SWR, terminal values, TIPS, I-bnds & comm paper

[fire5soon]

Now I'm a Payless buy one get the second half off kind of guy. Since my Nike purchase I haven't paid more thatn $15 for a pair of shoes... and those were my nice dress work shoes!

[cute fuzzy bunny]

Hmm, I just glued the sole back on my pair of costco shoes, for the second time. I might have an old pair of nikes stashed away in a bag somewhere.

[Ted]

Quote:

I don't understand how the Europeans live so well. * Their taxes are so high, their gasoline costs are so high; do they make more money than us ?

The short answer is that they "live well" by consuming a *different mix of goods and services than we do. *For example, they have smaller houses, and smaller (or practically no) yards, and yet they are generally very clean, well maintained, and comfortable. *In place of yards, they have beautiful, safe, public places that are either close by, or accessible by public transportation that is reliable, safe, and clean. *Thus, people in most European countries have no need for more than one car. *But most families in the wealthier European countries such as Switzerland, Germany and Sweden have a car, and it is likely to be a Mercedes, BMW, or Volvo in excellent condition.

There is no simple answer to the question of "whether they make more money" because the money they are making is their own nation's currency (or Euros) and not U.S. dollars. *If the average income in, say, Switzerland is converted into U.S. dollars, it sometimes is higher than the average U.S. income, and sometimes lower, depending on currency exchange rates. *

What this means is that whoever has the "higher income" has the greatest capacity to purchase goods and services that are traded in international markets. *These include things like cars, cameras, computers, travel to foreign countries, steel, and crude oil. *But vitally important things like land, houses, medical services, car repairs, and education are not included. *In terms of the average person's ability to purchase these things, the U.S. has the world's highest standard of living. *

What most economists would recognize as the main problem in the U.S. is that its distribution of wealth is much less equal than in other industrialized nations. *That is related to the fact that the U.S. has a lower average life expectancy, higher infant mortality rate, and higher crime (especially, murder) rate than any other "advanced" nation. *

In recognizing this, I am not advocating the simplistic "solution" advocated by leftists of just "soaking the rich" and spreading the wealth around. *I basically support the moderate level of wealth transfer that we have now, although I think that the process could be made a lot more efficient by revisions to tax policies, with the benefits distributed mainly to lower income people (contrary to Bush tax policy).

Good post Ted! Re. "tax policy, soaking the rich" etc.
We should all remember that the economy does not operate in a vacuum. Thus, money "spent" in any way at any level has to go somewhere. If the "rich" have more than they need (maybe one definition of "rich")
the money still has to produce, unless they keep it in their mattress. True, maybe just more jobs for wine distributors, Lexus
salesmen, domestic help, and pool staff at the country club.
Still..........................

John Galt

[Michael]

Quote:

But vitally important things like land, houses, medical services, car repairs, and education are not included.

In terms of hours worked, luxuries are cheaper here, but most necessities are more expensive. Virtually every tiny trailer home in the wilderness has a foreign made television, but the people watching the televisions die early because they cannot afford regular medical care. IMO, necessities are more expensive primarily because our winner takes all political system makes it easier for politicians to impose hidden taxes on them, grant monopolies on them to favored special interest groups, and micromanage them with regulations designed by committee to placate the noisiest special interest groups. I don't see things changing in the near future.

[Skylark]

Quote:

The short answer is that they "live well" by consuming a different mix of goods and services than we do. What most economists would recognize as the main problem in the U.S. is that its distribution of wealth is much less equal than in other industrialized nations. That is related to the fact that the U.S. has a lower average life expectancy, higher infant mortality rate, and higher crime (especially, murder) rate than any other "advanced" nation.

I am most familiar with northern europe. The standard of living has been improving very quickly over the time I have been visiting family, from about 1975 to the present.

However, crime is a big problem in major cities. I feel far safer in Detroit than Rotterdam, for example.

Increased wealth has allowed more and more people to purchase vehicles. Unfortunately the infrastructure is set up for far fewer vehicles than are being used today. As wealth and auto miles increase, there will be more and more problems with traffic. That said, there are more opportunities to live without an automobile, however anyone who can afford one seems to want one.

The retail distribution system in Europe is inefficient. Retail stores are zoned into central business districts and not permitted out on the "prairie". This is good for cities, however high real estate and rent prices drive retail prices up. The trucking and delivery of retail goods is difficult in urban areas. For all its negative effects on the central city, Wal-Mart and similar retailers have brought the cost of essential household items down to an incredibly low level.

Given equal incomes in Euro and Dollar, housing prices in Europe are far higher. I recently compared a similar job in the Netherlands and the pay rate was roughly equal in Euro's to my pay rate in Dollars here in the US. Housing prices in my area in the US were roughly half of prices for similar living styles, for entry level (or a bit better) housing.

I have the right to live either in the US or Europe. My impression is that you can live like a king in Europe if you are wealthy (multi-millionaire), but if you want to live well as a middle class citizen, the US is a better place.

I also tire of the strange attitudes that many European people have, so maybe my decision is based more on personality of the neighbors than money.

Every four or five years I think about moving back to Europe, but it only takes a few days on vacation to convince me that the US is the better place to be.

[TheFIREman]

Quote:

I also tire of the strange attitudes that many European people have, so maybe my decision is based more on personality of the neighbors than money.

Funny, a lot of people living here say the same thing about Americans.

There's now't as queer as folk.

Well, I think Americans are strange too, and I've lived here all my life. However, I am a borderline
misanthrope so I suspect I would feel the same
no matter where I landed.

John Galt

I think Europeans have a much healthier view of life than Americans do overall.

Americans spend all their time talking about work and what they do for a living. Europeans tend to focus more on life issues.

One thing is for sure - The food in Europe on average is much better than here in the states! And the average European has a much more sophisticated palate. As most Americans would not think that the food is better in Europe, mostly because they are used to eating plastic 'Big Macs' and Fries.

Things do seem to be more expensive in Europe, but at least they have not sold their souls to Wal-Mart and Strip Malls.

I've never been to Europe and will not be going in the
future. Don't feel sorry for me. I have no desire to go.

Cut-throat, I think you are generalizing way too much
in comparing Europeans to Americans, based on what I assume is pretty limited exxposure. I am sure your
experiences were valid, I just don't think you can apply
them to all Europeans. It's a big place.

John Galt

[renferme]

Interesting discussion. Some have lived or do live in Europe. Are you American citizens or citizens of a Euro country ??
.
My experience with Europe is only with Scotland and England. Most of the homes in the UK seem to be extremely old, at least by US standards. Most seem to be well over 100 years old. I wonder if housing costs for most residents of the UK are low, mainly because they inherit these homes from deceased parents.
The Scots close the doors to each room in their house.
I or we don't do that here. I suppose, since they have radiators, that they turn on the heat in the room they are using and keep the others turned off if the room is not in use.
.
As far as soaking the rich and distributing to the poor, I tend to believe that if the rich keep their money, they will use it for investment and entrepreneurship to create more jobs for the non-rich. The non-rich don't create jobs. More handouts to the non-rich does not help our economy. And the rich worked hard for their money and deserve to keep it. Europe's economy is bad now because of their socialist attitudes. I guess you could say that I hate taxes and I'm certainly not rich.
I've seen enough of what our governments do with our tax money to know that they could do the same with less of it if used more efficiently. And much of what governments do with tax dollars is not necessary anyway. For example, we have a nice high school where I live. But, the old biddies on the school board want to build a new school. A complete waste of our money.

I have never been rich and will not in the future.
However, I am in favor of letting the rich keep their money. You have a much better chance of good things
coming to pass than if you transfer wealth to the
government. In that way lies disaster. With the rich you have some chance. With the continuous expansion
of government the country our founders built with blood and sweat will disappear. So, I'll always take my chances with "the rich" however you define them.
Remember. The Republic is never in more danger than when the legislature is in session!

John Galt

[Hiss]

Cut-Throat wrote:

Quote:

One thing is for sure - The food in Europe on average is much better than here in the states! And the average European has a much more sophisticated palate. As most Americans would not think that the food is better in Europe, mostly because they are used to eating plastic 'Big Macs' and Fries.

Having spent nearly 50% of my time over the past two years in Europe (France, UK, and the scandnavian countries), I would tend to agree with two exceptions:
1) The food in the UK is worse than the US or anywhere else. and
2) There is no finer beef than that good ol' grain fed stuff right here in the U.S.

I also agree that the Europeans have a much healthier view of life than we do in the US. Although most are very committed to doing a good job, their overall dedication to work does not nearly rival their US counterparts. I have often seen major pieces of equipment down for an entire week-end because they were unable to get maintenance to come out to work on it (France). The UK is probably most like us in terms of work ethic.

It is, of course, difficult to generalize too much among Europeans as each country's attitudes are so different.

I do believe, though, that economically speaking their standard is below the US, even though I have no statistics to prove it. I work for a global company and our European counterparts are paid generally less than we are even taking into account the exchange rate. I would never trade my home for anyone's home I have been in in Europe.

I did find the costs of living generally comparable. Even gas was not quite as outrageous and many are led to believe. Diesel fuel (many cars run on diesel over there) was about 0.75 E per liter and when the exchange rate was closer to 1 euro = .78 dollars rather than the opposite as it is now, that came out to be just over $2 per gallon (comparable to California at times).

Botton line though: I have seen enough of Europe that I don't care if I ever go back. There is enough to see right here in the US to keep me happy for the rest of my life (poor food and all).

[Ted]

Quote:

I do believe, though, that economically speaking their standard is below the US, even though I have no statistics to prove it.

There are statistics on GDP per capita, and when these are converted to U.S. dollars, as I said before, some European countries sometimes have a higher GDP per capita than the U.S. This is especially true of Switzerland, Sweden, Norway, Iceland, and Germany (if the former East German part is excluded).

I am most familiar with Switzerland, in that I spent 2 weeks there in 1984, and I was impressed by the many perfectly-maintained single family houses, many with a BMW parked outside. It also has a higher life expectancy and lower infant mortality than the U.S., which are indicators of a high level of health care and sanitation.

On the other hand, countries like Scotland, Denmark, and the Netherlands have more modest housing -- much of it being multi-family, fewer cars and "luxury" cars, etc. But life there is still very comfortable, and I would bet that the people on the average are as happy as Americans.

Goods that people purchase there at neighborhood stores cost more than at mega-stores like Wal-Mart, but what people in the U.S. fail to appreciate is that part of the cost of purchasing goods at places like Wal-Mart is the cost of owning a car to get there, and the time cost involved. The ability of market economies to mold themselves to local circumstances does a lot to equalize people's level of material well-being even when there are pretty substantial differences in GDP per capita, expressed in dollar terms.

[Michael]

Quote:

...part of the cost of purchasing goods at places like Wal-Mart is the cost of owning a car to get there, and the time cost involved.

Walmart delivers Ted. I can order from them online, and the UPS guy delivers it right to my door.

[Ted]

Quote:

Walmart delivers Ted. I can order from them online, and the UPS guy delivers it right to my door.

Sure, most stores do. But you pay a fee for shipping and handling.

There is a tradeoff between having the time and travel cost of driving to a large centralized "discount" store and buying goods cheap once you get there, and having a "mom and pop" store nearby that you don't need to drive to, but which has higher prices because it has lower volume and (probably) higher rental costs per square foot. This is a universal fact of economics whether you are in New York City, the middle of North Dakota, or Europe.

[cute fuzzy bunny]

I actually have a walmart within a medium walk distance, and a superstore planned for about 1/4 mile away!

[TheFIREman]

Walmart is taking off here in Europe as well. They are buying local superstore chains and adding "A Walm*rt Company" to the name. They play a big part in reducing prices across they board.

Ted:
You must have visited a wealthy part of Switzerland. Most Swiss that I know live in apartments. When they come to Britain and see all the house, they usually shake there heads and say "What a waste of resources."

Hiss:
You are right about British food, but if you hunt about, you can find some fantastic places. London in particular has some of the world's finest restaurants (and the food is good, too!).

bennevis:
The average age of a Birtish house is oddly enough only about 50 years old. I think it is the modern high rises built in the 60's that skew it. The weather helps here as it rarely gets below freezing in the winter so heating costs are low (many people are still not sold on the idea of double glazing).

I think alot of North Americans (me included), get an initial impression of people in Europe dressed only the the finest clothing, driving only expensive cars, eating the finest foods,..etc. While not physically large, Europe is a culturally varied place. The French love there food, but have cr*p cars. The Germans have high quality cars, but a looming pension crisis. The Italians are mad but have Venice and Florence. And most of those picturesque ruins (and terraced houses in Britain) you seen on postcards are occupied by some poor schlep like myself. Leaky roofs, century old plumbing, 50-year old wiring...

In the end, of course, only Walm*rt will remain...

[Ted]

Quote:

Ted: You must have visited a wealthy part of Switzerland. Most Swiss that I know live in apartments...

That is true -- I was hiking in the mountains and did not get into any large cities. I went there because I had heard that Switzerland is called the "Colorado of Europe"

But the large cities of Europe that I have seen (Paris, Vienna, Copenhagen, Amsterdam, Munich, Edinburgh) were indisputably cleaner than American cities, with better public transportation, and seemed like much better places to live (in comparison to American central cities, as opposed to American suburbs). Although I prefer living in the suburbs, living in a well maintained apartment in a city that was clean, safe, and had a lot of parks, restaurants, stores, and cultural attractions readily accessible by public transportation would certainly qualify as a high level standard of living. And that is my original point -- that although Europeans have, on average, a different lifestyle than Americans, I think that the wealthier countries have a standard of living that is equal to ours. I also think that in a lot of countries where the material standard of living is somewhat less, people enjoy life as much as Americans do -- and that is what is really important.

[TheFIREman]

No argument there. Hence our plan to raise children in the country and then move back to town when the last has flown the nest (in 15 years time!)