Some Things Never Change, Others Never Stay the Same.
It's tempting to do what you are comfortable with instead of what you need to do.... George Guerin.
It's Been An Interesting two Weeks. I've been here in Colorado for almost two weeks and neither my body nor my mind have slowed down during the whole time. I've had interesting conversations, picked up some new ideas, and have reached some new conclusions, one of which is that we can't continue to do what we've always done. The the picture above shows a scene that Native Americans could have seen hundreds of years ago. It looks pretty much the same today as it did then. As you head down the mountain towards civilization, you can see immense changes that have occurred even in the short time I have occupied this planet. If i had my "druthers," I might prefer fewer changes but times are different and we must adapt.
The Demographics Of Our Society are Changing. Anglos will represent a smaller proportion of voters, consumers, and workers in the future. Even if immigration slows, differences in birth rates will force this change. The anglo section of society is rapidly aging and will place pressure on entitlement programs such as social security and medicare. Continuation of these programs in their present form is highly unlikely.
Growth In The Financial Markets Is No Longer a Foregone Conclusion. As older Americans look to liquidate their investments to fund living expenses, selling pressure may increase making it difficult for markets to grow as much as they did in the past. We are quite fortunate that the recent rally in the markets has allowed us to recoup much of our losses, it is unlikely that this rally will continue for long.
We Will Consume Less In The Future. Americans have rapidly changed their spending habits. Consumers can no longer borrow on their home equity to buy luxuries because many have no equity. Credit cards are being restricted. Despite a perfect payment history, Bank of America recently cut my credit card limit in half. I really didn't need the $33,000 limit they gave me but it illustrates my point. I also no longer receive five or more offers of new pre-approved cards a week. An aging population will also affect this trend since older people have less energy to roam shopping malls looking for things to buy. Since the consumer accounts for 70% of our economic growth, this will continue to put a damper on things.
Tax Rates Will Increase Regardless of Which Party is Elected. Eventually, we will have to support our government instead of vice-versa. Foreign investors will grow weary of buying our treasury debt unless they see that we are serious about reducing our debt levels.
Increased Government Regulation In The Future. Lack of responsibility in corporations and on wall street has resulted in the call for more government regulation. If what they have done in the real estate and lending industry is any example, this won't work. It takes longer to get a mortgage loan because of new regulations which will do little to help the consumer. Changes in the appraisal process will echo through the economy as appraisers will be selected at random rather than being directed towards the more competent practitioners. While I admit that free markets may not work perfectly, these industries are so complex that effective government regulation unlikely.
Stay Tuned For Strategies To Cope With The New Reality. I am leaving Denver to go back to Texas on Tuesday. I will continue to think about these changes and propose new strategies for dealing with them in future posts.
Sad but true. Thanks for the Perspective.
ReplyDelete