European Economy

[tdw]

Over in the "How Long Do You Expect to Keep Your Boat" thread we kind of got a bit distracted so I thought I'd start this thread. Copying in some stuff from other thread.

Originally Posted by PCP

When I bought my last boat in 2002 (Bavaria 36) I thought that it would be my last sailboat and could well have been. I sold it in 2009 because I had the money for a better boat and because the boat was approaching the time where I would have to spend some serious money in maintenance: New sails, new standing rigging, new running rigging, new epoxy barrier, new batteries, new spraywood, new bimini and in not much time, new electronic and a overall on the engine.

All that money would be wasted unless I stayed with a boat otherwise it would add little value to the boat (I learned that the hard way).

The boat still sails exactly as I have sold it, with the same sails and all, but the Italian I have sold it to don't use it like I used to do, I mean with long range cruising.

With proper maintenance a boat like that can be around for more than 30 years and that means that would have lasted all my life.

I preferred not to waste any money on the Bavaria maintenance and add that money to the value of the used boat to buy a new boat that will be maintenance free for the first 10 years or so.

The new boat will not be much bigger (2ft bigger), but more modern, faster more seaworthy and nicer and it certainly will outlast me

A last comment regarding cultural differences: I have noticed that many Americans talk about new boats as if they should last 50 years or more, and see defects in building techniques and details that instead of lasting 50 years will only last 30 or 25.

Nothing wrong with that but the funny thing is that while on Europe we tend to look at the boats as timed limited objects (maybe with the exception of the British), like cars, we tend to look at houses as hereditary objects, I mean, many houses are own by the same families for centuries and they pass from father to children. As result the traditional European house is built to outlast its owner and the generations to come while the American traditional house (I am talking about single houses) is built in a much less solid way and has a limited duration.

Of course it makes some sense to build a house to a limited duration, like boats, it will be a lot less expensive, but if you try that here nobody will want it even if the house will clearly outlive the owners time frame. I guess that the same happens in America regarding boats.

Regards

Paulo

Originally Posted by Faster

My observations visiting relatives in Holland back that all up, Paulo.... no one drives old cars, no one would be caught dead buying used furniture..there's a great deal of weight given to one's appearance of status in all things.

Originally Posted by tdw

Australia in recent years has most certainly caught the "it must be new" disease. Second hand car prices have most certainly plumetted, new boats depreciate faster than they once did.

I confess I am old fashioned in this respect. Sure I owned new cars but quite frankly I doubt I will ever buy another. Both our cars were a few years old when we bought them and have still given us long faithful service at a considerable price advantage to the same model bought new.

To some extent boats are a bit different cos systems on older boats are difficult to repair or to have repaired but even so I am content to go with a ten year old model from a builder of good repute though I can understand why the racers among us like to have the latest go fast bits and pieces.

I'd also be very interested to see to what extent what is rapidly becoming a European economic meltdown will alter the European mindset.

Originally Posted by PCP

I would not be that interested because if things go really bad on Europe you will have a world crisis far worse than the last one and chances are that some big economies that are very connected like the American and Japanese will suffer heavily and I will not know till what point because the factors that are behind the European crisis are common to Japan and to the United States. They are there waiting to explode and may well explode.

Why do you think that Australia, Japan and United States are buying European debt even if it is a risky affair? Well, the answer is obvious, nobody will do a bad business if it has a possibility of not doing it

Regards

Paulo

Originally Posted by casey1999

From what I understand the economy in Australia is booming, unlike the United States.

[tdw]

Paulo,

I put that badly. Obviously a complete European meltdown will result in crisis throughout the world but surely the end result of the current situation will be a less prosperous Europe for quite some time to come and this surely must impact on consumer spending within Europe.

When I was a boy there was a huge disparity between Europe and e.g America. European cars were small engined, very basic automobiles with only a few exceptions. Mercedes were there but even then most of them were seriously underpowered, Porsches were glorified VWs, Citroen were in a league of their own, Audi and BMW were not really on the radar while VW had Beetles and Kombis. In Britain the Mini was about to make a famous last stand but as cool as it was it was still a pretty basic motor. By way of contrast America was pumping out classic yank tankage. Even in the middle market think '56 Chevvy, Ford Thunderbirds and the like.

I well remember my first visit to Europe in the early '70s. Germany was well on the way up for sure but places like Italy France and England were for an Australian, akin to stepping back in time. Sure by then there were better cars and roads between the major cities but the towns were decrepit with plumbing and electricals that would see the abode declared uninhabitable in Australia. (Not that I was complaining. Europe was still Nirvana as far as I was concerned and the plusses well outweighed the negatives.)

My, how things have changed. Even my friends in Spain who lived in wonderfully old and decrepit abodes back then, now have all mod cons, far surpassing my own place here. Back then they drove Seats now they drive BMW, Mercedes and Porsche.

So to cut this long story a bit , I was only wondering whether or not the long term (and it does look as if it will be long term) reduction in overall disposable income within Europe will see a return to more frugal days.

The same of course could be said of America and Japan.

Casey,

Yes our economy does quite nicely thanks to some extent to our exports to China. Couple of interesting links .....

Australian Exceptionalism | Pollytics

(Thanks Bent)

Aussie consumers ripped off, overcharged: report - Business (Australian Broadcasting Corporation)

Reality is that successive Australian governments from 1981 on have left Australia with a pretty good outlook particularly when linked to our positive trade surplus. Of course any further downturn in Europe will effect exports from China and thus raw material exports from Australia. OTOH a lot of Oz exports are being used to supply a pretty robust internal Chinese economy.

We'll suffer for sure but perhaps not as much as Europe and America.

The big question is whither Europe ? In my industry (lighting) the European producers are either falling over or opening factories in China. The same is presumably happening in the furniture industry and other architectural and interior design fields. Some very top end producers will of course survive, they always do but even so can Europe maintain existing standards of living when her manufacturing base is moving offshore ?

Please do not get me wrong. I am not trying to insult anyone nor start a fight. Even back in the 70s I loved Europe, I still do. The essence of the place, the cultural diversity, cuisines, history and the like all go to make Europe for me the most fascinating place on earth, I simply doubt she can hold on to the results of the previous decades prosperity. Reduced manufacturing plus the need to pay back such gobsmacking debt must surely be seriously dampening to standards of living.

[jzk]

A last comment regarding cultural differences: I have noticed that many Americans talk about new boats as if they should last 50 years or more, and see defects in building techniques and details that instead of lasting 50 years will only last 30 or 25..

Not sure why a good boat won't last forever if properly cared for. What will happen to our Beneteau First 47.7 that will end its life? I have had 25 year old boats made nowhere nearly as well as the Beneteau, and they were far from the end of their life.

[PCP]

Originally Posted by tdw

...
...but the towns were decrepit with plumbing and electricals that would see the abode declared uninhabitable in Australia. (Not that I was complaining. Europe was still Nirvana as far as I was concerned and the plusses well outweighed the negatives.)

....
So to cut this long story a bit , I was only wondering whether or not the long term (and it does look as if it will be long term) reduction in overall disposable income within Europe will see a return to more frugal days.

The same of course could be said of America and Japan.

...
We'll suffer for sure but perhaps not as much as Europe and America.

...Some very top end producers will of course survive, they always do but even so can Europe maintain existing standards of living when her manufacturing base is moving offshore ?

Please do not get me wrong. I am not trying to insult anyone nor start a fight. Even back in the 70s I loved Europe, I still do. The essence of the place, the cultural diversity, cuisines, history and the like all go to make Europe for me the most fascinating place on earth, I simply doubt she can hold on to the results of the previous decades prosperity. Reduced manufacturing plus the need to pay back such gobsmacking debt must surely be seriously dampening to standards of living.

Andrews, to answer you shortly, yes we are going to live more frugally and in a different way.

I had said that in threads about economics but nobody seems to believe I am right: With the economic growth of China, Brazil and India the world has not enough resources to maintain the kind of living westerners have and allow for all those emerging economies to raise the pattern and quality of their live and income. This is obvious to me and is what is on the roots of these crisis and all the next crisis that are to come...fast.

You see, this is complicated because our pattern of development have as basis the consumerism that is what supports capitalism and our model of social development and when you take that model away....it is all society and way of living that will change.

It is also obvious that the lack of resources, including fresh water availability will not permit this model to continue for much more years and things are going to change radically, not only in the quantity of things we have and through away quickly to buy another (nobody repairs anything it is cheaper to buy another one) but in our cultural and social framework. It will be our way of living that will have to change completely, our values and our priority list.

Regarding Europe and the 70's I guess that something is escaping you: Europeans have a different mentality in what regards old things. If you go to Paris or Lisbon on the old quarters the plumbing and the houses are old but nobody would think of replacing all quarter by a new one, as they do in the US. Actually people like to live in old houses, houses with a past.

Regarding cars I remember those Thunderbird, Chevrolet Impala a Camaro and the like but we thought those cars were just huge, heavy and slow (here we called them American bathtubs).

Put any of those cars in a rally (that always were the preferred form of European auto sport in what regards road cars) and they would be ridiculously slow compared with the cars we liked, much smaller cars but much faster, except in a straight line. That kind of races in a straight line never said anything to an European. The cars that make us dream were the Renault Gordini, The Cooper S, the Escort RS, the Lancia Stratos, the Renault Alpine, those were the fast cars to an European, the cars we dream to have.

In the end in what regards cars it seems that it was the Americans that end up abandoning their idea of huge cars and come to the European and Japonese idea of a car, I mean in what regards size. Anyway today cars are still ridiculous: They have huge amounts of power that cannot use due to speed limits and they pollute much more then they needed to, for the use they have.

Any car with 120hp would be more than sufficient considering the speed limits and for that you don't need more than an engine with 1300cc. So why making a lot more pollution and waste more in resources having 3000cc engines, not to speak of some 6000cc American ones?

Just for status, the same as new cars or new boats. Of course this is going to finish and I guess that in the future someone that use a big engine with a power that is not needed will not only be severely taxed but looked has an irresponsible and a fool (no status anymore).

There is an old concept in Europe that did not die entirely but that is a bit at sleep, the concept of the "new rich". Really rich people in Europe, people that always were rich from generations, always tended to live modestly and to give importance to other things and not to public status ostentation. Only the "new rich" needed that ostentation and were looked by the others as people without class. I bet that in some years people that have big luxury cars with huge engines and change cars every year and boats every 3 years would be looked as the "new rich" and that would not give them status anymore, would just show bad taste and waste of ressources.

Regarding the Europeans sure they are in trouble now but they have already on its culture a more ecological approach regarding living and I think that can gave us more flexibility in changing to a new paradigm of living.

For instance here in Portugal, our electrical energy comes in a bit more than 30% from renewable sources and we heavily invest in research and development of means to produce energy from renewable sources. We export different systems, even to Arabia

Europe as an all is also much more focused on renewnable sources of energy and as you know the biggest research to produce atomic non poluttant energy is a joint European one. So in the end it is possible that Europe has already a head start.

Of course in the near future Europe will be in trouble till it manages to readjust to another way of living, but the crisis you see here will soon happen in US, Japan and in all the world. Even the Chinese will not have anybody to sell their products and will have problems too. Australia would not escape. it is bigger, it has more resources and less people so probably it would be less affected, but affected it will be, you can be sure.

I will bet that our grand children would look back and would think we were all crazy and irresponsibly in the way we lived.

I guess that consumerism/capitalism will have its days numbered, I don't know what would follow but certainly a more responsible way of living towards earth and the environment with a much bigger social responsibility, that is if on that transition the selfishness of some nations would not throw us on the claws of a global war that may well destroy us all.

How much of your energy comes from renewable sources?

Regards

Paulo

[SloopJonB]

Originally Posted by jzk

Not sure why a good boat won't last forever if properly cared for. What will happen to our Beneteau First 47.7 that will end its life? I have had 25 year old boats made nowhere nearly as well as the Beneteau, and they were far from the end of their life.

Totally correct - there are lots of fiberglass boats in use that are well over 50 years old and I daresay the boats from the boom period 1965 - 1985 make up the majority of boats (at least sail) on the water - the YOUNGEST of them is 26 years old now.

How come plastic is eternal except when talking boats?

[jzk]

[QUOTE=PCP;808381]I had said that in threads about economics but nobody seems to believe I am right: With the economic growth of China, Brazil and India the world has not enough resources to maintain the kind of living westerners have and allow for all those emerging economies to raise the pattern and quality of their live and income. This is obvious to me and is what is on the roots of these crisis and all the next crisis that are to come...fast./QUOTE]

What finite resources are we depleting? To suggest that standard of living is directly correlated with resource depletion is a fallacy. Consumerism and desire for the western standard of living is what will drive the global economy. We should be opening up markets to offer everyone a chance at it. As resources become scarce, alternatives are found. Water, for all practical purposes is an infinitely replenishing resource. When we "use" it, we haven't really "used" it. It goes somewhere and then comes back for us to use again. Energy is also infinite as far as we are concerned. For now, we use oil, coal, and gas, especially gas. North America has so much gas that there will be a glut of it for at least our lifetimes. Eventually technology will bring more efficient, cheaper, cleaner energy sources. Let that happen, but do not force it. Make current energy forms as cheap as possible in the interim.

[jackdale]

Originally Posted by jzk

Water, for all practical purposes is an infinitely replenishing resource. When we "use" it, we haven't really "used" it. It goes somewhere and then comes back for us to use again.

I would not be telling that to the Mexicans who USED to rely on the waters of the Colorado River.



I spend time each year in Yuma and see the massive canals that drain the water off for agricultural use.

[killarney_sailor]

Jzk, you are the eternal optimist, I assume you buy a lot of lottery tickets. Water is a huge issue. There are examples all over the world from the Colorado River mentioned above, to the Aral Sea to the Ogallala Aquifer. Farmers in the latter are already having to change their cropping practices because of concerns that the aquifer is running out. With many other resources, they are still avaiable but at higher prices as cheap sources are being replaced by more expensive. As someone said, 'the low-hanging fruit is all gone'.

What will the effect be on economic growth? I think there will tend to be a slowing in the developed world and probably an acceleration in the developing world, so long as resource availability continues and I am not as optimistic about that as you. I suspect that people in the developed world will, of necessity, spend less since the excess of recent decades is economically unsustainable. People are already saving more (reducing debt) and spending less. In the long term this is a good thing but in the short term it is a real problem for auto companies, boat manufacturers, tourism industry, etc.

[PCP]

Originally Posted by jzk

...

What finite resources are we depleting? To suggest that standard of living is directly correlated with resource depletion is a fallacy. Consumerism and desire for the western standard of living is what will drive the global economy. We should be opening up markets to offer everyone a chance at it. As resources become scarce, alternatives are found. Water, for all practical purposes is an infinitely replenishing resource. When we "use" it, we haven't really "used" it. It goes somewhere and then comes back for us to use again. Energy is also infinite as far as we are concerned. For now, we use oil, coal, and gas, especially gas. North America has so much gas that there will be a glut of it for at least our lifetimes. Eventually technology will bring more efficient, cheaper, cleaner energy sources. Let that happen, but do not force it. Make current energy forms as cheap as possible in the interim.

That's why I say Europeans have an head start. What you say, that is pretty much what the average American think, makes no sense to most European.

Regards

Paulo

[PCP]

Originally Posted by killarney_sailor

..

What will the effect be on economic growth? I think there will tend to be a slowing in the developed world and probably an acceleration in the developing world, so long as resource availability continues and I am not as optimistic about that as you. I suspect that people in the developed world will, of necessity, spend less since the excess of recent decades is economically unsustainable. People are already saving more (reducing debt) and spending less. In the long term this is a good thing but in the short term it is a real problem for auto companies, boat manufacturers, tourism industry, etc.

I agree, but it is more complicated than that. It would no be a big problem if practically all developed countries had not continued to live over their possibilities, borrowing money to do that and increasing deficit. They all were counting on a economic growth, that as you have said is not going to happen, to diminish deficit and to pay the huge amounts they owe .

When the creditors start to believe that the debtors will not have the means to pay what they own they will raise so much the interests that it will be impossible to maintain the situation, I mean to borrow forever maintaining a live standard that country cannot maintain anymore....and then it will happen what is happening in Europe.

To diminish deficit countries will have the reduce public services, pay less or fire civil servants, increase taxes and this will lead to a recession and to a huge unimplemented tax (Spain has 23%). And after that they still will have to pay what they own.

Eventually things will come to a new balance, where we all (developed countries) will be a bit poorer and will live with less, but that is just the first step, the second will have to do with increasingly more expensive energy (shortage of oil and water) and absolute necessity to control pollution. That will leave us even more poorer. Of course that is if we continue to live under the same paradigm: Consumism/capitalism and I don't believe so.

I am no Socialist and this is no political talk, it is an evidence that we have to change our ways in what regards consumption of no renewable resources. This will affect the type of consumerist society we live and will affect capitalism, as we know it, I don't know how but we need a more responsible society.

Regards

Paulo