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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Jim McMannis who wrote (251974)6/4/2010 6:07:14 PM
From: Elroy JetsonRead Replies (1) of 306849
 
During that last Great Depression, the government could not balance their budget with cuts, let alone pay down debt, while consumers and business did. Because tax revenues fall off a cliff. Increasing taxes during an economic depression is not helpful, so the government goes deeply into the red. Local and State governments, however, will be decimated.

The only way to balance the reduced Federal tax revenues would require both dismantling the military and terminating all Social Security benefits. I find this very unlikely. There's not enough spending in the rest of budget to balance the revenue decline, even if they were cut 100%.

Additionally there is pressure during and economic depression for the government to provide soup kitchens for the unemployed and homeless. It may be hard to imagine now, but the public pressure for soup kitchens becomes shrill from all, merely to prevent widespread crime.

After the Great Depression the government can pay down debt.

As in the Great Depression, property taxes and utility fees will rise sharply to provide basic services as properties go into default and taxes are not paid. Many landlords who owned their properties without any debt lost their properties to tax liens, as the properties taxes rose and rents declined. You'll see that again.
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