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ken_ichikawa

Alvin Hall: The Generation Poorer Than Their Parents

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Sentiment is changing:

http://www.bbc.co.uk/programmes/b012w4h2

That’s the startling assertion of financial guru Alvin Hall, in a new Radio 4 series on the burden facing baby boomers’ children. So who’s to blame?

Remember the future? The future was always a better place, in which one’s children could look forward to better education, higher incomes and better homes. They would have more money to spend on luxuries, take more holidays and at the end of it all enjoy a longer and more secure retirement. Unfortunately, the future ain’t what it used to be.

Parents belonging to the baby boomer generation, the one born between 1946 and 1962, find themselves in the novel and uncomfortable position of having to explain to their offspring why life is going to get tougher.

There are short- to medium-term factors, such as fewer jobs as a result of cuts in the public sector, but longer-term, structural factors, too. The end of heavily subsidised university education is likely to be a permanent fact of life, combined with a housing market in which prices continue to bear no relation to average earnings.

And then there is the burden, not yet realised, of all those ageing baby boomers 12 million of them. Over the next 18 years the majority will retire, placing a huge burden on those who come after them unless there is a reappraisal of how the country pays for old age.

Into this rather bleak future steps the ray of sunshine that is Alvin Hall. You may have seen or heard Mr Hall on the BBC, advising spendthrift members of the public how to rebuild their finances.

His latest offering is Poorer Than Their Parents, a four-part dissection of the challenges facing young people. “Young people don’t see the opportunities that their parents had,” says Mr Hall.

“The debt that is being incurred, the lay-offs, the increases in university fees these things are part of a diminution of their ability to achieve a lifestyle better than that of their parents. There is a general lack of optimism.”

Even in America, where optimism is the default setting, there is a feeling that the march towards higher living standards that began at the end of the Second World War is now doing an about-face. In a poll by Gallup in April,

55 per cent of US citizens questioned said they expected their offspring to fare worse in terms of income, housing and education.

“Some of the young people we talked to are very angry about this,” says Mr Hall. “And there are some who recognise their parents were just lucky.

"We have several older people on the series saying there could be a revolution among young people as they realise their options are not as bright as those of their parents. We decided to see if there is evidence of a movement that’s burgeoning out there, and we were surprised to see that there is.”

Although people under the age of 40 account for half the population of the United Kingdom, they hold only 15 per cent of its assets. Buying power resides with the baby boomers, particularly those who first bought homes in the 1970s and 1980s and have watched their equity balloon.

That newfound wealth does not necessarily translate in inter-generational generosity: a study by the think tank Demos (Xetra: A0MSNV - news) found that, while many parents want to help their children, they also desire a long retirement, and do not take kindly to being forced into surrendering their wealth by the state.

“It’s a natural parental instinct to want your children to do better than you,” says Mr Hall. “They want to help the next generation, but they don’t want to be driven by guilt.”

Britain is much wealthier than when the boomers took advantage of free university education to forge ahead, unencumbered by debt. But even the growth in GDP cannot offset the huge increase in students, resulting in post-university debts of £30,000 and upwards.

The economist Ruth Lea says the problem resides partly in expectation. A tertiary education has become the norm, irrespective of its value. “University is the issue for the current young generation, especially next year when they start paying £9,000 in tuition fees.

"But people don’t have to go to university; they don’t have to incur this debt. About 40 to 45 per cent of people go to university.

"The Labour target was 50 per cent. It’s one thing to be able to finance through taxation five to 10 per cent; it’s another thing to finance half. A country like Switzerland has about 15 per cent of people in university. That is relatively low and they finance it through tax.

“The second thing is the ageing population: unless the old are forced to self-finance, they will have to be paid for by the taxpayer the generation coming up behind the baby boomers. In the medium term, the next five to 10 years, there will also be the overhang of debt left by Gordon Brown.

"Then we have the housing market: one might say this is a transient feature because bank and mortgage lending is poor. But in the longer term it depends upon supply: at the moment supply is pretty unchanging.

"Especially in London and the South of England the demand for properties will probably still outstrip supply. I don’t think there’s any comfort there.”

Should baby boomers feel guilty? Miss Lea thinks not. “It’s not my fault. I’m one of those people who put money aside to look after myself. If you want to start pointing the finger of blame look to one G Brown who spent as if there was no tomorrow.

There was already a big entitlement culture but Brown exacerbated the situation. He was buying votes by ratcheting up people’s entitlements and thus creating an intergenerational burden. And lo, it has come to pass.”

Mr Hall says the young will have to adopt new ways of thinking. “Take housing. In one of the interviews we spoke to an older man in Milton Keynes who had started out with a very modest house.

"His son, who was starting out, could not imagine moving into a house with fewer than three bedrooms. People expect to have their dream home initially, rather than doing what their parents did and move up step by step.”

He sees signs of the tougher culture all around, in unpaid internships. “Look (Munich: 867225 - news) at the number of young people having to take unpaid internships in the summer in order to be considered for a job,” he says. “Does that drain the soul or is it the new normal?”

The job market, says Miss Lea, will remain tough. But she thinks the intergenerational divide can be overstated. “The idea there was a golden age when everyone was in settled jobs and nobody ever lost their jobs is a myth.

"Perhaps we went through a period of full employment in the 1950s and 1960s and got into the habit of thinking that was the norm. But it wasn’t really. Think back to the 1920s and 1940s.”

Mr Hall says people have to relearn an old quality: “You need to find your satisfaction incrementally. People are less patient than they were. Parents are less patient for their children and children are less patient for themselves. We need to be more patient.”

'Poorer Than Your Parents’ is on Radio 4

Edited by ken_ichikawa

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Sentiment is changing:

Bring it on. Young vs old. You might be able to block-vote in your favour but let's see how you handle a pitchfork, grandad!

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They can block vote now but the boomer generation is decreasing in size due to natural wastage while the post-boomers are increasing in number and anger level.

Edited by Ulfar

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They can block vote now but the boomer generation is decreasing in size due to natural wastage while the post-boomers are increasing in number and anger level.

Who will us youngsters vote for though? (That's those of us who can be bovvered)

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Buying power resides with the baby boomers, particularly those who first bought homes in the 1970s and 1980s and have watched their equity balloon.

I loathe this sentiment. It plays to the "Your house is an investment" mantra. No, it's not. It's where I live. I can't realise this magical money unless I borrow against the "equity", or sell and somehow find an equivalent at a cheaper price. Neither is very likely, since I've still got grown children who can't afford a place of their own.

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Buying power resides with the baby boomers, particularly those who first bought homes in the 1970s and 1980s and have watched their equity balloon.

I loathe this sentiment. It plays to the "Your house is an investment" mantra. No, it's not. It's where I live. I can't realise this magical money unless I borrow against the "equity", or sell and somehow find an equivalent at a cheaper price. Neither is very likely, since I've still got grown children who can't afford a place of their own.

Quite; not sure I can entirely blame the 'boomers'. Who is it that invented all the 'exotic' financial products? Bought houses with 'liar loans'? Pushed the prices up by offering huge multiples of wage for a crappy part ownership flat in a local hell hole?

Where I believe some responsibility lies is with NIMBYism, planning, not building social housing and not making sufficient provision for retirement/care plans. IF house prices were 50% lower, there would be no beef with the boomers so is it something they all did in the last 10 years?

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Quite; not sure I can entirely blame the 'boomers'. Who is it that invented all the 'exotic' financial products? Bought houses with 'liar loans'? Pushed the prices up by offering huge multiples of wage for a crappy part ownership flat in a local hell hole?

Younger people? New entrants to the market.

Who has been in the background peddling the line "you can't go wrong with property." Older people higher up in the ponzi. Blinded to the problems due to the majority being infatuated with how much their homes were going up in value, and accepting it as their own clever investment success.

Exotic financial products accepted by older bankers, politicians and shareholders for a period of profiteering, big bonuses, grandstanding politicians infront of the nation, and especially seeing their own homes go up in value.

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Old age and treachery will overcome youth and inexperience.

law of averages says most of the old are too dim to be effective at treachery in the long term

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law of averages says most of the old are too dim to be effective at treachery in the long term

A significant number of the non homeowning 'children' are cracking on in age too.

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Bring it on. Young vs old. You might be able to block-vote in your favour but let's see how you handle a pitchfork, grandad!

The really worrying thing is that soon there will be a majority of people who knew nothing of life before Thatchers year zero and therefore only know post Thatcher year zero solutions. As for handling pitchforks, I have a couple that I handle pretty well and yes I'm a grandad. Being aware of what took centuries to develop and what has been destroyed in 30 years, I like many other grandads realised that the outcome of post 1980's British thinking would be 2007+ cr@p Britain and so decided that pitchforks were better than Porsches.

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Bring it on. Young vs old. You might be able to block-vote in your favour but let's see how you handle a pitchfork, grandad!

This is the elites plan , get everybody fighting with each other so they cannot join together and fight the elite banking cartel that plans for a one world government.

That was the whole point of multiculturalism , bring in a massive number of people from different backgrounds that often have no intention of integrating so the plebs bicker amongst themselves rather than seeing the bigger picture.So far their scheme is ticking over quite nicely.

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Unfortunately, the young are too distracted to organize themselves politically. None of this is new, the demographic changes have been known about for years. David Willetts knows all about it and has written extensively about it, but the young don't vote and are too daft to force change starting now rather than in 20 years time when their grandparents and parents have got away with the loot.

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Bring it on. Young vs old. You might be able to block-vote in your favour but let's see how you handle a pitchfork, grandad!

its always amusing when a young nerd sitting at his computer keyboard with no job, probably still relying on masturbation for sexual relief and still living with mum and dad talks big on the internet about taking on elderly people with pitchforks.

I am afraid that there can only be one result if the feckless youth of today were to take on my generation. Guys like myself who have seen armed service and had to kill people as part of our duty to our country would not raise a sweat dealing with some pimple faced chinless wonder with a pitch fork.

This is a fair approximation of the likely result:

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Unfortunately, the young are too distracted to organize themselves politically. None of this is new, the demographic changes have been known about for years. David Willetts knows all about it and has written extensively about it, but the young don't vote and are too daft to force change starting now rather than in 20 years time when their grandparents and parents have got away with the loot.

The median age of UK citizens old enough to vote is about 40, so half of potential voters were born in 1971 or earlier. People born from 1980 onwards belong to the 'priced out' generation, with a 1976-1979 grey zone for people who could have bought cheap house in the late 90s provided they were quick off the mark in their twenties. Demographically therefore, the 'priced in' generations have an unassailable upper hand (for now). It's also worth remembering that most people standing for elections also belong to the 'priced in' generations.

In about ten years' time, the situation could change radically as the median voter tips from being 'priced in' to 'priced out'.

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Unfortunately, the young are too distracted to organize themselves politically. None of this is new, the demographic changes have been known about for years. David Willetts knows all about it and has written extensively about it, but the young don't vote and are too daft to force change starting now rather than in 20 years time when their grandparents and parents have got away with the loot.

Have you never heard of the Hitler youth? perhaps someone, somewhere will do the organising for them.

428px-Hitler_jugend.jpg

post-10636-0-55393000-1311239794_thumb.jpg

Edited by Lord D'arcy Pew

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its always amusing when a young nerd sitting at his computer keyboard with no job, probably still relying on masturbation for sexual relief and still living with mum and dad talks big on the internet about taking on elderly people with pitchforks.

I am afraid that there can only be one result if the feckless youth of today were to take on my generation. Guys like myself who have seen armed service and had to kill people as part of our duty to our country would not raise a sweat dealing with some pimple faced chinless wonder with a pitch fork.

This is a fair approximation of the likely result:

It always amuses me when an old fart who thinks his SLR skills are any relevant forgets about the constant warfare that this country has engaged in, and that there are people born in the 90's who are on their second or maybe even third! combat tour who are not only fit but have far more up-to-date combat skills than he will ever muster. There are a large number of guys out there in their 20's who voluntarily left service, and more to follow who are going to be made redundant. Will they be happy bunnies in the current employment and housing climate?

I am afraid that there can only be one result if the out-of-date grandads of today were to take on my generation (not really, I wasn't born in the 90's, but trying to make a point here.)

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Mr Hall says the young will have to adopt new ways of thinking. “Take housing. In one of the interviews we spoke to an older man in Milton Keynes who had started out with a very modest house.

I've come across this meme a few times.

When you press a bit harder it transpires that they started out in a very modest house at age 21 that cost them a couple of times their annual income, which they owned outright within 5 years.

They conveniently forget that the same "very modest house" these days costs 5 times the average wage for the area and 10 times the average for a 21 year old.

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It always amuses me when an old fart who thinks his SLR skills are any relevant forgets about the constant warfare that this country has engaged in, and that there are people born in the 90's who are on their second or maybe even third! combat tour who are not only fit but have far more up-to-date combat skills than he will ever muster. There are a large number of guys out there in their 20's who voluntarily left service, and more to follow who are going to be made redundant. Will they be happy bunnies in the current employment and housing climate?

I am afraid that there can only be one result if the out-of-date grandads of today were to take on my generation (not really, I wasn't born in the 90's, but trying to make a point here.)

Us youngsters can be far more organised too when we want to be. During the student protest they used google maps to as a mobile war room to track police movements and avoid them. I'm sure they could use the same tech to organise attacks. Not every youngster is a skinny keyboard warrior imaginiing they are a super soldier just cause they prestiged 10 times on call of duty.

I think most youngers are passive about the situation as its not really hit home yet. Yes a lot us still live at home with parents or rent but they have money in their pockets to spend on life. So until they start to lose everything and hit seriously hard times or realise what ever they do is futile I don't think there will be much of an uprising.

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I wouldn't expect too much from Alvin Hall. He'll probably suggest (with a falsetto laugh) that everyone under 25 takes out an ISA...

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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