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Baby boomers' financial illusion

Saturday, January 17, 2009, 6:15 PM

In Crash Course Chapter 14 - Assets and Demographics I make these statements:

The boomers are the wealthiest generation ever, they hold nearly all of the assets, and they will need to dispose of those assets to fund their retirements.

In order to fund their retirement dreams, boomers are going to have to sell off their assets.
Who exactly are the boomers planning on selling their assets to? Even if [the smaller following] generation somehow could afford to buy all these assets, there simply aren’t enough people in this generation to buy them.

Figure 1


Figure 1: the Yellow and Red bars represent the US population broken out into age bands of five year increments for women and men, respectively. The green circle draws attention to a “hole” that exists in the population demographics with the Boomers represented as the “bulge” just a little higher up the chart from the hole. In red and yellow text to the right we see the six main sources of wealth for boomers (not ranked). Of the six, the five in red have to be sold in order to extract the wealth contained within them.


Daily Digest - Jan 17

Friday, January 16, 2009, 10:26 PM
  • Paulson Predicts Banks Are Done For, Shares Drop 
  • Stimulus may bolster dairy industry 
  • Famine USA---7 million dead (1930s Depression) 
  • Clear channel plans revamp
  • Hertz to cut more than 4,000 jobs 
  • Layoff Watch: 11,000 From GE (GE)? 
  • Circuit City to liquidate remaining US stores (34,000 Employees) 
  • Astonishing Worker Layoff Count Today 
  • Rescue of U.S. banks hints at nationalization 
  • Calif. tax refunds to be delayed starting Feb. 1
  • Stimulus plan repeals big tax break for banks 
  • Report: Over 8 in 10 corporations have tax havens 
  • Harsh turn of fortunes for 2 huge U.S. banks  
  • Citigroup Splits Into Two After Losing $8.3 Billion 
  • Paulson, Bair Raise ‘Aggregator Bank' for Toxic Debt  
  • Foreclosure Heat Map
  • 2009 Bank Failure #1: National Bank of Commerce, Berkeley, IL 
  • Umpqua Bank Acquires the Insured Deposits of Bank of Clark County, Vancouver, WA (Failure #2, 2009) 
  • Can You Help?

Daily Digest - Jan 16

Friday, January 16, 2009, 6:47 AM
  • The Bailout Game
  • The Big Picture (Video)
  • Ron Paul - Bernanke (Video, hat tip Jrf29)
  • World demand collapse, bonds next
  • Reform plan raises fears of Bank secrecy (hat tip David L)
  • Schwarzenegger Urges Action on Budget
  • Buy or Rent? (Calculator)
  • The 24/7 Wall St. Chapter 11 Watch
  • FSN News Hour, 3rd Hour (Hat Tip Doug)
  • Treasury, Federal Reserve, and the FDIC Provide Assistance to Bank of America
  • Foreclosures Climb 81% in 2008, Says RealtyTrac Report
  • Financial Sense Fed Watch (Links)

Daily Digest - Jan 15

Thursday, January 15, 2009, 8:20 PM

Davos is busy so I am filling in here today...

  • Group Led by Volcker Urges More Oversight of Banks
  • Retail sales dive as holiday spending slumps
  • U.S. 2009 auto sales seen at 27-year low
  • Argentine Peso Worst Latin Currency on Devaluation
  • Economic downturn pounds commercial real estate market
  • Warning that house prices may fall by 80%
  • Group Led by Volcker Urges More Oversight of Banks

Daily Digest - Jan 14

Wednesday, January 14, 2009, 9:37 PM
  • Federal Reserve Vice Chair Donald Kohn
  • Unemployment Rate (Chart).
  • The beginning of the end of Ben Bernanke
  • Accountability for the Troubled Asset Relief Program
  • Tax Oversight Dogs Treasury Nominee (Hat Tip JoeManC)

What's the total debt-to-GDP ratio for the US?

Wednesday, January 14, 2009, 6:38 PM

In response to yesterday's post, titled The crisis explained in one chart: Debt-to-GDP, Lisa G did her homework and then asked a great question:

This debt/GDP % of 403% from 2+ years ago compares to the % in today's post of "340 percent of total GDP. " 

Are these calculated differently or has the percentage actually dropped from 2006?

Any help here? I am getting lost.

Kudos for doing the research and resisting the call to become 'a believer'!  Well done.  There's a perfectly good explanation for all this....


Your chance to be on TV (if you live near Springfield, MA)

Tuesday, January 13, 2009, 10:19 PM

While I have been in discussions with WGBY Springfield (MA) for a while, we have confirmed that I will be giving a seminar on (next) Friday, January 23rd, in the afternoon, from about 1-5 pm.

The event will be taped, with multiple cameras, in a studio (I'm trying to say "high quality", and then broadcast for their upcoming fundraiser on February 10th.

If you:

  • Can come, and...
  • Don't mind being filmed...then...

Erik's changing role at

Tuesday, January 13, 2009, 6:05 PM

When I first discovered the Crash Course last summer, only the first 15 chapters had been completed, but I was still awestruck. I'd never seen anyone do a better job than Chris had done at organizing so many seemingly disparate topics into a single, cohesive message. And frankly, I was a bit envious. My favorite part of my business career was the public speaking I used to do - giving keynote talks at professional conferences and trade shows in the software industry. When I first watched the Crash Course, I thought "Boy, would I love to present this material myself!" Of course I would never try to steal or plagiarize Chris' material, and assured him of this when I first met him. But Chris was quick to say "Wait a minute, this is about promoting the cause, and if you want to help, I'm all for it!". Chris' selflessness and commitment to doing the right thing for society never ceases to amaze me. I was elated to have the opportunity to use Chris' presentation materials myself.


The crisis explained in one chart: Debt-to-GDP

Tuesday, January 13, 2009, 9:41 AM

If I was ever given just one chart, just one piece of data, to make the case that we were on an unsustainable path that had a date with a long period of contraction and economic hardship, it would be this one.


Figure 1: This chart compares total debt (or “credit”) in the U.S. to GDP (or Gross Domestic Product) on a percentage basis. Current total credit-market debt stands at more than 340 percent of total GDP.

As we can see on this chart, the last time debts got even remotely close to current levels was back in the early 1930s, and that bears a bit of explanation. The debt-to-GDP ratio back then didn’t start to climb until after 1929 (blue arrow), because debts remained relatively fixed in size, while it was the GDP that fell away from under the debts. With the exception of the Great Depression anomaly, our country always held less than 200 percent of our GDP in debt (green circle). In 1985 we violated that barrier and have never looked back.


Daily Digest - Jan 13

Monday, January 12, 2009, 8:48 PM
  • Influential Professor Says US has 'Entered a Depression'
  • We're Borrowing Like Mad. Can the U.S. Pay It Back? (Hat Tip JKibbe)
  • Humor, Video on Central Banks
  • Bush to Seek Rest of TARP Money At Obama's Request
  • The Companies That Will Dominate Retail Job Cuts
  • Shane Co., U.S. Jewelry Retailer, Seeks Bankruptcy
  • Cost of war (Graphic)