The incursion of non/transparent sovereign wealth funds from authoritarian states begs the question related to giant money laundering operations. Foreseeably amounts contributed by SWFs will not be subject to scrutiny.

JYe – is it real fairness or just a reluctance to tackle problems /kinks in the economy that’s producing rapid inflation?

Stormy – Labour has been neutered by globalization, sad but if you want to reap huge profits in record time , some things have gotta give and more often than not the weak get exploited. Arguably, the retreat from protection for labour has been ignored in democracies as democracies have been comfortable in pointing towards the lack of protection in “less democratic states”. Could the demise of the Communist threat have contributed to complacency?

Neocolonialism has made much of the world uncomfortable, the supposed advent of reverse colonialism probably raises more heckles than others but hey, no one can hog the stage forever.

It’s about four times as much as the what they would make as a farmer and most factory workers in southern China send most of their money back home where it goes to support lots of relatives. The money also gets saved since a worker in a factory can work for about five years, and they are pretty much set for life.

Stormy: There is one union in China, one–it is an arm of the communist party.

Relationships between the union, the communist party, and management are actually rather complex. Walmart fell into the trap of thinking that the union was a rubber stamp, so when it didn’t let the union into its stores, there was a bad reaction.

Stormy: but there is no guarenteed right for labor to collectively bargain.

If the factory doesn’t promise wages, the workers walk and go home. If the factory promises wages and then doesn’t pay, the workers riot.

Something that does change the dynamics of the situation in China with respect to the US or Latin America is that if a worker quits, they won’t starve since they can go back to the countryside and farm, and having this alternative is keeps things from being too abusive.

The trouble with increasing wages via unions is that wages get increased for the union members, but people that aren’t employed are then out of luck.

Privatization vs nationalization. I agree with your standard of fairness, etc. I am not against either per se. Dictatorial regimes do worry me….either from the left or from the right. In some cases, dictorial regimes promoted a brutal form of privatization–Chile/Pinochet. The U.S. collaborated in that one. China is a more complicated story. It certainly is centrally controlled, albeit not in the same manner as Chile was. It is leveraging its vast population to leap forward. It’s lack of fairness towards labor is the plum it is offering FDI–that concerns me a lot. If wages in Chinese Walmart stores are .75/hr–what precisely can that wage earner buy? There is one union in China, one–it is an arm of the communist party. There have been some modest attempts at labor fairness–the “contract” labor law; but there is no guarenteed right for labor to collectively bargain. End of story. The U.S.–since Regan–has neutered labor as well.

Here is my central concern: the WTO and its indifference to labor standards, labor regulations, or the environment. The fact that the latest WTO negotiations have stalled is a sign that many countries are upset. In short, trade policy has rewarded abuse.

As a consequence, wealth has been ever more centrally concentrated. Does that concern you? A few posts back, Boat 52 wrote a telling indictment on precisely what is happening to the U.S.–slowly but surely becoming a Mexico look-alike:

“Slowly but surely the United States is morphing into a larger size twin of Mexico. A small elite ruling class controls politics and enjoys wealth on a scale that is multiples of the average citizen. While the average person is able to enjoy an increase in their quality of life if measured in consumer goods, currency devaluations accomplished no significant increase in prosperity. If it wasn’t for Mexican law that made 100% foreign ownership difficult, Mexico today would be totally owned by U.S. based entities. The next presidential election will be the line in the stand to stabilize the U.S. ship of state. That stabilization must tax the wealthy elite, regardless of political affiliation, end the Roman empire like military base expansion globally, and turn our fighting ability to a war on energy with a real solution in the very short term. The U.S. needs a “dark horse” candidate to win and that individual faces the prospect of being a one term candidate if the measures enacted early in the new term do not show meaningful progress. Failure to elect a agent of change will surely see this decade as the turn in the “American Empire” no different than the turn of the British Empire many years ago. A visit to Mexico spent with the ruling elite (as I have) will open any doubters eyes to the future of the U.S. In conclusion, I must add that I am a lifelong Republican aged 63 who enjoyed a wonderful career on Wall Street and can do whatever I want. Sadly, I don’t see the U.S. as a wonderful environment for my grandson age eight unless changes occur very fast. This election as evidenced in a tiny way last night in Iowa (and some may say that basing forecasts on Iowa is laughable) offers a glimmer of hope. Not because of the stature of the candidates but because of the outpouring of voters who are demanding change.”

How about that as a first step towards telling the truth?

We all know, as educated folks, end of the day bread matters. Its only when you don’t have enough bread or have too much bread, you start lamenting about freedom/ideology/democracy…

However difference between the two, the former being you face an immediate expedient issue to get some bread or even crusts on hand, the latter an issue of how to add more or preserve my vast share of bread?

Moody’s says spending threatens US rating
http://www.ft.com/cms/s/0/40f3a2be-bfa9-11dc-8052-0000779fd2ac.html?nclick_check=1

What might happen when US really loses its AAA? Coupled that with the massive channelling by SWFs/Reserves out due to conflicts in inherent directives (USTs no longer AAA, thus no longer eligible), investment strategies (shed overweight safe to riskier assets) and/or simply speculative (USD crash story)

Will it spark a mad rush for strategic assets, non USD? Or the prelude to a hegemonic shift?

Bernanke is becoming a parody. Like a thick spectacled mad genius ratcheting every lever in his inventive flying machine which is quickly stalling out. Every fly-by-wire, every device that whirs and purrs is being gunned to the max as he rapidly moves through his limited toolbox of remedies. Anybody remember Oz’s many pull knobbed workstation behind the curtain? BINGO! His message? Stay out of this market–long or short, or you will be made sorry. I’m a consummate chessplayer.