Liquidity

This you don't want to hear. The daily tax returns closely parallel market movement as a proxy for the liquidity index, L2. The daily receipts for 2/24 trails that of a year ago by a round billion. The month to date trails year over by 16.5 billion. Year to date year over shows a gain of 34.4 billion. --- Late February liquidity slumped and so did the market.

Last year, the fed ends Sept. 30, listed 2.038 trillion revenue. We spent 3.685 trillion. Thus far this year we took in 822.8 billion and spent 1.379 trillion.

The National Debt at the beginning of 2010 was 11.864 trillion. By year end it was 13.511 trillion. As of 2/24 the National Debt is 14.067. The statutory limit is 14.294 trillion.

What does it all mean? Mostly a short term negative effect on the stock market. If institutional and corporate money does not continue to buy into the equities market, and there are not a lot of buy backs, then market liquidity is not sufficient to sustain the growth that we have seen year to date. One might anticipate a short term market adjustment.

As for the continuing growth of the deficit, we obviously need more tax revenue and that will come with economic growth and productivity. It would be nice to tax the bank bonuses that so outrage the Nation; however, the Telegraph reports those bonuses totaling 20.8 billion. That seems low compared with other reports, hardly enough to make a difference. Another source reports total compensation as 128.7 billion, still not enough --- but out of principal!