David DeRosa, a finance professor from Yale, offers this succinct analysis of the push for China to unpeg the reminibi. He also further exposes how lost our US Senators are when it comes to economic issues.

For some reason, China's foreign reserves, of which these dollars are a large part, are a red flag to U.S. elected officials. They look at this as a smoking gun, proof that China is pulling a fast one with the yuan.

Few people have taken this analysis to its logical conclusion. What's going on is that China's yuan policy, combined with its trade surplus, forces the regime to accumulate dollars.

And where do those dollars go? Answer: The U.S. government bond market. They don't keep the dollars in cash -- they buy U.S. bills, notes and bonds.

So no wonder U.S. Treasury yields are so low -- a fact that is helping U.S. industry, small and large.

Put it this way: If you think China is manipulating the currency market with the yuan's peg, then you also have to acknowledge it is therefore manipulating the U.S. government bond market -- and it is doing the later to the benefit of the U.S.

Now if the yuan were to become a floating currency, or at least revalued, the demand from China for U.S. government debt would either cease or be substantially reduced. And that would partially undo, and maybe reverse, the work that the U.S. Federal Reserve has done to make credit cheap.

Is that what Senator Snowe wants? Be careful what you ask for because you just might get it.

Jacob Sullivan opines on ephedra and what he calls the rush to condem it. Sullivan reiterates some points that I have made in the past on my blog, but expecting the government to act in a rational manor when "the children are at risk" is suspect at best. As I explained a couple posts ago, ephedra products are being pulled and NBTY, GNC and others no longer carry any products with ephedra.


As one of Bechler's teammates put it, "Someone has to be held responsible for a young kid dying like that." But the rush to condemn ephedra, which the Food and Drug Administration and members of Congress have threatened to ban, is not justified by the evidence.

With an estimated 12 million to 17 million Americans taking something like 3 billion doses of ephedra products a year, FDA Administrator Mark McClellan admits, "serious adverse events from ephedra appear to be infrequent." That point is underlined by data from the federal government's Drug Abuse Warning Network, which indicate that two deaths, or even 100, over a decade would not make ephedra stand out on a list of drugs mentioned by medical examiners.

Speaking of ephedra, do you think Lee Flowers really got suspended for taking ephedra or maybe it was something else? Personally I hope it was roids because after watching him get burnt left and right last year for the Steelers, I think he needs to mess with something a little stronger than ephedra. Props to him for his quotes on smoking crack though....

Flowers said he appealed the suspension, but lost a hearing in June. He also criticized the league's drug policy.

"I would have been better off smoking crack. I would have got a slap on the wrist," Flowers said. "And that's a shame because here's something where we don't know what's going into these vitamins, but I can go out here and smoke crack and it's like, 'Well, you be careful next time.'