August 17

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays...We are beginning to abandon our tolerance of the abuse of power by those who betray for profit the elementary decencies of life. In this process evil things formerly accepted will not be so easily condoned..."
Franklin D Roosevelt, Second Inaugural Address, January 1937

Homebuyer Demand All But a 'Standstill': Altos Research. Housing Wire.

"The market, right now, is a veritable case study of the law of supply and demand," according to the report. "Right now, there's a whole lot of supply, but very, very little demand. The buyers that drove a flurry of activity during the spring have left a deafening silence in their wake."

Michael Feder, CEO of Radar Logic Inc., on outlook for the U.S. housing market. Bloomberg.

Uh-Oh Canada? Paul Krugman, NYT.

When unconventional becomes conventional. Paul McCulley, PIMCO.

- When the economy suffers from Post Bubble Disorder, characterized by private sector deleveraging and a fat-tail risk of deflation, conventional monetary policy is not enough.

- In such circumstances, the central bank has a profound duty to act unconventionally, ballooning its balance sheet by monetizing assets, either government or private, or both.

- The central bank has a profound duty to meld itself with the fiscal authority, until
the fat risk of deflation is eliminated.

on the other hand, as noted in previous posts, what good will it do?

along those lines:
The Federal Reserve Enters Decline. Gregor Macdonald.

The Federal Reserve is now in permanent, irreversible decline because it has no tools to fight both the limits placed on the economy by oil, and, current debt levels. Were the Fed to conduct debt jubilee on a scale sufficient to restart demand, that would vaporize the currency. But even if it were possible to manage a workable debt jubilee, then the economy would come more squarely back into confrontation with the energy limit. And there too the Fed would discover that its role as provider of money and credit was reduced, as credit itself relies on future growth.

recall yesterday's note about Chinese GDP surpassing Japan's; well, here's a reminder from the Economist that for most of the past 2000 years, China and India were the two largest economies in the world

Armageddon view of the week:

The Ecstasy of Empire. Paul Craig Roberts.

on exploding deficits, therefore collapse of the dollar, therefore big-time inflation and spiking interest rates

Here is what can be done. The wars, which benefit no one but the military-security complex and Israel’s territorial expansion, can be immediately ended. This would reduce the US budget deficit by hundreds of billions of dollars per year. More hundreds of billions of dollars could be saved by cutting the rest of the military budget which, in its present size, exceeds the budgets of all the serious military powers on earth combined.

US military spending reflects the unaffordable and unattainable crazed neoconservative goal of US Empire and world hegemony. What fool in Washington thinks that China is going to finance US hegemony over China?

The only way that the US will again have an economy is by bringing back the offshored jobs. The loss of these jobs impoverished Americans while producing oversized gains for Wall Street, shareholders, and corporate executives. These jobs can be brought home where they belong by taxing corporations according to where value is added to their product. If value is added to their goods and services in China,
corporations would have a high tax rate. If value is added to their goods and services in the US, corporations would have a low tax rate.

This change in corporate taxation would offset the cheap foreign labor that has sucked jobs out of America, and it would rebuild the ladders of upward mobility that made America an opportunity society.

If the wars are not immediately stopped and the jobs brought back to America, the US is relegated to the trash bin of history.

BP link of the day:

Relief wells delayed... does the government have ANY IDEA what it's doing? Washington's Blog.