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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: UncleBigs who wrote (64279)	6/21/2006 11:34:03 AM
From: Broken_Clock	Respond to of 110194

We have a workforce concentrated in mortgage brokers, real estate agents, remodeling contractors, Starbucks baristas, Wal Mart greeters, manicurists, and speculators.>> You forgot massage folks. That is a huge component of work force. -g-

To: UncleBigs who wrote (64279)	6/21/2006 1:43:17 PM
From: GraceZ	Read Replies (1) \| Respond to of 110194

We've reached the point in the u.s. economy where we need debt induced speculation and consumption to keep the system intact. I imagine if I was a speculator using borrowed money I might make the same observation. Speculation is never more than money flowing from one set of speculators to another set of speculators, it adds no value, it's net neutral to the real economy even while it reeks havoc with prices. BTW all products are created with the end goal of consumption. All capital has a cost even your own. Sometimes the cost to use your own exceeds the cost to use someone else's so it makes perfect economic and business sense to use someone else's capital. We have a workforce concentrated in mortgage brokers, real estate agents, remodeling contractors, Starbucks baristas, Wal Mart greeters, manicurists, and speculators. Some industries defy increases in productivity (the common example is that it always takes four musicians for a four string quartet) and those industries still have to compete for inputs with industries which are increasing their productivity. As the country becomes wealthier, from the increases in the productive industries, the demand for those low productivity services increases, bidding up their prices. Who's at the top of the economic foodchain? Hedge fund traders. Tell that to the hundreds of managers who have capital losses this year and whose pay is performance based. Who needs robots when you have a billion Chinese who will work for $1 per hour? Ask the Japanese if they want to trade the robots in their US based auto factories for cheap Chinese labor. I dare say their robots produce a greater return on investment. Chinese labor most certainly has increased the productivity of US companies and US workers, for sure. But if cheap labor was all that was needed to get and stay rich than the average Chinese would be rich and the average US citizen poor. Mexico would be rich! I would venture to guess that the average Chinese ex patriot living in the US is a lot richer than the average Chinese citizen living in China even if they do something here with low productivity like running a carry out restaurant. I don't expect that the average Chinese will stay as poor as they are now, but that is because they will create their wealth the same way the US created theirs, by creating something that is worth more than the sum of its parts and reinvesting the difference.