The coming generational tsunami

Description:

The baby boom generation in the western world is retiring between now and 5 years. The baby boomers, especially the Americans, are spending more and more, while their household savings have plummeted to nil. Americans are currently borrowing 3 Billion every day from the rest of the world in order to consume at the same level as they do now.

Their debt will have to be repaid by their children, who face a huge economic burden.

Enablers:

• In 1950 there were 16.5 workers per social security beneficiary. That ratio fell to 3.4 by 2000. By the time the last baby boomers retire in 2030, there will only be 2 workers per benificiary.
• The Us population of people older that 100 will rise from 60,000 to 600,000 by mid century
• Demgraphics show that the US and the EU will become one big retirement community
• Government spending and the deficit have risen to a record high
• A potential drop of the dollar, initiated by the financial markets

Inhibitors:

• China and India will keep on buying dollars, as the Americans buy a huge amount of their export products
• The FED will keep on rising the interest rates, making the US dollar an interesting currency to invest in
• Americans will slow their consumption because of a furhter rise in oilprices (above a $100 a barrel)

Paradigms:

• Do we get earth from our parents of do we borrow it from our children?
• People, profit, planet: economic development should be sustainable

Experts:

• Kotlikoff and Burns: The coming generational storm (book)

Timing:

• somewhere between now and 5 - 10 years this forces will become more visible and clear for everyone

Web Resources:

• http://www.imf.org/external/pubs/ft/weo/2004/02/pdf/chapter3.pdf