The days of college graduates having multiple job offers all over the world are clearly over. Their best bet now lies in moving in to mom's basement and taking bong hits with other 23 year olds in the same predicament. Mom and dad wouldnt mind so much, except that dad's real estate deal is $600k under water and mom's 401k is down 48% from its all-time high. Soon Junior gets married, and suddenly Lovely Laura is moving in also with a baby on the way. These 3 people will not be taking part in a process so stoked in tradition that it has never been questioned in almost 100 years: Household Formation. And as this scenario gets repeated millions of times, the only economic response is COLLAPSE. There can be nothing else. Everytime this happens, someone WILL NOT be giving mortgage business to a bank. WILL NOT be hiring a gardener. WILL NOT be needing new furniture. WILL NOT be paying property taxes. WILL NOT be buying a new car. WILL NOT be going to Vegas. WILL NOT be investing in the stock market. WILL NOT be very inclined to have real health care. WILL NOT be dining in fine restaurants. And on and on and on. So as the bubble-induced economic diaspora comes to a screeching halt, we will do something that in reality has been the case throughout 99% of mankind's history. Relying on and helping each other in a communal sort of way. Harsh economic realities now in effect for 3+ years haved forced even the most die-hard capitalists to realize this new reality. We will live with each other more often, nepotism will make a surging comeback from the highest to the lowest economic classes, and micro-socialism will be the norm among us as senseless economic policies are enacted merely as an attempt to placate the masses.
Aside from young graduates/new adults no longer taking part in the formation of new households, there also another dire situation taking place which is exacerbating the aforementioned phenomena: Household De-Formation. The number of men in the 30s living with their parents has also surged to all-time highs. So aside from a lack of new entrants into the household formation category, there are also millions of Gen Xers literally dropping out of society as we know it, and shacking up with mom and dad. Add to this the growing list of folks in their 70s and 80s who have been hit by the triple whammy of rising health care, zero interest on savings, and significant drops in 401k balances, and the holidays may soon be a time to get away from, rather than visit, the extended family.
Of course, a grand economic re-set would be one way to solve these problems. But that would entail a whole different class of folks taking huge economic hits. And those folks never take economic hits. You, on the other hand, do.
Saturday, December 31, 2011
Wednesday, December 21, 2011
BCS Championship: Old Money vs. New Money
Well, they had a ball didnt they? They saw the burgeoning successful American middle class as on opportunity for just one thing: The Heist of the Millenium. And now it appears the vault is empty. There really isnt much else to plunder and pillage. Between housing, health care, education, utilites and consumerism, only the lucky ones still have a sustainable lifestyle, and even they are on borrowed time. So when theres nothing left to steal, nothing left to squeeze, and no one left to trick, the elites turn to each other. GAME ON, MF'ers!!!!. Get ready for the most epic battle of all-time, as TPTB set their sights on each other. The good news is, you are out of their cross-hairs. The bad news.... its only cause they blew you the fuck away.
Subtle hints of the elites turning on each other have been going on for a few years now. Making former BofA CEO Ken Lewis gobble up worthless entites like Countrywide and Merrill Lynch were some of the early opening salvos of this battle. Merril stock would have opened that Monday at about $0. But for some reason, Ken Lewis offered $29/ share on Sunday night. Then he was forced out. Do this. And this. Then get the fuck out! Thanks Ken. Or Dominic Strauss-Kahn getting pulled off an airplane about to depart and arrested on ultimately baseless rape charges. Never would have happened when all the elites were on the same page. The latest, of course, is Dave Corzine and MF Global. $1.2 billion in segregated customer money still missing. No real explanation of where it is. Turns out Corzine decided to load the boat on bail-out dependent European soveriegn bonds at a time when his brethren were despereately looking for a way out of these investments. How convenient. Global banks were all too happy to dump, and MF Global was gone in a poof. Of course, there will be no perp walk for Corzine..at least for now.
So its Old Money vs New Money. And though it might be billed as the Ali-Frazier analog of Wall Street, in reality, it will be no contest. Old money will blow out New Money. See, Old Money is clean. Made many times over, over the course of 100+ years in some cases. Pure. No debt, no derivatives, no 30-1 leverage, no CDS. Just pure money, free and clear. New money on the other hand, is largely dependent on leverage, accounting trickery, fractional reserve lending, and stock market levels. It is the new money that is desperately seeking to hold on to what they have. It is new money that will implode should the derivatives market, or interest rates, or emerging markets, or real estate be allowed to find their natural levels. Thus all the shenanigans and bailouts by the Fed, US Govt, and the Euro counterparts. But the Old Money is getting tired of carrying the New Money. They kindly, though reluctantly, let the Grand Global Bailout Scheme have a chance to succeed. But now its grown long in the tooth. And so the Old Money is getting ready to pull the plug. All the plugs. They realize that no country or union's currency that was predicated on foolish printing, or endless and unlimited bailouts, has ever flourished. It will be ugly. But it should happen relatively quickly. And then, we start over. Week 1.
Subtle hints of the elites turning on each other have been going on for a few years now. Making former BofA CEO Ken Lewis gobble up worthless entites like Countrywide and Merrill Lynch were some of the early opening salvos of this battle. Merril stock would have opened that Monday at about $0. But for some reason, Ken Lewis offered $29/ share on Sunday night. Then he was forced out. Do this. And this. Then get the fuck out! Thanks Ken. Or Dominic Strauss-Kahn getting pulled off an airplane about to depart and arrested on ultimately baseless rape charges. Never would have happened when all the elites were on the same page. The latest, of course, is Dave Corzine and MF Global. $1.2 billion in segregated customer money still missing. No real explanation of where it is. Turns out Corzine decided to load the boat on bail-out dependent European soveriegn bonds at a time when his brethren were despereately looking for a way out of these investments. How convenient. Global banks were all too happy to dump, and MF Global was gone in a poof. Of course, there will be no perp walk for Corzine..at least for now.
So its Old Money vs New Money. And though it might be billed as the Ali-Frazier analog of Wall Street, in reality, it will be no contest. Old money will blow out New Money. See, Old Money is clean. Made many times over, over the course of 100+ years in some cases. Pure. No debt, no derivatives, no 30-1 leverage, no CDS. Just pure money, free and clear. New money on the other hand, is largely dependent on leverage, accounting trickery, fractional reserve lending, and stock market levels. It is the new money that is desperately seeking to hold on to what they have. It is new money that will implode should the derivatives market, or interest rates, or emerging markets, or real estate be allowed to find their natural levels. Thus all the shenanigans and bailouts by the Fed, US Govt, and the Euro counterparts. But the Old Money is getting tired of carrying the New Money. They kindly, though reluctantly, let the Grand Global Bailout Scheme have a chance to succeed. But now its grown long in the tooth. And so the Old Money is getting ready to pull the plug. All the plugs. They realize that no country or union's currency that was predicated on foolish printing, or endless and unlimited bailouts, has ever flourished. It will be ugly. But it should happen relatively quickly. And then, we start over. Week 1.
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