I just read an interesting article here that discusses the current economy and the struggles of being young in it. My overall observation is that I seem to be reading more and more articles like this. The author talks about the aging baby boomer population and hints at some of the issues that are sure to come as more and more of this “bubble” in our population hits the beaches. The younger generations will certainly see a significant strain on the economy as more and more of these baby boomers attempt to live without working. He also talks a bit about the cost of college and the overwhelming debt that some graduates end up with after they graduate, (or don’t graduate, but still have the debt). Certainly some people will attack this guy and say he’s just a doomsday author who has a negative outlook on the economy and the world in general. I tend to take a less controversial view. I think this is just one more person that is recognizing that the economic fundamentals in our economy aren’t all that great.
-Huge national debt
-Average consumer debt over $9k
-Housing prices down for the first time in 2 decades
-Morgage defaults drastically inreasing due to creative mortgage loans
-Largest US employers being service sector, lower paying jobs (Walmart)
-Aggressive global competition
-Declining pension opportunities
I’m sure others could list even more factors. I have to wonder whether authors like this are simply “warning signs” that the overall party may be over. Prior to the dot com crash, there were these same types of authors saying that the financials of these companies just didn’t make sense and there was no reasonable explanation for their inflated prices. Others poo poo’d on them saying that they just didn’t understand the new economy. In the end, the authors were right. In more recent times, there were those that said the housing price increases couldn’t be sustainable and the mortgage loans that people were signing up for were outrageous. Others would simply tell them that “they aren’t making any more land”, or “You just don’t understand real estate”. Well, I think most would agree that, while those authors were in the minority, they were right. We are now in the midst of a small real estate melt down. It’s hard to say how ugly it might get. I would venture to guess that if the economy starts heading south and we go in to a recession, the housing market will get even uglier. Overall, I have a very concerned view of the economy right now. Sure, I’m just an amateur, but I think as I live through a few more of these cycles of boom and bust, I’ll probably be accused of being one of those negative authors that just doesn’t get it. Pardon me while I go move a bit of my investments back over to cash. I think I’d like to play a little defensive investing for awhile and be ready for the next buying opportunity.
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