weekend reading

looking for an exit: Economist James Hamilton provides some background for Bernanke’s proposed exit strategy...fed balance sheet charts: http://www.econbrowser.com/archives/2009/07/looking_for_an.html
part2: http://www.econbrowser.com/archives/2009/07/looking_for_an_1.html

Phil Izzo: A Look Inside Fed’s Balance Sheet — 7/16/09 Update - Real Time Economics - WSJ

Bernanke’s Exit Strategy Fine On Paper; Timing’s The Issue (MarketTalk)Bernanke’s groundwork for the Fed’s exit strategy looks good on paper, but whether it’ll be implemented at the appropriate time is the major cause for concern

http://economistsview.typepad.com/economistsview/2009/07/ben-bernanke-the-feds-exit-strategy.html

No inflation here. zerohedge on fed balance sheet, velocity, etc...

On the Mend (Economist) Bernanke talks up the economy to defend against accusations from Congress.

The Debate Continues (FedWatch)Economist Tim Duy reviews the debate over the shape of the recovery.

naked capitalism: Representative Alan Grayson on His Questions to Bernanke Over Dollar Swap Lines (counterpoint:)
"The Fed is Lending to 'Foreigners' instead of Americans!"
Dear God, Alan Grayson is a Tool, Economics of Contemptboth articles include video of Alan Grayson "gotcha" questioning of Ben Bernanke

Bernanke: Why I Oppose Ron Paul’s Bill - Real Time Economics

Fed Mortgage Report – What’s Ginnie Mae Up To? Bruce Krasting

Treasury Proposes Putting a Fed Official on the FDIC’s Board
http://blogs.wsj.com/economics/2009/07/23/treasury-proposes-putting-a-fed-official-on-the-fdics-board/

http://robertreich.blogspot.com/2009/07/wall-street-rally-watch-your-wallets.html

Has housing become a bright spot? Existing sales up for 3rd-straight month.

Bailouts could cost U.S. $23 trillion
A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the nation’s entire economic output for a year.

Worldwide financial system losses and capital raised

Another Great Depression? - Economic Perspectives why not

CRE: I Think The Other Shoe Just Dropped (Chart on Page)

• S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage (Zero Hedge)

another chart: as we suspected, one income families in the 70s were better off than 2 incomes today

from the curious capitalist:
mortage applications are paper extravaganzas, and the vast majority of what gets written on that paper never makes its way to investors. Dubinsky estimates that 2,000 to 2,500 data points are collected when you get or refinance a mortgage. Bundle that mortgage with 499 others into a mortgage-backed security and you're talking about between 1 million and 1.25 million "discrete pieces of data," as Dubinsky puts it.
What happens when that MBS is brought to market? The rating agencies get to see 16 data points. Investors get access to two.

Economics is in crisis: it is time for a profound revamp Paul De Grauve, Financial Times"...take monetary policy...both camps line up an impressive list of Nobel prize-winners to buttress their arguments. Economists have often disagreed in the past, but this time the tone is different. The protagonists do not hesitate to accuse the other camp of ignorance or bad faith. I have never seen anything like this."

The real estate roots of the crisis in the US
The current economic crisis stems from the fact that the underpinnings of the market are either broken or rotted, and in some cases there are no underpinnings. That makes it a non-traditional crisis; what we are confronting is the direct result of inadequacies in upstream property rights. This crisis combines the original sin of badly valued properties with a financial system based on harmful, unproductive gambling and incentives to continue gambling.


More than you could ever want to read on why “the affordable mortgage depression” won’t end until 2013 (or)
• How far will US home prices fall? (Vox EU) not much further...

The other walk-away phenomenon: Banks that refuse to reposses.

“The US trade deficit hasn’t shrunk by as much as foreign demand for US long-term assets.”

A Treasury supply tsunami on its way.

Innovation as regulatory evasion is something regulators should expect. What we had instead was precisely the reverse.“

Executives Receive One-Third of All Pay in the U.S. (Alternet)

USPS May Be Unable to Make Payroll in October and Retiree Health Plan Costs, Unions' Letter to White House Says
The letter, which the FederalTimes.com blog provided a scanned copy late last week, says:
"[USPS] top executives are now saying that the USPS will default on a $5.4 billion payment to prefund future retiree health benefits on September 30, 2009. And its government affairs representative are now telling Congressional staff that the Postal Service may not be able to make payroll in October and will be forced to issue IOUs instead."

Jobless Checks for Millions Delayed as States Struggle Sixteen states, with exhausted funds, are now paying benefits with borrowed cash, and their number could double by the year’s end.

Detroit Heads For Bankruptcy; 50 Cities Must "Shrink to Survive" Mish's latest

Oliver Willis: Fox News ‘63: Racist Communists Invade Nation’s Capital

Ben Casnocha: Comparing Modern Education to a Placebo
In his new book... Tyler Cowen writes: "Placebo effects can be very powerful and many supposedly effective medicines do not in fact outperform the placebo. The sorry truth is that no one has compared modern education to a placebo. What if we just gave people lots of face-to-face contact and told them they were being educated?" He reluctantly provides the terrifying conclusion: Maybe that's what current methods of education already consist of.

China’s Magic Numbers: Is the republic really growing at 8 percent a year?

• What Can China Get For Its $2 Trillion? (Real Time Economics)

China orders internet purge Financial Times
Chinese government censors have launched a sweeping campaign to purge any mention of a corruption investigation in Namibia from the internet because it involves a company formerly run by the son of China’s president.

Chinese College sudents banned from credit card applications Xinhua And we wonder why their savings rate is higher than ours?

All stimulus roads lead to China Barry Eichengren, Project Syndicate

My whopping $32 emergency room visit in the land of socialized medicine
"This afternoon I went to the emergency room of the Centre Hospitalier National d'Ophtalmologie des Quinze-Vingts in Paris, France. It's a hospital that specializes in eye problems. I had to have emergency eye surgery on the spot."

400 Percent APR—Is That Good?
Do people take out payday loans because they're desperate—or because they don't understand the terms? What happens when payday loans are linked with full disclosure?

Swiss banks running out of storage space for gold bullion
Worries about the global economy and the success in marketing gold ETFs has seen Swiss banks finding difficulty in meeting secure storage requirements for gold bullion.

historical savings rate chart popup

CBO June 2009 Long-Run Budget Outlook 82 page pdf w/ projections chart & bookmarks

http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/

joe biden op ed NYT re: http://www.recovery.gov/

Minimum Wage Hike Doubles Portion Of Workers At The Bottom

According to the New York Times:
According to the Labor Department, 5 of the 10 occupations expected to add the most jobs through 2016 are “very low paying,” up to a maximum of about $22,000 a year. They include retail sales jobs and home health aides. Another 3 of the 10 are “low paying,” from roughly $22,000 to $31,000, including customer-service representatives, general office clerks and nurses’ aides.
Those are the careers that are left when high paying manufacturing and white collar jobs are shipped overseas.8 of 10 jobs will be low or very low paying. That means the median income will surely drop over the next decade

http://economistsview.typepad.com/economistsview/2009/07/should-bernanke-be-reappointed.html

Dave Altig has a very interesting graph showing just how pessimistic consensus estimates are about this economic recovery.

The AP goes to war with search engines and blogs; installs protective sofware, says that even a link doesn’t represent fair use in the Internet age: Tom Curley, The A.P.’s president and chief executive, said the company’s position was that even minimal use of a news article online required a licensing agreement with the news organization that produced it. In an interview, he specifically cited references that include a headline and a link to an article, a standard practice of search engines like Google, Bing and Yahoo, news aggregators and blogs.

Eric Boehlert: This is not going to end well for CBS
[W]e learned that CBS was in full panic mode and was willing to take whatever step necessary to placate the right-wing fanatics frothing about Memogate. The picture painted by the CBS memos and documents already reviewed by Rather suggest a craven news organization that was less interested in uncovering the truth about the disputed memos, and more interested in appeasing Rush Limbaugh. It wanted to "mollify the right," as one internal CBS memo put it. As I said, my guess is that with Rather and his lawyers about to dive into a new batch of documents, that portrait will only become more vivid. And here's the kicker for the former Tiffany Network: Rather has vowed to never settle the case out of court.

A man who lives without money.

The Anonymous Liberal: John Yoo: Still Lying

Swine flu: intensive care beds will be swamped experts warn Telegraph. Experts saw what happened in the southern hemisphere winter as key to how bad this would get. Intensive care units in Australia and New Zealand are overtaxed now.

US vehicle efficiency hardly changed since Model T – New Scientist