Money in the Morning

TOP STORY: Existing home sales plunge in July by 27.2 percent from June level

WSJ, A1: "U.S. home sales plummeted in July to a level not seen in more than a decade, spurring fears of renewed weakness in housing prices and the broader economy." 

NYT, A1: "The steep descent surprised nearly every analyst and put the volume of single-family home sales at the lowest level since 1995. The financial markets took the news badly, with the Dow Jones industrial average closing down 134 points to a six-month low. As investors sought security, the yield on the two-year Treasury note fell to a record low." 

"Lack of Jobs, Foreclosures May Keep Housing Depressed." Bloomberg: 

Justin Fox (on Ezra Klein's blog) argues that housing prices need to fall more to lure buyers in. 

WSJ editorial calls for end to housing subsidies: "What people really need are jobs, and what the economy needs to create those jobs is for Washington to stop force-feeding investment to politically favored goals and let investors find the most productive uses for their money."

World markets jittery, says FT: "Fears that the US and other major economies are slowing sharply sent investors piling into the safety of government debt on Tuesday, sending UK, German and US bond yields down to record lows."

Eyes turn to Bernanke speech at the Fed's annual meeting on Friday, according to Reuters' Mark Felsenthal: "The big question now is whether the Federal Reserve will start buying Treasury bonds more aggressively again to provide the U.S. economy with a new injection of cash." 

More housing data coming Wednesday: New home sales from the Census Bureau and the mortgage applications index from the Mortgage Bankers Association

BOEHNER v. WHITE HOUSE ON ECONOMY. ICYMI: House GOP leader, in a Tuesday morning speech, called for Treasury Secretary Timothy Geithner and top White House economic adviser Lawrence Summers to step down. 

Gallup finds Americans' confidence in the economy at its lowest level this year. 

Fiscal hawks at the Committee for a Responsible Federal Budget see House Minority Leader John Boehner (R-Ohio) open to deal on tax expenditures. 

Some good news for Dems on the stimulus: The Congressional Budget Office finds that it boosted GDP growth by as much as 4.5 percent and employment by as much as 3.3 million jobs.

Germany's Deficit Soars. WSJ:

TAKES ON KRUGMAN ON TAX CUTS. Former Bush White House economic adviser Keith Hennessey says NYT columnist Paul Krugman's attack on the Bush-era tax cut extensions relies on "language tricks" and historical revisions.

Krugman's original column: