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Demographics Thread : People, the Key to the Future

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I find the idea of Kondratieff cycles interesting, but I'm a bit skeptical - what's the best reference on this?

 

I recently read The Coming Generational Storm by Kotlioff and Burns, and while it is focuses on the fiscal issues that will specifically hit the US due to demographic change, it touches on the general aging trend through the developed world. It seems to me that Europe is more vulnerable since if you don't feel like paying German taxes, you can leave, but it's not that easy for the US.

 

(As an aside, the book really drove home why government-financed retirement provision is pernicious and socially destructive - at least in my opinion.)

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the other side of the demographics problem - it ruins property-in-the-pension-plan...

 

Drop in housing demand predicted

 

Citywire: Equity release faces demographic challenge

 

Tom McPhail, head of pensions research, at Bristol-based adviser Hargreaves Lansdown is saying that an expected drop in the population over the next couple of decades would reduce housing demand. Meanwhile, he says, older people will be trying to trade down or release equity in lieu of a pension.

. .

"Tom McPhail, head of pensions research, said an expected drop in the population would mean there would be fewer family age adults around to buy houses. At the same time, there will be more older people trying to release value from their houses."

 

@: http://www.citywire.co.uk/News/NewsArticle...&NewsPage=1

 

I think that the current retirement preference to downsize and release equity will not be a problem in future.

 

High living costs will force us to change our habits and do as Asian families do. Sons will marry and bring their wives into the family home; Grandma will look after the childre, overheads will be kept low, and there will be a massive shortage of 4+ bedroom houses, and a huge oversupply of 1 and 2 bed flats and rabbit-hutch houses.

 

There are huge savings to be made through extended family living and although it has become unpopular in so-called advanced economies over the past fifty years, necessity will force us to return to former times when such practice was the norm.

 

Also, it makes much more economic sense for adult children to throw in their lot with ageing parents and preserve their inheritance than to watch it being swallowed up in nursing home fees.

 

I predict a real shortage of large family houses suitable for extended family living. Not the least because so many have been converted into flats.

 

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Demographics are going to be a huge issue for our Globe-

too many people want to retire, and leave the labor force in the next 10-15 years.

Who is going to keep the economy growing, as these people stop working.

 

Why must everything grow, decline is a natural part of the same cycle. Economies sometimes fail, ideology changes, demographics change, bubbles burst and people die!

 

Economic migrants will leave countries when they experience a downturn and so will welfare migrants when the rate paid to those that do not work falls as governments reduce spending. As welfare drops in value so more of the indigenous population that was on welfare will have to work in the lower paid jobs that were held by the economic migrants, inflation will only make this happen sooner.

 

The poorest countries are in a demographic crisis already. Richer, successful countries limit the number of welfare immigrants and limit the amount paid out to welfare for immigrants. Economic migrants are also limited and indigenous people are hired before those migrants. They build up sovereign wealth funds when times are good to support the indigenous population during downturns, the more economically intelligent of the population save. There is only a demographic crisis in a downturn when there is not enough money saved, the economically weakest will experience hardship.

 

Poorly lead governments like immigrants because they can obscure financial failings in the increasing numbers of incoming migrants, more tax take, more schools, services, roads, waste, etc, and greater assumed growth. The increased tax take is used to prop up the state economically, trying their hardest to project those ‘good time’ numbers forward showing that the cost of free health services, social commitments, etc, can be met in the future. It is a fallacy because they never save for the lean times.

 

When the economy moves into a downturn the indigenous population can only see the welfare migrants taking the services and handouts from the taxes that they have to pay. Nationalist political parties grow and social unrest begins, the deeper and harder the economic downfall the greater the unrest. Rather than reducing services governments borrow causing inflation that accelerates the downturn. If the downturn continues then those that do pay taxes and are not a drain on the economy but whose parents or grandparents, great-grandparents were immigrants also become the target for nationalists. This is where the UK is heading as it has very little economic reserves even though it seems to be successful. People can either stay and protect themselves financially or become welfare or economic migrants to other countries.

 

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BUMP

 

This is an important thread, the coming demographic crisis has to be material to all investment my thoughts are;

 

The boomer generation exists in most western countries including the US and UK it includes those born in the period 1946-1964; these people represent a huge demographic bulge, which has to some extent dominated society e.g. youth culture was important in the 1960’s. They are now saving for retirement and are buying assets, which they intend to sell during or at retirement. The result is high demand now and low demand in later years for those assets favoured by these people to save for retirement (equities, bonds and property). The result will be high prices now and lower prices later when demand drops – conclusion; if you are a baby boomer these assets are not a good way to save for retirement.

 

Gold makes sense as an investment because among other reasons it is not a favoured by western boomers, can anyone think of anything else?

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Has this been posted previously? - it belongs here...

There is also a St Louis Fed research paper on demography and house prices, and why Japan is doing so badly.

 

I know why my prediction for house prices is so bearish (see chart below :) ).

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LONGER TERM - IF SPX-777 GOES...

1015_clip_image003.jpg

look at Japan, for the importance of demographics

1015_clip_image006.gif

and then to the US

1015_clip_image008.gif

 

Chris Puplava's article:

http://www.financialsense.com/Market/cpuplava/2008/1015.html

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A pont worth noting here, is, as it is true that the developed countries populations are changing - in favour of more oldies. It is also true that the world's population generally is growing at an alarming rate. This will lead inevitably to more migration. Even though immigration is shunned by the natives of most developed countries, who try their best to accommodate social, or economic travellers, it brings an underlying discomfort.

 

Whether it is uncomfortable or not, it is a fact of life that western civilisations 'need' immigrants to fill the void made by the childless natives. These extra people will pay the taxes to support the pensions, and provide the market to buy up all the houses that the baby boomers will be selling as they retire. The housing market will stabalise, and may even keep growing, as investors buy property to rent out to the immigrants, and so on.

 

The world will keep turning, and everyone will live happily ever after. Well, until the food, and water shortages anyway - which will be caused by too many people on the planet. That's a long way off though. ;)

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I don't follow this line of argument. The people in the old USSR have had their pensions wiped out by inflation since the countries went capitalist. Their populations are falling more quickly then those in the UK. So how will importing villages of people from say Sudan or Iraq change the amount they get to live off. Surely the new immigrants will compete with the native people for limited resources and the ruling class will take whatever benefits arise from immigration.

 

Many families are waiting to have children because house prices are very high and wages are still low. I believe that given affordable housing the native populations will increase. This argument about countries needing immigration to make up numbers ignores the possibility that the natives will start having children if conditions are right.

 

If immigration is needed to make up the pensions of the old people it should be put to a referendum.

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I don't follow this line of argument. The people in the old USSR have had their pensions wiped out by inflation since the countries went capitalist. Their populations are falling more quickly then those in the UK. So how will importing villages of people from say Sudan or Iraq change the amount they get to live off. Surely the new immigrants will compete with the native people for limited resources and the ruling class will take whatever benefits arise from immigration.

 

Many families are waiting to have children because house prices are very high and wages are still low. I believe that given affordable housing the native populations will increase. This argument about countries needing immigration to make up numbers ignores the possibility that the natives will start having children if conditions are right.

 

If immigration is needed to make up the pensions of the old people it should be put to a referendum.

 

The USSR model of socialism didn't work, and has been a struggle for some to adapt into the capitalist brave new world. Eventually, they will be better off.

 

Obviously, if natives have more children, then they will not need immigrants.

 

I don't think you will get a politician to admit that the UK needs immigrants, they will always state that the issue is under control, but behind the scenes they are actively encouraging it.

 

 

 

 

 

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The USSR model of socialism didn't work, and has been a struggle for some to adapt into the capitalist brave new world. Eventually, they will be better off.

 

Obviously, if natives have more children, then they will not need immigrants.

 

I don't think you will get a politician to admit that the UK needs immigrants, they will always state that the issue is under control, but behind the scenes they are actively encouraging it.

 

I'm sorry I still don't understand this properly. I was not refering to the UK but Slovakia and Czech Republic. An argument was presented that the UK needs immigration to prevent some kind of economic disaster/collapse of state related to pensions. I believe a similar disaster has already occurred in the old USSR, the collapse of the old state meant that people who depended on this state for income, suffered greatly if they were not self sufficient. Rather than increase immigration the people made sure older family and friends were well fed and happy, they grew their own food , looked after old relatives, fixed their own cars and worked togther to overcome the problems.The solution you suggest , ie import people from somewhere else, would I think work against this kind of community action. To work together people need trust and good relationships and these take time to form. You cant put them on a balance sheet either.

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I dont see the truth in that Puplava posted graph, unless I am misunderstanding something. Many in mid age have no kids, either. And that trend is growing. The graph needs updating anyway as the nikkei has swung lower, social mood too. I just cant see the nikkei rising like that projection any time soon.

 

Have alook at official numbers here.

 

http://www.ipss.go.jp/index-e.html

 

 

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