The Lost Generation

[19 year mortgage 8itch]

It's like watching someone argue (poorly) for the existence and beneficence of god through the proof of the existence of the church.

The "lost generation" are those who are trapped in this thread. What was the OP about again?

[the_dork]

This is an interesting take from a blog I read-Stumbling & Mumbling

http://stumblingandmumbling.typepad.com/

Am I a member of the luckiest generation in history? I ask because of the possibility that US government debt could appraoch 100% of GDP by 2020. My reaction to this?

Kerrr-ching!

The thing is, I’m hoping to retire in the next 10 years. What I’d like, then, is high annuity rates. And high real government bond yields resulting from worries about high public debt would suit me nicely.

This, though, would be only the last in a long line of good luck I’ve had simply because of when I was born. For example:

1. I was in the last year to go to a grammar school before their abolition. I therefore got a better education, and more chance of getting into Oxford, than I would have a year later.*.

2. Not only did I get a student grant at university, thus leaving with little debt, but I was also in a small minority to get a good degree. I therefore had an easy way of signalling my ability. Unlike today’s young graduates, I didn’t need to worry about building a good CV whilst at university to signal my superiority over other job applicants.

3. When I graduated, the City was expanding, so I could easily find well-paid work.

4. I benefited from one of the largest-ever booms in house prices, in the 90s and early 00s; this more than offset 20 years of poor stock market returns.

In all these respects, I and my contemporaries have enjoyed enormous good luck, simply by virtue of an accident of birth - which is why I’m looking forward to reading David Willetts’ take on this question.

What surprises me here, though, is how little resentment my generation attracts from 20-somethings. If I were a recent graduate saddled with tens of thousands of debt and poor job prospects as a result of the decisions made by my generation, I’d be livid.

So why are younger people so quiet? Is it because they are just passive? Or is it that they have other forms of luck which my generation didn’t. I mean, stories like this could never have emerged from universities in the 80s.

* This is not an argument for reintroducing grammars. I was in a small minority in being from a poor background who got into one. Social policy should not be based upon my own idiosyncratic experiences.

[Si1]

You've got to be sh*tting me.

I'm a 32 year old FTB in prospect who also happens to be a higher rate taxpayer (40%.... not the new 50%).

your ramblings do raise the question 'how'

either public sector or possibly corporate business/finance, where volume outweighs content with the bosses, can't quite tell

Edited February 6, 2010 by Si1

[Si1]

So why are younger people so quiet? Is it because they are just passive? Or is it that they have other forms of luck which my generation didn't. I mean, stories like this could never have emerged from universities in the 80s.

this is an interesting question - I know early 20 somethings with 40k of debt from uni.

I think maybe they are numbed by it, it's simply crazy, other thing being they don;t realise just how cushdie it was for people 15-25 years older than them.

They still think 'getting on the property ladder' will sort them out and more than outweigh their current debt burden. I think the realisation of what they've actually been sold will take 20 years to sink in.

[Si1]

Injin isn't that bad

[Georgia O'Keeffe]

This is an interesting take from a blog I read-Stumbling & Mumbling

http://stumblingandmumbling.typepad.com/

Am I a member of the luckiest generation in history? I ask because of the possibility that US government debt could appraoch 100% of GDP by 2020. My reaction to this?

Kerrr-ching!

The thing is, I’m hoping to retire in the next 10 years. What I’d like, then, is high annuity rates. And high real government bond yields resulting from worries about high public debt would suit me nicely.

This, though, would be only the last in a long line of good luck I’ve had simply because of when I was born. For example:

1. I was in the last year to go to a grammar school before their abolition. I therefore got a better education, and more chance of getting into Oxford, than I would have a year later.*.

2. Not only did I get a student grant at university, thus leaving with little debt, but I was also in a small minority to get a good degree. I therefore had an easy way of signalling my ability. Unlike today’s young graduates, I didn’t need to worry about building a good CV whilst at university to signal my superiority over other job applicants.

3. When I graduated, the City was expanding, so I could easily find well-paid work.

4. I benefited from one of the largest-ever booms in house prices, in the 90s and early 00s; this more than offset 20 years of poor stock market returns.

In all these respects, I and my contemporaries have enjoyed enormous good luck, simply by virtue of an accident of birth - which is why I’m looking forward to reading David Willetts’ take on this question.

What surprises me here, though, is how little resentment my generation attracts from 20-somethings. If I were a recent graduate saddled with tens of thousands of debt and poor job prospects as a result of the decisions made by my generation, I’d be livid.

So why are younger people so quiet? Is it because they are just passive? Or is it that they have other forms of luck which my generation didn’t. I mean, stories like this could never have emerged from universities in the 80s.

* This is not an argument for reintroducing grammars. I was in a small minority in being from a poor background who got into one. Social policy should not be based upon my own idiosyncratic experiences.

I would say the author is unfortunately among the unluckiest generation in history

[Si1]

I would say the author is unfortunately among the unluckiest generation in history

deflationary wealth destruction?

[Georgia O'Keeffe]

deflationary wealth destruction?

deflationary asset price destruction, immediately morphing into inflationary wealth destruction.

Edited February 6, 2010 by Tamara De Lempicka

[Si1]

deflationary asset price destruction, immediately morphing into inflationary wealth destruction.

thing is, I agree with you re: deflation followed by inflation, I just disagree on the amplitude, I think it will be much less than you reckon.

but you always make very engaging and informed comment

[DeepLurker]

...

What surprises me here, though, is how little resentment my generation attracts from 20-somethings. If I were a recent graduate saddled with tens of thousands of debt and poor job prospects as a result of the decisions made by my generation, I’d be livid.

So why are younger people so quiet? Is it because they are just passive? Or is it that they have other forms of luck which my generation didn’t. I mean, stories like this could never have emerged from universities in the 80s.

...

I think that humans are very reluctant to accept sudden readjustments to how they understand their world.

E.g. HPI has been a feature of the UK for decades now. Yet - for example - it was only in 2005 that this subject bugged me enough to Google it - and I found this site. And even then, I read the posts about how the economy would come crashing down because of HPI with amusement - those silly little tin-foil hatters! The whole idea was just too far fetched for me. I only returned to HPC (and joined the site) when the banks crashed and I understood that those nutters has been right all along.

I see a similar problem with graduates: having been fed a story of "work hard, get a degree, and you'll get a cushy job", it then comes as a shock that their first job is flipping burgers at McDonalds, and it will take a couple of years to accept reality.

For them to accept that the whole economy is rigged to favour the rent seekers over the wealth creators will take a little longer...

[Tired of Waiting]

Guardian article today on 'the lost generation':

http://www.guardian.co.uk/money/2010/jan/31/unemployed-graduates-credit-crunch-andrew-hankinson

"Our parents had free education, fat pensions, and second homes. We've got student debt and a property ladder with rotten rungs. Thanks very much, says Andrew Hankinson, BSc".

Please comment on this article - I have done so under the username 'Outragemified'.

In practice, you can't blame the masses for mass movements. This credit/debt/house prices boom was mainly Gordon Browns's fault, by forcing the Bank of England to keep interest rates too low, since December 2003, when Brown tampered with the inflation index, removing housing costs from it. It is on record - CPI x RPI malarkey. Google it. Mervyn King was against it at the time, and said so to brown, at the time. This is on record too, in a House of Lords Economics Committee. It was Chancellor Gordon Brown's fault.

[Injin]

In practice, you can't blame the masses for mass movements. This credit/debt/house prices boom was mainly Gordon Browns's fault, by forcing the Bank of England to keep interest rates too low, since December 2003, when Brown tampered with the inflation index, removing housing costs from it. It is on record - CPI x RPI malarkey. Google it. Mervyn King was against it at the time, and said so to brown, at the time. This is on record too, in a House of Lords Economics Committee. It was Chancellor Gordon Brown's fault.

"If he told you to jump in the river, would you do it????"

Yes he said, but then loads of people went and did it. Without them Gordon is just a raving anti social loony destined for special housing, psychicatric treatment and a coat with mittens sewn into the sleeves.

[Tired of Waiting]

"If he told you to jump in the river, would you do it????"

Yes he said, but then loads of people went and did it. Without them Gordon is just a raving anti social loony destined for special housing, psychicatric treatment and a coat with mittens sewn into the sleeves.

And it is not even fair to demand knowledge of economic theory from the masses. Their decisions about taking credit or not are based on the monthly payments. They can't foresee future interest rates, or bubbles. And it is not their job, really. In our democratic system this is the job of their representatives, civil service, and these should be watched by the press. All of these failed the people.

Edited for bad grammar.

Edited February 9, 2010 by Tired of waiting

[TGP]

TGP You've got to be sh*tting me.

I'm a 32 year old FTB in prospect who also happens to be a higher rate taxpayer (40%.... not the new 50%).

your ramblings do raise the question 'how'

either public sector or possibly corporate business/finance, where volume outweighs content with the bosses, can't quite tell

IT, Senior QA.

[Britney's Piers]

Asked if they want it and pay for it......... or they want to f*** off and go live somewhere with no taxes...... they stick around (like No. 90 being forced to choose between pay or the mongols). I hear somalia is nice this time of year, yet no-one seems to want to go ? Strange that.

I would've though that such an anarchist utopia would be drawing you lot like flies....... but for some reason you don't go. I wonder if the relation between them NOT having a functioning govt...........and you not wanting to go.........are in any way connected.

It's all academic at the end of the day.

The East Berliners risked everything to jump the wall. Some didn't even plan it, they just happened to be walked by and saw the opportunity. leaving everything behind except the clothes on their back. So if they could do it...

[aa3]

I think that humans are very reluctant to accept sudden readjustments to how they understand their world.

E.g. HPI has been a feature of the UK for decades now. Yet - for example - it was only in 2005 that this subject bugged me enough to Google it - and I found this site. And even then, I read the posts about how the economy would come crashing down because of HPI with amusement - those silly little tin-foil hatters! The whole idea was just too far fetched for me. I only returned to HPC (and joined the site) when the banks crashed and I understood that those nutters has been right all along.

I see a similar problem with graduates: having been fed a story of "work hard, get a degree, and you'll get a cushy job", it then comes as a shock that their first job is flipping burgers at McDonalds, and it will take a couple of years to accept reality.

For them to accept that the whole economy is rigged to favour the rent seekers over the wealth creators will take a little longer...

Yes most people just put their heads down and try to copy what worked in the past. And the culture is very slow to change to reflect the changes that happen on the ground. The real changes sometimes happening quite quickly, like a new technology that changes things.

There was a time when going and getting that degree was a ticket to a cushy job and good life. So today millions and millions have gone out and tried to replicate that. Not understanding that it couldn't possibly scale to work the same when millions tried to do it.

But even though things have clearly changed that old 'common wisdom' still is based on what was true 30 years ago, but isn't really true today.

[aa3]

And it is not even fair to demand knowledge of economic theory from the masses. Their decisions about taking credit or not is based on the monthly payments. They can't foresee future interest rates, or bubbles. And it is not their job, really. In our democratic system this is the job of their representatives, civil service, and these should be watched by the press. All of these failed the people.

Democracy itself is flawed in that way. The average person is put in charge.. even though the average person is basically a deer in the headlights of the complex interactions and machinations of the economy.

[Cogs]

And it is not even fair to demand knowledge of economic theory from the masses. Their decisions about taking credit or not is based on the monthly payments. They can't foresee future interest rates, or bubbles. And it is not their job, really. In our democratic system this is the job of their representatives, civil service, and these should be watched by the press. All of these failed the people.

Not since 1979 and the end of deference. You can't have it both ways. Everyone for themselves, if you can't keep up, tough.

[TGP]

Democracy itself is flawed in that way. The average person is put in charge.. even though the average person is basically a deer in the headlights of the complex interactions and machinations of the economy.

Well,

It's not supposed to work like that. Not in representative democracies (it is supposed to work like that in direct democracies).

The average person is NOT in charge........ what the average person is supposed to do is to give a very broad indication of which way they want the country to go, and a broad statement of it's objectives.

The politicians elected are supposed to take those broad statements/broad objectives....... and figure out the technical requirements and neccessary actions to get there.

We're supposed to say "Well we want these kinda things...... a better NHS...... higher/lower taxes...... this balance between defence and domestic programmes".

The politicians are supposed to lead us there, and if neccessary choose between the objectives as and when they conflict (e.g. lower taxes and lower waiting times)..... and ALSO if neccessary protect us from ourselves (we want no taxes..... and so no army !).

I think labour have certainly failed to do this....... at least since 2001/2002...... but to say the people "are supposed to be in charge" is really wrong. We aren't. We're supposed to give general indications where we want to go........ and it's the politicians duty to LEAD us to the place where most of those can be acheived.....by neccessity that means they are in charge, as you'll soon find when you fail to pay a new tax no one specifically asked for (but was neccessary to pay for an objective we did ask for).

I want economic knowledge in our leaders....... the public don't need to, and aren't going to, have it (although I would certainly support adding economics to the GCSE's as a compulsory subject)......... sadly where we've fallen down is not economic illiteracy among the masses. It's economic illiteracy among the leaders.

The people are SUPPOSED to say "We want lower taxes...... and lower debt...... and more services !" ........ it's the LEADERS who are supposed to responsibly handle this.

Yours,

TGP

[Cogs]

Democracy itself is flawed in that way. The average person is put in charge.. even though the average person is basically a deer in the headlights of the complex interactions and machinations of the economy.

The problem is that nobody wants believe that is the case. I see comments here saying, people expected the government to protect them and so on but frankly, its rubbish. Because whatever a government does, half the bloody country on the basis of a Daily Mail editorial dumbed down to the point its barely recognisable thinks they know better. I mean, there are some people who think climate science is blissfully unaware of both solar flare activity and the existence of water vapour, the days when it was considered there was some sort of entry fee of learning and diligence required to enter a debate has long since gone. Our politicians are smaller people than they used to be, but to be honest they have to be, the 'great men' of the past would last less than days against our rabid moron-media. It used to the idea that you picked someone to represent you, he listened to the advice of the most knowledgeable and qualified, and you trusted he did the right thing. We don't defer to authority figures anymore and sometimes thats a good thing, but it also means our democracy enforces the view of the lowest common denominator on everything. If the sort of person who thinks the Daily Express is a newspaper can't understand it, it isn't a valid argument and it doesn't matter, it is irrelevant whether it is true or not.

Edited February 9, 2010 by Cogs

[wren]

My dad used to say that benign dictatorship is the best form of government.

[Dorkins]

My dad used to say that benign dictatorship is the best form of government.

You are Uday Hussein and I claim my five WMDs.

[Tired of Waiting]

Well,

It's not supposed to work like that. Not in representative democracies (it is supposed to work like that in direct democracies).

The average person is NOT in charge........ what the average person is supposed to do is to give a very broad indication of which way they want the country to go, and a broad statement of it's objectives.

The politicians elected are supposed to take those broad statements/broad objectives....... and figure out the technical requirements and neccessary actions to get there.

We're supposed to say "Well we want these kinda things...... a better NHS...... higher/lower taxes...... this balance between defence and domestic programmes".

The politicians are supposed to lead us there, and if neccessary choose between the objectives as and when they conflict (e.g. lower taxes and lower waiting times)..... and ALSO if neccessary protect us from ourselves (we want no taxes..... and so no army !).

I think labour have certainly failed to do this....... at least since 2001/2002...... but to say the people "are supposed to be in charge" is really wrong. We aren't. We're supposed to give general indications where we want to go........ and it's the politicians duty to LEAD us to the place where most of those can be acheived.....by neccessity that means they are in charge, as you'll soon find when you fail to pay a new tax no one specifically asked for (but was neccessary to pay for an objective we did ask for).

I want economic knowledge in our leaders....... the public don't need to, and aren't going to, have it (although I would certainly support adding economics to the GCSE's as a compulsory subject)......... sadly where we've fallen down is not economic illiteracy among the masses. It's economic illiteracy among the leaders.

The people are SUPPOSED to say "We want lower taxes...... and lower debt...... and more services !" ........ it's the LEADERS who are supposed to responsibly handle this.

Yours,

TGP

Exactly. Thank you.

That is why I wrote "representative" democracy. (I should have put that in bold.)

[Tired of Waiting]

The problem is that nobody wants believe that is the case. I see comments here saying, people expected the government to protect them and so on but frankly, its rubbish. Because whatever a government does, half the bloody country on the basis of a Daily Mail editorial dumbed down to the point its barely recognisable thinks they know better. I mean, there are some people who think climate science is blissfully unaware of both solar flare activity and the existence of water vapour, the days when it was considered there was some sort of entry fee of learning and diligence required to enter a debate has long since gone. Our politicians are smaller people than they used to be, but to be honest they have to be, the 'great men' of the past would last less than days against our rabid moron-media. It used to the idea that you picked someone to represent you, he listened to the advice of the most knowledgeable and qualified, and you trusted he did the right thing. We don't defer to authority figures anymore and sometimes thats a good thing, but it also means our democracy enforces the view of the lowest common denominator on everything. If the sort of person who thinks the Daily Express is a newspaper can't understand it, it isn't a valid argument and it doesn't matter, it is irrelevant whether it is true or not.

I think we are approaching the centre of the problem. Our press is awful. Unprofessional, unethical, unqualified. Even the "quality" press failed to warn the country properly of the huge debt bubble, including the BBC, and the FT, and the "economics" correspondents (no one has a degree in economics though) of the broadsheets. Shambles. Shame.

[Bear Goggles]

I think we are approaching the centre of the problem. Our press is awful. Unprofessional, unethical, unqualified. Even the "quality" press failed to warn the country properly of the huge debt bubble, including the BBC, and the FT, and the "economics" correspondents (no one has a degree in economics though) of the broadsheets. Shambles. Shame.

I recently had to make an Oxford economics graduate aware of the debt-based monetary system, and also make him aware of the social credit movement that became popular as a reaction to it in the 1930s.

He wouldn't believe me at first and had to look it up (I'm sure his calculus is much better than mine though!)

I think history is probably a better qualification than economics for warning people about debt bubbles. (Indeed that was pretty much his excuse for not knowing)

He also said that JP Morgan (who have offered him a job once he's finished his Masters) were very prudent and ethical during the bubble and have a solid financial position.

A future central banker perhaps?