Friday, August 15, 2008

Bank Losses: Secondary Effects

Something else for the Gummint to consider--not that they will do so--but they were warned!

The massive losses taken by Wall Street Banks and Brokers is going to wipe out their profit for the next few years. About $500 Billion in write downs have already occurred. Best estimates for the total that will get written down range from $1 trillion to $2 trillion dollars.

That's not only very bad for the firms, their shareholders and employees -- its also going to be very challenging for the regions where they are headquartered and do much of their business.
In New York State, the 16 largest banks sent taxes totaling $5 million in the most recent reporting period; that compare with $173 million from the same period a year ago.

Taxes paid are down an astonishing 97%!

There are several large Banks with headquarters in Wisconsin, meaning that there will be LESS tax revenue showing up at the State's doorstep. We're not New York--the effect will be smaller--nor are Wisconsin banks bleeding at the rate of, say Citicorp, or Chase.

But there will be an effect.

My guess: the Legislature and Governor will continue spending as though nothing happened, leaving it to folks still present in Wisconsin to pay the bonded debt in the period 2030-2050.

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