Old Farts

I have been away in Canada and then busy after returning.  I will add blogs from time to time, hereon.  My 2010 mission it to be terse. Where there is a detailed logic to apply, I will link to places where people are sufficiently in agreement with me; hence, generally correct. 


So, now to digest an important economic factor: old farts. Click the title to see the foundational observations in Seeking Alpha. 

•  The wealth gap between those under 35 and people over 65 is at an all time high of 46 to 1.  (The last I saw, it now takes fewer than 3 workers to support 1 Social Security beneficiary. Clearly, this system, as it is, is done though the socialists in charge have no idea what this means, if they even care.)

•  In Japan, 33-60% (depending on the survey) of Japanese youth between the ages of 25-34 either do not work or marginally survives on low wage jobs. The social contract to care for seniors cannot be met. A yen crisis is looming as this impasse will be cured by the hand of reality.

•  Assets will be sold off to meet estate requirements adding to the supply of "expensive" property, that is, property that the young cannot afford.

•  Assets will be sold off by older people not interested in watching inflation and confiscation steal the results of a lifetime of work and investment. (Even selling at an apparent "loss," will not matter where there is a significant profit over time. Normal rules of economic patters will be distorted.

•  The liquidation era will alter economic models. For example, the liquidation may be the reason people have continued to buy treasury bills though they are not a good investment in the traditional sense which gives a false sense of security.   

The supply of homes available will continue to expand, prices go down, real estate tax follow, government "employees" will be fired, etc etc. 

Banks will want to lower borrowing rates, but eventually inflation will prevent that. This will cause housing prices to drop quickly as a selling fear takes control of the gloated market. Few people will qualify to borrow. etc. 

Assets freed from homes, 401k accounts, and stocks will find new homes, but will not be "investments" designed to take a risk in order to produce new capital; they will be put into passive income vehicles, gold and silver, or foreign investments at a rate not seen before in the United States.  The wealth of the nation will concern itself with a shrinking pie while looking to the shrinking worker pool to fund social security. The Obama people will cause a transfer of wealth, but in a way not intended nor understood.

Of course, money being returned into real estate and hard savings may be a good thing in the long run, but it will cause a shudder in our economic structure.

So, as formal lawyers will add at the end of a warning letter: "...govern yourselves accordingly"