Wednesday Links Take Off Their Shoes

U.S. Is Bankrupt and We Don’t Even Know It – Bloomberg

Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.

My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”

Apartment Sellers Insist on Exposure, of the Feet – NYT

“People believe in signs. When they show up and you ask them to take off their shoes, it’s almost like, ‘This might not be the one for us.’ ”

Storm Clouds Loom Over California Housing Market – WSJ

While the rest of the nation saw buyer traffic plunge after the federal tax credit expired April 30, the state credit has softened California’s blow. But now, it’s time for a reality check.

“Slam Dunk Stimulus” – The Natural History of a Rumor – HousingWire

This is great propaganda, but it’s not constructive public discourse.

Moody’s: Odds of a Double Dip Increasing, Home Prices Could Fall 20% – WSJ

That compares to the baseline forecast that calls for another 5% decline with prices hitting bottom early next year. Housing economist Celia Chen writes that the odds of a near-term double-dip recession now stand near one in four, versus odds of one in five during the spring.

Q2 GDP May Be Revised to Near 1% – The Atlantic

Earlier today, we learned that the U.S. trade gap for June grew by a staggering 18.8%. That was dramatically worse than the 0.6% increase that economists expected. But it also implies that GDP for the second quarter, which includes June, will probably get a pretty major downward revision.

For Those With Jobs, a Recession With Benefits – NYT

For many of these long-term unemployed, the financial and psychological damage will last for years. For most other workers, however, the situation has had a perverse, and mostly overlooked, silver lining.

Fed Move on Debt Signals Concern About Economy – NYT

With short-term interest rates already close to zero, the Fed’s policy makers have relatively few tools available to encourage consumer and corporate spending. So they now plan to use the proceeds from the Fed’s huge mortgage-bond portfolio to buy long-term government debt.

That action may put downward pressure on long-term interest rates and stimulate borrowing. For consumers, it means mortgage rates are likely to remain at record lows for some time.

The peril of false bottoms – Asia Times

Observers have been startled by the recent slowing of US economic recovery. A recession as deep as that of 2008-09 would normally be followed by a recovery of exceptional vigor. Austrian and other anti-Keynesian commentators, myself included, have pointed the finger of blame at the excessive fiscal stimulus of 2009-10 and at the locked-in Federal Reserve’s zero rate monetary policy.

Californians’ income falls for first time since WWII – SacBee

California’s decline was a third more than the national 1.8 percent personal income drop, reflecting the relative intensity of the state’s recession.

The Food Bubble – Democracy Now

A new article in Harper’s Magazine examines the role Goldman played in the food crisis of 2008 when the ranks of the world’s hungry increased by 250 million. We speak to Harper’s contributing editor Frederick Kaufman.

Top Fed Official, Warns Fed Risks Repeating Past Mistakes – HuffPo

The economy doesn’t need further stimulus, Federal Reserve Bank of Kansas City President Thomas M. Hoenig said. Rather than worry about juicing an economy mired in slow recovery, we should take note that the economy is recovering and instead be wary of repeating the mistakes of the past.It’s like 2003 all over again, according to Hoenig.