For years China has been the place for cheap labor. But with workers taking home a pittance – less than $200 monthly – of what Americans yield, labor strikes have been springing up like wildfire in August. Foreign multinationals are the target of these outbursts, and the Commie government is happy to displace its people’s anger abroad.While China recognizes that these mega-corporations need China more than China needs them, there is another reason why workers are unhappy.

Consumer spending is the real issue here. Since labor is a resource, it makes sense to want to preserve it, like we do oil. Moreover, exporting labor will drive up prices abroad, which is great when we’re all scared of deflation. As the Economist points out, a 20% rise in Chinese consumption would create 200,000 American jobs alone. In effect,for the world economy to recover, we need Chinese workers to be treated better, and spend more. For that to happen, a stable urban workforce is necessary, as are greater skills and investments in employees to become long term.  That means lower profits, but it also means a more prosperous China.

And don’t worry about cheap labor, India and Southeast Asia are still rife with workers.

The Financial Bill passed 60-39 and has been lauded by many as a responsible piece of legislation, and touted by others as imcomplete. Deregulation and laissez-faire economics have seen and done enough damage for the government to enact its first step towards economic socialism. I’m sure that phrasing made many of you shudder, but what else would you call it?

Republicans voted against the bill, obviously, but even Democrats are unsure as to whether the Bill will prevent future damages. The ability to invest in hedge funds, hold derivatives, and charge for debit interactions will change up front. The Financial Stability Oversight Council is a new department in charge of monitoring flashpoints in the economy, breaking up firms that pose a risk to the economy, and other regulatory procedures.

Republicans argue that this will prevent small and medium sized businesses from obtaining credit, and will force jobs overseas. To other more capitalistic countries? HA! The lack of attention to Freddie Mac and Fannie Mae is one of the larger issues that remains, as is the definition of “too big to fail,” but again, the bill is still up for review and is on the way to becoming complete, so Dems say.

The Dow was up 2.82% today at 10018.28, the first time it broke 10000 since June 28. After last week, when stocks were at their lowest point this year, this is a welcome rebound. State Street, the world’s second largest custodian bank was up 9.9% as it projected profits well above analysts’.

Worries about the European markets caused the slide of last week, but today when details were released about the stress tests for Euro banks and a date was set for July 23rd, confidence about the stress tests soared.

Despite low German manufacturing numbers, which were said to be based on a technical correction, crude oil regained stature, to $74 a barrel.  Spanish banks gained mightily as their team reached their first World Cup today.

Treasury prices fell as investors sought riskier stocks and the Euro regained some of its earlier losses, back up to $1.2638.

Unemployment is still extraordinarily high, however, and there’s much dispute as to whether a second stimulus is going to do anything. It seems that now, most of the world is willing to spend the next couple of years in the financial doldrums in order to reduce a future deficit.  Americans, and Europeans, want a long term fix, and stimulus doesn’t seem to be the answer.

The unemployment rate dropped for June, to 9.5%, even though 125,000 jobs were lost. The reason is that the rate is defined by people who are out of work and looking for work. The decline in the civilian labor force demonstrates that people are not looking for work any more. What happens when they do, is the rate will climb up, unless there are available jobs, which there probably won’t be.

The International Institute of Finance (IIF, based in Washington) predicts that as mature economies end their stimulus packages at the beginning of next year, growth will decline. Forecasts for 2011 from around the world predict slight decreases in growth, which when backed by austerity measures, will continue for years.

When the Bush tax cuts expire on January 1, this will be good for the immediate repayment of our massive debt; but many are dissatisfied with higher taxes. The thing is, if growth lags, and the mini stimulus that failed for the third time in Congress this week doesn’t get passed, you can likely expect that double dip we’ve been hearing so much about.

So it seems as though Obama – gasp! – may be right about his economic policy, deferring payment for a few years until the economy has legs. But with his support still well under 50%, don’t hold your breath.