No WhiteWash!

It’s a slow day in a small town and
streets are deserted.
Times are tough, everybody is in debt, and everybody
is living on credit.
A rich tourist drives through town, stops at the
motel, and lays a $100
bill on the desk saying he wants to inspect the rooms
upstairs to pick one for the night.

As soon as he walks upstairs, the owner
grabs the bill and runs
next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the
street to retire
his debt to the pig farmer.

The pig farmer takes the $100 and heads off
to pay his bill to
his supplier, the Farmer’s Co-op.

The guy at the Farmer’s Co-op takes the
$100 and runs to pay his
debt to the local prostitute, who has also been
facing hard times and has
had to offer her “services” on credit.

The hooker rushes to the hotel and pays off
her room bill with the hotel owner.

The hotel proprietor then places the $100
back on the counter so
the rich traveler will not suspect anything.

At that moment the traveler comes down the
stairs, states that
the rooms are not satisfactory, picks up the $100
bill and leaves town.

No one produced anything. No one earned
anything. However, the
whole town is now out of debt and now looks to the
future with a lot more optimism.

And this, ladies
and gentlemen, is how the United States
Government is
conducting business today.

What has Tennessee elected officials done to get the data center business?

The state of Virginia has adopted targeted tax incentives to attract major data center projects to the state, which is already one of the most active data center markets. The incentives are designed to keep Virginia competitive with other states that have passed similar tax incentives to attract data center projects, and positions the commonwealth to benefit from IT investment in the Obama administration’s economic stimulus plan.

Last month both houses of the Virginia General Assembly unanimously passed the incentive package, which offers tax breaks on servers and other equipment purchases for either new or existing data centers. The bill was promptly signed into law by Gov. Tim Kaine.

The new measure offers an exemption from the Virginia Retail Sales and Use tax for computer equipment bought or leased between July 1, 2010 and June 30, 2020 for use in a data center. The facility must be located in Virginia, generate capital investment of at least $150 million and create at least 50 new jobs that pay one and one half times the prevailing average wage in the locality.

Read more via Virginia Passes Data Center Tax Incentives « Data Center Knowledge.

Grandparents, retirees and struggling seniors have waited months for this.

Tens of millions of Social Security recipients will see their bank accounts jump by $250 starting Thursday, when the government began sending out checks and transferring funds for a one-time boost coming from the stimulus bill passed in February.

The payments are flowing to nearly 55 million seniors and retirees between now and June 4, with a huge batch of checks hitting the mail this week.

Read more via $250 checks going to millions of seniors Thursday – CNN.com.

When Warren Buffett speaks, it’s usually worth paying attention. This time, the Oracle of Omaha is voicing concerns about the ability of some battered local and state governments to pay off their debts. The idea of cities and states facing insolvency is alarming for sure, and Buffett isn’t alone. Moody’s recently assigned a “negative outlook” to the creditworthiness of all the nation’s local governments. The agency has rarely made such a sweeping generalization but said the magnitude of this recession warranted the move. The comments are the latest to have shaken the once-staid world of municipal bond investing.

Traditionally, muni bonds offered lower yields — usually about 20% less — than Treasury bonds, since their income isn’t taxed. But the group was crushed last year, sending prices down and yields up. Now bargain hunters have started to emerge, attracted by yields that are as much as 70 basis points, or 0.7%, more than similar 10-year Treasurys, for example. As a result, the S&P Muni index has climbed 7% this year, compared with the nearly 6% decline in the broader stock market. Continue reading “Could Municipal Bonds Really Default?” »

Cash-strapped state treasuries could lose tens of millions of dollars in income and corporate tax revenue if states copy the tax breaks in the federal economic stimulus package, officials say.

Most states tie their tax code to the federal government’s to make it easier for individuals and businesses to fill out their tax forms. The $787 billion stimulus package that Congress approved and President Obama signed contains about 10 new tax cuts that state officials will have to decide whether to follow.

Read more via Stimulus tax breaks threaten state revenues.

State and local governments are turning to user fees to raise quick cash — from increases on hunting licenses to fees for enrolling in the Little League. One town is considering charging accident victims who need to be extricated from their cars.

As cities and states struggle with sinking property values and declining sales tax revenue, many see raising fees as more acceptable to voters than increasing income taxes and sales taxes, said Bert Waisanen, a fiscal analyst for the National Conference of State Legislatures.

Money from the federal stimulus package will bolster some parts of states’ budgets, but it won’t be enough to close the gaps, said Scott Pattison, executive director of the National Association of State Budget Officers. “The stimulus favors education and health care,” Pattison said. “Other parts of the budget are going to be disproportionately hit, like parks and recreation.”

Read more via Cities, states tack on more user fees – USATODAY.com.

More than three weeks after President Barack Obama signed into effect the stimulus package, many area governments, including Johnson City, are still waiting on word of how much money they will receive. Johnson City City Manager Pete Peterson says the city requested several hundred million dollars in stimulus funding that could be used for a half dozen “Shovel-Ready” projects.

Read more via Johnson City Hoping For Millions In Stimulus Funding | TriCities.

ETSU Bureau of Business and Economic Research has released the fourth quarter 2008 retail sales results for the Tri-Cities area.  You can see the ETSU full report by clicking on the link. Tri-Cities Retail Sales Report

Note the steep inclines in the graph below for Johnson City and Bristol  Kingsport did have growth but not as much as compared to Johnson City and Bristol.  Kingsport is just now picking up the sales that it lost due to Sams Club moving to Johnson City.  From the years 2000-2008, Kingsport increased $219.1 million in sales and Johnson City picked up $466.5 million for the same period.

In the last four years with Dennis Phillips as Mayor, Kingsport has grown less than Johnson City and Bristol in terms of retail sales growth. For the years 2004-2008 Johnson City had $264.2 million, Bristol had $138.5 million and Kingsport had $112.5 million in new retail sales growth.  Clearly, Kingsport has been the laggard in the retail sales for the Tri-Cities area in the last four years.  But, I think Kingsport just might be the biggest spender of taxpayers money in the Tri-Cities area.

Take time to look at the facts and try to understand them and do not take for granted what the Kingsport public relations machine gives you as the gospel.  See the Tri-Cities Retail Sales Report for the data.

THE TRI-CITIES

As expected, the deepening recession overwhelmed the urge to spend during the holiday selling season. During the fourth quarter, dollar sales fell 1.8% in Kingsport, 2.8% in Johnson City, and 7.1% in Bristol. Adjusted for inflation, holiday sales volume decreased 3.1% in Kingsport, 4.2% in Johnson City, and 7.1% in Bristol. In comparison, real sales were down 8.9% in Tennessee and 9.0% in the nation as a whole.

For the year 2008, Kingsport reported the smallest decline in retail activity with a loss of only 0.4% in inflation adjusted sales. Retail volume decreased 3.3% in Johnson City and 7.7% in Bristol. In comparison, real sales were down 6.3% in Tennessee and 3.8% in the United States

THE METROPOLITAN AREAS

During the fourth quarter, dollar sales in the Combined Statistical Area (CSA) declined sharply, falling 7.8% to $1,573 million. Adjusted for inflation, retail volume in the Tri-Cities metro area was a 9.2% below the same period in 2007. Dollar sales and sales volume decreased in all seven metro counties. The smallest loss was reported by Hawkins County, followed by Unicoi, Carter, Washington (TN), Scott, and Washington (VA) counties.

he recession also caused a miserable holiday shopping season in the nation and the state. In the United States, dollar sales decreased 7.6% to $1,094 billion. Adjusted for inflation, real sales were lower by a staggering 9.0%. This marks the fourth decline in a row, after twenty consecutive quarters of real growth during the 2002 to 2007 business expansion. Tennessee suffered a similar retail performance. Dollar sales fell 7.5% to $20.6 billion, and sales volume was 8.9% below 2007 levels. Retail activity has now declined for five consecutive quarters in Tennessee, creating the prospect of a one billion dollar deficit in the state budget.

Looking at the annual data for 2008, the dollar value of retail sales fell only 0.2% in the nation to $4,475 billion. But adjusted for inflation, real sales in the U.S. were down 3.8%, compared to a 1.1% increase in 2007. Retail sales in Tennessee decreased 2.8% to $82.1 billion. Sales volume in the state dropped 6.3%, compared to a 0.6% increase in 2007.

ANALYSIS

There are no surprises in this report. It is now well understood that the nation is in a major recession, and that business conditions will continue to get worse, before they get better. The last time we saw such bitter economic news was the severe recession of 1981 and 1982. It is worth recalling that the federal government under a Republican President and with a Democratic Congress undertook a massive stimulus package of tax cuts and increased spending. They were successful, but in retrospect, they probably should have done more.

The overriding danger in this recession is not its severity, but the meltdown and continuing dysfunction of the financial system. As Ben Bernanke, Chairman of the Federal Reserve, has stressed, there will be no recovery until the financial system is healed. And the last time the financial system collapsed was in the early 1930s, and we know what that led to.

The central bank has been pumping massive amounts of liquidity into the financial system, and the federal government is undertaking the largest fiscal stimulus since the Depression and World War II. But the financial system remains paralyzed and the credit flows necessary for our capitalist economy to function are not being provided.

The economic outlook for the nation and the region depends upon events in the financial system. If there is an early resumption of normal financial operations, business activity would quickly recover. If the financial system continues to malfunction, the recession will last longer, and the ultimate government intervention in the financial system will be more drastic.

With this in mind, if the financial system begins to function normally over the next several weeks, then an end to the recession by late spring or early summer is very probable. Then we can fret over when the recovery will begin and will it be strong or weak. And if we are very lucky, a year from now we will be concerned about tight labor markets and inflation dangers.

Newspapers can blame “AL Gore” for their downfall by inventing the internet

The coroner’s report on the newspaper and magazine industries will read that they died from lack of public interest in the printed word.  Read more on Newspapers

Check out the link below for the scoop on getting your stimulus money.

Since Congress passed the economic-stimulus bill February 13, a lot of people have asked us how they will get their money. Some of the details will be worked out in the coming weeks, but here’s what we know so far.  More on Stimulus Money