Pricewaterhouse Projections Shows China Beating US And Europe By 2050
By Elaine Meinel Supkis
Analysts at Pricewaterhouse project that China will "dwarf" all G7 nations by 2050 based on present trends. This comes as no surprise to me but it does leave out the effects of the Hubbert Oil Peak. Probably, thanks to all businesses wanting to squeeze out inflation, the relocation of all factories to China will probably happen much faster, I am guessing, twice as fast.
From the BBC:
China's economy is projected to grow so fast that it could outstrip all developed nations by 2050, a report by Pricewaterhouse says.Throughout history, the Chinese peasants have had a reputation for hard work. This is why immigrants from Europe, pouring into America during the 19th century, were violently hostile to any Chinese incursions. Building the railroad through the Sierras, though, was so terrifyingly brutal, Asian immigration was loosened to allow some workers in. But even this caused a wave of fear in the European community which has a much more laid-back attitude towards hard work.
The Asian giant's economy is set to double in size between 2005 and 2050, according to the report.
As with other developing countries, a key driver for China's rapid growth is its younger, cheaper workforce, it argues.
Factories with a sullen, slow moving, often overweight workforce that feels hard labor stinks will be beaten in competition with factories working at full speed with motivated, fast moving workers. At first, we prided ourselves on using robots to finesse the work and speed production but that wasn't sufficient.
The quality of the labor force matters. This is why people claiming we will move factories from China to wherever are foolish. These factories ain't leaving Asia so fast. In most other countries, the peasants know toil and hardship but for some reason, don't have the work ethic of the Chinese (or the mountain free farm folk, for that matter!) Cultural differences do matter. The desire for perfectionism plus the desire to log long hours to build up surpluses equals dynamic cultures.
Ancient Egypt hit upon this nexus and made some of the greatest human works of art and building. For a brief while, the ancient Greeks honed a very dynamic culture build on the base of freeholding peasants, multi-tasking like crazy. Often such cultures deteriorate and the populace grows lazy and abusive such as the free farmers of ancient Rome who lost their culture of hard work nearly immediately.
The wide American farmlands used to be the nursery of hard working, intelligent, get-up-and=go workforce but the padded life of imperialism has caused a huge deterioration in the work ethic and ability to think and organize. Flaccid and weak, the work force stands agape as their lifestyles and futures slip away to greener pastures.
Even the smallest moves away from this looming disaster can't seem to motivate the workers in America. They seem bent on some easy trick to get out of the trap, namely, gambling. Gambling has exploded across the country and now is probably the chief form of "entertainment" except anyone going to any casino knows the people there are hard at work, trying to con their way to a lazy lifestyle.
There is little pleasure or joy.PwC is basing its analysis on forecasts for economic growth on the basis of purchasing power parity (PPP).One reason we are going bankrupt is because we want to keep up purchasing power via various tricks and strategems. One is to ship out all possible jobs to China so we can tap cheap labor. The other is to not pay as we go but wrack up ruinous debts. The third is to gamble. I will note, 90% of the businesses being rebuilt in the Gulf that hire more than 20 people are virtually all entertainment or gambling ventures.
This figure defines the size of an economy by adjusting for local costs.
While China's economy is currently 18% the size of the US's in dollar terms, it is 76% as big on a PPP basis.
By 2050, PwC believes, it could be 43% bigger than the US by PPP - although it would still lag when measured in terms of dollar size.By 2050. we will be, relative to China, twice as poor. Think about this! Will the Chinese relocate factories here at that point?
I seriously doubt it. For they know the other side of the deal: if you move your businesses out, the country collapses. The Chinese understand this quite well. They listen to Western economists but they also listen to other voices and they are most anxious Americans don't figure out this riddle so they won't say anything outloud just yet, but you can bet, they will trumpet it in the end: "Gotcha!"
Meanwhile, our own benighted economists can't put 2+2 together. Beholden to the mythology that free trade=eternal wealth without working much, they puzzle over the signs of American fiscal collapse. From AP:
Now that America's savings rate has been negative for an entire year, a first since the Great Depression, the question is whether we're a spendthrift nation on its way to the poor house or whether we're looking at the wrong numbers when we calculate savings.Idiots like Bernanke boasted that China was in a savings glut so we didn't need to save, they would work hard and foot our bills forever and forever! This childish idea is a sign of mental rot that has killed all previous empires that decided to pretend reality is fake.
The personal savings rate is, essentially, the amount of after-tax income left once household bills are paid. Maybe it's $75 for a household, maybe it's $7,500, but as a percentage of income, it's declining. The personal savings rate used to be 10 percent of disposable income from 1974 to 1984, according to the Bureau of Labor Statistics. It fell to 4.8 percent by 1994, and was negative for all of 2005. As of January, the personal savings rate was minus 0.7 percent.
Instead of being alarmed and fixing our savings deficit by pegging interest rates at a realistic level that would attract savings, our government did the exact opposite making our fiscal situation much worse over the short run and the long run for we don't have too many more years to run this scam because the basis of it, China lending us cheap dollars, is predicated only on the Chinese secret plan to suck up all major American industries and then spit us out. They only have the auto and aerospace industries left and are making great ground on both, quite rapidly.
Some economists say that's far-fetched. They argue the personal savings figures are artificially low, since the numbers don't include increases in assets such as equities and homes. Yale University economics professor William D. Nordhaus made that argument in 2002 congressional testimony, saying that once assets were included, the savings rate for the 1990s would have been a robust 25 percent.This is pure bullshit. I always warn people not to bank on the value of their homes because it is only worth what someone wants to pay for it and you can't tell until the day arrives that you try to sell it. So it can appear to be worth $500,000 but when the economy goes bad and you want the money to retire and no one can buy it for more than $150,000, then you are screwed, big time. This is why I view the value of my homes I build and design as homes until I sell. Then, if the market is right, I can make some good money.
Baby boomers will be dumping a huge number of unwieldy houses into a declining market when they retire. Since everyone wants to move to the hurricane/drought/overheating zones, this means a train wreck especially since the need for a playground/goof off culture will increase hugely, I see no "work ethic" appearing on any horizon. In China, the elderly raise the grandkids, for example.
Here, they run away as far as possible. I know that I had to raise my children while working long hours. It was very difficult.
In a dead market, all the equities and stocks assembled for good times will jointly lose value if there are no buyers. This is why depressions happen and why merely saving up isn't enough. One has to be vigilant like a hawk to prevent social/economic problems to accumulate and sink one's own ship.
Already, more warning signs are flashing. From the NYT:
Along much of the East and West Coasts, home buyers and home sellers are engaged in a stare-down.Instead of rushing to close, everyone is playing the waiting game. Guess who prevails!
Many buyers, having heard that the real estate market is a bubble in danger of popping, are refusing to offer the asking price on a house, convinced that it will soon drop. But many sellers are not blinking either, thinking that offers will improve when the weather does and biding their time until then.
As a result, the housing market is now in a deeply confusing state, with average prices still rising even though homes are taking much longer to sell and the number on the market has soared. Sometime soon — probably in the spring, the peak sales season — one side or the other will have to capitulate, many economists and industry executives predict.
The buyers. Always. I used to lecture people about "the pie in the sky and the pot of gold at the end of the rainbow." To illustrate this, I have many stories of people I have known who put a property on the market. As prices go up, they raise their price. Then, in a panic, they drop them as prices drop but never quite catch up until they sell at the very bottom for a great loss. Homebuyers know the relative value of a property to the last penny. If one doesn't bag a buyer pretty quickly, the property is either overpriced or unsellable.
I usually had a property for sale for less than one week. Price it right, people will bid up the price! So I let them set the price, in the end, but the lower price always lures more than one, often as many as ten, bidders.
The fact that buyers are waiting means prices will fall and fall since the longer you wait, the greater the benefit. All buyers know, instinctively, when they have the upper hand. Sellers seldom go to house openings. When I sell, I go all over kingdom come, checking out the competition. This is very salutory.
In Buxton, Me., a suburb of Portland, Geof and Cheri Toner put their three-bedroom Cape Cod-style house on the market for $379,900 late last year, shortly before moving to Raleigh, N.C., for Mr. Toner's job. They have received only one offer — for $350,000, which they rejected — and recently reduced the price to $374,900.Only one offer in several months? And the little greedy family turned it down? This is hoping some little green guy with a pot of gold will slide down a rainbow and buy their place? Fools.
Mr. Toner said he assumed that more buyers would look at the property as the weather warmed up. In the spring, they would not have to wonder whether snow covered up flaws in the lawn or the roof. He expects that the eventual buyer will be a transplant from elsewhere in New England who is willing to pay significantly more than $350,000.
General rule of thumb: if there is only one offer within the first week, take it.
Many real estate agents argue that people like the Toners are doing the right thing and that the market will not slump as it did a decade ago. The job market is now improving. The interest rate on a 30-year fixed rate mortgage remains just 5.79 percent, according to Bankrate.com. And the number of homes on the market remains far lower than in the early 1990's, relative to sales volumes, despite the recent increases.Most realestate agents are fairly young and many operated only in the hot up and up climate. Whenever the market collapses, many agents turn in their badges and seek someone else to skin. Right now, the market is filled with people who have virtually no idea how to sell in a hard market or how to advise families selling in a hard market.
The pros are already bailing out. They need to unload the last of their value added land to someone, anyone and already, they are beginning to panic, feeling in their bones, if they don't unload by June, they are cooked. Once the market turns down for good, it slides very quickly into red ink territory.
Acting as if grooming and building private homes is a sustainable industry in a global economy is sheer stupidity. Our houses can't be shipped (I hope) to India or China. The relative value of these houses hinge on our jobs not being shipped out. Yet this is what we are doing.
Alas. During my childhood, the mansions of the twenties littered the landscape. They were called "White Elephants."
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