Real Baby Boomers of Genius

Today we salute you, Mr. Fred Goodwin.

You were on top of the world while you ran RBS (The Royal Bank of Scotland).
But running a bank founded in 1727 wasn't good enough for you.
You merged, you expanded, you never met a credit product you did not like.

Now, your bank is being nationalized.

Others before you guided the institution through depressions, panics and world wars. To be a modern Yank I can say, "It was A real Energizer bunny rabbit of a bank."

To kill it took a baby boomer.

Good Job Mr. Goodwin.

For all you do, this Buds for you.

The Ponzi Generation

Today it is off to the American Thinker for our story. (Hat tip to Ken for the link.)

What is a service economy? How can you have an economy based on doing each others laundry? Or, cleaning each others home? If I pay you $100 to mow your lawn and you pay me $100 to mow yours have we created $200 in GDP?

I believe the answer is, no.

Wealth is created by taking raw materials adding some labor and creating something new. The thing remains. It is an item of value. It might be consumed gradually over time but the time frame should be long. Ten years or more.

We have lost that. We took our factories and moved them over seas. We had to replace it with something.

One of the things we tried to replace it with was the, "Financial Services Industry". This industry takes debt, slices it up and sells it as something. In the process turning a negative (a promise to pay) into positive (cash).

This is what the baby boomer economy is based on.

What value did they add to this debt?

We are seeing in the Wall Street implosion the inevitable result of the Boomer Elite outlook and the behavior it spawned. Storied investment banks were being run on 40 to 1 leverage. Fancy new securities were designed and widely disseminated whose terms are opaque even to highly knowledgeable and experienced hands. Mortgage securitization techniques were developed which, our betters assured us, would magically spread risk and thus stabilize the financial system. However, simultaneously with these brilliant innovations, lenders were being forced -- by Boomer Elite congressmen with an aching love of the poor and oppressed unique to themselves -- to loan to uncreditworthy borrowers at subprime rates and without adequate documentation. These loans, packaged into securities together with standard, performing loans, rendered unknowable the value of the securities, leading to mandatory write downs and drastic capital impairment or outright insolvency for many very large firms. Given the high degree of integration of the international financial system, critical destabilization was the real result of this confluence of Master of the Universe genius and Boomer Elite turpitude.

There is an idea going around right now that part of this problem was caused by banks being forced to lend to the poor. This is a lie.

The system needed loans. Lots of loans. "Industries" make things. The "Financial Services Industry" needed something to make. Its raw input were loans. Its output were bonds backed by the loans.

In the early part of the cycle there were lots of credit worthy borrowers available. This is sort of like picking up gold from the surface. Soon these borrowers were used up.

Next they had to start digging. These borrowers had jobs and a little bit of money to put down but soon they got used up.

Then all the easy money was gone. Where would the next set of inputs come from. There was not gold left. So instead the industry turned to fools gold.

No job? No Income? No problem. The "industry" needed raw material to feed into the machine.

Now these new Masters of the Universe have made a shambles of the US and world financial system. This is, to be sure, not the construction put upon things by the main stream media, but it is plainly the case. The current market turmoil is a product of every bad trait the Boomer Elite has long exhibited in other social and political contexts: unbridled greed and hubris, exorbitant self-regard, breathtaking recklessness, insatiable appetite for immediate gratification, and a rollicking sense of entitlement.

Everybody gets a loan.

It's not just the liberals. Remember, W is a conservative and he wanted us to have the, "Ownership Society". Well folks, not everyone is capable of owning their own home. There is nothing wrong with that. Sometimes it is just better to rent.

The "Industry" ran out of loans to process. They ran out of inputs. When you make something you need raw materials. If you use crappy raw materials then your end product is crappy. There is no way around that.

Now that that the industry is "broken" we are expected to pay for it.

The unwillingness of the rest of us to underwrite the moral excesses of the Boomer Elite perfectly enrages them. So, today, the rest of us are being screamed at. In fact, the barrel of a gun is being pressed to our temple. It is demanded that we play our accustomed role of sheep to the slaughter. We are told we must funnel the better part of a trillion dollars to the fantastically imprudent, self-dealing Wall Streeters that gave us the mess, and that we must also chip in the odd tens of billions more on pet lefty projects with which the Boomer Elite, with characteristic cynicism, lard up the package.

Our efforts to be responsible citizens in this crisis are ridiculed and shouted down: exclude from the bail-out the pork and the payoffs to interest groups? How dare we! Include measures that might actually spur badly needed growth in the tough times now surely coming, like cuts in capital gains and corporate taxes? Leave the room!

Now this is where I will take a big turn from the article.

The left / right war is a big time baby boomer fallacy. There is no difference between the Democrats and the Republicans except for one or two wedge issues. By creating wedge issues and getting us to fight over those we are distracted from the real issues at hand.

Although our Masters of the Universe insist we credit them as moral paragons, they are among the most luxury loving, wealth flaunting population ever seen in the world. Whenever a Hollywood celebutard mouths some perfect imbecility in front of a camera, it is sure to be done from a five star resort hotel or on the red carpet of one of those absurdly frequent self-congratulation festivals. The silk tie, moussed hair crowd on Wall Street is no better. If the extent of the naked short selling, self dealing and market manipulation that has actually gone on these last few years were ever to become generally known, it would indict this crew all by itself. And it cannot be said enough: this crowd is heavily on the left and mostly in the Democratic Party. The cigar chomping, pin-striped caricature of a GOP money man has been false to the Wall Street facts for some time, though the left continues to furiously peddle that image.

Yes Virginia, the Republicans created this mess. It started with the deficits of Regan. The fire was flamed by the easy money of Greenspan. The investment banks were allowed back into the mortgage industry when Senator Phil Gram worked to repeal the Glass-Steagall Act.

The Republicans had the Presidency and the Congress for six years. We will lay blame were blame is due.

The Democrats however were quick to get behind the bailout and made sure that it passed. They are culpable in this mess as well.

We will place the ongoing crisis at all of their feet.

Here's the articles ending.

This crisis is, at bottom, about self government in two senses and the Boomer Elite is against both. On the macro level, they don't want the American people to govern themselves under the terms of the Constitution of 1789, preferring to rule over us by anti-democratic means wherever possible, and to the full extent possible. On the micro level, being Rousseau's children, they abjure governing their own appetites, and bid everyone act likewise. The Boomer Elite ideal is a sort of Directorate in the political system and economy, moral anarchy in personal conduct, and a quasi-totalitarian PC regime in societal relations. It is bad character as a manifesto, and tsarism as a mode of governance.

Some of the sane knew it all along, but for many others a stunning realization is only now dawning. Much of the vaunted wealth creation of the last 20 years was a mirage, and the ballyhooed processes of wealth creation were themselves largely a scam, no more than the discounted cash flow of the borrowed future.

We must shudder to think how little of our civilization may remain standing when the Boomer Elite finally, mercifully, passes from the scene.

Gone for a week

Today's post is going to be a bit a rambler. I am just going to dump out some thoughts about our world today.

Wow, I go on vacation for a week and the whole baby boomer world falls apart.

Yup, I left town and went on the road. Made a swing through the North East. It is really pretty up there at this time of year. And, one of the great things was that I stayed away from the news. (As best I could.)

Tuesday I was waiting in line in Quincy Market to buy a coffee and looked up at a TV and saw the Dow was around 9,500. I will say that I wasn't shocked. Our finance system is a giant house of cards. It is based on us borrowing more and more money from each other. At some point the system has to collapse. At that point it can be rebuilt from the ground up; wash, rinse, repeat.

That was my first full week vacation in over 15 years. Like most gen-xers I work. I work a lot. I don't do a lot of shopping and I don't do a lot of spending. I am not good for the economy.

I did make time last week to watch the debate. I can tell you we are screwed. Not because of any difference between the candidates but because of their similarities.

No matter what they are saying about Iraq, Obama and McCain have the same foreign policy. A policy that is costing us over $1 trillion a year. Neither one has said they are going to change that. If you take the military budget of every other country in the world and add them together, we spend more than that. Think about that for a minute. Neither one will change that.

Why do we have troops in Japan? Germany? Pick a country? Empires crumble from within. It takes a great amounts of money to maintain an Empire. Money that we do not have. At some point our allies / enemies will not want to lend us any more money.

Our current financial crisis is based on easy credit. Both candidates want to get those credit markets going again so that we can continue this current Ponzi scheme of debt.

Then there is the question, "Given the current financial crisis, what in your economic plan would you change?" Neither candidate has the stones to tell us either A. they don't know, or B. Name some stuff to change.

I believe, deep down, that we have it within us to pull together and work for a greater good. However, our leaders, do not have the balls to ask us to do it. After 9/11 we were told to go shopping. That statement from our leadership shows the moral bankruptcy of our age.

I will tell you all right now I am voting for Obama.

Something has gone very wrong with McCain. We should search his many houses (how many was it again) for pods. He is not the man that he once was. The quest for power has ruined him. He has taken on a win at any cost mentality.

Normally a VP candidate should not matter as much. But, given McCains age there is a chance that Palin could become president. To me, that would be a nightmare scenario. Palin encompasses too many traits that I cannot stand. She is like a female George W. Bush. I do not believe she is capable of understanding complicated issues. (And is it just me or is she just like Karen from Will and Grace?) That whole wink and, "You bet-cha" is right out of the world of sitcoms.

Of the two candidate I believe Obama may have the spark within him to ask us to make the sacrifices that are required to rebuild our country. I could be wrong, it's hard to tell because he too is pandering to his base. But, I think he will do better on the world stage. His tone is better.

That's it for today. (Oh, and if the markets bounce over the next few days, don't think that the crisis is over. We still have a very long way to go.)

That's it for today.

Now a return to your regularly scheduled boomer bashing.

Real Baby Boomers of Genius

Today we salute you Mr.Kerry K Killinger. A Real Baby Boomer of Genius.

As the head of Washington Mutual your bank never met a borrower they wouldn't lend too.

No Income? No Job? No problem.

Can't afford the monthly payment. That's OK. Let the borrower pay what they can. You'll just add the balance to the end of the loan.

We can't see how this will hurt you in the long run. And since the long run means next week; we think you're good.

For all you do, Mr. Killinger, this Bud's for you.

It's the end of the world as we know it

I don't read Pat Buchanan regularly. I will admit I don't know what to make of him. There seems to be two of him. There is the shill that is on TV. Once in a while he let's the real Pat out but then the TV producers pull him back in line and he sticks to the talking points.

Then there is the Pat Buchanan who writes books and articles. I wish that Pat was on TV more. (Though I don't watch TV so I wouldn't see him anyway.)

It is obvious that he does not think much of the baby boom generation. I've linked to him before. Today some one sent me this article by him. He talks about our current financial meltdown. (We'll get to his piece in a minute.)

I will confess to you here that I am a financial news junkie. But, I want to clarify that. As you may have figured, given the content of this site, I do not get that news from mainstream sources. I do not watch Cramer or anything on CNBC for that matter. That is not news that is entertainment.

Now this financial meltdown might be a surprise to some of you. But there are people in the world that saw this coming. Though I lightly touch on financial topics here I do it only in regards to the baby boomers. If you want to understand what is going on in the world there are a lot better places to go to. Some of them (in no particular order) are:

Calculated Risk
The Big Picture
Nouriel Roubini's Global EconoMonitor (Sign up to read all the content, there is more free stuff there than you will have time to read.)
Dr. Housing Bubble

That's just a subset to get you started.

Now, let's get back to Mr. Buchanan:

The Crash of 2008, which is now wiping out trillions of dollars of our people’s wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

Remember the curse, "May you live in interesting times."

This is nonsense. What we are witnessing is the collapse of Gordon Gecko (”Greed Is Good!”) capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great.

Remember folks, Gordon Gecko was the villain of the story. All those boomers who watched, Wall Street, and decided to grow up to be like him were saying they wanted to be the bad guy.

For years, we Americans have spent more than we earned. We save nothing. Credit card debt, consumer debt, auto debt, mortgage debt, corporate debt — all are at record levels. And with pensions and savings being wiped out, much of that debt will never be repaid.

Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars.

We are going to have to learn to live again without our means.

The party’s over

Yes, the party is over. I am glad that the party is ending while the baby boomers are still alive. They will reap what they sow. Those of us that come after them will have a chance to rebuild and make a decent life for ourselves. We will be able to show our kids what happens when you live beyond your means. And gen-y (like my own grandparents) will become a deeply changed generation. Having baby boomers for parents, they are going to need it.

Up through World War II, we followed the Hamiltonian idea that America must remain economically independent of the world in order to remain politically independent.

But this generation decided that was yesterday’s bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into “global companies” and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers.

As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad.

At home, propelled by tax cuts, war in Iraq and an explosion in social spending, surpluses vanished and deficits reappeared and began to rise. The dollar began to sink, and gold began to soar.

Yet, still, the promises of the politicians come. Barack Obama will give us national health insurance and tax cuts for all but that 2 percent of the nation that already carries 50 percent of the federal income tax load.

John McCain is going to cut taxes, expand the military, move NATO into Georgia and Ukraine, confront Russia and force Iran to stop enriching uranium or “bomb, bomb, bomb,” with Joe Lieberman as wartime consigliere.(x-er: I went to public school, I had to look that one up. The link is there in case you didn't know either.)

Who are we kidding?

What we are witnessing today is how empires end.

Sorry for the huge quote.

Yes, it is the end of the world as we know it. Empires crumble from within. The people become complacent. They will no longer sacrifice for the greater good. The citizens have been raised with the largess accumulated by the work of prior generations.

Empires may be forced down from the outside but they topple because they have become rotten from within.

At the start of the novel Atlas Shrugged, by Ayn Rand we are introduced to a giant old tree. One that has stood for a very long time. One of the characters loves that tree. It represents strength and fortitude. One day a wind blows it down. The wind could blow it down because it was rotten on the inside. It may have looked strong but there was really nothing left of it. It serves as a metaphor for the entire novel.

The American Empire is now beginning to crumble from within. No one is willing to sacrifice or to go without for the greater good.

The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like failure of government, of our political class, and of democracy itself, casting a cloud over the viability and longevity of the system.

Notice who is managing the crisis. Not our elected leaders. Nancy Pelosi says she had nothing to do with it. Congress is paralyzed and heading home. President Bush is nowhere to be seen.

Hank Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail out Bear Sterns but let Lehman go under. They decided to nationalize Fannie and Freddie at a cost to taxpayers of hundreds of billions, putting the U.S. government behind $5 trillion in mortgages. They decided to buy AIG with $85 billion rather than see the insurance giant sink beneath the waves.

An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators.

I don't know what a gen-xer is to do. There aren't enough of us. I guess the best we can do is get ready for the struggle. I think we are ready for it though. I think collectively we have known that this moment would be coming. It's just sooner than we expected.

I grew up hearing stories of the great depression. I can't say that I am truly read for what may be coming but at least I won't be wondering why.

We know were to lay the blame and so does Pat:

What the Greatest Generation handed down to us — the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved — the baby boomers, oblivious and self-indulgent to the end, have frittered away.

The government is doing all it can to keep the game going. The stock market may rally for the next few days, maybe even a week or two, but make no mistake we have reached the endgame. In the end the bill always comes due.

Here's your video:


And while looking for that one I found this one. Which is a lot of fun too:

Go green little boomer, go green

You've got to love the headline for this news story at Market Watch: 40 Million Boomers Can't be wrong.

In the category of an understatement not only are 40 million baby boomers wrong but we are hard pressed to think of a time when that many of them have ever been right.

In Scottsdale, AZ there is actually and event called the Festival of the Wise. This just shows how marketers will say anything to get you to buy stuff. You are older now, you are more experienced, you are the wise ones.

How great is that? First, never trust anyone over thirty but now that you are way past that mark it is a sign of your wisdom. Do these folks ever stop?

The point of the story is that they are adding a whole section on "green" living to the event.

The GreenWise track will see a variety of dynamic discussions revolving around topics such as greening your home on a budget, saving money through solar paneling, and the comparison of hybrid vehicles. It will offer intelligent and up-to-the-minute information on the latest and best trends in going green and offer simple ways for people to immediately become more energy efficient.

Let me rephrase: Here is how to spend your money so that you feel good about yourself and you can further inflate your giant sense of self importance.

The next block is the funny one.

"Boomers as a whole have always led the way in taking care of our environment. But, we are now seeing the number of environmentally conscious boomers increase," stated Melle Amade, co-founder and Marketing Director of Festival of the Wise. "As they enter their 50+ years, boomers are using their formidable purchasing power to change the world by insisting that green products and services enter the main stream. The GreenWise track is intended to support the decisions made by boomers and give them the information they need to continue in their endeavors to leave a lasting legacy."

Yes, the boomers have always found a way to take care of the environment. They developed the exurbs. The most inefficient style of living ever created by mankind. From those exurbs they drive for two hours in gas guzzling SUVs to get to work. They embraced the gas guzzling mini-van which they used to cart their kids all over creation.

Yes. These boomers have done well by the environment. Let's not forget the McMansions with their massive lawns growing in climates that were never meant to have green grass. Places like..... Scottsdale, AZ. Massive amounts of water, fertilizer and chemical pesticides for a lawn. I guess it makes sense, first poison the ground water so that you have to buy bottled water.

Yes folks the boomers have always gone there first. I say we let them go that way. We can, however, choose to go somewhere else.

Well, which is it?

Ahhhh, the main stream media. The want us to be scared. Scared of something, anything. The oceans are going to swallow all our cities. A giant asteroid will hit the Earth. Something. Dear god will you please be scared of something!

Anyway, as far as the baby boomers go, the media can't make up it's mind. What should we fear? One day it's, "they can't retire because they don't have the money." the next it's, "they are retiring and all businesses on earth are sunk."

Today's news story (ht Joel) is the latter. The world is going to end because businesses are going to loose all their, "expert" employees.

Now before we get to the story I would like to tell a brief story of my own.

I once worked with a this mid-size company. About 100 employees. There were a couple of different computer systems there. I maintained one and this other guy (will call him OG for Other Guy)) maintained the other.

Now, OG thought he was special. He had written most of the system. He had to do special things once in a while to it; load data, create special exports, normal programmers stuff. Well, OG thought he should get more money. Did I mention he thought he was special? He was sure that he was completely Indispensable to the business.

OG asked for a raise. They wouldn't give it to him. The company wasn't doing that great financially so it was even and option. OG had a hissy and said he would leave. They said, "OK". He left. On his way out he offered to work as a consultant. They said no. Needless to say there was someone in OGs seat within two weeks doing the same job and figuring out what had to be done. OG was never missed.

The moral of the story is no one is irreplaceable.

So on to this news story from MSNBC:

A surge of titanic proportions is about to sweep through American businesses as 80 million skilled and experienced baby-boomers reach retirement age. Departing the work force at a rate of 4 million per year until 2024, this loss of seasoned workers will create an undertow in every sector. Retirees take with them networks of professional contacts, specific skill sets, and organizational knowledge.

OOOOHHHHHHH, so they are irreplaceable? Because I bet all those contacts are:

• A. Not in Outlook
• B. Not in need of staying in contact with the company themselves so they can get product or make sales.

No folks. Us consumers of the news are stupid.

The good take away from above is that four million baby boomers a year a going to leave. That's 333,3333 a month and that starts very soon. (Three more years. (2 years and 3 months but whose counting?))

Moving on:

But here's the good news. (x-er: to who?) In a recent American Association of Retired Persons study, 70 percent of employees nearing 62 and older plan to work well into their retirement years. (x-er: But who will hire them if they aren't in charge anymore?) The BLS study breaks down the numbers of those already retired, those who accepted early retirement packages, and those who were laid off. Employment of mature workers 55 to 64 is expected to climb by 36.5 percent. For those 65 and older, the employment numbers will soar by 80 percent. According to AARP's Public Policy Institute, "…workers aged 55 and over will account for more than 90 percent of projected labor force growth over the next decade. The number of employed men and women aged 55 and older grew by nearly 2.3 million, or 9.7 percent between 2005 and 2007." Companies looking to keep their competitive edge will have the opportunity to make use of the skills of these returning workers.

Who makes these predictions? What are they basing this on? Are these the same people who told us there was no NASDAQ bubble? The same ones who told us there was no real estate bubble? Oh, I know, these are the same people that have been telling us for the past eight months that the economy is great and we are just having a, "mental recession."

I think they are just making this shit up.

Telecommunication companies, such as R & B Network Services, No. 887 on the Inc. 5000 list, already hire workers who took early retirement from the top 500 publicly traded companies and are too energized to sit at home. Firms in the education sector, such as ESW Incorporated, No. 2125 on the Inc. 5000 list, search for employees with 25 to 35 years of specific subject matter experience. As a result, their staff ranges in age from the mid-50s into the 80s. The company is so successful that 95 percent of its business comes from repeat clients. Another firm, Educational Services of America, No. 1015 on the Inc. 5000 list, finds retirees a useful resource. Mark Claypool, President and CEO, comments that 15 percent of his staff is aged 55 to 75 and they "…offer a rich tapestry of experiences to the school environment."

I'm throwing this paragraph in for one reasons. Schools suck. The education system in the country would have to improve dramatically just to get the point where it was only a big stinking pile of dog shit. Hiring back the people that made it that way will do it a world of good.

You know where I usually find retires working? Wal-mart. I don't go there very often, but every time I do, I see them.

The article goes on a bit more, you are welcome to read the rest yourself and add your comments below. We'd love to hear from you.