Tales from the Crypt - personal anecdotes on the economic big sleep

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Downrange's picture
Downrange
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Tales from the Crypt - personal anecdotes on the economic big sleep

This thread is intended to provide a starting point for some of our personal observations of how this crisis is playing out in the lives of real people.  The hope is we may glean a new fact, make a connection, or at least release some stress by "venting" about what is happening around us and to us.  I'll begin with an experience I had last night:

I happened to talk with a friend I hadn't been in touch with for several years.  Bill retired a few years ago, having spent a career in the northeast U.S., selling paper products to businesses across a wide and busy territory.  Bill did well enough in this work to raise a nice largish family, own a nice suburban home, take annual vacations to nice places, and, in general, enjoy the American "good life." 

When he retired he also managed to afford a really nice vacation home on a lake in the Adirondacks, which he and his wife and family have been enjoying now for several years.  Skiing in the summer, snow-mobiling in the winter, back and forth from Jersey to NY as they wish with no worries about money.

Last night, I could tell he was very worried.  "So, how's it going?"  "Oh, just really concerned and don't know how we're going to get through this economy."  It turns out that for Bill, like most of us, his 401K has become a 201K.  Being a working stiff a decade or so away from thoughts of retirement, I hadn't really thought about how this all was affecting people like Bill, those I'd always assumed had plenty of money socked away, and had managed to ease off into their golden years, backed by the "tailwind of cheap oil" Chris talks about in the Crash Course.  It really hit home for me that this is a global economic PANDEMIC, crossing all class lines, and no one is going to escape - something I knew theoretically, but hadn't experienced so personally.

As we talked on, I was astonished to learn that Bill actually expected Obama to fix this.  Bill never struck me as the kind of guy who could get behind a democrat for anything, but he just seems to be unable to come up with any answer to the problem than "somebody better fix it."  I tried "but, I don't think this is an executive branch problem, Bill," and he replied, "but they're the ones that are going to have to fix it."  I wonder what our next conversation, say a year from now, is going to reveal, for I have no doubts that this is certainly NOT fixable by an election, or any other political means.

I am mentally multiplying my conversation last night by the millions, to reach a product of anxiety, malaise, and disappointment which reflects must be the coming disenchantment of the boomers.  We've watched our parents, the WWII generation, survive three wars, raise families well with stay-at-home wives, and retire into a golden sunset of ever longer lifespans, fueled by top notch health care extended past the age where previous generations died from "old age."  We are the generation that, by and large, began to find a diminished standard of living from that we were brought up with, found single income families almost unworkable, which forced us to pawn our kids off on day care centers, found ourselves responsible for our own "retirement," and now, when the golden ring is finally in sight, find our treasury looted and the future locked down.

Not complaining, personally, as I figured out some time ago I would have to work "until I drop," since the golden age of oil was not sustainable.  But I suspect there are going to be a lot of "Bills" coming around, as this age of diminished expectations descends upon the globe.  I think it's seeing all this theory come home like this that helps me understand what we're in for, and it's really only starting.  And I realize this is an extreme example, in that we're looking at an upper middle class lifestyle that's maybe being forced "down the ladder" a peg or two, and that looking a class or two below this would provide views into total despair, early death, etc.  But I don't (yet) live down there, so this hit home for me.

I could say more about how the oil boom made all this possible, but that's all in the Crash Course.  It's interesting to me to note that, during the big run-up, people could make a really great living just by being intermediaries between one larger company and another, skimming small profits that added up from the commerce in something as mundane as supplying paper to the operations of the giant oil-fueled juggernaut.  Like the Course said, surplus manifests as the "good life," everywhere, and when there is no surplus, well...

 

scepticus's picture
scepticus
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Re: Tales from the Crypt - personal anecdotes on the ...

A key part of bills problem is that he is a baby boomer. This issue is covered in the crash course under 'asset prices' One reason that the boomers have enjoyed such prosperity is that they represent a demographic wave, with many new workers entering the workforce in the 50s and 60s and 70s, creating an all round economic boom, peaking when the boomers earning potential peaks (ages 45-55). Now that's what you call a demographic dividend, trouble is, the dividend must be 'repaid' as bill and co leave the workforce, since the generations coming after the boomers are smaller and less wealthy.

 That is, much of their apparent wealth is created by high demand for assets among numerous paper-wealthy boomers, and as demands for those assets fall off as the boomers die or try and sell them, so do the prices of those assets. This factor is almost certainly a factor in the whole current financial crisis, and will cause even more pain in the near future.

Asset prices will stabilise again once all the boomer's have dold off or died, and then it will be (in asset price terms) as if they (the boomers) had never existed. There is not a thing the exec branch or anyone else can do about this - its demographics, and demographics is destiny, and won't be diverted.

 

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Re: Tales from the Crypt - personal anecdotes on the ...

A friend of mine is in her 70s and living on fixed income and
retirement. She hit a rough patch a few years ago and had to start
cashing out her stock investments in order to pay her rent. She was sad
that she couldn't leave it to her children. I told her please don't
worry because if she were my mother, I would want her to live well and
spend her money on herself. The kids can and will take care of
themselves.

Now, the stocks are gone and she is living on her
social security. I recently congratulated her. "You got out of the
stock market at its peak! If you'd waited, you'd have been cleaned out."

Obviously,
this is no help to her at this point in time, but she had to agree that
she'd gotten out at a good time. Now, the real work begins, figuring
out how to live and eat without losing our humanity.

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Re: Tales from the Crypt - personal anecdotes on the ...

Good thread, downrange.

I have not yet been badly hit by the economic problems personally (besides the shrinking retirement fund).  But my brother, who has his own internet business, says he saw his business do a sharp 40% drop a couple of months ago, and it has stayed there.  I have a sister who lost her job in publications recently, and is now trying to make a go of a little start-up business on her own.  She is luckier than some; at least she got a severance pay to carry her for some months while she tries to get back on her feet.  She's also got a lot of good business skills; she just might make a go of  it.

I can easily see where families and family members could (will) end up moving in together as this thing progresses.   My sister said she can now easily see how people, without families to fall back on, end up homeless.   We are the safety net now!

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Amanda Witman
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Re: Tales from the Crypt - personal anecdotes on the ...
Downrange wrote:

This thread is intended to provide a starting point for some of our personal observations of how this crisis is playing out in the lives of real people.

Well, I see a lot of things that I would not have imagined so soon in my lifetime. 

I see friends and family unemployed and trying to make ends meet - pay our bills, heat our houses, feed our children. 

I see thirty-somethings and forty-somethings trying to reconcile a childhood and young adulthood of abundance, casual wastefulness, and carefree enjoyment, with this "puzzling" sense of disillusionment that things are not turning out the way we were always led to believe they would.  It feels like we're pushing large rocks uphill. 

I see friends and relatives either feeling very stressed about their situation or erroneously convincing themselves that it will all blow over (or some politician will fix it, or the market will swing up because "it always does," etc.) 

I see my parents, in their early 60s, on the brink of what they expected would be their retirement years, slowly figuring out that they're not going to get to retire soon - or maybe ever. 

I see my grandmothers nearing the end of their lives; I predict one of them will die happily, a recreational consumer to the end; the other will also die happily, believing there was only one Great Depression and there won't ever be another one. In a way I think they are lucky that they will most likely be spared the pain that we are collectively due. 

I see my kids growing up excruciatingly conscious of resources.  I see myself hoping and praying that I can help my kids be prepared, as prepared as anyone can possibly be, for what they will face as teenagers and young adults. 

I am hoping that my family can continue to make ends meet, that we can keep our house, that we can maybe even do better than that and someday buy the land we've been talking about for so long.  

"It wasn't supposed to be like this."  That, to me, feels like the theme of this whole experience.

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Re: Tales from the Crypt - personal anecdotes on the ...

Amanda,

You said it perfectly! Exactly my thoughts. Thank you for putting them into words.

Now, I guess we have to grab those boot straps (where are they?) and pull ourselves up, ugh. 

-Tim 

Downrange's picture
Downrange
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Re: Tales from the Crypt - personal anecdotes on the ...

Excellent comments here, thanks for sharing! I meant to reply earlier. I agree the Baby Boomers are a unique problem within a crisis. I mean, it is compounding the situation, as there are no "takers" for the assets they will need to unload as they retire and sail off into the sunset.

More and more, I'm hearing people say that they have delayed their retirement plans, put it off, and I can only say that they may have to keep delaying them. If this continues down the present path, and there is no reason for it not to, traditional stock market-based investment plans are going to be worth about a quarter of their 2007 values. This represents the largest single loss of "wealth" ever experienced by any generation.

In many ways, the older generation (my parents, for example) are perhaps the most blessed in all this. They are getting the benefit of top medical care, even in their last year of life, essentially provided "cost no object." This clearly cannot continue. As resources recede away, assets devalue, inflation of currencies begins, corners will be cut. Entitlement programs are an obvious target.

I hope that others will post some anecdotal experiences - that's what the thread is for. Thanks guys.

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Re: Tales from the Crypt - personal anecdotes on the ...

FWIW,

After years of cajoling, a year ago I finally got my 80 y.o. parents to forget about leaving me $ and get a reverse mortgage on their home. They get $1400./mo tax free since it's actually getting slices of their home equity as cash. It goes on until they die and there is a provision for them to cash out if they need to go to assisted living, etc. The missed the boom in FL real estate (didn't listen to me!) but got it done before the big slide. I tell them I laugh every day when I think of them being paid for an asset valued at $250k. that is now probably worth $175k.

If your parents own their home and are over 62 (I think) they can do it, though the older you are, the more you get. Of course, house value also matters. They may need a lawyer as, as always, some shysters are out there but the Feds (hah!) somewhat regulate this.

 

SG

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Re: Tales from the Crypt - personal anecdotes on the ...

cape, good for you for getting your parents to do that.

I work
for the state of California. Eek. But I work for a very special branch,
the Courts, and this branch has more latitude on how they deal with
cuts. For instance, furloughs are voluntary. As I understand it, there
are several agencies that are not closing for two days per month, and
the Courts is one of those agencies. I believe, but am not certain,
that the state hospital may be another agency that is not closing.

We
had a voluntary retirement back in November which represented a 20%
workforce reduction, so we are holding that position open and taking
the savings from that. We are a very small court in a very small county
in a very economically depressed area.

Our county thought it was
fine and was looking at us like oh, you poor state workers. Then the
state arrogantly withheld federal and state funds from the counties,
and suddenly our county was not doing well at all. Suddenly, they found
a need to have furloughs two days per month. Suddenly, my friends are
treating me just a little bit differently. There's a little edge of
resentment. I'm working just as before and they're fighting for
survival.

The economy and the state are the big topics of conversation and
it always comes up about why we aren't having furloughs and they are. I
keep saying we were told we have payroll *this month*. I may be on
furlough next month... I don't know. I keep saying we had a 20%
reduction in workforce, but I can't communicate how my workload has
increased so much, and how I secretly wouldn't mind a furlough because
I'm so tired all the time, and I'm so behind all the time, and I'm so
overwhelmed.

Our little court is cutting back on everything it
can. It's very hard. We have to offer the same services as the big
courts, but our volume is very low. We may only have 6 unlawful
detainers in a year, but we still have to process them and know how,
just like the big courts. I understand in a big court, you can have
many employees who do just one thing, like only dissolutions, or only
jury duty, or only traffic tickets. In our court, we all have to know
how to do several things so we can overlap when someone is out. 4
employees and a court executive officer. That's it. (Also 2 judges, but
they're no help in the office!)

It's very stressful. I get the
feeling that county workers are somehow intellectually blaming me, a
person paid by the state, for their lack of funds.

Davos's picture
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Re: Tales from the Crypt - personal anecdotes on the ...

DownRange:

Good read. It continually amazes me to see people believe that someone can fix something that is fundamentally busted. Some houses are better bulldozed and then rebuilt. Take care 

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Re: Tales from the Crypt - personal anecdotes on the ...

My mother passed away last May at age 70.  She had a reverse mortgage that I encouraged her to get.  She took out $75k on a $200k house and got a $300/mo income.  In 4-5 years that became $115k.  Not bad.  She managed to clean up ALL her bills to ensure we would be left something.  I had no idea until I did the estate stuff.  As a person who could likely spend a large lottery winning - say $100 million in a few weeks, I don't know how she did it but she joked that she was getting so ill she no longer had the will to continue spending. She died with $4500 in the bank and $150,000 in net assets. 

The reverse mortgage people were awesome.  They said I had 6 months to sell and she could extend another 6 months.  It took us 4 months to have a funeral, paint inside and out, make repairs, sell off and remove household items, and put the sales money in the bank.  We did our own work (I sort of drove my family a bit hard but I think they thought it was worth it), we made the house much better than the rest, and we sold at practically fire sale prices.  I had buyers to choose from.  I also knew that the market was about to crash and I didn't want to be stuck with a house with huge monthly expenses and continual repairs due to no one living in it.

It worked out well for us but I swear the sun, moon, and stars were aligned....

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Re: Tales from the Crypt - personal anecdotes on the ...

I personally haven't felt the "stint" that many here have.  Perhaps because I have a farily solid job right now and so does my wife?

What I see more and more are people looking at what's happening in the economy, on television etc.. as if it is a play or theatrical presentation that will have clear cut lines and climaxes and ultimately have a "happier ever after" ending.

I simply don't have that sort of "faith" in people to be sure that anyone will do the "right" thing or not turn to deviousness as a way to garner the basic necessaties of life.

I was in Somalia in the early 90's while I was in the Navy, I've seen some pretty "beat-down" societies over my years and I wholeheartedly feel that once the thought that we're being "protected" by our leaders leaves the masses, we are in serious trouble.

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Re: Tales from the Crypt - personal anecdotes on the ...

Brother-in-law is well-into his middle-aged years.  He is a self-employed skilled laborer in South Florida.  He never had a problem earning a living, paying bills on time, and putting aside some savings.  But he has worked only eight hours in the past eight weeks.  Savings are shrinking... and he wonders for the first time in his life whether he'll end up on the streets, with his vehicle repossessed.  He has friends and colleagues in similar situations.  They (grown men) are scared.  Men he knows have started bartering with each other, he said.  Out of necessity.  Money-saving tips are swapped, too, some of which don't feel honest, like taking more than your fair share of paper goods and ketchup packs from fast food joints with which to stock your kitchen pantry. 

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liven the dreem
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Re: Tales from the Crypt - personal anecdotes on the ...
Craigmandu wrote:

What I see more and more are people looking at what's happening in the economy, on television etc.. as if it is a play or theatrical presentation that will have clear cut lines and climaxes and ultimately have a "happier ever after" ending.

I simply don't have that sort of "faith" in people to be sure that anyone will do the "right" thing or not turn to deviousness as a way to garner the basic necessaties of life.

I was in Somalia in the early 90's while I was in the Navy, I've seen some pretty "beat-down" societies over my years and I wholeheartedly feel that once the thought that we're being "protected" by our leaders leaves the masses, we are in serious trouble.

I've worked in dysfunctional societies as well and I agree with this thought.  Most folk from 'developed' countries have no comprehension of how dog-eat-dog things can get.  Indeed, you don't have to look back far through history to see how rough life has been to many people in well developed nations either.

 Whatever is in the future, it may well unfurl at a slow enough pace that makes it easy to normalise deprivations that we would currently find intolerable.  Maybe stimulus is less about stimulus and more about sinking the living standards of the populace at a pace that people can manage?

LTD

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