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The Unwinding

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It's probably safe to say that we're going to continue witnessing the unwinding of a multitude of excesses for years to come . We all have access the thousands of blogs, market gurus, stock charts and newspaper articles, but it's very difficult to cut to the chase and really understand what's going on here.

Long story short. The largest generation in history is soon to 'retire' (I use that in quotes for a reason, more on it shortly) and is just realizing that more often than not, they'll be working in some form or another until they die.

Having just observed the second bubble in the past 10 years explode right before their eyes, they would rather blame someone else than to look in the mirror and be honest with themselves. Those dreams of working for 30 years, retiring at 58 or whatever age, moving to sunny Florida and living for another 20-30 years while living off a diet of 401K capital gains and government cheese were just that, a dream. The whole concept of retirement and the american dream for the past 25 years have been just that, a dream. We've finally woke up, but most people just continue to hit the snooze bar delaying the inevitable. Our leaders in every aspect of the term 'work' have passed any decision that could cause dissension on to the next shift or generation. We've just slowly become a society that says 'I'm going to make sure I protect myself' with a CYA attitude instead of going out and making the tough decisions which are sure to upset a small minority of public opinion.

Who is this crowd I speak of?

- How about the ones who haven't done a lick of work (and having a job doesn't mean you do work) in their lifetime but have racked up thousands and thousands of medical bills.
- The ones who bought 10 houses in California to flip, got caught holding the bag and are now crying and destroying their house because this it's The Man's fault the happened.
- Anybody, and I mean anybody who lived above their means because in their pathetic eyes, materialism was what made them feel accepted in life.
- The ones who talk loud in a public setting so the rest of the world can hear how important they are.
- The ones who constantly blame the government for our problems, yet have racked up thousands in credit card debt, lived above their means for years, and never had a back up plan but feel that isn't their responsibilty, but the government's.
- The ones who complain about high gas prices but never cut back on their spending habits in order to adjust their cash flow allocations.

It's a short list, but we all get the picture. I like to call these people 'Undesirables'. It's just so fitting, broad, and politically correct to use that term.

Most folks just haven't come to the realization that they are going to be working in some form or another until they die. Retirement is not for everyone, just like owning a home or car or cellphone is not for everyone. Our leaders just kept deferring that fact to the next leader to the next leader until we've put ourselves in the corner we find ourselves in now.

Demographically on paper, we as a nation are completely screwed. Anyone who doesn't follow the role of demographics in the economy/financial markets, it can be summed up as follows: Peak earnings come in around 45-50 years of age when the mortgage is paid off, the kids are out of the house, and one is making the most money on their job. The earnings from today go into the pot so the ones who retired before them can live a life of retirement. The ones who retire today will be counting on the earnings from the generation they've created. Boomers, I hate to tell you but this generation you'll be counting on isn't big enough to support you all in retirement. And no, the China growth story isn't going to be there to save you either.

Hmm, sounds like a Ponzi scheme if we have the largest generation ever preparing to call it quits soon just as most pension funds and 401K's are as underfunded as they've ever been and the future of healthcare coverage remains on the ropes. On paper, yes, we're screwed, but there is a silver lining to all of this. (Those who know me know I'm not a doom and gloomer and always try to find the silver lining that's been overlooked.) Again, baby boomers, instead of doing nothing but learning to golf and windsurf in Miami in their 60's will be working in some form or another and will be forced to make contributions to society so that the system can hopefully revert to the mean. This is sure to agitate a lot of baby boomers, especially the ones who have obtained no more of a skill set than selling mutual funds, buying stocks, or telling somebody it's a great time to be a home buyer in California during the collapse. The abundance of those skill sets is about as prevalent as foreclosed houses or cars on the selling lot. And how about those stories we hear of auto workers retiring at 45? The system just can't handle every baby boomer 'retiring' in the traditional sense just as the system couldn't handle houses going up indefinitely or oil prices above $100.

So my silver lining is this: I believe we're going to come out of this one strong and will remain on top due to the new opportunities that will be created from the collapse of the herdish mindset. I don't think we're going to see hyperinflation or deflation (though as a saver and someone who lives below their means, I would rather see deflation happen), or a collapse of the dollar. What is there for the dollar to collapse against? Stocks may never recover in our lifetimes or maybe they will, but nobody knows for sure. It's not time to call it quits and give up on stocks, investments and savings but this is a time 'when the going gets tough, the tough get going.' The means to achieve financial goals is still there waiting to be taken, but the easy button has been used up and is no longer applicable. New opportunities will arise from this crash just as new grass grows after a forest fire. The risk takers and doers will continue to develop new and uncharted careers to capitalize on these consequences (in a legit manner) and lead us to higher ground.

Oh and my generation..... well that's another story, so don't think that I'm just out to get the baby boomers here. 'Undesirables' can be found within every demographic region and we're going to have to knock them down at some time or another in order to keep the wheels turning. We''ll be dealing with the actions of today in about 20 years or so, but we'll cross that bridge when we come to it.

At the end of the day, I think everybody needs to look in the mirror and ask themselves, "Did I contribute to this mess? Did I live above my means for all this time? How important are material things to me? Is my position or title at work something that makes me feel more important than everyone else around me?". Or a better question yet to ask yourself, "Have I learned anything or managed to make myself a better person from all of this?"

Take care.


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  1. CountryBoy's Avatar
    Well said and thought out Bullet. You call them undesirables, I call them unproductive. They don't add any value to society and just take. We've live below our means since out daughter was born, so that we couldl save for her college. We live a simple life and it takes very little to entertain us. Just walking the farm and land that we own is enough. Do I plan to retire, you betcha. Quit working, no way. I hope that what we've saved and will save in the next 4 years or so, will give us the opportunity to go into semi retirement ( work about 20 hours a week), but give us the opportunity to do some of the things we've put off in the past to save, ie maybe have a vacation once a year, instead of every 4 years or so. Have I blown money, oh yeah, especially in my younger days, but I've tried to pass on my mistakes of youth to my daughter, so that she will be more frugal and not frivolously waste money, as I did 30 years ago.

    Hopefully, I've past that lesson on to my daughter, and I hope other BB's have done the same for their kids, but just seeing how my daughter's friends run thru money, their parents haven't learned anything from the past 20 years or so.

    This should be required reading for all, but especially BB's and those getting ready to start a family, because these times sure ain't my Dad's times.

    Your always a good read,
  2. Bullitt's Avatar
    CB it's good to hear that you have made the preparations and sacrifices today so you can enjoy the rest of your life. My wife and I, we are fortunate that our parents taught us sacrifice from the early days as they raised the family on a mortgage with an 18% interest rate, no credit cards, paid cash for everything and found out the importance of the little things. On the news this morning the mayor of Las Vegas was complaining about Obama's comment regarding gambling in that, "Now is not the time to be spending money at Vegas". Casinos.....

    I sometimes think that maybe so many of our problems have stemmed from the idea that we have conditioned society to think they are going to receive a trophy even for finishing in last place. It's kind of like when they were on the losing soccer team and still received an award as a kid.

    This quote was from Obama's inauguration speech. Most people probably consider themselves doers, and just remember, you can fool society, but you can't fool yourself. That IPhone, convertible car, McMansion, and 'happy' smile has managed to fool society for all of these years. Leisure over work, short cuts, nothing is ever a given.

    Political beliefs aside, either get this quote or you don't.

    “In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”
  3. CountryBoy's Avatar
    Bullitt unfortunately I've come to the conclusion that we have become a country lazy "I want it now, because I am entitled to it" people. They've become drive thru window people and don't realize or weren't taught that it takes hard work and sacrifice to get the better things in life.

    You're exactly right, a big part of it stems from the belief that there are no losers, because it may hurt their feelings. Well folks, life ain't like that and the sooner they take the thumb outta their mouths and become responsible productive people, the sooner this country will turn around.

    But the social/welfare programs being proposed are just going to have the opposite effect and we're going to become a country of whiners, when they don't get what they want now. My sympathy is running pretty close to empty right now because this attitude is becoming so prevalent and being supported by our worthless politicians, because it gives them the power they want if they can turn American into a bunch of whining crybabies, that depend on Uncle to take care of their every need.

    You're not alone in your beliefs, but I worry that our kind of responsible, productive, depend on yourself attitude is being bred out of the future generations. We can only pray that something will cause this process to reverse itself.


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