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Old 02-23-2009, 10:28 PM   #41
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As far as the market is concerned, long bull and bear markets ended when almost everyone was convinced that "it really is different this time", then they discovered it wasn't.
True. If people get an idea that someone is home in Washington it could turn around quite soon.

Otherwise, it might have to get to a level of extreme values that even people who have little optimism would buy anyway, figuring that dumb luck should get us something from those levels. I would put that level somewhere between 500 and 600 on the S&P.

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Old 02-24-2009, 01:23 AM   #42
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I don't believe it's different this time, but that doesn't mean it won't be worse than history this time. If we've got 100 years of history to go by, and everything stays the same, there's a 50% chance that the next 100 years will have worse times. (And a 50% chance that they will have better times).
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Old 02-24-2009, 10:11 AM   #43
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Someone thinks it's different this time:

Commentary: This is not your father's country anymore - CNN.com

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I think this time, it's different. I have this uneasy feeling our country is in the process of changing forever, and not necessarily for the better -- unless our perspective changes with it.
In particular, this next passage nails it (with my emphasis added):
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The baby boomers are starting to retire and will consume an ever larger share of these entitlement programs. They will also age in sufficient numbers to drive the political agenda for the foreseeable future. Think they're going to want less Social Security and less Medicare? Think again.

The generation coming along behind them that will be asked to pay for all this can't. There are not enough good jobs left in this country to pay those kinds of bills.

At the end of the day, we are going to have to settle for less. Less money, smaller houses, smaller cars and smaller dreams.
I might add "no retirement" to this last list, at least for a lot of people.
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Old 02-24-2009, 10:42 AM   #44
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Someone thinks it's different this time:

Commentary: This is not your father's country anymore - CNN.com

In particular, this next passage nails it (with my emphasis added):

[At the end of the day, we are going to have to settle for less. Less money, smaller houses, smaller cars and smaller dreams.]

I might add "no retirement" to this last list, at least for a lot of people.
"Less" compared to what? The lifestyles of the last 10 years? Or the lifestyles that people enjoyed in the 1960's ?
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Old 02-24-2009, 10:48 AM   #45
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"Less" compared to what? The lifestyles of the last 10 years? Or the lifestyles that people enjoyed in the 1960's ?
I think it's the unwinding of the unsustainable lifestyle of the last few decades, one which was fueled by a post-WW2 economic bubble that started deflating by the 1970s.

We spent decades in denial that this level of middle class prosperity and security was unsustainable, and now it's biting us in the butt. We borrowed and borrowed to allow current generations to pretend the economic deal of post-WW2 America was still viable, and now it's reached the breaking point. I do expect some of the increased "middle class expectations" over the last 60 years to unwind as mentioned in this article -- smaller (and fewer?) cars, smaller houses, reduced expectations.

I might expect other changes "back to the future" as well. I'd not be the least bit surprised to see the "extended family" household make at least a modest comeback out of economic necessity, for example, or the ultimate expectation that retirement is only for the idle rich.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-24-2009, 11:16 AM   #46
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I might expect other changes "back to the future" as well. I'd not be the least bit surprised to see the "extended family" household make at least a modest comeback out of economic necessity, for example, or the ultimate expectation that retirement is only for the idle rich.
So are you giving up on the retirement idea, early or otherwise? Seriously, if this is the future, what do we do if we thought we were going to be able to RE? Do you think our unearned income will get taxed more making the retirement idea obsolete for us, or will it just be unattainable for the next generation?

I guess I could get my father in law to live with us and mooch off his SS check. He actually called me the other day and said he was going to sell his house and car and buy a small RV to tool around in. He hinted around if he could park it at our house when he wasn't on the road. I think I tried to change the subject and talk about something else at the time, but maybe that's the future!
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Old 02-24-2009, 11:25 AM   #47
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So are you giving up on the retirement idea, early or otherwise? Seriously, if this is the future, what do we do if we thought we were going to be able to RE? Do you think our unearned income will get taxed more making the retirement idea obsolete for us, or will it just be unattainable for the next generation?
I'm not giving up on it, but I am resigned to the increasing likelihood that my retirement won't be "early" like I originally thought it could be. And I think the generations that follow me will face even stiffer headwinds; for them, as the old saying goes, failing to plan will be planning to fail.

I got an early and aggressive start on retirement investing, so even though I've taken a pretty bad wallop in the last 18 months, I'm still way ahead of most people my age in terms of what I've put away for my own defined contribution plans. Once upon a time I thought that was the difference between early retirement and retirement at the "retirement age." Now I'm thinking it's the difference between being able to retire at all or not being able. Had I started investing for retirement at 33 -- 10 years later than I did, but still sooner than many people start -- I'd bet retirement at less than age 70 would look hopeless for me.

As for younger folks, taxes can only go up to support these debt loads. Wages aren't keeping up with inflation. All in all it means people will have less money to save for retirement at a time when they'll have to rely on themselves more than ever. Frankly, I think we'll see a redefining of the middle class over the next couple of generations.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 02-24-2009, 11:29 AM   #48
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I think it's the unwinding of the unsustainable lifestyle of the last few decades, one which was fueled by a post-WW2 economic bubble that started deflating by the 1970s.
.
Agreed, the US has been resting on it's laurels since WW2, growing and expanding until we had to look offshore to sustain our appetites for more and more when our own resources ran out. Europe was doing the same.

When the laurels eroded, we borrowed, more and more, using inflated assets as collateral to feed the frenzy. It's all a frenzy of more and more, and when we ran out of assets to collateralize, there was nothing left to tap. Actually I believe things just kept inflating until most recently.

What is ridiculous in my mind is that the "experts" want to bring us back to our frenzy of buy buy buy. In reality, there aren't enough good jobs to go around, there isn't enough opportunity, most of us have to go back to doing grunt work.

If you want full employment eventually, we are going to have to "share" jobs, not us, just the working folks, and perhaps the workday should be cut to 6 hours to give everyone a chance to survive.

Can't stave off the inevitable for long.

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Old 02-24-2009, 11:42 AM   #49
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will it go into a positive control feedback loop or a negative control feedback loop - the former allowing for an orderly return, the latter to possible out of control acceleration. This is crazy - and scary.
We are in a divergent phugoid.
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Old 02-24-2009, 11:46 AM   #50
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Frankly, I think we'll see a redefining of the middle class over the next couple of generations.
I agree with you, and also agree that taking a conservative view of ER is the prudent thing to do.

But I also seem to remember people feeling this same way in the 60's (Communist threat), the 70s (some bad economy stuff, I was too busy studying and having fun and working to pay attention), and 80's (Japan was going to take over the world), and again in the 90's (everybody better learn to speak Spanish, Hindi,Mandarin).

It will be "interesting" to see If good old American Ingenuity can came to the rescue, or maybe just forestall this once again. I don't feel that we can count on it, but I won't rule it out either.

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Old 02-24-2009, 11:51 AM   #51
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As for younger folks, taxes can only go up to support these debt loads. Wages aren't keeping up with inflation. All in all it means people will have less money to save for retirement at a time when they'll have to rely on themselves more than ever. Frankly, I think we'll see a redefining of the middle class over the next couple of generations. Today 05:16 PM
I've got two kids, boys 9 and 11, and I'm constantly trying to think about what type of job they should shoot for. I have told them that they need to think about not having to rely on a regular pay check from a regular job, because I felt (still feel) like payroll taxes will have to rise so much it will be hard for that guy. Also, I used to tell them that the best way to be FI was by being a business owner so you could possibly shield some income and control your own destiny and be your own boss, but over the years my business got more and more complicated as far as government regulations and demands (privacy act, truth in lending, finance department scrutiny, doc fee lawsuits, tax collection demands, environmental issues, etc.) and I think that may just get worse in the future as the government gets bigger and bigger. My wife tells them they need to be doctors, but I feel like their income will be regulated in the future due to some kind of nationalized health system. I think they should study law so they will actually know the laws and maybe can WRITE the laws, which could give them power but I'm not sure about the income.

So far one wants to be a surf bum and the 11 year old just wants to just sleep-- I keep telling him that's not actual job training . The surf bum idea is actually souding pretty appealing to me right about now..............

Any other ideas about the next generation of kids?
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Old 02-24-2009, 12:03 PM   #52
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Any other ideas about the next generation of kids?
Forget the specifics. They will likely be out of date by the time they need them. You just can't predict the future.

Teach them to learn how to learn.

Teach them to observe.

Teach them to analyze what they observe.

Teach them to react/adapt to what they analyze.

Teach them to look forward and plan, but have a plan B and a plan C. None of those plans are cast in stone. Be flexible, because you just can't predict the future.

That said, I directed my kid toward a BioChem degree. He was interested in it, and it seemed general enough that many different industries would need people with those skills. Kinda fits the flexibility aspect. He is employed in his field, and there are many paths to take, so it seems to be working OK.

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Old 02-24-2009, 12:06 PM   #53
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Any other ideas about the next generation of kids?
It's difficult because things change from generation to generation. When I was in college in the mid-1980s, it was all about computers being the future, so I earned a CS degree. A couple decades later, those jobs became more exportable.

Economies like this tend to lead to a surge in interest in jobs considered "recession-proof" and "offshoring-proof". Right now, health care would be an obvious example. Nursing schools are packed like CS programs were 20 years ago when they were turning a lot of qualified applicants away. The increase in moving computer jobs to places like India have relieved the overcrowding and CS programs often have half the students they had 15-20 years ago.

The thing is, a couple decades from now we could have another shift that makes something else look the most "safe" and "recession-proof."
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Old 02-24-2009, 12:14 PM   #54
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We are in a divergent phugoid.
I had to look that one up....
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Old 02-24-2009, 12:22 PM   #55
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I had to look that one up....
Don't feel bad, I read lots of stuff on this board, then spend hours looking up meanings.
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Old 02-24-2009, 12:26 PM   #56
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I had to look that one up....
You mean to tell me that you didn't know that a phugoid (pronounced /ˈfjuːˌgoɪ̯d/) is an aircraft motion where the vehicle pitches up and climbs, and then pitches down and descends, accompanied by speeding up and slowing down as it goes "uphill" and "downhill." This is one of the basic flight dynamics modes of an aircraft (others include short period, dutch roll, and spiral divergence)! Huh!

Ummm, me either. Google/wiki are your friends:

Phugoid - Wikipedia, the free encyclopedia

I thought I might have to turn off "safe search" to find it. No such luck.


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Old 02-24-2009, 12:31 PM   #57
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An exaggerated, repeated phugoid is the maneuver shown in this video:

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Old 02-24-2009, 12:34 PM   #58
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I prefer a smooth ride......
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Old 02-24-2009, 12:41 PM   #59
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A smooth ride sans phugoid gives neither a smile nor full barf bag.
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Old 02-24-2009, 12:49 PM   #60
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A smooth ride sans phugoid gives neither a smile nor full barf bag.
Decisions...Decisions....

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