Summer of Recovery: 'The IMF has... pronounced the U.S. bankrupt'

For your consideration, an eclectic montage of upbeat economic stories:

U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy... the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years...

Sounds sustainable!

Looking for a more positive assessment? How does a comparison to a Disney character sound?

America is a "Mickey Mouse economy"

America is a "Mickey Mouse economy" that is technically bankrupt, according to Jochen Wermuth, the Chief Investment Officer (CIO) and managing partner at Wermuth Asset Management.

"America today looks like Russia in 1998. Consumers, companies and the government are all highly indebted. America as a result is a bankrupt Mickey Mouse economy," Wermuth told CNBC.

Kewl! Thanks, Mister Prezodent!

Deficit in July Totals $165.04 Billion

The U.S. government spent itself deeper into the red last month, paying nearly $20 billion in interest on debt and an additional $9.8 billion to help unemployed Americans.

Federal spending eclipsed revenue for the 22nd straight time, the Treasury Department said Wednesday...

The $165.04 billion deficit, while a bit smaller than the $169.5 billion shortfall expected by economists polled by Dow Jones Newswires, was the second highest for the month on record...

The highest was $180.68 billion in July 2009...

That level of deficit spending comes to, uhm, $2 trillion a year. For you leftists out there, that would pay for about... carry the one... 20 years of the Iraq and Afghanistan wars -- combined. Oh, and it's another Obama record for economic master FAIL.

Freddie Mac requests $1.8B more in aid after 2Q loss

The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae from the brink of failure nearly two years ago...

The new request means they have needed $148.2 billion to stay afloat, about $63.1 billion of which is being used by Freddie Mac.

Freddie Mac is losing money from bad loans it backed, many of them before the housing market went bust...

It had $118 billion in bad loans at the end of June, up from $103.4 billion at the end of last year. It owned more than 62,000 foreclosed properties in June, up from about 35,000 a year earlier.

To put it all in perspective, please recall the following:

The Democrats' so-called "financial reform bill" completely ignored Fannie Mae and Freddie Mac. To have truly repaired these government-sponsored entities -- which triggered the 2008 economic calamity -- would have exposed some very, very embarrassing truths.

And the real reasons for the mortgage meltdown.