Saturday, October 18, 2014

Businessweek: Why Are Chinese Millionaires Buying Mansions in an L.A. Suburb?

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(Mod: A number of readers have commented about this article, so I thought I should post at least some of it here. The insane real-estate boom in Arcadia, garish McMansions and all, is being fueled by the extraordinary amounts of money being somehow spirited out of Communist-ruled mainland China. And as we saw by our city's capitulation on One Carter, the madness that has turned Arcadia into an immensely profitable dumping ground for architectural atrocity has now begun to infect Sierra Madre.)

“Oh, hey! How ya’ doin’?” Raleigh Ornelas hollers, leaning out the window of his spotless white pickup truck. He’s recognized the man across the street, a developer standing in front of a Tuscan-style mansion under construction. “Where have you been hiding at? I call you, you don’t call me.”

Ornelas is an informal broker in Arcadia, Calif., a Los Angeles suburb at the foot of the San Gabriel mountains. He’s been keeping an eye out for the builder, an Asian man with a slight comb-over who goes by Mark. Ornelas has found two older homeowners who’ve finally agreed to sell their properties, and he knows that Mark, like all developers here, needs land on which to build mansions for an influx of rich clients from mainland China.

Ornelas rattles off addresses on a nearby street. “Three-eleven, that guy, he’s wack,” he says, shaking his head. “He wants 2.8.” He means million dollars. “And then 354, they want $2 million.”

The lot is 17,000 square feet. “Seventeen for 2 mil?” Mark asks, incredulous.

“I know,” Ornelas says. “They’re going crazy.”

A year ago the property would have gone for $1.3 million, but Arcadia is booming. Residents have become used to postcards offering immediate, all-cash deals for their property and watching as 8,000-square-foot homes go up next door to their modest split levels. For buyers from mainland China, Arcadia offers excellent schools, large lots with lenient building codes, and a place to park their money beyond the reach of the Chinese government.

The city, population 57,600, projects that about 150 older homes—53 percent more than normal—will be torn down this year and replaced with mansions. The deals happen fast and are rarely listed publicly. Often, the first indication that a megahouse is coming next door is when the lawn turns brown. That means the neighbor has stopped watering and green construction netting is about to go up.

This flood of money, arriving from China despite strict currency controls, has helped the city build a $20 million high school performing arts center and the local Mercedes dealership expand. “Thank God for them coming over here,” says Peggy Fong Chen, a broker in Arcadia for many years. “They saved our recession.” The new residents are from China’s rising millionaire class—entrepreneurs who’ve made fortunes building railroads in Tibet, converting bioenergy in Beijing, and developing real estate in Chongqing. One co-owner of a $6.5 million house is a 19-year-old college student, the daughter of the chief executive of a company the state controls.

Arcadia is a concentrated version of what’s happening across the U.S. The Hurun Report, a magazine in Shanghai about China’s wealthy elite, estimates that almost two-thirds of the country’s millionaires have already emigrated or plan to do so. They’re scooping up homes from Seattle to New York, buying luxury goods on Fifth Avenue, and paying full freight to send their kids to U.S. colleges. Chinese nationals hold roughly $660 billion in personal wealth offshore, according to Boston Consulting Group, and the National Association of Realtors says $22 billion of that was spent in the past year acquiring U.S. homes.

Arcadia has become a hotbed of the buying binge in the past several years, and long-standing residents are torn—giddy at the rising property values but worried about how they’re transforming their town. And they’re increasingly nervous about what would happen to the local economy if the deluge of Chinese cash were to end.

(Mod: You can read the rest of this article by clicking here.)



Is there another way to make money in Sierra Madre besides real estate?

(Mod: There is.  And anyone can get in on the action. As they say, you can't win it if you're not in it. This from CBS Los Angeles.com - link.)

Winning $5 Million Scratcher Sold In Sierra Madre - Officials with the California Lottery say a lucky player just scratched his way to a $5 million prize. Steve Armogida won one of the top prizes in the Million $$ Match Game.

Armogida bought the winning $5 million ticket at Happy’s Liquor on Sierra Madre Boulevard in Sierra Madre. The store also wins a bonus of $25,000 for selling one of the top winners.

Million $$ Match Scratchers is a $20 game. The lottery says there is more than $340 million in total available prizes in this game alone.

Non-winning tickets also have a chance for smaller prizes in the Lottery’s 2nd Chance Draw.

According to CALottery.com, there are two more $5 million tickets available, as well as three $2 million tickets and five $1 million tickets.

(Mod: They are even happier at Happy's then they were before. And they have always been pretty chipper. Except for the guy in the afternoon. In the spirit of full disclosure, I myself have purchased a few lottery tickets at Happy's. But only because I wanted to make a small donation to public education.)

http://sierramadretattler.blogspot.com

66 comments:

  1. Congrats to Steve. Use it well. On another thought, has anyone looked at the warrants paid by the city? You and I would call them bills. Check out the amount of money paid monthly in legal fees. Unbelievable. Of course if we ever asked for a breakdown, we'd never get it. Talk about a cash cow.

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    1. What is it you call people who pay money for lawyerss they don't want and work against their interests?

      Suckers.

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    2. I only wish he had purchased the " winner" at the Bottle Shop. Bill senior was such a generous man.
      I purchased an item at Happy's and the transaction was so difficult I vowed I would never shop there again and to this day, that's exactly what I have done!

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    3. My experience is the opposite. I stopped going to the Bottle Shop when Billy demanded and took our tax money to build a wine tasting room. Now I go to Happys.

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  2. More than One Carter has been infected with the MacMansion plague, though it's true that will be a whole suburb of them. But there's also the houses on Camillo as part of the contagion, another lot sold just recently close to them, a crammed in thing on Lima - there are actually a number of depressing examples.

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    1. Ebola Houses.

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    2. That article is a real eye opener. Its happening in alot of places on the west coast. However, the San Gabriel Valley is ground zero for the largest and fastest demographic change in history. Most countries have some kind of limits on that kind of immigration because they want some degree of assimilation. Not in our case.

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  3. I thought the Chinese government was wrapped tighter than this. They are allowing so much money to leave.

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    Replies
    1. Once hard times hit they'll round a bunch of developers up and have a big show trial.

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    2. You'd think the billionaires in the Chinese politburo would start getting a little concerned with all the money and smart people leaving hte country. They are known for thinking long-term so they must realize they have a problem. Maybe that's why people are getting their money out of China as fast as they can.

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  4. Monrovia must be suffering too. I saw a site on Facebook entitled Save Our Monrovia. The residents are concerned about McMansions.

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    1. Let's face it, every community in the San Gabriel Valley will be unrecognizable in about ten years.

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    2. Make it 5 years!

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    3. Monrovia is just one of a long line of cities that are facing the same problem with McMansions. Some cities put in place policies to preserve their town while others, like Arcadia, just let it go to ruin. Every city can make that choice for themselves.

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    4. Let it go to ruins? Are you serious? As i drive to my newer home in Sierra Madre, I drive past dilapidated house after dilapidated house. These, my friend, are truly ruins.

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    5. Move to Arcadia.

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  5. Yes the McMansion plague is coming to Sierra Madre. When you have at least 20 million people who want to move out of China and into the San Gabriel Valley and with Arcadia getting filled up, where are they all to go. How about the next door neighbor, Sierra Madre. If most of these millionaires like brand new status symbol homes, well guess what, you get 150 homes torn down in Arcadia. There will soon be 150 homes torn down in Sierra Madre. You think that might change the community a bit. We may want to consider putting some restrictions on McMansion building in Sierra Madre before its too late.

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    1. I don't blame the 20 million Chinese for wanting to come to the San Gabriel Valley instead of living in China. We have better education and alot less pollution. I don't blame them for wanting to tear down smaller character homes and build big, garish McMansions. I'm told in their culture, its considered to be a status symbol to have a big flashy home with pillars, marble and big chandeliers. I blame the people who live in these various towns for not doing anything to stop it when they have the power to stop it. That's whose to blame. Of all towns, you'd think Sierra Madre would be more active in preserving its small town eclectic architecture. Mere bandaids will not stop the 150 homes every year from being torn town. There is no movement in Arcadia at all to stop this. They gave up and let it get away from them. Now its too late.

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    2. Don't worry about this surge affecting our city. We have a God awful school district and undesirable, small lots mostly. We couldn't be Arcadia if we tried.

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  6. Is it just me or do a lot of McMansions look like mausoleums?

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    1. Yes, they look like mausoleums. Tombstone markers to read, Here lies the City of Sierra Madre.

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  7. Another phenomenon not too many people know of is the Parachute children a few years ago. Where a wealthy Chinese family would buy a modest ranch home in a suburb with a good school district and plop their high school age son (I never met any girls in this situation) and quietly support them through their graduation from an American High School. What I witnessed in my classroom was absolute politeness, intense scholarship and emotional depression.

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  8. I heard that 3 homes near one another, have , over a period of time, been purchased on Bonita with no new residents moving into the homes. Does anyone know if that is true? Sounds like a Monoply game strategy.

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    Replies
    1. They are probably just parking their money somewhere. Its hard to have a sense of community if too many people are seeing Sierra Madre in that light.

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  9. The people making the big money in China are the ones connected to the "State" or the "Party" i.e. the communist party. You can't get ahead over there unless you are a member of the party. Everyone is selling out for the almight dollar.

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    1. You don't think they eat their own? It is a one party state. Where else are they going to find scapegoats?

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  10. Its hard to imaging 150 homes being torn down in a given year. Talk about changing the look of Arcadia. Wow. And now its not hard to notice where the Camillo developer, One Carter and Stonehouse developers come from. If you don't want 150 homes torn down in Sierra Madre, you kind of need to do something about it folks.

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  11. I think Peggy Fong Chen, the real estate broker, said it best in the article: "They saved us from the recession". When money means more than quality of life and when money dictates that older more modest homes be torn down and replaced with hideous monstrosities, then we're in trouble. Her statement says it all. If its all about the money, tear down Mary's Market, tear down Lizzy's Tavern and tear down everything else. 150 homes torn down in one year. Umbelievable, sad and tragic for those who grew up in Arcaida. If that same mindset comes to Sierra Madre, then forget about it. Sierra Madre will be ruined too. Its just a matter of time. I'm moving to Tennesse with the Koerbers. And I won't look back. I want to remember Sierra Madre the way it was.

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  12. I must give the Tattler credit for putting together phrases that are so apt. I'm referring to the Tattler description of Arcadia as "....an immensely profitable dumping ground for architectural atrocity". Nobody can turn a phrase better than the Tattler. How does the Tattler come up with this stuff?

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    1. I agree, no one can write it like John can! He is a master of words, wit, and HUMOR.

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    2. That's what makes the Tattler such a joy to read. There's nothing like it out there. Thank goodness, the Tattler is still shining its spotlight on Sierra Madre.

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    3. "The Tattler"....So entertaining, yet so ineffective.

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    4. How's that Measure UUT working out for you? Get your raise yet? Councilmember Green getting settled into his seat pretty good? Hmm?

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  13. Dream on.....the fix is in.

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    1. You never know. This could be the catalyst that causes the citizens to throw their unfaithful government out. Democracy is still alive in America.

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    2. "Insanity: Doing the same thing over and over again and expecting different results." - Albert Einstein

      I don't think it takes an Einstein to figure out that we have been doing things the same way for a decade and we always lose. The only way we will perserve Sierra Madre is if we change City Hall.

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  14. You can't stop progress so grin and bear it. Its inevitable.

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    1. McMausoleums are not progress. They are the product of people with too much money and absolutely no taste. Besides, communist countries are slave labor states. We should not be rewarding that.

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    2. Yes! These fortunes were made on the backs of people who were brutally exploited. So sad to see certain Sierra Madreans grubbing for such dirty money.

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    3. Now we know what their souls are worth.

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    4. I'm as capitalist a person as anyone can be, but I also believe we have to live responsibly and in a sustainable manner. Forgetting about how ugly these McMansions are, they also use alot of energy and water at a time when most people are going in the opposite direction. I guess its the attitude of the nauveau riche.

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    5. Its not inevitable. If we don't want 150 homes torn down in Sierra Madre next year, change the General Plan and Municipal Code to prevent. A few people may cry that they can't do exactly what they want with their own property, but that's a price we have to pay if we want to have Sierra Madre look anything like it does now ten years from now.

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  15. If you want to stop McMansions in Sierra Madre, you can't do it alone. Go to www.PreserveSierraMadre.com and get on their email list or send them an email at PreserveSieraMadreNow@gmail.com. Better yet, get five friends to do it also.. If this coalition's database can be increased five-fold, that will allow Preserve Sierra Madre to have even more strength and influence. This is a battle that can can only be won if we band together. Can you imagine if 150 homes wee torn down in Sierra Madre on one year. There's no time to lose.

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    1. Everyone in Sierra Madre needs to join and help out this group of brave citizens that are trying to preserve our town.
      PreserveSieraMadreNow@gmail.com We have the power to fight, but we need your help!

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  16. Accpording to city data, the Asian population percentages:
    San Marino 53.3
    Monterey Park 62.7
    Diamond Bar 53.8
    Arcadia 56.8
    Alhambra 52.5

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    1. In five years those percentages will be in the 60% or 70% for each one of those cities. In ten years it will be 80%. Then Sierra Madre businesses will follow the pattern from Vallley Blvd then it went to Main Street then Huntington Drive and finally Sierra Madre/Baldwin. That's simply the reality of that kind of demographic shift. It actually became a safety issue in, I think it was Monterey Park or Montebello, because the police could not read the name of the businesses and thus had difficulty responding to emergencies. English-only signs anyone. The funny thing is watch what happens to the real estate agents. Its common knowledge that most Chinese will use Chinese agents for the language issue if nothing else. So all the agents are going to see their business shrink over time until they won't have any business. They may be feasting now but wait and see down the road. Maybe its the "get it while I can" mentality. Sorry folks but I'm simply stating the consequences and not saying anyone is a bad person. Its kind of like how the Indians weren't able to hunt buffalo anymore and had their whole way of life turned upside down in a matter of a decade or so.

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    2. We stole this land from the Native Americans and now we're selling it to the Chinese.

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  17. We need to be pro-active. No more Mr. nice Guy. The planning commission had the power to stop Adele from her gross design from the get go. Instead, the commission leader gave her free advice many times on how to go about implementing the changes needed. That's not his job. The general population in Sierra Madre need to wake up and care. There are many who are willing to sell their 350,000 house for a million and leave the rest of us to clean up the mess. No one buys a house for longevity anymore. It's an asset to sold to the highest bidder and then move on to bigger and better. We can't stop them anymore than we can stop realtors who place "huge lot" as a selling point. It's all about money for everyone. Obviously these people choose to get involved when they want. 1 person spoke about the back door meeting regarding the pedophile ordinance. Where were all those moms from the A. West debacle? It wasn't on a banner at Starbucks or what? Any suggestions on how to wake up these apathetic citizens. While I'm at it, I might mention the lawyer Graves who wants to build an apartment in a basement on Baldwin. He thinks cuz he builds a really cool place to live he's doing us a favor. Really?

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    1. too many and too often on the planning commission we get dudes who just love to tout their opinions or pass along free advice on how to get things built

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    2. Well said 11:23. Absolutely right. We had no obligation to help Adele design the house. I also didn't like it the way City Staff was there to help them with their presentation and be at their beck and call. Why are we helping people to do the very thing that nobody wants. There's something wrong with this picture. Is it apathy or what? Its one thing if we can't do anything to stop this madness. But when we have the power to stop it in its tracks and we do nothing, that is sad and disappointing.

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  18. there was coverage on 20/20 or 60 minutes about the construction boom in China - funded by the govt and investors, small investors bought up the condos and entire cities, malls were built

    but they are all empty - bought as investment, not as live in housing cause the govt doesn't allow investment outside of China

    I'm positive our weak Planning Commission and pro development Council will lay over and let SM be gutted so as long as the realtors and developers profit

    our kids will return in 20 years and not recognize this city

    why would Chinese investors give a rip about American or SM history?

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    1. I'll say this again, its not the fault of the Chinese who want big garish homes. They are going to de what WE allow them to do. If the developers and the Chinese investors care more about their profits then we do about preserving any semblance of the Sierra Madre that we all love so much, then they win. Sierra Madre turns into Arcadia. We have the ideal chance to do something now. We have a building moratorium. We have a General Plan about to be finalized. We have a decent City Council. Mark my words, this will be the only opportunity. If we miss this chance to get it right, we will not get a second chance. Get involved. Join a group. Contact the Preerve Sierra Madre people and offer to help. Show up at a few meetings and get involved. As a community, we don't have to allow what we don't want.

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    2. The only way we will preserve Sierra Madre is if we change the culture at City Hall. That means firing the city manager and those aligned with her and replacing them with people dedicated to community preservation.

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  19. 12:47 I agree up to a point. The city plan won't be in place for a year. Elaine is responsible for that stall. We need to go to the council and push. Make sure the environmental study is scheduled. Ask why the parts that have been approved can't be studied and rest of the city plan finished sap. No it's not the Chinese it's their money. Money is power. We bow to them because they threaten to sue. We need to push the planning commission to de elop the review board quickly, comprised of professionals and citizens. They also need to change the footprint of any house to 3000 sq ft. The commissioner stated he couldn't go for that. It's not up to him. It's up to us. The city council needs a list of potential heritage homes. Elaine didn't like that. A citizen group could be responsible for that. No cost to the city. Elaine didn't like that. Citizens need to wake up. Again, how do we get them I spired? What can Save Sierra Madre do to move this? Suggestions are helpful.

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    1. Suggestion: Elect preservationists to the city council who will then change the culture at city hall. The people running that place are now working very hard to overdevelop this town. They want the money to fund their pensions and benefits, and 60% of the City Council supports that. We need to reinvent government in Sierra Madre. Nothing else will work. One Carter should have proved that to everyone. And trust me, the city manager will not fire herself. Neither will the city attorney.

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  20. This comment has been removed by a blog administrator.

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  21. By the way, the article mentions the people who become millionaires buidling railroads in Tibet. Tibet was overrun. The Tibetan culture has been eradicated and the Dali Lama was forced to flee. The government of China pushed the millions of Hun Chinese to go to Tibet and now they are the dominant culture. That beautiful country lost its identity and that's why monks over there will periodically immolate themselves with gasoline. Very sad.

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    1. Like anyone in SM cares about that?

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    2. Just because you're a nitwit is no reason to assume many others are like you.

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  22. at least maybe we'll get a decent Chinese restaurant out of it

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    Replies
    1. Incredibly good:
      http://dintaifungusa.com

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    2. Dintai Fungus?

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  23. city hall "the machine" needs more money - more revenues from its residents!

    We the residents need a smaller government,

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  24. Sunday Times editorial predicts changes from the Chinese Government that may just slow this down

    "Economically, the decades of double-digit growth rates that marked the reform period have ended. The infrastructure and real estate booms driving China's economy since the 1990s have peaked. Even the state media now speaks of adjusting to the “new normal.”

    http://www.latimes.com/opinion/op-ed/la-oe-1019-minzner-end-of-china-reform-20141019-story.html#page=1

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  25. Maybe people in this town need to take their heads out of their own dog's poop, or off of their yoga mat, and CARE about something.

    ReplyDelete
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