Dear Readers: A quick show note — I will be on Canto Talk with Dawn Wildman today covering the travesty that is the California Election Outcome. As far as I can see, only two clear silver linings.
1) Barack Obama can’t get re-elected again.
2) The inane food labeling regulation got a big now.
Other that that: I welcome our new statist overlords.</
Meanwhile, I have a report from Professor Athena, the Shrine’s “Finance Insider”:
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THE WEALTHIEST GENERATION FADES AWAY
The most expensive and most would also argue the most divisive Presidential race in our nation’s history is over, and after digesting the results and demographics of voter groups, one thing stands out. The makeup of who decides elections in our United States has changed. Unlike so many conservatives who express bitterness and anger, I find myself sad. I am truly grieved over the path that has been so painfully chosen.
Young people tend to be more liberal, simply because it is much easier to believe theoretically in how ideal expensive social programs are, how easy it is just to live in peace with all mankind, and how “fair” things should be. Until maturity and reality of situations in young peoples’ lives and experiences change their idealized views, those opinions prevail. This happened to my own generation in the highly idealistic 1970’s, when we worked to stop a war, gain the vote for 18-year-olds, win equal treatment and wages for women, and depose a President who was proven to be a liar to the American people. Like we see with young people today, we wanted our own way with sexuality, drugs, anarchy. Until, that is, we went to work.
The affluence of our first real reform generation has been nothing short of astounding. Not only did we watch as teenagers the sweeping changes in civil rights and the 14th Amendment, we also watched Roe v. Wade and Title IX. We watched the Cold War evolve into the eventual fall of the Berlin Wall and collapse of communism in the USSR. We had families and continued earning money and amassing wealth. As a group we earned much more than our parents. In fact, our earnings eclipsed exponentially that of our parents who fought and won WWII, the “greatest generation”. You might call ours the “wealthiest generation”. The generation after us earned less than we did (factoring in today’s costs and overall economy). The current generation, despite being better educated, cannot find enough jobs. They will earn much less, have a lower standard of living as a group, with much reduced chances for improvement over their parents’ achievements. They voted overwhelmingly for that on Tuesday. This is what I find sad.
The demographic shift we are now seeing is the biggest single factor driving changes we see taking place in America. Going forward, the national political conversation will not be about the “little things”. It will not be about free birth control, or legalizing marijuana, or what is “marriage”. It will all be about how there is not enough money. As it currently is in Europe. You can go to http://www.heritage.org/issues/retirement-security to read in detail about the threat of retirement programs’ costs. The baby boom generation may not be what turned this election, but we will be taking all the dollars out of the hands of those who did turn the vote for Obama to fund our retirement, along with our health care. As any life insurance actuary will explain, the biggest amount of health care dollars are statistically expended in the last 6 months of a person’s life. Health insurance costs are not going to go down, and especially not under Obamacare. Young people and minorities who think they voted for “free stuff”, as one major political news pundit terms it, will find they voted themselves the most expensive bill they have ever imagined. A decade from now, the baby boomers will no longer be earning. The “wealthiest generation” will have moved to senior citizenry, many drawing on public pensions younger people will still be working to pay for, using health care dollars and expensive services young people will be working to fund, and they will be drawing on their savings and potential estates to supplement what the inevitable rationed health care will not cover hence Obamacare.
The current “fiscal cliff” is to be sure a threat, most specifically to the credit ratings and continued deficit borrowing of the United States government and its currency. Congress may or may not find a solution. Yet it pales in comparison to the larger burden of the cost of an expanding federal government alongside a growing percentage of population who pay no federal taxes. Sooner of later, this “pushing on a string” no longer works, unless there is a reversal in the amount of tax revenue. This could happen, but only if economic growth exceeds 4% GDP, creating new wealth among the current working population. The longer deficit borrowing continues, the greater the pain threshold, and the more difficult to reverse. It will be magnified when (note that I did not use, “if”) interest costs for our deficit borrowing rise, something that has already occurred in Europe. By way of comparison, our 10-yr. Treasury is yielding about 1.70%, while Spain’s is yielding about 5.80%. We have yet to experience a “credit crisis” as they have. But, California and Illinois are our Greece and Spain.
The current generation of young people are being told they can improve their economic circumstances by borrowing from the federal government to attend college. While attending college is certainly a worthy goal, this choice is a sinister camouflage of “free government money” that is not fully explained to most of them. Student loan debt (FFELP) is NOT forgivable under bankruptcy law. Those who make that decision will therefore owe student loan debt that burdens them over several decades. Indeed, the current President and First Lady actually bragged to young voters that they had just paid off their own student loan debt eight years ago! This in sharp contrast to the “wealthiest generation” who largely did not borrow money that had to be paid back to creditors in order to attend college.
The U.S. credit crisis is almost irreversible at this point, and it should be said that the results of this Presidential election might not have done much to change its course. But, one thing is now more certain. As the “wealthiest generation” leaves the workplace in the largest exodus of earning power (and taxable current income) our nation has ever experienced, the generation who overwhelmingly voted for Obama can face the inevitable decline in their standard of living knowing they asked for it all.
Temple of Mut 