Change is coming. A good bit of it is going to be uncomfortable -- painful, even. Take a look at the NY Times columns by Friedman and Krugman to get a pretty clear idea of the big picture we are facing.
We did this to ourselves. Sure, the big and powerful in DC and Wall Street and Detroit, etc. have larger impact than we do -- but that doesn't relieve us of the responsibility to be responsible. Consider this: over the last few decades in the U.S. consumption has soared and household debt has skyrocketed, while the savings rate has dwindled to nothing and wages stayed pretty much constant.
Where did the money come from? Where did it go?
None of this was a secret, but people acted like it was. Every story is different, and the big picture is that the ever increasing "value" of our real estate had us believing that as one of my friend's put it, "it's like free money!"
Well, it wasn't free. A lot of it was imaginary. A lot of it is essentially in China and various other treasuries and funds around the world.
The change that is coming is essentially less money in our pockets. Even after this recession is over, in every way money grows, it will grow relatively slowly for quite a while. In America we'll still be able to earn a living, and most of us will be able to have our cable TV and cell phones. But we'll have a lot less of most everything else.
This is the cold edge of sustainability. If we aren't living sustainably, the party will end.
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Maeke: A few years back when so much building (residential and commercial) was taking place, I worried about the future of real estate in the USA with the baby boomers reaching retirement age. My logic was that without a hefty younger-generation population, there would be a lot of empty buildings as baby boomers go into nursing homes, living with other family members, or dyeing. I was one of just a handful of agents attending some of the public hearings in support of not granting more building permits. Obviously, I and a few others were outweighed by the others.
Doing recent reading about the worldwide economic downturn and some noteworthy statistics in yesterday's Washington Post, it is not surprising to me that the effect of the aging baby boomers' decline in consumer demand (don't need more work clothes, don't go out to lunch every workday, don't have commuting expenses, etc.) would impact business throughout the world. Countries that have a growing younger population are not helping the equation unless there are expendable incomes. However, if they are or remain poor, not only will they not be purchasing products beyond the necessities, they will also be draining economies even further because of their need for social services.
Where is the balance -- or the remedy? To add more salt to the wound, I suspect the elderly will not be leaving as much to their offspring. The offspring might actually be incurring some/all of the elderly's debt, lessening their own net worth. It's a complex situation calling for a global re-evaluation of the impact of economic opportunities as well as a personal education on both values and value.
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