Riots in the streets 2008-2013 style.

[Researcher]

    This is how the myth is kept alive.By saying that there are teachers, doctors, nurses,blah, blah, blah....when you look at actual incomes there are very few middle class in these third world countries.
What's the average income in China? The last I saw was around 3000 dollars a year!That isn't middle class.So the myth goes on.Anywhere you go and see massive amounts of grinding poverty doesn't have much of a middle class.Incomes aren't rising much in places like China either.The lie that was told was that free trade agreements would bring many jobs to the US....that was a lie.Many, many jobs have left and not many have been created...hence 9.1% unemployment.

        Researcher

[Colgando]

   I don't think that cutting corporate taxes will bring companies back.Many companies are making record profits and have tons of cash on hand.How much money do they need to build in the US?Tax breaks will do nothing.

    I just hope that this election year will be on issues and not on who has the best slogans like "Hope" and "Change" .I think Pawlenty is brave by putting his ideas out there this early on.Everyone knows that by the time elections roll around the other candidates would have picked his ideas apart.Not to mention that most candidates actually campaign close to voting time because voters attention spans are so short.

      Researcher

I agree, that alone will not do it. It seems to be mostly driven by labor and regulator costs and hurdles, much easier and more profitable to build a product overseas and ship to the end consumer. Hard to see how the American worker can compete with the Chinese or Indian worker, would be great for someone to figure that out, if it is possible at all.


Yep, there is a bubble in the emerging markets, that is the nature of the beast, asset bubbles always form and bust. Fast money moving across the markets chasing returns.


Read today that China had a 5.5% annualized inflation rate in April, the Chinese monetary authorities are trying to rain that in by tightening their monetary policy, which will cool off their GDP growth, traders are taking out short positions. The researchers still have a 8% GDP growth target for 2012 in China, still say it is a bull market there, but anticipate a pullback in the short-term.   


Interesting what is happening with the Boeing plant moving from WA state to SC state.


What is the universal definition of middle class? I would expect China to allow wages to rise to keep up with inflation, that would be smart of them, so I expect them to do that if they are not already doing it.

[Capstone]

    This is how the myth is kept alive.By saying that there are teachers, doctors, nurses,blah, blah, blah....when you look at actual incomes there are very few middle class in these third world countries.
What's the average income in China? The last I saw was around 3000 dollars a year!That isn't middle class.So the myth goes on.Anywhere you go and see massive amounts of grinding poverty doesn't have much of a middle class.Incomes aren't rising much in places like China either.     

No myth about it.  As a high school teacher my wife's base monthly salary was around 6,000RMB/month (~$900) plus she got a prorated bonus every month based upon her student's end of year exam scores which added around another 1,000RMB/month (~$150). She also received a paid trip at the end of every school year as well - (the trips were to Japan, Australia, Thailand and South Korea among other places). So as a high school teacher she earned an annual income of about $13,200/year plus received a paid vacation. $13,200 has a lot of purchasing power in China and would definitely be comparable to a middle class income in the US (same purchasing power).


The reason that the average annual income in China (~$4000) is so low is because there is indeed still a very large poor class in the country but to think that there is no large middle class in the country is being extremely naive. If there is no middle class, then who is buying all those apartments, cars, ipads, etc. in the country every year?

[Capstone]

I would expect China to allow wages to rise to keep up with inflation, that would be smart of them, so I expect them to do that if they are not already doing it.

You are right - that is exactly what they have already been doing. My in-laws have seen an increase in their retirement incomes over the past year as an attempt by the Chinese government  to fight inflation.

[Researcher]

       $13,000 a year is barely above the$11000 a year poverty line in the US.In the US that average teacher's salary is $40000 a year.So I am supposed to believe that everything in China costs 1/4 of what it does here in the US?....not likely. This is just another part of the myth:Sure wages are lower but things a much cheaper in other countries.That's a myth.I was expecting that things would be cheaper when I lived in Mexico but it just wasn't the case.Some food was cheaper but not much.For the most part everything was pretty much the same price.

       Sure some salaries have gone up in China.I think factory workers are making 80 cents an hour as opposed to 25 cents and that's quite an increase percentage wise.It's all smoke and mirrors.The only thing that has happened is a redefinition of the term middle class.

       I really don't have a problem with redefining the term or the fact that the US is in such a decline.I just think that everyone should know the truth so they can prepare for the decline.Eventually, when the dust settles, I think life will be alot different here.



 Researcher

[Capstone]

$13,000 a year is barely above the$11000 a year poverty line in the US.In the US that average teacher's salary is $40000 a year.So I am supposed to believe that everything in China costs 1/4 of what it does here in the US?....not likely. This is just another part of the myth:Sure wages are lower but things a much cheaper in other countries.That's a myth.I was expecting that things would be cheaper when I lived in Mexico but it just wasn't the case.Some food was cheaper but not much.For the most part everything was pretty much the same price.

       Sure some salaries have gone up in China.I think factory workers are making 80 cents an hour as opposed to 25 cents and that's quite an increase percentage wise.It's all smoke and mirrors.The only thing that has happened is a redefinition of the term middle class.

Actually most things in China do cost 1/4 or less than what they do here in the US. You can get a very nice meal in a restaurant for less than 1/4 of what you would pay for a comparable meal in the US. A nice meal consisting of several courses and drinks for two would usually set me back $10-$15 in China. Or you can buy groceries in China for much less than 1/4 of what you would pay for them in the US - you can buy vegetables for pennies. I bought red bell peppers in Xiamen for about 10 cents where as I pay $3 for one here. My wife and her parents were absolutely shocked at the food prices here in the US as compared to China. I can go to the movie theater in China for about $1 where as it costs about $8 here.
 
I rented a nice 2 bedroom apartment in Xiamen for 3 months and paid about $200/month rent which is no where near 1/4 of what you would pay to rent a city center apartment in the US. You can spend $2 on a taxi fare in Beijing or Shanghai that would set you back $10-15 in NY. On the other hand, the cost to buy an apartment in a tier 1 city such as Beijing or Shanghai would be more than 1/4 of what you would pay for an apartment in a city like NY. However in other non tier 1 Chinese cities which have not seen the drastic effects of the current real estate bubble prices aren't as high. The real estate bubble in Chinese cities has really had 2 effects - 1. the prices of apartments in tier 1 cities have shot up but 2. this in turn as also caused rental rates to remain relatively low. This is because many of the apartments being bought are strictly for an investment where the buyer has no intention of ever living in them, they only want to sell them at a profit after owning them for several years. That is exactly what my wife did - she bought an apartment but never lived in it and then sold it for a pretty good profit after about 3 years. My 2 brother-in-laws are both currently doing the same thing, they each own an apartment that they have no intention of ever living in - both apartments currently sit empty.
 
A car in China built by a Chinese manufacturer costs a fraction of what a car does here in the US built by a US manufacturer however cars such as Toyota, Honda, Ford etc cost about the same or a little more in China than they do in the US - my wife owned a Ford Focus.  Luxury cars such as Mercedes, BMW, etc cost quite a bit more in China than they do in the US because of the luxury import duties that are applied to them.
 
If my wife and her two brothers were each able to buy investment properties, cars, nice clothes, eat out frequently and take vacations then there definitely is a large middle class in China. We are talking about a high school teacher, a newspaper editor and a telecom marketing manager here.  This is not anything unique in China - most of my wife's family & friends all live a middle class lifestyle. They live in nice apartments, own cars, eat out frequently and travel. No myth, no smoke & mirrors - just middle class.
 

 
 
 
 

[Researcher]

    Its good to hear that folks in China are getting by on less.It goes to show that we need deflation here in the US.Maybe that will happen with the further decline of our country.

    The chinese engineer I work with says that chinese made cars are cheaper but they are no where near as safe, of good quality and don't require emission standards like cars made here are.He said that if you want a decent car in China you need to buy a car made by GM, Toyota and the like.I have always wondered if the emission and safety standards here in the US are necessary.

         We definitely can live cheaper here in the US. I could eat Ramen noodles for every meal, buy the cheapest car I could find and live in an old mobile home.The question is do I really want to.I have thought about it and I think my wife would even go along with it.It kinda looks like that's where our standard of living is headed.

         Researcher

[no comment]

The lie that was told was that free trade agreements would bring many jobs to the US....that was a lie.Many, many jobs have left and not many have been created...hence 9.1% unemployment.

Maybe not a lie but an assumption.  Many bad assumptions were made... that everyone needed to own a home, that ethanol would get us off dependence on foreign oil, that there were so many shovel ready projects for the stimulus money, that we can spend our way out of a recession, that so many green jobs would appear.....

It appears you are on record as saying we will not have riots anytime in the near future.  I say the chances are better than 50/50.

First you predict riots and now you're sitting on the fence with a 50/50 chance.  Spain has higher unemployment and they haven't had riots, just peaceful demonstrations.

[Capstone]

The chinese engineer I work with says that chinese made cars are cheaper but they are no where near as safe, of good quality and don't require emission standards like cars made here are.He said that if you want a decent car in China you need to buy a car made by GM, Toyota and the like.I have always wondered if the emission and safety standards here in the US are necessary.

Chinese manufactured cars are $hit for sure - the Chinese branded ones that is. Most of the Toyotas, Hondas. etc sold in China are manufactured there but are built in Japanese or American designed and run plants, so I guess that makes a big difference in the quality. I sure don't think that I ever want to fly in one of the Chinese designed/built airliners that are supposed to be coming out in the next couple of years. No thanks, I'll stick with Boeing.

[Researcher]

Maybe not a lie but an assumption.  Many bad assumptions were made... that everyone needed to own a home, that ethanol would get us off dependence on foreign oil, that there were so many shovel ready projects for the stimulus money, that we can spend our way out of a recession, that so many green jobs would appear.....

       The next big lie is that a return to Reaganomics will save us all.The liberals want to spend us into prosperity and the conservatives want to starve us into prosperity. Although I lean more toward the conservative side of things I think our main goal should be moving away from being the world's police, looking out for our own interests and coming up with a way to better transition into the global economy.

      Researcher

[Alabamaboy!]

Colgando, what are some specific stock picks for you? I was buying into the "emerging markets" thing because it seemed like Brazil was a big boy and could stand on its own, but since I have invested about 4 months or so in about 5 highly rated ETF's such as BZF and others, the stocks have tanked about 8%. Even though there is very little bad info out there regarding Brazil. The Colombian ETF's are the same. And it seems like they are so intertwined the the US economy that in this time there is no where to hide.

I just cannot feel comfortable buying gold at this time because in the end it is just a shiny metal.  And common sense tells me that a shiny metal cannot increase in value 10 times over a 10-15 year period when it is still nothing more than just a metal. No new uses for it. It seems like the Tulip bulb mania of Holland years ago. Seems like it could just go down the toilet at any moment.

[Jeff S]

Chinese cars were real $h1t. So were Japanese cars in the 1960s. Nowadays there is an enormous push to get the quality standards up to world class and the privately held Chinese auto makers are churning out a top notch product - maybe not yet up to Japanese standards but at least as good as the big 3 US makers. I was in several in 2008 including Gonow Taizhou, and their product is at least as good as General Motor's: http://www.gonowauto.com/Global/article/global_news/20101012/15634.html

I agree that there are plenty of middle class Chinese in the cities. More than half of the billions of people in China live as rural sustenance farmers, or in manufacturing dormitories to make meager money in the factories to send home to their families. There are millions upon millions of accountants  engineers, purchasing agents, schedulers, sales people, insurance brokers, and so on supporting all of that manufacturing capacity and that means white collar, middle class people. People who own homes or condos, cars, go out to dinner, and so on- True, maybe they don't spend money like we do here, but they were easily as "middle class" or more than our parents were in their day - heavily budgeting when they are young, but enjoying a lifestyle far better than their parents. I'd also wager the "middle class" is as big in sheer numbers as in the US, but a much smaller percentage of their total population.

[Jeff S]

       The next big lie is that a return to Reaganomics will save us all.The liberals want to spend us into prosperity and the conservatives want to starve us into prosperity. Although I lean more toward the conservative side of things I think our main goal should be moving away from being the world's police, looking out for our own interests and coming up with a way to better transition into the global economy.

      Researcher

Who was it that starved during the Reagan years?

[Researcher]

Who was it that starved during the Reagan years?

     I never said anyone starved during the Reagan years.What I am saying is today we're facing a different situation that will take different solutions.Just because Reaganomics worked during the 80's doesn't mean it will work now.I was around in the 80's and remember how things improved.We need someone with Reagan's approach who isn't afraid to go against the grain but at the same time is able to get things done.We need a government that is going to look out for the US instead of the sell outs we have now.

    I'm glad to hear the Chinese are pushing for better quality cars.Although I will miss watching the crash tests done on them where the engine ends up in the trunk and the car ends up looking like an accordian.But with higher quality comes higher prices and those "middle class" poor folks won't be able to afford them any more.

    It's all smoke and mirrors.The next conservative Reagan wanna be's will want to apply Reaganomics and then we will be wondering why things didn't improve.Just like when jobs started leaving the country in the 90's due to free trade agreements and globalization and we now are wondering why we have such a jobs crisis....DUH! I'm surely not advocating socialism but if the Chinese are doing so great maybe we should consider communism??? Heck no! We just need a government that is going to look out for the US and citizens to realize what is really going on.

      Researcher

[Researcher]

Colgando, what are some specific stock picks for you? I was buying into the "emerging markets" thing because it seemed like Brazil was a big boy and could stand on its own, but since I have invested about 4 months or so in about 5 highly rated ETF's such as BZF and others, the stocks have tanked about 8%. Even though there is very little bad info out there regarding Brazil. The Colombian ETF's are the same. And it seems like they are so intertwined the the US economy that in this time there is no where to hide.

I just cannot feel comfortable buying gold at this time because in the end it is just a shiny metal.  And common sense tells me that a shiny metal cannot increase in value 10 times over a 10-15 year period when it is still nothing more than just a metal. No new uses for it. It seems like the Tulip bulb mania of Holland years ago. Seems like it could just go down the toilet at any moment.

        I have always considered emerging markets to be riskier than others.Too much corruption.Who knows if what a company is reporting in those countries is the truth.I know there is corruption here in the US but the corruption in those emerging countries makes that in the US look like child's play.

 I'm with ya on gold.

  Researcher

[Colgando]

Colgando, what are some specific stock picks for you? I was buying into the "emerging markets" thing because it seemed like Brazil was a big boy and could stand on its own, but since I have invested about 4 months or so in about 5 highly rated ETF's such as BZF and others, the stocks have tanked about 8%. Even though there is very little bad info out there regarding Brazil. The Colombian ETF's are the same. And it seems like they are so intertwined the the US economy that in this time there is no where to hide.

I just cannot feel comfortable buying gold at this time because in the end it is just a shiny metal.  And common sense tells me that a shiny metal cannot increase in value 10 times over a 10-15 year period when it is still nothing more than just a metal. No new uses for it. It seems like the Tulip bulb mania of Holland years ago. Seems like it could just go down the toilet at any moment.

AB, I will send you a PM.

[Colgando]

Governor Chris Christie from New Jersey, watched a special on him last night, I like his style. He is not running though, I believe him, he is not ready to run he said. He seems to have a nice balance of positions that would play well across the electorate, and he is very straight-forward and blunt.


Yeah man, communism is a bad, long-term idea, goes contrary to human nature, I think China is ok for now because there is so much upside in their country, they can keep the people at bay by continuing to provide opportunity. However, imagine one day, if 100s of million of people go to the streets and demand that they want a democratic republic, wow, that would be something else.

[fathertime]

r.....First you predict riots and now you're sitting on the fence with a 50/50 chance.  Spain has higher unemployment and they haven't had riots, just peaceful demonstrations.

I already made my predictions and they are here to see.  Most of what I said back when I argued with Heat in 2007 has already come to pass.   I believe we will see some rioting and you don't think so, or maybe you want to change your mind at this late date.  Obozo has done a decent enough job of holding it all together for now. 


Fathertime!

[Researcher]

    What some are saying is that a similiar scenario in Europe could happen here in the US.Take the situation in Greece for example:

                     

     Greece can't pay it's debts so their finances are in ruins and people are rioting when protests turn violent.It has been said that California is the Greece of the US.With it's continuing debt problems that aren't being fixed.What happens when California defaults? Federal bailout?Will the US government have the money to do this when it has reached the debt ceiling?Probably not so there is a possiblility of the same situation in California as in Greece....Riots in the streets.

    Researcher

[El flaco]

    What some are saying is that a similiar scenario in Europe could happen here in the US.Take the situation in Greece for example:

                     

     Greece can't pay it's debts so their finances are in ruins and people are rioting when protests turn violent.It has been said that California is the Greece of the US.With it's continuing debt problems that aren't being fixed.What happens when California defaults? Federal bailout?Will the US government have the money to do this when it has reached the debt ceiling?Probably not so there is a possiblility of the same situation in California as in Greece....Riots in the streets.

    Researcher

It can even happen if you lose the Stanley Cup.


http://www.vancouversun.com/news/Downtown+Vancouver+Rocked+Stanley+Post+Game+Riot/4953593/story.html

[no comment]

I already made my predictions and they are here to see.  Most of what I said back when I argued with Heat in 2007 has already come to pass.   I believe we will see some rioting and you don't think so, or maybe you want to change your mind at this late date.  Obozo has done a decent enough job of holding it all together for now.

You argued with Heat in 2007?  That was before the crash.
President Obama has done a decent job of holding what together?  It seems that the administration has just borrowed and kicked the can down the road.  There doesn't seem to be any solutions by leaders throughout the "West", which is Europe, the US, Japan & Korea.  Japan has been in an economic malaise and the European socialist model looks to be falling apart.  Nevertheless the democrat party wants this country to imitate that model.

[fathertime]

You argued with Heat in 2007?  That was before the crash.
President Obama has done a decent job of holding what together?  It seems that the administration has just borrowed and kicked the can down the road.  There doesn't seem to be any solutions by leaders throughout the "West", which is Europe, the US, Japan & Korea.  Japan has been in an economic malaise and the European socialist model looks to be falling apart.  Nevertheless the democrat party wants this country to imitate that model.

you should remember you were an active poster both here and on that other obscure 'forum'...don't bother to look through the archives or anything, but yes i was blabbing about this way before it all began to unravel.


Fathertime!     

[utopiacowboy]

All these comments that there is no middle class in Third World countries like Colombia etc. Geez, my wife lived better in Colombia than she does in the US making a quarter of what she makes now. Sure things are expensive in Colombia but labor is dirt cheap and int he US it's always the labor costs that make everything expensive. Who needs a washing machine in Colombia when you can pay someone $10 to wash a weeks worth of laundry and clean your house?

I look at my in laws and none of them are hurting - they're living better than we are and we make an income in the top 2% of the US! And it's only to get worse as the US declines into oblivion.

[no comment]

Sure things are expensive in Colombia but labor is dirt cheap and in the US it's always the labor costs that make everything expensive. Who needs a washing machine in Colombia when you can pay someone $10 to wash a weeks worth of laundry and clean your house?

So much of what we do is an exercise in chasing our own tail.  We cut labor costs and create labor saving devices, then pay folks to remain unemployed.  We have machines that make work easier and then go to the gym, hop on a machine to get the exercise we missed at the desk job.

[Researcher]

    There is a very small number of middle class in third world countries.The last number I saw in China was 80 million....China has a billion people.80 million is a drop in the bucket.Because of the redefiniton of the middle class I'd say the number is even less.The emerging middle class in poor countries is a myth so that the true disappearing middle class here in the US will buy into the lie that things will get better.Those in power are afraid of an uprising that will sooner or later happen.They are just buying time by telling lies about an emerging middle class in other countries.What some have seen are exceptions and very small numbers.If you compare the mythical middle class to the disappearing middle class here in the US there is no comparison.

      Using the $10 a week for laundry example.Sounds really cheap compared to the $400 cost of a washing machine right?When you take the cost of electricity the average load of clothes costs $2.78 when you use a machine and average it out over the life of the machine. Now, if the machine cleaned your house it would be a no brainer as far as which is cheaper but I don't mind cleaning my own house.For me, it is cheaper to own a washing machine.

    The smoke and mirrors come in when things are compared and made to sound much more expensive here in the US when it really isn't.Many things in other countries are just as expensive and in some case more expensive than here in the US.All this talk about the emerging middle class is one big myth.What is really going on is a redefinition of the middle class term to what is actually the working poor.

         Researcher