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Shanghai To Hike Minimum Wage By 10%

Tyler Durden's picture





 

While rising prices alone are traditionally never seen by conventional economists as sufficient to push inflation into the stratosphere, due to the claim that flat wages prevent a comparable rise in spending, the same can not be said about the combination of rising prices and wages. In fact, when that happens, there is little that a deflationist can assert will offset the price pressure. And it just happened in the epicenter of the Chinese frothy excess liquidity driven inflationary bubble, after Shanghai just announced it will hike minimum wages by 10%. This also means that labor costs are about to surge, corporate margins for Chinese corporations will plummet, and CEOs will be forced to sell their trinkets to the US at higher prices to offset the margin plunge. Which in turn means prices for "commodity" made in Wal Mart prices will be forced to also go much higher, setting off screams about wage hikes in the US, which in turn will force either US companies to see margins drop even more, or the Fed to assume that it has to offset the resulting equity weakness with more money printing. In other words, bad news all around.

From Reuters:

Shanghai plans to raise minimum wage by more than 10 percent this year, the mayor of China's most populous city said on Friday.

"We have to raise minimum wage this year. The final adjustment will be well above 10 percent," the city's Mayor Han Zheng told a news conference.

Local media reported on Thursday China's Guangdong province will raise its minimum wage by an average 18.6 percent from March, in a sign that Chinese labour costs may rise strongly again in 2011.

Bernanke: 100% confident, etc.

 


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Fri, 01/21/2011 - 10:16 | Link to Comment John Law Lives
John Law Lives's picture

<<<  In other words, bad news all around.  >>>

Isn't that the central theme of this site???

Fri, 01/21/2011 - 10:18 | Link to Comment fredquimby
fredquimby's picture

Nah, only when there is no good news to report...lots of good news stuff on here!!

http://www.zerohedge.com/article/golds-unstoppable-rise

Fri, 01/21/2011 - 10:22 | Link to Comment John Law Lives
John Law Lives's picture

I don't suppose you paid any attention to strong corporate EPS from AAPL, GOOG, GE, SLB etc. over the past few days.  Just focus on bad news.

Have a nice day in the cave.

Fri, 01/21/2011 - 10:26 | Link to Comment SheepDog-One
SheepDog-One's picture

Well John, you crying baby, if you look youll see Zerohedge put up Apple and Google earnings as they came out! What would you like, direct Unicorn Dew enemas all day? Turn on CNBC!

Fri, 01/21/2011 - 10:31 | Link to Comment John Law Lives
John Law Lives's picture

I am not the one who is crying, you moron.  I am objectively pointing out the overwhelmingly negative bias of this site.  BTW, the Dow Jones has rallied 5,000+ points in 20 months.  The doom-and-gloomers here (like you) were probably pissed off every step of the way.  You are the baby... not me.  I am an optimist.

You are so biased against good news that you are blind.  People who claim to be "contrarian" can be just as dogmatic (and wrong) as those whose views they oppose.  Think about it.

Fri, 01/21/2011 - 10:51 | Link to Comment packman
packman's picture

FWIW - JLL I agree this site is overwhelmingly negative; and yes often hyperbolically so (for example if seasonally-adjusted unemployment numbers go down but NSA go up - Tyler focuses on the former, and vice versa). 

However I see it as mostly reaction to the sunshine-and-rainbows mentality that got us into the economic problems we have today - the other end of the spectrum (pun intended).  If the problems that were mounting in the 2003-2006 timeframe had been properly exposed (even in hyperbolic fashion), perhaps we wouldn't have gotten in as bad a shape as we did, with the huge mortgage debt bubble.

Thus I think there's great value here.  You just have to apply a filter.

 

Fri, 01/21/2011 - 11:09 | Link to Comment John Law Lives
John Law Lives's picture

Thanks for the reply, packman.  We agree.  I personally believe this site is just as dogmatic as CNBC (for example) in its attempt to offer a "contrarian" perspective.

BTW, despite what many people here seem to believe, Ben Bernanke is not evil incarnate.  He is trying to improve and strengthen the economy.  I haven't heard too many people here say how they would manage monetary policy if the Fed were abolished.  Conundrum!

Fri, 01/21/2011 - 11:18 | Link to Comment DaveyJones
DaveyJones's picture

you're right he's not evil incarnate, he's not human...he's goldman 

Fri, 01/21/2011 - 11:21 | Link to Comment John Law Lives
John Law Lives's picture

Feel free to explain to this board how you would manage monetary policy in the face of the challenges the Fed has faced over the past 3 years.  I would bet Tyler might be willing to publish it if you sent it to him.  I look forward to reading it.

Fri, 01/21/2011 - 11:43 | Link to Comment DaveyJones
DaveyJones's picture

First, you'll have to tell me what his "policy" is. Is he helping the stock market, inflation, or other things? 

JLL, you honestly believe that the state of our economy, our debt, our regulatory agencies, our legislators, our energy sources, and our ever consolidating "press" is not in a historically unique and unhealthy state and if so, it is impropper to be oh... uniquely cynical? 

Fri, 01/21/2011 - 11:54 | Link to Comment John Law Lives
John Law Lives's picture

I do not deny there are many challenges in the global economy.  I do not deny that Al Greenspan played a prominent role in fueling the housing boom (leading to a subsequent bust that is not yet resolved).  I would like to know what others think Bernanke should have done in 2008 when the credit markets seized up. Should he have done nothing?

Fri, 01/21/2011 - 13:21 | Link to Comment DaveyJones
DaveyJones's picture

there is a big difference between not doing nothing and doing the wrong thing. That is a classic politician and criminal defense line. "Many challenges in the global economy" is also gloss over politician speak. Corruption and collapse of our financial regulatory system was and remains a major player. The "solutions," the people put in power to "correct" these problems (the very people who caused them), and the people benefiting from these solutions are powerful evidence of ongoing corruption.   

Fri, 01/21/2011 - 15:11 | Link to Comment Hephasteus
Hephasteus's picture

You are an entire flock of birds shitting on my morning paper.

You are the annoying guy at the watercooler.

Fri, 01/21/2011 - 15:55 | Link to Comment Samuel Morales Jr.
Samuel Morales Jr.'s picture

Lol man, if you don't like Zero Hedge, then just leave. It's like a liberal democrat complaining about Fox News hating on liberal democrats. Watch CNBC if you want happy news all the time. If you are easily stressed by bad news, then don't watch bad news. Think positive, and move on.

Fri, 01/21/2011 - 20:04 | Link to Comment Stephanovic
Stephanovic's picture

Personally I like to hear the counter-argument as long as it is not trolling.

Fri, 01/21/2011 - 11:39 | Link to Comment Ray1968
Ray1968's picture

If we pulled an Iceland, we'd be in a true recovery.

However, we're incapable of giving our banks the middle finger.

Fri, 01/21/2011 - 14:25 | Link to Comment dlmaniac
dlmaniac's picture

China is going down!!

It's such welfare junk as minimum wages, unemployment benefit, universal health care etc. that killed economy in the developed world. Now China is picking it up.

Fri, 01/21/2011 - 11:50 | Link to Comment schadenfreude
schadenfreude's picture

Fed is burdened with a task that's simply not theirs. If you are in need of refurbishing your house you can't do it with a hammer only. Politics, Society, courts and corps have to bring in their tools to do the job. To be honest, I feel pity for the Fed, as they are left alone with the hardwareshops (PD's), selling her everytime a new hammer when the Fed destroyed one by trying to cut an iron bar.

Fri, 01/21/2011 - 11:57 | Link to Comment John Law Lives
John Law Lives's picture

Agreed.  The global credit markets were seizing up and they had their backs to the wall.  I would like to know what people here think they SHOULD have done.  Doing nothing was not the right course of action.  I would rather pay more for a glass of milk than have to shoot somebody for a glass of milk.

Fri, 01/21/2011 - 14:58 | Link to Comment Larry Darrell
Larry Darrell's picture

I'll say it since you obviously want someone to do so:  YES, HE SHOULD HAVE DONE NOTHING!!!!!

Assholes like you come around with lame ass strawmen statements such as "I would rather pay more for a glass of milk than have to shoot somebody for a glass of milk."  as if those 2 options are the only ones.  For fuck's sake, people like you are the reason civilizations fall.  You're so fucking incapable of adapting to "the unthinkable" that you leap to retarded conclusions and scare tactics so you won't have to be the ones to make real, tough decisions.  Some of us have the capability of producing shit that a dairy farmer would find useful and trade us the milk.  We add value to the human experience.  But you're probably some jackass whose "job" provides zero benefit to society--if you even have one.

Next you'll be spouting shit like "Think of all the death and starvation doing nothing would have caused."

Well here's what I have to say.  The death and starvation are coming anyways.  None of us here know when, but it will happen like it always has.  The problem with you and your kind is you don't want it to be you.  You'd rather continue to be a selfish fucking piece of shit and push responsibility for things off on someone else and let those who come after you deal with the aftermath of your fucking recklessness.  You're a bunch of fucking parasites who have continually slowed the progress of human beings as a species.

I'm only 31.  The shit storm coming wasn't created by my generation, but for some reason everyone wants to pass the buck so we are left to deal with it.  I've got a message for you:  GO FUCK YOURSELF.  A better solution would be for people like you who add no value to debate or production to society to come to the decision to take your own life so we don't have to carry you around as baggage.  And I make that statement as a person who was very close to someone who took his own life, so don't think I'm tossing this at you haphazardly.  I truly, deeply wish you would just fucking leave the face of this planet.

Fri, 01/21/2011 - 12:06 | Link to Comment packman
packman's picture

BTW, despite what many people here seem to believe, Ben Bernanke is not evil incarnate.  He is trying to improve and strengthen the economy.  

I think the problem is he's at the beck and call of his banker bosses.  Certainly he claims he's trying to improve and strengthen the economy - that's his job after all.  The problem is that "improve and strength the economy" is a relative thing, and subjective to the extreme.  The problem is that the bankers' view of an improved economy is a growing banking sector.  Well that's all fine and good, but only if it doesn't come at the expense of other things - increased debt and a lower-than-would-otherwise-be standard of living. 

Unfortunately neither of the mandates of the Federal Reserve is "decrease debts" (either public or private).  If so, then it would have failed miserably.  If the true purpose of the Federal Reserve was to "improve the economy" - then this would be one of its mandates.  But the problem is that that's not the purpose of the Fed - the purpose is to grow the banking community; which by its nature has an opposite goal - they grow when debt grows.

So in reality Ben's just doing his job, and thus no - not really evil incarnate.  Evil incarnate is those that created the Fed in the first place, and allowed its mandates to have that one giant hole.

I haven't heard too many people here say how they would manage monetary policy if the Fed were abolished.  Conundrum!

The problem is this - most people who want to abolish the Fed simply believe that monetary policy is something that shouldn't be managed.  So it's not a question of "How should you manage monetary policy?", it's a question of "Should you manage monetary policy?".  In a free market economy money flows are managed by the will of the people - not by the policy mandates of central planning.

 

Fri, 01/21/2011 - 11:10 | Link to Comment surf0766
surf0766's picture

Overly optimistic people make bad decisions which cause people to loose money.

Fri, 01/21/2011 - 11:18 | Link to Comment John Law Lives
John Law Lives's picture

http://en.wikipedia.org/wiki/Dogmatic

Good luck being Mad Max in your dreams of the coming Apocalypse.

Fri, 01/21/2011 - 13:08 | Link to Comment tmosley
tmosley's picture

I could accuse you of being dogmatic as well.

Don't worry, all is well.  Debt is not a problem.  Money printing is not a problem.  It hasn't happened yet HERE that I can remember, so it can never happen.

You're the kind of person they found floating face down in New Orleans after Katrina.

Fri, 01/21/2011 - 13:17 | Link to Comment SheepDog-One
SheepDog-One's picture

If you dont like it so much, JLL, then LEAVE! You didnt have to pay to get in here, so what are you bitching about? Its real simple if you dont like it dont let the door hit you on the way out to CNBC where you'd like it far better!

Fri, 01/21/2011 - 13:48 | Link to Comment futboller04
futboller04's picture

1 in 8 in foodstamps... 17%+ un/der employed... $3 Trillion BS for Fed... hard to see the glass as half full.  those are facts, and if you lived on yahoo, you probably wouldn't have seen them

Fri, 01/21/2011 - 10:18 | Link to Comment LoneStarHog
LoneStarHog's picture

When someone has nothing intelligent to say, it is called Shoot The Messenger.

Fri, 01/21/2011 - 10:25 | Link to Comment John Law Lives
John Law Lives's picture

Did you have something intelligent to say?

Fri, 01/21/2011 - 10:19 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

the theme is the truth. MSM is not the truth.

Fri, 01/21/2011 - 10:23 | Link to Comment SheepDog-One
SheepDog-One's picture

John Law, if you dont like it so much, Mr Complaining Nancy, youre free to piss off! Go to CNBC where its sunshine and rainbow enemas all day!

Fri, 01/21/2011 - 10:24 | Link to Comment John Law Lives
John Law Lives's picture

I am not the doom-and-gloomer here.  I am an objective voice.  That is not the same as complaining.  You are free to piss off, doom-and-gloomer.

Have a nice day in the cave.  The world economy is growing.  Don't bet against it.

Fri, 01/21/2011 - 10:27 | Link to Comment SheepDog-One
SheepDog-One's picture

OH I see....not enough sunshine, lollipops, and double-rainbow enemas for you around here...well if you want that youre free to go to ANY other media outlet where youll be rammed full of BS all day!

Fri, 01/21/2011 - 10:33 | Link to Comment John Law Lives
John Law Lives's picture

You are not objective.  Being "contrarian" is not being objective.  You can be "contrarian" and dogmatic at the same time.  Think about it.

Fri, 01/21/2011 - 10:23 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Life is not good or bad, it just is.  Get over it.

Fri, 01/21/2011 - 10:27 | Link to Comment John Law Lives
John Law Lives's picture

I am not the doom-and-gloomer here.  Many of the lemmings that flock to this site are.  The global economy is recovering.  Stop fighting it.  You will be crushed.

Fri, 01/21/2011 - 10:31 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Once again with the name calling.  My view is neither gloom nor doom, for after the end of the Keynesian experiment, humanity may once again flurish.  I think it will be the fiat system that will be crushed, and I think humanity will flurish once we turn this leaf.  How is it that the global economy is recovering?  States to declare bankupcy?  What is U 6?

Fri, 01/21/2011 - 10:41 | Link to Comment John Law Lives
John Law Lives's picture

I am not calling you names.  I am pointing out my observations.  Objectively speaking, there is an obvious negative bias to this site.  Whoever Tyler Durden really is, he/she seems like a jaded and cynical person.  This site is FILLED with people like that.  Look how quickly a person (e.g. Robo or Harry) gets JUNKED when they post any data that appears optimistic.  It happens like clockwork.  Can't you see that?

I don't deny that there is bad news.  I do acknowledge good news.  I am optimistic things will get better.  Ben Bernanke is not the antichrist.  He is trying to improve the economy.  If any Brainiac on this site really does want to abolish the Fed, please tell us all in great detail exactly what you would replace the Fed with?  Do you know how manage monetary policy?  I didn't think so.  If you did, you wouldn't be posting doom-and-gloom messages here all day.

Come out of the cave.  The sun is shining.

Fri, 01/21/2011 - 11:05 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bernanke? Bernanke and his Bildeburger "friends" (he will be shortly thrown under the perverbial bus a la sacrificed on the alter by these "friends") uses strange fiat policy that has gotten us to where we are.

The sun is shining, yes.  Did you know that gold comes from super novas and only super novas?  Too bad Bernie is only an alchemist and not a true artist.  Artists create by the light of the heavens, alchemists toil in the cave by the flicker of the flames.

Fri, 01/21/2011 - 11:14 | Link to Comment John Law Lives
John Law Lives's picture

If you believe you know more about managing monetary policy than the Fed, please feel free to submit your ideas.  I would love to know what you would have done in 2008 when the credit markets were seizing up and paralysis was rapidly taking hold.

Fri, 01/21/2011 - 12:06 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This sytem can not and will not be saved.  It needs to be destroyed.  Once the wrold understands that Keynesiasm is a joke, that Adam Smith considered a world with slaves as an input, then we can move on.  People must burn their econ books with their fiat to understand reality.  Reality is not the King dollar.  Reality is finite resources.  We must manage our world, because we must live in the world.  Build your house not on sand, for it will fail.

Fri, 01/21/2011 - 15:05 | Link to Comment Larry Darrell
Larry Darrell's picture

You can't seem to stop, so neither will I.  You've asked several people how they would manage monetary policy.  Yet, in your infinite wisdom and (as I pointed out earlier) inablity to think outside the box you can't even fathom the thought that we DON'T NEED a monetary policy.  You're too stupid to realize that having a monetary policy at all has gotten us to where we are.  For fuck's sake, we don't even NEED money.  Sure it makes some things easier, but it is not NECESSARY.  Of course for jackasses like you, if it's not easy or it requires any thought at all it's uncomprehendeble.

Fri, 01/21/2011 - 11:15 | Link to Comment tmosley
tmosley's picture

The fundamentals (www.shadowstats.com) say otherwise.

FYI, no-one here is short.  We don't plan to get crushed by Ben's Helicopter.

Fri, 01/21/2011 - 11:27 | Link to Comment John Law Lives
John Law Lives's picture

I am glad you are not short.  Even though people junk me here, I do not want to see anyone here lose money.  That is the 100% truth.  I want people to make money and prosper.  Only an SOB would delight in seeing someone else fail.  I don't want that.  Never did.

Don't bet against the Fed.  They have essentially no opposition, and they are not about to put on the brakes.  Don't get crushed.

Good luck to you.

Fri, 01/21/2011 - 11:36 | Link to Comment SheepDog-One
SheepDog-One's picture

Troll.

Fri, 01/21/2011 - 11:48 | Link to Comment John Law Lives
John Law Lives's picture

Cave dweller.

Be sure to stock up on ammo for the Apocalypse.  You might have to shoot and eat an evil banker to survive.  Be sure to file down their horns and cut off their tails before consuming them.

Fri, 01/21/2011 - 12:16 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Fed can print oil?  Valhallelujah, mon!  Praise be to the Private Federal Reserve Bank that bankrupted and ruined finance, because they can make everything new again!  Praises, praises.

Fri, 01/21/2011 - 13:24 | Link to Comment DaveyJones
DaveyJones's picture

and water and fertile soil too. I heard they can impregnate a virgin without a human encounter

Fri, 01/21/2011 - 12:49 | Link to Comment Mariposa de Oro
Mariposa de Oro's picture

Please define "Recovery".

Fri, 01/21/2011 - 13:19 | Link to Comment SheepDog-One
SheepDog-One's picture

'You are not the doom n gloomer around here', well I dont think anyone said you were. But if youd like more sunshine and lollipop enemas theres lots of places better suited to your liking, like everywhere else! GO!

Fri, 01/21/2011 - 10:28 | Link to Comment Kina
Kina's picture

I like this site because it doesn't give me fairy tales. Without it we would be being informed by the MSM and confident that all was fine, nothing to worry about, all risk on, the kool aide isn't kool aide.....and able to participate in the next crash with the other sheep.

Fri, 01/21/2011 - 12:48 | Link to Comment bankonzhongguo
bankonzhongguo's picture

China just blinked (again).

What one should really take away from these is that these types of rules only started around 2003 with the creation of some ministry of labor social security (or something like that) BUT ALSO how byzantine wages laws are in China - IF THEY COULD BE ENFORCED!

For a place under such central authority (cough cough), the basic wage law give EVERY province, county and city, auto-zone the capacity to create their own local wage law.  So now you have a patchwork of minimum wages overlaid on a purely disposable 100 million migrant labor pool.  Its un-implementable (is that a word?) bureaucratic cracks like this that really drive a stake into the worried hearts of China's poor.  Meanwhile, how often do you find stories of outright slavery in China?  More often than stories about jailed banksters.

More so, the hurried multiple adjustments over the last year they make to the wages come at 10-20% overnight increments.

Now if China starts deploying their social system via EBT/SNAP debit cards they might have chance, but otherwise its more voiceless slave labor living on the job site and saving for that spring festival train ticket.

Big business will pay more for labor, but they can still go down to the bank to get a loan to fuel the domestic consumption.  Keep'em working at any cost. 

Idle hands make sharp spears.

Fri, 01/21/2011 - 10:24 | Link to Comment Arius
Arius's picture

i might be wrong, but I will give Bernanke the benefit of the doubt...

Btw - correct me if i am wrong but the title should be: "WELL ABOVE 10%"....thats what Reuters says...which perhaps mean closer to 20%...

Fri, 01/21/2011 - 10:25 | Link to Comment dan10400
dan10400's picture

i might be wrong too, but doubt the benefit of Bernanke.

Fri, 01/21/2011 - 11:35 | Link to Comment SheepDog-One
SheepDog-One's picture

What? Better not tell John Law Lives that Tyler UNDER reported the number! Goes contrary to his assertion that all news here is way overhyped to the bad side!

Fri, 01/21/2011 - 10:22 | Link to Comment bingaling
bingaling's picture

I thought China was fighting inflation, isn't this inflationary there as well ?

It doesn't matter I just got out of the WUJO and TSHF worldwide shortly .

Fri, 01/21/2011 - 10:23 | Link to Comment spinone
spinone's picture

China is fighting civil disorder

Fri, 01/21/2011 - 11:09 | Link to Comment confimationbias
confimationbias's picture

urbansurvival saved me in '08, but I am beginning to believe it was a flash in the pan, though his terra prognostications seem reasonably valid thus far.  that might be where things get dicey and the benny put fails....

Fri, 01/21/2011 - 14:23 | Link to Comment bingaling
bingaling's picture

His writing is entertaining and a very amusing way to see the days news headlines

Fri, 01/21/2011 - 10:24 | Link to Comment Arch Duke Ferdinand
Arch Duke Ferdinand's picture

I am planning a State Visit and Parade in Shanghai in a week or two.

It will be an open Landau for me so's I can wave to all my Chinese friends...

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/01/archduke-ferdinandassassination.html

Fri, 01/21/2011 - 10:24 | Link to Comment dwdollar
dwdollar's picture

A lot of people whine about it being too negative here, yet they keep coming back.  Something doesn't add up.

Fri, 01/21/2011 - 10:44 | Link to Comment John Law Lives
John Law Lives's picture

I am not whining.  I am not a doom-and-gloomer.  I am objective.  This site is filled with whiners.

Fri, 01/21/2011 - 11:14 | Link to Comment Dagny Taggart
Dagny Taggart's picture

This site is filled with whiners.

This site is filled with winners. There, I fixed it for you.

Didn't you get the memo: When they tip the snowglobe back rightside up, she (he) who has the gold: wins. That makes quite a few here optimists, too. It's happened every time in the history of ever. Perhaps objectively reading some Murray Rothbard would be helpful? 

Fri, 01/21/2011 - 12:14 | Link to Comment John Law Lives
John Law Lives's picture

I was reading Ludwig von Mises long before Rothbard showed up on the scene.

Fri, 01/21/2011 - 12:25 | Link to Comment Dagny Taggart
Dagny Taggart's picture

So you're a mean, really old troll. Shoo!

Fri, 01/21/2011 - 13:14 | Link to Comment tmosley
tmosley's picture

Define "long".  Man, Economy, and State was published in 1962.  If "long" means ten years, and you started reading Mises at 20, that would make you 79 years old.  Someone that old shouldn't be suffering from the debilitating normalcy bias that you have been afflicted by.  There have been more than 50 instances of hyperinflation around the world during your lifetime.  But then, perhaps you have simply led an exceptionally sheltered life.

Fri, 01/21/2011 - 11:21 | Link to Comment Arkadaba
Arkadaba's picture

You may not be a doom-and-gloomer but you are annoyingly repetitive. 

Fri, 01/21/2011 - 13:21 | Link to Comment SheepDog-One
SheepDog-One's picture

Lots of 'objective' people giving out their double rainbow enemas in all the other media outlets there JLL, go there and get your fill!

Fri, 01/21/2011 - 10:24 | Link to Comment Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

 President Hu Jintao: "Thank you for diner. Here is the bill". 

Fri, 01/21/2011 - 10:26 | Link to Comment BobPaulson
BobPaulson's picture

And they have started buying diners over here. Full chains of them.

Fri, 01/21/2011 - 10:26 | Link to Comment Arius
Arius's picture

dont blame the man...perhaps he just didnt know...you know those cities just do things on their own...look at what the military did with the new plane and none told him

Fri, 01/21/2011 - 11:16 | Link to Comment tmosley
tmosley's picture

Obama: Put it on my tab.

*slips out bathroom window*

Fri, 01/21/2011 - 11:31 | Link to Comment DaveyJones
DaveyJones's picture

very good

Fri, 01/21/2011 - 10:25 | Link to Comment BobPaulson
BobPaulson's picture

Right now worker wages are a very small fraction of the price tag of the useless injection moulded stuff you buy at WalMart. This will take quite a while to start affecting the hunk of junk you get in your happy meal. (I know China makes more than that, but my point is prices here are mostly distributed to middle men, not the poor slob breathing toxic fumes on the shop floor).

Fri, 01/21/2011 - 12:44 | Link to Comment DaveyJones
DaveyJones's picture

let's see I'm the poor slob breathing toxic fumes on the shop floor, the poor slob eating toxic food in the shop lunch room and the poor slob forced to  buy toxic assets. :/

Fri, 01/21/2011 - 10:26 | Link to Comment buzzsaw99
buzzsaw99's picture

CEOs will be forced to sell their trinkets to the US at higher prices to offset the margin plunge.

Good luck with that!

Which in turn means prices for "commodity" made in Wal Mart prices will be forced to also go much higher,

:snickers:

setting off screams about wage hikes in the US,

When pigs fly

which in turn will force either US companies to see margins drop even more,

True

or the Fed to assume that it has to offset the resulting equity weakness with more money printing.

Also true.

Fri, 01/21/2011 - 10:27 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

What is the minimum wage in Shanghai? 7 cents per hour? Therefore would a 10% hike be something a westerner could comprehend?

Fri, 01/21/2011 - 10:28 | Link to Comment buzzsaw99
buzzsaw99's picture

Good point, heh.

Fri, 01/21/2011 - 10:55 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

$164 month. That's $1.02 hour on a 40 hour work week and Shanghai already has the highest min wage in China. It's no wonder they pirate CDs.

Fri, 01/21/2011 - 11:51 | Link to Comment DaveyJones
DaveyJones's picture

at that rate, I'd become a pirate

Fri, 01/21/2011 - 13:47 | Link to Comment Cruel Aid
Cruel Aid's picture

Times half a billion. Gets to be real money.

Fri, 01/21/2011 - 10:27 | Link to Comment tmosley
tmosley's picture

Razor thin margins, meet government intervention.

At this point, I'm thinking those in charge of the Chinese economy really are just stupid.  Raising the minimum wage will do little except to price new workers out of a job, and encourage more capital investment to make up for the reduced labor pool.  This leads to more unemployment, which, it seems to me, is extremely dangerous for China.

"doing SOMETHING" should never trump economic principles.  When it does, it is a harbinger of doom for the government that participates in such activities.

That is not to say that the scenario laid out by Tyler won't happen--it will, at least in the short term.  Prices will rise quickly, but again, the incentive is now to increase mechanization, which will cause input prices to decrease in the long term.

Fri, 01/21/2011 - 10:37 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Intellectual diarrhea you spew

Fri, 01/21/2011 - 11:44 | Link to Comment tmosley
tmosley's picture

Nice rebuttal, shoeshine boy.

Fri, 01/21/2011 - 10:27 | Link to Comment Jason T
Jason T's picture

That coupled with stronger RMB = export inflation to the US and good bye to those amazing margins at AAPL and the like. 

Fri, 01/21/2011 - 10:27 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Hu didn't see this coming a mile away?

I do not like the minimum wage because I think it is the best way to keep the working class seperated from the upper class, but this is righteous.  I mean, slave labour isn't what it used to be!  Oh, and Wallmart is the devil, so any margin that destroys their business model (business model=slave goods) is a blessing.

Fri, 01/21/2011 - 10:40 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Maybe they are raising wages to AVOID class warfare dufus. Enough thinking for you. Get back to your doomsday watch and your peanut butter hoard.

Fri, 01/21/2011 - 10:28 | Link to Comment duo
duo's picture

Would this make Wal-mart a short, or can they pass a 10% increase in the cost of cheap crap on to the EBT customers?

Fri, 01/21/2011 - 10:28 | Link to Comment RobotTrader
RobotTrader's picture

Higher wages will probably spark a consumer spending boom of epic proportions.

And we will see the Shanghai and Shenzen markets up 60% in 2011.

LOL....

Fri, 01/21/2011 - 10:32 | Link to Comment BobPaulson
BobPaulson's picture

Uncharacteristically overdressed for your posts. Did you get in trouble?

Fri, 01/21/2011 - 10:34 | Link to Comment Arius
Arius's picture

you have to learn chinese to participate on that boom...

http://www.nma.tv/us-sino-currency-rap-battle/

Fri, 01/21/2011 - 10:45 | Link to Comment John Law Lives
John Law Lives's picture

Whoever you are, it is good to have an optimist on this site.  Too many doom-and-gloomers here.

Fri, 01/21/2011 - 12:11 | Link to Comment HarryWanger
HarryWanger's picture

John Law, it's great to have another voice of reason and common sense here. Thanks.

First rule though, never reply to the sheep dog guy or lennonhendrix. They may be both the same person but they really offer no insight or intelligence but rather babble about how horrible it is or it's going to get, etc. I don't bother to reply to them.

Keep the positive comments coming. This post above is a perfect example of making doomsday assumptions. Somehow, the author ties a bizarre chain of events to come to the conclusion that WalMart will have to raise prices much higher. Does he know how business works? Obviously not. But it's an excellent example of negative assumptions based upon nothing concrete.

Fri, 01/21/2011 - 12:46 | Link to Comment DaveyJones
DaveyJones's picture

...which is fundamentally different from positive assumptions based upon nothing concrete

Fri, 01/21/2011 - 13:18 | Link to Comment tmosley
tmosley's picture

What's the national debt as a percent of GDP again?  The highest in US history!?  That must be good for the economy!

What, wages are being forced artificially higher in a goods producing nation?  Clearly that means more sales as the prices go up!

BRILLIANT!

Fri, 01/21/2011 - 13:23 | Link to Comment SheepDog-One
SheepDog-One's picture

HarryWanker hows that Apple and Google doing you were crowing with glee over last nite!

Fri, 01/21/2011 - 13:49 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am honored that you think that!

Fri, 01/21/2011 - 10:28 | Link to Comment Mudflap
Mudflap's picture

The Bernanke on raising the minimum wage back in 2006...

"My inclination is to say that you'd like to find ways of increasing the return to work which don't have the effect of potentially shutting some people out of the workforce.

And so I think I would agree that -- and I've said this in previous testimony -- that the earned income tax credit, which provides extra income to people who are working, and skills and training, increased training for increased skills and productivity, are in my opinion probably more effective ways to approach this question."

http://macroblog.typepad.com/macroblog/2006/07/paul_krugman_la.html

EITC for the WIN!

Fri, 01/21/2011 - 10:29 | Link to Comment doomandbloom
doomandbloom's picture

this is good news ..no? for the Chinese workers? they will consume a bit more...and take the pressure off the US consumers...hopefully.

Fri, 01/21/2011 - 10:37 | Link to Comment KickIce
KickIce's picture

Not really, this will get eaten by their rising inflation rates very quickly.

Second, they buy Chinese goods, not American.

Fri, 01/21/2011 - 10:45 | Link to Comment Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

Indeed, they will be able to buy more gold. The chinese just love that barbaric relic.

Fri, 01/21/2011 - 10:52 | Link to Comment grunk
grunk's picture

Do I have this correct?

The Chinese are going to raise prices on useless junk people already can't buy because they are unemployed by virtue of all the jobs going overseas to low wage workers?

We need Rembrandt quality economic policies and instead we get Earl Scheib.

Fri, 01/21/2011 - 13:21 | Link to Comment tmosley
tmosley's picture

No, they are gong to raise prices on EVERYTHING you buy.  Try to find five items on your desk, or in your office not made in China, in whole or in part, within five minutes.  You can't.

Fri, 01/21/2011 - 14:26 | Link to Comment grunk
grunk's picture

If my stapler and my lamp and my chair are made in China, and I would like new ones of each, I can: A) Buy new ones and pay more (Chinese employed); B) Buy new items but forego other purchases, like a made-in-China flatscreen (fewer Chinese employed); C) Buy used items (no Chinese employed).

If I don't have a job, add D) Do nothing (No Chinese employed).

If, by virtue of the Ben Bernank's currency debasement, food becomes more expensive for the Chinese citizen, that citizen can: A) pay more for food; B) starve.

It's all well and good that the Chinese want to control the economic world, but to do it at the expense of your customer's purchasing power is counterproductive. As long as the Chinese want to control everything, the Ben Bernank and his cronies will print money/debase currency/cause global inflation.

Irrational policy on both sides of the ball.

Take your excess capital, build factories abroad so that your markets have money to purchase things your citizens produce. Then the U.S. does not need to send its currency into the crapper in a fruitless exercise to stimulate the economy. Win/win?

The Chinese ought to stop reading from the globalist banker and industrialist playbook. Those devils are stateless.

Fri, 01/21/2011 - 10:54 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

As they revalue and tighten this will cause layoff's. So the consumption level falls further ... ( already dropping for years ... ) 

This is all really positive long term but as she changes from being focused on exports only the transition will be choppy ... and take a few years.

Fri, 01/21/2011 - 10:37 | Link to Comment Fred123
Fred123's picture

I find it interesting the Hu visited the US a few days before Zero's State of the Union address. Considering that China has an inflation problem (think revolts) partly created by the Fed/US gov't I'd be very interested in what Hu had to say to Obama. Maybe something like: 'Cut the printing shit out or we will dump all your fucking treasuries then take down your entire infrastructure you little shit.' Or something like that.

Fri, 01/21/2011 - 10:56 | Link to Comment KickIce
KickIce's picture

imo, the takedown is already in process.

After they purchase every commodity they can with worthless fiat, then they will dump our currency.  I'm guessing at that point they, meaning the central banks, will "issue" a digital currency and unless you buy into their system you will be unable to get credits.  "Almost" sound like a Bible prophesy, doesn't it?

Fri, 01/21/2011 - 10:39 | Link to Comment Miramanee
Miramanee's picture

It is BEYOND bad news. It simply is another moment that elucidates how the global growth and debt cancer is being treated w/increasingly experimental protocols. All of the nations of the world---except for East Timor---are desperately trying to figure out ways to keep the whole deal from coming unhinged. AND, in the end, it MUST come unhinged: because the entire charade is based upon monetary policies that are inherently destabilizing and that cannot account for ALL of the concerns and for ALL of the needs of a growing number of impoverished and suffering people:

http://www.youtube.com/watch?v=fbMq1WWUXc8
http://www.youtube.com/watch?v=fMq8Ert1ss0
http://www.youtube.com/watch?v=Er-6Ppdp9cc

Fri, 01/21/2011 - 10:40 | Link to Comment Founders Keeper
Founders Keeper's picture

Thanks, TD.

Increasing wages is a confirming component of the inflation UN-virtuous cycle. Will be important to watch governments/unions/companies react in-kind.

 

Fri, 01/21/2011 - 10:45 | Link to Comment Catullus
Catullus's picture

Or Chinese workers get laid off. Not everyone can push through rising costs down the supply chain.

Fri, 01/21/2011 - 10:53 | Link to Comment savagegoose
savagegoose's picture

im an optimist to, we're definately fucked.

Fri, 01/21/2011 - 11:37 | Link to Comment SheepDog-One
SheepDog-One's picture

Im totaly optimistic on the chances we're totaly fucked.

Fri, 01/21/2011 - 11:59 | Link to Comment DaveyJones
DaveyJones's picture

I am in the top 2% of my pessimist class. I told the teacher I thought I'd drop but then she raised my standing 

Sat, 01/22/2011 - 05:14 | Link to Comment Hephasteus
Hephasteus's picture

You frickin bell curve blower upper. LOL

/thread

3 people 3 pieces of awesome.

Fri, 01/21/2011 - 10:57 | Link to Comment Oh regional Indian
Oh regional Indian's picture

The thing everyone is forgetting here is that China might announce a hike but cannot enforce it.

A huge part of "China" is the black market. Underground market. Sweatshops without licenses.

Only big exporters will see all the heat Tyler talks about.

Everywhere else, as before. Same thing in India. They "banned" child labour a few years ago. Nothing has changed.

no enforcement here in the east. 

ORI

http://aadivaahan.wordpress.com/2011/01/21/accidental-lives/

Fri, 01/21/2011 - 10:59 | Link to Comment snowball777
snowball777's picture

After seeing AAPL's cards, I think they can handle some margin compression this year.

Fri, 01/21/2011 - 10:57 | Link to Comment RagnarDanneskjold
RagnarDanneskjold's picture

They are playing catch-up. Factory wages, not minimum wages, went up 50% last years and jobs are still unfilled. Some factories have shut down production lines due to a lack of workers.

If you look at China's demographics, this past couple of years has seen the start of the declining population, in that the number of 18 year olds is declining Y-o-Y. These are the workers that fill the entry level factory jobs. This is why there's an influx of illegal migrant workers from Vietnam and Laos into southern China, and also why some factories are leaving for Vietnam and other destinations that have more favorable demographics and wage rates.

 

Fri, 01/21/2011 - 10:58 | Link to Comment snowball777
snowball777's picture

bad news all around

 

I'm pretty sure the majority of Chinese workers disagree with that statement.

Fri, 01/21/2011 - 11:47 | Link to Comment tmosley
tmosley's picture

Yes, they, like us, love it when their jobs are shipped away to less interventionist countries when their governments start sticking their noses where they don't belong.

They should rename Shanghai "New Detroit".

Fri, 01/21/2011 - 11:25 | Link to Comment snowball777
snowball777's picture

Well at least the cowardly one-junk-punk is thorough, if completely retarded.

Fri, 01/21/2011 - 11:28 | Link to Comment getplaning
getplaning's picture

I predict that none of the "bad news all around" will come to pass. Every bit of that wage hike will go straight back into the economy and fuel growth.

Fri, 01/21/2011 - 11:37 | Link to Comment johnnymustardseed
johnnymustardseed's picture

The FED can't halt imported inflation. Thank you WalMart for all that cheap shit you sell that is about to get more expensive. Someday we might reach parity, but there are miles to go before that happens

Fri, 01/21/2011 - 11:39 | Link to Comment SheepDog-One
SheepDog-One's picture

Zerohedge has now about 50% of the posts being sunshine and lollipop bull trolls...the top is very near.

Fri, 01/21/2011 - 11:45 | Link to Comment jeffca
jeffca's picture

Raising minimum wage in Shanghai is like raising the minimum wage in Manhattan.  Shanghai tends to be like Manhattan in many ways.   And there are many other cities in China (and 10s millions in poverty)?   China is like 2 economies; much like the US.

Fri, 01/21/2011 - 12:00 | Link to Comment lamont cranston
lamont cranston's picture

We'll know the jig is really up in the US when American girls start advertising for Chinese husbands.

Fri, 01/21/2011 - 13:26 | Link to Comment SheepDog-One
SheepDog-One's picture

When the illegal aliens started running BACK to Mexico in droves last year, that was the signal its over.

Fri, 01/21/2011 - 16:37 | Link to Comment Arkadaba
Arkadaba's picture

Apparently there is a surplus of potential husbands.

Fri, 01/21/2011 - 12:41 | Link to Comment redarrow
redarrow's picture

Is this an under the radar attempt to increase domestic consumption in China? If the domestic consumption there increases, they can keep at it, and may not need the west as much as they need today. A first step in a series to make the RMB more like the next defacto reserve currency?

Fri, 01/21/2011 - 13:43 | Link to Comment Paul Bogdanich
Paul Bogdanich's picture

You know the ZH commentary about this is the same clap-trap they gave Henry Ford when he wanted to double wages.  In a growing economy it didn't create inflation then and it won't now.  Anyway the reason they are doing it in the first place is the inflation in food and fuel which a bad combination of our policies and the weather are causing.      

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