The greatest transfer of wealth in history
mhammerman
Posts: 3,769 ✭✭✭
So, what happened? The greatest generation has begun ageing out and their hard earned, depression survivor investments are being transferred to their children...the Boomers. Curse the Boomers, those social security sucking, free love and existential garbage spouting, degreed, AARP toting geezers. That transfer of wealth hasn't even made a blip on the societal/economic radar screen as the U. S. continues its plunge into second tier status, sans military might. What are the boomers doing with the money?
I searched the topic and there were no philosophical diatribes or reminiscing looks at how this wealth transfer fell from the backs of the parents to the gifted ones. The search turns up investment advice, investment houses positioning themselves to get this wealth into their portfolio of customers, even warnings about how the money will flow from the poorly informed to the well informed. There are circling flocks of vultures sending out free dinner cards to the boomers, offering cruises to boomers...if they will just come to a seminar about happy retirements and making the money last, they are even marketing retirement communities to the Boomers so the investors can get that money comitted early...we're talking about a lot of money here.
There are few venues anymore that are easily accessible for the boomers to make good money; the stock markets are gimmicked up to where taking a 2% trimming on your IRA or 401K is a good year, CDs and savings accounts might yield 2% providing there is 10K in there and the bank can hold it for a couple of years. The articles in my search talk about how the wealth to be transferred is staged to move "from the poorly informed to the well informed". The Rule of 8's where investment captialization doubles in 8 years at 8% interest...well, that is now simply a fairy tale about how things used to be...nobody gets 8% anywhere anymore and you only see it in dusty old books now but when the boomers were growing up, it was a mantra. Self managed assets are not the hottest topic among the boomers, they are busy calculating if their income from mutual funds are going to be enough to pay for the extended care insurance they have all been sold..."to keep you safe".
So where's the money? Is it quietly sequestered into some piece of rural property in anticipation of the great urban uprisings that folk are reading about in the news? Well, here's my take on it...it's going for the children of the boomers. Boomers taking care of their grandchildren's colleges and houses, boomers with their kids living upstairs, boomers that are paying off Gen X's and Gen Y's irrational exhuberance, and maybe a small place in the coutry...but the money is not showing up in stock demand or realestate demand or market demand or anywhere on our economic radar screen.
The boomers are stashing what cash they can while trying to keep the 4500 SF house mortgage going and maybe trying to squeeze a few more years in as wage earners. I would postulate that much of the gleanings from the WWII generation are simply passing through the boomers and trickling down to the X's and Y's (well, except maybe a new car for self and the missis) with the boomers simply being facilitators and not necessarily the beneficiaries. How can the boomers abandon their kids and their kids kids...well, they can't.
Oh well, just simple musings on a lazy Sunday. Please return to your regularly scheduled programming.
I searched the topic and there were no philosophical diatribes or reminiscing looks at how this wealth transfer fell from the backs of the parents to the gifted ones. The search turns up investment advice, investment houses positioning themselves to get this wealth into their portfolio of customers, even warnings about how the money will flow from the poorly informed to the well informed. There are circling flocks of vultures sending out free dinner cards to the boomers, offering cruises to boomers...if they will just come to a seminar about happy retirements and making the money last, they are even marketing retirement communities to the Boomers so the investors can get that money comitted early...we're talking about a lot of money here.
There are few venues anymore that are easily accessible for the boomers to make good money; the stock markets are gimmicked up to where taking a 2% trimming on your IRA or 401K is a good year, CDs and savings accounts might yield 2% providing there is 10K in there and the bank can hold it for a couple of years. The articles in my search talk about how the wealth to be transferred is staged to move "from the poorly informed to the well informed". The Rule of 8's where investment captialization doubles in 8 years at 8% interest...well, that is now simply a fairy tale about how things used to be...nobody gets 8% anywhere anymore and you only see it in dusty old books now but when the boomers were growing up, it was a mantra. Self managed assets are not the hottest topic among the boomers, they are busy calculating if their income from mutual funds are going to be enough to pay for the extended care insurance they have all been sold..."to keep you safe".
So where's the money? Is it quietly sequestered into some piece of rural property in anticipation of the great urban uprisings that folk are reading about in the news? Well, here's my take on it...it's going for the children of the boomers. Boomers taking care of their grandchildren's colleges and houses, boomers with their kids living upstairs, boomers that are paying off Gen X's and Gen Y's irrational exhuberance, and maybe a small place in the coutry...but the money is not showing up in stock demand or realestate demand or market demand or anywhere on our economic radar screen.
The boomers are stashing what cash they can while trying to keep the 4500 SF house mortgage going and maybe trying to squeeze a few more years in as wage earners. I would postulate that much of the gleanings from the WWII generation are simply passing through the boomers and trickling down to the X's and Y's (well, except maybe a new car for self and the missis) with the boomers simply being facilitators and not necessarily the beneficiaries. How can the boomers abandon their kids and their kids kids...well, they can't.
Oh well, just simple musings on a lazy Sunday. Please return to your regularly scheduled programming.
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Comments
This is exactly what will happpen. Thats why I say the future is very bright for America.
boomers that are paying off Gen X's and Gen Y's irrational exhuberance
I think it is actually the boomers who live(d) in excess. The Gen X and Y are suffering from high prices as a result of excessive demand from the boomers.
Knowledge is the enemy of fear
or is it one big continuum? certainly your broad brushstrokes describe subgroups within the subgroups, but can hardly be universally applied? Is it still Cool to be a Cynic?
Liberty: Parent of Science & Industry
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
Well, who is providing the care and receiving that money? The Boomers and other employees who own and work at the hospital, drug companies, nursing homes, and casinos, and all the other places these aging parents are spending money. The dough is going to the boomers, just not all of it directly to the boomer children of your friend's mom. The demographic shift is why I'm bullish on health care companies this decade. the population bulge has driven every market boom (and bust) for decades, and increasingly, these people will want to purchase more health care in the future.
of course, "quality of life assessments" and evaluation of "therapeutic index" of palliative care are very sensitive and controversial subject to discuss, and tend to polarize folks' opinions. When it is the person's family's money, that's one thing, but when "the public" is asked to provide the increasingly highest levels of health care "possible" (do everything you can for her, doc!) for everyone, obviously the math won't work out in the long term. Our society has some tough decisions to make about allocating health care to rich people, not to mention people and families who have run out of money
Liberty: Parent of Science & Industry
<< <i>it's going for the children of the boomers
This is exactly what will happpen. Thats why I say the future is very bright for America.
That is what I am hoping for.
I have had enough of judges, lawyers and bail bonds that it's my grand kids that will see most of my largeness.
.
Got quoins?
Well, the boomers are a one of a kind event. Post WWII after a very successful war and a fully employed citizenry and the beginning of subivisions, the population boomed like never in history...hence boomers. The parents of the boomers were the suvivors of the great depression and knew what a dollar was worth and also knew what it was like to have no dollars. The idea of wealth transfer from one generation to the other is typically some kind of drawn out affair that lasts for ten years or so but this transfer of wealth is different; it is a huge amount of money albeit drawn out over 20 years of so.
Firstly, the boomers are a huge population group. Secondly, the boomers are accoustomed to having what they need or feel they need, much different than their parents who had very little to begin with. Over all, the boomers have done well, living with low unemployment for most of their life times, if they could get up and go to work, they did...the boomers are a fairly industrious bunch that transformed the post industrial work place into the digital work place and made a fair amount of money along the way. The boomers brought the "what if" to counter the "that's the way it's always been done" thinking of the previous generation.
A broad brush synopsis for the boomers would be that they turned 55 and realized that they were not 19 anymore but still want the same level of freedom. They want health care, they want to feel and look like they are still 19 and they will spend the money to get there even if it is in the form of a part D Medicare package. Health care is a huge expense and will only skyrocket from here as we are just on the leading edge of the boomer push but that's not new information, it's been cooked in to health care for a while now and the boomers can afford to keep their health up.
Recent articles reflect the multiple generational households that are becoming the status quo instead of the exception. Boomers didn't live with their parents, they were out of the house and roaming freely, never to look back, as soon as they got a job. Now, there are two or three or even 4 generations living under the same roof. With the high unemployment and low opportunities for advancement, it's more of a survival response than a choice. The X's and Y's and Z's typically don't have the resources of the boomers and have to rely on them for support. Kids still need education and health care and food regardless of your generational classification and maybe it's just easier to move in with mom and dad's mom and dad than get out there and take your licks as you make your way. Don't take this x and y situation as a comprehensive stroke, there are some exceptionally successful x's and y's out there.
Boomer money = health care + XYZ...now there's a math problem for ya'.
Edited for comma splice
stock market well befoere things turned down from 2008-2009. I also don't think there's a flood of investment money still to come....it's already happened and was
part of the reason for the vibrant markets from 2003-2008 (ie boomer inheritance money being invested and consumed).
The greatest bad transfer of wealth is a reality and it is going in both directions from the middle class, mostly to those that already have more than they can ever spend. It is being accomplished covertly with dollar destruction and outright blatently with taxes and market manipulation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Some research on the web estimates intergenerational wealth to be around $41 Trillion from 1998 to 2052. $41 Trillion
I agree that some of the boomer wealth will go to healthcare. But I don't think handing it off to Gen X and Y is a good idea too, but its better than giving it to the vultures on wall street, I suppose to be picked clean.
I am fortunate enough to take care of my aging mom only because I am single and my company offers me a flexible work schedule in order to do so. I realize most families don't have that option. She still lives in the home she has known for 54 years.
Box of 20
Another factor is that virtually no one feels rich. It takes mega-mega money to feel wealthy in high cost of living areas of the country, that even those in the top 5% in income or net worth do not feel a sense of financial well being and think that they are just "average." Many of them will answer that if they make or have 2x (double what they have now), they would then be "rich." Of course, when a few make that leap, the bar is moved higher still and they again say double again.
As with almost all things, I advocate a healthy balanced approach to saving and spending.
When you look at wealth what is there really. Just real estate and metal, maybe some animals. All else is just fiction and they are transferring the same land that has been transferred for a lot of generations. They just value it alot more in terms of IOUs.
Money, stocks, bonds, IRAs are not wealth, just IOUs and they net to 0.
It is real and those that see it devalued or stolen by the actions of others have legitimate reason to be outraged.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Young folks do NOT know what consequences for ones actions mean and or principles.
We have produced a bunch of Politically Correct capons!
My baby boomer observation. JMHO
<< <i>Young folks dunno the meaning of work. They do know if I just beg some mom & dad will cave and give me the $$.
Young folks do NOT know what consequences for ones actions mean and or principles.
We have produced a bunch of Politically Correct capons!
My baby boomer observation. JMHO
>>
Thats a pretty big generalization. I think I heard my grandfather say the same thing 50 years ago.
I know a lot of very ambitious hard working young people and I don't envy them. The system has been rigged against them and they will be taxed to death to support our self endowed retirement system. I sure don't envy them. They will have a lot harder time making it in the current environment all the while carrying thier parents and grandparents through retirement.
<< <i>Young folks dunno the meaning of work. They do know if I just beg some mom & dad will cave and give me the $$.
Young folks do NOT know what consequences for ones actions mean and or principles.
We have produced a bunch of Politically Correct capons!
My baby boomer observation. JMHO >>
It's not just young people who don't know the consequences for ones actions, the baby boom generation helped creat the bankruptcy laws which have been abused so badly by everyone.
<< <i>It's not just young people who don't know the consequences for ones actions, the baby boom generation helped creat the bankruptcy laws which have been abused so badly by everyone. >>
That's the only abuse you see??
You are correct, we should make people pay that 20% on money the banks get for free and when they lose thier job and can't pay they should be sold to the mines.
The money? it's mostly on the sidelines. The money that is currently in the game is from the guys that grew up playing three card monte. Traders and schemers.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Exactly. Hi prices for equities, hi prices for residential real estate that isn't in a ghetto or economically depressed area, hi prices for medical care. It started decades ago, but now the early boomers have started selling, while the late boomers as well as gen X & Y are buying. It remains to be seen when, or if, the supply starts to overtake the demand.
-just another Gen X sucka
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>We spent most of my Lockheed 401k to keep my mother in a nursing home for 6 years at $6000/month. I can't tell you how many of my small-government low-taxes Republican friends told me we were fools for not getting her on welfare so the government would pay for her care. >>
Then again.... the government forces you to pay for them..... why not use them?
In a prefect world you wouldn't be force to pay for these type of programs in the first place.
In God We Trust.... all others pay in Gold and Silver!
This economy is dragging it's knuckles on the ground right now because smart money is still waiting. And it may be a while until smart money makes the turn. However, I've noticed a few players have re-entered the housing market. Marcus just bought a couple of very large projects. Bren actually restarted Irvine Pacific to complete a buildout at Irvine Ranch and every home sold out. 1500+ developed parcels with multiple builders at $550k-800k+ per each sold out. Impressive in this economy. To me, this seems to indicate a huge demand is coiled up and ready to go but is limited by economic factors. People want to move forward but can't.
Middle class and upper middle class consumers with strong asset bases and good borrowing histories are moving forward.
The low end wage earners are getting hurt the most. I do not see a bright future for those folks.
When in history has the future ever been bright for the poorest people? the bottom 10% in income always makes less than everyone else.. by definition
Anyway I agree with your coiled spring analogy, this economy is a giant aggregate, certain segments (there is always a top 10%, too) are doing really well, and most of the middle to bottom are "making do" with their Needs for now (due to reduced aggregate cash flow) and postponing "upgrades" that they Want to purchase.
As for adult children moving home, if it makes sense, and they're invited (at least some are invited, even welcomed back in to their parents' homes) then that's another form of "making do" until prospects improve.
that coastal property streeter describes, let me guess, at that price point, they're average sized houses (2000-3000 sf) on , say, a sixth of an acre?
the dough for such goods (and high end services) is indeed expected to trickle down. the good stuff usually recovers first
Cramer tonight did a show about high end discretionary spending stock plays, you probably saw it, Harley Davidson was at the top of the list
Liberty: Parent of Science & Industry
Irvine Ranch(BREN CO.----btw Donald Bren is a GREAT AMERICAN...wiki him) is 5ft lot lines and large houses. Not for me(I live on 5 acres). Irvine is not coastal property. Irvine is a nice safe little town that was made to order. A cup of yogurt has more culture. A lot of people like it. You couldn't pay me to live there.
Notice the AP story yesterday, 8/10 highest unemployment cities in the nation over 100,000 are in California. 26% down to 15% for #9.
Highest unemployment rates December 2011
El Centro, Calif. 26.8
Yuma, Ariz. 23.1
Merced, Calif. 18.7
Yuba City, Calif. 18.1
Visalia-Porterville, Calif. 16.2
Fresno, Calif. 16.2
Modesto, Calif. 16.1
Stockton, Calif. 15.9
Hanford-Corcoran, Calif. 15.3
Ocean City, N.J. 15.1
-----------------------------------------------
You take a town like Fresno, population...500,000+ ------not well known but larger than ...say Pittsburg or St. Louis or Cincinnatti. If any of those cities were 16.2%...and that's the OFFICIAL rate for Fresno---I suspect 20+%....You'd hear a MASSIVE outcry from the people who scream the loudest.
You could take the INLAND 'EMPIRE'...4.4 million people---Ontario/Riverside/San Bernardino (which is a large 20mile x 20mile x 20mile triangle with a population more than most states) and it's unemployment is 12-14%.
We're in trouble right now. You could say with great certainty that CAL is in a depression. Our POLS don't get it. They want to raise state taxes ahead of the FED increase in TWO years because when people realize what is happening with federal rates starting in 2014, there will NO CHANCE of raising state levels in the forseeable future.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Same here in MD, O Malley is tax happy. Increase sales tax to 7% and gasoline tax 18 cents. The Pols won't cut spending. There answer will always be higher taxes. Maybe we need a Christie here in MD.
Box of 20
Yes, Irvine and Tustin are largely master-planned communities, and my recollection has them a few minutes, certainly less than a half hour, from the Pacific, it's not coastal, but those central valley places on your list, have you ever been there? Just about as far from well-planned and coastal as it gets in California
and probably, they folks buying those new homes have more than their "fair share" of Harley's in the third garage
Liberty: Parent of Science & Industry
All of the San Joaquin central valley cities have an illegal problem that is beyond solution at this time. I encourage anyone to read Victor Davis Hansens piece on the problem. Truly enlightening from a man in the Stanford think tank that still owns his family farm in the San Joaquin valley.
Here's a site that needs linky help please
http://www.nationalreview.com/articles/255320/two-californias-victor-davis-hanson
and,
CAL, by and large, is de-toying as we speak. LOL
The state is a host for the parasite of democratic/union government. State workers are retiring at 55 with more income that most people make working back east (100K a year is not uncommon). The state is financially drained but won't stop feeding the union voting base. The big scam is photo traffic tickets. $495 each for not a full stop on a red light before turning or something else that insane. That's 500buck, a weeks pay for those with a MAC job. So many of my friends are out of work at 50. Companies can't leave fast enough. So many taxes and regulations. and then the great idea, a $90 Billion (yes with a
California is the next Detroit. Boom to bust and destroyed by the Unions.
Are you referring to the whole state, or certain blighted downtowns or the overbuilt, rundown, desert cities?
So many of my friends are out of work at 50
would you mind revealing what sort of work they're looking for?
Liberty: Parent of Science & Industry
CAL is in a depression. Some areas not so much.
I never did get where you hail from. You have no profile.
Two rules of America. As the general goes, so goes America(GM). As California goes, so goes the rest of America.
7 out of those 10 wonderful cities,( previously mentioned) are smack dap in thee Not 'one of the' but thee most fertile ag area in the world. Who would of thunk. Yuma and elcentro are the last two exits on the road to hell. They don't count. El Centro is the farming center however of the IMPERIAL Valley....the area in the U.S. where you get lettuce in the winter. Imperial valley, 7 crop rotations per year. Just add water and fertilizer.
I wish someone would have linked that article I previously referenced by Victor Hansen. I might have to go back to school and learn to linkify. I used to pay people to do it and never learned. My bad.
I know that I've read that before, but it should be read by everyone. It lays out the unpleasant realities that we need to face in California.
I knew it would happen.
Probably the biggest insanity is the huge drop in agriculture due to a decision to shut off all the water to the farmers. They have been major family farming there for 200 years and now some endangered fish. I'm sure the issue will be resolved as soon as all the farms are foreclosed and the major multinational corporations buy them up. Its all insane out here.
Our two current U.S. senators have failed to represent the people of California. They represent 'others'. Other 'constituents'. The water issue was/is a ruse to stop development. Both senators only enter the gates of southern California when their hand is outstretched with the palm up.
JMHO, and I believe I see them, their actions and the issue for exactly what they are and it is.
Seeing them operate and how they have failed to represent California makes me want to step back 40 years in time to when I entered Berkeley and to start a revolution to flush our country of having these type of people represent citizens but mostly represent their own interests..
Because we need it.