China Factory Suicides Signal End of Cheap Labor

Ten workers (mostly young women) have committed suicide at Foxconn factories in China - the same places that make iPhones and iPads. At least 13 have tried, and some reports are of 11 suicides out of over 20 attempts.  Foxconn may not be running sweatshops as Upton Sinclair exposed in The Jungle, but the impact may be similar: the Chinese government is demanding changes. 

This may signal the end of the cheap labor era. A recent strike at a Honda plant shows workers resisting exploitation. The inflationary forces surging inside China is also putting pressure for increased wages. 

Honda workers on strike in China factory (LA Times photo)

The Beijing Youth Daily dissects the problem and finds conditions are a modern version of hellish: long hours, trapped at night in dull dormitories, severed from the social constructs of the farm villages, precluded from overtime pay, and regimented to minute details in the tasks they perform. They call themselves "pubic hairs", an exemplar of their low self-esteem. 

Foxconn workers (Bloomberg photo)

Bloomberg adds additional color. Perhaps most striking are these factoids:

• 80% of assembly line workers work standing up, sometimes 12 hours a day, 6 days a week
• 86% of workers live in dormitories with 8-10 per room
• Making friends is hard since they are not allowed to chat on the line

Apple is caught up in this mess and will add to the pressure put on these factories for change. Apple's initial response was to say they were not "sweatshops", but this missed the forest for the trees:

The word "factory" is something of a misnomer: It would be more accurate to describe Foxconn's facility as a manufacturing city, according to the AP. Large-scale industrial production is booming in China on a mind-boggling scale. Imagine a gated industrial complex that sprawls across five square miles and employs hundreds of thousands of people on assembly lines running 24 hours per day. The workers live there, eat there and shop there. And they make your iPhones and other electronic devices.

Steve Jobs comments at D8 conference still seem an effort in spin not resolution:

On the matter of the recent spate of suicides at Foxconn, the Chinese company that manufactures electronic devices for Apple and several other major consumer electronics brands, Jobs said the company was very concerned about the issue. “We are on top of this. We look at everything at these companies. I can tell you a few things that we know. Foxconn is not a sweatshop. It’s a factory — but my gosh, they have restaurants and movie theaters. But they’ve had some suicides and attempted suicides, and they have 400,000 people there. The rate is under what the U.S. rate is, but it’s still troubling. We’re trying to understand right now before we try to go in with a solution.”

This all may be a blessing in disguise. The US went through this at around the time of The Jungle, and greatly improved working conditions - plus found it came with improved productivity. At the time the US had two huge advantages over China: innovation (think: Edison) and efficiency (think: Carnegie in steel, Rockefeller in oil, Ford in manufacturing). When Japan went through this, they innovated in process (think: the Toyota manufacturing system). China now needs to step up their game, and move beyond cheap labor in virtual slave camps to push for innovation in products and process. 

The Chinese story sounds an awful lot like the immigration story that has been replayed across the world: off the farms, into the cities, exploited ruthlessly, struggle in sweatshops, and slowly pull themselves out of the bottom and into the middle class. The Chinese government has been acting like a modern-day Midas, hoarding the gold (foreign reserves) and keeping their citizens relatively impoverished as they chase the mercantilist dream. Their citizens are now clamoring that the powers-that-be spread the wealth around, and let them in on a little bit of it. It is time. 

Comments

[Mamma Boom Boom]

Looks like us bovine may be out of the woods.

[Neely]

This is the only chart that matters right now:

http://jsmineset.com/wp-content/uploads/2010/06/Dow-Gold_ratio.pdf

Read it and weep, wavers...

[min]

Maybe.

The NDX is the only hold out that says a quick spike down first. Doesn't matter much either way the road will be paved with bear skins soon enough.

[Rally Time]

He was a day late, but very nice reversal so far in the SPX.

http://www.rallymonkey.com/oldvideo.php

[Roger D.]

Will this "c" wave extend up towards 10K? Probably. We closed right a .38 retrace and the last rally was weak. I think it continues to depend somewhat on the Euro and it has not made any meaningfull bottom yet.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/30005f60-db67-4bfe-97b6-f329c09a6ef9

[Rally Time]

Towards 10k?

This rally is gonna BLOW through 10k and eventually through 11k

[the general]

It's gonna' BLOW alright. Blow up!

[Rally Time]

Up is right! 11k here we come.

[Roger D.]

This chart probably will determine if this rally has any legs. Will the Swiss continue to prop up the Euro?

http://www.screencast.com/users/parisgnome/folders/Default/media/7b18539f-bc4f-4170-bbc1-ce59b8588620

[Hockthefarm]

Y:

I'm with you, time for change. It is not like we haven't seen it all before:

Some people say man's made out mud,
Well, a good man's made out of muscle and blood
Muscle and blood, and skin and bones,
And mind that's weak and the back that's strong.

You load 16 tons,
And what do you get?
Another day older,
And deeper in debt.
Saint Peter, don't you call me,
Cause I can't go,
I owe my soul to the company store

I was born one morning when sun didn't shine,
I picked up my shovel and I went to the mine,
Loaded 16 tons of number nine coal,
And the straw boss said: "Well, bless my soul!"

H

[Account Deleted]

dow jones analysis after closing bell
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-analysis-after-closing-bell_09.html

[the general]

This is a test post.
I want to make sure that my new deflationary spiral avatar is available for use in the near future.
This is only a test.
Had this been an actual deflationary spiral you would have been instructed to............

[Michael]

Thanks for the article on the labor unrest in China. Most informative.

[For the best rates in town go to the General now]

Hey General, do you insure against inflation as well?

[Leslie Martin]

"Their citizens are now clamoring that the powers-that-be spread the wealth around, and let them in on a little bit of it. It is time."
Completely agree.
Good thing they didn't hoard that wealth in the form of gold bars... or did they? I think gold has reached a bit of an intermediate top around the $1250 level and it will now be some time before enough Chinese grannies have the wherewithal to blow on a fifth wave bubble.

[Account Deleted]

Dow jones analysis before opening bell
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-analysis-before-opening-bell_09.html

[upstart]

Rally fitting perfectly here, in two ways. Since strong multi-month cycles point to a low in another month, it makes sense that intervening bounce happens here and not continued collapse yet. Also, two rather weak cycles are due in June, which fit well with a brief downdraft, one or both now being over with. The target month for the low not only sports 3 cycles in sync, but two multi-month turning patterns coming together there. If the decline comes when expected, there is also a very long multi-week pattern relating to another major turning point that I will eventually share. So much pointing to the same place.

[Roger D.]

Dow 10070 area reversal. Everything has reset and the stage is being set for a move down.

http://www.screencast.com/users/parisgnome/folders/Default/media/9327d94e-139a-4f12-af72-f614ee0f6b2d

Roger D.

[JT]

Europe closes on the highs.
The S&P will too.

[Hockthefarm]

When Dubya was about half way through his second term we were all wondering if he had the brains to double our debt on his 8 year watch. Sure enough he did (4.5 to 9T.

We figured that the only way to top that was for the next president to double it again in his first term.

Well it looks like Obama is set to deliver:

http://www.reuters.com/article/idUSN088462520100608

On the exponential curve,
Hock

[Every Day is "3 of 3 Day"!]

Dow 10070 area reversal. Everything has reset and the stage is being set for a move down.

What did I tell you folks? Every day the market "resets" for a "move down" that will blow your mind! Don't let the fact that the last 10 times it's "reset" for a "move down" didn't lead to anything bother you. It's coming and SOON!

Yelnick, we need to resurrect the old "Wolf! Wolf!" series of posts and throw Roger's charts into there. Maybe if they all get collected in one place he will realize that he's been saying the same thing for months. Kind of like if you line up the cans of beer emptied by an alcoholic the night before, he realizes just how much damage he did.

And, in true amateurish fashion, once the count gets busted to the upside, he doesn't let the count develop more and wait to announce the "3 of 3". No, sir, that kind of patience isn't for Roger! The "3 of 3" is always merely delayed a "couple of hours" or "probably by tomorrow".

Seriously, this isn't "Elliott Wave", it's "Groundhog Wave". Same count, every day.

[Roger D.]

Just have to see how this plays out.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/edc34a8b-76ef-4f81-b84b-9f81a403160e

[Samuel Beckett]

The "3 of 3" is always merely delayed a "couple of hours" or "probably by tomorrow".

Say, this gives me a good idea for a play. Only, instead of the "3 of 3" being delayed, the play will be about this guy named "Godot" who's supposed to show up at this place but never does.

Nobel Prize in Literature, here I come!!

[Roger D.]

http://www.screencast.com/users/parisgnome/folders/Default/media/010a6ebf-1dcc-4268-93ac-e8eadf51604b

http://www.screencast.com/users/parisgnome/folders/Default/media/56db324b-8af3-4970-88c4-c1acc10d2fea

Another small wave down in the USD to complete W2? Would give another wave up in the dow? 10090+-

[da bear]

EWI can't count 3's. the correct count was the Big Tease count with the "flash crash" being the '3'.

This is 2 of 3. So 3 of 3 should happen after this rally is over.

The Crash of October '29 was a '3' of 1.
The crash of 1930 to 1932 was the BIG 3 down.
The Oct. 1987 crash was a ... '3'.
The first big decline in the fall of 2008 (the famous part) was a '3'.

This bear market is playing out like the Figure 5-7 scenario seen in At The Crest of the Tidal Wave.
Also very similar to the setup of the 1929 to 1932 crash if you count 1928 as the orthodox top as some old e-waver did. then the rally into September 1929 looks like a great B wave top. The crashes of '29 and 1930-1932 were part of wave 'C' down. The rise into 1937 was a 'wave 4.'

da bear

[Roger D.]

If we do move up in a final wave, probably would take the form of a EDT.

http://www.screencast.com/users/parisgnome/folders/Default/media/53a6527e-1a35-4d5c-96b3-05d7fc5f6033

[Roger D.]

The NDX looks toppy here.

[Roger D.]

Going below 9955 I would think we have probably topped.

Roger D.

[Roger D.]

USD move off the line looks impulsive.

[Mr. Panic]

$Rut-roh!!!! Russell 2000 and $ndx failed after tagging their 200 day averages which have now become resistance. How beautiful!!!! $SPX went up and tagged its 10day average. They need to save this market today. According to sentiment trader and Cobra (indirectly) the next two days should be down according to the historical pattern following 1%higher close in the Dow combined with negative close in the qqqqs.

[DG]

Look, unless the SPY declines more than 1.5 points in less than 119 minutes off of a high (it didn't off the 108.28 high, or it would have reached 106.78 before 119 minutes elapsed) or a lower high, any talk of a reversal to the downside to new lows is ignoring the logic of "post-pattern behavior". Reason being that yesterday there was a decline from 106.32 to 104.83 which took 119 minutes, so the MINIMUM decline necessary to talk about "tops" is at least 1-tick larger than that in the same amount of time or less. It's basic logic, not to mention one of the few useful heuristics to avoid overtrading.

Getting all excited about a few pennies drop is ridiculous and typical of people who subjectively see what they want to see in charts rather than making decisions based on the two main OBJECTIVE factors in the market, i.e. "price" and "time".

[Bird]

$spx is geometrically harmonious for a top on 10 min. $dji is not. Don't know the implications.

[Steven_737]

Decision time!!
on 5 min chart price action looks
either
abc-x-abc- bullish implication (on the 5 min chart)

OR

leading diagonal down followed by 2, followed by i -ii
bearish implication (on the 5 min chart)

Lets see

cheers :)

[Steven_737]

this on both ES and NQ

also price inside OR

ES 1068.75 just above R1 1068
NQ 1805.5 just below R1 1808

now, this is a good setup, no matter what

[Steven_737]

by the way price below ema20 and ema50
on both charts

draw trendlines,
watch favorite momentum indicator
and enjoy price action (assuming it wants to break away)

BEWARE OF FAKE-OUTS
this setup is good practice to learn about fake-outs

cheers :)

[Roger D.]

USD needs to hold 87.701 and take out 87.830

Dow? B down and C up to go or it's topped and just waiting on the USD to resovlve.

[Steven_737]

price action inside a triangle - not in Elliott terminology
(base starts at 10 am EDT)
price approaching tip of triangle located
approximately at 15:15 for NQ
and at 15:45 for ES

it has to breakout before that time

:) :)

[Steven_737]

Lets see what she does now at the backtest
:)

[Steven_737]

price hesitation at OR bottom
and probably sayonara !!
adios trendline - triangle bottom

[Mr. Panic]

What was that about that arrogant drivel about getting excited about a pennies drop from the top?

[DG]

Under 106.41 by 3:26 ET is a short trigger.

Doesn't mean the beginning of the end of the world starts then. Doesn't mean it doesn't start then, either. My crystal ball is much more limited than that.

[Steven_737]

Hello Duncan
this is also a good example,
where I need to have a bellwether to tell me if wave 3 will extend
yeap!
on the 5 min chart!

cheers :)

anybody on this blog has any suggestions on that?

price at yesterday's close, as expected rebounds

is this going to be a good rebound (as in wave 4)
or wave 3 will extend and one has to fight the urge to take lighten up on the trade?

[Roger D.]

The Dow broke 9955 and USD vaulted 87.830. Now if my count is right in the USD we should get a monster move up in the next 10 days.

Roger D.

[Steven_737]

Let me say a couple of things:
ES "wave 3" reached Fibonacci projection 100% at 1060.25

next levels are 1057.25 127% , 1053.5 161.8% and 1042 261.8 %

If wave 3 will not extend then minor 4 (or iv) is under way NOW

otherwise, price is in minor 2 (or ii) and nice iii of 3 is about to start

[Steven_737]

ES targets the pivot at 1054.5

NQ below its pivot targets 1780 price area

[Steven_737]

by the looks of it,
it appears that price action is in iii

[Steven_737]

ES and NQ iii reached preliminary targets

take profits or will iii extend??

please do not tell me about trailing stops - I have tried all of them.

I am looking for something better than that

I am looking for the conditions that "forecast" the likelihood of wave 3 extending.

Same for keeping a runner! i.e. keeping 50% or 25% as runner will be conditional upon probability of wave 3 extending.

[Steven_737]

it appears that wave 3 wants to extend

[Steven_737]

yesterday's ES low 1041.25 is a Fib 261 extension
good for target

[Steven_737]

although S1 is at 1046

for NQ yesterdays low at 1770
S1 at 1772
good region for a mini bounce

next target is S2 at 1753, far away