Unk,

I just wanted to take a moment and congratulate you on the new forum, though I don't imagine I'll use it much. I recently downscaled my postings at TB2K and see this trend continuing through the foreseeable future. Personally, I found the flap over Y2K far more amusing than the current political debacle. Bush and Gore cannot replace the comedy team of Milne and "a." (laughter) I wish you the best in your forum management (and body building) efforts. Be well.

-- Ken Decker (kcdecker@att.net), December 07, 2000

Answers

Ken,

I for one will miss your insight. I also would like to thank you once again for enduring the slings and arrows at the original TB2K, your commentary encouraged me to re-evaluate my position on Y2K.

Now, on a completely different subject, Doc brought up a point on another thread (at Poole's Roost) about the coming Baby Boomer retirement. He is pessimistic about the economic effects of so many people leaving the work force en-mass, and so am I. Harry Dent had a book in the late 80's (Title escapes me at the moment) in which he predicted the current boom, but also predicted a coming crash that would result from so many people retiring at once. I would enjoy hearing your take on this subject. Thanks.

PS, the pecs now writhe like snake filled mountains when I flex, a terrible sight to behold.

-- Uncle Deedah (unkeed@yahoo.com), December 07, 2000.

Unk,

You are the man.

As for the effects of "boomers" retiring, I am uncertain. Frankly, it is difficult to predict the work or investment behavior of a rather large and diverse group. Without the benefit of extensive research, it seems retirement behavior is evolving. People are working longer, although often in a different capacity. The extended life span has also complicated matters. If you live to 65, odds are that you will survive into your 80s. If one correctly anticipates living longer past a traditional retirement age, one might stay more aggressively invested (equities) and may choose to work longer.

I certainly think some of the current market "bubble" is due to money pouring into the stock markets. It seems "everyone" has a 401k, mutual funds, IRAs, etc. Much of this money enters the market on "autopilot." The worker establishes a retirement account, starts putting money in, and then thinks about other things. I doubt most Americans could name the top five stocks held by their mutual funds. Alarming, but true.

Will this influx of money flow out of the equities markets like the swollen evening tide?

The good news is that a flat or declining market has self-limiting characteristics. Investors are often reluctant to sell shares at a loss. The lower stock prices fall, the harder it is to bite the bullet. After saving for 40 years, do you want to take a nickel on the dollar? Of course, in a full-blown panic, investors are rushing to sell before the nickel becomes a penny. There are institutional barriers to panics, far more so than in ealier eras.

Also think of the labor market. The "boomers" are an increasingly expensive labor force... much like a baseball team full of aging veterans. As they retire, firms can hire younger (cheaper) workers. The subsequent reduction in cost may increase profits.

If the "boomers" retire and start spending, how will this consumption impact the economy? Won't some companies be profitable providing goods and services to relatively affluent retirees?

You see, Unk, it's hard to imagine the end result of the many complex forces. The retirement of the boomers may create a long bear market, but the economy is far more than Wall Street. The "boomers" may boost the economy through personal spending and investment decisions focused on their children and grandchildren.

The biggest questions involve public policy decisions. Can we afford, as a society, to keep social security in its current form? Will seniors become an unstoppable voting bloc? Will the increased social costs of an elderly society drag the economy into a malaise?

Our best hope is to make tough decisions now... before every other voter is over 70 years old. We should eliminate the artificial barriers to employment for the elderly. We should reform social security and create a system that can be supported when there is one retiree for every two workers. This means making some unpopular decisions including means testing and consideration of investment income.

Remember this, Unk, the free market economy is much tougher than most people think. It is the cockroach of economic systems... existing even in the FSU. (laughter)

-- Ken Decker (kcdecker@att.net), December 07, 2000.

Unk & Decker, will this topic become known as "boomer-angst?"

-- Casey DeFranco (caseydefranco@mindspring.com), December 07, 2000.

Ken,

Thanks. In other words, who the hell knows. Oh well, at least a lot of them will bring their money south when they decide to play golf and eat "early bird specials".

I fear that we will need to totter on the brink of disaster before any serious reforms are made in the SS system, look at the thrashing GW took for even suggesting that a minute portion of the system be privatized. Politicians are also well aware that raising the age of eligibility for benefits is political suicide, despite the fact that the system was designed in an era when folks who made it to retirement age lived just a few years past the age of sixty five. But yes, we had better do something soon, the seniors are force to be reckoned with now, and while they hold the vast majority of wealth in this country they still want freebies from Uncle Sam, freebies that I pay for with my "investments" into the system.

-- Uncle Deedah (unkeed@yahoo.com), December 07, 2000.

Just my two cents:

There is no way in hell that medicare can support free or subsidized prescriptions for retired people. The medications my grandparents depend on are extremely expensive. There's no way MY grandparents will have to choose between food or medication as long as my parents and my children and I draw breath, but many elderly do not have relatives who can or will help them.

-- helen (b@c.k), December 08, 2000.