However, I wonder how many of these Middle Class Workers who have lost their jobs to Foreign Workers or Concerns continue to vote for people who have no concern except the Corporate Profit Motive, such as George W. Bush.

Perhaps we need an America First Presidential Candidate, but hopefully someone with more intelligence than Ross Perot!  America First!
 --Douglas Somers

**

Hey Modelman: I found your review of reader comments regarding China very good. I feel all this China bashing is overplayed. In his congressional testimony last week, John B. Taylor, Under Secretary of Treasury for International Affairs, stated: "Many imports from China are goods from other Asian economies that are processed or finished off in China before shipping to the United States and other countries. Other East Asian economies increasingly send goods to China for final processing before they are shipped to the United States. China accounted for 11 percent of U.S. imports in 2002, up from 3 percent in 1990. Meanwhile, the combined share of Japan, Korea and Taiwan in U.S. imports declined to 17 percent from 27 percent over the same period. Thus, the total share of U.S. imports coming from these four Asian countries has remained steady since 1990, actually falling slightly from 30 percent to 29 percent."

So, it appears to me that China has become a convenient scapegoat. Our total imports from East Asia are about the same; it's just that final shipments are consolidated and coming from the region's lowest-cost assembler. (You might want to review the Treasury's Report to Congress on International Economic and Exchange Rate Policies (October 2003), which was referenced by both Secretary Snow and Taylor: http://www.treas.gov/press/releases/js954.htm  One thing I found most curious is that oil producers in the Mideast "maintain inflexible exchange rate regimes, including narrow bands and explicit or implicit pegs to the dollar." If Mideast oil suppliers are "manipulating" their currency against the dollar is ways similar to China, why are they not being called up on the political carpet?)

Separately, I agree with you that the "seeds of our next [economic] revival are probably all around us, unrecognized at the moment but sprouting nonetheless." IMHO, a capitalist economy is creative economic chaos. I am a firm believer in the innate human drive of economic inventiveness. We, in a capitalist economy, always seem to find a way to advance our standard of living. Eventually. But the road is not straight and smooth. It's full of twists, u-turns, potholes and bridgeless spans which we must find a way to traverse. Our personal challenge in finding our way along this road is to adapt, and it is not easy. .Keep up the good work. -- Tom Low

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Belkin is dead wrong, this time. After a pullback next week, we are going much higher. Another prophet self-destructing. His present call will be shown to be 2-3 years off. -- Ken Langeberg

**

Hey Modelman: Does anyone bother studying the history of the stock market anymore?. Because if they did, they would know that we're going to S&P 1125. 50% retracements from major lows are not only common, but they've been occurring since 1876. ..and they happen very rapidly. Bull markets last a lot longer than eight months too.

I own 12 stocks, American capital, hr block, citi, GE, Intel, mcdonalds, Pepsi, an energy trust, Pfizer, pulte and Washington mutual.. 5 of them closed at 52 highs today. The internals of this market are too strong for the averages to start turning south...I'll know it's time to get out when I see record volume on the NYSE...that'll mean the retail investor has finally capitulated and it's time to take some profits, but we simply are not there yet..and no one knows when that day will come, this rally could go on for months. Take care. -- Thomas D Edmonds, Carmel Indiana

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Hey Modelman: I just read all the correspondence you posted on your wed site about your China article. Hopefully we all will absorb some of the knowledge and information that was send in most of those email messages.

You should have kept to your facts and left the politics out of your article. Example: "DON'T LET THEM SCARE YOU". Shame on you.

As for the content I respect your opinion but disagree with your conclusions and understanding of the China issue. I will not go over what has already been said in previous emails since I agree with the majority but will give you a few actual examples.

1. I have a friend that imports baby wipes from China into the USA. Currently I know of three or four manufacturers of baby wipes in the USA. His price LANDED is 25% lower than this country's manufacturers. If the Chinese currency was not pegged to the US Dollar and was increased in value by the 30% figure as one of your emails suggested, the imported product would be more expensive than the domestic product.

That would favor the domestic manufacturers and allow them to continue in business here and employ workers locally.

THEREFORE, IF THE CURRENCY IS NOT ALLOWED TO FLOAT, YOU WILL NOT HAVE A FAIR TRADE SITUATION!

2. I had a friend who use to work for PillowTex Corp. They were one of the largest and best quality bedroom furnishing companies of sheets, pillows, towels, blankets etc. in the USA. Their largest customers were Kmart and WalMart. As the China situation gained steam, PillowTex could not compete in price, lost a lot of their market, and went bankrupt. Plants were closed and moved offshore. My friend lost his job and retirement(most of the retirement was in PillowTex stock).

THE UNFAIR LOW PRICES OF CHINESE GOODS CAUSED THIS COMPANY ITS BUSINESS.

In this day and age we do not seem to stay together and look out for our country. We find it easy to play the blame game. Instead of paying a little more for gas and develop a synthetic gas industry we just blame the big oil companies every time we have a jump in the oil prices. The fact that we are dealing with a limited commodity and that the commodity is controlled by unstable foreign countries seems to be forgotten. CHEAP GAS PRICES MUST BE A GOD GIVEN RIGHT.

Jobs leave our country so we jump on the current administration. It took a number of administrations to get us here. DOESN'T ANYONE REMEMBER ALL THE JOBS AND MANUFACTURING THAT WENT TO JAPAN WHEN JAPAN WAS DOING WHAT CHINA IS DOING TO US NOW?

What is gone now are Household Appliances, Car Parts, TV's, DVD's, Cameras, Semi-conductors, Cell phones, some Farm Equipment, Boat Motors, Textiles, etc.

Now that high tech jobs are going WHAT CAN WE INVENT NEW FOR US? Maybe you have some ideas. I would love to have some. I am out of ideas.

Thank you for writing the article. It did drum up a bit of deep feelings about what is going on around us. If you could just learn to write the facts and drop the political bashing I would think we would all become better at getting our problems solved. -- Arnie Jellison

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Hey Modelman: Of course the incremental jobs "reclaimed" from China by making their goods less competitive -- through boycotts, tariffs, or floating the yuan -- will not flow back to the US, but likely move to other low-wage countries which, albeit somewhat more expensive, is still substantially cheaper than producing the goods at home. The shareholders of Corporate America would expect nothing less.

The ultimate impact of such actions to make goods manufactured in China less
competitive is probably defined by a complex set of interrelated variables.
One plausible scenario, however, would be that on the whole, goods will be
more expensive in the US and the dollar won't buy as much for the average
consumer -- at Wal-Mart and elsewhere. Overall consumer consumption will
decrease, and China in particular, will have less reserves to plow back into
the US to help fund America's growth and spending habits. Interest rates
will rise. The large unemployed ranks will prevent consumers, wearing their
worker hats, from demanding wage increases. The standard of living will
decrease.

Along with slower top line growth, interest expense will increase for heavily
leveraged Corporate America, further depressing the bottom line. And
consumers who opted for lower-cost ARMs will see their mortgage interest rise
and have less discretionary income, although they'll earn a bit more on their
money market funds. Companies like Wal-Mart and MacDonalds will decide they need fewer sales clerks and hamburger flippers. These job cuts will further
suppress economic growth leading possibly to stagflation and more job cuts.
Not a very good outcome considering that the original intent was to protect
jobs. -- K. Kw. Gee

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Hey Modelman: I have been sitting here intently reading the responses to your article regarding American jobs being transferred to China. One in particular sparked my urge to respond. The response by Dave Anderson is particularly interesting because he believes that importing “1 million Chinese laborers to America to work our farms and factories and live in barns” would spur “outrage!”

This is entirely untrue as evidenced by the fact that we have more than 3 million illegal Mexican immigrants presently living in the US who “live in slum-like apartments 8-10 [or more] per room” now. The majority of these immigrants are migrant farm workers who for substandard wages harvest crops from American soil that are sold to Americans. No one complains that strawberries cost $1.50 a pint. But would they complain if strawberries cost $10 or even $20 a pint because the people picking these crops were earning legal wages? Yes then, “Americans would be outraged.” Is it “illegal” to have people earning these wages? Yes. Why don’t we change it? Because no one wants to pay $20.00 for a pint of strawberries or any other produce for that matter. -- Steve Kachocki

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Hey Modelman: You may be intereseted in the following piece from one of, if not the most, knowledgeable and rational men in the US
House in terms of knowledge of our economy. He also runs the Foundation for Rational Economic Education. He writes on the losing jobs to China question.....

Economic Woes Begin at Home

by Rep. Ron Paul, MD

Many in Washington are concerned about the loss of jobs in our nation’s
manufacturing sector, but few seem to understand the role Federal
Reserve currency manipulation plays in that loss. The economic problems
currently facing this country are the direct result of a boom-and-bust
cycle caused by inflationary Fed policies. An open debate on monetary
issues therefore is long overdue.

However, instead of debating America’s monetary policy, Congress wants
to debate China’s monetary policy. The goal is to pressure China to
change the valuation of its currency, to unlink it from the U.S. dollar
so that its value fluctuates. The main beneficiary of this would be
certain U.S. manufacturers, at least in the short run. But American
consumers would be the overwhelming losers in the long run, as the
price of countless consumer items would rise. Manufacturing interests
have powerful lobbies in Congress, but consumers do not.

China exports many products into the United States, which makes her a
convenient scapegoat for our economic problems. Demanding that China
adjust its currency valuation is merely a distraction from addressing
the real economic dilemmas facing our country, however. Congress should
be focused on our own disastrous monetary policies. As long as the Fed
can print money at will and set interest rates, the value of our
dollars will be subject to the whims of politicians and the perceived
economic needs of politically powerful special interests.

Congress should consider the sobering fact that the Chinese hold
billions of dollars of U.S. debt. The dollars the Chinese acquire by
selling us goods and services eventually must be returned to the United
States. Since the Chinese are not buying an equivalent amount of
American goods and services, they use dollars to finance our
extravagant spending.

In fact, our ability to continue funding the welfare-warfare state
without destroying the American economy depends on foreigners buying
our debt. Perhaps we should think twice before we start bullying and
browbeating our foreign creditors to change their economic or other
polices to our liking.

Instead of promoting global economic government, Congress should reform
those policies that reduce our manufacturers’ competitiveness.
Recently, a prominent financial journalist visited with businessmen who
are launching new enterprises in China. When he asked them why they
chose to invest in China, they answered: "It is so much easier to start
a business in China than in the United States, especially in places
like Massachusetts and California."

This answer should send a clear message to every lawmaker in America:
the taxes and regulations imposed on American businesses are hurting
economic growth and killing jobs. If we are serious about creating
jobs, we should be working on an aggressive agenda of cutting taxes and
repealing needless regulations. We should be working to adopt a stable,
gold-backed dollar whose value is determined by the market. We don’t
need to bully our foreign competitors, we just need to stop subsidizing
them while releasing the regulatory and tax stranglehold on American
businesses.

November 4, 2003

Dr. Ron Paul is a Republican member of Congress from Texas.

**

Hey Modelman:  Basically, there are three types of jobs in the American economy: unskilled, manufacturing (you make something) and decision makers (managers, professionals, pink collars, government).

The unskilled jobs are pretty taken by illegal immigrants in the US. We have
this schizophrenic relationship with immigration. We obviously need these
workers but we spend as much money trying to remove them as the companies
who try to import them. I don't know why we cannot have a common sense
immigration / foreign worker policy that other countries use.

Manufacturing is the source of the bulk of the higher paying jobs. These
have traditionally been the jobs with the best benefits because they were
heavily unionized. Frankly, if there were no unions in the history of this
country, there would be no middle class to speak of (and you and I could not
even have this conversation at all because we would both be searching for
food). These jobs have been systematically destroyed by off-shoring for 30
years. IMHO, just because some trend has been going on for decades does not
make it right (war, crime, the Middle East and human stupidity come to mind
as examples).

When people think of the service economy, they think of one of two things:
highly-paid professionals or low-paid clerks. This is simplistic of course.
You would be surprised that only 10% of the work force of 141M are of the
white-collar profession variety. About 50% of the wage base is comprised of
the lower-paying retail, household and transportation services variety. When
the number of high-tech jobs (generally the better paid kind like
programmers) are being marginalized, you are removing a significant source
of higher-paying professional jobs in this country. And, remember that even
a doctor has to have patients that can afford to PAY for their care (this
was a contribution from someone I know who is in medical school).

While I agree that there are some opportunities that COULD (but by no means
certain) replace these higher paying jobs (healthcare come to mind), it is
highly unlikely that these new jobs would occur in enough numbers to replace
what has been or will be lost. And those jobs that do come about do not have
the same job security or benefits as the displaced jobs. That is pretty bad
trade in my opinion. When you really think about it, there are very few
industries which pay well that are constrained by time or geographical
considerations that prevents them from being outsourced to cheaper labor
markets. The Internet is the key. Lower import prices mean nothing because
the pay scales will drop faster than the price deflation. People say that
the capital savings get re-invested (which is true) but it is being
re-invested overseas and not in the United States. As for productivity
gains: we are in this situation because of excess capacity; I do not see how
building even more capacity overseas will improve the situation unless you
are willing to pay those workers reasonable pay scales to generate enough
demand. Our experience with Mexico after NAFTA should be a clear signal that
the globalization benefits do not always compute.

The last thing that people do not take into account when manufacturing and
engineering bases move overseas is that the new market that it serves does
not need the United States as an exporter anymore. They can make whatever
they want and sell it to themselves within their own markets (and provide
the related services). The American economy becomes superfluous.

If your thought process is dominated by some conservative political
correctness, please be quiet. You're of no use to anyone because you are not
thinking about the situation clearly. This is a clear instance when wishful
thinking (driven by greed and/or zealotry) overrides clear analysis.
Americans are terrible at looking at the economy holistically. Other
countries seem to be able to do this (at least the Chinese are creating jobs
for their own people) but we, apparently, are not. We are too busy stabbing
each other in the back to notice. -- Lawrence Louie, Plano, TX

**

[From the publisher of the investment newsletter website Trendvue.com]

Hey Modelman: Just got an email from Michael Friesen: On the market/economic psychological front, check out Jon Markman's (MSNBC's) archive of e-mail he received on an article he wrote: "Letters to SuperModels about China and U.S. jobs - Nov 5, 2003" From many of the writers' tones, it gives further evidence that the psychology of the US could turn quite protectionist in the next few years. Remember Ross Perot and "That giant sucking sound?"

You know, I don't care if I get hate mail for writing the following but I'm personally just so sick of hearing how a country that has more than a billion culturally non-homogenous people is going to somehow suddenly get rich, take over the world and do us all in. The only thing the Chinese have "conquered" in the last 100 years is ... TIBET! Crikey!

Besides, there are philosophical questions to be asked:
· Is it OK to have more than one really rich country in the world?
· Is it OK to have a large non-White rich country in the world?
· Is it OK to have a large non-Democratic rich country in the world?
· There must be room for us all, right?
· Is a predominantly Buddhist nation where people are working 24/7 too tired to wage jihad like the poor Muslim nations?
· Wouldn't it be good if there are a billion people who we can sell our goods and services to?
· Who will buy all the QCOM cell phone services?

I could go on all day, since I might have some insight into the cultural issues, since I'm Chinese, but I'm too busy working. -- Teresa Lo / TrendVue.com