"A test drive here of the Lifan 520 sedan showed it to have an impressively sturdy body with no rattles or wiggles even when traveling over very rough pavement - although this is no guarantee of long-term reliability. There is ample headroom in the front seats and even the rear seats for a 6-foot-4 occupant.

"The $9,700 price tag includes leather seats, dual air bags, a huge trunk and a DVD system with a video screen facing the front passenger - a combination that could cost twice as much in a comparably equipped midsize sedan in the United States."

That's the New York Times describing China's growing auto industry...another symptom of the relentless Exodus of wealth from the West to the East.

And repeating a comment from yesterday's Daily Reckoning:

"Mr. Yin has no doubts that China can also compete with the United States.

"Americans work five days a week, we in China work seven days," he said. "Americans work eight hours a day, and we work 16 hours."

Given a choice, and all other things being equal, where will the shrewd capitalist decide to put up his factory? Until recently, you see, all other things were not equal. China was a communist country. It wanted nothing to do with capitalists. But now, China is a communist country that wants to get rich. They are laying down the red carpet for capitalists and opening bottles of champagne when they show up.

Americans are so sure that everything is going their way - doesn't everyone want to be an American-style entrepreneur, they say to each other
- they don't notice that wealth is steadily going the other way, slipping away from them. The triumph of their creed is the defeat of their own selves. In a world of globalized, capitalistic competition, people can't expect to earn more than the market rate for their labor. A guy in Detroit should earn about the same as a guy in Guangzhou. This is good news to the fellow in Guangzhou; but it will come as bad tidings to the UAW member in the Auto City.

But who cares? How many UAW members are there? It's a dying industry...yesterday's enterprise...archaic...antique. It's the Old Economy. Remember, the buggy industry went out of business, too. We were all better off afterwards. Progress! Creative destruction!

But the destruction of America's productive industry may not be progress at all. Because America's factories are not being replaced by new and better industries, the loss is merely disguised by debt and delusions of grandeur.

But don't worry, dear reader. Congress is on the case. "The U.S. Senate is jumping on board the competitiveness issue," says a recent headline. Again, Paul Craig Roberts tells the story:

"The Bush regime and the doormat Congress have come together in the belief that the U.S. can keep its edge in science and technology if the federal government spends $9 billion a year to "fund innovative, big-payoff ideas that have the potential to transform the U.S. economy.

"The utter stupidity of the 'Protecting America's Competitive Edge Act'
(PACE) is obvious. The tremendous labor cost advantage of doing things abroad will equally apply to any new 'big-payoff ideas' as it does to the goods and services currently outsourced. Moreover, U.S. research is open-sourced. It is available to anyone. As the Cox Commission Report made clear, there are a large number of Chinese front companies in the U.S. for the sole purpose of collecting technology. PACE will simply be another U.S. taxpayer subsidy to the rising Asian economies."

Like the U.S. Empire itself...for isn't it the American taxpayer who pays to maintain order throughout the world? Isn't it this order that allows the rapid expansion of the globalized economy? And isn't it globalized commerce that undermines U.S. wages?

*** Chickens almost killed us once. Now, we're keeping an eye on them again.

"Did you see the cranes pass yesterday?" asked Pierre. "They're doing their annual migration. But this year is different."

It was a rainy day. We heard the cranes before we saw them. They stopped in the trees beyond the cattle field, taking a break on their long trip. We were outdoors all afternoon, working on a stonewall. Damien, our gardener, was helping. So were Henry and Edward. Henry mixed the mud in a cement mixer attached to the tractor. Edward passed us stones. And even the two boys from across the street, Adrien and Gabriel, came over. They are enjoying a two-week holiday from school, but it is already the second week. They are getting bored. After a moment of gawking, they began picking up rocks, too.

The wall had fallen down decades ago. We are finally rebuilding it, one stone at a time, the way it was put up in the first place. We are reusing the same stones, and laying them down with the same ancient mixture of lime and sand.

But something is different this year. The cranes might be carrying bird flu. The disease has already been discovered in France. Health authorities are taking precautions to stop it from spreading.

"We're not allowed to let our chickens out," Pierre explained. "It's the rule throughout the whole country, I think. All the fowl have to be kept indoors until the migratory season is over."

What this has to do with our daily economic report, we're not sure, but yesterday, while the markets were closed in America, life went on. And life comes with hazards...risks...dangers. The cranes that passed over yesterday might have dropped some bird flu virus, which might have been picked up by the ducks on the pond who often fly into our chicken yard to steal food. From there, we don't know what might happen, but we take for granted that there is only one way out of this life, and the only man who kneweth the hour and place of his exit was probably on death row. For the rest of us, it will have to come as a surprise.

What may also come as a shock is what happens to our wealth. And what is shocking to us here at The Daily Reckoning is how little people seem to worry about it. We think back to our childhood and beyond. When we were about eight years old, as a 4-H project, we raised chickens. A few years later, we were diagnosed with histoplasmosis (a bit like tuberculosis) and is thought to be carried by chickens. Frank Perdue made his fame and fortune by raising the birds in Maryland; we just got sick. Had it not been for the invention of penicillin - which had only come to widespread use about 10 years before - we probably wouldn't have survived.

Not only was our health precarious, so was our financial situation. Our family had no money. Not that we worried about it excessively, but we were always aware of it. We drank powdered milk and collected soft drink bottles along the roadside in order to return them and claim the deposit. Clothes were passed down from one child to the next, and worn out completely before they were discarded. We didn't go hungry, but in a large family living on the edge, you didn't want to get to the dinner table late.

Maybe that childhood experience is why we think of financial risks more than most people do. Not that there's anything wrong with being poor. We don't remember being any less happy when we were penniless than when we were flush. But we've gotten used to central heating and hot and cold running water. We don't think we'd like to go back.

*** Every investment comes with a certain amount of risk. Asset prices go up and down. Even the price of gold went down for 20 years. If you'd bought gold in the early '80s you would have paid as much as $500 an ounce. Thereafter, the price fell in half...until the present bull market began in the early days of the George W. Bush administration.

The safest place for your money is where you don't have to worry about prices falling. If you buy a house to live in, for example, you may not care whether the price goes up or down; you're getting your moneys' worth out of the house itself. That may be true of a business, too. If it provides you with a living and you have no intention of selling, what do you care if it rises or falls in price?

But most people cannot bear to see their investments fall in price. They try to gauge the risk of loss and look for an "upside" that more than offsets the risk. If they are going to make a loan to a desperate company or a shaky country, they want to see enough of a return to make it worth the risk. But the perception of risk is an emotional thing. Sometimes, you see danger everywhere you look - even in the passing of a flock of cranes. And sometimes, you look out your window and see no danger at all.

Today, investors buy Iraqi bonds yielding scarcely more than 7%. Consumers borrow money to buy gadgets from China - running down their savings for the first time since the Great Depression. Speculators buy condos at prices that would have been considered absurd five years ago. Google was still selling for more than $300 a share, last time we checked. No one seems worried about danger: the danger of war, the danger of inflation or the danger of economic setbacks.

Everywhere they look, circa 2006, people must see a world without risk, where all corners have rubber cushions, and where all investments are equipped with airbags.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.