Jim Sinclair’s Commentary

The 2006 Formula of the economic downward spiral is actually only the beginning.

State Revenue Falls Most Since 1963 on Incomes, Sales (Update2)
By Jerry Hart and William Selway

Oct. 15 (Bloomberg) — U.S. state tax collections tumbled the most in almost half a century in the second quarter as the economic recession curbed levies on incomes and sales.

The 16.6 percent plunge was the biggest since at least 1963, the Nelson A. Rockefeller Institute of Government said today. For the 12 months to June 30, the fiscal year for most states, revenue declined 8.2 percent, or $63 billion, about twice what states got from the $787 billion U.S. economic stimulus package, the institute said.

State revenue has dwindled for two straight quarters and continued to decline in July and August, the Albany-based research organization said. Budgets for the year that began July 1 already face $26 billion of deficits, the Washington, D.C.- based Center on Budget and Policy Priorities said Aug. 12, forcing state lawmakers to confront additional spending cuts.

“We’re looking at a multiyear problem hitting essentially every state,” Robert Ward, the institute’s deputy director, told reporters. “It has happened during recessions before, but the depth of this decline is unprecedented in modern times.”

Collections dropped in 49 states in the second quarter as sales and personal-income taxes slid for the third consecutive period, the institute said. Income tax was down 27.5 percent and sales tax fell down 9.5 percent, its study said. Both categories fell by the most in 45 years.

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Jim Sinclair’s Commentary

The move away from the US dollar and desire for diversification is a universal acceptance that the gold market is the real thing.

Bolivia summit adopts new currency

Leaders from Latin America and the Caribbean have agreed during a summit in Bolivia on creation of a regional currency aimed at reducing the use of the US dollar.

The decision came shortly after members of the Bolivarian Alternative for the Americas (Alba) gathered in the central city of Cochabamba for the start of the two-day summit, the AFP news agency reported.

Top on the agenda for the left-leaning regional trade group, which includes Venezuela, Ecuador and Nicaragua, were talks to implement the new currency, known as the sucre, for use among Alba nations.

"The document is approved," Evo Morales, Bolivia’s president and summit host, said on Friday.

Earlier, Hugo Chavez, the Venezuelan president, described the new currency as a "revolution of paradigms".

"The sucre is born in the Alba," Chavez said ahead of the meeting.

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