Niall Ferguson in an article for Economic History Review asked why the bond market failed to anticipate World War 1 any better than anyone else. “The main question addressed [in the paper] is why political events appeared to affect the … the London bond market, much less between 1881 and 1914 than they had between 1843 and 1880. In particular, I ask why the outbreak of the First World War … was not apparently anticipated … To investors, the First World War truly came as a bolt from the blue.”
Nor was World War 2 any more obvious, except in some markets. Moreover Bruno Frey and Daniel Waldenstrom argue that with the possible exception of the Nordic countries it was unclear whether the bond markets were able to anticipate World War 2 despite the obvious impact such an event would have on sovereign debt.
But once the surprise was past, Frey and Waldenstrom showed that the markets were capable of drawing the obvious conclusions. Studying markets which stayed open for the duration of the war the professors found that major events in the conflict affected the prices of both German and Belgian bonds in obvious ways. Hitler’s offensive in 1940 raised the German bonds but depressed the Belgian while the defeat at Stanlingrad raised the Belgian but depressed the German. It is tempting to conjecture that the markets are no better at anticipating a ‘phase change’ than anyone else. But once the discontinuity has been crossed investors proved themselves fairly astute analysts of events across the more linear parts of the trajectory.
What can be said about the predictive power of markets today? The Wall Street Journal reports that a “combination of Korean tensions, Spanish bank health worries and inter-bank lending woes slammed U.S. stock futures”. Is the rising LIBOR rate predicting anything? Such as a second financial crisis? Maybe. But one complicating factor is that market signals have the ability to change the future by warning politicians of possible catastrophe. They send back an echo from the unseeable future that may alter present policies and thereby change the future.
James Pethokoukis, writing for Reuters says the “Greek debt crisis could save America” because the sad example of Greece may cause enough American politicians to have second thoughts about the wisdom of welfare states and rising deficits. Here the markets acting like a Crystal Ball, may yet keep America from that meeting in Samarra; or mayhap it may help ensure it in other ways. Yet if financial responsibility were wisdom it is sagacity compelled on politicians by the voters. Left to themselves they wouldn’t give it a damn. Pethokoukis is certain that American politicians would gladly ignore the even the prospect of the collapse of US bonds but for the certainty that the voters would resist more heedless spending.
Americans intuitively understand that there is something deeply wrong about running trillion-dollar budget deficits as far as the eye can see. Maybe deficits didn’t politically matter in the 1980s, but debt as a share of GDP was only 50 percent. Now it is 60 percent only its way to 100 percent in a decade.
This is why we didn’t see a second trillion-dollar stimulus. Although plenty of liberal economists though it was needed, even congressional Democrats understood that Stimulus 2.0 would not fly with voters freaked by all the red ink.
Second, America doesn’t need a domestic debt crisis. Voters can easily track the one happening with Greece and the EU. Runaway spending. Overpaid civil servants. A loss of confidence. Trillion-dollar bailouts. Falling standards of living. National decline.
Ultimately it is fear for their political hides and not a string of figures on a piece of paper that can make them see the sums. In this scenario the politicians are completely irrational but are saved from utter folly by reactions of the public, who in a strange way keep their betters in check, the way butlers kept wayward aristocrats from doing anything too stupid in the PG Wodehouse universe. The voters take their cues from the somewhat rational markets and the dwindling state of their bank accounts and tell the politicians about the bad things ahead. Certainly the danger to the global economy is become obvious even from the summit. CNBC reports that despite assurances from the US, China is worried about Europe. “The United States suggested Europe’s debt crisis would have minimal impact on global growth, but China took a more pessimistic view, warning it would impact demand for its exports and other regions would suffer too.” That would not be news to the general public. That the thought would occur to the exalted ones — that is news. The catastrophe is no longer unthinkable and paradoxically, therein lies the hope. A real sense of danger may avert the headlong race for the cliff.
The problem is whether the negative feedback will be strong enough to arrest the momentum. USA Today reported that private paychecks in America have fallen to historic lows while the government payroll has risen to unprecedented heights.
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.
At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.
Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.
The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. “This is really important,” Grimes says.
Especially to those who know how to take advantage of a growing government role. For some, the expanding size of government is a once-in-a-lifetime opportunity. The willingness of government to intervene creates a moral hazard that may be irresistible. For example, Robert Reich argues that the so-called financial reform bill still leaves the banking industry concentrated in a few large firms. “That makes them too big to fail almost by definition, because if one or two get into trouble — as they did in 2008 — their demise would shake the foundations of the financial system, even if there were an “orderly” way to liquidate them. Because traders and investors know they are too big to fail, these banks have a huge competitive advantage over smaller banks.” That same dynamic has allowed Spain, California, Illinois and whoever else to trip carelessly through the financial fields, secure in the knowledge that the government will step in and rescue them — like the banks — from their own folly. The taxpayer’s always there for the ‘sake of stability’ or for the ‘sake of the children’.
All those government jobs come at an eventual price. Consider the pensions. The Financial Times reports that “state pensions are becoming a federal issue”. “Illinois used to have a plan to pay off the gaping shortfall in the pension funds that pay retired teachers, university employees, state workers, judges and politicians … But Illinois could not stick to the plan.”
Illinois is the poster child of unfunded pensions in the US. But state retirement systems could become a national concern, new research shows.
Joshua Rauh, associate professor of finance at the Kellogg School of Management at Northwestern University said that, without reform, some state pensions might run out within the decade. By 2030, as many as 31 states may not have the money to pay pensions. And, if these funds exhaust their assets, the size of payments for the benefits they have promised will be too large to cover through taxes, putting pressure on the federal government for a bail-out that could potentially cost more than $1,000bn, he says.
“It is more than a local problem,” Mr Rauh said. “The federal government could be on the hook.” Estimates put the unfunded liabilities at between $1,000bn and $3,000bn after years of states promising benefits but not contributing enough in both good times and bad to cover them.
The pensions are too big to fail to the tune of 1 to 3 trillion dollars. Which means they won’t stop mailing the checks, at least, not while a stone remains upon a stone. Will a day come when everything comes tumbling down? Maybe. But we may not be able to rely on the markets for proximate warning. Yet despite their inability to clearly predict the crash of 2008, once past the discontinuity they have proved fairly good at tracking the linear parts of the trend. And while the politicians remain utterly blind they are not insensible to the voters, who with their greater reserves of common sense, can read the tea leaves better. But the future is still a blank. Does a second discontinuity lies ahead and when? What will happen in Europe? Will some ‘damn fool thing’ on the Korean peninsula or the Middle East create an unanticipated bend in the road? Nobody can say for sure. But it’s a good bet that politicians will keep their blindfolds on until the very last second. No crystal ball is any better than the willingness to look into it.
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The real question is whether Republican politicians have have the cojones to to radically cut back the welfare state. Early next year, the national debt limit must be raised again by a vote of Congress. In a better world, the Republicans, who likely will be in control of the at least the House at that time, should refuse to raise the limit without massive cuts. Federal spending close to 30% of GDP is simply not even close to being sustainable, and every sane person knows it.
The problem so far is that hardly any of the Republicans want to reach for that big hatchet and swing away. They’re gutless in the face of this crisis.
If GOP (or any other) Congresspeople will not reach for the hatchet and veto another hike in the national debt limit, then they will have to be retired ASAP. And their replacements likewise, until we regain some fiscal sanity. I recognize this may not happen; that if we miss this chance in November the liberal autocracy may, before November 2012, have metastasized fatally. I recognize that this may not happen precisely because too many people think it must happen, that our system is well within what Wretchard might call its “design margins” of accountability, that balance will be restored.
What if it isn’t? The hour is late.
Ahhh, terrific post today wretchard. Tons of the great phrasing that’s your trademark, tons of content to respond to. I’ll take one from the middle.
Ultimately it is fear for their political hides and not a string of figures on a piece of paper that can make them see the sums. In this scenario the politicians are completely irrational but are saved from utter folly by reactions of the public, who in a strange way keep their betters in check, the way butlers kept wayward aristocrats from doing anything too stupid in the PG Wodehouse universe. The voters take their cues from the somewhat rational markets and the dwindling state of their bank accounts and tell the politicians about the bad things ahead.
I’d say it has to get to the point where the politicians fear for their PHYSICAL hides before their behavior changes. And some, not even then, noble idiots.
But the public does not take their cues from the markets – the public ARE the markets, that’s the whole point of why the markets resist phase change, have hysteresis. If something is too terrible to consider, it isn’t considered, we all have to be dragged kicking and screaming into the future, do you think I was happy waking up with Obama the president-elect? Yeeeaarrrgghhhh!!
oMan,
I would take your idea of liberal metastization and say that it has infected the GOP as well. They’ve become DemLite, even with them holding the House, Senate and the bully pulpit no reforms got accomplished, it was all about compassion, reaching across the ailse, kicking the can down the road, other drivel.
The easiest, quickest path is to let it fall, pick it up, clean it off and stand it back upright. If we’re lucky we’ll get another 150 year run before it starts going sour again.
Sooner or later the grown-ups will have to take control from the (forever)Baby Boomers. An entire generation of people have grown up in the West without ever reaching an intellectual and moral state of maturity. They have acted as if they were the Last Generation (and in most of Europe have tried to be exactly that) and had no responsibility to the future.
Now the bill must be paid and they are utterly without ideas, they whine and wring their hands but take no action. They act like spoiled children waiting for their parents to come and tidy up after them.
The Socialist Titanic has well and truly struck the iceberg and the ship is rapidly taking water (red ink?, perhaps) but, unlike the elites of 1912 who ordered another round of drinks while waiting to live up to their station, our current elites are looking to stand on our shoulders to keep their noses above water for one second longer.
Change will come soon enough; I pray it comes via a ballot-box rather than the alternative.
imho cascading crises will continue and drive O’s numbers down.
the pubbies will likely take one and maybe two houses of congress. They’ll pass legislation which will take massive bites out current US deficits. That in combination a big fall in the price of oil–already down 20% to $68@barrel but likely headed to $40@barrel or less– will turn the tide.
However, the dems lead by O will totally demonize the pubbies–while taking the credit. This is what Clinton did after 2004.
Who knows what will happen next in North West Asia.
4. LFMayor
The real hazard of “liberal metastization” (sounds scarier than cancer!) is that sooner or later they have a hook into everybody. The objective of the Socialist program is to get everybody sucking on a teat, to the point where no one will vote to bump themself off the dole. This collapses in the end, but it of little matter to the elites; they had fun while the party (or should I say “The Party”) lasted, future be damned.
The Soviets tried this and they managed what, seventy years or so. The Chinese are trying to do capitalism half-way but are likely to get sucked down the drain when the West goes bankrupt (they can, of course, fall back to their default setting of totalitarianism).
The comparison to the first decade of the 20th century is apt. Tensions swirl unabated as trouble-makers and madmen thrown matches at the tinder while most of the folks just keep saying “Oh, that could never happen!”.
Interesting times, indeed.
anton @ 5: Sooner or later the grown-ups will have to take control from the (forever)Baby Boomers. An entire generation of people have grown up in the West without ever reaching an intellectual and moral state of maturity. They have acted as if they were the Last Generation (and in most of Europe have tried to be exactly that) and had no responsibility to the future.
Hey, us boomers were still trained to operate via management by objective, very WWII and results oriented. Obama is no boomer. Reid and Pelosi are, I suppose, but they are freaks. It’s Gen-X, or even Gen-Y, that has no respect for results, and even less for what it takes to simply maintain. And the whole (pop-psychological) basis for conservative thought is concern with holding on to what you’ve got, or more charitably, maintaining and preserving current systems.
I guess by that analysis, the financial meltdowns are the fault of all these young whippersnappers, demanding and granting absurd pensions, making absurd mortgages and absurd derivative instruments on top of them. So, it’s not that Boomers are all perfect, but the shape of recent disasters are not boomer shapes.
The types of changes which will be necessary are not the type that Parliaments and politicians accountable to voters are good at. Ergo, they will not be made by choice, but forced by events.
World War I was not predictable by investors because it was less driven by rationally based economic considerations than by power politics (not necessarily irrational, but less quantifiable). The financial structure of the time, especially in the major continental monarchies (Germany, Austria-Hungary and Russia), incorporated major investors and economic actors at best indirectly in diplomatic and military decision making, the Germans to a greater degree than the other two.
The 1914 crisis became the First World War (rather than the “Third Balkan War”) primarily because of the Austrians and Russians, with the other powers, to greater or lesser degrees, playing (essential in the case of the Germans) supporting roles. The investment community could not account for the perception of the Austrian elites that Serbia needed to be crushed, or the desire of the Russian elites to protect their fellow Slavs and the prestige of Tsardom from a repeat of the earlier humiliation (1907-08) over the Austrian annexation of Bosnia-Herzegovina.
Nor could economic considerations account for the extent to which the German war plans were driven by the mobilization speeds of the great powers — the minute the first Russian reservist pulled on his boots, peace in Europe was doomed whatever the diplomats did, because the German plans counted on crushing France before Russia could complete mobilization. Not even the German diplomats were complely in this picture.
What distinguishes human beings from other animals in our conceit is the ability to learn from the experience of others. Unfortunately this gives rise to two vulnerabilities;
1. a belief that not just humans but other natural systems can also learn and adapt we call Lysenkoism,
2. since we are dependent on experiences that are recorded and then transmitted through cultural patterns, such as writing and the educational systems, we are vulnerable to having those sources we rely on corrupted.
Socialists use the first weakness, an imperfect ability to weld expectations to reality, to create sufficient suspension of the reliance on personal experience that they call “Hope.” This is then compounded by the Gramscian corruption of those institutions relied upon for the education of future generations. Eventually you arrive at a point where people cannot read the crystal ball. Their eyes have been taught not to focus and the ball they do look in has been tuned to deliver only reruns from the “West Wing” TV show. What is needed, lest we become less than a memory, is a new crystal ball, a palantir that can look with “straight sight” back Into the West and remind us of how things ought to be.
I think I am hearing more and more in my mind the sad melody of “The Night They Drove Old Dixie Down.”
While the market tanks, reacting to systemic risks, the productive class watches its savings and capital lose value, perhaps permanently this time. At the same time, Congress-Obama aim to bail out the “retirement funds” of unions and public employees. In effect, the regime is spreading around the wealth of the productive class by borrowing against it and giving the money to nonproductive people and groups. The government then will tax the taxpayers more, of course, to pay for the largesse of the government.
So let’s see if I get this right: I acquiesce to the government (because Nancy gives me no choice) giving my money to favored groups. Then I spend the rest of my life paying taxes to amortize the government giving my money to favored groups. Yeah, I think that’s it. That makes me real happy.
The ideology of the left seems to be that if the ship is going down, we are all going down together, because that’s fair, and anyone who has money is going to have to pay for the final deck party.
I don’t think Richard would invoke “crystal ball” without knowing we would think of a particular crystal ball and what one sees in it, i.e., the eye of Sauron.
I’ve been reading Tainter’s “Collapse of Complex Societies”. One surprise is how many complex societies there have been, all around the globe — now all gone. And it is shocking to read his quick summary of the decline of the Western Roman Empire. Declining education; dropping human fertility; inflation (debasement) of the currency; growing bureaucracy. It all sounds so familiar.
Still, it took the Western Roman Empire centuries to collapse — many human generations. There is indeed a lot of ruin in a nation. Sometimes it seems like the whole edifice of western culture could collapse as rapidly as the Soviet Union. Sometimes it seems like this process could continue for centuries. There is historical precedent for both.
To add to what Josh has to say, us boomers are the last generation to have a solid, grounded education as an aggregate, and the majority of boomers didn’t really participate wholeheartedly in the “counterculture,” which was actually created by elements of the ‘Beat Generation,’ which — in turn — was not representative of its generation, but, rather, a collection of degenerates and sociopaths who resented the productive society around them.
http://bit.ly/bVakVI “Soros & Paulson accumulated a record 1,938 tons of or eclipsing all but four of the biggest central-bank holdings”
So, if anyone can explain why these 2 financial wolves had to make that ?
looks like we are gonna experimenting difficult times !
Social activity would be impossible without shared hallucination. Each actor in the system must have a “theory of the Other,” the intentions that drive the other actors. Trivial example is driving on the right side of the road (left in UK, Oz, etc). Nobody has to negotiate the driving protocol before setting out each morning, or at each intersection. Extrapolate that approach to the whole socioeconomiculturapolitical megillah, and you get the miracle of collective action that usually sorta-kinda works.
Until it doesn’t. I remember vividly the stock market crash in 1987, watching the numbers dwindle on a display in the window of Merrill Lynch or some other retail brokerage shop in NYC. And I remember thinking, “the collective hallucination just ended.” Well, it recovered in its way; but it left me, and doubtless many others, a little more guarded and sober (wiser?) about how systems evolve within basins of relative stability.
A bigger example was the collapse of East Germany and, later, the Soviet Union. I had the impression that, one day, everybody just woke up and looked at their world with momentary clarity and said, “This is BS. Why are we doing this, again?” and boom, that was that.
It can happen. And when it does, it’s rarely pretty or polite.
Dude, what happened to the Age of Aquarius?
I mean “golden living dreams of visions”, isn’t that literal?
You guys are really bumming my high!!
“It’s Gen-X, or even Gen-Y, that has no respect for results, and even less for what it takes to simply maintain.”
Huh? Gen Y has had about let’s say on average five or six years in the workforce – TOTAL. How can they be blamed for anything? If you’re blaming them for living with their parents and being unemployed, well, who drove housing prices through the roof in every major metropolitan area outside the South and West to begin with? And if parents jobs eventually get cut, won’t this ‘problem’ of ‘subsidizing unemployment’ soon be solved? But it can only be solved when there is an actual job short of starvation levels to go to. You cannot ‘solve’ it by simply converting the late great American middle class into a vast Latin America-style underclass. That’s the stuff that Tea Parties are made of.
“I guess by that analysis, the financial meltdowns are the fault of all these young whippersnappers, demanding and granting absurd pensions, making absurd mortgages and absurd derivative instruments on top of them. So, it’s not that Boomers are all perfect, but the shape of recent disasters are not boomer shapes.” Dumb dumb dumb, 90% of this crisis is Boomer driven, with Gen-Xers at some hedge funds and bureaucracies bringing up the caboose. Gen Y is being strangled in its professional cradle.
Perhaps I overstated my case, or failed to explain.
The Boomers, that generation born 1946-1959 (plus or minus a bit), are the ones that allowed creeping Socialism to become entrenched in almost all aspects of our culture. The same generation put into place social institutions that destroyed the lower-middle class family structure and elected politicians that engaged in evermore grandiose social spending that ate away at productivity and increased the government’s burden on both business and workers.
These resulted in poor productivity and increased costs which caused jobs to leave for foreign shores. At the same time the Boomers promised themselves both earlier retirements and better benefits, largely at the tax-payer’s expense. Now they seem suprised that the Gen X and Y types are blanching at the idea of working to 70+ and getting a far lower return on their forced “investments”.
While this was playing out the Boomers failed to replace themselves, thus guaranteeing fewer taxpayers in the future, they then failed to educate the children they did have adequately. School systems became a left-wing indoctrination camp under their watch, providing political theory instead of a sound basis in math, science and history.
Yep, some of us were working hard and trying to make something of our world, but most of our generation were complete knuckleheads. Just think back at all those morons that got elected to office between 1965 and 1995 and remember who was the biggest group in there pulling the levers.
It was us baby.
The piper will be paid, and it won’t be pretty.
I’m a bit surprised that someone as allegedly smart as Niall Ferguson would be surprised that the bond market failed to predict WWI. A prudent man does not expect markets to predict black swans. That’s why the reward for betting on black swan events is so outsized. It’s the same reason why powerball lotteries pay $30 million. The odds of picking those numbers are over 16 million to one.
To say it another way, markets don’t reflect perfect knowledge. Markets reflect the sum total of knowledge of what every participant knows at the time.
Come to think of it the fed doesn’t need to raise interest rates to keep down inflation. All they need to do is put more of their two trillion worth of housing assets on the market whenever the economy heats up.
Which appears increasingly unlikely now.
I doubt markets are any better than the rest of us at predicting the future. The Peace of Dives isn’t Kipling’s best poetry, but its 1908 prediction of universal peace through trade is bitterly ironic: Kipling lost his son in WW-I. Prophets “crying ‘Peace, peace!’ when there is no peace” do so from linear extrapolation of the moment. Every few decades we breed a population of brokers who don’t realize prices can fall, because all they’ve known is growth.
This link gives the North Korean response to the South Korean announcement.
The confidence of the rhetoric is a function I think of the Norks (realistic) belief that the Chinese (PLA) will come to their aid if anything really serious happened. Further, they believe, economics not withstanding–history is on their side. Finally, they have profited by going to the mat at every turn. So they will not provide an opportunity for the South Koreans to climb down. Rather it looks like they will escalate and provocate in order show the South who’se boss.
12. Kinuachdrach regarding the velocity of descent: I think it took Rome so long because of the lack of speedy communications. This fall will be much a much shorter timeline, due to the very medium we’re using to talk about it. Worldwide, live, and with millions of prying eyes to find the attempts at hiding facts and events.
Anton @ 18,
Ok, I agree, I just resent like hell this claim that ‘Gen Yers weren’t raised to work’. In Russian TV you see Gen Yers all over the place, but over here in the U.S. the minimum age to be on TV unless you’re an actor or reality show participant is 40. All the ads are for Levitra. The West has gone geriatric and the youngins are supposed to shut up and pay their dues till, I dunno, 60?
Marie Claude,
I am glad at least one more BCer is talking about Soros as the kind of Ernst Blofeld James Bond villain of our time. Even the recent movie Quantum of Solace has the evil Bildeberg/NWO type organization backing Bond’s adversary Dominque Green named ‘Quantum’ – the same name as Soros hedge fund!
Paul Greengrass other flick, The Bourne Supremacy, also featured a Russian oligarch who bore a remarkable resemblance to Mikhail Khodorkovsky. Coincidences, or subliminable messages? Mr. X reports, ya’ll decide.
24. Mr. X
I hope that I didn’t give the impression that Gen X or Y weren’t raised to work.
I suggested that they didn’t want to work themselves into a grave to support a bunch of spendthrift hippies. My kids are outraged at the idea that they are expected to work to 70+ (and their children will be buried by the current deficits as well) because my generation couldn’t think things through in a rational manner.
I agree about Soros, if there is a modern personification of evil he is it. It seems everybody suffers and he gets richer.
What the boomers did with our kids (I’m one of those without), maybe. Just a note on terminology and math – if boomers were those born thru 1959 and gen-x followed, then gen-x are those of Obama’s age, approaching 50! They’ve had plenty of time in the workplace. It’s the generation after that that brought the term “slackers” into the language. Not that there weren’t beatniks and hippies and whatnot in previous generations. None of these types is new, but some are more or less associated with generational labels. Not that any twenty-something is ever responsible for the world into which he/she/it arrives. Yuppies were more gen-x than boomers, but right on the cusp. And of course it’s not to say that some kids in any generation manage to make it through intelligent and hard-working and well-adjusted. Again, we’re talking more stereotypes than anything.
And again, the one featherless biped on whom I put the most blame for current fiascos, is one Alan Greenspan, almost too old to be counted in the Greatest Generation.
Let’s see here Medicare, Medicade, The great Society, Aid to dependent children, HEW, NASA; Lyndon “Landslide” Johnson brought us those socialist programs. The EPA,wage and price controls, unlinking from the international gold standard; Richard “Tricky Dick” Nixon. Neither of these guys were baby boomers. Creeping socialism has it’s roots in the 1930′s embrace of socialism by our major intellictual institutions; media, academia, and elites. The baby boomers were indoctrinated by their culture. This has been a progressive train wreck that started with Teddy Roosevelt; over a hunderd yrs. in the making. Socialism world wide, as a social organization philosophy, is only 200 yrs. old +/-. On the other hand,dictators have been with use forever.
This is not the fault of some generation but a result of the intersection between our unparalleled success and our still-flawed humanity. When we regain our awareness of our unworthiness, then progress will follow, but not until then.
The conflict that is playing out is manifest on the material plane, but the meaning and solutions are not to be found in the events themselves because the meaning and solutions are spiritual in nature. That’s what the founders grasped and now the Tea Partiers are beginning to intuit.
It looks to me as though the ascent of man will either continue in the U.S. or will not continue at all.
Docbill @ 27, NASA as a socialist program? But of course socialism is an older concept and term, let us not forget President Wilson, or for that matter Thomas Jefferson!
http://www.cato.org/pub_display.php?pub_id=11241
In 301 AD, the Roman emperor Diocletian imposed price controls on most commodities and professions in the empire. The penalty for raising prices was death. Yet the controls failed utterly, leading to shortages, more inflation and the near collapse of the imperial economy.
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Nor am I against some kind of social safety nets, and even the expansion of those nets over time. I think that’s the direction of our economics and technology, and nobody said it had to be easy. The trick is to not let the politics of it get ahead of the numbers. The trick is to learn basic arithmetic and not try to fight it, because it’s always going to win in the end.
The Governors of states such as California, Illinois, New York, New Jersey, and now Arizona, have already consulted their crystal balls, and they can see the abyss. It will be interesting to watch the various methods they use to try to bring their states back from the edge…Democrat from Republican, liberal from conservative.
Our current Congress people aren’t feeling enough heat yet, and the bulk of Americans aren’t likely to look to Greece or even Great Britain for lessons to learn, excepting a worldwide economic meltdown. They will, however, have a harder time avoiding the harsh realities that the largely liberal, and mostly coastal states will need to mete out to their citizens in order to avoid even harsher realities.
They can watch in horror as taxes skyrocket in California, and “fees” take on a life of their own in New York. They can watch a new, fiscally conservative Governor in New Jersey battle even those who voted for him, now that their own state, local or union wages and benefits are being modestly adjusted. The price of any of these changes not working, is the potential for ALL taxpayers to acquire the debt of these states. They can watch Arizona to see how the national government is likely to deal, or NOT deal with, illegal immigration.
Bottom line, do we really need to look into a crystal ball, or do we need to shine a spotlight on those states with the biggest problems…BIG problems that can be added to the madness of the ones we already have at the federal level.
Who are the Boomers? They are the children of the Greatest Generation, born from roughly 1946 (when returning millions of US armed service members got home and immediately got married and had kids) to 1964 (when the Greatest mostly were through having kids.)
Gen X, Y, and others are the descendants of the Boomers. They are much, much more like the Boomers than like the Greatest. Why?
Because it was the importance of the Hippies/Boomers that changed the culture. That was first, because of their sheer SIZE – the biggest generation ever! By sheer size, they swamped everything.
Second, it was the Hippies’ U-TURN away from the traditional culture. They abandoned and trashed the values of their elders – the Greatest Generation – all the way back to the US founding. Unwittingly led by the “red-diaper” babies of US communists (like David Horowitz, formerly editor of Ramparts Mag), they TURNED LEFT massively. That was both politically and culturally.
Most of the present turmoil is, in fact, mostly directly traceable to the Boomers. (And to the mistake of the Greatest in raising them “permissively.”) Statistically, the US society has fallen lower and lower every year since 1960, in every statistical measure of a healthy society (crime rates, illegitimacy, addiction, illiteracy, incivility and grossness, child abuse, psychological problems, etc., etc. Looking it up is not that hard.)
Many roots of the decline were earlier, of course. But the key was probably the drastic change in child-rearing, 1946-64. The Greatest raised the Boomers “permissively” (thank you, Dr. Benjamin Spock!) That was the first time in our history when children were not raised the traditional way their parents had been raised. The result was “permissiveness” (anything is permitted) and permanent childishness (they never wanted to “be grown-ups”).
The pop psychology of the day also preached resisting authority and overthrowing all social and sexual restraints. (The most frequent 60s bumper stickers were “Make Love, Not War” and “If It Feels Good, Do It.” Following these instructions were supposed to end war and violence, and to avoid sexual repression. No kidding.)
Because the Boomers raised their kids “permissively” also, Gen X, Y, etc., are mostly “Boomer Jr.” Not that much difference.
I’m from the in-between Silent Generation, between the Greatest and the Boomers. We “Silents” baby-sat the Boomers. “Silents’” memories include the Great Depression, WWII, and the Korean War (“our” war.) We entered the workforce in the 50s and 60s, while the Boomers began to arrive at college. So we have been observers of current history since the early 1930s. (The Greatest were all born in the 20s or earlier.)
“SILENTS”, mostly Depression babies, were also an unusually small generation. So our impact has not been great.
Except for the surviving Greatest, however, we “SILENTS” are the ones with the longest surviving memories of these things. Most crucially, we are pretty much the only ones with first-hand knowledge of what sensible child-rearing looks like. That’s where it all started, mostly, and still is a major driver of our society’s sickness. If THAT traditional kind of child-rearing doesn’t survive somehow – well, it is going to be pretty bad.
(In my work with the poor, I authored a booklet on parenting to give them the basics of good child rearing. Fortunately, it is actually easier than raising kids “permissively.” And makes a parent’s life much easier too, as well as serving as foundation for a better country.)
@19 and 21
Barton Biggs in “Wealth, War and Wisdom” http://www.amazon.com/Wealth-War-Wisdom-Barton-Biggs/dp/0470474793/ref=sr_1_1?ie=UTF8&s=books&qid=1274824085&sr=1-1 shows that the stock markets of the victors and vanquished in WWII were nearly perfect in predicting the war’s turning points.
Regarding the current stock market decline, external factors may be the principal cause, but it is hardly irrelevant that prices were at the upper envelope boundary on the monthly time frame when the downturn began.
Darn it, I have submitted a comment 5-6 times in the last 30 minutes, and it still has not been published. Two other comments have been published since then. What is going on??
Now I begin to understand why there are so much fewer comments at BC now. You just have so much trouble commenting here now!
A change is needed.
ridgerunner: Thanks for the pointer. I sit corrected, although the middle of an all-out war is probably a little better at focusing attention than the tail end of a wealthy peacetime.
33. GerryP:
What browser are you using? I have found that if IE is giving me fits then Firefox works. I also copy my intended comments to a Notepad file if they’re long, just in case.
Don Rodgrigo,
I too am using Firefox. I too copied my comment, and have presented it about 4-5 times now, in case it got lost or something, as well as these short protests. Because of medical reasons, it has been awhile since I have commented. Something has REALLY changed! I’m at a loss to know what to think.
Professor Hamilton asked a similar question about oil futures in econbrowser.com. If Peak Oil was upon us, how would it show itself in oil futures markets? The answer was either that Peak Oil was not yet or else not a useful concept or that futures markets were blind to such events.
I’ve often held that conservatives are much better at predicting the future than liberals. Conservatives would loudly proclaim that new government programs (social security, medicare, GSEs) would end in disaster while liberals would present sob story after sob story to show the moral imperative of action NOW.
The Boomers, that generation born 1946-1959 (plus or minus a bit), are the ones that allowed creeping Socialism to become entrenched in almost all aspects of our culture. The same generation put into place social institutions that destroyed the lower-middle class family structure and elected politicians that engaged in evermore grandiose social spending
We did? The earliest that any boomers were able to vote was 1967, after the ‘Great Society” had been put into motion. That was back when you still had to be an actual grownup to vote.
Think about what occurred in the 60’s. It was the Perfect Storm. We had expanded Great Society programs. We had a Civil Rights movement that morphed quickly into a Welfare Rights movement. We had a massive worldwide Communist offensive. We had a communications revolution. We had a huge influx of young people who had never known hard times. We had a Federal Government that believed that top down detailed control was the way to get things done – from the F-111 to school desegregation, DC knew how to do it all. We had the Warren Court decision on the incarceration of the insane. We had an increasingly affluent society, that had – or seemed to have – the resources to spend on all of these ideas. And perhaps most of all, we had an expanded definition of what was defined as “acceptable” in terms of personal behavior.
Which came first? It probably does not matter, but each factor acted as an enabler for the others. On the heels of being assured that they would reap the rewards of “acting white” the blacks were told that it did not matter if they did, and eventually that it was wrong to do so.
Read “The Dream and The Nightmare” by Prof Myron Magnet.
1960s politics was entirely driven by the echo of the Great Depression: any manner of program was established on the premiss that it would stop those bad old times from ever coming back.
Likewise, defense spending was high and sustained because all remembered just how costly losing ground in a war really is — and now you’ve got atomics!
The civil rights movement was a direct reaction to the shoah: even total bigots like LBJ did not want to have themselves cast as echoes of the Nazis WRT race relations. I refer you to ‘Master of the Senate.’
The Peter Principle applies to societies and cultural themes. Success, huge success, triggers exponential expansion/ adoption. But free-riding social parasitism rides that wave, also. Note how the King’s Court always expands over time — and how many Generals Argentina has….
————–
Handing out modest social development funds in Afghanistan has triggered serial murders and extortion: the Talibs want the honey.
That they are chasing such thin gruel is an indication as to their cash position — and to their fear that American ‘butter’ may be changing too many minds.
—–
In WWII we won by ‘more is always better’ and ‘sooner is better’; insurgencies operate with reverse English: sustainable is better and modest progress is best.
Such an inversion of philosophy is anti-Pentagon, anti-beltway…
Hence, all of the screwy opinion pieces flogged by the Mostly Solipsistic Media.
Wow, Great thread as usual. So I’ll toss in a couple of pennies; Our problem is our conceit and our short-sightedness. We can stop this if we make some hard decisions and go back to WHAT WORKED to make us a superpower.
Stop government expansion: government does not produce, it consumes. Make government unions illegal so they can not continue to leverage us into bankruptcy. All government pensions should be capped at 50% of base pay upon retirement- if its good enough for the military, then by God it should be good enough for those who send them to war.
Reduce unemployment: Close the border, penalize employers who hire illegals and jobs will magically appear. Stop pushing kids into college- trade schools are needed and we need to resurrect industry, badly. (I am reading Shop Class as Soulcraft- highly recommend) End welfare MONEY- bring back the soup kitchens, only better. We still take care of our own but reduce the power of the free lunch politically and limit the free-fall into socialism. Also spending the money on food instead of iPods and LCD TVs.
Control Variables (as much as practical- variables are, well, variable- but not necessarily unknown): Put an end to derivatives, speculation and other artificial investment vehicles. Make it a law that you must take possession of anything you buy before you can sell it again. End the Federal reserve bank- but audit it first to hold the criminals responsible for their actions.
Share the burden: Everyone should pay the same percentage of taxes based on income. (any % of 0 is still 0) Stop using kids as deductions- if you can’t afford them, don’t have them. Taxes are not a government entitlement, they are supposed to be in exchange for DIRECT services rendered.
My apologies for the length of the rant but I’m fed up. I do feel much better now. The bottom line IMHO is we either make some tough choices or they will be made for us- and we will not like them much.
Gen Xer raised by a Greatest and a Silent. Did they believe in corporal punishment? Youbetcha. USMC Dad’s idea of teaching us kids how to swim was, when each kid reached the ripe old age of two, to take said kid down to the American Legion, throw the mancub off the dock into Lake Silver and yell, “SWIM!” We all became expert waterbabies, by gum — no water wings, no drownings. But if anyone *had* gone under for too long, well, said Dad was a lifeguard. Handy, that. I just can’t imagine that sort of thing being done today without dear ole dad being arrested.
Re: Obama’s generation, look up “Generation Jones.” It’s supposed to be a subdivision of the Boomers. I’ll leave it up to individual readers to buy or not. I think there are some tangible differences between, say, a Hillary and an Obama that are age-related, but not enough to split them when it comes to what I tend to think of as one of the defining characteristics of the tranzi Boomers, which is the outright missionary zeal of their anti-Americanism/anti-Westernism. The tranzi Boomers aren’t just critical of this country. They hate it. They hate it clear through to their bones. America is what’s wrong with the world. They have held fast to this view for forty years. It is their North Star. It has made their skulls impermeable to any other view or conflicting evidence. Now of course the more clever among them have learned all sorts of ways to dissimulate, to pass themselves off as as either not-Commie or as old-school liberals. But they are not FDR, they are not Truman, and they are not Moynihan. They are not Jack Kennedy. It would never have occurred to any of these men to spit on an American soldier. But tranzi Boomers did spit on our soldiers, and now that they are in power, they are spitting on us. “I won.” Big Gavel.
Zeal & relentlessness. The tranzi Boomers have been an especially terrible poison in the American body politic. They certainly do not represent the entire Boomer generation, not even most of it, I would guess … but they have been the most influential portion, alas.
37 GerryP
I too use Firefox and have noticed that my comments sometimes take awhile to post. Try hitting the “reload current page” button several times (I’ve sometimes had to use it five or six times) to get the comment to show up. I admit the new regime is a nuisance.
O/T I was at the Tucson VA yesterday for a blood draw. In the lab waiting room the TV had MSNBC on with Chrissie Matthews and Ed “Loudmouth Lardazz” Schultz. I wonder whether that was a directive from the Obamaites or just some doofus VA employee. As I sat talking to a fellow 25th Division Viet Nam vet; I saw most of the other vets in the room ignoring the agitprop. Cluelessness reigns
#43 bogie wheel
USMC Dad’s idea of teaching us kids how to swim was, when each kid reached the ripe old age of two, to take said kid down to the American Legion, throw the mancub off the dock into Lake Silver and yell, “SWIM!”
My best friend from college is a yinzer whose dad was a GP in Pittsburgh (made house calls up until he retired– that kid of old-fashioned doc). Friend’s younger brother was in a boat on the Allegheny one day back when the rivers were pretty bad and fell into the polluted water. Doc dad rushed him to the ER to make sure the river water hadn’t caused any damage (kid could swim, no problem with that), and the resident on duty remarked he was lucky the kid hadn’t fallen into the Monongahela or he’d be looking at a rip-roaring ear infection for sure and possibly meningitis.
Hope your dad didn’t have to worry about the quality of Lake Silver water.
Both my parents were Greatest Generation. They taught me to swim during summer vacations at the Jersey shore (cue Billy Joel’s “Allentown” here) and the lifeguard/swimming instructors at the church camp I went to each year did the rest. No throwing off docks, but no nonsense either.
SpeakEasy @ 42: I’m with you on all. Would mention the H-1B and outsourcing issues under employment. If salaries of scientists and technicians are not DOUBLED in the next ten years, none of the rest will matter. This would only put them back where they were circa 1995 (H-1B I believe started just a year or two earlier) and still much lower than they were in 1975.
I agree a priority is in restoring the bottom half of the income pool to participation in the income tax – not to raise funds, but to raise consciousness! To achieve this fairly will require merging social security taxes in with income taxes. Since this has only been the reality from day one, it is loooong overdue, and would likely result in a decrease in taxes for a fair percentage of the population.
Outlawing the participation of government-backed entities like banks, from most derivatives, is also essential. Let the rest go offshore, good riddance, if crack cocaine is illegal so should be synthetic CDOs and for about the same reasons.
Putting an effective cap on all government pensions – and retroactively! – is a seriously needed task. Nobody said it would be easy, but we’re bankrupt until and unless that happens – and the worst offenders are state and local goverments, so how you reach those, I really don’t know!
Actually, the “Baby Boom” began earleir than usually stated. First arrivals were in September 1942—–nine months after Pearl Harbor. Gunpowder is a powerful aphrodisiac. Things just hit high gear after the cessation of hostilities. Heck, it was a wonder “the boys” managed to keep their pants on until those victory parades were finished.
American society had always worked (to a degree) on the reasonable presumption that there would be an ever-expanding younger population to pay for the needs of the elders.
Then when more normal fecundity rates kicked in, said presumption became an unwarranted assumption.
At the same time, the notion of intergenerational transfers of income became infested with notions of what can only be described as interracial transfers and transfers for the sake of transferring.
All generations were infected. Greatest, silent, boomer, X, Y, and Omega. There has always been some opposition to all this. Finally, it is gathering steam. Both intellectually and from sheer necessity.
The reaction? Forcibly silence opposition. What else could you expect? That is why Subotai’s TWANLOCs
are making kissy-face with every thug they can find, both foreign and domestic.
Our job? Make them fight—–or surrender. Either give up on their misbegotten notions or get downright physical in their efforts to suppress their dislikes.
This entails certain inescapable risks to ourselves, as does everything else vital to our well-being. However, if we prove ourselves to be sufficiently and stutely valiant, we shall prevail. So Mote It Be!
I think GerryP’s comments above are right on. I’ll add nothing theoretical, but only offer an annecdote regarding the experience of my family. Mine is one that has been here in America for quite a while. My ancestors came over to the Virginia colony with a charter from King George II. One of them would found the town of Alexandria, VA, right down the road from what would become Mount Vernon and right up the road from what would become Washington, DC. It was also the birthplace of Robert E. Lee, who went to Gettysburg with 6 of my forefathers, and that’s just on the Confederate side — 4 others met them there dressed in blue. All of them survived the battle, btw, unless you count one of my Confederate forefathers who was captured there and later died in the Yankee war prison at Point Lookout, MD. All this is quite usual in my family’s history, where you’ll find old Cowboy relatives alongside a young George Washington during the French-Indian War, and then the Revolutionary War, and then on the Barbary Coast fighting pirates, and in short in every war of the United States and before until: … Vietnam.
All of my uncles served in WWII with distinction. My father was too young, having been drafted for Korea but out before Vietnam. When I was 18 years old a man walked up to me and said, “Hi, I’m your first cousin, Steve.” But I didn’t have a cousin named Steve (names changed). I found out later that I did, but that Steve had run away to Canada to escape when his Vietnam draft number came up, and had been wiped out of the family Bible and never mentioned by anyone. He was persona non-grata; shunned.
As I survey these facts and also assess where we are now, I have to say that the baby boom generation has been the undoing of our family. I’ve got two boys, and that’s all that are left to carry on the family name despite the fact that my own father was the last of ten kids. The baby boomer generation has hit our progress on this continent like a nuclear bomb, and most unexpectedly.
As for Steve, he did manage to make his peace and gained forgiveness. The Greatest Generation clearly did put up a fight to steer him in traditional directions, but in the end buried the hatchet and passed the torch. As it is, Steve went on to make a huge pile of dough in corporate America, and he still despises corporate America and preaches against it, and he still finds anything from any Pacific island to be enlightened and fascinating and all things rural Virginia to be backward and ridiculous and best put out of the mind.
He is, of course, childless, as are most of his generational peers in our family — certainly, every one of the males. The older females do have kids, the younger ones have virtually none. Nobody under 30 does. I can’t believe what I read from my younger female relatives on Facebook, it’s so full of in-your-face and idiotic displays of spunk, and it comes in such a barrage. Also, I can’t believe how notably absent my younger male family members are. They’re essentially underground. Whatever family bomb that went off back when the Beatles grew long hair was really a doozy!
This is how nations die. It has been increasingly said that, “The future belongs to those who show up,” and that’s one of the most true things I’ve heard in ages.
Do I personally blame the various generations for their shortcomings? Well, I’m very tempted because the sudden derailment of events does beg the question of what came to a head back in the 1960′s and how come people haven’t risen to deal with it. A good case can be made for generational failure, and for the argument that people like my cousin, Steve, should only have been welcomed back to face a firing squad.
But, that was always off the table, and Steve knew it, or else he would never had run off. I might as well place the blame on the boomer’s shortcomings square on the shoulders of the Greatest Generation, for not kicking needed ass, for making life too easy for their babies. And that’s kinda stupid.
Rather, I think, and I hope, that the 20th century trials and failures, which were systemic from beginning to end if you ask me, are more philosophical than anything else. I hope to discuss how philosophy got pickled, rather than hang blame on year of birth.
PA Cat – Siblings & I grew up in a little hick town in Central Florida. There seemed to be a lake (aka, a sinkhole into which much precipitation had fallen over the centuries) every half mile in our town, and at that time (1970s) they were either not that polluted due to our still being in hickville, or else nobody cared about such things. At any rate there was lots of fishin’ and swimmin’ in the lakes by all and sundry. Lake Silver (American Legion on one side, public beach on the other) and Lake Thomas (at that time, surrounded by pine woods & pasture) were my family’s primary spots. In the warmer months, Dad would pick us up from school, we’d change into our swimming gear in the back of the van, and drive to Lake Thomas, avec the family German Shepherd, whereupon dog, kids & Dad would proceed to spend the next couple hours getting waterlogged. Mom generally didn’t go along on those jaunts; she couldn’t swim, and I suspect she was glad to get rid of us for an afternoon or two a week. Anyhoo, good times. Lake Thomas is all built up now. Glad I found the Indian arrowhead there when I did.
The Pittsburgh rivers are another story entirely. I’ve heard tales from those who did grow up here in the days of the pew-lution. The pH in the Mon was something like 3.5. It’s now 7.5. And this year the Burgh is again ranked the #1 Most Livable City in America by Forbes. w00t! Whatta tahn.
#27. Docbill
This has been a progressive train wreck that started with Teddy Roosevelt; over a hunderd yrs. in the making. Socialism world wide, as a social organization philosophy, is only 200 yrs. old +/-. On the other hand,dictators have been with use forever.
Its all a throwback to the ancient idea of the Wise King who can do no wrong and makes no mistakes. In essence, the idea of central planning and a pyramidal governmental structure was not some great new innovation in thinking, it was a retreat into the past. Its nothing more than feudalism with a modern face. In the era of capitalism and democracy the need and value for philosopher kings was greatly diminished. For those who aspired to be the philosopher kings this was intolerable.
Despite their talk of equality the Left has never had anything against the idea of aristocracy. They just were convinced that they should be the aristocrats rather the people who currently held those positions.
It both amuses and disgusts me to no end about how the “progressives” truly want to take us back to the social model of the dark ages all the while proclaiming that it will be something new, unprecedented, and wonderful beyond description.
Say, Wretchard -
Now I see I bothered you for nothing. Sorry. My comment was (eventually) published at #31, which was probably the time slot I hit with my first try. But it took so long to surface that I kept watching the latest comment, instead of that particular place. Futilely, or so I thought. My bad. It all worked after all. I shouldn’t have complained.
Hopefully my missive at least found you and your dear ones prospering and in good health. Including the cat!
Blessings,
GerryP
No you didn’t bother me in vain. I went and unhung your comment from the spam filter, which works according to an algorithm of its own. I have been hung up on the spam filter and I just live with it as the price of keeping the viagra merchants off the site. Don’t hesitate to complain if things go bad. I may not always respond promptly, but once alerted I will respond.
No discussion of what’s happened to us is complete without mention of the fact that the end of the 19th century ushered in a world that was predicated on relativism rather than absolutes. That’s when we began to lose sight of what is true and good and beautiful.
When what’s right is just a matter of perspective, then it’s only a matter of time before the will to power dominates the landscape. It didn’t take long for a hollowed out Europe and Russia to succumb, and now we’re finally dealing with a version of the same pathology. During JFK, Nixon, and even Reagan the bulk of the country still knew there was a right and a wrong, a good and a bad, but it was the boomers who were most deeply infected with the relativism and materialism that underlie cultural Marxism and the associated moral decay.
Just think of how deteriorated you have to be to champion Mao and call police pigs, not to mention glorify drug abuse, worship nature fairies, romanticize savage cultures, and abuse the freedoms that so many others died to provide while denigrating their memories in the process.
Still, as recently as 2000, Obama would have been laughed off the stage. But now we’re so lost that a carny barker like him can mesmerize us. That’s what we’re dealing with, and if we don’t the tenets of natural law will.
#31 GerryP,
“(In my work with the poor, I authored a booklet on parenting to give them the basics of good child rearing. Fortunately, it is actually easier than raising kids “permissively.” And makes a parent’s life much easier too, as well as serving as foundation for a better country.)”
I would very much like to see a link to where your booklet might be found, if it is available online.
My own parents were from the very, very last of the Silent Generation: both born in ’41, in the summer and the fall, just before the bombs fell on Pearl. They were raised the ol’ fashioned way, and passed that on to me, which simply means I’m educated on the depths of my ignorance.
And, there’s a boy arriving in a few days for the first time.
On economic market prediction: the markets are likely to do a much better job of predicting impacts of current events for a several reasons. First, the pervasiveness, velocity and volume of information. Second, because though the international system that was created after WW2 has perversely prolonged many conflicts that should have been settled long ago, it at the same time does an OK job of keeping conflicts “small” to the extent that they do not impact markets all at once the way waking up to discover Europe aflame would. This, at least, is the design margin. Perhaps it simply pushes “real” black swan events even further out on the tail, where their impact is therefore that much larger.
–JC
While I am a late Boomer, and agree that my parent’s generation was superior to subsequent ones in many ways, the Greatest Generation was not flawless. My dad was a “Scoop Jackson” Democrat, a social conservative who had great contempt for the McGovernite wing of the party. However, he, like many, many members of his generation, revered FDR and thought the New Deal, Medicaid, Social Security and other middle class entitlements were fine and dandy. To the average American in, say, 1947, a veteran who was by no means a Commie symp, Big Government didn’t look too damn shabby. It had just fought and won a titanic struggle against 2 evil regimes and the Marshall Plan was rebuilding Europe. No, we can’t blame them too harshly for not foreseeing where the entitlements would lead, since there are people in 2010 who stubbornly refuse to see we’re headed off the cliff. But the two biggest budget nightmares facing us are Social Security and Medicaid and those programs were not created by boomers. Social Security – the 800 pound gorilla in the room – was untouchable for a very long time. Who made it untouchable? The Greatest Generation, who would have turned out in force to defeat any candidate who mentioned reform or privatization. I figured out back in the 1970′s that I probably would never collect anything I paid into it. I don’t think I’m exceptionally brilliant or farsighted. It’s simple math. And yet my parents generation never seemed to do that math.
And, there’s a boy arriving in a few days for the first time.
Congrats!
#56 Donna V.
I figured out back in the 1970’s that I probably would never collect anything I paid into it. I don’t think I’m exceptionally brilliant or farsighted. It’s simple math. And yet my parents generation never seemed to do that math.
Agree with you 100% about the role of the Greatest Generation in supporting and reaping the benefits of SS. My mother lived to be 88 and received much more than she paid into it (my dad didn’t live long enough to collect anything). When I commented (this was maybe 12 years ago now) that her generation made out like bandits from SS and mine would be lucky to get a fraction of what we had to pay in, she thought that was just delightful and laughed in my face. It’s the one time in my life when the thought of matricide flashed momentarily through my mind. Some members of the Greatest Generation decided to enjoy themselves rather than create a financial legacy for their Boomer offspring. I recall that it was not unusual in the late 1980s–early 1990s to see large fancy RVs driven by retirees with bumper stickers that read “We’re spending our children’s inheritance.” Point being that some Boomers likely learned self-indulgent habits from their parents rather than from the Zeitgeist of the ’60s.
Zerohedge has a post up ” http://www.zerohedge.com/article/greek-bailouts-two-secret-exit-clauses-why-europe-now-cheering-its-own-demise” that discloses two secret clauses in the Euro rescue package.
The second clause allows a Euro country to back out of it’s rescue package obligations once their national debt interest payments exceed 5%. The upshot of this clause as described by Tyler Durden is that :
A. there is a helluva of an incentive to blow the deal up very quickly by the weak states so they can bail.
B. Very quickly after the weaker European states have bailed on their responsibilities, just Germany and you guessed it – good ol’ Uncle Sam ( thru the IMF as promised by Helo Ben) will be left to pick up the pieces.
It kinda makes discussion of all our debt problems small by comparison. Hey Ben, that’s just great! Just what we need- trillions of more debt!
I am glad at least one more BCer is talking about Soros as the kind of Ernst Blofeld James Bond villain of our time.
It depresses me to think that Anne Frank died in the Holocaust and Soros not only survived, but flourished.
He really is a James Bond- type villain, isn’t he? Incredibly rich with a filthy finger in every pie, and yet (as far as I know) he’s prudent enough to stay on the right side of the law.
What is the end game for him, I wonder? Is it just meglomania and power-lust? Some sort of twisted idealism? Or just pleasure in pulling the strings and watching the puppets dance – on a global scale?
I recall that it was not unusual in the late 1980s–early 1990s to see large fancy RVs driven by retirees with bumper stickers that read “We’re spending our children’s inheritance.”
Yes, I remember that. And people like my parents were the first to decry “welfare queens.” I hold no brief for welfare queens, but it isn’t welfare that’s going to bankrupt the country.
The thing is, both my parents had had a hardscrabble Depression childhood, followed by the war, and that did give them a sense of “damnit, after what we went through, we deserve the SS checks and anything else the government gives us.” And how could us boomers say “no, you don’t?” I was very conscious of having had an easy time of it growing up compared to them. (Well, we’ll have it much worse in our golden years, so I’d say it’s a wash.)
JC in KZ @ 55:
You have a boy coming in a few days? Wow! I’d love to give you a copy of my booklet on parenting. Just send me your address at gerryp22 AT hotmail.com. (Your parents would recognize the methods. I started baby-sitting Boomers from the time I was 11. Your parents probably did too.)
You won’t need most of the contents until he can at least walk or talk. Until then, just be aware that any kid will be trying to run things long before then. And learning where all your buttons are and how to push them, too. It will start when you learn when his crying is real, and when it is manipulative. (Yes. Some of it will be – probably some time after about 6 months old.) You can safely ignore most deliberate crying, which gets to be easy to recognize. Child-rearing actually begins, mildly and carefully, about then.
Don’t worry. You will both do just great!
You and your wife are very brave and very lucky. I’m so happy for you!
Blessings, GerryP
JC,
This is a rare case where you are wrong. The markets lack the predictive power you suppose. They did not predict WWI, nor did they predict WWII. Rather, in both instances, they got taken aback.
Now, having said that, once the hostilities commenced after both those cases, the markets were pretty good predictors. According to the bond markets, it was obvious the Kaiser was in trouble in 1918, but that’s little consolation considering how they missed the Russian crises of 1917. The markets also held Hitler in trouble after Stalingrad, but who didn’t? 1942 was the Axis Power “top” and the market called it — as did the Pentagon and the New York Times.
James Surowieki describes five conditions that must be in place in order for the wisdom of the crowds to be truly predictive, and in the case of WWI and WWII they didn’t apply. So, you might be on to something.
But then again you might not be. No simple correlation exists that suggests market trends have much predictive ability. They stubbornly blow with the wind.
That said, markets are still the best mechanism for determining price, and that’s simply huge. It’s huge.
But it ain’t a crystal ball.
Dave “Our job? Make them fight—–or surrender. Either give up on their misbegotten notions or get downright physical in their efforts to suppress their dislikes.”
Good stuff there sir. I’m thinkging at the end they’ll long to sneak back under the rocks, where they can attempt to build it again.
Beautifully written post, Richard, with apt turns of phrase that elegantly connect the dots.