Okay! We’ll say what we’ve been thinking…
..that our children are going to spit on our graves!
First, Americans made a colossal mistake in the ’90s and the ’00s. They partied…they spent…they borrowed…running up huge debts in the private sector. Most kids could forget about inheriting anything from their parents; the geezers spent it years ago.
The boomer generation also made a mess of the biggest success story in world history – the United States of America. In the ’60s and ’70s – when boomers matured and began to take over – the US was still on top of the world. It had a positive trade balance…huge savings…massive investments abroad…and the strongest companies in the world.
They ruined it. The financial industry took over…replacing manufacturing. Instead of making things we could sell at a profit, Wall Street sold debt – mostly to us! In government, imperial ambitions pushed aside the restraints and good sense of the old republic. Overseas, military bases were set up in 120 countries. We now have unwinnable, trillion-dollar wars that could go on forever. At home, the sheep look to the government to solve every problem. Thirty-five million Americans – almost as many as the entire population of Spain – depend on the feds’ food stamp program for their daily bread.
At least, most Americans are making amends in their private lives. The old days, when the US was “the world’s mouth,” are over. We can no longer be counted on to buy up every gadget and gizmo produced in the world. We’re rediscovering the old virtues of thrift and savings. Frugality is back in style. If this continues, the Baby Boom generation may not leave the next generation with much net wealth, but at least it will not leave behind huge net debts.
But over in the public sector, the debt toll mounts up. The boomers want the government – which means, the next generation – to pay for their health care…their unemployment insurance…their bailouts and their handouts. The deficit for this year is expected to be about $1.5 trillion. Next year, it will be about the same. The feds say it is too early to pull back on their stimulus efforts. Housing credits and unemployment benefits have just been extended. A trillion-dollar overhaul of the healthcare system is in the works. Even assuming a real recovery – don’t hold your breath – the deficits are supposed to run $1 trillion per year for the next 10 years. More likely, as we reported in this space a few weeks ago, the deficits will be $2 trillion per year. By the time today’s 30-year-old gets a family…a house…and a mortgage, he will also have his share of a $20 trillion dollar deficit – not to mention the “off budget” obligations of the US government, a total of more than $100 trillion!
But wait…aren’t these spending efforts paying off? Isn’t the stimulus helping the US economy get back to into the pink? Don’t all these federal spending programs create a safer, more prosperous world?
Ah…tell that to the kids! “We were just trying to get the economy back on its feet…so you could find a job in a thriving economy,” we might say.
Take any two young people, 16-24 years old. Odds are, one of them will be unemployed. Joblessness among the young has hit 53% – a post WWII high.
Seven million jobs have been lost in the last 24 months. Employers are still cutting payrolls. And when business picks up…what kind of jobs are they going to offer? Will the next generation compete with the Chinese for low-cost production? Are they going to compete with the Europeans for high-cost/high quality production? Are they going to develop more mortgaged-backed securities? Or are they going to put on waiters’ aprons and take orders from clients who no longer dine out?
Good jobs will be hard to come by. Because the ‘growth’ of the bubble period – 2001-2007 – was a fraud. Instead of building up capital assets and creating more jobs, people borrowed money …and then squandered it. And now, the recovery is a fraud too. Now, the government pumps up the economy with cheap credit…borrows trillions…and wastes the money on pointless ‘stimulus’ programs.
And day after day, the debt builds up. Soon, it will be too big to handle. And then, these same young people – who can’t get a foot onto the lowest rung of the employment ladder – will be asked to shoulder this huge burden of debt left to them by their parents. You can imagine their reaction…
..they will spit on our graves!
for The Daily Reckoning Australia