China's preliminary August manufacturing PMI came in at 49.8 compared to consensus of 49.3 in the prior month -- this is the first increase in two months and comforting in the face of the eurozone banking crisis and the volatility of the world's stock markets. The print implies full-year Chinese growth of about 8%, which would qualify as a soft landing to most. (The recent drop in oil prices and a moderation in food prices tightening in China would be a plus for risk assets.)
In Europe, the August composite of service and manufacturing indices held constant at 51.1 (well above consensus of 50.0). Though at a low level, the print is still consistent with positive economic growth and markedly different to the chaos in the eurozone stock markets. Orders were slightly lower, but the employment component was solid. Manufacturing was 49.7 vs. 50.4 in July while services were flat at 51.5.
Here are 10 changes that I endorse:
1. Establish term limits for all our representatives.
2. Limit government spending. Set a specific limitation on the annual gains in spending to be less than the increase in consumer price index.
3. Develop a comprehensive jobs plan.
4. Fix housing. Over 15 million homeowners are underwater with their mortgages, the shadow inventory of unsold homes is a drag on a housing recovery, and we must find a way to find a way to reemploy over 2 million former housing-related workers. We need a Marshall Plan for housing. I would suggest that the Obama administration reach out to the two most knowledgeable and smartest guys in the residential real estate markets, Eli Broad and Bob Toll. I would have them all meet in a locked room with Fed Chairman Ben Bernanke, Treasury Secretary Geithner and President Obama (and his economic team).
5. Raise taxes on the rich. Put a three-year income tax surcharge (of 10% to 15%) on incomes above $500,000.
6. Create a health care czar and tackle our health care industry's delivery and costs.
7. Mean test entitlements, freeze entitlement payouts and gradually increase the social security retirement age to 70 years old.
8. Exit Afghanistan and Iraq immediately. More effectively rationalize the defense budget and provide returning soldiers full tuition to vocational schools and colleges as they have sacrificed much.
9. Build infrastructure. Set up an infrastructure bank, and place the money saved on defense into a massive build-out and improvement of the U.S. infrastructure base.
10. Create energy self-sufficiency. Develop a comprehensive plan designed to rapidly develop all of our energy resources.