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Wednesday, May 27, 2009

Great Recession Roundup — May 27, 2009

Items of Interest:

projected U.S. budget deficits from 2008 to 2019John Taylor / Financial Times:
Exploding debt threatens America -- Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.

Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years...

discussion:
Mark Thoma / Economist's View: Starve the Beast (Recession Edition)
Andrew Sullivan / The Daily Dish: Deal With The Debt! — Or face serious inflation.
Curtis Dubay / The Foundry: Out of Money? Value-Added Tax Next Up
Ryan Avent / The Washington Independent: America Unable to Talk About Debt Without Losing It
Steve Verdon / Outside The Beltway: John Taylor on U.S. Debt
Fausta / Fausta's Blog: Andres Velasco's plan: Save for a rainy day

related:
Brian Wesbury & Robert Stein / Forbes: America's Debt Is Still Triple A
Zubin Jelveh / The Stash: How Long Can Rates Say Low Without Inflation?
Joe Weisenthal / Clusterstock: Why Quantitative Easing Fails
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Barry Ritholtz / Big Picture:
Dollar's Slide Begins to Hurt Foreign Investors -- Will the greenback turn out to be the Achilles heel of the US economy?
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Bloomberg:
U.S. Inflation to Approach Zimbabwe Level, Faber Says -- The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said...
discussion:
Edward Harrison / naked capitalism: Guest post: Marc Faber says “I am 100% sure that the U.S. will …
Ryan Chittum / CJR.org: Nut Says Moon Is Made Of Cheese, Bloomberg Reports
Felix Salmon: Hyperbole watch, Bloomberg edition
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Washington Post:
Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look -- Levy Viewed as Way to Reduce Deficits, Fund Health Reform

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax.

Common around the world, including in Europe, such a tax -- called a value-added tax, or VAT -- has not been seriously considered in the United States. But advocates say few other options can generate the kind of money the nation will need to avert fiscal calamity...
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Diana Oleck / CNBC Realty Check:
High-End Foreclosures Are Next -- I heard a startling statistic from the National Association of Realtors this morning…no not that home sales are actually increasing, but something about the high end of the market.

Chief economist Lawrence Yun said that the supply of existing homes for sale over $750,000 has reached a forty-month supply. Yep, that means it would take well over three years at the current place to sell off all of those homes.

The trouble is manifold: Jumbo loans are pricier and more difficult to get, job losses are mounting, and buyers in that price home are generally move-up buyers, so they have to sell their own homes first...
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Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia