Here is a real bright ray of sunshine over at American Digest about The Ship of State:
The jobs are not coming back. To know that you need to get off the inter-states; off the scenic blue highways that lead to your summer beach retreats. You need to get into the towns that have been passed by; the towns whose main industry has become food stamps and "assistance." These towns are growing in number daily and will continue to grow.No, it is not, and here's the demographic-tsunami reason why.
There is no work in these towns. The factories that supported them are long dead or dying. They, like the people they supported, are carbon based life forms and the strange insects that govern us seem to be united in making sure they never return. The checks and the food stamps come, but that's not enough to paint the houses or put in the gardens or do much more than eat too many pizzas and drink too much watery beer. The young would leave but more and more there's no place to go. They spend their time instead deciding on what sort of new tattoo will go well with the previous twenty.
The building of new houses and malls and condos and other large construction projects are not coming back. And even if they did where would we find the workers trained to build them? Old carpenters have moved on to making a living at something other than construction. There's not enough work to bring young ones onto the job and help them to master the skills needed. When a nation stops building it stops having the jobs that can train the next generation of builders. Mexicans, working cheap and off the books, are still in some demand, but there's a limit to repainting and the kind of minor brickwork that makes for a pleasant garden.
The money isn't coming back except at something worth less with every passing day.
There are 79 million baby boomers like me. The oldest boomers, born in 1946, have started turning 65 just this year and many are entering retirement. There are 17 years worth of boomers left to retire, on average, 4.3 million per year. (Actually, since boomer births did not peak until 1957, the number of boomers retiring will steadily rise by more than that average. Boomer births passed more than 4 million per year in 1954 and never fell below that number; 1965 was fewer than 4 million, but '65 was not a boomer birth year. See here.)
It will not be until 2025 when median boomer's age will be 70. But boomers' longevity will be years longer. That means that boomers' mortality rate will not start diminishing boomers' numbers significantly for several years, probably at least 10 years. Since for many years now the death rate per 1,000 population has been declining, the margin of error is wide in just when the number of boomers will start falling steeply, probably only when the median age has gone significantly higher than 70.
So: boomers are starting to retire and will do so in accelerating numbers for at least 18 more years - 1964's boomers (the last of the cohort) won't start to retire until 2029. We are living longer. And we are selfish people who are not very much inclined to leave a sizable estate to our kids. The huge wealth transfer we enjoyed from The Greatest Generation has been spent, boyo, because man, do we boomers love our lifestyles.
Don't expect a big inheritance from your boomer parents -- even if they are rich. Less than half of millionaire boomers say that leaving money for their kids is a priority for them, according to a 2011 U.S. Trust study. But 64% of boomers say they plan to use their money to travel and more than one in three say they want to use it to "have fun."Now, where is all the money to pay for our retirement centers, medical care and vacations in Costa Rica going to come from? It will come from the equity investments we made before we retired. In short, we are going to sell stocks, bonds and mutual funds like crazy starting very soon. And because each successive year adds millions more to the retired ranks, the selloff will accelerate every year into the late 2030s and almost certainly well into the '40s.
|The fate of traditional equity markets, beginning, oh,|
next year. Found at Boomer Cafe.
In fact, if the near-term retiring boomers cash out only $1,500 of equities per month, starting with zero retired boomers and adding about 360,000 every month, then in only six months more than $3 trillion of sold-share value will be reached.
Read this slowly: Three. Trillion. Dollars. Sold off every six months. That's in addition to the previous semiannual's sum. That's $18 trillion of equities sold in just the first 18 months. And it only goes much higher from there. Folks, we are looking at possibly hundreds of trillions of dollars of equity sales over boomers' retirement years.
There are two huge problems with this. First, the total world market's valuation is only $37 trillion. So boomers' simply cannot cash out enough equities to maintain their standard of living because there is literally not enough money in the world to do it, assuming that boomers need only about $1,500 of sold principal per month to make up a shortfall of dividends and interest. Even if you halve the figure, the numbers can't be sustained.
So - we boomers simply are not, as a population group, going to enjoy in retirement the high standard of living we are accustomed to.
The second problem is that Generation X, boomers' successors, doesn't have nearly enough money to match as inflow into equities what we boomers are going to take out. Gen-X is the generation hit hardest by the multi-year Great Recession. Enormous numbers of them have already sold out just to stay afloat financially. And even before the recession hit, they were piling up debt like madmen.
The Gen Xers, generally defined as those born from 1965 through 1980 — now 27 to 43 years old — have even less assurance than the boomers of receiving company pensions and projected Social Security benefits.In short, the traditional US equities markets - the Dow, the S & P and the NASDAQ - are heading over the falls and there is nothing they can do about it. Anyone younger than 50 today is going to get clobbered if they keep investing for retirement with the old "buy and hold" method of investing in funds or stocks.
In 1979, when the oldest Gen Xers were teenagers, the sole retirement plan for 62% of workers was a traditional pension, according to the Employee Benefit Research Institute (EBRI). By 2005, when most of the Gen Xers had joined the workforce, that number had flipped: 63% of employees found themselves covered only by voluntary 401(k) plans. So much for the corporate safety net.
On top of that, the Gen Xers' life expectancies, and thus their retirements, will likely exceed even the boomers'. They'll need to save more aggressively. Yet, burdened by high housing costs, stifling college debt, stagnating wages and outsize health insurance and gas prices, Gen Xers are saving too little for retirement, just as workplace benefits have shrunk.
According to the EBRI, more than one in three workers ages 35 to 44 aren't setting aside any money for retirement. Among those ages 25 to 34, 45% aren't saving.
The US economy is not coming back even to the 1980s level of performance, and as for that of the '90s and middle Oughts, only in your dreams.
What we boomers have done is left an incredibly bollixed up legacy to our children, and we captain the ship of state happily off the falls because, hey, we'll be dead by the time it crashes onto the rocks, so what's it matter? But our kids and grandkids will be crushed by what we have done. Fact is, we never grew up and we never will.