Saturday, September 01, 2007

where is my market?

find the market

I pulled this from charle hugh smith's site (which I recently found through cheap realty) and thought that I would share some lucidity with you (emboldening is mine).

No need for me to babble about it, but if you are intrigued by the excerpt below, check out his site.

Henry Ford said it best, essentially, he said, "If my employees can't afford my cars, where is my market?"

Today's corporations and economic thinkers seem to have forgotten the father of capitalism.

Yes, US wages will fall to match the rest of the world--that's expected and spoken of. What is overlooked is that NECESSARILY--prices, and profits...and taxes...--must fall to meet them.

I'd like to put this one other way: an economy is nothing but people trading to shuffle things around and make life nicer for themselves. As Bastiat said, Everybody cannot live at everybody else's expense and everyone get rich: it sometimes works with ONE v Everyone, but not Everyone v Everyone.

But there's another side: if there is no way for everyone get rich at everybody else's expense, then everyone must increase in wealth TOGETHER. ...And that doesn't sound so bad. For things to improve for ME, I also need to help YOU...and that is also capitalism. Its good and productive side.

I'm happy China has increasing wages and opportunities, however, in exchange, I need the vastly lower taxes, food, and housing costs. That fair exchange for my now permanently low wages is being stonewalled by the companies scooping up that differential--but it's a historical anomoly that is now ending. Chinese wage inflation is +5%, and english-speaking professionals now receive about the same wages worldwide.

Greenspan's last paper showed that perhaps ALL of the 2001-2005 boom was due to Home Equity Withdrawl. When that ends--and it has--demand will fall precipitously, and with it, prices. Economists have another name for massive overcapacity, low wages, and falling prices: Depression. Get used to it because they tend to last a long time.


Anonymous said...

Too cryptic for me to understand.

a) I went to this CHS website. Very confusing site; not well organized. Could not find the story about this realtor.

b) Is the quote you have in your post from CHS or from this realtor?

c) Why should I spam this guy?



solipsist said...

Too cryptic for me to understand.

I've been doing that a lot lately (being cryptic) - I get "ah-hah" moments, and don't have the time or mental function to expound on them. Maybe I best stick with pictures of over-priced POS, but that is getting so tired. I've been flailing (and failing) lately in trying to keep things fresh and interesting.

The quote is from chs. The site is a bit of a hodge-podge, but some of what is written there is (concise).

The picture of the realtor is totally unrelated, just a picture of a realtor, but with flagging sales, and houses beyond the reach of many, it begs the question - "where is my market?". Who will be buying when nobody can afford to buy, and the banks tighten up credit?

Why should I spam this guy?

Just an attempt at cryptic humour. I am feeling edgy, and nihilistic these days, and was simply reacting to the "don't worry, everything is fine" tripe that I have been reading lately. The guy's picture seemed to exemplify that stance.

Blake, I'm not. (and I feel that I have not unmuddied the waters)

Rantenki said...

Remove that "spam this guy" link immediately. That is the kind of crap that gets you sued. Generally speaking, soliciting a DDOS of any kind against a business is a good way to get in trouble...

and that is coming from a guy that otherwise totally agrees with you.

solipsist said...

Good point rantenki. To be clear, I was not encouraging a denial of service attack, or even anyone contacting him. I have nothing against realtors.

I did an image search for "where is my market?", and his was what seemed the most salient image (to my befuddled mind). I had actually hoped for a Henry Ford pic' of some sort, but changed my mind...

BearClaw said...


Things have never been as absurd as they are right now in Vancouver. Perfect time to be a blogger.

Vancouver's Rennie in Edmonton. Boasting LRT living:

Century Park

The ride

The LRT station at century park is above ground. Ever waited for an Edmonton train in January?

casual observer said...

The picture I have in my mind is that of a line up to get into the latest trendy restaurant/hot spot. People just can't wait to get in. They would endure just about any hardship to get through the front doors, even though the food and the drinks are way overpriced, and not that good.

When passersby notice the line up and question what the fuss is all about, some decide to join the line up. After all, if people are lining up for it, it must be a good thing, right? Others just keep walking. They wonder why would anyone stand out in the rain, and give up most of a perfectly good evening, just for the privilege of overpaying for mediocre food and watered down drinks?

The people in the line up figure that the others just don't get it. The more people join the line up, the more certain those already in the line up feel that they are "in the know". They got in the line up earlier than those other folks. They think that they are so wise.

The really smart people were those who lined up at the front, when there were hardly any people. They took one look behind themselves and instead of gloating in their wisdom, they decided to take advantage of this crowded situation. They decided to sell their place in line to some of the people who came later. Others who were at the back of the line started offering people closer to the front of the line money for their spots as well.

Once, a person who paid for a spot in line got offered more for it just to give it up. He thought about it, and eventually re-sold it for a tidy profit. Others saw this happening and realized that they could make money just by standing in line and selling their spot. All they would have to do is stand in line early and sell their spots to others who wanted a better spot in line.

Pretty soon, people were leaving early from work in order to go get a spot in line that they could sell. Eventually, some started standing in line first thing in the morning, while everyone else was at work. This enabled them to get the prime spots in line.

After awhile, even the people who were standing in line for profit, who had no intention of actually going inside to eat, started to sell and re-sell their spots to each other, making a profit each time. Ironically, those who started in line early, often made more money buying and selling their spots in the line up, than the guy who went to work all day. Some noticed this, and decided to quit their jobs and become "professional" spot flippers.

Eventually, the people who actually wanted to go to the restaurant/hot spot could no longer afford even to stand in line. The whole line up was being monopolized by the people buying and selling spots in line.

Each time a spot was bought and sold, the price went up. Higher and higher. The professional "spot flippers" figured that there was no price too high for a prized spot in line. After all, everyone wanted to go to this trendy new hot spot.

As time went on, an interesting set of circumstances developed. The people that actually wanted to eat and drink at the place, could no longer afford to pay the price to stand in line, and the people in the line up selling spots didn't actually want to go in and eat.

Eventually, the trendy new hot spot went out of business, due to lack of customers.

solipsist said...

Thanks for the links bearclaw. So Rennie moves east with his Bentley...good luck and goodbye (or...good riddance?).

Great story casual observer (wanna take over the blog?). That's the long and short of it, isn't it?

Anonymous said...

casual observer - brilliant post! I'd never seen that analogy, but it seems to sum it up.

greg said...

Nice analogy, casual observer.

No doubt that when prices do go back down closer to historical norms, as so many like Charles are predicting, lo and behold, the housing market will not disappear - it might get a bit healthier out there and maybe some of us prospective homeowners can look forward to the prospect of owning a home without living on kraft dinner.

casual observer said...

Thank you for the comments. The analogy does seem to fit the reality. As for what the future holds...we shall see.