Category Archives: Guest Contributed

Where Is George Bailey?

Casey Stengel

From the moment we landed in Beijing a year and a half ago I have worked to understand more about the real estate market in China, and more specifically the market in our second tier southern city. Many of my Chinese colleagues at the university have recently purchased a house or are in the process of doing so. Their comments about buying a house are many and varied. Some, who are first generation off the farm, are bewildered by the process and the price. Others, who are a bit more real estate savvy, are already figuring out how to get around the laws against owning more than one house even using a mortgage comparison website to find what they need to get buy their home.

For those readers in the US we should clarify some terms. When Chinese people talk about buying a house, and when we discuss the housing boom, we should have a picture of an ‘apartment’ in our minds. Individual houses like those found in American suburbs are not being built. The government is carrying out a policy of urbanization and the cities here are growing larger. Suburbs look like small cities on the outskirts of big cities. Urban sprawl does not include subdivisions with split levels, front yards, lawnmowers and mini vans. A subdivision here looks like a cluster of 8 to 10 twenty five story high rise apartment buildings. Some subdivisions have 2-3 story townhouse buildings scattered throughout the high rise complex.

Recently as we took a taxi from our campus to the center of the city, a 7 kilometer drive, I counted fifty five tower cranes situated on new construction sites. These projects ranged from those which are two months from completion to those which are not even out of the ground. There are a lot of construction sites and I could only wonder at there safety regulations that had been put in place for workers and pedestrians, just in case anything were to happen. Construction accidents can happen from time to time, that's why it is now so easy to get an attorney to help you if you are injured. A total of fifty five projects just along one main road leading into the city. There is a whole new section of the city across the river that is growing even faster. I have never seen the scale of building construction anywhere to match this and it appears to be mostly residential construction. Reports of a slowdown in the residential construction market are beginning to surface from some big cities, but the construction boom will continue in our city for at least another two years.

My Chinese friends tell me that houses are expensive. In our second tier city, prices range from 8,000 to 10,000 Renminbi (rmb) or $1,280 to $1,600 per sq meter. This is for new construction and it does not include anything but a concrete shell with windows and doors as well as plumbing and electrical rough in. You want it ready to live in? They call that decorating and it will cost you another 200,000 to 800,000 rmb ($32,000 to $128,000) depending on your tastes. Tile floor, light and plumbing fixtures, appliances and draperies can increase the sq meter price significantly. In fact, when everything is added up the cost is out of reach for most Chinese people.

So who is buying? Investors, many of which are small time mom and pop types who see an opportunity. Unfortunately they failed to get the memo saying the big run is almost over and they bought near the top. Consider Iris who took the profits from the sale of her first house and plowed them into a house being built next to the campus where I teach. She put 50% down and can easily make the mortgage payment of 2100 rmb ($336) per month. However she can’t afford to decorate the house which is not a problem because she already has an apartment on our campus. She says she will let her future husband pay for the decorating. I hope she has a long term vision for her investment because she stands a good chance of being underwater in the near future.

Wanting to get the real scoop on what is out there I charged my phone, started the Google translate app and went out house shopping. An American in his mid fifties dressed for success is welcome to look around and kick the tires. I focused on the two-story town homes next to the high rise houses. They were stylish on the exterior, and the landscaping would be acceptable anywhere in the USA and was in fact quite beautiful. Inside they were plain cold concrete walls and stairs. The layout was open and if you could imagine the finished project they seemed like a nice place to live.

I wandered on over to the sales office located in the clubhouse. After establishing that I didn’t know much Chinese and the sales lady didn’t speak English we got down to business. I suspected she could read, but not speak English, which was in fact true. I would write some things and then go to Google translate for the more difficult words. She got out a sales brochure and started filling in the vital info. 120 sq meters, 9000 rmb ($1,440) per sq meter. Simple enough. “Decorating and financing was my job. She was only there to close the deal.” (Ok I imagined the last part because I had no idea what she said at the end.)

Quickly enough I figured I could have a nice place to live for about $210,000 USD. Not bad really, by US standards at least, but what about local folks? This is the part that loses me. I just don’t see an unlimited number of people here who can shell out 600,000 rmb ($96,000) for the down payment on a 1.2 million rmb ($192,000) house. A week later I toured a new house which was finished. 2.4 million rmb ($384,000) was the final price. It was being rented for 3000 rmb ($480) per month. Oh, and by the way, I am told the law states that the buyer can only own the house for 70 years.

As I shopped around all I saw was new construction tailored to those with some serious money. A large percentage of buyers are investing rather than living in what they purchase. I had a nagging question in my mind; why is no one building starter houses for those with a smaller down payment, but the ability to meet a mortgage payment of 2200 rmb ($352). Where is George Bailey? Is Mr. Potter the only game in town? The rich will buy and all others will rent?

We read reports every week about the decline in construction within China. Commodity prices are falling due to decreased demand. Reports about ghost cities and falling real estate prices abound. Recently a 29 year old entrepreneur was discussing with me his plan for moving up to one of the 1.5 million rmb ($240,000) houses. He will sell his current house which is in a good location and use the 300,000 rmb ($48,000) profit to help give him the proper down payment. When I asked him about the time frame for this big move up he smiled. Prices on new construction are coming down, he said. I will wait till they come down to bargain levels.

It is apparent that the market will sort this out. Prices will come down and more people will be able to afford to enter the market. Or so it seems. When I proposed to an economics professor a combination of factors which would soften the hard landing of the real estate bubble he agreed that they would help. “But”, he responded, “We never know what those in charge will mandate. For that we need divination, not economic science.” I am watching carefully to see if the next big thing in Chinese real estate is the construction of starter houses for those who are actually ready to live in the house they buy. This is potentially a massive market.

And finally, as my conversation with the 29 year old entrepreneur was drawing to a close he leaned forward to give me some advice. “Poor people use banks to save money. Smart people borrow from the banks in order to make money.” I responded with my most astonished, “Really?” Inside I was thinking that, yes, I did waste my time reading books about the communist economic system. In China it looks a whole lot like capitalism.

Casey Stengel

07-01-2014

Guest Contributed

Hydroponics With The Urban Pepper

5 Comments

A Step By Step Guide To Setting Up Your Own System

The Urban Pepper

I could only read so many articles about GMO processed foods, hidden inflation, just in time inventory systems and worldwide droughts before I came to the conclusion something was very wrong. In my opinion there are massive problems coming down the road and after much consideration it seemed the only logical thing to do was to start a garden and change myself. Easier said than done and I’m not there yet. But I progress step by step and one day at a time.

The garden is a big part of my life now and I spend a great deal of time tending to it. I gave up TV, fast food (90%, not there yet) and I gave up drinking. What I do now makes me a happier person. Gardening has helped teach me patience and a love for all things.

If you want to get to know your neighbors better I highly recommend starting a garden. Having done so I now know all my neighbors by name and most of them have gardens as well. A new neighbor was walking his dog past my house and stopped to comment on my garden. We introduced ourselves and I gave him a couple of pepper starter plants. So gardens are a great conversation starter as well as common ground to build upon your local community.

After gardening for three years, mostly in containers and raised beds, I came across a video about Dutch water bucket systems and I was impressed. They were named "Dutch" because you build the system yourself. You can buy them ready-made for about $15 or you can build them for about $9 each.

The system is expandable so you can start off with just a few and add more at any time. I started with five on a covered porch that gets very little direct sun light. By building them myself I developed a better understanding of how and why they work so well.

Please note that the system must be installed under cover to prevent the rain from diluting the nutrient solution and it is best if the covered area is facing the sun.

Two gallon buckets and lids can be purchased at Lowe’s or Home Depot. You may be able to acquire some for free at local restaurants where they often discard them. It’s recommended that the buckets be darker in color to keep the algae manageable. The buckets I used last year are white and and they were fine.

Drill a hole about two inches from the bottom of the bucket to accommodate a 5/8’s Inside Diameter (ID) rubber grommet. This will provide a sealed hole for a 3 inch long ½ inch CVPC (plastic) tube. Insert the tube through the grommet hole so half is in the bucket and half is outside the bucket. Attach two 90° elbows of ½ inch CVPC, one on each end of the tube, both facing down.

Cut a 3 or 4 inch hole in the bucket lid and cut a slit from one side to the other of the lid with the hole in the middle. This will allow you to maneuver the plant through the hole and slit in the lid later. You will also need a 5 gallon paint strainer net. This is used to contain the Perlite as explained below. Place this strainer net inside the bucket, then put the modified lid on the bucket. The plastic elbow inside should be on the underside of the net. They should look like this when completed.

Bucket Building

Once the buckets are done, it is time to create the water reservoir. I used a 27 gallon plastic storage tote, approximate cost of $10 at Lowe’s or $8 at Costco. The tote will house the water pump ($15), nutrient solution and air stone ($15). I prefer to use this type of tote (see image below) because it is easy to drill through. Place the pump in the bottom of the tote and drill a hole in the lid to accommodate the hose from the pump near the backside. Drill another hole for the power cord. Only one pump and tote is needed to feed up to 10 buckets.

Tote with fill hole and pipe installed to allow for nutrient water replenishment without removing the cover

Inside the 27 gallon tote with pump installed

You will need to drill a hole in the lid or the side to accommodate the ½ inch CVPC drain tube that will be connected to the buckets.

Tote lid with pump and drain lines drilled and filled

Once you have all the holes drilled and everything is in place, you can connect the ½ inch CVPC drain tube with the ½ tee to the elbow on the bucket like the picture above. I chose the ½ inch CVPC plastic plumbing pipe because of the low cost and ease of working with it. You do not have to glue any of the CVPC plastic pipe and fittings together because it is used for drainage only and the pipe is not under water pressure. Space the buckets about 12-18 inches apart.

Tote drainage setup

Take the hose that is connected to the pump and run it along the backside of the buckets and cap off the end of the hose. Make sure the cap or plug is secured with a hose clamp because the line is pressurized. The thin black lines going into the top of the 2 gallon buckets are called feeder lines and these were purchased at a hydroponics store for about 20 cents each. They have pointed ends that poke through the pump hose fairly easy, or you can use a needle to start the hole. Push the feeder line into the pump hose about a ¼ of an inch. The hose will seal around the feeder hose by itself.

Bucket setup. Note the water reservoir/tote with pump and connections under the buckets.

At this time you should fill the reservoir with the nutrient solution. I use a product from the hydroponics store called Aqua grow bloom developer 9-21-12. The cost was $90 but it makes 2500 gallons, enough to last many years. I also add Miracle Grow organic choice plant food. The mix ratio I use is 1 teaspoon per gallon on both mixes and I use a 1 for 1 ratio of Agua grow bloom and Miracle Grow plant food. At this time fill the tote 1/2 full, then add 1 gallon of water and a table spoon of Epson salt to the tote. This will help the ph level. The solution should have a light brown tint. I think the hardest part for me was getting the correct nutrient solution. I had help from the guys and gals at the hydroponics store for that.

Finally, it’s time to test the system. Plug in the pump and air bubbler and check to see if there is solution coming from the feeder lines. Let the system run for at least 15 minutes so the buckets begin to fill. As the water level in the buckets rise to the level of the drain elbow in the bottom of the bucket, it will start to drain back into the reservoir.

This is where you will discover any problems with drain pipe leakage or feeder line blockage if there are any. Feeder line blockage can be fix by removing from feeder hose and blowing through it to clear any obstructions. Leaks around the CVPC connections can be fixed by making sure they are tight and fitted correctly. The system can not have any leaks what so ever.

Nutrients

Next fill the buckets with Perlite. Have a gallon of mixed nutrient solution handy during this process. If you are filling the buckets with dry Perlite, then add the nutrient solution to moisten the Perlite as it’s filling. Fill to about 1 or 2 inches below the top of bucket without the lid on.

At this point the Perlite should be soaked with the nutrient solution. Create a hole with a stick or dowel all the way to the bottom of the bucket. This is where your roots will live. Repeat this process with the rest of the buckets. This is why you only fill the water reservoir half way, because as you’re preparing the Perlite buckets, the nutrient solution you are using to moisten the Perlite will fill the other half.

Ready to plant with Perlite and hole

When you put your starter plant down the hole in the center of the Perlite you want to make sure the roots are as clean as possible. You can gently rinse the dirt and debris from the roots. Once they are clean, insert the roots into the hole and use the the dowel or stick to gently push them down. Be careful not to tear them from the plant.

Then use the existing Perlite to fill in the hole where the roots lay. Be gentle while filling the hole with Perlite so you do not damage the roots and plant. You can now put the lid with the hole and split in it on the bucket. Gently place the hole in the lid around the plant, then secure the lid onto the bucket. If you don’t have a split in the lid, it’s harder to put the lid on and around the plant, also for fixing future problems as they arise.

Plant in bucket with Perlite

Place the remaining plants in your buckets and don’t forget to put the feeder line into the hole in the lid so the solution pours directly on the roots. There is a little stake that will hold the feeder line in place right above the Perlite in the center of the bucket. The little stake can be replaced with a 4" long piece of CVPC to hold and guide the feeder line above the roots.

An outdoor timer and power strip will cost around $20. Set them to run 30 minutes 4-8 times per day. I have 15 buckets plus a rail system that only requires 6 gallons of water per week for 20 plants. Another cost benefit is that you use Perlite rather than soil. A large bag of Perlite is $12 and will fill every bucket with some left over. The growth rate is awesome and the plants are healthier. With this system it takes the hardest part of the equation out of gardening. Watering in my opinion is the biggest challenge in gardening.

Another great benefit to a system like this is all the different variations you can create using the basic components and ingredients. I have three friends who were inspired by my setup and they all did different things with similar setups. The common denominator is that they all work.

A Word on Indoor Gardens to Start Your Plants

I started an indoor hydroponics set up in November of 2013 because I always hear people talking about starting plant indoors out of season. I took a little drive to my local Hydroponics store and picked up a few grow lights. The two light sets I got were T-5 four bulb fixtures @ $140 each. Grow trays were $3 each and rock wool slab was $13 each. Each rock wool slab can start 98 plants and each light accommodates 196 plant starts. I turned one of the extra bedrooms into a grow room and now have 7 lights. I also picked up a little window AC model for $60 to keep the room temperature constant. You don’t need all this stuff for one or two lights.

Inside my indoor grow room

By starting the plants inside, it gives you time to prepare your garden outside.

I also grew lettuce inside during the cold winter months of Nov, Dec and Jan, which was real nice. I will grow the lettuce inside again when it gets too hot during peak summer heat. With one four foot light you can start 196 plant starts in two rock wool trays. Think about all the different variations you can create with just one grow light.

Rock wool tray indoors

I guess the entire point of this exercise is to ensure that I am growing my own produce in an organic environment. There are a lot of claims out there regarding organic produce. The only way to know for sure what you are eating is to grow it yourself.

Indoor lettuce

The Urban Pepper

Guest Contributed

Chinese Consumerism – Where Gold is Money

9 Comments

Chinese Consumerism

Where Gold is Money

Mr. & Mrs. Casey Stengel

In 2012 Mrs. Stengel and I retired from our jobs and, being debt free, began looking for an adventure. We pondered about where in the world we would like to go, and after no small measure of deliberation settled on China. We jumped through many hurdles to secure a teaching position at a university and soon began our adventure. Each day reveals something new to us about this culture and its people. China is such a fascinating place that is changing at breakneck speed; so fast in fact it is hard to keep up with the changes. In his book “China Road” Rob Gifford writes “if you’re not confused about China you’re not paying attention.” Amen to that.

Recently I was on a domestic flight within China. The flip down seat back TV screens were showing short documentaries with cultural and educational themes. Imagine my surprise when I saw pictures of Ulysses S. Grant, some gold coins, and the picture of another man who I learned soon enough was Jay Gould. The folks on this flight were being educated about gold coins, gold as money, agricultural commodities, and farmers being paid in paper notes instead of gold coins. By the end of the clip, passengers were made aware that there are powerful people in the world who will exert influence over government leaders so the rich and powerful can profit from manipulation.

Any farmer on the flight learned to never trust a banker who wants to ‘help’ them and they were all made aware of the fact that Gould bought a bank through which he could run this scam. The video ended with Grant realizing that Gould had played him like a fiddle and the only thing missing was a picture of Gould rotting in prison. Oh wait…rather than go to jail he went on to own a railroad after the Gold swindle. I wonder why the powers that be over here want their citizens to know the history of gold manipulation.

In the land of the free and the home of the brave, Bernanke says that Gold and Gold Coins are not money. In the most populated communist country on earth, the masses are being educated about how Gold is good money and how rich and powerful people will manipulate it. Truth is stranger than fiction. You cannot make this stuff up.

One of the best parts about teaching in China is the friendships I have with colleagues at the university. They want to talk about the United States, but surprisingly are not very interested in hearing what I think is wrong about the direction the US is headed. Such talk would shatter their dream that there is a place where people are free. Many of them would jump at the chance to visit America, and some of them would want to stay there. Others would enjoy the visit and then head back home. They are solidly middle class and they like it.

I have been talking to an economics professor about fiat currency, gold, real estate, and economic trends in China. (I surmised that he’s well connected because some of the things he said I read about on Zero Hedge six months later). He told me that China will slowly transition to a consumer based economy. As I try to wrap my mind around this economy and the middle class I’ve observed three things.

First, the economy here is solidly capitalist, and by comparison the US is socialist. I’m not kidding about this. People are free to start businesses and make all the money they can. I am sure there is order to it all in the typical Chinese kind of way, but it can look like a capitalist free-for-all sometimes. Regulations are minimal, though from a safety standpoint they could use a few regulations. In fact I have been encouraged to open an English language school here in China. There are expat teachers here making three times their regular salary operating a school on the side. No problem either because it is encouraged.

Second, there is a growing and happy middle class who are not far removed from the nightmare of the Cultural Revolution, so they appreciate their new found wealth. I have been asking the same question to many different people I meet here. “What is considered middle class and are you middle class?” Responses include owning a car, buying a home, and making the equivalent of $1000 to 3000 per month (in our 2nd tier city). For me who grew up in the 60’s and early 70’s America, it is like watching a rerun on television.

As The Powers That Be steer this country toward a consumer based economy, this middle class will drive the economy. Hundreds of millions of people are middle class, happy, and have no idea they are pawns. The malls here are over the top as far as technology is concerned. There is a 200 foot by 50 foot giant screen on the ceiling of the mall entrance. Shopping is entertainment. (Does this sound familiar? You know where this is headed.) And right on cue, I saw this billboard in Beijing.

Third, the negative effects of the global economy have begun to show up here. I was talking to an Ag student about his family and home, and after telling me the usual family information he said that the government was against his father’s farm. Oh? How so? His father runs a small pig farm with a total of fifty sows while employing three workers. His farm needs to receive 8 yuan per unit of pig weight to show a profit. About 2 months after the acquisition of Smithfield, the price of pork went to 7 yuan. The government, he said, would not subsidize their domestic pork and was therefore against them. The family was pondering any and all possible options to save their business.

When I saw the student two weeks later I asked what his father had decided to do. The student told me that his father had laid off all three employees and was doing all the work himself. ‘Ironic’ does not begin to define this scenario. Coming from a small business agricultural background I could understand his dilemma and the financial stress it brings. I thought about asking him how it felt to have a business threatened with closure because of cheaper imported products, but I did not. Even if I asked the question in my most sincere voice, it could be misunderstood as gloating and I did not come here for that. I really didn’t need to ask, I could see the answer in his eyes.

I also didn’t tell the student that we had a lot in common. Back in the late 90’s I was developing a growing honeybee pollination business and was picking up more pollination contracts each year from the apple growers in our area. Those contracts provided a nice supplement to my income. In 1999 I saw my business shrink as growers went out of business. When I questioned a big grower about the future of the orchard industry, he talked about China dumping massive amounts of apples on the juice market and effectively shutting off a needed source of revenue for American producers. I shook my head as I drove home that evening. I could not believe that people in China could really have an effect on such a small time beekeeper in the U.S. Welcome to the global economy.

I appreciate the work that Cog and Mrs. Cog are doing to provide a venue for those of us who are just figuring out how to articulate what’s going on, and how we navigate this brave new world.

04-25-2014

Mr. & Mrs. Casey Stengel