Tuesday, December 22, 2009

Baby boom ... and bust ?

Guambat has been puzzling over the recent calculations that the first decade of the New Millenium was the worst on record for US stocks.

Drawing inferences solely from personal experience and anecdote (so hardly a "study" in any sense of the word), Guambat wonders if this is all just a Malthusian Boomer thing?

It all began with the tsunami tsurge of prices in the 1990's as Boomers, not unlike your humble Guambat, woke up to the reality of the calendar.

After all, this was the world's first generation where a college degree was the new high school diploma. Which taught all of us, if nothing else, the power of procrastination. Of "all nighters" and "cramming" and "pulling it out of my ...", well, never mind. You get the picture.

So here we are humming along and then the calendar turns and the Boomers think, "I've got to get me some retirement stuff." And off they all went, herding as they've done since before the Beatles, into the stock market.

Now most things that this demographic bulging Boomer crowd have touched have been sorely affected, and the market was not the only one. It had to go up, but it is the nature of the beast that it could not possibly stay there. The herding instinct raised it beyond fashion, beyond fantasy, into the realms of entertainment drugs: any high is followed by a crash, and stocks, like dope and booze, were no exception.

And this is the part where Guambat's puzzlement gets foggy, but not unlike most things swimming around in Guambat's thick cerebellum these days.

Was the bust that this last decade has been just the after-high crash, from which we will drag back up off the floor so we can twist again like we did last summer or party like it's 1999, or is something else broken as well?

Guambat considers it highly possible, not necessarily probable, that this is unlike the usual cyclical experience. The bulging demographics now consist of a bunch of retiring types whose retirements have been busted. Not only can they not afford to go back into the market to push it up again with their mighty collective and herding bloat, but their wholesale withdrawal from that market to live off of what is left over will be a pall on indexes of unprecedented proportion.

So, just like in the '60's, it's back to stick and seeds, again. And we are the pall bearers of our own savings.

Unless the burgeoning third world can somehow make up for and take the baton from the aging Aquarius generation, there are going to be just heaps of Boomers who, thinking they survived the '60's, will find themselves busted in their 60's.

It's nothing personal. Just a Boomer thing.

Does Japan offer us an appropriately analogous model with its aging population bulge?



MORE ON THIS THEME:

Tidal wave of retirees threatens to break the bank
AUSTRALIA is on the crest of a demographic tsunami, with the first wave of 5.3 million baby boomers eligible for the age pension from next week.

The country's money box faces the double whammy of paying for older Australians who need extra care and for workers who are retiring in greater numbers than ever before.

In response to some of those emerging challenges, the Federal Government last year announced it would push out the pension eligibility age to 67 by 2023. CommSec chief economist Craig James said the pension qualifying age might have to be revisited.

"I think we may see further shifts over the next couple of years," he said.

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