Boomers Made a Mess of the United States of America
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!
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Terry Jones on 23 November 2009:
I've been reading your web site for quite a while now and by and large agree with the things you say Mr. Bonner but it seems you have a "down" on Baby Boomers of which i am one having been born in 1946.
In your most recent grizzle you talk about Boomers "maturing during the sixties and seventies". Do the math, at that time we were late teens early twenties and had more important things on our minds like having fought your Imperial wars ( That is to say American Imperialism ) or dodging them. Far to busy to be thinking too much about finance!!
My observations of the way it has all unfolded in my time is that my folks taught me frugality ( whether or not it was practised is another story ) but you can bank on this - by and large Boomers had to earn whatever we have now. Generation Y seem to believe that they deserve the good life and generation X, having no idea at all, are most likely to lose it all.
Generally i find your comments on inheritance trite.
I believe that all generations try to leave their heirs a better place -after all we have fought wars to do so - if we can there will be a surplus of wealth available too but that can't be garaunteed because,after all, we have to live until we die and if there is a way to bugger it up we will find it!! In this paragraph i use the term "we" to mean mankind.
TJ
Perth. Western Australia
Comment by Mike on 24 November 2009:
This article describes American baby boomers very well.
The problem is that it only represents the majority of baby boomers in America, say 60%, but that is enough to wreck the country for the rest of us.
I thought this was a very insightful article!
Comment by christina on 24 November 2009:
You're so right!! Plus, on top of all that they spoilt their kids (generation y) and didnt discipline them when they were naughty, so now they have stuffed up that next generation too. They got all of generation y addicted to credit from a young age, and generation y thought that credit cards and debt were okay as they just copied the way their spoilt baby boomer parenst shopped. That's quite an accomplishment-to stuff up 2 generations in a row
Comment by Scott on 24 November 2009:
Wow, you discribed life in the U.S. perfectly, and two presidents from the baby boomer generation, Clinton and Bush jr., added crap the the debt pile. Clinton may have brought down the deficit, but under the guideance of Larry Summers, who was the secretary of the Treasury, who is also a baby boomer, help deregulate the banks. Bush jr. felt that spending and borrowing was okay because that's all he really knew how to do. After all he came from a wealthy family and daddy's money always pulled him out of a jam. The American economy has been a great illusion. Other countries saw her spending money, creating a belief that Americans were wealthy and had lots of money. Wrong! America and Americans have been living off of credit for years. You are not wealthy if you owe the banks and everyone else. The problem is if the U.S. ever declared bankruptcy she would take so many countries down the drain with her that we would really see a great depession. Don't wish ill will on the U.S.; instead other countries should be like a parent towards a spoiled child. You borrowed the money young lady and you are now going to have to pay it back. It will come out of your allowance, so there will be no new clothes, no parties, and you will get a part-time job to pay back what you owe. The sad thing is it will never happen, so we need to love this spoild rotten child and hope she may have learned her lesson, but I don't think she has.
Comment by Ned S on 24 November 2009:
Alan Greenspan doesn't look like a baby boomer to me - As in do you blame the pigs for doing what pigs will always do or the pig farmer for feeding them too much slops and standing back and admiring his handiwork and saying My, what big fat pigs I've raised!
Comment by Dan on 24 November 2009:
The pigs took over the farm, Ned.
Comment by Dan on 24 November 2009:
"Take any two young people, 16-24 years old. Odds are, one of them will be unemployed. " ... that would be ideal, as one of them could take care of the kids.
Comment by Ned S on 24 November 2009:
Absolutely 100% agreed Dan! (About the kids.) Ken Henry doesn't though - He wants lots and lots of happy little breadwinners cum tax payers. It's always dangerous trying to effect societal change I think ... The Afghans are proving to be extremely recalcitrant! But Aussies are more compliant by nature than some of our foreign brethren I guess?
As to the pigs, I reckon it's the hired help that doles the slops out to them that took over the farm?
Comment by baal on 24 November 2009:
goodness, did you say boomers or bankers messed up the USA? nothing like blaming the victims: the boomers and the geezers both seemed to have lost their life savings...
did anybody mail wall street or DC a reality check yet ?
Comment by John L on 24 November 2009:
I generally agree with The Daily Reckoning (even enjoy the humor), so much that I am a member of Outstanding Investments. However, you're being too hard on us Boomers! Peel back the "onion" a little more...
We Boomers started adult life after our elders fabricated the "Gulf of Tonkin" incident, which seemed to have been quite a waste of lives and finances. At that same time our elders also started a number of disastrous social programs, damaging the culture intended (perhaps) to help. These programs grow worse each year, instilling corrosive values in new generations every 15 years.
I read that during the Lehman failure time, when the Bush Administration was twisting the arm of Congress, Americans were against the bailouts by a margin of 100 to 1. Even today our tea party type protests to current policies are quite marginalized or ignored by the "free" press. Smells like a rat, or families of rats.
So, ultimately I believe we all bear personal responsibility for our lives. However, if the "Captains of the American Ship" take us where we obviously don't agree to go, to an extent we are captives on that ship.