Chinese workers flee expensive coastal regions for the interior.

The Pearl River Delta may be 900,000 short of workers, and the other coastal regions are similar. Increasing prices and stagnant wages are making it increasingly difficult for workers to remain on the coast and many are returning to the interior.

Significance: 1. Bottlenecks are developing in China’s state-controlled industrial sector. 2. Worker discontent is growing.

http://www.nytimes.com/2010/11/30/world/asia/30china.html

Industrial production growing rapidly across the globe

YOY in September 2010:

China: China: 13%, Japan 11%, Eurozone 9%, Brazil and Russia 6%, United States 5%. With the weak dollar, why is the US lagging? The answer may be anti-business government policies.

Factoid: The Mall of America has no vacant retail space for the first time in 18 years

Is this a retail recovery or the devil finding work for idle hands?

3rd quarter US corporate profits the highest ever (over 60 years)

Now at 11.2% of GDP. At a $1.7 trillion annual rate, corporate profits are ahead of 2007’s $1.5 trillion. The recession is over for the corporate sector.
http://www.nytimes.com/2010/11/24/business/economy/24econ.html

India's underground economy continues to thrive

India's underground economy has maintained a steady 50% size of the reported one for three decades and now totals $640 billion at the current exchange rate. (3x that at purchasing power parity.)

Source: LiveMint of India

China’s Achilles’ heal: Its industry is entirely state-owned and controlled.

The true private sector in China has actually shrunk in the past 10 years. The country is testing the economic limits of a socialist dictatorship. It is reasonable to expect it will eventually come to an impasse. From the WSJ, Nov. 17, 2010:

“According to China's Ministry of Finance, assets of all state enterprises in 2008 totaled about $6 trillion, equal to 133% of annual economic output that year. By comparison, total assets of the agency that controls government enterprises in France, whose dirigiste policies give it one of the biggest state sectors among major Western economies, were €539 billion ($686 billion) in 2008, about 28% of the size of France's economy.”

http://online.wsj.com/article/SB10001424052748703514904575602731006315198.html?mod=ITP_pageone_0

Blood banks and bleeding

From today's NYT: Should the small countries let the banks go, as did Iceland?

Lincoln

“This policy of saving banks at the cost of breaking the back of entire countries is a disaster,” said Daniel Gros, director for the Center for European Policy Studies in Brussels. “Ireland is beyond fiscal plans as long as one cannot see the bottom of the losses in the banking sector,” he said. The only way to “stop the rot,” he added, “would be to let the Irish banks go under” and then use the European funds to “tide over the government until markets and the economy recover.”

"Ireland is unlikely to let its banks fail, but it has been unable to accurately forecast its banking losses — or say whether bondholders will pay part of the bill.

"Irish banking losses are estimated at up to 80 billion euros ($109 billion), depending on the forecast used, or 50 percent of the economy. As long as housing prices continue to fall, these losses cannot be capped."