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Nope... Baby Boomers will not access SS as early as previous generations. #1, they won't need to as their inheritances, 401k's and other investments & savings will provide them with enough cushion so that they can delay dipping into SS. Additionally, it is widely believed that while Boomers may retire at a staggering rate, they will not entirely leave the workforce. They are healthier than previous generations and fully capable of carrying on in either full or reduced capacity well into their 70's.
And don't get me started on "the failing system"... If only Bush could have gotten his plan passed. Privatization is the only things that will cure the diseased SS System...
Again 0 the doom & gloom, end of the world speak is quite entertaining...
First you're assuming that they won't file for SS. My experience is many people who don't need it, still file for it because they feel it's "mine".
Second, you can work AND get social security, my dad does this right now, he'll be 73 in August. He is also withdrawing from his 401K or IRA(forget which) because he's required to.
So yes presumably some people will say I don't need it, but many will still won't.
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There have been books written about the boomers being a lump in a python that just keeps moving through the system.
They first really entered the system in the late 70's and as they did the interest rates and inflation went nuts.
Then they more or less stabilized for a while then they moved up in housing soaring real estate prices again off and on.
This last thing has relatively little to do with them but banking on them saving us is a bit odd IMO.
Everyone realizes they'll bankrupt us under our current system when they retire, I don't see that as a good or pleasant event they'll cause. They have been rich but about half of them have squat but their homes for savings.
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At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
First you're assuming that they won't file for SS. My experience is many people who don't need it, still file for it because they feel it's "mine".
Second, you can work AND get social security, my dad does this right now, he'll be 73 in August. He is also withdrawing from his 401K or IRA(forget which) because he's required to.
So yes presumably some people will say I don't need it, but many will still won't.
Russ, I don't know how one could not see it from that point. After all, we all pay a portion into it, why shouldn't the payers get it back?
Can Phoenix avoid mimicking America if slowdown lasts?
Jon Talton
Republic columnist
Mar. 15, 2007 12:00 AM
If the history of the 2007 recession predicted by Alan Greenspan is written, it may be that America tried too hard to be like Phoenix.
When stocks tanked in 2001, Greenspan's Federal Reserve slashed interest rates and kept them at historic lows, igniting a wild housing mania. Greenspan repeatedly encouraged the real estate sector, including the use of creative financing to make house ownership more widespread.
The result: housing production, sales, speculation, home improvement, etc., became the biggest driver behind the expansion. Soon it became a bubble detached from economic reality and crashed. The comeuppance is the biggest thing spooking Wall Street. advertisement
America should have read the fine print about Phoenix that says, essentially, "Professional driver on closed course. Do not attempt."
I don't know all the reasons metro Phoenix's narrow, housing-based economy levitates decade after decade, lagging by a host of quality measures but usually at the top in job creation and construction. But the biggest reason is population growth, including newcomers bringing wealth from the more diverse American economy.
To be sure, housing isn't the only speculative bubble that worries investors. China is the other biggie. As former Labor Secretary Robert Reich wrote on his blog about the underlying forces, "This time, the out-of-control trend has been excess liquidity - so much easy cash all over the world (excess petro-dollars, excess sino-dollars, excess saving in the rest of Asia) that investors have been overly optimistic in lending money and buying stocks.
"In other words, they've taken on way more risk than they've thought they took on."
You could say the same thing about many people who took out mortgages during the boom, especially the subprime, interest-only loans aimed at those with poor credit or lack of up-front cash.
The come-on for these loans is alluring. You pay only the interest portion of the monthly payment for the early years of the mortgage. Then - and what American thinks that far out nowadays? - the loan reverts to its original terms. Other mortgages offered a floating rate, seemingly more attractive than a 30-year conventional deal.
And it all worked fine, as long as housing values appreciated and rates stayed low.
Now millions of Americans are learning a lesson taught painfully to an earlier generation. Interest-only mortgages were popular in the 1920s, an earlier housing mania. After they collapsed in the Great Depression, lenders retreated for decades from creative financing.
Now Wall Street keeps bouncing from sell-off to cautious retrenchment because it's trying to assess where the damage lies. This is particularly true of the cratering subprime mortgage sector. Much of that bundled debt threatens some of America's largest financial institutions, but how much and how bad?
Nor will Main Street be immune. A Bloomberg News story, quoting real estate agents, economists and a Fed governor estimated that up to 1.5 million more Americans might lose their houses, while another 100,000 housing related jobs could be axed.
Mark Zandi, the chief economist for Moody's Economy.com predicted the correction would last another year.
Lost jobs, stagnant or declining housing values and increasing foreclosures would feed the downturn cyclone, adding housing to already large inventories and dampening consumer spending.
Now the question is whether Phoenix can avoid becoming America, if slowdown or worse happens. The local experts sound confident - but if an asteroid were about to slam into Earth, they would only call for a "slight slowdown in growth" here.
The region and state were socked by the 2001 recession, which nearly clear-cut the local tech sector (the local experts were shocked). Then all the speculative money flowed into our bailiwick, real estate, and the economy zoomed even more.
This time there will be no similar bailout.
So we will feel national tremors, especially if a pullback in consumer spending or lending becomes severe. Subprime damage to pension funds, insurance companies and other institutions will affect the state's large retirement population.
Yet as long as the economy retains enough wealth and dynamism to fuel the continued migration from the cold Midwest to the warm (and getting warmer) desert, we will dodge another bullet.
Wal-Mart may have big banking plans
Report: Retailer renegotiated leases with its in-store banks
MSNBC News Services
Updated: 23 minutes ago
NEW YORK - Wal-Mart Stores Inc. renegotiated leases with banks in its stores so the discount retailing giant can offer mortgages, home-equity lines of credit and consumer loans, the Wall Street Journal reported Thursday.
One of the leases gives Wal-Mart permission to offer debit cards and investment and insurance products, either directly or through a third-party vendor.
Wal-Mart said the lease language does not signal anything new because the company has already been offering services such as check cashing, money transfers, branded credit cards and bill payments.
Wal-Mart's efforts to enter the banking business in the U.S. have met opposition.
The company's application to establish an ILC, or an industrial loan corporation, in Utah spurred arguments from banks, unions and lawmakers.
Critics say the growth of industrial loan corporations in recent years blurs the line between banking and commerce and concentrates assets in the hands of a few big companies, stifling competition and hurting consumers.
An Ohio representative released an e-mail on Thursday that he said suggests Wal-Mart’s ambitions into consumer banking may extend beyond what the retail giant had previously disclosed to regulators.
At a press conference, Republican Rep. Paul Gillmor distributed a copy of an e-mail from a Wal-Mart executive with language the retailer has included in tenant leases letting it reserve the right to offer a variety of financial services, including mortgages and home equity loans.
Gillmor said the e-mail suggests Wal-Mart has been deceptive in its disclosure of its banking plans.
Wal-Mart has submitted an application to U.S. regulators that, if approved, would allow it to operate a specialty bank known as an industrial loan company (ILC).
It has long insisted that it was not interested in branch banking, but was looking to use the bank as a way to save money by internalizing credit-card and check transactions.
Kevin Gardner, a Wal-Mart spokesman, said the retailer had recently updated language in its leases, but it had similar language in the agreements for the last five years.
“At this point, no one should be surprised that Wal-Mart is interested in financial services. We continue to grow our product offering like check cashing, money transfers,” he said.
Earlier this year, the Federal Deposit Insurance Corporation voted to extend a freeze on applications by commercial companies to open or acquire ILCs. The U.S. House Financial Services Committee plans a March 22 hearing on the issue.
Actually the boomers retiring will cause an enormous strain on our economy because they'll move from a period of intense consumption to very light consumption except of medical services.
You hit the nail on the head. I was at a conference over the summer and it was basically the chief economists from a number of banks giving their views on the economy. The biggest issue they saw facing the economy was not Social Security, the trade deficit, the value of the dollar or the housing market. The one consistent worry was the baby boomers and Medicare. The projections on dollars needed to support Medicare in the future dwarfed Social Security.
There is a real need for reforming the Health Care system and while I am usually not on the socialized side in most cases....health care is getting to the point where socialized medicine may actually be more efficient than the current system. We are at a point where 40-60% of health care dollars is spent on administering health care and not on actual health care. The projections for 10 years down the road are frightening to where 20% of our spending will be in health care. Oddly enough, the government could probably provide a decent level of health care to everyone more efficiently than the current system by reducing the costs of administering health care.
Another cure for our economy is on reforming immigration and actually creating a worker program that would allow more of the money earned by illegals to be captured in the tax system and spend domestically on goods and especially housing.
Russ, I don't know how one could not see it from that point. After all, we all pay a portion into it, why shouldn't the payers get it back?
Well many people are mistakenly believing that money goes into a "fund" that has their name on it, when in reality it goes into some retired person's SS check now.
I in no way fault someone who claims SS and may not "need" it, not my place to decide what they need. I'm just saying it doesn't matter how many of the baby boomers are "rich" many of them will still file for SS, relying on them not to would be a huge mistake.
I've said all along that what's keeping the economy strong is the consumer, so far you can punch them flat in the face and they'll come back spending and spending and spending time after time.
My opinion is that the American consumer is unstoppable until you simply won't give them more money then they stop.
The question you have to ask yourself is with a negative savings rate, tightening credit standards and now falling home prices or at least stagnant prices nationwide, where's the money coming from?
I guess the money fairy.
Where does the money come from?!
Living on a budget, living on less than you earn, saving money for a rainy day (aka emergency fund), driving paid-for vehicles, having no credit cards, having a low fixed-rate mortgage, etc.
It's all about personal choices. Most people are stupid with their money (BTDT, BTW). Credit card companies and other lenders are not helping them either. They are out there to feed on the population's stupidity for the most part.
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"If Chuck is Solo, Larkin is his Fett!" - Morgan
I've found this thread extremely interesting and have learned quite a bit.
In its most simple form, the economy appears to rely heavily on consumer spending which is made up mostly of $$ the consumer really doesn't have to spend in the first place. Am I on the right track?
I love my house, and we're two years in on a 15 year fixed mortgage at 6.75% on a house that would price at least 125% higher when we bought it in 1998. So, we're sitting pretty right now.
Doesn't change the fact that we're all gonna die and have to leave every penny behind. (I notice no one argued that point when I made it earlier. )We come into this world naked and penniless, and leave it the same way. That has to mean something.
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We live in a world which is full of misery and ignorance, and the plain duty of each and all of us is to try to make the little corner he can influence somewhat less miserable and somewhat less ignorant than it was before he entered it.
I love my house, and we're two years in on a 15 year fixed mortgage at 6.75% on a house that would price at least 125% higher when we bought it in 1998. So, we're sitting pretty right now.
Doesn't change the fact that we're all gonna die and have to leave every penny behind. (I notice no one argued that point when I made it earlier. )We come into this world naked and penniless, and leave it the same way. That has to mean something.
You are like a lot of people. There are a lot of people who were made much better off by the run up in the housing market and ability to take advantage of it due the liquidity that the new mortgage products offered. I am not saying that some won't be crushed in the housing market by getting into loans they never should have been in at the wrong time. But the net effect is that it created a lot more wealth and positives to the economy than the negative impact the impending downturn will have....hopefully.
Hopefully, people will learn a lesson from this and we will still have the advantages and innovations of the market forces and consumers will make better decisions with regards to it. I believe that is the meaning of the word Caveat Emptor that everyone learns in Econ 101.
In digging through this I found out some very interesting facts that answered my number one question.
Where in the heck is all this cheap money comming from?
I have a degree in finance and economics but it's only a bachelors so I understand the concepts fine but my word these people redefine complicated!
I know enough to see it for what it is, IMO it's at it's heart, cheap monetary policy in Japan and here that created this entire bubble.
The cheap money is still flowing in buckets from Japan and China but mostly from the Bank of Japan via these Japanese carry trades, a truly facinating phenomenon.
There because the BOJ the equivalent of our FED, has their funds rate set at .5%, Japanese traders capitalized on that by borrowing Yen at .5% and then buying $ and then buying T bonds, specifically 10 year T bonds with that borrowed money and they get a 4.5% return on those, netting 4% in a money machine of the ages.
What sets the price of bonds collateralized by mortgages? 10 year T bills.....
There you have it! We were all told vauge stuff like it's the Chinese, it's foreign money being saved and invested here... blah blah blah blah...
That's not a lie but it's huge half truth, a gigantic amount of it is a simple arbitrage exploiting discrepencies in the market, it unwinds when the Yen moves higher fast vs the $ which causes them to lose money converting the $ back to Yen and removes the profit thus you heard about the Yen carry trades unwinding when the Yen shot up.
However at it's core the entire thing is one gigantic debt machine that is monetizing debt, again it's complicated but in simple terms is an outlandish recipe for eventual disaster.
I will post a few links later to the articles describing what is going on, it's heavy on macro economics but the gist is simple, the economy is built on debt, tightening debt is like putting a log on a train track.
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
~Abraham Lincoln Lyceum Address
Last edited by conraddobler; March 15th, 2007 at 02:12 PM.
What am I missing? It appears to me (in this instance anyway) that (in the most simple view) people borrowed money which they didn't have and received when they should never have.
Had people not spent $$ they didn't have to this degree (sub-prime mortgages) this problem would not be present.
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