Does the US / EU middle class really matter anymore?

[shah269 0]

Does the US / EU middle class really matter anymore?

Without getting into major spin and name calling....if that's even possible.

I was thinking last night while watching the evening news and the BBC, does the middle class in the US and the EU really matter anymore?

My reasoning came when I realized two critical factors.
First and foremost SEA's middle class is more diverse and has greater buying power than the combined middle classes of the US and of the EU.

Those who are investing in means of manufacture of products for consumer products, be it financial or physical, are primarily focusing their investments in SEA and not in the US or the EU.

As such if one steps back, a high level investor in effect is divorced from the society in which he or she resides. They can and should invest in production in SEA due to the simple fact that it is more cost effective to build any product in SEA and sell it in the US or the EU at a substantial margin.

Now one could have argued in the past that this model of producing cheaply in foreign lands and selling at home had a finite limit for eventually the home market would lose it's liquidity for no one would have a job and thus not have any capital to utilize to procure goods or services and eventually prices would have to be so low and the cost of local labor such that manufacturing would eventually after many decades return back to the home country.

But this model of thinking if you ask me is highly flawed for it does not take into account two critical facts, improvements in manufacturing systems and growth of the middle class in the manufacturing country.

As it stands now manufacturing is hyper efficient. Reject rates and scrap rates are at an all time low of well under 3% of scrap per product developed and a failure rate of well under 2%.

Furthermore manufacturing countries such as China and India as well as ancillary countries such as Vietnam now have viable and hungry middle class sectors who are hungry for goods and services.

And thus we have the perfect storm in that now the middle class of the manufacturing country can and will consume products developed in country and do it at a viable price so as to generate a viable margin for the producer and investor.

All of this leaves the middle class of the EU and the US out in the cold. Unable to compete on the global labor market and without any capital to consume any products yet providing a safe and secure legal and social structure for those who invest heavily in foreign markets and foreign production for foreign sales.

A death spiral. And no matter how much I rack my brains I really don't see a way to climb out once one starts on this spiral. And no job is secure other than that of the investor. Due to ever increasing and improving education levels in these countries not even skilled and educated labor is safe in the US and the EU. After all why pay a US based engineer $100k to do any job when you can pay an equally talented engineer in India or China only $40k and get the same level of professionalism and accuracy?

I'm looking out and thinking and I just don't see how one climbs out of this well we are now stuck in. Other than a major war in SEA there doesn't appear to be any reason what so ever to invest in either the US or the EU and or to ever bring any jobs once lost back to either region.

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[Andrewwhyte 1]

Well it seems your premise is that the presence of a poorly paid working class is the key to a prosperous middle class. The solution seems obvious, no? Simply roll back the labour standards, remove all social safety benefits for the working class and voila, you have your low cost labour class once again. The other solution is to stop persecuting manufacuters who bring in low cost labour from other countries. Mexico is good, but the real savings is from smuggling workers in from Hunan Province.
Of course you did mention the problem of overpaid engineers and other middle class types. The real answer there of course is to get them to recognize that $40K is a middle class wage (gotta get the workers down to about $5K first).
Sounds like Gingrich is your guy.

[shah269 0]

So who is ready for a 70% pay cut?
Shit the country is ready to kill the rich becasue their homes lost 30%-40% of it's value while the investor class's value has shot up 30% - 40%!

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[kelpdiver 2]

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So who is ready for a 70% pay cut?
Shit the country is ready to kill the rich becasue their homes lost 30%-40% of it's value while the investor class's value has shot up 30% - 40%!

the investor class's value hasn't gone up 30%.

[shah269 0]

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the investor class's value hasn't gone up 30%.

It was a wild ass guess from the conversations I've had with my friends who work for Chase on Wall Street. They indicated a solid 20% growth if the investor had major investments in SEA production facilities.

So......why are you....defending the 1%?
If you are part of the top 1% great. If not why?

The reason I ask is this, if I had a few million to throw down on investments...I assure you that i would not invest in the US and if I did I would make sure any and all jobs were moved overseas. Be it production or engineering.

And before you get your panties in a twist about pushing high end tech jobs out of the US, ask yourself one important question. Is math science and engineering any different here than it is in China? If no then why should a US engineer get paid as much as a Chinese engineer who works for well under $30k a year.

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[weekender 0]

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So who is ready for a 70% pay cut?
Shit the country is ready to kill the rich becasue their homes lost 30%-40% of it's value while the investor class's value has shot up 30% - 40%!

the investor class's value hasn't gone up 30%.

he doesnt care. he does this all the time, just makes things up and then changes the subject. not saying he is lying just loose with the facts then claims its hyperpole after the fact.

also, Chase is not Wall Street. Thats a commercial bank. peope who work there are commercial bankers not Wall Street bankers. perhaps a bit pedantic but if your going to use terms use them use them correctly. otherwise your point is lost on those who actually understand the business. also, your friends who work at Chase know as much about what's going on at JPMS as you do, which is nothing. completely different industry.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[shah269 0]

guys cut out the spin, or provide an answer.

So.....Does the US / EU middle class really matter anymore to the investor class?

The more and more I think about it...the more and more I see the answer as being a solid NO.

An investor can and will invest in SEA and even when the US and EU middle classes can no longer consume products made in SEA, due to ever increasing efficiencies the ever growing middle class in SEA will more than make up for the lost consumption of the middle class in the EU and US.

The only way to really correct this is to either increase the working wage in SEA....not happening...or drastically cut the medium pay in the US and EU....deflation....not happening.

Thoughts?

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[Southern_Man 0]

The "middle class" is Asia is still really, really poor compared to the middle class in the US and EU. It is expanding and wealthier than it used to be but it is starting from a really low base. So yes, the consumer class in the US and EU still matter.

"What if there were no hypothetical questions?"

[shah269 0]

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The "middle class" is Asia is still really, really poor compared to the middle class in the US and EU. It is expanding and wealthier than it used to be but it is starting from a really low base. So yes, the consumer class in the US and EU still matter.

Southern_Man
I would love to agree, but I was in China and Vietnam last year.
I would say everyone in China had a minimum of one cell phone and one Ipod on their hand at any given time. The retail outlets were doing exceptional business and the number of new cars on the road was just amazing!

With recent improvements in production methods with lean engineering and design you can sell lots and lots of products and though your margin per product sold is small your overall profit margin will be sufficient to selling few products at a high price and low cost to the middle class of the EU and the US.

I recall walking the Apple Ipod assembly line...impressive.....and picking up hints as to how much the thing really costs...try $30 in material and labor costs.

With cheap enough labor and cheap enough lean production....vast numbers of people suddenly qualify at a middle class market for you can now sell them a product at a low cost and still make good money.

I don't know...the more I look at it the more I see the spiral just getting steeper and steeper. Why make anything in the US or the EU? Why hire anyone in the US or the EU? We have financed almost a decade and a half on credit and well credit has just ran out. And as an investor...why invest in the US or the EU? You can invest in a less regulated environment where human life and limb are not cared about and where workers live, work and die in factory towns much as they did in the US back in the "good old days".

And we think a change in leadership is going to save us from the facts of life that are economics and finance? HA!

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[billvon 2,463]

>but I was in China and Vietnam last year.

And I was in Shenzen at a Primax factory about ten years ago. The factory workers had almost nothing. They lived in concrete dormitories with no plumbing and no glass in the windows.

[shah269 0]

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>but I was in China and Vietnam last year.

And I was in Shenzen at a Primax factory about ten years ago. The factory workers had almost nothing. They lived in concrete dormitories with no plumbing and no glass in the windows.

Shitty Shitty Shenzen ..... god what a POS town!

Spent 5 days there. Did not see a single live bird in the sky!
I was there in January and still the works still have nothing but all their investments came from the west.

However within the city there was a "viable" middle class of professionals who though they only make in the low $30k's still can afford a "comfortable" life.

And the various lectures and presentations my team viewed there was significant discussion regarding the notion that more profits can be had by diverting a good amount of the exports to the local markets, lowering the price of the good but making up the margin via economies of scale to meet investor expectations of continued double digit returns on their investments.

14 days in China and 7 in Nam....and it became evident, the gig is up. Over the next decade expect either the middle class to die off or some massive deflation to occur to make the US and EU's middle class viable.

While you were there did you see the accounting houses? AMAZING! High rises of people just accountant...number crunching for the American and European firms! And the vast coding and troubleshooting facilities....
For the price of ONE US employee you can hire up to 5 Chinese. professionals.

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[billvon 2,463]

>Shitty Shitty Shenzen ..... god what a POS town!

I'd have to agree with you there. And it's growing at a nearly incredible rate - but it all still sorta looks the same.

>However within the city there was a "viable" middle class of professionals
>who though they only make in the low $30k's still can afford a
>"comfortable" life.

And those workers who make $5K a year work for two years, move back to the provinces - and live like kings for the rest of their lives. Although that's starting to change now that more people are doing that.

[shah269 0]

When I was there it was a mess. It was just a total mess. But it worked. At least in the city you could see the middle class folks walking around and getting dinner and shopping.

Outside of the city...nope it's a mess! Nothing grows everything is dead and any and all water ways are filled with sludge!

I asked one of the people who was guiding us through an woman's undergarment facility the question of how long do these migrant workers work here....and the answer he gave me was a little cold.....as long as they can.

They no longer go back. They work until they can't work no more. The factory town just eats up any and all money they make.

I never got a chance to go to the country side but from what I hear it's deserted for a lack of a better word. Old folks trying to plow fields and watching little kids who's parents are working.

Bad for China, bad for the US middle class.......GREAT for any investor!

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[billvon 2,463]

>Outside of the city...nope it's a mess! Nothing grows everything is
>dead and any and all water ways are filled with sludge!

Yeah, last time I was there was a sort of estuary along a river there that I guess was once a marsh. When I went by there were dozens of sewer pipes spewing God knows what into the estuary. They had built a dam across the exit of the estuary to keep all the crap in. I asked one of the guys what would happen if it rained hard.

"Big problem, no one knows now," he said. "Right now just overflows into river."

[shah269 0]

Visiting China was like getting in a time machine and going back to the start of the industrial revolution in the US and Europe.
Safety? What Safety! Pay? Just enough to shut people up!
And the air quality was.....horrible! In my days there I never saw the sun. It was amazing how dirty the sky was.
Would I live and work there? For the right money sure why not!
But you better pay me well! It is a hellhole which is a great place to make a shit load of money if you are an investor!

There is no way on gods green earth the US or EU will ever join China at the bottom of the barrel like that.

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[kelpdiver 2]

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the investor class's value hasn't gone up 30%.

It was a wild ass guess from the conversations I've had with my friends who work for Chase on Wall Street. They indicated a solid 20% growth if the investor had major investments in SEA production facilities.

So......why are you....defending the 1%?
If you are part of the top 1% great. If not why?

just correcting your usual wild ass assertions pull out of thin air. 2011 was a neutral year - even Warren Buffet lost money. Not like 2008, where people lost buckets of money, but sure as hell not a 30% gain year. 2009 and 2010 obvious were better, but only if you ignore the context of 2008.

That said, my net worth went up another good chunk last year because I continue to save > 20% of my salary. And that's the primary difference between those in the 1 or 10%, versus the others. The worst don't save at all, claiming Wall Street is rigged. The middle bunch of idiots sell all their stocks and buy 1% bonds.

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And before you get your panties in a twist about pushing high end tech jobs out of the US, ask yourself one important question. Is math science and engineering any different here than it is in China? If no then why should a US engineer get paid as much as a Chinese engineer who works for well under $30k a year.

How many Chinese come to the US to get their degrees in math science and engineering. How many go to China to get these?

Your business school continues to not serve you well. It's very familiar - new kids come to Berkeley and quickly learn how fucked we all are. But they've been doing that song and dance for decades.

[shah269 0]

How many Chinese come to the US to get their degrees in math science and engineering.
And how many go back home!
I visited some very nice very well funded universities while in China who are sadly better than what we have here in the US. Soon US schools will become the "over flow" rather the prime choice!

Have you ever been to China?
If not take a visit. It's different.

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[mnealtx 0]

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I visited some very nice very well funded universities while in China who are sadly better than what we have here in the US.

And you know this because the degree you obtained in those two weeks you spent in China, right?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[shah269 0]

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I visited some very nice very well funded universities while in China who are sadly better than what we have here in the US.

And you know this because the degree you obtained in those two weeks you spent in China, right?

It was my second time in China my first in Nam. My EMBA was 22 months nonstop with a thesis ending.

I've been all over the world but never truly got an in depth view of China until this past trip. And I hate to tell you......they got us by the balls because we gave them our balls.

Think for a second, you want to invest to make back lots of cash....where would you build a factory? Here in the US or in SEA?

And seeing these mega factories.....and the thousands upon thousands people working like little ants producing products working for $5 a day sometimes. And engineers and QA guys working for not much more than $30k a year.

You think you or any of us here in the US or the EU stand a chance? Math Science and Technology are universal, it's all about who will work with them to produce a product and charge the least for their talents. And don't think banking and finance jobs are any safer!

Life through good thoughts, good words, and good deeds is necessary to ensure happiness and to keep chaos at bay.

The only thing that falls from the sky is birdshit and fools!

[mnealtx 0]

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I visited some very nice very well funded universities while in China who are sadly better than what we have here in the US.

And you know this because the degree you obtained in those two weeks you spent in China, right?

It was my second time in China my first in Nam. My EMBA was 22 months nonstop with a thesis ending.

Good for you - and your MBA has *what* to do with your statement about relative quality of universities between the two countries?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[kelpdiver 2]

http://www.amazon.com/Communist-Manifesto-Karl-Marx/dp/1453704426/ref=sr_1_1?ie=UTF8&qid=1325885355&sr=8-1

It's now older than 160 years, but still your bread and butter.