Rick Kahler: Inflation and Consumer Price Index Not the Same

In this week’s article, Rick Kahler discusses the difference between inflation and consumer price index. Prior to 1984, the Bureau of Labor Statistics calculated the CPI as the average price increases (or decreases) of the entire value of a basket of goods i.e. food, clothing, rent, etc…”If a loaf of whole wheat bread costs $3.00 on year and $3.30 a year later, the price increase to the consumer is 10%. The following reasons are why the BLS then modified its calculation of CPI. If that loaf of bread increases in price, consumers can stop buying that bread, substitute it for a less expensive item, or a cheaper brand.  Another modification Kahler goes on to discuss more in depth  is the adjustment in quality. With his example of a Blackberry phone costing $400 five years ago and the latest version costing $400 today, there is far more power and better quality in the latter. The BLS will contend the cost of an equivalent Blackberry has fallen and
adjust the cost downward to reflect higher quality. “A simple comparison of prices for a fixed basket of goods, versus comparison with the BLS adjustments, gives a very different perspective on inflation”

To read this article in full please click on the link below:

http://financialawakenings.com/investment-updates/inflation-and-consumer-price-index-not-the-same

 

Rick Kahler: Market Value and Emotional Value

Rick Kahler discusses in the market value versus emotional value of physical possessions, particularly your home. He states that one of the most challenging aspects of selling a home is letting go of the emotional attachment to it. Being unable to detach yourself from a house or any physical object makes it difficult to sell at a reasonable selling price according to market value. To overcome this, he suggests acknowledging that the process of letting go is difficult and painful. Perhaps say goodbye in your own way and realize that the emotional value does not end when the home has been sold. By selling, you will pass on the potential of a high emotional value for the next owners, and with time and use they too will develop attachments of their own.

To read this article in full please click on the link below.

http://financialawakenings.com/
weekly-column/market-value-and-emotional-value#more-4961

Thread: CIF Course in China – Day 15

Wednesday, March 2, 2011, (Beijing DAY 3):

My alarm goes off at 5:45 AM. I have an ambitious day planned today and need to get started early. Breakfast service begins at 6:30 AM and I am there at 6:40. I am out the door at 7 AM on my way to the subway station 250 meters west of the hotel.

I had initially arranged yesterday for a taxi to meet me this morning and take me to the Great Wall at a point outside of Beijing. The hotel concierge would arrange that and estimated the taxi would charge 800 RMB ($123). I considered it throughout the rest of yesterday and when I got back to my room I did some Googling and decided to be a bit more adventurous. I canceled the taxi.

This morning I take the Beijing subway, unassisted, to a bus depot at Dongzhimen (2 RMB, or about 30 cents). Beijing’s subway is just as crowded, if not more than Shanghai’s. I stand out as a westerner and get a few stares. It requires a transfer
but I arrive without getting lost. At Dongzhimen, I board the number 916 bus heading north of Beijing to Mutianyu village. The spot is about 56 miles north in Huairou County. I luck out because this bus turns out to be an express bus.

Upon arrival in Huairou, several men are waiting at one of the first stops and when the back door of the bus opens they call me outside, and each bids to take me to the base of the Great Wall. I agree to 120 RMB (about $18) without negotiation. I almost certainly could have paid half that, but I’m already saving a ton by not taking a taxi from Beijing.

At the foot of the mountain, my driver guides me over to the ticket booth, suggesting I buy the chair lift ticket. I decline and purchase only the admission ticket. I intend to walk up the mountain. The ticket people think I am crazy, explaining it will take 45 minutes. The chair gets me there in 5 minutes! But to me, the walk is part of the experience and so I set out.

The climb is steep. It is colder here
than Beijing due to the elevation. Snow is still much more visible, but the sun is out and I believe the path will be clear of snow and ice. I am the only person climbing the stairs and I pause on occasion to take in the view. There is a fork in the path with a choice of Tower 8 or 10. I take the path to the right.

I’m thankful for my hours on the elliptical machine and stair master back at the gym, because I reach the base of the wall in about 20 minutes. I mount the steps up the wall and take in the view. There are only a few visitors here, which is one of the primary advantages of this selection.

The Great Wall got its start as a series of earthen berms constructed by seven different powerful kingdoms. It was turned into a wall only after the unification of China in about 220 BC. The wall uses the natural terrain and covers mountains, plains and deserts. This particular section was constructed about 550 AD, and the existing wall was built on top of that original section in about 1368. It
has of course been restored since that time as well.

The Wall was ultimately ineffective, as it was breached twice, the first time by the Mongols in the 13th century and the Manchus in the 17th. Nonetheless, it is an impressive feat and one of the Seven Wonders of the World.

I hike between several watch towers. These are constructed two arrows distance apart so that no section of the wall is unprotected. There are ramparts across the entire length which allows defenders to fire arrows upon attackers. Holes in the lower portion of the wall accommodate cannons. On average, the walls are 8 meters high and 7 meters wide. Stairs are sometimes shallow and wide, and at other points narrow and steep.

I had planned to hike back down the wall as well, so I had turned down the ticket offer down below for the chairlift. However, I now need to use the bathroom, and can you believe they have never installed plumbing or sewage lines along the wall?

I hike back down to the
point where the chair lift stops and purchase a ticket for the toboggan. Yes, you heard that right. I’m not waiting for the chair lift…I have to go! So I pay for a toboggan ticket, stow my camera and begin my descent. There are several signs along the path down directing riders to slow down. I ignore them and speed through the turns. The staff staked along the way yells at me, but I ignore them and lean into the curves. I make it down in about 2 minutes; hit the brake and dash for the restroom.

With that business taken care of I am free to stroll the souvenir stands and am amazed at how cheaply they are hawking t-shirts for. I don’t buy any because I am certain they will fall apart the first time they are laundered. I drink an Americano coffee then find my driver for the return ride to the bus stop. He offers to drive me into Beijing for just 100 RMB more, but I’m counting the bus trip as part of my adventure.

The return bus ride is not an express bus, and is standing room only the
entire hour and a half ride back. I get some photos, but I plug in my iPod headset and tune out for most of the ride back.

I am mindful in crowds to keep my wallet inside my coat breast pocket, and my coat zipped to thwart pickpockets. Violent crime rates in China are very low. There were 31,000 murders in China last year but none of them in Shanghai. So the entire trip I have not been worried about safety.

In the subway, I make the first train without incident. While waiting for the train at the second station, however, I am approached by a prostitute who wants me to take her back to my hotel. I firmly tell her “Bu” (Chinese for “No”, actually short for “bushi”) and shake my head. She lingers behind me so I move to another portion of the platform.

The train pulls in shortly and fortunately she does not follow me on this car. I make it to my terminal station and head back to my hotel. I will rest a bit and decide later what to do for dinner and where to go this evening.

n8:52 PM

I’m back from visiting the Wudaoko area, just a bit north of the hotel. It’s a shopping and night life area, not far from Tsinghua University. I hopped on the subway just one stop away and strolled around, sampling some of the food. The first item I had is sort of like a hot pocket, or as I recall growing up, a beerrock. Essentially it’s a thin roll filled with meat, potato, onion and spices. It was fresh from the oven and delicious. I ate it while standing on the side of the street watching people go by.

Before I left the hotel, I checked my directions with the concierge. He was very helpful and cautioned me to beware the traffic, that it is particularly dangerous in that area. This brings to mind: my general observation is that all traffic lane markings, traffic lights and even curbs and medians are general guidelines only. Pedestrians do not have right-of-way, and in fact must be on the defensive at all times, even when they have the light.

Bicyclists
are a breed unto themselves. Though not nearly as heavily used as say 20 years ago, they are far more common than in the US. It seems that riders either put on blinders or operate under the impression that they have a guardian angel protecting them because there are frequent instances when they are barely missed.

Back in the Wudaoko area I sample some other foods, but nothing as good as the first item. I stop in a coffee shop, order an Americano and a slice of cake (total 38 RMB, or just under $6). The bonus is they have complimentary wifi here and I retrieve a ton of work emails on my iPhone.

I had been able to get some wifi access in Shanghai, but nothing since I have been in Beijing. The usual complimentary wifi spots require a Chinese wireless account number. The government controls the Internet tightly, so I’m surprise that I am able to so easily get online with the coffee shop.

After finishing my coffee I head back to the subway and the hotel. I need to begin packing. I check out
tomorrow at noon, but won’t head to the airport until about 6 PM or so. My flight is at 9 PM. I have two specific sites in mind to visit, and one of those will be on the way to the airport. Other than that, I plan to sleep in and maybe hit the pool tonight before 11 PM.

Thread: CIF Course in China – Day 14

Tuesday, March 1, 2011, (Beijing DAY 2):

I head out early this morning for the Forbidden City. Learning from yesterday’s experience, I double-check the guide book and decide to enter the City from the back side, or the Gate of Heavenly Purity. The primary entrance is through the Meridian Gate (Wu Men), but that is where all the crowds will be queuing for tickets and entry. I decide to begin near the Pavilion of a Thousand Autumns in the Imperial Garden and work my way forward.

I rent the Audio Guide here as well, and begin my tour. The Imperial Gardens are amazing. There are trees that are hundreds of years old, rock gardens, and a general sense of tranquility (not least of which is due to the minimal number of tourists at this early hour).

I move forward to the Western and Eastern Palaces. The Western Palace is where the last emperor, Pu Yi, lived after abdicating the throne at age 7 (he became emperor at age 3).
He was ejected from the palace in 1924 by a Christian warlord. At the end of World War II he was arrested by the communists and imprisoned in 1950. In 1959 he was “pardoned” by Chairman Mao. He lived until 1967, when he died of cancer, childless and anonymous, working for 7 years as a gardener in the Beijing Botanical Gardens.

Throughout the grounds, there are depictions of Chinese dragons, which were reserved for the emperor. They are a sign of power. A number of walkways are sculptures with dragons. Only the emperor was allowed to walk there. One such slab is 10 meters long and weighs many tons. It came from a location over 100 miles away. How could a single massive slab of stone be moved such a distance with no machinery? The path was dug as a waterway. When the water froze, 10,000 laborers were used to push the massive slab all the way to the Forbidden City. It was a very expensive process and took over a month.

I take pictures and several locations, and on occasion ask a fellow
tourist to snap a photo of me with some object in the background. When I offer to take photos of them together, they instead choose to have one of their group photograph them standing with me! As a Westerner, I am almost as much a curiosity as the relics of the Forbidden City, apparently.

While examining the Hall of Supreme Harmony, we are approached by a security detail and told to move aside.  A foreign dignitary is being given a personal tour. Their contingent is surrounded by a group of ten or more security personnel while receiving a personal explanation of the large hall, which was used for special occasions such as the enthronement of the emperor. I take advantage of the time to chat with a fellow from France. Soon, we are able to resume our separate touring.

I spend about four hours in the Forbidden City. It is certainly possible to spend more. There are so many intricacies in the relics. The city possesses more than 1 million. I have pictures for posting later, including Chinese Lions
guarding the entries, bronze vats that used to contained water and were gilded with gold but were scraped clean by Eight Nation alliance (US and European) that quelled the Boxer Rebellion in 1900.

After my visit in the Forbidden City I exit to the South to Tian’an Men Square. I stroll the vast expanse but take no pictures. I had taken photos of the soldiers at the Ming Dynasty gate, from which Mao proclaimed the founding of the People’s Republic of China in October of 1949.

After leaving the square I walk west toward the National Center of Performing Arts (or, The Egg). I get a quick couple photos, walk into the entrance and then return to the street, The day had started at 25° F. but it has warmed significantly. While at the Forbidden City I had stowed my stocking cap and gloves. Now I put away my scarf as well and open the buttons to my jacket. It is a beautiful winter day!

I get back to the hotel, rest and make plans for the evening and for my travels on Wednesday. At 5 PM I head
out to the CCTV tower, the tallest building in Beijing, and the location of a revolving restaurant with a 360° view of the city. CCTV is the state run cable TV station. The original tower caught fire in 2009.

I arrive at about 5:30 PM, which is about when the restaurant opens. I get a couple photos from street level, and as I approach the entrance find a barrier blocking entry. It appears they have temporarily closed for some renovations, effective…today. Arggghh! Well, back to the hotel for alternative plans.

I lay out my clothes for tomorrow, including comfortable walking shoes because I will be going to the Great Wall. The whole day is a special adventure. I’ll provide more details after the visit, letting you know how it turns out.

Thread: CIF Course in China – Day 13

Monday, February 28, 2011, (Beijing DAY 1):

I awake and take advantage of the breakfast buffet. I’m in the restaurant early, around 7 AM, and it is already full. I am the only westerner. The other guests appear to be some Chinese, Korean and Japanese. I eat my filling at the buffet and head back to the room to start my day.

In the room I am torn what to do first…Forbidden City? Tiananmen Square? The Great Wall? I have a list of suggested things to do, provided by a colleague at work. I also have some feedback provided by Yifang while in Shanghai. In the end, I decide to just get out of the room and do something! I choose to visit the Temple of Heaven.

The bellman flags a taxi and when I get in and ask to go to the Temple of Heaven, they ask me which gate. Apparently there are four of them. I flip to my guide book and just guess and point to the West Heavenly Gate. I figure one is as good as the other. I then
begin to re-read the guide book and realize, maybe not….The Temple of Heaven was completed in the Ming Dynasty, and it was here the emperor would make sacrifices and pray to heaven and his ancestors for a good harvest. Well, most of the good sites, are near the north and south gates.

I get dropped off, pay my entry fee and rent a set of audio guide headphones. The audio guide detects when you are near a specific location and gives you information about the history and cultural significance. As I enter the park, I observe a group of Chinese women to my right exercising to music. It’s not exactly aerobics, but it’s interesting to observe.

The ground is still covered with snow and ice in some patches. Though the sun is out, it is very cold and I have to wear gloves, a stocking cap and a scarf. I walk through a park area and see another group of women kicking a sack around. It’s like hacky-sack, but the bag has fins. I see other older people walking and stretching.

As I stroll next
to a wall with nothing of particular architectural interest in site, I think I picked the wrong entry. The entry is near the Hall of Abstinence. I have never been very good at that, so I should have taken that as a sign. Just then, I see a group of old men sitting and playing musical instruments, similar to a violin (with a bow) that produces what one would think of as traditional Chinese music. I observe for a while and as I resume my walk, an older gentleman walking the same direction is humming to the music.

I soon get to the area where the Hall of Prayer for Good Harvest is located. It is striking in the colors and design. The circular roof is blue, representing the color of heaven. The interior and exterior walls are red, which represent the emperor and empress. The ceiling is ornately adorned with dragon and phoenix. It is constructed entirely of wood, without use of a single nail.

There are other structures on the grounds. Marbles steps, stairs, columns, and beads on doors are number 9,
or factors thereof. Odd numbers represent yang, the preferred masculine element, and 9 is the ultimate odd number.

I notice more people are staring at me here in Beijing as compared to Shanghai. Westerners are present, but not as frequently. The opposite of staring is sometimes true, as well. In some cases, the people behave as if they do not see me, and cut in front of me in line. For crying out loud…I’m 6’2” and 180 pounds. Do they really think I believe they don’t see me???

I make a pit-stop in the restroom. I won’t talk about toilets this time. Rather, I notice that despite the no smoking signs, it is very common to be overwhelmed by the odor of cigarettes in public toilets. This was true even in public buildings like shopping malls, where smoking was not permitted. Though the largest producer and consumer of tobacco in the world, China is making an effort to reduce smoking.

They are also addressing another public nuisance, which is spitting. It is very common. In fact,
even in the bathroom, men will just spit on the floor, even if a sink, urinal or toilet is right there! Again, this is not true for all Chinese, but common enough.

I tour the rest of the grounds, including the structures near the South Gate. After I leave the grounds I turn East and walk a few blocks to a major thoroughfare. The area is down at the heels and I walk past older buildings, shabby apartments and small shops. I get to a more commercial area and stop for lunch at a fast food noodle restaurant. The meal is quite good.  A big bowl of noodles with beef and vegetables, a small soda and some side garnish vegetables for 25 RMB (about $3).

I catch a taxi over to Wangfujing Street, an area recommended for shopping. The taxis in Shanghai has been almost exclusively Volkswagen Santanas, In Beijing, the vast majority of cabs are Hyundai Elantras. I do see a few VW Jettas, but no Santanas.

The shopping area includes shops on two sides of a broad walkway. There are cheap souvenir
stands and licensed shops selling over-priced goods from the 2010 Shanghai Expo. There are brand name stores, which I know will have items priced way above what they cost in the States, due to import tax.

I find the side street where they sell skewers, delicacies and a variety of foods. I’m still full from lunch so I pass these by. After looking for souvenirs and finding nothing of interest, I catch a cab back to the hotel. I take a quick nap, then go to the gym.

It turns out there has been a bit of a hubbub here Sunday, and again Tuesday when Chinese security agents roughed up some foreign journalists and smashed their camera equipment. Apparently this mall was the planned location for some protestors, though the protests never transpired. I think I’ll give the area a wide berth the rest of my stay…

I have dinner at the hotel in the buffet and overeat, canceling out the benefits of the gym. I tell myself I have walked a whole lot and could have those three pieces of dessert AND
the ice cream with no ill effect, but I’m not convinced. Maybe I’ll swim alter.