These people (the U.S. government) need to be stopped. Every time we get ourselves into an economic mess, there’s usually some milestone idiocy we can point back to as the government action that made the meltdown inevitable.
Take the current housing crisis that has now spread to the financial markets in general. The cause was too-easy credit that fueled a massive increase in housing prices as people bought houses they couldn’t afford with mortgages they weren’t able to pay off.
In 1999 there was roughly $5 trillion in total U.S. mortgage debt. That number ballooned to $12 trillion by 2007, and we know what happened from there (data is from the U.S. Office of Federal Housing Enterprise Oversight). To put this into perspective, total U.S. GDP is about $11 trillion annually, and U.S. government debt is around $9 trillion. If the housing market really falls apart (meaning more than conservative estimates of a 20% drop), there’s no way the government can simply cover these losses.
Why did it happen? Let’s go back to 1999, when Fannie Mae, the nation’s biggest underwriter of home mortgages, was under pressure by the Clinton administration to find a way to get more loans to “borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans.” A pilot program was launched, which soon became general policy. Money flowed to people who couldn’t afford to pay it back.
These new policies came on top of previous changes in the 90’s that let consumers get zero-down payment loans.
In a 1999 article that now looks absolutely insane, the New York Times reported on the easing of credit terms. Fannie Mae Chairman Franklin Raines, who’s quoted in the article, was all sunshine and roses as he threw away the financial future of millions of Americans. But at least one person. Peter Wallison, had a good idea of how this would all play out:
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
Too bad nobody listened to that guy.
I went to college at the University of Michigan. During my freshman year, before any of us had really started to venture far beyond our dorm, a friend dubbed Ann Arbor "teen island," referring to the odd feeling of being in a place where everyone was the same age and at the same stage of life. Everywhere you looked you saw yourself reflected back. I never experienced that sensation again in quite the same way until we moved to Beijing and landed in a compound where it seemed everyone was Western, just turning 40 and had two or three kids between two and 10 years old.
This crew, which has been at the center of our social life here, represents the classic expat population -- successful people in midcareer who have been exported, generally at great expense to their employer, to establish a beachhead or expand market share in a foreign land. But these old school mainline expats may be endangered. There is another, growing group of expats in Beijing who are younger, more willing to move around and less expensive to employ.
Talk With Alan
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Did you move abroad in your youth? Where did you go? And what inspired you to go there? Share your thoughts.
Beijing and the rest of China have seen an explosion in younger expats because the region has been so economically and culturally hot. Many people come here post-college, some simply to experience the place; some to learn the language or put into practice their college China Studies classes; and others simply because they want to punch the China ticket and give their career a boost.
But the trend towards younger expats is not exclusive to China. "It is a noticeable change which is often discussed by people in the relocation business," says Geoffrey Latta, Executive Vice President of ORC Worldwide, a management-consulting firm. "Companies are interested in sending younger people abroad because they are cheaper and simpler to move, with less family entanglements. And more young people are interested in moving because virtually every field is becoming more global."
These changes are beginning to be reflected in the data, such as it is. The 2008 GMAC Global Relocation Trends Survey of human-resource managers shows that fewer expats are married and have kids than in past years.
"Companies are basically saying to up-and-coming employees that they value international experience and young people are much more open-minded about it than in the past," says GMAC's Scott Sullivan. "In fact, they are often aggressively pursuing these opportunities, sometimes even at cost to themselves, or at least accepting much lower expat packages. They see it as a way to get experience and become more marketable."
The GMAC survey only reflects people who have actually been moved abroad by employers, but there is also an exploding population of "halfpats" -- people who travel on their own. Many of them end up getting onto a career track, even if they arrive overseas initially as students, interns or even backpackers.
![[Younger expats]](http://s.wsj.net/public/resources/images/OB-CH593_expat__D_20080911101202.jpg)
Maria GuimaraesMaria Guimaraes, a public relations consultant from Portugal, is one of a younger breed of expat professionals. She came to Beijing for a three-month internship and stayed.
Beijing is filled with college students and recent graduates studying Chinese at a university or teaching English as they feel their way around the city. Many of them spend some time here and then head home or off to further travels, but an increasing number seem to be sticking around and launching careers, often finding it more fertile soil than their homelands for advancement and experimentation. Because they are often seeking entry-level jobs and generally don't have houses full of possessions to move or kids to educate, they neither expect nor receive the large expat packages that have always made it so expensive for an employer to send someone overseas.
Maria Guimaraes, a 28-year-old Portuguese who came to Beijing for a three-month internship three-and-a-half years ago, now works as a consultant at Ogilvy Public Relations.
"I think three years work experience in China is the equivalent of twice that in Europe because things move so fast," she says. "I have been given a lot more responsibility and worked in a lot more different environments. I don't think Europe or America offers such opportunities to people just starting out."
"And that's in the best of times… right now the job market is not good in Europe. It is difficult for graduates to even find opportunity to prove themselves. China offers more possibilities. I am making two or three times what I would in Spain or Portugal and just learning so much more. This is a tremendously exciting place to begin a career."
Chad Tendler, 28, has worked for Prudential PLC in Hong Kong for three years, after four-and-a-half in Beijing. He came to China after graduating from New Jersey's Drew University, where he studied Mandarin, in 2001. Not seeing a lot of career opportunities in the U.S. in the aftermath of the dotcom bubble burst, he decided to return to Beijing, where he had studied for one semester.
"I just thought spending time overseas would be a great interim move," says Mr. Tendler. Instead he has found a career and a lifestyle he never pondered. He sees himself as part of a growing trend.
"Traditionally there were two main ways for a young person to spend considerable time traveling and seeing the world," says Mr. Tendler. "It was either backpack travel, maybe teaching English so you can get a stipend to stick around some place, or it was the Peace Corps. People still do both of those things, but I think increasingly new graduates are also looking at job opportunities overseas. And they are out there."
Alex Chen, 30, is another young American who has found unexpected career opportunities in China. Now the communications manager of the Opposite House, a luxury boutique hotel, he worked as a producer at the Food Network before leaving at age 26 to study Chinese for a year in Beijing.
"My parents are from here originally and I wanted to be able to communicate with them better in their native language as they got older," he says. "I didn't have a plan beyond the study but living as an expat presents opportunities to reinvent yourself and see what else there is to do out there."
Before landing his current job, Mr. Chen worked for a publishing company and for Warner China and he had little difficulty making these career changes here.
"I could have stayed in the U.S. and been a relatively good television producer, but I wasn't sure I wanted to do that forever," he says. "Coming here has allowed me to have some really interesting jobs and then move on to something else."
Obstacles remain. Longer-term visas have become harder to obtain in China. Many of the visa brokers often employed by halfpats have been shut down and there are rampant stories about expats without full-time employment having to leave China, at least for a while. But there is a widespread anticipation that at the end of September, when the Paralympics are over and this extended Olympics period finally ends, things will lighten up again.
Immigration restrictions can largely be overcome with a good job, but all of the young expats I spoke to think that the golden age of job seeking in China may be over; many opportunities still exist here, they say, but there is more competition. More local Chinese now have good English skills and a higher level of comfort operating in a foreign environment. And more and more young Americans, Australians and Europeans have figured out all this and are coming to China -- and more of them have good language skills, as studying Mandarin becomes more popular.
"The novelty of being a foreigner is really wearing off in Beijing and Shanghai," says Mr. Chen.
