Downside risks have risen sharply. In the near term, the main risk is an escalation of financial stress and contagion, prompted by rising concern over sovereign risk. This could lead to additional increases in funding costs and weaker bank balance sheets and hence to tighter lending conditions, declining business and consumer confidence, and abrupt changes in relative exchange rates. Given trade and financial linkages, the ultimate effect could be substantially lower global demand.

In a separate report from late June, released today, the IMF said it does not expect the U.S. economy to fall into a double-dip recession, but that unemployment will stay above 9 percent throughout 2011. That translates into a long, slow recovery characterized by persistent joblessness and sluggish growth in GDP and consumer spending: “The outlook has improved in tandem with the recovery, but remaining household and financial balance sheet weaknesses — along with elevated unemployment — are likely to continue to restrain private spending.”

But the biggest risk to the U.S. recovery? Housing:

[The] backlog of foreclosures and high levels of negative equity, combined with elevated unemployment, pose risks of a double dip in housing; the continued deterioration in commercial real estate poses risks for smaller banks; and financing conditions remain tight, especially for smaller firms reliant on bank finance.

The letter from The Free History Project, which owns the rights to “The Weather Underground,” demands AIP immediately pull the ad from the airwaves — it is reportedly airing in Ohio and Michigan — as well as from the AIP Website, and threatens legal action for non-compliance. When it announced the release of the spot, AIP said it would be part of a $2.8 million ad buy.

This is reminiscent of Sen. John McCain’s issues with Frankie Valli’s record label and “Wayne’s World”-creator Mike Myers. Why do conservatives seem to have such a hard time obeying federal intellectual property laws?