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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (47148)	2/15/1999 11:55:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Yiwu, thanks for the comments on the Chinese consumer's attitude toward debt. I don't know of any other consumers who are so in love with consumption and debt as the american consumer. I would also add that the current pattern of both consumption and debt rising faster than incomes is not sustainable. Mike

To: RealMuLan who wrote (47148)	2/15/1999 12:15:00 PM
From: Bonnie Bear	Read Replies (3) \| Respond to of 132070

excellent post...I was raised by a Depression-era mother with this value set...I have no debt except a small mortgage I can pay off with cash, one credit card used as a charge card for emergencies, and a low-consumption lifestyle. My first two houses and all my cars were paid for in cash. Interest rates were incredibly high and nobody wanted to give a loan to an unmarried woman 15 years ago, so I was forced into paying cash for a house. My, how times have changed! I've been investing in IRAs and 401Ks for 15 years largely because my employer matched it with free stock and I didn't have to pay out 40% of the contribution in fed and state taxes. There wasn't much incentive to buy stock or have the 401K until US taxes ballooned in the 1980s. People in the US use the mortgage and the stock market as a tax-reduction strategy. Even stocks that go down are used as a tax-reduction strategy, wildly inflated stocks are used as a charity donation to reduce taxes for the rich. It is a sad waste of time for a society this modern, our tax burden has spiraled out of control and many games are played to control it at the individual and corporate level.Even bankruptcy is used as a tax-reduction strategy, done repeatedly and legally. It is such a waste. My understanding about China is that it has a tax code it has been unable to enforce, people prefer barter and cash, as they do in small towns in the US. If China develops a corporate structure to generate tax revenue, my guess is that the same bizarre use of stock and 401Ks will happen there. Note Canada has severe tax burden and its citizens have the RRSP, the equivalent of the US 401K/IRA for tax-deferred savings. The more interesting feature of the stock market, other than its tax-evasion utility, as as a casino. Gambling is an ancient hobby traceable though thousands of years of history in nearly all societies. At face value, the stock market is a casino. I remember hearing about the Shanghai stock market as "a casino"...we have state lotteries throughout the US that act as another source of tax revenue. People love buying lottery tickets because they like to gamble. So I think the bubbles will form as very large societies get wealthy enough that a large percentage of society can afford the casino, and the nations find it as a convenient means of generating tax revenue. There will always be a few professional gamblers who can win consistently at the expense of others, and the casino owner will find a way to make the casino profitable or go bankrupt.