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Thread: weekend commentary - from 'subprime' US borrowers to 'subprime' US consumers

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    Default weekend commentary - from 'subprime' US borrowers to 'subprime' US consumers

    (snip)"Think about this. Currently, foreign tour operators are organizing shopping tours, where foreign citizens fly to America for the specific purpose of buying goods cheaper here than they can buy the same goods in their own countries. Of course, most of the goods they are buying, such as clothing, electronics, jewelry, etc., were not made in America in the first place. How absurd is it for Italians to come to New York to buy Italian made shoes cheaper than they can find them in Milan? Does it make sense for foreign producers to offer products to Americans for less than their own citizens? Of course not. In short order the free market will correct this by raising prices here in America and lowering them in the rest of the world.

    Many naively believe that this scenario is unlikely as foreigners will indefinitely prop up the U.S. economy in order to preserve their "best" export market. However, the same argument could have been made regarding mortgage lenders and subprime borrowers. After all, based on the outsize fees generated by subprime lending products, risky borrowers were clearly the mortgage industry's best customers. Given their profitability, why didn't lenders simply extend subprime borrowers even more credit to preserve the market? The obvious answer is that at some point lenders discovered that the market was not worth preserving. They realized that the short-term profits came at the expense of far greater future losses.

    The same revelations are about to be made around the world as other nations realize that selling consumer goods to Americans is a losing proposition, as the profits they believe they are earning today will simply evaporate tomorrow. When that happens, just as subprime borrowers are losing access to mortgage credit, America's subprime consumers will find far fewer bargain basement imported products at their local Wal-Mart."(snip)

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    Default Re: weekend commentary - from 'subprime' US borrowers to 'subprime' US consumers

    Quote Originally Posted by Melonie View Post
    http://www.321gold.com/editorials/sc...iff111607.html

    (snip)"Think about this. Currently, foreign tour operators are organizing shopping tours, where foreign citizens fly to America for the specific purpose of buying goods cheaper here than they can buy the same goods in their own countries. Of course, most of the goods they are buying, such as clothing, electronics, jewelry, etc., were not made in America in the first place. How absurd is it for Italians to come to New York to buy Italian made shoes cheaper than they can find them in Milan? Does it make sense for foreign producers to offer products to Americans for less than their own citizens? Of course not.
    This is what happens when stupid people write articles

    Goods are cheaper in America, because Americans are efficient in selling. i.e they innovate in every part of the supply chain, right from purchasing, shipping, distribution, inventory control. Do you think that $20 you pay straight goes to the manufacturer? There are economies of scale enjoyed by efficient US companies. That is why goods are cheaper in USA.
    As long as Italians are still hung up on manufacturing, they will never innovate on the other parts of delivering the product and in the end, consumers will pay higher prices.

    It is so stupid and naive to think that "Assembled the Product in Italy" is the most important part of the product. There are a thousand things that go into making even a simple gadget. Just because it was assembled in Taiwan doesn't mean Americans are out of their jobs or Americans are not making profits on that gadget.

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    Default Re: weekend commentary - from 'subprime' US borrowers to 'subprime' US consumers

    Quote Originally Posted by xanfiles1 View Post
    This is what happens when stupid people write articles

    Goods are cheaper in America, because Americans are efficient in selling. i.e they innovate in every part of the supply chain, right from purchasing, shipping, distribution, inventory control. Do you think that $20 you pay straight goes to the manufacturer? There are economies of scale enjoyed by efficient US companies. That is why goods are cheaper in USA.
    As long as Italians are still hung up on manufacturing, they will never innovate on the other parts of delivering the product and in the end, consumers will pay higher prices.

    It is so stupid and naive to think that "Assembled the Product in Italy" is the most important part of the product. There are a thousand things that go into making even a simple gadget. Just because it was assembled in Taiwan doesn't mean Americans are out of their jobs or Americans are not making profits on that gadget.

    LOL! Awesome. We have a believer from the Church of Free Trade here. Destroying american jobs is good for america!

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    Banned Melonie's Avatar
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    Default Re: weekend commentary - from 'subprime' US borrowers to 'subprime' US consumers

    LOL! Awesome. We have a believer from the Church of Free Trade here. Destroying american jobs is good for america!
    actually, it is good for some Americans ... 'very rich' Americans, upper echelon managers of American companies, and to some extent stockholders of those American companies, to be precise. It's also arguably good for very 'poor' Americans ... as long as the gov't is willing to continue enforcing a high minimum wage plus social welfare program handouts such that 'poor' Americans have extra money to spend versus their worldwide counterparts. Of course it is ruinous for 'middle class' Americans who must pick up the tax tab for both of the above ... assuming of course that their mid level jobs haven't yet been permanently exported.

    this also loops back to Xan's post versus my post re Apple Computer, Merck etc. in the 'breaking the buck' thread.

    !
    Last edited by Melonie; 11-18-2007 at 08:35 PM.

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