patrick.net

thomas.wong87 says

Leigh says

I highly doubt that I’m a typical soon-to-be-26 year old though. I have over $130k in the bank (at least until closing), my 401k is maxed, and I’ve already made over $190k this year

Frankly, I doubt such numbers. As a controller I have access to Payroll numbers and never seen anyone at that young age making such salary. TODAY! It takes 15 - 20 years of experience to even come close to $150K annually. Over the decades salaries have been more meager increasing slightly with inflation.

I do have 10 years of experience -- most people with 10 years of experience as a software engineer who are reasonably good will clear $150k easily (well, assuming that they live in a place with costs of living similar to silicon valley). I'm usually assessed as having less than 10 years of experience since I have such a non-traditional background. Someone with 15-20 years of experience is typically in management (highly likely to be a director or maybe a VP, unless they're in research or just don't care that much), and will easily clear $250k a year. Of course, there are plenty of people with 20 years of experience who don't make nearly as much as that. Note my "reasonably good" qualifier -- most software engineers aren't even worth the cost of their education.

Kevin says

thomas.wong87 says

Leigh says

I highly doubt that I’m a typical soon-to-be-26 year old though. I have over $130k in the bank (at least until closing), my 401k is maxed, and I’ve already made over $190k this year

Frankly, I doubt such numbers. As a controller I have access to Payroll numbers and never seen anyone at that young age making such salary. TODAY! It takes 15 - 20 years of experience to even come close to $150K annually. Over the decades salaries have been more meager increasing slightly with inflation.

I do have 10 years of experience — most people with 10 years of experience as a software engineer who are reasonably good will clear $150k easily (well, assuming that they live in a place with costs of living similar to silicon valley). I’m usually assessed as having less than 10 years of experience since I have such a non-traditional background. Someone with 15-20 years of experience is typically in management (highly likely to be a director or maybe a VP, unless they’re in research or just don’t care that much), and will easily clear $250k a year. Of course, there are plenty of people with 20 years of experience who don’t make nearly as much as that. Note my “reasonably good” qualifier — most software engineers aren’t even worth the cost of their education.

I'm glad you are doing so well but

most people with 10 years of experience as a software engineer who are reasonably good will clear $150k easily

is ... not accurate.

Most software engineers make well, well under $150k. You are clearly doing better than most. For example I hired Bearing Point for a large Peoplesoft implementation and their engineers, the top ones, made $75-90k. The Project Manager - not an engineer but a manager of 20 people on a project made about $130k. I've managed comercial software products and projects directly myself, and we had excellent engineers making under $60k. Count your blessings, you are way ahead of most sofware engineers, you must be exceptional.

P.S.

http://www.bls.gov/oco/ocos267.htm

http://www.engineersalary.com/Software.asp
"The middle 50% of software engineers earned compensation between $64,560 and $99,630. The lowest 10% earned less than $50,430, and the highest 10% earned more than $142,810."

I agree with pkowen, I worked as a technical recruiter in San Francisco from 1998-2001, the highest salary we paid was around $120-130k during the dot-com bubble. More than $110k was highly irregular for any software or systems engineers regardless of experience. I worked in finance as well, it's wasn't until you got to the SVP level in IT that you came anywhere near $150k. No one in IT was making 250k except the very top executives. I call bullshit.

Normally I'm cynical on these forums, but I was an engineer knocking down $80K/year, five years after graduation, in the Midwest where the cost of living is fairly low. I had colleagues in the Bay Area making $100K in Silicon Valley. That happens less now, but if you're a solid architect or an RF expert, you can be a hotshot pretty quickly after graduating.

As to 401(k) assets, I've got well over a Buck, and I'm only 8 years out of school. My two biggest moves were buying into growth stocks/funds in 2004, and avoiding the 2006-2009 bust (props to CR on that one).

pkowen says

Most software engineers make well, well under $150k. You are clearly doing better than most. For example I hired Bearing Point for a large Peoplesoft implementation and their engineers, the top ones, made $75-90k. The Project Manager - not an engineer but a manager of 20 people on a project made about $130k. I’ve managed comercial software products and projects directly myself, and we had excellent engineers making under $60k. Count your blessings, you are way ahead of most sofware engineers, you must be exceptional.

Have you worked with anyone in the bay area in the last 5 years? $150k is down right ordinary.

Yes, engineers elsewhere make a lot less, but we're not talking about elsewhere here.

Yes I currently work in the Bay Area, and last year changed jobs. I took a 10% pay cut, and now have furlough on top of that. Lay Offs are rampant. We are actually hiring and I see the desperation. At my old company I hear of lay off weekly. I don't know of a single person who is not upper management (and in place for several years) making 150k. I talk to contractors as well and hourly rates are plummeting. You are either living in a fantasy world of your own making, or full of shit.

Kevin says

pkowen says

Most software engineers make well, well under $150k. You are clearly doing better than most. For example I hired Bearing Point for a large Peoplesoft implementation and their engineers, the top ones, made $75-90k. The Project Manager - not an engineer but a manager of 20 people on a project made about $130k. I’ve managed comercial software products and projects directly myself, and we had excellent engineers making under $60k. Count your blessings, you are way ahead of most sofware engineers, you must be exceptional.

Have you worked with anyone in the bay area in the last 5 years? $150k is down right ordinary.
Yes, engineers elsewhere make a lot less, but we’re not talking about elsewhere here.

Yes, including THIS year. It may be ordinary in your circle, but statistically your income level is very rare for a 'software engineer'. Yes they are generally well paid compared to non-technical folks, but $150k is way above the income for a non-executive run of the mill 'ordinary' engineer. Managers of engineers make less than that in most cases. Even here in La-La land.

Guys, no offense, but a lot of people who call themselves "software engineers" are working in IT functions like databases, web servers and such. These days anything that even remotely involves coding gets labeled as engineering.

When I think of a real software engineer, I think of an embedded code designer at Qualcomm, or a search engine scientist at Google. Maybe a DSP algorithm designer at TI. I knew a legion of CS-degree coders working for $60-70K/year. I've also known architects and other bona fide software engineers; they contribute a lot more to their companies, and they make at least 50% more as well. Plus they get all the goodies like stock options and performance bonuses.

I say that independent of whether Kevin is spinning straw into gold (which is impossible to prove anyway). I've observed plenty of software engineers making $100K+ outside of the Bay Area, and $125K+ in San Diego and Silicon Valley. Is it everybody who touches code? Well, no. But "engineer" is a pretty subjective term these days.

I doubt that in 2009, new hires will get the red carpet pay package. But companies didn't cut pay or demote rank for everyone who survived all the recent layoffs. The pay level mentioned is a B+ or A- pay range, but it's not completely crazy, at least in my anecdotal experience.

Brand, the argument was that $150k a year was "ordinary". That is complete bullshit. I don't doubt that there are people out there making $150k as software engineers, but it's probably to top 5%.

And another point, in my experience DBAs are WAY harder to find than coders, even good ones. They do have the ability to make $150k+. But once again, it is rare, not "down right ordinary"

Tude says

Brand, the argument was that $150k a year was “ordinary”. That is complete bullshit. I don’t doubt that there are people out there making $150k as software engineers, but it’s probably to top 5%.
And another point, in my experience DBAs are WAY harder to find than coders, even good ones. They do have the ability to make $150k+. But once again, it is rare, not “down right ordinary”

Exactly. No one debates that some people in the industry make $150k. It's the assertion that it is 'ordinary' or average. And I agree, a good DBA is harder to come by - but even harder is a true solution architect who understands DB, software, and infrastructure - all of it. THEY are worth $150k oftentimes.

jeffmgreg says

I’m 24 and I have the mindset of most of the people on here, it’s a terrible time to buy. I know I don’t speak for my age group though. All my friends are so determined to buy a house right now that it makes me sick. I’m constantly being bombarded with “you’re going to be sorry later” “prices are too low not to buy”, or my personal favorite “my dads friend is real estate agent” . It seems like no matter what proof that I show them, simple calculations I do for them, nothing get’s through to them.
Right now my current roommate is looking for a house, if you can call it that, in SF for $350,000. At that price range it’s something like a 400 sq ft hole in the wall. For some reason he believes that buying a house is an investment, that it will magically make him money, guaranteed. He’s even planning on dipping into his 401k to pay for it… seriously!?
I guess I have a question now. How do you deal with people like this?

this is my life 100%, I don't know how you deal with them, THEY ARE ALL OUT OF THEIR MINDS!!!! I've tried showing them proof, telling them the facts, etc, etc, and every single person is MAD AT ME because they think that I'm either stupid, don't have any experience in housing, or against them in some way... sooooo I'll take the back burner, sit back and enjoy the roller coaster they just hopped on... PS- I'm also 24, think its A HORRIBLE HORRIBLE TIME TO BUY, and although I really would love to own a house someday, it really makes no sense... I'm sick of hearing peoples happy stories of how they just bought a house in a shitty neighborhood for 400k, that they have to remodel, and only put 3.5% down, and they expect to make EQUITY and move to a nice neighborhood when they have kids in a couple years... GOOD FREAKING LUCK!

if you buy right now, you better like the house you buy, because youre gonna be there for a long long long time.

the end!

Kevin says

At this point I just don’t care that the house price will go down. We’re going to be a 5 minute walk away from my children’s school, a 20 minute drive from work, and have a quarter of an acre of land and a 3200 square foot monster of a house to live in. Sure, I might make more money putting my down payment elsewhere, but I don’t need the money in any case, and shelling out around 20% of my gross for housing costs seems reasonable to me.

now if only all 20-30 year olds thought like this before they make the biggest decision in their lives! see--im not totally against buying, if youre in it for the long haul, then it works... its these people who are buying start up homes, etc, and expecting to make money... good luck to you and your family, it seems like you have your stuff in line!!!!

oddhack says

jeff- you deal with them by not getting emotionally/sexually involved with them or loaning them money, and standing back to watch the trainwreck from a safe distance.

amazing advice!

Troy says

That graph is worth posting here, because I think it shows exactly what’s happening here:

Not quiet similar, Japan is a 110% anti-immigration country, on a contrary, we have millions of people migrate to U.S.A. legal or illegal, and that is the demand. Again Japan's R.E. are highly control by small group of people, and close to planned economic, the artificial housing price. Our R.E. still lead by free market, the demand and supply, even our president willing to destroy it, but not there yet.

If someone doesn't have the financial skills to save, buying a house is a great way to force savings. If they plan on jumping ship and buying something in 3 years, they might find they can't and stick with what they've got. It just means they can't compete with the Jones. If their job changes, it might mean a longer commute. The absolute worst case scenario is they have to move cities and can't unload their houses. It might just lock them into a large city for a longer period of time than they had hoped for.

In the end, at least they've got shelter, even if takes them 30 years to purchase it and they end up paying way too much for it. If they're not that great at saving to start with, in 30 years without buying, they're likely to have 0 savings and no house. At least this way they have a house with 0 savings.

If a person is responsible, good at savings, understands the housing market and fundamentals like most of the people here do, then they should wait it out and look for a better opportunity. If your friends CAN afford something now, it isn't terrible. It's definitely not optimal, but in 5-10 years it won't be bad. They might just break even, but still no worse than saving $0.

pkennedy says

If someone doesn’t have the financial skills to save, buying a house is a great way to force savings. If they plan on jumping ship and buying something in 3 years, they might find they can’t and stick with what they’ve got. It just means they can’t compete with the Jones. If their job changes, it might mean a longer commute. The absolute worst case scenario is they have to move cities and can’t unload their houses. It might just lock them into a large city for a longer period of time than they had hoped for.
In the end, at least they’ve got shelter, even if takes them 30 years to purchase it and they end up paying way too much for it. If they’re not that great at saving to start with, in 30 years without buying, they’re likely to have 0 savings and no house. At least this way they have a house with 0 savings.
If a person is responsible, good at savings, understands the housing market and fundamentals like most of the people here do, then they should wait it out and look for a better opportunity. If your friends CAN afford something now, it isn’t terrible. It’s definitely not optimal, but in 5-10 years it won’t be bad. They might just break even, but still no worse than saving $0.

'Forced savings' is a joke. So what was the money spent on before you had the house? Vacations, dinner out, coffee, clothes, etc. So say good bye to all of that. If you can't stop the spending then it goes on the credit card with the car repairs, home repairs, vacations, etc.

Sorry, but from personal experience and experience of some close to me, 'forced savings' is a joke. Just pretend you have a high mortgage and pocket the difference and see how that lifestyle fits you.

thunderlips11 says

I’m going to become a home health aide, it’s one of the top 10 jobs in the next 10 years.
The pay sucks at $9/hr and there are no benefits, but your employer will give your free handsanitizer for when you are wiping poop from a 90-year old’s tush, and best of all you qualify for grocery assistance in the form of food stamps.
Man I love these jobs of the future. Isn’t it great being served Coffee by somebody who went $100k in debt just to write a 50-page paper contrasting Kant and Kirkegaarde? Or to get Ethernet Cable advice from a kid who spent $50k on a Computer Science Degree? Or have your oil changed by a 50-year old man who used to make $18/hr as a machinist with 20 years of experience in Aircraft Fabrication? All yet all of them are regarded as “lazy, stupid, timid”. Only in America!

LOL but crying inside as I agree the USA's glory days are over. My entire adult life has been a bubble, first the crazy dot com, business plan on a cocktail napkin with VC money by the end of the night craze. Then soon the RE bubble followed. And now what a god awful recession.

The only reason we seemed to thrive in the 50s was that Japan and Germany etc were rebuilding after being bombed to hell, then once they caught up it's been down hill with the US pummulting (sp?) faster with NAFTA, etc. Really, what is gonna create stable, high paying jobs. Intel has locations in 48 countries just to give an example. Is Asia the new powerhouse?

Another good eye opener for potential young buyers...plan on having kiddos? Drop by the nearest daycare center and ask how much PT and FT childcare is for one and then two kids? Can you still afford that mortgage after hearing those numbers? And don't even think that your raises and bonuses will be sufficient once you finally conceive.

Another thought, check out your health insurance. How much will it cost you out of pocket to deliver? This year I paid higher premiums just so I ONLY had to pay 10% of my bill for an uncomplicated vaginal birth (add ~50% if it's a C section). My 10% was $2K! And then there are diapers and potentially formula and if your baby has issues with the breast milk or formula like allergies then you get to buy the premium stuff at around $200-300/month depending on the appetite of the baby.

Just some thoughts for those young adults that are thinking about buying...

How about thinking a bit more realistically.

Your view:
Cars, vacations, clothing and no retirement = good? You said that all that will go away if you're "forced to save", if you aren't forced to save and just save, all that goes away too. Either way you can't have both. If you're living outside your means, something has to change.

Then you follow up with an argument that people who can't save, should save. Great, got some great advice for smokers who want to quit? "Stop smoking" ? Look at the numbers where that has worked for people and get back to me. People almost never change unless they hit rock bottom, or have some kind of intervention, or are forced into it.

Finally, you're claiming it's the end of the world. There is no way people will be able to vacation, buy cars, expensive clothing, have children, buy a house and have cheap healthcare, all while saving for retirement? Therefore, everything must fail?

Things will definitely have to change going forward. We will have to change some of our ways to continue. Obviously what worked yesterday won't work tomorrow for every aspect of our lives.

Times change, they will always change and the need to change investments will change as we go through life. There is nothing you could buy/invested in, in 1901 that would have given you a 100% secure retirement fund if you changed nothing from the day you started your saving strategy to the day you started pulling it out.

What commodity/investment/bond/piece of land has had a stable gain for the last several hundred years? What is a realistic time frame to draw from. A 10+ year housing bubble doesn't sound like a bubble to me, it sounds more like an economic period. The same as the period from 1970-1980 when inflation took off, 1980-1990, 1990-2000, and 2000-2010, something happened in each period. Some made out like bandits, some didn't.

I remember my father saying how they laughed at people who went house crazy in the 70's, taking out massive mortgages, only to have inflation essentially wipe those mortgages out for these people. They lived like kings after that. 80's had massive interest. 90's had a bust and then started off again. Nothing last forever, everything must change to survive.

pkennedy says

How about thinking a bit more realistically.
Your view:

Cars, vacations, clothing and no retirement = good?

I said nothing about not saving for retirement. Here is what I am witnessing in Portland, Oregon. Folks getting in way over their heads to get into a home. Can they realistically save for retirement? And if I had a dollar for every time I heard someone say that their home/equity was their retirement plan...gasp...wonder what they are thinking now? I know of a few people in their 40's who have erased their IRA's to save the house.

I still think getting into a mortgage as a way of forced savings is a joke. It depends, of course, on much mortgage one is getting into.

Another thing that will likely happen and there is enough evidence that folks are doing it now or at least before the crash...dipping into the equity to fund college and weddings. And I have met a few 'financial advisors' who strongly recommended refi-ing when ever rates hit a certain point to take advantage of the tax savings for interest on mortgage thus making that 30 year plan more like 40 plus.

I think it's unrealistic. Yes, a lot of things will change..Consumerism is viewed much differently now though it will be interesting how long it lasts.

Would you say that those people who are saying "My home will be my retirement plan" are smart enough to dodge stock market crashes? junk bonds? the enrons of the market? The derivatives markets? (pick your favorite investment vehicle).

In 40 years, they might own their home and not be able pull anything from it. Lets say it's value is far below todays value, and the government has changed regulations not allowing them to pull any value from it. Maybe they can't sell it now for some reason. If they didn't invest well, and didn't own a home, they would now be paying rent + have potentially 0 savings. In this scenario, they have a home and very little savings. Another possibility is that due to bad investments and inflation(etc) their savings are completely inadequate. A final option is they've done some amazing savings and now they have enough to buy a house outright anywhere and live on the beach until they die. If they aren't financial geniuses now, it's unlikely the third option is going to pan out for them. They are more likely to buy into the next hype and lose it all there too. A few enron investments, some inflation they couldn't deal with, whatever the case be.

A home might not guarantee the best retirement if they can't pull from it, but at the very least they have a home. For many, buying a home is the only way they'll be secure when they retire. Whether they understand the reasons or not.

I agree w/ you pkennedy. I guess my views are clouded by Portland's ugly bubble not that it was any worse or better than anywhere else it's just that I watched a lot of folks get in way over their heads. I guess those that strategically walk away can have somewhat of a fresh start but to start off your investment 50-100K underwater ain't exactly a great path either.

I am just a nurse but I was able to dodge much of the this stock market crash, only lost about 10%, I also sold my house at the peak. But I think the markets are to the point of 'it's any one's guess'. Fundamentals are out the door and government involvement makes it even more complicated. Lot's of unpredictable things. What happens when oil gets traded in EUROS? what if we follow Japan's lead?

Yes, a lot of investment tools are over our heads. I know some just using good ol' CDs and savings bonds.

You are right about one thing for sure. At least they have shelter and ideally didn't dip into the equity. And of course, pride of ownership. I just hope folks aren't getting in over their heads. Money is the number on cause of divorce and we have had quite a few murder suicides and suicides in this area caused by financial hopelessness.

My coworker is maybe 24 years old. She does not make much money at this job or at her other job, but she bikes to work, brings her lunches, and saves a certain amount each month before she even thinks about spending. At 24, she is jaded by what she has seen so far, and she is careful. I don't know where she is on housing theory or whether she is representative, but she seems a lot more cautious and smart than I was at that age. I know she has no plans to buy at this time.

Brand says

Guys, no offense, but a lot of people who call themselves “software engineers” are working in IT functions like databases, web servers and such. These days anything that even remotely involves coding gets labeled as engineering.
When I think of a real software engineer, I think of an embedded code designer at Qualcomm, or a search engine scientist at Google. Maybe a DSP algorithm designer at TI. I knew a legion of CS-degree coders working for $60-70K/year. I’ve also known architects and other bona fide software engineers; they contribute a lot more to their companies, and they make at least 50% more as well. Plus they get all the goodies like stock options and performance bonuses.
I say that independent of whether Kevin is spinning straw into gold (which is impossible to prove anyway). I’ve observed plenty of software engineers making $100K+ outside of the Bay Area, and $125K+ in San Diego and Silicon Valley. Is it everybody who touches code? Well, no. But “engineer” is a pretty subjective term these days.

If you aren't designing software and writing code, you're not a software engineer, and you're probably easily replaceable in the industry. Some people do more of one than the other, but lacking in either discipline is a sure path to irrelevance and crappy employers.

I doubt that in 2009, new hires will get the red carpet pay package. But companies didn’t cut pay or demote rank for everyone who survived all the recent layoffs. The pay level mentioned is a B+ or A- pay range, but it’s not completely crazy, at least in my anecdotal experience.

New hires start pretty low compared to people who have proven themselves. It's typical for a talented engineer to see pay increases of 100% during the first 10 years of their career.

Based on what I know from people being hired today at major bay area engineering-focused companies, a salary in the range of $65-70k is normal (I can't speak for elsewhere) for someone fresh out of school with a BS, and maybe 75-80k if you have Ph.D. The PHD path typically leads to "research" positions which pay a lot less than the "engineering/ development" positions in the long run, but still generally pay pretty well.

That said...

You guys must be dealing with some shitty companies. If you know good people with 10+ years of experience who aren't bringing in $150k, please send them my way. Note that knowing how to write some PHP and set up MySQL does not make one "good people".

Anyway, back on topic:

I know that these forums tend to be a "most bearish" contest, but some of this stuff is kind of laughable. Really, if you guys think the prospects for the future in the US are so dire, why are you still here anyway? You act like there has never been a recession before or that we're some third-world country without the resources or knowledge to grow.

So, yeah, there's a good chance that in our lifetimes China and India will have a larger GDP than we do. You still wouldn't want to live there because most places won't have potable water and a third of the population will be living in abject poverty. Global economics isn't a zero-sum game.

I thought this article was appropriate on the original topic.

Easy FHA Loans in Expensive Areas (nytimes.com)
http://www.nytimes.com/2009/11/20/business/20limits.html?ref=patrick.net

Having read some of the comments, I do feel 'ordinary', thanks ;)

To add to Kevins post. Even if China or India have higher levels of income than the US at some point for all of their citizens, it won't change how we live in the US. In fact, it will likely reverse all of our debt problems here instantly. With a massive market for the US to sell into, it wouldn't have to compete with other countries selling to US citizens. US citizens could save, while we sold to other citizens allowing them to go into debt!

For those worried about the trade deficit, actually look at the numbers.
# Exports increased to $132.0 billion in September from $128.3 billion in August. Goods were $90.3 billion in September, up from $86.8 billion in August, and services were $41.6 billion in September, up from $41.5 billion in August.

# Imports increased to $168.4 billion in September from $159.1 billion in August. Goods were $138.0 billion in September, up from $128.8 billion in August, and services were $30.5 billion in September, up from $30.3 billion in August.

Gas and related products make up a good amount of our deficit as well. Without that, things don't look too bad. Exports of Products still makes up 2/3rds of exports. Obviously people claiming we make nothing in the US have never looked at what actually makes up the trade deficit.

http://www.census.gov/indicator/www/ustrade.html

Yeah, we produce/export a lot of heavily subsidized crops.

And we don't import much oil so I'm not sure we even fight about it;O)

But I'm intrigued. Let me see what else we export.

edit 10 minutes later:
Browsing the chart...capital goods look like our forte...anyone want to elaborate on what that exactly is?

It doesn't appear that agricultural exports make up a huge amount. I couldn't find a lot of information, but it didn't seem to be a large number in terms of actual dollars.

Oil.... The US produces around 40% of what it needs. Oil from Canada and Mexico make up about 30% of the total oil imports. Another 35% from Venezuela, Nigeria and Saudi Arabia. Of all the oil we receive, only a small portion comes from Saudi Arabia, less than from Nigeria!

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Oil imports can change, as the energy policies of the country change. If oil becomes expensive enough, we will adjust the way we live, and our deficit will reduce by itself in that case.

It is definitely not doom and gloom.

It definitely means some changes in the next decade though.

Wonder what our exports would look like if we didn't force the countries that receive our foreign aid to buy our goods?

Israel and their weapons come to mind.

And the main reason we can export corn, wheat, etc is since it is heavily subsidized we can flood markets like Mexico with our cheap crops and screw up their agribusiness. Anyone wonder what Mexicans did before they crossed the border into USA?

You think we could really export crops without heavy subsidies?

Yahoo for our 'free' market!

Oh those captial companies! Caterpillar making all those trucks and other goods used to make houses! Landlords better watch out! Soon houses will be a dime a dozen if they keep this up!

Corn isn't being exports as much anymore, is it? Corn has become hugely more expensive because we're using it in gas now, and so many farmers are turning their crops over to corn for the higher selling values. Corn isn't exactly a crop most of the world likes either, it was considered pigs food for a long time.

Canada exports a lot of wheat and corn with less incentives. Farmers might be making good money with the subsidies, but obviously without they would survive and do the same. Lots of whiners would say they would fail but they would figure it out.

Lots of doom and gloom. Things change, and people change with them. The gloom and doom sayers have been around forever. Claiming it's all going to blow up, but it never really does. It gets bad, then gets corrected as free market thinkers bring things back in line and keep the whole machine running.

Corn often gets exported as High Fructose Corn Syrup, HFCS. The only reason farmers make money on corn is due to the subsidies. It is subsidized to keep food prices low. Pick up ten items in your kitchen cupboard and look at the ingredients. Corn is expensive to grow partially because you can't save seed anymore and the need for heavy fertilizing, herbicides and pesticides. It's a monopoly for Monsanto and AMD: seed and fertilizer, pest and herbicide. Yes, our yields are higher and we can feed the world but at what price to our soil. Our topsoil is down to 2 inches in some places in the Midwest where not long ago it was 2 feet.

I'm not anti-Capitalism. I just think folks need to look at the big picture as the world gets smaller and production/manufacturing can occur ANYWHERE! To ignore the fact that MADE IN CHINA, MACAU, INDONESIA, VIETNAM, etc dominates our goods is naive and well, ignorant. So what does America make anymore?

Yes, things change. Give me an idea why things will change for the better here besides the hope that more people will value family instead of the big house and 2 new SUVs as those days are gone for many and never were truly there because it was all a house of cards.

The US obviously exports a lot. Once oil is removed the equation, the US exports more than imports. That says something.

The world is becoming flatter. Right now the world competes for US consumers. That is the only place to make money. As these countries start growing out their middle class, they will become the target for businesses, and the US will be right there, targeting those same consumers.

China is already starting to build out a middle class, but they haven't started spending much yet. They will. Most of these countries have a huge penalty for losing a job. Here, you might go in debt. Maybe have to move into a crappy ghetto house, or move into your car. There you get nothing. Absolutely nothing. If you lose a job, it might take years to get another. Most of these countries have massive savings rates because they need it. They're currently stashing away everything they make. As the countries loosen up and become less scared they will start spending more on everything. Tv's, cars, movies, etc.

pkennedy says

The US obviously exports a lot. Once oil is removed the equation, the US exports more than imports. That says something.

What do we export...specifics. I know in the Pacific NW we export cherries, apples, and pears. My brother has worked in the meat industry which is why I know we do export a lot of beef (once again, cows are fed heavily subsidized corn keeping beef prices low!) What else do we export?

"The US obviously exports a lot"

Pretty much all our products from Apple, HP, SUN, Juniper to Cisco to Intel etc etc outsourced to contract manufactures such as Selectron, Flextronics and others like Asus, TSM to sites overseas in Asia. Last we made anything was back in the late 80s early 90s. If a product is sold, its shipped from Asia to other continents never crossing out from our borders. We don't export much of anything except food products.

We dont even ship Pepsi or Coke.. since that is made locally in China with their own production plants.

"What else do we export?"

If you want the big $$ amounts...We will be known for exporting our toxic debt/mortgages/credit card bills.

Leigh says

pkennedy says

The US obviously exports a lot. Once oil is removed the equation, the US exports more than imports. That says something.

What do we export…specifics. I know in the Pacific NW we export cherries, apples, and pears. My brother has worked in the meat industry which is why I know we do export a lot of beef (once again, cows are fed heavily subsidized corn keeping beef prices low!) What else do we export?

First off, the US is the largest manufacturer in the world -- larger than even China. It's important to remember this in any discussion. We aren't the largest exporter (China edges us out by about $200bn), but we are by far the largest producer as well as the largest consumer.

On to specifics. Our largest manufactured exports are (and you really could have googled this, these are the CIA figures for 2008):

Civilian aircraft … US$74 billion, up 1.3% from 2007 (5.7% of total US exports)
Semiconductors … $50.6 billion, up 0.3% (3.9%)
Passenger cars … $49.6 billion, up 13.3% (3.9%)
Medicinal, dental and pharmaceutical preparations … $40.4 billion, up 15% (3.1%)
Other vehicle parts and accessories … $39.9 billion, down 10.1% (3.1%)
Other industrial machinery … $38.1 billion, down 0.6% (3%)
Fuel oil … $34.9 billion, up 124.1% (2.7%)
Organic chemicals … $33.4 billion, up 5.5% (2.6%)
Telecommunications equipment … $32.9 billion, up 4.6% (2.6%)
Plastic materials … $31.6 billion, up 8.7% (2.5%).

Notice the distinct lack of cheap crap.

The reason that it seems like China and other countries produce "everything" is because ordinary people don't buy very many of the things on the above list. The US exports *very* few consumer goods -- mostly automobiles, but it is by far the largest producer and exporter of heavy machinery and precision instruments.

In other words, stuff that machines can make is imported, and it's made with the machines that we export.

We're also one of the top agricultural and raw materials exporters

And this is why I think the people who insist that the US is doomed if we aren't producing cheap plastic toys and furniture are dead wrong.

The claim that if we stopped importing oil we'd eliminate the trade gap entirely is still wrong though. We import about $300bn of oil annually, which is less than half of the trade deficit.

Kevin says

Leigh says

pkennedy says

The US obviously exports a lot. Once oil is removed the equation, the US exports more than imports. That says something.

What do we export…specifics. I know in the Pacific NW we export cherries, apples, and pears. My brother has worked in the meat industry which is why I know we do export a lot of beef (once again, cows are fed heavily subsidized corn keeping beef prices low!) What else do we export?

First off, the US is the largest manufacturer in the world — larger than even China. It’s important to remember this in any discussion. We aren’t the largest exporter (China edges us out by about $200bn), but we are by far the largest producer as well as the largest consumer.
On to specifics. Our largest manufactured exports are (and you really could have googled this, these are the CIA figures for 2008):
Civilian aircraft … US$74 billion, up 1.3% from 2007 (5.7% of total US exports)
Semiconductors … $50.6 billion, up 0.3% (3.9%)
Passenger cars … $49.6 billion, up 13.3% (3.9%)
Medicinal, dental and pharmaceutical preparations … $40.4 billion, up 15% (3.1%)
Other vehicle parts and accessories … $39.9 billion, down 10.1% (3.1%)
Other industrial machinery … $38.1 billion, down 0.6% (3%)
Fuel oil … $34.9 billion, up 124.1% (2.7%)
Organic chemicals … $33.4 billion, up 5.5% (2.6%)
Telecommunications equipment … $32.9 billion, up 4.6% (2.6%)
Plastic materials … $31.6 billion, up 8.7% (2.5%).
Notice the distinct lack of cheap crap.
The reason that it seems like China and other countries produce “everything” is because ordinary people don’t buy very many of the things on the above list. The US exports *very* few consumer goods — mostly automobiles, but it is by far the largest producer and exporter of heavy machinery and precision instruments.
In other words, stuff that machines can make is imported, and it’s made with the machines that we export.
We’re also one of the top agricultural and raw materials exporters
And this is why I think the people who insist that the US is doomed if we aren’t producing cheap plastic toys and furniture are dead wrong.
The claim that if we stopped importing oil we’d eliminate the trade gap entirely is still wrong though. We import about $300bn of oil annually, which is less than half of the trade deficit.

I dont agree, I know that we could use those "cheap crap" jobs right now. We need to increase incentives and/or raise tariffs to match China, Japan if we are to end the offshoring of American industries. Textile, electronic industries have dissappeared yet we continue to buy clothes and televisions. Returning some of these plants to US soil will be important piece of the pie if we want to improve our economy.

We will only increase the poverty in the USA without these industries.

4X says

I dont agree, I know that we could use those “cheap crap” jobs right now. We need to increase incentives and/or raise tariffs to match China, Japan if we are to end the offshoring of American industries. Textile, electronic industries have dissappeared yet we continue to buy clothes and televisions. Returning some of these plants to US soil will be important piece of the pie if we want to improve our economy.

We will only increase the poverty in the USA without these industries.

You're wrong. Kill the exports from poorer countries and poorer countries stop buying those items that we export that are on the top of the list.

Are you really advocating that we sacrifice high paying jobs at boeing, intel, or Cisco in favor of shit jobs at some random toy factory?

Thanks for finding additional information Kevin! I was only quickly looking information up. Not only does the US export all of those goods, the GDP is almost 10T while the trade deficit is a fraction of that.

The below link is a few years old unfortunately. But it does show how oil is impacting the trade deficit. It states that trade deficit went from 30B to 68B in this particular time frame, but oil went from 6B to accounting for 26B. 26B of 68B. That is quiet a bit. From 20% of our deficit to over 38%.

http://www.frbsf.org/publications/economics/letter/2006/el2006-24.html#sub1

"Has the increase in oil prices affected the U.S. trade deficit?
Figure 1 plots monthly data from January 2002 to July 2006 for both the overall trade balance and the petroleum-related trade balance; the latter includes imports and exports of crude oil, fuel oil, liquefied petroleum gases, and other petroleum products. It shows that the overall monthly trade deficit went from $30 billion to $68 billion, and the petroleum-related trade deficit went from $6 billion to $26 billion. These numbers imply that higher oil prices and the resulting higher cost of petroleum imports have accounted for over 50% of the deterioration in the overall U.S. trade deficit during this period. Indeed, looking at only the last two years, from August 2004 to July 2006, the data are more striking. The overall trade deficit grew from $54 billion to $68 billion and the petroleum-related trade deficit rose from $14 billion to $26 billion, indicating that the deterioration in the petroleum-related trade deficit accounts for 80% of the worsening in the overall trade deficit."