and it appears those talking about it are right...if it was not allowed, wala, our massive trade deficit would evaporate.

But on the other aspects....I'm really not sure this is a good idea at all...

I would prefer the U.S. to just confront directly China on currency manipulation. (as promised and now blown off!)

It would kill wage arbitrage that favors the Chinese. How? Well there are no rules as to how one pegs a currency to this neo-bancor (for the uninitiated, the "bancor" was Keynes idea for a global reserve currency). Everyone has different reasons to support it. The Chinese because they are now the planet's largest hedge fund and are doing what such vehicles do. The Russians, because for some damn reason in their brains the Cold War isn't over for them, and are once more looking to stick it to us/drop us a few pegs. The others (mainly developing nations) either fall into three categories

A) Want to bring "the great Satan/Big Capitalist" down.
B) Are afraid that Dollar-denominated assets like oil will rise as our currency falls.
C) Promote a multi-polar currency/new currency/their own currency as a replacement of the status quo.

But still, this could work in our favor. To be honest, I'm still iffy on this concept of a global reserve. My main hesitation is that many benchmarks like oil is priced in US Dollars. What if they were pegged into bancors/SDRs? There is no real tangible value in these new notes. Indeed, we would be replacing one mismanaged fiat currency with another. At what value do we peg our US Dollar to the New Bancor? Who has the right to make such calculations? Would it be set, or would they operating in a valuation band? Or would they be free floating against this one reserve?

In each case, I spot an opportunity. Of course this will come at a price. Look, the globalization system of China builds and US buys is coming to an end. The Chinese think they can simply sell here take their winnings and plow it into these SDRs and all will be fine for them. But they don't realize, or perhaps they do but underestimate the situation, but there will be a cost for them. What I'm getting at is if we are to be thrusted onto this new global reserve, then we should guage it to our advantage.

No matter what, our costs, should this go through, will begin to escalate. Be it in the price of credit to the price of crude, our costs are going up. We will have to compete for money to purchase our bonds, thus interest rates will have to go up. Oil, if priced in SDRs/Bancors/etc, will go up relative to the value of our currency, because distributors could offload to new customers without the FX risk. So if we're going to pay the piper, let us get something out of this.

Which is why if and when this goes through, we undervalue the hell out of our currency relative to our trading partners. Like I said, we're going to face higher costs anyways in this globalization game, so lets take away one of their balls....wage arbitration. If at present the USD/CNY is 6.82, then we need to push it so that whatever the USD/SDR is at, that USD/CNY is like 2.0 or less. The Chinese can't have their cake and eat it too. If we're to enter this "new world," let us be its factory. Under this new regime, there is absolutely nothing that says we can't do this.

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www.venomopolis.com

read this on tax credit, plus SAAR estimates...

but the most astounding calculation is the 1st time home buyer tax credit he is calculating to be $43k per house!

of the tax credit: Link

RebelCapitalist.com - Financial Information for the Rest of Us.

they are calling more regional home bottoms, to lack of a better term but they are also pointing to that $8k home credit, the massive number of investors, distressed sales and CR at least is expecting prices and sales to go lower in the fall.

Then, it does seem some regional markets are lagging in terms of their own "crash and burn". For example, in Oregon, with the 2nd highest unemployment rate....
now regions, such as Bend Oregon have crashed and burned and it seems now foreclosures are really on the increase but it hasn't quite deflated (my view) than say Florida, Phoenix or Las Vegas.

350k of 2M is about 17.5% of first time home buyer sales...

so what does that mean in terms of the aggregate number of new sales?

What percentage of new sales are speculators, investors vs. regular people buying for a residence?

Ford reports a 17% rise for August, but....

do you see the total number, as in SAAR? I thought it supposed to be released today...

I think there are a bunch of indexes out today, home sales...

so one can figure out how many sales happened that were not CfC.

I think and it's one of those posts I need to research out, takes time, so I haven't gotten to it...

but I believe a lot of the Stimulus is going to be deployed in Q4/Q4, so I fully expect Q3/Q4 GDP to be about the "G" and not the "I" or "C" or "E".

As far as the stock market goes, from what I can tell it's irrational exuberance. I mean it doesn't make a hell of a lot of sense to me that it's soaring at all. So count me clueless and if someone wants to write a post on that one (I know you're said suckers rally), feel free.

I mean we know that the markets do not reflect overall economic reality, over and over again...but which non-reality is causing this I do not know.

I do see a bunch of people, as usual saying "emerging markets are the place for growth" just got seriously burned yesterday on China, which dropped 7% and some are calling a Ponzi scheme.

Also, China, all through their Stimulus, just shot up in manufacturing output like a rocket.

Ya all, I hope others write posts more. Lately I'm becoming the sole "feed the pig" on posts, which is a lot of work for one person plus it kind of biases the site to just my style and views (which is pretty sarcastic!).

growth
Eleven of the 18 manufacturing industries reported growth in August. These industries — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Computer & Electronic Products; Transportation Equipment; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Chemical Products.

contract
The six industries reporting contraction in August — listed in order — are: Primary Metals; Plastics & Rubber Products; Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; and Machinery.

This is certainly good economic news, but I have to wonder about one thing: how much of this upturn is due to federal government spending? For instance, if we subtracted cash-for-clunkers, would the ISM index still be positive?

I'm not the only one wondering this.

Jones’s Tudor Investment Corp., Clarium Capital Management LLC and Horseman Capital Management Ltd. are taking a bearish stand as U.S. stock and bond prices rise, saying that record government spending may be forestalling another slowdown and market selloff. The firms oversee a combined $15 billion in so- called macro funds, which seek to profit from economic trends by trading stocks, bonds, currencies and commodities.
“If we have a recovery at all, it isn’t sustainable,” Kevin Harrington, managing director at Clarium, said in an interview at the firm’s New York offices. “This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”
...
A focus on misleading indicators is driving markets, macro managers say.
Clarium watches the unemployment rate that accounts for discouraged job applicants and those working part-time because they can’t find full-time positions, Harrington said. July joblessness with those adjustments was 16 percent, according to the Department of Labor, rather than the more widely reported 9.4 percent.
The housing data isn’t as rosy as some see it, Harrington said. As existing U.S. home sales rose 7.2 percent in July from the previous month, distressed deals including foreclosures accounted for 31 percent of transactions, according to the National Association of Realtors, a Chicago-based trade group.

It seems curious that the stock market today is dropping when we are seeing some of the first legitimately good news, as opposed to the "less bad" news we've been subject to for months.

Included in today's links at Naked Capitalism, is this outstanding rant from Lee Adler of the Wall Street Examiner. The analysis of where we are and how we got here is excellent and there are nice graphs too. But the money quote is his conclusion to the piece:

A whole lot of ordinary people “got it.” Only the mainstream infomercial media didn’t get it, because they are, after all, on the payroll of the Wall Street Mob.

The fact is that the economy is not getting better. It is not healing. Nothing goes down in a straight line, especially when a government throws a couple trillion in debt at it. But those trillions are not endless. The kindness of strangers, namely foreign central banks who buy that debt, is not without limit. The time will come when the government will not be able to float more debt to pay off the existing debt, when the burden of paying back these wildly reckless bets will fall directly on the back of the US taxpayer.

We are facing a crisis much greater than any we have faced so far. The Fed will not continue to pump cash into the pockets of the Primary Dealers indefinitely as they have been doing since March. When that cash gusher stops, or even slows, the stock market will again collapse. It simply cannot be sustained at these levels without that subsidy.

As for the economy, over the next year, it will get worse, for all the reasons enumerated above. How much worse, I have no clue. I’m not an economist, thank goodness. What an embarrassment that would be. Obviously they have no clue either. They pretend. That’s all. They missed the biggest collapse in the last 75 years. Knowing what’s likely to happen is not their job. Their job is to talk a good game so that Wall Street can continue its game.

Ripping off the rest of us.

So Good Night, and Good Luck.

You’re going to need it.

Read the whole thing, it's well worth the time.