If after reading the post below, you’re not sufficiently bummed out, then Scot Bathgate sends this along from Business Insider:
Matt King’s Most Depressing Slide Ever.
Citi’s Global Head of Credit Strategy, Matt King, has a knack for putting together useful illustrations.
King explained his charts to us like this:
It’s what I like to call “the most depressing slide I’ve ever created.” In almost every country you look at, the peak in real estate prices has coincided – give or take literally a couple of years – with the peak in the inverse dependency ratio (the proportion of population of working age relative to old and young).
In the past, we all levered up, bought a big house, enjoyed capital gains tax-free, lived in the thing, and then, when the kids grew up and left home, we sold it to someone in our children’s generation. Unfortunately, that doesn’t work so well when there start to be more pensioners than workers.
More here. And then you’re ready for this.
Canada’s dependency ratio forecast is here http://www.statcan.gc.ca/pub/82-229-x/2009001/demo/dep-eng.htm#hg
Just to help with reading the charts
– the right-hand axis is the dependency ratio one
– note that it’s the INVERSE dependency ratio (the charts are wrongly titled/captioned, but you’ll notice that the numbers on the axis go big to small, bottom to top)
– so the US goes from ~51 in 2010 to ~63 in 2030
– higher numbers are worse: that’s a higher number of non-workers (dependents) supported by actual workers
– Canada (whose axis is the right way round) goes from 60 in 2010 to 75 in 2030, so a worse situation than the US (but of course our parents will sell their house to Guanzhou factory owners, not to their kids, so they’ll be fine, right?)
The big problem for echo-boomer millennials like me is that the boomers will still be alive in 2030 and, presumably, voting in their own self-interest to tax the bejesus out of us, in order to pay for their heatstroke healthcare, heat-trapping stroads and flood insurance. Soylent green anyone?
Hopefully the climate refugees flooding north from dustbowl US states and Mexico will be accommodated in a pedestrian-oriented built environment that fosters innovation-spawning job-creating serendipity.
Or we could build a few more freeways just for kicks.
If this means housing prices are set to drop as the boomer’s retire, then that’s the best news I’ve heard all day.
I guess all we have to do is wait until 2030 before buying a house 🙂
@ neil21
“The big problem for echo-boomer millennials like me is that the boomers will still be alive in 2030 and, presumably, voting in their own self-interest to tax the bejesus out of us, in order to pay for their heatstroke healthcare, heat-trapping stroads and flood insurance. Soylent green anyone?”
Yeah, this one terrifies me, in particular because it’s already started and makes one wonder to what extremes it will eventually take us. We’re already seeing CPP rates rise to fund the retirements of those who haven’t been made to adequately contribute over their working lives, and if you’ve ever been in a private pension (or had a family member enrolled), you’ll know that things have changed hugely in the past 10 years. Contribution rates are up often 30% (or more), payouts are set to fall, and eligibility is being delayed, all to pay for workers who should have been properly contributing for the past 40 years and weren’t. It’s a pretty terrible deal for Canadians ~30 years and under. We get to pay more, to receive less, at a later date. What a deal!
Combine this with increasing feelings of regionalism (e.g. are we Canadians? I sure don’t feel particularly patriotic these days, I feel that the Canada I grew up with has died) and a mobile, world-curious Canadian workforce, and I think the possibility of youth-exodus is real.
I think this is spot on. Generational divides are something that aren’t really talked about much (except oddly enough by Price on this blog) yet are a growing and major problem I find. Boomers have such a numerical advantage that they have been able in many ways to skew the tax system to their advantage, and we’ve seen lowering taxes in their most productive years, and lowering services for those coming behind them. Defined benefit pension plans are already non-existent it seems. There simply aren’t the same opportunities for those in the younger generations. Regionalism is also growing as those programs and the identity that tied people together are lost.
But what happens now as boomers enter retirement? It’s hard to say.