Economic Update

The Institute of Supply Management's manufacturing index had declined for the first time in 11 months. Predictions had placed it at 50.5, rather slow growth, but it came in at 47.7, on drops in orders and production, and we have the same thing happening worldwide, with the Global manufacturing PMI falling to a 4½ year low, which seems to indicate that the rest of the world has not "decoupled" from the US economy.

Singapore's economy is taking a hit, because Americans are no longer able to buy their stuff.

Then we have the other Mecca of Anglo-Saxon capitalism going through the same real-estate crisis that is hitting in the US

The latest figures indicate that 23 per cent of people – 9.5 million adults – were finding their current level of debt "unmanageable". Although the Bank of England cut the base rate of interest last month, an estimated 1.4 million people will still have to pay more for their home loans when their fixed-rate deals come to an end this year, costing an extra £150 to £250 a month.

Sounds familiar.

Merrill Lynch has sold itself for some more cash, which seems to indicates taht there are some more losses, probably significant ones, that have not yet found their way to the balance sheets and quarterly reports.

In further banking news, General Electric and the Blackstone Group had to backoff of a buyout of PHH, a mortgage and auto-leasing company, because their financing fell through.

Finally, we have reports that dollar-based assets held by the world's national banks have fallen to a record low. There is not yet a stampede to the door, but people are definitely standing up and stretching their legs.

The data indicated that of the $3.8 trillion in allocated reserves, about 63.8 percent was held in U.S. dollars, down from 65 percent at the end of the second quarter this year.