The Prodigal Boomers

Surely one of everyone's favorite parables is the The Prodigal Son. Well consider the inverse situation with the following statistics -

Boomer Statistics

• $400 Billion: Amount that will come out of annual U.S. consumption as thrifty boomers push savings rate from 1% to nearly 5%.
  
• 47%: Boomers share of national disposable income in 2005 before the bubble burst. Boomers contributed only 7% to national savings.
  
• 2.4%: Forecasted GDP growth over the next three decades as boomers ratchet back. GDP has grown 3.2% a year since 1965.
  
• 69%: Portion of boomers aged 54 to 63 who are financially unprepared for retirement.
  
• 78%: Boomers' share of GDP growth during the bubble years of 1995 to 2005

Those stats are from a McKinsey study, and there is nothing remotely inflationary about boomer demographics.

Nor is there anything inflationary about Generation X demographics. Generation X's have seen boomers blow it. By sharply curtailing spending, generation X at least has chance to right the ship before retirement. It's too late for most boomers. Time ran out.

Now consider generation Y with 19% of the population. Think the income levels of generation Y are going to catch boomers or generation X?

The Real Effect
Let's consider that for a moment shall we? What can we surmise?

• Boomers were spending a significant amount of money on things. They were good consumers. (47%: Boomers share of national disposable income in 2005) This bought things like boats, cars, vacations, fancy dinners, "investment" properties, etc. This is their right to do so.
• Boomers are beginning to figure out they were had in a giant ponzi scheme and they're going to be broke. In order to participate in the ponzi scheme, they had to sell their children into bondage via -
• Social Security, Medicare, Medicaid, Unemployment,
• Legacy pension plans, government bulk, Educational Tenure
• Bailout programs (SNL, 2008, FDIC, Fannie/Freddie)
• Empire building (Myriads of wars to support cheap goods)
• Artificially low interest rates (ZIRP is the most recent which destroys their pensions)
• Job outsourcing for cheap consumption (NAFTA, GATT, FTAA leading to Wal-Mart)
• Boomers have not prepared for "retirement", yet are fully expecting to retire. (Boomers contributed only 7% to national savings, 69%: Portion of boomers aged 54 to 63 who are financially unprepared for retirement.)
• They will most likely fully expect their children, Gen X, to "take care of them". (Read as "support their lifestyle".)
• Their children, Gen X, have been dealing with the ramifications this issue for the last 20 - 30 years and a good percentage of them plan on rewarding their parents in the manner that they themselves were treated. (Here's a cot, find a corner)
• I don't believe the boomers have much of a clue this is coming. In response to this, Gen X is now getting into the driver's seat.

I believe that in investigating this it will become more and more apparent that the Boomers have relied on "The System", be it in the form of Treasury Bonds, 401ks, Public Pensions, Corporate Stocks, Social Security, Housing and so on. The problem with all of these institutions, is that they are all only as good as their funding and with fraudulent rulings calling the shots, the institutions have already spent the dough in one way or another.

What a shock this is going to be to all those who were brought up on this mentality as "The System" dumps them faster than they can say Chappaquiddick.