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

To: bentway who wrote (229777)	11/21/2009 1:45:04 PM
From: neolib	Respond to of 306849

In our future - inscrutable CHINESE financial panics! Unfortunately (and I know little about China) there appear to be some Gangster genes in Chinese (or perhaps only some flavors of Chinese??) so that will make international finance interesting as China gains in the world pecking order. It is interesting however how cultural differences deal with hard times. I've consulted on and off with the American subsidiaries of Japanese companies, and during this recession, their approach was salary reductions rather than layoffs, with modest amounts (5% at the low end, and 10-15% for upper management). As things started to improve, they retroactively paid back the cut for the low end, but not all for the higher earners. The US approach is layoffs, usually at the low end, and no cuts for management. So in a recession where our economy contracts 3%, in the USA we cause about 3% of our population to become unemployed (i.e. get a 100% wack in income) while the rest do more or less ok, while the Japanese spread the pain around with the most pain (% wise) targeted at the upper levels, who also reap a bit more (not as much as the USA) of the benefits during good times. I've often mused over the fact that if during a 3% GDP (year not quarter!) contraction we could uniformly ensure that all sectors and individuals saw exactly a 3% contraction, we would hardly notice the recession. But because of the wide variation (look at housing & autos falling near 50% or more) by sector, the overall 3% recession is much more difficult. Of course there is no mechanism for obtaining such uniformity, and if there were it would have lots of negative implications as well. There is some truth to the "creative destruction" theories in economics too.