Tuesday Links Take Cover

2nd Half: Slowdown or Double-Dip? – CR

The arguments for a slowdown and double-dip recession are basically the same: less stimulus spending, state and local government cutbacks, more household saving impacting consumption, another downturn in housing, and a slowdown and financial issues in Europe and a slowdown in China. It is only a question of magnitude of the impact.

The Choices That Pay Us Back – NYT

But as the nation struggles to emerge from the most severe downturn since the Great Depression, such cuts are the last thing we need. There is no conflict — absolutely none — between our twin goals of putting the economy back on its feet and reducing long-term deficits. On the contrary, government could take many steps that would serve both goals simultaneously.

For example, it could create a program to restructure consumer debt. Although rates on 10-year Treasury bonds are only about 3 percent, many consumers still carry tens of thousands of dollars of credit card debt at 20 percent or more. This burden has been a continuing drag on spending. The federal government could reduce it by borrowing at 3 percent and lending to consumers at 8 percent under a one-time debt-restructuring plan.

China Property Market Beginning Collapse – Bloomberg

China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.

A Market Forecast That Says ‘Take Cover’ – NYT

Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.

Mortgage Rates Scream DO NOT BUY – Patrick

Mortgage rates are at record lows, making this a terrible time to buy a house, but realtors count on the fact that most people don’t understand the relation between interest rates and asset values.

Short answer: when money is cheap, assets are overpriced.

With the US trapped in depression, this really is starting to feel like 1932 – Telegraph, Ambrose Evans-Pritchard

“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us beyond it are failing.”

Is the Deficit No Big Deal? – Michael Kinsley

A couple of graphs in the Congressional Budget Office’s annual Long Term Budget Outlook, published Wednesday, have supplied some ammo to people who think so.

FIX AMERICA? FIX THE POLITICIANS – Dylan Ratigan

Today we end Fix It week on my show, although we hope to keep this recurring theme. But the largest hindrance to solutions for all of the problems we’ve discussed – be it the Deficit, Energy, Education or the Wars – goes back to one place: the current Political Process in our country.

Office Vacancy Rate Keeps Climbing – WSJ

Office buildings across the U.S. lost 1.8 million square feet of occupied space in the quarter, pushing the national office vacancy rate to 17.4%, the highest level since 1993, according to New York-based research firm Reis Inc.

Banks Already Moving to Evade Volcker Rule - Naked Capitalism

But the big problem is with the treatment of dealing desks. Firms could and did take proprietary exposures on customer desks long before the creation of formal prop desks; a lot of prop positioning still takes place on trading desks. And when a prop desk enters or exits a trade, the execution is on a customer desk. Exactly how often do you think the counterparty of that prop trade is a customer, as opposed to a dealer? Unless the prop desk is in a huge hurry to take or unload the position, the odds greatly favor the party on the other side being an customer.