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A Coming Generational Conflict

  1. Every week Barrons has a selection of market views from various financial institutions. This week they had one from Deutsche Bank called A Coming Generational Conflict which caught my eye.


    The widening generational divide should be a key source of alarm investors, financial markets and society as a whole. Young people perceive themselves as losers on issues ranging from housing to climate change to student debt. This anger is manifesting itself in political outcomes, with elections around the world increasingly fought along generational lines.

    We believe this intergenerational conflict will get worse in the near term. Aging populations are tilting the balance further against the young. Expensive house prices are continuing to create anger and resentment. And the Covid-19 pandemic, which has disproportionately hurt the young economically, risks inflaming this resentment further.

    There are three paths down which this conflict may travel. The first is a natural resolution, where large falls in asset prices set against demographic change narrow the generational divide without external intervention.

    The second scenario sees a political party elected with strongly redistributionist policies. Some countries have already seen strong performances from such parties, and if this becomes more widespread, investors can expect an abrupt and significant upheaval in housing and asset markets, tax systems, climate policy and many other areas. This scenario becomes more likely toward the end of the decade as younger voters exceed those in older generations.


    Another social change significant for those of us on GT could a more permanent change in the way the Second Amendment is viewed. Obviously all of us have anecdotal evidence to the contrary, but reading this gave me food for thought. What do you all think?
  2. All they need is a good spanking.
  3. Biggest ripoff is buying a house, made with $40K in materials and illegal alien labor, then sold to you for the low low price of only $275K + 30 years worth of interest. Financial slavery for most of your life, yet most people are overjoyed to sign the line and get the keys, with no complaints at all. Work all your life to pay it off, and just when you've made the last payment and are about to retire and relax in your home that you FINALLY own, you die and it gets sold to someone else for another 30 years of payments to the bank.
  4. And there is the problem. Most of them have never been spanked.
  5. News flash. It’s not coming, it’s already here. A lot of retirees don’t have a pot to piss in.
  6. From the surveys I have seen most people period don't have a pot to piss in. They have over extended themselves and are way in debt to pay for all of the crap they have to have. And that debit is your fault and if you don't have any it is because you took advantage of someone.
  7. As I said in an earlier thread, the young feel that capitalism has failed them. As a result, they are flocking to socialism.

    I expect GT'ers will assign blame. I would rather see some possible solutions to their problems.
  8. 1. Comment on Deutche Bank. Take the time to read about the years of mismanagement, the record fines, the laundering of monies. Corrupt and on the verge of failure. Doesn't negate comments on generational conflicts, just take the time and read about the Bank.
    2. Generational conflict.
    The source is deliberate tax and fiscal policies. These are designed to have people borrow and not save or invest.
    When a 3% downpayment is required for a home that will have the mortgage sold to a government sponsored entity, AND, you are now permitted to borrow the 3% down from relatives, a person is a fool not to consider buying a house.
    When the federal reserve system permits its members to loan money on car purchases that can be repaid over 7 years, a person is a fool not to consider buying a car.
    When the federal government encourages you to borrow money for college, you have a problem. Go to your local college. Ask if the loan money is paid to the student or to the school. Also ask an administrator if it is not true that students will take the loan money and drop out of school for a term.
    3. Fiscal policy. It was a very long time in my life before I saw a $50 bill, much less met a person carrying a $100 bill in his wallet. Your governments either pay back money borrowed, or it inflates the currency so that the value of its accumulated debt is reduced. You now have trillions spent by the federal government in the last 6 months.
  9. If a 65YO tries to spank a 35YO, the results may not be what was desired. In point of fact, that may be the how the whole generational divide thing turns out. Wait until Social Security goes broke, and they need to raise the SS tax rate to to keep it running.

  10. $275K Where can you get a house that cheap?

  11. There are no absolute sinners and no absolute saints. Everyone involved bears some degree of responsibility for what is happening.

    Young people often forget that older folks were young and poor at one time. They built up what they have over time and many young people forget this. They brush this off when you ask them what they're doing to build a future for themselves.

    Older people are living (and judging) from a perspective that was developed in a world that doesn't exist anymore. Student debt, the TRULY out of context threat posed by AI, the shocking costs of everything, etc. Older people brush this off when you ask them how to deal with these things.

    Far, far too many people are living with their heads in the sand.

  12. So you think renting is a better financial deal? Have you done the math? The other possibility is to buy the land buy the materials and build it with a friend or relative. My Grandfather and his brother-in-law did just that. Build as small a house as you can live in.
  13. I watched something last night about the whole "participation trophy" mentality. The millennials and later were brought up this way. They were supposed to be automatically successful. They weren't supposed to have to work for it. Now they been slapped upside the head with reality. They don't like it and want it to stop. That's what's going on here.

  14. In a place with limited economic opportunities.

  15. There are lots of places where you can buy an old run down house for cheap, fix it up, and build a 5hitton of equity. They may not be in the hippest, fastest growing areas though.

  16. You should get into house building instead of bloviating.
  17. The young adults don't like to work because it gets in the way of their Quality fun time. So they call in sick a lot. They don't seem to think ahead. They will quit a job without having another job lined up and have the excuse of just getting unemployment until another simple job comes along.
  18. I know the truth hurts you and makes you cry at night about overpaying, but don't use $5 words with your Fiddy Cent education.
  19. Lol, I built a house. And I have every receipt. Saying you can build a house for $40k plus labor and sell it for $275,000 is in line with your endless hyperbole.
  20. He is simply say that if you think building houses is so profitable, and easy, you should do it your self. The number of bankruptcies among small builders suggests otherwise.
  21. Red counties/states it can still be done quiet easily.
  22. Another old(2).jpg

    I know a lot of young people that work harder than a lot of older people. People are the same despite generational differences.

    What's different now is the rich tilting the system in their favor making it harder for the common folk to get ahead, and the ridiculous echo chambers everyone gets in via social media causing extreme polarization in society.

    You old guys and going folks need to get off Facebook and go out and see the world for what it is, not for what advertising based algorithms are telling you to keep you scrolling till you die.
  23. Truth is "hate" to those who hate the truth.... Seems that anyone under 30 years old cannot stand being told the truth
  24. Hippies became Yuppies, today's little commie babies will finally realize they've been played and it's already happening - Just look at Robinhood... New capitalists are joining everyday and investing, it's the perfect seed to change the loser mindset of the current young generation.
  25. Agreed.

    Once this generation gets out, gets a job, has some property....they turn into the next generation of conservatives.

  26. While I understand and agree with your sentiment, you are factually incorrect. The material and labor involved in building the typical $275,000 spec house is around 80% of the cost of the building, to which profit and overhead are added, and then the cost of the lot, the infrastructure assessment, taxes, commissions, and profit on the lot itself. The framing and foundation materials alone are probably $50,000.

    I think the problem is that we have devalued our currency over the course of a century, lessening individual buying power, and having grown the disparity in pay scales in comparison to inflation, home ownership has become less attainable for reasons not directly related to the building industry itself. It certainly doesn't help that many people are financially illiterate, caring only for what they can get approved for now, rather than the actual cost of their financial decisions. The absurdity of mortgaging a home at 30 years simply doesn't occur to many people (in my opinion), even when noting that this is somewhat mitigated by the idea that a home is an appreciating asset.
  27. Phoenix Az suburbs, in Surprise we have new homes in the low $200s.
  28. Probably some blue ones also. But the original post was alluding to new construction. Don't see that pretty much anywhere at that price level or below.

  29. Is your last sentence your own sentiment, or the conveyance of someone else's?
  30. Way too many people don't have a pot to piss in because they took advice to mooch off of the government rather than work hard. Many others have turned to drugs and have lost everything they once had from working hard.. A former co-worker threw 26 years away because he decided to smoke weed after it became legal to have a small amount. Sympathy for him is zero.
  31. That is my plan exactly.
  32. Neither, it is my sarcasm in response to comments like this from Jerry brown:
    Revenue means taxes, and certainly those who have been blessed the most, who have disproportionately extracted, by whatever skill, more and more from the national wealth, they’re going to have to share more of that. . . . And everyone is going to have to realize that building roads is important, investing in schools is important, paying for the national defense is important, biomedical research is important, the space program is an indicator of the world leader – all that takes money.

    There are many that seem to have a hard time understanding some people have more money than them because they worked harder, risked more, and sacrificed more than they did. They drive a new Mercedes, go to Hawaii every year, have the latest phone, and get Starbucks everyday but it is the economy/president/conservatives fault their bank account is empty and you should be taxed so they can continue with their idiotic lifestyle.
  33. Thanks for explaining in more detail. I agree with you. I feel that few truly understand what it is to sacrifice for longterm success. Immediate gratification seems to be the popular priority, especially among younger people.
  34. This has seemed pretty obvious for some time. It's interesting to see it out in the open.
  35. Your life becomes ugly the moment you start comparing. Any kind of jealousy is a poison. Jealousy comes because you wanted something, something of strong desire, but you were not able to achieve, and so jealousy is a mark of your failure. It only causes anger and frustration. (I copied this from something i was reading a long time ago). I don’t think they realize how hard we worked to get to were we are, that’s why socialism appeals to them. A trophy for everyone has back fired. Both of my kids, 27 and 29, have both opened homes. I did help them get a vehicle, old, but it got them to work. Both started part time jobs at 16. I believe that a lot of the current problems are directly related to piss poor parenting.
  36. Deutche Bank should have already failed....................I'm sure it is being propped up, (the TBTF thing). It represents everything wrong with the "boomer" generation, however, it isn't right to use too broad a brush when assigning blame.
    Yes, I saw a generational conflict coming some time ago..............but there isn't much moral high ground for either side.
    I've tried to prepare my kids for what I see coming at us.
  37. The biggest head winds to home ownership here (in this state and county) is the year on year increase in real estate taxes.........................roughly 600 dollars per.

    The exodus is underway.
  38. In my town of 25k, that kind of money puts you in the top 20%.

    Only the youngest Millennials got participation trophies. Within the “Millennial” generation, there is a huge divide from the older half and younger few years. A lot of this also comes from which part of the US, you’re referring to. All of my friends are older than me. One if my closest friends is near 60 years old. We grew up much more similar, than different. We both also grew up in rural Kansas.
  39. Weird. I'm surrounded by young, mostly only high school educated (well, the males anyway) people who have made successes of themselves, bought nice homes in their 20's and park their nice vehicles next to their toy collections (swamp buggies, airboats, motorhomes, open fishermans, etc.)

    A number of them are / will be at least semi-retired by late 30's.
  40. The younger generation is hallmarked by an immediate need to start at the top rung of the ladder, coupled with a lack of loyalty to employers. The end result is impatience. Young people face increasing doubt about the American Dream, as we older folks knew it.

    They don’t lack work ethics or skills. I am often impressed by this younger generation and I can see how many would see the deck stacked against them.

    Something needs to be done about student debt, for sure.

    In the end, older folks need to ask themselves what they can do to help someone younger. It’s easy to isolate yourself as you age. Guard against that notion.
  41. This sounds like a manufactured mainstream media issue.

    When I entered the working world in the early 1980's mortgage rates were around 16%, jobs were scarce and we did not have the information of the world at our fingertips.

    Also the old generations can't take it with them when they die so the young people of today will inherit it all one day.
  42. Ain't that the truth. Social media magnifies this.

    And jealousy drives Socialism.
  43. You have not caught on to the new way. Recently, in a thread, someone posted they would not hire someone who stayed with a company more than a couple of years. Within that thread, there was no consensus as to how long the best candidate should have been with a prior company.

    I come from an old school thought. If I hadn’t lost my job, due to disability, I would likely be in my twelfth year, with the Sheriff’s Office.

    I’m trying to get a job in the private sector. It has been extremely difficult. The little feedback I’ve received has been mind boggling and contrary to other advice. Yes, working for the same place, for over a decade has been counted against me.
  44. Socrates called. He wants his bit back.

  45. Which one?
  46. Talking out yer azz I see. You obviously have NO idea of our industry. Sewer taps and permits alone are typically in excess of 10K. Site work, foundation and lumber alone will bury your so called 40K budget. You'd be lucky to make 30/40K on a house in that price range.
  47. This question was answered in 1976...

  48. You're harshing my mellow. :crying:
  49. I just don't see it like the article. Most of us become more conservative as we age. I enjoy being around young people. Some will be more successful than others, as it was in my youth. People of all ages only need a look in the mirror to see who is responsible for their situation and who can improve it. There are many opportunities.
    On the subject of homes for $275k, you can get a nice house, in a desirable area for that here. Property taxes are lower than most states as well.

  50. Most of these replies are just wrong. I don't hesitate to call them hogwash.

    This idea of 'naming' generations just causes artificial divisions. I'm technically a 'pre-boomer' but, for simplicity, I just call myself an old man.

    We believe in higher education, our grandson will get a decent education without a dime in student loans. He's in his senior year of college and will probably start grad school next September.

    I bought a house in '86 for $81k and sold it in 2003 for $291k. Not bad considering I had to live somewhere. Our current house has increased in value by $200k+ in the last 3 years. Again, we have to live somewhere, we might as well increase our net worth. It's not a lot but it's better than nothing.

    Fundamental to the idea of economics, a thing is worth what the last one sold for. There need be no relationship between cost and price and their usually isn't. Housing is just that way. There's only just so much dirt and they aren't making any more. Worse, lawsuits are preventing some cities from expanding their boundaries if it would encroach on farm land. Too bad, the farmers WANT to sell their excess dirt.

    Lots of demand for a scarce resource results in increasing prices. Econ 101 - yes, I took that course. Way back when...

    There will probably be a downward blip in home prices as soon as the Covid-19 foreclosures kick in. It might be a good time to buy.