Monday, February 2, 2009

The Rage of Our Age

As the sub-prime meltdown was unfolding and as the current sinking of economies worldwide is dragging more and more people down with it, I've noticed that there are a lot of angry young people who feel that the boomers have gobbled everything up and left nothing but a big economic mess for young people. Most of us who are younger than 50 are unlikely to enjoy the same level of lifestyle as our parents. In particular, we seem to be in a situation where we will not be able to buy property and expect it to help smoothly pave the way to retirement. In fact, most people feel they will be lucky to stumble down a dirt road considering the collapse of the housing market.

I can't say that I know what is ahead. I tend to think it'll get better and that it'll happen sooner than most people expect. That being said, I must say that sometimes I also get angry about some of the things which I view as disparities between economic conditions and opportunities for our parents and those for ourselves. This anger is completely wasted of course, but it is not irrationally rooted.

Sometimes it makes me mad that people who have retired complain about younger generations not doing better and blaming it on their inability to control their spending. While I have no doubt that this is true for a lot of people, not everyone who is finding it hard to prosper is failing to live modestly or work hard. The truth is that a lot of older people have built their prosperity on real estate. That is, they bought houses which appreciated in value greatly and have been able to cash in for retirement. The amount of appreciation on more recent purchases, with a few exceptional areas, is less than that on homes bought 40-50 years ago.

My point is that a lot of people who cite hard work as the reason for their comfort at retirement actually just got lucky that they were buying in their era and not ours. They didn't necessarily prosper because of hard work and scrimping and saving. That was actually what our grandparents did, not our parents. Some of them just bought homes, others became landlords of one sort or another. Some simply checked out at the right time before the stock market bubble burst. In fact, a lot of the, supposedly inspirational, stories about people who became millionaires despite never working at very high wage or professional jobs emphasize frugal and simple living rather strongly and whisper and vaguely mention in a footnote at the end of the article that there were also real estate purchases. Such people can't stand as an example for us since our era is unlikely to yield such opportunities to increase investments ten fold (or more).

I'm not whining because I won't end up rich when I retire, because I've never been in a position to consider much investing anyway. That's not because I don't have a little bit of money to play with, but rather that I have been living in a foreign country on a mental lease that I renew three years at a time rather than staying in a place I expect to remain in. Rather, I am complaining because of the amount of blame that gets tossed around and the arrogant presumption that anyone who hasn't set themselves up for a comfy retirement has not lived in a manner that suits their income level. What is more, I'm probably more than a little jealous and resentful to see people who get to coast on their buying-based luck later in life, while I will be working until I no longer am capable of doing so. Going by a lot of the comments I see on various articles, I'm certain I'm not alone.


Roy said...

You can choose to do something about your situation if you want to, rather than being "jealous and resentful" about it. I think we have way more opportunities for creating wealth that previous generations did not. IMO.

Orchid64 said...

I'm not *that* jealous and resentful. The truth is though that there are a lot of people with wealth that they did not earn and I'd kind of like to have that sort of wealth as well (who wouldn't). I'll be the first to confess that this is not the right way to be, nor is it productive.

That being said, I'd be curious about the opportunities you mention as I believe that people see the equivalent of wealth mirages everywhere (and they are constantly being peddled to them through a variety of web sites and pyramid schemes). Lots of people talk about making money passively or catering to niches, but there is only so much market to go around and plenty of them are well and truly saturated.

My situation isn't bad at all, mind you. I wasn't complaining about that but rather that people who are well off as a result of the largesse of their time shouldn't be blaming younger people for their inability to build equivalent security. I was simply stating observations and immediate emotional reactions.

I'm really pretty well off from my viewpoint, but it is money I absolutely earned every yen/cent of and not something I got through manipulation of money while other people labored (which is a lot of what stock market wealth is from) or blind luck at buying something that happened to increase in value (like real estate). What I got, I earned hour by hour. To whatever extent I admit being jealous and resentful, it's based on the fact that I have worked hard and others have not yet they judge me and others like me for not having the resources that they do.

This post was to some extent about helping me purge something I'm unhappy about. Sometimes talking about a reaction I wish I could change helps me change it, though I do risk it being seen as a persistent state when it is actually an occasional thing when something brings it to mind.

Roy said...

I think it is all about your mindset and how you view abundance versus scarcity. I personally do not pass judgment on those who have a lot of money or wealth because I believe "you reap what you sow" and in some way they earned that whether thru hard work or other means. I don't think being wealthy means you have to work hard either and that wealth earned through "hard work" is more valuable than that earned thru passive income or investments. Income is income.

Also, as a person in the markets (stock markets) I can tell you that making money in the stock market is not a piece of cake and that 99% of people lose money in the markets. It's one of the hardest jobs out there and requires extreme discipline and control over your emotions. And no one manipulates the market. If anything those that prosper in the stock market are people that are highly skilled at being able to sense the sentiment and other variables that influence the crowd mentality that makes up the whole of the market.

I hear people say things like daytraders are scumbags because they don't create anything of value etc etc. But what people don't realize is that their pension funds and the interest they earn off their savings are created by institutional traders trading everyday! What value a individual (like myself) in the markets brings to the world is liquidity which is required to move market prices and bring wealth (or losses) to all the people in the world.

I'd write more about this but I gotta get to work!

Roy said...

I got a bit of time just now so I'll comment some more.

Your post sparked my interest because I've been pondering the issue of wealth and money and my own biases towards the subject for quite a long time now. I approach the subject of money as energy that is returned as a result of value you send out in the world. Kind of like "Love." Yes corny, sorry..

Anyways, if you want wealth and you feel you are not acquiring it now than obviously you need to be doing something different or doing what you are doing differently. I don't think you need to sell your soul or ruin the environment or take advantage of others to do it. There are a lot of fantastic ways to bring wealth to yourself while providing value to others.

One blog I recommend is Steve Pavlina's blog. It's a good starting place, he's a proponent of law of attraction but there's quite a bit of practical advice too:

I also like reading books by Stuart Wilde but he can be too new agey and extreme for some.

Kelly said...

Do you think when you and the hubby retire eventually, you will stay in Japan or return to your native country?

Orchid64 said...

Roy: You and I actually don't disagree that much. I think that there are issues of balance perhaps separating our views. I think that fluidity in the market is important, but I don't think that has been what has fueled investment for the last decade or so. The main problem is one which I'll try to explain via an analogy.

If you have a dining hall where people contribute a certain amount of money to allow meals to be prepared and served to them, that is good as it provides employment for a benefit. Both the investor and the worker benefit. If, as time goes by, the investor wants bigger and more frequently lavish meals for his investment, the imbalance starts as the investor getting more means someone takes a cut. That's the employees. As time goes by, you not only have the investor trying to pig out all of the time at the expense of the employees' wages, but you also have more people wanting to be on the investor side demanding those meals and fewer people on the other side preparing them.

The stock market had become a pig out for many people. Too many people wanted to see constant growth and companies only got that by shaving the employees' benefits and wages or sending the jobs to other countries where people work for lower (often slave) wages. This imbalance is simply wrong. As you said, you get what you give in all things, but people have increasingly wanted to get much more than they give. This is the part that disgusts me (and others).

This is a simplistic analogy, and a flawed one at that, as a realize that one can argue that more investors are meant to expand the operation behind the meal preparation (so to speak), and that'd be ideal, but it simply has not worked that way which has contributed to getting us where we are now.

I'm all for my money (and the CH and I have a pretty tidy amount in CDs back home) being loaned out to others for them to fuel their businesses. I get interest and they pay interest. This is a good thing, but it's far more complex than that and it all starts to topple due to greedy people who are getting something essentially for nothing other than duping other investors (like the sub-prime mortgage problem). If someone is the financial equivalent of a snake oil salesman, he's certainly skillful, but his wealth comes at the expense of thousands (or possibly millions) of other people who purchased bad loans from him and now lose their nest eggs or retirement funds.

Personally, I'm not all that concerned with wealth. We do very well, but we will never reach the levels of say the CH's parents who live in a house worth over a million dollars in the Silicon Valley area (which they bought for something like $40,000 35 years ago. That sort of ease isn't going to come to us.

I'd say that the only point on which I have a stronger feeling than you is about earning your money yourself. I think that part of putting your energy out there is that that energy is used or producing positive results that are of concrete value to other people. While some investment certainly is of great value, a pretty fair amount of it is essentially playing poker with money and hoping that you win while others lose. It is actually harming others by taking from them so you may benefit.

Kelly: We are not really sure what we're going to do. The only thing I can say is that we are in Japan on a short lease at all times. As long as we're satisfied with life, we stay. We're pretty happy with things right now, so we'll renew our visas this year and hang around a bit longer. The only thing I can say for sure is that we have no plans to retire here. We sock away as much money as we can for retirement back home. The most likely possibility is that we'll end up living with my sister in Pennsylvania at retirement, but it's hard to know for sure.

Thanks to both of you for your comments!