China’s leaders have brushed aside warnings of an incipient credit crunch in the Chinese economy, determined to purge excesses from the financial system despite falling house prices and the deepest industrial slowdown since the Lehman crisis.

Industrial production dropped 0.4% in August from a month earlier, a rare event that highlights how quickly China is coming off the boil. The growth of fixed asset investment fell to record lows.

“It is a shockingly sharp deceleration,” said Wei Yao, from Societe Generale. “What is surprising is the calm response from Beijing. The new leadership’s tolerance for short-term pain seems to have jumped by another big notch.”

Electricity output has dropped 2.2% over the past year as the authorities continue to force dinosaur industries into closure, chipping away at excess capacity.

New credit has fallen 40%, and there has been an outright contraction of trust loans and undiscounted bankers acceptances over the past two months, the result of a clampdown on parts of the shadow banking nexus.

Premier Li Keqiang has so far refused to blink, determined to drive through deep reforms and wean the economy off exorbitant levels of debt before the damage becomes irreversible. “We are restructuring instead of expanding the monetary supply,” he said last week, warning markets not to expect easy money to ignite a fresh boom this time.

But will he and his fellow Communist Party leaders keep not blinking?

Among the general public, the International Monetary Fund (IMF), the World Bank and their lesser known younger sibling, the Organization for Economic Cooperation and Development (OECD), have reputations far exceeding their actual achievements.

The OECD was originally set up as an organization to promote trade among the developed countries and to build statistical databases. It has now morphed into an organization whose principal goal appears to be the collection of more taxes for its member governments.

Last week, Angel Gurria, secretary-general of the OECD, said it was the "duty" of international companies to stop employing tax-reduction strategies -- aiming some of his comments directly at Apple and Google.

Mr. Gurria seems to think the purpose of business is to pay taxes. Not so. The purpose of a business is...

Over a beer earlier this week with a Republican Senator, I couldn't help but asking how he was doing.  Had the GOP retained its majority, he would have been the chairman of one of the Senate's most powerful committees.  Starting next month, he would be just another minority schmuck.

"Sure, it's a disappointment," he said.  "It's the dream of your life for a guy like me.  So I have a choice.  I can be bitter - or I can have fun.  I choose fun."

I frowned.  "How are you going to have fun?" I asked skeptically.

He smiled.  "Come on, Jack, you know how the Senate works.  It's not like the House, where the minority is lower than dirt, and treated like subhuman Moslem Dhimmis.  Harry (Harry Reid, incoming Senate Majority Leader) has no majority at all.  Hell, it's 51-49, with the 51^st being Joe Lieberman and we've got Cheney as a tie-breaker.  We can screw them any time we want and Harry knows it."

Something extraordinary has happened.
 
On August 31, PLO chief and Palestinian Authority President Mahmoud Abbas told an audience of Fatah members that Egypt had offered to give - give, as in cede sovereignty to - the PA some 1,600 square kilometers (625 square miles) of land in Sinai adjacent to Gaza, thus quintupling the size of the Gaza Strip. Egypt even offered to allow all the so-called "Palestinian refugees" to settle in the expanded Gaza Strip.
 
Then Abbas told his Fatah followers that he rejected the Egyptian offer.

On Monday (9/08), Israeli Army Radio substantiated Abbas's claim.
 
According to Army Radio, Egyptian President Abdel Fattah al-Sisi proposed that the Palestinians establish their state in the expanded Gaza Strip.
 
In his speech to Fatah members, Abbas said, "They [the Egyptians] are prepared to receive all the refugees, [and are saying] ‘Let's end the refugee story.'" "But," he insisted, "It's illogical for the problem to be solved at Egypt's expense. We won't have it."
 
In other words, Sisi offered Abbas a way to end the Palestinians' suffering and grant them political independence. And Abbas said, "No, forget statehood. Let my people suffer."