only anecdotal but USEFUL

happinessfactory

Nenen wrote: »

Anyone else out there who knows the *sensible* thing is to wait but is finding that hard to do? Or anyone got any tips for how I develop patience and a sense of stability/security in a rented place????

Nenen, as you'll have seen on my other threads, we're in exactly the same situation as you. I absolutely crave the security and stability of my own little nest, and never imagined we'd end up living out of boxes with all our lovely books and pictures and furniture in storage (and probably being nibbled by mice and moths).

I'm just trying to be very zen about it all and trying to see it as a lesson from the universe about the value of patience and the folly of being too attached to material possessions

Generali

A couple of points:

Re Chinese inflation. There are now effectively 2 economies in China, urban and rural.

According to some research I read from Big Bank (my former employers) food makes up 35% of the basket of goods that makes up inflation in China. Now food is rising price so quickly there (due mostly to the drought in Australia) that it accounts for pretty much the entire rise in inflation.

However, people in the rural economy spend more than a third of incomes on food so their personal inflation rates are much higher than official figures. People in the cities don't spend anything like that on food as their incomes are much higher and go on scarcer housing and on discretionary stuff.

If anything, food price inflation will push more people from the countryside to the cities in search of work helping to keep wages down!

Re outsourcing. European Bank (an old employer) had a go at outsourcing and effed the whole thing up because they tried to do it on the cheap - it was hopeless. They had to give up and start again in the end.

Big Bank did it properly. They got a bunch of Indian guys in for interviews (wholly in English) and the ones that were accepted worked in London as proper Big Bank employees before going back out to India. That worked very well and is saving the bank even more cash as they don't have a high staff turnover out there (leading to high training and recruitment costs) and they do as good (or as bad!) a job as anyone else working there.

Here endeth the lesson

lynzpower

If anything, food price inflation will push more people from the countryside to the cities in search of work helping to keep wages down!

Id never really thought of that aspect! thanks a lot. however, in rural economies like this, wont that lead to further food shortages, as there are less farming? Or does it go hand in hand with mechanisation in rural areas do yu think?

Generali

lynzpower wrote: »

Id never really thought of that aspect! thanks a lot. however, in rural economies like this, wont that lead to further food shortages, as there are less farming? Or does it go hand in hand with mechanisation in rural areas do yu think?

These things can become self reinforcing.

The low paid farmers leave the countryside for the city. Food prices rise. That encourages farmers to invest in their farms (to produce more and take advantage of higher prices). That depresses rural employment further as jobs become mechanised are so more people (especially the highly skilled that can earn lots in the City or town and the unskilled that have been replaced by machines) are forced out. Those with the right skills (say tractor drivers for example) prosper as demand for their trade increases.

That brings me nicely on to The Joy of Trade. The rural farmhand, Mr Ng, can move to the city and get work in a factory making plastic tat (sorry, 'Heritage Toby-style Jugs'). The factory owner can sell them to Tescos or something and afford to pay our hero Mr Ng rather more than the Farmers' Workers Co-operative can.

Mr Ng can then take his wages and spend some of them on far more efficiently produced New Zealand food, leaving him money to spend on other things.

Free trade leads to people doing what they do best and everyone gets richer as a result! Check out the writing of David Ricardo, a C19th economist who puts it all very nicely.

Generali

epz wrote: »

yeah well lets be honest its not hard to increase productivity when your production base is starting as basicly people working piecemeal at home, though it does require infrastructure to scale.

the problems i see are more the wafer thin margins they operate on. im sure many are below 1% if panorama and the memory cartels are to be belived. now it only takes some local problems like a union or material shortage for that to feed through.

also rising wages make it a lot less advantagious to outsource jobs there since you get all the problems but the rewards are substantially reduced. this results in higher inflation here.

I don't see higher wages as a problem per se. If you're getting 10% more money for producing 10% more profit then there's no problem.

The Chinese are slowly starting to add more value and margins are rising as a result (e.g. IBM/Lenovo).

The biggest problems the Chinese face IMO are rapidly rising house prices that could put a stop to productive investment, replacing it with speculative purchases of land and houses to make a turn. Remind you of anywhere?

fc123

happinessfactory wrote: »

I'm just trying to be very zen about it all and trying to see it as a lesson from the universe about the value of patience and the folly of being too attached to material possessions

me too......living in an empty rental house is very character building!
We do have a great view and the absolute bare essentials; bed, table etc. No telly either as aerial doesn't work...so suddenly have loads of time to get stuff done plus no clutter to keep having to organise.....

i reckon when we get our stuff back from the loft in the house we own, it's all going straight to charity....I can't even remember what's there!:o

epz_2

Generali wrote: »

I don't see higher wages as a problem per se. If you're getting 10% more money for producing 10% more profit then there's no problem.

The Chinese are slowly starting to add more value and margins are rising as a result (e.g. IBM/Lenovo).

if i recall the reason ibm sold the thinkpad range was it was making less than the magic 6% ibm require, and that was with the highest spending users out(except possibly the daft apple crowd). now their laptops are droping in price and and basicly fighting it out at the low end basicly giving the top to toshiba and the style crowds

i would be surprised if the % the make on each laptop has gone up much if(didnt see anything on google) any though im betting they are doing more volume in the short term.

acer has basicly killed the low end laptop business with there £200 eeepc(1), it is pretty much a solid state device that is good enough for most users, once the rest start going after this market it doesnt matter what the volume is on a 1-2% margin of a cheap as product if you need to keep up high end r&d aint good.


anyway RE my previous point, i wasnt making any calls regarding the rights and wrongs of outsourcing, more pointing out that a risk of stuff going wrong might be attractive to cut your wage bill by to a 10th is a lot less attractive if wages are only cut by half.


also high inflation does have a nasty habit of becoming a routine, if you can demand a 10% increase in wages one year due to high food prices whats to stop you wanting one next year, everyone else is thinking the same thing and its not like they can find anywhere else to send you job.

now productivity might get improved for now but the rule of diminishing returns will soon kick in, you cant just keep throwing more people at the jobs cause their wages are too much and if you want to fight it out with automation you better not have any real shipping costs. the reason well a robot costs the same arround the world, their aint that many suppliers anyway so you can either pay the same tooling costs, the same energy costs, lower admin but higher shipping costs and tarrifs and it suddenly aint as much fun in the global village.



(1) its only 7" at the moment but i bet there aint much cost difference between a bespoke 7" lcd and a generic 15.4"

Generali

epz wrote: »

if i recall the reason ibm sold the thinkpad range was it was making less than the magic 6% ibm require, and that was with the highest spending users out(except possibly the daft apple crowd). now their laptops are droping in price and and basicly fighting it out at the low end basicly giving the top to toshiba and the style crowds

i would be surprised if the % the make on each laptop has gone up much if(didnt see anything on google) any though im betting they are doing more volume in the short term.

acer has basicly killed the low end laptop business with there £200 eeepc(1), it is pretty much a solid state device that is good enough for most users, once the rest start going after this market it doesnt matter what the volume is on a 1-2% margin of a cheap as product if you need to keep up high end r&d aint good.


anyway RE my previous point, i wasnt making any calls regarding the rights and wrongs of outsourcing, more pointing out that a risk of stuff going wrong might be attractive to cut your wage bill by to a 10th is a lot less attractive if wages are only cut by half.


also high inflation does have a nasty habit of becoming a routine, if you can demand a 10% increase in wages one year due to high food prices whats to stop you wanting one next year, everyone else is thinking the same thing and its not like they can find anywhere else to send you job.

now productivity might get improved for now but the rule of diminishing returns will soon kick in, you cant just keep throwing more people at the jobs cause their wages are too much and if you want to fight it out with automation you better not have any real shipping costs. the reason well a robot costs the same arround the world, their aint that many suppliers anyway so you can either pay the same tooling costs, the same energy costs, lower admin but higher shipping costs and tarrifs and it suddenly aint as much fun in the global village.



(1) its only 7" at the moment but i bet there aint much cost difference between a bespoke 7" lcd and a generic 15.4"

All good points epz.

My opinion is that I think when looking at outsourcing or any of the other risks involved in dealing with a rapidly developing emerging economy is that they keep some things static in their mind while moving other things ahead rapidly.

If China or any other nation continues to grow very quickly (say 7%+pa on average) then there will be more money available to spend on infrastructure, education and so on. All things that make the people more productive and thus able to demand more money.

If I'm outsourcing the confirmation of equity trades, for example, (something I have direct experience of) then I look at the total cost plus risk of having it done elsewhere (plus a one-off cost of moving that process) and compare that to the total cost plus risk of staying where I am.

All other things being equal, I don't care if I'm employing 30 people and paying them (including employment costs, office space etc) £6k pa or if I end up with 6 people on £30k pa. It still ends up costing me £180k to get the job done.

That is the process I think we are starting to see in India and China - people are becoming much more efficient as their job skills and the infrastructure to support them becomes better. In turn, higher pay isn't a problem IMO.

I agree that low margins are a cause for concern - a big drop in world demand caused by an oil price shock or a credit crisis in the US (as consumer of last resort) will leave a lot of Chinese manufacturers struggling. Then isn't that what recessions are there for? To weed out the weak companies so the strong can thrive!

Very interesting point about Acer and laptops. That sort of thing could be good for Apple(?) - computer as commodity or status symbol with little in the middle. It's how I think a lot of markets (including labour markets???) are going TBH.

Turnbull2000

More anecdotal from my work colleague who's been struggling to sell for a while.

No offer yet from last weeks viewer, but they are returning this weekend to take a look during daylight. He's just revealed that their fixed rate will be up soon, and the repayment will likely jump up by around £150. Also heard from a distance that he's looking to convert to a buy-to-let mortgage, but I'm not sure why. His intention remains to sell-up ASAP.

After reading so much about the fixed-rate 'time-bomb' in the mainstream media and forums like HPC & GHPC (who predicated this long ago), it's fascinating to see it play out with somebody I know. I hope he resolves it all quickly.

edit: Apparently the BTL mortgage is for his first home. He's been letting it out for a few years (which I already knew), but on a residential mortgage only. I believe some relatives are the tenants.

lynzpower

turnbull where abouts?

Anecdotals are useful ONLY when we know where you are talking about