patrick.net

Dinor,
you touched on something that I think will be the next bubble: Retirement plan bubbles. Has anyone noticed that there has been a HUGE increase in the number of commercials for retirement plans and investment planning? They are all painfully targeted to boomers. One had this guy walking through the woods with his kids. He has an inner thought: "Soon the kids will be gone and will I have enough to retire?" These commercials are strange to me. Most people I know who retired in my family simply viewed retirement as... retirement, yet many of these commercials are all about entitlement and how cool you are. One even has a narrator saying something like: " this generation deserves... blah blah blah..." along with videos of 50-somethings surfing to a overly 60's sound track.
There are trillions of dollars getting ready to change hands. Boomer parents are going to die. Somewhere in that transaction, the banks and investment industries are going to want a piece of that action. So here we go again with a fresh commercialization of fear: " Are you about to retire? well- you'd better have enough.. or else! Invest with..."
I can see it now. They fucked up housing, so what else can they sink their money grubbing hands into? Once again, the banks and financial institutions are going to make a killing. I just hope that this time around the other generations don't get screwed in the process.

SHTF,

Wow! I hardly know where to start. You're right, absolutely right on virtually all accounts. By trade I watch Bloomberg all day everyday and the sheer amount of "financial services" advertising going on is staggering! We've all seen the repulsive Amerprise "Boomer's Rule" commercial and you'd think I would have developed something of an immunity to it by now but it never fails to sicken me.

My big question (and I have to be careful here b/c I work in the industry) is who the hell would want these losers as clients? They've already spent their WWll parents inheritance in advance and my guess is that these accounts are what's known in the business as "bleeders". Meaning they are in a constant state of being DEPLETED! I can't speak for others but I'm kind of partial to accounts that GROW! Call me crazy.

Then there's the blame game. While we're not pulling any punches here boomers aren't short on blame. If said acct. does not perform and generate liquidity faster than they can spend it look out! I smell litigation in the making. Is there ever enough? Even if you bring these people stellar returns rather than leave "something" for their kids they will almost immediately "grow into" their new found wealth!

This is why firms like Ameriprise aren't taking any chances. True, they have to go after the boomer dollar but they're not complete idiots. They're aware of boomers need for blame so they are almost without exception putting these people either into annuities or some kind of managed account where returns will be meager as will the liklihood of lawsuits. When I worked for a bank I managed for whoever was assigned to me. Now as an independent I work with the people I like and believe me I'm not actively seeking boomer's business. Sorry.

>>Boomer parents are going to die.

Yeah, but that's going to be a long smear of an evnt. Boomers have been dying for a long time. They'll be dying for the next 50 years. Sure, it'll be a bell curve with a peak somewhere in maybe 20 years, but dying isn't a mania that they'll all jump into like hula hoops, Frisbees, Pet Rocks, candle-making, bell bottoms, and real estate.

I think the next bubble will be something that can attract all the Boomers at the same time. The boomers are too diverse in age to all worry about retirement planning at the same time.

I used to think that commodities would be the boom that follows real estate, but I don't think that any more. I think the bubble has too be something that starts up after the RE boom is over. No idea what the next bubble will be, but there will be one somewhere.

Michael Anderson,

I definitely understood where you were coming from the other day when you said as a "tweener" that we didn't LEAD anything! You know that is soooo true. Boomers told us what we should think (even while they told their parents they wanted to think for themselves)! I was watching a special the other day on IFC about "The Drug Years" which documented from "Refer Madness" to today and they interviewed all the usual suspects, Ray Manzarek (of the Doors) file footage of Ken Kesey, Timothy Leary etc. and NOT ONE took ANY accountability for our current state of affairs! NOT ONE! They expounded on the "enlightment" and even lamented a few O.D's but don't look for any accountablility (it ain't there).

End Boomer Rant:

Conor,

"independent watchdog to political lapdog"

Can it be said any better than that?

2) FDR — exacerbated the Great Depression, put into place a variety of social programs (notably Social Security) which bog down the US to this day

right. except US social security is generally more regressive and less generous than comparable affluent economies in europe and the british commonwealth on most measures. taxonomies of welfare states in the affluent OECD always put the US system at the bottom. and you think it should be worse? if you're bogged down, everyone else like you is therefore bogged down even more. maybe it was just a decent, humanistic thing to do to instate social security, in order to recognise the rights of citizens to a dignified life, no matter how begrudgingly, rather than being a hairy-chested individualist rolling with the punches...

i don't think anyone really know what exacerbated the great depression in the great capitalist cycle of 'who gives a f@ck what happens' - only that it took a war to create the illusion of full employment...

>>I was watching a special the other day on IFC about “The Drug Years” which documented from “Refer Madness” to today and they interviewed all the usual suspects, Ray Manzarek (of the Doors) file footage of Ken Kesey, Timothy Leary etc. and NOT ONE took ANY accountability for our current state of affairs!

Were Leary and Kesey even boomers? I thought Leary, at least, was born too early. No matter--he was a guru to the boomers.

Of course they didn't take any responsibility. The last time I saw Ken Kesey in person, he was giddily projecting psychedelic images onto a wall at a hotel New Years' Eve party. I don't know if he was high on anything, but he was awfully cheerful and goofy and likable that night. I admit it was kind of fun to talk with him, but he seemed distressingly child-like to me. Someone who got old without growing up.

Leary didn't seem like that; he seemed like a strange, abstract thinker (I don't think I ever spoke with him in person, maybe a "hello," but I did see him speak in person).

Despite superficial similarities, all these people were individuals. But what they had in common was their shared experience and their influence on each other. The rebellion in them discouraged any kind of thinking that they associated with their parents.

Wherever these guys were coming from, they seemed to either be incapable of seeing how their actions affected others, or maybe deliberately didn't want to think about it, or maybe figured that everyone was out for themselves. Responsibility or accountability would impede what was most important to them.

>>1) Woodrow Wilson — started the income tax, sitting president during the inception of the Fed, dragged us into WW1 — essentially pushed the first domino to turn America into the Global Empire it is today

If you feeel you want to dislike him more, read "The Great Influenza."

Has anyone noticed that there has been a HUGE increase in the number of commercials for retirement plans and investment planning? They are all painfully targeted to boomers. One had this guy walking through the woods with his kids. He has an inner thought: “Soon the kids will be gone and will I have enough to retire?”

SHTF,

Could you have been referring to this perhaps? When I first saw this ad, I threw up a little in my mouth (and nearly put my foot through the TV).

Conor,
I don't think FDR should be on the list because many of the programs he started at the time were greatly helpful to the country, particularly parts of the country that suffered the most during the depression.
My grandfather was part of TVA, a government program started by FDR that essentially brought the south into a modern era with cheap hydroelectric power, jobs to men that would've probably starved to death, and education to farmers to get more production from their land so they could survive with more crops from less land.
I agree that many of these programs are very outdated, but they were at the time of their inception revlolutionary and most responsible for pulling the US together when it could've gotten very, very ugly. A dead man can't be responsible for the actions of today.

Thanks for the input DinOr:

Are you saying start your own business? I'm not really sure what sort of business you were getting at.

My friend Chris, MBA Columbia, chucked the corporate sh-t and started his own business. It's been a tough a-- go of it but he's squeeking by.

HARM-

I just threw up in my mouth a little when I clicked your link. [[shudder]]

>>A dead man can’t be responsible for the actions of today.

Well, why not?

Every time you start a government program, you're creating a beast for the future. Institutions don't want to shut down when their task is done. Indeed, they don't even want their task to be done--they have a vested interest against a degree of success that would put them out of business.

They twist like snakes and will go for any niche they can to stay alive.

Look at how little of our budget is discretionary now. It's almost impossible for current politicians to do anything substantial because the dead presidents still rule the budget.

Michael,
I'm in total agreement with you that old programs only have so much time to be useful before they become obsolete. Ca's prop 13 is the perfect example of an old piece of legislation that's biting us all in the ass.
But at the time of their inceptions, most programs and laws were passed to adress a dire problem. Prior to 1978, property taxes were going up so much that many elderly CA residents were getting priced out of their homes. Prop 13 was supposed to be a temporary fix until enough housing supply was built, or a diffrent tax system was devised. That never happened, so now we have to pay for it.
The programs started in the depression were formed for obvious reasons and have no business still being around, yet many are. I doubt many of the politicians that thought them up imagined they would be around 20,30, even 70 years later.

Michael Holiday,

I'm saying exactly that. I (like Surfer X) openly admit that I have scrubbed crappers, emptied trash cans and washed the boss man's car! And where did it get me? I was in my late 30's before I realized something was terribly wrong. You're busy raising a family, commuting, paying taxes and trying to make a buck you didn't notice that others are being advanced but "you're too valuable where you're at" for us to consider "moving" you"! Notice the use of the word "moving". Why you're the BEST cold caller (or crapper scrubber) we got! Besides you make plenty of money! Well yeah, but...... I've had my share of "Snakes in Suits" (not finished but good read) thank you!

This is going to sound pretty weird but it doesn't really matter what you do out of the gate. Work on a small scale and see if your compatible w/ the self employed environment. Work up from there. You don't have to be the next Bill Gates, just get your foot in the door and take it from there. You can hack it.

Conor,
The US was a very diffrent place circa 1929. Over 75% of the country was rural. That's totally opposite of today. Many farmers were either completely reliant on agriculture, or even using crops as substinence. Where I came from, most farmers had no running water, electricity, or roads that would allow automobiles. When the depression hit, it wasn't simply a matter of accepting lower wages and expecting people to make due because many of these people didn't have ANY money to start with. Trust me- I listened to my grandad talk about this very thing.
Programs like the CCC in our area paid the workers in food and shelter. Without these programs, they would've either starved, or come very close to it.
The US is now 100% opposite of 1929. Come a depression, people could probably make due better than back then when the majority of the population exsisted on low income salaries.

When the fed was created, the public was told that its primary purpose would be to make sure that the American dollar stays strong. Throughout its history (especially since we went off the gold standard), the dollar has lost its value continuously.

If an organization is created for a primary purpose in which it fails miserably, should'nt it be shut down?

Sriram Goplan,

You are promoting some dangerous ideas --I order you to cease & desist at once. If you do not, the black helicopters will be coming for you forthwith.

Thanks for the input DinOR.

I was considering this strategy: Law enforcement and real estate on the side. Get in legit with real estate, work the neighborhood I patrol and sell a few houses a year just to build up legit experience.

Ten years into being a cop, if I hate it I can bail with half a pension and make the switch to full time legit real estate (my own business).

I'm sick of corporate shit and wouldn't mind going back to the South Bay, even though I'd have to rent for years.

I see that this thread has become a blame game.

Michael Holiday,

I echo much of DinOR's perspective on getting another Masters at your stage. Getting an MBA mid-career can be a form of insurance, though it still won't really get you invited across the glass ceiling. It will ensure that you can have a good chance at making the pile of resumes that get looked at. The network is the main thing. You can call on folks you went to school with or other alumni your entire life, which helps alot of you ever do start your own business/practice, etc.

A second Masters, especially a "generalist" sort of one, isn't really that useful for the $. People don't hire on academic accomplishments at your stage, but on experience. That's why you'll find guys with 3 or 4 advanced degrees working for guys with just an MA who's managed his/her career very carefully.

You could consider a PhD in a field you love. That would give you the ability to teach as an adjunct professor somewhere, which can also be part of a plan to launch your own consulting practice. Again, you might be able to find such a professorship with just your MBA, so the PhD is really a vanity/labor of love thing.

I see that this thread has become a blame game.

Blame laid precisely where blame is due, perhaps, but unwarranted?
Hardly.

All I can say about the Great Depression discussion and FDR is that it is highly revisionary. Perhaps its part of the natural generational cycle with war and economics that future generations are doomed to eventually repeat the past having forget its lessons.

The GD was not a set of economic and financial variables occurring in a petri dish. One needs to spend some time carefully studying US and European history from at the least the early 1900s forward to the 30s to understand what realistically could and couldn't be done.

Just a couple of things: FDR was not the cause of Deutschland's Inflationszeit, but had to deal with its consequences. FDR didn't command the overcapitalizations and misallocations during the peak industrialization era, but had to deal with the consequences. FDR didn't write Upton Sinclair's novels, but had to deal with the resultant societal changes.

The stakes were pretty high during this period in history. Keep in mind that the two major victors of the entire era, following the war, were one which won a war of economic and military attrition and another that won a war of slash-and-burn "heroic" self sacrifice. Both were terrible policies, ill-formed strategies, and downright irresponsible. Both were preferable to the alternative.

Blame laid precisely where blame is due, perhaps, but unwarranted?

True, but why blame when there is nothing you can do?

Who here has done scenario analysis on alternative outcomes which the Fed could have engineered? What would have happened without post 911 liquidity? I'd love to hear the armchair Fed governers here teach a lesson in global macroeconomics.

You know, it is quite possible that the housing bubble is an unintended consequence, albeit a pretty bad one, but still preferable to the alternatives.

And just for the record, the Fed's mission has never been to "keep the dollar strong". Google "Strong Dollar Policy" to see how well the US' experimentation with currency manipulation panned out.

RE: blame game

For the record, I am no fan of Woodrow Wilson's policies or LBJ's bloated "Great Society" welfare programs, but I admire FDR for making a pretty decent play, given a very bad hand (I agree with Randy H here). There were times during the Depression when the country could have turned in a very bad direction (communism or fascism) and FDR helped to steer us away from that.

SS may not be an ideal program, but it's chief problem is in how it's been mis-managed and perenially looted/underfunded by Congress. If not for it, we would have many more homeless elderly people on the streets than we already do. Not a bad thing. That said, I am not against instituting private retirement accounts. Personally, I think all 401k contributions should be mandatory for the corporate employed, and IRAs should be manadatory for the self-employed. If you're not saving for retirement now, then you will almost certainly be a drag on others' incomes later on.

Who here has done scenario analysis on alternative outcomes which the Fed could have engineered? What would have happened without post 911 liquidity? I’d love to hear the armchair Fed governers here teach a lesson in global macroeconomics.

One common perception is that recessions are bad and that they must be averted. As a result, many think AG is a hero.

In reality, a recession is bad only if it affects you. During the 2000 SV recession, many of us actually enjoyed improved traffic flow, abundance of restaurant tables, and low rent.

IMO, recession is a necessary garbage collection process.

HARM,

Where did you find the "puke in your own mouth link"? Funny stuff especially the comments! Over at "Ben's Blog" (which sounds suspiciously like a tavern your wife rather you not frequent) there was a link to the "San Diego Creative Investor" website that was freakin' hysterical. One of the gals ventured over to offer her opinion on:

"I bought ANOTHER flipper home in Phoenix (at the height of the market) and have had difficulty getting it sold. Now I'm just looking to break even but with the realtors cost and the monthly payments it looks like I'm screwed wether I sell it OR rent it out".

Needless to say she was less than generous with this FB!

Who here has done scenario analysis on alternative outcomes which the Fed could have engineered? What would have happened without post 911 liquidity? I’d love to hear the armchair Fed governers here teach a lesson in global macroeconomics.

Can't say that I have, though I would put little credence in the results from anyone's "scenario analysis". Isn't economics the art of predicting the past? No macroeconomic model --no matter how sophisticated-- is capable of predicting future outcomes with perfect reliability. And most are built with the inherent bias of the person(s) constructing the model.

One thing we can do, however, is study the consequences of past mistakes (unintended ot not) and adjust our current policies appropriately.

You know, it is quite possible that the housing bubble is an unintended consequence, albeit a pretty bad one, but still preferable to the alternatives.

Such as what? A somewhat deeeper recession followed by sustainable growth and no housing bubble? Sounds pretty good to me.

In reality, a recession is bad only if it affects you. During the 2000 SV recession, many of us actually enjoyed improved traffic flow, abundance of restaurant tables, and low rent.

Don't forget decent returns on cash. Randy, we're JBRs. If we owned houses from '00-'06, we'd be singing the praises of Greenspan as he blew up the prices of the assets we owned and inflated and cheapened our liabilities.

Instead, our wages have shrunk substantially wrt house prices, our cash assets have been pilfered while every house-betting man in the BA has been handed a check for $300K.

My push for a slow moving Fed is to make the Fed's motions become predictable for the average Joe so he can plan accordingly and avoid getting stolen from. If recessions result from a lethargic Fed, so be it.

HARM,

Myself and others have been most vocal regarding "dis-enrollment" for 401K participants! Meaning you're new on board, we automatically enroll you into the plan and if you really, really want out you have to jump through hoops. Maybe even have their spouse sign acknowledging that they are "O.K" with living in a single wide at retirement? I think busting this bubble will provide the first step and sufficient motivation.

Such as what? A somewhat deeeper recession followed by sustainable growth and no housing bubble? Sounds pretty good to me.

Unfortunately it doesn't work that way. Global economics contains myriad feedback loops and threshold "tipping points". Given the imbalances that existed before the shock occurred, a global deflationary cycle was a very real possibility. The reversal of Japan's recovery caused by a drop in US consumption alone could have started the ball rolling, not to mention the fragile nature of Europe's anemic recovery at that point.

Keep in mind that most of the folks writing books and essays about killing the Fed are hedge fund managers, former or current. A requirement of being a hedge fund manager is truly believing you are smarter than the Fed Governor, and everyone else on the planet for that matter. There's plenty of room for criticizing the Fed, as in DinOR's accusations of politicization. But all this "those bastards are useless" is, in my opinion, useless rhetoric.

Randy H,

I'm going to have to differ with you slightly on this one. Had the HB been "unintended" they would have pulled the punch bowl much more quickly. I don't consider having your choice of 89 different varieties of hardwood flooring of any real benefit.

A requirement of being a hedge fund manager is truly believing you are smarter than the Fed Governor, and everyone else on the planet for that matter.

You only need to think that you are luckier than most.

FRIFY,

I think you attributed a quote not mine to me. That was Peter P I think.

I'm a renter too with the task of protecting substantial equity savings from inflation. I still do not see the Fed as my "enemy". I see global imbalances, massive deficit spending, irresponsible tax policy, and time as my enemies.

Randy H,

If all those hedge fund managers are SO smart why do they keep calling me for ideas? Me?

RH,

I was agreeing with Peter P who responded to your quote. I'm just joining the pile on top of Randy crowd. ;-)

I certainly agree that our Tax policies are a bigger threat to my long term economic health than the Fed meddling.

"predictable for the average Joe so he can plan accordingly and avoid getting stolen from."

Hopefully this would not include Uncle Al suggesting ARMs for mass-consumption in a rising-rate environment AND when rates are already at historical lows.

Red Whine,

Yo! Even the financial media struggled with the logic of that one! Those comments should have served as a warning to GTFO! Yo!

Just for a laugh check out www.sdcia.com. Man, talk about "equity locusts"! Got to the message boards and check out "Losing Shirt in Tucson". Freaking hysterical!