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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (59215)	8/6/2006 11:55:58 AM
From: arun gera	Read Replies (2) \| Respond to of 306849

GST, How many consumers are being added in India and China who consume real goods in the same quantities as US? I don't see that many in India in absolute numbers. India is selling about a million cars a year at this point. But in terms of impact on commodities, these are equivalent to 250,000 new cars in the US ,because Indians buy cheaper and smaller cars that consume less gas. Americans buy 15 million cars a year. 1 million immigrants are added to the US economy every year. After they have been around for 5-10 years, these immigrants are consuming basic goods (housing, oil, education) in much larger quantities than a successful IT person in India. The immigrants may not be consuming starbucks coffee, but may buy Folgers. They buy TVs and cell phones. They drive around. They consume beer. They use up $12,000/kid/year in school education. Successful Indian IT people number less than 0.5 million after 15 years of outsourcing. And the successful IT people are paid in the top 1 percent of salaried workers in India. Even if a single successful IT person creates 10 other jobs of significant compensation, the annual rate of Western level consumer addition is lower than that being contributed by the immigrants to the US. What is the reason US is facing growth issues? Here is one theory that I have. The typical US consumer who has been in the US for greater than 10 years, has reached a balance between what he wants in life and how much he is willing to work for it. To make him consume more, the combined sales force of all corporations is working very very hard. An oft quoted example is the made-in-china bra which reaches US shores at $1 is sold at Victoria's Secret store at $23. The biggest budget items of a household are houses, cars, and education. As the typical US consumer is not interested in working any harder to acquire these, he is being extended loans at cheap rates to acquire these, so that he does not think he is working hard. That has kept the GDP growing. But that era is possibly coming to an end. On the other hand the recent immigrant household can exert true demand not the flaky demand generated by Victoria's Secret. And that household has untapped earning capacity, as they are typically underemployed. Therefore, economically speaking, it is imperative that for sustainable US GDP growth - legalize the 10-15 million immigrants who have been in this country for 5+ years. This will create true demand and also a greater supply of hardworking legal workers for US corporations. -Arun >The US will no longer contribute much to global growth, at least not until we get our house in order -- but your belief that the world is doomed without the spending power of a few million people in the US who are in over their head on real estate is fantasy.>