Wednesday, August 26, 2009
Ted Kennedy died and so with him some of the best attributes of an otherwise dismal generation. I refer to the Baby Boomers, an insufferable lot who gave us the likes of George W. Bush, Bill Clinton, and myself.When you look around at American society and its many short comings keep us in mind whether its schools that teach nothing and resemble medium security prisons or mile after mile of McMansion subdivisions and strip malls.Now it appears that we will drag down our offspring and their progeny for years if not decades to come. Dave Cohen fills in the blanks in this illuminating if not depressing article. Here are some highlights if you can call them that:
"I was born in 1953, which makes me a post-World War II “Baby Boomer” (those born between 1946 and 1964). First off, I want to issue a blanket apology to younger cohorts (generations X & Y) for the excesses of my generation. No generation in the human history was given so large an opportunity to ravage the Earth through excess consumption, and Boomers did not squander that opportunity. No generation has adversely affected the welfare of future generations as the Boomers have. So much for Woodstock and the Age of Aquarius...
"I’m sure you’ve heard the expression “spend money like there’s no tomorrow.” That’s precisely what the Boomers did. It was an unprecedented debt-fueled spending spree made possible by easy credit. See my Don’t Buy Stuff You Can Not Afford for some details. As Bill Bonner put it at the Daily Reckoning, that household debt now “represents spending that has been taken from the future.”
The first Boomers reach retirement age in 2011. Business Week reports that it has long been expected that aging Boomers would cash out and decrease their spending. But the real Big Chill arrived a few years early.
When 79 million people—nearly a third of Americans—start spending less and saving more, you know it won’t be pretty. According to consulting firm McKinsey, boomers’ conversion to thrift could stifle the economy’s hoped-for rebound and knock U.S. growth down from the 3.2% it has averaged since 1965 to 2.4% over the next 30 years. “We would have gotten here in 5 or 10 years as boomers retire, but [the economic crisis] pushed it up,” says Michael Sinoway, managing director of consulting firm AlixPartners. “Now [companies] are scared things won’t come back”…
Not so long ago, boomers were never going to die. Filled with a self-confidence born of unprecedented prosperity, many thought rising markets would assure their future. If the economy faltered, well, it would rebound more strongly than ever, as it had so many times before. And so boomers spent—and borrowed—as if there were no tomorrow.
Tomorrow is here. With retirement looming, the Great Recession has put Boomers into emergency thrift mode. Unsurprisingly, McKinsey Quarterly reports that most of them are unprepared for their golden years.
The low savings rate and extensive liabilities of the boomers have left about two-thirds of them unprepared for retirement. We reached this conclusion by assessing the level of post-retirement income and assets that the boomers would need to maintain 80 percent of their peak pre-retirement spending.This analysis—based on net financial assets such as bank deposits, stocks, and bonds, minus credit card balances, car loans, and other non-mortgage debt—indicates that 69 percent of the boomers are not prepared to maintain their lifestyles. The inclusion of home equity, whose value is declining in many regions below the levels prevailing when we undertook our analysis, only reduces the proportion of the unprepared to 62 percent.
The home equity situation is not improving. According to American CoreLogic, more than 15.2 million (32.2%) of all mortgaged properties were in negative equity in June, 2009. (Negative equity means your mortgage debt exceeds the value of your house.) An additional 2.5 million homeowners were nearly underwater. Although the rate of decline in home prices has slowed, it is not at all clear that we have reached the bottom in the housing market. Beyond home equity, Boomers’ net worth has taken a huge hit as asset values fall. Many Boomers will have to work longer than they anticipated.
Economists and demographers say Boomers will need to replace some $2 trillion of wealth lost in retirement funds [e.g. 401k plans] during the recent stock meltdown, plus the billions in home equity that have vanished in the housing crash. Government policy makers will have to figure out how to provide for a huge cohort of people who could live well into their 80s.
McKinsey found that the Boomer spending accounted for an astonishing 78% of GDP growth during the “bubble years” from 1995 to 2007. Much of that spending will disappear. The “generational crash” will be a drag on the economy for years to come."
"In this and other columns I have cast doubt on a prosperous future for the United States. Since 1983, the American consumers—rhymes with Boomers—spent tomorrow’s wealth today. GDP growth depended on ever-greater borrowing and was thus systematically inflated. All this time America’s industrial base declined (moved to China) and its (no longer cheap) imported oil dependency grew to ~66% of total consumption. To keep the party going after 1995, the U.S. blew two enormous bubbles, one in the NASDAQ and a much larger one in housing. We used those bubbles to float up to the mountain top, where all that thin air made us giddy. Now we’re sobering up as reality propels us down the other side.
The boom times are over. A secular change has now taken place. The U.S. will look more and more like a Third World country. In health care, compared to Canada or Europe, it already does. Thus our prospects for another economic boom in the next decade are like those of Monty Python’s famous Norwegian Blue parrot—
“This bleeding parrot wouldn’t boom if I put 4 thousand volts through it! It’s bleeding demised… It’s not pining for the fjords, it’s passed on. This parrot is no more. It has ceased to be! It’s expired and gone to meet its maker. This is a late parrot. It’s a stiff! Bereft of Life, it rests in peace! If you hadn’t nailed it to the perch, it would be pushing up the daisies! It’s run down the curtain and joined the choir invisible. This is an ex-parrot!!!”
American Economy 1983-2007: Requiescat in pace
Forget about a “V-shaped” recovery or Ben Bernanke’s “green shoots.” This parrot is no more, it has ceased to be."
Yeah I'm sorry too.
Sunday, August 16, 2009
The American Right is having a field day as it uses fear and outright lies to derail any meaningful reform of the pay or die U.S. health care system. An integral part of the fear mongering is attacking other countries health care delivery systems, notably Canada's and the British NHS. Right-wing Americans are detached from reality and inhabit a conspiracy laden universe happily served up by corporate infotainment and thus are unaware that countries outside of their historical and geographical vacuum have begun to take notice of the lies and deceptions.
Canadians for instance take exception to Sen. Mitch McConnell of Kentucky dissing their system as noted by this in the Ottawa Citizen:
"In Senator McConnell's home state of Kentucky, one out of three people under age 65 do not have any health insurance. They don't have to worry about wait times for hip or knee replacement or cancer surgery -- they can't get care. The median household income in Kentucky is $37,186 -- not quite enough for the $97,000 bill at the Mayo Clinic. CNN didn't mention that in its "Reality Check."
As the debate on health care reform heats up the United States, it seems certain that Canada's public health care system will be used, or more accurately misused, in the battle for hearts and minds. For years, Canadians have feared the American health care system; now Americans are being told to fear ours."
Others have a somewhat more visceral opinion of the freedom from heath care nitwits to the south. I particularly enjoyed the remarks of United Steelworkers International President, Leo Gerard, reported in the Toronto Star:
"Gerard said it was hard to stomach the right-wing attack on Canada's universal health care system as their ways of whipping public sentiment against U.S. President Barack Obama's health care plan.
"Many of you must be watching ... in disbelief at the bunch of nut bars, hairpins and lunatics collectively and every right-wing (nut) ... in the United States of America who is parading around during this health care debate," he said.
When Gerard asked if anyone in the room would give up Canadian health care for the private sector-driven system that exists in the U.S., where 48 million American don't have health care it was a resounding no.
"Remember this, when the wrong people win our most prized possession, which is health care, is put at risk," he said."
Not to be outdone British commentator, Simon Hoggart, has the following to say in his aptly entitled column, "Why the American Right Makes Me Sick":
"There are few tribes more loathsome than the American right, and their vicious use of the shortcomings in the NHS to attack Barack Obama's attempts at health reform are a useful reminder."
While Canadians do have complaints about health care it's informative to know the esteem in which its chief architect, Tommy Douglas is held is such that he was selected the "Greatest Canadian" in a poll conducted by the CBC in 2004. There he nosed out the likes of Pierre Trudeau and Wayne Gretzky.
Meanwhile in the U.S. hordes of brain-eating zombies, hepped up on samples of patent protected Viagra, Aricept, and Chantix, descend on townhalls throughout the land at the behest of insurance companies, big pharma, Glen Beck, Sarah Palin, and Rush Limbaugh. President Obama has his work cut out for him.
Thursday, August 06, 2009
Yes I've had another summer hiatus from the blog but for good reasons. At the end of June Mrs. WINston SmITh and I spent the weekend in Toronto at the jazz festival observing our 25th wedding anniversery and generally having a great time. It was even greater given the the fact that this was the first time since 1969 that I visited Canada as a Canadian citizen. Yes I fulfilled a childhood dream in returning to the homeland.Yes I am a "Lost Canadian".
Perhaps it should have been obvious that moving to the U.S. on November 22nd, 1963 was not the best idea. Oh well, that and a lot of other things that my parents overlooked. I am now a card carrying Canadian thank goodness.