The Generational Blind Spot-BOOM! - Page 10

The Social Security "trust fund," you'll recall, isn't a trust fund at all. It's just another source of annual government financing and a future liability. Today's receipts are used to pay current payments to retirees and, in the case of a surplus, whatever else the government is spending money on. As the Social Security surplus shrinks, therefore, the government loses a source of funding. If it wants to keep spending at its planned rate, it therefore has to borrow the difference.

When Social Security goes into deficit, meanwhile, the government will have to borrow even more money to pay current SS recipients. Chris Martenson:

From a budget-busting perspective, last year where the US government had a $73 billion Social Security surplus to spend, this year it will be a paltry $16 billion and next year it will be a number indistinguishable from zero. It is hard to overstate the importance of this shift.

This means several things. Instead of $703 billion coming in over the next 10 years, the current (overly optimistic) projection calls for only $83 billion. This means at least another $620 billion in fresh borrowing will have to occur.

Since the dawn of the Industrial Age, this has been simple: produce more with less. ("Productivity," in economic jargon.) Mass markets developed for clothes, cars, computers and much more because declining costs expanded production. Living standards rose. By contrast, the logic of the "post-material economy" is just the opposite: spend more and get less.

What defines the "post-material economy" is a growing willingness to sacrifice money income for psychic income -- "feeling good." Some people may gladly pay higher energy prices if they think they're "saving the planet" from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor. Unfortunately, these psychic benefits may be based on fantasies. What if U.S. cuts in greenhouse gases are offset by Chinese increases? What if more health insurance produces only modest gains in people's health?

Originally Posted by dfiler

My head is left spinning after reading a few of those articles, especially after checking up on some of the authors' previous articles.

It seems like Hanson is using the carpet bombing approach. I can't really tell what he's trying to get at other than everything sucks and it is all getting worse by the second. While I agree with some of what he's saying, every other sentence seems to stem from a world view that I don't share. Sometimes it even happens in one sentence. For instance:
Sure, I'm all for fiscal responsibility and less litigation, but what's this about drilling rather than whining? That sentence alone would require a bunch of discussion. The merit of drilling for oil in various locations is quite a complicated subject, and one that seems fairly separate from whether or not america is "not post anything".

When whole articles are made up of such sentences, replying is difficult if not impossible. Even the title of the article demonstrates the shotgun approach to debating, "America Is Not a Post-Anything". What does that mean? That the economy, society, the world in general, hasn't changed one bit? It kinda comes across as everyone is wrong about everything. Which I suppose is a valid assertion, but one that is rather difficult to debate. Perhaps debate wasn't the intended outcome. Maybe he just wants everyone to reanalyze their world view. There's nothing wrong with that, but I'm already doing that without throwing out the baby with the bathwater.

Originally Posted by dfiler

"Not in my backyard" isn't new though, right? And it certainly isn't limited to America. I think we're just more aware of the battles here because of proximity. For instance, France hasn't figured out what to do with its nuclear waste yet. They're still arguing on where to put it when the temporary storage fill up.

Also, I wouldn't portray America as doing comparatively badly in terms of energy. Don't we have good prices compared to most other similar markets / economies? Not to say that the situation is good, but rather that others haven't dealt so well with it either.

But really, I'm not sure how to comment on this in relation to everything else the author slings at the same time. So many controversial assertions are tacked onto every other sentence, that unless you agree with the author's world view, it just comes across as unsubstantiated and chaotic.

There's certainly a place for that type of across the board propagandizing and editorializing. Bundling the entire thing into a single discussion in a venue such as this, I'm not sure we'll make any headway while batting around between all the different ideas.

The numbers show a genuinely frightening gap between what people have saved for retirement and what they will need. And many of these studies don't take into account last year's stock market crash, which will make the problem worse..........

How bad are baby boomers at financial planning? Extremely bad, according to Annamaria Lusardi and Olivia Mitchell of the National Bureau of Economic Research. They found that more than one-quarter of boomer households thought "hardly at all" about retirement, and that financial literacy among boomers was "alarmingly low." Half could not do a simple math calculation (divide $2 million by 5) and fewer than 20 percent could calculate compound interest. The NBER researchers also found that, as of 2004, the typical boomer household was holding nearly half its wealth in the form of housing equity. Uh-oh.

OK, for households headed by persons between the ages of 55 and 64, the median value of all retirement accounts was just $100,000. Purcell noted that for a 65-year-old man retiring in April 2009, that $100,000 would buy an annuity that would pay a paltry $700 a month for life, based on current interest rates.

What's going to happen? Certainly, people will try to save more. But my guess, knowing my generational cohort, is that we'll want a government bailout to supplement our too-meager retirement savings. Unfortunately, the Treasury won't have enough money to fund our Medicare benefits, let alone a top-up in Social Security.

Originally Posted by dfiler

The inability to retire will indeed be sad for millions of people.

But pinning this on a particular generation seems like faulty logic. The whole concept of retirement is quite new. It isn't like generation upon generation got it right only to be fowled up by the boomers. Very few generations from any civilization throughout human history have been able to retire.

And even those that did manage to retire found "retirement" to mean something quite different than what we expect now. Typically it meant living with your extended family and taking on responsibility for many of the chores for everyone living in the home. Basically the elderly went to work for their extended families because families can be more lenient toward the limitations of age.

Perhaps the entire concept of what we now consider to be "retirement" is flawed. Kicking back and doing no work for a couple decades sure would be nice. But it may be a pipe dream, attainable only briefly by imperialistic and otherwise temporarily advantaged empires.

At a town hall meeting at AARP headquarters in Washington, D.C., President Obama was asked by a woman from North Carolina if it was true "that everyone that's Medicare age will be visited and told they have to decide how they wish to die."

At first, the president joked that not enough government workers existed to ask the elderly how they wanted to die. The idea, he said, was to encourage the use of living wills and that critics were misrepresenting the intent of the "end of life" counseling provided for in the House bill. He did not say, "No, they wouldn't be contacted."

Watching Social Security Eat the Young Alive
By Bill Frezza

My 26 year old son got the most extraordinary letter from the Social Security Administration last week. In plain English it admitted that the system was a Ponzi scheme destined for bankruptcy more than a decade before he reaches retirement age. It warned that if he is to have any hope of retiring he'd better start saving on his own. Anyone who wasn't personally hypnotized by FDR knows this to be true. Yet I was still surprised that such a frank government confession didn't make national news.

The two-page pamphlet entitled "What young workers should know about Social Security and saving" reminds us that 50 million, or one in six, Americans will collect more than $614 Billion dollars in Social Security benefits this year. It informs young people that the Security Taxes they now pay go into a "Trust Fund" that is used to pay current beneficiaries. Paying off early investors with funds taken from later investors is precisely how Wikipedia defines a Ponzi scheme. The pamphlet advises that the Social Security Board of Trustees estimates that the "Trust Fund" will be depleted before my son's 54th birthday. Because people are living longer and the birth rate is low, it goes on, taxes paid by workers in the future will not be enough to pay the benefits promised in his personalized retirement account statement enclosed with the pamphlet. Imagine what hell would break loose if Schwab or Fidelity Investments enclosed a confession like this when they mailed investors their 401(k) statements.
On top of the negative rate of return young people paying into Social Security are expected to suffer, the pamphlet concludes that my son should plan on taking an additional 24% haircut on the benefits promised in his statement. This is the same healthy young kid being told that he will soon have to buy an artificially overpriced health insurance policy so his premiums can be redistributed to aging Baby Boomers lobbying Congress for free stuff.
Given the fact that Social Security will be bankrupt before my son even reaches my age, the pamphlet directs him to a handy web calculator that shows how much he will have to save every week if he hopes to retire on his own. Play with it for a few minutes and you realize that there is only one field in the calculator that really matters, and that is the rate of inflation. Plug in an annual inflation rate of one or two percent and the numbers look pretty reasonable as compound interest works its magic. But stick in the double digit inflation figures that were in vogue when Jimmy Carter was president and a funny thing happens. In order to prepare for retirement, young people would have to save more than they make!

Given the Vesuvius of cash the Fed pumped into the economy to disguise the real estate debacle, what do you think the odds are that inflation is going to stay at one or two percent?
Why do kids put up with this? Last time I checked they were old enough to vote. An entire generation is being systematically robbed by their parents with nary a peep. Why aren't they marching in the streets like we did? When they do show up at the polls like sheep ready to be shorn, they pull the lever for kumbaya politicians promising to stick them with the bill for an ever-expanding menu of unfunded middle class entitlements.
There only conclusion I can come to is that we Baby Boomers have infantilized our children into idiocy.

Our kids got so used to being taken care of, educated, clothed, entertained, and driven to the mall that they somehow got the idea that this life of Reilly would go on forever. Little did they know that we were luring them into an adulthood of intergenerational slavery. Baby Boomers made a mess out of what was once the most productive economy in human history. Rather than atoning for our errant ways by paying our own bills, we seem determined to use Congress to squeeze every last bit of cash out of anyone we can get our hands on before we shuffle off this mortal coil. Après nous, le Déluge.
Impoverished by our incessant demands for free government services, our children will most likely get revenge by not providing us with any grandchildren. Even if they wanted kids, how will they afford them if half their paycheck is confiscated to take care of us? [B]As the most self-absorbed generation in American history, I suppose Baby Boomers will find it easy to live out their days bereft of grandchildren, much as the French and Italians have.[/B] Can this really be the Great Society we've been promising to bequeath to posterity?

“This film is about a crisis – one that is as profound as The Revolution, The Civil War, or The Great Depression and WWII,” says Bannon. “The title ‘Generation Zero’ is ironic, as it refers to both the Baby Boomers and the generation born today: the one generation whose greed and fiscal mismanagement has destroyed the financial legacy and inheritance of the other.”

Featuring more than 40 leading experts, authors, and pundits from across the political spectrum, “Generation Zero” exposes how the mindset of the “Greatest Generation” — to not let their children suffer through the same economic hardships that they did during the Great Depression and WWII — led to the “Me Generation” and ultimately the Clinton/Bush era of trading campaign contributions for government “cover” in the form of guaranteed bailouts of Wall Street’s speculative investments, thus sowing the seeds of economic disaster that would be reaped by coming generations.


Originally Posted by Taskiss

Your logic would have us blaming Adam and Eve.

I thought you were all about personal responsibility?

Your theory is hardly unique. There are therapists all over the world listening to people blame their parents for their failure... and then there are people all over the world overcoming their limitations and succeeding. Which are you?

Originally Posted by Taskiss

You can blame a whole generation for the creation of entitlement programs if you want, but I'm thinking that boomers have also given more than any generation too, in the form of things like infrastructure.

Highways across the nation weren't going to build themselves. Same thing for communications infrastructure and the power grid, etc.

I don't have a problem with spending when there are tangible results, and boomers have had more tangible results than any other generation.

Originally Posted by Taskiss

All your points are easily explained - subsequent generations failed to perform as well as the boomers.

Boomers have had less and less influence and are now leaving the workforce... and the economy is going to hell in a handbasket.

http://zfacts.com/p/318.html

Originally Posted by Taskiss

Boomers came on the scene in 1946 and started becoming a dominant part of the workforce and voting demographic in 1964.

Generation X came on the scene in 1961 and started becoming a dominant part of the workforce and voting demographic in 1979 or so.

http://en.wikipedia.org/wiki/Generation_X

Gen X are slackers.