find itself tomorrow as a result of today’s environment.

Download the full report below then share your thoughts. What do you agree with? Disagree with? Make us support our opinions!

The War On Credit

In 1940 America the War had been felt only in reminiscent ripples, by “tweets” on telegraph receivers and two week old newspapers.  Pearl harbor still stood strong and broad on O’ahu’s South Face, while mothers and wives hung close to those on which they’d grown to depend.

Not so dissimilar from those days, we now face threats that only quietly whisper their motives from Asia and Europe. Constructed by years of fiscal white lies and monetary insanity, the body bags have yet to be filled. Municipal governments in China still depend on increasing real estate values, while European banks holding large debts of failing Southeastern states still stand. The United States Economy has “recovered faster than anyone could have imagined” and the S&P 500 at one time had nearly doubled from it’s lows. But still the whispers; 10 year U.S. Treasuries nearing 3% yields, LIBOR trending higher, market technicals showing a shift towards negative confidence, and this weeks economic data hanging in the balance…

Quintessential Indicators

This week is a pivotal moment for the global economy for many reasons, not the least of which are the developing technicals of the S&P 500 (SPX).  Take a look at the QUINTESSENTIAL CHART, THE MEANING OF LIFE, THE TRUTH OF YOUR VERY EXISTANCE below…

Economic Data

In economic news this week we have an immense block of information set to hit the street. Monday we saw that incomes rose by 0.4% in May and consumer spending turned higher by 0.2%. The consumer spending portion was an upside surprise, but it was mostly in the auto sector which tends to be volatile.

Tuesday we’ll get consumer confidence which is expected to stay constant at 63.3, while Wednesday will focus on Chicago PMI, the EIA Petroleum Report, and MBA Mortgage Applications. We’ll be watching the PMI for signs from Midwest manufacturers and the EIA report for signs of further dry storage supply increases. EIA may be fighting tropical depression Alex over traction in the Crude Oil space.

Look for a volatile morning session on Thursday as the Initial Claims , ISM Manufacturing, Construction Spending, and Pending Home Sales reports cross tickers. ISM is expected to drop to 67.0 in the June reading and Construction Spending projected to fall from a 2.7% gain to 0.5% loss in May. Initial claims will be closely watched for signals on the heels of the ADP report from Wednesday; all in preparation for the May Employment situation report on Friday. Also due on the final day of trading this week, will be the Factory Orders report at 10:00 am, which should set the tone for the final hours of trading ahead of the weekend.

Remember it’s all about the S&P 500 (SPX) until we say so! Stay vigilant and nimble. We see this market on the edge of further downward momentum. There is a battle just over the horizon and bombs may well fall when we least expect it. To those prepared and those forewarned…

“Good night and good luck.”

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June 24, 2010 -The moment that Europe and the U.S. have been lobbying for over the past nine months finally arrived, as China ended the rule based exchange rate “peg” of the Renminbi, or Chinese Yuan, to the U.S. Dollar. While the immediate implications of a floating Yuan are positive for Asia as a whole, the mid-term reprocussions of a stronger Renminbi may tell a starkly different tale. We’ll explain what a floating Yuan means to Korea investors. We will also preview and review several market moving reports, helping to give subscribers a better grasp of current economic health and prospects for growth here in the ROK…

Download the full report below then share your thoughts. What do you agree with? Disagree with? Make us support our opinions!

It’s no secret that the entire China Renminbi “de-peg” issue, as defined by the U.S. White House, Obama, and “Tiny Tim” Geithner, was a complete sideshow to draw attention from domestic financial policy that has carved a handsome crevasse into the foundation of our country, formerly referred to with common adjectives such as “strong”, “unwavering”, and “solvent”. The currency was pegged to our currency and if it were un-pegged it would effectively levy a major tax on all of the American families who have traded down from Whole Foods to Wall Mart as we learn to live on fewer incomes and more humiliating job titles. Why is that Rob? Well sports fans the equation is simple: Cheaper goods = Chinese goods. The single and solitary reason that President Obama and Treasury Secretary Geithner had any stance on the issue, was due to European pressure to hard-line China into a gentle revaluation to make German goods more able to compete. And now that the Euro is nearing 1 to 1 parity with the USD, it seems that all is well in Whoville…

Well not quite, because now that no one cares China has played it’s middle child syndrome role to a “t” and obeyed the oldest son’s sustained pleas. Sure the Yuan will revalue, but apparently it will be capped around +1.5% in 2010, and still managed by central China. So is a managed float really a float? Well is a bear Catholic? Not really… in fact they don’t really belong in the same sentence. Exactly.

So sure the second largest economy in the world suddenly feels the need to float it’s currency because it runs a major current account surplus and is ending it’s stimulus fueled domestic spending; which would force it’s currency higher, or in the case of a pegged currency, keep exports competitive but cause inflation to run rampant as prices increase and wages stay stagnant. Make no mistake, China may be a middle child but they made the de-peg decision for themselves and it means nothing to the economic recovery there or anywhere in the World. Still, we’ll probably see some self proclaimed credit groping out of Washington in the near future by idiots who have no idea how to spell current account surplus, much less the name of the intern who wrote the speech they delivered on the subject. (Of course, that’s only after they zip up from railing the heads of global Petroleum giants.) This is why markets rallied early as bulls shot blanks, meant to be live rounds, over the bow of U.S.S. Permabear but ended in negative territory.

This week we’re going to see some serious pain from the housing reports on Tuesday and Wednesday where economists expect a rise to 6.2 million and a fall to 400,000 annual units in the Existing and New Home sales reports, respectively.

We’re getting towards the middle of 2010, and eventually we’re going to have to hear something from Bernanke to prep markets for the inevitable day when the U.S. economy has to sell the xbox, leave the parents’ basement, and in the words of a wise man, “get a job sir!” Many of us forget what it means for the large financial institutions that manage our cash to actually pay interest on borrowed money, but the day will soon arrive. The same folks who approved all of the crappy mortgages that you didn’t pay, because you didn’t actually make what you wrote on the application, are going to have to start paying their own rent as well. Yes, the event I’m so jovially alluding to is the Fed Funds Rate announcement from the Federal Reserve, and we’ll hear it on Wednesday.

Otherwise this week is going to be in the hands of the traders. Lucky for you, you’re reading this so you’ll have a jump on that as well. Check out the chart below for a look at the S&P 500 (SPX)… THE ONE AND ONLY QUINTESSENTIAL CHART NECESSARY FOR ANY EQUITY TRADES UNTIL WE SAY SO!

As regular readers know, we endorsed “short” positions relative to the S&P 500 and Crude Oil and a “long” call on the VIX following our proprietary trades to open said positions on Friday, May 28. As you can tell from the chart above, we called the next leg down to new six month lows correctly, but sentiment reversed and we called for investors to exit positions before the next big leg up on June 10.

I’m going back on the line now to call a true and magnanimous move lower on the S&P 500. Sentiment is waning as the truly negative effects of a floating Renminbi are becoming realized ahead of two sure to be nasty reports this week on the U.S. housing market. The MACD histogram (blue bar chart below main chart) has peaked, RSI is back above 50 and out of “oversold” territory for the first time since May 1st, and the SPX has followed a string of anemic trading sessions with a hugely volatile Monday session that ultimately ended lower.

Normally, we like to use the “simple moving average” (SMA) to chart trendlines for resistance and support of prices, but due to a drastic sentiment shift we’re more comfortable with the “exponential moving average” (EMA) trendlines, as seen in Green (200 day) and Red (50 day) above. The 200 EMA and 50 EMA have both served as resistance  and are nearing a bearish cross amid the slew of other red flags facing the U.S. equity market.

Take 5 minutes and look into SDS (UltraShort S&P 500), DTO (UltraShort Crude Oil), and VXX (Short Term VIX). We like using www.stockcharts.com to chart these vehicles and suggest our readers use it as well. It’s free and has a lot of technical indicators for your convenience. (And no we’re not even getting a cut for that plug, it’s just a solid chart service…)

Stay vigilant and keep stops tight if you want to dabble at these levels… For the record, we are most certainly dabbling in those very names as of this morning. Be sure to stay current on all of our positions and trading moves with our free Twitter service that tracks DS Lead Analyst Robert Eberenz’s trades in real time by clicking on the follow button under the DS_Shoutbox tweets in the right sidebar…

Fingers on the trigger boys!

June 17, 2010 –

Download the full report below then share your thoughts. What do you agree with? Disagree with? Make us support our opinions!